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SoCap, Clean Energy, and Mike Tyson
Wednesday, Sep. 14, 2011
I didn’t expect that my favorite quote at last week’s SoCap conference would be from Mike Tyson, but that is what makes SoCap so great… a gathering of people who are not afraid to bring in new ways of thinking from any sector, even professional boxing. Tyson was not there in person, but Josh Suskewicz of Innosight quoted the infamous heavyweight to emphasize his point that ~90% of successful entrepreneurs have changed their strategy 4 times before settling on one that lets their venture succeed: “Everybody has a plan until they get punched in the face.”
My second favorite quote came from Lisa Kleissner of KL Felicitas Foundation, who was in attendance and spoke on an uplifting and thoughtful panel entitled, From Crisis to Building Something New Together. When asked about the best way to have impact, she said that “the best way to have impact is to fail…. Because if you fail it means you took action.”
I’ve had my fair share of figurative punches in the face, real failures, and sudden strategy shifts in my careers as a social entrepreneur and a supporter of social entrepreneurs. I believe I have made a small or not-so-small difference in the lives of quite a few people, but it has never been easy, and it has seldom gone according to plan. SoCap is refreshing because most of the attendees are also practitioners, and we talk openly about the gritty, messy reality of the space we work in. Three days were not enough to have a thoughtful conversation with all 1500+ attendees (even though everybody tried their best), but it was enough time to invigorate me to keep moving forward with our Center’s plans to expand the Global Social Benefit Incubator program offerings to be able to help more social entrepreneurs become investor-ready.
So, how does clean energy fit in to all this? While there was no official clean energy track at SoCap, there was a large grouping of both clean energy entrepreneurs and other organizations working to tackle the problems of 1.5 billion people without reliable access to an energy grid and the 3 billion people cooking on dirty, inefficient stoves. It is more evident than ever that these are problems that can be solved through market-based approaches because the new technologies and innovative business models being deployed give cleaner energy to BoP consumers for lower prices than what they are paying now for inferior solutions like kerosene lamps and disposable batteries.
Last month, at our GSBI clean energy forum, we worked with 11 clean energy entrepreneurs and a variety of experts to discuss what it will take to accelerate the growth of the social enterprises serving this sector. Our two-day session led us to envision an ecosystem accelerator that efficiently finds and deploys human and financial capital to enable new and existing social enterprises to be built for scale and to be brave enough to experiment with innovations in pricing, distribution, and legal structures to find successful models.
This is an ideal sector for the SoCap community to get excited about because it provides the impact investing community with real opportunities for making a difference while making a profit. Impact investors are often criticized for being too risk averse or for favoring profits over social impact. Successful ventures such as Toughstuff are showing that in the BoP energy market, there are investment opportunities with lower risk and profits that correlate directly to positive social and environmental impact.
Lesley Silverthorn of Angaza Design was one of at least 10 GSBI alumni I saw at SoCap looking to connect with funders and other entrepreneurs. Her company’s solar LED room light is far brighter than other comparably-priced lights on the market and was designed to illuminate an entire room for multiple members in a family to use effectively at the same time. At $60, it is not an entry-level product for East Africans, but something that they aspire to own once they see the pros and cons of the lower-cost products. She commented, "I actually got so much more out of SoCap by meeting fellow energy entrepreneurs, thought leaders, and investors than I got from just attending the organized panels and speakers. Now there is a large group of energy companies forming a 'SoCap Energy Alliance' to further our collaboration to achieve our goals of a world with access to clean, bright light and the ability to power small electronics." (Contact Lesley at firstname.lastname@example.org for more information on the Energy Alliance.)
An ongoing concern for everyone involved in the sector is how to make even the lowest cost products affordable for people living on a few dollars a day, who have limited savings and little access to credit. A recurring notion has been posited that BoP products need to pay for themselves within a year to be able to gain widespread adoption. Many of the clean energy products we see meet this requirement, especially if other benefits like increased productivity are factored in. The most obvious solution to getting these products out is microloans, but that has been challenging because it puts all the risk on the consumer. Even if the lamp breaks, is stolen, or otherwise fails to meet their needs, borrowers are still liable for the costs of the product plus interest. In response, entrepreneurs are coming up with a plethora of new models to overcome this obstacle. Typically these models are based on a rent-to-own or other pay-as-you go scheme. This greatly reduces the risk for the consumers, and with the right mixture of technological and social mechanisms in place, entrepreneurs can mitigate their own risks. Husk Power Systems is succeeding with such a model by operating community power plants in remote regions of India. It is still too early to point out a company that has made this work at scale for household products, although Sunlabob is having good success in Laos with its solar lantern rental system. These and other learnings about affordability have been documented on the Energy Map, which we will continue to expand to incorporate best practices from new companies.
I was pleased to see several noteworthy organizations especially engaged in clean energy at SoCap. The UN Foundation deserves accolades for its proactive role, moderating three clean energy sessions which helped the entrepreneurs connect with each other and the broader ecosystem. Other big names that were notably present at the clean energy sessions include the World Bank Development Marketplace, National Geographic, and E+Co.
Where does this leave us? As I reflect on the GSBI Clean Energy forum and my take-aways from SoCap, I am confident that we are moving in the right direction, but we have a long road ahead and we should expect as many punches in the face as inspiring stories of success in enabling millions more people to benefit from clean energy.