Somebody told me a few weeks ago that the job of a CEO is to say NO.  Constantly and incessantly say no - so that when the Yes's pop up they signal direction and focus.  I see myself more as a YES person, but this week has torn me.  We have designed super flexible and really killer lighting solutions.  However, their flexibility means we can toggle the features up (increasing cost) or down.  There are some really big decisions I have been making in terms of the quality, features, and cost of the components we source and their impact on the final prices of our initial product line.  This is exaggerated in economies like India's where  a slight rise in manufactured cost is magnified many times as the government taxes you, and then taxes you on the tax, and then taxes that.  I have heard anecdotally about some of the world's largest beverage companies that have been losing money for decades in India, and where the population is so price sensitive that they have lost up to 30-40% of a given customer group with a 2-3cent increase in price.  Ouch.  In that environment, we have to make trade-offs on how long our lights should last, how bright they should be, how durable and how portable, and finally how aesthetic and powerful.  This is what has been tearing me up, especially because i am not living in a village and can't go and test different versions of the product every day to see what our clients would choose.

To give a backdrop - I like to remember how we started d.light design with a simple point of view - we were NOT going to be another bone in the growing grave-yard of primarily foreign led attempts to introduce alternative technologies into emerging economies.  In other words - we were not ,that is, I was not, going to produce another $50 lantern nobody could afford.  Instead, we went to the other extreme and challenged ourselves to produce a $5 lighting solution that almost any family would desire.  Not an easy task.  Now I have had to make decisions on what ultimately I think will be best both for our customers and for the growth of our company.

I'm actually kind of sad that I can't share the details.  This is one of the problems I feel with blogging about a social enterprise on the net.  We are not an NGO and I can't elaborate on our strategic choices until either they are common knowledge, or, we have succeeded and are past the vulnerable start-up stage.

In any case - I've heard it before but I have been emphasizing to myself that perfect is the enemy of the good.  I want to sell product lines made after careful and well informed choices, and then I want to constantly improve them and out-compete companies that can't meet customers needs as quickly.  In the end - I think customers want choice and we can provide them with really great choices - but probably not perfect ones... and there are just too many bad products out there to fill that gaps while we search for the perfect solution!

The other breakthrough this week is that I am so so impressed with our team.  I really have to say that if we want to do the impossible and eradicate kerosene, I think I've teamed up with a group that can.  Erica is heading up a needfinding efforts, making logos, packaging, and figuring out how to build our new products, Xian is scaring me because he's going to be a manufacturing guru before we even move out of our first office, Ned is synthesizing insane amounts of data and running monte carlo simulations (Wow - go business school), and Gabe is working with Brian to build a space station (testing stands:) ) in the back of our office. Go Team!

I am totally re-invigorated.  I need to be around crazy entrepreneurs with wild visions more often.  I am more and more sure that we can bring light to millions.  The wind is at our backs.  We have a ridiculous need and a great product and the right team and supporters to make it happen.  I can’t wait to get selling!

Gray Matters Capital

First I need to introduce Gray Matter's Capital (GMC), our first institutional investor after we won the DFJ Venture Challenge.  GMC works to connect private social investors with social enterprises.  They are all about jump starting social change.   

I attended the GMC retreat last week and here's a  download of the incredible people I met there.

Lumni:  Filipe is a born entrepreneur, and already runs several language centers in the US while he raises money for Lumni.  Lumni is already in 4 countries and invests in students. They find people with high aspirations to attend higher education but who can’t afford it, and then they pay the education, train them in interviewing, confidence building, job skills, etc and take a small percentage of their future income for severals years.  For example, I heard the story of Marco who was packing crates in a store for $150 a month and saved enough to pay for 1 credit of classes each semester.  So, it would have taken him a minimum 7 semesters to graduate.  Felipe gave him a loan for $2500 and Marco graduated and has had 2 promotions and now makes $36,000/yr.  Marco wants to reinvest in the fund now for another student.  I think this is a really awesome idea and if you have a min $5000 you can invest in a life.

Cell-Bazaar:  Founded by Kamal Quadir, the brother of the founder of Grameen phone, they are essentially creating craigslist in Bangladesh over mobile phones.  People sell rice, bananas, used watches, and thousands of other items directly to others in their localities.  Kamal tells a great story the day he learned that his driver was actually making about 50% addition income above his salary by selling used cell phones through cell-bazaar.  When Kamal heard the story he knew that he was on to something big.

Paralife:  Founded by Rolk Hueppi, a charismatic and retired insurance guru with a ton of energy and vision.  He's raised millions and has decided he can provide 70% of the world with life insurance, especially the poorest of the poor who cannot afford to lose an income earner.  Paralife has started by training handicapped people in Mexico (an estimated 10% of the global population are handicapped) who really can’t afford to have people who look after them pass away.  He trains the handicapped to admister life insurance and rides on the infrastructure that larger banks have already developed .

United Villages:  Drive-by wi-fi!  They are setting up kiosk operators in different states in India, and then they install their proprietary wi-fi transmitters on buses and motorycles that ply the roads.  When the bus comes by it uploads and downloads all the information so you have internet even off-line.  Go MIT technology labs.  Villagers can get products, services, and information after buying a prepaid card.

Rentbureau:  The largest monthly expense for many lower income families is their rent.  However, even when they pay it consistently on time it never factors into your credit rating (as opposed to wealthier paying mortgages which do).  Rentbureau has devised an online system to reflect payments and provide apartment owners (now in the UK and US) with data to make better rental decisions, while helping to build credit for honest renters.

I also had dinner with Iqbal Quadir, the founder of Grameen phone, who is starting Emergence BioEnergy to take a sterling engine and create 1kw of energy from biogas, and to role it out to every family in bangladesh in need, starting with those that can use the excess heat produced to dry vegetables.

Finally, GMC is now going to start a fund to finance entrepreneurs all over the world that have started private schools in slums and other areas where public education is insufficent (quantity or quality).  They found schools charging families from $2-4/mo and which needed capital ($5-10K) to build new classrooms, get furniture, etc to grow and provide more kids good quality education.  These private schools are committed, families like them and demand good results, and generally they take kids with not other options, like aids orphans, free.

You've got to love this portfolio!

I have been thinking lately about the few days I spent with Raj and Jyoti in India.  As an entrepreneur, one of the lessons I have been learning more and more is that meetings I think will be extremely important seldom are, and the meetings I can't tell from afar what to make of, often yield fruits of many forms.  Meeting Raj and Jyoti was a rare flower.

Raj and Jyoti are interested in providing hundreds of thousands of lights to families truly living in the dark.  They have been organizing the Dalit (sometimes incorrectly called Untouchable) community in India for many years to provide them a voice in Indian society, with political representation through private elections, and corresponding lobbying to increase the Dalit communities access to land titles, proper representation in the eyes of the police and courts, etc. 

[A brief aside, Gandhi called the Untouchables Harijan's or children of God, which many consider terrible because it came from the use of Harijan girls in the temples by some upper-caste men.  Those girls later gave birth to children without fathers, and because they were birthed at the temples they were the 'children of God.']

I ignorantly thought that I could provide lighting to these families if I could provide appropriate financing.  I was amazed as an outsider to discover it wasn't so easy and that very little progress had been made to erase caste prejudice in the Indian villages I visited.  I learned that caste is sometimes even more strongly (and wickedly) enforced in the Christian and Muslim communities than the Hindu ones.  I witnessed villages where one side of the road was literally all cement houses with electricity and water, and the other side was thatch houses with kerosene lanterns.  The kids from the thatch houses would try to study under a bulb hanging off a power line running directly over their houses, but other caste children would come and throw rocks and smash the light and relegate them back to darkness and kerosene.  The problem wasn't supply of power - power was 10 feet away - the problem was 2000 years of society blocking access to power.  In fact it was legally free to these citizens!

On one of our visits to a community that had recently had some of their houses burned down by a group of upper-caste men, some of the non-Dalit community thought we had come to redistribute land to compensate the families.  They started shouting and raising a big ruckus in the meeting.  When they learned we had no power and were merely there to learn about lighting, they promptly left.  I began to wonder what institutions would serve this population that obviously was in need of lighting.

With Raj and Jyoti I showed our lights to families who lived in thatch houses so dark even during the day that the women had to use kerosene lanterns to cook.  They loved the lights but were very blunt that they could not afford more than 25Rs (about 40cents) for all their expenditures per day and there was no way they could afford $10.  I also realized that they were unlikely to get government support soon, as there already existed government programs to provide them with electricity and  electricity meters (heck the power lines were running right overhead), but either a) they would be hooked up and then promptly taken away when the collector came one year later and demanded the hook up fee and monthly payments or b) and more likely, they were never given the electricity because you need a land title to get the benefits and they were never given land titles.

It truly was sad for me to open up a newspaper and look at the marriage ads ; with a scant one or two ads per day that would say 'caste no bar.'  What amazing people those must be and incredible families to have the guts to be caste-agnostic.  I would like to meet them.

It has since become obvious to me that to supply this portion of the population would require working very closely with individuals and institutions.  What remains to be seen is the social, economic, and political consequences to a business that pursues a path of working with Dalit communities in India.  I heard many stories of successful individuals with close private sector and government ties who, upon opening up that their parents were Dalit's, would lose all their 'upper-caste' friends.  Those friends would now have somebody else answer the phone and then say ' so and so is not home.'

This population of Dalits is one group at the base of the pyramid - and they are several hundred million strong!

The best part of my days are the 7:30am brisk 4 mile bicycle ride to work on back-roads.   Falls coming, my belly is full, mind alert, and I am usually rushing to implement some change that popped into my head at 1am while I lie in bed rehashing our strategy.  This morning was hastier than usual, as I sprinted to make a conference call with the supplier of one of our most important components - and eureka, it was definitely worth it.  We shaved about 5% off the cost of our product and can ring our little Tibetan bell.  The bell is an auditory reminder of our goal, and we keep handy whenever we can color in the thermometer we drew on the side of our wall measuring the drop in cost of our product.  ring ring ring.  We're just responding to customer feedback - and they want the price to drop ;)

I've spent the last week basically going over the thousands of pictures and videos that Lubna, Melissa, Nora, Erica, and Rohan took in India, as well as Ned and my pictures.  If there is one thing I learned at the d.school its the power of pictures and most importantly video.  We put a short video on youtube of a girl studying with our light after spending her whole life using kerosene.  In fact, I'm amazed at how many of the India MBAs at Stanford  spent their youth studying at one point or another with kerosene.

http://www.youtube.com/watch?v=uA2g0IObKP0
I really just can't wait to get some more units out to commercial pilots so we can starting getting broader feedback and designing more products.  On that note, I wanted to thank Nick Webb extensively for being the worlds most amazing Intern.  Nick's back at Stanford for 8months in the mechanical engineering program at which point we'll try and lure him back!

In the meanwhile, its time to prepare for another trip to India.

I have to admit - It is tough continually riding the rollicking wave of our start-up.  Always having new things on my plate, whether its making big product decisions, watching our first product samples come back, hiring new employees, traveling to India, getting updates from all over the world, or prepping for board meetings.  But at the same time it is what I love.  I absolutely love the highs, looking back briefly, but basically forging ahead full pace... and then all of a sudden things dipped last week. 

whoosh - everything slowed down. 

I found myself back in Palo Alto, with a two week sub-lease on an apartment, boxes in storage in three places, my friends from biz school and previous years scattered helter skelter about the globe, and not quite enough happening at work to keep me occupied 24-7.  So I borrowed 10 movies from a friend, got out my mountain bike, enjoyed brunch with friends, and got to work at 8:30am instead of 7:30...but I was a little uneasy.  d.light is in a transition and i'm realizing i have to make my own personal transition as well.

I noticed I have come to equate speed with progress -  which can be a problem and I need to learn to nurture these slower periods and even plan them so our team can recuperate.  We need it.  We (d.light that is) have been extremely fortunate - and some harsher realities of life came up last week which I hadn't planned for.  Xian, our amazing mechanical engineer and d.light founder, was (is! Damn the immigration system) having trouble with his visa status and in a worst case scenario might have to go hang out in our factories for a few months.  Ned, or most humbe and softspoken president, was really sick and we thought he had malaria.  Meanwhile, manufacturing wasn't moving as fast as our idealistic hearts would want, and I'm quickly learning that 'minor' design changes take MAJOR effort.  So my spirits dipped a bit and it was great to see our team rally.  We went back to our roots and as a team asked ourselves - 'what do our customers want' - -  We then applied our magic formula based on months of visits to villages over 2 years and we made some design changes and strategic decisions that stripped about 10-20% of the cost out of our unit without dramatically impacting the functionality to our target customer! I feel great!

(I realize this is scattered but hey its 9:30 at night and I haven't eaten dinner ... I can feel things are picking up a bit though:)