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"Profit Feeds Impact at Scale"



(p. 1) Eric Reynolds will tell you that he is on the verge of freeing much of humanity from the deadly scourge of the cooking fire. He can halt the toxic smoke wafting through African homes, protect what is left of the continent's forest cover and help rescue the planet from the wrath of climate change.

He is happy to explain, at considerable length, how he will systematically achieve all this while constructing a business that can amass billions in profit from an unlikely group of customers: the poorest people on earth.

He will confess that some people doubt his hold on reality.

"A lot of people think it's too good to be true," says Mr. Reynolds, a California-born entrepreneur living in Rwanda. "Most people think I am pretty out there."

The company he is building across Rwanda, Inyenyeri, aims to replace Africa's overwhelming dependence on charcoal and firewood with clean-burning stoves powered by wood pellets. The business has just a tad more than 5,000 customers and needs perhaps 100,000 to break even. Even its chief operating officer, Claude Mansell, a veteran of the global consulting company Capgemini, wonders how the story will end.

"Do we know that it's going to work?" he asks. "I don't know. It's never been done before."

Inyenyeri presents a real-world test of an idea gaining traction among those focused on economic development -- that profit-making businesses may be best positioned to deliver critically needed services to the world's poorest communities.

Governments in impoverished countries lack the finance to attack threats to public health, and many are riddled with corruption (though, by reputation, not Rwanda's). Philanthropists and international aid organizations play key roles in areas such as immunizing children. But turning plans for basic services into mass-market realities may require the potent incentives of capitalism. It is a notion that has provoked the creation of many businesses, most of them failures.

"Profit feeds impact at scale," says Mr. Reynolds, now in the midst of a global tour (p. 8) as he courts investment on top of the roughly $12 million he has already raised. "Unless somebody gets rich, it can't grow."

More than four decades have passed since Mr. Reynolds embarked on what he portrays as an accidental life as an entrepreneur, an outgrowth of his fascination with mountaineering. He dropped out of college to start Marmot, the outdoor gear company named for the burrowing rodent. There, he profited by protecting Volvo-driving, chardonnay-sipping weekend warriors against the menacing elements of Aspen. Now, he is trying to build a business centered on customers for whom turning on a light switch is a radical act of upward mobility.


. . .


To succeed, a stove had to be so convenient and clean burning that women preferred it over their existing cooking method.

Mr. Reynolds began testing stoves made in Italy, India, the United States and China. He tried making his own.

He came to realize that the magic was in the combination of stove and fuel. He experimented with making charcoal out of corncobs. ("A stupid idea," he says.) He tried burning banana leaves. Then he discovered wood pellets, which involve compressing wood and eliminating water, the element that produces much of the smoke.

He settled on a Dutch-made stove that reduces wood down to clean-burning gases. Using pellets reduced the need for wood by 90 percent compared with charcoal. But those stoves cost more than $75.

Then came the epiphany: Inyenyeri could supply the stoves for free while collecting revenue from subscriptions for pellets. Rwanda was urbanizing rapidly, and city dwellers rely on charcoal. They would be eager to switch to pellets, which were 30 to 50 percent cheaper.


. . .


(p. 9) The business model would get more attractive as the cost of charcoal climbed, and as innovation inevitably made stoves more efficient. Inyenyeri would also stand to collect revenue from an arrangement it later entered into with the World Bank to sell credits for reducing emissions.

In 2010, Mr. Reynolds sold his house in Boulder and went all in on Inyenyeri. He unloaded his wine cellar, liquidated his retirement accounts and moved to Rwanda with no plan to leave.


. . .


"This business model will happen," he says. "If it's not Inyenyeri that's the first mover, then it will be someone else who learns from our mistakes and does it better. It's too big of an opportunity."



For the full story, see:

Peter S. Goodman. "'A Low-Cost Fix for Africa's Silent Killer." The New York Times, SundayBusiness Section (Sunday, Dec. 6, 2018): 1 & 8-9.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 5, 2018, and has the title "Toxic Smoke Is Africa's Quiet Killer. An Entrepreneur Says His Fix Can Make a Fortune.")






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