Making Affordable & High Tech Innovations for Emerging Markets

How do you develop high-tech products for people living in slums? How do you go about testing them in a safe way? How can you design a product and business model that such users can actually pay for? These are some of the challenges facing innovation managers in companies addressing the UN Millennium Development Goals and the ‘Base of the Pyramid’ market.

In this interview with Peter Carstedt, an active funder of the start-up company Peepoople, you will get some of the answers to the questions above. Peepoople aims at providing an alternative to toilets for people living in slums, in the form of a self-sanitizing, biodegradable bag which allows the waste to be used as fertiliser.

Peepoople is a result cross-sectional research. What impact does this have on how you manage innovation in the company?

- We have always worked across sectors and will continue to do so, especially working with local partners in order to understand how our product works in their context. Currently, we collaborate with universities (in Sweden, Kenya and the Netherlands), the public sector, local and international NGOs (such as Oxfam, the Red Cross, GTZ and Umande Trust), local micro entrepreneurs and many CBOs (Community Based Organizations). This results in a creative chaos: we believe in co-creation for both product and services.

Tell me more about the field tests that are a part of your innovation development and what you have done?

- After testing the quality of our product, we immediately started field tests at several sites in order to get a better understanding about the requirements of the people in need, and their current sanitation solutions. For example, we had 300 people in one of the largest slums in the world, in Kibera, testing the Peepoo toilet and evaluating whether it was a suitable solution for them. We had a close collaboration with GTZ, doing the evaluation, and we found that approximately 90% of the people liked our solution, and that it was primarily women and children who used the Peepoo in their homes. This encouraged us to develop our strategy of recruiting women micro-entrepreneurs for our distribution systems and working with local schools that had no access to proper sanitation.

- We also carried out tests in a Muslim context in Bangladesh in order to assess cultural differences and found that, although in Bangladesh it is more of a taboo to handle faeces, the people preferred the Peepoo toilet to their existing habits. We currently have an ongoing field test in Haiti, where, together with Oxfam, we are evaluating this solution in a disaster relief context. We plan similar tests in Kenya in collaboration with the Red Cross. We partner with NGOs in all our field work which allows us to reach more areas where people are in need of rapid, dignified sanitation solutions.

Do you see any advantages, from an innovation perspective, of working with products addressing the base-of-the-pyramid market?

- There have been very few innovative solutions within the – very conservative – water and sanitation area. We see an opportunity for this new solution to change things by changing perceptions of what is required to provide dignified sanitation solution for the very poorest people. Peepoople from the start of developments, has had in mind the needs of the people living at the base of the pyramid. I believe that it is this focus in combination with the creativity of our founder that has allowed us to make such a very different product. Our particular starting point has enabled us to provide a solution that should be easily and quickly scalable and should reach many more people in need of sanitation facilities.

How does your choice of investors impact on your opportunities to continue product and service development?

- In November 2009, Peepoople was honoured by its founder, Anders Wilhelmson, being made the first Swedish Ashoka Fellow. One of the rules of the company is that return on investment (ROI) should be paid by the end of the first 10 years after investment, and that all funding should be used to scale up the business. Therefore, we need resilient and long term investors. We prefer also to have a small number of investors that believe in both social and financial returns from a project, as this is the ethos of the company. We want to enable as many people as possible to have a dignified sanitation solution, while also making a profit. So far, we have been successful in identifying investors with the same priorities, willing to engage in building up our company. For example, in the early stages of the company, we invited researchers in agriculture and bio plastics, from Swedish University of Agricultural Sciences and The Royal Institute of Technology respectively, to be part-owners in the company and to be closely involved in product development. This strategy has proved successful so far.

In what ways does sustainability come into your processes in Peepoople?

- Based on the People-Planet-Profit concept, we address the first aspect by providing toileting solutions for individuals and reducing contamination in their environment. Since the bag is biodegradable it can be used for fertilizer, it provides nutrients especially in peri-urban agriculture, and prevents soil depletion. Thus, it also addresses the problem of recycling and responds to the Planet aspect of the concept. In relation to Profit, our business model makes it possible for micro entrepreneurs to earn some money from the distribution and collection of the Peepoo bags. Because the Peepoo is sanitized within 2-4 weeks its contents can be used as fertilizer and can be sold to the agricultural sector, thereby creating a new market.

You were recently at the ‘Rework the World’ conference in Leksand, Sweden, and the session you participated in was called ‘Making startup companies sustainable – What is the role of funders?’ What do you think as an investor?

- Many of the companies at the conference had excellent solutions to some really serious and global challenges; however, they did not always manage to describe them in ways that investors could understand. It is vital to be able to explain one’s business ideas, describe ROI, how the solution will be distributed and how it can be scaled up. All this is very important, and I believe that funders should help entrepreneurs to understand its importance.

- As an early investor you must also give the company a bit of a breathing-space. We make it possible for the company to employ an external CEO if necessary, make any patent applications that are required, work on development of the business model and formulate strategies to prepare the business for its next phase.

You are planning to set up an NGO in parallel with the company. How will it contribute to innovation management?

- We really don’t know yet! One of the reasons why we want to start a foundation is that many NGOs are still not comfortable with working with a for-profit organization. Starting an NGO would be an innovative way to get closer to customers and partners. We would not be the first company to do this and the Grameen Bank is a great inspiration to us about how to combine the work of an NGO and a for-profit organization in order to reach many more people.

By Lena Holmberg, Programme Manager at Innovationsbron, Sweden

About Peter Carstedt

Peter Carstedt is an investor in Peepoople AB, which takes a completely new and innovative approach to solving one of the major problems of today – sanitation. Peter is currently Managing Director of Credendum AB, a small management consulting firm that focuses on sustainability issues. He previously worked as a senior consultant for Celemi Ltd. in Shanghai, and as a business expert for the Clinton Foundation in Haiti. Peter is also involved as a consultant and/or as board member in a number of other social businesses in Sweden, Asia and Africa.
Rework The World

This year, the Tällberg Foundation joined forces with YES to organize the 5th Global YES Summit – Rework the World. More than 1,600 people from 120 countries gathered in the small Swedish town of Leksand, among them Percy Barnevik (Chairman, Hand in Hand), Ismail Serageldin (Director, Bibliotheca Alexandrina), Mary Robinson (Former President of Ireland), Hans Rosling (Co-founder, Gapminder), and Thomas Kåberger (Director General, Swedish Energy Agency, Sweden). The entry point to the discussions was employment opportunities for the future, and the summit was based on 100 real and investible initiatives and ventures from across the world. One of the sessions – ‘Making startup companies sustainable – What is the role of funders?’ was organized by Innovationsbron.

    Ilike the idea on the issue of sustainability in community especialy the urban poor.good job.