(Via JustMeans)

Position: Assistant Director for Social Entrepreneurship, Berkley Center for Entrepreneurial Studies

Location: New York, NY

Organization: Stern School of Business - New York University

Job Description: The selected candidate will work with the Associate Director to create and manage a sustainable, world-class social entrepreneurship program that is recognized for its leadership in research, curriculum and programmatic offerings.

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Today I'd like to highlight what I see as a frequently occurring theme in BoP business models, and an element that could make it or break it for companies that look to target BoP markets. Entrepreneurship is often cited as the critical component for small and medium-scale enterprises, especially ones that employ a franchise model. Enterprises such as Scojo, Medicine Shoppe, Drishtee, HMX Sumaya, Florestas and Berni Labs are among many examples of business plans that rely on entrepreneurial individuals to take a model and make it work in their own communities.

Despite this impressive list, I think what underlies some of these entrepreneurs' success is not based on ‘entrepreneurship' per se. Rather, there is another, crucial element that explains why smaller enterprises often are the ones to find a successful BoP niche, and why larger corporations (even when they have greater economies of scale and resources available) do not always succeed in these same markets.

That element: KYC. No, not Colonel Sanders; KYC stands for know your customer. And in the BoP context, that doesn't just mean doing market research about consumer preferences and purchasing power (though that IS important). No, KYC means becoming a provider of personal attention and building an individualized connection with initial and potential customers. The importance of this for a BoP business model is

perfectly illustrated by Acumen Fund Fellow Catherine Casey in her recent blog post about rural SHEF Health Clinics in Kenya.

Casey describes the success of a for-profit rural health franchisee based on the personalized attention that customers receive and a willingness to tailor services to meet a variety of needs and comfort levels. Evidence from SHEF clinics in Kenya shows that BoP customers are willing to pay for these services, even where the alternative option of a free government clinic is available.

Is this specific to the BoP?

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Today, I read with interest an article from the Business Standard entitled "TutorVista Readies Indian Rollout; [Firm] To Raise $15m to Address Bottom of the Pyramid." Perfect for the NextBillion Newsroom, right?

Perhaps not. TutorVista, a leading online education firm, matches India-based tutors with students in the U.S. and U.K. For $100 per month, students have unlimited access to certified, trained tutors in subjects ranging from Calculus to Geography to GMAT test prep. Just over two years old, the company has over 10,000 registered students, 850 employees, and an estimated annual run rate of $5 million. Not bad for a start-up!

What caught my eye is the report that TutorVista is expanding back into the Indian market. According to the Business Standard,

Around 300 learning centres will be set up in B and C class towns, mostly on a franchisee basis, with TutorVista managing them and controlling quality. This will seek to address the gap in such towns for quality tutoring which cannot be accessed by those who do not have a PC and Internet connection at home...The rates have not been frozen yet but Indian students are likely to be charged Rs 25,000-40,000 per year, for eight hours of coaching a week.

As I read the article, I wondered to myself, "Is this really a 'bottom of the pyramid' business model?" Curious, I did some calculations - based on today's exchange rates, Rs 25,000-40,000 equals USD $636-$1,015. With such a high price point, can BoP households afford TutorVista?

Based on our research in The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid, the answer is easy: no, it is not. Not even close.

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