NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Editor’s Note: I recently had the pleasure to meet Andrew Youn, co-founder of the One Acre Fund. He and his co-founder, Eric Pohlman, generously agreed to an interview. Last week, One Acre Fund was singled out by the Skoll Foundation as one of four 2010 Skoll Awardees. The award’s 3-year, $765,000 grant will enable One Acre Fund to serve 100,000 of the poorest, hardest to reach farm families in East Africa.

Let’s learn more about Andrew, Eric and the social enterprise they’ve dedicated themselves to: One Acre Fund.

Tell me about One Acre Fund’s business model.

One Acre Fund brings two unique innovations to subsistence farmers.

First of all, we deliver a comprehensive group of services to farmers. Teaching somebody about seed and fertilizer isn’t enough, if they can’t actually buy these things. Growing more food is useless, unless a farmer can actually sell their surplus. We deliver a comprehensive group of services – we form farmers into groups, loan them seed and fertilizer on credit, train them, and then help them access harvest markets. Anybody who works hard can succeed.

Secondly, we deliver our services deep into rural villages. In rural areas with serious transportation challenges, if a service is not within 2 miles of a farmer, it may as well be on the moon. We take delivery orders from more than 20,000 farmers, purchase as a group, and then deliver it on a single day to within 2 miles of their home

Tell the audience a little about who you are – where you come from, your educational/professional background, etc.

Eric and Andrew run One Acre Fund. We come from different backgrounds. What unifies our thinking is putting “farmers first.” We have a customer – the subsistence farmer – and are obsessed with helping this customer generate more income.

Andrew (left) comes from a business background. I graduated from Yale in economics, became a management consultant, then went to Northwestern / Kellogg for business school. During a summer internship at BroadReach Healthcare, I was inspired to start One Acre Fund.

Eric (right) comes from a development and entrepreneurship background. I was a Georgetown SFS grad, and served in the Peace Corps in Cameroon, where I helped start a local organization that builds wells and still operates today. We both made the transition into agriculture because 75% of the world’s poor people depend on agriculture. “If you want to generate money for poor people, agriculture is where you need to go,” says Eric.

When/where did you first hear about the idea of market-based approaches to poverty alleviation?

As we were starting One Acre Fund, we became aware of the sector at large. The idea was self-generated – the idea of being part of a larger sector came later.

What did you think of CK Prahalad’s book, The Fortune at the Bottom of the Pyramid?

It was incredibly expanding. It helps to think of the base of the pyramid as a customer segment. People have a very non-profity attitude towards poor people – who are indigent and need assistance. It’s transformative to think of poor people on par with other customers. We need to start businesses (or NGOs that work like businesses) so we can provide high quality products and services, listen to the customer with dignity and develop customer intimacy.

What continues to be your inspiration?

We are inspired by talking to farmers, first and foremost. But we are also inspired by the incredible staff we’re working with. Many of these guys are only educated through high school. Take Isaac (shown at left), for example – he was a farmer, then hired as a field officer. Now, 2 years later, he is managing 35 people as a Field Director. All this, and Isaac doesn’t have a high school education – but he’s a natural manager.

What is the 1 thing you never would have expected when founding One Acre Fund?

At first, we were very focused on cash crops and high value crops. You read a lot about coffee, flowers, tea, etc. Thought this was the best way to generate income. But we re-focused to subsistence crops and I was surprised to see how you can transform the harvest of a farmer who has been planting and growing this crop all their lives. Our strategy is to change as little culture as possible, but interject some very simple differences that unlock 2-3x harvest potential. By interfering with culture as little as possible, we believe our model could be applicable to an incredibly broad range of farmers.

How is One Acre Fund similar to or different than Root Capital?

We work in complementary spaces. Root is working in the high value crop space, adding value to the production – which is incredibly important to developing economies. We work in subsistence crops exclusively, helping people produce more of it.

What’s the secret to developing customer intimacy?

One technique we use is rapid test and learn. This is the same thing Capital One uses on their credit card customers. Every year, we trial dozens of products, services, offerings – and we just track which ones customers really respond to. The anthropological approach works well, too – but the best advice I have is to throw a bunch of things out there (in a responsible way) and see what sticks.

What’s 1 piece of advice you have to someone looking to support rural farmers?

Go and meet the farmers ASAP. The agricultural field is dominated by people living in New York, Nairobi – and that’s important – but there simply aren’t enough people in the field building customer intimacy and learning what farmers really, really need.

What’s the biggest positive trend you see in the social sector today?

We’re developing a whole new generation of leadership that’s obsessed with and dedicated to the bottom of the pyramid and in particular, market-based solutions. What we’re doing is very important, but to solve all the problems, we need a whole army of people. We are just a drop in an ocean of people that are getting engaged in the idea of BoP as a customer. That ocean is partially being created by NextBillion…

What advice do you have for someone just graduating college and who’s feeling really inspired to get involved?

Get into the field as soon as possible – learn your customer as quickly as possible.

What’s your biggest fear about the social sector today?

In the private sector, power is based on money. The guy with the money is the guy who’s in control. It’s the same in the social sector. In a traditional development scenario, who really dictates the terms of an intervention: the NGO (guy with the money) or the poor community? Who decides when the services or goods will be delivered to complete the intervention? Who signs the checks?

At One Acre Fund, we’ve turned this adage on its head. Where we work, poor farmers are the guys with the money. They have the power. If we don’t provide good service, they don’t pay us back. If we don’t deliver inputs on time, they don’t pay us back. This shift in “who has the money” makes us fanatically customer service-focused, which is really what the social sector ultimately wants.

What does the NextBillion reader need to do to support One Acre Fund and the farmers you’re working with?

We are always constrained by money and people. Donations are always great, but people is the bigger problem. We need people who are 2-4 years out of university who have some demonstrated interest in development – i.e., have lived in a developing country for at least a year. We want people who have a firm, long-term career commitment to the BoP idea. If there are people out there who fit that description, check our web site for all the open jobs. We’re looking for people who are willing to live a big chunk of their lives in rural areas of developing nations.

What’s a book or author who has been inspiring to your work lately?

I’ve just been reading Portfolios of the Poor, which continues the philosophy of getting to know our customers as well as possible.