NextBillion.net - Development Through Enterprise - Shell and Envirofit Partner on BoP Cookstoves - Comments

Thanks Paul

Rob Katz — Thu, 24 Jan 2008 13:12:22 -0500

Thank you Paul for the thorough analysis on top of what Bill has written. Please keep us posted on your progress - the NextBillion community is and will be interested.

Profit motive

Paul Hudnut — Thu, 24 Jan 2008 10:35:02 -0500

Thanks Bill and Rob for highlighting the NYT article. A few comments. Envirofit operates on the principle that there is a mutual respect that comes from a commercial transaction with its customers. We want to design and sell products that are affordable, durable and which reduce pollution. To do that, we look for opportunities to transform pollution/waste into income for our customers. We want our products to be ones that customers want to buy, not ones that look like they should be given away. We offer warranties and parts, so that if there is a problem, our customers can get it fixed. We offer financing, and are sometimes able to have our clients start generating income the day they start using our product (their daily savings exceed their daily payment). So whether they are saving on fuel with our motorcycle retrofits, or spending less money/time on firewood, our customers' potential to generate income increases. Additionally, the TOP is willing to pay for things such as carbon reduction, and as entrepreneurs we need to build a value chain that captures this value for our organization, and shares it with our customers. A non-profit is allowed to make profits (it just has no owners to which to distribute them). Our goal is to produce profits that can be used to invest in new products and ventures. Right now, we have our heads down, focusing on executing our two current projects (motorcycle retrofits and stoves). In the past I have written on the need for "Venture Gapitalists"- those who create ventures which produce returns in excess of 0% (non-profit) but not at a level which attracts conventional private capital. I know of no other financially sustainable and scalable model than profitability. That is our aspiration for Envirofit, first for our product lines, then for the organization as a whole. Shell and Envirofit are collaborating on this project, and the requirement of building the cook stove business as a profitable one was part of Envirofit's DNA before Shell invested. In fact, I think it was this shared vision on approach that brought us together.

Shell and Envirofit Partner on BoP Cookstoves

Rob Katz — Wed, 23 Jan 2008 08:21:31 -0500

Guest blogger Bill Kramer is principal of The Global Challenge Network, LLC, an executive education and training company. From 2001 through mid-2007, he worked on pro-poor business strategies with WRI. Previously, Bill founded a non-profit focusing on the relationship of knowledge to economic development and enjoyed a long career in the private sector, founding a dozen companies, most of which were in the book business.

By Bill Kramer

Yesterday, the New York Times' Science section featured an ongoing partnership to develop, manufacture, and sell cleaner-burning cookstoves. Working together, the Shell Foundation and Envirofit – a Colorado-based non-profit that we've profiled before on NextBillion – plan to address air-quality problems in a host of BoP communities worldwide. According to the Times:

Envirofit has plans not only to engineer the stoves, but also to market them. The hundreds of prior stove projects, Dr. Willson said, were not “guided by a real strategic vision of what it means to understand who the customer is, what they need and how to get it produced.” Envirofit has been visiting rural areas to study factors like the ergonomics of cooking habits and preferred color schemes. In India, women tend to squat while cooking, making height an important consideration. Envirofit will offer a variety of sleek ceramic stoves from single to multipot, with and without chimneys, and with colors like apple red, baby blue and gold. The cost is to start at $10 to $20 and run to $150 to $200.

For readers of NextBillion, this project has a number of interesting takeaways. First of all, the partners have consciously created a BoP product through careful analysis of user demands and requirements. Secondly, the stoves have been developed from an NGO perspective, but the business model is fully intended to scale to the level of need, and to operate as a sustainable, profitable enterprise – clear marks of Shell's involvement.

More analysis of the cookstove project is available at What's a BOPreneur?, the blog of Envirofit co-founder (and NextBillion ally) Paul Hudnut.