EGG-energy

One of the most frequent questions that we hear from EGG customers is if and when we will start offering a TV package.  Most of our customers go to local shops and movie houses to watch TV (see photos below).  A few have purchased or found old car batteries and inverters to power TVs at home, but this can be expensive, not to mention dangerous (old car batteries may leak, and they are often connected to TVs in a rudimentary and hazardous fashion).  The demand for affordable, reliable TVs that do not require a grid connection is high, and it has become even higher as we approach the June 11^th start of the first African World Cup.

Over the last week, the EGG team has begun testing a TV package with five current customers.  The package consists of devices to power a TV (a battery and an inverter).  The customers selected for the trial already own TVs but are either not using them or are powering them with a generator or hazardous car battery and inverter set-up.  EGG is supplying the customers with newer, safer devices free of charge for two months, provided that they keep detailed logs of their usage patterns and how long their TVs last after each battery charge.  The goal of the trial is to determine which devices are best-suited to power the TVs currently on the Tanzanian market and in people’s homes, and ultimately, what to include in our more permanent TV offering.

EGG’s trial TV package includes one of several sizes of 12-volt batteries.  These batteries are larger and higher capacity than our current batteries, which are intended for small appliances such as lights and radios.  As before, the customers in the trial will charge these batteries at our charging station in Chanika.  The package also includes an inverter to convert the battery’s DC power to AC, since most of our customers have standard (20-inch, color) AC TVs.  The exact battery and inverter combination that a customer receives depends on the number of watts consumed by his / her TV set.

At the end of the trial, we will decide if supplying devices to power TVs currently on the market is a viable business.  Another option we are considering is importing TVs that consume less power, such as LCDs.  These TVs would require cheaper, lower capacity batteries and inverters than the TVs currently on the market.  Until these decisions are made, we hope that this trial will show current and prospective customers that we are serious about developing a TV package that suits their needs.

A movie house near EGG's charging station in Chanika

Kids watching TV inside the movie house

This post profiles the hard-working people behind EGG-energy’s operations in Tanzania.  As you will see, they come from a variety of backgrounds and geographies.  Meet the EGG team in Tanzania!

Micah, Field Operations Manager
Born in Kansas, USA (14,400 km NW of Dar)
Past Experience: Studied international development at Calvin College (USA) and conducted microfinance research in Tanzania
Best EGG-memory: “My favorite EGG-energy moment is when we finish an installation and invite the customer to turn on the lights for the first time.”

Yohana, Sales Manager
Born in Musoma, Tanzania (1,200 km NW of Dar)
Past Experience: Managed a hotel in Dar
Best EGG-memory: “A few months ago, I did a demonstration of EGG’s product with Micah at Kigogo Fresh.  So many people gathered to listen!  I sold 10 installations that day.”

Greyson, Electrician
Born in Shinyanga, Tanzania (1,000 km NW of Dar)
Past Experience: Worked for a construction company
Best EGG-memory: “I remember doing an installation with Micah, Jamie and Hussein in Msongola.  After it was complete, many people came to see it.”

Hussein, Regional Manager
Born in Tabora, Tanzania (800 km W of Dar)
Past Experience: Assisted refugees as a distribution clerk for UNHCR
Best EGG-memory: “The first day we demonstrated EGG’s product in Mvuti.  It was like a public meeting.”

Laurent, Intern for 7 months – implementing information management systems and procedures, documenting feedback from the field, developing expansion plans and helping look for partners
Born in Tours, France (6,800 km NW of Dar)
Past Experience: Studied physics, economics and energy policy at Ecole Polytechnique (France) and MIT (USA). Professional and volunteer experiences in French Polynesia, the Philippines and Japan.
Best EGG-memory: “Driving home after completing an installation in Msongola.  Everything was dark except for the EGG lights.”

Jonathan, Chanika Charging Station Manager
Born in Shinyanga, Tanzania (1,000 km NW of Dar)
Past Experience: Served as a radio operator in the Tanzania People’s Defense Forces
Best EGG-memory: “One month ago, two people from France came to see EGG’s station in Chanika.  They wanted to know what EGG was up to.  My job here has given me the chance to work with many foreigners, like those two and like Micah and Jamie.”

Saidy, Electrician
Born near Mbeya, Tanzania (800 km SW of Dar)
Past Experience: Worked as an electrician for various companies
Best EGG-memory: “Interviewing for the job many months ago.  I like working here.”

Juliet, Electrician
Born in Iringa, Tanzania (500 km SW of Dar)
Past Experience: Volunteered at a technical school
Best EGG-memory: “Hearing that I got the job with EGG and would be getting paid to work here.  My last job was volunteer work!”

Jamie (Not Pictured Above), CEO, Board Director and Co-Founder
Born in California, USA (16,200 km NW of Dar)
Past Experience: Earned a PhD in engineering from MIT (USA) and developed prototypes for microbial fuel cell start-up
Best EGG-memory: “When a customer came to the charging station in Chanika with his kerosene lamp.  He said that with EGG’s service, he no longer needs to use it.”

Pareen (Not Pictured Above), Summer Intern – Developing battery distribution model and formalizing ground operations
Born in Texas, USA (14,700 km NW of Dar)
Past Experience: Studied economics at Rice University (USA) and worked in the energy practice of a management consulting firm
Best EGG-memory: “Going to Msanga for an installation.  We spent half a day in the village and began to understand how things work there – where people gather, how people and goods travel and the village’s current methods of getting electricity.”

A couple of weeks ago, I accompanied Micah, EGG’s field operations manager, and Yohana, our sales manager, on a sales run.  We started at our charging station in Chanika and drove north.  After about 20 minutes, we noticed a group huddled around a game of checkers and decided to stop to do a demonstration.  Yohana proudly exhibited EGG’s batteries and their ability to power lights, a phone charger and a radio.  The group had many questions.  They wanted to know where they could swap batteries, if our batteries could power TVs and the price of an installation.  Yohana answered their questions and explained EGG’s pricing scheme.  Afterwards, those who were interested put their names on a list for Yohana to contact later in the week.

While this account might not seem like anything special, it made me think about what it means to treat the poor as consumers and the advantages of such an approach.  Thirty years ago, well-meaning development organizations used a very different strategy – they decided what was best for the population they served and offered it to them for an artificially low price (and sometimes for free).  That day in the field, Yohana treated the group as other producers in their lives treat them – as consumers who are capable of making their own purchasing decisions.

I see two major advantages to operating this way.  First, it increases the likelihood that the service we sell will be used and valued by our customers.  Like any for-profit business, we allow potential customers to decide for themselves how they value our service, instead of deciding for them that it suits their needs best.  Those who elect to purchase our service believe it will benefit them and are thus more likely to use, take care of and potentially improve our service.

Second, operating this way allows us to provide a higher-quality, more sustainable service to our customers.  We price our service above our cost.  If we instead sold it at an artificially low price, our ability to serve current and future customers would depend on the (sometimes unpredictable) availability of outside funding to fill the gap.  In addition, because we pay attention to our profits, we invest in increasing the quality, convenience and cost-efficiency of our service in order to remain competitive.

All in all, it makes sense to experiment with using for-profit models to provide socially valuable goods, keeping in mind that the limited wealth of our customers poses an impressive challenge to our operations, one that other for-profit companies might not face.  The key, however, is to use this challenge to become radically more cost-effective than we would be if we operated as a non-profit.

Anne-Cécile and Benoît are on the roads to meet with social entrepreneurs around the world. Check them out on http://www.escale-responsable.com/. Their study of EGG-energy is available (in French) at http://www.escale-responsable.com/2010/05/17/egg-energy/

The first time I visited EGG’s charging station in Chanika, I was amazed by the number of customers swapping their exhausted batteries for charged ones.  One customer came by motorcycle from Bwama, a village nearly two hours away.  In America, the only time that I think about my electricity usage is when I get my monthly bills.  I have never made a special trip to secure electricity access.  But as I learned more about the electricity options available in Tanzania, I began to understand why EGG’s service has attracted so many customers, even from long distances.  Some of EGG’s customers live in areas far from the grid, like Bwama.  But even when transmission lines are close by, getting connected can cost more than 1,000 USD – a prohibitive cost, given that household incomes in the villages near Dar es Salaam likely average 1,000 – 1,500 USD a year.

Nevertheless, asking customers to swap batteries in Chanika would eventually constrain EGG’s reach.  I have therefore been tasked with figuring out how to get EGG’s batteries closer to current and potential customers.  We considered the idea of opening EGG storefronts near places like Bwama but quickly decided that the capital and labor costs would be too high.  We are now looking into franchising the transport and swapping of EGG batteries.  Our franchisees will ideally be storeowners that have physical space near our customers (e.g. convenience stores, cell phone shops).  These storeowners will take care of transporting batteries to and from Chanika (and other charging stations as they open up) and will swap batteries at their storefronts for a fixed price.  The price will be set to allow storeowners to profit from each battery swapped (even after transportation costs).

I began conducting interviews with potential franchisees last week, and my initial impressions are positive.

• The storeowners we spoke to are intelligent and business-savvy.  During our conversation, Salwa Sultan, who sells building materials in Msanga and recently became an EGG customer, quickly calculated what the swapping price at his storefront would have to be in order for him to profit from each swap.
• They have information about local distribution channels that is not immediately apparent to outsiders.  Phares Kweke, who owns several shops in the Mvuti area and has been an EGG customer for five months, surprised us by explaining that his goods travel from Mbgata to Chanika, instead of in the opposite direction as we had assumed.  Many of the storeowners we spoke to know who in their village travels for business, where they travel to and how often.
• Finally, they have some degree of accountability to the people in their villages.  All of the villages we visited have a central street or intersection where stores are located, and the villagers seem to know the storeowners in the area and vice versa.  We hope that these ties will prevent franchisees from taking advantage of customers, but we will also make sure to weave proper incentives and quality controls into our franchise offering.

Over the next few weeks, I will continue speaking with storeowners and will begin developing our franchise offering.  I am excited to be involved in making EGG’s service more accessible to current and future customers.

*****

A graduate from Rice University and a consultant at Booz & Company, Pareen Bathia will be assisting EGG-energy’s management team in Tanzania this summer.  If you are interested in applying for such a fellowship, please let us know at info-at-egg-energy.com.  Please note that all summer 2010 positions have been filled.

First night in Dar. The sweltering heat barely alleviated by the noisy fan prevents me from falling asleep. There’s nothing I can do but think. I am going to stay here in Tanzania for 7 months. I had heard about EGG-energy a year ago, when I was doing my master in technology and policy at MIT. It then took me a few months to realize that I wanted to come in on this venture, one that encompasses my two fields of interest: energy and development.

For the first time, a doubt pops into my head: these fields are precisely those we want and love to hear good stories about, so much so that we may be sometimes tempted to sidestep some of the facts that would not fit in our idealized frame, regardless of their importance. This may be fair game in the realm of traditional entrepreneurship: after all getting investments is as much a matter of seduction as a matter of well-grounded numbers. Yet, the social dimension of a venture such as EGG entails a different and probably more imperious sort of moral imperatives than those of traditional businesses, given that it affects so strongly the lives of its customers. Investors must also be respected for their guts. What if the story of EGG was too good to be true? This is my last thought before I finally close my eyes.

Spending my first day in Tanzania at the charging and swapping stations of Chanika and Mvuti totally dispels my previous doubts. The show of customers routinely coming to the station to swap their batteries, just as we would go to the bakery or the post office, is a powerful demonstration of the validity of EGG’s power distribution model. Being in a position to assess the context in which the company works makes me realize how far EGG has already come : it is truly impressive. Yet, this is just the beginning : there is still a lot to be done for the model to be perfected and its service to be expanded. In addition to the day-to-day operations, I will contribute to the deployment of an IT system to handle customers and batteries data, the establishment of new partnerships with both local and external actors and investors, and the opening of up to 10 new stations.

***
A graduate from Ecole Polytechnique and MIT, Laurent Guérin will be assisting EGG-energy’s management team in Tanzania from February to September. If you are interested in applying for such a fellowship, please let us know at info-at-egg-energy.com.

Jukka’s trip to our Tanzanian outpost is coming to an end. During the few weeks he spent assisting Jamie in Mvuti and Dar, Jukka designed an incentive plan to bolster EGG-energy’s sales capability, assembled field data to update our financial models, roamed the capital city to find four white polos to be printed with our logo and worn by our highly motivated salesmen, picked up a few more kishwahili words and helped install our systems at customers’ houses. There’s little doubt that the sight of his butterfly sunglasses will be missed by the Tanzanian sun!

In addition to the many stories and energetic enthusiasm that he’ll bring back to Cambridge, MA, Jukka was tempted to toss an old tincan in his backpack before deciding to leave it on Jamie’s bedtable. Yesterday, one of our customers brought it to the station, as a gift to us: a tin can that had gotten a new life as a kerosene lantern. Polluting, leaking, a fire hazard, low quality light. “Now that I’m your customer, I don’t need this anymore. I’m giving it to you as a gift.” He must be happy with our service, confident that he can pay our fees all year round, and sure of our continued presence, him who’s giving away what was lighting up his family’s evenings! We’re betting that seeing this unexpected token of appreciation every morning will help put a smile on each of Jamie’s days!

This side of the ocean is not short of good news. We’re very proud to share that
- we’ve been selected to compete in the next round of the William James Foundation‘s socially responsible business plan competitions,
- we’ve progressed to the second round in the Global Social Venture Competiton,
- we’ve been invited to present at the UNC Kenan Flagler’s annual Sustainable Venture Capital Investment Competition and
- and we will represent MIT at the Net Impact 2010 Walmart Better Living Business Plan Challenge.

Goooooooooooo EGG-energyyyyyyyyy (TM Ben)!

- Blandine

EGG-energy’s opening day in Mvuti was a great success. We signed up eleven customers, completed five installations, and took in Tsh. 637,000 in revenue (480 USD). Interest is strong, and many additional orders were promised.

The day got off to a rocky start, with the wheel falling off of the car.

After catching rides in a dala-dala and a very dilapidated taxi, we made it to Mvuti to sign up our first customer.

We’ve done a range of installations, from a single light to six lights (two batteries). The lights are typically used in the common room, bedrooms, the shop, or outside for security. Almost all of the customers purchased a mobile phone charger. Here are a few pictures of our happy customers after their electricity was installed:

And finally, a very tired EGG-energy at the end of the day, outside of our first distribution center in Mvuti.

We are learning a lot about how to make this business efficient and scalable and are looking forward to sharing these insights with you. More to come soon!

–Jamie

Over the last few weeks we’ve been gearing up for the opening of our pilot site in Mvuti. This last Monday we conducted an informational meeting detailing our service offering and pricing. After I introduced the EGG-energy team in my broken Kiswahili, Hussein presented the business to the community.

We quickly disseminated 200 pamphlets that day. Here is one sheet of our three-fold pamphlet, including the cover (right), the frequently asked questions (middle), and the inside flap with the summary of our service (left).

After the meeting, we conducted a survey of our feasibility study customers to determine how much their energy expenditures have changed since starting with EGG-energy 2 months ago. The results were very encouraging:

• Kerosene usage for lighting in most homes went to zero
• EGG-energy saved its customers an average of Tsh. 1800 per week on energy expenditures for lighting, radio, and mobile phone charging. This is an annual savings of Tsh 90000 ($70), more than enough to cover the cost of the installation and battery subscription.

Our supply room is stocked, batteries charged, user manuals ready, receipts printed. EGG-energy is open for business Monday November 2nd!

–Jamie

Emmanuel and Jamie installing the new batteries and lights in two households

Today Jamie and Emmanuel installed two more batteries and lights in two households. People are very keen the see and get the new electrical systems.

The demand is high and the chairman has already gathered a list of 40 next customers in the village.

We have also found a location for the first charging station as well as a potential hire to be the first egg-energy battery charger.