Read through Case 4.2 (d.light) Answer the Discussion Questions Answer the Application Questions
Posted: Wed Jul 06, 2022 6:06 am
Read through Case 4.2 (d.light)Answer the Discussion QuestionsAnswer the Application Questions
CASE 4.2 d.light: How Bringing Its Business Plan to Life Helped a Social Enterprise Get Off to a Strong Start Web: dlightdesign.com Twitter: delight_design Facebook: d.light design Bruce R. Barringer, Oklahoma State University R. Duane Ireland, Texas A&M University Introduction Imagine the following. You're in the audience of a business plan competition. The next team up to present is d.light, a for-profit social enterprise that plans to bring light to people without access to reliable electricity. Two young men introduce themselves as the founders of d.light, and out in a fou The young men apologize for say they're going to start their presentation with a The lights demonstration. The lights go out. In a few seconds, you see dim light at the front of the room, and smell smoke and burning kerosene. After about 30 seconds, your eyes start to water and it becomes slightly uncomfortable to breathe. The lights switch back on and the smoke clears. for the lack of light and and smoke, but say the demonstration was staged to illustrate a point. Around 1.5 5 billion people, or more than one fifth of the world's population, have no access to electricity, and about a billion more have an unreliable or intermittent supply. A large share of these people use kerosene to light their homes at night. Kerosene fumes are extremely unhealthy, even fatal. In fact, the United Nations estimates that kerosene fumes kill 1.5 million people per year, and cause countless health complications for others. Sam Goldman and the Origins of d.light The scene described here actually took place-several times. It's the way Sam Goldman and Ned Tozen, the cofounders of d.light, introduced the company at business plan competitions and when they pitched investors. d.light is an international consumer products company serving "base of the pyramid" consumers who don't have access to reliable electricity. Although d.light technically started in at Stanford ite a class at Stanford University, its beginning can be traced to Sam Goldmanis an's youth and early adulthood. Growing up, Goldman's parents worked for the United States Agency for International Development (USAID), a government agency that provides economic and humanitarian assistance in countries across the globe. Goldman lived in Pakistan, Peru, India, Canada, and several other countries. As a young adult, while working for the Peace Corps, he lived for four years in a West African village that had no electricity. A neighbor boy was badly burned in a kerosene fire, an event that deeply impacted Goldman. At one point during his time in the village, Goldman was given a battery-powered LED headlamp, and was struck by the dramatic difference that simply having light at night can make in a person's life. He could now cook, read, and do things at night that were unimaginable without the benefits reliable lighting provides. Impacted by this experience, Goldman sought out a graduate program that would provide him the opportunity to start thinking about creating a business to take light to people without access to reliable electricity. He landed at Stanford, which was starting a program in social enterprise. A pivotal class was Jim Patelli's 2006-2007 Entrepreneurial Design course. The class was divided into teams, and each team was challenged to address a significant issue in the developing world. Goldman was teamed up with Ned Tozen, a business classmate, and two engineering students, Erica Estrade and Xian Wu. The team tackled the problem of light for people without access to reliable electricity, and developed a rough prototype of a portable LED light that could be that could be recharged via a solar power. That spring, the team traveled to Burma for the purpose of going into villages that didn't have access to electricity to introduce their device. Villagers told them they spent up to 40 percent of their of their income on kerosene. When shown how their crude prototype could provide light at night and be recharged during the day simply by deploying small solar panels on their homes, the villagers were so taken that one women actually wept. According to one account of the team's trip, in one village the local police confiscated the prototypes. They, too, needed light at night. Design and Distribution After completing the Entrepreneurial Design course, the teammates headed their separate directions for the summer. In the fall, they reunited, and determined to continue to work on their business concept. The concept t of using solar power to recharge portable lights in poor rural areas wasn't new. In fact, it had been tried many times. The problem, in Goldman and his team's estimation, was a combination of design and distribution. Previous models relied either on NGOs and governments "giving" fairly expensive lights to people without access to electricity, which they couldn't afford to replace when used up or if broken,
or commercial enterprises buying extremely inexpensive lights in China and exporting them to Africa and elsewhere, where they performed poorly. It was clear to Goldman that neither of these models was sustainable. So Goldman and his team, driven by the possibility of changing literally millions of people's lives throughout the world, recruited talented engineers and distribution experts, who worked on a near pro bono basis, to help with the project. The goal was to produce a solar-powered portable LED portable light that was exactly what rural villagers needed-nothing more and nothing less. It also had to be cheap enough that villagers could afford it yet produce sufficient margins for d.light to be profitable. The decision was made early on that d.light would be a for-p be a for-profit t to impact company. The company's goal was not to 100,000 people or a million people but to impact hundreds of millions of people. Goldman and his team knew that their lofty ambitions would take cash and additional R&D efforts, which would require private-sector investment capital. During this period, which covered the summer of 2007 until early 2008, Goldman and his cofounders continued traveling to remote areas for the purpose of obtaining feedback about their prototype. During Christmas break, instead of traveling home to see his family, Goldman was in the middle of Miyamairi doing research. The team thinned some in early 2008, with Goldman, Tozan, and Wu continuing. d.light was now up-and-running and opened its first international offices in India, Shenzhen, China, and Tanzania. Told Stories and Showed Pictures All In Right Team Big Market Product Focus Strong Vision Business Plan Competitions and Investor Presentations One thing Goldman stresses during talks about d.light is the instrumental role that the company's business plan played in helping the company take shape and in raising investment capital. Early on, d.light entered several business plan competitions. It the spring of 2007, it took second place in the University of California, Berkley's Social Venture Competition and won first prize at Stanford's Social E-Challenge. A big breakthrough happened in May 2007 when the team claimed the $250,000 first prize in the prestigious Draper Fisher sture Challenge Jurvetson Venture Challenge competition. This money funding for provided seed funding for much of the work that was completed during the summer and fall of 2007. What's part teresting is Goldman's reflections What's particularly interesting is whats ramany on why his company was so successful in business plan why his company was the competitions and eventually investor presentations- that are i reflections t are instructive for all young businesses. There are six reasons, shown in the table that follows. Collectively, these attributes presented d. light as an organization with a compelling idea, a strong team, large markets, a product focus and a coherent, resolute, and extremely admirable vision for the future. d.light Today Today, d.light is fully up-and-running. In 2008, the company reached about 100,000 people in eight coun- tries. Its numbers now exceed one million units sold in 37 countries, and d.light projects strong growth for the Six Key Reasons d.light Was Successful in Business Plan Competitions While many teams enter business plan competitions with impressive PowerPoint slides and bullet points, d.light focused on telling stories and showing pictures. They showed photographs of rural villagers using their device, and shared their testimonials. In one interview, Goldman remarked that he was confident that no matter how many plans or pitches a group of judges or investors heard during a day, he was confident they remembered d.light's presentation. The founders were fully committed to d.light. They passed on corporate jobs and focused on d.light full time. Along with talking the talk, they also walked the walk. Instead of saying that they planned to travel to remote villages to test their device, they just went out and did it. Some of the trips came before the business plan presentations. d.light put together a strong team, with a balance of business and engineering expertise. The team was well-suited for launching a global initiative. Goldman had lived overseas the majority of his life, in places like India and Pakistan. Other team members had demonstrated that they had no inhibitions about traveling to remote villages to talk about their device. d.light was tackling a large market, which investors like. To make their financials work, the team would have to scale the business and sell millions of units. While the challenge was great, so was the potential payoff. The company iterated its device multiple times before settling on its first solar-powered portable LED light, called the Nova. The Nova sold for a U.S. equivalent of around $25. Early feedback indicated that the price was still too high, so more iterations took place. Although d.light was social enterprise, it unashamedly presented itself as a for-profit venture. The team was resolute that getting to scale could only be accomplished via private sector capital. d.light also measured its success by the number of families it positively impacted. This sense of purpose and vision permeated the organization. (continued)
future. Its first product was the Nova, which was a solar- powered portable LED light that sold for a U.S. equivalent of about $25. It's most popular device is now the Kiran, which at U.S. equivalent $10 has been touted as the world's most affordable portable solar light. It has a life of 50,000 hours, and if if used to replace kerosene, can pay for itself in just four months. In one study in rural I India, having a a Kiran LED light in the home increased the study time for school-aged children two to three hours per day. d.light continues to strength its distribution strategy. One strategy rategy One that has worked well is to employ "rural entrepreneurs" to sell the product. likes d.light to employ indigenous personnel, who know the local customs, people, and language, to sell its product on a commission basis. In India, d.light has established partnerships with NGOs and microfinance organizations. It has also scored $6 million in investment capital from U.S. and Indian investors. Challenges Ahead As it grow, d.light faces host of challenges. The primary challenge, as it continues to enter new areas, is to convince hesitant customers with little extra income to invest in unfamiliar technology. Although kerosene has many harmful side effects, it is an integral part of many villagers' lives. Another challenge is managing the tension between growth and profitability. d.light can actually accelerate profitability by slowing growth. Yet slowing growth is counter to its Indian mother of three with her d.light Kiran solar-powered lamp. overall mission of reaching as many people as possible. Finally, while d.light's most basic lantern costs $10, the price will have to fall below $5 to make it universally affordable, according to a study by the International Finance Corporation, an arm of the World Bank. d.light has not yet reached this milestone. Discussion Questions 1. Of the six reasons listed in the case that d.light was successful in business plan competitions, which reason do you find the most compelling? Explain your answer. 2. If y f you were the founders of d.light, what would your marketing strategy be? How would you educate people in re in remote areas about the existence of your device and the benefits of purchasing it? 3. Why do you think the problem of bringing light to people who don't have access to reliable electricity isn't being tackled in a meaningful way by a large lighting company, like General Electric? What qualities do Sam Goldman and his team have that will help them solve the problem of providing light to the 2.5 billion people in the world who don't have access to electricity or only have access to intermittent electricity, which General Electric or a similar large company is unlikely to muster? 000000 4. Why do you think Sam Goldman goes out of his way to talk about the importance of d.light's business plan? In what ways do you think having a meticulously crafted business plan helped d.light?
Application Questions 1. Make a list of the ways in which Sam Goldman's pas- sions and life experiences made him the ideal founder for d.light. Then, make a list of your most distinct passions and life experiences. Study the list. Is there a potential venture for which you might be the most ideal founder? 2. Find an example of an entrepreneurial company that is addressing a significant issue in the developing world (excluding companies featured in the "You Be the VC" features in this book). Briefly relate that company's story. What similarities, if any, do you see between the company you're reporting on and d.light? Sources: d.light homepage, www.dlightdesign.com (accessed February 15, 2011); J. Wiener, "d.light's Lofty Goals Meet Practical Challenges in India," Stanford Business Magazine, May 24, 2010; Sheela Sethuraman and Sam Goldman, "Lighting the Way to Economic Development," Social Innovation Conversations Podcast, http://sic.conversationsnetwork.org/sho ... l4238.html, September 8, 2009.
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or commercial enterprises buying extremely inexpensive lights in China and exporting them to Africa and elsewhere, where they performed poorly. It was clear to Goldman that neither of these models was sustainable. So Goldman and his team, driven by the possibility of changing literally millions of people's lives throughout the world, recruited talented engineers and distribution experts, who worked on a near pro bono basis, to help with the project. The goal was to produce a solar-powered portable LED portable light that was exactly what rural villagers needed-nothing more and nothing less. It also had to be cheap enough that villagers could afford it yet produce sufficient margins for d.light to be profitable. The decision was made early on that d.light would be a for-p be a for-profit t to impact company. The company's goal was not to 100,000 people or a million people but to impact hundreds of millions of people. Goldman and his team knew that their lofty ambitions would take cash and additional R&D efforts, which would require private-sector investment capital. During this period, which covered the summer of 2007 until early 2008, Goldman and his cofounders continued traveling to remote areas for the purpose of obtaining feedback about their prototype. During Christmas break, instead of traveling home to see his family, Goldman was in the middle of Miyamairi doing research. The team thinned some in early 2008, with Goldman, Tozan, and Wu continuing. d.light was now up-and-running and opened its first international offices in India, Shenzhen, China, and Tanzania. Told Stories and Showed Pictures All In Right Team Big Market Product Focus Strong Vision Business Plan Competitions and Investor Presentations One thing Goldman stresses during talks about d.light is the instrumental role that the company's business plan played in helping the company take shape and in raising investment capital. Early on, d.light entered several business plan competitions. It the spring of 2007, it took second place in the University of California, Berkley's Social Venture Competition and won first prize at Stanford's Social E-Challenge. A big breakthrough happened in May 2007 when the team claimed the $250,000 first prize in the prestigious Draper Fisher sture Challenge Jurvetson Venture Challenge competition. This money funding for provided seed funding for much of the work that was completed during the summer and fall of 2007. What's part teresting is Goldman's reflections What's particularly interesting is whats ramany on why his company was so successful in business plan why his company was the competitions and eventually investor presentations- that are i reflections t are instructive for all young businesses. There are six reasons, shown in the table that follows. Collectively, these attributes presented d. light as an organization with a compelling idea, a strong team, large markets, a product focus and a coherent, resolute, and extremely admirable vision for the future. d.light Today Today, d.light is fully up-and-running. In 2008, the company reached about 100,000 people in eight coun- tries. Its numbers now exceed one million units sold in 37 countries, and d.light projects strong growth for the Six Key Reasons d.light Was Successful in Business Plan Competitions While many teams enter business plan competitions with impressive PowerPoint slides and bullet points, d.light focused on telling stories and showing pictures. They showed photographs of rural villagers using their device, and shared their testimonials. In one interview, Goldman remarked that he was confident that no matter how many plans or pitches a group of judges or investors heard during a day, he was confident they remembered d.light's presentation. The founders were fully committed to d.light. They passed on corporate jobs and focused on d.light full time. Along with talking the talk, they also walked the walk. Instead of saying that they planned to travel to remote villages to test their device, they just went out and did it. Some of the trips came before the business plan presentations. d.light put together a strong team, with a balance of business and engineering expertise. The team was well-suited for launching a global initiative. Goldman had lived overseas the majority of his life, in places like India and Pakistan. Other team members had demonstrated that they had no inhibitions about traveling to remote villages to talk about their device. d.light was tackling a large market, which investors like. To make their financials work, the team would have to scale the business and sell millions of units. While the challenge was great, so was the potential payoff. The company iterated its device multiple times before settling on its first solar-powered portable LED light, called the Nova. The Nova sold for a U.S. equivalent of around $25. Early feedback indicated that the price was still too high, so more iterations took place. Although d.light was social enterprise, it unashamedly presented itself as a for-profit venture. The team was resolute that getting to scale could only be accomplished via private sector capital. d.light also measured its success by the number of families it positively impacted. This sense of purpose and vision permeated the organization. (continued)
future. Its first product was the Nova, which was a solar- powered portable LED light that sold for a U.S. equivalent of about $25. It's most popular device is now the Kiran, which at U.S. equivalent $10 has been touted as the world's most affordable portable solar light. It has a life of 50,000 hours, and if if used to replace kerosene, can pay for itself in just four months. In one study in rural I India, having a a Kiran LED light in the home increased the study time for school-aged children two to three hours per day. d.light continues to strength its distribution strategy. One strategy rategy One that has worked well is to employ "rural entrepreneurs" to sell the product. likes d.light to employ indigenous personnel, who know the local customs, people, and language, to sell its product on a commission basis. In India, d.light has established partnerships with NGOs and microfinance organizations. It has also scored $6 million in investment capital from U.S. and Indian investors. Challenges Ahead As it grow, d.light faces host of challenges. The primary challenge, as it continues to enter new areas, is to convince hesitant customers with little extra income to invest in unfamiliar technology. Although kerosene has many harmful side effects, it is an integral part of many villagers' lives. Another challenge is managing the tension between growth and profitability. d.light can actually accelerate profitability by slowing growth. Yet slowing growth is counter to its Indian mother of three with her d.light Kiran solar-powered lamp. overall mission of reaching as many people as possible. Finally, while d.light's most basic lantern costs $10, the price will have to fall below $5 to make it universally affordable, according to a study by the International Finance Corporation, an arm of the World Bank. d.light has not yet reached this milestone. Discussion Questions 1. Of the six reasons listed in the case that d.light was successful in business plan competitions, which reason do you find the most compelling? Explain your answer. 2. If y f you were the founders of d.light, what would your marketing strategy be? How would you educate people in re in remote areas about the existence of your device and the benefits of purchasing it? 3. Why do you think the problem of bringing light to people who don't have access to reliable electricity isn't being tackled in a meaningful way by a large lighting company, like General Electric? What qualities do Sam Goldman and his team have that will help them solve the problem of providing light to the 2.5 billion people in the world who don't have access to electricity or only have access to intermittent electricity, which General Electric or a similar large company is unlikely to muster? 000000 4. Why do you think Sam Goldman goes out of his way to talk about the importance of d.light's business plan? In what ways do you think having a meticulously crafted business plan helped d.light?
Application Questions 1. Make a list of the ways in which Sam Goldman's pas- sions and life experiences made him the ideal founder for d.light. Then, make a list of your most distinct passions and life experiences. Study the list. Is there a potential venture for which you might be the most ideal founder? 2. Find an example of an entrepreneurial company that is addressing a significant issue in the developing world (excluding companies featured in the "You Be the VC" features in this book). Briefly relate that company's story. What similarities, if any, do you see between the company you're reporting on and d.light? Sources: d.light homepage, www.dlightdesign.com (accessed February 15, 2011); J. Wiener, "d.light's Lofty Goals Meet Practical Challenges in India," Stanford Business Magazine, May 24, 2010; Sheela Sethuraman and Sam Goldman, "Lighting the Way to Economic Development," Social Innovation Conversations Podcast, http://sic.conversationsnetwork.org/sho ... l4238.html, September 8, 2009.