Conventional wisdom dictates that the world’s problems – safe drinking water, disease prevention and shelter can only be solved by governments and charities. Very few companies see them as market opportunities that need unconventional thinking. Consider this – 90% of the world’s investment in health benefits cover just 10% of the world’s population – mainly in the developed world. So just 10% is spent on eradicating problems in the rest. Entrepreneurs who have technologies to solve those problems can reap rich dividends by helping governments, United Nations and voluntary organisations. But it isn’t as simple as making a product, distributing it in the market and waiting for the sale to happen. Because the people who desperately need it cannot afford to pay for it. The solution is in figuring out who will.
Vestergaard Frandsen a Danish company that started out by making and selling uniforms for factories forty years ago now practices the doctrine of Humanitarian Entrepreneurship. Their products include Life Straw – a remarkable water-filtration tool, the size of a fat carrot, which produces drinkable water simply by sucking on it, Perma Net – a mosquito net that kills the insects on contact and Zero Fly – insecticide treated plastic sheeting for complex emergencies where shelters have to be put up for refugees at short notice. Over 3000 children die every day from malaria infections and 6000 every day from bad water. It is a huge humanitarian problem but it pays rich dividends to the companies that help to overcome them.
So how does Vestergaard Frandsen make money from Life Straw? They won’t, not directly. The product costs $25 and not a single one of their customers can afford them. So, they are giving them away for free. In just 5 weeks 90,000 households will get it through a volunteer force of 4000. So here’s the ingenious solution – to make the water drinkable, it needs to be boiled using wood fires. Now that leads to carbon emissions. The wood and the carbon saved is credited to the company – over 2 million carbon credits (One carbon credit currently trades at anywhere between $6-$12), which they can sell in turn to companies in developed countries looking to offset their carbon footprint. They recover their investment of $30 million, several times over in the course of the ten-year program. Saving the world, saving lives and making money. What could be a sweeter business formula? The next frontier – eradicate guinea worm that is endemic to the area and wipes it out in the next 40-50 years. If successful it will be only the second disease to be wiped out in the world after smallpox. In the eradication of disease and providing shelter, they see not problems but opportunities. If only more companies in the world adopted this kind of thinking.