Acumen Fund Fellows Report Back From the Field

Deepti shushed me; gave me the look – let’s get started, she was trying to say. I kept talking anyway. Then Abigail shushed me; same look. I still kept talking. Finally, Hali gave me a nod – the presentation was starting. I finally shut up, and politely asked Jason Rzepka from Pop!Tech to come in and have a seat. Through the shushings, Jason and I were using the last few minutes of pre-event networking to catch up on his work – a yearly conference held in Maine. But neither he nor I had come to Gibson Dunn’s 48th floor offices (sidenote: thanks to Gibson Dunn for letting us use their amazing space) to talk about Maine. We were there for a presentation by the returning class of Acumen Fund Fellows.

Why would someone from Pop!Tech – and about 50 others – be interested in the Acumen Fund Fellows? Well, in Pop!Tech’s case, they’ve just launched their own Social Innovation Fellows program. So Jason joined us – along with representatives of the financial, non-profit, academic and business sectors for the first ever Acumen Fund Fellows Knowledge Discussion.

I took my seat, and looked around the room. Moses Lee – a researcher from the William Davidson Institute – was sitting across the room from David Auerbach and Elmira Bayrasli of Endeavor. Gary Rindner – an Acumen Fund partner and one of the Fellows’ mentors – sat in front of Jason from Pop!Tech and across from Jason Spindler of the NYU Reynolds Fellowship program (more fellows!) My colleague Mariko sat with Sarah Murray from the Financial Times; Mike Hokenson from Minlam Asset Management sat in front of them. The crowd stirred and squinted – the sun set behind Acumen Fund Talent Manager Deepti Doshi as she introduced the event, sending a glare into our eyes – and the program began.

One at a time, all seven Acumen Fund Fellows presented his or her research project, each based on work they’d done in the field. First to present was Chris Walker, who spent the last 10 months working for Dial 1298 for Ambulance in Mumbai, India.

We’ve written about Dial 1298 for Ambulance – 1298 for short – before. Basically, the company is a privately-run ambulance company serving the 16 million citizens of metropolitan Mumbai. Before it was founded in 2005, Mumbai had little, if any, reliable, modern ambulance service. But 1298 is not just an ambulance service. It is committed to service for all – and this concept is the driver behind Chris’ research.

In order for a financially sustainable, for-profit company to serve everyone, regardless of one’s ability to pay, it has to use a cross-subsidy pricing model. In theory, cross subsidy means that rich customers pay slightly above-market rates for service; 1298 uses the extra profit to subsidize poor customers’ below-market or free services.

In practice, 1298 charges Rs 1500 for a trip to private hospitals; a trip to government hospitals costs Rs 750 or – for the truly poor or victims of disasters and accidents – the trip is free. All told, about 80 percent of 1298’s customers pay the full fee.

When Chris arrived at 1298, the company had 15 ambulances and was looking to expand. But when your service is delivered via cross-subsidy, marketing – key to an expansion plan – is difficult. You don’t want your rich clients to think that the service is low-quality, but you don’t want low-income customers to think that they can’t afford it, either. As a result, Chris worked with 1298 to develop generic marketing messages, emphasizing 1298’s around the clock service provision and running ads that read: “When every second counts, call 1298. An ambulance starts treatment before you reach the hospital. A taxi doesn’t.”

Of course, 1298 benefits from its social orientation. They’ve used their commitment to serving everyone to convince the Mumbai bus and train companies to donate significant free advertising – worth more than $100,000 per month.

As Chris talks, it’s clear that he’s not just an Acumen Fund Fellow; he truly became part of the 1298 team. Throughout his presentation, he uses “we” when talking about the company, not “they”; when he talks about cell phone stickers as part of an ad campaign, he casually reaches into his pocket, pulling out his personal phone, affixed with 1298’s iconic yellow logo.

Chris puts his phone away; Deepti introduces Wangari Muchoki, who’s just back from Lahore, Pakistan, where she worked for the Kashf Foundation. Kashf is the third largest microfinance institution in Pakistan, with more than 300,000 clients; I wrote about its founder and chairperson, Roshaneh Zafar, back in April.

For her research, Wangari sought to answer a seemingly straightforward but often vexing question: do microfinance institutions actually reduce poverty? She began her research by delving into the details of poverty, and ended up asking another question – what’s the difference between poverty and vulnerability?

Simply, poverty is about the present, whereas vulnerability is about the future. In her research, Wangari conducted 60 focus groups with Kashf clients, asking what they used financial services for – and trying to bucket the responses into poverty alleviation, vulnerability prevention and ‘other’ categories.

Interestingly, it turns out that most of Kashf’s loans are not working capital. Rather, the money is used by women to pay a daughter’s dowry, fund a child’s schooling or pay medical bills. The implication of these data on the Pakistani microfinance sector is straightforward: there’s untapped client demand for non working capital loans, specifically in savings and insurance.

Wangari isn’t the only Fellow to base her research on customer interviews. In fact, Fellows Tricia Morente and Catherine Casey collaborated on their knowledge work, creating a business school case study about the universality of healthcare spending habits.

Their collaboration was not straightforward, but it makes sense. Tricia spent the last 10 months working with LifeSpring, a chain of maternity hospitals in Hyderabad, India. Catherine, meanwhile, was a world away in Kenya, working with SHF, a network of franchised pharmacies/clinics. They may have been 3,000 miles from each other, but their worlds were strikingly similar: both worked with low-income, predominantly female clients in the healthcare sector.

Their case study – which will be taught in US, Kenyan and Indian business and policy schools – centers on client interviews, some of which Catherine and Tricia screened for the audience last night. It is striking how similar the healthcare markets are in countries as different as India and Kenya. For example, in both countries, low-income clients save for marriage and education, but not for healthcare emergencies or planned healthcare events (pregnancy/delivery can be considered planned). As a result, LifeSpring has shifted its marketing, emphasizing the future value of a safe, professional birth – an investment akin to a child’s education. SHF, meanwhile, enables its owners to offer services on credit, recognizing that many clients have no savings and would otherwise have to turn to an exploitative moneylender to pay or go to the crowded, low-quality government hospital.

Credit, interestingly, was also one of the focus points of Jawad Aslam, who spoke next. Jawad has spent the past three years – including one as a Fellow – working with Saiban, a low-income housing development in Pakistan. His research piece explores Saiban’s work through the lens of Hernando de Soto – the Peruvian economist noted for his work on “dead capital”. De Soto argues that the poor have $9.3 trillion worth of untapped assets – dead since those assets lack proper legal title and a framework through which property rights can be transferred at low or no cost.

In Pakistan, there are more than 10 million people living in slums, without legal title to the land on which they live. Saiban, where Jawad works, enables slum dwellers to buy titled land and build a home on it. To date, Saiban’s various developments have 30,000 homes. But Jawad’s research isn’t a case study on Saiban; rather, he wants to know if de Soto is right about dead capital.

The answer? Hernando de Soto is both right and wrong, argues Jawad. Yes, clear property rights and easy-to-navigate government systems are necessary to unlock dead capital. And Jawad agrees with de Soto’s suggestion that low-income, base of the pyramid customers are industrious and need the right framework in which to succeed. But de Soto over generalizes, Jawad argues, noting that access to credit isn’t sufficient. After all, Saiban has built 30,000 homes and mainstream banks haven’t exactly come running to offer mortgages. Furthermore, de Soto fails to address the issues of investor speculation and government corruption.

John Tucker followed Jawad on stage. Before becoming an Acumen Fund Fellow, John was an IDEO designer, and he’s headed back there in two weeks’ time to re-join the firm. As such, his knowledge work centers on an IDEO mantra – that everyone is a designer.

In that light, John switches things up a bit, asking the audience to participate in a short design workshop. He concentrates on three pillars of design thinking – empathy, storytelling and prototyping. While working with VisionSpring, an eye care enterprise, in India, John recorded a number of customer interviews. He asks the audience to watch some clips, keeping three questions in mind:

What surprises you? What’s important to the speaker? What values are different than our own?

The point of John’s exercise is that rural healthcare isn’t much different in India than anywhere else, but if you don’t have properly trained doctors, or good marketing messages or proper design, then its bound to fail. As the audience, we see this come across in the videos. Have a look.

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From John, we move onto Jon – Yates, that is. Jon Yates is the last Fellow to present, and noting that he is the only thing between the audience and the reception, he keeps it short. Jon worked for Advanced Bio-Extracts as a Fellow, based in Kenya. Advanced Bio-Extracts (ABE) is an agro-processor, sourcing raw Artemisia annua and processing it into artemisinin, the primary input for anti-malarial drugs.

Jon’s work with ABE centered on the company’s supply chain, and as a result, his research takes the form of a management tool for agro-processors at large. It’s title? The nine questions agro-processors should ask before working with small holder farmers.

Three components determine success for an agro-processor like ABE. First, the firm must have control – i.e., be able to ensure steady delivery of the raw material. Second, it must have some way of certifying the inputs – are they organic? Are they fair trade? Finally, agro-processors must keep costs low in order to turn a profit. With these in mind, Jon asks, how can a company like ABE work with small holder farmers to ensure control, certification and cost?

The answer – which was Jon’s focus while at ABE – is not easily determined, but his research generated an easy-to-use management tool (a checklist, basically) that can help all agro-processors determine when and how to work with small holders. We’ll be publishing his work shortly – along with the rest of the Fellows’ – and will post a notice here.

Ultimately, the event was a great opportunity for our community to hear directly from the Fellows. At Acumen Fund, we often talk about the Fellows program in general, and describe the Fellows’ work rather abstractly. It was good to get it firsthand.