The product is something people everywhere need, but is often costly or – for more than a billion people worldwide – simply unavailable. It has to be produced locally on a daily basis. And the market price, in rural India, is less than $20 per household per year. An impossible business? I say no; in fact, I'd argue that this is a classic base of the pyramid business opportunity: low-margin, high volume; leveraging advanced technology; scalable; and potentially very profitable.

I'm talking, of course, about clean water for drinking and cooking. And two of the businesses I've been mentoring at Santa Clara University's Global Social Benefit Incubator have already achieved proof of concept for this market. Environmental Planning Group Limited (EPGL) is a fully commercial entity operating in Gujarat state. The Naandi Foundation is an NGO that partners with the government but operates with business-like efficiency and is already starting to scale in several states outside its Andhra Pradesh base. Both deploy reverse osmosis water treatment plants, primarily in rural villages that do not now have access to clean water.

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"...you can have the very best technology in the world, and if you don't get it out there and market it, if you don't have a distribution network, then it doesn't have any impact."

Martin Fisher, Co-Founder and CEO, KickStart

Creating markets at the base of the pyramid is hard work.  This theme that has resurfaced again and again in my recent work, whether at a gathering of budding BoP-focused entrepreneurs or during a conversation with established social innovators.

What do we mean by 'market creation'?  What role does it play in BoP venture creation?  And why is it so often overlooked by entrepreneurs, investors, policymakers and pundits?  In this post, I'll touch on these issues by citing examples that have surfaced recently in my work, including insights from the Acumen Fund portfolio.

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Tendai used to be a teacher in his native Zimbabwe, until he saw one of his students died for reasons related to poor water quality. That event changed his life's direction and led him to become one of the founding members of Pump Aid, an NGO that has brought safe drinking water to thousands of villages in Africa by designing and manufacturing Elephant Pumps based on a centuries-old Chinese technology.

Pump Aid is experiencing an interesting transition that explains Tendai's presence at this year's GSBI. In the midst of the difficult and unstable situation in Zimbabwe, it recently re-located to Malawi where the elephant pump has been very successful since its introduction as a pilot project a few years ago. It has also experienced growing demand from households and is moving towards creating a fee-based social enterprise called WISH (Water, Irrigation, Sanitation and Hygiene) that will partner with microfinance institutions to offer the "WISH Package", a comprehensive solution for clusters of households that incorporates clean water (through the Elephant Pump), sanitation (through the Elephant Toilet) and nutrition (through nutrition gardens).

So here is Tendai, whose next steps I look forward to tracking and sharing through NextBillion.net.

It's pretty intense, the process Francisco and I are engaged in this past week and the coming one. Take 16 social entrepreneurs from a dozen countries on three continents, some very knowledgeable faculty, and more than a high-powered dozen mentors and guest lecturers from Silicon Valley companies, and stir well. Throw in 12-14 hour days, hard work improving business plans and elevator pitches, instruction on strategies, etc.

That's the Santa Clara University's Global Social Benefit Incubator. And we are both embedded, as the war journalists say--we talk to the entrepreneurs non-stop, we eat with them, we sleep in the same dorms, we go drinking together.

But even more interesting than the formal program are the informal interactions and unexpected discoveries. These are, after all, entrepreneurs, quick to seize on new ideas and used to thinking outside the box. So the cross learning is amazing. I can only give you my own subset of that, but it's happening all across the entrepreneur group.

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I believe that the dialogue on philantrocapitalism featured in NextBillion is actually rooted in a question of semantics. As Edwards points out in his book, the whole conversation surrounding NextBillion.net has coined a number of terms (Social Enterprise/Entrepreneurship, patient/creative capital/capitalism, blended value, double/triple bottom line, B, M and ToP, inclusive business, and the list goes on...) that can create confusion and may pose a risk overheating for the sector. Even SMEs are now being called Small and Growing Businesses. Not that I disagree; we want them to grow and become the next microfinance, but agreeing on a nomenclature wouldn't hurt. By the way, stay tuned next week for a wrap-up of the ANDE conference.     

Anyway, I guess this is the case for any growing sector and challenges like Edwards' are necessary for the it to gain maturity and continue its consolidation. Skoll Foundation has previously tackled the question of definition, and two recent papers continue the conversation around key issues for the sector's maturity: the first, by CGAP, discusses the (some may argue) blurring line between the for- and non-profit models, analyzing ownership and governance challenges faced by MFIs as they leave the NGO model and transform into commercial institutions.  Also, Harvard Business School discusses the future of social enterprise, as part of its year-long 100^th birthday celebrations.

On another note, just a couple of links to remain current on the latest water debate: Scientific American offers a very informative piece on the coming water crisis, possible courses of action and how it will affect everyone at the base and elsewhere in the economic pyramid. This week's Economist also goes into water shortages focusing on the markets and pricing issues, as does Aguanomics' David Zetland in a recent Forbes article.  All pieces seem to agree at least on one point: sooner than later, prices will keep us from taking water for granted.

If there was ever a good summer to be in Spain, 2008 was it. Not only because of the great celebrations that surely followed Torres' match-winning goal last Sunday, but also because of the remarkable Expo Zaragoza 08.

Titled "Water and Sustainable Development", the Expo will be a three-month long venue --already underway through mid-September-- full of movies, shows, live performances, talks, and discussions among experts from all over the globe to celebrate water and raise awareness about its role in our planet.

The venue is timely in its purpose of "radically changing the way human beings think about and relate to this resource". Hence the following roundup of upcoming events at the Expo and recent discussions that tend to affect the way we relate to and talk about water, regardless of where in the economic pyramid we happen to live.

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There have been some interesting base of the pyramid-related topics afoot in both the mainstream media and the blogosphere lately, including a call for water privatization in developing countries and a self-critical blog post authored by the founder of a media-darling BoP startup. Without further ado, what follows is a quick roundup of the latest rumblings and grumblings in the base of the pyramid world:

Water privatization is not a new concept, nor an uncontroversial one. The latest to take up the banner is George Mason economics professor and Marginal Revolution author Tyler Cowen. I admire Cowen and read his blog regularly – he's particularly good at making esoteric economics arguments come alive in readable language. He authored an opinion piece in Forbes back on June 19 entitled Pay For It, in which he argues that government-run water monopolies in developing countries should be completely deregulated.

Of course, Cowen is not blind to the perils of deregulation:

But for all the problems deregulation can bring, the status quo seems much worse. And it's worth asking what these higher prices are relative to. Carrying water on your head costs much more--in terms of both money and effort--than piped water. If you're a poor person, wouldn't you rather face a private monopolist, selling you water through pipes, than not have any water company at all? Whether we like it or not, those are the real world alternatives.

Even so, Cowen's arguments seem awfully academic and not the least bit practical in a real world sense. Yes, base of the pyramid consumers are willing to pay for clean, safe water. But full-on deregulation? It's likely that it would negatively impact the poorest of the poor at the price of improving service for the middle and emerging middle classes. Besides, it's politically infeasible; see Bolivia, Cochabamba.

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File this under the eye-catching-BoP-design category and add it to the list of fascinating cycle innovations intended to meet multiple needs for the poor - in this case, the challenges of water filtration and transportation.

The product is called the Aquaduct, a tricycle designed by a team of five at IDEO that stores water in a twenty gallon tank in the back of the bike's wide, blue frame. As the user travels back home, the energy they expend pedaling is used to filter the water into a removable two gallon tank that rests in front of the handlebars.

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Guest blogger Sasha Dichter is Director of Business Development at Acumen Fund. Before joining Acumen, Dichter held senior positions in the corporate citizenship departments of GE Money and IBM. He earned a B.A., M.A., and M.B.A., all from Harvard University.

By Sasha Dichter

Today, we had the pleasure of meeting with the MicroDrip team to discuss their drip irrigation systems being rolled out in the Thar desert region of Pakistan. Dr. Sono is the visionary founder of the Thardeep Rural Development Program (TRDP), which is incubating MicroDrip as a for-profit to serve poor farmers living in the desert. TRDP, the non-profit, provides support services, like education and training, to these farmers.

This is my second chance to meet Dr. Sono, who spoke at Acumen Fund's 2007 Investor Gathering and Celebration last November. Dr. Sono was joined at the meeting by Saqib Khan, the COO of Micro Drip, and Javaid Chaudhry, MicroDrip's Technical Sales Manager.

MicroDrip is a for-profit company that sells and distributes drip irrigation systems to farmers in the Thar region. Acumen Fund has supported the formation of MicroDrip as a for-profit company and is making a US $500,000 loan to support their growth.

Acumen Fund has been working with drip irrigation since 2003, when we first funded International Development Enterprises India (IDEI), an NGO that had the ingenuity to engineer drip systems that were inexpensive enough to make economic sense for farmers making as little as $1 a day. MicroDrip now buys these systems from Global Easy Water Products (GEWP) in India, a recent Acumen Fund investment in scaling the domestic and international distribution of affordable irrigation technologies available to smallholder farmers. This is a powerful partnership across the India/Pakistan border.

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As Ana first reported back in February, Ashoka's Changemakers and the Global Water Challenge have partnered to open a worldwide search for ideas and projects with the potential to transform the provision of sanitation and water worldwide.  The search, entitled Unclogging the Water and Sanitation Crisis, began with a call for projects and culminates this Sunday, when voting closes.

This is a competition through collaboration, meaning that the Changemakers community gets to nominate projects, vet them and vote for the winner.  (If you've never heard of Changemakers, check out Leslie Berger's concise profile of their work in the Stanford Social Innovation Review.) 

The water and sanitation competition is coming to a close; 9 finalists have been selected by the community, and voting is open.  If you haven't already, drop by the Changemakers site and vote - it only takes a few minutes, and your voice actually counts (the winner gets $5,000 cash and is eligible for up to $1 million worth of Global Water Challenge grants). 

In an era when most decisions - political, business - are made in back rooms away from our inquiring eyes, Changemakers represents real change.  By opening up the decision making process to anyone with a web connection, they are democratizing (and crowdsourcing) at the base of the pyramid.  Happy voting...

It was sunny, and tempting to sit outside at the University of San Diego to enjoy the weather. Inside, however, a group of global practitioners and scholars - organized by Patricia Marquez of USD and Carlos Rufin of Sussex University and Babson College - were discussing the role of utilities at the Base of the Pyramid. (See 'attachments' at the end of this post, where I have uploaded the meeting's full agenda as a PDF.)

Utilities provide basic services - telecommunications, water, power - that are essential to people's lives and increase their productivity. But a decade ago, many utilities in emerging markets were failing—service to low-income communities was poor, and many of their customers simply didn't pay or acquired the service informally.

The picture that emerged in San Diego, however, was more optimistic. A number of utility companies have engaged BoP communities and increased their willingness to pay, in return for investment that improved service quality. Codensa, a power utility in Columbia with 400,000 non-paying customers (out of a total of 2 million), reduced non-paying customers dramatically. Manuel Bueno has an excellent analysis of the Codensa case in his post, "The Codensa Case: Electricity and Related Services for the BOP in Colombia," from December, 2007. And mobile phone companies improved service and access to service dramatically compared to legacy fixed-line telecom companies (sometimes another branch of the same company).

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Today's New York Times front page features, once again, the pressing crisis that has risen from soaring food prices around the world. The debate has found its way to institutions like the UN and the World Bank, who have called for urgent measures to keep the world's poorest from suffering the hardest consequences.

Meanwhile, another issue is slowly gaining momentum and I'm sure we'll begin to hear more and more about it in the coming months: water scarcity. The past two weeks have seen extensive coverage, discussing everything from proper pricing and innovative technologies, to business models and new concepts like that of "virtual water." This is an issue I will explore in depth in the coming months as I will be joining Al Hammond in the Global Social Benefit Incubator project, studying and mentoring innovative business models that tackle the issue of clean water supply for the poor.

I'm very excited about this opportunity to learn more about a subject that will be increasingly important for my generation, so stay tuned for detailed coverage. Meanwhile, here's a quick roundup of the last two weeks for those of you interested in following this discussion:

Financial Times addressed the issue of proper water pricing, based on the penalty that the world's poorest pay for access and possible measures of accountability on behalf of the world's most water-intensive industries.

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