NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, January 11, 2013

In 2007, a married couple with well-paid tech jobs in Singapore saw a prototype of a Japanese electric car and had a revelation. An electric car could be run for a tenth the price of a comparable one fueled by gas. The couple wondered: Could they create an electric motorbike for the masses in their home country of India?

“This hit my mind like anything. This is the future,” Pachyappa Bala, the husband of the couple, remembered thinking at the time.

Shortly after, Bala and his wife, Annamalai Hemalatha, sold their $1.8 million apartment in Singapore and moved with their two school-age daughters to Coimbatore, India, to found Ampere. This was a drastic move. Coimbatore is a second-tier industrial town in the steamy-hot south of India with no cosmopolitan flair. Though Bala is an engineer with a specialty in electric motors, neither he nor Hemalatha had tried to build or sell an electric vehicle.

What they have learned since offers lessons for anyone building a business where the risks are high, the time horizon is long, and the customer makes $2.50 a day or less — a population that is known in some circles as the bottom of the pyramid (BOP). Clean tech businesses are finding that the road to success is long and rocky; so are those serving the BOP. What makes the endeavor worthwhile is that the benefit to society can be great and the potential market is huge. It’s estimated that three billion people worldwide make $2.50 or less, most of them in Asia, Africa and Latin America, and each has the same desires as those who make $100,000 a year. How do you make a product that satisfies their needs on a measly budget?

Hint: It looks nothing like a comfortable IT job in Singapore.