Are Businesses Without Benefactors Better?

Monday, July 20, 2009

Usually a hot startup bankrolled by eager investors doesn’t care much about its burn rate. In the case of Envirofit, though, that was the obsession from the beginning. The company sells cookstoves to “bottom of the pyramid” customers in India and the Philippines, and thanks to innovative engineering, they use less kerosene, burn hotter, and produce 80% less noxious fumes than the most commonly used models. So impressive is the technology that its inventor, engineer Bryan Willson, was honored as one of the “Scientific American 10” of 2009 – ten people whose work exemplifies science in the public interest.

But getting the stoves’ intended customers to vote for the innovation with their wallets has been challenging. Given higher production costs, Envirofit can’t match the price point of existing cookstoves. what are the two different price points? And even though the economics work out beautifully in the long run–do we have the figures on why it works out better? Cost of using less kerosene over time versus cost of cookstove?, that makes for a hard sell to anyone short of cash and living day to day.

Source: Harvard Business Review (link opens in a new window)