Turning Flower Pots into Life-savers
Ecofiltro started growing when it stopped giving away its water filters
Ecofiltro sells water filtration systems in Guatemala. In 2009, Philip Wilson led the organization’s transition from an NGO to a social business, and since then its customer base has expanded dramatically. The firm’s filtering unit is made of clay, sawdust and colloidal silver and is designed to remove solids, bacteria and parasites. Its bacteriological effectiveness, according to Ecolfiltro, is 99.98 percent and it lasts two years. Here, as part of NextBillion’s ongoing series of Q&A blogs about different business models and technologies addressing sanitation, Wilson talks about his high hopes for Ecofiltro, and why failure is not an option.
Kyle Poplin: How serious is the lack of clean water in Central America?
Philip Wilson (left): Fifty percent of the hospital beds in Central America are occupied by people that have an illness caused by unsafe water. Ninety-seven percent of the water sources in the region are contaminated with bacteria of fecal origin. This unsafe water causes one in 20 kids not to reach the age of 5 and those kids that do survive do not reach their potential in terms of physical growth due to recurrent intestinal infections.
KP: When did Ecofiltro start and where did the idea for Ecofiltro come from?
PW: Ecofiltro is a locally developed water filter that was a part of our family’s foundation (Familia de las Americas, formed in the ’80s) for many years. It was developed by Fernando Mazariegos, a Guatemalan, (in 1981) while working for the Central American Research Center for Technology and Industry. He donated this discovery – ceramic pot filtration – to humanity and there are currently 59 factories in 38 countries.
My sister, a social worker and nutritionist, saw that babies would often be sick due to unsafe water and her campaigns to improve nutrition (through the family foundation) were not effective without a clean water solution intervention. My sister tried chlorination campaigns which were not successful due to the fact that the taste of chlorinated water was not culturally accepted. She met Fernando and did a study with his filter and found that it was effective at removing bacteria and parasites from water and the taste of the water from the filter had a high cultural acceptance.
KP: How did turning the family foundation into a for-profit company help you reach your goals?
PW: We found that giving filters away was not scalable or financially sustainable. When we were giving filters away to families under the foundation there was never any “ownership” of the filter by the rural families. These families that were given a filter for free would often not appreciate the filter. It was not uncommon to see the filter being used as a flower pot or garbage can.
We realized that we had to be able to sell the filter at an affordable price to rural families and see them as potential customers as opposed to objects of pity.
We asked lots of questions to the rural poor and understood what they were paying for firewood and bottled water. Based on this information we priced the Ecofiltro in such a way that we could sustain our organization and yet provide a solution that was much cheaper than their current methods of providing safe water for their families.
When Ecofiltro was part of our foundation we were limited by our donations and reached about 2,000 families a year. Under the social business model we began to scale rapidly and this year we will reach 70,000-plus families.
KP: How has your view of poor, rural families changed over the years?
PW: They will pay for a product if it works, is culturally accepted and has a fast payback – no more than two to three months. They are worthy of protecting their dignity – a patronizing attitude of giving things to them for free kills their dignity and makes them dependent. A transaction approach with the rural poor protects their dignity and is sustainable and scalable.
KP: Could you explain your sales strategy/subsidization model, with urban and rural customers? How many of each do you have?
PW: 75 percent rural, 25 percent urban. Our profits from urban allow us to provide an affordable price to the rural poor.
KP: How much do you charge for Ecofiltro, what payment plan do you offer, and how did you arrive at that price/payment schedule?
PW: $50 to $300 for urban models, $35 for rural models, and several payment options: 10 percent discount if paid up front, two monthly payments, three monthly payments and five monthly payments.
We arrived at this through trial and error and a “fail fast” approach in the company.
KP: Are you profitable in both urban and rural areas?
PW: As we have scaled our per-unit costs have come down and in 2015 we will be profitable for the first time in both areas.
KP: How did the idea for a stylish ceramic receptacle evolve? Who makes them, and is their creation part of the business plan?
PW: Urban folks particularly want something nice in their kitchens that looks like a piece of art, as opposed to an ugly plastic 20-liter water container. We have lots of indirect employment at Ecofiltro (including) local artisans that produce clay and ceramic receptacles that we use to house the Ecofitlro filter units. We only produce the filter unit at Ecofiltro and locally source the receptacles in rural areas.
KP: Are there other models for social entrepreneurship that you especially respect and emulate?
PW: I respect all social business models that are financially sustainable and not dependent on grants and/or donations. Kingo in Guatemala is scaling and has a transactional approach with the rural poor.
KP: How will you know Ecofiltro is successful? Do you fear failure?
PW: When we reach 1 million families in rural areas in Guatemala by the year 2020 and solve the lack of access to safe water completely. Failure is not an option!
KP: What major challenges do you face going forward?
PW: Having production keep up with demand and getting better at converting new families to our “water for life families” through our school program approach. … We donate Ecofiltros to schools and gather all the parents together in a big room to sell them on the idea of having clean water at home, now that their kids have clean water at school. We convert 10 families per school in the initial meeting and I would like to see that rise to 30 families during the initial meeting.
KP: What advice would you give others who might want to start a business in a developing economy?
PW: Make sure you have a product that is solving a real problem for the rural poor, that is culturally accepted and that you can price above your cost.
Ask a lot of questions in the target market before launching any product and get validation before investing lots of time and financial resources.
Kyle Poplin is the editor of NextBillion Health Care.
Photos via Ecofiltro’s Facebook page.