d.light founder: Solar can leapfrog the grid for people living at the “bottom of the pyramid”

Wednesday October 26th, 2016 - Smart Villages

Interview with Ned Tozun

Co-founder, d.light, a for-profit social enterprise based in China, India, East Africa, and the USA

Location: Nairobi, Kenya

“Now that the technology has evolved, we want to provide more holistic energy solutions”.

After studying and working in engineering, Tozun knew he was “wired” for entrepreneurship. He started “a couple of companies” whilst he was volunteering abroad. This took him to Malawi, helping him realise that although he wanted to do something which impacted people, he couldn’t see himself working for a non-profit. Tozun’s interest in developing and emerging markets was also linked to his father’s emigration from Northern Cyprus. “We went every couple of years when I was a child,” says Tozun. “It was an unrecognised territory, where running water was not very stable. It was a totally different experience to where I grew up, and I realised that the whole world was not like Silicon Valley. That was always in the back of my mind.” Tozun is co-founder of d.light, a social enterprise focused on technology and those living at “the bottom of pyramid”. That was in the summer of 2007; almost ten years later, d.light has just raised a whopping $22.5 million in its last funding round, with contributions from organisations such as the UN Development Fund, the Shell foundation, and USAID.

A decade ago, Tozun remembers that not many universities were working with the idea of social entrepreneurship. After entering Stanford’s Graduate School of Business, he had applied to one programme—design for extreme affordability—and stuck to his guns despite an early stumble, when he was not accepted onto the course immediately. “I immersed myself in that world and was determined to get into it. It was weighted towards second-year MBAs, but persistence is key! They let me in finally”. On the course, he met Sam Goldman, who had “grown up in India, Pakistan, Africa, and South America, had a good feel of the market, had done Peace Corps, and had lived in a village without electricity for two years”. Tozun’s understanding on the tech side of the business and his experience in raising money meant that the two complemented each other as a team, and their values aligned.

d.light's founders, Ned Tozun and Sam Goldman

d.light’s founders, Ned Tozun and Sam Goldman

When graduation came around, the duo had their seed funding. Tozun spent four years in China; Goldman moved to India, and they planned how to make make d.light affordable. “Quite soon, we went to East Africa, and we have been growing ever since. The whole concept of d.light was on eradicating kerosene lamps”. The company’s initial goal was to eradicate kerosene use for 100 million people. In one case study from the website, a farmer in a rural area of India, Janendra Singh, claims to have saved 200 rupees a month from cutting out kerosene lamps for d.light lamps. “Now that the technology has evolved, we want to provide more holistic energy solutions,” says Tozun. He hints that thanks to d.light,  a district in India might be rid of kerosene lamps entirely.

d.light operates four offices around the world with 500 employees. It has sold over 15 million products and has impacted 65 million people. Today, the goal is to reach 100 million people by 2018, including with solar home systems, which has been developing for the last five years. “We really want to help customers go up the energy access ladder, and there are lots of players and companies in the space today, so it is very early days. We’re pioneering.” There is a US$25 down payment for the solar home system, or 40 cents a day. This perspective for scale was built into the company from the very beginning, yet d.light stays true to what it initially set out to do: provide entry-level solutions. For example, the company just launched a new five dollar solar light. “So many solar products are junk, which are low risk to buy,” says Tozun. “We provide good quality, which convinces people that solar is good, which helps build distribution. The technology is cheaper, and we’re building up, and have been focussed on household solutions – on ‘delighting’ the household and customer”.

There have been a few trends in his ten years at the helm of a pioneering global solar company, reflects Tozun. “Each year has been interesting, what with the significant advances in LED technologies and energy efficiency broadly,” he says. It was in and around 2010, Tozun noticed, that there was a shift to lithium batteries from sealed or acid batteries, and d.light were the first adopters in ensuring the batteries were both durable and affordable Tozun also points to the level of awareness which seems to have grown, particularly in the last 18 months. “There has been a huge shift amongst policy makers, funders, and there is a huge amount of capital now”. Finally, the market has become more crowded, although not to the risk of d.light’s existence. “There are so many more counterfeits and knockoffs in the last four years, and other branded companies, who even though they were investor backed, might have failed,” says Tozun. “They would have said they had ‘tough stuff’ and despite being well-meaning and smart, ironically their products weren’t durable”.

Tozun points to various examples of how d.light has contributed to the creation of smarter villages, from the tailors or fishermen who can work into the evenings to an increae in pass rates in schools. “Studies have proved that having access to 30 minutes to an hour’s solar lighting created a direct positive impact on a child’s performance in school,” he says. Then there is the popular pay as you go financing method. “In Haiti for example, you sign up for mobile money at the same time as you access energy,” adds Tozun. “Financial inclusion is something we didn’t bank on, but it has becomes critical for us. Families can’t afford products that retail at 20 or 30 dollars”.

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Over a quarter of a million d.light products have been sold through microfinance organisations, customers using pay as you go over time, and via a new technology that enables a device to be switched off or on remotely. The future is looking busy for d.light. Tozun says he is selective about which investors are brought in. “They have to be aligned with our vision and company. It allows us to get into new markets we haven’t been in before.” He points to Kenya and Tanzania but also expansion to Asia, as well as in product terms. “This kind of funding is focused on helping people climb up the rungs of a ladder, and we want to continue to build higher access levels. We fundamentally think solar will leapfrog the grid; it’s becoming really viable”.

And then, here is the book that Tozun’s wife, writer Dorcas Cheng-Tozun, will be releasing soon. So how do you survive marriage to an entrepreneur? “d.light wouldn’t have been possible without my wife,” says Tozun. “She has also worked full-time for d.light, and it’s a labour of love, especially for entrepreneurs internationally, about how much it is also about having the buy-in and support of a spouse.”

—Nabeelah Shabbir