It turned out to be both a blessing and a challenge to have a good reputation coming in to the GSBI® Accelerator program at Santa Clara University. I had attended this program in 2009, when the program was called the Global Social Benefit Incubator and was focused more on business development basics like finding your target market and understanding distribution channels.
Now I was a veteran social entrepreneur coming back to GSBI Accelerator to get a 10-month deep dive into gap analysis and funding priorities, to prepare my company and 11 others for the rigorous review we will get from investors. When I came on campus in mid-August, I soon found out that our reputation was fairly strong among the investors, consultants and others who attended our first-day and final-day presentations. But that also proved a challenge when it came to telling our story.
Husk Power Systems has been known primarily for its biomass power plant business. For our first five years, our mini power plants have used biomass, especially rice husks, to provide electricity to rural areas. In our five years in business we’ve learned a lot about how to scale in rural areas, and that’s how we are known.
But lately with declining solar prices, we are now powering more mini- and microgrids with solar power. Currently we have 1,000 households connected to the microgrid using solar power instead of biomass. Solar makes a lot of sense for lower-income households that primarily use power for lighting or cellphone charging. It is cheaper to procure and maintain than biomass. I thought I was explaining the full scope of our company on the first day of presentations.
It turns out that people were highly confused, thinking that because I was mentioning solar power it meant we were losing our way, blindly experimenting with different business models. Our strong association with husk power (it’s our name, after all) meant that we hit a wall trying to explain what we truly are, which is a company that manages mini- and microgrids very effectively.
So my mentors, VC veteran Jeff Miller of JAMM Ventures and retired Intel executive Dennis Lenehan, helped me go back to my presentation and figure out how it was tripping people up. I changed my focus from explaining the technologies to explaining that both technologies – biomass and solar power – are two different means to power the mini- or microgrids, and that our core competency is managing those grids.
I also had to explain another change that had people confused: our move from a model in which we owned and operated all the power plants, to a franchise system in 2013. Dennis and Jeff helped me articulate why a franchise model makes sense. That included a difficult truth – that part of the problem was employee theft.
When we expanded to more than 50 power plants in India, theft by some of our 200-plus employees increased. It would be like if you owned a lot of restaurants, if you are not close by, some people will take cash from the register, or offer free drinks to their friends. The same process applied here. Some employees colluded with cash-paying customers, or with the rice mills where we got our biomass, which affected our revenue and profits.
It was little awkward for me to say all that, but Jeff and Dennis helped me just to come out and say it, and not dance around the issue. The audience, for the most part, understood this as a business reality that had to be dealt with.
Now I’m focused on the huge challenge of scaling. Our goal is to reach over five million people in the next five to seven years, which means we have to scale by about 20 times from where we are today, into completely uncharted territory. But we are already, surprisingly, the largest decentralized small power producer in the world. Our franchise model, despite decentralization and lower margins, will enable larger volume while still being profitable. And based on the GSBI Accelerator feedback and meetings, investors seem willing and ready to come on board once we achieve the next step of getting two to three times faster than we have been in the past.
Manoj Sinha is president of Husk Power Systems