Tell us a little bit about yourself and your journey so far

My relationship with social entrepreneurship begins from my school days. I was really passionate to work in this space and when I got a degree in Electronics Engineering, I thought I could use my degree to solve some problem that we are facing in our day-to-day life. With my experience at Wharton, that’s what changed drastically. When I came to University of Penn., it allowed me to look at it from a very different angle. When single problem that used to annoy me about India seemed like an opportunity. Quite a few accidents in my circle were bothering me. Accidents which stem from the fact that there were no street lights on the roads. It was of concern to me, and my management education made me realize that I could use efficient and proper management here to solve this problem. This led me into thinking of Prajwal Bharat as an idea. One of the few things that I did in the entrepreneurship classes at Wharton was to develop the whole idea of a marketplace and that’s where the genesis of the whole thing.

So, the idea came to your mind when you were a part of the Business School?

Yes, it was kind of lurking around in my mind. It’s funny how so many entrepreneurs are looking for inspiration. Just the other day, one of my classmates was saying that the moment he gets a really good idea, he would quit his job to pursue it. I think that’s not true. For me, I took a Management class, for which the pre-requisite was that you have to have an idea and you have to be beyond the idea stage. The class really helps you in the implementing stage and running it in the first two months. While I really wanted to get into the class, I did not have an idea. But, I kind of bluffed my way into it. And there I was sitting in my room at night, thinking what should I put on my Power point slides for this 9 AM class? Then, I go back to this list of ideas I had and I had this street light idea listed there. It took me an hour to come up with an entire plan and I put it on a Power point. So, anybody who is looking for an exciting idea, I would say stop looking for an inspiration and start looking for a deadline.

That’s an amazing story. Can you walk us through that process - how you went from the idea you had on a slide to actually leave business school to work on this full-time?

So, first you delve deeper into the problem -why does the problem even exist? So, in this case street lights are supposed to be the responsibility of the Govt. Why is it not putting it out? So, one of the things that came out was that there was no budget allocated for street lights. So, then we started to think about whether we could get additional sources of revenue into this issue. So, what Prajwal Bharat did was that we sold advertisements on Street lighting poles to help put it out. So, after assessing the market, you need to identify the customer (for me: is it the person getting the light or the person putting the advertisements), have the right people in your team. Who you pick as your customer is the first thing you do as a startup. All of these aspects build towards building a business plan. And then you put a timeline to it. Maybe after working for a few months, the market conditions change. EG: by the time I was building my business, the Govt itself was undergoing huge changes. So, the resources available for Govt employees were much better by the time I was on the ground and that was not something that we had factored in before.

How did you decide what kind of tests you wanted to conduct before you actually decided to jump into this full-time?

The really important thing that most of the entrepreneur would have to answer is that how to price your product? For that it is important to access market data. So, for us it were resources at Wharton and people who went in the market and got that data for us. EG: Take a village with a Gram Panchayat. What do they buy lights for? How much lights do they buy in a yearly cycle? What are the drivers of these decisions? How many people decide? This is how I understood how the decisions are made at my customer level. A lot of such research was used before I entered the market.

B2G — Business to Government

Gram Panchayat — Local government body of a village (population: <=15000)

What were the key questions you were looking to answer?

Basic and the most important question you start off with is — Is there a need or reason for you to exist in this space? Does your Government need a company to put out lights? If so, are you going to be that company. If the answer is yes, then you would go and do it.

How many villages did you speak with before you decided to go ahead with it?

We did a sample size of about 100 villages.

How would you describe a social enterprise?

The first misconception that people end up doing is that kind of mix up non-profit with social enterprise. A social enterprise is by definition a for-profit entity. The goal is to make profit. But, at the same time to make an impact. However, there are some key pointers that need to be defined before you can call your business a social enterprise. EG: who is the final customer? What is the social impact? How is that impact measured? In our case, the customer was Gram Panchayat who don’t have a service provider coming down to their village and putting out those lights. Our impact was measure by the number of lights put up and the crime rate reduction and the reduction in the number of accidents and the actual kW hour of energy saved. That metric was tied in well with the profits. The more number of lights we put up, the more energy we save and the more profits we make.

Can you also spend a few minutes telling us what Prajwal Bharat do? Also, has there been an evolution of the overall mission since you started?

Entrepreneur should be able to pivot based on what he/she learns on the ground. What we do is that we put out energy efficient street lights for rural India. Unlike Philips or GE who also manufacture those lights is that we offer a complete turn-key solution. We also provide those brackets, poles, wires. All of these as a promise to our customer. What the Government used to do was buy a bulb from Philips, buy a pole from someone else and then have another guy for maintenance. We do everything from start to end and service those lights for the next 5 years as well.

Initially, we decided to fund these street lights through CSR initiative money. And we had to on the way make it only an additional revenue source after our customers said that we are willing to pay for it. A lot of the focus was then shifted to making the product even better.

What are the pros and cons of starting a social enterprise?

Pros: Disruption is available at fingertips. The very fact that you are giving this service is disruption in itself and a quick win. The market is not overcrowded. You’ll become cash flow positive much sooner than a regular business. This may seem counter intuitive. But, usually the need exists and cash flow comes in immediately.

Cons: Non very attractive for many VCs. You cannot get 10x returns in 3–5 years. However, there are exceptions to these rules. But, this would apply generally. Another con is the risk factor, Risk is physical risk and financial risk. Physical risk: If an entrepreneur is going to a war zone, he is risking his life. This is what happens when you are going to a village which is experiencing a lot of unrest. Financial Risk: more or less common to both businesses.

You’re saying it takes a longer period of time for a social enterprise to provide the kind of ROI that VCs would want?

Yes. However, most VCs would counter me. This is because most VCs would say that they won’t understand the space well. You would look for some kind of history in the industry. EG: technology has had a lot of exists in the past. So, its past record is of giving good returns. In the social impact industry, there is no great track record which is challenging. However, in the coming few years, the industry will give big numbers.

What markets come to mind in terms of how mature for starting a social enterprise?

Most innovation is happening in Fintech, EG: Microfinance, insurance, micro lending. That is the most fertile area, so to speak.

Micro finance, Micro lending: small loans which have a size of INR 5000–50000. Interest rates 20–22%.

Returns have been promising.

You started out as a completely bootstrapped firm?

Yes, till date we are completely bootstrapped. We have spoked with about 10 odd VC firms as well. However, to raise institutional money, the social enterprise needs to be operating at a certain level. If you raise institutional money, your direction would change very fast from profitability to growth and your business should have structures, processes in place to handle that growth. If it doesn’t have that growth, then it is a downward spiral.

How did you put together your team for Prajwal Bharat? What were the skills you were looking for?

So, I had dropped out of the Business School. So, one of the strong hiring policies that we followed earlier was to hire only dropouts. In the first initial months, I was travelling throughout India in my car, sometimes sleeping inside the car and sourcing those leads that I wanted to do. The first sale happened when the customers said that we heard you are a supplier, and we want to do it in 1 week. For me, it was great news because generally in B2B businesses, the sales cycle is really slow. So, we put out our first light, I brought it at INR 2500 and sold it at INR 800. The rest of money we made through advertising on that pole. Even during my first guy and maybe one or two interns who helped virtually. What really helped me was a newspaper coverage and within no time, I had calls from around 50 odd Gram Panchayats. I also got calls from a number of people who told me that they really liked my work and wanted to work with me. Our entire business was driven from there. The employees have driven the company from that day. Most people think that if you have got an idea, that is propriety to you. I think that’s not true. What’s propriety to you as an entrepreneur is you, your inspiration, and your desperation that really is propriety. We hired people with no experience in lighting industry. We, instead, hired people who had a thirst of learning and needed to prove themselves rather than those with degrees. My co-founder also joined me during those initial days.

Can you talk a little bit about your business model?

Right now, CSR is not a core part of the business. We sign a contract with every single Gram Panchayat who is interested in street lights. We charge a fixed fee per light and we have advertising permissions on all of the poles for the next 5 years and we sell ads to ad agencies.

What are the kind of problems that someone in your positions would be dealing with on a day-to-day basis?

First part is uncertainty. The real feeling of an entrepreneur kicks in when you have an office and you are out to hire people. It’s a very different zone you get into. Usually, my days go in training my staff. HR would also be a huge headache. You sit down with two people fighting with each other and you are trying to make peace between them.

The best part about entrepreneurship is that you have a choice. Unlike a job, I was able to take a week off for the birth of my child without annoying my employees.

What are some of the key highlights of your journey?

Business wise, there are two milestones: how many employees and how much revenue? I think crossing 15 employees and crossing USD 100,000 is a great milestone. For me, it has been an amazing journey. I am wearing so many different hats at the same time. There was one village which had no light to begin with. It was plagued with politics. We went at lengths to spread light in that village. It was monsoons then. So, it was a physical risk for my employees to climb up a pole. But, my employees pulled it off. And they did adhere to the timeline. I take pride in my team. Because of us, that village will never see darkness again.

To learn more, listen to the full discussion below