It's just the sort of whacked idea that might turn up in a
secondary school science show, but former pharmaceutical scientist
Ray Avery's latest invention, Proteinforte, is just such a
super-food. The product works on a premise that children in
developing countries die from protein-energy malnutrition. Even if
they have access to food, they don't have the energy to break down
the protein molecules. Avery's product 'pre-digests' the protein
molecules and includes added immunogenic peptides and small- and
long-chain amino acids. Voilà: the nutrients of an entire
chicken in a sachet the size of a teabag. Avery has even enlisted
Martyn Atack (the man behind the flavours of Paradiso ice cream and
EasiYo yoghurt) to come up with a variety of tastes to appeal to
different countries, from banana in Ethiopia to pumpkin in
Nepal.
The technology is so useful, it's now patented in every country.
Which is handy given the sachets have come to the attention of
athletes in developed nations, particularly bodybuilders in
California, who pay as much as US$25 for each magic teabag.
"What I like is the sexiness of the idea," says Avery, who works
his wizardry from a lab in his garage in Balmoral, Auckland. "I
like that we can take products that we throw away and create
something new. In Nepal, we're building a factory, and on one side
of the road is the biggest chicken factory and on the other is a
pineapple plantation. Put it together and you've got a real deal.
This technology is reasonably simple-it's just that nobody's
thought of applying it to this end use.
"It's also a nice paradigm to make money out of a good idea that
has a use in both worlds. If you don't have that mix, I don't think
you'd be able to make a sustainable business out of the Third World
environment, because there always has to be a distribution channel
for marketing these products."
"One man can make a difference. I know,
because now there are five million people walking around with one
of my lenses in. That would never have happened if we hadn't found
a way to break the cartel of the multinationals"
Words like 'channel', 'markets', 'products' are not the usual
vocabulary of Third World aid. But Avery is not alone in
re-imagining how the wealthy can serve (and benefit from) the four
billion people living below the poverty line. Though the individual
purchasing power of the poor is, er, poor, the total is sum is
enormous-as much as US$5 trillion according to a March report from
the World Resources Institution, The Next 4 Billion: Market
size and strategy at the base of the pyramid. And the
opportunities for innovation, particularly for high-tech solutions
in health, education and infrastructure, are spectacular. According
to The Next 4 Billion, the trend towards high-tech
business solutions is on the upswing. For example, a consortium of
19 mobile phone operators serving 600 million people in 100
countries recently announced a new transfer remittance system to
reduce the cost of mobile banking by more that $1 trillion annually
by 2012.
Recasting the way we think of the world's poor-from victims
awaiting our aid to customers demanding our services-has most
famously been documented by CK Prahalad in the book The
Fortune at the Bottom of the Pyramid. In it, he finds
examples of entrepreneurs solving problems as intractable as
sourcing potable water in Africa and creating insurance banks in
India. We wondered if this spirit of invention is alive and well in
New Zealand. How silly of us to ask. Here's a bunch of amazing Kiwi
innovators at work.
Illustration by Adrian Clapperton
rom his garage lab, Avery affects the lives of more people than
most of us will ever meet. Once he made "a very good living" for a
large drug company but Avery left the multinational to work with
The Fred Hollows Foundation, creating low-cost lenses for cataract
surgery in Eritrea and Nepal.
"I was lucky enough to meet Fred, who stuck a bony finger in my
chest and said 'Stop making money out of sick people'," he
says.
The result was the Intraocular Lens. Although it is marketed
through normal distribution channels, the proceeds support national
healthcare programmes-sustainable business with an ethical
basis.
The lenses, now used in both the West and the developing world,
once cost about $300. However, by making the lenses for $3 and
selling them for $7, Avery collapsed the international market and
made them affordable for those who needed them most.
"One man can make a difference. I know, because now there are
five million people walking around with one of my lenses in. That
would never have happened if we hadn't found a way to break the
cartel of the multinationals."
And so began his company Medicine Mondiale. Avery began working
on a gadget to control the flow rate of drugs through an IV drip.
He'd noticed that technology from the 1800s was still in use in
developing countries and, because of the lack of medical staff,
mothers were inadvertently killing their children through improper
use of equipment. Enter Acuset, a five-dollar piece of medical
equipment that is foolproof and reusable. It didn't take much to
get financial backing from Trade Me founder Sam Morgan and support
from dozens of others, from patent attorneys to manufacturers, who
donate their time. But this device doesn't just have uses in the
backblocks of Africa-vets also use it as a low-cost alternative to
a syringe pump, and Californian mansion owners are now using it to
deliver chlorine to their spa pools.
"For me, a project has to be based on business DNA, otherwise it
doesn't work," says Avery. "We need to work on both product streams
simultaneously-for the First World and the developing world market.
If we can address some of the major issues in healthcare in
developing countries and have a product that has an equal fit in
the First World, that's fabulous, because it's the way I think we
evolved as a community-to try to look after each other-and somehow
it's got terribly disordered.
"Recently a drug company exec said to me at
a conference: 'There's no money in sick, dying people in Africa,
and no point in investing there.' I take a different view"
"Developing countries have lots of diseases, but unless you can
work out who's going to pay for it … recently a drug company
exec said to me at a conference: 'There's no money in sick, dying
people in Africa, and no point in investing there.' I take a
different view. We need to chip away using our technology."
Avery isn't the only Kiwi looking to solve health problems in
the developing world. A group of Unitec students has come up with a
universal crutch for people with lower-leg injuries. Christopher
Metcalfe, Greg Holdsworth and Darrin Eades-Smith were the
co-winners in the student category at the 2007 BeST Design Awards
for their plastic handle, dubbed The World Crutch. The
injection-moulded handles fit onto a bamboo stick, providing an
affordable walking aid for $3. The design is currently on a
one-year option with the Maddi Group.
It's still in the development phase, but the group hopes the
crutch will be a viable alternative to expensive aluminum
crutches.
Back in the 1970s, a small loan-less than US$100-could make a
world of difference to a farmer in the developing world. From the
mid-1980s in New Zealand, the beginnings of a microfinance scheme
were stoked by Christian aid organisation World Vision. The charity
convinced New Zealanders to donate to VisionFund, a recyclable loan
scheme that enables Third World families to access business
coaching and microfinance to start modest businesses.
Poor fortune
- BOP doesn't always mean Bay of Plenty. It's also Bottom of the
Pyramid, the term coined by business academic CK Prahalad to
describe the four billion souls living on less than US$2 a day. His
best-selling book, The Fortune at the Bottom of the
Pyramid (Buy@Fishpond), urges us to think of the world
poor not as victims but as the world's fastest-growing market. The
book has spawned a BOP industry, from banking to treadle pumps,
including Prahalad's own global consulting firm Next Practice.
Here's a snapshot of what else is being done in the BOP space.
What's the opportunity for you?
Kiva
- Kiva is the world's first online microcredit service, connecting lenders
to the world's poorest entrepreneurs. Think of it like child
sponsorship minus the overheads (and the money keeps coming back
into the pool). It now has over a US$11 million in loans from
118,000 lenders.
WaterHealth International
- Millions die from contaminated water. WHI employs a patented
ultraviolet sterilisation process to provide clean
water stations in remote locations - powered by solar cells and
controlled by micro-debit cards bought by villagers. The company is
backed by Plebys International, a venture capital fund specialising
in BOP enterprises.
Grameen
- Founded by Nobel Prize-winning academic Muhammad Yunus, Grameen
started as a microcredit facility for a dozen poor
Bangladeshi entrepreneurs but now has five million customers and
has morphed into a giant corporation with eight divisions,
including a rural telco and a renewable energy supplier.
The $100 Laptop
- Led by MIT's Nicholas Negroponte, the One Laptop Per
Child project has its critics and production problems. But the
OLPC is now in mass production and due to hit Third World schools
early next year; the price, however, is expected to be closer to
US$200.
Large banks worldwide are increasingly viewing microfinance as a
serious business. Deutsche Bank, Citigroup and Goldman Sachs are
just a handful of the megabanks in the race to tap into the
potential profits in this emerging market.
Smaller venture capitalists currently taking on the market here
in Enzed include American expat Greg Casagrande, whose
not-for-profit South Pacific Business Development Fund is the first
to take microfinance to the Pacific, providing unsecured,
zero-collateral loans with manageable interest rates to Samoan
startups. The SPBD has provided over 14 million tala (about $7
million) since the organisation began in 2000. It's a slick,
financially sustainable operation, with just 0.8 percent of its
loans 30 days or more in arrears.
"That 99.2 percent rate of repayment is better than ANZ or
Westpac get from their far wealthier customers here or anywhere in
the world," says Casagrande. It's also attracting investors such as
Morgan, who recently visited Samoa with Casagrande to meet the
customers and is talking with him about expanding the SPBD further
into the Pacific, potentially under a separate for-profit
umbrella.
The for-profit plan isn't about making profits, though. "I'm not
convinced that a for-profit business in this sector means more
money to be made," says Morgan. "But it is about building a huge
network, and the possibility through that network to get into
for-profit. When you create a for-profit structure, it gives
motivation to profit services."
Casagrande agrees-he's not in it for the cash, he says. He's in
it for the potential. "There are loads of needs and demands out
there that are still unmet. It's a matter of business: looking at
the opportunities and needs of your potential customers, instead of
just saying they are too poor to afford anything or can't pay back
your loan-that's a myth."
It's a matter of evaluating the needs, building a business and
then scaling gradually upwards to reach people who are underserved
with quality products, in a way that is financially sustainable
both for the business providing these services and for its
investors.
"If it's not financially sustainable it's charity and if the
government changes administration, or the charity falls over, then
it's gone."
if it makes sense that New Zealand is a world leader in
agricultural innovation, then it makes sense that we'd have an idea
or two to ease Third World agricultural problems. Enter Neil
Macintyre, founder of func.nutrition. Macintyre pioneered the
functional food category with the highly successful Sun Latte
brand. But it's the developing world that now has him fizzing. He
recently returned to Cambodia with VisionFund and is now looking to
start a Phnom Penh dairy company to create nutritious,
cost-effective products using Kiwi technology.
Dual use: the pre-digested protein formula in Proteinforte
(top) is saving children and helping athletes. Acuset (below) is a
$5 lifesaver in developing countries, as well a handy piece of
equipment for the pool boy
Macintyre says Cambodia's 13-14 percent growth rate makes it
attractive to investors. "While there may be downward corrections,
there's a good solid foundation of growth." The three main areas of
growth-tourism, garment production and agriculture-are providing
jobs in both urban and rural areas. "It's really exciting in terms
of all the right components for good long-term development," says
Macintyre.
A new milk drink will incorporate some of the ultra-filtration
techniques used in producing Sun Latte to create a low-lactose
drink that is high in calcium and protein and can be sold for about
20 cents a unit. He also plans to employ locals in all sectors of
the business, including bringing Cambodian employees to New Zealand
to learn milk-processing techniques in what he hopes will provide a
"cornerstone to dairy consumption in Cambodia, utilising Kiwi
technology".
Macintyre is also exploring ventures in Mongolia, after a recent
trip with VisionFund and agribusiness expert Chris Bryan. In
addition to marketing milk products across the country, there's the
possibility of introducing new farming techniques. For example, New
Zealand gene transfer technology can be used in Mongolian goat
farming to provide high-quality cashmere for the nearby fashion
markets of Tokyo and Hong Kong-and Macintyre hopes the higher
quality material and designs will provide a higher rate of return
for the herders.
"Can New Zealanders have a role? Absolutely. We have the skills
to grow small enterprises into medium ones."
In fact, Macintyre is heading back to Mongolia in October and
he's looking to take others who are interested in understanding the
opportunities to do business there. But he isn't just in it for the
business. After seeing children scavenging through rubbish tips in
South East Asia, he realised he wanted to make a lasting
difference.
"You can't just swoop in Angelina Jolie-style and whisk these
kids out of the dump," he says. "We have to do something real.
Working in these countries, you're not guaranteed to make a big
profit. There's no expectation that you establish capital in the
first year-it takes time. But you will get your money back in the
medium term. If you're in it for the long term, and you take a
long-term position in this market, you're going to grow many-fold
and become a central player in that market."
Bryan agrees: "There are opportunities [for Kiwi entrepreneurs]
but over a longer time period and with higher cultural and economic
risks. But if you pick the right people to go into business with,
and have a focused attack, you're likely to have financial
success."
What all these entrepreneurs have in common is that they
genuinely began looking to these markets as a way to help break a
cycle of poverty. Donating learned skills to help those in
developing countries has traditionally been left to health
professionals, but Kiwi business people are joining the ranks of
those donating their time.
Still, we need to be humble in our approach, says Macintyre.
"New Zealanders often have swelled with pride at the thought of
being entrepreneurial. We are entrepreneurial and extremely clever,
but if you hand a piece of No. 8 wire to a Vietnamese man with
absolutely nothing, he will slice the wire into a thousand pieces
and then start working with it in a way that is so creative that we
look crude by comparison. These people are strong and they can
still manage to laugh at the end of the day and, in a way, that
makes them far stronger than anybody in the West."
