Big surprises sometimes come in small packages and Angaza Design embodies this maxim. Led by CEO Lesley Silverthorn Marincola, the three-person team had already launched in five countries with its innovative SoLite solar lamp when it encountered the affordability barrier. Unfazed, the team pivoted and turned its engineering skills to developing and testing a new concept in pay-as-you-go solar energy. Lesley spoke to Arc Finance about how the human-centered design and can-do approach of companies such as Amazon – where she worked on the early generations of the Kindle e-reader – can be applied to seemingly intractable renewable energy problems with impressive results.
Arc Finance: Perhaps we could start with an introduction for those unfamiliar with Angaza?
LSM: Ok, I’ll give you a quick overview. We’re a technology development company that’s specifically focused on being a leader in pay-as-you-go platforms, which can be applied to many kinds of BoP consumer products. Initially, we’re focusing on the energy space because the need is so huge. Enabling pay-as-you-go on a light that retails for even $50USD or less makes a massive difference in the size of the market you can target. Once we understood this, we decided we wanted Angaza to become the provider of choice for low-cost, pay-as-you-go technology solutions that will only add a few more dollars to the retail cost of the product. We’re now live in Kenya, Zambia, and Tanzania with our pay-as-you-go platform.
Arc Finance: OK – so let’s hear about this new pay-as-you go application. How does it work?
LSM: To keep the cost low, we are capitalizing on the fact that pretty much all of our customers already have cell phones. We use that cell phone hardware to create an open voice connection to transmit payment and activation information. This keeps the cost of the actual hardware we have to add within the SoLite very low. In addition, by using an open voice channel for the communication component, we don’t need to have a specific relationship with a telecom provider before entering a new market and rolling out our pay-as-you-go functionality.
Arc Finance: So where is this audio signal controlled from – do you have a back office and technology team in East Africa?
LSM: It’s all regulated with our cloud-based, backend software platform – which we’re calling the Angaza Energy Hub – and everything is done automatically. The Hub receives mobile money payments from users and translates the payments according to a specific dollar-per-watt-hour ratio. We have the capability to specify different pricing depending on the circumstances of the market. For example, different markets have different kerosene prices. In certain markets, a product may sell better at an upfront price of five, ten, or fifteen dollars. We can easily tweak the pricing based on the market and distributor with whom we’re working. We’re also able to get usage and diagnostic data back from all the units using our two-way communication channel.
Arc Finance: At what point did you start to work on this? Because when you first launched in 2010, your focus was on well-designed solar lights, right?
LSM: We had an interesting pivot a bit over a year ago. When we launched our first generation product, which was a very high quality 2-watt light – the brightest light on the market – we wanted to blow the socks off everyone else in terms of functionality. Unfortunately, the product was selling at such a high price point that we weren’t able to move the product quickly at all. It sold for about US$60. That experience made us take a step back and realize that it’s not necessarily the product we needed to innovate on, as there’ve been a lot of recent innovations in the solar and LED space. Rather, we needed to innovate on the financing in order to make these clean energy products take off in these markets.
Arc Finance: How do you manage the “heavy lifting” of design while handling manufacturing, distribution etc?
LSM: We do most of our design and engineering work in-house. My background is in product design and mechanical engineering.
For distribution, we’ve decided, so far, that we really needed to focus-in on the nature of our core talent, which is technology development, so we’re partnering with other companies who have years of experience in distribution with established channels. We enable the distributor to sell to the end-consumer with marketing material and pay-as-you-go training. Using our Energy Hub, all the distributors can see their payment activity and data; they’re very involved in the whole process.
On manufacturing, we decided that at our current stage, it wouldn’t make sense for us to set up a manufacturing team, so we’re outsourcing with a terrific contact that we found through our networks in Silicon Valley. It’s one of those great relationships that has helped our company get as far as it has.
Arc Finance: Getting back to the new payment application, how does it feel for the end-users financially? Are they paying interest? Can they vary payments?
LSM: We’ve found a real value in the capability to give the customers complete flexibility to pay as much or as little as they want towards paying off the product, whenever they want. Right now, we’re seeing a variety of payments – as low as 80 cents to as high as about 8 dollars at a time.
Arc Finance: So you’ve already got two parts to Angaza after two years: the actual SoLite lamp, and now this pay-as-you-go software. I imagine this carrier-agnostic payment application will be of great interest to others, which begs the question: where do you think Angaza will move towards in the future? Are you going to develop more lighting products, or are you going to focus on developing the pay-as-you-go platform?
LSM: Great question. We’re currently using a dual approach. The first, which is what I’ve mainly been talking about, is where we, Angaza, manufacture that whole solar home system kit that has the pay-as-you-go embedded in it. We then sell those products under the Angaza brand through brand-agnostic distributors. But we’re actually also exploring a licensing approach. We can easily embed our technology in other products and sell under their brand and still regulate everything through our Energy Hub.
Arc Finance: Let’s finish off with your predictions for the next twelve months.
LSM: Over the next twelve months, we’ll be focused on scaling up the technology in our first 3-watt commercial unit. We’re in a really exciting stage of company development, where we’re quickly establishing ourselves with the mobile money and distribution partnerships and scaling up volume. We want to be a leading provider of pay-as-you-go technology. Right now, we’re working on scaling a specific pay-as-you-go technology as our initial entrance point to the market, but we’re very open to moving up or down the energy-output ladder. There are even cheaper implementations of pay-as-you-go that don’t have a cellular connection. Likewise, there are other implementations of pay-as-you-go that are more costly. And, there are other products that we can offer. For example, we can offer higher wattage products. Or, we can diversify from the energy space and into other BoP-focused products like water kiosks. There are a lot of applications for pay-as-you-go, and we intend to use our technical expertise to make pay-as-you-go a reality for all kinds of products to transform emerging market landscapes.
Arc Finance: Thanks Lesley – this is an exciting time for Angaza and we wish you well.