Ben West is the co-founder and CEO of EcoZoom: a for-profit, certified B Corp, social venture company selling affordable wood and charcoal-fueled, highly efficient cookstoves in developing countries. EcoZoom works to empower local workforces, economies and women while creating financially sustainable markets and connecting themselves to all parts of the value chain. The company has 15 staff, and offices in Portland, Oregon and Nairobi, Kenya. To date, the company has sold more than 90,000 units to 14 countries, with key projects in 5 countries.
Before founding EcoZoom with co-founders Amanda West and Phil Ferranto, Ben managed the complete turnaround of the social venture company StoveTec. Ben earned an MBA from the University of Oregon, and before attending graduate school, Ben ran a US$20m account with 6 office staff and 150 truck drivers within the US$1bn company, US Xpress. Ben and his team have just finished setting up their offices in Kenya, where he currently lives with co-founders Amanda and Phil.
Arc Finance: Let’s begin with talking about your background. How did EcoZoom get to where it is now?
BW: We got started in April 2011, initially with me and three other founders. We started with just $40K in founder funding, plus a small loan. The goal was to sell our cookstove products to distributors, and since then we have sold about 90,000 stoves – 70,000 of which in the first two years, across 14 project countries, generating about US$3m in sales.
We came to see within the first two years, however, that many of our partners didn’t have all the ingredients to make the project scalable and successful, so we decided that we wanted to push our products into a market ourselves too. Six months ago, we made a change to our plans and we moved from Portland, USA to Kenya – leaving two staff behind.
Arc Finance: How have the last six months gone since you made this decision?
BW: So now we have about ten people working with us to drive the products to market, still using local distributors and sales agents. We remain a B2B business, and our focus is setting up sales agent systems through local networks.
Arc Finance: Can you give us an example of how this looks in practice?
BW: An example might be using a coffee trader network, which works with 10,000 farmers: the trader network can work with those farmers to sell cookstoves; they already understand the need for the product, and how to sell within their network. We just give them the stove specifics and some tools to make it easy.
Arc Finance: Let’s back up a moment, and talk about the need. Why does EcoZoom exist?
BW: We are a for-profit, certified B Corp that makes clean cookstoves accessible and affordable in developing countries. We want to work to empower local workforces, economies and women while creating financially sustainable markets. We continuously improve upon our product offering and the customer value we deliver by being connected to all parts of the value chain.
How do we do this? By providing highly efficient, durable cookstoves with a commercial finish that can be manufactured on a massive scale, designing appropriate, affordable products for the market by incorporating direct end-user feedback and purchasing data, building distribution partners’ knowledge and financial capacity by sharing experience and resources, bridging the gap between artisanal suppliers and offshore manufacturing by creating a scalable local stove manufacturing solution, taking action to create and utilize logistics, and by reporting and monitoring systems for our customers, our stakeholders and us.
We believe that people of any economic status should have access to beautifully designed cooking products that will improve their health, income, and environment. The benefits of improved cookstoves are well documented, but the health and environmental benefits are supplemented by the income impact of savings among clients.
Arc Finance: You’ve described yourself as a B2B company leveraging distribution networks. Could you go into a bit more detail on your customers and market segmentation?
BW: We work with NGOs, governments, aid organizations and local businesses and entrepreneurs who want to put stoves into the hands of people who need them. We group our customers into three segments, depending on the type of project they are implementing. First, commercial customers: cookstoves can sell for a profit throughout a sustainable value chain, creating recurring revenue opportunities for manufacturers and distributors. In this market, end consumers purchase a cookstove outright, or will purchase a cookstove with end-user financing.
Second, we have “development” customers. Cookstove markets are just getting started in many areas and must be fostered in order to grow into a commercial market. The value of a cookstove to a family is not well known, price elasticity of demand is quite small, and we compete for end-user purchases with mobile phones or other technologies. Cookstove samples, and subsidized stoves, can help generate a thriving cookstove market. In some cases, stove donations or subsidies can break the poverty trap of spending a high amount of time or income on fuel, and demonstrate the value that an improved cookstove has to health and prosperity.
Third, we have relief work customers. There are millions of people living in abject poverty and in Internally Displaced Person (IDP) camps. Relief organizations target these end users to provide relief in extreme settings and to break the poverty trap. Relief organizations also recognize the strain IDP camps put on local natural resources. Once wood is gone, desertification occurs and fuel is trucked in. Health impacts are also exacerbated with concentrated smoke and emissions. So cookstoves can have a huge impact.
Arc Finance: So far we’ve talked about cookstoves as one product, but you have a suite of products available, do you not?
BW: Yes. At this point, we have ten products, including six different woodstoves of different sizes and made of various materials. We have two charcoal-burning cookstoves, one flexfuel cookstove, and one plancha with a griddle and chimney. The price to end users ranges from US$0-48 (zero is for some relief work), but we are looking to focus more on the commercial market.
Arc Finance: You said you started in 14 countries, but have consolidated. Where is the focus now?
BW: The main focus countries now are Mexico, Nigeria, South Africa, Kenya, Somalia and Rwanda. We’re in the final stage of a deal for 700,000 stoves into Rwanda, which is very exciting.
Arc Finance: What are your targets, and what do you see as the main drivers of, or barriers to, scale in reaching these numbers?
BW: In terms of barriers, we really think we can scale quite well. Here in East Africa we believe we can reach the market quickly, but the constraints are the human and financial resources needed. And there are always potential risks around government programs distorting the market.
We’ll be making 800,000-1 million units in the next year. We don’t see manufacturing as a hurdle at all; the scale is limitless in China where we are producing the products. Obviously, maintaining quality control is always important, but we are pleased so far. That’s the offshore manufacturing, but we’re looking to set up production onshore too, starting in 2014. Our stakeholders are strong proponents of this.
Arc Finance: Where is the funding coming from to move to this next level?
BW: We have been able to bring on an inventory financier – a local businessperson who is importing and paying for the finance for bringing in the units – he is also interested in equity finance. For the Rwanda project I mentioned before, for the 700,000 we’re picking up $18m in debt for that program from the customer, and providing that customer 90-day terms, so it’s quite a working capital requirement, which our customer is helping with. We’re also raising US$1.5m for setting up the onshore manufacturing – a big part of which will be inventory. We hope to bring in some institutional investors too.
Arc Finance: Have you done much – or any – research on testing the affordability of the products and on market segmentation?
BW: We’ve done market feasibility studies of course, but we believe income is a poor indicator of who our customers are. We have high-income people as customers, who have people working in their homes who are poor, and cook on charcoal fires.
What we’ve looked at more is different end-user groups, and we’ve concluded that we can sell to all user groups in Kenya, and use different sales channels for reaching those end-user market groups. In this sense, it is more like a pilot, testing different models, but with a commercial scaling goal.
Arc Finance: And what lessons have you learned so far? What would you do differently?
BW: We’ve been pleasantly surprised at how being here – with the market in Kenya – has so many benefits. All the stakeholders are here in Kenya, and you get into a high-energy environment, and people take you more seriously when you’re on the ground. The social venture space here is a lot of what we hoped it would be, with organizations sharing best practices. It’s very collaborative.
Our main disappointment is having had to learn to choose our customers more carefully. Not all organizations have the capacity, skills, motivation or direction we need to work with them; we’ve had to learn to scrutinize carefully. But these lessons are standing us in great stead as we expand and innovate through new networks and distribution channels.