Social Entrepreneur: Harish Hande (Part 14)

We continue our discussion on India’s economic development, and the gaining affluence of the middle class. Harish challenges the common statements that there is high economic growth, countering that the growth only affects a very limited portion of the population.

SM: So the middle class has created affluence. HH: 18% of the wealth is with 1% of the population. For me, that is scary. There are 80,000 auto rickshaws in Bangalore alone. People say that is a growth. How is that growth? These are 80,000 who cannot find a job, and the only other thing these people know to do is rent an auto rickshaw and drive it. >>>

Social Entrepreneur: Harish Hande (Part 13)

Here Harish and I begin a more philosophical discussion regarding the recent economic development of India.

SM: Of course the people you are dealing with are operating in a capital market, and they get rewarded by maximizing shareholder value. The solution you need does not exist. HH: The logic that we are doing it in Germany to help climate change is not terribly credible is all I am saying. Shareholder value is shareholder value. Let’s not confuse that with climate change! >>>

Social Entrepreneur: Harish Hande (Part 12)

The recent solar energy boom in Germany has placed a significant strain on Selco. Selco will need to face the possibility of continued high demand in developed countries which are already highly industrialized, can pay big dollars, and suck up the supply of solar panels.

SM: One of the points I would like to discuss is the impact of Germany on the solar power market. Can you tell us how that impacts India and impacts you? HH: Plain and simple, the German market killed us. I always bought solar panels and solar products from India. When Germany suddenly implemented a subsidized program, it sucked up the world’s production.
Manufacturers in India had a shortage of modules needed to build the products I used.

Second, manufacturers changed and stopped building the smaller modules so they could make larger ones for Germany. My lead times increased, and for a small company like me it went from 15 days to 90 days. The cost of the panels increased by 47% over 18 months. Both of those issues hurt us very badly. >>>

Social Entrepreneur: Harish Hande (Part 11)

We continue our discussion on the challenges of human resources, and then move on to discuss business strategy. Selco has developed quite well to date by offering unique services and customized solutions. However, they now face the difficulty of hiring strategic thinkers who can continue this model for such low pay. The need to productize their offering is a key enabler for future growth and scalability.

SM: Your biggest challenge then is the human resource piece to scale all of this. If you are looking to do an additional 200,000 systems, it seems the real issue will be the management scaling. HH: Very true. I also see that the people who come into interviews are very good at one aspect, but they are one-dimensional and that is a problem. I have a very hard time getting people who can think in terms of technology and financing.

SM: You are really looking for strategic thinkers. You are going to have to find more productized solutions so people at that level don’t have to do that type of thinking.

HH: I am sure we are going to have to make that sacrifice.

SM: A lot of companies have scaled, and nobody has scaled by requiring strategic thinkers at the lower levels who can design solutions on the fly. To scale you have to productize. Even in custom software, there is plenty of reusable code. >>>

Social Entrepreneur: Harish Hande (Part 10)

A company like Selco must have a unique culture. Harish has explained that his company does not offer charity and he does not want his workers to have pity for people. Instead, they are intermediaries who assist individuals as they make their own changes and shoulder their own responsibilities. Doing so requires a unique organizational culture.

SM: Let me switch gears a bit and explore how you build an organizational culture to sustain this model? How do you hire employees in this culture, especially facing the stiff IT competition? >>>

Social Entrepreneur: Harish Hande (Part 9)

A key partnership Selco has recently achieved is with Sewa Bank. This will not only provide access to additional microfinancing, but will also provide access to more customers in a very efficient manner.

SM: Let me ask you a bit more about the Sewa Bank partnership opportunity. What does it offer and how will you leverage that? Sewa Bank started in 1972 as a part of Sewa (Self Employed Women’s Association) which was a Women’s Union. It was looking to give poor women who were mostly street vendors access to credit.

Financial institutions saw no value in poor women who had no assets. That led to the creation of a new bank, which is Sewa bank – the whole purpose was financing poor women. Over the years they have built up a clientele of 300,000 users. Most are street vendors, midwives, and all sorts of poor women who are actually part owners in the bank. They have built up from bottom to top with varied financing mechanics, depending on the type of work a woman does. The loan in not given for the sake of giving loans. They look at clients as partners. They look at what the loan is being used for. >>>

Social Entrepreneur: Harish Hande (Part 8)

In the next phase of the interview, I look to understand where Selco earns its revenues and how it plans to finance its growth. It is interesting to see the mix of social venture funds along with private foundations.

SM: Of the 80,000 installations completed, have they paid you one-time fees, or do you go back and do more work for them? Do you have any recurring revenue from them? HH: In most cases, at least in terms of solar, it’s a one-time revenue. However, there are a lot of places where people who are return customers for more energy in a few years, after they have expanded their income. >>>

Social Entrepreneur: Harish Hande (Part 7)

Here we review the current status of Selco. Harish and his company have completed 80,000 installations with plenty of room for growth. They have 25 service centers, and just over 140 employees.

SM: What stage are you at now? How many installations have you done, how many employees do you have, what is the level of profitability, and what kind of geographical coverage are you accomplishing? HH: As of today, I have reached a revenue base of approximately $4 million. I have 80,000 housing installations, most of them are in individual households in the state of Karnataka which has population of 44 million and approximately 8 to 10 million households.

We have 25 centers, and we aim to have all of these centers profitable. We have 142 employees, 20 in the head office and the rest in the centers. We believe that sustainable energies are only sustainable if we have door step service and door step financing. That is why we created 25 centers, and their location is based on the distance a technician can travel on a motorbike in two hours. That is the service area. >>>