NextDrop

I bet everyone is just really excited that it’s not just me posting on this thing (finally!) right?  Yeah, our team is pretty awesome, and have really amazing insights that I thought should be shared with the world at large (or at least internet-dom for starters). I thought it was time for a post from me though, mostly because I was getting a bit nostalgic since it’s been a little over two years since I officially became CEO of NextDrop.

Good News: Company has not been run into the ground yet.

I digress though.  What did I want to talk about today?  I wanted to talk about company culture, because I think it’s probably one of the most important factors for startup success.  Why do I think this?  Greatest influences on my business life thus far: books like Good to Great, Delivering Happiness: A Path to Profits, Passion, and Purpose, and learnings/slideshares/conversations with people who have actually done stuff that I want to do, like Chamath Palihapitiya and Fred Destin.

How have they influenced NextDrop?  In a few ways.

Everyone Learns Python.  Yeah, Even You, Civil Engineer

I remember around January, Quijano approached me and Nishesh after a team meeting and basically said that we would suck as a company if we all didn’t learn Python. (Ok maybe not his actual word choice, but that was my takeaway).  Of course Nishesh and I were terrified because…well..IT’S PROGRAMMING.  I am a CIVIL ENGINEER.  That was WHY I chose civil engineering, and not..Computer Science or something.  Same with Nishesh- Water Engineer and POLICY.   Totally not what we signed up for.  We tried to push back, but Quijano was adamant.  Luckily we both secretly (but not so secretly) sort of think Quijano is a genius, so we decided to just go with it and…learn Python.  Best decision EVER.  Why?  Think about what we’re actually doing at NextDrop.  We’re using simple technology to solve complex social problems.   The hardest part is understanding what problems need to be solved, and how we can solve them.  But the other really important part is knowing what technological solutions are available in your arsenal to solve these problems.  Without an intimate understanding of your system, there is no way you can accomplish this.  Also, it saves a TON of money on development, because in this early stage, most of what is going to hold you back is programming.  So if you have all key people focusing on the biggest barrier to moving forward, then you make the most progress.  I know I know, you’ll probably argue that everyone should be focused on what they do best. Sure, in an ideal world yes.  But in that ideal world, we would also have all the technology we want developed in an instant and we would have all the data we need at our fingertips.  Without data, we have nothing.  Plain and simple.  And speaking from experience, let me tell you this is what makes or breaks you as a company.

Again, I would encourage everyone to adopt this policy.  I’m currently working on a program that more accurately breaks down/visualizes our valvemen data so that we can make more informed decisions around our valvemen incentive program.  Really stoked about it actually!

Hire People You’d Want To Hang Out With

It’s pretty simple actually.  You’re going to spend most of your waking hours with these people.  If you wouldn’t even want to be friends with them, chances are, you wouldn’t want to work with them. No matter what their resume says.  This goes even beyond work though.  I think it also self selects for people who believe in your vision and mission.  Chances are you hang out with like minded people.  At least for me, I hang out with all sorts of people, from different walks of life.  But the thing they all have in common, is that they think what I do at NextDrop is pretty neat.  They get it.  They may not want to do it themselves, but they get the vision.  The most important thing I can do is make sure I populate NextDrop with people who jive with the vision, and are working at NextDrop to build a new reality- one that doesn’t exist today.  And have a really good time along the way of course.  As long as that is your motivation, I’ll probably want to hang out with you and we can hire you at NextDrop.

Fail Fast, Fail Often, Learn As Much As Possible

The Hacker mentality and the Lean Startup.  Let me tell you, another thing that really influenced my personal life greatly, and all of us at NextDrop, was the essay, How To Be A Hacker along with Eric Reis’s book, The Lean Startup.  In short, the life of your company is determined by the number of experiments you run, and the number of learnings you can acquire within the lifetime (i.e. burn rate) of your startup.  You’re probably going to be wrong, so just be nimble, and as soon as you know you are incorrect, pivot.  Putting ego aside, just look at the facts and do what needs to be done to achieve our goals.  Pivot or persevere.  It doesn’t matter, as long as we know we are headed in the right direction.

Those are the 3 major takeaways regarding culture I wanted to share/learned along the way.  Personally, it’s been an incredible journey, and in addition to just being really thankful that I get to work on solving really interesting problems, with the smartest people I know, I’d have to say I’m a pretty lucky person.

I also wanted to say thank you to everyone out there, reading this post.  It’s been two years, and with all of your support, we’re still alive and kicking.  We wouldn’t be where we are without you, and I wanted to make sure everyone knows how much we appreciate it all.

So thanks, from all of us here at NextDrop.

It’s a bit difficult to keep this blog updated on everything interesting we’re doing, but we’re trying our best!  Today we have our newest employee, Bindu, who is running operations in Bangalore (yes, we’re actually working in Bangalore now), writing about her experiences/our progress thus far.

Where do I start?
For someone who had spent 9 years enjoying the centralized AC, freq cafeteria visits, chit-chats (most frequently discussed were traffic jams, where is our country heading? kind of interesting topics..;))
The pilot in bangalore has made me go through ‘A hell of an experience’ (of course in good sense )
Right from searching for the water tank in the area we first visited (I remember how me and Anu were asking every other person on the street if he knows where the water tank is.. no one seems to know and they gave strange expressions.. like why are these two girls so desperately looking for a water tank after all!) to sitting across the table with top BWSSB (Bangalore Water Supply and Sewerage Board) officials explaining the outcomes of our pilot and astonishing them

We got the necessary permissions from BWSSB to carry out the pilot in Bandappa Garden NE1 sub-division and Bhoopasandra NE3 sub-division (Of course it was as simple as that! ).  We trained the valveman, enrolled people for our service and started monitoring the notifications.  4 weeks down the line, taking feedback from customers was so much fun – they totally loved us! )

Today, we have our Vice President of Product Development, Nishesh Mehta, talking about what he’s learned about Incentives since he’s been here thus far.  Really fascinating topic, with implications across many sectors.  Why do people do what they do? Why do valvemen give us information?  I’ll let Nishesh take it from here

NextDrop was featured as one of the practioners at the ACM Dev 2013. At the conference, we witnessed some of the most innovative ideas in action that married crowd-sourcing, ICT with the mobile platform. One of the questions I was asked most often was, “So why do the valvemen work with you? How have you crafted your incentive program to get them to give you accurate information?”

To answer the question, we have to go back to September 2012. I had recently moved back to India to join NextDrop. My charge was to set up an incentive program that would convert each valvemen into human sensors – accurate, timely and most importantly consistent. Over the last 6 months, we have been able to devise a program that has achieved good results. About 70% of the valvemen working with NextDrop in Hubli report water supply timings accurately.

The incentive program that we designed works like a frequent flier program. For each correct notification, valvemen accrue a certain number of points which can be redeemed at the end of the month in the form of rewards such as jackets, T-shirts, petrol, ration etc. Essentially, they can get anything except cash.

What have I learnt in the process of designing this incentive program? I am going to summarize these in a multi-part series. Here goes Part I.

1)     The signalling effect is much stronger than actual incentives – When valvemen can see the rewards being given to other valvemen for good performance while they are left out, it creates a huge “I also want it” effect. In economics, it is called the signalling. What we learnt is this signalling effect has a disproportionately larger impact on valvemen performance than the actual incentive. It is also a powerful attraction to get new valvemen into the fold. Consequently, all incentives are given in a group setting. It not only enables the signalling effect but also gives you credibility that you will deliver on your promise of the incentives.

2)     They must decide on the methodology to score points – This is crucial for any system to work. If they perceive the points system to be biased, they will never buy into the incentive program.

3)     You want them to fight over points – Once they trust the points system, however, you want them to fight over points. You will be at the receiving end of a lot of flak, a few disparaging remarks even. The questions may sound accusatory such as – “How did I get so few points?” or “Why did he get so many and I received so few?”. When you start to hear those – you know you have traction. You have their ear. Now is the time to fill them with the sweet music of rewards! The worst thing for an incentive program would be if everyone ignored it.

4)     Who is afraid of unions – One of the first meetings I had when I started was with the union leader of the valvemen in the city. What a meeting it was! If I said, I came out with a bloody nose that would be putting it mildly. However, we have learnt that having a union can be really helpful. A union is a great way of organizing the valvemen and it provides a readymade chosen few who could then influence all the valvemen to work with you. Once we convinced the union leader on the incentive program it has been a lot easier to function with the valvemen. It also provides you a new voice when there is any sort of disgruntlement on the other side.

5)     You need institutional backing at least in name – In our case the valvemen are contracted by the city water board. Being the primary employer, they hold sway with the valvemen and are consequently cast in the main villain’s role in their saga. Their influence however is crucial here. We developed a feedback loop from the water board to the valvemen. The water board now monitors valvemen performance through the same messaging system that informs the customers. As a result, if a valvemen didn’t send correct notifications, they would hear about it from their water board supervisors. Even though it is primary a verbal warning or praise, it goes a long way in cementing the importance of sending in timely notifications to the NextDrop system.

6)     Are you funny and charismatic? – An important note in conclusion; No incentive program can work without some old school charm. I continuously feel that the role of charisma is grossly under-estimated in enhancing productivity. Here is a perfect example. None of the ideas on the incentive program would have worked without a team that has been able to charm their way into the valvemen’s daily lives.

Here ends the first part on what I learnt while creating the incentive program. In part II, I will throw in some field experiments based on behavioural economics, game theory and some highly original ideas that we have come up with to structure the incentives. In the meantime if you all have any ideas you always thought would work and are itching to find out, here’s your ready laboratory.

Since we recently got invited to be a panelist at The Indus Entrepreneur (TiE) event in Hubli, I was thinking about questions that we had interesting answers to/we get asked the most often.  The top question: Why Hubli?

I thought it would be interesting to go through the Pros and Cons of starting in a Tier II city (as opposed to a Tier I city like Mumbai or Bangalore).

I’ll start with the Cons:

• Banking: It’s is pretty tough.  Trying to get Foreign Direct Investment through the Indian banking system is tough enough without having to deal with the fact most Tier II city branches have never dealt with it before. 
• Human Resources: It’s much harder to get top talent to move to Hubli.  The US equivalent is basically choosing between a job in San Francisco or a job in Wichita, Kansas.
• Location: Given the fact it there are only 2 flights into and out of Hubli (which actually shut down for the last 8 months and just reopened), it’s difficult to get places.  To get to Delhi, it would take about 2 days (because I don’t want to land at night for…safety reasons).  Also, you don’t get many visitors (again, hard to get to).

The Workarounds/Business Hacks (to overcome the Cons)

• Banking: There was a very large learning curve there, but after a while, I think they got the pattern.  Once a pattern is established, things go smoothly.  It took about a year, but it’s good now.  If we were to do it again, I think we may have had our “local” branch in a big city (because we go there once a month anyway).  I don’t know if it’s any better, but I think I’d like to try it that way.  Most things can be done online now anyway, so I think it could work.
• Human Resources: This one is pretty interesting.  I was talking to one of the founders of a pretty famous Hubli company, Sankalp, and they said their competitive advantage is really by training students from Tier II city colleges (the ones that didn’t get accepted into the prestigious semi conductor companies) and just make them stellar.  This seems to be the trend in India because I know other famous companies like Infosys, Wipro, Accenture, IBM etc.. do it too.  Their training programs last between 6 months-2 years (Crazy, right?!) But it’s the Indian corporate workaround for the fact the Indian college education system does not really seem to prepare students for the corporate world.  But what does a startup in Hubli do when you need people, and you need them… yesterday?  Sankalp worked around it by starting in Bangalore, and then when they got big, moved to Hubli.  They already had built enough reputation for people to take a risk and join the company.  Their solution for small startups like ours (whichI thought was incredibly insightful/pretty much what we ended up doing): The founders just need to do be incredibly hands on and do most of the work/train their staff.  Let me say that again, because I felt like this was a huge nugget of wisdom that most people can learn from: the founders need to be on the ground and put the proper systems in place/train their staff to reach the levels of excellence they expect.  Essentially, you need to create a 6month-2 year training course,  implement, and execute it (in real time/while you grow your business).
• Location: Batching meetings so you can just make one trip and knock out 3-4 things.  It makes you more focused and saves you money anyway (because you won’t leave unless you have 3-4 compelling reasons why!)  Also, honestly, in the beginning, you don’t really want people coming by to visit because you don’t have much to show that’s interesting yet.  It’s better to fly under the radar until you have something good.

The Pros:

• Focus: The problems that we are working on are the same across India, just at different levels of complexity. So when you start out, you want to isolate one variable, and figure it out.  In Hubli, we asked one question: Can we get useful and accurate information from the valvemen?  The answer: Yes. That’s the only thing we tried to solve, and that’s what we did.  If we had started in a much larger city, we’d be spending so much time figuring out the pipe network, who reports to who, the politics, and navigating the beauracracy, we wouldn’t have time to answer the most pressing questions.  
• Human Resources: Back in high school, our basketball team had a very effective strategy to see who would make the team.  Anyone who made 5am practices (getting there by 4:45am) for a whole summer, made the cut. Guess what- our team was undefeated and we won our league every year.  It’s the same with starting in a Tier II city.  The upside is that you know that the people who do join you are incredibly committed to your cause, and will do anything to make it survive.
• Less Red Tape: Related to the first point, it’s much easier to navigate…everything really, in a Tier II city. And for a startup, that’s really one of the most important things it can ask for.  The people in power are much more amenable to trying new things, and the systems are much more straightforward (which is still incredibly complicated!) But figuring the path of least resistence in a smaller city and then applying the same concepts to a larger city, I think, gives you the most bang for your buck.
• Location: Similar to the Human Resource answer, you know that the people who do visit you (investors, interested individuals), are really interested in what you do.  Also, we mostly travel by bus/train, and tickets are really cheap- I can book at the last minute and still get a good ticket (~$20 round trip gets me to Mumbai or Bangalore in a sleeper bus!)
• Cost: Hands down, super cheap to live and work in Hubli (Compared to a bigger city).  Food is great, and housing/transport/office rent is inexpensive.  We’ve kept our burn rate considerably lower because we live in Hubli.

Overall, if I had to do it again, I would still start in Hubli.  Yes, it’s much less glamorous, but the pro’s, in my head, definitely outweigh the cons.  I would also encourage any other social enterprise starting out to really figure out the overall problem they are trying to solve, work backwards, and figure out the first key question they need to answer.  Then ask yourself: what’s the easiest geography to answer the question in?

As always, thoughts/questions/comments are much appreciated!

Conversation with our water expert, Emily:

Anu: “Emily!  Oh man, the meeting with the low income areas in Bangalore was great!  I think we can make a HUGE impact there! Did you know 10% of their income goes to water? I had no idea it was that high! Did you realize that?”

Emily: “Anu, that number seems really high.  I don’t think they spend 10% of their income on water.”

Anu: “Really? But when we asked them how much they spent on water, they were talking about anywhere from 200-500 INR/month! And that’s what Ashish found too…why would they say otherwise?”

Emily: “Ok Anu, think about it.  If someone came and asked you how much you spend on water, and it looks like you may be able to do something about it, don’t you’d think you’d over report how much you actually spend? Anyway, here are some research papers  that study this exact thing- and most of them agree on people spending about 1%-2% of income, including opportunity costs, on water. “

Anu:“….UGH you’re right.  This is why I’m really glad you’re here.”

(Paraphrased conversation, but you get the point).

The thing about being a social enterprise (as opposed to just being a regular business), is you have to try and keep track of the social impact you’re making (or at least the potential you can make).  Businesses are well equipped to track the bottom line (which we actively do), but we’re not as good at the social bit.  And we just have to acknowledge that part.  From my own personal experience (which I should have remembered), I know that I can get a person to change their answer (to the same question) just by the way I phrase it!  There are so many nuances to surveying, and studying impact that “market research” just won’t uncover (as evidenced by the myriad of graduate classes available on the subject).  All we as a social business know is that there is some sort of opportunity for positive change, but quantifying that opportunity is something we leave to the professionals.

This is why we think collaborating with world leaders/experts in the field is crucial to our success.  Business and capital markets naturally lead itself to being efficient, but what if you’re efficient at the wrong things?  That’s where the experts come in: channeling that efficiency into doing something that makes positive change.

Anu, is the point of this post to say that the numbers from the last post are running high (re: impact?) Yes, probably.  I’m revising it to say that’s what our crude initial market research studies found, but academic papers suggest that we’d save ~ 2% of income, NextDrop would be able to save ~30% of that.  I’ll leave it up to others to use their numbers for how much a typical family makes (but the papers we read show something between 1300 INR- 6000 INR/month).

Also, is the other point to engage/call to the academic/expert water community? Yeah, pretty much.  It’s also a…personal learning to put out there for other social enterprises.  Make sure to have some experts on board to gut check your theories.  It’ll save you a lot of trouble in the long run when you realize you are nowhere close to doing the thing you thought you were doing.

It’s no fun learning when you were probably wrong, but it’s incredibly important if we want to get at what’s right.

Again, comments/questions/etc.. are always welcome! Has this ever happened to you?  What are your thoughts? Do you think we’re still off here?

I feel like that’s the title of every other blog post we write- apologies.  There’s just so much going on, lots of really interesting things happening, and so much we are learning, I forget that people can’t read our minds- we actually have to write about it to transfer information (unless someone has invented telepathy in the time we’ve been over here in India, which would be really amazing.)

Potential Scaling Plans:

So we’ve been eyeing Bangalore, to see if we can actually make the impact we want to. First, as luck would have it, Ashish, an Indian Institue of Management, Ahmedabad (IIMA) student from Bangalore, emailed us because he was bored and looking for a project to do during his break.  (We love when we get smart people who want to work with us!)  He began our market research in Bangalore, and came up with these initial findings:

Ashish is going to continue to interview people, and do an independent market sizing exercise for us, and we expect his report by the middle of next month, which we hope to share with everyone (thanks for being awesome Ashish!)

Basically, Ashish’s preliminary research told us that it was worth investigating Bangalore further. After some more conversations with people from Water.org, they introduced us to one of their local partners in Bangalore, Mythri Seva Sarma Samithi (MSSS) who is working to improve water/sanitation in 19 urban slums in Bangalore (among other things).  They graciously took precious time out of their day to show us around, and find out if a NextDrop solution could be helpful to the people they serve.  Here is what we found:

• The Bangalore Water Supply and Sewerage Board (BWSSB) has given a contract to 4 NGO’s to help provide legal in home water connections to 96 slum areas in Bangalore (MSSS being one of the 4 contractors). This means that there is a large population (~96,000 families we know of) who will have access to in home connections, one of the biggest assumptions we had to verify

• MSSS is ahead of schedule, the connections have already been installed, and now they are waiting for the BWSSB to start providing water to these areas

• One of the main problems in the slum areas is simply a lack of water

• Some areas that MSSS works in already have in home connections, and get sufficient water supply.
  • Of those areas, we estimate from our conversations, that people (especially women), lose approximately, 4-6 hours/week when the water is off schedule.  It was reported that water was off schedule ~ 2-3 times/month (more in the summer season). Also, it was reported that many times, depending on how far work is from their house, one person from the family will miss an entire day of work if they believe water is to come that day.

From our learnings, we believe that if we can get families to change water collection behaviour, we can save each low income family ~$27.59/year, amounting to a savings of  ~$500,000/year  for the 96 slums in Bangalore with in home water connections.  This only includes the monetized opportunity cost of waiting for water, and does not include any benefits from: sharing NextDrop water information, keeping children in school, health benefits from receiving clean water, increased time to do household chores, money saved from buying private water (which seems to happen quite frequently at ~ 1 INR/pot of water-located 1 KM away), and increased access to water due to timely information.  These are all things that I believe could be true, but would like to study it further when we operate in these areas.

Here are the assumptions we used when we came up with these numbers (We would love to get input and see if these numbers seem reasonable to you all!)  The biggest assumption, I feel, is that we can change water collection behaviour.  From our learnings in Hubli, we have found that if we provide accurate information, people seem to benefit from the service- which we are confident we can do.  However, those were in middle income brackets, and I believe that we will have to spend more effort in lower income brackets to accomplish this.  This is something we are really excited to take on, and a new challenge we would love to enter into, with other partners on the ground who know more than we do- like MSSS.  (We love learning, partners, and challenges!)

When smart people  tell us that we’re not making the social impact we really hope to be making, we usually tend to listen.  So then the next obvious question: What’s our next move?  Well, after talking to some other really smart people from Unitus Capital, we realized that we are straddling the social and the non social.  We’ve found a product that people (across a whole lot of economic levels) really like (for various reasons).  Which is great- we’re all for people loving us.  But since we went into this business to maximize social impact, that’s what we are going to try and do.

How do we do that?  Elementary my dear Watson: Use Hubli to perfect the information delivery mechanism, and pick the next city we scale to based on where we WILL make the most social impact.  (Ok we lied-we didn’t come up with that idea- one of our amazing advisors, Catherine Berman did.  This is totally why we have advisors.)

Learnings/Hypothesis: Tier II cities like Hubli probably don’t have a high number of people that fall into the “If Statements” that Amanda outlined, which will get to the type of impact we’re looking for.  We think that there will be more people who fall into that category in larger, Tier I cities, like the working poor of Bangalore.  This is still purely speculative, and we have no numbers to back this hypothesis up…yet.

Next Steps:

We at NextDrop understand where we make discernable socioeconomic impact: where both the man and the woman work, they do not have the social network to help them collect water (if they miss water collection), and they don’t have the coping mechanisms (storage containers vs number of people in the household vs number of days between each supply) to deal with missing the water supply.  What we need to do is quantify this market size in Bangalore: what percentage of the population (if any) does this definition apply to?

That’s very specific- what if you find that the market is too small for the business to be viable?

Upon talking to more smart people, (like April Rinne from Water.org), we realized that this could very well be the case.  Are there people who are new enough where they don’t have established social networks/coping mechanisms for missed water, but old enough to have access to piped water/in home connections?  We don’t know- that’s what we have to figure out.  But if we find that this market IS too small, what we will do is figure out what other types of water information we can provide to serve low income households. We’re thinking things like timings of water tanker truck arrivals- basically things that can still leverage the same NextDrop mechanism but in a slightly different water context. We’ve perfected (or in the process of perfecting) the delivery mechanism here in Hubli, and it may be a great chance to see how the mechanism works in a new context.  How robust is it?  What tweaks do we need to make it work?  All exciting questions we would love to be able to answer.

Also, a note on “Big Picture Things”- just for kicks.  Mostly the way we work/our philosophy.  As always, input is more than welcome.

Paul Graham said it best in his blog post about “Frighteningly Ambitious Startups”   In this post, he goes on to talk about “frighteningly ambitious ideas”: how to create the next generation of competition for Google, replacing email, replacing universities (you get the idea).  Basically things that are incredibly difficult and at the beginning sound ridiculously crazy.  I want to quote his advice on tactics: How he thinks companies should go about actually making this happen.

Let me conclude with some tactical advice. If you want to take on a problem as big as the ones I’ve discussed, don’t make a direct frontal attack on it. Don’t say, for example, that you’re going to replace email. If you do that you raise too many expectations. Your employees and investors will constantly be asking “are we there yet?” and you’ll have an army of haters waiting to see you fail. Just say you’re building todo-list software. That sounds harmless. People can notice you’ve replaced email when it’s a fait accompli. [4]

Empirically, the way to do really big things seems to be to start with deceptively small things. Want to dominate microcomputer software? Start by writing a Basic interpreter for a machine with a few thousand users. Want to make the universal web site? Start by building a site for Harvard undergrads to stalk one another.

And that, my friends, is our strategy (well, not building a site for stalking part):  Start with deceptively small things.  We want to tackle big hairy audacious goals, like structural change.  But you know where we start?  With the small, focused thing.  Because that is actually really hard to do well, turns out.  We’re STILL trying to figure out how to provide accurate water information to the city of Hubli, and we’ve been at it full time for the past year, working our tails off.  That’s not to say we’re not close, but I’m saying that on paper, it looks really easy to do.  Geez, I came in thinking it would be really easy to do! (And it constantly amazes me how long “simple” things take to accomplish) That’s what people say when I tell them our business.  ”Really? That’s it? Don’t people know this already? That sounds so simple”  Yes.  Deceptively simple.  But when we pull this off, our team will know just how hard it was, and we’ll definitely be patting each other on the back.

I think in the social enterprise space (the little I know of it at least) people are so used to talking about that big hairy audacious goal that they’re trying to tackle.  And people who prefer Paul Graham’s philosophy (starting small, doing it well, change the world), maybe get kicked to the side a bit.  Because at the end of the day, MAKING CHANGE IS NOT SEXY.  Doing good things means a doing a lot of really painful, really unsexy/boring things 99% of the time.  It’s looking at a lot of data, hearing a lot of things you don’t want to hear, and making decisions that are really not fun (because honestly, who wants to say that their brilliant ideas are not so brilliant, turns out?) You think finding out that you are currently not making the social impact that you thought you were making is fun?  No, it is not.  Not by a long shot.  But you face it. Brood a little bit (like maybe 1-2 hours) and then move on.  (And write a blog post about it).

So that, for anyone curious, is our strategy.  We’re doing Hubli well- getting the information delivery mechanism down.  Then we’re gonna do it and measurably make people’s lives better (maybe in Bangalore, we’ll see if the data backs it up).  And then when we get that under our belts, we’ll tackle bigger things.

What are those bigger things?  Honestly, it’s too early to tell.  I mean don’t get me wrong, we have a lot of ideas and theories.  But I’m not out here to distract everyone from keeping the eye on the prize, and holding us accountable.

What is the prize?  Delivering results in Hubli &  showing we can make measurable social impact in one more geography.  If we can do that, we are well on our way to tackling those big hairy audacious goals that everyone loves talking about.

PS If you are a smart person and want to consult for us/work with us/be part of our awesome team, shoot us an email!  We are always looking for smart people to tell us what to do.

It’s a good question, and what we brought on Amanda Meng from the Fletcher School of Law and Diplomacy to find out.  Here are her thoughts on the matter.  (We will let her introduce herself, we are linking interested people to her personal blog about her experiences in India, and we are so sorry for taking so long to post this Amanda!)

If there’s something just as fashionable as social enterprise these days, it’s impact evaluation (especially of the RCT variety). So it makes perfect sense that NextDrop would request some of the great minds at Berkeley to design a rigorous evaluation that could isolate change caused by the information service.

The first phase of an impact evaluation is preliminary qualitative research, aiming to answer one question: Is there measurable, socioeconomically relevant impact?

Enter me.

Last year I was an economic development M.A. student at the Fletcher School of Law and Diplomacy. In August I’ll move to a Ph.D program at Georgia Tech to dig more into an earnest curiosity in how Information Communication Technology can affect development and democracy outcomes. When my advisor mentioned this opportunity, I jumped at the chance to join the inner, elite Berkeley circle and participate in an evaluation that might explain how access to water delivery information can overcome a lack of access to said water.

After outlining a utilization focused evaluation question, nailing down NextDrops’ assumptions of change, and four weeks of focus groups and guided interviews, I’ve discovered how and where we can find a social impact from NextDrop’s service. And from this reservoir of information, my own concerns of the danger in the hype for social enterprise in the development realm have floated to the top.

Finding Impact

Countless chais, puzzled looks, dosas, and inviting smiles later, I began to better understand users, non-users, and the context that NextDrop’s service lives in.

Based on discussions, interviews, and direct observation:

Users range from lower income slum areas to upper middle class, majority falling in the middle class. Highest potential  areas (in terms of subscription renewal) are middle and upper middle class. Water comes to these individuals every 2-5 days. Households are generally able to store sufficient amounts of water until the next supply cycle in underground tanks and/or roof tanks. Having enough water to make it to the next supply cycle depends on size of storage containers and how intermittent water supply is. Middle and upper middle class households all have underground and/or roof tanks. Upper middle class users reported occasionally missing supply cycles without a problem because they had sufficient water stored. Users and non-users claim to be aware of the water schedule, which is printed in the newspaper. They have expectations of which days water should come and those expectations are usually met. Most users and non-users across classes are not worried about having enough water and have little stress caused by water supply. The lack of stress across class is best explained by the ubiquitous practice of women staying in homes at all times (easily able to collect water) whether it is a housewife, mother-in-law, teenage daughter, middle-aged mother, or maid.

So why do people use? They like the convenience of knowing, whether they are 10 feet away from the tap, or a kilometer down the street at the market.

From this research emerged an archetype of users that could exhibit socioeconomically relevant impact, but it requires a few quite particular “If” statements that I imagine may be hard for NextDrop to isolate, reach, and tailor an impact evaluation to.

Socioeconomic impact exists…

• If NextDrop service is on-time
• If all members of the user household are out of the house (work/school) and the household can’t afford help or don’t have neighbors to rely on
• If water supply is sufficiently intermittent that missing a supply day requires the household to go to other supply sources (coming once every 5 or 6 days)
• If water collection methods are limited (in some sort of proportion of size of water collection containers to number of members in household) such that the household is pressed to not miss collecting waters on days of supply

If these conditions hold, then impact can be measured with

• hours of work/school missed
• number of times forced to collect water from alternative sources
• loss of disposable income due to cost of alternative source
• health impact due to quality of alternative source – self reporting of water related illnesses (doing a baseline survey of how different water sources are used… drinking v cleaning v laundry could give an idea of vulnerability to water born illnesses)

I am still in the process of estimating how large this population is in urban India. In this search I have found the following interesting statistics: 20.45% of Indians fall into the lower middle class which consumes 2$ – 4$  per person per day (2005 PPP) – this would be the income bracket that I think the impact archetype falls into. Partly because from observation, this is the group that doesn’t have underground or overhead tanks. Additionally, studies show that the higher a husbands educational attainment (which is correlated with income), the less likely their wives are to be employed. Which brings me to another relevant statistic: the female labor force participation rate (LFPR). It has hovered at around 23% for the past few decades. If you include women in school, the rate jumps to 32.3%. Urban women’s LFPR is consistently lower than their rural counterparts.

This leads me to my developing concern of the hype and hope the development world has placed in social enterprise.

When we think about water systems and development, the real challenge is access – access to water. This lack of access most certainly frustrates what we call development symptoms/outcomes. They are our indicators: health, hygiene, efficient time use, income constraints, empowerment, livelihood opportunities. In this case, outcomes are impacted by the coping mechanism adopted (ie – households have to pay for water to be trucked in; use of alternative, contaminated water sources; members of households stay at home to wait for water and therefore cannot use time efficiently). And, yes, NextDrop may impact these outcomes for a certain user profile. But what this social enterprise doesn’t change is the system that creates the symptoms. Communities don’t have 24/7 water for reasons like infrastructure, technology, corruption, or perhaps resource constraints. These are the system inputs that NextDrop likely can’t and won’t touch.

Consider lack of access as a power issue. On the street level, power may manifest as bribes to valveman or other water utility employees to open certain valves more often or for longer periods of time. At a government level, this power struggle has more to do with priorities and the voice of constituents to set government priorities. A community culture of accountability and power structures in the home and the community also play a role. What I am getting at is, a social enterprise that offers a service to make a lack of access more comfortable, does not change the systems’ power structure, is not development, not systemic change, and it may even be dangerous.

Why is it dangerous? To affect the system, constituents or utility workers have to be empowered to hold their public servants accountable. A big part of empowerment and accountability is the ability to envision change. What if NextDrop’s service of sending a text on the water schedule makes households more complacent with the water schedule? more complacent with the poorly performing water utility? and effectively lowers their expectations?

That’s dangerous.

NextDrop becomes merely a crutch for coping. It doesn’t impact the system, and in fact, it needs the broken system. If and when water is 24/7, the service would not be needed. So in terms of market and the all powerful incentive, a social enterprise that relies on revenue from a text on water delivery may be particularly incentivized to have the water utility never offer 24/7 water.

If we look away from the user side, we can see one, unproven opportunity for NextDrop to create system change. And that is through the valvemen. What if calling in to NextDrop’s IVR system is acting as an accountability mechanism for vavlemen? If it is, does this mechanism improve timeliness of water supply? These are questions that might point to a system change.

To those on the elusive quest, I offer caution in how we identify the work of development. And the way I see it there are systems of inequality that allow lack of access and  poverty to thrive. Any organization, enterprise, government, or person that does not recognize this symbiotic relationship between the system and symptoms of poverty and inequality and is not working to change that system, is not working in development.

In our last episode, NextDrop was in the midst of tackling the evil scaling demon (and it didn’t look very good for our protagonist). How did we fare?

Well, I think we discovered the first step/key to winning: Just get good data about yourself. Period.  Even if it’s ugly.  Because after admitting there’s something wrong, the second hardest part is wading through the mess and figuring out what that exactly is!

Let me try and lay out everything we discovered about our service

Customer Side:

Goal: Bill everyone possible and make money

Immediate Problem: Billers wasted a lot of time because even when they found houses (which many times proved difficult), a lot of people were getting late messages, weren’t getting messages at all, were getting messages intermittently (ha, no pun intended) so they didn’t want to pay for the service (no argument there), or just didn’t want the service.

Immediate Solution: Make a list of areas that have been getting regular messages for the past 2 weeks, and then CALL all those people before we actually go out and bill.

Immediate Systems We Put in Place:

• Creation of the “Green List”: We look through all of our valvemen data, and using the all mighty Excel, we figure out which areas received at least 4 calls within the last 2 weeks.  Our logic here is that since the supply cycle is once every 3-4 days now, if they are getting regular messages, valvemen should call in at least 4 times in a 2 week span.  This system is by no means perfect, but it’s a start, and at least gets us to the next level.

• Conduct Phone Surveys: After we see all the areas that are on the “Green List”, we then call all the customers in that area.  We spent 2 weeks piloting the survey to even figure out what categories/questions we should ask, and we’ve finally got some classifications the Sales Team feels good about.  Here are the different categories of NextDrop potential customers:
• • Could Not Contact (people who had phones turned off, didn’t answer the call, possibly fake numbers)
  • Satisfied Customers
    • Pay (want to pay for service)
    • Continue
      • 1 month Free Trial (again)
    • Deactivate
  • Unsatisfied Customers
    • Deactivate
    • Not Getting Messages
    • Wrong Messages

• Bill: We just bill the people that are Satisfied and want to pay, or who are satisfied but want another free month trial (and have already had one).

When we finally had data, we discovered some really interesting things about our service!

• Total Number of people called: 1493
• Total Number of people we could Contact: 884 (59%)
• Total Number of Deactivated Customers: 229
  • 15% of Total Customers
  • 26% of Contacted Customers
• Total Number of Continuing Customers: 655
  • 44% of Total Customers
  • 74% of Contacted Customers
• Total Billable Customers (%Receiving Messages-%late messages>70%, and not including deactivated customers): 405
  • 27% of Total customers
  • 46% of Contacted Customers
• Total Billed Customers (%Receiving Messages-%late messages>70%, and excluding “not contacted” and “deactivated” customers): 223
  • 15% of Total Customers
  • 25% of Contacted Customers
  • 55% of Billable Customers
• Total Number of people Who Paid: 95
  • 6% of Total Customers
  • 23% of Billable customers
  • 43% of Billed Customers

As you can see, the 2 major problems we identified were a) we were unable to contact 41% of the customers we tried to contact and b) a majority of the people who we WERE able to contact were getting incorrect messages (54% of the contacted customers).

And that’s where we are at: trying to troubleshoot those two problems.  Here are the immediate solutions we are putting in place to increase the people that we contact, and to put customers in the correct valve area.

• Instead of taking “Could Not Contact” customers off the billing list, we are going to try and contact them.  We are in the process of seeing what % of the “Could Not Contact” customers we can actually find/contact when we bill.
• We have an intern, Kristine, from UC Berkeley, who will be working with us for the next 6 months to figure out how to place people in the correct valve area (because that is the critical question, now isn’t it?)

Kristine’s findings are pretty interesting (and definitely deserves its own blog post- to follow shortly), but our first prototype is to test a guess and check methodology:

• First we call customers and find out what the last time they got water was
• Then sort through our data and see what areas got water on that date (plus or minus a few hours).  This should at least eliminate 50% of the areas
• Then, to narrow it down even further, we only consider those areas that are geographically close to the customer.  This should narrow it down to within 4-5 areas to check.
• We subscribe the customer to these areas, and see when he/she gets the correct message (we will find out through the phone survey)

That’s what we are going to try- we will let you know how that goes.

There’s a lot more stuff going on that we’ve discovered, but I thought that was enough for one blog post.  More to follow on Valvemen information, our incentive programs and progress ont that front.

In any case, I think we see the path to the tunnel that has the light at the end of it, so that’s all we can really ask for: Progress!

And as always, we will keep you updated on our progress, what seems to work, what doesn’t, and more importantly, WHY.

Additionally, and most importantly, we are hiring! We are looking for enthusiastic and passionate individuals who want to be a part of our team!  If you love problem solving, and finding creative solutions to problems, we want you!

As always, please feel free to write comments, offer insight, ask questions, or just say hi.  Our proverbial door is always open!

Other titles that were considered for this post:

•  ”No Please Don’t Cancel Our Service- I Swear You’ll Get Messages In the Future and You Will Love Them!”
• “Don’t Call The Police- We’re A Real Company I Promise!”
• “The Irony of Ironies: For A Company That Collects & Sells Data, Our Internal Data/Records Are Pretty Comical”

That pretty much sums up what our billing has unearthed about NextDrop as an organization. I used to not understand why people thought scaling was so hard.  You figure something out, and then just…go do it again-but bigger this time.  That’s doesn’t sound so bad right?  Yeah….about that logic….it’s similar to going in thinking you just need to do some simple algebra, when you’re really dealing with multi-variable calculus (sorry, I had to get a little nerdy on you guys). But that’s the closest analogy I could think of.

I think if you keep your eye on the prize (profitability), then you learn a ton about the problems that arise when you scale.  On one hand, this is great.  We need to get better.  But man.  If you’ve never faced harsh reality, let me tell you.  It’s not the most fun thing in the world.

Here is the breakdown of the good, the bad, and the ugly.

The Good: People who get our messages regularly, pay for our service.  Not only that, they pay a 3 month advance payment for our service.  For people who regularly get our messages, we have in insanely high retention/payment rate (~95%). Yay us!

The Bad: A ton of people are not receiving our messages. (And by a ton, I’m talking ~50% of the customers we were supposed to bill this month).  So the logical next question- why not?  Well, there’s a simple answer.  The valvemen just weren’t sending the messages to the people.  Next question- why didn’t you do anything about it?  Simple answer- we just weren’t tracking it very well.  Why not?  Great question.  I have no good answers there.  (Nothing that doesn’t sound like an excuse at least).  Looking back, I think we were just focusing on growth, and validating our core business.  Up until last month, we were still trying to decide between the utility and the end user as our main revenue stream.  With half our focus with the government, and the other half with our citizen facing product, we were just trying to figure out if we had a real business here or not.  We were focusing so closely on whether our initial customers would pay/how they would react to the service (and tracking their behavior), that we really didn’t focus on creating a system to accommodate all the other people we were launching (i.e. we were not planning for the best case!)  Looking back, it seems so obvious and dumb.  Of COURSE you need this organized system in place!  How WOULDN’T you need this organized system?  No argument there.  We’re getting it together and putting it in place right now!

Learnings for the future: As soon as you know you have something, start thinking about systems.  Start putting systems in place from the get go so that you can practice at a small scale and leverage this “muscle memory” to run on a pseudo auto pilot at a larger scale.  That being said, there is definitely a tradeoff between taking time to establish a system, and agility/being able to produce results fast- but it’s our job to find the right balance.  I mean, we DID get a lot of people interested/excited about this service in a short period of time. Will we keep them interested and excited? We’ll see.  Hopefully we will.  But next time, I am hoping we get closer to finding that elusive balance between systems and scale.

The Ugly: People are starting to cancel our service.  I mean obviously, if someone asks you to pay for a service that really hasn’t been sending messages regularly, why would you ever want to continue?  Luckily, when we realized these people weren’t getting the messages, we quickly stopped billing in those areas and just used the opportunity to apologize/tell them the service will start soon (and by quickly, I mean 2 days).

The Good (that came out of the ugly):  We found out that ~10-20% of the customers who don’t even get our messages will pay 30 INR advance payment for this service! That was pretty cool to find out.

Learnings for the future: I think we handled this part well.  We reacted quickly, and changed tactics.  I have a feeling that even in the areas where we DO regularly send messages, some people may not see them.  We’ll have to figure out what to do in those situations- probably try to tell them about our IVR system and see if that works.  But some good still came out of this- if we have a 95% payment rate with people who get our service and a 10% payment rate with people who don’t, we’ve validated the fact that the free month trial is pretty key to getting customers to sign up/buy the service.

In the grand scheme of startup growth, I think we’re right on track/par for the course.  The main thing is that we have a product that people want and will pay for.  We are undergoing the classic growing pains of rapidly scaling, and I think this is going to really test us as an organization.  What is our team really made of?  Can we figure this out and still keep all of our customers? Given our track record, and our ability to rapidly recognize and solve problems, I am confident we can handle it.  But it really doesn’t matter what I think, or say.  The numbers will speak for themselves.  So we’ll see in a few months what happens.

Will NextDrop overcome the growing pain pitfalls and defeat the evil scaling demon? Stay tuned for the next episode of NextDrop’s unfolding business drama.

PS- the thing about the police.  Some people didn’t think we were an actual company, and one of the local politicians threatened to call the police on us.  Then, we had to get her on line with the Chief Engineer, who vouched for us and said we were who we said we were. She seemed ok with that.  Mini crisis averted! This is why it’s key to work in conjunction with the government.