Drinkwell is a social business that aims to solve the global drinking water crisis. the company launched their activities in various regios across Asia and have recently started operations in Manikganj, Bangladesh; providing cleaner, safer drinking water to the rural population. Drinkwell’s technology is far more efficient than reverse osmosis, which is the norm for obtaining clean drinking water. For their activities, Drinkwell members have received numerous accolades and Honors: the MIT clean Energy prize, Dhirubhai Amabani Award, Fulbright award to name a few.
I recently had the chance to talk with Minhaj Chowdhury (Second from left in the upper picture), co-founder and CEO of Drinkwell. Minhaj has also been listed this time under Forbes’ ’30 under 30′ Social Entrepreneurs. During our conversation, Minhaj talked about about his own experiences, what Drinkwell does and the company’s journey and what the future of the business is. And of course, he has some valueable advice for aspiring social entrepreneurs.
Tell us about Drinkwell and what you guys are doing
Drinkwell transforms the global water crisis into entrepreneurial opportunity. We do this by blending 100% locally-sourced technology with a franchise business model that empowers local entrepreneurs to run safe water businesses in their communities.
Tell us about Drinkwell at the beginning. How did you meet with the other founders and united under the vision to solve the global water crisis.
I originally went to Johns Hopkins University to study Public Health. In 2009, I worked with a small NGO in Manikganj to distribute household arsenic water filters. The reason why I did that was because I was born in Dallas and my parents are Bangladeshi. I was always interested in going to Bangladesh, but not just go there and sit in air conditioned apartments.
I had a chemical engineering roommate at the time. We came to Bangladesh and distributed a hundred filters for free. I really enjoyed the experience. After graduating, I came back to see how I could scale that up. Out of the hundred filters that were distributed, only three were still working. I then found that there was a lack of after-sales servicing and locally-available parts if certain components would go break or crack, so wanted to innovate around the servicing angle of the water sector and ensure there was no dependency on outsiders or foreign replacement materials. The question I sought to answer was “how do we find a locally sourced solution to ensure that systems will work forever?”.
I went to a Fulbright research conference in India to share this failure and the experience and come up with possible solutions for scaling. I was on a panel, speaking about the water crisis and how it was the largest failure of the public sector in South Asia where I followed up my talk with Dr. Arup SenGupta, inventor of our technology, from Lehigh University. He had already scaled up about 150 locally sourced technology solutions in West Bengal. We had lunch afterwards about his model and how we could scale it and bring it to Bangladesh. He was very interested.
I returned to Bangladesh. I was with BRAC at that time on the Fulbright. He actually came on the following month (April 2012). Dr. SenGupta already had these technologies in West Bengal where he gave local entrepreneurs the ability to establish a safe water business, his motto was to “transform a water crisis into economic opportunity.” What was unique about his model was that not only did he develop locally sourced technology that was 60% faster in terms of providing safe water and 40% cheaper than existing solutions, but in every step of the chain, he created a win-win situation for the locals. Everyone made profits along the chain. And that was very sustainable, and interesting to me.
He came to Bangladesh and gave a talk. I came back to the US and I worked at a consulting firm. And after a year, I was itching to get back. I reconnected with Dr. SenGupta and expressed interest to scale his model and bring it to Bangladesh. And that’s when he introduced me to Mike German, the other co-founder. He was doing a Fulbright in India at the time. So we connected. He was researching on the technology to not just remove only arsenic, but also fluoride, nitrate, and other contaminants. That was in 2012. We formed a company then, virtually. I was still in Boston, Dr. SenGupta was at Lehigh and Mike was in India. I started pitching Drinkwell as a company from Boston. From 2012 until last year, we ended up raising about half a million dollars. During that period, we not only raised money, but we had momentum in having 206 deployed systems proving our technology across Laos, India, Cambodia and Nepal. And the issue was, where’s Bangladesh? I felt it was on me to bring this innovation to Bangladesh. Finally, we got some funding from USAID via the Echoing Green Fellowship Program. That is what is helping us this year launch in Bangladesh in Manikganj. It’s a pilot system, and we’re looking to launch systems in Comilla, Northern Bangladesh and in other highly arsenic-affected areas.
Our model isn’t just about giving entrepreneur’s technology they can use to create jobs. It’s also about creating jobs locally. We actually have service engineers who are in charge of maintaining the technology. So we hire local villagers and teach them about chemistry, backwashing, routine water filtration maintenance, and “skill” them so they have a toolkit they can leverage to build a career. We find that when we hire locals and empower them, it creates an organic sustainability as we create even more “stickiness” in the market. When your customers, employees, and suppliers are all from the community, it is hard to go out of business due to outside dependency.
Tell us about the technology Drinkwell uses. There are some figures mentioned on your website. How does your technology achieve those figures?
Sure, so we have basically created proprietary ion exchange “bead” that can selectively remove arsenic, fluoride, iron, and other harmful metals from water. We were inspired to do this because what we found in the market was over-engineered solutions like Reverse Osmosis that removed both the bad metals as well as good minerals and essential nutrients in water like calcium that children need to grow strong and healthy. On top of this, the systems had high up-front capital expensive costs, were energy-intensive, and very expensive to maintain requiring skilled service engineers. We sought to make something much simpler, and that was module so you could add on UV and other filtration devices to remove bacterial contaminants. We ended up calling this technology “HAIX”, and the 3 critical figures that provide differentiation are as follows:
1.99% water recovery – We recover 99% of water whereas competitor technologies like Reverse Osmosis only recovers 30-50% of water.
2.30% cheaper capital costs – Upfront capital expenditure is the biggest barrier to scale in the sector. We are able to provide World Health Organization compliant-drinking water with an upfront capital cost solution that is 30% cheaper than competitor reverse osmosis, microfiltration, ultrafiltration, ultraviolet community water solutions.
3.6-16x decrease in electricity: Drinkwell uses 0.5 kWh/m3 whereas RO treatment typically uses 3-8 kWh/m3, which translates to a 6 -16x decrease in energy consumption costs. In rural South Asia where consistent access to electricity is a challenge, this is a critical point of differentiation that allows us to create our niche in villages where rural electrification is a challenge.
We have seven peer-reviewed journal articles that substantiate these claims, all from our existing deployments in West Bengal. We were funded via Intel, Hilton Foundation, the US State Department, EPA, India Dept of Science and Technology to validate the technology. Our longest running system is ten years old, when Dr. SenGupta first conceived of the technology. Our newest system is going to the one in Manikganj. In India, we launched two systems this year, one in Orissa and the one in West Bengal, and will be launching our first in Bihar in March. All these have been tracked for technical advantages. Put simply, we have the world’s lowest cost solution for rural water filtration at scale. So in terms of how we measure against reverse osmosis, it’s as simple as looking at neighboring systems that might use reverse osmosis, comparing technology and the quality of water produced and finding that we. We also have independent third party arbiters validating our technology’s performance.
Tell us about the regions you operated in so far and the success you achieved in those regions.
What we initially did was pilot in a few countries just to figure out which market would be the most attractive. So we operated in Cambodia, Nepal, Laos, India and are starting out in Bangladesh. Our bet was very simple. It was a typical pilot program, understanding not just the technical feasibility, but also the business model feasibility.
We found that in India and Bangladesh, there are very attractive markets for three reasons. First is, arsenic problems, especially in Bangladesh, were acute. And no one’s solved it yet. It’s still an open gap that has seen many failed interventions. Iron in other regions is also an issue, but arsenic’s the big gap. Second reason is that there are very attractive concentrations of people, very densely populated communities that give us the scope to grow really fast. And the final reason is our relationships. I myself have worked with BRAC before. I’m a Bangladeshi-American. Dr. SenGupta is from West Bengal. So it just made sense for us to build from the inside-out as our core is in West Bengal.
Tell us about your business model and how you generate revenue
We have a four step business model: select, build, sell and service. In the select stage, we engage with the local stakeholders like Upazila (Sub-District) chairmen, the local imams. And we have them shortlist entrepreneurs who must own a tubewell that is contaminated with arsenic, iron or harmful metals. We then have them go through a moth long training program to become our franchisee. Then, it’s the build process. They will hire two drivers and an assistant caretaker. In the build process, we actually deploy our system. It’s 25 cubic metres in size and at a minimum produces a thousand litres of safe water an hour. This takes a month to build. During that phase, we sell the system. The cost to build is about US $8,000 – $9,600. Cost varies based on how large the community is and how may point of sale systems you need. We don’t just build our system, we also build awareness in the community, having melas (fairs) and free samples. And then we have the third stage, which is sell. This is how the entrepreneur makes money. The entrepreneurs sell water in monthly subscriptions to many households and about a 100-150 Taka a month. What we found is that, season wise, we’re most popular during wedding seasons. Water is a very emotive issue. People can get it for free, so why should they pay for it? What we found is that people are using our water not just for drinking purposes. But also because they get savings in their health expenditures on a monthly basis. They save upto 250 taka a month by not buying diarrhea medicine. They are also buying it because they can cook fish and rice better.
During wedding season, what happened in India. A father bought our water, but didn’t tell the daughter it was for drinking. The daughter ended up showering with the water. At the reception, people asked how her hair was so smooth. And she replied by saying it was Drinkwell water. Our sales went up 200% the next month!
So people do not buy your water simply to drink it. Your applications went beyond what you had originally intended.
And I think that’s the biggest lesson learned. Let the market teach you. We could have spent hours and hours in the board room thinking up innovative education partnerships with NGOs and really try to figure out how the value proposition would work. But we just let the product take a life of it’s own in the hands of the customers. This is what formed our “Drink well, Live well, be well” motto. We are actually now in the process of adapting that to the Bengali context.
So what does that mean? That means, in Manikganj, there are certain areas where you have madrasas (Islamic Schools) and imams. And they might not understand “Drink well, Live well, be well” and might not like the idea of having some western-sounding brand come in and start selling water. The way that behavior is typically changed is by educating them and by having a marketing campaign with the “drink well, live well, be well’ motto with local influencers. But that doesn’t automatically translate to a successful marketing campaign due to cultural discrepancies. So we’re going back to the drawing board now and figuring out what should our brand be, what should our slogan be, how can we be successful in rural Bangladesh. So that’s the sell stage.
And we make our money in the servicing stage. So this is a big gap where after you deploy a system, it’ll work properly for two years. And then the system breaks down. This is why the water crisis persists. People have spent billions of dollars and if it worked, we wouldn’t have a crisis today. But there’s a crisis because things break down and locals don’t know how to solve it. It is seen that parts for many systems are only available in the UK or the US.
So what we’ve done is that we’ve created a network of service engineers who are locally trained and are from the local community. And they go every month to do three things: First, they’ll go unannounced to make sure that things are clean and tidy. Second they’ll collect a water sample to ensure that the water complies with WHO standards. And then finally, if necessary, will regenerate the resin. The resin can be used for six months. Afterwards, it can be regenerated and reused. We charge a service fee for that, and that forms our revenue stream.
So your revenue comes from two sources. One, you charge a franchise fee for your technology. Two, you charge a fee for regeneration services
Yes. It’s a tiered monthly service fee that goes down as throughput goes up. What we want to do is we want to make sure that the franchisees are focused on one thing and one thing only, and that’s getting more customers, getting the word out, making sure people understand that this is something that will give them a better livelihood so we want to incentivize higher utilization rates. We don’t want them to tinker with maintenance and potentially break a system. That’s what we do.
Since you talked about marketing and education challenges, can you tell us a bit about customer acquisition costs?
What we found so far is that it’s all about the committee that we have in the ‘select’ stage. That helps us with our customer acquisition costs. The basic customer acquisition cost we incur is at the select stage. Getting all of the key influential people together and agreeing that water is the biggest issue. And then picking the right entrepreneur to actually market the water.
After that, we don’t do any customer acquisition ourselves. We have the entrepreneurs do that. They’ll use a portion of all of the water sales they get on a monthly basis for customer acquisition. Because frankly speaking, there’s no uniform marketing campaign for all these different regions. People buy water for different reasons, whether it be for improved health outcomes, smoother hair, tastier meals, or pure taste. The person who knows that is the entrepreneur who has the skin in the game to acquire customers.
You recently launched in Bangladesh. Tell us about your activities in Bangladesh and what your future plans are.
We just launched our system in Manikganj. What we really are doing with this system is we’re validating our technology and proving that the system can produce WHO standard drinking water. And we’re also getting a feel for how the franchise model is working out. The franchisee used to refer to a local NGO and now he’d like to basically build his own business. With this first pilot, what we’re doing is we’re creating a baseline for what customer acquisition rates are, what the uptake is, how things are looking like, what messaging campaigns work. What we’re going to do over the next ten months is basically lunch an additional nine systems. And each with different kinds of iterative models in terms of the customer acquisitions and messaging. Our approach is to see which ones work best. So that by the first quarter of next year, we have ten systems that give us an idea on how we can scale up. We want to hit a million people by early 2017. And Bangladesh will play a large role as we go for that number. The only way we can do this is via experimentation, getting the products out, doing different types of marketing, and letting the market teach us.
Tell us about your activites outside Bangladesh and what your future plans are
We’re focused on Eastern India and Bangladesh. We’re not looking at any other countries to date. We really want to get our servicing down well. In India and in Bangladesh, we’re becoming world leaders when it comes to rural water filtration market as it pertains to arsenic and fluoride. We find that this is the biggest gap. A lot of people are in urban areas. But we think there’s a huge opportunity with growing incomes and attractive demographics to capture the rural markets. We’re building out a servicing platform that initially services our water filtration technology. At the end of the day, no one technology will win as other water quality issues may arise. We want to be sure we are in a position to be the leading go-to market partner when such issues arise. You need to have the flexibility to change and adopt. The only way we can build that kind of platform is by building our servicing network, so getting that muscle is our main activity.
The second thing we’ll be doing is introducing what we call a water ATM system. That’s where customers can come basically with a card and tap at a sensor. We’re getting great sales data on the purchasing habits of customers. And then we can push not only to save water, but we’re essentially creating a rural sales channel where we can push all kinds of life-saving products that allows us to aggregate our franchisees buying power to give them a great incentive to stick with us 5-10 years down the line. So we’re also looking forward to testing different product mixes in these villages to give our franchisees more revenue-generating opportunities.
Arsenic poisoning is not the only issue with drinking water. Do you have plans to tackle other problemes with drinking water?
Definitely. Our technology already removes other harmful substances like bacterial contaminants, we remove iron, we are starting to remove fluoride in India, where it’s a particularly acute problem. The biggest thing that we stand for is that we have an extremely efficient, environmentally-friendly, cost-effective technology for rural villages. We can remove any metals and any contaminants while recovering 99% water. Whereas reverse osmosis will remove contaminants and even minerals, but they will only recover 30% water. The remaining 70% is waste water that pollutes the environment again. So it’s not that we’re just tackling arsenic or flouride. We’re taking on the whole notion that you need to deploy energy-intensive incumbents such as reverse osmosis to provide safe water.
Is there anyone out there who you would consider a competitor. Who you would say that “They’re doing what we’re doing?”
Certainly. So in Bangladesh, the competitive landscape in Bangladesh isn’t as substantial when it comes to private players as it is in India. Community-level competitors can include WaterHealth International who did a joint venture with AK Khan Group and IFC who is using ultraviolet technology and reverse osmosis. In Bangladesh, when you think about the competitive landscape, there are a lot more household filtration technologies that are out there compared to community-level solutions (a lot of which has failed and been discontinued over the past decade). These are solutions that are focused more at the household level, filters from which people in one household can take water. So we’re trying to zoom out and bring it to the community level because the cost per household decreases by an order of magnitude when you can do a community-level deployment.
In India, there is actually a lot of reverse osmosis being used in rural parts. That’s our biggest competitor. Beyond that, activated alumina is another type of technology.
It’s mainly about technology and we find that the portfolio is more pronounced in India.
You were recently listed in the Forbes ‘30 under 30’ list for social entrepreneurs How did you feel when you got the news?
Hands down one of the happiest moment of my life.I was in Dallas, where I grew up and where my family’s from. And I actually got the news not through Forbes, but through another friend who had an advance copy of the issue. She took a photo on her cellphone and sent it to me. I thought “What is this? Why am I getting an email at 4 a.m.?”. I opened the email and attached was a photo of the actual issue of Forbes. She had circled my name. I started tearing up and yelled. My parents got up and said “What’s going on? What’s wrong.” I replied by saying I just got on Forbes and gave them a big hug. They were still dis-oriented, didn’t know what was going on, and proceeded to go back to sleep.
It was actually the next morning when both my parents woke up and asked what happened last night. Just fifteen minutes before the Forbes 30 under 30 list went live, I received an official e-mail from the editors. And I would say that was just one of the best and most rewarding moments of my life. Afterwards, I got phone calls from so many important people that helped me on this journey. The one thing I will say is that this is not anything I did by myself. This is the product of my family supporting me, my mentors helping me, friends getting me through some of the hard troughs of entrepreneurship. A lot of these people were ones I hadn’t connected with in a long time. And each of them were people who contacted me through email, SMS or phone calls. It was a beautiful day. I’m still really inspired by that moment.
What advice would you have for aspiring social entrepreneurs?
The most important thing is to spend time with the customer. Don’t think that because you studied and issue, because you did research during a college course or read in-depth interviews on some report that you know how to start with a solution. Take some time to live with your customer. Understand how nuanced their decision making is, especially if you’re pushing a product to people who make $2-5 a day, those are hard-earned dollars that are hard to part with! Some of the most important insights stems from the time I was a Fulbrighter. Our co-founders are all Fulbrighters. Everything we do today is informed by our time spent on the Fulbright to live with and understand the end user. That leads to a larger truth about entrepreneurship: I believe in accidental entrepreneurs, people that just find themselves mired in a problem that is so interesting that they don’t view it as work. Instead, they just want to spend hours and hours on it. I find that to be a lot more sustainable for the passion because, frankly, entrepreneurship is very hard, it’s very tough. There are a lot of long nights and long days. So if you just think “I’m going to be an entrepreneur. Let me find a problem”, it’s not going to work. You are going to start hating it at some point.
In terms of social entrepreneurship, it is hard to group social enterprise with high-technology start-ups. Social impact is something that is very hard to practice because you don’t have large exits. You can’t get huge valuations that translate to acquisitions in quick time frames. I think when it comes to capital, one of the most important pieces of advice was about thinking in terms of risk, and not budget and time. So typically what we do when we want to raise capital is say “okay, I need this much money and this much time to validate my product.” And then you’ll take that and build some kind of excel model that has your budget being spent over a period of time. That’s actually the worst way to create a model. The best advice I got was: think of your fundraising plan in the same way you think of layers of an onion. At the very core of the onion, you have a repeatable, sustainable business model that has you on a path to being cash-flow positive. But before you get there, there are all these layers of risk around it: team risk, technology risk, product risk. With that lens, think of how much money it will cost to remove the team risk, how much money it will cost to remove the technology risk. And then what you’ve got is a mindframe that is already aligned with investors. And these aren’t investors or angels or VCs. It’s also the grant makers who we’ve gotten a lot of our early capital from. And this brings me to my second point. Entrepreneurs at the beginning stage tend to think that they need angel funding or some kind of seed funding from VC’s. So, going back to technology risk, few angel investors will take on technology risk. They’ll take on market risks and they’ll take on business model risk. The technology risk is usually handled by the university grants, by USAID, or by similar bodies who have funds specifically designed for early-stage experimentation. So the lesson is, don’t waste time pitching to angels when your risk stage is not consistent with their risk profile. And so mapping the whole thing out “I have technology risk, so I can only go after grant funds. Okay, now I have business model risk, so I can start looking at angels. Okay, now I’ve got scaling risks and execution risks, so now I can seek growth capital.” So, thinking in terms of risk will save a lot of time and effort for both you and investors.
