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our guest today is Philip Wilson founder and CEO of eco filtro a social enterprise whose goal is to provide
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clean water to the brutal poor of Central America a Philip thanks so much for joining us at knowledge of Wharton
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thank you for the invitation so I would love to know a little bit more about how
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serious the clean water situation is in Central America and how it inspired you to start Eagle filtro sure so the the
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two big problems in water is one lack of water which is more problem in the continent of Africa and then the quality
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of the water and in a central america we have quality of water issues let's take
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for instance Guatemala 90s and ninety-seven percent of the rivers the lakes the streams are contaminated with
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bacteria fecal origin so you know in Guatemala over half of the population does not have access to clean water and
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so you have you know one out of 20 kids don't reach the age of five years because they get an intestinal infection
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that they die from so it's a real big problem in in in Guatemala and how did
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that inspire you to start echo filtro so I I mean it all started with my sister who's a social worker and a nutritionist
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and when I was 15 16 17 years old I would go out with her and she was doing chlorination programs because back then
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everyone was involved in you know chlorine is the main way to purify water the only problem is it wasn't culturally
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accepted so we'd go back to the families that we would teach and ask him how the
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chlorination program was going and they'd be like oh great our clothes are clean our plates are clean they would
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use it as a household cleaner not as a as a vehicle to purify water it was like a three percent usage rate so at that
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young age I first I I fell in love with rural areas and rural people and understood the predicament they were in
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and how lack of access to water held them back but I also realized that if you didn't have a culturally accepted
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product you wouldn't be able to solve their problems and so eco filtro came about because we my sister failed and
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then I subsequently failed joining her on the chlorination program and we discovered this locally made product
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using local labor that was based on clay in ceramic pot filtration and people loved drinking out of a ceramic pot
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filter and so we're like aha we have something that's affordable and that
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people really like the taste of the water so your first efforts to distribute it go filtro were done
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through a family foundation in the 1990s yeah what are the pros and cons of that
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approach so well you know there's lots of NGOs and foundations in Central America and you know they look at the
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rural poor families as objects of pity and you know their ability to reach these people is determined by how many
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donations they receive so you're never going to have enough donations to reach
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all the families don't have access to clean water so i looked at the model and
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i thought that it wasn't sustainable and couldn't scale and i knew there was a
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better way and that's when i talked to my mother and my sister and i asked him
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if I could do an experiment of taking the water element out of the foundation and creating a social business how and
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when did you do that and how did you go about it so five years ago I said okay I'm not going to look at the rural poor
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is objects of pity i'm going to look them look at them as potential clients which changes the game completely and
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and you know i went into the rural area and i asked a lot of questions you know I said okay what what are poor families
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doing to purify water how much are they're paying i found that somewhere using firewood to boil water and purify
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it somewhere buying bottled water and i asked them how much they were spending on medicine because many times they
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wouldn't do either one of those and ask after asking questions I realized that if I provided enough
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payments and set the price of the eco filtro at a certain level I could distribute them for a price higher than
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what it would cost me and I would then be able to scale and reach the million families you know wouldn't be a pipe
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dream it would be a reality so just asking lots of questions and I think that's the real way to solve a lot of
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social problems is understanding what people are doing and understanding you know what the right product is to
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deliver and what are the economic so that you can do something affordably so what was the cost of producing the eco
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filtro and at what price did you need to provide it to the rural consumer in order to teach treat them as clients as
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not and not as objects of pity right so we found that if we could price the rural model between 35 and 40 dollars
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and if we could provide a minimum of five payments it was cheaper per month than what they were doing right now
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which was buying lots of firewood or buying bottled water and that was you know it took us you know about a year to
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really figure it figure that out and a funny story is we uh you know at first we provided 24 payments because I
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figured you know gosh iya a longer mortgage is better right 30 40 50 years and we found that the rural families
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were telling us gosh can you make the payment scheme shorter we feel like we're in debt with you forever and so we
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tried a few models that I thought would work at first and you know we have the fail fast mentality at eco filtro but we
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found that you know they started telling us and we found that five payments was something that was affordable and it was
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short enough for the anxiety that many bottom of the pyramid families feel about being in debt to someone else now
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when you also when you started your sort of for-profit social enterprise you also
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targeted the urban consumers yeah and and you used it as a cross subsidy yeah alright by charging some can you
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explain your strategy sure so we you know it was actually at the beginning we knew that as we were entering the rural
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market which is quite costly because Guatemala doesn't have great roads and it's very difficult to get to the areas
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that we want to deliver clean water too so we started focusing on urban areas and we've you know I at the time was
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buying bottled water and it was costing me two hundred dollars a year so I brought in an eco filtro my wife didn't
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like what the equal filter look like so I said well what if I put it in a beautiful ceramic receptacle and we
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found these beautiful ceramic receptacles I brought it home my wife said wow I have an art in the kitchen no
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longer a big plastic bottle and I said aha if I can start reaching the you know six hundred thousand families that buy
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bottled water in urban areas and sell it at a major profit a reasonable profit not a very high profit then I can
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establish a cash flow that will allow me to provide payments in rural areas so that's how it happened you know the
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first hundred families we're difficult they're like you want me to drink out of
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a flower pot because i think the filter looks like but then people started you know because the water tastes so good
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they started falling in love and because it looks beautiful in a ceramic or clay
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receptacle you know the first thousand were difficult to sell the next 10,000 were easier we're up to ninety two
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thousand kerbin customers which provide a nice cash flow which has allowed us to
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provide a financing mechanism for the 170,000 rural families that that by the eco filtro which is the same filter unit
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but it goes into a plastic bucket which allows us to keep the price low so is eco filtro profitable now yes it's we're
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profitable this year we're not only profitable in the urban area which we were from from year one but at the rural
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area is profitable now we were producing so many filters last year we reached just over 50,000 families this year will
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be just over 80,000 so the economies of scale has allowed us to lower you know is lower the cost of the filter
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and so it's made us profitable in the rural and urban area enough I always wanted to be profitable in both because
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the first four years the urban was subsidizing the rural but now the rural can stand by itself and I always wanted
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to prove that if you really put together a good go-to-market strategy and had a good payment scheme you know the rural
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poor can you know finance your venture and and you know water is a big problem in many countries and I would love
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people to study our model and replicate it in other countries now since you are not just a for-profit business but also
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a social enterprise apart from profitability what are some of the other measures you used to measure your impact
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yeah so when you know when a we did a study right at the beginning with what kind of impact is a filter provide a
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rural delivered to a rural family and intestinal infections are are decreased by over sixty-five percent just by
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having the filter inside the home but most importantly and this is significant Guatemala for instance in most of the
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countries in Central America Honduras as well they burn a lot of firewood boiling
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water so when a filter goes into a rural family the average family reduces its consumption of firewood by 21 pounds
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which is a significant economic savings for the ones that are buying the firewood and significant time savings
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for those that collect you know chop down the trees and collect the firewood so now the family has more time and more
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money for more food better food school supplies you know just like an urban family saves two hundred dollars a year
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on water by having the eco filtro well the you know the the rural family saves about 120 dollars a year and that's
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money that's desperately needed you know for school supplies is is a great example of where that money gets
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directed now organizationally speaking you've I run a non-profit as well as for-profit
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social social business what have been the main difference is between those two models yeah so I mean were you know for
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me when I when I say social business I I put social in lowercase and business and
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uppercase for a reason it's got to be profitable so that the social can continue to grow and eco filtro we have
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a very significant school program which is where the philanthropy is directed so
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we've partnered up with companies like coca-cola visa the largest telecom company in guatemala the swiss
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government and they donate filters to rural schools and then we use that filter in the rural school as the
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go-to-market strategy and we leverage that to get to into the into the homes of the rural families that live around
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the school so all the philanthropy is directed at schools and we we've had an
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incredible amount of ambassadors created for our product which are the school kids like glass this school cycle which
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just ended in October we reached 822 rural schools which reached which provided clean water to 173,000 rural
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school children and those 173,000 rural school children became our ambassadors because we we part of the program in
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schools as we educate them on clean water you know the importance of always drinking clean water of not polluting
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the rivers and lakes and so they would go into the family after school and if they didn't have an eco photo you know
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because they don't like the taste of bald water they would say look mom looked at their these new eco filters at
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school the water tastes great and you know what you shouldn't be drinking water that's contaminated so they became
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our it's it's guerrilla marketing at its best and and and we really focus any
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organization that wants to help us we focus them on the school program because that's what's going to get us to the
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million families quickly yeah I'd meant to ask you about that because you referred to companies like coca-cola
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others what has been the role of say foundations and NGOs in amplifying eco filtros impact yeah right now it's been
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significant a lot of corporations in regions like Central America they want to help but they don't know how and so
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my role has been explaining how providing clean water in a rural school can be leveraged and can help us get
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clean water into all the community so we actually have corporations lining up now
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because we're one of the few organizations in the region that you know will multiply the donation you know
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i mean it's it's a good idea to bring clean water in school but if you could
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bring clean water help us put filters in schools and provide clean water to all these school children but also you know
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have clean water in the entire community through that donation well that's something that corporations really like
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because they want to squeeze the most they can out of every dollar that they donate to a social enterprise and eco
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filter is not the only thing you do right and in addition to that you're also the founder and CEO of something
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called solution web yeah which is Gautam Allah's largest web and social media
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services company how did that come about and what's the connection between the
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two well I you know I straight up when i graduated from wharton i became an entrepreneur you know 20 years ago and
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when i moved back to Guatemala I was starting another company and there was no companies that were doing websites at
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the time so I'm like aha why don't I start a company to serve that need so I
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don't know anything about technology but I knew that there was a need for companies needing a digital presence and
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you know right now we have a nice little business that employs a lot of young kids I say kids because
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they're the ones that know all about social media and we serve a lot of corporations especially with their
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social media needs and doing it in Central America and has that there has been a synergy between that and oh yeah
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Eco filter so for instance we have over seventy eight thousand followers on the Eco filtro facebook site and we really
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we communicate not only with our urban end users but rural through Facebook we have 318 community entrepreneurs that
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represent eco filtro in rural areas and all of them have a facebook presence and
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it's amazing how that's been a significant way for us to continue the dialogue and reach more families because
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they also follow us and they every time we go into new schools well we post it and so they see that the town next door
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has filters and so they requested themselves all through digital media great well if you were to look back the
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last 20 years or so that you've been doing all this what would you say is the
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biggest leadership challenge that you faced how did you deal with it and what did you learn from it oh my gosh I so
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many I think I think the biggest leadership challenge for me if we talk about entrepreneurship in general and
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eco filtro specifically was you know there's no models of social enterprises
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or that I knew at the time five years ago that we're scaling very quickly and
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a social enterprise is like a helicopter and a typical businesses like a Cessna you know there's an incredible amount of
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moving parts and I had trouble being able to fulfill the social part at first and making it financially sustainable
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and leading two types of people because the rural field reps were very different from the
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urban salesman that were just you know the type a's that were going out so i
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feel like i had a lot of trouble communicating the real message or the real purpose of eco filter at the
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beginning to the different types of groups I've almost had two different types of companies and now you know we
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have 1 message in one purpose and I didn't do that at the beginning you know
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it was very murky you know I was running two companies as opposed to one and just
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letting everyone know we're all in this together and buy you're selling urban
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filters you're helping with the rural and you know so I had a lot of clashes
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between the urban and the rural departments so that that was my biggest challenge at eco filtro and I feel like
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we solved it but took me like three years to figure it out do you refer to you know the model that you have
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developed what do you think social entrepreneurs in other parts of the world could learn from eco filtros
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experience what do you what do you think should be the most important takeaways for them yeah if they want to learn from
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your experience yeah I think I think the most important is really good to know your end user if you're a social
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entrepreneur in a developing country you know the bottom of the pyramid the rural
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family is going to be your customer ask a lot of questions you know many times people going to a developing country and
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even social entrepreneurs and they feel like they have the solution and kind of very patronizing attitude they're like
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here take this and I think social entrepreneurs just need to ask more questions you know really go into the
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field and exhaust every single angle of what you're trying to do and really you
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know ask what their needs are in you'd be surprised that what you think their
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needs are may be different from what your perception was at the beginning so ask ask and it's very important that you
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be financially sustainable you know it's very important that whatever product you
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deliver to the rural poor have a payback period that's very quick you know are in for instance an eco
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filtros case the family pays off the filter in three months so if you really want to scale and be a successful social
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entrepreneur it's got to be a product that pays for its you know pays off really quickly and the cultural
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acceptance has to be there remember the chlorination and the you know you have to have a product that rural families
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are going to really feel good about using so payback and cultural acceptance and ask a ton of questions is very
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important so to just before we end I'd like you to dream about the future where
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would you like a co filtro to be in the next five years some of the new programs
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that you want to do sure well in the next five years we want to we we want to be at a million families in Guatemala
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and I don't want there to be one family that doesn't have an eco filtro that
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right now doesn't have access to potable water we recently opened the market of
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Honduras El Salvador and Mexico Mexico is going to be a significant enterprise and it's going to be a challenging one
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because in Mexico it's it's about serving urban poverty the urban poor in
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Mexico they receive water one or two days out of the week and so when they open the spigot it's green and so it's
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going to be very challenging but I foresee in the next five years putting a lot of time and resources into Mexico
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and really solving the problems of the urban poor right now they're the ones
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suffering the most with lack of access to clean water in Mexico which is you know ten times bigger than Guatemala so
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that's going to be a real big challenge but I'm looking forward to it I think we
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have the right solution and we've picked partners that are you know very innovative and young and excited to
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bring a lot of health to the folks at the bottom of the pyramid good luck to you Philip and thanks so much for
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speaking with knowledge important thank you so much for the invitation you