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our guest today is Philip Wilson founder
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and CEO of eco filtro a social
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enterprise whose goal is to provide
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clean water to the brutal poor of
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Central America a Philip thanks so much
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for joining us at knowledge of Wharton
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thank you for the invitation so I would
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love to know a little bit more about how
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serious the clean water situation is in
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Central America and how it inspired you
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to start Eagle filtro sure so the the
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two big problems in water is one lack of
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water which is more problem in the
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continent of Africa and then the quality
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of the water and in a central america we
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have quality of water issues let's take
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for instance Guatemala 90s and
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ninety-seven percent of the rivers the
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lakes the streams are contaminated with
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bacteria fecal origin so you know in
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Guatemala over half of the population
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does not have access to clean water and
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so you have you know one out of 20 kids
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don't reach the age of five years
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because they get an intestinal infection
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that they die from so it's a real big
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problem in in in Guatemala and how did
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that inspire you to start echo filtro so
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I I mean it all started with my sister
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who's a social worker and a nutritionist
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and when I was 15 16 17 years old I
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would go out with her and she was doing
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chlorination programs because back then
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everyone was involved in you know
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chlorine is the main way to purify water
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the only problem is it wasn't culturally
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accepted so we'd go back to the families
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that we would teach and ask him how the
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chlorination program was going and
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they'd be like oh great our clothes are
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clean our plates are clean they would
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use it as a household cleaner not as a
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as a vehicle to purify water it was like
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a three percent usage rate so at that
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young age I first I I fell in love with
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rural areas and rural people and
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understood the predicament they were in
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and how lack of access to water held
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them back but I also realized that if
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you didn't have a culturally accepted
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product you wouldn't be able to solve
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their problems and so eco filtro came
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about because we my sister failed and
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then I subsequently failed joining her
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on the chlorination program and we
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discovered this locally made product
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using local labor that was based on clay
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in ceramic pot filtration and people
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loved drinking out of a ceramic pot
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filter and so we're like aha we have
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something that's affordable and that
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people really like the taste of the
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water so your first efforts to
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distribute it go filtro were done
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through a family foundation in the 1990s
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yeah what are the pros and cons of that
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approach so well you know there's lots
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of NGOs and foundations in Central
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America and you know they look at the
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rural poor families as objects of pity
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and you know their ability to reach
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these people is determined by how many
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donations they receive so you're never
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going to have enough donations to reach
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all the families don't have access to
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clean water so i looked at the model and
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i thought that it wasn't sustainable and
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couldn't scale and i knew there was a
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better way and that's when i talked to
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my mother and my sister and i asked him
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if I could do an experiment of taking
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the water element out of the foundation
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and creating a social business how and
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when did you do that and how did you go
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about it so five years ago I said okay
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I'm not going to look at the rural poor
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is objects of pity i'm going to look
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them look at them as potential clients
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which changes the game completely and
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and you know i went into the rural area
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and i asked a lot of questions you know
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I said okay what what are poor families
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doing to purify water how much are
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they're paying i found that somewhere
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using firewood to boil water and purify
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it somewhere buying bottled water and i
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asked them how much they were spending
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on medicine because many times they
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wouldn't do either one of those
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and ask after asking questions I
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realized that if I provided enough
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payments and set the price of the eco
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filtro at a certain level I could
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distribute them for a price higher than
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what it would cost me and I would then
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be able to scale and reach the million
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families you know wouldn't be a pipe
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dream it would be a reality so just
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asking lots of questions and I think
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that's the real way to solve a lot of
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social problems is understanding what
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people are doing and understanding you
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know what the right product is to
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deliver and what are the economic so
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that you can do something affordably so
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what was the cost of producing the eco
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filtro and at what price did you need to
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provide it to the rural consumer in
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order to teach treat them as clients as
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not and not as objects of pity right so
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we found that if we could price the
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rural model between 35 and 40 dollars
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and if we could provide a minimum of
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five payments it was cheaper per month
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than what they were doing right now
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which was buying lots of firewood or
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buying bottled water and that was you
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know it took us you know about a year to
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really figure it figure that out and a
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funny story is we uh you know at first
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we provided 24 payments because I
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figured you know gosh iya a longer
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mortgage is better right 30 40 50 years
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and we found that the rural families
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were telling us gosh can you make the
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payment scheme shorter we feel like
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we're in debt with you forever and so we
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tried a few models that I thought would
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work at first and you know we have the
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fail fast mentality at eco filtro but we
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found that you know they started telling
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us and we found that five payments was
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something that was affordable and it was
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short enough for the anxiety that many
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bottom of the pyramid families feel
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about being in debt to someone else now
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when you also when you started your sort
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of for-profit social enterprise you also
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targeted the urban consumers yeah and
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and you used it as a cross subsidy
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yeah alright by charging some can you
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explain your strategy sure so we you
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know it was actually at the beginning we
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knew that as we were entering the rural
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market which is quite costly because
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Guatemala doesn't have great roads and
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it's very difficult to get to the areas
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that we want to deliver clean water too
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so we started focusing on urban areas
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and we've you know I at the time was
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buying bottled water and it was costing
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me two hundred dollars a year so I
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brought in an eco filtro my wife didn't
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like what the equal filter look like so
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I said well what if I put it in a
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beautiful ceramic receptacle and we
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found these beautiful ceramic
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receptacles I brought it home my wife
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said wow I have an art in the kitchen no
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longer a big plastic bottle and I said
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aha if I can start reaching the you know
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six hundred thousand families that buy
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bottled water in urban areas and sell it
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at a major profit a reasonable profit
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not a very high profit then I can
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establish a cash flow that will allow me
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to provide payments in rural areas so
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that's how it happened you know the
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first hundred families we're difficult
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they're like you want me to drink out of
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a flower pot because i think the filter
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looks like but then people started you
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know because the water tastes so good
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they started falling in love and because
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it looks beautiful in a ceramic or clay
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receptacle you know the first thousand
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were difficult to sell the next 10,000
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were easier we're up to ninety two
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thousand kerbin customers which provide
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a nice cash flow which has allowed us to
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provide a financing mechanism for the
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170,000 rural families that that by the
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eco filtro which is the same filter unit
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but it goes into a plastic bucket which
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allows us to keep the price low so is
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eco filtro profitable now yes it's we're
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profitable this year we're not only
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profitable in the urban area which we
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were from from year one but at the rural
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area is profitable now we were producing
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so many filters last year we reached
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just over 50,000 families this year will
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be just over 80,000 so the economies of
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scale has allowed us to lower
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you know is lower the cost of the filter
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and so it's made us profitable in the
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rural and urban area enough I always
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wanted to be profitable in both because
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the first four years the urban was
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subsidizing the rural but now the rural
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can stand by itself and I always wanted
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to prove that if you really put together
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a good go-to-market strategy and had a
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good payment scheme you know the rural
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poor can you know finance your venture
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and and you know water is a big problem
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in many countries and I would love
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people to study our model and replicate
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it in other countries now since you are
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not just a for-profit business but also
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a social enterprise apart from
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profitability what are some of the other
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measures you used to measure your impact
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yeah so when you know when a we did a
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study right at the beginning with what
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kind of impact is a filter provide a
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rural delivered to a rural family and
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intestinal infections are are decreased
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by over sixty-five percent just by
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having the filter inside the home but
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most importantly and this is significant
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Guatemala for instance in most of the
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countries in Central America Honduras as
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well they burn a lot of firewood boiling
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water so when a filter goes into a rural
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family the average family reduces its
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consumption of firewood by 21 pounds
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which is a significant economic savings
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for the ones that are buying the
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firewood and significant time savings
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for those that collect you know chop
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down the trees and collect the firewood
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so now the family has more time and more
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money for more food better food school
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supplies you know just like an urban
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family saves two hundred dollars a year
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on water by having the eco filtro well
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the you know the the rural family saves
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about 120 dollars a year and that's
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money that's desperately needed you know
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for school supplies is is a great
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example of where that money gets
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directed now organizationally speaking
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you've
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I run a non-profit as well as for-profit
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social social business what have been
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the main difference is between those two
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models yeah so I mean were you know for
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me when I when I say social business I I
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put social in lowercase and business and
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uppercase for a reason it's got to be
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profitable so that the social can
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continue to grow and eco filtro we have
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a very significant school program which
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is where the philanthropy is directed so
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we've partnered up with companies like
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coca-cola visa the largest telecom
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company in guatemala the swiss
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government and they donate filters to
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rural schools and then we use that
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filter in the rural school as the
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go-to-market strategy and we leverage
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that to get to into the into the homes
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of the rural families that live around
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the school so all the philanthropy is
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directed at schools and we we've had an
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incredible amount of ambassadors created
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for our product which are the school
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kids like glass this school cycle which
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just ended in October we reached 822
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rural schools which reached which
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provided clean water to 173,000 rural
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school children and those 173,000 rural
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school children became our ambassadors
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because we we part of the program in
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schools as we educate them on clean
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water you know the importance of always
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drinking clean water of not polluting
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the rivers and lakes and so they would
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go into the family after school and if
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they didn't have an eco photo you know
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because they don't like the taste of
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bald water they would say look mom
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looked at their these new eco filters at
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school the water tastes great and you
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know what you shouldn't be drinking
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water that's contaminated so they became
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our it's it's guerrilla marketing at its
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best and and and we really focus any
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organization that wants to help us we
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focus them on the school program because
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that's what's going to get us to the
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million families quickly yeah I'd meant
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to ask you about that because you
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referred to companies like coca-cola
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others what has been the role of say
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foundations and NGOs in amplifying eco
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filtros impact yeah right now it's been
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significant a lot of corporations in
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regions like Central America they want
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to help but they don't know how and so
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my role has been explaining how
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providing clean water in a rural school
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can be leveraged and can help us get
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clean water into all the community so we
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actually have corporations lining up now
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because we're one of the few
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organizations in the region that you
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know will multiply the donation you know
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i mean it's it's a good idea to bring
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clean water in school but if you could
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bring clean water help us put filters in
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schools and provide clean water to all
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these school children but also you know
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have clean water in the entire community
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through that donation well that's
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something that corporations really like
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because they want to squeeze the most
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they can out of every dollar that they
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donate to a social enterprise and eco
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filter is not the only thing you do
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right and in addition to that you're
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also the founder and CEO of something
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called solution web yeah which is Gautam
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Allah's largest web and social media
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services company how did that come about
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and what's the connection between the
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two well I you know I straight up when i
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graduated from wharton i became an
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entrepreneur you know 20 years ago and
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when i moved back to Guatemala I was
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starting another company and there was
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no companies that were doing websites at
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the time so I'm like aha why don't I
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start a company to serve that need so I
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don't know anything about technology but
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I knew that there was a need for
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companies needing a digital presence and
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you know right now we
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have a nice little business that employs
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a lot of young kids I say kids because
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they're the ones that know all about
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social media and we serve a lot of
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corporations especially with their
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social media needs and doing it in
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Central America and has that there has
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been a synergy between that and oh yeah
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Eco filter so for instance we have over
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seventy eight thousand followers on the
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Eco filtro facebook site and we really
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we communicate not only with our urban
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end users but rural through Facebook we
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have 318 community entrepreneurs that
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represent eco filtro in rural areas and
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all of them have a facebook presence and
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it's amazing how that's been a
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significant way for us to continue the
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dialogue and reach more families because
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they also follow us and they every time
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we go into new schools well we post it
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and so they see that the town next door
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has filters and so they requested
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themselves all through digital media
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great well if you were to look back the
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last 20 years or so that you've been
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doing all this what would you say is the
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biggest leadership challenge that you
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faced how did you deal with it and what
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did you learn from it oh my gosh I so
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many I think I think the biggest
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leadership challenge for me if we talk
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about entrepreneurship in general and
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eco filtro specifically was you know
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there's no models of social enterprises
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or that I knew at the time five years
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ago that we're scaling very quickly and
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a social enterprise is like a helicopter
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and a typical businesses like a Cessna
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you know there's an incredible amount of
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moving parts and I had trouble being
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able to fulfill the social part at first
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and making it financially sustainable
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and leading two types of people because
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the rural
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field reps were very different from the
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urban salesman that were just you know
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the type a's that were going out so i
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feel like i had a lot of trouble
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communicating the real message or the
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real purpose of eco filter at the
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beginning to the different types of
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groups I've almost had two different
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types of companies and now you know we
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have 1 message in one purpose and I
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didn't do that at the beginning you know
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it was very murky you know I was running
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two companies as opposed to one and just
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letting everyone know we're all in this
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together and buy you're selling urban
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filters you're helping with the rural
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and you know so I had a lot of clashes
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between the urban and the rural
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departments so that that was my biggest
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challenge at eco filtro and I feel like
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we solved it but took me like three
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years to figure it out do you refer to
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you know the model that you have
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developed what do you think social
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entrepreneurs in other parts of the
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world could learn from eco filtros
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experience what do you what do you think
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should be the most important takeaways
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for them yeah if they want to learn from
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your experience yeah I think I think the
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most important is really good to know
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your end user if you're a social
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entrepreneur in a developing country you
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know the bottom of the pyramid the rural
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family is going to be your customer ask
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a lot of questions you know many times
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people going to a developing country and
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even social entrepreneurs and they feel
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like they have the solution and kind of
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very patronizing attitude they're like
00:19:03
here take this and I think social
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entrepreneurs just need to ask more
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questions you know really go into the
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field and exhaust every single angle of
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what you're trying to do and really you
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know ask what their needs are in you'd
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be surprised that what you think their
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needs are may be different from what
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your perception was at the beginning so
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ask ask and it's very important that you
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be financially sustainable you know it's
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very important that whatever product you
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deliver to the rural poor have a payback
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period that's very quick
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you know are in for instance an eco
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filtros case the family pays off the
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filter in three months so if you really
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want to scale and be a successful social
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entrepreneur it's got to be a product
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that pays for its you know pays off
00:19:57
really quickly and the cultural
00:19:59
acceptance has to be there remember the
00:20:01
chlorination and the you know you have
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to have a product that rural families
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are going to really feel good about
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using so payback and cultural acceptance
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and ask a ton of questions is very
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important so to just before we end I'd
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like you to dream about the future where
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would you like a co filtro to be in the
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next five years some of the new programs
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that you want to do sure well in the
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next five years we want to we we want to
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be at a million families in Guatemala
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and I don't want there to be one family
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that doesn't have an eco filtro that
00:20:39
right now doesn't have access to potable
00:20:41
water we recently opened the market of
00:20:44
Honduras El Salvador and Mexico Mexico
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is going to be a significant enterprise
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and it's going to be a challenging one
00:20:52
because in Mexico it's it's about
00:20:55
serving urban poverty the urban poor in
00:20:58
Mexico they receive water one or two
00:21:01
days out of the week and so when they
00:21:03
open the spigot it's green and so it's
00:21:05
going to be very challenging but I
00:21:07
foresee in the next five years putting a
00:21:09
lot of time and resources into Mexico
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and really solving the problems of the
00:21:15
urban poor right now they're the ones
00:21:17
suffering the most with lack of access
00:21:19
to clean water in Mexico which is you
00:21:22
know ten times bigger than Guatemala so
00:21:24
that's going to be a real big challenge
00:21:25
but I'm looking forward to it I think we
00:21:27
have the right solution and we've picked
00:21:29
partners that are you know very
00:21:31
innovative and young and excited to
00:21:35
bring a lot of health to the folks at
00:21:37
the bottom of the pyramid good luck to
00:21:40
you Philip and thanks so much for
00:21:41
speaking with knowledge important thank
00:21:43
you so much for the invitation
00:22:01
you
