Innovation · Livelihoods · Social Business · Social Impact Investing

BOP-focused businesses need to reach 100 million customers

Matt Bishop of The Economist recently interviewed prolific inventor and global poverty innovator Paul Polak about his views on how best to reduce poverty on a large scale for base-of-pyramid (BOP) populations (< $2/day PPP income).

A few highlights on Paul’s comments from the below video interview:

  • We will not make a meaningful impact on poverty without selling useful products to the BOP and making a profit from them
  • There is a big difference between selling something to BOP customer which gives them more value than what they paid than ripping them off (which is mostly what they have experienced)
  • In order to be sustainable, businesses targeting BOP populations generally need to target reaching 100 million customers because of the low profit margins (his previous advice was at least 1 million customers)
  • Businesses need to seek out “radical affordability” and highly distributed last mile distribution strategies in order to be successful in BOP markets
  • To make your product/service attractive to BOP populations, it must double their income in a relatively short period of time in order for them to take the risk
  • He believes that most of the successful BOP businesses will come from new startups rather than multi-nationals who just don’t have the DNA to think about and build these new type of businesses
  • There will be huge failures of BOP-focused businesses — this doesn’t mean there isn’t an opportunity (he noted that the Indian Andra Pradesh microfinance crisis is hardly a wimper compared with the disruption that accompanied the changes in the Soviet Union/Russia starting in 1989)

Thanks to NextBillion.net for alerting me to this.

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