Meet the Entrepreneur: Andi Kleissner and Kurt Kuhlmann, Amped Innovation
At FINCA Ventures, we look for entrepreneurs leveraging market-based solutions to create large-scale, lasting social impact. In this series, “Meet the Entrepreneur,” we’ll be taking you into the minds of the intrepid leaders at our portfolio companies who boldly venture into markets in need of positive disruption.
The off-grid solar industry is abuzz with excitement, fueled by a flood of new entrants into the market, heightened customer awareness, end-user financing innovations and a bullish investor outlook. Yet, more than one billion members of the human family remain without reliable and modern forms of power. In this interview, we chatted with Andi Kleissner and Kurt Kuhlmann, co-founders of Amped Innovation, for a deeper look at how they are tackling the current — and future — power needs of developing economies. Amped Innovation is a social enterprise that designs solar home systems and DC-powered productive use appliances to help those living under $4 per day grow their wallets.
What was the genesis for Amped Innovation in terms of the market opportunity?
Andi: Kurt and I got to know each other while I was a student at Stanford University pursuing a graduate degree in engineering. Kurt was an advisor to Design for Extreme Affordability, a Stanford program which looks at how can we better develop products for emerging market contexts — products that are extremely affordable yet still deliver the high quality that people want. I had previous experience working on biomass gasifiers in villages and during that time I really immersed myself in what it’s like to live off-grid. The challenges were tangible, but I also saw the joy that a villager got from getting a solar lantern in her home. I realized, though, that people quickly reached the limits of what they could do with solar lanterns. There is always a need for more power, yet the price points of existing offerings were out of reach for these customers. This awareness formed the basis of conversations that Kurt and I would have over archery, a shared hobby. We thought it a shame that so many customers were stuck in the paradigm of being able to afford a single solar lantern, but unable to have significant levels of power that would provide the basis for earning additional income.
Why is Amped Innovation focused on helping emerging market customers grow their wallets?
Kurt: One of the required steps to get people out of poverty is to replay the industrial revolution: getting them using power and machinery. If you follow the trajectory of countries that moved out of poverty, what comes first is improved incomes. Things like health care and education follow. Even though much of what Amped sells today are solar home systems, we never saw ourselves as a solar home system company. Instead, we wanted to develop the lowest cost and most scalable way to provide poor people with productive use power, so they could generate more income. We think about it like missing rungs on a ladder: there is a big gulf between charging a phone and powering machinery. We are filling in these missing rungs by hiding a productive use power center inside a solar home system that is super expandable. Our work is a means to the end of empowering poor families to be more productive and grow their incomes.
Solar-powered appliances remain at the blueprint stage for many companies. Where is Amped Innovation today in the path to productive use appliances?
Andi: Kurt and I realized early on that it is not hard to make a system that can expand in power and provide the bridge from solar lighting to productive use appliances. It’s just that nobody was doing it. The industry was focused on meeting the market where it was at, not where it was going. So, we took all the products on the market, tore them down and challenged ourselves to make something better. What we decided to do was put a large power center that can run significant loads into a small package that anyone can afford as an entry level system. That’s how we landed on a solar home system that can grow into a money-making, productive use appliance center. For example, we launched WOWsolar TV with double the brightness of existing offerings. This allowed business owners — shops, restaurants, bars — to display a TV outside, even during the day, and it’s bright enough that it attracts customers and gives them a reason to pay extra for that experience. That’s more income for small business owners. When we started down the solar TV path, people told us it wouldn’t work, that we wouldn’t be able to get the customer traction or revenue to make it sustainable, that the market was still in lighting. We put a lot of effort behind making an awesome TV and the result is that 50 percent of our revenues are from TV sales, which no one ever expected.
Can you paint us a picture of the future potential for productive use appliances?
Andi: There are steps in the journey to greater power. Our WOWsolar product family goes from 6 to 150-watts. To scale from there, we need to graduate customers into another realm. And we want our customers to grasp this potential. That’s why on our solar home system packaging we show the upgrade pathways available. For example, adding a TV, a fan, an ice maker, etc. This gets customers excited because they immediately see how these products can translate into business opportunities and a better quality of life. So, we build this scaling potential into our designs using the core controller from our solar home systems for its PAYGo (pay-as-you-go) technology. This will keep productive use appliances affordable to poor customers through a loan. But from there we’ll add modules that can support larger power to compete with 1-kilowatt diesel generators. It’s an exciting challenge because getting into greater power loads has tremendous job creation potential. For example, we were approached by a group in Ethiopia that organizes sewing machine co-ops where 15 people get together in a micro-factory to produce goods and sell in the global marketplace. The group was frustrated because they were unable to start such co-ops in rural, off-grid areas. But a 1-kilowatt generator replacement system is perfect for starting and growing micro-factories like these to create jobs and support small industries. At Amped, we want to move the market to where it is going. We realized we needed to start with a lighting system to move into TVs to move into large power centers. We’re always designing with the future in mind.
Amped Innovation is a B2B company, working with last-mile distributors to get its products to end-users. Why did Amped decide to specialize versus taking on all aspects of the value chain?
Kurt: It’s easy to delude oneself that because I am good at designing a power center I should also be good at distributing this product to villagers in rural Senegal, for example. But that’s typically note the case. At Amped, we are very good at designing products — that is our skill set so that’s what we focus on. To make our designs more impactful, we take a collaborative, open-source approach to our work. When we developed our PAYGo system, we gave away the source code and the file sets. Proprietary software has been interfering with scaling up the off-grid solar market. So, we decided to take an open-source approach because that’s where the market needs to go.
Andi: From the very beginning, Kurt and I emphasized close collaboration with our distribution partners to gain on-the-ground customer feedback. We are not distributors — that’s not fundamental to our DNA. We are power electronics engineers who are very cost-conscious and innovative in terms of how much power we can deliver at a certain price point. But we knew that we needed to listen closely to our distribution partners to deliver what customers need.
Let’s say five years from now Amped Innovation is attracting international attention. What would the headline be?
Kurt: It feels a bit vain to say it this way, but I think that Amped can be the little company that figured out how to power half the world. This matters to us because power gives opportunity and it gives hope. Power allows people to participate in the world’s economy and to see that life can get better. We’re tiny and scrappy, but I think we’re moving the needle.
What are some key barriers that stand in the way of powering half the world?
Andi: A couple things come to mind. First, we need more people willing to shake up the industry. We were willing to open-source our PAYGo token generation and integrate it with all available software platforms. Without opening ourselves up to this level of collaboration at the intersection of hardware, software and distribution, we were not going to be able to move as fast. Second, funding has yet to catch up to the specialization that is happening in the industry. The number of new players popping up in off-grid energy is remarkable. The next wave of innovators is already here. Funders can better support them by acknowledging that vertical integration is not the answer. Distributors cannot succeed, for example, without excellent product innovation. They need partners who stand behind their warranties and are willing to support them at any hour of the night. They need product engineers who are able to provide new features that break the limits of what people thought was possible in terms of efficiency and runtime.
Solar energy is poised for growth throughout the socioeconomic ladder. Why is Amped Innovation focused on a bottom of the pyramid market?
Kurt: Going after markets just to make money would really dampen our enthusiasm. What we provide makes a big difference to people who need it. It’s a sizable market with tremendous impact opportunity. We must make these systems a viable alternative so that, as power consumption goes up in places like East Africa, it is almost entirely non-carbon. We would all be doomed if the developing world comes up on the backbone of diesel and coal. That means somebody must be a good example of another way.
Why were you excited to have FINCA come on-board as an investor?
Andi: We wanted strategic investors at the table — people who could be thought partners with us in all the different areas we needed expertise. FINCA represents the voice of the customer and the distributor. We like that FINCA works quickly to test out hypotheses around microfinance and energy access, and that it can help us bridge those two sectors. FINCA has its ears close to the ground and a pulse on the customer, and they push us on what’s possible.