Meet the Entrepreneur: Galen Welsch, Jibu
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.
In sub-Saharan Africa, approximately 40 percent of people lack access to clean drinking water. Water availability in African cities is being threatened by rapidly increasing metropolitan areas which is outpacing the development of wastewater management systems, resulting in municipal water service providers being unable to dependably deliver safe water to the tap due to limited water distribution infrastructure surrounding urban water management plants. Jibu was launched to serve urban consumers more affordably and efficiently with clean drinking water through an innovate decentralized franchise model. In this interview, we spoke with Galen Welsch, co-founder of Jibu, to understand how the company is providing affordable access to drinking water and other essential products to hundreds of thousands, while also creating hundreds of new businesses across East and Southern Africa.
You and your father founded Jibu in 2012. What was the inspiration behind the business model and what role has working alongside your father played in the mission and success of the company?
My father and I were on two opposite ends of our careers yet had a convergence of passions. I studied international relations in college and afterwards became a Peace Corps volunteer in Morocco to learn about another language and culture before I launched into a career in the United States. With the responsibility of raising funds for each of my projects, my time at the Peace Corps gave me a new perspective on how businesses should be operated – patronizing is not a sustainable option for businesses and people are actually willing to l pay for a product as long as it can be sustainable. When money is generated and kept in a community, that community becomes more powerful.
After I returned from my Peace Corps term I visited my father, a tech entrepreneur, who had also been thinking about his next steps in his career. He’d recently completed a consultation for an NGO to help them design more sustainable water projects and after considerable exploration into the subject of producing long-term water solutions, we launched Jibu a few months later. Being like-minded in our vision helped Jibu become as successful as it is. We wanted an eye-to-eye partnership with local entrepreneurs and always valued the importance of both having a positive impact through delivering useful products and creating meaningful business partnerships and ownership opportunity for our partners. Water has always been the driving force for us because it’s a basic necessity and relevant for emerging markets globally.
Given that water access is a challenge across sub-Saharan Africa, why did you choose to focus the Jibu model on urban areas?
When we initially started Jibu, we discovered that water was unsafe to drink, even in the cities. There is a statistic that indicates 1 billion people do not have access to safe drinking water, but the actual number is closer to 3.5 to 4 billion. While the quality of tap water has improved and many people have access to it in their homes, it is used more for domestic purposes and not for drinking water. In many cases you cannot drink without boiling or using other ways of improvement. Given the larger demand in metropolitan areas, we decided that here would be the greatest place to start because we had the population density to make the model work.
Building a successful franchise model means that you and your team are regularly assessing the character and work ethic of potential franchisees to best serve their communities. What key attributes are you looking for in a franchisee and how has this inspired your own entrepreneurial journey?
Our franchise selection procedure has had a huge impact on our progress. We employed a 7-step process when we originally started Jibu, which included interviews, recommendations, and a third-party financial examination. In the end, we were unable to locate an entrepreneur who would be a good fit for Jibu through this process. As a result, we’ve changed the process such that individuals must first work as a reseller or distributor in conjunction with a current franchise owner. We then offer these individuals the opportunity to apply for a production franchise based on the volume of water they have sold. That way, before each entrepreneur joins the network, we have a “date before you marry” or “trial before you purchase” relationship with them to assess their true abilities.
To give you an idea of the pipeline for prospective franchisees, we currently have 5,000 resellers in seven countries and roughly 150 production franchises. It works because we help our existing franchises with the reseller vetting process because having resellers in the pipeline accelerates their reach and distribution. At the same time, we’re always planning the launch of new production franchises. As a result, we can expand our reach and distribution while still having time to explore new potential partners.
From an environmental standpoint, how do you perceive Jibu’s work is contributing to climate change mitigation efforts?
I believe it all starts with the company model. We limit water distribution in the first place by decentralizing water production to a local water source. Rather than having it created in a central location and then transported all over the city, it is made and dispersed within a one-kilometer radius. From a business model standpoint, this is one of the most significant environmental impacts you can have. The other point is that we only sell bottles that can be refilled. As a result, clients are only charged for the water refill and not for the plastic waste and we can help reduce single-use plastic water bottles, which are a major source of pollution, by encouraging people to refill their bottles. It also saves the buyer half the price and gives the store owner a healthy profit margin.
The COVID-19 pandemic has undoubtedly impacted many businesses around the globe. In the challenging moments, how do you stay focused on moving forward and scaling your business?
We’ve been fortunate due to our decentralized model with local ownership, which allows us to respond quickly to the unique dynamics of each community. We’re also a provider of essential services. Having those two elements working in our favor prior to the pandemic allowed us to meet our pre-COVID goals and stay on track throughout the crisis. What we found most encouraging is that a local ownership and decentralized manufacturing model is resilient to macro changes and viruses that can sweep through entire countries because it’s self-contained in terms of supply chain and production, and it’s the efforts of a local owner who can ride through whatever is going on. That was one of our major takeaways.
What is the biggest lesson that you have learned from serving Jibu’s customer base?
Our franchisees, our partners, are our number one client, since they’re the ones generating water and selling it to customers, and their customers, or end users, are the other. From the perspective of a franchise owner, something that is often overlooked when starting a business is the enormous quantity of talent that is underutilized and under-resourced. While there is an abundance of talent, there is a misalignment between the services or solutions being offered and what talent wants and is ready to accomplish to satisfy them professionally. Again, we discovered that if it’s the proper type of solution, one that someone would want to interact with and is enthused about, there’s amazing skill, enthusiasm, and motivation. In terms of end-user clients, I think the middle class is underappreciated. The focus has traditionally been on the top 10 percent through the private sector and the base of the pyramid through the NGO sector, but there is a significant underserved segment in the middle. We need solutions that take those people into account as well.
Imagine it’s five years from now and Jibu is making international headlines. What would that headline be and why is this important to you?
In our Key Performance Indicators (KPIs), we have what we call the north star metric which basically aggregates all of our different KPIs into what we ultimately aim to accomplish as an organization. We utilize these indicators to evaluate a variety of things, like the number of liters sold, consumers reached, revenue and EBITDA, and so on, but they all feed into our north star, which is the number of successful franchises we’ve launched. So, for me, I’d like the headline to read something like this, “The Missing Middle: Social Enterprise Creates Opportunity Engine That’s Filling the Gap Across Emerging Markets.”
I believe we have the potential to alter the course of economic development in a way that democratizes wealth in nations that are experiencing rapid growth. Rather than adopting the conventional American paradigm of catering to the top one percent, we have an opportunity to decentralize business ownership in such a way that wealth is distributed among many entrepreneurs. Then the need for a missing middle is met, and a successful economy emerges that is truly entrenched. Ultimately, we want to increase the number of successful entrepreneurs who are changing the dynamics of local economies around the world in a way that others can follow.
What do you want readers to take away from this in interview?
The main point is that you must examine the business model and how it is transforming a system and shifting from a current product to one that will improve the planet. The eventual goal for us is to transfer the locus of power to local enterprises. And our business strategy is based on decentralizing ownership, which has a much larger impact than any of our products. Of course, we’ll only offer things that have a product impact, such as safe drinking water, renewable energy, and so on, but that’s secondary to the business model’s core impact.
Finally, do you consume the necessary eight glasses of water every day?
Let me start by saying that I drink a lot of water and enjoy pure water. I used to pass judgment on everyone else who didn’t drink two liters of plain water every day, when I learned that people should drink the equivalent of two liters of water. Fruit, drinks, and teas are all good sources of this. It should be roughly 1.8 liters for women and 2.2 liters for men, if I’m not mistaken. So, no, your intake doesn’t have be in pure water, which I shouldn’t say as someone who sells safe drinking water, but it’s the truth!