Measure and Move Along
KickStart’s model is based on the Diffusion of Innovation theory. When a new product is first introduced into any new market, sales are few and the costs per sale are high. In fact, as the market is building, items are sold at a loss until the market reaches a “tipping point.”
Right now it costs us $17 to get a family out of poverty, but once we reach this tipping point, our cost per family out of poverty drops to zero.
The more radically new the product is, the more expensive it is to make these early sales. In the private sector, these early losses are subsidized by investors. KickStart uses donor funds the same way a for-profit would use venture capital.
A Permanent Solution
By using donor funds as smart subsidies KickStart is building a permanent solution to poverty.
We have set three measures of success for ourselves:
- Do the people whom we’ve helped out of poverty, stay out of poverty?
- Can more people avail themselves of the solution, without additional investment from KickStart?
- Is KickStart becoming more self-sufficient as an organization?
Because we are building a profitable, private-sector supply chain, replacement parts are available to keep existing pumps in operation (like all machines, our pumps have moving parts that wear out and need to be replaced). We know from our Impact Monitoring efforts that the entrepreneurs continue to expand and diversify their businesses.
Because we distribute through local retailers, new pumps will be available to anyone who wishes to purchase one.
Once we reach the tipping point, KickStart will make a profit on every sale. We will reinvest these to develop new technologies and enter new markets so that we get millions of people out of poverty.
Time to Tipping Point
The tipping point is reached when sales of a technology reach 15% to 20% of the total market potential. We predict that it will take between 12 and 14 years from market entry to tipping point.
Compare this to cellular phones, personal computers, or the internet, which were developed for and marketed to the wealthiest consumers in the world.
We expect that we will reach a tipping point in Kenya around 2014. Proving the KickStart model will change the way the world fights poverty. Which is exactly what Nick and Martin set out to do.
143,000 new businesses started to date.