The win-win business plan
Over the past three months, we’ve profiled some of the businesses involved with The Venture, a global competition for social entrepreneurs (see boxout below). The overall winner of this year’s prize was Algramo, founded by Jose Manuel Moller and based in Santiago, Chile. It’s easy to see why his company triumphed in the face of some formidable challengers. His business proposition is disruptive thinking at its best and could potentially help millions of people across Latin America.
This is a continent where much of the population lives on less than $4 per day and affordable food is hard to come by. The outskirts of Santiago, where Moller once lived, typifies this problem. There are few supermarkets, and produce at small stores can be up to 40 percent more expensive than in larger outlets. Moller, who studied business administration and gained a master’s degree in design from the Catholic University of Chile, viewed this “Poverty Tax” as an unnecessary problem. So he partnered with Salvador Achondo, an industrial designer and came up with a solution.
Algramo buys essential products, such as rice, beans, lentils and sugar, in bulk from suppliers and distributes them directly to small convenience stores, through mechanical dispensers. It’s a win-win for everyone because Algramo installs the machines for free, splitting the profits evenly with the shopkeepers, which helps them compete with big retail corporations. The reusable packaging is better for the environment; and the end product is considerably for consumers.
Moller says his biggest sources of inspiration for starting the company were the local community leaders and shopkeepers he’d encountered over the years. “Seeing them working hard every day to defend their local store, helping and listening to the neighbours, they gave me the desire to work hard as well, to help them to maintain their key role in the neighbourhood,” he says.
The best moments in those early days were when he convinced those shopkeepers to work with him and sell Algramo products. “That meant that we had won their approval, and that they had understood how our system could defend them against the big retailers and help their community to afford staple foods,” he says. “It was also incredible to see consumers requesting that their shopkeeper sell our products, because they found it fairer, smarter and more sustainable. We saw it as the confirmation that what we were fighting to implement was worth it.”
Algramo was already expanding beyond Santiago before Moller’s success in The Venture competition. Its vending machines were located in more than 350 grocery stores in Santiago, with plans to enter Colombia, Peru and Mexico. The business was already making a very real difference to thousands of people, leading Moller to see the potential for reducing the cost of living for millions more around the world.
A rapid expansion of the business on this scale would require additional support and funding. Moller’s goal was to use The Venture platform and its prize money to raise awareness of the necessity of his work and to expand his company’s distribution network to other areas and countries. His success in the competition means he can now also invest in improving the technology of its vending machines, making them more energy efficient, as well as developing innovative new dispensers for products like cooking oil, household goods or even pet food.
“The biggest challenge is to find the best way to scale up and develop a system of logistics capable of providing our system to shopkeepers around the world. We need to find local and global partners who understand our philosophy, and have the skills necessary to help Algramo grow,” he says confidently of the mission ahead.
Having successfully launched a ground-breaking concept that could be genuine force for good, Moller is in a good place to offer advice to other would-be entrepreneurs. “Keep your feet on the ground, co-create and be empathetic,” he advises. “Nowadays, the world and, especially low-income families, need us to use our creativity and energy to help people in need. The world requires concrete solutions to real issues. It doesn’t need us to invent the next new smartphone, but to find solutions inequalities, poverty and injustice.”
And that, as we have learned during this series of profiles, is the beauty of social entrepreneurship.
The Venture, launched by Chivas, is a global competition to support social entrepreneurs. From now until December 15, the search is on for a Gulf representative to join over 25 other winners who will be invited to a week-long training camp in California, before pitching their business at the global final in July 2016. The prize is a portion of The Venture’s $1 million funding. Visit theventure.com for details on how to enter