Subsisting barely above the poverty level, these hardworking yet environmentally friendly operators are all but invisible to their passengers as they navigate busy urban streets and rural country roads with the same ease. But they did come to the notice of Irfan Alam, a young social entrepreneur, who was struck by the poverty-ridden conditions in which they operate.
Alam wondered if the rickshaw drivers could make extra money by selling drinks, newspapers, or even mobile-phone cards to their passengers. He figured a rickshaw could be used as an advertising medium and courier service, since the average vehicle covers about 10 kilometers (six miles) a day around town.
These ideas evolved into the non-profit organization Sammaan (which means “dignity”). Today these sleek refitted cycle rickshaws, driven by uniformed personnel, have changed the landscape of the roads in the state of Bihar in India.
Alam, the winner of Business World’s “Hottest Young Entrepreneur” award, the TED fellowship award, and BRLP World Bank Innovation Award was also nominated by the Foundation for Social Young Entrepreneurs, Beijing as Asia’s most inspiring young entrepreneur. He was in the United States in beginning of May 2010, at the invitation of President Barack Obama, for the Entrepreneurship Summit in Washington. Alam visited San Jose recently to deliver a lecture about “Bottom of the Pyramid Entrepreneurship” at TiE (The Indus Entrepreneurs) and India Currents had the opportunity to speak with him.
Congratulations on your achievement. When and how did you conceive this idea?
I was 17 years old at that time. I was traveling in a rickshaw and in the middle of the journey I was very thirsty. I asked the rickshaw puller if he had any water. He said that he did not carry water bottles because he did not have money to buy and stack them. It set me thinking and I immediately realized that there was a market for selling water bottles in rickshaws. The very next day I talked to five rickshaw pullers and gave them each eight bottles of water. I told them that for every bottle they sold, we would make a profit of two rupees which we could split in half. The very first day I made a profit of eight rupees.
You were very young when you came up with and executed this idea.
Yes, I guess entrepreneurship is my blood. I had an interest in business from a very early age. During the infamous Harshad-Mehta stock market scam in 1992, my father and many of his friends lost a lot of money.
That is when I started taking interest in the stock market and began researching various companies.
Interestingly, using my advice, all of my father’s friends recovered their losses, and most of them started making profits. This enabled me to start my first portfolio management firm at the age of 13. When my parents found out that I was dabbling in the rickshaw sector as well, they pulled me aside and asked me stop doing it and concentrate on my studies. So I shelved it, but my interest never waned. I kept reading and researching about this sector all through my college days in Pondicherry, where I pursued my Masters of Foreign Trade degree.
What was the spark that revived this idea?
In 2006 an Indian TV show called Business Bazigar launched an entrepreneur hunt and solicited ideas for new businesses. I entered this contest with a business proposal. My idea was to organize the rickshaw sector and make it a profitable venture. According to my proposal, rickshaws were to be redesigned so that the spaces on the vehicles could be sold for the purposes of advertising and brand promotion. Also, I indicated that additional revenues could be made by selling products like water, juice, biscuits, mobile-cards, and newspapers to the passengers. I won the show and was offered the seed money of Rupees 150 lakhs (300,000 dollars).
Was Sammaan started with this seed money?
No. I very soon realized that the entry barrier to this business was very low. The only way to sustain this business was to earn the loyalty of the rickshaw pullers. I wanted to provide insurance, id-cards, and uniforms to the rickshaw pullers. I wanted to run this as a not-for-profit organization. To be honest with you, I was not thinking about social entrepreneurship at that point. I just thought that it would be the best way to sustain the business and the easiest way to get banks to give out loans. Since the organizers of the TV show did not agree to this model, I ended up refusing the seed capital.
When did this turn into a true social venture?
As I understood more about the lives of the rickshaw pullers and their plight, it turned into a social cause.
There are about ten million rickshaws operating in India. Most of these rickshaw pullers do not own the rickshaws but instead rent them at the rate of 30 to 40 rupees per day. The money they make, after paying the rent, is barely sufficient to sustain their families. They continue to remain at the bottom of the pyramid. I thought if I could create an organization that could empower the rickshaw pullers and find a way to increase the overall revenue, it would be a win-win situation for both. I firmly believe in C.K Prahalad’s idea that businesses can be successful by targeting the bottom of the pyramid. Sammaan was finally founded in 2007 with seed money from family and friends.
Can you describe the operation model of Sammaan?
When a rickshaw puller approaches Sammaan, we first go through a verification process. The operator is then given training on basic etiquette and traffic rules. Then we approach the banks and help them get a loan for a new rickshaw. Previously, banks were very reluctant to give loans to this section of the society. Now, since we stand as guarantors, these rickshaw pullers have access to credit. The rickshaw pullers feel truly empowered when they drive their own vehicle. We provide the rickshaw pullers with accidental and health insurance. Each driver is given an id-card and is required to wear a uniform while operating the rickshaw. The rickshaw puller now becomes a part of the Sammaan family.
How does Sammaan help increase the revenues of the rickshaw pullers? How does Sammaan itself get its revenues?
Sammaan rickshaws are designed such that they have plenty of space to display advertisements. Several local and national brands place their advertisements here. The advertisement revenue is split in half between Sammaan and the rickshaw pullers. Also, rickshaw pullers can choose to sell water, fruit juice, cell phone prepaid cards etc. In that case they come to a central rickshaw yard in the morning and load up their wares.
At the end of day the profit from their sales is split between them and Sammaan. The money that rickshaw pullers earn through transporting the passengers is solely theirs. The revenues of our rickshaw pullers have increased 30 to 40%.
There are several other benefits on which we cannot put a monetary value. Rickshaw pullers now have a sense of belonging and empowerment. Children of the operators and their spouses attend free evening classes called Samman Gyaan. Sammaan has brought dignity and inclusion to those previously considered as menial laborers. In addition, I am very happy to say that Sammaan itself is profitable. Last fiscal year we made a net profit of eight lakh rupees (20,000 dollars) and revenue of 50 lakh rupees (125,000 dollars). My mentors have been emphasizing the importance of sustainability.
Does Sammaan get directly involved in micro-financing?
No. We do not directly micro-finance the rickshaw pullers. We just enable the rickshaw pullers to get finance from the banks. Instead of paying rent for decades, the rickshaw pullers only pay the bank loan as installments and eventually become the owners of the rickshaw.
Aren’t cycle rickshaws a dying breed?
Rickshaws continue to be a popular mode of transportation in most parts of the country. The number of rickshaws in New Delhi has actually increased by 20% in the last two to three years. The reason for this increase is that it has become the choicest form of transport to carry passengers to and from the metro stations. Also, I personally think rickshaws are the vehicles of the future. They are environmentally friendly.
We have an R&D wing that is working on a solar-powered, fiberglass rickshaw.
What were your experiences at the Presidential Entrepreneurship Summit?
I met some truly great people. I was indeed honored to talk to the Nobel Prize Laureate Muhammad Yunus.He invited me to Bangladesh to help set up a similar organization for the rickshaw workers there.
Thank you very much for taking the time to talk to us. We wish you the very best for your unique journey.
Thanks. It is with the blessing of my mentors and well wishers that I carry my journey forward.
More information can be found at http://sammaan.org.
Sujatha Ramprasad loves to read poetry and philosophy. She is an ardent fan of Harry Potter.