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Metz

I am studying how to set up a distributive enterprise here in the Philippines.

Many here have seen some of the things I have been working on, although a lot more projects remain in the camera to be uploaded.

This weekend I went out to demonstrate version 3 of my rocket cook stove. I have met with several people who are interested in building and selling the rocket stove, manual CEB press, GVCS CEB press, and working on development of a rocket stove steam generator.

I have a meeting with the micro finance and livliehood group for the Philippines this week. However I am in need of advice to set up a proper presentation.

I am thinking that I will make parts kits with the CNC and sell those along with giving away the free plans. My vision is that a entrepreneur could start with about 100k pesos (about 2500USD) for the purchase of a welder, hand tools, and metal bender powered by a 50 ton bottle jack for the first product being the rocket cook stove.

Later products to be introduced are the manual CEB press, Rocket stove steam generator for power generation, water purification, and weed control. As the enterprise gets more success, introduce the entire GVCS product lineup.

Some may ask why not introduce the GVCS machines first. Well, it comes down to costs. Even something like the power cube is too expensive for a small micro manufacturer to take on. However the rocket stove which has a projected retail price of $43USD is a much more affordable and within the abilities of the local market.

So I have this meeting and proposal to present, any suggestions on how to present it?

dorkmo

are you going to try to explain the whole gvcs or just the aspect of microfactory output? might be hard to build the whole concept for someone in one sitting. sounds like a good business plan in general though.

do you have a certain amount of time to present?

might focus on the parts kits aspect and supplying independent manufacturers?

will manufacturers have internet? would be interesting to somehow collect feedback on processes and stuff.

Matt_Maier

People will probably wonder about the "open source" part of it. With the plans freely available there isn't anything stopping anyone from jumping into the market, say a previously established business, and undercutting you with their greater volume. If someone wants to build a business on open source machines they need to sell 1) hardware and/or 2) expertise. You can't really be a middle guy. You have to either be the guy selling the actual pieces for the hardware, or you have to provide support for the hardware, or both. Those are things that don't decrease in cost just because the intellectual property is free. There aren't any secrets in open source to help you maintain competitive advantage.

Ultimately you have to understand your own market and what is important to your customers. Open source hardware isn't free, but it does provide freedom. One of the most compelling advantages is that there's no vendor lock-in. If someone buys your stove, and then wants to change it, they can. They don't need to go back to you and ask for you to change it, and then wait for you, and then pay extra when you finally deliver the upgrade. They can even switch to another machine/provider/whatever. It frees them to do what they want with the technology.

One of the problems/opportunities is that open source hardware tends to not go through a lot of testing before it is released. That means your first 1,000 customers are also your R&D department. You need to clarify that to them. They need to be aware of the fact that the machine may or may not work as intended over the next several hundred hours of use.

Ned_Ludd

"With the plans freely available there isn't anything stopping anyone from jumping into the market, say a previously established business, and undercutting you with their greater volume." Economies of scale are dependent on the technique of manufacture, and that is dependent on the design of the product. If someone thus jumps in, be sure that they will change the design better to suit the methods they would rather be using.

In fact the history of product design over the past century and a half is that of a quest for techniques that are more responsive to economies of scale. More recently it is the history of manipulating legislation to outlaw alternatives that, though less responsive to economies of scale, are flexible and responsive to natural demand. That way, if product x is available at all, it will be made by one of a handful of organizations that are capable of pulling off the scale - which includes being capable of creating ways to offload the resulting volume into a hitherto limited market.

So I'd sooner fear getting banned than undercut.

Apart from that, Matt makes a valid point.

Matt_Maier

I was just addressing how to deal with people who are hearing the idea for the first time.

Yes, you will always have to worry about competition, even dirty competition, from established players.

Probably the best way to avoid being targeted by a powerful or well-connected entity is to avoid threatening them. Open source is particularly well suited to coming in and serving the bottom of the market, or even serving a new "bottom" that it hadn't been possible to serve before. Those people require less capability, will accept more risk, and can't pay as much. It's an area that isn't part of any existing company's plans so they won't really notice what you're doing there. Open source is also particularly good for a company that provides a lot of one-on-one customer support, which tends to be smaller companies serving smaller clients who aren't buying from the big players anyway because they need a provider who is more flexible (the big guys don't have to be flexible. Again, the point is to serve people who aren't customers of the entities you might worry about.

Metz

My customer base consists of people who do not buy propane gas because it is too expensive, they buy shampoo in salad dressing packet sizes, and they pump water from a well by hand.

They do have cell phones however.

The micro-finance business is actually dominated by the big players here. They currently have a solar panel/light/battery/cell phone charger with a USB outlet as well. They are looking for products that fit into the life of the very poor. The same micro finance players have instituted programs where they buy cassava root for use as hog feed from the subsistence farmers.

I am thinking of engaging entrepreneurs with about 100k pesos or about $2500USD to build and market rocket stoves, CEB presses, and as they grow move to the GVCS machines. Like a co-op. most likely partnering with established co-ops for this. Providing support and the precision cut parts for their machines that they would be unable to build economically without using a few high tech tools that are at this time un-affordable. Selling the scarcity so to speak.

Matt_Maier

Maybe you could lease the tools. Instead of a customer having to come up with the cash to buy a CEB press, or the collateral to borrow for one, they could just rent/lease the use of it for a little while.

Metz

I am talking about the tools to build a CEB machine themselves. The materials cost itself is unaffordable without a step up. I myself have not the resources to lend or build several to rent out. If I built a couple GVCS machines right now, I would not have money for food or electricity.

Bootstrap at a lower level of the financial ladder than the current GVCS enterprise is at now. By starting with something simple like a rocket stove, a mig welder, and a metal bender powered by a 50 ton hydraulic jack they can earn enough to make the manual CEB press, and as they get more successful, they start building life traks, and iron workers.

People here think that 45 dollars for a rocket stove is high, and they don't have lots of money. Different economic scale here.

Metz

Meeting is this week with the micro finance people, I have tweaked the design of the stove to lower the costs and make it without a bender. We shall see how it goes.

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