Problem, Challenge, or Focus:
Enterprise at the Base of the Pyramid to Address Global Poverty
My name is Michael Chu. I am on the faculty of the Harvard Business School and I am also a managing director and co-founder of the IGNIA fund, a venture capital fund focused on commercial enterprises serving the base of the pyramid.
My work through Project Antares aims to identify high-impact health interventions for the poor and develop models to deliver these interventions commercially.
I became interested in commercial platforms for a few reasons. First is that in most poor countries, health care is already transacted in a commercial market. Second is that you want to change the ability of poor families to earn or maintain income, then you have to reach about 4 billion of the 6.5 billion people in the world. And let me suggest to you that the only thing in the history of humanity that delivers scale, sustainability, continuous efficiency, and continuous efficacy is business.
People spend a lot of resources to find better and cheaper interventions, but the truth is that often we know already effective interventions. The challenge is delivery of care to those who need it. So we actually partner with organizations that are in the field who can implement these interventions. Our ultimate aim in Project Antares is to make changes in the street, not just learn a lot from an academic point of view.
I also co-founded IGNIA, a venture capital fund aims to invest in areas like health care, housing, water, education, or telecommunications to have a big social impact.
My background is in business. I received by M.B.A. from Harvard Business School, and then I had a business career. I ran large companies, and then I went into leverage buyouts, so buying companies. In the course of that, I was asked to join the board of a non-profit organization called ACCION. ACCION pioneered microfinance – access to financial services by low-income people around the world. I found microfinance interesting because it was one of the few effective responses to global poverty that I knew of.
I decided to go into microfinance full time, and actually ran ACCION, which was then starting some of the leading microfinance banks in the world in Latin America. All of these organizations like Bancosol in Bolivia, or Mibanco in Peru, were like any other banks except their clients were on the wrong side of the track.
Then about seven years ago, HBS asked me to join the faculty. And in addition, I also started a venture capital firm, the IGNIA fund, based in Monterey, Mexico, that looks toward investing in commercial enterprises that serve low-income sectors.
Now some years ago, I was asked to sit down with an alumna of HBS, Rosalyn Payne. She told me she was interested in three issues: poverty, gender, and health. This made perfect sense to me because I had been thinking that of the many things that can happen health-wise to the poor, there must be a handful that have a disproportionate impact on the ability of poor families to earn and maintain income. For example, both the poor and the wealthy get brain tumors; but, if tomorrow we find a cure for brain tumors and get it to everybody in need, it likely would not move the dial on poor families’ income statuses. However, some things would.
So I thought it would be useful to define those high-impact interventions and deliver them through commercial platforms. She found this interesting, too, and this led me to begin a collaboration called Project Antares with professor David Bloom at the Harvard School of Public Health that does just this.
What I do on a daily basis reflects my two hats. At HBS I teach a course called Business at the Base of the Pyramid. When I am not teaching, I am engaged in my research and writing, all of which involve commercial solutions for low-income sectors. With the IGNIA fund, I am either in Mexico or in touch with my colleagues there, looking at possible investments or seeing how we can make existing investments better.
I have been fortunate that I am focus on the exact same thing at the business school and with the IGNIA fund. I think it is important to be problem-driven. You have to pick a problem that is really really big, and when solved, will have a huge impact. That is what will captivate you, and that is what I love about what I do. I think I have identified problems that are huge and mean a lot to me, and this brings out the best in me.
One of the IGNIA fund’s first investments was in a health model that delivers the home-run punch of medical interventions by staffing clinics with pediatricians, gynecologists, internists, and specialists in internal medicine. Basically we would have a company that offers unlimited access to clinics staffed with these four specialties and nurses for less than $100 a year. So you would think this is a fantastic, powerful combination that a lot of people could afford.
This was the holy grail of public health interventions: preventative medicine. You treat people so they never get to a crisis stage. But we found that a condition that might be hugely important, like diabetes, does not feel urgent to patients, even though ultimately it can really affect quality of life. For example, a diabetic woman may not be in a position that will make her face amputation, so she focuses instead on a more urgent concern that is currently present.
So a huge challenge is understanding the people who you are working to help. So our first business model that I just described failed horrible. Our clients didn’t understand why they were paying for a service that they might not use more, so they canceled it because they didn’t see the benefit of preventative health care. So to be effective you need to understand what motivates people so you can then change their behavior. Now we are in the thick of changing that whole model and approaching it totally differently.
A lesson you can generalize out of that is that the more you want to change something, the less of a map exists to guide you. You have to dive in with the best road map possible, which may be totally wrong; but then you reinvent it, and reinvent, and reinvent it until you succeed. That is a really important lesson. If you want to get into changing the world in things that really matter, you have to be prepared to just persist.
My undergraduate was at Dartmouth, so I am a product of a liberal arts education. I was a foreign student, so I had a great appreciation for this. As a result I am interested in a wide variety of areas – movies, modern history, sports. I have lived a very lucky life. I have a wonderful wife and son, and we get along really well.
– Man’s Hope, André Malraux.
Know who you are, find out what interests you, and think about what environment draws the best out of you. And beyond those practical things, I think it is really import to work with people that can help you grow as a person and as a professional.
I think that trumps thinking about your resume or what your track is. Looking back at my own career, I didn’t know what I wanted to when I was an undergrad, but I was sure what I absolutely didn’t want to do. I was never ever going to be in business. I had no interest in non-profit organizations. The farthest thing from my mind was actually teaching. And I ended up doing all three of those.
What has endured is a real interest in social change and people. I discovered I thrive in unstructured environments. These are things that have shaped me. People are too concerned about building neat steps along some road. Of course when you are young you don’t know what road you want to travel, so it is easy for people – your parents, society as a whole – to impose their road on you. There is a Spanish poet who says, you craft your road as you go along, and I think that is right. You find out what you want to do by trying things that interest you and not by those that bore you.