When I announced to my family and friends that I would be moving to India for six months, I think most of them imagined me in a sun-lit classroom with a gaggle of tiny Indian village children. Although that is nothing like my day-to-day life in India, I recently found myself at Hippocampus Learning Centers (HLC). While the preschool students sang me “Row, Row, Row Your Boat,” my mind fixated on the dichotomy of this moving scene and my interview the previous week with HLC’s founder, Umesh Malhotra.
When I walked into my interview with Umesh, I expected some inspirational words on how HLC, a chain of affordable preschools in rural India, is changing the world. However, I left the meeting unsure if I just interviewed a social entrepreneur or read The Lean Startup.
“Get your product ready so you can take it to the market, it doesn’t have to be perfect,” Umesh told me. Uh… we are still talking about bright yellow painted preschools with a hippopotamus mascot, right? Umesh added, “They may buy [your product] and say, ‘this is crap!’ But they were willing to pay for the product.” He was not messing around.
I visited two of HLC's 104 locations in the Indian state of Karnataka and it’s evident why they’ve been able to scale—they have a workhorse entrepreneur at their helm.
Why haven’t I heard more about no-nonsense entrepreneurs like Umesh? People in the impact space want to talk about number of children educated and clean drinking water, not gross margins or human resources—but those are often the most important parts of an impactful enterprise. We are exposed to the “show ponies” all the time—the people sitting on panels, winning awards, and talking about “changing the world,” but those people aren’t always investable. At Unitus Seed Fund, the seed-stage investment fund where I work, we invest in the workhorses, like Umesh. When the risk of failure is high, they are the only ones who have a chance of succeeding.
As Umesh observed and I’ve felt as well, impact investing is seen as the “five times removed cousin of mainstream investing.” It’s still seen as “soft”—focused on storytelling and not returns. However, after working at Unitus Seed Fund and meeting with entrepreneurs like Umesh, I feel this couldn’t be farther from the truth.
Building a business like HLC is much more complicated than building a chain of preschools that target a wealthier population. Umesh’s margins are razor thin, so he has to be extremely efficient. This is increasingly difficult when you have a distributed business in places with poor Internet connection. Despite these challenges, HLC is succeeding. They are already seeing profits. “Will money be made? Yes, definitely,” Umesh confirmed. “Will it be obscene? It better not be. Obscene means people are paying higher fees and they should be lower.”
Why aren’t we talking more about the business aspect of impact? Good ideas mean nothing when they aren’t coupled with execution. Let’s change the conversation and talk to more people like Umesh. Let’s focus our attention on the workhorses and not the “show ponies.” Only then when I explain to my family and friends what I do for a living, they won’t think charity. They’ll think business.