The problem building a business to cater to the poor

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at:, or follow me on Twitter.


1) Poor areas are overrun with corruption and graft. Its very hard to do the right thing, when individuals with power will actively work to put a bribe barrier between you and your work. Its like these individuals smell out good intentions and attempt to tax them for the perceived weak-minded good intentions. An example would be, after my brother created several successful startups using ex-cons, he wanted to turn the program over to the City. He quickly learned without a politician attached and ‘sitting on the board’ you couldn’t do this. The price of this? Paying him 70% of the donations coming in to support the program. I have numerous examples more blatant in 2nd and 3rd world nations.

2) Economy of Scale. You must serve more customers in order to make up for lower prices the market will bare. This is easy to say and very very hard to do. As you scale, you can’t afford more workers, so your quality inevitably goes down. Other things like support, QA and tasks that don’t scale past 1:10 user rations become very poor quality, turning off people to the product and making you ashamed of your work.

3) Not knowing what the problem is. You can guess at problems for a class of people you aren’t a part of, but its pretty hard to design a new solution for them. Your instincts are often wrong and you have to do a lot of expensive testing and research you can’t afford to get the right solution. See problem 2.

4) Distribution to customers. Want to get the product to this underclass? Do they have smartphones? Do they have computers? Often no. How are you going to ensure they see your product let alone purchase it? Maybe they do have smartphones, but they use everything from dumb-phones to android 2.3 devices to Nokia-whatevers. Development for all those things will cost you 5x as much as just making a food iPhone app. (see 2 again)

5) Value offer. This becomes very very hard when your target market is low on funds and often makes anti-self-interest choices. The individual who uses what little money they have to feed their family with fast food is going to pay money for your education app? Its pretty unlikely, they have more pressing needs in their hierarchy that they are often too scared and desperate to solve properly.

6) Their problems can’t be solved with software. Often these people have real-world problems that require hands on work and real product to solve. My brother worked very hard to add software where possible but needed to do mostly ‘real world’ labor to get to his customers. Software is inherently cheap to produce compared to hardware and manual labor.

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