You Need More than Magic - KXI's "World Filter"

“No single measure would do more to reduce disease and save lives in the developing world than bringing safe water and adequate sanitation to all.”

- UN Secretary-General Kofi Annan, Millennium Report

How do we meet the clean water needs of the world's billions?

Connecticut based KX Industries may have the answer.

Perhaps you never heard of KX Industries (KXI), but you probably tasted the fruits of its work, they created the technology behind the PUR and BRITA "end of tap" filters: those water purifying pitchers we all know and love. Directed by CEO Dr. Evan Koslow and investor Kevin McGovern, KXI has recently developed an exciting new water filter technology, the "World Filter".

Very little is publicly available about the filter, but the company claims its "nanofiber" technology is both extremely low cost and highly effective, so much so that Cornell business professor David BenDaniel called it "magic" when presenting a business case on the company. We agree with BenDaniel's assessment, the technology was certified against strict standards: bacterial reduction of 99.9999%, viral reduction of 99.99%, and oocyst reduction of 99.95%. The company sees huge opportunities for profit and to meet the severe water needs of people in developing markets.

As magic as the technology is though, at BRINQ we know that success in Base of the Pyramid (BOP) markets is rarely about technology alone. For instance, look at Proctor & Gamble's failure to crack the rural water purification market (as reported in a recent Wall Street Journal article). We've seen many demonstrations of P&G's PUR powder, watching the swirling powder pull dirt out of muddy water looks like magic too, but its education requirement made the powder a difficult sell:

Still, the water purifier isn't always an easy sell, even when it is free. One problem, P&G concedes, is that the product practically needs an instruction booklet. The powder, which kills bacterial diseases such as typhoid and cholera as well as various viruses, needs to be mixed with a specified amount of water and then allowed to sit for several minutes. The clean water then must be filtered through a cloth, to separate it from any debris, before it can be consumed.

Distribution in emerging markets is a huge and costly challenge too. Add marketing, gaining local trust, combating copycats, and protecting intellectual property to the mix and you can see that even with the most magical of technologies, the solution isn't going to be easy. Clean water is also seen by many as a medical necessity: a perception might exist that people should get it for free. Even if the government buys your product at market value before giving it away, limiting your customer base hurts the products financial sustainability. You might even destroy local jobs by cutting out potential resellers. However, we're not sure how toxic such "philanthropic poisioning" really is, and we know of at least one great example where free can help you reach high profit margins [Aravind Eye Care].

We believe an even worse curse for multinational companies is their financial return requirements. Though we don't know how much KXI invested to develop the World Filter technology, chances are it was a pretty significant sum. There's an unwritten law here: the more miraculous the technology, the more R&D dollars spent, the bigger and faster you'll need to come out the gate to meet your Top of the Pyramid returns. With those pressures, it can feel impossible to start small and grow your business organically and smartly. Organic growth gives you time and experience to learn from your mistakes, whereas a fast and furious approach means that if you fall, you're going to fall hard.

We have a lot of hope for KXI, the World Filter technology appears to be nothing short of amazing and Koslow and McGovern employ some incredibly brilliant individuals: their technical savvy itself borders on the magical. Still, here at BRINQ we know the world needs more than just magic, if brilliance were the only missing ingredient, wouldn't one of us billions have figured out the answers long ago?

Past "How to Change the World" articles:

Unleashing Competitive Imagination -- The Fortune at the Bottom of the PyramidThe Model T Trap Going Beyond Networking


Healthcare Delivery: Consumer Products

Healthcare Delivery: Consumer Products for Disease Protection - Part II

As I discussed in Tuesday???s post, there are an increasing number of businesses producing health-improving consumer products that are affordable to customers at the base of the pyramid. Today, I will highlight a few more examples, including specialized