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• Case | HBS Case Collection | September 2020

  Algramo

  Michael Chu, Monica Silva and Mariana Cal

  Algramo, recognized for reducing food prices in Chilean low-income neighborhoods through dispensers eliminating packaging, has developed a model to end single-use plastic in the FMCG (fast-moving consumer goods) industry. Beginning with a partnership with Unilever Chile, this has attracted global interest from FMCG giants and environmental NGOs, and capital from foreign impact investors. Algramo’s board has approved a joint venture with a Dutch NGO to take the model to Indonesia, the world’s second-largest source of plastic leakage into the oceans. Meanwhile, Chile has been hard hit by the Covid-19 pandemic, certain to bring great hardship to Chile’s low-income population. Algramo’s founder and CEO José Manuel Moller must decide whether to continue with the Indonesia project (and other initiatives in New York City and Europe) or focus the company’s efforts on Chile.

  Keywords: Packaging-as-a-Wallet; Plastic Waste; business at the base of the pyramid; reusable packaging; Alliances with FMCGs to meet ESG goals; Social Entrepreneurship; Environmental Sustainability; Strategy; Value Creation; Consumer Products Industry; Latin America; South America; Chile;

  Citation:

  Chu, Michael, Monica Silva, and Mariana Cal. "Algramo." Harvard Business School Case 321-079, September 2020.  View Details

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• Case | HBS Case Collection | September 2020

  d.light

  Michael Chu, Krishna G. Palepu and Dilyana Karadzhova Botha

  Kenyan off-grid-solar pioneer d.light can power entire homes in rural Africa but must now decide how to fund the growth of its asset-heavy business model. Ned Tozun and Sam Goldman founded d.light in 2006 to transform lives through solar solutions enabling access to electricity, the seventh of the United Nations Sustainable Development Goals for 2030. Originally providing simple portable solar lanterns to people without access to reliable electricity, the enterprise developed solar home systems that included lights, mobile chargers, and an energy-efficient device such as a radio, fan or TV. By 2019, with the success of home systems, d.light had become one of the leading players in the off-grid solar sector, with the world’s largest distribution network for off-grid solar products and a projected revenue of over $90 million.
  Key to d.light’s solar home systems was pay-as-you-go (PayGo) plans, a lease-to-own model consisting of a down payment followed by small (<$1.50) daily payments, normally for a period of 12 to 18 months. In 2019, sales from PayGo products were expected to contribute close to 70% of the company’s annual revenue. However, PayGo was an asset-heavy model and in the past 18 months, d.light had raised over $90 million, nearly 75% of which was in debt facilities. As the company continued to grow rapidly, its co-founders were deliberating whether they ought to go out and raise capital again. If so, should it be equity or debt? How much and from whom? If not now, when? Alternatively, should they modify the business model to reduce the company’s need for so much external funding?

  Keywords: Alternative Energy; Business Model; Capital; Emerging Markets; Expansion; Financial Strategy; Renewable Energy; Strategy; Social Entrepreneurship; Energy Industry; Africa; Kenya; India;

  Citation:

  Chu, Michael, Krishna G. Palepu, and Dilyana Karadzhova Botha. "d.light." Harvard Business School Case 321-069, September 2020.  View Details

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• Case | HBS Case Collection | August 2020

  Nubank: Democratizing Financial Services

  Michael Chu, Carla Larangeira and Pedro Levindo

  Nubank, a wholly-digital solution created to disrupt Brazilian banking, with 6 million clients and a $4 billion valuation after five years, must decide whether to expand to Mexico. The company was founded in Sāo Paulo in 2013 by Colombian-born David Vélez to seize what he saw as the opportunity latent in a banking system long dominated by five large incumbents with what he considered low value products and deficient customer service. The answer for Vélez was through technology. Backed by foreign venture capitalists and recruiting a top team, Vélez launched a credit card available solely through a smartphone app, with quick approval and no annual fee, with credit and payments totally online and transparent, friendly customer service, completely up-ending the traditional terms of the market. Nubank’s credit card became viral among the Brazilian urban middle-class and by the end of 2018, the company was the fifth credit card issuer in Brazil with over 6 million cardholders. A second product, a digital banking account, also changed market terms by offering services at no fees and yielding higher interest rates. By 2018, Nubank had $628.8 million in deposits. With success, a multitude of opportunities were now open and Nubank and its board must define strategic priorities. Within Brazil, Nubank’s market share was still minor compared to the incumbents, and there were many other financial products that could be launched. In addition, 30% of Brazilians remained unbanked. Yet Vélez and his team were convinced that the whole of Latin America had the same banking pain points as Brazil and was ripe for Nubank products. For Vélez, the gateway to unlocking that potential was through Mexico.
  
  The case also examines the challenges in an emerging market of financing and developing a new business concept based on cutting-edge technology, the nature and sustainability of the difference between a fintech startup and leading incumbents, and the role of regulators in the development of fintech.

  Keywords: fintech; Financial inclusion; digital banking; Credit Cards; Banks and Banking; Disruption; Expansion; Growth and Development Strategy; Financial Services Industry; South America; Brazil; North America; Mexico;

  Citation:

  Chu, Michael, Carla Larangeira, and Pedro Levindo. "Nubank: Democratizing Financial Services." Harvard Business School Case 321-068, August 2020.  View Details

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