02/24/2012 12:07 pm ET Updated Apr 25, 2012

Bringing Affordable Solar Lighting to Millions

Sometimes great technology companies are about creating things that people never even imagined that they needed or wanted -- look at Apple and Facebook. But sometimes, great technology companies are about taking a very simple product and making it affordable and available to people who wouldn't normally have access to it.

That's what Ned Tozen and his co-founders at d.light have done with their simple, easy to use, affordable solar paneled lighting that is being used in countries where electricity is hard to come by.

There are 1.6 billion people in the world who don't have access to electricity. There are an additional one billion people who have some kind of electrical connection but "it's so intermittent that more than half the time they are off the grid."

Many of these people are using kerosene for lights. It's a terrible source -- hazardous, dim, polluting, and expensive. Many people around the world spend 10 or 20 percent of their income just to buy kerosene.

Ned and some classmates were grad students at Stanford. In 2006, they took a class called "Design for Extreme Affordability" at Stanford's Design School (it's an amazing place that I was fortunate enough to attend for a few days during an Executive Education program on Social Entrepreneurship). It was an interdisciplinary class with students from the engineering and business schools. As Ned told me, the class was filled with people who are "passionate about social enterprise thinking about how to develop technology for 'base of the pyramid families' families making less than $2 a day."

Their team wanted to come up with some ideas of how to address the needs of people who don't have access to electricity. So, as part of the class, they went to Southeast Asia to see for themselves. They soon realized there was a real need that wasn't being met and they started brainstorming solutions using the Design School's unique method of product design.

Soon, the idea became more than just a school project. The Design School incubated the team -- giving them space and some funding to get started.

They certainly didn't come up with the idea of solar lighting replacing kerosene. The idea had been around for a while. And, solar has been getting a lot of buzz lately. But most of the companies offering solar solutions don't see the 1.6 billion people as a real market. For a variety of reasons, including the problem of distribution -- not too many large companies were interested in finding ways to get products to "the bottom of the pyramid." There was a lot more lower hanging fruit for these companies to go after. They just didn't look at this as a viable market for them.

Ned and his team were able to address a lot of the challenges to making products work for this market.

The biggest challenge was that products had to be extremely robust. According to Ned, "Most of the existing products couldn't hold up in these types of environments." Plus the customers are extremely price sensitive and there wasn't really organized distribution.

Of course, the product had to be as affordable as possible.

The team looked at multiple options -- should they be a non-profit or a for-profit business? In the end, they decided that "the way to achieve the best social impact is to create a business that is sustainable and scalable where it's not funded with grant money but can be funded with the profits of the business."

So, d.light went out to investors instead of foundations and raised money from several well-known investors including the always innovative Acumen Fund, Draper Fisher Jurvetson and others.

Today, over five million people are using the product, and there is distribution in 40 countries in India, parts of Africa and Asia.

They have partnered with Kopernik to reach people in places where they don't have distribution yet. Kopernik also has an interesting model, connecting affordable technologies with communities that don't have access to them. They are trying to set up sustainable marketing and distribution channels in places like East Timor.

The product cost somewhere between $8 to $10 for the light -- which may seem like a lot for people living on less than $100 a month. But, according to Ned, "People are spending on average $5 to $10 a month on kerosene. So, the economic payback is so fast for people they are willing and able to make that investment."

It wasn't an easy road. According to Ned, "It took a few years of getting the product and distribution right, hitting our head against the wall, but the last couple of years we've seen an amazing explosion in the market."

"We didn't imagine where this all would take us when we got started... We had big dreams when we started out and thought that we could make a big impact, but actually seeing it happen --that's been a different experience than just imagining it. It's been really amazing."

You can listen to our interview with Ned on Launchpad on WOR Radio.