Fulbright US-India Series: Kamal Lath | CFO of D.Light

Kamal Lath is the managing director and former CFO of D.Light, which just recently reached the 100 million rural product milestone. Mr. Lath was instrumental in helping D.Light raise 100 million dollars in funding during a difficult time, providing thus an important inflection for D.Light in its mission. In this episode Mr. Lath discusses the company's journey and many challenges they had to overcome to reach their goals.
Mr. Lath concludes by providing his views on the decentralized energy landscape and the potential it has to move forward.
Hope you enjoy my conversation with Mr. Lath!
In case interested - transcript link here:

Topics covered in this podcast:

[2:02] What was Mr. Lath's experience like engaging in the Harvard Executive MBA Program?
[5:02] Mr. Lath's background and how he joined D.light as a CFO in 2015
[10:04] How was such a significant amount of capital raised, what lessons have been learned from this experience?
[16:37] What is the pay-as-you-go model and how effective is it?
[21:15] How did D.light manage to build trust with customers?
[25:38] Mr. Lath's views on decentralized solar across emerging markets
[26:05] What piece of advice would Mr. Lath give to his younger self?


00:06 Karan Takhar
So, Mr. Lath, thank you so much for taking the time to join us today. I really appreciate it, and just to start off, I was looking at your LinkedIn profile and I saw you were a participant of the Harvard Executive MBA program, and I would just like to quickly ask prior to diving into your journey what made you want to participate in an executive MBA program, and I'm just personally curious that how was the program was it learned a lot and like what were some of the or some of the positives that you got out of the program I've always been curious about the Executive MBA program, yeah. 

00:33 Kamal Lath
So, Harvard, the IT is always I'm a chartered accountant and also have done CPA from United States, the CPA exam from United States, and haven't been exposed to formal MBA program kind of a thing. So for me, it was a nice to kind of I haven't have that MBA studies out, So what that happens and stuff like that. So you know the Harvard executive program I could see and we applied and it's phenomenal actually we haven't completed due to the COVID crisis. It's the last module that is got delayed the entire program, I would say lot of validations have come by we practiced when we believed so that validations have come by and that is backed by Howard It is really very inspiring and I'm motivating. Now , Other aspects learned a lot in terms of organizations and different Methodologies, techniques, what great leaders have done, things like that, and the whole approach of their how they teach the case study method is so unique and so nice. So I think that was another that has been very beautiful experience how the professors bring about a particular case and with so much of passion and so much of ownership for the students and the overall, you know getting to know like a 75 to 80 people and many of them are like-minded professionals from different walks of life. So that's really I would say to sum it all up, it's a life-changing experience.

02:08 Karan Takhar
So in terms of like some of the things that were validated. Could you talk a little bit about this just to, yeah, just to dive a little deeper, like if there's anything that comes to mind that was validated in terms of like maybe a leadership style or like how teams work together or any concepts like these, they come to the top of your mind, it would be really nice to hear.

02:32 Kamal Lath
Yeah, so many things actually are very difficult to quote one or two, but in interest of time, I would say I think the light is born with complete design thinking, human-centered design, logic, and beliefs in, you know, running that entire process in terms of innovation, is around product or anything else, and that does mean that you know, we will experiment, we will test it ourselves. So I think the validation around experimentation has been really great on a management technique basis, the leadership styles, what are needed in a social sector, what is needed on a organizational manner, I think that many of those have got validated culture this was a very profound validation and of course the learning as well. So I think those were the top three I would if I were to say.

03:33 Karan Takhar
Thank you for expanding on that and yeah, so now just going into a bit your background, and for people listening I think it would be nice to start at the beginning. Could you briefly tell us about like your own personal journey, meaning like where you grew up, where your early educational passion and ultimately what led you to joining D.Light in 2015 as CFO and like how that connexion came about we had that opportunity?

04:01 Kamal Lath
Yeah, sure though I was born in a well-to-do family, but we were not untouched by the several hours of power cuts that seems to happen and I remember sometimes I have also studied in lanterns during such power cuts. Yeah, I come from a business family, have seen some have seen ups and downs, and did face some strong financial hardship for a prolonged period and I was always inspired by my elders told me about. You know, there's a saying in India that you know wealth may get lost, but knowledge will always be and knowledge will always stay with you, and though we are a business family, I taught to pursue a respectable degree, and of course, which was affordable and that is how I went to do chartered accountancy, and later while I was in US roughly a decade later in 2009 - 10, then I passed the CPA exams and taking up the CFO role in delight It'll be good to kind of give you a little background of the professional journey also. So roughly what overall 21 years odd of experience and safe to say roughly 10 to 11 years in large multinationals type set up, some Indian conglomerate, some global conglomerates, and 10-plus years apps. I've worked in India, I've worked in United States, physically present there in California in New York for roughly 4 and 1/2 years old and exposure has been to several industries, information technology, engineering, technology, digital media, education. So right in 2012, you know, I moved from a digital media company and I decided to work for some core industries to impact some real aspects I've done enough of IT, enough of international stuff and all that, and I was thinking either I'll do healthcare, education, infrastructure kind of a thing and I got through 1 organization and which was taken education space as a CFO in 2012 times, and it was invested by Sequoia Capital, and a very rapid education company called Neat Learning spent roughly. So it was also a transformation spent around three years got the financial and the business transformation done. You know I was about, I was in the process of thinking about my next tenant, and in May time frame net out to me and he actually reached out through some past colleagues. So he should ask somebody in the board to refer somebody in India, and both decided to have this position which the CFO position to be located in India because earlier it was getting managed from San Francisco and while you know our manufacturing was in China, we were hubs of selling hubs were sales hubs for India and Africa. India was nice from a centre of gravity standpoint for this particular role, and so yeah, that was looking for somebody in India, that's what the board decided and he approved the board member then and at that time some colleague of mine were friends with them and kind of referred and so multiple people I think got interviewed and I and I had connected over a Skype call and I must say that was a a quick 45 minutes type of a call. But I could get the connect in the very first call, and you know we all have checkboxes. I had some checkboxes and there should be development. So the light actually was like clean energy back last mile, developing nations, so I met all my requirements. So the light back then had a very accurate financial crisis, and cashflows was into huge trouble, and though I had other offers in hand, this thing actually appealed me most the challenge appealed me the most as I felt that the need was bigger one here and that challenge of financial credit somehow became a cool factor for me. So that was the conviction with which I joined the delight yeah.

08:28 Karan Takhar
I see and yeah, so I thought I was doing research. I also read that during the time you were joining, there was some sort of financial crisis. I don't know the details of it, but I'd like to read a quote given by same Goldman regarding you because, from that period onwards, delight has been able to scale significantly and so here's a quick quote I would like to read, just so people can get an understanding. Sam Goldman says we couldn't have gotten where we are today. This is written in 2020 in particular without the fundraising efforts that Kamal and its relatively lean corporate finance team led to the tune of 100 million USD. Kamal has managed through many ups and downs with poise, and helped build the culture and company that delighters across the world know today. So I've spoken with many entrepreneurs or leaders of various energy access companies and social enterprises and I think there's more attraction towards giving funding to businesses like these today in India. But this was a few years back and just curious to understand how like how you managed to raise such a significant amount of capital and whether you can provide any lessons learned like from this experience.

09:56 Kamal Lath
That's the. That's like a great question, and yeah, first of all, it's very nice known, added Sam to mention all this, all are very down to earth humble people and so am I don't believe in kind of laurels so much, but yeah, I'm interest of, you know, a general, my learnings are our learnings would like to share, and in fact, I've written and what I've not written I can mention a little bit that gives a little bit flavour. So yeah, so maybe we caught a 50 plus no before we got one yes, and I think we took off after that one, yes. So it doesn't matter how many nodes we get, but when we get a, yes, that's so that's the only thing that you need and the journey has been essentially around trust and it is not like one individual trust made as organization as founding team members, including the management, we completely believed and always maintained high degree of integrity and trust and openness, and transparency with all our financial supporters, our partners, and that also helped us and in fact still growing. So yeah, so five learning that I mentioned in my article is, you know, we need to have this maybe little technical, but we need to have the right type of capital or diversified capital is really enabler for your strategic goals. You know there are several strategic goals and there is capital that you need like impact equity provided some patient capital and all also held the purpose flag and you know we are and should rise for profit thinking because we always believed and believe that of sustainability in the business model can only be maintained with the economic benefits around while purpose remains at the center, but all the persons who are associating should have a living out of it. So that kind of a thinking, it's very important that you have private equity also who helps you scary expensive manner and also helps us have eye on sustainability profitability, you know, grants is not a fundraising technique but comes out as a strong accelerator for difficult markets or categories or stuff like that and that's also you have to see where you need a short term, where you need a long term, where you need a secured, where you need done yard and finally for our PLC go market, we recently closed the off-balance sheet financing as well. So we are still core to our thinking of product, brand, and consumer thinking. So yeah, so diversified capital is mind learning no. 1 great, the 2nd I focused on is we always had a complete alignment to invest our time, our resources in building long-term value in areas of say platform, technology, R&D, distribution. So that did mean to kind of take some strategic choices and even that all the alignment was there, we could do that third was the strategic direction itself. You know, which typically when you are in a hardship or you tend to not say no to any opportunity, and we don't have guts to take very large strategic decisions, because you are looking at your balance sheet and your bank and so we believed in the strategy we made a very strong executional strategy, which internally we did not publish it too much, and talk about it. But internally we made hatrick what we call in India when a cricketer actually does OK. So it was like a 2018 we will raise $100 million, 2019 we will cross 100 million in revenues, and 2020 will actually meet our goal number one, which was impact 100 million lights. I think we stayed very strongly and I thank our everybody to kind of one they believe on that and stick to that and all the three have got delivered.

14:29 Karan Takhar
Thank you for sharing that and yeah as I was reading your articles well 1 quote particularly stuck out to me, which you wrote was when Ned and Ned, when Emmett and Sam founded the company, they wanted to impact 100 million people, but they agreed that even if DY only reached 10,000 people well, it would all still be worth it. You're currently connecting more than 10,000 people to clean, reliable, and safe energy every day. That's amazing.

15:01 Kamal Lath
Anything. Yeah, and yeah. So today, that's true, and this article is like roughly 2 years old, but yeah. So every few hours now we impact 10,000 people to taking the reliable energy and improving, transforming their lives. So that's that's very empowering. Yeah.

15:21 Karan Takhar
So really briefly, I would like to go back before I forget because I'm so curious about this and I've heard a few people say this in the past about how you can get as many rejections. However, it's that one, yes, which matters. But what exactly does that mean, like, how did that play out in reality? So after you got the one, yes. Then what happened for yeah, interesting.

15:47 Kamal Lath
So, you know The thing is you are and you have your challenges, there is some crisis in terms of cash. Stuff like that, and you're believing the projects that you have and you're going to the market, market is thinking that you know maybe, maybe not and let's see a pilot and so, you know accumulating some funds, managing some funds to do a pilot and by that time. You get a yes, and so you keep expanding it. So we started it small we proved pilots, we experimented it and we proved, and simultaneously we raised funds. So that is how we did. We did not like go for a large funding at one go and diluted ourselves we kind of raised funds as we needed it, so that is how the journey was taken.

16:40 Karan Takhar

I see. Yeah, OK, and as you prove, as you continue to prove, it becomes progressively easier to.

16:47 Kamal Lath
Yeah, You know earlier we had issues and I think there are very strong names and strong banks that are and investors that are supporting us. It is like European Investment Bank, the development banks of US. Yes, so many now funders are investors, so many investors are coming from development sector, some from private equity space. So a very nice mix of equity investors. We are well supported and we are sorted from that perspective.

17:21 Karan Takhar
I'd like to quickly zoom out and prior to diving into delights, and impact across several eastern and Western African countries would like to just highlight that D.Light has a significant presence in the off-grid Indian rural context and was a key partner for the IFC lighting Asia initiative, which helps validate D.Light products and also build consumer awareness for these systems in the rural Indian context and now let's go back to hear about the work that D.Light is engaging in across several eastern and Western African countries Talking about this Paygo model, I was reading online that Paygo was very effective in Kenya specifically and I think I remember reading that one in three off-grid people have a delight product in Kenya. Could you just give a brief understanding of for those who may not understand how Paygo works like how does Paygo is it cash-based or is it more digital 'cause like I could just talk a little bit about this?

18:37 Kamal Lath

So I'll demystify it a little bit. OK, so pay-as-you-go is a methodology, it shows clearly enabler for us in Kenya and East Africa and now also in West Africa and so this particular methodology I have to see two aspects of it. OK, when the prevalence of mobile money so in Kenyan context is embarrassed and what are the functions that additionally a brand like delight has been doing OK. So we do like you know from business model perspective, we enable easy instalment for consumer starting from 30-40 cents a day and robust fintech is in play and offering the financing on instalments and doing the analytics to manage the risk, and so these are the same constituents that we do I mean, explain the proposition. So typically consider that this is a solar on writing system with the five lights and thoughts and the radio just for sake of ease kind of a $200.00 type of a product and kind of 8%, 8 to 10% down payment upfront, cash upfront. This product is given with some kind of basic cheques and balances and this person then has to pay the remainder the money on daily instalments over a 12 to 18 months period or the 20 months period as the case may be and each day he would do mpesa some do like a week in advance, they'll do Mpesa and this money then hits our server we send them a token, and there is a keypad on the device when they punch back the token in and the unit would power off on the lights, and there is a good Social Security because you know does want light in the evening and secondly, also you know it's also a social right nobody would want that one home is not lighted up for the two people, so our experience has been pretty good in that perspective. So that's the basic position. Now coming to Indian context, we'll have to understand real consumer need and demand it's way different from Africa, in fact, Africa you can say many parts of Africa off-grid. India is unreliable grid and fast-changing from electricity standpoint financial majority of Indian market is way higher than that of Africa. There is presence of microfinance which is very deep and very credible quote for your self-help groups, and mobile money wallets are coming in, but it's not like that of any other East Africa rolled as the currency we are still to take. So from my perspective, I see we actually experimented the pay-as-you-go model here and the results were very encouraging. But the products that we have for Africa won't work in India and Indian product has to be something the needs are should be meeting the needs of the fast-changing market dynamics. So the consumer here is now actually moved to an aspiration where he wants 24 hours of power, kind of wants the gap to be solved. I see many things are moving parts there and so like you know just if I were to quote the lithium battery or the traditional lead acid battery which are getting used in inverters. So yeah in future as panels prices have reduced we do expect that KTM prices would reduce and again such markets will come up which can be taken up, but there are players who are wanting to do like simple done. Something from the D.Light perspective we would like to see our real case and then we take up from there now coming back to the different categories of products that we have, there is certain level of products between it's a 30 to $80.00 type of 1 so we actually sell it through microfinance in India with who in turn offers instalments, easy instalments to their member base and if you kind of see it, say indirect not a direct favor, but I indirect Paygo working in the place. So India side, I feel that we will not need to do with financial partnerships in India. We should be able to offer easy instalments through a consumer finance models, yeah, so that's the thing.

23:28 Karan Takhar

Wrapping it up, almost wrapping it up on just the last question in terms of the D.Light business model and how D.Light has managed to achieve this success and scale that it has so a common insight across the interview series is that in India and also in Africa I know this was  the case is that a lack of quality and solar products created significant mistrust in the rural communities and I was just wondering so in terms of like how D.Light actually reaches the last mile customer and like how D.Light is able to overcome this hurdle of consumer potential, consumer mistrust towards solar products. I mean, I guess now this probably isn't the case of D.Light has grown and become more of a brand. But I'm just curious as to you like what does that distribution channel look like, like how it D.Light able to get so into the last mile and build trust with the consumer?

24:30 Kamal Lath

So D.Light inspired by its mission of transforming lives, sustainable products, and having completed the 100 million lives impacted the new goal that we want to pursue is 1 billion lives by 2030 to be transformed with the sustainable products and a little bit on the you know, the whole genesis and the thinking and the philosophy of the light comes, and partly inspired by where it was born.OK, D.Light was born in the TI school, the design school in Stanford under the programmer for Design for Extreme Affordability, and our proposition and our thinking at a broad outline level is D.Lighting consumer experience, OK, the D.Light. The D is actually coming from the design school, and the delighting consumer experience is that has to come by, must be affordable and there are 4-5 pillars around that. Quality is the first layer of affordability price and savings is another installment-based payout is people create livelihoods from our products. So that's another. So you know that affordability has many ways to look at it as affordability does not actually mean is cheap affordability does mean high quality or you know savings and value for money and the third prong should be scalable we want to impact a lot. There are two million people out there are without accessible, without access to reliable energy. So it's a very simple, it has our products have to be a complete ease of use, whether it is installation, whether it is you say it is, you know, bringing awareness, all these things, so needs to be there in our products now It means, like you know, to deliver the consumer experience doesn't only mean that the product has to be great, it means the aftersales has to be also great, and our innovation process is all around the concepts of human-centered design, which means, you know if I were to touch on pricing, it is the starting point for assets It's not something that we come out something and then try to fit a price that actually human-centered design. When you're dealing with the problem, you deal with that team and you have that clarity completely clear and you know so there is also when you come and talk about trust products are starts from range of four dollars to 2 Lantern to large sophisticated home systems with appliances like TV plans which are many of them are quite awarded once so you know who the 3rd every third hold has delayed are the ones who take today the home systems are the ones who have taken the lanterns and got to experience, build their trust, and then grown up the energy level. So that's the philosophy over aliasing initial years we also based able to establish the brand but once people get to use it word of mouth also spread and we kind of smoked here and that journey has been identical both in India and African markets or any other markets from that perspective.

27:40 Karan Takhar
OK. So does D.Light have a very vast distribution network? 

27:47 Kamal Lath
Yes, we do have a very good distribution network from in India. We would not say that it's very, very big, but in African part.

27:56 Karan Takhar
So you do you recruit people from the local areas, is that how?

28:00 Kamal Lath
D.Light is very global in their approach, their philosophy. You know the world best, design works best processes and innovations come by, but when we hire, we and we operate in regions, so it is completely local people, and that two are well empowered.

28:20 Karan Takhar
Let's see. So it's like a kind of micro-entrepreneurship model.

28:24 Kamal Lath
Yeah, very much.

28:27 Karan Takhar
I see and thank you. Thank you, super helpful, and just two final questions more on the personal like personal side in terms of trying to understand how you're approaching so like in your views, so in terms of like off-grid solar or just decentralized. The decentralized application of solar do you believe it to have significant potential moving forward over the long term?

28:56 Kamal Lath
I got in that great point and I would actually the strong theories that are coming by and I am a strong believer of that and in working with D.Light for roughly 5 years I do feel that we have just basically it would be good to say that the DRE, The Distributed The Renewable Energy is the way to go and the EV's will support the pricing reduction of battery in next 2-3 years to come panels pricing we have seen has got reduced significantly and the other aspect is consumer aspirations are also increased and the quality requirements have completely changed so a consumer asking the right quality. The DRE has already proven it out itself the prices of the components are reducing. So it does support that everybody is generating their own power, everybody is doing their own power and everybody is coming up with a DC appliances kind of a thing. Yes, a DC applying standard needs to be analyzed across the globe, but I don't think I don't see that to be a challenge I already see those things coming by.

30:06 Karan Takhar
And final question, this is the $1,000,000 question that I never let anyone leave without asking because so essentially if you so reflecting back on your journey, on your professional journey, and also just your personal life journey would you and remember yourself just graduating, I'm graduating from your chartered accounting program would you tell, what would you tell your younger self like fresh out of college and just reflecting through the lens of your experience. Like if there's one piece of advice or even a few pieces of advice that you would give your younger self, what would this be?

30:51 Kamal Lath
Very interesting, Karan. I'll say I'll not say something that I haven't done myself. So there are three points to make I would say first, believe in yourself. So I come from a small town and by God's grace has been able to lead organization going to HBS kind of a university. So I'd say just believe in hotel and you know it becomes tough when you come from smaller places and smaller towns, and what comes to you as a friend is experiments and data. So prove all the uncertainty and adversity with experiments and that helps your own decision-making personally and secondly establishes your point to many of the know people and they know departments the so that was the 1st, the 2nd I would say for previous and trillions, as I said, you know, you may get 50 no's, doesn't matter. You just need that one. Yes, and then providence place, and you know in the world where with millennials this is looks like to be already sorted and I would say, you know be driven with the higher purpose not only the economic benefits both individually and for the organizations, you work. I think that's the three points that I would share.

32:08 Karan Takhar
Thank you so much for your time, Mr. Lath. Really appreciate this was very inspiring.

Also Listen to Our Other Podcast

Related Podcasts

Rick Rossow | Senior Advisor at Center for Strategic and International Studies (CSIS)

Read More

Sameer Shukla | World Bank Energy Head for Europe and Central Asia

Read More

Meagan Fallone | CEO of Barefoot College International

Read More

Vaishali Sinha | CoFounder of ReNew Power (NASDAQ: RNW)

Read More