Fulbright US-India Series: Piyush Mathur | CEO of Simpa Energy | CoFounder of Clean Energy Access Network

2022-08-17
Piyush Mathur ​ Piyush Mathur is the recent CEO and long-running CFO of Simpa Energy. Mr. Mathur has been attributed to helping Simpa scale and expand to 22 more districts in 3 states, employing 700 full-time staff and 3000 village level
entrepreneurs. Simpa is well-known for its unique usage of technology, which we will explore in this conversation with Mr. Mathur. In this
episode, Mr. Mathur also explains the key decision components which one must evaluate prior to scaling into a new area and what he believes to be the future of the energy sector. ​ ​ ​

Topics covered in this podcast:
[1:55] Piyush provides insight into the story of how he connected with Simpa Energy
[4:52] What are some of the core components of the Simpa model from the customer point of view, as well as, the sales channel?
[8:42] What happens directly after agreement between Simpa’s sale agent and a customer?
[12:52] The costs of the solar systems
[13:42] Technical details of the solar systems
[14:33] What is the challenge in convincing rural customers to adopt Simpa's system?
[15:45] What’s the situation of the customers before adopting Simpa systems? Do they experience power cuts?
[17:30] What is the payback period for these customers generally?
[18:09] The role of technology in enabling Simpa to scale its operations
[20:55] The key decision-making criteria on whether Simpa scales and expands into new areas
[23:00] Mr. Mathur reflects on his experience and provides insight to recent college graduates
[25:28] What does Mr. Mathur believe the future of solar to be?

Transcript

00:06 Karan Takhar
Hello everyone. This is Karan Takhar, and welcome to the Energy podcast. Over the past decade, India has done an impressive job of integrating renewable energy into its energy mix. For this Fullbrights podcast series, I sought to investigate the enabling factors and potential of India's global leadership in renewable energy with the focus on solar. This Fulbright series is broken down into Four Seasons. In this season, through conversations with ten leading social entrepreneurs and development experts, we will illustrate how renewable energy in India has taken off at
the rural level. Not only will the series provide insight into their fascinating entrepreneurial journey but also how they've been able to overcome the financing, consumer awareness, and distribution challenges associated with rural solar energy deployment at a large scale. In this episode, I will be speaking with Piyush Mathur, the recent CEO and Long-running CFO of Simpa Energy. Piyush has been attributed to helping Simpas scale and expand into 22 more districts across three states with 700 employees in 3000 village-level entrepreneurs. Simpa is well known for its unique usage of technology, which we will explore in this conversation with Piyush. I hope you enjoyed my conversation with Piyush as much as I enjoyed speaking with them. I'm just curious as to like how it all happened in terms of like the logistics of it, so someone connected you, and you guys like got you guys met up and then explain to you the business or how it.

01:59 Piyush Mathur
Yes, one evening, I was having a Skype called another of my friends London Business School who was at that time was based in Abu Dhabi, and he had heard of Simpus somewhere, and he mentioned very randomly to me that since I mean, all of us were interested in this phase of climate change climate finance and development finance. He just mentioned to me randomly. Oh, have you heard of Simpa? They seem to be doing some clever work in India, and I was like, I hadn't heard of simpa. But then I sort of go to the google website of simpa right away, and I see this progressive purchase model, which then sparks of few ideas in my mind. And I mean, it was a fascinating concept being applied in our very development context, and I could see a few applications for it, so this looks like a lazy private equity guy. I shoot off an e-mail to influenceandmanagers.com asking for a chart and to better understand the technology and possibly make some helpful commercial introductions and Paul Needham, who is the founder of Simpa and later there, would be my colleague.

03:02 Karan Takhar
No way wow.

03:21 Piyush Mathur
Then called back after a week or so we got chatting. I think it was clear that Simpa meeting technology was not sort of quite made for the kind of applications I was imagining in my head, but it sort of led to a sort of nice introduction to Simpa, and yeah, I was I went from that call fairly impressed hearing from Paul. Everything that they had done, having moved their families to India to set up the business to do some early pilots. In Karnataka, which is South of India, and see some early traction. So all of that sort of left me quite impressed. And then I again, I mean just our sense of kind heart offered to Paul, but he's welcome to call back if I could be of help in any way. And well, having that sort of triggered a series of conversations which ultimately pollinated in joining the business six months later.

04:28 Karan Takhar
I see in 2014.

04:30 Piyush Mathur
Yes, that's right, damn.

04:32 Karan Takhar
Very interesting, and yeah, this progressive purchasing pay-as-you-go pricing model. That simpa's employs also very much fascinates me, and I find it to be quite unique in terms of I've spoken with a few other entrepreneurs who work in this space. And yeah, this model has always attracted me, and I feel like it's a very unique one. So for those listening who may be unfamiliar, can you talk about some of the core components of this model in terms of like how it works both from the customer point of view as well as the sales channel, meaning like after the initial agreement with the customer is signed what generally takes place?

05:20 Piyush Mathur
Sure, absolutely so. Simpas has always stood for making clean energy and clean, abundant energy accessible and affordable for regular people who otherwise. Do not get reliable energy through the grid. And the way simple makes it happen is by packaging solar micro list of device, which is of a capacity sufficient for a rural home or a shop uniquely with finance and at the point of sale as well as after-sales service. So there are three elements in the proposition. It's not simply the device, it's also the financing to make it suitable and after-sales service at the doorstep at customer's home to actually make the product and the use of it accessible and hassle-free for the customer. Now, the way it works is that we have a number of sales agents out in the field, all on Simpa's mobile app. And they use our mobile app to visualize the use cases and show videos to the customers at the point of sale and help them into selecting a suitable product for them. 

06:37 Karan Takhar
I see.

06:38 Piyush Mathur
Then they also counsel them into selecting an appropriate pricing plan which could be anywhere over one to three years. 

06:48 Karan Takhar
OK. 

06:49 Karan Takhar
And instantly in a sort of assisted e-commerce way. They book a order right there, collect a small down payment, and then within 48 hours, we processed us that order from the customer and install a system on customer's rooftop and make it live, so it don't happen that very high velocity, and it happens a number of times during the day, so it's all sort of facilitated by the technology that we have invested in we call it produces 30 years because this is really the first time that anybody has an opportunity of acquiring a small power plant which they can call their own for their home or their shop. And then also pay for it in a progressive way such that they're not having to bear the upfront cost of it, which is prohibitively high for many of them. They can actually progressively buy it as they make payments every month. The payments and to make every month count not only toward the service but also the capital goes to the equipment such that by the end of that payment period, which is anywhere within one to three years, the equipment, then the ownership and the equipment transfers to the customer and they ordered completely. So from that point on, the energy is free. The customer is left with their own little power plant. Which is their own, and I can enjoy the continued use of user fit for remaining useful life of 10 to 15 years.

08:28 Karan Takhar
That makes a lot of sense. And just to yeah, I'm just very curious about them like specifics just gonna ask a few more questions on this trends so after a sales agents like makes that initial agreement with the customer and then so at the moment of sealed does a customer provide a down payment or does simple then have to verify like whether a customer meets the there may be financial credibility criteria, so like what happens directly after, say, an agreement between a simpa sales agent and a customer takes place.

09:09 Piyush Mathur
So if you are a person somewhere out in three territories where we operate, and simpa salesperson has visited you and counseled you into selecting their appliance as well as the financing package to go over, we'll ask you for a very small down payment, which is typically about 10% of the capital cost of the total appliance and that will trigger processing of an application in the back end. We'll do our credit checks. We'll speak to our banking partners, and then, as I mentioned earlier, within the next 48 hours, we will have that equipment delivered to your place and installed it. So. 

09:52 Karan Takhar
OK.

09:53 Karan Takhar
And then, from that point on, the customer has to pay small monthly payments, which could range from anywhere between $10 to $25 depending on the size of the device.

10:08 Karan Takhar
Which are mostly digital payments down.

10:11 Piyush Mathur
Including your digital payments? Yes.

10:14 Karan Takhar
Understood, yeah, that makes a lot of sense.

10:17 Piyush Mathur
 How to make it work in the back end what we have done is implant IOT device and every solar installation that we complete so that we can remotely monitor it, its location, its performance, its usage. And God forbid if the customer would stop pays or something happens, then maybe even in the most extreme cases, disconnect that device or stop that device. OK, so we can also control that device.

10:57 Karan Takhar
OK.

10:57 Piyush Mathur
Now that may seem very negative, but hey, it's a great credit reinforcement tool for our banking partners or our financing partners. Deeply value it because it provides that sort of second line of security beyond our feels can sweeping that, yes, we have records to a customer who stops paying, and we can I think we can take some actions which might redress that situation. I see so, but I think from a business standpoint, this remote monitoring technology that I just described actually has a number of other advantages. So because we can monitor the usage of the device. We actually have a chance to present customers who are, let's say, picking out on their usage the higher capacity device as a follow-on device was taken by so we can be a little clever about managing customer experience and delighting them by proactively offering them an upgrade because we know that the right candidates to take advantage of it. Similarly, it also helps us proactively monitor any service issues or performance issues with any of our installations, so we could actually, even before the customer has started to realize the problem detected remotely in our systems and activate our field technicians to go over the location and fix it.

12:38 Karan Takhar
Very interesting.

12:39 Piyush Mathur
That begins that again sort of helps with enhanced customer experience.

12:44 Karan Takhar
Can you talk a little bit about the costs? Of these systems.

12:48 Piyush Mathur
Sure, I, the typical system costs around $300.00 for an individual household, but they don't pay $7.00 for.

12:56 Karan Takhar
US dollars.

12:58 Piyush Mathur
yeah, US dollars, and they pay a very small upfront amount, maybe, say, 30 dollars, 10% of that U.S. dollars, and then they keep paying a regular monthly amount. We call it? I created one stage. It's on once they pay us enough so they have this flexibility to subscribe to various lease term, right? 12 months, 6 months, 24 months, 36 months, depending on their appetite, how much they can pay every month, how much they can afford to pay? So once they pay their lease period, the system unlocks permanently, and it belongs to them. Now they have the ownership. The ownership gets transferred to them. So that's the rough cost. Is it?

13:36 Karan Takhar
So do your systems generally power the? Whole rural household, or do they also require grid connection in addition to your systems?

13:47 Piyush Mathur
Depends on the household size. If a typical family member, you know, parents, two kid, maybe 1 grandparent again, that kind of family is absolutely can rely on our system. They can go totally sufficient. We have a 300 Watt system which has multiple fan. They can run multiple fan, multiple lights, the basic needs, and a TV. But that's the basic need, but you cannot really if you done beyond that, if you want to run a refrigerator, you want to, you know, use some other appliances. Yes, you'd need grid, but for basic load, as we say. You can really go off-grid with our solution.

14:27 Karan Takhar
And what is the challenge in convincing these customers to adopt your systems? Are they generally pretty receptive, or does it take a lot of convincing? Like what are the main pain points?

14:40 Piyush Mathur
So now it takes this general awareness is very low, so people do not understand solar as such. So, that itself is a big barrier. So first, you have to tell about solar irrespective of your own product. How does it work? How it would be when in the sale, etc. So that's the first barrier, once they understand yes that solar is good. The second barrier, of course, is price. But then you overcome that with all your finance options and stuff like that. Once that is done, the third barrier is, of course, the comparison with the grid, right? So is it like light? Yes and no, no in the sense that you cannot just like there's a limited power, right? The server can only produce limited power grid is unlimited. You can virtually connect any number of loads you keep connecting, so here you don't. So there is a comparison around that factor, so these are the typical challenges that we face. You know the day-to-day business.

15:40 Karan Takhar
Before Your customers adopt your product, what is their situation like? Do they generally experience power cuts like what is the reason for them taking your product as opposed to their current situation?

15:54 Piyush Mathur
Should we have three types of customer segments versus one is upgrade, so they did not have grid? So these people are looking at grid-like power lies for the kids study and fan for comfort. But they do not have grid, so they that's one segment of customers. They are looking at solar the second is they have grid, but grid is very unreliable, so it doesn't fall today. Do not have grid when they want to watch TV. They do not have grid when the kids want to study. It's there in the order times. So, these are unrelated. That's the second segment of people, and then there's a third segment who or whom we are very relevant. The third segment is people who has grid and who have It very reliable meanings 24 by 7 almost or 20 hours by7 22 hours by 7. But the problem is it's they have to pay basis consumption.

16:46 Piyush Mathur
The first 2 segment that I said off-grid. They do not pay anything, obviously no grid people who have very unreliable grid. They normally pay very fixed amount. It's unmetered. It's not consumption-based, but people have who has very reliable grid. They have to pay basis consumption, so for them then they suddenly get they face the cost of electricity. So they look at solar or as simpa as an alternative or power-saving proposition.

17:14 Karan Takhar
Because the cost per units is cheaper.

17:18 Piyush Mathur
Yeah, or they sift the base load to solar, then their electricity bill reduces.

17:24 Karan Takhar
And what is the payback period for these customers generally?

17:27 Piyush Mathur
So less than 3 years.

17:29 Karan Takhar
And which customer segment out of those three is your main?

17:34 Piyush Mathur
No, it was in phases like when you started. Like I said, most of India was rural. India was upgraded. Now today, you don't find any upgrade village, so the upgrade is gone unreliable 50% and reliable, but paying who are looking at as energy saving probation and that reviews.

17:54 Karan Takhar
Thank you so much for your time. Very interesting, and yeah, I've I was reading somewhere that as CEO, you were very key in terms of helping simpa scale-like. I think I've read that simpa least expanded to 22 more districts in three states. Well, as you were the CEO of the company and is, was this technology factor one of the keys to enabling that and also like, when you're evaluating whether to scale into a new area like, what are some of the key considerations you take into accounts prior to executing on expanding?

18:43 Piyush Mathur
Sure, so I think another thing which is unique about some problems that we always were very clear that we are building a commercial solution to a longstanding socio-economic problem. So for this to be commercial, we have to employ all those disciplines which you would expect in a sort of contemporary startup. A new age, technology, business perhaps. But I mean in today's time. Technology is a great sort of leverage that everybody must use to not only build scalable processors but then also achieve greater degree of control, especially when you are managing a very geographically dispersed operation. So that's that was our sort of approach to using technology. Yes, we were always very clear that the only way we can actually build these scalable processors without sort of multiplying cost without multiplying scale is to invest in technology and run them through technology. So that was definitely a motivation. And that's the sort of direction we took, but then equally, technology also helps in enhancing the degree of control. And monitoring that one could exercise on the whole business so that you would actually come to very sub decisions about making changes introducing products for different policies where you operating, or even changing prices. But all of that would not be possible very swiftly if we were not managing it through technology. Your other question was about how do we select areas where we operate.

20:44 Karan Takhar
Exactly like what? What are some of the key decision-making criteria in terms of when you're deciding whether to scale or expand into a new area?

20:56 Piyush Mathur
Yes, so of course, I think there is the customer need that one needs to look at and start with. So even, obviously, we're looking for areas where their energy and liabilities patchy regular or the cost of electricity is very high, and therefore the customers are looking for an alternative solution.

21:20 Piyush Mathur
So that would most certainly be 1 consideration or one category of considerations, but then we would also evaluate any new area where we are, which we are sort of considering to operate and on our ability to service effectively. So what's the sort of road infrastructure?

21:42 Karan Takhar
I see.

21:46 Piyush Mathur
Cannot people travel deep into the villages all the way to people, homes, and shops and quickly provide service? Are we able to find delivery partners locally? We actually go and quickly deliver our product. So yeah, I think I would say it's a mix of considerations ranging from obviously the strength of customer need to our ability to actually deliver on that customer need effectively. But defining consideration then would also be what many microfinance companies will employ. In terms of understanding the credit culture and the correct behavior of local people because, in a way, we are also offering customers financing. The product and we must, therefore, also employ those filtered on disciplines which ensure a high portfolio quality.

22:47 Karan Takhar
I see, and if you were to maybe say a few words to say someone who's currently graduating from bachelor's or is just entering like the workforce or maybe even to your own younger self like Piyush when he was 22. What would? What insight would you give in terms of? Like whatever, whatever you want, well, anything you would you would say.

23:23 Piyush Mathur
I think my big learning is that rather than settle or compromise or given a little too early, A few extra days or months of so really exploring deeply what exactly excites you and what do you feel like committing to for the next 6-7 eight years? Because I mean whatever you get involved, and it does take that long to get started, and that ultimately group into a fish. So I'm afraid I don't have any signs to sort of give you here, but I suppose my couple of messages are that follow your heart and hold out for the right time rather than settle for a compromise because every career switch or an Indian traction point then commits you for hours 7-8 years. So that's a significant amount of time out of your life. I think the other big piece of advice I'll want to offer to the younger self of my own would be to invest in understanding technology in all its sort of majesty and glory. OK, so that you are able to employ it in all clever ways that it can be used because I think in times to come even today. How we're going to be building businesses and organizations will actually depend quite significantly on how we effectively we use that technology, so that would be the other thing I'd just like to add.

25:19 Karan Takhar
Thank you, this is and last question is so how do you see like solar in terms of like? What do you personally believe the future of solar to be?

25:37 Piyush Mathur
Oh, I'm very positive and, yeah, excited about the possibilities that solar holds out for our world or community. Because as I said earlier, I think the technology has now come to that point. I'm talking about the solar technology, but the solar technology has now come to that point where it can actually generate meaningful amounts of power where it has, where it has to be consumed so that that distributed feature of solar technology is game-changing. It's like a secular trend which is irreversible. I mentioned earlier how we've seen that trend play around in some adjacent sectors like transport, even technology for that after we've gone from mainframes to personal laptops and now handheld devices, it's flying out now as we speak in solar technology, and as it plays out and as solar technology runs through its technology evolution curve, we are also seeing prices go down quite significantly every single year, so the combination of those two factors prices coming down plus the power and potential of the technology itself increasing all the time is creating new opportunities for us to think about energy infrastructure in a number of different ways also then start to pair it with applications so they've always understood energy as electrons which can enable a certain use? Like they're on a fridge or, well, they don't know they can power a mobile phone, which we use, but I think in the in the in the these emails to come. You could also employ the solar technology in combination with appliances. So, for example, your mobile phone can actually have a solar panel on its back cover, and it's a self-standing generating time-consuming device. Similarly, you could think of other applications too, so I'm being extremely positive and excited about the potential of solar technology because I can visualize so many ways in which our world is getting ready to leverage.

28:13 Karan Takhar
Thank you so much for your time Piyush. It's been really great. I hope you enjoyed that episode, and do check out the show notes For more information on my guest. See you next time.

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