The Stealth Entrepreneur Behind One of the Biggest Innovations in Finance

The Stealth Entrepreneur Behind One of the Biggest Innovations in Finance

Why you should care

Because you might not know the name Nick Hughes, but it belongs in the same category as Zuckerberg and Musk.

Plenty of entrepreneurs hew to form. They puff their chests, they bluster, they pitch idea upon idea that will change the world.

Then there’s Nick Hughes. The man is reticent, calm and so behind-the-scenes that he can come off as a bit of a wallflower. At investor meetings, “we’d have to prop him up with a bunch of espresso,” half-jokes his business partner, Jesse Moore. Which is all the more interesting because the British entrepreneur is utterly, demonstrably audacious. With a mobile-payments platform called M-Pesa, Hughes has busted genres, created something entirely new and changed the lives of millions and millions of people. And he and his small team at Vodafone did it in 2007, years before Apple Pay and Venmo. Now, in an Elon Musk–type move, Hughes is on to a new venture that would upend another couple of sectors — energy and finance — and leapfrog the West along the way. The question is: Can Hughes do it again?

Established in 2012, M-Kopa is another genre-busting business that, at first glance, looks like a solar company: It sells solar kits for around $200 to customers who pay as they go and eventually own. Each kit is implanted with a SIM card, connected to the mobile network, that users can top off every month; if they don’t pay, the company can shut down service. Others have since copied the idea, but M-Kopa had a head start, “particularly because they built on the foundation of M-Pesa in Kenya,” says Richenda Van Leeuwen, former head of energy access for the United Nations Foundation. Today, the company has some 400,000 customers across Kenya, Uganda and Tanzania and $30 million in revenue in 2015, which was expected to double in 2016.

But for Hughes, solar is just the way in; the ultimate goal is to disrupt finance. (Kopa is Swahili for borrow.) After customers pay down their solar kit, which usually takes about a year, they can remortgage it to buy other items from M-Kopa that would otherwise be too expensive: low-wattage TVs, water tanks, smartphones. So far, 60,000 M-Kopa customers have refinanced. All of those microtransactions mean M-Kopa collects around 30,000 payments and 7 million data points a day, with the potential to know more about the buying habits and behaviors of this previously invisible customer segment than any other business in the region. “He has this incredible gift of connecting the dots in a way few of us can do,” says Moore, M-Kopa’s CEO.

Hughes’ colleagues say he’s a big-picture guy. He’s “wonderfully unconstrained” by convention, says Susie Lonie, who has worked with Hughes on M-Pesa from the start. Long before climate change or social entrepreneurship became trendy, Hughes was thinking critically about development. After earning a Ph.D. in applied sciences, Hughes worked for British Petroleum on carbon markets. Then came business school and a plum position as the head of Vodafone’s corporate social-responsibility team. Today, some 19 million Kenyans use M-Pesa to transact more than $70 million a day. The platform itself is a beacon to countries around the world and has created a cascade of new companies capitalizing on mobile-pay technology.

Solar wasn’t a choice of the heart, but of the mind: Hughes saw it as a playerless field with scalability and massive market potential to solve otherwise intractable social problems. As it stands, around 600 million sub-Saharan Africans are off the electric grid, and East Africans pay up to 30 percent of their incomes on kerosene, which is cumbersome, risky and costlier than the solar kits. “It’s true market failure,” says Hughes. Given high mobile penetration and unfulfilled demand for finance services, there’s an obvious space to rethink “fundamental services for humanity.” he adds. “Deep down, you see, whether it’s moving money or providing power, the models we have don’t work.”

To be sure, M-Kopa wouldn’t exist without the technological advancements of the past five or six years. Lithium batteries have gotten better, which means that LED lighting and panel prices have dropped meaningfully, poising the sector for a rush of market-based innovation. In the past, industry experts like Van Leeuwen had to “lower expectations about the profitability of small-scale solar.” Today, “there really is a story for investors there,” she argues.

While the low-key Hughes might need a triple-shot of espresso to tell that story himself — let it be known that there is still some dispute over who invented mobile money — Hughes’ lack of bluster may make him the perfect man for the job. He is stealthy in arenas with plenty of entrenched interests: banking, telecoms, energy. Many would-be mobile-payment companies in other countries have faltered before strict bank and telecom regulators. In the case of solar and off-grid solutions, regulation has been very light, where it exists, says Van Leeuwen. But “one of the questions is to what extent that will continue.”

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