Thursday, January 17, 2013

Entrepreneur and Engineer Kyle Schutter ’10 Powers Takamoto Biogas Forward

As Kyle Schutter ’10 and his roommate were riding back to Providence on the train from Boston one day during their senior year, they did what they often did during their discussions. “We’d just throw these crazy ideas at each other,” Schutter says. The crazy idea this time was biogas. “Have you ever heard of it?” his roommate asked. Schutter hadn’t. “You just take anything that can rot and turn it into fuel.”

After this, Schutter, a biomedical engineering major, couldn’t get biogas out of his head. For a class, he drew up a plan for a biogas company operating in the developing world. After graduation, he considering earning a PhD, but he changed his mind.

“I could get a PhD and know what I’ll be doing for the next seven years,” he thought, “or I could start this company, and I won’t even know what I’ll be doing a year from now.” Young and adventurous, he chose the second option.

After graduating, he went on a fact-finding trip to Africa and started an internship with a biogas construction company in Ghana. It didn’t work out. Schutter didn’t like his boss, and he was being given only menial tasks to do. After five days, he quit and went on his own to Uganda, Rwanda, and, finally, Kenya, which he decided “was a great place to live and start a business.” The country has a reliable cell phone network, he says, and an educated, business-oriented population. Farmers in rural areas—his target customers—have access to banking services. And finally, well ahead of the United States, Kenya has developed a mobile money system in which phones can be used to purchase goods. This makes handling cash unnecessary, which Schutter says reduces “the chances of theft and increases transparency.”

He opened Takamoto Biogas in Nairobi in 2011. He used a biogas system developed by a nonprofit company, taking cow dung, vegetable scraps, cooking grease, and even human feces—pretty much anything organic—mixing in water, and placing it in an oxygen-free container. Bacteria digest the waste, generating natural gas that can be captured and used to fuel anything from a milking machine to a propane cooking range. Over a six-month period, Schutter sold twelve biogas systems, each one costing $1,000.

Schutter turned to friends and family for additional capital, and during the next year and a half he sold twenty more units. If the cost of research and growth are excluded, he says, his company is already profitable.

Ever the engineer, several months ago Schutter began working in his backyard on a new model for the biogas system. He has now lowered the upfront cost to $100 and reduced installation time from twelve days to three hours. This winter he plans a renewed push to sell more units. He also will begin to court outside investors and apply for grants from foundations.

“Right now we are in a good place,” Schutter says. “We could grow faster if we had more cash, but we have to keep” enough cash on hand “because one of the biggest threats to an enterprise is stress and burnout.”

Government corruption can also be a hindrance. A Kenyan official once asked him for a $200 bribe in exchange for a permit. Schutter said he would sell the bureaucrat a biogas system at a reduced price: $1,000. The official didn’t know that what Schutter was charging him was the regular retail price for the system. The bluff worked, and no laws were broken.

For now, Schutter plans to concentrate on Kenya, but he eventually hopes to distribute his biogas systems throughout the developing world. Already, he’s received inquiries from officials in Cameroon, Somalia, and Uganda. “Whether it’s me or someone else,” he says, “this idea will be spread worldwide.”

- by Lawrence Goodman/Brown Alumni Magazine