Interview with Henrik Esbensen for DSG Hub

In 2008, my wife and I temporarily hosted a Malian English teacher, Dadougou, in our home in California. He was in the US to improve his English skills, and his stay with us changed the course of my life. Poverty changed from being something I’d see on TV to being a person, my new friend, sitting at my kitchen table. My problems were absolutely meaningless—absurd—compared to his.

When Dadougou went back home to Mali, we helped him financially to start a small business. Things escalated, and before we knew it, we were running a small MFI and providing financing and training for entrepreneurs in Mali and Burkina Faso. It wasn’t really planned, but there was a need and growth was spontaneous. There were many success stories but also many challenges and setbacks. We learned a lot from trial and error.

One specific need was that of software tools for our staff – basic tools allowing us to work together. We weren’t impressed by the tools that existed at the time, so we started writing our own simple tools. They turned out to be a far greater success than our MFI . We won some awards for the technology. But we struggled running our tiny MFI. Then one day, finally, the obvious dawned on us: We shouldn’t be running an MFI at all (what a ridiculous idea) , we should leave that to the pros. However, we should be focusing on something we did know about: technology.

In 2016, I co-founded DreamStart Labs, Inc. together with my closest friend, Wes Wasson, with a vision to develop technology which empowers human talent to create opportunity for all. Tragically, Wes passed away in late 2023. But we managed to save the company, and we have very strong traction now.

DreamStart Labs is a for-profit social enterprise—a fintech focused on developing powerful digital tools for savings groups and individuals in developing countries. Our flagship product, DreamSave, is an Android app which manages the groups meetings from beginning to end: tracking attendance, the group’s constitution, financial transactions, shareout, compliance, etc. It is a digital replacement for the paper ledger and passbooks, which greatly improves accounting accuracy and speed while minimizing fraud.

DreamSave Insights is a web portal used by NGOs to see the data of their groups. The DreamSave platform is now being used by 30,000 groups with more than 500,000 members across 25+ countries.

Our newest product is DreamLink, which will provide the tools needed by MFIs, banks and other FSPs to offer financial products and services to savings groups and their members. The groups will be able to evaluate and choose product offerings displayed in the DreamSave app, and the app will be able to automatically pre-approve the group.

Well, I can tell you what has surprised me the most, and I think that many other people will second this experience: I’ve been surprised by just how resourceful, creative, talented and entrepreneurial the members of a typical savings group are. I’ve visited groups in which no one had ever seen a smartphone before. With some guidance, and less than one hour of practice, most people can use the app! They start asking very good questions. And after a few weeks, it’s amazing just how creative people are. They see the opportunities created, and they pursue them.

Our mission at DreamStart Labs is that virtually all savings groups will be digitized and consequently, most savings groups will have access to trusted financial services – loans, savings, insurance, etc. – which will enable them to fulfill their dreams. Talent is everywhere, but opportunity is not. It is my hope that five or ten years from now, we’ll have made significant progress leveling the playing field and creating opportunity for all savings group members.

However, to get there, I believe we need to change the way we operate – and by “we”, I mean technology providers and NGOs. As a sector, we are stuck in “pilot mode”. We keep doing 20-group pilots of apps, year after year, in country after country. There are countless blogs and articles on a pilot by NGO X of app Y in country Z with 20-50 groups or so. The latest pilots are no different than those done 8 or 10 years ago. The findings are the same. As a result, we have spent a decade without making as much progress as we should have made.

This situation is very different from what typically happens in the technology space. Generally, whenever a new technology emerges, you first see a flurry of startups. Then, after a relatively short time, say, 2-5 years, there’s heavy consolidation, and maybe 2-3 strong providers emerge. They capture 90% of the market, and now you get scale because these players have the size and the resources needed to scale.

As technology providers, we need to do better. I see technology-related problems we still haven’t solved well enough. Connectivity (internet access) remains a significant issue, as does affordability of smart phones, and easier to use apps. At the same time, on the NGO side, it’s difficult to understand why a new 20-group pilot with a new app from a new regional startup is a good use of resources at this stage. Unless the technology provider has a truly scalable technology, a broad geographical reach and the financial resources to sustain it long-term, what are the odds of significant impact?

To break out of pilot mode, and truly achieve scale, I think we need two things:

1. Consolidation rather than fragmentation. A heavily fragmented technology market simply won’t scale – no single player has enough resources.
2. Collaboration. Technology development is very expensive and therefore difficult for any single provider to finance alone. But there are many things we all need: Robust credit scores, chat bots, voice recognition, etc. Why not develop the engines for these expensive capabilities together and then share these engines? Today, we are all trying to develop the same things, and that’s not a great use of very limited resources.

In our sector, it is very difficult for any technology provider to survive. It is very challenging to find sustainable business models. Our end users cannot pay for our products. Therefore, it is a lot harder to be sustainable in our sector than it is for software providers in affluent markets. And that makes the above points even more critical, in my opinion.

In several countries throughout the world, we currently see a shift away from helping fellow human beings in need towards instead making the rich even richer and fueling conflict and division in the process. This is especially true in the USA, as exemplified by the dismantling of USAID. As a result, many NGOs have had to eliminate or drastically reduce their programs around the world.

In response, our sector needs to develop big ideas that can deliver impact proportional to the scale of this problem. Significant reductions of the operational costs of NGOs and MFIs have probably never been needed more than now. Digitizing savings groups is an important first step in that direction, but it shouldn’t be the last.

AI is of course the latest technology which has huge potential in this context. We need to embrace it and maximize its value as we are doing at DreamStart Labs.

To discuss all these issues, and develop the needed ideas, we need a platform. And that’s the DSG Hub. It has never been more important.