The Freeplay Group, a young, fast-growing company based in Cape Town, South Africa, wants to build products that capture the imagination of the world. It also wants to change the world — which means it has to operate in many different worlds. January in Las Vegas: Hundreds of thousands of businesspeople and technology geeks have gathered for the annual International Consumer Electronics Show. Even by Las Vegas standards, the show is a spectacle. A maze of booths sprawls across more than 1 million square feet of convention space. Some 1,800 companies are competing for the attention of the attendees. There is glitz — and schlock — galore: Three people in six-foot-tall, rhinestone-bedecked parrot suits dance to a company jingle; a bright-red sports car provides a place to demo new speakers. The whole scene is set to a bone-shaking hip-hop beat — the music of choice to showcase new audio technology.
Freeplay doesn't have to shout for attention. The company's booth is lined with a collection of stylish, transparent radios in eye-pleasing colors: wild cherry, lime, blueberry. They look as if they've been carved from giant Lifesaver candies. Each radio has a handle that, when wound up, generates the power to play the radio. There are no electric cords and no batteries. People can play these "self-powered" devices, which sell for $79.95, for free — hence the name.
"What's this?" asks a curious visitor, clad in a black T-shirt and jeans. "An iMac radio?" A Freeplay staffer hands him a device. "Wind it up," she says. The man folds out the handle and turns it for 10 seconds. The chorus from "Zoot Suit Riot," by Cherry Poppin' Daddies, blasts from the speaker. The base of the handle, now retracted snugly against the radio's face, spins slowly backward as the gears — visible from the outside — turn kinetic energy into electricity. "This is incredibly cool," he says. "Where can I buy one?"
Meanwhile, an ocean away, in a tin-shack classroom in the South African province of KwaZulu-Natal, a Freeplay radio is attracting eager attention from a very different audience. A group of kids is crowding around for an English lesson. In this part of KwaZulu-Natal, Zulu is the primary language, and electricity is a luxury, not a utility. Few residents can afford to buy batteries. And few teachers are fluent in English. Enter the Freeplay radio, donated by War Child, an aid organization based in London. War Child has purchased enough self-powered radios to help 150,000 South African children to learn English. Every morning, the kids listen to a 30-minute lesson that's broadcast over the radio. Each lesson begins with music and dancing and then moves on to storytelling. The students — ages five through seven — follow along in bright-colored workbooks. "In the rural communities we serve, when the batteries die, the learning stops," says Gordon Naidoo, who coordinates the program. "When we implement the program with these radios, it is instantly sustainable."
Plenty of companies aspire to make money and also to make a difference. Freeplay has delivered on both of those aspirations in dramatic fashion. The company was formed in 1995, shipped its first product in 1996, has generated revenues of $20 million as of March 1999 — and expects to reach $35 million by 2000. Freeplay's investors include General Electric Pension Trust; WorldSpace, a satellite-broadcasting company in Washington, DC; and Liberty Life, a top South African insurance company. The company's famous advocates include Nelson Mandela (who made an appearance at a Freeplay factory opening) and Jimmy Carter. Gordon Roddick, chairman of the Body Shop, serves on the board of the Freeplay Foundation. And Terry Waite, the former envoy of the Archbishop of Canterbury, who was held hostage in Beirut, is a trustee of the Freeplay Foundation.
Waite has a decidedly personal connection to Freeplay's flagship product: "I know what being cut off from communication is like. I spent five years in captivity, four of them in solitary confinement, during which time I got no news from the outside world. But near the end of my imprisonment, I did get a small, battery-operated radio. I was terrified that when the batteries died, the guards would not replace them, and I'd be back in total isolation. There are millions of people in this world who are in similar situations — cut off from the flow of information."
So although Freeplay's products have made a big splash in the rich countries — its radios (along with the Freeplay Lantern, a self-powered flashlight that retails for $69.95) are available at RadioShack, the Sports Authority, REI, the Sharper Image, and Harrods, the London retailer — the radios are actually making a difference in the poorest countries. The United Nations Development Program used them to broadcast election results to the people of Liberia; the government of Ghana purchased 30,000 radios so that villagers there could also listen to the elections. War Child may distribute radios to refugees in Zaire, to warn them about land mines in that strife-torn country. And Rotary International plans to use the radios to broadcast information about a child-immunization project in India.
In short, Freeplay is setting the agenda for how to combine the quest for innovation with a commitment to social justice. And its corporate agenda keeps expanding. "We're not just in the radio business," insists Rory Stear, 40, the company's cochairman and co-CEO. "We are in the energy business." Stear, who stands 6'7", has the appeal of an evening news anchor — wavy brown hair, light-blue eyes, a 10,000-watt smile. "We always ask ourselves, What else can we do with this technology? Countries like India have daily power outages. Even if you're a billionaire, you'll need some kind of self-powered device when the lights go out. We're creating a whole new industry that can improve people's lives, whether they're in Los Angeles or Lagos."
"We want to see self-powered products in every village and every city in the world," adds Christopher Staines, 38, Stear's cochair and co-CEO at Freeplay. "This self-powered technology is relevant, whether you're listening to a radio in Botswana, using a laptop computer in New Jersey, or hiking the mountains of Peru with a global-positioning system. That's our goal."
Commitment to Innovation
The workroom on the second floor of Freeplay's engineering division in Cape Town looks like it's been ransacked: Boxes of parts are strewn about, opened or toppled over. Gears, circuit boards, and springs are piled on room-long counters and on the island workspace. The chaos reflects the crushing deadlines that the six-person team had to meet for Freeplay to make a splash at the International Consumer Electronics Show. Several of the engineers worked well past midnight on Christmas Eve, building the prototypes of the FPR3 that Freeplay displayed in Vegas. The team now has just three weeks to debug the prototypes and prepare the specs for the factory.
Inside each radio lies the heart of Freeplay's proprietary technology — a spring made of a two-inch-wide, 20-foot-long ribbon of carbonized steel. The spring is positioned so that turning the handle forces it to wind backward onto a bobbin. The force of the spring rewinding itself drives a set of gears, which in turn feed into an electric generator — a DC (direct current) motor powered in reverse. The electricity feeds from the generator into a circuit board, which regulates the rate of unwinding. Winding for 30 seconds produces up to an hour of playing time on the radio and generates about 3 minutes of light from the flashlight.
Chris Rhomberg, the team's lone electrical engineer, has been hunched over the FPR3's circuit board for two days. The sales team in Las Vegas noticed that at higher volumes, the sound from the radio was distorted. Rhomberg, 30, is working on the problem. Meanwhile, Gavin de Brés, 30, and James Ramsey, who at 36 is the oldest team member, are building rough prototypes for a new project: One of the world's biggest toy companies has asked Freeplay to submit a proposal for a self-powered mechanism for a miniature monster truck that, when finished, will be a brilliantly simple device, powered by a spring that is wound up by pushing the truck backward. Three revs and it will roar off, no batteries required. For the moment, though, the truck is only a klunky, open aluminum box with the spring and gears bolted inside.
This workshop-clubhouse has no private offices. The engineers spend their time in perpetual motion, touching base for 30 seconds here, or two minutes there, swapping information, asking a question, and then returning to their piece of the project. Watching the team work is like seeing professional volleyball players in action — everyone touches the ball, and it never hits the floor. It's easy to understand how this group designed and produced the current version of the Freeplay radio in just 14 weeks.
Rhomberg, who's been quietly assembling the case of the radio that he's been debugging, interrupts the group's conversation. "Listen to this," he says. He winds up the radio and cranks up the volume. The music spills out — loud and clear. Everyone knows what that means — the bug is out. Fellow team member Pierre Becker thumps Rhomberg on his back as the rest of the group applauds. "Take that, Sony!" Becker says.
That kind of tenacity is precisely what John Hutchinson, Freeplay's director of engineering, wants to cultivate. Hutchinson, a shaggy-haired 46-year-old, has a laid-back, informal management style. But there are two kinds of people he won't tolerate — "liars and loners." At some point, every member of his design team has weathered a verbal thrashing from Hutchinson over those issues. Hutchinson combines the meticulousness of an engineer with the doggedness of a lawyer, and, in fact, he has degrees in both fields, as well as an MBA. "For us — working with these tight product cycles and inventing new technology as we go — it has to be about teamwork," he says. "We can't have one guy work on the design and then hand it to the mechanical guy, who drops it in the lap of the electronics guy. It has to be seamless collaboration from the start. And if you screw something up, by God, you'd better say so. It's okay to make a mistake, but we can fix it a lot faster if you open up the mistake to the group."
In exchange for his demands, Hutchinson offers a huge amount of freedom. The company has box seats at the national rugby games, and Hutchinson rotates tickets among team members. He also takes team members up in his ultralight plane, a passion that he's had since the 1980s, when he built his own makeshift rig from a hang glider and a chain-saw motor. To Hutchinson, flying is the perfect model for the team's working relationship. "Once you're in the air, it doesn't matter who the hell you are or what your title is. You're totally exposed. You have to trust each other."
Not only do Freeplay engineers have to trust each other, they also have to trust in the technology's potential. This small, resource-strapped company has taken on some big-time risks. The company is feverishly developing self-powered products — a global-positioning system, a land-mine detector, a water purifier — for which there is no proven market. The purifier is particularly ingenious: When water and salt are combined in the prototype's metal cup, the machine produces enough hypochlorite to sanitize 10 liters of water. Its potential is vast: It could purify water supplies in disaster areas; it might even prevent the spread of AIDS by generating clean water to mix with powdered infant formula. (One source of infection is communal breast-feeding.)
"We have a real sense of commitment," says Hutchinson. "It comes from doing honest work, for an honest wage, to make a product that's meaningful. The Red Cross, for instance, gave radios to a village in Afghanistan. One little boy had the job of winding the radio. The whole village would gather to listen to the radio; it was an incredibly important part of their community. One day, the boy accidentally broke the handle. He was so distraught that he ran away from home! If that story doesn't teach us the importance of quality, nothing will."
Chris Rhomberg sums up the sentiment this way: "We're like a family that works together." That philosophy is reinforced by the Afrikaans phrase that the engineers use when answering their cell phones: Ja, boet. Hello, brother.
Money and Mission
Breakthrough innovations — from the Apple Mac to the PalmPilot — usually begin with a simple idea that redefines people's expectations about what a product can do. But even the most brilliant idea requires staying power — the wherewithal to handle the kinds of setbacks and slowdowns that are part of the entrepreneurial process. Stear and Staines have had a lot to do with Freeplay's stamina. The two of them figured out early on how to marry a powerful idea to deep pockets — and still maintain the company's original vision.
Chris Staines remembers precisely when he first encountered the idea that led to that vision. It was April 15, 1994. Staines, who lived in London at the time, was flipping through TV channels while waiting for his wife, Emma, to get ready for an evening out. He stumbled across a BBC show, called "Tomorrow's World," that profiled Trevor Bayliss, the inventor of a wind-up radio. Bayliss built the rig after learning that one of the biggest hurdles in slowing the spread of AIDS in Africa was the inability to inform people in remote regions about safe sex. Bayliss, a blustery, optimistic sort, figured his contraption could do the job — if he could find a partner to build it.
Staines wanted to be that partner. The British native was a finance whiz who'd honed his skills while working in Australia and Britain for the accounting firm known then as Deloitte, Haskins & Sells, and as head of mergers and acquisitions for Seff Corporate Finance in Cape Town. "It was just a brilliant idea," says Staines. "Anyone who couldn't see that was foolish. I had the contacts in South Africa and in the U.K. I knew how to raise money, and I lived less than 100 miles from Bayliss. I couldn't think of one reason why I wasn't the best person to help."
Apologizing to his wife, who was by now ready to go, Staines called Rory Stear in Johannesburg. Staines had worked for Stear for three months at Seff. The two made a great team: Staines, an accountant by training, is as reserved as Stear is gregarious. Stear, a serial entrepreneur, started his first business as a disc jockey at age 18. Staines is more the passionate tactician. "I'm no great humanitarian," he quips. "I suppose I'm an accountant with a vision."
Stear shared Staines's enthusiasm for the radio, so Staines called the BBC and got Bayliss's fax number. That night, Staines stayed awake writing a business plan, which he faxed to Bayliss the next morning. Bayliss agreed to meet for brunch, and a few days later, the three had an agreement. Although Staines and Stear intended to raise money to launch the product, they didn't expect to be doing business with some of the biggest companies in their country and the world. Nor did they intend to run a multimillion-dollar operation with two factories and 270 employees. "We're like the dog that catches the bus," jokes Stear. "What do we do with it now?"
What they did was to build a company. On the wall of the conference room in Freeplay's Cape Town headquarters are copies of cartoons that Stear and Staines commissioned as gifts for their major investors. In each illustration, there is a caricature of Stear on his knees pleading and one of Staines brandishing the Freeplay radio. Also in each cartoon is the investor, appearing either pleased or panicked (depending on how you read the expression) but nevertheless signing a check or showering the founders with cash.
Freeplay's first big check wasn't an investment per se — it was a donation. Stear and Staines were called to a meeting with Andy Bearpark, a former aide to Margaret Thatcher and the head of humanitarian affairs at the Overseas Development Administration (ODA) in London. ODA gave the partners £150,000 (the equivalent of $235,000 at the time of the transaction, in 1995) to make a commercially viable model of Bayliss's original prototype (which took two minutes to wind and played for only eight minutes) that would be used by aid groups. "It was unbelievably easy to raise funds at first," Stear says. "We did not even have a product yet, but the idea was so compelling that groups like ODA were willing to finance it. The BBC even shot a documentary about us — before we had a factory. It was all very heady and exciting."
One of the people who heard the buzz about the company, which was then called BayGen (as in Bayliss Generator), was Hylton Appelbaum, head of philanthropy of Liberty Life, a big South African insurance company. Appelbaum, 45, was intrigued by the radio's potential in Africa, a place filled with people who had no access to electricity. The Liberty Life Foundation offered the company £1 million (about $238,000 in 1995) to build its marketing operation.
But the money didn't last long. Realizing that Freeplay could not outsource its manufacturing (its production runs were too short), Stear went back to Appelbaum for additional funding for a factory. The Liberty Life Foundation's primary goals were to promote job creation and to assist the disabled. Appelbaum saw a chance to address both goals through Freeplay. He offered another £1.7 million (or $480,000) — not to the company but to a consortium of nonprofit organizations for the disabled. This consortium then gave the money to Freeplay to open a factory. The consortium took a 50% interest in the factory, Liberty Life Foundation got a 25% stake, and the workers got 25%. Freeplay got board control and full management responsibility. A year later, Freeplay used the same financial structure to open a factory to manufacture flashlights. This time the key stakeholder was NICRO (National Institute for Crime Prevention and the Reintegration of Offenders), an organization that helps ex-convicts and abused women.
"It was a perfect investment," Appelbaum says. "We were able to create jobs for people who had the least chance of getting them, while helping to decrease crime. And we did it in a sustainable way."
The next crucial investor was Gordon Roddick, who visited Freeplay's factory and was impressed: "Thousands of good ideas die because the right people are not there to carry them out," says Roddick. "Rory and Chris were entrepreneurial — hungry. They were also taken with the idea of creating a socially responsible business. My visit coincided with their first big cash shortage, so I became an investor."
Over the next two years, Roddick invested more than $2 million. He also provided a virtual blank check as overdraft security on Freeplay's production. (Which is why Roddick's cartoon depicts him galloping in on a white horse.) "At one time, Gordon owned 42,000 radios," Stear marvels. "He'd buy them at cost, we'd stockpile them and sell them when we could. For a while, Gordon was the world's largest collector of wind-up radios."
But Freeplay's vision was too expansive to be financed by a single investor. So in 1997, it wooed its first big-time corporate investor, the General Electric Pension Trust. In return for a one-third stake, GE provided $11 million. The deal also included a research partnership with GE, whose labs in Schenectady, New York had been working on self-powered technology. The cartoon marking this investment shows Leonard Fassler, head of GE Pension Trust, suspended midshot over a basketball hoop — Michael Jordan-style — tossing an armful of cash through the hoop into Stear's arms.
"Ultimately," says Stear, "we all want to make startlingly good profits. GE didn't invest because it wanted to feel good. It invested because it was getting in on a major industry, and it expects to realize extraordinary returns on the investment. We're not asking for charity. This is a commercial venture. But if you can make a huge profit and make a difference, that's nice."
Freeplay's manufacturing facilities are a 20-minute drive north of headquarters. The verdant route, lined with South African pines, winds past the University of Cape Town and the Groote Schuur Hospital, where Dr. Christiaan Barnard performed the world's first heart transplant. The ride offers a scenic view of Table Mountain and lush hills covered in soft green bush that the Afrikaners call fynbros. It is an unusual plant — as are the plants in which Freeplay builds its radios and flashlights. In one, a third of the 125 workers are blind, deaf, paraplegic, or otherwise handicapped. In the other, half of the 125 workers are ex-convicts or battered women. With the exception of the occasional wheelchair, it's impossible to tell the disabled from the able-bodied, the criminals from the victims.
Freeplay executives shrug at the idea that they are conducting a bold social experiment inside their factories. When the assembly lines opened two years ago, 125 people produced 500 radios per day. Today the same number of people make 2,000 radios per day. The output per person is the same in the factory with handicapped workers as it is in the factory without them. Both factories have defect rates of less than 1%.
Given the specialized, labor-intensive nature of its assembly process, it's tough to benchmark Freeplay's productivity against that of other factories with processes that are more automated. But it's easy to gauge the commitment of the workers. "Our factory is across a four-lane highway from the bus stop where many of the workers get off," explains Derek Sturgess, 51, Freeplay's manufacturing director. "A couple of months into our first production run, I got a call from a local traffic cop who told me about two of our blind employees who were stuck without a sighted person to help them cross the road. The bus pulled away, and the two men just took off across the street. A five-car pileup resulted! When I asked the men about the incident, they said they were determined to be on time."
Maxwell Khosana, 28, has been working at Freeplay for seven months, installing motors in the radios. Khosana flunked his high school exams in 1991, and, shortly after that, his mother lost her job. Faced with no job prospects and a younger brother to feed, Khosana was easily recruited by some friends to break into houses. During an attempted robbery, one of Khosana's cohorts assaulted a worker who had been painting the house targeted for the break-in. The worker later died, and Khosana spent five years in prison. Afterward he worked for a short time in a bakery and in a restaurant, both of which eventually went broke. Then he heard about NICRO, which led him to a job at Freeplay.
"When I arrived here, I was shocked," Khosana says. "In my previous jobs, you had to call the boss 'mister' or 'sir.' Here, I am told there is no boss, that I am in charge of me. I stopped feeling like I was going to die. This job gave me back my dignity. Even people in my community — they look at me now, and they respect me. They don't see a criminal. They see someone who made a mistake. Freeplay made me feel like a person when I felt less than that."
Hylton Applebaum, the person who envisioned the factories as they are today, couldn't be more satisfied with the results. "I get goose bumps," he says. "I took a friend of mine who is disabled to see the plant. His first thought was, 'It's a sheltered environment where people are patronized and given special treatment.' But he saw that it wasn't like that at all. At the end of the day, we were standing outside the factory next to stacks of boxes labeled, 'Made in South Africa.' And his eyes filled with tears. You can't imagine how significant and inspiring the work done in the factory is."
To Staines, the factories are flesh-and-blood examples of the value system that drives his company — but they are merely a part of the social impact that he wants Freeplay to make. "Our larger vision involves how the products are used, not just how they're made," he says. "When we employ several hundred workers in South Africa, we touch some lives. But when we ship 5,000 radios into a community — and then the radios get used to teach about health care, AIDS, agriculture — we are giving thousands of people a chance to better themselves. That's what keeps me going."
Adds Rory Stear: "I don't want to preach to anybody about how to do things. I just do what makes sense for me as a person and for our business. But when I come to the Unites States, I am overwhelmed by its abundance and by how isolated Americans are from the rest of the world. I just don't believe that talented people can pursue wealth in a vacuum. There's no reason why U.S. companies can't be doing things similar to what we're doing — even inside the United States. Sure we want above-average financial returns, but we also want to feel good about what we are doing."
Not all of Freeplay's partners feel as good about the company's social vision as the company's co-CEOs do. Indeed, Stear worries that, to some people, Freeplay's values come off as soft-headed — or worse, as calculated self-promotion. That's why he is now working so hard to get through to Freeplay's distributors and retailers that are in wealthy countries. These are the places that he hopes will not only buy the company's products but also buy into its worldview.
Back in Las Vegas, Stear hosts a dinner during the International Consumer Electronics Show. His guest of honor is one of the company's most important U.S. reps. This rep has owned a distribution network on the West Coast for more than 20 years. He's the guy who put Freeplay in the Sharper Image, and he's one of the people who will help the company to expand into sports retailers. He knows his business. But he does not know Freeplay — not really. Looking very much the part of the tough businessman, he lays out Freeplay's challenge as he sees it. "What it comes down to, Rory," he says, gesturing with his bread roll, "is that if you want three feet of shelf space in sporting goods departments, you have to knock someone else out of the way. It's all about killing the competition and ripping their livers out."
One of Stear's young salespeople savors the phrase. "Rip their livers out!" he repeats, "like Hannibal the Cannibal." He waggles his tongue and slurps loudly, mimicking the character from The Silence of the Lambs. The people at the table shriek with laughter. Stear laughs too, but hesitantly. The man is a great partner, but Stear feels that he doesn't "get" what the company is about. "The opportunity to learn from him is immense," Stear confides. "He's got 20 years of experience in retail, and he knows what he's doing. But we won't ever be about profit at all costs. It's hard to get that through to some people."
Later that night after the dinner has been eaten, the wine drunk, and the whiskey poured, the rep stands up to say good-bye. He extends his hand to Stear and smiles. "It's been a pleasure," the rep says. "I look forward to furthering your education." Stear shakes his hand. "Thank you," he says graciously. "And I look forward to furthering yours."
The Freeplay Group is setting the agenda for how to combine the quest for innovation with a commitment to social justice. Its cochairmen and co-CEOs, Rory Stear and Christopher Staines, don't apologize for their ambitious business plans and savvy approaches to marketing. Nor will they compromise on their goal to make a difference as well as to make money for their shareholders. Here are some of the principles that are guiding the company's growth.
1. Big problems demand big ambitions.
"We're not just in the radio business," insists Rory Stear. "We are in the energy business." The company's self-powered radios and flashlights are hits, but it keeps searching for new ways to apply its proprietary technology — even when there's no immediate demand for it. Freeplay engineers are experimenting with everything from wind-up laptops to global-positioning systems.
2. Mission matters.
"We're not just a business," says Stear. "We're a business with a soul." It would be easy for Freeplay to leverage its popularity with First World consumers by postponing its plans to distribute radios throughout the Third World. If it did, the company would be more profitable — and even more attractive to investors. But it would lose something valuable as a result — its mission. That's why the young company has already established the Freeplay Foundation, which supplies radios at steep discounts and works with broadcasters to create educational and instructional programming. "We are investing in the future," says Staines. "Not everyone may understand some of the decisions we have made, but those choices will bear fruit in the long term."
3. Small companies need big-name supporters.
With revenues of $20 million as of March 1999, Freeplay is an entrepreneurial success — and still a pip-squeak by most standards. But the company's influence and visibility far exceed its current size. One reason is that it has managed to affiliate itself with big companies, such as General Electric, as well as with big-name humanitarians, such as Terry Waite. "We have gathered the most powerful people we know," says Staines. "It's impossible to measure the value of their contributions."
4. Companies that do good works attract great talent.
"Whether you're running a company with 3 people or 300,000 people," says Stear, "you have to hire the best engineers, the best marketers, the best production workers. The products we make, the programs we have, the mission we espouse make people feel good about working here. Our values become a motivator."
5. Companies can't succeed in countries that fail.
Freeplay has lots of strategic challenges to overcome — raising money, cracking upscale retailers in rich countries, working with aid agencies to distribute radios in poor countries. So why take on the extra challenge of staffing its factories with ex-cons? "Crime is the single-biggest obstacle to the success of a democratic South Africa," says Stear. "Business here can't just pay lip service to stopping crime. And the only way to begin to stop crime is to create jobs. If our company can do that, then so can a whole lot of other companies."
Cheryl Dahle (firstname.lastname@example.org) is a Fast Company senior writer. Learn more about Freeplay on the Web (www.freeplay.net) or contact Rory Stear (email@example.com) and Christopher Staines (firstname.lastname@example.org) by email.