For Profit, For Honduras

In 2006, Will Haughey was working as a trader at Goldman Sachs while his brother Chris was traveling throughout Central America doing a study for the Boston Consulting Group. There was something about Honduras that spoke to Chris, so he sat down at his computer and e-mailed his brother.

Will recalls the day he got that message in his inbox.  "He said, 'this country needs help, a lot of it. They don't need another nonprofit, what they need is something that can scale outside of the country's borders."  Out of that conversation, the two of them began to think of ways to bring sustainable jobs to a country where more than 65% of the population lives below the poverty line.  What products could be consistently produced in Honduras for oversees markets?

Within a month, they realized that they could produce something in wood. Eventually, they began to see promise in crafting high-quality wooden children’s toys. But what kind of toys? Chris, whom Will describes as being the more risk-tolerant of the two, quit his stable job to dive more deeply into the project. They began to churn out lots of prototypes of toys, with the help of some design friends from Stanford, Chris’s alma mater. Early prototypes were very “basic, rough and crude,” as Will says, but they hinted at the innovative products they would develop. Instead of normal wooden blocks, which are limited in play by placement and gravity, the brothers had developed blocks that can be arranged in new ways, thanks to strong magnets hidden inside. Still, it’s one thing to have a wild idea, and another to see if anyone else likes it. So they spent a lot of time with kids, taking their early versions out on the road for feedback. After one of these hands-on prototyping sessions, they realized they had a good product.

With that realization, they launched their company, Tegu, to start building and selling sets of these innovative toys. Tegu – named after the Honduran capitol Tegucigalpa, as you may have guessed – has an interesting approach to achieving its mission. At first glance, they seem to have multiple missions: making innovative and relevant products that people in the U.S. want to buy; increasing employment in Honduras; and encouraging sustainable design and production. Will, however, is clear that their main objective at Tegu is job creation in Honduras; and equally clear that they cannot accomplish this mission without paying attention to one measure above all others: profitability.

Tegu now offers a variety of sets of blocks on their website, each made in Honduras out of sustainably-grown hardwoods. For customers who care about the story behind the product, Tegu provides easy ways for people to get involved: you can donate to plant trees, or provide funds for schools in Honduras. When asked about how he felt now that the product was shipping, Will responded, “As you can imagine, the process of opening a business, starting a factory, sourcing materials and labor, and producing a quality product has been a little more time consuming than we ever would have expected. But we're there.”  Success at Tegu hasn’t been without its hiccups: being featured on the Today Show was terrific, but created a giant backlog of orders for the young company. Likewise, a terrific mention on the gadget blog Gizmodo sent tens of thousands of people to the Tegu website before the holiday, only to find out that the toys were backordered for weeks.  But these setbacks haven’t stopped the action. As Will told his incredulous boss at Goldman Sachs, when he decided to work full-time on this project, it’s not about going to work at some stable, existing company, it’s about the chance to create something new of value in the world.

And to keep them in stock.


Learning from Tegu.

1.  Do what you know.

When Will and Chris Haughey set out to manufacture something, they both could lean on years of experience making things out of wood. Both their father and grandfather had workshops at home, so crafting things out of wood was second nature. Likewise, by the time they started Tegu, both brothers knew the conditions in Honduras well.

2.  Learn from your mistakes, but don’t wait until you’re perfect.

Taking a cue from Guy Kawasaki’s book “The Art of the Start,” Will Haughey notes that it’s important to work on getting your product or service out the door. You had better fix your problems, but don’t think that you’ll be able to anticipate them all, nor that your first product will ever be perfect.

3.  Think outside the nonprofit box.

Tegu’s business model shows that there are other models for helping people thrive in impoverished areas. Creating things that people want to buy is one way to do it.

4.  Don’t wait for the lightbulb moment.

Thinking about getting involved in service? In exploring some new idea? Will Haughey didn’t wait for a magical moment to make the move—he studied the field, found a great co-founder (who happened to be his brother), and took stock of his risk.  

Knowing that the Haugheys set out to make a company succeed on the strength of their products, you may be wondering whether the Tegu toys are indeed any good.  SixSeeds contributor Mark Basnage wanted to know too, so he ordered a set. Tune in next week when we review the Tegu blocks.