Category Archives: Strategy

Broadening the Base of the Startup Pyramid

While in London at the RGS event I spoke about a different way that I’ve been trying to explain the startup and successful ecosystem needed in places like Africa. Specifically, in the major technology hubs for the continent, these are cities; Nairobi, Jo’burg, Accra, Lagos and Cairo. There seems to be enough funding available for SMEs. How do we get more of them?

It goes something like this.

We have a few good success stories in any one of these cities. There are a handful of great tech companies and organizations that have “made it”. This can be seen as a success in innovation or in business (or in both). Everyone wants to be at the tip of this, and these are the examples we hear of at international conferences and read about in the media.

In the middle we have everyone else, the guys who are still slugging away. They have some clients and revenue streams, but they’re not at the top (yet).

At the bottom, that’s what we deal with in places like the iHub and m:lab. These are those scrappy startups that might or might not have any right being in the place. They’re risky, probably don’t have a solid business model yet, and only a few of them will graduate into the SME space above them.

What to do?

To make the tip of the pyramid bigger, to have more success stories in the tech space, there is only one option: you have to make the base of the pyramid broader.

If your job is to see more innovative new tech companies come out of Africa, the recipe is quite simple:

  • Invest seed funds into local tech entrepreneurs.

(that’s my only bullet point, it’s that simple)

Ushahidi Strategy Meeting 2011

[Reposted from the Ushahidi Blog]

Yesterday Ushahidi won the Kenya ICT Award for “Social Equity and Poverty Reduction“, which we’re extremely grateful for. None of us were able to attend the conference in Kenya due to the whole team being at our big annual meeting.

The Ushahidi core team works from 7 different timezones ranging from Kampala to Louisville, soon expanding to places like Brazil and Korea. One weekend a year we’re able to get together, in-person, to solidify our connections with each other and talk through the big strategic topics that are best done face-to-face. It could be argued that it’s the most important 3 days of the year for us.

The First XV

2010 was a big growth year for Ushahidi, where we got up to 12 core team members – doubling in size from 2009. We’re adding 3 more people this year, which brings us to 15, a fortuitous number for the team as many of us are big rugby fans. :)

(Caleb decided to have a little fun, putting us all in our positions based on the date that we joined the team.)

12 Months Later

Last year we met in Miami, as we are this year, and a lot has happened since then. To name the big ones:

  • Plugins – extensible way to add new functionality without bloating the core
  • Crowdmap – maps for non-developers, also a means to quickly collect reports giving deployers time to install their own server
  • SMSSync – simple and robust alternative to Frontline and Clickatell
  • iOS – rich smart phone experience
  • Checkins – opens platform to entirely new uses
  • Stand-By Task Force – game changer in disaster response
  • J2ME – extending reaching onto older devices
  • Community Site – fantastic documentation
  • Map Geometry

Looking at the historical record, it’s been a good year. However, there’s a lot more to do. At this meeting, besides drinking a Mojito on South Beach, we’ll get into some of the big future-looking issues, such as:

Visual Reporting: What’s the perfect Ushahidi dashboard? How do we surface “power stats” for Ushahidi deployments and metrics. Swift-Ushahidi integration visuals on the front and back end.

Knowledge Management: How do we come up with a plan to capture information that we know internally, so that it is shared with deployers and developers better?
The inverse, how do we handle and capture information that our *users* know regularly?

Crowdmap Scalability & Migration: Making sure that even the biggest deployments work on Crowdmap. Adding in new a la carte features, etc.

Of course, this is a chance to discuss some of the more mundane items as well, around operations, funds and how we work towards organizational financial sustainability as well. It also means that we’ll be offline from today until about Tuesday of next week. We’ll be a little slower on email and other communications mediums, but bear with us as it’s for a good cause.

The Afrilabs Association

In 2008 a couple of tech guys sitting around a table after Barcamp Nairobi first discussed the idea that eventually would become the iHub. In January 2010 there was another group, this time of people trying to setup their own labs, hubs and coworking environments in other countries across the continent.

It was there that the idea for Afrilabs was born: an association of these facilities across the continent. The association is for linking the spaces for learning, growth, and to provide greater mass for the entrepreneurs that we work with.

The labs serve as an accessible platform for bringing together technologists, investors, tech companies and hackers in the area. Each lab shares a focus on young entrepreneurs, Web and mobile-phone programmers and designers.

Spaces and Models

The founding 5 member facilities are the iHub in Kenya, ActivSpaces in Cameroon, Hive Colab in Uganda, Nailab in Kenya and Banta Labs in Senegal.

There aren’t many spaces like this across Africa, and there were even fewer a year ago, though we hope that more will quickly be added from many other countries. Already we’re hearing about new spaces popping up in Nigeria and the Ivory Coast, with planned ones in Tanzania and Ghana.

We’re all experimenting with our models. Some are pure coworking, some incubators, others provide freelancers a chance to act as a collective agency, while some serve as a community commons where tech serendipity happens. My take is that we’ll end up having as many models as the unique city cultures that spawn them, mixed in with the ethos of the founders. And there’s room for many more, even in the same city.

Why Afrilabs?

The Afrilabs Association serves a few purposes:

  1. Provide an association that is easily accessible by lab and hub managers, where they can learn from their peers, understand the different models and connect easily.
  2. Provide a bigger target (continent vs country) for attracting outside investors for the entrepreneurs in the labs. Possibly with an Afrilabs fund, accessible only through the filter of an entrepreneur’s local lab.
  3. AfriLabs seeks to build on this common vision and further promote the growth and development of the African technology sector.

I’m excited to see the dawn of this new open and accessible model of coworking, incubation and community spaces for Africa’s tech industry. Not only will the labs receive greater visibility, but businesses and investors now have a channel to more easily source talent and investments within Africa’s tech community.

If you run a tech lab or hub in Africa, or are putting together one, make sure you contact Afrilabs.

Tackling Africa’s Classified Listings Space

Just over a year ago I was frustrated. We had just moved back to Kenya and I was trying to outfit our house with a few necessities. Just finding sellers of the items we were looking for was a pain, as there were no options for classifieds services online that had much to offer.

Being a builder and a problem solver I wanted to better understand what was going on here. Why, in 2010 did I have to go to one of 7 large shopping centers across town, in Nairobi’s terrible traffic, in order to look at a notice board to find products? With this in mind, I sat down and penned a strategy paper that I thought could address the problem.

(Below is the overview, the full document is to long to post)

The Overview

No organization or entity in Kenya has come up with a good classifieds network. There is little, to no, traction in the online space and the offline arena is a fractured market where each group protects their fiefdom and doesn’t share their ad content. This is seen in the popularity and reach of the classifieds at major shopping centers like Sarit Centre, Yaya and Village Market, but also in the newspapers and mailing lists.

There is also no good option for digital classifieds, even though there have been multiple attempts, including Nation Media Group’s N-Soko, Craigslist Kenya and eBay’s Kijiji as well as many small operations by Kenyan developers.

This fractured landscape, as well as a missing digital nexus point for classifieds in Kenya, creates a large and open opportunity. Real money is ready to be made, as there are many frustrated buyers and sellers who need an outlet.

In order to succeed at making real money with classifieds listings in Kenya, one needs to have a strategy for both the analog and the digital sides. It’s not enough to make a great classifieds website – as N-Soko and Craigslist are showing us. Neither is it good enough to have just offline newspaper ads or shopping center message boards.

The document went on for another 5 pages outlining a solution that I thought married up what was needed: a way to mix Kenya’s analog community habits and the efficiencies of a digital solution.

Our Solution

A couple months later I was discussing this with David Kobia, my colleague at Ushahidi, talking about how there are wide open opportunities like this in Kenya where there is a clear void that no one is filling. It’s not hard, it just takes focus on a simple platform that’s both web and mobile enabled, along with a way to bring in the analog side.

Fast forward a couple of weeks and David built a little site for this purpose over the weekend, called Pigia.me. A place for us to experiment with, and we did. We spent some time gathering classifieds from the shopping centers and the newspaper. We did some Facebook ads. It worked, we quickly got up to over 3,500 listings and traffic was increasing. Total investment 3 days coding and $300 in ads.

But we didn’t have the time. Ushahidi keeps us way to busy, as does the iHub.

Enter Dealfish

About 3 months ago Dealfish, the big classifieds site owned by MIH in South Africa, launched in Kenya. Simultaneously it launched in Nigeria, Tanzania, Uganda and Ghana (English). And in Francophone Cameroon, Ivory Coast, Senegal, and the DRC. They scooped up well-known tech entrepreneur and blogger Moses Kemibaro from Dotsavvy to run East Africa’s operations, while Neil Schwartzman overseas all Sub-Saharan Africa for Dealfish and Stefan Magdalinski presides over Dealfish as well as Mocality and Kalahari for all but South Africa.

They’re now at approximately 12,000 listings (in Kenya), serving the major urban areas and have about 6000 “answers” per month (which is what they call it when a buyer tries to contact a seller). The top areas are auto, home and jobs – like most classified sites.

Until critical mass is reached, classifieds are something that you have to put a lot of energy towards on a constant and consistent basis. Thus Dealfish has chosen Kenya and Nigeria as their first focus-countries, where they have dedicated personnel.

MIH has deep pockets, and they’ve decided that there is a future in investing in digital arena in the Africa outside of South Africa. They came on strong with online ads by Google, Facebook, Inmobi, Admob and Buzzcity. Inmobi has given them the best return, with Google ads in second place. However, it’s the Dealfish team notes that the Inmobi traffic doesn’t have nearly the same intent to buy or sell as the Google traffic – it’s blind coming in.

Offline Dealfish used radio, in-store advertising, posters in malls and in club bathroom stalls. The form of advertising dictates the type of user, whether they use mobile phones or PC web. In the beginning mobile users were their predominant type, but now it’s split 50/50 between mobile and PC web users.

Dealfish is doing well, and will continue to do so, especially as they have enough financial backing to continue seeding the market. Their competition comes in the form of verticals that are specifically created for a niche market. In this case, autos with Cheki, jobs with Brighter Monday and homes with Property Kenya. And that’s just in Kenya, they’ll fight that same battle in the other markets as well.

Tackling Africa

The only other classifieds system that has made a dent in Africa is Kerawa, operated out of Cameroon. They have thousands of listings in quite a few countries. They’ve done this over the last 3 years, bootstrapped and growing organically.

However, there’s a danger in trying to go after everyone and everything. In the broad classified space there is only a single winner, no prizes for second place, except in niche areas. Whoever reaches critical mass first wins, and the rest can go home. It’s better to win in a couple countries than to lose in all.

Both Dealfish and Kerawa have to fight the very real issue of spam listings. Just letting anything to so as to get bigger numbers only decreases the value to the user. How customer service and clarity of use and value play out to the listing companies and people is where a lot of time and resources can be spent.

[Update: Google Trader launched in Ghana and Uganda to mixed success. As long as there was a lot of marketing put into the effort, they had a lot of listings, as soon as they stopped there was a big drop-off. It's yet to be determined if Google Trader is a failure or success, or if Google is still putting any more effort into it.]

Urban then Rural

Finally, you have to start in the urban areas due to users, devices and general “mass”. However, if you think that’s enough, then you haven’t learned the lessons taught by the mobile operators. That is, urban is your anchor, but rural is your long tail, your reach.

Any attempt to get enough critical mass to make serious money off of traffic or transactions has to reach beyond the cities. The towns and rural areas are untapped and ripe for the approach. Phase 2 of this approach should look a lot like what I wrote about back in 2009, on how village billboards should be leveraged alongside the mobile phone shops in smaller communities.

Pay Attention to the Mobile Web

In 2008 we saw the scales begin to tip with imports of data enabled phones being larger than that of non-data enabled phones.
In 2009 we saw the undersea cables hit East and Southern Africa in a big way.
In 2010 we saw the mobile operators get serious about data availability and cost packaging for everyday Africans.

2011 is upon us, and with it brings a new type of data-enabled mobile user in Africa. It also brings the mobile web to center stage.

Mobile web content has been defined as any internet-connected or browser-based access to the internet and as digital content connected to a database that passes through a handheld device connected to a wireless network.

Simply put, the mobile web is the same data that the web layer brings to you on a computer, just now on your phone.

The mobile phone is the most ubiquitous instrument there is in the market. Usage is no longer limited to sending and receiving calls and texts, especially with the increase of data enabled phones, increased bandwidth availability and decreasing data costs. The convenience in terms of use-anywhere-anytime has made access to mobile web content easier, accelerated by dropping rates of mobile handsets and data.

What does it look like?

Here are a couple of examples:

  • Consumer content such as movie times and restaurant reviews, such as Flix and EatOut.
  • Consumer focused transaction sites and classifieds like Dealfish and Pigia.me.
  • Content, such as news, blogs and aggregators like Afrigator.
  • Business information for consumers and businesses, such as Mocality.
  • Mobile-specific communities, such as Motribe, Facebook and Twitter.
  • The ability to pay via mobile payment methods or credit cards, brought to you by mobile payment aggregators like PesaPal.
  • Advertising done by the likes of InMobi and AdMob.

You can see that it doesn’t look all that different from it’s purely web-based counterparts. It’s the same data, just more accessible on your phone.

There are strong plays to be made in all of these fields, as there are few leaders in any country, much yet regionally… yet. The reason for that is we’re just on the front end of this sea change, so even the leaders only have a very small slice of the pie.

While there will always be a place for client-focused mobile applications (Android, iPhone, Ovi, etc.), there is just too much friction there to scale. Friction for the developers who build the applications, and friction for the users who need the “right” phone to access the apps.

For more brain food on this topic, I suggest reading Fred Wilson’s post, Counternotions and alternate thoughts from Diogenex.

Tech Success in Africa is Built on the Ordinary

It’s not a big surprise to see Nokia’s Symbian operating system is the most popular in Africa. We all knew that, but it’s by how much that draws your attention.

Royal Pingdom has an excellent post on the web usage (which is what they can measure) of the top OS use around the world. It’s amazing to see the difference between Africa, Asia and South America as opposed to Europe and North America.

While, as a developer, it’s a lot more sexy to work on the cutting edge operating systems like iOS and Android you’d be making a mistake to do that in Africa. Unless you’re developing apps that are global in scale or you’re doing client work, you should be focusing on Symbian (or Samsung’s Bada OS in some countries). It’s where the numbers are.

Reaching Ordinary Africans

This brings to mind something I’ve been thinking about for a while. Mxit, as most people know now, is the mobile social network out of South Africa. It was built about 4 years ago and has 20 million+ users.

Mxit didn’t get big because they tried to build something that was cool and sexy for the middle/upper classes in South Africa (which is what so many try to do there). Instead, they built one of Africa’s most successful tech companies by focusing on everyday South African youth and fulfilling their needs.

In fact, you can take this one step further. Almost any meaningful success in Africa’s mobile or web space has been from companies focused on meeting the needs of ordinary people. Go ahead, think of the success stories in Africa’s tech space, now name them and see if they’re made for a global market, Africa’s elite, or for the masses.

(The Lack) of African ICT Research

I’m at the ICTD conference at Royal Holloway, University of London, this week. Usually I wouldn’t be at a conference full of academics and researchers, but Tim Unwin (conference Chair), was interested in having a practitioner panel leading it off, of which I was a part. It’s a conference of very intelligent and driven people, with a lot more patience than myself, studying a lot of what’s going on in the ICT space as it relates to development in Africa, Asia and South America.

More Research in/of Africa, by Africans and African Institutions

One of the people that I’ve been speaking a lot with here is Shikoh Gitau (on Twitter), a Kenyan lady who has spent the last few years down at the University of Cape Town doing research. In the talk about “ICTD Research by Africans: Origins, Interests, and Impact” by Gitau S; Plattiga, P and K.Diga, there were some very interesting points given and a great argument made for why Africans need to be involved more.

ICTD Research by Africans: Origins, Interests, and Impact
View more presentations from kdiga.

“African research agendas need to involve Africans more”
- Geoff Walsham

It’s no surprise that most of the ICT research comes from South Africa, followed by Nigeria and Botswana. But even if you added up all the research done in all of Africa, it is only 9% of the research done in Africa is done by African institutions.

Who are the researchers in Africa?

This, of course, is what Shikoh and her team looked into. Here’s where you can help to. What are the African ICT research institutions? What are the publications?

Add any ones that you know to the comments below and I’ll add them to the list above.

Thoughts on Doing More

One of my questions about why there isn’t more African ICT research was whether this was a supply and demand problem. Is it because there aren’t enough researchers in Africa? Not enough research institutions? Or, is it because the people paying for and funding research are only funding researchers in their own back yard (the US and Europe)?

Part of the answer seems to lie in the lack of incentives for African academics to get away from “just” lecturing and into research. Another seems to be the lack of funding organizations looking for Africans to do the actual research.

I’m intrigued enough by this that I’m thinking of how the iHub can be used to support African researchers. If that interests you, let me know.

Mocality: Mobile Business Listings for Africa

It’s not often that you hear of a tech startup from South Africa who chooses to build and deploy their product to Kenya first. In fact, I’ve never heard of such a thing. However, that is just what is happening with Mocality, a mobile and web-based business listings and directory application built for Africa.

Mocality’s job: create a digital platform that makes it easy for business owners to promote and expand their businesses in Africa.

“As a business owner, you get free SMS, a contact list, a free mobile website and a free mobile business card.”

Mocality represents this change in the paradigm that we’ve seen coming on for years in Africa. An application built agnostic to the client platform (mobile phone or PC), where data is fed into whatever you use in a meaningful way. Where the mobile usage is just as rich as the PC use.

In fact, they’ve studied usage of mobile phones on their system and have seen the usage of smartphones to be so negligible as to not matter. As CEO Stefan Magdalinski says, “This is the Mocality reality: RIM, Android, Apple are 2% of usage.”

About the Team

Successful startups generally have great leaders, Mocality has that. Stefan Magdalinski (@smagdali) is a seasoned web veteran and entrepreneur, co-founder of Moo.com and an early entrant into the programming space in England in the mid-90′s, and just recently relocating to South Africa for Mocality. They have plenty of funding, from MIH, a subsidiary of Naspers Group (who has been eying Kenya with recent forays such as Kalahari and Haiya).

I’ve met with Stefan in Kenya and South Africa, and I’ve also had the chance to meet some of the members of his team here in Nairobi. The impression that I’m left with is that this is a serious startup, with plenty of funding and a great vision and a strategy put in place to pull it off.

How it Works

Mocality is built for Kenyan businesses that don’t have enough money (or value to gain) to advertise in a print directory.

Again, a paradigm shift. They’re saying that they don’t care about the big end of the power law of distribution (the big companies), only the longtail (small, marginalized businesses). This is apparent in the images below of their typical user:

  • SMS, WAP & Web tools (now J2Me, iPhone)
  • Businesses can self list
  • Geo-coding All business locations
  • Map view of business
  • Business toolkit:
    1. Add customers & suppliers
    2. Send bulk messages (400 free SMS monthly) (but with anti-spam controls)
    3. Send mobile business card
    4. Add details (e.g. Menus, Special Offers)
  • Website, google optimised (white hat only)

Important to business owners in this segment is that the platform is free. Services will be added to the platform over time that business owners can pay for, but currently the only cost to them is data or SMS usage on their own mobile phone to access Mocality.

Scaling using the Crowd

Initially, the Mocality team walked all over Nairobi getting businesses to put their listings on the platform. They were successful, and in about 6 months of hard work were able to get approximately 11,000 businesses listed. That’s good, but barely puts a dent in the number of companies operating in this city.

The team then launched a crowdsourcing option, where they experimented with allowing anyone in Nairobi to add their own (and other’s) businesses to Mocality, and they got paid a bounty to do so. Within the last 6 weeks they have as many listings entered as the previous 6 months. If you live in Nairobi and want to become an agent, you need a WAP-enabled cameraphone and only need to visit http://www.mocality.com/money.

That’s impressive, but the impact is even more apparent when you look at the visualization:

If you have a business in Nairobi, you can get your listing onto it by visiting www.mocality.com email to info@mocality.co.ke or SMS callme to 2202 from within Kenya.

Nairobi Hackers Descend Upon the iHub

I’m sitting at the iHub this morning, after just having given my welcome to the 40+ Nairobian hackers who have descended upon the place. They’re here to take part in the global Random Hacks of Kindness (RHoK) hackathon to develop tech solutions to pressing needs in crisis and disaster response.

It should come as no surprise that Nairobi’s technorati are well-versed in mobile solutions, that’s quickly becoming a competitive advantage in this city. So far we have groups coming up with solutions for amputee registration via SMS and USSD, An SMS solution to create distress texts, improvements to people finder apps and tracking of mobile payments.

Keep up to speed

This event goes through Sunday afternoon, it’s a full 36 hour hackathon. Watch as the devs in Kenya work with their counterparts in Australia, Indonesia, Brazil, the US and UK. Keep an eye out on the above resources to see what comes out of Africa!

RHoK Nairobi, Kenya

Kenya’s Tech Regulation Conundrum

A lack of regulation, or at least a more relaxed regulatory environment, have been directly responsible for Kenya becoming a hub of innovation, specifically in the mobile payments and banking space.

The gorilla in Kenya’s room is Safaricom. The posted a Ksh 21billion pre-tax profit yesterday, citing growth and profits in almost all areas, including 137% growth in data services, which they see as the next big cash cow.

Safaricom has directly benefited from this environment and their savvy marketing and business moves have left others in the dust. Businesses should be allowed to make profits and smart strategic decisions rewarded by profit and market position should be expected and encouraged – else why do they do it?

A couple of weeks ago new regulations, put together last year by the CCK, were floated by the Monopolies and Prices Commission. These rules were intended to curtail the massive growth of firms like Safaricom and the ScanGroup, to the detriment of competitors and the market as a whole. Naturally, the only firms upset with these rules were the incumbents.

Just yesterday, Dr. Ndemo, the permanent secretary for information and communications decided that Kenyan professionals who drafted these new rules weren’t professional enough and called in consultants from the United States to review them. While it is true that the Monopolies and Prices Commission is weak in ability to fulfill its mandate, this move comes off as an appeasement by Dr. Ndemo to Safaricom as it came out on the same day that Safaricom was having it’s annual shareholder’s meeting. It makes you wonder who dances to whose tune.

Both sides have good points. Smaller firms do have an uphill battle, not only due to their size, but also due to the unfair practices that larger firms tend to busy themselves with in Kenya to keep the competition at bay. However, large firms also have point. If they are playing fair, should they be punished for being better than everyone else?

Too much regulation in a sector can cripple a country’s innovative business growth, especially technology (see South Africa’s banking rules…). Dominant players have the same effect.

Maybe, instead of adding unnecessary regulations, governments should look to truly and strongly punishing unfair and dirty practices that are already on the books. A 200,000 Ksh ($2,500) fine is the most that Kenya’s monopoly commission can do, and it’s laughable at best.

Facebook Zero: A Paradigm Shift

Just a week ago I was in Cape Town talking about how entrepreneurs in Africa are looking at the prepaid mobile phone market and are trying to solve for the cost structures for data provided by the mobile carriers. Who knew that internet giant Facebook would beat them to it?

Facebook ZeroThis week Facebook launched 0.facebook.com, where they worked out deals with 50 mobile operators in 45 countries to either zero-rate data costs coming to that URL, or paying that data cost themselves. This means that anyone, even those with no airtime on their mobile phone, can still take part in Facebook.

“Thanks to the help of mobile operators we collaborated with, people can access 0.facebook.com without any data charges. Using 0.facebook.com is completely free. People will only pay for data charges when they view photos or when they leave 0.facebook.com to browse other mobile sites. When they click to view a photo or browse another mobile site a notification page will appear to confirm that they will be charged if they want to leave 0.facebook.com”

Interestingly enough, 5 of the 6 largest Facebook using countries in Africa do not have access to this service yet: Morocco, Nigeria, South Africa, Ghana and Kenya.

Top Facebook Countries in Africa

Facebook Zero is launching in these countries

Why this matters

What has happened is that Facebook, even with all of their problems and questionable ethical moves on privacy issues, still have a great strategist with a global perspective in their midst. What they have realized is that the only way to increase penetration in the developing world is to cover the data costs for their users (or, if lucky, snooker a mobile operator into not charging them for it).

I pay for someone to visit this blog. I pay my web hosting fees and that means that you can visit it for free. Almost. Unless you’re on a free WiFi service you still have to pay your ISP to connect to the internet. This is akin to me paying off your ISP for when you visit my website.

It’s a big deal, and I think we’ll see a lot more of this happening. It raises the bar for everyone else. If you want to play in this league, you now need to pay off the mobile operator for the traffic that goes your way. Meanwhile the mobile operators laugh all the way to the bank – it’s a huge win for them, and a big score for mobile web consumers in the developing world.

The Israeli vs Silicon Valley Models for African Startups

Everyone wants to compare any up-and-coming tech city in the world to, “The Next Silicon Valley”. That idea is dead on arrival, yet we’re seeing many a reference to it in the media for places like Nairobi and Cape Town.

Paul Graham’s essay states this best (please, read the whole piece):

“What it takes is the right people. If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley.”

A model for African startups

Yesterday I spoke at Mindspeak, a monthly meeting in Nairobi where people in the business and tech fields talk about what got them to where they are. During the Q&A session after I spoke there was the recurrent question and comparison between what we’re trying to do with the iHub and how we see the increased critical mass in the Nairobi tech space, and if that was going to make us the next Silicon Valley.

That’s the wrong model for us. Instead, we should look closer at the Israeli model.

“Very often, local high-tech startups can’t find the funding here,” Mr. Glaser said. “They get funding elsewhere and ultimately move their locations from here to be closer to their investors.”

Israel already has a culture of innovation and entrepreneurship, which leads to a strong startup culture. Due to geographical and political constraints, startups that create high-tech products and services are forced to look at their growth strategy early on. When a company starts gaining traction, they spin out their executive and parts of their operations to places like Silicon Valley, New York, Cambridge, etc, while maintaining parts of their operations in Israel.

We’ve seen the same with a South African tech firm. Yola (old name: Synthasite) moved first their executive team, then part of their operations, to San Francisco. Shortly thereafter, they raised an amazing $20m.

Of course, the Israeli Model, requires more than just up and moving half of your startup to Silicon Valley. That’s a simplified formula. However, it does serve as an indicator for what we should be looking at here. Instead of trying to grow the same ecosystem that took decades to develop in California, we should look at what works for us.

Key ingredients needed:

  • A network of investors, mentors and connectors in the bigger tech hubs of the world that help incoming African tech companies and help them take the next step. Most of these should be well-placed African diaspora.
  • A policy and legal framework in African countries that allow them to build and succeed/fail quickly so that they can take that next step globally.
  • Seed capital and incubation options for early stage prototypes and business testing in-country.
  • Teach entrepreneurship and leadership within the education system, especially at the university level.

You’ll note that none of these items can be done by just one entity, it takes a concerted effort by multiple parties, including investors, academia and government in order for both a high-tech startup culture to come into being and for success beyond a countries borders to take place.

Certain cities in Africa have the ability to pull this off, including Nairobi, Johannesburg, Cairo, Accra and Lagos. Others have a chance too, but these 5 have the critical mass that makes it more possible, though none of them are there yet.

Crowdfunding and Seed Funding in African Tech

I’ve written a couple of times about the lack of seed funding in Africa, and how to find the entrepreneurs to fund if you did have seed capital. We’re starting to see a few angel investors like Sean Murphy of Chembe Ventures making their way around the continent, but they are not nearly enough to fulfill the capacity of ideas and individuals who need startup capital.

Crowdfunding

Just this week the CrowdFunding South Africa site was launched (look for them at SXSW this week in Austin), working off the theory that, “South Africa cannot compete in the global online sector if it isn’t funding start-ups at the beginning stage.” Their plan is to do this by getting:

“1000 people get together investing R1,000+ each by pooling the money into the Crowdfund.”

Seed funding is risky, and the idea of Crowdfund is to distribute that risk over a number of people thereby reducing it for everyone. Their goal is to invest 50,000-100,000 Rand in 10-20 “excellent ideas”, and also provide legal advice and contracts, designers, specialized developers, bandwidth, hosting, office space and running costs, mentorship and time saved.

This idea is similar to what Ben White at VC4Africa is thinking about, basically a “Kiva on steroids” as Bill Zimmerman puts it. A way for you to invest in people and projects with larger sums of money and greater risk and returns than on the microfinance investing sites.

Finding the Real Tech Entrepreneurs

Both the Crowdfund and VC4Africa initiatives are excellent steps in the right direction, as they both provide platforms that allow less-knowledgeable investors (of tech in Africa), and deeply involved African tech investors alike, to get involved without too much risk at one time. There remains one issue to be solved though, and that is finding the entrepreneurs to invest in.

Any VC worth their salt will tell you that they invest in the people behind good ideas, not just the product/service that the entrepreneur is trying to create. So, how do you find these individuals? It’s generally through your network, people you trust, that serve as a filter to guide you towards the promising ones. That’s the same in Africa as it is anywhere else, yet here in Africa, there are fewer of these trusted intermediaries who act as filters (especially for international capital), than there are in the US or Europe.

In a meeting this last week of the people behind Limbe Labs (Cameroon), Appfrica Labs (Uganda), the iHub and the iLAB (Kenya) we discussed how these spaces could act as that type of a filter for investors and funds. Each of us sees more young tech entrepreneurs every day, and sees these individuals consistently, than most any other single person could by themselves.

Could these labs, which are now showing up all over Africa, be a way for entrepreneurs to make themselves known, show their stuff, then be introduced to the funds and investors with a greater level of confidence than normal?

iHub: Nairobi’s Tech Innovation Hub is Here!

iHub – Nairobi’s Innovation Hub for the technology community – is here! It’s an open space for the technologists, investors, tech companies and hackers in the area. This space is a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers and designers. It is part open community workspace (co-working), part investor and VC hub and part incubator.

A number of us in the Nairobi tech community have been discussing the need for a physical nexus for the tech community here for a couple years, so it’s great to finally be so close to uncorking the bottles and celebrating a big step forward for all of us.

iHub opens on March 3, 2010!

Here’s a rough video of the iHub. A first-look at the space, before any design or wiring is done:

[Note: my apologies for the video quality, it was taken with my phone.]

Background and Info

The iHub will have a redundant 10Mbs connection, hardwired and WiFi, and it’s freely available to any tech person in Nairobi to use once they become members. Membership is free, our only requirement is that you are indeed involved in the tech space as a programmer, web designer or mobile application developer.

Data connectivity is the most important aspect of the iHub, but after that comes a fresh design and an atmosphere that is conducive to techies getting cool stuff done.

Finally, we’re putting our networks into place to give special access to the entrepreneurs and startups who need space to meet with VCs, seed funders and local businesses. We’re trying to create the place where seeds are planted and are easily found by the people with money to help them grow.

A Blank Canvas

The iHub is what we as a tech community make it. It is a blank canvas, a big open room with a great view and wonderful location, but still an empty room that needs some input from people within the community to design, and create a culture around.

What part are you going to play?

  • Want to have bragging rights on being the logo designer for the iHub? There’s $500 (38,000 Ksh) up for grabs at the iHub logo contest!
  • Have a penchant for design, want to help layout the floor plan, pick the wall colors or design the signage?
  • We’re wiring this place with the latest and best data connections in Kenya. Can you help us make sure the network is sound?
  • Good at creating intranets for fast and easy file sharing of 1gb+ downloads like the Android SDK? Want to help us build that?
  • Maybe you’ve got great business connections. Will you help us connect the iHub and the people in it to the business community?

iHub Location

The new iHub’s location is going to be on the 4th floor of the new Bishop Magua Centre on Ngong Road (directly opposite the Uchumi Hyper). It’s an amazing location, with quick access to public transportation, food and the rest of town.


View iHub – Nairobi’s Innovation Hub in a larger map

Community Involvement

I’ve been working closely with a couple of people from the community to find a place and get some basic items squared away. This advisory group is made up of individuals with a long standing presence in tech locally, including:

  • Riyaz Bachani, CTO of Wananchi
  • Josiah Mugambi, Co-Founder of Skunkworks
  • Rebeccah Wanjiku, Tech reporter and entrepreneur
  • Conrad Akunga, Blogger and Software Manager
  • Erik Hersman (me), Tech blogger, Founder of AfriGadget and co-Founder of Ushahidi

As mentioned earlier, there are a number of things still to be done, and we all need to band together in order to make this space what we hope it will become. Your ideas and drive will make the iHub into the space to be in all of East Africa for tech-related activities.

If you would like be involved, leave a comment below.

The FLAP Bag Project at Pop!Tech

If you follow AfriGadget, you’ll know that this summer I spent some time testing some new bags made by combining flexible solar panels from the people at Portable Light with the top-notch bags made by Timbuk2 in Ghana and Kenya over the summer. The whole initiative was put together by Pop!Tech, and it’s called the FLAP (Flexible Light and Power) bag.

the FLAP bag project

The FLAP bag is still very much in its testing phase. What I was doing was alpha level, today more people are getting access to the bag and will help with beta testing in more places. This is good. It means that the team behind the project are not just rushing something to market to take advantage of the buzz, but are really trying to get it right.

Some of the suggestions from the African users can be found in the Fast Company article I wrote last week, but there are more coming in too, from South America and an Indian reservation in the US.

A few suggestions from African users

  • The American-style Timbuk2 bags were generally thought of as too large
  • Electronics need to be put into a more rugged case to survive the beatings that they’ll take in Africa
  • People wondered if there was a way to hide, or cover, the solar panels to disguise what the bag was – for security reasons
  • There was a general feeling that there was more use for portable light and power in rural settings rather than urban
  • The ability to remove the solar components from the bag was genius
  • The tailors wanted to make their own designs, and wanted access to cheap components to experiment with, and then sell

Testing, Local Relevancy & a Challenge

Hacking the FLAP bag project

One of the most compelling things that happened on the trip was my interaction with tailors. I would give them a bag, but also give them the raw components and challenge them to make a bag of their own design, using local materials that they thought would be right for them, or right to sell in their market.

The bag above is my favorite customized bag design, it’s a smallish backpack that was made by Stephen Omollo in Nairobi. There are others though (see them here), and these creations serve as an indicator of the desire to own the technology. To make the technology relevant to specific local needs.

What this left me with was a nagging thought – that I was the wrong person to do this testing project. Sure, AfriGadget connections make me and the other editors a likely vector to do this, but that It was Timbuk2 that needed to be out in Africa with us. (I’m letting Portable Light off the hook, because I know they already do this)

Luckily, I’m here at Pop!Tech with the team from Timbuk2 and the team from Portable Light. I’m inviting them out to Kenya to actually get on the ground with these tailors and people who understand the pulse and cultural usage norms of the clients that they serve locally. With a little luck, we’ll get even further with the project, seeing a true partnership across two continents.

A big thank you goes out to my colleague Henry Addo in Ghana and David Ngigi in Kenya for their help with both videography and the interviews.