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Pivot East: East Africa’s Startup Pitching Competition

Mark your calendars, buy your tickets, submit your applications!

We’re ramping up to the Pivot East pitching competition, where the best startups in East Africa come to show what they have, pitch their startup to investors, media and the judges for a chance to win the prize money.

Pivot East will be held at Ole Sereni Hotel in Nairobi, June 5th and 6th. Last year we had over 100 applications for the 25 slots, and we’re expecting even more after seeing how well Pivot25 did last year (writeups by TIME Magazine and CNN). Last year we saw startups from Kenya, Uganda, Rwanda and Tanzania, and this year we’re hoping to see some from South Sudan and Somalia as well.

Getting more information

Pivot East is put on by the m:lab East Africa, an incubator for startups in the mobile apps and services space. All profits go to support the facility. This year support comes from Samsung, and we’ll be announcing a few more big names in the coming weeks. If you’d like to be one of them, contact us.

If you have any questions, we’re having a meeting a Baraza at the iHub on Monday the 6th of February from 2.30pm to 3.30pm. If you’re a startup wanting to know more, or are media or an investor, come by and talk to the organizing team.

[Note: for more on last year’s here is my blog post retrospective.]

UPDATE:
The Pivot East Team will be coming to Uganda on the 20th February 2011 at Makerere. You can book your tickets for the event on the link below:

http://pivotuganda.eventbrite.com/

The “Mobile Web” as text and voice

January 23, 2012 / HASH / 5 Comments

The mobile web revolution has already spread around the world. The phase of it that we live in is where we see the internet hitting critical mass based on the availability of web connectivity on mobile devices. Data is widely available, and the costs continue to decrease at an alarming rate. We’re seeing the disruption this is causing already, from businesses to consumers, and within the political structures of entire countries.

THE MOBILE WEB from Duniamedia on Vimeo.

Dunia Media, out of Switzerland, has put together a good video showcasing this change.

Interestingly enough, this video showcases iCow and M-Farm, both providing agricultural data to farmers, not in a browser, but as text or voice messages. One could think the title to be a tad misleading, as the “mobile web” term is largely applied to web interaction on a browser on a phone.

What I like about this take though is this; the internet allows for a paradigm that doesn’t care what device you have, whether PC or phone, as long as you have a database and a channel you’re in the game. As long as the device has some type of text or voice communication it is suddenly a read/write platform.

What we’re seeing in applications coming from Africa is a way to stretch the use-case of “old” messaging technology like SMS, USSD or voice into new ways of data transfer that challenge Western conceptions of what the internet is.

Thoughts on Africa’s Mobile Operators and Disruption

November 13, 2011 / HASH / Comments Off

Generally speaking, mobile network operators (MNOs) were highly disruptive in the 90’s, but have continued to decrease in this over the last decade. Operators are no longer the offensive, attacking force of yesteryear, instead they’re putting up barriers and defensive walls trying to protect what they have and hide.

Instead, the disruption comes from the open web. Whenever the operators put up a blocker to what users want, usually in the form of price or access to their infrastructure, the web finds a way of displacing them. Examples abound in location based services, text messaging, video and photos.

There’s a reason operator revenue is shifting away from voice and SMS towards data. The products that got the operators here are receding in relative value. The user wants what’s available in the open web, and that’s just not found, or being provided, by the operators.

So, what is an MNO to do?

Change. Disrupt someone else. Innovate.

One of the biggest disruptors, even in this decade of MNO mediocrity, has been Safaricom – the 800lbs gorilla in my own back yard. They’ve invested in new technology, products and business models like few others, and are reaping the rewards of those strategic moves.

Do I like having a monopoly player in my market? No.
Do I feel bad for the other MNOs (Orange, Airtel and Yu) who are crying now? No, they did this to themselves.

Let’s dig into their golden-child, Mpesa, the mobile peer-to-peer payment system that’s did $3.15 billion in transaction in just the last 6 months(!). How do you know they succeeded in innovating? Well, the easy answer is looking at their profitability and user tie-in that they get from Mpesa. Look more closely and you’ll notice the other signal, all of the bank lobbies in other countries have put up huge walls, blockading an aberration like Mpesa from having sway in their country.

[Sidebar: A warning to everyone who wants to see innovation in their country. Over regulation of telecommunications and banking strangles it. South Africa and Nigeria are cases in point.]

So, Mpesa sounds to everyone like a huge success story. It is, and it’s not. What we think of as an amazing disruptive product is really only halfway up the mountain. There are too many corks being popped while money lies sitting on the table. This stems from 2 main things, which seem to be an issue of Vodafone primarily, since they own the IP for Mpesa and own a 40% stake in Safaricom:

The lack of leadership by Vodafone to NOT open up an API that other businesses could build on and increase usage. They’ve stifled innovation on their own product.
Their lack of vision in the global payments space. Their shortsideness in not spinning out Mpesa as its own company to take on Visa and Mastercard directly. This was one of the few products and business models that could do that.

More MNO Innovation

So, Safaricom might be stifling its own product, but they’re still not short on disruptive features and products. They do fall prey to bureaucracy and political infighting, but they’re also one of the most aggressive MNOs globally, always trying new things. Three more examples:

Creativity in 3g data pricing and accessibility down market.
First-movers in 3g and exceptional data coverage countrywide.
Okoa Jihazi, their product that gives a loan of credit from the operator to users who are tight on cash.

Other examples of MNOs who are innovating in Africa are:

Airtel Madagascar working with Movirtu with their new Cloud Phone, a way for people to share a phone, but keep the SIM card in the cloud.

MTN, testing Mobile Phonebook by FeePerfect out of Cameroon, a product that puts a phone book into everyone’s phone.

Small + Big

Clearly, innovative products can come to market through MNOs. What’s the common denominator on these products though? Most of them came from small companies and were then incorporated into the MNO.

Ideas come from outside, they come from the edge. Scale comes from inside, from the massive infrastructure provided by the MNO. They have to work together to succeed.

I work with, and talk to, hundreds of entrepreneurs. They have ideas, prototypes and products that just might be what the users want. They lack the access to the infrastructure to roll it out.

As an MNO, you boost your chances of success in this increasingly chaotic space by not walling everything off, but by opening it up.

Africa: Turning the World Upside Down

October 25, 2011 / HASH / 14 Comments

Whitespace in business is defined as a place, “…where rules are vague, authority is fuzzy, budgets are nonexistent, and strategy is unclear…” It’s the space between the organizational chart, where the real innovation happens. It’s also a great definition for what we see in Africa, and it’s the reason why it’s one of the most exciting places to be a technology entrepreneur today.

I just finished with a talk at PopTech on Saturday where I talked about “The Idea of Africa” and how Western abstractions of the continent are often mired in the past. It’s not just safaris and athletes, poverty and corruption – it’s more nuanced than that.

Today I’m in London for Nokia World 2011 and am speaking on a panel about “The next billion” and how it might/might not turn the world upside down. In my comments tomorrow, I’ll probably be echoing many of the same thoughts that came out over the weekend at PopTech.

Here are a few of the points that we might get into tomorrow:

Horizontal vs Vertical scaling

I talk a lot about this with my friend Ken Banks, where we look to scale our own products (Ushahidi and FrontlineSMS) in a less traditional format. As entrepreneurs you’re driven to scale, but our definition of scale in the West tends to be monolithic. Creating verticals that are incredibly efficient, but which decreases resilience.

In places like Africa, we have this idea of horizontal scaling, where the product or service is grown in smaller units, but spread over multiple populations and communities. Where a smaller size has its own benefits.

In this time of corporate and government cuts, where seemingly oversized companies are propped up in order to not fail, there are some lessons here for the West. We shouldn’t be surprised that the solutions to the West’s problems will increasingly come from places like Africa.

Instead of thinking of Africa as a place that needs to be more like the West, we’re now looking at Africa and realizing the West need to be more like Africa.

Reverse distribution

Will we increasingly see a new set of innovative ideas, products and services coming from places like Africa and spreading to the rest of the world? Why is Africa such a fertile ground for a different type of innovation, a more practical one – or is it?

Disruptive ideas happen at the edge.

Africa is on the edge. While the world talks at great length about the shifting of power from the West (US/Europe) to the East (India/China), Africa is overlooked. That works in our favor (sometimes).

A couple of the ideas and products that have started in Africa and been exported beyond the continent include; Mpesa, Ushahidi and Mxit.

Mpesa – the idea came from Vodafone, but product met it’s success in Kenya. Over $8 billion has been transferred through it’s peer-to-peer payment system. Vodafone has failed to make the brand go global, but the model itself is being dissected and mimicked the world over.

Ushahidi – we started small, from Kenya again, and driven by our Crowdmap platform now have over 20,000 deployments of our software around the world. It’s in 132 countries, and the biggest uses of it are in places like Japan, Russia, Mexico and the US.

Mxit – the famous mobile chat software from South Africa has 3x the number of Facebook users in that country, and has over 25 million users globally.

Like we see at Maker Faire Africa, these innovative solutions are based on needs locally, many of them due to budgetary constraints. Some of them due to cultural idiosyncrasies. Often times, people from the West can’t imagine, nor create, the solutions needed in emerging markets, they don’t have the context and the “mobile first” paradigm isn’t understood.

A good example of this is Okoa Jihazi, a way to get a small loan of credit for your mobile phone minutes when you’re out of cash to buy them, from the operator. They’ve built some safeguards in to protect against abuse, such as you have to have had the SIM for 6 months in order to get the service. It works though, because the company selling it (and many of the mobile operators do across Africa) understands the nuanced life of Africa.

We hold on to technology longer, experiment on it, abuse it even. SMS and USSD are great examples of this, while much of the Western world is jumping on the next big technology bandwagon, there are really crazy things coming out in emerging markets, like USSD internet, payment systems, ticketing and more.

Throughout the world, the basic foundation of any technology success is based on finding a problem, a need, and solving it. This is what we’re doing in Africa. We have different use cases and cultures, which means that there will be many solutions. Some will only be valuable for local needs and won’t scale beyond the country or region. Others will go global. Both solutions are “right”, it’s not a failure to have a product that profitably serves 100,000 people instead of 100 million.

Turning the world upside down has as much to do with accepting this idea of localized success as an acceptable answer as it does with explosive global growth and massive vertical scale.

The Two Big Trends

Trend #1: Adoption by Africans as consumers is increasing.
Trend #2: Technology costs are decreasing

Let’s get back to my talk for tomorrow at Nokia… 87% of sub-$100 phones sold by Nokia are sold in emerging markets. 34% of Africa’s population (313 million) are now considered middle class. The fastest growing economy in the world is Ghana, 5 of the top 10 are African countries (including Liberia, Ethiopia, Angola and Mozambique). Across the continent, the average GDP growth is expected to be at 5+% going forward.

At the same time, we’re seeing bandwidth increase, and bandwidth costs decrease. Mobile operators are the continents major ISPs, and they’re getting creative on their data plans. Handset costs are going down. Smart(er) phones are available for less than ever before. We even have one of the lease expensive Android phones in the world at $80 in Kenya, the IDEOS by Huawei.

Is it all bright and rosy? Not at all. You’re on the edge, you have to create new markets, not just new businesses. But in that challenge lies opportunity, for it’s from these hard, rough and disruptive spaces that great wealth is grown. If you’re an African entrepreneur, why would you want to be anywhere else?

IGF 2011, a busy week in Nairobi

September 30, 2011 / HASH / Comments Off

It’s been a busy couple days with the IGF meeting in Nairobi. I sat on 2 panels, one on cloud computing and how it relates to emerging markets, and another on privacy and security in an open data, realtime, networked world. Both extremely interesting, where I had to put my iHub and Ushahidi hats on to answer questions.

We also had some fascinating guests, including Vint Cerf (Google), Richard Allan (Facebook) and the VP of the EU.

VP of the European Union

It started off with helicopters and bodyguards as the European Union Vice President, Neelie Kroes, visited, speaking with a number of startups operating out of the iHub and the m:lab. We made the case for the open web and the light touch that the Kenyan government has had in regulation and why that has allowed innovation to flourish here.

Facebook

Richard Allan is in charge of policy for Facebook in Africa, the Middle East and Europe (I put them in that order on purpose AMEE sounds better than EMEA, after all.). It was especially fascinating to have someone of Richard’s calibre within Facebook visiting so shortly after the big changes that the social network has had in the last week.

There was a healthy discussion around privacy, the new HTML5 “Spartan” push at Facebook, and thoughts around how local devs could take advantage of the Facebook platform to make apps and money. He also mentioned that any dev could go to their jobs area and start testing to see if they’re good enough to make the team.

Vint Cerf (Google)

Yesterday Vint Cerf, one of the founding father’s of the internet and a VP at Google, spent the whole afternoon with a room full of us at the iHub. Besides the surreal stories he told of getting the this whole internet thing going, he also provided some much needed context into why things work like they do now and where we might be going with the internet in the future (the answer to that, apparently, is space).

A big thanks to all of the community members who came and spent time with the guests, sharing their insights into the local startup and programming space. A big thank you to the VIPs for coming, and we hope to see them again.

Mobile Apps in Africa (2011 Report)

September 26, 2011 / HASH / 6 Comments

I maintain that Russell Southwood and his Balancing Act newsletter and reports are some of the best material on pan-African technology and broadcast information that you can find anywhere. Their recent “Mobile apps for Africa: Strategies to make sense of free and paid apps” report is one of them, and here are some interesting tidbits from it.

The report is broken into three parts: device, developers and distribution.

Device

South Africa, Egypt, Nigeria, Morocco, Ghana, Kenya and Tanzania all are good markets for apps, due to their population, 3g pickup and smartphone penetration. It should be noted that the highest smartphone penetration is in South Africa at 10%, though the high-potential countries are expected to grow by 8-10% per year over the next 3-5 years.

“Interestingly, infotainment activities score high off-line (using the phoneâ€™s features) and online (mobile Internet).”

Balancing Act provides a very interesting visual of what the “Handset pyramid shift” looks like in Africa.

Africa's handset pyramid, and its shift

Developers

The development of smartphone applications in particular commercial apps will depend on the rate and level of smartphone adoption. Developers in countries like South Africa, Kenya or Egypt with encouraging smartphone penetration rates have more opportunities in terms of apps development and uptake by potential users.

The major international apps stores (Apple, Android, etc) have set a figure of 70% of the revenue generated by apps will be going to the developer. This is very good news for African developers because so far with SMS based content, the revenue sharing model is not in favour of developers since less than 30% of the revenue generated by the content is going to the author. It is African mobile operators that make the most out of them as they take a minimum of 50% of the revenue generated by SMS services. The major international apps stores also offer additional revenue to developers via advertising and in-apps purchases. These revenue streams are becoming more and more significant for developers.

Building into the next section on distribution is the issue that developers have with creating apps for the international app stores. It’s very difficult, and often impossible, to sell apps on them and for African customers to buy them.

Distribution

The major consequence of the â€œsuccess storyâ€ of the apps store is that it
establishes a distribution model for mobile content that breaks away from the monopoly and exclusivity that mobile operators have enjoyed so far on the delivery of services to their mobile subscribers. Today the mobile apps distribution ecosystem can roughly be divided in 4 main groups:

Operating system app stores
Handset manufacturerâ€™s app stores
Mobile operatorsâ€™ app stores
Independent app stores

So far, most African mobile operators have been little affected because smartphone penetration rates are very low in most African countries and also because African smartphone users still have access issues to the full portfolio of international apps stores.

The report goes on to express Balancing Act’s thoughts on how mobile operators can get into and take advantage of mobile app stores, “While revenue potentials are promising what else do mobile operators have to consider if they want to roll out their own apps store?” The report establishes the following 8 recommendations:

Be OS agnostic
Know the devices on your network
Use â€œwhite labelâ€ apps store
Source international content from third party content providers
Donâ€™t forget about additional revenue streams
Build a strong local flavour to your apps store
Make apps affordable to your subscribers
Use carrier billing

And there’s More

Unfortunately, I can’t put all of the good stuff in this blog post. There are a lot more interesting points in the report, and you can buy it here. Amongst some of the best are:

What smartphones do South Africans want?
Nigerians love their BlackBerry
Examples of mobile apps start-ups companies in Africa
Morocco: Mobile internet users and penetration rate
Mobile Internet subscribers and market share per operator
Advertising and in-apps purchases potential income for developers

Dragon’s Den: Kenya

September 19, 2011 / HASH / 7 Comments

This should be a fun one. I was approached a month or so back about the Dragon’s Den coming to Kenya, and it looks like it’s actually going to happen (It’s much like Shark Tank if you’re in the US). If you think you have what it takes to pitch your idea in front of these guys, here’s your chance.

To make it easy, here’s the Dragon’s Den Application Form – Kenya (Word Doc).

“Dragons’ Den is a series of reality television programmes featuring entrepreneurs pitching their business ideas in order to secure investment finance from a panel of venture capitalists.”

Five experienced investors (the â€˜Dragonsâ€™) are coming to Nairobi in the next few months to hear the pitches of some of Kenyaâ€™s brightest business men and women with the intention of investing in the very best. But these Dragons are not easy to please; they will be looking for entrepreneurs who are offering investable money-making opportunities, who can also explain why their proposal has what it takes to be a success and will make a difference to the local community.

The rules are simple: entrepreneurs ask for a reasonable cash investment in return for a negotiated equity in their business. However, they must get at least the amount they ask for or they will walk away with nothing.

The Dragons are prepared to listen to a pitch for any kind of business but they must be convinced that it requires investment and will make money. Ideas, businesses and products that have previously gained financial backing in the UK Den have demonstrated one or more of the following:

Unique selling point
Scalability
Clear route to market
Planned exit strategy

If you havenâ€™t seen the programme, visit www.bbc.co.uk/dragonsden for more info, or search â€œDragons Den Series 9â€ on YouTube to watch previous entrepreneurs pitching to the Dragons. Email DragonsDenNairobi@bbc.co.uk for an application form.

This isn’t the first time it’s been done in Africa. It ran in Nigeria in 2008. This Dragon’s Den is done by the BBC as a special edition for Comic Relief – a major charity based in the UK.

MedAfrica Pitches at DEMO

September 19, 2011 / HASH / 1 Comment

Mbugua Njihia and Steve Mutinda were the overall winners at the Pivot 25 event earlier this year with their MedKenya app, which has since turned into MedAfrica. Their prize was a chance to pitch at DEMO, the big startup pitching event in Silicon Valley. Here’s their team last week giving the pitch.

MedAfrica is just the tip of the iceberg, as we see more startup spaces, pitching events and seed capital entering the continent.

Where Africa and Technology Collide!