Carrying on the conversation from yesterdays piece on Forecasting Africa’s Mobile Future and some of the thoughts about what that future looks like, where the opportunities for entrepreneurs and innovators are, as well as Erik’s ‘Pyramid model and theory’; let’s dig a bit deeper into the aspect about broadening the base of our startup pyramid.
As we noted, the basic concept behind Erik’s pyramid model is that there are currently very few success stories as far as African tech startups are concerned, and at the same time fewer attempts. The base of the pyramid is made up of the upcoming guys who simply have an idea, maybe some code running but no real business or business model, just an idea. The middle level is made up of the guys who’ve come up with a business out of their idea but are playing at the Small and Medium Enterprise level, they have not quite ‘broken through’, at the very top are the likes of Ushahidi and MPESA, the names that are easily recognisable even at big time international conferences. These are the ones that have caused the world to turn around, look back at Africa, and specific African states/cities and say “Wait a minute! Something’s going on there”.
The theory part goes something like this: to expand the ecosystem and get more success stories at the top of the pyramid, we need to put effort into the base of the pyramid, broadening it. The idea is that the more people we have trying at the bottom the more chances some of them will trickle up into the SME space, the more get up that one level, the more chances that a few will break through further into the top of the pyramid.
This is also a meme we picked up from Vint Cerf’s visit at Nairobi’s Innovation Hub, where he talked about the power of building “Bottom up versus Top Down“.
Bottom-up versus Top-down: Tech Parks versus Tech Hubs
Mbwana Ally wrote a piece recently in which he basically critiqued the tech park model that several African governments are using to push innovation, he says
What I have problem with is the belief by Government officials that these cities will create armies of entrepreneurs and innovation based on this infrastructure… Did Mark Zuckerberg or Larry Page need a gleaming tech city to create Google or Facebook?
Both the tech park and tech hub model are really trying to solve the same problem – that of getting more successes up at the top of the pyramid – only that they use different approaches in principle.
The tech park model is an extremely high capital, potentially lower risk undertaking for governments. In reality it is an attempt to feed the top of the pyramid directly with the hope that there will be a trickle down effect that will then spur innovation locally hence pulling up local innovation through competition or at least falling back to Business Process Outsourcing.
The main objective in these projects tends to fall on the belief that foreign companies will set up their regional headquarters and create jobs as well as the idea that lots of local medium sized ICT firms and business process outsourcing centers will emerge and move in. The model is to emulate the parks that have gone up in Bangalore, India.
On the other hand, tech hubs such as Nairobi’s iHub, Senegal’s Bantalabs, Cameroon’s ActivSpaces and others are attacking the same giant from the feet instead of the head and hoping to chop it down instead of knocking it over. Tech hubs are comparatively, much smaller scale, much lower capital, but higher risk private initiatives. The goal being to grow the base of the pyramid, and then Erik’s theory kicks in.
It may perhaps be left to time and history to show which model will work better (my money’s on tech hubs) in the long run, but one thing’s for sure, the giant must come down and all efforts to bring it down are definitely welcome and it’s better to try multiple things than just one.
At the end of the day what we really want to achieve, particularly as far as the bottom up approach is concerned, is critical mass. The right number of entrepreneurs and innovators taking a chance, trying and trying and trying and trying and trying, and then trying some more and then some more. The more the better, because the more they are the higher the chances of a few breaking through the ceiling.
Jason Calacanis, a serial entrepreneur – Silicon Alley Reporter, Weblogs, Inc., Mahalo and ThisWeekIn.com- has created a really cool startup event called LAUNCH, they got over 500 applications and close †o 200 of those are shortlisted to launch at the event. The day we’ll be able to give those kind of numbers we’ll know we’re getting there. Jason in the interview below says, “We’re bringing together critical mass…. it keeps the number of transactions up whether that’s people getting hired, investing… ”