I have now been back in East Africa working in the Tech scene for 3 months after 7 years working in silicon valley. I attended one major conference, hang out at incubators/workspaces in Tanzania and Kenya meeting with the startup community… Spent time in the rural areas of Tanzania on a solar tech pilot and advised many startups in the region. Its only too easy for me to start draw comparisons about the differences I have spotted compared to working full time in Silicon Valley.
Its been a hard post to write because each of the factors identified below are intwined with others, yet they are distinct- someone or an organization exhibiting one is probably showing tendencies of a few others to some degree- as you’ll see I’ll refer accordingly so you might have to jump around between the points whilst reading. To be clear- this is more about pointing out the differences and the realities of doing business in East Africa from outsiders/diaspora coming in point of view- it serves to highlight the challenge trying to “emulate” Silicon Valley as the gold standard for Tech in Africa.
SUMMARY: “It’s hard for an investor to fund a startup with little traction and a bias on IP over execution- especially if these investors rely on a few trips a year to Africa tech events as a basis for due diligence and have no local offices. But Startups need to get over their fear of being copied in the face of big companies such as Telcos/MNOs, be more transparent and get to work getting customers and revenue whilst only using the support they need from tech hubs/workspace- not being distracted in attending the growing number of tech events. They need to focus but also be open to collaboration and partner opportunities in areas where they are weak recognizing that tech is not a zero sum Game.”
1. Media events/competitions/awards are plenty, but experience tech entrepreneurs, increasingly distracted, still lacking: I have tweeted countless times about the number of events that happen on and offshore that attract the very few quality speakers or startups to talk about their experiences. I believe the supply is greater than the demand right now- whilst more media events, competitions drives awareness of the industry and could even lead to the exposure/business deals and hence growth a company needs, I believe it can also draw the few entrepreneurs away from their work and give a false sense of security in achievement- at a crictical time when we need more real tech company successes before we celebrate prematurely. The fact of the matter is in Silicon Valley, the top entrepreneurs and execs are highly selective of the events they go to- At the extreme you never see an Apple exec talking at a conference, whether World Economic Forum (WEF) Davos or Consumer Electronics Show (CES) in Vegas- their stock price shows the results of focus- which means shipping a quality product, getting customers and revenue. So if you are a startup focusing on East Africa, what good is it in attending a conference in Cape Town on a totally different vertical you are addressing? Of course, I am not saying never attend conferences- I say, there is a need to be selective and systematic, apply a business case. Take this 3 point rule: 1)Are you panelist or speaker that can add value 2) Are there potential business partners or customers 3) Are you announcing or selling something to the world or that region based on the reputation and audience reach of that event? Being systematic and learning to say no shows discipline in the face of a free flight, free accommodation to Cape Town (or often not, pay your own way!). If I hadn’t decided to attend Pivot East last year (then Pivot 25), I might have never had the fortune of running into Erik Hersman and Ben Matranga who kicked of the idea for Savannah Fund or even seen the talent to make me believe in focusing on the East Africa tech ecosystem. One of my best friends and recently turned Tech Entrepreneur in Tanzania decided not to attend Pivot East this year even after I gave him a 3 month reminder- I really believed it would be good for his startup to get the exposure and be able to hire and find investors vs e-mailing back and forth with someone you’ve never met or has never been to Africa on Angel List or VC4Africa- or maybe he is indeed quietly executing and the conference was a distraction- time will tell. Meanwhile foreign investors need to show more patience and move away from what I call “driveby investing”, a term I coined and believe many are engaging and missing opportunities as result- These events encourage such behavior by firms headquartered abroad – real investors should invest accordingly, hiring local talent and take the time to understand the region beyond the events and sponsoring competitions. Foreign AID donors fall victim to the same issues too. Let’s not fall into the “Conference Ho” trap. And even worse there seems no end in sight for yet more contests e.g. Innovation Prize Africa backed by UN not to be confused by African Innovation Prize backed by a UK charity. Can you tell the difference? Who can add the most value given the time it takes away from a startup to apply and attend these contests?
2. Over-reliance on Intellectual Property (IP) vs execution: I still notice that many startups find it hard to disclose their “idea” and hence make tangible progress- it probably arises from experiences or stories and hence fears of the telecom companies stealing ideas. For the mobile ecosystem this is a very real issue that plagued even western Tech ecosystem before the arrival of the App Store. But its still prevalent now (effectively, working in say mobile tech in Africa feels like working in Silicon Valley pre iPhone- and before iPhone there was no thriving mobile ecosystem for independent developers to build companies). Africa really came into tech in a broad way in the mobile era, but the power dynamics still favor the Telecomm/MNO companies like its 2002 in the west (maybe Android will change that, but not as long as feature phones still dominate…). As a result, barriers get setup with NDAs without thinking about the consequence it has on a startup’s ability to hire or raise funding or be transparent (see my last point (5) on transparency). There is a widely held belief, that protecting the “idea” is not progress, its just sitting on it and hoping the best happens- but even those who preach it don’t practice it and this is often common on all ecosystems. The fact of the matter is there will always be copying and an even bigger reality is that you can’t stop it at the early stages- Startups should focus on execution and differentiation- one should be flattered when others are copying, after all isn’t your idea an adaptation or built on the shoulder of giants?(see point 4- tech is not a zero sum game). It can even reassure investors that you are onto something and better yet, the competition should drive you to double down and focus on the business and not be lead astray (see points 1 and 3 on events and workspaces). I have been a victim in underestimating execution potential- I have written essays on Kiva, Admob and even SpaceEx in the early days and seen them rise right under my nose- I had access to the founders whilst at Stanford and with my non western/silicon valley thinking at the time only having lived there 2 years, I watched these companies execute whilst in my head I worried how they might get crushed by giants or the “industry structure”- it never happened, they infact changed industries and were ahead of their time. Look where they are now 7 years later? Others have copied their model, but they have thrived on execution. You could argue there is less or more reason for Telecomms/MNOs to “steal” ideas in the mobile space- just take a look at the tumbling Average Revenue per User (ARPU) and projected services revenue- do you expect them all to come from mobile operator enabled services? There is room for more innovators than just the telco stealing and owning every idea.
The goal with this post was to show some of the interrelated factors and the challenge of building a tech ecosystem – especially when I compare how Silicon Valley works and the difference with what I see in East Africa- a summary again:
SUMMARY: It’s hard for an investor to fund a startup with little traction and a bias on IP over execution- especially if these investors rely on a few trips a year to Africa tech events as a basis for due diligence and have no local offices. But Startups need to get over their fear of being copied in the face of big companies such as Telcos/MNOs, be more transparent and get to work getting customers and revenue whilst only using the support they need from tech hubs/workspace- not being distracted in attending the growing number of tech events. They need to focus but also be open to collaboration and partner opportunities in areas where they are weak recognizing that tech is not a zero sum Game.