Why “solve a need” formula doesn’t work for African startups

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You’ve often heard it being said “find a need and provide a solution for it” as the secret sauce for developing great products.

It’s true.

One of the best ways to change the world is to find a need and solve it.

When you study some of the great innovators through out all the ages, they often set out to identify problems, challenges, pain-points experienced by either themselves or other people. They then innovated solutions that solved those particular problems in return of a reward such as money or recognition.

The same formula works today. At least it works for me. I always set out to solve a personal problem and discover than there are thousands of other people with the same challenge. But for African entrepreneurs specifically those in the African Tech industry, there are loopholes to this theory.

Stepping in the path of the giants

Storipot is one of the products that myself and friends set-out to create because we found it hard to keep track of the interesting local content in Uganda. With everyone having a Twitter or Facebook account and posting pictures of the party they had last night, and then commercial Facebook pages trying to sell us stuff, it had become a chore to look for good content online.

Our solution — Storipot — was to create a directory of all local blogs and news sites in Uganda in a well categorized manner. That made it easy to find and discover great bloggers and their sites.

But to keep track of content they posted, we also created a news reader which is what you’ll experience on the product’s home page. This reader curates headlines of the latest stories posted by bloggers and media houses in Uganda. And we are not done yet. Storipot is an on-going effort to make local content easily dicoverable and consumed. You can read more on why we built Storipot.

However, while we have might have made significant strides in organizing the digital content space in Uganda, we face external forces bigger than ourselves.

Twitter and Facebook often bundled as “social media” have become the default standard for finding content anyway in Africa.

Online users no longer type in website addresses of publishers’ sites to access the latest information.

The homepage is dead if you didn’t receive that memo. Instead users want content to find them where they are (on social media), not them finding content.

Online users expect news to find them on their twitter stream or Facebook Newsfeed. If your content doesn’t hit their individual streams, then you’ve forever lost those users. And with Facebook’s organic reach of less than 5% of your total Facebook fan-base, contrary to popular opinion, it’s even becoming harder to distribute and find local content. Anyone who runs a Facebook page knows that very well.

While Storipot could have helped with the distribution of local content, we discover that users would rather stay on their newsfeed (sometimes for free thanks to Facebook Zero) rather than visit Storipot.com to find local content. In essence, we are coming to a realization that we are in fact solving a need that Facebook already solved — finding local content.

Isn’t this a common scenario faced by most African products?

It is.

What need are you going to solve that hasn’t already been solved by global giants? Search? There’s Google. Productivity and Word processing? There’s MS Office. Communication? There’s Gmail, Whatsapp, Twitter and several local telecoms. Accounting and Finance? There’s Quickbooks. Social networking? There’s Facebook and Twitter. E-commerce? Well, there’s no Amazon in Africa, but you’ll to build the physical infrastructure that would make E-commerce work in Africa(more on this later). Plus, if there’s something I’ve left out, simply visit Github, SourceForge, Google Code, Stackoverflow for free source code of whatever need you want to solve.

Being a Tech blogger at Dignited, I see products terribly fail here. Judges and Tech pundits are quick to point at the assumption that they are not “solving any specific local need”. That’s completely wrong. Often times, the local need has already been solved by a global silicon valley giant rendering any local product attempting to solve the same problem completely useless.

Mxit, South African-born Whatsapp before Whatsapp ran smoothly on feature phones such as Nokias and smartphones like Blackberry. When it was at its best, Mxit is rumored to have had over 1 millions users actively using its revolutionary messaging platform. However, the coming of Silicon Valley-backed Whatsapp spelt the end of Africa’s social and messaging platform.

Even well-funded products struggle against the big shots for those of you always complaining about lack of VC support in Africa. Ugandan-born Billionaire Ashish Thakkar has launched a Whatsapp competitor dubbed “Mara Messenger” as well as a Skype competitor for emerging markets. Still both products haven’t taken ground anyway in Africa, not even in Uganda here.

There have been only a handful of locally-brewed products that have made it. That’s not predominantly because they solved a need. It’s because they solved a local need that was outside of the jurisdiction of any of the Silicon Valley big-shots either because of market conditions or local regulatory landscape.

The Case of M-Pesa

A good example that’s often quoted is Safaricom’s M-Pesa, the posterchild of mobile money transactions. The mobile telecom roll-out mobile financial services on it’s own GSM cellular network which was outside of the global internet that’s dominated by Silicon Valley companies.

By using technologies like SMS and USSD which are mostly alien to Silicon Valley, Safaricom was able to create mobile financial products in its own ecosystem.

In essence Safaricom was and still is the only bull in the kraal. The same model has been used by MTN Group, Airtel among other mobile Telecoms operating in African markets.

Safaricom also took advantage of loose regulatory landscape in the Kenyan financial sector to quickly grow its M-Pesa product.

This explains why Mobile Money hasn’t been successful in other emerging markets where regulatory bodies put stringent measures for mobile telecoms to roll out their Mobile money products.

Why dual-sim phone vendors won

Another good example is the success of dual-sim smartphones in Africa by the likes of Tecno, Infinix etc.

The African mobile voice market is unique compared to markets in Europe and US.

I’ve extensively wrote about why mobile subscribers in Africa find dual-sim phones more attractive than their single-sim counterparts. One of the reasons is users want to take advantage of the various promotions and prices from different providers to cut costs. Only smartphone vendors that understood this consumer behavior have been able to capture marketshare from global big-shots like Apple, HTC, Samsung who instead release premium single-sim smartphones.

These little-known brands didn’t just solve a need. No. They solved a need that the global giants couldn’t or were not solving.

Doing it like Rocket internet

Yet another case is Rocket internet online companies in Africa. Under the Africa Internet Holding (AIH), rocket internet has mastered the art of duplicating products that have worked in the west in emerging markets.

But rocket internet isn’t simply a photocopying machines as many Tech media sites would like to think. Instead Rocket is strategically rolling out only products that the Silicon Valley big shots haven’t been able to effectively do in Africa.

For instance, we know Rocket for being an e-commerce behemoth in Africa. It runs Jumia which is literally Africa’s biggest online mall. Kaymu which is an eBay of sorts without auctioning, Vendito which is a Craig’s List, HelloFood, an online food ordering service, Everjobs which is a job searching site among several others.

Clearly Rocket Internet isn’t just about duplicating just about any product that has worked in the west into emerging markets.

Why haven’t they done a “Facebook for Africa”? Maybe a “Google for Africa” or perhaps another “Whatsapp for Africa”? Why E-commerce?

If you’ve been following my arguments up until this point, the reasons are obvious. Rocket doesn’t want to cross the path of western internet giants because it knows very well the end result of that futile attempt. It will miserably loose like most African startups have.

Instead Rocket is interested in E-commerce because for starters trade is local. Amazon doesn’t work in Uganda because the infrastructure for Amazon to work here doesn’t yet exist — at all. I’ve personally found it a challenge to shop anything from Amazon. One needs a credit card which unless you earn a salary of 10 million Shillings per month won’t be given to you. The other option is a visa-enabled debit card. Your bank needs to support a visa-enable debit card with online shopping activated.

Only a handful of banks in Uganda do offer that service making online shopping almost impossible. Then there’s shipping a product from a vendor on Amazon (who’s most likely in the US) to Uganda. The shipping charges could be 5 times the cost of the actual product. So who’s going to shop from Amazon in their right mind?

There’s no doubt that Amazon has failed to capture the Africa market.

Knowing very well that Africa is outside of Amazon’s turf, Rocket is unrelenting investing in online shopping internet sites. The biggest one is Jumia which is currently in over 12 countries. I’ve shopped with Jumia Uganda. It’s the best, most fluid, painless and convenient shopping experience I’ve had.

Rocket internet is willing and able to invest lots of money just to set-up the physical infrastructure that would make e-commerce a plausible venture in Africa.

The offline world in the most parts of Africa is a mess. I live in Uganda and I experience the pains of broken systems on a daily. You should probably read my post on fixing the housing sector in Uganda.

Done? Good.

Most of Africa leap-leapfrogged postal system thanks to mobile wireless telephony. While that might have made communication affordable and accessible to all, it left physical addressing system undeveloped.

Rocket internet is now paying for that.

While Jumia might have my physical address in their database, it’s a complete illusion. Delivering products to my doorstep involves a long string of calls between myself and the delivery man sometimes at my expense. I’ve to direct the delivery guy to my location via phone calls. If I posted a recorded conversation, it wouldn’t be anything short of being hilarious.

Rocket internet is currently incurring heavy operational costs in logistics, delivery while keeping the price of products down in order to keep customers happy. Costs that very little local startups arecapable to bare without serious Series A funding from a VC.

Dancing with the giants

If you’re not Rocket internet, does this mean the end of your dreams. Is this the end of innovation for local startups? Can we just throw in the towel.

Of course not.

Brutal as it may be, the internet presents endless opportunities even for local startups. Even in a big ocean, there are big and small fish co-existing in the same ecosystem.

Internet entrepreneurs like Jason Njoku, co-founder of iRokoTV, a Video-on-demand service for Nollywood content is proof that you can dance alongside Youtube, iTunes or Netflix.

Not Hollywood, but Nollywood, Jason invested in distribution and commercialization of the Nigerian local content which has a wide audience across the African continent.

Ugandans for instance including myself are big fans of Nollywood movies locally known as “Ki-Nigeria”.

Another person to comes to mind is Seun Osewa, the founder of Nairaland.com. You could call it the “Facebook of Nigeria”. Nairaland was started around 2005/6, just about the time that Zuck was rolling out his social network. FB hadn’t caught up yet which gave Nairaland time and space to become the ultimate online destination to find local content and connect with other Nigerians.

Today Nairaland which is on top of the 10 most visited sites in Nigeria sits comfortably slightly below Facebook.

Unfortunately, success stories across the continent are still limited. The hassle is real. But we must not give up. I find the internet the most interesting, invigorating, scalable space to innovate and build stuff.

But don’t just solve a need. Solve a need that the big guns aren’t already solving.