Why startups are so different for The Next Billion

5 minute read

Note: I’m heading to Kenya next month to teach promising engineers how to make a startup out of their technology. I need your help to meet local business role models, so I can design workshops that will share the right experience. If you can think of anyone, please get in touch.

Fast, good, or cheap. Pick two.

I first saw that on a poster in a local print shop in Vancouver, Canada, etched into my mind in gaudy primary colours. I was sixteen, and had started a computer shop around the block. Back then, in an area called Whalley, the print shop was located across the street from two strip clubs, a used clothing store, a biker bar, and a laser tag. In our building, there was a corner store, a blueprinter, a kickboxing club, and for a short while, some kind of customer service call centre.

To save ourselves from cleaning up after “the night trade” in our rear parking lot, me and my fourteen-year-old business partner would stay late in the shop, lights off while playing video games, until we’d see a car pull in. Then, we’d make ourselves known, and let them know to find another place for their business. Once we were threatened with violence, so resorted to carrying baseball bats as a silent message. Cops loved to hear this from a scrawny kid - it got me out of a few speeding tickets.

There were a lot of Harley Davidson’s around - Hell’s Angels. On one service call, I was asked, “can you make this computer chat work so I can talk to my friend without the police snooping in?”

“Maybe. But I can’t be sure. What if I get it wrong?”

“You don’t want to get it wrong.”

I politely declined the challenge.

I can tell you these stories now with some pride of being an industrious little kid who’s lived on the wrong side of the tracks. Canada prides itself on it’s multiculturalism and pluralism. I grew up the son of a French woman and an Indian-Tanzanian man. I’ve lived in Vancouver, London, Barcelona and Sofia. I’ve tought startups hundreds of times before, from San Fransisco, to London, to Hong Kong.

I thought I had a worldy perspective. I thought I knew about being poor.

Until I started teaching entrepreneurship in Africa and with Roma people in Eastern Europe.

A lot of what we think of as universal only applies to the richest billion in the world.


Our approach has always been to calibrate education to the learners. Learn from them and adapt the teaching.

Here are a few lessons I’ve learned:

Copycats

One of the East African entrepreneurs I was teaching has a new high-tech approach to a basic human need. One of his worries is that he’ll be copied – not the technology, but simply a device that looks the same, and can be called by the same name. It’s not that knock-offs will hurt his reputation, it’s that they destroy the reputation of technology itself. And that sucks the air out of consumer demand.

In Vietnam, Apple-branded products are everwhere! But they’re not knock-off phones and tablets – you see the Apple logo on shoes and handbags!

It’s certainly possible to thrive in such an environment, but our expectations about intellectual property don’t apply, and this removes the foundation from how we think business is done.

Word Of Mouth

We’re used to a bunch of staple marketing channels. Email and content marketing, for example, just don’t exist in the same way in Africa. If we revert back to first principles and ask how can we stay in touch with potential customers so we’re top-of-mind when a buying event arises in their life, we’ll hear about WhatsApp and Word Of Mouth.

Most African cultures are chatty. People see each other, and stop to hang out and catch up. They share, and it’s pretty common for people to open up about what they’re considering buying to get a wide range of advice. It’s not that this type of research is done explicitly, it’s just a natural part of talking to people.

So where we think of Word Of Mouth as a type of awareness channel, largely around inducing explicit recommendations, in Africa it’s more a part of how a customer considers. And more than that, it inverts our startup concept that talking to customers is a low-scale way to test ideas, before going to higher-scale channels.

Premature scale

The concept of premature scale is now engrained in startup culture. Talk to customers first. Test it with a few. Then get the word out when you’re ready.

How exactly do you do that, when, within your first 20 customer conversations, you risk that word will start spreading like wildfire? (At least in the local market.)

There are opportunities here. Like checking in with others to know what they heard – that’d tell you what parts of your idea resonated with customers, and possibly some concerns too.

But what does Customer Development look like when talking to customers is more of a scale-mode activity?

Trust

Coming back to copy-cats, there’s a lot to be said for being an honest dealer. Reputation counts a lot, and even though disrepute might come to certain product categories, people still remember who gave them a quality product for a good price – and this leads to referrals for other products in the future.

A common way to super-charge referrals is through church leaders, either by convincing them or paying for their recommendations. Often both.

Credit and ethics

But before you get on your high horse about ethics, you have to consider that we’re using different ethical frameworks. Different, not necessarily better.

When I learned that a lot of Roma corner shops suffer with bad debt, I floated the idea of a credit agency, maybe run over SMS, and was told with conviction that this was evil. Why would you prevent someone from feeding their family just because they’re having hard financial times? The informal Roma credit system is a social safety net, based on ethics and personal understanding, rather than a cold, calculated score.

Time is not money

I’ve also noticed how our view that time is money affects our assumptions.

I’ve seen studies that show that non-Anglo people think of time a circular, not linear, so where we see something that needs to be done, or we “lose time,” others see it as a recurring event, and a chance to do it again next time. Where we attribute rationality to the act of considering alternatives, this isn’t necessary when you experience time cyclically.

Our assumptions about time are incongruent in others ways. The now-infamous Dertu livestock market, in Kenya, was setup with the assumption that nomadic tribes would benefit from a closer market, allowing them to trade more frequently. But to someone who’s always on the move, it doesn’t make sense to sell your cattle for even a dollar less in the closer market – might as well travel that extra four days to the big city market.

Trading cultures and price competitiveness

When teaching Roma teenagers about tech startups, they pick up HTML, CSS, and .NET pretty quickly. But when it comes to understanding customers, they have a lot of trouble grasping the concept that some customers care less about price, and more about quality or convenience.

They come from a place where doing business means trading. You buy low, sell high. But more than that – you buy whatever you can if you can get a good deal, then find someone to sell it to. It could be phones one day and fireworks the next.

It’s taking some time to instil the concept that more profit can come from higher volume, leveraging customer relationships, or better business models.

Not so fast

As I’ve tried different ways of teaching this, that red, blue and yellow poster comes back to me.

Fast, good, or cheap. Pick two. In Roma communities, this doesn’t apply. Cheap is a constant. Even rich people are frugal.

That universal rule isn’t so universal.

The definitions of startup, scaling, and even the implications of capitalism are all different outside of The First Billion. Even my experience from poor areas of Canada are simply the poorer part of the richest category. A poor person in Greece might might make the same as a wealthy person in Tanzania, but they belong to different economic and cultural categories, with completely different fundamentals.

When it comes to The Next Billion, there’s lots we can teach and lots of ways we can help, but only if we’re aware and sensitive to these differences.

This is why I need your help

I’m heading to Kenya next month to teach a number of promising engineers how to make a startup out of their technology. There are a range of challenges that have Africa-specific answers:

  • working with telcos
  • convincing farmers of technical benefits
  • capturing customer contacts to reconnect when they launch the product
  • learning about actual customer behaviour without sharing trade secrets
  • dealing with distributors and copy-cats

I need your help to meet local role models – people who’ve succeed commercialising technology in Africa, or have dealt with these challenges.

My role is to design workshops that will share this experience, and help others see success as well. Please help us by recommending role models.

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