critic, funding, hacking, Life, Technology & Startups

Has the bubble burst? developed a leak? or was there even a bubble at all?

“Today, across my network of companies, I directly and indirectly employ around 200 people. 90% under 27. 150 or so in Lagos but hope by 2015 that number reaches at LEAST 1,000.”
May 7, 2013.

“Today I had to fire retire 13 people.”
October 13, 2013.

What happened in the time between the 2 posts?

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funding, hacking, programming, Technology & Startups

Building your startup on the side is freaking hard.

My typical day: I wake up by 5am every weekday, go through my daily ritual and leave my house by 6am to begin my 10 km commute to work (I am a “factory worker”) to get to work almost an hour later [1]. My factory shift resumes by 8am and ends by 6pm officially although this might extend into late hours of the night on some occasions. I do not work on anything IT related (which factory worker does?) so none of the hours I spend at work contributes in any way to gaining startup experience. After work I start another 10 km commute back home which can extend for almost 3 hours most times no thanks to the crazy traffic on Lagos roads, so I get home earliest by 8pm on a very good day. Most days I am so tired I hardly can code or do anything substantial before crashing on my bed. Most times the stuff I can do are only on weekends when I have some few hours to concentrate.

Building a startup on the side is freaking hard, scratch that, extremely hard. Some people do it but it’s no easy feat.

Pros of building your startup on the side.

1. Focus: when you have so few hours to work on your startup per day you tend to focus and prioritize on what is really important and what isn’t. I work an average of 50 hours at my day job and the few hours left have to be spent with laser focus or I might just wake up and discover that 6 months have passed by. [2]

2. Funding: Most Nigerian founders complain about not having funding for their startup ideas so having a day job will actually allow you to funnel part of your salary into your startup till it starts generating income of its own. I have a relatively well paid factory job so I can bootstrap for now until I start generating real income.

3. Work experience: If you are lucky enough to have a day job where you are gaining skills and experiences that are directly transferable into you startup, all well and good but if you are not like I am, you can learn people management or if your day job is so bad, you would learn how not to run a business.

Cons of building your startup on the side.

1. Burnout: Working nothing less than 50 hours per week on a day job for some years can have a terrible toll on you, your health and motivation to work on your startup. Most times I am so tired I can’t do anything reasonable during the week. This directly leads to my second point.

2. Speed: Most times I imagine and wish that the hours I spend on my day job could be funneled into my side project. I imagine where it would be by now. My startup might look slow and lethargic due to the fact that I barely even have time to work on it.

3. Burning hunger: Having a well paid job can actually make you lazy and take away the hunger to having a successful startup. If on the 24th of every month a substantial amount falls into your bank account with a loud bang, putting your all into a startup might not be topmost on your list of priorities. You might wake up after some years to discover that you have become a boring old fart with a receding hairline and your startup, still a pipe dream.

P.S: Thanks to this article on joel.is for inspiring this post.

Notes:

1. I get most idea’s for these blog posts and write them in my head while driving on my long commute to work. It’s a wonder I haven’t hit anyone yet.

2. Talking about focus: I developed my infamous unofficial nairaland API in less than 20 minutes in a frenzied coding spree.

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critic, funding, hacking, programming, Technology & Startups

Live in Nigeria?(***insert your 3rd world country here***). This is why your startup will fail.

You live in Nigeria or any 3rd world country?, are a techie and thinking of starting a web startup? here are some reasons why your startup is doomed to fail.

1. Your startup is a solution to a “WANT” and not a “NEED”. If you can remember your basic economics, you should know what “WANTS” and “NEEDS” are. Quickly, I would define a “NEED” as something you have to have, something you can’t do without e.g. food, clothing and shelter, while a “WANT” is something you would like to have. It is not absolutely necessary, but it would be a good thing to have. A good example is music.

When developing your startup idea, ask yourself, “is what I am creating a solution to a NEED or a WANT?”  According to the Nigerian Bureau of statistics 60.9% of Nigerians in 2010 were living in “absolute poverty” i.e. less than $1 per day. Do you think that taking a hiatus to create a music startup to enable these people living in abject poverty listen to music amounts to a good use of your time? or “skills”?

2. Your startup is a clone of some popular 1st world website or application [1]. Why would you clone when there are a myriad of problems you could develop solutions for? If you are developing a clone, ask yourself this question “why would anyone use this (***insert the name of your clone***) instead of the main thing (***insert the name of the website you cloned***)?” .

3. Your startup will require loads and loads of traffic i.e. pageviews with gullible people who would be ready to click on Google ads before it can generate income. In Nigeria, there are no VC’s, no Angels, no startup accelerators, no Government support programs, no infrastructure, regular electricity supply is a pipe dream, Internet access is patchy and expensive, in short, “NO NOTHING”. So it kind of beats me why anyone would base his startup’s business model on the benevolence of Google? In between the time your startup comes online to the time it can generate enough traffic to keep the lights on and the servers humming, how would you survive? Do you have some gold bars stashed under your mattress somewhere? If not, why don’t you just develop a product where you can start charging from the very first day? [2]

4. Reading too much of Techcrunch et al. These tech blogs are written by elitist white techies who live in silicon valley where the difference between over there and here is like light and day. Any advice you can glean from those sites just isn’t applicable here in Nigeria. [3]

NOTES

[1] The current fad in Nigeria is creating clones of Groupon.com. It once used to be Twitter clones, bulk sms and then Facebook clones. Why coders still do this kind of beats me. Instead of cloning, why don’t you build on these sites and take advantage of things like Facebook’s “Social Graph” etc and develop innovative solutions? Developing another DROPBOX wont meet the need of the average Nigerian, he has no need for it, and if he does why wont he go for the original? patriotism? please!

[2] Despite the fact that 60.9% of Nigerians live under $1 per day and there are 90 million mobile subscribers in the country with at least 1 mobile phone, these phones have to be loaded with “call credit” by these people because communication has become a NEED and not a WANT. So despite the grinding poverty in the country, the major Telco’s still declare mind boggling profits every year, with Nigeria now having the largest mobile phone market in Africa with 60% penetration. So in order to be successful, develop a solution to a NEED and not a WANT.

[3] Sarah Lacy, a former columnist for Techcrunch, when she came to Nigeria in 2011 advised techies not to read Techcrunch et al. Its of no use, the stories of billion dollar valuations for 6 month old companies that do nothing but count your number of Twitter followers will actually screw with your head. That can never happen here, this is Nigeria, be creative, be innovative, think local but act global.

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ecommerce, hacking, mobile money, Technology & Startups

Hey guys….please do me a favor. STEAL THIS IDEA!!!

I just heard that the Central bank of Nigeria recently awarded licenses to 8 new additional mobile money operators bringing them to a grand total of 24 (if so many licenses are being given out, maybe I should just apply for one). On a serious note though, I would be extremely hard pressed to name any of the 24 apart from mypaga which to me has been a very big disappointment. To me, these guys are somewhat bereft of ideas, so I have some questions to ask the “24 wise men of the mobile money industry”  which I hope would get their creative juices flowing.

1. My Phone or My Wallet: Why cant my mobile phone be turned into my wallet? that would allow me use my mobile phone airtime to buy stuff both on the web or offline i.e. in the real world? In other words, why cant I go to a site xyz.com, select stuff I want to buy, check out and be presented with a payment option where I can enter my mobile phone number and PIN and have the total cost of my purchases deducted from mobile phone airtime? So whenever I load credit on my phone, it would be the same as funding my account without actually having an account. Or why cant I go to a local market buy stuff and send a text containing my phone number, PIN, cost of what I bought and the traders phone number to my mobile money operator and have the trader’s account credited with the cost of what I bought? This idea would require you hobnobbing and doing some serious ass kissing to the major TelCos. Nigeria is going to go cashless, whether you guys like it or not, so the earlier you jump on the train with real innovative solutions the better, because that man called Sanusi “wont back down”.

2. eCommerce for Dummies: Since you guys are untested without a track record and your sector is new, it would make much sense if you make the barrier of entry as low as possible to website owners, eCommerce merchants and other people interested in using your solutions. And please scrap the dumb idea of charging a sign up fee, think solely of transaction volume, i.e. charge a cut on each processed transaction, so the higher the transaction volume, the more revenue rolls in. This business model could be likened to a company that gives out shaving sticks but charges for shaving blades or makes its printers free but sells ink and toners. The bottom line is you getting your foot into the door and taking the whole process from there.

I know you guys came into the market on the premise of doing money transfers and the likes, but there are now 24 of you, would it really hurt if just one of you could really be creative and turn the whole industry on its head by tweaking a little the terms of your license by offering a web payment gateway? Since the “big for nothing, monopoly seeking” companies like INTERSWITCH et al have been caught napping in that aspect? The sector is in dire need of innovation and is the number one reason why Nigeria’s tech industry is still in a comatose state.

P.S: I had an interesting conversation with someone today and he asked me a thought provoking question:

“If you implement something like Paypal here in Nigeria without a CBN license, would they send you a ‘cease and desist’ or would they just arrest everyone involved and throw them into jail?”

So, CBN Guv….what would you do if a train of young unlicensed tech innovators ran head first into this sector? what would you do? what???

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critic, funding, Technology & Startups

Number One Reason Why The Nigerian Tech Scene won’t “BLOW”!!!

I sometimes complain about lack of innovation and the endless clones of popular western world type websites, but on second thoughts web developers in Nigeria shouldn’t be blamed, it makes sense travelling on the “safe road” especially when you have a major reason to do so as:

1. Payment gateways: Its so difficult and expensive integrating payment gateways from companies like “Interswitch” into a website[1] and with the16 just licensed mobile money operators, who don’t seem to care about the web but are more concerned about mobile to mobile and mobile to offline, cash transfers. I dont see the industry “blowing up” anytime soon. If its so hard to get your money from customers as a website owner via the web, why would anyone want to develop one? Whenever I go to any of the so called Nigerian “e-commerce” websites, I select stuff I am interested in, click on “checkout” and I am presented with a bank account number where I am to deposit money before I can get my stuff, I am like, jeez!!! whats “e-commerce” about this? How do you expect me to pay in money into the account of an untested company when I could just go to a supermarket or store, select what I want, pay for it and get my goods instantly without any stories? As an analogy, Nigeria’s music scene is so huge today because most people who go into music have this hope that they might just “blow” and make it “big”, because they can see others making big money in the industry. So in the mean time, we better be prepared to seeing little or no innovation and lots of clones of Facebook and a myriad of “SIMPLEMACHINE” forums in Nigeria’s Tech space, just as we have lots of people in the music industry who have no business being there [2].

Notes
[1] In 2004, I did some research and found out that it would cost upwards of #150k to integrate Interswitch web payment gateway into a site. #150K in 2004!!! How many web devs could afford splashing such an amount on just a gateway, minus other day to day running costs? I dont know how much it would cost now, anyway. Dear Interswitch et al, there is more to epayment channels than just ATM’s and POS machines and with the new CBN’s cash withdrawal policy, people, like it or not would be forced to use epayment channels, please “don’t drop the ball”. But if you guys do, which I strongly suspect you will, any of the new mobile money operators should please do to you what Google did to Microsoft in the Web Search Industry.
[2.] Although we have some gems in the Nigerian music scene, like 70% of them there now have no business being near a microphone. Terry G, I am looking at you!

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hacker spaces, Technology & Startups

A Nigerian Hacker’s Wish (4): Business Models

“How will this generate income?”

“Can it stay afloat?”

“Is this economically viable?”

These questions and more are what I get tossed at me whenever I pitch a new idea or project. To the average Nigerian startup founder, the most likely answer to such questions would be “Google adwords/adsense”, which is the most popular ad network in the world today. Since a business model based on advertising might not be the best option for some startups, I have listed below some business models that Nigerian startups can adopt.

1. Subscription: This means charging users of your site right from the very beginning. This requires a lot of gumption and courage as most would be users might not be so well disposed to paying for a service that has not yet tried and tested. Also most web users have been spoilt by the FREEMIUM model which is the most popular business model on the web, hence it would be extremely difficult to get those kind of people to pay for what you have to offer. The success of the SUBSCRIPTION model depends on some factors:

(i.) Your Product: Can your product offer enough value to would be user’s to convince them to pay for it?

(ii.) Means of Payment: How easy is it to pay for your service? In a place like Nigeria, where e-commerce and e-payment platforms are either complacent or not interested in offering mobile/web payments, this can be a huge challenge.

2. Incentive Marketing: This business model involves offering discount coupons to users as an incentive to using your website. The income generated from this is shared between you and the merchants/advertisers.

3. Affiliates: This is a variation of the advertising model, and it works by having the website owner advertise goods and services for merchants, thereby providing customers to such merchants and taking a percentage of the sales generated.

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Technology & Startups

A Nigerian Hacker’s Wish (3): Funding

The average hacker here in Nigeria has almost zero access to funding for his startup, from either angels, venture capital firms, banks or even the government. At best if his idea looks promising, he might be able to convince friends and family to invest in his startup i.e. if they have the means to do so. But to face the facts, most hackers might not be able to go this route so I have listed some ways to circumvent this barrier.

Alternatives to Traditional Funding

1. Grow Organically: This mostly depends on the idea behind the startup. This is one reason why I am against hackers creating clones of popular websites here in the Nigerian web space. The idea behind any would be Nigerian startup should have the innate ability to grow organically, i.e. it should be a viable idea and should be able to generate revenue immediately from the time of launch. This would allow the startup to stay “lean”, prioritize on features and stay focused on what is absolutely necessary to the growth of the startup.

2. Freelance: Another word I could have used is to “consult or offer consulting services” i.e. provide services to individuals or corporate bodies based on your skills set. e.g. web design/development, database administration etc. This will allow you to plough back money generated from this activities into the startup, allowing it to stay afloat until it starts to generate income of its own.

3. Day Job: I am absolutely sure this is the path most hackers here in Nigeria are on. Having a day job means the hacker has access to steady income out of which he can dedicate a certain percentage to the daily running of the startup until it starts to generate enough income for him to take the full time plunge into it. One advantage of this path is that you as a startup founder gets to keep your 100% equity stake in the startup.

Since angels, VC firms, banks and the government are still blind to the gold mine they have left fallow in the form of web startups in Nigeria, I just have this to say: “Let’s become so good, that they can no longer ignore us!”.

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