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.


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!”.

A Nigerian Hacker’s Wish (2)

In part 1 of this series, I wrote about a place in Lagos where I could code without thinking about power cuts from the power company, my laptop battery dying, my generator running out of fuel or my inverter battery running down. I made this point number 1 on my list because of its relevance to flow and a hacker’s productivity.

What is Flow exactly? According to Wikipedia:

Flow is the mental state of operation in which a person in an activity is fully immersed in a feeling of energized focus, full involvement, and success in the process of the activity. Proposed by Mihály Csíkszentmihályi, the positive psychology concept has been widely referenced across a variety of fields.

According to Csíkszentmihályi, flow is completely focused motivation. It is a single-minded immersion and represents perhaps the ultimate in harnessing the emotions in the service of performing andlearning. In flow, the emotions are not just contained and channeled, but positive, energized, and aligned with the task at hand. To be caught in the ennui of depression or the agitation of anxiety is to be barred from flow. The hallmark of flow is a feeling of spontaneous joy, even rapture, while performing a task although flow is also described (below) as a deep focus on nothing but the activity – not even oneself or one’s emotions.

A hacker being in the Flow while coding is usually at the peak of his productivity. Flow is that elusive state in which a hacker is so immersed in what he is working on that he looses all sense of time and space, everything else is a blur, as he has “tunnel vision” on the problem he is developing a solution for. To most hacker’s who have to hack at work, they will tell you that they hardly ever if not never get into the state of Flow, which is why the 37signals guys will tell you that the typical workplace is antithetical to productivity. Flow once gotten into is very easy easy to break out of and harder to get back into once distracted.

How to stay in the Flow

1. A conducive workplace, i.e. a place where the hacker doesn’t have to think/bother about mundane things like infrastructure, e.g. power, Internet etc. Also the hacker should have all the stuff he might need during the hacking session like food and drinks, notepad and pen, reference materials and manuals at arms length  to avoid breaking out of the flow just to get these stuff.

2. Avoid distractions like emails, IM’s, phone calls, co workers, meetings etc and also have a certain period of the day when he can code for a solid stretch of time without interruptions.

3. If the hacker is in a noisy place with lots of people, using high quality noise canceling earphones would be ideal as it would serve the dual purpose of shutting out external noise and also dissuade people from talking to you.

A Nigerian Startup: Not thinking mobile? you are so wrong!!!

Any Nigerian startup that wants to get some form of traction and probably produce a mass product but isn’t doing or thinking about doing mobile is so so wrong. And when I say mobile, I am not talking about the approximately 150,000 blackberry users spread across the major GSM networks in the country, I am talking about the baseline population i.e. people with $50 Nokia phones.  Here are some reasons why you should be going down the mobile route.

1. Nigeria has a population of 154.7million people, approximately 80million mobile subscribers and an estimated 10million Internet subscribers. Any startup that goes the mobile route has opened itself to a potential market of 80million people. Even if such a startup decides to go freemium and have a business model based on advertising, its still a huge market to mine from and make profits.

2. With approximately 10 million Internet subscribers, if out of this number, 5 million access the web through their mobile devices, this leaves 75 million mobile subscribers without access to the web. Any startup that decides to target this demographic with mobile services like mobile alerts, sms search, sms coupons etc will be extremely profitable. Taking a site like Nairalist (a site with huge potential, but hasn’t really taken off) as a case study, if the owners of Nairalist could allow me setup mobile alerts via SMS against keywords of stuff I am interested in buying on the site and then alert me when ever posts which match my keywords are posted by advertisers, this would make the site extremely useful to me and weave itself into the fabric of my daily routine. This is a “sticky feature” which will make me want to use the website more and more.

3. Most people lunge around with their phones and other mobile devices wherever the go, hence sending SMS alerts, coupons or other mobile VAS (value added services) from your application or website will definitely be seen by this users and acted upon almost immediately. This can not be said of pure web services like emails and other web alerts which will only be seen by users only if they log onto your website.

4. For startups looking for that killer idea, I can name so many that involve SMS and other mobile features e.g. SMS alerts, SMS search, Traffic Reports, Mobile Coupons (think Groupon via SMS), SMS news service and alerts, the list goes on and on.

Incorporating mobile features into a website or application isn’t difficult and it exposes your startup to a huge untapped market.

A Nigerian hackers wish.

How I wish there is a place in Lagos, Nigeria where:

1. I can code without bothering about power cuts from the power company, my inverter running down, my generator running out of fuel or my laptop dying and also have REAL BROADBAND ACCESS.

2. I can harness the collective intelligence of fellow hackers, brainstorm on issues relating to coding/startups/funding/business models etc, get validation on ideas for web projects etc (Twitter/Facebook doesn’t just cut it).

3. I can get to meet VC’s and angels who might become interested in my work, put in funding and get it off the ground.

4. I can have unlimited access to food and energy drinks to fuel my coding sessions i.e. I wont mind paying a daily/weekly/monthly fee to get something like this.

5. I can concentrate on coding which I do well and leave stuff like UI/UX design, database design and administration, system administration to the guys who do it better.

6. I can attend hackerton’s, *camps, workshops and trainings related to IT facilitated by veterans in the industry, both local and foreign.

I think I should stop wishing and start acting, anyone else interested in making this happen?