Traditional Business Principles Apply to Tech Start ups Too

In 2010, the Kenya ICT Board was formed, with the main agenda of catalyzing Kenya’s tech sector. Money was set aside for innovation grants, competition prizes and content grants.

Several companies were formed and benefitted from the sudden surge in the amount pumped to the Ministry of Information and Communication, while some people managed to form a career hoping from one competition to the other, while the grants went unquestioned. It was a great time to have an idea.

In the private sector, local and international journalists did their best to paint a positive and vibrant tech scene, which attracted venture capitalists in the hope of cashing in on the next big thing. International donor agencies also supported the tech sector to support innovation and the hope of replicating Silicon Valley progress.

Five years later, it emerged that even though several start ups had been supported, very few of the ideas resulted in solid businesses. Yes, the ideas sounded very nice during pitch sessions but it was hard to move from social funding to solid businesses capable of breaking even and making profits.

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There are several reasons why the start ups did not do well; from lack of support from the public sector, problems getting data, to greed and professional ineptitude.

For the few that managed to jump through initial hoops, they soon realized that even for the modern, digital companies, traditional business principles still apply, when it comes to growing a business.

Having a product or service

For the young, and hip digital population, having a cool mobile app is good enough. As long as it receives accolades within the tech scene drunk with self-adulation, it is enough to move from one funding pitch to another. This tactic works until another cool app comes along.

Most of the “cool innovations” are centered on an idea, which in most cases is not actualized into product or service. This means that these companies do not survive when put through the rigors of normal business.

The start ups that tend to do well are the less talked about, usually away from the tech scene, and they usually develop a product or a service that targets a specific market sector. This is what happens in the traditional setting; you must have something that makes life or business easier, that people can invest it.

Managing Cash Flow

For many businesses that have been around for a while, cash flow management is probably one of the toughest tests they have had to pass and at times fail. Some of the more open founders will share tales of hiding from auctioneers, being auctioned and having no food.

This affects the start ups hard because our financial sector is not well matured to understand and gamble on tech businesses. The banks will ask for collateral, usually title deeds, and many of the tech enthusiasts may not have such collateral to put up.

Many of the companies have failed this test, and they usually quietly fold up or sell off to a more established player, and they found other newer companies, depending on the popular idea at the time. Currently, its cool to invest in Fin-tech, if you mention buzz words like financial inclusion, banking the unbanked, and block chain, you will attract some money, for the time being.

Business development

Even if the company has a good product that answers many of society’s problems, it needs to be marketed for the particular constituency to know that such a product exists.

For instance, there are cloud service providers answering many of the challenges faced by SMEs in getting online, but many do not know about it. In as much as more people are online, traditional marketing and business development processes must be employed to clinch bigger deals.

Given trust issues and cyber security concerns, it would require a few face to face meetings to convince a local insurance or financial institution to give their non essential data for archiving.

The start up would require an introduction and hand holding from someone familiar with both sectors, and for that person to command enough clout for their word to count. Ideally, this is the job a Cabinet Secretary like Joe Mucheru can do well, if he wants, because he understands the intersection between tech and most sectors.

Social good is good, but doesn’t always translate to business

Answering societal problems is great; some major solutions have been found for the agricultural, health, water and sanitation sectors. But some of the innovators think that developing a mobile app means immediate uptake. Developing a mobile app for everything is commonly known as “M-vitu” or “M-whatever”, it is fuelled by the belief that because most Africans use mobiles, then a mobile app is the magic bullet to conquer the market.

After the initial stages, if the company is to make a business out of the innovation, then it must answer the critical questions, meet the demands of the clients or customers and also generate income to support the running expenses.

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What can we expect from Mucheru, Kyalo in ICT?

There is no doubt that the appointment of Joe Mucheru and ICT Cabinet Secretary and Victor Kyalo as PS is expected to provide new impetus to the ICT sector.

Why?

For the last two years, Kenya’s ICT sector has been uneasy over the rate of progress, much of which was blamed on unsupportive government officers and changing global trends.

The unease stems from the fact that seven years ago, there was a lot of hype, government support and international goodwill that resulted in competitions, grants and general investments in the sector. With this progress, Kenya seemed to be taking its place as a bonafide contender for Africa’s top technology hub.

That momentum seems to have slowed since the appointment of Dr. Fred Matiang’i as the head of Ministry of Information and Communication. The concern was that Dr. Matiang’I lacked deep understanding and appreciation of the ICT sector because he was an outsider in the ICT sector. In some cases, outsiders bring about change and development and in other cases, it doesn’t happen.

For those who know Kenya’s tech scene, these are the leading lights in policy and technology in the last 17 years; since the Kenya Communications Amendment Act took effect. Mucheru is probably well known for his role in growing Google in Africa, he was the first hire, when the content giant decided to set up offices in the region.

Mucheru and Kyalo were involved in policy advocacy and ICT sector involvement  through the Kenya ICT Network (KICTANET), an online forum that allowed members to contribute to government policy,  and the Telecommunications Service Providers of Kenya (TESPOK), a private sector lobby group.

However, those who have transitioned from private to public sector know that it can be tough. You need the workers at the ministry to help in delivery of promises, the supporting team usually determines the success and can sabotage or support, just like the private sector.

One of the arguments for sector challenges is lack of support for the government front, usually blamed on clueless leadership. Now you have people at the top who understand the challenges and opportunities in the sector. For once, the PS and CS are industry insiders, if they fail, then its not because of appointment of “wrong” or clueless leaders who don’t foster growth in the industry.

For those old enough to remember the “dream team”, we know that success in the private sector doesn’t always translate to success in the public sector. Success will be hinged on culture change for some of the characters who are set in their ways and may not be too happy with regime change. Kyalo has already navigated the murky waters, let us see how Mucheru deals with crocodiles.

So, what should we expect?

Leadership and direction- E.g Safaricom dominance

One of the biggest controversies relates  to the issue of Safaricom dominance and the best way to support Orange and Airtel to turn around profits and find a way to compete with Safaricom.

When asked about this topic by the parliamentary vetting committee,  Mucheru promised to work with the Communications Authority and explore ways to help the other telcos to be more competitive. He mentioned infrastructure sharing as one area that could promote more competition.

He was quick to mention that Safaricom is valued at $ 5 billion, which is lower than Whatsapp ($19b) and Uber ($60b). Of course there is no correlation between market capitalization and market dominance but I got his point to be that we must grow more billion-dollar companies before curtailing their growth. The fact that the committee didn’t pin him more means that they were either clueless or will allow Mucheru to bullshit around, as long as he can drop big names and jargon.

The CA and Matiang’I have been at odds with Safaricom, writing to parliament and promising to implement measures that cut Safaricom’s growth instead of helping others competing and catching up. Mucheru had constructive suggestions, let us see if he will implement/

The problem is that whether we like it or not, Safaricom supports other smaller companies and in cutting its growth, the government is eventually cutting the growth for other smaller companies. For instance, Mpesa depends on smaller local software developers to innovate, if the revenues drop,  this jobs go to India, where the costs are way lower. Of course, market forces could force similar results but its better than government doing it. That is why this fight makes more tech companies jittery.

It will be interesting to see how Mucheru handles this balancing act between the government and its largest tax payer.

Leadership and direction- Blockchain, bitcoin, etc

Every time new technology comes up, there is usually apprehension from the incumbent; mainly it borders on the economic effects but is usually masked as public interest; to a larger extent that is…… for instance, when Mpesa entered the market, banks complained to the Central Bank, arguing public interest and demanding that Safaricom be licensed as a bank and comply with all the rules if it wants to handle money. It was a convoluted battle that Safaricom finally won and banks had no choice than to partner.

Countries like Japan, Tunisia and many in the EU are exploring how to use blockchain. It will probably take another 10 years for it to go mainstream. You can read about bitcoin in Kenya here. CBK has already cautioned the public on its usage.

In this respect, Mucheru and Kyalo should offer leadership and insights on the best way for Kenya to go.  Whether CBK recognizes the opportunities provided by blockchain or not, will be down to the approach and guidance from the ICT ministry.

Restoring the vibrancy

There was a time Kenya’s ICT sector was vibrant, with competitions here and there, which provided opportunities for new ideas and career “app competition winners”. People say that the tech ecosystem doesn’t benefit from competitions but for the young guys from school, it can offer some motivation and a way to set up.

Its funny how some people vilify app competitions, even if they are well known or found their footing in those competitions. I recently read some WhatsApp messages from some guys saying how competitions spoil the industry. The irony is; the two loudest characters have won the most money and were a mainstay in those competitions. They ran professional start ups; being know just by pitching in those competitions.

For the people entering Kenya’s tech space now, you missed a boom of unaccounted government money, forget about the $1,000 Barclays is giving, this was money 🙂

There is so much we can expect, but this is all I can think about for now; read what Mucheru promises in this article.

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Govt should centralise to improve security

In the last two weeks, a group calling itself Anonymous Kenya has terrorized government folks by hacking social media accounts belonging to Kenya Defence Forces, their spokesperson and the deputy president.

The response from government folks was just laughable. Just watch this KTN interview with Evans Kahuthu, the guy tasked with Information Security at the ICT Authority.  It was the week that the accounts were hacked, exposing the governments behinds and this guy dances on the fence with jibber jabber….. he didn’t say anything and the presenters/interviewers….well, that warrants a post on its own. I spoke to Evans later and he explained his challenges, off the record, but still, as an info sec rep in a government, this guy should have more teeth. Who should give him the teeth? Read on…

A lot has been said in the media and a lot of that is available online. But beyond all that, I thought it was better to look at the root causes, other than the symptoms.

When you talk to many folks in the ICT industry, a common theme that is emerging is the fragmentation of government ICT functions; yes the ICT Authority is supposed to be the more consolidated arm, but does it have all the powers? Listen to Evans and you will get it.

BtZtCDLIAAAOVkO

 

 

1. ICT Authority

When e-gov, GITs and the ICT Board merged to form the ICTA, the idea was that all govt functions would be consolidated into one major body that can now advise government and the county ICT reps on the technology directions. Now, I could go on and on but one key thing was that when the hackings happened, even the guys at ICTA weren’t aware of the passwords or who operates what.

It was clear that there was no audit or a centralised doc that can tell you the ICT hardware (servers, laptops etc), Software – think of all money paid to Oracle by government, and the attendant passwords. So when you say, why were we not Secure? Govt folks might ask, didn’t we invest in new locks?

2. Itumbi and his team

There is something about a duel between young and old people. The old guard thinks experience trumps technology, the young think the dinosaurs are hogging power and do not know what they are talking about. Itumbi and his digital team, are in charge or operate the social media accounts. They know their stuff and no one will tell them anything.

I asked whether the ICTA and team Itumbi have ever sat in a room together and I couldn’t get straight answers, so I assumed the answer was no.

So, the ICTA is in charge of ICT direction in this country but do they give advise or direction to team Itumbi? Whether they like it or not, its government security and it matters.

I am not sure what security precaution team Itumbi takes  but clearly, more synergy is needed at least not to have the Deputy President’s personal number exposed. There is no big deal but probably some people will add him to their Whatsapp group on neighbourhood security or something.

3. The Communications Authority

Now, the CAK is the big boy. You know the guy or girl in your school who would threaten or take your piece of bread in high school, yet they have theirs? Well, CAK insist that it can handle all matters tech in the country, even when its clear that that they should handle only policy stuff.

The CAK has been in a tug of war with ICTA to own the Cyber security master plan and the numerous master plans and road maps that this government has specialised in. It has been clear that they can’t handle. Why?

 

KECIRT

Picture this; in May 2012, a group that maybe the now anonymous Kenya set up KE-CIRT twitter account, which has the ca.go.ke as their contact and has been tweeting on tech matters. After the hacks, the account was used to spew disparaging remarks and push the buttons of Anonymous group.

Do you think a government body would be spoiling for a fight with anonymous given the situation?

When I asked the folks at CAK, they said that thats not them bla bla but you are the custodian of KE-CIRT, how would you not know of an account operating in your name, now masquerading as the government body? From 2012? There has been no attempt to at least lock your accounts to avoid squatting?

You can imagine the commotion and phone calls as people tried to find out who was KE-CIRT and others saying how they are helpless and can only depend on Twitter Inc to help.

It is clear that something needs to happen, I don’t have all the answers but something needs to happen now..

🙂 and the crowd say…….. we have heard that before!

 

KECIRT 2

 

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Oracle, Dimension Data, govt contracts and the great wall of silence

For those who have been following the tech sector closely, you will know that there is a lot of money floating around for big projects. The only challenge is that very few projects go to local companies; you can cite the common excuses given, lack of capacity, financial backing, etc

This means that most of these projects are deployed by big international corporations. One of the contract requirements is that these companies must transfer skills etc etc… we all know how it goes.

Oracle

Let us take the example of IFMIS I wonder how many people remember what exactly it does. Well, read it here . This project is using Oracle. Apparently government paid for 14 modules and only three or four have been implemented. The project started in 1998.

Apart from that, it is said that the government has spent about Ksh 100 million on Oracle licenses across the various government ministries. Just calculate the amount of money paid in licenses annually.

That is why, in my estimation, the greatest winner in the whole government digitisation favours Oracle because the government can not afford to vote away from the investment.

So, is Oracle happy at the continued support that it will receive from government going forward? I caught up with Gilbert Saggia, head of Oracle in Kenya and asked for just five minutes.

“I can not talk in the absence of my PR person, maybe we can do this tomorrow?”

Well, companies have rules and regulations but I haven’t seen him or got a reply to my email, so we assume that was the answer he wanted me to have.

Dimension Data

Three years ago, Dimension Data won the tender to implement Unified Communications within government. It is a way for government to stop using landlines and reduce the communication costs.

I have not gotten the actual costs, some people privy to the tender say it was $16 million while others insist it was about $30 million. Take your pick.

I tried to get a response from Dimension Data and this is what I got.

DiData

 

ICTA position

I asked Victor Kyalo, ICTA CEO, on why the DD project had to take so long and he explained that political changes, building preparedness etc meant that only two government ministries are interconnected.

The project is expected to be completed soon 🙂

My question

Why do international companies decline to answer questions on these tenders? Is it:

a) That because government is a client, they have to be the ones to comment, so who are you to comment? Thats if you want more biz.

b) The companies do not want to be associated with failed/stalled/lengthy (insert yours) ongoing projects?

c) They are there for the money and do not care whatever happens to the project, they sold whatever they were selling, they earn from annual support and licenses and anything you would like to ask is none of their business.

It is what it is 🙂

Of Journalists, press conference and political pressure

Yesterday, the first day of Connected Summit, there was a press conference attended by Info Com PS Joseph Tiampati, ICTA CEO Victor Kyalo, Andrew Waititu, SAP CEO and Edwin Yinda, ICTA Board chair.

This was a routine press conference. If anything, the CS had not arrived and it looked like the only big story would be the affirmation and details of a previous announcement by Deputy President William Ruto that Kenya will have third generation ID cards.

The journalists went on with the usual questions and one sought clarification on the actual cost, Tiampati clearly indicated that the cost would range from 5 to 8 billion Kenya shillings, this was on record, tv, radio etc.

Just like it was a routing press conference, this was a routine story.

Well, that was until Capital Fm was the first to run the story, on radio, online and through text service. That was the time the political pressure kicked in. Apparently, the figures were discussed in a closed door meeting and Tiampati was not supposed to disclose.

And Ruto/his office/his handlers were pissed!

Calls started going into newsroom bosses, demanding a correction, even before the story ran. The issue was that the figures were wrong, it will not cost that much, etc… For the journalists on the ground, they could only stand their ground because there is no way ten journalists with radio and TV clips can be wrong.

In retrospect, you can understand Tiampati, he is the technical guy, he probably sat in those meetings that decided on these figures. He probably has not been briefed on how to doge journalists questions and saturate press conferences with philosophical and abstract BS.

For tech journalists looking for stories, this is the guy to talk to….he will give you a story 🙂 probably anytime 🙂

Anyway, it was a nice last minute run around for the guys handling PR for Connected Summit.

Here is the correction/clarification sent late in the evening.

“Government to begin digitization of all persons

 The National Digital Registration Exercise targets to establish clean data set registers for all people, establishments, land and assets.

The entire exercise covering all the four data sets budget will be firmed up as soon as design and logistics are finalized (this is still work in progress).

The people registry which is the immediate exercise will target to clean up especially the 0-17 years old records. Details to be captured for those between 12 and above will be to ensure clean data for planning and socio-economic use.

This will be across all the different data users in Government and the private sector who rely on data for their operations.  Effectively through economies of scale this will lead to lower costs and efficiencies across the board.”

🙂

ICT Authority to have a desk for ICT related work permits

For the last year or so, the immigration officials have been camping at “tech start up” hotspots, seeking to weed out illegal workers or in other words those with no work permits.

This has been frustrating to “expats” who have maintained that Kenya has no tech capacity etc. I am sure you have read stories of how people can not find appropriate hardware such as key boards, mouse, etc in Kenya.

It seems Fred Matiangi, Info Comm Cabinet Secretary will give the expats a reprieve in the work permit application process.

Since Jane Waikenda took over at Nyayo house, she had a policy of employing stringent measures especially in areas where such capacity is available locally. This didn’t go down well for some ICT companies bringing in unemployed westerners in droves as “expats”. Some have argued that they would move their corporate headquarters to South Sudan or  Congo, just to protest, well, maybe Tanzania or South Africa.

Anyway, Matiangi says he has had discussions with his interior ministry CS and now ICT work permit applications will be treated differently. The ICTA will participate in the process and there will be a desk where the applicants can be helped.

This helps in the transfer of skills 🙂

How are Kenyan Companies fairing at Connected?

Last year, I did a post on KITOS and its efforts to ensure Kenyan companies are involved in large government tenders?

Has this improved? Well, I see JTL Faiba is a sponsor this year, if you think Liquid Telecom in Kenya, and that is it.

Mike Macharia and SST were conspicuously missing from the programme, maybe to give opportunities to other local company CEOs.

Who knows what happened to KITOS?

I don’t think the story has changed from last year…..

 

Liquid Telecom Succeeds in providing milkshakes, fails in connectivity

Last year, I wrote this story of pathetic connectivity at the Connected Kenya Summit. The issue was; how can you have a conference talking about connectivity and one of the most touted regional company can not manage internet connectivity?

This year, Liquid Telecom decided to abandon its core business and succeed in the food and beverage department. While the wifi didn’t work from the word go in the morning, Liquid shakes were working very well and some internet-frustrated attendees enjoyed the milkshakes thoroughly.

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I am sure for some people, having no internet connectivity is good for concentration but you know what? we are so hooked that people switched to their mobile hotspots, which means that in a room of 400 people, there were probably 300 hotspots.

This resulted to Liquid Telecom blaming these little hotspots for the failure in their network set up. Apparently these little hotspots were clogging the network. This didn’t make sense.

I have attended the Mobile World Congress, which is attended by 100,000 people and each provider has their network and yet, the public wifi works very well. How does it work?

Anyway, I think Liquid had a problem with their network and for a company of their repute, I think we should have gotten a better excuse/reason.

Apparently, the organisers were promised an STM1 (155mbps) and Ben Roberts, Liquid CEO confirmed that they were pushing 170mbps which is huge.

The duties were also subdivided; Orange were providing online streaming and Liquid to handle the conference connectivity.

But the milkshakes worked well for all attendees….

 

Connected Kenya Summit makes prog. changes….

Last year was my first time at Connected Kenya and I wrote this post suggesting some changes. The best part is that the program this year has changed.

The program has been changed to include breakout sessions, it has different tracks, the speakers seem to be on topic and the projection seems to be working ok…….

But… how do we deal with death by powerpoint, do we change font, do we say presentations are on for 15 minutes or what do we do with those power points?

I was seated next to Sam Gichuru of Nailab and he was not impressed with the presentations, he thought much should change in the presentations area.

“The set up is brilliant, the tech is good, the process and venue is good but the content needs to be repackaged to reflect the dynamics of attendees, less powerpoint and more discussions beteween the presenters and the audience,” said Gichuru.

The bigger point is, we have Oracle, SAP, Dimension Data, Liquid Telecom, Orange etc as sponsors, how about we engage in discussions regarding implementation of projects and how to overcome strategies.

For instance, government paid for 14 Oracle modules in IFMIS, how comes only three have been implemented, or something like that. We can get powerpoint as attachments or via bluetooth and read and discuss between the speakers and delegates.

For better details, please read the year old post 🙂

East Africa Ministers stay in the hotel whole day

Government Ministers from Rwanda and Uganda were forced to stay in their hotel rooms after Fred Matiangi, Cabinet Secretary in the Ministry of Information and Communication failed to turn up for the first day of Connected Kenya Summit.

Matiangi was meant to open the first day of Connected Kenya and launch the ICT Masterplan (revamped) but he was apparently/allegedly held up in meetings with the president and could not make it for the first day. Word is that he will arrive later tonight, to participate in the second day.

The minsters/reps from East Africa could not participate in the conference because protocol demands that if you visit a country in official government capacity, then your host must be there to receive you. If not, it would break protocol or raise an international incident.

It would be nice to hear stories of how Uganda and Rwanda have implemented the digital companies registry. Kenya is yet to get there.

Let us see if they turn up tomorrow….