OoTheNigerian

sometimes, I make a lot of sense.

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Xenophobia vs. Protectionism: How should local Nigerian startups compete with ‘foreigners’?

20 January 2014 by Oo Nwoye

 I read a post that would not be too out of place if it came with the byline of BNP’s Nick Griffin.

The crux of the post is that we should be afraid of the foreigners coming to Nigeria to take it all from the Nigerian tech scene and “forcing them back into the Lagoon” is the way forward.

I suggest you read it

Ideally, it would not have been worrisome but the fact that it was written by a poster boy for the Nigerian internet space and wholly endorsed by Sim Shagaya, CEO of Konga who called it “words of wisdom” makes it so

If people do not state early, their opposition to such xenophobic (irrational fear of foreigners) thinking, it could easily be misconstrued as a true representation of the view of Nigerian tech ecosystem.

This is coming on the heels of a Nigerian commentator/activist advocating that foreigners should not be allowed to run malls in Nigeria

Interestingly, Nigerians are particularly known for traveling far places to do business and are usually on the receiving end of “these foreigners are our problem” thinking.

Why the fear of Rocket Internet?

Rocket Internet is an Incubator funded by 3 German brothers, the Samwers. Their business model initially was copying businesses that had gained traction in USA but yet to enter Europe then sell these companies to the original US companies when they are ready to tackle Europe.

Version 2 of their current business model is aggressively building ecommerce verticals in Africa, Middle East and South East Asia.  They centralize and reuse technology in Germany and then hire a person to lead the operations execution in the country they are tackling. They sell and leave as quickly as possible

When they come into a market (it is rumored that operation leads on the ground, aka co-founders, are given $1million to check out the market) they move aggressively, hire and quickly spend lots of money (in the local ecosystem) in a very short time.

This of course causes a mini inflation in the local tech scene as they poach staff, cause an increase in the ad buying cost etc, mainly making things much more expensive. No local startup certainly likes it since it makes business unnecessarily more expensive to run

My views on Rocket Internet have evolved over time. Before, I thought they were a net negative to our ecosystem since they play the pure extraction short term game. Meaning, they build solely to sell and when they sell, they take the money out and move to the next area to extract from; leaving a wake of over stretched local startups and questionably self-sufficient businesses.

But that was one dimensional thinking on my part. Rocket internet is majorly responsible for the urgency we have in our local tech system especially in the ecommerce space. Alongside stretched startups, they leave in their wake human capacity trained on their dime a more developed market and of course a new investor holding the bag. I’m certain the local advertizing companies are also not complaining.

A negative remains though. In other successful tech ecosystems, local money is a major part of the tech scene so when there is an exit, the money is poured back to the local economy and it gets bigger. With the Rocket model, nothing like that happens.

How do you solve a problem like Rocket Internet? Protectionism or Xenophobia?

What is worrisome in Jason’s post is the fact that a legitimate problem (the Rocket extraction model is not the best for a fledgling ecosystem) is muddled with the xenophobic “stop the foreigners” solution.

What is bad for the Nigerian ecosystem is the extraction game irrespective of who plays it.

[Side note: Interestingly, Nigerian politicians and to a large extent ‘business men’ are guiltier in playing the extraction game. They take money from Nigeria (usually foreign loans) and go and develop Dubai. At least Rocket is bringing in money before planning to take out their spoils.]

I’m in favour of protectionism to an extent.

Protectionism are laws created to protect local companies from foreign (company) competition especially if the locals are operating at a disadvantage. The value in protecting home companies is based on the assumption that they will employ residents, pay tax and limit capital flight. They more they succeed, the more tax they will pay and more people they will be employed locally. Local companies could be run by New Zealanders for all anyone cares. i.e citizenship of local company owners does not matter.

Hypocritical words

Jason states:

“We are at the cusp of losing the key internet 1.0 verticals to non-indigenous players. This is something which would be dire for the ecosystem at large.”

 

“My simple thought. Our fathers lost the Telecoms, PayTV and other technologically driven industries to foreigners. Let’s not make the same mistake and lose our internet industry.”

So what exactly is he arguing are we losing?

If he is talking of returns, shouldn’t those who take risk be rewarded? When Konga and IROKO eventually successfully create a massive liquidity event, who would win?

Well, their approximately 100% foreign investors.

Is he talking about losing by building foreign capacity as against building local capacity?

Jason’s Co-founder, first angel investor and IROKO COO Bastian (who runs the company) is ironically, German (same with Rocket’s founders). DealDey (Sim’s previous company) is run by a foreigner. Konga and IROKO have foreigners in leadership positions.

There is no noticeable difference between the citizen structure i.e the citizen composition of the employees of either Sim/Jason’s company and an average Rocket Internet company e.g. EasyTaxi and Jumia (until recently) are Nigerian run.

I have previously written about why we are losing the investment game to foreigners.  In summary, there is less risk and turnaround time in investing in traditional tangible opportunities like real estate. Only those who have made money via software can see the internet opportunity. Sadly, they are not much around.

Competition:

The absence of international competition is the reason why Nigerian payments infrastructure has been way behind. Without competition in PayTV, we would have been at the mercy of HiTV that broadcasted premier league matches without sound or halftime commentary.  Without competition the customers will lose.

The world is flat and companies can no longer hope to be protected by artificial political borders. From day one, you should build like the biggest player in the world is going to launch in your market tomorrow.

The sole reason Silicon Valley is the outright leader in technology startups globally, is the combination of the concentration of talent brought by the high priority placed on competence irrespective of origin and a lot of money.

What is the way forward?

Asides the xenophobic card, how do local ‘underfunded’ companies compete against the foreigners especially those playing the extraction game?

Ironically, Jason answered  this in the beginning of his post referencing the Alibaba movie

“a great company culture, locally focused product development and a fierce belief in your local market can withstand and defeat a massive global competitor”

In addition to the above the government has a role in ensuring local capacity is built. Local businesses are encouraged to  operate/employ locally,  Yadda.. yadda  yadda..

 

First they came for Rocket Internet, but I did not speak up because I was not German..

Then they came for the Kenyans, but I did not speak up because I was not Kenyan..

 

PS:

  1. I do not for one second think either Jason or Sim are xenophobic one bit. Jason is even arguably British. But playing the xen? card for short term individual business advantage is VERY detrimental to the general ecosystem at large in the long term.
  2. Make no mistake, I am a very biased man all things equal, if a local company is executing at 70% of their foreign counterpert, I will go with a local. Same with friend vs. non –friend, family vs. non-family. Etc. However, I will not go attacking the other.
  3. Being pro x is cool, being anti y, had better be justified and being foreign is the worst of justifications.
  4. Triple irony is that Alibaba’s major investor was Yahoo! – a foreign company founded by a Chinese immigrant who would not have founded an American company if Silicon Valley was anti-foreigner (this is getting too meta for me).
  5. Oh. The Alibaba story was told by a foreigner.

33 comments | Categories: Commentary, Nigeria, Uncategorized | Tags: , , , , , , , , , ,

Why the MTN – Rocket Internet Deal Worries Me.

17 December 2013 by Oo Nwoye

When I read about the Rocket – MTN tie up, I thought “WOW!” for a second. Then was a little puzzled as to how a deal between the telco giant and an eCommerce juggernaut made any sense. I slept woke up and my eyes opened literally and figuratively.

I sent out a tweet to which Eghosa responded quite accurately

 

My main worry stems from Net Neutrality or  more accurate the possibly death of it and the implications

Net neutrality (also network neutrality or Internet neutrality) is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, and modes of communication – via Wikipedia

Last year, Pando covered a company, ItsOn that makes it easy for web/mobile companies to pay for the cost of interacting with their application. I did not think it was a good thing then

Under this deal, Rocket Internet is financially aligned with two telecom firms MTN and Millicom (which also owns part of Rocket Internet and which is in turn funded by Kinnevik) that have access to over 200 million subscribers.

So how does his affect competition and consumer choice?

What if for MTN/Millicom subscribers to browse/shop on Jumia does not cost you any bandwidth/money and opening the Konga.com homepage wipes out 50MB? Where do you think people will go shopping? What about Movies/Media?

This no longer becomes a level playing ground.  With this deal, “level don change”.

Of course, I will have to fearfully salute the Rocket guys and their obviously forward thinking backers for blowing up the ecosystem upping the stakes so drastically in less than 3 years on this continent. Can you blame them if they are within the law?

I don’t

The way forward?

Those that are policy experts are better versed on how to allow the ’free market’ operate within the context of avoiding monopolies that harm the consumer.

Interestingly, net neutrality is at an important turn in the US and the result will change EVERYTHING

I’m worried.

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8 comments | Categories: Uncategorized | Tags: , , , , , , ,

December 10 2012: The Day I Did Not Die.

10 December 2013 by Oo Nwoye

Monday 10th December 2012 started like any other day. The weekend had been busy. On Friday I had visited the US embassy and my Visa was finally approved. Saturday, my home boy from UNIBEN got married and I taught everyone how to dance Alingo.  On Sunday night I packed (while dancing Alingo with a friend who I was Skyping with) I woke up looking forward to my trip to Ife. A couple of us were going to speak to students interested in technology. It was all good.

The chap who was coordinating our bus began calling me and I told him I was on my way. Drove out gave my guyman Gateman our usual salute greeting and drove to my cousin’s office to leave my car. All this while, the coordinator of the bus was calling and I updated him on my location.

My cousin could not leave his office so I had to go drop my car somewhere on Awolowo Road, Ikoyi and the bus was to pick me up there. I dropped the car came out and met my fellow journey people and the polite coordinator.

We proceeded to CcHub to pick the rest of the gang.  I saw Saheed Adepoju so I came down from the bus and dropped my tablet on the chair we had a brief chat (as he was not going with us) while the rest of the people came downstairs. I got into the bus, Femi Longe took my seat, I gave cogent reasons why the seat was built for me and got it back and the journey began.

Then I sent this tweet.

Emmanuel Olutosin was sitting in front and pleaded with me to pause talking around 12 noon (do I talk that much?) as he had an important call.

I started reading from my tablet until we got to Lagos Ibadan express road then we began to argue about the road. “Ah the road is better” “It is not better” ” Bi Courtney dey try”, “it is not Babalakin that should be praised, na Jonathan” “Should we still be talking about this road in 2012?” etc etc.

When we passed that part of the road and I slipped into my favourite position on private bus long trips – I wore my headphones listening to music and imagined I was in bus scene of Craig Davids “I’m walking away” video. I began dozing off while reading and listening to music.

Life could not be better.

I heard an explosion (learned later the tyre burst ) and the crumpling of metal and felt tumbling (I think I remembered stretching out my hands to break the fall). Then I opened my eyes. I began squinting as the sun was shining in my face, I was in the sand by the side of the road. My body was in pains and could move only my left hand. I overheard screaming.

 

Accident

A road safety guy came over and said, “You just had an accident” in my mind I remember saying “ahhhhh fuck”. Then I started panicking. The first thing I did was to try and remember my name (lol. How would I have known if it was correct). Then I recollected my mum’s number and knew that was the one number I was not to call.

Then I started feeling faint and called my cousin Namo
Me: “Namo I am dying, I am dying”

Namo (without knowing the situation): “SHUT UP ARE YOU MAD?! WHAT DO YOU MEAN YOU ARE DYING?

Me: I am dying I WAS IN AN ACCIDENT I AM DYING

Namo: SHUT UP THERE!!  ARE YOU MAD?!!  IF I HEAR YOU SAY THAT NONSENSE AGAIN. YOU ARE NOT DYING!!  YOU MUST BE AN IDIOT TO SAY SUCH RUBBISH!!! *MORE RAKING*

Me: Oya sorry. I am not dying.

Namo: Good. Give someone the phone.

Then the road safety guy took the phone from me and began explaining what happened and giving our location.

Then out of the blues, I started thinking about the domain names in my possession.  I had no succession plan for them. About my email, PayPal dough and ‘digital assets’ that my family would never access if I died.  I began trying REALLY HARD to recollect my man Joel’s number since he was one of the few people I could trust and with the technical knowledge to access my stuff with my email and password. I remember that not remembering the number causing me a lot of distress.

(BTW, it was his UK number I was trying to recollect which I never knew by heart. And secondly, he had moved to the US and I did not have his new number)

Next thing, I woke up (I guess I passed out) with a drip in my hand and saw my cousin Chuka and Uncle Azubike. I smiled.
(I do not remember calling either of them. But I learnt I called Uncle Azubike and my other cousin Obinna called Chuka who came down)

Osibo who work out from the CcHub came over. I did the most trollish thing ever. I looked at him remembered his name was Osibo and carefully called out “Charles!!” with a confident smile on my face.

The way his eyes widened (thinking I had lost my memory). I pointed, laughed and he realised I was a damn good troll (I am still proud of that move)

I heard them talking of an ambulance that would take me to Lagos. I sincerely did not believe I would last the road journey to Lagos. So I told my cousin I needed an Air Ambulance.  I called Tonye Cole whose number he gave me many years ago and definitely did not have my number talk less of remembering me

“I need an Air Ambulance” I told him, with the confidence of the son of a dictator or the Minister of Petroleum.

“Who is this?”

“Floreat!” I replied. Forming KCOB.

Let’s just say an Air Ambulance was not on its way (of course, it was an insane request. But when you think you are dying, making insane requests is not what you are afraid of)

I think I shouted Floreat when I was abandoned on the hospital floor with a drip in my hand.

This KC belief wey I get eh.

Next thing, I was on the road to Lagos and the road was bumpy. I begged my cousin for water to no avail.  I started feeling sleepy again. I was convinced that if I slept, it would be the end. I told my cousin not to let me sleep. Big Mistake!

As soon as my eyes attempted to close TOZAAAI! Came the slap that woke me up. I would respond. “Thank you. Do not let me sleep”. With joy in his heart, he responded with another slap (to keep me awake I suppose). About 30 slaps later, we got to Igbobi Hospital where X- Rays were done e.t.c.

Then I called my folks.

“Mumsie, I had a minor accident. But I’m good. It was like something I could get on a football field.” Sadly, she did not have the opportunity to panic. I called my dad, gave him the same football line.

They did not want to believe that it was not worse, but I was the one doing the calling. 😉

My uncles and aunts came around and my friends started coming around.

I asked for the status of other passengers and learned that the guy coordinating the trip, the chap that kept calling me, the chap that sat behind me, died. His name? Bankole Taiwo

Later on, I got to learn of his final Tweet

That night, before I slept, I scrolled through my phone thinking of my final interactions before the accident. I was happy that most of them ended with “Lol”, “Oo, you dey crase o”, “laugh smilies”. Usually after I may have make one ridiculous comment or the other. I was happy.

Though I do not pray often, I prayed briefly and thanked the lord for keeping me alive.  Closed my eyes to begin the most difficult 2 months of my life.

It has been a year and every day I am thankful for surviving with only a broken clavicle and some bruises as injury.

I am thankful and grateful to many people for their support. I would like to specifically mention my cousin Chuka and Uncle Azubike who got to the scene as soon as they could. My gratitude to the road safety chap. Of course my cousin Namo for instructing me not to die.

My Aunty Franca is an angel. She took care of me when I could not bathe myself. Every one of my family and friends that came to see me at the hospital and in Akoka and of course those that called from afar. You have no idea how much you lifted my spirit.

Baba God, thank you.

Rest in peace Bankole Taiwo. I did not get to know you but the little interaction I had with you was entirely positive. My God continue to give your folks the strength to carry on.

Notes

  • I do not want anyone to read this and feel any tinge of sadness for me. I am doing spectacularly well and in a much better place than I was before the accident. You may however, drink a STAR on my behalf and say a prayer for Bankole Taiwo
  • Family is everything. They will be there when shit hits the fan. Hold your family strong
  • Except Bankole Taiwo, I decided not mention those I was in the accident ( Edit: Emmanuel Olutosin gave me permission) with because I don’t think I should be the one doing so.  We’re all at various stages of recovery and improving every day.
  • Please think of a succession plan for your digital assets and those you handle for others. I hope to find a solution for this soon. Maybe today.
  • The state of Nigerian health care is another story entirely. But I am thankful for those that helped with the limited facilities  at their disposal.
  • Though my hand still hurts a bit, I can still dance Alingo.

Update:

Emmanuel Oluwatosin has written a post and so has Femi Longe

16 comments | Categories: Self, Uncategorized | Tags: , , , ,

Another Roll of the Dice

29 November 2013 by Oo Nwoye

As some of you may know, my friend Ope and I have launched a new company, it is called Fonenode. We are building a telephony infrastructure on which solutions that simplify communication for businesses and individuals can be built easily.

The last year has not been easy. A few ups and a number of really deep downs and I always wonder if I should have taken this road at all. Getting a proper and stable job would have been obviously much more straightforward for me.

I always tell my fellow entrepreneur journeyman and women, “we are playing the startup lottery” because of the amount of uncertainty and risk involved. This time around though, I have that niggling feeling that “this is it”. That all lessons have been learned and would be applied this time.

But isn’t that what the gamblers all say?

To my family and friends that have supported and rooted for me all this years. Especially my mum, dad and my cousin Namo. Without whom, I would have given up a long time ago.

*Thank you!

Here’s to successful and fulfilling journey.

PS: What is the status of GBEDU.FM? It is officially my expensive hobby.

*Yes mum, I know the only form you want my thank you to take. I am searching hard. I will find her soon. Promise.

11 comments | Categories: GBEDU.FM, Self, Technology, Uncategorized | Tags: , , ,

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