Thursday, 16 October 2014

The Wantrapreneur Chronicles #3: Angels

Land, labor, capital. The 3 classical factors of production that an entrepreneur has to bring together to carry out some venture. When it comes to financing the dream, the options at the initial stages of a venture are limited. Furthermore seed/startup stage ventures carry a larger burden of risk. Sometimes the entrepreneur (or Wantrapreneur) has some savings from which he or she can get started but that can usually only take them so far particularly if it's their first venture. Where do they turn to?

Initially: Friends & family, and business angels.

Within the context of the Wantrapreneur, we can group these sources and label them 'Angels'. Because that's what they really are, the people who risk their own hard-earned money, and more importantly, their reputation in what may be no more than an idea.

I've previously shared part of my Wantrapreneur story. Funding for my first attempt at a startup came from four individuals I highly respect who pooled resources to take a chance on an idea, and a young fellow who had never been an entrepreneur before. To cut a long story short, the idea did not work out. But if nothing else, that experience was like a wake up call – entrepreneurship is not a game, its serious business and real people stand to lose real money in the process. The experience has also taught me the critical importance of angels to entrepreneurs (in the making). It is because of these individuals that any entrepreneur could stand a chance of even getting started. Without them, entrepreneurship would be stifled.

Tune in next week for another episode of The Wantrapreneur Chronicles.

Why innovation in payment systems is important for entrepreneurship

Look around you. Chances are that at least 90% of everything around you is there because of entrepreneurship.

There's a Swahili saying that says, 'ukiona vya elea, jua vimeundwa', translated literally as 'if things exist, it is because they have been made'. The meaning is very simple: things don't just happen by themselves.

In the context of entrepreneurship – you are only able to enjoy the products and services around you because someone, an entrepreneur, somewhere made it happen. They had the idea, mobilized people, resources and production in order created something for you to enjoy and for them to profit by. Adam Smith had the piercing insight that it is because of people's self-motivation that led them to create products for the rest of the society to benefit from. The 'invisible hand'. What moves this 'invisible hand' to work? - Profit. Money.

And here's where innovation in payment systems come in.

It goes without saying that at the macro-level the value of a nation's currency is of great significance to the state. If the currency loses its value, trade and investment are negatively impacted. Similarly, at the micro-level the ease with which an entrepreneur can get paid for providing a good or service has a direct impact on their willingness to provide the product or service. If, as an entrepreneur, I cannot expect to be paid relatively fast, reliably, and securely I will be less willing to expend time and effort to produce and sell something of value. The cost of settling the transaction should also not be prohibitive.

PayPal is probably the poster child for online payment gateways. Bitcoin, the digital crypto-currency, ushered in a new wave of innovation in money and payment systems. Companies such as Square are making it easier for businesses to receive payments. And now Apple has thrown its weight behind payments, giving it as much validation as the iPhone gave smartphones.

In so far as innovation in this area helps tackle challenges with or improve upon four key parameters, the greater the direct impact on entrepreneurship:


  1. Cost – How much does the entrepreneur lose to the payment processor? The less they lose in transaction fees the better. Innovative payment systems could provide cheaper alternatives to existing payment gateways.
  2. Speed – As an entrepreneur, how fast can I get my money? The faster the better. That's basic cash-flow logic. I come from the land of MPESA (and no this is not a YAM (Yet Another Mpesa) article). One of the key benefits that came with the advent of mobile money is the instantaneous transfer of funds.
  3. Security 
  4. Reliability

A case in point:

Back in the land of MPESA – Safaricom, the leading mobile network operator under which MPESA runs is fretting a new player in the market. A once little known bank that grew to be a giant under the very noses of other established commercial banks in the country is now threatening Safaricom's dominance in the mobile money space. Equity bank, having recently secured a Mobile Virtual Network Operator (MVNO) license is getting into the mobile money space. The have a large client base, and they are seeking to use thin-SIM technology that can attach to any other operator's SIM card. Safaricom is not happy with that. More importantly, however, is the fact that Equity Bank is planning to charge drastically lower transaction charges than Safaricom.

That's music to the ears of entrepreneurs who settle via mobile money!

Monday, 13 October 2014

The best sales & marketing strategy is...

Value creation.

In a nutshell: Create value for your customers to the point that they want (and are even eager) to pay you. Create value for your customers to the point that they are willing to talk to other people about you and your product or service and recommend you.

Why?

The reason is simple: first of all people generally tend to do business with people they know or have been recommended to them by people they know.

As one study shows, the majority of conversations about brands happen not online but in real world social networks. Furthermore, most consumers will not complain about receiving bad service but will usually talk about their bad experience to friends and relatives. And the fact is that Word of Mouth Marketing trumps other forms of marketing and advertising.

How?

Creating value for your customers need not cost you much, it may not even cost you anything at all! For instance, if you have a corporate Twitter account, or other social profiles for your brands or products, one way to create value is by simply surfacing great content about your domain to your followers. Not content about your product or anything directly related to your company, but content about your general domain of expertise that your customers will find useful, helpful or informative. If you sell computers, why not tweet relevant articles about computing and tech in general?

Here are 3 areas where you can create value for your customers:

Service: The classic example is Zappos. Their competitive advantage is simply the best, no compromise customer service. Tony Hseih, founder of Zappos, is legendary in his razor sharp focus on this. In fact you could say he wrote the book on the topic.


Experience: Whether you sell a product or service you can create value around the entire customer experience including the physical space in which customers make purchases. Apple's revolutionary retail store concept is a great example. The Apple Store is not just a place you go to buy a phone, it's a place where you get an amazing experience you won't get anywhere else, breeding die hard customer loyalty.


Give something away, for free: You could include a Freemium component to your business model for instance. The trick however is not just to give something away or give something cheap away in hopes of luring in a paying customer. That's not creating value. If you have a free membership on your website, make sure the features that are accessible to free subscribers are not second class but are polished just as well as if the customer was paying for it.

Friday, 10 October 2014

The Wantrapreneur Chronicles #2: The Wantrapreneur

This segment is dubbed the 'Wantrapreneur Chronicles' because I think that's how I got started. Who or what is a 'Wantrapreneur'? Sometimes the word is used in a derogatory manner to mean someone who is not a real entrepreneur but is more like a pretender - they love the idea of entrepreneurship but don't want actually do the 'dirty work' of actually running a company. That's not what this is about.

In the first entry in this series I discussed how some entrepreneurs get into entrepreneurship out of circumstance. They had never planned or intended to be entrepreneurs. They would not say they were 'born' entrepreneurs but had to become someone they had never imagined out of necessity. In other cases the person really 'desires' to be an entrepreneur and their intentions are genuine, but they are just clueless about what it takes to actually run a business and lack basic skills of entrepreneurship. In yet other cases the person is just in the wrong business. Perhaps they heard that the particular type of business is lucrative and decided to give it a shot but were a bit naïve I'm thinking they could get in and make it having underestimated the industry.

That's what I mean by a 'Wantrapreneur'. 

Usually the Wantrapreneur can graduate to full blown, even successful, entrepreneur. It just takes time, and nurturing. They are a bit like a baby born prematurely. They are weak entrepreneurs at best, others may look at them and find it hard to believe that they will make it, sometimes they fail miserably and people write them off.

If entrepreneurs can be 'made', Wantrapreneurs are potential entrepreneurs in the making. The 'Wantrapreneur to Entrepreneur' journey is one of self discovery as much as it is about learning how to be a business person.

But just as with premature babies, not all Wantrapreneurs make it.

Tune in next week for another episode of The Wantrapreneur Chronicles.

Monday, 6 October 2014

Using innovation and creativity to get out of a crisis

Entrepreneurship, as with life in general, is a risky business. One of the hallmark characteristics of the quintessential entrepreneur is the boldness to take risks. However, with risk comes the potential for failure and the wrong decision can wind you up in a crisis situation. Entrepreneurs therefore have to develop the capacity to handle crisis with poise. The situation is made all the more complex by the fact that the entrepreneur is by default a leader, there are people looking up to him or her to see how they will handle the crisis. How they tackle the issue could either breed confidence in their team or lead to loss of morale among the troops.

One entrepreneur related to me how they once received some devastating news about a prospect that had failed to materialize. A lot had been hanging on this prospect to the point that the business would literally sink or swim on the outcome of ongoing negotiations with the prospect. He had rallied up his team to give their all to this prospect and everyone was upbeat about the outcome. Unfortunately the deal fell through. In his own words, he felt as if “the ground had caved in under his feet” when he received the news. He realized that this would be a big blow to the entire team. What would he do? How would he break the news to his people? How would they take it? More importantly, how would they pick themselves up from there and move on? How would they get out of this crisis that had just knocked them off their feet?

His response? He chose to innovate his way out of the problem, literally. How? Well, according to him, there was no right play-book by which to solve the current conundrum. His is a very niche and seasonal business. By missing out on this one client they would have to pour in a sizable investment into courting a new client and staying afloat through the process, furthermore the typical purchasing season was drawing to an end. How would they hold on till the next high season?

At the next team meeting before breaking the bad news, he started by announcing a bold new initiative. He challenged his team to come up with creative ways to break the seasonality of their business. This were not just empty words, he had taken a lot of time, working with his management team to structure the initiative and presented it in detail, backing it up by committing appropriate resources and dedicated leadership, getting the team's buy in and rallying them to see this as a chance for them to re-invent their business. This was also not just about proposing solutions. Employees were expected to be as practical as possible – working in teams, researching, making a case for, prototyping and eventually pitching potential solutions to management who would then pick the best solutions for full scale implementation.

Eventually the team managed to come up with and implement creative ways to solve their problem and the business is in much better shape today. According to the entrepreneur, here's his personal take from the experience:


  • Creating shifts your mind from problem space to solution mode: Fixating on the problem gets you nowhere. By getting your creative juices flowing (even on an unrelated project, solving an unrelated problem) the mind gears up into solution search mode. It will tune itself to thinking about how to solve whatever problem it comes upon – including the one that's the real issue.
  • Allowing people to be creative is a powerful morale booster: There is a satisfaction that people get just from creating, after all creativity is human nature. The team had something to pour their creativity into and that kept their motivation level up.



Thursday, 2 October 2014

The Wantrapreneur Chronicles #1: Circumstance

"Are entrepreneurs born or made?"

Of course they're all born! One person remarked (get the joke?). Seriously though, this is one of those questions that you find being asked at entrepreneurship forums and the like. The real question is: is there something special about entrepreneurs, that sets them apart from the rest of us? Something that is not attainable by mere mortals? Or can anyone learn and become one? Is there hope for we mere mortals?

The same question has been asked of leaders and leadership: "Are leaders born or made?". No doubt there are factors that predispose some people to be more entrepreneurial than others - personality, upbringing etc. However, one often overlooked factor is circumstance. Part of my heritage as a Kenyan and African is the colonial oppression that my forefathers (and mothers) were forced through, a period which spawned many visionary and dedicated leaders across the continent, heroes and heroines who gave everything including their lives to the cause of the liberation of their people.

What is amazing to me is the fact that some (maybe even most) of these leaders would have been the least likely to have become the die-hard freedom they came to be. These leaders were born of circumstance. They were not trained in the methods of leadership per se, but in a bid to throw off the oppressor, they became leaders. There may or may not have been some early indication of leadership potential, but the circumstance forced it.

In the same way, some entrepreneurs are born out of circumstance. They may have never dreamt of becoming entrepreneurs but somehow they find themselves there. They start off as 'wantrapreneurs' and gradually find their footing as entrepreneurs.

One of my friends exemplifies this: caught on the wrong side of the financial crisis, he found himself out of a job with narrow chances of landing a new one in the near term. After going through the natural progression of denial and depression that was only aggravated by the fact that none of his numerous job applications bore any fruit, he eventually came to accept his new reality and had to get creative to make an income. So, he started his first 'business'. He had never considered himself an entrepreneur. His dream was to get a job at a particular multinational that he held in high regard and progress with his career. He had a simple idea and dove right in. However, more for a lack of experience or business acumen than naivete he tried to get his company off the ground to no avail, failing totally at one point before gathering courage to try again. Today he is doing OK. He's not wildly successful (yet) but he has found his feet and is slowly making it work.

Obviously not every one who starts like this ends up being a successful entrepreneur much as some of the very heroes of Africa ended up being very poor, corrupt national leaders once they became presidents. However, circumstances can create that spark out of which are born great leaders and entrepreneurs.

Tune in next week for another episode of The Wantrapreneur Chronicles.

Tuesday, 30 September 2014

To change the world start with your next customer

The desire to 'change the world' has been attributed especially to the so-called 'millenial' generation as a form of 'entrepreneurial idealism'. However, millenials aside, entrepreneurs really do change the world!

The name Percival Elliott Fansler might not ring a bell but you should remember it the next time you are taking a flight. Back in the early 1900s Mr. Fansler proposed a new kind of venture, "a real commercial [air]line from somewhere to somewhere else." And thus was born the world's first commercial airline. Mr Fansler's venture lasted 4 months flying one route twice a day. Still, he managed to fly over 1200 passengers on his airline. 100 years later, billions of passengers fly tens if not hundreds of thousands of routes, covering massive distances, operated by multiple airlines of varying sizes all over the world. Air travel has radically altered not only global and local communities but even more fundamentally the way we perceive the world.

Mr. Fansler in all likelyhood may not have been able to stretch his imagination to the sheer scale of today's aviation industry, let alone the fact that we now not only transport people from one point to another within the Earth's atmosphere but beyond it. He did however radically alter the lives of the people he flew on his airline, giving them if nothing else the thrill of flying.

Another name that might not ring a bell is Ms. Fatima Ahadi, and you might not remember her name beyond reading this article but her story is just as valid as Mr. Fansler's.

Ms. Ahadi, a former finance professional turned small business owner who had the entrepreneurial insight to start a unique kind of real estate firm in Kenya. She focuses on providing quality, affordable housing to the lower end of the market, in a real estate industry that is mostly focused on the higher end. Through her work she has (quite profitably) enabled thousands of families to own homes that most likely they would otherwise not have been able to.

Did Ms. Ahadi change the world? I think so. She may not end up sparking the same scale of change that the airline industry has, but she has had an effect on the lives, on the world, of her clients. You see, the common denominator between Mr. Fansler and Ms. Ahadi is simply this: by providing a unique product/service they were affecting the lives of the people who took up their value proposition, one way or another.

This is a unique capability and a potent one for entrepreneurs. Companies such as Zappos that have been lauded for their extreme customer-centric approach understand this. The point of interaction with the customer is a powerful opportunity not just to feed the bottom line by making that sale, but to actually 'change the world'!

So to change the world, start with your next customer.

Monday, 29 September 2014

Is innovation what you do when your back is against the wall?


I remember watching the movie, 127 Hours. In a dire situation, facing almost certain death, his hand lodged by a rock against a crevice, the main character in the movie does the unthinkable to save himself – he chops off his own arm! Usually people will behave in the same manner when pushed against a wall, they will find some 'creative', if painful, means to solve the situation. Why is this so? Why can't we be naturally creative and innovative all or most of the time, regardless of whether there is a pressing situation or not?

Famous educator Sir Ken Robinson states that we lose something of our creative abilities through the course of formal education. We literally have our creativity educated out of us! Back in 2013 I attended a 2-day design thinking workshop at the re:publica conference in Berlin that brought me face to face with this reality. For our first exercise, working in pairs, we had to ask our partner 5 times over, “What is creativity to you?”. We found that by the time you got to the fourth or fifth time asking, you had exhausted the superficial definitions and had to really think: "What is creativity?". The workshop turned out to be a landmark event for me. I discovered, that I am a 'creative' despite the fact that somewhere along the course of living, I had come to believe that I did not have a creative bone in me!

Prior to this my imagination of a 'creative' brought up images of 'artistic' people, designers, architects and such. And this is typical of how most of us think: there are two kinds of people in the world – the chosen few, the creatives and the rest of us, the non-creatives – you are either one or the other. But if we have that germ of childhood creativity still locked inside us somewhere, can we learn or re-learn how to be creative?

Tom and David Kelley of IDEO and authors of the book, Creative Confidence claim it is possible! They have given themselves to the task of trying to restore that child-like creativity that many of us have suffered the injury of losing or being hoodwinked into believing we are not 'creative types'. In their HBR article, they argue that there are four fears that block us from reaching creative nirvana. Eliminating these fears leads us to embracing creativity and being more innovative, naturally. In summary, the fears are:


  • Fear of the messy unknown: 
“Yes, we know it’s cozy in your office. Everything is reassuringly familiar; information comes from predictable sources; contradictory data are weeded out and ignored. Out in the world, it’s more chaotic. You have to deal with unexpected findings, with uncertainty, and with irrational people who say things you don’t want to hear. But that is where you find insights—and creative breakthroughs.”
  • Fear of being judged: 
“... we self-edit, killing potentially creative ideas because we’re afraid our bosses or peers will see us fail. We stick to “safe” solutions or suggestions. We hang back, allowing others to take risks. But you can’t be creative if you are constantly censoring yourself.”
  • Fear of the first step: 
“Creative efforts are hardest at the beginning. The writer faces the blank page; the teacher, the start of school; businesspeople, the first day of a new project. In a broader sense, we’re also talking about fear of charting a new path or breaking out of your predictable workflow. To overcome this inertia, good ideas are not enough. You need to stop planning and just get started.”
  • Fear of losing control: 
“Confidence doesn’t simply mean believing your ideas are good. It means having the humility to let go of ideas that aren’t working and to accept good ideas from other people.”


Friday, 26 September 2014

Creating Sustainable SMEs


An except from an article I recently wrote for The Broker.

SMEs are the lifeblood of most economies. Thankfully, there is no limit to human capacity for innovation – the bedrock upon which entrepreneurship is built. Enabling entrepreneurship should be of foremost importance to governments and can be promoted by establishing three main pillars, which will lay the foundation for sustainable business growth.

(continue reading here)

Tuesday, 23 September 2014

Go big or go home. Really?

When I started out I had this idea that I had to be big, well, not me (literally) but my startup. 'Go big or go home' as they say. Especially by virtue of being in tech, there's a tendency to think this way, that you have to scale to massive proportions, you have to be a 'growth startup'. Be the next Facebook or the next Google! You're not worth looking at if you're not signing up millions to hundreds of millions of users. Paul Graham asserts that:

A startup is a company designed to grow fast.

This thinking is fueled further (in part) by the fact that venture capitalists especially at the early stages (seed/startup) typically invest in such startups. After all, they are in the business of multiplying their investment several times over at exit. They would naturally gravitate to 'growth' ventures. New entrepreneurs following where the money is, similarly gravitate to the idea that they have to build something big, after all that's the only way they'll attract those investor dollars (or shillings).

However, in the real economy, the fact of the matter is the vast majority of entrepreneurs are small, 'lifestyle startups' and small businesses (and these 'small players' taken together probably employ more people than the relatively fewer 'big players').

Here are two realizations I had to come to with this regard:


  1. Do I really want all that comes with being big? It is far more demanding in every aspect. Scale brings complexity with it. Just managing all the relationships involved – from investors to customers to suppliers – is a task in itself. Add on to that the operational complexity that comes along with it. The journey there is just as much a roller coaster.
  2. Do I want to be big, or do I want to be profitable and sustainable (based on sound fundamentals)? I take a few lessons from watching Shark Tank and I remember one episode where the entrepreneur wowed the sharks with a stellar $3+ million in sales the past year, only to shock them that out of that she actually made a profit of $60,000! Being big does not mean being profitable. It may mean massive revenues but marginal, or zero profits, or losses.

This does not mean that you shouldn't be ambitious and have big dreams. As they also say: "Dream big start small". It just means you have to be honest enough with yourself to know what you want, what you are content with, and how far you are willing to go as an entrepreneur. I also found from reading this account of part of the Airbnb story, that looking for solutions that scale is not always the answer!