The African Startup Manifesto — Systems or Tech What Comes First?
The startup is not an easy concept for Africans to comprehend. For generations, our wealth has been built on tangible assets. Imagine asking for capital from your rich uncle, saying, I hope you can lend me some money. I want to start a business in an untested market with an unproven business model, but there is a potential for it to grow exponentially and create a crazy amount of wealth. The look you will get will naturally shut down the conversation. You can't blame the rich uncle. In Africa, wealth starts in things we can touch and feel.
The Non-Tech Part of The Startup
Tech startups in Africa have always been seen as artificial things or concepts. Something that young people do for fun. For the love of the American dream. When the modern-day startup movement started in Africa, the focus was on replicating startups and business models that work in mature markets. Everyone wanted to make a replica of Facebook, Amazon, Google, etc. Most founders focused on the tech side of the business, improving the UI/UX of the products to mimic similar products in the West. The products struggled to connect and grow in the local markets. Few founders realised this early, and instead of focusing on the tech side of things. Their focus was on building "real" businesses by looking at existing systems and finding ways to plug into what already works. Companies like MaxCom Africa (Max Malipo), a payment aggregator, now Tanzania's technology product adoption problem was not a technology problem. It was a "system." problem. To solve it, you needed systemic thinking beyond just being a good developer. You need to know who does what, where and how they can plug into your core system.
African Startups and Systemic Thinking
Systemic thinking is about debugging complex relationships and roles in an ecosystem, approaching a problem as a whole instead of focusing on specific things. You apply it when solving problematic issues involving multiple engagements and overlaps between actors and resources. Most problems that startups in Africa are trying to solve a systemic, and they are complex problems requiring systemic interventions. When your solution only focuses on the tech side of things and ignores all other essential aspects of the business and the community, you are setting yourself up to fail.
Systems thinking expands the range of choices available for solving a problem by broadening our thinking and helping us articulate problems in new and different ways. At the same time, the principles of systems thinking make us aware that there are no perfect solutions; the choices we make will have an impact on other parts of the system — Michael Goodman
In one of his YouTube keynotes, Bosun Tijan talked about the importance of design and systemic thinking to African problem solvers. For founders, it's imperative to look and try to understand the problem beyond its tech needs by engaging different stakeholders in the design and execution phase. The best way is by being agile and constantly improving the product through user feedback and reflections. It is possible to have a great idea, a perfect team and a relatively good product but still struggle to get into the market simply because you have failed to understand the "system" surrounding your product or service. For example, the e-commerce business in Africa is a logistics business. The founder's job is to figure out how to master logistics in a market where millions of people live without physical addresses. Your company might fail not because your platform doesn't have a good UX but because your customers don't have a physical address. These are some external systems shaping the success of your startup. It is imperative to have a deeper understanding of the systems surrounding the problem you are trying to solve.
African Complex Consumers
What do you sell? Convenience or Necessity. If your primary focus is the "app", you have already lost the customer. It is imperative to understand your customer's empathy. To you as a founder, half a dollar might look cheap to access an online service, but there are myriad things African customers can do with that money; pay for the internet bundle, buy lunch, or pay for the business ticket. Your customer has to go through all that decision-making process before deciding to pay for a service on your platform. Your proposed value needs to go beyond providing convenience to address necessities. African consumers have one of the most complex definitions of value for money, and their willingness to pay scale is always low. Your biggest task is to get that money out of their pockets.
It is not too late. You can revisit your product or service design and see how to integrate it with the existing systems. Some successful startups in Africa are already doing this. To guarantee quality and sustain supply, Twiga started commercial farming. All the services offered by the company focus on connecting with the physical "real" ecosystem. It is the same discussion we have been having with the founders of GasFasta. How do you disrupt one of the most significant sectors in the country, the LPG sector, without being part of the value chain? The simple answer is you can't unless you understand how the industry works and find a way to plug yourself into it.
Either strategically or by chance, soon, we will see more African startups moving beyond mobile applications to start physical shops, outlets, collection centres, etc., to engage with the biological ecosystem of their business. No wonder Tunzaa opened its physical store, and GasFasta is launching GasFasta Wakalas. To disrupt markets at scale in Africa, you can not afford to stay on an app or website forever, and you need to get your hands dirty and get into it. You will avoid being swallowed or removed from the ecosystem.
In the end, your conservative uncle (a bank or microfinance) will only invest in things they can see, feel and touch. A blended approach will allow you to enjoy capital from them. Keep building, keep growing.