88MPH Demo Day Nairobi - A Great Day For Beer Drinking, Networking, Learning And "PDA"

I attended the last Demo Day organized by the 88mph startup accelerator in Nairobi yesterday and had a swell time. The location of the accelerator is probably the best place in Africa!  By location, I don’t mean Nairobi the city but rather being located the same building where the best beer I have ever tasted on the continent is brewed. We all know that Starbucks Coffee and beer largely power tech entrepreneurship in places like Silicon Valley, Brew Bistro and Lounge (my favourite and adopted Nairobi hangout) provides both food and drinks in the same building as 88mph.

Brew Bistro is run by http://thebigfivebreweries.com/ and they provided a lot beer at the event. A pub run by a brewery with fresh beer flowing is always a winner. They actually brew it right on the premises.

Sometimes it seemed people were more interested in beer and networking than the startups. People spoke freely as alcohol flowed even more copiously; it probably allowed most of us to ignore the fact that the list of startups doing demos was a tad underwhelming. Frankly with all the fanfare, I expected really innovative ideas but a lot of them were more like recycled Western and local models. A few were outstanding and I am sure things will get better with time.

In my opinion, the only truly awesome startup at the event was Mdundo.com a revolutionary African music distribution venture.

Gamsole from Nigeria was also pleasant surprise. and I had a chat with them after the pitch where they mentioned stuff to me I did not hear previously. I liked their tenacity and willingness to learn more but they need to review their model. My belief is that the future of gaming is social and multiplayer not single player downloads. There were others that were so bad that they could not answer simple questions about the valuation they placed on their company. Presenting a pitch to raise $50m means being at your best form and if you can’t give straight answers when asked, it means you either don’t understand the reason for the pitch and have a long way to go.  I will talk more about my experiences with startups at the event (awesome, great and not so great) in subsequent posts.

LESSONS ON BUILDING AFRICAN STARTUP ACCELERATORS

The most important lesson I learned yesterday was that building an Accelerator or even the larger project of growing the tech ecosystem is not a part-time affair. The guys at 88Mph are are devoted to the accelerator (and Brew Bistro) 1000%. That has been the greatest mistake we have made at Afrinnova and Open Garage. It will DEFINITELY change in January 2013, opening a bar or lounge nearby may also help. Seriously, the guys at Amplify.la (in Los Angeles) always tell me, “an Accelerator is also a startup” and it deserves to be incubated or nurtured carefully. You cannot outsource it. It is not about hiring and firing but putting all your passion in it the same way you would do for any startup or growing enterprise.

I used to think that because we had an "unconventional approach", things would happen just like that as there was pent up demand. I was wrong. For startup ventures in Africa there is quantity and not quality. The noise to signal ratio is very very high. It also explained why the 88Mph Demo Day line-up was underwhelming. What I have learned in the past year is that getting people who do not know each other to work together in Africa is the biggest hurdle. Building African tech communities depend on deeper ties and a great foundation. We discovered that probably the only way you get great teams who work well is if they all started from school. If you take a sample of the best teams around Africa, they all started out as friends in school and had a common purpose from the beginning. Getting hustlers together to form a community is a disaster.

African seed stage accelerators should ideally be in schools. Gbenga Sesan’s effort with TENT deserves special commendation as it encourages entrepreneurship at that level. The schools already need a lot of help as Olabinjo Adeniran highlighted in his latest post. Having accelerators inside them will do everyone a lot of good.

Tomorrow I will try to visit HiveCoLab in Kampala, Tuesday it will be ccHUB in Lagos and I am not only learning but also building relationships with entrepreneurs and investors all over Africa. In the past year, that has only been something I do as a secondary outcome of my business visits to clients and partners. This will now change.

THE “PUBLIC DISPLAY OF ALTRUISM” MENANCE

Another thing that struck me after my visit to Nairobi and interacting once again with the tech community is that there are still a lot of people hung up telling the world how their venture or organization is also founded on principles of social impact. It even crept into some of the presentations by the startups and it made me cringe each time anyone mentioned it. This public display of altruism (PDA) makes me more worried about the future and gives little comfort.

I love Africa and I am one of the biggest advocates of progress in the continent and YES, I am also a “cynical punk” and "hardcore capitalist" who does not sugarcoat the obvious. There are some things that must be said for the benefit of everyone while others struggle to avoid the apparent truth. If you want to do good stuff for your community, just shut up and do it not brag about it.

I sometimes wonder why can’t we be very Machiavellian about tech in Africa and say the real truth that we all really want to make money for all parties involved. All parties including entrepreneurs and investors are there not just to save Africa but to get groceries on their table and the rent or mortgage paid. A few get lucky and become philanthropists but the underlying fact is that you don’t grow great companies by thinking of social impact first or flaunting your credentials as a possible Saint.  Bill Gates became a phialtropist only after Microsoft was a success and Pierre Omidyar could not have been one if eBay was not successful.

Social impact is an important by product of growing a tech ecosystem and should not be the primary motive. Excellence and merit is what builds great ecosystems not donor funding. If we keep getting hung up on social issues, we will miss the point of it all. Growth and excellence comes when we create efficiencies and new markets and not from compounding mediocrity. Collaboration and building communities work best when all parties are truthful that they will also gain from it.

I will say it openly here and you can quote me; trying to run a startup by claiming that it is solely because of purported altruistic motives is a scam. You will not get canonized by the Catholic Church for pretending to do it from the good of your heart so enough of this PDA. I actually get edgy when someone starts from this angle and they remind me of used car salesmen.

I believe hubs/accelerators/incubators etc have two purposes 

  1. To make lots of money for everyone while building communities and ecosystem or
  2. Just become a location where a collection of tech enthusiasts gather for the sake of the tech itself and have fun at it while also growing the ecosystem. 

Personally, I am interested (as part of Afrinnova) in growing the local ecosystem because I hope to make a lot of money while helping awesome local startups to scale across Africa. I am motivated primarily by longer-term survival and sustainability for the ecosystem because of ventures I have in it and not any high hopes of becoming the next Nelson Mandela or Fred Swaniker. Those great men did not talk to everyone about doing it, they just did it.

Two people have said things in the past that I did not realize made a lot of sense until yesterday. Kwame Luke is Sierra Leonean co-founder at Afrinnova; he really gets pissed at self-appointed (or is it anointed?) “Saints” in technology who pretend that they are do-gooders but surreptitiously using funds from donors to support their lifestyle. He says these same people quickly become hardcore capitalists when it suits them revealing their true intentions. He used to work with a lot of them and he knows what he is saying. Jason Njoku (Founder of Iroko) puts it less eloquently and calls them “bloody fake hippies”.

 I don’t know if it was the “Brew Bistro” beer that sharpened all my senses but I could smell the bullshit all around. At a point I had to ask a guy if he realized he was talking to a Nigerian? He quickly got the message and avoided me for the rest of the evening. “Hippies” may have built Silicon Valley but capitalists now run it. I think for Africa, we have wasted enough time and should skip the hippie stage altogether.

Yes we must build communities, yes we must collaborate but we can only do that if it suits our primal objectives. There will always be Darwinists and hardcore capitalists and I am not their best friend either but at least they are honest about their intentions. PDA scammers are the scum of the earth.

Dee Hock the founder of Visa says and I quote yet again:

"Community is composed of that we don’t attempt to measure, for which we keep no record and ask no recompense. Most are things we cannot measure no matter how hard we try – such things as respect, tolerance, love, trust, beauty – the supply of which is unlimited.  The nonmonetary exchange of value does not arise solely from altruistic motives. It arises from deep, intuitive, often subconscious understanding that self-interest is inseparably connected with community interest; that individual good is inseparable from the good of the whole; that in some way, often beyond our understanding, all things are, at one and the same time, independent, interdependent, and intradependent…

Without an abundance of nonmaterial values, and an equal abundance of nonmonetary exchange of material value, no true community ever existed and never will.  Community is not about profit. It is about benefit."

 

Nairobi is an awesome place and everyone who is doing something positive there also enjoys a great time.They should make no apologies for that or try to hide behind the veil of PDA. Others outside Nairobi are beginning to also follow the same path as well. In Ghana, some techies I know are in it more for donor money than anything else and the first thing you hear when they pitch is “social impact”. A guy in our office started building yet another education app for the last Google Apps developer challenge and I asked him how it would scale? He started talking about social impact and funding, I killed the project and replaced it with a commercial one. I also heard this interview of one of the founders of Wennovation Hub in Nigeria today, it started out very great when he talked about their focus on getting local investors involved (I believe in that 100%), when he started making the social impact pitch, he lost me as part of the audience as I switched off.

To be candid, I will not reject any money from an investor who genuinely cares about local growth especially if they decide they are doing it from the good of their heart and not expecting abnormal returns. They most likely have met their objective by just giving it to the entity they believe will spend it wisely. Most of the time there is due diligence and monitoring but some NGOs or social impact investors still directly or indirectly perpetuate the problem. It seems there is a glut of this type of money around and it is not bringing out all the best but more of the noisier mediocre bunch.

As Eghosa Omoigui of EchoVC reiterated and I completely agree, "investor funds of ANY kind are not meant to fund lifestyle but to generate returns" Those returns can be in any form but have to be measured empirically to make sense. I am also an investor and entrepreneur and I know what money can do when spent wisely. Returns on social impact investments are harder to measure and it makes it easier for the unscrupulous to hide their true motives. What I really abhor is entrepreneurs pitching social impact as a way to score cheap points in a demo day. If they are that desperate then they don’t deserve ANY money from ANYONE.

Thanks again to 88Mph for an awesome event yesterday, the networking was worth much more than the pitching and they should probably do more events with Brew Bistro beer flowing. That is my last shameless Bistro plug in this blog and I hope they compensate me with a barrel next time I am in Nairobi.

4 responses
Nice piece. Yes a lot of hidden motives are behind all those donor-seeking business plans but still one should approach social impact entrepreneurs with open-minded optimism because sometimes the greatest ideas come from that angle. For example MPesa started out as a donor-funded project (DFID) in Nairobi and look at it now. Then what about Craigslist and Linux? Would they have scaled if the profit motive had been the overriding principle?

In general one has to recognize that the incubation process is one complicated model that is infused with lots of donor money at base. The universities that produce a lot of the tech advances in the western world are financed by govt money, alumni charity money and corporate social responsibility money allowing the researcher access to a lot of knowledge and equipment for cheap. Not a wonder a researcher at CERN produced HTTP, HTML and the first early WWW browser before Marc Andreesen a worker at UIUC created the first graphical Web browser Mosaic.

For Africa or more specifically Nigeria, one cannot divorce tech startups from that basic process of incubation and learning. Either the university creates the lab environment and finance for that research or its done by someone else with the means. I suspect that local incubators need more than just beer to be successful. They need lots of corporate or angel money to pay for the patience that is needed in building a viable ecosystem where local talent has a chance to learn, collaborate and eventually produce world-leading products.

I like the frankness in your review of the event. Yes most ideas were an African take off from the West. Let's see how they fare. However I am personally also looking forward to the progress of Mdundo, HiviSasa and Closet49.
Straight to the point and you put it in a succint manner.

I've always thought that there was something wrong with my understanding of some of these "models".

@Harleen - HiviSasa shut down in February.

Businesses founded by hardcore capitalists are the same ones that cause these Financial bubbles & IT bubbles, because they build for FORBES list & not for creating historic organizations. Hardcore capitalists are the reasons we have so many tenderpreneurs who profit at the expense of poor societies, because it makes business sense to do so. The act of inventing is a secret art-form that deserves far more respect than what all these so called hubs/accelerators/incubators are giving it. These talents are god given and the primary object should be to server humanity in someway.