Know your customer isn’t just banking regulation; it’s the ideology for entrepreneurs around the world. And while the set of problems across the continent are unique in their own right, and often equally unique to the city or country in which the problem exists, this ideology especially holds true for entrepreneurs in Africa.
Yet, the number one reason why startups fail? No market need.
In other words, entrepreneurs are building solutions for problems that people don’t really want to be solved. Or, aren’t big enough problems to create a sustainable and scalable business.
The problem comes from not knowing your prospective customer, and not intimately understanding the problems to create appropriate solutions for a viable business.
While most startups fail in this way, there are nonetheless many successful startups on the continent who are succeeding because they’re taking the worm’s eye view - understanding or experiencing the problem first hand, to build solutions that will gain them customers at scale.
In episode one of The Flip, I talked to three such entrepreneurs about their experience building solutions to problems worth solving.
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Ricky Rapa Thomson is not your ordinary tech co-founder. Prior to SafeBoda, Ricky was a boda driver himself - a motorcycle taxi driver in Uganda’s capital city Kampala.
Many problems existed with the boda industry, but most prevalently safety (hence SafeBoda) - traffic-related accidents are the second leading cause of death in Uganda, only behind HIV/AIDs. Safety issues are exacerbated by lack of helmets amongst drivers and riders, lack of driver training, and in general the informal and unregulated nature of the industry. Poor safety, lack of adherence to the rules of the road, and untransparent pricing has all created poor reputations for boda drivers, who are comprised primarily of Ugandan youth with little other employment options.
After a minor accident in 2014 led to the death of one of his very good friends, Ricky became an advocate for road safety in the industry. He not only started wearing a helmet himself, but was one of the few boda drivers to carry a second helmet with him for his passengers.
A serendipitous encounter with a passenger ultimately led to an introduction to his co-founder, Maxime Diedonné, and SafeBoda was born.
For the public, SafeBoda is a safer, more convenient and more transparent way to ride bodas in Kampala. But for Ricky, SafeBoda represents an opportunity for boda drivers to regain dignity and respect -
[Boda drivers] wanted an identity, they wanted a sense of belonging and they wanted some kind of human face into the business they were doing… At the time when I started sharing my idea, and what we wanted to do with the boda drivers, they were like yeah if I'm going to look different, if people are going to appreciate me, if I'm going to make more money, if I'm going to be respected then I am going to be part of SafeBoda…. Even as of to date as we speak, most of the operations team is dominated by ex-boda drivers.
Around the world, we’ve seen strained relations between ride-hailing mammoths like Uber and their drivers. Yet, SafeBoda is a solution build by boda drivers for boda drivers, and perhaps that’s what makes the difference.
Driver retention amongst big ride-hailing companies is extremely low. Uber’s driver retention rate has been cited as low as 4 percent. As for SafeBoda? 80 percent.
While it helps to come from the group for which you are solving problems, it’s not a requisite to finding problem-solution fit.
Lumkani seeks to address the challenge of fires in urban informal settlements and townships in South Africa and across the globe. A high prevalence of open flames and highly combustible materials combined with an extremely high population density means that fires can cause outsize damage and impact on the communities they affect. A 2018 fire in the Cape Town township Khayelitsha left 4,000 people displaced.
Lumkani aims to mitigate the impact of fires in informal settlements through network connected hardware, innovative early warning systems and low-cost insurance products.
David Gluckman, the co-founder and CEO of Lumkani, did not himself grow up in a township, but he and his team have invested heavily in co-developing with the communities they seek to serve, to develop products that appropriately fit their customers’ needs.
A lot of the design, a lot of the thinking, a lot of the strategy was co-developed with your end-user. We could speak to our end-user every single day. That's probably one of our critical enablers - the ease of access we had to our client and who would be our future client.
Lumkani is one of the first companies to offer low-cost short term insurance for informal settlements, and this product line was born from customer requests and learning. Importantly, Lumkani has set up a series of systems to meet their customers where they’re at - agent networks to build trust and reach customers at the last mile, cash payments, and flexible payment terms to account for the unpredictability of incomes amongst their customers.
Lumkani is going where most financial services companies have not been able, or do not dare to go, and prove that, by taking the worm’s eye view and intimately understanding the needs and wants of your customer, you can build an in-demand product, even for low-income customers.
Farmcrowdy’s founder Onyeka Akumah isn’t a farmer; he’s a technologist. But he’s always understood the importance of agriculture to Nigeria’s economy and has paid close attention to the set of problems and opportunities that exist for the industry.
While agriculture remains the main source of livelihood for the majority of Nigerians - yet more than 70% of Nigeria’s smallholder farmers live below the poverty line of $1.90 per day.
Two such problems are access to financing and access to market. Farmcrowdy is - as the name implies - a crowdfunding platform for everyday Nigerians to invest in agriculture yields. And through their platform Farmgate Africa, a marketplace and aggregation point for farmers to gain access to market and improve their margins.
When introducing a crowdfunding platform, or any investment opportunity, it is vital to address the inherent risk-related concerns of the investors. Onyeka knew those concerns intimately -
I put myself in the shoes of the first investor that wanted to invest in the platform. It was a case of I had to be the first investor and I noticed the challenge the investors were having - one of it was the farmers weren't giving them enough updates, they were worried about the risk of their investment going bad and them losing all of their capital. These were my own worries, as well, so I put myself in the shoes of the person investing in the platform and tried to make sure we designed the platform that met all of these needs. So we provided insurance coverage for their capital, we provided updates from the farms so that person is getting updates about the activities from the farm and we did all of the things necessary from technical expertise standpoint to make sure that the investor is confident with his investment with us, and we had customer service taking care of them.
And while Onyeka does not have a farm background, testing and iteration was the way forward for addressing the challenges farmers faced. By taking the worm’s eye view, Farmcrowdy saw the need to provide content - technical expertise - for farmers and introduced the aforementioned Farmgate Africa platform to address the access to market challenges.
SafeBoda, Lumkani and Farmcrowdy are three of many audacious startups across the continent solving real problems and creating real impact for their users.
Yet, their impact cannot be realized without an intimate understanding of the problems their end-users experience, without taking the worm’s eye view, and without experimentation around the solutions for their customers.