Thus Spaketh Idd Salim

Alot of times, I have been stopped on the streets [on my way to Laico for lunch] by many a coders with the same question. ‘Salim, I want to make money using SMS shortcodes and tun my own campaign ya kulipua mabilioni kama ile ya Safaricon. Nidosike kama Sebi na ninunue Kompressor sita za pink.’

So, being the big brother I am to a few, I always cancel my lunch and take the person to Savanna Loita, and explain it all.

• How it works
• How much money once can make
• What different types of billings are available
• What are the best people to partner with to get value
• How to promote your service

Now, After the Arsenal Loss, I woke up refreshed and sober. I can share this with the public. So here we go.

Premium rate SMS services are a value-add SMS revenue model for Mobile Service Providers (MSP) customers, that is run by Premium Rate Service Providers (PRSP) and Content Providers (CP) to drive revenue via SMS and SMS-related services.

By Law, MSPs (Safaricon, Zain, YU, ME, Orange and PineApple) are not allowed to run ANY shortcode business directly or indirectly, as this would kill the small players (But we all know SafCom does it anyway, huh?)

To become a PRSP, you will need to pay KSHS 210, 000 to CCK for a license, and renew it anually for KSHS 100, 000. This allows you to book Shortcodes with the MSPs. If you dont have 210, 000, you can become a content provider and book a shortcode from a PRSP.

There are two types of shortcodes in Kenya.

• Golden Shortcodes : (e.g.) 5050, 8008, 4441. Easy to remember, cute on the eye and cost KSHS 200, 000 application and a monthly of KSHS 10, 000 per month, per Network + VAT.
• Normal Shortcodes : (e.g.) 4034, 2346, 4659 etc. Kawaida shortcodes for KSHS 10, 000 per month, per Network + VAT.

So if you want to run a normal shortcode on 2 networks (e.g. SafariCon and Zain), you need KSHS 20, 000 + VAT per month and you FULLY own the shortcode and can run your own services on it and rake in cash, as long as you can advertise them and make them popular.

So, Where is the money?

When you book a short-code, you need to decide the following:

• What Billing band should it be? – Bands start from KSHS 3.5 per SMS where you make 0 (Read Zero) Shillings to one that the client gets charged around 100 bob per SMS. Most people settle for KSHS 10 to KSHS 60.
• Should it be MO-billed, MT-billed or MO-MT billed? MO-Billed means user MUST have the money e.g. the 10 bob, on their phone before engaging you. MT means user gets billed once SMS lands on their phones. MO-MT is obvious. Means user gets billed half on send and half on receive.
• How much money you want to make. Obvious huh?

So, How much money Do I Keep?

Well, I was hoping we dont fika here. This is the saddest part of the entire business. Normally, based on whether you are a PRSP or a CP, the moneymatics are as follows:

• Unless you have received 1, 000, 000 SMSes on your shortcode, the MSP takes 50% revenue, PRSP takes between 10-30% of the remaining 50%. So, if you are charging 20 bob per SMS, you take home between 7-9 bob per SMS, PRSP takes between 1 to 3 bob and Safaricon takes 10 bob; bila adabu.
• Zain have a better deal at 30% if your volumes are high.

Errrr, yeah. I will answer the rest personally.

Back to code.

<< Part 1 Here

Along came Safaricon

Those guys from henga (Wahenga) once said ‘Mtegemea Nundu Haachi kunona’. That is normally the truth because as we see it all over, then BIG companies are always helping out the small ones, even if via mergers and acquisitions, for the good of everyone. Google just bought AdMob last week for USD 750M [KSHS 54.7 B].

However, In Kenya, the saying was officially changed to ‘mtegemea nundu, haachi kusota’.

The 2003 experience

I vividly remember in 2003. I was co-habiting at UoN with some of my Starehe Old Boys. Like most Kenyan Coders, I was all-brains and bubbling with Ideas, but NO Money. So, Me and my Friend Wasena Angira went to Safaricon with our very brilliant Idea. We called it 2GeS [2^nd Generation Email Service]. This solution would help one aggregate all his emails using a simple web Interface we had created and would get an SMS when new mail checked into any of his/her email accounts. Via USSD, the user would then quickly peruse his emails and decide whether it is necessary to rush back to the office or cyber to read the mails. User could set parameters and priority levels based on sender, subject or message body.

Assuming Safaricon was there to help the innovators be able to finally afford some groceries, we did the demo, shared the documentation and the entire concept. Talk of a cute gal walking with a shirt with the words ‘Take me, I am single and desperate’ in Westlands.

‘Very nice concept, we will get back to you in 2 days’, was the response. And so we walked back to westlands stage smiling at each other everytime we saw a nice car because we knew, ‘we will own 2 of those each, soon’.

OHHH!! How wrong we were!!

We got a regret email stating that Safaricon was not immediately looking at email over SMS and that they will get back to us.

Needless to mention some time after that, Safaricon and Google did a replica of that system. Thanks to God, it flopped. Amazingly, [possibly just coincidence].

I do not have enough facts to intelligently comment on the origins of mPesa, OkoaJahazi or Sambaza concepts, but I know some people that talk about coders who went to Safcon, were told off via email or call, only to see their product on a billboard and all over news. Powered and Owned by Safaricon, ofcourse.

The 2009 experience

So, fast-forward 2009. We are more equipped and stronger. More technically adept and mentally sanguine. We develop and test Sembuse version 3. A mobile Social Network that comes with Real-time Cheap Messaging, Operator Agnostic payment, SIM-Independent Revenue model and a ground-breaking Advertising Engine [ManenoAds].

So we go to Safaricon with after a request for a meeting from JM, we send an NDA and they send an email saying that all but MJ have signed the NDA, but we can proceed with the meeting. We go to Safcon House and meet with a group of 3 marketing department staff and 2 VAS Staff. All names available. We take them through the system and all its workings, discuss revenue models etc.

‘Very good product. So, what do you want from Safcon’, The VAS lady asks. ‘One-off Licensing cost and a revenue share’, Says TM. ‘Hmmn, Revenue Share? How does 90% Safcon and you 10% sound’, She Asks.

Ohh dear! 2003 all coming back to me.

We found a way to get off the meeting amicably and they were to ‘get back to us’. Till today, we have not yet received the NDA. MJ bado hajasign.

Amazingly, [possibly just coincidence] Safaricon started a CLASSIFIED service on Safcon Live, aiming to cannibalize on our ManenoAds ad engine. Needless to say, it was a kindergarten implementation of our concept.

The advice

I have shared this idea with a lot of people and the following was the collective advice I have got on how to deal with Kenyan Corporates:

1. The NDA is just a piece of paper. Go to ALL meetings with a lawyer. No phone calls. Insist on Emails and always CC your lawyer.
2. Don’t deal with middle or low-level staff. They will steal your Idea, package It as theirs and sell it to senior management. They are mostly under-achievers who will do anything to get noticed. They are kawa people like you who HATE to see you walk in with an Idea and walk out with a check right before their very eyes. Above all, they will just waste your time.
3. If you can’t deal with SENIORS or OWNERS, then it is not worth your time. God has given you that Idea and he will open other doors for you.
4. Don’t be intimidated by company size. Remember, Companies like Safaricon are just ‘Jogoos was shamba’. With their 12M subscribers they are non-entities in the global scene [read: Mjini]. Using LinkedIN and simple google searches, you can find bigger fish who can take up your idea in a more professional level and manner.
5. Look for a VC or a non-kenyan investor to put money in your idea and LAUNCH BIG. A small launch is like a small erection. It impresses no one and just exposes your Ideas to the hunters and gatherers.
6. Offshore is better. Why Non-Kenyans? Because there are no real investors in Kenya. We have not met someone who can put USD 100k in faith and equity on an IT startup. Kenyans have no faith. All we have met are people who want to put KSHS 1M for 80% ownership of your solution and your life. Remember it is Software. Not Bread.
7. Never give up. Like Jose Chameleone said, ‘Chako ni Chako’.

More Soon…

Part 2 Here >>

It is 3am, and am yet to sleep because code has to be done. My coffee is getting cold and so is the night. Then comes the Email from Timo.

“The CDSC want a software very similar to Esplanade. The tender was in the newspaper so this seems a fair thing to propose for”. [Esplanade is our revolutionary system that allows people to monitor, watch and trade shares in the stock market from home via web, sms or email]. “Nice!!”, I remark. At last a Kenyan company will but software from a Kenyan developer because the advantages of dealing with local talent are clear.

• We understand the local market needs than any punjabi coder could ever hope to.
• We have local support and dont need to be hosted at Hilton for USD 400 per night as we debug.
• We make better software than the Indians/Sri Lankans anyway. Better Interfaces. Better Backends.
• We come unbelievably cheap. Pay us a mere KSHS 2M and we will do an entire system for you.
• The government has the ‘Kazi Kwa Vijana’ initiative underway.

Ohh how wrong I was! CDSC called us for about 3 meetings :

• Meeting 1 – We meet and take them through our concept. We could see how awed and disbelieving they were. “Hii kitu imetengenezewa Kenya kweli?”, One fella asked, “Ama nyinyi ni partners na some Indian Firm. Nyinyi ni resellers sio?”. Well, we malizad the concept and we were slotted for an actual demo in 3-4 days time. We were informed that we have been shortlisted as one of the 3 companies to do the job. YES!!
• Meeting 2 – We suggested they book the shortcode CDSC [2372]. And we took them through a demo on how an investor would detect fraud, set stock price threshold alerts, make statement and valuation inquiries via SMS etc. About 13 unique features. We discuss financials and do a quote for KSHS 1.2M.
• Meeting 3 – We get a regret email that the job has been given to another Company and that the meeting was not necessary.

Ok. Ok. Ok. No problem. We can take it on the chin like hardcore coders do and we keep soldiering on. Ama vipi? Maybe the best proposal won.

So, a month later, the CDSC launch this innovative System.

Developed by a firm rumoured to be from Sri Lanka for an amount rumoured to be bordering KSHS 50 M, the system launches. It has only 2 features and pathetically build. [Call it sour grapes, but my 6 year old daughter knows enough Visual Basic to do that system while watching Tom n Jerry.] My beef was:

• The system used our proposal, WORD for WORD, even up-to the shortcode and modus operandi we proposed.

Why is it, to a Kenyan, so EASY to engage a Kenyan group of hard working and smart programmers to spec and brain storm, but paying them is VERY hard. Where is the pain?

Why is it so hard to financially empower a Kenyan [a mere KSHS 1.2M] but so easy to pay out overseas [KSHS 50m+] for a baby-class implementation of the same system?

Part 2 Coming up n Wed. This time round, Safaricom does it…

Starting December 2009, Zunguka, Tarazaki, TumaSMS, PashaHabari, Citizen Tv and all websites under the Symbiotic stable will switch from the Combo of Apache and Lighttpd proxy to a single solid setup of Nginx.

No service downtimes are expected and the only thing that will change is speeds and death to the bloated experience.

One process of Nginx will server as a master [serving PHP and Python files], and another will serve as a slave [Serving Images, Flash, Videos, CSS and Javascript files].

A test of the new setup can be accessed through the self-signed secure site :

https://www.zunguka.com/

More later.