Thus Spaketh Idd Salim

Ok, so you have an App; That don’t impress me much

by on May.30, 2011, under Coding, Google and Africa, Sembuse, Symbiotic

App vs Biz. You decide.

It is a long, tedious and demanding procedure to create a product. An App. A problem solver. Your idea finally converted to bug-less code. It compiles and runs like a hawker from Kanjo. It connects to the server 99.5% of the times of asking and always purrs. People are talking about it. 2, 000 downloads per day. Etc, yadda, yadda.

But then, slowly but surely, comes the sad reality. A Business.

You have an App. But do you have a business? How much has your app made so far? What is the daily/weekly/monthly ARPU? In the last 4 weeks. Ok, Last 4 months. Further? Ok, the last 12 months. 10, 000 USD?.. wait… 5, 000?.. no?…. ZERO? STOP CODING IMMEDIATELY! Get a job.

Unless you have rich parents and alot of pesa-ya-daddy-na-mammi, then you need to CLEARLY define your revenue points before developing an App. It is good to dream. That is what hope is made of. After hope comes faith. Then reality. Sad reality, sometimes. Happy realities, some other times.

But no one will invest in a dream. Unless it is your mother, no one will give you money unless they can see that it will have a RoI.

Before developing an App, decide. Are you doing this for fun? Can you afford to have NO SALES? Can it interest an investor, or better still, do you have Angel Funding?

That is why some no-brainer kindergarten products like DealFish will come and go. They don’t have a Kenyan-Applicable revenue model. Just alot of money to run for 3-5 years with the hope that their foreign idea will forge a niche.

That is why MXit failed in Kenya [As I said last year on my birthday] [My sentiments on some of the players mentioned might have changed since them]. As soon as the money to ‘test the waters’ runs out, the product dies. It is not sustainable. Same is the risk with some products like Mocality.

Don’t forget. The difference between the coder people see and say : “Heh! Manze huyo msee ni mnoma sana code. Hakuna kitu hawezi develop”, but takes a matt home, and the coder people see and say : “Msee fake sana. Hata system yake si kali but kina doo kaa shiiiet”, and jumps into his Kompressor after work, then calls your girlfriend, is the business mind.

And this is my challenge to iHub, NaiLab, mLab and IddLab. We need to incubate monetizable ideas, make them work and turn them into businesses. Then we can create success stories. Hopefully we can stop Ndemo from seeing Google as the Saviour. We need to demonstrate local competencies. We don’t need Google to host and digitize Government data. We need Google to Work with us to do that. The skillsets are there, but let us have some real businesses out there. Running and profitable.

Hapo vipi?

Back to code…

Wazi

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  • http://twitter.com/lukawanjohi Luka Wanjohi

    well put. 3 years in a start-up taught me the hard way

  • Katu

    Intersting Iddi. I asked some coder who had 80,000 downloads during the April MOMOKE how he intends to make money.. he could not move a muscle.. hahaha.. And he didnt want any new ideas to assist him make money.. anyway he is happy with all those 1Million download from Ovistore and Zero bob in his bank account.. yeah.. kenyan coders for you..

  • http://frontiersforkenya.blogspot.com/ steve nguru

    well said, Salim. But is it always necessary to have the money end of your app “bug-free” early on ? Is it not sufficient at the onset to concern oneself with getting the app running well, then worry about monetizing it?

  • http://twitter.com/elkingsparx Kinyanjui Ngugi

    on point kama kawa, i think dealfish approach was to get traffic then start running paid ads, according to alexa they are No. 16 in Kenya which is a good bargaining tool for them. A client of mine wanted to run an ad on nation.co.ke and i was surprised to see the rates which were ranging from like 50k-200k for ads on the home page.

  • Anonymous

    Kwanza hiyo link yako ya Mxit iko dead kama bin Laden. Second, Google, Intel , Microsoft are out to make money. This is done by making it easier to use their products for a purpose, like reading the Gazette. Sadly, it’s easier for this big companies to get partnerships than @iddsalim:twitter  who may even get arrested for proposing a partnership. 

  • Anonymous

    Nonono. Make a monetizable app, then give it for Free. Then bill later. No need to have a non-monetizable app. Hata 1M people on it will not help.

  • Anonymous

    Baaas…! Make that 4 for me…

  • Anonymous

    I feel you… Hence the need for a collabo between coders and business minds. Some coders, understandably, cant see beyond the code. 

  • Anonymous

    makes complete sense. Only time will tell…

  • Anonymous

    I feel you totally bro…

  • http://www.kenyanlyrics.com Mr. Majani

    The jury is still out on Dealfish and Mocality, but to call them “kindergarten products that don’t have a Kenyan-applicable revenue model” is just plain wrong. Reasons:

    1. Pass them through any test of loading times, design, search and other features, and you’ll see that they pass the test with flying colours! In fact, I would say that they are up there with Wazua.co.ke and Kenyangospel.com as some of the best developed Kenyan content websites.
    2. They also solve real problems. Just because niche online classifieds/ business directories is a no-brainer, doesn’t make it a “kindergarten product.” Only today I needed an ETR for my business. First name that came to my head: ‘Dealfish.’ I did a very crude search there for etr(no fullstops). Results came out abit dirty. Used the search filter to fine tune the price point I wanted(below 20k), found an ETR vendor of my liking. Went to his shop, found out that the vendor was a one-man show run in those hardware stalls for tao! Yaani this ka old skul guy had found Dealfish useful?!
    3. Given all this, paying customers WILL come. It’s not that hard to envision that as competition among vendors heats up, they start paying for premium search placements, or that advertisers start paying top dollar for site-wide ads. The only thing standing in the way of Dealfish’s success is probably excessive investor expectations. Otherwise, it is a well-executed, brilliant idea.

  • Moses Kemibaro

    Idd. If you only knew the playbook behind dealfish you would eat your words

  • Jicholatai

    Kudus.  Well written. Incubators should be about how to turn an idea into a profitable business. Thing is, we are stuck in the “white man” syndrome.  As for the companies mentioned here, I block out ads. I don’t have to be bombarded by ads on the streets, tv and now on my private space!!! Imagine when more guys do this Idd, enough said…….

  • Marketer

    There are two genuine questions / problems here. 

    The first is the trend in Kenyan tech world for product launch before business model.

    Sometimes non-business products are worth doing eg Facebook. Google. LinkedIn. Twitter. Its this 4 in a zillion chance of hitting the big time that people are chasing. Not the realistic 99.999999999999999% chance of doom.

    The second is to question how will Dealfish make money and whether at this early stage they’re going to be an example of the 99.999999999999999% failure or 0.0000000000001% success.

    The case for:

    They have lots of ads, and lots of traffic. These are often the right ingredients for marketplace businesses. They are well funded, they are in the number one position as a generalist site. Moses seems to be a passionate guy with an actual track record better than most in the Kenyan digital sector. People appear to be using the site for actual tranactions. They are rapidly growing the public’s awareness for online products on behalf of every other start up.

    The case against:

    As @whiteafrican:twitter  has pointed out on his blog recently, Dealfish stands for everything. And nothing. There are very credible players in the Kenyan market more specialist than Dealfish, which are just below the radar and are doing well.  @whiteafrican:disqus
      lists several credible competitors. He mentions that in cars, http://www.cheki.co.ke has more ads than Dealfish and better functionality and the smallest bit of google research will tell you that the people behind this site have impressive track records and backing. In jobs, BrighterMonday.com, CareerPoint, BestJobsKenya and MyAfricanCareer seem to have a better product set for human resources departments than Dealfish, and in some cases, better traffic. They also have actual revenue in the case of BrighterMonday which has been around for 5 years. There are strong diasporan backers in the case of MyAfricanCareer and BestJobsKenya.

     In nearly every market in the world, specialist sites have won out over generalist sites, although there are some strong counter examples too. In Dealfish’s home country of South Africa, they have shut down the Dealfish brand in the face of strong competition from BidorBuy (also now in Kenya) and EBay’s Gumtree, and other players – PNet.co.za in Jobs, PrivateProperty.co.za in real estate, AutoTrader.co.za and Carfinder.co.za in cars and so on. So the issue for Dealfish is whether these Kenyan diasporan initiatives in cars, jobs and real estate (eg http://www.propertyleo.com) can outpace the South African all-verticals initiative. Which is a point: between the diasporans and the imports, where are the locals?

    The second case against is the maths.

    Dealfish appear to be spending about USD$100,000 a month on advertising on every medium available plus running an office and employing their staff including Moses, who I am guessing is not earning the minimum wage, but by the look of his Twitter feed spends a lot of time (and Dealfish $) on aeroplanes. Perhaps Moses will tell us if this is an exaggeration.

    Dealfish currently have 50,000 ads on their site. A certain percentage will be from advertisers who have no intention of selling anything, let alone paying for it. Another percentage is from people who want to buy not to sell (ie ‘jobs wanted’). There are many duplicates because of Dealfish’s policy of auto-refreshing. Click ‘more by this advertiser’ in cars or houses and you generally get a few more of exactly the same car or house.  So the 50,000 ad number is just a PR number that doesn’t actually reflect the genuine number of likely-to-pay advertisers or adverts, although probably reflects the number of adverts itself.

    There is plenty of literature that will tell you that in a freemium model where advertisers pay for prominence, no-one in the history of the internet has ever managed to monetise more than 20% of the free ads – Craiglist San Francisco. Most end up monetising about 5% using prominence – either top of the list, or standing out with colours (EBay which is pay per listing, or Oodle.com or Zillow.com)  or adwords (Google, Indeed.com)  The basic rule is the more you interrupt searchers relevance with advertisers-paid real estate, the more you destroy what made consumers like you in the first place. EBay.

    Pay for Performance is there if you’ve got the courage. But if you watch the video Moses posted today from Mobile Monday, even he admits that the ratio of ad views to ad transactions is 1:180 so to break even on a PFP basis at 1 shilling a click, Dealfish need to have every single Kenyan internet user look at every single ad every single month.

    ie  Assuming Dealfish is the best at Prominence Monetisation in the entire history of the internet, they’ll have to charge at around KShs3,200 per prominent ad at current volumes.

    Even if they quadruple the ad volume and sort out the resulting quality issues, they get to KShs850 a prominent ad. Assuming of course that Dealfish do not offer recruitment agencies, car dealers and real estate agents any discount for their ad volume. Just to break even.

    Which means one of four things.

    1. Dealfish is going to have to stop marketing like they trying to change the constitution
    2. They’re going to be overpriced for Kenya
    3. They’re going to stop being free and have to tell everyone actually, we’re not your trusted free online marketplace after all.
    4. They’re in the 99.999999999999999%.

     

  • Anonymous

    Wow! What more can I say? 

    Thanks for the contribution.

  • Anonymous

    In that case, then I Apologize…

  • Anonymous

    Clearly, I touched a nerve. Brilliant Idea. Wrong Market. I apologize. Profusely…

  • Anonymous

    Speaking of Wazua and KG, 2 words come to mind… ‘CMS’.. and ‘Mashup’…

  • Ahole

    dude u are so full of urself.. whatever happened to ur social platform that allows u to send a text of 100000000 characters?

  • http://twitter.com/dnahinga Keep Walking

    The points raised by Marketer, Idd & Other contributors are fascinating.
    If 1 out of 10 businesses succeed in the marketplace, the Business Man shall then consider at first that he is fighting against that 1/10 ratio.

    Considering that the 9 businesses that fail shall have dispensed some cash into the economy before they learn they are running out of gas, it is prudent to encourage them to continue “pumping” this said resources in the economy.

    We need as many business start-ups to start and fail and we also need 1/10 businesses to succeed and stay at the top of the food chain.

    The ecosystem needs both the failing businesses and those succeeding. In brief, Idd has offered us an incisive view into the scheme of things.

    Let us have as many examples as to how “things cannot work”. 
    Most coders do not have enough money to help us exhaust the experiments on models that cannot work. So let the story unfold…
    Wapi Lighter?
    Cheers

  • http://twitter.com/MurayaKamau Muraya Kamau

     Blame the education system and the innovation centers. You need Okuyo blood to make cash in this market.

  • http://twitter.com/thespianic Daniel Mbure

    Interesting points made. I raised the same issue about Dealfish and Mocality a while back and got the same answers; just you wait and see the magic behind our play book. The truth is, as some comments have pointed out, solutions that work in the west may not work here. You have to study the peculiarity of Kenyans and Africans as @sunnysunwords:twitter would tell you. We don’t care for online shopping because we distrust people’s intentions, have no faith in our local entrepreneurs and lastly are just plain old fashioned. That’s why the guy who found the ETR guy on Dealfish had to go all the way to his shop instead of calling him and performing a virtual transaction. That said, the Holy Grail for web businesses in this country is mobile/online payments. If this little issue can be sorted out (and it’s more of an ideological issue than a tech issue) then maybe people like Dealfish and Mocality can have some dynamic ROI. As for techies and business, what else can I say that @iddsalim:twitter has not said already. Techies must collaborate with entrepreneurs for success, as one person said in the top predictions for mobile in Africa http://www.slideshare.net/rudydw/mobile-trends-2020-africa. A nuance worth mentioning is that in the west, tech businesses are started by engineers who have some serious entrepreneurial skills but somehow, this model just does not work here. Finally, I’m no techie, but I can conceptualize and run a kick-ass tech business and that’s why instead of learning how to code, I partnered with a serious coder and the collabo is working like a charm.  

  • http://twitter.com/thespianic Daniel Mbure

    here’s the link again http://slidesha.re/iED6ZF

  • http://twitter.com/thespianic Daniel Mbure

    Not really, we just have to approach business scientifically or technically and stop treating it like a “hustle”. If one has to build skills to code, why not build skills to run a business? Read books on strategy, New Product Design, Execution Strategies, etc.

  • AmkaKenya

    Please enlighten us?  Marketer raises some very valid points below.

  • Anonymous

    Hapo sawa!

  • http://www.kenyanlyrics.com Mr. Majani

    Kwani using CMSes and Mashups is a sin? Ushahidi used BOTH and they don’t seem to have any problems getting users and funders…

    All of NMG’s websites are vanilla WordPress, and they don’t seem to have any issues building a business around that.

    In your article you talk of building a business instead of some flashy code, yet you come to the comments to bash real businesses for not using superior code?

  • http://www.kenyanlyrics.com Mr. Majani

    You have to be more specific. Why exactly is Dealfish going to succeed? 

    There is evidence that Naspers do not have what it takes to succeed in the Kenyan market. Remember the now defunct haiya.co.ke ? There is also a telling testimonial from an ex-Kalahari employee on Skunkworks that Kalahari is not doing so well: http://goo.gl/zI8Rx

    What is your counter argument to that?

  • Izo

    Interesting discussion here by the commenters, and some thought provoking points by @iddsalim:disqus . As a coder, this has led me to research and be familiar with at least the basics of:

    1. Software marketing skills – the means by which you’ll get your product to your end users, other than depending solely on app stores. A good place to start is here: http://bit.ly/lVba5c

    2. Software project management – how to maintain and manage an app all the way from conception to delivery to the end user, including why many software projects fail and how to avoid this.

    3. Managing a startup – very important skill sets required here, even if you’re freelancing, as it may be some time before you can find a competent business advisor/mentor to help you in the initial stages.

    There’s tons of info available in the above fields, and it’s critical for coders to be familiar with at least the basics.

  • Mimi

    Marketer….very well said.As for Idd…hating wont get u anywhere.The “Kenyan partners and incubator owners ” are just after one thing.FUNDING.They dont care whether the start ups will survive or not…they are just after fame and fortune and they will get it whether we  hate or love them.The only point worth noting here is that they dont come from humble background like u Salim…their families and friends in the corporate world will hook them up with the adverts…their fathers stole what was ours, placed them in positions of power and the F***** continues.

    Tis time you crossed over to the other side boy…..

  • Anonymous

    Marketer,

    you obviously did your research. Let’s wait and see.

  • Geoffery

    I can’t add anymore to Marketers comments. Brilliant!

    Dealfish need to make money! The question is how? 

  • Three3rdz

    Best post I’ve read in a long long time!

  • Anonymous

    Hmmmn…

    Insightful. Thanks.

  • Anonymous

    Just sharing facts, friend.

    Like our learned fellows have pointed out, 9 out of 10 genuine efforts fail. Because of one reason or 15 others. Wait you have NEVER failed in life?

    You sound employed. I think you are.

  • http://twitter.com/owigarj Judith Owigar

    Hapo uko na point

  • Rasta

    Dealfish East Africa boss Moses Kemibaro posted a video today from Dealfish’s parent company MIH CEO  http://www.moseskemibaro.com/2011/06/06/oliver-rippel-of-mih-internet-presents-on-the-state-of-e-commerce-in-africa-at-netprophet/
    In it, Oliver Rippel describes the context of Dealfish.The parent company MIH is building brands across the e-commerce spectrum throughout Africa.He says that Mocality is about when you’ve forgotten where your local kinyozi is, you can look it up on the phone. Must be those long dreadlocks I got – it so long that I forget where my kinyozi is. I question whether Kenyans want to look up the phone number or Google Maps location of a nyama choma joint. He seems to be saying that Dealfish is the brand where once you’ve used whatever you bought new on Kalahari.co.ke, you sell it again to some other random Kenyan on Dealfish. Fact: Kenyans use things until they can be used no more.    

  • Westie

    Questionable ethics from Dealfish over in West Africa http://techloy.com/2011/06/18/dealfish-country-manager-denies-deliberately-using-jobberman-as-adword/?utm_source=rss&utm_medium=rss&utm_campaign=dealfish-country-manager-denies-deliberately-using-jobberman-as-adword&utm_source

  • http://www.facebook.com/charles.gichuki Charles Gichuki

    I liked your post, it asks some questions that i have been asking myself, but also gives a lot of answers. The brash language leaves a challenge on the table. Great Stuff.

  • http://www.facebook.com/charles.gichuki Charles Gichuki

    A very well written and detailed response, you are one sharp fella.

  • Deadfish

    MIH have announced that they will be closing Kalahari.co.xx in Kenya and Nigeria, and also closing Dealfish Uganda, Tanzania, Ghana and so on. All except Kenya and Nigeria for now. 

    http://webtrendsng.com/blog/exclusive-more-on-kalahari-dealfish-and-mocality-shutdown/

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