By Ian Ortega
Honesty is something that’s not compatible with the Ugandan society at large, especially in the section of Ugandan businessmen and entrepreneurs. Yet, I think it’s high time some of us took that road less traveled and became honest about a number of things. It is this candidness that could help future start-up entrepreneurs in Uganda to be well-prepared for the jungle of business.
I had a discussion with one of my friends. I told him that start-ups such as Kaymu, Jumia, Hellofood and many others were yet to begin making abnormal profits, it was all a matter of time. I told him that everything we can’t seem to see about online businesses will become clear in the Ugandan context the moment internet penetration goes beyond the 50% mark. I know MTN Uganda is working day and night to make that possible. If at a penetration of less than 30% we can already feel the impact of the online industry, what is going to happen at over 50%?
On what elements play a crucial role in the success of a start-up, the following five were listed:
1. Timing
2. Team
3. Idea
4. Business Model
5. Funding
Timing was considered to play the biggest role in start-up success. The difference between Facebook and Myspace was more about timing. Too early and your idea may fail. Too late and you find the industry saturated.
The Team came in second especially the founders. Most start-ups failed because of intrigue between the co-founders, collisions. Some failed because one of the founders didn’t do his role as required.
The Idea itself was ranked third. Notice something crazy here. Contrary to common thought of the idea being the most important thing, it was third on this research done on over 400 start-ups. But it was still important. How good is the idea? Do people understand the idea?
Fourth was the Business Model because regardless of what you do, if you are working with a wrong business model, it will eventually collapse.
Finally, it was the Funding. This is greatly lacking in Uganda. Unlike in America where Venture Capitalists pour millions and millions at start-ups, in Uganda, most funding for start-ups comes from the pockets of the founders.
But what struck me the most was the fact that Timing was everything. Timing is the difference between life and death on the road. Because of timing, a man who was earlier rejected by a girl gets accepted hours later during a night out. Timing at the airport implies that too early and you have to wait, too late and you find the plane gone. Yes, too late and you find your dream girl already taken.
I have taken a special interest in timing because I have seen it lead to the collapse of many Ugandan start-ups especially those in the Online field. I have seen online businesses in Uganda fail not because they had a wrong business model, not because their idea was poor, not because they had an incompetent team, not because they lacked funding but largely because the timing is right just yet.
If some online start-ups in Uganda were honest, they would confess that they are not even operating at 1% of their potential. Why? Because the timing is not yet right in Uganda.
So then, why is the timing still wrong for online start-ups in Uganda? Simple, the internet penetration is still low. Coupled with this, the internet costs are still high, internet speeds are still low and generally the infrastructure required to start and run an online start-up in Uganda is lacking in most areas.
Thus, most Ugandan start-ups are forced to fight over the market of Kampala and its suburbs. It’s as though other parts of Uganda are not present.
As of 1st December 2014, internet penetration in Uganda was 18.1% of the population. We have an estimated 10 million internet users in Uganda. Of these 10 million users, 5 million are not active users. They are once in a blue moon users who still have to buy bundles once in a week if not in a fortnight. Of these internet users, the computer literacy is still at its lowest. In fact, when you measure by internet subscriptions, there are only 4.2 million mobile internet subscriptions in Uganda and just 100,000 fixed internet subscriptions.
Online Start-ups in Uganda ought to have all this at their back as they venture into this field with all their glossy ideas. They are working to win over just 5 million users who spend no more than one hour on the internet per day.
Is the future brighter? Yes it is. But that could be in the next three years. It’s just not yet time for most online startups in Uganda. They would be better off waiting a little longer or probably starting small and letting their ideas grow organically in line with growth in the internet penetration in Uganda. It’s a hard fact to fathom, yet ignoring it could see many get depressed when their expectations don’t much the reality.