Is Safaricom Intent On Killing Kenyan Tech Start Ups?

Is it me or is Safaricom doing everything these days? Safaricom is in health, in helping you pay rent, payments (Kopo Kopo), accounting and payroll (cloud accounting and cloud payroll), it is in music; who can forget the infamous Safaricom CEO music video. Rumour has it, the CID questioned him about this video for a good 30 minutes yesterday. I am kidding!
Most recently, Safaricom opened an online market place, similar to what OLX is doing.

Various arguments have been put forth for and against Safaricom’s business strategy. I especially liked this one by Kachwanya. Safaricom is a public business, and its first responsibility is to its shareholders. After spending so much time and money on building a brand and gaining a loyal following , it only makes sense that they would leverage that following to make more money. They don’t really owe the Kenyan start up scene anything, maybe some sort of assistance as part of their corporate social responsibility.

Regarding the overall annoyance at Safaricom’s finger that’s in every pie, I have a differing opinion. By doing these things, Safaricom is actually helping the Kenyan tech community “sharpen its sword”, which is a fantastic thing. It is helping the industry grow in excellence in two ways:

1. Partnerships: For most initiatives, Safaricom has partnered with start ups that hatched the ideas, and put in a bit of work to make a credible product. I know their cloud payroll, mHealth, KopoKopo and iCow have been originated by Kenyan companies. I know for sure that Safaricom does not take over the businesses, it markets and acquires the customer, then shares revenues with the start up.

This is a fantastic advantage to the small start ups it has partnered with. They instantly get access to their 19 million customer base, and free marketing. Customer acquisition and marketing are the two greatest challenges most tech businesses face today because of limited funding. Even where a VC gives cash, the marketing budget is often low.
Yes, the start ups only get a share of the revenues, but as my friend says, in a start up, you can choose to own a small slice of a large pie, or a large slice of a small pie. I always will go for the former.

Of course Safaricom could do a lot to make this easier for the start ups. I spoke to one of their partners and the time taken to close the deal and go to market was incredibly long and tedious. Even getting the agreements signed was a crazy process. That’s a conversation to be had with Safaricom.

2. Training and experience: One thing we can all agree on is that the Kenyan tech community is very very young (despite the hype). I love the youthful energy, but there’s also lots of inexperience and lack of excellence. I also feel the status of a “broke entrepreneur” has been “sexied up”, yet in reality, that’s a terrible place to be at.

By doing some initiatives inhouse, Safaricom is helping our tech scene develop. Most start up entrepreneurs even in Silicon Valley worked for bigger companies before going out on their own (even our local Ken Njoroge and Mike Macharia). Working for “A Safaricom” first gives you an edge if you have entrepreneurial ambitions. You get to learn at their cost and get paid to do it. You have access to tools and resources you wouldn’t have if you went straight from college to starting your own business, and you get to watch them fail and certain things and you learn from that. That shortens your success time when you go out on your own.
In my opinion, Safaricom has added tremendous value to the tech scene by offering all these services on their network.
Who knows, the next Kenyan tech millionaire may be an ex-Safaricom developer.

Related, I found this article fantastic. Makes sense even more for the Kenyan scene. “You are probably not Mark Zuckerberg. So stay in school.”

Disclosure: This is NOT a sponsored post.