From Idea to MVP: Lessons Across Uganda, India, and Silicon Valley

Transcript

Welcome and Guest Intros

SPEAKER_03 0:42

All right, once again, welcome everyone. This is Impact Masters Podcast in collaboration with the Todd Podcast from Africa's Talking. And in collaboration with Founders Launch, bringing you this conversation. Founders Launch is an organization that brings uh together entrepreneurs in the ecosystem, helping them uh network and also make collaboration really big. Today we are honored to have uh two guests. One of them will actually be hosting these podcasts, uh having good conversations that will entail more so in terms of what it takes to be an entrepreneur and scale businesses, among other things. I I hope I'm allowed to ask questions here and there, but I'm not the main host today. I want to welcome our main two guests in this podcast. The floor is all yours. Yes.

SPEAKER_02 1:32

Yeah, hello. So my name is Jonathan. Um Jonathan Integil Wama, and I'm the principal at uh Benue Capito. So Benu Capito is an early stage VC firm here in Uganda, in Kampala, Uganda. And we do early stage investment. So we take pride in being the first, the first check that founders receive. And uh we have be we we launched in 2023, so we're just celebrating our first year in the market, and uh we are happy to partner with African Stalking with uh Founders Lounge for this special edition of the Founders Lounge meetup. And uh so I'm hosting uh Ken Morris. Um Ken Morris is the CEO of Codify. Uh Codify is uh located in Silicon Valley. But uh I'm a firm believer in uh allowing people to blow their own trumpet. So I'm going to ask Ken to do exactly that.

Why MVPs Fail and What MVP Means

SPEAKER_05 2:36

Thank you. Uh thank you and thanks for having me here. Uh very, very happy and excited to be in Africa for the first time in my life. Uh in Uganda, the and in Uganda for the third day. Uh uh thanks for coming over and spending this time with us. Uh my name is Ken. I am the founder, CEO of Codify. Uh, Codify is a software development uh uh company. Uh we are the trusted partner for many software companies, including a large number of startups. We established ourselves in 2014 in Silicon Valley in Sunnyvale, California. And uh for the first five or six years, we were purely an onshore company. We were doing services on-site. Uh but as more and more startups uh required us to go offshore, we had a partner company doing our work offshore, and then in in uh 2023, uh 2022, sorry, two years back, we acquired a company in India and that has become an offshore development center for our services. Uh we currently have about 70 developers in India, and uh we work with a number of startups, uh, and at any given point in time we have about eight or nine or sometimes ten or twelve projects. Uh yeah, that's that's and I'm very happy to be here once again.

SPEAKER_02 4:02

Yeah. So I know a big percentage of the people here are either developers or setup founders. And um one of the key components of building a startup is you you get an idea, you have this brilliant idea that you think is going to change the world, probably change the world. So, what you do is you set out to build an MVP. So, MVP, you know, minimum viable product. You want to build the least amount of software that you can build or the least with the key features that you need to be able to test your idea in the market. Now, a lot of startup founders here and have found a challenge when it comes to building an MVP. Um, I was having a conversation with with Ken prior to this, and he uh he told me at Codify they build an MVP in six weeks. Now, a lot of people founders here and a lot of developers here can attest that uh sometimes we build MVPs for even four months and six months only to put it in the market and realize it's not going to work. People don't like it, it can't do anything. And then you have to build again for six months before you know it, that's one year already gone. So the purpose of this conversation is I want us to talk about uh building an MVP. Uh, what are the key differences in between building an MVP in Silicon Valley and you know ecosystems like ours that are very young? And what are some of the things that we need to do when you're building an MVP? Uh and I would like to kick off this conversation by asking Ken. Uh because Ken Ken builds MVPs in San Francisco, in Silicon Valley. So I like to ask him about the key components of a successful MVP in Silicon Valley, just to kick off our conversation.

Core Ingredients of a Strong MVP

SPEAKER_05 5:56

Uh thanks. Uh uh thanks, Jonathan. So uh I I think uh just a slight difference. I mean, we don't build in Silicon Valley. We design probably in Silicon Valley, and the and the whole work is done offshore in India. So I think you know the main components of a minimum viable product is that uh is is right there in the words itself. It should be minimum, it should be viable, right? So uh what is what does minimum mean? Minimum means it should have just the core features and functionalities. We are not trying to build the whole product. So just select the core very, very essential features and functionalities that you want to build up, and that is the that is the point number one. The point number two is that uh this should always be built taking into consideration user feedback. If user feedback is not brought into this, then it will be normally what we call as a uh thought product because we are if we the founder will have it in his mind that his product should do all these things. So it is in his mind. He has not talked to any uh any uh any customer or client or future uh client. The third factor is the scalability factor of it, which if you are a startup person, you know that we are not building it just for the MVP, we are building it to scale it up once it gets approvals. Uh the uh the other uh factor and the most important factor I think is the market fit. Uh is is this product uh really required in the market? Uh if you are building a product that is not required by anybody, then maybe there'll be a buyer of one because the founder himself may have to buy the product. Uh and the and the fourth important and the last point, but not least, there's many other factors, but I think one other point is that uh when we build an MVP, we are not building an MVP to actually stop at that MVP point. But we will either there can be two or three uh there can be two or three uh results. One is that you you might actually get a lot of approval from your clients and they say that's a great product, so you'll start building the other features of the product. You may actually get a uh response from the client saying that, you know, I mean I I like I don't like features one to nine, but I like maybe ten, which means that the product is like it doesn't really work. And which also uh reached reaches to a point where you may have to tweak the product or you have to uh what you have to pivot or build something else. So these are in my view, these are the four or five major factors involved in uh as a key factors of an MVP.

SPEAKER_02 8:36

Yeah. So my actual next question that I had already prepared was what is how important is user feedback when building an MVP? But I think uh we can agree that you've talked about it and you've said if you're building an MVP without user feedback, then you're probably building for yourself. Uh so I would like us to you know maybe shift to another question. And uh I just want to uh to ask uh since you're building an MVP and you're building something that you know you can build very fast, push it out into the market and test it. What is the relevant software that you think is is best placed to be able to achieve a successful MVP?

Tools, No‑Code, and Building Fast

SPEAKER_05 9:22

Uh I don't know the answer for that question because uh you can't have a standard software for every every kind of a product. But we normally these days we use uh we use uh so for, I mean, let me say in in different words. So if you don't know, if if you as a founder uh yourself doesn't know what the product is going to, uh whether the product will be accepted or whether the product is really going to take off, you are at that early stage where you think that, okay, this this could be a good idea, but I don't know. So in those cases, actually, what we would strongly recommend is to go with a uh low-code software, uh, low-code, no-code software. There are many of that in the market. I don't want to name any names. But that is probably the best way to do it because you spend very little money, and if by some chance uh your idea is not going to work out, then you can always say, okay, I've spent this money, that is okay. Now I'll I'll build something else in that. But but if it is something that the you are uh fairly uh clear as to that is what you want, these days the most popular softwares are React and React Native and those kind of stacks is what is normally used. And then you have PHP and Laravel and all those kind of things that have come up its side. So there is nothing, there's no hard and fast thing uh that we can actually name for this. Yeah. Um I I hope I answered the question. Was that the question or was it something else?

SPEAKER_02 10:55

Yeah, I think uh it's it mo maybe would lack on, but I think developers are familiar with the no-code tools. Uh so for me, I just wanted to understand instead of actually coding the in the MVP, what is like the fastest way to ship it?

SPEAKER_05 11:15

So uh you mean after coding it?

SPEAKER_02 11:18

No, uh I mean uh the okay the fastest way to build the MVP.

SPEAKER_04 11:23

Right.

SPEAKER_02 11:23

Yeah. Uh I would say because so in here in Uganda, when you go for some intubations and accelerator programs, uh they always start scoping to build an MVP. And uh most of the time they usually uh draw something like on a board. Um they you you use things like air table, um the you know tools like that, Notion. So I just wanted to know if if that is like maybe standard across the world.

SPEAKER_05 11:58

Again, it uh it depends on the product. I mean, uh as far as software is concerned, I I don't know whether there is any other way to do it. But if you have non-conventional, I mean non-software products, like for example, uh you want to build something like a hardware product or you want to build uh I mean there are examples of uh you know there there is a there is there is a person called Eric Rees who has written a book. Uh he has said that you can build a uh MVP in five days. Yeah. Right. You can so that is again not for software probably, but for non-conventional products. Like, so what he's saying is basically that uh, you know, each uh the product itself doesn't have to be complete. It can be, you can have mock-ups and you can have uh, for example, let me give you an example. For example, this is a very old example that happened in IBM. IBM wanted to bring out, I'm talking about uh this is an example maybe 30 years old. IBM wanted to bring out a uh a laptop, uh a computer that could actually record a voice, or or could follow a voice. So if I just speak into the laptop or the computer, uh it will actually start writing.

SPEAKER_04 13:10

Yeah.

Prototyping Without Code: Real-World Hacks

SPEAKER_05 13:10

Right. So, and this is remember it's 30 years back. Right. So uh what they did was a slight trick. Uh they had a table and chair like this, and they had a screen at the back, and the person would come here and you would start dictating, or sit here and you'll dictate. And there will be a typist at the back with a keyboard, right? Typist means that it is a keyboard. And as soon as he talks over here, she's a fast typist. So she types whatever is there and it comes on the keyboard on the screen. So the idea was not to trick anybody, the idea was to see whether people like the idea of actually having a uh having a uh it is a testing, it's an MVP, right? So so hundred ten people walked by and this said out of ten, maybe five said, okay, let me try it out. And they tried it out, and it actually was working. So then IBM got this idea that okay, if this is working for five out of ten people, I'm just giving up making up some numbers, then maybe it's a product that we can start working on. So that was the idea. And this is a very expensive product to work on. It takes a lot of money to build something like this in those 30 years back. So, so like that, I mean, so the idea here is that MVPs, you don't need to, you know, first the first thing is that go and sit with a client or a customer or a prospect and find out what their feedback is. That is the most important thing. And then if you think that there is some good feedback coming back from the customer, then it is a good product. Another example I can give you is this happened recently. I mean, when I was in one of those pitch events, there was this young kid, he was probably 28, 29 years old. Uh, he has no no I no background in pitching, he was doing pitching for the first time and he was pitching an HR product. I can't talk about the product because it will be an NDA kind of issue. But basically, what he did was that while he he talked to 2,000 prospects himself personally, it was an HR product. And he talked to 2,000 uh prospects, and out of the 2,000 prospects, uh about 1,200 or 1,300 of them actually said that you make this product and we'll buy it from you and we'll use it. You don't say buy it, we will use this product. So which means he had he had at that before even he could start talking about the product, he had 1,400 signups. 1,400 signups means 1400 customers, right? So that is gold. If you go to a VC with that saying that, okay, I have, I don't have a product, but I have this 1400 signups saying that they will they are signed up to actually start using the product from me. I mean, which investor will not give him money? So that's an example of an MVP without nothing. There's no code, not a single line of code was written over there.

SPEAKER_04 15:45

Yeah.

SPEAKER_05 15:46

It was an HR platform meant to be integrating so many different things around recruiting. That was basically the product.

SPEAKER_02 15:54

Yeah, yeah. I think I think uh we can just understand from that we shouldn't complicate an MVP. Exactly. You should just test it in the simplest way possible as long as you get the results that you need before you move on. Um, you talked about uh codify acquiring an Indian company and uh moving a significant amount of your code work to India. Uh so you're working with remote developers. Um I don't just like to understand uh your experience working with remote developers because we have a lot of developers here. Uh some of them would like to work remotely, some of them work remotely. And uh when it comes to building an MVP, because I I I'm just thinking about an MVP as something that needs constant communication between the person who needs the MVP, you who commissions the work of the MVP, and then also the the developers that are building it. Um so I just want to understand how what's the synergy that makes sure that you do the entire process efficiently.

SPEAKER_05 16:57

Yeah, I uh that's a good question. And you know, uh I I personally am a believer in having the essential team sitting physically in one location together. I believe that. Uh, but in the cases where we are given work to be done offshore, we can't transfer the team to the on-site side. So there are certain fixed processes that we we would like to follow, and that we follow it very strictly. The first thing that we do is to make sure that everyone understands what has to be built. So the the client gives the right specifications, the specifications are not right, we go back and forth till it is right, then we sign off on the specifications. And then we we kind of estimate the effort to be done and how how long is it going to take. Normally, as I said, as he said, we don't take more than four to six weeks to bring out an MVP. So this four to six weeks is as a very short time. So before even you do anything, you know your four weeks are gone and then you have only two weeks more. So we have to be very clear as to what will be done on a daily basis, on a weekly basis. So we have short sprints where we have either two week sprints or four uh or one week sprints, but there is a daily stand-up uh which takes not more than five or ten minutes, or five or maybe less, uh, to make sure that everybody knows what needs to be developed on that particular day. And then along with the sprints, uh you know it completes, it gets completed very fast. And all this is done remotely.

Working Remotely and Shipping in Six Weeks

SPEAKER_02 18:18

Yeah. Um so I would like to ask something. Um when you've built a successful MVP, what happens next? Do you uh does Codify provide any help after the MVP is successful for a client, or do you just move on from the client?

SPEAKER_05 18:46

No, I mean um it is a it is slightly a combination of both. I mean, we're not actually running away or anything like that. So when we when we develop anything for any client, be it an MVP or be it a regular product, there is normally a one-month warranty period. Yeah. Right. And the other thing that we do normally for with clients is standard procedure. I mean, this is done with all the standard companies. Any company who doesn't do this, you'll have to be suspicious of the company. So what we are saying is that from day one, we have we ask the company on their account to open a GitHub account.

SPEAKER_04 19:17

Yeah.

After MVP: Warranty, Handover, and Fundraising

SPEAKER_05 19:18

On day one, even before we start coding. So on every day that coding is done, the code is checked into that GitHub account. That GitHub account is commonly shared by the client and by us. Why are we doing this? Because if for some reason tomorrow something happens to the company that, I mean, touch word, we go bankrupt or all of us die in the company or whatever it is. I mean, the client should not suffer. So the client has the code of that particular day, till that particular day, and he can, he or she can take the code and start working with some other company. So that is the first thing. And and so, like this, there are uh so we do that, we do the warranty for one month. And normally, normally what happens after an MVP? MVP C MVP is built for two reasons. One reason is you want to see whether the clients really like your product. So if there is a client buy-in, you you know that the next step is to actually start uh building more features and and going ahead with the building of the product. And the second reason why you build an MVP is to actually uh put this in front of some investors and say, hey, you know what, this is what we're building, some clients have already signed up. Do you want to have a look at the product? And so we're pitching to investors also. So what happens after the MVP is that uh, and if not neither of these happen. So, for example, if a company has not done their homework well, or if they don't have clients signing up, or the clients don't like the product, or they don't have any signups, then then of course, then there will be a long gap between them getting back to the drawing table and coming up with a different product. And we we we just don't know what to do. We'll we'll just wait. Or we'll just wait or we'll wait to hear back from them. But if the product has been accepted and there are investors, then we immediately get to know and they will come back to us and say, you know, that they would want to go ahead and build the product more.

SPEAKER_02 21:11

Yeah, yeah. So when uh a founder is commissioning an MVP, uh, what are some of the more common, you know, like the frustrating experiences that any developer can go through? And uh how as uh codifier, how do you mitigate uh some of these frustrating experiences? For example, I would say, let me say someone wants to commission an MVP, but then they are very unsure about you know what they want exactly. All they keep changing. Today it's something else, the next day it's something else. Um I I know for most developers here. I have I've ever been uh a tech founder and I had a developer developing something for me, and it used to frustrate him because every morning I would wake up with a new brilliant idea, all brilliant feature that I would want, uh, which would sometimes lead him to, you know, end what he has been doing all just you know uh make it redundant. So, but I've just I just want to know like uh from a developer perspective, how do you uh mitigate some of these frustrating experiences that come with building MVPs?

SPEAKER_05 22:14

Yeah, uh, you know, so uh it's a it's a very tricky question. I probably it's not a good question for a podcast. But but earlier days when we were starting and we were doing work for the first time, we used to do everything. If some customer comes to us and says, You do this, we will do it for them. But now we have got a bit more grey hairs, and so so we think that we have enough leverage to tell the customer, you know, have you have you thought about this? Have you done this? Do you really want to do this? Uh can we have a phase two? So we have a lot of ways in which we can tell the customer that, you know, maybe not saying no on his face, but telling him nicely that, you know, maybe this is not a good idea, but if you really want to do it, we'll do it. But I mean, that is there. And the second is normally since it's a six-week effort, we normally try to bring it into a fixed bid. Not in a fixed bid, we don't commit on the price, but we say that it will get over in six weeks. And if we have to include another additional developer, the cost may go up, but it'll get finished in six weeks' time. Um so because of that, we do not like uh you know entrepreneurs coming and telling us that we want to add more features. So that is a that is what we call as a feature creep. So we are trying our best to put it aside, or we very diplomatically say, Oh, this is a great feature, but we'll do it in phase two. So we won't take it in the first MVP. So those kind of things are as a services company, we have to do all that.

Managing Scope Creep and Founder Drift

SPEAKER_02 23:41

Yeah. Uh okay, um, this this is gonna be my last question. And uh I'd like my co-host maybe to ask something, or someone from the from the from the audience to also ask something. But uh by last question would be around um my last question, I I would say about it would be around the strategies uh you've seen the MVPs that you've built as Codify. Um and these MVPs were successful. Uh by successful, I mean you someone tested an MVP and they found that people actually like the product. Uh and some of the startups that you've worked with, what were they what did they do to successfully launch uh the product after building a very successful MVP? Now, building the product, what are the key things that they did to be able to have that success after the MVP?

From MVP to Traction and Investor Interest

SPEAKER_05 24:42

So, I mean, the the natural progression after that is to is that they've got validation from the client. They know that what whatever they have been doing so far has been on the right track. And uh so the next step is to is to go and try and sign up as many clients as they can. Okay, and then then go to a VC or a or an investor and tell them, hey, I have so many clients, my ARR has gone up, my ARR is doubling every six months or one year. So all these are factors which they can pitch into investors, and investors can actually, you know, uh investors will start taking notice of them. And if they do this continuously, I mean it's tough to get in even in the Silicon Valley market, very, very tough to get funding. So if they have to struggle, they have to get the funding. But I think the other important thing about MVPs is that it is not an end process. You're not ending, you're not building a product that can be launched. You're building uh you're building just a skeleton of a product, it is basically a core product that is there. I can give you a very good example. I mean, uh uh many years, I mean, I think this was in 2018. Uh, I don't know how many of you know, but in California we have a lot of wildfires. Uh so uh in uh so there was a company that we started, uh we helped build their MVP. Their product was basically a very scientific product that uh based on the so what happens during a wildfire is that you know uh people are are required to evacuate from that area. They have to just run, just take the whatever they can, put it into a car, and they'll just get out of the place. And so before this product was launched, uh there was no scientific way to tell which area to evacuate first. But this product has a very clear uh uh uh scientific methodology around it, so they know exactly which direction the fire was going. So they looked at wind speed, uh, you know, they looked at the temperature, they looked at humidity, they looked at all those factors to predict which direction the fire is going. And so they would actually ask those people in that direction to uh to evacuate. And this was being sold to uh to districts like counties, we call it counties over there. And so while they were actually just about completing the product and they had already shown it to a few counties, one of the counties had a very, very bad wildfire attack. And when a wildfire comes, it normally lasts for about two or three weeks. The severity, and people have to be evacuated for at least 10 or 15 days. So when this fire started, since they uh since they knew that the county knew that they had this product, they said we don't care if the product is complete or not, just bring the product. Just come and sit in our office, fire fire chief's office, and please let us use the product. And so they used, they they allowed them to use the product, and they told them that it's not going to be perfect. So they used the product, and guess what? While they were using the product, they actually saw more and more features coming in to the product. So the the fire chief said, okay, okay, now the fire is done. Now we want to call back all the people from each of the counties. Uh each each that they have been evacuated. But uh normally they would just tell everybody to go back. But now they had this product and they would say, okay, now from county only the northern most people come back or the southern most people. So this was a feature that they never thought about. So by using the MVP and by including the customer into it, they were actually uh they actually benefited because their product became more and more feature feature rich. So again, the it's a long answer, I know, but I'm just saying that you know the MVP is not an end product. MVP is a midway product or it's a trial balloon, what we say. So we are just putting it out there to see how many of the customers would like to have it.

SPEAKER_02 28:26

Yeah. Hey, please, it deserves a round of applause. Yeah, I don't know where you'd be getting this kind of insights from if uh if you had not come here. So we'd just like to open up to some questions, some remarks, you know, some reactions to the conversation that's been going on. And uh I'll I'll start with my co-host if he has anything to say.

SPEAKER_03 28:49

Yeah, I have a lot. Uh and uh, you know, I don't know, since this is your first time in Africa, you know how hard it is to build a business in Africa. If it was hard in San Francisco, it's like 50 times harder to build it in Africa. But of course, we can share the lessons and uh the experiences. I know San Francisco is one of the places that you know uh every entrepreneur, especially in tech, knows they can build a business that can scale. Uh, what is that that we need to prepare until we get there? What is that process to look like?

SPEAKER_05 29:25

You know, as a company or as a region?

SPEAKER_03 29:27

As an ecosystem.

Ecosystems: What Makes Silicon Valley Work

SPEAKER_05 29:29

Uh it's a long journey. I mean, it's it's San Francisco is uh Silicon Valley, Silicon Valley, not because something happened two days back or three days back. This this journey started in maybe 1988 or 1990. And so uh the core reason why the place is so successful is because uh uh the reason, this most important reason being that it had a it had three factors involved in it. So one factor is that it had a very uh Critical educational institutions over there. So Stanford and Berkeley were one of the engineering institutes of the highest quality. So you had always people I'm coming out of those places with a lot of skills and abilities and all those kinds of things. And some people didn't never even bother to finish their courses, right? Google guys and all that. So that is the one first thing. The second thing is that education institutions, and then these guys actually brought out a lot of tech talent, and tech talent started coming out there. And the third factor was the money. And the money, there was a lot of investors who were ready to actually invest in these early stage startups. And and actually, you know, there is also a factor that I don't know whether you've heard of the semiconductor company called Fairchild. Fairchild was the earliest company, started in the 60s, that actually it is from there that companies like Intel and then later Cisco, and then later on, you know, companies started coming out of these companies, founded out of people who came out of these companies. So there was already a very rich environment of entrepreneurship plus technology background over there, which is why Silicon Valley is Silicon Valley. I mean, people have tried to replicate Silicon Valley in China and in India and all it will never happen. It's very difficult to happen. But at the same time, if you and and so as they say, we say success, success beats success. So as you get more and more rich people, nowadays anybody that is walking on the streets of uh Silicon Valley has a million dollars in his pocket because they are coming out of Nvidia and Apple and all those companies. So uh so that that environment has to come. That environment, it's a tough thing to reach there. So you, I mean, I was today visiting the university here today. You guys should actually work more closely with the universities because this is a this is a combined team effort. You can't do it by yourself. The developers can't do it by themselves, the investors can't do it by themselves, the university can't do it by themselves. You have to actually come together, make some really, really solid plans to actually help each other. I mean, it doesn't matter if out of this help, if one or two people kind of break out and have succeed, it is good for you because if that person succeeds as a company, he will make a few millionaires and you know it'll come back into Ugandas, right? So this is a long effort and it has to have a very clear plan. And I'm actually, you know, I don't know whether I should say this, but I'm disappointed that you know, a hundred-year-old university, you you are you're right next to a hundred-year-old university, and and you you have nothing to show from there in terms of tech talent or where are all these graduates from this university?

SPEAKER_03 32:47

I don't know. Yeah. It it looks like that, but there are so many such things.

SPEAKER_05 32:54

No, I don't mean I don't mean it in a in a bad manner or a but I'm just saying that unless there is a combined effort to bring everybody up, it is not the fault of the university. It is not, it is not. It's the every the ecosystem itself has to help you. I I I did my undergrad in India. Yeah, and my university is actually one of the oldest universities uh in the in the country. Uh we are already we are pre-independence. India got independence in 1947. Our university was formed before that. One of the three or four universities over there. Yeah. And we are so proud that uh our university has more than 6,000 of our alumni in the US. 6,000. The Bay Area itself, we have 1,000 alumni.

SPEAKER_04 33:31

Yeah.

SPEAKER_05 33:32

So if you just say send a letter out to them saying that I want this, I want that, I want uh I want my son to get an interview over there, man, five, ten, fifteen people respond to it. So that is that ecosystem has to be developed. That you have to be we have to be proud of that ecosystem.

SPEAKER_03 33:48

Ah, nice. I mean, uh those are quite good insights. Um and it makes a lot of sense. I think it's just that also we don't celebrate our main founders, engineers, presidents, ministers, finance guys. Because also the ecosystem means not everyone will be a tech uh entrepreneur, but of course there are different key players in different sectors that make start a tech ecosystem. So you said uh, you know, money also has to play a factor in building this ecosystem. And I'm curious where did people in Silicon Valley go get the money to invest in the initial startup? Because ideally I don't believe that you know Silicon Valley was all about tech. Where did that old money come from to invest in the tech ecosystem?

SPEAKER_05 34:35

Yeah, so uh, you know, uh it's it's if you're if you're in Silicon Valley or anywhere in the US, if somebody starts a company, uh the normal first round of funding comes from what we normally call as friends and family. Right? So, which means that you know you have friends and family who are rich, right? Who can give you, you can just close your eyes and say, okay, you take$10,000, you take$10,000, you take$5,000.

SPEAKER_04 35:00

Yeah.

Funding 101: Friends, Family, Convertible Notes

SPEAKER_05 35:00

I I know that this country is not yet uh there at that stage, but I'm just saying that that is the source of funding for the first level. And this is not free money, this is not money given to them free of cost. I mean, we we have this uh uh funding thing that uh money is given, this$10,000, for example, is given out as a loan against equity. Right. So there are three or four conditions or three or four outcomes that if if at the end of say one year uh the company has has gone bigger and they are taking off, then there's an option. At the end of one year, there is an option. Either way, there is an option for the person who has given 10,000 to actually take out his entire money with interest. So you can go to the founder and say, I know I don't want to be with you anymore. 10,000 with interest. Second, he has an option of not taking out the money, but converting all the money to equity. Right, that is the second option. The third option is to have anywhere in between. So you can say, okay, give me 50% back and 50% is equity. So this is actually it is convertible, it's called a convertible debt. And that is a very commonly used instrument in Silicon Valley. But I understand over here, you have to have some similar system over here. Uh some group of people who can come together and say, okay, there is a fund for investing in good startups. Something like that. That's why I'm saying it's a group effort. You can't just, as a as a developer, you can't sit in your house and say, okay, I don't know how to do this. Uh investor can't say that, uh, university can't say that. So this has to be a group effort.

SPEAKER_03 36:27

Absolutely. So also the legal system have to support those. Absolutely, 100%. So my next question, and uh then I'll open for two or three questions if time allows, is around uh in uh raising funds. You've seen so many companies, especially in uh you know uh silicon savannah as we call it, the sub-Saharan Africa, and that's when they fail. It's like when most uh I don't know if how true this is, when most uh successful musicians get signed by a big entertainment company, you stop hearing from them. I I'm not so sure where the disconnect is that when you raise this money, that's when you fail. And what actually happens? So the question then comes to am I ready to raise money? Do I really even need to raise money? And if I raise money, what are those key indicators or milestones that I need to achieve to even be able to grow and either repay as a debt or liquidate some of that investment that is taken and continue to grow?

SPEAKER_05 37:33

It's uh it's a very complex question because I I I can sit in the next two, three hours and talk about it. But because it's a very complex question. I mean, uh uh so raising money doesn't mean that you're that you're stopping your company. Raising money means that you have come to a point where there is a validation and the first funding is actually a validation. And then you have to actually, the founder will have a vision as to how his company has to proceed. So uh, and once you start raising money and once the company grows, raising money becomes constant. You you just can't stop raising money unless and until you have actually reached uh such a what we call hockey growth, then you don't require any more money, then you can stop funding. Right. Uh and the other thing is uh, you know, uh the the raising money part of it itself, when you raise your funding is a very important thing. Because angels or VCs, when they actually give you money, they you have to give a personage of the company to them. So I I was talking to some of the uh folks over here, and it is a common mistake that in that we that founders do to actually go and approach a VC right at the beginning without even any f any uh revenues or customers or whatever it is, if you go and ask money from a VC, and if your product happened to be happens to be appealing to them, they might ask you for a lot of equity. So you're losing a lot of equity just because you're not doing the right work at the right time. Had you run all the right work at the right time and waited for you for a for another few months or a year to get the money, then your equity would have the equity that you give away will be very low. So if you start off your company with a very high equity being given, what is very high? Even 25% equity is very high. Because as soon as you get 25%, your uh your your stock as a uh founder is diluted. Right. And if you have two or three people as co-founders, then each of you has less than 50%. So you lose control on your company.

SPEAKER_03 39:30

Yeah, yeah, absolutely. So I just opened for two questions from the audience. Please proceed to this mic and then we'll be followed by David here. So just make our way for him and you can use this mic.

Audience Q&A: Hardware, Markets, and Government

SPEAKER_00 39:54

Thank you. I'm Duncan from Ocean Technologies. I'm here to ask on behalf of the hardware designers here because uh usually in such forums we have mostly software people and we ignore the hardware people. And I think our problem as Africa, before we go to the software, we should focus on the hardware because there is quite a lot that we could achieve if we can build uh hardware. However, the biggest challenge is that I think we don't have any examples of successful hardware startups that can enable us to convince the people, for example, the government or maybe other private investors that this can actually work. Because I'm speaking from experience, something I have been through. You have something, maybe an MVP, but the complexity of, for example, moving it to production scale is quite astronomical. And this person who had maybe picked interest looks at the cost and like because one person told me that no one has done this here in the country and it has worked. And like that, he backed out. He had the capacity financially and also the connections, but because of that fear he backed out. And also the government uh still has, you know, this mistrust. We don't have the trust between the private sector and the government that we can actually work together. So we are all looking at each other as uh, you know, like with you know contempt. So the question is how do we bridge this gap? How do we convince each other? Because I think for me that is the starting point. If we can't convince each other, we the only option is, for example, if I want to make something similar to what ASML did, to sit and work for 30 years and get funding consistently to build the next EUV machine, I will have to leave the country, meaning that we keep going back to zero. This person leaves because there is no ecosystem and support. So maybe from experience you could advise us on how we can give input or feedback to ourselves, first of all, and maybe the government and other private companies here to have that kind of uh togetherness, to believe in experimentation, to even fund things that seem to have no positive outcome. Thank you very much.

SPEAKER_05 42:14

Yeah, I mean, this is uh this is a political questionnaire. I should answer it. But I I can I can say something that you know uh see there are there are there are certain you know from a startup perspective itself, there are points of view over here. I think the first thing uh you know, especially being in America and um we normally don't depend on government at all. We don't like to talk about government. This is a private business. So we keep, I mean, of course, they can give us money if they want to, but we keep them out of our business. So I think that you should also follow the same process over here. I mean, why would you want to government to get why do you want the government to say, hey, you are a good boy, you're a good company? I mean, I we don't want that. Without that, we know we are good, so we should do that. The second thing is that I think you should follow the market. I mean, if you have uh if you have a good market for your hardware product over here, then you have to be adamant about succeeding in this market. But if you don't have a market over here, why are you being here? If you don't have a market over here, go to where the market is. If the market is in the US, try and go to the US. Or if the market is in some other country, go to some other country. But the idea is that you know, if if you don't have a market, then then you are at the wrong place at the right at the start itself. So even if the government comes and helps you, I mean, then you will blame the government if you don't succeed. Right. So uh I mean I assume that that will actually be the core of your answer. That uh the hardware, if it is a hardware product, uh or any product for that matter, if you don't have a big enough market where you are, then you have to get out of that place. Uh and they and the inverse also is true: that even if before you get out of the place, try and test your product in the near local market. I have actually got calls from uh some customers and some founders in Europe. They say, hey, you know, you are in Silicon Valley and uh we like what you write on LinkedIn, so how can we get into the Silicon Valley market? I said, please don't come here. If you are you are in wherever Netherlands or or Spain or whatever it is, try a product out in that market, in your neighborhood, in your district, in your city. And if it works over there, it works. Then at least you know how it works and how well it works or how well it does not work. You can have something else. But if you're sitting in Spain or you know, Denmark or Portugal and you're trying to do business in Silicon Valley, I mean, so much of money is being spent just by commuting and by worrying and by having people on the ground. And so it's a very logical thing. So sometimes when you start building a product, you forget about all the logic, and then you say, Okay, whatever I'm saying is good. So let's just that that is that is the common mistakes we can make.

Emerging Markets, Localization, and Distribution

SPEAKER_01 44:59

Yes, um, thank you very much, Ken, for those insights, and thank you, Wama, for inviting him over and moderating the session. My name is uh David Oki, and uh I've built a number of MVPs that haven't seen the light of day, unfortunately. But thank you for the insights that you've shared in that area. So um my question is uh Uganda and so many African countries are still at that emerging stage, right? And so it's very hard for us to, for example, relate to a number of startups or companies in Silicon Valley because that's a totally different market at a totally different maturity stage, right? Personally, I find it extremely hard to relate to and apply a lot of uh advice that comes from, say, the US or those mature markets. My uh instead I I I seek to look at uh other emerging markets that are slightly at a higher stage than Uganda or Africa, but not as as far as uh as the US, like uh India a few years ago, and uh you know uh far east, like uh Indonesia and uh Singapore and so forth. So I'd like to know what what lessons can we here in Uganda building for an emerging market where digitization hasn't really reached that far? What lessons can we um learn from those markets there, right? Like Indonesia, for example, that we can use to apply here, or even India. I know India is a lot, lot far, but a few years ago, said 10 years ago, digitization wasn't that far, right? So what lessons can we draw from those uh startups, if you know any, that we can use to model and run our startups here in emerging markets? My second question is around uh distribution, what you talked about, right? Why try to build for the US, yet you have a lot that you can build it for for Africa or for Uganda? Um and an easier way to do that is really to uh collaborate with uh with uh a company or a startup that has global presence, right? Like Uber or Airbnb and so forth. Are there opportunities where startups here in Africa and Uganda can work with uh Silicon Valley companies to localize uh some of their product features, right? Uh for example, one of the reasons why Uber has uh failed to compete against Safe Border, is because Safe Border, which is the right hailing app, has a lot of local context and local knowledge, right? And so that's how they've been able to survive and beat this big giant company. So are there any opportunities, if you know any, where startups here that are struggling, instead of building and running their own distribution, can ride on an existing uh product, but then localize either a future or uh I don't know, uh a business model or whatever for the local market. I think that would make sense for me. Yes, thank you very much.

SPEAKER_03 48:37

Did you forget the first question?

SPEAKER_05 48:40

No, I I forgot where I am, sorry. I'm kidding. So I I I think the I think the answer to the first question was all about ecosystem. I mean, I I don't I don't know. I'm I I don't know what else to say. But uh the the lessons that you get from all these environments that have picked up is that there is an ecosystem, there is a conscious effort being done, either by the government, and if you want the government to stay out of it, then uh the private uh you know stakeholders themselves have to actually make this effort to happen. And uh that is the only answer. I mean, uh the India startup ecosystem uh you know started off, I think sometime about 10 or 12 years ago. Uh India was supposed to be you know just a back-end market for software development till till maybe 2010. Uh normally people used to say, okay, you are you are the software slaves of the world, you don't make any products, you don't do that, you don't do this. And suddenly one fine morning, you know, people uh I remember from my college, youngsters started, you know, leaving uh final year, refusing offers from Microsoft and starting their own company. So it is all it is all a cycle. It's all it all it all leads up to a particular uh thing based on how strong the ecosystem is. So if a young kid can just walk out of university and say, I want to do a startup, just imagine how much pressure he has from his parents to not to do that. But he does that because he has a belief that he can do well. So I think that ecosystem is the answer to all this. Unless there is a strong enough ecosystem to support each other, that is that I think is not going to happen. And uh the second question actually I have not understood. So I mean, I mean, meaning uh I you said something about localization and those kind of things, but but what exactly is your intent? What is it, what do you want to know?

SPEAKER_03 50:32

So if if I got your question, uh what what actually most people, even in Africa itself, so we are 54 countries. So you find Egypt things are really doing well, the ecosystem is really doing well, Tunisia, Morocco, you go down south, they're also doing well. You go in the west, Senegal, Ghana is doing well, Nigeria. You come to East Kenya, Rwanda is doing fairly well. But you go to other countries, they they they they are struggling because of various things that are actually local to that community, and some of the things actually are not do not really make sense. For instance, in Silicon Valley, someone can give you one million dollars and take a risk. It's like if we lose that, we lose it, right? But let's try it. Someone giving you, I don't know, a million uh UGX CI three three three billion, right? UGX. I'm from Kenya, so uh I'm a bit having had time to convert. It's really hard because you need a lot of fingers, yeah. It's a lot of money, which means even for that person, it means between life and death. So if they they don't they they can't take that risk. So yes, someone might say, okay, let's take a risk with one million dollars. Someone thinks about one million dollars actually in Uganda, there's so many things I can do. I can get into real estate and I'll never be the same again. I can get into maybe railing and call a keto which actually I can see them and count them and maybe sell them when they mature, and that is safe. But you're building a software that I can't see. You're trying uh hardware that actually might fail tomorrow and I cannot really uh see the value. So that con uh that context is very important, and uh in even building that tech ecosystem to an extent that I feel also as much as this is concerned, what Founders Lounge is trying to do is very important because if everyone brings the context, it's really important to hear different people's stories and also to know that you're not alone in this journey. What also Africa Stocking is doing with the summit moving from one country to the other is also to tell guys we can do this together. Africa Stocking has been here for 15 years. We are bootstrapped, we have raised funds, we have seen all these challenges. Now, can we do it again together with our lessons? So I don't know what kind of input you'd have on comparing the ecosystem that is almost close to Uganda's economy and growing that so that at least the entrepreneurs and founders who are in this room can actually find tangible things that they can even implement starting tomorrow, next month, and going forward.

SPEAKER_05 53:17

Yeah, so I I think it all goes back to the ecosystem that we've talked about.

SPEAKER_03 53:21

Yeah.

Practical Next Steps and Pitch Practice

SPEAKER_05 53:21

But I again I just wanted to say this that you know, uh right now, I mean, uh, because of all these things that have happened in all these different markets, US and uh India and Europe and all that, you know, the the amount of tools that are available have actually become more and more available, not just to these regions, but they have become available globally. Right. So this is something that I wanted to leave you guys with, saying that uh there are more and more investors who are now ready to take risks across geographies. Uh and and there are links, there are platforms, links. So there is a platform that is started by a VC who has been a VC for almost 30 years. And he was about to retire when somebody said, You retire, then where does all the knowledge go? So he was a very practical and a very sweet guy. So he for the last two years he was building a platform where uh it's like a marketplace where you have any any startup founder can go uh there, any investor, there are many investors there, many startups over there, and there are many service providers over there as well. Could be uh any kind of service provider. And so here you have an opportunity as a startup, you can be anywhere in the world.

SPEAKER_03 54:37

Yeah. Is it productant?

SPEAKER_05 54:39

No, it is uh scale upstream.

SPEAKER_03 54:41

Oh, okay.

SPEAKER_05 54:42

And that person actually, uh Gary Jinx is a is a legend over there, and he has has a number of investments in Africa. So uh actually it is not that bad. So, you know, but the the only warning I can give you is that please don't go unprepared into these kind of things because whatever little chance you have to succeed will go away. So you you have to actually start building an ecosystem where you help each other. I mean, as somebody was saying over here, we have pitching events almost every day in the valley.

SPEAKER_03 55:12

Yeah.

SPEAKER_05 55:12

So at least have one pitch event one once a week. You you are a founding, you are a founder's group. I think you should help uh the help each other by actually uh getting some uh investors or getting some some wise guys to come and sit on these pitching events. And you know, it is a pitch practice. So you practice how to pitch. There are a lot of ways in which you can do the practice. You can look at YouTube videos, or you can talk to us, or you can do whatever you can do. But these are all things that actually have to do to increase the the level of uh you know quality of the companies that are seeking for funding. Because funding is very tough. I mean, you can make a mistake, any experienced company themselves make mistakes. Then you forget about the lesser experienced companies. So I think there are there are a lot of good things happening and the there are a lot of work that has to be done in order to catch up and be at that level.

SPEAKER_03 56:09

Thank you so much. I'll give uh this, we may not take another question, but I'll give him a chance to give a parting shot and uh yeah, we conclude.

SPEAKER_02 56:17

Yeah, so just uh small reference to what David asked about context. Uh when he said Jumia came to Uganda, Jumia has money, you know, the technical know-how, obviously in other ecosystems. And then it came to Uganda and it you know, they battled safe border that was built for me and it didn't really work out for them. Um, it reminds me of something. Uh so I used to love e-commerce a lot. Um I think I searched about anything e commerce in Latin America, in India, in China, in Silicon Valley, and I'd built like an encyclopedia about e-commerce. So uh one day I realized I I looked at Amazon, how Amazon grew, and I saw Amazon became you know a trillion dollar company. I looked at uh so the the the e-commerce equivalent of Amazon in Latin America is called uh Mercado Libre. It's uh an Argentine company, it's like the biggest e-commerce platform in in Latin America. I looked at how Mercado Libre grew and I saw it had become you know a billion-dollar company. I did the same, I saw Flipkart and I saw you know Flipkart was acquired for billions of dollars. And I when I looked at how all these companies grew at the time it took them to grow, I started to think, okay, Jumea is the next. So I got my money that I made from crypto and put it in Jumea stock. And it has never recovered. But it was just that uh the context from Latin America, the context from you know Southeast Asia, you know, Silicon Valley may not truly apply to some ecosystems. So at least it's very important for you to understand the market that you're dealing with. Uh just that that would be my parting shot. But I just thank all you for coming.

SPEAKER_03 58:15

So can you can give a parting shot?

Closing Thoughts and Where to Watch

SPEAKER_05 58:18

Right. Uh I thanks a lot for having me here. Thanks a lot for attending this uh event. And uh I I know it's uh uh start startup by itself is a very, very, very tough journey. And when you have that tough journey with more hurdles in it, it's going to be tougher. But I'm just saying that uh you have to the the operating world in all the startup environments is you have to hustle. I mean, hustle, you know what hustle means, right? Keep keep keep fighting. So keep fighting.

SPEAKER_03 58:48

Thank you so much. Until next time, uh, this was uh founders launch Uganda uh podcast in collaboration with Africa Stalking and Impact Masters. For those who uh wanna see these podcasts afterwards, you'll find it on Impact Masters YouTube channel and any other podcast channel, including iHatRadio. And you can also find it on Retoad Podcast YouTube channel, Africa Stalking, and any other podcast publishing channel. Until next time, my name is Michael Kemadi. Thank you so much.