[HN Gopher] Why and how to start a startup serving emerging markets
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Why and how to start a startup serving emerging markets
Author : luu
Score : 58 points
Date : 2022-03-27 05:51 UTC (2 days ago)
(HTM) web link (www.benkuhn.net)
(TXT) w3m dump (www.benkuhn.net)
| njacobs5074 wrote:
| I think part of it is that while this may be a win for your
| customers and maybe for the founders, the payoff for the
| startup's employees may not be that lucrative, based purely on
| the wages that are typically paid in-country as compared with the
| US, for example.
| m0llusk wrote:
| From what the article describes the benefits of working for
| such a company are transparently honest and fair plus that work
| gives experience with robust management practices and
| international business culture. In these countries a good job
| with fair and regular pay that prepares workers for expanding
| career possibilities is a really big deal.
|
| And there is evidence of this opportunity focused mindset in
| the US. Last I checked the highest earning demographic segment
| in the US was Nigerian immigrants. Being ready to work hard and
| conscious of the risk of failure makes a huge difference in how
| pay, work, and business operations are evaluated.
| unmole wrote:
| > Last I checked the highest earning demographic segment in
| the US was Nigerian immigrants.
|
| That has more to do with the fact that only the most highly
| skilled and educated Nigerians manage to emigrate to the US.
| You see something similar with Indian immigrants, also a very
| high earning demographic.
| throwoutway wrote:
| This article mentions providing $5 of value when the daily wage
| is $5.
|
| Question for an economist: what effect does this have on an
| emerging economy? If scaled up to half of the population, does
| that cause inflation?
| claudiulodro wrote:
| It's complicated. For example, productivity in America has
| soared the last 50 years, so people are providing more value
| than ever, but American salaries have not increased at the same
| pace.
| gruez wrote:
| >but American salaries have not increased at the same pace.
|
| AFAIK most of the difference is from measuring total comp vs.
| wages.
| ccvannorman wrote:
| FTA: "Wave's mission is to improve the world, not to make money"
|
| "Our investors are venture capitalists trying to make a high
| return"
|
| "saving our users over $100 million so far [in Senegal alone]."
|
| Am I missing something? What's to stop your VCs from leaning on
| you to suddenly hike your rates up in favor of more profits once
| you are a de facto monopoly on payment services? If the answer
| isn't "They don't and will never hold voting shares and board
| seats", then why did they invest in your company at all ...?
| barry-cotter wrote:
| > What's to stop your VCs from leaning on you to suddenly hike
| your rates up in favor of more profits once you are a de facto
| monopoly on payment services?
|
| They don't hold a majority of votes is one possible answer.
| Another is that they're much more invested in growth than
| profitability. Why try to make as much money as you can in
| Senegal when the rest of Africa is right there? Also "Your
| margin is my opportunity." If you're the first company to
| provide a good service and you're cheap and good what exactly
| are wannabe competitors going to do to oust you?
|
| > If the answer isn't "They don't and will never hold voting
| shares and board seats", then why did they invest in your
| company at all ...?
|
| To make lots of money. If founding team is really important and
| VC returns are power law distributed then investing in a much
| better team that is a lot less greedy can be a great bet.
| bilbo0s wrote:
| _Why try to make as much money as you can in Senegal when the
| rest of Africa is right there?_
|
| Because the rest of Africa is more likely to settle on mpesa.
| Not trying to be snarky, genuinely looking for a reason for a
| Kenyan or Ghanaian to switch to Wave for example? Off the top
| of my head, I can't think of one? This is particularly true
| for anyone in the EAC.
|
| In short, maybe your investors will begin to see they have
| little chance of winning over all of Africa. Fundamentally,
| you're really no different than mpesa in terms of structure.
| (I can't determine much of a difference in terms of
| fundamental functionality either?)
|
| I'd genuinely like to hear how you guys view things like
| mpesa? Along with a good answer to the neo colonial
| criticism? If you have good stories for those two issues, I
| think you have a chance. (Where 'good' means 'resonates with
| young Africans who are much more likely to be Pan Africanist
| these days'.)
| ignoramous wrote:
| I'm no capitalist, but if you could improve the world while
| delivering exponential returns on capital, that's a win-win? I
| don't think something's mutually exclusive just because it is
| rare.
| rodolphoarruda wrote:
| The post does not mention Latin America, only Africa. Using
| "emerging markets" is somewhat imprecise then. I believe the
| title could be updated to reflect that, maybe to "serving the
| African region".
| jcmontx wrote:
| Latin America is often overlooked in the tech world, but there
| is a growing and healthy tech ecosystem in the region.
| Argentina has companies like MercadoLibre, Auth0 and Globant.
| Colombia has Rappi. Uruguay has dLocal. Brazil a ginormous
| amount of fintechs. Among many others.
|
| The cool thing is that these companies are usually very region-
| focused and if they hire/open offices outside their HQ, it's in
| other LatAm country. I think the region is on the right track
| to become a player in the tech world.
| camillomiller wrote:
| Downvote me to hell, but all I could read, despite the good
| intention, is about taking advantage of emerging markets because
| of the opportunities they offer to Western entrepreneurs. How is
| this not digital colonialism? What about fostering local
| entrepreneurs to develop a local healthy startup community?
|
| >> more altruists with experience working in the developed world
| should try this approach.
|
| This post should have been called "the Western man's digital
| burden"
| makerdiety wrote:
| The solution to your digital colonialism is free and open
| source software. :)
|
| It would demonstrate that venture capitalists aren't as smart
| as they think they are and it would prove that they're playing
| a losing game.
| recuter wrote:
| OK, move to Africa and foster local entrepreneurs and show us
| all how to do it better. I suggest Liberia as a starting point,
| godspeed.
|
| P.S. - Bonus points if you befriend some locals, show them this
| post and the service discussed, explain your position about how
| it is wrong and regale them with your politics. I'd love to see
| a video of that.
| user_named wrote:
| On point.
| longtimelistnr wrote:
| ? I don't know what you're trying to say if only furthering
| his point. Not everyone wants to be a cryptobro or a VC pet
|
| Emerging markets are emerging because they're doing something
| right no need to offer them something "better"
| recuter wrote:
| No problem, I'll spell it out for you:
|
| Calling a person who is dedicating his life and actually
| spending time in Africa a "digital colonist who is doing it
| wrong" based on some vague gut feeling is somewhat
| unhinged.
|
| Not providing even a whiff of a suggestion as to "the right
| way" is not constructive. And doing all this whilst likely
| contributing absolutely diddlqysquat of value yourself is,
| to use your parlance, problematic.
|
| Topping it off with pointing out his alleged western
| origins is flat out bigoted.
|
| As for yourself, Star Trek-esque non interference is the
| morally superior path? You've tried nothing and you're all
| out of ideas? Certainly an interesting approach. Perhaps
| more of a peanut gallery ethos than a hacker one.
|
| You could explain how on earth cryptobros factor into all
| this or offer any shred of specific concerns and criticisms
| you have with regards to the OP but that would involve
| actually reading the article and making an effort and
| that's not in keeping with your moral philosophy of doing
| nothing.
| camillomiller wrote:
| The only unhinged thing here is the tone of your
| comments. I'm posing what I consider a reasonable doubt,
| especially due to the way the linked post is written.
| There is not one single bit of ethical thinking, just a
| sheer celebration of how easy it is to make money in
| countries you wouldn't think of as profitable markets.
| You, on the other hand, have decided already that a white
| man's proactiveness and alacrity is all it takes to free
| him from whatever colonial baggage we all INEVITABLY
| carry when we dab as Westerners into African affairs.
| recuter wrote:
| Sure bud, we are all white men with colonial baggage on
| this website. I'm slowly backing away now.
| camillomiller wrote:
| You can be whatever, but you haven't declared yourself.
| Based on the general demographic of this website, it's
| fair to assume that you are both a man and a Westerner,
| or in some way a high-skilled privileged English native
| or near-native from a Western country, or Western-
| adjacent country.
| camillomiller wrote:
| Also, please learn how to properly quote your opponent in
| an online debate. I never said anything along the lines
| of "digital colonist who is doing it wrong". That is your
| (wrong) assumption about what I wrote. I asked if what's
| described in the original post can't somehow be
| considered a form of digital colonialism. It's a rather
| important point for me, because when I discuss a systemic
| problem I'm strongly convinced we should avoid to call
| out individual behaviors, Twitter-storm style.
| bilbo0s wrote:
| Liberia?
|
| Just curious how a place like Liberia would be considered
| 'emerging'? Not to slam Liberia, but even most Liberians
| would readily admit that there is an enormous difference
| between Monrovia and Accra. It's just reality. I mean,
| Liberians are trying to get settled in Ghana, not the other
| way around.
| elforce002 wrote:
| I'm 100% with you.
| oraoraoraoraora wrote:
| Just going to drop this here for a good laugh.https://hire-a-
| mzungu.biz/
| recuter wrote:
| Can you also drop an explanation as to why OP deserves to be
| classified as a mzungu or is your classification automatic?
| oraoraoraoraora wrote:
| Don't know where this is going, just thought this website
| was bringing to light something that isn't discussed, in a
| very funny way.
| recuter wrote:
| It isn't unfunny and tokenism is surely a cross-cultural
| phenomenon in all of its many forms. I don't believe in
| PC culture and getting offended, discuss away.
|
| My impression is the guy in the OP is genuinely trying
| and isn't incompetent. If these guys are capitalizing on
| the very phenomenon you are lampooning by getting large
| VC sums injected into an emerging economy robinhood
| style... wouldn't that be... a good thing?
|
| That's what the blog post is flat out intimating. Perhaps
| I'm naive.
| [deleted]
| blip54321 wrote:
| My experience is that there are a lot of synergies to be
| leveraged. It's almost ridiculously easy to start a successful
| startup in a place like Nigeria or Ghana which either:
|
| - Providing things Nigeria excels at to Western markets (e.g.
| the same types of call center models India started out with a
| few decades back).
|
| - Launch services in Nigeria common in Western markets but not
| yet there.
|
| - Integrate Western and African models
|
| Those sorts of things tend to benefit everyone involved on both
| sides of the pond. Compared to, for example, making web
| frameworks, there is a lot more low-hanging fruit. Silicon
| Valley has an almost unlimited supply of people wanting to do
| startups for people like themselves. This leaves many other
| markets under-tapped.
|
| In terms of fostering local entrepreneurs, that happens
| naturally. Look at China, Taiwan, Korea, or Japan. They started
| with this model, at which point locals noticed they could do
| the same better and cheaper themselves, while retaining more
| profit. India is about half-way there now. It's very hard to
| foster entrepreneurship by telling. It's very easy by modeling.
|
| China, Korea, Taiwan, India, and Japan never turned into
| Western colonies, as you're predicting.
| telchior wrote:
| I don't think you should be downvoted, it's a consideration
| that should probably always be somewhere in the back of
| people's minds when they go to some emerging market,
| considering history. Maybe in the same way that Germany asks
| themselves what their true purpose is when they're adding to
| their military budget.
|
| But it would be nice to see some suggestion of what the
| "proper" way to try to help out in the developing world if
| you're an altruism-minded tech person.
|
| Off the top of my head...
|
| You could completely avoid going there and stay at home,
| because anything you do is inherently corrupt and colonialist.
| Let's call this the Catholic option (original sin and all). OK,
| but "emerging" can stay that way for decades or just never
| emerge; whatever knowledge you have stays locked in your head.
| Maybe eventually, some Western corporation comes in with the
| product you would have built there, except it's all made
| overseas and only takes from the local economy.
|
| You could go there and teach coding and entrepreneurship. Great
| idea! Hope someone is paying your bills to do so (they're going
| to be higher than you think). But there's another issue here:
| there is a local environment. You can't just import your
| knowledge, it's kind of specific to where you're from and won't
| work. Everything from -- how do you interact with employees?
| (Believe me, Silicon Valley BS does not fly in the
| international workforce.) What are the buying habits and needs
| of your local customers? How do you deal with governments that
| range from inefficient to massively corrupt? At best, with no
| local experience, you're teaching skills that are not really as
| great as you think they are.
|
| You could join an existing local company. Whoops, nobody can
| hire you and/or there are none and/or you don't speak the
| language. Also, you don't have a work permit. Nobody is
| particularly interested in this weirdo with no local experience
| going around offering their knowledge.
|
| Honestly, I'm trying to give you a fair reading. I have
| traveled, I've started a (very small, still exists but isn't
| growing) startup in an emerging country, and it is just really
| difficult. Everything is different, and trying to adapt what
| you know is not a cakewalk. The capitalist model works because
| you have to get hands-on, figure out how to actually build
| something, and work through the very difficult puzzle of how
| knowledge actually is transferred.
|
| And in my personal experience, the big successes really aren't
| "Westerner barges into and takes over local market" anyway.
| There's usually some connection -- off the top of my head, look
| at Canva, with a second-generation Filipina-Australian building
| a massive business in the Philippines (with help from US and
| Aus investors / execs).
| jimkleiber wrote:
| Quick note: I think the post is from November 2019 and that the
| title should probably be updated to reflect that.
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