WebSummit in Dublin highlights opportunities for SA start-ups
WebSummit, the annual technology conference which sees attendees from over 134 countries congregate to experience the latest and best of what the technology world has to offer, took place in November. Dana Buys, technology entrepreneur and founder of CloudOne.mobi, attended this conference in Dublin, and according to him, news from the tech start-up front is that it is moving faster than ever.
Here are his thoughts:
Nearly 30, 000 attendees paid close to R15 000 each to attend the three days of WebSummit, making it a big investment for start-ups traveling from abroad. From the outset it was clear that there has been a massive growth in the start-up culture, largely attributed to the fact that funders are willing to take bigger risks, with both investors and founders acknowledging that failure is not a black mark on your track record.
Another trend that is really taking off is the so-called ‘fast-follower’ strategy, where young tech entrepreneurs scout for new ideas to copy and clone in their part of the world. This is an idea that seems to sit well with investors, who see geographic spread as an opportunity to grow, and who will back ‘cloned’ ideas in different parts of the world. They believe that the big corporates in that specific market will end up buying the local leaders, once these start-ups expand globally.
From a CloudOne.mobi point of view, it was interesting to notice a strong interest from the Middle East, Africa and parts of Europe in PageMan, our digital signage solution. With our focus being on building products for emerging markets, where there US and European model of persistent, cheap and fast internet does not apply, it is comforting to see our strategy paying dividends.
It was encouraging to notice that there weren’t a lot of competitors in the digital signage space: instead a lot of the new ventures on show focuses on social network and sharing economy type type of ventures. As such gaming is a highly competitive market, with a lot of companies promoting games and especially sports-related games. Most of these products had to vie for the exclusive attention of attendees during the summit.
The good news is that there is plenty of the proverbial ‘cake’ going around: the idea of ‘if you can’t be first, create a new segment’ seems to apply, with markets being ‘sliced’ into many fine segments or verticals. The amount of new business ideas and eager funders, looking for the next unique opportunity, is staggering.
In many ways WebSummit had me reminisce about the global DotCom boom (and subsequent crash). Value is created from good recurring cash flow over the long term. With so many startups relying on fast user growth, without a good strategy to drive income, I worry that for these entrepreneurs, funding will dry up. Without cash flow, most of these startups are doomed.
Equaling worrying, is the number of investors who are happy to invest in concepts without a strong, defensible revenue plan, in the hope that they can make a big and fast exit before the cash runs out. These feeding frenzies, driven by greed, always have an unhappy ending.
It is overwhelming to notice the generous funding available to US, European, Israel and Asian start-ups, whilst South African entrepreneurs still struggle on this front – unfortunately local start-ups have to choose their battles carefully against the well-armed and larger ‘armies’ out there.
Overall, I think the strategy we’ve adopted at CloudOne.mobi – where we focus on building Cloud-based solutions that generate recurring revenue to meet specific needs for specific markets that the highly funded players are not necessarily focused on – is spot on.
In closing I’d like to reference the Walmart strategy of the 60s and 70s: SA entrepreneurs will be served well by avoiding big cities of the developed world and establish ourselves in the ‘rural’ developing markets. Let the ‘big guns’ have it out in the US and the likes – the developing markets is where start-ups can really sink their teeth into the proverbial cake.