Eskom CEO Andre De Ruyter has come out to clarify what appears to be a case where he was allegedly quoted out of context….
We all know that we face some unique challenges in Africa, driven by the lack of access to market and the relatively small skills pool to draw from. If we look at the four types of innovation (thanks to The Innovator’s Dilemma for the foundation) they are:
- True Innovation: creating something new that has not been done before
- Incremental Innovation: improving something that exists
- Sector Innovation: taking bits of tech from other sectors to disrupt another sector
- Market Innovation: figuring out new ways to get to market and scale
Most tech innovators focus on Sector Innovation, when in Africa our main barrier is Market Innovation. The problem is that we spend scarce time and resources building out technical solutions that will struggle to get the market adoption to make them viable. The approaching technology Uber moment is about to transform all of that.
The Uber moment is when a business provides massive disruption to a sector, to the point where the whole sector is transformed. Disruption happens when someone figures out how to access a sector and provide a service at less than 10% of the cost of the incumbents. Uber has a US$50-billion valuation and consumes a bit of Amazon web services and uses a developers license in Google Maps. The on-device app is good but not transformational in it’s own right.
The Uber moment is driven by the secondary innovation market — the market that has leveraged the primary innovators, Amazon and Google to slingshot into the market. The Uber staff count is, I believe, around three and a half thousand with a US$50-billion valuation. Google has just under sixty thousand staff with a US$560-billion valuation, and Amazon, who have poured billions into AWS have a US$260-billion valuation.
What is truly exciting is the time it has taken Uber to get this valuation compared to the likes of Google and Amazon. The secondary innovation market is better in every way than the primary innovation market. Lower barriers to entry, higher and faster scale.
In Africa, we certainly lead the mobile market race but we are quite a long way behind the curve in the cloud and B2C markets. Why are we still writing code like crazy when most of what we need exists? Why are we building out a base development pool, when, in the market of the near future, core development skills will be largely redundant? This is a contentious statement as we need to create jobs and building a services economy is the fastest way to to it.
If we do in the technology sector what we did to the mining sector, we will build an industry that will collapse in the near future. India are going to be facing a tough market in the near future, why would we try to emulate that?
We need to embrace the secondary innovation market not for IaaS (Infrastructure as a Service), nor for PaaS (Platfrom as a Service) but for SaaS (Software as a Service). Developers leverage and embrace IaaS, they are beginning to leverage the PaaS market, but, generally speaking, they won’t embrace the full capabilities of SaaS, as they know how to code and want to use their skills. Fully leveraging the SaaS market is where the largest returns lie. If you focus on SaaS first, the SaaS provider will wrap up IaaS and PaaS in their offering and we won’t even know they are being leveraged. By fully leveraging SaaS, you can get to market in a fraction of the time, with minimal coding effort, at massively lower costs and with a world class UX. This is the No Stack opportunity.
The Sw7 team have spent the last year immersed in figuring out how to leverage “No Stack for Africa”. We are a B2B-driven economy, which means the majority of technical skills we have are based on data and systems integration. In South Africa in particular, because we have such a strong technology business market, we are a nation of Systems Integrators. In the current innovation market, these skills are seen as redundant. Yet, if Access to Market remains our largest hurdle, why do most innovators spend much of their time re-inventing the wheel? Building out platforms and technology that already exist, work, have a great UX and can scale?
Developers develop, that is what they do, so if you ask a developer to solve the problem, they will archtiect a solution and write the code. You can’t ask a creative artist to paint by numbers. The problem is that we have nowhere else to to go for help, the concept of what we are trying to to is alien to people that sell hours or write code for a living. In the new No Stack markets, developers skills will be useful, but won’t be the core requirement.
No Stack is simple. Don’t write it, consume the web services that exist, stitch them together, get your MVP up and running in a few weeks and spend all your energy and resources addressing the real problems we face: what the customer really wants and how to access the market.
The No Stack approach is based on the premise that at least 80% of the code you need, exists as a web service, which you will usually pay a few dollars a month to consume. Most technology businesses build from scratch, consume valuable resources and get to market late with a product they are not sure the market wants.
No Stack means connecting different systems and moving data around, which is what Systems Integrators do, and we have lots of them. The developed western digital markets have given us the keys to the kingdom and as a result, we have an explosion of services we can consume to get to market in a fraction of the time and cost it used to take. They have made the more desirable secondary innovation market available to us. Their massively skilled resource pool is not an advantage in the secondary innovation market, as Uber, AirBnB, WhatsApp have proven.
In the secondary innovation markets, building everything from scratch will slow you down and give you an expensive code debt to service and will massivley restrict your ability to pivot. In Africa, a largely unfunded innovation market, it will also consume a lot of scarce and expensive resources.
The Uber moment has happened to the primary innovation market in the West already, which means the cost-to-host and deliver solutions has collapsed over the last two years. As an SME or a tech innovator, we consume cloud services from the large global players, either for free or at a punitive cost. We can now scale using very cool tech from niche innovators at a few dollars per user per month. The next step is to take these offerings, combine them in a way the market wants, and offer it to the broader market.
We have a massive opportunity in Africa. We have a market that the West does not understand and have been given a world-changing transformational toolset to enable us to get to market quickly. The opportunity is to own our space and access the booming emerging markets before other players figure out its complexities and nuances. This means we have to stop reinventing the wheel and have to figure out the No Stack methodologies and challenges.
We are not constrained by our thinking, resource pools or any technical debt. Africa has the opportunity to have our Uber moment and to surpass the established players by leveraging the secondary innovation market that No Stack makes possible.
We are over a year into our No Stack learnings at Sw7, it’s been a bumpy ride and we are not there yet. What we have learned on our journey is that the market now is completely different to the market of six months ago — the pace of change is accelerating.
A few of us went to the Web Summit in Dublin in November, the largest startup event globally, and were amazed by the focus on the secondary innovation market. The setbacks and challenges we have faced in the last year have converted us from intellectual believers in the No Stack principles to evangelists.
No Stack is, in our view, the way forward for Africa. We are early, and it’s not pretty. But the pace at which the secondary market is evolving shows us that we will be there very soon. If you want to innovate in an innovator’s market, you need to be early. We will share our journey with you as we progress and learn, and if all goes well, we will be able to take a solution to market every two weeks if we want to. Now that’s disruptive.
Image by Michael Himbeault via Flickr