Dear Kenyan Start-ups, Advertising is Not the Only Business Model

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Every year and every month I get fascinated with a certain aspect of technology. My current obsession is Mobile and the grand convergence. I got the clear picture about it after the talks by Tomi Ahonen at Mobile Web East Africa which took place in Nairobi recently. Tomi had a pic which show how 15 industries converged and became mobile.

  • Insurance
  • Banking
  • Credit
  • Computers
  • Watch
  • Camera
  • Mapping
  • Print
  • Broadcast
  • Social Media
  • Gaming
  • Music
  • Advertising
  • Telcoms
  • Internet

I also think we should add the following:

  • Health
  • Education

So if you are an aspiring entrepreneur or developer you look at the list and find 17 industries that you can work on. That is great, that is good.

As a blogger, I have the duty of observing what others are doing. The work basically involve talking to people and getting to understand what they are doing. The great thing about it is the amount of things one learn about the industry and the direction it is taking.  The problem I have seen and heard several times especially in Kenya is how monotonous start-ups go about looking for scalable business.

Talk to any start-up how they will make money from their business and one answer keep coming up. Regardless of the industry a start-up is targeting or operating in, most of them will tell you that they will make money by providing space for Advertising.  I bet that 90 percent of the start-ups in Kenya will tell you that.

I think it is good if you have numbers and can attract the advertisers to your page. Actually it is probably the same reason why the likes of Mark Zuckerberg are willing to pay over 16 Billion for Whatsapp. They look at the number of users, 450million and yeah, that is impressive number to sell to advertisers.

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The problem for Kenyan start-ups is that the ad stuff is a number game. Unless you can attract millions of users, or visitors, you are not going to hack it.  And probably this explain why most Kenyan start-ups are not doing well… Yes, Lack of business model.

Recently I had a heated argument with one of the Start-up Founders in one of the above mentioned industries. I asked the person how their start-up is going to make money. And the answer was adverts. I looked up and said that start-ups are overplaying the ad thing as business model. And that is when the hell broke loose. How do I dare say that the ad is not going to work. The person felt that I do not understand the industry they operating in and unless I can give a solution I should not question the great work they are doing.  The emotions took over and I was not able to suggest any solution. The whole incidence left me thinking, does it have to be ads for everyone, even in a situation where it is not going to work?

If you look at the above list, there are industries that ad would be perfect. Industries like Gaming. Social Media, Music, Internet attract mass users. If you are in those industries, then it would be understandable if you are eying the ad as a business model. But still even within those industries, there are still other ways to make money that one could consider.

I think this problem can easily be sorted out if people take time to look at the traditional ways of doing business. The Grand convergence has taken place but the ways of doing business or how people pay for stuffs remain the same. I am going to stop there and leave the room for dear readers to help me out with coming up with solutions.

What is your opinion on the topic?
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