Lessons you should learn from the death of Safaricom’s vumaonline

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  • 5 years ago
  • Posted: September 12, 2014 at 7:10 pm

There was a discussion on Twitter this morning regarding the status of vumaonline, an initiative by Safaricom to offer free Internet access to Kenyans as they commute in matatus from home to work and back that was launched in mid June 2013. Over a year later, vumaonline seems to have been buried underground as there seems to be no matatus that are still offering the vumaonline services. The seeming death of vumaonline led Soshi OG (@daidey) to ask:

For a related article read: Matatus With WiFi….Safaricom Wants You To Enjoy Your Ride

The straight answer to Soshi’s question is a yes but that raises a second question, why? The discussion on Twitter came up with some possibilities namely:

  1. Vumaonline wasn’t properly planned or thought through
  2. Vumaonline wasn’t sustainable in the first place
  3. Implementers had no understanding for the matatu industry
  4. Vumaonline was implemented in the wrong sector

 The four points are very critical for the success of any project; be it initiating a startup or just expanding existing business line into new product lines/territories. Let us examine them in light of the vumaonline project and learn a lesson or two for our betterment.

1. Lack of proper planning and thinking before starting a project

The place for proper planning and thinking through the project is very key to success of any project, otherwise a viable project is likely to stall half way simply because contingency measures were not put in place to counter any foreseen obstacles. Though planning and organizing for a project before actual project implementation can be considered a matter of common sense, the reality on the ground as revealed by subsequent tweets by Soshi OG clearly shows how well-intended projects that failed half way did not  have thoroughly planned blueprints. She tweeted:

Some of these projects have high economic value and ought to have taken foot for the betterment of this country. Other projects that come to mind are the likes of Konza City (read:Konza City, Vision 2030- Is It The End of The Road For These Projects?) and free laptops to class one kids (read: Is the government conspiring to kill the laptop project?).

A project like BebaPay by Google and Equity got a setback because the government did not do thorough planning and thinking when it talked of Outlawing Cash Payment On Public Transport. Key questions that any planner ought to have asked in regards to the cashless transport initiative are: 1. Who are the players, 2. Who would be happy with the initiative and why? 3. Who won’t be happy and why? 4. How do we sort out the reasons they won’t be happy? 5. Who would want to eat from the initiative and how do we deal with them?  etc etc.

Specific attention must be given to projects that are intended to offer “free” services to the end consumer .For such projects, it is important to plan twice as much and think thrice as hard because ultimately the provider of such services must get value for money spent. For example, when Safaricom was thinking for giving (or selling to) Nairobi matatu owners the routers for free Internet access, did they properly think of the value add this Wi-Fi project will give the matatu owners who were expected to part with Shs 2000 every month? If there was a value add to the owners, was this value add demonstrated in terms of clearly calculated additional profits the matatu owners were to expect? If there was no value add in the form of additional profits, how were the matatu owners expected to remain motivated in ensuring continuity of vumaonline?

Lesson: Do not start a project/business without thinking through it holistically and laying down an execution plan that contains contingency measures for apparent risks and knowing your exit strategy.

2. Lack of sustainability approach

In the discussion about the death of vumaonline, it was mentioned that one challenge for vumaonline was the inability of bus drivers and conductors to recharge the Wi-Fi routers. It then seems that Safaricom did not foresee this possibility hence did not have a contingency measure to counteract it.

Assuming that this was foreseen, what was it that was needed to be done in order to ensure that the routers were regularly recharged? As shall be discussed below, the matatu owners did not have sufficient incentives for ensuring the routers were constantly online.

A project in which at least one of the players does not gain economic or otherwise benefits cannot be sustainable. This is so since it is the benefits to be reaped by each player that act as incentives for the player to play his part in ensuring that the project not only survives but also grows to be bigger and better.

There is one important criteria useful for evaluating whether a venture will succeed or not – and that is whether every person required to play a role in the venture has direct economic or otherwise benefits. After identifying all the benefits each player will reap, it is upon the project owner to ensure that every single player understands and appreciates (through practical demonstration e.g. by calculating additional profits to be gained) those benefits and the impacts the benefits will have on them or on their businesses. A sustainable project therefore is that which all players know what they stand to benefit and are motivated enough to play their parts in order to reap those benefits, otherwise it is not a sustainable project.

Lesson: Do not start a long term venture where you are the only one that stands to benefit. Selfishness and greed don’t go hand in hand with sustainable businesses. If consumers won’t run away, then the vendors/distributors will.

3. Lack of industry’s understanding/knowledge

This is another “common sense” requirement that one must have before venturing into any business; do you have a thorough understanding of the sector you want to venture in? Do you know the players, the existing hurdles, constraints, regulations, limitations, opportunities, costs, and potential benefits?

There is one lie that most Kenyans seem to live and this lie seem to have spread to the corporate world: that one can be a jack of all trades and succeed in all of them. Take our institutions of higher learning for example, every University in this country is now offering every single course in existence under the sun; instead of each University specializing on core strengths to offer courses that they can deliver best in. People like Safaricom also think they can succeed by opening up ventures in every sector of the economy whereby instead of supporting startups that have solutions for a particular sector, they open up competing products that they have no understanding of e.g. the long forget mymarket.

But the lack of understanding in the public transport sector is different. When Safaricom thought of engaging the Nairobi’s matatu owners in providing Nairobians free Wi-Fi as they commute from home to work and back, they must have thought that Kenyans would generally prefer to board the matatus with the “Free Wi-Fi Available” branding and shun the others thus the matatus that had opted for vumaonline could have been in a position to make more trips at full capacity hence more profits.

What Safaricom failed to understand is that the nature of public transport in Kenya and particularly in Nairobi is such that commuters are in a hurry and the first matatu to come by takes them home thanks largely to the traffic jams the city experiences daily, the requirement by the SACCOs that the matatus queue to pick up passengers, and the chaotic manner the industry is run by the stakeholders. Traffic jams ensures that commuters will queue up for matatus during peak hours hence an individual commuter is forced to ride on the matatu that the queue dictates he uses, the queuing of mats during off peak dictates that the commuter uses the matatu that is loading passengers and the chaotic nature of the industry ensures the traffic jams never go away. All these factors eliminate the freedom to make a choice of which matatu one should use when commuting – thus whether a matatu has free Wi-Fi or is as old as scrap metal, they both have equal opportunities of transporting passengers.

Also read: Limit Matatus to 4000 to control traffic jam in Nairobi

Safaricom ignored the above factors when calculating the viability of the Shs 7 million investment in the vumaonline business. They seem to have done their calculation like this:

  • Number of matatus in Nairobi are 30,000
  • If 30% of them give us shs 2000 per month
  • We stand to get shs 18 million every month
  • That comes to Shs 216 million every year
  • Hence Shs 64.8 million additional gross profits

Convinced by the salivating figures, they didn’t think thrice or hard but went ahead to pilot the project with some 45 matatus – and a year later, vumaonline is dead. It is important for everyone who intends to venture into a business to thoroughly understand the dynamics of the sector he or she wants to venture into so that all contributions by all stakeholders are taken care of, otherwise it shall be a selfish venture whose sustainability is a nightmare.

Lesson: When the deal is salivating, there is probably a stakeholder whose contribution to the project and potential benefits are not being accounted for.

4. Implementation in the wrong sector

There are multisectoral projects – not the types that cut across many sectors but those that can either be implemented in one sector or the other, or both. For example vumaonline is a project that could be implemented in the public transport sector, the hospitality sector including recreational sector, or in learning institutions sectors among others. As mentioned in the foregoing section, Safaricom must have chosen the public transport industry because of the quick cash (returns) it saw in the industry, but the sector where Safaricom could have done greater good is the hospitality industry.

Still Safaricom could have chosen the public transport sector but instead of going for the matatu industry, they could have gone for the long haul buses that ply Mombasa Nairobi and Kisumu Nairobi routes. These routes have several buses that offer value add services including meals on board, toilets, first class vs economy seats, mobile phone charging among other services but free Internet has been lacking. The prestigious buses in the routes could be more than willing to add free Wi-Fi to their high end buses to further beat the competition.

The other sectors that vumaonline could have performed best at is on middle range restaurants like Highlands, bars, and clubs where people mostly gather to watch the English Premier League matches. The competition in these places are heightened and restaurant/bar owners would see immediate need to attract customers to use their Free Wi-Fi services.

Implementing vumaonline on matatus, other than the fact that competition isn’t available for the sector, also had a very huge risk. When vumaonline was launched, Techweez.com ran an article on it and they received this comment:

But this can increase carjarking since they’ll be aiming at the Laptops,tabs,iPads phones etc. Dont just celebrate yet…. Look at things in all perspectives b4 going ahead to impliment them. Thank you. ~ Kenyan Rugby Queen

 

It is true that commuters on Nairobi matatus have been targeted by thieves occasioned by the growth of smartphone uptake. Personally I have witnessed two incidences where passengers were robbed of their smartphones through the matatu window by thieves pretending to pedestrians. Dennis Mbuvi identified this as a key challenge for vumaonline in the article Matatus to offer free WiFi courtesy of Safaricom:

Other issues likely to arise include rising phone thefts especially targeting matatu commuters. A number of city roads such as Haile Selassie avenue are notorious for phone snatching from criminals pretending to be pedestrians. In addition, criminals have also been targeting matatus for hijacking and pick pocketing. On May 1, thugs armed with knives commandeered a route 34 matatus during the day where they asked commuters to leave their phones and wallets when alighting.

:These issues clearly tell us that although the matatu industry offered a “quick cash” enticement for vumaonline, it was not the suitable sector for implementing the project. Challenges of how to provide direct benefits to matatu owners, offer incentives to bus drivers and conductors to constantly ensure that the routers are online, and provide protection to commuters who would want to use their gadgets in the matatus played important roles in ensuring the death of vumaonline.

Lesson: When a sector looks promising for any particular venture, identify key challenges that may kill the venture and if the risks are too high, identify alternative sectors where the venture can still perform relatively well.

What is your opinion on the topic?
Odipo Riaga
Managing Editor at KachTech Analytics Ltd
Film Director, Tech and Business Blogger, Chess Player, and Photographer. God is Science.
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