Why Nigerian StartUps struggle

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yomi eveningIn my earlier article, An economy grows when everyone earns an income, I laid a basic foundation for some of the things that I had burning in my mind for years. I had vocalised some of these things before. Not many people listened.

However, the repercussions have begun to hit us and now stare us in the face. Hopefully, more people will pay attention this time.

I will not blow my trumpet here, but suffice it to say that I have been in the tech scene since 2002. Some of you who are reading this were in Secondary school then. Bear that in mind.

For a while, I did not see the problem either and I was a part of it. However, it soon became clear that the freeway was leading nowhere. Nowhere good.

Years ago, a craving for freebies hit the young people of our nation, Nigeria. Whether it was due to years of suffering or feelings of being defrauded or simply the base human selfish tendency, we began to want things for free.

We wanted free mobile internet, free PC software, free mobile apps, free calls, free websites – free everything, if possible. I warned about that craze. I preached. But no-one listened. It was fashionable to get freebies, and we dove into it.

Bang!
What we did not know was that someday, it was going to backfire and blow up in our faces.

Consider the following:

  • How many software developers in Nigeria today are making significant sales?
  • How many mobile app developers are making a living off their apps?
  • Have you noticed the aversion for paid seminars and conferences – except when employers sponsor their staff for such? Free events are in, especially in the tech sector.

Nodding your head? Yes; all these are products of our years of developing and/or fanning an appetite for free.

Somehow, we must execute a U-turn and begin to develop a culture of paying for services again, even if its a small fee. Then, we must progress back to the point where we are willing to pay a premium fee for better quality of service.

The state of our startUps and SMEs
Shoot me all you want, but the consequences of our love for free are staring us in the face. StartUps and SMEs that can’t generate sustainable income litter the landscape. Why? People are not willing to pay for services. They want free.

But don’t forget that it is only when each individual is paid for services rendered that our economy grows. For now, the Nigerian economy is on a backward roll.

Young people are flocking out of our higher institutions with great zeal and great ideas. But who will they sell to? A population that is addicted to free?

I will pursue this crusade passionately, for I daresay that the future of this nation rests on this paradigm change. We cannot thrive on free!

Taking a Stand
I encourage you to take a stand. Put a price on your skills, services and products. Make the price affordable, if you will. But do put a price. Say no to “free” services (at least until you can afford to give out the occasional freebie).

Take a stand. Let that stand say something like the following:

  1. I will not speak at your seminar for free
  2. I am not available to anchor your event for free
  3. My expertise is not available for free
  4. My time is not available for free

Yes; we can work out convenient fees and all, but if you are not paying, don’t call me.

I have nothing against free services, but if you are giving out free services, you must have a strong, sustainable alternative source of income. If that alternative source does not exist, a freebie/freeware model is an exercise in futility.

Like I said to Jesse Oguntimehin today at “Mobility Towers”, simply getting more people to use your service and/or product doesn’t mean much if they use it for free. More people paying zero for your services equals zero returns.

When we all take that stand, then we ALL begin to earn, and then this struggling economy can begin to truly grow.

8 comments

  1. Hi nice post,

    A lot of nigerian developers have wondered why we have our web development fees displayed publicly on our website. I think you post has helped answer that question better than I could ever.

    Basically it depends on how much you value your expertise, it’s a simple deduction: if you charge little you must have little to offer…

    Another problem may be that these startups don’t know how to charge, i.e. they don’t have the business intelligence, in that case the starting point should always be to charge what is obtainable in the industry. However as your expertise grows you’ll want to differentiate yourself by raising your fees.

  2. Unwillingness to pay (commensurate fee) for services is something I have been encountering for long. It is basically human nature. Why is it that most Employers will pay the minimum they can? Why is it that most Employees will try to grab as much as they can get away with? In an environment of economic depression and scarcity, the basal nature of humans (and animals) get amplified. Survival. This is instinctual. True; there are animals that fight savagely for food even when there is plenty to gobble, but most will not if they are assured of plentiful food. The same thing applies to humans.

    It is not only in the ‘Technology Arena” this desire for freebies is prevalent. It is everywhere.

    I think if one istruly talented/skilled in an area of ‘great / essential need’, he will always earn good income. This is why a ‘Novak Djokovic’ or Maria Sharapova – will earn so much in Lawn Tennis (Entertainment is highly sought after). This is why a ‘P-Square’ could earn more in a year what I have earned in my entirely lifetime. The trick is -how essential a field you operate in, and how unique / talented you are in that field. If that field is not essential, or you are not unique / talented enough in that field, the solution is – hone your skills better/ oroperate in other fields that are better sought after. Say the ‘Education’ / “Health’ sector. Which Doctor treats patients for free? You expect to (and you do) pay when you go to a Private Hospital! Would a ‘Mercy Johnson’ or ‘Mike Ezuruonye feature in a NollyWood film for free? An unknown Actor could be cajoled to do that and get paid later, but not a ‘Star’.

    The way things are in the country, we need to have multiple streams of income. Google is into solar_electricity generation. They are into self_navigating automobiles. They are foraying into hardware. These – despite being (originally) a software company. ‘Search’ is free, but by Jove, they have found many ways to monetize it and then invest the income in. other areas.

    Conclusively, in an environment of scarcity, people will try to survive. In a country where hard work (generally) does not (/is not seen to) pay, people will cut corners. And one of the ways they do this is an entrenchment of the thinking, ‘why pay for it if I do not have to?’ This needs to change, bit out will be a long and painful process. I think a spiritual rebirth mai be necessary.

    God help us all!

  3. Well said. It’s about time we inculcate the habit to pay for services rendered.

    However I see Nigeria as in a peculiar dilemma. Some of us would’ve loved to purchase merchandize, services from overseas just to find out that Nigeria is not supported as a Country. Just recently i tried buying some DvDs from Amazon and was told that they do not ship to Nigeria. The other time I tried to buy a Medical Text from the UK and I was told that I have to apply by post! That they don’t accept Nigerian credit cards. Luckily for me I was abe to order the same Text from Canada! I felt quite very bad that despite our money many of us are cut out from the International Scene in many instances!!

    Where am I driving at? Yes, I am looking at the issue of piracy and downloading copyrighted materials and Intellectual properties. Many people have no choice than go into that habit of torrenting music and videos online. You say it’s a crime, however there isnt any other means of getting those materials because YOU a NOT supported as country. I believe that It is one reasons why many Nigerians become used to “FREE” stuff Online and this transcribes to other facets in life and ultimately affects the Ecomomy.

    My last travail was with Paypal! I opened up my paypal account with a UK credit card and used it quite alright while I was briefly in the UK. Immediately the card expired and I put in a prepaid UK credit card in it’s place I was then told to verify my account using a LandLine in the UK. Of course I couldn’t do that, so I have some of my funds trapped in that Paypal account. Then, why on Earth would Amazon refuse to support Nigeria? It beats me! Even in the so called Nigerian Apple iTunes store, you can’t even buy Music or Movies or Paid Books. After complaining multiple times to Apple, I was told to specifically requests for the items that I need from ITunes. I did but I’m yet to have a decent & favourable reply.

    Nigerians need to be able to compete favourably in the International field. The Government needs to champion this cause. And also we as individuals need to learn to pay for contents! Especially, if it’s indigrnous & Nigerian! I don’t see why anyone shouldnt download foreign movies or music online since there isn’t any sane way of getting it in Nigeria! Hod Help us!!

  4. This thing is not peculiar to Nigeria even though it certainly is more prevalent here. For instance, Linux OS is developed to give not just free software but also freedom to computer owners for both their operating system and application softwares. Sites like pyratebay.com and all other p2p sites are there not for Nigeria in particular but for the rest of the world and are even hosted on European and American countries. The difference between Nigeria and these countries is that they are already developed and have basic infrastructures that promote development and thus, the percentage of the people involved in these act is very small when compared to the rest of the population.

    In the last post, I gave an instance of how different class of people react to the introduction of ATM in the country. Whereas the working class saw it as a big relief to have ATM machines most every prominent place around the city, people with little income saw it as a waste of money and would rather stay on queue for hours to withdraw say N5,000 instead of paying a monthly of charge of N100 for the ATM service and most of them waited until they were coerced with stringent policies by the banks in withdrawing cash below specific amount from the banking halls before applying for their ATM cards.

    Though there are still people with money that indulge in the hunt for freebies like free browsing and free software and even free services, majority of people with money will not bother themselves with hunting for free stuff on the net and would be ready to pay for services and some people with money will always doubt the quality of anything (software and services) with that a free tag. The major problem in this country is high unemployment rate and lack of basic infrastructure that could enable creation of jobs and that lies with the ruling class.

  5. This thing is not peculiar to Nigeria even though it certainly is more prevalent here. For instance, Linux OS is developed to give not just free software but also freedom to computer owners for both their operating system and application softwares. Sites like pyratebay.com and all other p2p sites are there not for Nigeria in particular but for the rest of the world and are even hosted on European and American countries. The difference between Nigeria and these countries is that they are already developed and have basic infrastructures that promote development and thus, the percentage of the people involved in these act is very small when compared to the rest of the population.

    In the last post, I gave an instance of how different class of people react to the introduction of ATM in the country. Whereas the working class saw it as a big relief to have ATM machines most every prominent place around the city, people with little income saw it as a waste of money and would rather stay on queue for hours to withdraw say N5,000 instead of paying a monthly of charge of N100 for the ATM service and most of them waited until they were coerced with stringent policies by the banks in withdrawing cash below specific amount from the banking halls before applying for their ATM cards.

    Though there are still people with money that indulge in the hunt for freebies like free browsing and free software and even free services, majority of people with money will not bother themselves with hunting for free stuff on the net and would be ready to pay for services and some people with money will always doubt the quality of anything (software and services) with that a free tag. The major problem in this country is high unemployment rate and lack of basic infrastructure that could enable creation of jobs and that lies with the ruling class.

  6. i agree with you guys…there are a lot of things that needs to be put in place in nigeria,for how long do we have to wait for paypal,amazon and other e-commerce websites to accept we nigerians, yet they are losing lot of customers from nigeria who really use these services
    “This is why a ‘Novak Djokovic’ or Maria Sharapova – will earn so much in Lawn Tennis (Entertainment is highly sought after). This is why a ‘P-Square’ could earn more in a year what I have earned in my entirely lifetime” the government needs to support the internet and all e-commerce aspects of the nations economy financially and also fight for our freedom to use these international services.I think LAMIDO SANUSI is doing a good job….

  7. A very timely article which should not only speak to consumer of services/products, but also to the providers. The culture of “awoof” has eaten deep into us and will take persistent and sustained crusade to eradicate. We have been told above by the last contributors how this attitude came to be as far as it concerns online items but this doesn’t explain why even the village man or woman wants to get your services free. Sometimes, we services providers encourage this attitude by rendering free services to people who do not appreciate our values and who feel it is their right. Example is when a friend/relative comes for consultation and treatment. He wants to be treated as a special case but feels treating him for free will not hurt your practice. When you give your bills, which in this case is just a token fee, he picks offense. But this same friend/relative is ready to spend fortunes for a less effective or non effective treatment at the hands of a less qualified person or a quark who is not a friend or who is not related to him. EyeBeeKay said: ” You expect to (and you do) pay when you go to a Private Hospital!” How incorrect. Same mentality applies here.

    The truth is that an average Nigerian does not care whether you progress or not so long as he gets what he wants free from you free. This attitude must change.

    If friends and relatives pay for your time and services, you will be in a position to give better services since you will be empowered and encouraged.

    As far as Internet access and online “awoof” tendency is concerned, the various sites and providers have a share of the blame. Until recently, it was almost impossible to buy anything online from Nigeria because we were either not supported due to logistics or services not extended to us for fear of fraud. This attitude created a situation whereby nigerians had no choice but to look actively for free versions of almost any paid app or service. And in some case, looked for ways of obtaining paid apps/services for free. Thankfully, things are better now and we are enjoying the benefits derived from paying for apps and services.

    We provider have it as a point of duty to educate our people the more and this article by YOMI is very timely.

  8. this why yomi is a bitter pill necessary to swallow.The techbiz scene should know better,if our economy is to grow with every body on board we must begin to sensitize everyone around us.when we all pay the sector pays back, even more than the oil sector.

    as per amazon and paypal insults,I believe we can reverse it.Yomi has done such before.I sugest you coopt your friend at wapreview and other western originating techies,let them help us call these sites to order.

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