7 ms·

Why and how to start a startup serving emerging markets

74 points by luu 5y ago

ccvannorman 5y ago
FTA: "Wave’s mission is to improve the world, not to make money" "Our investors are venture capitalists trying to make a high return" "saving our users over $100 million so far [in Senegal alone]." Am I missing something? What's to stop your VCs from leaning on you to suddenly hike your rates up in favor of more profits once you are a de facto monopoly on payment services? If the answer isn't "They don't and will never hold voting shares and board seats", then why did they invest in your company at all ...?
- ignoramous 5y ago
  I'm no capitalist, but if you could improve the world while delivering exponential returns on capital, that's a win-win? I don't think something's mutually exclusive just because it is rare.
- barry-cotter 5y ago
  > What's to stop your VCs from leaning on you to suddenly hike your rates up in favor of more profits once you are a de facto monopoly on payment services? They don’t hold a majority of votes is one possible answer. Another is that they’re much more invested in growth than profitability. Why try to make as much money as you can in Senegal when the rest of Africa is right there? Also “Your margin is my opportunity.” If you’re the first company to provide a good service and you’re cheap and good what exactly are wannabe competitors going to do to oust you? > If the answer isn't "They don't and will never hold voting shares and board seats", then why did they invest in your company at all ...? To make lots of money. If founding team is really important and VC returns are power law distributed then investing in a much better team that is a lot less greedy can be a great bet.
  - bilbo0s 5y ago
    Why try to make as much money as you can in Senegal when the rest of Africa is right there? Because the rest of Africa is more likely to settle on mpesa. Not trying to be snarky, genuinely looking for a reason for a Kenyan or Ghanaian to switch to Wave for example? Off the top of my head, I can't think of one? This is particularly true for anyone in the EAC. In short, maybe your investors will begin to see they have little chance of winning over all of Africa. Fundamentally, you're really no different than mpesa in terms of structure. (I can't determine much of a difference in terms of fundamental functionality either?) I'd genuinely like to hear how you guys view things like mpesa? Along with a good answer to the neo colonial criticism? If you have good stories for those two issues, I think you have a chance. (Where 'good' means 'resonates with young Africans who are much more likely to be Pan Africanist these days'.)
njacobs5074 5y ago
I think part of it is that while this may be a win for your customers and maybe for the founders, the payoff for the startup’s employees may not be that lucrative, based purely on the wages that are typically paid in-country as compared with the US, for example.
- m0llusk 5y ago
  From what the article describes the benefits of working for such a company are transparently honest and fair plus that work gives experience with robust management practices and international business culture. In these countries a good job with fair and regular pay that prepares workers for expanding career possibilities is a really big deal. And there is evidence of this opportunity focused mindset in the US. Last I checked the highest earning demographic segment in the US was Nigerian immigrants. Being ready to work hard and conscious of the risk of failure makes a huge difference in how pay, work, and business operations are evaluated.
  - unmole 5y ago
    > Last I checked the highest earning demographic segment in the US was Nigerian immigrants. That has more to do with the fact that only the most highly skilled and educated Nigerians manage to emigrate to the US. You see something similar with Indian immigrants, also a very high earning demographic.
    - drekipus 5y ago
      Makes me think of what would be possible if we stopped reverse-brain-drained emerging countries like this..
jimkleiber 5y ago
Quick note: I think the post is from November 2019 and that the title should probably be updated to reflect that.
rodolphoarruda 5y ago
The post does not mention Latin America, only Africa. Using "emerging markets" is somewhat imprecise then. I believe the title could be updated to reflect that, maybe to "serving the African region".
- jcmontx 5y ago
  Latin America is often overlooked in the tech world, but there is a growing and healthy tech ecosystem in the region. Argentina has companies like MercadoLibre, Auth0 and Globant. Colombia has Rappi. Uruguay has dLocal. Brazil a ginormous amount of fintechs. Among many others. The cool thing is that these companies are usually very region-focused and if they hire/open offices outside their HQ, it's in other LatAm country. I think the region is on the right track to become a player in the tech world.
  - Bayart 5y ago
    I see LatAm as more reminiscent of the EU in terms of its capital structure than Africa.
camillomiller 5y ago
Downvote me to hell, but all I could read, despite the good intention, is about taking advantage of emerging markets because of the opportunities they offer to Western entrepreneurs. How is this not digital colonialism? What about fostering local entrepreneurs to develop a local healthy startup community? >> more altruists with experience working in the developed world should try this approach. This post should have been called "the Western man's digital burden"
- recuter 5y ago
  OK, move to Africa and foster local entrepreneurs and show us all how to do it better. I suggest Liberia as a starting point, godspeed. P.S. - Bonus points if you befriend some locals, show them this post and the service discussed, explain your position about how it is wrong and regale them with your politics. I'd love to see a video of that.
  - user_named 5y ago
    On point.
  - longtimelistnr 5y ago
    ? I don’t know what you’re trying to say if only furthering his point. Not everyone wants to be a cryptobro or a VC pet Emerging markets are emerging because they’re doing something right no need to offer them something “better”
    - recuter 5y ago
      No problem, I'll spell it out for you: Calling a person who is dedicating his life and actually spending time in Africa a "digital colonist who is doing it wrong" based on some vague gut feeling is somewhat unhinged. Not providing even a whiff of a suggestion as to "the right way" is not constructive. And doing all this whilst likely contributing absolutely diddlqysquat of value yourself is, to use your parlance, problematic. Topping it off with pointing out his alleged western origins is flat out bigoted. As for yourself, Star Trek-esque non interference is the morally superior path? You've tried nothing and you're all out of ideas? Certainly an interesting approach. Perhaps more of a peanut gallery ethos than a hacker one. You could explain how on earth cryptobros factor into all this or offer any shred of specific concerns and criticisms you have with regards to the OP but that would involve actually reading the article and making an effort and that's not in keeping with your moral philosophy of doing nothing.
throwoutway 5y ago
This article mentions providing $5 of value when the daily wage is $5. Question for an economist: what effect does this have on an emerging economy? If scaled up to half of the population, does that cause inflation?
- claudiulodro 5y ago
  It's complicated. For example, productivity in America has soared the last 50 years, so people are providing more value than ever, but American salaries have not increased at the same pace.
  - gruez 5y ago
    >but American salaries have not increased at the same pace. AFAIK most of the difference is from measuring total comp vs. wages.

74 points by luu 5y ago

FTA: "Wave’s mission is to improve the world, not to make money" "Our investors are venture capitalists trying to make a high return" "saving our users over $100 million so far [in Senegal alone]." Am I missing something? What's to stop your VCs from leaning on you to suddenly hike your rates up in favor of more profits once you are a de facto monopoly on payment services? If the answer isn't "They don't and will never hold voting shares and board seats", then why did they invest in your company at all ...?

ignoramous 5y ago
I'm no capitalist, but if you could improve the world while delivering exponential returns on capital, that's a win-win? I don't think something's mutually exclusive just because it is rare.
barry-cotter 5y ago
> What's to stop your VCs from leaning on you to suddenly hike your rates up in favor of more profits once you are a de facto monopoly on payment services? They don’t hold a majority of votes is one possible answer. Another is that they’re much more invested in growth than profitability. Why try to make as much money as you can in Senegal when the rest of Africa is right there? Also “Your margin is my opportunity.” If you’re the first company to provide a good service and you’re cheap and good what exactly are wannabe competitors going to do to oust you? > If the answer isn't "They don't and will never hold voting shares and board seats", then why did they invest in your company at all ...? To make lots of money. If founding team is really important and VC returns are power law distributed then investing in a much better team that is a lot less greedy can be a great bet.
- bilbo0s 5y ago
  Why try to make as much money as you can in Senegal when the rest of Africa is right there? Because the rest of Africa is more likely to settle on mpesa. Not trying to be snarky, genuinely looking for a reason for a Kenyan or Ghanaian to switch to Wave for example? Off the top of my head, I can't think of one? This is particularly true for anyone in the EAC. In short, maybe your investors will begin to see they have little chance of winning over all of Africa. Fundamentally, you're really no different than mpesa in terms of structure. (I can't determine much of a difference in terms of fundamental functionality either?) I'd genuinely like to hear how you guys view things like mpesa? Along with a good answer to the neo colonial criticism? If you have good stories for those two issues, I think you have a chance. (Where 'good' means 'resonates with young Africans who are much more likely to be Pan Africanist these days'.)

njacobs5074 5y ago

I think part of it is that while this may be a win for your customers and maybe for the founders, the payoff for the startup’s employees may not be that lucrative, based purely on the wages that are typically paid in-country as compared with the US, for example.

m0llusk 5y ago
From what the article describes the benefits of working for such a company are transparently honest and fair plus that work gives experience with robust management practices and international business culture. In these countries a good job with fair and regular pay that prepares workers for expanding career possibilities is a really big deal. And there is evidence of this opportunity focused mindset in the US. Last I checked the highest earning demographic segment in the US was Nigerian immigrants. Being ready to work hard and conscious of the risk of failure makes a huge difference in how pay, work, and business operations are evaluated.
- unmole 5y ago
  > Last I checked the highest earning demographic segment in the US was Nigerian immigrants. That has more to do with the fact that only the most highly skilled and educated Nigerians manage to emigrate to the US. You see something similar with Indian immigrants, also a very high earning demographic.
  - drekipus 5y ago
    Makes me think of what would be possible if we stopped reverse-brain-drained emerging countries like this..

jimkleiber 5y ago

Quick note: I think the post is from November 2019 and that the title should probably be updated to reflect that.

rodolphoarruda 5y ago

The post does not mention Latin America, only Africa. Using "emerging markets" is somewhat imprecise then. I believe the title could be updated to reflect that, maybe to "serving the African region".

jcmontx 5y ago
Latin America is often overlooked in the tech world, but there is a growing and healthy tech ecosystem in the region. Argentina has companies like MercadoLibre, Auth0 and Globant. Colombia has Rappi. Uruguay has dLocal. Brazil a ginormous amount of fintechs. Among many others. The cool thing is that these companies are usually very region-focused and if they hire/open offices outside their HQ, it's in other LatAm country. I think the region is on the right track to become a player in the tech world.
- Bayart 5y ago
  I see LatAm as more reminiscent of the EU in terms of its capital structure than Africa.

camillomiller 5y ago

Downvote me to hell, but all I could read, despite the good intention, is about taking advantage of emerging markets because of the opportunities they offer to Western entrepreneurs. How is this not digital colonialism? What about fostering local entrepreneurs to develop a local healthy startup community? >> more altruists with experience working in the developed world should try this approach. This post should have been called "the Western man's digital burden"

recuter 5y ago
OK, move to Africa and foster local entrepreneurs and show us all how to do it better. I suggest Liberia as a starting point, godspeed. P.S. - Bonus points if you befriend some locals, show them this post and the service discussed, explain your position about how it is wrong and regale them with your politics. I'd love to see a video of that.
- user_named 5y ago
  On point.
- longtimelistnr 5y ago
  ? I don’t know what you’re trying to say if only furthering his point. Not everyone wants to be a cryptobro or a VC pet Emerging markets are emerging because they’re doing something right no need to offer them something “better”
  - recuter 5y ago
    No problem, I'll spell it out for you: Calling a person who is dedicating his life and actually spending time in Africa a "digital colonist who is doing it wrong" based on some vague gut feeling is somewhat unhinged. Not providing even a whiff of a suggestion as to "the right way" is not constructive. And doing all this whilst likely contributing absolutely diddlqysquat of value yourself is, to use your parlance, problematic. Topping it off with pointing out his alleged western origins is flat out bigoted. As for yourself, Star Trek-esque non interference is the morally superior path? You've tried nothing and you're all out of ideas? Certainly an interesting approach. Perhaps more of a peanut gallery ethos than a hacker one. You could explain how on earth cryptobros factor into all this or offer any shred of specific concerns and criticisms you have with regards to the OP but that would involve actually reading the article and making an effort and that's not in keeping with your moral philosophy of doing nothing.

throwoutway 5y ago

This article mentions providing $5 of value when the daily wage is $5. Question for an economist: what effect does this have on an emerging economy? If scaled up to half of the population, does that cause inflation?

claudiulodro 5y ago
It's complicated. For example, productivity in America has soared the last 50 years, so people are providing more value than ever, but American salaries have not increased at the same pace.
- gruez 5y ago
  >but American salaries have not increased at the same pace. AFAIK most of the difference is from measuring total comp vs. wages.