Ethiopian Tech Ecosystem Analysis I

This article is part I of a longer series: An analysis on the Ethiopian Tech Ecosystem

I decided to work on this series because I receive at least two emails a week from people looking for my opinion about my analysis on the challenges and problems of the Ethiopian tech ecosystem. A lot of organizations are working on mapping the ecosystem, understanding the missing components and proposing solutions. Most of the time, the challenges and the solutions have been the same.

Recently the Ethiopian ecosystem has started to get a lot of attention. Thus I am creating a series devoted to exploring the ecosystem. Although I am not sure how long this series will be, this is part one of what I hope will be a thought-provoking journey. We will be going through the present challenges, current status, and solutions.

As a startup founder, I am continuously pushing the boundaries of what I believe is possible. This experience has taught me that it's important to be innovative and creative to compete with other companies in the same industry. With this series, I will reflect on my experience of leading a startup, educating, and working with young founders all over Ethiopia. This is my opinion.

Let's get to it!

Most Founders are Technical

I started as a coder; now, I mainly handle business operations. Although my technical knowledge has had its advantages in leading my team, it would have been difficult to run operations smoothly without my business insight. But to get to the level I am, there was a long process. For starters, I've always loved having conversations with founders I look up to and reading books; this helped me position myself for success by learning from the best of the best! Working with different experts in the field was also very rewarding because they could guide me through their companys' day-to-day.

However, most founders I have met focus on the technical and neglect the business aspect of their startup. They are unwilling to bring co-founders with a business, marketing, or finance background on board. Most founders don't understand the value of what these individuals can add to their business. The fact that coders and the act of coding itself are considered "cooler" than the business or marketing admin also plays a factor in this misunderstanding.

I am not saying being a technical founder is bad; most of the time, it's advantageous, but the trick is to find either someone who can run a business or you need to learn how.

It's understandable why founders want to take care of every aspect of early-stage startups with limited resources, but this does not allow them enough downtime from doing certain tasks. It is impossible to wear all the hats the business needs without overworking themselves.

You would be surprised how much more of an impact you can have on a startup when you are not multitasking and working on everything. It is crucial to create responsibility for your co-founders, which will free up some time for other duties which may arise during your day-to-day operations.

Recommendations

Founders with technical skills should consider having a co-founder with business or marketing skills in order to utilize their expertise and create a viable product. The same applies vice versa.
Founders should try to expand their knowledge towards the particular expertise their business needs.
Education institutes should include entrepreneurship, business, marketing, and finance courses for STEM students.
Join incubation/acceleration programs that provide the needed expertise and mentoring.
If you have resources available, founders should hire external experts with relevant hands-on experience in the business.

Lack of Exposure

Even though the startup scene is growing in Ethiopia, we still have a long way to go. Something I have noticed is that we don't see a lot of success stories. But there are many small startups providing services here and there—usually, the same services with minimal variation. The lack of success stories and exposure have limited founders to think within a box.

From our Solve IT program, I have seen many startups building Enterprise Resource Planning (ERP) systems for schools, hospitals, or universities. These ERP systems are viral because there is a market for them, and founders feel like other innovations have limited market potential. So they stay with these solutions instead of exposing themselves to new problems.

Founders will continue to work on these systems year after year, and it will be difficult for them to think beyond until they see that there is success and impact in different innovations.

This pattern continues to appear in the 15 cities we have implemented Solve IT. The lack of exposure to success stories in Ethiopia and the ability of startups to scale up has limited the type of startups coming to the ecosystem.

Moreover, there are many startups and companies that duplicate the business models with minor changes and enter into a price war in a highly saturated market. Founders and investors prefer copying an already proven business idea rather than taking the risk of creating a new market for their startup.

Recommendations

Founders should harness the power of the internet and expose themselves to what's happening outside of Ethiopia to get the mindset and work to find innovative solutions unique to the country.
Demo days - startup showcase events - can show there is a presence of these success stories and are essential to understand the local perspective.
Parents and schools should expose their children to creative and critical thinking from an early age. But it doesn't end there. Children should continuously be exposed to training, conferences, and success stories to allow the students to be ambitious.
The government should create a platform where entrepreneurs and startups are exposed, encouraged, and supported.
Private companies and organizations should also be open to accepting and training interns during apprenticeship periods and the early years of campus, as innovation happens not only in startups but also in organizations.
Even if you want to provide the same service, what is your unique value proposition?
Investors should re-evaluate what idea they're allocating their investments on

Hustle Hustle Hustle

The 'hustler' mentality, the sense of being uncomfortable and wanting to change, is a massive driver to most successful startups and most of my favorite rappers :). I don't see that in most of the founders in Ethiopia. There is too much comfort.

There are many people with better skills, exposure, and connection than you. Yet, if you want it badly, put yourself out there, ask questions, and continue your persistence; you are already different from others.

Change happens in uncomfortable places. Be uncomfortable. Always work on setting the bar higher! Can you sense that I have read and watched a lot of self-help books and videos ;)

Recommendations

If you are a founder and you believe in your startup, focus on that. Make it happen, don't hold back from launching the next unicorn because of the limitations around you, be a change-maker because that's what entrepreneurs are.
Have a definite plan and break it down into weeks, if possible, into days. Having a Key performance indicator (KPI) and measuring your progress can help you make critical adjustments in your execution to achieve your strategic goals.
Parents and schools need to let children explore. Allow them to find answers on their own.

Talent

I know, I know, a large young population. X thousand of youth graduating every year in x fields etcetera. Sadly the talent in Ethiopia lacks quality.

Most companies, including mine, cannot scale to their capacity because we don't have enough talented people coming out of universities.

If this is shocking to you, let me put things into perspective;

We receive more than 500 applications every year; out of this 500, we accept 100 to join our internship program in which 2 or 3 people remain at the end. I agree that the talent we need is very high-end since we focus on Artificial Intelligence. However, finding developers with basic skills like web development, good communication skills, and reliability is very hard to find.

Don't get me wrong, there are good people with fantastic talent, but we all know what happens to them. They get a fat paycheck abroad. Sadly there is not enough money circulating in the ecosystem for them to get paid. And universities/colleges are not producing quality talent in time to replace them.

Although it looks like I am saying the issue is only with the employed, it isn't. Leadership also lacks the same type of talent. It's a problem that needs to be addressed on both sides.

Recommendations

Government institutions should do more to ensure the quality of talent coming out of universities is top tier.
Training and motivating employees should be a priority of a company to build a good working environment.
Technical skills are nothing without 21st-century skills. At iCog Anyone Can Code, we believe in building a well-rounded individual. That means not only focusing on technical skills but also teaching people how to communicate and collaborate better with others while being creative and adaptable.

I believe that there will be a day where Ethiopian companies will deliver services for Ethiopia and the rest of the world. The startup ecosystem is still maturing, but with more collaboration between the private and public sectors, it has great potential to evolve into an innovative hub that provides jobs for Ethiopian citizens while surpassing global standards of excellence. I hope we all do better, not just because of what it means for my startup or me but also because of what it could mean for the next generation.

If you want to read an extensive analysis of the Ethiopian Digital Economy, this report by Cephus Capital is excellent!

We will be sharing parts of this series every other week. Till then, please let us know your thoughts on this? Have any ideas or comments? Share your them on social media and tag us or type them in the comments section below. We would love to create a dialog on this!

This article was initially compiled by Etsesabek Taye, Feteha Nuredin, and Nardos Mulugeta on our Solve IT Acceleration Pitching Session, which then was reviewed by Semegn Tadesse and edited by Dawit Dejene Woldemariam.

Written by: Bethlehem Dessie.