Out of 190 economies around the world, Zimbabwe is ranked 155th on the World Bank Ease of doing business index. Couple this with the country having a perennially ailing economy it is easy to over generalize the reasons for most of the local business failures. New businesses have a high failure rate, but it appears that most local technology based firms are doomed from the word go. I am one of the countless young people to have been won over by the tales of Silicon Valley riches. After dabbling in a few apps and repeatedly failing (like many before me) to unlock the fabled riches that are hidden in computer code, I can share with you, from both personal experience and observation, some of the most common reasons local tech startups fail.
Zimbabwean tech start-ups, like their counterparts all over the world, are by their very nature pompous outfits. They are characterized by young, naive founders with oversized ambitions. Unfortunately for a lot of these startups and their founders, they also regard themselves as being exceptions to even the most basic of sound business principles.
After spending several weeks building your latest app or website it is natural for you to view your creation with pride and to assume that the next person will be just as thrilled about it. You tell a few acquaintances about your product and you then wait for it to go ‘viral’. It does not. A lot of prospective technopreneurs find it difficult to wrap their minds around the idea of having to market their wares. They try to build great products that will attract users with nothing but their ‘raw appeal’. Most often than not these fail to live up to their expectations. For these kinds of people this would mean that the product is a failure and it would fade into obscurity while its creator moves onto his next ‘big idea’.
At the opposite end of the spectrum there’s the founder who is proud of his start-up idea and is willing to share it with anyone who will listen. But sooner or later he will discover that some groups are more enamoured with startups than others. Most often than not these are not the customers that you are looking for but you discover that their attention is relatively easier and cheaper to acquire so you spend your time and attention on them instead of your real customers. We all know these people: fellow founders, bloggers, newspapers and so on. The little bit of publicity and attention may be good for your company and your ego but it comes at the cost of promoting you over what you are trying to sell and is most often directed at the wrong crowd.
Inability to sell
Some start-ups have loftier goals than others. On one hand you can have an app that teaches you how to cook sadza and on the other a complicated software system that is supposed to help in the running of a nation wide, multi-branch micro-financial institution. Now imagine that both were built by young people barely out of their teens. The purveyor of recipes will have an easier time getting his creation to its intended audience than his much more ambitious counterpart. No matter how useful or innovative his product, the latter young man would have a much harder time navigating the inevitable institutional red tape that surrounds his intended customers. It will only take a few overworked secretaries and receptionists (the so called gate keepers) to chip each and every last bit of enthusiasm out of him. Most startups which attempt to tackle institutional customers discover they are unable to figure out how to sell to them. Add onto this the often elusive decision makers and the long sales cycle, most local B2B(business-to-business) startups whose founders have insufficient sales experience are stillborn.
Lack of market research
Zimbabwe has a population of only around 13 million with more than 65% of it in rural areas. Furthermore only 55% of the population is between the ages of 15 and 65. Using a simple calculation (45% x 55% x 13 million) it can be seen that the average B2C (Business to consumer) tech start-up only has about 3 million possible customers in one of the most unfriendly economies. Depending on your niche this figure can only get even smaller. Add to this the minuscule marketing budget that is in most start-ups’ coffers, the number of customers you can reach rapidly dwindles to a few thousand or less. Some startups make the mistake of not conducting even a cursory market survey in order to estimate the actual sizes of their potential markets. Failing to conduct market research in the early days of your start-up is a bad idea because the initial excitement will cause your estimated figures to be as unrealistic as most of your assumptions will eventually prove to be. In this way a lot of money, time and effort is wasted on inherently flawed ideas.
What are the other reasons why most Zimbabwean tech startups fail? Share in the comments below.
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Wow powerful points marketing is everything in the tech sector
Thanks for the feedback.
Love it! I’d say access to working capital. Cashflows are a devil that will kill the most promising of startups. As long as you don’t have the runway of running after clients without worrying about how you’ll actually pay for petrol to get to those clients let alone operating whilst waiting for payment, you won’t get very far.
Thank you Gugu. cash flow is definitely a problem for any business in Zimbabwe right now.