Jeremy Kirshbaum examines digital innovations in Ghana, Nigeria, and Kenya that Western companies overlook. MTN uses prepaid airtime as micro-insurance in Ghana. A Kenyan SMS service gives farmers real-time market prices. These frontier markets are generating business models faster than Silicon Valley.
Chapters
One more. This isn't a full future force. It's kind of a mini one. It's one that I'm building out right now. But as I said, I've worked a lot of the last few years in Ghana, and it's caused me to look at what I are usually called frontier markets. And this is a really bad term—not bad terms, just a very inaccurate term—because it's like frontier to who? Like they're not really new; they've been there the whole time. I think my friend has the best. Name for them, but you can't really use it in presentations, like Mendeba markets, markets recently discovered by Americans. And so these are different from the BRICS, because the BRICS, like, are often called, like, emerging economies, but it's not really accurate anymore. The biggest U.S.-listed IPO in history recently happened, Alibaba, a Chinese company. Budweiser is now owned by the largest beer company in the world, AB InBev, which is run by Brazilians. So to say that these countries are emerging is a little bit passé. And so— but there is this class of company— countries beyond the BRICS that have massive populations, high volatility, and high growth. So this is Indonesia, the 3rd most populous country on the planet, very high growth. Bangladesh, 7th most populous country on Earth, very high growth. Nigeria, 2/3 of the population of the United States, 10% growth year on year. Pumping out billionaires and $100 million startups every year now in Lagos. So we're going to see a lot of disruption here in Palo Alto where a lot of innovation is happening from places that we don't expect. And it's not just a matter of like, oh wow, these places are catching up to us. They're actually innovating in completely different ways than we are. And so me, I suspect— I don't have enough evidence to really make this statement yet, But I suspect that Palo Alto might be the declining curve. And so we need to start building out our connections with very diverse markets, even beyond what we consider to be diverse markets right now, if we're going to be able to make the jump. So this is an example from Ghana. I'll— could I mute it while it plays in the background? You can mute it. Can you mute the sound so I can just talk over it? Thanks. This is a product by MTN, the largest tele— one of the largest telecom companies in Africa. It's owned by South— it's based in South Africa. And they are partnering with an insurance company in order to give mobile insurance through SMS. So this is completely unlike anything we would see in the United States. Of course, we have life insurance here, but with this you have an SMS phone. It has a SIM card in it. You load money onto your SIM card in the form of mobile airtime. So you buy a scratch card, it has like $10 worth of airtime. With that same $10, you can either make a call, transfer it to your friend, which— whether or not they have MTN, they can withdraw it from an office, and you can now sign up for insurance. When you sign up for insurance, all you do is text a code, it deducts an amount from your airtime, and then you are covered up to a certain amount for that month. If you miss a month's payment, you're just not covered for that month. So we said this for a group of State Farm managers and they were sitting there just like, like, what, like how? You know, and so Ghana actually isn't a lower regulation place than California or the United States necessarily, it's just they're different. And according to our regulations, you can never have a telecom company that then becomes a bank and then is a money transfer service and then an insurance company all in the same phone with no partners. You know, like if you look at the Apple Pay ecosystem, they had to get the credit card companies and the regulators and they had to get the banks and they had to like create this massive ecosystem just to do the same thing that you can do unilaterally here. So this is an example of how radically different innovative business models can develop and mature in places that we might not expect. This is an example from East Africa, which I've never been to, but know a little bit about. This is from Kenya. This is a— again, all on SMS. This is for farmers to increase the efficiency of their market pricing. So there's people at the market— farmers bring their goods to market. They're often cheated by middlemen who, on their way to market, because they might be too far from the market to actually know what the pricing is, the people at the market enter the pricing. The people— the farmers also enter their desired prices on the phone. That data is aggregated by— partly automatedly and partly by a team. That data is then used for 2 things. One, through a text, the farmers can receive the price of the goods at the market very easily. And then that data is then— the company gets revenue, one, by selling the data for people who are interested in agribusiness, because agribusiness in many African countries is a huge part of the economy. And 2, they're able to arrange for commercial purchases, because most commercial buyers don't want to buy a basket of yams. They want to buy 10 tons of yams. But you might not have enough friends to make 10 tons. They use this service and you can enter your pricing and they help make those sales and take a cut. And this last one I think is probably my favorite. This is by the oldest software company in Ghana. They're about 15 years old. They're called Soft Tribe. And they have a few different really innovative products. They started about the time that Ghana shifted from a authoritarian government to a democracy. And this is called Hey Julo. So Julo is a Gaan word for thief. And so if you— Ghanaians hate thieves. They hate them. Like, if someone steals a phone or anything, like, all of a sudden you hear, like, Julo, Julo, Julo, Julo! And you should hope that the police catch you. Like, they give you to the mob, you're screwed. And so they— the other factor is that in Ghana, the police are not— their response time is rather slow, you might say. So And they recognized that there's a need to kind of bridge the gap for social infrastructure in terms of security. With Hey Julo, you pay 15 Ghana cedis a month, which is the equivalent of about $4. That's affordable to Ghanaians also. And 4 things— you get 4 things for that $4 a month. One, you sign up 10 of your friends and you get a number, and if you call that number or send a blank text, all of them are alerted that there's an intruder in your home. So someone's in your home, you're not— you think someone's in your home, you send the text, and then all of a sudden your neighbor's like, what's going on? Like, what's going on at Kofi's house? And then second, you get an ad on a local radio station. So if you send the text, all of a sudden like the taxi driver's going along, it's like, oh, this just in, house under the mango tree might have an intruder in it. So they're like, oh, what's going on over there? And then third, they hire a private— and I think this is the really big innovation— they hire a private security company that you could not afford on your own, But because of the amount of subscribers, they're able to send it for you, like insurance for security. And 4, they call the police, but nobody really expects them to show up on time. But the reason why this is my favorite signal is because there's now a lot of places in the United States where we could use this. Parts of Oakland, parts of Detroit, parts of New York. It would be really effective, it'd be really cheap, and it wouldn't be a replacement for the police. It'd be to help them in areas where they have slow response times or are underfunded, things like that. So, anyway, that's not a full forecast, just like a glimmer of something that I'm working on. I'm gonna be going to Nigeria at the end of May to continue some on-the-ground research there in Lagos. So, takeaways from the presentation. One, prepare for the digital natives and be careful with the Generation Y and Millennials. That's us. Think gameful engagement. Watch out for frontier markets. And remember, clarity. To gain power in a VUCA world, you have to give up control. And that's a glimpse of the future. Thank you.
