Africa Business News: Entrepreneurs. Investments. Banking & Finance. Emerging Markets. Start-Ups
Monday, 9 December 2013
Why Nigerian Entrepreneurs Need To Fail More
“A person who arrives at a feast when the cooked meat is being pulled out of the pot, does not know what was endured by others to catch and cook it.” – African proverb
VENTURES AFRICA – Last night I had a conversation with three Nigerian friends and some how we landed on the topic of the tech startup scene in Nigeria and how recently there have been some high profile shakeups on that front. (Iroko’s off-shoot, IRoking music streaming service CEO left the business along with 60-70 percent of the workforce & Tunde Kehinde of Bandeka.com, the African dating website and Jumia, Nigeria’s answer to Amazon recently left from his co-founded business).
The discussion turned on whether Nigerian’s needed to be able to fail at business. I say we need to be able to fall flat on our faces in very public ways, accept that failure and renew. Not a new concept, based really on more academic notions of “creative destruction” or “failing forward.” The former being more like economic development arises out of previous failures and the latter being more learning from mistakes to become a greater success.
Unfortunately, my perception is that some of the tech startup are being held up to a standard few startups and silicon valley wouldn’t live up to…not that folks should want to fail. But I believe learning from mistakes and admitting they have been made is itself a virtue. So the next question I asked is why do I perceive such a stigma exists amongst the Nigerian business community.
My experience with the Nigerian business community has been that most investors are extremely risk adverse, willing to invest only when they know there is some type of fix and the largest companies are mostly rent seeking. And in that community of rent seeking companies there is no shortage of people who have failed in business in Nigeria and rebranded themselves. Moreover, it’s even more prevalent. There’s another academic term for that called “destructive creativity” which basically speaks to how in resource rich countries tons of companies sprout that are productive or innovative and survive through cronyism. So these companies grow huge but eventually die out because they operate inefficiently and instead of using creativity to be better companies they become better crooks.
It’s no surprise that a prominent politically connected (read that as inept plunderer) is able to get multiple bank loans for new ventures while having a zombie company that doesn’t pay staff salaries, versus a tech startup that can rarely get a bank loan and definitely would be laughed out of the branch if a previous venture failed. It’s this misallocation of resources that has arguably metamorphosed into the “Nigerian thesis”. The Nigerian banking crisis and the Asset Management Company of Nigeria (AMCON) was built on that story but that’s an argument for another day.
That’s my roundabout argument for saying Nigerian tech entrepreneurs need to fail, admit it and dust themselves off. The innovation they are driving isn’t just the technology they are building, but the culture of embracing failure and rebuilding – the culture of innovation and change for Nigeria and business. Anyone who visits Nigeria comes away evangelizing the fact there is no shortage of entrepreneurs, yet building upon a culture of impunity and rent seeking doesn’t create competitive world class institutions, just more zombie companies trying to get the government to ban this, buy that and give them a mobilization fee for a contract.