Firm sets pace in cashless society race [Nation (Kenya)]
(Nation (Kenya) Via Acquire Media NewsEdge) Kenya has been praised as the world leader in mobile money, mainly because of one innovation: M-Pesa.
The mobile money method was initially envisioned as a way for people across the country to send money to their friends and loved ones without the stress that came with other money transfer solutions. It has since grown beyond that, and at a remarkable rate.
At the front of this revolution is Kopo Kopo, a firm which enables small and medium enterprises (SMEs) in Kenya to accept, process and manage mobile money payments.
In 2012, the firm became an official partner of Safaricom and began to extend its 'Buy Goods' service to merchants across the country.
The service was later renamed 'Lipa na M-Pesa', essentially it is still the same service except that it is now more accessible and cohesive.
Kopo Kopo is the only non-bank partner in this initiative and continues to give more traders access to M-Pesa on behalf of Safaricom.
The platform, accessible online, allows the merchants to access their statements and payment data, analyse it and act on their trends.
"Kopo Kopo was founded by Dylan Higgins, Tom Bostelmann and I in August 2010," says Ben Lyon, the head of product. Dylan is the CEO. Tom has since left Kopo Kopo.
"Tom and I were working on another project when the idea to work in the mobile money field came to us. Tom had worked with Dylan before and thought he'd make a great partner. He brought us together."
When mobile money burst into the scene, Ben knew what was happening in Kenya was unique. He was interested in microfinance, particularly why it was so expensive and how it could be made cheaper. He had also studied informal economies and spent time in Uganda.
Dylan, on the other hand, had been in the technology field for over 15 years, consulting for multinationals. He got interested in small entrepreneurs and the power of software as a "democratiser" and saw it as a good opportunity to apply his background in technology to help people.
"Our goal was to improve access to financial products for people who were traditionally excluded. Initially, we focused on connecting microfinance institutions and their borrowers, but this changed to connecting businesses to their customers," Dylan says.
"We felt we needed to change course since we were trying to change too many things at once. We reviewed what we'd done until then, and an opportunity hit us: merchant payments." So how do they make money?
"We recruit merchants on behalf of Safaricom, and we are paid a fee per merchant. In March last year we signed the world's first merchant aggregator contract with Safaricom. Our model is similar to the one used by companies like Visa," Ben says.
Their task seems daunting, so I ask what motivates them. "We want to help businesses grow and prosper. Traditionally, some businesses have been left out of the financial services sector; kiosk operators, stall operators and mama mbogas. Their needs were being neglected, so we decided to serve them for the first time, to give them affordable, world-class service and access to their data," Ben says.
"Few big corporates comprise the private sector in Kenya. A majority are micro-enterprises and SMEs. The business needs of both groups are the same: to be able to accept payments, study purchase behaviour of customers and visualise this data, as well as integration to other systems such as management information systems. We build our services in response to these needs."
"We help the merchants maximise on their own data and establish trends. The software enables the information to become insightful, even providing visualisations," Dylan says
"This enables them to act from a point of information. This data is also stored on the platform in an organised format, making it easily accessible and aid in record keeping."
The capital requirements in the mobile money field are high. How did they raise it?
"We pooled our savings, then we raised money from friends, family and fools," says Ben. This is a common expression in startup circles used to refer to one's loved ones and people who take a risk by giving you their money.
"Later on, we took equity investment," adds Dylan.
The two say belief in oneself is key in business.
"Belief in one's vision and the fanaticism to actually make it come true. You also need to be very principled," says Ben. "Curiosity, always trying to push the envelope," adds Dylan.
Are there any misconceptions about entrepreneurship, especially in the technology field? Any challenges they have faced?
"Definitely," says Ben. "First, the tech scene has this romantic appeal. That is until you have a team and you realise you are responsible for their welfare and in extension, that of their families. This gives you a new level of focus and increases the pressure to succeed."
"In a start-up your team is like your family, but it is lonely being a founder. You are at the apex of the business and it feels like all the pressure is focused on you. It may feel like no one else really understands how you feel since they are not in your shoes. You also have to strike a balance with the team, as much as they are like a family, you are still running a business. The more you grow, the heavier this responsibility gets. It only gets harder." says Dylan.
"There's also dissonance between what entrepreneurship is really about and what it's been made to seem like. It is not about celebrity. It quickly stops being about you once you get started. If you don't realise this, you are doomed to fail," advises Ben.
The two also warn against the trap of paying attention to numbers.
"Don't fall into the trap of focusing on vanity metrics – it's not about the numbers of awards you have won, it's about your customers and how well you serve them," says Ben.
"We realise that we have a long way to go, and that traction is what is important," adds Dylan.
How do they overcome these challenges?
"We celebrate the successes of the team. We recently went to Longonot together as a treat. Pay attention to your team, just like you would your family. Ask about their welfare and be empathetic. Make sure the work environment enables their happiness and growth, and help them build healthy careers," says Ben.
"Keep working harder to deal with the loneliness. When you are working hard, you can't really dwell on feeling lonely. We are motivated by the fact that we are not there yet. It also helps to remember that you are lonely because you are a pioneer. It is a difficult path, but it is also very fulfilling.
"Get focused, and stay focused."
Don't get drunk in the attention."
"Focus on the metrics that matter," adds Ben. They may be pioneers, but they also face challenges from their competitors. Some openly copy their terms of service and other elements of their site and materials. "The problem with this is that they are reacting to what already is, not what will be. This keeps them one step behind."
Any advice for people interested in becoming techpreneurs? "If you are starting a tech company based on a product or platform, it is a long game. It is not a get rich quick scheme. Be in it for the long haul," says Dylan.
"Mobile money is a crowded, complex and dynamic field. The margins are small, the capital needs are high and the geography is relevant. 80 per cent of mobile money transactions happen in East Africa, and 50 per cent of these in Kenya. The big players know this and are getting involved. Be prepared!" warns Ben.
"You should roll up your sleeves. This is no place for fancy dresses," adds Dylan with a laugh. So, what is Kopo Kopo's ultimate goal? "To grow a global software company headquartered in Kenya," says Dylan.
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