Large networks of engaged users in Africa

Posted in: Social, Uncategorized- Mar 05, 2012 No Comments

Fred Wilson, of Union Street Ventures (Twitter, Foursquare, Tumblr), often talks about their investment thesis of “building large networks of connected (engaged) uses.”  These new markets are a “networked” architecture rather then a hierarchical model.  And, rather then looking for startups that sell software, or services, to established market participants, they look for startups that enable things to happen “outside” existing channels. Monetization happens, not in building the network, but afterwards by selling value-added services,

I’ve been thinking a lot recently about how a ‘network’ architecture of connected users plays out in Africa.

Businessinsider.com did a report The Key Ingredient To Massive Hits Like Pinterest And Facebook That You Should Copy.  It appears quite obvious, but is sometimes overlooked, that one path to success is to take popular things that people do in the real world and make them easy to do online.  Amazon (shopping), Craigslist (classified) Pinterest (Clipping) are all examples of this.

Large African Networks

MXit with 50 million users is probably the largest network in Africa.  In a recent survey the number one thing MXit users want more of was not news, or sports, but help in dating.

The high interest in dating is due to the popularity of MXit among Africa’s youth.  But, it does show how fast growth can be obtained when you help people do something they are familiar with — better.  Safaricom’s M-Pesa, is also a large network, but one built upon giving Africans access to new services that previously where unavailable; or too expensive.

New Networks

How does building networks in western countries compare to building networks in Africa?  There are many similarities to what is happening in the West and what has, and will, happen in Africa.  But, there are some difference too; differences that will have a significant, direct impact on people and society.

Populace

1. Africa surely has enough people to build large networks.  Mobile money’s success in Africa shows that when properly designed and implemented large networks of connected users can appeal to citizens irrespective of socioeconomic status or geography.  Will regional and/or cultural difference isolate network adoption?  Its hard to say, but even with difference between North and South, or East and West, there is commonality between all people when addressing fundamental needs and desires that transcends regional differences.  Further, the continent is so physically large with growing populace that even if regional networks occur they still have the potential to be large and significant networks of users.

Technology Adoption

2. Africans are already connected by mobile.  Can large networks of connected users be built absent data connections?  Can efficient, cost-effective networks be built with high data costs?   Will networks in Africa emerge that are unique to the continent’s technology and infrastructure limitations?  These are all going to be interesting things to watch in the coming months and years.

Institutions

3. African institutions are often weak, ineffective and many times corrupt.  How will building these new large networks of connected users that by-pass existing organizations with new ideas and services operate?  What will be their impact on government, corruption, the media, politics. culture, society?  It is not just a question of if these networks will grow but how they grow; and their impact on existing institutions and society in general.  Will these networks be welcome and fostered and allowed to grow and flourish?  Or, will they be stifled and suppressed?  Their inevitable impact is going to be varied and substantial and cross all aspects of society and daily life.  It will be interesting to see how the rule of unintended consequences manifest itself in these new networks.

Possibilities and Benefits

4. In the absence of strong institution you would think large networks of connected users would flourish.  Its kind of like water.  Water always seeks its on level.  The same with networks. Once they start, and the basic requirements of devices and connectivity are present, due to their viral nature they tend to grow, grow quickly. and are difficult to control; and virtually impossible to stop.  And, they have a tendency to amplify what is already being done by users or society.

1. They have ability to make weak institutions stronger and fundamentally corrupt institution weaker. Will governments and other institutions try to bend networks to their will?  Or, will they use networks to better connect and better inform citizens both up and down the chain.  Will in effect, the networks change existing institutions for the better?

2. They strengthen people to people connections and therefore have impact on economic activity.   Networks have the tendency to flatten levels, to remove middle layers and wring inefficiencies out of markets. Typically all good things (if your not a middle man). Networks could have effect on farmers by connecting them together and to markets and to customers.  They could effect small and medium sized enterprises (SMEs).  They are going to have impact on members of the informal economy by creating new connections and communication channels.  On youth; by allowing them to break some existing ties and make new ones and by opening up economic activity.  On job creation by creating “markets” for both permanent and temporary work.  These are just a few examples.

3. They have the potential for significant and direct impact on African’s lives.  In the West, large networks of connected users targeted consumer applications.  Things like trading pictures, or managing connections to friends, sharing recommendations about restaurants of tastes in music.

In Africa new large networks of connected user have the potential to fundamentally affect peoples lives.  Like growing and selling more food or finding a job, or voting for the right candidate because you understand her vision of the future.  And, to me that is exciting!

You can view Fred Wilson’s talk about large networks of connected users below.

 

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