Going Local or Global?
My biggest frustration with local entrepreneurs is their dogged approach to building local web businesses. My personal feeling is that it's difficult to reach critical mass building a product just for South Africa, as you're just fishing in a smaller pond (4m users in SA vs 1.4bn users online). I've always said that the Internet is "Geographically agnostic" - so why focus on a small segment and limit yourself when are the much bigger markets to tap into and potential for hard currency earnings. You can target advertising to consumers in any country in the world - why limit yourself to South Africa?
Some people may think that this is unpatriotic (and in fact, I've been accused of this) - but to me, patriotism is bring in foreign revenues and creating jobs & industry for local South Africans - something which I'm passionate about.
The question therefore is: Should people based in the Silicon Cape be focused on building locally or globally relevant startups (and yes, the right answer is probably in the middle!)...
Some people may think that this is unpatriotic (and in fact, I've been accused of this) - but to me, patriotism is bring in foreign revenues and creating jobs & industry for local South Africans - something which I'm passionate about.
The question therefore is: Should people based in the Silicon Cape be focused on building locally or globally relevant startups (and yes, the right answer is probably in the middle!)...
Views: 69
Replies to This Discussion
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Permalink Reply by Richard Watson on -
My feeling is that we're often under-served locally. I'd like more locally-targeted apps, not fewer.
Yelp.com started ultra-local (SF only) and have grown hugely, so your choice of local or not really depends on your strategy.
Benefits of local:
- Aim too broad and you lose an advantage - the ability to target a segment in a way that global companies find hard to beat. A company like Microsoft or Google have to think how a choice affects 99% of users worldwide, whereas we can add local flavour very easily and cheaply.
- Live testing in a market while effectively staying under-the-radar of international companies. Go big when your model is proved.
- An ability to dominate the market, which offers excellent defense in the longer term. When you're #1 it's much harder for someone to unseat you. Apple survived on education and graphic design when everyone else ignored them.
However, let me say that we do need more confidence to compete internationally. The big difference between an SA kid and a US kid is that the US kid knows he can be an astronaut. We only figure that out when a SA boy becomes one.
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Permalink Reply by Kim Li on -
I laughed when you said "dogged" - we are in Africa, and I say never forget that.
As for businesses for the global market? Keep ideas open, just because you're in this pond doesn't mean the money's from this pond too.
To me the question is, what is the difference to you between building locally and globally?
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Permalink Reply by Paul Roberts on -
Gosh. Kinda late but just saw this now. I agree with Vinny. I think that we have been doing an excellent job of thinking globally, but sometimes this can bring a heap of unexpected trouble, especially around the use of languages.
Not everyone online uses English and thus you may not be accommodating a key language group that would love to engage with your web-site. For example, Google's Orkut (a social networking web site) created in California exploded in popularity in Brazil (where it is now based) and India. It is now available in almost 50 languages.
A compnay which our translation agency is now working with is also experiencing something similar. Their product was initially designed for South Africa, but they have seen interest from as far as West Africa, North Africa, Angola, and have begun thinking about Brazil and China.
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Permalink Reply by Dan Bowyer on -
I agree. Go global. Get foreign cash into your amazing country. Nothing but good can come of it.
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Permalink Reply by Shaun Lindbergh on -
Think global, test local and grow global. Local being anywhere you are. That's the model I am busy exploring. The idea of a global village of the 70's is a virtual reality today. I am also a big fan of offline/online relationship building. There's something powerful in a handshake or a hug that you don't get online. Cool comments.
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Permalink Reply by NAFEESA KARBARY on -
I agree. I have started an on line marketing business. The problem that I have found is that people are to scared to have their businesses marketed online. They still believe in print media, not realising that it is being phased out.
Our advertising is focused both locally and internationally. We are hoping to sign up a few international clients soon.
Anyone interest in advertising with us are welcome to contact me : nafeesa@ecodynamics.co.za or look at our website:
www.ecodynamics.co.za
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Permalink Reply by Paul Roberts on
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Great point about launching globally, Godfrey. We often have clients come to us after their online business has made some promising moves into different language markets. It can be tough to scale for another language, alphabet (think Asia), and/or region of the world/country if you never gave it any thought in the first place. We help clients identify their target languages and work with them to make sure that their product still works the way they want it to, even if they don't speak the target language. A basic strategy for foreign language markets is a must nowadays. If it's online, it can be consumed from any part of the global.
Godfrey Parkin said:Three quick points, Tatenda:
1) You DO have intellectual property - the code you have had written for you and the solution concept behind the business (which may be patentable)
2) Make sure you unambiguously own the code. There is still a tendency among programmers in SA to believe that they own code written for their clients, which is fundamentally not the case in law. Don't risk it being held to ransom. It's work for hire, so make sure your agreement states that you own the code and that your developers will hand it over to you.
3) It is a mistake to launch in SA with the hope of launching globally if you succeed here. Launch globally! Your chances of success are much greater if you are exposing your business to 1.8 billion people online around the world instead of exposing it to 5 million people online here. Especially if volume is a significant success factor, go for a volume market at launch. Failing in SA happens often because the local market is not big enough, and is not an indicator of probable failure elsewhere!
Godfrey Parkin
Tatenda Muregi said:Hi Justin
I, like Jono am a student though part-time and distance.
What if my idea has no Intellectual Property but still has potential to be a great online business? As far as I see it, there is also a category of start-ups that are pure web businesses utilizing existing cloud services and web based applications to create services that thrive of fulfilling a need online e.g. product personalization. These types of web businesses in my view offer an appeal (to would be funders) in terms of their scalability, marketing...in other words users.
My project fits into that category but and after realizing last year that it would take more than just my idea to get backing for seed funding, something that is tangible was needed. So i closed all thoughts of funding, extended my timeline and set off boot strapping. Over the past year i have worked with a programmer to develop everything for me (I know no code) on a pay as you go agreement in bits and pieces as well as moving to Cape Town where I feel the environment for tech/web start ups is more conducive. The goal really is to fight to launch my product locally, "test" its viability by accumulating users and then think about taking it global. What I then view as very crucial in that drive to go global is having the funds to market online (SEO and PPC to me is key) and establishing a solid shipping system etc.
And to me, the time taken to go at it this way has enabled me to flesh out my initial idea, throw away my business plan and focus on developing at a low cost and launching as quickly as possible and as soon as the product is usable, then let my users "finish it off".
This may have strayed off topic somewhere but i feel you could throw in some pointers for me in here as well.
Justin Stanford said:Jono,
Nice post! Don't worry, you aren't alone! Loads of great startups were started out of dorm rooms on pennies by students. FireID was run out of a Stellenbosch res room piled to the ceiling with equipment and paper for ages! At 4Di Capital our slogan is "From Garage to Global", and I think garage also implies things like dorm rooms too, so we know this. What you're looking for is seed money. This is out there, it can be had, especially for promising students. But you need to bear in mind some of the criteria any investor will be looking for, no matter how small the amount, such as: Is there intellectual property being developed here, ideally protectable? If it's an execution play, can the company attain market power or become entrenched? Is this opportunity limited to being local or can it go bigger, even if it's just testing locally? Investing in tech startups is very high risk so investors only look for opportunities that have the potential for equally decent return. Fortunately though the cost to get going online these days is getting lower and lower.
Unfortunately I don't think that business veterans and others are going to reach out to you, as you've asked for, you're going to need to reach out to them. Hopefully Silicon Cape will create a platform for people like you and them to find each other. I think you might be surprised, if your idea is well thought through enough and you can explain it well in a short amount of time, raising the $1500 or more won't be that hard! If you still struggle, maybe your idea needs some refining to make it more investor friendly.
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Permalink Reply by Hilary Albutt on -
Godrey unfortunately I have to disagree with you. The code falls under intellectual and copyright law.
With your saying its illegal for me to reuse my code would make the web impossible and a lot of the programs you use would not exist.
A lot of the code being used by modern programmers is open source libraries and unless the contract states the client is paying for the code, they are in most cases only paying for the labour.
The key words here are explicitly stated. This means that the program has to be virgin code, with no block re-used or tested by open source world to be safe, this will naturally increase the cost to the client.
In some cases by up to 10 times what it would cost to use already existing blocks and libraries of code.
What programmers and web specialists do is akin to artwork. You may buy the artwork but you can never reproduce it just because you have it hanging in your lounge. You WILL need the original authors permission (licence) to do so and that normally costs a whole lot more than the painting did.
Under South African and International copyright law code is covered as an original work. Copyright automatically stays with the author not the person who bought the book to read or study from.
In an engineering sense the same rule applies, if you ask the engineers to come up with and make your a widget that you describe as having a function, they own the rights to the drawings they come up with and the tooling. If on the other hand you hand them the actual drawings and the tools and say to them please make x number of copies of my design, please sign this NDA. The key thing is they have to sign the NDA.Much the same as Apple, Google, MS makes programmers do when allowing access to their source code.
If you really wish to protect your IP use the UK law as a basis. You can also use the Open Source licence, which has been proven to protect the rights of the programmers.
As to the work for hire, if the client has provided the original source, then you are correct, the work for hire principle will apply much in the same way it would with a copywriter.
Godfrey Parkin said:Three quick points, Tatenda:
1) You DO have intellectual property - the code you have had written for you and the solution concept behind the business (which may be patentable)
2) Make sure you unambiguously own the code. There is still a tendency among programmers in SA to believe that they own code written for their clients, which is fundamentally not the case in law. Don't risk it being held to ransom. It's work for hire, so make sure your agreement states that you own the code and that your developers will hand it over to you.
3) It is a mistake to launch in SA with the hope of launching globally if you succeed here. Launch globally! Your chances of success are much greater if you are exposing your business to 1.8 billion people online around the world instead of exposing it to 5 million people online here. Especially if volume is a significant success factor, go for a volume market at launch. Failing in SA happens often because the local market is not big enough, and is not an indicator of probable failure elsewhere!
Godfrey Parkin
Tatenda Muregi said:Hi Justin
I, like Jono am a student though part-time and distance.
What if my idea has no Intellectual Property but still has potential to be a great online business? As far as I see it, there is also a category of start-ups that are pure web businesses utilizing existing cloud services and web based applications to create services that thrive of fulfilling a need online e.g. product personalization. These types of web businesses in my view offer an appeal (to would be funders) in terms of their scalability, marketing...in other words users.
My project fits into that category but and after realizing last year that it would take more than just my idea to get backing for seed funding, something that is tangible was needed. So i closed all thoughts of funding, extended my timeline and set off boot strapping. Over the past year i have worked with a programmer to develop everything for me (I know no code) on a pay as you go agreement in bits and pieces as well as moving to Cape Town where I feel the environment for tech/web start ups is more conducive. The goal really is to fight to launch my product locally, "test" its viability by accumulating users and then think about taking it global. What I then view as very crucial in that drive to go global is having the funds to market online (SEO and PPC to me is key) and establishing a solid shipping system etc.
And to me, the time taken to go at it this way has enabled me to flesh out my initial idea, throw away my business plan and focus on developing at a low cost and launching as quickly as possible and as soon as the product is usable, then let my users "finish it off".
This may have strayed off topic somewhere but i feel you could throw in some pointers for me in here as well.
Justin Stanford said:Jono,
Nice post! Don't worry, you aren't alone! Loads of great startups were started out of dorm rooms on pennies by students. FireID was run out of a Stellenbosch res room piled to the ceiling with equipment and paper for ages! At 4Di Capital our slogan is "From Garage to Global", and I think garage also implies things like dorm rooms too, so we know this. What you're looking for is seed money. This is out there, it can be had, especially for promising students. But you need to bear in mind some of the criteria any investor will be looking for, no matter how small the amount, such as: Is there intellectual property being developed here, ideally protectable? If it's an execution play, can the company attain market power or become entrenched? Is this opportunity limited to being local or can it go bigger, even if it's just testing locally? Investing in tech startups is very high risk so investors only look for opportunities that have the potential for equally decent return. Fortunately though the cost to get going online these days is getting lower and lower.
Unfortunately I don't think that business veterans and others are going to reach out to you, as you've asked for, you're going to need to reach out to them. Hopefully Silicon Cape will create a platform for people like you and them to find each other. I think you might be surprised, if your idea is well thought through enough and you can explain it well in a short amount of time, raising the $1500 or more won't be that hard! If you still struggle, maybe your idea needs some refining to make it more investor friendly.
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Permalink Reply by Hilary Albutt on
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@William why use local hosting companies? You are not stuck with them, you are not forced to use local. I do managed hosting for all my clients and I refuse to use RSA based hosting companies because they are so d*** expensive. R0.50c per megabyte are they insane? That isnot included in the hosting package either.
As for the paye -sorry no can do South Africa has one of the smallest tax bases in the world where 95% of the country STILL does not pay tax and its still the 5 million it was when apartheid supposedly stopped.
However a SME tax break in the form incentives DOES exist - get yourself a better tax adviser. You can claim R25000 per year for employing unskilled workers and I know of companies that employ 10 unskilled workers because they make money out of it.
They pay the workers the basic minium of R1137 pcm and get more than R2000pcm from the tax man in return.
I cannot comment on building relationships for small business as I have not researched that yet.
Agree on the stupido forex kak inherited from the apartheid regime, why do we still have this? It should be dumped now, and the Rand will continue to rise if only purely because of the interest differential.
Helen Zille does see them, if you want her to respond write to her directly. You can also join her FB page and leave a response there. There are literally thousands of messages and I agree she should have though up a proper marketing strategy to keep in touch not get all autocratic on our a**** after she became the local boss.
Thems the breaks, keep b******* and make changes and eventually we can change the way things happen. But if you expect others to hold you hand and do it for you, you gotta be kidding.
Help yourself, get of your own a** and get involved like I do.
William Kleynhans said:Vinny Thanks for starting this post, though its seems to have drifted a bit , for me your main question was how to go from local to global, seeing that we are pre -local launch I would say the following:
1. Sort out hosting, its b***** expensive for start ups and most of the time you sit behind in the que to local corporates
2. Sort out tax: Give guys a break on paye/site for only a few years, that money will straight back into the company, that way you can build the support and sales base to be able to service the world 24/7
3. Build relationships for us with Brazil, Argentina, Australia and the like so we can get partners easily , even if its just for language support
4. Lobby the government so that we fix the ridiculous forex setup that means we are locked into a gilded cage.
You know how many politicians I see are part of this site? 1, and she doesnt respond to messages anyway.
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Permalink Reply by James Hurford on -
IT'S ALL IN THE MIND.
There's nothing to stop Silicon Cape based businesses building globally.
In fact, when I started my business I saw being based in South Africa as a massive opportunity.
With fourteen Rand to the Pound at the time, I thought 'those buggers in the UK are going to love that'.
And with no language and culture problems, I knew I was on to a winner.
After picking up business from London I then thought 'what's stopping me getting business from other countries?'
I focused on English speaking countries but soon found there were loads of English speaking businesses and people scattered all over the world. It's come in from Europe, USA, Middle East, Asia and Australia.
Geography isn't a barrier. If there are any barriers it's time difference, language, culture and your mindset.
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Permalink Reply by Paul Roberts on
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True, James. Many e-businesses go global just like yours did. And, thanks for mentioning the language barrier. That's why our translation business exists. Language certainly is a major barrier, but with careful planning and awareness that your business idea may be more easily accepted by markets in other countries (think of Google's Orkut which was created for the US but has huge support in Brazil and India) it should be no problem. Visit us online to learn more about us and how we provide SA businesses with global language solutions. www.folio-online.co.za
James Hurford said:IT'S ALL IN THE MIND.
There's nothing to stop Silicon Cape based businesses building globally.
In fact, when I started my business I saw being based in South Africa as a massive opportunity.
With fourteen Rand to the Pound at the time, I thought 'those buggers in the UK are going to love that'.
And with no language and culture problems, I knew I was on to a winner.
After picking up business from London I then thought 'what's stopping me getting business from other countries?'
I focused on English speaking countries but soon found there were loads of English speaking businesses and people scattered all over the world. It's come in from Europe, USA, Middle East, Asia and Australia.
Geography isn't a barrier. If there are any barriers it's time difference, language, culture and your mindset.
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Permalink Reply by Gloria G on -
i totally agree that you have to think global but don't forget about the lical things)
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