The Perils of Cloning Foreign Startups in Africa

Author’s Note: A colleague, after reading through, suggested that I note that we had actually made the same mistake. We cloned Kickstarter.com via StartCrunch.com, becoming the first crowdfunding firm in Nigeria. We failed. We did not know that Nigerians or the world would not open their wallets to back Nigerian projects. So, people, no one has all the answers. We wasted thousands of dollars on StartCrunch, cloning a U.S. company, and failed big.

In this piece, I explain the perils of trying to clone successful foreign startups in Africa. While it is always good to explore how something that worked somewhere can be replicated at home, it is always important to understand the underlining reasons why the foreign companies worked. I present a case study on Yelp, an American company that provides reviews on local businesses, helping people make better decisions on who to hire for repairs, catering or where to eat.

Yelp will struggle to thrive in sub-Saharan Africa because the cornerstone of our economic processes is not contract-driven. We run “carry and pay” system while America is contract before service, thereby pushing people to look for the very best hands since you are paying for the time and not necessarily the outcome. You will still pay a mechanic for spending his time working on your car, even if at the end, he did not fix the problem. In Nigeria, that is not likely: you can pity the guy and give him something but because he did not do his job, he does not deserve the money. So in Nigeria, you have the opportunity to review the work before you pay (carry and pay). In America, by the time the mechanic is done, you are contracted. to spend money, either way. That is why I do think, it is a waste of time trying to clone Yelp in most parts of Africa.

Yes, there are many companies in U.S. you should clone: startups working on tools, productivity, processes and also ones which get competitive advantages owing to regions they operate.