Zero-based ventures

Zero-based ventures

Data and simplicity
International House of Pancakes (IHOP) is a famous American food chain with outlets all over America. The fascinating thing about them is that their menus, processes, and decor are identical wherever you go in America. It is the same with most fast food chains. They have been able to get a formula that works and appeals to a particular type of customer. Those typical customers are found all over America, and that is why it is easy for them to scale that model everywhere. The same principle works for all products that scale. It may appear to be one giant market, but there are a number of small markets with similar customers all within one large population.

It is easy for IHOP to do this because data exists on where to locate their restaurants. Suppliers exist to provide the same product of the same standard across the 50 states of America. Those suppliers also rely on data on companies like IHOP to forecast their production and planning.

Everything works like a well-oiled machine. I am always perplexed when I ask African startup founders the market they are building for, and they start mentioning national population figures. I used to think that it was probably the only information available in the public domain until I tried to find data on the population of my hometown Benin City. I found the Edo Open Data initiative on the recommendation of my mentor and role model Kingsley Uyi Idehen. I also discovered that a national open data portal exists with links to every state. The datasets available at those online locations are a gold mine. I still wonder why startup founders don’t take advantage of these resources when building their business cases. 

Kingsley is one of the global authorities on Linked Data and a pioneer of the Semantic Web. We had a conversation many years ago on artificial intelligence and machines in an article he wrote where he described the human ability to create/generate-from-nothing as, “Zero-based Cognition.” He distinguished this ability from those of machines which “on the other hand can only discover and infer based on a substrate of structured and interlinked data, information, or knowledge in a concrete human created realm, e.g., a web of linked data.”

Zero-based cognition separates humans from machines and has helped humans change the world drastically using the same devices as tools. In that conversation, I argued with him that maybe instincts are hardwired but generating this base of data for the machines to start from is analogous to the learning process in humans. Most humans go through an early learning process before they can indeed become creative.

Zero-based startups
Someone asked me recently if we are doomed in this part of the world always to be consumers of technology rather than pioneers?  It seems that all of the innovation happens elsewhere and all we do is to adapt it locally. My answer was that building technology ventures are similar to academic research exercises. Theoretical knowledge is typically always built on previous experience and data is the bedrock of this knowledge. We cannot begin to start talking about innovating without building up datasets about our markets and environments. Even when such datasets exist, they get rarely used, founders rely on instinct by default. We are always building “Zero-Based Ventures.”

Every startup or venture that is built today ideally should be adding to this body of knowledge about our markets. Every startup gathers unique data, and it is why I don’t believe any local startup fails when there is still so much to learn. Anyone that stumbles has only just learned a lesson, and it is essential for that experience to be shared for more also to learn. The problem is that, we all go back to zero when there is no sharing and we keep repeating the same mistakes. We speculate about the failure of others and only learn the hard truths when faced with the same circumstances. Those who succeed in overcoming barriers understandably let those obstacles remain to protect themselves. 

Technology communities are beginning to break out of that mould. While most people will not share customer and market data they have acquired, they usually share technology tips, techniques, and tools more frequently than before. I believe that this now happens more frequently because it is encouraged by the global technology providers. 

Shared data and platforms as an advantage
In emerging markets, most entrepreneurs see data access as a more significant competitive barrier than execution. It is why it is hoarded and protected. I also believe that organizations who depend on themselves as the only source of their data even limit their growth as they can never have enough resources to collect and keep all the data in the market. It is not capital efficient. It is why “scale” is difficult to achieve.

I always maintain that Facebook would never have grown if Google didn’t create Android. Google would not have achieved growth if Netscape and Microsoft didn’t create web browsers that allowed people to access and upload content on the internet. Technology progress and growth is more about data and platform dependence than independence. Building Zero-based ventures create an endless loop of reliance on foreign innovation. 

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