What It’s Like For Startups To Partner With Mobile Operators In Emerging Markets
The difficulties in obtaining a partnership with a mobile operator are all too familiar to Perseus Mlambo, CEO of agri-tech startup Zazu.
Zazu connects small farmers in remote areas via text messages with purchasing markets in cities. Mlambo successfully partnered with mobile networks in Zambia, but it was a labor-intensive process that required micromanaging people, Mlambo said.
Tech startups innovate much faster than mobile operators but lack the wide reach — and customers — that more established companies have.
Working together in emerging markets could be mutually beneficial for mobile operators and tech startups, but securing a partnership can be an onerous task for a startup.
A new report provides entrepreneurs with help and advice in obtaining such a collaboration.
The report, entitled “Opening Doors: A Start-Up’s Guide to Working With Mobile Operators in Emerging Markets,” was produced by the GSMA Ecosystem Accelerator program and Match-Maker Ventures.
GSMA is a London-based trade association representing about 900 mobile operators worldwide and companies in the broader mobile ecosystem, including device makers, software and internet companies. Based in London, GSMA has regional offices in Atlanta, Hong Kong, Shanghai, Barcelona, Brussels, Brasilia, Nairobi and New Delhi. It holds events such as Mobile World Congress. Match-Maker works to accelerate innovation by changing how corporations and startups collaborate.
The report provides entrepreneurs with help and advice in obtaining such a collaboration. Valuable indeed.
Zazu’s customers use text messaging and USSD (unstructured supplementary service data, a global system for mobile communication technology that is used to send text between a mobile phone and an app in the network). The mobile operator partnerships allow anyone to connect to its services. But Mlambo says putting these arrangements in place can prove difficult.
“It’s a very labor-intensive process and it requires micromanaging the account managers,” he said. “As an example, one of the three operators here really made it easy for us to obtain the integration documents and to implement the process.
“The other two openly admitted to us they are quite new to these type of integrations and we had to spend the best part of three months finding out who we needed to speak to. When we finally got there, we had to guide them through the process. And of course people get shuffled internally, so when that happens, you are back to square one.”
This can be a problem for startups like Zazu, which is a mobile-based service that needs to work with operators.
Advantages of a startup working with an established mobile service provider
The most obvious advantage is the distribution channel, Mlambo said. “Without them, customer acquisition is severely limited.”
“Secondly, as private companies, they often have KPIs (key performance indicators), so whoever you speak to, you are likely to gauge their capacity or interest to make it happen. And if you know these, you can sufficiently predict the outcome of any conversations before starting them.”
Meanwhile, operators are amassing data that could be crucial for a startup.
Benefits for mobile service operators working with startups
“Having built the infrastructure to make this mobile ubiquity possible, they are rightly concerned and prioritizing segmenting the customer,” Mlambo said.
“They know that their subscribers are looking for particular solutions and they know that startups are very agile and obsessive to the point of spending a few years trying to understand how can we solve this particular problem.
“And I am willing to bet that the iteration is much faster when done by a startup versus by the operator.”
For operators, partnering with startups provides access to products that are capable of not just selling more airtime, but giving the operator a competitive advantage and offering services that result in customers staying longer.
Operators are open to working with startups, but they have a limited capacity for bad ideas, Mlambo said.
“When a good idea comes before them, they obviously make it happen because it makes business sense. On the other side, they do not need to be so open to working with startups because they own the platform and any decision to do so, should inevitably be weighed on cost-benefit analysis,” he said.
Zazu is one startup that has successfully managed to negotiate the process of partnering, but there are many that have not and many that do not even try. Mlambo said there are operators out there that are openly listing their API documentation and integration processes, and are willing to listen to people’s ideas.
However, more must be done to ensure this becomes the norm, and that is why Mlambo supports initiatives such as the GSMA’s efforts to try and smooth the process for everyone involved.
“(GSMA is) looking for these case studies and interviewing founders and operators to find out how partnerships happened, what worked well and what could have been improved,” he said.
“(This) is such a great idea because it means for future founders, the process is simplified and clarified for them, instead of beginning from square one every time an integration needs to happen.”
This is an early step towards easing partnerships between tech startups and mobile service providers, but it’s a vital one in establishing collaborations that could benefit startups, operators and consumers alike.
Tom Jackson is the co-founder of tech news and research platform Disrupt Africa and a journalist covering innovation on the continent from the Cape to Cairo.