Innovating - and investing - beyond the West brings the best business opportunities
When Facebook acquired WhatsApp in 2014, for a cash and stock deal reportedly worth $19bn, the reaction from most U.S. smartphone users was “WhatsApp… what’s that?”
At the time, the messaging service had more than 450 million monthly users globally, but was relatively unknown in North America. Even today it has a modest 23 million U.S. users, compared to 200 million in India and 120 million in Brazil.
After the mammoth deal was completed, technology watchers pondered how WhatsApp could have reached such an epic scale, largely unnoticed by the world’s pre-eminent tech nation (save for Mark Zuckerberg).
The answer is that WhatsApp’s founders had (intentionally or inadvertently) solved a problem faced by billions of people around the world, but not necessarily in the most developed nations. They had cracked how to deliver instant, global messaging using minimal bandwidth, even on cheap, underpowered devices.
WhatsApp’s elevation to tech superstardom prompted a dawning realisation that there might be greater opportunities than building first world solutions to first world problems. Greater opportunities in terms of both scale and potential societal impact.
A world of opportunity
Today, there’s still disproportionate media focus on ride hailing apps, on-demand exercise classes, and other services that marginally enhance the leisure and convenience of affluent Westerners. However, innovators and investors have also become more savvy about looking to what used to be called ROTW (Rest Of The World) for inspiration and opportunity.
The British founders of What3Words came up with the idea of pinpointing any location on the planet using a three word combination after one of their number - whose job involved managing bands - became frustrated that his artists were frequently unable to find their own gigs. The team quickly realised that there were many more applications for their service than navigating lost musicians.
Today, What3Words is unlocking opportunities across large parts of the world that lack conventional street addresses. For example, the ability to precisely identify any location opens up the possibility of home delivery services, in turn enabling the creation of new ecommerce businesses.
What3Words is also helping to direct emergency relief and medical assistance, and to promote financial inclusion. In Mongolia, a partnership with Trade and Development Bank allowed unbanked citizens - many of whom live in remote locations with no address - to open their first account using a W3W address instead.
The underserved millions
Having a worldly perspective is something that is incredibly important to us at Remitly. Our co-founder Matt Oppenheimer was living and working in Kenya when he saw the scale and impact of money sent home by migrant workers living abroad. Food, accommodation, healthcare and education all relied on families receiving remittances from overseas - a story repeated in Colombia, Vietnam, Ghana, India and everywhere in between.
Yet despite a global population of 250 million migrants, sending well over half a billion dollars annually, financial service providers weren’t exactly scrambling to innovate on behalf of these people. Neither were early fintech innovators, who had other priorities to pursue - mainly around online payments. As a result, migrants were stuck with offline transfer agents that typically charged punishing fees and offered poor customer service.
For Matt and Remitly, seeing the world from a different perspective was the genesis of an online money transfer service that today has nearly two million customers and moves in excess of $6bn annually. Remitly employs a thousand people in offices from Managua to Manila (as well as London, Dublin and Krakow). And the company has attracted over $300m of funding from some of the world’s top investors.
Crucially, our immigrant customers are no longer out of sight, out of mind as far as the fintech revolution is concerned. We are working every day to build them the world’s best financial services.
A new world view
Thankfully, we’re not alone. The (Western tech) bubble is beginning to burst, in the best way possible. Investors and entrepreneurs are increasingly looking to the wider world where vast numbers of people are seeking solutions to fundamental problems.
Most are finding that doing good and doing good business go hand-in-hand.
That was the experience of Nicolas Hughes, Jesse Moore and Chad Larson - a Brit, a Canadian, and an American who set up off-grid solar power provider mKopa in Nairobi.
“What you had to do was focus on neglected customers and solve a really massive pain point for them,” said Jesse Moore in a 2016 interview with the FT. “We didn’t see any trade-off in the pursuit of building a really strong commercial business and making lives better,” continued Moore.
To date, mKopa has landed more than $160m of international investment and now provides power to more than 600,000 homes across Kenya, Uganda and Tanzania.
But thinking outside the bubble isn’t just about uncovering untapped opportunities and new markets. It is an acknowledgement that we live in an interdependent world where a global approach is often the best way of solving problems closer to home.
The United States currently has a critical shortage of software engineers. The number of unfilled vacancies for programmers is expected to hit 1 million by 2020, according to US government research.
Andela, an organisation founded in Nigeria in 2014 to train software developers is putting fresh new talent into the global workforce. Andela graduates are now doing contract work for many well known companies around the world, including multi-unicorn cloud software business Gusto, and also with Remitly.
So compelling is the Andela offering that it has attracted $180m of investment from the likes of the Chan Zuckerberg Initiative, GV (formerly Google Ventures) and Generation Investment Management.
Innovative, international investment
Andela is not alone. Increased focus on global opportunities has seen a dramatic increase in funding for innovators living and working outside the Silicon Valley bubble.
Investment in African tech increased from $125m to $725m between 2016 and 2018, according to the Wee Tracker. Over the same timescale, annual investment in Indian tech companies rose from $4.3bn to $10.5bn.
Naturally, some people have asked whether the sudden interest in serving the global South and East is a form of technological colonialism. It is an important question and a matter on which we should all remain vigilant.
But for now, we see more evidence of a virtuous relationship, extending the rapidly evolving technological advantages enjoyed in the West to a greater share of the global population.
Whether you are an individual or a corporation, being compelled to consider the needs of the world beyond the one you inhabit is always a good thing.
It is our firm belief, that if applied fairly, this great technological revolution can improve the lives of the many, not just the few.