Africa currently receives less than 0.5% of global VC investments! Over the last decade, I have been focused on addressing this gap by investing in over 20 startups on the continent. While it has been rewarding to see the difference capital can make for determined teams who are solving Africa’s big problems, it has also been challenging because I have seen up close that more capital is needed. Badly! And yet, over the last year, I have decided to shift my focus from capital to talent by starting Decagon. Here’s why.
In 2010, I was the first investor in Jobberman and in 2011 I co-founded Cheki. Both companies raised follow-on funding from New York-based hedge fund Tiger Global and Wakanow and Iroko became what I call the “Early 4”. They helped lay the foundation of Nigeria’s startup ecosystem. Of Nigeria’s “Early 4”, I believe only Jobberman had a software engineer among its co-founders. The others relied on software engineering teams in Europe, Asia or America to build their products because it was easier for their visionary founders to source reliable and affordable engineering talent outside Nigeria. That should have set off alarms. The foundation of Silicon Valley, the world’s role model ecosystem, was not the legendary founders like Steve Jobs, Mark Zuckerberg and Elon Musk that now command the world’s attention. The founders are, in a sense, the pillars around which Silicon Valley’s greatness is built: but the foundation, which came before the pillars, was the high concentration of exceptional engineering talent in the region, mostly from Stanford University. The second most successful startup ecosystem in the world, in terms of exits, is Tel Aviv and there too, the precursor to ascendancy was an abundance of engineering talent coming out of Tel Aviv University and the military.
Great companies typically emerge when smart people solve a problem that a lot of people are willing to pay to see go away. Having a great software engineer as a co-founder of a startup does not guarantee it will become a great company. However, a region that has a large number of really smart people who have been trained to solve problems around them in a structured way, using the most advanced techniques and tools will, all things being equal, see more important problems being solved in that region and resultantly, more great companies being built there.
Some companies have managed to find success in spite of the death of software engineers in Nigeria. One I am close to is Terragon. Elo Umeh, Oduntan Odubanjo and Deji Balogun, who is a software engineer, were not able to find enough engineers to solve the mobile advertising and marketing technology problems they were looking to tackle. So, they started off licensing technology from Europe and eventually set up an engineering office in Bangalore, India. Deji ended up spending a good part of the last decade in Bangalore driving their engineering team. But India is far and it doesn’t have Amala. At some point Deji decided to setup Terragon’s mini-engineering school in his alma-mater OAU IFE; Amala confirmed. By so doing, Terragon sought to secure the supply of engineering talent they would need to scale. Several other companies like Interswitch, Konga, Hotels.NG and Seamfix have also had to set up their engineering academies to train engineers on software engineering fundamentals.
The idea of building an internal engineering school has rightly become a source of pride and a sort of secret competitive advantage for these companies, but in talking to Erik, a Director of Engineering at Opera, a NASDAQ-listed firm with headquarters in Norway, I realized what was really going on. Opera had not needed to set up an internal engineering school in Europe because they could just go to the local universities and hire graduates whose software engineering skills were already industry-ready. Opera didn’t have to spend scarce capital and management attention creating their talent pipeline from scratch because the pipeline already existed; paid for by the government through investments in great universities; just like Stanford in Silicon Valley and Tel Aviv University in Tel Aviv. Then it hit me. Just as Nigerian founders have had to commit scarce capital and management ingenuity to produce power using diesel generators to guarantee electricity to run their businesses, they were also having to commit resources to generate a talent pipeline that should just be there.
It doesn’t have to be so
In 2001, when I started my first company, to introduce mobile internet to Nigeria in partnership with MTN, I spent close to 50 percent of the capital I raised to get reliable internet service into my office. We had a 5-metre satellite dish on our roof and I became an expert in things like C-Band, Ku Band and DVB. I had to build relationships with satellite bandwidth providers like GILAT and New Skies and I would often make trips to conferences in US and Europe just to keep up with the latest in this space since I was spending up to $20,000 a month for about 1 Mbps of internet bandwidth. If you visited me at Campos Street in the early MTech days and I considered you a VIP, I just had to take you up to the roof to see our 5-meter VSAT. Two decades later, due to the visionary work of people like the tireless Funke Opeke at MainOne, Decagon launched with 75Mbps bandwidth at a price affordable enough that I didn’t bother to understand how it worked and haven’t even seen the equipment that delivered the bandwidth into our premises. It was just there, working.
We can do it
India has 4million people working as software engineers today, about 0.3% of its population, generating $120B in export revenue annually from selling their talent to countries all over the world, including Nigeria. That is more than 4 times the $26B that Nigeria generated from selling oil in 2018. Other countries like Poland and Ukraine also have about 0.3% of their population working as software engineers generating $3.9B and $3.6B respectively every year. Nigeria is not in the game. Data is scarce but I estimate that we have about 6,000 software engineers, which is closer to 0.0003% of our population. This would mean that India, Poland, and Ukraine are all doing 100 times better than us at converting talent to software engineers to meet the growing global demand for software engineers.
Meanwhile, Nigeria has a “ticking time-bomb” of 53% of youth unemployment according to Nigeria’s National Bureau of Statistics 2018 numbers. It would not be unreasonable to generalize simplistically and say that our youth are chronically unemployed and poor. To digress briefly, I believe this is another important reason why the Early 4 and many other otherwise promising startups have struggled to live up to their full potential. Wakanow was set up to sell air tickets online, Cheki to sell cars and Iroko to sell movies; but poor, unemployed youths don’t have money to buy any of these things. Given the conditions in Nigeria, and the normal failure rate of startups globally, it is quite remarkable (and a testament to the doggedness of the Early 4) that not a single one of them went extinct and several have even delivered exits with decent returns for the founders and investors.
Oletu Godswill is a name I will never forget. I hired him in 2001 to get me out of trouble. I had pitched to MTN, who had just gotten their GSM license, that I could use a cutting edge technology to make email and websites available to their subscribers on their mobile phones. They took me up on it and now all I had to do was find someone who could make it work. When, after some weeks, I couldn’t find anyone even in Europe and America that understood the technology and was available to help me, I knew I was in trouble. Then I met Oletu, a recent graduate of FUT Minna. Oletu came from a modest family background; he had never been out of Nigeria and had never even written commercial quality software but he had been training himself in software engineering using internet access at the local ISP where he was working as a network engineer. He joined me at MTech and in 6 months Oletu had read the draft standards of this new technology and, using open source tools, built the WAP gateway, application server and the application itself to deliver MTN MLife — the first mobile content and email service in Nigeria. The day after he got it done, he shared with me that he had been recruited by a US company and had received his US work visa 3 months prior but had kept the new company waiting so he could stay and help me accomplish this milestone! Oletu is now a Principal Engineer at AT&T (among the company’s highest levels of technical competence). Last time we spoke, he was working on the architecture for AT&T’s 5 G rollout in the United States. There are many many Oletus in Nigeria: world-class potential ready to rise, given the opportunity.
In December 2018, Decagon accepted its first 7 trainees out of almost 4,000 applicants including 56 medical doctors. The DecaDevs, as we call them, who made it through our rigorous screening process have now been trained using a curriculum we developed with support from experts at Google, Oxford, and Stanford as well as senior engineers in Nigeria at companies like Max and Opera.
In addition to the strong technical curriculum, we have the Decagon Agile Leadership modules which focus on building the Decadevs communication, collaboration, and leadership skills. Decadevs all receive laptops, accommodation, feeding, health insurance and a monthly stipend for the 6 months they are with us. When the first cohort finished this May, all 7 received at least one job offer from our hiring partners and only after securing jobs are they now paying for the program enabled by Nigeria’s first student loan program for software engineering training, courtesy of Sterling Bank under the compassionate and innovative leadership of Abubakar Suleiman.
We have 60 more Decadevs in training and by the end of this our pilot year, we plan to have produced 200 Decadevs. Next year, we scale up.
Grace was a Squad 1 DecaDev. To join Decagon, she had chosen to drop out of her MSc program in Computer Science at a “tier 1” Nigerian public university. She realized she was wasting her time when after 4 years of getting her BSc in Computer Science and an additional year into the MSc, there was still no actual writing of code on computers or solving any real-world problems. They only focused on the theory of computer science and passing exams. 6 months after joining Decagon, we got her placed with the Software Engineering team of a leading Nigerian startup.
My colleagues and I have signed up for the Decagon mission to ensure that a generation of Graces’ and Oletus’ potential does not go to waste. Instead, this nation’s brightest will be equipped with engineering skills to power the new wave of promising companies in our startup ecosystem. When a Nigerian startup receives funding, our goal is that the quality talent pipeline is readily available locally so the founders can focus more on customers and business models, like their peers in Silicon Valley and Tel Aviv.
Within a decade, our vision is to propel Nigeria to become a top-tier software engineering country with 0.3% of its population working as software engineers like in India, Ukraine, and Poland. That will be about 500,000 software engineers, about 5 times the number of people currently working in the banking and petroleum sectors combined. They will be generating about $15b of export revenue annually into Nigeria, helping to reduce our national overdependence on petroleum while solving local and global problems.
Even more importantly, they will be generating hope; the hope that through hard, honest work any brilliant young Nigerian can lift themselves and their family out of poverty and then go even further to take on the world’s big problems and, using technology, help build globally competitive companies. This is the Decagon mission. We are not alone. We are joining the ongoing efforts of others like HNG Internships, ForLoop, Andela and CcHUB. I believe in this mission. I had to commit
Also, read about this company that embeds microchips in its workers.