The Cameroonian with a business management tool for the informal sector
From the fruit seller at the side of the road to the fisherman supplying a market, informal businesses account for the majority of economic activity on the continent. The space is made up of necessity entrepreneurs, due to a shortage of job opportunities, and many have a limited formal education, if any at all. Inventory and financial record keeping is typically done via pen and paper, opening it up to human error, as available business management tools usually require computer and financial literacy.
However, 27-year old Cameroonian entrepreneur, Ted Boulou, believes he has a solution. He is the creator of Somtou, a management console designed specifically to cater for informal and small businesses in African markets. The tablet-like tool is solar-powered and enables micro-entrepreneurs to manage inventory and keep financial records, which might assist them in accessing credit from banks and other institutions. The software does not use text and its touchscreen allows users to easily record their inventory with pictures or drawing of products. When making a sale, the image is selected, the price is entered, and the device then automatically updates the stock and finances of the business.
Boulou moved to Dakar, Senegal in 2013 to work for the IFC after completing both a masters in engineering and economics at prestigious schools in Paris.How we made it in Africa talks to Boulou about Somtou’s business model and his entrepreneurial journey so far.
What was the inspiration behind your idea?
As a child in Cameroon, I grew up in an environment where my mother and aunts use to manage small businesses on the side. I spent time on vacations helping them with selling in those small businesses. But I have the memory of inventories being a nightmare most of the time for the people who were in charge. Missing items and money disappearing would turn those entrepreneurial activities into family disputes.
Growing up, I remained interested in the power of those small businesses and figured out that technology could be a game changer.
Is this your first entrepreneurial venture?
I have always had an entrepreneurial mindset, trying to challenge the status quo and propose innovative solutions for Africa’s and the world’s most-pressing problems.
When I was in Paris, I started a small venture with my brother that aimed to place tablet devices in waiting areas – such as train stations and supermarkets – which people can use while they wait. We did not succeed in getting it off the ground, but this gave me expertise in technology and lots of lessons on execution.
As part of my previous role at the World Bank in Dakar, I led the efforts of my team in rural electrification, getting in touch with rural areas and falling even more in love with the so-called base-of-pyramid, where business cannot go without empathy and human relationships.
Somtou is my first “successful” venture as we have been able to raise significant funds to move forward.
How many informal traders are using the device so far?
It is currently being used by around 20 different micro-entrepreneurs, including shopkeepers, fish sellers and young professionals.
The device comes with a locally-produced wooden casing, but where is the device manufactured?
We are actually building the whole device here in Dakar. As you’d imagine, we buy different parts from France, England and China, but we do all the soldering and manufacturing ourselves. We even use 3D printers to print the buttons.
How affordable are these devices for informal traders?
Universality goes with affordability. Even though the informal sector is a huge source of wealth for emerging countries, investing in the future can be challenging for micro-entrepreneurs in a context of over-prudent capital. We have been able to come up with a business model that allows a great adoption of our device. It is a subscription-based model, where businesses pay a monthly fee ranging from as low as US$5 to $25 depending on the size of the business.
We fully bear the payment risk by relying on our very active and on-the-ground proximity agents who will build and maintain close and personal relationships with our customers.
Where have you found funding?
In the beginning our company was bootstrapped for almost two years. During that time we managed to achieve a decent representation of our device and a clear value proposition. From there we were able to get seed funding of €100,000 (about $110,850) in March 2015. This was raised from well-informed individuals who believed in our idea and our vision for the informalised economy.
What risks does your business face?
Firstly, production risk. We rely on craftsmanship and this could be an issue if sales exceed our forecast. As authenticity is a key value of our product, we will have some challenges keeping it while scaling up production.
Another risk is talent detection. We are building a company with human values at the core. The people we hire will have to be exceptional individuals with an outstanding level of empathy. There is no ‘test’ today that is able to detect the level of empathy of people. But as proximity with customers is key in our value proposition, human resources is a key challenge.
So far, what has proven to be the most successful form of marketing?
We have not been very active on the marketing side. But as mentioned, our marketing process will be mainly based on field marketing, as our target audience (the informal sector) is often very sceptical and need to see our solution in action to be convinced.
If you were given $1m to invest in your company now, where would it go?
Today our company has a reduced production capacity. Our focus for the last few fears was to produce a very good and compelling minimum viable product (MVP). With considerable funds, we will invest them in building up our manufacturing capabilities for mass production. The manufacturing of wooden materials is more complex than the traditional mass production of plastic tools.
In addition to manufacturing, a greater engineering team and customer relations service will be necessary to continue our research and development, and be ready to step in and resolve any maintenance issues that may occur in the future.
What has been the biggest mistake you have made in your start-up, and what have you learnt from it?
Our biggest mistake was perfectionism. For months, we did not want to go out without having a perfect and fully-finished product. But we realised that our main source of improvement would be customers’ reviews. And thus we decided to go out with MVPs and gather customer feedback. This made us progress a lot more quickly and efficiently.
Describe your most exciting entrepreneurial moment.
We have won a number of competitions including Best Start-up in Senegal in 2014 (Seedstars World) and Best Impact Start-up in Senegal by Slush in 2015. These were really exciting moments, but still not as exciting as seeing the eyes of our first product tester – a shopkeeper in a Dakar neighbourhood – when he first touched our device. Watching him easily navigate it, and enjoying the experience, was for sure the best moment so far.