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Why failure has got start-up scene excited

By Frankline Sunday | July 21st 2015

Nataka tu heshima yako/nataka tu furaha yako/leo ujue mahali bidii yangu imetoka.

This is the chorus to the song Bidii Yangu by Kenyan rapper Paul Nunda — or Jua Cali — where he recounts his time at the bottom of Kenya’s competitive music industry and his intention to make it big.

Eight years after its release, Jua Cali stands out for being one of the country’s highest-paid musicians, and for managing to spin off his talent into a career that includes a clothing franchise and millions of shillings in endorsements from popular brands like Coca-Cola and Orange.

It was, therefore, a treat two weeks ago for a group of fans and entrepreneurs when incubation hub Nailab invited him to speak at a new monthly event, Fail Up.

For two hours and in the characteristic sheng that made his music famous among his audience, Jua Cali narrated the many missteps and cold shoulders he encountered before his music was accepted and made him a fortune.

Big break

He was the latest speaker at Fail Up, an initiative in Kenya’s dynamic start-up scene where participants get to hear matured entrepreneurs’ stories of failure before their big break.

The event, which has attracted great interest from Kenya’s start-up community, was launched in January this year and is organised by Nailab, one of Nairobi’s numerous incubation labs and co-working spaces.

“As much as we are always beating the drums about entrepreneurship, and starting and growing a business, we seldom talk about failure, which is a big part of building a business,” said Josephine Mwangi, who heads communications and marketing at Nailab.

With nine out of 10 enterprises folding, failure is a big part of the start-up ecosystem, and for many, failure starts even before they get a chance to test their business idea.

Kenya has about a dozen incubation labs, co-working spaces or enterprise nurseries, where young people looking to start a business can get support in the form of mentorship, networking or seed money.

In exchange, the start-ups pay some money or give up a part of their company and work within a set amount of time — often three to six months — after which they are expected to move out of the incubation stage and make room for others.

Difficult process

In the case of Nailab, applications for each six-month season come in their hundreds. However, the incubator can only sustain about 10 start-ups at a time.

For the lucky few who get picked for incubation, the work has just begun, and the pressure to make it big and avoid being another statistic is immense.

“Within incubation, entrepreneurs are cushioned and they do not have to think about paying bills or salaries for their workers because Nailab takes care of that for them,” said Ms Mwangi.

“Once they leave and venture out into the real world, however, that is when issues like competition, taxes, overheads, the search for clients, etc, become a reality for many, and the failure rate is very high.”

It is against this background that Nailab started hosting Fail Up every month. From an audience of just over 40 participants, the event now draws close to 200 people.

“We wanted a set up where our young start-ups learn from those who have made it, and understand that failing in business is not a bad thing, but a lesson and often just a bump on the road,” said Mwangi.

After the success of the first two sessions, Nailab started selling tickets at Sh300.

“We tell participants to suggest whom they want to listen to next and we approach them and invite them to come share their failure lessons. Everyone we have approached so far has been enthusiastic to share their experiences.”

Networking platform

The event has also provided a networking platform where entrepreneurs exchange ideas and seek out opportunities for partnership across various sectors.

Despite the growing hype in the country that Nairobi is set to be the Silicon Savannah of Africa, many start-ups that are ideally supposed to fuel this vision lack crucial business skills.

A private equity confidence survey released last year indicated that Kenya’s tech industry was losing to Nigeria and South Africa in getting deals and early-stage start-up capital.

Despite an increase in the billions of shillings being poured into SMEs in the agriculture and real estate sectors, both local and international investors are giving the tech sector a wide berth, which has contributed to its high rates of failure.

ICT consultant Harry Hare has been a judge at numerous start-up launching events, listened to hundreds of pitches and three years ago founded Demo Africa, a platform for discovering innovative start-ups from Africa.

According to Mr Hare, Kenyan entrepreneurs sometimes contribute to the failure of their start-ups by failing to see them through the idea phase.

“When you are running a business, you cannot relent. You coming to pitch at Pivot East or launch at Demo or wherever is just one of the things you have to do as an early-stage entrepreneur,” he said.

“A business is sustained by clients not pitches, and if you are going to pitch and then sit and wait, then nothing will happen. You’ve got to get out there and look for clients because it is the only way you are going to be sustainable.”

And with initiatives like Fail Up, entrepreneurs not only get to learn that failure is a part of succeeding, but also get crucial insights on what to do when they experience it from those who have failed time and again to become successful.

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