TechCrunch
Africa-Focused Savannah Fund Graduates Its First Batch of Startups
Even though it’s still nascent, Sub-Saharan Africa continues to grow pools of capital and entrepreneurial know-how in hubs like Nairobi, Kenya.
Today, the Nairobi-based Savannah Fund, which is raising up to $10 million for startups in the region, just graduated its first batch of companies at PivotEast, a Disrupt-like competition for African mobile startups. They include a Ghanaian e-commerce startup that sells electronics called Ahonya, a Ugandan mobile game developer called Kola Studios that’s popularized a local card game and SafariDesk, a site that helps travelers find off-the-beat experiences and places for luxury camping.
Mbwana Alliy, who returned to East Africa after business school at Stanford University, said he picked these companies out of about 170 applicants across the continent. He then puts them through a three-month accelerator in Nairobi, Kenya, where he’s arranged sessions with mentors like Aardvark’s Max Ventilla or other Silicon Valley-based or foreign entrepreneurs who come through the region.
They take about a 15 percent equity stake for about $25,000, which does sound steep. But Alliy says he’s seen a fair amount of deals where other angels might have taken 40 percent of a company for as little as $10,000.
The reality is, with a much lower per capita GDP, the economics of founding a company in Kenya or Nigeria are very different than they are in the Valley.
Alliy says the whole process of setting up the fund, for which he’s still raising funding, has been a big learning experience. When he announced the fund last year, he set it up with i/o Ventures managing director Paul Bragiel and Erik Hersman, who co-founded Ushahidi, a mobile platform that’s been used to crowdsource information during disasters and elections.
“When I started, people asked me, ‘Mbwana, are you going to copy and paste i/o onto Africa?’ And I was well aware that it couldn’t be like that.”
Certain things have gone well. “The biggest thing I was surprised by was that we put together quite a few solid mentor sessions over the past three to four months,” he said, noting that big names in tech like Eric Schmidt have passed through Nairobi on visits to the local iHub. “A lot of global talent shows up here.”
Schmidt’s Tomorrow Ventures followed on with an early Savannah investment in biNu, a platform that optimizes app use on basic feature phones.
He’s also taken initial funding from angels like Yelp’s Russ Simmons and venture capitalist Tim Draper, over going for institutional investors like other more established venture firms.
But investing in the region is also naturally more risky and takes more gut-checking. Two-thirds of Savannah’s companies originally weren’t even incorporated at all and Alliy had to get the proper paperwork established.
“To be honest, we take risks. I kind of laugh when I think about what Valley VCs are doing,” he said. “All entrepreneurs there are so educated. They can read about what to do on VentureHacks. Everyone is so knowledgeable about everything. It feels so easy compared to Africa,” he said. “So I guess the thing is, we take more risks and we’re much more comfortable taking a bet.”
When they flew in the Ghana-based team from Ahonya, they went on Skype interviews and pure online vetting. The company has so far sold about 600 products online in about nine months, with an average transaction size of $350 (which is pretty big for Sub-Saharan Africa).
“We got a good feeling from them,” Alliy said. “We liked their traits. They were doing growth hacking in Ghana without even knowing what the term means.”
After Exiting From Crashpadder, Founder Hopes Pact Will Be The ‘Zappos Of Coffee'
You can’t really keep a good entrepreneur from continuing to launch companies. That appears to be the case once again with Stephen Rapoport. Rapoport previously built and sold the apartment sharing site Crashpadder to Airbnb, but has since got itchy feet once again after exiting a few months ago. And what started out as a hobby business to keep him interested before the next big thing, has turned into a much bigger project.
YourGrind launched in October last year, with the objective of making specialty coffee accessible to the mass market. But today it relaunches as Pact after closing a £500,000 ($768,600) first round of seed funding with Connect Ventures, Rowan Gormley (Naked Wine, Virgin Wine) and Ian West (Naked Wine, BSkyB).
Pact joins a competitive marketplace in the subscription coffee business in the UK, which includes more established subscription coffee players such as HasBean and Kopi.
Much like the US market, the UK market features numerous coffee clubs which focus on a bag per month/bag per fortnight model.
However, the big difference with Pact is that they plan to be the first to offer free next day delivery 6 days per week. In other words, by saving customers from ever running out of coffee they are competing for share of wallet with major supermarkets and shops, not the bag-per-month guys.
What we’re dealign with here is more a sort of “Zappos for coffee” style play.
Rapoport’s ‘pitch’ is that by keeping a small selection of world-class coffees and shipping within 7 days of roasting “we have been able to focus on removing friction from the first purchase (by matching bean selection and grind to brew method) and retention rates.” In other words, they plan to make their customers very happy.
“Our visit to subscription conversion has stayed over 20% for the past 4 weeks and the average user buys over 2 bags per month,” Rapoport tells me excitedly.
Like Zappos, they are looking to create very strong bonds with their community, and it seems to be paying off. Last week, faced with 200kg of excess coffee they asked customers tell any friends who may be interested in their coffee. The result was 120% customer growth in just 24 hours, says Rapoport. Bang goes the wastage, literally.
Numbers, are small but Rapoport is unfazed and quite open about it. They have 1,700 users and are shipping 100-350 packs of coffee per day, but the focus remains “on retention not growth”.
So does he plan to be the Zappos of coffee then?
“Yes and no. I am inspired by Tony Hsieh and his approach to customer service. Our product is roughly twice the price of supermarket coffee. Whilst we know this is great value for fresh-roasted, most people don’t so trust is central to our business. The only way to nurture real trust is to stamp openness and honesty into the culture of the company, and pair it with a passion for making customers happier.”
Admittedly this is more commerce than tech but it will be very interesting to see if they can scale this model in much the same way Zappos did.
Despite Grumbles, Most Actually Prefer iOS 7 Icon Designs To iOS 6, Study Finds
iOS 7 is getting a lot of mixed reaction from blogs, critics and the Twitterverse, but it’s actually winning over a lot of people, according to polls created by Polar, a mobile polling tool built by Input Factory to gauge user and community sentiment. Polar’s results find that in general, its users prefer iOS 7 versions of system icons almost two to one vs. the existing versions, with over 46,401 people total chiming in on the subject.
Those numbers represent the cumulative totals for all votes gathered on individual iOS 7 icons by the service since their unveiling at WWDC, and the data reveals that not only do people tend to prefer the iOS 7 versions overall, but they strongly prefer them in most cases. The redesigned Phone icon, for instance, garnered 80 percent pro-votes, with just 20 percent preferring the older design, and the Messages app icon was preferred by 84 percent of respondents, vs. just 16 percent for the older edition.
The iOS 6 equivalent won out in just a few cases, including the Reminders, Safari, Game Center, Camera and Calculator app, and even in those cases the margin was much smaller than it was for those preferring the iOS 7 design of other apps, generally speaking.
iOS 7 is still fresh, and it was always bound to be divisive in terms of how people accepted the significant new changes in appearance it brings to Apple’s mobile OS. Consider that even small changes in Facebook’s website and mobile app design prompt massive upheaval, petitions and general revolt, and yet also don’t seem to do much in terms of affecting the social network’s engagement or user growth.
Most assuredly, iOS 7 will have its vocal critics and its vocal defenders, and the icons themselves are already a huge subject of debate. But this survey is a good reminder that there’s a vocal minority paying a lot of attention to the changes now while they’re new, but that’s not necessarily reflective of how anyone will actually see the shift. Polar’s users seem firmly in the corner of the new look, and I’d suggest that’s probably about where we see general consumer taste fall, as well, if the average user even cares enough to share an opinion.
Facebook's Creepy Data-Grabbing Ways Make It The Borg Of The Digital World
The latest Facebook data breach – which exposed personal contact information Facebook had harvested on six million of its users – is a reminder that even if you’re not handing over all your contact data to Facebook, Facebook is obtaining and triangulating that data anyway. And even if you’re not on Facebook yourself, your contact data likely is because the social network is building a shadow profile of you by data-mining other people.
You might never join Facebook but a zombie you — sewn together from scattered bits of your personal data — is still sitting there in sort-of-stasis on its servers. Waiting to be properly animated if you do sign up for the service. Or waiting to escape through the cracks of another security flaw in Facebook’s systems.
Facebook is a crowd-fuelled data-mining machine that’s now so massive (1.11 billion monthly active users as of March 2013) it doesn’t matter if you haven’t ever signed up yourself to sign over your personal data. It has long since passed the tipping point where it can act as a distributed data network that knows something about almost everyone. Or everyone who leaves any kind of digital/cellular trace that can be fed into its data banks.
Chances are someone you have corresponded with — by email or mobile phone — has let Facebook’s data spiders crawl through their correspondence, thereby allowing your contact data to be assimilated entirely without your knowledge or consent. One such example was flagged to TechCrunch on Saturday when one of the users informed by Facebook they had been affected by its latest breach found it had harvested an email address they had never personally handed over.
This behaviour casts Facebook as the Borg of the digital world: resistance is futile. It also underlines exactly why the NSA wants a backdoor into this type of digital treasure trove store. If you’re going to outsource low-level surveillance of everyone then Facebook is one of a handful of tech companies large enough to have files on almost everyone. So really, forget the futuristic Borg: this ceaseless data-harvesting brings to mind the dossier-gathering attention to detail of the Stasi.
Does this matter? That depends on whether you care about privacy — your own or other people’s. Since Facebook is not immune to data leaks and security imperfections, as the latest bug illustrates (which has apparently been a puncture-hole in its systems since last year), the fact that it is harvesting and storing your data means there is an ongoing risk that data could be exposed to others without your consent. And that’s ignoring the primary lack of consent in Facebook storing your data without asking you in the first place.
Apparently it’s ok for your friends to consent to sharing your data on your behalf. Better choose your friends carefully then. Except it’s not even just your friends — it’s likely anyone you have had cause to correspond with in any capacity, friendship or otherwise. It seems unlikely Facebook’s algorithms are discerning enough to determine which contacts are friends, were once friends or have always only ever been passing/fleeting acquaintances and therefore have zero claim to be custodians of your personal data. Not that your real friends are likely aware they are acting as guardians of your data either.
Facebook says it uses the data it mines on you from others to power its friend recommendation feature. Which means the friend suggestion thumbnails that periodically crop up to help you build out your Facebook network, based on people its algorithms think you might know. This feature is helpful to Facebook, allowing it to encourage rapid growth of its users’ networks — by cutting down on the legwork required to find friends on the service — and therefore fuel overall user growth of its service. Sure, it’s also handy for individual Facebook users but is it useful enough to justify holding on to a vast mountain of personal contact data without consent?
The key issues here — beyond the overarching privacy theme — are transparency and consent. Facebook is very coy about explaining what it is doing. Do your friends even know they are consenting to your contact details being stored in Facebook’s cloud when they hook Facebook up to their contacts’ books? It’s highly unlikely they’re aware that that is what is happening. All they’re likely thinking is: ‘this feature will help me find more friends’. Facebook is certainly not going out of its way to explicitly say how its digital matchmaking service works.
You could argue that the average user won’t care or likely understand a technical explanation. But that does not excuse Facebook treating your personal data as the property of another person who may or may not care where that data ends up. It’s your data — and you are the one affected if it’s leaked. But Facebook is sidestepping that reality by being opaque about its processes and failing to acknowledge there are wider privacy implications to its data-grabbing ways (Packet Storm goes into one possible unpleasant scenario of the current Facebook data-harvesting process here).
In its blog post detailing last week’s data breach, Facebook skimmed over the surface of its processes (see quotation below). It focused, instead, on explaining why it harvests data, rather than making it clear it is storing users’ friends’ phone numbers and email addresses’ to do this. Why avoid spelling that out? Because it inevitably sounds creepy. Because, well, it inevitably is creepy.
When people upload their contact lists or address books to Facebook, we try to match that data with the contact information of other people on Facebook in order to generate friend recommendations. For example, we don’t want to recommend that people invite contacts to join Facebook if those contacts are already on Facebook; instead, we want to recommend that they invite those contacts to be their friends on Facebook.
Because of the bug, some of the information used to make friend recommendations and reduce the number of invitations we send was inadvertently stored in association with people’s contact information as part of their account on Facebook. As a result, if a person went to download an archive of their Facebook account through our Download Your Information (DYI) tool, they may have been provided with additional email addresses or telephone numbers for their contacts or people with whom they have some connection. This contact information was provided by other people on Facebook and was not necessarily accurate, but was inadvertently included with the contacts of the person using the DYI tool.
Note Facebook’s phrasing: “This contact information was provided by other people on Facebook”. In other words, ‘your personal contact info was shared with us — but not by you’. That’s the root issue here, and Facebook is cloaking it with anodyne language — and burying it five paragraphs into the post. Transparent? No, not even close.
Of course Facebook is not the only tech giant intent on amassing data dossiers on as many Internet users as possible. Google has drawn the attention of European data protection regulators, for example, after it consolidated more than 60 individual product privacy policies into one joined up policy — allowing it to join the dots of usage of its different products to sketch more detailed profiles of those users. Mountain View’s Google+ social layer is also designed to function as a data harvester, pushing people to tie their usage of multiple Google products back to a single public profile. As the Guardian‘s Charles Arthur has argued, Google+ is not really a social network at all; it’s more like The Matrix.
But despite Google’s consolidated privacy policies drawing the attention of data protection regulators the company has not (yet) altered its data-knitting course. It remains to be seen whether the investigation by six European Union member states will force it to make changes. The possibility of fines is on the table. But when you’re dealing with a company with such massive resources as Google — and one which pours so much effort into political lobbying — it likely requires a commensurately joined up, global approach to have any hope of changing its behaviour. A handful of EU countries aren’t going to be able to turn this juggernaut around.
There is also the argument that the cat is out of the bag. That these huge data-mining operations are now so mature, extensive and well used that any kind of regulatory unpicking is futile. Not least because the quantity of data being gathered on human behaviour is only going to grow — likely becoming even more personal and intimate, with wearable devices enabling the harvesting of physical data-points too. And yet that actually sounds like a lot more weight for the argument that these huge data-harvesting operations really need proper scrutiny stat.
It has to be said that data protection regulators have been extremely flat-footed in their response to the implications of systematic consolidation and cross-referencing of personal data. The lack of transparency about how these algorithms work has certainly helped the companies that created them to grow their user-data mountains in carefully crafted shade.
But a little more light is now being directed onto those darkened places, and onto the control-minded organisations (such as the NSA) inevitably attracted by the scale of the data-mining operations going on behind some of the shiniest consumer facades in tech town. So, even if we as personal Internet-using individuals can’t now hope to claim absolute ownership of all our data online, it’s worth asking what other kind of data-fuelled Frankensteins are lurking in the darkness — besides Facebook’s zombie army of shadow profiles.
My1login Raises Further $500K To Help Businesses Get Security-Savvy With Its Cloud-Based Password Manager
Most of us employ weak passwords and should know better. Blah blah blah. But actually, as boring as the topic of password security is, get found wanting and the repercussions can be anything but dull (and extremely costly). Just ask the Associated Press.
Aiming to help users double-down on their password security is 1mylogin, which offers a cloud-based password manager. Today the UK startup has announced that it raised an additional $500,000 or so in funding that it will use to market its relatively new business offering, which soft-launched last month.
This brings the total raised by my1login to approximately $1.5 million via a mixture of grants and equity financing. This latest seed round comes from previous backers Scottish Investment Bank, the investment arm of Scottish Enterprise, and TRI Capital and Equity Gap, in addition to a number of unnamed angel investors.
Launched early last year, my1login’s freemium-based consumer product offers 1-click login for a user’s various online accounts by storing and making accessible all passwords via the cloud, encrypted with banking-grade security. Like other password managers, the idea is that you have a master password that unlocks access to your other passwords. That master password should (obviously) be strong and unique, but then so can the others since you won’t need to remember them.
Taking that proposition and dialling up the security notch further, my1login’s business product adds features, such as 2-factor authentication (key phrase-based), a central admin panel for managing access to passwords across an organisation, and analytics to help a business keep tabs on its various passwords and their usage. Thus my1login is setting out to help businesses prevent the use of weak passwords and what it calls weak password practices, where employees use the same password across multiple websites. Blah blah blah.
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