Nic Haralambous, co-founder of Motribe

“Fail… and get it over with fast.” This mantra has become accepted wisdom in Silicon Valley, arguably the world capital of high-tech innovation. And when reading up on the stories of its most famous residents – the likes of Steve Jobs, Bill Gates, and the “Google guys” – you can quickly understand why.

All these tech giants tasted failure en route to their success, and it was failure that provided them with the most instruction. Yet failure is still taboo in many parts of the world, including here in South Africa, where young developers and potential investors are highly risk averse. This mindset, combined with a small local investment community, formidable legal and regulatory obstacles, and a lack of financial incentives, is making it very difficult for local technology start-ups to get off the ground.

“Our business culture does not encourage two key motivations behind the vibrant start-up cultures in countries where the tech industry is driven by innovators: risk and failure,” explains Arthur Goldstuck, MD of World Wide Worx. “First, investors aren’t willing to take risks, and always want a sure thing. As a result, they tend to invest only in businesses that are already generating profits.

Failure is not an option

Second, there’s little tolerance for failure. The book that unpacks the Israeli start-up success story, Start-up Nation, continually emphasises the importance of failure as part of the learning curve. That would be laughed at here. As a result, we have a laughable start-up culture.”

In the US, failure has become such an accepted part of business success that events such as FailCon have become hugely popular and are now being replicated in Europe and elsewhere. Started in 2009, FailCon is an annual conference for technology entrepreneurs, investors and developers to explore their own and other’s failures. So why aren’t we following this example and giving young talent more space to try, and perhaps fail?

“Failure isn’t as accepted in South Africa for a few reasons,” says Jason Norwood-Young, founder of 10Layer – a successful digital publishing start-up. “The first is that we’re primarily a B2B market, and if you’re selling products to traditional companies, they really want you to be around the life of the product. Also, I think South Africans culturally don’t accept failure, and this makes us weaker as a nation.”

Nic Haralambous, CEO and co-founder of Motribe – a start-up that specialises in social mobile platforms, adds: “Embracing innovation is also something that’s lacking.  From a culture of developers leaving university all the way through to big corporates, I think that innovation is still a scary concept. South African developers are more interested in safe and secure jobs over innovative and disruptive companies.”

Step up the risk

So local entrepreneurs, particularly in the fast-moving and complex terrain of tech, clearly need to develop an appetite for risk. Yet without the support of investors, this is a big and perhaps unreasonable ask. Every start-up needs capital, and investment is seriously lacking.

“We don’t have venture capital in SA,” says Stafford Masie, IT consultant and ex-Country Manager for Google South Africa. “There isn’t a place where you can go if you have a great idea.”
Goldstuck agrees: “The single biggest obstacle (for start-ups) is access to real venture capital. Even those who call themselves venture capitalists are really conventional corporate-style private equity players who insist on a profit history. We do have angel investors who play that role, but they are thin on the ground and not easy to access. The consequence is that the bright young thing coming up with the next big thing in a garage ends up being the next unknown flop.”

Yet if the industry can overcome these obstacles, most agree that SA has incredible potential – it is just a case of harnessing it.

“The upside of being a tech entrepreneur in SA is the unique perspective and market that we have in SA, Africa and the emerging markets in general,” says Haralambous. “Many are calling this the ‘next billion’, and in SA we are perfectly positioned to own this market.”

Masie adds: “I don’t want to go and do this anywhere else in the world. In the US you can make money, but in Africa you can make a difference…”

Jessica Hubbard
jessica@simondingle.com