Derrick Kotze is the CEO of mLab, an incubation laboratory that offers support to entrepreneurs and start-ups for creating innovative mobile solutions. We talk to Derrick about the incubation process for technology based businesses, the requirements needed from these entrepreneurs, and we hear about some of the best examples and success stories that have been created through mLab.
Explain exactly what it is that an incubation laboratory does?
In the current start-up ecosystem there seems to be two major support structures.
Incubators which are environments, mostly physical infrastructures providing joined working spaces like hot desks and office space as well as more intangible services like mentoring, training and networking. The investment from an incubator is generally much larger as support is provided over a longer period of time and covers most, if not all, of the business development life cycle. Some of the programs I am familiar with provide up to 3 years support.
Accelerators are generally more short term investments and focus on boosting start-ups with the aim of pivoting their businesses much quicker. There is also a growing trend of Vertical Accelerators that focus on 1 specific industry or part of a start-up’s life cycle to help accelerate it to the next level. mLab is such a Vertical Accelerator as we focus on providing both tech and non-tech start-ups the support to mobilize their service or product.
Why does mLab focus on mobile applications?
mLab was created through the vision of the Finnish Government and the World Bank to help developing markets develop sustainable businesses through entrepreneurship, innovation and technology, so I guess you can say it’s in our DNA.
That said, we all know the massive number of mobile phones being used in Africa and those numbers and the capacity of the device keep growing month on month. Its a new era for Africa with people gaining access, often for the first time, to the internet and they are doing so at a rapid rate. This also brings a great number of new opportunities for entrepreneurs to start new businesses or reaching a far greater market with their existing businesses by developing a mobile service offering or product.
Its important to note that we don’t just focus on ‘apps’ in the popular sense of the word, but also on any mobile related innovation or services including legacy technologies like USSD that is still widely and actively used every day. So to cut a long justification short; mobile = massive market = massive opportunity. So we focus on it.
So what are some of the most interesting innovations that you have seen or been a part of?
Innovation is such a difficult thing to define these days since the ‘innovation window’, especially in mobile, as it has become so small that many ideas are not always novel but still have a massive impact when existing ideas are applied to mobile, or even sometimes just re-applied with local context.
It’s also a difficult question to answer, not because there is a lack of innovation happening in South Africa, but rather that there are so many and so many currently being finalized, that I don’t want to not let their “cats out of the bag”.
Firstly, mobile payments. It’s been interesting to watch South African start-ups innovating in the mobile payment space. There are existing solutions, some very successful like M-Pesa that has just not taken off locally as they have in other African markets. We seem to have a much greater affinity to cash, ATMs and cards and also much more stringent banking policies so the innovators here are having to approach the opportunity differently. Two good ones I have seen in the last year include a product by Entersekt that have innovated around the security models being used and Ching Payments who applies mobile to our current ways of transacting. I always find the best innovations are disruptive long term not because they intended to be, but actually because they were so simple and easy to use in the beginning that the adoption rate hockey sticks and then leaves the dominant players scrambling out of their complicated R&D labs in a panic.
Secondly, Evolution of Legacy Technology. I have also seen some smart integrations of legacy technology like USSD being developed by guys like BaleFyre and also a team at the Meraka Institute. I think there are some lessons to be learned about integration and adaptation rather than leapfrogging, especially in the enterprise space. Companies made very large investments in technology during the early boom and they seem to respond a lot better to start-up offerings that respect and find ways to integrate mobile rather than rip out and start from scratch.
Lastly, SAP. A small number of local developers are also moving very quickly into one of the newest mobile ecosystems, SAP. There is massive opportunity here since it’s so new, well entrenched with major businesses, and has a high demand. I also believe this is where we will see major innovation happening for security and other enterprise reasons and where South Africa has an opportunity to produce global players.
What are some of the requirements for a start-up or entrepreneur to have in order to receive incubation from mLab?
Well, firstly I look for great founders, people that have the passion and drive for starting their own business.
We rate applications to our program on the ideas, concepts of existing businesses and how viable they are for mobile and if we can add value as mLab, but the reality is that very often those original ideas morph into something even better once we start working with the teams, so its important that the team developing the mobile solution have what it takes to succeed, even if we have to put a completely different idea in front of them.
We also run a very fast program so the start-up or entrepreneurs need to be committed. Young entrepreneurs often still have some hard lessons to learn with regards to investment and the responsibilities and expectations that come with it. We are looking for the ones that are respectful of the opportunity and not ‘lifestyle entrepreneurs’.
If you are a start-up, tech or non-tech, and believe your business will benefit from a mobile element, then mLab is interested to hear about it. We run an Ideas Lab program where we evaluate and consult with the entrepreneur over a 2 month period to figure out their business and the reasons for moving into mobile – if its not clear from the first meeting.
What is the difference between an incubation lab and an angel investor?
In many cases they can provide the same value to a start-up depending on the requirements but I would say where angel investors are often more focused on providing financial support and advice an incubator or accelerator provides value through infrastructure and capacity support. We help manage the resources and I guess in a way provide some security for an investor in that they know the start-up is being supported within a reputable program. The ideal situation is where the two merge, where it’s a combined effort to take an entrepreneur and turn the idea into a sustainable business and attractive investment opportunity.
What are some of the success stories that have come out of mLab?
mLab is still pretty new in the ecosystem and we are currently supporting our first group of start-ups.
I think in a country with huge unemployment and skills shortage we view the first success of our entrepreneurs as them taking that difficult step in doing their own thing. All of the founders and their teams at mLab could easily find a really good job since their skills are now in high demand, but they have chosen to create opportunities for themselves and hopefully soon for others and that is what our economy desperately needs.
If I have to mention one it would be Mobi.lity. They recently launched the GoMetro service for MetroRail in the Western Cape with great success and will be launching in Gauteng later this month.
We will be publishing profiles of all the start-ups in our current program very soon.
What are your predictions for the future of mobile?
Having spent some time in the industry I have learned that you never predict too far ahead, especially with regards to platforms and manufacturers. Things change over night.
But if I have to give a prediction it would be that mobile and apps of the future will not resemble anything we associate with today, in fact we will probably not even refer to them as mobile or apps. I think handheld bulky screens and even a singular smart device will be gone and replaced by a bunch of different censors carried on you, in you and not even with you and that will provide you with a holistic mobile experience. The internet will be used by things more than people and I think mobile will evolve to cater to that shift. It will be a world of sensors and experiences rather than ‘a’ device and ‘an’ application.
We have already seen some of these in forms of smart glasses, smart wrist bands, smart appliances, and smart cars. It will be about context, your real life, less virtual. I guess screens in my opinion will be any surface and a phone will just be an instruction you give to speak to someone. I also believe app stores will be either much smaller or wont exist, as we are currently in a phase of hyper open innovation. Already apps are starting to ‘consume’ each other to create bigger, better apps and at some point the best ones will become part of a unique service offering from either the platform owners or the manufacturers.
But hey, l’m a dreamer so lets see what happens.
Thanks Derrick, your dreams don’t seem too far off where I think we are headed too! We look forward to seeing the great things that mLab is helping create. Follow Derrick on Twitter here, and find out more about mLab here.
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