Kencall: Blood, Sweat, Tears & Bureacrats (Part 2)
In this second half of the post on Kencall, I want to talk about parts of the case study that I found interesting. Again, a copy of the case study can be found under part 1 and you should read it and also leave your own comments about what you found interesting.
For me, I have found that the best way to learn about business & entrepreneurship is to focus on the personal journeys of the founders of these companies because it is within that journey that you’ll discover how hard it was for them to get started, what it was that they did that worked, what didn’t work, etc, etc; So, when I talk to Kenyan entrepreneurs that’s really what I’m looking for. I want to learn about their personal journey. I don’t want to get a bunch of numbers cobbled together on a page about sales & profits & AGM meetings because you won’t learn anything from that — numbers alone won’t capture the story.
When I first started reading this case study, the first thing that jumped out at me was the recognition that in Kenya, you need connections in high places and it’s something we have talked about here, i.e. the wheel & deal culture that defines Kenyan business and this something which can either end up being very good for you or very bad for you. However, I have concluded that in the long-term, this wheel & deal culture is ultimately what destroys innovation and creativity because too many people are benefiting from a system that has allowed them to make quick money without having to work very hard for it and when this happens, a country cannot develop any long-term indigenous companies. This is why I keep saying that Kenya doesn’t produce much of anything. People lie in wait for the right regime to come into place, then you wheel & deal yourself into quick wealth without having to make anything (Transcentury, Equity bank, Family bank – what are these people making? nothing! they’re just taking people’s money).
So, in 2001 when Nesbitt decided to move to Kenya and start this company, he teamed up with a childhood friend who the case study describes as someone who came, “from a powerful business family who would provide the land and get the approvals…the father was subsequently appointed Minister of Telecommunications in December 2002 – what a godsend I thought (these are Nesbitt’s words)- but immediately thereafter they informed me that they had a different partner and our agreement was terminated. Although I was deeply offended, I was confident that I could survive the setback.”
As I’m reading this, I’m thinking to myself…who was the Minister of Transport and Telecommunications right after Kibaki came into office? It was John Michuki. So, this “childhood friend” must have been one of Michuki’s sons and I’m thinking it was Francis Michuki.
Now, why would Francis (assuming it was him) do this to a childhood friend? He did this because Nick Nesbitt gave him an idea, which he obviously thought was a good one and which he thought (with his fathers connections) he could “easily” use to make money for himself. This is where the wheel & deal culture comes in. I do not think Francis went on to start an outsourcing center. He probably realized soon after, that implementing the idea was going to be too much work and after abandoning his childhood friend, he quickly abandoned the idea as well.
However, as I’ve said before, when you live in a semi-criminal economy or in a state where crony capitalism rules the day, with the right connections, you can make a lot of money without having to work at all and I’ll tell you how. When Michuki was the Minister of Transport, he implemented new rules (& good one’s by the way) – which required all public transport vehicles to be fitted with seat belts. He also introduced a rule whereby drivers would be checked and arrested for drunk driving, but guess what? Guess who got the exclusive contracts to not only sell the seatbelts in Kenya, but to also sell the alcoho-blow devices that the police had to use? Michuki’s sons.
So, why waste time sweating for 10 or 15 years trying to build a company when you can get an exclusive contract and make millions of shillings within a few months?
This post is not just about simple gossip. I had to use these personal stories because I think they’re the best way to highlight the point I’ve been trying to make about this wheel and deal culture, which is that the people who are willing to work and sweat and who are not looking for quick money, but who are interested in building long-term viable companies are being shut out of the system and without these home grown indigenous companies, the country will not be able to reduce it’s poverty numbers.
In Part 3 of this series on Kencall I want to talk about some of the operational structures of the company, the bureacratic encumbrances they had to overcome in order to get the company off the ground and the negative stereotypes about Africa as a place where an outsourcing center can even exist.
I know people keep wanting to hear these dreamy eyed positive stories about business in Kenya, they want to believe that they can just wake up in the morning and their ideas will flourish, but hey! people need to be realistic about what it takes and the real world is a messy, difficult place.
I was going to say something else, but I’ve forgetten what it was. Anyway, may everyone have a fruitful and productive day.
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KE
I am still trying to figure out whether to comment piecemeal to each part or wait until you have all the posts done. Let me first say that I have read the case study with interest, nay enormous interest. Now the surprising thing is the almost diametrically opposite conclusions that I am drawing from the case study as opposed to you. Let me delve immediately into the case study.
Did you read the letter Nesbitt wrote to the Deputy PM when asked about what it would take to make Kenya a major BPO destination? Then did you read the reaction of KenCall during the PEV fracas in Kenya? Did you also hear what some westerners say about Giraffe, bones and Africa? Then look at the odds this guy has faced. Do you think if he was telling you about his dream of making a pioneer BPO company before he did it you would tell him go for it or you would tell him Kenya is trending towards disaster?
This is exactly what I keep saying here. When Obama came with his message of hope some people said the most nasty things. Oh look at this young black naive dreamer. Why waste his time? If Obama had listened to them he wouldn’t be where he is. Do you think we who try to project a positive image about Kenya dont know the difficulties? We are even more aware of the difficulties than you doom-soothsayers. Imagine trying to write something positive about Kenya right now when everything seems to be going haywire. I can tell you it’s not easy.
But let me tell you something I believe the best things in life are done against the odds. Look at the early christians in Rome, Mahatma Gandhi, the struggle for independence, the fight against slavery and the allied battles of the first & second world wars. All this things were fought against great odds. During this times some pessimists said forget it we can never dislodge the British they have superior technology, money and status we cant do it. They accused those who said it could be done as dreamers. Today we are accused of drinking koolaid whatever that is. I put it to you if koolaid is what Mahatma, the early christians and independence heroes drank then by all means send me a crate, nay make that two or more if you can.
When I talked of the fibre-optic cable some were trying to digress because they have small minds. You see to be a visionary requires you to see far. I play chess and it has taught me alot that if you can keep several moves ahead of your opponent you are guaranteed victory no matter the situation on the board. You can win against an opponent with far superior pieces. It is the same in business and success in life. If you believe in yourself it doesnt mean you wont suffer or wont make mistakes but you will eventually succeed. I will make follow up comments once we have all the details. However I notice the case study is redacted is it possible to get a complete one say by a link?
A link to competitor. Maybe Kencell can productize their services?
http://www.123employee.com/
Jellyfish:
You pose an interesting question. Had Nesbitt come here and said that he was thinking about starting a BPO in Kenya, post PEV, I would have told him to go to Rwanda instead, but in 2002, when he returned, Kibaki had just been elected and there was great optimism for the country. However, things have changed since then, but again, some people have the capacity to overcome just about anything. Not many, but they do exist.
I don’t know why you are refusing to accept that Kibaki has really been a failure and that things are getting worse and more difficult.
At the end of the day, everyone is going to make their own decisions about what they want to do. So, they’ll come here and read what they want, go somewhere else and read what they want and come to their own conclusions.
Why do you blame the leaders???
Its the people who are stupid, not the leaders. The leaders are only taking advantage of teh situation.
@KE
Great stuff man. Some of the pages in the case study are missing while others are truncated. Could u please repost so that I can give u my 2 cents.
You’re the best.
Nimesoma nikaona ni kweli kabisa. Yaani when Michuki introduced the safety belts & alcoblows, we dint have to think alot so as to identify the supplier you are a genious. I also think this also applies with the indians. They give tenders to each others companies e.g where I work, all our creditors i.e those who supply us are all Indians while African companies wanawekwa Kando. Example. If I & another mhindi each started an office supplies business then we approach a big established Indian firm to supply them, they shall prefer to support the mhindi business over me. My business shall be left struggling while that of my mhindi counter part grows considering that many companies belong to Indians.
Kenyan Dude:
I checked the PDF attachment. One page was truncated and I’ve fixed it, but all the other pages are fine. It was not a long case study — only 17 pages and they are all there. So, you can go back and re-read the part you couldn’t see before.
Chegepreneur:
Why would you even bother doing business with Indians? They’re very insular people. I’d sell them whatever they need and take their money, but I wouldn’t get into business partnerships with them.
** Book review of “It’s our turn to eat” in the New York Times: http://www.nytimes.com/2009/07.....;ref=books
Once a book lands in the NYT, it sales go up.
Actually, page 3 is missing from the case – it would be great if you could add that. This is great stuff though and I look forward to your third post on this.
I have the same concerns about starting a business in Kenya – the wheeling and dealing is too much.
Have heard of this one KE
http://www.horizoncontactcenters.com/
First and foremost, Hongera! to Marty Nesbitt for being on the vanguard of the new Kenyan economy and literally sticking his neck out and putting it on the line.
I never paid any mind to the ‘Kencall is not paying its employees’ meme because I figured there were two sides to the story and probably some legitimacy on the company’s side….moreover it sounded suspiciously like the typical and tiresome kneejerk reaction of Kenyans in response to mzungus getting paid…in short playahatin’.
To the substance of the case study, I agree how aggravating it is to read about the ‘connections that feel apart at the last minute’ of course a staple of doing business in most parts of Africa. However I think it is illuminating for the micro/SME entrepreneur in that it highlights the dividends that can come from operating below the radar as opposed to Nesbitt who by necessity had to go big because of the nature of his venture, in a fast changing telecoms market in Kenya. It perhaps should also spur some enterprising Kenyans to think of providing support services to these call centers e.g. outsource their training of call agents, transport provision for employees, hardware maintenance etc
Anyway, another good beat the odds story in Kenya…..wish him the best of luck!
okay, I’ve added page 3.
I think I need to get a better scanner.
Sijui,
The working under the radar is something I had to learn painfully. It is why, I don’t attend big “Let us plan how to improve Kenya” functions. It is amazing the amount of work that can be done if you get 2-5 committed Kenyans outside of the limelight. So much gets done!!
ssssh!! Stop giving away the secrets
Another thing from the case study that I think many should heed, when going into a negotiation, bring along people who “can read” people if you can’t.
Before going into any business, DO THE NUMBERS. If the gross profit margin is not 40% or more, don’t waste your time.
I wonder if KenCall has made back all the money it had invested
The problem with this analysis of “doing the numbers” is that it’s based largely on theory. Until you actually execute, you won’t really know what’s happening.
That’s why I don’t believe in business plans. When your starting a business you have to just go with the flow and adjust accordingly. How do you calculate the numbers before you’ve even gotten one sale?
I was supposed to do a third post on this series, which was going to include an analysis of why they kept saying that sales were not their priority. They were concentrating on the operational aspects of the business. With a business like that, shouldn’t sales be everything? especially since the operational aspects of the business are not that complex.
This story about Kencall is so worrying. The local media should investigate and let the general public know about it. How can they hire and yet they cant pay?
And perhaps you did not know, for about a month now, Kencall has been training new staff. The training was supposed to take ten days initially but a month later its still on going.
That’s how I came to know about your blog after googling for about an hour for any tangible thing about Kencall. If they can’t pay their employees, them why the hell should they be hiring in the first place? if anything, they should think of wrapping up their business.
Before you do a part three on Kencall, please take time and interview a trainee or an employee of Kencall. It seems a great deal of fraud to me.
I really agree to what you are saying, the success stories we often hear are just the cover page of what really happens. I personally have experienced a lot of short-comings as an entrepreneur.kencall despite being a great company that has managed to rise through the years, the naked truth could make a lot of people opt out of entrepreneurship. Great piece, awaiting part3.