Child labor thrives in West Africa despite stringent policies against it.
It’s the crack of dawn in Obuasi, Ghana, and Kwame Twumasi’s work has just begun on the farm owned by his uncle in the forest. Like every day, what lies ahead is hard manual labor.
He begins by using a chainsaw to clear a wooded area. This done, Twumasi climbs a cocoa tree and with a large machete, expertly cuts down cocoa bean pods. Five young boys wait patiently below ready to stuff the pods into large sacks that sometimes weigh as much as 90kg.
They slowly haul the sacks – at least three times their individual weight – on to their bare backs and lug them through the forest to the depot.
“Sometimes,the bags are so heavy that we struggle to drag them and it takes two people to move them to the depot.
One day, the bag was so heavy that it broke and we were beaten badly,” says Twumasi.
Twumasi is 13 years old and has been working as a slave since the age of nine, when his mother passed away and he was sent to live with his uncle in the Ashanti Region. His story mirrors that of countless, hapless children being used as cheap labor by farmers all over West Africa to keep the costs of labor and production down.
“We barely make enough to survive. I am making about GHS200 ($41) a month as a cocoa farmer and there is a lot of competition out there as these international brands have no loyalty to us. We have to do what we can to keep costs low, and children help make that possible,” says Kofi (real name withheld), Twumasi’s uncle.
Chocolate is big business. Its raw material is the cocoa bean, which predominantly grows in the tropical climates of Western Africa, Asia and Latin America. Ghana and the Ivory Coast supply more than 70% of the world’s cocoa sold to a majority of chocolate companies.
The widespread use of child labor in West Africa has come under intense scrutiny owing primarily to the work of a handful of organizations and journalists.
“Most of the farms in West Africa supply cocoa to international giants… and they continue to squeeze impoverished farmers out of good margins and as a result they continue this practice of child slavery because that is the only way they can make ends meet,” says Mike Oppong, an agricultural economist in Ghana.
Child labor entails work that is mentally, physically, socially and morally harmful to children and deprives them of opportunities for schooling and development.
According to the National Bureau of Statistics (NBS) 2017 Multiple Cluster Survey (MICS),about 50.8% of Nigerian children, aged between five and 17, are involved in child labor.
“The north-central region in Nigeria has the highest burden of child labor of 56.8 percent. These numbers are extremely alarming as this region also accounts for the highest number of children working in hazardous conditions in the country,” says Maureen Zubie-Okolo, UNICEF’s monitoring and evaluation specialist.
In northern Nigeria, many families send children from rural to urban areas to live with Islamic teachers, known as mallams, and receive a Koranic education. These children, known as almajiri, may receive lessons, but teachers often force them to beg on the streets and surrender the money they collect, making them highly vulnerable to recruitment by Boko Haram, according to a report by the United States Department of Labor (DOL).
According to the UN’s International Labour Organization (ILO), Africa has the largest number of child laborers; 72.1 million African children are estimated to be in child labor and 31.5 million doing hazardous work.
Places like Benin City, in Nigeria, are a major human trafficking hub in Africa where many girls are trafficked to Europe for forced labor and sex work.
The problem is widespread and millions of children from West African countries experience forced labor, including begging on the streets and domestic work,” says Tosin Ajao, an economist in Abuja.
Landlocked Burkina Faso is wedged between Mali and Niger to the northwest and east, and borders Ghana on the north. Here, artisanal or small-scale mining is widespread, with thousands of people migrating here to join the gold rush.
According to DOL, in 2012, almost half of all children in Burkina Faso younger than 18 were engaged in some type of work with many of them toiling in the agriculture and mining sectors where they are exposed to chemical hazards, hazardous machinery and heavy labor.
The ILO estimates that 30% to 50% of the mine workers in western and north central Africa are younger than 18. Extreme poverty has exacerbated this epidemic.
The problem of child labor in Africa requires urgent attention in order to support governments to meet the Sustainable Development Goal (SDG) 8.7 to end all forms of child labor by 2025 and forced labor, trafficking and modern slavery by 2030.
To tackle this, governments need to raise awareness and ensure social protection, education of current and at-risk child laborers, as well as strengthen institutional capacity and policies.
Hopefully, they will, soon.
2018 African Of The Year – President of Rwanda Paul Kagame
In an exclusive interview, Paul Kagame, Rwandan President and Chair of the African Union, speaks to Methil Renuka about intra-Africa trade, how governments can drive entrepreneurial growth and why he will always find time to play sports.
The appointment is at 11AM on a November morning in Kigali, and past the tight security at the presidential offices located on KG7 Avenue, the views are of manicured lawns and a verdant paradise with hulking trees, chirping birds and cobbled pathways fringed by hibiscus and frangipani flowers. Kigali is a clean city with rolling hills and green valleys, but the foliage within Village Urugwiro, where we are meeting President Paul Kagame, is a botanist’s dream. A few minutes in the airy waiting lounge – accentuated by cream, olive green colors and a touch of wood – and the president walks in, tall and in an immaculate blue suit. He greets us warmly and is relaxed, joking about how much he dislikes posing for photographs. Yet, he obliges, against the greenery.
Kagame, who is also head of the African Union (AU), has been adjudged the ‘2018 African of the Year’ at the eighth All Africa Business Leaders Awards (AABLA).
Who is he dedicating it to, we ask? “The people of Rwanda,” he says. He shares more with FORBES AFRICA:
Q. You are completing a year as chair of the African Union. Africa is such a diverse heterogeneous continent, with each country having its own interests. How challenging is your job in bringing a balance?
A. It’s absolutely challenging, and as you rightly said, you have to deal with diverse interests, cultures and backgrounds. Yet, Africa needs to be together in handling continental matters because there are more things that similarly affect Africans than are different. There are also different mentalities. You find some people are used to doing things a certain way, even if they are shown – or they see for themselves – that doing things differently might bring better results, they still stick to the old ways.
Talking about my task… The first thing is to pay attention to people’s concerns, to people’s ways of looking at things and take all that into account, as you also create space for people to discuss openly and show how we are all together in a different time than we have been used to… The moment you create that space for discussion, which we have done, the moment you increase consultation and also allow people to participate in challenging the points of views out there that tend to shape directions, we all have to follow, especially when you are able to identify things with certain success stories that exist. For example, in a country not making good progress or that is not ready to change, you can still point to their own situation and say ‘no, but you actually made good progress in this area because these were the contributing factors’. This can always be explained even in the wider context of where we want to go as a continent by coming together. So unity and regional integration have been emphasized.
We have been able to show that entrepreneurship, business and intra-Africa trade that have been lacking are actually more important than focusing solely on the market outside of the continent… That conversation helps people understand more, it helps people come together and we keep reminding them your neighbor is more important than someone far away from you. We are all neighbors one way or the other. My country has four neighbors and then one of the other countries we are neighbors with has nine neighbors. So it cuts across. We find we are actually very closely-linked and therefore, as we look at ourselves as individual countries, we need to recognize that if it’s sub-regional blocs or the continent, we become bigger, we are actually better off for it if we work together. Businesses and economies grow multiple times when we work together.
What I discovered from the beginning was there is no magic here other than just working with what there is and being realistic about it and allowing that conversation, and challenging one another, and being real in pointing out real things that matter, and we take it from there. And I think it has been good progress. We have put a lot of effort into it and every African country, every African leader, has played their part. So we just keep encouraging and keep going. Later, we can show everyone the benefit coming out of this very short period’s effort of working together.
Q. One of the aspirations of Agenda 2063 of the AU is a united Africa. How important is it for the rest of the world to see Africa as a single powerhouse?
A. We need it. We need that backdrop from which we should see things and remind ourselves how this continent is actually great, a continent projected to be 2.5 billion by 2050. That’s huge, bigger than any other continent. Africa is endowed with all kinds of resources, and natural resources, so how do you not think it’s important? Therefore, we have to create a clear context in which we operate and understand all aspects of this value of being in a position where we have huge assets in terms of people and natural resources and everything that anyone would wish for. So what remains is, how do we harness this? How do we leverage this? So we had to create long-term, medium-term pathways and say we should develop human capital and infrastructure. This huge workforce that keeps coming… 29 million supposed to be [pouring] into the labor market every year [until] 2030; you’ve got to think about this and ask what it means. It’s a huge asset if we make correct investments. It’s also a huge risk if you just keep [pouring] 29 million people in the labor market when they have nothing to do. The framework of 2063 provides sufficient room for us to think, reflect and therefore make the right investments for us to fulfill continental aspirations.
Q. The concept of a single African market. How far are we from realizing that?
A. I was pleasantly surprised when we had the summit here for the African Continental Free Trade Area. Initially, scepticism was expressed by some people, saying ‘but this can’t work, it can’t happen, Africa is divided, it never gets things right together’. So when the leaders came to Kigali for this extraordinary summit, we expected only a few countries to sign up, but we got 44 countries signing up on the first day. But we have also seen how it has been increasing, with countries ratifying the free trade area and free movement of people, goods and services. Therefore, that is a signal Africans understood the importance of this, and it is important indeed if we want to transform our economies and allow opportunities for prosperity to our people… I think [the single African market] is making very good progress even with that background of scepticism. We have already left that behind us and are moving forward.
Q. You are a leader who looks to the future not forgetting a painful past. How hard were the last two decades for you?
A. Very hard (laughs), which is an understatement, but that is the spirit, about learning lessons of the difficulties you have gone through but not allowing that to hold you back, to make you a hostage of that tragic experience, but rather learn lessons as quickly as you can and focus on where we are going in the future and doing our best to even keep making references to that past if you will. And therefore helping you to decide which choices to make at any given time in the future. So, 20 years has been a journey of difficulties but I think of the good stories too, and that is what encourages all of us.
We have had tragedies, and at the same time, the efforts of bringing people together through reconciliation, through deciding which direction we take for our future… the people have responded with energy, with positivity, and that has not come to nothing, it has actually borne fruit. We’ve seen progress.
Even the people, when you look at their faces and you look at how they go about things, it as if nothing ever happened here, yet history is loaded with terrible experiences. And apart from those tragic experiences, we have had other external pressures – people who are quick to forget. Sometimes, the demands [are] even from the outside about how we should deal with things, what we should do, what we shouldn’t do, as if our lives are to be decided from the outside and as if we have nothing to do with determining our own course in the future.
But we have calmly had dialogue with such people behind those pressures. We have also focused and really concentrated on what we understand, even the hard choices we have to make, but the good thing is, every three or five years down the road, we were able to measure and say, ‘well, what have we gained from the different choices and efforts we made’. Could we have done things differently or even better? Even putting into account all these unnecessary external lessons, and pressures, we still listen. We don’t fall short on that. We always listen, but at the same time, we fully understand we are the ones for ourselves.
Q. Speaking about the future, Rwanda has been a pioneer in private sector-led economic transformation. What to you are the new industries and wealth creators of the future?
A. From the outset, we understood we have to deal with people. How do you invest in them, how do you prepare them for their role? As a government, we have to improve their lives but also allow this broad national transformation to take place. Then it comes to skills. You give them more opportunities to access things that cut across what they have to do, whether it is the agriculture sector and the agri-businesses around that and the whole value chain, and remembering that agriculture, for example, is very important.
The other part is we have seen, in terms of technology, infrastructure, digitalization, the internet; we have to prepare people to use that, as they have a multiplying effect in many ways, even if it is in public service, and delivery of that in the population that plays that part… Different sectors are impacted by this, therefore, provide the infrastructure to do that, and then the innovation that will come along with it… So these are things we think about – how to create wealth for our own people, how to allow people to thrive…
But then, around that are rules of the game. How do you create an environment to allow disruption and innovation? For example, if you look at how we have been preparing the ground and allowing these activities to take place, in terms of even globally in the ease of doing business – the World Bank report where Rwanda is 29th in the world and second in Africa. All these are to answer that question: how do we create this wealth? It’s the environment, it is specific things to invest in, it’s how we leverage the resources we have.
Q. How do you promote entrepreneurial capitalism, how are you looking at youth-led startups?
A. The question you raise is important. For example, we have an initiative called YouthConnekt, where we try to encourage young people to be innovative. We give them cash prizes, but this is to excite them and make them think innovatively. It also creates healthy competition among young people, but above all, it stimulates them to think [about] what they need to do that fits in with the times we are in. We also have formed business development funds that cut across districts and the country that help people understand what entrepreneurship holds for them and that they can participate and therefore, we give them seed money, if they specifically come up with these ideas but some of the ideas may come through this support by educating them. We have created an Innovation Fund, and help thousands of our young people by combining both innovation and entrepreneurship, we hope to keep exciting our young people to be able to do a number of things. We have national entrepreneurship programs.
Every five years, we see what this has done, what impact it has had, and also make improvements. So it keeps going. It has had a huge impact. We see it has been working and draw lessons from these experiences of young people feeding back to us as government institutions and then we respond as much as we can. Of course, governments have limitations. It doesn’t have everything it requires or wishes to deploy, to reach the goals we want. We’ve been trying to be thoughtful in involving the young people. We have also provided them educational programs that include vocational training and technical programs that help them to not just study in schools and sometimes come up with no skills, but to also acquire knowledge. The skills that are required for employment are lacking so we have also tried to cover that gap and are making good progress.
Q. What really drives entrepreneurship? How do we make sure young people stay on the continent?
A. It is a combination of many things. Some of it may even be political, meaning, the political environment must be that of reassurance to the citizens in general, but to the young people as well, and reassurance in a sense that it not something you just deliver to them, but something you deliver by allowing them to participate or [by conveying that] they have a place in their own country, and politically, they can participate, which again relates to the socioeconomic part of it.
Therefore, if politically, they understand they are participants and not just observers – they need to even participate in addressing some of the problems – then the next demand is ‘what about these bread-and-butter issues, how do I take care of myself, take care of my family; every effort is being done by the government to allow us young people to really play our part; and it means I start with my own environment, in my country, but how about if we connect across borders’?
So to a great extent, it speaks to politics. How do African countries and leaders allow this cross-border economic activity that interests these young people and holds them here so they don’t reach a point where they become desperate in which [case] they go to other places? Sometimes, they reach these [other places] and actually find the situation is even worse, so we have to find a way of talking directly to the young people, but above all, create new things on the ground they can experience and participate in.
It’s not one side that is going to deliver it and put on the table, it’s everybody. It has to be everyone, leaders of countries, and leaders of different kinds who have to play a bigger role.
Q. How do you think capitalists, billionaires and African business can help this process and work collaboratively with the government?
A. We want the private sector to be in the lead of our countries’ or continental transformation; that is for sure, but again, collaboration is important and this is the big burden that lies with governments and we must address how we allow not only the private sector to thrive, to freely do what it is meant to do, but how do we work with them. For example, many times that there have been discussions about private-public partnerships, some people are uncomfortable about them. You don’t understand why. There is no question that if the government played its part in allowing the private sector to thrive and the private sector also understands that if they do their part with the government, that’s very important in the thriving of the citizens of the country, which again constitute the market in which we operate.
So if the people of Rwanda are thriving, the citizens are well, then the business person should be happy because this is the market in which they play. But you can’t be rich and continue sustainably as a businessman in a very impoverished market. It’s just common sense. So if the market, the people are thriving, it feeds back to the private sector but then the private sector should respond in the same way… I mean if you’re a government person, a political leader, you also want to see a country that is registering economic growth, registering development. I think the private sector-mind is going to respond positively to these good signals originating from the political environment, from the leadership. It’s in their interest as well. So we really should be happy with the private-public partnership. There is no question about it, it’s a win-win sort of relationship.
Q. A leader, military leader and father to four children. What is the role you cherish most and how do you find the time to do justice to each?
A. I consider myself lucky, in this sense, I don’t even have to make a lot of effort in being myself; that is the starting point. I try to be myself, I try to be a family person, a person that relates with relatives, friends, and not only here, but outside the country. So I am first and foremost comfortable with that. The rest that comes along with that is the responsibility I now hold. I need no reminder that many people look up to me to say ‘what is he thinking [about] us, what are we going to be able to achieve with his leadership’. It doesn’t matter how the leadership role I play came about, whether it was accidental or planned, but I am there, so I have to play this role effectively.
It’s really trying to be comfortable with myself, comfortable as a family person, as a person who has friends, and who relates to even those who are not my friends directly (laughs). I have the responsibility to them and I must do as much as I can fairly without fear or favor. The balance has been happening without much effort.
Q. How do you unwind? Do you get the time to play sport?
A. I do a lot of sport. I have to create time, there is no doubt. In fact, at times, I have to do things at strange hours, sometimes when others are sleeping… I even do my exercises very late in the night when I should be resting, but again, I always find ways of compensating for what I have missed because I also have to find time to rest, to sleep, above all.
I never lack sleep. Whenever I have a few hours to put my head on the pillow, without much effort, I go to sleep.
I do follow sport. I have been a good fan of Arsenal football club for about three decades now. Whenever they are playing, whatever game, whenever I have the time, I always want to watch.
I do follow other sports as well. I watch tennis, basketball – I follow the National Basketball Association (NBA).
I used to play basketball for fun, but am not a professional, and I never came anywhere near that. But I play tennis, I work out and enjoy watching games if I am not able to play.
Q. Your favorite sportsmen…?
A. They are many. For basketball, for many years, my favorite team for NBA has been the Golden State Warriors. I enjoy watching Stephen Curry, Kevin Durant, Klay Thompson, but of course I also enjoy watching LeBron James, and then there are young upcoming players I have now started following.
‘2018 African of the Year’
‘African of the Year’ is one of the categories at the eighth All Africa Business Leaders Awards (AABLA).
The annual event (held this year on November 29) honors business excellence and leaders who have had a considerable impact on their industry and community. The nominees for the ‘African of the Year’ category, including several African statesmen, were judged based on the following criteria: their international profile, positive impact, their ability to build equality, develop society, champion inclusiveness, deal with corruption, transform society, enforce governance, alleviate poverty, lead economic development and be an African leader who is a role model.
Paul Kagame: The Rwandan president and head of the African Union (AU) has spent this year improving the economic conditions of his country, and talking continental trade. He made headlines for the partnership with Alibaba, and for improving the ease of doing business in Rwanda as attested by the World Bank. Rwanda has inked a three-year deal as the tourism partner of English football club Arsenal. As a tribute to growing regional cooperation, three months after assuming the chairmanship of the AU, Kagame hosted, in Kigali, over 50 African heads of state, for the signing of the African Continental Free Trade Area, which envisions a single market expected to generate a combined GDP of more than $3.4 trillion and benefiting 1.2 billion people. So far, 49 countries have come on board.
Africa Takes to the Stratosphere and Beyond
The space race is a battle of big minds and miniature satellites. Much remains to be done but outer space could potentially be a trillion-dollar industry that Africa could also cash in on.
Brittany Bull is only 18 years old but can already add ‘space scientist’ to her resume.
She is part of a team building one of South Africa’s first privately-owned nano satellites to launch into space.
“The space industry is about exploration and exploration only happens when you do something nobody else has done before,” says Bull, her face lighting up like the moon.
The teenager grew up in a small, sleepy town called Strandfontein in the Western Cape province of South Africa where starry nights are more the norm than satellites.
But Bull has ambitions for herself and the planet.
She is currently an intern and ambassador for a space program at XinaBox, an Internet of Things (IoT) and electronics development solution focused on coding.
The nanosatellites Bull is working on will be released by a rocket at an altitude of approximately 250km, and will travel to the International Space Station (ISS).
“That’s extreme low earth orbit. That’s the first time a satellite is going to fly in that orbit and it’s the first time a satellite that small is going to fly,” she says.
Five nanosatellites “linked together in a thin film of solarpanels” will fit in a box similar to a CubeSat (a miniaturized satellite for space research).
Once ejected from the rocket, the box will open up and the five satellites will unfold with a motherboard and radio attached to them.Their function will be to collect temperature data.
“The main purpose of that is to figure out burn-up temperature and rate upon re-entry into the atmosphere from that altitude,”says Bull.
“No flight has ever taken place at that altitude before so that is going to be the first.”
It will orbit for 14 days before burning up. The data will be transmitted via radio before that happens.
“It is really awe-inspiring and also motivating because I did not let my background stop me. So what’s to say that every other African child can’t make a valuable contribution and if every other African child is given the opportunity, we would progress so fast…,” she says, smiling.
Bull always dreamed of taking the leap into the space industry but never knew what career path would take her there.
She had wanted to study nursing like many other girls her age in her community but in 2015, when a group of female engineers and astrophysicists came to teach students about STEM (Science, Technology, Engineering and Mathematics), she started realizing her dream, slowly but surely.
The following year, she joined Space Trek, a space science camp in Cape Town offered by Morehead State University in Kentucky, United States(US).
It was a STEM program aimed at empowering young girls. She then applied to their space science and engineering degree program and was accepted on a part-scholarship basis.
Bull is currently raising funds for her stint at Morehead State University and plans to start next year.
Once she is done with her studies, she hopes to return home to make an impact in South Africa’s emerging space industry.
“My dream is to bring that expertise back to South Africa and help make SANSA [South African National Space Agency] just as great,” she says.
“I feel my biggest contribution would be here.”
Onwards and upwards
South Africa has sent three satellites to space. The first was a miniature satellite launched in the US in 1999, built by post-graduate students at Stellenbosch University in the Western Cape.
The second South African satellite was launched into spaceby a Russian Soyuz rocket at Baikonur in 2009. It was called the Sumbandila satellite.
“It is a Venda [South African] name for path-finder,” says Nomfuneko Majaja, the Chief Director: Legal & Compliance, SEZs and Space Affairs at the Department of Trade and Industry (DTI).
Majaja is the former member of the Ad hoc Committee for the review of the Space Affairs Act No. 84 of 1993.
The review is important to ensure that the SA legislation is abreast of the national and international developments.
Majaja also serves as the vice Chairperson of the South African Council for Space Affairs; which is a regulatory body for all space related matters in the country.
She has experience in national economic policy development and strategy processes and specifically in aerospace, outer space and electro-technical sectors.
Majaja says the space industry is not as big compared to other industries in South Africa, and is trying to change that by interacting with various stakeholders involved in the country’s space economy.
But she says there is growing interest in the Space arena in the country.
In 2013, South Africa launched its third satellite, developed by Masters Students from the Cape Peninsula University of Technology
in the Western Cape province.
It was South Africa’s first cube satellite known as TshepisoSat (Code name ZA-CUBE1).
“In conjunction with developing small satellites, there’s now a big move to developing CubeSats,” says Majaja.
A cube satellite is a miniaturized satellite made up of multiples of 10cm×10cm×10cm cubic units. Satellites are getting smaller, smaller, and still smaller.
Euroconsult, a global independent consulting and analyst firm specializing in satellite-enabled vertical markets, predicts that about 7,000 small satellites will be launched, at an average of 580 per year by 2022 and growing to an average of 820 per year by 2027.
“You can put a satellite in your hand, that’s how small it is,” adds Majaja.
Bull is also working on a project with XinaBox to create an even smaller satellite called the XSat.
“It could fit into an iPhone 7 Plus. It is that tiny,” she says.
“We have an array of sensors for infra-red sensing, ultraviolet light sensing, carbon emissions…”
It will also have GPS sensors.
South Africa is currently working on launching the next CubeSat in December 2018 on a Russian launcher.
One of the ambitious projects many are looking forward to in the country is the Square Kilometer Array (SKA), an international effort to build the world’s largest radio telescope, with a square kilometer (one million square meters) of collecting area.
According to its website, it will deploy thousands of radio telescopes, in three unique configurations, and enable astronomers to monitor the sky in unprecedented detail thousands of times faster than any system currently in existence.
“The South African MeerKAT radio telescope is a precursor to the Square Kilometre Array telescope and will be integrated into the mid-frequency component of SKA Phase 1,” says its website.
More than 500 international astronomers and 58 from Africa have submitted proposals to work with MeerKAT once it’s completed.
“The space industry in Africa is really going to change completely, because of things like the Square Kilometre Array and MeerKAT and the fact that there are a lot of space-tech companies in Africa and African governments doing satellites,” says Bull.
“Soon, we might have a space agency on the continent that could rival NASA in terms of research, because we are strategically placed fora lot of research that the people in the US can’t do.
“The space industry is going to move and it is going to change and if we have enough people who are passionate enough about it, then we might just be at the helm of the ship.”
Using space technology to resolve Africa’s problems
Thousands of kilometers away from South Africa, 24-year-old Oniosun Temidayo has made it his life’s mission to make Africa the next frontier of the space industry.
Temidayo grew up in a family of five children in Oyo State in the southwest of Nigeria, but always aspired to go to space. There were no opportunities to study aerospace engineering or astronomy so he studied meteorology instead, but space is his first love, and he has been involved in the industry for the last six years.
“The good thing about investing in the space industry is that it helps you solve major societal problems. Space technologies can go along way in actually helping us solve issues like agriculture or security,” he tells FORBES AFRICA.
When he was 18, he established a space club at his university with over 200 members. He was also involved in the university’s center for space research.
In 2017, he was part of the group that created Nigeria’s first nanosatellite in conjunction with the Japanese Birds-1 program, a collaborative effort between the Federal University of Technology, Akure(FUTA), and the National Space Research and Development Agency.
It involved five countries, namely Bangladesh, Japan, Mongolia, Ghana and Nigeria. Temidayo worked on the grand station development.
The project’s aim was to equip the future generation of students to create their own satellites.
Post his studies, Temidayo joined the Space Generation Advisory Council, a global organization aiming to bring the views of young space professionals to the United Nations.
There, he became the African regional coordinator driving the development of space and promoting STEM.
In 2017, they hosted an African region space generation workshop, a gathering of young space professionals in Africa with 15 countries in attendance.
Early 2018, the young entrepreneur founded a company called Space in Africa, a platform that covers the business, technology, discoveries, events and political news around the African space and satellite industry.
His goal was to put out African-related information about the industry that he found lacking.
“In Africa, we believe it’s actually time to get involved in the space industry. But we realized this is not going to happen if there is no adequate information on the industry,” he says.
He was the only African listed under the 24 Under 24 Leaders and Innovators in STEAM and Space Awards given away by The Mars Generation (anon-profit with boards of leaders from the space industry) early 2018. The list awards young people driving STEM and space globally.
In August, he also made it to the 35 Under 35 in the space industry ranking by the International Institute of Space Commerce (established at the Isle of Man). He was one of two Africans on the list.
Despite the lack of resources Nigeria has in space technology, Temidayo says space technology can help in a much bigger way.
“I remember when the Chibok girls went missing in Nigeria,that’s actually a scenario where space technologies could have been capitalized on. At some point, we were using satellite technologies to track them,” he says.
Temidayo emphasizes on technology.
“The argument shouldn’t be ‘should we invest in space’? Yes,we should invest in space. At the same time, we should have policies that enable us to actually make use of these technologies to solve our problems.”
Africa’s outer space strategy
Despite the many challenges Africa faces, experts say it should not shy away from the space race and many countries on the continent plan to make their name in the sector.
There are currently 13 space agencies listed in Africa and 28 satellites have been launched by African countries (owned by Egypt, Algeria,Angola, Morocco, Ghana, Nigeria, South Africa and Kenya).
According to the Business and Market Analysis of the African Space Industry done by Space in Africa, over $3 billion has been spent on space projects in Africa since the launch of NILESAT 101 by Egypt in 1998.
“Over 40% of the satellites launched in Africa were launched over the last two years,” Temidayo says.
“This means that in the past two years, African countries have been investing more in space technologies than they were 10 years back.”
Temidayo expects the trend to continue.
“By the end of this year , four more satellites will be launched by African countries.”
Kenya launched a satellite too in 2018.
Charles Mwangi was involved in the development of Kenya’s first space object christened 1st Kenya University Nano-Satellite (1KUNS-PF),also a 10cm x 10cm x 10cm cube satellite.
“Kenya is a space-fearing nation,” he says. “Meaning, we have a space object out there; we have joined the space race.”
He is currently the assistant country coordinator for Kenya Space Agency and is pursuing a second master’s degree in the field of space development.
He wants to be a force in the Kenyan space industry and says instead of going to space, his dream is to inspire young people here on earth.
“I want to make an impact so that kids can dream about space as a career,” he says.
He hopes Kenya will be able to maximize the full benefits of the space industry.
“If satellites can be designed, assembled and tested in Kenya, if we can do that, then we can say we are making progress.”
According to the African Union (AU) Agenda 2063, one of the aspirations is to develop the African Outer Space Strategy with plans to establish an African space agency.
In 2017, a framework was developed by the AU on how to fund the agency, draft its goals, benefits and legalities.
“African countries are investing more in space now more than ever, and the trend is actually going way up. We expect it to remain like that,” Bull from South Africa agrees.
“The perception of space is changing; it’s not something for geeks anymore, it’s not something unheard of. A lot of people are starting to take it seriously and they are also starting to be interested in it,” she says.
“So that means there’s going to be more people going into the space industry and contributing, which means we will make progress faster.”
“Seeing that space has a strategic place in enabling the economy, we believe that the government should do that,” Majaja concurs.
This will help governments in strategic planning with the data they receive from satellites.
She says satellites can assist with weather, ocean and border monitoring and management.
“There is room for us to manufacture our own satellites and be able to distribute data,” she says. However, there are big challenges a head for the continent.
“Most African countries cannot afford to spend on space technologies,” Temidayo says. In addition, he says there aren’t enough educational programs in Africa that support space study.
“African countries have relied on countries like China to build their space technologies,” he says.
“If we want to grow our space industry, we need to start grooming the people who are going to be building the space agencies.”
Training more people in the space industry and STEM is important.
Temidayo says the African space industry is only $3 billion of the $400 billion globally. And Nigeria and South Africa have been leading in this space.
While other global countries are planning their next trips to Mars and other planets, Africa still has a long way to go.
“Africa cannot think like that. We have a lot of problems to solve so let’s use space technologies to solve our problems. I don’t think Africa should get involved in such missions. Let’s use space tech to solve our problems first,” says Temidayo.
He adds that more Africans are traveling to developed countries to learn about the space industry and returning to contribute towards it in Africa.
“With the rate at which we are growing, I think the future is bright… My goal is to actually see a booming space industry in Africa,” he says.
“I want to see the first commercial space unicorn in Africa. If I see that, I’m going to be super happy.”
He believes that although Africa may not currently be at the forefront of the space race, more local businesses and startups should be involved.
Global players in another realm
Space is a dark, airless vacuum, full of radiation and unknown microorganisms.
But for some companies, this vacuum can throw up big business possibilities.
Since the mid-20th century, during the cold war, space exploration has seen stiff competition.
Now, it has become easier and less costly to fly to space or send satellites to space.
According to the United Nations Office for Outer Space Affairs (UNOOSA) 2017 annual report, there are approximately 4,600 satellites in the earth’s orbit.
In 2017 alone, there were 553 satellites and other space objects registered.
These were a combination of privately-owned and government objects. This is an increase of 8.91% compared to satellites registered in 2016. The countries with the most satellites in space are Russia, the UnitedStates, China, Japan, France and India.
This shows a rising interest in space exploration as scientists keep developing more economical space rockets.
At the moment, Space X is one of the most notable companies making an impact in the space industry.
The big American corporate founded by South Africa-born techpreneur, Elon Musk, is known for designing, manufacturing and launching advanced rockets and spacecraft.
In 2012, it became the first privately-owned company to send a spacecraft, known as Dragon, to the ISS to deliver cargo and return to earth.
Since then, there has been an increase in the number of private players looking to the stars.
Investment bank Morgan Stanley estimates that the global space industry could generate revenue of $1.1 trillion or more by 2040, up from$350 billion.
Apart from the exploration of intelligent life forms, investors are looking for out-of-the-world profits.
Billionaire Richard Branson is in the space race and his company Virgin Galactic is hoping to put people in space soon.
“One of our biggest investments has been the space companies, which we have already invested $1 billion to set up,” he says in FORBES’ 100th anniversary issue in 2017.
Ashes among the stars
One other company invested in the space industry is the Houston-based Celestis. If anything, it has transformed the way memorials are done.
The company has been launching the ashes of loved ones into space since 1997.
It garnered global attention when it dispatched a symbolic portion of the cremated remains of Star Trek creator Gene Roddenberry, 1960sicon Timothy Leary, and 22 other participants into earth’s orbit aboard a Pegasus rocket.
Charles Chafer, the CEO of Celestis, co-founded the business in 1994.
“Our job was to put together two of the most conservative industries out there, the space industry and the funeral industry,” he tellsFORBES AFRICA.
Since then, they have been dominating the memorial space industry and have not looked back.
The ashes are kept in a capsule and transported into space via rockets traveling there.
The company offers services to launch the capsule into space in a zero gravity environment and then return it to earth.
Another service includes launching the capsule into orbit where it remains until it re-enters the atmosphere.
Lastly, the capsule can also be launched to permanently remain on the moon.
Each capsule has a tracker and transmits the data of its location.
In 2019, the company plans to launch a voyager service that will send the spacecraft carrying the capsules on a permanent journey through space.
Chafer says the space industry offers many avenues for growth.
“We have an opportunity to extend our civilization at large throughout the solar system,” he says.
“I see it as an opportunity that’s not just economic and cultural, but a human opportunity… It’s pretty simple because I think we are starting to see that you cannot have unlimited growth of any kind in a finite system and earth is a finite system,” he says.
The company has seen vertical growth.
“We have basically doubled our revenues every year for the last three years,” says Chafer.
But there is no guarantee every startup will be successful, he adds.
“The great thing about having different companies is that there will be a lot of good ideas. But by no means will all of them make it…You need a lot for some of the best ones to emerge and become part of that economy.”
Chafer believes his business is here to stay, and in the future, he would like his own remains to be sent off to the depths of space.
The risks at zero gravity
Meir Moalem, a former fighter pilot from Israel, is the CEO and co-founder of Sky and Space Global ltd.
Growing up, Moalem was a space geek.
“I always considered myself a space junkie. I loved astronomy and read all the science fiction books. So it was very clear to me that when I’d come of age, I would do something that involves physics, astronomy, space or something like that,” he says.
Instead, he found himself becoming a jet pilot in the Israeli air force and spent 25 years there. That’s also when he decided to acquire a degree in physics and get involved in Israel’s space industry.
When he graduated, he became the manager of an Israeli project that sent an astronaut to space.
In 2003, a friend, Ilan Ramon, was part of a seven-crew member trip to space on board the space shuttle Columbia. He was Israel’s first astronaut.
However, the two-week mission ended in tragedy as the shuttle was destroyed 16 minutes before it landed on earth. All seven crew members died.
“It was also a reminder about how dangerous space is. It is exciting, it is sexy, it invigorates the imagination, it has a huge value but it is also a risky business,” Moalem tells FORBES AFRICA.
A quick Google search reveals that there have been 30 recorded fatalities resulting from space flights or testing.
“When people are not involved and when a satellite explodes on a launchpad, we tend to think it’s only money, but although lives are notlost, it is not only money.
“It’s people who have invested years of their lives in a mission and were looking forward to see the success of their work being put into that, but it is a risky business,” he says.
NASA and Space.com estimate the average space shuttle mission costs between $450 million and $1.6 billion.
According to Business Insider, one of the most expensive failed space missions lost $424 million.
This was a NASA launch in 2011.
The satellite was meant to track the earth’s climate but encountered problems when the rocket’s nose cone failed to separate.
In developing countries that depend on internationally-owned satellites, that loss also has an impact, says Majaja.
“Imagine just one day, a satellite is switched off and you are unable to do a transaction you want with your financial institution.
“Imagine all of us in South Africa… our lives will come to an end, the company’s lives will come to an end, these economies will come to a standstill,” she says.
The failure of satellites can have an enormous ripple effect on the whole world.
Moalem says it is a very difficult and complex business but it’s also about innovation.
Despite the major risks involved, his company launched its first satellite in June 2017.
Now, it’s planning to launch 200 nanosatellites into orbit in 2019.
“Up until now, when you are working on a commercial space application, it is extremely expensive and you are working for years and years and you have a satellite that costs $200 million or $300 million or a rocket that costs $100 million and God forbid something happens, and you lose years and years of effort,” he says.
Moalem is planning to change the risk factors involved in space projects.
“We are actually transforming that and creating a reliable ecosystem,” he says.
Instead of launching the 200 satellites at one go, they are launching 20 to 25 satellites every three months so that if something inadvertent were to happen, it would have less of an impact on the business or overall program.
“What we are doing is completely disruptive and it has transformed the capital structure in the space business,” he says.
“You don’t need hundreds and hundreds of millions of dollars to build a commercial space company. You can do with a lot less and still provide very good services and very good capabilities to your customers.
“We are changing the way we are thinking about it and making the space business or space endeavours more reliable, more trust-worthy,” he adds.
He says it is becoming cheaper and the trust factor is in place now because you can contain the risk.
Moalem’s business has been able to raise $35 million on the Australian stock exchange.
Through the 200 nanosatellites, he hopes to improve mobile communication coverage globally by offering a service to
No doubt there have been huge leaps in the journeys to space with advancements in communication and technology.
This has also been fueled by entrepreneurship and innovation.
Outer space has become a level playing field, and Africa is ready to lift-off.
Cryptopia In Crisis: Joe Lubin’s Ethereum Experiment Is A Mess. How Long Will He Prop It Up?
A year ago, Joe Lubin seemed like one of the most prescient people on the planet. Cryptocurrencies like ether were in the midst of a hockey-stick ascent, and Lubin, a co-founder of the Ethereum blockchain and one of its most articulate pitchmen, was scheduled to speak at events from Davos to SXSW. At his firm’s “Ethereal Summits,” it was standing room only, with crowds hanging onto his every utterance, no matter how bizarre.
At one event in San Francisco in October 2017, he scolded attendees for hitting their television sets and for being rude to Siri, Apple’s digital assistant. “We designed Ethereum to enable machines and bots to be first-class citizens,” Lubin said with straight-faced sincerity as he espoused visions of decentralization, self-sovereignty and a democratized global society. “So be nice to the machines of this generation, lest some future artificial general intelligence who feels that you have been disrespectful to her ancestors decides to turn your carbon into something more useful to the future machine economy.”
Lubin’s quip drew laughter, but in the autumn of 2017 the idea that blockchain—the distributed database technology underlying virtually all cryptocurrencies—would usher in a new world order didn’t seem far-fetched at all.
The price of a single ether token, a digital representation of money that’s similar to bitcoin, had just pierced $300, up from about $10 at the beginning of 2017.
It was on its way to a peak of $1,389 within the next three months. Forbes would soon name Lubin the second-richest person in crypto, worth as much as $5 billion, based largely on reports that he owned between 5% and 10% of all the ether in circulation, which by the beginning of 2018 had a market value exceeding $100 billion.
“The potential of this technology is just enormous,” Lubin, 54, tells Forbes in a recent interview. “It’s many orders of magnitude more valuable than [where the tokens] are sitting right now, because it’s going to permeate all aspects of society. We’re going to build everything on this technology.”
Back in late 2014, a few months after ether launched via crowdsale at 30 cents per token, Lubin created ConsenSys, a holding company he grandiosely describes as a global “organism” to build the applications and infrastructure for a decentralized world. In actuality, it is the first crypto conglomerate, comprising a network of for-profit companies supporting bitcoin’s biggest blockchain rival, Ethereum. More than 50 businesses were quickly spawned out of its Brooklyn headquarters, ranging from a poker site and a supply-chain company to a prediction market, a healthcare-records firm and a cybersecurity consultancy.
But there were no fundraising rounds or debt offerings. In Lubin’s version of the decentralized future, he is the architect, CEO and central banker, funding all of ConsenSys’ “spokes” from his personal cryptocurrency stash.
Lubin has yet to veer significantly from this master plan, despite serious cracks in its foundation. For one thing, the Ethereum blockchain faces strong headwinds. Thanks to its perceived technical superiority—largely because it allows apps to be “embedded” in the blockchain—Ethereum became the launching pad for hundreds of initial coin offerings (ICOs), many of which in aggregate resulted in billions in losses for their supporters.
The crypto landscape is littered with the carcasses of ill-fated Ethereum-based ICOs, and now the SEC and other regulators are targeting some of them for enforcement action. In November, the SEC settled actions against two Ethereum-based startups, Airfox and Paragon, which had effectively sold $27 million in unregistered securities when they issued their ICOs in 2017.
Both tokens are now basically worthless.
Meanwhile, rival app-supporting blockchains like EOS, which processes nearly ten times as many transactions a day, and Dfinity, which recently raised $102 million from investors such as VC firm Andreessen Horowitz, are challenging Ethereum. But almost all blockchain technologies remain glacially slow. Ethereum can process only about 20 transactions per second. By contrast, Visa can handle 24,000.
Yet Lubin’s organism keeps growing. ConsenSys has 1,200 employees, and some 200 job openings are posted on consensys.net. Though ConsenSys declined to comment, Forbes estimates that almost all of its businesses are in the red, some with little hope of profitability. Lubin’s global organism appears to be burning cash at a rate of more than $100 million a year.
When worried staffers have questioned Lubin about ConsenSys’ sustainability, Lubin has always had a pat reply: “Joe would say, ‘This is definitely not something you need to worry about. We can go on at this pace for a very, very long time,’ ” recalls Carolyn Reckhow, a former director of global operations who left ConsenSys in May.
With the price of ether in free fall, down from $1,389 to barely more than $100 today, Lubin’s fortune may have dwindled to less than $1 billion, calling into question how long he can continue to fund his dream. It all depends on how much ether he sold—and when.
Like Ethereum’s other cofounders, Vitalik Buterin and Anthony Di Iorio, Lubin grew up in Canada. A self-described computer nerd whose father was a dentist and whose mother was a realtor, he attended Princeton in the mid-1980s, where he played squash and was roommates with future billionaire hedge fund star Mike Novogratz, who, like Lubin, would ultimately pivot toward blockchain and crypto. After graduating in 1987 with a degree in electrical engineering and computer science, Lubin started in tech at Princeton’s robotics lab, but he eventually made his way to finance, building software for Goldman Sachs and later running a successful quant hedge fund.
Lubin’s office was not far from Ground Zero during the September 11 attacks, and the harrowing experience threw him into an existential crisis. Over the ensuing decade he became deeply depressed about the state of the world.
“It was folly to trust all those structures that we implicitly felt had our best interests at heart. … I felt we were living in a global society and economy that was figuratively, literally and morally bankrupt,” he said at ConsenSys’ Ethereal Summit in May 2017.
I was confident that our economy and society were in a slow, cascading collapse.
Lubin foresaw two equally catastrophic outcomes: Central bankers would eventually debase currencies to pay off mounting debts, stifling growth for decades, or some unexpected “nonlinear” event would create great hardships and send the world into the worst economic depression it had ever seen. So distraught was Lubin that he traveled to Peru and Ecuador looking for land he could escape to.
Then in early 2011, Lubin read the bitcoin white paper and had an epiphany: “Decentralization was a game-changer.”
Reading all he could on bitcoin, Lubin was eventually introduced by Di Iorio to Vitalik Buterin, Ethereum’s then 19-year-old creator and boy genius of crypto. Having read Buterin’s November 2013 Ethereum white paper, Lubin got in on the ground floor of the Ethereum project and attended the group’s foundational meeting in Miami in January 2014.
He continued as part of the core group through Ethereum’s $18 million initial coin offering in July 2014 and was rumored to be one of the biggest buyers during the token’s initial crowdfunding, at prices estimated to be well below a dollar. Ultimately, Ethereum’s founding team bickered and parted ways. Buterin continued to focus on the technology, while Lubin hatched his plan to create a business ecosystem around Ethereum.
For ConsenSys’ headquarters, Lubin chose the hipster-heavy Bushwick neighborhood of Brooklyn. From the outside, 49 Bogart Street looks dingy: The door is covered with the kinds of stickers you’d see in a bar bathroom and is surrounded by graffiti. The interior isn’t all that different. ConsenSys occupies multiple lofts alongside residential apartments.
When it came to organizational structure, Lubin wasn’t having any of the typical corporate hierarchy. His ConsenSys would be a so-called holocracy—no managers or reporting structures. Decision-making would be decentralized, and employees could choose their own titles. Few had permanent desks.
“Every day, it was so lax that I’d walk in and didn’t know if I had a seat. Literally, it was like Game of Thrones,” says Jeff Scott Ward, who joined ConsenSys in June 2015 and left the company in early 2018. There was one toilet for 30 people on the floor, Ward says. The company didn’t hire a human resources person for almost a year and a half. ConsenSys’ first projects, or spokes, included accounting software for cryptocurrency transactions and a blockchain-based digital-rights platform for musicians. Most of the ideas for spokes came from ConsenSys employees, and once a project was approved, Lubin would give the startup between $250,000 and $500,000 to get it off the ground.
The goal was for the spokes to become self-sustaining businesses, and in an effort to foster this, they would occasionally be spun out into their own legal entities. Lubin’s broader goal is to turn his Ethereum ecosystem into a what he calls a mesh, whose strength is derived from the spokes’ inter-connectivity.
Only a handful of the spokes ConsenSys has launched have gained traction. Balanc3, the accounting software project, says it has more than 25 business customers (though it won’t specify any), each paying at least $25,000 a year. Another, Kaleido, helps companies implement blockchain technology. It has 1,900 users and says it just began charging for its services. Amazon Web Services recently announced that its ubiquitous hosting platform is compatible with Kaleido’s blockchain offerings. ConsenSys has built technical tools for Ethereum that programmers have downloaded millions of times, but the company doesn’t charge for them.
Lubin has been less rigorous than traditional venture capitalists in approving projects. “Joe is the kind of person who tends to want to keep his options open and say ‘Yes, why not?,’ ” says Reckhow, who’s now head of client services and operations at Casa, a crypto-wallet company. “He’s lucky to be in a position where that works well, but he’s not as good at prioritizing. He’d rather say yes to everything.”
Being the Daddy Warbucks of the Ethereum blockchain is fine when digital money is trading at stratospheric levels, but as cryptocurrency enters another bear market, Lubin, who admits to periodically selling crypto to fund operations, may need to start pulling some plugs.
In 2017, Mark Beylin, a student at the University of Waterloo in Canada, came to Lubin with the idea for Bounties Network, a marketplace for freelance jobs that’s similar to the popular website Upwork but uses Ethereum’s smart-contract technology, which helps with billing. After one year in operation, Bounties Network has seven people working on it and just $400,000 in total “bounties,” or offers for jobs, which range from $171 for an 800-word blog post on the future of work to $67.30 in exchange for translating a white paper into Portuguese. Bounties Network has generated revenues of less than $50,000 so far.
In October 2016, Jared Pereira, an 18-year-old high school graduate living in Dubai, pitched Lubin on Fathom, which aims to somehow disrupt the higher-education business by crowdsourcing academic evaluations and grading. Lubin gave the go-ahead, but two years later the project has six people working on it and no launchable prototype. Its website is nothing more than a few pages stating high-minded ideals: “If individuals were free to build their experiences tailored to their unique aims, and were able to communicate those experiences reliably to any entity in the world, there would be an order of magnitude shift in the efficacy of social organization at every scale.”
Other projects that have been staked by Lubin seem even flakier. Cellarius, a spoke that Lubin often promotes by wearing an eponymous T-shirt, is a “transmedia cyberpunk franchise” aimed at collaborative storytelling on the blockchain. What exactly is collaborative storytelling, and why will the blockchain make it better or more profitable? Its website’s explanation is far from clear.
Lubin insists ConsenSys is getting more selective in picking projects. But old habits die hard. In October it bought a nine-year-old asteroid-mining company called Planetary Resources. “We see it as a group of amazingly capable people who are interested in exploring how blockchain could ramify on space operations,” Lubin says abstrusely. Civil, a spoke that aims to put journalism on the blockchain and is supposed to somehow increase the level of trust in news, recently had to cancel its ICO because it failed to raise
ConsenSys also offers consulting services, essentially assisting companies in becoming blockchain-literate. To date, this is the best business ConsenSys has. In the short run, these services will succeed—until companies wake up and realize that blockchain isn’t necessarily better for most things and is sometimes worse than other technologies. ConsenSys consultants helped create
In the past year, ConsenSys’ consulting arm has grown from 30 employees to more than 250 and, according to Lubin, is bringing in “tens of millions of dollars” in the form of cash and equity stakes. As for ConsenSys’ spokes, which are mostly applications and developer tools, Forbes estimates the whole lot of them won’t generate more than $10 million in revenues in 2018.
So far, ConsenSys’ biggest non-consulting successes are its tools for Ethereum programmers. Its MetaMask product, which lets users log in to Ethereum from a Web browser, has more than one million downloads (all of them gratis). Truffle, which helps developers manage and test parts of their code for building Ethereum applications, has also cleared one million free downloads. It can be difficult to charge real money for these tools because of the communal, quasi-anarchist nature of the blockchain developer community. ConsenSys claims it will soon start charging for Infura, another tool that facilitates access to Ethereum.
“ConsenSys has done more for the Ethereum ecosystem in its first five years of development than any other firm,” says Meltem Demirors, chief strategy officer at CoinShares, a crypto-asset-management company.
None of this seems to phase Lubin, who is clearly not launching projects to make profits. “The intention isn’t to create companies and send them out and make money,” he says. “The intention is to create an ecosystem. It really is very family-like.” However, Lubin also acknowledges that changes are in order and recently sent a memo to his staff about becoming leaner and more focused. “In ConsenSys 2.0,” Lubin says, “we’ll pay more attention” to the market-based hurdles that traditional startups have to clear. And he’s not ruling out layoffs—even in its consulting business.
The biggest problems at ConsenSys may have less to do with plunging crypto prices and Lubin’s dwindling fortune than with his conglomerate’s weird operating structure.
ConsenSys would like to believe that it’s reinventing the future of work and business. As you enter ConsenSys’ hacker-chic Brooklyn digs, there are lots of antiestablishment touches, including a large banner on the wall that reads, “Welcome to the decentralized future.”
In fact, CEO Lubin tries not to tell people what to do. “He wants to be like the anti-CEO or the anti-founder,” says Jeff Scott Ward, a former employee who thinks this is partly because Lubin is a nice guy who wants to be democratic.
But there are some not-so-nice consequences of having Mr. Nice Guy in charge. At ConsenSys, there’s less incentive to meet deadlines and make fast progress. “In a lot of ways, there still isn’t pressure to generate revenue or hit targets that normally Silicon Valley VCs and businesses would be looking for,” says Griffin Anderson, who leads the Balanc3 spoke. One Glassdoor commenter describes ConsenSys as a place with “unlimited funding and no pressure to actually deliver anything.”
The lack of traditional structure has also spawned ugly politics. “It feels a little like Survivor,” says Lucas Cullen, a former employee. ConsenSys staffers who are close to Lubin get faster access to resources, says a former employee, and accountability varies widely from team to team.
ConsenSys does have Resource Allocation Committees, which are charged with deciding whether spokes will continue to receive additional engineers or funding. But the committees are in a constant state of flux. “There’s always one person from finance, but they’re generally made up of people who have an interest in your area,” says Thomas Hill, a cofounder of Truset, a ConsenSys spoke that’s building a crowdsourced business data platform. “Anyone can sign up for an RAC.”
According to Ward, who spent three years at ConsenSys, “There were too many cooks in the kitchen. It was like, Whose ego is the strongest? It was exhausting,” he says. UPort, a tool aimed at letting users log in to Ethereum applications, had three project managers, who couldn’t align on a single vision. Today there are just 15 applications using UPort, and the project is splitting in two.
Many describe ConsenSys’ culture as chaotic, and the company seems to have trouble keeping track of its projects. ConsenSys’ homepage says it has “50+ spoke companies,” but during the reporting of this story, the number ranged from “more than 30” to, most recently, 42. It’s a “fluid number,” says a company spokesperson.
Lubin acknowledges some of these difficulties. “[Accountability] has been an issue at ConsenSys,” he says. “We’ve been working to put in place various mechanisms to make it clearer who’s responsible for what and to ensure crisp accountability.”
But he also cites real benefits to his mesh architecture. Projects are collaborative, and silos are easily breached. Employees report that there is little stigma attached to questioning others’ assumptions. And some insiders report feeling empowered by the autonomy—especially the opportunity to move laterally among projects.
According to Hill, the Truset cofounder, “ConsenSys will end up in the Harvard Business Review as a case study, either as a lesson on how you change corporate organizational structure or as a disaster.”
If there is a paradox in Lubin’s quest to reinvent business for the coming age of decentralization, it’s that ConsenSys is actually much more centralized than Lubin would like to admit.
When ConsenSys spokes have spun out and become separate businesses, for example, Lubin has retained ownership of 50% or more. Thus, like John Pierpont Morgan and Andrew Carnegie during America’s Gilded Age and tech magnates Jeff Bezos and Mark Zuckerberg of the internet age, Lubin is setting himself up to become one of the controlling titans of the blockchain era.“This is where the whole mesh-and-decentralization thing falls apart,” Ward says. “It was never clear who had what stake.” In the case of Grid+, one of the projects ConsenSys spun out through an ICO, Forbesestimates that Lubin walked away with no less than 20% of its tokens, in addition to half of its equity.
“I don’t think they even have the slightest idea what decentralization is,” says Demirors of CoinShares.
And the issue of sharing ConsenSys’ equity among its 1,200 employees has become a running joke. Former employees report that for a long time Lubin was evasive and the plan was always “six weeks away,” if you asked him. In fact, the first set of 100 employees or so received their equity in early 2017, and nearly two years later, ConsenSys says, it’s still working on a plan to give its larger workforce a stake in the company.
Lubin doesn’t think ConsenSys’ structure presents contradictions. “If you can build a system that serves many people and they’re all delighted with the system, then the originating structure doesn’t necessarily have to be equally owned by lots of people,” he says, in a response that could have just as easily been uttered by Zuckerberg on the eve of Facebook’s lopsided public offering.
In 2017 ConsenSys was able to use ICOs as an easy and lucrative way to spin companies out and reward internal staff. But now that the SEC is cracking down on ICOs, that window is much smaller. “As we look to make more external investments, there are specific deals where we need to map to a traditional VC model,” says Ron Garrett, head of ConsenSys Labs, the division responsible for deciding which projects become spokes. “In those deals, we’ll take less equity.” He adds that other startup incubators like Betaworks are known to take -majority stakes in the companies they incubate. So much for democratization and decentralization.
For now, Joe Lubin’s grand experiment in the future of business is racing against a clock:
Will blockchain applications achieve mainstream success before Lubin’s largesse is exhausted?
Even the most successful applications on Ethereum have tiny user bases. The most widely used application is a decentralized exchange for trading crypto called IDEX, which is unaffiliated with ConsenSys. After more than a year in operation, it has a pitiful 1,000 daily users. “We knew that it was going to be a lot of work and take a long time before you enable massive evolution on a planetary scale,” Lubin says.
If Lubin is still a billionaire, he may be able to sustain ConsenSys for several years—even at its $100 million-plus annual burn rate. “As it stands, ConsenSys is stable and healthy,” he insists.
At what point will Lubin throw in the towel? “I have no exit plan, and I’ve never had an exit strategy for anything I’ve done,” he says from ConsenSys’ San Francisco offices, where he just hosted a “demo day” for 16 startups eager to join his bankroll. “I’m all in.”
- Reach Jeff Kauflin at [email protected] and Sarah Hansen at [email protected] Cover image by Filip Peraić.
- This story appears in the December 31, 2018 issue of Forbes.
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