Eleven years ago, a 25-year-old Indian from Gujarat came to Kenya seeking greener pastures. He found a job as an accounting clerk in an Indian-owned polythene manufacturing company for Ksh18,000 ($230) a month. In his spare time, he decided to write software for an extra buck; but his employer discovered his private project. The penalty was costly. He reported to work one morning and was handed a one-way air ticket back to India. His former employer drove him to his house, ordered him to pack, drove to the airport and made sure he boarded the plane. As the plane roared above the suburbs of Nairobi, Kamal Budhabhatti looked wistfully through the window and made a silent pledge. He came, he thought, had seen and he was going to conquer Kenya.
Eleven years later, Budhabhatti can claim to have conquered, as he is one of Kenya’s youngest multi-millionaires. He pioneered the business of software development in East Africa and plans to create a Silicon Valley in Africa. Budhabhatti runs one of East Africa’s fastest growing software development companies—Craft Silicon—with its head office in Nairobi.
Budhabhatti is a techie through and through. He graduated with a BSc degree in Physics and describes himself as a hands-on programmer who makes money out of what he enjoys. “Nobody in my family is a business person and it was not really in my cards to get into business. However, the only link I may have to entrepreneurship is that I come from a region in India that is considered very entrepreneurial,” he explains.
India’s Gujarat state is the home of famous entrepreneurs—among them, Dhirubhai Ambani, the founder of Reliance Industries, that was ranked 134 in the 2011 Fortune 500 list.
Wealth is a far cry from Budhabhatti’s lean first days in Kenya in a clerical job.
“All I used to do was input invoices in the system. It was not what I had expected, and I developed a great dislike for the job. Every day I used to say I needed to do something better. I had a friend where I used to stay who was the IT manager of a local bank. He was looking for someone to come up with a system that would automate the check clearing system. I asked him if I could write something and he said, ‘why not?’”
Budhabhatti had landed his first job as an entrepreneur.
A decade ago, Kenya’s ICT sector was in its infancy. Internet and computers were a luxury few could afford. There was little investment or infrastructure and companies like mobile operator Safaricom were just setting up shop. When it came to technology, Africa was not taken seriously—the US, home of Microsoft, HP, IBM, Symantec and Oracle, largely ignored Africa.
Budhabhatti knew he was onto something.
“These problems that Africa has are the greatest opportunity because if you go to some of the developed economies, they have lesser problems. Because of all these problems that we have here, they present a lot of opportunities to come up with solutions. It’s like playing computer games: if there are no challenges in the game, then it becomes boring. Challenges push you to the limit in terms of thinking and innovation,” he says.
After his forced return to India, Budhabhatti spent 72 hours brooding at home before flying back to Kenya.
“I asked my sister to pay for my ticket back because I felt there was an opportunity here and just had to come back. I had Ksh23,000 ($295) in savings which I survived on for one-and-a-half years!”
Budhabhatti returned to where he was staying as a paying guest, explained his situation to the landlady and she allowed him to stay without paying rent. He says he survived on the good humour of his friends, who often paid for his meals.
“I went back to the bank, but the bank realized I was desperate and took advantage of me by renegotiating the price we had agreed on. Every time I went to follow up on the status, they would say come back tomorrow. I finished making the software after one-and-a-half years and was paid Ksh200,000 ($2,550).”
Budhabhatti used the money to settle his debts and set up Craft Silicon. From there, he embarked on an entrepreneurial journey that saw his company win $100,000 at the 2010 Africa Awards for Entrepreneurship.
Craft Silicon sells software to banks and micro-finance organisations in 40 countries around the world, including China and India.
“Banks talk to each other and since I was cheap, a lot of the small banks thought there was no point investing a lot of money in buying an expensive product.”
As word got round, banks like Equatorial Commercial Bank, KRep and Equity Bank asked Craft Silicon to develop software for them. That led to the making of Craft Silicon’s first solution—Bankers Realm—an automated banking operating system.
Like Steve Jobs at Apple, Budhabhatti rolls up his sleeves and gets his hands dirty. In 2011, he launched his brainchild, Elma, an online way to move cash and transact.
After a decade of doing business, Budhabhatti has created a multimillion-dollar empire.
“To calculate software valuation, you look at a company’s annual turnover in terms of how many licensed softwares you are selling, then multiply by 20,” he says.
In 2010, Craft Silicon’s turnover was $6 million, which translates to $120 million. Budhabhatti’s bet on technology has paid off.
Kamal Budhabhatti’s Investment Tips
Planning to invest in a technology business in Kenya? This is what to keep in mind:
• Understand the emerging economy, especially if you are coming from a developed economy, as you may not understand solutions required in these countries. Understand local solutions and provide them.
• Keep in mind the governance structures, especially legislation about intellectual property (IP). These are things you will have to keep fighting every day. Laws here are still not strong in terms of IP.
• Don’t expect a very high return. Most people think since they are investing in a high risk environment, they will get a high return—manage your expectations from day one.
• Currency fluctuation is a major risk. Ensure you have a way to manage that.