[kictanet] M-Kopa Solar fires 18% of its staff including all developers, outsources work to a foreign company

[Adam Lane]

Hi Brian
Yes, to some extent you are right, though with hundreds of thousands of customers they keep recycling the loans and I am sure the profits would take a long time to pay back such a large amount of loans (which may indicate their business model’s success or otherwise) – again right now we can only guess.
Adam

From: Brian Munyao Longwe [mailto:blongwe at gmail.com]
Sent: Monday, March 12, 2018 2:57 PM
To: KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke>
Cc: Adam Lane <adam.lane at huawei.com>
Subject: Re: [kictanet] M-Kopa Solar fires 18% of its staff including all developers, outsources work to a foreign company

Hey Adam,
Fair analysis - but given that the average "loan period" is 12 months - after 7 years of operations wouldn't the majority of their customers have already paid off their loans, thereby recapitalizing the business as well as servicing any of the debt repayments that would have to (continue) to be made?
Just like you, I'm only guessing...
Best regards,
Brian

On Mon, Mar 12, 2018 at 1:08 PM, Adam Lane via kictanet <kictanet at lists.kictanet.or.ke<mailto:kictanet at lists.kictanet.or.ke>> wrote:
Brian
The money they have raised was debt financing to predominantly pay for the up-front costs of solar systems, TVs and phones that they then resell onto their consumers, who pay back day-by-day over several months. These are all assets. Of course some of the money is also for operations and for expansion. It is not accurate to say they have burnt through the money; they have spent a lot of the money on assets.

I would also think that they don’t need a large software development team having already developed their software, and instead focus on a smaller (maybe outsourced) team for maintenance and small upgrades (which would be easier to outsource after the initial development), but that is just a guess.

Adam

From: kictanet [mailto:kictanet-bounces+adam.lane<mailto:kictanet-bounces%2Badam.lane>=huawei.com at lists.kictanet.or.ke<mailto:huawei.com at lists.kictanet.or.ke>] On Behalf Of Ali Hussein via kictanet
Sent: Monday, March 12, 2018 1:39 PM
To: Adam Lane <adam.lane at huawei.com<mailto:adam.lane at huawei.com>>
Cc: Ali Hussein <ali at hussein.me.ke<mailto:ali at hussein.me.ke>>
Subject: Re: [kictanet] M-Kopa Solar fires 18% of its staff including all developers, outsources work to a foreign company

Brian

Exactly! In one sentence you have hit the nail on the head. The new game in town is P2P (and here I mean Path 2 Profitability not Peer2Peer) :-)

Regards


Ali Hussein

Principal

AHK & Associates



Tel: +254 713 601113<tel:+254%20713%20601113>

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On Mon, Mar 12, 2018 at 1:30 PM, Brian Munyao Longwe via kictanet <kictanet at lists.kictanet.or.ke<mailto:kictanet at lists.kictanet.or.ke>> wrote:
Hmm, they've burnt through US$ 152 million in less than 7 years... and are downsizing instead of scaling up...I'd be a very worried investor if I had skin in *that* game....
My two cents,
Mblayo

On Mon, Mar 12, 2018 at 11:14 AM, anyega jefferson via kictanet <kictanet at lists.kictanet.or.ke<mailto:kictanet at lists.kictanet.or.ke>> wrote:
Follow the money, chief, which strategy creates the lowest operating costs?


And we kinda can't begrudge anyone , for seeking profit maximization, though i'd think Kenyan developers are the most affordable

On Mon, Mar 12, 2018 at 12:04 PM, Watila Alex via kictanet <kictanet at lists.kictanet.or.ke<mailto:kictanet at lists.kictanet.or.ke>> wrote:
Good Afternoon,
Are kenyan developers to expensive or unable to meet the grade. or is something else happening here

Article from M-Kopa Solar fires 18% of its staff including all developers, outsources work to a foreign company<http://kenyanwallstreet.com/m-kopa-solar-fires-18-of-its-staff-including-all-developers-outsources-work-to-a-foreign-company-linked-to-new-cto>





M-Kopa Solar fires 18% of its staff including all developers, outsources...

Kenya based pay-as-you-go solar provider M-KOPA Solar has fired undisclosed number of staff including most of it...







Kenya based pay-as-you-go solar provider M-KOPA Solar has fired undisclosed number of staff including most of its developers. According to people familiar with the matter who requested anonymity, the developers work has now been outsourced to a foreign company that is linked to the company’s new CTO.
The exercise, which was completed in December last year affected a number of employees and some of whom were absorbed by Safaricom according to the source.
We sought comments from the company’s CEO and Co-Founder Jesse Moore, who confirmed the layoffs and explained that they were necessary due to rising costs of technology and there was need to generate profits and give returns to investors.
“I can confirm that we completed a restructuring process in December 2017. This was done to reduce fixed costs and keep us on the path to profitability. Overall, the company reduced headcount by 18% covering all departments and all levels in Kenya, Tanzania, Uganda and UK. We are outsourcing more of our technology work, maintaining a smaller in-house team to work directly with outsourcing partners in Kenya and overseas.” he noted.
He went on to say that this was the right thing for the company’s long-term sustainability, “This means building a sustainable, profitable company that offers impact for customers and returns for investors.”
On whether the company had outsourced the IT services to a company that is linked to the new CTO, this is what he said.
“In mid-2017 our Acting CTO was seconded to us from one of our outsourcing partners, when our previous CTO left the company. Our board approved this and the individual is strictly recused on procurement decisions with companies where could be a potential conflict of interest.”
The company was started by Nick Hughes, an Englishman, and his Canadian co-founder, Jesse Moore. Hughes is a former executive at Vodafone, while Moore was working for the GSMA Development Fund, a mobile telecommunications industry group, where he was in charge of identifying opportunities to make mobile services available to people in developing countries. M-kopa is one of the best-funded startups in Africa having raised more than $152 Million since inception in 2011. However, a big chunk of this financing is in form of debt.


Regards,

Alex


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