July 29, 2019

Mobile Connectivity Continues to Transform the Lives of Millions of People Across Sub-Saharan Africa

By 2023, mobile's contribution to Sub-Saharan Africa's economy "will reach almost $185 billion (9.1% of GDP) as countries increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services," says a report produced by GSMA Intelligence, the research arm of UK-based GSMA.

Furthermore, "The informal economy accounts for a large part of the mobile ecosystem in Sub-Saharan Africa. Almost 1.2 million of the 1.7 million directly employed by the mobile ecosystem are informally employed in the distribution and retail of mobile services."

The Mobile Economy Sub-Saharan Africa 2019 states: "Mobile-enabled platforms are increasingly disrupting traditional value chains in different verticals across the region. These platforms – mostly developed by a rapidly expanding local tech start-up ecosystem – aim to eliminate inefficiencies in conventional business models, as well as extend the reach of services and provide greater choice to customers."

The report also reveals that:
  • Around 239 million people, equivalent to 23 percent of the region's population, use the mobile internet on a regular basis;
  • Smartphones accounted for 39 percent of mobile connections in Sub-Saharan Africa in 2018, forecast to increase to two-thirds of connections by 2025;
  • 3G will overtake 2G to become the leading mobile technology in Sub-Saharan Africa this year;
  • 4G will account for almost one in four connections by 2025. However, 4G uptake is being dampened in some markets by the high cost of 4G devices and delays in assigning 4G spectrum;
  • The region's mobile operators are increasing investment in their networks and are expected to spend $60 billion (capex) on network infrastructure and services between 2018 and 2025 – almost a fifth of this total being invested in new 5G networks; and
  • Sub-Saharan Africa's mobile ecosystem supports around 3.5 million jobs, directly and indirectly, and last year contributed almost $15.6 billion to the funding of the public sector through consumer and operator taxes.
With respect to supporting sustainable development through mobile-enabled services, the report points out that "[a]s the final decade of the UN Sustainable Development Goals (SDGs) approaches, mobile technology will play an increasingly important role in accelerating progress. The impact of mobile will be particularly profound in developing regions, such as Sub-Saharan Africa, which face an uphill task to achieve the goals due to acute resource and infrastructure shortages. The mobile industry's support for the SDGs is demonstrated in three main ways:
  • Deployment of infrastructure and networks: The mobile industry drives impact through the provision of – and investment in – high-performing mobile networks, which provide the foundations for the digital economy and act as a catalyst for a diverse and innovative range of services.
  • Access and connectivity: Mobile operators are continuing to connect the unconnected; across Sub-Saharan Africa, the mobile industry has connected 62 million new mobile subscribers and 90 million new mobile internet subscribers since 2015.
  • Enabling services and relevant content: Mobile connectivity continues to transform the lives of millions of people across the region, by enabling the delivery of life-enhancing services, including education, health and financial inclusion. This is especially significant given the challenge of providing services by conventional means amid considerable infrastructure and funding gaps."
The report also explains that "[a]rtificial intelligence (AI) and blockchain – two of the most widely discussed transformative technologies over the last three to five years – are beginning to attract considerable interest in Sub-Saharan Africa. In April 2019, Google opened its first AI Lab center in Africa, located in Accra, Ghana, in addition to supporting machine intelligence programs at the African Institute for Mathematical Sciences center in Rwanda. In May 2019, Microsoft launched its Africa Development Center (ADC) with two initial sites in Nairobi, Kenya and Lagos, Nigeria, with local developers expected to focus on transformative technologies, such as AI and machine learning. AI and blockchain have the potential to help address a variety of social and economic challenges in the region, as evidenced by some of the use cases and applications being implemented."

What mobile solutions do you think will transform the lives of millions of people across Sub-Saharan Africa? Do you agree that AI and blockchain have the potential to help address a variety of social and economic challenges in the region?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

July 27, 2019

Report Explores How Companies Are Managing the Employee Experience, and the Role of Technology in Shaping It

"Employees who are engaged in their work are more innovative and self-starting, research suggests, but 85% of workers globally are disengaged," according to a report by The Economist Intelligence Unit (The EIU). "This has prompted employers to consider the working experience they create for employees and how to make it as engaging and productive as possible."

Sponsored by Citrix, an American software company, The experience of work: the role of technology in productivity and engagement explores how companies are managing the employee experience, and the role of technology in shaping it. The EIU surveyed 1,145 senior executives including IT, HR and other business leaders. This research report presents the key findings, including insights for IT executives on how to maximize their contribution to the employee experience.

Listed below are the report's key findings:
Responsibility for improving the employee experience is often blurred. Shaping the employee experience tends to be a shared responsibility among multiple senior executives. This can, however, often signal a lack of leadership clarity and lead to a vacuum. The risk of this is apparent in the survey, as little more than one third of C-suite respondents strongly agree that they take full responsibility for it across the organization. Only a few more say they take full responsibility for it even within their own teams. As companies mature digitally, C-level executives, including the CIO, take on more of a leadership role in this area.
Access to information breeds engagement and empowerment. Having ready access to the data and insights they need to do their jobs, wherever they are located, does more to influence employee engagement and productivity, and ultimately their overall experience, than other technology factors. For many companies, that translates into "mobile first" policies and efforts to perfect their use of collaboration tools, the digitization of onboarding, training and other employee-development activities, and efforts to recreate the consumer experience at work to the extent possible.
IT and HR may not be natural partners, but bridges are being built. In the survey, the two functions appear to feel they have a joint stake in improving the employee experience. For example, similar numbers of IT and HR respondents say they feel personally responsible for this within their team or more widely. At high performers and digitally more mature organizations, a large proportion of both IT and HR executives say the objective is part of the strategy of their function. To overcome the lack of understanding that hampers collaboration, many firms are taking practical measures such as employing specialists with knowledge of both disciplines and developing common metrics.
Companies struggle to measure improvement in the employee experience. Although virtually all companies in the survey measure employee engagement and productivity, and most are striving to devise suitable metrics to capture improvements in the employee experience, not many are as yet registering success. Less than one-third, for example, "strongly" confirm that they can quantify such improvements in financial terms. A higher proportion of high performers, however, are able to do this.
The EIU importantly explains: "The more engaged employees are in their work, previous research suggests, the likelier it is that they will contribute to the success of an organization. They will be more productive than less engaged colleagues, as well as more innovative and self-starting—critical attributes when business models and the competitive environment are changing rapidly."

Furthermore, "In recent years a consensus has formed around the idea that, rather than one or two individual factors, it is the totality of an employee's involvement with the organization—the 'employee experience'—that ultimately influences their contribution to success."

The report adds: "Today, the employee experience is firmly on the senior management agenda of the vast majority of firms" and "nothing influences the employee experience more than the quality of the organization's leadership. But technology is also an important contributor, and especially so at firms whose employees are, according to respondents, more engaged and more productive than their rivals (termed 'high performers' in this report). The same is true at organizations that are further along in their digital transformation than others (termed 'digitally more mature' organizations). Perceived improvement in the employee experience has also been greater at these groups than in the rest of the sample."

According to The EIU, "The clear conclusion is that business leaders have several technology levers they can pull to brighten their employees' journey through the organization, from the time they are recruited to their departure and even later. The challenges to doing this well are numerous, above all getting IT and HR to collaborate effectively toward this end, but companies featured in this report are finding ways to meet them."

How should companies manage the employee experience and what is the role of technology in shaping it?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 18, 2019

Smart Investment in Emerging Technologies Can Help Address the Challenges Faced by the Global Giving Sector

Emerging technologies such as artificial intelligence (AI), blockchain, and internet of things (IoT) is having a profound effect on how businesses worldwide operate. However, less is known how these technologies are impacting the giving sector. A report produced by The Economist Intelligence Unit (The EIU) and supported financially by the Bill & Melinda Gates Foundation presents the key findings of a research program on the potential impact of ten emerging technologies in the giving sector. Venture into the future of giving: The potential of emerging technologies in the giving sector highlights ways that smart investment in emerging technologies can help address the challenges faced by the global giving sector.

The report argues that "Fourth Industrial Revolution technologies are transforming the development assistance and giving sectors, from using AI and machine learning to diagnose diseases to implementing drone-based humanitarian logistics. However, their potential impact on the giving process remains underappreciated to date."

Having served in leadership positions of various nonprofit organizations, I understand that "[w]ithin the giving sector, donors, intermediaries and implementing organizations operate in a complex global giving supply chain, which encompasses a wide variety of stakeholders including corporations, academic institutions, watchdogs and governments, among others. Each participant in the supply chain faces both unique challenges and challenges that are common across the sector. For the purposes of this report, we focus on three of the sector's most noteworthy shared challenges: 1) building and sustaining trust, 2) increasing efficiency, and 3) measuring and maximizing impact."

"There are ten key emerging technology applications," the report explains, "that have the potential to enhance the workings of the giving supply chain: big data, AI analytics, virtual reality (VR), augmented reality (AR), cryptocurrencies, blockchain payment infrastructure, the IoT, drones, smart contracts and impact tokens. All of these applications are powered by four core technologies: AI, virtual intelligence (VI), blockchain and the IoT."

Moreover, "These technologies can be applied to five key links in the giving supply chain: matching donors and recipients, motivating and informing giving, facilitating transactions, tracking outcomes and validating performance."

Below are the report's key concluding points:
To support donor and recipient matching, big data and AI are helping charitable organisations to understand more about the views, behaviors and opinions of current and future donors, and about trends in the giving sector. A key challenge is determining how to take advantage of the benefits of analytics in a way that does not impinge on privacy and is compliant with relevant regulations like the GDPR.
To motivate and inform giving, VR and AR are allowing donors to see the impact of their investments, overcoming the marketing and communications challenges faced by the sector in the past. A key challenge is the potential for misuse and manipulation when using a powerful tool to unlock empathy.
To facilitate transactions, blockchain and cryptocurrency can add a new rail to financial infrastructure, with tech companies using these facilities to reduce transactions costs.
To improve outcome tracking, sensors, drones and the IoT can be used to gather data that humans cannot, including on environmental and pollution challenges.
To validate performance, impact evaluation can be facilitated by smart contracts, which promote transparency and enable automated pay-outs when a social program reaches a performance threshold. This gives donors greater control over performance-related disbursements. Tokens can also help to monetize measures of impact and create new economic incentives for donors beyond tax exemptions. 
As I am continually learning how emerging technologies work, I appreciate the report's assertion that [w]hile no single technology can overcome the challenges inherent to the giving process, smart investment in appropriate solutions can ensure that all participants in the ecosystem make optimal use of their resources. The structured analysis of technologies undertaken in this study seeks to provide a guide for groups that are willing to experiment and invest to ensure that the sector's sizable contribution to economic and social development can be deepened and sustained in the years to come."

Although I agree with the report that smart investment in emerging technologies help address the challenges faced by the global giving sector, I am disappointed the report does not address the topic of cyber security. It is important for those stakeholders to understand the cyber threats that exist and have a system in place to keep their technologies secure from hackers. Not doing so will negate the value of any "smart investment."

Do you agree with the report's findings? Will smart investment in emerging technologies help address the challenges faced by the global giving sector?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 11, 2019

More Than Four in Five Mobile Connections in Asia Will Be Smartphones by 2025, Says GSMA Report

Having worked in the region over the past several years, I can attest to a report's assertion that "[m]obile internet uptake is spreading rapidly across Asia Pacific, and smartphone ubiquity has resulted in consumers continuing to transition from connectivity to digital services." Authored by GSMA Intelligence, the research arm of the GSMA, The Mobile Economy Asia Pacific 2019 further says the size and diversity of the region, however, "mean countries are at different stages of digital development. Consequently, the policy frameworks for a digital society vary across the region as national governments address their own unique challenges."

The report adds: "For some Asian markets, 2019 will see 5G become a reality as mobile operators move from development and testing to commercial deployment. For many countries in the region, however, 5G deployment is several years away so 4G will remain pivotal to the development of a digital society. Meanwhile, other critical components, such as payments and identity, are evolving rapidly, and governments will need to ensure they continue to develop policies that are modernized and relevant."

The report reveals that:
  • Mobile operators are forecast to invest $574 billion (capex) on new networks between 2018 and 2025, almost two-thirds of which ($370 billion) will be spent on new 5G networks. China alone is forecast to invest $184 billion on 5G by 2025;
  • 4G became the most dominant mobile technology in Asia in 2018 (52 percent of connections), forecast to rise to 4.8 billion by 2025, and will grow to account for more than two-thirds of regional connections by 2025. Around 18 percent of connections will be running on 5G networks by this point;
  • More than four in five mobile connections in Asia will be smartphones by 2025, up from 61 percent in 2018;
  • There were 2.8 billion unique mobile subscribers in Asia at the end of 2018, equivalent to 67 percent of the region's population. The number of subscribers is forecast to increase to 3.1 billion by 2025 (72 percent of the population), though the growth rate is slowing as many key markets approach saturation;
  • Almost all new subscribers to be added in the region between 2018 to 2025 will come from six countries: India, China, Pakistan, Indonesia, Bangladesh and the Philippines;
  • In 2018, mobile technologies and services in Asia Pacific generated $1.6 trillion of economic value, equivalent to 5.3% of regional GDP. This contribution is forecast to surpass $1.9 trillion by 2023; and
  • Asia Pacific's mobile ecosystem directly and indirectly employs more than 18 million people, and last year contributed $165 billion in public sector funding via general taxation (excluding regulatory and spectrum fees).
Infographic: GSMA Intelligence

As the use of smartphones become more ubiquitous in Asia Pacific coupled with the gradual deployment of 5G networks in the near future, we will see a rise of business opportunities across a multitude of sectors including artificial intelligence and machine learning, cloud computing, connected devices (IoT), digital health, e-commerce, and fintech, just to name a few.

What services or products do you see will make the greatest impact in the region's mobile economy?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 10, 2019

Internet Economy is Driving New Growth and Market Opportunities in Southeast Asia

Over the past several years, I have observed how the internet economy is driving new growth and market opportunities, globally as well as in the ten Association of Southeast Asian Nations (ASEAN) countries. Therefore, I found value in reading Digital platforms and services: A development opportunity for ASEAN, a report from The Economist Intelligence Unit (The EIU) commissioned by the Asia Internet Coalition (AIC), an industry association based in Singapore, which examines the mutual opportunities and challenges of digital platforms and service providers, and governments in the ASEAN countries.

To provide insight into the role of digital platform providers in ASEAN, The EIU conducted desk research and six in-depth interviews. The key findings of the research are as follows:
  • ASEAN countries are deploying different strategies to capture the potential of the internet;
  • Connectivity matters: to capture the benefits of an internet economy, increasing connectivity and improving digital skills are key to further development;
  • Regulatory hurdles can stifle innovation and growth: some countries in ASEAN have introduced data localisation policies, which can limit economies of scale for global providers and domestic companies; and
  • Overcoming challenges through innovation: public- and private-sector engagement is the most frequently cited solution to challenges and potentially seizing the full benefits of the internet economy.
The report also provides six key recommendations for ASEAN governments and enterprises to consider in order to seize the full potential of the digital economy in stimulating economic growth:
  1. Educate stakeholders about the benefits of digital platforms and services: the private sector should inform governments about the latest innovations and co-operate with governments to deliver economic and societal benefits. Likewise, the public sector should educate potential users of e-business benefits;
  2. Encourage government and private sector collaboration: the public and private sectors must encourage engagement to discuss current and emerging issues and opportunities as technology advances;
  3. Increase digital adoption among all population groups: to reap the full benefits of the internet economy, all population segments should be online and have access to high-speed broadband services;
  4. Support ASEAN's SMEs to come online: as the main engine of growth across ASEAN, SMEs need greater support to expand online, and across borders. Private enterprises have a significant role to play;
  5. Support technology providers that help improve the economy: e-commerce and e-tourism providers are particularly valuable in ASEAN, given the region’s attractions and economic composition, with travel contributing a large amount to GDP in several countries; and
  6. Support digital economy programs: all stakeholders should support at the highest level the development and implementation of forward-looking digital economy strategies.
"It is estimated that the ASEAN region can see US$1trn added to its GDP by 2025 if the digital economy can thrive and avoid barriers," according to the report. "Countries around the region are increasingly implementing digital economy strategies ... to reap the full benefits of the internet economy, which is largely dependent on people being able to use digital platforms and services, such as e-commerce and cross-border data flows. The numbers are encouraging: mobile-broadband subscriptions have increased and now reach more than half of the population in most markets; similarly, online access is steadily rising, again reaching more than half of the population in most countries in the region."

I concur that "[e]nhancing digital access and usage allows countries—and their populations—to save time, money and effort while enhancing productivity. Globally, the internet contributed 3.4% of GDP to the world's 13 largest economies in 2009 and 5.3% of GDP in the G20 in 2016. The benefits of the digital economy are set to increase. In 2018 the International Telecommunication Union, a UN agency, found that more than half of the world's population is now online. The potential benefits of digital development are huge."

What are your thoughts?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

July 2, 2019

IPO in Australia: A Solution to Raising Working or Expansion Capital for US Companies?

As discussed in this blog, there are multiple risk factors that may prevent a company from achieving sustainable profitability. Exit risk is one that many startup entrepreneurs do not consider nor completely understand. Yes, if you are focused on your exit plan, you are not focused on your business. Founders, however, must address two key questions: How will your investors receive a return on their investment? As your business scales, how will you raise large amounts of working or expansion capital?

Common types of exit strategies include strategic acquisitions, management buyouts, liquidation, and initial public offerings (IPO). Investopedia provides a good explanation on business exit strategy:
Which exit strategy an entrepreneur chooses depends on many factors, such as how much control or involvement (if any) he wants to retain in the business and whether he wants the company to continue to run in the same way or is willing to see it change going forward as long as he is paid a fair price for his ownership share. A strategic acquisition, for example, will relieve the founder of his or her ownership responsibilities, but will also mean giving up control. IPOs are often seen at the holy grail of exit strategies since they often bring with it the greatest prestige and highest payoff.
On June 18, 2019, I attended an event, "IPO in Australia - an Alternative to Series B and Beyond," which presented the the option of a U.S.-based company listing its shares on the Australian Securities Exchange (ASX). The panel featured the following individuals: Kate Galpin, Business Development Manager, Listings of ASX Limited; Daniel Hutchinson, Executive Director of Moelis Australia; James Posnett, Senior Manager, Listings Business Development at ASX Limited; and David Ryan, Partner with Australia DLA Piper. While the PowerPoint presentation may be viewed here, there are a few points that I found of particular interest.

With 2,200 listed companies and issuers, the ASX is home to some of the world's leading resource, finance and technology companies. It is a highly active capital market handling over 120 public listings annually and $4.5 billion of equities traded daily. And with a total market capitalization of around $1.5 trillion, its $47 trillion interest rate derivatives market is the largest in Asia and among the biggest in the world. Interestingly, the ASX hosts the fourth largest pool of pension funds globally.

As reflected in the chart to the right, the ASX is an active market for both early stage and mature companies. And barring 2009, the ASX has seen an annual increase the number of listed technology companies from 2007-2018 and ranks #3 globally in tech IPOs of companies with a market capitalization of $500 million and below. This statistic should be of particular interest to founders of American tech businesses and their investors as an option of listing its shares on an exchange other than the New York Stock Exchange or Nasdaq where listing companies typically have much larger market cap.

With respect to size and track record requirements to list on the ASX, the panel explains how the issuer must generate a minimum of $1 million aggregate profit over the past three years and $500,000 consolidated profit over the past 12 months. The assets test provides an alternative to the profit test where a company must have a minimum of $4 million in net tangible assets or a $15 million market cap. As reflected in the slide to the left, the ASX also obtain a minimum requirement to the number of shareholders (300) an issuer must have in order to list its shares in an IPO.

Addressing the connection U.S. companies must establish or maintain with the Commonwealth of Australia, the panelists noted it is not necessary for a company to setup operations in the country, a desire to access the substantial pool of capital in Australia is a sufficient business reason for listing on the ASX. In addition, an issuer must register as a "foreign company" in Australia and Australian resident directors are expected. Conveniently for American issuers, they report in Generally Accepted Accounting Principles (US GAAP) and US dollars (USD).

Lastly, I appreciated the way the panelists explained how ASX investors frame their decisions:
  • Focused on business strategy;
  • Large, addressable market;
  • Solves market need or product validation;
  • Track record of growth and execution;
  • Backing and reputation of existing investors;
  • Quality and incentivization of senior management;
  • Investible size and a pathway to profitability;
  • Growth funding vs. quantum of sell down by existing investors.
An insightful article, "Why IPO Is an Entry Strategy and Not an Exit Strategy?" lists five reasons why an "IPO can make for such a great entry strategy":

An IPO opens you up to the world

"When you make a public offering, you are essentially opening yourself up to the investing world, which can be a great thing. This will bring you added marketing opportunities, clients and even business deals across the world."

It brings stature

"A company that has gone public is usually seen as a larger company. Of course, there are a number of small companies that have gone public but they still seem more reliable and trustworthy than a regular company. There is a psychological effect to public companies, and it can only do you good."

Helps you get rid of financial bottlenecks

"It is always easier to rise funding when you go public. Whatever financial bottlenecks you might have, you can easily solve them when you have access to investors of all kinds. Public investors tend to be safer than other kinds, as there will be transparency from all sides."

Easy publicity and credibility

"There is nothing better than being able to gain some free publicity and credibility. When you go public, your name gets splashed across investment sites and stock news channels, which helps you to get more publicity."

Thank you to the four panelists for taking the time to present their valuable information to a group of entrepreneurs and investors in Seattle. The information presented should be given serious consideration to mitigate a company's exit risk. In addition to the aforementioned presentation, "Capital with confidence: A launch pad to accelerate your growth" contains additional information about listing with the ASX. An IPO on the Australian Securities Exchange may be a viable solution to expose issuers to a whole new world while bringing stature and resolving financial bottlenecks.

Is your business considering listing its shares in an IPO? If so, would you consider an IPO on the ASX?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.