Learning from Nepal’s successful platform businesses

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Learning from Nepal’s successful platform businesses

Hamrobazar, Kaymu, Foodmandu and Tootle have shown that Nepali entrepreneurs and startups can succeed by focusing on building platforms

At first glance, behemoths such as Google, Apple, Amazon, Airbnb, and Uber might not seem to have too much in common with Nepali businesses like Hamrobazar, Kaymu, Foodmandu and Tootle. But a closer look will reveal that all these businesses have developed platforms that bring people together in ecosystems in order to exchange value.

Marshall W Van Alstyne, Geoffrey G Parker, and Sangeet Paul Choudary, in their Harvard Business Review article Pipelines, Platforms, and the New Rules of Strategy, point out that “Platform businesses bring together producers and consumers in high-value exchanges. Their chief assets are information and interactions, which together are also the source of the value they create and their competitive advantage.” Traditional businesses, on the other hand, are based on the ‘pipeline’ model, which simply uses raw materials and resources as the inputs to create their own products or services. These products and services are then marketed to consumers.

Apple’s App Store and Google’s Play Store are better examples of how powerful platforms can be. On these platforms, the app developers create apps that solve problems or offer benefits. The smartphone users then derive value from these apps. And finally, Apple and Google profit significantly from these millions of value-exchanging interactions. These platforms have enabled Apple and Google to rule the mobile phone industry, previously dominated by Samsung, Nokia, and Motorola. Google, in particular, has used its considerable platform might to venture into industries ranging from AI to self-driving automobiles.

Closer to home, Hamrobazar.com, Foodmandu, and Kaymu were the pioneers of platform businesses in Nepal. Each of them has allowed Nepali people to explore and exchange goods and services more conveniently—Hamrobazar with secondhand goods, Foodmandu with food, and Kaymu with consumer goods. They have harnessed the power of platforms, and it’s not a coincidence that they are often counted among the most successful Nepali startups.

But can such companies take on Facebook and the like? Facebook is the largest social media platform in the world. Today, many Nepali businesses are using Facebook as a platform to sell everything from electronics to furniture. And groups like Entrepreneurs for Nepal are even using the platform—besides for hosting discussions—to allow their members to ask for quotations for goods and services they need, almost in a tender like procedure.

Today, many Nepali businesses are using Facebook as a platform to sell everything from electronics to furniture

There is no doubt that Nepali businesses and users are deriving a lot of value from Facebook. But can a Nepali startup build a platform to sidestep Facebook? Can it attract a significant number of users to generate a network effect strong enough to sustain the platform? Yes, they can.

It’s important to remember that Facebook is a social network before anything else. No matter how much Facebook tries to help people to do business on it, its primary value proposition and focus will always be on social interactions. There in lies the opportunity for Nepali startups. Facebook will never be a complete solution for a specific industry. This is most beautifully demonstrated by the wonderfully conceptualised app that has been the talk of the town among Nepali startups—Tootle.

During the height of the fuel crisis in Kathmandu in 2015, a Facebook group called Carpool Kathmandu garnered a lot of attention for the utility it offered in such dire times. People used the group to offer and find rides to various destinations when availing of private and public transportation was exceedingly dif cult. Given the number of users offering and accepting rides, through the group, it can be deemed a success. But the one shortcoming of the Facebook group was that ride seekers could not match with the right ride providers regularly and on time. Afterall, Facebook groups are not designed to cater to such specific needs.

Tootle, however, because it’s a standalone app, hasn’t suffered from such shortcomings. It’s designed specifically to seamlessly match people offering rides with people seeking rides. Tootle also proves that if a Nepali startup provides a significant enough solution with acceptable levels of functionality, it will be able to attract users.The Tootle team recently revealed to The Kathmandu Post that so far, more than 2,000 people have signed up as Tootle partners; and they have a client base of 7,000-8,000 people.

Although there are uncertainties regarding the rules and regulations surrounding Tootle and its operation model, Tootle is certainly onto something. The Tootle team have successfully created a service/solution that is significantly greater than what would be available had they been dependent on Facebook. They have been able to incentivise a substantial number of users to start the network effect. The platform’s model has allowed the team to avoid the expensive fixed cost of purchasing their own vehicles, and it has allowed people to utilise an unused resource: their pillion seats. But most significantly of all, the platform’s model allows Tootle to scale their operations and grow rapidly throughout the country when the time is right.

The entrepreneurs behind Tootle definitely took inspiration from similar platforms like Uber, and there are plenty of other inspirations out there that Nepali entrepreneurs can look upto. From Airbnb, which allows travellers to rent out accommodations from local hosts, to Dribbble, which allows designers to find work and publish their creations, these are all platforms Nepali entrepreneurs can learn from.

With agriculture being so prominent in Nepal, perhaps the best industry to create a dynamic platform would be agriculture. Some businesses are already using Facebook to sell fresh and organic agricultural products straight from the farmers to consumers. But as we have already discussed, Facebook is not fully equipped to deal with the dynamic needs of this market. Therefore, a platform to efficiently and seamlessly bring together producers and consumers of healthy and organic agricultural products has substantial potential. Other prospects for new Nepali platforms could be in medicine, where people could have their health reports checked by certified doctors, or in service, where people can post their requirements and hire skilled people for one-off jobs like plumbing, painting, decorating, etc.

Nepali entrepreneurs, no matter which platform they choose to build, will always face the problem of attracting enough users to create value within their ecosystem at first. But if they provide a solution that is significantly better than the alternative, if they start small, and if they focus on the value exchanged between producers and consumers of the platform—instead of instant monetary gains—then they can succeed. Don’t believe me? Just look around in your home, office or school, and you will  find someone who has arrived there on a Tootle ride, someone who is ordering lunch on Foodmandu, someone who is buying her next smartphone on Kaymu, and someone who is selling his secondhand phone on Hamrobazar. 

*First pubished by the author in M&S VMAG



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Guest Friday, 01 December 2023