Startup of the week: Mdundo, a mobile music service for Kenya
Emerging markets often require a novel approach, as demonstrated by Mdundos strategy of selling MP3s via physical scratchcards.
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As Africa’s infrastructure improves, there’s an increasing market ripe for the plucking by local tech startups. One hot property is mobile music service Mdundo, a collaboration between two Europeans and two Kenyans. We spoke to co-founder Martin Nielson about the company’s business model and the challenges faced in this emerging market.
What’s your elevator pitch?
Mdundo is a music distribution platform that aims to give consumers access to African music by providing a mobile web music platform, where music can be downloaded legal, easy and fairly priced.
We’ve tailored our product to the market by enabling locally popular payment methods and delivering local content, which does not appear on international music platforms.
A key element in our model is scratch cards (similar to lottery tickets with a pin code hidden under the foil), with the pin code a user can download songs from our platform. Scratch cards are already widely used for buying airtime in Kenya and broader Africa. Mdundo distributes the cards though Kenya’s artists. The cards are sponsored by AIRTEL which covers the production cost in return for advertisement on the cards, and they are distributed free of charge to the artists who sells them.
Mdundo then upsell music to the same users and sell scratch cards for promotional usage to other brands and split that revenue with the artists on our platform.
When was the company founded and where are you based?
Mdundo is a company founded by the African seed investment fund 88mph. Key investors in the fund started testing the idea of selling music on scratch cards in August 2012, and decided to make an investment into the startup in September 2012. From that point a team was established around the startup, which moved into 88mph’s incubator offices in Nairobi, Kenya.
How many staff, and what do they do?
The Mdundo team is currently four full time employees.
- Gustav is the CEO, he has been a part of the team since November 2012. He focuses on business development, finding customers and creating potential revenue streams. Gustav is from Sweden.
- Martin was previously working as an intern at 88mph, and he has been a part of Mdundo since August 2012. Martin’s task is to “make the shit work” and he spent his time searching for a perfect product-market fit. Martin is Danish.
- Eugene started working as an intern for Mdundo in October 2012, he is taking care of aggregating the content and updating the content on the site.
- Catherine, the last member of Mdundo, is responsible for marketing and interaction with customers. She has been a part of Mdundo since November 2012. Eugene and Catherine are both Kenyans.
What technical difficulties did you overcome to get to market?
Usability – a smartphone can handle several tasks at the same time, which is not the case for a basic feature phone.
Another technical issue is the stability of the Internet connection. This is an issue which is a bit hard to do anything about, but we have had a number of lost connection during downloads.
What difficulties have you found scaling up (people and tech)?
The model is based around printing and distributing “scratch cards” for each and every artist on the platform. We are depending on the cards to attract users to the platform. The printing process of the cards has proven to be a bit difficult, and companies who specialize in printing the cards needs a fairly high quantity for it to be profitable and the delivery time has been a lot longer than we expected.
What are the company’s plans for the future?
Currently we operate in Kenya only, but during the following weeks we are planning to sign up artists from the rest of East Africa. Since the model is web based and the distribution is focused around the artists it is fairly easy and simple for us to expand into new markets.
We are also looking into other usages of the scratch cards such as tickets with music on for events and promotion for cooperates. We are working with Samsung in Kenya who are buying music cards from us to distribute together with their phones as a value add for the customer.
What are your three top tips for wannabe entrepreneurs?
- Focus on revenue.
- Test your assumptions as fast as possible.
- Look for partners who are as hooked on your idea as you are.