Why entrepreneurs should target untapped sectors for disruption

Today, Bangladesh can safely claim to be experiencing a burgeoning growth of startups. From e-commerce to food-tech to logistics, we are noticing the birth of new startups almost every other day. But which are the most successful of them so far?

If you think of bKash, you are not wrong. It is one of the largest providers of mobile financial services (MFS) in the world, with an estimated valuation of USD 640 million. The second most successful startup could be Pathao, which is worth upwards of USD 100 million. Unfortunately, these are two in a morbidly tiny list of successful Bangladeshi startups as per global standards. Many of the others in the market, with some operating for more than 3-4 years, have yet to reach a similarly enviable position, be it in terms of customer adoption, revenue, profit or valuation.

While there is of course a multitude of reasons why we as a nation are still struggling from the point of view of the global startup scene, a chief cause is the fact that most of our entrepreneurs are copying ideas instead of pursuing innovation.  Most of us look at business models that work great in the west, and just adapt that into our own market, thinking if it worked there, it should work here. But we completely fail to take into account the many factors that determine startup success, such as business environment, infrastructure, socio-economic constraints, consumer purchasing power, etc. In all these areas, country A could be vastly different from country B. So it is logical to assume that the same business model would not work for both the countries.

Instead of jumping to launch the 50th e-commerce marketplace, if we take a deep look at our own unique economic realities, and devise solutions that specifically addresses our biggest problems, our chances of success will be higher. For example, bKash and Pathao have done so well exactly because they came up with solutions to some of our most pressing problems that are unique to our market, and leveraged our unique resources to implement those solutions. A brilliant distribution strategy was executed by bKash by turning local mom-and-pop stores into their agents. They focused on the needs of the "bottom of the pyramid" which represents our largest market size. Pathao recognised Dhaka to have one of the worst traffic conditions in the world, and introduced bike-sharing (not car-sharing) as the most scalable solution to help consumers beat the traffic.

The good news is that there are several other industries in our country that are crying out for modern, tech-enabled disruptions. Let us look at three of them in brief:

Migration/manpower export

One of the chief drivers of Bangladesh's economy is remittance earnings. We have been recognised as the ninth highest recipient of remittance in 2019 with $15.9 billion, experiencing a growth of 17%. With our ever-increasing population and inadequate growth of local jobs, it is clear that more and more of our people will be migrating abroad for better lives. Yet, the manpower export sector in our country is extremely broken. There is almost no technology adoption, prospective migrants pay as much as 60% of the actual fees as bribe to illegal middlemen, dishonest recruiting agencies often cheat migrants with lower paying jobs than promised to pocket higher profit, and so on.

This industry, with such a big and growing market, is ripe for a technological disruption. Unfortunately, such a solution has to be produced from scratch, because there is no western model to copy. Western countries do not have such emigration problems.

Agriculture

We've read during childhood how agriculture is the backbone of our economy. And no matter how much we move towards industrialisation, a very significant chunk of our population will always be involved in agriculture. Yet again, the use of technology is very limited in this sector. Problems are rife owing to the use of harmful pesticides, farmers' lack of knowledge regarding modern agricultural practices, wastage of produce because of lack of storage spaces, middle-people taking the lion's share of the value generated, food spoilage (as much as 25%) during transportation of produce to the urban markets, etc. Add to that the global challenge of feeding a growing population with ever decreasing arable lands. But as this market is quite big, innovative startup solutions have the potential to make a huge impact. What makes it even better is that scalable solutions can easily get support and funding from international organisations like USAID, DFID, etc.

Legal Services

The legal landscape of our country is in a mess owing to poor regulatory procedures, bureaucratic redtape and crippling corruption at every step. The simple task of acquiring legal documents for starting a business can be very cumbersome. Other pain points include filing for taxes, finding qualified lawyers, reporting businesses for malpractice, divorce proceedings, etc. All of these spaces have huge potential for technology-led disruptions. In addition, lawyers, who greatly value their time, are spending a copious amount of it tending to tedious tasks that can be easily automated. Software to automate paperwork, appointments, accounting, reporting, case management, etc. can free up their time to pursue the more important tasks in a disciplined manner.

In conclusion, budding entrepreneurs would be strongly encouraged to not look at overcrowded sectors and instead, think deeply about the blue ocean markets in our country where real difference can be made and success can be achieved far more easily.

Muhammed Asif Khan is striving to leave an impact by working hard and helping everyone around him. For any support or advice, you can reach him at muhammed. asifkhan92@gmail.com.