Craft Silicon is one of Kenya’s leading software
exporters. The IT firm won the US$100,000 grand
prize at the 2010 Africa Awards for
Entrepreneurship. Kamal Budhabhatti, founder and
CEO of Craft Silicon, chats with Dinfin Mulupi
about how he started the business and why Kenyan
startups need to come up with more original ideas.
How did you start Craft Silicon?
After I completed my studies I moved to Kenya [from
India] and worked for a company in the polythene
sector for a while doing data entry.
Five months later
a friend of mine approached me to write software for
a local bank . Of course my boss found out about this
and was not very pleased. He had me deported back
to India. On my flight all I could think about was the
great opportunities in Kenya. I moved back to Kenya
and began writing software for banks full time. This
eventually gave birth to what Craft Silicon is today.
We are serving banks, micro-finance institutions and
other financial services companies in 44 countries.
We offer integrated financial software solutions to
banks, microfinance institutions and cooperative
societies worldwide. We have grown over the years to
become one of the leading software export companies
in the region.
For six years since starting the business I worked
without a salary, I concentrated on growing the
company. We want to continue growing the company
so that one day we can hire 10,000 people and sell
our software all over the world.
Today the company
is valued at about $30 million. I am not very happy
with that. There is still one zero missing at the end.
My vision is that by the year 2020 we will have a
valuation of $500 million. We want to be bigger than
Equity Bank and Safaricom Limited.
Describe some of the challenges you face.
We have had exponential growth, which is a good
thing but it has also presented challenges. At the
moment we have 220 employees in Kenya and 100 in
India. Most of our challenges have been in human
resources management. We are constantly working on
ensuring that all our employees carry the ideas and
vision of the company.
We have avoided micro management and instead
opted to train staff to be responsible and have a
sense of ownership in the company. I try hard to
boost my staff’s morale by appreciating their
innovative efforts. We try as much as possible to
make the employees comfortable. In our offices (Craft
Silicon Campus) we have constructed a gym,
swimming pool, sleeping rooms for staff working
overtime and give our staff free lunches to motivate
them.
Meeting our customers’ expectations is also
something we think about a lot. Technology keeps
changing and the market is very competitive. We
want to be innovative and to always be ahead.
In a previous interview you mentioned that one of
your plans was to list on the stock market. Give us
an update on this?
We don’t want to list too early because the public
will not appreciate the true value of the company.
We want to list when we have a valuation of about
$300 million to $400 million. By 2017 I think we
should be ready to list. By that time if the Nairobi
Securities Exchange (NSE) will be mature enough for
a software company then we will list here.Otherwise
we are evaluating other markets, including
Singapore. There is a lot of technology hype in the
country at the moment, we think people would be
willing to invest their money in Craft Silicon by that
time. However, I think that if you want to raise a lot
of money for an IT company, then Kenya might not
be the place right now, we still have a long way to
go.
You mentioned the hype around the IT industry in
Kenya. What do you think about all these new
startups?
I don’t want to discourage them, but I think
developers and entrepreneurs need to come up with
more original ideas. I don’t see any unique ideas. I
have not seen something that can genuinely be the
next big thing. I am just not convinced. M-Pesa was
invented five years ago, but everywhere you go, every
other technology conference, the only thing we talk
about is M-Pesa. We must come up with something
new. We cannot ride on the successes of the past.
Even the government keeps talking about M-Pesa.
This will hurt Kenya in the long-run. We need to
move on and innovate the next big thing. We need
something new to talk about.
What do you think about Kenya’s proposed Konza
City project (a planned high-tech hub inspired by
Silicon Valley)?
I think it is a great project. We are planning to take
space there. We are having meetings with the
concerned authorities to see if it makes sense for us
and if it makes sense for the company to take space
there. I think it is a good project that can bring in a
lot of outside companies into the country that will
help our economy as well as the technology sector.
How can the government attract more foreign
investment in the technology industry?
When I came to Kenya, I came with nothing and I
started from scratch, so I did not have anything to
lose. For bigger foreign companies coming in with a
lot of investment they need to do some due
diligence. A lot of large companies go to southeast
Asia because the cost of setting up and doing
business in some of these countries is affordable.
Kenya does not have tax incentives for technology
companies. One of the reasons we are planning to
set up a development centre in Singapore is because
they give us software incentives and tax rebates. This
is what attracts companies. The government needs to
address some of its policies and make the
environment attractive to foreign companies not just
to open their offices here, but to run most of their
operations from here. This will create jobs and
ultimately impact the Kenya economy.
What about creating our own local tech giants?
Craft Silicon together with Seven Seas Technologies
and Cellulant are good examples of local tech ‘giants’
in the making. I believe in these three companies,
and I believe they have the potential to take up the
world. Other companies still have some work to do.
But these are truly ‘made in Kenya’ companies doing
business with the rest of the world.
One of the changes we have witnessed in the last
few years is the influx of venture capital funding.
What advice do you have for entrepreneurs when
dealing with VCs?
Most times there are inconsistencies between the
founder’s vision and that of the VC. If that is
addressed then you are good to go. Entrepreneurs
should be careful to look at every term and condition
because some of the VCs, not all, but some, put fine
prints there that can hurt your business. Yes we
have seen a lot of VCs showing interest in Kenya’s
technology sector and a lot have come here. What I
don’t understand is why we are not seeing real big
impact so far. Correct me if I am wrong, but in the
last one year what difference have you seen? I am a
person who likes seeing results.
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