In 2005, when Farshid Ghyasi founded NETLINKS, Afghanistan barely knew IT. The market, he generously says, was “virgin…there were no players.”
It doesn’t take a Silicon Valley VC to know that founding an IT company in a country with no IT market might seem folly. That didn’t deter Ghyasi. “Websites were new and so were the business solutions,” he told Red Herring from his office in capital city Kabul. He would approach clients before they even knew there was a pain point. That, he said, quickly built respect.
Ghyasi’s logrolling tactics paid off: today NETLINKS is Afghanistan’s biggest software solutions firm, with over 200 employees. Growing with no ecosystem and few qualified professionals, however – in a country ravaged by war and corruption – was a tough ask. Sectors like enterprise resource planning (ERP) would suffer an almost blanket shortfall.
Ghyasi had to look outside the country’s borders. He still trains Afghans at a development center in India. “Hopefully with the next three to four years we will meet the shortage of those skills in Kabul,” he said. A 2015 Asia Foundation report found that only 23% of Afghans report having a secondary education. 7% have obtained a degree.
Afghanistan’s IT industry is no cake walk. As Red Herring reported last week, only 12.3% of Afghans have regular access to the internet. Most meaningfully-sized contracts are therefore won within the international community that is patrolling and attempting to stabilize the troubled state (with varying degrees of success).
“Our target is the government mainly and the government regardless of donor fundings being there or not needs our services,” Ghyasi said. “It may decrease our revenues in the short run but in the long run, establishing ourself as a strong player in the market would eventually increase the revenue as we increase our client list.”
NETLINKS is an example of Afghanistan’s first tech wave of companies: established, with a large and growing staff and abundance of contracts. Back then there was barely any link between the IT, marketing and business aspects of startups: failures were many, and often.
Mustafa Ghaznavi, CEO and co-founder of Codezone, counts himself among the second wave. The 25-year-old’s offices are located beside a former UN compound in the shadows of one of Kabul’s many historic hill forts.
It is currently the holy Islamic month of Ramadan, which this year has fallen during unforgiving daylight hours: most Kabulis wake around 2.30am, eat, then sleep until the morning. Fasting ends a shade past 7pm. Business-wise, Ghaznavi said, he has become accustomed to fasting.
“I was working out of a friend’s restaurant,” he said, referring to his first year out of Kabul Polytechnic University. “I didn’t even have the $1 to take a bus to my home 15km out of the city center.” Ghaznavi made ends meet catering to the restaurant’s IT needs.
In 2013 he launched Codezone, which focuses on four key areas: IT training, web solutions, software development and software maintenance. But the hard times were still upon him. “We developed a product, e-Maktar (‘school’ in the predominant local Dari language), then tried to find clients.”
Codezone soon found the renowned Barakat International School. “We launched the product and set up the system for them…It worked six months, but then we couldn’t negotiate the price and couldn’t continue. The biggest challenge is that most of the tech companies here have a good technical background, but there’s a lack of business skill behind them. There is no-one to decide on where they are going.”
The lack of linkage between IT and business had almost sent Codezone under. Now, though, it has 23 employees and donor funding. There is also, Ghaznavi said, some understanding of IT solutions today where just three years back there was none.
The government, he added, is still not doing enough to push tech as a viable sector of Afghanistan’s flagging economy. But a recent raft of private ventures such as Startup Grind, Ibtikar and DAFTAR coworking space has brought business and IT knowledge in a way that has not been hitherto seen.
Now when Ghaznavi visits local trade fairs he sees companies with integrated models. “I see a very big change. I see they have a very good company profile, a business idea – everything. HR, financial policies: they know what they should learn.
“What we did in three years, these new guys can do in six months,” he added. “All of them are behaving very well.”
One of the new, third-generation companies hoping to accelerate its growth is Khowabgah, a Kabuli online tour operator which is serving the hundreds of Afghans per day who travel to India for medical care. Its founder, Mustafa Amiri, a computer engineering graduate, had the idea after a difficult first trip to the country.
“I saw lots of India in movies, and had a new picture in my mind that it should be like a garden,” he said, speaking at Startup Grind’s office where he has a desk. “But the first step off the airport Delhi was a strange city for me. I couldn’t find a friend of someone who could take me to the hotel.”
Afghans stepping of the plane in India are quickly accosted by Hindi-Dari/Pashto translators who command extortionate fees and usually have sweetheart deals to send patients to certain hospitals for treatment. That, Amiri said, should stop.
Khowabgah works alongside Indian hotel startup OYO Rooms and a fleet of accredited drivers and translators, who work for travelers for a fixed daily fee. He reckons client savings to be up to 40% on an unregulated trip. The company has only been taking enquiries for six weeks.
But with the help of Startup Grind, Amiri has been able to cheaply access the office and expert tools to merge an idea with a business model. “Otherwise,” he said, “I don’t think this would be able to work.”
But even with a nascent tech ecosystem in place, Afghanistan’s entrepreneurs have a problem. Donor and international money, on which it largely relies will not always be there. Foreign governments are already pulling the plug on development projects as their domestic taxpayers turn against the Afghan effort.
Ghaznavi said the answer is simple: innovation.
“We are a donor-funded company, but we are investing in ideas,” he said. “For example (Codezone) are now not only focusing on the Afghan market, but we have some mobile applications launching soon, for everyone.” The company has developed a mobile cooking app called EasyCook, which tells users what they can create from the ingredients they see in their fridge. It will launch on a freemium basis, whereby users pay to bolt on regional cuisine.
Ghaznavi has also been working on an app which reads the numbers on phone credit scratch cards, which are ubiquitous in developing nations.
“Before the Afghan market was demand-driven,” Didar, who years back couldn’t even convince government licensees what an IT consultant was, said. “That is, entrepreneurs were seeing what the donor funds were looking for, then making a company based on those funds.
“But now those funds are reducing, there are funds for innovation. So you see a gap and develop, then push it to the market. Slowly, slowly, the market is changing to that model. The aid money is going, and funds have to cough up.”
Building on its 11 years in the local market NETLINKS is moving towards more innovation, too. It is developing more bespoke products and solutions to cater for a wider catchment of clients. Now, Ghyasi claims it is the company’s main focus, as the landscape has shifted. “Innovation,” he said, “is what has kept us up and running.”