Erik Hersman & John Graham-Cumming Fireside Chat

All right, well, good afternoon from Lisbon. I'm John Graham-Cumming, Cloudflare's CTO. I was going to forget my own title there for a minute, but I remember the title of our guest. I've got Erik Hersman, who is CEO of Brick and the creator of the iHub in Nairobi coming to us from Nairobi. Welcome, Erik. Yeah, thanks for having me, John. It's good to see you. It's great to see you again, because we were just discussing before we went online that the last time I actually saw you physically, you was in Tunis. And I said it was two years ago, but you reminded me it was a year ago. It's just that 2020 feels like an extra year. Exactly. It feels like a lot longer time has passed since. But yeah, we were together in Yeah. Well, you know what? I suspect that some of the people watching aren't familiar with Brick or the iHub. So if you could give us a sort of a little intro to those two things, it'd be very interesting. Sure. Yeah. So I'll start with the iHub. So the iHub is Innovation Hub in Kenya. We started 10 years ago. It's a large space where a bunch of tech people come together and do a whole slew of things, everything from starting startups to research to investors. Everybody's in the same mix. And then Brick is the company I currently run, which is a company that started off as a hardware company, but we now deploy Internet connectivity network across Kenya and Rwanda in public transportation and public spaces for affordable Internet. I'd love to talk about Brick, and I will do, but just digging to iHub a little bit, because I'm interested in that. You said that was one of the first things on African continent that brings all those people together. What are the sorts of things that actually get done on a daily basis there? Yeah. So the iHub started in 2010. And back in those days, a lot of people didn't think there was so much going on in tech in Africa. Turns out there is a lot. And what this ended up doing was just bringing a lot of people together that were in the same space and kind of accelerating what was going to happen anyway, but making it happen much, much faster. And so what you have is you have anywhere from, it's a co-working space and it's a research lab and it's an incubator and it's all these things. And so what you have is any given day, you'll have some startup people there, software engineers, designers, investors coming through, media, and it's just this melting pot, this nerve center for all these different types of people coming together. Of course, the pandemic has put a little bit of some breaks on that activity, but for many years, it's been that kind of nerve center for activity that you find in the tech community here in Kenya. Fascinating. And how many people are involved in this? So we grew to about 17 ,000 members and we've had two floors in the building. It got pretty big. And now there's a bunch of other tech hubs that have grown up across both Kenya and the continent. And I think what we're seeing is this idea of creating these spaces that like-minded people can come together, works out really well for everybody. Basically, it makes a larger target for people trying to invest, people trying to write about things, but it also becomes those serendipitous locations where you can find your next CTO, where you can run into somebody who becomes an intern, then an engineer at your company, those kinds of places. And yeah, it's just, it's become a vibrant core for what happens in the tech community in any given ecosystem across Africa now. Fascinating. Oh, that's, that's really great. And happy birthday, I guess, if it's 10 years, it's the same age as Cloudflare. So congratulations. All right. So let's talk about Brick. I think I first came across Brick because I saw a photograph of a bus in Kenya with a big waterproof box attached to it with an antenna on it. And I came across an article, which said, you know, there's Internet wifi on a bus. And of course, you know, in a place like Lisbon where I live, there's wifi on buses because, you know, that's something the government provides here, but this is a very different thing, right? So take us through the beginnings of Brick and then we can talk about where it is today. Okay. So I'll start off. We started in 2013. So we're seven years old. We started off by saying, well, the problem with Internet connectivity in Africa is that we have bad power and we have different types of sources of that Internet connectivity. So it could be a SIM card, it could be an Internet cable, could be any of these things, but none of it's reliable. So what if we built our own device that could handle, you know, dirty power, power spikes, power outages, as well as SIM card usage and became really like a super powered mi-fi device. So this is the first Brick V1. So we shipped this in 2014 and it's BrickShaped. That's the company name. There is no acronym. I like to tell people we couldn't afford the I, but it ended up being a pretty good success. You know, just to explain it briefly, you have your power and the SIM card slot, you have ethernet cable port, and then you have a USB port and then another antenna port here. And then inside of it's eight hours of battery life. So it can last a long time on its own. And so this was good. It was commercially, it went fine. But when we sat back at the end of that first year, we were like, we're actually maybe solving the wrong problem. We're selling the device to get people online, but the problem is that not enough people can get online because of an affordability issue. So it made us kind of rethink our whole business model and our reason for being and change the way we operate as a company. Without being too long-winded, I'll say that we then went forward and we built another device. So this is the Super Brick. So all designed and engineered in Kenya. This is like super rugged. I mean, like this is all... Yeah, this is the thing I, this is what I saw a picture of. It looked like it was very, very rugged. And both of these devices were providing Wi-Fi, right, as well. It wasn't just ethernet. Right. So yeah, that's the first thing we do is they provide Wi-Fi out and then you can do all kinds of stuff on them. They can do content storage on it for caching. It has the ability to do some compute as well. So in a way, it's a little rugged micro server and that allows us to do a lot of different things, no matter which type of environment we're in. And just as we go through the history of it. So that device, you know, I saw on a bus, I think, or something like that. And that was, how was that sold to people? So, yeah. So, I mean, so the first device we actually just sold retail for 200 US dollars approximate. This device, we don't sell at all. So we install these in buses, in Matatus public transportation in Kenya and Rwanda. We also put them in fixed locations across the two countries. And we run that network. So that's our back home provision from our partners. And then what we do is we have a platform on it that's much like what you'd see at an airport where you get a dashboard that pops up, you watch an ad, you do a survey, you do something to earn your time. And then you get online, which in East Africa is really important because people have time, but they don't have money. And so if you want to hit this demographic and allow them to have equal access to that global digital ecosystem that's out there that we all take part in, you need to find a way that they can do so without going into their wallet. And this is the only way we found that we could do that. And so we have businesses who end up paying us and that's what subsidizes that cost. So this is very interesting. So if you didn't have the device, and if I was in Kenya, how would I get, what are the tiers of Internet access? Assuming I could get broadband, if I could afford it, mobile access, what do people do prior to this? Yeah, so we're fortunate in Kenya, maybe Kenya is one of the few big countries in Africa that has a lot of connectivity options. We have undersea cable coming in since 2008. So you can get fiber to the home if you're in one of the major metros. There's really good 4G or even LT signal off the towers nearby. And across the country, you'll find three to 4G, even if you're not in a major metro. So there's a lot of connectivity options if you have the money to pay. So whether you're in office space or you're at home, the truth is that not a lot of people can pay. The real numbers tend to be around, so of everybody who owns a smartphone in the country, only about 20% of them can pay for the Internet. The other 80 get online randomly. So they might turn on their data on Sunday to do WhatsApp with the family. Maybe they want to check a sports score, things like that, but they're not, they don't have data on often. And so if you want to change the way people use the Internet, so that is something that's part of their life all the time, then you have to have a way for them to not think about their ongoing cost to their own pocketbook. Because they're thinking about, well, how do I pay school fees? Where are we going to get food today? Are we buying soap? These kind of very basic necessities. And the Internet, while it does play a relatively high position in people's lives for what it is, they still need the daily necessities. Right. And so you've essentially got a sort of a partner or advertising supported model, is that right? So if I were to use this thing, suppose I'm somewhere, I get my phone out, I see there's a special Wi-Fi name, I connect to it, and then what happens to sort of take me through that? I watch an ad or I... Yeah. So ours is called Mojo Wi -Fi, and you'll find it on buses and public spaces. We have about 2,700 locations across the countries, about 500 buses in Rwanda, and another about 1,000 in Kenya. And those locations, you see Mojo Wi-Fi, you jump on with your phone, because that's what people are using here more than computers. And you get this pop -up, you can watch this ad, and you'll get your hour free of Internet. And then what you can do is you can also do other surveys, or we actually have other kinds of digital work. So there's, of course, just watch an ad or do a survey, but we've started incorporating different digital work from other companies where you actually do something to train an AI, or you do something small, it's usually micro work that allows you to earn points. And those points, you can cash, you can bank, and then use in the future. And so people really use that. And they're very price conscious on even the time to do these things. So we have to spend a lot of time on the user experience side, going into the field and just talking to individuals and how they're using it, watching how they're using it. And it's been really interesting to see that people are more than willing to do something that maybe in Lisbon or if you're in Chicago or something, you might not be willing to do, because it's like, I'm not going to spend five minutes of my time doing this. But somebody here, five minutes is a lot more accessible to them than a dollar. Right, right. It's interesting because so much of the debate that's going on on Internet use in, say, in Europe and the US is around advertising supported models and the privacy of that. And one of the things that's interesting is if you take away those kind of things, you actually do have this real affordability problem. And the fact that I can read so much stuff on the web for free is because of advertising. And you're even bringing this home even more, which is even getting on the Internet here is something being supported by other businesses through advertising and actual work, right? Yeah. Yeah, no, that's absolutely right. I think the crux of that, it really comes around about your privacy and your decision, your power over this. So the way we've always thought about it is trying to get in front of it and say, listen, you decide if you want this to be shared with anybody. And then you can always turn that off on your own profile in the future. For instance, if you did a survey for Unilever, that's shared with Unilever, obviously, but it's not shared with anybody else. And you can turn it off sharing with Unilever in the future too. So you're not tied to that long term. That was one of the ways that we're trying to think and play in this new space, this new kind of paradigm of personal information, yet somebody else is paying for the service that you're getting and trying to bring the two together in a way that we hope works well for both the end user and for the person paying for the service. Just to dig into the experience a little bit, let's imagine I arrive and I get on a bus, I see the Wi-Fi, I get on, I spend, what, a few minutes for an hour? Is that sort of a trade-off kind of thing? Yeah, you actually spend about 15 to 30 seconds for your hour. Okay. You can spend a lot more time. So on the higher end digital work things where you're training in AI, where you might spend anywhere between two to 15 minutes, you get a lot more points. So by doing kind of lower tier stuff, you earn fewer points. By doing higher tier stuff, you earn more points. And then those points you bank and use however you want. And now in terms of where you put these things, you said buses, obviously, and also public spaces, does that tend to be in cities or is it also in smaller locations? Yeah. So we basically, we look at a footprint of a location. So if you're in the city, it's fairly easy to figure out where the high footprint areas are and make sure that people are using it. But we have to be smart about that too. High footprint doesn't necessarily mean high usage. It might not be a place where you want to pull your phone out. And so we need to make sure it's high footprint, but also people are okay with being stationary for a few minutes and doing something. The second thing we do is when we're looking outside of the city, actually, sorry, when we're looking inside of the city, we're really in kind of the lower economic demographic areas. So the slums are pretty heavy for us. And then when we go outside of the city, we are looking for smaller towns or smaller cities, depending on where we are. I think we're in about 20 different cities across Kenya right now. And we're looking again for the same type of footprint for a certain number of people will be getting onto this every month we know and we can count on. But recently, because of the pandemic has caused just a lot of craziness in our lives. First of all, you can imagine in Kenya, we had like two thirds of the buses went off the road. They weren't being used for public transportation. And then those that were only had only about half full. So that was chaotic for us. The second thing that happened is Kenya became the first country to get the commercial loon usage. So Google's loon balloons are about the country. They started to deal with telecom Kenya so that people can get that LTE or 4G signal from that balloon, no matter where, well, depending on where the footprint is for the day. Right. Well, one of the things we realized that was that we also have another issue with the pandemic, which is educational content for our students. And because schools aren't in session, they're still not in session in Kenya. So could we deploy our very kind of ruggedized hardware into these very much off the grid locations with solar power backup and be able to provide that digital education and balloon for that coverage instead? So we deployed some very, very rural areas just to provide that connectivity and see what the usage looked like in those areas. And that's been really fulfilling one, too, because you feel like you're doing you're not just doing something for a commercial game. It's also good for the community. And so how good is the loon coverage in Kenya? Is it generally covering the whole country? I mean, obviously, those balloons move. They tend to. Yeah. What they do is they program them to try and provide standardized coverage across certain areas. But the wind does what the wind does. And some of them show up in Uganda and some show up in Tanzania and other places. But by and large, they have a footprint that they try and stay over. And those tend to be very rural areas that don't have good terrestrial fiber or have somewhat spotty tower coverage so that it makes sense to go in there. And really what they're looking for is they're looking to solve the problem for sparsely populated wide areas that have people in them, but it doesn't make commercial sense for somebody to put a tower up. Right. And it just so happens that the problem with that is that those people also don't have as much disposable income to spend on data coverage. Right. So even if they have a signal, do they have the phone? And if they have the phone and the signal, can they pay for that connectivity? Right. And so we're saying, you know, there's a model where you could it doesn't matter. Right. Put this here and that and take that out of the equation. Yeah. And so you say you put the box, it does 4G or LTE up to the loon balloon and then provides the your standard service in that local area. Yeah. It's just Wi-Fi. You know, it's free Wi-Fi in your area. Yeah. Free Wi-Fi with your, you know, watch an ad or do a survey access. Yeah. Yeah. Yeah. What we found is like there's a lot of people who are trying to do a more affordable Internet, but, you know, all over the continents in Nigeria, there's some good guys doing it down in South Africa, a lot of really good projects. And the same same with Asia and Latin America. But a lot of people are just saying, well, affordable, it just means less expensive. That's not true. It is true, technically. But the problem is the people that can pay just less and less and less is just infinitesimally more and more and more, not a lot. Right. So you if we said, like I said before, only if you already have a smartphone in Kenya, only 20 percent can pay for the Internet. If you make it really, really, really, really cheap, you might get another 10 percent. Right. The other 70 percent still aren't connected to the Internet. Right. And so you've got a real problem on your hands. And that's what we're trying to solve for is that other percentage that just won't ever have that income that allows them to to pay for, you know, a faster industry regularly. Interesting. And just to flip back to the buses, are buses important because they reach places in the country or bus journeys are long or what was the thinking behind buses? Yeah, buses are interesting. Started off just as a something we thought that would be interesting because we thought it fit a certain demographic, which is people who are trying to go to work and they tend to have the ability to buy a device. So that means they already have that. That's interesting demographic. And that proved to be very, very true. And our bus usage is actually much, much higher than our physical location usage. So sorry, our fixed location usage. Right. Right. So for so what we what we find is like on a let's say on a bus fits 50 people. Right. And you'll have maybe 20 of them connect to the Internet on any given run. And they'll stay online for 10 to 15 minutes and then they'll do it again in the evening. So it becomes very much a part of their daily routine. So we have a lot of repeat users and they use it all the time. And when it's not there, if a bus shows up that doesn't have mojo Wi-Fi on it, they'll wait for the next bus until they can. You know, that kind of thing. So it ends up being a really interesting user base. But funnily enough, this is where our expertise in hardware came in handy. All these other people were trying to do like, well, let's just get a router from China or Korea and put it on a bus in Rwanda. And this is actually what happened. And of course, they break in two to three months. They can't deal with the vibration, the bad roads. They can't deal with the heat, the dust, all these other things that we have as a normal part of our countries that we live in. Right. But the Superbrick is made for this. You know, it's made extra rugged. And so we started installing these in. We had other problems, like we had the electricians that cut the cables sometimes or, you know, just issues that you have to overcome. But once we got it figured out and we trained up the, you know, the buses, the electricians, and we told people what's working with them, they just work and work and work and work. Sure, every once in a while, there'd be an issue and we just send a tech out and they replace the Superbrick and bring the old back. We fix it, send it back out into the field. Right. So, yeah, they're still today, I think, the only device that can work in emerging market roads over a long amount of time. And so Kenya and Rwanda right now, are there other plans to go other places in East Africa or in general? Yeah, we've been looking around quite a bit. We had, because of the pandemic, we had a false start in South Africa. We're hoping that we can get that going again. And then the DR Congo is another one that's become really interesting. We've had a couple of trips out there and we've deployed some technology into Kinshasa already and hope to do further expansion in the DR Congo as well. That's a very big, widely spread population. I would imagine that requires a lot of bricks. Yeah. Well, so interestingly enough, like we have to look at countries that have decent sized populations and DR Congo is huge as far as geographic area, but Kinshasa is a massive city. Its population is amazingly large. And even its secondary and tertiary cities are a million people. Right. So when we're looking even at like Goma and places in the far eastern side of the DR Congo, it becomes really interesting. The numbers do look interesting for us. And in our world, when we look at that expansion into certain markets, we have to work off of the type of investors who are willing to go into that market with us, as well as the partners on the ground, because we obviously can't have a bunch of Kenyans going into DR Congo and trying to run everything. We have to find partners that are good on both backhaul, good on maintenance, things like that. Yeah. Yeah. But every time we talk about this, I'm totally fascinated by the way in which this thing works. And we're actually getting down to the last sort of five minutes of this. I was wondering about switching gears and just talking a little bit about COVID-19, which I'm sure everybody would love to talk about. But just give us a little bit of perspective from Nairobi about how things were handled there and what you're living in right now. So we went into full lockdown and then the president locked down the city of Nairobi and the city of Mombasa. So we weren't even allowed outside of the city. Curfews at 7pm. It was pretty tight. And then, so for the first two months, it was pretty, everybody was, it was a real shock to the system. It slowly started to open up. The cordon of Nairobi was let down about a month, month and a half ago. And we've been able to do some more travel. It's been, it's been, I got those dates wrong. It's actually more like two and a half months ago. But we've been able to do more travel. And but the interest, interestingly enough, the impact of COVID on the country health-wise hasn't been that great. The economic hit has been massive. You know, lots of companies failing, lots of people out of jobs right now. But the, I don't have the numbers in front of me, but we, we don't have relatively that many cases or deaths. And hopefully we don't get a second wave or any of that kind of stuff that's happening in other places. Right. So for whatever reason, we've had, we, you know, we've had to deal with it. And it's, it's really shocked a lot of us in our businesses, especially. But in another way, we're thankful that, you know, COVID-19 hasn't had a massive death toll in Kenya. It's very interesting because I was reading, there was an article in the Washington Post a couple of weeks ago about COVID in, in East Africa and West Africa, actually, and talking about how sort of the, the narrative in the US and Europe was, well, COVID is going to be terrible in Africa. And it hasn't actually come true in a lot of places. And partly because there was already, you know, those populations were already used to dealing with diseases that have had to spread. And they're like, you know, there was less resistance to, okay, we've been through these problems before, now we'll deal with it. Yeah. You know, I don't think any of us know why we haven't been affected as much as anywhere else. Because South Africa's been affected pretty heavily. It has, yeah. And it shares quite a bit in common with the countries north of the Limpopo River, right? Yeah. But, you know, we're, we don't, it's not clear as why we're grateful it hasn't. Yeah. There's still precautions in place. But it looks like the country's going to open up pretty quickly. Already, you can travel to Kenya. And it looks like the government's going to open things up even more because, and just say, listen, be responsible, keep distance, keep your mask on, and then go back to business. Yeah. Yeah. Well, it's fascinating. I'm really fascinated by the different approaches in different countries and how these things have gone. Because we've done this giant experiment on the entire world to see what works and what doesn't. What was it like in Portugal? It was, so Portugal's relatively small, right? It's a relatively small country. And basically, in the middle of March, there was a lockdown, which meant that you couldn't go anywhere outside for anything other than grocery store and pharmacy kind of stuff. And there were a couple of periods where the major cities were isolated to stop people, particularly around Easter, for example, to stop people from going and having big family reunions, they essentially shut the city's, you know, border. That kind of happened a couple of times. And then in May, they began to sort of slowly reopen things. And so, you know, we're, we are now dealing with, I think, a second wave, although it's not a massive one. In general, the government here is, what happened was the government is a coalition, and they very quickly agreed, we're just not going to argue about anything, we're just going to do it. So there was a lot of like, we're just going to get on with it, is how we're dealing with it. And I think the population in Portugal also is just like, okay, we'll embrace that. Yeah, we'll just do it. We'll just go for it. And I think Portugal has pretty strong memory of the 2008-2009 financial crisis, and other difficulties. And so it was like, okay, we're all in this together, kind of feeling. And that's really reflected in the streets. So now we can do most things, we can't have large gatherings, we wear masks everywhere, everywhere there is alcohol, you know, gel. You know, schools have gone back here. And that's a, that's probably the biggest thing that's happened, compared to some of the other European countries. So I think, you know, we hunkered down. And it was tough. It was, it was very tough being isolated for a couple of months. And then we slowly, when you know, we're now used to it, I think so. Good. Yeah. So you're getting back to normal as well, in some ways. It's interesting, you mentioned earlier on about the good connectivity in Kenya for, you know, businesses and things like that. Because I remember when we were in Tunis, at the time, there was various Internet shutdowns going on. I talked to some folks from Ethiopia, who said, well, in order to keep our business running, we're flying from, you know, Ethiopia to Nairobi, where we can get good Internet while the Internet shut down in Ethiopia. So it sort of shows how how attractive good Internet can be to people. Yeah, well, you really can't have a 21st century economy if you don't have good power and connectivity. And so countries that shut off the Internet will suffer because of that. Yeah, yeah. Yeah, we actually had contractors in Kenya doing UI work for us at one point. You know, that worked because the Internet worked. So they were great. Yeah, no, that's right. I mean, if you have good connectivity in a country, you can take part in that global digital economy. And if you don't, then you can't. Yeah. Yeah. Making it reliable, which is partly what you're doing is a big part of that. Seconds away from being out of time, as fascinating to talk to you. I'm sad it's in some exotic location. It's going to be Costa Rica this year, but that got cancelled. Hopefully we'll see each other in Nairobi at some point. I'd love to come visit. Yeah, you're always welcome whenever you come. Do let me know. And thanks for the conversation, John. I appreciate it. It's great. Thank you for doing this. Happy 10 year birthday, by the way. Thanks very much. Well, happy 10 year birthday to Ihab as well. And seven years to Brick. Thanks. Cheers.