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A storm in the African cloud

How two young Kenyans built a company worth fighting for; and are doing it again.

It is 8.30 AM, on Tuesday, April 26th, 2016, as normal a Nairobi morning as can be. I am at the offices of Node Africa, a cloud services company. Node is a young firm, less than two months old. I have come to meet the CEO, Phares Kariuki, who is in his early thirties.

The office is medium-sized, divided into a spacious workspace with computer screens on a large red divided table; a lobby with a roll-up banner, coffee bar and no furniture; and a small boardroom with four chairs around a small table. The workspace is deserted. As I come to learn later, its usual occupants are working from a data centre this morning.

I am thirty minutes early, and Phares is meeting someone else in the boardroom. In the few minutes I wait for him, I look around and take in the surroundings. Outside the window, machines clang and whirr at a construction site across the road. There are many ways to think of the Silicon Savannah, Kenya’s effervescent tech scene. But this image is rarely wrong: a bunch of guys in a small office on the second floor of a new building, close to a reputable mall with nice coffee shops, and within a certain radius of the iHub, Nairobi’s fabled tech hub.

For a long time, news coverage of the Silicon Savannah has been rather good. It has been lauded as a testament to the opportunity Africa has, and has used to good measure, to leapfrog clunky legacy technology right into the digital age. And lead in it. But the cool waters have been ruffled a few times lately. A number of scandals have peeked out of its well-manicured reputation, lighting small fires in the Savannah.

I am here to talk to Phares about perhaps the most high profile scandal of 2015. He experienced it from the vantage point of an uncomfortable front seat. It involved Angani, a company he started with his long-time friend Brian Muita. The climax of the scandal came in October 2015, when they were unceremoniously booted out by the board under highly controversial circumstances, and the company’s services came tumbling down.

Angani was the first native cloud services company in East Africa. When Phares and Brian were planning to start the company, they didn’t have too much money. Scraping together their personal savings, contributions from family members, friends and teachers, they came up with a total of about KES 1,000,000 to start with, a measly amount by any standard. With such limited resources, they had to fall back on sheer grit (supplemented by a generous helping of DIY ingenuity) to cobble together the company. Needless to say, this was feat at whose prospect many sneered.

Angani went live in August 2013 and became publicly available in January 2014. The beginning wasn’t smooth. “The market took its time to respond,” Phares says. “Because everyone thought we would fail”. Soon however, the sneers of detractors turned into smiles and congratulations. Companies in their numbers moved their data and applications from foreign hosts or their own premises to Angani’s servers. The growth of demand was exponential; the founders were soon in need of help to run the company.

So Angani tapped Riyaz Bachani to be its Chief Operations Officer. Riyaz had been working as Chief Technology Officer for Wananchi Group, a “public data communications carrier” according to its website. As reported then by CIO, he had extensive experience in the tech industry in the region, and brought with him the connections and networks that would be instrumental in scaling and financing the company. Phares said then that he was a “great addition” to the company.

To cope with the growth, the company did a fundraising round in early 2015. A number of investors lined up for a stake. The founders settled on Erik Hersman, the founder of the iHub and the man behind the famous Ushahidi app; and a high-profile personality in the Silicon Savannah. He invested through Savannah Fund, a venture capital firm at which he is a partner. He also brought along Invested Development, another VC firm, represented by Miguel Granier. The board consequently expanded to include these men, as well as Riyaz. Effectively, the two founders were now outnumbered and out-muscled on the board.

The cracks started showing soon after.

After undertaking a few questionable appointments, including those of his sister and brothers-in-law to key positions in the company, Riyaz clashed with the founders over strategic decisions and technical issues. It was only a matter of time before the situation exploded. And it did, over a technical disagreement on where and how to host client data. Riyaz wanted a cheaper, but riskier solution. Phares and Brian were for a more expensive, but way less risky setup.

Arguments ensued, and insults were traded. It soon became clear that something had to be done to resolve the impasse. A board meeting was scheduled for the 19th of October, 2015. Going into the meeting, there were four proposals. The only one involving the retention of Phares as CEO was struck off the table at the beginning of the meeting. He had just been fired from his own company. Brian, the CTO, resolved to follow his friend out. By the end of the meeting, the two founders were out in the cold. It was agreed that the handover would take three months. “It was painful,” Phares says. The proceedings of that fateful board meeting were acquired and published by iAfrican, a South African tech news site, in late 2015.

The next day, Brian was asked by the company to hand over the platform’s administrator passwords. Since he still had three months to do the handover, he was nominally in charge of customer data until January, 2016. To avoid risk to client data, he contended that the new hires brought in by Riyaz needed to be trained properly to run the platform. Brian would know. He had personally custom-built the software from the ground up over two years. Given these circumstances, it would have been unethical of him to hand over the passwords. So he declined, asking that all requests be passed to him for action.

After more pressure he agreed he would give the passwords if the company could sign a document showing it now had custody of, and responsibility for, the platform. The company sent him undisclosed threats to try and force the passwords out of him. When these threats did not work, it filed an urgent lawsuit against Brian and Phares. Eventually, they decided to deposit the passwords with their lawyer and asked the company to collect them from him. Then they left for the resort town of Malindi, on the Kenyan coast, to take a short holiday and plan their next move. Nobody picked the passwords from the lawyer. Instead, the company flew in hackers from Shape Blue, a British consultancy, to hack into the system.

All this time, the system had been working properly. Though rumours had started circulating that all was not a bed of roses inside the company, most customers continued using the service without encountering a glitch. The hackers set to work on 1st November 2015, and managed to gain root access to the system. But they brought it down in the process. Phares says Riyaz later admitted he knew the hackers were probing in the dark, since the platform was custom-built. Soon, clients realised they could not access their data and applications.

The company, in veritable corporate-speak, offered apologies, explanations and promises. Only the system did not come back on. Service was later restored, but it has never returned to the initial level. Phares and Brian cut short their holiday, losing KES 100,000 in the process. They hurried back to Nairobi and offered to assist in bringing the system back up, since Brian was the only person who knew it inside out. Their offers were rudely declined. Seeing that there was nothing they could do, Phares offered an unreserved apology to Angani customers. The company has never done the same.

When the story came out, the tech community went on a frenzy. A number of bloggers claimed the ousting had been carefully orchestrated by the Hersman, Riyaz, Ripduman and the other investors. The word “racism” was bandied around. Erik Hersman immediately took to his blog to rebuke this, offering the alternate meta-narrative of the incompetence, inexperience and irresponsibility on the part of Brian and Phares, and terming the whole thing as natural “growth pains” for the local tech scene. Many refused to believe this. An eerily similar scandal involving Hersman, which surfaced in early 2016, did not make matters any better for him.

Angani is now a ruin of its former self. It continues to spiral into oblivion, staying in public knowledge only for the infamy of what happened there, and the fact that it opened the local cloud services space. Its services never really took off again, and its user portal is still down. The last blog post from the company is a press release on 19th November, one month to the day after the fateful board meeting, notifying clients of resumption of services. It doesn’t take a genius to notice that the comments below the post are curated (perhaps even posted) to paint the company in good light.

However, not everything that came out of the saga was negative. In February 2016 Phares and Brian launched Node Africa, a new cloud services company. They scratched up all the funds they could get, again from friends and their own savings. Two short months later, VMware, the world’s largest virtualisation software company, did a case study of the young company as a success story. While it might still be too early to declare success, the company is off to a good start. It is backed by a budding relationship with Microsoft, and the blessing of the local tech community.

A number of former Angani clients followed Phares and Brian to Node Africa, and now they host data and applications for all manner of companies, from bakeries to security companies. According to a blog post from VMware the young company now has 21 clients. More are coming in. Much of the team also came along. Phares says they feared for their jobs after he and Brian were kicked out.

Whether as a result of natural growth pains (as Hersman claims) or malign intent (as many tech bloggers postulate), what happened at Angani was exceedingly uncomfortable and painful for everyone in the local tech scene, but especially so for the founders. It was so seminal actually, it has rubbed off on the mission and the very identity of their new startup.

Towards the end of the interview, Phares happily turns his computer around to show me his team’s conversation on Slack. One of the most recently sent “messages” is a picture of smiling young men and women crouched among servers with laptops in their hands. It’s a picture of the team which is currently at the data centre. And yes, the group is called “Assertive Natives.”

It is easy, but it would be a slight to justice, to apportion blame to only one side in the Angani saga. In the end, everyone involved had a finger in what happened. That Phares is the only one who has ever apologised doesn’t absolve him from responsibility. But it does say something for his willingness to bear his cross. And that may explain the gladness with which Node Africa has been accepted.

“I don’t regret what happened at Angani. It taught me, in a relatively short time, valuable lessons that people normally take years to learn,” Phares says. That, in the end, is the takeaway from this story. Africa’s tech rise might be phenomenal, but it will not escape the problems posed by such a scale of growth. It is only on the absorption of such lessons that the continent will successfully leap into the digital age.

In conclusion, I paraphrase Phares: “Now we have to continue what we started at Angani, which is to make Africa a cloud-first continent. We want to prove that this can be done in Africa, by Africans, so that foreigners won’t be surprised anymore to find Africans doing things in Africa rather than having those things done for them by other foreigners.”

Note #1: This article was originally written in April/May 2016. Due to the sensitive nature of its contents, combined with the fact that it considered its subject from only one perspective, I shied away from publishing it then. Instead, I published an abridged version with a more balanced outlook on May 23rd, 2016. Back then I promised myself I would one day publish the full version. But time just wore on and the right moment never came. I have finally decided to just release it. The article is as close to the original as possible, but has obviously been edited to account for the passage of time. The reader is advised to keep this in mind.

Note #2: A quick check has revealed that the mentioned (and linked) blog-post by Angani on 19th November is no longer online.

Feature image: wallpapercave.com.

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