Running a business not for the faint-hearted: The story of Mi-Fone

Alpesh Patel

Alpesh Patel

“I wouldn’t wish entrepreneurship on anyone,” says businessman Alpesh Patel.

In 2008, Patel founded Mi-Fone, an African mobile phone company that has since sold about three million units. Over the years he has received significant media coverage tracing his birth in the jungle in Uganda, becoming a refugee in the UK after former Ugandan President Idi Amin expelled Asians, and quitting a successful career to start Mi-Fone. It was the perfect story of a small African mobile phone company fighting it out with foreign giants.

From the start it was never going to be an easy battle. Patel only had US$100,000 capital, which was but a drop in the ocean compared to the deep pockets of companies such as Samsung.

Mi-Fone had a virtually zero marketing budget so it adopted innovative techniques using social media and offering mobile operators co-branding on its handsets. It paid off, and by 2011 Mi-Fone had strong traction in the market.

But then things took a turn for the worse.

“We were at our peak, then things started going wrong for me. Maybe we over-expanded or we tried to take on too many other customers. This business works on credit so because of the need to sell your stock quickly, you start giving credit without doing the necessary checks and balances. We got hurt by the fact that a lot of people ended up not paying us – and remember I don’t have any other money. This curtailed our ability to make new product. It curtailed our ability to spend money on our own marketing. It curtailed our ability to hire more people. After 2011 we started going down,” explains Patel.

“This time last year I was close to shutting down Mi-Fone. What saved the day was the fact that we got bought out.”

Three months ago Mi-Fone concluded a deal with a listed South African company that, according to Patel, has a market capitalisation of $5bn, which acquired a 51% stake in the phone maker. Patel says it was a “pretty decent” deal but the name of the South African company remains secret for now.

A difficult seven years

The last seven years have been “tough”. Despite Mi-Fone’s high profile it struggled to raise funding.

“We were suffering because we didn’t have capital. I went to maybe 100 private equity firms, VC funds and angel investors and they all shot me down,” says Patel. “What has made us who we are is our resilience to the market conditions, to the challenges of not having any money, to the challenges of fighting [bigger brands]. [It] has made us very tough. It’s made us a bit bitter that we could have been much bigger today if we had that funding from day one, but no-one shared my vision until now, after seven years.”

Patel believes some investors simply didn’t have an understanding of the market. But he also points to the lack of support in Africa for homegrown brands.

“If I was a US company set up seven years ago saying I want to attack Africa, today I would be a billionaire because the US guys would give me support. But African governments don’t support African companies – they support only the big guys. How many [mobile] operators do you know that have African product in their product portfolio?” he poses.

Despite Africa’s mobile phone market expected to show strong growth in coming years, Patel warns it’s a tough game.

“You’ve realised over the last few years that a lot of [companies] have started leaving the market. Today you don’t see HTC… Motorola is gone [and] Nokia is gone,” he says. “Number one in most markets is Tecno [which] is a very clever Chinese company but Tecno is still very Chinese. It is not an Africa brand. They just happen to have an African focus and they have done a very great job – I tip my hat to them. But there is no African-owned brand besides Mi-Fone.”

An earlier Mi-Fone advert shared on social media platforms.

An earlier Mi-Fone advert shared on social media platforms.

Realism in entrepreneurship

For Patel, entrepreneurs are born, not made. He says he works seven days a week, went without a salary for the first two years and had one member of staff for three years and no office.

“We don’t have a Silicon Valley infrastructure here where failure is celebrated. In Silicon Valley if you fail you are a hero. But for me failure is not an option. If I fail I don’t pay my rent.”

While not discouraging people from becoming entrepreneurs, Patel says they need to be realistic, especially at a time when entrepreneurship is romanticised.

“We are a good company. We have survived. We have been through some harsh terrain but what makes us stronger is the experience. If we look good on social media – great. But the truth of the matter is there is a lot of pain behind the scenes and I think people should start understanding that, so that it’s not always seen as a great story. I’m not into storytelling. I’m into real business. I have got to pay my rent. I have to put my kids through school. I’m into realism. So let’s make entrepreneurship realistic.”

The journey goes on

According to Patel, Mi-Fone’s new majority shareholder has pumped money into the company that will enable him and his team to execute their plans. Mi-Fone has moved its headquarters to Kenya and hired a local team to drive growth across East Africa. It also intends to open an office in Nigeria within the next 12 months, but has put off earlier plans to set up a manufacturing plant in the West African nation. Although it might manufacture in Kenya at some point, Patel says for now China, which “still has a very good ecosystem”, will continue to produce its devices.

Mi-Fone will redefine its brand strategy and also focus on delivering devices preloaded with apps and content such as entertainment and educational material.

“Just because we have a bit of money now doesn’t mean we are going to put up billboards. We are still going to be very nimble… flexible and humble and pretend that we never had this money. So we can still be very grassroots [and continue to] use social media [and] word of mouth to spread our message,” he says. “Our whole message is not about the handset, it’s about what the handset can do to make you more productive. I’m not selling a device, I am selling a lifestyle tool.”

An optimistic Patel says Mi-Fone has “many tricks” up its sleeve and nothing will stand between him and his vision.

“You can put probably any challenge by me and it will not upset me [or] bother me too much because I have been through so much crap already over the last seven years,” says Patel.

“In Africa there is going to be 500 million handsets sold in the next five years – we would like to get a good chunk of that. I know the handset market, every few years it [changes]. Motorola was number one, then came Nokia, then came Blackberry – our time is coming.”