There's an app for that
Established by two software developers, Ephraim Tekle and Befekadu Ayenew, ArifSoft is a company that has been founded to address the lack of Ethio-centric apps in the mobile space. Among several apps developed by the company, ArifZefen, a music streaming service catering to Ethiopian music fans is one that has seen success. Capital's Eskedar Kifle sat down with CEO of the company Ephraim Tekle to talk about ArifZefen and its contribution to Ethiopian music.
Capital: Could you tell us a little about your company? Ephraim Tekle: Our Company is called ArifSoft. I started it with a friend of mine from college about four years ago. We wanted to create software geared toward the Ethiopian Community and to create (mobile) applications that people can use to network with each other. One application we created was ArifLife. When people downloaded this application on their mobile phones it became easier for them to stay in touch with other members of the Ethiopian community; like lawyers, dentists, stores and restaurants. We also have an application called ArifZefen, which started a little bit before that, which made it easer to share Ethiopian music. At first, we started a website for ArifZefen. When we started, there were already a number of websites containing Ethiopian music but none of them were really accountable to the artists or anybody else. They would simply copy music,post it on a website and distribute it. We wanted to give people using the site a superior experience in order to attract more listeners. We believed artists would benefit from this as well. After making the site we created an iPhone and Android application that provided links to each musician's website. It would mention any upcoming event each entertainer was having and describe biographies of each artist so people who used the application could learn more about each performer.
Capital: What was your starting capital and what is the company worth now? Ephraim: The co-founder and I live in Silicon Valley (California) and we are both software developers. At first our big investment was time. We would work nights and weekends. We were doing it because we loved it-the company was our passion. Once we were 'discovered' and people started using our site, we needed to have servers and people to monitor them. Now, our yearly operating cost is in the tens of thousands of dollars and for a long time that came out of our own pockets. Recently, we began posting advertisements on our website. They are not targeted ads yet, right now the ones we show come from advertising networks like Google.The ads help cover our costs but we still pay some expenses on our own. Regarding how much ArifZefen is worth now we have not made a formal valuation so it is hard for me to answer that.In software a lot of the time, sites like Facebook, Twitter and also Pandora, which is where I work, these companies are losing money, they are operating in the negative. So software companies usually value themselves by the number of users they have, so they say for example for every user it's 100 USD, which becomes the valuation. So right now we have from 150,000 to 200,000 users.Capital: So you have said you show ads from Google and other similar ad networks. Are any Ethiopian companies advertising? Ephraim: Right now our focus is on growing the company, growing the number of users and the catalogue; the music collection as well as the number of agreements and partnerships we have with artists. So we are really only focused on that right now. For artists, typically, we would feature them through our app support. We are not actively working on getting advertisements; we believe that will come later on.Capital: How do artists benefit from these mobile applications and the website? Ephraim: Right now CD sales are decreasing rapidly and musicians, especially in Ethiopia, do not know how to control what gets shared and downloaded on the Internet. Their music is being copied and freely distributed, they can't sell CD's and basically it becomes hard for them to make a living through their music. So what we really want to do is to organize Ethiopian music on the Internet and provide users with an easy and compelling experience. Much like what happened with movies in the US when Netflix (a DVD rental and streaming service) came out, people basically stopped pirating movies because the service Netflix provided was much more compelling. When you provide a quality product you will get users and our goal is to help artists benefit from listeners. I mentioned earlier that I work at Pandora (music streaming site) and my mentor is the founder of Pandora Tim Westergren. His vision is to create a middle class of musicians; because in the music world right now, you are either a superstar or you are a nobody. But through services like Pandora, which we are trying to emulate, artists benefit anytime a song is listened to or downloaded. So that is basically our vision, we want to be a platform where artists can make a living, and we are speaking to as many musicians as possible because we want them to be our partners.Capital: As you mentioned, CD sales in Ethiopia are declining and the Internet is still slower than in other countries. Yet, people still go online to listen to and download music. Your website does not permit users to download music and your target audience is the Diaspora. How can you modify your product for users in Ethiopia?Ephraim: Right now we do not allow users to download music. To go back to your question, it is true that we started out in the Silicon Valley and provided our services to the Diaspora. But our goal is not to stop there. We want to come here and introduce the technologies we work with. It is very much our goal to be present here, sort of to help catalyze the technology used over there for start-ups over here and to bring in new innovations. We do understand that the Internet connection here is a work-in-progress. For that we do have plans to make it easer for listeners to use the product. One way we are planning to do that is through offline listening. That means the app will be able to download some content just within the app, allowing users to listen to some of the music without an Internet connection. The network here is actually improving amazingly, I mean right now I am able to connect my iPad through my phone's 3G network, obviously it is expensive and like I said it is a new thing here. Capital: There are other websites that offer similar services and are better known so how do you plan to compete? Ephraim: The market is big enough for multiple competitors. Our goal is to give users the most compelling and easiest experience, we have an advantage because we are software developers and we have the passion for it. I believe that will be what will set us apart from the others. But, like I said, competition is always good, for both the users as well as the market. Right now, in the mobile application world, I don't believe we have competition. We are ahead of others and we intend to keep in that way. Capital: What do you think will be your contribution to the Ethiopian music scene? Ephraim: Earlier, we discussed how CD sales are declining. So what is the future and what are the alternatives? Why don't people buy CDs anymore? It is because a new technology is taking over; it is sweeping across the whole world. Now, especially because of mobile devices, people can listen to music wherever they are. So the expectation is high now, you no longer say there is a CD you have to buy and then you need a CD player to listen to it. The reason that the old market is dying is not because music is disappearing but because there is now a new technology. We are basically at the forefront of that where Ethiopian music is concerned. We do believe we will have a huge impact on the industry and we also believe we will help others follow in our footsteps to come into the fold and give listeners an alternative. Piracy comes because there are no alternatives or easy methods of accessing music. In music there used to be, and there still is, a lot of piracy, especially in the Western world. But now through extremely well designed apps and very low fees people are able to listen to as many songs as they want. This is replacing piracy. That is what we want to bring here.Capital: Which artists are you currently working with? Ephraim: We have a partnership with Teddy Afro and other big names as well as artists that are not so well known. Right now the way artists make money, here and abroad, is by doing concerts; they have sort of given up on CD sales. So the artists want to make their music as popular as possible so that when they go out to do concerts they will be able to make money.There are some tricky situations for companies like ours where we need to be avoiding piracy and be true to the artist and the listeners because if you talk to artists, they are more than willing to give you their content but they don't necessarily have the right content.. But it has been great, approaching artists and actually they often approach us and ask us to add their music to our collection. ArifZefen offers a level playing field regardless of your popularity. We do not decided what music is good and what is not, we really just want to provide the platform for listeners to choose what music they want to listen to. Capital: What does partnership with artists mean? For example I understand you are developing an app for Teddy Afro. Ephraim: We have been asked to develop apps by not just artists but for other companies as well. When we work on apps we try to be selective because developing an app is not an easy process, it is time consuming. So for a famous artist, to have a fun app where the artists can broadcast whatever they are doing and keep their listeners updated, or release their new music and things like that, is very common and it was part of our agreement with Teddy Afro to do that for him.Capital: Right now there are some local IT startup companies established by young entrepreneurs. What were some of the challenges you faced and how did you manage to become successful? Ephraim: Initially, we might have had an unfair advantage because my partner and I went to Massachusetts Institute of Technology (MIT). So right out of college we were really working on starting a company and I personally have been involved in a few. In startup companies there are a lot of ups and downs, you can't give up, you have to keep trying.I guess for success, it really requires a lot of commitment and time but also you should not be afraid of failure. Most startups fail, but if you try enough times you are bound to succeed. There may be a cultural context here but, if you have an idea, don't try to hide and make it happen by yourself. You need to talk to people and get their feedback. Work with others, because it is easier to keep a piece of the pie instead of trying to keep the whole pie for yourself. You have to work with others, if you are an engineer, try to work with a person specializing in business. There are a number of elements to becoming successful and one is being persistent.