Nairobi is known for two unique things to a first time visitor: heavy traffic on the roads, and the public service buses popularly known as matatus.

Combine these two factors and you also get a population that spends over three hours in traffic commuting to and from work every day.

With a population of over 4 million residents and the majority of these people using public transport to get to work, Nairobi has a possible customer base in transit that businesses could pay to market to in one way or another.

Having identified this opportunity, Jeremy Gordon and Caine Kamau co-founded FlashCast: a Nairobi based startup that specialises in advertisements on buses using digital interactive screens.

ITWeb Africa caught up with Jeremy at their Nairobi offices and sought to find out more about their product and service.

ELLY OKUTOYI: Give us a little background about yourself and how you came to be where you are right now.

JEREMY GORDON: I was a kiva.org fellow in March 2010, which is a microfinance lending platform where I worked as a volunteer. I had been out of university for three years, and worked in Japan and San Francisco before venturing into consulting. I wanted to move out more into national development and technology. I therefore took this volunteership with Kiva, and the plan was to do this for four months in order to understand how microfinance works, and how it fits into the development scene. I was excited about mobile money and M-Pesa, so this was a great place to be.

The plan was to go back after that volunteership was up, and go back to graduate school in engineering and design, back at Stanford. However, while I was still here, I was really interested in all the tech companies that had been formed here in Kenya, the interesting tech people I had come across and how they were solving unique problems in a way that seemed quite different from the problems I had seen solved by startups at Silicon Valley, where I am from. I was intrigued, so I decided to defer school for one year to stay here to work on a couple of projects.

One of these projects was Ecomobile, a company that we formed before Flashcast. The next year I deferred again because I still wasn’t ready for graduate school. This was until a year and a half ago when they told me I couldn’t defer anymore, and that I had to decide. I decided to withdraw my application and decided to stay on and work on projects that I had already begun.

ELLY OKUTOYI: When did you decide to start Flashcast and what was the motivation behind this?

JEREMY GORDON: Caine and I co-founded founded FlashCast just over two years ago. We saw a really exciting opportunity to build a market communication tool that will allow even small businesses to communicate with the market, because otherwise, they will not have the opportunity to reach the market. The advertising industry in Kenya is an interesting one as you only see billboard and hear radio campaigns from the big companies. The reason behind that is that mid-market communication is really expensive for small companies in this country.

If you are an SME and you want to talk about an exciting new product or service, you have very few channels to do that, and for that reason, we built Flashcast to solve this problem. We built it on- transit as this is the most exciting platform for this kind of communication as you will find people sitting in traffic for three to four hours a day doing nothing. We saw an opportunity to engage the passengers providing information while they are just sitting there.

This created a win-win situation, where we have passengers who are entertained and engaged, and at the same time SME’s and large companies who are able to communicate with this audience.

Caine and I are both engineers, and so we created a technology solution to this problem. We decided to install GPS-enabled locational displays. The first one was the LED-marquees, that had text scrolling across the screen, which are GPS enabled. This means that they download new information from our servers, with targeted content depending on where the bus is, something that made our product unique.

To allow interactivity, we created an SMS shortcode, free of charge, where we engage the customers via word games, run quizzes and also run campaigns. The most recent one was the digital signal change-over, where we have been running a discussion topic, where we asked the customers to comment on the change by sending SMSs to our shortcode. They get a response thanking them for their comments, and after a short while they see their comments on the screen. This way, they are able to also know what passengers in other buses are saying, increasing interactivity. This is a bit like Twitter but does not require one to sign up or have a smartphone in order to interact with.

ELLY OKUTOYI: How has the journey been like, in terms of getting finances to run the business, considering you are still a startup?

JEREMY GORDON: We have an angel investor who has funded our operations to date. We raised a small convertible round to allow us to prove the concept, and get the hardware that we have deployed already out into the streets. We are actually in the middle of a second raise that will allow us scale our operations.

We also have a new product, a multi-media screen that will no longer constrain us to text. It will be able to show graphics, animations and HD-Video, and of course all the other interactivity elements of FlashCast. We want to first scale our operations in Kenya before we look into other markets as well.

ELLY OKUTOYI: How has the response rate and uptake of FlashCast been like by both the passengers and advertisers?

JEREMY GORDON: There has been a big barrier when it comes to SMS response. As you know, most short codes are premium rated. This has raised concerns among passengers, as most of them think that they could be signing up to a subscription service by interacting with our platform, consequently making most OF them keep off. One of our challenges is just reminding them that FlashCast is totally zero rated, and that they will never be charged for interacting with our platform.

Uptake has therefore been restricted by that reason, but it has been growing over the time generally. We are now seeing more engagement with the platform from the customers based on the response rates from the discussions we have been carrying out. We believe uptake will continue to grow once trust towards our platform grows.

ELLY OKUTOYI: What are your market penetration strategies to ensure you bring more advertisers on board?

JEREMY GORDON: We have partnered with IBM research, and they are helping us make this product work for our market. The project is to turn small businesses into resellers of FlashCast content. Just like the agent model for Safaricom, we are small shops (dukas) where a person can walk in, tell the person behind the counter, “I have a business that I want to advertise on your premises using the FlashCast displays.”

The small business owner simply takes photos of the business to be advertised, upload it to our FlashCast network, before they take payments, off which they earn a commission. We are currently running a pilot using free advertising space to enable us understand what people want to sell, and also enable them understand the service better before we roll it out.

Another business model is one where we are going to use mobile coupons. A passenger sitting in a bus, sees a message on the screen saying “Get free tea with breakfast. SMS ‘Tea’ to XXX”. The passenger simply sends a text and they get a response saying, “You have claimed Tea at XYZ restaurant.” To claim the tea, the passenger will be required to walk into the restaurant and give a one-time authorization code that comes with the SMS. This way, we have brought new clients into the restaurant’s door, and the passenger gets free tea.

We are also targeting routes that have the most commuters like Ngong Road and Eastlands. These routes’ cross section is of younger populations who are more likely to interact with our platform, are early adopters of new technology, and most businesses are targeting this group of people.

ELLY OKUTOYI: Tell us about FlashCast Sonar and how this is complementing your service.

JEREMY GORDON: FlashCast Sonar is our Android application that is linked to all our buses. This gives all the routes that we are operating on, and also the location data of the buses on which our equipment are in real time. The application also gives some analytics, for example showing the traffic situation on the road and how long it takes to get to the central business district (CBD) at a particular time. We provide all that for free to our users.

ELLY OKUTOYI: What value proposition did you have for fleet owners for them to allow you to mount your screens in their buses?

JEREMY GORDON: The benefit to the bus owners is three-fold: one, when we make money, we share revenues with them paid out monthly. This increases their revenue streams considering some of them are struggling a bit.

Two, with FlashCast Sonar, bus operators are able to log into the app, check the location of their buses, and how fast they are going. We also offer a web version of the same, which also couples up as a fleet management tool, provided to the operators for free as a value added service for working with us.

Three, we also realised that passengers are more likely to board buses with FlashCast screens, as they are guaranteed interactivity while commuting. This also means more clients to the bus owners and consequently more revenues.

When you get such a value proposition, you get the bus operators thinking this is something that can set them apart from their competition, at no extra cost.

ELLY OKUTOYI: What advice do you have for other startups out there struggling to get business partners on board and make their products scale to profits?

JEREMY GORDON: I would say, always have a solid value proposition that is also very clear to your target audience. With any new technology, there is always risk involved. It always involves some behavior change on the side of the user in the business. The most important thing is for the decision maker to feel the risks are so low, and the value offered is so high that they can make that decision to take up the idea. You can't always get a value proposition like what we have for our bus operators, businesses and passengers, but you can always try to push things in that direction.