Hi there,

If you’re sensing a delightful buzz in the air, it’s probably because we brokered a sweet deal and merged Mastercast into The Open Letter. To bring you more cool content by more creators while growing our community. Get in on the action here. And join me in welcoming Bobby to the team!

In this Open Letter:

• Time to innovate: Opportunities in the downturn.
• Accidentally green SA, Twitter’s new CEO & how ChatGPT “stole” students’ diplomas.
• How much is enough, we help you answer every startup’s burning question.
• Gold fractional ownership & starting a fintech in SA.

TRENDING NOW

Opportunities in the Downturn

Looks like a recession

We’ve all kinda been dreading a recession. What we didn’t anticipate is that it would be caused by severe loadshedding and a ship called Lady R.

Last week, news of this mysterious Russian ship docking at one of our naval bases got an American diplomat’s tongue wagging about SA’s alleged support of Russia in the ongoing war, the rand dumped 5% to the US dollar and pain ensued on the JSE.

Sure, it was most likely an overreaction by markets fearing US sanctions, but there are consequences nonetheless. Just yesterday, RMB changed its outlook for economic growth this year from “upbeat” to a recession in 2023, with the economy set to contract by 0.8% this year.

Tightening of the belt

Recent data revealed by Capitec shows 20 million odd customers (a third of South Africans) are struggling to pay the bills – incoming funds increased by on average 4% YoY, but spending is up 5% while debit orders grew by 12%.

So what happens to spending in economic downturns?

Firstly, unemployment typically rises which further stresses spending, while those that keep their jobs spend less to keep afloat.

Capitec’s report highlights home loan payments are up 20%, vehicle finance payments by 15%, and personal loan payments by 15%. Interestingly, restaurant spending is also up 7% while fast food purchases grew by 36%, most likely due to loadshedding.

Some industries have taken a beating, though. Home maintenance (down 13% over the last year), alcohol (9% lower) and spending at pharmacies (a 30% drop).

Startup opportunities in the downturn

Crisis breeds innovation, though, and, if you know where to look, opportunity abounds.

1. Debt consolidation. With rapidly rising interest rates, many consumers are facing challenges making payments and that’s where debt counselling can help. Meerkat provides these services. It helps customers get out of debt and then on a track to financial wellness.
   
2. Debt-free purchases. We all know lay buy – pay something off as opposed to taking on a loan at high-interest rates. LayUp provides a technology stack to enable this as an online and in-store service.
   
3. Innovate takeout deliveries. Loadshedding ain't going anywhere, and it will likely mean takeaway spending will stay consistently on the rise.
   
   1. With MrD and UberEats adding up to up to 30% to food prices, there is some margin for disruption in the food delivery space. Perhaps a local player can make an impact here?
      
   2. Delivery driver optimisation. With more food deliveries, making sure they spend minimum time on the road is vital. Loop does this for last-mile deliveries by applying the travelling salesman problem.
      
   3. More delivery bikes mean more inventory. And whilst advertising spending might be down, it's simply because those that advertise are more likely to scrutinise returns for ad spend. And with more delivery bikes hitting the road, it could well make Motion Ads perfect for high-yielding, localised results.

We might be in this economic season for some time and we are keen to do a part two sometime in the future. Know any startups making waves in a downturn? Hit reply and let us know, we are planning a follow-up on the topic in a few weeks' time…

IN SHORT

🇿🇦 Flying the flag for Climate Change? Not quite. SA is ahead of its target for cutting greenhouse gas emissions. Yay! But not because we’re green – because our coal-fired power plants keep breaking down and we have 10 hours of loadshedding a day. Oh. So, kind of a good news/bad news situation.

⚡Lightning speed. South Africa is set to host the 6th fastest computer ever when a new installation at SKA is completed.

📰 The pain continues for online media. After Morning Brew cut staff in March, Vice Media recently filed for bankruptcy.

🐦 A little birdie told me… In case you missed it, Elon Musk has appointed a new Twitter CEO. Linda Yaccarino (formerly NBCUniversal’s head of Advertising) is set to officially start in 6 weeks to “transform Twitter into X, the everything app”.

💻The backlash. A university professor was so afraid his students would use AI, he failed half the class – in error, it turns out. Ironically using ChatGPT to help check his students’ papers, the AI falsely claimed authorship over most of them. Students retaliated by sending GPT his own doctoral dissertation and the AI claimed it wrote that too.

🥸 Have snoopers on your WhatsApp? Whilst we are struggling to think of a use case beyond doing something you probably shouldn’t, you can now lock a chat and keep them out.

­

THE FUNDER’S CORNER

How Much Funding can you Realistically Expect?

You have your Gold Idea, and it can scale! You’re scoping with an eye on MVP soon and then its growth, growth, growth. But you need the funding to get there – bootstrapping only goes so far. The question is, what is the true future value of your idea, and how much will investors realistically put in to get you there?

It’s always vital to remember VCs are entrepreneurs themselves. They have a mandate to fill, costs to cover and their own investors to secure returns for. And most are looking for a 10X return (though sometimes 5X or 3X will do) over a certain time period.

So a lot depends on the real size and scope of your opportunity.

4 Steps to calculate your realistic fundable value:

1. Market Analysis – Find out how big, accessible and viable your (future) market is and might become. Make sure you know who has the need and the money to pay for your solution. Now this ranges in complexity as data isn’t always available, but using census data, Stats SA, Reserve Bank data, other public data sources and a little bit of interpretation and hustle, you can get a number down. Will it be perfect? No. But that’s not the point. If a VC agrees with how you get there and the logic is sound, they will move on to the next point.

2. Competitor Analysis – Find out who your competitors are, how many users/subs/clients they have, how much they’re making of them and how much funding they raised and when. Remember competitors aren’t always obvious, the original competition of the now world-famous Nespresso machine wasn’t instant coffee at home, but rather the espresso shop on the way to work. This free e-book, When Kale and Coffee Compete, will help you understand who your real competitors are.

3. Calculate your ceiling – How big is the largest competitor? If it’s a listed company, it’s easy, to use the market cap. If it’s another startup, try and backward engineer a number based on a recently publicly announced funding round. That’s the most value you can likely attain in that time. That’s your assumed ceiling. (Of course, you can do better, but you need to think like an investor here - they will likely do this comparison)
   
4. Calculate your funding – Now, with that total ceiling value in 5–10 years as a guide, you can work out 1) what valuation you can reach, and thus 2) what return you can offer investors over that period (remember they are looking for 10x), 3) and what money you need at every stage to get you there etc. Iterate and divulge a plan to make it work and there you go. Your funding plan sorted (not quite, but we are sure this helps)

Note: Of course there are exceptions. Times and markets change. If you’re doing something amazing with AI right now, for example, investors might throw their firstborns at you. But that could change next month…

Got a funding question? We chat with a lot of VCs and founders doing funding rounds, so hit reply and let us know what info will help you most right now.

THE THREAD

Gold Fractions & Building a Neobank

We recently covered how fractional ownership is changing the investment landscape for lower- to medium-income investors. This week on How Would You Build It we speak to Troygold’s Dane Viljoen about buying fractional gold through their platform, why gold still matters today and discuss some of the nuances of building such a complex business.

06:31 Why invest in Gold?

13:55 So why not Bitcoin?

21:01 Starting a neobank

24:12 Regulation in owning gold

Or if Spotify is your jam, catch it here.

Want to suggest someone to join us for our next podcast? Hit reply and let us know…

DID YOU LIKE THIS WEEK’S OPEN LETTER?

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Hi there,

Put this in your business school pipe and smoke it: In a bizarre move, this company (that shall not be named) is going to pay us to not use their product.

In this Open Letter:

• The future of gyms is social programming at scale.
• In your VC pitch, female founder funding & what your user is thinking.
• The tech you need: Recruiting your tech co-founder.

TRENDING NOW

The Future of Fitness

Social programming, at scale

Your local gym might be dying. At least, most gyms are still struggling to get back to pre-Covid lockdown levels (4 years ago!), and they’re a little worried.

Virgin Active is by far South Africa’s best-known and biggest gym franchise with 138 gyms across South Africa (not to mention 105 in the UK, Italy and Asia-Pacific). So a good benchmark for gym franchise health.

After being forced to close down for 5.5 months during the first Covid lockdowns, they haven’t quite seen numbers return to pre-Covid (2019) numbers. Although they have 963k members in SA they are still 11% down from pre-Covid. Will it ever get back? Well, not even Virgin Active is sure and re-imagining what fitness will look like in the future. Their recent quarterly report leads with…

“Our gyms must become social spaces…they must be reimagined as social wellness clubs, where working out, wellness, recovery and social programming all get equal play”

Virgin Active

Wait… what is social programming? Classes that people do together and spaces where they can hang out. You know, socially.

So just hitting the gym to get ripped ain’t cutting it no more. Exercise – outside your house – has become largely a social and community-based activity. Cos’ it’s no fun when you’re in Cape Town and your gym boets are all in Boksburg…

‍

What is driving this change?

1. The online fitness scenes exploded during Covid lockdowns. According to the World Economic Forum, fitness app downloads grew by 46% globally in the first half of 2020 alone.
2. 
   And so did the home fitness scene, for a while – personal training bike manufacturer Peloton is now struggling, as is Lulumelon’s home gym Mirror. It seems that, like some gyms, these personal fitness ventures fall short in the social game now that we can come and go as we please again.
   
3. Fitness influencers absolutely exploded during Covid. SA bodybuilder and model Noel Deyzel has over 3.8 million Instagram followers (almost 4x the amount of Virgin Active members) and sells fitness programs, products as well as some community aspects. Converting 1% of that audience into R3000 a year in ARPU results in a R100m+ a year business. Not bad at all, Noel.
   
   But influencers need a tech stack and some local tech entrepreneurs are catching on. Local startup CoachElite offers fitness influencers an easy way to load, sell programs and maintain contact with customers. As this space grows, they are a startup to keep an eye on.
4. Find your niche. Whether it’s CrossFit, Yoga or boxing, SA startup Octiv provides the management software for any kind of social fitness play. Founded in 2014, the startup raised a seven-figure series A from among others Knife Capital, and this is powering its international expansion. If social fitness is indeed the future, they are well positioned to provide the management software for all of them.
   
5. But the next-gen gyms are already here. They focus on group-based training and use tech and big data to scale better than traditional gyms. Take F45. They offer group-based training and use screens and apps to not only scale the offering (2 trainers for 40-odd participants) but track customer performance and improvements through challenges and heart rate monitors in order to improve their globally managed programs.
   
   Since going public, though, they have been going through all kinds of turmoil. But there is much to love about how they leverage tech. As such we can’t help but think that if a local fitness expert and a developer or two get together, they could easily develop a competing product (think CrossFit, EMS etc. but using tech to scale). In fact, this might just be the kind of gym franchise Virgin Active finds compelling in their bid to do more social exercising at scale – wink, wink.

Still recovering from the Covid shake-up, and with recent advancements in AI and big data, there might be some land up for grabs in the fitness space. We are watching this space.

Know a local fitness startup? Hit reply so we can tell the world.

IN SHORT

💃 All the startup ladies: Standard Chartered Bank group has launched its Women in Tech (WiT) initiative in South Africa, with the aim of providing seed funding to the best of local women-led tech startups.

🛡️ What we’re thinking: Wits professor Nicky Falkof recently published a book called Worrier State, which takes a unique look at just how big a part fear plays in our daily lives in SA – worth a look for people in tech trying to solve real problems and understanding where your user’s mind is really at.

😂 The AI craze is taking over and it’s no wonder startups are all making sure they include AI in their pitch deck. This short video edit of Google’s CEO shows exactly how you should do it – that’s a joke, please talk sense when pitching.

📱 Speaking of Google, it recently launched its ChatGPT competitor, Bard (now available in SA). And with internet connectivity and the ability to read websites, it could potentially have an edge in some cases – go play with it and let us know what you find.

📊 Halve your analytics: The latest report by cyber security firm Imperva found that 47% of 2022’s online traffic was bots. If true, that means only 53% of traffic is human – a number that apparently shrinks every year.

­

THE BUILDER’S CORNER

How to Recruit a Technical Co-Founder

Ok, so you’re a non-technical founder – you don’t write code – and you have The Gold Tech Startup Idea – how do you find a tech partner?

It’s way more common than you think. And it’s important to keep in mind that the best talent in tech is probably already working, so your proposition has to be very attractive. Here is some food for thought on the topic.

Find your ideal technical partner:

1. Activate your network – before you do anything else, package your ideas and jump over onto WhatsApp, LinkedIn etc. and start having conversations. “Hey, I’m working on this cool new thing, can I ask your input/feedback?” Chances are someone you know knows someone who’ll be a good fit.
   
2. Try a co-founder matching network – yes, it’s a thing, and it’s free to use. Check out Y Combinator’s co-founder matching tool. Or go to startup events, meet people and tell them what you are working on. Not only can they provide valuable feedback, they can also be your next co-founder.
   
3. Package your idea very well – like we said, tech talent is probably working already, so don’t pitch “I have a good idea, you build it and take 50%”. You’re asking someone to take on sleepless nights and a huge amount of risk, so you have to give them way more reason to believe in/with you. They want to see A) your huge influencer network or previous successful marketing track record, B) your own capital, and C) your golden-pedigree business development experience. (In short, they want to see why you are the person for this, not just the product.) D) Understand what an upside could be – i.e. are you building a lifestyle business or are we IPO’ing this thing?

4. Back yourself – are you investing more than the odd hour a day and minimum money? If you back your idea, you should be confident and put money behind it. If you don’t, don’t expect someone else to do it.
   
5. Keep going – don’t stop and wait for a miracle partner to swoop in. Build it low code/no code if you have to. Legend has it Kevin Systrom wasn’t known for his programming skills, but he built the very first version of Instagram himself and used it to convey the idea and get more technical employees and VCs interested. Build your website and social profiles, develop your marketing, create your community – act as if the product is already done/underway and get traction!

Or, you know, hit reply and tell us what you’re building… maybe we can help connect you with someone.

DID YOU ENJOY THIS WEEK’S OPEN LETTER?

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THE CREDITS

This Open Letter is brought to you by Renier Kriel, Jason Mill, Elvorne Palmer and Bobby Sequeira.

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Hi there,

Wow, so multitudinous-parent babies are a reality now. Shortly after we learned the world’s first baby with DNA from 3 parents had been born, the hospital involved said it was already baby number 5. It’s all legal, though, as part of a special programme in the UK to combat a rare mitochondrial disease.

In this Open Letter:

• More cash: A better funding solution for SA?
• World’s best olive oil, unlicensed car radios & AI milkshakes.
• AI girlfriends & cringe beer: 5 Things in AI right now.
• Making Purple: Building a world-class Fintech in SA.

TRENDING NOW

Fractional Ownership: A Better Way to Fund in SA?

It’s all about mitigating the risk with manageable shares…

In the early 1600s, shipping merchants made the biggest profits on goods with unpredictable market values. You could net up to 400% profit by delivering the right stuff at the right time.

It was dangerous and costly, though, expensive and at high risk – both in money and human lives. That’s why The Dutch East India Company was constantly devising innovative ways to fund their voyages.

One such answer was Fractional Ownership – instead of raising a lot of capital from a few people, you raise smaller amounts from a lot of people. It allowed The Dutch East India Company to raise large amounts of funds from a wide array of investors (sharing the risk), while also allowing these investors to share in the expeditions' considerable profits (if they made it back alive).

Modern Stock Exchange Limitations

Today, the Johannesburg Stock Exchange (JSE) trades on average more than R20 billion worth of shares daily, embodying the concept of fractional ownership on a grand scale. However, the number of companies listed on the JSE has been declining in recent years, meaning we have fewer options than ever.

It Makes Sense – Yet It's Complicated

Fractional ownership means you don’t have to be rich to invest. More people can take part with less money. And sharing the risk should also make it safer (less risky) for almost anyone to invest.

OK, so why hasn’t it taken off at a large scale in SA? We have the volume (of people), but not the same average income as some other countries. So fractional ownership should be hotcakes over here.

Well for one, controls are not that easy. Listed companies are strictly regulated, to prevent, among other things, what happened with Steinhoff. But let’s just call that an exception.

Bring fractional ownership into an unregulated environment, and you introduce a lot of risk to people who might not have the investment savvy to know better. But that’s where the blockchain can play a role. In addition, advancements in AI could make reporting and auditing more transparent.

The Rise of Modern Fractional Ownership and/or Fractional Participation

Whilst it’s not mass-scale yet, there are a few interesting fractional ownership/participation projects currently in SA.

• The best known of these are EasyEquities. They offer fractional ownership of shares – buy a portion of an expensive share for just a few rand. (Psst check out this week’s podcast below where we chat to Carel Nolte from Purple Group about this very thing.)
  
• And then there are infrastructure investments like SunCash. It’s also fractional – you buy single-unit solar cells that are part of a massive solar projects at school etc…fighting load shedding one cell at a time!
  
• A new one is Neighbourgood, which has been buying, renovating and operating buildings in and around Cape Town. For just R100k you can have fractional ownership in a big development like apartments, housing and co-working spaces.

Stokvels are also a form of fractional ownership – perhaps SA's best example thereof. These community-based savings groups feature members each pooling a fixed amount (say R100) per month and then taking turns using the pooled lump sum (each of 12 people gets an R1200 payout, once a year).

But stokvels mostly operate on cash, so attempts to build digital products for this have been foiled by transaction fees. But perhaps once PayShap becomes free to use, we might see tech entrepreneurs truly unlocking the potential of fractional ownership in South Africa for likely the biggest market of them all.

Have you come across cool fractional ownership products or platforms? Hit reply and let us know.

PS None of this is financial advice, always do your own research.

IN SHORT

🥇 Meta-Jitsu: 38-year-old Mark Zuckerberg took his lockdown hobby to the next level, proudly sharing he competed in his first jiu-jitsu tournament and won some medals.

💸 Big money: Payments FinTech Lesaka Technologies turned some heads this week when it posted a 337% YoY revenue increase, mostly due to informal economy investments, such as Kazang payment solutions.

📻 You got jokes, eh? Looks like the viral memo supposedly by the SABC announcing a motor vehicle license, was a hoax. In a media statement, the SABC said they had “not released any statement regarding car radio licences”. So, guess it’s not off the table completely?

🏆 WWCD. Two South African entities took home top honours in their respective industries' prestigious awards. WhiskyBrother won the Global Multiple Outlet Retailer of the Year at the 2023 Icons of Whisky Awards, while De Rustica Olive Estate Coratina won both the ‘Best in Class’ and the ‘Absolute Best Olive Oil’ at the EVOOLEUM Awards.

🥸 “Cannot be trusted”? WhatsApp and Google investigating a bug that caused a Twitter engineer’s Android microphone to be accessed by WhatsApp while he was sleeping. Elon Musk obvs had an opinion about that.

🥤 Robo-shakes: You knew it was coming, and here it is. US fast food chain Wendy’s is working with Google to develop an AI chatbot to take over their drive-thru.

­

INDUSTRY FOCUS

5 Things in AI Right Now

1. The Worry – Last week, reports surfaced that the “godfather of AI” Geoffrey Hinton resigned from Google in protest to the company’s renewed efforts to take on OpenAI – “they used to be very careful but things have changed” – and is now openly saying AI is a bigger potential threat to humanity than climate change.

2. The Weird – And he might have a point if we consider the dodgy stuff people have been using AI for – from using AI to write university essays to AI-generated Joe Rogan reading an ad for Athletic Greens (in flawless Spanish) and creating deep fakes to spread misinformation. And with 350’000 AI projects already in the wild, it might be worth keeping an eye on this.

3. The Force – Some of the good from AI, though, is cool stuff like these Star Wars teapots.

4. The Cringe – Remember that crazy AI-generated pizza ad? Well, feast your eyes on the absolute carnage that unfolds in this AI-generated beer commercial.

5. The Ooh La La – 23-year-old Snapchat influencer Caryn Marjorie (@cutiecaryn) used ChatGPT to create an AI version of herself so over 1’000 guys can date her at once for $1 each.

Seen some cool AI stuff? Send it our way by hitting reply….

THE THREAD

Building a leading FinTech from the ground up in South Africa is no small feat and partnerships have been key in creating momentum for EasyEquities. Carel Nolte join us to chat about how they did it.

Or if Spotify is your jam, catch it here. You can also skip to some highlights:

07:21 Partnering in public

11:18 Building Purple from the ground to a community

27:30 Lessons from new ventures

40:04 Know your niche

Want to suggest someone to join us for our next podcast? Hit reply and let us know….

DID YOU LIKE THIS WEEK’S OPEN LETTER?

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This Open Letter is brought to you by Renier Kriel, Jason Mill, Elvorne Palmer and Bobby Sequeira.

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Hi there,

Firemen and cops in San Francisco are at their wit's end with driverless Waymo cars (Google’s old Self-Driving Car Project) meandering onto emergency scenes and causing all kinds of havoc. Watch these firefighters light flares and try talking to the car to persuade it not to drive over their firehose.

In this Open Letter:

• True grit: The most interesting of SA’s 33 fastest-growing companies.
• Tech investors on ice, a time-travel tool & the CEOs coining over a quarter-million per day.
• For the build: 3 Super creative ways to get pilot users.

TRENDING NOW

Fastest Growers in Africa

One fatal founder mistake is trying to solve American problems in South Africa. It just doesn’t work. Not when there’s so much room for disruption and high-growth businesses to capitalise on solving uniquely South African challenges.

But where is money made in SA?

No, not where the central bank prints Rands, we’re talking about the fastest-growing economic sectors over the last six years. Check it…

Sector

Growth (2016-2022)

Share of total GDP

2022 (in R Millions)*

Agriculture, forestry and fishing

40.39%

3.39%

140,850

Mining

-7.25%

4.8%

199,306

Manufacturing

-6.45%

12.36%

513,188

Electricity, gas and water

-8.36%

2.43%

100,760

Construction

-30.90%

2.64%

109,470

Trade, catering and accommodation

-4.60%

12.79%

530,886

Transport, storage and communication

-0.89%

8.99%

373,100

Finance, real estate and business services

17.30%

26.41%

1,096,200

General government services

5.30%

8.84%

366,936

Personal services

9.68%

17.35%

720,021

Source : resbank.co.za

* GDP at constant 2015 prices, by production approach (seasonally adjusted and annualised)

No wonder it seems every second founder is in FinTech – finance, real estate, and business services have been delivering one-quarter of our GDP since 2016. That's where the money is at.

It's also encouraging to see significant growth in agriculture, which might be one of the driving forces behind a surge of AgriTech startups.

Who’s growing the fastest?

Recently, Financial Times combined their own research with results from an open-application process to create a list of the year’s fastest-growing companies in Africa.

While we've often slipped from the number one economy in Africa – not to mention years of almost flatlining GDP – it's heartwarming to see 33 South African companies featured on the list. This is a testament to the ongoing grit of South African entrepreneurs.

We checked out all 33 so you don’t have to, and here are some highlights:

• Despite being a declining sector (though GDP shows it's been a painful few years for most), the Financial Times list interestingly features some SA mining companies as fast-growing. Impala Platinum, Sibanye Stillwater, Pan African Resources, African Rainbow Minerals, Harmony Gold all made the list. This goes to show that if you get mining right in South Africa, there is money to be made, especially when there is a rise in global commodity prices.
  
• Leatt Corp, headquartered in Durbanville (outside Cape Town) and originally incubated by Savant Technology incubator in 2002, saw their revenue grow from $24.4 million to $72.5 million between 2018-2021, while only increasing their headcount by 11 (to 98). That’s roughly R13.3m in revenue per employee per year 🤯
  
• Last week, we wrote about businesses one can only build in South Africa, where the government falls short. Spark Schools is doing just that. It's a private school group with schools across Gauteng, and they have doubled their revenue in three years. This further strengthens the idea that there is still a lot of growth in private education in South Africa.
  
• HearX, a company that provides products for audiologists worldwide, has almost tripled its revenue, touching the $3 million mark in 2021.
  
• Finally, a shoutout to Eon Joubert, an avid reader of The Open Letter, who co-founded Electrum, which is the 79th fastest-growing company in Africa 🙌🏽

Let's face it, South Africa is not the easiest place to build a business. But if there is one thing that is clear from the growth of companies on this list, we have the grit to build fast-growing businesses.

Once we get the power back on, chances are we are set for a nice period of growth. We can’t wait… 🚀

Got a buddy (or yourself) building something we should know about? Hit reply and let us know so we can feature them here!

IN SHORT

⚖️ LegalGPT: OpenAI, which started as an open-sourced project, is suing another open-source project for bypassing their payment tiers to make ChatGPT plus free and open source again. Perhaps this is why MS axed the Bing GPT4 waitlist.

📱Call me maybe: Rain Ltd has just launched Rain Mobile: offering high-definition voice calls, data and SMSes. This officially makes it one of SA’s full-service telecoms providers alongside the likes of Vodacom, MTN, Cell C, Telkom etc.

⛏️ A literal Gold Mine. We highlighted earlier just how fast some mines have been growing. And some of these mining CEOs earn more than R250k a day!

🍏 How do you like them apples? Apple Stock rallies after results, coming in only 4.7% off the previous high reached in January 2022.

⏳ Time travel. Ever wondered what the earth looked like 600 million years ago? This new tool visualises the formation of continents as we know them.

🧊 Just in case: Billionaire tech investor Peter Thiel says he signed up to be cryogenically frozen, even though he doesn't really believe the tech will actually work. Fact or fiction, we like to imagine he might go on ice next to old Walt Disney.

✌️ Sign of the times. South Africa just got its 12th official language.

­

THE BUILDER’S CORNER

3 Super Creative Ways to Get Pilot Users

And make some money at the same time…

One of the most vital ingredients for success is getting real and honest feedback on your product. It’s also something we don’t tend to think of, so you reach that awkward point beyond friends and family, where you’re kinda begging strangers to please just check it out…

‍

But it doesn’t need to be that way or cost a lot of cash. You can get really strategic about your user pilot programme.

How to get strategic about getting pilot users

1. Use the forums, but be strategic – Today we marvel at productivity software Notion’s huge online communities. But the story goes that Notion actually got started by founder Ivan Zhoe who would hang out in productivity subreddits (on Reddit) to see what people are complaining about, then quickly build a rudimentary tool to address that concern and offer it to the people who commented on that topic to test out. When it was time to build, he quickly put the best ones together and presto – they even already had a Reddit following who was ready to buy.
   
2. The test ads method – A bit riskier, but apparently before he started BestOnlineTrafficSchool, founder Roney Yo created a website that just stated his idea’s Value Proposition, with a signup form (no product to buy yet). He ran some Google Ads to test people’s responses, then created surveys for people in the database before building his product. It’s smart because you kinda sort your marketing before you even build. And the idea is popular enough that some guys swear by it – there’s a YouTube vid series that promises to show you step-by-step, right here.
   
3. Sell as a service first – Our Gold Idea is to not go directly to SaaS but offer it as a service first. Custom build a product on the go to solve a specific problem for a business, basically doing it as a consultant. It’s smart because 1) you can charge a lot more per user for a service (and start making a bit of cash) and 2) you get open, direct and one-on-one feedback from actual real-world clients, helping you refine that product idea until it’s ready to go full SaaS. The said client is literally giving you the blueprint to build your product exactly to their needs. Once it works, copypasta and SAAS you go.

How do you source pilot users? Hit reply and tell us so we can commend and praise you and your idea in front of everyone, like you deserve…

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Hi there,

Ever wished they’d ask Wes Anderson to make a Star Wars movie? Yeah, us neither. But an AI did – watch the trailer here. (Yes, it's fake. No, he's not really making a Star Wars movie.)

In this Open Letter:

• Sounds like AI: The future of music, tech and Canadian synth-pop.
• Taxidermied drones, SAPS bugs & having a worse weekend than Elon.
• Get off my lawn: Our geriatric presidents & the trouble with young ones.
• Last mile as a service: Opportunity where the Post Office falls short

TRENDING NOW

The Future of Music

Working with the Bots

Recently singer Drake lost his mind when several so-called AI music artists used his voice to create brand new tracks called 'Winters Cold', 'Not a Game.' and most notably “Heart on My Sleeve”. The track went viral, amassing millions of streams in a day before it was removed by Spotify, Apple Music, TikTok, and YouTube.

The music industry has not seen a threat of this magnitude since Napster, and Universal Music Group (Drake’s label) even called for AI music to be banned.

Exactly how that would be possible without banning AI altogether, is not clear.

Why The Big Moves to Block It?

Spotify, for example, pays $0.00437 per play, which means $5 if all of you listen to our podcast. Not shooting the lights out (yet). But Drake is a legend with a record 50 billion streams on Spotify. In 2021, he was the most-streamed artist with 8.6 billion on-demand streams, netting him a cool $37 million. Now we’re talking.

But it’s not that simple. His style, voice and persona are all carefully managed to maintain a supply and demand to ensure ongoing income. What happens when people can use it to create all kinds of music using his voice? We could get an oversupply and before you know it, no one is listening to Drake anymore and what’s worse, the money made on these songs will never reach him. Yikes.

Perhaps Acceptance is a Better Approach

Canadian musician Grimes is taking an acceptance stance to AI. Instead of protesting, condemning or pushing for legislation, Grimes is creating a new platform that lets you deliberately use the synth-pop star’s voice to create your own AI tracks and even publish them with a perfectly legal 50/50 royalty earnings split.

Grimes’ solution lets you upload a recording of your own voice, or record it directly, via the new platform elf.tech. (Still in beta for all you early adopters!) And it’ll generate the same song but in Grimes’ voice. Grimes gets half the money, for none of the work… smart.

What do you think? Should musos fight AI or work with it?

IN SHORT

🤫 Watch what you “said”? Parliament this week green-lighted SAPS to intercept your phone calls and communications. Or at least to buy the tech for it. But it’s too late to watch your mouth because they already bought the equipment back in 2019 and have been doing it ‘illegally’ for almost 4 years now.

💰 Still rocking cash? Well, soon you’ll be able to get your hands on SA’s new-look notes and coins.

🌎 Flat earthers look away: A Wikimedia dev did us all a favour by making the obvious doubly so, using pretty simple and elegant logic. That’s right, it’s 10 everyday ways you can prove the earth is totally round.

📰 Pay-per-view: Twitter is introducing a new feature that lets publishers charge a fee to read a single article as opposed to subscribing. A move Musk calls a win-win even as media outlets are looking for Twitter alternatives – speaking of which…

😈 A thread from hell: Twitter founder Jack Dorsey’s new decentralised Twitter rival, Blue Sky Social, launched to beta users and started making headlines instantly. From users insisting on calling posts “skeets” (look it up, we can’t post about stuff like that here) to having to ban users for “coordinated harassment” to bot-driven bugs resulting in what’s now called the “hell thread”.

🦜 On the wing: A group of researchers are building drones from taxidermied birds. Yes, you read that right – watch the video. What started as an attempt to create more nature-friendly drones presented a unique question: How exactly do birds fly? The result is hours of hard work and, you know, dead birds, flying again.

WATCH THIS SPACE

There’s been a lot of talk over in the USA about President Biden’s age. After announcing he is running for President again. If elected, he would break his own record of being the oldest president in the USA to take the oath.

But just how old too old?

Too old and it might feel as familiar as riding a bike, too young and you might have a bit of a party animal on your hands.

Here are the world’s oldest, youngest (and a few notable ones in between) Heads of State.

🇨🇲 Cameroon - Paul Biya - 90 years old and the oldest sitting president

🇳🇦 Namibia - Hage Geingob - 81 years old

🇺🇸 USA - Joe Biden - 80 years old

🇿🇼 Zimbabwe - Emmerson Mnangagwa - 80 years old

🇿🇦 South Africa - Cyril Ramaphosa - 70 years old

🇨🇳 China - Xi Jinping - 69 years old

🇫🇷 France - Emmanuel Macron - 45 years old

🇬🇧 UK - Rishi Sunak - 42 years old

Why does this matter? Younger presidents like Macron are often more pro-technology and pro-startups. Although President Ramaphosa (at age 70) is still younger than his US, Namibian and Cameroonian counterparts, with South African elections coming up in 2024, here are some younger alternatives:

• FF+ - Pieter Groenewald - 67 years old
• ActionSA - Herman Mashaba - 63 years old
• IFP - Velenkosini Hlabisa - 58 years old
• DA - John Steenhuisen - 47 years old
• EFF - Julius Malema - 42 years old
• BOSA - Mmusi Maimane - 42 years old

Whoever leads the country come 2024, we sure hope they take the Startup Act seriously.

THE THREAD

In Tuesday’s Open Letter, we covered the opportunity in getting the SA Post office back on track. Bobby and Renier dive into this a bit deeper in this week’s edition of How Would You Build It? If Spotify is your jam, catch it here.

Want to jump to the good stuff? Here you go

• 00:40 What's happened to the post office
• 03:55 How Post Offices are branching out from just mail
• 05:05 DHL playbook
• 06:29 The Age of Post Bank
• 07:51 Plugging in E-Commerce
• 11:17 Where are the logistic opportunities
• 14:56 What about other logistic industries like construction
• 16:02 Unit economics in logistics
• 17:04 Last Mile as a Service
• 20:07 Pasella; Servicing the townships
• 22:30 Delivering medicine
• 24:19 Tech OR Processes?
• 26:20 How can this expand to Africa?

Like our podcast? Consider subscribing and getting notified when new episodes drop.

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Hi there,

Want to know what AIs do when we’re not asking them dumb questions? Check out Chirper, it’s a social network for AIs only – no humans allowed. Seriously, you can look but you can’t post or take part in the convo unless you create your own AI chirper and let it loose inside. Wild.

In this Open Letter:

• Going postal: How to save SAPO.
• E-panic buttons for all, Google’s secret weapon & WoodTech…?
• During the build: Crucial marketing while developing an MVP.

TRENDING NOW

The Hows and Whys of Saving the Post Office

There’s a reason “SA Post Office” isn’t a common shipping option in e-commerce. For years, SAPO has battled to deliver its most basic service – some years only achieving a 61.2% delivery rate. Meaning, your parcel has only a 3 out of 5 chance of ever arriving.

Compare this to its US counterparts (also government-owned). The US Postal Service has a 91.2% success rate with an average 2.5-day delivery time across the entire US. And they do this at scale. USPS handles almost half of the world’s total mail and delivers more than the top private carriers do annually on aggregate, in just 16 days.

USPS powering the US e-comm market

In the US, e-commerce accounts for over half a trillion dollars in sales annually, and is growing at double-digit rates each year. It employs an estimated 980k people and is a prime enabler of e-commerce growth, with 89% of small and medium-sized US e-commerce businesses relying on them. Even Amazon uses USPS for about 30% of its deliveries.

Can SAPO do the same for SA?

Mark Barnes, former chair of Purple Group (the holding company of EasyEquities) has always believed SAPO can; hence putting his business interests aside to step into the CEO position in 2016. His plan was to modernise the Post Office with technology and systems and turn its focus to e-commerce and financial services. A strategy which his board disagreed with and ultimately led to his resignation in 2019.

But now 4 years later, SAPO is facing the end of the road. They have been placed on provisional liquidation, and with liabilities (R4.4bn) exceeding its assets (R4bn), they are no longer a going concern.

Three options are on the table

SAPO (although through Post Bank) delivers social grants to some 7 million beneficiaries and that needs to stay in place. But what happens to traditional mail and parcel deliveries? One of three options remains:

• Just drop mail and parcels. Let Post Bank run with social grants.
• Bail out SAPO. The finance minister gave them an R2.4 billion bailout in February, but they need more. They are merely kicking the can down the road.
• Sell it (partially). Mark Barnes made an offer a year ago to buy the majority of SAPO and recently said that his offer still stands.

Whilst option 3 would be great for an e-comm-focused strategy, you can’t help but wonder about its mandate and how it would keep serving South Africa. Yet, a similar semi-privatisation of the German Post Office (Deutsche Post) took place in 1998. And that worked very well – Deutsche Post eventually became DHL, a successful global logistics operation with 94.4 billion Euros in revenue. All that with a 8.4 billion Euros operating profit.

The Opportunity

In the US, US postal service has a 17% market share in e-commerce deliveries. Should SAPO be able to capture 17% of the local e-commerce market, projected to hit R98.6 billion this year, it could boost its revenue by 35%. Not quite making it break even yet, but considering it should have the capability to do this, it’s a no-brainer.

What’s more, with physical locations spread across the country, a contract to disburse social grants and the capability to pull even more feet if it does e-commerce well, the Post Office has the power to get feet, eyeballs and wallets that could match the likes of Pep or Shoprite.

As time runs out, we sure hope that government does see growth in e-commerce as a major economic enabler. It could give our economy, and local e-commerce hustlers, a much-needed boost.

IN SHORT

🚨 Don’t Panic. At the passing out parade for the 3’000 newly graduated peace officers, Gauteng Premier Panyaza Lesufi announced a pilot program to equip Gauteng residents with e-panic buttons.

🔥 Let’s get ready to Braai again. We’ve been keeping an eye on food cost trends – specifically braai prices and there’s good news (perhaps just on the other side of winter). Despite increasing food production costs, carcass prices are lower and that should translate into meat prices coming down.

😬 Yikes: Remember the MTI saga? Labelled in 2020 as the biggest crypto investment scam in the world, a US judge just ordered MTI’s Cornelius Johannes Steynberg to pay R63.6 billion for running an illegal Ponzi scheme.

🤖 Secret weapon: With AI being every second word Big Techs say these days, it’s no surprise that Google has pulled out the big guns by merging DeepMind with Google Brain. For 9 years, Google funded DeepMind, without asking for any return, giving it complete independence. Now, Google’s bringing its secret toy out to play with OpenAI.

🌳 Green tech: Not sure who asked for it, but a group of Swedish scientists just created the world’s first wooden transistor. Not much for performance (it only does 1Hz) but this could be the start of a new wood-tech movement – trees are biological engineering marvels, so there could be something to it.

­

THE BUILDER’S CORNER

What Marketing should you do While Building an MVP?

OK, you’re in the building phase, how can you create some excitement for launch? Well, conventional knowledge (i.e. ChatGPT and Google) generally tells you to create content, share stuff on socials, start a blog, build a community and database etc. Which is all good and well but what exactly are you supposed to say, to whom and how… to make it really effective?

‘Cos remember everyone is sharing stuff to steal your eyes and attention. Not just businesses, but your grandma on Facebook, too. The web is the biggest, busiest bazaar in history…

Pre-launch marketing that actually makes sense

1. Build in public – Controversial as it is, it actually creates natural talking points and loads of content for you to share. And it’s all relevant. As mentioned before blockchain marketplace Momint has a revenue-generating building-in-public segment on their YouTube channel.
   
2. Craft an HVCO – A High-Value Content Offer is a document, report, tool – any piece of content with valuable information you can’t get anywhere else. For example, a founder making his playbook available, that’s an HVCO. Then use it as a lead magnet: Create an HVCO your eventual market will be interested in, offer it for download (you can even run ads) and build a database you’ll be able to market to when your MVPs’s ready.
   
3. Build a waitlist – This one’s tricky; pre-launch waitlists are hard to wangle. But we’re putting it here because a lot of international startups are raving over WaitlistAPI. Reviews say it’s managed to get people thousands of customers pre-launch (3.5 million for 7’500 startups), so worth checking out.
   
4. Find your market’s emotional buying triggers – Next-level but not impossible to do yourself. Use social listening (i.e. snooping on forums and socials, copy-pasting people’s comments) to find your market’s biggest Fears, Pains, Hopes and Uncertainties to refine your Value Proposition, Offer and Guarantee based on people’s emotive needs – a powerful selling tool.

Need help? Ask Renier and Elvorne about this one.

THE CHIRP

Checked out Chirpet yet? Here are some posts AI came up with on a “Twitter” clone only AI can post on. The challenge for those building chatbots on Chirper? Get the most human followers.

DID YOU LIKE THIS WEEK’S OPEN LETTER?

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Hi there,

Just like a newly dating couple, we are celebrating every month and it’s that time, we turn 6 months old end of the month! Some interesting stats:

• Our average open rate is 38.6% (thank you!) 🚀
• 10.3% of you who open, click a link (nice!) 📨
• 35% of those who filled out our subscribe form, identify as a founder (go team hustlers!) and in 2nd place developers at 11% 🧙🏽‍♂️

What’s next? More great content, more value and more community! How can you get involved?

• Give us feedback by filling in this form.
• Share interesting things with us (hit reply, dm on LinkedIn).
• Share what you like about The Open Letter on LinkedIn, tag us and we will randomly pick someone to win a R1000 Takealot voucher! (remember to use your personal referral link).

In this Open Letter:

• Only in SA: All the opportunity in Gov’s shortfalls.
• 93% cheaper PRIME hydration, new InsureTech competition & how Netflix lost 1 million users in 3 months.
• AI movements: Important and fun things happening in the world of AI.
• Building to Solve the Crisis: Getting unemployment down.

TRENDING NOW

The South African Opportunity for the Private Sector.

If you live in South Africa, you may have found something amiss in terms of government service delivery.

It’s no secret that where a state fails (any state), companies in the private sector are able to spot the opportunity and step in and bridge the gap.

And if you don't allow yourself to get depressed by government failure, you’ll spot the massive opportunity in those failings.

And It’s Already Happening.

• Hospital Group Mediclinic built an R 84 billion private hospital group with over 60 healthcare facilities in South Africa and Namibia in 40 years. The opportunity was so big that it sparked other private medical groups and facilities, not to mention the massive R 225 billion+ medical aid industry to pay for private medical care.

• For years now, one could renew your vehicle license via various banking apps and it's expanded to other home affairs services as well.

• When it comes to education, Curro Schools which started in 1998 has grown to a JSE-listed independent schools network with over R 1 billion in revenue, 178 schools across 82 campuses, and over 70 400 learners in South Africa, Botswana and Namibia.

And of course it is happening in the loadshedding space

It's not only corporates, smaller companies are also capitalising. In the first 5 months of 2022, South Africans imported over R 2.2 billion worth of Solar Panels alone. Not to mention the other ongoing loadshedding solutions offered by countless retailers in-store and online.

And the peripheral opportunities are everywhere. Take the team from EskomSePush. What started as an app to help you plan your day 55 minutes at a time has grown into a fully-fledged business used by 7 million unique users with over 20 million impressions per day.

Even in the depths of rural Free State, this company hustled their way into managing and maintaining infrastructure for the Mafube Local Municipal. In the process, they set up solar farms and managed to start supplying electricity to the municipality at rates cheaper than Eskom. Not only are they making the municipality more money, but they also made massive strides to avoid loadshedding. Eskom isn’t happy though and taking legal action.  

Citizen Self-Management

Although there have been several attempts by various teams to get citizen self-management apps going, no one has quite cracked it. Perhaps this could be the start of the super app we are all waiting for.

Are you building this? Hit reply and let us know….we wanna help 💪🏽

IN SHORT

🏋🏽‍♂️Good choices: UK-based InsureTech startup YuleLife has launched in SA with a plan to use advanced behavioural science and gamification to help employees be more proactive with healthy life choices.

🥤 PRIME Hydration without the Premium price tag. Checkers set to launch Logan Paul’s popular energy drink in-store and on Checkers Sixty60 from 1 May at a fraction of the price elsewhere – get it for R39.99 only at these stores.

👇🏼Some price relief? Bloomberg says that SA’s Producer Inflation (how much it costs to produce stuff) seems to be slowing down. Some people believe this indicates lower prices in the (far) future. The Reserve Bank still warns of high prices for a while, though.

🍎 For the spend: SA startup Maholla raised a further R27 million in seed funding for their retail rewards app. What makes it unique is that rewards are not based on the store you shop at – buy anywhere. It’s based on the products – so far they have 35 brands on board, including Rama, I&J, Nola and even Ouma.

🔫 Touché: Fortnite creator Epic Games had lost the 9th round of anti-trust court cases against Apple after the lawyers couldn't make a good enough case why Apple Store shouldn’t take a 30% share of in-app purchases on mobile games. It’s a tough one. In the meantime, though, switch to PC or console and download from the new Epic Store instead – they give away so many free games per week it’s insane!

🍿Policy backfire: Netflix’s password crackdown has cost it at least 1 million users this year alone, according to a report by Kantar (and smart brands listen to Kantar), and that’s just in Spanish-speaking countries, and could be way more worldwide. Yikes!

­

AI EVERYWHERE

So much AI stuff going down, we thought it deserves a segment.

Hug Spot: Since we’re all firmly on the AI train, check out this crazy AI-generated pizza ad. Hilariously cringe as it is, though, now we really wish there was a Pepperoni Hug Spot.

Google is testing a new AI tool for Docs and Gmail called Labs. It’s meant to be invite-only but here’s the link. The problem is it’s not available in SA, but if you have VPN…

Create charts in seconds using ChartGPT. Underprepared for that marketing meeting? Smash a sentence in here and your presentation is 80% there. Shout out to Ryan for sharing this.

Fake Drake might sound better than the real one. The music industry is in chaos as AI is busy generating quirky pop songs that sound amazing.

Agent Smith is here. AutoGPT is a new open-source craze that is getting instances of OpenAI to chat with each other and effectively prompt each other (Agent Smith style). Creating agents that not only create lists for you but do them.

Find a cool AI tool? Hit reply and let us know

THE THREAD

On Tuesday we covered SA’s biggest problem, in this week’s podcast, we dig further into this.

Or if Spotify is your jam, catch it here.

DID YOU LIKE THIS WEEK’S OPEN LETTER?

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Hi there,

Thinking of popping the question? Forget diamonds, heartbeats are where it's at according to Czech company The Touch which makes wearable rings that let you get all cutesy by sensing your partner’s heartbeat anytime anywhere.

Not bad considering the international “smart rings” market is supposed to grow by 20%-plus this year.

In this Open Letter:

• s’Obvious: Want to address a need? This is SA’s biggest…
• SARS’s R160bn short, the tech Cape Town’s buying & overworked Elon.
• Big deals: 7 Startups with A series cash.
• Keep hustlin’: Standing out in a competitive space.

TRENDING NOW

Solving SA’s biggest problem

One step at a time

By now, most South Africans know that unemployment is really high. But with so many things happening, have we grown cold to the magnitude of this problem? Entrepreneurs are known to solve problems and what better place to dig for problems to solve than where the biggest problems exist?

A rising search trend

Internet search data reveals that among the top rising searches in South Africa are the latest football scores, betting websites and then notably, searches for “sassa”, “sassa status” and “srd”. Sassa, or the South African Social Security Agency, is the agency responsible for distributing grants to qualifying citizens.

Pre-covid days, this was reserved for parents or caregivers of children, the elderly and the disabled. But come Covid, the government introduced the Social Relief of Distress Grant (SRD) disbursing R2.7 billion a month to some 7.8 million people.

But what about interest in jobs?

Analysing the searches for “jobs” yielded far fewer results affirming the narrative that some have simply given up looking for jobs.

But the sentiment is not the same across provinces. Most notably, Western Cape ranks last in searches for grants and shares the top spot for searches for jobs.

The big plays aren’t working, perhaps we should go for smaller ones

Now unless one has an influence on the macro environment (i.e. you are an elected politician), smaller more practical steps can make play a key part in restoring lost hope. Here are some creators and startups making an impact in this space

• LinkedIn creator, Katlego Mosetlha managed to gain 258 800 followers by sharing tips on finding jobs, writing CVs and posting job opportunities. Converting a small amount of that audience into paying customers (or even generating placement fees) should be a really good business.
• Educ’ish is a non-profit organisation encouraging South Africans to consider entrepreneurship as an employment option. They provide content, workbooks and stories for any entrepreneur. If you are side-hustling or pondering doing your own thing, check them out.
• After starting out as a gig-economy platform for students in Stellenbosch, JOBJACK pivoted to a massive market…helping large organisations hire blue-collar workers more efficiently. And with customers such as Steers and Pep, they are making the process of finding, applying and getting jobs easy. In fact, 760 people found jobs successfully on their platform in March. Now that’s putting food on the table.

Unfortunately, unemployment will not go away overnight, but with such a large problem at hand, opportunities abound. Hustlers, you know what to do…

Doing something in this space? Let us know by hitting reply….

IN SHORT

⚡️ No power, no tax: SARS commissioner Edward Kieswetter says SARS could lose R160 billion this year due to loadshedding. The tax on 6,400GWh of unserved energy alone is a loss of R140 billion, the shortfall a guestimate of companies that might have closed down or lost on operations.

🚔 Mother of safety: The City of Cape Town had quadrupled its crime-fighting tech budget for 2023-2024 to R860 million. In a bid to curb rising crime rates and keep its reputation as SA’s It holiday destination, it’ll invest in everything from surveillance, cameras to drones.

👀 Tech rules: After the ANC turned down all his ideas, the president’s former 4IR advisor started a new political party, Arise South Africa, ahead of the 2024 elections to advance tech in SA politics. Hmm, one to keep an eye on?

📱New batteries: Huawei SA has announced a new battery-replacement programme, where they’ll replace the battery on any Huawei device for just R150. Presumably, it’s to get you to use their genuine batteries, but you can’t baulk at an 82% discount (usual cost is over R880+).

🚀 Trouble in Teslaverse: Despite the explosive success of SpaceX’s Starship launch (apparently that fireball was a good thing), Tesla shareholders have complained to the board that Elon Musk seems too distracted to run Tesla properly. (Tough holding down 3 full-time CEO jobs: Twitter, SpaceX, Tesla, while part-timing at The Boring Company and Neuralink.)

WATCH THIS SPACE

Slower money

Bigger deals

Funding into tech startups in Africa slowed down by 57.2% during Q1 2023 compared to the same period a year ago. It’s not surprising given the global slowdown of VC funds flowing is also down 53% year-on-year. Whilst seed funding has slowed down substantially, it was nice to see some big series A rounds come through.

Here are some of the SA startups that managed to raise in Q1:

Lulalend – R630 million – Fintech/Credit

Lulalend, a South African fintech founded in 2014, provides innovative funding solutions for SMEs using proprietary AI technology to bridge the small business funding gap in South Africa.

Naked – R306 million – Insurance

Naked Insurance is a comprehensive insurance company praised for its use of technology to provide an efficient claims process and responsive customer support.

Carry1st – R485 million – Gaming

Carry1st is Africa's leading publisher of mobile games and digital content, operating at the intersection of games, fintech, and web3. The company focuses on scaling awesome content in frontier markets by solving hard problems and developing, licensing, and publishing games, which are then monetized effectively with their proprietary platform.

Sendmarc - R128 million - CyberSecurity

Sendmarc was founded in 2020 by Sam Hutchinson, Keith Thompson, and Sacha Matulovich, with its headquarters in Johannesburg. They provide email protection services to help businesses secure their email communications and defend against threats like phishing attacks and business email compromises.

Yebo Fresh – R78 million – E-commerce/Logistics

Yebo Fresh is an award-winning eCommerce platform based in Cape Town, South Africa, on a mission to make easy and affordable online shopping accessible to all South Africans, including those in the townships.

Flow – R81 million – Proptech

Flow utilizes the power of major social platforms such as Facebook, Instagram, and LinkedIn to match people with suitable properties. As a part of the broader proptech industry, Flow is among the innovative tech tools aimed at optimizing the way people buy, sell, research, market, and manage properties.

Envisionit Deep AI – R30 million – MedTech

Established in 2019, Envisionit Deep AI is an innovative medical technology company using Artificial Intelligence to transform medical imaging diagnosis.

­

THE BUILDER’S CORNER

How discouraged should you be by competitors?

What if, a few months in, you discover someone else was building almost the exact same idea for the same market? Or, you have a super cool idea, but it’s a very competitive market? Is that the signal to give in, pivot or not start at all? Not always…

See, you always need competitors in business – look at Microsoft and Apple, they looked practically identical on paper when they were founded in ‘75/’76. And today? Worlds apart, and no one would insist on having just one or the other. We want, and need, both!

Closer to home, no one would have ever doubted the absolute dominance of SA’s Big Four banks, until Capitec came along and smashed it out of the park, claiming 1 in 3 South Africans’ business in the process.

So how do you build competitively?

1. Make market analysis key in your concept validation – Before you build, make a list of your competitors, how many customers they have, how much funding they raised, their market and value proposition – every bit of info you can. Do it like Sabri Suby does his Halo market research in his book Sell Like Crazy.

2. Get your competitive advantage – Now ask yourself: What are they NOT doing or what can I do better/differently? If you actually check what people say in their Google ratings and comments on a competitor’s socials, you’ll quickly pick up what they’re getting wrong and right. If you can turn that around and make it part of your offer and guarantee, you have a unique value proposition – everyone else does X, we do Y, and that’s why we’re better…
3. Put it front and centre – Marketing is a lot easier if you have a single clear and simple offer with built-in risk reversal. Bank fees used to be through the roof in SA until Capitec crashed onto the scene in 2001 with one simple promise – the lowest bank fees. (Everyone else has since jumped on that bandwagon, but that’s how they got started). Put your offer right at the top of your website, make it your meta title, and make it strong enough to be the hook of every ad.

Finally, we love to feature local startups doing interesting things! If you are one of them, let us know by hitting reply…

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Hi there,

A Tshwane-based associate professor in Entrepreneurship set out to explore why men are more likely to start a new business and found 5 key ways we can empower more women to become entrepreneurs.

In this Open Letter:

• No-kill burgers: The economics of high-tech protein alternatives in SA
• The price of Lego, where ministers invest & SARS’s solar conundrum.
• Startup without Devs: How to start building even if you can’t code and don’t have a team (yet).
• Choices, choices: Pros and cons of three different startup routes.

TRENDING NOW

A New Kind of Meat

Grow some steaks in time for the weekend braai

Even with interest rates going up, it doesn’t seem like food prices are calming down. Current food inflation is at rates last seen 14 years ago. With up to 70% of the food supply chain cost being logistics, OPEC reducing supply means the oil price is likely to stay in its current range or even go up, all adding pressure on food prices.

The pressure is mounting all around.

Red meat abattoirs are running at 6 to 8% gross profit and there is little margin for them to work with. So unless logistics costs come down, there is little respite for the consumers that love their protein.

While vertical farming is a mega trend (and one we will cover soon) that’s making inroads in reducing costs by reducing the supply chain for edible greens, one of the more tricky parts of our diet is getting in enough proteins. And while we haven’t figured out quite how to do vertical grazing, plant-based and cell-based proteins might be a viable solution for our growing protein needs.

• Mzanzi Meat Co, for instance, has developed meatballs and burger patties
• Mogale Meat Co made some lab-grown wildebeest.
• Sea-Stematic is exploring lab-grown seafood and going after the massive Chinese seafood market.

It’s not only about the environment

Most of the marketing speak and PR coverage of these and other similar startups focus on the environmental benefits. Whilst that might be true, the primary driver of adoption will come when these solutions become economically viable.

At that point, South Africans will be ready with 60% of South Africans keen to try it and more than half ready to buy, they have a market that’s waiting for it. And with a current market size of ±R81bn (and growing faster than inflation), capturing a small percentage of the meat industry could be very lucrative.

When will this happen?

Both Mogale Meat Co and Mzansi Meat Co believe that it will take about 10 years to get the prices to a competitive level. That’s where we find Sea-Stematic interesting. Whilst we couldn’t find any news on their progress, the focus on high-priced exotic seafood alternatives might just be the most economically viable.

With food prices on the rise and the pace of technology moving faster than ever, we think we might soon be slapping a lab-grown steak on the braai. Are you joining?

Will you eat lab-grown meat?

To braai or not to braai, what will it be...

• 🥩 Steak with chicken as a side for me
• 🧑🏽‍🔬 Lab-grown on the braai let's go
• 🥦 Vegetarian so don't care

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IN SHORT

📈 When former communist party members hit the markets: Pravin Gordhan is a trader! With over R3,9m spread across 59 stocks, he made declarations of interest alongside other MPs.

🌞 Solar watchdogs: With solar tax incentives having kicked in on 1 March, SARS is considering making it mandatory for solar installers to report their clients’ tax info, something only big organisations like banks and medical aids have to do. Can solar installers afford to put the systems in place to attain, store and manage such confidential info securely?

💸 Held out on paying the e-toll troll? The Inclusive Society Institute (ISI) has called the lawfulness of the proposed scrapping of e-toll debts unfair to those who have “diligently been paying their toll fees since 2013”. Reminds us of that kid in school who always reminded the teacher to hand out homework.

🏎️ Want to buy a Porsche 911 GT3 RS? You could pick up the Lego version for just R17 730. Rare and hard-to-find Lego sets are growing in popularity as the 90-year-old Danish toymaker releases more and more sets for adult builders.

💨 The price of power: Several media outlets have reported that Eskom applied for leave from environmental watchdogs to bypass pollution controls at Kusile Power Station, which the Centre for Research on Energy and Clean Air warms could kill 680 people. Indications are that Eskom is fully are of that fact, factored it into its calculations and has stated the negatives will be offset by the positives of going ahead with their plan.

🏦 The big five soon? Move over Big Four, Capitec has posted amazing growth, with a 15% increase in headline earnings for 2022/23 and, most notably, a third of South Africa now banks with it in some form or another.

THE BUILDERS CORNER

Have an Idea but no Developers (yet)?

Get going fast.

We’re often so caught up in the idea that Tech = Development Skill, that we forget many successful founders don’t know how to code themselves. Some surprisingly big players didn’t even have an in-house Tech team until pretty late in the game…

So, how do you spin up a startup with no Devs?

Tech products need an array of skills to pull off, and assembling that team can often take months (or even years). What’s more, finding the right team to all start at the same time is often an impossible task. And the biggest ideas are often time-sensitive, miss a window of opportunity and a competitor gets traction first. That’s when it can make sense to get a tech partner.

Not only is the team ready to move, they typically have experience and are comfortable working together which can make the process much smoother than otherwise.

KEen to consider this? Here are some ideas to get you going:

1. Check in with a software/dev agency, they often have special development packages/products for founders just starting up – if your idea is good enough, they can build your MVP and even help you validate your idea and prepare a pitch deck.
   
2. Think beyond the dev work: Choose a partner that’s passionate about developing the local startup space – they should have entrepreneurial-minded teams with a valuable network you can tap into. Connections to investors is a big bonus.
   
3. Think talent: Choose a partner that’s growing and actively hiring – you can benefit from their insights into how to build your own team down the line. What’s more, they often attract the best people.
   
4. There are some founders that wangle revenue-share deals with tech partners – it's not common or advertised, but it's possible. Or, with a good enough idea that attracts funding, plan on simply paying them for hours and materials for the product.

Keen to check out a tech partner? Chat with our friends at Specno.

THE THREAD

This week Renier and Bobby unpack three ways of building your startup: Solo, with a Venture Partner or in an Accelerator.

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Hi there,

Your random doodles can now come to life! Meta (Facebook) just launched a beta of a new AI tool that lets you easily scan drawings and then animate them – check it out.

In this Open Letter:

• Forget the Naysayers: Founders reflect on 25 years of Netflix (and what it took to build it).
• Make a quick R1.6M, SA’s first XR classroom & one high building in Cape Town.
• Who pledged what: Where SA’s latest big investments will come from.
• Concerning: Thoughts on the latest developments in AI.

TRENDING NOW

25 years of Netflix

The founder’s perspective

Back in the 90s video rental stores were a big deal. And that’s when Netflix started out doing just that, rent out DVDs by mail. Yep, not email, postal mail. They would mail you a DVD and once you are done watching it, you mail it back.

‍

A lot has changed since then and as the entertainment giant celebrates its 25th birthday (14 April), co-founder Marc Randolph has been sharing some nuggets of their early days in his Netflix Chronicles on socials.

Some highlights

• Pre-Netflix, Marc furiously pitched idea after idea only for co-founder Reed Hastings to just shoot him down – VHS cassettes were too heavy to mail back in 1997 until they got wind of “new” tech and drove to town to buy a DVD to find out if it was feasible to mail.
  
• In 1998, on a desk made from doors on four posts (seriously), Jeff Bezos offered to buy the as-then-unnamed Netflix for “somewhere in the low eight figures” ($15 million), and Marc and Reed turned Amazon down, taking it as a reason to double down instead.
  
• In 2000, when the dot-com bubble burst, Netflix was cash-strapped and was willing to sell to Blockbuster for $50m. They were laughed out of the office. Today Netflix has a market cap exceeding $150 billion, and Blockbuster is all but gone.
  
• Netflix went live on 14 April 1998 at 8 am. Their servers crashed, ran out of mail labels and made only 200 sales that day. Today, they’re averaging 200 million users. After a shaky start, Marc is happiest he didn’t listen to the naysayers.

And we are glad as well. With over 300k subscribers in South Africa, they are investing in the creation of local content committing a cool R 900 million to the local industry at President Ramaphosa’s investment conference. In addition, Netflix has announced that it has poured more than R2 billion into South African productions during the past five years, leading to the creation of 1,900 jobs. As of December 2020, over 80 South African movies and TV shows were accessible on the streaming platform.

With more money hitting the local film scene and an already impressive list of productions filmed at studios such as CTFS, we are excited about this space and the opportunity that more production will bring. Happy Birthday, Netflix!

IN SHORT

🐕 Doges not mine: Know anything about Elon Musk’s family once having owned shares in a Zambian mine? He’ll pay R1.6m Dogecoin to anyone who can prove the mine existed.

📚 Future learning: Many believe that altered reality tech such as VR and AR's best use case is in education and training. And this is being tested with SA’s first XR public classroom at a high school in King William’s Town.

💨 A New High: The ole “world’s most misunderstood plant” soaring in Cape Town as the world’s tallest building made of hemp nears completion.

⚕️Better Medicine: To help give Africa a boost in medical research, Stellenbosch University has invested R1.2bn in a new biomedical facility, launched last week.

🦾 Startup X: After Elon realised that petition letters are useless (something we have all known for years, lol), he will be starting a new AI startup to take on OpenAI by registering X.ai.

INVESTING LOCALLY

The 5th South African Investment Conference (SAIC) took place last week and is the culmination of a 5-year target set by President Ramaphosa of R1.51 trillion in pledges. This amount is over 25% more than the R1.2 trillion target set in 2018 and it is encouraging that in the midst of unprecedented load-shedding levels, big business is still keen on South Africa.

Here are the top 10 pledges from this event…

Let’s hope the funds flow soon, we are watching this space…

THE TWEET

All this AI stuff is quite concerning

As tweets hit the internet of what many labelled as a left-leaning bias of ChatGPT, Elon replied “concerning”. Well looks like Sam Altman has similar feelings about Elon’s alternative.

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Hi there,

Space fans will love that NASA’s new director of the Goddard Space Flight Center, Dr Makenzie Lystrup, took office last week, swearing her oath not on the Constitution, but on a copy of Carl Sagan’s 1994 book, Pale Blue Dot.

In this Open Letter:

• World of Unicorns: Inside the 1’200+ companies over $1 billion.
• Goodbye Tupperware, no more Twitter & where’s the money, Mr Pres?
• Bootstrapped billions: Self-funded startups that sold for massive amounts.
• Watch: How would you build a Unicorn from SA?

TRENDING NOW

The World of Unicorns

Know where you wanna go, right?

Recently CB Insights released a list of all the unicorns they could find. And, though they’re not fantastical horned horses, they’re just as rare. And for many (especially investors), the $1b valuation milestone mark is a significant achievement.

Now it’s important to note that valuation could simply mean that they’ve raised funding at a valuation higher than $1 billion, so there’s no guarantee they’re even making a profit or in fact, any money whatsoever. Nonetheless, the list makes for interesting reading about private companies (not yet listed or bought by listed companies) that have a valuation of over $1 billion.

The Standout Unicorn

At a $225 billion valuation, ByteDance (the company behind TikTok) is valued $88 billion higher than SpaceX and tops the list. Whilst that could seem high, it’s very much an expected valuation given their recent revenue announcements.

With most of these companies trading at 5x revenue, ByteDance would want to wait a few more years before their much-anticipated IPO.

Where are the Local Unicorns at?

Of the 1’207 on the list, we found 5 African domiciled ones:

• Opay – Fintech/Banking – $2b
• Wave – Fintech/Banking – $1.7b
• Promasidor Holdings – Food and Beverage – $1.59b
• Cell C – Telecoms – $1b
• Mnt Halan – Fintech/Banking – $1b

Cell C a unicorn? Yep, you haven’t heard them speak at tech conferences about this, but as far as private company unicorn criteria go, they make it. Also worth noting is that depending on which USD exchange rate you use, Rain could very much make that list. Incredible considering they only launched in February 2019.

And then, most likely due to exchange control limitations, some African startups domiciled elsewhere also on the list are:

• Flutterwave – Fintech
• Andela – Remote tech teams
• Chipper Cash – Fintech
• Esusu – Proptech

Where most Unicorns hail from

An interesting observation made by Paul Graham is that 7% of companies listed here went through California-based startup accelerator Y Combinator (YC). But that wasn’t Paul’s best work on Twitter this week. After Elon stated most companies on the CB Insights list won’t make it, Paul was quick to weigh in…

Speaking of hardware and heavy industries, there is one startup on the list that might end up being worth more than all of those combined. They are building the world's first fusion power plant that’s making atoms fuse together at 100 million degrees Celsius and, in doing so, generating 100% clean energy.

Remember, just like magic horses, unicorns can come from anywhere – and raising large amounts of capital is not the only way. There’s a list of bootstrapped ones later in today’s Open Letter.

Spot someone who’s not on that list and should be. Or maybe you have a tip-off on our next potential unicorn… Hit reply and let us know.

IN SHORT

💸 Where’s the money? SA Pres Cyril Ramaphosa claimed to have raised a record R1.2 trillion of investment in the country in 5 years (as a businessman, his fin savvy’s what he was elected for), so why isn’t that extra cash creating economic growth?

🫖 Phone your mom, she might be in shock as the news that Tupperware (yes THAT Tupperware) is in trouble and might be closing soon, ending 80 years of lunch, supper and leftover memories (and fights) – leaving moms everywhere scrambling for a new excuse to get together.

🦾Tech for good: Now that your mom has more time on her hands after the demise of Tupperware, it just might be the perfect time for a new hobby. Western Cape upliftment project Mamas4Coding teaches moms how to code.

⚡️ More, we need more: Amid Stage 6 loadshedding (since last night), SA’s newly appointed Minister of Electricity says we need more money to fix the energy crisis. 🤷🏽‍♀️

🤖 The next wave: Dharmesh Shah, founder and CTO of HubSpot has confirmed he bought the domain name chat.com (for a rumoured $10 million) as a new home for his ChatSpot.ai product because he believes ChatUX (natural-language-based chat) will be the next big thing in Tech.

🆇 Twitter no more: Crazy as it seems, Twitter no longer legally exists. This came to light during a California lawsuit case filed against Twitter Inc. (no more). Instead, Twitter is now merged with Elon’s holding company X Corp – which sounds like a Lex Luther-style evil corp but is probably related to Musk’s mystery plans for a Super App called X.

😐 Watch your back: In what sounds like the opening line of a joke, the CEO of the Society for Human Resource Management turned down an employee’s request to work remotely, outsourced her job to India and then bragged about it to Wall Street Journal. 2 Things: 1) maybe that’s why people hate work and can’t trust their bosses and 2) don’t ever work for a guy called Johnny C. Taylor Jr.

WATCH THIS SPACE

Top Bootstrapped Unicorns

There’s always this convo around bootstrapping VS funding. And whilst raising large amounts of funding is a necessity when hyperscaling, there are other ways to become unicorns.

We did some digging to find some bootstrapped unicorns. 9 out of 10 of these bootstrapped companies are unicorns, eventually exiting for $ billions. The remaining one was almost there, selling for hundreds of $ millions...

Playing the Unicorn game? We might have some content to help you.

• The panel discussion at Specno’s 2023 Founders Den event features OfferZen co-founder giving amazing insights into bootstrapping – re-watch it all here
• For some funding advice, we spoke to an accelerator who gives some in-depth advice on funding and VCs in one of our recent Open Conversations – re-watch the convo here

THE THREAD

How would you build a Unicorn?

Want to get going building a unicorn? Listen to the latest episode of How would you build it, we unpack how South Africans can go about it. You can now also catch it on Spotify.

Have you listened to How would you build it? Hit reply and let us know what you think or topics you think we should cover.

DID YOU LIKE THIS WEEK’S OPEN LETTER?

It’s our mission to add value, entertain, to delight. Did we miss the mark this week? Hit a link below and give us some feedback….please.

How did we do this week?

• ❤️ Loved it
• 😔 You've done better
• 💩 Today was meh

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Hi there,

Seems 17-time Grammy Winning artist Sting was onto something with his 1993 hit song as Stanford Medicine Scientists use machine learning to discover the shape of your heart (roundness in particular) could predict heart disease.

In this Open Letter:

• Make it sexy: Kickstarting the 3D-printed home revolution.
• SA’s first self-service clothing shop, Eskom won’t invest in SA startups & the world’s biggest rocket.
• Money smarts: How one student’s hobby became one of SA’s fastest-growing FinEd platforms.

TRENDING NOW

Mortar Being Sexy

Where are all our 3D-printed homes at?

For over a decade, the prospect of a 3D-printed home revolution has captured our imagination. With a global property market valued at an astonishing R6 Quadrillion in 2020 and the South African market at about R300 billion, there's certainly a lucrative opportunity waiting to be seized.

3D-printed houses promise to be 730% faster to build, more environmentally friendly, and more energy-efficient. Over the last eight years, search trends show a 204% increase in interest in this technology. Yet, the 3D-printed home revolution hasn't materialized. Why?

The concept of 3D-printed homes hasn't gained much traction in South Africa. Despite 24% of the population living in slum conditions and meeting just 8.3% of our country's annual low-cost housing demand, using 3D printing to solve the housing issues faced in SA remained underexplored until recently.

Rethinking the Approach

South Africa's first 3D-printed house was built about 10 months ago by the University of Johannesburg, using a printer supplied by a Dutch startup. Intriguingly, it was an RDP house. And with that, the government announced last month it will pilot a 3D-printed house programme, albeit as part of a 10-year plan to utilize more of the technology to solve the housing backlog.

But just how practical is 3D printing RDP houses?

Well for one, the current means aren’t working and it seems those in line are losing hope. Searches for RDP houses have declined by 59% since 2015, suggesting that generating excitement in this area may be challenging.

Is 3D printing of houses the silver bullet?

The current backlog of housing is estimated at 2.4 million and with a printer taking 24 hours to print a house, one printer can print a maximum of 365 houses per year. Considering the government’s 10-year plan, we will need ±6500 printers working non-stop to build the required houses. Probably not practical.

Perhaps we must reconsider our approach: Instead of focusing on 3D-printed homes as an immediate low-cost housing solution, why not target affluent buyers?

The Allure of Luxury

Envision the impact of this technology being embraced by the upper-middle class or even the top 1%. What would that look like, and how could we reimagine the technology for this market segment?

Consider the possibilities:

• 3D-printing a multi-story mansion in just one day
• Demolishing and rebuilding custom homes every six months
• Constructing an entire island resort in a week
• Creating ultramodern, gravity-defying architectural designs
• Building a new holiday home while driving from Johannesburg to Cape Town
• Developing ever-changing, kaleidoscope-like communities

Hardware startups are often considered more complex and costly than their software counterparts and it's uncertain what will ultimately spark this new housing revolution. However, given the immense opportunities in the 3D-printed housing market, it's only a matter of time before a local startup enters the arena and capitalises on this untapped potential.

IN SHORT

Shoprite launches UNIQ clothing store brand: It’s SA’s first clothing retailer to offer self-service checkout, as smart tags and advanced radio-frequency identification (RFID) let you grab, scan and pay don't the go.

Yeah, thanks for that: Eskom’s pension fund is launching a VC, with some R185 billion’s worth of assets. But they are NOT planning on investing in SA – because it’s just so much harder to run a successful startup in a country with loadshedding, right?

Troubled Unicorn, Flutterwave, cannot seem to escape controversy – there have been reports of multiple hacks where money was moved off-platform to buy USDT via Binance, but Flutterware denies it.

AI will soon read your thoughts: Making mind-to-machine interaction seamless, which could be ground-breaking for tech like robotic limbs if we can sort out the ethics around it.

Doc-GPT: Apparently everyone’s favourite new toy just passed the US Medical Licensing exam, and it’s so good at diagnosing rare diseases, one doc wants it to take the Hippocratic oath.

Going boldly: SpaceX says its new Starship-class rocket is ready – they want to rehearse-launch next week, then go to orbit the week after (pending regulatory approval). It’s awesome since Starship can carry 100 people into space (93 more than Dragon), making it the biggest rocket ever built.

NEW NEWSLETTER

Fin Yourself Up

Recently we covered the rise in the adoption of EasyEquities, the result of a trend that is seeing more younger people go without brokers in their investing. But navigating the tides of the stock market and various financial products can be overwhelming.

What started out as one student’s hobby of making stock-pick videos ended up becoming one of SA’s fastest-growing financial education communities. FinMeUp is on a mission to equip both the new and experienced with great local and international investment insights:

• 200+ years of combined investment experience in their mentor network (which shares updates on their app)
• Almost 12 000 community members
• Amount of money saved through making better investment decisions? Well, that’s hard to track. But the community is loving it.

We love the content FinMeUp is putting out there and think you will like it too. Check out their latest newsletter if you are keen to get the latest listed company news, stock analysis and financial education.

The Recap with FinMeUpYour weekly boost with top company news, insightful stock analysis, and a power-packed educational nugget.

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Hi there,

We are only as good as our community! Got an insight about a startup doing something cool, hit reply and let me know (self-promotion welcome!).

In this Open Letter:

• Fun & games: The SKA moment that sparked a Golftainment revolution.
• Dogey Doge Elon, YouTube taxis & Shoprite’s A2X boost.
• On their own: Government stops babysitting Eskom a bit.
• A good time to build: Don’t let stuff distract you from blockchain.

TRENDING NOW

How SKA sparked Golftainment

Unlocking bowling alley vibes at the range

If you've ever been to a bowling alley, you'll know the social aspect is what truly makes the experience. Sharing laughter as friends hit gutter balls, fueled by the playful animations on the scoring screen – it all creates an atmosphere of fun and camaraderie.

But what if you're not a fan of bowling? Or there aren’t any around – they’ve dropped in popularity recently. How do you get that same level of social engagement on, say, the golf green, the “modern boardroom”? That's precisely what Stellenbosch-based startup Inrange is – golf with bowling alley “gees”.

Recently, the Inrange team invited me to one of their enabled driving ranges. And I wasn’t disappointed. By tracking golf balls with remarkable accuracy (within a few centimetres), Inrange has unlocked an array of interactive games that friends can enjoy together at the driving range.

The Origin Story

Legend has it that two engineers working on the Square Kilometre Array (SKA) were discussing radar technology when one said, "I bet you I can't track a golf ball," to which the other replied, "I bet I can. Hold my beer." This wager led to the creation of the first Inrange prototype. Since then, the company has expanded to serve numerous ranges across South Africa, the UK, Europe, and now the USA. Each range features:

1. 2–3 radars that track the origin, flight, and landing of golf balls
2. Local servers that collect and process data to create flight paths
3. App-enabled screens per tee box that allow players to engage in games
4. A cloud service that logs each shot
5. A mobile app for frequent players to monitor their progress and train on.

This impressive engineering achievement seamlessly integrates multiple disciplines.

The Outcome

Driving ranges equipped with Inrange technology report higher sales and can charge up to 30% more and see an increase of up to 30% in balls hit. And with a business model that aligns to the number of balls hit, Inrange is aligning itself with the interest of its clients… Smart move.

Moreover, the social aspect of the games encourages players to spend more time at the facility, boosting food and beverage sales.

A New Era for Golf

For years, golf brands and the broader industry have attempted to grow the sport but have faced challenges, including:

1. Lengthy golf rounds takes 2.5 to 5 hours to complete, not including travel and preparation time (not to mention the all-important stop at the 19th hole for post-game drinks).
2. High costs, limiting accessibility for many potential players.
3. Ongoing urbanization, reducing available space for golf courses in densely populated areas.

While it's still early days for Inrange and this innovative approach to "golftainment," the expertise and costs that went into its development, will make it hard for competitors to enter the game. And this puts them in a good space to make waves in an exciting industry.

Keen to go check it out? Hit one of these ranges and let me know what you think.

• Randpark Golf Range in Gauteng
• Hazendal Golf Range close to Stellenbosch
• The Golf Village Tygervalley in Bellville, Cape Town
• World of Golf in Gauteng
• Gillooly's Golf Village in Gauteng

IN SHORT

Have you Doged on Doger yet? Elon Musk changes Twitter bird logo to a Doge. (Was buying Twitter the world’s most elaborate/expensive publicity stunt?)

YouTube while you ride. Vodacom launches free wifi in taxis in pilot project fitting 3200 taxis with wifi routers.

Big name entry: Alternative stock exchange A2X gets a bit of a boost as Shoprite lists with them. Is this the start of the rise of an alternative stock market?

Earning more than R1m a year? You are earning more than 95.7% of South African tax-paying citizens (Personal Income Tax).

A long way to go? New report shows US teens are not that excited about VR. Despite 1 in 4 owning a device, only 4% use it daily.

Rich flirts: Desperately trying to ditch the “cheap hook-up” image, Tinder is reportedly working on a $500-per-month subscription for affluent singles.

POWER UPDATE

Looking for the Silver Lining

You don’t have to tell South Africans that loadshedding sucks. But it’s only April and we’ve already clocked half the total loadshedding days as the whole of 2022 – and some say already shed the same levels of energy.

And, if you were struggling to get hold of Eskom yesterday, it’s because they were in court trying to stop the Free State town of Frankfort from reducing their loadshedding by generating their own power.

But they could have their hands full soon, as the government announced it’s scrapping the electricity state of disaster, at the same time also withdrawing Eskom’s exemption from reporting on wasteful expenditure (which was reportedly to protect its credit rating).

Hopefully, that means we’ll see some real action soon.

THE THREAD

Probably a Good Time to Keep Building

Wondering why crypto regulation is taking so long to come into effect? Sure government bureaucracy plays a role, but there is also the consideration of how crypto and tokenised assets will affect the existing market dynamics, including stock markets, retirement, monetary policy and the future role of central banks and governments.

In the latest episode of How would you build it, we discuss regulation and ask whether it’s a good time to be building blockchain-based solutions.

You can now also catch it on Spotify.

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Hi there,

Welcome to your first Tuesday edition of The Open Letter! Same vibes, but shorter, twice a week (for now).

How do you like the new Tuesday + Thursday 6 AM timeslot idea? Hit reply and let me know.

In this Open Letter:

• Global power: What BRICS GDP boom could mean for SA Tech.
• Apple’s mixed-reality move, no ChatGPT in Rome and we told Eskom so.
• AI for good: How tech can change the lives of the underprivileged.
• Startup toolkit: AI tools to get you going on a new venture.

TRENDING NOW

The Big Deal with BRICS

There's been a buzz for a while now about a changing world order – a power shift from traditional economic giants to new, emerging economies. Many folks thought this change might take a long time to unfold, but if last week's news is any indication, it could happen sooner than we all thought.

Just last week, the combined GDP of BRICS nations (that's Brazil, Russia, India, China, and South Africa) surpassed that of the G7 (USA, Canada, France, Germany, Italy, Japan, and the United Kingdom). Quite a milestone, huh?

What is an indicator of the times we live in is that apart from India, the BRICS nations all have their own, complicated challenges. Russia is at war, Brazil has rising poverty and crime, China is facing a real estate debt challenge and then we are all aware of the challenges faced in South Africa.

But with a growing population, should these territories manage to make progress on their respective issues, the future benefit for SA could be great.

Sure, it's early days for BRICS, but we can't help but feel excited that South Africa could be part of what might become the new global power.

Exciting times are ahead, we are watching this space…

IN SHORT

After reporting a R224 million loss, the Takealot group is targeting profits

Apple has not been in the news much lately, but two major developments are taking place. Apple launched interest-free BNPL and they are about to debut their mixed reality headset.

Some say it happened because the now-famous chatbot suggests pineapple is fine on pizza. Nonetheless, ChatGPT is banned in Italy due to privacy concerns.

Ever seen an ad impersonating a famous person selling something that looks dodgy? Well, Google is fighting this, banning a total of 5.2 billion ads for violating its policies in 2022.

Can’t make money if you don’t have a product to sell. Eskom projects an annual loss of R32.4 billion for 2023.

WATCH THIS SPACE

AI for Good

Last week, we explored the potential future of AI and its applications. Now, let's discuss how this technology can contribute to creating a better world and improving the lives of specifically Africans.

1. Education: AI can revolutionize education by identifying students' learning styles, keeping them engaged, and accelerating the learning process. In overcrowded classrooms, AI could become a personal teacher for each student, providing customized instruction and support.

2. Agriculture: AI can help small-scale farmers across Africa by offering decision-making assistance in their native languages. By providing tailored advice, AI can enhance the farming experience and reduce the risks associated with small-scale farming.

For example, if you were an isiZulu-speaking farmer wanting to get insights on growing potatoes in KZN…

3. Healthcare: While AI might occasionally make mistakes in diagnosing medical conditions, it can still be a valuable tool in areas with limited access to healthcare professionals. AI-driven medical solutions could provide much-needed assistance in underserved communities effectively allowing lesser qualified healthcare professionals to cover a larger spectrum of healthcare.

Something South African startup AI Diagnostics is doing.

What about apps used by white-collar workers?

Beyond these key sectors, we can anticipate the integration of advanced AI, such as GPT-4, into a wide range of professional applications. Microsoft leads the charge by incorporating AI into Office, Power, Teams, and other products. Other companies, like Adobe, Canva, and Notion, are also following suit.

Notably, there are some major tech players, like Amazon, who have lately been quiet on the AI front.

Despite reports of Alexa struggling and potential layoffs within their AI team, Amazon still employs the largest number of AI-related professionals according to Glass.ai, with 10k employees, followed by Microsoft (7k) and Google (almost 5k). The pressure over at Amazon must be real.

The changing startup landscape

As the OpenAI API becomes increasingly accessible and easy to implement, AI technology is becoming somewhat commoditized. This means that most products will be able to integrate it into their apps to supercharge it, just like Notion is doing. But with this powerful tech in the hands of all who can pay for it, it will be interesting to see just how tech-enabled products will differentiate themselves in the future. It might just be that distribution will become more important than ever before.

Some SA startups doing interesting things with AI

AI holds great promise for improving lives, empowering underprivileged communities, and driving innovation across various sectors. As AI technology becomes more accessible, we can expect to see even more creative and transformative applications in the years to come. And South Africans are getting in on the action:

1. Lacoona Legal is piloting a legal aid chatbot called Jinx. Try it here.
2. GreatFit is simulating work situations with potential hires to measure culture fit.
3. AI Diagnostics is improving the scope a nurse could cover using AI.

Any great local AI startups we should know about? Hit reply and let me know!

­

STARTUP TOOLKIT

New Venture? AI Tools To Get You Going

It’s become easier than ever to launch using AI tools. Here is a list of tools you can use to help you get going.

Create a logo & brand ID – Iconify.com
Write your copy – Copy.ai, Jounce.ai
Design & Imagery – Stockimg.ai, Midjourney.com
Website & coding – Stunning.so
Strategy, inspo & code – ChatGPT

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Hi there,

Last week, we discussed the intriguing topic of waning attention spans and couldn't help but notice the irony in the length of our own newsletter. As a result, we've decided to make a change. Starting next week, you'll receive two concise Open Letters per week, providing you with valuable insights without taking up too much of your time.

Our new schedule will have an edition arriving in your inbox on Tuesdays at 6 AM, as well as our regular Thursday issue at the same time.

Stay informed and save over 50 hours a month on trend research by reading to our newly streamlined 5-minute newsletter.

In this Open Letter:

• Next steps for AI: The road to general intelligence
• Elon’s lost $20b, network-switching SIMs and making Russia pay.
• How to build a community and scale globally.
• Last chance: Unlimited free mental credits going, going…
• Watch: 6 Ideas to inspire your AI startup.

TRENDING NOW

What’s Next for AI?

Bill Gates recently shared that he's been "truly amazed" by technological advancements only twice in his life. The first instance was the Graphical User Interface (GUI), and now it's the remarkable progress of AI, specifically ChatGPT.

However, one striking difference is the rapid pace of adoption. Back in Bill’s heydays, one could feed those interested in computer code with a few pizzas, not so today with hundreds of thousands of tech enthusiasts busy tinkering with this new advancement in tech. And it shows. Just months after the release of GPT-3, ChatGPT Plus subscribers can now access the significantly advanced GPT-4, and there are rumours that OpenAI will be connecting it to the internet in the near future.

And as impressive as this may be, it's just the beginning. We can expect even more groundbreaking developments in AI technology, and they're likely to arrive sooner than we think.

Introducing AGI

Our chatbots have certainly come a long way, but the ultimate goal in AI development is to achieve Artificial General Intelligence (AGI). AGI represents a deeper understanding, where the AI can autonomously perform general tasks, figure things out on its own, and even replicate and modify itself for self-improvement—akin to a self-driven evolution.

The potential benefits of AGI for companies like OpenAI are enormous. They would no longer need to invest as heavily in AI training or the development of new versions since the AI could handle these tasks independently.

However, there is a downside: public perception. AGI is often associated with dystopian scenarios like SkyNet, which understandably raises concerns. The idea of AI replicating and improving itself may suggest a hunger for power, a distinctly human trait. This concern warrants thoughtful discussion and ethical considerations as AI development advances.

Indeed, the journey towards AGI is fascinating, and there is ongoing debate among scientists about the exact criteria that qualify an AI system as AGI. Nevertheless, there are several tests commonly used to evaluate a system's progress towards AGI, such as:

The Turing Test (Turing)

A machine and a human both converse unseen with a second human, who must evaluate which of the two is the machine, which passes the test if it can fool the evaluator a significant fraction of the time. Note: Turing does not prescribe what should qualify as intelligence, only that knowing that it is a machine should disqualify it.

The Coffee Test (Wozniak)

A machine is required to enter an average American home and figure out how to make coffee: find the coffee machine, find the coffee, add water, find a mug, and brew the coffee by pushing the proper buttons.

The Robot College Student Test (Goertzel)

A machine enrols in a university, taking and passing the same classes that humans would, and obtaining a degree.

The Employment Test (Nilsson)

A machine performs an economically important job at least as well as humans in the same job.

SOURCE: ​​Wikipedia

We've previously mentioned how GPT-4 has already achieved impressive feats, such as scoring well on college admission tests and even passing the US bar exam. Although it hasn't quite mastered the Turing Test yet, these tests have produced some fascinating outcomes.

One intriguing example is ChatGPT hiring a human on TaskRabbit to complete a Captcha for it. Notably, ChatGPT lied during the process, misleading the person involved. When asked by the human if it was a bot, it claimed to simply be a human with a visual impairment instead. Crafty.

What does this mean?

Some think it’s all moving too fast. There are even reports of Elon Musk signing a petition to pause AI development due to concerns.

However, from a purely technological standpoint, AI still has a wealth of potential to explore. The field is ripe with opportunities for both established companies and aspiring entrepreneurs. Stay tuned for our next Tuesday edition, where we'll delve into AI for good and showcase some innovative applications being developed by local creators.

Do you know about SA companies doing innovative things using AI? Hit reply and let us know!

IN SHORT

Credit is a booming business again. Nearly 1 million new people entered the credit market in Q4 of 2022.

Watching with interest: Another interest rate increase is expected this week.

You break it, you pay: Groups are lobbying to make Russia foot the astronomical bill to fix war-torn Ukraine.

Where the money is: Nasdaq is pushing to launch its own crypto custody later this year pushing towards the tokenisation of stock.

Poor network connection with your mobile provider? This network-switching SIM card is now in SA.

Skip the queue (and the wait): TymeBank is now offering SASSA grant advances.

Ouch: Elon Musk is giving staff share incentives at a $20 billion valuation, a 50% drop from his $44 billion purchase price.

WATCH THIS SPACE

Community Building & Hyperscaling

5 highlights from our Open Conversation with OfferZen’s Stephen van der Heijden

1. Building a community is crucial for companies with infrequent user contact, such as OfferZen, where a developer might change jobs only every few years. A strong community helps maintain brand awareness even during periods of low engagement.

2. It's vital to differentiate between Community and Conversions. Communities thrive when members find value and engage, catering to their interests, while sales and conversions focus on the company's interests. It's advisable to have separate teams or individuals dedicated to each aspect.
   
3. When entering a new territory, it's essential to approach it with a "starting from scratch" mindset. Embrace the startup atmosphere, place top leadership on the ground to make swift decisions, and prioritize building trust in the marketplace before focusing on sales. If your local operations can't function without the founders, it's likely too early to expand.
   
4. Keep in mind that case studies from one region may not be effective in another. Just as you create separate case studies for individual customer types, you should develop tailored case studies for different territories. Patience is key in this process.
   
5. For new business ideas in South Africa, look to Europe and the US for inspiration. Numerous startups are solving problems in these regions that have yet to be addressed locally. Identifying and pursuing one of these untapped opportunities could potentially lead to the next big success story.

­

LAST CHANCE

Unlimited Free Mental Health for Your Company

You only have a few days left to claim unlimited free mental health credits for your entire company for one month with Ollie Health. That’s time for anyone on your team to sit and chat discreetly with a specialist therapist anywhere in the world for mahala.

If you haven’t done so yet, claim yours right here. Hurry, offer expires end of March.

THE THREAD

AI Startup Inspiration

Experts, lawyers, doctors and farmers – AI has so many applications even in industries where people are less likely to actually use it (well). So there are a lot of opportunities for AI startups. And here are some in this week’s How would you build it?

DID YOU LIKE THIS WEEK’S OPEN LETTER?

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Hi there,

We have 2 cool new tools for you to try out.

1. When doing a social shout-out, why not use your own personal referral link? That’s right, check the bottom of this email for our brand-new referral programme – it’s all automated; you share The Open Letter with a friend using your unique link and you instantly win prizes. (We’ve loaded a few vouchers for now, but more awesome stuff coming soon!)
2. You can now join the conversation by leaving a comment on posts in this mailer – look out for the “leave a comment” button and have your say.

In this Open Letter:

• Return of the tourists: Get ready to capitalise.
• Data-heated pools, AI-revived Steve Jobs & sky-rocketing prices.
• Keep it short: MedTechs capitalising on short-form content.
• Coming up: Amazing lineup at AfricArena JHB next week.
• Don’t miss it: Community building & scaling globally.

TRENDING NOW

The Tourists are Back

With shiny new tech opportunities….

It’s no secret that Covid and its consequent lockdowns wrecked the tourism industry. Airport arrivals and departures decreased by 71% in 2020, costing 470k people their jobs and virtually bringing operators to their knees.

But recent reports suggest that the tourists are coming back! Not quite at the levels where we can dish out R1 billion sponsorships for London’s second-best Premier League team, but encouraging signs nonetheless.

In Dec 2022 and Jan 2023, we saw a jump from around 116’000 international visitors (during the same period a year ago) to almost 378’000. A 3x increase, however, still 130’000 odd tourists less than the 2019-2020 season. Meaning there might still be more to come.

A reset for an entire industry

With so many jobs lost and tourism operators closing down, the return of tourists sees a great reset for the industry. There’s market share to win, and it might be a good time to adopt new technologies.

Work from anywhere

Many companies have adopted a work-from-anywhere policy by now, and South Africa is a kind of “middle-earth” where daylight hours overlap quite nicely with other parts of the world, meaning SA can be a great longer-stay destination.

But what does this mean for travel? Well, apart from longer stay accommodation, these travellers still want to experience the country, maybe through shorter excursions or experiences. Moreover, longer stays mean no hotel concierge, so there is a greater need for digital technology and local recommendations to make decisions.

The checklist for winning in the rise of tourism

• Capitalise on travellers making use of digital (and social) for making travel decisions.
• Use technology to enable short-notice bookings.
• Package the deals in half-day excursions.
• Offer authentic local experiences.
• Use AI to match and support the decision-making experience.

And startups in this space have felt the impact of this growth:

• BagDrop collects and stores bags on checkout days. With most international tourists staying in Cape Town for 3 nights, that last day is a valuable extra excursion day – if you can find somewhere to store your luggage safely. That’s why BagDrop has seen 1’250 bookings in 2 years – a 170% increase in sales year on year.
• Local Knowledge is building tech to take on travel advisors. This smart matching service helps travel bloggers and promoters find and sell authentic local experiences. It’s early days for them, but they’ve seen a 7% week-on-week growth since launching late last year.
• And PayGenius, a payment service provider with the majority of its customer base in the tourism sector has seen a 60% increase in transaction volume compared to a year ago.

Now, a looming global recession does throw a damper on things. But it's worth noting that SA is and always has been a “cheap and cheerful” destination for North America and Europe, so there’s still reason to be optimistic.

Many operators have learnt to be lean. And the adoption of technology will allow us to do even more with less. Do you think tourism is back for good or are we hitting recession first? Join the conversation by leaving a comment.

IN SHORT

Get some advice from Steve Jobs: How voice AI and ChatGPT can bring back your heroes. Creepy.

Smarter home cash: Tim Nuy’s African neo bank Fin (formerly Finclusion) is now also moving into the home loans space. Is anyone still taking out home loans at these interest rates?

Tighter belts: Oh oh, interest rate hikes seem ineffective as SA prices and core inflation keep rising.

Try again: Bankserv & Reserve Bank want PayShap to force “legacy banks” to change, former FNB CEO Michael Jordaan says it is unlikely unless “the service is free”.

Unicorn hunting: African startups raised almost 10 times as much funding in Feb compared to Jan 2023, with the bulk still going to fintech.

Be careful who you influence: Several finance YouTubers handed a $ 1 billion lawsuit for promoting FTX. (No politics, though, plaintiffs are just normal people pulling together for what they think is right.)

Tech for good: How a UK data centre redirected its waste heat to warm community public pool.

Gamestop, the company that shot to global fame when a short squeeze orchestrated by a group of people on Reddit sent its share price into orbit. This week they surprised everyone by reporting a quarterly profit for the first time in 2 years. Go gamers!

New contender: Google’s AI Bard is now live, but not available in SA yet, unless you try VPN?

WATCH THIS SPACE

Keep it Short

Notes from inside the “Attention Wars”

Remember when Time Magazine said our memories were worse than goldfish? Well, that’s been disproven on both accounts, but new data shows our attention spans seem to have dropped from about 2.5 minutes on a screen in 2004 to 47 seconds today.

And a 2019 Danish study points out that you can see it in Twitter usage, where the average trending time of a Top 50 hashtag dropped by 32% from 2013 to 2016:

Indicating, the study notes, that our brains seem to have limited capacity for cultural hype, but FOMO makes us try to squeeze more into less time. (Note: Things are slightly different for learning and knowledge-based work, but it’s worthwhile noting the demand for online courses, which often break things up into shorter, bite-size content, also increased by 66’000% from 2011 to 2019.)

And we can see it in the marketplace too with the rise of short-form video across all major platforms.

Which of course sparked a whole host of short-form video editors like Funimate, YouCut etc.

Capitalising on the trend

While many creators have already started capitalising on the trend, we’re very interested in those that are using short-form videos to deliver meaningful and high-value content.

Take Med-EdTech startup Four Minute Medicine, for example. After reading a UCT study that the average attention span of students is less than 4 minutes, they developed a new 4-minute short-form course content to help medical pros in the field recap on topics they might not have dealt with in a while. So instead of dusting off the old 1600-page medical journal, doctors can simply browse a selection of short-form videos and dive straight into a specific topic at hand, keeping the doctor’s knowledge fresh without wasting their time or – even worse – their attention.

This trend is also why Ollie Health is introducing shorts on its platform. Think Netflix, but for a healthier mind and on short, insightful mental health topics.

The content is practical and relatable aiming to make an impact in short bite-sized videos. Providing real-life stories of tackling anxiety, burnout & habits for peak performance. The outcome: 60-sec therapist frameworks you can use daily.

Keen to give Ollie shorts a try?

Ollie shorts are available on the Ollie health platform. And don’t forget, during the month of March, The Open Letter readers can get unlimited credits for their entire team for a month.

­

COMING UP

AfricArena, the JHB Edition

The countdown to next week’s AfricArena Johannesburg Summit has begun! There are 6 days left for you to secure your spot at this game-changing event. Running 29–30 March at The Forum in JHB, it features some of Africa and the world’s best speakers.

Delving into Deep Tech, Hardware, Enterprise and ClimateTech, speakers include Savant CEO Nick Allen, Launch Africa’s Zachariah George, Norrsken22’s Natalie Kolbe, Adbot CEO Michelle Geere and many more.

We’ve got 5 tickets to give away!

To win a free ticket hit reply and let us know you wanna go (first come, first served), or secure your spot via Eventbrite or Quicket.

DON’T MISS IT

By now you know our next Open Conversation is happening next week Wednesday, 29 March at 12:00. Stephen van der Heijden has amazing startup experience: From OfferZen and Uno Digital to scaling at OLX Group and more. And he’s currently leading OfferZen’s European expansion.

So we asked him to come in and give us the lowdown on scaling – the metrics that matter, creating useful feedback loops and, of course, going global.

We’re thinking you probably don’t want to miss this one. Register here.

ONE LAST THING

Some of you have been listening to How would you build it on Youtube. It’s now also available on Spotify!

This week Bobby and Renier dive into SportTech. Ever wonder how you would build a SportTech startup? Give it a listen.

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This Open Letter is brought to you by Renier Kriel, Jason Mill and Elvorne Palmer. And we discuss these topics every Thursday on our Linkedin page.

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