THE OPEN LETTER NEWSLETTER

Ready to fly? Check out this awesome video of the Star Warsy new model space plane being mounted on its cargo module at NASA's Neil Armstrong Test Facility.

In this Open Letter:

• Supply and demand: Tech to solve SA’s doctor dilemma.
• Flying mangoes, the bank of WhatsApp and the “Please Call Me” guy’s R20bn.
• Social payment: How to build a business on WhatsApp.
• How we like to gamble: The results are in.
• Free stuff: Share this and get cool business tools.

TRENDING NOW

Solving SA’s Sawbones Supply

South Africa is severely short on doctors.

Which is funny because, just a few days ago, about 1’000 newly qualified doctors marched with their CVs to meet the Health Minister at the GCIS offices in Pretoria.

Their mission: To ask the department’s hospitals to employ them.

The answer: No, sorry, the government doesn’t have the money to employ them right now.

Talk about your catch-22.

But we’re not here to discuss the politics – seems bad financial planning is behind gov’s inability to hire the new doctors it so desperately needs, if you must know… No, we’re here to look at the opportunity.

What we have right here, is a supply and demand issue. And it’s quite severe.

How Many Doctors Do We Need Exactly?

Look, we all know doctors’ services are sorely needed in SA. 

And according to this interactive map by the WHO, South Africa has 8 Drs per 10’000 people. So, about 48k doctors in SA.

Now, compare that to the likes of Australia (41 per 10k), Sweden (70 per 10k), and even some of our BRICS counterparts like Russia (38 per 10k) & Brazil (21 per 10k). If we want to get to Brazil’s density of medical doctors, we need an additional 78’000 which could take 78+ years at our current graduation rate of 1’000 per year (probably longer considering retirement, etc).

So it does seem like we need more doctors, so why can’t we get them jobs? Is there even a market for them?

But there is a market

The current healthcare situation is actually abysmal. Last year, South Africa ranked in the bottom 22% of the global healthcare index. Almost all our African neighbours – including war-torn Sudan — have better healthcare than South Africa.

Not that our care is bad, quality healthcare is just unaffordable for most. See SA spends an inordinately large portion of our health spend on private healthcare, which only serves 16% of the population, meaning almost 84% are entirely underserved (50m+).

Medical aid costs upwards of R5’000 pm for a family of 3 (which the 16% is currently buying), but Unicef says most households in SA earn only R18k per month. Realistically, taking living expenses into account, those people can only afford to spend a few hundred Rand per month on healthcare.

Even if you can only reach a fifth of the remaining 84% of SA’s population, that’s still a market of 10 million people.

So arguably if one can get the cost of primary healthcare down to a level this 10m can afford, you have a massive market, with a large demand on your hand.

And by looks of things, there are many unemployed doctors ready to serve it.

Tech to get the cost down

The traditional GP service includes a whole host of people and facilities that bloat the cost. Think facilities, reception, finance, etc. Not to mention all the admin involved in claiming from medical aid and losses due to no-shows and non-payment. It’s a very ineffective process — making the consult price high.

Introduce tech to slice that price in half and all of a sudden the market size is massive. And some local startups are making great progress in this space.

• Kena Health (backed by Next176) provides online nurse, doctor and therapist consultations. They use AI and nurses to collect diagnosis information optimising the time a patient spends with the doctor and by doing so, they get the price down.
• Udok also connects patients with a doctor for a virtual consultation and one can consult a doctor either through their online platform or at many Clicks Pharmacies across the country.

Whilst both of these currently offer online consultation, this is merely the start of introducing technology in the supply chain of primary healthcare, decreasing costs to patients, increasing healthcare and catching the ball where the government is dropping it. We are watching this space.

IN SHORT

💳 Mastercard Investing. Mastercard has just forked over R3.8 billion for a minority stake in MTN’s MTN Group Fintech pushing the valuation of the telecoms operator’s Fintech arm to nearly R100 billion.

📱 WhatsApp Banking. Absa has launched a new WhatsApp wallet called ChatWallet that allows users to manage money directly in the messaging app without needing an existing bank account.

👠 Fashion Incoming. A new eComm fashion player in town is setting its sights on Superbalist, Bash and Shein. Chinese eCommerce marketplace Temu launched in SA last month and is already one of the Top 3 free apps on both Google’s Play Store and Apple’s App Store.

🥭 Mango Flying. Low-cost airline, Mango, might be able to take off again soon after its business rescue practitioner has greenlit the sale to an unknown investor.

👨‍⚖️ Vodacom Appealing. A Supreme Court of Appeal ruling has instructed Vodacom to pay a former employee R20 billion (10% of its market cap) for part of the revenue generated from the “Please Call Me” service since 2001 within 30 days.

HOW WOULD YOU BUILD IT?

How to Launch a Business on WhatsApp

If you’re building a product or business that might benefit from selling directly on social media, this week’s podcast is for you. We caught up with Danielle Laity and Dean Pienaar at payments startup WigWag to tell us about what it takes to launch, grow and get paid via socials.

The highlights

1. WhatsApp is now a massive marketplace

As Daniele explains here, WhatsApp is extremely popular, with 96% of SA internet users being on WhatsApp, its 21m user base in 2022 is expected to grow to 26m users by 2026.

And the community feature really unlocked the ability for people to create dedicated spaces around a common interest – from secondhand baby clothes or luxury goods sales to job postings.

You might see actual buying and selling going on in these groups, but some of them have grown so huge that even they themselves are starting to charge membership fees and effectively becoming businesses. 

2. Solving the payments problem

As mentioned here, handling payments has always been a pain point with these social communities. EFT and cards always have a major trust barrier on socials, and cash is often a big risk for people.

So what WigWag, who is part of payments innovator Stitch, did was to build a super-sleek payments interface, where the seller can push people through to a branded dedicated instance, with their logo and everything to process payments safely. 

3. Beyond the solopreneur

What’s interesting is, as Danielle mentions here, that it’s not just small-scale and solos jumping on this tech. Service businesses can easily run their payments through the platform, and even restaurants that want to do their own deliveries and not pay exorbitant app fees and commissions use WigWag to process mobile orders and payments.

They even have an Internet Service Provider who runs all their monthly service billing via the platform. A simple script runs through their customer list and sends each customer a WhatsApp with the payment link. And that’s how they collect their cash every month.

You can also grab the Spotify and Apple Podcast links on our website here.

THE RESULTS

We asked if you participate in sports betting, and the majority no, but there’s some gambling going on…

🟩🟩🟩🟩🟩🟩 🚫 Nope (64%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🏆 Big games only (6%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🤑 All the time (9%)

🟨⬜️⬜️⬜️⬜️⬜️ 📈 I'd rather bet on the stock market (15%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🚀 I reserve my bets for myself (and my startup) (6%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Some people, eh? A 21-year-old product manager was pulled over and reportedly arrested for driving his Tesla while wearing a new Apple Vision Pro headset — on the day it released, nogal!

More importantly, though: Cue the confetti, The Open Letter grew by 22% just over the last 3 months (we flew past 5000 subs 🎉)! Remember: if you share this email with friends using your unique share link, you get free startup tools, a coffee on us and loads of free AI tools.

In this Open Letter:

• Big leagues: Inside SA’s lucrative sports betting space.
• Cape to Kruger direct, R48bn acquisitions and bigger paydays.
• Lean team: Hiring the best people on a tight startup budget.
• Where we shop fresh: The results are in.
• Tell a friend: Share this and get free stuff.

TRENDING NOW

Making The Big Bets

When Takealot recently announced its leadership changes, a lot of the focus was on Frederik Zietsman becoming group CEO and Mamongae Mahlare stepping up to group Executive Chair.

Understandably so, with the coming of Amazon’s marketplace coming to SA and all.

But something interesting is to note where Takealot's founder and former chairman, Kim Reid, is likely turning his attention – the BLV group, owner of BetKing.

Founded in 2018, the Nigerian sports betting service serves 9 million customers and employs around 350 people globally. Something even MultiChoice noticed, investing an initial R1.5bn for a 20% stake in BetKing in 2020 – upping that to 49% with a cool R4.4bn in 2021.

The perfect match?

Sports betting’s number one cost by a long shot is its customer acquisition cost. 

Buying media in popular sports content slots is very expensive – so partnering with a company that owns a lot of media can help you get a better acquisition cost for the win. 

And it's not a novel strategy, Barstool Sports was bought by Penn Entertainment, a Pennsylvania-based sports content platform and casino operator which runs ESPNbet, for more than $550 million.

They ran into regulatory challenges, though, and eventually had to sell it back to Barstool’s founder for $1. But there’s still merit to the idea of marrying a content platform to a betting service if you can navigate the red tape.

‍

The margins

What makes sports betting easier than traditional casinos, though, is the precise nature of how they offer bets to customers. 

Bradley Prior did a great job of unpacking it in this article, but the TLDR is that they offer you either side of a specific outcome. 

Let’s say in the upcoming Bafana Bafana vs Nigeria game:

• they would offer a bet to say Nigeria will win by one goal or more and you can pick whether this will happen or not.
• the odds are then set up so that you can’t profit from by betting on both sides.
• and they often skew it a bit by offering less value to a popular outcome. I.e. you win less by picking the popular outcome even though that outcome is less likely.
• and some even change odds as time goes on, to balance their risk and ultimately make better profits.

With these models, their gross margins sit typically around 4% to 6%, with cost to service per customer typically going down as you add new users. Meaning: the bigger the book, the bigger the profits — and that’s why you need media… lots of it.

Sports betting is big

We know betting’s big internationally – estimates say over 50 million Americans placed bets during Superbowl 2023, with over $1.3bn expected to be wagered in 2024.

Locally, data is scarce – but we can tell you it's rumoured that the amount of Flash 1Vouchers (sold mostly at spaza shops) getting used for sports betting and casinos at one of their 46 partners is in the region of R1bn per month.

The moral of the story is: Yes, there are some massive players in this space (for good reason), and you will need deep marketing pockets to take them on. But with the sheer amount of cash flowing, there’s bound to be some peripheral opportunities for startups – we’re watching this space.

IN SHORT

🙅‍♂️ Acquisition Denied. French broadcaster Canal+ is facing an uphill battle in its bid to acquire the MultiChoice Group. Its latest offer of R105 per share (a deal worth R48 billion in total) was rejected by MultiChoice shareholders last week.

🗝 Decentralised Social. The crypto world is abuzz with the rise in adoption of Farcaster, a decentralised platform that allows people to build social apps that connect to it. Think X, Facebook, etc but you personally own the data and can move it across different apps.

🦁 Direct Lion. Off the back of a bumper tourist season, Cape Town is getting a direct flight to the Kruger National Park from the 2nd of April. Two of SA’s hottest tourist destinations are now that much closer, with the 2.5-hour flight going for under R2k one-way.

🤳 Turning off the Tap. FNB will sunset its tap-to-pay functionality in April in a move to encourage customers to switch to existing contactless payment methods like Google Wallet, Apple Pay etc. due to the rise in popularity of these platforms.

🤑 Insured Takeover. Sanlam Limited, SA’s biggest insurer, is preparing to buy 100% shareholding in Assupol Holdings Ltd for R6.5 billion. This comes after the announcement last year that 2 major shareholders in Assupol are looking to dispose of their shareholdings.

💸 Better Wages. South Africa’s minimum wage is set to increase by 8.5%, well above the 6% CPI. The new minimum wage, which comes into effect on 1 March 2024, will see an increase from R25.42 to R27.58 per hour (or R220 odd per day).

BUILDER’S CORNER

How to Hire (the Best People) on a Budget

– By Ben Shaw author of The First Kudu

Finally! – you’ve found the perfect candidate. You consult your cofounders. You receive nods of approval from your board. Your poor understaffed team’s begging you to make this hire... 

But, you don’t simply have that amount for the salary.

Look, if you’re even trying to compete with corporates on salary offers, you’re playing the wrong game. Startups have things to offer that no corporates can – so it’s worthwhile learning the startup hiring game…

A winning startup hiring formula

1. Acknowledge you need to do more with less

Your first hires need to buy 100% into what you’re building. The risks, personal development opportunities, improbable rewards and ultimate company vision need to be the core reason they want to join you. 

Now, that limits your options but it also enables you to make it your core offering – “you’re gonna learn and do things here you simply can’t do anywhere else!”

There is some good news here – there are many excellent people in SA who will jump at the chance to work in a stimulating, empowering environment. And there are ways other than monthly salary to remunerate them.

2. Get the tough conversation out of the way early

You’re not just hiring for skills, you need to know exactly how much each position will add to your company’s value and earning potential. If they can demonstrably bring in X new revenue, partnerships, subs etc. how much equity (shares) can you realistically give them in exchange for that?

You need to understand and start all hiring conversations by exploring this idea of the delivery-remuneration ratio. Literally, ask them how much new business they plan to bring in and calculate what that’s worth to your company right now.

Then, ask them: “On a scale of 1-10, if I offered you the job at R[x] per month, how would this opportunity rate for you?”. It’s not a direct offer, but it anchors the candidate on your expectations and lets you see how they respond. You could even make the R[x] slightly lower than what you have in mind, so you have room to negotiate.

3. Prepare non-cash incentives to sweeten the deal

Equity (company shares) is the ultimate long-term incentive, so reserve that for senior hires that you really want to make core to your team. For most new hires, the major incentive (especially if they’re coming from corporate into the startup space) is the ability to “Learn and Earn” – you get to learn the startup game first, then earn bigger later.

Then, as a founder, offering access to your network is a great incentive for ambitious candidates. Offer to introduce them to top contacts and take them with you to events etc. It helps them feel secure that, even if this startup fails, they still get long-term value and opportunities – which helps them get over the initial jitters of joining your team.

Don’t rely too heavily on lifestyle perks like hybrid working, extended leave, free food and free days to work on side projects – almost everyone’s offering that these days.

4. Sense-check your own expectations

Let market conditions guide you a bit – check the role’s earning bracket and balance it against how much the role will meaningfully contribute to your business.

Then share this openly with each candidate – transparency helps you build quick rapport. And then just treat the hiring process as a conversation as much as possible.

Try to keep it simple and look for the candidate who will love waking up to build the future with you.

Getting the best people can often be a matter of life and death for a startup, so it’s worth the founders to put in the effort here.

Got startup hiring insights? Hit reply and let us know (and maybe you get featured here, too).

Today’s Builder’s Corner was written by Ben Shaw who is an experienced founder and author of SA’s must-read startup insights book, The First Kudu.

Connect with him on LinkedIn here or via his website.

THE RESULTS

We asked where you buy fresh veggies, and no wonder “fresh” seems like a growth opportunity for retailers…

⬜️⬜️⬜️⬜️⬜️⬜️ 🍓 The old housewife market (10%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🌾 Direct from the farm (5%)

⬜️⬜️⬜️⬜️⬜️⬜️ 📱 On Match Exchange, of course (3%)

🟩🟩🟩🟩🟩🟩 🛒 The retailer’s fresh section (77%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🍖 What are “vegetables”? (5%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Macaque trouble? After almost a week of failed attempts, Scottish animal authorities hired a specialist mountain rescue team using thermal imaging drones to recapture an escaped Japanese monkey that terrorised the Highlands with cuteness for days on end.

Pssst Founders… we want to follow your journey, let us know what you are building.

In this Open Letter:

• Fair game: Saving SA’s R300bn agri sector.
• Brain implanted, “struggling” TikTok artists and kissing the millionaires goodbye.
• Press play: Supercharging SA’s economy overnight.
• Where you like to buy: The results are in.

TRENDING NOW

Saving our R300bn Breadbasket

Agriculture is big. HUGE, actually.

The South African agriculture market will be worth R303bn this year – almost double that by 2029.

Over all of Africa, it was R5.2 trillion in 2023, accounting for 35% of Africa’s GDP – and could be around R19 trillion by 2030.

So why then are 78% of SA’s farmers not seeing any profit?

A clue comes from the DA’s Shadow Minister of Agriculture, Land Reform and Rural Development who told parliament in May 2023 that farmers are “facing a cost-price squeeze” and most are battling to service their debts.

See, most of us assume that, with official-seeming indexes like SAFEX, there must be some form of universally accepted pricing for agricultural goods. But due to supply chain costs, timing and quality, the farmers often end up taking whatever price is offered – inevitably putting them in a compromised position.

‍

The Wild West of SA’s Agri Pricing

A grossly simplified way this works is:

• A broker engages the farmer and offers a fixed price for goods — effectively a future.
• He then works relationships to sell the produce at a higher margin, before actually having to take ownership of the goods.
• The difference between the buying price and selling price is then the agent's margin – he is selling contracts (with little risk to himself).

A major issue with this model is the misalignment between the broker’s incentive and that of the farmer. The broker is trying to pay the farmer as little as possible and sell it for as high as possible – not a win-win.

And what’s more, as a farmer, you don’t have any way of doing proper price discovery.

The stuff you just sold could be worth 10 times what you got paid. 

You would never know, until now…

‍

Fair Prices and Agri Markets

Some local players have pounced on this pain and have gotten good traction.

• The Match Exchange is a tech-enabled marketplace that connects farmers and buyers directly (i.e. cut out the middleman). Which is great for price discovery and managing supply and demand, while still ensuring the farmer gets what his goods are truly worth.
• Nile.ag is another marketplace that connects farmers and buyers, but they are taking it one step further, providing a marketplace for farming inputs (think fertilizers etc.). This is another part of the process that suffers greatly due to the limited distribution of sales reps and price discovery — smaller or better-priced input providers simply cannot get to some farmers.

By connecting the farmer directly to the source of his feed, materials etc. the farmer gets to run his business more cost-effectively while finding great prices for their outputs on the same platform… Noice.

With prices rising and consumers feeling the pinch, there are still a lot more opportunities for innovative tech to solve real problems in the agri space – which we are, as always, watching pretty closely.

IN SHORT

⛷It’s here. The Apple Vision Pro officially launches today with over 600 apps and games optimised specifically for it. If you paid the $3500 to get it, let us know how it goes.

👋 Millionaire Exits. South Africa has lost over 9’000 US-dollar millionaires in the last 10 years with many having moved to a “safe haven country” including Australia, Switzerland, Monaco, Singapore, the UAE, New Zealand, Malta, and Mauritius.

🔇 Muted Tok. The Universal Music Group (UMG) has pulled its music from TikTok. It would appear that struggling artists like Taylor Swift, Billie Eilish and Ariana Grande are receiving royalties only at “a fraction of the rate that similarly situated major social platforms pay” from TikTok.

🚙 Unbundled Cars. Transaction Capital’s share price surged this week at the announcement that the board has resolved to unbundle its mega second-hand vehicle trading platform WeBuyCars, with all WBC shares to be listed on the JSE at the same time.

🧠 Implanted BrainTech. Elon Musk has announced that his BrainTech company Neurallink has successfully implanted its first wireless brain chip in a human and that the patient is recovering well, with promising brain activity detected.

⛑️ Aerial Rescue. Ellies Holdings, one of the JSE’s longest-surviving tech companies has been placed into voluntary business rescue after its planned acquisition of Bundu Power fell through.

🌌 Orbital Tours. SpaceX has been contracted to launch Starlab, the ISS’s replacement, in six years — the world’s first privately owned space station (Airbus), whose own website describes it as a “science park” in space.

HOW WOULD YOU BUILD IT?

How to Supercharge Your Economy Overnight

If our reports on regulating crypto asset service providers in SA got you excited, this week’s podcast is for you. We chat with Tobie van der Spuy, co-founder of Block Markets Africa about how this can potentially fast-track fintech projects in SA.

The highlights…

1. Who’s getting in on the FSP licensing bandwagon?

An interesting insight shared here is around the 20-odd applications that were withdrawn from the Financial Sector Conduct Authority’s Financial Services Provider (FSP) licencing process. The first reason was that existing FSPs wanted to also get licenses to trade crypto - but one of the criteria is to have a key individual who not only bears the responsibility but also understands the complexities and risks that exist in the crypto space.

2. SA’s best-kept Crypto Secrets!

One of South Africa’s best-kept secrets is that we have a really mature and highly innovative space. Arguably one of the best in the world, actually, Tobie says. He shares that he often has international customers come and visit them in Cape Town, and can introduce them to 20 different really serious players in the crypto space (in a 3.5km radius) – all doing things of global significance.

3. The FinTech opportunities in SA and the rest of the continent

One of the challenges with trading crypto as a South African is that we have to do it using other currencies. Tobie and his team have been working on the EZAR, it’s a standard for any licensed financial service provider to issue their own stablecoin. Listen in here.

So if you want to understand how blockchain will affect all of our lives check out the entire episode for these and more gold nuggets.

You can grab the Spotify and Apple Podcast links on our website here.

THE RESULTS

We asked if you buy on social media, and most have yet to explore it…

🟨⬜️⬜️⬜️⬜️⬜️ 📱All the time (15%)

🟨⬜️⬜️⬜️⬜️⬜️ 🙅 Don’t trust it (13%)

⬜️⬜️⬜️⬜️⬜️⬜️ 😤 Can’t seem to pay without issues (5%)

🟩🟩🟩🟩🟩🟩 💳 Only normal e-commerce for me (64%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🛒 I only buy in physical stores (0)

⬜️⬜️⬜️⬜️⬜️⬜️ 🧔🏾♀️ I live a self-sufficient life living off the land (3%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

More power? A Chinese tech company made a coin-sized battery that lasts 50 years without charging. It’s small now, but could do wonders for powering phones in the future.

In this Open Letter:

• Savvy payments: A better way to sell on the socials.
• Dodgy farm funds, SA’s best-loved tech & triple growth.
• People power: Retaining quality as your team grows.
• What we really want from blockchain: The results are in.
• Tell a friend: Share this and get free stuff.

TRENDING NOW

A New Way to Sell on Social

Checkers Sixty60 and its rapid grocery delivery have revolutionised how we shop for everyday items. Joined by PnP asap!, SPAR2U, and Woolies Dash, these services deliver our grocery favourites within an hour – and speaking to any of these retailers, that side of the business is booming. 

It's a remarkable convenience for consumers, but it's not without its ripple effects. 

One significant impact is the decline in foot traffic at the malls where these stores serve as anchor tenants. A decrease that affects the smaller retailers who rely on the flow of customers visiting the larger stores – a massive shift that’s hard to quantify without official data. 

A glimpse at the fleet of Sixty60 motorbikes zipping in and out of a Checkers store offers a clue:

• If one bike manages 3 trips per hour, that could very well be 24 deliveries a day.
• Multiplied by 20 bikes for some bigger stores, you're looking at up to 480 daily deliveries per store.
• And that’s essentially 480 potential customers who no longer pass by the smaller shops on their way to the anchor tenant (up to 14’500 per month!).

‍

This is a significant blow to these small businesses and poses questions about the future of malls' business models – perhaps a major contributing factor to why Amazon has decided to launch its marketplace in SA. 

But that’s a story for another day.

Today is about how small businesses are adapting.

The Small Business Sales Revolution

While setting up an e-commerce store has become incredibly accessible with no-code and low-code platforms like WooCommerce, Webflow, or Squarespace, many are turning to social media spaces where South Africans spend an average of 3 hours and 44 minutes daily. 

With 40% of GenZ using platforms like TikTok and Instagram for product searches, and 26% of South Africans using social media to buy and discover products online, the potential to sell on social has become significant (and will likely continue to grow).

From clothes to furniture or even braai wood, small businesses and solopreneurs are increasingly harnessing social media to market their products and finalise sales. 

And it's not only new items but also second-hand goods that are finding a marketplace on platforms like Facebook Marketplace and various WhatsApp groups.

However, a major pain remains in the payment process. While social media provides a certain level of trust and community verification, completing transactions securely and efficiently remains a hurdle. 

Social Sales, Solved and Optimised

That's where local payment startup WigWag’s checkout product comes in. They've tailored a solution specifically for small businesses and solopreneurs, allowing them to accept card payments online with minimal fees (as low as 2.55%). 

Sellers can send customers a payment link with a pre-set or adjustable amount and even integrate the delivery address into the payment process, streamlining the entire transaction and minimising the need for back-and-forth communication. What’s more, a simple interface makes it easy for sellers to keep track of their orders.

This gives the small business or solopreneur a single payment tool to use on WhatsApp, Instagram, Facebook, and email – basically everywhere you can imagine.

With online commerce set to keep on rising, expect to see more of your local small businesses sell online… we are watching this space.

IN SHORT

🐄 Unlicensed to Thrill. SA AgriTech startup Livestock Wealth, which allows investors to invest in livestock and farmlands, has been accused of operating without a license and using another entity's license number by the Financial Sector Conduct Authority.

🎧 Top Tech in SA. South Africans have voted for their favourite tech brands in a recent Analytico survey of 2’500 respondents. South Africans prefer Luno for crypto, JBL headphones, PCs for gaming, Huawei routers, Samsung Storage and Windows Defender (to keep those gaming PCs virus-free) — and The Open Letter for tech and startup news (we’re joking, that's not in there, but it should be).

🤝 Takealot Shakeup. Takealot has appointed a new CEO. Frederik Zietsman will take the helm (including Takealot.com, Superbalist, and Mr D.) from the 1st of February 2024. Outgoing CEO Mamongae Mahlare will move to the position of executive chair of Takealot Group.

📈 3x Good News. South Africa’s economy is expected to grow from 0.5% in 2023 to 1.5% in 2024 according to the Bank of America. This is despite national elections, interest cuts expected in the second half, and deteriorating public finances

🙊 No Jokes. Looks like you can't even make a joke about loadshedding anymore — at least not on social media. The CCMA recently ruled in favour of the Ford Motor Company when an employee made a joke about employees not needing to work due to Stage 6 Loadshedding.

🎤 Dealing with it Swiftly. X has blocked users from being able to search for “Taylor Swift” after AI-generated fake explicit images of the singer went viral. Crazy Town.

BUILDER’S CORNER

How to Maintain Quality When Your Team Grows

We’ve all seen it before. You have the world’s coolest product/service when you or your founding team are sweating away and doing it yourself.

But then, as soon as you get real momentum and bring new people on board, things start moving really fast… And quality can, naturally, suffer a bit.

It’s a biggie, not just for startups. And a possible answer came from Netflix. Their years-long HR guru, Patty McCord, has explained a few times how they managed quality throughout rapid growth by focusing on culture.

3 Key People-and-Growth Insights

1. Teach everyone how the business works

A massive bone of contention, because management always seems to want to keep the financials and true goals hidden. Modern workplace psychology, however, tells us teams perform better when they have the full picture.

Netflix actually had weekly meetings where they discussed their acquisition numbers, returns, and profits – the works! They held nothing back because that gave them the ability to unlock Number 2…

2. Show everyone how and where they add value

When everyone knows how the business works, it makes it clearer how each person’s individual contribution adds to the overall picture. Which is a great internal motivator.

“Oh, if I do X, Y and Z, the organic subs go up, lowering our CAC and increasing our LTV, increasing profit. So, if I put in this extra effort, I qualify for this and that bonus…”

You could even structure reviews around it, showing and explaining to team members how their tasks fit into the big picture. It increases autonomy and ownership, motivates and creates a culture of accountability, where everyone is working towards the same goals.

3. Hire selfishly

The third part of this is realising that where a) what I’m good at doing and b) what I love doing meet, is where people will be most efficient. So, large corporates look at this and go “How can I develop my people more?”.

But you’re not a large corporate. As a startup, you actually can’t afford to develop anyone, you need the right people to help take the company where it needs to go.

So, you still focus on finding out what people love doing, but flip it around and look at what your business needs most. Then, only hire the people who really love doing the things you really need.

Got a people or hiring tip for growing startups? Hit reply and let us know…

THE RESULTS

We asked which blockchain products you’re most excited about, and it’s not much…

🟨🟨⬜️⬜️⬜️⬜️ 🪙 Bitcoin only (14%)

🟨🟨🟨🟨⬜️⬜️ 🏡 Digital title deeds (23%)

🟨🟨🟨⬜️⬜️⬜️ 🖼️ Tokenising other assets 17%)

🟨⬜️⬜️⬜️⬜️⬜️ 💳 Payments (12%)

🟩🟩🟩🟩🟩🟩 🥱 I couldn't really care less (34%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Grand entrance? Don’t take it too far. A tech CEO plunged to his death this week making a theatrical stage entrance at a company event. Sheez, sorry, man.

In this Open Letter:

• Fast forward: A bold new financial future for SA.
• VR treadmills, raising R82m & Chinese walkie-talkies.
• Solid start: How to build a startup in a funding drought.
• The results: How fast you want your claims processed.
• Tell a friend: Share this and get free stuff.

TRENDING NOW

The Future of Finance in SA

There are two schools of thought when it comes to cryptocurrency… 

1. Leave it unregulated to keep it open and free from government controls.
2. OR regulate so that mainstream adoption of tech can accelerate us into the glorious fin-tech future for our dreams.

And whilst the dream of keeping it open and free gives us all the noble Robin Hoodsy feels, unfortunately, the world has proven itself a little less than trustworthy with this tech. 

‍

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Between Bitconnect, Onecoin, Quadriga (the one where the founder faked his own death), our very own MTI and of course FTX, Crypto has a bad reputation.

That’s why many industry players have been working with the South African Reserve Bank to develop a framework to introduce regulation. 

SA’s Crypto FSP pioneers

Just this week the Reserve Bank announced that the first 50 Crypto Asset Service Provider (CASP) license applications have been submitted for review and are expected to be issued within weeks.

What this means:

• Declaration as Financial Products: In October 2022, the FSCA declared crypto assets as financial products under the Financial Advisory and Intermediary Services Act (FAIS Act). This subjects Crypto-Asset Service Providers (CASPs), e.g., trading platforms, exchanges, etc. to FSCA registration and compliance with its regulations.

• Anti-Money Laundering and Combating Terrorism (AML/CFT): Amendments to the Financial Centre Intelligence Act (FICA) are proposed, making CASPs "accountable institutions" subject to FICA's AML/CFT obligations. This includes Know Your Customer (KYC) procedures, transaction monitoring, and reporting suspicious activities.

• Consumer Protection: The "treating customers fairly" requirements of the FAIS Act will apply to CASPs, aiming to protect consumers from scams and unfair practices.

• Taxation: SARS is developing regulations clarifying the tax treatment of crypto transactions, including income tax, capital gains tax, and value-added tax (VAT).
• New players: Most importantly, perhaps, is that regulation paves the way for listed companies and banks to join the party!

But it also opens a whole lot of exciting new doors for fintech and beyond…

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Opportunities lurking

Regulations will surely bring about some limitations, but what it does also do is provide a level of legitimacy to crypto assets and the technology behind them in general. 

Particularly people will most likely easily adopt it as legal tender and more will consider it as part of investment options, bringing about opportunities:

• Making digital ownership certificates: Having a digital authentic ownership certificate can facilitate a whole host of financial products and transactions. From more efficient escrow in purchases (managed by smart contracts) to raising liquidity against all kinds of assets. 
• One to watch out for here is digital title deeds for property – something FNB’s CEO has said they’re looking into. Fanfire is a Stellenbosch-based company that has run a few projects including selling ownership certificates to fine wine. These kinds of solutions stand to benefit mightily once there is mainstream adoption of crypto as it will introduce more buyers.
• Raising funding: IPOs have gone out of favour, at least in South Africa. But the blockchain could provide a way to raise funds. 
• This is something Momint is doing with SunCash. By purchasing ownership certificates to shares in solar projects, you get the returns from these projects over time as long as you hold them. 
• The exciting part is really that once crypto gets regulated, this can become a recognised financial instrument that can be traded or used as surety for loans.
• Instant payments: Blockchain has long been seen as the answer to borderless payment mechanisms. VALR has already introduced this in VALR Pay and has introduced the ability to pay using crypto at Pick n Pay, for example.
• All kinds of other verifications or certificates will get a boost: Wanna know where your meat’s been grazing? BeefLedgerSA can give you irrefutable proof — sure they have been going for some time, but mainstream adoption is bound to help companies like this.

Whilst there are quite a few blockchain solutions in play, once banks warm up to crypto due to regulation, expect to see way more action here… we are watching this space.

IN SHORT

💪 Digital Muscle. The Western Cape Government has launched The Western Cape Digital Productivity Business Technology and Innovation Support Programme which aims to catapult local businesses into the digital age by offering support to start-up businesses valued up to R100 000.00.

🥽 VR Treadmills. Tired of banging your knees and shins into furniture while wearing VR headsets? Well, Disney has developed HoloTile, a system that allows a VR user to remain on the system’s pad whilst walking on tiny round tiles that act as an omnidirectional treadmill.

🦾 Jobs Secure. Still worried about AI snatching jobs? Don’t be. An MIT study just proved that it’s way too expensive to replace humans with AI. At least, for now.

🐔 Walkie Talkies. 540 million tons of chicken feet, a South African delicacy will be making its way to China every month in a new deal worth R300 million per year. Despite the recent bird flu challenges faced by the industry, it’s great news for poultry farmers and clients.

🧑‍💻 Big Dev Push. SA’s leading developer job marketplace gets a shot in the arm as OfferZen just secured R82 million in funding and plans some of the biggest platform updates yet.

HOW WOULD YOU BUILD IT?

How to Build Startups in a Funding-Drought

If you’re wrestling with how to fund big ideas without bootstrapping, this week’s podcast is for you. We spoke to venture studio Next176 CVO Tramayne Monaghan about strategies for de-risking and building with an exit strategy.

Just the highlights

1. The state of startup funding in SA

The macro-economic reality in SA, and thus the amount of risk a funder knows they can safely take on, is starkly different to developed countries. And, as Tramayne explains here, the sentiment among funds here is really that they only want to back ventures that are generating revenue.

This naturally means getting early-stage funding is tough, and it’s not likely we’ll see much of a shift with the current economic flux we’re in. And that’s part of the reason why he believes venture studios are an important new way for founders to get their ideas built.

2. A new way to build in SA

As Tramayne discusses here, incubators and accelerators started because the developed markets had many VCs and not enough early-stage ideas to invest in. Africa has the opposite problem. And that’s where venture studios come in.

Venture Studios house a collective of really top-notch people – at Next176, for example, Tramayne has a team of people from Google, Salesforce, Tencent etc. – and they sit with founders and really build out the idea, validate, shape and start building it with you. Not over a few weeks, but in-depth and long-term.

And what’s great about bringing such an experienced team together is you create a space that is at once rigorous and creative.

3. Building to Exit

Thinking about exiting before you build is often a bit tricky for founders, as Tramayne mentions here. And where VC conversations can get a bit uncomfortable in later sales stages, his personal experience has been a greater sense of security since they’re corporate-backed (Old Mutual, if you didn’t know), which means there are quite a few natural exit opportunities almost baked into the process.

You can also grab the Spotify and Apple Podcast links on our website here.

THE RESULTS

We asked how long you think is acceptable to wait for an insurance claim to pay out, and 7 days is where you draw the line…

🟨⬜️⬜️⬜️⬜️⬜️ Immediately (8%)

🟨🟨🟨🟨⬜️⬜️ Less than 3 days (37%)

🟩🟩🟩🟩🟩🟩 Less than a week (45%)

⬜️⬜️⬜️⬜️⬜️⬜️ Who cares? (2%)

🟨⬜️⬜️⬜️⬜️⬜️ I don't have insurance (8%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Excess heat? See how this spa warms its pools with BTC mining. They claim they don’t even want to profit from it, it’s just a fancy way of keeping things steamy (and attracting BTC bros to visit of course).

In this Open Letter:

• Fleet innovation: Hidden opportunities in claims processing.
• GPT-5, space drones & who will and won’t be on Vision Pro.
• People power: Building the ultimate startup team.
• Your drinks of choice: The results are in.
• Free stuff: Share this and get cool business tools.

TRENDING NOW

Opportunities in Speeding Up Vehicle Claims

Remember when they said South Africans are among the worst drivers in the world? 

Reports show we have around 1 million accidents per year, and a lot of them are fatal – 44.8 people out of every 100’000 South African citizens die in road accidents. 

And it’s all thanks to a dangerous mix of speeding, alcohol use, unroadworthy vehicles, illegal drivers and poorly maintained roads, of course.

Let’s face it, folks, every time you pull out of your driveway, you’re practically heading out onto The Fury Road.

‍

Now imagine your business depends on road travel

We showed in the past how hard all this is on SA’s taxi industry, but take a moment to imagine what it must be like for anyone operating a commercial fleet (think logistics, taxis, Ubers, buses).

If one of your fleet is in an accident serious enough to warrant repair time, the costs can escalate quickly – those in the know say that the total amount of hidden costs and lost revenue in an accident can be ten times the repairs, insurance and injury costs.

No wonder we need so much insurance, right?

Ah, but therein lies another point altogether…

The time it takes to process a claim

Insurers have quite a robust claims management process – and it can be time-consuming (bad news if you’re a fleet manager who’s losing money every second that vehicle’s off the road).

Typically the steps involved in processing a claim are:

1. Put in a claim
2. Get quotes for repairs
3. The insurer sources an assessor and assigns them to the case
4. Find a suitable time to inspect (when both you and the assessor are available)
5. Approve quotes
6. Payment flow
7. Order parts
8. Wait for parts
9. Repairs get done

How long does this take? Well, it depends on whom you ask. The insurers themselves, like Discovery, will say it takes only a few days. But that’s just their internal processing time, not taking into account the accessor’s time, actual repair time, parts order time – and the delays in these processes that result from when they actually make the money available to the repairer.

In reality, you’re looking at weeks – sometimes as much as 1 to 6 weeks. (In the US, for example, the average actual time is around 3 weeks.)

That’s a lot of lost revenue for commercial operators.

Now, imagine if you can create and offer a product or service (or the entire workflow suite) that shortens any of these steps by a meaningful amount of time. Do it well, and you’re in business. 

AI might make it easier than ever

For example, Carscan. This local AI-powered Augmented Reality app helps capture accurate conditions of vehicles, detect damages and generate competitive quotes from a network of repair workshops to fix the damages — probably cutting time to get insurance payouts by days.

And despite only being a couple of years old, they’re already operating in South Africa, Nigeria, Kenya, Ghana, India, and the Middle East and raised a cool R20 mill in early 2022. And it will keep getting better. With a database of over 2 million vehicle images in various conditions, Carscan’s AI trains itself to identify issues with high accuracy.

Of course, that’s just one element (the assessment part) of the workflow. There are likely many awesome tech startup opportunities up and down this claims workflow. We are watching this space.

IN SHORT

☀️ Charge Up Off-Grid. SA’s first Eskom-free electric car charging station is set to launch by June 2024. Zero Carbon Charge started building its first fully off-grid EV charging station in November 2023 and aims to have 120 of these sites (including a charging station, farm stall, parking area, restrooms and botanical garden) by September 2025.

🚁 Mars Drone Found. NASA has regained contact with Ingenuity, its mini-helicopter currently living on Mars. The first motorised craft to fly autonomously on another planet was taking a test flight last Thursday when it lost contact. Engineers were able to re-establish contact via the Perseverence Rover over the weekend.

🙅‍♂️ Snubbed Apples. Apple is bargaining on cementing its position as “the ultimate entertainment device” by locking in some of the world’s most popular entertainment apps. But Netflix will not be developing an app for the Vision Pro. Ditto for YouTube & Spotify.

🤖 Level 5 GPT. ChatGPT-5 is expected later this year and will be power-packed with improvements including better reasoning capabilities, more accuracy and fully multimodal with speech, image, code and video support.

🚗 No Tesla. Elon Musk confirmed on X that there aren’t any plans to bring Tesla to SA amidst high import duties imposed on electric vehicles by the government. Remember what we said about car manufacturing in SA a while back?

🇿🇦 Winning Nation. Sunday was a big day for South Africa. Dricus “Stillknocks” Du Plessis won the UFC Middleweight Championship & Bafana Bafana won their AFCON Group Stage match against Namibia. South Africa takes on Tunisia tomorrow night at 7PM in a bid to qualify for the Round of 16. Let’s GO!

BUILDER’S CORNER

How to Assemble Your Ultimate Startup Team

While doing research for our recent piece on venture studios, we noticed that many of the best tech and venture people in SA were being snapped up by Next176. As you might expect, we investigated and traced it all back to the desk of their CVO Tramayne Monaghan. 

So, when the topic of building innovative startup teams came up, we asked Tramayne to take the lead…

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There’s a major difference between someone who has shined in an established business vs someone who will succeed in the pace and chaos of the startup world — so it’s important to look for the right things when hiring for your startup.

When I’m hiring and managing, I look for people who will take extreme ownership of their domains. They must be proactive, willing to challenge my (and the entire team’s) thinking, know how to work in flux and adapt to change fast.

I look for people who will be able to think on the fly and execute fast, knowing we’re working towards the same vision.

The following 10 characteristics are key

Embrace Change

Maintain a Competitive Mindset

Value Results Over Perfection

Challenge Conventional Wisdom

Are accountable

Push Boundaries

Resourceful and Efficient

Recognise and Mitigate Weakness

Embrace Challenges

Prioritise Doing the Right Things

But how do you test whether candidates have these characteristics? You ask them good questions. Here are a few examples:

5 Interview Questions to Help You Find Those Values

1. Assessing Agility & Critical Thinking

Ask: “How do you approach problems that have no clear solution or path forward?”

Assess: The candidate is expected to exhibit their skill in dissecting a problem into more manageable segments, pinpointing possible solutions, and considering various elements to reach a conclusion. Moreover, an effective response would highlight the candidate's capacity to assimilate new data and modify their strategy accordingly.

2. Assessing Drive & Creativity

Ask: "Tell me about a time when you identified and seized an opportunity that put you or your team ahead of the competition. What was the scenario and how did you go beyond the usual limits to achieve this?"

Assess: The ideal answer will showcase the candidate's ability to foresee opportunities and their strategic thinking in outpacing competitors.

3. Resourcefulness & Efficiency

Ask: "Describe a project where you had to prioritize results over processes and use limited resources efficiently. What compromises did you make and what was the impact of those decisions?"

Assess: You're assessing practicality and problem-solving skills. Look for their ability to make strategic trade-offs, use resources wisely, and their capacity to deliver results under constraints.

4. Accountability & Self Awareness

Ask: "How have you held yourself or a team member accountable for a mistake, and what steps did you take to rectify the situation?”

Add: “How do you address your own weaknesses in a professional setting?"

Assess: Look for integrity and self-awareness. Good responses should reflect honesty in acknowledging errors, taking responsibility (whether personal or shared), and concrete steps taken to correct mistakes.

5. Prioritising & Decision-making

Ask: "Can you give an example of a challenging situation where you had to make a critical decision to ensure long-term success? How did you determine the right course of action and what was the result?"

Assess: This tests strategic thinking and decision-making under pressure. Candidates should illustrate their ability to evaluate complex situations, weigh various factors and potential outcomes, and make decisions that align with long-term goals. Pay attention to their thought process in solving the problem.

Today’s Builder’s Corner was written by Tramayne Monaghan who is the Chief Venture Officer at Next176.

Got a team hack, insights or tip to share? Hit reply and let us know… we might feature your insight next.

THE RESULTS

We asked what your social drink of choice is, and, well, they say South Africans love their beer…

🟨⬜️⬜️⬜️⬜️⬜️ Water (9%)

🟨⬜️⬜️⬜️⬜️⬜️ Coffee (7%)

🟩🟩🟩🟩🟩🟩 Beer (33%)

🟨🟨🟨🟨⬜️⬜️ Wine (24%)

🟨⬜️⬜️⬜️⬜️⬜️ Spirits (7%)

🟨⬜️⬜️⬜️⬜️⬜️ Non-alcoholic beers (9%)

⬜️⬜️⬜️⬜️⬜️⬜️ Non-alcoholic wine (0)

⬜️⬜️⬜️⬜️⬜️⬜️ Non-alcoholic spirits (2%)

🟨⬜️⬜️⬜️⬜️⬜️ I'll just have a Coke thanks (9%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Fancy ice? This startup is exporting chunks of glacier ice harvested from fjords in Greenland to exclusive bars in the UAE. Compressed over millennia, frozen without bubbles, and uncontaminated by humans, guaranteed to be purer than the stuff kicking around in ice trays in your deep freeze.

In this Open Letter:

• Smart flava: South Africa’s teetotaller opportunity.
• Local startup buys startup, Apple takes the lead & Busy Airports.
• Find and convert: How to use storytelling to win at marketing.
• The results: What Startup founders are struggling with most.
• From the rooftops: Share The Open Letter and get free business tools.

TRENDING NOW

The money in sobriety

Drinking isn’t as cool as it used to be. 

At least that’s what it looks like if you follow movements Sober October (Ocsober) or Dry July. But ask any person who quit booze what the most annoying thing is about quitting – Having almost no options for drinks in social settings – it's either extremely sweet juices and sodas, or water. Until recently…

Raise a glass for the sober ones

When making beer or wine, the sugar reacts with the yeast to create alcohol and carbon dioxide. So naturally when alcohol is made, the fluid loses most of its sweetness. And it's this natural removal of the sweetness that gives these drinks its unique taste. 

For years, people have attempted to create drinks with a similar taste but without the sugar turning into alcohol. Unfortunately, they were never able to achieve the same result. Alcohol-free beer tastes like cold bitter Horlicks (a malt drink consumed hot in winter) and alcohol-free wine tastes like grape juice (Which is literally what it is. Lol). 

Enter the process of de-alcoholisation

Removing the alcohol post-manufacturing however keeps a lot of the taste intact – or at least it's closer than anything up until now. And this is something many traditional alcohol brands have jumped on. 

Locally Castle Free, Heineken 0.0, and Savannah no-alc are some of the most popular sober versions of otherwise popular drinks. And these sober versions of popular drinks are likely making good money.

When you buy a normal beer or cider alcohol tax (commonly called sin tax) applies to the volume of alcohol in the drink – it results in SARS collecting roughly R2 per beer over and above VAT. Yet non-alcoholics don't pay this tax, and also sell at prices higher than their alcoholic counterparts. Meaning there’s some nice margin to be made.

Just how big is this market?

Unfortunately, as with so many industries, South African data points are really hard to come by, but some assumptions point to a massive and fast-growing market. In the USA for example, the non-alcoholic market is roughly 13.5% of the size of the alcoholic beverage market. With the SA alcohol market at R173 billion, one could estimate that the demand for non-alcoholic beverages locally could be as much as R23.35 billion soon. And it lines up with predictions that it will grow at 8.9% per annum over the next few years.

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But it's not only beers and ciders

Initially, non-alcoholic beers, ciders, and wines hit the shelves. But recently local manufacturers have started producing non-alcoholic spirits as well (with even less tax to pay, one can imagine the margins are really attractive).

• Mahala Botanical is a South African distilled non-alcoholic spirit infused with 9 hand-sourced botanicals. As the name ‘Mahala’ (Zulu for free) suggests it’s free from sugar, alcohol, colourants and artificial flavours.
• Abstinence is a range of non-alcoholic spirits and aperitifs inspired by the Cape Floral Kingdom.
• Iconic is another distilled non-alcoholic spirit with its Citric Rose offering made from natural and classic London-Dry (yeah, the London-Dry type gin) ingredients. 

But that’s not all. Overnight e-commerce offerings, Drink Nil and Zero Drinks popped up even retail giant Woolworths has fridges stocked with low and no-alcohol drink options.

This space is set for massive growth and there are opportunities across the value chain here. We will be keeping a sober eye on this space.

IN SHORT

🧙‍♂️ Epic Pass. Private school learners in South Africa (including online learners) who wrote their 2023 matric exams through the Independent Examinations Board (IEB) have achieved a 98.46% pass rate. Will be interesting to see how that compares to the rest of the 2023 Matric class’s results being released today.

🦶 Secured Footprint. Stellenbosch headquartered Entersekt has acquired Modirum’s 3-D Secure payment solutions for an undisclosed sum to help it expand its customer base and secure over 2.5 billion transactions per year.

🍎 Big Apple. Apple has overtaken Samsung as the world’s largest smartphone seller, ending Samsung’s 12-year unbeaten run. Apple ended 2023 with 20% of the smartphone market share, while Samsung grabbed 19.4%.

📈 Good Tymes. TymeBank has become the first digital bank in Africa to reach profitability, and it did so in less than five years. Pretty impressive considering less than 5% of all neo-banks around the world have reached profitability. They are also looking to raise at a valuation exceeding $ 1 billion soon — unicorn incoming.

🛬 Busy Airport. Cape Town International Airport set a new record in December 2023 for the most traffic in and out. Beating the previous record set in January 2020.

🇿🇦 Fight Morning. SA’s very own Dricus “Stillknocks” du Plessis will challenge current UFC middleweight champion Sean Strickland for the title in the wee hours of Sunday morning (thanks Canada) at UFC 297. The main fight will be broadcast on SuperSport (around 5AM) — with English, Afrikaans and isiXhosa commentary. #hulleweetniewatonsweetnie

HOW WOULD YOU BUILD IT?

How to Market Your Startup Like a Guru

If you’re battling with marketing, acquisition, growth, awareness and beating competitors, then this week’s How Would You Build It podcast is for you. We sat down with serial entrepreneur, founder and marketing guru Dave Duarte, to chat about how to market a startup, build the brand and build a community. And it’s solid GOLD.

Some of the best bits…

1. Tell a good story and your marketing is done

Dave jumps straight in with the one hack that does all your marketing for you. He says not to leave marketing to the “arts and crafts” department, build the narrative of what you’re trying to do internally at the core of your product.

Sometimes a single line makes every sale so much easier. Uber’s was so good – “press a button, get a ride/taxi” – that it built the company to mega-scale, and even led to other startups comparing themselves to Uber – “we’re the Uber of the xxx space”. 

It’s your job as founder to figure out what that one line is for your brand. Dave says to make your customer the hero of a story – “They are Luke Skywalker, your product is the lightsaber, get Luke to understand that he needs that lightsaber to save the universe.”

2. Identify your audience by eating your broccoli

Dave says there’s only one reliable way to find your user and that is to get in front of a whole lot of people you think might have the problem you’re solving and have a three-tier conversation: Who they are, What problems they’re facing and then Frame your product as the solution to those problems.

Then comes the acid test: If that person looks you in the eye and says, “Oh my goodness, yes! I want it, right now. Where do I sign up?”. Only then do you have your audience – everyone else is a mom (they like the idea of your product but they will never buy it).

The broccoli part is actually finding those people and getting them to talk to you – via video call or in person.

3. Startup marketing hacks

First off, you gotta actually have a plan and budget to build and test a suite of marketing approaches (channels). Then Dave says you structure it like so…

1. Truths: Expend some of your budget and effort on doing the basics right: Create your story, have an awesome website, get a great product video, and engage with your audience on socials or wherever. Just make yourself look like a company you’d actually buy from. Clients "Look before they eat”, so make sure things look awesome.
   
2. Trends: Test out trending marketing approaches – try TikTok, approach influencers, and run ads and adjust. You never know if you don’t try.
   
3. Trifles: Keep a little bit of budget to do crazy, fun stuff you really want to do. The key is to just have fun – host an in-person event, try something whacky with AI – and just have fun with a bit of your marketing.

Then, bring it all together in a channel-based approach: Try different channels, measure them, see where you have success, double down on those and gradually just build a series of marketing channels that actually work for you.

If you are a founder, you have to listen to this one, we promise it will be worth the 40 minutes.

You can also grab the Spotify and Apple Podcast links on our website here.

THE RESULTS ARE IN

We asked what you mostly need help with in your startup, and market fit and acquisition come out tops…we can help with that btw, so hit us up.

🟨🟨🟨⬜️⬜️⬜️ Securing Funding (23%)

🟩🟩🟩🟩🟩🟩 Market Fit and Customer Acquisition (37%)

🟨⬜️⬜️⬜️⬜️⬜️ Product Development (7%)

🟨⬜️⬜️⬜️⬜️⬜️ Scaling the Business (10%)

⬜️⬜️⬜️⬜️⬜️⬜️ Team Building and Management (0)

⬜️⬜️⬜️⬜️⬜️⬜️ Regulatory Compliance and Legal Issues (3%)

🟨⬜️⬜️⬜️⬜️⬜️ Marketing and Brand Awareness (10%)

⬜️⬜️⬜️⬜️⬜️⬜️ Financial Management (0)

🟨⬜️⬜️⬜️⬜️⬜️ Competition and Market Differentiation (10%)

⬜️⬜️⬜️⬜️⬜️⬜️ Work-Life Balance (0)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Space dust? NASA says it finally managed to open the container with the world’s first actual asteroid sample. It only took 3 months, but already scientists say there are super interesting hydrated organic compounds from asteroid Bennu in there.

In this Open Letter:

• Venture studios: A new way to build a startup in SA.
• Cheaper streaming, magnetic forests & accelerating Africa.
• Easy growth: Ensuring you have the perfect market fit.
• How we like our pocket AIs: The results are in.
• Free stuff: Share this and get cool business tools.

TRENDING NOW

Ultimate Startup Support in SA

In the startup-verse, the harsh reality is that the majority (9 out of 10) don't make it. 

Yet, the prize and thrill of building a successful startup has many wondering, is there a better way? This has led to a whole host of mechanisms to help give as many new startups the best possible shot at making it.

At the core are the grassroots startup development initiatives we all know – accelerators like Y Combinator and Techstars, incubators and VCs to help fund and develop new ideas.

And they all fit together in a specific way:

• Incubators are short-term programmes that validate ideas and help get early traction.
• Accelerators are short-term programs for growth-stage startups (already have an MVP just need to grow) that help them reach a point of raising capital.
• VCs are investors, offering capital to help startups reach their goals.

But there is another, slightly rarer and, some might say, more in-depth type of startup developer. One that acts more like co-founder…

Enter the Venture Studio – a game-changer for startup development

Venture Studios are like the special forces of the startup world. They're not just passive investors; they roll up their sleeves and get involved in building businesses from scratch. 

They employ top people across various disciplines and bring them to the table to help you build while often supplying the funding needed as well – the whole shebang.

1. A scientific approach to building startups
   Venture Studios don't gamble on hunches; they use a structured, gated process for developing and testing hypotheses. This approach allows for the early identification and discontinuation of less promising ventures, thereby focusing resources more efficiently on those with greater potential.

2. They learn the nuances of a startup in a specific territory faster
   By managing multiple ventures at once, they accumulate knowledge rapidly across various sectors and technologies. This breadth of experience means they can avoid repeating mistakes, improving the success rate of new ventures.

3. They share expert skills across multiple startups
   Venture Studios operates several ventures simultaneously, sharing expertise, services, and other resources between them all. This shared model is particularly beneficial for startups that need experienced, yet costly resources early in their lifecycle. In a Venture Studio, these resources are distributed across various projects, offering significant cost savings and synergies.

4. Opportunities for older founders
   Contrary to popular belief, the typical successful founder isn't in their early 20s, but rather closer to 45 – experienced but often burdened with responsibilities that make high-risk ventures less feasible. Venture Studios offers a solution here: They provide roles like venture architects or venture owners, allowing “startup founders” to earn a salary while working on startups. While this might mean less equity than founding a startup independently, it also means less risk and a steady income — nice.

The numbers speak for themselves 

Startups backed by Venture Studios have shown impressive Internal Rates of Return (IRR) – around 53%, compared to 21% for those backed by traditional VC funds.

In the South African eco-system, you have companies that do venture services like Specno who assist startups, corporates and scale-ups in building ventures. And then there are those like The Delta that have a hybrid model of building some of their ventures internally whilst also helping corporates build their ventures.

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A new way to build

But, you often get the best results when a studio builds along specific verticals… 

This way they create synergies between startups that complement each other. Put a large corporate in the mix that has many problems to solve and opportunities to unlock and you might just create a powerhouse for SA startup creation.

And that’s exactly what's happening over at Next176. 

Backed by Old Mutual, they’ve set up their own Venture Studio to create disruptive and innovative businesses as well as invest in growing startups — a hybrid model. And they have lofty goals – to positively impact a billion African lives – by focusing on consumer-led products in the Health, Education, Jobs, Business Ownership, Debt Management and Environmental Sustainability space. 

Heck, they’ve already invested a collective R84 million into tech-driven startups like Kena Health and JOBJACK. And they say they are also building a bunch of new startups internally with some exits on the horizon.

So, with VC funding drying up, perhaps venture studios are the future of building startups in SA. We can see them having a major impact on the local ecosystem. We are watching this space.

IN SHORT

🫰 Cheaper Streaming. Showmax subscribers in SA can expect to pay 10% less on its monthly cost when it launches the much anticipated Showmax 2.0. Showmax is set to cost R89/month, while its mobile offerings are also set to be similarly discounted.

🦈 Magnetic Forests. A South African startup, SharkSafe Barriers has come up with an innovative, safe way to deter sharks from popular beaches: an array of flexible pipes that mimic a kelp forest (sharks steer clear of them) with magnets inside that disrupt sharks’ electromagnetic receptors.

🧴 Iced Sunscreen. Scientists at the North Pole have found traces of sunscreen in the snow after collecting glacier samples from the Brøggerhalvøya peninsula. Pretty interesting considering the sun doesn't shine there in winter, and could point to long-range atmospheric transport from contaminated air masses from Eurasia.

👟 African Acceleration. Pan-African venture capital firm Norrsken22 has opened up applications for its eight-week Accelerator Program for African startups. The program offers upfront funding of $125,000, as well as interactions with unicorn mentors and leading investors. Apply here now.

📵 Hanging Up. Mobile Virtual Network Operator (MVNO), Lyca Mobile has ended operations in SA, 6 years after entering the market. Lyca Mobile is one of the largest MVNOs in the world, with operations in some 60 international markets.

🌍 African Expansion. FirstRand is looking to acquire banks in the other African countries it operates in to capitalise on the rapid economic growth in other countries on the continent.

BUILDER’S CORNER

How to Make Sure You Have Market Fit

We often speak about product-market fit, which is just building the right product, the one the market needs most right now. And, generally, the market rewards you by buying it.

Startup guru Brian Balfour actually breaks market fit into 4 distinct categories. Each with its own exercises, measures and methods.

So, if you’re pretty far along and have a product already, this is one to pay attention to. (And if you’re still building, keep it in mind as a place to build towards.)

Nailing all 4 Market Fits

1. Market-Product Fit

How to Check: It’s sorta the opposite of product-market fit, in that this time you check to ensure that the market you’re targeting is the ideal fit for your existing product.

Do some surveys to gauge how well your product meets their needs – try the “bait” survey to find your superuser. And then look at customer satisfaction, retention rates, and your Net Promoter Score (NPS).

How to Get It: If you don't have Market-Product Fit, consider pivoting your product features based on customer feedback. Niching down on a specific segment of the market should do the trick. Find a few segments to test and see if you get better feedback, retention and NPS scores among those niches.

2. Product-Channel Fit

How to Check: Analyse the effectiveness of different marketing channels (Google VS social networks, Facebook VS Linkedin, Instagram VS TikTok, email VS app etc.) in reaching your ideal customers. 

Look at your customer acquisition cost (CAC), conversion rates, and engagement levels in each channel. Your best channels are the ones where you have the best possible CAC.

How to Get It: To improve Product-Channel Fit, test different marketing channels and strategies. Optimise your messaging for each channel and focus on those that bring the highest quality leads at the right cost.

3. Channel-Model Fit

How to Check: Now you need to check if your business model works with your sales and distribution channels. How profitable is each channel for you? And then, how scalable is that channel? 

Consider the lifetime value (LTV) to CAC ratio you get from each channel. You ideally only want to spend a low percentage of 20—30% of LTV as CAC, so look at the channels where you think that’ll be possible. Then, also analyse channels based on sales cycle length – the faster you can get to the sale, the better.

How to Get It: If you’re spending too much to acquire new customers, there’s only one of two options: 1) Find different channels that work better with your business model, or 2) Adjust your business model, pricing strategy or sales approach to better leverage existing channels.

4. Model-Market Fit

How to Check: Assess if your business model is sustainable and scalable in the market you’re currently targetting. If you niched down, check that the niche is big enough, reachable enough and able to pay in your competitive landscape.

If yes, great, go for it. If not, you’ll have to find a way to increase your potential market to unlock growth.

How to Get It: If you lack Model-Market Fit, you could try and discover a newer, larger market – though that’s easier said than done, and takes you back to Step 1.

More often than not, model-market fit might require you to pivot your business model. Maybe you can change your revenue model, target a different market segment, or adapt your operations to better suit the reality of the market (i.e. slim down operations until you are profitable in the current situation).

See how to reverse-engineer startup success.

Got a market fit hack to share? Hit reply and let us know…

THE RESULTS

We asked whether you’d use an AI pocket assistant like rabbit r1, and most people haven’t found a use for it just yet…

🟨⬜️⬜️⬜️⬜️⬜️ 👍 Already ordered mine (15%)

⬜️⬜️⬜️⬜️⬜️⬜️ ✍ My human personal assistant will do just fine (4%)

🟩🟩🟩🟩🟩🟩 🤷 I really don’t know how I would use it (48%)

🟨🟨🟨🟨⬜️⬜️ 💥 This is the beginning of the end of the world (33%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Remember when…? If you’re in tech, it’s always cool to look back at how far we’ve come. Now you can check the main tech advances in the year of your birth. (For everyone born after 1970, though.)

In this Open Letter:

• On trend: The future of human-machine interfaces.
• AI-friendly chips, deeper diamonds & SA’s e-commerce battle.
• Kickstart: Building a tech company in 2024.
• The tech presidents need: The results are in.
• Tell someone: Share this & get free business tools.

TRENDING NOW

The Future of Human-Machine Interfaces

Steve Jobs made a historic trip to Xerox's Palo Alto Research Center (PARC) in December 1979. It’s famous because here he would be introduced to several revolutionary technologies, including the computer mouse and the graphical user interface (GUI). 

Steve knew immediately what he saw would change computing forever – an intuitive way for humans to communicate with computers. 

Because, before GUI, the way we talked with computers was a bit of a mess…

And Apple ended up shaping much of the world as we know it today by releasing GUI (with keyboard and mouse) in 1984, along with its operating system, Macintosh. 

Microsoft followed suit, releasing Windows and finally gaining success with Windows 3.0 in May 1990. A move that would set up Microsoft as a global leader in software.

Over the next 30 years, user experience design and user interface development have become massive industries. There are millions of designers and developers working daily to create interfaces for humans and machines to engage.

Talking tech

However, at its core, user interfaces are simply the communication layer between humans and computers. It’s a mechanical way for us to translate our human instructions into code, so the computer can display data in a way that’s helpful to us – a simple concept that spawned entire UI-based industries.

But when computers innately start getting better at understanding what we want from them, we might not need all of these interfaces anymore. 

Now, you might be familiar with Large Language Models (LLM) that’re used in innovative AI tools such as ChatGPT. Enter LAM, a Large Action Model that enables a computer to execute tasks humans normally do.

Introducing Rabbit

The rabbit r1 is a pocket-size AI companion built on the world's first LAM operating system. It was announced a few days ago at CES and, on its first day, it already sold 10‘000 devices at a retail price of $199.

The LAM operating system connects to an online vault where you can give it access to your online accounts such as Uber, Airbnb, etc and it can then execute complex tasks on your behalf by simply following your voice prompts. 

Not quite replacing the phone, and likely more playing in the personal assistant space. But what it's doing is challenging the status quo in how we interact with computers. 

In fact, it probably won’t threaten all the user interfaces we know and love just yet. But we do think that, just as Steve Jobs got excited about the mouse and what it could do, LAM is going to play a big role in human-machine interaction in the future. 

This might just be the start of an exciting new tech journey… and we’re definitely watching this space.

IN SHORT

🖋️ Kenya Startup Bill. Kenya’s president will sign Kenya’s Startup Bill 2022 into law by April 2024. The bill will set out to provide employment opportunities for Kenyan youth, provide tax breaks and access to platforms to access information and support, as well as a credit guarantee scheme.

🔨 Battening the Hatches. Things are hotting up in the local e-commerce battleground as Naspers boosts investment into Takealot in anticipation of global e-comm giant Amazon’s arrival on SA shores this year.

👨‍💻 Consumer Electronics Show. CES 2024 kicked off in Vegas this week and showcased all of the upcoming incredible tech set to hit the streets including the next generation of laptops, tablets & handhelds powered by AI-friendly chips, transparent TVs from Samsung & LG, and Honda’s global EV series Honda Zero.

💎 Diamonds are Forever. Diamond behemoth De Beers and the government of Botswana have approved the $1 billion deal to dig under the world’s richest diamond mine Jwaneng, to extend the life of the mine by 20 years and haul out up to 9 million carats per annum.

🤑 Taken for Granted. South Africa has 28 million grant recipients, nearly 12x as many as in 1994 and 4 times as many as the 7.1 million taxpayers.

🌝 To the moon? The Securities and Exchange Commission (SEC) has approved 11 exchange-traded funds (ETFs) that hold bitcoin (BTC).

HOW WOULD YOU BUILD IT?

Building a Tech Company in 2024

If you’re amped to build something innovative in South Africa this year, then this week’s How Would You Build It podcast is for you. We spoke to the ever-vibrant Zanele Matome, founder of Welo Health, and she has some remarkable insights into building a MedTech, as well as some awesome general startup advice.

Some of the highlights…

1. Taking the leap & being bold

Zanele says she was in a mining job when the entrepreneur bug bit her. Then, engaging with some people in tech inspired her to want to head to Silicon Valley, to immerse herself in what tech was all about.

However, as she explains here, Zanele had nothing but the clothes on her back when a “happy accident” with the old car she was driving gave her an insurance payment just big enough to cover a plane ticket to San Fransisco. So She risked everything and went – a move she credits as enabling her to come back to SA and build Welo Health.

2. Build up your core tech team internally

Zanele explains that she’d made the strategic decision early on the outsource most of their development but regrets not building an internal tech team when they had successful funding rounds.

Having an internal dev and CTO, made up of people who are inside the company and share your vision is key, she says. 

3. Be smart about managing your cash flow 

Zanele also has some great insights on managing startup money. She advises, as a startup getting corporate or government contracts, to negotiate faster payment options – even if you have to lose up to 50% of the contract value just to get them to agree, getting paid faster is more important in the early days, she feels.

Then, she recommends saving and building up a windfall of 6 to 12 months of operational expenses in the bank as soon as possible and advises every founder to think twice before making any hires.

You can also grab the Spotify and Apple Podcast links on our website here.

THE RESULTS

We asked what tech you think politicians need, and of course like 60% of us said tech to improve their delivery 😜

⬜️⬜️⬜️⬜️⬜️⬜️ 🗳️ Tech to win more votes (8%)

⬜️⬜️⬜️⬜️⬜️⬜️ 📨 To answer my requests (3%)

🟩🟩🟩🟩🟩🟩 💪🏽 To actually do something (60%)

🟨🟨🟨⬜️⬜️⬜️ ⚖️ To be less corrupt (29%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🌿 They don’t need tech (0)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

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Hi

Posh flush? There goes the maxim of Alexa “doing everything for you” ‘cept wipe. This new smart toilet comes with an Alexa-enabled bidet, so you can ask her to “spray” and she’ll keep you clean.

Welcome to all our new readers!

Wow, what an amazing start to 2024 – 200+ new signups in just the last 5 days. So if this is your first newsletter, welcome! A quick recap of what we do:

• We send 2 newsletters every week, Tuesdays and Fridays.
• For each newsletter, we pick relevant business/startup sectors.
• The spread of topics is to accommodate different industries
• And the purpose is to give you great insights and ideas for the work you do.

We often find very niche and previously unknown opportunities in strange places, like today’s “business and politics” focus. Next time it will be something else, just as crazy, but always backed up by data.

Hit reply and let us know how you like it!

Let’s get into it.

In this Open Letter:

• Smart moves: Business opportunities in politics.
• Blimp funding, volcano drilling & cashless Woolies.
• Founder focus: How to avoid startup theatre & build something solid.
• SA’s best startup sector: The results are in.
• Free stuff: Share this and get cool business tools.

TRENDING NOW

The business of politics

Half the world is heading to the polls in 2024, including us here in South Africa. And democracy and progress aside, elections are big business.

Although official numbers are hard to come by, it appears big political parties spend anything from R550m to R1bn on election campaigns. (Cyril Ramaphosa apparently spent in the region of R400m to become president of the ANC).

In the 2019 national elections, every ±40 000 votes resulted in one seat in parliament. For the DA’s R550m they spent, they gained 3,622,531 votes nationally. That’s R151 per vote or ±R6m per parliamentary seat. 

Incidentally, that’s about the 5-year salary of a member of parliament.

Where do they get money?

• Investments: I.e. Chancellor House is ANC’s investment vehicle.
• Donations: Which by law needs to be declared — you can track all of them here on a very cool dashboard.
• Companies paying for things on their behalf (not quite legal, but likely happens) — these ones aren’t tracked.

Want a slice of the campaign budget? Offer something to get that cost per vote down (it’s like CAC, but for political parties — CoV?). And whilst traditionally T-shirts and KFC vouchers played a key part, it’s likely more and more the online narrative will influence voting patterns. 

So, a few billion rands will be spent this year, but where are the opportunities? 

Intelligence

Channel campaign messages and budget in the right area and you will certainly get the cost per vote down. This is where intelligence ventures like Murmur can capitalise – being able to map and predict online trends and sentiment using big data and AI. Analysing hundreds of thousands of online conversations, these guys can tell politicians where to focus their attention and money.

Campaigns

Manufacturing T-shirts and banners might not get you paid (at least not until the next election), but digital services for campaigns or even the operating system for the election campaign payment terms are likely different. 

Stellenbosch-based, PlusPlusMinus built a suite of campaign management tools for the DA and has spun it out as a standalone product for political campaigns used in various countries across the world.

Management

Nothing buys a cheap vote come the next election better than performance. So performance management software, tailored for political parties, can do a whole host to help those who are serious about service delivery to track and monitor their reps.

With billions to be spent in the next 6 months on wooing voters, opportunities abound. You know what to do… we will be watching this space…

IN SHORT

🎈 Soaring High. Local blimp startup Cloudline has raised $6 million in a funding round led by an ex-Google VC and a couple of pan-African funds in a bid to become the leader in carbon emissions-free autonomous flights.

🌋 Hot Stuff. Scientists in Iceland are going to drill not one, but two boreholes into a magma chamber – the first journey to the “centre” of the earth to give the first direct measurement of magma and to potentially supercharge geothermal power.

🥶 Funding Winter. Looks like it could be a long, cold winter for startups in SA as the impact of the US economy continues to be felt on SA shores. With the interplay between the rand, dollar, the Fed as well and US interest rates impacting the available capital for emerging markets, it might be time to look further afield for those cash injections.

⚽️ Turned Tables. The SABC has (finally) managed to get one over MultiChoice & SuperSport after it secured the broadcast rights for the Afcon 2023 football tournament set to kick off in a couple of days.

🚫 Cashing Out. Woolies have announced that their WCafé’s will be going cashless from the 16th of January and it’s caused a bit of a stir on X and other social media platforms.

BUILDER’S CORNER

How to Grow a Next-Gen Startup

So, you were excited about building a startup the Silicon Valley way: You know, develop an idea, convince a bunch of investors to bet loads of money on it, hire lots of people, take years to develop it, borrow some more, grow to unicorn status… and then hope to someday get a payday…

Experienced founders in The Open Letter say that things don't always work out as you expect, and investors are not foolish enough to invest in every idea.

We’ve said a few times: There are other ways of building something truly amazing. But, just in case you think we’re full of it, you should know this line of thinking is not unique to South Africa.

Canadian founder Pierre Sabbagh shared this insanely sobering post on LinkedIn. So we thought we’d use it for today’s Builders Corner.

The Experienced Founder’s Advice to First-Timers

1. Steer Clear of the Startup Hype

Don’t get swept up in the glitz of startup culture of having to constantly raise money. Focus less on fundraising and remember, a startup's worth is not in its perceived glamour but in its real business value.

2. Embrace Bootstrapping

Start with what you have. Use your own funds and invest your own time and effort. Look into government grants for initial support if need be (check the TIA seed fund grant or some of the SEDA programs). This self-reliant approach breeds resilience and creativity.

3. Build a Compact, Capable Team

Resist the urge to hire too early. But do outsource tasks that aren't core to your business. Rely on your founding team for critical operations. A lean team is nimble and more manageable.

4. Product Development: Think Before You Code

Before diving into product development, take a step back. Reconsider your initial ideas. Hold off on writing code until you have a clearer picture of what is truly needed. Validate the idea first, then make sure the market actually wants (and will pay for it) before you try to build anything scalable.

5. The Importance of 'The One Customer'

Find that one customer who can be a real partner in your journey. Someone willing to share insights into their business pains, challenges, and gaps in existing solutions. This relationship is invaluable for targeted product development.

6. Craft and Refine Your MVP

Develop your Minimum Viable Product (MVP) in collaboration with this first customer. Offer them a significant discount, but avoid giving away your product for free. This approach ensures real-world feedback and a committed early adopter.

7. Expand Through Referrals

Utilise your first customer’s network for growth. Each new customer brings opportunities for learning and product refinement.

8. Focus on Revenue from the Outset

Prioritise generating revenue from day one. Grow your business sensibly, without the pressure to expand rapidly. Always keep an eye on your financial health.

Some absolute Gold in there. Great principles for almost any new business. How are you tracking with them, what do you need to start (or stop) doing in 2024? Hit reply and let us know.

THE RESULTS

We asked which startup sector in SA has the most potential in 2024, and AgriTech seems to be the hot new favourite…

🟨🟨🟨⬜️⬜️⬜️ FinTech (13%)

🟨🟨⬜️⬜️⬜️⬜️ AI (9%)

🟩🟩🟩🟩🟩🟩 AgriTech (23%)

🟨🟨🟨⬜️⬜️⬜️ EdTech (11%)

🟨⬜️⬜️⬜️⬜️⬜️ InsureTech (5%)

🟨🟨🟨⬜️⬜️⬜️ GreenTech (13%)

🟨⬜️⬜️⬜️⬜️⬜️ HealthTech (6%)

🟨🟨⬜️⬜️⬜️⬜️ E-commerce (9%)

🟨🟨🟨⬜️⬜️⬜️ A brand-new sector I'm creating (11%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Good year so far? Hundreds of partiers who booked a special time-travelling flight to celebrate the New Year twice (you know because the Earth is round like that) got a bit of a letdown when the flight was delayed just enough for them to miss 2nd New Year by a few minutes.

Heh heh.

And, with that, a happy New Year to you. We hope you had an awesome rest over the holidays and you’re ready for 2024. Because big things are happening this year.

Here’s how to be a part of them…

In this Open Letter:

• Startup changes: Big predictions for 2024
• Inflatable Wi-Fi, pocket AIs & talent wars.
• Savvy start: Building your product around its marketing.
• The results: What we’re most looking forward to in 2024.
• Tell someone: Share this & get free business tools.

TRENDING NOW

How startups are going to change in 2024

In 1929, amidst the tumult of the US stock market crash, Walt Disney and Brother Roy founded the Walt Disney Studio. 

This bold move marked the beginning of what would become a legendary entertainment empire.

Similarly, during the closure of a 16-month recession in the 1970s, a young Bill Gates and Paul Allen launched Microsoft, setting the stage for a technology revolution. 

Moving to more recent history, the aftermath of the 2008/2009 global financial crisis became a fertile ground for innovative startups like Airbnb (2008), Uber (2009), Slack (2009), WhatsApp (2009), and Instagram (2010).

So, does the birth of great companies require the backdrop of a recession? 

Not necessarily. However, the unique challenges posed by financial downturns often create conditions ripe for entrepreneurial innovation.

Loads of available experienced talent 

In 2023, the tech industry experienced a record number of layoffs. This surge of available talent, often at the lack of options is willing to work for less (or be compensated with equity) and is ideal for startups seeking talent. Some of these individuals might finally get the nudge to start that startup they have been wanting now that they have the time to do so. But that’s not all.

Creative funding models

Funding patterns also shifted. In 2023, venture capital investments in Africa fell from around $5 billion in 2022 to approximately $3.2 billion. While funding is often crucial for rapid growth, its scarcity can hone a founder's focus and drive more frugal, effective strategies – a key ingredient for long-term success.

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The Resurgence of Lean

And let's not forget how the economic constraints back in 2008 paved the way for one of the most significant startup movements of the 21st century: The Lean Startup. 

Coined by Eric Ries and popularised in his 2011 bestseller, this approach shifted the startup mindset. Traditionally, companies would spend millions to fully develop their products before launching and then only seek customer feedback — often completely missing their market’s needs.

The Lean Startup methodology, advocates for building quickly, measuring user engagement, learning from it, and then iterating. Once a necessity, this cycle has now become a widely adopted practice.

A new kind of startup in 2024

As we navigate through this economic turmoil (maybe even recession?), we're potentially on the cusp of witnessing the birth of some of the most significant startups in recent years. And if you are building something, be sure to tap into the knowledge and learnings that founders will be sharing over the next 24 months.

Our big prediction for 2024? Startup founders will shift from trying to raise funds to building lean, call it Lean Startup 2.0. And as always, we are watching this space….

IN SHORT

⭐ Star Recruits. Of the 5% of the world’s population not yet covered by mobile internet, half live and work in sub-Saharan Africa and SpaceX is about to turn up the heat in this area. They are actively recruiting a global licensing and activation manager for Starlink, its satellite internet service.

🎈 Inflatable Wi-Fi. But they are not the only ones going after this market, The World Mobile Group, in partnership with Vodacom, is trialling tethered balloons that provide internet in rural Mozambique.

🤖 Pocket AI. Samsung is set to launch its latest phone – expected to be the Galaxy S24 with the Samsung Unpacked live stream event on 17 Jan. And it looks like Samsung will be going hard to bring AI into its smartphones if the teaser “Galaxy AI is Coming” is anything to go by.

🪖 Talent War. Local corporates are finding it increasingly harder to get talented, skilled workers as professionals are emigrating or generally dissatisfied with their jobs. The increasing shortage of skills doesn't only impact the relevant industries, but the broader economy as well.

🏖️ Holiday Planning. If the memories of your December holiday are already fading away, take comfort in the fact that South Africa will be getting 2 extra Public Holidays this year. First up will be the expected Public Holiday for Election Day (around May), followed by the observation of Youth Day which falls on a Sunday this year (16 June).

BUILDER’S CORNER

How to Build Your Product Around Your Marketing Strategy

A recurring theme among SA startups is that they tend to battle a bit with marketing.

And it rings true, a lot of founders we talk to build amazing products and then only at the tail end of production ask: “Well, how are we going to market this thing?”

And, in some dealings with local ecosystem players, we started exploring the idea of actually building products around well-developed marketing strategies.

It makes sense because then you can build with your marketing plan already in mind.

In fact, that’s very much how we at The Open Letter build our products, so we thought we’d share some insights…

4 Steps for Building Around a Marketing Strat

1. Nail down your core customer before you start

Most founders do a quick validation, then jump straight into development and only look at user journeys once they get to UX/UI.

We’re saying reverse that and do way more in-depth market research beforehand. A more thorough validation, if you will. 

What’s more, see if you can’t get a lot more info on your various customers, segments, individual needs, preferences and – most importantly – where to reach and influence them (which channels).

2. Craft your value proposition first

Next, try to reach some of those customers and sell them on the idea.

Engaging with your actual audience helps you figure out what resonates with them, what language works and what doesn’t etc. Conversations, interviews and surveys are your friends here.

Take all of that and start building out your messaging, defining your brand and playing with ways to convert.

3. Optimise your product to integrate with marketing channels

Building your product, brand and technology to align with your chosen channel(s) lets you deliver your product or aspects thereof where your market is most active.

It actually helps to build product and marketing together, and then allow them to inform each other…

4. Test & build in feedback loops

As an example of how marketing and product can inform each other: Our first MVP version of The Open Letter was built on a platform with certain features.

But, as we rolled out our marketing, we learnt that we’ll need to double down on a specific conversion mechanic which our existing platform didn’t offer.

This allowed us to very quickly and early on switch to a different platform that’s been way more successful for us, helping drive down CAC and boost growth in one fell swoop.

If you want to chat about building better products, smarter, set up a strategy session with us.

Got a building or marketing hack to share? Hit reply and let us know…

THE RESULTS

We asked what you’re most looking forward to in 2024, and we can’t wait to see what innovations the new year will bring…

🟨🟨🟨🟨⬜️⬜️ More AI stuff (22%)

🟨🟨⬜️⬜️⬜️⬜️ The 2024 SA national elections (12%)

🟩🟩🟩🟩🟩🟩 Launching/Scaling my Startup (31%)

🟨🟨🟨🟨🟨⬜️ The incoming post-recession bull market (27%)

⬜️⬜️⬜️⬜️⬜️⬜️ More Open Letter memes (4%)

⬜️⬜️⬜️⬜️⬜️⬜️ The Open Letter community launching 2024 👀 (4%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there

Space to breathe? Since Jeff Bezos plans to move humanity into massive cylindrical space habitats, have a treat and watch an actual physicist with almost 1 million followers explain in the most sci-fi way possible what other insanely cool things we could do in space cylinders. (Plus: check out his other vids for crazy futuristic tech ideas.)

In this Open Letter:

• Remixed: Big startup movers and shakers.
• Best airports, Apple-tinted goggles & a slice of the big tech pie.
• Where we cut & trim: The latest results are in.
• Free stuff: Share this and get cool business tools.

TRENDING NOW

Greatest Startup Hits of 2023

Well, it’s (almost) a wrap. 2023 is done and dusted. 

And we’re getting ready to take a little break ourselves:

• Today, 22 Dec will be our last newsletter for the year – we hitting the beach soon. 
• Don’t worry, though, we’ll be back in the first week of Jan.

So we thought it’s a great time to highlight some of the most interesting movements in the startup space in SA this year.

FinTech in SA is alive and kicking

The financial services sector is big in SA – it contributes some 14% to our GDP — ±R650 billion per year. Now, it’s hard to build a FinTech, and it needs a lot of money, but pull it off and you’re building something massive. 

And the space has seen some big rounds of fundraising this year:

• Peach Payments – raised $31 million in April.
• Revio – raised $5.2 million in September.
• Stitch – raised $25 million in October.

This space is heating up, and we’re excited to see what’s gonna go down in 2024. 

Did you miss our fintech feature? Read it here.

A silent unicorn

African startup bros love talking about unicorns. And they often list and talk only about VC-backed unicorns (a tech startup with a $1 billion valuation). 

But, without too much VC hoo-ha, SA mobile network operator Rain has quietly become a unicorn in less than 6 years of operating. 

It’s a great example of what can happen when you go all-in on new tech (5G) in an established industry.

However, Starlink is coming (eventually) and is said to be rolling out plans for satellite-to-phone networks, meaning you don’t need them towers. 

This space is only set to get more interesting.

Missed our Rain feature? Read it here.

The informal economy is pumping & perhaps we’re not all that unemployed?

GG Allcock set SA abuzz with some research he did on the size of the informal economy – R750 billion a year. And whilst many claim they don’t pay tax unless they’re selling counterfeit products (those fake lemon twists that recently hit the news), they’re likely still paying VAT. 

But will we see the government making moves to introduce more taxes here after the 2024 elections? Won’t be popular, but a competent government can do a lot with that tax money to improve services in the informal sector.

What’s more, there are major opportunities for tech to play a big role in supercharging these informal businesses.

Did you miss our informal economy feature? Read it here.

The new insurance companies are here

Big data is any actuarial scientist’s dream. And as these models and processing power get better and better, more innovative insurance models pop up. Not to mention how LLM can improve customer service and operational efficiencies.

All this means more competitive products, better margins and all-around better value for everyone (if more people have insurance, insurance can get cheaper for us all). 

With 70% of cars on the road being uninsured, there is a lot of opportunity here – ±7 million customers in waiting.

And it does make sense that there are some big rounds of funding in this space:

• Naked – digital insurance platform raised $17 million in February
• Pineapple – digital insurance provider raised $22 million in November

Did you miss our neo-insurance feature? Read it here.

It’s all coming down to 60 minutes

Checkers Sixty60 has recently set the pace for grocery delivery in SA – which others like Woolies Dash, PNP Asap and Spar2u have had to follow. 

The challenge for the newcomers is that grocery delivery typically competes with smaller convenience stores (think PNP Express, QuickSpar or The Woolies Food at Engen garages) which is traditionally not a market Checker’s focussed on. 

So, whilst Checkers is pulling in new customers they otherwise didn’t reach (quick, small-basket convenience buys), the other retailers joining in are simply serving their existing customers in a new way (likely just to stop the bleeding caused by Sixty60). 

So we’d say it's round 1 to Checkers. But don’t expect Woolworths, PNP and Spar to take this lying down – things are likely to heat up in this space in 2024.

Did you miss our Sixty60 feature? Read it here.

The Open Letter

As for us? We were up to a whole lot in 2023. Here are some stats:

• 100k+ words written over 77 Newsletters.
• 160k impressions on our emails.
• Grew our active subscribers from a few hundred to 4200+.
• We maintained an average open rate of 39% and click-through rate of 9%.
• Our podcast, How Would You Build It, had 43 episodes generating 748+ hours of listening in total.
• And we created and shared roughly 198 glorious memes across all our publications and channels.

All and all, we had a great time. Thanks for reading and listening. We wish you a Merry Christmas and a highly successful 2024. 

Want to give us (or a friend) a Christmas gift? Share the newsletter with someone you think will enjoy it.

See you in 2024 🥳 🚀

IN SHORT

🚗 Tesla Recall. Over 2 million Teslas in Murca & Canada have been recalled (nowhere else), for an over-the-air software update. Seems like some drivers think Tesla’s Autosteer is an Autonomous System (it’s not). It’s a semi-autonomous system meaning that while Autosteer can handle accelerating and vehicle steering – it still requires a human to keep an eye on things.

🥧 Piece of the Pie. Tired of Google, Apple and Meta making ad revenue from your content? The Competition Commission has invited comments on its investigation into the imbalance between large digital platforms like Facebook, Google and Apple, and South African news publications. We might just fill this one in.

🥽 Apple-tinted Goggles. Production of Apple’s mixed-reality headset, The Vision Pro is running full steam ahead, with the launch set for February 2024. Said to be one of the most complex launches – the headsets come in multiple sizes and configurations that need to be fitted to the specific user’s head - not to mention the additional accessories needed.

✈️ Flying High. With over 4’000 airports in the global database of AirHelp Inc., together with survey data compiled from nearly 16’000 passengers, we now know the world’s best and worst airports. And what do you know, SA is in the mix.

🛰️ Starlink-ed Africa. Eswatini is beating us. It has become the 8th African country to have Starlink launched. And from only R1’070 per month, the low-orbit satellite fleet is offering wide, fast and stable internet connectivity to folks in rural areas where network operators have found it difficult to service.

THE RESULTS

We asked where you get your hair cut, and the mall barber/salon still takes the crown – now go build some tech for it…

🟨🟨🟨⬜️⬜️⬜️ ✂️ I cut/shave myself (20.5%)

🟨🟨⬜️⬜️⬜️⬜️ 💇‍♂️ My wife/husband (18%)

🟨🟨🟨⬜️⬜️⬜️ 💈 I got a guy in Ekasi (20.5%)

🟩🟩🟩🟩🟩🟩 🪒 Fancy barber/salon at the mall (41%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🧔 I don’t cut my mane, ever. (0)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi

Imagining stuff? “BrainGPT” can now read your mind directly and turn it into text on screen. Great, we were getting sick of using our thumbs anyway.

In this Open Letter:

• Clear cut: A wide-open SaaS market in SA.
• 1 Billion for Xmas, Musk University & 100 years of radio.
• Dream team: Assembling the right skill set.
• The results: Who’s writing the code of the future.
• Tell someone: Share this & get free business tools.

TRENDING NOW

The Barbershop-SaaS Run

Building a successful SaaS (software as a service) business in SA is complicated.  

When you’re selling SaaS to corporate SA, you’re up against international players with deep pockets and often well-developed products and track records. I mean, as much as we want them to buy locally, who can blame them for picking foreign providers with established, low-risk products?

And those SaaS consultants are so slick.

However, there is a segment of the market which is underserved when it comes to SaaS in SA – small to medium-sized businesses (SMEs). 

Not agencies and tech companies. No, think SMEs like laundromats, carwashes, barbers and beauty salons. It’s slick ‘cos they’re normally not digital natives and probably don’t browse the internet buying international products to improve their operations.

The Barbershop Business Model

Their business models are relatively simple – cover your monthly expenses (rent, wages, electricity, water, etc.) and the rest is almost pure profit. I.e. let’s say your expenses are R50’000 a month, and you do a standard haircut at R250; after 200 cuts, your margin per cut is almost 100% (given that service costs are negligible). 

What can such a SaaS product do:

• Drive more bookings through better service to customers and using tech.
• Plan resources better (when to have how many staff to optimise for income).
• Using intelligence to offer discounts or promotions in times of lower volumes.
• Collect payments (for convenience, but also to boost the product’s ARPU).
• Offer unique business models – monthly subscriptions and sell products (all great for the products ARPU).

All to make the business hit the cashflow breakeven point sooner, maximising profit.

Zoning in on barbershops and hair salons

SA doesn’t have great industry stats, which is a shame – it could help entrepreneurs find opportunities way easier.  But for a start, GG Alcock estimates the informal economy’s hair salon industry at R10 billion and some internet scrapers claim there are ±3’300 hair salons and ±1’000 barber shops in SA.

Sizeable but there is even more room for growth. In the UK, there are roughly 19’000 barber shops. Now with an employed population count of 33 million, that’s one barbershop for every 1’684 employed citizens. Or, comparing it to their GDP, that’s 1 barbershop for every $165m generated in their economy. 

Mapping that back to SA, the demand could be anything from 2’500 (by GDP per barbershop) and 9’200 (by employed citizen per barbershop) and that’s not even counting the hair salons!

So, who is onto it?

Whilst there are international SaaS solutions such as Fresha that South Africans can use, you can’t help but feel a local player can serve the SA market that much better. 

Especially since a solid in-person and on-the-ground sales effort is probably how you’re gonna get the most adoption in this space (just ask Yoco!). 

That might just be an opportunity that DNKO can jump on. In its first year of operations, they managed to book more than 1’000 appointments for their clients.

Early days, but with a sizeable, growing market and little local competition, they might just be onto something.

IN SHORT

🕹️ Fly From Home. ASL Aviation Holdings, owner of several airlines including local Safair and FlySafair, is running trials on pilotless cargo planes with Reliable Robotics over the San Francisco Bay Area. And while there was no pilot on board, the test flight was piloted remotely from Reliable Robotics’ control centre 80 km away.

💳 Tap-and-Go. Remember how back in August we ran a Poll about how Open Letter readers like to pay and an overwhelming 41% voted “Tap-and-Go with card”? Well, Safaricom is set to issue 60 million of its mobile money platform M-PESA users with physical plastic Visa cards to provide Tap-and-Go payments to their customers.

🎓 Chancellor Musk. Elon Musk is set to open a university based on his recent tax filings that show he donated $100m to his charity, The Foundation, to establish a primary and secondary STEM school in Austin, Texas. The school will primarily be funded through donations and tuition fees.

👎 Shrinking Tech. The global tech scene has already seen a 50% increase in tech layoffs in 2023 from last year, with nearly 250k jobs lost. With everyone from Google, Amazon, Microsoft, Yahoo, Meta, and Zoom right the way through to smaller startups affected, here is the list.

💯 Radio 100. Radio in South Africa just turned 100 (yesterday – 18 December 2023). Happy Birthday to the still universal mass medium in SA and the most popular and pervasive medium on the African continent. Here’s to the next 100 years of Taylor Swift, Opinionated DJs and annoying, repetitive radio ads. 

⏪️ Reversed Sale. After mounting pressure from UK & EU regulators, Adobe’s $20bn deal to buy out Figma has fallen through. But Adobe has to pay a “reverse termination fee of $1 billion”. Now that’s gonna be one lekker Christmas party.

BUILDER’S CORNER

A Team with the Right Skill Set

You got your idea (or getting there) and it’s time to get going – great! Now, how do you set yourself up with the right skill set/mix of people?

Well, inspired by Paul Graham’s original hackers & painters analogy, and looking at the 3H concept of what any startup needs right at the beginning, we propose building your startup around 3 core functions/roles.

These could be your first 3 employees, or – more likely – 3 founders or a mix thereof. Either way, these are the 3 skills you likely need to start strong.

Your First 3 Team Members

1. The Hacker

This is your coding guru. The Hacker's role is to develop and deliver code swiftly, turning your vision into a tangible product. Speed and efficiency are their mantras, and they thrive on bringing technical solutions to life. Now don’t confuse the “hacker” with someone who has stolen money from your internet banking or even with a normal software developer. The “hacker” in this instance refers to a kind of software developer who is extremely creative in moving fast (i.e. hacks things together) and is adept at taking the shortest route possible to ship. 

“Hacking code together is bad in the long run” you might rightly point out and it's true. But in the early stages of startup speed trumps scale. Why? Because you are still learning and chances are you are going to bin the hacked code soon. If you spend months putting together your scalable product, you will lose a lot of money when you realise it's not exactly what customers want.

How to test if someone is a “hacker”: Give them an idea and ask them to slap a basic version of it together over a weekend. If they come up with something that can be used to solve the problem (or part thereof), chances are, you have a hacker.

2. The Painter

Aesthetic appeal is key. The Painter ensures your product doesn't just work well but looks great too. They bring a blend of design prowess and creative flair, essential for captivating your audience and standing out in a crowded market.

And they double as your branding and marketing material go-to as well. Things that look legit, just sell more easily, and someone with that visual eye that can help you bring legitimacy is worth gold.

How to test if someone is a “painter”: Two things. Firstly, look at their portfolio but secondly, watch them design something in person. Ask them questions along the way to see how they think about aesthetics. A good “painter” generally has a natural feel for what looks slick and feels right.

3. The Hustler

Growth is their game. The Hustler is your business builder, focused on networking, sales, and strategic partnerships. They're the force behind your startup's growth, pushing boundaries and opening doors to new opportunities. A startup is nothing without customers and this guy will do anything and everything to get it done.

How to test if someone is a “hustler”: Give them 24 hours to get an interested prospect you can pitch to. Better still, get them to make a sale (even without the product being done). If they pull that off, selling once the product is live will be a breeze.

What’s more, you can use these core functions as a base to build out the rest of your team as you grow.

Got startup team-building hacks or insights? Hit reply and share with the class…

THE RESULTS

We asked who’s writing the code of the future, and NQF5 grads and self-learners are in the lead…

🟨⬜️⬜️⬜️⬜️⬜️ 🎓 BSc CompSci grads (8%)

🟩🟩🟩🟩🟩🟩 🤓 NQF5 grads (32%)

🟨🟨🟨🟨⬜️⬜️ 😎 Self-learners (26%)

🟨🟨🟨🟨⬜️⬜️ 🤖 AI (24%)

🟨⬜️⬜️⬜️⬜️⬜️ 💪 Me (10%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi {{ FIRSTNAME | there, }}

Flippered overlords? Scientists were rather stumped when they thought they’d discovered a dolphin with a “thumb” off the coast of a Greek island. Turns out they were wrong – it has two thumbs.

In this Open Letter:

• Real growth: What 650k devs could solve.
• 1 car per minute, le big Apple & loadshedding wrapped.
• Inside track: How to get your first B2B sale.
• Your bakkie of choice: The results are in.
• Tell someone: Share this & get free business tools.

TRENDING NOW

650k Jobs Big Enough to Bail Out Eskom

Plus stimulate so much new growth…

Speak to any SA tech startup founder and they’ll tell you finding good devs is a nightmare. 

Between not being able to pay as well as corporates, and then requiring devs to do some really complicated hack jobs, you’re looking for a unicorn. 

Now, that problem’s not unique to SA startups. But the difference is that places like the US and India just have way more developers than we do, so your chances of finding those unicorns are just so much higher.

And this marketplace imbalance is as old as the software industry itself. Supply just never seems to keep up with demand. 

How does SA stack up?

South Africa has roughly 150’000 software developers. That’s 2.4 devs for every 1 thousand citizens (not quite 1 in a million, but close). Compare that to the USA, where there are 13.29 developers for every 1;000 citizens. We’re somewhat behind – by that ratio, we should have ±800’000 developers by now. 

Now we know, USA’s GDP is 50+ times that of SA, so they’ll have more dev jobs. But considering that many SA developers and dev firms do work for foreign companies, that 800k number is likely more accurate than not. And it means we’re 650k short.

What will 650k dev jobs do?

Dev job marketplace OfferZen’s research shows the average salary of a software developer with 2–4 years of experience is between R30 000 and R35 000 per month (depending on where you stay, Cape Tonians earn more ¯\_(ツ)_/¯). 

And someone earning R35k per month pays roughly R75k a year in Pay As You Earn (PAYE) taxes. Now, we’re not saying SARS should convince government to train more devs… wait, yes we are – they absolutely should. Adding 650’000 software developers at that pay generates an extra R48.75 billion in PAYE per year. That’s enough to bail out Eskom… a few times over…

But making devs isn’t easy

SA doesn’t have the best education rep. And expensive universities aren’t helping. 

Want to study computer science at Stellenbosch? Well, the course alone will set you back R60k per year, add another R60k for accommodation, money to stay alive, and, and, and... 

4 years and R600k later you can hit the job market and start paying off that student debt – yikes! 

Passive learning also seems a bit silly for a skill best learnt by doing. And with such a massive shortage, perhaps fast-tracking devs to practical experience is the way to go. 

That’s where platforms like Zaio come in. Having recently announced strategic financing by E Squared, Zaio is an accredited developer training program that gets those wanting to code going within 6 months for as little as R 6’950. 

WeThinkCode is another innovative company that does on-the-job training for devs. They even offer the course for free + give developers a stipend, because the stuff they learn on is actual real-world developer work. Noice!

Whilst both these companies are making great progress, we’re still a long shot from closing the gap – and perhaps there is a case to be made to get the government to fund these initiatives more aggressively. 

Either way, at sub R10k vs R600k for your education, it’s definitely something to think about. 

Now before you @ us, we know a bachelor of science is not the same as an NQF5 qualification. But perhaps NQF5 is enough to get most devs going?

Besides, at a few hundred BSc CompSci graduates per year, it's going to take centuries for SA to fill the gap, at which point whatever comes after AI will do the job, right?

IN SHORT

⚡️Loadshedding Wrapped. The lekker okes at EskomSePush have Wrapped Loadshedding for us this year. With some cool stats and insights for SA as a whole and your area in particular (see your area in-app for deets), it’s a fun data spin on a not-so-lekker topic.

⛰️ Cape Ai. Some folks had some AI fun with Cape Town this week - reimagine what Cape Town Suburbs would look like as action figures. Among others, there were: Fish Hoek, Obz, Constantia, Bo-Kaap, Sea Point, Athlone, Bellville and Stellenbosch. Did your ‘burb make the list?

🚙 One in 60 Seconds. 2ndhand car platform WeBuyCars sold 1 car every 60 seconds from the 24th to the 30th of November – with 864 cars sold on Black Friday alone. Looks like the 2nd hand car market is on the rise again – with the number of vehicles WBC sold in 2023 increasing by 13%.

🍏 Comparing Apples with French Fries. Tech behemoth Apple is slowly but surely gaining on the French stock market’s market value. With the companies (including Louis Vuitton & Hermes) listed in Paris’ combined market value of around $3.2 trillion – Apple is breathing down its neck at around $3.1 trillion.

😎 Meta Bans. Meta’s Ray-Ban smart glasses have received a shiny new update and will start rolling out its multimodal AI features. Demo’ed by Zuck on Instagram – it showed how it can help you pick out the right pair of pants for a shirt, write a funny caption for a pic, identify an object in an image, and translate text.

HOW WOULD YOU BUILD IT?

Getting Your First 10, 20 B2B Sales

If you’re building with an eye on targeting companies and enterprise clients, this week’s podcast is for you. We spoke to Heine Bellingan, founder of JOBJACK, who just raised R46m, about their mission and, most importantly, how to get your first few sales as a B2B startup in SA.

1. No 1 sales secret: Persist & celebrate publicly

Getting those first sales is super hard, but Heine says there’s magic in being able to approach a new prospect when you refer to having done work with another big-name company. 

They did pilot projects and would share them on LinkedIn, making a big deal about it (even though there’s no cash yet), and this would create the impression that big brands are hiring JOBJACK. The snowball effect is that getting the next meeting becomes much easier – and, from there on, it's just persistence.

2. Never underestimate the value of cold calling

If you want to learn what’ll work, fast, Heine says the way to go is to cold call. Because when you actually speak to people you get immediate insights into what they want, need and what they’ll respond to.

If you’re targeting the kind of client whose contact details can be easily sourced, get on the phone and be prepared to make a fool of yourself for the first 10 or so calls. You’ll learn so much from that, you’ll be able to go back and adapt your script, approach and proposal, so you’re fine-tuning the process for your first hit.

3. It gets easier, but the hard yards come first

As Heine explains here, landing that first client requires working up the willingness to phone 100 people, dead cold, in a matter of a week, getting rejected by 99 of them and maybe getting a “yes” from just one.

However, once you’ve broken that barrier, it gets a lot easier.

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

We asked what your bakkie of choice is, and we have the Hilux in pole position, with Cybertruck close on its heels, followed by a decidedly no-bakkie crowd…

🟨🟨🟨🟨⬜️⬜️ Give me that Cybertruck now (22%)

🟩🟩🟩🟩🟩🟩 Hilux (27%)

🟨🟨⬜️⬜️⬜️⬜️ Ford Ranger (10%)

🟨🟨⬜️⬜️⬜️⬜️ Land Cruiser (10%)

⬜️⬜️⬜️⬜️⬜️⬜️ Isuzu (3%)

⬜️⬜️⬜️⬜️⬜️⬜️ Corsa Bakkie (2%)

🟨⬜️⬜️⬜️⬜️⬜️ Tupperware Bakkie (5%)

🟨🟨🟨🟨⬜️⬜️ I don’t Bakkie (21%)

LET’S DO SOMETHING TOGETHER

• Partner with The Open Letter to engage 4000+ people in the SA startup ecosystem — Let’s chat.
• Need advice on how to build or grow your startup? We can help — Let’s chat.
• Come across a cool startup or founder you think we should cover. Hit reply and let us know.

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi

Let it grow? Remember when we shared the video of a new Japanese island’s fiery birth? Well, new satellite images show it’s still growing, so there might be some new beach property investment opportunities soon.

In this Open Letter:

• The switch: A new way to build cars in SA.
• Google fakes, Eskom’s new CEO & the chance to build your idea.
• Think big: How to generate more viable ideas.
• The best online shopping: The results are in.
• Free stuff: Share this and get cool tools for business.

TRENDING NOW

Supercharging SA’s R230bn Auto Industry

SA really needs more policies to help create jobs and boost the economy.

Take our motor manufacturing industry, for example. We’re the biggest manufacturer in Africa, producing some 600k cars a year for brands like Mercedes, BMW, VW, Toyota and Isuzu – two-thirds for export.

The impact? The industry contributes 4.9% of our GDP (±R230bn) and 110’000 jobs.

But there is a storm of epic proportions brewing

The EU is set to ban the sale of internal combustion engines from around 2035. 

That means European manufacturers will have far less incentive to keep making fuel-powered cars in SA because they won’t be able to export them to the EU. 

What’s more, as they switch their focus to EVs, if SA isn’t EV compatible, well we ain’t getting those cars and you’ll be driving that Corolla till the cows come home (mind you, it will probably make it there and back, no sweat).

Late adopters

Let’s face it, most South Africans have largely ignored the global move to electric vehicles – despite us showing you how EVs could free up billions in disposable income and giving you ideas on how to build an EV-based business.

For several hours a day, we can’t even power our kettles, let alone a car. 

But it’s not just our lack of electricity that is holding back the move. What makes matters more complicated is that SA is one of the only places in the world that employs over 140’000 petrol attendants – meaning if we drop petrol, we’ll need to find new jobs for these people.

What’s more, the government will need to figure out a new way to collect levies for the Road Accident Fund, which they’re currently collecting from petrol and diesel sales (even if you use it for your generator, LOL).

It’s a tricky situation, but EV adoption is coming whether those things are in place or not. Our guess is government knows this because they’ve just released a 67-page whitepaper on our transition to EVs – mainly focusing on manufacturing, but the adoption will surely follow once the vehicles are produced here. It outlines some ideas on:

• Investment and Funding Boost: Enhancing investment and funding levels, including improved incentive support for EV assembly and component manufacturing.
• Electric Battery Value Chain Development: Establishing a regional value chain for electric batteries, including raw material refining and battery component production.
• Reduced Import Duties on Batteries: Temporarily lowering import duties for batteries in domestically produced and sold vehicles to improve cost competitiveness.
• Export Market Access and R&D Incentives: Securing duty-free export market access and leveraging R&D tax incentives to increase domestic value addition.

So far we’re missing out

Take the Cybertruck, for example. The reviews are incredible – it’s the bakkie of the future. 

It beats a Ford F-150 in a 100m drag (on a dirt track while the Ford is on tar). It even beats a Porsche 911 Turbo in a sprint while towing a Porsche 911 Turbo. 

It sells for $61k (R1.16 million) about the same price as a F-150 and by the looks of things, great value for money. But we can’t buy it in SA. 

Just imagine if Elon Musk sets up a Cybertruck manufacturing plant in the country of his birth – a long shot, but we can dream, can’t we?

With the government getting to work on policy and a looming forced transition by some of the biggest car manufacturers in the world, we think it's finally time to say that EVs are coming.

So, who is early?

A few months ago we covered Zimi – watch our podcast with founder Michael here – who is supplying charging solutions to fleets and end users.

But with last-mile deliveries like Sixty60, ASAP! and Dash taking off, electric delivery vehicles are likely a great place to start. And that’s where 3 local companies are focussing:

• ScootHero – delivery motorbikes with 3 ranges, finance and leasing options. 
• Ev Africa – delivery bikes from R44’900, four-seater cars and even a bakkie priced from R239’900. 
• Everlectric – a sweet-looking delivery van that promises you’ll “never pay for fuel again”.

Is it too late to get in? Nah we only just getting started.

IN SHORT

🪙 Got Crypto? According to an in-depth study by the Financial Sector Conduct Authority (FSCA), more than 5.8 million South Africans own some form of Cryptocurrency, with most using local Crypto trading platforms.

🤖 Staged AI. Google has admitted that the “Hands-on with Gemini” video used in the Gemini launch was staged. Not only was the video not recorded in real-time, but the vocal interactions with Gemini were dubbed later.

⚡️In Power. Eskom (finally) has a new CEO in Dan Marokane. Currently acting CEO of sugar producer Tongaat Hulett, he will join the power utility by the end of March 2024 and is no stranger to electricity, having previously held senior positions in Eskom, including Head of Group Capital.

👜 Emotional Baggage. Some travellers may find themselves getting emotional at the security counter on their upcoming holiday as the Airports Company South Africa tightens up their hand luggage regulations – including size and weight, as well as what is allowed in a slimline laptop bag. Hint: you can’t also carry your boardies and wine bottles in it.

👩‍💻 Unemployment Tech. Got a cool startup idea that can help solve unemployment? Enter the Next176 unhackathon and get mentored by top venture studio partners. You can also win some great prizes, and even end up building your idea with them.

BUILDER’S CORNER

How to Generate More Viable Ideas

Steve Blank once said that he thinks most startups fail because they don’t “find the right product-market fit”. But if ideas start from a bad place, the chances of them never hitting PMF are great. So we thought: Isn’t there a way to generate ideas out of a place where it makes it easier or more likely to get the right fit? 

You know, so you don’t even start working on things there's no market for…

Turns out growth hacker Max Bonpain wrote an article about it on Medium, and we quite liked his idea-gen method (which they take even further into POC and MVP, but we’re only looking at the idea bit now).

Solving the right problems 

1. Start with finding problems in segments

Maybe you read something in The Open Letter, or you have specific domain knowledge – likely the best place to focus. Focus your efforts on the various pains that a market faces. I.e. let’s say you are a doctor (or targetting this segment) you might know that doctors have issues collecting payments promptly.

While this might be a great place to start, engage more roleplayers in the space to start unpacking the nuance of it and the “real problems” (the real reason they are experiencing pain). I.e. timely collections might have nothing to do with the tech they use, but rather a business process to bill later making collections harder. In changing the business process, the role tech plays is different than the former where it simply acts as a collection mechanism.

Either way, chances are those experiencing the pain might not be able to get to the root themselves and you need to discover it through iteration and experiments.

2. Use the “How Might We” method

Use a visual tool for sorting ideas – use Figma or just colourful sticky notes on an old-school whiteboard. Write each problem as a “How might we…” statement. For example: if they battle with tracking their payments, write “How could we make payment tracking effortless?”

Don’t generate solutions yet. First, spread all the problems out and see if you can spot any general themes. It’s important to map all the problems you can find, even if they are not part of your original idea or direction.

Are a lot of them focused on a particular theme (payments, finance, admin or repetitive daily tasks perhaps)? Group these similar ones together.

Now, consider the individual groups and start generating solutions for each group – this helps you generate concepts that impact multiple problems.

You could even just focus on the groups with the most problems in it first.

3. What you are up against

Just like you’d journey map a product, mapping for ideation is creating a hypothetical journey of how customers might currently try and solve each problem they face – they might search for tools, try different methods, use MS Excel, get frustrated with complex software or simply give up.

Again, put each step in the journey on a sticky note or a visual tool and identify where they have pain points. Brainstorm how a product/service could solve each pain point to flesh out your ideas.

Next, you’d do a proof of concept (hopefully you can use no-code/low-code) and get it in a customer’s hands. This is where you can start uncovering the “real problems” and offer something meaningful to solve them.

Got a killer idea-gen hack? Hit reply and let us know…

THE RESULTS

We asked who you think will have the best marketplace experience in 2024, and Amazon’s in the lead – but love seeing all the support for Takealot.

🟨🟨🟨⬜️⬜️⬜️ 🛒 Takealot (32%)

🟩🟩🟩🟩🟩🟩 📦 Amazon (52%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🏷️ Bobshop (4%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🎁 Gumtree (2%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🏪 Makro (0)

🟨⬜️⬜️⬜️⬜️⬜️ 🤸 The local flee market (10%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Room to smize? People got pretty panicky when a bunch of tourists overturned their gondola in Venice, reportedly from being a bit overzealous with the selfies.

We can’t fault them though, having recently capsized a vessel ourselves. And that without even taking selfies — more at the end of today’s newsletter.

In this Open Letter:

• Big moves: The race to rule online retail in 2024.
• Web3 funding, return of the sharks & hating on ISPs.
• Big insights: How to raise R97M for your FinTech.
• Where we save & invest: The results are in.
• Tell someone: Share this & get free business tools.

TRENDING NOW

The Race to Rule SA’s Online Retail in 2024

There will be innovation…

In the olden days, mall owners made big bucks.  

Tenants didn’t have many options, nor did they care much as customers didn’t have that many shopping options, either. Everyone was making money.  

However, the higher up the food chain you were, the proportionately more money you made with less effort – so that's where you wanted to be. But now with malls shooting up everywhere and pressure on retail, being the mall owner no longer guarantees to make money – many are under pressure with quite a few malls up for sale.

But there’s a new race for a new kind of mall that will fully kick into gear in 2024.  

And that is to become SA’s biggest online mall. A multi-tenanted online marketplace featuring potentially limitless third-party storefronts that’ll deliver your heart’s desire straight to your door.

But we’ve had e-commerce stores

Yes, and the likes of Takealot have been running for years. However, e-commerce stores have a massive challenge in keeping down customer acquisition costs – buying ads to get me to buy from them quickly eats most of the margin.  

What’s more, sourcing niche products with higher margins creates warehousing and nuance customer service challenges. So, taking a book from brick-and-mortar malls and offering a storefront for third parties is quintessentially moving up the food chain — the online kind. By doing this they stand to benefit among other things:

• No cost in sourcing products.
• Lower storage and warehousing costs.
• Little-to-no cost in CAC (sellers market their own products).
• Offset risk of overstocking to third parties.
• Offset customer service and returns to third parties.
• All while making a sweet margin on every sale.

Amazon’s quite good at it

60% of Amazon in the US’s e-commerce sales are for third-party products – their marketplace is pumping.  

What’s more, the ad revenue generated from this (third parties can place ads on Amazon’s website), is what is pushing Amazon e-commerce into the green. Effectively using their eyeballs to capture ad revenue whilst also making a margin on the sale – ah, the good ‘ol double dip, something you just can’t do if you sell your own products.  

What’s more, their 9.7 million sellers brought in around $117.72 billion in third-party seller services in 2022 – and many of them did so quickly, with 63% reportedly being profitable in the first year.

So, what is coming to SA?

By now you probably know that Takealot has a marketplace where it sells third-party products – they currently have more than 10’500 sellers on their platform.  

But with Amazon coming to SA in 2024, they are also gearing up to make their marketplace a big focus, offering an exclusive R1 for the first year fee for sellers (Takealot normally charges R400 per month, which at 10 500 brings in a cool R4m+ a month).  

But it's not only a battle between these two e-commerce giants. Bobshop (formerly BidorBuy) is an online marketplace and internet auction platform, focusing exclusively on its marketplace – meaning they don’t sell their own products at all – and thus don’t compete with suppliers.  

What’s more, SA’s oldest classifieds site, Gumtree, is also rumoured to be pivoting away from in-person meetups and switching to a marketplace and arbitrage role. Bad news for scammers everywhere.

Even wholesale giant Makro is getting in on the action with Makro Marketplace where third-party sellers can list and sell new products on Makro’s normal site (if it’s not already available in-store).

The opportunity

The big thing is, as these platforms start enabling e-commerce for every product and supplier you can imagine, the suppliers will need tech to manage their one-man shows or small operations.  

Planning, stock, logistics, finance, etc. What’s more, these people might need some help with digital marketing, websites and other activities.

So whether you are a seller or supplier to sellers, 2024 is lining up to be a massive year for SA online marketplaces. And we feel that just like the early days of the physical mall, there will be money made across the board… don’t miss out.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

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OVER TO YOU

Who do you think will have the best marketplace experience?

Vote to see what others say...

• 🛒 Takealot
• 📦 Amazon
• 🏷️ Bobshop
• 🎁 Gumtree
• 🏪 Makro
• 🤸 The local flee market

Login or Subscribe to participate in polls.

IN SHORT

🚙 Unbundling. WeBuyCars’ parent company Transaction Capital is considering unbundling it from the group and listing it as its own entity on the JSE. With a 14% decline in earnings in 2023, WeBuyCars has seen growth in the 2nd part of the year with increased volumes and added bays to its national footprint.

🪙 Web3 Africa. Fuse Network has announced a $10 million grant aimed at funding Web3 projects in emerging markets like Africa. And while sub-Saharan Africa has the smallest crypto economy, countries like Kenya, Nigeria, South Africa and Tanzania show some of the highest grassroots Crypto Adoption.

🤮 Sick & Tired. South Africans have had it up to their necks with their ISPs. A new report from DataEQ which tracks how consumers feel about their ISPs based on 140’000 public posts on social media shows that local ISPs have a -42% average net sentiment. It’s lower than banking (23.5%), insurance (9%), and even telecoms (-14%).

🦈 Hi Haai. Great White Sharks could be returning to Cape Town’s False Bay. In 2011 there were over 300 sightings by SharkSpotters. In 2020 that number dropped to zero – staying there for 3 years. In the last few weeks, six different sightings have been recorded. Be safe out there.

🤖 Google AI. In the last year, OpenAI (and specifically ChatGPT) has been pretty much all the AI conversation has revolved around. Google hopes that this will all change with its release of Gemini – “the largest and most capable AI model” with Gemini Ultra the first to be available in an early access program.

🔇 Spotify Wrapped. Despite posting a R650 million+ quarterly operating profit in October on the back of a 26% active user increase in Q3, Spotify announced this week it would be reducing its employee count by around 17% and someone wrapped it for shareholders, LOL.

🏉 Scoring Money. VC firm HAVAÍC is kicking nearly R19 million into African-born tech company Sportable’s Series A round (R283 million). Sportable uses micro-tracking tech in sports like rugby, soccer and American football to improve data collection and analysis.

30-MINUTE PODCAST

How to Raise R97M for Your FinTech

If you’re passionate about the potential for high-growth ventures in Africa, this week’s podcast is for you. We spoke to Nicole Dun, COO and co-founder of Startup Club’s 2023 FinTech of the Year, Revio. Nicole was part of the team that raised their $5.2 million seed round in September, and she was super happy to tell us all about it…

Some highlights

1. A day in the life of the COO of a scaling FinTech

Despite the title, Nicole says she leans into her strengths, which are more on the commercial side of the business – enterprise sales, fundraising, brand and marketing etc. But then there are those stark context shifts when someone comes in and asks a much more practical focused question, like “How’re we gonna manage leave?”, etc.

Finding the balance between the strategic and operational side has been more about managing her own energy levels throughout the day.

2. Landing the $5.2M Funding for Revio

Nicole’s approach was to build relationships with potential funders long before it was time to ask for money. Making contact and giving monthly updates on their progress meant that, when it was time to raise, the investors already had so much insight into the company, they wanted to get on board.

Even now, after they’d raised, those relationships are important to keep going.

3. What are they going to do with the money?

Firstly, Nicole says, they’re deepening product capability based on feedback from their first 10 or so corporate clients. Next, they’ll be building the team, developing a repeatable sales process and investing in marketing, as well as ensuring they stay ahead of the curve in terms of payment tech.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

We asked how you save, and would you believe savings and RAs are in the lead…?

🟨🟨⬜️⬜️⬜️⬜️ 🏊 BTC (one swimming pool at a time) (10%)

🟨🟨🟨🟨⬜️⬜️ 👵🏻 Retirement Annuity (18%)

🟨🟨⬜️⬜️⬜️⬜️ 💸 Money Market (10%)

🟨🟨🟨⬜️⬜️⬜️ 📈 Shares via EasyQuities (14%)

🟨⬜️⬜️⬜️⬜️⬜️ 🙌 Stokvel, baby (6%)

🟩🟩🟩🟩🟩🟩 💰 Good ‘ol Savings Account (27%)

⬜️⬜️⬜️⬜️⬜️⬜️ 🛋️ I hide it in my couch (like a president) (5%)

🟨🟨⬜️⬜️⬜️⬜️ 🤔 What is this “save” you speak of? (10%)

WE FLIPPED IT

It’s flipping easy to tip a kayak — at least that’s what it felt like. We are proud to say we were the first “tourists” in Cape Town to flip a kayak this season. Hope yall having a great Dezemba, stay safe!

LET’S DO SOMETHING TOGETHER

• Partner with The Open Letter to engage 4000+ people in the SA startup ecosystem — Let’s chat.
• Need advice on how to build or grow your startup? We can help — Let’s chat.
• Come across a cool startup or founder you think we should cover. Hit reply and let us know.

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