Plus: Smart toilets, funded blimps, cashless Woolies & how to build a new-gen startup.
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 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:
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.
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…
🎈 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.
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.
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.
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.
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.
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.
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.
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.
Utilise your first customer’s network for growth. Each new customer brings opportunities for learning and product refinement.
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.
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.
Plus: Inflatable Wi-Fi, star recruits & how to build your product around its marketing strategy.
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:
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.
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.
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.
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.
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….
⭐ 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).
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…
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).
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.
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…
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…
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.
Plus: Space cylinders, Apple-tinted goggles & a piece of the big tech pie.
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:
Well, it’s (almost) a wrap. 2023 is done and dusted.
And we’re getting ready to take a little break ourselves:
So we thought it’s a great time to highlight some of the most interesting movements in the startup space in SA this year.
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:
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.
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.
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.
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:
Did you miss our neo-insurance feature? Read it here.
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.
As for us? We were up to a whole lot in 2023. Here are some stats:
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 🥳 🚀
🚗 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.
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.
Plus: BrainGPT, 1 Billion for Xmas, Musk University & your first 3 startup employees.
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.
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.
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:
All to make the business hit the cashflow breakeven point sooner, maximising profit.
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!
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.
🕹️ 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.
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.
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.
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.
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…
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.
Plus: Flipper’s thumbs, le big Apple & the inside track on landing your first B2B sale.
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.
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.
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.
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…
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?
⚡️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.
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.
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.
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.
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.
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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%)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
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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.
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.
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).
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:
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.
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:
Is it too late to get in? Nah we only just getting started.
🪙 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.
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).
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.
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.
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…
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.
Plus: Web3 funding, return of the sharks, Google’s latest AI play & how she raised R97M for their FinTech startup.
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.
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.
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:
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.
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 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.
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🚙 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.
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…
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.
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.
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:
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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%)
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!
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Plus: Repo-ed microwaves, SA’s e-comm wars & how to lower your CAC and be more profitable.
Hi
Cool off? Talk about the environmental impact of crypto; researchers have just shown that a single Bitcoin transaction could use as much as a swimming pool’s worth of water to cool the processors executing it. Sheez.
The next wave of tech opportunities will follow
It’s Dezemba! And, for many, that means a few more weeks till summer break. But for millions of South Africans participating in grocery stokvels, it could mean Christmas grocery is on the way.
What you might not know is that the uniquely South African communal savings mechanism we call stokvel gets investments of about R50 billion per year, split across around 800k stokvels running in SA's informal sector.
No wonder then that many a digital entrepreneur has tried to digitise the stokvel. So far, with little success – simply digitising the process with tech doesn’t work and feedback’s non-existent since most users can’t articulate what they need ‘cos they have no banking or tech frame of reference.
Common misconceptions around stokvels are:
Don’t feel too bad, though. Banks haven’t figured out how stokvels work either – case in point, these are the requirements for opening a “stokvel account” at one of the major banks:
What, no blood samples needed? Should be simple.
Let’s say you capture just 2% of that market. You could buy R1 billion of SA government bonds using the deposits, earning a cool ±R100m per year in interest (if those rates stay this high).
So it’s worthwhile figuring out the stokvel market…
Now, there are complicated regulatory hurdles here. But probably the biggest challenge to overcome is transaction fees.
PayShap is a rapid interbank payment protocol that allows instant transfers between different bank accounts at a low fee (or even free). Currently, each bank has its own fee structure and it’s a bit of a mess. But there is pressure from the reserve bank to make PayShap universally free.
Now, when PayShap goes free, it’ll become the direct digital competitor to cash, with a lot less risk of getting mugged etc.
And stokvel is just one of many applications that can take off once we get to totally digital cash. So if banks can just find some consensus on fees, there might be opportunities everywhere soon.
Tech entrepreneur, watch out for this one…. it's about to get real.
🚙 Uber 500. Would you believe Uber Technologies Inc. has been added to the S&P 500 Index? This after two straight quarters of posting some operational profits, which sparked renewed investor interest (Uber Shares gained 132% in the last year). Here’s hoping the optimism’s enough to carry them all the way.
🪑 Removable Assets. Working at Luthuli House? Warming up your lunch might be hard going forward as the Sherrif is set to attach anything and everything (even microwaves) in an attempt to settle the R100 million account run up with an events company during the 2019 elections campaign. R100 mill – that’s a helluva lot of Streetwise Twos and yellow T-shirts.
🧲 E-Comm Talent War. Looking to cash in on the e-commerce giants’ plays in 2024. Takealot has double the amount of e-commerce jobs available compared to Amazon. Amazon will be hitting SA shores early next year with its jobs portal having around 22 e-comm-related jobs, compared to SA e-comm king, Takealot, with 47.
🗼Low Signal. Despite recapitalising in September 2022, Cell C remains insolvent – as seen in its latest financial results revealed last week. The mobile operator’s assets are pegged at R5.7 billion with liabilities of R15.09 billion. Its subscriber numbers have also decreased significantly over the last 5 years from 17 million to 8 million.
🧶 Time Travelling Knitwear. Longing for the days of the Windows XP Wallpaper (you KNOW the one…)? Well, last week Microsoft dropped its “Windows Ugly Sweater: Bliss Edition” onto its Xbox store and it’s already sold out. You can still add it to your wishlist – who knows, they may just do another run in future.
OK, so you got some adoption, your usage is growing and you’re making some sales. Now, why aren’t you making any real profit yet?
Good business comes down to one thing: The money you get in (Customer LifeTime Value or LTV, i.e. revenue) minus what it costs you to get that customer (Customer Acquisition Cost or CAC) equals profitability (considering your customer servicing cost is under control, but more on that in a future edition).
Servicing costs aside, there are basically 2 ways to make more money from each customer :
The first one only works up to a point, I mean you can’t keep raising prices without taking pain. So, like most of us, you’ll want to focus on number 2.
The first step is to actually know what your current CAC is per channel. Build yourself an “Omega” dashboard that combines all your analytics with your weekly/monthly sales. Then looking at these costs, try different strategies in different channels while still measuring your CAC per channel.
Once you have your lowest CAC channels, A–B test and double down. Boom.
Create a standalone, associated audience-based product (ask Elvorne to help you) – a newsletter, community, blog, tool etc. – with marketability, so you can develop high value and engagement on it.
Test acquisition costs into that product instead – it should be cheaper because it’s a more neutral, value-driven space. Build your funnel to go from audience to your main product, optimise the conversion and double down on acquiring users via that route instead.
Word of mouth is great (because it’s practically free!), and its digital cousin is getting current customers to refer their friends and family. If your Net Promoter Score is pretty decent, take it a step further and build a referral mechanism with a strong internal campaign – reward people with value for referring others.
You don’t want to raise your prices to the point where you’re not competitive. But that doesn’t mean you can’t increase your LTV in other ways.
Remember, you only pay CAC once. Once they’re in your database, you can reach them cheaply. So why not create new products/services and upsell them?
Is another non-competing company talking to your market? Maybe there’s a chance for synergy or some other reason to collaborate. Striking a deal where you share or cross-promote products is one way to access more of the right people at a lower cost.
Got a CAC insight to share? Hit reply and let us know…
We asked when was the last time you were in a Pep store, and would you believe Pep Home is rocking it…
🟨🟨🟨🟨🟨⬜️ 👍 All the time, baby (20%)
🟨⬜️⬜️⬜️⬜️⬜️ 👔 Just for kids’ school clothes (7%)
🟩🟩🟩🟩🟩🟩 🏠 Some good deals at Pep Home, though (22%)
🟨⬜️⬜️⬜️⬜️⬜️ 📱 Buying business phones cash at Pep Cell (5%)
🟨🟨🟨⬜️⬜️⬜️ 🛍️ Kids clothes at A.C.Kermans (13%)
🟨🟨🟨🟨⬜️⬜️ 💻 Just HiFi Corp and Incredible Connection (15%)
🟨🟨🟨🟨⬜️⬜️ 🙅 Never have I ever (18%)
⬜️⬜️⬜️⬜️⬜️⬜️ 😆 I’m there right now! (0)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
Plus: Lazy AIs, cybertruck deliveries, AI in Africa & how to set laser-focus KPIs for growth.
Hi
Break time? Brickception lets you play a game within a game within a game – adding a whole new dimension to Atari’s classic 1970s hit “Breakout”.
Where does the 2 out of 3 baby garments sold in SA come from? Or what about 7 out of 10 prepaid phones?
Well, most likely, China. Originally. But locally, it gets sold through one of the various stores in the Pepkor. With store chains such as Pep, Ackermans, TekkieTown, Buco – even Hifi Corp and Incredible Connection – Pepkor has diversified a lot over the years.
The group reported revenue of R87bn in the 2023 financial year. But what’s most noteworthy is that their FinTech division contributed R10 billion of that revenue and R950 million in operating profit. It’s a powerful combo… Physical stores spread across the country that serve as a place of distribution for FinTech products — there's likely no slowing down.
Pepkor’s FinTech division has a suite of products including:
But these all make up only 33% of their FinTech revenue.
The other 67% is generated by one you probably never even heard of — Flash.
Flash gives merchants (mostly spaza shop operators) a device with an app that allows them to sell digital products and services like:
Impressive range of services, but one of Flash’s major feats is likely how it “digitises cash” – i.e. allowing the “unbanked” to transact digitally.
They reportedly turned R37.1 billion of cash into digital vouchers or digital products. That’s a significant amount considering the estimated size of the township economy is R425bn.
Flash is currently financial services and VAS, but with its footprint of circa 200k merchants across South Africa’s informal market, it could become any or all of the following:
Pepkor only started reporting Flash’s numbers in this year’s financial results, for good reason. This FinTech juggernaut might just become the major driver of group revenue and profit in years to come.
And with them cracking the cash-to-digital problem in informal markets, chances are anyone wanting to sell things from outside the informal settlement to inside (be it digital or physical goods), would likely need to make use of their systems.
🦥 LazyGPT. Users have been complaining about ChatGPT avoiding doing monotonous or tedious tasks asking the user to complete the work. Wasn’t that why we got ChatGPT in the first place? Interestingly enough the tedious and monotonous tasks we’ve put up with for decades, ChatGPT got tired of in a year.
🪡 Listed Threads. Shein wants to list for R1.7 trillion. The e-comm clothing behemoth has filed with US regulators for an initial public offering (IPO) in the wake of its massive growth. Perhaps shareholders can expect to receive their dividends 4 times longer than expected and also need to pay additional “duties” before cashing out.
🚪Shutting Down. More than 1’300 South African businesses have closed down in 2023. Loadshedding, N3 transport disruptions as well as consumers feeling the pinch (or shall we say punch) of elevated petrol and food costs, have all made it harder on businesses.
🛻 Get Trucking. It’s been a busy week for Elon. He not only announced that Cybertruck deliveries would start this week (this could push Tesla’s valuation closer to $1 billion), but he also told us exactly how he feels about advertisers wanting to blackmail him by withdrawing their ad spend (it’s not flattering, we can tell you that much).
💰 Parking the Bag. Ticketless parking company admyt has agreed to the terms for a R30 million investment from REdimension Capital to drive product enhancement, expand the number of admyt-enabled locations and scale its user base.
Yesterday was ChatGPT’s 1 year birthday and to celebrate we did an online webinar to discuss how AI can help solve the continent’s biggest problems. In case you missed it, watch our very own Bobby Sequeira, Catherine Lückhoff of 20Fifty and Matt Quatra from Webory talk all things AI and Africa.
It’s easy to set and track core KPIs when you start – maybe it's just you and a few founding members. Simple. But keeping that laser focus gets hard when you grow and stuff gets complicated…
No worries, the good guys over at Midstage Institute developed the concept of retaining only 2 core metrics, no matter how large your business (inspired by Jim Collins’s book Good to Great).
And they make a compelling case using 2 examples from a few years ago:
Why? Well, that’s how they make money. Facebook sells advertising based on exposure, so the more people on their platform for longer, the more they can make. Google also sells ads but they get paid more on the click. So the more people click, the better.
1. Identify your Growth Metric
This is what amplifies your revenue. In Facebook and Google’s case (all ads-based social media actually), active users because they need network effect. In free-to-paid and freemium, for example, this might be the total number of new free users, etc.
2. Pinpoint your Economic Metric
This is the single action that generates revenue – when that free user subs (the upsell) or a user clicks etc. This can usually be tied directly to a monetary value.
3. Use it to scale
What’s cool about this method is that you can use it to simplify KPIs as you grow. Each metric has millions of sub-metrics underneath it that all contribute to making it happen. So you can tie almost any employee’s action to the core metrics.
What’s more: It helps align your team’s focus and can even help you make critical growth decisions – if you can’t tie a new role’s performance directly to your 2 core metrics, maybe you shouldn’t be hiring (paying) a person to do that job.
How do you measure and ensure performance in a growing team? Hit reply and let us know…
We asked if you ever had issues with a landlord, and the ole “where’s my deposit” scene takes the cake…
🟩🟩🟩🟩🟩🟩 🤏 Stole my deposit (40%)
🟨⬜️⬜️⬜️⬜️⬜️ 🦶 Kicked me out (8%)
🟨🟨🟨🟨⬜️⬜️ 💕 Loved each other (28%)
🟨🟨🟨⬜️⬜️⬜️ 🧐 I am the landlord (24%)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
Plus: Super pigs, brain money, Brazilian hackers & niching down properly in a small market.
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Got bacon? North American states are battling to fend off a devastating invasion of “super pigs”. Some are employing “pig squealer” apps to try and stop the “most invasive species on the planet” from devastating more farms and taking more human lives (no jokes).
“The startup failure play-by-play we never knew we needed”
Anyone who’s rented or rented out property will know the frustrations (if not PTSD) that go along with it. This R340 billion-a-year industry has more problems to solve than Jordie Barret’s chiropractor after the Rugby World Cup final.
Apart from “the usuals” like payments, deposits and damage, though, South Africa has the unique problem of race discrimination in tenant selection – something Benjamin Shaw tackled with his first startup, HouseME, back in 2015.
In their must-read new book, The First Kudu, Ben and HouseME COO Lorne Hallendorff share how they raised multiple rounds of funding, grew to 34 employees, 50’000 registered users, and processed hundreds of millions in rental payments per year.
They were flying so high that there was even talk during one media interview of HouseME becoming SA’s first unicorn. To which Ben replied that a Kudu might be more appropriate, given the South African context.
The problem, of course, was that the Kudu isn’t mythical… but that was all pre-generative AI, so we couldn’t resist…
But then it all came crashing down in 2020 and HouseMe went belly up.
Apart from Covid lockdowns disrupting HouseME’s momentum (people couldn’t go to work, so how could they pay rent?), Ben and Lorne explain that they made some other critical startup mistakes, mainly because this kind of thing is so poorly documented in SA.
So this book is essentially a play-by-play documentation of a tech startup’s rise and failure, specifically for SA.
Some of the failures they unpack in the book include:
Keen to learn more? We had Ben and Lorne on the podcast last week – check it out, they share some priceless insights…
As for the residential rental space, opportunities abound.
The market might just be big enough that zoning in on one of the many challenges and solving that well could be an opportunity in itself. But, as with all major problems, there are already a few active players:
Residential rentals aren’t going anywhere and neither are the Proptechs resolving some of its more pressing challenges. We are watching this space…
🤝 Board Games. After all the OpenAI craziness last week, they’ve appointed a new board. Members include some heavy-hitters in the tech space including a board member from Spotify, a President Emeritus at Harvard, and a former Facebook CTO.
🤑 Big Spenders. The Western Cape has won Black Friday according to Peach Payments’ Black Friday tracking dashboard. The payment gateway processed over 435’000 transactions with the province seeing 53% of all merchant transactions followed by Gauteng (42%) and KZN (4%) — do other provinces even Black Friday?
🚢 Barge-Power. Floating power plant provider Karpowership just got the environmental authorisation for their 2nd of 3 projects to connect to SA’s power grid. Last month it won approval for the 450-megawatt plant at Richards Bay, with the second being a 320-megawatt gas-fired plant at Saldanha.
🧠 Brain Money. Brain chip company Neuralink has just raised another $43m increasing its previous tranche to $323 million. In May, Elon Musk’s company received FDA approval to kick off human trials.
👨💻 Brazilian Hackers. Credit bureaus TransUnion and Experian have allegedly fallen victim to a hack again by the notorious Brazillian hacker group N4ughtySecTU Group. The group is demanding a $60 million ransom but both companies have denied being hacked.
During our podcast with Ben and Lorne, focussing on a niche came up as something that is crucially important for startups. Yet niching down means making your total addressable market (TAM) smaller – sometimes too small.
That’s what makes building startups in SA so much harder than in a massive market like the US – and why so many SA startups we consult have tried to be too much to too many people.
So how do you niche down without killing your TAM?
Can your solution service a subset of the total market well first? DigsConnect, for example, niched down on just student accommodation at first.
Identify your market, then choose a subset that has:
Then ask yourself, can I go even more niche on this? I.e DigsConnect could have started offering accommodation only for first years and nail that, etc.
When you have 40 (or 120) hours a week to figure out how to add value, trying to add value to 4 different types of customers means you are only giving each 10 (or 30) hours. So you might attract a larger base, but you’re gonna battle to make it a great experience for them – founder focus doesn’t scale well in the early days!
However when you double down on a specific niche (1 type of customer), you can really fine-tune the value and customer experience. Create a “wow that was awesome” experience and they’re likely to tell others – and the others they tell might just be the group you target next.
Momentum is key, don’t break it by trying to be everything for everyone.
Iterate your offering to catch fringe use cases, and scale with tech. Once it runs smoothly and your cost to service is less than the fee they’re paying you, that’s when you can try to increase the size of your TAM by going vertical or horizontal.
Large markets are nice, but even when generating lots of revenue from these markets, the business will fail if the unit economics don’t work. Focus smaller, get the cost to service down and scale from there.
Got a hot niching and revenue tip? Hit reply and let us know…
We asked how you insure your stuff – Discovery, Naked and “winging it” take the cake…
🟨⬜️⬜️⬜️⬜️⬜️ 🧐 Old Mutual (or the like). (7%)
🟨⬜️⬜️⬜️⬜️⬜️ 💰 Outsurance – Early disruptors for my Outbonus. (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👑 King Price – Funniest Insurance ads. (3%)
🟨🟨🟨🟨🟨⬜️ 🫣 Naked – The name just gets me. (23%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍍 Pineapple (what’s not to like). (0)
🟨⬜️⬜️⬜️⬜️⬜️ 🥃 MiWay – If it’s good enough for Frank… (7%)
🟩🟩🟩🟩🟩🟩 🧭 Discovery now owns my life (27%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛋️ Bunch of banknotes stuffed in my couch. (3%)
🟨🟨🟨🟨🟨⬜️ 🧚♀️ I’m just winging it. (23%)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
Plus: Astronaut problems, open-source Tesla, OpenAI’s 4th CEO & Black Friday deals for founders.
Hi
Still wanna go to Mars? Scientists have just discovered that prolonged time in Zero-G could cause ED. Suppose the jury's still out on whether NASA should issue male astronauts a few extra (blue) pills.
Well, we all sat up a took notice when Pineapple raised another R400m the other day. (During a general startup investment downturn, no less). But it wasn’t their first, they raised R80m in 2021.
And it might not be their last, because they seem to be playing the “old” insurance game pretty well.
Let’s face it: Africa is underinsured. Almost 90% of Sub-Saharan African adults have no insurance – and that meant Africa sucked up over R18bn in dead losses from theft, natural disasters etc. in 2019 alone.
But we knew that. Of the 11.4 million cars on the road in SA, it is estimated that 70% are uninsured. (That’s more than 2 thirds of cars, so that’s likely the driver in front and behind you that is uninsured – eek!)
In fact, Pineapple says almost half their customers are first-time insurers – prolly ‘cos they’re appealing to a new demographic. But it does show that, even in the most established and competitive industries, there’s still lots of room for growth.
But how does the insurance business work?
Well, we’re no experts, but a dive into Outsurance’s numbers gives a glimpse into the model of one of SA’s leading short-term insurers.
It can get quite complex – you need to attract enough customers with a certain risk profile, at a premium price point that is competitive.
Now, to make the premiums more competitive than other insurers, you could either: 1) Reduce your claims (initiatives like the Outbonus could drive people to claim less), 2) Reduce your operating expenses, or 3) Lower your profit.
And that seems to be exactly what new kids on the block like Naked and Pineapple are trying to do. Naked has also been in the news for some big rounds of funding and has been in a showdown with Pineapple for best billboards in Gauteng for some time now.
Both are using AI and tech to automate much of the business processes and sales. In fact, Naked is so bullish on how tech can help them win, instead of a variable cost-to-income ratio, they charge a fixed percentage fee, meaning that if there are fewer claims, the additional money will be paid back to policyholders – neat.
What this means is that their profit margin can only grow if the operating costs come down. Aligning shareholders, staff and customers – a recipe for success.
It’s much the same over at Pineapple.
And how do they stack up?
Sure, R400m sounds like a big raise for an SA startup, but one of the incumbents in the sector is making 5 times that as operating profit in a year. So you almost wanna ask: is that enough?
It all seems to come down to better tech and lower operating costs.
For example, Outsurance has 5’924 employees in South Africa and, from a quick LinkedIn search, it looks like Pineapple has only 85 (Naked sits at 106).
But how they use their staff is absolutely fascinating…
Ho ho, no surprise the new kids are proportionally investing more in engineering and IT. But what’s interesting is the difference in sales vs operations.
It does seem that Naked is set on using tech to scale the sales (quoting, onboarding, etc) process as well. Having more people in ops could point to the back office functions of supporting the front end, maybe?
Pineapple does seem to be able to throw a whole lot more into sales while likely using more tech on the operations side. Is R400m enough? It surely can give the tech a big boost. Time will tell.
But one thing is for sure, the future of insurance is most definitely more lean and tech-enabled. And these two startups are positioned to have a say in how it’s going to play out.
🏆 Power Brand. Still revelling in national pride from the Bokke’s Rugby World Cup victory, it would seem like it’s also good for business. South Africa’s back-to-back Rugby World Cup titles have seen its brand value increase by 44% to USD117 million (ZAR1,989 million). Now that’s lekker man.
🛠️ Weekend Plans. Got some time on your hands? If you’re a Tesla Roadster fan, Tesla just open-sourced every single part of the Tesla Roadster's design and engineering. You could build your very own Roadster in your garage – but some assembly may be required.
🤼♂️ Trading Blows. Investec is jumping to capitalise on EasyEquities' recent press with the release of its trading platform Clarity. And while many are comparing the two head-to-head, they’re not the same thing. EasyEquities allows users to invest directly in shares offering voting rights etc, whilst Clarity (for now) offers trading of synthetic CFD, meaning you don’t actually own shares.
🪑Musical Chairs. OpenAI is getting its 4th (we think) CEO in a week. On 17 November, Sam Altman was removed as CEO by the board, with CTO Mira Murati briefly made interim CEO. Twitch founder Emmett Shea was announced as the new interim CEO on the 19th. Then, on the 21st, Sam Altman returned to OpenAI as CEO (but not after first accepting a job at Microsoft and like 95% of OpenAI employees threatened to quit). Just make AGI the CEO already!
🤑 Crypto Fine. The world’s largest crypto exchange Binance, has had its CEO step down. Changpeng Zhao (CZ) will also admit to violating US laws as part of a $4 billion settlement after an investigation into illicit financial breaches at Binance.
We’ve all watched the global AI plays, but what can this tech unlock specifically for us here on the African continent? We’re meeting two founders leading the AI charge locally to come share where they think the big opportunities are…
Join us, along with Catherine Luckhoff from 20Fifty and Matt Quatra from Webory for The Open Conversation on Tuesday 30 November at 18:00.
Found any great deals for founders? We honestly think it’s slim pickings this year…
And maybe that’s how it’s supposed to be – Black Friday mainly for entertainment goods, considering that’s how it all started. See, in the US, you have higher incomes and economies of scale, so Black Friday was all about clearing stock from showroom floors after Thanksgiving.
Last season’s stock just took up valuable floor space for newer, more expensive models people are gonna want around Christmas, so selling a TV for $1 dollar made sense if it was holding you up from making a juicier $1’000 sale.
That said, SA dropped nearly R20 billion on Black Friday last year, with that number set to rise to R26 billion+ this year. Prolly driven mostly by retail – just watch yourself, those buggers have inflated their prices all year, so your “deal” might not be as sweet compared to the same one last year.
If anything, we’d love to see SARS get on the Black Friday bandwagon.
OK, all jokes aside, we did manage to round up software deals you might find useful…
Project Management
Get 25% off all your favourite Notion Templates. Valid ‘til 29 Nov.
Marketing
Get 50% off social media and email tool Tailwind’s annual plan.
Automation
Get 90% off Robomotion, which lets you automate web or desktop applications that don’t have an API with cross-platform robots that work on Mac, Linux, and Windows.
Collab
Save up to 94% on Sessions, the remote collab tool that automates tasks like creating agenda drafts and transcriptions using an AI-powered copilot to manage your entire meeting lifecycle from bookings to large webinars.
AI Imagery
Get lifetime access to Supermachine for just $79 (normally $190 per year), an AI image generation tool for stock photos, art and more.
SEO
Get 30% off selected Semrush annual plans – one of the only big SEO tools that has any deals this year (SEO, content marketing, competitor research, PPC and social media marketing all in one place).
Email newsletter
Our email services provider, beehiiv is offering 20% off all annual plans! Thinking of copying us? Well go on and get your beehiiv set up.
Found any great deals? Hit reply and let us know…
We asked which channels/OTTs you watch, and now we’re seriously doubting Netflix’s reported SA penetration…
⬜️⬜️⬜️⬜️⬜️⬜️ 🏈 DStv (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ 📺 SABC (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 💪🏾 Showmax (4%)
🟩🟩🟩🟩🟩🟩 💻 Netflix (53%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍏 Apple TV (4%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏰 Disney+ (11%)
🟨⬜️⬜️⬜️⬜️⬜️ 🦸 Prime Video (9%)
🟨⬜️⬜️⬜️⬜️⬜️ 📱 Nah, give me social media any day (13%)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
Plus: Granny-powered drones, exploding starships, whale-watching AIs & valuing your startup like an investor.
Hi
Stealth attack? This Ukranian Grandma of 6 enlisted as a drone pilot for the army. But only because they wouldn’t let her join the infantry.
In South Africa, video OTT (delivering media content over the net) is an R4b+ industry. The entire entertainment & media industry is set to grow to R231.2 billion in 2027 at a compound annual growth rate (CAGR) of 5.5%.
So it makes sense then to see DStv and Showmax owner MultiChoice doubling down on Showmax, dropping R500 million into a Showmax 2.0 (set to launch in 2024), in partnership with COMCAST, who owns NBC Universal.
It also makes sense, given that for the first time ever DStv has lost subscribers in every segment, including a whopping 14% decline in the Compact tier – previously one of its strongest performers.
But will this Showmax 2.0 play work? Let’s dive in
Well, we know Showmax generated R555 million in subscription fees over 6 months, and assuming most people are on the R99 or R229 per month subscription (Showmax also offers an R39 pm mobile-only option), they likely have anything between 600k and 800k active subscribers (some say its closer to 1 million).
That’s a long shot from their 21 million DStv subscriber base. But Showmax 2.0 is built with the ambition of getting to 50 million subscribers across DStv and Showmax in the next 5 years – another 29 million to go.
The good news is that OTT is predicted to grow 12% year on year over the next 5 years, putting SA’s OTT market at R7.6 billion.
Now, even if Showmax claims all the growth there is over that time, it might only grow its Showmax subs to 5 million. Still 24m short which they would want to make up throughout the rest of Africa — ambitious indeed.
Although the latest data shows that Showmax has overtaken Netflix as the leading OTT in Africa (40% vs 35%), we all know the chances of capturing 100% of the growth are extremely slim.
Netflix is a global powerhouse with over 240 million subscribers (300k-400k in SA alone). And then there’s still Apple TV, who’s pitching itself through our smartphones, making up a bouquet of options.
And with Amazon e-commerce coming to SA soon, we might see a bigger uptake in Amazon Prime subscriptions locally. In the US, Amazon offers priority delivery, coupled with other benefits for a monthly subscription, including access to Amazon Prime streaming.
But whilst the battle for who captures the TV screen rages, the real question is: “Was this ever a battle for the TV to begin with?”
The one thing that really poses a serious threat to OTT streaming services could be platforms like TikTok, YouTube and Instagram.
The content might differ, but it overlaps, competing for the same time slot in consumers’ lives: Entertainment.
And with the socials’ business models mostly not requiring subscriptions, competing for our attention is becoming fierce.
South Africans already spend 154 days per year online, 54 of those on social media. Each month, the global average for time spent on social media increases:
So, whilst Showmax is pumping millions into becoming the continent-dominant OTT, it might all be in vain. Who knows what the future of screen entertainment holds… As always, we’re watching this space…
🐋 Conservational AI. Vodacom and the World Wide Fund for Nature (WWF) in SA have joined forces to launch a pilot program in Saldanha that aims to protect whales and other marine life from getting tangled in the ropes of offshore mussel farms. The AI-based tech uses cameras and hydrophones to alert mussel farmers to whales in the area to activate an emergency response.
⚡️Splashing Cash. Eskom will use some of the R230 billion multilateral loans to expand SA’s transmission grid, which will “significantly contribute to stopping power cuts and is crucial to bringing renewable projects online”. It’ll also go a long way to improving Eskom staff morale and performance – as Eskom struggles with “people problems”.
🤖 Open Cray I. Between Sam Altman’s ousting (and joining Microsoft), and some heavy hitters resigning after the drama – newly appointed interim CEO Emmett Shear already has the first 30 days of his tenure planned out. The former Twitch CEO tweeted his 3-point plan at 1 AM (as one does) including hiring an investigator to dig into the events leading up to his appointment.
🤝 Neighbourgood news. SA Prop-tech Neighbourgood has acquired Local Knowledge, a next-gen travel experience and tech company. (The founder of Local Knowledge, Nick, reads The Open Letter. Lekker one Nick!). Local Knowledge is set to build the experience vertical of Neighbourgood – helping guests create lifelong memories and meaningful connections.
🚀 Scattering Starships. On Saturday SpaceX launched its 2nd Starship. The rocket flew for around 7 minutes, successfully separating from its booster before its internal Automated Flight Termination System was triggered destroying it mid-flight.
Ask any founder how much they think their startup’s worth and you’re likely to get a range of answers that all boil down to the same thing: More. Always more.
But then you chat to investors and do some funding rounds, and they always seem to have a different figure in mind…
Why? Well, for starters, they don’t have any personal or emotional attachment to it, so they need to evaluate it objectively, on merit alone. And that often means finances and execution, not the idea itself. So they look at it as potential multiples of Annual Recurring Revenue (ARR).
And doing the same exercises they do is extremely illuminating for how you should grow your company. Here’s one of our favourites…
LTV and CAC are north stars for startups. A quick recap:
If you take your LTV and divide it by CAC you’ll get your LTV/CAC ratio.
According to Dirk Sahlmer from SaaSfyi’s valuation framework, the higher your LTV/CAC ratio, the higher your value scales as a multiple of ARR (annual recurring revenue). Like so:
LTV/CAC ratio
Company Valuation
Lower than 2
Double your ARR
Between 3 and 5
2–2.5 times ARR
Between 5 and 8
2.5–3 times ARR
Between 8 and 10
3+ times ARR
Note: These are international SaaS metrics, so you might have people locally differing from this quite a bit. In reality, very few companies have an LTV/CAC higher than 3 to 5.
But, this should serve less as a valuation tool, and more as some benchmarks for you to be building towards – because every startup needs to generate revenue.
Got a valuation insight or question? Hit reply and let us know…
We asked how you sell your cars, and most people use tech-enabled platforms…
🟨🟨🟨🟨⬜️⬜️ 🏆 Trade in for something bigger and better, baby. (23%)
🟨🟨⬜️⬜️⬜️⬜️ 🚗 Drive it into the ground then sell it for parts. (13%)
🟩🟩🟩🟩🟩🟩 ⚙️ WeBuyCars, Weelee etc. (30%)
🟨🟨🟨⬜️⬜️⬜️ 💻 Facebook Marketplace/Gumtree. (17%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🚙 Pass it down to my kids. (3%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏷️ Drive around with a “For Sale” sign in the window. (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤹 Leave the keys in the ignition and claim insurance. (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🙃 Why on Earth would I buy a car? (3%)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
Plus: Squishy robots, DStv solar, Christmas delays & setting up a tax-savvy company in SA.
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Need a hand? Scientists developed a new soft-materials technology for 3D printing robots with ligaments, tendons and such. Meaning new Luke Skywalker-style limbs are not that far off.
Ten, 20 years ago buying and selling a second-hand car meant navigating dealerships or a trek to Pick n Pay for a printed copy of the AutoTrader. Problem was, by the time you’re done browsing, the one you wanted might have already been snapped up. Not ideal.
SA’s 2nd-hand car market
Used cars are a big business. Out of the ±11 million vehicles on the road, more than 1 million change hands every year. Consider an average price of R250’000, that’s a R250bn industry!
But WhoBuysCars?
WeBuyCars changed the game over the last few years – one of SA’s leading vehicle buying (and selling) platforms with over 2’500 employees, and 70 branches (including Morocco).
At first, the name seems odd for a company that sells 2nd hand cars. But it's indicative of the fact that selling your car has more pains than finding one to buy. WeBuyCars solves this pain like so:
This put WeBuyCars in the position to acquire a lot of stock, to offer the widest choice to buyers. But it also means they have to sell quickly, which is where the tech comes in:
Tech & business process engineering make the model work
Chatting informally to a WeBuyCars buyer, we learnt they try to sell a car within 5 days or less. If not, it goes up for auction. Unsold cars cost money and moving stock fast is crucial.
And 2022 was a massive year for them.
But then the wheels came off a bit in 2023. Rising interest rates and a downturn in the market dealt the entire car industry a blow, and WeBuyCars are expecting 20% less profit this year.
That said, though, the use of tech to empower their business processes has unlocked margin and powered their business model – and therein lies the opportunity. This is an R250bn a year industry with thousands of independent dealerships. So the question is: Why aren’t we building more software to help second-hand car traders cut costs, improve efficiency and unlock more margin?
And it might make sense now more than ever. Official numbers aren’t showing a recession in SA (yet) – but there is definitely a lot of pressure on consumers and the industry. Players across the board, from WeBuyCars to Weelee, Cubbi, getWorth and all the small independents will be looking for cost savings and better margins. And what can do that better than great niche SaaS products?
We are watching this space.
Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend
🛰️ Leaving the Nest. Just like a little bird getting ready to leave the nest, SpaceX looks to be preparing for Starlink to spin off via IPO. With assets being moved to a wholly owned subsidiary, the listing for the fast-growing satellite division could happen as soon as next year.
🍍 How you like them (Pine)apples. Local AI-powered digital insurance provider Pineapple announced the closing of their R400 million funding round led by new investors with existing investors also kicking in some cash.
☀️ Let the sunshine in. MultiChoice released its interim financial results this week, revealing a 5% drop in active subs. Apparently, loadshedding is to blame, so the video entertainment group is exploring a subscription-like service for solar to help its customers stay entertained – even when the lights go out.
📱 Invest Tech. Investec is set to launch its EasyEquities competitor Clarity (previously only available to its private banking clients) to offer easy, affordable access to financial markets. And if Investec’s six months’ financial results released yesterday are anything to go by, doesn't look like they’ll need to charge R25 per month…
🧌 The Grinch That Delayed Christmas. SA’s busiest container port, Durban, is suffering heavy congestion with some container ships taking up to 20 days to offload their cargo – 4 times longer than normal. To add to importers’ headache, shipping operator MSC says it’s going to start charging customers a $210 per container “congestion surcharge” from 3 December 2023.
If you’re deliberating company structure or being smart about tax, this week’s How Would You Build It podcast is for you. We spoke to tax advisor and Irhafu founder Andre Bothma about setting up your startup in the SA company and tax landscape.
And he dives straight in with the No 1 biggest mistake most startup founders make…
1. Don’t just run to the CIPC to start a company
It’s way easier and cheaper to just test ideas out as a sole proprietor first, especially if you don't have official long-term contracts or lots of sales yet, Andre explains here. Just use revenue share contracts to sort out things with your co-founders and go test your ideas.
Once you grow or land big longer-term contracts, take your time and register your company properly, he says here. Avoid equal share structures (like 50/50 or 33/33/33 splits) and redefine all your business agreements to reflect your new structure. Plus: Remember, the main reason you want a company is for the business benefits and to protect you personally from the credit agreements necessary to grow, so be clear about why you need a specific structure.
2. When and how to register internationally
If you’re targeting international markets or especially if you’re going to raise funds outside of SA, then setting up offshore’s an option – maybe Delaware for the US and Malta for Europe – Andre says here.
Just do it when it’s financially viable, ‘cos it can cost a whole lot more to get done. And be aware of Controlled Foreign Company (CFC) regulations – for example, if the majority of your overseas company is owned by South African residents, you actually pay tax here in SA, not over there. It’s best to get a professional financial advisor to help you set up overseas.
3. South Africa could be set up for business-beneficial tax
With SA’s company tax now down to 27%, it’s a good time to start keeping more cash inside your business (as opposed to spending it all to post a loss just to save tax). Andre even mentions here that he imagines South Africa could lower corporate tax even further, down to maybe 25% sometime in the next decade.
This wouldn’t be a bad move for the country, since lower taxes make it more attractive to post profits, and more profit drives more business, economic growth and employment. This would also make SA more attractive to investors, so keep your eyes on this one.
Or if podcast app is your vibe, catch them here:
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We asked if you see yourself using a stablecoin soon, and would you believe the majority still opt for normal currency?
🟨🟨🟨⬜️⬜️⬜️ 🤙 Yes, I use it all the time. (29%)
🟨⬜️⬜️⬜️⬜️⬜️ 😕 Still not sure what a stablecoin is. (17%)
🟩🟩🟩🟩🟩🟩 🏦 No, I only make use of FIAT (50%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛏️ I keep my money in my couch (like a president) (4%)
Find more awesome business ideas from South Africa's favourite startup and tech newsletter.
Plus: Goodbye Fitbit, Apple’s next big play, early Black Friday deals & building a fully remote startup.
Hi
Can’t trust your AirPods? It might be best to CT scan them – see what real Apple AirPods VS counterfeits look like under computerised X-rays.
One of crypto’s biggest criticisms has been its volatility.
Now, volatility is great for day traders who profit from ups and downs, but when you want to pay someone, it gets tricky…
You are getting more or less, but not the amount you agreed on.
That’s where stablecoins like USDT (Tether) or USDC are useful. And Tether provides a safe retreat back into good old FIAT currency in times of great volatility without having to exit crypto altogether. (Just exchange your crypto for the USDT and wait for the storm to pass then exchange it back.)
But what is a stablecoin?
The world's first stablecoin, Tether, was launched in 2014 and is backed 1-to-1 with the dollar, according to Tether Limited Inc. In simple terms, it's real-world-equivalent money used as digital money to transact on various blockchains. Think of it as having dollars in crypto format.
How does Tether work?
There are 5 steps in creation, using and redeeming tether.
Step 1: A KYC -erified user deposits FIAT currency into the Tether bank account.
Step 2: USDT tokens get created for the amount deposited minus fees and sent to user selected address.
Step 3: USDT is used by users and can be transferred, traded or stored for later usage.
Step 4: Users can redeem their USDT for FIAT currency.
Step 5: Tether removes the USDT from the blockchain and deposits the funds to the user’s bank account.
Then Tether generates revenue in two main ways:
Basically, they sell you Tether for real dollars, then they use those dollars to invest in mostly US T-bills (government bonds) at roughly 5% per annum. That’s a boatload of interest which they are not sharing with users.
Ridiculously profitable and that’s how they manage to generate $1b+ per quarter profits with just 60 employees.
Well played, mon wascals…
The only caveat? You need enough utility and liquidity for people to want it and trust it.
So the playbook in simple terms is:
Sound easy? It’s not. But as the adoption of blockchain grows, there might just be a chance that South Africans see a need for a ZAR-backed stablecoin.
After all the South African Rand is one of the top 20 most-traded currencies in the world. As more and more trading moves to blockchain, the need for a ZAR-backed stablecoin might just increase.
The local stablecoins
Now, if you grew up in the 90s, you might remember Gareth Cliff on 5FM had a tech insert at one point hosted by Simon Dingle. Well, after leaving the journalism world behind, Simon founded ZARP stablecoin.
While it’s not SA’s first and only attempt (XZAR is another rand-pegged stablecoin), ZARP recently announced that Old Mutual will be pumping “substantial” liquidity into ZARP.
Why could this be big?
Got ZARP?
For now, the use cases are limited, but it could very well be adopted by local crypto exchanges as an on-chain irrefutable proof of customer funds. In addition, forex traders of USD and ZAR can now trade USDC/ZARP on-chain, should the transaction fees be economically viable.
But as Decentralised Finance (DeFi) becomes more mainstream, we could see more and more use cases for ZARP emerge. Pull it off, and this might just be one of the most profitable fintechs (by % margin) in South Africa yet.
Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend
🎉 Early Black Friday. With Black Friday becoming more of a thing in SA in recent years, many retailers are already hustling to get their hands on your South African rands, with some retailers already in the thick of it with some lekker discounts on tech gadgets.
💸 Going for Broke. MultiChoice invested R500 million into Showmax ahead of its relaunch in late 2024. Looks to be causing some cold sweats for shareholders, though. The increased investment could reduce trading profits by as much as R1.3 billion – and comes off the back of MultiChoice’s share price dropping 43% YOY.
🙅♂️ Thanks, but no. Green digital utility startup WiSolar, has turned down a $1.5 million loan offer from the Industrial Development Corporation of South Africa (IDC) citing unfavourable loan terms that could potentially hinder their growth and mission. Instead, they are opting to install prepaid solar systems.
💁♀️ Throwing in the towel. After being acquired by Google back in 2019, Fitbit is turning its back on SA shores, and taking Nest (also owned by Google) with it. The wearable brand’s reason for waai’ing is part of a move to align its hardware portfolio to the Pixel smartphone’s regional availability.
🍎 Apple’s Big Plans. Apple is launching iOS18 next year and promising it’ll be “ambitious and compelling” with major new features, designs and ramped-up performance and security. We’re gonna hazard a guess and predict they adding some major AI capabilities. Anyhow, it’s set to be Apple’s biggest OS update yet.
You got your idea, a few key individuals lined up and you’re ready to go. And like most startups, you don’t have a dedicated building space, but what if your team is scattered all over the country or province?
Not that remote Jimmy…..
Yes, you can build an entire company full-on remotely. It’s said that the best startup newsletter in the known universe is 100% remote. And it’s exactly as easy AND as hard as you imagine.
But there are 3 core elements you need to nail from Day 1 (because it’s too hard to change afterwards), namely:
Here’s how
1. Get the team aligned on the vision
Whether it takes vision workshops, scenario planning, goal-setting sessions, freaking role-playing or a mix of them all, do it. Ensure everyone is aligned on what you’re doing and where you’re going before you make anything official.
2. Autonomy is king
People need to be and feel 100% empowered to execute, call to question, interrogate and even stop production if necessary, when they feel something is not working towards company goals.
Likewise, they need to have full control over their time and contributions. For this, it helps if your roles and responsibilities are super clear – possibly even having domain specialists as a team.
3. Adapt to asynchronous work
The biggest hurdle for most companies is saying goodbye to the 9 to 5. When you’re remote, people can’t and shouldn’t always align calendars. Everyone’s rhythms differ, and you frankly get the best quality work when you let people work when and how they want. This means designing a way of working without meetings and using tools to fill the gaps.
4. Meetings with a purpose
Speaking of meetings, cut them down to the absolute bare minimum your company needs to survive and they must have a specific purpose, agenda and action points.
We at The Open Letter have only 2 super-short video meets per week – a quick review the night before you get your newsletter. But they’re entirely optional (we’ve rarely had any with everyone present), because our system of work negates the need for real meets.
5. Have a central truth centre
If you have information and strategies that change all the time, keep a central “truth centre” where the new direction is constantly and centrally updated so everyone can see it.
We chop and change all the time, so we use Notion to keep track of our current truth. But you could have a Miro board, Trello or whatever collab app you choose.
6. Project management & accountability
When you have co-founders and team members, you need absolute transparency and accountability around tasks and progress. No worries, your truth centre takes care of that, too.
Got a remote startup hack? Hit reply and let us know how your team optimises…
We asked who’s gonna be building GPTs when it goes public (which it has), and the majority said YAY…
🟩🟩🟩🟩🟩🟩 💡 Yes, I have a ton of ideas. (32%)
🟨🟨🟨🟨⬜️⬜️ 😐 Normal ChatGPT is fine for me. (24%)
🟨🟨🟨⬜️⬜️⬜️ 📱 Nah, but keen to use other people’s apps. (16%)
🟨🟨⬜️⬜️⬜️⬜️ 😕 WhatGPT? (12%)
🟨🟨🟨⬜️⬜️⬜️ 😈 AI is evil, I refuse to participate in any of this. (16%)
Your 2 cents…
It’s live: If you have GPT-4, Nicky, hit “Explore” and start building!
Instagram post by @theopenletterza
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Plus: Birth of an island, oxygen on Venus, electric Uber & bootstrapping a cybersecurity platform.
Hi
More living space? Don’t worry, Earth’s got you covered by creating more new land all the time. You can watch a brand-new island being born off the coast of Japan this past week.
Inside the brand-new BombGPT Altman just dropped…
Just as we start relaxing into a world with AI, OpenAI drops a bomb at their first-ever Dev summit – and, once again, some rippling waves will reach our shores soon…
Why, you ask? Most media are just putting us to sleep with long lists of incremental performance improvements announced at the event – how far back it can recall and boring stuff like that. And that’s great, you can go read yourself to tears about that elsewhere.
We’re talking about that pivotal moment when Altman shows how they’re giving users the ability to create apps (or GPTs as they call them) and make them available on a new OpenAI GPT store.
Missed it? Behold:
“App Stores” are big business
Some context: Last year, Apple grossed about $80 billion in app store revenue. But that’s nothing. Through the store, Apple has ±36 million registered developers who maintain almost 1.8 million apps – apps that add value to 373 million weekly Apple users without Apple having to do a thing.
Now imagine OpenAI can get millions of developers contributing to making apps for its 100m weekly active users. The best part? Looking at the demo video, it might only take a few minutes to build a useful app. Building a proper iOS app? Probably a few months.
If the revenue share is lucrative (which it likely would be), expect to see a lot of apps hitting the store once it opens to the public.
However, building apps within minutes without requiring code has some implications for the broader tech space.
What happens when AI goes there….
Many startups built frontend chatbots around specific themes using OpenAI in the background. I.e. a social media post-writing app that uses the Open AI API with some context overlaid. With the GPT Store, it will take minutes to build such an app and with a major distribution channel in Open AI store, it will be tough to go up against it.
We only use app interfaces for certain tasks because large language models have always been bad at understanding what we want these apps to do. Now we can speak to apps and get them to execute tasks for us – meaning we might no longer need an app between us and the services it needs to execute.
User experience design was a field that originated to fill the gap between humans and software communicating with each other. Now with large language models that can understand what we want done, do we still need those interfaces? Some for sure, but many will likely be replaced by voice or text prompts.
A large part of building software is about building the interfaces we as humans engage with. And whilst there has been a lot of talk about how AI will end up writing software, what if AI makes the need for building software interfaces mostly obsolete?
With an easy-to-build platform, major adoption and an army of developers, I think we will see more happening in this space in the next few months than ever before.
Will anyone catch Open AI? Once their store is established and paying developers well, it will be a tough battle for anyone to dethrone them.
As far as app ideas go, we have a few ourselves, more in the opportunity pick section below.
Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend
🖐️ Access Denied. The SABC has seen a recent additional funding request to treasury denied. The request for an additional R1.5 billion was turned down by the Finance Minister. The SABC has previously warned it would collapse financially without an urgent cash injection.
🗼Catastrophic Debt. The same failing SOE (SABC) is also a threat to broadcasting signal distributor Sentech whom it owes R700 million – roughly 50% of Sentech’s annual revenue.
🫁 Venus Air. Oxygen has been discovered on Venus, but don’t hold your breath – or maybe do. Scientists have found a thin layer of atomic oxygen (consisting of a single oxygen atom, not the breathable two-atom kind) smushed between two other layers of Venus’ atmosphere.
🎮 Discounted PS5s. FNB has launched their Black Friday deals and, among others, you can pick up a brand spanking new PlayStation 5 plus 2 games for a cool R6’660. The deal coincides with FNB’s 185th Birthday and will only run on the 24th of November for 185 units.
🛵 Uber Services. Uber in SA just celebrated 10 years in the country with a bunch of interesting announcements including an electric scooter fleet for Uber Package, Uber Store Pick-ups for collecting prepaid items from any store, Uber Van expanding to Cape Town, and Uber Live where Uber Eats delivers food to any large event like a festival or sports match.
If you’re inspired to start looking for where corporates have gaps with easy GPT apps, you’ll love the story in our latest 30-minute podcast. We spoke to Dan Thornton, co-founder of cybersecurity training platform GoldPhish.
Dan explains how initial engagements with CyberSec firms’ helpdesks led to a whole host of innovations and opportunities.
A few lekker highlights
1. Great things evolve out of hands-on experience
GoldPhish didn’t start as a big training platform, as Dan mentions here, they initially just entered with your standard training courses and programmes. But then, being in that space, Dan and team quickly learnt that the real issue for CyberSec is the human element, as he mentions here.
And it was from that moment of realisation onward that they could confidently build up the platform to what it is today.
2. This allowed them to fund development themselves
Going to market with an initial product and getting some clients first, quasi-service-based, Dan and team managed to generate some income initially and were then able to use that revenue to build the platform – almost no funding rounds required – which is awesome and savvy bootstrapping.
3. And the whole thing is run fully remotely
Don’t tell Dan full-on remote can’t be done. As he explains here, his co-founder is in the UK and he’s in Saint Francis Bay, so they started off working remotely and through the years assembled an amazing team of top tech people from all around the country.
Still working fully remotely, they use tools like Slack, Loom and a suite of Google products and basically meet face-to-face once or twice a year for, we assume, a bit of gees.
Or if podcast app is your vibe, catch them here:
Like our podcast? Remember to subscribe and never miss an episode.
We asked if you would pay R25pm to trade on EasyEquities and, well, “users say OK!”
🟨🟨🟨🟨🟨⬜️ 😊 With a smile! (I make money with them) (23%)
🟨🟨🟨🟨⬜️⬜️ 🚫 Not a chance (even if I made money last year) (19%)
🟩🟩🟩🟩🟩🟩 🙌 Yes, I’m pro investment accessibility, so will support them, win or lose (26%)
🟨⬜️⬜️⬜️⬜️⬜️ 🛏️ Never, I’ll stuff that R25 in my presidential mattress instead (6%)
🟨🟨🟨⬜️⬜️⬜️ 💰 Nope, I don’t trade stocks and shares and stuff (13%)
🟨⬜️⬜️⬜️⬜️⬜️ 💹 I only invest through unit trusts or brokers (9%)
🟨⬜️⬜️⬜️⬜️⬜️ 😕 What is a “stock market”? (4%)
Plus: Gas masks, Elon’s AI, Apple’s iCar & how to bulletproof your onboarding.
Hi there,
Fresh air? In light of WeWork going belly up, here’s a reminder that its ousted founder Adam Neumann once smoked so much marijuana on his private jet, the cabin crew had to put on oxygen masks. Do due diligence, people.
A lot of big players are switching up business models…
X did it first. Then, back home, so did OfferZen, News24 and now even low-cost investment platform EasyEquities is switching from fees to a subscription model.
Why? Their ads- or fees-based models fell victim to the current economic climate.
From cuts in marketing spend, hiring freezes and fewer transactions – it’s all signs of an ailing economy.
Like, 70% of users would probably draw the 25…
In the case of EasyEquities, they introduced a somewhat complex loyalty program structure that now costs R25 – unless you can tier up to a point where they waive the fee.
And what if you don’t pay? Well, every 6 months they’ll sell some of your shares to cover the bills – yikes!
But we’re not here to discuss the EasyEquities subs structure, rollout or backlash – that’s all over the internet. No, we’re here to show you some things we found in the numbers they released earlier this year and the possible thinking that led to this change.
It was probably inevitable
Making it big on the stock market is most retail investors’ dream ever since the Robinhood app launched back in 2015. But the problem is that for some to perform better than the market, many others need to perform below the market.
Some estimate that up to 70% of retail investors lose money. The bull run (when more people buy more than sell) during the pandemic, retail investors lost more than $1 billion.
So what happens when inflation goes up, and that “losing” 70% are either out of money or get tired of losing? Well, they stopped trading.
And when your business model is tied to the activity of users (buying and selling, for example), well, it gets hard to keep the lights on in wavering activity.
Yeh, we feel you, Harold.
Behind the numbers
Some highlights from EasyEquities’ Feb reports include:
From this you can conclude the following:
So for the 2023 financial year, the revenue generated through activities pretty much only paid the fees to keep the platform running.
But with active users down and trading activity likely also down, well the math doesn’t work so well. And when the math don’t work, things need to change…
So R25 a month per user is probably in the range that would give it a good shot. Will the subs model work for them? Only time will tell. In fact, Purple Group (their holding company)’s interim results are due soon, and that’ll shed more light on the actual numbers.
For now, the learning is clear – bull-market business models might be going extinct, and we are expecting some major shifts in how many of our favourite tech companies operate.
Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend
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🌍 Africa Investment. Tech fund Norrsken22 closed its first African tech growth fund at $205 million to back startups in the African startup ecosystem. This highlights the keen interest shown by global investors to support African startups at a critical stage of their growth journey.
🦹♂️ Wen Lambo? Once promoted by celebrities Jake Paul and Soulja Boy, meme coin SafeMoon’s execs have been arrested after being accused of withdrawing $200 million from funds they apparently told investors were “locked”. The CEO and CTO allegedly splurged on luxury cars and homes.
💰 Funders’ Corner. Looks like SA tech has had a couple of big wins on the funding front of late. Jobs platform JOBJACK secured R45m in their pre-series A round. TRIPPLO logistics software platform raised nearly R34m, and InsureTech Inclusivity Solutions raised over R27m.
✖️ AI Twit. This weekend, X King Elon Musk soft launched his answer to fight ChatGPT called: xAI. The platform will be launched to a select few and has been touted (by Musk) as: “in some important respects, it is the best that currently exists.”
🚙 iCar Hype. Apple fanboys and girls will be happy to know that the Apple Car is in the works – but may not be launched “until later in the decade”.
🍯 Sweet. Two South African Beekeepers hailing from the Western Cape have clinched top honours at the 100th UK National Honey Show. Dawid Rooifontein came first in the International Honey Category, with Audrey De Jongh coming in third.
Welcome to Builder’s Corner, proudly presented by Redeem Studio. Keen to elevate your onboarding experience? Connect with Sherwin at Redeem Studio.
OK, so you’ve got some users and want to create an awesome experience. Short of paying people to keep using your app, how do you get them to really WANT to stay…?
How Product Owners start every weekday.
Well, if you ask tech growth hacker Casey Winters, user onboarding is THE place to retain and even acquire users, because that’s where you engage them and where they refer their friends to.
And, according to CEO-coach Samuel Hulick, there’s a divine trinity for foolproof onboarding…
1. Integrate it fully
Forget tooltips, tutorials, videos or anything that overlays your interface. You want no interruptions, so build your entire product with the onboarding seamlessly integrated.
This means: The user opens the product for the first time and they’re guided by an “invisible hand” to take an action that realises instant value. I.e. make your onboarding part of your UI. Every step is friction (even the ones you think are helpful), so make it simple.
2. Let it empower them
Onboarding is not for “teaching” people how to use your UI – no one likes that. Instead, design onboarding to instantly help them do what they came here to do, fast.
3. Make it continuous
Onboarding is not just for first-time users. Build it into the fabric of your product so that even weeks or months down the line, that same “invisible hand” is still guiding them to realise value.
A) B2C Software/App: Netflix
One awesome example of an integrated, empowering and continuous onboarding experience is the Netflix app. First time you open it, there’s no visible onboarding, just an advanced recommendations engine running in the background.
The engine knows which shows most people are here for, so it automatically puts them on your first screen (integrated). The user watches the show, great, that’s what they came here for (empowering). Then, when the show’s over, it gives truly intelligent, data-based recommendations, always (continuous).
B) A Service Business: Consultant
Copy-paste this thinking for physical businesses too. A consultant, for example, can provide an awesome experience with a simple booking tool on their website, that syncs with the client’s calendar and notifies them, etc. (integrated).
Then, in the meeting itself, the consultant doesn’t overwhelm the client with “answers”, they spend the first half of the conversation actively listening and asking questions, so they are 100% sure they understand what the person needs before making a recommendation (empowering).
Lastly, the consultant might run every meeting just like this, so that the format of empowerment stays constant. Otherwise, they might create a communal dashboard or some form of data-based analytics system, from which all future discussions and actions lead (continuous).
Builder’s Corner is brought to you by Redeem Studio. Ready to take your onboarding to the next level? Chat to Sherwin at Redeem Studio.
We asked where you started your first company. And would you believe most people are still spinning up or launching from home?
🟨⬜️⬜️⬜️⬜️⬜️ 🏡 My parents’ garage (8%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🏘️ At my friend’s place – I was more Wozniak than Jobs (0)
🟨🟨🟨🟨🟨⬜️ 👨💻 In my home office, thank you very much (27%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛳️At workshop 17 of course (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 💼 WeWork all the way (4%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💡 Innovation City, baby (4%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🔑 Had to rent property because of the business type (4%)
🟩🟩🟩🟩🟩🟩 🤞 Still working on my first startup (30%)
🟨🟨🟨🟨⬜️⬜️ 💻 Wherever my laptop takes me (23%)
⬜️⬜️⬜️⬜️⬜️⬜️ ☕ The corner coffee shop (0)
Your 2 cents…