Hi

Chill into the weekend? Almost 2 million people seem to love AI Johnny Cash remixing Taylor Swift from beyond the grave.

In this Open Letter:

• Desk space: Some startups scale differently.
• Faster coding, SA tech investment boost & EasyEquities’ subs woes.
• Paid to play: Meet the guys helping gamers earn cash.
• The results: What and whom we buy LEGO for.
• Share this: Get free startup tools for your business.

TRENDING NOW

Keeping Hot Desks Warm

Some startups just scale differently…

Remember when we said not everything works on a global scale?

Well, there’s a new startup casualty: The once-darling of VCs, WeWork is apparently filing for bankruptcy as early as next week. 

The co-working giant has over 500 locations in 119 cities worldwide (including 3 in SA). And was, at one point, valued at $47bn. But things have gone sour since then.

Why? Well it all began with startup folklore

Apple, Google and Amazon all started out of garages – a highlight of any Silicon Valley tour is probably walking past the places tech giants started… 

Love how Apple has the most aesthetically pleasing, Google’s functional with natural light, HP looks like our printer and Disney – well anything could come out of there.

But there’s a problem. Big cities like New York, Paris and London don’t have a lot of garages to work from. So where do tomorrow’s great startups gather?

Well, that’s where WeWork thought they had the answer.

By entering into long-term leases at below-market value, they’d transform office blocks into co-working spaces and sub-lease desk space to create a margin.

Why did it fail? Well for one the business model wasn’t sustainable; one year they made a $1.6bn loss on $1.8bn in revenue. But there are some other factors at play that other global tech giants such as Uber and Airbnb also experience.

New York isn’t Cape Town

Can you actually build one platform that operates the same everywhere around the world? 

Software, maybe. It worked for Web 2.0 and pioneers like Facebook and Twitter. But scaling physical services globally, you run into a particularly sticky problem…

While Tim in Cape Town might like Taylor Swift just as much as Michelle in New York, when it comes to working habits, culture, ideas of holidays and desires and dreams, they are quite different as people. 

"Never heard of most of these places I'm making money from..." – Swift

Not to mention how diverse markets are – i.e. Cape Town apartments are bigger and way more affordable, so perhaps working from home is not so bad over here? Finally, our laws and societal norms are very different, adding complexities that make it hard to scale.

Does that mean co-working won’t work? Of course it can, but, as with so much else, hyper-local is way more lekker.

This stuff works better locally

To be fair, WeWork South Africa says it will not be affected by its parent’s bankruptcy. But there are a few more tech-startup-focused spaces to note:

With locations in Cape Town, Joburg, Paarl and even Mauritius, Workshop17 is one of the pioneers of startup co-working space in SA. But co-working is more than just desks – it's about the community and the vibe which is something that Innovation City Cape Town does well.

But a startup in this space that caught our attention was Neighborgood. They are pioneering a hybrid model combining hotels, long stays and co-work in various locations. This is smart ‘cause it beats the seasonality of each of these models. And at just R990 a month for a desk (including unlimited coffee!), it might just become a go-to option for freelancers in the city. 

The world has moved on from startups’ garage days and co-working spaces are here to stay. As for a player of WeWork’s size attempting this on a global scale? We are not convinced (yet).

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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

OVER TO YOU

IN SHORT

⚡Blitz Coder. AI search engine and pair programmer, Phind is reportedly coding 5x faster than GPT 4, with high-quality answers to technical questions in 10 seconds flat.

⛰️Take a Hike. SA Finance Minister Enoch Godongwana has revealed that the national treasury will look to raise R15 billion in additional taxes in 2024 and cut R21 billion in government spending as the main budget deficit hits R54.7 billion.

🔥Under Fire. South African low-cost investment platform, EasyEquities has come under fire after switching to a subscription model. The platform introduced a loyalty programme, Thrive, rewarding users for activities on the platform, with inactive users not reaching these “goals” having to pay R25 per month.

💰Investment Boost. Private equity firms are stepping into the ring, boosting investment into the local tech scene. In 2022 11% of SA’s private equity firms’ investments went to tech companies – up from 3% in 2021.

🙅‍♂️Greyed Out. South Africa to remain greylisted to at least 2025 by the Financial Action Task Force (FATF) after coming up short in the investigation and prosecution of money laundering and terror financing cases. (See what SA’s greylisting is really about.)

30-MINUTE PODCAST

Building a World-First Product

If you were intrigued back in August when we told you about the SA company that created a new way for gamers to get paid for gaming, this week’s podcast is for you. We got Chris Heaton, founder of Skrmiish to chat all about what it takes to build a pay-to-earn product on triple-A games from right here in SA.

The highlight reel…

1. All about democratising earning potential

If you didn’t know, earning actual money in gaming is normally either 1) reserved for top-tier, sponsored pro players in tournaments (like pro sports today) or 2) blockchain-based indie gaming.

But what Skrmiish did was build the world’s first product that allows everyday gamers to bet on themselves in challenges on triple-A titles like Fortnite and Call of Duty, and earn real money on their performance. It’s taking earning potential from the elite and giving it to everybody – nice and inclusive.

2. Sometimes pivot is the only option

Starting in the go-to peer-to-peer (PVP) play market, Chris says they quickly learned that to deliver a great product you would need a lot of cash and gamers, which is hard to come by. And it was only by chance in a VC meeting that they started playing with the idea of players earning based on performance against “the house” (personal-progress based).

With no cash and income, the team took a major risk and quickly bootstrapped some tech that took this entirely new angle and suddenly saw some money come in. So they took it on the chin, switched off marketing and rebuilt the entire product in 3 months. And it suddenly took off.

3. If you’re aiming global, start global

An extremely interesting point Chris raises here is that the plan was always to build a product with international reach, so they went through all the turmoil and extreme costs of setting up the company overseas.

A hair-raising process, but so worth it according to Chris.

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

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

THE RESULTS

Well, whaddya know, most of us here still buy LEGOs just for kicks…

⬜️⬜️⬜️⬜️⬜️⬜️ 👷 I have a big personal collection (0)
🟨🟨🟨🟨⬜️⬜️ 🙅 Nah, I have other hobbies or interests. (28%)
🟨🟨🟨🟨🟨⬜️ 🎈 All the time for family (kids/grandkids). (33%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🧱 I’m heavily invested in The Brick as a long-term investment strategy. (0)
🟩🟩🟩🟩🟩🟩 🍭Just for fun. (39%)

Powered by beehiiv

Hi there,

Hip, hip hooray?! Almost exactly a year ago we set out to create the most meme-errific startup & business newsletter in SA. And you love it, so we keep going & growing.

To celebrate our first birthday? Some new threads – check out the all-new and improved Open Letter website and brand.

Hit reply and tell us what you think…

Plus: A big shoutout to Redeem Studio who did the work for us. They’re a startup & scale-up advisory agency that helps founders grow ARR & become investor-ready by offering Product Consulting, Unit Economics Analysis, GTM strategy and implementation & UX – go check them out.

In this Open Letter:

• Your niche: Building a business on your passions.
• A new dimension, Zuck goes meta (again) & how to lose R500m.
• Smart ways to incorporate AI into your product/business.
• Share this: Get free tools and stuff for your business.

TRENDING NOW

Cashing In on Passions

More reasons to build in the niches you love…

If you remember our recent discussions around e-commerce, you’ll know the stats show mass-market approaches battle a bit in SA. But the niche space definitely has some legs. Take LEGO for instance.

While the global toy market was down almost 7% in the first 6 months of 2023, LEGO grew by 1% – off the back of 17% growth in 2022 and 27% in 2021.

And it’s a good investment, too. Those simple colourful bricks from your childhood rise in annual value by about 11% like clockwork. In fact, studies show investing in LEGO is more lucrative than gold, art or wine. And you know some locals have picked up on the trend…

‍

The pre-loved LEGO scene in SA

The folks at Block Shop sell pre-loved LEGO sets, minifigures and pieces (a great way to complete older sets). They’ll also buy any old sets (if you’re selling).

Rarity Bricks started as a family’s lockdown hobby – refurbing and completing old classic space sets – and quickly turned into a business. They specialise in rare, retired and vintage LEGO sets and minifigures.

Oh, and if you’re really into LEGO investment, check out Retired Sets. Featuring sets from 1987 to 2022, their inventory is locally held (so no drop shipping), sealed (original LEGO factory seals) and expertly curated using statistics and machine learning.

‍

Looking at those prices, we wish we never opened our Lego as a child… then again, we’re glad we did for all the playtime we got out of it.

Find your niche

The point is not LEGO per se, but rather to show you how something you love can become a niche business. It’s easier than ever today to spin up a quick e-commerce website and start targeting people who share your passion(s).

You can use anything from Shopify to Webflow, WooCommerce on WordPress or even Wix, with loads of templates and pre-built features and functions, to create something fairly quickly and test to see if you get some traction.

With people always more willing to keep aside a little extra for the things they love, you know this is a space to watch.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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

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

Get your sharing link here.

OVER TO YOU

What do you buy LEGO for?

Vote to see how others play...

• 👷 I have a big personal collection
• 🙅 Nah, I have other hobbies or interests.
• 🎈 All the time for family (kids/grandkids).
• 🧱 I’m heavily invested in The Brick as a long-term investment strategy.
• 🍭Just for fun.

Login or Subscribe to participate in polls.

IN SHORT

🐇 Bunny Virus. First, it was bird flu. Now our rabbit population is under threat as Rabbit Haemorrhagic Disease Virus sweeps through SA after first being detected in the Northern, Western & Eastern Cape late last year.

🚪 WhereIsMyFunding. After over R500m in initial rounds, local mobility startup WhereIsMyTransport has been forced to close its doors after it did not receive the necessary funding to continue operating.

⛽ Petrol Relief. After significant increases in the last 3 months, we could be in for a bit of a breather at the pumps in November as petrol and diesel prices are expected to come down.

✏️ Another Dimension. Dimension Data (one of SA’s biggest IT companies) will be renamed to NTT Data from 1 April 2024. It was sparked by Japanese telecoms company NTT Group, which acquired Dimension Data in 2010.

💸 Empty Wallets. SA government is expected to collect R52 billion less in tax revenue than initially projected back in Feb. The finance minister’s medium-term budget statement tomorrow is expected to outline measures to trim spending and raise borrowing.

❤️ Caring Man. Looks like the modern man is doing more care work (household domestic work and child care), and would like to do even more, according to the 2023 State of the World’s Fathers Report.

🥽 Weird Cool. Wondered why Zuck was so bullish on the Metaverse? Check out this interview with Lex Friedman, hosted on Lex’s podcast in the Metaverse as photorealistic avatars.

BUILDER’S CORNER

Smart Ways to Incorporate AI into Your Product/Business

Generative AI and LLMs are of course unavoidable. We showed last week that AI investment increased by 27% globally while all other startup investments dropped by some 31%.

So, much like we were all asking; “Will AI destroy…” Google, your job, the stock market, the world…? at the beginning of the year, we now need to ask how can you use all this AI hype to bolster your product/business.

‍

We’ll let you in on a little secret – you don’t have to re-engineer your entire product around AI to start reaping benefits. Just start using it in small ways that make sense…

3 Super-fast ways to incorporate AI

1. Use AI for personalisation

Personalised experiences are key to driving user engagement, but it takes quite a bit of analysis, segmentation, interviews and A-B testing to set up. Enough for it to be nice to have a robot do it for you.

Amazon’s been touting its machine-learning (ML) product recommendations for a while, for better or worse. But you can get a similar vibe straight from Google – great because they already have so much of your user’s data from elsewhere. You can also check out Recombee as an alternative.

2. Get a chatbot/virtual assistant

OK, chatbots have been around for a while, but now you don’t have to spend that much time programming every possible interaction/flow. With AI and ML tools, the machine can adapt on the fly.

Zendesk’s answer bot, for example, gives you an AI that “learns” your FAQs and help section content and then handles a bunch of support tickets automatically. Otherwise, check out Wonderchat or Landbot for no-code web-based options, or build your own with ChatGPT.

3. Predictive analytics for sales & marketing

AI is not just customer-facing; if it can help you understand and qualify your leads better, that’s great. A great example, even though it’s not pure AI is Hubspot’s predictive lead scoring which helps you know which leads to follow up on first.

Also check out Salesforce’s Einstein, Zoho’s AI tools in CRM Plus and, for a completely independent option, check out InsideSales for AI lead scoring coupled with a huge library of playbooks of how other founders did what you’re trying to do.

That’s all apart from using ChatGPT to inspire and refine all your content ideas – which we really hope you’ve nailed by now.

Got a startup AI hack? Hit reply and let us know…

THE RESULTS

We asked if you ever get annoyed when having to hire a tradesperson to help around the house, and who knew most of us “know a guy”…

🟨🟨🟨🟨🟨⬜️ 🚒 All the time (33%)
🟨🟨🟨⬜️⬜️⬜️ 🔨 Nah, I do it myself (24%)
🟩🟩🟩🟩🟩🟩 👨‍🔧 I know a guy (38%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🦾 I only use those that use ServCraft (5%)

Your 2 cents…

“After my recent experience with this, I came to the same conclusion... thought about the permutations, but glad to hear that ServCraft is actually offering it!”

Marc

“I used to do most of it myself until old age crept up on me and my doctor told me that the most dangerous thing in the world is a 55+-year-old man and a ladder. Even more dangerous than a kid with a revolver. Nowadays I know a guy.”

Chris

“Nothing that a youtube video and a visit to Brights cannot fix.”

Chrisjah

‍

Hi there,

Ever miscalculated your budget? Don’t feel bad, the ongoing FTX trial revealed a software bug in the exchange resulted in miscalculating $16 billion in liabilities.

In this Open Letter:

• Artisan focused: Fixing the right problems in SA trade.
• Tourism spikes, briefcase scooters & big exit returns.
• Poised to boom: Growth opportunities in electric cars.
• The results: Who’ll actually trade petrol for EVs.
• Share this: And get lekker free stuff.

TRENDING NOW

Fixing the Right Problem

Why you can’t just copy-paste service-marketplace apps in SA…

Every South African knows: Hiring a new tradesperson for maintenance is risky.

You never know what you’ll get – great service at a fair price, or a job that drags on for ages and maybe never gets done properly. Reports of corrupt installers and fly-by-night builders, plumbers etc. are as common as praise for the “good ones”.

Now just add a door and move into the ceiling.

And it’s an issue many local startups have tried to solve by building service-marketplace apps to the tune of “the Uber of home services”. GetTOD was probably the first major player here in SA (and they don’t seem to exist anymore), with many others following suit.

The issue? Perhaps they’re trying to solve the wrong problem.

Looking at the state of SA’s education and training for artisans, it might be less of a need to connect consumers with tradespeople, and more about helping more people in trades be more effective at their jobs.

Either way, there’s opportunity here…

SA needs more skilled tradespeople (and we know it)

The South African Development Plan (NDP) set out some ambitious developmental goals for 2030, including up-skilling way more artisans to support and drive the economy.

At least our government is taking aim…

We are currently only producing 15’000 qualified artisans per year. That’s only 42.9% of the 35’000 per year that NDP 2030 requires – and we started implementing way back in 2012, sheez!

The demand is big

A subset of these skilled artisans that provide home services (such as plumbers, electricians, carpenters etc.) has seen a major increase in demand since Covid. Kandua, a home services digital platform, saw a 750% increase in demand for home services in just one year in 2021.

We don’t know the specific figures in this subset alone, but Statistica says about 3.3 million South Africans are employed in the trade industry – 79% of which are employed by companies, the rest either work for themselves or stay unemployed.

But the need is bigger

Now, those 600k-odd small-time “bakkie builders” often lack back-office support, capital and financing options. So you probably have a lot of these guys driving from one job to the next, living hand-to-mouth, having to do their own admin, quotes, invoicing, collections… It must be hectic.

And it might just be the source of all our frustrations.

Solving the right problem

If tradespeople can work more efficiently, plan better, service all their clients well and get paid without spending time on collections, chances are they can do more work, earn better and increase satisfaction.

Tradespeople don’t need more work, they need tech tools to help them work smarter.

And that’s where local solutions like ServCraft come in. ServCraft offers built-industry job management software that helps tradespeople plan and execute better. From the moment a customer reaches out, to creating quotes, job cards and invoices, wrangling customised forms, and streamlining comms between tradesman and customer. It’s the back office every tradey needs and, at a mere R260 per month, most likely one they can afford.

As a country, we might never end up qualifying 35’000 artisans per year, but with more tools that actually help tradespeople work more efficiently, we might not need as many.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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

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

Get your sharing link here.

OVER TO YOU

Ever get annoyed with a builder/tradesperson?

Vote to see what others say...

• 🚒 All the time
• 🔨 Nah, I do it myself
• 👨‍🔧 I know a guy
• 🦾 I only use those that use ServCraft

Login or Subscribe to participate in polls.

IN SHORT

👶 Baby Leave. A major South African court ruling stated that parental leave for natural births, as well as surrogate & adopted children under 2, should be 4 months in total and can be split between both parents in whichever way they see fit.

💰 Tech Revenue. All eyes are on big tech as earning reports of tech giants start coming in. Early signs of positive growth from among others Microsoft (13% YoY), Alphabet (Google) (up 11% in Q3 growth from 2022), and Snap (Snapchat) (5% in Q3 from 2022).

🏖️ Tourist Spike. Looks like the Western Cape is in for a bumper tourist season with Cape Town International Airport’s seat capacity expected to increase by 25% compared to last year – exceeding 1 million inbound international summer seats for the first time ever. Lekker man.

💼 Briefcase Scooter. Honda has just released the Motocompacto, a scooter that folds away conveniently into its own housing/body the size of a briefcase. This lil’ firecracker can reach breakneck speeds of 24km/h (in 7 seconds), and go as far as 20km carrying a sturdy 120kg user. Handy.

🇿🇦 Winning Travel. South Africa won big at the 2023 World Travel Awards. Awards include Africa's Leading City Destination 2023 for Cape Town, Africa's Leading Airport for Cape Town International Airport, and Africa's Leading Luxury Resort for One&Only Cape Town.

💸 Exit Returns. Some local VC investors cashed in (or took their losses, we will never know) in 2022 with exits in the investment space totalling R321 million for the year at an average of 3x return.

30-MINUTE PODCAST

Growth & Opportunities in Electric Cars

If our look at the prospects in electric vehicles got you excited, then this week’s podcast is for you. We sat down with Michael Maas CEO of Zimi who is making big plays in this space. You know, to pick his brain and see what they’re doing, what’s working and what other opportunities there are to get in early…

A few good highlights…

1. SA’s about 5–10 years away from full-on EV

Having gained a lot of experience in both the consumer and commercial/fleet side of things, Michael explains here that compared to Europe, SA seems to be around 5–10 years away from full consumer EV adoption.

Of the 12 million cars on our roads, only 0.02% (2’500-ish) are EVs at the moment. But as we’ve seen in Europe and the US, the inevitable business incentives and regulation will push the entire industry along, so it’s one space SA’s poised for tremendous growth.

2. EVs lower transport costs by 30%–40%

The problem with low adoption is the consumer doesn’t realise the true benefits, yet. Michael points out here that, while EVs’ cost price is currently around 20% higher, electricity is 90% cheaper than fuel options.

Balance that out with maintenance, tyres, lubricants, financing and infrastructure (batteries, chargers etc.) and real-world commercial transport operators who’ve made the switch to electric see total cost of ownership savings of 30%–40% compared with fuel. And he reckons consumers will see about the same savings on their transport.

3. Big EV opportunities are in batteries and vehicle supply

Michael says there are lots of growth opportunities in SA’s EV space for founders and startups. He highlights battery swaps, manufacturing, replacement and maintenance as big-ticket opportunities. As well as helping ensure the quality of battery services across a range of suppliers and dealerships.

That said, simply getting more EVs on the ground in SA is also a hot space – whether manufacturing, importing, sales or financing – there’s a market poised for growth here.

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

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

THE RESULTS

We asked if you see yourself driving an electric vehicle in the next 5 years, and almost 40% of us are on board…

🟨🟨⬜️⬜️⬜️⬜️ ⛽ No way I’m giving up my petrol (16%)
🟩🟩🟩🟩🟩🟩 🔋 Definitely going EV (39%)
🟨🟨🟨🟨⬜️⬜️ 🚗 I want a Tesla, now (29%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛵 EV only for delivery companies (6%)
🟨⬜️⬜️⬜️⬜️⬜️ 🔌 Loadshedding…lol (10%)

Your 2 cents…

“1. EVs are not a net benefit for the environment if the battery manufacturing process is taken into account. 2. Yes, they are more cost-effective in the short term, until they need a battery pack replacement. 3. They are less convenient on long road trips. 4. I don’t like the dependence they create on the manufacturer for repairs.”

Roland

Important points, Roland, thanks for sharing.

“An interesting option is taking existing cars with EV conversion packs – seems like a route SA may be keen to explore and keep costs lower.”

Brandon

Wow, is that even viable? If so, could be very interesting.

‍

Hi there,

User woes? Can’t be as bad as Meta who had to apologise last week after its auto-translate inserted the word “terrorist” into some Palestinian Instagram profiles.

In this Open Letter:

• Big fish, small pond: An industry to get into early.
• The biggest drone, graphite wars & lekker beaches.
• Must-havers: How to find your growth customer.
• Where we keep our money: The results are in.

TRENDING NOW

Getting in Early

Ever heard the saying “big fish in a small pond”?

One of the most successful founders you’ve never heard of, World Economic Forum Young Global Leader and Treeshake founder Dave Duarte, attributes his success to getting into social media decades ago before anyone took it seriously. Today he’s a megatrends specialist who earns top dollar.

The moral? Startup success = be the first and become the best in a small, growing industry you know is going to be big.

‍

And if there’s one thing we know for sure, it’s that electronic vehicles (EVs) are coming.

It’s small now, but…

We spoke before about how EVs in South Africa could free up billions in disposable income. And, yes, it’s pretty small now, but SA had the 7th highest increase in electronic vehicle sales in the world this year.

So there’s reason to think the EV market could start stirring:

• For the first time, AutoTrader included EVs in its Mid-Year Car Industry Report.
• EV sales have grown by 106% for new vehicles and 108% for used ones in 2023.
• The numbers are still small – just 131 used EVs sold Q1 & Q2 2023 – but climbing.
• EVs are still about 3.5 times more expensive than combustion cars, so we need better pricing.
• In Europe, 13.6% of all new car sales are electric vehicles – should SA reach the same levels, that could constitute 71,800 new electric vehicle sales per year.

But then there’s the big ol’ Eskom elephant in the room…

How are we gonna charge ‘em?

Funny enough, SA’s 170 public chargers back in 2021 was one of the world’s highest number of chargers per car – because no one owned EVs yet. Now, however, we’re falling behind with our mere 435 as EV sales have doubled to 1’200 in the last 2.5 years.

And what about loadshedding? Well, with SA’s solar adoption through the roof, it might not be a biggie, since solar seems to be the most cost-effective way to top up your EV battery’s charge.

In short: If you’re looking for a small, inevitable industry to get big in, EVs are a fun, cool and dare we say green-sexy option.

‍

Local Startups Plugging into the Trend

With its first 8 prototypes already built back in 2015, MellowVans started producing full-on electric delivery vehicles ready for the global market in 2021 in Stellenbosch. These vehicles have a range of ±100 km which is enough to do several daily deliveries within small towns or areas of the city.

With customers such as Takealot, DHL and Spar in SA, MellowVans is keen on expanding to Europe where the EV market is rife.

The charging station market was already a $4.1 billion industry in 2022 in Europe, btw, and with rising EV sales locally, we’re going to have to increase our number rapidly to meet demand.

Having identified this opportunity, Zimi Charge provides electric fleet charging solutions for companies that are moving their fleet of vehicles over to electric. With a range of pricing options, companies can either rent it, own it or pay per charge. (Pssst… We have Zimi on the podcast this week – so be sure to read Friday’s newsletter for more.)

It’s still very early for EVs in South Africa, but expect more EVs to hit the road soon and, if you’re interested in this space, perhaps now is a good time to dive in and get building while the pond is small. We are watching this space….

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

Get your sharing link here.

OVER TO YOU

Do you see yourself driving an EV in the next 5 years?

Vote to see what others say...

• ⛽ No way I’m giving up my petrol
• 🔋 Definitely going EV
• 🚗 I want a Tesla, now
• 🛵 EV only for delivery companies
• 🔌 Loadshedding…lol

Login or Subscribe to participate in polls.

IN SHORT

🏖️ Hoist the Flag. Eight Cape Town beaches have been awarded Blue Flag status by the Wildlife and Environment Society of South Africa after meeting the requirements for Blue Flag status across 33 criteria in four categories. An additional 2 beaches have achieved pilot blue flag status for the 2023/2024 summer season.

🔋 Graphite Fight. South Korea is looking to Mozambique and Tanzania to secure graphite – a key material used to produce Electric Vehicle battery anodes. This as China tightens its export controls over some categories of graphite to “safeguard national security and interests”.

🕹️ Droning On. The largest drone built in Africa, the Milkor 380, has just undergone its first successful test flight. The drone from Pretoria, with a wingspan of nearly 20 metres is capable of a continuous flight time of 35 hours, 2’000 km range and can reach an altitude of 9’000 metres.

🤖 Where it’s at. Funding for AI projects hit a staggering $17.9 billion in investment in Q3. This is despite overall startup deals shrinking by 31% to $73 billion from the year before – including climate tech investing which dropped a cool 40% year-on-year.

⛔ Access Denied. Turns out we weren't imagining it. The readers on the SA 4x4 forum, have also picked up that the entire News24 seems to be behind its subscriber paywall these days. Looking at the comments, if you can find a business model to make a free news website work, well you’d have some readers.

­BUILDER’S CORNER

How to Find Your Growth Customer

With the “must-have” method

You have your product and some traction, nice! Now, how do you blow the roof off this thing? Turns out true scalability starts with focusing 10’000% on the exact right user…

‍

This goes back to product-market fit in a big way, but Facebook- and Google-level growth hacker Sean Ellis always said that you can scale almost anything, as long as you can find its “must-have” user.

The user for whom the product is a non-negotiable, they absolutely NEED it in their life. End of story. That’s the user whom, if you can find more of, your product will snowball.

So, how do you find them?

3 Steps to nail down that growth user

1. Start with the “bait” survey

Send users a survey asking them how they’d feel if you took your product off the market tomorrow. And just give them a few options like – “happy”, “not affected”, “disappointed”, and crucially “very disappointed”.

‍

2. Find your “very disappointed” 40%

What you’re looking for is for at least 40% of users to say “very disappointed”. Because that means the product has become entrenched in their every day. That’s your must-have user, the one you will be focusing on for growth.

But what if it’s less than 40% 😢?

3. Segment until you get your 40

If you have less than 40% “must-have” users, start segmenting them. If you sent out a survey to mainly, for example, doctors, start splitting them up – male VS female doctors, by different specialisations, by geographical location, age etc. Keep segmenting your data until you find a segment that has a 40% “very disappointed” rate relative to the number of users in that specific segment.

Then, brush your teeth and comb your hair, because you just got a new job at a new company targeting ONLY that user segment. From now on, that segment is your new user – build for them, market to them, and delight them.

With a bit of luck, the segment’s still big enough for what you need, because there and only there (until proven otherwise) is probably where your growth lies.

Got an ideal user hack? Hit reply and let us know…

THE RESULTS

Well, well… we asked which bank you prefer and FNB wins the majority…

🟨🟨⬜️⬜️⬜️⬜️ Capitec (16%)
🟨⬜️⬜️⬜️⬜️⬜️ Nedbank (6.5%)
🟨🟨🟨⬜️⬜️⬜️ Standard Bank (24%)
⬜️⬜️⬜️⬜️⬜️⬜️ Absa (5%)
🟩🟩🟩🟩🟩🟩 FNB (42%)
⬜️⬜️⬜️⬜️⬜️⬜️ Bank Zero (3.5%)
⬜️⬜️⬜️⬜️⬜️⬜️ Tyme (1.5%)
⬜️⬜️⬜️⬜️⬜️⬜️ Lula (0)
⬜️⬜️⬜️⬜️⬜️⬜️ VBS (0)
⬜️⬜️⬜️⬜️⬜️⬜️ I roll with cash (1.5%)

Your 2 cents…

“Discovery Bank as a 2nd acc”

Nikhil

“What, no Discovery Bank?”

Connect

Whoops, yeah you’re right, sorry Discovery.

FOR THE MEMES

theopenletterza

View more on Instagram

theopenletterza

Add a comment...

Got some startup memes? Send them our way or tag us on socials.

‍

Hi there,

A few wrinkles? No worries, Google is rolling out portrait beautification in Meet that’ll help smooth fine lines, whiten teeth and even add some under-eye lighting in video calls.

In this Open Letter:

• Startup awards: Top movers in 11 sizzling industries.
• Elon’s bot wars, the Drake in you & why are SA CEOs dumping stocks?
• Big insights: Building an African data company with AI.
• Free coffee: Plus startup tools when you share this.

TRENDING NOW

Top 60 to Watch this Year

Startup today, scale up tomorrow, IPO soon?

It’s tough building a startup – so many daily challenges. Founders often just need a win somewhere. So we’re all for recognising exceptional contributions toward changing entire industries – like StartupClubZA launching its inaugural Startup of the Year Awards. And we managed to get our hands on the shortlist of 60 startups that made it to round two. Wanna see?

Special edition: Today’s Letter is a bit different, but it’s worth it. Short on time? Skip ahead to the industries that tickle your fancy.

Don’t @ us please

These are the 2nd round main categories and their finalists:

Mobility/Logistics

Think of it as the bloodstream of the modern world; it's all about moving goods, people, and information from A to B in a flash, like FedEx on steroids. Estimated to be an R 400 billion industry in 2023 and, with Amazon on the way, it will likely grow faster than most sectors.

The finalists:

• TUNL
• Michanic
• RNR App
• ShipRazor

Biotech

This is where science fiction takes a DNA test and finds out it's 50% reality. Biotech firms are cooking up everything from designer drugs to lab-grown burgers. Predicted to be a R64 billion global industry by 2030, Biotech is on the rise.

The finalists:

• Smartroots
• Afrobodies
• Maltento
• Newform Foods

Future of Work

Imagine the office and remote work had a baby, then raised it in a co-working space with nannies like AI and Machine Learning. Voilà, that's the future of work! Covid lockdowns forced changes to the way we work. How big is this industry? Hard to say, but basically every single job could be affected by it. So it's big.

The finalists:

• Adbot
• Jobox
• ServCraft
• WorkWeek
• JOBJACK
• Bento
• Lawyered Up
• PikUniq

EdTech

This is Hogwarts but digitised – spellbinding tech that transforms traditional education into a magical learning experience. The South African Government budgets about R28 billion a year on education. What’s more, private education has been booming of late. Big challenges, big opportunities, big money to be made.

The finalists:

• Resolute Education
• Yenza
• Matric Live
• Bookt

Informal Market

Picture a bustling bazaar minus any corporate suits. This is where grassroots entrepreneurship meets raw consumer needs, often without barcodes or tax IDs. Recently, we showed how this sector could be bigger than agriculture and mining combined at an estimated R425 billion a year.

The finalists:

• Loop
• Mapha
• Komuniti
• Timbaktuu Jobs

ClimateTech

It's like Earth just swiped right on its own set of Avengers, heroes tackling climate change with everything from renewable energy to carbon capture. Whether you recognise climate change or not, green companies introducing cost benefits are popping up everywhere and this R400 billion global market is set to continue to grow faster than others.

The finalists:

• Kudoti
• Tweak Carbon
• AgriLogiq
• Verisola
• Arable Grow
• Amnova

E-commerce

It's the digital mall of your dreams, where you can window-shop in your PJs, and a courier is your personal Santa Claus all year round. Amazon is coming, but local players are making moves as online sales reach an estimated R30 billion a year in SA. Not shooting the lights out yet, but signs of life, that's for sure.

The finalists:

• Artisans Tade Depot
• TradeFed
• Joboy
• SwiftVEE
• Swifti
• WISI-Oi

AI and Big Data

Sherlock Holmes and Watson in ones and zeros, solving the mysteries of human behaviour and big business alike. And this space is enormous. Generative AI is set to become a R24.6 trillion market globally. It’s huge.

The finalists:

• MobileGPT
• Visiosoft
• Carscan
• Melio AI
• Kriterion
• The Awareness Company

FinTech

Your grandpa's bank got a glow-up and now it's streamlined, sleek, and can probably predict what you'll want to spend on next. How big is FinTech? Globally, it's set to become R 13.250 trillion by 2030.

The finalists:

• Float Technologies
• Momint
• Skrmiish
• Troygold
• Capital Art
• Revio

PropTech

It's like playing SimCity but in real life, using tech to build, manage, and jazz up physical spaces. The residential segment in SA alone is a R360 billion industry – add commercial and it's simply massive.

The finalists:

• Popping
• InvestRand
• Parket
• LeaseSurance

HealthTech

Imagine if your doctor was a Jedi, armed with gadgets and data analytics to keep you fit as a fiddle. NHI might be coming and many medical professionals have traded in the stethoscope for the laptop as they embark on the entrepreneurial journey to take part in this R418 billion market.

The finalists:

• Kena Health
• Zoie Health
• DelMed
• VitruvianMD
• Mia Health
• Strove
• Contro
• BioCertica

A big shoutout to all these startups and the teams involved – be sure to head on over and vote for your favourites.

Also, thanks to Mathew Marsden and the StartupClubZA team for putting the awards together and showcasing SA’s startup talent.

IN SHORT

🤖 Bot War. Elon Musk is said to charge $1 for new users of X in a bid to combat the crypto-bots and scammers. The annual charge has been rolled out to New Zealand and the Philippines on Wednesday.

💰 Share Moves. Truworths CEO & Deputy CEO have sold over R 90 million in shares over the last 2 months. And they’re not the only ones. Just last week the Shoprite Group announced that its non-executive director, Christo Wiese sold almost R 1 billion worth of shares. Not to mention the nearly R210 million in sales of Naspers shares – in 2023 alone.

👨‍🔬 Space Cape. NASA is sending 2 of its modified jets to Cape Town to conduct a biodiversity field campaign with the University of Cape Town. ‘BioSCape’ will see local and US scientists map marine, freshwater and terrestrial species and ecosystems within the Western Cape.

🎙️ Fake Drake. Wanna sing like a famous person? Well, thanks to YouTube and AI – you could do so quite soon. YouTube is allegedly in talks with major record labels to obtain the rights to songs it could use to train the tool.

🍫 Beastly Sweetie. Mega YouTuber Mr Beast’s chocolate brand “Feastable Chocolate Bars” will launch in SA today. The 4 variants will be available exclusively at Game and Makro stores for 50 bucks for a 60g bar.

30-MINUTE PODCAST

Building a Data Company in the Age of AI

Whether you’re interested in the AI- or data-as-a-business space, or just looking to gain deeper insights into the true value of data for your own use and business, this week’s podcast is absolutely required material.

We spoke to Priaash Ramadeen, co-founder and CEO of The Awareness Company, who is building African AI-powered data solutions that are more accessible and actionable than the normal “overloaded, under-used” stuff in the data space. Check it out…

Some of the juicy bits…

1. Data is power (if you use it right)

We all have a lot of data (much of it unused), with a lot of people jumping on the data bandwagon. But as Priaash affirms, data alone is not useful, it’s all about the application of it – how effectively you can draw actionable insights from data.

And that requires a lot of refining to turn it into stories, yet Priaash says most Data Centres spend up to 60% of their time on cleaning data, leaving precious little time for getting real insights.

2. Unlocking true value from data

As Priaash points out, when most people hear data they think of measurement or niche applications. So they instead built a business around being able to better extract valuable stories from data and then build in mechanisms that allow everyone at every level of the company to actually access data to benefit them in their individual roles.

3. Creating your own data

As the discussion flows to the quality of data in South Africa, Priaash makes the point that our data only feels chaotic because we tend to build it up bit by bit over time, and then try to retroactively make sense of what we’ve been able to gather so far.

The next paradigm is to be able to build the data your company really needs from scratch, which is why their service is built around coming and really building structured data with a purpose from the ground up. And yes, you can integrate data from current systems, but it has to absolutely make sense for you to get actual actionable insights with AI models.

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

‍

‍

Hi there,

A bit lonely? Meta’s apparently paying celebs like Kendall Jenner and Mr Beast up to $5 million a pop to turn them into AI chatbots on Facebook, WhatsApp and Instagram. Because you’re not wasting enough time on social media yet.

In this Open Letter:

• Smart money: Why SA needs better startup & SME banking.
• Dry mines, cash for trash & SA gov takes on Netflix.
• Solid advice: How to get a startup mentor.
• Hottest opportunities: The results are in.
• Like Vida Coffee? Share The Open Letter twice and get free coffee!

TRENDING NOW

Smarter Small Business Banking

Let’s be honest here, SA’s current business banking solutions aren’t ideal for SMEs.

It’s no one’s fault. The SA business banking segment is defined as companies with a turnover of R30m–R1.6bn. Most SMEs and startups just fall outside of that category – hence government had to launch special measures to stimulate SME growth.

Every bank, ever…

And yet the SME and startup market is huge. Estimates vary between 2.6 million and 3.5 million SMEs in SA. According to Stats SA’s 2019 Annual Financial Statistics, SMEs generate about R2.3 trillion annually or 22% of the total R10.5 trillion that SA’s formal business sector generates.

A few quick sums show that’s an average of R880k turnover per SME per year – money going in and out of their account, of course. So, isn’t it time we built more creative products and businesses in the SME/startup banking space?

It’s a smart move since banking comes with a built-in moat. It’s such a nightmare to change accounts as a business – because it means getting your customers to change your details on their banking app, which they never do. So, if you get SME banking solutions right, you’ll probably have a lot of long-term clients.

So, what do SMEs need?

Well, for starters, there’s capital and funding. In 2020, McKinsey did a report on just how laughably inadequate banks’ service is to SMEs. Sorry Mr Commercial Bank, you can’t just rebrand your normal product as “business banking” and then just deny every SME application because they’re not already bazillionaires.

Seriously, walk into a bank with a new business idea and be prepared to get laughed out. Or they’ll just ask you to get someone to sign surety. This begs the question if it’s not better to fund it out of your home loan. Which leads to: is this even business banking at all?

But, we get it. Banks just don’t have the data to make good decisions when it comes to risky new ventures.

Yeh R150 a month bank fee when you have zero revenue is splendid.

But there are some who do – they’re just not using it (yet). If you’re the likes of famous disruptor Yoco, with lots of SMEs’ transaction data, you can do something banks can’t: predict with much greater accuracy which SME will make it or not.

See, companies serving SMEs directly could summon their data – who has which type of business, in which location and how much are they transacting per day – and use that as a model for reviewing funding applications.

Whilst it’s hard and expensive to get a banking license in SA, the opportunity to build another “Capitec” is just too lucrative for local players to stay away….

Local business banking plays

After years of supplying loans to small businesses, Lulalend probably picked up on this issue of banks not really servicing the needs of small businesses well. What’s more, when you offer business banking to a range of small businesses, the data gathered can help you package and offer even better finance products to small businesses.

And that’s probably why they just launched Lula, SA’s first dedicated SME banking platform. It promises to let you handle your day-to-day banking, manage cash flow, and access funding quickly – all from its digital platform. The fees? Well, they offer a free account that has zero monthly fees and only R3 for an outbound transaction.

Then, backed by former FNB CEO Michael Jordaan, Bank Zero recently launched commercial and business banking offering banking with basically no fees – yes their name speaks to fees not your balance as a founder in case you wondered. Bank Zero is still very small, yet they have seen their deposits grow from just over R110m in January to almost R200m by August. (Pssst… Neat little data source if you are a bank geek – banks report their balances to the SARB monthly which then publishes it on their website).

And, we’ve yet to see any big or exciting moves from them, but Capitec bought Mercantile, which traditionally served SMEs and entrepreneurs, in 2019. Whilst they’re most likely still working on integrations and optimisation between the two entities, it’s clear that SA’s biggest bank in customer terms is seeing SME banking as a major next phase of growth.

So, there are options. But we reckon there’s still a lot of opportunity to be unlocked in the startup/SME banking space. That’s why we’re keeping an eye on it…

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

Get your sharing link here.

OVER TO YOU

Where do you bank?

Vote to see what others say...

• Capitec
• Nedbank
• Standard Bank
• Absa
• FNB
• Bank Zero
• Tyme
• Lula
• VBS
• I roll with cash

Login or Subscribe to participate in polls.

IN SHORT

⏳ Countdown. Renowned for our mineral supply of gold, platinum, iron ore, and coal, South Africa’s dwindling resources threaten the local mining industry, with reports suggesting we have less than 50 years of mining left. Perhaps if we load shed enough we can add another 25?

♻️ Conversion. Want to turn your e-trash into Makro cash? This weekend (21 & 22 October) the E-Waste Recycling Authority (ERA) will be handing out Makro vouchers for eligible e-waste dropped off at specific Makro stores.

🛰️ Connected. Looks like even ships & planes will get Starlink before SA does. Starlink just signed deals with both shipping giant Maersk and Qatar Airways to get high-speed, low-latency broadband internet onboard.

📺 Competition. Look out Showmax & Netflix, South Africa’s Government Communications and Information System (GCIS) is reportedly spending R1 billion on a new video streaming service, despite already having SABC+ which was launched in November last year.

🏆 Champions. South Africans are first to bed and first to rise according to the weekly stats published on Sleep Cycle’s home page. We like to hit the hay at 22:56 and are up and at ‘em at 06:25 for a grand total of 7 hours and 29 mins of shut-eye.

­BUILDER’S CORNER

How to Get a Startup Mentor

OK, so you want to build not only the next best thing but also a company that’s really worth something. And that’s where a great mentor would really make a difference – someone who knows the ropes and can just help nudge things in the right direction.

Just one problem: It’s a bit weird walking up to total strangers like…

I’m totally not stalking you or anything…

Thing is, we really need mentors. In one survey, 75% of company executives said that mentorship was critical to their career development. One CNBC survey even found that 9 out of 10 mentees (people with a mentor) were happier in their work.

So it’s no surprise that we want mentors. In September, Adobe released survey results showing that 83% of Gen Z really want a mentor, yet only 52% say they have one. So, how do you actually find a mentor?

5 Ideas to get you going

1. Ask inside a company

If you’re still employed, or connected to a company in some way, look there first. Companies know they should have mentorship programmes (the most successful ones do), so, even if a company doesn’t have an official one, chances are that any slightly more senior person will relish the chance to “give something back”.

2. Fire up your network

You can try and make it less cringy by just reaching out to people and saying: “Hey, I’m building this new thing, know anyone in the space that could give me some pointers?”, as a start.

You could even do a bit of research first, see if there are any specific people you’d like to learn from, and then see if anyone knows them. LinkedIn is great for this because it shows you how many connections you’re away from a person, so you can ask for an intro.

3. Attend some startup events

Not all events are great learning experiences, but if you’re just there for the networking, you can actually make some valuable connections.

4. Online services

Although it’s a bit dubious because you’re actually paying for people’s time, some places like internationals GrowthMentor and Techstars promise to connect you with real pros. South African options include Startup Mentors and Start Wise.

Note: We don’t have any experience with any of these paid-for mentorship programmes, so we can’t tell you if they’re any good or not.

5. The distance-mentor method

We have to mention this option because it’s how most of us at The Open Letter like to operate – don’t even ask, just learn from whoever you want. Seriously. With the net there’s so much info about people online, you can literally appoint Elon Musk as your mentor without him even knowing it – just follow him on every channel, read everything about him and you’ll eventually develop a feel for how he thinks and operates.

So many founders publish playbooks and host podcasts and have their own blogs etc. You can easily distance-mentor yourself just by making them your focus of study.

Did you have a mentor? Got any tips for those looking for mentors? Hit reply and let us know…

THE RESULTS

We asked what you think is the hottest opportunity highlight out of Census 2022, and most of us are looking at EdTech (and staying in Cape Town it seems)…

🟨⬜️⬜️⬜️⬜️⬜️ 🌍 Building in more languages sounds hot (5%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🚇 Heck, I’m moving operations to Gauteng (0)
🟨🟨🟨🟨⬜️⬜️ 🌊Nah, Western Cape is where it’s at (28%)
🟨🟨🟨🟨⬜️⬜️ 🏗️ Keen to get into construction or PropTech (28%)
🟩🟩🟩🟩🟩🟩 👨‍🏫 Building educational product is the game (34%)
🟨⬜️⬜️⬜️⬜️⬜️ 😒 Not much useful for me here I’m afraid (5%)

Your 2 cents…

“Desperate for a smart translation tool for webpages & email newsletters, would be a real value add for my cross-continental project.”

Anon

Yeh, that would be neat. For now, we are using ChatGPT for translation, it’s pretty good.

“It would be good to have some info on where to source funding/investment in proptech as I am working on providing a services platform in this space.”

Fritz

Nice one Fritz. It’s quite a small and niche space so I’m sure what you can find on Google is pretty much all there is. Check out these guys who recently launched a R200m fund.

FOR THE MEMES

theopenletterza

View more on Instagram

theopenletterza

Add a comment...

Got some startup memes? Send them our way or tag us on socials.

‍

Hi there

Hungry for AI? New research shows ChatGPT and Bard’s data centre energy use is spiking so far off the charts, they’ll require the same amount of electricity as the entire country of Sweden by 2027 (85–134 terawatts, about 0.5% of the global energy demand).

In this Open Letter:

• New Data: Congrats on your 10 million new customers.
• Google attacks, SA’s payback time & crypto terror.
• The winner: Look who just won R2’500s actual gold.
• Go long: How to build an agency worth millions.
• How you like your drones: The results are in.
• Free stuff: Share this and get cool tools + coffee on us.

TRENDING NOW

New Data, New Opportunities

What startups can learn from the Census results…

Nothing highlights opportunity quite like data. But in South Africa, high-quality data is hard to come by. Just ask any local founder how big their market is – in most cases, it's a guess.

So when Census data does get published it's always interesting to see what’s happening in our country, but also, to dig in and find some opportunity. We’ve done the hard work of unpacking the pertinent SA Census numbers – so you don’t have to.

1. There’s 10 Million More of Us

As of 2nd February 2022, South Africa's population has grown impressively to 62 million, marking an increase of 10.2 million from the 2011 census.

Gauteng is still the most populous province with 15.1 million, up from 12.2 million in 2011, though all provinces have grown. That’s maybe because more people moved to Gauteng from other provinces (5.2 million, known as “lifetime migration”), followed by the Western Cape (2 million).

Opportunity Insight: Gauteng is still where it's at

15.1 million consumers is not only the most, it’s also the easiest to reach. Gauteng is the smallest province. It's dense. And if you’re trying to reach a lot of consumers (B2C), this is probably the best place to do so. Maybe that’s why insurance startups like Naked and Pineaple are focussing their marketing there. Better ROI.

Getting a bit crowded over in Gauteng…

2. The Market’s Evolving

There are some changes in demographics – Black Africans now make up 81.4% of the population (up from 79.2% in 2011), while the coloured population dipped from 8.9% in 2011 to 8.1% in 2022, while the white population has decreased from 8.9% in 2011 to 7.3% in 2022.

The gender distribution is now at 51.5% women and 48.5% men, and it looks like 1.1 million people moved from the Eastern Cape to the Western Cape.

Speaking of migration, the total number of foreigners living in SA (both documented and undocumented) is estimated at 2.4 million or roughly 3%. Most are from SADC and more than 1 million are from Zimbabwe.

Opportunity Insight: All kinds of ‘gration

Semi-migration, emigration and immigration are all happening. Help those leaving get rid of items and those arriving get items, jobs and places to stay. What’s more, tech-enabled businesses to help these people with compliance, documentation and processes could score big as these numbers continue to increase.

3. There’s Huge Educational Disparity

In Mpumalanga and Limpopo, 11.7% and 14.1% of the populations, respectively, have had no schooling – that’s almost double the national average of 6.9%. On the brighter side, Western Cape boasts the lowest at 2.3%, with Gauteng at 3.9%.

Opportunity Insight: Tech to bridge the gap

It’s hard to think how the private sector can play in this space where the government controls all the money flow, but using technology to get better teachers at rural schools could play a vital role in bridging the gap.

And, if you missed it, we interviewed a founder who’d built incredible tech brands in rural areas that are massively successful specifically because the need is so dire there – reverse engineer the approach for EdTech or build tech as a stop-gap in the community?

Doubt even GPT4 will help here…

4. How People Live is Changing

Most people now live in formal dwellings (actual built structures), with only 8.1% still in informal dwellings (down from 16.2% in 1996). 59.7% of households have piped water inside their dwellings, and electricity is now the primary lighting source across all provinces.

Opportunity Insight: We have been building!

So many opportunities in the construction space, it is exciting. From building plans and support to fast-track approval to hardware supplies to spaza shops. The hardware supplies are particularly interesting as other commodities often sold in spaza shops have too small margins. Supplying some hardware basics (door handles, gates, etc.) to spaza shops could move some higher-margin items, unlocking more of that elusive (yet massive) township economy.

5. Our Languages are Evolving Too

isiZulu continues to be the dominant language, spoken by 24.4% of households, with isiXhosa at 16.3%. Afrikaans-speaking households have seen a decline from 13.5% in 2011 to 10.6% in 2022.

On the migration front, 2.4 million international migrants now reside in South Africa, with a significant 86% coming from the SADC region.

Opportunity Insight: Talk the talk

Building language-specific entertainment content, educational games and content can be a massive play. isiZulu and isiXhosa are market segments of 15.1 million and 10.1 million respectively. (SA’s been laser-targeting Afrikaans speakers for years – Virseker, Maroela Media, Huisgenoot, etc.)

iAfrika Digital, for example, is building learning products and content-rich websites in African languages and capitalising on this.

6. A Lot of Destitute People Need Help

There are approximately 55,719 homeless people in SA – 74.1% in metropolitan areas. And 41.3% of those are due to joblessness or lack of income, while 25% point to drug and alcohol abuse.

Opportunity Insight: Smarter ways to help

Don’t be too quick to dismiss working in this space – NGOs and voluntary organisations can summon a lot of spending power for the right ideas – especially tech that can scale the impact.

One initiative that’s been doing well in Cape Town is U-Turn’s voucher system, where you can donate to someone with a card that lets them buy food, shelter and clothes, with two upshots: 1) you don’t have to use cash (safer to donate) and 2) you know they can only redeem it for things that actually help (food, clothes, shelter).

These are just some of the initial insights we gained – you can bet there’ll be a lot more to glean and inspire new startup ideas in the next few weeks.

IN SHORT

🔱 Hack Attack. The Google DDoS Response Team has warned that distributed denial of service attacks are increasing exponentially with the most recent series of attacks on Google services, Google Cloud Infrastructure and Google customers, peaked at 398 million requests per second – more than the total number of article views on Wikipedia in the whole of September 2023.

🤖 AI in SA. More and more South Africans are integrating AI into their lives. Data released by Google shows that AI interest in search terms has increased by 230% in the last year. Some of the most searched topics include: "what is AI technology?", "how to invest in AI?", "who created AI?", and "how does artificial intelligence work?".

🛰️ Starlink 4 Mobile. Starlink is wading into the direct-to-cell market with its announcement of support for text at the beginning of 2024, voice, data and IoT at the start of 2025.

⌛ It’s Payback Time. South Africa owes a total of R427 billion in marketable debt to foreign creditors. Of this, R28.4 billion is due for repayment within one year, R61.6 billion due for repayment in one to three years, and R337 billion due for repayment after three years.

💰Video Money. Loom, the async video messaging platform has just been acquired by Atlassian for $975 million. Expect your Jira tickets and Trello boards to be filled with reaction vids from your Product Owners and QA’s.

🪙 Terror Coin. It looks like the recent terror attacks by Hamas on Israel were financed through cryptocurrency. On Tuesday Binance froze hundreds of crypto accounts associated with Hamas, following requests by Israeli law enforcement. Remember how a few weeks ago we wrote about SA’s greylisting by global money laundering and terrorist financing watchdog, Financial Action Task Force (FATF)?

­SOLID GOLD WINNER

Congratulations, Kobie Van Tonder

You might remember in September we ran a TroyGold competition – if you entered, you could win R2’500s worth of gold and this cool hoodie…

Well, eat your heart out because avid reader Kobie Van Tonder is our ultimate TroyGold winner.

Congrats, Kobie – we’ll be in contact with your prize real soon.

30-MINUTE PODCAST

Building & Exiting an Agency/Consultancy in SA

If you’ve been building, or are looking to build, a service-based startup to sell or take public – like we said recently: sell your idea as a service first – then this week’s podcast is for you. We spoke with software engineer turned-founder Andrew McElroy, who built the agency Responsive Digital over 10 years, and sold it to Capital Appreciation in early 2022.

He gives some awesome insights into what it takes to build a startup to exit stage…

A few interesting bits…

1. Go deep before you go wide

Andrew is quick to say that there wasn’t really a big master plan at the start, it’s really all about assembling the right skills, landing your first client, and then growing it organically from there – get the insights here.

What is key though is to niche down a bit. Focus on packaging what you have to offer well, as a start (go deep), before adding additional services etc (wide).

2. Get your positioning right

To get attraction from any niche, you need to keep the momentum going. Andrew says that they were lucky to be riding a trend when they started, but like anything, it comes to an end. And that’s when your marketing and sales need to shine.

You need to be building a pipeline of clients, generating leads, keeping a CRM and maintaining it and consistently doing sales development. You can’t take any clients for granted. And, importantly, Andrew’s the first to say that he’s not a marketer, but he partnered with people who know marketing to make it work – which often comes down to getting your positioning spot-on so that your messaging always hits the mark.

3. Learn to showcase value

Just as you would when building a product, an agency/consultancy business is there to solve a problem, address a need and deliver value. And being able to showcase that upfront with every interaction is vital, and subject to what you’re offering and to whom.

As Andrew says, they dealt in a visually creative space, so having great design even from your first presentation was vital. And that extends to whatever you’re building. If it’s technical, you need your team’s dev or CTO in that meeting with the client. In the product space, you want your product manager in there to speak the right unit economics language – it all helps give a potential client a clear picture of what it’ll be like working with you.

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

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

THE RESULTS

Well, well, we asked what you think drones are good for, and most people say emergency response…

🟨🟨🟨⬜️⬜️⬜️ 🤡 No way those deliveries make it to their destinations (21%)
🟨⬜️⬜️⬜️⬜️⬜️ 🎁 Maybe for small items but not food (10%)
🟨🟨⬜️⬜️⬜️⬜️ 💌 Post office 2.0 let’s go (16%)
🟩🟩🟩🟩🟩🟩 🚑 Great use case for emergencies, but that’s it (38%)
🟨🟨⬜️⬜️⬜️⬜️ 🍟 Yes and the smell of KFC flying past your house is genius (15%)

Powered by beehiiv

Hi there,

Got a temperature? Don’t fall for this fake TikTok doctor who conned almost 300k followers, Radio 2000 and even the Gauteng Dept of Health into thinking he’s an actual doc.

In this Open Letter:

• Drone wars: Solving business logistics the KFC way.
• Soaring solar, time to de-list & Amazon’s new satellites.
• Get growing: 5 Steps to optimise your pricing page.
• The results: How school impacts your day.
• Free stuff: Share this and get cool tools + coffee on us.

TRENDING NOW

Lowering the Cost of Delivery

If you’ve been following some of our analyses of business trends like the viability of SA’s e-commerce sector, what Checkers Sixty60 gets right and even SA’s absolutely massive township economy, you might have picked up a general theme that plagues a lot of businesses trying to do something new… Logistics.

Man, moving anything – stuff or people – is expensive here in SA. And you can bet a lot of that comes from having to use actual drivers, with salaries and needs. Don’t get us wrong, people should have jobs, but you can’t ignore the potential price benefits we could unlock with more automatable solutions.

Life was simpler in the 90’s

It’s in the numbers

Takealot, for example, do about 25’000 parcels per day. And, unless you’re spending more than R500, delivery can cost between R70 and R95 – which means SA is spending upwards of R1.75m just on deliveries per day. Yet the company’s not showing profit. Well, maybe if we helped put that R1.75m back in the consumer’s pocket, it could be.

Even Uber Eats’ R15 delivery fee is just a mask for the astronomical hidden costs they need to build in just to get you your burger on time. Why? Because, again, the delivery is so expensive.

See the trend?

What about the next frontier for business in SA: Bring down the cost of deliveries.

And, of course, there are a number of options for doing this. Autonomous vehicles. Sidewalk-crawling robots. And, of course, drones.

Time to fly?

It’s not as far-fetched as it seems. Remember Zipline? The drone company that started out as an NGO and got the contract to deliver blood to hospitals in Rwanda? Well, they’ve pivoted…

Seems Rwanda was a great training ground, because they entered the commercial space with a storm, raising $250m at a $2.75bn valuation in 2021, and another $330m at $4.2bn in May this year. This is on the back of their partnering with Nigerian retailer Jumia in 2022, hailed as Africa’s biggest e-commerce player. Not to mention having been the first to start commercial drone deliveries for Walmart in 2021.

You can bet it’ll keep growing. Amazon recently completed its first 100 drone deliveries in the US, and is setting its sights on overcoming regulatory hurdles to expand the operation.

Local plays in this space

After 5 years of effort to get clearance from SA civil aviation, SANBS is ready to start using drones to transport blood in emergency situations. It’s small, at first, limited to transit between two hospitals. But it has legs, since the SANBS has plenty of locations, meaning they should be able to expand – a vital service, too, since you normally have just a 1-hour window when a patient is identified as in need of blood, and drones could really help save lives.

On the commercial side, KFC recently delivered its first order by drone to no-doubt hungry cricketer David Miller during a T20 match against Australia.

Catching the fine leg on fine leg

Just how far are we from drone deliveries going mainstream? Well, there are probably still some regulations to get sorted with Civil Aviation. But with these kinds of players getting on board, it’s definitely a space to keep an eye on.

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

Get your sharing link here.

OVER TO YOU

Will drone deliveries work in SA?

Votes to see what others say...

• 🤡 No way those deliveries make it to their destinations
• 🎁 Maybe for small items but not food
• 💌 Post office 2.0 lets go
• 🚑 Great use case for emergencies, but thats it
• 🍟 Yes and the smell of KFC flying past your house is genius

Login or Subscribe to participate in polls.

IN SHORT

👋 Hi Speed. Zambia just became the 6th African country where SpaceX has launched its high-speed, uncapped Starlink services. Starlink’s satellite internet services are suited for rural areas and areas underserved by traditional internet infrastructure and could see millions of Zambians getting high-speed internet for the first time.

🥸 Stealthy Privatisation. A recent study by RMB & Morgan Stanley shows that Eskom’s electricity generation will be replaced by the private sector within the next 2 years! This is off the back of record-breaking solar panel imports and installations in 2023.

🔌 Delisting Trend. SA Billionaire Businessman Patrice Motsepe’s African Rainbow Capital Investments (ARC) is considering delisting from the JSE as it evaluates whether or not there is value in remaining listed on the JSE. In 2022, 20 companies delisted from the stock exchange, with at least 32 set to delist in 2023. Scary stuff for your retirement annuity.

🚰 Going Liquid. Steinhoff International’s liquidators will (finally) liquidate the company this coming Friday (13 October) when it will delist and its shares will no longer exist. Around 99% of shareholders had voted to dissolve and delist the company from both the Jozi & Frankfurt stock exchanges back in July of this year.

🛰️ Forest Satellites. Amazon’s reply to SpaceX’s Starlink, Project Kuiper, just launched 2 prototype satellites. The e-commerce giant is looking to deploy over 3’200 more satellites over the next couple of years after initially vowing to invest $10 billion into the project back in 2019.

📮 Going Postal. The South African Post Office (SAPO) has been forced to close another 80 branches – bringing the total number of closures to 396 since 2020. As it stands SAPO is technically insolvent with only R4.5 billion in assets and negative equity of R7.9 billion.

­BUILDER’S CORNER

5 Steps to a Killer Pricing Page

Once your product and plan move along the comms and website stage, you run into the big pricing page dilemma: Should we advertise our price?

Soon, it will cost you a customer.

And it’s not just in SaaS. We see a lot of startups unwilling to list prices. Some clearly even consider their pricing page as the END of a sales funnel when it’s actually not. See, pricing has a bit of psychology to it…

The case for pricing awareness

We’re going out on a limb here and betting that most (or at least a lot of) South Africans’ behaviour flow when checking out a new product online goes something like this:

1. Check the Landing/Home page, read a little bit, maybe watch a quick video.
2. Click through to pricing page first to see if this is even in your league.
3. Only then go to product page and maybe check features or some testimonials.

Why? Well, we’re conditioned that most overseas products are out of our price range, so a quick price check will tell you if you should even bother engaging further with this or not. And we’re also willing to bet this behaviour translates to looking at local products, too.

The lesson? Your pricing page is probably VERY important to any market. And it’s not the end of your sales funnel, it’s close to the start. So, how do you build a killer price page?

Optimise your pricing page

1. Lead with your Value Proposition (and repeat it)
2. When the price point’s important, people are probably going to click here first before your fancy sales pages. So why not consider your pricing page close to the start of your funnel? Show and remind them here what problem you solve, how you solve it and why it’s better than the alternative.
3. Make it super clear and super simple
   Pricing tables, options and feature lists are often SO clunky! No one can read 4pt font, and you don’t want to bore people – remember your goal is to get someone to buy or jump on a call, so optimise your page for that. It’s not an info dump.

3. Emphasise the Benefits, not Features
   Everyone always says “Sell on benefits, not features”, but what does that mean? Well, it's a bit complicated, but here’s a practical exercise to help you do it right:
   
   Get two columns on a page, label the first one “Features” and the other “Benefits”. In the Features column, list your product’s features like you normally would have done on a pricing table. Now, next to each Feature, in the Benefits column, write down 8–10 ways that single feature will enhance your customer’s life – “If you have this feature, you will…”
   
   Example: If your product is a little cheaper, that’s a Feature. Your Benefits will be really obvious ones like “because it’s cheaper, you save money”, but also include more creative ones like: “because it’s cheaper, you’ll have more money to spend on chocolates, therefore this product helps you eat more chocolate”.
   
   See what we did there? That’s selling on benefits. And if you can match the benefits you imagined with actual needs and fears from your user research, you’ll know exactly which ones to use to convert more.

4. Talk to their fears directly, calm them
   Your pricing page is actually where your testimonials and lists of B2B brands you’ve worked with come in most handy. See, people hesitate to buy because something is still bothering them.
5. When Slack started, they had a “Wall of Love” on their pricing page – a rolling compilation of tweets from users saying “thank you” and fawning over “what an amazing” product this is. This helps new users feel like “Well, if others like it so much, maybe I should try it…”
   
6. Use some psychology to convert
7. Depending on what you’re selling, you might want to have tiered pricing with decoys to make your actual price look attractive. Or maybe you have an up-sell, down-sell presentation to push people to the product you’re really trying to move.
8. You can A-B test different options on the page, and see what converts best.

Got a pricing hack that works? Hit reply and let us know…

THE RESULTS

Last week, we asked how school affects your daily life. And it’s a three-way split between soccer mom-ing, no kids (yet) and kids outa school…

🟩🟩🟩🟩🟩🟩 🙅 Not at all, avoiding having kids as long as possible (26%)
🟩🟩🟩🟩🟩🟩 ⚽ Directly, doing school runs every day (26%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏈 Only sports days, fees and parent-teacher meetings (6%)
🟩🟩🟩🟩🟩🟩 🎉 Thank goodness mine are out of school! (26%)
🟨🟨⬜️⬜️⬜️⬜️ 🚦 Just get stuck in school traffic a lot (11%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏠 Hardly, we home school (6%)

Your 2 cents…

“My kids are all grown, and I miss their school days, I enjoyed the hell out of it. Sports, plays, functions, the lot. Thanks, kids!”

William

FOR THE MEMES

theopenletterza

View more on Instagram

theopenletterza

Add a comment...

Got some startup memes? Send them our way or tag us on socials.

Hi there

Future of cargo? With 90% of the world’s goods transported by sea, the race is on to green commercial shipping. Currently in the lead? Huge cargo ships with wind-power sails. Deja vu anyone?

In this Open Letter:

• School’s in: SA’s lesser-known 40m distribution channel.
• SA spies hacked, a big week for FinTech funding & your Shrek royalties.
• Go big: 20 Years of informal economy hacking.
• Your bank tech: The results are in.
• Claimed your free Coffee yet? Share with 2 people and get coffee on us!

TRENDING NOW

For Whom the Bell Tolls

OK, so EdTech is still one of the more popular buzzwords in startups today. We spoke about advancing education in SA before and even learned how to build an EdTech startup from the ground up.

But set aside the drive to advance learning through tech for just a moment and consider just how many of our daily lives – kids, parents, teachers, service providers, people who live near schools – are impacted by plain old school.

There are about 26k schools in South Africa, with around 400k teachers and 13 million pupils. That automatically involves at least another 13 million responsible adults (one parent, grandparent, family member or guardian) directly, and probably another 13 million (second parent, partner etc.) a little more indirectly.

That’s almost 40 million South Africans.

Or should we rather say “captive audience”?

Building for school markets

Again, apart from the BIG and obvious learning/education/curriculum part of it, there are also many peripheral problems like the basic logistics and administrative issues around such a massive daily exercise.

Think: Schools have entire rooms just for storing the stuff kids lose on a daily basis. You have tuckshops, excursions, performances, sports days – a lot of unsafe money changing hands here! Not to mention the nightmare of coordinating communication between teachers, parents, student bodies, PTOs, and school boards – it’s endless.

Then there’s the arts and culture side of things, as well as extracurriculars and carpooling – so much to manage. And we’re pretty sure at least a few parents and families would love their little ones’ sports leagues presented and updated in beautiful and easy-to-follow digital formats.

Face it, there’s a lot of opportunity here, and it’s a potential golden market, because:

• It’s self-regenerating: new people join the school system every year.
• It’s economically active: by default, these parents have disposable income.
• It’s a captive audience: the school itself becomes the distribution channel.

Local teacher's pets

If you grew up pre-2000 you would know that one of the biggest pains faced by parents, kids and teachers alike is the circular that stays stuck in that bag the whole term and parents have no idea they have to participate in the entrepreneur day up until the night before.

‍

School-to-parent communication has been a challenge since school started. So back in 2010, some tech-savvy schools introduced a Java-based app that ran on desktop computers and provided parents with school communication.

The idea is simple — this app will run in the background and when connected to the internet will pull the latest news or information for parents to read. It worked like a charm. Bored-at-work parents would open this up and always be informed.

And whilst SaaS was still a foreign concept to South Africans back then, schools didn’t want to pay. So the creators of this app settled for ad revenue. Smart move, considering parents are spenders (or at least they have to be, coz kids need stuff).

Fast forward to 2019, and this app, d6 School Communicator has an array of mobile and web-based products that extend beyond communication. And they had more than 2’500 schools using their software — which equates to about 3 million parents.

These days they do make use of a SaaS model (among other things) to generate income and also offer fully-fledged school management solutions, but its power really lies in its customer base and distribution model. Established relationships with schools that have established relationships with parents… and you’ve got something worthwhile. The opportunity at hand was acknowledged when they raised funds in 2021 — from among others Knife Capital.

But they are not the only tech company solving challenges in the inter dynamics between schools and parents. Backed by Nedbank, Karri is a payment service for communities and organisations that specialise in schools.

It had its start trying to make schools safer by minimising the amount of cash students were carrying. Parents can use Karri to pre-order meals from tuck shops and more recently, introduced a Mastercard card that children can use to pay.

‍

This card is fully managed by the app on the parent’s phone and one can imagine whilst the use case starts at school, it quickly becomes a useful tool outside the school environment.

Schooling-related opportunities are abundant because the system creates so much friction for all role-players. Build an innovative solution to solve some of these challenges and you have a distribution channel like no other.

IN SHORT

👑 Leading Lady. Mary Vilakazi will become FirstRand’s CEO, and as its first female leader is set to usher in a new era of female leadership across the group’s portfolio of businesses including RMB, FNB, WesBank, Aldermore Bank and Ashburton Investments.

🤐 No Comment. South Africa’s State Security Agency (the SA version of the CIA) was “allegedly” hacked just days before the BRICS Summit held in Jozi in August. But if you’re wondering why no one in SA has heard about it, it would seem like government’s official policy might be to keep it under wraps.

🪡 FinTech Funding. Mere hours after Tuesday’s Open Letter dropped featuring SA Fintech Stitch, it was announced that their Series A round was extended by an additional $25 million from Ribbit Capital. Elsewhere in local FinTech funding news: Revio raised $5.2 million in funding, while Peach Payments raised $30 million.

🧌 Swamp Money. Everyday investors can now get their hands on shares to the music rights of the Shrek movies for less than R200 via the trading platform, Public. The nearly 89’000 shares will pay dividends quarterly, generated from the revenue each time the movies are streamed or aired.

🤦‍♂️ Flag Facepalm. In 1 week, The Boks and Proteas could take the field without the South African flag on their jerseys at their respective World Cups. This after the SA government failed to meet the deadline to comply with the 2021 World Anti-Doping Code (Wada).

THE THREAD

Inside Track: How to Hack SA’s Informal Economy

Looking to tap into SA’s R425bn township economy? Then this week’s 30-minute podcast is for you. We spoke to serial founder and veritable informal economy expert Luvuyo Rani of Silulo Ulutho Technologies, who has been setting up technology centres in townships and under-served areas for, like, 20 years. It’s gold…

The Highlights

1. Long-term thinking
Having been one of the first movers to try and bring internet into townships, Luvuyo realised early on how important branding and visibility are in this market.

He explains here how they had to constantly push to be the first to deliver new tech to the market. And how they’d have to work (even at a loss) when malls and big brands started encroaching onto the local township space – driving up rental costs and ousting small local businesses. Particularly, how they had to take the high costs on the chin, just to be the local brand whose shop could stand next to a big brand in a township.

2. Localisation is King

As Luvuyo explains, even townships within the same metropole are vastly different. So localising yourself is key. They always made sure to employ local people, engage with local radio stations and media, and work with stakeholders in the area to make them feel a part of what they were doing.

Slowly but surely, the local entrepreneurs and even community leaders started getting involved and on board with what they were doing. To the point where today they can franchise.

3. Go where the need is

For years, and perhaps even now, the story to many entrepreneurs in SA is to go one of two places – either Cape Town or Joburg – to build a business. But Luvuyo realised early on that it wouldn’t work for them.

They needed to bring internet infrastructure to those who didn’t have it, so they went the exact opposite, to the Eastern Cape. And, because the market was being ignored by all the main players, they were, apart from easy access to the general public, able to get meetings with school principals, heads of departments and even government department officials in the area.

It’s amazing insights – and if you’re keen on the township economy, this 30-minute podcast is probably the best investment you can make.

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

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

THE RESULTS

So when we asked how keen you are on open banking, a cool 58% said they can’t wait for it to really take off…

🟨🟨🟨⬜️⬜️⬜️ 😡 Hell no (26%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🧐 I don’t do my own banking (0)
⬜️⬜️⬜️⬜️⬜️⬜️ ₿ IDC, crypto is the future of “France” (5%)
🟩🟩🟩🟩🟩🟩 🦾 Can’t wait to hook up apps and never bank again (58%)
🟨⬜️⬜️⬜️⬜️⬜️ 🛋️ I store cash in my couch – like a president (11%)

Hi there,

Value your privacy? Meta has once again teamed up with Ray-Bay to release a new version of their smart sunglasses that let you covertly photograph and record anyone, anywhere. Talk about hitting “the Mark,” though, as Zuck himself probably needs a pair of these after he got not 1 but 2 black eyes at jiu-jitsu training this weekend.

In this Open Letter:

• Smart money: An Open Banking revolution.
• Pricey lions, iPhone heat & public lawsuits.
• Savvy startup: 8 Steps for Product-Led Growth.
• What you outsource: The results are in.

TRENDING NOW

The Future of Banking is: Open

Strap in, folks! While the world is utterly obsessed with the sorcery of blockchain and regulating the wild, wild west of crypto, let's not forget that we can still use our good ol' traditional banking system to cook up some transformative innovations.

Take Apple in the UK, for instance. Last week, Apple soft-launched a feature on the iPhone Wallet app that utilised a special function in the UK’s banking framework that lets the app show users the balances on all their cards, while they’re making a purchase.

‍

Obviously, a lot of people loved it. This begs the question of why they can’t do it everywhere. And the answer is that the UK made it possible by creating what’s called an Open Banking framework.

Open what now?

Open Banking is when the financial industry, including regulators, get together and make it possible for third-party FSPs to access financial data and services that only banks normally have access to – like your account balances – typically via API.

While a lot of FinTechs have been pushing for more access since the early 2000s (when mainly banks offered online banking services), the big shift came with the introduction of PSD2 in Europe in 2016 – a set of regulatory standards for payment services (including 3rd party ones). This led to the UK ordering its banks to make APIs available to third-party providers in 2018.

And this led to similar initiatives in Australia, Canada, Singapore and, to some extent, it’s starting here in SA, too…

Inside open banking

The options are insane. Think what 22Seven or business accounting software such as Xero or Sage could do if they could (with your consent) interact on your behalf in your Internet banking. Budget apps, auto payments, automatic savings when you have extra money – the works.

Even Ozow’s workaround for an “instant EFT” using Yodlee to log into your bank account and act on your behalf will be much better if can offer this via an official bank API. If anything, it’ll get more people to use official channels, while unlocking huge value for the user.

But not all of these applications will be equally loved by front-end users, though. The government could then also use a version of this to better track you and make sure you pay SARS what they’re due. In fact, there’s currently talk about SARS implementing automated, real-time VAT calculation.

‍

Local trailblazers

Investec did not only go Open Banking but probably a step further in releasing programmable banking. Want to create certain rules on how your card can work? Well, you basically plug into their API and unlock the ability to control your card’s features and functions – down to setting custom limits, transaction rules and behaviours, and even custom budgeting and notifications. A tinkerer software developer’s dream.

Then there is a startup that’s positioning itself well to capitalise on the eventual adoption of Open Banking: Stitch. Using APIs, automation and other tools, Stitch is literally stitching together the complex world of the flow of funds in modern organisations.

Oh, and if you want to see which SA banks offer these abilities, you can track our banks’ open API progress here.

Exciting developments and the time for this to go mainstream might be closer than we all think. We are watching this space…

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

Get your sharing link here.

OVER TO YOU

Keen on Open Banking?

Vote to see what others say...

• 😡 Hell no
• 🧐 I don’t do my own banking
• ₿ IDC, crypto is the future of “France”
• 🦾 Can’t wait to hook up apps and never do banking again
• 🛋️ I store cash in my couch – like a president

Login or Subscribe to participate in polls.

IN SHORT

💰 Big moves. Telemedia, a subsidiary of Rex Trueform, has just bought a 35% stake in ITV Africa, an automated sports coverage company using and distributing AI tech products for school sports broadcasts and streaming services. Interestingly enough Rex Trueform also owns retail chain Queenspark and a minority interest in SA Water Works.

🐛 A Worm in the Apple. If you’ve wondered why your new R20’000+ iPhone 15 gets hot while you’re scrolling Instagram in an Uber, you’re not alone. Apple has identified “a few issues” that make their latest iPhone overheat including a bug in iOS 17. When Apple said the new iPhone was gonna be hot, we don't think that’s what they meant.

🥊 Stepping into the Ring. eMedia (the cats who own Openview, eTV, eNCA etc.) took out a full-page newspaper ad to announce legal proceedings against MultiChoice for the RWC broadcasting rights shenanigans between SuperSport and the SABC that left Openview out in the cold.

🦁 Pricey Lions. Africa’s wild lions have disappeared from 92% of their historic stomping grounds – about 25 countries all told, according to a study led by Oxford University and the Endangered Wildlife Trust (EWT). Fear not though, we’re pumping a cool $3 billion per year into conserving what’s left of Africa’s lions.

💨 Written in the Stars. Well, it was inevitable. As loadshedding continues to continue, looks like 4 of Eskom’s 15 coal-fired power stations are breaching government emissions regulations – Matimba, Matla, Kendal, and Kriel, 2 of which were emitting more than double the permitted limit of particulate matter.

❗ Pro Garage Sale. Ever wondered what big retailers do with the excess stock they struggle to move? Looks like Game’s got a solution with its non-branded store called ”The Last Chance Store”. It’s opened right next door to the Game store in Fourways Mall with up to 60% off goods.

­

BUILDER’S CORNER

8 Steps for Product-Led Growth

You’ve got a product – awesome! Now, how do you grow sustainably? Because we don’t all have a never-ending supply of ready cash to feed a growing startup…

‍

We took some inspiration from Jaryd Hermann, a former SA founder turned product specialist based in New York. He has an awesome newsletter you should totally check out called How They Grow. He recently covered Product-Led Growth and its gold. The PLG movement revolves around the idea that the product itself, rather than traditional sales and marketing efforts, drives customer acquisition and retention.

The teams behind a number of successful products swear by PLG, including:

• Slack – the freemium model, coupled with easy onboarding and good word-of-mouth among creative agencies soon made it a top player in workplace communication.
• Zoom – despite it not being a unique product, Zoom offering free access to businesses and schools at the right time during the pandemic made it a household name.
• Notion – known for its community-based building model, it should be no surprise they have massive word of mouth and referrals.

It’s much the same with Airtable, Figma and Trello.

PLG Steps to Growth

1. Core Problem Validation
Does this help me solve their problem?

At the core of product-led growth is the fundamental question of whether your product effectively solves the user's problem. To make this happen: Ensure that your product genuinely addresses the user's problem and provides a solution. Then, communicate that well in your comms with others.

2. Help Them Make a Decision
What information do users need to decide?

Once users get what your product does, they need the best info to know if it's for them. For this, you need a comprehensive product page with detailed features, transparent pricing, social proof (e.g., testimonials, case studies), and emphasis on what differentiates your product. Keep that info updated.

3. Remove Friction
How easy it is to try?

A smooth onboarding process is vital. Reduce the number of steps required to start, and give people a low-risk, high-value way to trial your product.

4. Value Discovery
How easy is it to learn to use?

Once users are in, they need to quickly discover the value your product provides. Develop intuitive onboarding tutorials and educational content to help users learn to use your product effectively.

5. Time to First Aha!
How quickly do users unlock value?

Accelerating the time it takes for users to experience that "aha" moment, where they realise your product's true value, is vital. Identify key actions that lead to the "aha" moment and optimise the user interface to guide users toward them quickly.

6. Repeatable Value
How often do users get value?

Ensuring that users consistently and repeatedly get value from your product is what drives long-term engagement. Continuously get feedback and improve your product based on it to build a loyal user base.

7. Monetisation
How well does the product monetise?

While PLG focuses on delivering value, monetisation strategies are crucial. Implement flexible pricing, analyse user behaviours, and adjust pricing strategies to maximise revenue.

8. Get the Flywheel Going
How can users bring in more users?

Mechanisms within the product itself that encourage referrals and sharing can lead to a self-sustaining growth cycle. Create referral and advocacy programs, offer rewards for successful referrals, and make it easy for users to invite others.

Got a low-cost growth strategy that’s worked well for you? Hit reply and let us know…

THE RESULTS

Last week, we asked to what extent you take part in the access economy. And quite a few of us (40%) are pretty actively outsourcing ownership…

🟨🟨🟨🟨⬜️⬜️ 📄 Nope, I own everything (30%)
🟨⬜️⬜️⬜️⬜️⬜️ 🚙 Maybe rent a car now and then (10%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏠 Choose to rent the house (13%)
🟩🟩🟩🟩🟩🟩 📱 Uber/Bolt, Airbnb/Lekkeslaap – the works (40%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💻 I’m reading this email on a rented device (3%)

Hi there,

Feeling fit? Scientists might have just discovered an actual exercise pill. A new compound called SLU-PP-332 successfully helped obese mice lose weight and tone up. And you bet everyone’s gonna want to get their hands on it.

In this Open Letter:

• The high life: Renting VS owning in the Access Economy.
• Meteorite Olympics, desert dreams & web buyouts.
• Wealth secrets: Investments you’re not supposed to know about.
• Last chance: Get R2’500s gold in your new account.
• Watch: How does greylisting affect startup funding?
• The results: Your take on SA’s greylisting.

TRENDING NOW

Do You Really Need to Own It?

Imagine a world where "having" doesn't mean "owning." A realm where you can flirt with products, lifestyles, and even energy solutions without tying the knot.

It’s called the Access Economy, and it’s already unlocking a whole new segment of customers for your business.

The Curious Case of Ownership – or Lack Thereof

You know how one has those fleeting moments of passion? A surge of creativity accompanying the sudden urge to capture the world through a high-end camera or an impulse to serenade your cat on a brand-new guitar?

‍

Well, what if I told you there's a way to heed the call without breaking the bank? The Access Economy whispers, "Why buy when you can borrow?"

The Access Economy is basically renting things like appliances, cellphones, laptops or even your solar installation. But more than that, it’s accessing things you need only for the period you need them.

The Nitty-Gritty: Why It's a Hit

This isn't just a single; it's an entire album. And here are the beats that make these tunes so catchy:

• Economic Flexibility: Big dreams, small budget? Renting offers a front-row experience without the VIP price tag.

• Technological Tango: Platforms and apps are the dance floors where all the magic happens. Airbnb, Uber, and Spotify are the DJs, setting the mood just right with affordable prices and subscriptions that enable access to heart desire.

• Eco-Chic: Share more, waste less. Simple, yet revolutionary. Less plastic, less waste, less carbon. Makes sense.

• Urban Space Jam: In bustling cities, space is often limited, meaning while you might have a 3x3 meter patch of grass, storing a lawnmower might not be ideal. Imagine you can rent it twice a month – nice.

• Generational Groove: For many millennials and Gen Z’ers, experiences are the new currency – why have one holiday home when you can go to a different place every time? What’s more, the ownership admin and overhead is something else – and we know how much Gen Z loves responsibility.

• Risk Mitigation: Skip the stress of the depreciating assets and interest rates going bananas. With renting, there are no bad investments.

• Flexibility & Freedom: Why settle for one when you can have a little bit of everything? Don’t deploy all your cash into one item, hire what you need and be able to afford access to it with cash flow.

• Work-Life Remix: Flexible work patterns call for flexible life patterns. It's all about that work-life balance for the gig worker. And as their seasons and opportunities change, so too does their requirements for specific items.

• Global Village Vibes: With the world as your playground, who needs the baggage of ownership? Many modern workers work remotely, travel a lot and don’t want to be tied down.

• Innovate or Bust: New startups are making renting so convenient, it’s a no-brainer and it is bound to threaten those businesses that don’t embrace it.

While Uber and Airbnb get a lot of credit, let's tip our hats to the real O.G.—car rentals. Yeah, Sixt had this figured out way back in 1912. But let's be honest, what’s really made the Access Economy a household name is the development in tech.

‍

‍

Tech is the magic wand that turned this pumpkin into a golden carriage. Access, tracking and payments are all now baked into easy-to-use apps. It’s what made Uber (just an iteration of another access economy business model – taxis) viable.

Access it local

Now, let's shine a light on some remarkable ventures that have tapped into the Access Economy like Cheslin Kolbe in space.

• GoSolr: Energy blackouts got you down? How about renting a solar system? A recent investment from ARC has slashed GoSolr’s lead time to just two weeks. Say adios to energy woes and hello to a sunshine-filled future.

• Strapp: Your garage might be a treasure trove of unused items, from cameras to power tools. Strapp is like the digital marketplace of your dreams where you can list these treasures for others to rent. While it could grapple with the challenges of marketplace dynamics (having enough on offer and enough to buy at all times), there's undeniable potential, especially for niche items.

• Rentoza: Now here's a success story for the books. Starting in 2017, this South African startup has already roped in over 8,000 active customers. Rentoza has more than R100m in assets being rented out and a team of over 110 people. And with a recent $6 million in funding, they’re not hitting the brakes anytime soon, planning African expansion as well as local retail expansion (this could make it blow up 10x).

The Access Economy is no longer just a section in a business textbook; it's a lifestyle choice that's democratising luxury, convenience, and choice. It’s a strategy not just for making life more enjoyable but also more sustainable. It’s not just about consumption; it’s about smart, flexible, and conscious living and this is just the start… we are watching this space.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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

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

Get your sharing link here.

OVER TO YOU

Do you take part in the access economy?

Vote to see what everyone else says...

• 📄 Nope, I own everything
• 🚙 Maybe rent a car now and then
• 🏠 Choose to rent the house
• 📱 Uber/Bolt, Airbnb/Lekkeslaap – the works
• 💻 I’m reading this email on a rented device

Login or Subscribe to participate in polls.

IN SHORT

🏜️ The Australia of Africa. Namibia could be the next big thing for wealthy dollar millionaires looking to retire. This is due to its low crime rate, favourable tax rates, low population density, abundant natural resources, and the rise in lifestyle estates. Interestingly enough experts say that if South Africa followed our neighbour’s examples especially when it comes to capital gains tax and estate duty policies, it could be one of the wealthiest countries in the world in 10 years.

🤑 Market Consolidation. Dimension Data (who owns local ISP Mweb) has just accepted an offer from a competing ISP, Webafrica, to acquire Mweb. The deal, an undisclosed amount, will see Mweb continue operating independently.

☄️ Meteorite Olympics. In 2021, two meteorite fragments were discovered in the Northern Cape. In August 2023 the Meteoritical Society finally accepted that “Brierskop” and “Wolfkop” are in fact from 2 different meteorites – despite being found only 1km apart. This takes SA’s tally of confirmed meteorites to 51 – the highest in sub-Saharan Africa. Namibia lies 2nd with 18 and Botswana has found 12 Space Rocks.

🕵️‍♂️ Crime (Mini) Boss. The 2023 Global Organised Crime Index was just released and South Africa scored a 7.18 out of 10 criminality score making us 7th in the world. Only the DRC (7.35) and Nigeria (7.28) were other African nations ahead of SA with drug trafficking, cash-in-transit operations, poaching syndicates, robberies, and more the crime of choice for these Mafia-style, well-armed syndicates operating in Cape Town, Johannesburg, and Durban.

🌱 Seed Funding. Local payment API startup Revio has just raised a $5.2 million seed round. The startup provides businesses with an API for payment collection and allows businesses to accept and reconcile more than 70 payment methods including major mobile money products, card schemes, direct bank payments and wallets in 25 countries in African markets.

­

THE OPPORTUNITY

The Investments You’re Not Supposed to Know About

Anyone who’s ever read those old Rich Dad Poor Dad books from the 90s will remember the idea that the 1% mega-rich get these super-secret massively profitable investment opportunities that we ordinary people never have access to (the books are basically about how he learns and tries to get access to those elusive opportunities).

One of those vehicles that’s publicly known but seemingly inaccessible to us is gold. Really old, mega-rich families stockpile and profit off gold like we can't even imagine.

And there’s a very good reason why…

Gold never loses its value. In fact, it’s one of the few things that has and probably will always just get more valuable. Sure, the price goes up and down all the time, but the value increase is remarkable, especially if you compare it to cash.

We explained the whole thing in our Open Letter on gold’s investment value, but here’s a practical example that’ll blow your mind:

The real reason why it’s so clever

Buying a loaf of bread

with

Cash

Gold

In 2008

R7. 22

87% more

0.00095 ounces

33% cheaper

In 2020

R13.51

0.00064 ounces

Buying a pack of cigarettes

with

Cash

Gold

In 2008

R20.13

66% more

0.00325

48% cheaper

In 2020

R33.40

0.00169

If you buy stuff with gold, you pay less for it even 10 years later, while everyone else pays more due to inflation. Gold is almost immune to inflation – and it’s the same if you use gold to buy almost everything: coffee, cars, houses. Wouldn’t you be better off today if you could pay less for stuff than you did back in 2008? See why the rich get richer with gold?

But there’s a problem…

Buying gold, as a normal person, is hard because it’s very expensive to buy in quantity, it’s hard to store safely (you paint a target on your back), and you can’t actually go to the shop and pay for groceries with just gold, you have to turn it into cash first.

Now, you will have noticed over the last few weeks that we’ve been promoting a new SA product called Troygold. And the reason we did that is because Troygold solved all those problems – they took all the good stuff about gold, removed all the bad stuff and made it available to all of us normal people.

Here’s the diff…

Normal gold

• Hard to come by because supply is so limited and stockpiled.
• Very expensive, because you have to buy in bulk.
• Hard and risky to store and safeguard.
• Can’t just buy stuff at the shop with it.

Troygold

• Easy to buy – takes less than 4 minutes.
• Affordable because it’s fractional – you can buy portions of gold for just R1 upwards.
• Safety is not your problem, your gold is already secured, insured and stored for you.
• You can just buy stuff – you get a special Mastercard that lets you buy anything with gold, not cash.

‍

Troygold gives you access to the gold market with a simple app you download, then you start buying gold in whatever quantity you want. And you can trade, save and borrow cash to spend against your gold. Beautiful, right?

Check out their awesome video…

Now, before you head off and become a gold magnate, let us help you get started by paying your first R2’500s worth of gold into your Troygold account.

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

And all you gotta do to stand a chance of winning it all is 1, 2, 3…

STEP 1: Go to LinkedIn.

STEP 2: Create a post on what you think about The Open Letter (as a post to your followers)

STEP 3: Tag us: @TheOpenLetter and hit “post”.

The winner will be announced on Tuesday, it’s your last chance to enter. Go get it!

THE THREAD

What Does SA’s Greylisting Mean for Startup Funding?

And how is it impacting the larger ecosystem…

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

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

THE RESULTS

Well, well… we asked your opinion on greylisting and an overwhelming 55% says the government should just make it a legal requirement right now.

⬜️⬜️⬜️⬜️⬜️⬜️ ❓ What is greylisting? (5%)
🟨⬜️⬜️⬜️⬜️⬜️ ☑️ Yes, my company is ready. (10%)
🟨⬜️⬜️⬜️⬜️⬜️ 😡 I hate KYC. (15%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💁 I don’t care. (5%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🙃 It’s the government’s job, they mustn’t bother us. (5%)
🟩🟩🟩🟩🟩🟩 ⚖️ They should just legislate it right now. (55%)
⬜️⬜️⬜️⬜️⬜️⬜️ 😲 First I'm hearing of this. (5%)

Hi there,

Love irony? AI startups are now clamouring to hire all the writers and poets that publishers are laying off due to their products, to help improve their products. See, we told you it’s no biggie – even developers have nothing to fear from AI.

In this Open Letter:

• SA cash flows: Opportunities inside the grey list.
• Ancient Zambians, grocery subs & where to semigrate to.
• Your turn: Get your hands on R2’500s worth of gold.
• Get found: Building more discoverable products.
• What AI’s really for: The results are in…

TRENDING NOW

Keeping SA’s Cash Flowing

Remember the morning of Monday 28 August? SA crypto traders choked on their cornflakes as US crypto exchange Kraken’s arbitrage premium suddenly doubled overnight. It made trading BTC a nightmare.

However, the reason’s a bit concerning: one of Kraken’s banking partners, Bank Frick in Liechtenstein, put SA on its anti-money-laundering blacklist and stopped accepting deposits from SA altogether.

It’s not the first time, either. USDC stablecoin issuer Circle stopped taking fiat deposits from South Africa earlier this year, too. So, what gives?

Well, it has everything to do with SA’s greylisting on 24 February this year. Now, remember, Government told South Africans that the greylisting is not so bad. Yeah, we’re not so sure…

‍

It’s already affecting our economy

And it’s actually worthwhile plotting out some recent events around SA’s greylisting:

• Feb 23 – SA greylisted by global money laundering and terrorist financing watchdog, Financial Action Task Force (FATF).
• Mar 23 – Al Jazeera uncovers a massive gold-based money-laundering operation in SA implicating bankers at Absa, Standard Bank etc.
• Apr 23 – USDC stablecoin issuer Circle blocks deposits from SA.
• Jun 23 – The United Nations Conference on Trade and Development shows that SA loses R1.1 trillion per year due to Illicit Financial Flows (IFFs), mainly misinvoicing in imports and exports.
• Aug 23 – Bank Frick blocks deposits from SA.
• Sep 23 – SA’s car industry confirms billions are lost due to illegal imports and exports in September 2023.
• Sep 23 – FirstRand (FNB, RMB, WesBank) CEO Alan Pullinger expresses concern over SA’s efforts to get off the greylist.
• January 2025 – SA’s deadline to comply with anti-money-laundering measures or get permanently greylisted (if not blacklisted).

Let’s just be very clear about the risks. If SA doesn’t get taken off the greylist, any bank or company would have the right to simply stop dealing/trading with SA altogether. (In fact, they’d probably risk being greylisted themselves if they didn’t.)

At best, we’d have to wheel, deal and pay a fortune to import basic stuff. At worst, we’d have access to nothing and our financial system would collapse.

‍

‍

So it’s probably worth knowing what the greylisting is really all about…

SA’s greylisting in a nutshell

The greylisting is about SA not having enough anti-money-laundering (AML) and counter-financial-terrorism (CFT) controls in place.

See, criminals and terrorists fund themselves with perfectly legal financial tools. So being AML and CFT compliant simply means getting SA banks, FSPs and some other businesses to check customers against international Sanction Lists before doing business with them. And this also creates opportunity…

The scope of the opportunity

Thing is, it’s not just banks, there are quite a few industries that would by law be required to do this type of screening, including: Estate Agents, Loan issuers, Deposit takers, Crypto exchanges, Banks, Insurance companies, Medical aids, PSPs, Industry bodies, Lawyers, Brokers and FSPs.

That is a HUGE market. With 10’157 FSPs, 36’000 estate agents and 29’981 lawyers alone, you’re talking hundreds of thousands of businesses affected. All of whom don't necessarily have the tech or capacity to check all customers against Sanction Lists, but need to, else we all go under.

Moving in this space

That’s where Southern African startup ZenDetect comes in. They’ve built a super sleek platform that lets companies in SA, Namibia and all of Southern Africa upload their clients or plug into their API and scan them against Sanction Lists in real-time and continuously.

SA has just about 14 months to get its industries AML compliant, and the consequences are dire if we miss that window, so we’re watching this space.

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

Get your sharing link here.

OVER TO YOU

What's your take on the whole greylisting thing?

Vote to see what others say...

• ❓ What is greylisting?
• ☑️ Yes, my company is ready.
• 😡 I hate KYC.
• 💁 I don’t care.
• 🙃 It’s government’s job, they mustn’t bother us.
• ⚖️ They should just legislate it right now.
• 😲 First I'm hearing of this.

Login or Subscribe to participate in polls.

IN SHORT

🚛 Considering Semigration? At the forefront of the semigration trend are these small towns across SA, with beautiful scenery, slower pace and cheaper goods as major drawcards. Property prices in these hotspots have also seen a significant increase over the last 10 years – anywhere between 44% and 167%.

🏍️ Special Delivery. After a couple months of pilot trials, Checkers Sixty60 subscriptions are available to all customers. For R99 per month, you can get unlimited deliveries (gotta spend more than R350 though) and other special subscriber perks. Also, check out the rad launch ad featuring a Cruising Hollywood actor and the references to his most iconic roles.

🛸 Geeking out. Comic Con Africa is set to hit Jozi this weekend with 80’000 comic fans expected to attend. The event will be host to Cosplayers, gamers, board game players as well as some international celebrities from films and TV shows like Yellowstone, Star Wars and The Walking Dead.

☀️ Solar Slump. Seems like solar isn't as big a deal for home buyers despite South Africa’s ongoing loadshedding woes. But while 75% of agents noted an increase in backup power systems, 64% have said that pre-installed systems are not something prospective buyers are looking for.

🪵 Ancient Wood. Archaeologists in Zambia have found a wooden structure believed to be nearly half a million years old at the Kalambo Falls near the Tanzanian border. The discovery is set to reshape our understanding of early hominid behaviour, suggesting that they used a variety of stone tools (also found at the site) to cut, chop and scrape the logs. Could also just be some oke’s Heritage Day Braai from 500’000 years ago.

💰 Bag Secured. After being blocked by the UK’s competition regulator back in 2022, it looks like Microsoft’s multi-billion dollar purchase of Activision Blizzard is set to go through. The proposed amendments to the deal are to allay concerns that Microsoft’s control over Activision would withhold popular titles like “Call of Duty” and “World of Warcraft” from other competing gaming platforms.

⛏️ Golden History. Gold has been mined for thousands of years, with as much as 86% of the above-ground gold being taken out in the last 200 years. South Africa was topping the charts of gold-producing nations up until 2007 when China surpassed us. Wanna get your hands on some gold really easily? Talk to our friends at Troygold.*

_{*This is a sponsored short}

JUST FOR YOU

Last Chance to Win Gold!

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

How to Build Products to Be Discovered

You know how everyone wants lots of organic traffic so they can save on marketing? Then there’s the running joke that South African builders tend to battle with marketing itself… Well, the idea of “building for discoverability” could be a solution.

‍

What is Building for Discoverability?

No, it’s not about how your product helps users discover features or whatever. It’s about how you position your product to help users find you out of the blue.

Building for discoverability is twofold:

1. Building features you know people are looking (searching) for
2. And marketing them in all the right places.

And it’s important because, on Lenny’s Podcast the other day, they said some US SaaS companies found that building for discoverability helped reduce the time it took to recoup their acquisition costs from customers by 36%. (A fancy way of saying “make your money back faster”.)

For example: Zapier

Zapier gets this very right. Quick, go Google “workflow automation tools” (what Zapier technically is). See any Zapier ads there? No. Because they don’t want to waste their money…

See, software users rarely search for new products, they search for the problems they want to overcome. Now go Google “connecting Typeform with Google Sheets” and watch those Zapier dollars hard at work.

See, Zapier spends their bucks not on telling you what they are, but what their product can do for you – that’s how they almost tripled their annual revenue between 2020 ($50m) and 2021 ($140m) alone.

Also: Canva

They don’t focus so much on ranking for “design software”, but check out “how to make a flyer”. See the trick?

Others that do this well are HubSpot, Ahrefs etc.

How to Build for Discoverability

1. Know your ideal customer
2. It’s extremely important to know them inside out. Not just basic demographics, but what they do during the course of the day, how they look for solutions, who they trust and where they hang out. Because only when you know this can you discover the next one…
   
3. Speak to the outcomes they’re looking for
4. When you know who they are and where they hang out, you can do the research needed to find out what problems need solving. What will they search for, what do they look for during the course of a day, a week? Etc.
   
   Now, you’ll already have a great product if it actually helps them solve a lot of those. But you can take it even further…
5. Create content + advertise on those pain points
6. Forget the idea of telling people your product is “a (broad startup category) that helps you…”. Rather spend your money on appearing when someone searches for the outcome they’re looking for.
7. This extends to social and other ad types, too. Remember how Zapier appears on YouTube with ads on “how to connect X to Y”? Well, do the same, just for your product.

Found a way to help people find you faster? Or maybe you have a specific question about building smarter? Hit reply and let us know…

THE RESULTS

Alrighty, we asked what you really use AI for and most people here automate workflows and social posts…

🟩🟩🟩🟩🟩🟩 🦾 Automating repetitive tasks and workflows (27%)
🟨⬜️⬜️⬜️⬜️⬜️ 🦸‍♀️ Enhance customer support and engagement (7%)
🟨🟨🟨⬜️⬜️⬜️ 🔎 Analyse user data and gain insights (12%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍕 Debate AI on whether pineapple belongs on pizza (0)
🟨⬜️⬜️⬜️⬜️⬜️ 👨‍👨‍👧‍👧 Streamline recruitment and HR processes (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤡 See if AI can tell jokes better than we can (0)
🟨🟨🟨🟨⬜️⬜️ 🎨 Write stuff and draw pretty pictures (20%)
🟩🟩🟩🟩🟩🟩 🚀 Automate social media posting (27%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤨 What on earth would I use an AI for? (0)

PARTNER WITH US

You are reading this because you are a mover and a shaker in the SA startup space. Want to engage thousands like you? Sponsor The Open Letter for the month of November.

Hit reply and tell us you are interested and we can share the details.

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

Hi there,

Feeling fowl? Some scientists have created an AI to help us talk to chickens. Ok, it’s not peer-reviewed yet, but they claim they can tell what your chickens are feeling with 80% accuracy.

In this Open Letter:

• Overflow: What’s reshaping developer recruitment.
• Bee drones, SA’s new bank & Neuralink human trials.
• Last chance: 1 Week left to win R2’500 worth of gold (for reals).
• Moving fast: Learning from other startups quickly.
• Preferred ISPs: The results are in…

TRENDING NOW

Reshaping Developer Recruitment

So, the CEO of Naspers and Prosus suddenly stepped down, and eyebrows are rocketing skyward. The scuttlebutt is that it's connected to their rather surprising 100% acquisition of Stack Overflow in 2021 for $1.8 billion. A weird deal considering Prosus has largely been wooing developing countries, but here they are, buying up something as Big Apple as it gets. Intriguing, huh?

But without hindsight, one could try and rationalise it.

‍

The need for dev resources

We can sympathise with a group that owns so many tech companies in Africa trying to secure more developer resources. Africa has a severe software developer shortage – less than 700’000 across the continent (something we covered earlier in the year).

For perspective, India has 7 times as many software developers for roughly the same population count.

But, of course, a few months after purchasing Stack Overflow, it became one of AI’s biggest casualties...

Enter ChatGPT

This AI not only talks the talk but walks the walk. It can write code (albeit not flawlessly). The kicker? ChatGPT trained on Stack Overflow data.

So, the entire wealth of knowledge that Stack Overflow, shared and developed by a global community of millions, is now, essentially, embedded in the AI. Why post a question on a forum where you have to wait for a reply when AI can give you an accurate answer (albeit not 100% accurate 100% of the time) within seconds?

Ironically, Similarweb, another Prosus portfolio company, wrote a blog article back in March 2023 attributing the drop in Stack Overflow’s traffic to ChatGPT.

‍

But there’s a silver lining

Speaking of AI and coding, will our robot friends replace us? Hardly.

Some developers are seeing a kind of technological symbiosis. Perhaps even a dev renaissance of sorts. See, according to GitHub Copilot (an AI code-writing companion for $19 a month), developers who use their AI product spend 74% of their time on more enjoyable work, 88% feel more productive, and 96% speed through repetitive tasks.

So, AI can and should be more of an assistant than a replacement.

OK, so why are we seeing tech layoffs and a hiring slowdown since late 2022?

Could it be the economy? Or is AI actually reducing the demand for software developers? Either way, things are changing and those in the space are already evolving with the times.

Local developer recruitment platform Offerzen, for instance, changed its hiring model to make hiring devs more attractive:

• Old fee – fixed per hire, 12.5% of the developer's annual salary, ouch!
• New fee – flat monthly fee of R10k for up to 5 devs, nice!

Prosus will release its financial results in six weeks. By then, we'll have a clearer picture of how their Stack Overflow play pans out. And, for those of you scrounging for top-notch developers, let's hope the treasure hunt gets easier soon.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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

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

Get your sharing link here.

OVER TO YOU

What do you use chat AIs for?

Vote to see what others say...

• 🦾 For automating repetitive tasks and workflows
• 🦸‍♀️ To enhance customer support and engagement
• 🔎 To analyse user data and gain insights
• 🍕 To debate AI on whether pineapple belongs on pizza
• 👨‍👨‍👧‍👧 To streamline recruitment and HR processes
• 🤡 To see if AI can tell jokes better than we can
• 🎨 To write stuff and draw pretty pictures
• 🚀 To automate social media posting
• 🤨 What on earth would I use an AI for?

Login or Subscribe to participate in polls.

IN SHORT

🧠 Want brain Implants? Neuralink is now ready for human subjects for their PRIME (Precise Robotically Implanted Brain-Computer Interface) Study. The 6-year experiment is aimed at quadriplegic candidates due to spinal cord injury or ALS, with the view of giving them mental control over various devices.

🐝 Busy Little Bees. Worker bees in George and the Outeniqua mountains have been acting like little micro drones, collecting pollen from plants in the area as part of a pilot project for Belgian startup BeeOdiversity. The pollen which contains important plant DNA and data provides mega-valuable insights into the biodiversity of the area.

🐓 What the Cluck? Hold on to your hats chicken lovers. SA is heading for a chicken shortage due to loadshedding and bird flu currently doing the rounds. Perhaps if those Japanese scientists can crack the AI to help us translate what chickens are saying they can let farmers know if they’re feeling under the weather and can self-isolate.

🤷‍♂️ Google who? Despite still being the big Search dog, it looks like Google is in danger of having its lunch money taken by the likes of TikTok, Reddit and even Instagram as more and more users (including 40% of Gen Z’ers) turn to these platforms to search for answers to their most burning questions.

🏦 Another Place to Bank. The Department of Women, Youth and Persons with Disabilities (DWYPD) has applied to the South African Reserve Bank to launch a new cooperative bank to specifically advance the inclusion of women, youth and persons with disabilities and their businesses and other co-operatives

🟡 Digital Gold Rush. You can now buy and invest in Gold straight from your phone without worrying about moving and storing it securely. *This is a sponsored post.

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

THE THREAD

How to Learn from Others and Grow Fast

If you’re serious about building something unique, this week’s podcast is for you. We take the concept of learning from the successes and failures of other founders, introduced in our earlier letter on deconstructing startup success a little further.

All in a quick 30-minute podcast that shows you exactly how it’s done and what the benefits are…

The Juicy Bits

1. Speed up your “school fees” by studying other startups
   Few things school a founder faster than building a new product. You have to constantly learn and adapt to make it stick and work. But you can fast-track it even more by studying the models of successful and failed startups.
   
   “Go and unpack what they've already done because there are lessons inside there.” But don’t just copy-paste, try to understand why something was built in a certain way.
   
   "Understanding the 'why' really sparks ideas of how you could do stuff in your own product.” Get all the insights here.
   
2. Utilising customer interviews & behaviours
   Something we didn’t touch on so much in our post is the idea of deconstructing customer experiences. If you can get in front of a potential customer and ask them about instances when they needed a solution and couldn't find one, you can probe about their decision-making process directly afterwards. This helps identify gaps and opportunities for what the market needs and how you can potentially position an offering.
3. This exercise is also useful for refining an existing product. Ideas like actually looking at other apps your customer would typically use before you interview them can give you a real edge – get more ideas here.
   
4. Marrying Tech with Ops to create your moat
5. Going back to our previous post on Checkers Sixty60, which was kind of a deconstruction in itself, if you think about how Checkers managed to leverage their tech in tandem with in-store operations (unlike others, who keep store and online separate), that’s actually what enabled them to create such a unique offering. This makes it hard for others to compete in the space – it’s their “moat” if you will.
   
   So there’s definite room for founders to go and deconstruct their competitors now (or perhaps even other parts of Checkers itself) to find the gaps and build products that help solve for growth at a corporate with deep pockets – get the inside track here.

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

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

THE RESULTS

Earlier this week, we asked what you used for broadband, and good-ole fibre’s taking the cake…

🟨⬜️⬜️⬜️⬜️⬜️ 🌧️ Rain (18%)
🟨⬜️⬜️⬜️⬜️⬜️ 🇿🇦 Vodacom, Cell C, Telkom, MTN (16%)
⬜️⬜️⬜️⬜️⬜️⬜️ 📱 I use my phone for internet at home (0)
🟩🟩🟩🟩🟩🟩 ➰ Fibre (54%)
⬜️⬜️⬜️⬜️⬜️⬜️ ⚡ Starlink (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💼 I’m reading this at the office (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🥰 Got my neighbour's wifi password at braai once (0)

PARTNER WITH US

You are reading this because you are a mover and a shaker in the SA startup space. Want to engage thousands like you? We’re introducing partnership opportunities.

Hit reply and tell us you are interested and we can share the details.

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

Hi there,

In case you haven’t seen it, this is the video of the couple getting soaked by a freak wave smashing through the Brass Bell’s windows in Kalk Bay.

And, if you have trouble sleeping, read SA’s Weather’s snooze-fest explanation for why our country got battered by 9-metre waves this past weekend. (Hands up who thinks The Open Letter could have done a better job.)

In this Open Letter:

• No competition. How Rain’s making it pour.
• Best in Africa, a drive braai & why AI shouldn’t write obituaries.
• Up for grabs: We’re giving away R2’500s worth of gold.
• Fast track: Reverse-engineering others’ success.
• How we shop: The results are in.

TRENDING NOW

Making it Rain

Remember when Rain was the new kid on the block? With their irresistible uncapped 4G bundles, and we all thought, "Cute, but they'll probably be a flash in the pan like so many others." But then, hold the phone! Late last year, they were bold enough to make an offer to merge with Telkom, and we couldn't help but do a double-take.

Flash forward to today, and would you believe it? According to African Rainbow Capital (ARC), Rain's valuation has surged – let's say "precipitated" – by a jaw-dropping percentage, landing at R22.3 billion; lapping Telkom’s R11.9 billion, with ARC projecting Rain's EBITDA (earnings before deductions) to hit over R2.5 billion by February 2024.

Mind-blowing for a company that's barely 5 years old. And in such a competitive space.

‍

Rain keeps it straightforward with their packages – uncapped home 5G at three different speed levels for a flat R559 per month. Want more speed? Just add R200. They even toss in a couple of 4G SIM cards, each complete with 2GB of data and 60 minutes of voice calls (and some SMS credits, lol).

The Secret Sauce: Unpacking Rain's Success

Last week we dissected Checkers Sixty60 and their e-commerce shakeup. Rain is no different, combining smart market analysis with cutting-edge 5G tech to position itself as the telecom network to beat.

Let's break it down:

• ARPU: With a monthly rate of R559, Rain's Average Revenue Per User (ARPU) overshadows the likes of Vodacom, Cell C, and MTN. These providers have a large prepaid base that is known to switch to new SIM cards regularly.
• CAC: Operating purely online means no retail costs – no rent, no excessive staffing, and no massive capital outlay. So these fees can be applied towards a slick, obligation-free signup process. You don’t have to sign any contract to get a 5G modem for free!
• Lower Churn: But once you get it up, it works like a charm and the price is great, why would you switch? Rain likely has lower churn than other operators.
• Cost to Service: Online servicing can be automated, and their state-of-the-art 5G towers are easier (and cheaper!) to maintain than the older networks of their competitors. Not to mention that they roll out in urban areas – easier to travel to and service well. One tower could also serve a multitude of customers in dense areas and as such, the cost to service a customer goes even further down.

We got a unicorn, people

Who says you need a global market to be a unicorn? Rain proves that sometimes thinking locally is not just lekker – it's a game-changer. With a $1.18 billion valuation achieved in just a few years, it's evident: Rain is not just a storm passing through; it's a climate change in the telecoms industry.

So, whether you're on the hunt for a new mobile network or just a fan of startups shaking things up, Rain is one to watch. This is a company going places, and fast.

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

Get your sharing link here.

OVER TO YOU

What do you use for broadband?

Vote and see what others say...

• 🌧️ Rain
• 🇿🇦 Other mobile broadband (Vodacom, Cell C, Telkom, MTN)
• 📱 I use my phone for internet at home
• ➰ Fibre
• ⚡ Starlink
• 💼 I’m reading this at the office
• 🥰 Got my neighbour's wifi password at braai once

Login or Subscribe to participate in polls.

IN SHORT

♨️ Drive Braai. If you haven’t seen it yet, this is the viral video of two guys spit-braaiing in the back of a moving bakkie everyone’s talking about. Talk about your Braai Day vibes.

👋 Packing it in. Naspers and its EU internet company Prosus’s Bob van Dijk resigned very abruptly as CEO of both companies. They’re putting heavy-hitting dealmaker Ervin Tu in his place for now. Some say it’s about time after years of losses across their assets (outside of their Tencent holding of course).

📜 State of Affairs. SA Gov’s controversial move to kill off The Department of Public Enterprises and create a new company to manage state-owned enterprises (like Eskom) has been published as a draft bill. And we have 30 days to comment on it – info on the bill here.

🇿🇦 Best for Startups. Despite new ventures attracting less investment than counterparts in Egypt, Kenya and Nigeria, the Global Startup Ecosystem Index still ranks South Africa as the best startup country in Africa.

🕊️ Not funny. Microsoft News removed an AI-generated obituary for an NBA player who passed away last week, after the AI messed up pretty badly, calling the beloved player “useless at age 42”. The cringe post is still visible on archive, though.

JUST FOR YOU

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @The Open Letter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

How to Reverse Engineer Success

A Step-By-Step Guide to Deconstructing Startups

Ever wonder why some businesses work and others fail? There’s no silver bullet, but unpacking a successful or failed business can help you learn a lot. In this post, we'll arm you with a treasure map – a step-by-step guide that will help you unearth hidden gems of business insights.

‍

It’s called Deconstruction, the process of separating complex systems into the smallest subsystems possible to help understand them. In the real-world context, it's akin to reverse-engineering the critical decisions startup founders made to get where they are.

Here’s how…

Step 1: Choose a Target & Objective

Select a startup that aligns with your goals or interests. Consider a business that targets the same market with a different product or service. Understanding how they delight your ideal customer can help you find nuggets.

Outline what you hope to learn: marketing strategy, revenue model or perhaps their team structure. Pose a specific question: "Why do the best people love to work there?" or “Why do people buy from them at that price?” etc.

Step 2: Analyse the Business & the Market

Study the business model, including revenue streams, customer acquisition costs, and retention rates. Public interviews and annual reports are good sources. And also look for patents or exclusive technologies that give a competitive edge.

Identify competitors and analyse market trends. This will help you understand the startup's position and unique selling proposition in its ecosystem.

Step 3: Examine the Team

Look into the backgrounds of the founding team and key employees. Skills, experience, and roles can reveal much about a business's success or failure.

Step 4: Identify Key Milestones or Pivots

Recognise the moments when the business made significant changes or reached important goals. What led to these moments, and how did the business capitalise on them? What did they do differently from this point on?

Step 5: Consolidate & Strategise

Compile your research into notes and share it with your team (or outside advisor) to unpack what you can learn from these insights. Can you draw actionable insights? This could be anything from a unique customer retention strategy to a successful revenue model.

Step 6: Implement and Test

Apply the insights you’ve gathered to your own startup. Track these changes meticulously so you can evaluate their effectiveness.

Step 7: Repeat

Continuously analyse other startups to update and refine your strategies. Remember, in the fast-changing world of startups, standing still is akin to moving backwards. Keep deconstructing, keep learning, and keep iterating!

Ever tried to deconstruct another business before? Hit reply and let us know what you’ve learnt…

PARTNER WITH US

You are reading this because you are a mover and a shaker in the SA startup space. Want to engage thousands like you? We’re introducing partnership opportunities.

Hit reply and tell us you are interested and we can share the details.

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

Hi there

Need to move fast? A group of Swiss students just smashed the world acceleration record with a custom EV racer that goes 0–100km/h in less than a second. And it does it over less than 12 metres.

In this Open Letter:

• Basket price: Changing the grocery game.
• Cringey Apple, Elon’s bio & how to lose R1.1 trillion.
• Got gold? We’re giving away R2’500s worth + merch.
• Startup play: The ins and outs of building in public.
• Your security? The poll results are in…

TRENDING NOW

Disrupting the Cart

Inside the on-demand grocery revolution

If you follow memes like we do, you’ll have noticed that Springbok’s minty green away kit reminds people of Checkers Sixty60 (and Listerine).

And in a masterwork of guerilla marketing, Checkers quickly moved to co-sponsor the RWC TV rights on SuperSport. So now when you tune in to World Cup games, you see the Sixty60 logo together with shots of the team in that jersey — genius.

But that’s not the only place they’re scoring big…

It’s in the numbers

Shoprite Group’s recent results show Sixty60 sales grew by a staggering 81.5% this past year. And Moneyweb estimates its revenue to be somewhere in the region of R3.5bn.

If those numbers are accurate, and with the app being downloaded over 3 million times, that means their annual revenue per download is around R1200 per annum. Not bad at all.

It’s going so well, rumours are they’re working on innovative ways to solve problems delivering in townships, possibly partnering with a taxis-as-logistical-partners startup. Important, because if they crack the informal market it could become their primary driver of growth for the next 10 years.

Now, you might remember we showed how other big players are battling in the traditional e-commerce space. So the question is: What did Checkers Sixty60 do differently?

Play on Playa(s)...

Let’s go back to before the Sixty60 launch.

Both PnP and Woolworths had e-commerce plays in place long before Checkers. But they weren’t nearly as fast. They were essentially, traditional order-now-get-it-next-Tuesday services.

What was wrong with this?

• Delivery was a mess. Recipients need to be home at a future-dated time. What’s more, cold chain products could be a challenge as a driver typically goes out for a few trips.
• Consumer behaviour doesn’t align. Do you know what you’re eating tonight? Likely not, but come 5 pm and if the sun’s out, you might wanna light the fire to start the braai at 6. Ordering through traditional e-commerce just doesn’t fit this common behaviour.

It’s only when Sixty60 entered that the game changed: Take 60 seconds to order and get your items delivered in 60 minutes. Fewer logistics issues and delivery within 60 minutes from a local Checkers store means no cold chain issues.

Sure, everyone’s trying to match that now – PnP acquired Bottles to turn it into asap! and Woolworths is offering fast deliveries via Dash. Even Massmart (Game, Makro, etc) bought OneCart to enter this space.

But how did Checkers change the game?

By strategically aligning with a tech startup…

See, back in 2018, local startup Zulzi was working on solving the problem of getting groceries delivered in 60 minutes. And, in particular, they had an innovative approach to allow pickers to replace items that weren’t available (a common problem in this space).

So, Checkers got Zulzi to build their first app and tested it in a few locations close to their head office. This helped them develop the unit economies needed to make it work at scale.

Some would say Checkers had “last-mover advantage”, but we disagree. Sixty60 shies away from the traditional e-commerce model to pioneer on-demand grocery delivery. It’s something else entirely.

And they're cementing their place as first movers with Sixty60 & Checkers-branded toys like the Barbie-compatible “Ken the Sixty60 delivery guy” and the “Checkers Little Shop” kick bikes and scale models.

‍The long game

So, what about cross-store delivery options such as Zulzi, OneCart or even Uber Eats? Can they beat Sixty60? We doubt it. Deliveries don’t make money (it breaks even at scale, at best) so what’s left is the margin. And when Checkers is already selling on Sixty60 at in-store prices, where is the margin to be made? Not to mention the volume of data they’re already collecting to ensure their basket margin stays more competitive than peers.

There’s lots to love about the Sixty60 story, but our favourite part is how a large corporation embraced innovation by partnering with a startup. With deep pockets and large customer bases, we hope more corporates take a leaf from the Shoprite innovation playbook.

IN SHORT

🍎 Apple of her eye. In the middle of its iPhone 15 event, Apple played a 5-and-a-half-minute-long skit featuring Mother Nature (Octavia Spencer) grilling Tim Cook and a bunch of supposed Apple employees over “Apple’s First Carbon Neutral Product”. At one point, they lock eyes for an excruciating eternity before Mother Nature walks off saying “Don't disappoint your mother”. Cringe.

📢 Meta Channels. Meta expanded WhatsApp Channels to 150 countries this week. Channels let brands, companies, sports teams and content creators you choose to follow send you updates. It’s all private, no one can see who you follow. But it’s getting pretty close to that ultimate tipping point where someone can just pay and spray every WhatsApp user. Not yet, but eerily close…

📖 The Book of Elon. The much-anticipated biography of Elon Musk dropped this week and gave many an insight into the tech titan’s life. Written by Walter Isaacson (the same guy behind the Steve Jobs bio), the 600+ pages include more on the various Twitter shenanigans, his beef with veganism-champion Bill, Elon’s favourite mobile game and more.

🥩 Beefy Prices. As we head into summer, South Africans are preparing themselves (and their gear) for serious braaiing. And it would seem that meat producer prices have been coming down. So why then is the price of meat on the fridge shelf increasing? Well, it would seem like the retailers are applying meatier margins than they did before according to the Competition Commission's latest Essential Food Pricing Monitoring.

💸 Like a sieve. The SA economy is losing out on R1.1 trillion each year due to “trade misinvoicing” alone. For some perspective, that’s about half the country’s annual budget – a whole lotta schools, clinics and infrastructure maintenance we’re missing out on.

JUST FOR YOU

Want to own gold but can’t afford to have the money locked up?

Here’s how to get it AND keep it liquid…

One of the major issues in buying gold is that, although it’s more liquid than other asset classes, there are some delays in accessing your cash. That’s why Troygold allows you to borrow up to 75% of your gold value and access it via your own personal Mastercard. Gold has never been this liquid.

Keen to check out Troygold? Head on over to their website, create an account and buy actual gold (stored in vaults) in under 4 minutes straight.

And since we are partnering with Troygold for the month of September, we’re giving away R2’500 worth of gold, plus this cool merch.

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

Share the newsletter

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

THE THREAD

To Build or Not to Build in Public…

If you’ve been marvelling at the amazing momentum of public builders like Momint and Notion, and wondering if maybe you should do the same, then this week’s podcast is for you.

It’s a quick 30 minutes, jam-packed with killer insights…

The best bits

1. The best time to build in public
2. Building in public is an awesome way to cement one of the fundamental needs for a successful startup (or any business) - accountability. If you promise to do something in public, everyone’s eyes are on you, so it's great motivation to follow through.
3. It’s particularly well suited for builder founders (founders who code and build out the product themselves) because you can get so much direct feedback if people know what you’re developing and you can simultaneously generate hype and a following even before your product’s out – get specific insights here.
4. When not to build in public
5. Equally as important is knowing when it won’t work for you. Accountability is one thing, but there is the risk of someone (anyone) stealing your idea. Unlikely, but not impossible.
6. And it’s especially dangerous to build in public if you are not committed or willing to put in more time, effort and resources than anyone else to see it through. If you emphasise the idea's value over the actual execution, someone who’s a better executer could potentially sweep in and build a similar product better or faster than you – get all the insights right here.
7. Why people REALLY want to hear your story
8. Building in public has really taken off because it can create such hype and essentially become your entire marketing strategy. And many founders shy away from it because they don’t have much real success to show yet.
9. But, if you’ve ever followed a startup’s public story, you’ll know that there’s immense entertainment value when someone who came from nowhere suddenly starts getting things right. People love that. It engages them, which, arguably, makes them more likely to become a customer or promoter. Get the lowdown here.

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

THE RESULTS

Last time, we asked “who ya gonna call”, and most people say private security firms or community WhatsApp groups…

🟨⬜️⬜️⬜️⬜️⬜️ 👻 Ghostbusters (9%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍩 SAPS (2%)
🟨🟨⬜️⬜️⬜️⬜️ 🦹🏾‍♂️ Neighbourhood Watch (18%)
🟩🟩🟩🟩🟩🟩 👮 Private security firm (41%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👓 A friend (2%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🥋 Recall my karate training (0)
🟨⬜️⬜️⬜️⬜️⬜️ 💪 Hugo (7%)
🟨🟨🟨⬜️⬜️⬜️ 📱 Facebook/WhatsApp group (21%)

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

Hi there,

Dreaming of space exploration? Well, it’s looking a lot more promising now that NASA’s Perseverance rover has proven it can produce oxygen on the surface of Mars. It’s all thanks to a new toaster-sized device called MOXIE.

In this Open Letter:

• Safety net: SA’s R640bn security industry.
• Invasive Apple, AI rugby & the SABC crash.
• Get gilded: R2’500s worth of solid gold up for grabs.
• Active users: 4 Steps to track and boost word of mouth.
• The results: Who will win the RWC.

TRENDING NOW

The 640bn Big Ones Keeping SA Safe

It’s no secret that SA has a crime problem. About 1.1 million families were burgled last year (that’s over 5% of us), and 1% of SA were robbed while they were still at home, according to recently released crime stats. And there’s been – gulp – 68 murders per day, every day just between April and June this year, which is absolutely shocking.

No wonder SA spends a lot to protect ourselves

Recently at the “On the Record Summit”, SA’s Finance Minister Enoch Godongwana revealed that South Africans spend 10% of GDP (around R640 billion) per year to be safe amidst rampant crime and social unrest. What’s more, violence cost our society R3.3 billion in damages in 2022. Yikes!

‍

Wait a minute, that’s Big Money

Yes, you read that right – R640 billion per year. Why, that’s bigger than:

• The Healthcare sector – both private and public – at R 500 billion.
• And SA’s bustling township economies at R425 billion per year.
• Even our taxi industry at an estimated R90 billion in 2021.

Indeed, SA has well over 11’000 private security companies registered with PSiRA (Private Security Industry Regulatory Authority). And, in 2022, there were nearly 2.7 million registered security guards in SA – only 580’000+ employed in the industry, though.

But hold on to your hats. There were only 140’000-odd SAPS members at the same time – that means there’s only 1 police officer for every 4 private security guards in SA. Sheez!

It’s not just us…

And don’t think it’s just us ordinary South Africans that have to spend on private security, either. Government (including national departments and other organs of State) are locked into hundreds of long-term private security contracts to the tune of R16.9 billion.

And if you add provincial and local government contracts with private security, it could be as much as R100 billion – all for services that should be provided by SAPS, mind you.

We’re not here for the politics, though.

We’re here to tell you that, if a R640bn market exists, you can be a part of it.

Plays in the security space

Now the industry is big and the problem even bigger. But not everyone has it in their veins to manage a fleet of gun-carrying Corsa Bakkie drivers. Here are some local players capitalising in the tech space:

• Olarm is a Cape Town-based IoT company building mobile apps and systems for home security and monitoring. Their app allows users to control their existing home alarm systems from their smartphones. What’s smart about their approach is they partner with security companies. So instead of trying to sell to end users, they use the existing sales force of the security companies that sign up their existing customers at ±R50 a month. So a low CAC, subscription-based billing and easy to maintain.
  
• Namola is an on-demand emergency response app – a crucial service when you have fragmented emergency services and unclear addresses in remote areas. It ensures responses to a user's last-known location, even when they can't answer their phone. Basically a panic button that connects with a close by emergency response team.
• Interestingly, MultiChoice bought Namola end of last year and DStv subscribers can now add Namola debit orders to their existing DStv bill. MultiChoice buying a security company is interesting, perhaps they saw the size of the market and pounced, and maybe there are other big players following.

It’s a huge market, and with tech or a smart service, you can come in and add value without having to take the obvious route. We are watching this space.

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

Get your sharing link here.

OVER TO YOU

When there’s something strange, in your neighbourhood, who do you call?

Vote to see what everyone said...

• 👻 Ghostbusters
• 🍩 SAPS
• 🦹🏾‍♂️ Neighbourhood Watch
• 👮 Private security firm
• 👓 A friend
• 🥋 Recall my karate training
• 💪 Hugo
• 📱 Message the community Facebook/WhatsApp group

Login or Subscribe to participate in polls.

IN SHORT

💥 Crash tackle. With more drama than an episode of 7de Laan, the SABC Rugby World Cup broadcasting left them with egg on their face even before the Boks kicked off against Scotland on Sunday with many users reporting the SABC’s app and streaming services crashing. That’s not all. Details have emerged from the sub-licensing deal including the 3 companies that foot the R58 million deal to show 16 RWC matches – that’s right a whole R20 millie more than the initial deal on the table.

🏖️ Life’s a Beach (Resort). A brand spanking new Club Med beach resort is coming to the KwaZulu-Natal North Coast. The R1.6 billion resort will be co-owned by local companies Royal Shaka Property Group, GFS Holdings and Collins Residential.

🤖 AI RWC Winner. AI is great for a lot of things, but determining the winner of the Rugby World Cup, might not be one of them. The Rugby Vision algorithm seems to disagree with readers of The Open Letter – we know it’s coming home.

🧠 Nevermind. For a long time, proponents of privacy in tech have said that the only privacy you’ll have is in your head. Well, that’s all about to change with Apple’s latest update and the introduction of its mood tracker: “State of Mind”. The feature will ask users to rate how they feel and provide questionnaires that can act as preliminary screening for depression and anxiety.

💰 Gloves Off. Armchair experts had a field day in the comments when veteran Wall Street Journal, Bloomberg and Reuters journalist, James Picerno, told Investing.com that it’s easier to understand the markets if you think of gold as a form of cash – liquid, free of government influence and with a longer track record than BTC. Which is exactly why we’re giving away R2’500 worth of Troygold below…

JUST FOR YOU

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇

(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

Track & Measure Your Word of Mouth

"Your brand is what other people say about you when you're not in the room." – Jeff Bezos

Ah, word of mouth, the most powerful, gold standard and often most elusive “tool” in product marketing. And we say “tool” in quotes because it often feels like something you don't really have control over…

Enter your Net Promoter Score (NPS), a method to start discovering your customer loyalty, satisfaction and how likely they are to tell others about you.

Not the only one, mind you, but definitely the simplest for a small business or startup to quickly implement right now…

How to get your Net Promoter Score

1. Include an NPS question in your survey

Simply ask: "On a scale of 0-10, how likely are you to recommend our product/service to others?" and let people indicate on the scale. If possible, give them the chance to say why they entered that score.

2. Calculate your NPS

In NPS, you only look at 2 segments: Detractors (those who voted 0-6) and Promoters (those who voted 9-10). Subtract your percentage of Detractors from Promoters.

E.g. let’s say you had these results:

Promoters (rating 9-10): 50%
Passives (rating 7-8): 30%
Detractors (rating 0-6): 20%

NPS = Promoters – Detractors
NPS = 50% – 20%
NPS = 30%

So your NPS is 30%.

3. See how you measure up

Compare your NPS to some industry standards – basically see if you can find some online or ask ChatGPT about your niche.

Some NPS standards are:

• SaaS: 30%–50%
• Social Media & Communities: 20%–40%
• Gaming: 20%–50%
• E-commerce: 20%–40%
• Cloud & hosting: 30%–50%

Obviously, the higher, the better.

4. Make it long-term

The magic of this simple and continuous measurement is that you can use it to inspire changes and updates – just read WHY people give their scores and action those things. But you can also use it to test how your updates/changes impact NPS over time – if, after a major update, your NPS suddenly goes up and everyone says that’s why, that’s obviously a great update, do more of those.

And, as a general rule, you’re trying to do stuff that will make more people want to be Promoters.

THE RESULTS

But of course: Last week we asked who you think will win the rugby world cup, and well, you know…

🟩🟩🟩🟩🟩🟩 🇿🇦 South Africa (82%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇫🇷 France (8%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇳🇿 New Zealand (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇮🇪 Ireland (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇦🇺 Australia (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇬🇧 England (2%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇦🇷 Argentina (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 😕 What is “rugby”? (5%)

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