Hi

Cool off? Talk about the environmental impact of crypto; researchers have just shown that a single Bitcoin transaction could use as much as a swimming pool’s worth of water to cool the processors executing it. Sheez.

In this Open Letter:

• R50bn play: Stokvels when Rands go digital.
• Repo-ed microwaves, e-comm talent wars & Cell C still insolvent.
• For profit: Lowering your customer acquisition costs.
• Where we shop: The results are in.
• Tell someone: Share this & get free business tools.

TRENDING NOW

When Those Rands Go Digital

The next wave of tech opportunities will follow

It’s Dezemba! And, for many, that means a few more weeks till summer break. But for millions of South Africans participating in grocery stokvels, it could mean Christmas grocery is on the way. 

What you might not know is that the uniquely South African communal savings mechanism we call stokvel gets investments of about R50 billion per year, split across around 800k stokvels running in SA's informal sector.

No wonder then that many a digital entrepreneur has tried to digitise the stokvel. So far, with little success – simply digitising the process with tech doesn’t work and feedback’s non-existent since most users can’t articulate what they need ‘cos they have no banking or tech frame of reference.

What hasn’t worked

Common misconceptions around stokvels are:

• Record keeping and planning aren’t a problem – replacing pen and paper with an app adds little value since the few members in the group often know and trust each other and the calculations are simple.
• Participants mostly don’t expect more money back than they put in, so offering interest isn’t as appealing.
• There is some risk in carrying cash, but transaction fees on cash are still zero. Fact is: If you contribute 12xR100 into the stokvel you expect 12xR100 back. Interest and transaction fees confuse the equation.
• Onboarding needs to be unbelievably simple. Participants usually know the person running the stokvel. And to join, you just give them R100 or whatever and there you go. It needs to be as simple or simpler than that.

Don’t feel too bad, though. Banks haven’t figured out how stokvels work either – case in point, these are the requirements for opening a “stokvel account” at one of the major banks:

What, no blood samples needed? Should be simple.

But R50bn in deposits is attractive

Let’s say you capture just 2% of that market. You could buy R1 billion of SA government bonds using the deposits, earning a cool ±R100m per year in interest (if those rates stay this high). 

So it’s worthwhile figuring out the stokvel market…

Now, there are complicated regulatory hurdles here. But probably the biggest challenge to overcome is transaction fees. 

Enter PayShap

PayShap is a rapid interbank payment protocol that allows instant transfers between different bank accounts at a low fee (or even free). Currently, each bank has its own fee structure and it’s a bit of a mess. But there is pressure from the reserve bank to make PayShap universally free. 

Now, when PayShap goes free, it’ll become the direct digital competitor to cash, with a lot less risk of getting mugged etc. 

And stokvel is just one of many applications that can take off once we get to totally digital cash. So if banks can just find some consensus on fees, there might be opportunities everywhere soon. 

Tech entrepreneur, watch out for this one…. it's about to get real.

IN SHORT

🚙 Uber 500. Would you believe Uber Technologies Inc. has been added to the S&P 500 Index? This after two straight quarters of posting some operational profits, which sparked renewed investor interest (Uber Shares gained 132% in the last year). Here’s hoping the optimism’s enough to carry them all the way.

🪑 Removable Assets. Working at Luthuli House? Warming up your lunch might be hard going forward as the Sherrif is set to attach anything and everything (even microwaves) in an attempt to settle the R100 million account run up with an events company during the 2019 elections campaign. R100 mill – that’s a helluva lot of Streetwise Twos and yellow T-shirts.

🧲 E-Comm Talent War. Looking to cash in on the e-commerce giants’ plays in 2024. Takealot has double the amount of e-commerce jobs available compared to Amazon. Amazon will be hitting SA shores early next year with its jobs portal having around 22 e-comm-related jobs, compared to SA e-comm king, Takealot, with 47.

🗼Low Signal. Despite recapitalising in September 2022, Cell C remains insolvent – as seen in its latest financial results revealed last week. The mobile operator’s assets are pegged at R5.7 billion with liabilities of R15.09 billion. Its subscriber numbers have also decreased significantly over the last 5 years from 17 million to 8 million.

🧶 Time Travelling Knitwear. Longing for the days of the Windows XP Wallpaper (you KNOW the one…)? Well, last week Microsoft dropped its “Windows Ugly Sweater: Bliss Edition” onto its Xbox store and it’s already sold out. You can still add it to your wishlist – who knows, they may just do another run in future.

BUILDER’S CORNER

How to Lower Your Customer Acquisition Costs

OK, so you got some adoption, your usage is growing and you’re making some sales. Now, why aren’t you making any real profit yet?

Good business comes down to one thing: The money you get in (Customer LifeTime Value or LTV, i.e. revenue) minus what it costs you to get that customer (Customer Acquisition Cost or CAC) equals profitability (considering your customer servicing cost is under control, but more on that in a future edition).

Servicing costs aside, there are basically 2 ways to make more money from each customer :

1. Raise the LTV — This can be done through partnerships, reducing churn or upselling.
2. Lower your CAC — Acquire those customers for less.

The first one only works up to a point, I mean you can’t keep raising prices without taking pain. So, like most of us, you’ll want to focus on number 2.

5 Strategies for lowering your CAC

1. Know your numbers

The first step is to actually know what your current CAC is per channel. Build yourself an “Omega” dashboard that combines all your analytics with your weekly/monthly sales. Then looking at these costs, try different strategies in different channels while still measuring your CAC per channel.

Once you have your lowest CAC channels, A–B test and double down. Boom.

2. Build a hyper-engaged audience/community

Create a standalone, associated audience-based product (ask Elvorne to help you) – a newsletter, community, blog, tool etc. – with marketability, so you can develop high value and engagement on it.

Test acquisition costs into that product instead – it should be cheaper because it’s a more neutral, value-driven space. Build your funnel to go from audience to your main product, optimise the conversion and double down on acquiring users via that route instead.

3. Build a solid referral mechanism

Word of mouth is great (because it’s practically free!), and its digital cousin is getting current customers to refer their friends and family. If your Net Promoter Score is pretty decent, take it a step further and build a referral mechanism with a strong internal campaign – reward people with value for referring others.

4. Diversify and upsell

You don’t want to raise your prices to the point where you’re not competitive. But that doesn’t mean you can’t increase your LTV in other ways.

Remember, you only pay CAC once. Once they’re in your database, you can reach them cheaply. So why not create new products/services and upsell them?

5. Partnerships & collabs

Is another non-competing company talking to your market? Maybe there’s a chance for synergy or some other reason to collaborate. Striking a deal where you share or cross-promote products is one way to access more of the right people at a lower cost.

Got a CAC insight to share? Hit reply and let us know…

THE RESULTS

We asked when was the last time you were in a Pep store, and would you believe Pep Home is rocking it…

🟨🟨🟨🟨🟨⬜️ 👍 All the time, baby (20%)

🟨⬜️⬜️⬜️⬜️⬜️ 👔 Just for kids’ school clothes (7%)

🟩🟩🟩🟩🟩🟩 🏠 Some good deals at Pep Home, though (22%)

🟨⬜️⬜️⬜️⬜️⬜️ 📱 Buying business phones cash at Pep Cell (5%)

🟨🟨🟨⬜️⬜️⬜️ 🛍️ Kids clothes at A.C.Kermans (13%)

🟨🟨🟨🟨⬜️⬜️ 💻 Just HiFi Corp and Incredible Connection (15%)

🟨🟨🟨🟨⬜️⬜️ 🙅 Never have I ever (18%)

⬜️⬜️⬜️⬜️⬜️⬜️ 😆 I’m there right now! (0)

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

Hi

Break time? Brickception lets you play a game within a game within a game – adding a whole new dimension to Atari’s classic 1970s hit “Breakout”.

In this Open Letter:

• Big money: Pepkor’s secret FinTech weapon.
• Lazy AIs, parking investment & SA’s lost businesses.
• Recap: Using AI in local context to benefit Africa.
• Smart scaling: Laser-Focus KPIs for growth.
• Landlord experiences: The results are in.
• Tell someone: Share this & get free business tools.

TRENDING NOW

The FinTechs that Earned Pep R10bn

Where does the 2 out of 3 baby garments sold in SA come from? Or what about 7 out of 10 prepaid phones? 

Well, most likely, China. Originally. But locally, it gets sold through one of the various stores in the Pepkor. With store chains such as Pep, Ackermans, TekkieTown, Buco – even Hifi Corp and Incredible Connection – Pepkor has diversified a lot over the years. 

‍

The group reported revenue of R87bn in the 2023 financial year. But what’s most noteworthy is that their FinTech division contributed R10 billion of that revenue and R950 million in operating profit. It’s a powerful combo… Physical stores spread across the country that serve as a place of distribution for FinTech products — there's likely no slowing down.

FinTech at Pepkor 

Pepkor’s FinTech division has a suite of products including:

• Capfin, a subsidiary of Pepkor, is an unsecured credit provider.
• Abacus is a niche insurer within the Pepkor group, offering easy and affordable retail insurance​.
• Tenacity Financial Services, part of the Pepkor group since 2007, specialises in managing in-store credit card programs for several Pepkor retail brands

But these all make up only 33% of their FinTech revenue.

The other 67% is generated by one you probably never even heard of — Flash.

Flash gives merchants (mostly spaza shop operators) a device with an app that allows them to sell digital products and services like:

• Airtime
• 1voucher (which can be redeemed for sports betting, Dstv or other online services such as Uber)
• Prepaid electricity and water
• Payments
• Payouts of SASSA grants
• Transfers and much more.

Impressive range of services, but one of Flash’s major feats is likely how it “digitises cash” – i.e. allowing the “unbanked” to transact digitally.

They reportedly turned R37.1 billion of cash into digital vouchers or digital products. That’s a significant amount considering the estimated size of the township economy is R425bn. 

What could Flash become?

Flash is currently financial services and VAS, but with its footprint of circa 200k merchants across South Africa’s informal market, it could become any or all of the following:

• Payment and distribution for e-commerce plays – perhaps they can even launch their own e-commerce solutions to informal markets by collecting cash at Flash vendors and using those locations as pickup points (yes, this is super complex, but if anyone has a chance of pulling this off in informal markets, its probably them).
• Provide financial services (and even bank accounts) to Spaza shop owners – and with the data points they have, they could offer unique services.
• Perhaps a more ambitious move could see them go into informal FMCG supply and compete with the likes of Yebo Fresh.

Pepkor only started reporting Flash’s numbers in this year’s financial results, for good reason. This FinTech juggernaut might just become the major driver of group revenue and profit in years to come. 

And with them cracking the cash-to-digital problem in informal markets, chances are anyone wanting to sell things from outside the informal settlement to inside (be it digital or physical goods), would likely need to make use of their systems.

IN SHORT

🦥 LazyGPT. Users have been complaining about ChatGPT avoiding doing monotonous or tedious tasks asking the user to complete the work. Wasn’t that why we got ChatGPT in the first place? Interestingly enough the tedious and monotonous tasks we’ve put up with for decades, ChatGPT got tired of in a year.

🪡 Listed Threads. Shein wants to list for R1.7 trillion. The e-comm clothing behemoth has filed with US regulators for an initial public offering (IPO) in the wake of its massive growth. Perhaps shareholders can expect to receive their dividends 4 times longer than expected and also need to pay additional “duties” before cashing out.

🚪Shutting Down. More than 1’300 South African businesses have closed down in 2023. Loadshedding, N3 transport disruptions as well as consumers feeling the pinch (or shall we say punch) of elevated petrol and food costs, have all made it harder on businesses.

🛻 Get Trucking. It’s been a busy week for Elon. He not only announced that Cybertruck deliveries would start this week (this could push Tesla’s valuation closer to $1 billion), but he also told us exactly how he feels about advertisers wanting to blackmail him by withdrawing their ad spend (it’s not flattering, we can tell you that much).

💰 Parking the Bag. Ticketless parking company admyt has agreed to the terms for a R30 million investment from REdimension Capital to drive product enhancement, expand the number of admyt-enabled locations and scale its user base.

THE RECAP

AI in the African context

Yesterday was ChatGPT’s 1 year birthday and to celebrate we did an online webinar to discuss how AI can help solve the continent’s biggest problems. In case you missed it, watch our very own Bobby Sequeira, Catherine Lückhoff of 20Fifty and Matt Quatra from Webory talk all things AI and Africa.

BUILDER’S CORNER

How to Set Laser-Focus KPIs (as you Grow)

It’s easy to set and track core KPIs when you start – maybe it's just you and a few founding members. Simple. But keeping that laser focus gets hard when you grow and stuff gets complicated…

‍

No worries, the good guys over at Midstage Institute developed the concept of retaining only 2 core metrics, no matter how large your business (inspired by Jim Collins’s book Good to Great).

And they make a compelling case using 2 examples from a few years ago:

• Facebook has 2 company-wide metrics:
• Active users
• Engagement time
• Google also has 2 across the entire company:
• Active users
• Clicks

Why? Well, that’s how they make money. Facebook sells advertising based on exposure, so the more people on their platform for longer, the more they can make. Google also sells ads but they get paid more on the click. So the more people click, the better.

Reverse-Engineer it like so

1. Identify your Growth Metric

This is what amplifies your revenue. In Facebook and Google’s case (all ads-based social media actually), active users because they need network effect. In free-to-paid and freemium, for example, this might be the total number of new free users, etc.

2. Pinpoint your Economic Metric

This is the single action that generates revenue – when that free user subs (the upsell) or a user clicks etc. This can usually be tied directly to a monetary value.

3. Use it to scale

What’s cool about this method is that you can use it to simplify KPIs as you grow. Each metric has millions of sub-metrics underneath it that all contribute to making it happen. So you can tie almost any employee’s action to the core metrics.

What’s more: It helps align your team’s focus and can even help you make critical growth decisions – if you can’t tie a new role’s performance directly to your 2 core metrics, maybe you shouldn’t be hiring (paying) a person to do that job.

How do you measure and ensure performance in a growing team? Hit reply and let us know…

THE RESULTS

We asked if you ever had issues with a landlord, and the ole “where’s my deposit” scene takes the cake…

🟩🟩🟩🟩🟩🟩 🤏 Stole my deposit (40%)

🟨⬜️⬜️⬜️⬜️⬜️ 🦶 Kicked me out (8%)

🟨🟨🟨🟨⬜️⬜️ 💕 Loved each other (28%)

🟨🟨🟨⬜️⬜️⬜️ 🧐 I am the landlord (24%)

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

Hi

Got bacon? North American states are battling to fend off a devastating invasion of “super pigs”. Some are employing “pig squealer” apps to try and stop the “most invasive species on the planet” from devastating more farms and taking more human lives (no jokes).

In this Open Letter:

• Failing with grace: Lessons from a would-be unicorn.
• Brain money, boat-powered SA & attack of the Brazilian hackers.
• Maxing value: How to niche down properly in a small market.
• How we insure: And the results are in.
• Free stuff: Share this and get cool tools for business.

TRENDING NOW

The Rise and Fall of SA’s UniKudu

“The startup failure play-by-play we never knew we needed”

Anyone who’s rented or rented out property will know the frustrations (if not PTSD) that go along with it. This R340 billion-a-year industry has more problems to solve than Jordie Barret’s chiropractor after the Rugby World Cup final. 

Apart from “the usuals” like payments, deposits and damage, though, South Africa has the unique problem of race discrimination in tenant selection – something Benjamin Shaw tackled with his first startup, HouseME, back in 2015. 

In their must-read new book, The First Kudu, Ben and HouseME COO Lorne Hallendorff share how they raised multiple rounds of funding, grew to 34 employees, 50’000 registered users, and processed hundreds of millions in rental payments per year.

They were flying so high that there was even talk during one media interview of HouseME becoming SA’s first unicorn. To which Ben replied that a Kudu might be more appropriate, given the South African context.

The problem, of course, was that the Kudu isn’t mythical… but that was all pre-generative AI, so we couldn’t resist…

But then it all came crashing down in 2020 and HouseMe went belly up.

Apart from Covid lockdowns disrupting HouseME’s momentum (people couldn’t go to work, so how could they pay rent?), Ben and Lorne explain that they made some other critical startup mistakes, mainly because this kind of thing is so poorly documented in SA.

So this book is essentially a play-by-play documentation of a tech startup’s rise and failure, specifically for SA. 

Some of the failures they unpack in the book include:

• Focus — Don’t do too much for too many people (we are learning, check out Builder’s Corner down below)
• How to build the right features.
• How much funding do you need?
• Building, motivating and aligning the team.
• Delighting customers.
• and much more.

Keen to learn more? We had Ben and Lorne on the podcast last week – check it out, they share some priceless insights…

As for the residential rental space, opportunities abound. 

The market might just be big enough that zoning in on one of the many challenges and solving that well could be an opportunity in itself. But, as with all major problems, there are already a few active players:

• Founded in 2018, DigsConnect is the largest student accommodation marketplace in Africa, connecting landlords, estate agents, and property managers with students looking for accommodation. The platform simplifies finding and offering student accommodations.

• Established in 2017, Flow Living automates property ad creation and targeting for Real Estate Agencies and Property developers, streamlining their marketing efforts and simplifying deal closures.

• Launched in 2014, RedRabbit offers an inspection app that streamlines the property inspection process and includes a maintenance ticketing system, enhancing efficiency in rental inspections and property management.

• Founded in 2017, Preferental is revolutionizing the way landlords manage their property portfolios with advanced technology and expert support. The startup offers Preferential Promise, a service that guarantees rental payments to landlords, even in case of rental defaults.

• Founded in 2015, Property Inspect focuses on innovation in building compliance and efficiency. The platform offers user-friendly technology for all property inspection and operations needs, aiming to improve standards and streamline processes in the real estate industry.

Residential rentals aren’t going anywhere and neither are the Proptechs resolving some of its more pressing challenges. We are watching this space…

‍

IN SHORT

🤝 Board Games. After all the OpenAI craziness last week, they’ve appointed a new board. Members include some heavy-hitters in the tech space including a board member from Spotify, a President Emeritus at Harvard, and a former Facebook CTO.

🤑 Big Spenders. The Western Cape has won Black Friday according to Peach Payments’ Black Friday tracking dashboard. The payment gateway processed over 435’000 transactions with the province seeing 53% of all merchant transactions followed by Gauteng (42%) and KZN (4%) — do other provinces even Black Friday?

🚢 Barge-Power. Floating power plant provider Karpowership just got the environmental authorisation for their 2nd of 3 projects to connect to SA’s power grid. Last month it won approval for the 450-megawatt plant at Richards Bay, with the second being a 320-megawatt gas-fired plant at Saldanha.

🧠 Brain Money. Brain chip company Neuralink has just raised another $43m increasing its previous tranche to $323 million. In May, Elon Musk’s company received FDA approval to kick off human trials.

👨‍💻 Brazilian Hackers. Credit bureaus TransUnion and Experian have allegedly fallen victim to a hack again by the notorious Brazillian hacker group N4ughtySecTU Group. The group is demanding a $60 million ransom but both companies have denied being hacked.

BUILDER’S CORNER

How to Niche Down Properly in SA

During our podcast with Ben and Lorne, focussing on a niche came up as something that is crucially important for startups. Yet niching down means making your total addressable market (TAM) smaller – sometimes too small. 

‍

That’s what makes building startups in SA so much harder than in a massive market like the US – and why so many SA startups we consult have tried to be too much to too many people.

So how do you niche down without killing your TAM?

1. Find a niche

Can your solution service a subset of the total market well first? DigsConnect, for example, niched down on just student accommodation at first. 

Identify your market, then choose a subset that has:

1. The least competition
2. Biggest pains,
3. and/or Where you have the most experience/connections in.

Then ask yourself, can I go even more niche on this? I.e DigsConnect could have started offering accommodation only for first years and nail that, etc.

2. Double down on the value for this niche

When you have 40 (or 120) hours a week to figure out how to add value, trying to add value to 4 different types of customers means you are only giving each 10 (or 30) hours. So you might attract a larger base, but you’re gonna battle to make it a great experience for them – founder focus doesn’t scale well in the early days!

However when you double down on a specific niche (1 type of customer), you can really fine-tune the value and customer experience. Create a “wow that was awesome” experience and they’re likely to tell others – and the others they tell might just be the group you target next. 

Momentum is key, don’t break it by trying to be everything for everyone.

3. Maximise returns on each niche

Iterate your offering to catch fringe use cases, and scale with tech. Once it runs smoothly and your cost to service is less than the fee they’re paying you, that’s when you can try to increase the size of your TAM by going vertical or horizontal.

Large markets are nice, but even when generating lots of revenue from these markets, the business will fail if the unit economics don’t work. Focus smaller, get the cost to service down and scale from there.

Got a hot niching and revenue tip? Hit reply and let us know…

THE RESULTS

We asked how you insure your stuff – Discovery, Naked and “winging it” take the cake…

🟨⬜️⬜️⬜️⬜️⬜️ 🧐 Old Mutual (or the like). (7%)
🟨⬜️⬜️⬜️⬜️⬜️ 💰 Outsurance – Early disruptors for my Outbonus. (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👑 King Price – Funniest Insurance ads. (3%)
🟨🟨🟨🟨🟨⬜️ 🫣 Naked – The name just gets me. (23%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍍 Pineapple (what’s not to like). (0)
🟨⬜️⬜️⬜️⬜️⬜️ 🥃 MiWay – If it’s good enough for Frank… (7%)
🟩🟩🟩🟩🟩🟩 🧭 Discovery now owns my life (27%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛋️ Bunch of banknotes stuffed in my couch. (3%)
🟨🟨🟨🟨🟨⬜️ 🧚‍♀️ I’m just winging it. (23%)

‍

LET’S DO SOMETHING TOGETHER

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

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

Hi

Still wanna go to Mars? Scientists have just discovered that prolonged time in Zero-G could cause ED. Suppose the jury's still out on whether NASA should issue male astronauts a few extra (blue) pills.

In this Open Letter:

• Dem Pineapples: How to raise R400m funding.
• Open-source Tesla, OpenAI’s 4th CEO & what SA’s worth.
• Building with AI: Opportunities in Africa today.
• Cool tools: A few Black Friday deals for founders.
• Where we watch: The streaming results are in.
• For your business: Share this and get free stuff.

TRENDING NOW

How You Like Dem Pineapples?

Well, we all sat up a took notice when Pineapple raised another R400m the other day. (During a general startup investment downturn, no less). But it wasn’t their first, they raised R80m in 2021. 

And it might not be their last, because they seem to be playing the “old” insurance game pretty well.

Let’s face it: Africa is underinsured. Almost 90% of Sub-Saharan African adults have no insurance – and that meant Africa sucked up over R18bn in dead losses from theft, natural disasters etc. in 2019 alone.

But we knew that. Of the 11.4 million cars on the road in SA, it is estimated that 70% are uninsured. (That’s more than 2 thirds of cars, so that’s likely the driver in front and behind you that is uninsured – eek!)

In fact, Pineapple says almost half their customers are first-time insurers – prolly ‘cos they’re appealing to a new demographic. But it does show that, even in the most established and competitive industries, there’s still lots of room for growth.

But how does the insurance business work?

Well, we’re no experts, but a dive into Outsurance’s numbers gives a glimpse into the model of one of SA’s leading short-term insurers. 

• Claims ratio: The percentage of premium that is paid out to claims. In the case of Outsurance, that is 52.8% of their R10.9 billion in net earned premiums. 
• Cost-to-income ratio: This is the expenses compared to net premiums written. In their case, this was at 26.1% or R2.84 billion.
• Operating profit: The bottom line. And Outsurance had a good year with R2.244 billion in operating profit.

It can get quite complex – you need to attract enough customers with a certain risk profile, at a premium price point that is competitive.

Now, to make the premiums more competitive than other insurers, you could either: 1) Reduce your claims (initiatives like the Outbonus could drive people to claim less), 2) Reduce your operating expenses, or 3) Lower your profit. 

And that seems to be exactly what new kids on the block like Naked and Pineapple are trying to do. Naked has also been in the news for some big rounds of funding and has been in a showdown with Pineapple for best billboards in Gauteng for some time now.

Both are using AI and tech to automate much of the business processes and sales. In fact, Naked is so bullish on how tech can help them win, instead of a variable cost-to-income ratio, they charge a fixed percentage fee, meaning that if there are fewer claims, the additional money will be paid back to policyholders – neat. 

What this means is that their profit margin can only grow if the operating costs come down. Aligning shareholders, staff and customers – a recipe for success.

It’s much the same over at Pineapple.

And how do they stack up?

Sure, R400m sounds like a big raise for an SA startup, but one of the incumbents in the sector is making 5 times that as operating profit in a year. So you almost wanna ask: is that enough? 

It all seems to come down to better tech and lower operating costs.

For example, Outsurance has 5’924 employees in South Africa and, from a quick LinkedIn search, it looks like Pineapple has only 85 (Naked sits at 106). 

But how they use their staff is absolutely fascinating…

Ho ho, no surprise the new kids are proportionally investing more in engineering and IT. But what’s interesting is the difference in sales vs operations. 

It does seem that Naked is set on using tech to scale the sales (quoting, onboarding, etc) process as well. Having more people in ops could point to the back office functions of supporting the front end, maybe?

Pineapple does seem to be able to throw a whole lot more into sales while likely using more tech on the operations side. Is R400m enough? It surely can give the tech a big boost. Time will tell.

But one thing is for sure, the future of insurance is most definitely more lean and tech-enabled. And these two startups are positioned to have a say in how it’s going to play out.

IN SHORT

🏆 Power Brand. Still revelling in national pride from the Bokke’s Rugby World Cup victory, it would seem like it’s also good for business. South Africa’s back-to-back Rugby World Cup titles have seen its brand value increase by 44% to USD117 million (ZAR1,989 million). Now that’s lekker man.

🛠️ Weekend Plans. Got some time on your hands? If you’re a Tesla Roadster fan, Tesla just open-sourced every single part of the Tesla Roadster's design and engineering. You could build your very own Roadster in your garage – but some assembly may be required.

🤼‍♂️ Trading Blows. Investec is jumping to capitalise on EasyEquities' recent press with the release of its trading platform Clarity. And while many are comparing the two head-to-head, they’re not the same thing. EasyEquities allows users to invest directly in shares offering voting rights etc, whilst Clarity (for now) offers trading of synthetic CFD, meaning you don’t actually own shares.

🪑Musical Chairs. OpenAI is getting its 4th (we think) CEO in a week. On 17 November, Sam Altman was removed as CEO by the board, with CTO Mira Murati briefly made interim CEO. Twitch founder Emmett Shea was announced as the new interim CEO on the 19th. Then, on the 21st, Sam Altman returned to OpenAI as CEO (but not after first accepting a job at Microsoft and like 95% of OpenAI employees threatened to quit). Just make AGI the CEO already!

🤑 Crypto Fine. The world’s largest crypto exchange Binance, has had its CEO step down. Changpeng Zhao (CZ) will also admit to violating US laws as part of a $4 billion settlement after an investigation into illicit financial breaches at Binance.

JOIN US NEXT WEEK

Real AI Opportunities in Africa

We’ve all watched the global AI plays, but what can this tech unlock specifically for us here on the African continent? We’re meeting two founders leading the AI charge locally to come share where they think the big opportunities are…

Join us, along with Catherine Luckhoff from 20Fifty and Matt Quatra from Webory for The Open Conversation on Tuesday 30 November at 18:00.

Register Here

MORE VALUE

A Few Lekker Black Friday Deals

Found any great deals for founders? We honestly think it’s slim pickings this year…

And maybe that’s how it’s supposed to be – Black Friday mainly for entertainment goods, considering that’s how it all started. See, in the US, you have higher incomes and economies of scale, so Black Friday was all about clearing stock from showroom floors after Thanksgiving.

Last season’s stock just took up valuable floor space for newer, more expensive models people are gonna want around Christmas, so selling a TV for $1 dollar made sense if it was holding you up from making a juicier $1’000 sale.

That said, SA dropped nearly R20 billion on Black Friday last year, with that number set to rise to R26 billion+ this year. Prolly driven mostly by retail – just watch yourself, those buggers have inflated their prices all year, so your “deal” might not be as sweet compared to the same one last year.

If anything, we’d love to see SARS get on the Black Friday bandwagon.

OK, all jokes aside, we did manage to round up software deals you might find useful…

Founder’s Deals

Project Management

Get 25% off all your favourite Notion Templates. Valid ‘til 29 Nov.

Marketing

Get 50% off social media and email tool Tailwind’s annual plan.

Automation

Get 90% off Robomotion, which lets you automate web or desktop applications that don’t have an API with cross-platform robots that work on Mac, Linux, and Windows.

Collab

Save up to 94% on Sessions, the remote collab tool that automates tasks like creating agenda drafts and transcriptions using an AI-powered copilot to manage your entire meeting lifecycle from bookings to large webinars.

AI Imagery

Get lifetime access to Supermachine for just $79 (normally $190 per year), an AI image generation tool for stock photos, art and more.

SEO

Get 30% off selected Semrush annual plans – one of the only big SEO tools that has any deals this year (SEO, content marketing, competitor research, PPC and social media marketing all in one place).

Email newsletter

Our email services provider, beehiiv is offering 20% off all annual plans! Thinking of copying us? Well go on and get your beehiiv set up.

Found any great deals? Hit reply and let us know…

THE RESULTS

We asked which channels/OTTs you watch, and now we’re seriously doubting Netflix’s reported SA penetration…

⬜️⬜️⬜️⬜️⬜️⬜️ 🏈 DStv (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ 📺 SABC (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 💪🏾 Showmax (4%)
🟩🟩🟩🟩🟩🟩 💻 Netflix (53%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍏 Apple TV (4%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏰 Disney+ (11%)
🟨⬜️⬜️⬜️⬜️⬜️ 🦸 Prime Video (9%)
🟨⬜️⬜️⬜️⬜️⬜️ 📱 Nah, give me social media any day (13%)

LET’S DO SOMETHING TOGETHER

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

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

Hi

Stealth attack? This Ukranian Grandma of 6 enlisted as a drone pilot for the army. But only because they wouldn’t let her join the infantry.

In this Open Letter:

• A little OTT: Inside the war for SA’s eyes.
• Exploding starships, great neighbours & whale-watching AI.
• Builder’s benchmarks: Value your company like an investor.
• How we sell cars: The results are in.
• Free stuff: Share this and get cool tools for business.

TRENDING NOW

The War for SA’s Eyes (Heating Up)

In South Africa, video OTT (delivering media content over the net) is an R4b+ industry. The entire entertainment & media industry is set to grow to R231.2 billion in 2027 at a compound annual growth rate (CAGR) of 5.5%.

So it makes sense then to see DStv and Showmax owner MultiChoice doubling down on Showmax, dropping R500 million into a Showmax 2.0 (set to launch in 2024), in partnership with COMCAST, who owns NBC Universal.

It also makes sense, given that for the first time ever DStv has lost subscribers in every segment, including a whopping 14% decline in the Compact tier – previously one of its strongest performers.

But will this Showmax 2.0 play work? Let’s dive in

‍

How can they grow?

Well, we know Showmax generated R555 million in subscription fees over 6 months, and assuming most people are on the R99 or R229 per month subscription (Showmax also offers an R39 pm mobile-only option), they likely have anything between 600k and 800k active subscribers (some say its closer to 1 million). 

That’s a long shot from their 21 million DStv subscriber base. But Showmax 2.0 is built with the ambition of getting to 50 million subscribers across DStv and Showmax in the next 5 years – another 29 million to go.

The good news is that OTT is predicted to grow 12% year on year over the next 5 years, putting SA’s OTT market at R7.6 billion. 

Now, even if Showmax claims all the growth there is over that time, it might only grow its Showmax subs to 5 million. Still 24m short which they would want to make up throughout the rest of Africa — ambitious indeed.

‍

Global contenders

Although the latest data shows that Showmax has overtaken Netflix as the leading OTT in Africa (40% vs 35%), we all know the chances of capturing 100% of the growth are extremely slim. 

Netflix is a global powerhouse with over 240 million subscribers (300k-400k in SA alone). And then there’s still Apple TV, who’s pitching itself through our smartphones, making up a bouquet of options. 

And with Amazon e-commerce coming to SA soon, we might see a bigger uptake in Amazon Prime subscriptions locally. In the US, Amazon offers priority delivery, coupled with other benefits for a monthly subscription, including access to Amazon Prime streaming.

The Reel Future of Entertainment

But whilst the battle for who captures the TV screen rages, the real question is: “Was this ever a battle for the TV to begin with?” 

The one thing that really poses a serious threat to OTT streaming services could be platforms like TikTok, YouTube and Instagram. 

The content might differ, but it overlaps, competing for the same time slot in consumers’ lives: Entertainment. 

And with the socials’ business models mostly not requiring subscriptions, competing for our attention is becoming fierce. 

South Africans already spend 154 days per year online, 54 of those on social media. Each month, the global average for time spent on social media increases:

• YouTube is just shy of 24 hours
• Facebook & WhatsApp around 19.5 hours
• TikTok & Instagram 13 and 10 hours plus per month, respectively. 

So, whilst Showmax is pumping millions into becoming the continent-dominant OTT, it might all be in vain. Who knows what the future of screen entertainment holds… As always, we’re watching this space…

IN SHORT

🐋 Conservational AI. Vodacom and the World Wide Fund for Nature (WWF) in SA have joined forces to launch a pilot program in Saldanha that aims to protect whales and other marine life from getting tangled in the ropes of offshore mussel farms. The AI-based tech uses cameras and hydrophones to alert mussel farmers to whales in the area to activate an emergency response.

⚡️Splashing Cash. Eskom will use some of the R230 billion multilateral loans to expand SA’s transmission grid, which will “significantly contribute to stopping power cuts and is crucial to bringing renewable projects online”. It’ll also go a long way to improving Eskom staff morale and performance – as Eskom struggles with “people problems”.

🤖 Open Cray I. Between Sam Altman’s ousting (and joining Microsoft), and some heavy hitters resigning after the drama – newly appointed interim CEO Emmett Shear already has the first 30 days of his tenure planned out. The former Twitch CEO tweeted his 3-point plan at 1 AM (as one does) including hiring an investigator to dig into the events leading up to his appointment.

🤝 Neighbourgood news. SA Prop-tech Neighbourgood has acquired Local Knowledge, a next-gen travel experience and tech company. (The founder of Local Knowledge, Nick, reads The Open Letter. Lekker one Nick!). Local Knowledge is set to build the experience vertical of Neighbourgood – helping guests create lifelong memories and meaningful connections.

🚀 Scattering Starships. On Saturday SpaceX launched its 2nd Starship. The rocket flew for around 7 minutes, successfully separating from its booster before its internal Automated Flight Termination System was triggered destroying it mid-flight.

BUILDER’S CORNER

How to Valuate Your Company (Like an Investor)

Ask any founder how much they think their startup’s worth and you’re likely to get a range of answers that all boil down to the same thing: More. Always more.

‍

But then you chat to investors and do some funding rounds, and they always seem to have a different figure in mind…

Why? Well, for starters, they don’t have any personal or emotional attachment to it, so they need to evaluate it objectively, on merit alone. And that often means finances and execution, not the idea itself. So they look at it as potential multiples of Annual Recurring Revenue (ARR).

And doing the same exercises they do is extremely illuminating for how you should grow your company. Here’s one of our favourites…

Steps to value on the LTV/CAC model

1. Calculate your LTV/CAC ratio

LTV and CAC are north stars for startups. A quick recap:

• Life Time Value (LTV) is the total revenue you get from a single customer, minus servicing cost, over the average duration for which most customers use the product before cancelling.
• Customer Acquisition Cost is the total amount you spent to acquire that customer — think marketing spend, signup costs, etc.

If you take your LTV and divide it by CAC you’ll get your LTV/CAC ratio.

2. Multiply by ARR

According to Dirk Sahlmer from SaaSfyi’s valuation framework, the higher your LTV/CAC ratio, the higher your value scales as a multiple of ARR (annual recurring revenue). Like so:

LTV/CAC ratio

Company Valuation

Lower than 2

Double your ARR

Between 3 and 5

2–2.5 times ARR

Between 5 and 8

2.5–3 times ARR

Between 8 and 10

3+ times ARR

Note: These are international SaaS metrics, so you might have people locally differing from this quite a bit. In reality, very few companies have an LTV/CAC higher than 3 to 5.

But, this should serve less as a valuation tool, and more as some benchmarks for you to be building towards – because every startup needs to generate revenue.

Got a valuation insight or question? Hit reply and let us know…

THE RESULTS

We asked how you sell your cars, and most people use tech-enabled platforms…

🟨🟨🟨🟨⬜️⬜️ 🏆 Trade in for something bigger and better, baby. (23%)
🟨🟨⬜️⬜️⬜️⬜️ 🚗 Drive it into the ground then sell it for parts. (13%)
🟩🟩🟩🟩🟩🟩 ⚙️ WeBuyCars, Weelee etc. (30%)
🟨🟨🟨⬜️⬜️⬜️ 💻 Facebook Marketplace/Gumtree. (17%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🚙 Pass it down to my kids. (3%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏷️ Drive around with a “For Sale” sign in the window. (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤹 Leave the keys in the ignition and claim insurance. (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🙃 Why on Earth would I buy a car? (3%)

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

Hi

Need a hand? Scientists developed a new soft-materials technology for 3D printing robots with ligaments, tendons and such. Meaning new Luke Skywalker-style limbs are not that far off.

In this Open Letter:

• Sales gap: This R250bn industry needs more SaaS.
• DStv solar, delayed Christmas & the new EasyEquities competitor.
• Smart money: How to set yourself up tax-savvy in SA.
• Who’s buying stablecoin? The results are in.
• Free stuff: Share this and get cool tools for business.

TRENDING NOW

Why Aren’t We Building More SaaS for Cars?

Ten, 20 years ago buying and selling a second-hand car meant navigating dealerships or a trek to Pick n Pay for a printed copy of the AutoTrader. Problem was, by the time you’re done browsing, the one you wanted might have already been snapped up. Not ideal.

SA’s 2nd-hand car market

Used cars are a big business. Out of the ±11 million vehicles on the road, more than 1 million change hands every year. Consider an average price of R250’000, that’s a R250bn industry!

But WhoBuysCars?

WeBuyCars changed the game over the last few years – one of SA’s leading vehicle buying (and selling) platforms with over 2’500 employees, and 70 branches (including Morocco). 

At first, the name seems odd for a company that sells 2nd hand cars. But it's indicative of the fact that selling your car has more pains than finding one to buy. WeBuyCars solves this pain like so:

• Get a good price for your car
• Get money quickly (in 3 easy steps – with immediate payment) – if you need cash and have a car you can sell, these guys make it happen quickly.

This put WeBuyCars in the position to acquire a lot of stock, to offer the widest choice to buyers.  But it also means they have to sell quickly, which is where the tech comes in:

• Cars get listed quickly
• Online presence and ATL marketing ensure they are top of mind
• Tech-enabled financing processes.

Tech & business process engineering make the model work

Chatting informally to a WeBuyCars buyer, we learnt they try to sell a car within 5 days or less. If not, it goes up for auction. Unsold cars cost money and moving stock fast is crucial.

And 2022 was a massive year for them.

• They increased their revenue by 66% from R10.723 billion to R17.848 billion.
• They sold 125’812 cars (up from 88’271 in 2021), on average moving 10’484 vehicles per month (up from 7’356).
• E-commerce was no slouch either, with sales volumes increasing 27% from 26’810 cars to 34’300.

But then the wheels came off a bit in 2023. Rising interest rates and a downturn in the market dealt the entire car industry a blow, and WeBuyCars are expecting 20% less profit this year. 

That said, though, the use of tech to empower their business processes has unlocked margin and powered their business model – and therein lies the opportunity. This is an R250bn a year industry with thousands of independent dealerships. So the question is: Why aren’t we building more software to help second-hand car traders cut costs, improve efficiency and unlock more margin?

And it might make sense now more than ever. Official numbers aren’t showing a recession in SA (yet) – but there is definitely a lot of pressure on consumers and the industry. Players across the board, from WeBuyCars to Weelee, Cubbi, getWorth and all the small independents will be looking for cost savings and better margins. And what can do that better than great niche SaaS products?

We are watching this space.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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OVER TO YOU

IN SHORT

🛰️ Leaving the Nest. Just like a little bird getting ready to leave the nest, SpaceX looks to be preparing for Starlink to spin off via IPO. With assets being moved to a wholly owned subsidiary, the listing for the fast-growing satellite division could happen as soon as next year.

🍍 How you like them (Pine)apples. Local AI-powered digital insurance provider Pineapple announced the closing of their R400 million funding round led by new investors with existing investors also kicking in some cash.

☀️ Let the sunshine in. MultiChoice released its interim financial results this week, revealing a 5% drop in active subs. Apparently, loadshedding is to blame, so the video entertainment group is exploring a subscription-like service for solar to help its customers stay entertained – even when the lights go out.

📱 Invest Tech. Investec is set to launch its EasyEquities competitor Clarity (previously only available to its private banking clients) to offer easy, affordable access to financial markets. And if Investec’s six months’ financial results released yesterday are anything to go by, doesn't look like they’ll need to charge R25 per month…

🧌 The Grinch That Delayed Christmas. SA’s busiest container port, Durban, is suffering heavy congestion with some container ships taking up to 20 days to offload their cargo – 4 times longer than normal. To add to importers’ headache, shipping operator MSC says it’s going to start charging customers a $210 per container “congestion surcharge” from 3 December 2023.

30-MINUTE PODCAST

How to Start Up Tax-Savvy in SA

If you’re deliberating company structure or being smart about tax, this week’s How Would You Build It podcast is for you. We spoke to tax advisor and Irhafu founder Andre Bothma about setting up your startup in the SA company and tax landscape.

And he dives straight in with the No 1 biggest mistake most startup founders make…

1. Don’t just run to the CIPC to start a company

It’s way easier and cheaper to just test ideas out as a sole proprietor first, especially if you don't have official long-term contracts or lots of sales yet, Andre explains here. Just use revenue share contracts to sort out things with your co-founders and go test your ideas.

Once you grow or land big longer-term contracts, take your time and register your company properly, he says here. Avoid equal share structures (like 50/50 or 33/33/33 splits) and redefine all your business agreements to reflect your new structure. Plus: Remember, the main reason you want a company is for the business benefits and to protect you personally from the credit agreements necessary to grow, so be clear about why you need a specific structure.

2. When and how to register internationally

If you’re targeting international markets or especially if you’re going to raise funds outside of SA, then setting up offshore’s an option – maybe Delaware for the US and Malta for Europe – Andre says here.

Just do it when it’s financially viable, ‘cos it can cost a whole lot more to get done. And be aware of Controlled Foreign Company (CFC) regulations – for example, if the majority of your overseas company is owned by South African residents, you actually pay tax here in SA, not over there. It’s best to get a professional financial advisor to help you set up overseas.

3. South Africa could be set up for business-beneficial tax

With SA’s company tax now down to 27%, it’s a good time to start keeping more cash inside your business (as opposed to spending it all to post a loss just to save tax). Andre even mentions here that he imagines South Africa could lower corporate tax even further, down to maybe 25% sometime in the next decade.

This wouldn’t be a bad move for the country, since lower taxes make it more attractive to post profits, and more profit drives more business, economic growth and employment. This would also make SA more attractive to investors, so keep your eyes on this one.

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

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

THE RESULTS

We asked if you see yourself using a stablecoin soon, and would you believe the majority still opt for normal currency?

🟨🟨🟨⬜️⬜️⬜️ 🤙 Yes, I use it all the time. (29%)
🟨⬜️⬜️⬜️⬜️⬜️ 😕 Still not sure what a stablecoin is. (17%)
🟩🟩🟩🟩🟩🟩 🏦 No, I only make use of FIAT (50%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛏️ I keep my money in my couch (like a president) (4%)

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

Hi

Can’t trust your AirPods? It might be best to CT scan them – see what real Apple AirPods VS counterfeits look like under computerised X-rays.

In this Open Letter:

• Big play: Driving usage on SA’s first stablecoins.
• G’bye Fitbit, Apple’s big iOS18 play & early Black Friday deals.
• Go wide: How to build a killer remote startup.
• Building GPTs: The results are in and it’s gone live.
• Tell someone: Share this & get free business tools.

TRENDING NOW

The Business of Stablecoins

One of crypto’s biggest criticisms has been its volatility. 

Now, volatility is great for day traders who profit from ups and downs, but when you want to pay someone, it gets tricky…

You are getting more or less, but not the amount you agreed on.

That’s where stablecoins like USDT (Tether) or USDC are useful. And Tether provides a safe retreat back into good old FIAT currency in times of great volatility without having to exit crypto altogether. (Just exchange your crypto for the USDT and wait for the storm to pass then exchange it back.)

But what is a stablecoin?

The world's first stablecoin, Tether, was launched in 2014 and is backed 1-to-1 with the dollar, according to Tether Limited Inc. In simple terms, it's real-world-equivalent money used as digital money to transact on various blockchains. Think of it as having dollars in crypto format.

How does Tether work?

There are 5 steps in creation, using and redeeming tether.

Step 1: A KYC -erified user deposits FIAT currency into the Tether bank account.

Step 2: USDT tokens get created for the amount deposited minus fees and sent to user selected address.

Step 3: USDT is used by users and can be transferred, traded or stored for later usage.

Step 4: Users can redeem their USDT for FIAT currency.

Step 5: Tether removes the USDT from the blockchain and deposits the funds to the user’s bank account.

Then Tether generates revenue in two main ways:

1. Fees that you pay either to create Tether or redeem it.
2. Interest and gains on their treasury — currently sitting at a cool $86billion.

Basically, they sell you Tether for real dollars, then they use those dollars to invest in mostly US T-bills (government bonds) at roughly 5% per annum. That’s a boatload of interest which they are not sharing with users.

Ridiculously profitable and that’s how they manage to generate $1b+ per quarter profits with just 60 employees.

Well played, mon wascals…

The only caveat? You need enough utility and liquidity for people to want it and trust it.

So the playbook in simple terms is:

1. Create a use case for your stablecoin (trading, paying, investing, etc).
2. Drive adoption and create liquidity — so there are enough tokens for it to actually be useful.
3. Then, with enough reserves, you can invest the reserves at low risk and benefit from the returns.

Sound easy? It’s not. But as the adoption of blockchain grows, there might just be a chance that South Africans see a need for a ZAR-backed stablecoin.

After all the South African Rand is one of the top 20 most-traded currencies in the world. As more and more trading moves to blockchain, the need for a ZAR-backed stablecoin might just increase.

The local stablecoins

Now, if you grew up in the 90s, you might remember Gareth Cliff on 5FM had a tech insert at one point hosted by Simon Dingle. Well, after leaving the journalism world behind, Simon founded ZARP stablecoin.

While it’s not SA’s first and only attempt (XZAR is another rand-pegged stablecoin), ZARP recently announced that Old Mutual will be pumping “substantial” liquidity into ZARP.

Why could this be big?

1. More ZARP made available could fuel the usage. And when usage increases, demand likely follows. When demand increases, so will reserves.
2. Old Mutual manages the treasury of ZARP, so there is likely a margin on assets under management.
3. It could become a play for Old Mutual later to be a leader in the blockchain banking space once regulation around it is sorted out.

Got ZARP?

For now, the use cases are limited, but it could very well be adopted by local crypto exchanges as an on-chain irrefutable proof of customer funds. In addition, forex traders of USD and ZAR can now trade USDC/ZARP on-chain, should the transaction fees be economically viable.

But as Decentralised Finance (DeFi) becomes more mainstream, we could see more and more use cases for ZARP emerge. Pull it off, and this might just be one of the most profitable fintechs (by % margin) in South Africa yet.

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

IN SHORT

🎉 Early Black Friday. With Black Friday becoming more of a thing in SA in recent years, many retailers are already hustling to get their hands on your South African rands, with some retailers already in the thick of it with some lekker discounts on tech gadgets.

💸 Going for Broke. MultiChoice invested R500 million into Showmax ahead of its relaunch in late 2024. Looks to be causing some cold sweats for shareholders, though. The increased investment could reduce trading profits by as much as R1.3 billion – and comes off the back of MultiChoice’s share price dropping 43% YOY.

🙅‍♂️ Thanks, but no. Green digital utility startup WiSolar, has turned down a $1.5 million loan offer from the Industrial Development Corporation of South Africa (IDC) citing unfavourable loan terms that could potentially hinder their growth and mission. Instead, they are opting to install prepaid solar systems.

💁‍♀️ Throwing in the towel. After being acquired by Google back in 2019, Fitbit is turning its back on SA shores, and taking Nest (also owned by Google) with it. The wearable brand’s reason for waai’ing is part of a move to align its hardware portfolio to the Pixel smartphone’s regional availability.

🍎 Apple’s Big Plans. Apple is launching iOS18 next year and promising it’ll be “ambitious and compelling” with major new features, designs and ramped-up performance and security. We’re gonna hazard a guess and predict they adding some major AI capabilities. Anyhow, it’s set to be Apple’s biggest OS update yet.

BUILDER’S CORNER

How to Build a Killer Remote Startup

You got your idea, a few key individuals lined up and you’re ready to go. And like most startups, you don’t have a dedicated building space, but what if your team is scattered all over the country or province?

Not that remote Jimmy…..

Yes, you can build an entire company full-on remotely. It’s said that the best startup newsletter in the known universe is 100% remote. And it’s exactly as easy AND as hard as you imagine.

But there are 3 core elements you need to nail from Day 1 (because it’s too hard to change afterwards), namely:

1. Alignment
2. Autonomy
3. Trust

Here’s how

1. Get the team aligned on the vision

Whether it takes vision workshops, scenario planning, goal-setting sessions, freaking role-playing or a mix of them all, do it. Ensure everyone is aligned on what you’re doing and where you’re going before you make anything official.

2. Autonomy is king

People need to be and feel 100% empowered to execute, call to question, interrogate and even stop production if necessary, when they feel something is not working towards company goals. 

Likewise, they need to have full control over their time and contributions. For this, it helps if your roles and responsibilities are super clear – possibly even having domain specialists as a team.

3. Adapt to asynchronous work

The biggest hurdle for most companies is saying goodbye to the 9 to 5. When you’re remote, people can’t and shouldn’t always align calendars. Everyone’s rhythms differ, and you frankly get the best quality work when you let people work when and how they want. This means designing a way of working without meetings and using tools to fill the gaps.

4. Meetings with a purpose

Speaking of meetings, cut them down to the absolute bare minimum your company needs to survive and they must have a specific purpose, agenda and action points.

We at The Open Letter have only 2 super-short video meets per week – a quick review the night before you get your newsletter. But they’re entirely optional (we’ve rarely had any with everyone present), because our system of work negates the need for real meets.

5. Have a central truth centre

If you have information and strategies that change all the time, keep a central “truth centre” where the new direction is constantly and centrally updated so everyone can see it.

We chop and change all the time, so we use Notion to keep track of our current truth. But you could have a Miro board, Trello or whatever collab app you choose.

6. Project management & accountability

When you have co-founders and team members, you need absolute transparency and accountability around tasks and progress. No worries, your truth centre takes care of that, too.

Got a remote startup hack? Hit reply and let us know how your team optimises…

THE RESULTS

We asked who’s gonna be building GPTs when it goes public (which it has), and the majority said YAY…

🟩🟩🟩🟩🟩🟩 💡 Yes, I have a ton of ideas. (32%)
🟨🟨🟨🟨⬜️⬜️ 😐 Normal ChatGPT is fine for me. (24%)
🟨🟨🟨⬜️⬜️⬜️ 📱 Nah, but keen to use other people’s apps. (16%)
🟨🟨⬜️⬜️⬜️⬜️ 😕 WhatGPT? (12%)
🟨🟨🟨⬜️⬜️⬜️ 😈 AI is evil, I refuse to participate in any of this. (16%)

Your 2 cents…

It’s live: If you have GPT-4, Nicky, hit “Explore” and start building!

FOR THE MEMES

Instagram post by @theopenletterza

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

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Hi

More living space? Don’t worry, Earth’s got you covered by creating more new land all the time. You can watch a brand-new island being born off the coast of Japan this past week.

In this Open Letter:

• Next wave: 5 Big new tech shake-ups.
• Oxygen on Venus, half-price PS5s & electric Uber.
• Insider smarts: Bootstrapping a major CyberSecurity platform.
• How you invest: Behold, the often-surprising results.
• Tell someone: Share this & get free business tools.

TRENDING NOW

5 Major New Tech Shake Ups

Inside the brand-new BombGPT Altman just dropped…

Just as we start relaxing into a world with AI, OpenAI drops a bomb at their first-ever Dev summit – and, once again, some rippling waves will reach our shores soon…

Why, you ask? Most media are just putting us to sleep with long lists of incremental performance improvements announced at the event – how far back it can recall and boring stuff like that. And that’s great, you can go read yourself to tears about that elsewhere.

We’re talking about that pivotal moment when Altman shows how they’re giving users the ability to create apps (or GPTs as they call them) and make them available on a new OpenAI GPT store. 

Missed it? Behold:

“App Stores” are big business

Some context: Last year, Apple grossed about $80 billion in app store revenue. But that’s nothing. Through the store, Apple has ±36 million registered developers who maintain almost 1.8 million apps – apps that add value to 373 million weekly Apple users without Apple having to do a thing.

Now imagine OpenAI can get millions of developers contributing to making apps for its 100m weekly active users. The best part? Looking at the demo video, it might only take a few minutes to build a useful app. Building a proper iOS app? Probably a few months.

If the revenue share is lucrative (which it likely would be), expect to see a lot of apps hitting the store once it opens to the public.

However, building apps within minutes without requiring code has some implications for the broader tech space.

What happens when AI goes there….

1. Wrapper apps are in trouble

Many startups built frontend chatbots around specific themes using OpenAI in the background. I.e. a social media post-writing app that uses the Open AI API with some context overlaid. With the GPT Store, it will take minutes to build such an app and with a major distribution channel in Open AI store, it will be tough to go up against it. 

2. The end of traditional apps as we know it?

We only use app interfaces for certain tasks because large language models have always been bad at understanding what we want these apps to do. Now we can speak to apps and get them to execute tasks for us – meaning we might no longer need an app between us and the services it needs to execute.

3. A new era of UX

User experience design was a field that originated to fill the gap between humans and software communicating with each other. Now with large language models that can understand what we want done, do we still need those interfaces? Some for sure, but many will likely be replaced by voice or text prompts.

4. AI’s new attack on software developers

A large part of building software is about building the interfaces we as humans engage with. And whilst there has been a lot of talk about how AI will end up writing software, what if AI makes the need for building software interfaces mostly obsolete? 

5. AI is going mainstream fast

With an easy-to-build platform, major adoption and an army of developers, I think we will see more happening in this space in the next few months than ever before. 

Will anyone catch Open AI? Once their store is established and paying developers well, it will be a tough battle for anyone to dethrone them.

As far as app ideas go, we have a few ourselves, more in the opportunity pick section below.

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

🖐️ Access Denied. The SABC has seen a recent additional funding request to treasury denied. The request for an additional R1.5 billion was turned down by the Finance Minister. The SABC has previously warned it would collapse financially without an urgent cash injection.

🗼Catastrophic Debt. The same failing SOE (SABC) is also a threat to broadcasting signal distributor Sentech whom it owes R700 million – roughly 50% of Sentech’s annual revenue.

🫁 Venus Air. Oxygen has been discovered on Venus, but don’t hold your breath – or maybe do. Scientists have found a thin layer of atomic oxygen (consisting of a single oxygen atom, not the breathable two-atom kind) smushed between two other layers of Venus’ atmosphere.

🎮 Discounted PS5s. FNB has launched their Black Friday deals and, among others, you can pick up a brand spanking new PlayStation 5 plus 2 games for a cool R6’660. The deal coincides with FNB’s 185th Birthday and will only run on the 24th of November for 185 units.

🛵 Uber Services. Uber in SA just celebrated 10 years in the country with a bunch of interesting announcements including an electric scooter fleet for Uber Package, Uber Store Pick-ups for collecting prepaid items from any store, Uber Van expanding to Cape Town, and Uber Live where Uber Eats delivers food to any large event like a festival or sports match.

HOW WOULD YOU BUILD IT?

Spotting Major Opportunities in CyberSecurity

If you’re inspired to start looking for where corporates have gaps with easy GPT apps, you’ll love the story in our latest 30-minute podcast. We spoke to Dan Thornton, co-founder of cybersecurity training platform GoldPhish.

Dan explains how initial engagements with CyberSec firms’ helpdesks led to a whole host of innovations and opportunities.

A few lekker highlights

1. Great things evolve out of hands-on experience

GoldPhish didn’t start as a big training platform, as Dan mentions here, they initially just entered with your standard training courses and programmes. But then, being in that space, Dan and team quickly learnt that the real issue for CyberSec is the human element, as he mentions here. 

And it was from that moment of realisation onward that they could confidently build up the platform to what it is today.

2. This allowed them to fund development themselves

Going to market with an initial product and getting some clients first, quasi-service-based, Dan and team managed to generate some income initially and were then able to use that revenue to build the platform – almost no funding rounds required – which is awesome and savvy bootstrapping.

3. And the whole thing is run fully remotely

Don’t tell Dan full-on remote can’t be done. As he explains here, his co-founder is in the UK and he’s in Saint Francis Bay, so they started off working remotely and through the years assembled an amazing team of top tech people from all around the country.

Still working fully remotely, they use tools like Slack, Loom and a suite of Google products and basically meet face-to-face once or twice a year for, we assume, a bit of gees.

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

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

THE RESULTS

We asked if you would pay R25pm to trade on EasyEquities and, well, “users say OK!”

🟨🟨🟨🟨🟨⬜️ 😊 With a smile! (I make money with them) (23%)
🟨🟨🟨🟨⬜️⬜️ 🚫 Not a chance (even if I made money last year) (19%)
🟩🟩🟩🟩🟩🟩 🙌 Yes, I’m pro investment accessibility, so will support them, win or lose (26%)
🟨⬜️⬜️⬜️⬜️⬜️ 🛏️ Never, I’ll stuff that R25 in my presidential mattress instead (6%)
🟨🟨🟨⬜️⬜️⬜️ 💰 Nope, I don’t trade stocks and shares and stuff (13%)
🟨⬜️⬜️⬜️⬜️⬜️ 💹 I only invest through unit trusts or brokers (9%)
🟨⬜️⬜️⬜️⬜️⬜️ 😕 What is a “stock market”? (4%)

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Hi there,

Fresh air? In light of WeWork going belly up, here’s a reminder that its ousted founder Adam Neumann once smoked so much marijuana on his private jet, the cabin crew had to put on oxygen masks. Do due diligence, people.

In this Open Letter:

• To the subs: Why they’re switching business models.
• R4.5bn for tech, Elon’s AI weekend & successful funding rounds.
• No more Churn: 3 Core Principles to max your onboarding.
• Where startups start: The results are in.
• Share this: Get free startup tools for your business.

TRENDING NOW

The Big Subs Switch

A lot of big players are switching up business models…

X did it first. Then, back home, so did OfferZen, News24 and now even low-cost investment platform EasyEquities is switching from fees to a subscription model.  

Why? Their ads- or fees-based models fell victim to the current economic climate.

From cuts in marketing spend, hiring freezes and fewer transactions – it’s all signs of an ailing economy.

Like, 70% of users would probably draw the 25…

In the case of EasyEquities, they introduced a somewhat complex loyalty program structure that now costs R25 – unless you can tier up to a point where they waive the fee.

And what if you don’t pay? Well, every 6 months they’ll sell some of your shares to cover the bills – yikes!  

But we’re not here to discuss the EasyEquities subs structure, rollout or backlash – that’s all over the internet. No, we’re here to show you some things we found in the numbers they released earlier this year and the possible thinking that led to this change.

It was probably inevitable

Making it big on the stock market is most retail investors’ dream ever since the Robinhood app launched back in 2015. But the problem is that for some to perform better than the market, many others need to perform below the market.

Some estimate that up to 70% of retail investors lose money. The bull run (when more people buy more than sell) during the pandemic, retail investors lost more than $1 billion.  

So what happens when inflation goes up, and that “losing” 70% are either out of money or get tired of losing? Well, they stopped trading.

And when your business model is tied to the activity of users (buying and selling, for example), well, it gets hard to keep the lights on in wavering activity.

Yeh, we feel you, Harold.

Behind the numbers

Some highlights from EasyEquities’ Feb reports include:

• R123m in revenue generated
• 53% of this revenue was activity-based  
• 831 082 active clients (clients that trade regularly on the platform)
• R 75.83 is the cost to service an active client per year.

From this you can conclude the following:

• Service cost (basically overheads less marketing and sales) = ± R63 million per annum.
• Activity-based revenue = R65 million.

So for the 2023 financial year, the revenue generated through activities pretty much only paid the fees to keep the platform running.

But with active users down and trading activity likely also down, well the math doesn’t work so well. And when the math don’t work, things need to change…

• At R25 per active user, if all the 831 028 users pay, that's a cool R250m a year in revenue – double their 2023 revenue! But we doubt that will happen.
• As we know, 70% of retail traders lose money. So let’s say the “winning” 30% stick around – that would generate R75m per year. Enough to pay the bills and make a bit on top.

So R25 a month per user is probably in the range that would give it a good shot. Will the subs model work for them? Only time will tell. In fact, Purple Group (their holding company)’s interim results are due soon, and that’ll shed more light on the actual numbers.

For now, the learning is clear – bull-market business models might be going extinct, and we are expecting some major shifts in how many of our favourite tech companies operate.

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

Would you pay R25 per month to trade on EasyEquities?

Vote to see what others say...

• 😊 With a smile! (I’m part of the 30%)
• 🚫 Not a chance (even if I made money last year)
• 🙌 Yes, I’m pro investment accessibility, so will support them, win or lose
• 🛏️ Never, I’ll stuff that R25 in my presidential mattress instead
• 💰 Nope, I don’t trade stocks and shares and stuff
• 💹 I only invest through unit trusts or brokers
• 😕 What is a “stock market”?

Login or Subscribe to participate in polls.

IN SHORT

🌍 Africa Investment. Tech fund Norrsken22 closed its first African tech growth fund at $205 million to back startups in the African startup ecosystem. This highlights the keen interest shown by global investors to support African startups at a critical stage of their growth journey.

🦹‍♂️ Wen Lambo? Once promoted by celebrities Jake Paul and Soulja Boy, meme coin SafeMoon’s execs have been arrested after being accused of withdrawing $200 million from funds they apparently told investors were “locked”. The CEO and CTO allegedly splurged on luxury cars and homes.

💰 Funders’ Corner. Looks like SA tech has had a couple of big wins on the funding front of late. Jobs platform JOBJACK secured R45m in their pre-series A round. TRIPPLO logistics software platform raised nearly R34m, and InsureTech Inclusivity Solutions raised over R27m.

✖️ AI Twit. This weekend, X King Elon Musk soft launched his answer to fight ChatGPT called: xAI. The platform will be launched to a select few and has been touted (by Musk) as: “in some important respects, it is the best that currently exists.”

🚙 iCar Hype. Apple fanboys and girls will be happy to know that the Apple Car is in the works – but may not be launched “until later in the decade”.

🍯 Sweet. Two South African Beekeepers hailing from the Western Cape have clinched top honours at the 100th UK National Honey Show. Dawid Rooifontein came first in the International Honey Category, with Audrey De Jongh coming in third.

BUILDER’S CORNER

3 Core Principles to Max Your Onboarding

Welcome to Builder’s Corner, proudly presented by Redeem Studio. Keen to elevate your onboarding experience? Connect with Sherwin at Redeem Studio.

OK, so you’ve got some users and want to create an awesome experience. Short of paying people to keep using your app, how do you get them to really WANT to stay…?

How Product Owners start every weekday.

Well, if you ask tech growth hacker Casey Winters, user onboarding is THE place to retain and even acquire users, because that’s where you engage them and where they refer their friends to.

And, according to CEO-coach Samuel Hulick, there’s a divine trinity for foolproof onboarding…

1. Integrate it fully

Forget tooltips, tutorials, videos or anything that overlays your interface. You want no interruptions, so build your entire product with the onboarding seamlessly integrated.

This means: The user opens the product for the first time and they’re guided by an “invisible hand” to take an action that realises instant value. I.e. make your onboarding part of your UI. Every step is friction (even the ones you think are helpful), so make it simple.

2. Let it empower them

Onboarding is not for “teaching” people how to use your UI – no one likes that. Instead, design onboarding to instantly help them do what they came here to do, fast.

3. Make it continuous

Onboarding is not just for first-time users. Build it into the fabric of your product so that even weeks or months down the line, that same “invisible hand” is still guiding them to realise value.

2 Practical onboarding examples

A) B2C Software/App: Netflix

One awesome example of an integrated, empowering and continuous onboarding experience is the Netflix app. First time you open it, there’s no visible onboarding, just an advanced recommendations engine running in the background.

The engine knows which shows most people are here for, so it automatically puts them on your first screen (integrated). The user watches the show, great, that’s what they came here for (empowering). Then, when the show’s over, it gives truly intelligent, data-based recommendations, always (continuous).

B) A Service Business: Consultant

Copy-paste this thinking for physical businesses too. A consultant, for example, can provide an awesome experience with a simple booking tool on their website, that syncs with the client’s calendar and notifies them, etc. (integrated).

Then, in the meeting itself, the consultant doesn’t overwhelm the client with “answers”, they spend the first half of the conversation actively listening and asking questions, so they are 100% sure they understand what the person needs before making a recommendation (empowering).

Lastly, the consultant might run every meeting just like this, so that the format of empowerment stays constant. Otherwise, they might create a communal dashboard or some form of data-based analytics system, from which all future discussions and actions lead (continuous).

Builder’s Corner is brought to you by Redeem Studio. Ready to take your onboarding to the next level? Chat to Sherwin at Redeem Studio.

THE RESULTS

We asked where you started your first company. And would you believe most people are still spinning up or launching from home?

🟨⬜️⬜️⬜️⬜️⬜️ 🏡 My parents’ garage (8%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🏘️ At my friend’s place – I was more Wozniak than Jobs (0)
🟨🟨🟨🟨🟨⬜️ 👨‍💻 In my home office, thank you very much (27%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛳️At workshop 17 of course (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 💼 WeWork all the way (4%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💡 Innovation City, baby (4%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🔑 Had to rent property because of the business type (4%)
🟩🟩🟩🟩🟩🟩 🤞 Still working on my first startup (30%)
🟨🟨🟨🟨⬜️⬜️ 💻 Wherever my laptop takes me (23%)
⬜️⬜️⬜️⬜️⬜️⬜️ ☕ The corner coffee shop (0)

Your 2 cents…

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%)

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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).

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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

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‍

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.

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‍

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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).

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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

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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

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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%)

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