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

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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…