🌎 10 Million New Customers…

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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