Hi there,

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

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

In this Open Letter:

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

TRENDING NOW

Making it Rain

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

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

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

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

The Secret Sauce: Unpacking Rain's Success

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

Let's break it down:

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

We got a unicorn, people

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

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

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

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OVER TO YOU

What do you use for broadband?

Vote and see what others say...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

JUST FOR YOU

Got Gold?

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

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

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

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

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

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

Done, now you’re entered to get gilded.

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BUILDER’S CORNER

How to Reverse Engineer Success

A Step-By-Step Guide to Deconstructing Startups

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

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

Here’s how…

Step 1: Choose a Target & Objective

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

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

Step 2: Analyse the Business & the Market

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

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

Step 3: Examine the Team

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

Step 4: Identify Key Milestones or Pivots

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

Step 5: Consolidate & Strategise

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

Step 6: Implement and Test

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

Step 7: Repeat

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

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

PARTNER WITH US

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

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