Plus: R1.3M in free marketing, 7 things for go-big disruptors & taking pics without a camera or phone.

Newsletter

June 8, 2023

Hi there,

How do you get R1.3 million’s worth of marketing for free? Social listen like Airbnb. Two weeks ago, when influencer Alix Earle’s Booking.com guesthouse in Italy was a scam/fake, she complained on TikTok (5.9M views). And, because they were listening, Airbnb immediately jumped in and organised her and her crew a place to stay.

Of course, she posted about it, thanking them, not just once but twice, scoring Airbnb R2.6M’s (she charges R1.3M per sponsored post) worth of marketing with 6.8M impressions for Mahala.

Speaking about thanking people, we want to thank you for referring your friends to The Open Letter. Refer 3 friends and have a cappuccino on us! Click share at the end of the email for details.

In this Open Letter:

Buckle up: Huge margins and opportunities in EVs in SA.
Let’s play Snake, the no-camera camera & Bezos VS loadshedding.
How big? 7 Questions for disruptive, hyper-scalable startups.
Moving fast: A local accelerator that’s been in the game for 20+ years!

TRENDING NOW

Margins (and Opportunities) on EVs

And how it might even trump loadshedding

Electronic Vehicles (EVs). We know they’ve been coming for some time now, with global manufacturers promising to be mostly electric by 2030. It’s even gaining a bit of traction in SA, where our meagre EV sales have at least doubled this year.

And we know what you’re thinking: What about Eskom and the energy crisis? Well, we crunched some numbers and looked at margins and there’s reason to believe going full or mostly EV holds enough cost-saving benefits and opportunities to nullify even that.

*The road trip to Cape Town didn’t make it past Bloem*

Sounds crazy, we know. But stick with us here…

It’s a craze waiting to happen

Rumours are that China’s answer to Tesla, Build Your Dreams (BYD) who out-produced Tesla by 500k units last year, is planning to launch their Atto 3 EV in SA soon. While another Chinese import, City Blitz, just launched an entry-level model that’s priced on par with SA’s cheapest petrol cars.

Local energy tech company Rubicon has announced plans to build 150 new vehicle charging stations in SA in partnership with Audi this year alone.

It’s like there’s finally some movement, and there’s every reason to get excited…

EVs will change transportation beyond recognition

The big thing with EVs is the amount of middlemen it’ll cut out of moving you from A to B.

At the moment, over 33% of what you pay at the pump for fuel goes to taxes and levis like the RAF and general fuel levy etc. And 19%+ is transport, storage and margins. (That’s like 52%.)

So, the actual fuel is only 48% of what’s on your slip.

And even that is just paying off everyone on the supply chain – the oil landowner, the guy retrieving the oil, the refinery, the international transport, the storage, the local transport, the garage you buy from, they’re all taking a cut and pressurising that 48%.

Not to mention that oil is unevenly distributed around the world.

Now, here’s the magic: EVs make all of that disappear (except the taxes and levies, they will probably just move elsewhere).

No over-inflated supply chain. And you can make electricity anywhere on the planet. Even just that 30% saving creates enough margin for you to build businesses with because suddenly people have an extra 30% of their transport budget to spend.

It’s probably even more:

1 Litre of petrol costs R20.29 and it could take you about 14.5km.
Most EVs can do 6.6km on 1kWh (costing R2-something depending on where you live). So the same distance for R4–R5.
That’s an extra R15.

Whilst some of that would be absorbed in servicing costs, particularly battery replacements, the prices of batteries are coming down rapidly making the economics of EVs much more viable.

Now multiply that estimated saving by the 12 million+ cars registered in SA in 2017 (it’s probably way more by now), and you’ll see about 180 billion reasons EVs can unlock a huge amount of spending power.

And what about Eskom? Well, with that kind of spending power and the government has just lifted the ban on private power generation, that might just create room for entrepreneurs to find ways to generate power just for the EV market – batteries, maybe, ‘cos that’s technically private if you price and market on the battery unit itself.

Possible opportunities in the EV market

Manufacturing of charge stations, distribution, installation and supply.
Revolutionising public transport with lower prices.
Vehicle services – diagnostic centres, refurbishing, and repairs specifically for EVs.
Power generation for batteries – Solar farms that power EV charges.
Training in EV mechanics – Electric motors work a bit differently from their fossil fuel counterparts.
EV-specific charging locations – re-imagine the Engen Quickstop – complete with a Woolies cafe and shop. Perhaps some co-working space (charging takes a tad longer than filling with petrol).
B2B EV fleet management software.
You can even get into building EVs like Stellenbosch-based Mellowvans (they claim 15c per km, impressive).

Up until now, most of the EV agenda has been driven by environmentalists. But green elements aside, there is some serious money to be made in this space. We are watching this space.

Ouch, we got a cramp from writing that list. Got any you want to add? Hit reply and let us know…

IN SHORT

🧑‍✈️ Reach for the skies: From September SA airline Airlink will add 2 new routes to its offering, both to Malawi. After the tumultuous last 2+ years in the airline industry, it’s good to see expansion.

📷 The future of photography? This lensless, sensorless camera takes pics generated by AI based on your location data and it’s making people super angry. The Paragraphica generates a text prompt which is fed into AI to create an image.

💨 Up in Smoke: Schools across SA are taking extreme measures to combat teen vaping. From sniffer dogs to drug talks, to nip the addictive patterns vaping causes in school kids, in the bud.

⚡️ AWS to stop load shedding in CT? Cape Town is to roll out its plan to buy 700MW from private companies, including from Amazon Web Services.

📱 Miss your Nokia 3210? You probably can’t get it back, but you can now play Snake in the Eskom se Push app.

BUILDER’S CORNER

Builder’s Corner is brought to you by Specno. When it comes to scaling ventures, Specno’s got it down. Get in touch and learn how they can help you do it.

How Big can you Make This Thing?

The 7-Question method

With so many factors to consider, it's hard to know where to focus. But what if you could examine the viability of your business idea through a set of key questions?

Enter Peter Thiel's seven questions.

Thiel is best known as the co-founder of PayPal and a respected venture capitalist (also recently involved in a $1.5bil revenue AI company called Palantir). In his must-read book, "Zero to One: Notes on Startups, or How to Build the Future." he poses 7 questions that he asks each disruptive startup he meets.

*Bernie your questions are more uncomfortable than climate change.*

So if you are working on a big, disruptive startup idea, use these seven questions to analyse your potential for making it big:

The Engineering Question: "Can you create breakthrough technology instead of incremental improvements?"
Your business should aim to innovate, not just iterate. Incremental improvements may keep you afloat, but real success often comes from redefining the playing field. Is your technology a game-changer, or just a slight improvement on what's already out there? Does your technology offer a 10x improvement or cost saving on current solutions that are available?
The Timing Question: "Is now the right time to start your particular business?"
Timing is everything in business. A brilliant idea launched at the wrong time may still falter. Startups succeed when market conditions, technological readiness, and societal trends converge on their idea.
The Monopoly Question: "Are you starting with a big share of a small market?"
Domination of a small niche often leads to more success than having a tiny fraction of a huge market. Will your business be a big fish in a small pond, or a minnow in an ocean? Startups often start out by trying to serve everyone, this is too hard to do. Find a niche and double down. Dominate that market and grow into others from there.
The People Question: "Do you have the right team?"
The people behind the business are often as important as the idea itself.
– Motivation: Are you inspiring your team to put in the required effort?
– Skill: Do you have the leading subject matter experts in the places that matter?
– Culture: What are the subtle, often unspoken rules of how things are getting done? Do they help you move fast and focused?
The Distribution Question: "Do you have a way to not just create but deliver your product?"
They won’t come when you build it, you need to distribute your product. What strategic levers do you have to make your product or service go viral and get adopted?
The Durability Question: "Will your market position be defensible 10 and 20 years into the future?"
Short-term success is good, but long-term viability is crucial. Can your business fend off competition and maintain its position in the future? What moats naturally exist and how can you entrench yourself more and make yourself more future-proof? What trends are shaping your industry that could influence the viability of your business?
The Secret Question: "Have you identified a unique opportunity that others don’t see?"
Unearthing an unexploited niche or having a unique insight can give you a competitive advantage. What's your "secret sauce"? Perhaps it’s the way things will be done in the future, perhaps it's upcoming legislation that will impact entire industries that are currently unaware.

Now these are not simple yes/no questions. They are prompts for deep thinking, encouraging you to take a holistic view of your business proposition. The answers might not always be comfortable, but they will provide valuable insights that can steer your entrepreneurial journey toward success.

As you dive into your next venture, take some time to ponder these seven questions. They could be the difference between becoming the next big thing or just another business that almost made it.

P.S. These questions are mostly applicable to highly disruptive, fast-scaling startups. This means for most businesses it's not the be-all and end-all. Building a business and not having good answers for these doesn’t doom you to failure, if anything it could help you get a bit more strategic or point out that you are building a different type of business. Nonetheless, keep hustling fam.

Need help with these questions? Try setting up a free 30-minute workshop with Specno’s venture team.

HOW WOULD YOU BUILD IT

Looking to give your startup idea some wings or hunting for that partner who'll inject a serious dose of capital to lift your venture skyward? Hey, that's part of the founder's journey!

This week, we've invited our savvy friend, Nick Allen from Savant, to unravel the mystique of getting your startup to sprint, rather than crawl, through an incubator or accelerator program.