🚐 Unlocking this R90bn Core SA Industry…

Better robots? We got all teary-eyed when, 48 hours ago, Boston Dynamics released the video retiring their beloved Atlas HD robot (just look how far it’s come!).

But that was only till we realised it was to make room for the all-new Atlas 001 — it looks like you should get ready to be served by some butler-bots.

In this Open Letter:

• Keep moving: Tech opportunities in SA’s R90bn taxi industry.
• WhatsAppGPT, pocket parties & Jozi’s new Uber competitor.
• Smart play: How to start building a tech product with no cash.
• Who should build SA’s 2M homes? The poll results are in.
• Share the Open Letter & get free business tools on us.

TRENDING NOW

Inside SA’s R90bn Taxi Industry

Inflation has been pummelling sectors across the board, but it's landed especially heavy punches on South Africa’s minibus taxis. And recent unbundling of Transaction Capital (who owns SA Taxi) to list WeBuyCars independently reminded us of this.

ICYMI: SA Taxi, former darling of SA’s minibus taxi industry,’ posted a staggering R3.7bn loss in 2023.

And it’s no surprise.

The problem is that minibus taxis are highly sensitive to rising inflation. It coincides with the rising cost of living, which means you need more salary for the two operators (the driver and the fee collector or gaatjie for us Cape Tonians), not to mention rising interest rates driving up instalments.

And the same inflationary pressures limit the price they can charge commuters.

Taxi Operators’ Math

The cost of running a taxi obviously differs from location to location, whether you operate a new vehicle or second-hand, whether the operator chooses to have insurance, etc. But some back-of-the-napkin math reveals the following:

If the breakeven fee is in fact R38’000 p/m when operating a relatively new vehicle, it means the taxi needs to bring in R1’900 per day minimum to break even. With 14 available seats and a price of R20 a trip, they need to do 7+ trips a day on their route.

That’s cutting it fine.

Don’t make it and the driver gets less or no salary and that’s likely why they speed and drive like maniacs. Not to mention the setup where the driver isn’t the owner — and the owners also want a margin.

Now with little room to increase trip prices, perhaps making the asset do more is a way to increase revenue and, in so doing, eliminate some of the risk.

Making more than just trips 

Businesses have been waking up to the R425bn+ economy happening in townships but major challenges remain. For one, how to fulfil e-commerce in areas that are lesser known and can sometimes be dangerous.

Taxis generally know the areas they operate in well and using idle time (after their morning trips and before their afternoon trips), they can be used to deliver parcels and other items.

And that’s what TaxiConnect is doing. It’s a platform that connects e-commerce with its customers in the township using, among other types of transport, minibus taxis.

And with rumours of pilot projects with some big retailers, there’s a chance that this could very well offer a lifeline to minibus taxi operators struggling to make ends meet, all while opening the township economy to e-commerce and big retail.

Exciting times all around. We’re watching this space.

IN SHORT

🟣 Purple Turns Green. Purple Group, the owner of popular online trading platform, EasyEquities, has released results sporting a profit after tax of R11.8 million, representing an increase of 171.3% compared to the loss of R16.5 million the previous year. Looks like the gamble to switch business models we told you about last year has paid off.

🤖 WhatsAppGPT. WhatsApp has launched Meta AI a new feature that integrates AI directly into WhatsApp that you can engage with on a question-answer basis like Gemini or ChatGPT, and just like you would message contacts. Although not available in SA yet, it’s planned to roll out soon.

🚙 New Jozi Rides. SA has a new e-hailing service, Shesha, which offers partner drivers an opportunity to own a stake in the company. Currently only available in Gauteng and its app on Google’s Play store, there are plans to roll out an iOS app and expand its offering to other provinces in future.

📱Pocket House Party. There’s (yet another) hot, new app — Airchat. The invite-only app by an Angel List co-creator and Tinder’s former CPO, looks to be a combo of voice notes and Twitter, and has already been downloaded 30’000 times in the last month.

🐢 Slow and Steady. While talks in the Canal+/MultiChoice deal seem to be moving along at a snail's pace, Canal+ has bought another 3.5+ million shares (for less than the R125.00 per share offer on the table), passing the 40% shareholding mark.

🧟‍♂️ Terror in SA? The United Kingdom has issued a terrorism alert for South Africa warning that “lone actors inspired by terrorist groups, including Daesh (ISIS) could target public spaces and places visited by locals and foreigners”. Well, we definitely hope not.

BUILDER’S CORNER

Our weekly podcast is hitting the shelves slightly later than normal this week (life happened hard this week), so we are doing another Builder’s Corner.

Keep an eye out on our YouTube channel or Podcast page for our latest episode.

How To Start When You Have Little Or No Money

Let’s face it, most who want to start a business in SA simply don’t have the capital or – worse yet – are not connected enough to do so.

Now, there are many business types and approaches you could take to overcome this, but here’s one that has worked for many where your end goal is to create a Software as a Service (SaaS) product.

4 Steps to Start Up, Low Cost

1. Sell a service first

With no product (yet), the most pressing thing is to get some money flowing in. And the easiest way to do this is to sell your time and expertise to a company – as a contractor (not employee), providing the service that your SaaS product will eventually perform (accounting, job management etc.).

This will bring in some income but also help you get deep knowledge about the problems your SaaS product wants to solve and the customers you’ll one day sell it to.

Not to mention it’s a paying client with whom you can build a relationship and a playground where you can start implementing some tech to see how it works.

2. Automate parts of that service

Now that you’re solving some of the problems yourself, start identifying where tech can automate some of the pains experienced by the various stakeholders in the company. 

You can even experiment using low-code and no-code solutions such as Airtable, Notion, Zapier, the Google Suite and comms tools such as Slack, WhatsApp and email – to get a feel for how this could work and give you a solid idea of what to build.

3. Package it as a product and license

Take all your learnings from this, develop it into a product concept and engage your client as the first customer. Your objective here should be to get buy-in from them, and a commitment to use the product.

While the client keeps paying you for your time, consider offering the tech to them for free for a period (say 12 months). Just make sure you keep the IP (rights) to the product you build: just get that down on paper or email as proof.

If you can pull that off, you’ve got a deep understanding of what’s needed, a first iteration (albeit hacked together using no-code) and buy-in from your first trial customer, you’ve overcome a large part of the risk in launching.

Now get to work to either build it (learn to code) or find a developer that wants to partner on it. 

4. Engage clients with similar profiles and/or problems

Now that you have a first version, use the case study of your first client to engage people with similar problems. The case study and demo will go a long way to develop trust and give you a shot at landing that first SaaS customer.

Be patient, though, SaaS models take a very long time to be profitable, and you will likely have to raise funds at this point or keep going with the consulting work until your customer base has scaled enough.

Got a startup hack or expert knowledge to share? Hit reply and we might feature you here, too.

Today’s Builder’s Corner was written by Renier Kriel from The Open Letter who is an expert in SA startup strategy & growth.

Connect with him on Linkedin here.

YOUR VOICE

We asked where the 2 million homes SA needs to build should come from, and most want it for the private sector…

🟩🟩🟩🟩⬜️⬜️ 🤑 Yes, let us in the private sector build it. (26%)

🟩🟩🟩⬜️⬜️⬜️ 🙅‍♂️ Nah, government must deliver on its own promises. (20%)

🟩🟩⬜️⬜️⬜️⬜️ 👌 We’re doing just fine at the current rate. (14%)

🟩🟩⬜️⬜️⬜️⬜️ ⚖️ We should stop building houses until everyone pays tax. (16%)

🟩⬜️⬜️⬜️⬜️⬜️ 🏕️ We should go back to nature and live off the land. (10%)

🟩🟩⬜️⬜️⬜️⬜️ None of the above. (14%)

Your 2 cents…

Yep practical, actionable plans are the way to go! Remember when we wrote about SA’s real biggest needs?

Getting the economy going is #1 on our Christmas wish list. We have been flatlining for years!

Yeh good point Samantha. Kind of like how education works, there are some government schools and some private ones.