Cars45 has been acquired by Jiji. But that is not the main story of this piece. The key thing is this: an extremely vibrant innovator with first mover advantage scored a massive own-goal. Yes, Cars45 came into the Nigerian scene with something amazing: buy or sell your car within 45 minutes. I wrote about this business and even visited the team during a trip to Nigeria
As we celebrated it and as it raised tons of money, the ascension rose higher. But then, something bad began to happen: Cars45 CEO and about 11 employees left the company; South Africa’s giant, Naspers, had just invested $400 million in the European parent firm.
In 2017, Cars45 raised $5 million from Frontier Car Group (FCG), the Berlin-based company that builds used-car marketplaces focusing on emerging markets. This made FCG the largest shareholder and parent company in the Nigerian car business. Two years later, FCG received $400 million from OLX Group (a division of Prosus, the Netherlands-based separate tech holdings of South African tech giant Naspers). The investment valued FCG at $700 million, with OLX Group taking a controlling stake. In 2020, OLX Group, via its OLX Autos brand, acquired Cars45 from FCG.
Therefore, the acquisition will see Cars45 grow the vehicles category. Furthermore, Cars45 will merge its operations in Nigeria (primary market), Ghana and Kenya with Jiji as the classifieds marketplace wants to consolidate its position in the space. In addition, the acquisition of Cars45 will help mitigate problematic trust and safety concerns that have sometimes plagued Jiji and offer a different car-buying and selling experience via its transactional marketplace model. In turn, Cars45 users will benefit from Jiji’s dominance in online classifieds.
I summarized the paralysis thus: “This is hard braking for Cars45; we hope the pad is not burnt.” With the Jiji acquisition, I am extrapolating that the pad was indeed burnt. I do not think this acquisition was done on the position of strength for Cars45 considering that the guy who made it amazing has started a competing company, and raised tons of money.
Ladies and Gentlemen, while your economics textbook might not have included knowledge as a factor of production, do not play with it. Nothing matters in business than knowledge. Sure, everyone talks about capital but what really runs the world is knowledge. With the visionary gone, Cars45 became a shop!
For Jiji, it just added a great new category – cars – after real estate which continues to drive the classified-marketplace.
Comment #1: This statement “With the visionary gone, Cars45 became a shop” got me thinking. This implies that Cars45 was person-Centric other than system-centric. My question is, how can we avoid the pitfall of making an individual or group of individuals live-wire of an organization ?
Response: “My question is, how can we avoid the pitfall of making an individual or group of individuals live-wire of an organization ?” – not sure your comparison is fair. When you have a CEO and about 11 employees at leadership positions leave a startup at the same time, your connotation may not be right. Go to GTBank (or Apple, Dangote Cement) and ask the CEO and 11 management staff to leave and still come and claim if it was built around one person. And add the shock for a startup, then your argument may not be balanced. Cars45 was even GREAT to have not folded a week after that exit; so, we need to celebrate it to have survived that!
Comment #2: Sir, book shouldn’t be judged by it cover. Saying Cars45 became a shop is quite harmful to jiji as a business person I believe you know better what that means. Moreso time will tell if Cars45 would do better than the yet unknown (to be found company by the ex-CEO) or not.
Response: “Saying Cars45 became a shop is quite harmful to jiji as a business person I believe you know better what that means.” – it depends on what you understand to be a shop. You need to visit Onitsha or Aba. A “shop” is a business available to be sold. Today, Cars45 has sold itself. Jiji has bought a “market” because that “market” is a good product.
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