Long-Profit Gestation Period in Nigerian Startups And Peril of Blitzscaling

Long-Profit Gestation Period in Nigerian Startups And Peril of Blitzscaling

The gestation period to profitability in a typical Nigerian startup is long. That long gestation is also the reason why many startups or small businesses collapse few years of founding. Typically, one way to deal with this is to raise capital, ramp up market entry to grow fast enough to attain profitability. But in our extreme volatile economy, if the timing is off by months, the company can collapse. You just run out of cash.

Yes, your new business problem in Nigeria is not just capital but the long gestation period required for profitability, affected by many factors at scale.

Those factors include the fact that every business is a local government since you provide your light (generator), water (borehole), security (guards), etc. It is based on this that I tell founders – Do Not Blitzscale in Nigeria because if one core metric misaligns, you will struggle.

Many LinkedIn comments on the OPay piece. I spoke to a group of founders a few days ago, and the first question was the OPay article. Let me make it clear: OPay across its businesses have run validated business models.  No one is saying that the OPay business model is largely wrong. If you have read me, I have praised its aggregation and double play strategies. The core of my piece has remained that OPay has no patience. Yes, I have a problem with its intended rate of growth. In New York, London or Beijing, hyper-growth (or blitzscaling) delivers two options: win the trophy, or crash. In Nigeria, almost all the time, the only outcome is a crash because Nigeria does not have the conditions precedent to do any blitzscaling in the nation.

Blitzscaling within a stochastic system is an illusion and pure guesswork since the leverages cannot be put in order. Yes, the greatest entrepreneurs in Nigeria stay the course, go slow, and manage the state of our entropy. They look boring but there is a reason for that: you survive if you can find how to make profit rather than trying to go for dominance only to be tripped into oblivion.

Why Blitzscaling Struggles in Nigeria

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One thought on “Long-Profit Gestation Period in Nigerian Startups And Peril of Blitzscaling

  1. Where are we even doing well at scale? There is one component we haven’t learned to include in the expenditure column: preparing the future customers.

    We are not initiating or bringing new people at scale into the markets, yet we are preaching growth and improved purchasing power.

    I think the biggest investment every start-up should be making is on education, not the regular school funding, but rather spending so much in educating the potential customers. We need to reengineer minds here, if the excess of 200 million people we have must translate into meaningful market.

    Again, our purpose of setting up businesses is most times fraudulent or fortuitous, until it’s based on solving real problems rather than making money, the real growth will never come, and the money won’t flow…

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