This is the rule: do not begin to scale a business until you have attained a product-market fit. A product-market fit is essentially reaching an equilibrium where what you offer as a product or service is what customers want. Simply, after you have launched that product, you have improved on it to the point users love it.

This is important in business since it is not always a given that the first version of a product will meet the core needs of the users. So, you have to modulate, and using the feedback received, improve the product.

Cutting the phases by launching and scaling with massive media blitz, promotions, advertising, etc will only get users to the platform, but once you cannot retain them, the vision begins to struggle. In other words, when the buzz ends, that product must deliver value to users. And where the value does not exist because there is no product-market fit, wahala dey.

Can you think of a case study? Meta’s Threads. The microblogging platform was launched, but before it could attain a product-market fit, to deliver differentiated value to users (uniquely from Twitter), it was scaled.  Today, that buzz has faded and most users have gone. Imagine, if they have restricted access to the first 10,000 people as bigtech does, bake the products better with feedback, and then launch it. Of course, unlike a startup, they do not have to worry about wasting money on adverts since Meta’s bank account is huge and the blitz was largely free.

Meta failed Launch 101!

Money does not solve most fundamental growth problems; product improvements do! Work hard to understand your customers and do all to retain them before you begin to spend on massive scaling.

Never try to scale a business until you can retain customers. That customer retention is a validation of your business hypothesis via product-market fit.

A growth playbook which begins when a company cannot retain customers wastes resources. You are likely going to onboard customers, but the day that marketing or promotion blitz stops, the customers will move.

Build. Pursue product-market fit. Then Scale.

The CEO has already given up on that other app. He hasn’t posted in 4 days and traffic is down 94%. RIP ? pic.twitter.com/2R4vlziJDh

— greg (@greg16676935420) July 14, 2023

Yet, Twitter’s challenges remain: “Twitter owner Elon Musk revealed on Saturday that the platform still has a negative cash flow after a 50% decline in advertising revenue and a “heavy debt load.” Advertisers left the platform when Musk took over last year, but he said in April that “almost all of them” had returned or were planning to come back. Although Musk previously predicted that Twitter would be cash flow positive by June, he tweeted that “July is a bit more promising”for increased ad revenue. Twitter rolled out a new policy allowing creators on the site to pocket a portion of ad revenue they make from ads posted in replies to their tweets.”

At 4pm WAT, I will deliver a two-hour presentation during the Tekedia investment course today. Among others, I will discuss positioning due to exchange rate volatility in Nigeria. My postulation (read here), despite what most investment banking institutions wrote, claiming shortly after the float, that the Naira would stabilize at N680 per USD, remains that the Naira will continue to struggle until we can attain parity with demand and supply of US dollars. 

And that means, we need to float companies (digital, physical, services, etc) with capacities to “create” US dollars in Nigeria, before we can attain any optimal equilibrium to stabilize the exchange rate. If we fail to do that, no financial engineering by the Central Bank of Nigeria (CBN) can help because the strength of Naira does not come from bank branches or CBN headquarters, but from warehouses and factories (the modern and the old).

We recorded  N829 per USD this week, according to the News Agency of Nigeria: “A spot exchange rate of N829 to the dollar was the highest rate recorded within the day’s trading before it settled at N803.90.”

Good People, in Lagos, the bank I worked for paid for a correspondence doctoral program on international currency.  Simply, there is no market where demand and supply work more than in currency business. If 20 people want each $100 and only 2 people have each $100, there is a big problem. Unless you can improve that supply, those two people will move the pricing equilibrium point. That is the issue in Nigeria even at the investors and exporters window.

From all indications, I expect the government to put a pedal, with a little “lever” on this unbounded float. In other words, a quasi official rate will be reborn within 3-6 months, otherwise, balance sheets in Nigeria will deteriorate and many will lose their jobs. 

(Expect bank shares to drop if there is no FX stabilization since modeling assets risks will become harder. The original exuberance will fade as yield optimism freezes for capital inadequacy and illiquidity concern)

Nigeria needs to help the Naira and the immediate business in the National Assembly (the N70b for working conditions of senators and reps, bulletproof cars, N500b palliatives, etc)  will do nothing to help those factories and warehouses. If they fail therein, we could be in a big mess. Yes, I have expected a clear industrialization policy passage with fierce urgency and catalytic production-induced stimulus for things to be made in Nigeria.

—From NAN

The Naira on Friday depreciated against the United States dollar, exchanging at N803.90 at the investors and exporters window.

The Naira slipped by 7.72 per cent when compared with N746.28 which it exchanged for the dollar on Thursday.

The open indicative rate closed at N763.36 to one dollar on Friday.

A spot exchange rate of N829 to the dollar was the highest rate recorded within the day’s trading before it settled at N803.90.

Data gathered from the official window shows that the Naira sold for as low as N689.34 to the dollar within the day’s trading.

At Tekedia Mini-MBA, we understand the DNAs of enduring companies, building the Cells of vision which drive the Tissues of competition, delivering solid Organs in markets for SYSTEMS of innovation and market resilience.

(If you studied biology in secondary school, you will understand the word play on how a group of cells deliver tissues, tissues for organs, organs for system. But cells contain genes which are segments of DNAs.  And in the analogy of natural philosophy, we extrapolate looking for the DNAs of great companies)

Join me in this talk as we use biology to explain how great companies live really LONG. Hahahaha. How I wish Mr. Bobo, my biology teacher in secondary school, and Mr Udeagu Snr (the Commerce teacher) could join us.

This is Tekedia Mini-MBA, we pursue the mastery of entrepreneurial capitalism. register here.