Sure, my OPay piece was tough with some people writing that it is easier to criticize in “hindsight”. First, I do not criticize companies; I share perspectives on companies. If you take it personally, you will simply make your day harder. Many called me today to confirm if I was the person that wrote the Jumia piece. Lol. In response, I shared three more articles where I noted a few months ago that Jumia would rise with its new strategy. Since the Jumia double play redesign, I have come to admire the business. Yes, on a total volume of customers, JumiaPay is one of the biggest fintech companies in Africa!

For OPay, I wrote in Nov 2019, making it clear that it has “no future” unless it changes its model:

“Let me say it here: if OPay’s playbook is to “tax” Nigerians this way, it has no future. It has been proven that Nigerians like FREE things. If you try to ask them to pay, they move in exodus. Yes, provided it is free, you are the best service provider. Any playbook that depends on attracting users with freebies and expecting a paid conversion without a new level of product evolution will fail in Nigeria. So, OPay, you can burn your $50 million war chest, and the day that money runs out, all the users will look for the next deal in town. There is nothing like lock-in in Nigeria because the hardest thing is to get a Nigerian to spend money!”

Yet, this is not to say that I get everything right. If you read me and think everything would be 100% correct, you will be disappointed. Here, I just want visitors to our community to know that we did not start today. Over time, we have come to understand what works in Africa, and we continue to share perspectives to help the ecosystem.

In our Tekedia Mini-MBA LIVE on Saturday, a big time European CEO who signed up to understand African market better, challenged one word I used in a business model. ( I have this habit of branding my insights. Think of One Oasis, Double Play, etc.) By the time we were done, I was able to browse through the 53-page class note, and concluded that my word was confusing. I proposed a new word and the class approved it. One word, and I had to update the class note. We are all co-learning here.

I have written so much about Jumia when it was a pure ecommerce company. I never liked the business model then. But when Jumia changed and added payment, I became a fan. My change of heart was supported by data: the world has not seen any successful ecommerce company without double play. In other words, you cannot make money just by doing ecommerce, especially in emerging economies. Rather, you add something on that ecommerce, and use the transaction volume which comes from ecommerce to make money from something else. Alibaba became better with Alipay, its paytech unit. India’s Flipkart depended on PhonePe to become a better company. Even Amazon relied on AWS to find favour before Wall Street.

Jumia has gone paytech and today is one of the largest fintech companies in Africa with more than 6 million users. Wall Street has noticed and its stock is rebounding. In the last 3 months, it has doubled its market cap, and the trajectory looks positive.

Jumia has dramatically underperformed the market since its August IPO at $14.50 a share. The Africa-focused e-commerce company has struggled with fraud allegations on its platform and thin margins in some of its markets. However, Jumia’s revenue is still growing at a respectable pace, and the company has a convincing plan to turn things around over the long term.

To boost margins, management has divested from less profitable markets such as Rwanda, Cameroon, and Tanzania to focus on larger markets like Egypt, Nigeria, and South Africa, where consumers have larger purchasing powers and better access to the internet.

Internet access is a big driver of online retail adoption, and Jumia is well-positioned to benefit from several promising projects aimed at getting more Africans online.

American tech giant Facebook has partnered with several top telecom companies to build a 23,000-mile subsea internet cable called 2Africa to link 16 African countries to Europe and the Middle East. The connection is expected to go live by 2023 or 2024 and dramatically reduce bandwidth costs and improve internet speeds and access on the continent — three massive enablers for Jumia’s revenue growth.

Jumia reported first-quarter earnings on May 13, and the results show resilience amid the COVID-19 pandemic. Annual active customers grew by 51% to 6.4 million, while marketplace revenue grew 22% to 19.1 million euros ($21.48 million).

Comment on LinkedIn Feed

My responses to some comments

#1…It is important that those who have different views on Jumia are not seen as bad people. Before Jumia, there were Kalahari, Mocality, etc and all ended up in bankruptcy. People were simply telling Jumia one thing: ecommerce as a solo focus has never worked anywhere in the world.

Amazon was a lousy company before AWS and without AWS, Amazon may not be worth half of its current value. The good news is that Jumia is listening and adding those things people told it. For years, analysts wrote the same thing people wrote about Jumia on Amazon. Amazon responded by bringing a double play in AWS.

Amazon ecommerce changed retail. But AWS changed global technology forever.

Between 1994 to 2006 when AWS launched, Amazon stock was FLAT. It was when investors saw AWS impact in 2008 that its stock began to rise. When you write Amazon without that double play context, your readers may not see the big picture. Jumia as a pure play ecommerce has no future but with JumiaPay it is promising.

#2: To know those plays, I will go to things that would improve marginal cost since that is a huge determinant of scaling. Marginal cost = transaction cost + distribution cost. When a play adds payment, you reduce transaction cost. But the distribution cost is all atom (i.e all meatspace friction) which becomes harder when there is no national postal service. So, any 3rd play would be all players coming together to build a national postal network. If they do that, ecommerce will pick up in Africa. Unfortunately, no investor will give any company that type of money.

Intel is a fascinating company and a global innovator. But the news now is that Intel is no more the king as Nvidia has eclipsed it as the U.S. largest chip maker by market cap.  Blame TSMC, a Taiwan-based semiconductor contract manufacturer, for that. Despite the brilliance of Nvidia in making chips for gaming, AI and datacenters, the biggest factor remains that TSMC has created a new domain that could enable disintermediation of Intel.

In a surprising development in the US semiconductor industry, Nvidia has beaten Intel to become the most valuable chipmaker in the United States for the first time.

The company’s shares rose 2.3% on Wednesday to a record $404, to push its market capitalization to $248 billion, $2 billion above Intel’s $246 billion value, according to Reuters.

US chipmakers have suffered a hit following the emergence of COVID-19 that resulted in the S&P low on March 23. But Intel was coming out of it coldly while Nvidia has enjoyed a relative growth that has put it ahead.

Intel’s stock has lost almost 3% in 2020; Nvidia’s witnessed a 68% growth. The growth has been attributed to the evolution of remote work by investors who believe that the coronavirus pandemic will continue to spur Nvidia’s datacenter business to fast growth

Yes, Intel used to run the most advanced chip factories in the world, and companies depended on it for the most advanced chip designs. But with the advancement of TSMC and Samsung Electronics, companies can practically do the other thing Intel does: chip design. That means, they design and ask TSMC to manufacture. The ability to do that via TSMC without investing in foundries is a new level of disruption for Intel.

Apple had taken its Mac chips from Intel, and would design and fabricate with possibly TSMC or Samsung since other players like GlobalFoundries remain weak. Other companies will do just that. As that happens, the largely closed system of Intel will begin to make way for the ARM business model. Provided there is TSMC to make the chips after circuit designs, most companies will go all the way to designing internally and sending to TMSC to fab.This was not possible in the past as TSMC was weak, but over the last few years, TSMC has evolved to be as good as Intel, if not better.

Simply, TSMC produces advanced chips that can match, if not surpass, Intel’s foundry capabilities. With that, Apple thinks it can design the Mac chips, and get the outside contractor to manufacture them. That saves it a lot of money in a business known for relatively low margins when compared with Apple mobile business.

More so, having Apple mobile business and Mac within the same chip architecture opens a better interoperability where your Mac becomes an extension of your iPad and iPhone, and vice versa. It un-bundles the mobility business, and opens a new age in what Apple can do at homes, on the go and offices. This is the grand unification of Apple business and the beginning of a new dawn of fandom.

Simply, Intel has to solve TSMC flank attacks even as it looks for ways to defend its castle from AMD and Nvidia. If not, the Apple Mac effect will become more common.

The Apple’s GRAND Unification And New Age of Fandom