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The OPay’s Massive 1% “Tax” on Nigerians

By
Ndubuisi Ekekwe
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5

OPay has hit Nigeria’s legendary “long” gestation period before a business can turn a profit. Because you are your own electricity board (via your generator), your own waterboard (via your borehole), your own police (via your guards), etc, you have many inefficiencies in the utilization of your factors of production. Unlike in the U.S. or Europe, where your real challenge is growing the business, in Nigeria, you have to deal with orthogonal matters that may trip you the whole day. Yes, the generator man forgot to buy diesel and now there is no light to power the laptops!

So, for OPay, a platform fintech, which began life with the American startup playbook with the typical unlimited ocean of capital, it is looking like things are not working out. That explains why the company has become another “tax agency” in Nigeria by taxing its customers. But unlike the government tax agency where Senators can easily approve bills they have not seen, OPay does not even need Senate: it wakes up in the morning and changes its fees. 

People, we have an OPay double clip (hello Ireland and Amsterdam double dips, sure for tax reduction techniques). It involves wasting N45 for first transfer of your money from OPay wallet to your bank, and then 1% flat fee subsequently. The  1% was after a revolt by the believers; the company had set it at 2%. At 1%, every bank in Nigeria at our regular N52 flat fee offers better value.

OPay is facing perhaps its first-ever backlash from customers. On Tuesday, users found out they had to pay a 2% charge for transferring money to other banks, at a minimum rate of N15 per transaction. OPay apologised for not communicating the increased fees to its customers. The company then revised the fee to N45 for the first transaction a user makes in a day, while subsequent transactions will incur a flat 1% processing fee. (TC Daily)

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!

Sure, OPay may be using these fees to deepen intra-Wallet transactions where everything stays in its ecosystems. In other words, provided no one is transferring outside the Wallet, no fees will be incurred by the users.

But this redesign is actually good news in the ecosystem: it validates one thing – OPay is not doing magic by making costs to disappear. With the subsidized rides on ORide, OBus and OTrike, one could have imagined that this company was not under the gravity of high cost of doing business in Nigeria. But hello – OPay is just typical. It is being normalized in the beautiful nation. If you think you can achieve what took Paga about ten years in 18 months, Lagos Lagoons will welcome your ideas and OLX, Efritin, etc may be like peers in the swimming rivers.

Uber Follows Amazon, Unveils Ad Business

By
Ndubuisi Ekekwe
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0

Uber needs profitability because its public share price has become an international yoyo, about 50% less than its last rumoured private valuation. One new plan in the playbook is to run adverts in its UberEats. If that becomes successful, Uber could make a strong case that its future is assured before those concerned investors.  Interestingly, selling ads in UberEats is a great vision because it is likely going to be far more effective to tell someone who is looking to eat, a place to eat, than showing ads to someone, as Google does, who may just be researching “eating”. My point is this: merchants and owners of restaurants may get better value on UberEats that whatever they get on Google.

Uber will become an ad platform, selling space inside its Eats app to restaurants hoping to lure in more food delivery orders. A recent Uber job listing spotted by TechCrunch seeks an Uber  Eats Ads Lead “to lead the team and efforts responsible for creating a new ads business that enables eaters to discover new foods and restaurants to grow their customer base.”

An Uber spokesperson confirmed the company would be entering the ads business, telling TechCrunch, “We are exploring relevant ads in Eats.” Selling ads could help it improve margins on Eats, where it only takes 10.7% of gross bookings as adjusted net revenue because it pays out so much to restaurants and drivers.

This mirrors the Amazon playbook where the ecommerce giant sells ads in its ecosystem. The Amazon ad business remains a very big growth area in Amazon, and is systematically picking some market share from Google. Yes, over time, merchants have realized that Amazon ads business has a better conversation ratio than Google’s. It does make sense because the Amazon visitor has come to spend money unlike Google which shows ads to visitors who may be visiting for something unrelated to shopping, relying erroneously on search keywords.

As Uber moves deeper into adverts – “The effort is separate from Uber’s own marketing efforts that see it spend more than $1 billion per year to recruit riders, drivers and Eats customers. Uber will start selling the ads, not just buying them” – Yelp, a restaurant discovering ecosystem, may have new challenges as most merchants may decide to spend money on Uber ads over Yelp. Focusing on UberEats is strategic as the unit is growing very well within the ride-hailing pioneer. You can add this as part of Uber double play.

Uber could use any revenue it can get. This quarter the company lost $1 billion, with $316 million of that loss coming from Eats. But Eats’ revenue grew 64% year-over-year, showing it’s increasingly popular, and could command enough user attention to make advertising lucrative.

As Uber looks for new markets, Google continues to advance its search. The ad leader just unveiled a new feature which makes shopping ads to appear on YouTube’s home feed and search results.

There’s a new kind of ad coming to YouTube . Google  announced today the launch of Shopping ads on YouTube, which lets brands advertise their products and services right in the YouTube home feed and search results. For example, if a user searches for “Puma shoes review,” a Shopping ad may offer a row of suggested products at the top of the page before the video results..

Ads on Google ecosystem

The Double Play Strategy

Getting Your Business Ready for 2020

By
Obinna Obidike
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0

We are in the last quarter of the year.

November is the most important month for any business looking to hit the next year on the front foot.

As a business, how are you planning out your 2020 in advance?

This is that time of the year when forward and smart thinking businesses  roll up their sleeves and map out the entire 2020 campaign.

Implementation of your #Vision2020 should start January 1st 2020.

If you are still trying to figure it out, These should be your focus points;

  • Sales Target
  • Partnerships and Alliances
  • Finance and Budgeting
  • Marketing
  • Social media
  • Content plan
  • Events and conferences

Sales – Setting your sales goals/target early is very important to the survival of your business in 2020. If you have a goal and know where you’re trying to reach in 2020, you can focus all your efforts on finding the best and most efficient route to get there. Without a clear destination, you risk rambling along, wasting time and missing opportunities. Sales goals can be; Bring in 9% more revenue each month, Reduce customer acquisition costs by 15% in Q1 etc.

Partnerships – Businesses decide to form strategic business alliances for many reasons. One of the most important benefits includes developing more effective and efficient business processes in the company, expansion into the new markets, and gaining a competitive advantage in the market.

Partnerships can be horizontal or vertical. Have you drawn out a plan on the types of businesses to partner with for the new year?

Finance and Budgeting – Budgeting plays an important role to achieve the objectives of business by utilizing available resources efficiently. Revenue forecast is the first step in a firm’s budget process, then you have manpower, material, monthly cash requirements, fixed cost and the pro forma financial statements. Ultimately, the closer you stick to your budget, the more progress you will make on your financial plan.

Marketing – Do you take a good and honest look at your team’s marketing strategy every year? … A marketing plan clearly outlines your business objectives and the marketing strategies and tactics you plan to use to achieve them.

Your annual marketing plan is the all-important benchmark for your marketing goals for 2020.

Social Media – Social media is like a garden: If you start out with a plan, tend to it, use the right tools, and periodically clear out the junk, your business will have a thriving social media presence; if you don’t, your social media efforts will wither and die—just like an untended garden. ·

Succeeding on social media is hard these days. But with a well researched social media plan, you can build a real following and possibly covert leads to clients.

Create a social media strategy plan for 2020 now.

Philanthropy – To some business leaders, philanthropy may seem like an “extra” or something you engage in only if there is sufficient time, money, and interest to do so. But, When a company builds itself around a greater mission of doing good, It infuses that passion into their products, services, employees, customers, and shareholders.

Content – Drawing up an annual schedule might seem time-consuming, but there are a number of simple, effective ways to bulk-out a marketing strategy while ensuring that it caters to the specific needs of your business. Use seasonality to your advantage, Dig deeper into your industry, Try and find buried topics of conversation, get your content out there through the various channels.

It is very important to create a content plan that reflects the patterns and behaviours of your target industry.

Events and conferences – These are really valuable ways to expand your knowledge, learn from the success of others, get new clients and tell others about your business.

Plan ahead of time on the type of conferences and networking events your team will like to participate.

2020 won’t work out too well for you if you haven’t fixed the issues that held your team back in 2019.

Have you done yours? What focus area do you need help with?

“The Sermon On fintech”

By
Ndubuisi Ekekwe
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0

It was indeed a festival of deep business and intellectual conversations, as Africa gathered in the beautiful city of Kampala, Uganda, for fintech. At the end of the festival, I have this one to take home. In the morning, I had presented my speech. As I spoke, I went over time (not typical), but instead of the event moderator stopping me, she showed no signs. And because no one left the room or lost interest, I rewired the presentation with more vibes, on the fly, and by the time it was done, she called it “The sermon on fintech”. 

 Thank you Uganda. Thank you Africa. May fintech bring shared prosperity and the rise of ALL, not just a few!

Four Social Media Startups Winning on Uncommon Ground

By
Samuel Nwite
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0

The social media world has thrived under the dominance of Facebook, Twitter, Snapchat, Instagram, and LinkedIn. Their influence is so loud that you wonder if there will ever be a chance for any other social media startup. But there is a new breed of startups scaling through the domineering wind of the giants by doing things differently. The four of them have figured out what is missing in the dominant social media platforms and leveraged on them to pull a surprise.

TTYL

TTYL, founded by Alex Ma and Austen M, with a startup capital of $2 million, invested by Floodgate Fund, SV Angel, Weekend Fund and Shrug Capital.

TTYL makes an iphone app that aims to change how people talk to each other on the phone. The idea came when Alex Ma graduated from the university and felt he had lost touch with his friends. Although they still talked often, but there was something missing.

“I started to feel like I was losing touch with my friends, even though we were texting every day.” He told The Information that he started calling them randomly, and realized that “how we get into phone calls just hasn’t changed since the landline.”

So Alex teamed up with his brother Austen to build a place where people can feel present with their friends and family when they’re physically apart. And so came the birth of TTYL.

TTYL uses Snapchat’s nascent developer platform to authenticate new users and allow them to add custom Bitmoji avatars to their profiles. Ma said the technique makes more sense given the user overlap between TTYL’s younger target demographic and Snapchat’s. Moreover, he has no intention of selling ads so there is no need to collect people’s information: A reason why he chose Snapchat because it collects little user data. Ma said revenue will eventually be generated through optional in-app purchases or through the sales of physical merchandise.

Squad 

Another startup with a potential to scale the hurdle is Squad. Founded by Esther Crawford and Ethan Sutin, the company has raised $5 million through investors like First Round, Alpha Bridge, Y Combinator and BBG Ventures.

The idea of Squad came when Esther Crawford’s 13 year old daughter complained that she couldn’t see what her friend was doing on her phone’s screen while the two of them were talking on the phone.

So Crawford and Ethan Sutin, set out to create Squad, which lets users see what is happening on their iphone screen in real time while they’re video chatting. Squad is using apple’s software for iphone which gives developers the ability to easily capture what is happening on a user’s screen.

Squad relies on scanning user’s contacts list to suggest new friends while it’s working on developing a new functionality to discover new friends.

Over 200 million minutes have been spent on calls inside the app in 10 months of availability. The company commands a large number of young people who are between the ages of 13 and 22, most of them are based outside the U.S.

Squad also uses Snapchat’s developer platform for quick user authentication and because it has no intention to collect user data or serve ads. Crawford said:

“We’re not interested in an ad-based model. We think that the gaming model is much more interesting, where you have micro-transactions and micro-subscriptions. It aligns users with product development in a much better way. Because we want to build little things that you will actually pay for.”

YOLO

Another one is YOLO, founded by Gregoire Henrion and Clement Raffenoux with an investment capital of $2.5 million by A Capital, Bridgewater Capital, SV Angel and Weekend Fund.

The startup is an anonymous social network for young people where they can pose anonymous questions through their Snapchat stories. About five months ago, the app went up to number 1 on apps chart list, beating the odds where similar apps like YikYak have failed.

Like TTYL and Squad, YOLO leveraged Snapchat to pull a crowd of users in a very short time. The app is planning to add a new feature that includes anonymous, interest-based group chats for users who have a common interest: For instance, a workplace or a high school; using Snapchat’s Bitmoji avatars so that users can be identified by their digital avatar instead of their real names.

But there is a challenge! Due to the anonymous style of the app, content moderation becomes a top priority and the company is taking at it aggressively using artificial intelligence. About 10 percent of the messages sent fail to deliver because they are scanned and found to be offensive or hateful. Henrion said it’s a challenge that anonymity has presented.

“The challenge with anonymity is to create a healthy community, and we are doing that.”

Cocoon

Cocoon is the fourth app on the list, founded by Sachin Monga and Alex Cornell with an investment capital of $3 million funded by Y Combinator, Lerer Hippeau, Susa and Norwest.

Sachin Monga and Alex Cornell were two former employees of Facebook who sought to do things differently. Instead of allowing users to connect to as many people as possible, Cocoon narrowed the connections to closest relationships.

Although the app is yet to go public, Sachin described what they are working on as a digital space for close friends and family. The founders have been researching on a couple of things, from how people use apps to physical spaces like the living rooms, and how people interact in those spaces.

The idea is to create a method quite different from what is common in popular social media platforms that can keep family and close friends in a circle. Sachin said:

“We have a lot of latent desires that I think just, given the way everything shook out over the last 10 years, has sort of been left behind a little bit.”

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