The following are some features which distinguish digital (software-enabled) companies, knowing that most companies are now quasi-conglomerates. That means they exhibit both features. The structural business model of your business will likely bound the monetization strategy from day 1. In other words, you cannot expect to make money like Facebook (or Nairaland) when your business model is structured like Apple’s (or Interswitch). The implication is huge as how you make money drives most decisions you make on products.
Apple can build a top-grade privacy product in U.S. because its business model does not require “selling’ user data. Facebook can do that technically but it would be stupidity to execute that since its main raw material is the customer data. Unless Facebook changes its business model, its privacy will never match Apple’s [that does not mean Facebook cannot create a balance].
That is why when people compare what Apple offers on privacy to what Facebook has, they miss the point. Facebook engineers can deliver top-grade user privacy. But if they succeed, they would all go home, out of jobs. Yet, to show you that it is about business model [by that I mean, growing margins], Apple handed its encryption keys to the Chinese government on its Chinese customers, making it clear that if the pursuit of margin requires playing with privacy, Apple will fall in line.
So, as you begin the monetization strategy on your startup, look at how some ecosystem elements could shape what you can do. Most times, the business category defines the value-trajectory more than anything any accountant/strategist can envision.
Category A
Category B
Software
The product is Free
Users pay (licensed software, Microsoft; software differentiated by hardware, Apple)
Monetization
Third party (via adverts)
Direct payment for products
Scale Drivers
Absolutely network effect
Mildly network effect (growth costs money)
Internet
Absolute internet dependent
Necessary, but not absolute
Marginal Cost
Near-zero
Non-zero cost
Growth Strategy
Very fast (free wins)
Not as fast (marginal cost imposes limits)
Nature
Aggregators (natively internet)
Platforms (builds moats but cannot control suppliers/3rd parties as Aggregators)
This is exciting – two companies with similar business models merging. Typically, in Nigeria, we do struggle on that. Everyone wants to have the title of “CEO”, and at the end, there is no company that remains to have a meaningful one. From Aba to Lagos, Kano to Ife, Nigerian business owners must have a redesign where people understand that merging or coming together is not a sign of weakness. The merger of Senegalese Teranga and HotelOnline to create a stronger traveltech company should inspire us across Nigeria.
Senegalese Teranga Solutions has merged with HotelOnline to create a traveltech industry leader in the global frontier markets. The companies individually had systems and business models that were complimentary and together they now have a cloud-based ecosystem platform for independent hotels – the first of its kind, making HotelOnline a global leader in frontier markets.
[…]
In a joint statement the four founders said “by joining forces we are able to provide a complete solution specifically designed for hotels in frontier markets. The global frontier markets comprise majority of the world’s hotels. But these hotels are yet to catch up with digitization of their operations and markets hence they are the low-hanging fruits.”
Eric Osiakwan, Managing Partner of Chanzo Capital who is an investor in Teranga Solutions and now joins the board of HotelOnline indicated that by coming together under HotelOnline we have the clout to conquer and dominate the hospitality industry in the global frontier markets for the foreseeable future. “I am proud to be part of this amazing global team combining Africa and European expertise and experience considering the tremendous growth opportunities of the merged company.”
Largely, when you do not have a lot of growth capital, the best path to hold your territory from local and foreign competitors may be combining resources. Through a merger, you improve unit economics and most importantly become bigger before clients and customers.
Sure, you do not just have to merge for the sake of merging. The message here is that merger is a very important element of business systems. Recall how some banks during the Central Bank of Nigeria capitalization phases, many years ago, went under because the owners simply refused to merge their banks with other banks. Yes, when a big man merges with another bank, he would be unable to use the phrase “my bank” because he does not control all aspects of the institution, they reason! Yes, the same person would praise the durability of generation-shaping banking institutions in U.S. and Europe. Unless we are ready to do what they do there – combine resources when necessary – we cannot make progress in our economies.
From government and trade association data, more than 79% of Nigerian companies collapse within three years of establishment. It is possible that with merger and (possible acquisition), we could salvage more value from those entities.
The best job right now is the job you have now. That is very important. Do not make the mistake of thinking that you can resign tomorrow and become Dangote. More than 79% of new businesses collapse in Nigeria within 3 years. So, the system is not that easy. You can open a business in Lagos and operate for two years without one kobo of revenue.
The Benefits of Mergers
Across markets, it has been clearly understood that mergers deliver great benefits to companies and economies when done appropriately and strategically.
Economies of scale.
Tax benefits.
Financial resources.
Entry in global markets.
Growth and expansion.
Helps to face competition.
Increase in market share.
Increases goodwill.
Research and development (R&D).
Miscellaneous advantages.
All Together
As you create value for your stakeholders in Nigeria, be watchful where merging with another entity could open up more opportunities. Teaming up with others, when done correctly, opens many new opportunities in markets. Titles do not build empires – capabilities do. Mergers do bring capabilities in markets.
Sure – men cannot talk at beer joints that they hold the titles of CEOs and Managing Directors post-partnerships in some cases. We like titles – a lot. But we need to understand that they are ephemeral. It is far better for three shoemakers to make progress when one is indeed a CEO, another is focusing on production while the other is driving sales/marketing. While the egos may be muted, the bank accounts will grow. And as the banks see the growing scale, those loans will begin to come in because they are seeing better digits hitting the bank accounts.
Another key thing to know is that merger could help you to avoid the destruction of value in your market. That is why I still believe that Uber and Lyft would merge one day as traditional car companies rattle them with avalanche of competition: “As they become peer-competitors and rivalries, they will destroy the sector. Similar rivalries have ended together: Elance/Odesk (now UpWork), Groupon / LivingSocial, Sirius / XM and Rover / DogVacay. Please add DraftKings and FanDuel in the list”.
LinkedIn Feed Comment
I believe a lot of work needs to be done, in making the business owners understand the mathematical and economic meanings of this simple but complex word called – PERCENTAGE.
Actually, 100% percent is not always bigger than 5%, there are countless businesses whose 1% share is far bigger than the famed 100% ownership and control, which our small business owners are always in love with.
A mind shift is needed in our business space; with the refined and elevated mindset, we can better understand and appreciate the immeasurable benefits of coming together to achieve something big.
There are thought processes and ideas that are very difficult to place a price on, by joining forces, some of these valuable resources would naturally come the company, without needing to spend fortunes in search of great talents.
Mergers and acquisitions when properly done, would help to erase the ever-present stunted growth syndromes that are prevalent and palpable in our market space.
Forbes Africa went out to look for agtech innovators. My company, Zenvus, was selected as one of the top three agtech innovators in Africa by Forbes Africa. Forbes Africa spoke with me few weeks ago. The piece is out on print. The skinned web version is here. The magazine also quoted me, noting: ””2020 to 2030 will be the decade of agri-tech,” Ekekwe tells FORBES AFRICA.’
The new innovators talking tech to power in Africa’s agricultural economies. Could they be the future of farming and the continent’s path out of poverty?
Picture this: remote rural Africa, where communities assiduously farm vast stretches of arable land not knowing anything about digital technology or drones that can transform their lives.
Now picture this: forward-thinking innovators and entrepreneurs who swap the city for the village and lend these communities the tech and savvy to change farming – and their fortunes – forever.
Agriculture, the mainstay of Africa’s informal economies, needs a facelift, and some new faces to talk tech to power. Agri-tech is the buzzword, and we profile three innovators spearheading change in their communities. They grew up on these farms, and knowing their earth best, have created the technology they need, in turn revolutionizing agriculture, from the little corners of Africa.
About Zenvus
Zenvus is a pioneering precision farming technology company that uses computational algorithm and electronics to transform farms. Zenvus collects soil fertility and crop vegetative health data to deliver precision agriculture at scale. It then uses the aggregated and anonymized data to deliver financial services to farmers.
NB: There are some errors in the piece. Zenvus was founded in 2015 with USAID fund, not 2011.
Across Africa, governments are converting abandoned public buildings into technology makerspaces and hubs. There is nothing wrong doing just that. I support them. But when they add the statement – “We’ll create Silicon Valley here”- in different fashions to those initiatives, I get very concerned for the lack of basic understanding of what it would take to have a Silicon Valley.
Pursuing the vision of creating Silicon Valley is noble. Everyone needs one, from Nairobi to Kigali, Kampala to Lagos, it would help, as we strive to diversify the African economy. But the plan by Lagos State to actually create Silicon Valley within “18 months” in Sabo Industrial Estate got me laughing.
The Lagos State Government said on Friday that it had concluded plans to transform the Sabo Industrial Estate in Yaba into a technology hub and a silicon valley within 18 monhs.
The state Commissioner for Science and Technology, Mr Hakeem Fahm, made the disclosure at the 2018 Ministerial Press Briefing in commemoration of the third year of the administration of Gov. Akinwunmi Ambode.
Fahm said that the transformation meant that a new set of entrepreneurs and innovators would be raised to address the challenges confronting the Information and Communication Technology (ICT) sector.
Mr. Commissioner, you cannot create Silicon Valley in Lagos within 18 months because there is really no formal zip code called Silicon Valley. Silicon Valley means 24/7 electricity, better schools, good roads, excellent teachers in schools, smart regulations, healthcare systems, security and those things no one wants to deal with in Nigeria.
Once you can produce those, Silicon Valley would evolve. No refurbishing of abandoned buildings or building useless fancy offices will create Silicon Valley if you do not have electricity, pay health workers to avoid strikes, etc. In Silicon Valley, their leaders visit hospitals in Silicon Valley and not those in London, Paris and Baltimore. That means, the hospitals in Silicon Valley work, and they pay workers, preventing strikes.
I do not want to discourage you, but remember that the Federal Ministry of Science & Technology has many “Silicon Valleys” in nearly all states in Nigeria. Yes, find abandoned government buildings, ask a contractor to supply computers, get some young people to go there daily, and magically you have a Silicon Valley. It is irrelevant if those young people have electricity to power those computers.
Of course, go ahead and re-build Sabo but there is no need to add “Silicon Valley” to the initiative. Adding Silicon Valley complicates a noble vision which is to add facilities which any decent community should have. Let us just focus on such before we begin the unhelpful comparison which adds no value.
Sabo will be fine to be Sabo (Lagos State) in 18 months. It does not need to be Silicon Valley. It simply needs to be a community with good roads, constant power, decent schools, solid security, good hospital, etc. If you make such happen, you have done all you need. The rest belongs to the promise of the future – no one knows. Possibly, Sabo could be Silicon Mars because it makes better sense than a Valley. Yes, Sabo boys and girls can go to Mars but it may not be in 18 months.
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Politicians and their acolytes, they have once again activated the ‘reverse thinking’ or ‘inverted thinking’ mode, with one clear feature always present: lack of understanding about that is being copied or mimicked.
We have a Nollywood, with no physical address, but trying to mimic Hollywood; this time, it’s about renaming enclaves to ‘Silicon Valleys’, as if a name suddenly makes magical transformation, without the hardwork therein.
The fact that many of those in public service only see and understand tech innovations through the lens of ‘ICT’, says a lot about how knowledgeable they really are. Until they first learn to appreciate technology from the wider lens of knowledge economy, and do away with the already stale and mundane use of ‘ICT’ to convey their ineptitude about what tech innovation truly demands, in order to thrive; we may be stuck in this regurgitation for ages.
Sabo doesn’t need a ‘Silicon Valley’ emblazoned on its forehead in order to thrive, rather it needs just a change of mentality: knowing what needs to be done first, and then going ahead to do those things.
Webmaster Note (N.U): This event has sold out. Please contact us for a new workshop we plan to run in Lagos.
The ITNews Africa, a South African publisher, has called me a “doctor of innovation”. As they were creating a new product – the “African Innovator Magazine” – they knocked at my door. The London-based Planet Earth Institute, a non-profit chaired by a former UK Chief Secretary to the Treasury, has recognized me as an “African science and technology pioneer”. From TED fellowship to the World Economic Forum’s Young Global Leader, through my doctoral degrees and master’s degrees, to my works on iPhone sensors, innovation has been my only strategy. I teach innovation, from South Africa to Vietnam, from Kenya to United States, and beyond. And on the pages of Harvard Business Review, I have been writing on innovation for years. And I live innovation in my businesses and we have won awards because we delight customers.
This September, I will bring an innovation workshop to Nigeria. I always come to Nigeria to lead programs for banks, insurers, technology companies, governments and more. The cost is above industry pricing, making it very hard for some firms to afford to host me solely.
To solve that, I am going to run an open [anyone can pay and attend] workshop for three days in September. The cost is N800,000 ($2,300) per participant. The venue would be Lagos.
State of the Tech Nation – This address will discuss Technology, Opportunities & Unlocking Wealth in Nigeria
Workshop Structure
To innovate is to set a new basis of competition in an economy, business sector or market. Typically, it results to disruption. This workshop will focus on innovation and growth because growth is the reward of innovation. Otherwise, that innovation is actually an invention. I will be the lead instructor with my supporting crew. The table below provides the workshop structure.
The Category-Kings Benchmarking [Local & International]
Innovation Execution
Who should attend?
The workshop is designed for mid and senior leadership teams. These include CEOs, VPs, directors, technology, sales, marketing, strategy and finance leads in all business sectors. The workshop is aimed at:
Companies looking for new growth areas and products
Companies with potential, ambition and capacity for high growth
New company owners, founders and entreprenuers who want to build robust businesses.
Existing companies who want to engineer innovation within existing enterprises
Startups and their leaders who need directions on roadmaps and strategies
Governments and policy makers working to stimulate innovations
How to Register
There are two ways to register – either method works for us.
Make a payment of N800,000 to any of our bank accounts here [you can also use Interswicth and GTPay, though you can just make the transfer to our bank directly]. Once you make payment, email the contact below.
Make payment via Paypal using our FASMICRO U.S.A. merchant account for $2,300. Once you do, contact the email below. Use this link here to process the payment via Paypal.
Before the Program [Your Innovation Roadmap Brief]
Once you make payment, my team would reach out. We would need at least a two-page document frOm you, explaining your business (or function) and the challenges you are having or what you expect. Using the insight, we would develop an Innovation Roadmap Brief which will be sent to you before the program starts. That document would form a part of your Lab during the workshop. Our workshop ensures we look into your business (or functional role) and you leave our program with clarity on execution.
Venue
This event will take place in Lagos (Nigeria), September 2018, in a leading hotel. We would share with registered participants.
Expected Outcome
My goal is that after this workshop, you would have a clear roadmap to execute innovation at a company-wide or functional level. My workshops are intense, practical and interactive with local cases flavored with international examples, making sure you are global-aware even as you plot a gloCal strategy (see my Harvard piece on this]. I will focus on the growth of your business (or your functional role), and I expect you to return to work with clarity on how to make innovation happen at scale.
First Come, First Serve
We have limited space. Once we reach capacity, we would stop accepting participants. So, register immediately. You can also inform my team via email to reserve space immediately while you seek approval for payment [they typically give a time frame for that].
