On Tuesday this week, courtesy of indigenous online e-commerce giant Konga.com, I was invited to see a screening of Porter Erisman’s Crocodiles in The Yangzte.
It is very much a behind-the-scenes look at the founding and rise from $0 to $100B of the startup over 11 years of Alibaba.com Group. It is essentially a David Vs Goliath Story set in 2005, of a non revenue generating, $25M VC-funded local champion vs the most valuable internet company of that time; Ebay. Porter, who was an executive at Alibaba for 8 years, charts how a great company culture, locally focused product development and a fierce belief in your local market can withstand and defeat a massive global competitor. A $50B+ valued global player.
What I took away from that meeting was a sense of fear. A sense that whereas other BRIC countries are dominated by local champions across their big internet market verticals, Nigeria is at risk of being left behind. Across the BRICs, the funding may be international in nature but the actual startups were founded by local people. Either re-pats (those whose countries of origin is Nigeria but schooled elsewhere – myself as a classic example) or people who had grew up in their native country. The Nigerian internet ecosystem is developing differently. The most well funded and potentially dominant players are Rocket Internet, their brands and hundreds of millions of venture capital. Corporate venture capital.
This is bad for the ecosystem. Plain and simple. Rocket Internet import executives from Europe to essentially copy and paste business plans centrally sourced and controlled from the Paris or Berlin motherships. They are hyper aggressive at forcing money into things which a fledging ecosystem cannot support at early stages. They claim to have done an interesting job at fast forwarding internet adoption and attracting users online; at bringing the spotlight to Nigeria. I don’t buy that. Facebook has spent next to nothing in Nigeria yet has 12M users here. Nairaland has 6.5M uniques and didn’t need TV and billboard blitzes to get there. So their contribution to the ecosystem, I would say on balance, is negative. Think an explosion in salaries of talented internet executives and 100%+ 18 month increase in the customer acquisition costs. Facebook, Google et al. All costs have exploded. How does a lightly funded local startup compete with that?
Some might point to the revenues Jumia generates, but I am very sure the net revenue figures are not as great as they should/could be. I feel if they were true execution demons, Konga.com wouldn’t have stood a chance. But yet there goes Sim Shagaya, giving the hundreds of millions of dollars from Rocket a real run for their money. This is slowly becoming a story very similar to Alibaba Vs Ebay. Ingenious Vs the Europeans. Dollar for dollar I’m almost certain Konga.com out executes them. And I have told the Africa Internet Holdings folk that.
We are at the cusp of losing the key internet 1.0 verticals to non indigenous players. This is something which would be dire for the ecosystem at large. Rocket has never invested in a company outside of something they created themselves. Talk to Bastian, Sim, Chika, Tayo (from Paga) and I; we all share a fondness for the ecosystem, for Nigeria and when we see further liquidity, will circle our millions back via angel investments throughout the ecosystem, because this is our home. We are not going anywhere.
My simple thought. Our fathers lost the Telecoms, PayTV and other technologically driven industries to foreigners. Let’s not make the same mistake and lose our internet industry. That is largely the reason why I started Spark. I welcome any other local players to invest in early stage Nigerian startups. To support the product development which enables us to be in control of our own internet story.
Let’s force them back into the Lagoon.
“We shall not flag or fail. We shall go on to the end. We shall fight in France, we shall fight on the seas and oceans, we shall fight with growing confidence and growing strength in the air, we shall defend our island, whatever the cost may be. We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender, and if, which I do not for a moment believe, this island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God’s good time, the New World, with all its power and might, steps forth to the rescue and the liberation of the old.” – Winston Churchill
[Photo Credit: CharlesFred via Compfight cc]
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