. . . the first day we put an account number on the website, we got an alert. – Nigerian founder
In my wandering across the interweb, I came across this nugget of wisdom, which I would like to share.
You’re not a real business until you get paid. Pre-revenue, your “startup” is just a hobby. If your startup is venture-backed and a registered business but has no paying customer, then it’s just a glorified, well-funded and registered hobby.
A conversation about comedy in Nigeria
Last week, I was having a conversation with my brother, Obi, and he made a really interesting observation. He said, “Before Alibaba, comedians in Nigeria were a joke! He transformed comedy into a business.” I found this interesting because it helped crystallise some of my thinking around the problem with our startup ecosystem. What we need is a monster hit. Alibaba came and professionalised comedy; he made it a career. He demanded hitherto unheard of fees and customers paid gladly. We had always had funny people hustling to make a dollar, like the late ace comedian – Gbenga Adeboye. Alibaba was cut from a different cloth, he showed that comedy did not have to remain a side-hustle or hobby. When President Olusegun Obasanjo invited him to Aso Rock to perform, he inadvertently validated a nascent business model. Alibaba birthed an industry and was the forerunner for so many others like Gbenga Adeyinka III and Basketmouth.
In a similar vein, Jay Jay Okocha and Kanu Nwankwo did the same for football, elevating the sport from the sole preserve of ne’er-do-wells to a viable career path for talented children. There were many before them but in a sense, you could say they were the first to BLOW! By doing so, they made it possible for others to follow in their footsteps.
The blind leading the blind
It’s true we have Jason’s Iroko, Tayo’s Paga, and Sim’s Konga. These are huge startups which are apparently creating value for their customers and investors. The operative word here is apparently. These three behemoths are private companies and while we have a ballpark idea of how much they’ve raised from VCs, they are under no obligation to share their financials in the public domain and so they do not. Those who are interested have no recourse other than to make educated guesses. Today we hear Iroko raised $$$s, tomorrow we hear inside sources claiming Konga is losing $$$s. Next we wonder why Paga with all their $$$s have not managed to crack the product/market fit for mobile money in Nigeria. From the outside looking in, it is a case of the blind leading the blind. Wouldn’t it silence all the naysayers and second-guessers if one or more of these companies had gone public at a multi-billion naira valuation? I think so.
What makes a “Monster hit” and what can it do?
I recall the very first time I heard Coolio’s Gangsta’s Paradise, Boyz II Men’s Cooleyhighharmony, 112’s Only You, Puff Daddy’s (yes, he was still called that back then) Missing You and more recently 50 Cent’s In da Club. I immediately knew these were going to be hits. Maybe you did too. The question here is what makes a hit a hit? I strongly doubt it is my approval alone that catapulted these songs to hits. More likely it will be the approval of millions of people like me who heard the songs are went out to buy them. Commercial success.
Bringing this home, let us talk about Remedies, Tony Tetuila and the Plantashun Boiz. There were singers before them but none quite like them. Their hits fuelled an industry and built Kennis Music, the Cc Hub of the music business. Tu Face’s monster hit, African Queen raised the bar irreversibly. It taught music lovers to demand better and it encouraged artists to do better. His success also made a career in music seem like a viable pursuit. Now the local music scene is recognised as one of the most vibrant in all of Africa.
The missing ingredient
Omobola Johnson, the Honourable Minister for Information and Communication has been spearheading efforts to bring much-needed credibility to the tech ecosystem. Last year, she and a few selected startup founders junketed to Silicon Valley for a show and tell. The aim was to learn from the alchemists in Silicon Valley how to create global IT companies right here in Nigeria. Awesome initiative. The Federal Government of Nigeria is backing an established Silicon Valley VC to make investments in Nigeria’s startups. There is also Co Creation Hub which in addition to its socially-aware initiatives is working with several fledgling startups to find repeatable business models. The list is seemingly endless but there’s one thing you will not find even if I kept reeling out initiatives, partners and events for an hour still – an exit.
Before you bite my head off, I would like to acknowledge Chams Nigeria Plc and Courteville Business Solutions Plc (the folks that brought you AUTOREG). These are technology firms but somehow, they don’t quite fit the bill as startups. The same goes for those in the Computers and Technology (IT) category on the NSE. Courteville definitely had humble-ish beginnings but they never quite identified with the ecosystem even though I see they have moved to Yaba. I think this generation of founders needs its own set of success stories.
Show me the money
Success stories, beyond press releases about VC funding, do something almost magical to an ecosystem. A huge exit for one startup will go a long way to legitimise everyone’s efforts and raise the profile of all startups in lockstep. Success stories are great because they unambiguously signal to investors that there is value being created and the pie is big enough to go round. Success stories make the initial decision to work at a startup less heart-wrenching for many. They help parents manage their anxiety somewhat when their child tells them she is turning her back on Corporate Nigeria and embracing the life of a startup founder. Of these, the most critical is the parental pressure bit. Just kidding! Of course, it is the investor angle.
Because. . .
When local investors start to take Nigerian tech startups seriously, we will see a real and sustained change, akin to what happened in comedy and football. We will attract higher quality founders and we will have more startups working on truly interesting problems. I strongly believe the main reason why so few startups are working on original and innovative ideas is the fear of failure. Not just because of the ‘intangibles’ like the stigma of failure and the reputational damage. You see, most startups are self-funded and founders are usually betting the barn on their startup’s chances of success. With stakes that high, who has time to dilly-dally with innovation? Much better to airlift in a successful idea and apply it to the local market.
Finance guy, volunteer teacher, unsigned blogger, and high functioning recluse. Interested in business strategy, new ideas and capital formation.