Just under seven years ago we decided that we take the entrepreneurial plunge – as some say, it’s like jumping off a cliff and building a house on the way down. I couldn’t agree more.
At the time, the smartphone was a novelty in Africa and we were intrigued at the possibilities of what the future held for Telecommunication, Media and Technology on the continent. Our gut feeling was that internet access will be driven largely by the mobile device. The growth in mobile subscriptions at the time, the leapfrogging of African markets to mobile technology lead by Global System for Mobile (GSM) would continue with broadband being largely available through mobile devices rather than desktops computers as had been the case in the west.
It is with this opportunity, vision and curiosity that we embarked on a journey to create a market that leverages on the connections between people as well as the connections between applications and people to draw intelligence and insights – see our several research reports here, to enable payments through mobile monetization, to aggregate digital content for accessibility on mobile, innovative products and services to enable mobile marketing and lastly but not the least the technology that powers the unique set of products and services. The combination of these capabilities define the raison d’etre for our existence as a business. If and when we are able to deliver on the promise of each of these capabilities and finding the right operational structure to scale it, then we could possibly be on our way to something really special.
To identify these needs, figure out a way to culturally adapt to the local requirements and build a business model that is commercially viable in the long term can be an arduous task due to market limitations and economic necessities which in reality offer us a dose of surprise daily on where things are actually in several markets in Africa.
As stated above, the market is quite independent of our plans as we have come to learn. We have tried out several experiments, failing woefully with many. But because of the dynamism we have luckily built into the business, we have continued to learn invaluable lessons on how important it is to be agile, fast and stay bouncing in the ring if we stand a chance of landing a knockout punch. To have that staying power, the business needs to be generating more cash than its burning. It is super important because of the business environment and the macroeconomics of the continent of Africa. This same point extends to the imperative for agility and speed, to help the business deliver on strategic objectives within the realities of the market which changes without any indicator whatsoever. An example is the macroeconomic situation we find ourselves in Nigeria today, how and when we will get out of it is really up to 70% oil suppliers who are not OPEC members to agree on output cuts, then hopefully price stability between $60 – $80 range. Or we find another phase of growth out of China, India or even Africa. These are the markets where an unlikely growth could trigger resource and natural fuel demand like we have seen over the last 30 years from China.
Both these options are unlikely, therefore firms operating within markets needs to look inwards and solve the problems of the locals by adapting rather than aggregating, without a strong brand or a high willingness to pay. The strategy needs to be in alignment with market conditions, data backed customer needs, not perception and create an aptitude for launching products and services at the right time. With all these you could still be wrong, but what then do you have to fall back on is a dynamic strategic framework that offers a fall back that is multi pronged, complementary and a reinforcing loop of unique activities, which when executed can keep the business going.
As we continue our sets of experiments, failing a lot, learning from them and having successes sometimes, I have learnt that to continue in these turbulent African markets, we must have the staying power to remain in the ring and that’s cash, we should also consider a multi pronged strategy that offers us a fallback in case the public sector policies go against us or the macros just suddenly changes. And lastly, the timing must be spot on, it needs to be backed with data, extensive research and a humility that connects the business with the market realities rather than the fancy attributes we too often import from other markets.
About the Author
Elo Umeh is a Co-founder and managing director at Terragon. He holds a Global Executive MBA from IESE Business School and he is an avid football fan.
