In 2016, after leaving my full-time job to start a creative agency in a spectacularly ill-timed move, I found myself briefly working as an Uber driver to pay my bills. I met a few people who were also owner-drivers on the platform and we developed a loose network, sharing tips about bad roads, routes with traffic and fare surges. Just before I quit driving in November after scoring my first client, the others told me that they were planning to leave Uber and join this great new platform called Taxify. Competition was lower, fares were higher and the qualification requirements were not as onerous as Uber. They were going to be rich!
Over the next couple of years, I kept in touch with some of the guys, and they soon moved on to another ride-hailing app called Oga Taxi. Oga Taxi was great, unlike Uber and Taxify, they were rubbish! Soon Oga Taxi became rubbish too, and many end up using all three apps. Last week by pure coincidence, I booked an Uber that turned out to be one of my old ride-hailing brethren, and he excitedly informed me that he was moving on from those yeye Uber and Taxify to this exciting new app allegedly owned by Davido called Gidicab. With no irony whatsoever, he proceeded to describe why Gidicab would make him rich where Uber and Taxify did not.
Duplication Instead of Disruption
I did not have the heart to tell him that six, half a dozen and 18 divided by 3 are inevitably the same thing, regardless of the marketing budget and hype surrounding them, so I let him enjoy the euphoria. In any case, I reasoned that what he is doing and what the ride hailing apps in question along with lot of Nigeria’s tech sector are doing are not so different. They both hop onto waves hoping to extract value instead of actually coming up with a solid new idea to create value. First there was Uber, now there are god knows how many ride hailing apps competing for a market that is not as big as everyone seems to think it is. There was GOkada, now there is ORide, MAX and an indeterminate number of copycats coming up shortly.
There was Interswitch and Paystack, now every other person seems to have created a payment processing system, doing exactly the same thing as each other, only competing on price or marketing spend. First Jumia and Konga had a proper crack at ecommerce in Nigeria, then everybody tried to open an online store. It does not seem there is actually tech innovation going on, so much as merely tech business expansion. If Nigerian tech entrepreneurs are not cloning an existing app, they are taking an existing offline business and slapping a sometimes ill-fitting app on it – Tech!
That is not to say that reproducing an existing business model and finding a space in the market is not good business practice (I myself run a copywriting agency, which is not a disruptive business model by any stretch of the imagination). What it does mean though, is that there is very little change of an African Tencent or Rocket Internet Group developing out of Nigeria’s tech space. Not just because of a funding and infrastructure deficit, but because the thinking within our community is restricted to reproducing what has already been done, with the bulk of our creative thought going into marketing.
It also means that tech firms in Nigeria are not ‘startups’ in the true sense of the word because they are not creating their own market demand. They are merely competing on price and visibility with a plethora of exact substitutes within a market that is smaller in both absolute and proportional terms than Kenya and South Africa, the other two African powerhouses. Ecommerce giant Konga had just 184,000 active users in 2016, and still has less than half a million total registered users from genesis. In 2017, Uber had just 267,000 active riders in Nigeria, compared to 363,000 in Kenya (population 50 million), and 969,000 in South Africa (population 57 million).
These figures show that a business model based solely on the “Nigeria has x hundred million people and Africa’s largest economy,” statistical hope soup, is a doomed model.
Motion Without Movement
Back in 2016 after exchanging a steering wheel for a laptop, I consulted for a client who wanted to create an ecommerce marketplace. It was not within my remit, but I asked why he thought that yet another ecommerce site would succeed where the two big fish were struggling. His answer was that consumers adopt new apps and platforms based on fads, word of mouth and marketing. Using the evolution of mobile instant messaging from Yahoo Messenger to Blackberry Messenger to Whatsapp as the case in point, he argued that they all did exactly the same thing, but consumers migrated en-masse from one to the next purely because it was cool.
By spending enough marketing budget and hiring the right celebrities and influencers, he hoped to make this site cool. Let us pick through that for a moment. On the surface, the instant messaging migration was indeed driven by viral adoption but that does not tell the full story. Around 2009 when Blackberry Messenger became the world’s biggest mobile IM platform, Blackberry devices were also among the world’s top-selling smartphones. Prior to Blackberry Messenger, Yahoo Messenger was popular because it was available on the Symbian smartphone OS used by Nokia, Samsung and others.
Post-2010 when Google’s Android OS became prominent in Nigeria, WhatsApp – which provided cross – OS connectivity across Blackberry, iOS and Android – became popular. In other words, what actually drove consumer adoption of these apps was an underlying disruptive technology that was cheap and accessible. iMessenger, which had been around all along never achieved that sort of popularity in Nigeria because iPhones were and still remain too expensive for most consumers.
The lesson here is that marketing is not as important as Nigerian tech businesses seem to think. Utility, innovation and pricing exert far more influence over adoption numbers. You might be able to spend N100 million on marketing, but if your offering does not significantly disrupt what is currently available, you will end up with slow adoption, sky-high running costs and dissatisfied investors.
Nigeria might be a ‘big’ market, but perhaps it is time to think like an innovator before looking at the numbers.
David Hundeyin
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