So Jason Njoku got $8m. Now you want to make yours too?


Jason Njoku
Yep, that's him. Copyright http://faraitoday.com/

A few days ago, we got news the Jason Njoku and the Iroko Partners team for $8m in funding. First question a close friend asked was “What are we building? In fact what are you going to build?” I have heard this same question in different forms over the last couple of days. Now I have a question of my own.  Actually, I have questions?

  1. Must you build?
  2. Why are you building?
  3. What are you bulding?

To put these questions in perspective, I’m mostly asking: now that you want to do your own startup because Jason Njoku got $8m in funding (and you want to go get yours too), what exactly are you thinking?

I’m not going to go into the whole argument of what to or not to build, there’s EContent and Afrinnovator for that for that.

I’ll want to point out that Njoku/Iroko did not begin in one day. You just don’t get up to build something because of Iroko – it’s great to feel inspired, and indeed we all are, but there’s a name for jumping in that excited, inspired state to build ‘that app’ just because – it’s called suicide. Maybe there’s a softer name. Maybe it’s knocking your head in with a wooden mallet, which is sure to put out your lights for at least week and half, but it’s just not the thing you’d like to do.

There’s at least a million things to think about in order to build a successful app or startup. You won’t and can’t figure them all out in a day. You will need to put a decent, emotionless amount of work into the thinking process. You’ll need the equivalent of a ballistics resistance test on your idea before you even begin building – you take the idea out to the shed, setup a firing range, unload a few magazines of lead into it. If it survives, take it out again, do same with a business hat on. If it survives, then maybe you can start building.

Why is the business idea so important? In all of this hoopla, it should not be forgotten that Njoku didn’t sell an app or a complex, built up product. What he sold was an idea, a business plan! If your app or idea does not cut the business mustard, you are not going to see a dime. Because the funding is NOT free, funders will need to know that they will make money from their investment – I’m going to emphasize this, funding is AN INVESTMENT. This is why Njoku isn’t closing down his street for a major owambe anytime soon.

Here’s a few thoughts if you’re sure you are ready for that startup.

Be ready to not make money – yet. In fact, be ready to lose money. It’s important to not think your startup will magically start making money from Day 1.

Recognize the local environment. A tip on this is that the biggest impediment to monetization of apps and startups in Nigeria is payment systems. Ask any business minded developer, or startup owners. Until a mainstream payment solution is available for those little payments you need to collect from your app, most apps will not be profitable. Unsurprisingly, the big problem the Iroko team is still trying to nail is the “monetization problem”. The monetization problem has NOT been solved yet!

What to build? You could begin from where you know, where you have strong background knowledge. If you grew up in Alaba, think Alaba. If you know SMS, think SMS. You could then work it backwards, from the known to unknown. Of course this is not the Law of Moses, but it’s a bit of common sense.

Read. It is possible someone may have thought about that bright idea you have and walked away. Do you research. You just may find why the person walked away, or crack the kink that drove the previous idea owner off the land.

What this blog isn’t saying is for you not to build your app or startup – that’ll make me an effing idiot, you see. What it is saying is, think through it before you begin. Don’t do it just because someone else did, or you want to make money like Iroko Partners. Do something ridiculous, that actually makes sense, and maybe then, you can ask Jason how to get funding.

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editieffiong

#TeamAnakle Developer: business and code. Nigerian - Personal views

20 thoughts on “So Jason Njoku got $8m. Now you want to make yours too?”

  1. With all due respect, I think we should all allow people to make mistakes and plenty of them. Because Jason is a success (so far) does not mean we must all follow that path to success. The best shooting range to test your ideas out is the market and the more honest failures we have out there the better we will all be for it.

    Our problems have never been with the ideas, it has been with exposure and experience. Lack of exposure and experience also means that we also never learn how or when to scale. Startups exist to scale and Jason’s funding is meant for him to scale.

    We must look for ways beyond just cash to be able to scale. Monetization is a problem but cant startups solve that problem and collaborate with other startups who need them? Biggest problem in our market is that we never know when to imitate or emulate, compete or collaborate

    1. Hi Victor. Great POV! This is why this remains an open conversation.

      However, the support systems in out local ecosystem are quite limited, making the consequences of mistakes more dire. However, that should not kill the need for experimentation and ultimately, “mistake making.”

      That said, the piece is mostly addressing the knee jerk rush to build something with one single expected outcome, based on one event. As you said, this can’t be sustainable. Yes, the solutions to our problems may lie with us, but if you see the current developments in the Mobile Money space, you see why we need to be more strategic.

      1. I agree with you that support systems are inadequate or as I would say not obvious. The best support system is usually an ecosystem of peers and collaborators even competitors.

        I went to San Francisco 3 times in 6 months and there was something about the place that kept on being reinforced each time I went there, it was the simple fact that the ecosystem is larger than technology itself. It is also about the business then it is about respect for each other and not contempt or childish rivalry.

        Respect in SV comes from earning your dues, it is about having been in the arena and learned valuable lessons which you can share with the rest of the ecosystem. Sadly in our case we see failure as a stigma rather than a badge.

        I have run my business to the ground before, fired everyone then pressed the reset button. I have also seen friends fail and get back up again. I have seen someone go from a billion to one thaousand and back up again.

        Issues you mention in the mobilemoney space are a symptom of fundamental lack of experience. Because you get your product out there first does not mean it will be the best or most successful. This is trench warfare and it is not won by propaganda.

        We have been in that business for a decade or more and have the largest team supporting mobilemoney platforms on the face of the earth but we have learned one thing from previous experience. Let your results do the talking and scale! scale!! scale!!!

        We only learned this because we have seen others fail and we continue to learn more from our own missteps and the mistakes of others.

        Mentors exist not because they dont want you to make mistakes, they are there to share the mistakes they made. There is no perfect startup and we will all learn both from our mistakes and those of others.

        I remember a soap advert when I was growing up, it said “When children play, they get dirty. Let them get dirty, because getting dirty is part of growing up. We should leave pedagogical models of learning behind and allow experience take over. We have a huge market to learn from and hopefully a large sample size of entrepreneurs.

  2. If you have never sold software or products online, then don’t build a startup and don’t build a nigerian focused startup. That would be my advice. First spend 6 months just creating software and selling it online to western consumers. This will allow you quickly move from a postition of total ignorance to one with a lot of information, giving you a good base on which to launch a nigeria-focused startup.

    Nigeria is a bad market because of all the difficulties (payments, low internet-connected people, etc). It’s going to be very difficult for anyone doing his first business to make it work in the nigerian internet field. It’s very easy to gain experience targetting the western market – and that’s what I would advice anybody starting off to do.

      1. “Break things” – what does that mean? That’s one of those non-actionable things people say. What do you want to break if your customers don’t have internet connections, there is no logistics network to deliver your goods or your customers are unable to pay for your goods online?

        Moving fast is not always the best solution. You move fast when your market is ready. Look at video sharing – before youtube there were tens of services doing the same thing. They moved too fast – before the market was ready.

        “Move fast” is meaningless. If you have an established market and you have a good chance of dominating it by capturing and locking in a huge segment of the potential users, then yes, spend all you can to move fast. If it’s not that way, there is no real advantage to moving that fast.

    1. Mark, actionable or meaningless Facebook has proven its model. Companies will start and companies will fail it is a given fact. No perfect model exists for startups

      The obstacles you mention existed before Jason Njoku launched his business and got funding and will still remain for a while. My point is rather than giving people advice on how to or not to start “because of” we should be encouraging them to start “in spite of”.

      150 Million+ is a fairly established market in my opinion and people should look for other more creative ways to remain sustainable and scale.

      We should be looking for these new models rather than spewing advice about what to watch out for

  3. The market for software based products in Nigeria is not 150+ million. It’s way tinier, and the effective paying market is even smaller. Startups do not succeed based of hope and passion and encouragement.

    They succeed when there is a market and the startup works hard to exploit the market. And for that, people need a proper understanding of the fundamentals of what they are doing. Facebook is not huge because Mark Zuckerberg got lucky – it’s because he knows what he is doing and he is doing it right. And that did not come out of nowhere.

    Most peoples first startup fails. It’s the fact of the matter. The same holds for nigerian startups – most peoples first nigerian startup will fail. Probably, their second will fail too.

    That’s why my advice is this: Take some time and do something small to learn the fundamentals. Sell to people who are used to buying online. Understand the mechanics of software marketing. Fail there. Then you have enough knowledge to make your second nigerian-focused startup succeed.

    Everyone is encouraging people to do startups – to me though, doing a startup is like swimming. You can jump in a pool and maybe learn to swim in the process. But I’m suggesting you learn at least one basic swimming stroke before diving off the 10 foot diving board. You’re somewhat less likely to drown then.

    1. Mark. I think first of all your definition of startups is very narrow. I was involved in a telecoms startup called “Econet in 2001” and you know the rest of the story….

      Nigeria has 150M+ people available for anything. Even my 68 year old mother can use the Internet and definitely can use a phione.

      Lets think out the box here guys!

      1. Clearly, I mean software based startups as the current definition is. If it’s about starting normal businesses that are supposed to scale, then that’s a different matter.

    2. Even for “software based startups” the market exists if the goal is disruption and not pulling out new models from the hat.

      A startup by any definition is a business and it exists to meet customer needs and scale. The opportunities are there and lets get people to open their eyes and see not try to see for them

      1. You know what kills most startups? 6 weeks after launch, when nobody is visiting your site or cares about your site. People just give up and go tinker on something else. If founders understand that there is a market and they are providing a need for the market and when they have a customer acquisition method, then this phase will not discourage them.

        But those founders who just want to startup because they saw that Jason raised 8million, like Editi said, those ones will be killed at that stage.

        That’s why I think it’s more important that people get some real world experience before just jumping into it.

    3. My point is and still is let them die. More people will learn from many failures than a few successes. Even when startups fail there is a lesson to be learned by the founder and others.

      I am writing a blog post now titled “Failure to Scale” to show my own mistakes years ago with starting a successful software venture in Nigeria but not know how or when to scale.

      We all like to be teachers but teaching from foreign models will not help in this case but local experience. That is why someone like Sarah Lacy told Nigerian startup founders to stop reading Techcrunch and learn from their experience and others.

      I found a very interesting case study recently smartbuy.com.ng operating from the heart of Otigba and doing well. The founder has scaling on his mind and if he gets it right it will be an earth shattering disruption

      We have to re-write our own rules in Nigeria. We have uniqiue models and vast market yet to be explored fully

      1. I still do not understand why broke startup founders have to always target the local market. If you know how to write software, why not target a foreign market to put some cash in your pocket first? When you have some money it’s easier to go for a more difficult (but potentially more lucrative market) like nigeria.

    4. Mark, If a startup founder is “broke” how can he explore a market he has not been to or does not understand?

      I avoid using those kind of labels anyway. I believe the most successful startup founders have been the Igbo traders and if we really learn from them we will understand our market more.

      We cant be running away from a market others are lining up to get into. I agree that if you can you should move out but will never discourage anyone who decides to stay.

      I am the biggest advocate for people coming to Ghana to start something for the region including Nigeria but I will never tell anyone not to look at the Nigerian market.

      1. It’s the internet. Where you live or where you are has no influence on where your customers may be. I’m saying people should stay in Nigeria and first experiment with selling software to Americans to get a good idea on some of the intricacies of selling software.

    5. Look at the Indian model, they started selling services first before software.

      The assumption you make is that we even know what we are selling.
      Selling software is about selling “experience” in another context and we cant sell what we have not experienced

  4. My Questions:

    i. Did Mark Zuckerberg sell anything before then?
    ii. What did Njoku sell in the international stage before the Iroko ventures?
    iii. Being cautious is great, but would it stifle innovation?

    1. It’s easy to latch on to the prominent exceptions but actually think through the startup landscape. I don’t know what Njoku did before his current venture so I’m qualified to answer that question.

      Mark Zuckerberg is an exception to too many rules – I do not think he’s a good baseline for people to measure against. There are some people that I would advice to use Zuckerberg as their person-to-copy, but if I consider most people I know who are doing startups, their trying to do thing Zuckerberg style will make them fail.

      I’m not saying being cautious at all. Risk taking is completely where the game is played. But people sometimes misunderstand risk taking.

      Imagine you have an army of 30 people and you want to capture a castle with 500 soldiers, and you decide to risk it. People misunderstand risk taking as everyone hyping themselves up, dressing up in crazy outfits, and then simply storming the gates. That’s not right. The entire project is risky. It’s fundamentally a risky thing to attack a place with 500 soldiers with 30 people. So your job as founder now is to reduce that risk. Wind it as far down as possible to increase your odds. Get highly trained 30 people. Teach them stealth. Get your castle blueprints. Provide the best possible weapons. Be as hidden as possible for as long as possible.

      Risk means you are going for something where the odds are not in your favour. Your job now is to make sure you go as best prepared as possible.

      There is one question I always ask people who want to start startups: “How will people discover your startup?” If they cannot answer a fundamental question like that, how can they build a business?

      1. I totally disagree with all Mark jas said.

        1. There is no such thing as when the market is ready. Somebody always starts it, in some cases the first timers somehow lose focus and lose to the new comers, but there is NOTHING LIKE WHEN THE MARKET IS READY, start now, cut your churn rate, and when the wave blows be one of the few to catch it.

        2. As with every startup problem everywhere, awareness, awareness, awareness. If nobody knows it exists they wont use it. How can you sell to americans while youre here.

        150million plus people can benefit from a software startup. If the government forced us all to pay bills electronically, e.g online payments, then a large percentage of those 150million + peope will need internet access.

        Start now, learn, fail fast, try again, but you can succeed at your first trial.

        I started my first company, sold it and raised funds to do another in the same space.

        Just my 1 kobo

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