Hi there,

A bit lonely? Meta’s apparently paying celebs like Kendall Jenner and Mr Beast up to $5 million a pop to turn them into AI chatbots on Facebook, WhatsApp and Instagram. Because you’re not wasting enough time on social media yet.

In this Open Letter:

• Smart money: Why SA needs better startup & SME banking.
• Dry mines, cash for trash & SA gov takes on Netflix.
• Solid advice: How to get a startup mentor.
• Hottest opportunities: The results are in.
• Like Vida Coffee? Share The Open Letter twice and get free coffee!

TRENDING NOW

Smarter Small Business Banking

Let’s be honest here, SA’s current business banking solutions aren’t ideal for SMEs.

It’s no one’s fault. The SA business banking segment is defined as companies with a turnover of R30m–R1.6bn. Most SMEs and startups just fall outside of that category – hence government had to launch special measures to stimulate SME growth.

Every bank, ever…

And yet the SME and startup market is huge. Estimates vary between 2.6 million and 3.5 million SMEs in SA. According to Stats SA’s 2019 Annual Financial Statistics, SMEs generate about R2.3 trillion annually or 22% of the total R10.5 trillion that SA’s formal business sector generates.

A few quick sums show that’s an average of R880k turnover per SME per year – money going in and out of their account, of course. So, isn’t it time we built more creative products and businesses in the SME/startup banking space?

It’s a smart move since banking comes with a built-in moat. It’s such a nightmare to change accounts as a business – because it means getting your customers to change your details on their banking app, which they never do. So, if you get SME banking solutions right, you’ll probably have a lot of long-term clients.

So, what do SMEs need?

Well, for starters, there’s capital and funding. In 2020, McKinsey did a report on just how laughably inadequate banks’ service is to SMEs. Sorry Mr Commercial Bank, you can’t just rebrand your normal product as “business banking” and then just deny every SME application because they’re not already bazillionaires.

Seriously, walk into a bank with a new business idea and be prepared to get laughed out. Or they’ll just ask you to get someone to sign surety. This begs the question if it’s not better to fund it out of your home loan. Which leads to: is this even business banking at all?

But, we get it. Banks just don’t have the data to make good decisions when it comes to risky new ventures.

Yeh R150 a month bank fee when you have zero revenue is splendid.

But there are some who do – they’re just not using it (yet). If you’re the likes of famous disruptor Yoco, with lots of SMEs’ transaction data, you can do something banks can’t: predict with much greater accuracy which SME will make it or not.

See, companies serving SMEs directly could summon their data – who has which type of business, in which location and how much are they transacting per day – and use that as a model for reviewing funding applications.

Whilst it’s hard and expensive to get a banking license in SA, the opportunity to build another “Capitec” is just too lucrative for local players to stay away….

Local business banking plays

After years of supplying loans to small businesses, Lulalend probably picked up on this issue of banks not really servicing the needs of small businesses well. What’s more, when you offer business banking to a range of small businesses, the data gathered can help you package and offer even better finance products to small businesses.

And that’s probably why they just launched Lula, SA’s first dedicated SME banking platform. It promises to let you handle your day-to-day banking, manage cash flow, and access funding quickly – all from its digital platform. The fees? Well, they offer a free account that has zero monthly fees and only R3 for an outbound transaction.

Then, backed by former FNB CEO Michael Jordaan, Bank Zero recently launched commercial and business banking offering banking with basically no fees – yes their name speaks to fees not your balance as a founder in case you wondered. Bank Zero is still very small, yet they have seen their deposits grow from just over R110m in January to almost R200m by August. (Pssst… Neat little data source if you are a bank geek – banks report their balances to the SARB monthly which then publishes it on their website).

And, we’ve yet to see any big or exciting moves from them, but Capitec bought Mercantile, which traditionally served SMEs and entrepreneurs, in 2019. Whilst they’re most likely still working on integrations and optimisation between the two entities, it’s clear that SA’s biggest bank in customer terms is seeing SME banking as a major next phase of growth.

So, there are options. But we reckon there’s still a lot of opportunity to be unlocked in the startup/SME banking space. That’s why we’re keeping an eye on it…

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

Where do you bank?

Vote to see what others say...

• Capitec
• Nedbank
• Standard Bank
• Absa
• FNB
• Bank Zero
• Tyme
• Lula
• VBS
• I roll with cash

Login or Subscribe to participate in polls.

IN SHORT

⏳ Countdown. Renowned for our mineral supply of gold, platinum, iron ore, and coal, South Africa’s dwindling resources threaten the local mining industry, with reports suggesting we have less than 50 years of mining left. Perhaps if we load shed enough we can add another 25?

♻️ Conversion. Want to turn your e-trash into Makro cash? This weekend (21 & 22 October) the E-Waste Recycling Authority (ERA) will be handing out Makro vouchers for eligible e-waste dropped off at specific Makro stores.

🛰️ Connected. Looks like even ships & planes will get Starlink before SA does. Starlink just signed deals with both shipping giant Maersk and Qatar Airways to get high-speed, low-latency broadband internet onboard.

📺 Competition. Look out Showmax & Netflix, South Africa’s Government Communications and Information System (GCIS) is reportedly spending R1 billion on a new video streaming service, despite already having SABC+ which was launched in November last year.

🏆 Champions. South Africans are first to bed and first to rise according to the weekly stats published on Sleep Cycle’s home page. We like to hit the hay at 22:56 and are up and at ‘em at 06:25 for a grand total of 7 hours and 29 mins of shut-eye.

­BUILDER’S CORNER

How to Get a Startup Mentor

OK, so you want to build not only the next best thing but also a company that’s really worth something. And that’s where a great mentor would really make a difference – someone who knows the ropes and can just help nudge things in the right direction.

Just one problem: It’s a bit weird walking up to total strangers like…

I’m totally not stalking you or anything…

Thing is, we really need mentors. In one survey, 75% of company executives said that mentorship was critical to their career development. One CNBC survey even found that 9 out of 10 mentees (people with a mentor) were happier in their work.

So it’s no surprise that we want mentors. In September, Adobe released survey results showing that 83% of Gen Z really want a mentor, yet only 52% say they have one. So, how do you actually find a mentor?

5 Ideas to get you going

1. Ask inside a company

If you’re still employed, or connected to a company in some way, look there first. Companies know they should have mentorship programmes (the most successful ones do), so, even if a company doesn’t have an official one, chances are that any slightly more senior person will relish the chance to “give something back”.

2. Fire up your network

You can try and make it less cringy by just reaching out to people and saying: “Hey, I’m building this new thing, know anyone in the space that could give me some pointers?”, as a start.

You could even do a bit of research first, see if there are any specific people you’d like to learn from, and then see if anyone knows them. LinkedIn is great for this because it shows you how many connections you’re away from a person, so you can ask for an intro.

3. Attend some startup events

Not all events are great learning experiences, but if you’re just there for the networking, you can actually make some valuable connections.

4. Online services

Although it’s a bit dubious because you’re actually paying for people’s time, some places like internationals GrowthMentor and Techstars promise to connect you with real pros. South African options include Startup Mentors and Start Wise.

Note: We don’t have any experience with any of these paid-for mentorship programmes, so we can’t tell you if they’re any good or not.

5. The distance-mentor method

We have to mention this option because it’s how most of us at The Open Letter like to operate – don’t even ask, just learn from whoever you want. Seriously. With the net there’s so much info about people online, you can literally appoint Elon Musk as your mentor without him even knowing it – just follow him on every channel, read everything about him and you’ll eventually develop a feel for how he thinks and operates.

So many founders publish playbooks and host podcasts and have their own blogs etc. You can easily distance-mentor yourself just by making them your focus of study.

Did you have a mentor? Got any tips for those looking for mentors? Hit reply and let us know…

THE RESULTS

We asked what you think is the hottest opportunity highlight out of Census 2022, and most of us are looking at EdTech (and staying in Cape Town it seems)…

🟨⬜️⬜️⬜️⬜️⬜️ 🌍 Building in more languages sounds hot (5%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🚇 Heck, I’m moving operations to Gauteng (0)
🟨🟨🟨🟨⬜️⬜️ 🌊Nah, Western Cape is where it’s at (28%)
🟨🟨🟨🟨⬜️⬜️ 🏗️ Keen to get into construction or PropTech (28%)
🟩🟩🟩🟩🟩🟩 👨‍🏫 Building educational product is the game (34%)
🟨⬜️⬜️⬜️⬜️⬜️ 😒 Not much useful for me here I’m afraid (5%)

Your 2 cents…

“Desperate for a smart translation tool for webpages & email newsletters, would be a real value add for my cross-continental project.”

Anon

Yeh, that would be neat. For now, we are using ChatGPT for translation, it’s pretty good.

“It would be good to have some info on where to source funding/investment in proptech as I am working on providing a services platform in this space.”

Fritz

Nice one Fritz. It’s quite a small and niche space so I’m sure what you can find on Google is pretty much all there is. Check out these guys who recently launched a R200m fund.

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Hi there

Hungry for AI? New research shows ChatGPT and Bard’s data centre energy use is spiking so far off the charts, they’ll require the same amount of electricity as the entire country of Sweden by 2027 (85–134 terawatts, about 0.5% of the global energy demand).

In this Open Letter:

• New Data: Congrats on your 10 million new customers.
• Google attacks, SA’s payback time & crypto terror.
• The winner: Look who just won R2’500s actual gold.
• Go long: How to build an agency worth millions.
• How you like your drones: The results are in.
• Free stuff: Share this and get cool tools + coffee on us.

TRENDING NOW

New Data, New Opportunities

What startups can learn from the Census results…

Nothing highlights opportunity quite like data. But in South Africa, high-quality data is hard to come by. Just ask any local founder how big their market is – in most cases, it's a guess.

So when Census data does get published it's always interesting to see what’s happening in our country, but also, to dig in and find some opportunity. We’ve done the hard work of unpacking the pertinent SA Census numbers – so you don’t have to.

1. There’s 10 Million More of Us

As of 2nd February 2022, South Africa's population has grown impressively to 62 million, marking an increase of 10.2 million from the 2011 census.

Gauteng is still the most populous province with 15.1 million, up from 12.2 million in 2011, though all provinces have grown. That’s maybe because more people moved to Gauteng from other provinces (5.2 million, known as “lifetime migration”), followed by the Western Cape (2 million).

Opportunity Insight: Gauteng is still where it's at

15.1 million consumers is not only the most, it’s also the easiest to reach. Gauteng is the smallest province. It's dense. And if you’re trying to reach a lot of consumers (B2C), this is probably the best place to do so. Maybe that’s why insurance startups like Naked and Pineaple are focussing their marketing there. Better ROI.

Getting a bit crowded over in Gauteng…

2. The Market’s Evolving

There are some changes in demographics – Black Africans now make up 81.4% of the population (up from 79.2% in 2011), while the coloured population dipped from 8.9% in 2011 to 8.1% in 2022, while the white population has decreased from 8.9% in 2011 to 7.3% in 2022.

The gender distribution is now at 51.5% women and 48.5% men, and it looks like 1.1 million people moved from the Eastern Cape to the Western Cape.

Speaking of migration, the total number of foreigners living in SA (both documented and undocumented) is estimated at 2.4 million or roughly 3%. Most are from SADC and more than 1 million are from Zimbabwe.

Opportunity Insight: All kinds of ‘gration

Semi-migration, emigration and immigration are all happening. Help those leaving get rid of items and those arriving get items, jobs and places to stay. What’s more, tech-enabled businesses to help these people with compliance, documentation and processes could score big as these numbers continue to increase.

3. There’s Huge Educational Disparity

In Mpumalanga and Limpopo, 11.7% and 14.1% of the populations, respectively, have had no schooling – that’s almost double the national average of 6.9%. On the brighter side, Western Cape boasts the lowest at 2.3%, with Gauteng at 3.9%.

Opportunity Insight: Tech to bridge the gap

It’s hard to think how the private sector can play in this space where the government controls all the money flow, but using technology to get better teachers at rural schools could play a vital role in bridging the gap.

And, if you missed it, we interviewed a founder who’d built incredible tech brands in rural areas that are massively successful specifically because the need is so dire there – reverse engineer the approach for EdTech or build tech as a stop-gap in the community?

Doubt even GPT4 will help here…

4. How People Live is Changing

Most people now live in formal dwellings (actual built structures), with only 8.1% still in informal dwellings (down from 16.2% in 1996). 59.7% of households have piped water inside their dwellings, and electricity is now the primary lighting source across all provinces.

Opportunity Insight: We have been building!

So many opportunities in the construction space, it is exciting. From building plans and support to fast-track approval to hardware supplies to spaza shops. The hardware supplies are particularly interesting as other commodities often sold in spaza shops have too small margins. Supplying some hardware basics (door handles, gates, etc.) to spaza shops could move some higher-margin items, unlocking more of that elusive (yet massive) township economy.

5. Our Languages are Evolving Too

isiZulu continues to be the dominant language, spoken by 24.4% of households, with isiXhosa at 16.3%. Afrikaans-speaking households have seen a decline from 13.5% in 2011 to 10.6% in 2022.

On the migration front, 2.4 million international migrants now reside in South Africa, with a significant 86% coming from the SADC region.

Opportunity Insight: Talk the talk

Building language-specific entertainment content, educational games and content can be a massive play. isiZulu and isiXhosa are market segments of 15.1 million and 10.1 million respectively. (SA’s been laser-targeting Afrikaans speakers for years – Virseker, Maroela Media, Huisgenoot, etc.)

iAfrika Digital, for example, is building learning products and content-rich websites in African languages and capitalising on this.

6. A Lot of Destitute People Need Help

There are approximately 55,719 homeless people in SA – 74.1% in metropolitan areas. And 41.3% of those are due to joblessness or lack of income, while 25% point to drug and alcohol abuse.

Opportunity Insight: Smarter ways to help

Don’t be too quick to dismiss working in this space – NGOs and voluntary organisations can summon a lot of spending power for the right ideas – especially tech that can scale the impact.

One initiative that’s been doing well in Cape Town is U-Turn’s voucher system, where you can donate to someone with a card that lets them buy food, shelter and clothes, with two upshots: 1) you don’t have to use cash (safer to donate) and 2) you know they can only redeem it for things that actually help (food, clothes, shelter).

These are just some of the initial insights we gained – you can bet there’ll be a lot more to glean and inspire new startup ideas in the next few weeks.

IN SHORT

🔱 Hack Attack. The Google DDoS Response Team has warned that distributed denial of service attacks are increasing exponentially with the most recent series of attacks on Google services, Google Cloud Infrastructure and Google customers, peaked at 398 million requests per second – more than the total number of article views on Wikipedia in the whole of September 2023.

🤖 AI in SA. More and more South Africans are integrating AI into their lives. Data released by Google shows that AI interest in search terms has increased by 230% in the last year. Some of the most searched topics include: "what is AI technology?", "how to invest in AI?", "who created AI?", and "how does artificial intelligence work?".

🛰️ Starlink 4 Mobile. Starlink is wading into the direct-to-cell market with its announcement of support for text at the beginning of 2024, voice, data and IoT at the start of 2025.

⌛ It’s Payback Time. South Africa owes a total of R427 billion in marketable debt to foreign creditors. Of this, R28.4 billion is due for repayment within one year, R61.6 billion due for repayment in one to three years, and R337 billion due for repayment after three years.

💰Video Money. Loom, the async video messaging platform has just been acquired by Atlassian for $975 million. Expect your Jira tickets and Trello boards to be filled with reaction vids from your Product Owners and QA’s.

🪙 Terror Coin. It looks like the recent terror attacks by Hamas on Israel were financed through cryptocurrency. On Tuesday Binance froze hundreds of crypto accounts associated with Hamas, following requests by Israeli law enforcement. Remember how a few weeks ago we wrote about SA’s greylisting by global money laundering and terrorist financing watchdog, Financial Action Task Force (FATF)?

­SOLID GOLD WINNER

Congratulations, Kobie Van Tonder

You might remember in September we ran a TroyGold competition – if you entered, you could win R2’500s worth of gold and this cool hoodie…

Well, eat your heart out because avid reader Kobie Van Tonder is our ultimate TroyGold winner.

Congrats, Kobie – we’ll be in contact with your prize real soon.

30-MINUTE PODCAST

Building & Exiting an Agency/Consultancy in SA

If you’ve been building, or are looking to build, a service-based startup to sell or take public – like we said recently: sell your idea as a service first – then this week’s podcast is for you. We spoke with software engineer turned-founder Andrew McElroy, who built the agency Responsive Digital over 10 years, and sold it to Capital Appreciation in early 2022.

He gives some awesome insights into what it takes to build a startup to exit stage…

A few interesting bits…

1. Go deep before you go wide

Andrew is quick to say that there wasn’t really a big master plan at the start, it’s really all about assembling the right skills, landing your first client, and then growing it organically from there – get the insights here.

What is key though is to niche down a bit. Focus on packaging what you have to offer well, as a start (go deep), before adding additional services etc (wide).

2. Get your positioning right

To get attraction from any niche, you need to keep the momentum going. Andrew says that they were lucky to be riding a trend when they started, but like anything, it comes to an end. And that’s when your marketing and sales need to shine.

You need to be building a pipeline of clients, generating leads, keeping a CRM and maintaining it and consistently doing sales development. You can’t take any clients for granted. And, importantly, Andrew’s the first to say that he’s not a marketer, but he partnered with people who know marketing to make it work – which often comes down to getting your positioning spot-on so that your messaging always hits the mark.

3. Learn to showcase value

Just as you would when building a product, an agency/consultancy business is there to solve a problem, address a need and deliver value. And being able to showcase that upfront with every interaction is vital, and subject to what you’re offering and to whom.

As Andrew says, they dealt in a visually creative space, so having great design even from your first presentation was vital. And that extends to whatever you’re building. If it’s technical, you need your team’s dev or CTO in that meeting with the client. In the product space, you want your product manager in there to speak the right unit economics language – it all helps give a potential client a clear picture of what it’ll be like working with you.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Well, well, we asked what you think drones are good for, and most people say emergency response…

🟨🟨🟨⬜️⬜️⬜️ 🤡 No way those deliveries make it to their destinations (21%)
🟨⬜️⬜️⬜️⬜️⬜️ 🎁 Maybe for small items but not food (10%)
🟨🟨⬜️⬜️⬜️⬜️ 💌 Post office 2.0 let’s go (16%)
🟩🟩🟩🟩🟩🟩 🚑 Great use case for emergencies, but that’s it (38%)
🟨🟨⬜️⬜️⬜️⬜️ 🍟 Yes and the smell of KFC flying past your house is genius (15%)

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Hi there,

Got a temperature? Don’t fall for this fake TikTok doctor who conned almost 300k followers, Radio 2000 and even the Gauteng Dept of Health into thinking he’s an actual doc.

In this Open Letter:

• Drone wars: Solving business logistics the KFC way.
• Soaring solar, time to de-list & Amazon’s new satellites.
• Get growing: 5 Steps to optimise your pricing page.
• The results: How school impacts your day.
• Free stuff: Share this and get cool tools + coffee on us.

TRENDING NOW

Lowering the Cost of Delivery

If you’ve been following some of our analyses of business trends like the viability of SA’s e-commerce sector, what Checkers Sixty60 gets right and even SA’s absolutely massive township economy, you might have picked up a general theme that plagues a lot of businesses trying to do something new… Logistics.

Man, moving anything – stuff or people – is expensive here in SA. And you can bet a lot of that comes from having to use actual drivers, with salaries and needs. Don’t get us wrong, people should have jobs, but you can’t ignore the potential price benefits we could unlock with more automatable solutions.

Life was simpler in the 90’s

It’s in the numbers

Takealot, for example, do about 25’000 parcels per day. And, unless you’re spending more than R500, delivery can cost between R70 and R95 – which means SA is spending upwards of R1.75m just on deliveries per day. Yet the company’s not showing profit. Well, maybe if we helped put that R1.75m back in the consumer’s pocket, it could be.

Even Uber Eats’ R15 delivery fee is just a mask for the astronomical hidden costs they need to build in just to get you your burger on time. Why? Because, again, the delivery is so expensive.

See the trend?

What about the next frontier for business in SA: Bring down the cost of deliveries.

And, of course, there are a number of options for doing this. Autonomous vehicles. Sidewalk-crawling robots. And, of course, drones.

Time to fly?

It’s not as far-fetched as it seems. Remember Zipline? The drone company that started out as an NGO and got the contract to deliver blood to hospitals in Rwanda? Well, they’ve pivoted…

Seems Rwanda was a great training ground, because they entered the commercial space with a storm, raising $250m at a $2.75bn valuation in 2021, and another $330m at $4.2bn in May this year. This is on the back of their partnering with Nigerian retailer Jumia in 2022, hailed as Africa’s biggest e-commerce player. Not to mention having been the first to start commercial drone deliveries for Walmart in 2021.

You can bet it’ll keep growing. Amazon recently completed its first 100 drone deliveries in the US, and is setting its sights on overcoming regulatory hurdles to expand the operation.

Local plays in this space

After 5 years of effort to get clearance from SA civil aviation, SANBS is ready to start using drones to transport blood in emergency situations. It’s small, at first, limited to transit between two hospitals. But it has legs, since the SANBS has plenty of locations, meaning they should be able to expand – a vital service, too, since you normally have just a 1-hour window when a patient is identified as in need of blood, and drones could really help save lives.

On the commercial side, KFC recently delivered its first order by drone to no-doubt hungry cricketer David Miller during a T20 match against Australia.

Catching the fine leg on fine leg

Just how far are we from drone deliveries going mainstream? Well, there are probably still some regulations to get sorted with Civil Aviation. But with these kinds of players getting on board, it’s definitely a space to keep an eye on.

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

Will drone deliveries work in SA?

Votes to see what others say...

• 🤡 No way those deliveries make it to their destinations
• 🎁 Maybe for small items but not food
• 💌 Post office 2.0 lets go
• 🚑 Great use case for emergencies, but thats it
• 🍟 Yes and the smell of KFC flying past your house is genius

Login or Subscribe to participate in polls.

IN SHORT

👋 Hi Speed. Zambia just became the 6th African country where SpaceX has launched its high-speed, uncapped Starlink services. Starlink’s satellite internet services are suited for rural areas and areas underserved by traditional internet infrastructure and could see millions of Zambians getting high-speed internet for the first time.

🥸 Stealthy Privatisation. A recent study by RMB & Morgan Stanley shows that Eskom’s electricity generation will be replaced by the private sector within the next 2 years! This is off the back of record-breaking solar panel imports and installations in 2023.

🔌 Delisting Trend. SA Billionaire Businessman Patrice Motsepe’s African Rainbow Capital Investments (ARC) is considering delisting from the JSE as it evaluates whether or not there is value in remaining listed on the JSE. In 2022, 20 companies delisted from the stock exchange, with at least 32 set to delist in 2023. Scary stuff for your retirement annuity.

🚰 Going Liquid. Steinhoff International’s liquidators will (finally) liquidate the company this coming Friday (13 October) when it will delist and its shares will no longer exist. Around 99% of shareholders had voted to dissolve and delist the company from both the Jozi & Frankfurt stock exchanges back in July of this year.

🛰️ Forest Satellites. Amazon’s reply to SpaceX’s Starlink, Project Kuiper, just launched 2 prototype satellites. The e-commerce giant is looking to deploy over 3’200 more satellites over the next couple of years after initially vowing to invest $10 billion into the project back in 2019.

📮 Going Postal. The South African Post Office (SAPO) has been forced to close another 80 branches – bringing the total number of closures to 396 since 2020. As it stands SAPO is technically insolvent with only R4.5 billion in assets and negative equity of R7.9 billion.

­BUILDER’S CORNER

5 Steps to a Killer Pricing Page

Once your product and plan move along the comms and website stage, you run into the big pricing page dilemma: Should we advertise our price?

Soon, it will cost you a customer.

And it’s not just in SaaS. We see a lot of startups unwilling to list prices. Some clearly even consider their pricing page as the END of a sales funnel when it’s actually not. See, pricing has a bit of psychology to it…

The case for pricing awareness

We’re going out on a limb here and betting that most (or at least a lot of) South Africans’ behaviour flow when checking out a new product online goes something like this:

1. Check the Landing/Home page, read a little bit, maybe watch a quick video.
2. Click through to pricing page first to see if this is even in your league.
3. Only then go to product page and maybe check features or some testimonials.

Why? Well, we’re conditioned that most overseas products are out of our price range, so a quick price check will tell you if you should even bother engaging further with this or not. And we’re also willing to bet this behaviour translates to looking at local products, too.

The lesson? Your pricing page is probably VERY important to any market. And it’s not the end of your sales funnel, it’s close to the start. So, how do you build a killer price page?

Optimise your pricing page

1. Lead with your Value Proposition (and repeat it)
2. When the price point’s important, people are probably going to click here first before your fancy sales pages. So why not consider your pricing page close to the start of your funnel? Show and remind them here what problem you solve, how you solve it and why it’s better than the alternative.
3. Make it super clear and super simple
   Pricing tables, options and feature lists are often SO clunky! No one can read 4pt font, and you don’t want to bore people – remember your goal is to get someone to buy or jump on a call, so optimise your page for that. It’s not an info dump.

3. Emphasise the Benefits, not Features
   Everyone always says “Sell on benefits, not features”, but what does that mean? Well, it's a bit complicated, but here’s a practical exercise to help you do it right:
   
   Get two columns on a page, label the first one “Features” and the other “Benefits”. In the Features column, list your product’s features like you normally would have done on a pricing table. Now, next to each Feature, in the Benefits column, write down 8–10 ways that single feature will enhance your customer’s life – “If you have this feature, you will…”
   
   Example: If your product is a little cheaper, that’s a Feature. Your Benefits will be really obvious ones like “because it’s cheaper, you save money”, but also include more creative ones like: “because it’s cheaper, you’ll have more money to spend on chocolates, therefore this product helps you eat more chocolate”.
   
   See what we did there? That’s selling on benefits. And if you can match the benefits you imagined with actual needs and fears from your user research, you’ll know exactly which ones to use to convert more.

4. Talk to their fears directly, calm them
   Your pricing page is actually where your testimonials and lists of B2B brands you’ve worked with come in most handy. See, people hesitate to buy because something is still bothering them.
5. When Slack started, they had a “Wall of Love” on their pricing page – a rolling compilation of tweets from users saying “thank you” and fawning over “what an amazing” product this is. This helps new users feel like “Well, if others like it so much, maybe I should try it…”
   
6. Use some psychology to convert
7. Depending on what you’re selling, you might want to have tiered pricing with decoys to make your actual price look attractive. Or maybe you have an up-sell, down-sell presentation to push people to the product you’re really trying to move.
8. You can A-B test different options on the page, and see what converts best.

Got a pricing hack that works? Hit reply and let us know…

THE RESULTS

Last week, we asked how school affects your daily life. And it’s a three-way split between soccer mom-ing, no kids (yet) and kids outa school…

🟩🟩🟩🟩🟩🟩 🙅 Not at all, avoiding having kids as long as possible (26%)
🟩🟩🟩🟩🟩🟩 ⚽ Directly, doing school runs every day (26%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏈 Only sports days, fees and parent-teacher meetings (6%)
🟩🟩🟩🟩🟩🟩 🎉 Thank goodness mine are out of school! (26%)
🟨🟨⬜️⬜️⬜️⬜️ 🚦 Just get stuck in school traffic a lot (11%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏠 Hardly, we home school (6%)

Your 2 cents…

“My kids are all grown, and I miss their school days, I enjoyed the hell out of it. Sports, plays, functions, the lot. Thanks, kids!”

William

FOR THE MEMES

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Hi there

Future of cargo? With 90% of the world’s goods transported by sea, the race is on to green commercial shipping. Currently in the lead? Huge cargo ships with wind-power sails. Deja vu anyone?

In this Open Letter:

• School’s in: SA’s lesser-known 40m distribution channel.
• SA spies hacked, a big week for FinTech funding & your Shrek royalties.
• Go big: 20 Years of informal economy hacking.
• Your bank tech: The results are in.
• Claimed your free Coffee yet? Share with 2 people and get coffee on us!

TRENDING NOW

For Whom the Bell Tolls

OK, so EdTech is still one of the more popular buzzwords in startups today. We spoke about advancing education in SA before and even learned how to build an EdTech startup from the ground up.

But set aside the drive to advance learning through tech for just a moment and consider just how many of our daily lives – kids, parents, teachers, service providers, people who live near schools – are impacted by plain old school.

There are about 26k schools in South Africa, with around 400k teachers and 13 million pupils. That automatically involves at least another 13 million responsible adults (one parent, grandparent, family member or guardian) directly, and probably another 13 million (second parent, partner etc.) a little more indirectly.

That’s almost 40 million South Africans.

Or should we rather say “captive audience”?

Building for school markets

Again, apart from the BIG and obvious learning/education/curriculum part of it, there are also many peripheral problems like the basic logistics and administrative issues around such a massive daily exercise.

Think: Schools have entire rooms just for storing the stuff kids lose on a daily basis. You have tuckshops, excursions, performances, sports days – a lot of unsafe money changing hands here! Not to mention the nightmare of coordinating communication between teachers, parents, student bodies, PTOs, and school boards – it’s endless.

Then there’s the arts and culture side of things, as well as extracurriculars and carpooling – so much to manage. And we’re pretty sure at least a few parents and families would love their little ones’ sports leagues presented and updated in beautiful and easy-to-follow digital formats.

Face it, there’s a lot of opportunity here, and it’s a potential golden market, because:

• It’s self-regenerating: new people join the school system every year.
• It’s economically active: by default, these parents have disposable income.
• It’s a captive audience: the school itself becomes the distribution channel.

Local teacher's pets

If you grew up pre-2000 you would know that one of the biggest pains faced by parents, kids and teachers alike is the circular that stays stuck in that bag the whole term and parents have no idea they have to participate in the entrepreneur day up until the night before.

‍

School-to-parent communication has been a challenge since school started. So back in 2010, some tech-savvy schools introduced a Java-based app that ran on desktop computers and provided parents with school communication.

The idea is simple — this app will run in the background and when connected to the internet will pull the latest news or information for parents to read. It worked like a charm. Bored-at-work parents would open this up and always be informed.

And whilst SaaS was still a foreign concept to South Africans back then, schools didn’t want to pay. So the creators of this app settled for ad revenue. Smart move, considering parents are spenders (or at least they have to be, coz kids need stuff).

Fast forward to 2019, and this app, d6 School Communicator has an array of mobile and web-based products that extend beyond communication. And they had more than 2’500 schools using their software — which equates to about 3 million parents.

These days they do make use of a SaaS model (among other things) to generate income and also offer fully-fledged school management solutions, but its power really lies in its customer base and distribution model. Established relationships with schools that have established relationships with parents… and you’ve got something worthwhile. The opportunity at hand was acknowledged when they raised funds in 2021 — from among others Knife Capital.

But they are not the only tech company solving challenges in the inter dynamics between schools and parents. Backed by Nedbank, Karri is a payment service for communities and organisations that specialise in schools.

It had its start trying to make schools safer by minimising the amount of cash students were carrying. Parents can use Karri to pre-order meals from tuck shops and more recently, introduced a Mastercard card that children can use to pay.

‍

This card is fully managed by the app on the parent’s phone and one can imagine whilst the use case starts at school, it quickly becomes a useful tool outside the school environment.

Schooling-related opportunities are abundant because the system creates so much friction for all role-players. Build an innovative solution to solve some of these challenges and you have a distribution channel like no other.

IN SHORT

👑 Leading Lady. Mary Vilakazi will become FirstRand’s CEO, and as its first female leader is set to usher in a new era of female leadership across the group’s portfolio of businesses including RMB, FNB, WesBank, Aldermore Bank and Ashburton Investments.

🤐 No Comment. South Africa’s State Security Agency (the SA version of the CIA) was “allegedly” hacked just days before the BRICS Summit held in Jozi in August. But if you’re wondering why no one in SA has heard about it, it would seem like government’s official policy might be to keep it under wraps.

🪡 FinTech Funding. Mere hours after Tuesday’s Open Letter dropped featuring SA Fintech Stitch, it was announced that their Series A round was extended by an additional $25 million from Ribbit Capital. Elsewhere in local FinTech funding news: Revio raised $5.2 million in funding, while Peach Payments raised $30 million.

🧌 Swamp Money. Everyday investors can now get their hands on shares to the music rights of the Shrek movies for less than R200 via the trading platform, Public. The nearly 89’000 shares will pay dividends quarterly, generated from the revenue each time the movies are streamed or aired.

🤦‍♂️ Flag Facepalm. In 1 week, The Boks and Proteas could take the field without the South African flag on their jerseys at their respective World Cups. This after the SA government failed to meet the deadline to comply with the 2021 World Anti-Doping Code (Wada).

THE THREAD

Inside Track: How to Hack SA’s Informal Economy

Looking to tap into SA’s R425bn township economy? Then this week’s 30-minute podcast is for you. We spoke to serial founder and veritable informal economy expert Luvuyo Rani of Silulo Ulutho Technologies, who has been setting up technology centres in townships and under-served areas for, like, 20 years. It’s gold…

The Highlights

1. Long-term thinking
Having been one of the first movers to try and bring internet into townships, Luvuyo realised early on how important branding and visibility are in this market.

He explains here how they had to constantly push to be the first to deliver new tech to the market. And how they’d have to work (even at a loss) when malls and big brands started encroaching onto the local township space – driving up rental costs and ousting small local businesses. Particularly, how they had to take the high costs on the chin, just to be the local brand whose shop could stand next to a big brand in a township.

2. Localisation is King

As Luvuyo explains, even townships within the same metropole are vastly different. So localising yourself is key. They always made sure to employ local people, engage with local radio stations and media, and work with stakeholders in the area to make them feel a part of what they were doing.

Slowly but surely, the local entrepreneurs and even community leaders started getting involved and on board with what they were doing. To the point where today they can franchise.

3. Go where the need is

For years, and perhaps even now, the story to many entrepreneurs in SA is to go one of two places – either Cape Town or Joburg – to build a business. But Luvuyo realised early on that it wouldn’t work for them.

They needed to bring internet infrastructure to those who didn’t have it, so they went the exact opposite, to the Eastern Cape. And, because the market was being ignored by all the main players, they were, apart from easy access to the general public, able to get meetings with school principals, heads of departments and even government department officials in the area.

It’s amazing insights – and if you’re keen on the township economy, this 30-minute podcast is probably the best investment you can make.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

So when we asked how keen you are on open banking, a cool 58% said they can’t wait for it to really take off…

🟨🟨🟨⬜️⬜️⬜️ 😡 Hell no (26%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🧐 I don’t do my own banking (0)
⬜️⬜️⬜️⬜️⬜️⬜️ ₿ IDC, crypto is the future of “France” (5%)
🟩🟩🟩🟩🟩🟩 🦾 Can’t wait to hook up apps and never bank again (58%)
🟨⬜️⬜️⬜️⬜️⬜️ 🛋️ I store cash in my couch – like a president (11%)

Hi there,

Value your privacy? Meta has once again teamed up with Ray-Bay to release a new version of their smart sunglasses that let you covertly photograph and record anyone, anywhere. Talk about hitting “the Mark,” though, as Zuck himself probably needs a pair of these after he got not 1 but 2 black eyes at jiu-jitsu training this weekend.

In this Open Letter:

• Smart money: An Open Banking revolution.
• Pricey lions, iPhone heat & public lawsuits.
• Savvy startup: 8 Steps for Product-Led Growth.
• What you outsource: The results are in.

TRENDING NOW

The Future of Banking is: Open

Strap in, folks! While the world is utterly obsessed with the sorcery of blockchain and regulating the wild, wild west of crypto, let's not forget that we can still use our good ol' traditional banking system to cook up some transformative innovations.

Take Apple in the UK, for instance. Last week, Apple soft-launched a feature on the iPhone Wallet app that utilised a special function in the UK’s banking framework that lets the app show users the balances on all their cards, while they’re making a purchase.

‍

Obviously, a lot of people loved it. This begs the question of why they can’t do it everywhere. And the answer is that the UK made it possible by creating what’s called an Open Banking framework.

Open what now?

Open Banking is when the financial industry, including regulators, get together and make it possible for third-party FSPs to access financial data and services that only banks normally have access to – like your account balances – typically via API.

While a lot of FinTechs have been pushing for more access since the early 2000s (when mainly banks offered online banking services), the big shift came with the introduction of PSD2 in Europe in 2016 – a set of regulatory standards for payment services (including 3rd party ones). This led to the UK ordering its banks to make APIs available to third-party providers in 2018.

And this led to similar initiatives in Australia, Canada, Singapore and, to some extent, it’s starting here in SA, too…

Inside open banking

The options are insane. Think what 22Seven or business accounting software such as Xero or Sage could do if they could (with your consent) interact on your behalf in your Internet banking. Budget apps, auto payments, automatic savings when you have extra money – the works.

Even Ozow’s workaround for an “instant EFT” using Yodlee to log into your bank account and act on your behalf will be much better if can offer this via an official bank API. If anything, it’ll get more people to use official channels, while unlocking huge value for the user.

But not all of these applications will be equally loved by front-end users, though. The government could then also use a version of this to better track you and make sure you pay SARS what they’re due. In fact, there’s currently talk about SARS implementing automated, real-time VAT calculation.

‍

Local trailblazers

Investec did not only go Open Banking but probably a step further in releasing programmable banking. Want to create certain rules on how your card can work? Well, you basically plug into their API and unlock the ability to control your card’s features and functions – down to setting custom limits, transaction rules and behaviours, and even custom budgeting and notifications. A tinkerer software developer’s dream.

Then there is a startup that’s positioning itself well to capitalise on the eventual adoption of Open Banking: Stitch. Using APIs, automation and other tools, Stitch is literally stitching together the complex world of the flow of funds in modern organisations.

Oh, and if you want to see which SA banks offer these abilities, you can track our banks’ open API progress here.

Exciting developments and the time for this to go mainstream might be closer than we all think. We are watching this space…

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

Keen on Open Banking?

Vote to see what others say...

• 😡 Hell no
• 🧐 I don’t do my own banking
• ₿ IDC, crypto is the future of “France”
• 🦾 Can’t wait to hook up apps and never do banking again
• 🛋️ I store cash in my couch – like a president

Login or Subscribe to participate in polls.

IN SHORT

💰 Big moves. Telemedia, a subsidiary of Rex Trueform, has just bought a 35% stake in ITV Africa, an automated sports coverage company using and distributing AI tech products for school sports broadcasts and streaming services. Interestingly enough Rex Trueform also owns retail chain Queenspark and a minority interest in SA Water Works.

🐛 A Worm in the Apple. If you’ve wondered why your new R20’000+ iPhone 15 gets hot while you’re scrolling Instagram in an Uber, you’re not alone. Apple has identified “a few issues” that make their latest iPhone overheat including a bug in iOS 17. When Apple said the new iPhone was gonna be hot, we don't think that’s what they meant.

🥊 Stepping into the Ring. eMedia (the cats who own Openview, eTV, eNCA etc.) took out a full-page newspaper ad to announce legal proceedings against MultiChoice for the RWC broadcasting rights shenanigans between SuperSport and the SABC that left Openview out in the cold.

🦁 Pricey Lions. Africa’s wild lions have disappeared from 92% of their historic stomping grounds – about 25 countries all told, according to a study led by Oxford University and the Endangered Wildlife Trust (EWT). Fear not though, we’re pumping a cool $3 billion per year into conserving what’s left of Africa’s lions.

💨 Written in the Stars. Well, it was inevitable. As loadshedding continues to continue, looks like 4 of Eskom’s 15 coal-fired power stations are breaching government emissions regulations – Matimba, Matla, Kendal, and Kriel, 2 of which were emitting more than double the permitted limit of particulate matter.

❗ Pro Garage Sale. Ever wondered what big retailers do with the excess stock they struggle to move? Looks like Game’s got a solution with its non-branded store called ”The Last Chance Store”. It’s opened right next door to the Game store in Fourways Mall with up to 60% off goods.

­

BUILDER’S CORNER

8 Steps for Product-Led Growth

You’ve got a product – awesome! Now, how do you grow sustainably? Because we don’t all have a never-ending supply of ready cash to feed a growing startup…

‍

We took some inspiration from Jaryd Hermann, a former SA founder turned product specialist based in New York. He has an awesome newsletter you should totally check out called How They Grow. He recently covered Product-Led Growth and its gold. The PLG movement revolves around the idea that the product itself, rather than traditional sales and marketing efforts, drives customer acquisition and retention.

The teams behind a number of successful products swear by PLG, including:

• Slack – the freemium model, coupled with easy onboarding and good word-of-mouth among creative agencies soon made it a top player in workplace communication.
• Zoom – despite it not being a unique product, Zoom offering free access to businesses and schools at the right time during the pandemic made it a household name.
• Notion – known for its community-based building model, it should be no surprise they have massive word of mouth and referrals.

It’s much the same with Airtable, Figma and Trello.

PLG Steps to Growth

1. Core Problem Validation
Does this help me solve their problem?

At the core of product-led growth is the fundamental question of whether your product effectively solves the user's problem. To make this happen: Ensure that your product genuinely addresses the user's problem and provides a solution. Then, communicate that well in your comms with others.

2. Help Them Make a Decision
What information do users need to decide?

Once users get what your product does, they need the best info to know if it's for them. For this, you need a comprehensive product page with detailed features, transparent pricing, social proof (e.g., testimonials, case studies), and emphasis on what differentiates your product. Keep that info updated.

3. Remove Friction
How easy it is to try?

A smooth onboarding process is vital. Reduce the number of steps required to start, and give people a low-risk, high-value way to trial your product.

4. Value Discovery
How easy is it to learn to use?

Once users are in, they need to quickly discover the value your product provides. Develop intuitive onboarding tutorials and educational content to help users learn to use your product effectively.

5. Time to First Aha!
How quickly do users unlock value?

Accelerating the time it takes for users to experience that "aha" moment, where they realise your product's true value, is vital. Identify key actions that lead to the "aha" moment and optimise the user interface to guide users toward them quickly.

6. Repeatable Value
How often do users get value?

Ensuring that users consistently and repeatedly get value from your product is what drives long-term engagement. Continuously get feedback and improve your product based on it to build a loyal user base.

7. Monetisation
How well does the product monetise?

While PLG focuses on delivering value, monetisation strategies are crucial. Implement flexible pricing, analyse user behaviours, and adjust pricing strategies to maximise revenue.

8. Get the Flywheel Going
How can users bring in more users?

Mechanisms within the product itself that encourage referrals and sharing can lead to a self-sustaining growth cycle. Create referral and advocacy programs, offer rewards for successful referrals, and make it easy for users to invite others.

Got a low-cost growth strategy that’s worked well for you? Hit reply and let us know…

THE RESULTS

Last week, we asked to what extent you take part in the access economy. And quite a few of us (40%) are pretty actively outsourcing ownership…

🟨🟨🟨🟨⬜️⬜️ 📄 Nope, I own everything (30%)
🟨⬜️⬜️⬜️⬜️⬜️ 🚙 Maybe rent a car now and then (10%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏠 Choose to rent the house (13%)
🟩🟩🟩🟩🟩🟩 📱 Uber/Bolt, Airbnb/Lekkeslaap – the works (40%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💻 I’m reading this email on a rented device (3%)

Hi there,

Feeling fit? Scientists might have just discovered an actual exercise pill. A new compound called SLU-PP-332 successfully helped obese mice lose weight and tone up. And you bet everyone’s gonna want to get their hands on it.

In this Open Letter:

• The high life: Renting VS owning in the Access Economy.
• Meteorite Olympics, desert dreams & web buyouts.
• Wealth secrets: Investments you’re not supposed to know about.
• Last chance: Get R2’500s gold in your new account.
• Watch: How does greylisting affect startup funding?
• The results: Your take on SA’s greylisting.

TRENDING NOW

Do You Really Need to Own It?

Imagine a world where "having" doesn't mean "owning." A realm where you can flirt with products, lifestyles, and even energy solutions without tying the knot.

It’s called the Access Economy, and it’s already unlocking a whole new segment of customers for your business.

The Curious Case of Ownership – or Lack Thereof

You know how one has those fleeting moments of passion? A surge of creativity accompanying the sudden urge to capture the world through a high-end camera or an impulse to serenade your cat on a brand-new guitar?

‍

Well, what if I told you there's a way to heed the call without breaking the bank? The Access Economy whispers, "Why buy when you can borrow?"

The Access Economy is basically renting things like appliances, cellphones, laptops or even your solar installation. But more than that, it’s accessing things you need only for the period you need them.

The Nitty-Gritty: Why It's a Hit

This isn't just a single; it's an entire album. And here are the beats that make these tunes so catchy:

• Economic Flexibility: Big dreams, small budget? Renting offers a front-row experience without the VIP price tag.

• Technological Tango: Platforms and apps are the dance floors where all the magic happens. Airbnb, Uber, and Spotify are the DJs, setting the mood just right with affordable prices and subscriptions that enable access to heart desire.

• Eco-Chic: Share more, waste less. Simple, yet revolutionary. Less plastic, less waste, less carbon. Makes sense.

• Urban Space Jam: In bustling cities, space is often limited, meaning while you might have a 3x3 meter patch of grass, storing a lawnmower might not be ideal. Imagine you can rent it twice a month – nice.

• Generational Groove: For many millennials and Gen Z’ers, experiences are the new currency – why have one holiday home when you can go to a different place every time? What’s more, the ownership admin and overhead is something else – and we know how much Gen Z loves responsibility.

• Risk Mitigation: Skip the stress of the depreciating assets and interest rates going bananas. With renting, there are no bad investments.

• Flexibility & Freedom: Why settle for one when you can have a little bit of everything? Don’t deploy all your cash into one item, hire what you need and be able to afford access to it with cash flow.

• Work-Life Remix: Flexible work patterns call for flexible life patterns. It's all about that work-life balance for the gig worker. And as their seasons and opportunities change, so too does their requirements for specific items.

• Global Village Vibes: With the world as your playground, who needs the baggage of ownership? Many modern workers work remotely, travel a lot and don’t want to be tied down.

• Innovate or Bust: New startups are making renting so convenient, it’s a no-brainer and it is bound to threaten those businesses that don’t embrace it.

While Uber and Airbnb get a lot of credit, let's tip our hats to the real O.G.—car rentals. Yeah, Sixt had this figured out way back in 1912. But let's be honest, what’s really made the Access Economy a household name is the development in tech.

‍

‍

Tech is the magic wand that turned this pumpkin into a golden carriage. Access, tracking and payments are all now baked into easy-to-use apps. It’s what made Uber (just an iteration of another access economy business model – taxis) viable.

Access it local

Now, let's shine a light on some remarkable ventures that have tapped into the Access Economy like Cheslin Kolbe in space.

• GoSolr: Energy blackouts got you down? How about renting a solar system? A recent investment from ARC has slashed GoSolr’s lead time to just two weeks. Say adios to energy woes and hello to a sunshine-filled future.

• Strapp: Your garage might be a treasure trove of unused items, from cameras to power tools. Strapp is like the digital marketplace of your dreams where you can list these treasures for others to rent. While it could grapple with the challenges of marketplace dynamics (having enough on offer and enough to buy at all times), there's undeniable potential, especially for niche items.

• Rentoza: Now here's a success story for the books. Starting in 2017, this South African startup has already roped in over 8,000 active customers. Rentoza has more than R100m in assets being rented out and a team of over 110 people. And with a recent $6 million in funding, they’re not hitting the brakes anytime soon, planning African expansion as well as local retail expansion (this could make it blow up 10x).

The Access Economy is no longer just a section in a business textbook; it's a lifestyle choice that's democratising luxury, convenience, and choice. It’s a strategy not just for making life more enjoyable but also more sustainable. It’s not just about consumption; it’s about smart, flexible, and conscious living and this is just the start… we are watching this space.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

Do you take part in the access economy?

Vote to see what everyone else says...

• 📄 Nope, I own everything
• 🚙 Maybe rent a car now and then
• 🏠 Choose to rent the house
• 📱 Uber/Bolt, Airbnb/Lekkeslaap – the works
• 💻 I’m reading this email on a rented device

Login or Subscribe to participate in polls.

IN SHORT

🏜️ The Australia of Africa. Namibia could be the next big thing for wealthy dollar millionaires looking to retire. This is due to its low crime rate, favourable tax rates, low population density, abundant natural resources, and the rise in lifestyle estates. Interestingly enough experts say that if South Africa followed our neighbour’s examples especially when it comes to capital gains tax and estate duty policies, it could be one of the wealthiest countries in the world in 10 years.

🤑 Market Consolidation. Dimension Data (who owns local ISP Mweb) has just accepted an offer from a competing ISP, Webafrica, to acquire Mweb. The deal, an undisclosed amount, will see Mweb continue operating independently.

☄️ Meteorite Olympics. In 2021, two meteorite fragments were discovered in the Northern Cape. In August 2023 the Meteoritical Society finally accepted that “Brierskop” and “Wolfkop” are in fact from 2 different meteorites – despite being found only 1km apart. This takes SA’s tally of confirmed meteorites to 51 – the highest in sub-Saharan Africa. Namibia lies 2nd with 18 and Botswana has found 12 Space Rocks.

🕵️‍♂️ Crime (Mini) Boss. The 2023 Global Organised Crime Index was just released and South Africa scored a 7.18 out of 10 criminality score making us 7th in the world. Only the DRC (7.35) and Nigeria (7.28) were other African nations ahead of SA with drug trafficking, cash-in-transit operations, poaching syndicates, robberies, and more the crime of choice for these Mafia-style, well-armed syndicates operating in Cape Town, Johannesburg, and Durban.

🌱 Seed Funding. Local payment API startup Revio has just raised a $5.2 million seed round. The startup provides businesses with an API for payment collection and allows businesses to accept and reconcile more than 70 payment methods including major mobile money products, card schemes, direct bank payments and wallets in 25 countries in African markets.

­

THE OPPORTUNITY

The Investments You’re Not Supposed to Know About

Anyone who’s ever read those old Rich Dad Poor Dad books from the 90s will remember the idea that the 1% mega-rich get these super-secret massively profitable investment opportunities that we ordinary people never have access to (the books are basically about how he learns and tries to get access to those elusive opportunities).

One of those vehicles that’s publicly known but seemingly inaccessible to us is gold. Really old, mega-rich families stockpile and profit off gold like we can't even imagine.

And there’s a very good reason why…

Gold never loses its value. In fact, it’s one of the few things that has and probably will always just get more valuable. Sure, the price goes up and down all the time, but the value increase is remarkable, especially if you compare it to cash.

We explained the whole thing in our Open Letter on gold’s investment value, but here’s a practical example that’ll blow your mind:

The real reason why it’s so clever

Buying a loaf of bread

with

Cash

Gold

In 2008

R7. 22

87% more

0.00095 ounces

33% cheaper

In 2020

R13.51

0.00064 ounces

Buying a pack of cigarettes

with

Cash

Gold

In 2008

R20.13

66% more

0.00325

48% cheaper

In 2020

R33.40

0.00169

If you buy stuff with gold, you pay less for it even 10 years later, while everyone else pays more due to inflation. Gold is almost immune to inflation – and it’s the same if you use gold to buy almost everything: coffee, cars, houses. Wouldn’t you be better off today if you could pay less for stuff than you did back in 2008? See why the rich get richer with gold?

But there’s a problem…

Buying gold, as a normal person, is hard because it’s very expensive to buy in quantity, it’s hard to store safely (you paint a target on your back), and you can’t actually go to the shop and pay for groceries with just gold, you have to turn it into cash first.

Now, you will have noticed over the last few weeks that we’ve been promoting a new SA product called Troygold. And the reason we did that is because Troygold solved all those problems – they took all the good stuff about gold, removed all the bad stuff and made it available to all of us normal people.

Here’s the diff…

Normal gold

• Hard to come by because supply is so limited and stockpiled.
• Very expensive, because you have to buy in bulk.
• Hard and risky to store and safeguard.
• Can’t just buy stuff at the shop with it.

Troygold

• Easy to buy – takes less than 4 minutes.
• Affordable because it’s fractional – you can buy portions of gold for just R1 upwards.
• Safety is not your problem, your gold is already secured, insured and stored for you.
• You can just buy stuff – you get a special Mastercard that lets you buy anything with gold, not cash.

‍

Troygold gives you access to the gold market with a simple app you download, then you start buying gold in whatever quantity you want. And you can trade, save and borrow cash to spend against your gold. Beautiful, right?

Check out their awesome video…

Now, before you head off and become a gold magnate, let us help you get started by paying your first R2’500s worth of gold into your Troygold account.

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

And all you gotta do to stand a chance of winning it all is 1, 2, 3…

STEP 1: Go to LinkedIn.

STEP 2: Create a post on what you think about The Open Letter (as a post to your followers)

STEP 3: Tag us: @TheOpenLetter and hit “post”.

The winner will be announced on Tuesday, it’s your last chance to enter. Go get it!

THE THREAD

What Does SA’s Greylisting Mean for Startup Funding?

And how is it impacting the larger ecosystem…

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Well, well… we asked your opinion on greylisting and an overwhelming 55% says the government should just make it a legal requirement right now.

⬜️⬜️⬜️⬜️⬜️⬜️ ❓ What is greylisting? (5%)
🟨⬜️⬜️⬜️⬜️⬜️ ☑️ Yes, my company is ready. (10%)
🟨⬜️⬜️⬜️⬜️⬜️ 😡 I hate KYC. (15%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💁 I don’t care. (5%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🙃 It’s the government’s job, they mustn’t bother us. (5%)
🟩🟩🟩🟩🟩🟩 ⚖️ They should just legislate it right now. (55%)
⬜️⬜️⬜️⬜️⬜️⬜️ 😲 First I'm hearing of this. (5%)

Hi there,

Love irony? AI startups are now clamouring to hire all the writers and poets that publishers are laying off due to their products, to help improve their products. See, we told you it’s no biggie – even developers have nothing to fear from AI.

In this Open Letter:

• SA cash flows: Opportunities inside the grey list.
• Ancient Zambians, grocery subs & where to semigrate to.
• Your turn: Get your hands on R2’500s worth of gold.
• Get found: Building more discoverable products.
• What AI’s really for: The results are in…

TRENDING NOW

Keeping SA’s Cash Flowing

Remember the morning of Monday 28 August? SA crypto traders choked on their cornflakes as US crypto exchange Kraken’s arbitrage premium suddenly doubled overnight. It made trading BTC a nightmare.

However, the reason’s a bit concerning: one of Kraken’s banking partners, Bank Frick in Liechtenstein, put SA on its anti-money-laundering blacklist and stopped accepting deposits from SA altogether.

It’s not the first time, either. USDC stablecoin issuer Circle stopped taking fiat deposits from South Africa earlier this year, too. So, what gives?

Well, it has everything to do with SA’s greylisting on 24 February this year. Now, remember, Government told South Africans that the greylisting is not so bad. Yeah, we’re not so sure…

‍

It’s already affecting our economy

And it’s actually worthwhile plotting out some recent events around SA’s greylisting:

• Feb 23 – SA greylisted by global money laundering and terrorist financing watchdog, Financial Action Task Force (FATF).
• Mar 23 – Al Jazeera uncovers a massive gold-based money-laundering operation in SA implicating bankers at Absa, Standard Bank etc.
• Apr 23 – USDC stablecoin issuer Circle blocks deposits from SA.
• Jun 23 – The United Nations Conference on Trade and Development shows that SA loses R1.1 trillion per year due to Illicit Financial Flows (IFFs), mainly misinvoicing in imports and exports.
• Aug 23 – Bank Frick blocks deposits from SA.
• Sep 23 – SA’s car industry confirms billions are lost due to illegal imports and exports in September 2023.
• Sep 23 – FirstRand (FNB, RMB, WesBank) CEO Alan Pullinger expresses concern over SA’s efforts to get off the greylist.
• January 2025 – SA’s deadline to comply with anti-money-laundering measures or get permanently greylisted (if not blacklisted).

Let’s just be very clear about the risks. If SA doesn’t get taken off the greylist, any bank or company would have the right to simply stop dealing/trading with SA altogether. (In fact, they’d probably risk being greylisted themselves if they didn’t.)

At best, we’d have to wheel, deal and pay a fortune to import basic stuff. At worst, we’d have access to nothing and our financial system would collapse.

‍

‍

So it’s probably worth knowing what the greylisting is really all about…

SA’s greylisting in a nutshell

The greylisting is about SA not having enough anti-money-laundering (AML) and counter-financial-terrorism (CFT) controls in place.

See, criminals and terrorists fund themselves with perfectly legal financial tools. So being AML and CFT compliant simply means getting SA banks, FSPs and some other businesses to check customers against international Sanction Lists before doing business with them. And this also creates opportunity…

The scope of the opportunity

Thing is, it’s not just banks, there are quite a few industries that would by law be required to do this type of screening, including: Estate Agents, Loan issuers, Deposit takers, Crypto exchanges, Banks, Insurance companies, Medical aids, PSPs, Industry bodies, Lawyers, Brokers and FSPs.

That is a HUGE market. With 10’157 FSPs, 36’000 estate agents and 29’981 lawyers alone, you’re talking hundreds of thousands of businesses affected. All of whom don't necessarily have the tech or capacity to check all customers against Sanction Lists, but need to, else we all go under.

Moving in this space

That’s where Southern African startup ZenDetect comes in. They’ve built a super sleek platform that lets companies in SA, Namibia and all of Southern Africa upload their clients or plug into their API and scan them against Sanction Lists in real-time and continuously.

SA has just about 14 months to get its industries AML compliant, and the consequences are dire if we miss that window, so we’re watching this space.

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

What's your take on the whole greylisting thing?

Vote to see what others say...

• ❓ What is greylisting?
• ☑️ Yes, my company is ready.
• 😡 I hate KYC.
• 💁 I don’t care.
• 🙃 It’s government’s job, they mustn’t bother us.
• ⚖️ They should just legislate it right now.
• 😲 First I'm hearing of this.

Login or Subscribe to participate in polls.

IN SHORT

🚛 Considering Semigration? At the forefront of the semigration trend are these small towns across SA, with beautiful scenery, slower pace and cheaper goods as major drawcards. Property prices in these hotspots have also seen a significant increase over the last 10 years – anywhere between 44% and 167%.

🏍️ Special Delivery. After a couple months of pilot trials, Checkers Sixty60 subscriptions are available to all customers. For R99 per month, you can get unlimited deliveries (gotta spend more than R350 though) and other special subscriber perks. Also, check out the rad launch ad featuring a Cruising Hollywood actor and the references to his most iconic roles.

🛸 Geeking out. Comic Con Africa is set to hit Jozi this weekend with 80’000 comic fans expected to attend. The event will be host to Cosplayers, gamers, board game players as well as some international celebrities from films and TV shows like Yellowstone, Star Wars and The Walking Dead.

☀️ Solar Slump. Seems like solar isn't as big a deal for home buyers despite South Africa’s ongoing loadshedding woes. But while 75% of agents noted an increase in backup power systems, 64% have said that pre-installed systems are not something prospective buyers are looking for.

🪵 Ancient Wood. Archaeologists in Zambia have found a wooden structure believed to be nearly half a million years old at the Kalambo Falls near the Tanzanian border. The discovery is set to reshape our understanding of early hominid behaviour, suggesting that they used a variety of stone tools (also found at the site) to cut, chop and scrape the logs. Could also just be some oke’s Heritage Day Braai from 500’000 years ago.

💰 Bag Secured. After being blocked by the UK’s competition regulator back in 2022, it looks like Microsoft’s multi-billion dollar purchase of Activision Blizzard is set to go through. The proposed amendments to the deal are to allay concerns that Microsoft’s control over Activision would withhold popular titles like “Call of Duty” and “World of Warcraft” from other competing gaming platforms.

⛏️ Golden History. Gold has been mined for thousands of years, with as much as 86% of the above-ground gold being taken out in the last 200 years. South Africa was topping the charts of gold-producing nations up until 2007 when China surpassed us. Wanna get your hands on some gold really easily? Talk to our friends at Troygold.*

_{*This is a sponsored short}

JUST FOR YOU

Last Chance to Win Gold!

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

How to Build Products to Be Discovered

You know how everyone wants lots of organic traffic so they can save on marketing? Then there’s the running joke that South African builders tend to battle with marketing itself… Well, the idea of “building for discoverability” could be a solution.

‍

What is Building for Discoverability?

No, it’s not about how your product helps users discover features or whatever. It’s about how you position your product to help users find you out of the blue.

Building for discoverability is twofold:

1. Building features you know people are looking (searching) for
2. And marketing them in all the right places.

And it’s important because, on Lenny’s Podcast the other day, they said some US SaaS companies found that building for discoverability helped reduce the time it took to recoup their acquisition costs from customers by 36%. (A fancy way of saying “make your money back faster”.)

For example: Zapier

Zapier gets this very right. Quick, go Google “workflow automation tools” (what Zapier technically is). See any Zapier ads there? No. Because they don’t want to waste their money…

See, software users rarely search for new products, they search for the problems they want to overcome. Now go Google “connecting Typeform with Google Sheets” and watch those Zapier dollars hard at work.

See, Zapier spends their bucks not on telling you what they are, but what their product can do for you – that’s how they almost tripled their annual revenue between 2020 ($50m) and 2021 ($140m) alone.

Also: Canva

They don’t focus so much on ranking for “design software”, but check out “how to make a flyer”. See the trick?

Others that do this well are HubSpot, Ahrefs etc.

How to Build for Discoverability

1. Know your ideal customer
2. It’s extremely important to know them inside out. Not just basic demographics, but what they do during the course of the day, how they look for solutions, who they trust and where they hang out. Because only when you know this can you discover the next one…
   
3. Speak to the outcomes they’re looking for
4. When you know who they are and where they hang out, you can do the research needed to find out what problems need solving. What will they search for, what do they look for during the course of a day, a week? Etc.
   
   Now, you’ll already have a great product if it actually helps them solve a lot of those. But you can take it even further…
5. Create content + advertise on those pain points
6. Forget the idea of telling people your product is “a (broad startup category) that helps you…”. Rather spend your money on appearing when someone searches for the outcome they’re looking for.
7. This extends to social and other ad types, too. Remember how Zapier appears on YouTube with ads on “how to connect X to Y”? Well, do the same, just for your product.

Found a way to help people find you faster? Or maybe you have a specific question about building smarter? Hit reply and let us know…

THE RESULTS

Alrighty, we asked what you really use AI for and most people here automate workflows and social posts…

🟩🟩🟩🟩🟩🟩 🦾 Automating repetitive tasks and workflows (27%)
🟨⬜️⬜️⬜️⬜️⬜️ 🦸‍♀️ Enhance customer support and engagement (7%)
🟨🟨🟨⬜️⬜️⬜️ 🔎 Analyse user data and gain insights (12%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍕 Debate AI on whether pineapple belongs on pizza (0)
🟨⬜️⬜️⬜️⬜️⬜️ 👨‍👨‍👧‍👧 Streamline recruitment and HR processes (7%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤡 See if AI can tell jokes better than we can (0)
🟨🟨🟨🟨⬜️⬜️ 🎨 Write stuff and draw pretty pictures (20%)
🟩🟩🟩🟩🟩🟩 🚀 Automate social media posting (27%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤨 What on earth would I use an AI for? (0)

PARTNER WITH US

You are reading this because you are a mover and a shaker in the SA startup space. Want to engage thousands like you? Sponsor The Open Letter for the month of November.

Hit reply and tell us you are interested and we can share the details.

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Feeling fowl? Some scientists have created an AI to help us talk to chickens. Ok, it’s not peer-reviewed yet, but they claim they can tell what your chickens are feeling with 80% accuracy.

In this Open Letter:

• Overflow: What’s reshaping developer recruitment.
• Bee drones, SA’s new bank & Neuralink human trials.
• Last chance: 1 Week left to win R2’500 worth of gold (for reals).
• Moving fast: Learning from other startups quickly.
• Preferred ISPs: The results are in…

TRENDING NOW

Reshaping Developer Recruitment

So, the CEO of Naspers and Prosus suddenly stepped down, and eyebrows are rocketing skyward. The scuttlebutt is that it's connected to their rather surprising 100% acquisition of Stack Overflow in 2021 for $1.8 billion. A weird deal considering Prosus has largely been wooing developing countries, but here they are, buying up something as Big Apple as it gets. Intriguing, huh?

But without hindsight, one could try and rationalise it.

‍

The need for dev resources

We can sympathise with a group that owns so many tech companies in Africa trying to secure more developer resources. Africa has a severe software developer shortage – less than 700’000 across the continent (something we covered earlier in the year).

For perspective, India has 7 times as many software developers for roughly the same population count.

But, of course, a few months after purchasing Stack Overflow, it became one of AI’s biggest casualties...

Enter ChatGPT

This AI not only talks the talk but walks the walk. It can write code (albeit not flawlessly). The kicker? ChatGPT trained on Stack Overflow data.

So, the entire wealth of knowledge that Stack Overflow, shared and developed by a global community of millions, is now, essentially, embedded in the AI. Why post a question on a forum where you have to wait for a reply when AI can give you an accurate answer (albeit not 100% accurate 100% of the time) within seconds?

Ironically, Similarweb, another Prosus portfolio company, wrote a blog article back in March 2023 attributing the drop in Stack Overflow’s traffic to ChatGPT.

‍

But there’s a silver lining

Speaking of AI and coding, will our robot friends replace us? Hardly.

Some developers are seeing a kind of technological symbiosis. Perhaps even a dev renaissance of sorts. See, according to GitHub Copilot (an AI code-writing companion for $19 a month), developers who use their AI product spend 74% of their time on more enjoyable work, 88% feel more productive, and 96% speed through repetitive tasks.

So, AI can and should be more of an assistant than a replacement.

OK, so why are we seeing tech layoffs and a hiring slowdown since late 2022?

Could it be the economy? Or is AI actually reducing the demand for software developers? Either way, things are changing and those in the space are already evolving with the times.

Local developer recruitment platform Offerzen, for instance, changed its hiring model to make hiring devs more attractive:

• Old fee – fixed per hire, 12.5% of the developer's annual salary, ouch!
• New fee – flat monthly fee of R10k for up to 5 devs, nice!

Prosus will release its financial results in six weeks. By then, we'll have a clearer picture of how their Stack Overflow play pans out. And, for those of you scrounging for top-notch developers, let's hope the treasure hunt gets easier soon.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

What do you use chat AIs for?

Vote to see what others say...

• 🦾 For automating repetitive tasks and workflows
• 🦸‍♀️ To enhance customer support and engagement
• 🔎 To analyse user data and gain insights
• 🍕 To debate AI on whether pineapple belongs on pizza
• 👨‍👨‍👧‍👧 To streamline recruitment and HR processes
• 🤡 To see if AI can tell jokes better than we can
• 🎨 To write stuff and draw pretty pictures
• 🚀 To automate social media posting
• 🤨 What on earth would I use an AI for?

Login or Subscribe to participate in polls.

IN SHORT

🧠 Want brain Implants? Neuralink is now ready for human subjects for their PRIME (Precise Robotically Implanted Brain-Computer Interface) Study. The 6-year experiment is aimed at quadriplegic candidates due to spinal cord injury or ALS, with the view of giving them mental control over various devices.

🐝 Busy Little Bees. Worker bees in George and the Outeniqua mountains have been acting like little micro drones, collecting pollen from plants in the area as part of a pilot project for Belgian startup BeeOdiversity. The pollen which contains important plant DNA and data provides mega-valuable insights into the biodiversity of the area.

🐓 What the Cluck? Hold on to your hats chicken lovers. SA is heading for a chicken shortage due to loadshedding and bird flu currently doing the rounds. Perhaps if those Japanese scientists can crack the AI to help us translate what chickens are saying they can let farmers know if they’re feeling under the weather and can self-isolate.

🤷‍♂️ Google who? Despite still being the big Search dog, it looks like Google is in danger of having its lunch money taken by the likes of TikTok, Reddit and even Instagram as more and more users (including 40% of Gen Z’ers) turn to these platforms to search for answers to their most burning questions.

🏦 Another Place to Bank. The Department of Women, Youth and Persons with Disabilities (DWYPD) has applied to the South African Reserve Bank to launch a new cooperative bank to specifically advance the inclusion of women, youth and persons with disabilities and their businesses and other co-operatives

🟡 Digital Gold Rush. You can now buy and invest in Gold straight from your phone without worrying about moving and storing it securely. *This is a sponsored post.

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

THE THREAD

How to Learn from Others and Grow Fast

If you’re serious about building something unique, this week’s podcast is for you. We take the concept of learning from the successes and failures of other founders, introduced in our earlier letter on deconstructing startup success a little further.

All in a quick 30-minute podcast that shows you exactly how it’s done and what the benefits are…

The Juicy Bits

1. Speed up your “school fees” by studying other startups
   Few things school a founder faster than building a new product. You have to constantly learn and adapt to make it stick and work. But you can fast-track it even more by studying the models of successful and failed startups.
   
   “Go and unpack what they've already done because there are lessons inside there.” But don’t just copy-paste, try to understand why something was built in a certain way.
   
   "Understanding the 'why' really sparks ideas of how you could do stuff in your own product.” Get all the insights here.
   
2. Utilising customer interviews & behaviours
   Something we didn’t touch on so much in our post is the idea of deconstructing customer experiences. If you can get in front of a potential customer and ask them about instances when they needed a solution and couldn't find one, you can probe about their decision-making process directly afterwards. This helps identify gaps and opportunities for what the market needs and how you can potentially position an offering.
3. This exercise is also useful for refining an existing product. Ideas like actually looking at other apps your customer would typically use before you interview them can give you a real edge – get more ideas here.
   
4. Marrying Tech with Ops to create your moat
5. Going back to our previous post on Checkers Sixty60, which was kind of a deconstruction in itself, if you think about how Checkers managed to leverage their tech in tandem with in-store operations (unlike others, who keep store and online separate), that’s actually what enabled them to create such a unique offering. This makes it hard for others to compete in the space – it’s their “moat” if you will.
   
   So there’s definite room for founders to go and deconstruct their competitors now (or perhaps even other parts of Checkers itself) to find the gaps and build products that help solve for growth at a corporate with deep pockets – get the inside track here.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Earlier this week, we asked what you used for broadband, and good-ole fibre’s taking the cake…

🟨⬜️⬜️⬜️⬜️⬜️ 🌧️ Rain (18%)
🟨⬜️⬜️⬜️⬜️⬜️ 🇿🇦 Vodacom, Cell C, Telkom, MTN (16%)
⬜️⬜️⬜️⬜️⬜️⬜️ 📱 I use my phone for internet at home (0)
🟩🟩🟩🟩🟩🟩 ➰ Fibre (54%)
⬜️⬜️⬜️⬜️⬜️⬜️ ⚡ Starlink (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💼 I’m reading this at the office (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🥰 Got my neighbour's wifi password at braai once (0)

PARTNER WITH US

You are reading this because you are a mover and a shaker in the SA startup space. Want to engage thousands like you? We’re introducing partnership opportunities.

Hit reply and tell us you are interested and we can share the details.

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

In case you haven’t seen it, this is the video of the couple getting soaked by a freak wave smashing through the Brass Bell’s windows in Kalk Bay.

And, if you have trouble sleeping, read SA’s Weather’s snooze-fest explanation for why our country got battered by 9-metre waves this past weekend. (Hands up who thinks The Open Letter could have done a better job.)

In this Open Letter:

• No competition. How Rain’s making it pour.
• Best in Africa, a drive braai & why AI shouldn’t write obituaries.
• Up for grabs: We’re giving away R2’500s worth of gold.
• Fast track: Reverse-engineering others’ success.
• How we shop: The results are in.

TRENDING NOW

Making it Rain

Remember when Rain was the new kid on the block? With their irresistible uncapped 4G bundles, and we all thought, "Cute, but they'll probably be a flash in the pan like so many others." But then, hold the phone! Late last year, they were bold enough to make an offer to merge with Telkom, and we couldn't help but do a double-take.

Flash forward to today, and would you believe it? According to African Rainbow Capital (ARC), Rain's valuation has surged – let's say "precipitated" – by a jaw-dropping percentage, landing at R22.3 billion; lapping Telkom’s R11.9 billion, with ARC projecting Rain's EBITDA (earnings before deductions) to hit over R2.5 billion by February 2024.

Mind-blowing for a company that's barely 5 years old. And in such a competitive space.

‍

Rain keeps it straightforward with their packages – uncapped home 5G at three different speed levels for a flat R559 per month. Want more speed? Just add R200. They even toss in a couple of 4G SIM cards, each complete with 2GB of data and 60 minutes of voice calls (and some SMS credits, lol).

The Secret Sauce: Unpacking Rain's Success

Last week we dissected Checkers Sixty60 and their e-commerce shakeup. Rain is no different, combining smart market analysis with cutting-edge 5G tech to position itself as the telecom network to beat.

Let's break it down:

• ARPU: With a monthly rate of R559, Rain's Average Revenue Per User (ARPU) overshadows the likes of Vodacom, Cell C, and MTN. These providers have a large prepaid base that is known to switch to new SIM cards regularly.
• CAC: Operating purely online means no retail costs – no rent, no excessive staffing, and no massive capital outlay. So these fees can be applied towards a slick, obligation-free signup process. You don’t have to sign any contract to get a 5G modem for free!
• Lower Churn: But once you get it up, it works like a charm and the price is great, why would you switch? Rain likely has lower churn than other operators.
• Cost to Service: Online servicing can be automated, and their state-of-the-art 5G towers are easier (and cheaper!) to maintain than the older networks of their competitors. Not to mention that they roll out in urban areas – easier to travel to and service well. One tower could also serve a multitude of customers in dense areas and as such, the cost to service a customer goes even further down.

We got a unicorn, people

Who says you need a global market to be a unicorn? Rain proves that sometimes thinking locally is not just lekker – it's a game-changer. With a $1.18 billion valuation achieved in just a few years, it's evident: Rain is not just a storm passing through; it's a climate change in the telecoms industry.

So, whether you're on the hunt for a new mobile network or just a fan of startups shaking things up, Rain is one to watch. This is a company going places, and fast.

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

What do you use for broadband?

Vote and see what others say...

• 🌧️ Rain
• 🇿🇦 Other mobile broadband (Vodacom, Cell C, Telkom, MTN)
• 📱 I use my phone for internet at home
• ➰ Fibre
• ⚡ Starlink
• 💼 I’m reading this at the office
• 🥰 Got my neighbour's wifi password at braai once

Login or Subscribe to participate in polls.

IN SHORT

♨️ Drive Braai. If you haven’t seen it yet, this is the viral video of two guys spit-braaiing in the back of a moving bakkie everyone’s talking about. Talk about your Braai Day vibes.

👋 Packing it in. Naspers and its EU internet company Prosus’s Bob van Dijk resigned very abruptly as CEO of both companies. They’re putting heavy-hitting dealmaker Ervin Tu in his place for now. Some say it’s about time after years of losses across their assets (outside of their Tencent holding of course).

📜 State of Affairs. SA Gov’s controversial move to kill off The Department of Public Enterprises and create a new company to manage state-owned enterprises (like Eskom) has been published as a draft bill. And we have 30 days to comment on it – info on the bill here.

🇿🇦 Best for Startups. Despite new ventures attracting less investment than counterparts in Egypt, Kenya and Nigeria, the Global Startup Ecosystem Index still ranks South Africa as the best startup country in Africa.

🕊️ Not funny. Microsoft News removed an AI-generated obituary for an NBA player who passed away last week, after the AI messed up pretty badly, calling the beloved player “useless at age 42”. The cringe post is still visible on archive, though.

JUST FOR YOU

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @The Open Letter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

How to Reverse Engineer Success

A Step-By-Step Guide to Deconstructing Startups

Ever wonder why some businesses work and others fail? There’s no silver bullet, but unpacking a successful or failed business can help you learn a lot. In this post, we'll arm you with a treasure map – a step-by-step guide that will help you unearth hidden gems of business insights.

‍

It’s called Deconstruction, the process of separating complex systems into the smallest subsystems possible to help understand them. In the real-world context, it's akin to reverse-engineering the critical decisions startup founders made to get where they are.

Here’s how…

Step 1: Choose a Target & Objective

Select a startup that aligns with your goals or interests. Consider a business that targets the same market with a different product or service. Understanding how they delight your ideal customer can help you find nuggets.

Outline what you hope to learn: marketing strategy, revenue model or perhaps their team structure. Pose a specific question: "Why do the best people love to work there?" or “Why do people buy from them at that price?” etc.

Step 2: Analyse the Business & the Market

Study the business model, including revenue streams, customer acquisition costs, and retention rates. Public interviews and annual reports are good sources. And also look for patents or exclusive technologies that give a competitive edge.

Identify competitors and analyse market trends. This will help you understand the startup's position and unique selling proposition in its ecosystem.

Step 3: Examine the Team

Look into the backgrounds of the founding team and key employees. Skills, experience, and roles can reveal much about a business's success or failure.

Step 4: Identify Key Milestones or Pivots

Recognise the moments when the business made significant changes or reached important goals. What led to these moments, and how did the business capitalise on them? What did they do differently from this point on?

Step 5: Consolidate & Strategise

Compile your research into notes and share it with your team (or outside advisor) to unpack what you can learn from these insights. Can you draw actionable insights? This could be anything from a unique customer retention strategy to a successful revenue model.

Step 6: Implement and Test

Apply the insights you’ve gathered to your own startup. Track these changes meticulously so you can evaluate their effectiveness.

Step 7: Repeat

Continuously analyse other startups to update and refine your strategies. Remember, in the fast-changing world of startups, standing still is akin to moving backwards. Keep deconstructing, keep learning, and keep iterating!

Ever tried to deconstruct another business before? Hit reply and let us know what you’ve learnt…

PARTNER WITH US

You are reading this because you are a mover and a shaker in the SA startup space. Want to engage thousands like you? We’re introducing partnership opportunities.

Hit reply and tell us you are interested and we can share the details.

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there

Need to move fast? A group of Swiss students just smashed the world acceleration record with a custom EV racer that goes 0–100km/h in less than a second. And it does it over less than 12 metres.

In this Open Letter:

• Basket price: Changing the grocery game.
• Cringey Apple, Elon’s bio & how to lose R1.1 trillion.
• Got gold? We’re giving away R2’500s worth + merch.
• Startup play: The ins and outs of building in public.
• Your security? The poll results are in…

TRENDING NOW

Disrupting the Cart

Inside the on-demand grocery revolution

If you follow memes like we do, you’ll have noticed that Springbok’s minty green away kit reminds people of Checkers Sixty60 (and Listerine).

And in a masterwork of guerilla marketing, Checkers quickly moved to co-sponsor the RWC TV rights on SuperSport. So now when you tune in to World Cup games, you see the Sixty60 logo together with shots of the team in that jersey — genius.

But that’s not the only place they’re scoring big…

It’s in the numbers

Shoprite Group’s recent results show Sixty60 sales grew by a staggering 81.5% this past year. And Moneyweb estimates its revenue to be somewhere in the region of R3.5bn.

If those numbers are accurate, and with the app being downloaded over 3 million times, that means their annual revenue per download is around R1200 per annum. Not bad at all.

It’s going so well, rumours are they’re working on innovative ways to solve problems delivering in townships, possibly partnering with a taxis-as-logistical-partners startup. Important, because if they crack the informal market it could become their primary driver of growth for the next 10 years.

Now, you might remember we showed how other big players are battling in the traditional e-commerce space. So the question is: What did Checkers Sixty60 do differently?

Play on Playa(s)...

Let’s go back to before the Sixty60 launch.

Both PnP and Woolworths had e-commerce plays in place long before Checkers. But they weren’t nearly as fast. They were essentially, traditional order-now-get-it-next-Tuesday services.

What was wrong with this?

• Delivery was a mess. Recipients need to be home at a future-dated time. What’s more, cold chain products could be a challenge as a driver typically goes out for a few trips.
• Consumer behaviour doesn’t align. Do you know what you’re eating tonight? Likely not, but come 5 pm and if the sun’s out, you might wanna light the fire to start the braai at 6. Ordering through traditional e-commerce just doesn’t fit this common behaviour.

It’s only when Sixty60 entered that the game changed: Take 60 seconds to order and get your items delivered in 60 minutes. Fewer logistics issues and delivery within 60 minutes from a local Checkers store means no cold chain issues.

Sure, everyone’s trying to match that now – PnP acquired Bottles to turn it into asap! and Woolworths is offering fast deliveries via Dash. Even Massmart (Game, Makro, etc) bought OneCart to enter this space.

But how did Checkers change the game?

By strategically aligning with a tech startup…

See, back in 2018, local startup Zulzi was working on solving the problem of getting groceries delivered in 60 minutes. And, in particular, they had an innovative approach to allow pickers to replace items that weren’t available (a common problem in this space).

So, Checkers got Zulzi to build their first app and tested it in a few locations close to their head office. This helped them develop the unit economies needed to make it work at scale.

Some would say Checkers had “last-mover advantage”, but we disagree. Sixty60 shies away from the traditional e-commerce model to pioneer on-demand grocery delivery. It’s something else entirely.

And they're cementing their place as first movers with Sixty60 & Checkers-branded toys like the Barbie-compatible “Ken the Sixty60 delivery guy” and the “Checkers Little Shop” kick bikes and scale models.

‍The long game

So, what about cross-store delivery options such as Zulzi, OneCart or even Uber Eats? Can they beat Sixty60? We doubt it. Deliveries don’t make money (it breaks even at scale, at best) so what’s left is the margin. And when Checkers is already selling on Sixty60 at in-store prices, where is the margin to be made? Not to mention the volume of data they’re already collecting to ensure their basket margin stays more competitive than peers.

There’s lots to love about the Sixty60 story, but our favourite part is how a large corporation embraced innovation by partnering with a startup. With deep pockets and large customer bases, we hope more corporates take a leaf from the Shoprite innovation playbook.

IN SHORT

🍎 Apple of her eye. In the middle of its iPhone 15 event, Apple played a 5-and-a-half-minute-long skit featuring Mother Nature (Octavia Spencer) grilling Tim Cook and a bunch of supposed Apple employees over “Apple’s First Carbon Neutral Product”. At one point, they lock eyes for an excruciating eternity before Mother Nature walks off saying “Don't disappoint your mother”. Cringe.

📢 Meta Channels. Meta expanded WhatsApp Channels to 150 countries this week. Channels let brands, companies, sports teams and content creators you choose to follow send you updates. It’s all private, no one can see who you follow. But it’s getting pretty close to that ultimate tipping point where someone can just pay and spray every WhatsApp user. Not yet, but eerily close…

📖 The Book of Elon. The much-anticipated biography of Elon Musk dropped this week and gave many an insight into the tech titan’s life. Written by Walter Isaacson (the same guy behind the Steve Jobs bio), the 600+ pages include more on the various Twitter shenanigans, his beef with veganism-champion Bill, Elon’s favourite mobile game and more.

🥩 Beefy Prices. As we head into summer, South Africans are preparing themselves (and their gear) for serious braaiing. And it would seem that meat producer prices have been coming down. So why then is the price of meat on the fridge shelf increasing? Well, it would seem like the retailers are applying meatier margins than they did before according to the Competition Commission's latest Essential Food Pricing Monitoring.

💸 Like a sieve. The SA economy is losing out on R1.1 trillion each year due to “trade misinvoicing” alone. For some perspective, that’s about half the country’s annual budget – a whole lotta schools, clinics and infrastructure maintenance we’re missing out on.

JUST FOR YOU

Want to own gold but can’t afford to have the money locked up?

Here’s how to get it AND keep it liquid…

One of the major issues in buying gold is that, although it’s more liquid than other asset classes, there are some delays in accessing your cash. That’s why Troygold allows you to borrow up to 75% of your gold value and access it via your own personal Mastercard. Gold has never been this liquid.

Keen to check out Troygold? Head on over to their website, create an account and buy actual gold (stored in vaults) in under 4 minutes straight.

And since we are partnering with Troygold for the month of September, we’re giving away R2’500 worth of gold, plus this cool merch.

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

Share the newsletter

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

THE THREAD

To Build or Not to Build in Public…

If you’ve been marvelling at the amazing momentum of public builders like Momint and Notion, and wondering if maybe you should do the same, then this week’s podcast is for you.

It’s a quick 30 minutes, jam-packed with killer insights…

The best bits

1. The best time to build in public
2. Building in public is an awesome way to cement one of the fundamental needs for a successful startup (or any business) - accountability. If you promise to do something in public, everyone’s eyes are on you, so it's great motivation to follow through.
3. It’s particularly well suited for builder founders (founders who code and build out the product themselves) because you can get so much direct feedback if people know what you’re developing and you can simultaneously generate hype and a following even before your product’s out – get specific insights here.
4. When not to build in public
5. Equally as important is knowing when it won’t work for you. Accountability is one thing, but there is the risk of someone (anyone) stealing your idea. Unlikely, but not impossible.
6. And it’s especially dangerous to build in public if you are not committed or willing to put in more time, effort and resources than anyone else to see it through. If you emphasise the idea's value over the actual execution, someone who’s a better executer could potentially sweep in and build a similar product better or faster than you – get all the insights right here.
7. Why people REALLY want to hear your story
8. Building in public has really taken off because it can create such hype and essentially become your entire marketing strategy. And many founders shy away from it because they don’t have much real success to show yet.
9. But, if you’ve ever followed a startup’s public story, you’ll know that there’s immense entertainment value when someone who came from nowhere suddenly starts getting things right. People love that. It engages them, which, arguably, makes them more likely to become a customer or promoter. Get the lowdown here.

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Last time, we asked “who ya gonna call”, and most people say private security firms or community WhatsApp groups…

🟨⬜️⬜️⬜️⬜️⬜️ 👻 Ghostbusters (9%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍩 SAPS (2%)
🟨🟨⬜️⬜️⬜️⬜️ 🦹🏾‍♂️ Neighbourhood Watch (18%)
🟩🟩🟩🟩🟩🟩 👮 Private security firm (41%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👓 A friend (2%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🥋 Recall my karate training (0)
🟨⬜️⬜️⬜️⬜️⬜️ 💪 Hugo (7%)
🟨🟨🟨⬜️⬜️⬜️ 📱 Facebook/WhatsApp group (21%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Dreaming of space exploration? Well, it’s looking a lot more promising now that NASA’s Perseverance rover has proven it can produce oxygen on the surface of Mars. It’s all thanks to a new toaster-sized device called MOXIE.

In this Open Letter:

• Safety net: SA’s R640bn security industry.
• Invasive Apple, AI rugby & the SABC crash.
• Get gilded: R2’500s worth of solid gold up for grabs.
• Active users: 4 Steps to track and boost word of mouth.
• The results: Who will win the RWC.

TRENDING NOW

The 640bn Big Ones Keeping SA Safe

It’s no secret that SA has a crime problem. About 1.1 million families were burgled last year (that’s over 5% of us), and 1% of SA were robbed while they were still at home, according to recently released crime stats. And there’s been – gulp – 68 murders per day, every day just between April and June this year, which is absolutely shocking.

No wonder SA spends a lot to protect ourselves

Recently at the “On the Record Summit”, SA’s Finance Minister Enoch Godongwana revealed that South Africans spend 10% of GDP (around R640 billion) per year to be safe amidst rampant crime and social unrest. What’s more, violence cost our society R3.3 billion in damages in 2022. Yikes!

‍

Wait a minute, that’s Big Money

Yes, you read that right – R640 billion per year. Why, that’s bigger than:

• The Healthcare sector – both private and public – at R 500 billion.
• And SA’s bustling township economies at R425 billion per year.
• Even our taxi industry at an estimated R90 billion in 2021.

Indeed, SA has well over 11’000 private security companies registered with PSiRA (Private Security Industry Regulatory Authority). And, in 2022, there were nearly 2.7 million registered security guards in SA – only 580’000+ employed in the industry, though.

But hold on to your hats. There were only 140’000-odd SAPS members at the same time – that means there’s only 1 police officer for every 4 private security guards in SA. Sheez!

It’s not just us…

And don’t think it’s just us ordinary South Africans that have to spend on private security, either. Government (including national departments and other organs of State) are locked into hundreds of long-term private security contracts to the tune of R16.9 billion.

And if you add provincial and local government contracts with private security, it could be as much as R100 billion – all for services that should be provided by SAPS, mind you.

We’re not here for the politics, though.

We’re here to tell you that, if a R640bn market exists, you can be a part of it.

Plays in the security space

Now the industry is big and the problem even bigger. But not everyone has it in their veins to manage a fleet of gun-carrying Corsa Bakkie drivers. Here are some local players capitalising in the tech space:

• Olarm is a Cape Town-based IoT company building mobile apps and systems for home security and monitoring. Their app allows users to control their existing home alarm systems from their smartphones. What’s smart about their approach is they partner with security companies. So instead of trying to sell to end users, they use the existing sales force of the security companies that sign up their existing customers at ±R50 a month. So a low CAC, subscription-based billing and easy to maintain.
  
• Namola is an on-demand emergency response app – a crucial service when you have fragmented emergency services and unclear addresses in remote areas. It ensures responses to a user's last-known location, even when they can't answer their phone. Basically a panic button that connects with a close by emergency response team.
• Interestingly, MultiChoice bought Namola end of last year and DStv subscribers can now add Namola debit orders to their existing DStv bill. MultiChoice buying a security company is interesting, perhaps they saw the size of the market and pounced, and maybe there are other big players following.

It’s a huge market, and with tech or a smart service, you can come in and add value without having to take the obvious route. We are watching this space.

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

When there’s something strange, in your neighbourhood, who do you call?

Vote to see what everyone said...

• 👻 Ghostbusters
• 🍩 SAPS
• 🦹🏾‍♂️ Neighbourhood Watch
• 👮 Private security firm
• 👓 A friend
• 🥋 Recall my karate training
• 💪 Hugo
• 📱 Message the community Facebook/WhatsApp group

Login or Subscribe to participate in polls.

IN SHORT

💥 Crash tackle. With more drama than an episode of 7de Laan, the SABC Rugby World Cup broadcasting left them with egg on their face even before the Boks kicked off against Scotland on Sunday with many users reporting the SABC’s app and streaming services crashing. That’s not all. Details have emerged from the sub-licensing deal including the 3 companies that foot the R58 million deal to show 16 RWC matches – that’s right a whole R20 millie more than the initial deal on the table.

🏖️ Life’s a Beach (Resort). A brand spanking new Club Med beach resort is coming to the KwaZulu-Natal North Coast. The R1.6 billion resort will be co-owned by local companies Royal Shaka Property Group, GFS Holdings and Collins Residential.

🤖 AI RWC Winner. AI is great for a lot of things, but determining the winner of the Rugby World Cup, might not be one of them. The Rugby Vision algorithm seems to disagree with readers of The Open Letter – we know it’s coming home.

🧠 Nevermind. For a long time, proponents of privacy in tech have said that the only privacy you’ll have is in your head. Well, that’s all about to change with Apple’s latest update and the introduction of its mood tracker: “State of Mind”. The feature will ask users to rate how they feel and provide questionnaires that can act as preliminary screening for depression and anxiety.

💰 Gloves Off. Armchair experts had a field day in the comments when veteran Wall Street Journal, Bloomberg and Reuters journalist, James Picerno, told Investing.com that it’s easier to understand the markets if you think of gold as a form of cash – liquid, free of government influence and with a longer track record than BTC. Which is exactly why we’re giving away R2’500 worth of Troygold below…

JUST FOR YOU

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

‍

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇

(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

Track & Measure Your Word of Mouth

"Your brand is what other people say about you when you're not in the room." – Jeff Bezos

Ah, word of mouth, the most powerful, gold standard and often most elusive “tool” in product marketing. And we say “tool” in quotes because it often feels like something you don't really have control over…

Enter your Net Promoter Score (NPS), a method to start discovering your customer loyalty, satisfaction and how likely they are to tell others about you.

Not the only one, mind you, but definitely the simplest for a small business or startup to quickly implement right now…

How to get your Net Promoter Score

1. Include an NPS question in your survey

Simply ask: "On a scale of 0-10, how likely are you to recommend our product/service to others?" and let people indicate on the scale. If possible, give them the chance to say why they entered that score.

2. Calculate your NPS

In NPS, you only look at 2 segments: Detractors (those who voted 0-6) and Promoters (those who voted 9-10). Subtract your percentage of Detractors from Promoters.

E.g. let’s say you had these results:

Promoters (rating 9-10): 50%
Passives (rating 7-8): 30%
Detractors (rating 0-6): 20%

NPS = Promoters – Detractors
NPS = 50% – 20%
NPS = 30%

So your NPS is 30%.

3. See how you measure up

Compare your NPS to some industry standards – basically see if you can find some online or ask ChatGPT about your niche.

Some NPS standards are:

• SaaS: 30%–50%
• Social Media & Communities: 20%–40%
• Gaming: 20%–50%
• E-commerce: 20%–40%
• Cloud & hosting: 30%–50%

Obviously, the higher, the better.

4. Make it long-term

The magic of this simple and continuous measurement is that you can use it to inspire changes and updates – just read WHY people give their scores and action those things. But you can also use it to test how your updates/changes impact NPS over time – if, after a major update, your NPS suddenly goes up and everyone says that’s why, that’s obviously a great update, do more of those.

And, as a general rule, you’re trying to do stuff that will make more people want to be Promoters.

THE RESULTS

But of course: Last week we asked who you think will win the rugby world cup, and well, you know…

🟩🟩🟩🟩🟩🟩 🇿🇦 South Africa (82%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇫🇷 France (8%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇳🇿 New Zealand (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇮🇪 Ireland (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇦🇺 Australia (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇬🇧 England (2%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🇦🇷 Argentina (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 😕 What is “rugby”? (5%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Running low on storage space? You’re not alone as Toyota, the world’s second-largest car manufacturer, had to shut down all of its Japanese plants (roughly 30% of global production) because its servers ran out of disk space.

Guess we should tell our part-time Japanese intern to stop saving Open Letter memes on the company server, eh?

In this Open Letter:

• 900m eyeballs: RWC opportunities.
• The butchered vetkoek, cheapskate Eskom & the find of a lifetime.
• Fast value: How long does it take to buy gold?
• Cash flow: 6 Money-making business models.
• The results: Where you buy your fittings.

TRENDING NOW

The ball that pulls the eyes

Today is the day. The start of the Rugby World Cup 2023.

Now, even if you don’t like rugby, you have to appreciate that South Africa are the returning champs. Who can forget the vibes, 4 years ago, when Siya and the boys brought back that cup for the third time?

That’s why, with much anticipation, when the Springboks kick off against Scotland on Sunday, most DStv subscribers (and everyone they share their passwords with) will be watching.

How big an event is the Rugby World Cup?

The 2019 RWC broke broadcast records, with more than 857 million people tuning in – an impressive 26% increase from the previous World Cup. Not only that but a live average of 44.9 million fans watched the Boks beating out England in the final – the biggest in Rugby World Cup history.

And, locally, it was nothing to be shy about. Interest in the SA vs. England final was a combined 16.7 million viewers – more than double the 2015 numbers. It's big business – and you can imagine how much it costs to place your logo where 16.7 million middle-to-high-income people see it for 80 minutes straight.

Millions many don’t have. But there are more ways to capitalise on the gees.

Who is licking their lips for the eyeballs?

It's not just the matches. The buzz on social, posts on news websites – it’s all creating traffic and eyeballs. Four years ago, at the height of the World Cup buzz, Springbok players could earn as much as R58 000 per social media post.

Everyone is trying to get in on the vibes; from THIRSTI water teaching the Bokke French, to Checkers Sixty60 delivering a message of support to our boys, to CourierGuy getting Leon Schuster out to say “Bring vir my die Boks”, it all invites people to share these ads as part of the “gees”.

Then there is sports betting – 10% of South Africans do some kind of sports betting. And it might even be more as one of the core uses of 1Voucher is to redeem it for sports betting. With so much money flowing to sports betting, one can imagine how cutthroat it could be for local betting sites to get eyeballs.

The second-screen experience

But creating viral ads or making money as a Springbok player posting an ad is not the only people getting creative to get eyeballs. Second-screen experiences are a lucrative way to generate additional impressions that can be monetised through sponsorships and affiliate deals.

How do they work?

1. Create a reason for fans to engage with something that you’ve built.
2. Make that engagement exciting, but more importantly, drive engagement and virality – make the experience better when they bring friends.
3. Get the eyeballs (lots of impressions).
4. Convert the eyeballs into revenue through sponsorships and affiliate deals.

Remember Superbru? The paper-based league launched in 2001 at UCT with the online version soon becoming the go-to office pool game. At its height, Superbru had more than 2 million players. If each player logs in once a week to make a pick (let’s say generating 10 impressions) and once more to view results (maybe another 10), there could be over 100m impressions per month.

Couple that with some detailed user demographics and you could land a high CPM marketing deal and rake in a few million a year… Nice.

Along the same thinking, 4 South African friends built Golf Champs, a social game around pro golf. Pick your team, tally their scores, best score wins…. Easy. In a short space of time and using a very basic site (and app), it’s amassed 10’000+ active players. And with golf being so popular, this could be big, with nice sponsors and great prizes – watch out for this one.

7Qz is another innovative game within the game. A pool-based prediction game that’s easy enough for your grandpa to figure out yet has a nice level of strategic depth to it. Sure, there are your usual question categories like player performances and team performances. But then they take it a step further with Ref performances and quirky questions like “Will the Forwards score more tries than the Backs?” and “How many yellow cards will there be?”, which appeals to a broader market. They even asked once if there would be a streaker or not.

Wanna be part of it?

In the spirit of supporting a local founder in building a cool product around build World Cup “gees”, we have launched a special Open Letter 7Qz pool for the Bokke’s upcoming game against Scotland. Come make your picks and if you win, you win ultimate glory, a digital high five and a special mention in SA’s coolest newsletter. Join the pool here.

OUR TOP OPPORTUNITY PICK FOR THIS TREND

Keen to capitalise on this trend? Here is our top pick idea to make the most of this trend

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

Who will win the World Cup?

Vote to see what everyone else says...

• 🇿🇦 South Africa
• 🇫🇷 France
• 🇳🇿 New Zealand
• 🇮🇪 Ireland
• 🇦🇺 Australia
• 🇬🇧 England
• 🇦🇷 Argentina
• 😕 What is “rugby”?

Login or Subscribe to participate in polls.

IN SHORT

🟥 Red-carded? SABC rugby fans were nearly left in the lurch this week when the public broadcaster and MultiChoice (who owns SuperSport and the local RWC broadcast rights) couldn’t agree on the R38 million broadcast rights to air the games on SABC. BUT, they reached an agreement at the 11th hour (literally). SABC will show the opening & closing ceremonies, the opening game, all the Bok games, 2x Quarter-finals, 1x Semi-final, the bronze final, and the Final.

💐 Rest In Peace. Retail giant Raymond Ackerman has passed away at 92. The Pick n Pay founder purchased 4 stores in 1967 growing the PnP footprint to over 2’000 stores across South Africa and 7 other African countries.

🔌 Sitting on it. 3 months in and South Africans are wondering why Eskom still hasn't taken up the first 100MW offered by Mozambique. This as SA hit Stage 6 loadshedding this week (some say it was technically Stage 7 on Wednesday night). Could it have something to do with the Karpowership’s game farm “donation” to Ezemvelo KZN Wildlife in return for not opposing the 450MW ship-mounted power plant proposed for Richards Bay harbour?

🚀 Surging Sixty60. Checkers Sixty60 sales have grown a massive 81% year-on-year ending 2 July 2023. While this growth, compared to 150% in the previous years, shows that the on-demand delivery trend might be normalising, app purchases for the Shoprite Holdings group still only make up less than 5% of the group's sales – looks like South Africans still prefer to shop for their groceries in person.

🔪 Butchered “Vetkoek”. Hollywood star Selena Gomez has set tongues a-wagging across Mzanzi for her pronunciation of ”Vetkoek” in a scene from the series “Only Murders in the Building”.

🤑 Norway Bru. A Norwegian man randomly found some pretty rare 6th-century gold jewellery while out on a walk. He was trying out his new metal detector and found stuff from 500 AD. Of course, you don’t need to go through all that trouble, you can just win yourself some real Troygold below…

­

THE INSIDE TRACK

Solid Gold in 4 Minutes Flat

Want to buy gold? A trip to your local dealer could take 30 minutes+. Then you prolly need a safe way to transport and store it. And, unless you are a boomer, we doubt you got that down. So what’s one to do if you need the gold?

Well, we tried Troygold for ourselves and the whole thing took us less than 4 minutes. From downloading the app to being the proud owners of some gold bullion.

Here are the steps:

1. Download the Troygold app for iOs here or Android here.
2. Verify yourself in their super-slick KYC process.
3. State how much gold you would like to buy.
4. EFT the money to their account.
5. Get your gold.

The whole process took us less than 4 minutes. Proof!

Speaking of gold… Want to win some Troygold?

During September, we’re giving away R2’500 worth of gold, plus some cool Troygold merch to one lucky reader who shares our newsletter on LinkedIn! We got two entries so far, so be the third and have a 33% chance to win!

STEP 1: Click on this shiny button 👇
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

THE THREAD

Exploring Business Models for Your Startup?

If you’re not earning, this week’s podcast is for you. It’s no frills, just a quick 30 minutes of deep-dives into revenue models for your startup. Enjoy!

A few highlights

1. Advertising and affiliate programmes need SCALE
   No really, low RPM (revenue per 1000 views) means you need eyeballs in the millions to generate even a modest income, which begs the question if SA even has the volume to support a lot of CPM (cost per 1000) based businesses. A notable alternative, though, is looking into hyper-niche segments that are more valuable and justify a higher CPM.
   
   Much the same with affiliate marketing, which can work but at specific stages of your startup lifecycle.
   
2. E-Commerce/Marketplace needs a SMART approach
   A popular and relatively easy space to get started in, but pretty hard to perfect at scale, since you have to work on low margins and constantly leverage tech to expand and capture new markets. That said, there are some significant opportunities in the B2B e-commerce space.

3. SaaS is all about nailing METRICS
4. Synonymous with tech, Software as a Service (SaaS) can be extremely rewarding, but requires a lot of investment and scale to reach profitability. And success in this space hinges on striking the perfect balance between your acquisition cost (CAC) and the money you make from each customer over a period of time (LTV), and how fast you can get to that tipping point where one outweighs the other enough to become profitable.
   
   Also worth checking out is this discussion around another of tech’s fave approaches: "I just literally can't think of a local example of where the freemium model has worked."
   
   Plus: Way more insights in the podcast itself…

‍

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Earlier this week, we asked where you buy your fittings and fixtures. And it’s overwhelmingly Builders… but great to see Livecopper’s gaining some traction.

Where do you source fittings?

🟩🟩🟩🟩🟩🟩 🔨 Builders Warehouse (64%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛒 Takealot (3%)
🟨⬜️⬜️⬜️⬜️⬜️ 📱 Livecopper (15%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👷 Leroy Merlin (3%)
🟨⬜️⬜️⬜️⬜️⬜️ 🤦‍♀️ I don’t renovate/DIY (15%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Love a good bakkie? So does she! SA women are searching for Bakkies more than men. And not just the Botha kind, it’s Hiluxes, Rangers, the works.

In this Open Letter:

• The fix: The Yuppiechef of SA construction startups.
• SA’s favourite beer, fashion tax & gold outperforms stocks.
• Good measure: 6 Google Analytics alternatives.
• Get gilded: We’re giving away real gold (to you).
• The results: How you choose to invest.

TRENDING NOW

Fixing the Fixtures Game

If the construction industry was an actor, it’d probably be Barney Ross in Expandables 4. A bit grizzled, weighed down by years of struggle and challenges, yet somehow still teeming with untapped potential.

The sector, once a titan of economic growth, has suffered significant setbacks. The show-stopping numbers? A 19.8% slump in growth during 2020, courtesy of the pandemic, construction mafia, lacklustre economic scenery, and a dip in commercial property demand.

This constellation of hurdles suggests that although larger municipalities have seen an uptick of 28% in plans submitted in 2021, it could take up to 2026 for the industry to reclaim its former glory.

Every challenge brings opportunity

Enter the stage of startup innovation. The secret sauce here is the art of niche problem-solving. In South Africa, identifying a lucrative niche can be as elusive as finding a needle in a haystack.

Still, get it right, and you could be sipping champagne on the deck of your flourishing business.

Take the intriguing, albeit anxiety-inducing process of sourcing fixtures and fittings for construction projects. It’s like questing for the Holy Grail.

You finally get to the shop that sells what you need, and they don’t have stock, so now you have to trek across town to their other branch – that’s hours and money ticking away.

Even worse if you have top-dollar contractors, architects, interior designers and builders having to drive around and source fixtures, all on your tab. Not to mention entire teams of builders sitting around earning full pay while waiting for the perfect plumbing to arrive.

It really is a wasteful nightmare that’s worth solving.

A new way to source fixtures

In much the same way Amazon's digital revolution sprung from the limitations of physical bookstores (being unable to house millions of books in one physical store), South African B2B e-commerce player Livecopper is set to revolutionise the construction world.

Livecopper is the Takealot-meets-Builders Warehouse of the building industry. With a catalogue that would make even the most extensive physical warehouses blush, Livecopper offers over 10’000 building fixtures, then takes it up a notch by letting you submit your building plans and get quotes on them, too (a feature as tailor-made for quantity surveyors as a designer suit at a red-carpet event).

Good company

And the kicker? The founders of Yuppiechef, Shane Dryden and Andrew Smith, have recently invested in Livecopper. That's like getting the nod from industry royalty.

What we like about this play:

• Niche focus — making targeting easier and typically results in lower CAC.
• Higher margins — Bigger ticket items mean more money for the same effort. What’s more, certain items face less competition so one could charge more without too much risk.
• Saves time and money — the benefit to the end user isn’t simply “it gets delivered”. The substantial cost of time wasted driving around plays a big role.
• Can always beat physical stores with catalogue size.
• Nice extensions into a services marketplace for tradesmen (and women) (something many in SA have tried and failed at).

In essence, Livecopper is a compelling case study for startups looking to inject innovation into traditional industries and we love it. Not to mention there are definitely some other niches waiting for a play in the construction space itself…

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

Where do you source fittings?

Vote to see the results...

• 🔨 Builders Warehouse
• 🛒 Takealot
• 📱 Livecopper
• 👷 Leroy Merlin
• 🤦‍♀️ I don’t renovate/DIY

Login or Subscribe to participate in polls.

IN SHORT

💧 High Tech Tank. South African-born JoJo tank is going high-tech with an app and IoT devices to aid in water monitoring and management.

⚡ Ditch the Lightning. Apple’s upcoming iPhone 15 is rumoured to feature the USB-C connector instead of lightning cables in a move that is forced by the environmentally conscious. The move will mean greater compatibility across Apple devices as well as with non-Apple hardware.

🤑 Tax the Stitch. Chinese-founded fast-fashion giant Shein is facing social media backlash from its users after a marked increase in their customs tax. It would also seem like they’re facing greater scrutiny by the SA government after rumours they package clothing in containers that let them come in under a tax threshold.

🍻 Raise your Glasses. The results are in and South Africa (5th in the world for alcohol consumption) has declared its favourite elixirs. Carling Black Label remains SA’s favourite beer – with 6 of the Top 10 produced by SAB. SA’s Top Alcohol Brand, however, is 4th Street Wine, with big strides being made in the ready-to-drink, Wine, and Spirits categories.

🏅 Hold the Gold. Back in 2004, NewGold ETF was listed on the JSE. You could buy a couple units of gold on the JSE using your hard-earned South African Rondt. Fast forward nearly 20 years and that lump of gold outperformed the JSE’s All Share index.

JUST FOR YOU

Got Gold?

Share The Open Letter and you can win! We’re giving away R2’500 worth of gold, plus this cool merch from Troygold.

And all you gotta do to stand a chance of winning it all is 1, 2, 3, 4…

STEP 1: Click on this shiny button 👇️
(The button opens a LinkedIn tab.)

STEP 2: Click “Share in a post” right under the Open Letter logo in that new tab.

STEP 3: Type a few words on what you think about The Open Letter, as a post to your followers.

STEP 4: Tag us: @TheOpenLetter and hit “post”.

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

6 Alternatives to Google Analytics

If you’re a little frustrated with Google’s new GA4 analytics, you’re not alone. Millions of people are ragging on it online – calling it everything from a “downgrade” to straight-up “trash” and, worse yet, “the Windows Vista of Analytics”.

Not that Universal Analytics was that great, but this new one?

OK, to be fair, the GA4’s cross-platform tracking and granular control over events were sorely needed. But you do get the sense that its setup is more beneficial to large corporates – it can do A LOT if you have the training, resources, time and money to set up properly.

We figured we’d just have to learn it, but then we came across some founders who were so frustrated, that they committed to finding better alternatives.

Here are some options

1. All the power of GA4, just simpler: Matomo

Everything GA4 has, plus full data ownership (the data doesn’t sit elsewhere, it’s self-hosted with you), you can even deploy it on your own server. You also get way more flexibility in reporting and no data sampling (did you know GA only samples and shows predicted/modelled data, not the real numbers?). Check out Matomo.

2. Just basic website tracking: Plausible

For those who just want all the good-ol’ data you got from Universal Analytics for website only, check out the totally open source, self-hosted and dark mode-enabled Plausible.

3. For business, sales and conversion: Usermaven

Recommended for performance marketing, sales and conversion tracking, with native sales funnel tools etc., all while still being plug & play, check out Usermaven.

4. For tracking everything: Heap

Remember how Universal Analytics used to track everything? Well, that's basically what this one does – it tracks even more than before and you can drill down on whatever you like. See Heap.

5. Loads of tools and templates: Piwik PRO

Basically, the proprietary version of Matomo, what makes Piwik PRO unique is that it has all the same advanced events, tracking and reporting features as GA4, but instead of having to manually set them up, they have templates, so it’s basically plug & play on Piwik PRO.

6. For powerful extras, free for life: Microsoft Clarity

Advanced stuff like heatmaps, session replays (watch videos of user sessions on your platform), scroll tracking and features you’d normally pay for, but for free. That’s Microsoft Clarity (shoutout to Ahren from Momint for this recommendation).

Oh, and if you (or your technical partner) are just looking for a GA alternative that still needs Java to deploy and set up, try Mixpanel (great if you can code) or Amplitude (powerful user insights for products, great even for importing data from other analytics tools).

Got a tracking tool we should know about? Hit reply and let us know…

THE RESULTS

Last week, we asked how you store value, and would you believe most are still in stocks and shares?

🟨⬜️⬜️⬜️⬜️⬜️ 🧈 Physical Gold (8%)
🟨⬜️⬜️⬜️⬜️⬜️ 📱 Digital Gold (8%)
🟨🟨🟨🟨⬜️⬜️ ₿ Bitcoin (28%)
🟨⬜️⬜️⬜️⬜️⬜️ 💎 Ether (8%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💰 Cash (4%)
🟩🟩🟩🟩🟩🟩 📈 Stocks/Shares (36%)
🟨⬜️⬜️⬜️⬜️⬜️ 🤷 I don’t store value (8%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

AR for the visually impaired? No problem, scientists just invented a way to power smart contact lenses with human tears.

In this Open Letter:

• On the money: Why Gold is basically immortal.
• Up for grabs: Solid gold and lekker merch.
• Your iPhone 15, mall space & calling from X.
• Go deep: How to build a kasi-focused startup 101.
• No time to game: The poll results are in.

TRENDING NOW

All that Glitters is Gold

Gold. It’s one of the oldest and most enduring forms of money and investment. First minted on the order of one King Croesus of Lydia (ancient Turkey) a mere 550 BC. And to this day, the Krugerrand – which has its origins in South Africa – is the most-traded bullion coin in the world.

But gold is more than just a precious metal. It has certain properties that make it immune to most of the risks and devaluation that other forms of investment and currency are susceptible to – in fact, there’s a little-known “secret” reason why the gold price hedges your savings against inflation.

But what makes gold such good money?

Let's delve into the scientific realm for a moment. Gold is the element in the physical world that best fits the requirements for stable money; it doesn't degrade or tarnish with oxygen, is scarce, malleable and uniform – the requisites for a long-term store of value.

Basically, we can melt gold from ancient times and use it to cast Krugerrands today, and it would have the exact same quality and quantity as in its previous form.

Additionally, the complexity and cost of mining means global gold mining rates tend to align with population growth, keeping supply in check.

And, finally, as inflation pushes prices up, the cost to mine tends to follow, pushing up gold prices, too.

Holds the Line in Tough Economic Times

We all know that central banks sometimes inject cash into faltering economies. While this may offer short-term benefits, it typically devalues the currency and spurs inflation.

Gold, on the other hand, remains steadfast. In fact, it retained its value so well you would be paying between 30 and 60% less for some staples if you had paid with gold.

A loaf of bread in 2008, for example: Had you bought the bread using gold, it would've cost 0.00095 ounces of gold. Fast-forward to 2022, it only cost 0.00064.

A packet of smokes that cost 0.00325 ounces of gold back in 2008, only cost 0.00169 in 2022. See the pattern?

In Rand value, of course, the price of bread increased 222% and a pack of cigarettes rose 148%, in that same time. That's why gold makes for better money – it retains its purchasing power... not like your paper currency or digital FIAT money.

The Challenges of Traditional Gold Investments

Despite its allure, traditional ways of buying gold present a few hurdles. Safety is often a concern when buying from certain dealers. And, because it’s non-fractional, you have to buy at least an ounce at a time – no small investment.

Finally, storing a lot of gold securely is a logistical and security challenge most people can’t handle (unless you’re the president, in which case the couch does just fine).

But if you do prefer buying gold in physical terms yourself and high-tailing it out, you'd always go with dependable and reliable sources like Scoin and SA Bullion.

Local Golden Moves

Digital: This is where Troygold comes in. This digital platform offers a solution to the challenge of investing and storing gold bullion by allowing for fractional gold purchases and secure, insured storage on your behalf.

Fractional: Troygold lets you invest in gold Krugerrands digitally from as little as R1. The company buys and vaults kilos of 1oz Krugerrands coins, then numbers, digitises and fractionalises each coin, making it available for sale on the app.

Financial Tools: Troygold is also pioneering a Mastercard and credit offering on your gold holdings' value. You can access instant liquidity via a 75% credit facility against your gold, spendable globally via the Troygold Mastercard.

With innovations like Troygold, overcoming traditional challenges has never been easier. It may be time to include this age-old asset in your modern-day portfolio.

Note from the editor: This article is not financial advice but rather provides insight into an innovation that allows fractional selling of gold. Before making investment decisions, always do your own research.

OVER TO YOU

What is your value store of choice?

Vote to see others' votes...

• 🧈 Physical Gold
• 📱 Digital Gold
• ₿ Bitcoin
• 💎 Ether
• 💰 Cash
• 📈 Stocks/Shares
• 🤷 I don’t store value

Login or Subscribe to participate in polls.

IN SHORT

🏪 Opening the Doors. More than 2’000 shopping malls and retail spaces are set to see some big changes off the back of Pick n Pay, Shoprite and now Spar ending their long-term lease agreements. The move will create opportunities for Small, Medium and Micro Enterprises (SMMEs) as well as Historically Disadvantaged Persons-owned (HDPs) supermarkets.

🍎 Save the date. Apple has confirmed the iPhone 15 launches on 12 September. And rumour has it they’re gonna try to get a step closer to having no borders around the display and no cutouts for cameras or sensors. Let’s see.

🤧 Oof. After seeing revenue decline from R13.3b to R11.9b, mobile network operator Cell C just posted a mysterious profit of R4.6b. This does seem odd.

📲 Call from your X. Elon Musk has announced that video & audio calls are coming to X. It’s set to work on iOS, Android, Mac & PC and doesn't need a phone number since “X is the effective global address book”. All fun and games until your trolling and meme-posting gets interrupted by someone trying to reach you about your car’s extended warranty.

🗳️ Taking a break. According to a poll by the Cape Independence Advocacy Group (CIAG), some 68% of Western Cape voters support a referendum on Cape independence (breaking away from South Africa).

THE THREAD

How to Build a Kasi-Focused Startup

If you’re battling to strategise a way into SA’s R425bn kasi economy, you have to check out this week’s podcast episode. There’s no guest, just our team deep-diving into how you could build a business that serves and taps into the existing township market.

It’s a quick 30 minutes with some gold insights…

Just the highlights

1. Formalised housing on the horizon
2. With PPC Cement saying their biggest Cape Town market is people upscaling from shacks to built property in city townships, the City Council says it’s looking into enabling residents to do this with pre-approved set plans.
3. This will be a big deal because it creates registered housing, which in turn will require data, unlocking a host of tech opportunities that just weren’t there before – get the scoop here.
4. Back-room rentals are bigger than you think
5. It’s not just a South African township thing, as Renier mentions here, the Irish government has started giving people tax breaks for building extra rooms onto their homes to rent out.
6. This can be a kasi game-changer, as more people get income-generating property, creating a need for smart property management systems and software.
7. Commercial property is not just for corporates
8. A bit of further research shows that, in a township setting, commercial property for rent can be as simple as a resident opening their current prime-situated residence up, and hiring an assistant to run it as a spaza shop or other business.
9. As mentioned here, founders should take note because while the barriers to entry into traditional PropTech are steep, this “informal” sector has massive scale, and the need for smart tech to manage property is just as important (not to mention none of the big guys are looking that way, yet).
10. Formalising the informal economy is a big opportunity
11. As mentioned here, an ideal entrepreneurial environment supports people doing and scaling business. But it’s hard for government to invest in townships because all this transacting is going on in an informal space.
    Now, you don’t want to go in and tax everyone, ‘cos that’ll kill it or force it elsewhere, but finding smart ways to bring some formality to the informal economy is the key to unlocking even more opportunities in SA’s townships.
12. And, honestly, tech seems the only way to do this effectively and at scale.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Ha ha, last time we asked what your fave game was, and 51.8% say there's no gaming, just minding the wee ones.

⬜️⬜️⬜️⬜️⬜️⬜️ 🎮 Call of Duty (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🔫 Counter Strike (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ ⚔️ League of Legends (6.8%)
⬜️⬜️⬜️⬜️⬜️⬜️ ☢️ Fortnite (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🍗 PUBG (0)
🟨⬜️⬜️⬜️⬜️⬜️ 🐉 Dota (13.8%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🚔 GTA (0)
🟨⬜️⬜️⬜️⬜️⬜️ 🎲 My startup is my game (17%)
🟩🟩🟩🟩🟩🟩 😹 No time for games, I got kids (51.8%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Riddle me this, Batman. Why are people going batty over a James Webb Telescope image of a massive blazing question mark over 1’500 light-years away? (No, it’s not DC’s most expensive and elaborate stunt, it’s two galaxies merging.)

In this Open Letter:

• Paid to play: Realising the ultimate gamer’s dream.
• G’bye Nesquik, Africa’s best golf & the next Silicon Valley.
• Move fast: Quick startup idea-generating hacks.
• Kasi opportunities: The poll results are in.
• Startup ideas: Refer friends and get juicy opportunities.

TRENDING NOW

The Gaming Dream

From Play to Payday 🎮

Every gamer ever has had that daydream: "Wouldn't it be grand to play games for a living?"

After all, countless hours of levelling up and online brawls have to count for something beyond bragging rights, right? But the problem is that this space is big and has become super competitive.

The Grandeur of Gaming

Let's talk numbers. The global gaming industry boasted a staggering $217.06 billion value in 2022. Just to throw a comparison your way, the global movie biz? Less than half of that.

And let’s not forget about the avid fans – the eSports world pulled in a whopping 532 million fans in 2022. And the pie isn't just games. It’s a colourful canvas of marketing, sponsorships, and promotional deals that adds layers to this burgeoning domain – this space is booming.

Pro Gaming: The Highs and Lows

Going pro in South Africa is a mixed bag. The highs? Those who make a global mark can reap rewards. The lows? A lot of dedicated players juggle long hours for an income ranging between R7’500 to R14’900. It’s not exactly gold coins raining from a Super Mario block, especially if you've got real-world responsibilities beckoning.

A Novel Twist: Bet On Your Skills

But what if there was another way for avid gamers to earn some buck for the effort? Enter Skrmiish. This SA startup lets you back your own skills, setting wagers on your performance in popular titles. Think you can clutch a victory royale or smash that League of Legends objective? Put your money where your avatar is, and, if you pull it off, you actually get paid. Boom.

And with a $2.5m seed round under their belt and plans to include hot titles like Call of Duty, Dota and CS: GO, Skrmiish is turning up the heat.

Beyond the Game

Here's where it gets extra fascinating.

Traditional sports betting has its limits, but Skirmiish can tap into the digital nature of games (pulling in data from APIs or streams), unleashing a trove of creative new challenges and opportunities not available in traditional sports betting. And it can go well beyond just in-game achievement, there's potential for heightened player engagement and tantalising advertising prospects.

The gaming universe is vast, dynamic, and evolving. And with platforms like Skrmiish bringing innovative twists, the narrative is getting richer.

Hats off to the Skrmiish team for levelling up the game!

Refer one friend to sign up to The Open Letter and view our top opportunity pick for this trend (and all future trends we cover).

Get your sharing link here.

OVER TO YOU

What’s your jam?

Vote to see your nemeses/tm8s...

• 🎮 Call of Duty
• 🔫 Counter Strike
• ⚔️ League of Legends
• ☢️ Fortnite
• 🍗 PUBG
• 🐉 Dota
• 🚔 GTA
• 🎲 My startup is my game
• 😹 No time for games, I got kids

Login or Subscribe to participate in polls.

IN SHORT

⛽ Big Fuel Increase. Despite the petrol price coming down in the last little while, we’re in for a massive jump in fuel prices next week. Petrol is expected to jump by R1.60 per litre, while diesel is set to go up R2.80 per litre. Maybe it’s time for our new oil-producing BRICS friends to start giving South Africa the ol’ Friends and Family discount…

🏌️Swing Life Away. While golf might be experiencing a drop in popularity, it’s still the most popular thing to do for uberwealthy centi-millionaires. 5 South African golf courses have cracked the Top 10 African Golf Courses list including Fancourt, Highland Gate, Leopard Creek, Steyn City, and Zimbali.

🚙 Can't beat ‘em? Buy them. One way to take down the competition is to straight up acquire them. Which is exactly what EV company XPeng did when they bought Chinese ride-hailing platform Didi’s electric cars subsidiary for over $740 million. XPeng shares gained 13% after news of the sale and it’s expected to shake up the world’s largest auto market.

🥛 Ruin a Childhood. Nesquik has discontinued its strawberry and chocolate-flavoured powders due to a decrease in demand. Add that to the list of yet another thing from your childhood that’s gone.

🏗️ Concrete Jungle Dreams. A mystery company, Flannery Associates (funded by some big-name Silicon Valley players), has been buying up massive swaths of land in northern California to build a new “ Utopian Smart City” – Silicon Valley 2.0.

­

BUILDER’S CORNER

2 Idea-Gen Methods for B2B

Hey, so you know how we’re always pointing out opportunities? From township economies to online fashion, better digital payments to AgriTech and even education, etc. etc. Well, how do you action any of it? You know, where do you start?

Well, one filter to apply is the idea of solving problems for existing businesses. I.e. the B2B route. And there you have 2 types of clients – mid-level and corporates, or solos and very small businesses.

Here’s a strategy for quick ideation for each – starting with user/client needs.

For mids and corporates

1. Start with what you know
2. Do you have inside information on a corporate already playing in this space? Maybe you used to work for them and know how they handle things. Or maybe your partner does. A family member. A friend. Anyone who works or has worked in the specific department in a corporate that touches the field/industry you’re looking into (ed, agri etc.). If you don’t hustle your way in with networking or even a straight-up LinkedIn message.
3. Look for pain points/delays/inefficiencies
4. Where can you help them save time, money, and resources or help them reduce risk? Corporates hate risk, it’s bad for the share price.
5. Work on margins
6. You don’t have to disrupt or change the world with corporates. They have enough volume that even incremental or marginal improvements create huge value.

For SMEs and solos

1. Identify the ideal user
2. The person who’d buy your service (i.e. people selling niche products on Etsy or whatever).
   
3. Find their biggest general wants/needs
4. Go where they hang out online. Forums, social networks, groups etc. And just note down the conversations they have with each other – read the comments at the bottom of trending forum topics or YouTube videos and podcasts aimed at them.
   
5. Then, check which companies are already serving them, and scope out their Google reviews for what people like about what/how they deliver. Also, check their social posts – see which ones have the most engagement, make note of the topic and any comments people left.
6. Put it all in a spreadsheet, and then look for the pattern – group similar/related things together. If, for example, you see most people in the segment you want to serve talk about legal matters, then you know they have a legal need. Etc.
7. Figure out what’s standing in the way
8. Why are they struggling to solve that specific problem? Are existing solutions too expensive, non-existent or inaccessible? What’s the obstacle?
9. Your ideal product/service idea is one that removes that obstacle. I.e. you create the service, make it more accessible or cheaper, or whatever’s needed.

Next steps: Regardless if you’re eyeing corporates or SMEs, the next step is not to build. Offer it as a service, first. Try get in with a corporate personally to solve the problem for them – as in build some custom software or offer your service as a consultant to a few solos. That way you can charge some money, and refine the idea in a real-world situation, all while getting ready to build the tech and scale.

Got a method for finding problems worth solving? Hit reply and let us know…

THE RESULTS

Last week, we asked about your fave township opportunity and 27.5% say managing backroom rentals is the gig. But there’s a lot of interest in almost every aspect of this market — including avoiding it altogether.

🟩🟩🟩🟩🟩🟩 🏠 Backroom rentals management (27.5%)
🟨⬜️⬜️⬜️⬜️⬜️ 💄 The beauty industry (7.5%)
🟨🟨🟨⬜️⬜️⬜️ 🏢 Spaza shop rentals (commercial real estate) (15%)
🟨🟨🟨⬜️⬜️⬜️ 🛍️ Spaza shop retail (12.5%)
🟨🟨🟨⬜️⬜️⬜️ 🍔 Informal fast-food market (15%)
🟨⬜️⬜️⬜️⬜️⬜️ 🍺 Taverns and shebeens (7.5%)
🟨⬜️⬜️⬜️⬜️⬜️ 🚐 Taxi industry (5%)
🟨🟨⬜️⬜️⬜️⬜️ 🚫 Nope, I’d rather focus where it's comfortable (10%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.

Hi there,

Craving that UK pizza? Apparently, England’s gig economy workers can’t stop hitting on their customers (1 in every 3), so watchdogs are stepping in to make ordering food and rides less awkward.

In this Open Letter:

• Big shots: That R425bn kasi opportunity.
• Secret sauce, a new type of Loadshedding & some new BRICS.
• Right code: SA’s most in-demand dev skills.
• Poll results: Where you buy fashion online.

TRENDING NOW

SA’s Virtually Untapped R425bn Market

It’s no secret some 1-in-5 South Africans reside in townships. What is staggering, though, is the sheer magnitude of the economic potential they harbour.

Contrary to the popular narrative of township dwellers being confined to shacks and mired in poverty, economic activist GG Alcock says the economic figures tell a different story.

Take a stroll through these areas and you might witness traffic jams, hinting at a prospering market. A first job for many fresh graduates here might be at a carwash, serving a part of the now 10 million unfinanced cars in SA – yes, lots of people in townships now have cars!

The Hidden Economic Powerhouse

According to Alcock’s talk at BizNews, a deeper dive into the township's financial landscape is illuminating:

• Backroom rentals (that is people renting out a room or a shed on their property) generate around R20 billion annually.
• The beauty industry thrives with salons and hair extension sellers raking in R10 billion a year.
• Commercial property in townships? Spaza shop rentals contribute a substantial R25 billion to the annual economy.
• Speaking of spaza shops, the market itself stands tall at a whopping R160 billion spread across ±100’000 outlets.
• Hungry mouths find solace in the informal fast-food market, generating a hefty R50 billion through ±45’000 outlets.
• A nod to South Africa's vibrant nightlife, ±45’000 licensed taverns and shebeens pull in R110 billion each year.
• The hustle and bustle of the taxi industry adds another R50 billion.

In total, these businesses generate an estimated R425 billion annually. To grasp the enormity of this figure, it equals the combined revenue from South Africa's mining and agriculture sectors!

Navigating the Challenges

However, there are hurdles to cross.

• The preference for cash transactions, while direct, impedes the smooth flow of funds across supply chains.
• The crime rates in these areas pose significant challenges.
• The absence of subsidised transport means that the majority rely on minibus taxis, with fares taking up a sizeable chunk of the residents' disposable income.
• Moreover, the informal nature of most businesses here results in minimal taxation, which, if harnessed, could elevate the service quality in these areas.
• Businesses need infrastructure to flourish. While profit taxes fund essential services, townships often face shortfalls. A prime example is the stark difference in how different areas deal with loadshedding.
• A Woolworths in a more affluent area during load shedding operates almost as usual, while a township's spaza shop clearly feels the brunt, showcasing how small businesses face a bigger impact.

Innovators Stepping Up

There's a silver lining, as entrepreneurs and innovators are increasingly turning their gaze towards these untapped markets.

For instance, Waitr, a car wash management app, has made waves in the digital domain. Platforms like Delivery Ka Speed, Order Kasi, and others are revolutionising e-commerce in townships.

The payment sector has long been a lucrative one with key players like Flash, Shop2Shop, and Ikhoka already well established. Rumour has it Flash’s 1Voucher does 8 figures a month by allowing customers to convert a spaza shop-bought 1Voucher for anything from airtime to paying DStv or sports betting.

Even groceries have gone digital with Boxer Online running a distribution pilot in KZN and YeboFresh which we covered in a post recently.

And there are many more. In essence, there's R425 billion up for grabs, awaiting those with the vision to harness it. The townships, often underestimated, are vibrant hubs of potential. The question isn't if this potential will be realised, but when and by whom. So, are you ready to jump in?

IN SHORT

🥩 Steak Sauce. Spur Steak Ranches have released their financial results, which look mighty meaty. Despite challenging economic conditions, the franchise chain has capitalised on loadshedding, ensuring their grills stay on even when the power is off, and has shown a 24.9% increase in restaurant sales.

🏗️ Peak Property. Cape Town CBD is experiencing a resurgence after the ol’ Covid. Property investment in the inner city in 2022 has surpassed R3.5 billion. The developments are a mix of residential, commercial, mixed-use, retail and one parastatal property. Lekker man, lekker.

⚡ Loadshedding Shorts: Eskom graciously wants to let South Africans use some power during loadshedding – provided it’s under 10 amps. China is also donating R167 million worth of emergency power equipment to SA – that’s a lot of mops and knee guards. But not to worry – solar-savvy South Africans have installed their own Medupi-level worth of rooftop power generation (with the only difference, it actually works most of the time).

🦚 “The Indian Peacock has Landed”. On Wednesday, India became only the 4th nation to land on the moon and the 1st to land on the Lunar South Pole with the Chandrayaan-3 touching down a little after 6PM (IST). Fun fact: The $75 million budget is less than half what it cost to make the movie “Interstellar”. Someone read the Lean Startup.

🧱 6 More BRICS in the Wall. In what’s been a busy 3 days at the BRICS Summit held in Jozi, the current members have agreed to grant membership to 6 more countries to join the bloc next year. The new countries include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. (And, sadly, they’re not changing the name to BAREESIICUS, which would have been epic.)

30-MINUTE PODCAST

3 Most In-Demand Devs Skills

If you’re still not clear on all the tech talent opportunities out there, you gotta check out this week’s podcast episode. We spoke to Jessica Hawkey of redAcademy about how they groom new tech talent and help onboard them into companies every year.

It’s a quick 30 minutes with some gold insights…

Just the highlights

1. Traditional coding languages are still hot

Jessica says here they still see a major trend towards Java and C#. Most companies have large systems and they can’t just jump to new tech, so if you’re a software dev who wants to be almost assured a job, that’s still a solid way to go.

2. There’s a huge need for Front-end and Back-end developers

Have a look at this part of the conversation where Jessica says she’s heard that there are nearly 30k junior vacancies in the software space in South Africa. And it’s almost continuous, with companies having to look outside of the country – despite the fact that we have people in need of work right here in the country.

3. Explore emerging tech, too

Build your career off a solid base, then explore the new stuff. As Jessica explains right here, most companies still hire for the traditional tech, because that’s what their infrastructure requires. But the new and exciting stuff is coming in, so always keep upskilling and exploring.

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Oh, how interesting… we asked you last time where you buy fashion online, and like 68% of people in this community don’t buy clothing online — if you are building in this space, you are probably early.

🟩🟩🟩🟩🟩🟩 ⛔ I don't (68%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🌸 Shein or other Chinese shop (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 📦 Amazon (0)
🟨⬜️⬜️⬜️⬜️⬜️ 👠 Superbalist (19%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛒 Bash (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👚 Thrift (Facebook marketplace) (8%)

Find more awesome business ideas from South Africa's favourite startup and tech newsletter.