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.

Hi there,

Got inflammation? Then your liver might be driving you to hang out on social media more. (Especially if you’re middle-aged or in college, this weird new study says.)

In this Open Letter:

• In fashion: SA’s Chinese dress connection.
• Steal-free solar, remote tax & SA’s big Halaal thumbs-up.
• Free-to-Paid: 4 Conversion rates compared.
• Trouble with SEO: The poll results are in.
• Startup ideas: Refer friends and get juicy opportunities.

TRENDING NOW

When that Little Chinese Dress Hits SA

Oh oh. Remember when we said Takealot’s revenue growth has slowed over the years? Well, their online fashion arm Superbalist has just issued retrenchment notices. This is maybe the first time since their merger with Spree in 2018 that they seem under so much pressure.

The local competition

Superbalist’s original founders, though, seemed to have just waited out their non-compete with Takealot to team up with The Foschini Group (TFG) and launch Bash. An e-commerce platform consolidating all of TFG (think Sportscene, Markham, @home, Jet, etc.) into one super-shopping app.

And Bash recently flexed its muscle with stats showing how they outrank Superbalist on search, employ innovative lean logistics, and use TFG’s network of ±3000 stores as distribution centres. Seems they really want to take the fight to Superbalist (the Takealot group).

The bigger challenge

But now Superbalist faces even stiffer competition from overseas. Chinese fashion giant Shein started gaining popularity in SA back in 2020, during Covid. And it’s been rocketing ever since…

No surprise then that Shein South Africa is doing extremely well, with their app consistently being in the Top 3 downloaded apps on SA’s Google Play Store. But they’re making waves worldwide.

It’s become a global fast-fashion powerhouse becoming the 2nd largest manufacturer of clothing worldwide. And, slowly but surely, is starting to encroach on the world’s largest name in online fashion, Zara (Inditex), in a few chillingly key ways (if you are building an e-commerce store, take notes):

• Shein’s catalogue features ±2.7m items, 225 times Zara’s ±12k. Important if you want to prevent acquisition costs from turning into losses when people don’t find what they’re looking for (not to mention so much more to upsell and differentiate on later…) — When a customer hits your site, it was likely expensive. Do what you must to close the sale. Shein does so by offering variety, but you can also do it with sound targeting.
• Shein updates products daily vs Zara only every two weeks — Keep it fresh for returning users. Nothing creates drop-off like “Oh I’ve seen this before.”
• Shein is on average 50% cheaper than Zara — Well, they do have a Chinese labour force to help them here, but kudos for building the scale that can get this right.
• And, most importantly, Shein’s average delivery is 5–7 days, virtually anywhere, which is exactly half of Zara’s 10–15 days — Whilst the obvious benefit here is customer experience, what it also does is reduce warehousing costs which, at that scale, it makes a massive difference.

So, if Shein’s performing like this compared to the global player, where’s the opportunity for local entrepreneurs?

Work with ‘em

Look, we all know the SA Post Office has its struggles, now imagine the headaches of import and export. And, yet, it seems inevitable that international e-commerce companies will come to our shores to make a big impact. Their tech, manufacturing and operations might scale well globally and get run remotely, but when it comes to getting the parcel to your door, they need local partners.

That’s where locally registered BUFFALO International Logistics saw an opportunity.

Seeing what Shein, and perhaps some other Chinese brands (such as Alibaba) can achieve in SA, they set up and leverage a local footprint to streamline the process between Chinese e-commerce stores and South African consumers.

Granted, the reviews on Hellopeter aren’t great. But spot interviews with customers say most of their orders come through customs in good time and without unexpected taxes.

And that just might change the game.

The Last-Mile opportunity

With Amazon’s imminent e-commerce launch in SA, this space is set to light up like never before. And whilst these giants' tech and products can scale to meet SA demand, it's the last mile that will most likely keep relying on local players.

The local opportunity here is, if the global giants are inevitable in SA, why can’t SA founders develop the mechanisms they use to reach and deliver to customers? We have the local domain experience, it seems only fair that we help make it work (and build a couple of big businesses off the back of it).

Find those gaps, and fasten your seatbelts – e-commerce might just take off for good.

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 buy fashion online?

Vote to see what others say.

• ⛔ I don't
• 🌸 Shein or other Chinese shop
• 📦 Amazon
• 👠 Superbalist
• 🛒 Bash
• 👚 Thrift (Facebook marketplace)

Login or Subscribe to participate in polls.

IN SHORT

☀️ Dodgy Panels. As solar sales continue to rise in South Africa, so has solar equipment theft. But one innovative Eastern European manufacturer has started producing solar panels specifically for the SA market. The panels look damaged, with broken glass and missing corners – but still work perfectly, and look less attractive to sticky fingers.

💰 Mobile Money. Mastercard has agreed to take a minority stake in MTN’s R100 billion fin-tech business, with the signing on the dotted line set to happen soon-soon. MTN’s mobile money business had over 290 million subscribers by the end of July 2023, with transactions in the first half of this year surpassing $8.3 billion.

🥩 Beefy Exports. The Saudi Food and Drug Authority has lifted the ban on the import of meat and red products from South Africa. This after passing the inspection of local abattoirs and feedlots for market access protocol compliance and Halaal certification in the Kingdom.

🤓 Remote Tax. SARS is proposing a bill that would see changes to tax law that would (among other things) tighten up the tax requirements for remote workers to include employers (even non-South African ones) to deduct PAYE tax from SA-based remote workers.

🇷🇺 Moon “Landing”. Last week we shared how the Russian and Indian space agencies were in a race to land on the moon. Well, Russia got there first. Sorta. Its Luna-25 spacecraft crashed into the surface of the moon over the weekend after spinning out of control. And then there was one: India’s Chandrayaan-3 is set to touch down on Wednesday.

­

BUILDER’S CORNER

4 Free-to-Paid Conversion Strategies Compared

Freemium, free trial or reverse. It’s not only for SaaS. These days almost every business type has some form of sales funnel that seeks to get people aware and testing your product, with an eventual (percentage of total new users) sale in sight.

The question is: Which one will work for what you’re building?

And the answer is… way more complicated than you think (obviously). Because companies don’t just publish their internal conversion info. HOWEVER, good boys Kyle Poyar And Lenny Rachitsky (from Lenny’s Podcast) did us all a solid and collected some data on US companies’ conversion rates (percentage of new users converted to paid).

Here’s what we learnt…

What delivers the highest conversion rate

1. Free Trial: 8–25%
   This is when you offer free access to your full product for a limited time (14 to 30 days), and when it expires, the person has to actually start paying or stop using the product (lose access).

2. Reverse Trial: 7–21%
   When you give users access to your top-tier product for a limited time (14 to 30 days), after which they can either pay or revert or a low-tier free version.

3. Sales-Assisted Freemium: 5–15%
   Freemium is the classic SaaS model where you have various pricing models, one free (with limited features) and then tiered paid options (with more features). Importantly, Sales-Assisted Freemium is where you are guided by (and often even HAVE to interact with) a sales team or real people to purchase the higher tier.
   
4. Self-Serve Freemium: 3–8%
5. This is the same thing, but the entire onboarding and up-tiering process is automated. Users almost never have to speak to another human to use the product and upgrade etc.

Note: This is obviously US data, so it might be different here in SA. But still worth noting that the all-or-nothing Free Trial is so powerful.

Which one is right for your product?

Turns out it depends on who you’re selling to. Since more people complicate decision-making (including purchases), companies tend to take longer to convert and do so at a lower rate (interesting insight for those in SA being told to go B2B, no?).

Conversion rate based on size:

• Individuals and very small businesses: 5–25%
• SMEs: 4–20%
• Larger companies: 4–18%

Got a conversion strategy that worked for you or need some conversion-hacking help? Hit reply and let us know…

THE RESULTS

Oh, dear, we asked how your SEO is doing last week. And most of us don’t know what an SEO strategy is, are trying, or spending too much.

🟨🟨🟨🟨⬜️⬜️ 🏆 Always be Number 1, baby (21%)
🟨🟨🟨🟨⬜️⬜️ 😖 Try and try but never get anywhere (21%)
🟨🟨🟨🟨⬜️⬜️ 💲 Paying a fortune in ads, can't keep it up (21%)
🟩🟩🟩🟩🟩🟩 🤷 What is an “SEO strategy”? (31%)

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

Hi there,

Your brain on rock music? Scientists have reconstructed the song “Another Brick in the Wall” entirely out of Pink Floyd fans’ brainwaves. And it sounds super trippy.

In this Open Letter:

• Fair play: How SA’s trying to give startups a chance.
• FinnedThemUp, Amazon’s R30bn SA investment & 1-hour Takealot deliveries.
• Harsh truths: The realities of building a startup in SA.
• Poll results: What makes an ad memorable?

TRENDING NOW

Giving the Little Guy a Shot

Ever lose out to the smarter kid in school? Well, you maybe couldn’t do something about it then, but perhaps times are changing…

Remember when we poked fun at SA’s “busy-bee” Competition Commission for handing judgments on global giants like Apple, Booking.com and even Google? Well, they recently released a report on their inquiry into Online Intermediation Platforms (access the full 123 pages of bedside reading here).

Now we know platforms like Takealot’s marketplace, Booking.com, Property24 and UberEats need scale because their margins are small and often to get that scale, they need to execute strategies that, well, keep competition out. But that’s where the Competition Commission feels that some of the strategies are anti-competitive. And just ask anyone who’s tried to go up against them with their bootstrapping startup, and they will surely agree.

So, you know what, they make some valid points…

The proof

While the report mentions a whole lot of big international and local tech giants, by far the most interesting was its take on Google, which impacts all or most startups and other businesses.

Now, we all know the most challenging part for any business is getting in front of potential customers. And Google has become a major part of that, especially if you can get an organic ranking on Google.

But the Commission feels Google is not playing fair in SA, because…

• Research shows the 1st result on a Google search has a 33% click-through-rate. After that, it drops by half to number 2, then half again by 3. So, if you’re not in the top results, you’re dead.

AND YET…

• There are only 17 “spots” where your business could potentially appear on any Google Search Engine Results Page (SERP).
• However, the top 4 and bottom 3 slots on any SERP are reserved for paid search ads, dropping your potential space to only 10 spots.
• Now, Google rich features like local area, travel units, images, YouTube videos, and "People Also Ask" take up so much space, up to 18% of SERPs show less than 10 organic “spots”.
• Since August 2021, this has caused a 5.5% decrease in organic listings.
• Google adding Shopping and Hotel carousels is just giving you even less space to appear.

And it’s starting to show: Nowadays, almost 17% of click-throughs go to the flashy paid search content, and only 2% to organic results. Great move to force companies to buy ads, but it basically means if you don’t pay, they won’t find you. And guess who’s buying all the paid slots? The ones with deep pockets.

The report also notes elsewhere that Online Travel Aggregators spend 20% of their revenue on Google ads – yeah, no bootstrapper has a chance here.

Why does this matter?

Inequality is no joke in SA. The Gini coefficient that the World Bank uses to measure inequality puts South Africa as the most unequal country in the world.

And this isn’t just a social issue, it can lead to political instability and economic decline. So the Competition Commission is just one vehicle for SA to give the small guy a better chance this time, in the online world.

So, here’s what they are asking Google to do

Introduce SA platform badges to highlight which platforms are local companies – think searching for accommodation, the LekkeSlaap listing will have a “South Africa” badge on it – that’s lekker.

Let people filter search results to only see local SA platforms (which the commision wants to see implemented within 12 months).

Introduce new content-rich display for non-leading SA platforms in travel and shopping (within 18 months) and other categories within 24 months. Basically a content rich showcase for local platforms.

Provide R330m’s worth of support programmes for SA companies over five years, including…
– R180m in advertising credits for non-leading SA platforms (esp. SME and HDPs).
– Free in-depth technical training to maximise the efficacy of ad campaigns.
– Funding support for SME & HDP digital platforms, including Google product credits, along with startup training and networking.
– Register online profiles for 500,000 SMEs & HDP-owned businesses.

Will this work? Will Google actually concede to their requests? We don’t know. These things can spend years in court.

But if they do, it’ll change the game quite a bit here in SA.

Imagine search results that highlight searches stemming from local companies. What’s more, a specific page that features local players. If this goes ahead, it could be a major win for local platform developers wanting to compete with the likes of Booking.com, Uber or even Amazon. And when that happens, you platform builders better be ready….

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 is your current SEO strategy?

Vote to see how everyone voted.

• 🏆 Always be Number 1, baby
• 😖 Try and try but never get anywhere
• 💲 Paying a fortune in ads, can't keep it up
• 🤷 What is an “SEO strategy”?

Login or Subscribe to participate in polls.

IN SHORT

💨 Heads in the Cloud. Amazon Web Services are planning to invest R30 billion to train 100’000 young South Africans to become certified cloud computing practitioners. For Mahala. This over and above the already R15 billion AWS has invested so far.

💰 Gimme Yo Lunch Money. It was only a matter of time before small-scale solar started eating into municipalities’ incomes. We’ve spoken about it in a previous edition of The Open Letter, but SA has imported $2.5 billion in solar equipment in the first half of 2023 with June’s total estimated rooftop solar generation at an estimated 4411.50 MW – nearly 4 times what it was in March 2022.

⏱️ No Time Like The Present. Takealot just launched an on-demand service TakealotNow and is trialling it exclusively in Cape Town’s Northern Suburbs. Products include a bunch of curated items like laptops and smartphones, beauty products, loadshedding essentials and toys, and will be delivered within the hour and up to 10 PM at night courtesy of a dedicated section in the Mr D app.

💉 Cash Injection. SA personal finance startup FinMeUp has just raised an undisclosed amount in its latest funding round to help enhance user experience and create a dynamic learning environment. The round was led by SAAD & Blue Sky Investments.

🌒 Moon Water. Did you know Russia and India are about to land on the moon? Neither did anyone else, until they sent pics back from space going: “Oh, BTW, we’re in lunar orbit now”. Russia’s Luna-25 and India's Chandrayaan-3 lunar probes are set to land near the moon’s south pole (vast reserves of frozen water ice there) in the next few days. Bets are on for who’ll touch down first.

30-MINUTE PODCAST

5 Tough-Love Truths about Building a Startup in SA

If you’re feeling the pressure of scaling that startup, you’ll enjoy this week’s How Would You Build It. We finally got Bubu Buna of Jobox on for a no-holds-barred look at the (often painful) realities of building a startup in SA.

It’s super short – just 40 minutes – and it’s an absolute cracker for SA founders.

Just the highlights

1. Why building in SA is so tough

“It’s an extreme sport,” Bubu says here, “the most difficult thing I’ve ever done.” So much so that he’d tell most people NOT to build in SA. OR be prepared for the slog. Because funding access is hard or non-existent, B2B is way harder than most people let on and the only thing harder than actually getting a corporate to listen to you is getting your invoice paid.

But, despite that, he loves it. You just have to build differently.

2. A model that actually works in SA

One of Bubu’s biggest lessons is that international startup news and influencers are all wrong for SA startups. Raising funding, scaling and exiting in 3 years just doesn’t happen in our market. What does work is building a good, solid self-funded company that generates its own revenue, growing it slowly if you have to. Get the sage advice right here.

3. Business before platforms

One way to deplete yourself (of funds and energy) fast is to focus on building an MVP before you’ve validated your concept. In this context, validation means you have paying customers – get the insights here.

4. Build what the market wants

Bubu had a valuable experience building a product off user feedback that then bombed and needed a crucial pivot. He shares the whole story here.

5. Getting B2B sales going

Start as consultants within your network – first 10. The people who you know have the problem you’re looking to solve. But don’t give it for free. If it really works, your next few can come through word of mouth, before you go bigger.

A good place to start is to ask “How can I make this so good people don’t just want to use it, they want to get others to use it too” – catch that convo here.

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

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

THE RESULTS

Go figure. Earlier this week we asked what makes an advert memorable and like EVERYONE said when it makes you laugh…

🟩🟩🟩🟩🟩🟩 😄 When it’s funny (89%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤪 Crazy characters (5.5%)
⬜️⬜️⬜️⬜️⬜️⬜️ 😭 When it gives you feels/cry (5.5%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✨ Cool visuals (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 🔊 An epic soundtrack (0)

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

Hi there,

Still wondering if we should trust AI? Hackers at Def Con have just shown how easy it is to trick AI into saying 9 + 10 = 21, give tips on how to spy on others and just generally tell a whole bunch of lies with a smile.

In this Open Letter:

• Money shot: Making TV-quality ads at lightning speed.
• Wine and planes, g’bye WeWork & Elon (apparently) chickens out.
• Best buds: 7 Steps for good founder relationships.
• Your ideal workspace: The poll results are in.
• Startup ideas: Refer friends, get juicy opportunities.

TRENDING NOW

The Rise of Agile Video Ads

Five years ago, making a TV ad required a bunch of agencies, professionals, kit and anywhere between 1 and 6 months to ship. And, apparently, production costs can range from just R20k to R2m, which seems a bit iffy – but it’s probably why you end up with such mixed results…

And then, you still had to pay for the TV spots…

Across SABC 1, 2 and 3, it’s just over R1m for 170 spots. Child’s play compared to the R97m for 30 seconds during the Superbowl and R22m at a FIFA World Cup (Rugby World Cup spots are R60m, if you’re keeping score), mainly because spots are limited. Putting TV-quality video ads out of most smaller businesses’ reach.

But, of course, ye olde internet is changing that fast…

Video ads right now

With SA spending about R3.3bn per year on video ads online (climbing by 6–10% annually, set to reach R4.1bn by 2027), digital is taking an ever-growing chunk out of our combined R7.9bn TV and online video spend.

And that’s stretching what production companies and agencies can do, because in the digital realm, space is a lot less limited and the competition is beyond fierce.

There’s simply no way you can take 6 months or even 3 – or even 1 month – to produce a video ad. We need it in 7 days, max.

And the traditional boys can’t keep up with that, which creates gaps for hustlers…

Local boys and girls doing it right

You might not know the team over at Freckle, but you’ve probably seen their work – King Price’s “Tractor” and “Lobola” spots, Tipo Tinto’s “Lick Her”, ads for the National Lottery and Vodacom, and even that LekkeSlaap (whom we spoke about recently)’s famous one with almost 10 million views.

Being very creative, focusing on hyperlocal and niche, and bringing the entire production process in-house seems to be paying off.

Now also imagine making good use of tech advances – iPhone camera quality’s through the roof these days, and mics are getting better and more accessible. There’s just so much you can do to create stuff that stocks faster, more effectively.

Another local startup is Vidr, which was years ahead of its time – crashing around with the concept of hyper-optimised and agile iPhone video ads long before 2019. Their time has probably come right now.

Taking it a step further

But recent advances in generative AI could take things to a whole new level. You might have seen how people are using Midjourney images animated via Runway Gen-2 to create cinematic trailers.

Well, the results can be quite spectacular…

Our question is, who’s looking into this same tech to create video ads? Because there could be huge opportunities:

1. With more creative collectives taking a similar approach to Freckle, creating video content becomes more accessible for more companies.
2. Smaller companies can play in this space, without the hurdle of massive production budgets.
3. Young, dynamic, funny solo creatives can flex their creative muscle by creating high-quality productions that can help build brands for years to come.

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 makes an ad memorable?

Vote to see the results.

• 😄 When it’s funny
• 🤪 Crazy characters
• 😭 When it gives you feels/cry
• ✨ Cool visuals
• 🔊 An epic soundtrack

Login or Subscribe to participate in polls.

IN SHORT

🍷 Sky Wine. Construction on the Cape Winelands Airport is pretty much done. Acquired in 2021 and rebranded from the Fisantekraal Airfield, this 150-ha site has been used for film productions and private aviation transport but the big vision is to transform it into a full-service hub capable of handling passenger flights as well as non-scheduled flights by private plane owners.

☀️ Sunny Money. Standard Bank is set to finance as much as R300 billion in sustainability and renewable projects by 2026 in South Africa, Namibia, Kenya, and Nigeria. The bank says they saw demand increase substantially in the wake of government lifting the cap on private electricity generation projects at the start of 2023.

💵 2 Billy. Founders Factory Africa just raised over R2 billion from Mastercard and Johnson & Johnson to invest in African startups.

🍩 No Longer Works. After being valued at $47 billion at one point, the office rental startup WeWork is now facing potential bankruptcy. With over 600 locations in 33 countries, a drop in memberships and an excess supply of commercial real estate has threatened its liquidity and profitability, the news of which hammered its share price by 27%.

🔻 LessGPT. Looks like ChatGPT’s usage has dropped nearly 10% from May to June. It’s also showing a drop in website traffic and app downloads. Users have been complaining that the chatbot's responses have gotten worse (“lazier” and “dumber”) – something we’ve also been noticing in recent weeks here at The Open Letter. Could it be that the novelty has started wearing off?

🐣 Chickened Out. In case you missed it on Threads (LOL), Zuck has said it’s “time to move on” from the cage match against Musk after Elon apparently failed to agree on a date. Surely we can find a car park somewhere in Silicon Valley and someone can livestream the thing on their iPhone?

­

BUILDER’S CORNER

7 Steps for Good Founder Relationships

Navigating the startup world as co-founders is like a voyage of exploration. The initial excitement of your groundbreaking idea’s what sets you off. But the success of the journey – full of highs, lows, challenges, and rewards – depends heavily on your relationship and the ground rules.

When you pick a co-founder, chances are you gonna be stuck together for some time (unless it fails fast, of course).

But as you succeed, you need a solid working relationship. Here are some actionable steps to ensure your co-founder relationship is robust, resilient, and ready for whatever comes your way.

1. Align on Vision: Before diving deep, sit down and map out your joint vision for the company. That’s not the company vision, but your personal and joint visions, and how the company supports that. The trick? Find a company vision that allows each of you to achieve your personal mission.
2. Cultivate Trust Through Transparency: Trust doesn't appear overnight. It's built by consistently being transparent, honouring commitments, and always being reliable. Set aside time, especially in the early days, to discuss your fears, expectations, and hopes for the business and each other. And when you feel like trust is challenged, speak up!
3. Foster Openness to Feedback: Create a regular feedback loop. Maybe it's a weekly check-in where you candidly discuss what went well and what didn't. Ensure the conversation is framed in a constructive manner, focusing on the business's growth and mutual improvement. If this makes you or your co-founder feel uncomfortable, that’s ok. But when you start to avoid this, it’s probably a bad sign.
4. Plan Difficult Conversations Upfront: Address thorny topics like expected contributions, equity splits, and responsibilities head-on. Decide on the process if one of you wants to leave and set up a system for ongoing dialogue about your evolving roles and expectations.
5. Vesting and Equity Matters: Implement a vesting schedule that truly reflects each one's input. If someone contributes more in terms of funds, time, or expertise, the equity and vesting should reflect that. And whilst this is good for employees, it could be useful for founders as well. This covers the founder that stays behind should one decide to leave.
6. Clear Role Demarcation: Clearly define each co-founder's role to prevent overlap and conflicts. Break down responsibilities and give each founder a crucial domain to oversee. This is the co-founder's superpower. I.e. one owns the products/ops, one owns the sales and marketing.
7. What is the long-term plan: Are you building to sell? Building to get dividends or just paying bills while you having fun? What is the timeframe? Having alignment on these elements is useful to work towards common objectives and avoid surprises.

Got some pics of you and your co-founder when you just started? Hit reply so we can share it all cutesy on the socials…

THE RESULTS

Well, don’t we like our bread buttered at both ends? Speaking of better workspaces last week, 49% of us want to work both at home and in-office — we agree (although The Open Letter doesn’t have an office 👀).

⬜️⬜️⬜️⬜️⬜️⬜️ 🏭 Sleep at my desk, Elon Twitter-style (7%)
🟨⬜️⬜️⬜️⬜️⬜️ 🚉 9-to-5 with a decent commute, thank you very much (9%)
🟩🟩🟩🟩🟩🟩 💼 A few days in-office, the rest at home (49%)
🟨🟨🟨⬜️⬜️⬜️ 🏡 My home office is the best in the world (30%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💻 Hotel rooms, trains and coffee shops for me, please (4.5%)

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

Hi there,

A world record for the slowest 100m ever? Somalia had to apologise when it sent an untrained candidate to participate in University Athletic Games. Clocking in at over 20 seconds at the 100m event, this might be the slowest one in history. We haven’t run in years but pretty sure we can beat that.

In this Open Letter:

• Game changers: What truly inclusive workplaces look like.
• Cashless OK, $50M Series B injection & shoddy internet.
• The progress: Why female engineers make great founders.
• Discounts: Get R500 off this Cape Town founder's event.
• Poll results: How you choose to pay.

TRENDING NOW

Guess Who’s to Thank for Cooler Workspaces…

Do you ever wonder how work even began?

Picture this: ages ago, people probably realised, "Hey, we need more hands during harvest time!" And so, people pitched in and got a share of the crops. Zoom ahead to the middle ages, and people are farming, building stuff, and guarding towns.

Back then, jobs were super physical. So, usually, the guys did the heavy lifting while the ladies stayed home, managing everything and taking care of the kiddos.

But guess what? Times have changed big time! Work today? A whole lot easier on the back. Plus, thanks to modern family planning, ladies are smashing it in the workplace and business world like never before.

We really need to catch up…

Work: Still Stuck in the Man Cave?

Even though the nature of jobs has changed, the workplace itself? Not so much. It’s like we swapped out the old TV but are still using a VCR. So, while more women can now join the formal workforce, the formal work environment is mostly not a good fit.

And it shows in the numbers, 90% of informal work (typically work not governed by an employment agreement or formal business setup) in Africa is performed by women.

And oh boy, the classic 9–5 office grind? It's tough. Think about it: commute, work, commute. Barely any time at home. And perhaps that’s why 47% of women in SA are out of the workforce.

But this is all changing. Post-Covid we’ve seen a cool work mix – some days at the office, some at home. Major win? Moms get the best of both worlds! Just saving time on the commute alone is buying valuable family time.

What’s more, the rise of online gigs and remote jobs is rewriting the rules of work. And considering it's Women's Month in SA (shoutout to the incredible 20,000 women who stood up against unfair laws in 1959), it's time to dream of a workplace that's all about inclusivity and flexibility. One that works for more people.

Local Game-Changers

Ever heard of RecruitMyMom? It’s not your average job site. For years they have been a matchmaker for moms, connecting them with flexible jobs that fit their desire to spend more time with the family or other activities.

Think about a woman who spent the first 10 years of her career as a consultant for a top-tier consulting firm, or a woman with 15 years of auditing experience for a leading audit firm! These are the kind of candidates on RecruitMyMom that can be hired for a few hours a day. That experience is worth a lot and many companies only need it (and can afford it) for a few hours a day – a perfect match.

And businesses are loving it, feeling they get more bang for their buck. Highly focused, professional, and experienced women contributing positively.

And then there’s WomHub (check out our podcast guest Victoria Jackson from WomHub), championing the cause for mom entrepreneurs, especially in the STEM world.

• Their workspaces? Designed just for female entrepreneurs.
• Their accelerators? Supports female founders through maternity.
• Their funding? Modelled to help female founders succeed.

Bottom line? The workplace isn't just about adding more chairs. It's about reshaping the entire table. Let's get flexible! After all, not even all men are the same and these changes could greatly benefit everyone involved, leading to healthier families and more fulfilled adults…progress.

Come across a female founder changing the game? Hit reply and let us know.

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’s your ideal workspace?

Vote to see the others' votes.

• 🏭 Sleep at my desk, Elon Twitter-style
• 🚉 9-to-5 with a decent commute, thank you very much
• 💼 A healthy mix of a few days in-office, the rest at home
• 🏡 My home office is better than anywhere else in the world
• 💻 Hotel rooms, trains and coffee shops for me, please

Login or Subscribe to participate in polls.

IN SHORT

🪨 Janky Internet. Wondering why your favourite show is buffering or work video calls seem to be shaky? Turns out some undersea cables in the West African Cable System (WACS) and the South Atlantic 3 (SAT–3) systems have been damaged by a rock fall in the Congo Canyon.

👨‍🔬 Check your science. A prominent scientific journal is set to retract a paper containing controversial claims about the discovery of room-temperature superconductors due to ”possible data fabrication”. It’s also not the first paper by this specific physicist that’s been retracted.

💩 Causing a Stink. The long-time issues in Cape Town’s most polluted waterway – the Milnerton Lagoon – are set to see a Multibillion-Rand intervention by the City of Cape Town, including aerating and or bio-remediating the lagoon, upgrading the non-compliant discharges from the Potsdam Wastewater Treatment Works, as well as cutting off other pollution sources.

👌 More than OK. The Shoprite group’s franchise offering, OK, has just launched OK Urban with a bold new look hinting at taking on Woolworths, continuing the relentless onslaught by Checkers. All of it is cashless tap and go (which makes sense considering 80% of you prefer to tap to pay as voted in Tuesday’s Open Letter poll).

🍔 Good News Burger. In the latest update to The Economist’s Big Mac Index the Rand undervalued by 50% and should be trading at just under R9 per dollar. The index compares the price of a Big Mac burger in different countries to determine how currencies are valued. A Big Mac costs R49.90 in South Africa and $5.58 in the US.

🔪 Sharp Investments. Knife Capital raises a $50m fund to address the funding gap in critical growth stages of startups in the Series B stage. The fund is currently invested in startups like DataProphet and Kasha and plans to invest in another 10-12 firms primarily in the South African ecosystem.

THE THREAD

3 Women-First Founder Thoughts to Share

If you’re still hunting for new ideas, you probably haven’t seen this week’s How Would You Build It yet. No worries, you can still catch our chat with Victoria Jackson of WomHub – which has grown to so much more than just co-working, btw. They’re doing all kinds of amazing stuff: from igniting STEM passion in young women to female founder journeys, accelerators and funding support.

Our fave highlights

1️⃣ Female STEM Engineers Make Great Founders

In fact, it seems to be part of a natural journey/progression: Get STEM-educated, graduate, work in engineering, and then a lot of women naturally end up choosing to go the entrepreneurial route.

And WomHub focuses very much on helping founders in engineering, mining, green technology, software and tech through incubation and accelerator programmes specifically catered to women – see more here.

2️⃣ Women May Have a Different View of Sucess

And therein lies many opportunities. As Victoria mentions here, women might not have the unicorn-level goals of building that IPO in lieu of building a stable, sustainable family business. Not always, though, but often enough that there might be opportunities in helping more women unlock just that – how do we help fund that, how do we connect people there to realise value?

Another point that goes back to our main feature is that you do often find women in extremely high-profile positions, with decades of valuable domain skills, who exit the workplace to build a family. And then you have companies in need of that level of skill, who can’t afford to acquire it full-time, but would pay handsomely for just an hour or two a week of her insights.

Figure out a way to bring more of those two together, and you could have a very neat solution.

3️⃣ Unlocking Opportunities in the Circular Economy

It’s often hard to see how you actually make money out of reuse and upcycling etc. but Victoria points out here that there could be unique opportunities in building products or vehicles for the ESG space that can help smaller green companies get access to voluntary carbon credits because there’s a lot of good work happening there that’s maybe not getting the support it deserves.

Another worthy thought is that as Economic Social Governance marches on, there might come a tipping point of adoption. And if you were to start developing a software solution now to help those hard industries who are currently building in the space, you could benefit when that opportunity unlocks – more on that here.

BONUS: There will be way more unique women founder insights like these in two weeks’ time at Innovation City’s Digital Divas Summit. In fact, Victoria will be there, along with an amazing line-up of female founders and founder supporters.

Oh, and we organised for you to get R500 off your ticket down below…

If podcast app is your vibe, catch them here:

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

THE EVENT

R500 Off Your Ticket to Digital Divas Summit

We have a confession to make. We didn’t just incidentally have Victoria on the podcast – we chased that interview because we knew she’s leading a panel at an upcoming Innovation City event on 25 August.

It’s around female founders’ experiences through the years and decades (following the evolution of the movement), which includes the likes of Loop CEO and algorithm creator Kimberley Taylor, Zindi Africa’s Celina Lee, Endeavour South Africa MD Alison Collier and legendary female founder and IDF Capital chairperson Polo Leteka.

And that’s just the warm-up act to a masterclass on negotiation by venture capitalist and Knife Capital partner, Andrea Böhmert. Which then leads to the keynote by international journalist and The Female Quotient founder, Shelley Zalis.

It’s such a cool opportunity, we stalked, begged and bothered Innovation City endlessly until they agreed to give The Open Letter readers R500 off tickets to the Digital Divas Summit on 25 August in Cape Town.

So there you go. If you want in, or if you know a female founder (or soon-to-be), all you have to do is use the code YFP74EE8 when you checkout here.

THE RESULTS

Wow, we just kinda proved the main stat from our last letter on digital payments. 40% of us use tap-and-go and 39% Apple Pay/Google Pay – that’s a cool 80% for the future of payments. (Poor PayShap needs some love, though.)

⬜️⬜️⬜️⬜️⬜️⬜️ 💰 Cash (2%)
⬜️⬜️⬜️⬜️⬜️⬜️ Chequebook (2%)
🟩🟩🟩🟩🟩🟩 💸 Tap-and-go with card (41%)
🟨🟨🟨🟨🟨🟨 📱 Apple Pay, Google Pay or Samsung Pay (39%)
🟨⬜️⬜️⬜️⬜️⬜️ 💳 Chip and Pin (6%)
⬜️⬜️⬜️⬜️⬜️⬜️ ⚡ SnapScan or Zapper (4%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👍 PayShap (0)
🟨⬜️⬜️⬜️⬜️⬜️ 😎 Crypto (6%)

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

Hi there,

Who’s a good boy? This Japanese man, apparently, after he spent R375k to transform himself into a dog. Because woof.

In this Open Letter:

• Payday: How 75% of SA choose to transact.
• Space funerals, poor CEOs & Namibian crypto crackdown.
• Hustle 101: 5 Ways to do more with way less.
• Poll results: All your fave sports teams.
• Startup ideas: Refer friends, get juicy opportunities.

TRENDING NOW

It’s Official: How 75% of SA Choose to Pay

One major positive from Covid lockdowns was how fast SA adopted tap-to-pay technology. Mastercard now reckons 75% of card-using South Africans use it as their primary means of payment.

And it’s now even easier with Apple Pay, Google Pay, Samsung Pay etc. active in SA – seriously, I haven’t seen my wallet in weeks. Apple Pay already overtook Starbucks as the US’s #1 mobile payment solution back in 2019 and currently has an estimated 535 million users worldwide.

But it’s not just in retail, banking’s getting face paint too.

In fact, 60% of South Africans believe that in 5 years’ time, banks will have no need for physical branches as 73% prefer their mobile banking app for day-to-day banking.

Our phones are becoming our wallets

PayShap, the new South African rapid payment technology we told you about in March, allows instant interbank transfers for low fees. And they recently claimed to have handled 800k transactions at a total value of R660 million already.

(Interesting to note: PayShap was meant for microtransactions, yet their average transaction value is ± R 825, hinting that their initial poor user experience and confusing fees hampered adoption.)

Nonetheless, Payshap claims over 300k South Africans have registered PayShap IDs (the unique identifier you need to transact) so far, and expects higher adoption as more banks join. And with Capitec announcing its PayShap fees – Free under R100, R3 up to R3000 – this might just have a crack at taking cash out of the game.

The potential is massive. Rapid payment technology can reduce the amount of cash in society, which is already scaling elsewhere in the world:

• India’s rapid-pay system UPI surpassed 9bn transactions in May this year.
• Brazil’s digital payment system Pix recently became its most used payment method.
• Australia’s reducing its cash supply by $1 billion by limiting how much cash people can withdraw.

A new era of payments

With tap-to-pay becoming more acceptable on the consumer side, it unlocks major benefits and potential opportunities. Where, a few years ago, companies like Yoco gained a market-leading position by simply offering a cheap device, the next frontier probably lies in creating new in-store experiences.

Instead of having a “till point” in a store, sales reps can walk around with handheld point of sales that are NFC-enabled and can thus accept tap-to-pay. This does a few things:

• Shortens the time from shelf to payment, reducing friction and increasing sales.
• Reduces staff overhead as your sales rep can also perform checkout.
• Saves floor space and allows for creative store layouts.
• Removes cash, which reduces costs, risks and admin.

For FMCG retail, this also means faster checkouts which could optimise staff costs and increase customer satisfaction.

As far as using a mobile device for banking goes, technology like PayShap, when executed well, with a good user experience, could do wonders for financial inclusion.

• Whilst B2B e-supply solutions like YeboFresh makes orders and delivery easier for informal shops, it’s risky for them to take cash payments. Yet most of these shops deal mainly in cash, so transacting is tricky. A digital cashless solution would really help here.
• Instant, low-cost interbank payments can also accelerate the adoption of digital payments in transport, specifically minibus taxis. This could make it substantially easier for governments to implement the subsidy for taxis we spoke about, better integrating them into the public transport system.

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

How do you prefer to pay?

Vote to see how others voted.

• 💰 Cash
• 📜 Cheque book
• 💸 Tap-and-go with card
• 📱 Apple Pay, Google Pay or Samsung Pay
• 💳 Chip and Pin
• ⚡ SnapScan or Zapper
• 👍 PayShap
• 😎 Crypto

Login or Subscribe to participate in polls.

IN SHORT

🥊 3. 2. 1. Fight. Arguably the fight of the century (perhaps not if you’re a combat sports purist) Musk vs Zuck is happening. Elon has said the fight will be live-streamed on X (fka Twitter) – with proceeds going to charity. I mean, marketing stunt of the decade to get more eyes on your platform…

⚰️ Space Funeral. Seems like the medical teams at NASA are already figuring out what to do with one of the Astronauts should they die on the 300-million-mile mission to Mars. Low orbit and moon missions seem pretty much sorted, but what to do with a body should they die on the way to, or on Mars?

🪙 Kenya believe it? Remember when we said how Worldcoin could be a foundation layer for UBI? Well, it rolled out recently in Kenya and between the “security concerns” around the queues lasting days and data privacy & security, so much chaos ensued they shut it down.

🇳🇦 Crypto Law. Neighbours Namibia signed a bill into law that recognises virtual assets including cryptocurrencies — meaning all crypto operators would have to comply with new regulation or face fines or imprisonment. Funny enough, despite the new legislation, Namibia’s central bank is still warning that virtual assets are not legal tender and citizens should transact at their own risk.

🧐 Poor CEOs. The 1% are suffering too, people. A new study has shown that the average pay of an S&P500 CEO has dropped to only R300 million a year compared to the year before. Yeah, looks like everybody is tightening their belts in this economy.

­

BUILDER’S CORNER

5 Strategies for Doing More with Less

It’s a running joke how scarce early-stage startup funding is in SA. Seriously. We’re even lagging behind other African countries here. So whaddya gonna do?

Play the cards you’re dealt, of course. Bootstrapping is an art form, a way to get going and grow without outside capital. (In fact, we’re bootstrapping The Open Letter!) And, when you’re bootstrapping, nothing is more important than capital efficiency.

So, how do you make the little money you have go as far as possible?

5 ways to stay capital efficient

1. Get metrics in place ASAP: Numbers don't lie, and understanding costs and incomes from the get-go provides clarity. Proper financial tracking and metrics help you make informed decisions, so you can optimise spend and know exactly where to improve.
2. You can use a tool like Google’s LookerStudio (free) to pull in data from various places and run it like a central startup dashboard.
3. Leverage technology: There are loads of free and affordable tools available to help you streamline, automate and enhance productivity. From open-source software to cloud solutions or collaborative tools, tech can help you trim overhead costs and boost efficiency.
4. Share this newsletter with 1 friend and when they sign up you’ll get our list of Top 50 tools you can use to move faster and cheaper.
5. Hire smartly: Before expanding your team, consider contracting out certain roles, especially if they aren't central to your business. Embrace the gig economy or think about part-time positions. When it is time to hire, invest in versatile individuals capable of multitasking, to maximise return on each salary.
6. We consult a few startups on various aspects of early-stage building. Get in touch and let's see how we can help you grow.
7. Set targets and stand firm: Sometimes, the path to your goal can seem insurmountable without pumping in more funds. Instead of relenting, set your targets and be unwavering. Push your creativity to the limit, hustle relentlessly, seek strategic partnerships, and don't be shy to ask for favours or collaborate. Many times, audacity and resourcefulness can achieve what money cannot.
8. Quarterly, monthly and weekly targets together with someone external that can keep you accountable is worth a lot. A good accelerator program can help you with this, but be sure one of their key contributions to you as a founder is accountability.
9. Lean operations and Agile methodologies: Adopting a lean startup approach allows you to swiftly test and validate ideas with minimal investment, cutting down the risk of major upfront costs. This helps ensure you only invest in ideas with demonstrated potential. Pair this with agile product development methodologies, so you can iterate and get products to market faster while getting more feedback.
10. The Lean Startup is part of startup folklore. Whilst it shouldn’t be treated as the only way to build a startup, the thinking presented in the book is still helpful today.

Got some stellar workarounds for doing more with less? Hit reply and let us know…

THE RESULTS

Ok, now we’re curious. We gave you a list of top soccer, rugby and Premier football teams and asked which are your faves last week. And like a quarter said none of those, thank you very much…

🟨🟨🟨⬜️⬜️⬜️ 🌞 Sundowns (12%)
🟨⬜️⬜️⬜️⬜️⬜️ 🪓 Chiefs (4%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏴‍☠️ Pirates (8%)
🟨⬜️⬜️⬜️⬜️⬜️ 🐂 Bulls (8%)
🟨🟨🟨🟨⬜️⬜️ ⚡ Stormers (16%)
🟨🟨🟨🟨⬜️⬜️ 🔴 Liverpool (16%)
🟨🟨🟨⬜️⬜️⬜️ 🏟 Manchester United (12%)
🟩🟩🟩🟩🟩🟩 🤷 None of the above (24%)

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

Hi there,

We’re spicing things up by moving our Thursday newsletter to Fridays – you likey? Speaking of spice, Mr Beast is suing his own burger company and Uber’s CEO has no idea what a trip costs. World’s gone mad.

In this Open Letter:

• The game: Unlocking opportunities in local sports.
• A new VC, glasses for the deaf & SA’s big tech crackdown.
• The sound: Building local niche streaming solutions.
• Poll results: The future of farming.

TRENDING NOW

Carving Out a Slice of Your Local Sports Scene

With or without the Messi…

Sport’s big business. And, despite what we’re told, it’s nowhere near fully capitalised on yet. Seriously, just when you thought it’s all cornered you see something new…

Like when the EU’s Argentinian golden boy moves to America. Sure it makes for great headlines – Lionel Messi moves to David Beckham’s Major League team, Inter Miami, scores two goals in his first match, drawing amazing crowds that include the likes of LeBron, Serena Williams, DJ Khaled and Kim you-know-who.

Even before Messi touched a ball, the marketing and media storm around this was just staggering…

Kind of makes you want to ask why? What’s in this for Messi? Sure Inter Miami and American Soccer in general all benefit hugely from his presence. Think increased kit sales (you all want that Messi jersey, right?) and Apple TV deals. But why does Messi need them?

Obviously, there’s the pay – his $150 million, 2.5-year deal is a slight increase from his old $41m annual at PSG. But that’s not where the big money is. Since his singing, ticket prices have increased by 500%, with some resellers saying they’re selling 28 times more Inter Miami tickets since July.

The big thing is, Messi owns equity in Inter Miami.

And it’s valued at $600m today, but they look pretty much on track to double in the year to come.

The big idea: There’s still so much to leverage in sport

Owning a sports team is more than a status symbol or nice tax write-off. It’s big business, with a whole lot of big brands and egos involved that move slowly and probably miss way more opportunities than they create. The question is, are there opportunities for savvy startups and smaller players to capitalise on?

Sports teams have the following value:

• A captive audience of supporters
• A following during the season
• Big personalities with major influence
• Teams and players that amplify impact if they perform well

And all of these can be leveraged to varying degrees to unlock revenue.

It’s happening locally already

South Africans are football mad. The Soweto Derby draws over 90’000 fans. And tickets to a Kaizer Chiefs’ 94’000-seat stadium go for around R100 each – that’s a cool R9m per match day. Not to mention the 6.5 million who tune in via radio and TV – more sponsorship opportunities.

So big money, yes, but things aren’t always what they seem…

Let’s stick with our Kaizer Chiefs example. Arguably SA’s most famous football club (who else got a random English indie rock band named after them?) and, with 40m fans worldwide, definitely the most supported club in Southern Africa.

But, funny enough, Chiefs is only worth R283 million, roughly half the value of Mamelodi Sundowns’ R544m. So even there is a case for refining and better capitalising on opportunities.

TEAM:

WORTH:

OWNER:

Mamelodi Sundowns FC

R544 million

Patrice Motsepe

Orlando Pirates

R371 million

Irvin Khoza

Kaizer Chiefs

R283 million

Kaizer Motaung

Cape Town City FC

R212 million

Michel & John Comitis

Sekhukhune United FC

R208 million

Simon Malatji

Supersport United

R196 million

Khulu Sibiya

AmaZulu FC

R191 million

Sandile Zungu

Golden Arrows

R164 million

Mato Madlala

Stellenbosch FC

R160 million

Johann Rupert

Royal AM FC

R134 million

Shauwn Mkhize

Source: Daily Investor, Wikipedia, club websites.

The local plays

These sports teams and this industry offer an array of opportunities and some less obvious than others.

🎟️ Getting value from the audience: With fanatical supporters, the opportunity is huge to offer ancillary products (backed by existing corporates) leveraging the power of the club’s brand. Examples like Kaizer Chiefs Funeral Cover with Hollard, SIM cards/Mobile offerings with Vodacom, the club magazine, Amakhosi etc. and their counterparts at some of the other big clubs are all great plays.

It’s worth noting that some of these products come and go, suggesting there’s room to really refine and capitalise on this massive opportunity.

🤸‍♂️ Helping the players perform: In professional sports, the difference between winning and losing often comes down to margins. Dr Sherrylle Calder is world-renowned for helping Ernie Els putt better and the likes of Bryan Habana and F1 driver Valtteri Bottas react faster. She put her science into an online platform called EyeGym, and now it's used by sports teams across the world to improve player performance.

Imagine collab-ing with a domain expert to zero in on a niche – physical performance, the mental game or even teamwork and co-op – and packaging that to teams, clubs and eventually even the amateur market.

📻️ Team communication and organisation: Former Springboks Seven’s coach, Paul Treu, is behind the startup Phaseplay. A solution to help sports teams better communicate and organise. Pitch up for training on time, report an injury or niggle, see your training program and chat with the team – say goodbye to disorganised Whatsapp groups!

Moral of the story: Help the team perform better or capitalise on that captive audience, and you might have a proper business on your hands.

Come across a cool SportTech startup? Hit reply and let us know… 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

What’s your favourite sports team?

Vote to see the results.

• 🌞 Sundowns
• 🪓 Chiefs
• 🏴‍☠️ Pirates
• 🐂 Bulls
• ⚡ Stormers
• 🔴 Liverpool
• 🏟 Manchester United
• 🤷 None of the above

Login or Subscribe to participate in polls.

IN SHORT

☀️ Going Solar. Not satisfied with just investing in Sundowns, local billionaire Patrice Motsepe is also investing in sunrises as his investment company African Rainbow Capital (ARC) acquired a minority stake in solar energy company GoSolr.

🐝 Busy Bee. The Competition Commission has been busy these last couple weeks handing down judgements on Apple’s App Store and Google’s Play Store, travel platform Booking.com, online property classified platforms Private Property and Property24, eCommerce leader Takealot, aaaaand UberEats and Mr D (Mr Delivery).

🤑 PropTech Investment. Looks like somebody reads the Open Letter. Back in Jan we wrote about PropTech 2.0. Recently a R200 million VC fund was launched by REdimension Capital to invest in early-stage, innovative PropTech companies that improve how property is developed, managed and engaged with.

🤓 Subtitle Glasses. An Augmented Reality (AR) startup is changing the game for deaf people with their device, TranscribeGlass, which shows subtitles in real-time. The device attaches to a regular pair of glasses and transcribes what it hears onto the wearer's right-hand lens.

🪪 Noah guy? Dreading the queues to renew your driver’s licence? Well, good news might be just down the road. Pending cabinet approval, the validity of SA driver’s licenses could be extended to 8 years. This due in part to the single machine meant to print 120’000 driver’s licence cards per week constantly breaking. So, if you know someone in the cabinet…

­

THE THREAD

3 Lyrical Founder Thoughts for Your AI Brain

If your week’s feeling a bit empty it’s probably because you haven’t watched the latest episode of How Would You Build it yet. No, seriously, we got serial builder Catherine Lückhoff from 20fifty talking about everything from localised music streaming to the existentialism of AI. So do yourself a favour and check this out…

Our fave highlights

1. Cracking niche local music streaming
   Remember when we talked about tackling global giants with hyper-local sharing economy solutions? Well, Catherine recounts building a “hair-brained” Afrikaans streaming product in the face of Spotify that was probably just a bit ahead of its time, because today there are players around the world trying to do the same thing.
   
   It makes sense because a high-performing local musician struggles to find value in a pool as big as say Spotify’s, yet they make a decent living with their content at home. One example is a reported millions of Nigerians that exclusively listen to Nigerian gospel, and would struggle to find a home on something like Spotify.
2. It’s a tough and often expensive gig. But there’s reason to believe the big distributors are more open to the idea now – think how Netflix’s expansion plan is basically all local content.
   
   Catch that discussion here.
   
3. Blockchain could help solve a lot of those music woes
   Since the big thing to solve around music and content is delivering it to people – record companies in the 70s–90s, the Spotifys of today – Blockchain can be a handy solution for finding new ways to trade and deliver content (get the insights here).
   
   Especially, as Catherine suggests here, if Blockchain can help usher in a new way of tracking engagement – the current algorithms’ focus on total plays is actually a bit broken, and definitely part of the reason the local/niche muso battles to unlock value on major platforms.
   
4. AI unlocks a lot of potential for creatives
   In an industry so fueled by passion – people recording themselves in front of makeshift green screens with a dream of sharing their vision with the world – Ai tools can really help redistribute a lot of creative power – get the AI insights here.

There’s also some killer advice for non-technical founders and some predictions on what’s next for AI.

Building something in music, content, blockchain or AI? Hit reply so we can share…

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

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

THE RESULTS

Well, whaddya know… We asked earlier this week what you think the future of farming is. And 53% of us want to “bring the farm into the city” and literally no one wants an AI to make any decisions on their little patch of heaven.

🟨🟨⬜️⬜️⬜️⬜️ 🚁 Spraying drones. (20%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🌾 Robot harvesters (Edward Scissorhands style). (7%) ⬜️⬜️⬜️⬜️⬜️⬜️ 🤖 AI for decision making. (0%)
🟨🟨⬜️⬜️⬜️⬜️ 🛰️ Drought-control satellites. (20%)
🟩🟩🟩🟩🟩🟩 🏙️ Bringing the farm into the city (53%)

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

Hi there,

Battling to convert? This Chinese zoo is having all its days convincing visitors its bears are not just people in bear suits.

In this Open Letter:

• Let it grow: 282 Billion reasons to go Agri.
• A classic taxi, Elon’s bat signal & MIT’s AI perturbers.
• Only truth: 5 Steps of startup marketing.
• Poll results: The future of kasi commerce.
• Startup ideas: Refer a friend, get top opportunity picks.

TRENDING NOW

282 Billion Reasons to Go AgriTech

One of the very first SA apps to hit the app store over 10 years ago, was none other than the Landbouweekblad. (We don’t have a link to prove it, but we helped build it, so you can take our word for it).

Back then, savvy 40–50-year-old farmers bought iPads hoping to use them to revolutionise their businesses. Sadly, the tech wasn’t there to build the digital farm just yet…

But fast forward 13 years, and the landscape’s changed significantly. Connected devices and sensors (IoT), connectivity, big data and AI, and drones have all come of age and are starting to play a role in agriculture.

The ageing farmer and his tech-savvy son

In last week’s How Would You Build It, Zamokuhle Thwala dropped a stat that triggered a thought: The average age of a farmer in South Africa is 62, which puts them close to retiring.

And that means there is likely a younger generation poised to take over. This younger generation is likely 30-ish and grew up with tech — it’s second nature for them.

With improved tech, a growing market and a younger farmer that adopts the technology it’s creating a perfect storm of opportunity. So we ask: Is it time for AgriTech to shine?

The Opportunity

To put SA agriculture in perspective, with a forecast amount of R282 billion contributed to the GDP in 2023, it's bigger than the construction industry and only slightly smaller than mining. In terms of SA’s economic activity, it's a big deal.

And what’s more, it's set to grow at 7.6% per year to 2028, so there’s space for even more.

Finally, considering that the majority of agriculture production in SA is exported (a whopping $12.8 billion), it's well positioned should the rand face further deterioration – Europeans have no problems paying R20 a naartjie, it seems.

And where there is a growing industry, it's often the input providers, particularly those in tech, that excite us the most – they just scale so nicely.

Pouncing on the opportunity

There are quite a few local players that are pouncing on this opportunity, focussing on some of the most pressing farm matters:

Worker Management and Payments: Labour is one of the biggest costs on a farm, and with its seasonality and scale, becomes a complex process to manage. Using smart devices, NFC technology and connectivity, workers can be optimised and paid with little hassle. This is something that Agrigistics is tackling.

Regulation and Reporting: Farming is not without regulation, especially when it comes to preventing pests from devouring your produce. Reporting pest sightings and spraying of preventative substances needs to be recorded and reported on – something that KeyPhase offers farmers.

Sizing and Planning: Selling your products before they are ready can provide vital cash flow for farming operations. But how do you ensure you get the best price? Understanding what kind of produce you can expect and negotiating better deals and planning logistics becomes a breeze. This is something Stellenbosch-based startup Revolute Systems is tackling. This is also something that Naspers-backed startup Aerobotics is offering farmers – albeit with a focus on providing insurers with data to reduce the risk and cost of crop insurance.

Modern Farming: Farming aint what it used to be, and one of the popular ways to optimise output is through covered farming. AgriLogiq provides undercover-farm management hardware and systems to control airflow and manage the temperature within covered farming areas.

As these solutions become more mainstream, even more opportunities to connect devices will arise and with more devices, more data and with more data, more intelligence. The future of farming is here and 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

What excites you most about the AgriTech revolution?

Vote to see how others voted.

• 🚁 Spraying drones.
• 🌾 Robot harvesters (Edward Scissorhands style).
• 🤖 AI for decision making.
• 🛰️ Drought-control satellites.
• 🏙️ Bringing the farm into the city

Login or Subscribe to participate in polls.

IN SHORT

🚐 Blast from the past. The iconic Toyota Hiace minibus (nicknamed Zola Budd) was one of the OG’s in South African passenger transport. You can get your hands on an immaculate 1988 model with barely 80’000 kms on the clock. This piece of historical local nostalgia comes complete with full service history, spare key and Pioneer head unit (CD player, playa).

✖️ Superhero signal. In the latest episode of “What Elon Did Next”, the X (fka Twitter) big dog has had a massive flashing X installed on the rooftop of the X HQ – much to the annoyance of his neighbours. We always thought Musk was closer to Iron Man but with this bat-signal-esque X, looks like he’s more like Batman.

🚧 Gatekeeper AI. As AI’s capabilities keep on growing, researchers at MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL) have built “PhotoGuard” a technique that adds perturbations (tiny alterations in pixel values) to disrupt the model’s ability to manipulate an image.

⛽ On the rise. Don't forget to chuck in some fuel tonight. Unleaded petrol is to increase by 37c per litre while diesel will set you back 72c per litre. Analysts predict this trend will continue as Saudi Arabia continues to cut its oil production and demand from China and India increased.

🥵 Hot stuff. We might be cold, but scientists have said that July 2023 will go down, not only, as the hottest month on record since 1940 (when we started tracking these sorts of things) but possibly the hottest in 120’000 years. The UN Secretary-General António Guterres has warned that “the era of global warming has ended” and “the era of global boiling has arrived.”

­

BUILDER’S CORNER

The Truth About Startup Marketing

OK, you’ve got product, a plan and you’re ready to roll. But how do you get the high-performance marketing you know it takes to build something special?

NO, you can’t hire a marketer and hope they’ll just “sort it out for you”...

And NO, you can’t just focus on adding features and hope customers will just magically appear…

We’re going to give it to you straight: You, the founder, are the only person who can establish your marketing and sales framework. Agencies and marketers can only perfect the basic groundwork you’ve already laid, not the other way around.

Establish your sales and marketing like so (in this exact order)...

5 Steps for the startup marketing win

1. Anchor in a founder/co-founder
2. The only place to start is for a founder to take full control and responsibility for sales and marketing. Proven marketing expertise in your product domain is the second of the two main reasons you partner with a non-technical co-founder. (No. 1 is if they are the investor.) So that’s a good place to start.
   
   Before you can bring anyone else on board with any success, the founder has to nail the positioning, value proposition, target audience, core offer, conversion process/system and start testing and iterating that system.
   
3. Bring in a startup marketing specialist/agency
4. If you can find one, that is. A founder/builder or startup team who offers their services to help others market is super rare but worth gold. They know the ropes and have the startup-building experience that other marketers lack. Coupled with high-performance marketing experience, you can’t ask for a better assist.
5. But, again, extremely rare and hard to come by.
6. Outsource to key experts
7. If you’ve built a working funnel and just need skilled people to help you execute (because your time is needed elsewhere), you can start bringing in specific domain specialists – SEO, SMM, Ads, copywriters, meme lords etc.
8. Purely because they’re more cost-effective to hire and easier to end the working relationship with than a hire (if needs be).
9. Now you can start insourcing
10. Once you know exactly how your “marketing machine” works, you can start investing long-term in team members.
11. Add traditional agencies only if you have scale
12. By this time, you should almost start looking like a corporate, so it’s OK to start looking at traditional agencies to help you go big-league.

Got a marketing question? Hit reply and fire away, it’s what we do…

THE RESULTS

Last week, we asked for your predictions on the future of commerce in townships. And using spaza shops are distribution centres is the clear winner, with corporate malls and solopreneurs sharing the second spot.

🟨⬜️⬜️⬜️⬜️⬜️ 🛵 Deliver goods with e-commerce-like solutions. (8%)
🟩🟩🟩🟩🟩🟩 📦 Spaza shops as distribution centres. (46%)
🟨🟨⬜️⬜️⬜️⬜️ 🏬 Large corporates to establish malls etc. (19%)
🟨🟨⬜️⬜️⬜️⬜️ ‎‍💼 Service-driven solopreneurs. (19%)
🟨⬜️⬜️⬜️⬜️⬜️ 🛸 Drones and robots, baby. (8%)

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

Hi there,

Like seeing TV heroes cry? Amidst the ongoing Hollywood actors and writers strikes (against AI), Netflix just put out a job offer for a new AI product manager that pays R15.8M per year – while most actors get only R3’500 per day.

In this Open Letter:

• Kasi commerce: Changing how 12M people buy groceries.
• Bye-bye Blouberg, shipping hydrogen & you might already be a millionaire.
• Lean builds: 12 Tools for useful feedback on your MVP.
• Making Agri cool: Get the ins and outs from an Agtech founder.
• Poll results: What your degree is worth.

TRENDING NOW

Optimising How 12 Million People Buy Groceries

Not everyone can just pop to the shop…

One of the biggest consequences of apartheid was relocating people out of areas of economic activity into townships. (The numbers are hard to come by, but at least 12 million people are known to live in just SA’s 76 largest townships. The true figure is probably way higher.)

You might remember how, a few weeks ago, we covered how the minibus taxi industry was born out of this act. And how 15 million people’s daily transport is affected by the ongoing SA taxi crisis. Well, that’s getting from home (townships) to work (affluent neighbourhoods, cities and town centres).

But what about when they need to make the same trip for something as simple as collecting medicine or buying groceries?

The price of kasi commerce

Now, most of us don’t even consider the price of travelling to a store, since it’s so close by. But for millions of South Africans, it could cost an extra R35 to R55 plus just to be in a position to pick up meds or supplies. And it might take hours – sometimes you have to write off the whole day.

And it’s not only consumers. Rural business owners need to drive and expend quite a bit just to replenish their stock – and it might also cost them an entire day of business.

Save these people that R40 (or part thereof) and some time, and you might be in business.

But it’s not that simple

Deliveries and fulfilment in these underserved areas are complex and operators in this space typically face plenty of challenges, including:

• Low technology adoption and lack of trust in delivery services. If people don’t use it or haven’t used it, it can be hard to convince them to try. Township WiFi projects like Isizwe could potentially play a role here by offering banners and ads on their free internet access to drive engagement.
• Connecting driver and recipient. If the recipient happens to be far away (at a store) quickly driving home to collect is normally not viable. A route planner system with comms in advance could play a key part here.
• Safety. Some of these areas are either unsafe or have the perception that they are, making it hard to get drivers willing to work there.
• Payments. Making online payments is still a foreign concept to many people in this market. Perhaps this is something PayShap can eventually sort out should the fees come in at under R1 (or maybe even free)

Some of the pioneers

Iyeza Health is one of the earliest pioneers in this space, starting back in 2013 in the Gugulethu area near Cape Town. Many township residents have to make a monthly trip to the clinic to fill prescriptions for managing, amongst others, diabetes or HIV. Iyeza started delivering these meds via bicycle, saving people time and money in the process.

Thumela is the second startup founded by AgriKool founder, Zamokuhle Thwala, our podcast guest this week. They are tackling longer-distance logistics. Think: sending a parcel from Pietermaritzburg to Durban. They go from taxi rank to taxi rank, empowering several side-hustling WhatsApp entrepreneurs to deliver their goods cheaper and faster.

Order Kasi started out as the Uber Eats for townships but struggled with scale – as we said before, even at Uber Eats’ scale, it's hard to make money with this model. So in a similar vein to Mr D Food (Mr Delivery), they pivoted to focus on last-mile deliveries.

YeboFresh raised R78 million recently and is distributing to local spaza shops in townships. Shop thousands of products at competitive prices via the online store or WhatsApp. Your order is fulfilled within 24 hours to over 40 townships across Jozi and Cape Town – neat.

Zoning in on that R40 there and back, and the massive amount of time it takes, there are countless opportunities in this space. And considering the size of the market, it's understandable why there is already a lot of action.

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 is the future of commerce in townships?

Vote to see how others voted, too.

• 🛵 Deliver goods there using e-commerce-like solutions.
• 📦 Spaza shops as distribution centres.
• 🏬 Large corporates to move in and establish malls etc.
• ‎‍💼 Service-driven solopreneurs.
• 🛸 Drones and robots, baby.

Login or Subscribe to participate in polls.

IN SHORT

🤑 Secret Millionaires. Some of us could be millionaires and we don't even know it. Supermarket giant Pick n Pay says there are about 250 million Rands worth of Smart Shopper loyalty points floating about unclaimed due to some 111 million shoppers not having registered their Smart Shopper cards. Better dust off those loyalty cards and see if you’re one of them.

🌊 The Tide is High. Laurika Rauch wasn't joking when she said: “Kom ons draf LANGS die strand” in her 1988 hit “Blouberg se Strand”. By 2100 you could be running on Doodles’ Deck as Bloubergstrand is set to lose over 100 metres of shoreline due to rising sea levels making this world-famous beach the 9th-most at-risk beach in Africa.

⚰️ Killing the bird. On Tuesday we shared how Elon Musk changed Twitter’s name and logo to X. Some pundits are saying the move wiped out significant brand value that took over 15 years to build with the amount thrown around anywhere between $4 billion and $20 billion. Not much of an impact given that Twitter has apparently “lost a huge amount of value” since Musk took over.

🏆 Record Breaking. Not only is South Africa already experiencing record-level days of loadshedding, but it’s also on track to reach record-breaking service delivery protests. So far in 2023, there have been 122 protests over failure to provide (ja, you guessed it) electricity and water and it looks likely to break the 2018 record: 237 protests.

⚓ Getting our ship together. Transnet has selected three consortiums to present proposals to build the Boegoebaai port all the way up the West Coast of South Africa. The port will be used to ship green hydrogen and other hydrogen derivatives, as well as manganese. Nice one.

­

BUILDER’S CORNER

12 Tools to Max Your MVP Feedback

So, last time, we shared cool tools for building your MVP itself. But, arguably the most important part of an MVP is not the product but effectively testing and gathering feedback.

See, when you put an MVP out there, you’re taking the Lean Approach, which says you’re actually only releasing in order to:

• Get early-adopter feedback.
• Assess if the market will pay for it (and how much).
• Figure out what to focus on in terms of user experience.
• See if you can locate and appeal to the right audience.

All so that you can iterate and slowly build up towards your final product.

That means you’re really looking at feedback, analytics, marketing and launch testing. Like so…

Add these peripheral tools to your MVP

1. Customer interview tools
   These are vital for MVPs as they help you understand needs, validate assumptions, and refine features through real user feedback, fostering a customer-centric approach and market validation. Consider Typeform for a fancy and effective option, or good old Google Forms as a free option.
2. Tools to build landing pages
   Landing pages and marketing messaging are crucial for MVPs as they offer a cost-effective way to validate ideas, test messaging, capture leads, and make data-driven improvements. They help refine the MVP before investing more resources. Try Instapage or Strikingly, otherwise go with Webflow.
3. Product tools (for testing UX)
4. We actually gave you 5 awesome ones of these already in the Builder’s Corner section of our last letter.
5. Tools to study and analyze
6. To cross-reference your user feedback with actual data, analytics tools give you data-driven insights into user behaviour, preferences, and metrics. They enable informed decisions, identify user needs, and validate hypotheses. So check out Google Analytics or popular alternatives like Matomo and Hotjar.
7. MVP launch tools
8. The trickiest part for most. How to get people to actually use and engage with your product. We previously gave you some top tips like selling as a service before going SaaS and the ads-test method for getting pilot users. But if you’re looking to reach an audience you could try Reddit’s r/startups community, list on Product Hunt or BetaList.

Need more tools? Remember, if you share The Open Letter with friends, you get our 50 Founder’s Tools list and our 25 AI Tools for Startups list, too.

Want more lists or free how-to docs to download? Hit reply and let us know what you’re after…

THE THREAD

Is Agritech the new FinTech for millennials? According to our latest guest, Zamokuhle Thwala from AgriKool, there are massive opportunities available for young farmers in South Africa.

Enjoy this fascinating conversation with a rising star in the South African startup scene. And don’t forget to like and subscribe so you don’t miss an episode.

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 if your degree is worth the paper it’s printed on. And we’re tied between a yes because it instils work ethic and a no because it was just a party. So there you go.

🟨🟨🟨🟨🟨⬜️ 🤓 Yes learnt a lot and have used it at work. (23%)
🟩🟩🟩🟩🟩🟩 ‎‍💼 Yes it’s an important part of developing work ethic. (27%)
🟩🟩🟩🟩🟩🟩 🥳 No but it was worth it for the party. (27%)
🟨🟨🟨🟨⬜️⬜️ 🏎️ No I’m doing something different to what I studied. (19%)
⬜️⬜️⬜️⬜️⬜️⬜️ ⏳ No it’s a waste of time. (4%)

REACH OUT

Want to get featured, share your story or promote your brand or product? We engage with over 3’500+ early adopters and founders on this newsletter and the podcast. Hit reply and tell us what you have in mind…

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

Hi there,

Dolls or nukes? Whether you have Barbenheimer fever (Warner Bros’s Barbie and Universal Pictures’ Oppenheimer launched the same day this weekend) or not, this outrageous viral AI-created Barbeheimer movie mashup trailer’s quite impressive – considering it took only 4 days to make.

In this Open Letter:

• Quality tests: Are our universities delivering value?
• Adios Twitter, hiding from your boss & diesel for your takeaways.
• Low-code heaven: 5 Super savvy MVP tool options.
• Poll results: How we choose a holiday.
• Startup ideas: Refer a friend for top opportunity picks.

TRENDING NOW

When it Actually Pays to Skip School

Not all qualifications are equally valuable. That’s what drove the UK government last week to force “rip-off” degrees with high drop-out rates and poor employment prospects to drop fees by 37% from £9’250 (R220k) to £5’760 (R137k) per year.

Why? The UK's higher education regulator, The Office for Students, says that some 30% of students aren't getting skilled jobs, 15 months after graduating. In fact, says respected think-tank, The Institute for Fiscal Studies, 1 in 50 graduates might have been financially better off if they'd skipped university altogether.

All is not well back home

University education in South Africa is comparatively less expensive than in the UK, but with a starting tuition average of around R55,900 per year, adding textbook costs, accommodation, and living expenses, you're suddenly in for over R100’000 a year.

Now, the National Student Financial Aid System NSFAS helps support about 700’000 students. But that’s only 64% of the 1 mil SA students that enrol per annum – and with the average SA salary at just R300’000 a year, heaven knows where hero parents source that extra R100k per child.

(And maybe that’s why only 6% of Saffas have a bachelor’s degree – much lower than countries with similar GDPs.)

What’s more, at that price, the education had better be super high quality. And we’re not sure it is, because recent data shows that graduate unemployment is worse than it was a decade ago.

So, what are our universities doing? Well, it all lies in how they’re funded…

How SA Universities stay afloat

To remain viable, universities are essentially juggling three main objectives:

1. Fulfilling government requirements to ensure they continue to receive grants.
2. Attracting enough students who can pay tuition (although 60–70% of these fees are covered by NSFAS, which ties back to point 1 above).
3. Keeping residences full, and thus collecting those associated fees.

That forces our Unis to invest way more into government compliance and real estate management than actual education – let alone measuring the actual impact of the courses they offer. There are, after all, few real consequences for failing to deliver on student outcomes. (But with 50-60% of first-year students dropping out, that’s a lot of wasted money.)

All of this calls into question whether we put enough care into ensuring we provide a good enough education to actually benefit the country/economy. Just like in the UK.

Education that actually delivers

Interestingly, the grants-based funding model created a niche for private education institutions – catering to those who can afford tuition but don't meet the quota needs (that secure public grants).

Private schools jumped into this space, aligning their course offerings much more closely with student outcomes. And, over time, they’re likely to enhance their reputation and attract even higher-quality students.

Take, for instance, Stadio, a publicly listed entity with tuition fees on par with public universities. With a student body of roughly 40k, it's larger than UFS but just smaller than UJ. They are growing at roughly 8% per year and the business is cash generative with R148m cash on hand end of last year. And with another contact-learning campus planned for Durbanville, growth is set to continue.

However, you don't need to be operating a Billion-Rand university group to find opportunities in the tertiary education space. For example:

1. Learner Management Solutions – Private universities, operating on tighter budgets, often require more efficient systems. Software solutions can greatly enhance efficiency throughout the learning journey — building something that can help the tertiary education process and Stadio might be a great customer.
2. Graduate Recruitment and Placement – Private institutions have a vested interest in their graduates securing good jobs. By partnering with startups like Johburg-based Jobox, they can increase their effectiveness in this area.
3. Using AI and machine learning to better qualify applicants and thus improve outcomes by reducing dropout rates.
4. Alternative Education Formats – The traditional 3–4 year degree may be giving way to more flexible learning formats. The success of platforms like Coursera and Udemy suggests demand for short-form courses and the rise of EdTech overall. Locally, GetSmarter’s massive exit selling to 2U also points to the potential in this space.

The thing is, the UK is jumping in to address the situation. But locally, it might take some time. So there’s lots of money to be made for private players in 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

Are tertiary qualifications worth the paper they are printed on?

Vote to see how others voted.

• 🤓 Yes learnt a lot and have used it at work.
• ‎‍💼 Yes it’s an important part of developing work ethic.
• 🥳 No but it was worth it for the party.
• 🏎️ No I’m doing something completely different to what I studied.
• ⏳ No it’s a waste of time.

Login or Subscribe to participate in polls.

IN SHORT

📈 Early retirement. Remember when we said it’s time we let robots do all the work? Well, it’s happening: Sam Altman’s global currency-enabling Worldcoin launched yesterday.

✖️ X gon' give it to ya. Elon Musk has officially changed the name of Twitter to X – one step closer to his “Everything Super App”. And if you’re wondering what to call it or what to say you’re doing on the app, might we suggest taking a lesson from Xhosa-speaking South Africans and say you’re Xweeting…

🤒 Pulling a sickie. Everyone knows you shouldn’t lie about being sick to take time off from work. But what you REALLY shouldn’t do is send your boss a text saying you’re sick, take time off, attend (and be filmed at) an EFF march at a Clicks store and be seen by the same boss on TV and YouTube.

🍔 Chowing diesel. Famous Brands forked over R8.8 million for diesel to power their restaurants between March & June of this year. This after a massive 880% increase in diesel costs in Q1. But it’s not all bad news for the company that owns Steers, Wimpy, Mugg & Bean, and Debonairs. Between March and May, sales from their leading brands made up nearly a quarter of its revenue.

🤖 A bot for your droid. The long-awaited ChatGPT for Android is launching next week (the exact date is still TBC). This after OpenAI launched ChatGPT for iPhone & iPad in May. Users can preorder the app in Google’s Play Store to be installed once it’s available.

💰 Kasha investment. South African VC Firm Knife Capital led a $21m series B investment in female health-tech startup Kasha. With a unique focus on female menstrual and reproductive health, Kasha is set to use the funding to expand its offering beyond Rwanda, into, amongst others, South Africa.

­

BUILDER’S CORNER

5 Tool Options for Your MVP Build

So you have an idea, scope and a clear vision. Time for an MVP? The game is, as always, moving fast so you can gather feedback and stay ahead of the competition…

Remember, an MVP is not the final product. It’s meant to just be a fast way to get something of value in front of the right audience, so you can gather the feedback and data you need to iterate and build the real one.

We’ve said before it pays to build ugly and sometimes even build things that don’t scale, just so you can fine-tune value, user experience and run some rigorous, low-cost viability tests. So a few great tools can go a long way…

Consider these smart MVP tool options

1. Adalo
   Adalo is a no-code platform for MVP development with drag-and-drop, pre-built components, and templates. It handles data, offers real-time previews, and supports responsive design. Simplifies publishing and iterative updates, and provides basic app analytics for refining the MVP. Check it out.

2. Retool
   This low-code platform for MVPs comes with pre-built components, data integration, real-time previews, responsive design, simplified publishing, and iterative updates based on user feedback. Take a squiz.

3. FlutterFlow
4. Get efficient visual development, seamless Flutter integration for cross-platform apps, responsive design system, pre-built components, real-time collaboration, custom code support, third-party integrations, interactive previews, and database integration for fast and effective MVP creation. Sneak a peek.
5. Airtable
   Airtable's flexible data organization, user-friendly visual interface, real-time collaboration, integrations, version history, API access, automation, and mobile app, make it an ideal tool for efficiently building MVPs. Not to mention it can track and streamline a whole bunch of other business processes. Have a look.

5. Webflow
   Webflow's visual web design, responsive layouts, interactions, CMS, hosting, e-commerce support, custom code integration, and form handling make it an excellent choice for building diverse and visually appealing web-based MVPs efficiently. Flow this way.

Bonus: A super useful tool for building integrations and custom automation across all your tools, is Zapier. Want two separate tools to talk to each other? Just create a zap and presto! Check it out.

Know a hot new MVP tool? Hit reply and share so we can make it famous…

THE RESULTS

Last time, we asked you what your go-to holiday vibe is. And most of us in this community use Booking.com. Tied for second are LekkeSlaap and those of us who don’t even know what a “holiday” is. #startuplife

⬜️⬜️⬜️⬜️⬜️⬜️ 🛏️ Airbnb (4%)
🟩🟩🟩🟩🟩🟩 🏠 Booking.com (32%)
🟨🟨🟨⬜️⬜️⬜️ 🇿🇦 LekkeSlaap (20%)
🟨🟨🟨⬜️⬜️⬜️ 🏖️ My own beach house (16%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏕️ Tent/caravan (8%)
🟨🟨🟨⬜️⬜️⬜️ 🤷 What is this "holiday" thing you speak of? (20%)

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

Hi there,

Thought it was over? Terminator director James Cameron just weighed in on the AI debate with a classic "I warned you guys in 1984”.

In this Open Letter:

• Sharing economy: When hyper-local trumps global dreams.
• Retirees incoming, Starlink’s Kenya launch & world’s best vineyards.
• Target users: 5 Questions to reach a super niche audience.
• Insights: Bootstrapping one of Africa’s fastest-growing companies.
• Poll results: How we’re keeping the lights on.

TRENDING NOW

Putting the Hyper-Local in Your Global Shared-Economy

Cloud computing is one of the most enabling technologies of our time. And probably the most practical examples of how the shared economy can benefit an industry.

Pre-cloud computing, your web app needed its own server – pricey! And that server was almost never fully utilised. Enter cloud computing – share this piece of hardware among multiple users and charge them an operational fee instead of heavy capex.

Early pioneers of the web embraced and loved it. So it's no surprise the idea of sharing hardware or spaces spilt over into other areas.

The Uber of X

If you were involved in the startup scene 10 years ago, you would often meet a founder saying “My app is like Uber but for X”, where X refers to whatever industry they are targeting. Management consultants pounced claiming that the future is shared:

The problem with this is:

• Amazon’s e-commerce makes little to no profit.
• Uber is still not profitable and facing major challenges in various regions.
• Last week we highlighted how an EU court ruled Facebook makes 97% of its revenue illegally in our trend piece in Twitter vs Threads.
• And there are talks that Airbnb is facing major challenges from lack of demand due to prices surging, to local legislation banning or limiting Airbnbs.

The shared economy dream is shattered, or is it?

The biggest challenge for these global shared economy players is scaling context per country or sometimes even city.

The problem with Uber is not the tech or the execution, it’s that every country and municipality has its own laws, by-laws, regulations etc. And when each major city in the world has custom rules for Uber and these constantly change, it becomes a nightmare to scale efficiently – especially with centralised global operations.

Perhaps the share economy works, just not the way we thought. Hyper-local could be a great solution.

Think LekkeSlaap (which means sleep well in Afrikaans) which offers a similar booking service to Airbnb, albeit a bit more focussed on actual BnBs, resorts and hotels – so somewhere between Airbnb and Booking.com. LekkeSlaap being local (SA only or for a targeted SA Afrikaans audience) has benefited them in the following ways:

• You can use a name that rings with the local market, like LekkeSlaap.
• You can create locally flavoured content and marketing. Check out this great ad from LekkeSlaap – 9.6 million views.
• It’s easier to deal with local regulations and rules and make sure you comply. What’s more, being local you can engage authorities more efficiently and lobby for pro-business.
• You can offer a way better customer experience – phone local support.
• You might even set yourself up for a juicy acquisition (from the incumbent) once you have grown enough.

And it’s not only Airbnb facing local competition. Lula (who we featured on our podcast not too long ago), is also offering private transport services to rival the likes of Uber.

Often entrepreneurs avoid starting up where there’s already a massive, highly funded global player. But here’s a good case-in-point for why you should do exactly that.

Here’s what we’re pretty sure of: when you launch an attack to capture a big international industry player’s market locally, they will likely not have the agility to counter it. At least not for the southernmost country in Africa.

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 is your go-to holiday vibe?

Vote to see the results.

• 🛏️ Airbnb
• 🏠 Booking.com
• 🇿🇦 LekkeSlaap
• 🏖️ My own beach house
• 🏕️ Tent/caravan
• 🤷 What is this "holiday" thing you speak of?

Login or Subscribe to participate in polls.

IN SHORT

🍷 Fancy. 3 SA Vineyards have made it into the Top 50 of “World’s Best Vineyards 2023” list, including 1 in the Top 5. The list includes Creation Wines at number 4 (and Top Vineyard in Africa), Klein Constantia at number 32, and Delaire Graff Estate at 36. Benguela Cove and Tokara made the second half of the list at 53 and 94 respectively.

🛰️ Kenya believe it? Elon Musk’s Starlink now available in Kenya. The high-speed, low-latency broadband internet via a constellation of low-orbit satellites was just launched. Closer to home though, while Starlink doesn’t officially have a license to operate in SA, you can still access the services via third parties using its international roaming feature and it’s estimated that roughly 1700 people already do.

🏖️ Golden Years. SA (read: The Western Cape) is becoming a favourable retirement destination for foreigners from the UK, China, Germany, the USA, and Bangladesh. These countries make up more than half of the 3’645 retirement visa applications received by Home Affairs in the last 2 years.

😢 Feel the churn. Remember when we mused how people would slowly stop using Meta’s Twitter competitor Threads? It’s started. Threads users have dropped by half this past week.

💸 Breaking the Bank. Tesla’s Board of Directors have agreed to pay back a staggering R13.5 billion after shareholders claimed the Tesla board was massively overpaying themselves. Eina.

­

BUILDER’S CORNER

5 Questions to Reach a Niche Market

Ok, so your product has a few users, and now you’re ready to diversify and maybe serve a larger audience. But some of your personas and potential target markets are quite niche and hard to pin down – like CEOs, high-net-worth individuals, board members to voluntary organisations like home owner’s associations, parent-teacher organisations etc.

You know, people that would cost a fortune to try and reach with blanket advertising…

First off, you’re not supposed to be in this situation – that’s what your concept validation, discovery, scoping and go-to-market plan is for. But do not fret, there is actually a framework for it…

Questions for pinning down a niche audience

1. Via the entry points
2. How do they start in this job/membership?
3. Where’s the entry point? How do they join or get appointed? There might be some more formal structures around how and where someone gets into the niche you’re targeting.
4. Via industry bodies or academic institutions
5. Where do they get education on how to perform their duties?
   Almost every industry has bylaws and regulations that incumbents have to adhere to. If you can find out how and where the official overseeing structures communicate and educate your market, you might find a foot in the door.
6. Via another product
7. What products/services do they already buy?
   And whom do they buy it from? How do they use it?
8. Via a co-worker
9. Who on their team has the decision-making/buying power?
10. Who has the final say in what products and services they should use?
11. Via a partner
12. Are there any other companies already serving them?
13. Because the easiest way to reach a niche is to align yourself (i.e. strike a deal) with an existing player that’s already dealing with them on a day-to-day basis.

Bonus tip: Sometimes hiring some of their service providers (i.e. the freelancer that writes for them etc.) could give you goodwill with the service provider to do an intro. A word of caution, however, it’s not a guarantee.

Action plan: If you can’t find this information readily online, then approach a few of the niche people/organisations you can find in your area, and ask them those 5 questions. If you can speak to 5–10 people already within that niche target audience, you should get the info you need.

Then just repeat the process: align with others already serving them and boom, foot in the door.

Battling to infiltrate a hyper-niche market? Hit reply and let’s see if we can add some ideas…

THE THREAD

Have we romanticised venture funding? In this week's episode of How Would You Build It, we spoke to Stephen Osler & Martin Potgieter from Nclose about how they bootstrapped their business to become one of the Financial Times’ fastest-growing companies in Africa.

How Would You Build It

Get inspiration & advice on building businesses and products from industry experts.

www.youtube.com/@howwouldyoubuildit

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

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

THE RESULTS

A few days ago, we asked how you’re dealing with load-shedding. And would you believe that most of us in this community have only a battery to keep the WiFi going? Second is buying solar outright.

🟨🟨🟨🟨⬜️⬜️ 🌞 I bought my solar, baby (24.39%)
🟨⬜️⬜️⬜️⬜️⬜️ 🏆 Renting solar and it’s lekker (9.75%)
🟨🟨⬜️⬜️⬜️⬜️ 💪 A monster inverter, but still on the grid (14.63%)
🟩🟩🟩🟩🟩🟩 📱 Just a small UPS and inverter to keep the WiFi on (34.15%)
🟨🟨🟨⬜️⬜️⬜️ 🕯️ Candles, board games and gas stove (17.07%)

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

Hi there,

Keen to get away from that smartphone? This Finnish island aims to become the world’s first “phone-free” island. They are even giving tourists stickers to put over their screens so as to still use their phones as cameras.

In this Open Letter:

• The flipside: Opportunities in energy oversupply.
• MC Sinatra, more movies & bye-bye 7de Laan.
• Happy days: The 10-star Customer Experience method.
• Get startup ideas: Refer a friend to unlock our new opportunity picks.
• Shiny new polls: Vote and see votes.

TRENDING NOW

Too Much Power

When they pay you to use it…

With the whole world set on Green Energy – whether due to climate activists and policymakers lobbying in Murca, Europe and the rest of the first world, or driven by the necessity to survive loadshedding here in SA – there was a bit of an unexpected trend these past few weeks… Negative electricity prices in Europe.

Due to good weather and favourable conditions up North and the fact that renewables have now surpassed coal generation, their power prices have dropped below zero a few times now. Yep, that’s right, every now and again they’ve been paying people to use electricity as it’s cheaper for renewable power plants to pay customers to use more electricity than it would be to shut the plant down. Coupled with a coincidental drop in demand, it saw prices as low as minus R1’500 per megawatt hour.

And this might just be the future of electricity as more and more renewables enter the grid.

Record-Breaking South African Solar

Back home, and mega-unsurprisingly, South Africans have been loading up on solar to mitigate the impact of loadshedding, and you can bet it’s starting to make an impact.

In 2022, R5.6 billion worth of solar panels were imported. And in the first quarter of this year, that number is already sitting at R3.6 billion. Which equates to between 700MW–1000MW of solar capacity added in Q1 alone. With 1000MW = 1 stage of loadshedding, if the rate of installation continues at the same trend, we might see 4000MW of renewables hitting the grid by year-end, reducing load shedding by 4 stages (assuming we can supply solar power back into the grid – do it, Uncle Cyril).

But what happens when solar and wind end up providing way more than we need to keep the lights on?

What do the numbers say?

If you haven't already checked it out, the EskomSePush (ESP) app already shows daily Capacity Forecasts under the “ Insights” part of the app.

‍

At its lowest point of demand – 2 AM – SA was forecast to be using just under 20’000 MW – way less than is available. But what is most interesting is the line of supply is pretty straight (constant) at the moment. With renewables incoming, that is set to change.

Why is this important?

We all know government needs a plan to keep the lights on. But noting this global trend, post our loadshedding days, the way electricity is sold, stored and used is bound to change drastically. I.e. when that Available line starts to fluctuate…

What will happen?

Imagine energy prices fluctuating like stock prices – and all the wonderful opportunities that would bring…

Batteries and inverters and/or other electricity storage can become a game changer when prices fluctuate between getting paid to use and paying to use. It could allow you to buy electricity when it's cheap, and use it when it's expensive.

And that would need entirely new tech solutions:

1. Services to show prices and/or auction electricity at various prices.
2. A smart inverter system for homes that buys power when it's cheap and uses it when it's pricey.
3. Larger electricity storage solutions and management systems for companies and even municipalities.

Electricity arbitrage could be an interesting opportunity if prices of electricity differ substantially for different times of the day or even between different regions. Buy low sell high – just like crypto or stocks (for some people, at least).

Finally, with solar panels and battery prices dropping rapidly, loadshedding might not only be a thing of the past (whether Eskom and government continue to do nothing about it or not) but we could see a whole host of new opportunities, as we said a few weeks ago in our letter on new business opportunities in energy.

IN SHORT

🤖 AI Toolbox. With the rate at which AI is developing and the sheer volume of AI products, tools and platforms hitting the streets, it could be overwhelming to find something useful. Fear not. Check out these 500 ChatGPT plugins tested.

🤑 TikTok or TechTitan? Not satisfied with going after Apple and Spotify’s music streaming pie, TikTok has announced its plans to go after Amazon and other e-commerce players with TikTok Shop, a bustling livestream marketplace set to hit US$ 20 billion in gross merchandise value by the end of 2023.

🔥 Hot Track. Frank Sinatra just dropped his latest single – A cover of Coolio’s “Gangsta’s Paradise”. The AI-generated track (practically indistinguishable from the Jazz Icon’s style and voice) is an absolute masterpiece.

🍿 Magic at the Movies. Looks like the SA cinema landscape is recovering after Covid. Ster Kinekor has reported that their revenue is up 27% compared to last year, coupled with an uptick in attendance.

🚧 Roadblocked. After 24 seasons over 23 years on South African TV, the popular daily soapie, 7de Laan, has been cancelled. The fictional but iconic suburb, Hillside, was home to some of Afrikaans TV's most memorable characters, with many of the cast becoming household names. The final episode will air on Boxing Day this year.

­BUILDER’S CORNER

3 Steps to Delight Subs Like Crazy

So, you have your MVP or scaled-down product running and are focusing like crazy on delighting people – you know, to build that sweet, sweet customer experience that’ll make ‘em a client for life…

And those key moments – like when someone subscribes to your service or buys your product – are your chance to break out the champagne, and wine and dine like crazy.

Now, you might remember a few weeks ago in our letter on the SA taxi crisis, when we spoke to Mxit, Snapscan, OfferZen etc. mover Ben Blaine about doing things that don't scale. A huge insight from this was his views on creating these awesome customer experiences.

We were paying attention and built out the gist of it for you here:

3 Steps to Creating a Customer Experience that Zings

1. Image the ultimate 10-star experience

We all want a 5-star experience, but it’s tricky to design because the limit of 5 limits your thinking – you tend to 3.5 stars, which isn’t that great.

So, go a bit over the top. Start with 10. Sit with your team and ask: What would we do to make the customer experience a 10-star experience? If money (or reality) was no obstacle at all?

Like, imagine someone signs up, and your ultimate 10-star experience would be to have Taylor Swift personally appear at their door to serenade them “congratulations”, and give them a bottle of champagne and a biltong basket or whatever.

(We don’t know, whatever you imagine the ultimate is for your brand/product).

2. Scale it back a bit to what’s possible

Ok, so you can’t afford to hire Taylor Swift for even one sign-up, but maybe you can send them an email that when they open it, plays a Taylor Swift song or jingle. And maybe it’s somewhat possible to courier the guy a bottle of champers and some biltong? (Depending on the lifetime income you’re likely to generate, of course.) How’s that for an experience?

Or maybe just the jingle is pretty cool, and maybe a voucher. Whatever you can actually afford that brings you as close to that ultimate dream celebration scenario.

3. Don’t sleep on it

Once you have an idea that might work, do it. If it’s possible, don’t wait. That little bit extra might be what drives your adoption up when you need it most. And, if you’re talking about brand differentiation, well, you’re defs going to stand out among the guys who don’t put in a little extra celebration.

Dream about a 10, design a 7 and hit a 5 every time!

What would you like to see when you refer a friend to The Open Letter? We can’t quite do a Taylor Swift, but we will give you a major digital high-5 and refer two friends and get a free coffee! Want something else? Hit reply and lay it on us…

FOR THE MEMES

Got some startup memes? Send them our way or tag us on socials.

Follow us on Instagram for more juicy startup and trend memes.

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

Hi there,

Unhappy with autonomous cars? No worries, protestors show you can just disable Waymo’s robotaxis with nothing but a traffic cone.

In this Open Letter:

• Gloves off: Did Zuck just cross the line?
• TikTok vs Apple, US help for Eskom & that BRICS money.
• Better user feedback: The art of non-leading questions.
• Inside track: B2B Opportunities in employee wellness.

TRENDING NOW

How Threads Ups the Ante in the Zuck-Musk Saga

Did it just become a cage fight to the death…?

How do you get 100m users in just 4 days? Just leverage it off your other existing 1.6-billion-user-base products, of course.

Ask Zuck: In one of the biggest vanity metric moves ever, he boasted about his 100m users – which all turned out to be Instagram users, naturally – and continued to make fun of Elon Musk on his new Twitter clone, Threads.

You know, friendly banter ahead of the big one…

But how do you ensure your totally new, built-from-scratch startup app adds value to its 100m first-week users?

Well, some say, you just hire all the employees the owner of the app you’re cloning is firing (‘member when Musk fired 50% of Twitter employees?) and then “allegedly” go and scrape that app’s userbase to inform your new product’s network and recommendations features.

Jip, the Twitter-Threads episode is likely a pretty big plot point in Mark Zuckerberg and Elon Musk’s “let’s have a cage fight” saga.

What the beef’s about this time

Well, let’s not mince words here, Meta is under a lot of pressure. Facebook has been steadily declining. Losing 1m European users and 2.8% of UK users in 2018, about 42% of US Facebook users between 18 and 29 say they don’t log in very often while 44% just deleted the app. Add a 20% drop in US teen usage in 2020, and you can see where it’s going.

And then there’s Zuck’s Metaverse…

Not to mention lawmakers and lobbyists are having a field day with Meta’s user-information policies. The real reason Threads has not launched in Europe is a landmark EU court case blocking it from sharing info between its apps. The same court ruling says Meta generated 97% of its revenue illegally in Europe.

Long story short, Zucks and Meta needed to make moves, and Elon’s Twitter seemed like a weak target because of his takeover circus.

And that’s where it “allegedly” gets a bit underhanded…

In a supposedly leaked cease-and-desist letter last week, Twitter threatens to sue Meta for "systematic, willful and unlawful misappropriation" of Twitter's trade secrets and IP. Broken down like this:

• Twitter claims Meta hired ex-Twitter staff to not only help build Threads but to also gain access to trade secrets.
• It also claims Meta scraped Twitter’s user data – info like who follows who, so that Threads can suggest you follow the same people as you did on Twitter – in doing so, you are likely to quickly build a following on Threads (and getting all your old followers to follow you as they join).

All are illegal according to Twitter’s usage license agreement. An Elon’s not happy….

The Twitter gold

Let’s be honest, there have been a lot of attempts to clone Twitter including Mastodon, Bluesky and Truth Social. In fact, the Twitter copies are so plentiful, even Twitter Founder and now backer of Bluesky, Jack Dorsey is making fun of it.

But most of them failed to make major inroads into Twitter’s user base.

Why? Well, because the Twitter magic doesn’t lie in the tech, it lies in the fact that people have spent 17 years building their Twitter followings – i.e. the user data (which Meta allegedly just scraped).

See, when Elon bought Twitter for $44 billion, you might have asked, why not just build your own app? Chuck a billy into app dev and 43 billy into marketing and surely you have a better Twitter, right? Nope, it’s not that easy.

The IP Twitter built up on the platform over a decade-and-a-half includes followers, connections and interactions. Think about it: Establishing yourself on Twitter took years of hard work, why on Earth would you just give it up and go start over on a new platform? It’s just not worth it.

And what’s more, those that built that following will fight for the platform they built it on.

Will this fly?

So, Twitter’s biggest defence? The years people have invested in building their Twitter profiles.

Will it go to court? Tough one, because those things drag on so long, the damage is likely to be done long before anyone even testifies.

Will Threads last? We are not convinced. As soon as people realise it's the same amount of effort to build and maintain a worthwhile following, they are likely to drop off. What’s more, it seems like Zuck and co are using the same level of censorship on Threads that's going down on Meta’s other apps. So, maybe it’ll kill itself quietly…?

Or maybe the world has moved on from wanting free speech? Perhaps the future world town hall truly is going to become Zuck’s for the taking.

What do you think? Hit reply and let us know.

Like this article? Share The Open Letter with a friend and earn great rewards.

IN SHORT

👍 Thumbs Up. Beware of using the “Thumbs Up” emoji, especially as a response to a legal document sent to you in Canada. A court in Canada forced a grain buyer to honour a contract in full after he responded to receiving it with the emoji, which the court says is as good as signing.

🏖️ Life’s a Beach. Not one, but two South African beaches have made the Top 20 most beautiful beaches in the world by Betway. Camps Beach and Hout Bay Beach clocked in at number 15 and number 20 on the 100 beach list.

🤑 Show me the Money. The BRICS nations are apparently in talks to establish a new currency – and with approximately 80 other countries keen to join, it could be the start of some interesting geopolitical shifts. Don't burn up your Randelas just yet, though – a move like this could take a long time to bring about.

⚡ ‘Murca Power. The US Trade and Development Agency announced a $1.3 million grant to assess the economic, technical, commercial and financial viability of new technologies to improve South Africa’s transmission grid.

🎵 Sound of Music. TikTok to launch music streaming service TikTok Music to compete with dominant players Apple Music and Spotify. It provides song recommendations and personalised curation to help users find viral songs from TikTok videos.

­

BUILDER’S CORNER

The Lost Art of the Non-Leading Question

We can all agree on one thing – building something substantial and meaningful is no walk in the park. It's a journey laden with obstacles, complications, and inevitable setbacks.

And a simple "Hey, I like your product" skyrockets your morale so much, it can often lead you astray (we’re all human) and into posing leading questions. You know, those Qs that steer people towards giving you the answers you want to hear.

The thing is, it’s the hard ones, the answers you don’t want to hear, that you really need to grow.

What magic can non-leading questions work for you?

They might not always give you the praise you crave, but they can offer far richer rewards:

💡 Firstly, they can give you actionable insights that reach far beyond your current scope. Insights can guide your future tweaks, revamps, or even entirely new features. In other words, they can help you shape the future of your product.

🎯 Secondly, non-leading questions can bring you closer to that golden nugget we call the “truth”. If you're hunting for product-market fit, you need authentic and useful insights. That means feedback directly from users, without any subtle (or not-so-subtle) nudges from your end.

🌱 Lastly, they can keep you grounded. In the early days, you'll likely find that honest feedback can smash some of your cherished assumptions and elaborate ideas. But remember – this is a good thing! It's these reality checks that keep us humble, and more importantly, keep us innovating and improving.

So let's dive in and discover the art of asking non-leading questions…

Let them share their unique application or use case

• Leading: "This tool can be used for your work right?"
• vs
• Non-Leading: "How would you use this?"
  

Prompt them with new information

• Leading: "Would you share this information with your team?"
• vs
• Non-Leading: "What would you do with this information?"
  

Try to understand their process

• Leading: "And then you would use your card to pay, right?"
• vs
• Non-Leading: "What would you do next?" or "What's next?"
  

Allow them to express their feelings/thoughts

• Leading: "You're excited about your current task, aren't you?"
• vs
• Non-Leading: "How do you feel about what you're doing there?"

Direct attention without presumption

• Leading: "We really wanted that button to stand out, does it?"
• vs
• Non-Leading: "Go clockwise around this area and tell me what each piece means"
  

Invite them to elaborate on their own points

• Leading: "That strategy you mentioned earlier would increase profits, wouldn't it?"
• vs
• Non-Leading: "Expand on [that thing] you just mentioned"
  

Ask neutral questions

• Leading: "It looks like you had a good time?"
• vs
• Non-Leading: "What were your thoughts about the event?"
  

Avoid emotionally charged language

• Leading: "Wasn't it terrible when that situation occurred?"
• vs
• Non-Leading: "Can you describe your response to the situation?"

Break down complex questions

• Leading: "The movie and popcorn were great, weren't they?"
• vs
• Non-Leading: "Did you like the movie?" and "Did you like the popcorn?"

Now some leading questions might have their place, especially when you’re iterating with your team internally.

But practising how to ask non-leading questions in our own specific startup or business context can help us get the right types of insights, bring us closer to the truth, and keep us grounded.

Got a pet-peeve question to share? Or maybe some more insights on getting good-quality feedback? Hit reply and let us know.

THE THREAD

Providing health and wellness to employees became significantly more important since 2020. Many companies, whether working in-office or remotely, have had to find ways to ensure their staff are looked after while adding culture.

This is a massive opportunity that Chris Bruchhausen from Strove explained to us in this week's episode of How Would You Build It.

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

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

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

Hi there,

Old habits die hard. This Japanese textile factory still uses of punch cards and data cassette tapes to produce textiles.

In this Open Letter:

• Money shot: The Evolution of F1 advertising.
• The chocolate klap, YC’s 50 biggest & Vodacom’s solar burn.
• Startup vanity: 6 Metrics to sanity check (if you wanna make it).
• Celebrating 3000+ signups: Share and get free coffee.

TRENDING NOW

The Evolution of F1 Advertising

There’s BIG money spun by the pinnacle of motorsport…

Formula 1, or simply F1, is raced in some of the most affluent places in the world, by some of the highest-paid sportsmen on the planet. From ticket prices, merchandising, broadcasting rights, and sponsorships, it’s a literal money printer.

With 275 sponsors across the 10 F1 teams in the 2023 season, all dropping anywhere between $1 million to $50 million per year, per sponsor, that amount is astronomical. And given its recent rise in popularity due to Netflix’s Drive to Survive bringing the sport to a whole new generation of fans, it’ll only get bigger.

And where there are eyes, sponsors will follow.

F1 & Sponsors

Back in the day, F1 cars had sponsor logos primarily on the sides and rear wings because this was the most prominent place to put it to be seen by fans and TV cameras trackside. Even non-smokers will remember the famous brand on 7-time-world Champion Michael Schumacher’s Ferrari.

Enter Social Media and The Influencers

With the rise of social media, suddenly F1 teams had a direct line to their fans. And with fans came influencers. From updates on social media to full-length shows on YouTube, these people make a living by commentating on sporting events and have a massive influence on the sport.

Folks like:

• YouTuber Benjamin Daly.
• TikTok influencer Sophia Upton.
• Motorsport channel (and meme connoisseurs) What The F1.

Teams would host these social media influencers, giving them an exclusive back garage view of what happens on a race weekend, including meeting the drivers, seeing the teams in action, and, most importantly, posing with the cars for a pic to share.

And these pics, in front of the cars, would feature the nose cone (the front of the car).

And therein is the opportunity.

The humble nose cone, that no one would think of putting any more logos on beyond the manufacturer and perhaps title sponsor (because the amount of airtime was so little during the race), became a piece of advertising space that would now suddenly be seen by millions.

Well, Halo there innovation…

With the culmination of advanced cameras and angles on the cars, the driver’s view helmet cam and of course the introduction of the Halo (curved bar placed to protect the driver's head), you now had another premier place to put a sponsor logo.

In this past weekend’s British Grand Prix, McLaren driver Lando Norris tested a camera pointed at his pedals and driveshaft. It made for a fascinating look into the use of braking and acceleration during the race.

Which was another chance for the sponsorship team to add a sponsor’s logo to the heels of the driver’s shoes.

The Future of Onboard Sponsors

At the start of the 2023 season, McLaren rolled out a digital sponsor panel, visible from the cockpit cam. Weighing less than a can of Red Bull, it offers the team the ability to change sponsor logos throughout the race.

Fun Fact: In this past weekend’s race, the sponsor panel was replaced with a sticker to save weight due to the chrome finish (as opposed to the normal painted carbon fibre) of their special livery for the British Grand Prix.

The Opportunity

Technology is known to offer new angles and insights into our favourite sports. Each of these new angles or new views offers more things to look at and ultimately more advertising space to sell. An often less obvious business model for sports fan tech geeks.

If you’re watching Wimbledon right now you will see this in action when a player disputes whether a ball was called out (or in) correctly by a linesperson. The game will pause and everyone will turn their attention to Hawk-eye to see the flight of the ball and the tech-measured bounce — a juicy advertising space.

What’s more, most sports games you watch these days have a “win predictor” that comes up on the screen ever so often. In years gone by, these have been fairly inaccurate but recently with big data and AI, two things have happened – predictions have become way better and AI/big data companies, like AWS, Microsoft or IBM, love to sponsor that slot.

Back home

Take South African-founded Fancam. Back in 2011, they developed a camera that can take high-resolution, 360-degree photos of stadiums for fans to see themselves in a stadium, at the game. Share this on social or print it for your fridge, either way, it will feature a logo of someone who is paying to be there.

Similarly, a few months ago, we ran a story on South African startup Inrange gamifying the golf driving range experience. Introducing tech to make a driving range more fun also came with the opportunity to add advertising real estate to these games.

Find the angle

South Africa is sport mad – find tech that can either improve the game or improve the fan experience, and there might just be a new angle that can feature a sponsor’s logo.

And with the continued rise of AR & VR’s capabilities (we wrote about Apple’s play in this space), who knows what else could be possible?

Building a new angle or tool for sports? We would love to check it out. Hit reply and let us know.

IN SHORT

🍫 Not so Sweet. Chocolate prices are set to soar as high global cocoa prices and the ongoing energy crisis are klapping local chocolate manufacturers.

🌊 Top spot. Wanna work at one of the Top 50 Y Combinator-alumni companies? YC released a list of their 50 highest revenue-generating companies. Unsurprisingly, the list features Airbnb, Coinbase and Webflow, but it also features one startup operating mainly in Africa, Wave.

🇿🇦 Stillknocks. Local MMA fighter Dricuss du Plessis is set to become the Number 1 contender in the UFC Middleweight division after knocking out Robert Whittaker in the second round of their fight at UF290 over the weekend – extending his UFC win streak to six.

🔥 Roof on fire. Vodacom’s Cape Town HQ had to be evacuated on Sunday after a fire broke out. Fortunately, no injuries were reported and the cause is yet to be determined, but initial speculation by eagle-eyed Twitter detectives point to the solar panels installed on the roof.

💊 No pain. Talk about efficiency, scientists have discovered a way to create (previously expensive and labour-intensive) Ibuprofen and other painkillers for way cheaper with paper industry waste.

­

BUILDER’S CORNER

6 Metrics to Sanity Check

Meet Jimmy. Jimmy is a startup founder and the media loves him. They write about him weekly and he has 100k+ followers on social media. Jimmy has raised money pre-launching his product and he wins every single pitch competition there is.

Will Jimmy’s startup be successful? It's impossible to tell. Because all we shared are vanity metrics. Metrics that make you feel good but say nothing about the prospects of the business.

Vanity metrics make part of what we like to call “startup theatre” where people (mostly evident at conferences and events) talk about startup stuff, yet not one is building successful businesses.

Now, vanity metrics aren’t useless, they’re simply misleading – giving founders a false sense of progress. Here are some vanity metrics to be cautious about and good sanity metrics to replace them with:

1. Views & impressions

• Vanity Metric: Page Views / Downloads / Impressions
• Sanity Metric: Average Time on Page / User Engagement Rate

2. User numbers & registrations

• Vanity Metric: Total Users / Registrations
• Sanity Metric: Active Users / Daily Active Users / Monthly Active Users

3. App Store rankings

• Vanity Metric: App Store Rankings
• Sanity Metric: User Retention Rate / Daily Active Users

4. Total signups

• Vanity Metric: Signups
• Sanity Metric: Conversion Rate to Paying Customers

5. Pitch competitions

• Vanity Metric: Pitch Competitions Won
• Sanity Metric: Customer Accounts Won

6. Funding rounds

• Vanity Metric: Raising More Funding
• Sanity Metric: Customer Growth Rate

Have you found any particular vanity metric a sticky one? Did we miss something? Hit reply and let us know.

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

Hi there,

Think you’ve mastered AI prompt injection? (Tricking an AI into revealing things they shouldn’t.) AI safety company Lakera developed the Gandalf game, where you try to trick the AI into revealing its secret through multiple levels. Go get your AI hack on.

In this Open Letter:

• Big ones: Saving 15M’s daily commute.
• SA crypto exchange crackdown, Meta’s Twitter competitor & thanks for training our AI.
• Out of the box: How to build a network-effect product.
• Get practical: Building things that don’t scale with Ben Blaine.

TRENDING NOW

15 Million People are About to Lose their Only Means of Daily Transport

And there’s much to be done to stop it…

In the sphere of urban planning, it's become increasingly important to develop mixed-class neighbourhoods. For two reasons: combating classism and reducing the burden on our transport systems.

Living close to work means less commuting, promoting a higher quality of life. So proper city planning not only aims to reduce dependence on transport infrastructure but also to create healthier, more connected communities.

Remember apartheid's approach, which pushed people out of cities and into townships? It essentially undermined these principles of community development. In its wake, the minibus taxi industry emerged, serving the transport needs of the populace (circa 15 million people per day) and creating profitable enterprises in the process.

The bump in the road

During our recent chat with LÜLA CEO Velani Mboweni on How Would You Build It, we learnt that some 60% of South Africans depend on minibus taxis for their primary transport. But, unlike bus services, taxis don’t receive government subsidies. And, like it or not, our economy is deeply reliant on the minibus taxi industry for daily transport.

Now, there's a growing concern about taxi owners who are struggling. And minibus financing specialist SA Taxi is also feeling the pressure. Its parent company, Transaction Capital (who also owns WeBuyCars)’s share price is down substantially and SA Taxi has undergone major restructuring to keep it going.

Consider that SA Taxi finances over 36’000 of the estimated 250’000 taxis in South Africa (about 15%, or every 7th taxi you see on the road). And if this company is struggling, it is a reflection of broader issues.

Cause and effect

The crisis is not due to a lack of industry-specific innovation. We were impressed when we visited SA Taxi’s operations a few years ago – their understanding of the taxi business and ability to offer great value whilst reducing risks and costs way surpasses anything traditional banks could do.

• They finance your taxi for specific routes
  • Knowing how many commuters and taxis are on every route, they know whether you’ll make money (and could thus afford the loan).
  • Drive a different route and they cut you off remotely with a smart GPS device.
• They know one day off the road is one step closer to defaulting on the loan, so have all kinds of initiatives to help get taxis back on the road safely in record time
  • They offer custom insurance that processes claims quicker.
  • They train township mechanics to fix certain things on taxis, improving the quality of work (also uplifting them in the process).
• Repossessions have less impact on the business, as they would refurbish and refinance the taxi to a new owner – something a traditional bank can’t do well.

Despite these innovative approaches, several factors have contributed to the taxi industry battling to stay afloat:

• The cost of vehicle ownership (repayments, insurance, maintenance and fuel) increased a staggering 48% since 2019.
• Flooding at Toyota’s manufacturing site has created additional challenges.
• Other headwinds include rising interest rates and fuel costs.
• Lower commuter volumes due to slow economic growth and remote working policies.
• Fleet owners are unable to increase fares for cash-strapped commuters.
• Loadshedding is slowing traffic, reducing the number of trips drivers can make decreasing income.
• Less qualifying buyers for repossessed and refurbished vehicles.

Light at the end of the tunnel

While the situation is concerning, the taxi industry has shown resilience in the past. There's still room for optimisation within the current model, and technology could play a significant role.

Some of the obvious challenges include:

• It normally takes two people to operate a taxi – one to drive and one to collect funds and check admission. Salary is by far the biggest cost of operating transport, so being able to remove one of these will go a long way in saving costs.
• Taxis often wait till they reach a certain amount of passengers before setting off – which sounds logical to maximise income, but it's not that simple (you’re making current passengers wait).
• Although they’ve taken steps to try to formalise the industry, better coordination between different operators could improve efficiency and margins for everyone.

Opportunity time

Looking forward, there's a raft of opportunities for the taxi industry that could streamline operations and boost viability:

• Tax compliance is key for taxis to start receiving subsidies. In 2021, it was reported that this R90bn industry paid only R5m in company tax. Although some in the industry might already be paying employment or personal income tax, there's a need to formalise this process further. Subsidies could incentivize tax compliance, with technology playing a pivotal role in this transformation.
• Enhanced route planning is a potential game-changer. The combination of cameras, IoT, and AI can facilitate improved route planning and scheduling, optimizing earnings per trip. Cape Town startup, Quickloc8, is already venturing into this territory.
• Loop Mobility is endeavouring to increase demand by refining the user experience. They're offering an "Uber-like" service for minibuses, handling payments and offering insurance.
• There's an opportunity to introduce subscription model rides for a consortium of minibuses, which could stabilize cash flow, making it more predictable.
• Even though cash transactions still dominate the minibus taxi world, improved payment management could mitigate default risks and foster better planning. This is particularly relevant when the taxi owner is not the driver. By leveraging technology and digital payments, revenue from trips can be secured, potentially allowing operations to be handled solely by the driver.

For years, tech adoption had been lacklustre in this space, perhaps now with sufficient pressure, the time to use technology to optimise is finally here. We are excited to see this industry go from strength to strength.

Need an inside look into the tax industry? Hit reply, we might be able to organise it for you…

IN SHORT

🥵 Hot stuff. Records are meant to be broken (or are they)? Monday was the hottest recorded day globally with an average global temperature of 17 degrees Celsius. Probs something to do with that pesky El Niño thing we spoke about in a previous Open Letter.

🧵 Stitched up. Meta’s Twitter competitor (called Threads) is set to release today. According to a source inside Meta, they believe a version of Twitter run by a “sane person” is what the world needs. Depending on your definition of sane, it's either very good or very bad. Got an iPhone? The app will appear here.

🥊 Beat down. DStv’s owner MultiChoice’s share price took a beating after JP Morgan Chase & Co downgraded its rating of the company. This while French premium TV channel Canal+ increased their stake to 31.7% — one step closer to being forced to offer a buyout to other shareholders (which is at 35%).

🤑 Got crypto? SA exchanges might soon be forced to shut down if they don’t have licenses. SA’s Financial Sector Conduct Authority (FSCA) is pushing for regulation and SA is set to become the first African country to require digital asset exchanges to get licenses.

🎉 AI Trainer. Congrats on officially becoming an AI Trainer. Well, your publicly available information anyway. Google just updated its privacy policy saying they use publicly available info to help train their AI models. Time to go and update our LinkedIn Bios.

­

BUILDER’S CORNER

How to Build a Network-Effect Product

Want to build the next TikTok, Facebook, Uber or Airbnb? You know, products whose true value only unlocks once you’ve onboarded a certain number of users/stakeholders.

Well, the trick to building a network effect product is to NOT DO IT (at first, at least).

Method in the Madness

According to Y Combinator co-founder Paul Graham, and his 2013 essay that’s become startup folklore, it’s much better to build things that don’t scale at first.

What that means is: Network-effect products are complex, costly and super risky to build. If you don’t nail it first-time, you waste years of time and resources and so much money your investors won’t ever want to touch you again – that’s why most won’t invest in network-effect products anymore.

It’s best to build a non-scaling version first.

For example: Instead of trying to build a fancy new product

• see if you can deliver the service using simple tech like a spreadsheet first
• or see if you can build the community it will eventually serve, first.

Then, only once you have the community and service running so smoothly you can’t manage it anymore, that’s when you consider building the product. (It’s more common than you think: EskomSePush also started as spreadsheets first.)

So, how do you build for not scaling? Well, we were lucky enough to have an expert at that in our “How Would You Build It” podcast this week – check it out down below.

For now…

5 Steps for Building Solutions That Don’t Scale

1. Start with a deliberately narrow market
2. Instead of targeting a broad audience, focus on a specific subset of users who are likely to adopt your product or service quickly. By concentrating your efforts on a niche market, you can create a critical mass of users and gain traction more rapidly. Expand to a broader market once you have a solid foundation.
3. Recruit early adopters manually
4. Engage in personal outreach, offer hands-on setup assistance, and take advantage of your existing network and connections to acquire users.
5. Focus on user delight
6. Go above and beyond to make your early users happy. Provide exceptional customer service, personalize the user experience, and find creative ways to exceed their expectations. Aim to make signing up with your startup one of the best choices they've ever made.
7. Obsess over delighting users
8. Strive to create an insanely great experience for your users, even in the early stages when your product may be incomplete or buggy. Hint: it’s not your tech. Ask yourself – what is a 5-star experience? Pay attention to the details, iterate based on user feedback, and be attentive to their needs. Continuously seek ways to improve and make the user experience exceptional.
9. Engage as consultants for a single user
10. Treat a single user as a consulting client and build a tailored solution specifically for their needs. Continuously iterate and refine your product until it perfectly meets their requirements. By solving their problem effectively, you increase the chances of attracting similar users and expanding into adjacent territories.

Want to delve deeper into the topic? Check out our podcast below – it’s seriously great for when you want to build smart and well.

Stuck on how to “minimise” your big product idea? Hit reply and give us the non-NDA version and we’ll brainstorm it a bit with you…

THE THREAD

Ok, so we’ve discussed what it means to do things that don’t scale. But how do you put that into practice? Ben Blaine shares some war stories from pioneering the concept in SA from the early days of Mxit, Snapscan, OfferZen and running the Investec Programmable Banking project.

Buckle up for storytime for your weekly dose of How Would You Build It on YouTube, Spotify or Apple Podcast.

10:19 Getting Investec programmable banking off the ground.

21:45 Finding the tipping point.

29:29 How finding your early adopters grew SnapScan.

33:24 Once upon a Mxit.

36:31 The one thing every startup gets wrong.

44:08 A story that validates the 'secret' approach.

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

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

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

Hi there,

Tired of them golden teeth? The world’s first tooth regrowth medicine is going on trial in Japan. The team behind it aims to have it ready for commercial use by 2030.

In this Open Letter:

• Mall tricks: Is this what SA e-commerce is missing?
• SA’s secret airship, Elon’s Twitter limit & AirPod doctors.
• Fast-track: Tools for the first 5 days of your startup.
• Meet us: Got plans for Thursday the 13th?

TRENDING NOW

What E-commerce in SA needs

150 million more buyers or some good old startup hustle.

Naspers recently released its annual results and in it, the performance of South Africa’s largest e-commerce player, Takealot. It recorded a loss of R400 million in the fiscal year ended 31 March 2023. This is despite a 13% increase in gross merchandise volume (GMV) and a 12% rise in revenue in local currency.

Former CEO, Kim Reid, who left Naspers to buy Take2, rebrand it to Takealot and eventually merge it with Kalahari.com (Nasper’s old e-commerce play), said previously that Takealot should be profitable by 2021.

Two years later, the loss has grown. And maybe even more worrying is that over the last 3 years, their revenue growth has slowed down substantially.

Much of the reporting on the matter focussed on some of the obvious factors – tough economic circumstances, loadshedding, and increased fuel prices. But is there more to this than simply the current climate? We think there is…

An American model in an African Context

Amazon has been the global e-commerce pioneer for years. And many e-commerce offerings around the world have modelled Amazon in their territory. But just how practical is their model in South Africa?

Americans earn on average ±$ 60 000 (R1.1m) per year, while in South Africa the average salary is around R350 000. Add in some of the extra costs South Africans need to pay for healthcare, education and security and it's even less.

Now consider that the USA has 166 million salary-earning employed people, compared to South Africa’s 16.1 million. Not only is the disposable income per wage earner 4 times less but there are also 90% fewer wage earners – yikes!

Perhaps that’s the reason why Amazon has never set up shop locally – even though a large part of the AWS team is based in Cape Town.

The shopping mall nation

6 years ago, South Africa ranked 6th in the world for the number of shopping malls. Visit any large mall in your area on the weekend and you will see grazing the isles have become one of the most popular pastimes. And that’s the design:

1. Give people a reason to go
   • Get an anchor tenant where you buy groceries – you need to eat, so head to the mall and buy that.
   • Offer entertainment – and yes even having lots of shops is entertainment for some.
2. Design the mall in a way that you get lost (we can’t factually prove this but conversations with architects seem to confirm our thinking after getting lost in Canal Walk, Cape Town 1274 times).
3. And as you mindlessly stroll or scramble to find your parking exit, you walk past shops selling those things you kind of want but don’t urgently need.
4. The instant gratification of seeing it and taking it with you now kicks in and you buy.

Perhaps that’s what’s missing from Takealot-style e-commerce – there’s no anchor tenant and one can tend to forget about it. Next time you are at the mall to buy groceries, pop into Game to check out that TV you want to buy. Not to mention there’s no delivery delay – load it up and go.

SA’s established mall model is likely e-commerce’s direct competitor. But Takealot knows this, so what else has changed?

Easier than ever to launch e-commerce

Roll back the clock to pre-2020 when Takealot had a massive strategic advantage. Last-mile delivery was underdeveloped, and when they scooped up Mr Delivery (Mr D) back in 2014, they secured dominance with the ability to do same-day delivery.

Then Covid came along and not only is everyone doing it, B2B service providers make it easier than ever for established brands to launch e-commerce offerings. And it’s mostly on the logistics side, where last-mile-as-a-service delivery providers, such as Pargo and even Uber are eating away at Takealot’s competitive advantage. You don’t need a MrD to launch a compelling e-commerce offering.

And this means Takealot is facing stiff competition from all angles. We recently covered Dischem’s growth in e-commerce, whose R400 million in customer spend could very well have been Takealot customers a few years ago. And Dischem isn’t the only one. Bash, founded by former Superbalist founders (which ironically sold to Takealot) is consolidating the TFG brands under one online megastore. And with some good old SEO sorcery as well as some startup hustle, they claim to have outranked Superbalist on search.

An approach to consider

If E-commerce can replicate the mall’s anchor tenant trick, this could bring their cost of acquiring a customer down substantially and allow for larger margins on bigger ticket items. Recent ads by Pick n Pay ASAP! suggest that they are exploring this.

You can order your groceries and get them fast. And, hey, why not add that luxury item you’ve been eyeing all this while…

Smart move.

As for Takealot, finding out how to integrate its offering to be front and centre of its customers' lives will be crucial. Perhaps being the “everything” e-commerce store is hurting them.

Dive into some niches or better yet, find a way to pitch right next to an “anchor tenant of the internet” – perhaps a Naspers-owned media site, who knows…

Got e-commerce experience? Hit reply and share your insights…

IN SHORT

1️⃣ Firstbook. Not on Facebook? Well seems like everyone else is. Facebook is the number 1 social media platform in SA, with TikTok gaining ground pretty well – driven primarily by SA youth’s social media habits. (if you are on Facebook, go give us a follow)

🖥️ WhatsApp Meetings? That WhatsApp group your boss made for everyone at work might soon replace Zoom for meetings. WhatsApp is testing video calls with up to 32 participants. For now, it’s only available on desktops.

🔒️ Touch grass. In what is yet another fascinating episode of how to run a massive organisation like a startup, Elon Musk introduced a new rate limiter on Twitter over the weekend. You can now only see 300–6000 posts per day (depending on your subscriber status). This is all done in an effort to limit data scrapers that are using Twitter to train large language models.

🩺 DocPods. Apple AirPods are set to become your hearing Doctor. The next generation of AirPods could check for potential hearing issues and measure your body temperature (thankfully) via your ear canal. We guess it’s true what they say about an Apple a day…

🪁 AirShip. After years of flying “under the radar,” a South African-built autonomous airship was unveiled at the 2023 Paris Air Show. With awesome applications, these airships can be operated inexpensively with little infrastructure. We never knew airships were still a thing, much less that they were being built in SA.

COME SAY HI

Startupclub ZA is hosting a meetup next week Thursday (13 July) in Cape Town. The event will feature an interview with Bevan Ducasse (Yoyo formerly WiGroup) and Greg Chen (Mobiz) followed by some networking and good vibes.

‍

BUILDER’S CORNER

Tools for the First 5 Days of Your Startup

Ok, so you’ve validated your Startup idea (using the handy tips from a previous Builders Corner) and looks like you’re onto something promising. And so it starts…

This is where most techies jump in and start building, setting off a months-long rabbit-hole adventure of pizza, caffeine and blinking away the sleep.

We say no, build on the business side of your idea a little first.

See, startups are such an investment, you need to be 1’000’000% sure it has legs and you’re still gonna want to be “climbing that hill” in 10 months’ time.

Here’s how to spend your first 5 days  

1. Nail the name

It’s more important and powerful than you think. Needs to convey what you do but also be memorable, adaptable, distinct and super easy to spell and pronounce – without being cheezy. Plus: Some say you need to be able to use it as a verb – like Google – and keep in mind that you might want to expand one day, so it should be able to grow with you.

Check out Namelix AI name generator.

2. Get the a logo

Logos go everywhere. From your business, right the way through to your product. It makes a powerful first impression of your company – and if it’s super memorable or recognisable, it serves as a bat signal high in the night sky – golden arches anyone?

Plus, in the tech space, did you even attend a conference if you don't get a company’s logo as a sticker?

Give Looka AI logo maker a try.

3. Build a one-pager website

We’ve said before that you don’t even need a product to start building a client list and testing your idea on the market. Starting a sales funnel-powered website is an awesome way to do just that. You can always expand on it later.

Check out 10Web AI builder for a quick site and then start building a funnel by offering some value-adds for download in exchange for emails – test ideas with PageGenie’s landing page builder.

4. Do some Content for the Socials

Build a community around your product, showcase your wares, and educate potential customers in your network about the benefits of your product. With so many social channels to choose from, it might be worth your while to focus in on one – where your specific target audience might be and grow from there.

Ask ChatGPT or Bard to help you generate some posts based on known problems your target market is facing that your solution can help solve (just trawl relevant subreddits on Reddit for ideas or search AnswerThePublic), then use Buffer to easily share and schedule posts on up to 3 social networks for free.

5. Learn What’s Working

Iterate. Iterate. Iterate. If you find that certain types of content perform better to grow your audience, drive traffic to your site and make sales, double down your efforts.

Do a bit of social listening and deep analytics with Socialbaker, or optimise your ads (if you’re running any) with Wordstream’s machine learning or AdCopy, otherwise just rework, recycle and repost your top-performing content with Feedhive.

Next up, you’ll want to refine your funnel, start building some pitches and get some trial users – but that’s for day 6 onwards.

Did we miss something? Hit reply and let us know if we should anything to this list.

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