Hi there,

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

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

In this Open Letter:

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

TRENDING NOW

Making it Rain

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

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

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

‍

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

The Secret Sauce: Unpacking Rain's Success

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

Let's break it down:

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

We got a unicorn, people

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

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

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

Get your sharing link here.

OVER TO YOU

What do you use for broadband?

Vote and see what others say...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

JUST FOR YOU

Got Gold?

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

‍

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

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

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

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

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

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

How to Reverse Engineer Success

A Step-By-Step Guide to Deconstructing Startups

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

‍

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

Here’s how…

Step 1: Choose a Target & Objective

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

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

Step 2: Analyse the Business & the Market

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

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

Step 3: Examine the Team

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

Step 4: Identify Key Milestones or Pivots

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

Step 5: Consolidate & Strategise

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

Step 6: Implement and Test

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

Step 7: Repeat

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

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

PARTNER WITH US

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

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

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

Hi there

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

In this Open Letter:

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

TRENDING NOW

Disrupting the Cart

Inside the on-demand grocery revolution

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

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

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

It’s in the numbers

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

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

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

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

Play on Playa(s)...

Let’s go back to before the Sixty60 launch.

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

What was wrong with this?

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

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

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

But how did Checkers change the game?

By strategically aligning with a tech startup…

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

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

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

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

‍The long game

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

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

IN SHORT

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

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

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

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

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

JUST FOR YOU

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

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

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

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

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

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

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

Share the newsletter

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

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

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

Done, now you’re entered to get gilded.

THE THREAD

To Build or Not to Build in Public…

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

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

The best bits

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

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

THE RESULTS

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

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

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

Hi there,

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

In this Open Letter:

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

TRENDING NOW

The 640bn Big Ones Keeping SA Safe

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

No wonder SA spends a lot to protect ourselves

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

‍

Wait a minute, that’s Big Money

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

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

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

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

It’s not just us…

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

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

We’re not here for the politics, though.

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

Plays in the security space

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

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

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

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

Get your sharing link here.

OVER TO YOU

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

Vote to see what everyone said...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

JUST FOR YOU

Got Gold?

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

‍

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

STEP 1: Click on this shiny button 👇

(The button opens a LinkedIn tab.)

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

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

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

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

Track & Measure Your Word of Mouth

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

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

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

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

How to get your Net Promoter Score

1. Include an NPS question in your survey

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

2. Calculate your NPS

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

E.g. let’s say you had these results:

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

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

So your NPS is 30%.

3. See how you measure up

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

Some NPS standards are:

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

Obviously, the higher, the better.

4. Make it long-term

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

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

THE RESULTS

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

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

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

Hi there,

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

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

In this Open Letter:

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

TRENDING NOW

The ball that pulls the eyes

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

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

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

How big an event is the Rugby World Cup?

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

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

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

Who is licking their lips for the eyeballs?

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

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

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

The second-screen experience

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

How do they work?

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

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

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

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

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

Wanna be part of it?

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

OUR TOP OPPORTUNITY PICK FOR THIS TREND

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

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

Get your sharing link here.

OVER TO YOU

Who will win the World Cup?

Vote to see what everyone else says...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

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

­

THE INSIDE TRACK

Solid Gold in 4 Minutes Flat

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

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

Here are the steps:

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

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

Speaking of gold… Want to win some Troygold?

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

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

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

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

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

Done, now you’re entered to get gilded.

THE THREAD

Exploring Business Models for Your Startup?

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

A few highlights

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

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

‍

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

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

THE RESULTS

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

Where do you source fittings?

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

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

Hi there,

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

In this Open Letter:

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

TRENDING NOW

Fixing the Fixtures Game

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

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

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

Every challenge brings opportunity

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

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

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

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

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

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

A new way to source fixtures

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

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

Good company

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

What we like about this play:

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

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

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

Get your sharing link here.

OVER TO YOU

Where do you source fittings?

Vote to see the results...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

JUST FOR YOU

Got Gold?

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

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

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

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

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

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

Done, now you’re entered to get gilded.

­

BUILDER’S CORNER

6 Alternatives to Google Analytics

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

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

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

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

Here are some options

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

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

2. Just basic website tracking: Plausible

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

3. For business, sales and conversion: Usermaven

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

4. For tracking everything: Heap

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

5. Loads of tools and templates: Piwik PRO

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

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

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

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

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

THE RESULTS

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

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

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

Hi there,

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

In this Open Letter:

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

TRENDING NOW

All that Glitters is Gold

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

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

But what makes gold such good money?

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

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

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

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

Holds the Line in Tough Economic Times

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

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

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

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

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

The Challenges of Traditional Gold Investments

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

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

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

Local Golden Moves

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

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

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

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

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

OVER TO YOU

What is your value store of choice?

Vote to see others' votes...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

THE THREAD

How to Build a Kasi-Focused Startup

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

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

Just the highlights

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

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

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

THE RESULTS

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

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

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

Hi there,

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

In this Open Letter:

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

TRENDING NOW

The Gaming Dream

From Play to Payday 🎮

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

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

The Grandeur of Gaming

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

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

Pro Gaming: The Highs and Lows

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

A Novel Twist: Bet On Your Skills

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

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

Beyond the Game

Here's where it gets extra fascinating.

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

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

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

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

Get your sharing link here.

OVER TO YOU

What’s your jam?

Vote to see your nemeses/tm8s...

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

Login or Subscribe to participate in polls.

IN SHORT

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

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

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

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

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

­

BUILDER’S CORNER

2 Idea-Gen Methods for B2B

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

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

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

For mids and corporates

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

For SMEs and solos

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

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

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

THE RESULTS

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

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

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

Hi there,

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

In this Open Letter:

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

TRENDING NOW

SA’s Virtually Untapped R425bn Market

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

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

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

The Hidden Economic Powerhouse

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

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

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

Navigating the Challenges

However, there are hurdles to cross.

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

Innovators Stepping Up

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

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

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

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

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

IN SHORT

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

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

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

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

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

30-MINUTE PODCAST

3 Most In-Demand Devs Skills

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

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

Just the highlights

1. Traditional coding languages are still hot

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

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

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

3. Explore emerging tech, too

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

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

THE RESULTS

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

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

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

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.

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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…

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