The Age of Zero Excuses
AI is coming
I was listening to Eric Schmidt the Chairman of Alphabet (Google’s parent company) on a series of videos over the weekend and something was quite clear. Machine Learning (ML) and Artificial Intelligence (AI) are not fads. They are current and future technology reality and are currently finding their way into everything, from entertainment to healthcare. Complexity is being taken head-on and simplified.
Eric Schmidt mentioned something quite profound- Find your own niche and it is possible to dominate it with up to 90% market share models. This is now possible because with the help of ML and AI, market data can be understood. This is good and bad for us in Africa at the same time. Complexities in our markets can be unraveled but it matters who does it.
I used to complain about lack of data in Africa but I have now seen that as an opportunity rather than a disadvantage. There are models we can create here with the help of ML/AI that can make us monopolies with dominant market share. We just need to get the data.
I mentioned recently on Twitter that the greatest value of current African startups is not in the revenue they can generate now but the market data they are amassing. A lot of African technology ventures are “greenfield operations”. We are gathering or creating data where there was none. Current African startups may just be data gathering engines for something bigger that is yet to come. You can either become that BIG thing or you get acquired by it. 100% market share opportunities are actually possible.
Look at the streets first
Each time I look at an urban street in Africa, I see that each brick and mortar business has either a complimentary digital opportunity or a threat. Disruption or annihilation of models with technology is actually much easier than we realize. Gatekeepers are becoming obsolete.
I had a meeting with a group of European investors recently who were backing ventures coming with models that were already successful in Europe and were scaling to Africa. In less than thirty minutes into the meeting, they realized why those models could not work when transplanted. Our reality and priorities in Africa were different.
One simple example was payments. While the core value proposition of some payment products from Europe is time saving, the same value proposition will not make sense to an African consumer. In a lot of cases, time is something we have in abundance and people will not pay a premium to save time. Shortening distance, saving money or creating wealth are different value propositions altogether. We discovered that with bill payments years ago. We discovered it the hard way but these guys discovered it the easy way by talking to me.
Disruptors are coming
That meeting made me realize that while we may have an edge now because we know our people and markets better, that edge will not last for too long as more data is accumulated and analyzed. These better funded guys will come, make the mistakes, learn from their data and then get better. The market itself is also changing. Old assumptions are giving way to new ones. We can only realistically test assumptions in the market and not inside our heads. Foreign investors are already funding a number of local startups to test these assumptions.
Should we throw up our hands in the air and wait for seemingly inevitable domination by startups funded from outside Africa? I think not. I believe bootstrapping still has a lot of advantages. A lot of the niches with great opportunities may not be exotic or new. They could even be the mundane. They may not even be worth the time and effort of well funded entities at this time but they can become very big in future.
Things are also much easier to do now than they were in the past. When I was 25, I had to run 8 other ventures to support one tech venture. Now, you can test ideas and run a tech venture profitably with tools provided free or almost free. The problem is that people are not discovering niches as Eric Schmidt advised. They want to compete. Everyone wants “funding” for an idea that exists only in their heads or those that 100 other people have already done. They feel they have “a unique angle”.
Niches have the advantage of having little competition and not much attention. The time other people finally discover it, you are ahead. Some of those niches are in plain sight. As I said before —
Every urban street business is an opportunity.
They have been proven and are profitable. There is already a market.
Cars45 in Nigeria raised $5m from Frontier Car Group then EchoVC recently led a $22 million investment into the Group. A tech VC is basically funding a car dealership. Frontier Car Group became the BIG thing that hit the used car market. In hindsight, it was obvious, most cars on the streets are used cars. There is a huge market already and it will only grow.
I looked down the street on Spintex Road in Accra as I read the Cars45 announcement on my phone. There were two used car dealerships in front of me. I shook my head and realized that they didn’t know what was coming to hit them yet. I looked at the mechanic shop close to the dealer and realized that was probably the next target.
I tell my self this every day — Do not compete, keep finding niches. Dominate them. Get data. Learn about AI. If not, you will be worse off than Nana the used car dealer. AI may end up telling us more about Africa than we think we know. This new knowledge will create some very valuable monopolies.
