Strategy, Capital and Winning: Lessons from 5 years of Entrepreneurship in Africa
Winning a market is the ultimate goal for any business and the “winner takes all” concept is more pronounced in the tech, media and internet space than many other industries.
In the last five years, I have been privileged to have cofounded two companies in this space, Twinpine and Iconway. While Twinpine is a leader in Africa’s mobile marketing space, Iconway invests in consumer Internet ventures.
I spend a lot of my time these days thinking about how these businesses can win and from my experience, two really important factors for winning in Africa are Strategy and Capital.
Every business strategy is built around winning. In fact, the typical business cycle is strategise to win, execute strategy, evaluate execution, re-strategise to ensure win.
Strategy is all about choices. A rock solid strategy answers questions such as:
- How do we play: to become/continue to be number one in the area(s) we operate in
- Where do we play: what emerging/new/niche areas can we become number one
- Who do we play with: acquire/partner to become number one
Now some of the key inputs into making strategic choices are timing, long term thinking and planning to capture value created.
Timing is a critical element of any business model. If you’re too early or too late to get into the game you will only eat the crumbs and someone else will take the bread.
Timing is not just when you start but when you get it right. Timing is why some early Nigerian bloggers earn more revenue than the traditional media houses online.
Long term thinking:
Most of the opportunities several African startups are going after will mature long term. Do you see yourself building for 8–10 years. Better still 15–20 years.
Successful businesses (in any industry) are built long term and the strategies to get there also consider how to win at the end of that long period. Yes, MTN Nigeria is huge today but it’s been 15 years already.
Capturing unlocked value:
Another hard lesson for me is that unlocking value and capturing value are not the same: both on an individual level and business level. Getting timing right doesn’t guarantee winning.
People will steal your ideas and do it better, foreign competitors will move in and out execute you, investors will kick you out of the business you founded. We have things like this play out in the online taxi and e-commerce space and it’s just the beginning.
Figuring out a winning operational strategy, competitive strategy, investor strategy etc are essential to long term success.
In the early days of any venture, entrepreneurs usually play up their game changing ideas and timing while playing down the need for capital.
From my experience, three kinds of capital are key to winning: Cash, Social, Knowledge.
Cash is the primary reason foreign owned media or classified ads startups are taking the market from local competition. You need cash to build great products, attract and retain talent, invest in marketing and if you’re in Nigeria, to run your generator.
Social capital is also crucial. You need relationships to close those deals and make sales happen. They are even more critical in Africa which has systems that are not exactly merit-based.
Knowledge. I really don’t need to say much here. The technology, media and Internet space is knowledge driven. Domain expertise, capacity and experience is always a major differentiator.
One hard lesson many entrepreneurs learn the hard way is how to retain their key people.
To win long term it is important to retain those who your company’s success is hinged on. They are usually the founders or early employees of any business and sometimes hires who fit in well with the company’s culture and ambitions.
It is important to keep this team together for a long enough period to capture the social and knowledge capital they will unlock or acquire working in that business.
Do you have the strategy and capital to win?
The truth is that these things are harder to achieve here than in more developed markets which have better support structures and infrastructure.
However, they are things we must do to take the market, so keep thinking about your strategy and acquiring the necessary capital you need to win.