Nigerian Startups – Don’t Waste This, Abeg

Marek Zymslowski

This guest post should not be read as an official statement from the Managing Director of Jovago.com, Rocket backed African venture. This post doesn’t reflect company’s views in any way. It just comes from a dude who happened to be quite active for couple years in the Polish startup scene before he moved to Nigeria.

I worked in startups, I launched them, I raised capital and exited them. Others I mentored. I’ve seen how the ecosystem evolved in Poland. I can compare it now with what I see is going on in Nigeria. Obviously, there are many differences. But pointing them out is not that much fun. It’s too easy and every malcontent can do it for himself, feel free.

Historical Background

There are some similarities between Poland and Nigeria, which allow me, to some extent, to make some (just some) assumptions for NG, based on the Polish story.

To begin with, Poles and Nigerians are very entrepreneurial, active and creative. Sometimes maybe even too creative. We both are tradition oriented and God plays a huge part in the society. Not particularly when we party though.

Polish culture and language was able to survive even though Poland vanished from the map of Europe for more than 100 years, because some “royals” started to care more about their wallet then their country (ring a bell?).

Yoruba culture was able to survive in Brasil and Cuba, despite the hard times African people had to go through. The amalgamation of Nigeria in 1914 was organised by someone from the outside, but Nigerians have been able to keep the country together till this day despite domestic war, many coups and tribe conflicts of interests. Kudos for that.

Well, Poland sucks at football. Nigeria definitely doesn’t. This is why we convinced Emmanuel Olisadebe to play in our national team in Japan/South Korea 2002. Sorry for that.

Last, but not least we both have the most beautiful women (Duh! Miss World: Agbani Darego, Aneta Kreglicka. And Yes, I know you’re googling her now.)

Economic Background

Polish economy was choked by communist influence until Lech Walesa led us to freedom and inspired other East European countires to do the same. Our walk to economic prosperity started for good in the early 1990s. To simplify, let’s say that similar ignition towards growth started in Nigeria after Abacha’s death in 1998.

World financial crisis in 2008 actually helped Poland, our banking system wasn’t sophisticated enough to be influenced by the financial instruments that caused the crisis. So Polish GDP growth started to look way better compared to other European countries. The same crisis, as well as the DotCom bubble made many foreign educated Nigerians come back to their home and contribute to the growth of Nigeria with their international skills. Nigeria is now one of the growth leaders in Africa, just like Poland in Europe.

Polish Startup Scene

The Polish startup scene had issues and was born in huge pains. People claiming there’s were not enough investors and “foreigners are taking over”. Then, believe it or not, there was a problem of “too much money” in the market, which resulted in investing in very stupid ideas and unreliable people.

There were pessimists stating Poland will never build anything bigger than a local copy of something from US. Nowadays, Poland leads in 3D printing, Bluetooth beacons, we have worldwide appreciated SAAS solutions (LiveChat, Brand24, Nozbe) and Game Developers (The Witcher, Sniper). Polish Parcels (Inpost) contribute to ecommerce growth by optimising logistics in 50+ countries. Our startup scene is flourishing. And we managed to achieve all that mostly because of factors so criticised lately in Nigeria.

Foreign “Rocket” vs. “Local” competition

In general, Rocket companies don’t get involved in these kinds of disputes. Most of the time it’s a waste of energy. The competition won’t stop disliking us if we prove their arguments don’t hold water. Building a product people will love is exhausting enough. That’s what we care about. Only that will bring us satisfaction and profit. We just do our thing; we invest, build companies. We’re good at it and every thinking person will understand the longterm benefits of our presence in a particular country. These are most important.

We create the market by making people start doing online purchases, bookings, etc. We convince suppliers to expand the operations online. This would happen without us as well, but not that fast. We may be a so called online company, but the amount of field work we do is mindblowing. Especially in the marketplace business models we focus on. Every other player after us will have it so much easier to enter the market. Jason Njoku’s case of Facebook and Nairaland building scale without heavy marketing is simply missed, because it’s a totally different product, and different context.

We hire young, ambitious people, that don’t necessary have the skills in place, but have the potential. Not everyone has a family that will send them abroad to study, just like it happened to most of Nigerian startup scene’s heroes. We train our staff by transferring the knowledge and allowing them to gain experience. These guys are your future local entrepreneurs. I personally have 3 Nigerian friends, who after the Rocket adventure decided to start on their own. Ask a VC if it’s more willing to invest in a founder with Rocket experience.

What happened in Nigeria, and I can’t really recall similar situation from outside Africa, is that our competitors started to use the “local” card as a marketing weapon. I don’t mind the fact itself, it’s always good to get free publicity. It’s just the level of hypocrisy and populism I felt I needed to comment on. I referred to that case in my interview here. I also agree with many of the statements in the Oo Nwoye’s post here.

These are my favourite quotes about Rocket and Jovago.

Rocket imports Europe executives to copy paste business models controlled centrally. — Jason Njoku

Every developing country with not the best education system needs internationally educated and experienced people to speed things up. Nigeria is no exception. Throw a stone if your tech company is different than Rocket in that matter. And believe me, the moment the local market provides enough local talent, companies will switch to them and get rid of expensive expats. There’s no hidden ideology behind this. I’m sorry.

“Executives” is a big word. Average age of a founder in Nigeria is 25 years. I am one of the oldest! These are guys as hungry for knowledge and success as anyone else. They weren’t “imported” to Africa. They came because they want to have an impact. Work in a crazy, hence interesting market. Europe is not like that any more. And we earn way less than we could earn in the Old Continent. There is passion and energy, not cynicism and cold calculation.

Yes, we copy paste business models from developed markets. And when we implement them in emerging markets. That business model is the only thing we don’t need to figure out all over again. Is the innovation in the area of business ideas the only innovation that counts? I would love to see a purely Nigerian startup that rocks the world market. But even the non-Rocket ones are mostly inspired by what you can already find elsewhere. Looks like the only thing preventing the “local” companies from being called a copycat is the fact, that no one gives you that bad PR.

Controlled centrally? How stupid it would be to have people on the ground, with local expertise, and still manage everything remotely? Yes, I have people I report to. They’re called investors, and people that work for them to control my performance.

The most well funded and potentially dominant players are Rocket Internet, their brands and hundreds of millions of venture capital. Corporate venture capital. — Jason Njoku

Ahh yes, the big bad corporate venture capital. Which dares to ask about the profit and tries to cut losses when something is not going right.

I haven’t met an investor yet, doesn’t matter if individual or corporate, who invests just for the fun of spending money. Maybe Facebook lately. Accelerator or VC, that invests even in minority interests without any clauses allowing them to get at least some control when there’s a problem in the startup – represent a level of unnecessary rashness in a market already risky enough.

I totally understand the need of encouraging local Nigerian capital to acknowledge the new wave of tech startups. We need Nigerian online success stories, we need a lot of them. We need a proper IPO of a Nigerian tech company.

Looks like foreign investement need to start this trend. Then local money will follow. Just like in Poland. But as long as a young Nigerian kid goes to his parents to tell them he wants to build a startup, will hear that he lost his mind and should get a real job (been there), nothing really will change. And overpriced land on Banana Island will be more attractive.

The Rocket Internet model is to build something that they can sell as quickly as possible. We are building to stay. Hotel booking is about the hotel managers knowing you are here to stay and that they can trust the partnership to still be around in two years… — Mark Essien

I understand this was said to undermine the trust hotel management puts in Jovago. I wonder how much trust it takes away, when you list hotels without rates, pictures and simply without knowledge of the hotel.

One should not simply take some cases from Europe and based on them assume the complete strategy on other continents. It’s too vague and ignorant. Doing business in Africa is a marathon, not a sprint. The fact that our average speed in this marathon is higher than others who run for 100meters, is a different matter. Jovago is going to be the biggest online booking platform in Africa. This is the company’s vision, and it’s not going to happen overnight.

Going forward, suggesting that hypothetical change in the ownership undermines the partnerships shows lack of knowledge and experience. Partnerships and team are the most valuable assets when it comes down to M&As. People sometimes come and go even if company doesn’t change the owner. People stay, when the owner changes, or when investor comes into play.

Nigeria will develop, and this development is going to be huge. Simply because no one will allow such a big market not to have purchasing power to fuel the pockets of entrepreneurs and investors.

I have no doubt we will get to the point where VCs will start searching for projects to invest in, not the other way around. I just hope it’s not going to create the class of wannabe entrepreneurs, hanging out at numerous startup conferences, hackatons, tech hubs and incubators, burning cash for nothing, building startups just because they think it’s cool.

Managing Director at Jovago.com

  • Nwoha Nnamdi

    That last paragraph? That’s already begun here.

  • Big Laba Laba

    When local startups compete against rocket internet, it’s like a bunch of african running a marathon, struggling to make it to the end, then a new competitor suddenly drops in driving a brand new german made luxury car, with a comfortable MD on the passenger seat, being driven by a local driver that the MD is insisting is being trained on how to run a marathon.

    Then the guy in the car wins and awards himself the grand marathon prize.

    • Little Miss Sunshine

      And that, @ Big Laba Laba is leverage. :D

      • amaam

        Too much PaulG :)

    • amaam

      If they German luxury car provided more entertainment to the spectators than the “bunch of africans” then is fair… the arbiters are the consumers

  • http://www.victorasemota.com/ Victor Asemota

    “Doing business in Africa is a marathon, not a sprint”

    I am actually standing and clapping here.

    The market is like a spoilt child. It does not really care who owns a business. As long as treats keep coming. Local sentiment is a waste of time and effort as far as I am concerned. If the market really had any sense, we won’t have the type of politicians we have today.

    • Anon

      The market is distorted when one entrant has huge risk-free capital, and the local ones need to struggle to raise capital. With some businesses, you can simply buy market-share. The rocket companies come in and are able to buy market-share with money. The local competitors never even get the chance to compete then.

      • http://www.victorasemota.com/ Victor Asemota

        I don’t know how someone can “buy market share” without providing some value to the same market. We should focus more on understanding our market than worrying about presumed “risk-free capital”. All capital comes at a cost and you either can get it or you can’t. All markets are also available to be taken, fairly or otherwise.

        • http://www.passionincubator.ng/ Taiwo Ajetunmobi

          This is right on point. I totally agree. For me the lesson of the story is, founders keep the end user happy (quality of product, quality of service, price etc). If you do that you should smile to the bank. If you can’t do that. Get out of the way.

          The market does not exist to serve the needs of the startup community. Best believe, your business or product exist only because the market permits it. The moment she doesn’t care for you anymore… bankruptcy.

          BTW, all players face these same head winds so it’s plain stupid (no insults intended off course) to whine about foreign competition coming to steal your biscuit… abeg Rocket carrygo!

      • http://www.communitywealthclub.com michino

        You are right there, and i see danger in future with the local competitors if the trend continue this way…. in other words the market is endless to accommodate anyone with good innovations

  • http://njorku.com mambenanje

    The internet is open for anyone to setup a website and do business. Google, Facebook and Yahoo are the most used sites in Africa… why are people not bashing on them ? focus on your focus people and earn yourself a name and your family a living… the sky is large enough for all birds to fly.

    • chika

      You just took the exact words out of my mouth. There is space enough for everyone no matter where you are coming from. All that Essien does on twitter is to bash Jovago, its childish, he should get serious. Sometimes we get ourselves so occupied with the competition that we loose sight of our entire strategy, then our strategy now becomes the competition.Some countries have hundreds of hotel booking sites and everybody is fine.
      Lets also be careful not to send the wrong signal to the outside world seeking to come in with their investments

      • alex

        I have to say I totally agree with you. Stop hating the player just hate the game. No need to bad mouth rocket internet or jovago. May the best man WIN and WIN BIG!!

      • http://www.communitywealthclub.com michino

        On point Sir

      • BABA SULE

        WALAHI u re right .. the guy too dey fool inself … Dont be to proud else i bet u !!!! U might wanna go down .. ;( . #noBeef

  • http://www.gabrielshaze.com/ Gabriel Shaze ™

    Whoever gives the consumer the better product at the price they can afford + more convenience will win. I believe internationally backed startups and local entrepreneurs can succeed side by side.

    I guess we should just chase people back to their states of origin because they’re taking up the businesses and jobs that the indigenes of that state should have right?

    I’m tired of the bickering. Cut it out

    • http://blog.konga.com/ Ifeanyi Abraham

      Well, whoever has a bigger marketing budget, more innovative marketing ideas, better word of mouth, plus customer service will WIN…

      • http://www.gabrielshaze.com/ Gabriel Shaze ™

        Yep

  • Bezaleel .O. Ashefor

    I just fell in love with this guy.

  • http://www.essien.org Mark Essien

    I welcome Rocket Internet, but they are too focused on Hotels.ng abeg. Just let me continue building my product, if they feel they can beat us in customer satisfaction, number of customers or revenue, then they should focus on those things. All this noise making is a distraction.

    • http://www.gabrielshaze.com/ Gabriel Shaze ™

      “Want to be king? Beat the current champion and snatch his belt” At least, that’s how the boxers and wrestlers say it. Yeah, and the rappers too.

      I guess we know who the king is……..currently.

      • http://washlify.com Tomi Hassan

        jovago baby

    • chivuzo

      Mark, I’m beginning to think you feel so insecure and get so defensive anytime anyone brings up your competition. It’s open season bro, and healthy competition is good for everyone. You just do your bit (like you’ve been doing, and I commend you) and just let go of that exaggerated sense of entitlement. That’s my honest feedback to you.

    • Jimi

      You used to have the upper hand my man; but you kept talking and now he is a step ahead of you, again. This is business…build your company and let others do the talking!

  • http://ezeani.com/ Ezeani

    Moral of the story: everyone face your front ooo

    • http://www.gabrielshaze.com/ Gabriel Shaze ™

      Hehehehe. Farm for your farm

  • http://www.digitalcraftstudios.com Francis Onwumere

    alright everyone, you’ve read the memo – time to get back to work

  • Chukky Eboka

    Coca- cola and pepsi spent years bashing each other. hindsight research shows that they were better off pooling resources and creating market share and acceptance for their relatively novel product amongst the other brands of drinks such as lemonades. I’m sure i read that somewhere. There are 168 million nigerians. I would be hard pressed to believe than 1 million of those nigerians have successfully done a transaction online. the point is market penetration for internet brands is still low. Companies should be focused on working together to get the average nigerian online and buying rather than battling for a clearing in an almost limitless forest. Foreign or local the more forest area that is cleared in the shortest amount of time the greater the piece of the pie for everyone.

    • chizaram

      Well said.

    • disqus_lQclrQLxP6

      Hell no…fa fa foul. Adam Smith warned about this over 200 years ago. This ‘working together’ you talk about quickly becomes collusion and always ends up in ripping off the consumer.
      Will they work together and not fix prices?

      This is a non starter and please let us not encourage

      • Chukky Eboka

        well the idea and more pressing need is getting the average nigerian trusting the online ecosystem. when that is achieved then more aggresive competition becomes permissible and will help set prices at market levels and stress points. Also regulation will eventually catch up and help prevent or break up any price fixing or collusion. I really do not see the point fighting for a crust of bread in a field of wheat. The market is large enough for everyone. The struggle and working together is in building the infrastructure and trust for the online ecosystem to thrive

    • Mukhtar Oyewo

      Word. There is more than enough space to play.

  • tarebibi

    Very well said. I welcome the ‘international entrants’ forces everyone to up their game and hopefully will significantly reduce/stop this endless celebration of mediocrity

  • Samuel-Biyi ‘laolu

    Makes sense, Marek.

  • Chinelo Ngene

    The market is big enough for everyone to do business in, but there will always be one who becomes king. Look at CocaCola and Pepsi, ever wondered why Cocacola sells more, even though they seemingly produce similar products? Value creation + excellent customer service + innovative marketing strategies = WIN.

  • http://www.feleman.com/ Akin Sawyerr – Feleman

    Well said. Well said. I think we often miss the bigger picture here. THe markets and customers are more important that any one company. If someone is creating better value for the market I don’t care if they come from Mars. Its easier to quantify the benefit accruing the winners, much harder to quantify the benefit to society.

    Microsoft’s contribution to society is orders of magnitude bigger than their market cap. The same can be said for Google, Facebook, even Walmart. Think about it.

    Who built the platforms we use to build new companies? Many of us would not be able to do what we do without some of these companies and entrants that are vilified for convenience. We need to think a bit deeper before we throw around broad sweeping labels.

    Free speech comes as a price, one of which is a lot of noise to comb through. The noise can be pretty entertaining though.

    Good work Marek!

  • Andrew Airelobhegbe

    no one owns right to a particular business model, whether local or international. If you feel one business is too focused on yours, I think you made it too transparent for them to understand your moves because of too much rattling on social networks (social engineering)

  • alex

    All I have to say is when there is a game being played, football, basketball you name it, if you want to hate, hate the game and not the player. May the best man WIN and WIN BIG!!!

  • Prince Oluwasegun Abisagbo

    Marek!!! Oyinbo!… Interesting post…Rocket really has bad PR…im sure almost all local startups hate them..
    If you can change the narrative, Jovago might stand a chance….else a Konga would always beat a Rocket…even though they both spend foreign money

    • Jimi

      Even though they both spend foreign money and are owned by the same company, you meant to say?

  • AK

    Competition is great no matter where it comes from, it brings out the best from companies. I welcome foreigners who’s got the courage to invest in young and growing ecosystem, something most of our money bags don’t do.

  • @KoredeOyewoga

    For crying out loud.. we have a growing population of over 150million + here in Nigeria and there are still more than half of the potential customers that are yet to take a leap and initiate an online transaction because of trust and enlightenment… they are still coming…
    Everybody will get way too busy with their own fair share of the market that they wont even have time for twitter subs and lashing…
    We need more startups…more VCs..more foreign investors… and most importantly more job creation and LESS CORRUPTION…

    Kapish

  • BABA SULE

    @MAREK GOD BLESS U 100% WITH THIS POST … !!!!

  • chika

    Ok, am going to launch my own next week……www.jovagohotels.ng. Ghenghen ghenghen.

    The strategy is to steal from the 2 and create a mega hotel search.

    TC abeg am recruiting and I need angels and arch-angels investors. lol

    Lest i forget, please I need you to interview me as well.

    (anyone that registers this url is on long thing. no be me oo. na joke i dey oo)

    • Marek Zmyslowski

      Nice one;)

  • Dikachim

    Funny how the MD of a Rocket Company wrote the whole new testament and two thirds of the ancient and modern hymn book addressing “the kind of disputes Rocket Internet doesn’t get involved in”…

    At least I couldn’t recognize the names of about 50% of people who have posted comments. Progress.

  • Tunde Mo’ Aguda

    Nice article written by Marek, initially i use to be very critical of Rocket Internet, then after carefully analyzing the situation of things in the ecosystem, i found out that value is added one way or the other, not forgetting that the Nigerian ecosystem sky is indeed big enough for all of us to play in.

    One thing we must come to understand and accept with the RI approach is this, if i bring my money to your space, i should also be able to decide who i want to head operations be it Foreign or Nigerian. After all it is my money. But beyond that, i think the Rocket vs Konga face-off kinda triggered distaste for them.

    As for me, i think i am loving every moment of this, competition still brings out the best in us be it fair or dirty…………..

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  • http://www.shopandmall.com.ng/ shopandmall.com.ng

    the heavens are wide enough for every bird to fly and the oceans deep enough for virtually every creature to swim in. No two birds or air planes have ever collided for lack of space. Neither have two boats or ships collided for lack of space.

    There is too much room to play in Nigeria and the online / eCommerce space. I am so sure that we have not even seen the biggest players yet. All those we see now are their forerunners.

    Many were there before Google, eBay and Amazon that we dont even know their names today. They are gone into oblivion.
    Only the one who is myopic and vision less will stand and lash another.

    Get your own knife and have your own slice of the pie!

  • ayoolaajebeku

    Really time to get back to work. There are so many Nigerians out there that haven’t heard of our so called startups and we are here …. The most important thing is the customer and the genuine value we provide for them. So I say, let’s get back to work and solve problems.

  • adis

    Worried that a heavily monied competitor is entering a basically virgin market? Thats is a misplaced priority; and if I have to be blunt, showing lack of imagination. It costs so much to bring awareness to a service or market segment. More marketing funds to do that is better, even if from a richer competitor. Once the awareness is expanded, there are so many ways to bring a unique and viable perspectives for effective market relevance. I can immediately think of a few:

    1. Easy to port software for any hotel with computer and internet access in Nigeria to update room inventory and availability in real time
    2. System to track room rates of competing accommodations for better competitive price adjustments
    3. Regional focus that provides sharper and deeper coverage
    4. Disrupting the atrocious room pricing by opening up opportunities to smaller players and perhaps even non players
    5. Distinguishing content through more creative display and review systems
    6. Merging services (book a room and cheaper airport pickup integrated)

    There is a lot more where this is coming from. We need as many players as possible here and now and in all possible sectors. Deep pockets and broader experience are highly welcome. We can learn from each other and figure it out together. There is just too much scope for many winners as long as we stay creative.

  • http://www.printivo.com Olu’yomi Ojo

    1. Fight carefully. 2. Compete for customers only. 3. Watch MadMen season 6 and see what happened to Ted Chaough of CGC and Don Draper of SCDP.

  • josiahking

    Thanks for the info, well said history.
    http://parktelonline.com

  • SaintGermain Onwukeme

    Hello all, i find this particularly disturbing that some people’s response to rocket’s article(well, seems like a defence on behalf of them) is all so twisted and missing the point. Mark, sorry but you seem to be a little bit paranoid on your venture alone and that sucks, Simply put, every economy as much as i am aware of, tries to keep a fair competitive environment for businesses operating and by saying competitive i mean limiting a company’s market share especially foriegn ones in the bias of local growth.That’s a fact. The reason is, if rocket give the best products(really?, why can’t that be possible with the funds available) and other startups who are working with $50k are expected to compete with their $5m/$50m then people in the name of what’s good, WHERE is the competition? We’ve had this in the telecom sector and we know how worked out. There is nothing wrong with a foreign company operating anywhere but for the fact that we just allow anyone into our space is not done anywhere, growing economy or not. So, in a nutshell, i’m glad you cleared the air. Still doesn’t change what the company’s about.