This article was originally published on techcabal.com on March 27, 2014
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.
