I like free apps and services (who doesn't?) but I pay when I need a job done and I am unaware of a free and equally effective option. Consumer arbitrage can come from geographical constraints or knowledge constraints. Marketing tries to solve the knowledge problem.
The App Stores try to remove the geographical problem for services that can be delivered at internet scale. Marketing then has to solve for knowledge arbitrage. Digital marketing is in high demand in places where there is also no Internet access constraint.
Where there is access constraint, the means of creating awareness has to become very flexible. You most likely end up selling both access and your product. This is why I really don't understand why startups avoid African telco. Telcos are fighting churn as their biggest adversary
Telcos will sell for you if they see market fit. Many people will be surprised at the number of market experiments that telcos run regularly. They didn't get their numbers from being complacent. They understand the African customers perfectly and that is how they achieved scale.
Services to telco customers are not free. The customers pay for most of them. The great advantage of telco is the ability to extract micropayments from subscribers at zero external cost. The problem for third parties is that telcos now take the lions’s share when they partner.
That was the problem with the model of working with telco until telcos started becoming competitive payment companies themselves. Mobile Payments has removed the billing advantage telcos used to have as you can host the services elsewhere outside their infrastructure.
On the issue of knowledge arbitrage, something happened to me this week. I wanted to install Apple OS 11 and it required 25GB of disk space. I bought a product from the app store to help me uninstall apps, clear space and remove duplicate files. I paid $19 for this product.
An hour later, I found that the existing Apple OS (Catalina) had provided almost all those services for free!! I was very upset with myself for not doing proper research before buying. I, however, learned a lesson. People don't do research when needs are urgent. Best they ask.
This is what has made Google as big as it is today. People can ”ask Google” in simple sentences to get results. They can also ask friends and it is most likely friends who have used products that will recommend or condemn. I bought ALL my cars on friends’ recommendations.
People don't have time to also compare so much. This is where the best marketing and sometimes distribution wins with arbitrage. It is never the best built products that win, it is the best distributed or marketed.
Telcos have provided sub-par services but we still use them when there is little choice. It is, however, interesting how they changed with the existential threat of free OTT apps. If you don't have the money of Facebook, maybe try paid OTT apps to help telcos reduce churn.

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More from @asemota

22 Nov
Kill the idea that you MUST raise money to start a business. The money you raise is NOT free.

Raise only when it is the only option to grow faster and capture more of an opportunity. Some of the greatest African entrepreneurs I know bootstraped and took debt only when needed.
A friend mentioned last week that ”Caesar” or the tax man is a 32% stakeholder in every business. When you realize that even if you own a business 100%, 32% is really owned by the government who take their taxes, you try to keep as much ownership as possible.
The remaining profit is what you MUST share with other stakeholders. Employees are not going to just take salary, in most cases they share profits too. One of the most successful businesses I know in Nigeria is a chain of Bukas where profit is shared to everyone daily.
Read 8 tweets
21 Nov
Let's revisit this sachet thing. I didn't want what I wanted to say to be drowned in the noise of sentiment and vibes during the week.

”The Varian Rule” is what is at play with sachets.

”A simple way to forecast the future is to look at what rich people have today”
Attibuted to Google’s chief economist Hal Varian:

"A simple way to forecast the future is to look at what rich people have today; middle-income people will have something equivalent in 10 years, and poor people will have it in an additional decade."

It is also a strategic move by FMCG companies who suddenly find that the middle class has disappeared. They extend their product's lifetime and usefulness by creating economically affordable units. It is also sometimes VERY profitable to do so if you are smart.
Read 11 tweets
21 Nov
If everyone is shorting the Naira, doesn't it make sense to be long Naira? Or rather, long Nigeria.

I repeat, this is the best time to acquire Nigerian assets. I don't mean real estate oh! Companies, long term ventures and institutions.
This is best as a macro view rather than micro. I was thinking of something someone said this week about climate change and dynamics of Nigerian democratic shift. We are not putting climate change effects in a lot of our economic calculations yet.

We are reacting not proactive.
For Nigeria to survive, the government MUST start giving concessions from the exclusive list to capitalists with deep pockets. This is the time to build Nigeria for cheap and gain the benefits in the future. We didn't go far enough 20 years ago, let's try again.
Read 5 tweets
21 Nov
Most or the commerce in Nigeria is focused on import and then distribution. Even the manufacturers have to import a lot of inputs. I remember a project with a bank where we were looking to digitize most of the commercial flows and I realized that import is still a very big part.
A country that depends so much on importation for everything will never really grow. Most people import because the local inputs are not there or are not at scale. I remember Unilever with palm oil in the 90s. They could take up all of Okomu’s production and still need more.
Okomu could not afford to have only one buyer and that created the allocation racket. Many people became rich from just buying from Okomu and selling to Unilever. That increased the cost for Unilever and hence the final cost of product to consumer. That cost became uncompetitive.
Read 19 tweets
20 Nov
I heard something recently that made me respect @Chxta and @sbmintelligence more as they had written about it. Most of the problems with conflict we have in Nigeria currently are caused almost directly by climate change. We have lost arable land and our population is growing.
Their Jollof Index is funny by ominous. We laugh and make jokes about scarce onions but we are courting famine and total break down of law and order. What is annoying me is that the leaders in the private sector all know this yet they have no influence on the governing clowns.
The statistics don't lie. The events are not temporary. The misery index is high but for some reason, people believe things will just ”solve itself.” Revenues have dwindled and government treasury bills now have a negative interest rate. We are in a state of emergency but...
Read 4 tweets
20 Nov
Starting a business is now as simple as putting numbers in a spreadsheet to do a model. The easiest business to start are inventoryless service business where the products are based on personal skills.

I look at OnlyFans and I wonder if it is possible to have OnlyCustomers?
The closest to it already is Instagram. The problem is that Facebook is forcing commerce on something that was natively social and for entertainment.

Something as organic for personal services businesses only will make a lot of sense. Not the model of the current aggregators.
In Africa, the truth is that good artisans or service people do not lack customers. They only lack good customers and all of the processes around managing customers including records, collections and analysis. Payments companies are trying to do some of this but they shouldn't.
Read 10 tweets

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