Thread by @realkelvin07

Let me explain what a tech company in Lagos did recently to their business model.

I mentioned Lagos because they have not expanded outside Lagos.

Their VC investors, friends of the founders and Customers who follow me will understand what I’m saying.

They provide food packs

and laundry service on a monthly subscription basis for the customers. When they first started, they realized that focusing on tertiary level of the value chain, and the tech interface that enables it, means they have tiny margins, lack control of supply chain, and are gifting

their profits to the third party vendors that provide these services especially for food for their customers.

So in 2020, the company bought a warehouse to turn into a factory for doing the procurement, and cooking of the food packs they deliver to their customers daily.

So the business model has shifted from being a tech interface and a logistics delivery (tertiary level) to full secondary & partial primary.

Over time, their board and management will realize that at a certain scale, they have to involve themselves more in the upstream primary

end of the supply chain, only scale will teach them this lesson.

Point is: tech is only an enabler for the real sector, and a tech company that doesn’t that doing vertical integration in the real sector will increase margins and improve scale is new to the markets.