Technology

Doing the hard things for your new enterprise

farmer

Summary

  • Competition springs up daily with perhaps slight differentiation in the bouquet offered or an edge in customer service.
  • A business needs a defensive moat that protects it from commoditisation, especially where everyone has access to the same marketing tools, product roadmaps, and an increasingly friendly capital-raising environment.

I often mention this truth to younger entrepreneurs starting on their journey. The last decade has seen it become easier by several factors to start and grow a business. Stripe Atlas has helped thousands of founders from more than 140 countries form their companies in the US state of Delaware.

Norebase promises to help incorporate, get a bank account and register intellectual property in any African country. Closer home, the eCitizen platform makes it easy and affordable to register a business.

Riding on the rails of many fintechs, you can practically collect payments from any customer that you reach. Platforms such as Facebook and many local variants have made it possible to reach potential customers. Most value chains have been positively disrupted.

Access to services and resources is faster and more affordable, meaning more people can participate directly in the process of value creation or arbitrage.

The downside is that commoditisation quickly follows, as components to run any service or create any product are readily available.

Competition springs up daily with perhaps slight differentiation in the bouquet offered or an edge in customer service.

The API economy is great. There are many founders and businesses, running after known and emergent opportunities, often with the ambition to scale out to as many countries as possible, especially so in Africa where there seems to be a running narrative that a one-nation operation is not good enough.

A business needs a defensive moat that protects it from commoditisation, especially where everyone has access to the same marketing tools, product roadmaps, and an increasingly friendly capital-raising environment.

Marginal savings across any value chain add up at scale, as any hop or intermediary is a cost centre. It is okay to leverage as many integrations as possible to build quickly, iterate and hit product-market fit.

In the same breath, I offer the insight that post-product fit - businesses that hope to operate profitably at scale - must look for marginal gains unlocked by doing hard things and building moats.

In fintech, that may mean getting licences in core markets for direct localised compliance. In retail logistics, that looks like investments in warehousing and dispatch centres. In mobility, it may be building up an owned fleet and auxiliaries like garages while in agritech, holding land leases and value addition facilities.

Starting is easy, sustainability on defensible unit economics is another thing.

Njihia is the head of business and partnerships at Sure Corporation | www.mbuguanjihia.com | @mbuguanjihia