We adopt mantras and ideologies from markets considered more advanced and opinion leaders who have seen some success. This success could be from running a business to exit, high valuation, or backed entrepreneurial teams that have achieved the same.
‘Move fast and break things’ as popularised by Meta founder Mark Zuckerberg and ‘Blitzscaling’ as coined by internet entrepreneur and venture capitalist Reid Hoffman, come to mind. These and others form an unwritten gospel that entrepreneurs and investors look to as playbooks.
Context is important. Without it, understanding is limited, and any strategy born of this deficit will be wanting and likely unsustainable. Venture capitalists and increasingly downstream at the angel investor level, the pursuit of hockey stick metrics has turned insane.
Entrepreneurs are now building to flip, many times knowing that the fundamentals will not hold at scale, either from poor unit economics or lack of any defensive moats.
These two factors must be understood and juxtaposed against the challenges that present unique opportunities across the continent. We cannot have pure technology plays for our most pressing needs, at least not yet. It will take more in-depth value chain participation to realise the business impact we need and the spill-over benefits.
Technology is commoditised, and access to data and assets is the only edge. In financial services, the hard work is building physical agent networks that form the core of distribution. Solid ground networks hinge the success of many innovators in this space.
In agriculture, connecting farm-to-fork may be innovative, but defensibility eventually lies in cultivation control, literally getting your hands dirty. In logistics, it is in the density of warehouses, pick/drop zones and vehicles controlled.
In mobility, orchestration of diversified fleets on an asset-light gig-work model is en vogue, but long-term sustainability lies in disruptive innovation on asset ownership and staffing.
All this points to operational access and command, which many startups are unwilling to take on, a situation that I find symptomatic of the fact that it requires a lot more time and capital.
The trend you will see soon is technology players shifting into deeper value chain engagement after reaching a certain size. My take is that entrepreneurs know this is the path but have to hide their true intent in the early days to raise on popular narratives.
Perhaps the market correction happening will restore balance in the perspectives of the minders of capital towards models that have asset acquisition, consolidation, and optimization as central to success. Technology remains an enabler.
Njihia is the head of business and partnerships at Sure Corporation | www.mbuguanjihia.com | @mbuguanjihia
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