The listing of online marketplace Jumia at the New York Stock Exchange stirred debate on the extent to which it is an African company that should qualify for the grand reception that it has received and its perceived benefit to the African technology ecosystem. As a debate with opinions as varied as the pundits who engage in it, I would rather dissect it differently and look at the era in which we are now entering where pure software plays are no longer sufficient to disrupt or add value to industries.
In 2011, well-known entrepreneur, investor and software engineer Marc Andreessen wrote an essay titled ‘Why software is eating up the world.’ It was very apt for its time and in the examples shared about the transformational nature of connectivity and having billions of people getting online.
In the case of Jumia and other marketplace platforms, I have read conversations where the uninformed question the need to raise what is considered, at a cursory glance, obscene amounts of capital for mere websites that can be supposedly spun off by a single developer. What I feel is not highlighted enough in these discussions is that front-end simplicity is often driven by a complex back-end. Furthermore, for truly transformative simplicity, this is accompanied by offline brick-and-motor interventions and human resources that help control more factors of production to deliver magical user experiences.
If you were to start an online accounting service for SMEs, you could pull that off with a small team, make use of digital advertising to acquire customers and grow the business to healthy monthly recurring revenue. This is the same for classifieds, jobs boards and a host of other software-led, software-only opportunities.
However, if you are pursing any opportunity that has the movement of people or things as part of the fulfilment cycle, the dynamics change drastically if you look under the hood. The consumers understanding of Amazon, from their experience online, is far removed from the controlled chaos of its back-office.
Alibaba's investment in loss-making logistics outfit Cainiao and commitment to pump in close to $15 billion 2017 to improve the network speaks to the fact that technology that end-consumers interact with, is but a part of a large complicated, often misunderstood ecosystem. Sometimes, deep pockets are needed to power through long-term opportunities by providing capital for physical infrastructure and ‘plumbing’ before technology can stitch it all together and unlock profit.
Njihia is the Head of Business and Partnerships at Sure Corporation | www.mbuguanjihia.com | @mbuguanjihia