what's in your magic quadrant?
So usually when i find some interesting posts on twitter, I’m the first to screenshot and share with my friends who have interest in business in Africa. CF is one of such friends. He’s currently a management consultant with Accenture and will no doubt be receiving an angel investment from me for whatever company he starts in the near future. If you see me waxing lyrical about any healthcare plays and how they’re such great investments, it’ll more than likely have something to do with him. Anyway, I saw this posted by @docolumide and sent to CF for comments.

His response below:
[2:40 PM, 8/21/2019] CF: Hmmmm this is a different magic quadrant than my magic quadrant. We will have to discuss this one sometime
[2:40 PM, 8/21/2019] CF: I don’t know if I fully fully agree with it. But interesting perspective
[2:40 PM, 8/21/2019] CF: You can share your thoughts too via voice note on this.
I sent CF a voice note, which i can’t attach here but the following basically paraphrases my thoughts:
I understand where @docolumide is coming from but he’s using new age type models (I should’ve just said technology focused companies) for this magic quadrant. And maybe Doc should’ve made that clarification too because Dangote is probably in the “death zone” according to this chart but his business is definitely not dying soon. He’s been able to figure out the true market in the countries in which he operates and executes flawlessly. E-commerce hasn’t been primed for this market and thats why DealDey, Konga and Jumia currently occupy this “death zone”. Andela is a success for a whole number of reasons including the way their model works and who they’re serving. Are they really an African company? maybe. they’re solving a problem for Africans— unemployment. And an African is a co-founder. but they’re not necessarily serving the African market. thats not their raison d’etre. no doubt they’ll be big though and in the future, these tech companies will be winners but they way traditional business is done can’t be ignored. We definitely haven’t reached where companies can ignore being “operations heavy”. If you ignore that and move straight to “software heavy, operation light and asset light” if you’re not hitting a global market and looking to scale crazy fast, then you’re not playing the right game. *chatting shit for about 3 mins* As an investor, I’d want a healthy mix of both tech businesses that can scale very fast and companies that serve the mass market and serve their most basic needs like Dr. Ola Brown indicated in her article. *chats shit for another 5 mins*
CF has a tendency to send 23 minute voice notes explaining his perspective and I’m glad he didn’t with this one.
[3:10 PM, 8/23/2019] CF: So in response to your voice note I have a few comments and I might send VN when I’m off vacation but basically I’m not sure I agree with Twitter quadrant guy chale
1.) send that guy @NaijaFlyingDr article on market sizing he needs to read that. He probably reading too many blogs and books from Silicon Valley tech titans and seeing diagrams there and created his own. Not misguided but out of context for Africa even for tech companies. That advice he gives most likely than not won’t serve a local African entrepreneur well
2.) im sad to say but Andela is not a true African company in this sense: they really don’t sell services to African customer whether b2c or b2b. They sell knowledge and talent and they just so happen to that to international companies. The reason they raise so much money is they figured out how to massively cut their “cost of goods sold” while still providing great value and quality to their western clients. They are no different than Apple that produces iPhones in China and sources cobalt in Congo. Apple can keep its COGS low and keeps charging high prices to keep margins high and Wall Street loves that (although now that’s under threat with the new developments in Asia and poor stability in Congo but that’s talk for another day). The raw material for Andela is talent and they are sourcing that cheap in Africa and refining that raw material through their training program then Selling that at exorbitant prices relative to their COGS but that price is still a bargain for their customers who might currently be paying 2x for that talent. So using Andela as example for an entrepreneur building products or services to actually sell to local customers is misguided and little ignorant.
3.) tell this my brother to speak to Jason Njoku who is planning a massive operations play to scale his company to one that can be acquired for $100mil. Jason runs a tech company but is planning to invest millions for a sales force of over 500 people. According to my quadrant guy that will be a bad play but I’d rather bet on Jason on this one than twitter quadrant guy and I think Jason will win outright.
That’s my short not too long rant hehe *end of CF message*
So there’s me who’s kind of in the middle trying to see both sides and not offend anyone and theres CF who thinks Doc is off with this one. I’m pretty sure Doc has read Dr. Ola’s article and knows Jason (from what I see on twitter).
I’m glad for my smart friends.
Article List—Articles I’ve read in the past 24 hours or so
The mystery of market size in Nigeria (referenced article)
From Zero to IPO: How Growth Needs to Evolve at Every Startup Stage
Pinky Cole's Quick And Delicious Seafood Salad Will Change Your Mind About Eating Vegan
How Private-Equity Funds Can Artificially Boost Their Returns
Russia’s murky business dealings in the Central African Republic
Better.com Raises $160M Series C At $600M+ Valuation To Speed Up Mortgage Lending
Nine billion cedis tied up in Ghana after overhaul of banking industry
Nigeria: Epic political blame game follows $9bn judgement debt
Meet Mark Essien, the founder of Nigeria’s biggest hotel booking site
Podcasts—Listen to them!
Sports Wars— If you want to know about the different sports rivalries that have existed over time, this is the podcast for you
Books—Still reading my 20 pages a day. Consistency is the name of the game
Still on Merchants of Debt. KKR is a different type of company yo. Honestly, read this book to get the full scoop of how financial alchemy started with this private equity industry. Watch a bit about KKR co-founder, Henry Kravis here. Man’s drive is phenomenal.
As always, happy to receive feedback on my writing and what I could include in this newsletter. Ekow asked me what this newsletter is suppose to be because there’s no real structure (🙄🙄🙄) to it but I said “Yea I’m not writing thesis here boss. From head to paper. If I say I go spend time on am dier it’ll take me longer. Think of it like making an impromptu speech. You no really get time think about am better 😂”. Good, so now you also have a good idea of what this is. And please do well to follow Dr. Brown, Doc Olumide and Jason Njoku. You’ll learn a ton from their tweets and twitter chats with their followers. While you’re at it, follow Big Chief too.
Blessed weekend and remember: “Until the lion learns to write, every story will glorify the hunter.”