Silicon Valley startups’ models not ideal for everyone
I don’t know who needs to see this, but modelling your startup according to Silicon Valley startups may be a terrible idea. As the days unfold, we realize more and more that many of them did not survive the 6 weeks’ lockdown despite all the funding and ‘global reach’.
Most of them only survive because they are sitting on a huge financial bedrock and stable economy with huge government support to cushion their bad business practices.
To me, the right thing to do is to find out what running a business and what success means in your own locality and run your business successfully like that.
Instagram founders raised $500,000 while they were still conceptualizing Instagram. That’s about 200 million naira for a non-existent or untested product. They didn’t even see any sort of revenue for years until Facebook acquired Instagram. If you try building a picture upload and filter app in Nigeria, you will be met with failure. Where will you see the 200-million-naira funding? Not to talk of running it for years without revenue.
Traveling across different countries has shown me that the amount of money that makes up wealth is different across countries. $10,000 per month may make for a stable income for a single person in the US, in Nigeria for instance it could be $2,000.
So if you are doing a business that fetches you $2,000/mo in Nigeria, you are very successful already. You don’t need to over-stretch the business into losses in an attempt to expand just so you can start looking valleyish.
Many e-commerce businesses in third-world countries are collapsing because they are trying to run it like those in Silicon Valley such as Amazon, they want to sell everything instead of focusing on the niche that is workable and profitable.
For Amazon’s model to make the first profit, they needed massive government financial support for 14 years. If your ecommerce store is modelling Amazon in design, structure and operations, I can tell you the future right now: ko le werk.
Growth and the desired massive expansion should be done at the pace and strategy that resonates with your locality. Businesses don’t have to run on losses for years, to what end is that? Profit can be made from day one and explosive growth can be achieved without being pyrrhic.
Partnership as a strategy is very powerful, but the concept that you must give away large parts of your business in order to grow is contrived. It works but only in cases where it is necessary.
Many startups have died because they tried to split the business ownership with someone they could have just hired and fired later. Many cultures around the world aren’t even primed for such scenarios, yet businesses thrive there.
Who is Dangote’s co-founder?
In conclusion, find out what success means in your own region and achieve that first using the strategy that works in that locality. I will end with Bob Marley’s words “How much is a lotta money to you?”
Share and tag people, it could save someone some millions.
Dave Partner is one of Africa’s most sought after software developers. He has trained over 100,000 software developers on the continent and continues to inspire and empower the new generation of Africans through his software development training institute, Braintem.org.