Any Nigerian Tech Companies Building Products/Services for In-house Use and then Commercialization---the Amazon Model


#1

I recently read a very interesting analytical piece on the aggressive strategies being employed by Amazon to give their customers the best experience and how they are externalising such strategies (be it an in-house product or service) into commodities that other players (tech companies) can deploy in exchange for a fee, opening up an additional revenue stream for Amazon: the perfect example is Amazon Web Services which the company started to solve its cloud computing needs before commercializing it to serve other companies, bringing in about $3.6 billion in revenues according to their latest quarter earnings report; other examples of this model include Fulfilled by Amazon which other online retailers use;the Amazon Go still being tested among their users. Another company that commercialised an in-house product/service is PayPal whose anti-fraud system is today known as Palantir (which was rumoured to help capture Osama Bin Laden with its powerful data analytics tool) and is a company on its own.

While it is good to outsource a lot of peripheral stuff to focus on the core components of your company (in Nigeria), can this Amazon model be replicated by some tech companies here (when they get big) to launch new products/services that may end up being separate revenue-generating entities/companies for the parent companies? Considering one of @mark recent tweets on whether one can set up another company parallel to act as a competition to one’s parent company. A likely potential is KOS from Konga which the company initially started to serve its needs but is now available to other online retailers; Hotels.ng’s Spot.ng could also follow this model.

Are their other companies in Nigeria with in-house use-driven products/services that can potentially end up being commercialised to serve other companies, and possibly become companies on their own? And is this a better model for starting up new companies by parent companies (since the in-house use of such products/services provides an extensive feasibility framework/simulation of the potential market outside) when compared to just establishing a new company whose value proposition was not utilised in-house?


#2

I like your line of thoughts. Unfortunately, we are not there yet. The western economy (whichever the sector) still dictates the direction of global developments. Even when the need for a product or service becomes extremely evident based on our geographical needs, it is almost impossible to seek the approval of current investors. Only a company that has an unlimited pool of funds and/or resources would think about building a parallel product whilst still trying to build its current product. @mark spots.ng isn’t exactly a parallel product. HotelOga hospitality startup would have been an ideal example in this case. Besides, not focusing on a primary product might send bad signals about the current state of a business.

Also, the amazon web services which you made reference to was developed as part of the long-term strategic plan to avoid tax, achieved by re-investment. IMO, I think companies build parallel products when it feels the current product has reached a saturation point (diminishing returns) and there is a critical need to rejuvenate investors trust. Facebook, Google and Amazon are all good examples. These companies stay relevant by building (or acquiring) products that are sometimes not related to their core business. This is the only way they can constantly increase the value of the company.

My point is, parallel products don’t just come as a result of a company needs. Rather, it is mostly fueled by the need to remain relevant within a sector. Personally, I feel what we need to do is to collaborate more with each other (i.e. open up APIs), create products that depend on other products without ulterior motives and most importantly DISRUPT.


#3

The netsob guys told their story of releasing (still in beta), their SMS platform. Hope this possibly qualifies :slight_smile:


#4

Of course, the distant vision of launching a new product or service by any company would be to remain relevant in a given sector. However, if such a company has a need for that product or service in-house, it’s one of the most effective ways to test it over a period of time and gather enough insight (simulated) on how potential customers (outside the company) will interact with it in order to fix any loopholes before rolling it out: which could help reinforce the company’s relevance in the sector.


#5

Konga and KongaPay?