Yikes! There seems to be another major downsize. First Jumia, then iRoko, now this. What’s going on with these guys?
If it’s true then unfortunately the bubble has busted or should l say “currently busting”. Damn!!! I was kind of hoping they all had thier IPOs so that I can dump their toxic stocks on some unsuspecting magas before vanishing into thin air. I guess I have to look for another con. Any suggestions? Naija Darkweb?
Oga una don start again. Where did I mention hating anything? Una just wan hear word from my mouth…
You did refer to their stock as toxic, and implied that you owned a few of those. For a company that has so far been privately funded by institutional investors, you definitely want us to “hear word” from your mouth.
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I did not imply that and do not own any of the stocks. The way bubbles works is that they have to IPO so that Agberos like me can buy thier toxic stocks and dumps them asap on unsuspecting magas. You guys sha want to drag me into controversy again. Trouble sleep yanga go wake am…
Let me explain what’s going on and why these developments should concern anyone who has ‘skin in the game’.
Q. If it’s not working out for the big guys (Iroko, Dealdey, Jumia etc), are there macro factors at play ?
A. I think this can’t be just execution issues (across various startups) but instead the market is not fully there. Interesting that @sop_DDy asked a question earlier on about middle class and that’s what I suspect is happening here - People don’t have the disposable to buy what startups are selling.
Take a look at this one chart from The economist last week. The article titled ‘Africa’s Middle Class: Few and far between’ is also linked.
Now I can’t help anyone to think. However this is what I think when I hear these layoff reports:
- Some people are going to have no jobs. They have families to feed.
- If the big boys are laying off staff due to macro factors (like I suspect/The economist thinks), what does it mean for my startup.
- Is there a correction somewhere in the market, if so when can that be expected.
So @Tola this is not time to pop champagne and gloat that people/startups are in trouble. Like seriously I know people can be ‘keyboard gangsters’ and ‘internet Warriors’, but are you also a socialists that wants all business (which you didn’t start) to die?
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It’s largely the economy and a president who really has no clue on how to run a modern economy.
Politics eh? Government has nothing to do with the private sector issues.
Bros, please no sentiments. One man’s loss is another man’s gain. Startups die everyday and It’s part of the game. If Iroko, Jumia or Konga dies today, the world will move on and within 6 months everyone will forget that they ever existed. The people working with them will get new jobs and life will go on. If they cant find jobs in the startup space, they will retrain as accountants, doctors, chefs and whatever they can find their hands. Since most of them have tasted the startup life of overpriced salaries backed by pension pots from Afghanistan, they will go ahead to kickstart their own startups.
Bubbles bursting is good for everyone as its the mother of all disruptive business models. If all the telecom companies did not go burst after laying expensive fibre cables around the world, we all still be using dialup Internet. Unfortunately its sad for the founders but they have to see it as another lesson learnt.
So Bros, I will be popping champagne to see businesses die left and right as there is always money to be made in the midst of chaos. After all, true capitalism is all about the last man standing…
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Seriously? Enlighten me
Actually you’ve made loads of good points and I can’t fault them. I especially like below quote from you, because while fundamentally true, also shows that I’m right to believe you’re happy to see all business ( which you didn’t start ) to die?. Good luck with that.
Growth is not how many people on a companies payroll, Nigeria is a harsh country economically… & For startups to survive, running Lean should be a culture not an option…
The companies laying off are learning these lesson the hard way…“that the number of staff doesn’t equate to the amount of cash you will make”
Laying off maybe hard but its a smart survival move @markessien made such cuts and came up with what he called an “all star team of 9 people” after hotels.ng ran out of money…he said the 9 man team made more money than the previous team combined.
If I go along with your logic, it means that these companies laying off are not executing properly and are now facing the harsh reality.
Like I said earlier and I quote again, I don’t think this a simple operational issue. For you T
to start quoting Eric Reiss and say go ‘lean’, or use one founder as a proxy that all is well in the market, doesn’t buttress your point.
I personally don’t have any data points to judge why the various firms are laying people off. But I’m inclined to lean toward The economist point about the economy & not your view of ‘lean’ is the problem.
I think it’s a combination of the two, the market is not fully ready and a lot of these guys have operational issues.
I think you’re right actually. Of course there’s likely to be more than just 2 factors at play, but it’s fair to assume those 2 will likely be the bulk of the cause of the layoffs.
My take on the operational issue is that the guys & girls in these startups are not just empty heads, that don’t know how to run a firm. But by the very nature of startups, where you’re breaking new grounds and experimenting a lot, you will experience failure. That’s normal. What’s not normal is for someone to say, ‘hey look at founder x, he’s knows how to run a firm’ or say 'founder x has heard about ‘lean’ and the others guys have not Now that’s just false logic masquerading as good logic.
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By the nature of the business, they were already against a strong headwind. So many things stacked against them. You have highlighted the ‘bulk’ but just imagine Amazon broke new grounds but didnt need to create everything from scratch i.e. delivery
It is easy to blame poor execution but that does not even begin to touch the story and that would be very simplistic.
Plus the macro/micro forces at play, operational/logistical issues they had to contend with, the almost 'total lack of infrastructure in Nigeria is the main killer of online retailers. There is no hope if we cant get the payment system right!
Excerpt from the techmoran piece…
“Most of the affected departments include the Ops, Logistics and the Sales teams and the firm has reportedly closed down its warehouse in a move the insiders say might be pushing the firm into an eBay style marketplace or classifieds to take on the likes of Kaymu among others”
Before i forget, IT IS WELL!
Dealdey’s biggest problem is their unwillingness to use customer feedback to improve their business.
where does one start from? some questionable vendors offering problematic products and services, long delivery period (if i order from amazon the product reaches me faster than Dealdey), removing customers ability to review products, etc.
Many Nigerian businesses need to learn to respect the power of the customer and use market research services.
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There is nothing like good logic or bad logic in business…field experience defines…results define…experiments, market, users or consumers endorses or scraps…
And my finger on Mr x doing this or that and getting this or that was not an isolated case of better judgment but a result of EXPERIMENTS.