Afrigather Disclaimer: Richmond Bassey contributed his playbook for progress in a down market to TechCabal. Bassey is the CEO/co-founder of Bamboo.
Blitzscaling is what you do when it is advisable develop actually, actually rapidly. It’s the science and artwork of quickly constructing out an organization to serve a big and often world market, with the purpose of turning into the primary mover at scale.
Reid Hoffman, American web entrepreneur. HBR, 2016
If 2022 shook the African tech ecosystem out of its slumber, 2023 will probably be a splash of chilly water on the face. Everyone seems to be speaking about how 2023 will probably be a troublesome yr amidst the shrivelling up of enterprise capital (VCs) and deepening recession.
With a troublesome yr looming, bearish takes are a dime a dozen. A story has coalesced: blitzscaling is dangerous. It’s underpinned by two assumptions. The primary is that solely VC is maintaining startups afloat by subsidising customers. And the second is that startups have prioritised progress at any prices.
Nevertheless it’s not so simple as that. Whereas the top of a budget cash period (which actually spilled over into African tech in 2021) is reining in probably the most egregious excesses we witnessed final yr—like constructing when there’s questionable demand for a product—it’s shortsighted to slam on the brakes and gradual every little thing to a crawl.
In a couple of phrases, I wish to supply some ideas on why being “default alive” should not imply lowering your corporation to a vegetative state. And maybe draw consideration again to the all-too current threat of turning into anorexic.
Everyone seems to be a genius within the crowd. If following the gang acquired us into this ditch, vox populi might not be the very best information to getting us safely to the Promised Land. Sure, because the equal of throwing every little thing in opposition to the wall to see what sticks, blitzscaling is unsustainable. And if a Collection A is behaving like a pre-seed, that’s positively an issue. However founders should scale and develop their customers, and African founders, particularly, shouldn’t draw back from blitzscaling if their ventures have the three traits I wish to focus on.
If you happen to don’t have product-market match, and also you’re nonetheless attempting to determine issues out with VC cash (traditional case of a Collection A appearing like a pre-seed), you’re actually going to face issues.
However there are two truths to confront right here: Enterprise-backed startups should attempt in the direction of quick progress, and develop past their house market to hedge in opposition to nation threat. In spite of everything, a startup that’s seeking to exit through an IPO within the US might want to unfold its income throughout markets, not having greater than 40% in a single nation (rule of thumb). The second reality is that nothing defines product-market match greater than quick progress. It follows then that aborting your progress momentum is the equal of terminating product-market match.
In essence, how ought to you consider progress when the cash faucets have been turned off? Listed here are 2 ideas that will help you discover your reply:
- Do you’ve got sticky demand with a stable base of consumers?
- Do you’ve got 1,000 true followers?
The quantity will not be literal as it isn’t sufficient for a startup, however the perception holds true. If you happen to discover that you’ve a stable, and rising base of consumers in a large-enough market, who persistently belief you to ship options that meet their wants on a recurring foundation, it is best to select to develop and serve extra individuals like them.
Powerful market situations are the proper take a look at to find out how a lot product-market match you’ve got. You realize you’ve got sticky demand when regardless of robust market situations, there’s nonetheless sturdy demand on your product.
For us, satirically, it was 2022, when the US inventory market bubble popped, that made us extra assured within the stickiness of our product: Nigerians wish to put money into dollarised belongings, irrespective of how the US inventory market is acting at that second. We’ve now seen two extremes. In 2021, we had extra customers who have been aggressive day merchants. This mirrored the frothiness of the US inventory market the place meme shares, like AMC, took off. 2022 was a wholly totally different image.
However we additionally started to find an fascinating development
When the US inventory market plummeted, Bamboo customers saved buying and selling, and new customers discovered their method onto the platform. That is counterintuitive if you happen to maintain a dim view of consumer-facing fintechs. But, it gave us a glimpse into the motivations behind Bamboo customers for utilizing our product. We might establish a stickiness to the extent that regardless of a lower in US shares costs, customers needed to maintain their cash long-term in dollarised belongings as a substitute of naira-based belongings.
Our second perception was that new retail buyers in Nigeria weren’t deterred by low inventory costs. They believed it was higher to begin saving in {dollars} now versus later.
To discover a path for quick progress when the cash faucet is not operating, the primary query founders have to reply is, “Do I’ve sticky demand with a stable base of consumers?”
When you’ve assessed your demand, how do you earn your customers’ loyalty?
The insights we gained from the 2 totally different market realities drove us to create a brand new product (Mounted Returns) to permit Bamboo customers to speculate however minimise publicity to dangers. With Mounted Returns, we’re demonstrating that we perceive our customers’ motivations, but in addition that we care sufficient to supply some “safety”—and make ourselves extra sticky!
The important thing inquiries to be aware of listed here are, what are the differentiators that preserve your customers with you? How do you guarantee they don’t go elsewhere? It’s tempting to attempt to take the fast route and purchase buyer loyalty. However the issue with shortcuts is that they will trigger wildfires and shock. As an alternative search for cost-effective methods to serve the direct and adjoining wants of your clients, however don’t stray too far.
For instance, at Bamboo, we place a powerful emphasis on consumer training. Seventy p.c of Bamboo customers have by no means invested in US shares so that they want instructional content material. Our content material library and training partnerships allow us to fulfill an adjoining want—investing training. Whereas our excessive bias for delivering high quality customer support forces us to do one easy factor very effectively, which is delivering an app that works and is easy and intuitive.
We don’t fixate on a market downturn. Our purpose is to create a product that permits us to all the time be a trusted monetary associate in sizzling or cooled off markets.
How do you develop your buyer acquisition technique with out sinking in new prices?
Upon getting that consumer base, and also you’re assured you possibly can preserve them, it is advisable enhance the highest of funnel however not get killed by your buyer acquisition value (CAC). How do you do that? Search partnerships that diversify acquisition channels.
If you happen to’ve ever heard the phrase, “Distribution is king” you’re midway to understanding why partnerships work. The reply is surprisingly easy. It’s leverage.
The insights we gained from the 2 totally different market realities drove us to create a brand new product (Mounted Returns) to permit Bamboo customers to speculate however minimise publicity to dangers. With Mounted Returns, we’re demonstrating that we perceive our customers’ motivations, but in addition that we care sufficient to supply some “safety”—and make ourselves extra sticky!
We don’t fixate on a market downturn. Our purpose is to create a product that permits us to all the time be a trusted monetary associate in sizzling or cooled off markets.
When you’ve assessed your demand, how do you earn your customers’ loyalty?
The insights we gained from the 2 totally different market realities drove us to create a brand new product (Mounted Returns) to permit Bamboo customers to speculate however minimise publicity to dangers. With Mounted Returns, we’re demonstrating that we perceive our customers’ motivations, but in addition that we care sufficient to supply some “safety”—and make ourselves extra sticky!
We don’t fixate on a market downturn. Our purpose is to create a product that permits us to all the time be a trusted monetary associate in sizzling or cooled off markets.
Anorexia is a psychological situation characterised by an intense worry of gaining weight and a distorted notion of weight. Individuals with anorexia place a excessive worth on controlling their weight and form. As we head into what is definite to be a troublesome yr, it may be tempting to excessively trim fats. For growth-stage startups assembly a transparent want with sturdy demand and a transparent and sizable market, it’s the equal of wanting on the ditch whereas driving, as a substitute of the highway.
This isn’t to say the yr will probably be clean crusing. It clearly received’t. Client-facing fintechs will particularly be in a troublesome spot. However make no mistake about it: startups can’t afford to play it protected with their progress technique. Founders ought to take sufficient possession of the scenario to not draw back from large educated bets.
For us, it’s a matter of how we take a look at model fairness: we’re aiming to be the trusted monetary companions of Africans who begin off investing modestly, placing down $200 of their first commerce and rising in confidence and wealth. We can not afford to recklessly slam on the brakes. Nor do you have to.
