Five forces for startup success, by Bernard Avle

An interaction with Jason Njoku, founder of IROKOTV

Jason Njoku is a man on an upward trajectory. Named as one of the 50 most influential Africans by the Africa Report, one of London’s black men of power in 2012 and with his company recognised on Forbes’ most innovative list, his company has become the ‘darling boy’ of venture capital funds from all over the world attracting over US$25 million in investment since it was founded in 2010.

His business model seems rather straightforward: buy the rights to stream mostly Nigerian (Nollywood) movies from basic movie makers, tidy them up and stream online for a growing audience (predominantly) Africans in the Diaspora who value African movies enough to pay for it online.

The business started as a YouTube page, Nollywoodlove, which streamed about 200 or so movies to up to one million viewers. It now has its own platform which has impressively migrated from a free advert-only revenue model, to a paid subscription business that grew up to half a million active paying subscribers in six months. 

Some of the best known companies in Africa are either the extractive giants or the telecommunication behemoths.  IrokoTV is, however, a new kind of company. It is in the western dominated internet-technology space and more importantly, was founded by a second generation African, establishing its footprints from Lagos to Johannesburg, Kigali to New York, and is still expanding.

With such an impressive repertoire and reputation, one could be forgiven to think Jason Njoku would be a difficult man to meet or a complicated person to engage. Both assumptions were wrong.

Apart from his imposing physical frame, there was nothing neither sophisticated nor unusual about this fast-rising technology entrepreneur.

I gleaned five powerful forces for startup success from his story.

 

Strength of simplicity

Great startups are able to make sense of complexity by keeping things simple.

Rushing from the Citi FM Studios in Adabraka to the Movenpick Ambassador Hotel about five minutes away to moderate the MTN-Business World Executive Breakfast, I was pleasantly surprised when I first met the 33-year-old entrepreneur. His simplicity struck me. 

Later on, after my 40 or so minutes interview with him before an audience of about 100 business leaders in Ghana, I found his answers humorous and practical. 

One thing was clear from our interaction. This was a young man who knew how to keep things simple. No flowery words, no airs or attempts to sound philosophical, just a plain talking straight talking young man, who chose to use personal anecdotes to illustrate his point on many occasions.

People who succeed at the highest levels of business need two allies; simplicity and clarity. The kinds of decisions that need to be made at the level of business require a clear sense of what matters and what does not. It also demands a focused appreciation of the import of the questions and humility to admit, “I don’t know,” if that is the simple truth. 

In his answers to questions as in his approach to business, Njoku shows a clear sense of what his intentions are. And in analysing situations, one gets a sense of ruthless clarity of purpose even in chaotic industries. Neither ambiguous nor dithering, he knew what he wanted to say and they said it clearly.

 

Clarity of clairvoyance

To succeed as a startup, one must see where the market is headed.

We are told successful entrepreneurs see opportunities where others don’t. Njoku’s understanding of the African content space is absolutely clear.

The African giant in the media content space that IrokoTV occupies is South Africa-owned DSTV with about eight million paid subscribers and over US$800 million in annual profit.

But not many Africans can afford the DSTV subscription and with some 700 million GSM phone lines on the continent, many of which are getting smarter, he reckons that building a platform for great content at an affordable price is the key to owning the future of African eyeballs.

Most people I talk to say “the market is not ready for (the kind of investment) you are doing,”and “it doesn’t make sense.” What I tell them is ‘one day it will.”

This is the hallmark of a successful entrepreneur, which is to see the opportunity where others only see blockades.

“We have an opportunity to create great content at an affordable price. If we can do this in this unready market, what happens when the bandwidth is more and the phones get smarter and the market is ready?” He asked in response to my final question.

Internet startups like many successful startups, exists in so-called white spaces-that exist but are not obvious to the naked eye. Our young entrepreneur possesses the clarity of vision needed to succeed at the highest level.

He is building a kind of DSTV2 at a rate faster than even the industry leaders could anticipate.

 

Cash in the chaos

The ability to create a market out of the gap is the true prerequisite for startup success.

My Marketing Professor at Warwick, Nigel Piercy liked to say, “There may be a gap in the market, but is there a market in the gap?

Nollywood is jungle. I have been to Alaba International Market (the distribution centre of Nollywood Movies) in Nigeria, with its vastness and dark alleyways.

Jason is not kidding when he says, his ignorance and lack of expectation turned out to be advantageous in his first official trip to Nigeria. This is a distribution market where film makers and pirates coexist and where vigilantes are hired to protect one’s property.

In the words of the woman whose story brought him into the limelight, Sara Lacey (formerly of Techcrunch), “unlike Hollywood where the producers reside in glamorous offices and pirates operate in the shadows and basements of the Internet, in Alaba, the content creators and those destroying their hopes of revenue reside in the same place, selling the same product side by side.”

Add to that, intellectual property laws are either non-existent or simply ignored when it comes to content usage on the continent. Many movie makers and musicians are wallowing in poverty as their content is gleefully exploited by parasites struggling to survive.

To create a multi-million dollar company using content produced in this jungle is not just impressive, it is astounding. And for a chemistry graduate from Manchester University who had travelled to Nigeria only once prior to start up to make not only sense, but money out  of the chaos, speaks to immense creativity, practicality and dogged tenacity.

Jason has an easy gait and a deceptively laid-back aura that could be mistaken to be that of a pampered city boy. Beneath that sheath lies a doggedly determined and incredibly hard-working young afropolitan, who is “stupid” enough to try what many successful businesses people would consider an impossible minefield.

His story shows us there is money to be made amidst the madness and a lot of cash to collect in the chaos. Messy markets can be some of the most high growth and profitable in the world if approached with the tenacity and practicality needed.

 

4. The discipline of self-denial

“Startups don’t die, they simply commit suicide”

Young entrepreneurs in general and African startups in particular need to learn how to manage their initial success.

One worrying global statistic for venture capital supported startups is that 80 per cent of them fail within the first few years.

 Jason tells the story of one Nigerian filmmaker whose $40,000 movie grossed over $400,000 in profit after a year.

Thinking he would reinvest the profit into the business and produce a bigger project and possibly build a movie brand, he was shocked to realise that the guy chose to buy a hotel with his proceeds and hope it would become a store of value.

Many initially successful startups have a limited horizon from where they operate and a restricted conception of what success means.

For many Africans one-man business owners, after an initial round of success, and a few thousand dollars, the money goes into a big car, real estate or land.

There is no serious ambition to reinvest profits to  create something truly magnificent that would dominate the world.

 Early success tempts by many businessmen to a state of contentment with little differentiation between what is for the business and what is for one’s personal pocket.

Jason recounts how when he got the first $8 million  capital injection, most of his family and close friends started referring to him as a millionaire and asked when the building and the splurging would start.

“They don’t quite get it when I tell them the money is not for me.” He mused.

 

5.The eminence of emotional intelligence

“Raw intelligence and a health attitude to failure are more important than actual academic acumen.”

For entrepreneurs, emotional intelligence is a priceless commodity for success. Unlike analytical or academic intelligence, a Harvard MBA will not give you what you must learn from the School of Hard Knocks.

Jason Njoku tells the story of when IrokoTV first attracted its first round of capital; he was advised to hire a few top-notch Harvard, Stanford and Wharton MBAs to “run things properly.”

He had to let them go after a year because they couldn’t keep up with the crazy demands of a very fluid and unpredictable technology business, set in the heart of Nigeria’s capital.

“Raw intelligence and a healthy attitude to failure are more important than actual academic acumen.” He said.

According to Jason, because in startups, you start and fail, start and fail, start and fail so many times, it gets  a bit too much for MBA’s and highly successful graduates to take.

“I was in Business School for a year and one of the things we are trained to do is to get as much accurate information as possible to help you make quality high level decisions. But here you are in a chaotic market with incomplete information and yet have to make a call that costs a million dollars. MBA does not prepare you for that, its oftentimes raw instinct and a few bludgeons from the school of hard knocks”,he said.

 

In conclusion

We learn from Jason that there is such a thing as African solutions to African problems. Where Harvard & Wharton MBAs failed, young Africans with a passion for their continent and with the priceless understanding of our reality have succeeded.

There is no straightforward formula for success in any industry, much less the unpredictable technology world. But stories such as IrokoTV tell us that good models are not too far from us.GB

 

Bernard Avle, the host of Citi FM’s morning show, Citi Breakfast, is the sitting moderator of the MTN Business World Executive Breakfast.