Hi there,

Your brain on rock music? Scientists have reconstructed the song “Another Brick in the Wall” entirely out of Pink Floyd fans’ brainwaves. And it sounds super trippy.

In this Open Letter:

• Fair play: How SA’s trying to give startups a chance.

• FinnedThemUp, Amazon’s R30bn SA investment & 1-hour Takealot deliveries.

• Harsh truths: The realities of building a startup in SA.

• Poll results: What makes an ad memorable?

TRENDING NOW

Giving the Little Guy a Shot

Ever lose out to the smarter kid in school? Well, you maybe couldn’t do something about it then, but perhaps times are changing…

Remember when we poked fun at SA’s “busy-bee” Competition Commission for handing judgments on global giants like Apple, Booking.com and even Google? Well, they recently released a report on their inquiry into Online Intermediation Platforms (access the full 123 pages of bedside reading here).

Now we know platforms like Takealot’s marketplace, Booking.com, Property24 and UberEats need scale because their margins are small and often to get that scale, they need to execute strategies that, well, keep competition out. But that’s where the Competition Commission feels that some of the strategies are anti-competitive. And just ask anyone who’s tried to go up against them with their bootstrapping startup, and they will surely agree.

So, you know what, they make some valid points…

The proof

While the report mentions a whole lot of big international and local tech giants, by far the most interesting was its take on Google, which impacts all or most startups and other businesses.

Now, we all know the most challenging part for any business is getting in front of potential customers. And Google has become a major part of that, especially if you can get an organic ranking on Google.

But the Commission feels Google is not playing fair in SA, because…

• Research shows the 1st result on a Google search has a 33% click-through-rate. After that, it drops by half to number 2, then half again by 3. So, if you’re not in the top results, you’re dead.

AND YET…

• There are only 17 “spots” where your business could potentially appear on any Google Search Engine Results Page (SERP).

• However, the top 4 and bottom 3 slots on any SERP are reserved for paid search ads, dropping your potential space to only 10 spots.

• Now, Google rich features like local area, travel units, images, YouTube videos, and "People Also Ask" take up so much space, up to 18% of SERPs show less than 10 organic “spots”.

• Since August 2021, this has caused a 5.5% decrease in organic listings.

• Google adding Shopping and Hotel carousels is just giving you even less space to appear.

And it’s starting to show: Nowadays, almost 17% of click-throughs go to the flashy paid search content, and only 2% to organic results. Great move to force companies to buy ads, but it basically means if you don’t pay, they won’t find you. And guess who’s buying all the paid slots? The ones with deep pockets.

The report also notes elsewhere that Online Travel Aggregators spend 20% of their revenue on Google ads – yeah, no bootstrapper has a chance here.

Why does this matter?

Inequality is no joke in SA. The Gini coefficient that the World Bank uses to measure inequality puts South Africa as the most unequal country in the world.

And this isn’t just a social issue, it can lead to political instability and economic decline. So the Competition Commission is just one vehicle for SA to give the small guy a better chance this time, in the online world.

So, here’s what they are asking Google to do

Will this work? Will Google actually concede to their requests? We don’t know. These things can spend years in court.

But if they do, it’ll change the game quite a bit here in SA.

Imagine search results that highlight searches stemming from local companies. What’s more, a specific page that features local players. If this goes ahead, it could be a major win for local platform developers wanting to compete with the likes of Booking.com, Uber or even Amazon. And when that happens, you platform builders better be ready….

OVER TO YOU

IN SHORT

💨 Heads in the Cloud. Amazon Web Services are planning to invest R30 billion to train 100’000 young South Africans to become certified cloud computing practitioners. For Mahala. This over and above the already R15 billion AWS has invested so far.

💰 Gimme Yo Lunch Money. It was only a matter of time before small-scale solar started eating into municipalities’ incomes. We’ve spoken about it in a previous edition of The Open Letter, but SA has imported $2.5 billion in solar equipment in the first half of 2023 with June’s total estimated rooftop solar generation at an estimated 4411.50 MW – nearly 4 times what it was in March 2022.

⏱️ No Time Like The Present. Takealot just launched an on-demand service TakealotNow and is trialling it exclusively in Cape Town’s Northern Suburbs. Products include a bunch of curated items like laptops and smartphones, beauty products, loadshedding essentials and toys, and will be delivered within the hour and up to 10 PM at night courtesy of a dedicated section in the Mr D app.

💉 Cash Injection. SA personal finance startup FinMeUp has just raised an undisclosed amount in its latest funding round to help enhance user experience and create a dynamic learning environment. The round was led by SAAD & Blue Sky Investments.

🌒 Moon Water. Did you know Russia and India are about to land on the moon? Neither did anyone else, until they sent pics back from space going: “Oh, BTW, we’re in lunar orbit now”. Russia’s Luna-25 and India's Chandrayaan-3 lunar probes are set to land near the moon’s south pole (vast reserves of frozen water ice there) in the next few days. Bets are on for who’ll touch down first.

30-MINUTE PODCAST

5 Tough-Love Truths about Building a Startup in SA

If you’re feeling the pressure of scaling that startup, you’ll enjoy this week’s How Would You Build It. We finally got Bubu Buna of Jobox on for a no-holds-barred look at the (often painful) realities of building a startup in SA.

It’s super short – just 40 minutes – and it’s an absolute cracker for SA founders.

Just the highlights

1. Why building in SA is so tough

“It’s an extreme sport,” Bubu says here, “the most difficult thing I’ve ever done.” So much so that he’d tell most people NOT to build in SA. OR be prepared for the slog. Because funding access is hard or non-existent, B2B is way harder than most people let on and the only thing harder than actually getting a corporate to listen to you is getting your invoice paid.

But, despite that, he loves it. You just have to build differently.

2. A model that actually works in SA

One of Bubu’s biggest lessons is that international startup news and influencers are all wrong for SA startups. Raising funding, scaling and exiting in 3 years just doesn’t happen in our market. What does work is building a good, solid self-funded company that generates its own revenue, growing it slowly if you have to. Get the sage advice right here.

3. Business before platforms

One way to deplete yourself (of funds and energy) fast is to focus on building an MVP before you’ve validated your concept. In this context, validation means you have paying customers – get the insights here.

4. Build what the market wants

Bubu had a valuable experience building a product off user feedback that then bombed and needed a crucial pivot. He shares the whole story here.

5. Getting B2B sales going

Start as consultants within your network – first 10. The people who you know have the problem you’re looking to solve. But don’t give it for free. If it really works, your next few can come through word of mouth, before you go bigger.

A good place to start is to ask “How can I make this so good people don’t just want to use it, they want to get others to use it too” – catch that convo here.

Or if podcast app is your vibe, catch them here:

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Go figure. Earlier this week we asked what makes an advert memorable and like EVERYONE said when it makes you laugh…

🟩🟩🟩🟩🟩🟩 😄 When it’s funny (89%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🤪 Crazy characters (5.5%)
⬜️⬜️⬜️⬜️⬜️⬜️ 😭 When it gives you feels/cry (5.5%)
⬜️⬜️⬜️⬜️⬜️⬜️ ✨ Cool visuals (0)
⬜️⬜️⬜️⬜️⬜️⬜️ 🔊 An epic soundtrack (0)