The above picture was taken in 2005 (yup 9 years ago) in a beautiful loft in Manchester’s Northern Quarter. This was shortly after I met Jessica who had joined to edit a couple of magazines I had launched. Brash and Panache. This was, I think, one of the happiest times in our short and brutal adventure in publishing. It all went terribly downhill from there.
Shortly after this picture was taken my little company, Brash, entered into a brutal cash crunch which ended up killing the company. The biggest social contract I broke was not being able to make payroll. Having never really employed people I never knew the magnitude effect this has on someone. As sorry and embarrassed as I was it didn’t mean shit. Rent and groceries still needed to be bought. And I had failed the most basic of employer - employee contract. So the team left. All 7 of them. Jessica included. Paul (to my right) too. It hurt. But I totally understand. Oh they all totally hated me too. I was pond scum to them all.
One of the most dramatic things I remember of the time and my life was Jessica force-walking me to the nearest cash machine (ATM) to pay her the money I owed her. She had tired of my excuses and needed to settle some bills in her life. This is definitely one of the most humiliating things to happen to me. Ever. Little did I know it was only the beginning.
Jess and I didn’t speak for several years. Not one word. I think it was like 4-5 years later we spoke. Can’t even remember. But somehow we were drawn back into each other’s orbit. In early 2012 after struggling to manage the narrative of this little Nollywood thing I was building I decided I needed help. Jess was working for the Jewish Museum. I basically begged her to join. She accepted. Happy days. The old crew was getting back together.
Her first month on the job we both flew out to New York to set up the office there. Well. Jess set up the office. I did other things. If you think Jess is great a communications, she is awesome at organising things.
But she is super dupa awesome at communications.
iROKOtv has arguably more international press coverage than any other Nigerian company. Internet or not. Yes we have a great story, but so do so many others. Yes, I can speak forever, but it all starts with someone helping me gather my voice. Helping me develop my style. Someone honest enough to call me out when I am off message or being inconsistent. Jessica is fearless in that regard. She knows how to manage me. Very few human beings can. She understands how to articulate me without me explaining. That is the nature of our relationship. Although she has largely sat in London, and I in Lagos (or on a plane), she has helped sculpt the notion of ‘Jason Njoku’ (yes I just referred to myself in third person - but it’s in context). We are definitely one of the most open and communicative companies in Nigeria. The good, the bad and the ugly. You will always hear our perspective on things. This has defined us and made us thought leaders on all things internet in Africa.
Our wins have been evident. WSJ, Techcrunch, Pando, FT, CNN, BBC, Mashable, Variety, Fast Company, CNBC Africa, Le Monde, CCTV, BET, Reuters, Hollywood Reporter, USA Today, Mail&Guardian and Bloomberg. Whether it has been Radio or TV or print. We have won so many hearts and minds around the distribution of Nollywood. In terms of global evangelism we stand aside everyone else as true missionaries spreading and explaining the exists of that to the unknown. Jessica has totally embraced Nollywood. She can speak enthusiastically about it as only a true fan can.
Early this year when it dawned on me I had to close the London office. And those who think it was an easy decision driven by mere cost cutting aren’t even near to the truth. This was a difficult time but a great opportunity for Jess to do something I had been encouraging her to do over the years. Start her own communications company. Many people who are awed at our communications and media coverage have asked me who is responsible. My simple answer. Jessica Hope. But you can’t have her!
Now you can. We sat down. I spoke to her about the office closing. How it was the perfect opportunity to start a new adventure. At first she was a little afraid, but after a quick discussion with her partner [shout out to Wax], she embraced it whole heartedly. Enter Wimbart. A truly global public relations and media firm. Happy for iROKO and Spark to be her first clients. Because no doubt if she uses the same intensity that I know her to possess Wimbart will do truly transformative things.
Jess and I are entering our 10th year of knowing and working each other. This to me is super surprising but not at the same time. We have had our awesome ups and lowest of lows. But all through we have managed to remain friends. With a healthy respect for each other. ATM shakedowns aside.
Ooyala, our video platform partner, was sold in a deal valuing the company at $472m (cash consideration for 75% was $290m). That’s an amazing exit for Bis and the entire Ooyala team who have been instrumental to the birth and continued operating of iROKO.
On a personal note, Ooyala founder Bismark Lepe has been an iROKO evangelist, friend and mentor for the last 3 years. The moment he happened across little iROKOtv as one of many customers they had, we became fast friends. Although we were nowhere near the big customers such as Univision, Comedy Central, NBC Universal, Telstra, ESPN, Telegraph Media Group and Telefonica, Bis took a peculiar shining to this little Nigerian Internet company. From day one, I have always had a direct line to Bis. Any Ooyala related issue I would moan to him about he would literally move mountains to try and solve it. Himself. Even if it wasn’t initially at the best interest of the company he founded. Being ex-Google and having helped build the Adsense business when we were struggling to monetize in the early days of 2011, he helped us understand a display advertising technique which comfortably yielded $2.5m over the following years of net revenue (pre paywall). He then helped us build out our video advertising business. Something which we had literally called for dead. There is no version of reality the technology or monetization story of iROKO could be told without a mention to Bis and the Ooyala team. That was knowledge he shared without any immediate upside for himself. If he was in NYC, he would reach out. When he came to London, he swung by our 3 person office to say ‘Hi’. So when I came to SF last week for the first time in 2.5 years, he was one of the first I reached out to. Pizza and diet Cokes. A true SF lunch. Although Ooyala was his baby he founded back in 2007, he brought in a new executive team and moved on to new adventures last June, which is where I met him on Friday. Wizeline is that new adventure.
I have never known someone who has gone through an exit of this magnitude so I took a little time to pepper him with questions. As I suspected, making money wasn’t and has never been his motivation. Building awesome things is. Wizeline is 40 people-strong and he is super excited about the new awesome things he is building.
I wish I can be just like Bis when I grow up (even though we are the same age ooo). Happy just to be building awesome things.
This startup game is hard. Knowing someone who has founded something of such immense value in itself is an honour, but also a motivation when things get hard or bumpy along the road. The most likely result is failure. But the connections you make and the insights you can gather from those who have done things before is invaluable. Also remember to build out a genuine and robust group of friends.
Congrats Bis and the entire Ooyala team.
Every day, Dick Costolo gets hundreds of emails from well meaning (and some really horrid folk) regarding the strategy, misdirection or lack of specific feature sets at Twitter. I thought it was just me.
Almost daily, I too get given advice from well meaning people, speculators, bloggers or social media experts on how to operate my business. The assumption is that I haven’t thought of these things or perhaps just missed them. A successful company requires Herculean effort to create and nurture, usually at the expense of time with friends, family and hobbies. So most of the time, it is difficult to think of anything else. Thinking of something and actually doing it are very different things, yet when you operate a high profile, high velocity internet startup, you make mistakes. You prioritise or sequence what makes sense today vs tomorrow, based on what your team can or can’t do. Is your engineering up to scratch? Do you have the right capital to support this content spend? Are analytics ready to support this marketing spend? From the outside in, it looks like you haven’t got a clue, whereas internally everyone knows the organisational limitations and that, in fact, you’re working through all of the above. To be honest. Most of what we do is fancy data analytics distilled into ballsy guesswork. As a company grows beyond its startup roots, the friction to doing things increases.
This constant questioning of my business always used to annoy me. To my mind I always used to think 'do these people think I am stupid or something?' But I guess that was my ego working overtime. In reality those on the outside only see in one dimension. Outside in.
Information Arbitrage - The practice of discovering data and then extracting previously unavailable information from it to create market opportunities
Founders have a natural information advantage. Its their job to. It would be pretty scary if they didn’t. VCs and industry experts can help, but a founder needs to have their own perspective. It’s their job to look and understand their business in all its dimensions. For today. And more importantly, for tomorrow. You might not have all the data points, but you need to see in 3D and know what’s coming round the corner.
When I discuss strategy with Spark company founders, it always feels a little shallow. I always simply question their strategy as opposed to trying to help them shape or create an alternative one. And I always remind them that it is their business. I spend <2% on Spark activities and feel the long term success of startups are determined by the quality and courage of the founders’ decision making. I literally don’t have the time to work closely with them on building their business, and we are largely operating from the same building. VC’s have given me $24m. But If I was to chalk up the amount of actual time we have spent discussing strategy and business dynamics over the last 3 years, it wouldn’t amount to more than 200 hours (there are 168 hours in a week).
I just assume they know more than me and just need someone to sound out there strategy and slow them down from making fatal mistakes [it’s impossible to stop the mistakes, one can only try to slow them down]
We recently entertained some ad agencies for our offline Africa marketing plan due later this year. The groups would come in and try to spend the first 45 mins trying to reshape my strategy. On a good day I am curt so I shut them down pretty quickly. They felt confident in their assertions without a single data point. The most classic example was the lack of internet penetration in Nigeria
Nigerian internet is too slow and cannot support Internet TV. That is the consensus.
The Reality. Outside of YouTube and the ISP’s I can’t think of many people who have any data to back that assertion up. We do. Without spending or focusing on Nigeria as a market, we were able to attract ~100,000 free viewers per month for only Nollywood content in 2013. They watched on average ~17.3mins per video play they started. So the consumption, without a doubt, is there. How they are doing? We know. When are they doing it? We know. Why they are doing? We have asked. Can we encourage more of it? We will find out. We spent 6 months asking and prodding them to help guide us to a version of reality which gets us hundreds of thousands of subscribers in Africa. Now if over the next 18 months (with millions of dollars spent on customer acquisition) I could attract 100k paying subs at $2.5/mth in Nigeria, that would be $3m/revenue. That would be totally awesome and take us from 11th largest African PayTV operator to 7th.
Founders. Don’t listen to the noise. Tune out. Find your own signal. Those who only see in one dimension will never truly grasp your movements. Whether it works or not, they need to be your successes or failures. No one else can own them for you. So don’t allow them to overly influence you.
I sat on a panel in DC yesterday themed Charting a New Economic Future: Opportunities, Entrepreneurs, and Consumers Changing a Region [you can watch the full panel discussion here]
I was the certified smallie on the panel. It had:
Mo Ibrahim ($1.1b), Billionaire Africa telecom entrepreneur and founder of Celtel International
Founding of Celtel International
Mo was born in Sudan but in 1997 was an academic/geek running an 800 person telecom software consulting business. At the time, his clients were spending millions on acquiring mobile licenses globally whilst in Africa, governments were begging for people to accept their own. In DRC, a country of 55m people, there were 3,000 landlines. With the communication industry exploding in Europe, it made logical sense to expand these vital life services to Africa. But client after client he recommended this to, refused. Frustrated by Western ignorance about Africa, Ibrahim decided to take advantage of the continent’s enormous telecom opportunity himself.
“Why aren’t you going to Africa? You’re paying millions of dollars to get licenses in other countries that you could get free in some African countries.” One day I pulled aside a senior telecom executive and urged him to apply for a license in Uganda, which was seeking assistance. He said, “Mo, I thought you were smarter than that! You want me to go to my board and say I want to start a business in a country run by this crazy guy Idi Amin?” I was stunned. I said, “Idi Amin left Uganda years ago!” - Mo Ibrahim
Mo Ibrahim founded Celtel International shortly after with just $16m in VC funding. He then went on over the following 5 years to raise $415m to build out, at the time, Africa’s largest mobile network.
Have a look at their revenue growth standing start in 1998 to $641m with $200m ebitda. Breath taking.
On March 29, 2005 Celtel, 6 years after launch, received a $3.4Bn all-cash offer from Kuwait’s Mobile Telecommunications Company (MTC). Mo Ibrahim had a 21% stake [see this isn’t uncommon].
If that isn’t an amazing example of a seizing latent opportunities on the continent I can’t think of what else is.
My key discussion points in DC reaffirmed my absolute belief in the amazing value creation in Africa. Celtel definitely is a shining example of what is possible.
* 600m people under the age of 35 in Africa
* An increasingly mobile and connected society
*The Future services will be built for younger and increasingly technology savvy consumers.
* This creates a new type of consumer. It affords a huge amount of value creation to those who seize the initiative.
* A smarter consumer requires a smarter workforce. Education is key to harnessing the new economic future. In as much as our universities (in Nigeria) are largely broken. The burden will fall on employers to educate their staff just to enable them to do the job.
* Wealthy old families or gate keepers will have no place in this future. They may attempt to finance it but they definitely won’t be leading it.
iROKOtv has changed forever. Outside of Africa we are currently subscription only. It took us 4 months to get there. From 29th April to 17th July, geography by geography, we began erecting paywalls for our 1m strong global audience. The net result was effectively killing a revenue base which contributed $2m of 2013 earnings.
Inside of Africa we have re-aligned
Inside English speaking Africa [ESA] iROKOtv will be no longer just a platform for Nollywood content. We have broadened our content mix to include Hollywood, Bollywood, Telenovelas and Korean Dramas.
Why did we go ahead and do that? Because that’s what our viewers wanted. Be Customers is one of our guiding principals. So when we online-surveyed the viewing habits amongst our ~130k regular ESA free viewers today, the thousands who responded reiterated their love for Nollywood and also indicated their preference for a whole array of other content. The remarkable thing? They are willing to pay for it.
To go beyond our poll results, one of the key factors in building a long-term business is to know and delight viewers. We need our viewers to fall in love with us. So, four months ago we embarked on building an international content library which could, over time, stand shoulder to shoulder with the other PayTV players across Africa. Easing in with a limited library of Telenovelas, Bollywood, Korean and independent Hollywood contents for ESA, we expect to add thousands of hours of content as time goes on and we can glean what’s popular, as no one really knows what Africans actually like to watch. We will use our data insights to build a smarter library. This is an expensive endeavour. This definitely isn’t 2-3 guys in a garage building something which scales over night. We are talking about tens of millions of dollars in content commitments over the next 3 years. Far from my cosy little niche of Nollywood.
iROKOtv 3.0 | Features
* Delivery - Streaming and Download
We are starting with streaming-only but in the next few months will add DRM protected downloads. The downloads will be valid for 30 days (or until your subscription ends). There will be complete consistency too. Every movie or tv show will have the same download time frame and option.
* Encoding - Reducing file sizes
If you use torrents for illegal downloading the typical Hollywood TV show episode is ~500Mb. If it’s a feature length movie, it is more like ~2.3Gb. We are employing advanced encoding techniques to play around with the bit rates and frame rates to reduce those file sizes by 90-95%. We are essentially planning of our file sizes being between 50Mb - 150Mb in size. Data is still relatively expensive and we definitely want to unburden viewers from any data tax.
* Price - As low as $2.5/mth
We are asking viewers to pay $9 [monthly] $15 [quarterly - $5/mth] or $30 [annually - $2.5] for access to almost 10,000 hours of content. If you opt for the $30/year option you are effectively paying $2.5 per month. All access, all year round. Crazy prices. With our library the comparable cost is between $10-30 per month vs the traditional players.
Another interesting data point is 81% of our current Nigerian subscribers actually use credit/debit cards. Another 15% or so pay for their subscription via bank transfers or PayPal. It will be super interesting to discover more interesting things about our very peculiar audience.
iROKOtv - The PayTV operator
~80% of our polled viewer base doesn’t have a PayTV subscription, so I don’t see iROKOtv as being a replacement directly for PayTV. I have access to everything online but still pay my N13k [$80] per month for DStv. The total universe for paid television in SSA is about 12M. That will continue to grow aggressively as DTT gets built out and individual countries switch from analogue to digital. A report I read recently indicated that the initial subscribers for Internet TV plans were PayTV subscribers, why? Because they had the highest propensity to pay for content. Makes sense. PayTV is somewhat expensive and they are paying for it. Based on our Africa numbers, I believe we are the 11th largest PayTV operator on the continent. Below is the top 6
DStv [Naspers owned] - 7.2m
Canal+ [francophone] - 1.3m
GOtv [Naspers owned] - ~800k
StarSat - ~700k-1m
ZapTV [in Angola] - 400k
ZukuTV [East Africa] - 150-200k
Internally, we see iROKOtv as utilising the Internet as a delivery backbone for our paid content services. Once where there was DTH (Satellite - e.g. DStv) and now DTT (digital terrestrial Television - e.g. Startimes and GOtv). We are attempting to accelerate the development of Internet TV as the third platform for content delivery. Over the 18months we hope to build a feature set which strongly encourages the mass adoption of paid Internet TV services.
Internet TV is still somewhat early. We are definitely ahead of the curve. In 2011 when we first started we were too early [which is the same as being wrong], now we feel we are still early. But less so. And a little more ready. We have the operational intelligence to at least take a good swing at the opportunity. VC backed startups are essentially created or built to explore the white spaces. To be ahead of the curve. As I travelled across Africa, I saw the extent to which data consumption and internet adoption is being driven. It’s still expensive but we all know the prices are coming down. That’s the only direction they will go. Fierce telco competition will see to that. 5 years will look nothing like today. We look forward to that reality.
The beautiful thing about the Internet is that it has no restrictions. We will be about building into a market which is more youthful, connected and mobile. A non-Paytv market. Piracy will be the largest issue here. Especially in Nigeria where there is little to no formal distribution. But we feel that building a feature set for the consumer with no constant electricity could help us significantly contribute to the Africa PayTV universe.
Either way the beginning of our journey has ended. We are fully focused on what we need to achieve. We are trying to become a top 5 PayTV operator in Africa, using the Internet as our delivery backbone.
Internet TV has come to Africa. We feel in a good position to have an impact on the hundreds of millions of data devices on the continent. The re-alignment is the first step. Execution is the next focus.
Just wanted to take the time to reflect on iROKO’s 5 core values. Our guiding principals to build what we hope to be a $100M generating business by 2020.