Just me. Jason Njoku.

I am Jason Chukwuma Njoku, Founder of iROKO. Arguably one of the most awesome internet companies in Africa. as a professional (and certified) geek I read Chemistry at the University of Manchester, in 2005, I embarked on my journey of becoming a modern day Capitalist. These are my opinions. I own them and make no excuses for having them.
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Once upon a time I believed Lagos, Nigeria was the centre of the [Africa] universe. It’s not [obviously], although I believe the most interesting and largest companies will be built here. I found a refreshing new perspective on a recent tour of East Africa. The continent’s largest economy is Nigeria no doubt. But there is a different perspective. I have been to Nairobi twice before but no where else. So I focused on Kigali Rwanda, Dar Es Salaam, Tanzania and Kampala, Uganda. These were super short trips. 36-48hrs per city. But they were primarily fact finding, I am a big fan of boots on ground research and what I found was amazing. 

East Africa - 157m population. (Rwanda 12m, Tanzania 50m, Kenya 45m, Uganda 40m Burundi 10m). That’s a lot of economic activity.

As I attempt to build out the Internet TV opportunity across the continent, I am thinking about SSA (Sub-Saharan Africa) in terms of economic regions. West, East, Central and South. I discovered on this trip, most importantly, that the challenges we have in West are not replicable in East Africa. Not even close. 

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Payment. 

Even though 80% of our African viewers use card to subscribe for iROKOtv, I am very mindful that in Nigeria payment is a problem. Across East Africa? Not so much. Across the adult populace mobile money / Pesa penetration sits at nearly 50%. And they are active. And the official definition of active is someone who has transacted in the last 7days. Everywhere you look there are Wakala outlets who are essentially acting in the capacity of retail banks. In fact, mobile financial services [MFS] are larger in Tanzania than the former retail banking industry. I believe the numbers are 3m (retail banking) vs 12m Pesa (Vodacom, Airtel and TIGO). There are trillions of Tanzanian Shillings TSh (Billions of dollars) in transaction volume and liquidity across this system monthly. This ubiquity enables a frictionless payment experience and essentially facilitates commercial activity. For a Pay TV business such as my own, this makes the region super seductive. 

Data

* $1 = 88 Kenya Shillings or 1655 Tanzani Shillings 

I saw a unicorn in Tanzania. I came across an unlimited plan in Africa. I literally couldn’t believe it. Data is dirt cheap. Stupidly cheap. Suspiciously cheap. In Nigeria 500Mb is N2,000 [$12]. In Tanzania 35Gb is 20,000TSh [$12]. Don’t take my word for it - here are Airtel Tz, Vodacom Tz and TIGO website numbers. That’s unlimited or 35Gb for $12 [N2000]. 

Madness! The largest problem for an Internet TV platform is the access to data. In Tanzania at least, that isn’t a problem. The same in Rwanda. In Kenya the prices are more realistic. Yet for Airtel Kenya for ~$13 you get 1750Mb whereas with Safaricom ~$11.3 gives you 1.5Gb. Still both for the same price gives you x3 the data one would expect in Nigeria.

Internet TV

So let me get this right. Payment isn’t an issue in East Africa. Data is significantly cheaper. For Internet TV, these are the basic building blocks required to build a sizeable subscriber base. GOtv went from 2k subscribers in March 2012 to 817k in March 2014. But only after investing some $130m+ in their DTT network. Not to mention the significant operating costs. But I suspect GOtv will be larger than DStv in the next 5 years. Comfortably. So this only makes sense.

Mutant companies

When you build a business in Lagos, one sometimes forgets [I am obviously guilty on all accounts] that the challenges and issues are typically abnormal ones. Lack of electricity and poor infrastructure. Kigali, Dar Es Salaam and Kampala were modernised compared to anything I came across in Lagos. Predatory government agencies, lack of security and terrible healthcare? Not the norm. The art of the start-up is, at the very beginning, to narrow your efforts to afford the most likely path to survival. That’s it. Survive or die. It’s that simple. Once you move beyond survival you need to grow. And quickly. Less rambunctious climates are more favoured to this type of SME growth. Building with a Lagosian’s way of life in mind builds you a kinda mutant company.

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Kigali office 

I have opted to NOT locate iROKOtv East Africa in Nairobi, as I had planned and others would have expected. In order to have a fresh perspective on the East of Africa, iROKOtv will sit in Kigali, Rwanda. I have a deeper post about why but that will be later when I set up and establish the team. Rwanda is located perfectly between Uganda, Kenya, Burundi and Tanzania to enable our executives to serve the region comfortably. Also, the local market is too small to enable us to get lazy and attempt to build for that market alone which forces us to retain a broader, region-wide sense. I am really excited about 2014, as it’s a massively transitional year for the company. We finally have settled on the hard way ahead. [We expect to lose something like 95% of our traffic before the year’s out]. Now we just need to execute. 

The migration is over. We are a subscription only service. 

Internet TV is about to come to Africa in a big way. 

My son took more than his regular 1-2 steps yesterday. The only issue is I am in a different time zone. Not very happy about that. I have officially become ‘that Dad’ who has to make sacrifices and ends up missing important miles stones in his life. #dontwanttobethatdad

There is a downside to jumping on planes to chase the almighty dollar. Family. Although that unfortunately can’t be helped at this early stage. Big milestones like this are ultimately sacrificed. Would have preferred to be there. 

Nice to see our distribution efforts in real time. RwandAir on route to Kigali

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* If you don’t know who these people are above, ask somebody. 

Last week I was at the residence of the British Deputy High Commission in Ikoyi. Entrepreneur Country held a lovely dinner and round table event to promote the digital economy in Nigeria. To say titans were at the table is an understatement. Although I can’t name the folk who where there, leaders from banking to telecoms to private equity to tech giants were represented. Although I came late (big product push due soon) the small ~20 group didn’t hold it against me (I think). As usual, I was the youngest person in the room. I don’t usually attend these things but I was intrigued. It’s not every day you get to dine with the Deputy High Commissioner. 

There was the usual chorus of ‘Nigerians are so entrepreneurial’, ‘our future is technology’, ‘the future is the youth’, ‘the next big tech company can come from Nigeria’ - blah blah blah. I found a few kindred spirits but largely disagreed with ALL their other assertions. Why?

Nigerian technology is starving. And the boys are not happy. 

There is no innovation without capital. Yes, you can create some nifty technology at a small scale. But try creating that into a company without capital. In the West, it’s tough. In Nigeria it’s nigh on impossible. It just doesn’t really happen. Yes there are examples. Outliners. But the internet industries we see today globally from Facebook, Google, Twitter, Amazon, Netflix, Tencent, Alibaba, Rakuten et al were built up over many years with cold hard cash. Bucket loads of the stuff. Billions of dollars of ventured capital. Same in the US. Same in India. Same in Russia. Same in China. Same story. Different language. I don’t understand why people think it will be any different in Africa. History is a great teacher. Africa - let’s begin to learn. 

I have been to the same conferences and read the same responses over the last 4 years and am now a little bored. Yes of course you can create an enabling environment. Yes there are a myriad of challenges on the ground in Nigeria, but most of those problems are solved with capital. What every internet company does (globally) when it has money, it pulls people from established companies, brands or industries to staff up its early ranks so you can build awesome. Ideally locally. If not, we have an educated elite diaspora who are only too willing to return. Strangely, the music industry in Nigeria can teach us. 

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Angels and the Music Millionaires. 

More money went into brand ambassadors sponsorship in 2013 than angel investments in internet companies in Nigeria. With MTN and Glo going loco, signing cheques left right and centre, it was a great year to be an A-list musician. But it wasn’t always this way. Over the last 10 years, Nigerian entertainment, both movies and especially music, have transformed massively. They built an industry, from the ground up, in hostile climates and against all odds. As the popularity improved, the money improved and investments (reinvested in better sound, music videos and performances) started flowing, turning themselves into millionaires in the process. The untold story is that before most of the musicians we knew today got their start, they had angels. They had private individuals who used whatever money they could get their hands on to nurture the careers of today’s superstars. Once upon a time in Nigeria, if a child told their parents they wanted to ‘go into music’, their parents would immediately begin to cry, fear that ‘the person’ in the village who is ‘doing’ them had come again, then swiftly call in the prayer warriors (or Babalowo) to save thy soul. Today, an A-list artist can get any from $20-100,000 per show, and when I say show, it’s usually a couple of hours of work. That wasn’t always the case. Hence you see their new found love for Bentleys and Rolexes. Life is good. 

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And yet our internet boys are starving. [not the Yahoo ones - they’re just fine]

Nigerian musicians all had their angels. Whether it was family money support [think P Square, Naeto C, Davido or Lynxx]. Record company investments from the likes of Don Jazzy and D’Banj with Mo Hits [Wande Coal, Dr Sid], Kennis [Tuface], Segun and Banky W with EME [Wiz Kid and Banky W], Audu & Co at Chocolate City [MI and Ice Prince] Ubi Franklin [Iyana] and Obi Asika with Storm Records, these here individuals built the music industry in Nigeria with their bare hands. And I have no doubt it was brutally difficult. The shows, corporate events, the weddings, the radio stations, the TV networks, Alaba, YouTube. All these things weren’t readily available. Today they have super charged their talent globally. But it started with the talent. There were countless angels who invested in the industry early. Unsung heroes who as a collective probably didn’t get an ROI. The ones above are the ones who succeeded, yet today there is more money going into investing in music acts than internet startups. I literally see hundreds of them annually. I always used to wonder where the money was coming from. Politicians? Wealthy business men? Fans? children of wealth? Whoever they’re throwing millions of dollars investing to create the new Wiz Kid. Doesn’t matter. The investments are being made.

Yet our internet boys are still starving. Our future is still uncertain. 

Strangely, many people disagree with me that the most important thing to build out the Nigerian ecosystem is cash. There are always ‘softer’ things. I don’t buy it. I can’t see it. I worked in a low cash environment for 6 years. It’s a horrible place to be. Dreams turn to ash. Quickly. The ecosystem needs liquidity. Boatloads of the stuff. What we have done with CChub is awesome, Spark is cool. Leadpath is cool440 is tremendous. We just need all these efforts X10. With millions of dollars at its core. 

We need 1,000 funded startups per year. And when I mean funded, I mean like $10-50k as a first step funded. Then this ecosystem will grow beyond the hand full of companies we all end up talking about. 

Then the boys can start smiling. 

* definition. <30 = boy. 30> = man. 

* I am smiling. I am an old man.

* I wrote this off the top of my head so some parts will need adjustments or clarifications later. But you get the general gist. 

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There are very few books on the rise of mass communications, as we know them today, I have attempted to read. The most amazing books are about successes and the characters who constructed the media world we know today. Intertwined are the stories of how the largest corporations in the US were usurped by scrappy entrepreneurs. I totally love this book as it mentions one my biggest idols, John Malone. 

End of the Line tells the story of AT&T, the independent company which existed for 130 years before it was forced to react to dramatic implosion of its core business. Long distance phone calls. With price dropping at 75% and double digit annual revenue declines they were forced to plot a new reality. Mass communications, content, triple play and cable were supposed to be their saviour. They never made it. $100B in shareholder value disappeared. AT&T went from ~$50B revenues, $15B Ebitda (profits) and zero net debt. Some crazy deal making later, they had $9B Ebitda (profits) and $78B in debt. 

$20B+ was in short term commercial paper (debt instrument). This lead to them having to break up with the pieces going to competitors. 

One of my favourite books this year. 

$15b Ebita zero net debt / $9 Edita $78b debt

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End of an era…

Henrik is largely responsible for the internet wins of Kinnevik. Outside of Tiger Global (Wakanow, Cheki, Privateproperty, iROKOtv), Kinnevik AB venture money can take credit for seriously accelerating the Nigerian technology landscape. Ask Sim (Konga and Dealdey), Rocket and obviously me. Those Swedish Krona are making all kinds of waves here on the continent. Unfortunately he has now left. Henrik and I had some awesome times and we had some pretty [brutal] volatile times. Up until late last year he was a board member at iROKO and definitely one of our biggest fans. Like most relationships it we had our differences but that’s all fair game in the emotionally charged venture world. It looks nice and placid on the surface but it’s brutal and uncompromising underneath.

I had only met Sim once. The conversation was like 3 mins. But upon hearing about our efforts he introduced me to Henrik…

Hey Jason

We met when Sarah Lacy was around. Looks like things are well with you. I’m the founder of DealDey.

I concluded a raise from Kinnevik of sweden since then.

They are good guys - aggressive and pragmatic.

They mandated me to find entrepreneurs in Nigeria doing interesting things. Frankly there isn’t a lot of choice in this regard and you came to mind.

Trust me, you want to speak to these guys. They are doing some very interesting things and understand our region remarkably well.

Let me know if you are interested and how to best reach you.

At any rate, let’s find sometime to meet up.

Keep up the good work

Sim Shagaya - 3rd March 2011

Although I had a term sheet from another VC and had all but closed a round, after a 3-hour sushi marathon with Henrik at Nobu in Mayfair I decided it was fun to have him join the round replacing the other firm. A few weeks later Kinnevik wired a $2m cheque and have contributed to subsequent fund raises too. It was a good choice. We have had our ups. And believe you me (if only I could tell), we’ve had our downs. Being an emotional man that I am, I chalk that up to the nature of life. For all his mavericky ways, I salute Henrik. He has changed internet in Nigeria and Africa in ways which will reverberate for years to come.

Wishing him well on his next adventures.  

My wife persuaded forced me to do a little spring cleaning this weekend. As I was going through my things rubbish, I came across this old account statement for an iROKO Partners Ltd bank account in London. If you look at the date its 13 July 2010. The statement is for June 2010. That’s right. £60.25 paid in. £60.00 (my feeding money) paid out. And an ending balance of £0.25. That’s right folks. I literally had £0.25 in my account thats $0.42 or N63. 

Needless to say life has improved somewhat, but as I go about trying to frame this statement, it definitely reminds me of how far in such a short time one’s life can improve. It doesn’t have to be as dramatic, but improve life can. It also should serve to demonstrate to anyone, anywhere right now toiling away in obscurity on a little project or something no one gives a flying f*** about that as long as you believe in yourself and your project then success (whatever that may mean to you) is or may be just around the corner. All you have to do is find the inner strength to stay in the game. 

At this point I had toiled for 6 long years. Fast forward another 4 years and everything has changed. But then I didn’t know that. It was only pain. 

Founders. Never ever ever ever ever ever ever ever give up. On yourself. You may migrate from project to project and you will never know which one is ‘the one’. But one day, someday. Your stars will align. 

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On the 4th August 2004 I incorporated my first company in the UK. eFunctions Ltd. It was an event management platform aimed at supporting the student societies and organisations of Manchester to connect with bars, clubs, print companies and other suppliers they needed to create their annual parties. I got excited. Actually, Mad excited. I spent wasted my summer strategising, product developing / creating an expensive platform with all kinds of bells and whistles I thought were important to my thousands of potential customers. I wrote a 50 page business plan. Raised money from my summer job at Directline Insurance and used my student loan to start what I considered to be the most amazing thing ever. It failed right out of the gate. I didn’t stand a chance.

I invested blew almost £5,000 over that fateful summer, as an ordinarily working class, poor student approaching his third and final year in a Chemistry degree I had no business doing anything like that. I suffered for the year following. I had to work more than I wanted to (in my youthful gusto I quit my steady earning telesales job of almost 4 years to - go it alone - smh) I hustled on the side, running student club nights in a vain attempt to recover my total losses and find food to eat. I was never able to pay the rent on time which annoyed / bemused the hell out of Bastian who was then entering our first year as a room mate. In my final year of university, when I should have been knuckling down trying to attain the 1st class degree I was destined for, I was instead trying to figure out how to get out of the morass I had gotten myself into. Needless to say, in the end I failed on all accounts, I missed my 1st class degree. 67.3%, when 70% was automatic 1st class. I should have walked it. But I got distracted and came up short. In my first and second years I was always comfortably over the 70% range. In my second year I actually got a 78%. But hey. I lost because of this thing called capitalism. Bastian and Zainfur helped me cover my rent that year. 2004. I was a bum then. In 2005 I began my 5 year odyssey of poverty as I turned capitalist full time. I believed I was going onto untold riches, Mayfair apartments, Bentley’s and expensive watches. What actually happened was something fully opposite. What actually happened was my most epic failure: Brash Magazine

When people ask me about when I started or how I started I always think back to those summer days of 2004, when I was only 23 years old with the world as my oyster. That was 10 years ago. But I am 33 now. A husband and a father and have essentially been startup / business building for the last 10 years. That’s a long ass time. It’s rather exciting, as I take iROKOtv into the future, what I think the next 10 years holds for me. I am a veteran. I feel I have earned my stripes, been in the literal trenches, been battle-hardened in enough dire situations to earn anything I have attained today. I never thought I could be in the position I am in now yet at the same time I definitely dreamed and have worked my ass off to get here. It’s fun looking back. But where possible I need to stay focused on the future, because that’s the only way I can get to $100M in net worth by 2020. When I hit the big FOUR ZERO, I need to try and not become too cynical in my older days. Because that benefits no one.