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. I am also an angel investor having 11 Nigerian companies in my little portfolio. Jason [at] Spark [dot] ng is my email address
Recent Tweets @jasonnjoku
Jason in the press
Jason's Posts

imageAnyone who has spoken to me about the state of the media in Nigeria knows how much of a big fan I am of Linda Ikeji. My 8th tumblr post was about her rise and amazing platform she had built. That was in January 2013. Basically, she is Nigeria’s number 1 celebrity news purveyor. The TMZ of Nigeria, if you will. For almost 8 years, she had quietly blogged celebrity gist before becoming hugely successful in 2011. If there is breaking news, she is responsible for pushing it. I remember when the ‘news broke’ that I was getting married, I was surprised she actually bothered to reach out for official comments before writing the story. That’s why when she writes things, I believe them. I know she at least attempts to fact check which is almost unheard of in Nigerian media. I believe her consistent honesty and accuracy is the reason she has endeared herself to many.

People always ask me how successful can she possibly be? I suspect it’s somewhere in the $400-700k per year, range. With next to zero operating costs. Abnormally profitable. She doesn’t even pay for hosting her 2m+ readers as she uses blogspot instead. iROKOtv have been intermittent advertisers wither LIB and have seen over and over again that her super basic ad products work. On a campaign we ran for the first two weeks of September 2014 for ‘iROKOtv Africa’ LIB out performed Google Ad products. Yes. We tracked clicks and conversion to paying subscribers and LIB out performed Google Search, Display and retargeting across a 14 day period. It was embarrassingly bad in terms of performance. Although I suspect our entertainment product just works better on LIB vs performance based marketing.

I think Linda is a great addition to the media and technology ecosystem. The impact goes far beyond her ability to run a business and generate income. She is leading an area of media and technology which is overwhelming being dominated by women. If you think BellaNaija, Stella Dimoko , Ladun Liadi, they are also driving the soft title celebrity magazines across Lagos and Nigeria as they essentially have become digests of the week’s activities, for those currently not online. 

Many have attempted to out run her but have largely failed thus far. I believe Linda will continue to outpace and grow her base continually as the internet becomes a place where people increasingly turn to entertain and keep connected with what’s going on in the world. 

* Congrats on dropping $144k on the white RR Sport. I obsessed about that car in May 2013. But wasn’t even thinking about supercharge. So double congrats on that!

 

I have been sworn to secrecy and was told in confidence so unfortunately can’t share exact details. But the selling of secondary shares is not uncommon. The amounts vary, but in Nigeria it’s not abnormal for VC backed / later stage company founders to take off the table $50-500,000 to handle buying a home, marrying of partners and just bringing some normality to otherwise hardcore madness of startup founders’ lives. A little like a safety net, so they can focus on building big awesomeness without the worry of making rent. Usually, the share sales are 1-5% of their existing share holders so has no real material impact on their alignment vs investors. And the key buy stakeholders who need to be comfortable with this are investors.  

I, amongst others, are in support of it. Creating an internet startup is hard. In Nigeria that liquidity event is most likely 10+ years away. So founders whose investors have been happy with their performance over a period of time, in tackling an opportunity as opposed to actual revenue and profits (they come much much later), are okay with founders taking a little off the table. The unit economics of internet companies are usually upside down for the first 5 years, so as you take ever increasingly insane risks and pay for it with equity dilution, taking money off the table at least balances that. 

This is something which occurs in internet companies globally. It was rare but as companies are now raising larger amounts of funding and take longer and longer to exit, it is now happening earlier and earlier. 

Mark Zuckerberg (Facebook) - took $1m off the table at series A

Kevin Rose and Digg - took $6m off the table

SnapChat founders - took $10m off the table

Secret founders - took $6m off the table for their 6month old company

Post-Tiger Management funding 2011, I became personally aware of several emerging market founders [India, Russia and Brazil] who had taken money off the table. But it’s something which I never really realised happens in Nigeria or Africa. It does. With a fair amount of regularity. And it’s not a bad thing. If you have earned the respect of investors and they are happy, it’s a great way to remove life fears and improve the chance the massive binary (slam dunks) outcomes can be achieved. 

* this isn’t my house ooO. We are working towards it. 

iROKO Rwanda is an official company. Our VP of Africa spent 2 hours at the Rwanda Development Board and was issued the company certificate just 6 hrs after leaving. Electronically. And it was free. In Nigeria the speediest to achieve the same (in my experience creating 10+ companies at CAC) has been ~$800 and minimum a week. In Rwanda the entire process took 8 hours. With only 2 hours of your actual time taken up. 

Now, obviously this is not as fast as the UK where this could have been done in 30mins from your bedroom, but in Africa, that is easily the fastest I have come across. Another reason why I love Kigali and feel that the technology hub they are building here has the chance of being successful. 

image

Early last year, before we integrated an actual subscriber management analytics platform, we knew we had a problem. A casual search on Twitter any day for iROKOtv you would see tens of people searching for passwords. iROKOtv+ passwords. This has only amplified since we’ve gone paywall only. We suspect, based on data, we have double the number of users than actual subscribers. 

The greatest offender was an account called Chicken. We debated for some time what we should do with Chicken. She was being used 100% of the time. Across 30+ countries and hundreds of devices. To my mind the solution was simple. You kill her. So we did. 

Much easier said than actually done. This is an industry-wide problem. From HBO GO to Netflix or any subscription service. 

image

There are actual accounts (see above) which are in use 100% [Active Day Percent] of the time, across 10+ locations and have been accessed with 100+ devices. All for the princely sum of $5/month. We have identified this activity across 2,000+ accounts. Every time we kill the chickens, within 24hrs they arise from the dead. I don’t even know how this is possible so quickly. But is something we need to ultimately face and solve. Subscription business is data and technology focused. If you don’t know either, I think you will struggle immensely. Because we did. for the longest time. 

Engineers need to be in house. 

Chickens are one of the 87 KPIs we are tracking and improving. The number one reason we killed our advertising business was so the entire company could become super awesome, if not the best, operating online subscription business in Africa. This is a brutally difficult type of business to operate. There are no compromises. We kinda suck now but expect to get x10 better by this time next year. It’s the reason we are building out an experienced engineering team in NYC, arguably one of the most expensive markets in the world for technology talent. When I hear all the new VOD services launching, the first thing I look for is whether they have ‘technical partners’ or engineers in-house. We are moving almost everything in-house. We want to own our technology stack, not have a 3rd party vendor supply it like the noisy new entrants (it’s okay. I ain’t mad atcha). The recent announcements in Nigeria and SA both don’t own their technology. We believe that doesn’t work in Africa. Off the shelf is good to start but you need to have a technology soul, the DNA of working through problems yourself. Internet time. And just to reiterate, subscription businesses are content, data and technology. 

image

But that’s none of my business. 

Today iROKOtv.com announced that it has licensed from Starz Digital Media two of the top award-winning Hollywood dramatic TV series from Starz, Spartacus and Magic City. The acquisitions come as part of the adding increasingly better content to establish ourselves as a leading African Internet TV platform, a move into international content distribution, as part of its English Speaking Africa package, launched earlier this month. 

image

Spartacus is a thrilling tale based on the Thracian historical figure, who led a huge slave uprising against the Roman Empire from BCE 73-71. Starring notable actors, including Andy Whitfield and Liam McIntyre, this four-year series has been praised by critics both in the US and abroad, winning Saturn Awards in 2011 and 2012, as well being nominated for Screen Actor’s Guild Awards (2012 & 2013) and a People’s Choice Award (2013).

image

Magic City, set in 1959 Miami, Florida shortly after the Cuban Revolution, tells the story of Ike Evans (Jeffrey Dean Morgan), the owner of Miami’s most glamorous hotel, the Miramar Playa. Evans is forced to make an ill-fated deal with Miami mob boss Ben Diamond (Danny Huston) to ensure the success of his glitzy establishment. The series was nominated for a Golden Globe® (2013) and an Emmy® (2014).

Oh and part of the deal we also acquired Party Down, A group of actors move to LA to make it big, but end up working as caterers. too

image

“Licensing Spartacus and Magic City onto iROKOtv.com as part of our international catalogue for ESA is a great coup for us. Awesome, amazingly produced content that brings the best storytelling to the screen - no matter where it’s from in the world - is what we are all about and these TV series are perfect specimens of that. Both series have proved massively popular with audiences in the US and Europe and we hope that our audiences in Africa will love them too.”

So. Ladies and gentlemen, for as little as $2.50 a month, iROKOtv.com subscribers throughout ESA can now access an unrivalled yet affordable international online content package, to include Hollywood, Bollywood, Telenovela and Korean movies and TV series, as well as a Nollywood catalogue of 5,000 movies (10,000 hours).

image

Part of the Built to fail - the realities of VC-backed companies

I was talking to some young founders yesterday night. It was 8.40pm and I was just about to leave the office. They asked me how was iROKOtv? I began explaining that things are not easy. This big switch is creating all kinds of pain internally. Dramatic things usually do. They looked at each other and laughed. That things are not as bad for me as it was for them. 

I smiled and replied. No one is killing it in Nigeria*

Hype aside. iROKOtv is NOT successful. Yet. Small internet companies and the larger funded ones are all experiencing the same problems, just on different scales. We are all constantly trying to stare into our data to gain interesting insights to help build long term sustainable businesses. For the most part we are ALL too early to know whether we are actually making the right choices. All of us. I speak to most of the funded internet companies in Nigeria and we all share the same angst. Except if you are an iROKOtv or a Konga. To change some fundamental aspects of the business it may take 3-12 months. With a small startup (<20) it can take a a few weeks. When I make strategic decisions it effects tens of peoples’ careers. We only have around 120 people. It costs us like $700k per month just to keep the activity up and lights on. Burn cash baby. Burn. The other internet guys have 300+ so who knows how fast we collectively burn through cash. With the switch to building out Internet TV in Africa, we banished the opportunity to become a profitable entity for the foreseeable future. We exited $2m worth of 2013 revenue which we will now need to replace. So we need to raise more external capital to fund that growth. Founder equity will go down (obviously), our hope is we create more value in the long run.  

There is a misconception that because we are VC funded, we have ‘made it’. Whenever I hear this I realise how little the ecosystem (or people in general) truly understand about the nature of value creation in technology. The reality couldn’t be further from the truth. When you raise funding the stakes have just changed. Forever. And not necessarily in your favour. In 2011, before we were VC funded, we were a nice profitable business. We were making $30k/monthly in free cash flow. Once we accepted the money we embraced the reality of losing money year after year after year until we either failed (most likely scenario) or created a huge success. Note that no revenue numbers were mentioned. 

I sent an email to Bastian this morning concerning the $970m acquisition of another VOD play Twitch. Good for video at large as these deals always are. 

Twitch started out as a mere channel on social live stream company justin.tv (which was founded in 2006), its growth blew away the rest of the channels so they spun it out independently in 2011. Justin.tv raised $8m over 7 years before closing in 2014. The original idea failed. Twitch growth accelerated and went on to raise $35m over 2 rounds. There, it now sees 55m uniques per month. They had created a unicorn. It just took 8 years to realise that. In the West. In the most advanced internet economy in the world. 

Most Nigerian internet companies are less than 3 years old. In this market we haven’t started yet. Our internet users are immature in their understanding of what is possible online, buying data in Nigeria is still among the most expensive I have seen, the power and payments infrastructure is fucked and the venture capital is largely nowhere to be seen. 

So, people of the internet. Internet company building is hard. No matter the stage. And no one is really killing it in Nigeria. And 75-90% of all today’s startup activity will likely end in failure. Those who are funded have merely bought extra time. 

Hype aside. That is reality.  

* except the sports gaming guys. They are destroying it. 

 

image

HBO launched in 1972. I read a book which was written and published in 1987. 

Inside HBO: The Billion Dollar War Between HBO, Hollywood, and the Home Video Revolution. 

In 1973, Home Box Office was a small cable TV operation that its parent company, Time Inc., could not sell. In the following 15 years, HBO has become Time’s largest single source of profit. Author George Mair chronicles the behind-the-scenes events that shaped this great untold American business success story.

1973 - 8,323 (subscriptions)
1975 - 287,199
1977 - 600,000
HBO launches on their one thousandth affiliate cable system
1980 - 4m
1987 - 19m
Burning Cash
1973 - $1m ($5.5m)
1974 - $4m ($21.9m)
1975 - $3.15m ($17.3m)
$44.7m lost in first 3-years. 
In 1985 HBO made a profit of $125m
Churn 
HBO Churn
- 35% who sign up cancel in the first 90 days
- 60% of all new subscribers disconnect in the first 6 mths
- 42% who signed up disconnected within a year
- In 1981 7.1m signed up. An additional 5m signed up and disconnected
If you don’t manage your subscription inputs and understand the outputs, you can literally never make any money. We are aiming to take the number of subscribers we amassed over 2 years and then double it in H2 2014. Long way to go for that. Then we are trying to become a top5 PayTV network in the next 3 years. 
Data driven decisions will be the key of that. 

image

Monday 18th August 2014 was my 2nd wedding anniversary. My wife has been in Accra for the last 6 weeks so I thought it was an awesome idea to go and see her there. Behold. Another awesome idea was to travel back to Lagos by road. Google maps as you see above, said it was 6h 29mins. Road trip!

In reality, it was 13hrs. That’s a long ass time. Our driver, my son, my wife and I. We were using the Vogue, so the ride was as good as can be, the rear entertainment eased the pain, but after the 5th hour it quickly became apparent that my wife had other more normal ideas of how to spend her 2nd wedding anniversary (I missed the first one). Nonetheless, here we were. Navigating through Ghana / Togo /  Benin Republic and onto Nigeria. It was super illuminating to me as I haven’t really travelled throughout Nigeria. I have only really been to Lagos, Enugu, Owerri and Abuja. The most interesting thing in these Ebola-plagued times was how porous our borders are. People in cars were subjected to all types of pointless protocols. Pay here. Sign off over there. Change money here. Have passport stamped there. Of the 13hrs we spent on the road, easily 6hrs alone was spent navigating the silly border controls. Whilst I whiled away previous time no moving I noticed market men/women and general civilians (on foot) wandering both directions across the borders with nothing but a smile. No international passports, no checks, no balances, no ebola/HIV checks, no charges, no multiple FX transactions. Nothing. I then knew all the screening/temperature taking activities at the airport were a joke. Typical Nigerian cosmetic applications to real problems. 

The charges were ridiculous. It could’ve been the vehicle but we were taxed to the limit. Each border had a Byzantine array of different charges and I badly miscalculated how much I should have brought with me. By the Nigeria borders we had ran out of cash. Minor digression. Each country’s border had 2 parts. Example. At the Ghana / Togo border there were two sides. The leaving Ghana protocol, then the entering Togo protocol. Same from Togo to Benin Republic. The Leaving Togo protocol and then the entering Benin Republic protocol. Two barriers to end per crossing. 

Nigeria had something a little, well, Nigerian. We had to go through about 11 different checkouts. Most manning them didn’t even have uniforms and were literally less than 20m apart. In a long row. Each asked for our passports. Each asked us to open the boot for inspection. Each talking about certain levies we had to pay to enter Nigeria. Even though we all had Nigerian passports. After the 7th checkout, we basically ran out of money. 100% no cash. By this time it was 10pm. We had to beg them, well my wife and crying son did. And obviously they didn’t believe us. One even insisted we MUST settle him before we pass. We found N50 in the side pocket of the car and asked him to manage. So that wasted more time. I know there are fears of the Boko Boys engaging in terrorist activities, but I am pretty sure they’re not driving Vogues on their suicide mission. Of course I could be wrong. The military man did tell me. This is Nigeria. Everyone is a suspect. 

Nice.

I definitely won’t be doing that again. Which is a shame. But flying is so much simpler