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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Yesterday was my son Obi Jason Njoku’s 1st Birthday. We’re in Accra so we took some long overdue family pictures. Being a father is awesome. 

Our new international office in NY [just off time square in Manhattan] is nearly complete. It looks a bit of a mess but by the time I get there in 2weeks. It will look beautiful. Exciting times

The Man who tried to buy the World
The extraordinary rise and fall of Vivendi Universal’s flamboyant CEO, Jean-Marie Messier. Jean-Marie Messier has been called the most ambitious French empire builder since Napoleon. He started as a bureaucrat at a sleepy French water utility, but he dreamed of being a global media mogul like Rupert Murdoch. And like Napoleon, he shocked the world with his accomplishments - until his inevitable downfall.
Jean-Marie Messier destroyed $100bn in shareholder value in 2 years and brought Vivendi Universal to within a week of bankruptcy. In as much as I enjoy reading about successes, I also try to balance that with situations where things have gone horribly wrong. Because for all intents and purposes things are most likely to go in that direction.

The Man who tried to buy the World

The extraordinary rise and fall of Vivendi Universal’s flamboyant CEO, Jean-Marie Messier. 

Jean-Marie Messier has been called the most ambitious French empire builder since Napoleon. He started as a bureaucrat at a sleepy French water utility, but he dreamed of being a global media mogul like Rupert Murdoch. And like Napoleon, he shocked the world with his accomplishments - until his inevitable downfall.

Jean-Marie Messier destroyed $100bn in shareholder value in 2 years and brought Vivendi Universal to within a week of bankruptcy. In as much as I enjoy reading about successes, I also try to balance that with situations where things have gone horribly wrong. Because for all intents and purposes things are most likely to go in that direction.

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Last month, my wife and I had dinner in Lagos with one of the most successful record label executives in Nigeria. Although we speak whenever we see each other and both have a massive mutual respect for each others’ efforts, we have never been able to actually agree on any commercial deals to bring his labels music to iROKING. I was waxing lyrical about distribution and our efforts over the years, blah blah blah. During the meal, he mentioned one of his biggest artist’s tracks was blowing up everywhere. I am usually late to new releases. I’m old after all. Anyway, in real time I opened Deezer (I am a subscriber - more on that below), found the track and synced [downloaded] it for offline playing later. All this took roughly 10s. It dawned on me there and then. The opportunity was lost. iROKING had lost the war. 

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Above is the H1 2014 data for m.iroking.com. From Jan - June ‘14 we have seen average monthly unique users of m.iroking of 1,096,351

In June for audio and video downloads on m.iroking stood at 2.1m

For iroking.com we are currently seeing monthly uniques of 29,511

In the last 2 years we have had 18.5m downloads and 25m track plays. In terms of iROKING the platform, we are stable / constant at ~1.1m uniques per month. When I think platform today, looking at the numbers, we have something of a product success with m.iroking.com. However, iroking.com is there for nostalgic reasons. 

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Downloads as a business | Meet eMusic

Launched in 1998, eMusic has survived the rise of iTunes (it started selling downloads 4 years before they launched), Pandora, Spotify and Deezer. It has remained remarkably close to its origins too. With the tag discover and download music, eMusic has focused primarily on building a subscription community and business around the music download. Whereas this feels quaint in the world full of all-you-can-eat 30m track streaming libraries, a fair amount of people still prefer to download music. This is a US-based business, the epicentre of the global music market. Yet somehow it still remains relevant. Oh and it still generates around $100m in revenue, albeit significantly smaller than the leaders but a nice little business nonetheless. 

In Nigeria and Africa, the music download is the preferred mode of consumption. We are nowhere near the ubiquity of streaming quite yet. We calculated early this year that the download market for Nigerian content globally is at least 100m per month. That’s on feature phones, and as we know, that still makes up the majority. 

Losing a War

I’m being nice. To be frank we were never really in the game. We just never knew it. Local players have largely failed against the 30m track libraries of the big 2. Heck we were somewhat responsible for that. We started 3rd party distribution of Nigerian artists on both Spotify and Deezer late in 2012. At the time it was to ‘maximise’ revenue for the artist. Today it didn’t really make much sense. 

Spotify has 10m subscribers - founded 8-years ago and raised $540m

Deezer has ~6-7m subscribers - founded 8-years ago has raised $149.3m

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Saavn | My original inspiration

In October 2011 I met the founders of Saavn. They were building an Indian music startup out of NY. At the time, we hadn’t even launched iROKOtv.com yet but I was just funded with $3m and had visibility into the appeal of music and movies with my 3rd party distribution business on YouTube. They too were VC-backed by Tiger Global and were having some early success streaming music in India and the Diaspora. We met a few more times, I download their apps and realised there may be an opportunity to build something similar in Nigeria. This was October 2011 so the grand digitisation of Nigeria music hadn’t really started yet. So we hastily launched iROKING. The first set of web and smart phones apps were super buggy and not really any good. Then it was ignored for a few months whilst I rolled out iROKOtv.com and then our subscription service PLUS. Giddy with a 'we're going to change the industry' mantra and fuelled with millions of dollars (along with others) we invested / moved a few million dollars over 2011-2013 into acquiring music licenses. The problem was we massively overvalued those licenses [in movies the market over time has corrected itself as revenue caught up with license fees and other parties too bid and other platforms like PayTV adjusted their prices upward - today a good movie is priced $5 - 20,000 just for a license].

Saavn had competition. VC-backed competition. But the moment they were unable to meet their license requirements, even with $8.3m in VC funding and 9m free users? They Shut down. 

Yet with 9.3m actives user of which half are in Indian. Saavn still thrives. 

Bhat to the WSJ:  We offer purely South Asian content today.  We have English music for this [India] market only and other South Asian countries. We are not going to be where Spotify is, or Pandora is, or those kinds of services. They are already sort of addressing these  non-South Asian markets doing a great job.

We have added a bunch more labels which accounts for 900 record labels with which we work with out of India, and the total market is well over a 1,000 record labels. It is across 22 languages and 35 dialects.

We have 11 languages that are live including in this market  [India], with about 1.1 million music tracks.  

From my knowledge, Deezer or Spotify don’t have Indian or South Asian content on their platforms and definitely not in those local languages. with Bollywood or South Asian tracks not primarily in English. Saavn has a massive advantage vs the global players. And they are addressing a 500m per market opportunity. It’s telling. They are blowing off doors. 

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The Guardian recently projected that India will surpass the United States this year to become the second largest country for smartphone use in the world, adding 400 million new users. Inspirational indeed. 

The surge of free. 

Spotify, Deezer and Saavn were able to thrive over time because at core, the structural nature of their content licenses enabled them to. It protected them and their investors. If you want to build a streaming music service with Beyonce & Co, no problem. But you have to pay. Big time. If you don’t, the industry will sue you to oblivion. Grooveshark was sued by all 4 majors for $17Bn and within 9 months the founder was talking about how ‘broken’ he was. 

When Grooveshark's co-founder and CEO Sam Tarantino talks about what happened to his music startup between 2011 and early 2012, he doesn't hold back: It was, he says, “a year of getting punched in the face 10,000 times.”

During that period, the music streaming service was essentially hit with back-to-back-to-back blows. Google pulled Grooveshark’s mobile app in early 2011, after Apple had done the same the previous year, effectively snuffing out its potential on mobile. Spotify launched in the U.S. in July, 2011 with the blessing of the major record labels and started stealing away Grooveshark’s users. And then came the knockout blow: Universal Music Group filed a federal lawsuit against Tarantino and his employees for uploading copyrighted songs. Sony Music and Warner Music Group joined the lawsuit the following month and EMI filed a lawsuit of its own in early January, meaning that all four major record labels were simultaneously suing the company.

Grooveshark, which had been considered one of the most promising music startups in the late 2000s, suddenly saw its monthly user numbers crash from around 30 million to 12 million in early 2012, according to Tarantino. With the lawsuits looming, he had little choice but to start laying off employees and closing up offices. Grooveshark’s staff was more than halved from 145 to around 60 at its lowest point, with some let go and others choosing to leave on their own.

Read the full story on Mashable

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Yeah. iROKING or the other legal music streaming startups were never afforded that level of protection for our expensively acquired licenses. The Nigerian music industry is modelled to where the money is. Currently it’s not in digital. I don’t blame them. I wouldn’t have bothered with us either. Being super distributed [free] and popular is the only important thing. There are always shows, weddings, endorsements, RBT millions to fall back on. 

So with the music industry’s fundamental structural makeup stacked against you, coupled with our own lacklustre smart phone app building history, we lost the smart streaming opportunity. But we built something the market does understand. m.iroking.com. Africa understands m.iroking. We have never spent a single dollar on marketing and have done the minimum in product development yet we have a arguably a strong product for Africa. 1.1m uniques per month strong. 

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And in the top1 0 7/8 are African countries

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This year iROKING has been about product development. It is about trying to improve the performance and tools of the site. It’s been about me, alongside Ifeatu and the team, steadying the ship and exiting some of those crazy lose 97% per licensing type deals I so enthusiastically entered in 2011/12. It’s about getting back the basics of a service which delights our users and serves a fundamental utility. Ifeatu and the team will continue in that vein. The success of m.iroking has influenced significantly our thinking at a group level about services which can work in Africa. These experiences are institutionalised and form the foundation for a more agile and smarter company. At least I hope. 

iROKING’s only future is about building the right product set to grow from 1.1m uniques to 10m and after which figuring out a way to monetize that community. 

iROKING = discover and download. 

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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.