Category: Business

Read Adedeji Olowe’s take on business, business models, and other transformational topics about business in Nigeria, Africa, and the world.

Netflix eats Cable TV's dinner

Netflix strolled into Nigeria yesterday, as well as 129 other countries. I know it’s no big deal to a lot of people but trust me, it is to some. It’s like we are finally free of certain companies holding Nigerians to ransom. No name calling please; I have home training!

Netflix is an online video/movies streaming company. They started with video rentals with a subscription model, which was innovative at that time, and captured the market with unlimited views and no late return fees. Netflix is an example of high-performance innovative company; they quickly jumped on the bandwagon of internet movies and today account for 45% of all internet traffic in the US between the hours of 6PM and 9PM. Netflix offers millions of movies at very low and simple subscription model – pay a flat fee a month and watch as many as your eye balls could endure. Cancel anytime you want and come back when you are led by the spirit.

Initially confined to US, they aggressively moved into new territories such as Europe, Brazil, etc. but yesterday, in one giant sweep, entered into 130 new territories, including Ikeja, Lekki, Abuja and Kaduna. Ok, you get the drift.
If you want to read about the history of Netflix, go here. But the founder, Reed Hastings, is a personal hero of mine. Supremely smart, simple and hey, he demystified movies for everyone. But that isn’t all, he’s a great dude to work for.

When compared to what we currently get now from cable TVs, there is even no basis for comparison. Instead of paying N17K a month to watch from maximum of two TVs, you can get 4 simultaneous screens for $11.99 per month.
No need to even record and watch again, the movies are always there. Pause on the TV and continue on your phone. You can’t ask for more.

Some things are missing though:

I want to watch live TV, such as CNN, to just listen to Donald Trump yap.
Hate it or love it, Nollywood is keeping certain companies alive in Nigeria today. Mostly crappy content but hey, they love it if not they would have stopped acting. Haters like Deji Olowe can go hug an electric pole.

I want to see Arsenal get spanked, live. OK, sports is a big deal! Who doesn’t want to watch Wimbledon or see that British boy, what’s his name again, run around in circles in formula 1 cars.

When things like this happens, there would be gainers and losers, let’s talk about them.

Gainers

My friends and millions of Nigerians that want access to good movies. I mean, crawling to the cinemas can be a dog of a chore. Buying pirated movies is too much hassles for my simple life. Imagine having access to millions of movies on demand, play, pause, rewind and just anytime I want. Series don enter wahala!
Smile, Swift and other internet providers will now have guys guzzling their bandwidth like hell. Smile will probably see an uptick in its unlimited plan because 5GB of internet is just one Netflix HD movie

Banks will discover new and stable revenue stream of customers doing international transactions without leaving Nigeria. It’s small but it’s steady. Trust me, some banks are already prepping communications to their customers about this. What do you expect?

Losers

Cable TV. I’m sorry but babes thou art overpriced! Some of my friends spend upward of 17K a month to watch what? Super crap most often than not. If you miss a video, so be it.

Pirates will discover that it’s cheaper for their customers to do Netflix than buy CDs but no chilling 🙂
Banks may face more fraud issues as the payment process for Netflix is, I’m sorry, too simple not to be abused by just anyone. Just enter your card information and that’s it. Nothing stops anyone from using a stolen card to watch few mojos for some months.

Mum, AI took my job

AI’s expanding capabilities, from personal assistants to image recognition, pose questions about job security. Then there’s the scary part, the prospect of AI inventing other AIs. Will this lead to more widespread job displacements?

Recently jobless, I took to trolling the internet for good inspiring stories and I fortunate to bump into a long form on George Hotz inventing a self-driving car. George is of internet fame when he was the first to successfully hack an iPhone and then made a mess of Sony. That’s then.

There are many ways to skin a cat, at least if you can kill the cat first. But then automating self-propulsion isn’t a piece of cake. Planes have been flying themselves for over 84 years but all because danfo drivers don’t fly. Come to terra firma, somewhere around Abule Egba, and it’s a different ball game.

The best known name in the game is Google and they have been plugging away at this for years. Meanwhile African bad boy, Elon Musk recently released a patch that allows a Tesla to drive itself on the highway.

Summary, it costs zillions of dollars and millions of years to do build a working self-respecting self-driving car. Really?

George has turned all this on its head. In October of this year, he invested $50,000 ($30K of this was for a brand new Acura ILX 2016) and presto out came out a decent self-driving automobile. In 2 months? You must be kidding me.
This is where it starts to get interesting.

George’s approach is totally different from others. Instead of programming every conceivable rule and regulation of how to drive and what to expect (let Google come to Obalende!) he taught the car driving like the way I could teach my niece. Many things have made this possible – advent of deep learning, cheap computers, sensors, etc.

The bit I love is his bet against Musk.

So what has AI got to do with losing your job? Well, truth is AI can be taught to do many things. They already power simple things around you – SIRI, Cortana, Google search, image recognition, etc. What happens when it can be a perfect secretary, equity trader, physician, customer service officer, proofreader – correcting my numerous typos?

There is a lot it can do or may not do. The scariest for me though, would be when AIs can invent other AIs. Then, I’m sure that damnation would be an understatement.

Digital "Fluffy" Banking

Digital Banking seems to be the new buzz word these days. I love buzz words; they are necessary distractions in the agonizing world we live in.

But what’s digital banking? Nobody seems to know. Just like those mischievous boys in the bible – customer service we know, value for money we know but what the heck is digital banking?

A thousand definitions exist but basically everything points to a fancier electronic banking services.

Maybe people need to understand what we customers need.

We don’t need pretty names or fancy titles. We don’t care if you are a tier 1 or tier X bank. We don’t care if you are a boutique bank and cater for some fancy niche. We don’t think about innovation. We just want the damned services to work and you not to fleece us while at it. When things go wrong let us know. When our money is missing return it before we squeal. When we visit your branches or call, treat us like royalty.

You want to know what customers really want? Check here.

Damn it! Do you guys get it now? To hell with electronic and digital banking.
My bed has 3 wrong sides and just a good one, which incidentally is the side against the wall. I couldn’t get off from that good side this morning.

WhatsApp will eat MTN’s dinner

I visited WhatsApp, a close friend, last weekend and I saw him preparing for a large party but the interesting bit’s that he’s gonna serve MTN’s dinner to his other many friends.

Ok, that’s some unwitty joke but hey, I hope you caught the drift.
Some events over the last few months have shown me that the next 2 years may be quite scary for MTN and its colleagues. When you are making $2.6B profit a year, you may feel like part of the Greek gods just don’t forget Nokia and Blackberry.

International Calls Made Easy with WhatsApp

I get to do some travels once in a while. Roaming your phone can be a dog of an activity as it could be so expensive. Before you call me cheap, just imagine what N80 per SMS in Ethiopia means to someone who has never been a minister of petroleum. Rebtel has been a good companion over the years but sometimes the call quality can be very bad. At first I thought maybe because it’s VOIP but then calls to other countries were clear and never cut off. Apparently it seems our Telcos route their roaming calls through some Pentium PCs. You can’t be too sure of these things. My visit to some roaming-charge-friendly countries finally convinced me that our Telcos are rats.
Then WhatsApp call came along.

I didn’t know how good it was until when someone called me on it and I forgot that it was a WhatsApp call. It was clear and best of all free! Nowadays it has become my default calling mode whenever I hop on a metal bird out of the madness of Lasgidi

Local Calls Made Easy with WhatsApp

One of my annoying colleagues has an annoying habit of calling me annoyingly on WhatsApp. Until, wait, the calls are clear! I mean as bad as the Nigeria data network is, the calls are as clear as normal calls and best part, absolutely free!

The Hungry Future

  • What if the WhatsApp call catches on like Blackberry in Nigeria and everyone defaults to it?
  • What if WhatsApp creates a local gateway that allows termination of normal voice calls?
  • What if MTN’s voice income bottoms out?

Some Annoying Things about WhatsApp

Back to your desks, brethren!
 

Telcos to the Mobile Money Rescue

The Central Bank recently relaxed the rule on Mobile Money (MM) participation by giving out telcos invite to the party. Yes it’s a party but then everyone’s gone home.

Specifically telcos are now allowed to be Super Agents, which means they could use their thousands of retail touch points to serve MM customers. But unlike what most people are clamoring for or what some think CBN did, telcos cannot operate MM systems, they cannot accept deposits or give loans.

While we may want to quickly apply a generous dose of cane to CBN’s butt, we should for once understand their position and what it portends to the industry.
The problem, in my own opinion only, is that telcos cannot serve two masters and with some of them so powerful and rich, turning them to banks (banks collect deposits, :-)), is creating a monopoly. The NCC, a very strong regulator, is the umpire for the telcos while CBN patrols the financial sector. Trust me, nobody wants to mess with both of them.

Should that be allowed to happen, who controls who? What happens when CBN issues a counter memo to what NCC has issued? What about deposit insurance? If a telco is doing well providing voice and data services but tottering under banking related issues, can CBN move in and take over to prevent an implosion?
What about very large telcos that are like industry to themselves?

MTN is the obvious example here. While they control just about  62,813,111 active lines as of June 2015 which is 42% of 146,486,786 nationwide, data from other sources such as banks suggest that 75%+ of customer main lines are from MTN. Their 2014 $2.6B profit is a testimony to that. I believe that such a single entity controlling the bulk of telecoms and banking would simply be impossible to manage.

Another thing is CBN simply takes a more serious, no-nonsense approach to regulation. While getting hit by her stick might be painful, the disciplined stance has been of benefit to everyone. As we speak, there are clear laws by CBN barring banks from entering into the telecoms market. Oh, there are wider rules barring banks from doing anything apart from banking. #EnoughSaid.
This takes me to another point – what made the original efforts to skid of the track?

Transaction Charges
MM transactions are expensive for the target market and sincerely there are no feasible means of making it cheaper. There are no incentives for agents to cash in and cash out for free. If this is the case, how will it be different when telcos are super agents?

So you ask, how are banks able to do cash in and out for free? It’s simple – banks make money from lending the deposits they have. Click here to know a bit about banking. Unfortunately the advantage of float isn’t available to MM operators (MMOs) whose settlement accounts are ring-fenced. Visit the CBN website to read about guidelines of MM operations and pay attention to article 9. Don’t worry, you won’t lose your mind from reading it, it’s actually in next-to-everyday language.

Interoperability
MM died slow and painful deaths because they simply can’t connect to each other even though the CBN mandated it. Today everyone takes it for granted that you can easily zap money from Bank A to Bank B using common standards (NIBSS and QuickTeller) but try to do that for MM and you are out of luck. Try to move funds from Bank A to MM B, and you may get slapped. NIBSS has fixed the major interconnection issues but maybe its 3 years too late, maybe not.

Cash Out
Today you don’t think twice before using any random ATM of any random bank. After all, the worst is you get wacked with N65 from the 4th adulterous transaction on an amorous ATM. To do that with MM is just almost impossible as there isn’t any national standard for ATM cash out that’s bank agnostic. InterSwitch has been working on something for eons but as the target customers are dumping MM in droves, there hasn’t been any incentive to roll it out across all banks. And by the way, if that ever happens, MM customers will pay N100 per transaction as against free for ordinary bank customers.

Shopping
Whether online or in store, your card is always there to make you poorer. Unfortunately that can’t be said with MM. Even if you had N1B in your MM wallet today, you are probably going to die of hunger as the next restaurant doesn’t have any means of accepting your payment. Oh, if you told them you have N1B in MM they probably will beat you up as nobody will believe you.
Same problem exists online – you can’t pay for anything on all the major Nigerian websites. Paga made some in-roads but then how many people are on Paga and how many online stores even accept Paga? When you are shopping online and you want to pay, you don’t select banks, you merely select UPSL or InterSwitch, Visa, Verve or MasterCard.

International Acceptance
Ok, this is taking it too far. Your MM money dies right there at the airport. Even if you sneaked out through Seme Border, you can’t use it as Cotonou. Case closed.

CBN KYC Tier
I don’t know if this is a problem but according to CBN, banks are allowed to open accounts for everyone irrespective of race, religion or net worth. The target market of MMOs are better served by banks and unless they are cretins, which they are not, they wouldn’t touch an MMO with a 10 foot pole when all they get are hassles, fees and lack of interoperability.

How Can We Fix This?
It shouldn’t be all woes. I believe the Central Bank can fix the financial inclusion problem but it may be tough:

  • Allow telcos to to do MM. All they need do is develop a robust framework with NCC. They may also make the telcos to create Chinese walls between their different operations
  • I know it sounds dull, but CBN may have to wade in and review prices of transactions to allow the business to grow. Cash outs and cash ins should be free but agents to be reimbursed by MMO. Transfer will incur charges
  • Implement a common ATM cash out standards and ensure all banks comply within a reasonable time frame.
  • Implement a common purchase standard on POS and online and ensure banks, merchants and switches comply. Within a reasonable time of course.
  • Tie in the card schemes and make it easy for MMOs and customers to latch on without having to put up their relatives for sale on OLX.
  • Bar banks from having customers at the lower tiers of KYC.

Some of my recommendations sound despotic but then what do you expect from me on a Sunday afternoon?