Understanding business models (Part 1)

__”When did you first see the opportunity?”

When I first started Econet Wireless, I travelled to South Africa to meet the senior leadership of one of the leading mobile network companies. I was looking for investment into our business. I did the customary pitch and offered them 40% of my business. For some of you who have seen Shark Tank on Kwese Inc, it was a similar experience!

Their CEO balked at my price. “No way!” he said. “That is just too expensive!”

For several weeks we haggled over the price but we could not bridge the gap, and we decided to go our separate ways.

More than 10 years later, I ran into the chairman of that company at a reception, and he pulled me aside and said, “I really regret that we did not do that deal with you. Now I realize that your business was worth a lot more than you were asking for.”

He nevertheless congratulated me and we kept close and friendly contact until he died. He was a wise old man.

This has happened to me many times. Sometimes I’m the one who walked away from a potential investment and sometimes I’m the one who missed out on a potentially great deal.

It’s all business!

In that particular case, there was a reason we could not agree: I believed that the potential for growth in mobile phones was multiples higher than what they were projecting.

__Even though we were both in the same industry and could be considered experts in our field, we had a dramatically different view on the impact of a new technology: “Pre-paid payment” system!

(At that time you could only get a contract. The pre-paid technology was invented in Israel, and it totally transformed the industry, allowing billions of people to get access.)

I believed it would change everything. They thought my assessment was exaggerated.

There are so many new technologies coming through these days. Do you know what great technology is going to dramatically impact your business or the company you work for?

Years ago I used to keep a quote from William Goldsmith (one of the first British billionaires) which said:

“If you see a bandwagon, it is already too late.” What do you think that means?

Let’s talk.

End.

18 thoughts on “Understanding business models (Part 1)

  1. Strive Masiyiwa Post author

    Afterthought 1.
    If you first “see” an opportunity only after seeing lots and lots of other people in your market make money with it, chances are you are now dealing with a “bandwagon.”

    Reply
  2. Strive Masiyiwa Post author

    Afterthought 2.
    “What about being a “fast follower” you might ask? The “band wagon follower” is not “fast”! This is the guy still dreaming of a shop or grinding mill at a village where the first shop and grinding mill came 50 years ago!

    Reply
  3. Strive Masiyiwa Post author

    Afterthought 3.
    So many people call me about cell phone licenses available in their country, and really get disappointed when I tell them I’m not interested. That “bandwagon” came and went long ago. No serious mobile operator is interested in a fresh license, unless it is Ethiopia! Now we focus on acquisitions and mergers in a very strategic way. Not every business for sale is worth buying!

    Reply
  4. Strive Masiyiwa Post author

    Macgerald writes,

    I want to find out from you Doc. What if you see the bandwagon and analyse how it can be done better and more effecient and start another bandwagon.

    My reply,
    In that case you are not a “bandwagon follower” but a disruptive innovator. It’s like the guy who studies the taxi business and then introduced Uber. What you cannot do is to buy a Kombi (Matatu) to put on the road simply because you have seen people make money that way. Look for something that is a “game changer”.

    Reply
  5. Strive Masiyiwa Post author

    Michael writes,

    Why Ethiopia sir?

    My reply,
    The country has a population of 103m. It is also the fastest growing economy in Africa, and very efficiently run. I love that market.
    There is one state owned mobile operator. Mobile cellphone penetration is extremely low compared to other African markets. Every major operator in the world would love to get in, including “yours truly”!

    Reply
  6. Strive Masiyiwa Post author

    Otis writes,

    Also here in zim the problem we have with multi choice is one office or very limited places for complicated enquiries and payments .. I’m looking forward to the day we have kwese fully available in zim

    My reply,
    How is your father?
    He was so supportive when I started out in business. He was my “cheerleader”.
    Great man your father.
    #Respect, and love.
    God bless.

    Reply
  7. Strive Masiyiwa Post author

    Afterthought:
    If you see an interesting new venture happening in another part of the world, or even in your country, and you move quickly to get it into a new market, then you are a “fast follower”. You might have seen Starbucks, and it is not in your country yet, and can get the franchise, fantastic, do it! Only don’t wait until the whole street has Starbucks, before you are satisfied it will work!

    Reply
  8. Strive Masiyiwa Post author

    Afterthought:
    A dear friend who worked in South Africa, came to see me once to ask for a loan to start a cross border trucking business moving copper to DRC.
    I told him I would not give him a loan for two reasons:
    Firstly, it was not his area of expertise, as he had spent his career in a totally unrelated industry. “These things always look simple from the outside until you try it. Why don’t you use your vast expertise in your own field to start something new and exciting” I urged in vain.
    Secondly, I knew it was a “bandwagon” he was trying to follow, as he kept telling me of other Zimbabwean guys in “SA who are making a killing!”
    I refused to give him money but being determined he must have found it elsewhere. He went bust after much pain, acrimony and anguish.

    Reply
  9. Strive Masiyiwa Post author

    Uche writes,

    I think we have lots of innately gifted people in Africa. But to enhance such talents to commercial relevance, they must be turned into skills through training and polish. Dr Strive a lot of brothers have asked very pertinent questions here. Do you think you might want to help us out with an answer laced with years of practical experience? Can someone do well in business in an area they are innately gifted even if they have no form of former training ito enhance the gifts to become skills?

    My reply,
    How would you answer this question if we were discussing football? Can a guy with innate gifting to play soccer suddenly be thrust into a premier league team?
    Whilst it is not impossible, and has indeed happened in times past. It is such an exception that most managers would simply not take the chance.
    Great players emerge when the combination of gifting come together with training at the highest level.
    I hope your gifting will come together with my training to make you into a great entrepreneur!

    Reply
  10. Strive Masiyiwa Post author

    Afterthought:
    20 years ago every electronics and electric company in the world was trying to make a cell phone. There were hundreds of brands as everyone jumped on Nokia’s bandwagon.
    Then 10 years ago a young computer guy came up with a disruptive idea by putting a computer in the phone, and called it a Smartphone. That guy was Steve Jobs of Apple.
    The other bandwagon led by Nokia crashed, including Nokia. There is now a new bandwagon but only a few guys that followed are making money.

    Reply
  11. Strive Masiyiwa Post author

    Banabasi writes,

    Sometimes in 2011 when I returned to Zimbabwe, I got engaged in a business which was not my line of knowledge. I have been in construction industry since I started working and it’s all I knew but because I couldn’t find an appropriate place to establish my business ,I decided to do something I didn’t have knowledge about but just because i saw some people making good money ,so i thought since I had capital, i was going to succeed in that business. I engaged in business of buying and slaughter cattle for beef and supply local supermarkets. I didn’t know how to select best cattles are what to consider for good cattles for meat. In the process I lost close to 3/4 of my capital until I returned to business of my knowledge within the first year in construction industry and hardware material supply I managed to regain my stability and even today the business is doing fine. So I agree with you, if others are making money in a certain line of business doesn’t mean you can also do the same. It comes with knowledge.

    My reply,
    Thank you for sharing this experience.
    I offer only advice based on my experience.

    If you take the example of my friend with the trucking business, no serious investor or experienced banker would have given him the money he was looking for, because we see this time and time again.
    I’m glad you are back on your feet. The experience will make you stronger.

    Reply
  12. Strive Masiyiwa Post author

    Charles Grover Jnr writes,

    “The pre-paid technology” is what the African Continent (from my little survey) is clamouring for in the world of Pay TV services. People are tired of paying Muliti Choice exorbitant bills for hundreds of channels they will never watch in their entire lifetime. I hope you and your Kwese team are seriously looking into this.

    My reply,
    If you study the Kwese website the first thing you will notice is that we give options to pay for just 3 days, or 7 days or a full month.
    The owners of the content would not allow shorter period than 3 days. We however consider it a a game changer.
    Even then one of the sports channels is always on and for free.
    On the number of channels we focused on 75 high quality channels rather than hundreds of poor quality content. Most of our content is exclusive (only available on our platform).

    Reply
  13. Strive Masiyiwa Post author

    Zewelanji writes,

    One of the emerging technology is Artificial Intelligence.I believe it will be bigger than the internet and will power most if not all industries from healthcare to finance to agriculture.Millions of jobs will be lost and yet many more will be created.As enterpreneur and doctor I am aware the medical field will experience a massive disruption.Babylon Health from the UK has always launched a completely artificial intelligence system that responds to all sorts of medical questions.I have a friend in Europe who has taken it a step further.From studying antibiotics and pathology I am now studying machine learning.This wave will spare no one.We are also positioning to ride on this wave in not only the medical industry.

    My reply,
    I could not agree with you more. It is totally amazing what is beginning to happen in that space.
    There will be a generation of companies that will emerge from AI just like the Googles, Facebook and Alibabas of this world emerged from the Internet revolution. Only the AI mega companies will be $Tn companies!
    Pay attention to it!

    Reply
  14. Godfrey Muranganwa

    about seeing the band wagon? YOU ARE LATE. a lot has gone on with you having clue.But God reveals these things (ideas) to us but may be we ignore or would rather see others doing it first and then join the bandwagon.

    Reply
  15. Sibonginkosi

    I read an article about how you would be interested in helping to restore Bulawayo, where I live and got very excited. What pleases me even more is discovering your blog (Yes I realise I’m very late to the party) but finding out that you still take the time to communicate with people in this manner is really humbling. Many can learn from your example. I know I’m definitely taking a page from your book.
    I couldn’t agree more that when you see a bandwagon it’s already too late. Many have become such followers that unless someone else is doing it they will not consider it. It’s so easy to see something work for others and go for it but if it’s not for you, it will lead to nothing but heart ache.

    Reply
  16. Ifeoluwa

    I have always enjoyed reading all of your article and i have no doubt when i heard the launch of kwese tv, was even more excited when it got to Nigeria (still not well known as i thought). But will appreciate if more effort can be put into sport (football especially) broadcasting. I read online somewhere only one person is given full right to show the premier league and dstv has it. Is this really true? Because most people shows more interest when they hear kwese tv has right to show all premier league matches.

    Reply
  17. Christerbel Erica Mujaranji

    Thank you so much Sir Masiyiwa for sharing your experiences and the journey you have walked, please do continue to take us through it all, i am inspired and you have changed my world. I would rather be in front of the bandwagon or beside it and cause disruptive positioning. An Author named Michael Yankelovich’s mindbase segments, there is one which says “I am driven (my motto is nothing ventured, nothing gained) This is an ambitious person with a drive to succeed” I see myself as that driven person, the entrepreneurial way is the way to go small or big, and your area of expertise really has to be a calling and a passion for one to make it in this business world!

    Reply

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