Where’s the vertical integration in digital?

Vertical integration is a classic business tactic: Why just own the chicken farm when you can own the trucks that transport the chickens as well as the restaurant that serves the chicken. The benefits are that you can control your entire supply chain so if one business isn’t doing amazingly then you have the opportunity to supplement your income in the other businesses.

Here are some other benefits:

  • Lower costs due to eliminated market transaction costs
  • Improved quality of supplies
  • Critical resources can be acquired through VI
  • Improved coordination in supply chain
  • Greater market share
  • Secured distribution channels
  • Facilitates investment in specialized assets (site, physical-assets and human-assets)
  • New competencies

The downsides are fairly dire: you can spend so much time diversifying your workforce and strategy that all your businesses fall apart. If done wrong, vertical integration could result in multiple failures. Here’s a great diagram on the topic:

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In digital and specifically in South Africa we’ve not seeing much in terms of vertical integration. The only example I can think of in recent history is that of Mr Delivery being bought by Takealot in order to secure their distribution chain. In my mind this was a brilliant move as delivery is the weakest point of e-commerce businesses in South Africa. Again though, I can’t think of much more.

It would be interesting to see an agency in South Africa buying another, smaller agency in order to secure production or buying a media outlet to ensure preferential rates.

Fundamentally we’ve got an industry that’s still finding its feet so it’s going to be tough to start investing up or down your supply chain. The reality is that if I were a large digital business, I’d be jumping on opportunities such as this as it’s still cheap to buy into the digital industry.

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Getting involved with those around you

Recently I’ve had the pleasure of meeting a lot of interesting people. These interesting people also have interesting new projects they’re currently working on and it’s occurred to me that some really cool projects currently happening. I find that speaking to people about their projects is both interesting and inspiring for my own businesses.

Fortunately I’m getting to help various people with their projects and I wanted to share that with my readers.

Kirsty Sharman is the mind behind SuperHeroStuff. It’s a mixture of geekery, Superhero’s and gaming. I think what makes the site so unique is the fact that it’s a woman giving her input on general geekery rather than your typical horny man. At the moment I’m involved in helping shape content, a bit of strategy direction and increasing the amount of content. It’s a fun site and it’s only going to get bigger.

My friend Matt Hart is a storytelling genius. He understands the structure of a story as well as how to integrate it with business. He has a great blog on the topic (disclaimer, I also contribute) and the aim is to create a consultancy on helping businesses tell their story to their customers with more meaning and relevance. Storytelling is a massively popular topic at the moment not just because it’s a cool buzzword but due to the fact that humans are the best at understanding a product or sales pitch when wrapped in a story.

Another disclaimer here, I am involved in this business fairly full time but I’ve partnered up with Gary Meyer in order to help solve the recruitment problem with digital agencies in South Africa. We don’t provide staff, we provide a solution to your knowledge and people problems by getting involved on a daily basis to truly understand what your business requires in terms of staff and cultural fit.

So here’s my pitch: I wouldn’t have had these opportunities were it not for the chance meeting of these people. That brings me to my next point: I want to meet you. I don’t need to take ownership of your business but I want to hear about it and see where I can get involved. I’ve been called the “rolodex of the digital industry” and I love connecting people. Maybe nothing will come out of it, maybe we’ll get you further than before.

Email me.


The business of hotel WiFi

I recently went to an event launching WiFi at all Tsogo Sun properties around the country. Press release blurb starts here:

In its ongoing quest to create great experiences, Tsogo Sun has installed high speed quality connectivity Wi-Fi in all its hotels that is free up to a varying data limit per room per day, depending on which grade of hotel the guest is staying in.


In Tsogo Sun’s Deluxe hotels, 750MB is free per room per day to in-house guests; in Southern Sun hotels, the cap is 500MB per room per day; in Garden Court hotels, the cap is 350MB per room per day; and in StayEasy hotels, the cap is 250MB per room per day. In all the hotels, these data limits are limited to a maximum of three devices per room. The free high speed, quality connectivity Wi-Fi service was launched in Tsogo Sun hotels at the start of June 2013, setting a new Wi-Fi standard in the hospitality industry in South Africa.

I think it’s a great move by Tsogo and while it might initially be painful it’s a step in the right direction. Tweeting about this led to an interesting debate: surely WiFi in a hotel is akin to having towels? Well the counter argument has two points:

  1. WiFi has always been a profit line item for a hotel. Suddenly you’re looking at tens of thousands of rands lost per month. That’s not insignificant in this economy.
  2. Not everyone uses the WiFi so surely it’s being subsidised for those that use it by those that don’t? Why should there be a small charge on my room for something I’m not using?

In the US WiFi is fairly common in hotels yet in Europe this isn’t always the case. After spending six months selling a hotel product related to marketing I can say that hotels only care about two things: Can you make more money or lower costs. WiFi doesn’t really fit either of those short term but it’s definitely a longer term goal that all hotels should aim towards. People will pick a hotel with free WiFi over another if the price or location isn’t that different.

It’s about time hotels and malls realise that WiFi is a people puller rather than an expense.


The greatest storytellers of all time

In today’s “Slideshare Tuesday” we’re looking storytellers, more specifically the “Ten best storytellers of all time”. This brings me to another point, I’m big into storytelling lately and have a (what I think) great blog on the topic. Take a look at www.storyline.co.za for South Africa’s top blog on the topic. For now, enjoy the slideshow:


Some thoughts on the launch of WeChat in South Africa

Chat messaging software WeChat is up against some tough competition in Africa. Off the top of my head there is BBM, iMessage, Whatsapp, Facebook Chat, Mxit and 2Go that are ridiculously popular around the content. The service that started in China recently went from 50 million to 70 million users outside China in just six weeks. In China there are over 300 million people using the service. Now, they’re coming to Africa:

Five months after launching in the US, in addition to operations in South America, Europe, Australia and its native Asia, Tencent’s newest focus is Africa, specifically the continent’s biggest economy. With the help of its partner Naspers—which holds a 34% stake in the Chinese firm—Tencent is targeting South Africa’s 50 million people with a marketing campaign to promote WeChat.

WeChat competes directly with other well-known companies like Google, Facebook, Instagram, WhatsApp and LINE, with a suite of functions geared towards voice, video and text messaging. Its CEO, Pony Ma, has said that “internationalization is Tencent’s dream,” and it scored a major marketing coup this week by launching WeChat commercials featuring the internationally beloved footballer Lionel Messi.

This is fairly exciting considering the potential for smartphone growth in Africa. Internationally smartphone purchases have overtaken feature phones and we’re sure to see this trend expand into Africa around 2016. Considering that WeChat provides voice chat I’d say the network operators should be worried.

They’ve started a global campaign that features football superstar, Lionel Messi. He joins their impressive team of ambassadors, including musicians, artists, fashion icons and VIPs:

If you’re keen on getting videos, voice messages and photos from Messi, you can – by downloading WeChat and adding his official account ID: MessiOfficial. You can also win a copy of Fifa 13 for any platform if you leave a comment below.


WeChat is free and offers unique features like a “Hold to Talk” feature, video chat, as well as image, video and music sharing. You can also choose to communicate one-on-one, or within closed social networks through the “Moments” feature.

With the might of Tencent and Naspers behind them, WeChat can only be massive.

Follow them on Facebook and Twitter to find out more about what they have to offer.


This is an Uber bad idea

A recent job posting by Uber.com shows the service is coming to both Cape Town and Joburg according to this job posting. If you’re like me you’re probably thinking: “what the hell is Uber.com?” Here are the details:

Uber is a venture-funded startup company based in San Francisco, California that makes a mobile application that connects passengers with drivers of luxury vehicles for hire. The company arranges pickups in the San Francisco Bay, New York City, Los Angeles, Seattle, Chicago, Boston, Washington, D.C., Toronto, Paris, Berlin, Philadelphia, Dallas, San Diego, Amsterdam, Atlanta, Denver, London, Melbourne, Minneapolis–Saint Paul, Munich, Baltimore Phoenix, Stockholm, Sydney, Baltimore, Detroit, Milan, Sacramento, Rome and Singapore.


Uber drivers have cars such as Lincoln Town Cars, Cadillac Escalades, BMW 7 Series, and Mercedes-Benz S550 sedans. Cars are reserved by sending a text message or by using a mobile app. Using the apps, customers can track their reserved car’s location.


Uber has indicated it is planning to expand operations to include non-taxi ridesharing in the near future.

Considering they’re taken the service to large parts of America, Europe, Australia and some parts of Asia I guess they’ve run out of places to try market the service. It’s great to see a massive startup looking at South Africa and Africa as a whole to enter however I wonder if someone forgot to do their homework. While it’s technologically a great product (you hail a car with your phone) and it’s going to be a good employer for drivers and the tech industry I’m skeptical.

With our complete lack of public transport you’d think that Uber would make a lot sense however there are two major issues here:

  1. South African’s love their cars: We spend fortunes on buying, maintaining and showing off our cars. Ownership of a car is for some, more important than a house.
  2. Cars are expensive in South Africa: Cheapest BMW 7-series in the US is $77,000 or about R800,000. Locally the cost of entry is just over a million.

Uber have money, they recently ended a $50 million funding round but the target market might be problematic. High end cars equates to high end consumers, the type who may have an iPhone probably would rather make a call than use an app to get a taxi. The other issue is that you load your credit card once and then it’s automatically billed after the trip. I’m pretty sure the average South African has the attitude of “you want to me to load my credit card with who?”

I’m fairly certain this will come down to the person who manages to run the project. A good Country Manager could make this work but anyone less than amazing and the service will flounder.


What gaming can teach us about business

It’s always interesting to see what gaming has evolved into: originally a time waster and distraction the modern day entertainment they’re become modern day blockbusters raking in more than even the highest grossing big screen outing.

It’s interesting to think about the business behind video games but since it’s Slideshare Tuesday I thought it was time to take a look at a deck of how a game’s concepts can help us in business. Today it’s “10 Business Lessons from the Battlefield”


Why Tim Cook shouldn’t tie his bonus to share price

We’ve spoken about the Apple share price before on Loosechange and now it’s emerged that Apple boss, Tim Cook has moved his bonus structure to be linked with the price of the stock. This is an interesting move:

When Cook took over as CEO in 2011, he was awarded a bonus of one million shares of Apple stock, half of which were set to vest in 2016 and the other half in 2021 — with the only condition being that Cook stay with the company. However, Apple’s board revealed in a filing with the Securities and Exchange Commission that it has approved a request from Cook to tie his bonus payout to the performance of the company’s stock — a move that seems intended to prove to investors that Apple’s leadership takes the stock price seriously.

“Mr. Cook is leading this initiative by example and has the full support of the Board of Directors,” Bruce Sewell, Apple’s SVP and general counsel, said in the filing. “He asked the Committee to apply a performance metric to his outstanding 2011 CEO equity award as well as any potential future awards. After careful deliberation, the Committee has approved a modification to Mr. Cook’s 2011 award.”

It’s interesting that Cook himself picked this option in order to prove his commitment to the company.

The share price has plummeted close on $300 per share in the past year and no one is really sure when or how it will improve. Share prices are usually linked to the potential earnings and growth of a company, the higher the potential, the higher the share price.

Now if Cook’s bonus is linked to the share price and Apple’s potential earnings are linked to innovation there will be a desperate need to release a multitude of amazing hardware and software products. It’s not impossible for Apple to do this, they had an amazing run with the iPhone, iPad and machines such as the Macbook Air. To continue that run, they’ll need to continue to release products that amaze.

The problem with constant innovation is potential quality issues associated with pumping out such high levels of innovation. Already we’re seeing some pretty wild changes with iOS 7. It’s great software and a brilliant departure from iOS 6 but we’re still to see whether the layman Apple user can cope with such a radical change. The same can be said for the announced Mac Pro; a machine that looks beautiful but is aimed at a market of hardcore professionals. There is a very large chance that they will be turned off by the new design.

Cook putting his bonus on the line is a brave move by someone trying to emulate Steve Jobs for being ballsy. Steve was a genius visionary, Tim is a genius operator. Apple is and always will be a great company but we’ll never see the share price at the heady levels of 2012.

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It’s time to improve your presentation skills

Since it’s Slideshare Tuesday I found a great post on how to become a better presenter. We’ve all sat through the following:

  • The reader: reads their slides, might as well have just sent them to you
  • The waffler: goes on and on in circles about the same topic
  • The minimalist: tries to use minimal text and a heavy focus on imagery to get results

Personally I find that using Helvetica Neue Ultralight (also known as the iOS 7 font) makes for something amazing. Take a look at the slideshare below for some more tips and tricks.