Monday, August 8, 2022
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Home Startups CEO Weekends: To Build a Successful Startup Accept to be Screwed

CEO Weekends: To Build a Successful Startup Accept to be Screwed

by Ventureburn
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entrepreneurBuilding a successful business is not easy, we all have heard that from a friend or at an event, and it is true.

If you’re going to start an internet business in Nigeria, get ready to be screwed. That’s IROKO Partners‘ founder Jason Njoku’s biggest takeaway from the company’s journey since its inception.

In the last three years, the company has become synonymous with Nigerian content using the infectiously popular Nollywood as a segue, but getting there hasn’t been particularly easy.

The early days of the company mostly involved founder Njoku negotiating rights for movies in Nigeria. It’s a not hard to see why he went into the business. Nollywood was insanely popular before he got there, as was the Nigerian music industry.

“In the last three years, we have catalogued over 3 000 feature films and they had very little meta data,” says Njoku. Speaking at Social Media Week in Lagos, he reveals that 65 to 70% of iROKO’s significant staff and resources goes to admin and people gathering data by actually watching the movies.

iroko-partnersBy investing heavily in these resources, the company was able to compose the building blocks of what it was makes up Nigeria’s savvy and sexy online entertainment industry. The same lessons were later exported to the company’s iRoking brand, a local music distributor.

“We built iRoking to bring back value to Nigerian artists and give them back control of their music, says Njoku.

As the Video on Demand explosion began in 2008, and YouTube become a household name, the entrepreneur reckons that’s when investors cottoned on and risked Africa.

“In 2008 there was an explosion of VOD, thanks to bandwidth. Tiger Global found us when there was no site and wasn’t an actual business,” he says.

As with most startups, the product lacked a viable business model and that needed to be reworked, along with the creation of its own platform.

iROKO is interesting and it has gained significant traction, in no small part due to the great Nigerian diaspora. However scaling the business beyond the local “cheap thrills” content that its users have come to love doesn’t seem to be on the cards.

“We tried content that was more in-depth, but no one watched it. The more viewed content are titles such as Desperate Housegirls and Facebook Babes,” Njoku says.

He argues that this is the Nollywood model and that iROKO should stick to it — content that people will watch and want to watch. That’s all well and good: Nollywood has seen great success with its low-budget, not always very well executed, movies but will that always cut it? For Njoku it’s about aspiration.

“People watch the movies because they can relate to them and they can aspire to the lavish lifestyle that is displayed in the stories.”

All Nigerians live in big houses and drive big cars and all the women are looking for a rich man. That’s the Nigerian message Nollywood preaches.

The platform is built for the diaspora. Around 70% of its traffic bounces between the United Kingdom, United States and Canada. The goal for iROKO is to get more Africans in Africa to watch, more Nigerians in Nigeria to log on. It’s a problem that desperately needs to be solved as broadband becomes more accessible.

Jason-NjokuGetting here requires more infrastructure. While the West is watching content online after work, Nigerians are watching on the boss’ dime during office hours because that’s where WiFi is easily available.

Making money

Njoku says focuses the company’s presence around where most of its revenue comes from. “We go where we make our money,” he says. That makes sense. After all, when you are buying the movie rights (for 3-5 years exclusively) upfront, making back that money is key.

He reckons doing business in Nigeria is hardcore, that’s pretty much it. You will probably get screwed. “People find ways to screw you all the time,” he says.

Making money is important especially when you have investors such as Tiger Global. That’s one reason the company decided to move into physical products by selling Nollywood DVDs. Except that doing so turned out to be a terrible idea. The company sunk US$250 000 into this arm of its business and it essentially failed.

“We were idiots to try and do physical sales. You can replicate the Nigerian DVD sales, we were stupid because we had money to try,” he says.

So how doe it make money? Through advertising and subscriptions. How much would people pay for media?

“When we launched our paid service at US$5 a month and then to US$15 per quarter and to our surprise people were willing to pay for it,” he says.

“Then we moved to US$7.99 on par with Netflix. People will always pay for content if they see value in it and if they can afford. And from our experience people are willing to pay between the 3 to 6 dollar range for content.”

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VENTUREBURN_HIRES_logo (2)This post about Building a successful business means getting screwed was first published by Ventureburn our Africa publishing partner. To read the original piece, click here.

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