#28. On reputation and hype
The fastest African Unicorn, the pivots of a filter company in China, and long-form business in Africa.
Welcome! Have you been wondering:
OPay seems to be the cool kid these days… what’s it all about? 🦄🇳🇬
Meitu tried using its reputation to pivot, how did it go? 🤳📱
Keen to reading stories of Chinese business in Africa? 📈🌍
It’s OPay!
And everyone is raving about them these days!
Long story short: OPay, an African fintech, just raised a $400M round led by Softbank, including Sequoia Ventures, and now reached a valuation of $2BN, higher than the market cap of its main competitor in Nigeria. And everyone has something to say.
Let’s recap.
OPay operates in the fintech area in Nigeria and Egypt. OPay’s breakout was mobile money, and today they have 3 main product offerings: P2P payments, a free point-of-sale system for merchants, and debit cards.
Where you read OPay you could easily read ORide. OBus. OFood. OTrade. Not so long ago they were notorious in Lagos for their motorbike service, until it got banned. OPay did not just focus on financial services at its beginning but rather offered a wide assortment of services until it decided to refocus on its current financial core. Pivoting is in the company’s genes and they have the aspiration to become a Super App.
OPay launched in Nigeria in 2018, and in recent years they have raised a lot of money, concluding with this recent round that valued them at $2BN, making them the fastest African Unicorn according to some. OPay is a spinoff of Opera, a Norwegian company, and they entered the Nigerian market by acquiring PayCom in 2018; a company that was founded in 2010. OPay’s CEO is Yahui Zhou, a Chinese billionaire who is considered to be one of China’s tech darlings.
All things considered, we can conclude that this growth happened fast. Some argue that they employ a blitzscaling strategy: growth and speed over efficiency. They have pivoted many times, reportedly stole talent from competitors, and used aggressive promotions to attract more users.
This $2BN valuation has left people with a lot to say. Many of the skeptics argue against this blitzscaling strategy: are those margins sustainable? Does it make sense that they are valued higher than the market cap of their main competitor, GTBank? Can this growth strategy work for Africa?
On the other hand, there are proponents: people believing that it is good that such large sums of VC money arrive towards African founders, and that it would be even better if more arrived; and that compounding benefits can make this investment finish at a good endeavor.
All in all, 2021 is a year in which a lot of large investments are happening everywhere. I’m on the optimist side of the discussion: let’s see where this money drives OPay, and how it makes the pie bigger in the African ecosystem.
Failure story: the pivots of Meitu
Meitu is a Chinese App for editing selfies. It was released in 2008, back at the time when photoshop was the only option for editing pictures. They embarked on the mission to let everyone become beautiful easily.
Meitu was used by 50M people in China and defined the aesthetics of an era.
However, just an App for photo editing under a freemium model was not the best-case scenario for profitability. People would edit their pictures in minutes and move onto other things. However, a strong reputation can open up many opportunities, and therefore, Meitu tried to use its popularity to pivot.
In 2013 they launched a smartphone with a good selfie camera, Meitu T8 in partnership with Xiaomi. It was the first of its kind with such quality. However, it was too expensive for the target audience and other smartphone competitors caught up with the quality of the camera, making people go for their cheaper alternatives.
They tried to pivot on the beauty side: they would analyze the users’ skin conditions based on their selfies and would recommend them skincare products. It shut down in 2018.
In 2014 they launched Meipai, an app to edit and share short videos, including their filters. The launch was very successful, with 100M users in 9 months, but users eventually moved to Douyin (TikTok in China) and Kuaishou, for their larger communities and better algorithms.
Meitu reported its first profitable year in 2020, based mostly on its core app subscriptions. They have been listed in the Hong Kong exchange since 2016, being one of the first tech listings of its kind.
Recommended source: The Africa Data Digest
I’m a fan of anything that is long-form, deep and includes business in Emerging Markets. One thing I am noticing more and more is that there is a lot of women writing quality content in this space, which is great.
The Africa Data Digest is a newsletter written by Alexandria Sahai Williams, a former Beijing-based tech worker that now resides in Nairobi. In her writings, she combines her knowledge of Chinese business and how it can be applied in an African context. I discovered her in a guest post for Frontier Fintech, and really enjoy her long-form writings, I find them really packed with insight.
You can read it here: