South Africa, although well connected with the developed world, is not always seen as a developed country in its own right, and with good reason. Of the total population of some 50m people, only perhaps 10% enjoy the standard of living more normally associated with Europe and the US.
So when assessing ideas that have found favour in the more developed world, it is hard to justify their entrance into the South African market where these might only appeal to perhaps 5m people, and of which less than half are economically active.
For this reason, many of the new start-ups that I see prefer to develop home grown ideas, and then consider how these can be scaled outside of South Africa –into either Africa or Globally depending on the Living Standard Measure (LSM) of the target consumer.
Adapting a concept to fit the South African market
Despite the limitations in buying power of the majority of the South African populous, a number of companies have managed to look at purely developed world products and concepts, and then adapt these to meet the needs of a broader segment of the population and spanning far wider LSMs than their originators envisaged.
One such company is Essential Medical Guidance (www.EMGuidance.com). Founded by two local Doctors with international experience, they realised that mobile technology that had been developed for Doctors and Health Care Professionals in the US and Europe could have huge applicability in South Africa if the content could be made locally relevant. And by locally relevant, not just in a South African context, but locally applicable in a province-by-province situation and even town and city geography.
In the US, the leading medical reference app is Epocrates. Although this includes a wealth of information for Doctors, its homogeneity is not directly applicable to South Africa. In our country, drug availability and treatment protocols can vary widely over relatively small distances, and hence a new approach was required. EMGuidance therefore includes geo-location and relevant local content, so that wherever the doctor finds himself, the app can provide exactly the right information directly via his mobile phone.
This concept has proven to be so powerful, the founders are now planning their expansion not only into Africa (where exactly the same conditions apply), but also throughout the developing world. A true example of the adaptation of an idea imported from the developed world, into an iteration that is bespoke for the developing world, and which can then be exported into global developing markets.
Merging multiple ideas
Sometimes, simply adapting a business idea from the developed world to the South African market is insufficient to gain traction and scale to make this worthwhile. What is needed is the vision to take that business idea, and to expand this into an altogether different direction, often through partnering with other more established local or international players.
A great example of just this vision is Rent My Ride (www.rentmyride.co.za). Founded by a local entrepreneur who cut his teeth in the traditional Car Rental market, he teamed up with a CTO to mirror in South Africa the explosive growth that peer-to-peer rental companies were experiencing right across the US, Europe and Australasia. Targeted at individual or fleet car owners looking to monetize their otherwise unused or occasionally used cars, peer-to-peer rental is also a much cheaper option for both individual medium–term and corporate longer-term renters looking to secure a reliable rental car. In short, Rent My Ride is to car rental what AirBNB is to house/flat rentals – another business focussing on the ‘sharing economy’ that lets people monetize their unused assets.
Although peer-to-peer car rental is an exciting business model in its own right for South Africa, there is some debate as to the scale that can be achieved given the largely higher LSMs and Corporates for which this model has appeal.
Recognising this potential limitation, the founders of Rent My Ride have now linked up with Uber in South Africa to provide a really easy and equitable solution for both Fleet Partners (car Owners registered with Uber) and Uber Drivers to do business. A separate business and platform, DriverSelect (www.driverselect.co.za), was established which connects these parties and enables the Owners to still get great returns on their vehicles, but with far less involvement in the administration of their fleet. By the same token, Drivers who are struggling to either buy or rent a car through more traditional means, can now become an Uber Driver-Partner through the far more affordable DriverSelect platform.
What might have been just an exciting stand-alone business in South Africa has suddenly become an explosive growth opportunity right across Africa.
The secret of successful research
Sometimes you can plan for success, and other times it just lands in your lap. There is no doubt that for EMGuidance, it is the former approach that is bearing fruit. The founders were clear from the outset that their product needed to overcome the limitations of their developed world mirror parentage if it was to stand a chance in the developing world. Although the “customers” providing the revenue streams, large Pharmaceutical and Medical Device Companies through drug listings and advertising, were much the same in both hemispheres, these customers would not come to the table unless there was a realistic use case for the users of the app – the local medical professionals. The founders, largely through launching several non-profit medical apps prior to the launch of EMGuidance, were able to understand the needs of their target user-base with great clarity. This research has stood them in good stead when formulating their product and roll-out plans going forward.
In the case of Rent My Ride, although significant research was undertaken to create the South African peer-to-peer platform in the first place (the very best peer-to-peer platforms were analysed in both Europe and America, and the best features of each taken into the South African model), there was little advanced planning around the serendipitous tie-up with Uber. What is evident, however, is that had the founders not taken the time and effort to develop the core Rent My Ride platform to be the best facsimile of other international peer-to-peer rental companies, and involved the right foundation team, there is no doubt that the opportunity to set up DriverSelect would not have been possible. So in this case, detailed ‘product’ research for the core offering provided the opportunity to open up a new marketplace that might otherwise not have arisen.
Into the future
As South Africa develops, and its market adopts more and more of the trappings of the developed world, there is no doubt that a plethora of developed world opportunities will become more and more applicable to the local market. Factors such as the rapid penetration of smart phones even into the lower LSMs will change the local landscape dramatically.
There is no doubt that apps such as Uber would not gain any traction without such a shift, and hence opportunities for companies such as Rent My Ride to partner and expand with giants such as Uber would simply otherwise not exist.
For EMGuidance, as the percentage of health professionals using smart phones and other devices for their medical information resources increases, so the market to which the Pharmaceutical and Medical Device Companies can talk will expand. Without this shift, an app such as EMGuidance would not have the reach that is now evident, and which can truly make this into a global (in the developing world) expansion opportunity.
For individuals looking to import clever ideas from other markets, having some knowledge of how South Africa is in many ways catching up with the developed world, not necessarily in GDP per capita but through first world technologies cascading down the LSMs, will provide opportunities that hitherto would not have been apparent.
Apart from the growth in smart phone technology, the rapid advances in accessibility to data through free Wi-Fi via initiatives (such as Alan Knott-Craig’s Project Isizwe in Tshwane - and soon to be in Gauteng and then countrywide), and the access to far more rapid connectivity via fibre (through companies such as Enth Degree), will dramatically change the local landscape.
Whereas some international business ideas might not appear relevant today, in a very short space of time these changes could rapidly make them commercially viable. Entrepreneurs need to stay abreast of both sides of the equation – the business ideas and the local landscape – through ongoing research and awareness, and then connect the dots to take advantage of the myriad international business opportunities that will soon become possible in the local market.
This article was first published on Entrepreneurmag.co.za