Exactly like that, market-creating companies are innovators that don’t just compete within existing markets but actually create new ones altogether. They often introduce products or services that cater to previously underserved or unrecognised consumer or customer needs, effectively bringing new customers segments into the market. This can be through technological breakthroughs, disruptive business models, or entirely novel product concepts.
These (companies) usually build more than just the product, they actually build a whole ecosystem to support the product and the customers. Apple built the iPhone, Then to support the iPhone sales and usage, they had to build Appstore, ApplePay, add iTunes, Repurpose Apple stores, Bring telcos as distributors and more partners to deliver it with additional offers like lay-way loans and airtime bundles.
Other examples of famous market creating companies includes Uber, Amazon, AirBnB, Google, Netflix, Alibaba, Tesla and Microsoft because, historically, they’ve launched market creating products a few times and then dominated that new market themselves.
Do we have such market creating companies in Africa?
I have gathered a few examples from East Africa and I strongly believe there would be more in West or Northern Africa. I am focusing on foundational products which may be used to launch more stuff on their infrastructure or network.
- M-PESA (Financial services)
- KopaGas (Renewable Energy)
- Koko Networks (Renewable Energy)
M-PESA
Now the Godfather of Africa’s fintech boom
Yes, Safaricom MPESA which needs not introduction is a good example of a market creating innovation which essentially strip’d down a bank product (p2p transfer) and brought millions of users before adding more partner services (Loans, ODs, Insurance, Investments) which again became market creating.
For M-PESA to take off, Safaricom had to build an extensive agents network (human ATMs) with thousands of small shops to make sure cash in and cash out is as close to you as possible.
KOPAGAS
Still the World’s largest clean cooking technology acquisition
Examples of market creating companies in Africa includes KopaGas which in 2014 launched a PAYG service in Tanzania, They had to build a lot more stuff than just delivering LPG gas, They build the Hardware IOT meter, they build the software to go with it, they partnered with Oryx to get the meter fitted on the Canister, then they had to build payments so that the PAYG can work and last they had to build their own last mile logistics with a fleet of vans and vehicles.
This is why Circle gas, a company with Safaricom as an investor had to pay $25 million to buy KopaGas to launch across Africa.
Koko Networks
They’ve like 1,000,000 users now!
My favourite is Koko Points which created a new kind of environmentally friendly fuel, not LPG, and they are building their own agents network to distribute the smart fuel cans, in fact their agents are digital, more like a Gas ATM where you go for a refill, These guys had to build the IOT, the agents network, factories, storages tankers and a franchise service.
They also have partners for carbon credit to make their product more affordable and sustainable, I find it to be incredible.
One last thing
It is true market creating innovations take time to mature and dominate markets ?, It took Google 20 years to hit 1 Billion users on Youtube and it took TESLA almost 20 years to manufacture a profitable number of cars.
Koko Fuel’s Cofounder & CEO – says something like this:
“We’re looking at 10-20 years here, we are building a whole new industry here, The technology, logistics, agents, partners and we can use this foundation to launch more services in the future.”
If it takes time, it takes billions to build, scale and reap (shared value) the benefits for shareholders, government and other stakeholders then there should be a lot more outrageous attempts over the years.
- Netflix: It is a candid example of market creating companies and they have dominated that market globally by reinventing themselves over the last 10 years spending over $120 billions in content alone.
- Youtube: I guess it took them like 20 solid years to start making serious revenues in the range of US$30 billions with billions of active users.
- UBER: Have been hustling to stay on top Since 2009 !. Obviously they needed more than $22 billions to be number 1 at a global level
- Google Maps: I think it took them +15 years to start making revenues in billions with billions of users.
- Reliance Jio: It took them over 7 years with US$32 Billion spent to bring 400 million people online and grow their digital consumption by 100 times.
- Waymo: It has taken more than US$5 billion of direct investments, it has taken 15 years to operate self driving cars in just 3 cities, Imagine, just 3 cities!.
My last question:
Where else do we need market creating products ?
I listed a few places where I believe we need serious changes, Where else do you see changes in Africa and I have missed?
- Retail Banking and Wealth management
- Power, Energy and Electricity
- Real estates and Properties
- Transport and Logistics
- SME banking and Neo banks
- Insurance and healthcare
- Agriculture and Agro-trading
- Infrastructure and construction
- Communication and Electronics.
- Import, Export and Transit business
One last question
Where else do you see market creating products and innovators? I would like to learn more from as many innovators as possible, Do you know any market creating startup operating from anywhere in Africa?
This post was originally published on SubStack.
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