When Uber invented the modern ride-hailing, it was built on the construct that the operator of the asset is largely the owner of the asset. By doing that, the Uber business model stays asset-light since the vehicular assets are not in its balance sheet. In north America and western Europe, that model works just fine: there are people with cars, and they can put them on the streets to earn extra income.
But in the emerging economies like India and Nigeria where people (yes, potential drivers) do not have access to assets and do not own any, the Uber model struggles. That is why Ola, an India-based ride-hailing company, plans to acquire one million electric cars to pursue its mission. In short, companies like Ola will be the main car buyers, in most parts of Southeast Asia, in coming years, as ride-hailing continues to advance.
Then, when you come to Nigeria, you will notice that entities like Gokada and Max technically own (partially or otherwise) most motorbikes in their platform-fleet. The business model is to do“hire purchase” with the drivers who then pay over time for the assets. The drivers do not own the assets until they finish making the full amounts. Once that is done, the drivers can become owners of the assets.
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The hire purchase is a local adaptation to deal with supply paucity in an ecosystem where the drivers may not have the means to acquire assets. Sure, the companies carry the assets in their balance sheets, but without that in the playbook, there is no other option. Of course, they do claim assets-light because most will have a special purpose vehicle (SPV) for the financing of the assets. Yet, the African proverb notes that a bird that is perching on the anthill is still on the ground!
All Together
Open your mind as you examine any Silicon Valley playbook. The adaptation in the local ride-hailing domain has been critical to the promise in the mobility sector in the nation. Do same as you work in your sector.
It is important to understand that what Silicon Valley tech titans do in U.S. is different from their playbooks in Africa and other emerging regions. Google is a quasi-payment company in India even though it has none of such in U.S. Facebook is investing in connectivity systems in Africa when in U.S., it was not an issue. Yes, for every new sign-up Facebook gets, Wall Street watches: IP address is IP address. .My point is that these U.S. firms are not doing them for charity, they have to become parallel ecosystems to pursue their missions. Yes, they have to do things beyond that core mission which they have pursued in America because they do not have other entities helping them to fix the enabling frictions in emerging markets.
Remember – never start a company, rather, go out and solve a problem. If you understand that line, your mission will blossom.
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“Yet, the African proverb notes that a bird that is perching on the anthill is still on the ground!” This short statement had so much embedded in it.
Social Intelligence is the key phrase here, you can also add Situational Awareness; when you understand and apply both in your operating environment, you are likely to do well.
Our policymakers also have a lot to learn in this regard, simulation will never equate real life event.
“simulation will never equate real life event” – call that a constant.