Many have commented that OPay did not raise $150 million as I noted in the Gokada piece: “$150 million OPay has raised [$50m for OPay and the reserved $100m].” You are technically correct as the $100 million fund was not specific for OPay.
Yet, these are all semantics. Do not be fixated on it. I go beyond press release in my analysis; I think beyond the press. Since Opera raised $100m for Africa, it has not done anything, at scale, in any other country but Nigeria. I do believe that majority of that $100M is mapped for Nigeria even though it used Africa in the statement. Then, ORide/Opay/OFood got $50M. Nigeria is the only country it is building startups at scale. I don’t really care what they have on press release to make sense of what they are doing. This company wants to build a fintech (OPay) but it needs to acquire customers from different areas to help seed the transaction volumes.
OPay is the operating vehicle as they want to build transaction processing feeders to make their paytech system dominant. I did not say ORide; I said OPay because ORide is under OPay in the grand Opera strategy.
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This is a double play strategy: Opera will lose money in transportation, ride-hailing, food delivery, etc but will make money through OPay payment processing fees. So, as it pursues market share challenging Gokada and Max.ng, do not think it is stupid for losing all that money.
Yes, provided the chip business has an internal customer (the mobile device unit, the oasis in my strategy), Samsung will continue to commit resources as the oasis has removed most of the risks in investing billions of dollars to build new factories in the chip business. Yes, the mobile device unit (the oasis) makes the chip business better by being a “reliable customer”, irrespective of whatever happens externally. That is the heart of the one oasis and the center of Double Play Strategy in business.
Most of the comments here have focused that ORide will go bankrupt when its money finishes. The commenters do not know that ORide is structured to provide transaction fees for OPay. Provided ORide does that at scale, Opera will make money via OPay even if ORide is never profitable. Sorry that I have to repeat that again.
I told a firm to adjust strategy last week immediately my Practice came to the conclusion on this OPay strategy. Without a payment system, no ride-hailing startup in Nigeria can challenge ORide headson. Of course, there are other options on what players like Max.ng and Gokada can deploy.
This double play strategy is common. Amazon/AWS uses it. Alibaba/Alipay uses it. And Opera is working on it in Nigeria. If you want to compete against ORide without OPay, you will go bankrupt because ORide may never be designed to be profitable. But the parent company will be fine provided OPay is making money through commissions on transactions.
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I browsed through the comments on Gokada and was surprised that our mini-MBA is not yet efficient. ORide will not go bankrupt for giving cheap rides in Nigeria. ORide, OFood, etc are designed to be payment transaction volume feeders into OPay. So, provided they bring volume, even when losing money, Opera will make its money from payment fees. That is the Double Play Strategy: lose money in one thing but make up in another.
For Gokada, Max etc to compete with ORide, they need a Double Play. ORide business model is not to make profit on transport but to feed payment commissions to Opay. One of the best strategies for Gokada and Max will be to buy a fintech firm (I have some suggestions) to compete.
Alibaba/Alipay and Amazon/AWS are examples of double play. Read more on click. Do not be distracted by the discounted rates of ORide/OFood. It will be fine because of its OPay.
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The next thing to look at is whether this tactics of throwing loads of money at one end, just to frustrate competitors should be considered ‘fair play’, or another form of sophisticated bullying? And if other competitors fail to match Oride and its constituents cash for cash and go down as a result of it, how do we guarantee constant innovation, if we have one man standing?
Of course we haven’t reached such level yet, and I think there other ways to compete, aside from having payment systems to feed in.
In all, we must ensure that companies compete on fair ground, where innovation, products/services quality, customer experience become dominant features, rather than projecting price manipulation and burning cash as new business virtues. Uber has become a category king in loss-making enterprise, and has somehow remained afloat, with no profitability regime in sight.
We wait to see how much market share the Opay would accumulate, from there we can deduce if it’s enough to compensate for the ‘nightmare’ its Oride has created in the Okada space.
“Of course we haven’t reached such level yet, and I think there other ways to compete, aside from having payment systems to feed in.” Certainly
These days everyone wants to be the everything app, wechat pioneered it, go-jek went the ride hailing way and now everyone wants to take the same road, forgetting that we all saw the go-jek journey and to succeed is such a crowded market, you need to be more efficient, and also have a big wallet, but even then success isnt guaranteed in such a crowded field. I think opera should have gone a different route, they already have a quasi content business in opera mini and are the gateway for alot of people with over 100million downloads. Why not focus on that, create content, even subsidise data and invest some in the tech that lets them make sites less data hungry? Why not opera min for feature phones?Yes I know its a poor market, but their present strategy is also betting on a poor market getting rich. Why not get their content into agritech,edutech and possibly subsidised acesss to wikipedia? Maybe even add a free chat app to it like 2go, They are neglecting a headstart they have, and when google ,amazon and others comes with their satellite balloons and destroy the telecoms data business, opera will rue ignoring their head start. Uber makes money not on ridehailing but in other ancillaries like ubereats. At our income level, subsidising ride hailing and logistics may lose them more money than they will make in a crowded paytech sector.
It is the age of unification because once you have done the fixed cost, you can add anything on top marginally
The truth is that one wins the price war and whatever strategy you come up with to stay afloat would be overturned in no distance time. This is an opportunity for Gokada and cos to build a pragmatic business strategy that would not only anchor on delivering service but customers needs.
ORide forgot that the customer is the king and price isn’t the only concerns of the King.
Sorry…
The truth is no one wins the price war….