Weekly Briefs: EdenLife, Open Banking wedge.
The strategy behind the news in as few words as possible
Hey! Welcome to Weekly Briefs, a recurring series where I unpack the strategy behind the news in as few words as possible.
This week we explore the strategy behind:
EdenLife’s Kenya Move
Open Banking wedge
Enjoy!
Eden Life Opens Shop in Kenya
Remember Eden Life?
It’s Africa’s first home concierge service scheduling platform (yes, I know it’s a mouth full) that launched three years ago. Eden started with a simple model — users would pay a monthly subscription to handle their everyday chores: cooking, cleaning etc; the company, on the other hand, aggregated demand and matched users with service providers that it had aggregated.
From the off, many people thought the model was absurd (at least I did). Predictably, the aggregator model failed within the first 12 months due to quality control issues, as Eden CEO Nadayar Enegesi admitted in an interview with TechCrunch.
Since then, the company has pivoted to an handling supply internally while continuing to aggregate demand. The model has remained consistent since the end of 2020, but growth has not been as expected, with TechCrunch estimating that the quite popular startup had only 600 users across all services.
Ultimately, there are two reasons why businesses fail:
Wrong Strategy i.e. no PMF, poor understanding of users, poor planning etc.
Broken Strategy i.e. poor implementation despite having great strategy.
These two separate issues share the same symptoms (stagnant growth), but have opposite solutions. When the strategy is wrong, you dump it and start from scratch. When it’s right, but broken you run experiments to find the break and plug it. Misdiagnosing the problem can lead to even more complicated issues, so it is important to get it right.
Eden has been plagued by poor infrastructure needed to handle logistics, low consumer spend and slow growth because of the subscription nature of its business.
The move to Kenya seems like a chance to take learnings from Nigeria to a more stable environment and then see how that racks up compared to the current market.
This makes sense considering the fact that they are moving via an acquisition of a company that operated verticals which Eden has sought to expand to. Lynk, the company acquired by Eden currently offers services like Beauty & Wellness, Cleaning & Care, Installation, Repair & Maintenance, and Furniture & Decor.
More importantly, the now-acquired Kenyan startup also has a pipeline of personnel that can service the demand for these services, something Eden may struggle with in Nigeria.
For Eden, a lot rides on the Kenyan expansion. The Nigerian experiment is struggling. If the Kenyan experiment is not a success, and encounters the same challenges as the HQ, it may mean that the business model is faulty or the market is not ready for it.
I wish them all the best.
Is the Open banking wedge big enough?
Two things are converging in the Open Banking space right now: small market opportunity and a movement to payments.
This combination is creating an avenue for Open Banking Pioneers like Mono, Okra and Stitch to build a wedge with “Open Banking“, then capitalise on the audience to build other tools they can cross-sell to both businesses and consumers.
Mono’s Founder Abdul said it here
“The way I see it, our market is not that big. Compare the payments market now with 2016, when Paystack and Flutterwave just started. The payments space in 2016 was very small and the number of people using cards online was very small, It’s the same thing for us right now. That’s why our focus isn’t only on open banking but data.
And He followed up with the same point here
“I feel like Nigeria is capped in terms of how many businesses we can target,”
All Open Banking startups seem to have identified similar challenges as they have all launched payment products within the last six months. Mono launched Pay with Bank in conjuction with Flutterwave; Stitch recently made LinkPay— a one-click pay-with-bank checkout in South Africa and Nigeria; Okra has a bank payments product in Beta.
As is evident, this is an industry-wide trend. However, does it make sense in the long run?
I struggle to see the incentive of this ‘new payment system’ because of the obvious barriers to usage like trust from consumers and the need to enter sensitive bank information to a third party app.
On the merchant side, it does not also make much sense considering not a wide range of users have connected their accounts and the time to onboard takes up time to make payment. It would have made more sense if they had aggregated millions of users which would make the value prop considerably better.
More on this issue on a bigger piece.
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