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Comment by miguelrochefort | Hacker News Reader

I don't understand "X for Y" businesses such as:

- Kudi: "PayPal for Africa"

- WaystoCap: "Alibaba for Africa"

- Symple: "Venmo for business payments"

Can't PayPal, Alibaba or Venmo just target these customers themselves? Duplicating these efforts seems like a huge waste of resources...

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The cost, difficulty, and research required to penetrate the market makes it not worth the potential return for Paypal/Alibaba/Venmo. Instead - another company can take the risks, build the market, then be acquired by one of those larger companies. The larger companies now has a proven business model for the market.

Like a typical Korean "grind MMO" businesses have two options:

    (a) Buy high-level gear for an extremely inflated price from other players
    (b) Grind to make it yourself (potentially losing more money than if you had bought it in the first place)

(a) is lower risk and makes more sense for businesses. They "could" spend $300,000,000 - $800,000,000 to maybe extend into a potential market. Or maybe they fail and threw away $600,000,000. Maybe they try again and lose another $800,000,000 with nothing to show for it. So why not acquire a company for $3,000,000,000 and forego the risks altogether? (All figures made up for example purposes.)

It seems odd that PayPal/Alibaba/Venmo don't take these "risks" themselves. Considering their extensive domain experience, if anyone is to successfully acquire a market, it's them.

Which is why large businesses sometimes expand into markets they feel comfortable enough to expand into using their domain experience. Markets they aren't confident they can thrive in - they don't join. There is simply too much risk attached.

They have the option of expanding their existing markets instead of taking risks trying to enter new markets. Let other people take those risks then simply buy out whoever ends up being successful. Sometimes this backfires when the new kid on the block is better at your business than you are. That's a potential risk and is also why some acquisitions appear to be too soon and have an extremely inflated price tag. Give them an offer they can't refuse before they run you out of business entirely. :)

Luckily businesses transform from innovators to job-generators when they grow, so the small companies can get a piece of the pie.

If you don't understand why "PayPal for Africa" makes sense, then you likely are not from Africa, you've never visited, or you know very little about the place.

Consider that Paypal is not accepted in a few countries from that continent, then you'll realize that there's a market for it.

The other side is Paypal is an American outfit. With options like Kudi that are not controlled from the USA, there's less chance of a group not popular with the US govt. being denied access to funds.

There are many angles to consider. You just have to know the landscape. And an aside: From my knowledge of that part of the world, kudi is Hausa for money.

The same argument can be made for "Alibaba for Africa".

Imagine if Alibaba was not founded, and the Chinese had to rely on Amazon. That's a lot of moving flowing from online Chinese shoppers to the confers of Amazon. At some point it becomes a national security issue.

So, yes, "Alibaba for Africa" makes a lot of sense.

You did a nice job explaining why consumers should choose the local service option, but you didn't address why the service options shouldn't/can't launch in those regions.

But that's not what I wanted to do. What I wanted to do, which was a reply to another comment, is explain why the local service option matters.

Reading the comment that I replied to will help you understand my line.

I did. Specifically this line

>>> Can't PayPal, Alibaba or Venmo just target these customers themselves? Duplicating these efforts seems like a huge waste of resources...

Which is enquiring about the service options ability to enter those markets.

IIRC, one of the central points of Innovator's Dilemma is precisely about why this is rarely as straightforward as it seems.

All those existing companies are probably up to their collective ears in work satisfying and growing the lucrative markets they already operate in -- it's hard to justify focus on much smaller markets with much smaller margins.

Then, sometimes, those smaller markets end up being really big, and oops you've been disrupted.

And until they do? If a company isn't able to capitalize on the whole global market why shouldn't someone else fulfill that need?

People usually take the stance of "it's just ripping of that other original company's idea" but it's very hard to make a business succeed and grow it, wherever it is, much more in the harsher overall conditions Africa generally presents.

I hate the competitive feel surrounding these kinds of startups. It doesn't seem like any of them is trying to bring anything new. Mostly, they're building mediocre versions of what already exists, then fold after 6 months when faced with reality.

If they succeed, it's all of us that lose. We'll add yet another "me too" tool to the collective toolbox, further dissipating the little focus that we had.

> Mostly, they're building mediocre versions of what already exists

Yes and as such they can easily be summarized into X for Y. It shows no originality and it requires no thought.

Not necessarily. Local knowledge can play a huge part in building companies in emerging markets. Look at any number of companies entering Asia.

I thought this is how Silicon Valley works. The churn|acquisition|procurement is how everyone makes money, at least that is how it looks to an outsider.

Finding product-market fit can be focusing on an underserved segment despite there being big players in the market already.

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