{"id":455,"date":"2018-09-26T08:45:25","date_gmt":"2018-09-26T06:45:25","guid":{"rendered":"http:\/\/www.jongore.com\/blog\/?p=455"},"modified":"2018-09-26T08:45:25","modified_gmt":"2018-09-26T06:45:25","slug":"the-mno-business-model-trap","status":"publish","type":"post","link":"https:\/\/www.jongore.com\/blog\/startup\/the-mno-business-model-trap\/","title":{"rendered":"The MNO Business Model Trap"},"content":{"rendered":"<p>I touched briefly on this yesterday in my post.\u00a0 There&#8217;s a problem that inevitably\u00a0faces many startups in Africa where a strategic decision must be made whether to work with an MNO or not. For most, that decision is closer to the question of how much of the business model are they willing to rely on the MNO for?\u00a0 The fact is that the MNO&#8217;s are gatekeepers to most of the digital economy in Africa.\u00a0 They own the mobile money networks, the agent networks, cell phone access, and internet access.\u00a0 It&#8217;s a great position to be in if you&#8217;re an MNO because everyone wants to work with you, and you can dictate the terms.\u00a0 For the reasons previously stated, startups view the MNO as a great channel to reach customers. I&#8217;m willing to say that if you look at a collection of 10 of the most successful startups in Africa, 8 of them have business models closely intertwined with an MNO.\u00a0 \u00a0That means MNOs do provide a lot of value to startups.\u00a0 But with that value comes a significant amount of risk.\u00a0 Some of these risks include but are not limited to:<\/p>\n<ul>\n<li>The MNO will take a piece of any revenue or sales you generate on their channel.<\/li>\n<li>They might have hidden fees in parts of the journey, making it more expensive for your customer.<\/li>\n<li>\u00a0If you become successful enough, they might decide to dictate your price point to the customer.<\/li>\n<li>They might copy your model and push you out.<\/li>\n<li>They might renegotiate your fees when a new CEO joins.<\/li>\n<li>They might change your product if they think it&#8217;s affecting their business model<\/li>\n<li>They might give your\u00a0business model to a competitor<\/li>\n<li>They might just cut you off if they don&#8217;t like you anymore.<\/li>\n<\/ul>\n<p>These are all things I have seen happen to startups since my time working in the space.\u00a0 It&#8217;s usually resulted in the startup dying a slow painful death.\u00a0 Sometimes, the startup is able to pivot, but that&#8217;s rarely the case.\u00a0 It&#8217;s important to understand that while MNOs can provide massive value to a startup, the risks of them extracting rents on your model in the future are pretty high.\u00a0 Be careful!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I touched briefly on this yesterday in my post.\u00a0 There&#8217;s a problem that inevitably\u00a0faces many startups in Africa where a strategic decision must be made whether to work with an MNO or not. For most, that decision is closer to the question of how much of the business model are they willing to rely on [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-455","post","type-post","status-publish","format-standard","hentry","category-startup"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/455","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/comments?post=455"}],"version-history":[{"count":2,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/455\/revisions"}],"predecessor-version":[{"id":457,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/posts\/455\/revisions\/457"}],"wp:attachment":[{"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/media?parent=455"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/categories?post=455"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jongore.com\/blog\/wp-json\/wp\/v2\/tags?post=455"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}