Each week during Season Two of The Flip, we’re going to publish an essay that corresponds with that week’s podcast episode. This week is Season Two, Episode Nine: Much Ado About the Media, which was co-produced with The Subtext and DFS Lab’s Osarumen Osamuyi and features Jessica Hope – Managing Director at Wimbart, Jake Bright – Africa contributor at TechCrunch, Tomiwa Aladekomo – CEO at Big Cabal Media, Preston Ideh – CEO at Stears, and Emmanuel Quartey – Head of Growth at Paystack.
In our retrospective conversation at the end of this episode, I asked Osarumen if building a Stratechery for African tech was possible. Here’s how he responded,
I think that beyond Ben Thompson’s fantastic analysis and incredible discipline, one of the biggest assets that Stratechery has is high-quality sources of information. I would love to wake up every morning, scan through the news headlines, and write 1,800 words of commentary about what’s happened. But I just can’t do that today because lots of the information that I need to inform my analysis I have to gather originally. Like to write a 3000-word article, I’m probably doing a couple interviews, and probably reading papers, and I’m probably reading in some cases like a book or two just to get to the amount of information density that I can begin to sift through and do some analysis. And so that’s why it’s really, really difficult to make this work at scale because you’re both doing the job of the journalist and the analyst.
While the information density problem, on one hand, can be aided by greater openness, transparency and sharing on the part of those in the ecosystem, a further factor conflating the information density problem is that all of the companies in question in the African tech ecosystem are private companies. For readers of Stratechery, you’ll see that Ben Thompson primarily writes about public tech companies, for which much more data and information is publicly available.
The media should be about data first. It shouldn’t just provide data, it should be built on data and keep generating data.— Osaretin Victor Asemota (@asemota) September 21, 2020
Do we have our models wrong? Perhaps. Did we fall into a trap set by precious fraudulent experts? Most certainly.
But for media companies to help solve the information density problem requires an outsize amount of work. As Preston Ideh, Co-founder and CEO of Stears, told me, this requires that Stears be a five-companies-in-one kind of business just to be able to deliver their end product to their customers.
If you collect the data, you have to store it properly. Then you have the structuring, you have the analysis after that, and then you have the distribution. So the problems differ at different stages of the value of the value chain.
Preston goes on to give the example of the immigration cards we fill out when we arrive in a new country. Here, there’s not a data collection problem but a data storage problem. Then, even if records are digitized – in the form of scanning into PDFs or whatever the process may be – you still have a steep structuring problem, even before you get to the analysis and distribution parts of the process.
This work requires data scientists, engineers and other tech talent – that which is scarce in our ecosystem. And, in an environment where people are loathe to pay for media.
Stears, as a company more broad in scope than just the tech ecosystem, hopes to overcome these environmental challenges and build a sustainable business that includes both an information services business (Stears Data) and a subscription publication.
And therein lies the challenge for any media company – not just tech media or African tech media – is to work out a revenue mix that invariably is going to require a diversified business model.
Big Cabal Media, the parent to TechCabal, is one such diversified media company. Here’s what the company’s CEO, Tomiwa Aladekomo had to say about that,
We got into this with the premise that a single revenue line business was insane. And so our initial mix was advertising, it was revenue from working with brands through our brand studio, our events are a revenue stream, and some of the work that we do through our TC Insights unit, creating and selling reports, and doing some consulting strategy work… I think the main challenge that we’ve seen with that is it’s trying to do a lot. If you look at the biggest companies globally, they tend to have one revenue stream that really dominates and that really outstretches, and I mean, last year we had three different revenue streams each contributing somewhere between 25 and 30%.
It’s similar, in my view, to the challenges that social enterprises face on the continent, as well. Back in season one, we published a podcast episode on blended finance, and the diversified funding sources for early-stage startups. Here’s what my b-mic Sayo Folawiyo had to say,
It’s also the nature of the problems. You’re building sustainable, profitable, impactful businesses – so it should be raised through profit-seekers, impact seekers & sustainability seekers.
The media are data aggregators, they’re data structurers, they’re journalists, they’re analysts, they’re event organizers, and community builders. And for that, they deserve the benefit of the doubt. But is that the case?
I’ll leave you with a final word from Osarumen,
I think when evaluating company performance, we are often very understanding of the fact that it’s an early ecosystem and there’s many structural market reasons why certain things can happen. But I think when people tend to evaluate the media they consume, some of those considerations just disappear.
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