How to Build a Software Product from Nigeria (Africa) and Sell to the World

Introduction

Building a successful product is hard. The first step involves developing the product. Developers enjoy building, but there is more to a successful product than building. The quote “if you build it, they will come” no longer holds. To make a product successful, you need to market it, engage with customers, get feedback, and iterate on what to do next. The quote no longer holds for some reasons. The first reason is that hundreds and thousands of products compete for attention and space on your phone or browser tabs. So, if you build and expect people will come, you may be waiting for a long time. Customers are less likely to try new products unless they make their lives ten times better than the previous product or hack they currently use. Another reason is the market. Yes, you have built a great product, but it is not enough. You need to ensure that there is a market willing to pay for the product. This is known as product-market fit.

Nigeria

Let’s zoom in on Nigeria. According to the World Bank, Nigeria has about 200 million people. Some entrepreneurs tend to use this population figure to convince investors that they will make money because the population size is large. Most of the time, this is not true. Over and over, Nigerian (and African) startups raise funds at a high valuation, build a product, enter the Market, and get punched by reality.

Nigeria is the poverty capital of the world. Nigeria has more poor people than India, even though India has more than five times Nigeria’s population. The inflation rate for May 2024 is 33.2%. It is high and it does not appear to be going down anytime soon. The Nigeria-dollar exchange rate is high. A year ago, it was about 460 naira per dollar. In May 2024, it is over 1400 naira per dollar.

According to an article from BusinessNG, Netflix has about 169,600 paid subscribers out of 106 million bankable adults. South Africa has over 1 million paid subscribers. Furthermore, according to Techcabal, there were only 1.6 million admissions in 2023. Lagos alone boasts 20 million people, yet there were only 1.6 million filmgoers in Nigeria for nine months. In another Techcabal post, IROKOtv started 2022 with 192,174 active users, but by the end of the year, those numbers had dropped to 46,000, a 76% decrease. Since then, IROKOtv’s subscription numbers have steadily decreased.

All these go to show that the population is not equal to the target addressable market, Nigeria is poor country, and Nigerians are poorer than they were a year ago.

Why are Nigerian Startups not Building for the World

It all starts with an idea. Y Combinator’s motto is to make something people want. To build what people want, you need to understand what people want. It is not enough to have a good idea; it must resonate with the people you hope to sell to. You might ask yourself: How do you get ideas that might resonate with the world? The answers are as follows: new technology, new customer behaviour, and new regulations.

Let’s start with the new regulations and laws. New Regulation inspires new ideas and new startups. For example, in the United States. A new regulation enabled startups to sell cannabis over the counter. Another example was when Amazon’s One-Click patent expired. Some startups, such as Bolt, built this technology for other eCommerce stores. This is good, but for a Nigerian in Nigeria, it is difficult to keep up with new US regulations. Also, because it is a new regulation, I think the founders of the companies must be US citizens.

Secondly, new customer behaviour enables the formation of new startups. When Airbnb founded the company in 2008, the founders had a difficult time convincing both the hosts and the customers to use the service. The idea didn’t make sense. Why would anyone choose to offer their home to strangers, and vice versa? The 2008 housing crisis in the United States, which had a global impact, prompted people to seek alternative sources of income. Airbnb was there to provide the service. As a Nigerian in 2008, it was practically impossible because culturally we are a superstitious society. Even in 2024, it is relatively popular in only places like Lagos and Abuja. This idea will never come to a Nigerian mind let alone attempting to pitch it to VCs, early adopters, and the world. The Nigerian culture is conservative and less receptive to innovative technological solutions.

What about new technology?

New Technology is the Answer.

1. Build digital products. I love software. It is much easier to build and sell digital products. For distribution, you can pay Google Ads, and Facebook Ads and target customers in whatever part of the world you want to prioritize (US please :winking_face:).
2. Build products on top of global companies and platforms. There is a shared context and global target addressable users. For example, you can build a product on top of Shopify. Shopify has over 2 million merchants and 4.6 million websites. Shopify is a Canadian company, yet over 50% of its merchants are in the US. The United Kingdom and Australia are among the top three. If a Canadian company focuses on the US market, I think Nigerian startups should do the same. Another example is a Nigerian developer who built two Twitter bots. The bots were successful. They had over 500k followers each. The reason they were successful was because distribution was zero, there was shared context among all Twitter Users, and he monetized through Google Adsense. It was making about 1k USD monthly before Elon Musk took over. Of course, the revenue is small for a startup, but you get the gist.
3. Solve computer science problems. There is a shared context among tech companies and developers. The target addressable market includes tech companies and companies that use computer science technology. Tailwind Labs, for example, built two products: Tailwind CSS and Tailwind UI. The CSS framework is popular. I use it. They earned seven figures in 2022. A Nigerian developer built Chakra UI. It is a component library. He has started selling a pro version too. The product is popular among developers globally. I am not sure how much he has made so far, but I believe he is on the right path.

What I would not do

Don’t try to build highly regulated industries. It is expensive to go global if you are a Nigerian in Nigeria. Many of them have died before selling to the world. One just died today.

Conclusion

When I was growing up, I read a story about hunters and birds. The birds realised that hunters had gotten good at shooting without missing. They advised that they should learn to fly without perching. This story also applies to Nigerian startups and Nigerians generally. The macroeconomic reality are like the hunters, and they have gotten good at shooting at Nigerian startups without missing. The solution is for Nigerian startups to learn to fly without perching. The only way is to build and sell to the world (US and Maybe Europe).