After KKR's $1.5bn investment into Jio Platforms was announced on the 22nd of May, the Wall Street Journal reported:
[Chairman Mukesh] Ambani has said privately that his vision for Jio is to create a company that encompasses a telecommunications firm like Verizon Communications Inc., a service like Google, a digital payments company like PayPal Holdings Inc. and a digital content provider such as Netflix.
KKR's investment was the fifth into Jio Platforms in as many weeks, adding $1.5bn to the cumulative $8.8bn that Facebook, Silver Lake, Vista Equity Partners and General Atlantic have injected into Jio's coffers in the last month, valuing the business at $65bn.
A whole treatise can be written on the confluence of forces that have catapulted Jio in four short years to a point where Mukesh Ambani can harbour aspirations of building a multi-service super app to rival the Chinese messaging service WeChat, after whom the term was coined. In aspiring to such a lofty goal, Ambani shares a vision held by Mark Zuckerberg, who has written about how encrypted, privacy-first messaging tools will become "a platform for many other kinds of private services,”.
Lessons can be drawn from similar attempts to emulate WeChat's "everything app" network effects, for there has been no shortage of attempts.
African payments fintech Cellulant offers a useful definition:
A super app is an all-in-one, multi-functional mobile app that combines several services such as food/gas ordering, movie ticket online shopping and utility bill payments with features that include various payment methods, other financial services (lending/saving), and communication (chats) into a single platform.
Naturally, there will be variation in the exact services offered. Suffice it to say that the sum total of services offered ought to serve virtually all the needs of its customers, as Cellulant articulates:
By design, a super app should offer a seamless, integrated, contextualized, and efficient experience that collates several single-purpose apps into one app, offering consumers a single portal through which they can access “everything” they typically need.
A good case study of the iterative process that is the super app is Nigeria's OPay. There are plenty of similarities between the Asian and African markets, in that they both have young, growing, "mobile-first" populations. where smartphones represent the primary internet access point for a majority of internet users.
The three-year-old company traces its origins to Chinese-owned, Norwegian web browser Opera, who have openly proclaimed OPay to be "Africa's super app".
The company launched as a payment service, which has now evolved into a comprehensive consumer-facing payments platform. The service creates a bank account for users, using their phone numbers as their account numbers. People can receive and transfer money, pay bills and take out loans. In doing so, the company set out to tackle the lofty goal of reaching Nigeria's unbanked population of 36.6 million people. That wasn't enough.
The company raised a $120m Series B in November 2019 from top-tier Chinese investors, including Sequoia China and Meituan-Dianping, who know a thing or two about super apps. This followed hot on the heels of a $50m Series A in July 2019.
To put those figures into perspective, that represents 8.5%, 13.1% or 34.3% of all venture funding in Africa in 2019, depending on which total you use. That's a topic for another post.
When OPay announced its first funding round in July 2019, users in Lagos could not only use ORide, its motorcycle ride-hailing tool, but also bus transport (OBus), tricycle-hailing (OTrike), food delivery (OFood) and wealth management (OWealth).
Firstly, I bow my hat to the committee that signed off on such daring departures from the 'OPay' brand and name.
Secondly, I couldn't help but notice that some of those services were missing in a more recent list confirmed by Derrick Nueman, VP of Investor Relations at Opera, in an interview to TechCrunch. OFood and ORide were the only ones left of those available in June 2019, whilst new services like OMall, OTrade and OExpress had popped up.
The reasons for services appearing and disappearing are multifarious. OExpress, for example, owes its existence to stringent laws that were recently introduced which banned commercial motorbikes from operating on over 500 roads. As a result of these laws, ORide was essentially repurposed to become a logistics business, OExpress. The future of ORide depends on the company attempts to figure out how to navigate Nigeria's tricky regulatory landscape - again, a topic for a different post.
OPay's core business is growing at a rapid clip, claiming to process $10m in transactions daily.
Why not focus purely on financial services, you may ask? Well, for one, any given African fintech would be doing well to accurately represent the competitor landscape in its pitch deck without populating the running to several slides, as the graphics below illustrate:
The calibre of investors on their cap table would suggest there is some method behind the madness. Neuman points to the success of Grab and Gojek as validation for the concept of running multiple thin-margin, high-burn, businesses simultaneously.
The company has identified Ghana, South Africa and Kenya as growth markets. Setting aside the idiosyncrasies of each country and the challenges this will present, the juggernaut is bound to face heavy competition from startups operating in each vertical it enters. In mobility it finds competitors like Gokada, Max and EasyMobility, whilst in food delivery it will come up against the mighty Jumia Food and multiple smaller players.
Over the long term, it's hard to say whether OPay will succeed in becoming Africa's super app. With the amount of backing it has received and the investors behind them, you would think there may never be a more well-placed contender.
Mark Zuckerberg has been open about his desire to transform Facebook from a social network to an all-encompassing platform for at least a couple of years.
Indeed, seen through this teleological lens, it's not a stretch of the imagination to see how some of Facebook's largest acquisitions and most significant product launches serve this mission.
The recent launch of Shops is only the latest development in this arc, which goes as far back as the acquisitions of Instagram and WhatsApp in 2012 and 2014.
Over time, Facebook has morphed from a social network to a smorgasbord of utilities, including messaging, news consumption, e-commerce, augmented reality experiences, and advertising. I haven't even gone down the Libra rabbit hole. Zuckerberg's prophesy of VR/AR becoming the next technology platform, after the mobile phone, the web and the desktop computer, may or may not come true. If it does, you can bet that Facebook will be well placed to dominate.
Coming back to the larger point, Zuckerberg has a super app in his sights. However, unlike WeChat, Facebook does not enjoy the support of Western governments or the trust of users. There are various valid reasons for that, but the contrast with WeChat is worth emphasising.
China has essentially handed WeChat a defacto monopoly on messaging. Facebook Messenger has been blocked since 2009, whilst WhatsApp has been blocked since 2017.
This monopoly was the foundation on which Allen Zhang quietly built the world's foremost super app. It would be remiss of me not to give a plug to Zhang's brilliant product design principles, which Andreessen Horowitz's Connie Chan has covered.
In contrast to the reverence given to Zhang in China, Zuckerberg has been heavily criticised in multiple Western countries for a host of scandals; the headline ones don't have to be rehashed. These crises, primarily relating to breaches of user privacy, may well abate, but it will be a long and arduous journey before public trust is restored.
What's worse, Facebook's business model itself is coming under criticism. Early investor Roger McNamee has written about how the company's bottom-line is intrinsically tied to KPIs which are best optimised through stimulation of our "lizard brain" emotions, such as fear and anger. The ethics of this is beyond the scope of this post, but it's worth noting that this criticism isn't top of agenda for lawmakers and regulators, yet.
Far louder are calls for anti-trust investigations of Facebook's acquisitions, particularly of WhatsApp and Instagram. Massachusetts Senator Elizabeth Warren, the most vocal proponent of such measures, has more than few sympathetic ears in Washington. It will be interesting to see what happens if she is on Joe Biden's ticket, as this was more-or-less her cornerstone issue.
To sum up, Facebook has been and will likely continue to be impeded from becoming an "everything app" like WeChat, largely due to the milieu it operates in.
Lessons for Jio
The OPay trajectory teaches us that the path to becoming a super app is definitely an iterative one. Then again, perhaps Africa's regulatory landscape and the sheer volume of startups competing in each vertical means that this case may be too idiosyncratic. Or not?
On the financial services front, India has recently surpassed China in terms of VC investment into fintech. The competitive landscape is just as crowded as the African market, with India lagging only the US and the UK in investment in 2019.
In entertainment, Jio is not only up against Netflix and Amazon, but India's most popular platform, Disney-owned Hotstar. With the former two shut out of China for the time being, there is no doubt that they will be focusing on India as their growth market for this decade. Netflix CEO Reed Hastings has been open about this for a while now. Even food delivery companies like Zomato are hoping to hook consumers to their apps through video content.
The entertainment market will be a fiercely contested one, as demonstrated by the fact that India has the world's highest data usage per smartphone with an average of 9.8GB per month. A lot of credit for this goes to Jio's cheap data plans which have brought hundreds of millions of Indians online. This market is defined by both low costs and differentiation, as Indians have gotten used to premium content for the equivalent of £2 a month. Jio is well placed to compete on both fronts.
As far as telecommunications goes, Jio Infocomm has amassed 388 million users in three short years. Incumbents Airtel and Vodafone have been limp in responding to Jio's ascent.
Though deleveraging of the Reliance parent company was perhaps the driving motivation for the recent fundraises, the addition of KKR, General Atlantic, Vista Equity Partners, Silver Lake and Facebook to their investor base is sure to provide a multitude of benefits as Jio goes sets its sights higher.
Facebook offers a cautionary tale of how poor governance, unfettered shareholder capitalism and an insouciance towards the welfare of users can leave perhaps irreparable damage to a company's brand and reputation. Ambani will do well to heed this lesson.
Mukesh Ambani has enjoyed a mutually beneficial relationship with the ruling Bharatiya Janta Party (BJP). The upper crust of Indian society hold considerable sway in politics as a result of their wealth. That's a pandoras box worth steering clear of, but suffice to say that the risk of Jio coming under attack for anti-trust or user privacy violations is considerably lower than Facebook's.
The prospect of the government going as far as the Chinese did with WeChat by handing out monopolistic advantages is unlikely.
A whole generation of Indians has come online for the first time in the last few years. Unlike Western populations who grew up with a wide range of providers for their needs, Indians will probably be more pliable to the notion of a super app, having known little else.
I'd like to stress that my knowledge is far too shallow to predict whether Jio will succeed in becoming a multi-service super app.
Learning from past examples is undoubtedly instructive, but we should never lose an appreciation for the complexity of the world.
Deal of the week
Evervault, a Dublin-based internet infrastructure company, raised $16 million in Series A - funding. Index Ventures led the round, and was joined by existing investors Sequoia Capital, Kleiner Perkins, and Frontline Ventures.
CEO Shane Curran's (20) vision of a world where data privacy is preserved by design is revolutionary. Read for yourself.