Between 2015 and 2020, I was building startups. I am now a retired founder, I just write about startups, nothing more. In the early days of my startup-building journey, I landed on the term, value proposition and it is something I began to obsess over a lot. For every startup, there is a value proposition that their startup brings to the market.
But in some circumstances, what the founders believe is their value proposition may be different from what the users decide. But ultimately, the users determine what a startup’s value proposition is. This is what I am calling the True Value Proposition. But what does the term value proposition mean anyway?
Per Investopedia, a value proposition is a concise statement of the benefits that a company is delivering to customers who buy or use its product/services. Essentially, a value proposition is a promise by a startup to the customer for example, at Digest Africa, we promise investors (our major customers) to ease their due diligence and improve on their knowledge about an ecosystem, sector, or startup before writing checks. We do this through our data that encompasses investments, mergers and acquisitions, hubs and incubators as well as startups.
The term value proposition is believed to have been invented by the storied American consulting firm McKinsey & Co in a 1988 industry research paper. McKinsey defined value proposition (in that paper) as a “clear, simple statement of the tangible and intangible benefits that the company will provide, along with the approximate price it will charge each customer segment for those benefits”.
Every startup has its value proposition. Remember, a startup can have its value proposition, but then the market could decide differently. It is common for a startup to have its own view of why people would use it, and then the market uses the startup for different reasons. In this article, I explore the true value proposition of a few Ugandan startups from a user perspective.
For a company like SafeBoda, its true value proposition is not being able to move you from one place to another. Even normal Boda bodas can do that. In fact, waiting for a Safeboda can sometimes be inconvenient because getting one off the street is easier. Safeboda's true value proposition is safety. If you value safety, you will most likely opt for a Safeboda. Safety could imply wearing a helmet, following traffic regulations, or when traveling at night.
The monthly CCTV Boda Boda accident updates that are provided by the Uganda Police through posting videos on Twitter show how the normal boda bodas are a little bit overzealous and reckless on the streets. Boda-boda accidents are very common. We lost 5 Ugandans per day to boda boda accidents in 2021 per the Police Report. This is more than we lost to COVID-19. But the likelihood of an accident reduces if you use a Safeboda. The ride-hailing app has invested heavily in training its boda boda drivers in safety, so this is something about which they are intentional.
Also, another value proposition of Safeboda is around pricing. If you are new in an area, Safeboda will be your best bet at avoiding payment of exorbitant fares. Not only will you get a preview of the estimated fare before you board, but also, the fares are calculated by the app, not the driver.
Let's get to Jumia Group. Jumia, just like most e-commerce businesses provide convenience as their value proposition. Jumia doesn't compete with malls or other brick-and-mortar stores. It competes with messenger boys or your delivery guy. Those are the guys that enable you to shop in the comfort of your house.
Jumia also provides choices. In the comfort of your home, and by tapping your phone, you will have access to hundreds of thousands of items to select from. Not even the brick-and-mortar stores provide this amount of choice. This is arguably the same for Tubayo. What Jumia provides in e-commerce, Tubayo does the same in travel and tourism.
Rocket Health could also be in this boat, providing convenience. Without leaving your home or workplace, you can have your medical tests and consultations done. Then you can order medicine from their online pharmacy. Convenience sells.
Charge Ko Technologies makes sure your phone battery will never run out. It doesn't matter where you are, you will have a 24/7 battery. Even on days when UMEME plays hide and seek, ChargeKo will make sure you are covered. This is done through their kitenge-themed power banks and charging stations at various events. ChargeKo is single-handedly fighting to end the era of fighting to charge at the DJ’s deck at events and the pain of having to put your phone in airplane mode to preserve its battery because you have to withdraw mobile money to go back home.
Yo-Waste also provides convenience. You can have your garbage picked up by tapping a button. But even much better than convenience, Yowaste ensures reliability and consistency in collecting your rubbish. You can count on them to keep your environment clean every single week. Reliability and consistency is not a very common trait in the garbage business.
Cafe Javas may not be a startup, but it is one of the best-run businesses in this country. Its value proposition? Experience. Forget the food, you can get it anywhere in Kampala, but the experience will not be the same. Not even close.
Asaak and Tugende will give you an asset that you wouldn't otherwise afford to buy. They bring forward your timeline of getting a Boda Boda, fridge, etc. If you value getting these assets now, and you can stomach paying more overtime for it, then you are good to go.
Similar to Asaak and Tugende is Numida. The startup backed by Serena Ventures is also in the credit business. They help businesses to access loans to cater to various needs. If you want to buy a fridge to improve the revenue of your small shop because people want cold rinks, you will have the following options: to save money and acquire the fridge, accept outside investment or get a loan. Numida provides the latter.
Lipa Later Uganda and Paylater Uganda do similar work to Asaak and Tugende, but their value proposition is getting a vendor more customers. Vendors part with a small percentage of their sales to Lipa Later and Paylater UG in exchange for them getting more clients. This is because their products are now more affordable.
The writer is a retired founder, and now Editor-in-Chief at Digest Africa. You can reach him at +256771162922 or firstname.lastname@example.org
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