The year 2023 has started with a bang; the world of entrepreneurship and the digital realm is changing the economy at a rapid pace. Some critical corrections needed to take place and now we are back to reality – ideas chasing money and not money-chasing ideas.
As we face this new reality, I thought I’d share some of my thoughts around the next 12 months for all the digital avengers out there. In this article, we explore the rise of ultra platforms, the resurgence of revenue-focused start-ups, and the importance of prioritising customer-centric solutions over technology hype.
Move aside super-apps, ultra platforms are taking over
The Middle East, and specifically the UAE – with its high smartphone penetration rate of 97.6 percent and young ever-growing population – has given way to the rapid adoption of super-apps that by definition offer people multiple services in one application, from calling on groceries to taxis to healthcare. However, despite their efficiency and convenience, most super-apps cannot offer customers an entire digital ecosystem that is integrated with third party providers who are ready to meet customers’ changing demands.
Enter platforms. As platforms evolve, they will pave the way for a more sustainable business model that unlocks new revenue models for growth. But their value lies beyond just being an aggregate digital experience. Platforms serve as a single point of service for the new age of digitally native customers.
Platforms can offer a comprehensive and seamless experience by providing personalised services and expanded product offerings, enabling customers to focus on their core business, while leveraging the best of other service providers within the ecosystem.
Wio, the region’s first platform bank, embodies this integrated approach. Not only does it offer a direct-to-customer service, but it is also embedded onto other platforms, generating new revenue streams. Wio has built an ecosystem that includes features such as budget control and invoicing for SMEs, as well as integrations with third party providers to offer customers access to IPOs and Stripe, for example, to provide e-commerce payments within minutes.
Revenue over valuation
As the era of ‘easy money’ for start-ups is over ushering in a return to normalcy, we’re going to see a shift back to revenue over valuation. This will force start-ups to switch from a growth mindset to focus on a path to profitability as investors will increasingly seek real revenues. While some start-ups in the region might continue to get an easy ride, the overwhelming majority will have to fight for outside capital and prove their revenue model to investors. This is an age-old issue, especially for entrepreneurs in industries with high barriers to entry and burn rates.
One of the major flaws I see in businesses today is the assumption that because they are a digital company, they can easily cross over into another industry and gain revenue share. A fintech cannot just start a delivery company – the fundamentals are different, and the space is crowded.
Similarly, how many non-financial apps have some sort of financial service embedded as part of their business plan? I call this mythical revenue – a lot easier to sell and a lot harder to realise. It’s time entrepreneurs got back to basics, and focus on their core business and core value proposition. It’s still possible to attract investment as long as the focus is on solving real-world issues and there are sound business fundamentals in place.
Crave the solution, not the technology
Technology has become an addiction for some companies, and like all addictions it draws you in and comes at a cost. There are two areas where I see this play out: First, we frequently hear companies announcing plans to harness the power of blockchain technology to meet set objectives.
However, when you dig deeper, it comes to light that this investment is towards a problem that doesn’t need to be solved or does not deliver enough value for users to want to pay. Companies often try to shoehorn technology like blockchain into situations where it isn’t required or necessary–a case of creating solutions in search of problems.
The second is the allure of shiny new technology. Legacy technology is one of the biggest challenges that traditional corporates have to overcome; however, this isn’t the case for most start-ups. Therefore, they don’t need to be fixated on investing in the latest technologies, especially if it comes at a cost to their customers and profit.
There are more start-ups than ever selling fragmented solutions with limited capabilities, driving companies into a cycle of never-ending spending on tech – most of which will never really help customers.
Businesses need to be current but before systems are continuously updated ask yourself: how will this new tech help my customer, how much will I save by having it, does it allow me to scale faster and is my scaling ambition realistic? It’s important to remember that not all tech is made equal. In fact, many tech start-up partners fail to deliver on their promise to add value.
Tech solutions, including cloud and SaaS services, are loaded with hidden costs so companies must have a clear objective to justify their investment in new technology. This balance will impact your profitability or even survival in many cases.
As businesses clamour to become ‘digital first’ and keep Gen Z on side – the largest ever generation, the opportunity for growth and innovation is exhilarating. The acceleration of global digitalisation brings with it immense potential for improved customer experience and creating new revenue streams. At Wio, we are optimistic about this and are driven by the mission to ensure there is a human side to every customer’s digital experience.