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5 big lessons SA startups can learn from the Automattic WooThemes acquisition

This week the entire South African startup community is rightfully celebrating the acquisition of WooThemes. One of our own has been acquired, and by WordPress to boot! This is a wonderful outcome of what must have been, undoubtedly, eight years of blood, sweat and tears.

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Yet why has WooThemes succeeded where so many other passionate, hard-working local entrepreneurs have failed? Luck, to some extent, probably. But they also seem to have avoided some of the traps many of us (myself included) fall into way too often.

1. It is possible to bootstrap your way to success

Bonus: bootstrapping is a great way to overcome some of the pitfalls below.

2. Don’t dream of unicorns and rainbows

The chances of building the next Facebook-sized super-unicorn from your (proverbial) garage in Cape Town are slim to none in 2015. However, it is possible to build a US$10-million business from South Africa. By any reasonable standards, the rumoured US$30-million for WooThemes is a hugely impressive outcome.

3. Focus

I routinely choke on my evening coffee when reading about the next local startup that’s pivoting from “social” into “social + ecommerce + wallet + on-demand content + Uber for pet life insurance”. From WooThemes (WordPress themes) to WooCommerce (WordPress commerce plugins), we can see a natural, steady evolution of a coherent, singular vision relentlessly executed.

There is a lot of good business in providing tools and services, rather than building a sexy consumer product or platform from the ground up. Most consumer plays end up being “winners take all,” where there are two or three major players that eat virtually all the market share and revenue. Entering a market where you’re competing not just with other similar services, but also with all other consumer services for attention and advertiser or user spend, is brutal. There are plenty of opportunities in less crowded markets that are slightly off the beaten path of content/social/payments. The ultimate reward might not be Facebook-sized, but neither is the risk.

4. There is no shame in piggy-backing

Just about every successful South African startup I’ve come across has piggy-backed by providing services on a larger platform. You’ll read a lot about how that is dangerous. (Meerkat vs Twitter/Periscope and Zynga vs Facebook come to mind.) It is important to find a partner whose platform can bring the reach that you lack, and where purposes are aligned. The symbiosis doesn’t have to (and probably won’t) last forever.

However, gaining access to a significant market that you don’t have to build yourself is a massive win; it often means the difference between (possibly) having to course-correct after a few years when the symbiotic relationship (possibly) unravels and not getting out the gate at all. Partnerships are key. It does mean that you can’t be overly precious about your ideas — the draconian NDAs and paranoid protectionism of non-intellectual property that routinely get waved around by local entrepreneurs is poisonous to healthy partnerships.

5. Think global

Far too often, local startups focus on problems that have been adequately solved by global companies already and where a local flavour would have a tough time competing without much clearer differentiation (beyond “it’s Twitter but in a local language” or “it’s a generic Android handset but manufactured in South Africa”), or conversely are solving problems that are niche even to our own (small) local consumer market.

The global-ness of the internet is a wonderful thing — especially if you’re not trying to reach mass market consumers with geographically determined network effects, but rather target “niche” users with a geographically independent problem preferably using an established platform. Worth noting that competing globally necessarily means holding yourself to a higher standard than we’re often used to (where “local is lekker” often means “local is kinda crap, but at least it’s our crap”). You won’t get far in the global market by half-assing an over-ambitious concept; instead, focus (!) on whole-assing your core product. The problem is not that we lack the skills for world-class work; it’s that we often lack the focus required for world-class work and world-wide execution.

Here we have a great opportunity to learn from success. WooThemes is a victory for pragmatic, local entrepreneurship. Here’s to many more!

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