Just me. Jason Njoku.-I am Jason Chukwuma Njoku, Founder of iROKO. Arguably one of the most awesome internet companies in Africa. as a professional (and certified) geek I read Chemistry at the University of Manchester, in 2005, I embarked on my journey of becoming a modern day Capitalist. These are my opinions. I own them and make no excuses for having them.
Profit is a strange thing. Most people I come across don’t actually understand its relationship with time and market forces. Especially bloggers. I’m going to write a series of articles about my view on profitable frameworks of thinking, profit making and profit taking.
Profit is choice- Profit is actually a choice you make as a CEO. Do you focus on profit today?, or do you invest whatever you have in the bank from operations and whatever else you can convince people to give you in terms of ‘investments’ to grow faster. When do you start to take profit? Today or in 5-10 years time when you hope the numbers are orders of magnitude larger than today. There are very few internet businesses today, especially in Africa which don’t require some level investment to grow beyond the limitations of the founding team’s pocket. Even if you can start with $6.3k (N1Mn), time, the ticking cancer of startups, will bleed you dry as you flounder your way through the initial product / market fit hypothesis. Funding helps you grow faster and make mistakes faster.
Just before Tiger Global invested $3Mn in iROKO in August 2011, we were NollywoodLove (a YouTube channel) and operationally profitably. Outrageously profitable. Bastian and other angels had invested $200k by that stage and we had 200 movies under license.
January 2011 net revenues stood at $21k. It was 5 employees and I, those employees at that stage earned ~$200 each monthly. We worked from my rented apartment where I lived. We had already paid for 2years rent so there was no on-going office costs outside of diesel to run the generator and internet. So in reality minus my salary, the business was generating net profit of 70-80%. That was largely an internet business anomaly of having zero infrastructure and monetization costs and owning 100% of a market which 2-months earlier hadn’t existed. Only at that period of time was that possible. And of course it was never going to last. Nigerians can copy and follow follow like very few business communities out there. They didn’t know what I was doing and completely undervalued Nollywood so I was running away with it.
Six months later by June 2011 we were ~28 people and revenue had tripled. We had 800 movies under license. Did we need those extra 23 people to triple revenue. Nope. The business was on autopilot. YouTube and NollywoodLove was a cash cow, just churning out cash for doing nothing. In fact, until today it still generates hundreds of thousands of dollars a year without any real input. I could have run that business alone from my bedroom for the next 2-3 years and basically myself and my investors would have walked away with millions. But single digit millions. At that stage there was no competition. In the end the business doubled again before the end of the 2011 as we added music videos and created iROKtv to exploit this growing African content opportunity. But that was never enough. Effective distribution of Nollywood should be a business which generates hundreds of millions of dollars in revenue yearly.
Killing the cash cow- I was terrified that the cash cow would disappear in 3-5 years as people wised up to the opportunity to put movies online and competition sprung up. Today there are 50+ NollywoodLove replica channels furiously trying to make as much money on the YouTube platform. We track them all, and I must say, building iROKO’s own platform was the best decision I ever made. Imagine being 1 of 50 channels on a homogenous platform? I always told Bastian that I wanted to build a $100Mn business. iROKO was my first business that worked after 6 years of failure. So I wanted it to last forever. I wanted it to be my lasting legacy. My dent in the universe. Even if it takes me 15years to get to the Nasdaq, NSE or JSE. I will get there. So after being offered $3Mn to create my own platform from Tiger Global, I decide to suspend the immediate money in front of me, which was literally $30-50k per month in the pocket at that point. And build for the big time. A $500Mn+ African media company.
What does a $500Mn+ media company need to look like in Africa today. Well there is a great example in Kenya. National Media Group (NMG) owns newspapers, tv stations, radio stations and other holdings across East Africa. They are the largest media group across East Africa. NMG was founded in 1960 by his highness the Aga Khan. In 2012 NMG generated $147Mn in revenue of which $40Mn was profit. The Nairobi Stock Exchange has bestowed on them a valuation today of $741Mn. (63.5Bn Ksh). This is a company founded 53 years ago.
You don’t build a $741Mn valued company by taking all the profits upfront and buying houses and / or cars in the first few years. I discovered and started looking at Nollywood in late 2009. I launched NollywoodLove on YouTube in late 2010 then migrated to iROKOtv 1st December 2011. I am now looking at 2020 to demonstrate the real value in the efficient distribution of Nollywood. I recently spoke to a really well known tech founder who told me he would need to raise $100Mn in venture capital to build the company he wanted to build. I believe in him. He will raise the money because he dares to think he can build big.
But it all started with a choice.
a. Take whatever profit out of the business all today and put it in safe investments – house, land etc
b. invest the profit for more profits tomorrow
c. Raise ungodly amounts of money to build big scary $100Mn+ companies
99.9% of Nigerians I have met. Opt for decision (a) I opted for (c)
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