Top of Mind: Happy Sunday!
We hit a technical snag last week and couldn’t make it to your inbox, but we’re glad to be back this week 🙂
Top stories – the CEO of one of Kenya’s most prominent startups gave a masterclass in crisis comms; Elon Musk gifted Twitter users thousands of dollars while still owing ex-employees in Africa. Plus, crypto startup Patricia might be playing a fast one with user funds.
Let’s get to it.
3 big things:
- Twiga’s moment
- Elon Musk’s Africa debt
- Patricia’s got some explaining to do
A startup founder’s masterclass on crisis comms
The short: Peter Njonjo, CEO of Kenyan startup Twiga, taught a masterclass on communicating in a crisis after news of the startup losing 33% of its employees hit the press.
The drought is global: African startups faced a funding slump this past year, with some permanently shutting their doors. For Twiga, the lack of existing infrastructure across the supply chain forced the startup to adopt a capital-intensive strategy to rationalise costs and increase efficiency.
However, this strategy overstretched operational expenses, leading the startup to make significant changes by cutting staff, shutting down distribution centres and reducing deliveries.
Twiga speaks: When Twiga’s woes hit the press, CEO Peter Njonjo published an article so consumers could hear directly from the company.
In the article, Njonjo broke down Twiga’s infrastructure investments and growth, which allowed them to build a competitive advantage.
After establishing this baseline, he went into detail about how the global macroeconomic conditions affected subsequent fundraising efforts, which led the company to spend the past year figuring out how to pivot the business.
Back to the basics: Twiga returned to the drawing board by strengthening their unit economics and building on existing infrastructure. Njonjo overturned the narrative from a startup about to go under to one with strong, visionary, mature, and calculating leadership.
A lesson for founders: Njonjo gave founders a playbook for handling crises:
- Talk about the problem.
- Be transparent about plans.
- Lay a clear growth path.
Final thoughts: The roaring 20s are gone. Down rounds are in vogue, and founders who want to succeed in these conditions must take the difficult path of lowering costs, increasing efficiency, and optimising for long-term sustainable growth.
We hope to see more founders share their struggles in real time to help other founders who might be suffering in silence.
Elon Musk’s Africa debt
The short: X (prev. Twitter) rolled out its Ad Revenue Sharing Program to the registered users of its paid service – X Premium. The Program was launched in the U.S. with payouts between $1000 – $23,000 to super users.
The fear of Threads: Musk accelerated payouts to U.S. creators as Mark Zuckerberg’s fledgling social platform, Threads, was on the rise and breaking records as the fastest consumer app in history.
Musk needed a hail mary to keep his users and adopted a capitalist strategy – free money.
And this month, he spread the love to Africa.
Eligibility for payouts include:
- Subscription to X Premium or Verified Organisations.
- Five million organic impressions on your cumulative posts within the last three months.
- 500 followers.
- Registered Stripe account.
Unpaid severance: While Musk paid out users for tweeting, Twitter’s Africa staff who got laid off nine months ago are still owed severance. Ex-employees in the U.S. and U.K. have received their severance packages, but employees have had to resort to the media to get Musk to pay up in Africa.
New revenue: Industry analysts believe this is Musk’s strategy to generate profit while the company tries to mend relationships with ex-advertisers. By making payouts to only paid subscribers, more users will be incentivised to subscribe to X-Premium, which could give Twitter the cash flow it desperately needs.
Final thoughts: Twitter’s ex-employees can only contend with a debtor whose priority is paying random users rather than compensating those who built Twitter’s Africa operations.
This could have been avoided if Africa had better labour laws to prevent foreign companies from exploiting working-class citizens.
Patricia’s got some explaining to do
The short: Nigerian startup Patricia, described by CEO Hanu Fejiro Agbodje as Africa’s largest crypto startup, recently launched a new token that confused users.
Blame the hack: In January 2022, Patricia reported a security breach that drained the startup of $2 million in user assets. The company announced three months ago that they were temporarily suspending withdrawals across all their platforms while they did an internal restructure. But in the meantime, users lost access to their funds.
Is this…money?: The startup launched a new token called Patricia Token (PTX) and abruptly converted user assets from Bitcoin and other stablecoins to this new token without permission from its users.
What this means: Patricia says the new token will help with its fundraising efforts while it figures out a way to pay its users what they owe at a future date. In the meantime, users will receive 1 USDT for each Patricia Token they own and hope to their maker that the startup makes good on paying them real money.
Final thoughts: Security breaches are a persistent challenge faced by web3 companies globally, with billions of dollars of assets getting lost or stolen.
Similar to FTX, there’s a chance that Patricia’s users have permanently lost their funds and will be left holding questionable Patricia Tokens.
Thanks for reading! We’d love to hear your thoughts about this week’s issue.
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