That’s “good morning” in Tiv
In sizing up OPay as a competitor, Segun Agbaje, CEO of Nigeria’s GTBank, once remarked
“Anybody who has the guts to pilot at scale, and has the money, and has the will, and has the drive is someone you really have to watch… This is what makes OPay very scary.”
This was back in September 2020. He might not have known it at the time, but Agbaje made a self-fulfilling prophecy.
Fast forward to August 2021 and GTBank currently has a market cap of $1.99 billion, the highest of any Nigerian bank. OPay recently raised $400 million at a valuation of $2 billion. With this fundraise, the payments giant now has a higher valuation than Nigeria’s most valuable bank — that’s “very scary”.
At the time Agbaje made that comment, OPay was in transition.
The company had experimented with several verticals, all unmistakably prefixed with “O”: OMall, OTrade, ORide, OEverything, which seemingly pointed to its super-app ambitions. But a big part of OPay’s strategy was also to use those verticals to drive the adoption of its core business: payments.
So that while an episode like the Lagos okada ban of January 2020 was disastrous for ORide, it was a blessing in disguise for OPay because it made the company focus.
And according to reports
, OPay now processes about 80% of bank transfers among Nigeria’s mobile money operators and 20% of the country’s non-merchant point of sales transactions.
Blitzcaling done well?
The report also claims that OPay is the fastest African startup to reach a $1 billion valuation.
Although, that depends on how you look at it. OPay entered Nigeria by acquiring PayCom in 2018, and PayCom was founded in 2010.
So did OPay become a unicorn in 11 years or 3?
Either way, in trying to make sense of their growth strategy, Emeka Ajene of Afridigest opined
“OPay’s actions in Nigeria are best understood and analyzed through a blitzscaling lens.”
Blitzscaling is a term popularized by Chris Yeh and LinkedIn co-founder Reid Hoffman through their book of the same title. It’s a business strategy synonymous with growth on steroids.
While blitzscaling, a startup prioritizes speed over efficiency to beat out its competitors and secure market leadership, it then uses that leadership as a platform to eventually reach profitability.
Back to Ajene again and OPay’s approach to blitzscaling:
“The approach replaces the concept of first-mover advantage with that of first-scaler advantage, putting forth that many technology markets are winner-take-all or winner-take-most… Indeed, OPay seems to have viewed (and perhaps still views) the Nigerian market as winner-take-all or winner-take-most.”
But here’s the impressive part about OPay. In winning the market, the company hasn’t necessarily sacrificed short-term profitability.
In 2020, after just 2 years of operations — or 10 — OPay says
it became a self-sustainable business.
This is almost too good to be true.
According to Yeh and Hoffman, while blitzscaling, a company may expect to reach profitability after a decade or even more.