Forex strategies: How I Shorted the Naira

[Disclaimer: This post is just a case study. I am not writing it to claim that I got rich from some currency short or to encourage any aspiring short sellers on how to make trades or deals that will affect the value of the currency of our beloved country].

It was early 2015, around January, February to be precise. The value of the Naira had just taken a beating against the greenback and our Elections were nearing. Few anticipated that oil prices would keep falling all through the year.

In 2007 and 08 I thought the oil price of around $100 per barrel was just a temporary high but it stayed up there longer than we most anticipated. Then the world became used to high oil prices. It was a lost opportunity to a country like Nigeria I believe as the government went an unnecessary spending spree while the foundations of the economy were still shaky. Fast forward to 2015, there I was, a self-proclaimed student of world economic trends with a chance to play real life "short selling" with the little that I had or didn’t have.

I first read about short selling in 2008, I was just beginning to take an interest in the stock market and I tried to buy around 300,000 Naira worth of stocks. I got just a few bucks out of that as the stock market in Nigeria collapsed the following year. I wondered if someone read a little more and analyzed a little more of the capital market situation in the country back then and found a way to short most of the overvalued stocks (most stock prices were supported with credit from sometimes the banks that are issuing the stocks). I never found a way to short the stock market, so I gave up.

Early 2015 I had a trip planned. I was terribly worried about the fall of the Naira and I was scared the Naira could fall even further. Then it hit me, this is a situation I could short and make a profit. But before I attempted a short I realized with nervousness of the coming elections, the Naira could fall more and if oil prices keep falling, it could fall even further. So I used the excuse of the trip I was going on to collect a Naira loan which I then changed into Dollars at a rate of around N185 to the dollar and I kept the money.

After I came back from my trip and it was time to pay back my loan, I sold the Dollars at the rate of 220 each. I made a profit of N35 on every dollar I bought at N185. I paid back the loan and kept the N35 profit on every N185 I borrowed.

At today’s rate, a day after the U.S Fed raised interest rates, I would have doubled my profits if only I kept the loan long enough. I would have kept it till next year as I anticipate an oil price fall to follow the U.S. Fed rate hike.

 

"We just wanted to build the market, so we burned through our money," Unknown.

Many high flyers are flying straight into a banner with the words of the headline above written on it. It's not totally dumb for a startup to try to burn through a pile of cash and create a new market that it will turn into a future cash cow. It takes though, a lot of vision to achieve, and, of course, very patient investors.

Jet.com is the highest of these flyers, it is trying to take "some" of Amazon's business by spending it's way to growth in a span of a few years. As crazy as it sounds, these guys have vision. I must say. But there is a difference between vision and desperation, and the smaller "wanna be' flyers that I am seeing are more of the latter.

Selling stuff so cheap that a company shifts it's losses to it's investors is just the tip of the "losses for growth startup" icebergs we've been sailing through lately. Now startups give away money to users to have them sign up. You read that correct. You sign up with them, you get paid!

Not to pass any naive judgments here, many believe this is now the secret to building big startups fast, by losing money very fast in order to have growth. Uber, Airbnb, and many more are all doing this. My gut tells me this is not the right way, the Facebooks and the Googles where not built this way.

The main reason for this is probably the cheap money that is about to dry up in the coming months as credit is tightened with the coming rising interest rates. Then the market will get a reality check and we'll see if this strategy has worked or if it will backfire and then we'll see the ones saying - "We just wanted to build the market, so we burned through our money,"

App That Finds Your Birthday Mates Launched by Nigerian has the potential of going Viral.

Launched by a Nigerian, the app that helps you find other people with the same birthday with you I believe is both exciting and has the opportunity to go viral and engage users with new exciting birthday activities and connections. Here is how..

Find My Birthday Mates is an app launched by a Nigerian Kanayo O. that connects to social networks and finds those with the same birthdays with you and connects, it also looks for those in the same area as you so you could organize a collective celebration, may be dinner or even a party.

Apps like these are very exciting especially when used for the first time, they are fun to try. Discovery is fun and so is connecting with new people and almost everyone will be tempted to give them a try when the first use them. Any app that gives you the opportunity to connect also gets the opportunity to go viral in return when you invite new people or try to reach your network using the app.

But we have seen apps that go viral quickly without any utility use (they are only fun the first time) and then disappear quickly. www.birthday-mates.com can thank their lucky stars that birthdays don't just happen once in a lifetime, it's a yearly occurence. And, if they can build out more features, like help users organize birthday events and have notifications when a new birthday mate moves to your city, they can be as useful as the apps we use daily and can't imagine living without.

How Sustainable is The Startup Ecosystem in Nigeria

Always launched with much fan fair and a long guest list of celebrities and media people. The Nigerian startup ecosystem may be already partying too much, like it's 1999. Except for the biggest media companies and some fast cash burning big ecommerce sites, I doubt if any of the startups have much revenue or even profits to be dropping these launch parties. Yeah, launch parties and events, By "launch" being pre-revenue, pre-sales and sometimes even pre-product.

I'm sure it's nice to mix business and partying like Jordan Belfort even before the first sales start coming in. And I am open to the claims that these PR events are essential for press coverage and early realeases. For example, SlotMobileApp that launched recently, is already at the top of high traffic Nigerian ecommerce sites. But What's the main difference between them and Huntella Gadgets, a similar site that has been around for a while and which in a sustainable way acquire much of it's business through social media and search traffic. Which of the two is profitable and which will outlive the other?

Think of Nigerian music apps that sponsor weekly events with big name celebrities, Are they profitable or will they run out of cash? This is all debatable.

Noise isn't always performance. just take a look at SHOPA. The fast growing $11 million venture funded ecommerce startup that just closed it does after a high profile party attended by models and clebrities and then follow-up campaigns featuring the same class.

Seems we have forgotten the importance of Organic growth. We have no retrospect of how Startups like Instagram and even Facebook and Google got to where they are. They grew by lowering their costs of acquiring new users. Sometimes that cost is brought down to zero with their viral marketing.

Seriously, if you have to pay celebrities to acquire new users (and you are not even an entertainment company) how long will you be in business without again raising a lot of money to keep paying these celebrities and again and again till the funding surpasses your actual business or we hit a funding crunch and you are out of business.

Lastly, I forget where I saw this quote, but the saying goes like this "If you wanna survive in business, be a cockroach." I know investment is good in a booming market to grab as much market share and as quickly as you could, but being wasteful is equally bad and can kick you out of the market. 

4 Things That Helped Win World War II Which Are Unthinkable Today.

World War II was a deadly conflict, it killed millions of soldiers and innocent civilians. It was a war that had to be won at all costs. Some of the tactics employed are unthinkable in this modern day but they were what needed to be done in order for the allies to come out victorious over the axis.

1. Countless Human Sacrifice in the Front Lines: The Soviet's red army lost more than 10 million men in the eastern front. It was the necessary cost of stopping Hitler's troops march to Moscow with powerful weapons like the German machine guns and the Panzer tank. Endless ground troops were sent to face the advanced German weaponry. They were basically marched into a slaughter.

2. City Infernoes: A number of cities were completely set ablaze with air raids and fire fights when they were contended by opposing troops. Including Italian cities, the German city of Harmburg and the Russian cities of Kursk and Stalingrad. Thousands of civilians burnt in the blazes.

In modern day, Unless for military and communication targets, Cities are not indiscriminately targeted in warfare.

3. Poor Working Conditions in Weapons Assembly Lines: In the assembly lines of war hardwares in the US, workers worked very long hours in order to out manufacture and out supply the Germans in weaponry to the front lines. When the workers tried to unionize and strike, President Roosevelt threatened to enlist them in the army unless they returned to work.

4. The cost to animal rights: I'm not sure if there's an existing estimate on the number of horses killed during the war in Europe. The Soviet used specially trained dogs to deliver IEDs on a suicide mission to moving German vehicles.

5. Use of the Atomic Bomb: The US used the atomic bomb, twice, in order to take Japan out of the war. Atomic warfare is unthinkable today as it may lead to a full blown Global destruction.

The World today has many rules to conventional warfare that classify so many things as war crimes including the use of chemical or biological weapons. In the day of politically strong workers unions, PETA and the Hague, can desperate wars be won?

First Generation of Nigerian Startup Founders: Where Are They Now?

Around 2007, with cheap money flooding international investors' pockets, Global startup funding began to pick up at a fast rate. Funding had been undergoing sluggish growth since the start of the hangover from the dot-com crash.

Social media startups were popping up, digg, reddit, del.icio.us, twitter, were becoming sites you had to visit daily. Mashable was also coming up as a half blog, half social site. New entrepreneur networks were forming online and news of new funding was being shared daily. Optimism was back and so were new ideas.

This time founding a tech company wasn't limited to Silicon Valley alone. After the crash, funding got really scarce and the cost of starting and running a startup was hitting rock bottom. This opened the doors to many, including us, a few innovative Nigerians.

If we rewind 3 to 4 years back, I was already running my startup. The African Music Network, a music and discussion site hosted on only 100mb of server space. this was during the days of Styl Plus, Plantashun Boiz and Tony Tetula. In less than 2 years, the service had to shut down, and not because it didn't gain traction, but because it was extremely difficult to make credit card payments to the American hosting company and monetization in Nigerian didn't exist at all back then.

Now I run 9flix, One of the front runners in the future of Nigerian video entertainment, well, according to them > What You Get From Video On-Demand Services - Premium Times NG

Folabi Ogunkoya - I think Folabi is one of Nigeria's first Internet success stories. He co-founded CaramelLounge together with Lawrence Bassey-Oden during the early days of social networking when it was dominated by MySpace. MySpace was more American than Global (probably one of the reasons for its failure) so it was tough to meet fellow Nigerians or Africans via the network, mostly because there were few.

Folabi and Lawrence built caramellounge to solve that, and they sold the company not long after launch. It became Afriville and later shut down (probably because of dominance of FaceBook).

Folabi Ogunkoya is now an investment banker in the UK.

Solomon Sydelle - After the reign of MothelandNigeria.com, the one time biggest Nigerian site, which was never updated, Another patriotic lady took the reigns from Boomie, the owner of MotherlandNigeria. Solomon Sydelle was an early Nigerian blogger with Nigerian Curiosity.

Loy Okezie - Loy returned and settled in Nigeria to be a part of the developing startup scene. He has played a significant role, with his blog TechLoy becoming a news platform and a launch pad for Nigerian startups. Many Nigerian startups have taken to TechLoy to announce their launch or funding news.

Loy Okezie still runs a few tech news outlets including Techloy and partakes in many Startup events.

Francis Oghuma - The Naija educated and South Africa based outgoing personality launched an innovative idea of a social networking engine for Nigerians. Together with Nanje Mambe, the founder of the AfroVision group and now Njorku the Cameroonian job search engine, Francis launched Naijaborn as a smart social network for Nigerians, which has a searchable user generated database of the global Nigerian community.

Francisnow lives in Germany and has launched other digital media businesses like Sowambe, House of Picha, and a music discovery platform Jamoflife.

The Business of Nigerian Content Business | Case Study: Gimmesom.com

For a while now, I have been screaming that a great Nigerian content site needs to come out and take all the traffic. I even considered building my own site which will be easy to run and with lots of daily content flow. Nairaland is the one to beat here. Nairaland is a forum but it has let a lot of these blogs use social media to chip into it's market.

The site to be the one needs to have some news or current stuff, some interesting art and of course some really useful well written content.

One year ago, A friend explained to me her plans on developing a unique content site for the Nigerian audience. And now I am happy to say that the site has been live for the past few weeks, It has surpassed even my expectation in terms of quality, but I think the site isn't noisy enough to take the market.

Content is sometimes the quickest way to get into business and also has the advantage of high consumption. Gimmesom.com has the quality to be #1, needs more hands on the deck to tap into the Nigerian content hungry audience.  More hands for the feeding....

Beyond content quality, what exactly needs to be done?

Social Media: Gimmesom's sweet looking content needs to be all over Facebook and Twitter, It's already doing well on Instagram.. It needs to have at least a single Facebook post a day for a start, preferably posts with hundreds or 1000+ reach.

Content flow: Like i mentioned earlier The content flow frequency needs to be increased. may be gradually, content is king.

A Content Hub: The best way to sustainably get lots of content is by bringing other content sources together under one platform. Kind of like Nairaland on steroids.

My Bubblevaluation

Bubbles, unicorns, massive new funding rounds, that's all you hear of in the news these days. Even if you stay off the news to avoid all the bubble talk, you can't. It's usually on the front page of the site of your browser's homepage. Too much negative bubble talk and even bigger funding round news following it up, about the next startup to have "unicorn" status or potential raising a million dollars (or add some zeroes, matter of fact, add two zeroes) from some VC firm made up of dumb money, or smart money. you can't really tell the difference these days.

Yes there is a bubble, because you can find a startup for almost anything imaginable that has raised millions of dollars, and worse, there is still too much VC money chasing these startups. It's difficult to raise $50,000. Extremely difficult. Try raising $1,000,000 and booom, you've been funded.

On what grounds am I making these claims though? Sentiment and hear-say. I told a founder friend that I needed to raise $50,000 to test a new mobile media idea and he said, "well, I don't know about that, there are many VCs that would give you a million dollars but I can't think of anyone that is willing to do a small round like that." And, yes, he has raised around $2 million for his niche social networking startup.

About sentiment, I really do feel there's a bubble. And so does every other person who's screaming there is a bubble and it is going to burst. Yeah, some back up their sentiment with some data and they look convincing.

A few years back I did a lot of bubble reading, I read about the canal mania, railway mania, the great crash and the housing collapse. And even though I didn't witness the dotcom bubble, I remember what it was like in 1999 and 2000. I remember Boo.com dying and resurrecting and then finally getting the silver bullet, I remember those Nortel Networks adverts with songs from the Beetles which they must have paid a fortune for the royalties of, and last but not the least, I remember the AOL Time Warner merger, a desperate move by Time Warner to get in on it. Whenever people and companies start feeling they've missed out if they don't get in on something, it's probably a bubble.

There's too much influx of money into startups, Crunchbase sometimes captures more than a billion dollars of funding in a day. Every money bag is shoving cash into the next startup that hails manicurists. That is definitely another red flag. There's probably more money than value in these startups. Valuation is not equal to value.

New ways of making and spending money go along with bubbles. Tulipmania, the roaring 20s that lead to the great crash and the depression. Vanity. Yes there's too much of it. But I don't want to go on record screaming bubble yet. We could see this last through the year and even 2016. May the smart ones eat the dumb and weak while coming out of it.