"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,"

Nigerian Startups Advertising Everywhere Are Those You Won't Find Anywhere, In The Future!

My own startup dream started around 2000 and 2001 when the startup market in the US was collapsing. The time prior to the collapse was filled with memories of startup ads on TV and on every website you visited. These startups were everywhere, you couldn't get away from them. From adverts of Boo.com on anything you could get your eyes on to CNN advert videos with (high royalty paid) songs by Beatles advertising Nortell Networks. Where are these companies now?

Be it the year 1999 or 2013, it is never sustainable to spend a lot of money as a startup in order to continue to be in, or acquire new business. That is why startups are called "startups" in the first place. They find creative ways to market or build marketing within their products from the start. How many people taught Groupon was a big idea and bought shares in it's IPO. Groupon would have been a really great idea if they didn't spend so much money on sales.

So there are a ton of Nigerian startups mainly e-commerce sites and some content or media sites buying up Billboards in various locations in the big cities, buying TV spots, Youtube pre-roll ads, promoted tweets and handles, expensive Facebook likes and banners on every high traffic site that is offering to sell ad space. These startups are too focused on the short run and the money they are throwing on ads that may or may not perform at times could be used to build a great product that would promote itself for free in 5 years to come. Building a startup is not about short-term hype but building a successful company or product that would last a life-time.

There is only one way to build a successful startup, and it is by building a product that people will keep coming back to and that would be talked about by people there-by growing virally naturally. That's how I got on Facebook and Yahoo in the early days of email in Nigeria, peer pressure. My peers laughed at me because I didn't have an email address and I was mainly on Myspace till my friends pressured me into joining Facebook.

So I boldly predict that you won't be able to find most of the Nigerian startups making noise right now in the next 5 years. By 2018 a lot would have crashed after burning a lot of venture capital and smarter technology focussed startups come in and disrupt there business. Actually, 5 years is a long time but trust me a lot will happen within the time. If you are building a startup, make sure you make technology your biggest advantage, not a money-bag or some noise making bloggers.

To cut a long story short, very soon a highly focused technically talented startup would come along and optimize the whole e-commerce system in Nigeria, and also a hardware focused, great product genuises would come and change the content and data game. Watch this space :)

4 reasons why Nigerian startups are not funded

1. Traffic does not hold value. No analytics to specify value of each and every website visitor, advertisers are acting blindly.

2. The issue of online scam or 419. reminds me of my post where I said this lies on the back of the netpreneurs, It's time we start seeing b2b startups in Nigeria that solely address the problem of security.

3. Infastructure. see the post "can we build silicon valley in Nigeria?" well, do we have the infastructure.
http://www.sturvs.com/Science_Tech/Startups_Nigeria_-_Can_We_Build_Silicon_Valley_in_Nigeria/

4. Absense of a developed ecommerce system. Most startups have to run on the ad revenue model. The question is, how many companies want to advertise online in Nigeria? Since no one is buying online.