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Can Yazi Achieve a $10m Annual Recurring Revenue (ARR)?

Yazi's initial business model, centred around selling survey responses, lacks scalability. To reach a $10m ARR, a strategic shift is essential. Yazi should transition to selling its WhatsApp-based survey and research software, akin to a 'WhatsApp SurveyMonkey'. This pivot necessitates the integration of custom WhatsApp numbers for each client, aligning with their existing databases.
The Predicament with Rather Chat's Ownership
The crux of the issue lies in Rather Chat's ownership of the WhatsApp bot software and survey database, the bedrock of Yazi's product. This presents several complications:
Product Development Constraints: Yazi lacks autonomy in shaping and enhancing its product, hindering our capacity to deliver a tailored customer experience.
Dependency Risks: Any strategic shifts, price increases, or financial instabilities within Rather Chat pose a direct threat to Yazi's operations.
Data Control and Security Issues: As both Yazi and Rather Chat function as data controllers under POPIA, this introduces significant hurdles in corporate dealings and data security.
Challenges in Fundraising: Without ownership of the core technology or IP, attracting investment becomes exceedingly challenging.

Proposed Solution:

1. Independence through Rebuilding

The viable path forward is for Yazi to sever ties with Rather Chat, necessitating the reconstruction of the entire bot backend and database architecture. However, this endeavour comes with its own set of challenges:
Engineering Team Formation: With limited networks and resources, assembling a robust engineering team poses significant obstacles.
Funding Limitations: The absence of a well-rounded early-stage team, coupled with a lack of a substantial revenue history, dims the prospects of securing funding.
Co-founder Dynamics: Mzee, brought on board as a Co-founder, unfortunately, lacks the requisite experience in modern coding languages and AWS systems, raising questions about his suitability for the role of CTO and the responsibility of spearheading the engineering team.

2. Transforming into the 'WhatsApp SurveyMonkey'

Product Development: Investing in software development to enable businesses and research agencies to utilise WhatsApp for surveys is crucial. This is particularly relevant in emerging markets, where WhatsApp is a more effective channel for audience engagement due to higher completion rates and representative sampling.
Customer Advantages: Using WhatsApp for surveys brings several benefits, including reduced mobile data expenses and the ability to reach people who are otherwise digitally inaccessible. The platform's nationwide penetration in markets like South Africa ensures a diverse and representative sample. Its user-friendly nature, coupled with features like convenient pause and resume, enhances participant engagement. WhatsApp is particularly adept at facilitating longitudinal or diary studies and collecting qualitative data like voice notes and images.

Top Dilemmas for Yazi's Business Strategy

Intellectual Property and Sale Challenges: The intricacies of Yazi's entanglement with Rather Chat's IP, particularly the bot and database, pose significant barriers to selling to other companies. Disentangling Yazi’s survey and research code from Rather Chat’s system is complex, as it's deeply integrated and owned by Rather Chat. A partial solution could involve Yazi taking over the databases while allowing the bot to operate on Rather Chat’s infrastructure. However, this still presents substantial challenges in terms of saleability.
Scale potential with WhatsApp: Dealsizes are likely to remain small ($100 - $300pm) as many will consider this tool only for edge case type of research and will continue to have a primary license with a larger research company. An additional channel to to WhatsApp will likely be needed to move up to $1k+ pm dealsizes
Co-founder:

Challenges for Non-Research Agencies (Enterprises with large low-income customer bases)

Trust and Credibility: Non-research agencies face significant challenges in using WhatsApp as a research tool, primarily due to issues of trust. When customers receive unsolicited research requests from unknown numbers, they often perceive them as spam or scams, leading to low response rates.
Dependence on Traditional Communication Channels: To overcome trust issues, brands need to establish legitimacy through various means, including using other communication channels like email or app notifications to introduce the WhatsApp number. This reliance diminishes the unique selling proposition of WhatsApp, which is supposed to increase engagement and response rates independently.
Integration Difficulties: Incorporating Yazi's research capabilities into a company's existing WhatsApp bot involves significant technical challenges. Many companies already have established WhatsApp bots for customer service, making it difficult to simply add Yazi’s research functionalities. This could involve reconstructing client services within Yazi’s bot framework, posing challenges due to differing code bases and operational methodologies. This would require a custom development sprint, which is not only resource-intensive but also dependent on the cooperation of Rather Chat.
Market Research Agencies' Challenges
Participant Onboarding and Engagement: For market research agencies, the challenge lies in effectively onboarding new research participants to trust and engage with the WhatsApp number. This involves clear communication about the research purpose and expectations. The challenge is further amplified when participants have to be re-onboarded from other channels to WhatsApp, which can disrupt the seamless experience and increase operational complexities.
Cost Implications: The cost of sending WhatsApp invites is an added expense for agencies, atop Yazi's fees. This could impact budget allocation and decision-making processes in choosing the right communication tool.
Data Integration with Existing Systems: Agencies often have established systems and trackers for managing research projects. Integrating WhatsApp as a new tool requires additional setup and could pose data management challenges, demanding robust integration
Technical and Operational Complexities
Data Security and Compliance: Managing and safeguarding sensitive customer data such as phone numbers is crucial. Since Rather Chat acts as the data processor, its involvement must be declared and authorized in enterprise vendor onboarding, posing a potential risk to deal closures.
Acquiring WhatsApp API: Actually acquiring the WhatsApp API takes days or weeks because of Meta’s approval process. This is a large blocker in the sales cycle

Get acquired

The adoption and ubiquity of WhatsApp, especially in emerging markets is only going to increase. As a result, brands are opting to use WhatsApp as a communication channel as part of their omnichannel communication strategy (Clicks,
Checkers
⁠
,
FlySafair
⁠
etc.) in addition to email or their existing app. This positions Yazi’s WhatsApp research software in a good position for an acquisition.

The segment getting the most value of Yazi’s product is businesses doing a high frequency of research— market research agencies (e.g.
Kantar
⁠
,
Fieldwork
⁠
) or software companies (e.g.
Recollective
⁠
,
SurveySparrow
⁠
).

OLD

Challenges for Different Segments

Non-Research Agencies: Gaining trust from participants can be challenging, especially when brands reach out via WhatsApp to customers who haven’t saved the number. Brands must establish legitimacy and often rely on traditional communication methods to initiate engagement, which can dilute the effectiveness of using WhatsApp as a standalone tool.
Market Research Agencies: Non-response remains an issue, as participants may not recognise the number. Agencies need to effectively onboard new research participants and possibly re-onboard those from other channels into WhatsApp. This transition requires clear communication and expectation setting.

Technical and Operational Complexities

Integration with Existing Systems: Incorporating Yazi’s research capabilities into existing customer service bots is complex and may require substantial custom development. This could involve reconstructing client services within Yazi’s bot framework, posing challenges due to differing code bases and operational methodologies.
Data Security and Compliance: Handling sensitive customer data, such as mobile numbers, necessitates rigorous data security measures. As Rather Chat functions as the data processor, it must be declared and authorised in enterprise vendor onboarding, which could jeopardise deals.
Software Unification and Development: Yazi’s clients currently navigate multiple platforms, including Meta, the Yazi web app, and Rather Chat app. Streamlining these into a unified self-service system is crucial for enhancing the user experience and operational efficiency.

Challenge of being acquired by RC

Target Market and Value Proposition: The primary value of Yazi's product is for market research agencies, which demand frequent and varied surveys. However, this segment isn't a focus for Rather Chat. For clients who are only interested in static surveys like NPS or Pulse, Yazi’s advanced features may be underutilised, reducing demand.

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