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Yazi future: Essay

Over the last 18 months, Yazi's growth has been notably subpar. On 10 December 2023, a realisation dawned: the opportunity cost of continuing with Yazi is significantly outweighed by potential alternatives. This was prompted by a fundamental question: how much value have I created, both for customers and monetarily, and at what rate is this value growing? I feel it is not enough.

In life, every choice bears opportunity costs. When the cost of missed opportunities eclipses the benefits of the current path, a strategic pivot becomes necessary. I must ask myself, am I truly the right person to scale Yazi to a significant level? Currently, my efforts are not aligned with my 'golden zone'—the realm where my skills and passions intersect most effectively.

Key driving principles

Do you have any ideas left to grow your startup?

Can you drive that growth profitably?

Do you want to work on the startup that results from that growth?

Do you want to work with your co-founders on the startup that results from that growth?

Why I need to move on from Yazi?

Yazi’s growth over the last 1.5 years has been nothing short of subpar. On 10 December 2023, I realised that the opportunity cost of investing my time in Yazi is far exceeded by working on something else or someone else.

It’s not that I couldnt make it work, perhaps i could. Its whether 'making it work’ would exceed an alternative path where I moved on from Yazi.

Resilience, determination, and perseverance are characteristics I idolise. I’ve grown up knowing that the attribute that sets great leaders and company builders apart from average ones is their ability to push through the pain, suffering, and multitude of problems that present themselves to every entrepreneur. Thus, it has always felt like ‘moving on’ has never been an option - “It it can always be figured out”. The message of ‘The Hard Things About Hard Things’ by Ben Horowitz rings in my ears most weeks and urges me to dig deeper, fight harder, and just figure it out!

However, after thinking more ruthlessly about the opportunity cost of choosing to carry on with Yazi. I became quickly convinced that the path of greatest outcome: Value to future customers, growth in skills, and significant business outcomes—was to move on from Yazi

The catalysing event

On 9 December, Yazi’s WhatsApp account was disabled (again). As a result, the number was unable to send or receive WhatsApp messages. Meta emailed me, stating the reason was due to activities that breached WhatsApp's

Business Terms of Service⁠

This isn't a new challenge for us; it's the third such instance. Initially, our account was permanently closed in 2022. We navigated this by rebranding from AI-BO to Yazi Research, which allowed us to establish a new Meta Business Manager and bot. The account was later reinstated. However, the complexity of setting up a WhatsApp API, which requires extensive business documentation, means that creating new accounts as a workaround is not a viable solution. Each incident would require the formation of a new business entity.

This dependency on Meta’s Terms of Service has placed Yazi in a vulnerable position, with our autonomy over the company's direction feeling significantly constrained. The reality is stark – we are at the mercy of external policies that can disrupt our core operations without warning.

The implications are profound for our business model, which hinges on selling targeted survey responses, a strategy responsible for 95% of our revenue to date. The risk associated with this dependency has become increasingly evident. It is a clear indicator that our reliance on this model is unsustainable in its current form.

Am I the right person to take this business to a sizeable outcome? And if so, do I want to drive those outcomes?

I have no experience in market research

No secret sauce or game-changing insight. Dipst

I am working on too many things that are not in my golden zone. To be able delegate these tasks would require additional revenue or perhaps a funding round.

My time is not leveraged

I’d rather work for a rocket-ship startup that has an outstanding management team where I can learn what high-quality leadership looks like. Plus learn: How to implement and scale robust and efficient company systems

I want to learn more about AI

Life is short. I enjoy work and my career and do not want to blunder along doing something that does not suit or favour my skillset.

Long-term Issues with Yazi’s business model of selling: targeted survey responses

Incrementally better than competition.

What: Yazi is not 10x better than its competitors. Clients who find our services most valuable have almost 100% of the time, never used a market research vendor before. Companies like Kantar, Nielsen, Pollfish, Attest and Apinnio are all innovating in this space and come with much larger budgets.

A non-recurring revenue business model:

In 2023, the most separate pieces of research I did for a single client was 3. The sort of research Yazi does is not recurring and is very much dependent on a particular research need by a business at a point in time. A strong Q4 does not guarantee a strong Q1. this is not the kind of business i want to be in.

Non-defensible market position.

What: Yazi’s value proposition is speed and access/representation. Because our software is still relatively simple, we do not have a strong defensive or attacking position against competitors or new entrants. It is quite easy to spin up a WhatsApp bot and mimic us. A strong moat looks like having very proprietary access to a group of people that can only by accessed by Yazi. Example, a partnership with another company where they provide access to their customers. It could also look like access to another data source that could be matched to the survey respondents. This would enable us to have an enriched dataset - survey data + transactional history data. E.g. getting access to credit bureau data which could give us accessing to spending, borrowing, and transactionn history. This would also enable us to veryify the accuracy of the information and identities provided by participants. Data accuracy could be a huge enabler

Not personally poised to win in this market

Market research deals and contracts between agencies and enterprises have largely been in places for 5-10 years. Reputation, track record, credibility, and relationship, are key ingredients to succeeding in the traditional market research industry.

Quality of responses in WhatsApp

Starting out with Yazi. I assumed that using WhatsApp instead of email would protect against fraudsters who create duplicate accounts and try to do the survey multiple times with different email addresses. That proved to be far from correct.

IP Address

Digital link surveys retrieve the IP address of the respondents and enable you to block participants from doong the survey multiple times.

WhatsApp does not allow you to see the IP address of the sender, thus it becomes difficult to know if someone is responding from a different number or WhatsApp account.

Multiple numbers

To many privileged people, it would seem absurd to operate across multiple phone numbers or to change and update their number frequently. A phone number carries both convenience and social capital. It is something I personally would avoid at all costs. However, in the informal market, many people jump onto new sim cards on a monthly basis. 150 million SIM cards are Rica’d each year (2.5x the SA population. The driving force of this is hard to fully understand but as soon as they see a discounted data bundle or find that there is free airtime when you buy a new sim card, they jump ship.

This results in many people being able to complete a survey multiple times with different WhatsApp accounts or numbers.

At the mercy of Meta

As described above, Meta ultimately holds the power to terminate this business model over the weekend by disabling the account.

Dependent on Rather Chat

The entire WhatsApp bot backend has been built and is owned by Rather Chat

Can I see a path to getting Yazi to $10m ARR?

Unfortunately not.

Becoming the “WhatsApp SurveyMonkey”

What: Invest deeply into the development of software that would enable medium to large businesses and research agencies to use WhatsApp as a survey tool where WhatsApp is better suited to the audience or the research methodology. In emerging markets, WhatsApp yields a higher completion rate than digital link surveys. It is also the digital channel that can achieve the most representative sample.

Yazi clients bring their own audiences—either customers or participants recruited for research. They either use a Yazi-provided research number or have set their own number up through their Meta account.

Customers

Reduced mobile data expenses: Conducting a survey on WhatsApp consumes only 10 cents in data, making it affordable for participants. Many individuals already have WhatsApp data bundles, further reducing any potential financial barriers.

Reach people that otherwise can't be reached digitally: WhatsApp allows us to connect with individuals who may not have reliable access to the internet or digital devices.

Nationwide Representation: WhatsApp's popularity in South Africa - boasting 95% penetration of the internet population - ensures a diverse and representative sample size, critical for accurate market research.

User-friendly and familiar: WhatsApp is deeply ingrained in people's everyday lives in Africa. It serves as a central platform for managing relationships and communication. This familiarity and everyday use lead to a higher level of participant comfort and engagement in our surveys.

Convenient Completion: WhatsApp allows for easy pause and resume functionality, ensuring participants don't lose their survey progress. This feature is especially handy given the interruptions that can occur in our daily lives.

WhatsApp also allow

Longitudinal or diary studies: WhatsApp is better suited than a digital link for diary studies or data collection requirements that run over multi-day periods.

Higher response rate:

More representative

Qualitative data: WhatsApp enables better and more seamless collection for voice notes, videos, and pictures

Can it be done: Yes, this is the strongest avenue. It requires developing a lot more self-service features and tracking tools that show the customer the progress and engagement of their users.

Data security: Because this requires businesses to upload cell phone numbers, data security is a very important ingredient to the success of this strategy

Bulk SMS but with WhatsApp

What: There are many multimillion dollar bulk SMS businesses. For invitations and notifications to research activities, WhatsApp is the channel that yields the highest response rates and engagement. Many businesses would significantly benefit from migrating their communication and notifications from email or SMS to WhatsApp. This would

High Response Rates: Our WhatsApp surveys have seen an industry-leading response rate of 62%, suggesting that participants find this platform more engaging and user-friendly than traditional online surveys.

Analysis software:

What: Builld exceptional survey AI analysis software that generates insights immediately. My instinct would be to focus on qualitative data analysis (raw text, video and voice notes) as WhatsApp enables this kind of data to be retrieved. Yazi could focus on the best tool for gathering and analysing qualitative data in Africa.

Can it be done: Yes,

Do I want to get it done:

Highly bespoke enterprise bots:

What: Setup highly personalised research capabilities for large enterprises that integrate deeply into their existing tech stack. Examples of this:

Connecting an enterprise’s rewards and points system to the bot for the user to be able to see on their WhatsApp number

Integrating core services or account details into their WhatsApp number

Enabling certain forms and data collection processes to be handled by the bot e.g. claims processing for insurance companies

Can it be done: Relying upon Rather Chat for the actual integration and development makes this a difficult strategy to execute.

Propriety recruiting partner:

What: Develop a data partnership with company/ies that have exclusive access to a highly valuable segment of people from a research perspective. This would enable Yazi to offer insight that no one else could offer, the results could be highly verified, the 1st party data could be enriched with the data source

Proprietary access to data:

What: Partner with a data source that has a lot of commercial value and is highly defensible or protected. An example of this would be to partner with a company like 22Seven. Once receiving the survey data, I could connect and enrich it at the individual level to the external data source. This would give a much richer and bigger picture perspective of the person who gave the data.

Charging more for services:

What: Focus more on consulting and research expertise.

Do I want to get it done: This is not the direction I personally want to go or is an area I have an advantage in.

______________________________________________________________

For revenue to be continued, I can see 2 major avenues:

Drop the WhatsApp component completely and focus on proprietary recruiting partnerships through other providers and companies that have large customer databases that can be recruited to do surveys.

Focus entirely on the white-label solution, setting up research bots for market research agencies and businesses with large low-income customer bases that want to use it

October and November were strong revenue months for Yazi. However, delivering the data back to the customer proved to be incredibly tedious and time consuming. It made me recognise that there is a long road to ahead of product development before any sign of scale is reached. A more realistic path would be to start charging for research expertise and consulting services

What I did wrong

Not owning the end-to-end product experience. Yazi is fully dependent on Rather Chat for the WhatsApp bot infrastructure and backend.

Not finding a technical cofounder. This is a software business, yet I outsourced the development of all key software components. The webapp was built by a friend who is a freelancer, and the WhatsApp bot’s backend is built and owned by Rather Chat. Yazi set out to be a software business, yet I did not hire a technical person. Bootstrapping did not make it

Not going niche enough. If Yazi had potentially gone after a very niche segment and produced reports and marketing assets on that segment, we could have become the market leader in that segment and been able to easily sell to that buyer. Instead, we had clients across a variety of industries who all had different demands and needs and thus didn’t help Yazi build ‘best-in-class’ skills and expertise in a particular domain of research.

What did I do well

Potential buyers

All market research tech companies:

Pollfish

Apinnio

Rather Chat

Old Mutual

Questions:

If I just provide this service to my clients, are they not also likely to be banned or disabled if they follow the same business model as me

The catalysing event

On 9 December Yazi’s WhatsApp account was disabled again. This means no WhatsApp messages could be sent or received on the number. The reason for this, provided to me in an email from Meta due to policy issues resulting from activity that does not comply with WhatsApp's

Business Terms of Service⁠

This is the 3rd time it has happened. The first time, the account was shut down for good, the 2nd time, the account was reinstated. On this 3rd occasion, I have taken the event quite seriously and think it has material impact on the future of this business model.

Being at the mercy of Meta’s Terms of Service feels like I am only slightly in control of Yazi’s future and destiny. It’s a very uncomfortable place to be.

Firstly, though, was Meta justified in disabling the account?

Yes, perhaps to a degree. The disabling is driven by people reporting or blocking the number. These people typically are frustrated about not receiving their incentive immediately. In this particular instance, they needed to complete a survey using a digital link and perhaps found it complicated and expected the incentive based on answering questions in WhatsApp, even when they hadn’t done the digital link survey.

However, for most software companies, a communication or missed expectations blunder results in bad reviews on the Play Store, negative comments on their Facebook posts and a damaged reputation. For Yazi, this results in the most key and fundamental part of the product to cease from working.

Regardless, it is done now. Meta just declined my appeal and has marked the account as permanently disabled.

Setting up a WhatsApp API requires submitting business registration documents. So, it is not possible to simply spin up a new account and number because it is ultimately associated with the business.

This essentially shuts down Yazi’s core business of connecting companies to their target customers for research.

Removed

Increase dealsize

Revenue = Price x # Customers. The African market is too small to charge a low price, so revenue growth needs to come from increased deals.

Avenues to increase dealsize:

White-label solution:

For this to become serious:

Just use template messages feature

Onboarding needs to be more slick (setting up the number)

Need to display the users in a dashboard - key metrics

Pros

Dealsize could potentially be quite large, and the revenue model could be monthly subscription

Cons

I do not control or own the WhatsApp bot product experience, Rather Chat does.

Rather Chat + Yazi brings about Data ownership nightmares for enterprise sales

How much value have I created over a period of time? What is the value creation growth-rate?

Value for my customers and value in the form of money (how much I can charge). How fast is that value metric increasing, and what is the propensity for it to accelerate upwards. Everything in life is a trade-off and every decision is a series of opportunity costs. If the opportunity cost of doing something else is higher then I should change course as quickly as possible to focus on that particular opportunity.

Bullet form

Rethinking My Journey with Yazi: A Deeper Dive

Introduction:

The last 18 months have been a defining period for Yazi, revealing its growth to be notably subpar. As of 10 December 2023, I've realised that the opportunity cost of persisting with Yazi is considerably higher than alternative paths. This isn't about my capability to make it work, but about whether 'making it work' is the best use of my abilities and time.

The Decision to Move On:

Resilience vs. Opportunity Cost: I've always valued resilience and determination, traits underlined in texts like Ben Horowitz's 'The Hard Thing About Hard Things'. However, a ruthless evaluation of opportunity costs indicates that pursuing other ventures promises greater value creation, both for potential customers and my professional growth.

Golden Zone vs. Skill Utilisation: The concept of a 'golden zone'—where one's skills and passions intersect—guides my decision. Currently, my work at Yazi falls outside this zone, suggesting a mismatch between my abilities and the company's needs.

Challenges with Yazi:

Business Growth and Revenue Model: The pathway to achieving a $10m Annual Recurring Revenue (ARR) for Yazi seems implausible. Our business model doesn't support a high deal size in the African market, and our revenue generation is inconsistent and non-recurring.

Market Positioning: Yazi's incremental edge over competitors isn't enough. Our primary clientele are first-time users of market research, limiting our reach.

Building a Moat: Our software's simplicity fails to provide a strong defensive position against competitors. A robust moat could include exclusive access to unique data sets or partnerships, but we currently lack these.

External Dependence and Its Impact:

WhatsApp Dependency: Yazi’s heavy reliance on WhatsApp for operations has proven to be a critical vulnerability. The recent disabling of our WhatsApp account by Meta, for the third time, underscores our lack of control over a crucial aspect of our business.

Business Model Vulnerability: Yazi's dependence on WhatsApp not only limits our operational flexibility but also poses a significant risk to the business's continuity.

Future Paths and Challenges:

Alternative Revenue Streams: Two potential avenues include focusing on proprietary recruiting partnerships or a white-label solution for research bots. However, these paths also present their own challenges in terms of product control and data ownership.

End-to-End Product Experience: The lack of control over the WhatsApp bot experience and the backend, primarily managed by Rather Chat, highlights a significant gap in our product offering.

Reflecting on Mistakes and Lessons Learned:

Technical Dependence: Outsourcing key software components without a technical co-founder limited our capability to innovate and respond to market needs.

Lack of Market Focus: A broad market approach prevented us from developing specialised expertise and becoming a leader in a niche segment.

Long-term Business Model Issues:

Fraud Prevention Challenges: Assumptions about WhatsApp's effectiveness in preventing survey fraud were misguided. The inability to track IP addresses and the prevalence of multiple phone numbers among our target demographic complicated our data integrity.

Conclusion:

Reflecting on these challenges and the evolving landscape, it becomes clear that my path forward lies beyond Yazi. While it has been a journey of immense learning and growth, the alignment of my skills, ambitions, and the opportunities in the broader market landscape suggest that moving on is the most prudent decision for my career trajectory and personal fulfillment.

Paragraph form

Reflecting on the Path Forward: The Decision to Move Beyond Yazi

In the dynamic journey of life and entrepreneurship, every decision carves out a path, each with its unique set of opportunity costs. Reflecting on my journey with Yazi, I've reached a pivotal moment where the scales of opportunity have tipped. This isn’t merely about continuing what I started; it’s about introspectively questioning whether my presence at Yazi aligns with my 'golden zone'—that harmonious intersection of passion, skill, and effectiveness.

The last year and a half at Yazi has been a period of substantial learning but also of confronting hard truths. The company's growth has been underwhelming, and the pursuit of a significant scale seems increasingly elusive. This realisation isn't a testament to inability, but rather an acknowledgement of misalignment. My strengths and the needs of Yazi appear to diverge, making it clear that my potential could be more effectively utilized elsewhere.

I’ve always held resilience, determination, and perseverance in high regard. The ethos of pushing through adversity is deeply ingrained in me, echoed in the wisdom of entrepreneurial sages like Ben Horowitz. But there's a fine line between steadfast perseverance and the wise recognition of when a change in direction is warranted. The opportunity cost of continuing down a path that doesn't leverage my core strengths or ignite my passion becomes too high to justify.

The concept of opportunity cost isn’t just about financial metrics; it encompasses growth, learning, and personal fulfillment. Could I continue at Yazi and make it work? Possibly. But the more pressing question is whether this path is the one that leads to the highest value - both for myself and the potential impact I could make elsewhere. Life’s brevity demands that we make these choices wisely, ensuring we are not just moving, but moving in the right direction.

Looking forward, the allure of new challenges and learning opportunities beckons. Joining a rapidly growing startup, especially one that is pioneering in areas like AI and innovative company systems, is immensely appealing. In such environments, the scope for learning, impact, and personal growth is exponential. These are the environments where high-quality leadership, strategic scaling, and operational efficiency are not just discussed but actively manifested.

The trials and tribulations at Yazi have been invaluable. From grappling with the limitations of the African market to the challenges posed by our dependence on platforms like WhatsApp, every step has been a lesson. The recent disabling of Yazi's WhatsApp account by Meta has been particularly enlightening, underscoring the fragility of relying on external platforms and the importance of having control over key business operations.

This journey has also highlighted the importance of niche focus in business strategy. Had Yazi concentrated on a specific market segment, developing specialized expertise and solutions, perhaps the story would be different. Instead, the broad approach diluted our potential to become leaders in any one domain.

As I stand at this crossroad, the decision to move beyond Yazi is not made lightly, but with a deep understanding of what the future can hold. It’s a decision driven by the desire to align my career with opportunities that not only challenge me but also resonate with my aspirations and areas of expertise. The lessons from Yazi are invaluable, but the path ahead is one of new beginnings, filled with potential and the promise of aligning closer with my golden zone.

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