The Super App taking Ethiopia by storm ⚡️

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Today we’re featuring our first Tech Safari Memo.

ICYMI, I manage a fund that invests in startups across the continent and have invested in 18 African startups so far.

I’d like to say I’ve built up the muscle for what works and what doesn’t in Africa, an this is me sharing how I think about deals on the continent.

And I’ve gone the extra mile to let you co-invest with me. You can apply to join the Tech Safari Syndicate to get access to deals like this.

Before we start, this is not investment advice. This is a memo on a company I’m investing in.

In VC 90% of the time we are wrong - and our investment goes to zero.

It’s the 10% of the time that we’re right where we see the real, outsized outcomes.

And finally, I’m always open to feedback, ideas and disagreement when it comes to thinking about startups. So if you have any, hit me back.

Let’s do this!

Hulugram: Ethiopia’s Everything App

Hulu in Amharic means ‘Everything.’ And Hulugram is Ethiopia’s Everything App.

Started by Leoul, Tabor and Birhan: three young founders from the Addis Ababa Institute of Technology.

Hulugram initially started as an experiment between the three - making modifications to Telegram to make the messaging app experience more useable.

What started as a bit of fun is now a major hit, with over 1 million downloads with mostly word of mouth.

And their users use it for everything, all the time.

The average time spent on Hulugram is 40 minutes per day, and check Hulugram first thing in the morning and just before they go to sleep.

Before we dig deeper into how Hulugram works and how they plan to build Ethiopia’s Everything App, there are three ‘scenes’ we need to set.

They are:

1. The State of WhatsApp and Telegram in Ethiopia 💬

2. The Rise of the African Super App 📱

3. Ethiopian fintech is early, and mobile money is on the rise 💳

These will give us the context we need on Hulugram and answer the question: why could this work now.

Scene 1: The State(s) of WhatsApp and Telegram

Across Africa, WhatsApp is king of communication. With deep penetration around the continent, it’s the messaging platform of choice in Sub Saharan Africa.

This is true in all of Africa’s major markets. Except for one: Ethiopia

In December 2017, Google Playstore data found that Telegram was the app of choice in Ethiopia.

There are a lot of reasons for this, but the story was that WhatsApp usage was expensive in Ethiopia, and required a lot of data to move files.

Telegram was quickly adopted by university students who wanted to share files faster and cheaper. And it spread. When the government ‘turned off’ the internet a few years ago, Telegram was supposedly one of the few apps that worked properly.

And when we compare Telegram to WhatsApp, we start to see why it’s so sticky.

• Security. The Ethiopian government regularly blocks social media platforms and has used spyware on platforms like WhatsApp and Facebook. Telegram is the more ‘secure’ platform: with features like secret chats, locked chats and self-destructing media. We saw similar from social media users in Ukraine.

• Data. Data is notoriously low quality in Ethiopia. It usually takes Leoul (Hulugram’s CEO) and I ages before we can talk because of limited internet. Telegram uses less data (43 MB to download compared to WhatsApp’s 103 MB), and is cheaper for users.

• Everything. When data is limited and other platforms aren’t secure, having more features on one app is practical user behaviour. WhatsApp is a brilliant messaging tool, but that’s where the use case ends. Telegram has channels where people share music, buy goods and get their news. These can have an infinite number of people in them (rather than WhatsApp’s 256 person limit).

Telegram is becoming an app that Ethiopians can do everything on. And in Ethiopia, Telegram is king (for now).

But they still don’t cater for Ethiopia’s young population. A population who:

• Want to upload photos on a timeline (Instagram)

• Want to read and write in their local language (Translation)

• Want to meet the one (Tinder)

• Want to buy clothes and goods online securely (Amazon)

• Need to get from A to B (Uber)

• Need to make payments (CashApp)

Making the case for an improved Ethiopian Everything App. Next scene..

Scene 2: The Rise of the Super App

You may know of Tencent’s WeChat in China.

WeChat started as a messaging app in China in 2011. Now it’s China’s everything app: You make send money with it, pay bills with it, catch the bus with it and book your doctor on it.

With over a billion active monthly users, it’s one of the most important apps in the country, last valued at $67 billion in 2021.

Gojek has a similar story. Starting as a ridehailing app in Indonesia, now you can order food with it, buy office supplies on it and make payments with it. Now it’s Indonesia’s first unicorn.

WeChat and Gojek are Super Apps.

Super Apps are trying to become the all-in-one app within a country.

Super Apps can take many shapes. Whether it’s chat-based, like WeChat, or transport-based like Gojek.

And they arent limited to Asia. We’re seeing a few winners emerge in Africa, like:

• Yassir, which has 8 million users and raised a $150 million Series B in 2022. Yassir plays in Algeria, Morocco and Tunisia.

• Gozem started in Togo and is expanding to other Francophone countries (like Gabon, Cameroon, Senegal and the Ivory Coast), with over 800,000 users.

• MNT Halan plays in Egypt, and started with ride-hailing. Now MNT Halan is a super app for businesses and consumers and Africa’s latest company to join the unicorn club.

So, African Super Apps are on the rise and the model seems to be working. But what makes Super Apps super lucrative? The movement of money.

Next scene.

Scene 3: Ethiopian Fintech is having its moment

Ethiopia’s fintech story is early.

Five years ago in Ethiopia, fintech and telecommunications looked very different. There was one regulated, state-owned mobile network: Ethio Telecom.

And regulation prevented banks (or anything that looked like a bank) from having foreign shareholders.

But like many African countries, Ethiopia is making the shift from a cash-based system to a digital one. And a lot has changed in the last few years.

Ethio Telecom launched Telebirr - a mobile money platform in 2021 - now with over 31 million subscribers.

And earlier this month, Kenyan fintech giant MPesa received a mobile money license for Ethiopia.

When it comes to digital payments in Africa, Ethiopia is late to the party.

But the government knows it and is making moves quickly. Mobile money seems to be their tool of choice.

And as the government pushes the population to digital payments, there is an opportunity for fintechs to build easy, intuitive payment solutions the population.

So, we’ve set the scene:

• Telegram is King in Ethiopia (for now) and Ethiopia wants an everything app.

• The Super App model can work in emerging markets.

• In Ethiopia digital payments are new on the scene and fintechs have an opportunity to build payment solutions for consumers.

Let’s dive into the company under the spotlight: Hulugram.

Hulugram: Ethiopia’s Everything App

Product

Hulugram aims to be Ethiopia’s everything app. They have released small improvements to Telegram’s user experience, like:

• Translation - translating chats to different languages like Amharic, Oromo, Tigringya and Arabic.

• Feeds - where users can react to their friends and post moments (essentially Instagram’s stories).

• Nearby - Find and meet people near you. This is basically Tinder.

• Music - Where people can listen to music from their devices and share music in channels.

• Games: The hits, like Candy Crush and Bubble Tower 3D.

• Marketplace: Right now 7,500 merchants are on Hulugram’s platform, selling through a marketplace. Payments and logistics are handled offline (for now).

These are small improvements, but they were enough to convince 1 million people to download the app.

• Wallets: So users can send money to each other and make in-app payments. Products within wallets can include:

  • Peer to Peer Payments

  • Merchant Payments

  • Escrow services

• Ride-hailing: In partnership with a ride-hailing players in Ethiopia.

• Food Delivery: Getting meals delivered to your door, like Uber Eats.

• A Mini-App Store: for others to build their own apps that plug into Hulugram.

Today Hulugram is a social media app. But eventually it will be a fintech.

Founders

So who is the team behind Hulugram?

Leoul (CEO): While he was studying Software Engineering he led Unicorn Labs in Ethiopia - a Swiss-Based Venture Builder. At University he also started Room.et - a B2B2C marketplace in the hospitality industry and Ethiopia’s first hotel booking platform.

Tabor (CTO): A software engineering graduate who built Sportbook - a B2B sports betting platform that powers African betting platforms and is used by hundreds of thousands of users across Africa.

Birhan (Developer): A self-taught programmer who has tinkered with mobile app development for over 6 years. He dropped out of university to build products, mostly messaging apps and cryptocurrencies.

Leoul, Birhan and Tabor are young, coachable and hungry.

And it’s not their first rodeo. One of Leoul’s apps, AdVanced, was a take on Youtube with ad-free videos and background playback. It reached over 5 million users within a year before he closed it down due to the unsustainable growth.

And Hulugram’s first investor is Angesom Teklay, Founder of Kacha Digital: The first fintech to receive a mobile money license from Ethiopia’s Central Bank.

To date Hulugram has raised $130,000 USD. And they have done a lot with a little.

Traction

When Hulugram started, they spent $5,500 on ads. This got them their first 200,000 users.

In the last 12 months, they spent $3,000 and added 300,000 downloads.

While the marketing spend helped, most of this growth was organic - through word of mouth.

Today they are at one million downloads.

That’s a lot of downloads. But what about the engagement?

• 30% are monthly active users after 8 months (about 300,000 users).

• 12% are daily active users (120,000 users)

And those daily active users really like the app. They average:

• 15x logins per day

• 40 minutes spent on the app per day

With this next raise, Hulugram will turn on the marketing engine to reach 1 million daily active users. I think we will see their linear user growth will become more exponential.

Market

Like we learned last week on Tech Safari, understanding markets is key. Here is the short breakdown.

Ethiopia’s young, educated and upwardly mobile population is small compared to the rest of the country.

In a population of 110 million, 30 million are mobile users and have access to internet.

Ethiopia’s middle class (consuming $10+ per day, or $3650 per year) is somewhere between 2.5 million to 10 million people (depending on who you ask).

Within the next raise, we’re betting on Hulugram catching 1 million daily active users and getting time on the app up to 1 hour a day.

If they can do this, their next order of business is layering in features that get money circulating: wallets, ridehailing, in-app gaming purchases and a marketplace.

On the very low end, we think that Hulugram can get $20 USD circulating on the app per user each month, and make 50c a month.

Thats $500k revenue per month, or $6 million per year.

Not a bad start.

And knowing network effects and super apps, there’s an opportunity to go even deeper. Today Hulugram has even more datapoints on Ethiopian users than Facebook.

What about once they 10x their users? With this data, they can deepen their product offering - and in turn, make more money circulate.

Whether that’s discovery features on a marketplace or perfectly-timed food delivery push notifications.

And that doesnt count for Hulugram’s potential if they grow their product outside of Ethiopia.

So, it ticks the box on market. But there are risks..

Risks

In aiming to be the ‘everything app’ within Ethiopia, there are a few risks to work through.

Political Risk

In my opinion, the biggest risk. Ethiopia’s government can ‘ban’ apps when there is political instability, which has been frequent over the past few years.

However, Ethiopia’s young population is quite tech savvy and can still access WhatsApp and Telegram. Hulugram will need to walk the tightrope of being compliant and keeping government happy while growing.

We think they have the right people around them to minimise this risk.

Platform Risk

Building on top of Telegram is a good way to validate the product, but inherently risky. While Meta is known for fighting (or acquiring) social media apps, Telegram’s ethos may minimise this risk.

Telegram’s goal is to democratise free and secure communication rather and they released their API for developers to build on top of Telegram.

So while Telegram works for now, Hulugram may want to build their own app.

But, there are paths to Hulugram being on and staying on Telegram. Gaming company Zynga was built on top of Facebook and was acquired for $12.7 billion last year.

Super App War

Ethio Telecom (Ethiopia’s leading Telecom) just released their own super app. Safaricom will launch into Ethiopia soon too.

I’m less worried about this. How often do you spend time on your payments app versus WhatsApp or TikTok?

Summary

We’d like to see Hulugram become the WeChat for Ethiopia - the everything app that powers the country.

Starting by acquiring Ethiopia’s young population with a sticky user experience, and ending by becoming the platform you call your taxi, order your food and pay for goods on.

Ethiopia’s unique situation where:

• Telegram is king, but users want more functionality.

• The Super App model has worked in emerging markets, and

• Digital Payments in Ethiopia is having its moment

In addition with the team and their progress with hardly any resources make Hulugram an extremely exciting startup to watch.

It’s an experiment. But it’s one that has the ingredients to become an everything-app in Africa’s second most-populous country.

What do you think of my memo on Hulugram? And if you think you can be helpful to the team or want to learn more about the opportunity, hit me back.

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👋🏾 Caleb