Positive-sum game of crypto ecology: the battle for new Web3 users begins in Africa | DripEcho Episode 1
Original author: JoyChen, Waterdrip Capital
Foreword
From a conventional investment perspective, the first crypto user groups that the market reaches are generally in Europe and the United States, or in the Asia-Pacific region where the number of users has surged in recent years. Mature crypto markets basically have mature financial orders and systems, as well as user groups that no longer need "education". It seems that the total activity of users is positively correlated with the degree of economic development in the region. The African market, Latin America, or Southeast Asia often lacks understanding of cryptocurrencies and a stable financial system. In contrast, emerging markets are eager for cryptocurrencies to bring them stability and new trading scenarios.
Behind the gradual love of crypto products in emerging markets like Africa, exchanges and a large number of traditional financial and Western institutions have gradually noticed this "undeveloped continent" that they have never touched, and the long-term lack of desire has finally turned into soaring funds and new users.
Based on this, Jambo has expanded its business to more than 120 countries and regions including Brazil, Vietnam and Turkey, and launched the world's first Web3 Earn mobile phone JamboPhone, priced at only US$99. As of July this year, more than 460,000 JamboPhone units have been sold worldwide, and users have activated more than 1.8 million non-custodial wallets, marking a significant growth in its ecosystem. Provide users with a brand new path to embrace web3 at a very low cost price. In addition, the Jambo ecosystem currently covers more than 50 live Web3 projects on seven major blockchain networks.
The name Jambo comes from the Swahili word "hello", which symbolizes that Jambo is welcoming global users with a friendly attitude.
The first episode of DripEcho, a cryptocurrency and blockchain interview program produced by Waterdrip Capital, specially invited James, the founder of Jambo mobile phone. The Jambo project was founded in early 2022 and is headquartered in Congo. In just one year, it successfully completed a $7.5 million seed round of financing and a $30 million Series A financing, covering almost all the top Western crypto funds. As the founder of Jambo, James has rich experience in the African market. He transformed this unique background into innovative Web application scenarios, which promoted the rapid development of Jambo in the encryption field.
James Z: From Congo to Web3 Pioneer
James grew up in Congo and his family has been in Africa for three generations. His mother tongue is French, and he speaks Chinese with his parents. He has been exposed to the social environment of Africa since he was a child, and later went to the United States and China for study. He has been exposed to the social environment of Africa since he was a child, and the environment he grew up in is intertwined with the conflict and integration of multiple cultures, which coincides with the impression we first met James. While studying computer science at New York University, he first came into contact with cryptocurrency and bought his first Ethereum. After graduation, he accumulated rich experience in the investment field and eventually came up with the idea of founding Jambo.
For James, the inspiration for entrepreneurship may come from his indelible growth background. "Friends who are listening to this video, you can first think about whether you have been to Africa. Why don't Africans work in Africa? Why don't Africans do business? Because anyone who has done business in Africa will know that you can't transfer money to those in need, you don't have a bank account, these common problems in emerging markets, China and the United States have also had them decades ago.
So when you grow up in these places, your parents encounter various difficulties in doing business here, and these problems have long been deeply rooted in your mind. Then when I went to the United States and went to New York University to study computer science and finance, I didn't need to be a genius to see the differences between the United States and Africa. These differences are just because no one has solved them. Then I took the opportunity to do it."
The original intention of starting a business: the "Sword of Damocles" hanging over the heads of the project parties
Talking about the original intention of starting a business, "In fact, it was just because of boredom at the beginning," James He smiled and said, "If you want to invest, you have to invest in what you really want to do, but at that time, there were no projects suitable for emerging markets in the market." His goal is clear: to solve the problems of cross-border payments, remittances and the unbanked, which are common pain points in emerging markets.
At the beginning of 2022, the market was experiencing a round of "Southeast Asian GameFi craze", but few people paid attention to the African market. "We see that many people in African countries do not have bank accounts, but they are in urgent need of cross-border transfer services." The launch of JamboPhone is to solve this problem.
Being chosen by new users, or not being abandoned by old users, is the ultimate destination that all web3 project parties cannot escape, and it is also a must-answer test paper. "Everyone needs new users, it's that simple." James answered this question without hesitation.
“To be honest, the character portrait we envisioned is what every web3 company is thinking about. No matter how great your project is, you want to be listed on an exchange. If we are a web2 technology project now, you also want to be listed on Nasdaq or the New York Stock Exchange.”
How to avoid being abandoned by retail investors and exchanges is the "Sword of Damocles" hanging over the heads of many project parties. "What does listing need? New users, and new users are in emerging markets." James continued to explain, "They need new people, how can new users be obtained? They don't even know what web3 is."
Jambo's rise in Africa: the acquisition of trust
In 2022, Jambo successfully completed a $7.5 million seed round and a $30 million Series A round, covering almost all the top Western crypto funds. Speaking of difficulties, "The challenges we initially encountered in the African market were huge," James recalled, "No one there knew what crypto was."
In order to break this dilemma, James and his team adopted the most primitive way of promotion. "Two words: ground push." James began his story with a concise and powerful answer. This promotion method is not unfamiliar to Chinese people, but it is unheard of in the Western market. Alibaba has achieved today's success by bringing hundreds and thousands of people to promote the product on the streets. "We also use this method to expand in the African market," James recalled. They explained the advantages of JamboPhone to users over and over again and helped them earn money on the platform. The initial promotion was not easy. In Congo, no one knew what cryptocurrency was, and residents were full of doubts about new things. "You have to make them believe that you can change their lives, but they have been cheated too many times," said James. "Help them make a lot of money. Only when the money is really in their pockets can they believe you." "Our users are mainly young people. Imagine a 20-year-old boy in Nigeria who buys our phone. You will see 15 pre-installed apps. Jambo is just your wallet." This precise user positioning enabled Jambo to quickly occupy the market in a short period of time.
Our goal is to create new crypto users for the market
Perhaps it was shaped by his lucky upbringing. When the market generally believed that Africa was a "backward" continent, James saw the huge potential of this land. Africa's population is very young, with an average age of only 18, which means that there are a large number of young people who are curious and receptive to new technologies and new applications. James explained, "The same is true for our entire user base. Help these young people make money, and they will become our loyal users." He said frankly: "I think any founder who does this needs to grow up in several different countries to really know what is happening in that country. I grew up in Africa and saw many problems and needs that are different from those in developed countries. This background allows me to more keenly capture the pain points of emerging markets."
In a region lacking a modern banking system, crypto payments and blockchain technology have found unique application scenarios. "4G users in Africa are growing rapidly and are expected to reach 300 million in 2025," James said. "This huge user base provides huge room for development for our business."
James said, "Our goal is to create new crypto users for the market, not just duplicate existing users."
The following is an excerpt from the interview:
JoyChen: What was the reason for you to get in touch with crypto in the first place?
James Z: Because I grew up in Congo. The environment in Congo has shown me a lot of unfairness and difficulties. After growing up in Africa, I went to school in New York, studying computer science, and all my friends studied finance. I didn't think there was much to learn about finance at first, and then I started studying computer science. Around 2015, I first came into contact with Ethereum and thought it represented the future. So I bought some Ethereum, made a little money, and didn't care if it fell. I slowly learned about this technology. If I had been bolder at the time, I would have started a business when I graduated in 2017, but no one would have recognized me because I was too young. So I am very grateful to my sister, who suggested that I start a fund first. She is now my co-founder. I joined the industry as an investor as soon as I graduated. Before going to college in New York, I had never heard of crypto when I was in Africa. The atmosphere in Africa was not strong at that time. Crypto didn't become popular until 2016 and 2017, when Bitcoin rose a lot, and retail investors entered the market and began to pay attention.
Looking back, we are now in 2024, and no one really knew what crypto was at the time. Digital currency was accepted by retail investors in 2016 and 2017 because of the rise of Bitcoin. No one believed it at the time, because you have to make money to believe in something.
JoyChen: During this period, have you considered doing other industries? For example, traditional finance?
James Z: Because I am at NYU, most of my friends go to business school and work in the financial industry. But because I grew up in Africa, I have no interest in the financial industry. I think it is all created by people. If I don’t do what I am doing now, I might play professional basketball.
JoyChen: In the beginning, was it based on the idea of making a mobile phone that you chose to start with the African market, or was it your experience in Africa that made you want to do something in Africa first, and then you found that mobile phones or infrastructure are a good start? What is the order of priority?
James Z: Let's start by talking about the problem we want to solve, and then why and how we do it. The problem we want to solve is simple, which is the problem of cross-border payments, especially in emerging markets such as South America, Africa, and Southeast Asia. A common problem in these markets is that most people use mobile phones directly and skip the computer stage.
We focus on how to acquire users through device distribution. VCs usually don't invest in hardware because hardware is not as scalable as software, but we choose to do hardware to achieve the goal of distributing software to users. Our phone sells for $99 in emerging markets, and the cost is equal to the selling price, breaking even. Our goal is to distribute as many phones as possible so that Web3 software can be pre-installed on them.
From the beginning, we knew that to really enter these markets, we needed hardware support. But hardware startups are very difficult and require supply chains and distribution channels. The purpose of pre-installing our software in the hardware is to better promote Web3 applications, and to reach cooperation and incentives with multiple companies, so that users can earn coins in the pre-installed software after purchasing the mobile phone, and then exchange them for legal currency through the Jambo platform. The advantage of our platform is that we can provide distribution channels for users in emerging markets and cooperate with strong partners to provide high-quality content.
JoyChen: In the process of expanding the African market, there are still many difficult moments. Because I have never been to Africa, I am not sure whether the market there can be promoted like the North American, Asian or Southeast Asian markets. In the beginning, how did you sell your first mobile phone?
James Z: Two words. Ground promotion. It's that simple. When Chinese people hear it now, they think ground promotion is normal, but Westerners don't understand how deep the word ground promotion is. For example, it's not just Jambo. For web2, Alibaba, Meituan, and Dianping also register users through ground promotion and give users incentives. This is ground promotion, from first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen to second-tier cities, and then to third-tier cities. Web3 doesn't have such people to promote it, because web3 is very close to money. It is possible that you have issued coins and done many things, but no one has really done ground promotion to bring these users to the web2 real business model.
If you go to our website, you will see that we have three key data. First, in which countries do we sell mobile phones? Now we sell mobile phones in more than 120 countries, which means global coverage. Second, how many mobile phones have been sold, now about 500,000 units, although the target is more. Third, how many new wallets have been created.
When we first started promoting crypto in Congo, no one knew what crypto was. Congo has a population of 150 million. If you look at the map, Congo is one of the largest countries in Africa, but it is very backward. There are only two countries in Africa that are at the forefront of technology, one is Nigeria and the other is Kenya. The rest of the world is very backward.
In Africa, the problem we encountered at the beginning was that no one cared about you. You told them that you could change their lives, and they would say they had heard it ten times because they had been cheated many times. Anyone in any emerging market has been cheated many times. I have been cheated many times myself. When you need money very much, it is easy to be cheated.
Our marketing strategy is that you don’t need to do anything, just your time. Give me a chance and spend your time on our platform, whether it is a mobile phone or software. Even if you don’t have our mobile phone, you can download our software and make money. We attracted a lot of people through this strategy. You have to be very good to the initial users, help them make a lot of money, and make them believe in you. Unfortunately, they only believe in how much money you help them make. If you don't help them make money, they won't trust you.
JoyChen: You just mentioned that you fly to some markets where you are concentrated every once in a while, so where are you going to go next? Why is the first offline store opened in Brazil?
James Z: Our biggest markets now are Africa, South America and Southeast Asia. Our first offline store was opened in Brazil, not just to sell mobile phones, but more for publicity, to let people know about our existence and how many users we have, and to promote our partners.
We chose Brazil because there are the most users there. Although the languages in these places are different, Portuguese is spoken in Brazil, Spanish is spoken in other South American countries, and French or English is spoken in some African countries, this does not affect us because the main problems we have to solve are cross-border payments and remittances. These problems are common in all emerging markets.
Although these markets have different languages, the main problems they face are the same: insufficient banking services, difficulties in cross-border payments, and remittances. These problems need to be solved for both individual users and corporate users. Digital currency and Web3 technology can help us solve these problems.
We did not invent digital currency, but used it to help users. It is very difficult to educate users because people are reluctant to admit that they do not understand new concepts, so we need to start courses in all universities to teach people what digital currency is and let them know that learning these can help them make money. So, no matter where the market is, what users need is roughly the same. This is the service we want to provide.
JoyChen: What is the biggest difference between living in Africa and your early years in China or later in the United States when you went to college? Is there anything that makes you feel that if you hadn't come to Africa, you might never have had this idea or thought?
James Z: There are so many things like this. What is Africa like? Why can't I be born in Africa, even if my family has been there for three generations, because a mosquito bite can kill you, there is malaria. In addition to mosquitoes, there are many invisible viruses. You may die before you are three years old. It is very dangerous in Africa. Why don't Africans work in Africa? People who do business in Africa know that digital currency can help them solve their pain points. People who do business in Africa will know that you can't transfer money to those who need it, you don't have a bank account, and all the problems in emerging markets have existed in China and the United States decades ago. So when you grow up in these places, your parents also do business here, and face these difficulties, these things are already in your mind.
Then I went to school in New York, studying computer science and finance. In a place as developed as the United States, you don't have to be a genius to see the gap between the United States and Africa, it's just that no one is doing it.
JoyChen: If I hadn't had the experience in Africa, would Jambo still be successful? Or if Jambo didn't have a founder with a background like yours, would it have the current number of users?
James Z: I often think that if it wasn't me doing it, but my friends or others, they might have been more successful a long time ago. This may be a problem for founders, always feeling that there are things they haven't seen or done well. There are a lot of things happening every day, for example, if I didn't watch Twitter and crypto this weekend, I missed a lot. So I think if it wasn't me doing this, but someone else with a similar background, they might be more successful. It takes a person to grow up in different countries to truly understand what's happening in these countries. For example, when we raised funds in Africa, we raised 7.5 million in the first round and 30 million in the second round. Tiger Fund and Coinbase both participated. When we raised funds, I increased from 95 kg to 125 kg because of the huge pressure. No one has ever done this before. How do you convince investors to invest tens of millions of dollars in you? When you are only 26 years old, no one believes you can do this.
JoyChen: If you were asked to choose a city to live in now, where would you choose?
James Z: I may not choose to live in a certain country, but the place I will definitely not live in is Congo. I grew up in Congo and experienced two civil wars and evacuated overnight, so many people asked me if it was easy for me and my sister to start a company together. We have experienced life and death together, so our trust will always be there.
JoyChen: Did you create Jambo because you want to change the status quo?
James Z: I am just an ordinary person who saw an opportunity. There are many injustices and gaps in the world, especially in the financial system. I just saw an opportunity to change something. Otherwise, you can buy digital currency and don't move. You may also make several times or dozens of times in ten years. But starting a business may fail.
JoyChen: Let me share a word I learned from a friend, called "value within". If you want to be responsible to LPs and investors and make money, this is actually within the value. But there is a part that is outside the value. If you can really make some changes, what height do you hope to reach in the future?
James Z: The changes that any crypto founder wants to make are the same. For example, the market for Bitcoin is less than one-tenth of the market for gold. I think we are all very early now. If someone hears this video now and says that I don’t like what James said so much, but I just buy digital currency and hoard it. Then you do this, you don’t need to buy Jambo. I am not doing this to get everyone to buy my products. I started a company in this industry to solve problems.
If you ask me if I will continue to start a business, I may never do it again, because it is really too difficult. We now have dozens of developers for programming alone, in three different countries. I am in Asia, and I have nothing to do from 3pm to 6pm, but I am very busy from 6am to 3pm, and then I am also very busy from 6pm to evening communicating with people in Europe, the United States, and Africa. Being a founder in crypto is much harder than in web2, because if you are in web2, your time is the American time, working from 9 am to 5 pm. If you work in China, you may have social events in the evening.
But there is no such time limit in web3. I have not heard some of my partners, founders who are much smarter and more workaholic than me, say that they are tired because they work from 6 am to 11 pm, which is the norm. So what we want to do is the same. If you are listening to this video, you probably already know what we want to do. Believe in digital currency, and hope that more people can come in to understand and participate.
To know the full program content:
Xiaoyuzhou podcast: https://www.xiaoyuzhoufm.com/episodes/66a36c0d7349f7a557b95349
Youtube: https://youtu.be/xuxkCGgOPLg
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