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Hi friends 👋🏻,
Welcome to another essay on Open Africa.
I spoke with Eerik of Planet42 to discuss Planet42’s founding story. Planet42 is a rent-to-own car subscription service helping South Africans and beyond get access to their own car.
If you were gifted at a car when you turned 18, can I see a show of hands?? ✋🏽
Owning a car can be seen as a symbol of independence. Barring the occasional traffic or hike in fuel prices, owning a car ultimately puts you in control of your own time. However, getting finance from banks to buy a car comes with a lot of hassles.
Eerik is optimistic that Planet42’s model is here to stay and disrupt the South African vehicle finance market.
TL;DR
If you have a few minutes to spare, here's what you should know about Eerik and Planet42.
Planet42 enables people in South Africa and beyond to get access to their own car. People, who are unfairly ignored by banks, can rent cars and purchase them at anytime or after 60 months.
The idea for Planet42 didn’t actually come from Eerik but his co-founder, Marten Orgna. Eerik joined Marten on a scouting trip to South Africa and after learning more about the market and the opportunity that existed, he packed his bags to join the Planet42 train.
Securing partnerships took about 9 months to buy the first car. They made their acquisition process slow and analogue because car dealerships thought they were a scam.
After raising a total of $50million in debt and equity, Planet42 has 7000+ customers and makes $2m in monthly revenue.
Eerik is ambitious and believes Planet42 can deliver 1million cars to individuals in Africa and Latin America by 2025.
Let’s get to it.
Open Africa Founder: Eerik Oja - Planet42
Hello Eerik! What's your background, and what company are you working on?
I am Eerik, the CEO and co-founder of Planet42. I am originally from Estonia but moved to South Africa in 2017 with my co-founder Marten. I have been friends with Marten for more than a decade, studying in the same school and later working in the same company for many years.
When I heard Marten’s idea of Planet42, I was immediately intrigued. The opportunity of putting cars in the hands of people unfairly ignored by banks was one I couldn’t pass on. Also, Planet42 is fighting transport inequality and promoting financial inclusion for South Africans in a way that is both financially rewarding and socially impactful.
In one sentence, what do you want a reader to remember/take out from this interview?
Ideas are worthless, execution is everything. Note that I am not the author of this quote!
What motivated you to get started with your startup?
My primary motivation to co-found the company was that I could not bear the thought of NOT doing it.
The idea of launching a car subscription company in South Africa was proposed by Marten Orgna, my co-founder. At that stage of my career, I was willing to take the risk of founding a startup because I didn’t have anything tying me down in Estonia (no spouse, no mortgage, etc.).
I joined Marten on the first scouting trip to understand the local context of the South-African market. According to the car dealerships we talked to, up to 90% of vehicle finance applications are rejected by banks. The banks only served the elite, those with high income and perfect credit scores. And everyone in the industry-accepted this as normal. This made no sense to us - how is it possible that people with stable incomes and a clear need for a personal car cannot get a bank to finance them?
After more extensive research, we saw there was a need to service this large population excluded by the banks. I concluded that if I don’t accept the invitation to join him, then I would come to regret this decision. I didn’t want to be the guy who almost didn’t join The Beatles. I packed my bags and decided to shoot for the moon.
What went into building the initial product?
Because we couldn’t figure out why a company like Planet42 doesn’t exist, we decided to launch the idea on our own.
We quit our jobs in Europe, raised an angel round in Estonia, and moved to Johannesburg in 2017. It took us about 9 months to buy the first car. The most difficult part was to convince car dealerships that we do want to buy second-hand cars for people banks think are too risky.
We also struggled to get traction because our fully digital process raised suspicions with customers and dealerships. A few even said openly that we must be a scam because it is not possible that getting a car is this simple. They’d been traumatised by banks making them jump through needless hoops just to get a car. The applications only started rolling in once we printed out 1-page application forms that customers filled out and dealerships used to load onto our platform. So we made our process slower and more analogue, but it worked because that’s what people were used to.
What was the journey to reach the first 1000 users?
Since we bought the first cars, we’ve never had issues finding customers - there are millions of people in South Africa who need a car and can afford a car, but are not served by legacy companies like banks. For the first two years we spent no money on marketing, all the customer applications were generated by car dealerships eager to sell cars to people the banks were refusing to serve.
Our biggest challenge was to raise the funding needed to buy the first 1000 cars. We pursued many avenues to raise money, and the thing that ended up working was persuading friends, family, and other people in our network to lend money to Planet42.
What's your business model, and how have you grown revenue?
As of February 2022, our high-level metrics are:
Team Size - 70
Total cars delivered - ~9000
Monthly revenue - $2m
Customers - 7000+ cars in South Africa
Our revenue is made up of monthly subscription (rental) payments made by customers. Customers pay a flat fixed fee that includes comprehensive insurance and GPS tracking.
Planet42 has raised a total of $50 million of debt and equity. Investors include Naspers (investors in Tencent), Change Ventures, Startup Wise Guys, Lendable, and unicorn founders like Markus Villig (Bolt) and Ragnar Sass (Pipedrive)
What are the biggest challenges you've faced and obstacles you've overcome?
There is no one big challenge, it’s a constant barrage of different issues and experimentation with possible solutions. For example, COVID was difficult for everyone, but luckily we were able to adapt and switch to working remotely in March 2020. We were able to keep growing, as people still needed cars.
A lot of our customers are essential workers who still needed to get to work - and other options like taxis or ride-hailing were not operational during the lockdown. Also, people still needed to get to the store to get groceries - again there were no alternatives except using a personal car for these.
We also made the decision early on that we will not let any employees go, and in fact, we started hiring again very soon after the first lockdown ended.
Building a business is hard, building one in Africa is a lot harder. What was your most 'if I perish, I perish' moment that turned out to be worth it?
I don’t think building a business in Africa is fundamentally harder than it is in Europe, it’s just different. For example, while it is harder to raise money for a business in Africa, it is also true that competition is lower - so if you get it right, you can win big!
How did you motivate yourself and your team to avoid failure when things were tough?
We are mission-driven company i.e. we enable people to reach their full potential by removing unnecessary barriers. Everyone working in Planet42 knows how important it is to have access to mobility - to get to work, to drop the kids to school, to visit grandma. Knowing that your work has a positive impact allows you to push through difficult times.
From a personal standpoint, I acknowledge that failure is a natural part of being an entrepreneur. I’ve had many more failures than successes while building Planet42, but that’s ok - failures are just lessons that enable you to learn, and lead you to the successes. Or like Rocky Balboa said: “It ain't about how hard you hit. It's about how hard you can get hit and keep moving forward.”
What makes you proud about what you've built so far and what are your goals for the future?
Planet42 makes a real difference in the lives of real people. The difference between having a car and not having one in South Africa is life-changing.
Pride is an emotion that at best is useless and at worst creates needless conflict among people. I prefer to think in terms of gratitude - I’m grateful for the positive impact Planet42 creates in the lives of our customers, grateful to the amazing people in our team, and grateful to investors who have backed us.
As for goals, in the medium term, we want to deliver 1 million cars to our customers in Africa and Latin America. I believe we will get there by the end of 2025. But this is just the beginning, we always have more ideas than time and resources to bring them to life.
Have you found anything particularly helpful or advantageous?
The best “hack” I’ve learned is just to sit down and get to work. People tend to plan too much, but no plan survives contact with reality. Or, like Mike Tyson said, “Everyone has a plan until they get punched in the mouth.” I get punched in the mouth daily, but most days I’m still smiling. Attitude matters!
For fun
I’d like to use this space to urge everyone to support Ukraine in its war against Russia. Thoughts and prayers are not going to cut it, Ukraine is fighting for the free world and they need our help! Go to https://war.ukraine.ua/donate/ to make a difference.
Where can we go to learn more?
Website: https://planet42.com/za/
Twitter: https://twitter.com/eerikoja
LinkedIn: https://www.linkedin.com/in/eerik/
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Thanks for reading and see you soon.
Kamso.
I have had the most horrible experience with Planet42.
I purchased a vehicle with Gig Motors who uses Planet42 as the Financial Service Provider.
We had to wait two weeks for a car, as there were so many things that they needed to repair on the vehicle. There was more than 10 things that we were told will be done, including new tyres, the license and registration and much more.
We ended up receiving a car that is faling apart. Literally. The tyres are smooth as silk - with cuts in, the breaks are screaming, the roof is caving in, the mirrors are broken and NOTHING that we were told will be done had been done. The car is unlicensed and not roadworthy.
Gig Motors and Planet42 decided that they would not fix any of the things they promised to fix.
We are obviously not going to keep a car that is falling apart. Especially since it is not road worthy and unlicensed.
There are other dealerships that offer Rent to Own Vehicles. We have found cars that are of good quality. From dealerships with a good name - unlike Gig Motors. These dealerships also make use of Planet42. Planet42 is however now REFUSING TO OFFER THEIR SERVICES TO US.
I actually cannot believe it. Yes, we were disgusted by their services. Yes, they dealt with the matter horribly. BUT how can they refuse to approve our application (which we already qualify for) based on the fact that they did not like that we complained about their bad service?
A supermarket cannot refuse you entrance if you complained about bad products? A bank cannot refuse you an account if you are unhappy with them. They are refusing us service based on who we are. That is discrimination.
We really do not want to leave it there. If they refuse us a car loan / vehicle finance because we were not happy with a car that they did not even supply, then there must be steps that I can take against them.
I would appreciate any advice. Anyone who can assist me please contact me. I would love their CEO as well as their International Affiliates can step in here. They should not be allowed to turn me down based on who I am.
Thank you for any and all assitance.
I have had the most horrible experience with Planet42.
I purchased a vehicle with Gig Motors who uses Planet42 as the Financial Service Provider.
We had to wait two weeks for a car, as there were so many things that they needed to repair on the vehicle. There was more than 10 things that we were told will be done, including new tyres, the license and registration and much more.
We ended up receiving a car that is faling apart. Literally. The tyres are smooth as silk - with cuts in, the breaks are screaming, the roof is caving in, the mirrors are broken and NOTHING that we were told will be done had been done. The car is unlicensed and not roadworthy.
Gig Motors and Planet42 decided that they would not fix any of the things they promised to fix.
We are obviously not going to keep a car that is falling apart. Especially since it is not road worthy and unlicensed.
There are other dealerships that offer Rent to Own Vehicles. We have found cars that are of good quality. From dealerships with a good name - unlike Gig Motors. These dealerships also make use of Planet42. Planet42 is however now REFUSING TO OFFER THEIR SERVICES TO US.
I actually cannot believe it. Yes, we were disgusted by their services. Yes, they dealt with the matter horribly. BUT how can they refuse to approve our application (which we already qualify for) based on the fact that they did not like that we complained about their bad service?
A supermarket cannot refuse you entrance if you complained about bad products? A bank cannot refuse you an account if you are unhappy with them. They are refusing us service based on who we are. That is discrimination.
We really do not want to leave it there. If they refuse us a car loan / vehicle finance because we were not happy with a car that they did not even supply, then there must be steps that I can take against them.
I would appreciate any advice. Anyone who can assist me please contact me. I would love their CEO as well as their International Affiliates can step in here. They should not be allowed to turn me down based on who I am.
Thank you for any and all assitance.