Friction In Lending, iCreate’s Synergies, Digicel’s Misstep, MD Link’s Advantage and Others

In this week’s issue, I look at iCreate’s acquisitions and their potential monopoly on talent. Plus, Digicel’s recent move and MD Link’s acquisitions.


This is the first issue of my weekly newsletter featuring commentary on interesting regional and international news, research and books I read last week. As always, my analysis is framed from the perspective of the Caribbean and seeks to generate insights that provide value for businesses in the region.



One of the hallmarks of consumer apps is the removal of friction. When I signed up for a PayPal account ten years ago, it took days to set up as I had to verify my banking details through transaction verification which took at least two days to show up on my account statement. Today, I signed up for a brokerage account and was able to purchase my first stock within a few minutes.

Every major consumer app has leveraged this.

  • Netflix made it easy to sign up for an account and begin watching a show within less than a minute. Within minutes compared to cable providers’ laborious process, which required identity verification and proof of address.
  • Robinhood drove growth by removing fees and making day trading a slightly less expensive hobby for the average retail investor.
  • Apple has perfected this art, making everything from submitting SMS authentication, to connecting Bluetooth headphones or inputting Wi-Fi passwords just that little bit easier.

From this perspective, Buy Now, Pay Later providers follow a well-trodden path to success. These companies, from Affirm to Zip, have grown by making the lending experience as frictionless as possible. This is not without risks.

In lending, there is a significant margin for error in underwriting – the process for assessing customers’ level of risk. Underwriting models depend on your ability to estimate a lendee’s income and expenses to calculate their debt service ratio (their ability to service their loans via their income).

There are multiple potential errors: underestimating income, overestimating income, underestimating expenses, and overestimating expense. Underestimating income and overestimating expenses decrease the likelihood of approval (where these factors), which impacts potential revenue. At the same time, overestimating income and underestimating expenses increase the possibility of approval but increase risk.

This presents two challenges:

  • First, since overestimating expenses and underestimating income decreases the likelihood of approval, your portfolio is likely to contain higher rates of the second class of errors (overestimating income and underestimating expenses)
  • Second, the customers at higher risk of default are notably different from the average member of the people. These are the consumers where your model is likely to both overestimate income and underestimate expenses.

By reducing friction in the lending process, BNPL providers make credit much more accessible, driving higher average debt levels among their consumers. This may be acceptable during low-interest levels but can push customers who were marginally at risk for default to default.


iCreate acquisitions

iCreate Limited continued its spate of acquisitions to fulfil its ambitions of being a creative hub by acquiring Visual Vibe, an outdoor advertising company. Billboard advertising continues to be a well-used advertising channel in the region, though the adoption of digital billboards remains limited.

Digital billboards provide a noticeable advantage where advertisers can change their content dynamically and use price discrimination for their customers, charging higher prices at peak times. They allow shorter-term commitments allowing customers to advertise for specific periods to assess effectiveness. This should increase the market for billboard advertising.

From iCreate’s perspective, the acquisition is another step to meeting its goal of becoming a creative hub, following its acquisition of GetPaid, a payment gateway and processor in April.

By acquiring multiple companies in the advertising, commerce and media spaces, the company may benefit from synergies where customers who require various services use other portfolio companies rather than non-portfolio companies, or portfolio companies offer group packages at a reduced cost. This approach will depend on how portfolio companies manage their coordination or transaction costs.

The other intriguing benefit is the synergy with iCreate’s original business: training and development. This business may provide a talent arbitrage that would be difficult for other companies to replicate. In their training business, iCreate sees many talented individuals and helps develop talent, the exact talent required by their portfolio companies. This may make students more likely to choose iCreate versus competitors because they may have an opportunity to work for a portfolio company, which may provide their portfolio companies with talent at a lower cost.

Mergers and acquisitions are rife with failures where the expected synergies did not materialise, but the market has rewarded iCreate’s strategy. The company’s stock price on the Jamaican Junior Stock Exchange has rebounded from $0.88 in early April to $4.08 in early July so far.

Digicel’s Misstep

In an admission of defeat, Digicel has retired its messaging, music and video streaming apps (Billo, D’Music, and PlayGo). Two years ago, when Digicel rebranded itself as a digital operator aiming to capture an increasing share of consumers’ time, it leveraged its existing stable of apps to provide media experiences across all significant categories, from music to streaming television, offering plans which provided additional data which could only be used on these apps. The fundamental flaw in this strategy was that consumers did not want any of these applications, with global leaders have offered their services in the region for years.

For music, Apple Music had been available for several years, and Spotify began offering its services in 2020. For video content, YouTube and TikTok are the category leaders, and PlayGo lacks the userbase to provide enough content to keep consumers engaged. For messaging, WhatsApp is the leader in the region, with a spate of alternative platforms such as Telegram and Signal. Messaging is the app that most benefits from a network effect, and Billo never had much of a chance without a good user base.

Each of these flaws was readily identifiable, yet the company proceeded with a strategy that ceded two years to Flow, who promptly countered by offering consumers additional data for apps they used! The plan appears to have worked, with Flow gaining almost 120,000 mobile subscribers between 2020 and 2021.

MD Link announced its acquisition of Fleet Diagnostics Labs and futures plans to acquire a pharmacy this week. These may have been accelerated by the Attorney General’s announcement advising the Ministry of Health on the lawfulness of electronic prescriptions, which will likely see increased competition in the space.

The moves also highlight the evolution of aggregators. Initially, platforms focus on aggregating consumer demand by providing superior service along some dimensions. But once an aggregator gets to a specific size, other issues become more critical, mainly growing revenues and sustaining retention. One of the killers of retention is declining service quality, so acquisitions like the above are valuable for two reasons: they help the aggregator collect higher revenues (while also sustaining higher costs for service delivery) and help maintain service standards.

Despite the acquisition costs and increasing operational costs, these moves are less risky than they appear due to the first-party data that the aggregator possesses. MD Link has access to customer data, including whether the customer is active or has churned. This data provides insight into what diagnostic tests this person will need and what prescriptions they are likely to need. They likely possess insight into customer complaints on their platform. MD Link has a treasure trove of data to assist in valuing any companies it is likely to acquire, giving it a distinct advantage in developing companies.

Charts and Data

Travel and Tourism In the Caribbean 2022, WTTC

  • 708,000 jobs lost were in the tourism industry in 2020, with only 311,00 jobs recovered in 2021.
  • The Caribbean Travel and Tourism sector experienced the second-fastest recovery of all regions, with its contribution to GDP growing by 36.6% compared to the global average of 21.7%.
  • 83.3%, the Travel and Tourism sector’s share of GDP for Antigua and Barbuda in 2019, the highest rate in the Caribbean.



  • File this one away in the research supporting common sense; researchers found that bad experiences leave a stronger impression than good ones. (Link)
  • Researchers found that 41% to 48% of taxpayers could predict their returns based on current year data and prior year returns, which could save hundreds of millions of hours annually and provide an additional $9 billion in returns to non-filers. (Link)
  • Models and Forecast of Credit Card Balances (Link)


Noah Smith has a great feature highlighting the key accomplishments Abe Shinzo made during his time as Prime Minister of Japan. Through a series of key policy decisions, he reversed decades-long unemployment trends and low productivity, a key part of which involved increasing women’s participation in the labour force. (Link)

The Acquired podcast has a remarkable episode on Oprah Winfrey, including a transcript. Her story is remarkable for the early trauma she suffered and overcame. (Link)