Categories
Series V

The Good, The Bad and The Ugly:

How Startup Funding creates more problems

Article by Ololade Otayemi

The good, the bad and the ugly… Remember the movie? The end of the movie holds a big lesson. It shows Blondie riding off into the horizon, leaving Tuco tied up with a bag of Gold in the middle of nowhere. Although Tuco became wealthy, he was stranded… Lesson: Not all money is good money.

A few years ago, a young founder wanted to start a co-working business. He created a fantastic business plan and started seeking capital of about a million dollars. He had a grand plan. Eventually, He was only able to raise about 1 percent of what he was looking for from friends and family. He wasn’t very happy, but that was all he could get so he had to make do. He rented a large space and constructed a small prototype office in the middle of the massive hall. The office was made from dark MDF wood and could only sit 3 persons. He then invited some friends including me, to take a look. Everyone loved the idea but no-one wanted to work in a dark box. So he got white wallpapers and pasted on the wall then invited us again and this time, the feedback was good. We loved it. He sold that one box and now runs a massive co-working business. In retrospect, if he had raised the funds, he would have build dark offices everywhere and probably lost all or most of the money.

This is the story of many startup founders today. They have these fantastic ideas, conceptualize it and start running around seeking funding. They then end up frustrated when they don’t get funded. Some founders are lucky, or unlucky as the case may be; they find ways to raise the money and they end up losing it all and in some cases end up in debt.

Funding is only good at the right time, we’ve seen startups soar after funding. We’ve also seen startups crash and founders getting into debt after massive rounds. Research shows over 75% of VC backed startups fail. This means money wasn’t the issue for these startups. In fact, for most of them, money made them fail quicker. So, when is funding good, when is it bad and when can things get ugly?

The Good

When is fundraising good? The simple answer is when you don’t need to raise money. That doesn’t make sense right? Let me break it down. Investors are not going around looking for startups that need money. They are looking for startups that are growing (in numbers/reach) and are making money (Revenue, and in some cases, Profit). They are looking for traction. Investors find traction sexy. The more traction you have gained, the sexier you appear to investors. For you to get to this point, you must have created an MVP, tested it, have paying customers and possibly reached product-market fit. This doesn’t mean investors can’t spot potential in a startup and decide to fund, but that doesn’t put you in the best position. When funds come in here, it is for scale. To boost what’s already working. This doesn’t also mean things can go wrong at scale. Something might work well at 200 users and not work well at 1000 users. This is why leadership is key for funding to be good. With the right leadership, to scale won’t be an issue.

The Bad

They’ve got the idea. They’ve conceptualized. It’s a great idea but they haven’t tested it. This is not the best time to raise money from an investor. Angel investors usually come in at this point. But here is why it’s not the best place to be. At this stage of the startup, you are not exactly sure of what really works so there is a chance you will pivot. Because you have other people’s money in this, the pressure to hit the market is higher (they didn’t give you money because they are nice). So there are already strings attached to what you’re still figuring out. While this isn’t the worse thing that can happen to a startup, it’s not the best place to be. You will be forced to accept the offer on their own terms and not yours.

The Ugly

The worst thing that can happen to any startup is to raise money when they haven’t figured their craft out. They claim they know what they are doing, they even seem like they do, but they don’t. A lot of times, startups at this stage get desperate after many no’s from investors and most of them end up with debt financing. Some even go ahead to find ways to falsify data and trick investors into giving them money. Then they pump the funds into the business and waste it. When the business model is faulty or the leadership isn’t solid, the startup is already setup to fail. More funds will only amplify the failure. Some founders are just serial fundraisers — raising money until there is enough for them to exit and flex. These guys often focus on valuation since that’s the game they are playing. This isn’t bad if the business model and the idea itself actually works. The scary ones are sensitive startups like health, fin-tech, etc. where lives and wellbeing are at stake. When things go wrong here, it’s usually really ugly. This is another reason why the idea isn’t enough and good leadership is key. Good leadership is the difference between success post MVP and at scale. Managing 2,000 users is not the same as managing 200,000 users. Running operations in one location is totally different from running in 5 locations. The issue with startup leaders is that a number of them start off as developers or experts in certain fields. So the have skills related to their work but not leadership skills. So the business succeeds when it’s just them and a few people but as growth comes, they are not able to step back from being hands-on and become strategic. The biggest issue here is them admitting that they lack the skill and get someone who does to run the show while they improve their ability to lead. This has caused many startups to fail even after massive rounds of funding.

So, Before you fund-raise:

  1. Get the idea right — The idea must solve a real, scalable, and profitable problem.
  2. Test your MVP — Create something users/customers love. It’s best to either bootstrap or to take advantage of family and friends at this point.
  3. Gain traction organically — Get and increase users/customers. Increase revenue organically.
  4. Aim for product-market fit — Get to a point where customers are coming to you. If revenue is increasing organically, this will be easy to achieve.

It will not be easy, but in the end, it will be worth it! Investors will be drawn to you like metal is drawn to a magnet. Then you’d be negotiating on your own terms and that’s where you want to be.


PORTFOLIO CHATTER


The new PiggyVest app is launching soon —

Verto FX

Two female founders from two of our portfolio companies were named in the Quartz Africa’s list of 30 Africans leading the change for the continent’s future! Congratulations to Elizabeth Kperrun of ZenAfri and Odun Eweniyi of PiggyVest!

ThriveAgric

KUDI

The MDaaS Team were guests on the FINCA International Social Enterprise Podcast, talking about their tech-enabled approach to Africa’s health care needs. Please, watch it below.


INSIDE VP

Click here to learn about what we have been up to.

https://mailchi.mp/7c7f4e0a3f05/vp-newsletter-september2019


To keep up with our activities here at Ventures Platform Fund, please, follow us on Twitter @vp_fund. Also, sign up here to receive Series V straight to your email.

https://mailchi.mp/7c7f4e0a3f05/vp-newsletter-september2019


See you next month,

V.

Categories
VP Blog

Invest in Process? Here is Why.

Processes turn startups into legacy companies.

So I met this young enterprising and energetic fellow in one of my design thinking classes. He walked up to me after class and asked for help with business growth. He runs a food delivery service and has been running it for 6 years but the business has been stagnant; pretty much revolving around the same customers and barely making profits. He looked really tired because he came from his office to class and he said that the business still revolves around him and the team cannot deliver as he would.

Small companies (startups) are companies at the seed-stage. During this stage, they experience a lot of learning, testing and make mistakes until they reach product-market fit then exit the startup phase. This exit is possible because the company can replicate itself and its product or service in many places as they want. It is just like recipes that enable anyone anywhere to make dishes, without the recipe nobody can produce the results expected. Startups experience some growth when they are small, but fail to sustain this growth and cannot be successful at a large scale because they don’t have processes that are easily replicable.

Before you continue to read this article, you must first get rid of the perception (that’s if you have it) that processes stifle creativity, innovation and that it is an administrative burden. Yes, most organizational processes can be nerve-wracking and frustrating, but not all are and it doesn’t mean that processes should be gotten rid of, but processes can be designed in a manner that allows innovation & creativity to thrive and it’s not burdensome.

  1. The first reason why you must invest in process is that it is one of the key legs your business needs to grow. Just like a table needs four legs to stand. Every business needs four legs as well: Purpose, People, Process and Metrics. Processes turn startups into legacy companies. Growth means you have attained a product-market fit and you have a business model that can be replicated to acquire more customers in more places. To do this efficiently means you will need to set standards in place so your success is easily replicated without compromising on your values and competitive advantage as you grow.
  2. The second reason is, and if you think about it, that without documented processes, owners must rely on employees to pass on relevant information or to carry out tasks in a particular way; and information can get lost in transmission. Documenting processes as Standard Operating Procedures in a manner that is concise, easy to understand and accessible gets everyone on the same page and makes it easy to follow.
  3. Thirdly, having documented processes and, starting to do this early, makes scaling easier. You can onboard new staff, therefore, saving time, energy and brainpower to rethink and communicate operational activities repeatedly. Also, it soon becomes second nature to your staff that their results and work style can be predicted in alignment with the company’s expectations.
  4. The fourth reason is one way to measure the success of a company is if the company can grow with or without the founder. With processes in place, the founder doesn’t need to be there all the time. The operational system of the business can work without him or her. So, the student I spoke of earlier needs help with setting up Standard Operating Procedures (SOPs) to reduce his stress and prepare him for scale. Think about the founders of legacy companies who have died and their products are the same or even better?
  5. It helps with decision making and problem-solving. With the right protocols and standards, you minimize the occurrence of problems and make sound decisions that assure you that circumstances don’t force your hand against your ethos. You are almost predictable in a good way. Rather than take advantage of you, your customers, partners, and investors will respect you for it and comply just as much as they expect you to comply with them.
  6. Lastly, it ensures that your company maintains its core values, its soul, efficiency and attains predictable results, even as it grows. Think about any globally relevant company and you will understand what I mean.

What will sustain growth are processes and they usually take the shape of Standard Operating Procedures that do not necessarily have to be long, boring documents. Processes should be clearly outlined, easy to understand, innovative, accessible, promote creativity, flexible, and most importantly inclusive to ensure ownership and compliance.

It is one thing to translate your vision into a product or service and then into a business model that makes sense. It’s another thing to translate your vision into a repeatable and teachable business process for scale. Process is as important as product development, business modeling and measuring results. Invest in it if you want to grow!

Adaeze Sokan is the Programs Director at Ventures Platform. She designs and coordinates the implementation of programs and processes that helps entrepreneurs grow.

Categories
Series V

Communication: are you doing it right?

Yesterday, I tweeted:

We have spent the last four days at our bi-annual retreat, reflecting on how we have performed in the first half of 2019, and strategizing on how we will move ahead. A recurring area of concern has been communication.

We immediately acknowledged that a lack of communication is deadly for any company. The thing is, the teams will continue to operate under multiple layers of assumptions and bias when the right systems for communication are not set up. I safely concluded that if an organization does not create and maintain effective communication processes and internal teams don’t have the information they need to work together towards the big picture, things can go awry pretty quick.

I once read of ten young programmers who were put on a queue with a task to pass on a coded message whispered by the person before them. The message read, “You’re not a great programmer if you only know one language.” By the time it reached the tenth programmer, he exclaimed, “Java, C++, C, and COBOL.”

George Benard Shaw said, “The single biggest problem in communication is the illusion that it has taken place.”

As a company gains more people, the tendency of miscommunication exponentially increases, especially when there is no effective communication process available. Things can quickly change from fantastic to awful when the internal team of a company has divided objectives. You must start a company the way you want it to continue — as you grow, the ‘newbies’ will easily adapt and replicate what they see. This is why it is essential to deliberately take measures, no matter how small or large a business is, to ensure effective communication within a company, therefore, creating a safe space where effective communication thrives as a culture in your team. To achieve this, you can do the following;

  • Writing things down is an effective way of carrying everyone along — Uncertainty can create a lot of confusion and negative outcomes. Once it exists on paper or in a document, it becomes easy for anyone to access it, refer to it when lost, and of course, understand the workflow and duties assigned to each individual. At VP, we use Google Keep to share notes and thoughts, and this is open to all members of the team.
  • Always ask for feedback — Never assume people understand what is being conveyed — even when it is written down. Do not be reluctant to go over things again, break ideas down into smaller pieces, and ask for feedback. It is essential to set the atmosphere right and eliminate every form of hostility within the company. This way, it becomes easier for team members to open up.
  • Deliberately create time for team members to get along — Organizations are like families. They need to co-exist. The closer people work together, the lower the chances of miscommunication and the higher the chances of success. Spending more time together reduces tension between people and provides security to share ideas that will drive the business forward. Activities like periodic team bonding exercises are great — breakfast or drinks with direct reports and activities that take away the tension, creating an atmosphere of vulnerability and trust.
  • Invest in understanding your customers/partners — Spending time in understanding your customers is crucial in avoiding miscommunication. Successful businesses are patient and willing to align themselves with the interests of their customers to prevent conflict and optimize communication. It is therefore important for employees to be trained to address customer issues without being defensive or negative. The gap between profit and loss is dependent on excellent business-customer communication. While it is great to have a seamless internal communication process, ensuring an effective external communication system is perhaps a critical determinant for your business sustainability.

When a business understands the value of good communication, everything else falls into place. Transparency between the internal teams of a company is what maximizes productivity. No team can function without the other teams. They all have to be aligned. This way, costly mistakes due to misunderstandings are avoided, everyone works towards the same goal, and of course, the business grows faster, together.


Inside VP

It’s exciting new dawn at Ventures Platform Hub as we have made some leadership changes. Read about it here.


Portfolio Chatter

Reliance HMO gives you 20% of your money back when you don’t use your health insurance in a year. Either as cash or as a discount and that’s totally up to you! Read about it here.

Paystack has announced announce Multiple Products on Payment Pages! Users can:

  • Sell multiple products and quantities on a single Payment Page
  • Manage inventory on the Dashboard
  • Build custom inventory management solutions. Read more about it here.

PiggyVest introduces account numbers for its users. Read about it here.

ThankUCash has a brand new app! Download from Google Play here or App Store here.


What are we reading?

Measure What Matters by John Doerr. Find here.


See you next month,

V.

Categories
Series V

Boring Things That Makes Startups Fail

“An entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down.”― Reid Hoffman

Successfully starting and growing a startup is probably one of the most arduous undertakings on the planet. Typically, building a startup requires coming up with an idea that solves a problem, validating it, developing and testing prototypes, gaining traction, getting investment and working to scale the startup- all the while dealing with uncertainty, late nights, and overcoming the hurdles that arise when going through the stages of the startup lifecycle.

Startups are meant to grow rapidly and the mechanics required for this means that they should be able to innovate quickly and flexibly adapt in response to their environments. These necessities are evident in the makeup of most startups: small team size with a non-hierarchical, largely unstructured and informal form that engenders fast communication and decision-making. Many of the most successful startups in the world are evidence of the power of this model- a close-knit team buoyed by innovation, grit and a shared vision, working together to build a company that changes the world.

For many early-stage startup founders, this model is a frame of reference, a motivator, and a necessity. Startup founders thus tend to eschew structure and processes, viewing it as a hamper to the innovation, entrepreneurial spirit and ownership that bolsters startups in their early days. The implication of this is that usually, during a startup’s nascency, structures such as HR, legal, procurement, and accounting are largely non-existent.

Once a startup starts to grow in team size, investment and scale, however, the cracks that inherently accompany an unstructured organization start to come to the fore and deficiencies in structure begin to affect organizational performance. In some cases, chaotic operations and unpredictable performances in startups have led to combustion from within.

Based on experience, there are a number of areas that startups need to particularly focus on and develop a strategy for so as to be in good stead to avoid the negatives that accompany the absence of structure and processes in an organization:

  • Human resources
  • Accounting and book-keeping
  • Legal compliance

Human Resources: As more and more people join a startup, things that were previously easy such as communication, common knowledge, and decision-making begin to become more challenging.[1] Founders thus need to be strategic in their approach to managing the people who comprise the organization. For one, startups in their early stages are typically comprised of generalists that are able to carry out a wide range of functions in order to meet objectives. However, as the team size expands, it becomes necessary to define roles and expectations, hire specialists in select functions and demarcate team units.

Accounting and book-keeping: In the early days of a startup, accounting and book-keeping are not as integral as say, developing an MVP, however, as the startup grows, it is imperative that accounting and book-keeping measures are instituted in order to ensure that the startup is able to track all financial records, as well as interpret financial records that will serve as the basis for activities such as paying the right amount of taxes and making strategic business decisions based on numbers.

Legal Compliance: Legal compliance and its importance is often overlooked by some early-stage startups due to a lack of awareness of existing laws. Failure to adequately ensure legal compliance can affect a startup in many ways including; attractiveness to potential investors, issues with cap table and equity, as well as issues with intellectual property and regulatory authorities.

“Organization is the devil’s work” — Linda Medley

To avoid the pitfalls that arise due to a lack of structure, it is imperative that founders are cognizant of the beneficial role of structure and processes in startups, keeping a finger on the pulse of the startup and increasingly instituting structure as the startup grows. The differing needs and context of startups mean that there is no one-size fits all approach to instituting structures and processes, as such, it is advisable that startups:

  • Speak to experienced founders who have successfully grown startups
  • Develop a structure and process culture using DIY technology tools
  • Speak to experts that can provide specialist advice

Speak to experienced founders who have successfully grown startups: Founders of successful startups are likely to have experience of instituting structure and processes in their startups and might be able to provide anecdotal insight on the intricacies involved. By talking to them, early-stage founders are able to learn from the experiences of their more experienced peers.

Develop a structure and process culture using DIY technology tools: In the early stages of a startup, a lack of resources usually means that specialist functions such as accounting cannot be hired for. However, founders can instill a culture of structure and process by introducing the use of DIY tools to carry out these functions. Accounteer, for instance, is a simple accounting software that helps entrepreneurs to create invoices, track expenses and receive online payments.

Speak to experts that can provide specialist advice: By speaking to experts, startups are able to get tailored specialist advice on how to institute structure and processes in their startups. Ventoven- a sister company of Ventures Platform- is a shared services company that focuses on providing advisory and services in the areas of HR, Accounting, Procurement, IT and Audit to startups.

As stated at the beginning of this article, successfully starting and growing a startup is no mean feat. While it is tempting for founders to fall in love with the informality and flexibility that are the hallmarks of a startup in its early days, it is essential to ensure that the appropriate structures and processes are instituted in the startup as they become necessary. For startups, humble beginnings make for a great story but true greatness lies in the ability to adapt, transcend and radically change paradigms. Doing this requires cohesiveness and long term thinking that can only be achieved through efficient structures and processes.


[1] “Taking the Mystery out of Scaling a Company — Andreessen Horowitz.” 2 Aug. 2010, https://a16z.com/2010/08/02/taking-the-mystery-out-of-scaling-a-company/.


Inside VP

ARM presented equity free funding of N3Million to the 6 participating companies of their corporate acceleration program, LabsByArm.

The participating companies were Asusu Technology Limited, PayDayInvestor, FINT, Think First Technologies Ltd, Trove Finance, and Tsaron Technologies. Read more here.


Portfolio Chatter

Congratulations to VP portfolio company mdaas global on closing their latest funding round to power the next chapter of growth.

Congratulations to VP portfolio company Kudi as they hit 1B Naira in daily transaction value! Read here.

VP portfolio company, Printivo has introduced Thrive. Thrive is about sharing the ideas and the secrets of making small businesses great. Read about it here.

VP portfolio company, VertoFX wrote about Bridging the International Business Corridor in Africa. Its an insightful 3 minutes read.


What are we reading?

Lessons from Keith Rabois Essay 4: How to run an Effective Board Meeting and make an Effective Board Deck. Read here.

Evolution and Revolution as Organizations Grow. Read here.


See you next month,

V.

Categories
Series V

Startup/Corporate Partnerships and the role of Mentors

Corporate partnership is a mutually beneficial relationship between a startup and an established corporate organisation.

You probably read “mutually beneficial” and thought; “no way, big corporates will definitely exploit startups”, while this might be the case in some instances, it should not be the norm. This is why it is important for startups to understand how to navigate the corporate partnership landscape.

Startups desire partnerships with corporate organisations for obvious reasons: they are either seeking funding opportunities, looking to leverage the corporate partner’s credibility, navigate the regulatory environment, deepen their industry insight or most importantly to increase their distribution network.

It is important to note that startups are not the only party that win from this relationship. Corporates also have a lot to gain (without having to exploit the startups). Most corporates are constantly trying to create new innovative products with better technology and hence need cheaper ways of developing new products. They are also always looking to penetrate new markets while up-selling to existing customers. In all, corporates are either seeking ways to make or save more money and partnerships with startups can be a very appealing option.

Now we know that both parties stand to gain tremendously from this relationship, but before entering one, here are some very simple but important tips to remember. Corporate partnerships;

  1. Involves two or more entities.
  2. Have to be mutually beneficial.
  3. Have to be legally binding and
  4. Have to explicitly state the roles and responsibility of each party.

Mentors can play a very key role in forming beneficial corporate partnerships. The best mentors provide guidance and when convinced, can open up their network to founders.

Mentors with industry experience can help founders understand the corporate terrain and sometimes would have relationships within the organisations. Mentors can help founders better craft their value proposition in a way that corporates will appreciate. They can also provide founders with key industry knowledge that can make the startup’s pitch more tailored and appealing to the corporate.

But perhaps most important of all is that a credible mentor can make introductions which are usually more effective in starting the partnership conversation than a cold email or proposal. This is because investors and corporate partners trust startups who come highly recommended by those in their circle and a successful mentor has a large network of people who will be beneficial to a founder.

Now, even if you do not need corporate partnerships (and who doesn’t), there is still compelling reason for having great mentors. In an age where the pain-pleasure principle is glorified, it is not shocking that many entrepreneurs do not put in as much effort to seek out a mentor as they would for a co-founder.

Arguments proliferate the ecosystem about why entrepreneurs should trust their guts and follow their own instincts instead of relying on a mentor but it is important to note that most successful companies today have founders who had mentors. Facebook’s Mark Zuckerberg was mentored by Steve Jobs, Steve Jobs was mentored by Mike Markkula and Eric Schmidt mentored Larry Page and Sergey Brin of Google.


Inside VP

We just concluded demo day for our corporate fin-tech accelerator, Labs by ARM. Companies that pitched were Fint, Asusu, Ogaranya, Trove, Payday Investor and Tsaron. Look out for pictures and details in the next Series V.


Portfolio Chatter

  1. Tizeti launches IP voice call service, you can read more about it here.
  2. PiggyVest just launched a new feature that allows users to directly invest in multiple asset classes, see here.

What are we reading?

The Prosperity Paradox by Clayton M. Christensen, Efosa Ojomo and Karen Dillon. See here


Happy Workers’ Day.


See you next month,

V.

Categories
Series V

What makes an A+ Founder?

Today’s edition was written by Kayode. We think you’ll like this one. As always, give us feedback about the newsletter here, and please share. (Catch up on past editions here.)

I n 1988, Purdue University strategy scholar Arnold Cooper and two colleagues asked 3,000 entrepreneurs two simple questions: “What are the odds of your business succeeding?” and “what are the odds of any business like yours succeeding?” Founders claimed that there was an 81% chance, on average, that they would succeed but gave only a 59% probability of success for other ventures like their own. In fact, 80% of the respondents pegged their chances of success at least 70% — and one in three claimed their likelihood of success was 100%.

At the beginning of an enterprise, the business is only an idea in the mind of the founder, who probably spent a great deal of time analyzing the idea so much so, it becomes his paradoxical “baby”. He quickly becomes emotionally attached to it without noticing.

Founders’ conviction, attachment, optimism, confidence and naïveté may be necessary to get new ventures up and running, but founders often downplay the intensity of execution and discipline required to grow the business and keep the business default alive.

We have spent some time thinking through the differences between a high performing founder and an average/low performing founder assuming both have access to similar resources. In observing the several companies in our portfolio and companies that have gone through our several programs, one of the key traits we see in top performing founders is the strength and pace of their learning and their speed of execution — the ability to always move fast, deploy to the market, learn from the process, rinse and repeat. The best founders are “relentlessly resourceful” always figuring out a more effective way to execute a task or an alternative route to a roadblock they are facing.

While some founders sit around analyzing what can and should be, how their competitors are raising too much cash, how regulations are skewed (which might all be true), the best founders are constantly taking ideas to market to test and validate, they spend little or no time worrying about things they cannot control e.g their competitors raising money at a high valuations. They are constantly in the trenches trying to chart a path for their company, trying new things out and making new mistakes.

A founder once asked if the discipline of execution can be learnt, my answer was a resounding; yes!


Here are a few tips for founders to improve their pace of learning and speed of execution.

  1. Agree/disagree and commit, whenever you get a piece of useful advice. Decide on a strategy, document the plan and implement immediately. Chances are — the longer it takes, the more likely you would forget and the less likely you would implement.
  2. Be accountable to your team, advisors and investors. When you decide on a course of action, share the details and let these people hold you accountable. You would be pressured to deliver as you sure wouldn’t want to be perceived as incompetent by your team members, advisors or investors.
  3. Plan your day ahead, decide the day before what your top 3 priorities for the next day are and maniacally focus on doing those 3 things and ensure these are tasks that significantly move the needle for the company. Remember at the core of your company, you should be building a great product and selling to customers, so your daily activities should be largely focused on that. Reference the Eisenhower decision matrix
  4. Review progress daily. Did you knock off those top 3 priorities? If you are constantly not knocking off your top priorities, you are not doing it right.
  5. Track your time, track how much time you spend working vs checking twitter, WhatsApp and the likes.
  6. Set a learning goal that aligns with a key problem you are trying to solve in your organisation eg. Your company is trying to figure out distribution, so you set a goal that requires you take 1 course and read two books on growth and distribution over the next 7 days. Once again be accountable to your team.

The founder should make a periodic habit of analyzing his time to match intention to reality. How are the tasks on your daily to-dos moving you closer to your goals as a person and as a company? This is an important habit for every founder, as it will trickle down as a culture to other members of staff.

Always remember no battle plan survives first contact with the enemy (the market), so you will need to quickly get out and execute to figure out what works and what doesn’t and adjust accordingly.

Lastly, stay relentlessly resourceful.


Portfolio Chatter

  1. Co-Buildit launches a crowdfunding model for housing, you can check it out here
  2. Printivo is offering free shipping on all items here

What are we reading?

  • Execute Like a Rookies, Lead like a multiplier — here
  • A founders Guide to Discipline — here
  • Why “Leapfrogging” in Frontier markets isn’t working — here

If you are building something great and have developed the habit of being relentless, we would love to talk to you. Fill out our funding application here.

Know how we can be better, do better? Please drop us a line at [email protected].

See you next month.

V.


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Categories
Series V

Human Compilation Error

Today’s edition was produced in partnership with Justin Irabor. It is a half-fictional essay about startup founders and mental health. We think you’ll like this one. As always, give us feedback about the newsletter here, and please share. (Catch up on past editions here.)

Bruno Jide was 21, fresh out of school and looking to make an impression. As a result, he was an overeager, overexcited bunch of nerves; he resumed work early and closed late and always wanted to take on more work. He was only three weeks in.

It was December, 2012.

The company was close to closing up for the year and the entire team was huddled together in the largest room in the building (it had a poorly-stocked bar in the East-end, but no one ever drank from it). The room was splashed in a lazy blue pouring out of the projector overhead. The CEO was putting on his strongest act today; it was the regular talk — 2012 in review, highs and lows and plans for 2013.

Bruno was on the edge of his seat. He loved the CEO. He was learning to speak like the man, laugh like him and throw smart quips when he entered a room — just like the man. So far — and unbeknownst to him, he had only so far succeeded in making his colleagues loathe him further.

The talk was over in 25 minutes. No one said a thing. The entire house stared balefully at the CEO. He prodded, any questions?

No one said a thing. Bruno was alarmed. This was a brilliant, beautiful talk. Why is no one saying anything? In his panic, he raised his hand and asked a question, any question, to communicate his personal engagement. The CEO answered, but his heart was obviously not in it.

‘I am disappointed in every one of you,’ he said afterwards. ‘That the youngest and newest member of this team should be the most engaged. I expected better.’ He stormed out, abandoning the projector and his notes.

Bruno flopped against his seat, appalled. How could his team mates be so cold and uninspired?


In early 2014, a handful of people tuned in to watch an interview. A young, CEO, a different one from the one Bruno worked with in 2012, was on air and giving obligatory answers to template questions: what is your business model? How do you provide value? Challenges? Projections?

The man was nervous; it was obvious that he was camera-shy: he smiled a lot from one corner of his mouth, and tended to begin his statements with “uh, yeah.”

‘Let’s talk about your company culture,’ the interviewer asked.

The young CEO smiled weakly. ‘Funny you should ask that,’ he said. ‘I haven’t really given much thought to what our culture at XYZ is. On the spot, I guess I’d say the people I work with have overtime come to perform under a lot of constant pressure, and people have been known to work round the clock. Everything is measured, and if you cannot deliver, you probably will be without a job soon.’

He paused tensely, then chuckled. ‘Wow, that does sound terrible now that I think about it!’

And the interviewer laughed noncommittally.

The Atlantic, in 2014, ran an article titled ‘Tech Has a Depression Problem,’ giving an interesting anthropological viewpoint into the high-pressure life of startup founders in Silicon Valley. Since everyone in the tech space wants to be seen as ‘successful,’ a ‘thought leader’ and an inspiration to everyone else, the article explained, many founders weren’t being completely honest about their mental health.

“The notion that you can be vulnerable, the notion that you can share a weakness, those are antithetical to the great CEO archetype.”

One evening, after a particularly harrowing seven-hour stakeholders meeting, the results of which saw team members brutally cut off and people’s confidence in the entire company becoming shaken, I sat at my desk that night, too tired to go home.

The office was almost empty. The CEO was probably home.

I wrote him a private message: ‘Hey.’

He replied almost immediately: ‘Hey.’

‘Are you okay? Today must have been tough on you.’

‘LOL. No one has ever asked me that.’

And I waited five minutes before typing, ‘so…? Are you okay?’

‘Part of business,’ he responded. ‘Nothing to it, really.’

And we never spoke of that day, ever again.

I have flirted, almost wistfully, with the idea of a ‘cyborganization’, the ‘ultimate tech team’, where HR becomes effectively redundant — no one is dissatisfied, there is no need for team training because every team mate who needs to level-up in a particular skill will be self-motivated enough to look for tutors to help them catch up.

In this set up, the need for human maintenance and support is a non-issue, because humans are merely (and unfortunately) important ingredients in the truly important design: to ensure that the tech is just perfect, features are released on time, and scaling is done right when it is needed and everything is an oiled machine.

The ideal tech team, I wrote, would prune itself automatically:

Planning and troubleshooting is easier because anecdotal instances are hastily dismissed in the face of shitloads of data. Plan-to-action time gets faster and can actually be measured and optimized in real-time! Iterations are minimized, and the process of evaluating a team is easier — just download one or two things and you can easily know your star players and go to work on the team members lagging behind.

The only problem with everything I wrote is that it is utterly stupid. What’s worse, I am not in the minority of people that think — either actively or passively — like this.

In an episode of Mr Robot, where Elliot is faced with the daunting task of hacking a secure location, his allies say it is ‘impossible,’ because the system cannot be breached.

Elliot asks about the security detail, and his team mates inform him that there are five people in charge of security, to which Elliot says ‘I already see five bugs in the system.’*

He breaches the system, we find out later, by leveraging on information about the individuals that made them vulnerable.

The typical tech startup has a founder (or if you are lucky, a founder and a co-founder) running a flat hierarchy system.

Objectively, it centralizes command at one point, then disperses it uniformly along the team so that responsibility is shared strongly, team values are communicated coherently and everyone is always plugged in.

Subjectively, however, it is the perfect set-up for a CEO’s neurosis, narcissism and downright psychopathy to be dispersed rapidly down a chain. When startups like these have a ‘culture,’ it’s usually slanguage for a homogeneous collection of people acting and behaving along a narrow range of attributes that please one person only — the founder/CEO.

And along comes groupthink.

I met Bruno for the first time ever in 2015. He was older and wiser, and he could retroactively understand what had happened in that room in 2012. It was quite simple: the team had been sold dreams and incentives, but never seemed to ever cash out on the incentives. According to him, they had slowly come to realize they were being manipulated by the sheer charisma of their employer — and they started to see, to their horror, that they were stuck in a dead-end job.

It was nothing to go ‘whoop’ for at an end-of-year team review meeting.

In an employer’s market such as is the current set-up of the Nigerian tech scene, where many young people are trying to ‘break into’ the tech space, employers tend to be choosy and craft recruitment methods that may sometimes border on the ludicrous.

What is more interesting is this: it’s not a bed of roses when you eventually start working at a tech startup.

The founder faces pressure from investors, and that pressure can coalesce into unreasonable deadlines and KPIs and soon the entire ‘culture’ is a toxic one, where everybody’s putting out fires and doling out blame. The celebrated ‘fluidness’, the lack of structure, can easily become a HR disadvantage as things become even more vaguely defined with reassignments and ‘strategic realignments’.

Focus on the product is usually the call in the mist that founders tend to resort to when things get awry at the team level. As team members experience burnout and begin to get disillusioned, the founder may decide to employ the unpleasant shortcut of ‘cutting off’ the ‘bad eggs.’ This provides temporary respite, but shortly after, the hitherto ‘key players’ soon become the new ‘bad eggs’ and the circle goes again…

Debugging code is simple. Adding new features to your product is sexy. There are press releases and interviews that come with doing these things. Figuring out team dynamics, really understanding that people are people, and that you cannot ‘hack’ the process of effective team relations, that’s a thankless job.

But it is important work.

Motivational speeches get old quick, when they aren’t backed by results. Your trademark CEO’s smile might keep the public enthralled, but the people who work with you 24/7 will get tired of it and will need stronger values if they must remain committed to what is essentially your personal vision.

The tech is sexy. But what about the people?

See you next week,

V.


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Schlep Blindness

How [not] to think about marketing channels

Last week on Series V, we talked about using data to build products users love. (Catch up on past editions here.) This week’s edition is based on a conversation with ex-Jumia Food CMO, Justin Irabor, about a confirmation bias that marketers frequently display.

If the response is positive, it might kickstart a new series about growth and marketing. Give us feedback here, and please forward to a friend and share on your social media.


If you asked me to draw up a marketing plan for your brand, I would be reluctant to suggest branding BRT buses, or to invest money in social ads. I might come up with reasonable hypotheses as to why advertising on DSTv is a silly plan and you might bob your head in agreement, because (I’ve been told) I can be quite persuasive when I want to be.

The only problem is that I would be wrong.

I fear spreadsheets but love data. This paradox is something I still struggle with, but I really, really, really like knowing why people in this dimension and that cohort interact with a brand in the way they do. This, of course, means that I love digital marketing and favor it over more conventional flavors. It also means that, because the levers are more discernible for me, I would pick a PPC for search and the Google Display Network campaign over anything anyone would ever suggest for FB and Twitter.

Hell, I prefer email marketing to measuring a Facebook post’s reach. God.

This inherent bias is the actual villain in my noble tale: the journey to becoming a full-stack marketer.

Every channel — no matter how loathsome it might look to you — has its strengths and weaknesses. The sheer fact that it exists means it is useful for something. It is dangerous (almost foolish) to discard a channel for no other reason than you are a snob. Better reasons for forgoing channels should be your budget, your expertise at milking it, the difficulty of attributing, the degree to which your competition has’ established’ themselves in that channel, and the characteristics of the customers you hope to reach.

When you have fallen in love with a marketing sequence (mine used to be content, SEO, and PPC), it is easy to find articles on the internet that tell you how awesome your stack is, and how ineffective others are. But this is like the famous blind men touching different parts of an elephant and assuming it was the whole.

The glorious confirmation-and-defamation bias.

My thoughts? We must always treat the idea of marketing as an idea. That idea has growth as its only goal. It doesn’t care about your technique, and employs whatever means necessary for its fulfillment.

May your charts go up and to the right.

See you next week,

V.

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Bootstrapping

The term, as used in the 19th century, meant “to pull oneself up by one’s bootstraps” and it was often used to describe scaling a fence. (This implied someone was attempting a far-fetched or impossible task).

It is also widely attributed to “The Surprising Adventures of Baron Munchausen” by Rudolph Erich Raspe, where the Baron pulls himself out of a swamp by his hair.

Recently, Alex Konrad of Forbes wrote about how Mailchimp has an estimated valuation of $4.2billion — without a dollar of venture funding, and the consensus was that raising venture capital ≠ success.

Is it possible to build a successful startup on a shoestring budget? Yes, but it depends on what kind it is, and what ‘success’ looks like to you. Some sectors are capital intensive, and it’s unlikely that individuals/FFFs can afford the investments required. But if you’re building, say, an internet startup with a SaaS business model, it’s generally easier to get by without investment — as long as you’re willing to be patient about growth.

Because you can’t launch a startup into a vacuum, you need to figure out where your customers are/where they will come from. So, you either: run ads (expensive) or build your community (longer but cheaper). You have to work as hard as you can to make a dent and get people to notice you. It is also essential to define what success means for your startup and to enjoy what you’re doing.

Budgeting

One thing to keep in mind is you don’t want to have all your money in the bank in the beginning. Sometimes, you can pay for needs as you go. You need to understand how much it will cost you to build, and where it will come from, but you don’t need to have it all at the inception.

A way to save cash is by making small tweaks to your hiring process. For instance, Kendall Ananyi of wifi.com.ng (VP portfolio) said last year that in the early days, they didn’t hire anyone who didn’t already own a laptop.

Being your company’s sole funder can be both a blessing and a curse (and a choice many businesses don’t have). Every founder should be conscious of the point at which they’re no longer capable of going at it alone. Venture Capital is only one tool in your toolkit, and like any other, you ultimately have to decide whether it matches the use case you imagine for it.


Links from the Internets

  • Podcast: Shola Akinlade on getting into YC, building Paystack, growth, and the future. [Link]
  • Marketing: How trial length affects SaaS conversions. [Link]
  • Product: The art and science of Product development. [Link]
  • Bill Gates on Paul Allen. [Link]

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On mentorship

Telemachus and Mentor

“Mentor” was a character in Homer’s Odyssey. He was an older friend of Odysseus. When Odysseus left for the Trojan War in The Iliad, he asked Mentor to look after his household and his son, Telemachus. Because it took so long for King Odysseus to get back, the townspeople assumed he was dead, and moved to split up his vast estate. Telemachus, his rightful heir, was too young to defend his property. So, it was up to Mentor to protect their interests. Homer wrote that Venus decided to intervene, she took the form of Mentor and visited Telemachus, helping to guide him on his journey to find his father.

Because of Mentor’s relationship with Telemachus, and the disguised Athena’s encouragement and practical plans for dealing with personal dilemmas, the name Mentor has been adopted in English as a term meaning someone who imparts wisdom to and shares knowledge with a less-experienced colleague.

Starting a company can be a lonely affair, starting entrepreneurs need a listening ear and many incubators, and tech hubs have programs to match startup founders with experienced veterans. In the traditional mentoring model, the engagement between the mentor and the mentee took place in a physical, face to face environment, but thanks to the internet, mentors can now sit in any part of the globe and make themselves available to mentees who are sitting in Lagos, Kigali, Nairobi, or wherever else.

For young entrepreneurs, finding the right mentor can mean the difference. Great mentors keep an entrepreneur honest, and keep their feet on the ground, but can also take them to heights unimaginable.

An ideal mentor has domain expertise and broad experience in a particular area; makes introductions when appropriate; doesn’t ask for anything in return, and shows empathy.

“At least for me, becoming someone’s mentor means a two-way relationship. A mentorship is a back and forth dialogue — it’s as much about giving as it is about getting. It’s a much higher-level conversation than just teaching. Think about what can we learn together? How much are you going to bring to the relationship?” — Steve Blank.

For founders: For each meeting, go with a specific challenge with sufficient homework, and data collection.

Funding is still scarce in these markets, but mentors shouldn’t be. We need more mentors — tech company founders, corporate executives, and captains of industry who will provide a great sounding board, help make tough calls, and help make introductions to potential customers, partners, or even investors.

The ecosystem will be better off for it.


Links from the Internets

  • Design: To mark its 10th birthday, Chrome launched a redesign of its UI. Hannah Lee unboxes it. [Link]
  • Management: Grammarly’s Itamar Goldminz on team diversity. [Link]
  • Marketing: PR advice from Facebook’s Caryn Marooney [Link]