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The next African story will be written by Africans, and there are people crafting the narrative now. Join Dotun as he hosts a series of conversation with people whose ideas and work is shaping the African future.
Anu A on BTF
Dotun O: [00:00:00] It's good to have you, Anu, on the show. I think a good place to start from and we're discussing this just before we came on air, was your view on differentiation because B2B e-commerce has been tried and a lot of companies are doing it currently in Africa, it's one of those obvious thing to do, organizing informal market, organizing the value chain and providing value and extracting that value
it'll be good to understand your own view, how Sabi is differentiated.
Anu A: First of all, thank you for having me. I'll start with something I strongly believe, which is that you can't copy models or you can't wholesale copy models. I think we're today the only player that does what we do end to end. We have like for parts of what we do, different types of competition. B2B e-commerce, is a model that was developed mostly in Asia. And then brought to this part of the world. The traditional approach of basically trying to aggregate retailers and then working through distributors or manufacturers to find scale has a number of [00:01:00] issues.
I think the main thing that differentiates us is an outsized focus on what the market actually needs. And I don't say that in any funny way. It is just that is literally what we designed. We spent a lot of time looking at retailers, wholesalers, distributors, finished products and input products, et cetera.
And we intervene where we feel like we can make a difference and where we can find sufficient scale. And, our needs as a business what we want from a particular part of the market is completely different from what we want from another part of the market. I think what we're good at, but at the same time, what creates complexity in the market is then pulling those various solutions together in a way that helps us balance out the business' sustainability.
But in terms of what we actually do for us is really standing behind businesses and their needs and looking at the gaps that we can actually truly help [00:02:00] address.
Dotun O: There's so many things that I would like to unpack in what you just said. And from what you're saying, there is some assumptions around how the market is or should be built by. Some other people have tried to do this and you totally ignore those assumption you went to.
The first principle it seems to say, what does the market
Anu A: Well, To be fair, we didn't totally ignore it. We also took some lessons. And also to be clear, those models grew like wildfire in other parts of the world.
So I'm not trying to be critical of the baseline approach, it's just that we took a different approach.
Dotun O: took a different approach and I think that's what I want to release zero in on, which is can you break down the key assumptions that you have that you tested about what the market needs and how to organize the market to be more efficient,. You break it down into different parts and maybe use that to explain what Sabi actually does and how it's different from the others.
Anu A: At Sabi, we help businesses grow. Mostly in the informal sector . And how do we do that? We act as a trust layer between them and the services they need.
[00:03:00] So we help them access the resources or services they need to grow their business. Practically, that is supply the supply of physical products that they sell. That could be logistics, that could be quality services for the input sector and verification and compliance services. That could be access to credits, treasury management solutions, wallet payments, et cetera.
And our job is basically to understand the businesses we work with and basically make resourcing decisions around the allocations with partners. Okay, hey, only four cartoons of noodles available at this time. 10 customers need it. These are the most reliable, these have the long term sustainability, et cetera, et cetera.
And then, the distributor can decide where it's going or we can decide on your behalf. Same thing with credit. This guy needs a hundred million, super reliable. Yes, we know he cannot meet your usual requirements. We stand behind him, pay the supplier, we'll make sure you get your money back.
So on and so forth. In terms of the way we designed the [00:04:00] product, first of all I come from a trading family and I was working from very early
Dotun O: What's your family doing?
Anu A: Manufacturing.
And, a few things, but let's say manufacturing and distribution of those products. So I grew up on the factory floor a bit and in the office, so I had some baseline understanding of those things.
I also worked at Jumia. my last role at Jumia, I was in charge of offline sales. And at that time it was basically the biggest agent network save MTN in the country.
Dotun O: The J force? Yeah.
Anu A: J Force. And I led J Force in a few countries, Nigeria being the biggest by and mile. And so I understood offline dynamics and agent dynamics very well at a time when using agents in that way, was not common.
And then I worked in a company called Rent Source with, my co-founder for Sabi then, and a bunch of guys that work at Sabi today . We distributed power in markets. Now we were working on value added services for those power products, so we ended up understanding those merchants and their issues very well.
We already, as a team had a ton of insights into the market [00:05:00] dynamics and value chain dynamics. I think when we started, we knew a few things upfront. First of all, we knew we wanted to be asset light. At the time , there was this huge asset light versus asset heavy argument. And till today, I don't have an opinion on it because asset life versus asset heavy is a matter of convenience for the business, not for the user.
The user doesn't care if you own the truck
Dotun O: As long as the goods gets to that,
Anu A: Just bring my product. And I think why we went Asset light was a recognition that while this is a much harder thing to do from the onset, you cannot get to the kind of skill we want to get to owning assets because you'll always have a capital limitation.
I used to work in manufacturing at Dangote. I had managed some fleets at Dangote Salt, and it was hell. Do you understand you're gonna have issues? Is the driver high? No, I'm serious. This was one of the biggest problems we had. Like you'd have a driver that was high, he'd hit someone, you fire him, he'll go to another subsidiary.
So, they were at the time considering introducing biometrics to avoid. Do you understand? So [00:06:00] it's like, why do you wanna deal with that? It takes up a lot of management bandwidth. So for us it was that when we looked at scale and we were looking for scale, serious scale was always the aim. You look at China, you look at other places, you realize very quickly that to get to where you want, you're going to have to deal with this problem anyway.
So you might as well deal with it upfront when you're small. That's why we went, I said light. It wasn't more like some kind of huge this versus that. It was just for the scale we wanted. We didn't think it worked. So let's take the pain up front. We were fortunately also a very commercially savvy team, meaning we knew that you are not going to hit commercial dynamics in only one category.
It's not gonna happen. Do you get me? So you need to know what you are doing with each category to balance the business. So even then we didn't have the kind of market segmentation or commercial approach we do now. We weren't as disciplined as a team, but we did have a good enough understanding to know that one category will not solve [00:07:00] what we're looking for.
And then finally we were very flexible. So we're a very nimble team. We move really quick and we're not scared of breaking things. I think the other thing we had was that. We fortunately, and I'll give credit to my co-founder here, already had a ton of investor management experience.
Meaning we will argue that, argue you're not gonna come and force me to take a form that doesn't work for the market because you don't understand the market. It's like you're gonna understand the market
Dotun O: or
Anu A: you're not gonna invest is one or the other. And that's not from a place of arrogance. It's just from a place of don't come and help me kill my thing.
That combination meant we were able to design and change a lot for what we felt the market needed. And as we did that, the market responded. And I think one thing people don't understand in markets like this is there's never a demand constraints. Do you understand? 'cause it's a highly underserved market.
No matter which way you slice it, there's [00:08:00] demand. It's not that we got it. So right as survey, do you understand, we didn't come out operating at an eight or even a six, but if a market is at zero to one and you're doing a three to four, you are going to get traction. And that's what happened.
And I think what helped us was our willingness to take market feedback. We weren't glued to any particular model, I think growing up, or sorry. Any particular approach growing up? Said, my family are business people, but my dad like, has a very how do I say, non-traditional background, right?
He's, um, been in business forever, but he, he didn't go to school. Do you get me? But the net result of growing up around someone like that, or people like that, is you learn to respect what works and not what is supposed to work. Do you understand? Because see, oh, this brings about results, whether it fits a traditional model [00:09:00] or not.
And I think a lot of the team is also oriented that way where they have a lot of respect for design and understanding things. And so as a result of that, they're always pushing my team will always knock my head like, what you're saying doesn't make sense? No, you are wrong. So when you have a team that's willing to argue, willing to look at what their users actually need, then whether you fight, whether it's frictionless or not, you will get closer to serving my chance the right way.
Dotun O: this is good. Um, there are two things that came out, what you're talking about. And I'll maybe ask question the first one and which is.
Your understanding, again, going back to your history, your understanding of the market, of the offline market it's always a tension for tech people who have a viewpoint. All of us we have a viewpoint of how to build product, which is you use technology and innovation to scale the product, right? And that viewpoint comes from somewhere you [00:10:00] maybe your education, your exposure or your way of life or the people that you work with.
And there's no it's not it's not totally wrong that people, a lot of people are built startups have maybe from Legos or thereabout. But it's something that you said about unique understanding of the market, of the offline market. And I want to know what are the obvious things that exist in, in the offline market that a lot of tech pros don't know
Anu A: first of all, there's just a ton of money. It's just where all the money is. You know what I'm saying? It is like when you look at the Nigerian economy, even the South African economy, you have the insurance companies, you have the banks, et cetera, the telcos, these are all sexy companies.
Everybody's wearing a nice suits. They have money, but the reason they have money is who's using them. But you don't see who's using them because you see the sexy adverts. You see your own lifestyle, what you grow up to, or what you aspire to, not the reality. We spend a lot of time trying to know reality. And we don't take it as a failure where we got it wrong. [00:11:00] You got it wrong, you got it wrong, move on. But we want to make sure you knew you got it wrong. 'cause if you don't know you got it wrong, you don't know, this is one less thing to remove so that you can get it right. The offline market is a very practical market and this is why I always try and tell founders I'm talking to forget the sex. Do you understand? No one cares about your app. Literally no one cares about that application. They're just trying to make money. Help them make the money
or don't. If you help them make money, they're coming back.
If you don't, they're not. It is very simple. Now, I think looking at this market. A lot of people make the assumption, and this is where I come back to business models and approach and everything. Like you build a sexy application and then you put marketing money behind it and boom, it's not gonna work.
Nobody spent more money than JUMIA in this Africa
Dotun O: to acquire customers.
Anu A: Yeah, I was there. I know where for fact, JUMIA got it right and I know for fact where they didn't. And same thing, a thousand [00:12:00] other businesses. Once you start working with businesses, no one cares about the sex of anything.
All they care about is Guy, are you helping me or are you not helping me? That's all it is. Very simple. And so you have to then remove that need to present a particular way and try and think. What does this person or this business really need? What can I do that will solve your problem? And it's not that you're going to get it right, you're gonna make a lot of mistakes.
Do you understand? In Sabi, we make mistakes every day, but say, sorry, Nova,
us
what to do. We do it again. If we get it right and it proves to be sufficiently successful, then we start thinking, how are we going to productize this? And so the main thing I think about offline dynamics is design your channels for your markets.
Basically, when people think of the app, they think of the app as their product. It's a lie. That's not your product. Your product is every touch point that leads to the user's experience. The application is one channel. An offline agent might be a channel, [00:13:00] your phone line might be another channel. So in our space in sbi, the tech is not necessarily what is facing the user.
The tech is everything that sits behind it. It's your API library. It's who that API library is connected to. The more you can automate the backend, the simpler you can make the front end for the users, the better for them. The truth of the matter is, in our space,. If you could just send a black and white list with a toggle on the side and they can click yes no.
Yes, no. That's what will make them the most happy. That's the truth. These guys are not trying to tangle with your app. They're just trying to order or they're just trying to access credit or they just wanna make sure the truck got there on time or they just wanna make sure that the quality of the soy meats whatever the buyer needs so that they can get the product into the eu.
Right? That's pretty much it. If you just understand what they need and actually believe and respect them, your problem is solved. Then you go and figure out the scale and automation.
Dotun O: I was recently reflecting on condensing business models, especially the ones that probably work in Africa [00:14:00] into three categories, and it'll be good to get your take on this.
There's a business model where you make a margin on what you sell. So buy cheap, sell high, and you make a margin, maybe a classic e-commerce model or GMV type of model. And as a business model where you make a process efficient, efficiency, make life easy.
Slack, make communication easy for me as a business person. And or WhatsApp makes life easy for me to communicate. So those are maybe software as a service model where you just process efficiency. And the third one, which I think is very important is to help businesses make more money.
And you seem to be touching on that as one of the key drivers for you. Some of the businesses that have actually scaled a lot in Africa are the ones where the reward of the entrepreneurs or the businesses is aligned with a startup where you make money, I make money, and my future is tied up to you and they start align incentives.
Where do you think SBI fits in here? I know you talked about your opinion to make money, but do you also see other [00:15:00] SLIs of those model in your own model?
Anu A: It's a yes or no answer. So the first model you spoke about more take rate related and you're trying to increase your take rate over time. We have that, we do have that model. I don't love it for many reasons. But we do have it. The middle one,
Dotun O: process efficiency.
Anu A: Process efficiency,
We give software, but it's free. So I would say we're not there. The latter is where we sit for sure. Heavily and yeah, quite frankly, it works.
Dotun O: And so you make money by helping all these merchants to make lot of money. You touched on some of the stuff that you do around credit supply logistics. It seems you have a lot of moving part you put together, even though you are not asset heavy, you don't have any assets.
There are two sides to the question there. One is, the critique of asset light businesses in Africa especially is the lack of strong moats, where somebody can come in, or weak value proposition. The appeal of asset heavy is the barrier of entry is high, once you get it, you are there and because a lot of things are broken, you need to [00:16:00] control .
How do you you straddle between that? Because it seems to be doing a lot
Anu A: It's just extremely painful. You just learn to sit in the pain. It's about how much discomfort can you eat. That's the truth. There's a strong argument that SBI does too much.
But the truth of the matter is we do too much because the market requires it. And bear in mind that we're not doing those things ourselves. I'm not a bank. I'm not Flutterwave, I'm not Paystack. I'm not trying to run a payments company. So I'm plugging people in. What I am doing is managing the experience of it.
So if I have a partner, they're not delivering in a way that provides a good experience for our users. The management of that can become extremely painful. But yes, sitting across. That many points of service is difficult. But I would point something out. If you are doing a hard thing, do it.
There's no in between. If you're gonna do something, do it. If not, don't do it. If this is what the market needs is what the market needs. I think Sabi can be an immensely [00:17:00] fun place to work but you're gonna deliver and it's painful to deliver at that level consistently. So if you're not at that point in your life, just don't join us. There's not much complexity there. There was a point in my life where I wasn't ready put in that type of work.
So if someone came and presented the sheer amount of work and complexity of work, we do in Sabi, to me, I would've been like, no, I'm well paid. I'm chilling, go away. But when I made up my mind that I was gonna do Sabi, I made up my mind that I was gonna do Sabi. meaning, whatever needs to be done for Sabi to be delivered, delivered it'll happen.
I think most people in Sabi are like that. And if you're not like that, you're gonna bubble out of the business. It's an extremely difficult thing to do to build a business that serves any type of customer at scale. There's no ease to it. And the particular problem with informal market is you don't have an automatic translation of data points that help you with decision making.
If you look at traditional startup Silicon Valley style things, [00:18:00] because it's purely software based, once your data is telling you something, it's telling you something. There may be variance and nuance to it you need to dive into, but you can tell. you can't do that in this market because the data points you are getting are translating concrete transaction completion. You are gonna also have a lot of soft input from your agent, from your merchants themselves, from a ton of lost demand that you weren't able to fulfill for whatever reason, right? Because one thing people forget about connector models or
marketplace
adjacent models, is that the demand is based on the supply that's there. That's why if you look at e-commerce a lot of commercial decision making around products, as in that is the products that are listed is based on searches on Google. But if your customer is not searching Google, where do you start? So the amount of soft inputs you need to understand what your market is saying, whether they're happy or not.
Bear in mind that in this market, if you put an [00:19:00] NPS related survey on your app, they're gonna tell you are good.
Dotun O: Irrespective of whatever you're doing to them.
Anu A: Yeah. They don't like giving negative feedback. You must have annoyed their entire destiny for them to say you did the wrong thing.
It's only older customers that will give you precise feedback. So that first six months customer, I was gonna say good. If you call them about an agent, even though that agent has messed up, they're not the ones that are, they're not gonna snitch. So if you want to know, you need to go sit down and say, ah, madame hell, now madame, if you have any issues, call me.
If my driver messes up, call me. Blah, blah, blah, blah, blah. So our job at Aby is really simplifying that. It's like looking at the value chain. And what we do is we use our muscle.
So if for instance, I use agricultural commodities there are very few ,players that can intervene on the level we do. If you have players of that quantum, they're gonna be trading for themselves. So my ability to talk to a large foreign buyer that has repeat demand and tell them, you know what don't worry about Nigeria. [00:20:00] Just tell us when and where you want the product, and we're gonna make sure it happens for you. And then the team's ability to think about how aggregators think: their finance needs, lineup partners, plug everyone in a standardized way, do queue management so you can identify their anomalies and then productize that and then push it out to a second country.
That's painful. There's nothing easy about that and we don't always get it right. There's no other ways to do it, except you just sit in the discomfort and muscle it through till it's smooth and then you move on to the next thing and create the pain again.
Dotun O: Did I hear you say you do cross border distribution as
Anu A: For sure. Yeah.
Dotun O: That's a next level of pain. ''cause within Nigeria itself, it's painful. Hearing you now actually getting a better perspective of Sabi,
Dotun O: it's very difficult to write this kind of stuff in press release.
You creating lots of value here. How do you extract those value? Because it's one thing to create value, it's another thing to extract value.
Anu A: How does one extract value? I'll just say we take a fee. Like in terms of how we actually monetize, I think for the most part it's confidential, but we just take a fee on [00:21:00] transactions, on some transactions. Not all. We're very about enabling transactions, so our number one priority is how many connections are we making, how much supply are we connecting to demand?
We want it to follow through as much as possible, but monetization is not required on every single transaction. It depends on the sector. We have commercial matrixes and targets per month and per season. There is a very high level of sophistication needed for dealing with the informal market because it really does have a flow.
There's calendars to it like any other place in the world. Sometimes I think when you say informal markets, people think it's somehow less sophisticated. It's not. there's seasons, there's promo seasons. Christmas works a particular way. January is gonna be a different way. It works differently even for different types of FMCG products.
Agric is clearly seasonal and so on and so forth. So I think we're fortunate in that we have a very aggressive and capable commercial team. And we just try to evolve our model over time. And then [00:22:00] sometimes you just have to take a hit. Sometimes you're gonna make a mistake. But I think that commercial experimentation in terms of what you make available to the market is extremely important to finding money.
Quite frankly, to finding what's going to make you a lot of money and that gives you breathing room on other parts of the model to really focus on the user experience.
Dotun O: I've been to Kano market and I was blown by the complexity of that market and layers of complexities, not just the first layer, .
And also the way the market is organized, different market around different products and I think it's even more complex to look at that market just from the Nigerian lens. There is the Northern West Africa Niger, Chad lens that one has to look at our market and that reinforces some of my understanding that the informal market in Nigeria is grossly.
Misrepresented. One can have a viewpoint, whether it is undervalued or overvalued is grossly misrepresented.
But the key thing I want to hear from you is what are the key drivers and key lever, [00:23:00] both on the macro level from the business level that can unlock more value in that market?
Anu A: it comes down to infrastructure and access, right? And the disparity in these markets is always down to micro versus macro dynamics. People are looking for macro level interventions where the market needs specificity. There are obvious things that would unlock, for instance, if one focuses per country, there are different things that would unlock.
So in South Africa, for instance, it's a bifurcated market, right? So just getting some of the larger players to include townships, which are now a huge amount of the economy in their distribution networks, would just automatically reduce cost points for a huge amount of the population and change a lot in that country.
And obviously if they could address the power problem, but if they can't address the power problem, basically enabling more and more access to, solar home systems and home products would make a huge difference. Those are macro level interventions. In Nigeria, obviously if you fixed FX, you'd solve half the problems of my life.
Do you get [00:24:00] me? So there are macro level interventions that can be made in different countries that address huge issues, but for the most part, when you start looking at individual businesses, the specificity and nuance begins to matter a lot. Is it in the north of the country or the south? What's their culture?
What category of products are we talking about? Seasonality. How much risk is there, the risk of selling to an FMCG merchant and the risk of selling to a farmer is not the same thing. No matter how reliable that farmer is. If the season is gone bad, you're done for. Have you introduced insurance into that?
Is that farmer doing soy versus cassava? The amount of specificity you need to impact businesses is very high. And I think when policy is being designed, people forget that. There are very few things that you are going to have a policy that makes a huge difference to entire populations. If you want to impact businesses, you have to drill down to the specifics. And [00:25:00] that's where you begin to have problems is those micro level gaps that there's always an issue.
If you go to Kano, for instance, so we, when we were in Rensource, Kano, one of our biggest markets was in Kano, Sabon Gari markets.
if you
map out Sabon Gari, and we did, to be clear in Rensource, we visited every single shop in that market and mapped out every single one. You begin to have like little economies in that market.
I think that market had about 10 to 12,000 merchants, right? You had the guys that sell clothes, you have pockets of electronics, you have the hairdressers. All them, their needs are different.
Dotun O: And
Anu A: And this is from a financing point of view, this is from a supply point of view. This is from a PowerPoint of view.
Dotun O: demand
Anu A: yeah, exactly. Within those pockets, you're gonna find s but their needs are different. There is always that thin layer that says, what makes it easy for this guy or for this lady to use it. And that's where you really have to spend time thinking.
And it's [00:26:00] difficult 'cause you may get it right for one pocket, are you going to get it right for the next pocket? And you want scale. Like at Sabi, we've never been shy about the fact that we're chasing serious scale. So you have to then focus on the quality of your productization process. And that's difficult.
It's just difficult. I can't even tell you, I dunno if we get it right 50% of the time, but I can tell you that when we get it right we really get it right.
Dotun O: I wanna segue into expansion in the way you view it, especially Pan-African expansion. And it's quite interesting. Just before we came on here the question I wanted to ask why South Africa? my assumption is it'll be capital intensive market , it's complex.
There are well capitalized competition potentially, and maybe a little bit more organized. Why not go to maybe place like Kenya or maybe Ghana? Why South Africa for you?
Anu A: So South Africa I actually think is one of the better markets in Africa.
And the reason for that,
Dotun O: for your business, right?
Anu A: in general.
Dotun O: In general. Okay. So
Anu A: So basically anywhere that there's fractures, right? You have the ability to make money.
Dotun O: yeah.
Anu A: [00:27:00] Now in South Africa, you have a lot of capital. You have very organized players that have some scale. That's on one side. Then you have the other side where you actually have a huge amount of fragmentation in what is the larger part of the economy, which is the townships. Now within the townships, there's the organized and there's the informal sector, and they work differently. And more and more, the entire economy is melding on the consumer side, but not necessarily on the business side. And this has to do with the country's history.
We're usually very impatient in Sabi but in South Africa, we've actually been extremely patient. And the reason for that is South African culture, you need to make sure that you've designed something that works, not just in terms of providing value to the business, but that works for the way they work.
Anu A: And South Africans work just a little bit differently. So what we've tried to do is we did find the pockets of value very early, even before we entered the country, like we did a few visits, it was clear. But in terms of serving the market and being ready to really scale it, we've taken our time to make sure that we've gotten [00:28:00] this exactly right.
South Africa has a huge amount of potential. It's not that it's an easy market, but it's not what people think it is. There are hardships in the market, given the way that is structured. It's actually not easy to do cross border trade there. And then there's peculiarities where you have some businesses that are just hugely powerful, so you have to work with them
Anu A: there's hoops you have to jump through, but we have the muscle for that. There's gaps and I think opportunities in South Africa and a scale that comes with South Africa that you don't find in many other places on the continent.
We haven't cracked it absolutely. But I'm fairly confident.
Dotun O: You've mentioned a lot actually on this podcast about your time at Rensource and your co-founder from Rensource. And I'm curious to know maybe we go to that origin story of Sabi and what is the link with Rensource?
Anu A: I was COO at Rensource and yeah, we powered markets.
I like gnarly problems. right? I like things that require scale and that have operational complexity. When I [00:29:00] joined Rensource, a lot of the appeal was that it was a complex business. When Covid came, All the markets were shut down.
So what are we going to do as a team. Now, we were trying to figure out how to help merchants and businesses, but all our merchants weren't available. Once the markets were shut down, they went home. But we in Rensource. We were a, what was it called during the lockdown?
We were an essential service, so we had the right to move around.
Dotun O: providing energy.
Anu A: Exactly. So we were trying to figure out how to be of help, and we had built a listing tool. Where our merchants in the market at the time where they could list what they have so that people can know who to go straight to in the market.
We never released it, but during Covid we converted it to let you know, supermarkets and other businesses in cities, not our merchants at the time, use it so that people could order and get food during the lockdown.
Dotun O: Why was that relevant for Rensource, the marketplace?
Anu A: The vision at Rensource was always to layer [00:30:00] on value added services. So we're looking for things to help merchants in general. Rensource pivoted a bit during COVID went more into commercial and industrial solar.
For me, I'm not trying to be an engineer. Commercial industrial solar is a standardized approach. So we had started working on spaces, which was what we called Sabi early on and a lot of the team was working on it. And we were ideating a lot. So I just decided I was gonna leave and do that. Eventually my co-founder Demi joined. And not just Demi and I, by the way, a lot of the core team at Sabi today were colleagues at Rensource.
Dotun O: and know, does that impact Rensource?
Anu A: Rensource is fine.
It's there. Prince, the CEO of Rensource is there. And it's great to see his growth.
The thing was, it was so unrelated to resource's core business that it didn't make sense to stay there.
If it had made sense, then we would have probably grown it in Rensource. But Rensource is an entirely different thing. The reason we were able to go so [00:31:00] left and explore everything, by the way, was covid. If the markets were still open and we were all as busy as we usually were, we wouldn't have had time to build something.
'cause what we really did was we just chased the market. We chased what we felt merchants needed.
Dotun O: I'm gonna spend the last part of our conversation on fundraising.
You've been through, the market cycles, and you also through the cycle now with Sabi, you're building a high growth business, but still the market reacting in a different way. What has been your lessons, your pains in fund raise and key things that you would've maybe done differently if you are raising again now?
Anu A: I think when fundraising, it's a balance between the fact that you are growing a business that needs to be a healthy business to be sustainable, and you have to keep that in mind. And the fact that there's a formula you need to fundraise, there are certain things you have to do, certain ways you have to [00:32:00] present to even have a chance.
If you go too far on the latter, you may raise, but you're gonna die if you go too far on the former, you're not gonna raise. You have to straddle that balance.
I think the outsized growth at Sabi and, Sabi had a growth. We grew like mad on purpose. Give us a huge advantage because most investors had just never seen anything like it.
So they're already like, eh, that's number one. But if I were to go back, I don't think we needed that kind of growth. Really? Yeah.
Dotun O: Why? Even if the market is yanking that growth off your hand, you will control it.
Anu A: Yes. Not that much more, but I probably would have controlled it more. There's many reasons for it. And there's a complexity to the answer.
So it has to do with local market dynamics. So because of the way supply works, right? Demand is not a constraint, right? Your supply is actually a constraint. But even the way supply behaves is non-traditional. So if you do core [00:33:00] analysis and you look at demand and supply your suppliers and your demand in traditional logos, you still won't understand what the market dynamics are.
Because when you look at a cohort, you expect retention in a particular way. And retention is retention. So why should you have drop offs? But when you are growing very fast you are actually sometimes weeded Anyway, we're disregarding cohort dynamics, For value provision. Because we felt fairly confident that demand was there.
Dotun O: right?
Anu A: And even to an extent, the supply, the issue was always the flow, the methodology of connection and the sustainability of that methodology. So we were very focused on if you're going to mess up quickly, learn the lesson, and if you get it right, hunker down on it and really like iterate till it's right before you then go back.
So the way we experimented meant that there were disjoints in our market dynamics. And looking back, [00:34:00] I'm not sure we needed that level of disjoint. We were very commercially, experimental. It worked out for us. But when I think back on it now I consider that there might have been smoother ways to approach it. Now you can always say, looking back, that there was a better way to do it? I think if we hadn't grown at the pace we did would we be where we are now? There's no way to know, but obviously learning the things I've learned, I know better ways to make things happen. In terms of how that affected our fundraising dynamics specifically, I wouldn't say that fundraising was easy, but I would also say, I think most people would consider that we had very fast fundraising cycles and that we had one huge advantage, which is we have a fantastic set of investors. We don't have a particularly painful cap table. We have a supportive cap table. And I think that just comes with the experience of the team. Why I refer to my co-founder with fundraising is that it's more his [00:35:00] focus than mine. He's more on the corporate finance side of things, but we were able to pick a good set of investors.
So it's not that we were never in a squeeze where we had to say, oh, we just wanna close the round, so we'll go with this. We did have some hard decisions for sure, but I think we've been fortunate in that in our fundraising we've been able to pick very good investors and, that comes with making difficult choices.
We've had opportunities to have higher valuations. We've turned down because it may come with terms or it may come with things that you're not sure would hamstring you in the future, but possibly. Could hamstring you in the future. So I think we were fortunate in being a bit disciplined about the way we approached our fundraising, right?
We could have raised more and we could have raised from different investors, but we did make choices around choosing investors that would be helpful and are creative. And we did make choices that we felt would give us maximum optionality in the future. So we didn't [00:36:00] do things that may have given us more money in the short term, but would have meant that maybe future investors or some of our team that have equity would be at a disadvantage.
Dotun O: You touched on something at the beginning of that answer on cohort analysis and it's one of my pet peeve on founder.
depth and understanding their business, but there result is a balance to understand when should a founder be particular about cohort analysis and when it should dig deep into their businesses and get that data out. In your opinion, what is it minimum quantum of data or even time that is needed for a founder to tell the story better about their business?
Anu A: So the first thing I would say is that unity economics and cohort dynamics are not always related. In fact I think at Sabi, we are very ruthless about unit economics, like very ruthless. We're not gonna burn this money, it's just not gonna happen. We're gonna get the economics rights, or we decide we're sacrificing economics, but we know the commercial decisions we're [00:37:00] making. And I will say one thing for any African founder, please never delude yourself. You're gonna find unit economics at scale. It will not happen. Just find your unit economics before you scale.
That's number one. Number two, on cohort dynamics. From the jump. From the jump. See, don't get me wrong when I was speaking about retention is of extreme input. If you get into cohort analysis and segmentation properly, it is complex. And the problem is depending on where your data points come from and the creativity of whatever BI guys you're working with, or if you're doing the analysis yourself in, it requires extreme thought .
Level one cohort analysis will not tell you what you need in this market because if you are doing it right, you should have drop off.
Dotun O: Can you break down what that level one cohort analysis is? So
Anu A: there's cohort analysis where you just look at all the merchants, right?
You say, oh, I have, let's say a thousand merchants or 10,000 merchants.
And
you have high retention, 80 to 90% come back every [00:38:00] month. Or if you have low retention, 20% come back every month, but it doesn't really matter because my cost of acquisition is cheaper. Whatever.
The real way to approach co analysis is segmentation by location, segmentation by product type, segmentation by merchant and business type segmentation by vertical, by category, et cetera.
And within that further segmentation, meaning who do you want to retain? Some of the conversations I've had haven't taken into account the level of sophistication that very successful businesses apply in their user retention. If you go to a business that everyone uses Amazon. if you are a hardcore Amazon user. See they cannot mess up. That is not a standardized process.
Dotun O: there's a lot of tough and intentionality built into that for
Anu A: you cannot mess. They will never mess up on Amazon. See, if you are a high volume buyer on Amazon, eh, let them miss a delivery. They'll give you prime for free. They'll give it straight because they know you are coming back.
[00:39:00] But
if you're not a high volume user on Amazon and you call them, you're gonna wait on the phone longer. You don't know that you're waiting longer, but if you pay attention to Amazon's user experience, you will see the level of sophistication in the customer service management.
The customer service management is peak to the extent that if you call Amazon and you're a high retention user, right? A delivery is supposed to come on a day
a day
and you tell them. Look, I have to leave my house by six. Do you know they can reroute?
Dotun O: to get to you?
Anu A: Do you know how wild that is? The only thing you can do that is by understanding who is giving money and who's not.
It's the same level of sophistication and detail and thoughtfulness you need as a founder. When you're doing your own cohort analysis, when you look at your cohort, you're not just looking at numbers. You have to think about the customer conversations you've had, your friend that you spoke to that also sells the same market, the supplier conversations you've had and think, ah, this thing this person told me, or this thing I learned, could I be seeing those dynamics here?
Or you see an anomaly [00:40:00] and then you're like, what does this mean? It doesn't just mean these guys dropped off, or it doesn't just mean I had a lucky month. There was a dynamic. What was it? How the hell do I find that dynamic? And then you go and you search for it. And as your business grows, you then have to make sure you have commercial and product people that will do that.
And that's the hardest part because you have your brain, you know this what you did to start your own business, right? And you are busy. If you hire someone that's suboptimal, you are gonna manage the person because you have shit to do. But that person is not thinking on the level you're thinking, then you're gonna start having attrition. It is hard. Like it is just difficult. When I say core dynamics, I'm not dismissing them. They're extreme input, but they're not just numbers on a sheet. They're the entryway to understanding your user dynamics. And understanding your user dynamics is not just in numbers on Excel in front of you, or power bi.
Understand your user dynamics is talking to your users, talking to your team, trusting your team, talking to [00:41:00] suppliers, talking to competitors, talking to everyone from time to time and then using those insights or your team using those insights to learn and evolve your business.
Dotun O: What are the data pipes that you would recommend that companies and startups should actually be using initially to get that first level of data
Anu A: To be honest, there's nothing like Excel. As a founder, if you don't know how to use Excel I don't know what to tell you.
Go and learn Excel. You have to be able to dive into your numbers yourself,
in terms of what you should be collecting, it depends on what your business needs. So first of all, I learned this the hard way. I used to be an analyst. So my preference is every data point I can get, I want it. But that's for you. It's not for your user.
If you want convenience for your user, the amount of things you're asking them for needs to be minimal, right? If you look at all the hottest. Applications, they're very careful about the onboarding process. If you go on TikTok, for instance, you don't need to sign up. You don't need an account. You can already start using it.
It's when you want more engagements, then you now need to sign [00:42:00] in. Let's say you can buy on TikTok. To be able to buy, you're gonna give them your card information, then they can get bio data, et cetera. Right now, if you want credit, you're gonna have to give more information and so on and so forth.
So as a business it’s a balance between what is affecting user behaviors and adoption and what do you want to see? You can be clever. If you have a really clever data person, you'll have someone that can buy data pools and connect data points to give you more insights. But for us, because we work with businesses upfront, obviously we're able to collect more information. For me generally I want to know who owns the business, their age, et cetera, male or female. It affects their dynamics, location, and then you can extrapolate from there. But in terms of data and commercial decisions, I think what you most want to know is whatever service you're providing, the dynamics around that service.
So whether it is physical product you're providing or software or payments or whatever, you need quality tagging and tracking around the product itself, meaning do not make the mistake of not [00:43:00] tagging your products correctly. If you look at any other service like credit or payments, you want there to be nuance in your order management system, in your database to be able to know the specificity of the difference in products so that you can analyze on a detailed basis and on a high level basis.
So for instance, if you look at credits, you can say a product is inventory finance, but there's probably like seven shades of that same product. So you want to be able to do your analysis on the inventory finance level, let's say inventory finance versus commodity financing. You want to be able to do analysis on that level, but you want to be able to also say inventory finance 1, 2, 3, 4 versus commodity finance 2, 3, 5.
The initial data structures and design around your product specification is the most important for your commercial growth.
Dotun O: I like to end my interview with two fireround question that I ask my guests, and one is, what viewpoint did you hold in the past that you no longer [00:44:00] hold?
Anu A: I've always hated doing things for the sake of doing them. I hate it. I call it busy work, so I'm always like straight to the point, but I've learned. Of the value of righteousness. For the sake of righteousness.
So sometimes you can take a shortcut, and I've always felt that if you're taking a shortcut, know, it's a shortcut and document is a shortcut. At the same time, document the right way, meaning you know what you sacrificed and then catch up and reconcile the two. It's the same ethos as move fast and break things, right?
There's a truth to that, but also you need balance. Sometimes you just have to do things the right way because it can be a filter. And as a business grows, you need that filter because when you are moving fast and breaking things, what you're actually doing is relying on people. You're relying on the strength of your team and not only how good they are, their confidence to speak the truth or fight for what's necessary. As a business scales, it is difficult to maintain that baseline culture amongst the majority of people. [00:45:00] And so you have to quickly switch between that, move fast and break things.
You want to maintain some of that, but then you need to begin to find balance with just making sure things are done the right way. I've also always been a process person. I used to be a consultant, but it's beyond process. It's literally making sure it's right.
Dotun O: Which book are you reading now or read lately that is interesting to you or challenge your worldview?
Anu A: So the book I'm reading now is called Emotion by Design. It's by a gentleman who used to lead marketing and Nike, I can't remember his name. But it's a very interesting book because it speaks to the excellence of their marketing . A book I read this year that I enjoyed, I was surprised how much I enjoyed it, was the Ride of a Lifetime by Bob Iger, and the reason for that is he ended up somewhere he never expected to.
So there wasn't some big grand plan. He had fun doing it, but he got to this great place just by being really good and consistent.
I think a lot of the time we tell ourselves, especially in this part of the world, Nigerians, you must be the [00:46:00] baddest guy in the room. And we always plan to be super ambitious, I'm gonna be the president and I'm going to be Dangote and I'm gonna be Bill Gates and I'm gonna be everything.
But you can get to amazing and incredible places just by having a great attitude, being super hardworking and applying yourself. And I think that's something that's very underestimated. So I enjoy that book because of that. Yeah. But right now I'm reading Emotion by Design
Dotun O: I think a bonus one for me, you and I both enjoy heart
art.
And we actually are in a group where we share art pieces. But how is your love of and collecting art impact your life or improve it in a different way?
Anu A: I don't know. And it's not something I really feel the need to intellectualize. I was actually going to be an artist.
Dotun O: Interesting.
Anu A: And I didn't end up being an artist because parents. But I don't know. Art makes me happy. I enjoy it. I think it speaks to identity and I think we all have a need for creativity. In fact, business is a very creative endeavor.
I think art is one of the most direct expressions of [00:47:00] creativity. But I don't really feel the need to intellectualize it. I just enjoy it a lot.
Dotun O: spoken like a true art collector.
Anu, it's been a pleasure talking to you and I really enjoyed it and I hope the audience of this podcast enjoy it too.
Anu A: Thank you so much. Thank you