Subscribe
Share
Share
Embed
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.
#80 - Daniel Yu
[00:00:00]
[00:00:00] Dotun O: Hello Daniel, welcome to the building the future podcast, it's good to have you
[00:00:03] Daniel Y: it's great to be here.
[00:00:04] Dotun O: you've been on the news recently with your merger with Max AB, which is an exciting development and we're gonna touch on that because it's always very rare to see startups making that kind of move at that stage of their journey to have a Pan-African or multi-regional play by margin with another startup who are doing something similar .
[00:00:24] Dotun O: Because a lot of the conversation is startup what is zero sum game. But it seems that you are taking a different approach here and we're going to touch on that. But I want to your framework of thinking around B2B e-commerce in Africa, because it seems to be an obvious innovation that has to happen given the size of the informal market on the continent and the level of transaction that happens along that value chain of FMCG to the final retailer. And a lot of people like yourself, max, and you trade Depot hoes have attacked us in different ways, but you, but everybody has.
[00:00:59] Dotun O: Kind [00:01:00] different philosophy of tackling that. What is unique about your own approach changed?
[00:01:08] Daniel Y: Great question. I think we've definitely seen a lot of interest in the B2B retail, e-commerce space over the years. And as you said, I think this comes from the fundamentals which is. You have, something in the range of $800 billion a year of consumer goods that are sold through informal retail stores across Africa.
[00:01:26] Daniel Y: By most measures, this is, over 10% of GDP in most African countries, and certainly the single largest consumer segment that you have in Africa. Just given that. The majority of consumer spending is still on basic. Goods whether it's food stuffs or household products.
[00:01:44] Daniel Y: And the vast majority of retail is of course still informal. And so I think that the fundamentals there, if you look at that market size, and then you also look at what's happening within that value chain where you have multiple layers of middlemen whether it's the wholesalers, the distributors sub [00:02:00] distributors in some cases that are just sitting between the actual manufacturer of the goods and the point of sale.
[00:02:06] Daniel Y: And this is all being done in a very traditional manual setting where there's very little digitization. And these firms have been working as they have been for decades. It's very clear that there is an opportunity for innovation and for disruption here, especially as mediated by technology.
[00:02:25] Daniel Y: And I think What's very important to, to emphasize is we're not trying to create some new demand or new wallet space where it doesn't already exist. And I think this is where a lot of. Startups products over the years have maybe tried and failed because the reality is the consumer and the market is still very tight, budgeted and it's a very different proposition to come in and try to create demand or spending power for a new product or service that isn't already part of the budget. There's already $800 billion a year flowing through this informal retail [00:03:00] channel clearly given the lack of visibility, the lack of.
[00:03:04] Daniel Y: Just in time distribution inventory optimization, technology tracking, all that. There, there is an opportunity to optimize this through the right systems, the right processes but you have to do that in a way that ultimately is more efficient than what's already out there.
[00:03:19] Daniel Y: And I think for us, we started off doing this as a pure software platform. My background is as a software developer. I had no interest originally when we launched in Kenya back in 2016. To get into the nitty gritty of doing distribution, operating our own warehouse or last mile logistics.
[00:03:39] Daniel Y: I just want it to be the technology layer the quote unquote asset light that was gonna sit in the background and facilitate the ordering between shops. And the manufacturers or distributors. Turns out that solving that issue, basically the order signal between the customer and the supplier is not sufficient.
[00:03:58] Daniel Y: It's not the only [00:04:00] problem because the reality is that if you look at what distribution infrastructure, exists in the market today, you do not have a on demand distribution capability. To serve the small B2B micro retailers that, as we said, are over 80, 90% of the retail market in most places.
[00:04:19] Daniel Y: So even if you can send the order signal about this shop wants, one box of soap and one bag of rice the soap distributor is not interested in going all the way to that shop to deliver one box of soap. The rice distributor, if there is a rice distributor. 'cause most of, especially these food stuffs just sit at wholesale level.
[00:04:39] Daniel Y: They don't want to go deliver one bag of rice to one random shop in a neighborhood. And so you end up with this very interesting situation where the actual infrastructure delivery capability does not exist. And that's when we then had to pivot or expand our operations to actually include the in-house operations as well of having our own warehouse, of having our [00:05:00] own last mile logistics.
[00:05:01] Daniel Y: And and that indeed was what started to actually unlock the value proposition for the customer and what ultimately drove. Our growth through the initial period and all the way to this day. That remains the kind of core model of a, first party B2B e-commerce platform that we operate across the countries that we're currently in.
[00:05:19] Dotun O: It is interesting the way you, tell that story that B2B eCommerce in Africa starts initially with how do we layer in technology to make it more efficient. You approach the business from an asset light angle and then it become asset heavy because you have to vertically integrate and down the value chain, you then start exploring and I can see maybe you are doing that as well, embedded finance almost an end to hand. And then before you know it, you are actually managing a whole lot of the value chain from. Taking from the manufacturer or the way to the hands of the consumer and creating value or capturing value along the line. But the challenge there has always been the thin margin compared to the heavy amount of [00:06:00] work and investment you have to do to capture that value.
[00:06:03] Dotun O: How do you see that and how are you navigating that in a ops intensive markets and very competitive business model what are the key things that you're putting in place to be able to maybe increase your margin or even maintain it whilst doing all the things that you're doing
[00:06:18] Daniel Y: fundamentally I believe that the focus has to be on building out the E-commerce, the core e-commerce business, which is B2B, moving of these everyday consumer goods, building that out in a profitable way. Focusing on the unit economics, obviously the logistics the warehousing the cost of acquisition of.
[00:06:37] Daniel Y: Staying engaged with these retailers. Those fundamentals have to be extremely solid. And I think this is where if I had to just comment generally on this space and where maybe certain parts of the operation appeared easier than realized for different players is this is a relatively easy business.
[00:06:56] Daniel Y: To start up in the sense that at the [00:07:00] initial you could say pre-seed stage an e-commerce operation of this sort can be as simple as having, one go down with a dozen people or so you know, manually keeping track of what's happening, managing the orders as they go out, managing the inventory as it's coming in.
[00:07:15] Daniel Y: And you can make that work. And indeed, that is how the vast majority of distributors and wholesalers. Exist on the continent today. They're small, family run operations that are just making things happen manually, and you can get up to a certain size just doing that. The trick and the real fundamentals and the purpose of technology is in how do you use the tech to then break through from that ceiling to ultimately become.
[00:07:44] Daniel Y: In our case a Pan-African operator of this model. And that's really where the rubber meets the road. And I think where a lot of different companies as they were trying to scale up in the space got, a little bit too much funding and rocket fuel through that [00:08:00] step.
[00:08:00] Daniel Y: Did not have the operations in. As as tight and a sustainable way as possible. And basically just blew through focused on the scale up on the top line volumes without focusing on the fundamentals of, Hey, are we actually making money on every delivery? And so that, so I think that's actually where we have been quite focused for several years now.
[00:08:20] Daniel Y: And I think we've proven that that we are able to, make money on every delivery. As you suggested the margins that you get operating a, first party e-commerce business are not enormous, right? If you look at, Amazon's p and l the margins that they make on their first party goods, are not particularly high.
[00:08:36] Daniel Y: Where they make money is in the other layers. That they have stacked on top of the core infrastructure that they have. So whether that is their third party marketplace. Third party sellers who are able to sell goods through, Amazon. Given its reach and the customer base that it has,
[00:08:54] Daniel Y: or the actual fulfilled by Amazon service, which is using Amazon's logistical [00:09:00] capabilities to actually then do those deliveries. And that's something that actually we have been getting into as a business and have several clients that we're working with already. The other layers for us in our market are things like the embedded financing which is something that we've done quite successfully for a number of years now as well.
[00:09:16] Daniel Y: And if you look at the margins on that. That's quite high. And, but only possible if you have the customer base and you have the order volumes that are directly coming through your eCommerce platform. So I think about it fundamentally as there is this very large, high volume, low margin business
[00:09:35] Daniel Y: that you have to operationally get right in order to even play and have access to this customer base. But if you can do that right then the opportunities to layer on any number of other services. Many of whom are actually then quite substantial in terms of the margin opportunities that you can make on top of them that are uniquely accessible because of that e-commerce foundation.
[00:09:59] Daniel Y: [00:10:00] That's really where a lot of the future value is created. And I think why this space and this model is still fundamentally something that is very high value and potential in the long term.
[00:10:09] Dotun O: I also understand that you've done some backward vertical integration by going into manufacturing of some goods yourself. How do you evaluate that decision and. Are there any margin improvement or impact that also has on your business? And the third question is, are you not cannibalizing your existing competition?
[00:10:30] Dotun O: How are they seeing you going into manufacturing as well?
[00:10:34] Daniel Y: In terms of the verticalization that you mentioned there? So I think this is specifically referencing our private label operations, which is where basically we are looking at the data, we're look at the analytics. Of what products are selling best. And maybe in many cases where there's not enough variety, where we've struggled to get the supply the actual stock even of certain categories of goods, but [00:11:00] where clearly there's the demand in the market.
[00:11:02] Daniel Y: And so ourselves are actually going out. And to be clear, we're not manufacturing ourselves in the sense of we haven't set up our own factories and we're not running our own production lines. But what we are doing is we are contract manufacturing. The development and the production of these specific products based off of the specifications that we know are needed in the market to then ensure that those products are available for our customers and putting them under our own designated brands such that, we then have exclusive access to those products.
[00:11:31] Daniel Y: So look I think the fundamental reason for doing that is the same reason that. If you go to supermarket whether it's, car four or any of these other number of retailers you will see their in-house, brands on the shelf, right next to say the Unilever brands, or the Procter and Gamble brands as well.
[00:11:47] Daniel Y: Now fundamentally. Of course the suppliers prefer to have, less competition. They would prefer that car four was not also on the shelf. But at the same time are they going to pull their product? Just because [00:12:00] car four has decided to do their own private label?
[00:12:01] Daniel Y: Of course not, because then they're gonna lose access to all the customers who are coming to the supermarket to do their shopping. And we see ourselves in the same way. We are in effect. The virtual shelf for the retailers, and we believe that giving the retailers more choice, more selection is what is adding value to them and ultimately adding value to their customers and the communities as well.
[00:12:22] Daniel Y: So if we are able to directly contract manufacturer. A a cheaper line of soap that's better suited to the needs of the market. Based off the data and the insights that we have. Then because once again, we uniquely have this access. We have over 250,000. Retailers on our platform ordering digitally
[00:12:41] Daniel Y: this is not something that anybody else in this space or that the suppliers, the manufacturers have an alternative platform for. And ultimately using that reach, using those insights to innovate provide better products to our customers. Which also gives us better economics in most cases as well.
[00:12:59] Daniel Y: [00:13:00] Is a, is a clear example of how we're able to layer on another unique capability that's ultimately long-term. Very accretive for us as a company as well.
[00:13:08] Dotun O: As you're talking, something was just coming to me about how your model is making it to shift prioritization of your customer. There's something to speak into customer prioritization framework where at the beginning of your business model, I.
[00:13:20] Dotun O: people would think are the FMCG because you're distributing for them. And then down the line your customers are actually the retailer. And then now as I hear you speak, you are talking about prioritizing the end consumer, and saying, we wanna give them a lot of variety and I wanted to speak into how. Entrepreneurs, especially tech entrepreneurs, can do customer prioritization framework, or making decisions to be able to identify the real customers and prioritize the one, especially in a multi stakeholder business,
[00:13:49] Daniel Y: I would say this is really a core question. Something that several years ago we actually sat down and we had a significant strategy session around which is, identifying [00:14:00] who is ultimately our customer and then who is a stakeholder. And I think you, pointed out exactly right, and maybe this is also a difference in, in terms of how
[00:14:10] Daniel Y: different players in this space have approached the ecosystem as well where, we're quite clear that the end beneficiary for our services is not necessarily the manufacturer. Not even necessarily the retailer, but is in my mind, I. The single mother who has a dollar to go buy rice to feed her family today.
[00:14:36] Daniel Y: And the question is she going to be able to get 500 grams of rice for that dollar, or can she only get 400 grams of rice for that dollar if we are solving her problem? If we're enabling her to get 500 grams of rice, then we're doing our job, then we're actually bringing efficiency and we're adding value to this supply chain because it's ultimately resulting.
[00:14:56] Daniel Y: In the community getting more for less. If all we're [00:15:00] doing is, padding or increasing the margin for the manufacturer because now they have a lower cost of distribution, then to me this is not ultimately going to work because the fundamental source of demand in this market also comes from the consumer.
[00:15:14] Daniel Y: We have to acknowledge as well that, retail is going to evolve in Africa over the coming years. And certainly over the coming decades, right? I think we've already seen a lot of very interesting transformations in the role of a retailer over just the past 10, 20 years.
[00:15:30] Daniel Y: If we visited the Kenyan market, 20 years ago there was no such thing as an mpesa agent. There was this idea that, I could go to any shop and have them basically act as a human, ATM. That didn't exist. And the same thing with the likes of a, money point in Nigeria, right?
[00:15:46] Daniel Y: This idea that you could just have the shopkeepers with POS systems that are suddenly able to offer all these number of services that didn't exist. And so I think we see the opportunity to leverage the network of [00:16:00] merchants that we have to ultimately be agents for providing increased value. To their communities and to the ultimate end consumers and help them get more for less.
[00:16:09] Daniel Y: Whether that is right now in the actual physical consumer goods or even in the digital goods and services that we've moved into as well. If you look at some of the work that we are doing to drive digital adoption of, airtime replacing the scratch vouchers and all this, which is all also intermediated through the merchant app.
[00:16:29] Daniel Y: And then a number of other future potential services as well that are also uniquely only possible because we have this network of 250,000 merchants who are using our platform as well as the physical delivery network to get them whatever they need whenever they want to. We think about this as it is a capability platform.
[00:16:47] Daniel Y: It's this, Hey. If you are a manufacturer, if you are a bank, if you're an insurance company, whatever, and you have a value proposition that can [00:17:00] ultimately help the consumer get more for less on a mass market level, then was Wasoko can be your partner to help get that service to market.
[00:17:10] Daniel Y: But ultimately, who we are creating value for is that end consumer in the community. That's really where we've, we focused and where we've started all of our innovations since I think really crystallizing that framework and that thinking. And I think to your point, for any other entrepreneurs, founders who are working in maybe these complex multi-stakeholder types of environments, it's worth definitely sitting down and mapping out, okay, ultimately who do, who is our north star that we're creating value for? And yes, obviously you can and you probably will create value for other stakeholders along the way. But really keeping that North star, I think is is quite critical.
[00:17:45] Dotun O: It's interesting what you said there, in a multi-stakeholder business model, identifying who your customers are and actually focusing on that rather than thinking that everybody's your customer. I. Affects the way you actually design the business model, [00:18:00] also what you focus your attention on and what you invest in.
[00:18:03] Dotun O: Let's start back a little bit. And talk maybe more generic now about FMCG value chain. Is one of the oldest. Business model on the continent. As a matter of fact, UAC was one of the first company in Nigeria and UAC actually had the royal charter to form Nigeria.
[00:18:20] Dotun O: So you can say it's one of the oldest business the trading and manufacture and getting goods maybe to other people in those days. What are the key hypothesis around innovation of the FMCG value chain?
[00:18:32] Daniel Y: When I look at the FNCG value chain as it exists in most African markets currently versus let's say the more mature markets in. Maybe the US or in other other places. I think that the key difference that I observe is the typical manufacturer is still a family run business.
[00:18:55] Daniel Y: Maybe at this point in their, third or fourth generation. That have [00:19:00] inherited a much more traditional way of approaching the business, which also was set up, maybe it was 50 or even more years ago.
[00:19:07] Daniel Y: They were compelled. By virtue of a less developed ecosystem to do everything themselves, whether it was importing the raw materials setting up the factory processing the materials packaging, marketing, doing the distribution doing the consumer engagement.
[00:19:24] Daniel Y: Basically every level was engaged. Within the same roof of the operation. And I think this is very different than what you would find, with your typical FMCG in the US. If you go to a supermarket in the US and you go to the soap pile, chances are that the vast majority of those soaps.
[00:19:41] Daniel Y: Even though they all have different brands, were made in many of the same facilities. And so you could have, soap that is being marketed, branded as a Proctor and Gamble product or as a Unilever product, but the actual factory that made that probably doesn't even belong to Procter and Gamble, Unilever.
[00:19:58] Daniel Y: In the same way that, that we're currently [00:20:00] doing private label, they have outsourced the actual manufacturing part of it. And really all that they're focused on is the end brand marketing and consumer engagement. And I think that this kind of specialization in the value chain is a reflection of a more established, more mature market where each of the players have figured out how to most optimize on their specific capabilities.
[00:20:23] Daniel Y: and niches. when I look at. How most consumer goods brands operate across the continent today? I still see far too much of this everything under one roof type of behavior. And I think ultimately, it's the African consumer who is losing out on this.
[00:20:38] Daniel Y: Because if you are dependent on the same company. To not only source the raw materials at the lowest pricing import them, manufacture them, operate all that machinery at the most efficient way. Figure out the distribution, brand, the products, engage the consumers, all this all of these capabilities are not gonna exist at a world class level within one [00:21:00] company.
[00:21:00] Daniel Y: And so I think this is really where for other. Players who might be looking at this space, whether tech enabled or not understanding within these value chains. Okay. Are there may be opportunities? For example I do think that, this contract manufacturing is a huge opportunity. I. For for most markets and especially will become much greater as the Africa Continental free trade area really comes into its own because then we actually have, single markets that can justify a lot more capital investment into.
[00:21:28] Daniel Y: Some of these more expensive production facilities that are ultimately needed to get the the economies of scale to produce things at lower costs for greater numbers of consumers. But in our case, we happen to have. This captive audience and this existing demand based off of our data and our sales for different products.
[00:21:46] Daniel Y: And we've taken a lead to start to I think innovate in ways where private label manufacturing in African continent, I think is still very nascent or contract manufacturing overall. But I think that's only exemplary of the trends that I would expect going [00:22:00] forward.
[00:22:00] Dotun O: talking about this hypothesis as well. And thanks for the lay of the land that you just gave, I see a lot of. regional play and regional consolidation like you've done recently. But there are key big players in West and East Africa, north Africa.
[00:22:13] Dotun O: I don't know of any in South Africa, but I think you know them. They exist are, they're nuanced differences in. The model and innovation across those region. I know you've ventured into Francophone , Africa at some point and maybe you exited the market. What are your view on the innovation that will happen and regional differences in the innovation taking into cognizance maybe the cultural differences or the nuanced nature of doing businesses in those regions?
[00:22:43] Daniel Y: In terms of what fundamentally changes about this model, so B2B retail eCommerce as you go to different parts of Africa, the value proposition for the retailer in every market that I've been to and visited, which is most parts of the [00:23:00] continent.
[00:23:00] Daniel Y: Is the same. The key challenge of not being able to get the goods that you need to serve your neighborhood, your community, reliably on demand at an affordable price with a proper selection What is unique and different is the suppliers, the manufacturers that you have to work with.
[00:23:20] Daniel Y: To ultimately ensure that those goods are available to be served to those customers and to the communities. And so I think what we've seen is that's really where the hard work has to come in. And you referenced, for example the pilot that we were doing a bit in Francophone, west Africa.
[00:23:37] Daniel Y: if I had to outline the key challenges there it's more or less the result of having to build up a whole new network, a whole new base of suppliers and manufacturers to be able to reliably get the products at the best prices. For the retail network, the actual operating model itself was not the challenge.
[00:23:55] Daniel Y: It was much more around the work and the capacity required to build up that [00:24:00] whole new network on that level. And I think that, that was a really good lesson learned in terms of, okay, if we are going to go into a new region are there existing players. That we can partner with, that we can work with.
[00:24:13] Daniel Y: And in the case of the current transaction that's gone ongoing, actually merged with to immediately leapfrog and get the strong base of suppliers that's required in order to immediately execute and meet the market need and demand. I think that was a very strong lesson learned.
[00:24:31] Daniel Y: And with that in mind we've pinned down what the requirements are to be able to effectively execute in different markets. In East Africa across the multiple countries that we've been there we've been very successful because a lot of the manufacturers and the goods are actually cross border within the region, right?
[00:24:48] Daniel Y: So you'll find the same products and same manufacturer from Kenya, Tanzania also distributes into Uganda, Rwanda Zambia, stuff like that. And so we are able to much more kind of leverage on our existing strong [00:25:00] network of suppliers to be able to get into those markets. But when you're going to an entirely new region that's when there's a lot of hard work to start from scratch to build up those supplier relations.
[00:25:09] Dotun O: this is a good segue to your m and a that you recently announced with Max ab. For the benefit of those who are thinking or doing something similar, I wanted to talk about the key features and things that people need to look out for.
[00:25:23] Dotun O: If you were going for m and a, and what has been the experience so far for you integrating two large companies together?
[00:25:30] Daniel Y: I definitely want to start off and say that m and a and a merger between two, quite substantial large companies who are regional leaders in this case. Is no walk in the park. This has by no means been been an easy or straightforward process.
[00:25:43] Daniel Y: However, I think that the ingredients. And the opportunity if you can get it right which, definitely want to say we're still, early on in, our journey together. But I think if you can get it right, then the potential opportunity from what I'm seeing is absolutely transformative.
[00:25:58] Daniel Y: And the [00:26:00] ingredients that go into making this kind of transaction ultimately successful, I think Starts with the founders, and it starts with the relationship, with the trust and with the alignment of vision between them. I am incredibly fortunate to be working initially across the table.
[00:26:16] Daniel Y: And I think now very much on the same side of the table with with Belal who has been the founder and CEO of MaxAB and I. Between him and I from the earliest conversations that we have would actually significantly predate the current transaction. So for the full context I've known Belal since they launched their business.
[00:26:33] Daniel Y: Just a year or two after we did. And actually max AB team even came down, visited Wasoko in Kenya, I think back in 2018. And we've stayed in touch. We've exchanged notes many times since then. so even leading up to this particular transaction we already had that fundamental relationship which I think is incredibly important for getting into these more detailed types of discussions.
[00:26:58] Daniel Y: And so for [00:27:00] us. As we sat down and started to figure out, okay, is there a real opportunity here? It started with, hey do we trust each other and do we want the same thing ultimately from the combined company? And I think once, we very clearly articulated that the answer was yes, then we can get into the nitty gritties of what needed to be figured out from there.
[00:27:18] Daniel Y: obviously in addition to. The founder chemistry you also do have to have a proper business case as well do the actual analysis and really determine that one plus one is 11 and not one plus one is 1.5 because that's ultimately where a lot of m and a deals don't work out.
[00:27:34] Daniel Y: But in our case. I think it was quite clear given that we did not have overlapping footprint. So there was no kind of cannibalization of the existing markets. But also a lot of. Overlapping back office support and capabilities that there was a clear opportunity to create a much larger business from a market operations perspective while retaining more or less the same overheads that either of [00:28:00] us were operating on a standalone basis.
[00:28:01] Daniel Y: And so I think that was a very clear business case that, once we modeled out and put it forward in front of our shareholders made a ton of sense. And ultimately, given that we are aligned on this vision of how do we help as many communities across Africa get more for less and based off our prior experience, as I mentioned, going into a new region and trying to build up something from scratch ourselves we realize that going together is ultimately what's gonna take us much farther and much faster. And, if that ultimately serves that vision then that's what we wanna focus on. Rather than trying to claim the the need to build up everything from scratch on our own.
[00:28:37] Dotun O: So basically if I just sort recap what you just said now you start with the chemistry because that's very important. And then align goals and objectives, vision alignment and a third one is complementary skills and advantages
[00:28:50] Dotun O: and ultimately, and the fourth one is the combined entity has to. Significant value the sum of both should be bigger than individual [00:29:00] entity on their own. But I wanna touch on the second part of my question, which is, what are the lessons so far, like you started with, it's not walk in a park.
[00:29:07] Dotun O: What has surprised you the most in this process?
[00:29:10] Daniel Y: I think what has definitely been quite complex and tricky at times is just The multi-stakeholder management here. We're really the pioneers in this space, right?
[00:29:20] Daniel Y: I think nobody has seen a merger at this scale happen in the tech space in Africa. And so there's not really a playbook. There's not really an example that you can point to. For really anybody to have a sense of what to expect here.
[00:29:33] Daniel Y: And so I think starting off, as I said, with the founders, obviously that's the bedrock for trying to make any of this happen. And so that's why I emphasize the chemistry and the alignment . But then even from there.
[00:29:44] Daniel Y: You still have, both respective teams you know how different people perceive the opportunity, what's going on, there's a lot of skepticism. There's always a lot of questions, a lot of doubts, how are we gonna make this work, practical considerations, whatnot as well.
[00:29:58] Daniel Y: Obviously you then have the shareholders, you [00:30:00] have both boards and of course if the boards, represent different investor groups they have their own interests for what they want to get out of the transaction as well. So I think it just really struck me as I was getting into this.
[00:30:12] Daniel Y: And, leading this process wow, there's a lot of different players to get on side here. And just really the importance of clear consistent communication. And having your ducks in a row, being able to, to really tell the compelling and clear story of why this is creating value for everyone and have everyone focused on that long-term objective, whatever that vision is, for the combined company.
[00:30:35] Daniel Y: That, that's really been the critical part that you know, maybe I underestimated the complexity of getting into this original.
[00:30:41] Dotun O: One of the understated under emphasize, part of merger of two companies like yours and Max AB, is the culture and the culture alignment and how long it takes to merge both culture and form a common culture taking the best of both and reducing the worst.
[00:30:59] Dotun O: I'm sure you're just in [00:31:00] the beginning of that process now, but what are your thoughts on how to merge both culture together
[00:31:07] Daniel Y: I think that really is the the critical question, for the long term success of the combined team which is you have both companies that I think have been tremendously successful in their own regions, have been leaders in their respective markets.
[00:31:21] Daniel Y: And now they're coming together to, to be, the clear leader on a Pan-African basis. how do you really make that come together effectively? I think you have to start by having, I. a very explicit discussion of what that culture should be and where both sides are at, what their values are what kind of behaviors are rewarded what kind of behaviors, are disincentivized on both sides and aligning that and sitting down and actually having, in our case we actually did a session, leadership of coming from both sides and sat down and said, okay, what is the mission of the combined company?
[00:31:54] Daniel Y: What are the values of the combined company now? We're making this explicit for a reason because. We in this [00:32:00] room now have to go back and exemplify this and state and repeat this to everybody that we're working with. Whether someone from Egypt or someone from Kenya, or someone from, Tanzania or Morocco or wherever.
[00:32:12] Daniel Y: Now, we're all part of one company and this kind of culture building or this cultural integration at scale. Has to be an explicit project because it's very often said that the initial culture that you have as a startup or as a small organization just happens organically, you don't have to sit down and have workshops where write out your values and write out your mission and whatnot, because it just. Is organically flowing and clear within one or two rooms of people that you have. But as you get to the scale of being, hundreds of people, or in our case, thousands of people, the founders are not in every meeting, right?
[00:32:42] Daniel Y: The leadership is not even there. across most of the company where the day-to-day work is happening. And so you have to have these clear stated principles. That get cascaded down across levels. It's not easy. You have to put in the time, you have to put in the work, you have to repeat and be consistent in order for the culture to really take hold.
[00:32:59] Daniel Y: [00:33:00] But I think, the good thing is this is experience that, both companies have in, I think establishing very successful. And, mostly similar cultures to get to where they are today. And so I think it's the same process of now just hammering out being consistent in repeating and emphasizing our new combined culture at all levels of the company for, many months going forward now.
[00:33:21] Dotun O: The first time I met you or saw you was at Jay's club in Nairobi where you are. Playing as a musician, a performing musician, I was really surprised by you as a founder putting that time and effort into being an active member of a band.
[00:33:36] Dotun O: What are the key leadership lessons that you learned being a member of a performing band that you've been able to transfer into your leadership of of a high growth startup?
[00:33:46] Daniel Y: love that question. my back on my history with music doesn't often come up at least directly in my startup work, but, I actually do find that there's a lot of crossovers between the two. To specifically answer the question on leadership, the most important [00:34:00] thing when you're part of a band is you have to listen.
[00:34:03] Daniel Y: When you're in a group and in particular the the funk band that I was a part of in Nairobi was an 11 person band. And if you have an 11 person band and you are not listening to what everybody else in the group is doing, then very quickly, you're gonna stick out like a soup.
[00:34:16] Daniel Y: And so I think. To play as a musician effectively in that type of an ensemble really requires constant. Active listening, it's a call and response, right? You're feeding off of, what is the drummer doing? What's the bass player up to, how are the vocals sounding?
[00:34:33] Daniel Y: What's the emphasis, what's the vibe, what's the energy? And obviously you're doing all of this in an intuitive, in an instinctive, non explicit way. So your levels of attention and cues to how people are reacting and what's going on have to be at the highest level.
[00:34:49] Daniel Y: And of course you're doing all that while still doing your own thing. In my case, playing the piano. So there's a lot of just intuitive skills and, capabilities that have been honed by my [00:35:00] time playing as a musician for close to 25 years now since I was a kid.
[00:35:04] Daniel Y: But definitely I think that they do crossover and any type of environment where you're forced to really collaborate at a high level. With others I think is going to be helpful for developing the kind of skills as a startup leader that are ultimately required to scale up an organization.
[00:35:18] Dotun O: by the way, I enjoy the funky band. I think I. Have some videos of you guys playing that night? It was a highlight of my stay in Nairobi to listen to some of this live music
[00:35:27] Dotun O: I like to end my interview with some fire and question . view did you hold before now that you no longer hold?
[00:35:36] Daniel Y: I definitely did not envision that. Eight years in, I would still be very much in the thick of it, growing, scaling evolving as a leader and as a company. I think that the startup stereotype, at least if you're coming from a California Silicon Valley background, which which is where I was born and raised is much more, okay let me do this thing for [00:36:00] maybe three or four years. And and then, Google or Facebook, will come acquire the company and then I'll move on and I'll start the next company or go on to something else. And I think what has very much become apparent to me in the advice that I give to all founders, really considering building in the African ecosystem is, are you ready to do this for a decade?
[00:36:16] Daniel Y: Or, Or more than a decade. And what I can say for myself is I have never been more challenged, nor more inspired and excited than where I am today. More than eight years into the business and the opportunity to potentially still be building. This business for another eight years, or multiples of eight years beyond that is something that is still truly exhilarating for me.
[00:36:40] Daniel Y: And but I think this idea that, hey, This is not a short trip. this is a voyage that is gonna go on for a long time. And you have to be willing to stick it through all the highs and lows.
[00:36:49] Daniel Y: I think it's that kind of commitment that's really required and something that I've definitely updated my views on.
[00:36:53] Dotun O: Yeah, building a startup in Africa is a marathon, not a sprint. And Having that stamina to run that mile is [00:37:00] very important than just being Usain Bolt. that's quite good.
[00:37:04] Dotun O: The last question for me is, which book are you currently reading or I've read lately that state with you.
[00:37:10] Daniel Y: Great question. I'm currently reading a book called infectious Generosity which is actually by the the founder of the TED Talks. And it's a really interesting approach and philosophy that I think he's developed for. Fundamentally how to make the world a better place.
[00:37:25] Daniel Y: Ted has a very interesting model. They started off running these elite conferences where people were paying thousands of dollars to come and hear, some of the most innovative revolutionary thinkers and researchers in the world.
[00:37:35] Daniel Y: And then all of a sudden they started putting out, all of those videos for free for anyone, anywhere to see them and benefit from them. And actually it was by doing that made, not only their business model or whatever even better, but ultimately obviously had a much higher impact on the rest of the world as well.
[00:37:52] Daniel Y: So yeah, that, that's been a very fascinating read so far about. How can we ultimately be, more generous with everything that we do to benefit, more people [00:38:00] even if you are, running a business or somebody that's, for profit or supposed to generate a certain return to shareholders.
[00:38:05] Daniel Y: I think that this kind of opportunity where you can still maximize, for the value that you're creating for society while you're doing those things is something that I'm reflecting a lot on.
[00:38:15] Dotun O: Thanks. Daniel, this has been a very good conversation with you. I really enjoyed it, and I know you're busy trying to merge two company together and talking to us now from Egypt. Thanks for your time and very insightful for me.
[00:38:26] Daniel Y: Absolutely. It's been a pleasure.