BTF S5 Mark Straub
[00:00:00] 
Dotun O: Mark, it's good to have you on the show. 
Mark S: Thank you. It's great to be here. 

Dotun O: I think the good place for us to start... I just wanna go into the deep end with you. Okay. I've always had a thesis around FinTech as a bedrock for economic development. draw a straight line between FinTech, enabling people to have access to financial services, including credit. And without credit, people will not be able to consume more than what they can earn today. And without consumption, there is no production. Without production, there's an economic development. But you seem to have gone deeper than that to say without identity, we cannot have a very good FinTech company.
Dotun O: I use that for you to walk through how you came about, Smile Identity, the story behind it, and what is the mental framework behind the company. 
Mark S: Yeah. I'm happy to get into that. And I think there's definitely examples you can look at from around the world of how building blocks fit together that then create, an ecosystem or create economic development.

Mark S: It's hard to simplify economies down to just a [00:01:00] handful of building blocks, but I think you can pick a piece of it like FinTech and try to identify building blocks. So the journey started for me and the journey to start this company started in India actually because I was investing in some companies in India and I'd done a fair bit of work there over the course of a decade.
Mark S: And I'd lived in India two different points in time. Once in Delhi and once in Bangalore. And then at the same time I began around this time this is like 20 15, 20 16, I was also making investments in a few markets in Africa, mostly in Kenya. And I'd think I'd done one or two things in Nigeria.
Mark S: And the light bulb for me was I had watched the Indian startup ecosystem go from being not very exciting and very problematic. And the things that were potentially exciting, like credit or payments financial services that could have grown very fast 'cause there was lots of consumer demand for that.
Mark S: They were hamstrung because of central [00:02:00] bank rules. Mostly not really because of technology, but because of rules imposed by the RBI, the Reserve Bank of India. And those rules were largely trying to prevent and protect against terrorism and money laundering, which were, issues that go back in India all the way, to independence.
Mark S: And predate it if you think about the British Empire. But the real issue was that in India you couldn't easily move money across the country like you could with M-Pesa because the central bank forbade it once the national ID system was put in place. And that was a whole bunch of work, which we could talk about.
Mark S: But as that came into being advocates for financial inclusion, were able to appeal to the Central bank, the Reserve Bank of India, and get them to change the rules. And so initially it was slow, but then eventually kind of like a waterfall, you could now do all these things with mobile money that you could not do previously in India.
Mark S: And the most important one was being able to cash in and cash out fiat currency. So that was the building [00:03:00] blocks for something like an MPESA to exist. And now you have Airtel money and you have a bunch of other services like that in India, but that didn't exist in 2016. That was waiting for regulation to change it.
Mark S: So to me the building block there for unlocking the FinTech world and now India's got, just tremendous FinTech ecosystem. The building block was, yeah, not just the payment rails, which were already there, not just the innovation, on the product side, whether it's credit or something else around an app.
Mark S: But it was also the identity as a trust layer that allowed both regulators and businesses to feel confident that the person they're dealing with is both a legitimate person and that they have the rights to do the things that they're doing, whether it's moving money or taking a loan.
Mark S: And so to think, to me, that was why it was so important to solve the identity piece. Interestingly, in Kenya there has been a national ID system there for a long time. And in other markets in Africa, there've been ID systems for a long time, but these ID systems were not easily used by startups to build remote [00:04:00] onboarding or digital onboarding.
Mark S: And so making the systems easy to use and we can go into what that means, making those systems easy to use for startups was an important piece of solving that part of the triad. If I think of building a FinTech app as a triad, you need payment rails. Which I saw companies like Pay Stack and Flutter Wave and Pesa and MFS< now Onafriq. 
Mark S: Businesses like that had gotten started. They had success because they were solving a real problem around moving money and doing it within a country, but also across borders in different ways, in different parts of Africa. But the identity piece was like a piece that still needed to be solved.
Mark S: And the third piece I think of it is whatever the innovation is that the actual startup is coming up with. So it could be a credit scoring model, it could be, if you think about like Paystack, it was really seamless online checkout and payment gateways. You think about flutter wave, it was like being able to accept money in a lot of different countries.
Mark S: So there's always some innovation that the startup itself comes up with, but they need rails and they tend to need identity at some point. And if those two things aren't both in place, then the startup. Trips over [00:05:00] itself and has real problems. 
Dotun O: Which one comes first?
Mark S: So the analogy I use is like a sports car or just a vehicle. The payments generally comes first because it's a bigger use case. Moving money is a bigger use case than checking somebody's identity.
Mark S: And it's solves immediate need. Like I need to move value from here to there for whatever reason. Commerce. Trade remittances buying things. So that tends to come first unless the regulators stop it. But the reason why I think of the vehicle analogy, or sports car analogy is, having payment rails is like having a car.
Mark S: You can drive really fast and you can go from one place to another. You can send value from one place to another. Having good ID systems in place is like having a seatbelt and brakes that work. So you can stop the car from driving off the road and destroying everything in it. And if you have payment rails, you can move things very fast.
Mark S: That also means you can move money fraudulently very fast. You need the safety tools the seat belts and the brakes and the warning lights to help you avoid, hitting something in the road that's gonna destroy everything . And so I think of the two go hand in hand, [00:06:00] but I like to think of it as if you use our tools, you can drive really fast.
Mark S: That's what you want the company to be able to do. You want your company to be able to go fast. 

Dotun O: So if you were to design an ideal African country with no FinTech already now, what would you advise that they start with payment, with use case to get more people to use it or sort out your identity first?
Dotun O: 'cause the reason why I ask that, if you look at the western world we see a lot of innovation and we're copying some of them. Identity was solved many years ago. People have their social security. 
Mark S: It, it has been, it was solved in a legacy way, right? It's solved in a different way.
Mark S: And now there's new issues that emerge because, the ID systems in the US are all based on physical documents or just troves and troves of data that have been collected about people for a long periods of time. Remember in the US there's not an effective like national data, privacy law like there is in Europe or there even is in Nigeria and Kenya and South Africa for that matter.

Mark S: There's private companies that just hoover up troves and troves of data about people, and then they use that to try to approximate unique identity. But [00:07:00] sorry to come back to the quote unquote ideal African country. I have I chuckled because there's this great, I, it must have been a tweet from Wiza Jalakasi, who's prolific on Twitter and well-known startup world across Africa.
Mark S: And someone said in your average African country, and he said there is no average African country. Yeah, every one of them is unique. Which is actually one of the things that makes it so challenging to scale across the continent because going from Nigeria to Kenya or South Africa to Zambia or Kenya to Zambia is not like going from Virginia to North Carolina or even France to Germany.
Mark S: The languages in France and Germany may be different, the cultures may be a little bit different, but within the EU you have a lot of same legal frameworks. You can drive across those borders without stamping a passport. You can move money without really having to do a lot of KYC, and yet the rules can be completely different from one market to the next within Africa.
Mark S: And it's not just the rules. Yeah. The actual infrastructure is different. Yeah. So you may have, full fledged APIs that you can integrate with a whole set of rules [00:08:00] around them, consent layers, data protection, all that can be in place. Like Nigeria actually has a lot of that now in place, and it's continuing to evolve it.
Mark S: And you go to another country and there's there's no APIs, there's no digital ID system. There are physical cards, but there's no rules about how they get issued. And those, and there's every color of the spectrum in between, I guess which would we develop first?
Mark S: Or which would you wanna develop first? Ideally you want these two things to be developed. Simultaneously, co-developed at the same time where they're learning from each other and reinforcing each other. And I think you want regulators and public policy makers who have a long view.
Mark S: So they can take a five to 10 year view on things and lay down a piece of infrastructure with public comment and public input, but not trying to get something out by next quarter or like next month because there's an election or something. And then you end up with a lot of short term decision making where it's oh, we're gonna do this contract, we're gonna give it to somebody's brother, and like they're gonna get it done fast and that's gonna help my family.
Mark S: Or something like those kinds of very short [00:09:00] term decision making ends up holding back because it doesn't work. And then you gotta roll it back and you have to build it again. And so I think the ideal way of doing this would be where you have a set of things you're trying to accomplish from.
Mark S: A payment infrastructure standpoint from a digital public goods or digital public infrastructure standpoint, you clearly state to the market what's gonna be built by the government and what is going to be open for private companies to do. It's very clear like these are the areas where the public infrastructure's going to exist.
Mark S: Give us feedback, but don't try to copy that. And then also leaving lots and lots of space for private companies to say, Hey, this is all the areas where we want to see private companies innovate. And then having, dialogue about that. I think Ethiopia is doing a really good job of this right now.
Mark S: It's still early days, but they're building a new national ID system they're trying to open up. Historically it's been relatively closed, banking sector. So there's moments of this in different markets like Zambia's doing some of this now. Rwanda's certainly done a lot, in the last decade.
Mark S: They built a complete digital ID system with, e citizens or [00:10:00] e-government services. So there's a lot of good examples to point out, but they're all a little bit different and unique to the countries. 

Dotun O: It's interesting you answer that question by saying that things has to be done simultaneously.
Dotun O: You need both. And one is make you run faster, the other one will make you safe. And a lot of time when people think about these things, you think about it layer upon layer, one thing has been built first before you build the other one. Even though we know innovation doesn't work that way but let me approach it in a different way to say, if what you're doing is done properly,
Dotun O: what business models and what possibilities do you think it'll unlock that we are not seeing currently now? 

Mark S: Well, I think we've seen a snapshot of it in Nigeria. And of course there's a lot of things going on, including what's happening with venture funding, the flood of it a year ago and now the dearth of it. 
Mark S: So those things make it hard. You have to look beyond the headlines of the day. But I think what we have seen in Nigeria, and I think we should be pretty excited about it, is that there has been now, over the last several years standards built [00:11:00] around KYC those standards exist both in the, you could say the telecom sector or more broadly public services sector, which is around the NIN or the national IAD number, and then also in the banking sector with the BVN number.
Mark S: And increasingly there are now. More places where those IDs are used, where they're often required. And there are sets of rules around how you can integrate those and what consents need to be taken. And so those frameworks and those underlying tools create common ground that you can now build on.
Mark S: And it benefits the banks to some extent because they can do business not only with each other, but with other companies. And they can start venturing more into digital services and apps and things like that. You're starting to see more banks launch full fledged apps since the get out of the, being stuck by branches, but also it allows fintechs and non-banks To build effectively, almost full fledged banking services or neobank services. And they can acquire a lot of customers quickly [00:12:00] and do so relatively capital efficiently or in a relatively short period of time using these APIs and using these tools. So I think there's been in some ways, whereas maybe we've seen too much, too quickly in terms of like lots of companies getting built and funded before they had a full on business model.
Mark S: But many of them are gonna continue to go on and be really exciting dynamic players. And so I think there's probably at least 10 or 20 of the fintechs that have been built in Nigeria over the last five years that are gonna go on to be very successful and exciting long-term companies in credit, in payments, in small business or merchant services.
Mark S: And I think all those categories open up once you have infrastructure. I haven't yet seen stuff. I've started to see some stuff in ride sharing. So we see, so Bolt is like a customer of ours. Uber is a customer of ours. Those companies also are able to operate with more confidence if they've got ID tools that they can use.
Mark S: And some of those ID tools are around the payment or the customer account. And some of those ID tools are around confirming that the driver is who they say they're you feel safe getting into a [00:13:00] car. What we haven't seen yet is the rest of the shared economy. I would love to see more things like Airbnb more kind of social commerce that could exist events. And I think those things will come as these tools are easier to use for applications that aren't specifically financial in nature.

Dotun O: Another question I want to ask is to then step into what you're building currently. A lot of African countries struggle to have identity, especially digital identity, to have the infrastructure. And maybe the first question is, in your opinion, based on your industry experience, why do you think that is?
Dotun O: And an example is Nigeria tried to roll out NIN and doing well now, but it was a struggle. And you have Tanzania, they had to delay their introducing digital id. Apart from a lot of African countries don't even know how many people they have. But digital ID it's not rocket science.
Dotun O: It's something that could be done.

Mark S: Let's use the example of comparing. I just to pick on an entrepreneur who's been in the news. SpaceX is rocket science. [00:14:00] Twitter is not, it's social science, but that's the challenge of doing identity.
Mark S: It's not necessarily rocket science. It's not that the technology is so hard to get right. It's that you have to satisfy every stakeholder in the country. So you have this incredible range of people and institutions that you have to satisfy. And yet at some point you have to draw the line, we're gonna do this, we're not gonna do that.
Mark S: There's gonna be a digital method of verification, or there's not gonna be, the method of verification will include biometrics, or it's not, we're gonna use face or we're gonna use fingerprint. Like you have to make these decisions and everyone's got an opinion. And so the policymaker has to. Not just understand the technology and pick the tools that are best for that country.
Mark S: They have to fit that within a budget. They have to fit that within a timeline that they have, a mandate to achieve within certain number of months or years. And then they also have to fit that into the demands of everybody who's coming at them from both the public and private sector saying, make sure it does this, or I want a piece of that.
Mark S: So I think it's actually quite a challenge when I speak to the folks who, run these ID systems or [00:15:00] are building these ID systems in African governments, I'm preaching to the choir. They already understand how hard it is. They're trying to make the best decisions they can with the limited resources they have.
Mark S: So I have a lot of empathy for them. I actually think that there's a lot of good civil servants out there trying to do good work with very limited resources and a lot of demands or opinions that people throw at them. And of course some people wanna see them fail. Not only, of course the fraudsters wanna see them fail, but if you have a business that is predicated on an old rule that makes everyone have to show up and sign pieces of paper with wet signatures, and you've built sort of a niche for yourself, or you've built a large agent network for yourself, that's predicated on this. If someone comes along and says, we're gonna change all the rules, and now you have to, you're gonna go outta business or you have to completely pivot.
Mark S: Like people don't wanna see that. 

Dotun O: Yeah. And there are alternative businesses that are benefiting from that as well. 
Mark S: Exactly. Africa is, nothing, if not entrepreneurial, and people will find solutions to whatever problems exist, but those solutions may be the short term, [00:16:00] inefficient way of doing things.

Mark S: What you really wanna do is build the highway, but building the highway means you gotta clear space. And in doing that, inevitably there are some losers. So I think that's the challenge that a lot of these administrations face, not to mention just limited resources. They get a mandate, we want you to build something that looks like what Estonia has, but we're gonna give you one 10th of the budget.
Mark S: Yeah. And by the way, you've gotta do it in an environment where internet is intermittent, sometimes unpredictable. 

Dotun O: And there are a lot of strong incumbents who don't want it to succeed. 
Mark S: Yeah. 

Dotun O: Let's turn it positively now, and I'm sure there will be some government officials who will be listening to this. What are the key components that we need to have in place? And what are the key frameworks, including stakeholders that we need to talk to, and what are the incentives that we need to have for them to set up a very good digital identity system for our country.

Mark S: I think the best thing is to learn from other countries that are at a similar stage or maybe one or two stages ahead. I don't get any like kickbacks for this, but I was gonna plug this conference called ID for Africa, which [00:17:00] we've been going to now for the last three years.
Mark S: And Id for Africa it's a nonprofit, it's a movement that was put together between a variety of different African governments and a number of nonprofits. And so they have this conference every year and they have lots of content that they put out on YouTube. It's all free. The content is all free.
Mark S: And they dive into every one of these questions about how you set up the system, what types of biometrics you can use, how you get people to get enrolled and all of these rules around digital ID and how they can be done and the people who speak at these conferences and on these YouTube sessions.
Mark S: Sometimes there are people from industry like me, but a lot of it is government officials from other countries. And then you can go to the conference every year and they have it in a different country. So last year it was in Kenya, this coming year it's gonna be in South Africa, I think. And at that conference you've got hundreds of government officials and civil servants from across Africa who are dealing with these challenges every day.
Mark S: And most of the sessions are government officials talking to other government officials. And so I think the best thing that these folks can do is get involved in those communities, [00:18:00] learn from, okay, what has Ghana done? What worked? What's different? What doesn't work for our country? What has Uganda done?
Mark S: What has Ethiopia done? And usually you can figure out where does our country sit right now in terms of the stage of development of our systems relative to these other countries? And you wanna look at two or three countries that are at a similar or slightly further along stage. 'cause that's the best examples to learn from.
Mark S: And inevitably there'll be a few things you pick from and you say, this is great that we wanna do this, and then, no, actually we're gonna do things a little bit differently. And an interesting example of that was, like in Uganda, there was certain use cases around fisheries and fishermen and making sure that folks who lived along the lake could get access to ID services and government services the way they needed to, and to be able to prove their identities.
Mark S: And they had to think about including them in the onboarding and enrollment process and making sure that they had accessibility and that the services they needed were being met. There's just very specific things I'm sure in Cote D'Ivoire there's probably something around the cocoa industry they need to take in mind.
Mark S: So each country has different [00:19:00] circumstances that are important for them to take into account. 

Dotun O: We spoke about possible business models and. Potential startup that could evolve. You want identity is solved, but it's something that you touch on now that I think I wanted to, I want to double click on.
Dotun O: What is the possibility for an average African when the digital ID infrastructure is enabled for them, what are the possibilities for their own livelihood, for their economic development? 

Mark S: The building block for most economic development starts with being able to lay claim to what is yours. That could be a piece of land and the title associated with that land. It could be a small business that you own and the profits or proceeds that are associated with that business and the bank account that's tied to that business.
Mark S: Often, that may be the most important asset. It's I need to protect this financial wallet. That is what's really important to me. I need to be able to set it up. I need to be able to protect it and everything that goes into it. And at some point it becomes around credit.
Mark S: Being able to say, I have an identity that is trustworthy. Not only is it a unique [00:20:00] person and it's trustworthy, but I also have now built a set of financial habits, which I can share, ideally, digitally with you, a bank or a lender, and you can know and have confidence that this financial history is mine because I'm able to prove who I am and that this set of data points is tied to me.
Mark S: That's really important in establishing credit history so that you can get a loan. So you can buy the second boat. We're talking about these things like as if they all happen overnight. They don't, it takes 10 years. But 10 years is not that long of a period of time to, completely change, a financial services economy.
Mark S: And it's, it is doable. If you've got these building blocks, right? One thing I don't wanna do is just gloss over the idea. Oh, if you just solve for FinTech, like every, all the other problems go away. When we talked at the beginning, you talked about your thesis about how if you can solve for financial inclusion and then eventually credit, you can grow economies.
Mark S: There's definitely something to that. And it, especially for people who are in the urban centers and digitally connected and like knowledge workers or [00:21:00] professional service jobs, like increasingly they can make use of all those things. But I don't wanna overlook the fact that, China was built on manufacturing and India increasingly over the last.
Mark S: Five, 10 years has been built on knowledge workers or basically like developers and business process outsourcing. And then of course always agriculture so you have to have some, there has to be something that's producing value. Yeah. For financiers to be production. Yeah, it has to be production.
Mark S: But credit is an input and so having good financial services system means you can get credit as an input and then you've gotta have, a productive economy. So I think a good FinTech ecosystem can act as like an accelerant for whatever a country's already doing, but it's gotta be doing something that is production oriented. For FinTech to really leverage it has 

Dotun O: us something to be to sell. Yes. For you to produce. I think the core of that thesis is consumption, leads to that production especially when you have more people, if you look at it where we measure economic growth and its GDP, which is basically the gross domestic produce.
Dotun O: But then part of that [00:22:00] is what you're consuming locally. 

Mark S: Yeah. But even if you're doing that, like you gotta have roads to get things to market, it's yes, it's right. Like you can have all the digital payment services and all the credit you want, but if the harvest, rots on the highway, then you're limited. Yeah. But so I think like these things all have to come together and I think, the benefit of these investments in things like digital identity is that they can have a really high ROI, whereas you're, building roads is just always gonna be capital intensive.
Mark S: Building institutions and physical infrastructure is always gonna be capital intensive. But the payback from building things that are software driven or that leverage technology. You can have, five x, 10 x, a hundred x paybacks. And I think that's what's really exciting and why it's worthwhile.

Dotun O: There are lots of companies that do what you're trying to do now, and all of you are seeking data from the same sources. And I get pitched by few of those and see, okay, what is differentiating here? I can understand the problem that is being solved and how important that problem is.
Dotun O: From an investor perspective, I [00:23:00] can see the value that we created here. What differentiates you? Or not just differentiation.
Dotun O: What is your viewpoint and your own approach that is a bit different? 

Mark S: Like every market, if you grow a business fast enough and for a long enough period of time, you're gonna attract competitors.
Mark S: So hopefully the fact that there are a number of other companies now that, that do various forms of KYC, in Africa means that we've proven it's a interesting and worthwhile market. It matters less how we differentiated five years ago.
Mark S: 'cause. Now we're seven years old as a company, and customers aren't asking us, what did you do five years ago? They're asking, what can you do for us today? What can you do for us next quarter? So for us, it's about continuing to push the limits of innovation. I was on a call today with prospect and they wanna do merchant onboarding, and they want to do it both offline, so for POS, but they also wanna do it online and they wanna do it in multiple countries.
Mark S: And they want global sanction screening checks and a ML checks, and they want to be able to verify a document and they want to [00:24:00] OCR the document and they wanna run the ID number off the document against the national ID authority. But they also do liveness checks on the merchant, and at some point they're gonna want to be able to do authentication of the face of the merchant before they cash out that person, if they're, especially if they're cashing out from let's say, crypto into fiat or something.
Mark S: So there's a variety of things they need to, oh, by the way, it's gotta work across Africa. And we don't have a lot of developers, so can you make it easy for us to integrate. In a relatively short amount of time. So taking all the tools we've built, making them work in all these different markets, which is hard. Adding on some things that are global in nature, like global sanctions checks pep checks that's politically exposed persons. And then making it easy for a company to integrate regardless of what types of developers they have or what level of developer or what channel they're trying to use.
Mark S: Ah, we really want to use, we wanna send people a QR code that they can launch a mobile webpage on their phone. Great. We've got smile links. It can do that. You don't have to write any code. [00:25:00] Wow. Okay. This is awesome. Can you run the same ID number with one of our competitors?
Mark S: Yeah. But are they gonna give you an out of the box solution where you don't have to write a single code and you could be in production tomorrow? And you can distribute this stuff and it works in 54 countries. I think that's, where we're trying to push the envelope. And so you'll continue to see us do that, in the future, continuing to basically make it better, faster, cheaper, and then allowing more sophisticated use cases where actually, we wanna do, we're trying to onboard a business.
Mark S: We need to do a business registration verification, then we need to check that the directors k ycs match up against business. And by the way, we want a digital signature from those directors on a contract, but we wanna do it all over email with links. We are building the tools to make that happen. And you're gonna see that in, Q1.
Mark S: So we just keep pushing the envelope and making more and more automation possible with fewer and fewer developers. And I think with the advent of AI and large language models. The expectation from customers is can we do a lot more with a lot less [00:26:00] resources? And the answer is increasingly yes you can and we're gonna make it possible.

Dotun O: How do you balance or make the trade off between coverage, which is breadth Yeah. And compliance depth as you scale in multiple African countries. Yeah. 
Mark S: 54 of them. I spent a lot of time on this. It's not an easy, there's no math problem. You try to turn it into a math problem, is it worth doing?
Mark S: Okay, what's the cost of incorporating in this country? What are the things that we can only do in this country if we actually incorporate, and then if we incorporate, is that enough or is do we also have to get a license? And then ultimately, what is the cost of doing all that, both one time and then ongoing.
Mark S: And then you compare that against. What's the amount of demand that we're seeing either from existing customers or prospects, and how long do we think it'll take for those customers to actually start using the services? So you're constantly, we rotate through these questions. There's probably six or seven countries we're like rotating through these questions on and I've a small team.
Mark S: We, we talk about this they, they talk about this once a week and [00:27:00] we talk about it as a management team once a month. So yeah, we're just watching and we're talking and we're visiting and we're building relationships and in some cases we do go ahead and incorporate and pursue local compliance.
Mark S: And in other cases we wait. We wait until we think the moment's. 

Dotun O: And what is your. CCTO or CIO spending the time on now giving this complexities of you trying to weigh this every month and every week with the team. How do you allocate resources? 
Mark S: Yeah. We try not to burden the engineering team with the kind of the local country work to the extent we can, until it's okay, we've made the decision to do this and there is some specific thing we have to do that involves engineering, but a lot of it is around reading the law in that country.

Mark S: Like I've read the Kenyan Data Protection Act from cover to cover. I've read the Nigerian Data Protection Regulation from cover to cover. I think I've read it twice. And then my team has read similar ones in other markets. We've met with the heads of the national ID systems in a variety of markets, even markets that we're not in right now we're just watching.
Mark S: And [00:28:00] so a lot of it is around reading, talking to people. Trying to do estimates of what it would take to do something in a given country. And then when we actually make the decision, it's actually mostly our operations team and compliance team. So our compliance officer is pretty involved in that and that a lot of dialogue, a lot of WhatsApp conversations.
Mark S: But the engineering team, we try to shield them as much as we can from that work until it's absolutely necessary. Just 'cause it, it could be quite distracting if you're trying to ship code and then it's like you need to also understand political economy in the middle of that.
Mark S: So we try to limit the, how much time the engineers have to think about that stuff. In the last year. Been to Ethiopia twice in the last year. Got people who have been going to Zambia, people going to Tanzania. So you can figure out. 
Mark S: Where we see 

Dotun O: opportunities . You and I have met similar journey, but in opposite direction. I used to be an entrepreneur and I'm now an investor running a fund. You used to be, a fund manager. vc. Now an entrepreneur. 
Mark S: You wanna trade on Tuesdays?
Dotun O: No, I'm not trading, I'm not, being a startup founder is 
Dotun O: Very [00:29:00] hard. Yeah. And I increasingly appreciate founders, even when I was a founder I knew that. But now especially in this time, I appreciate it more. 
Mark S: Yeah. 
Dotun O: What is your mental model, apart from just finding about it problem and it pulled you, for you to make that jump?
Dotun O: To make that leap? You were an investor for a chunk of about nine years if I 

Mark S: Yeah, that's probably right. 
Dotun O: How do you make the leap and what are the key risk assessment that you have? 
Mark S: Yeah, it's great in your, it's a good question. 'cause it's, people have. Some people have very strong opinions about what it takes to be an entrepreneur.
Mark S: At the end of the day, there's a lot of things you have to be able to get right between product and people and understanding a market. The thing that tends to differentiate between people. There's lots of people who can build a product or are good at building a team or even can raise money.
Mark S: The thing that tends to differentiate between the ones I think that have made it and eventually been successful versus not, and I've heard other people talk about this. It's not like my idea, but it's just absolute relentless [00:30:00] persistence. So just being willing to keep going and finding a way every time roadblocks are thrown in your path.
Mark S: I think the thing that actually caused me to do it. I didn't know that I had that level of persistence, but I had a deep burning passion around this problem. I think for two reasons. One, because I'd seen it work in India and I'd gone from watching a country and have, I've at this point in my life, I have like deep personal connections to India.
Mark S: My wife is from India, my kids are half Indian. In-laws live there part of the year. I don't know how many times I've been there. I lived there twice. And I went from the first time I visited it where it felt like you couldn't get anything done online except maybe buy airline tickets to now you can pay for a rickshaw with a QR code from your phone.
Mark S: And that's all happened in 15 years. I know that you can have radical change, and that's a big country. It's a complicated country, something like 17 different languages, two [00:31:00] very different big religions. A lot of other smaller religions. So it's a complicated country, and yet it's actually changed dramatically within just within my career.
Mark S: And so that was one where I knew it was possible. And then the second thing was I was working with founders where they were doing really good work and they were getting ripped off by fraudsters. And when that happens, the investors around the table, especially the ones who weren't African, roll their eyes and say, oh that's emerging markets, or That's Africa, or that's Kenya, or whatever.
Mark S: They make some generic sort of stereotypical statement that writes off an entire. Country or continent. 

Dotun O: Interesting. 
Mark S: And then, but if you solve the problem, you realize no, it's just 10,000 people. And if you can catch those, or it's just 50,000 people, whatever it is, it's just 3% of the population or 1% of the population, or maybe 5% of the population.

Mark S: And if you can stop it there, then the other 95% of people who are hardworking, honest, trying to get on with their lives could go and build a country. So that's what made me very passionate about it, is seeing that it was [00:32:00] possible and then seeing good people doing good work, whether they were entrepreneurs or just consumers, the small businesses, and knowing that you could use technology to solve this problem and that there were counterparts in government that also were interested in solving the problem.
Mark S: That to me, what was like, okay, this is actually worth spending my life on. 

Dotun O: And you couldn't think of doing that as an investor because that way you can solve multiple problems. I could, 

Mark S: I would've been, the problem, I think there was some criticism of me when I was an investor that I was like a shadow CEO I was like, too involved.
Mark S: I think that's the problem. If you think you can do something better than someone else, you start sticking your fingers in and that you don't actually don't want investors like that. 'cause they can be really disruptive. And I realized at some point like, okay, if I'm going to tell people how I think they should do things I gotta put my money where my mouth is.
Mark S: I should put, I put my body where my mouth is and do it. So as to prove to myself that I actually was maybe as smart as I thought I was. And I think in hindsight I have an enormous amount of empathy now for founders. I probably, [00:33:00] if I could go back if the founders that I worked with previously are listening to this, I don't know if they would probably like, oh, Mark Straub and had enough of him.
Mark S: But if but I think if they heard this, I think what I would say to them is, I have far more empathy now for how hard it is, and I would've asked different questions instead of assuming that you hadn't thought of many things that I had thought of. I would assume you have thought of them.
Mark S: And I'd say, so how can I be helpful? Think that's the most com I, I'm now working with, I have a new, a board member on my board now who's, he's a four-time entrepreneur. He's the independent on my board. And a lot of the times when I talk to him it's really just so what's on your mind?
Mark S: How can I be helpful? That's what that he'll, that's what he'll say. And I'll start talking about some problem that I'm struggling with and he'll be like, yeah. I faced that one's really hard. He's I don't know if this will work for you, but here's what we did. And then so there's no assumption like why aren't you doing this?
Mark S: It's yeah, that's a hard problem. Here's how we approached it. I hope this is helpful.

Dotun O: A lot of the time entrepreneurs, I, I speak to entrepreneurs and I try to leave it and I hope some of the entrepreneurs that work with me, will be able [00:34:00] to testify that. I try to leave it every night, struggle sometimes.
Dotun O: Not to be a parent, but to be a partner as an investor, especially an investor like me would being an operator who, had also founded a business, you want to advise without advising. I think the analogy 
Mark S: I've heard used is actually a therapist. I actually think that there's some, because it's not just someone to tell you everything's okay.

Mark S: You need someone to also hold you accountable. But a therapist can do that in a way that's like. So tell me what's your problem? Oh, this is my problem. Huh? How long have you been having this problem? Oh, this, many months. What have you tried? Oh, I've tried these things. They didn't work.
Mark S: Okay. Have you thought about this? Yeah, Yeah, I've thought about that. Okay. What do you think is preventing you from solving this problem? So they basically use this Socratic method to help you think through a problem 

Dotun O: And then you get the answer yourself. 
Mark S: You can, yeah. And sometimes it's very specifically Hey, maybe there's this technique you didn't know about that other founders have used.
Mark S: So that's why it's helpful to have somebody who's been a founder before. 'cause they've tend to run into these problems before. And so there [00:35:00] are things like, oh, your business model is usage based. It's not a pure SaaS, it's usage based. So have you tried coming up with a metric that tracks this and focus on that metric instead of this?
Mark S: And investors can also do that if they have enough experience in a given category. But often. Fellow founders can deliver it with the sort of the therapist touch. And I think that's what makes it easier for entrepreneurs to listen to them. I have, I do have some really good investors who are not founders and they're often helpful in different ways.
Mark S: They can be helpful with customer introductions, they can be helpful with recruiting, which is actually very important for recruiting really good talent. 'cause it gives the talent the confidence that, that they're gonna, be backed by sophisticated investors. So that's also there's a lot of ways investors can be helpful, but I think the investors who have been operators or founders can take that kind of therapist approach.
Mark S: And I guess I would encourage the other investors to try to do it too. It's just, it's harder to have the same level of empathy until you've actually tried to ship product and make payroll. 

Dotun O: What are the advantages that you had being an investor that you now have as an entrepreneur from. [00:36:00] Network raising money.
Dotun O: Yeah. But what advantages do you think you were able to carry over from your experience as an investor into being a startup entrepreneur? 

Mark S: The obvious one is that because I'd been an investor, and I'm sure that a lot of other founders would probably point at me and say yeah, but he's got this advantage.
Mark S: The advantage that I have it's easy to point and say like he's American and, and sure there, there's obviously like those biases that come into play when capital's being allocated. There's no question. And thankfully some of those barriers are coming down.
Mark S: And capital is being allocated more and more increasingly on merit. But it's still not solved problem yet, especially female founders don't get nearly enough capital . But the thing that I understood that was useful for me is I understood what investors were looking to see at each stage.
Mark S: At certain stages, it's about the person or the people and the idea. Is the idea a good idea? And does this person sound like they're relentlessly resourceful and willing to pursue this idea? And then you get to a different stage and it's about the product and the traction. And it's what level of at traction do [00:37:00] you need?
Mark S: There's this, yeah. If you talk to enough people in venture the metrics change but if you know what those metrics are, you know how to, what it is you need to hit and then how to present those metrics in a concise way. 'cause the thing is, like VCs are busy and they're often busy scanning things and saying no.
Mark S: So you're trying to figure out how to get them to spend 30 seconds extra and then they spend five minutes extra and then they spend 30 minutes extra. So it's like, what is the tidbit of information that's useful for them to make that time allocation decision? And then of course, like when it came to actual like deal structuring, I knew how to do that efficiently.
Mark S: But increasingly those tools are widely available on the internet. Y Combinator teaches people a lot about this. I probably underoptimized for valuation and it, and it to some extent, like I, I've given up more ownership than I wish I had. And at the same time, like I'm still here, company's still running, we're funded, and I know lots of companies where they optimize for something very short term like valuation or like round size or whatever, or structure.
Mark S: And, some of those companies are gone. And I think not being too greedy and knowing how to balance those [00:38:00] interests allowed me to get some of those rounds done when it was a challenging time. 

Dotun O: You've been an entrepreneur for over seven years now, and you were before then an investor, so it's safe to say that you've been in the venture ecosystem for a long time and you've seen this circle.
Mark S: Yeah. Actually now it's interesting 'cause the current macro we're in is like what it was when I first started my venture career. 
Mark S: Interesting. 
Mark S: It's 2007. 
Dotun O: 2007. That's 2007. 2008. Yeah. Wow. There are a few things that people have to come to terms with now.
Dotun O: Given some people didn't start their venture career, as long as you they raised money and build business model or even build fund model on the assumption of zero interest rates. Yeah. Which is changing now. Yeah. What are the key things that people need to adjust based on capital allocation?

Dotun O: How you spend money that you are raising, exit expectations and valuation. 

Mark S: Yeah. I think, everything has to adjust. And I think that the best thing you can do if you're an early stage founder is [00:39:00] to not raise money if you can avoid it as least as long as you can. If you can avoid raising money until you've got a solid team in place, do that.
Mark S: If you can avoid raising, and when I say solid team, let's say, three to five people who are super committed and have skills, you need to build something. If you can avoid raising money until you've actually shipped product, do that. If for whatever reason you can't avoid that, and you do need to raise some money in order to pay yourself or pay your team to build something, raise as little as you can to get as far as you can because you're gonna, pay for it in terms of the ownership that you're gonna give up.
Mark S: And I would not optimize for valuation. I would optimize for traction and. A solid understanding of what your business model's gonna be. It doesn't necessarily, it's not necessarily gonna be working when you start, but you should have an idea of how value's gonna get created. What you're gonna build, how you're gonna make money.
Mark S: And I would basically take the approach of raising small amounts of money along the way and trying to get to product market fit and revenue [00:40:00] specifically revenue as, as quickly as you can, and get to some level of, we used to say in, in the Valley, people would say Ramen noodle profitability. Maybe it's ink to me profitability.
Mark S: But basically get to a level where you can pay yourself and pay your team to keep the lights on with revenues from customers. That's what you wanna do as long as you can. And then if you get to that point and you're in an interesting space, there will be people who offer you money that will happen because it's very hard to do with that.
Mark S: If you can do that's that's what's gonna set you up for success. 

Dotun O: You are known in the ecosystem someone who attract very good talent, and that's a very good reputation to have, to be a leader that can attract solid people. What is the frame that you use in recruiting and attracting those talent?
Dotun O: How do you go about it? And secondly, how do you manage many stars in your team? 'cause stars and top talent comes with ego and they come with very good ego. Because and also the culture because they, a lot of [00:41:00] them might not have started with you and they have a different culture from different organization .
Mark S: We could do an entire podcast on this, 
Dotun O: maybe we should do that this time. No, 
Mark S: It's a really good question and we have navigated through it trying things out. Some of them worked, some of them didn't. It's definitely been an evolution and something that I've learned through this process.

Mark S: It's not something that I knew. In fact, this is the one area, if you're an investor, you know nothing about this. So this one I had to learn totally from scratch, especially because up until the point that I started this company, all my jobs had been on like three to five person deal teams of type A people who you don't have to manage them.
Mark S: They just show up and it's oh, I did all the work already last night. I stayed up until 2:00 AM Like when you're working in investment banking or a venture, that's the personality types. And there's very little actual management structure and everything is deal driven. So it's like there's always this sense of urgency and then it goes away and there's a new deal and it comes back.
Mark S: So actually building a team where you can plan and execute over [00:42:00] a long period of time it's been a, definitely a process. And there's been lots of times when we've made edits to the team and we've brought in new people with different skill sets and backgrounds, and it's a very diverse team.
Mark S: We were just to get, we actually got everyone together in Rwanda about a month ago for our all hands offsite. It's like a United Nations conference. We got folks coming from Canada and from the US of course, but South Africa and a couple people who are from Zimbabwe originally, and Kenyans and Nigerians and Ghanaians and someone from the uk.
Mark S: So it's a pretty diverse group. How do I distill this down into something that's useful for a founder? I would say there's a few books that I've read that are useful. One is like the High Growth Handbook, which talks, there's a few chapters from Elad Gil and others around building a team and Claire Hughes Johnson.
Mark S: I would read those chapters in that book. They can say it better than I can. This problem changes at each stage. So in the very, very early days, you need what Paul Graham calls pirates and Romantics. So you want people who are just gonna be, they're like swashbuckling.
Mark S: They'll come in they'll work, they'll just, they're [00:43:00] crazy. And sometimes the culture is weird and difficult in the early days because you just, you need people who are just gonna build stuff and ship it, and they're not gonna come in with a bunch of demands about their. 401k or their options or their whatever it is.
Mark S: Like they just, yeah, like they want, you need to pay them, whatever you can pay them. You need to give them options and you need to let them build and give them, give 'em a direction. And then inevitably, like you get to a point where wait a second, that doesn't work Once you get past 20 people.
Mark S: cause you need to start having people come in who are quote unquote normal and, normal meaning like they've got experience in a given area, but they have some expectations around what their day to day is gonna look like. They want meetings to start on time.
Mark S: They want them to end on time. They want there to be a clear plan. They're, they're normal. And so then to get people who have experience and can operate that way, you need to build a culture that can work with them, which means you need some process. So there's a great concept.
Mark S: Another, this is another kind of Silicon Valley thing called minimum viable bureaucracy. You can find online, you can Google minimum viable bureaucracy. You want just enough organizational structure that people aren't. Tearing each other apart or, calling names and making things personal. So you [00:44:00] need not just enough structure but not so much structure that you stifle creativity and innovation and then you get a little further along, maybe you get to the series B and it's all about the metrics and the numbers.
Mark S: And so how do you get people excited about their job when it seems like it comes down to a number? You need to go back to what was the founding vision and mission and are people still bought into that and are you still very clear about that? So when we were actually in Rwanda, we went back, our mission still very much the same, make it easy for people to prove their identity regardless of their ID card or IP address.
Mark S: But the values we actually revisited and the values which I had set in my living room seven years ago, didn't speak to a lot of people who were in the company. 'cause they weren't with us and they didn't know me back then and it wasn't what was important to them. So we actually did a values refresh, we crowdsourced it, we ended up keeping.
Mark S: One of, the original values. And then the other we, there was two that, that we dropped and three new that we added. And it largely came from the team. And by including everyone in the process during that offsite, when we had everyone together and we actually did two sessions. We had one at the [00:45:00] beginning and one at the end.
Mark S: And then we had a small subcommittee kinda like polish things up. 'cause it's hard to do that with 40 people, but you can have 40 people kind of crowdsource stuff and then you group it and you have a small team that I wasn't on that was tasked with polishing it up. And so ultimately, it's like it's each stage in the game.
Mark S: You have to do different things. You have to have different kinds of people. You have to build a structure that works for those kinds of people at that stage in the company. Some people will be able to graduate to the next stage, some people will not. When they can't graduate to the next stage. You need to find a way to as humanely as possible.
Mark S: Have them exit the company. And then for the people who are staying on and the people who can scale. You gotta give them equity, you gotta pay them as best you can and you gotta involve them in the decision making. And then at some point you have to delegate and step back. And this is probably the last thing that I can say on this topic is that I've learned the hard way is like learning how to let go and let managers step up.
Mark S: And the more that I've done that, one I get more sleep, and two, the company actually [00:46:00] executes faster. And that was very hard for me to learn. But once I had good people in place and we had the right processes in place, I was able to do it. And that's made a huge difference. 
Dotun O: You 
Mark S: are 
Dotun O: right. We need to have another podcast, just on this, I think there's so many things that I can unpack there.

Dotun O: And one of the big one for me is stage appropriate culture. Company think that they just have one culture that fits or even value, that fits all their stage of their life, especially startup that grow really fast and sometimes faster than the founder is growing personally. 
Mark S: Yes, this happens.

Dotun O: You need to then have a refresh of the culture and the expectations I want to end the podcast with. No matter I end with two questions, but I think you answered one of them, or you can easily answer that now. The first one is what have you changed your mind on recently that you used to strong views that you used to have before, that you just recently edited? 

Mark S: I used to think that if we just went and incorporated and integrated in every country in Africa, that we would just, it would, everything would just [00:47:00] work. Like we would just, like if we just get there first, if we just do the hard work first, that success will follow. Now I've realized like no, no.
Mark S: There's been a number of places where we've gone and done the hard work and we've been first, and it didn't work out. And sometimes that was, we were too early in the market. Sometimes that was people. We didn't have the right person in that place. So that's definitely been like a reassessment for me.
Mark S: You talked early about how do you balance the decision about each country? Kiaan Pillay talked about this and he had a podcast he's at Stitch. He's a former smiler. He's the CEO of Stitch. And he talked about how hard it is to scale across Africa. And I think that's something I've really learned the hard way.
Mark S: 'cause it is many different countries. You said something else that I've changed my mind about. I think yeah, I think I've gotten more and more comfortable with this concept of letting go of delegating and. Often what it looks like. It doesn't mean oh, I like, I just don't show up for work.
Mark S: I don't join every meeting or whatever. It's more about decisions are still getting made. People will still come to me, but a lot of times I'll say, [00:48:00] thanks for bringing this to me. I defer to you. they'll say Hey, this problem, we could go A, or we could go B. And I'll say, what do you think we should do?
Mark S: And they'll say I think we should go A for the following reasons. Okay. And what would be the benefits of going B? Benefit B would have this other benefit, but it's got these big cons to it. I say, okay, what do you recommend? I recommend A, okay, let's go for it. So a lot of it is like encouraging people to actually have conviction in their own ideas.
Mark S: Making sure they do the work. 
Dotun O: I think that's a hard place for a lot of. Leader. 
Mark S: It's very hard. 
Dotun O: And it's an evolution. 
Mark S: But actually the most successful founders do it. Yes. And if you don't do that, at some point you, you drown. 
Mark S: And then the organization stifles.
Mark S: 'cause people get frustrated. 'cause you're the bottleneck. 

Dotun O: Yeah. I used to look at it this way at the beginning, you are one of the players and you are actually the star player. You are the striker. Then you need to move to become the captain and encourage other people to play well.
Dotun O: Then over time you move on to become the manager. That, that directs everyone. And over time, you need to become the chairman of the club. And you're allocating 
Dotun O: capital. 
Dotun O: You're like, and you're allocating captain resources. Yeah. And that's how you need to see the evolution [00:49:00] as a founder is difficult.
Dotun O: And some founders could not evolve from the star player to becoming the manager. 

Mark S: And I don't think it's like a set in stone thing. I think it's sort of the challenge of being a founder over a long period of time is like. Can you keep navigating these hurdles and can you do it quickly enough as the market changes? I can't say that I'm successful yet.
Mark S: I can say that I've made it this far, but now the organization has the next set of hurdles that we have to, it's just this ongoing marathon but each mile has hurdles that you have to jump over. Yeah. And this mile you gotta run through a muddy trench.
Mark S: And each part of the journey is a little bit different. 
Dotun O: And it's dynamic. Sometimes you might move from your manager to become the player because your goal has to be scored. Exactly. No, we've had that 
Mark S: happen before. Where maybe the market changes or you need to pivot the business or something.
Mark S: Or you have to change the team size and then I have to go back into playing Yeah. Playing Stryker or something like that. So that's definitely happened. That's why it's so hard. Yeah. It's just constantly changing. 

Dotun O: Last question is, what book are you reading now? 
Mark S: Oh so I just got this book from one of my teammates that I cracked open last [00:50:00] night and I'm about to dive into it.
Mark S: It's called Leaving the Tarmac. . And it's about the founding of Access Bank. 
Dotun O: You don't wanna stop reading that book? I read it. Let it Go. 
Mark S: Looked at it and I was like, this looks interesting that I started. And I was like, wait a second, this is good. So yeah, that's what I'm doing now.
Dotun O: Good. Well done on that. It's a very riveting book actually. I learned a lot from it. Thanks, mark. I was expecting this to be very good conversation and you didn't disappoint and I think Thank you. I'm gonna take you up on the other podcast, on just team and managing culture. 
Mark S: I'm looking forward to it.
Dotun O: Thanks. 
Dotun O: Thanks so much.