Are we expecting too much from African startups?

Episode 227 June 06, 2024 00:49:33
Are we expecting too much from African startups?
Techpoint Africa Podcast
Are we expecting too much from African startups?

Jun 06 2024 | 00:49:33

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Hosted By

Chimgozirim Nwokoma Oluwanifemi Kolawole Bolu Abiodun

Show Notes

Today on the Techpoint Africa Podcast, our host, Chimgozirim Nwokoma is joined by Francis Ogbuka, VP Sales, Zone and Abraham Augustine, Comms & Programs Lead, Norrsken to discuss:
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Link to Insight of the Week: Jumia Group recorded its highest loss in 2019, the year it was listed on the NYSE 
 
Timestamps
00:00 - Intro
02:05 - Zone's decentralised PoS payment gateway
16:01 - The Copia Global story
33:22 - Gro Intelligence's shutdown
 
Useful links
This episode was produced by Ogheneruemu Oneyibo and Crystal-Agnes Joseph
 
Email us your feedback at podcast@techpoint.africa. Visit www.techpoint.africa/ for more stories.
 
Music - Beach by MBB -
https://www.youtube.com/watch?v=dEnQ8dHwDSk
 
Find us on Twitter, Facebook, Instagram, and TikTok @TechpointAfrica
View Full Transcript

Episode Transcript

[00:00:00] Speaker A: Welcome to the Tech Point Africa podcast. On this week's episode, we are going to be discussing three stories, and thankfully we are covering much of Africa. So we have a story from Kenya, we have a story from, well, let's say Ethiopia. And then we have one story from Nigeria. But because you are Nigerians, we are beginning with one from Nigeria. Zone, a blockchain based company, has launched a Pos, a blockchain powered pos. And we're going to be looking into that. What does that mean for the. What does that mean for the company? What prospects lie ahead? Is it even necessary in the first place? And then we're also going into copier global. We've probably spoken a few times about its struggles in the last two years, and we're going to be looking at some of the challenges of building an e commerce startup in Africa. And rounding off with grow intelligence, a startup that we got news of its shutdown this month. This week we are going to be looking into some of the challenges that could have possibly led to it shutting down. With me in the studio, Abraham Augustine and Francis Ebuka. They will both be introducing themselves immediately. So, Abraham, let's meet you. [00:01:18] Speaker B: Well, thank you. I hope this is clear enough. My name is Abraham Augustine. I am a digital economy researcher, but I also work with Norskin foundation in East Africa. I lead communications and programs at the East Africa hub in Kigali. [00:01:36] Speaker A: Awesome. Welcome to the podcast, Abraham and Francis. [00:01:40] Speaker C: Hi. It's a pleasure having me on tech points. As you had already mentioned, my name is Francis. I am a payments professional with extensive years of experience working in the african ecosystem and industry, and I'm currently the vice president for business development at Zoom. [00:02:00] Speaker A: Okay. Okay. So without wasting much time, we're just going to get into the conversation. So, yesterday we got news that Zoon was launching a PoS that is powered by the blockchain. And I'll tell you my first reaction to it. What was this again? That was my first reaction. Right. We have a lot of POS providers, POS service providers in Nigeria, and hearing that one is being launched, set up a few belts in my head. And so we are going to be looking at all of that. So my first question is, given that POS terminals are largely reliable in Nigeria, what benefits does a blockchain powered or decentralized POS payment gateway? What benefit does it bring to the ecosystem? [00:02:45] Speaker C: All right. Yeah, I think I was muted for a bit. So it's interesting. So you've touched on two things. You've touched on pOS devices you've touched on blockchain and I think I'm just going to disintermediate and start with blockchain technology. Our vision as a company, as a technology company is to leverage blockchain technology to more or less build a few future state or decentralized financial ecosystem that provides significant benefits to individuals, to businesses and the institutions that deliver financial services to them. That's essentially what Zoom does. We commenced on this journey for a while. Now we're happy to say we have been the first regulated blockchain company at the Central bank of Nigeria and that we obtained a. We obtained a license from the Central bank of Nigeria about two years ago, in 2022. And we have been leveraging our technology to see how we can provide better efficiency to processing payments in fiat currencies for traditional financial service providers. Now, when I mentioned that, I know that's going to sound a bit strange. When you hear blockchain technology, you're able to relate that with other forms of digital assets ranging from crypto to stablecoins and the likes. So what we've done is more or less, we've learned a lot on our journey. I can beat my just to say we are the first to explore seeing how we can provide better efficiency to facilitate the movement of value between individuals and businesses and between businesses and individuals with the blockchain. So that's that as far as technology goes. And we'll begin to speak about another vertical, which is payments. Now, interestingly, you had mentioned that for POS, the POS payments are very reliable and I agree with you, but they haven't always been this way and a lot for, especially for the players, for the service providers. And you know, the very popular names are having to do a whole lot of work behind the scenes. That costs a lot as well to be able to deliver the services in the way we enjoy them as individuals and businesses that accept payments with bus technology. So what we have done essentially is to say, okay, how do we looking at the payment value chain and the way it is set up, how do we ensure that we can, can provide, develop and provide an infrastructure layer that sort of abstracts some of the complexities associated with processing POS transactions primarily to financial service providers and just allow them to carry out their primary objectives of delivering excellent customer experience and acquiring customers that can enjoy and benefit from this. And that is what we have done. So when you consider the payment value chain, you sort of have frontline providers or aggregators that provide POS devices to merchants. And this could either be a fintech or it could be a bank. But behind all of this, you need to ensure that when a cardholder or an individual decides that they want to make payment through any method via a POS device, that payment can. The funds can move from the payer's account to the business's account, and that process can be facilitated as seamlessly as possible. Now, I've mentioned that a whole lot is happening behind this issue. Ensure that this can happen. We had instances where some entities are saying, hey, how can they probably establish some direct connections in some instances to facilitate this payments and all of that? Traditionally speaking, we know that cash flow can be a problem for businesses, and typically the way the industry is structured, when a business decides to accept payment from you as an individual who has come into the store, what typically happens, and considering how the traditional settlement system is structured today, that business will typically not get value for that particular transaction that they have consummated between real time. They would need to wait for, in some cases for 24 hours before they can get that. That's on the one hand, in certain other instances, you could say that there are reliability issues as well associated with processing those particular PoS transactions. And this would require the providers to establish multiple connections to different banks or to different switching companies to see how they can improve upon this reliability. And then last but not the least, you have dispute related issues, dispute and chargeback issues. So what we have done is, as an entity, first of all, we are strictly a b, two B payment infrastructure company leveraging blockchain technology. We do not acquire merchants, we do not serve businesses, but we instead provide our services to the financial service providers that are doing this to them. And to say, we have a lot of entities today that are operating the POS space, like you've rightly mentioned, that provide these POS devices. What we will do is to operate on the infrastructure layer and, you know, sort of absolve them of some of the challenges that they experience today in delivering quality experience to their businesses and to the customers of those businesses. And that's what we have done. That's our focus, that's our niche, and that is what we are doing today. Some of the benefits we deliver are what we guarantee to our customers is to say, you will be able to, for the financial service providers, you'll be able to directly connect with different issuing institutions. Now, what do I mean by issuing institutions? These are institutions that essentially hold the balances for the customers that come to make payments to use. You'll be able to grant you that direct access that allows you to carry out that payment significantly in enhances reliability via a single point of connection. So rather than having multiple connections to these different institutions, we provide you a single setup that allows you to essentially talk to multiple institutions, building significant redundancy because it's a decentralized network, essentially, and that's how it operates. So you have that. And then we have also been, because we are able to provide real time access to records for these payment transactions, we are able to also facilitate faster settlements to the financial service providers. So these financial service providers, what they do is they give value to the businesses, the merchants, or the agents, or their books. They give them value in advance. When they get value from the institution of the cardholder or the people, that's what's happening. So to be able to facilitate this, it means you're going to have a lot of capital locked in for that purpose. You can't deploy that to any other users. And so it's actually a very expensive business to run. We have significantly shortened that turnaround time in such a way that we're able to provide settlement to these financial service providers with a quicker turnaround time. And this frees up capital that they can deploy to other activities, to other aspects of their operations, or even expansion, if you like that. And then we can see that we have gone a long way to eliminating the dispute problem as well. We've been able to provide intelligence, an intelligence system that provides visibility to both the bank or the institution that the financial service provider for the payer as well as the financial service provider for the merchant has accepted that payment. And with that, we have provided better visibility, and we're able to automate the refund for transactions that would have typically crystallized into dispute. So this is the niche, this is how we view ourselves. This is our focus. This is the efficiency we are provided, and this is why we believe we would be able to take on the market and win. [00:11:28] Speaker A: Okay, thank you for that, Francis. So you briefly touched on chargeback, which is something I'm particularly interested in. We've seen a lot of fraud incidents in the last two years, both for fintechs and for banks. And one of your key propositions is eliminating chargeback fraud. And what I'm particularly interested in that is the vast majority of chargeback fraud is, I mean, it's driven by humans, right. It's not really a technology problem. So how does zone propose to either reduce incidents of this or completely eliminate it? [00:12:04] Speaker C: Okay. Yeah. So I think when you, and if you have a good understanding of what causes this chargeback fraud or friendly fraud, if you like to call it that. It all stems from what you would call a lack of transparency in the way the traditional payment architecture is set up today in the industry that's different from zone. Now, for most payments that have happened, you have service providers, intermediaries, and this could be the switching company, or it could be the financial service provider that has deployed a PoS terminal, or the financial service provider could be a bank or a fintech that has provided a card or any other form of payment to an individual. We sort of operate in a hub of spoke, or the industry traditionally has operated in a Hubble spoke architecture, and this doesn't necessarily grant visibility or transparency in what is happening for a particular payment transaction that has been initiated across these different entities. So take for instance when a payment is initiated on the POS device, it goes to a centralized hub, which in turn is terminated to the institution, has issued maybe a card or if it's an account for that particular transaction. Now, the entity that has deployed the POS device can only see what has happened on its positive device, as well as the entity that's in the middle. And establishing this connection between the other two parties can only see what is happening in its own system per time. And then the entity that has also issued a card or that other method of payment can only see what's happening in its system by utilizing blockchain technology and guaranteeing that we can have replicated records across these different entities. First of all, we provide transparency to what's happening for these transactions. But we don't just stop there seeing as you have blockchain technology on one hand and you have traditional EMV systems, EMV payment systems on the other hand. We have also been able to bridge this gap by deploying a smart technology on the POS devices that is also able to tell us not just what's happening on the transaction processing layer, but also what's happening on the POS devices when the transaction is being initiated or when it's receiving a response. So that way we're able to archive the records for every transaction that's happened on the blockchain. And when we do that, so say bad faith actor goes to their bank to raise a friendly fraud claim to say they didn't get value for a transaction that was successful. Because we've been able to gain knowledge of what has happened in that transaction by providing visibility across the value chain, we're able to auto decline this particular transaction event. And so typically when you would have acquired institutions parting away with huge sums in chargeback for running from millions to even billions is some instances we've been able to bridge that gap by providing the service that sort of initiates an auto decline for this fraudulent event, saving our clients significant value. And that's how we've been able to solve for this. [00:15:33] Speaker A: All right, thank you so much for that, Francis. I mean, I have a lot of questions, but I'm already getting signs that we do not have a lot of time with you. But I mean, looking forward to how this plays out and seeing how much of a difference this can make in the industry. So we're letting you go now. Thank you so much for joining us. [00:15:51] Speaker C: It's my pleasure. It's my pleasure. It's been a pleasure speaking with you, chess. [00:15:55] Speaker A: Yeah. So we are going to be spending, like a lot more time on the two stories we have here. So we have one on copyright global, and we are discussing a bit about this yesterday. A lot of ecommerce startups or companies have struggled in the last two to three years as economic conditions across Africa has worsened. I mean, a large majority of them have been startups, but it's not just related to them. So copiac Global has reportedly shut down operations in six countries after they had started operations in the last two or three years. I think so. First question is that, what do you think are some of the challenges that could make it very difficult to build and also skill an e commerce startup in Africa? [00:16:44] Speaker B: I think this is a question that a lot of us are asking. I don't know that there is one. Well, I mean, your question was whether the challenge is not. What is the challenge? So definitely there's a strong point to be made about the influence of the space or the market in which e commerce or digital commerce is happening. Right. And how that affects whether a company survives or not, whether a business rather survives or not. Obviously, there are other factors, right. A company could not be the right, they could have a poor product. The model maybe doesn't work, maybe the problem that they're. So the approach that they've taken to sort of digitizing commerce is not a great fit. Unfortunately, a lot of what we're going to be, a lot of the conversation about digital commerce in Africa is pretty much going to still be stuck at the speculation level, because even for a place like Jumia, which is a public company, we can see outcomes. If Jumia goes on a say, they want to rein in costs and they are slashing costs here and there, we can see all of that but we don't have any, like, we don't have proper insight other than what you can just gather from observing from externally and making inferences based on financial statements and whatnot. In the case of startups, it's often worse because other than shut off press releases that announce the demise, or when things really get very bad or when people raise a bunch of money, it's very difficult to actually understand. To be honest. Even some of these companies really find it difficult to explain their models, to explain the business. Actually, if you talk to some companies and you're trying, I mean, there's the part about a nice story about how we're digitizing commerce, and I get that that's it in narrative, but from a business perspective, it's often not very clear, but it's not something that we usually pay a lot of attention to. Unfortunately, until something happens that is not good news, right. Then it becomes okay, people start asking questions. But personally, I think the biggest factor regarding commerce, digital commerce in Africa, especially when it's not, when you're not selling like soft items, when you're actually selling physical stuff, is that a lot of the market is still struggling under weight of poor consumption or poor consumer power, right? So people simply do not earn enough to justify, I don't know if you call it convenience, actually, right. So there's not been a proper connection between what does convenience really mean versus, especially when it has to do with everyday items that in this part of the world is already so broken down to like the smallest minimum. People talk about like the satchetization economy of whatnot. So when you have things that are really broken down, then ultimately what it means that the margins are very, very tiny per unit, right? So if you try to think about, okay, how do you make this work as a business and you want to do this for mass consumption, then it's very difficult. I think a greater chunk of the problem tends to lie within the fact that people just don't earn enough money to make some of these things work. Right. That's, it's not the only problem. I think it's not, it's something that is still, it's very significant. It's not obvious. Again, it's not really the only problem. And in the case of copier, it probably is not the reason why copier, you know, had to, had to struggle. There are there all sorts of things. There are things like growing too fast. There are things like, was this, you know, is this digital commerce really going to be something that, quote unquote union unicorn scalable. Does he really have a path to becoming a billion dollar company? Are we really going to create a billion dollar entity out of people, you know, shopping for. For. What's the valuation of MTN? [00:21:31] Speaker A: MTN, I don't have that off the top of my head, but it's definitely more than a billion of those. [00:21:38] Speaker B: Yeah. So because MTN is listed at. I mean, MTN is a ten point something billion dollar revenue company. That was in 2018. It serves pretty much a consumer market. Right. I think MTN does not have a market capitalization of up to 10 billion, even though it's revenue across the whole group, which is not just in Africa. [00:22:09] Speaker A: Yeah. 7.9 billion. [00:22:10] Speaker B: There you go. So MTN is an $8 billion business with a revenue of more than 10 billion. Right. So. So when you look at some of these things, um. Look, M ten is a. M ten doesn't just. I mean, I think they start. They sold their Afghanistan business, if. If I'm not mistaken. But it's not just an African doesn't just have operations in Africa. It's not just sitting in one country. It's not copier. That is in Kenya. It's not any one of those. Any one of these, you know, e commerce companies. So one question that really needs to be asked is, maybe this is a crisis of expectations, right? If you're expecting $1 billion outcome and the market is telling you that, I'm not sure I can give you $1 billion from, you know, from trying to sell food or when a lot of people still basically don't care about your new mode of delivery, it doesn't just appeal to people. The environment is not just. Right. So there are lots of things that could contribute or that contribute to the failure of e commerce generally. But I think, again, it depends on what perspective. If you look at this and you say, okay, e commerce businesses are failing to actually be unique, then maybe there's a structure. Strong failure story there, right. But maybe if we're saying, okay, you know, that we having. Is there a viable path towards e commerce businesses that are valued at 5100 million, 200 million, I suspect, right. That we will maybe not be having this sort of conversation because now you have businesses that are a bit more right sized from a valuation standpoint. So. But when you begin to drive towards these huge ambitions, then you begin to run into some sort of structural problems that, because you're in a market that has a very low purchasing power, those things, they magnify the market, basically acts as a magnifying force on the structural defects. Say you raise a bunch of money, right? And this could be copier, this could be anybody else. Again, a lot of this is conjecture because we're not sitting inside, we're not KPMG, we're not with people who are administrators and who are having to go through the whole company's operations and identify what works, what doesn't work. But say you start this ecommerce company and at a certain level your unit economics work and you're actually doing well, maybe not profitable, but there's a path towards this becoming a sensible business that can run on its own, that can do very well, probably get listed locally, but then you sort of get an infusion of capital, you know, and this capital is priced in USD, but figuratively and literally. Literally because you raise the funds in USD, figuratively because returns are expected to be generated by a foreign. It's either you get acquired, a grand merger, or you list not in your local stock exchange, because that would absolutely crash. Your local stock exchange does not even have enough liquidity. I mean, what's the market cap of the Kenyan Stock Exchange? Probably less than 10 billion thereabout. I'm not sure. I'm not sure. Anyways, that was shooting from the heap. So when you have all of these kind of factors and then you switch from doing a hundred million dollar business and now you're, you're running into a 1 billion, $2 billion business, you have a, you begin to make some mistakes that would not have been terrible, would not have been business defining if you were smaller, right? But because now you're bigger, you're just at a much larger scale. So everything just begins to magnify itself and maybe begins to happen exponentially. So this is maybe one of the questions that we really need to start asking ourselves, both from invest investors and investment perspective. I'm sure that people are asking themselves this question, right? But then I suspect that a great deal of this is not necessarily whether or not you received venture funding or whether or not unicorn, a great deal of this is really just down to the fact that, look, from 2021, even while people were still raising record valuations in Africa, something had changed in many african countries, you know, there was a. And on that trend, something had changed economically, things were beginning to look better. Look, if we were in, if 2021 was the same economic environment as the same economic indicators as say, 2012, 2013, maybe we'll be having a different story. Right. When you had a lot of african economies still on a very positive growth trajectory, broadly speaking, and you had the sort of maturity of companies that we had in 2020, the sort of capital in 2021. But you had the economic environment of 2012 where things were at least looking up across the continent. I suspect that the conversation about e commerce will be different. You know, so maybe things changed, but we didn't realize that early enough. And as a result, we didn't adjust early enough, you know, to those realizations. Because if people just don't earn enough, they just don't spend. They can't spend enough. And there are lots of other things that you could be doing very well. But those things, people. You know, the funny thing about economics as a subject is that it's essentially a type of quantitative psychology, right? Because you're ultimately trying to understand how humans will behave, you know, but then the more stable quantity or the more stable variable in that equation is resources. So resources can change. You can sort of predict all of that. But when it comes to how human beings sort of react to changes. Oh, so I don't live. Yeah, I don't live in Nigeria. I used to live in Nigeria. I don't live in Nigeria now. Like four months ago, six months ago, I could buy a one week call plan for 100 minutes, for 5000 naira. So I can call my family back home, I can call friends. Normally, 100 minutes. MTN increased that thing to 10,000 naira for 50 minutes. Now, I don't make those calls. Sometimes it's a very funny thing. Now I don't make those calls as much. I can pay that 10,000. But subconsciously, it just doesn't seem that valuable anymore to me, you know, whereas maybe I don't want to do WhatsApp. I want to just speak to somebody at this time. Now, I'm a bit more willing to wait. Now, MTN is doing this because obviously nigerian revenues and whatnot, it's a nigerian MTN number. But I'm not in Nigeria. I'm outside of Nigeria. I'm pretty much not affected by how the nigerian revenues are going up and down or whatnot. Like with whatever variables MTN is using to make that decision. But for that roaming product, which affects me because they are doing a revenue thing to sort of, you know, maybe they want to build up revenue to sort of, I don't know, bulk up what they are losing to the economic environment in the country. They've done this across board, and now it's affecting me. That uses an MTN Nigerian SiM card, but not in Nigeria. And I'm reducing my consumption. And I don't think MTN accounted for that. When they were doing that because they were doing this for people in Nigeria. So it's just a very, very interesting place where you have all sorts of variables, and if you don't pay a lot of attention, and even if you do pay a lot of attention, you can miss things. So I guess what I'm trying to say is, why is e commerce not looking like it's succeeding in Africa? That's a question that we're going to really need cooperation from the founders, from the investors to really be able to answer. [00:31:09] Speaker A: True. [00:31:09] Speaker B: And this applies to pretty much anything that you want to think about. [00:31:14] Speaker A: Yeah. Okay. So, I mean, there's a few things to take away from that. I think it was Emeka Okoye who said, we didn't really do e commerce in Africa because the market demanded it. It was a case of this was happening in the west and how we just do it as well in Africa and see what happens. And so we had all of that, all the early guys, Kunga, Fahri, Jumia and the likes. But like you mentioned, there's a whole lot to be said for the economic environment that they're playing in. I mean, Jumia, for example, had their highest loss ever in 2019, just after the. Just after they listed on the Nyse. And since then, they've significantly cut down losses. However, they are not yet out of the waters. Right. There's still some problem there with their long term sustainability. So I think there's a lot to be said for that. And then are we flogging a deadhorse? Are we expecting too much from african startups? I think that's the question we should probably start asking a lot more. Are we expecting too much? Because like you mentioned, guys like MTN, MTN is like, I think its top ten largest companies in Africa just by revenues, and it is barely making $10 billion. So are we expecting too much from startups in Africa? I mean, I was just checking earlier, and then the largest company in Africa by revenues is an oil company, and its a 60 plus years country like company. So are we really expecting a lot more from these guys than we should be? I know, I know there's a conversation about technology helping to scale, but are we expecting a whole lot? I mean, if you're an investor listening to this, we should probably have a conversation about this. If you're also a founder, how is this sort of tempering your expectations around your projections? Are you, are you revising some of your projections as a result of this? By the way, the stat I mentioned about Jumia's loss was provided by Intelpoint, and you could go to the website, Intelpoint CU to check and get a lot more about that. So, yeah, we are moving on to grow intelligence. And earlier this week, I think it was last week, there was a report about a possible about it shutting down. And I think this is interesting and important for a number of reasons. One would be grow intelligence is not a two year old startup that suddenly ran out of money. It's a company that was founded in 2012, if I'm not mistaken. And it was built on a premise that we could help get data for Africa primarily. And I don't know if you've done any sort of work, either in business or even as a journalist, getting data in Africa as hell, you'd. There's a whole lot of struggle with getting data. And then you also need accurate data. And just in addition to that, you also need up to date data. So we definitely need all of that. And there was also the infusion of artificial intelligence to make sense of the data that they were collecting. So, yes, the primary position was for the agricultural sector and then in the climate tech space. But like I mentioned, growing intelligence is not. It's not an upstart that is just coming out from nowhere. They've been around for a while. So what could have gone wrong? I mean, earlier you mentioned that a lot of what we are discussing is just based on conjecture, and that's correct. But as an outsider looking in, we heard quite a number of stories. So what do you think could have gone wrong at grow intelligence? [00:34:49] Speaker B: Yeah. So before I enter grow intelligence, let me just sort of double pedal to the last conversation we just had very quickly, because you had mentioned something from Emeka. Okay. Respect him very much about how e commerce in Africa was not done because the market demanded it, but because it was something that was happening in the west. I'm not sure that the market always demands things before those things come to the market. I mean, you know, was e commerce demanded in the west before it was. [00:35:21] Speaker C: Built in the west? [00:35:22] Speaker B: I mean, even credit cards and debit cards. Did anybody go out and say, you know what, we actually need a way to put our banking information on a piece of plastic, and then people created it? No, I don't think so. So it's perfectly fine that things come to the market before the market goes out and says, we need XYZ. The question is not whether e commerce is demanded by the market, but whether the market is willing and able to support the pro. Again, e commerce is pretty much a channel, a way of delivering commerce. Right. The question is, does the market want convenience and all of the other things that e commerce does for the customer? That's the actual product. The e commerce, a particular model, whether it's b, two b or b, two c or b, two whatnot, is a simple channel. But now, to come back to your question about grow intelligence, I said this to you yesterday, grow is one of those companies that we heard about. We know there is a grow intelligence. We hear about them. That's pretty much it, right? We don't even. As a journalist, when I used to write for Decobah, it wasn't one of those companies that was always on my radar. It always was like this mature company that was doing very cool, cool stuff. And to be honest, it wasn't a very african sounding company. Not because it was not Africa. He was focused on Africa, obviously, he was collecting. But grow is one of those companies that the narrative and the storytelling was global. It was a global perspective. Africa was definitely a huge focus where it started. A lot of the work was being done. But you could do an Internet search and you see articles like, bro is fighting world hunger. That's the direction you see, you know, now the question about grow, and this makes it a bit very difficult to talk about grow, right? It makes it very difficult to talk about grow, because we don't know. Personally, I don't know what. What types of data grow intelligence collected. Like, I'm not sure how disaggregated it was. I don't have any real insight into the product itself. It's one thing to say. It's one thing to say, okay, we collect and aggregate data. What types of data? How disaggregated was that data? To what degree was it broken down? Did it include proprietary data from private sources, or was this just an aggregation play of all publicly available datasets? And then you build an algorithm on. [00:38:18] Speaker A: Top of all of that just to provide a little context. They reportedly collected data from governments, I think including the us government. I'm not completely certain they collected data from governments, private companies, like you mentioned, publicly available data. And the focus was usually on climate tech data and agricultural data. But like you also mentioned, just for us who are outside, there's no clarity on the exact kind of climate data, for example, or agricultural data that we are collecting. So. Yeah, you can go on. [00:38:50] Speaker B: Yeah. So Columbia magazine had an article out where they. Where, you know, they discussed that grow is like the largest agriculture and climate related database, which is also a different point. At some point, grow was agriculture. Agriculture at some other point, it was climate. So it felt like it wasn't sitting in any one of those boxes. He wanted to do agriculture because you can yield a lot of data from that sort of work, but then it's also climate because, like, climate and agriculture interrelated. And climate was a very, it was a good story. It was a very big narrative. So if you sort of wave the climate narrative, you, you're positioning yourself properly, both from a business and marketing perspective, but also from a company perspective. So essentially, this Columbia magazine article was done as early as, or as late as last year. This was late last year. He mentioned that Gro has 170 data sets from public and private sources. And even Sara Menka said, even after you organize all of that, there's still a ton of missing data and all of that. So, but again, we can skip all the conversation about the technical and product details of grow intelligence and exactly how they managed to organize and collect all of that data. That's back breaking work. What's tough, and Emeka Jenny has also pointed this out when he made that sweet, that got a lot of attention about grow intelligence, you know, was that maybe grow intelligence found it a bit difficult to commercialize the information that they had. And I told you this when we were speaking yesterday evening, I think one of the gold standards when you think about business data applications is Bloomberg. Like the Bloomberg terminal, not the news, Bloomberg, the Bloomberg terminal. And I think at this point, it's very intuitive to people. Right. Why at least a significant degree of Bloomberg success. Yes, it creates a lot of data. Yes, it's the finance world, which is a very, very data heavy, intensive space. But also it's essentially become like a tool that allows people function in their jobs. It's not an assistant. It doesn't just make your job easier. It doesn't just make it nicer and cooler because you're using that, too. I mean, it does all of those things, obviously. Right. But it's pretty much become integrated in a lot of the workflows of a lot of the top companies. And Bloomberg even benefits from that. Because you use Bloomberg, it gets the data, and then to get the data, you have to use Bloomberg. And so there's this reinforcing loop around Bloomberg itself. So I think that's one of the things that really makes, that sets that thing apart. And it's also the challenge that data applications need to also sort of figure out and try to resolve. Personally, I'm also working on a food systems logistics data sort of play product thingy. And it always comes to that question, right? Is anyone going to wake up and say, for me to do my job, I need to use this tool? You know, because it's only when they, when they have to use the tool to do their job that it makes a lot of sense for them to sort of be actual users. Otherwise what happens is you begin to devolve into a consultancy. And the AG Funder magazine that essentially announced grey intelligence shutdown had already done a piece some months back, you know, when they talked about some of the struggles, and it essentially came down to that. There's a sentence somewhere that I'm paraphrasing, you know, that says something like, green intelligence was essentially doing consultancy projects, which is nice. It's a great model on its own. If you're a market research company, it's not maybe the best model if you're a technology product company, because a market research company, you know, can say, okay, we have 1234 clients. They give us a project, we do project costing, we submit a brief, we go all, we walk through all the sales cycle. We get this project for four, five, six months. We go out, run, do the market surveys, do research, collect data, and we deliver a report, we deliver a dashboard. We present the outcome of that project whichever way we want to present it for technology product. Can you imagine Bloomberg having to take on the consultancy for JP Morgan? And then they'll go out, they'll do like a six months project, and then they'll come back and give it to JP Morgan. I mean, that could potential, that could be a model that they could, you know, Bloomberg data could have, but now it's a technology product. Determiner itself now does not, is not unique in itself. Right? You don't need an actual Bloomberg device. You can use your laptop, you can use your phone, but the software is now sort of integrated into people's workflows. If I was a trader at some hedge fund or whatnot, I did not just rely on Bloomberg for trade data and trading information flows. I actually chats with fellow traders on Bloomberg, on the Bloomberg chat function. You know, I can trade jokes. And it's part of my work, too. It's almost like how you go to work as a journalist. You open your computer, you go to Microsoft Word or Google Meets, or whichever word application that you Google word or whatever word application that you use. It's part of your workflow. So that's it. And that's the big commercialization question when it comes to data products. You know, again, from outside, I don't see that grow had that thing figured out yet, which is very disturbing. Right? It's very disturbing. [00:45:08] Speaker A: That's just going to cut you in. Yeah, it's disturbing. And I think, I mean, it has me thinking right now, we've seen companies with similar models, not at growth scale, but they've also experienced similar struggles. So, I mean, just like we discussed with copier, are there certain business models that we should start rethinking in Africa, or probably our approach to them? Should we, should we really start rethinking some of these conversations? So, I mean, we are running out of time, but can you, in two minutes, just a lot of what we've said today has been, it has pointed to the need for proper postmortems whenever companies fail. So can you 1 minute. Look, I've been told I have 1 minute now. So in just 1 minute, can you just speak to the need for postmortems by people who were in the arena, as opposed to just random opinions by people who did not really have visibility into what was going on? [00:46:09] Speaker B: We definitely need postmortems, and we don't just need post mortems. We need honest, raw. I'm going to put this on the investors, not just the founders. Right? Running a company. Building a company is a very emotional thing for founders. So maybe they will not be in the emotional head space to really talk, but people that are around the company, maybe not the CEO and the founder, maybe people just below them, operations people and investors, people that commit capital. It's imperative. It's imperative that these post mortems are not just, again, Africa is a very small fish in the whole venture capital ecosystem. If you do your post mortem for your small $10 million fund and you keep it inside, maybe it gives you some advantage. But the LP's that fund, VC's generally, if they don't know what is happening, that's your small $10 million fund. Who will you give money? Who will you show that we need those postmoderns? Not just to know, yeah, not just to know what went wrong. We need it because that sort of transparency enhances how everybody collectively makes better capital allocation decisions, which goes back all the way to the LP's, because LP's can learn that these people are learning. And hopefully we begin to see more investors that don't just do this. Some of them do it internally. And it's a struggle because our funders are notoriously closed off, but more people should be doing it publicly. [00:47:56] Speaker A: Yeah. Thank you so much for sharing your thoughts on this. I think we could have a longer, more extensive conversation on some of the subjects that we've discussed today. But I mean, that could probably require a two hour conversation, the way I see it, or even more than that to really dive deeper into all of this. But yeah, thanks so much for joining us to review. Yeah, thank you for everyone who has stayed up to this point. I think this has been very long. So thanks so much for staying with us up to this point. You could always go check out other stories on the Techpoint Africa website, www. Dot techpoint dot Africa. You could also follow up with our newsletters Tech Point Digest, equity merchants and the modern workplace. And you would always stay updated on happenings in tech across Africa. Last but not the least, pitch Friday comes up next week. Friday. And basically it's for early stage founders. If you are an early stage founder and you would like a place to meet with fellow innovators, get to share ideas, also pitch your startup or whatever it is you're working on. Thats the place to be for next week. Im going to be looking at how to create a go to market strategy, which is very important considering the context of the conversations that weve had today. How do you prepare an adequate go to market strategy? So yeah, thats not a conversation you want to miss out on. So once again, thank you so much for staying with us and see you next week. [00:49:27] Speaker B: Subscribe our channel.

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