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Fostering Entrepreneurship: A Conversation on Ecosystems in Africa- Intermission

• Push Venture Capital • Season 2 • Episode 14

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Have you ever wondered what it takes to build a thriving entrepreneurial ecosystem in Africa? Today, we reconnect with our old friend Tesh to uncover the secrets behind MarketForce's impressive journey. Tesh shares his insights on the critical need for patient capital and supportive ecosystems for founders, drawing fascinating parallels to the early days of Silicon Valley. We stress the importance of allowing entrepreneurs the space to grow, adapt, and learn while highlighting the urgent necessity for local investments and ramping up M&A activity in Kenya.

In regions grappling with high unemployment, how can we make entrepreneurship an appealing path? We tackle this head-on by examining the powerful impact of local role models and success stories. From the significant role of startups in job creation to the essential support systems required for entrepreneurial success, we discuss it all. We also explore the importance of skill development and a strong value system, shedding light on how early employees can make or break a startup. Through these discussions, we reflect on the broader societal benefits of nurturing a culture of innovation and enterprise.

Finally, we embrace the power of honest conversations. Expressing frustrations about the lack of authentic voices in the entrepreneurial sphere, we call for more real stories from those who’ve faced the trenches of building a business. By fostering open dialogues and celebrating diverse entrepreneurial motivations, we emphasize the importance of freedom of speech and learning from both successes and failures. Whether you're aiming to start a small profitable venture or dreaming of creating thousands of jobs, every entrepreneurial journey is valuable and worth celebrating. Tune in to hear how diverse paths contribute to a robust and vibrant ecosystem!

For more information on Push visit www.push.africa

Tesh Mbaabu:

Hey Ram, it's been a while. How are you? Welcome man.

Bramuel Mwalo:

Thank you. How are things?

Tesh Mbaabu:

Things are okay, we're all right, yes, I'm around. I'm around most of the time actually, so I hope this is a good surprise yeah.

Ben Singh:

I was told that you two know each other from the days at the University of Nairobi. Yeah, KCAA.

Tesh Mbaabu:

It's been a long, long time. Yeah, Bram was supportive early in our journey, so it's good to see him.

Ben Singh:

That's why we have, and you told me it's been a long time since the two of you have met.

Tesh Mbaabu:

Yeah, we haven't connected in years.

Ben Singh:

Yeah.

Tesh Mbaabu:

At least four years. Five pre-COVID yeah, probably that's how we talk about COVID these days, pre and post COVID Great. Yes, it's good to Great. Thanks for bringing us together. You're very welcome.

Ben Singh:

From, just as a feedback or basically as a thought process of where we are actually. We had spoken about the whole journey that Tash went through, how he built Marketforce you know yourself. It started with Mezzosi, it turned into Marketforce and then how that closed down and the next chapter started. And this is my next podcast guest, by the way.

Bramuel Mwalo:

So I thought it would be good to just connect the two of you, because one of the thoughts, one of the things that all of us are interested in is how do we build a better ecosystem?

Ben Singh:

yeah, so I think it's interesting to just hear again your thoughts as thoughts, as well as Pramod's thoughts on what can we?

Ben Singh:

actually do in order to make it better in Kenya for founders. One of the points that Tesh mentioned, which was very important, is to have capital available as well and have more M&A activity amongst the bigger corporates, because the way they do it, I'm told, is mostly through their own incubator, which then kind of forces a founder's hands to run through that incubator even though there might be a five-year-old company who already knows what they're doing.

Bramuel Mwalo:

So maybe, what are your thoughts?

Ben Singh:

on that.

Bramuel Mwalo:

I think we're going through a learning process and we need to be patient with ourselves, because you find that, africa, we are treated unfairly when it comes to our process of learning. There's very little investment in research and development, very little investment in training, and training is not about putting a bunch of entrepreneurs in a class and teaching them bookkeeping and financing and fundraising and all that stuff.

Bramuel Mwalo:

Entrepreneurship can't be taught in school and and that culture has to be allowed to happen. People have to lose money and, trust me, the US is a mature economy. You're talking about companies like the crypto company that went with people's close to billions of dollars, all that stuff, and there are some that are fraudulent. There are some that are just a natural progression of learning, which entrepreneurs have to go through that journey and, as a matter of fact, the younger entrepreneurs need to be supported more, because then you're talking about three or four cycles of learning by the time you're actually getting a business that will become something. It's not a matter of having a bunch of investors who are on your neck to perform and you have very little time to even do your sales, to hire the right people, because the moment you touch that money is a clicking time bomb. You said you will do this. You said you will do this. So there's no time to grow. There's no time and as an industry, even the VC you know the people investing in Africa. They came up with this thesis five years ago, 10 years ago. They're testing their own thesis and the thesis was pump money into 10 companies, make sure two work. It's not based on any economies.

Bramuel Mwalo:

So right now, I think those data points are becoming clear in terms of what does the market really look like? What does the government affect these things? What are the policies changing Big companies that basically have billion dollar balance sheets. They still take time before they do proper market. When the campaign selection comes, the market changes. The local entrepreneurs have been able to survive that Seven years. Eight years. You've built a business from nothing. You've been able to push it seven years and create some type of even employment for 100, 200 people. I think there's some level of reality, and the reality is not about turning eyes on entrepreneurs who have tried to do something and probably it didn't work out as people or as the shareholder expected. If there's fraud, yes, deal with the fraud. If there's mismanagement, then, but there are just some things where entrepreneurs need to be allowed to learn. That has to grow that has to mature.

Bramuel Mwalo:

It's part of the process and we cannot trash it.

Tesh Mbaabu:

In fact, to put it into perspective, what he's talking about is in the markets that have a mature VC ecosystem, there was money in the 90s. That was their first cycle, Then in the 2000s and then in the 2010s and in 2020s. That's four cycles. Africa the first VC checks in Africa maybe 2014, 2015. Even later, Even way later, that was the first VC checks in Africa maybe 2014, 2015.

Bramuel Mwalo:

Even later, even way later that was like first checks, first checks.

Tesh Mbaabu:

Yeah, first checks.

Ben Singh:

And then everyone came at the same time.

Tesh Mbaabu:

Yeah, then 2020 is when we started seeing so, in a little sense, like five years, right. So the first cycle has to happen and if you think about even the successful companies we talk about globally, they were in probably the second cycle, in the 2000s, is when they really picked up and we can see how them becoming big, they're able to support the next generation, do M&As and all these things. Our first cycle is just trying to start to do those things. In fact, the M&As that are happening, the massive ones are companies in the West acquiring companies in Africa because they have a playbook. So I agree with Bram 100% the ecosystem needs, it's time and people must respect the process. Yeah.

Bramuel Mwalo:

And the thing about this whole journey of building businesses there is a painful difference between investment and entrepreneurship. If you want to make money quickly, don't invest in startups.

Bramuel Mwalo:

It doesn't work and if you basically are not an entrepreneurial investor, don't touch an entire startup Because at the end of the day, both of you are going to learn there's no playbook of how to get a startup from zero to a billion dollars. I know we are subjected to building pitch decks that have journeys that show that, but the reality of them people are bullshitting each other out here with those things because you need to close. If you don't close, you won't make payroll and and then you have, you know, a set of people back of your neck. You have targets and stuff, so it's a survival where there's no playbook. You know, test, test. Tomorrow we'll say, oh, I've raised X amount. And people go like, yeah, go test. But we'll go like, ah, you have any idea what actually you have to go through to get that. Then, once he gets that, then the gun's already turned. He has only a week to just celebrate that, enjoy with the team, but after that A week, isn't that a long time?

Ben Singh:

It's a long time. A week, even less.

Bramuel Mwalo:

You just have to quickly turn around and it's like okay guys, Okay, so immediately, either you've been given a chairman or a CFO who is not aligned with you. You have to find a way of making what you think and what the metrics and the parameters of the business is. If you want to be a millionaire or a billionaire, if you're not an entrepreneurial investor, don't touch a startup, Because a startup requires maturity Half the times. As founders, we are people who try to figure it out. We don't know if it's going to work 100%. We have the conviction. We then build a network of people who can advise us, who can invest in us, who can guide us as time goes by. But all of us, we're all trying to figure it out. So, and then at some point, then some of these things work, some of these don't work.

Ben Singh:

Now the role of governance.

Bramuel Mwalo:

somebody will say okay, what is the role of governance in this whole stuff? Let me put it from a macro point of view Regulation. Take, for example, regulation. Do you regulate before you innovate, or you innovate then you regulate? I think it's a balance and that balance needs to always alternate in terms of if you start with an egg, you will also need to allow the chicken to hatch the egg later. If you start with the chicken, then you have to allow the chicken to hatch the egg later. If you start with the chicken, then you have to allow the process of incubation of the egg. So, at any given point, it's an alternating process where the governance should allow for learning, and not in the sense that there's no flexibility. If this is the direction by which money was invested with and you realise it doesn't work, can you change direction?

Ben Singh:

I was involved in business.

Bramuel Mwalo:

To just narrow down to the point and give a practical example In 2016, I was involved in starting a very good business in San Francisco. We came to Africa, in Rwanda, in 2017, launched this business, Came to Kenya later 2017. Very successful business backed by a wealthy family office in the US, abundance of capital. So we moved quickly. Because of either the network I had and things, we built a robust business. At some point we needed to scale. Because of the pressure that came with the capital. We got a a $150 million trade line this $150 million trade line.

Bramuel Mwalo:

For us to sustain that trade line, it meant that we had to expand our business rapidly because the cost of capital was pretty high. Now that meant we started acquiring in terms of for you to close a client, that means you have to alter your playbook. There are certain due diligence things. Probably you may not follow through because you're like okay, we need to close so we can compromise on X, Y, Z and stuff. Now the danger with that is then we started seeing things in the business we never used to see, like fraud started coming into the business because we are under pressure to acquire that book value Like, dude, you have to close. You have to close your targets, move from a million dollars a month to five million dollars a month. It becomes a different conversation Now. It came to a point where now we, for the business to survive, we needed to change from a financing business to a technology company. That gives us the mandate to basically solve this risk.

Bramuel Mwalo:

That by itself is part of the reason why that company is not as known, as it is still operating but is not as whatever. So I think at some point we all face those things and I think the ecosystem just needs to be allowed to mature. Let's put up the right governance structures. Let's put up a supportive it's like having a child. You can love them, you can give them everything, but you need to allow the child to become.

Ben Singh:

It's always like looking at regulation right over. Regulation, from my point of view, is always harmful. It's a bit like the helicopter, mothers, when you're talking about children, because you can't do everything, and typically what happens when you over-regulate an economy as well is you're strangling the economy more, because you're putting into chains the people who actually want to contribute value and want to create things, while the people who are wanting to misuse the systems, they will always find a way of how to do it.

Ben Singh:

Yes, but now maybe asking one different question. Now, briefly, the two of you you met under specific circumstances, right At some point of like an incubating or entrepreneurial ecosystem part. How do those play into what we aim at creating here in terms of an ecosystem? How important are they? And again, how do you both feel about what? Should they do better to actually prepare entrepreneurs for?

Ben Singh:

what they're really seeing, because there's that disconnect. You know, like sure you can teach certain things academically, that this is roughly what you can expect. But then actually going out there and you know, as Mike Tyson would say, getting punched in your face is a very different story.

Bramuel Mwalo:

So what do you?

Ben Singh:

feel can be done in order to make it at least more understandable for the people who are out there who want to start a business.

Tesh Mbaabu:

Yeah, I think I have something just small to say that's really practical. What happened in our case when I met Bramwell he was heading innovation at one of the universities and I'd call it sort of an inter-university competition or award for entrepreneurs and I was among the entrepreneurs at that time was being awarded and we emerged top in one of the categories I think it was a technology category and we got about $1,000 then as the prize that the university was given.

Tesh Mbaabu:

I think such initiatives are really good because what they do is which, for lack of a better word I'd say they make entrepreneurship sexy, which is important. The reason it's important is because I don't think there's a greater tool, given the unemployment rate in our continent. I don't think there's a greater tool for I mean you're married. Now, right, yeah, right, yeah, Right. So um entrepreneurship needs to be. So we see entrepreneurship today and our parents.

Tesh Mbaabu:

If you think about it, like if you told them you need to be an entrepreneur. Like what is that? You know? Um, but right now it's. It's. It's called a creator economy. Like, you're doing your thing you can is appreciated because of the impact it can have. Uh, when you have companies employing 50 000, 100 000 people, that's massive impact. But the only way to achieve such outsized returns is building setups. There's no other way. There's no like. It's a great point you're making because you know we had this event with Anand Ryan one of MenzoBets who came from India to visit us here.

Ben Singh:

And what he also kind of resembled was that Indian startup ecosystem, which again is further ahead of us, right. But there was one book I read as well about that startup ecosystem, which again is further ahead of us, right. But there was one book I read as well about that startup ecosystem which said what had to happen as well for that to kind of come about. Was that the mentality of Indians and you know, indians are very they kind of raise their children, go to university, be a good kid, perform well academically, get a well-paying job. That was the old kind of mentality. Now it's become more acceptable to actually build your company, start a company and then, you know, get success that way because, like you're saying, it's become sexy.

Bramuel Mwalo:

People are looking at entrepreneurs again and saying, hey, these are the people who are bold they're going out there, they're building something you know they're employing people?

Tesh Mbaabu:

Yes, absolutely. And if you think about why it's now practical, is you have, I'd say, the first age of entrepreneurs, local entrepreneurs in Kenya who we can look up to as a generation, and I can say look at James Mwangi, who's creating the most jobs in this country, look at Safaricom. How is this founded? So there's that first generation of those traditional businesses, role models, role models, Role models that have created real massive impact. If you look at Cellulant, for example and at least now there's examples and us guys are trying to create the next generation of such. So I'd say top 25, that award was called top 25 under 25 entrepreneurs and being, uh, one of the entrepreneurs honored by that just created a platform to to really build um, to really show that we're doing something that can be important. You know.

Bramuel Mwalo:

So I appreciate that and I'm I'm glad that we're actually talking about that my belief in some of these things and there are different reasons why we all are starting a startup, and not all reasons are juristic, Like we are not always trying to start for good. Some people are starting these companies because they have no alternative. They need a job and they will do anything to get a job.

Bramuel Mwalo:

Some people are just doing it because it's cool, and the moment it starts being a headache they're like hey, dude, it's never that serious and that's it. And some of us for me, my inspiration is I have this obsession of trying to contribute in people's lives In one way or another. I will try and do something, and Tess has his reasons and we all have our reasons. Of course, there's what we say because of the marketing and communication, the quora.

Bramuel Mwalo:

The official communication the official communication that you have to stick to. But at the end of the day, there is this personal compass that drives you to do what you do. That's one that simply is the life of a nation, Because that's what actually before even there is a government strategy of GDP growth or an economic outlook, whatever, the spirit of a nation starts with the inspiration that exists within its people. If that thing is messed up, then it doesn't matter what kind of policies or structures that you have, it's not going to work. If the young generation is inspired for the right reasons to build, they will build. People will basically go on the road and build those roads for their meaning, because what motivates them. But if a bigger percentage of the population is inspired by hunger, you can imagine the kind of stuff that will begin to happen. That's what is happening in the country, because most of the people who can get jobs, entrepreneurship, is the only next alternative that comes with it. So that's level number one inspiration. What's inspiring? Growth of startups? That's one.

Tesh Mbaabu:

The second level is the level and as much as we're talking about investors and allowing the ecosystem to mature.

Bramuel Mwalo:

The entrepreneurs have a responsibility to develop themselves, not just in terms of skill but value system and in that sense in the sense about skill you see something you can go, be taught, be mentored, be coached and all. But value system can't, can't, can't be. Then, in addition to the entrepreneurship, is the entrepreneurship support ecosystem, which is the employees you end up staff and your first employees are the people who are either going to make you or break you, and I've seen both sides of the divide. You can hire somebody today and they will be the beginning of your problems, and you can hire somebody today they can be the beginning of your success. There are some employees who will walk from hell. There are some employees who will be angels. So that ecosystem in terms of those, first of all, what is inspiring the foundation and then what is the value system of the entrepreneurs and their perspective in terms of developing themselves.

Bramuel Mwalo:

When I first met Tess and I remember the first conversation we had you guys were doing websites and software which are bookkeeping stuff. From there I have seen TESS grow and one of the highlights you know behind the scenes, you see TESS in the Forbes thing cover. You know that top 30 under 30. And you've seen growth. Because it's not something that you can, because you will get the platform, you'll have to communicate. You can't communicate stuff you communicated when you were 25 under 25. It means there's some level of growth that carries you.

Bramuel Mwalo:

So, entrepreneurs, there's some level of value system and self-development that founders. It's cool. Yes, you invented what, like I'm going to speak here about AI and stuff. Yeah, you're cool and all, but you need to develop yourself so that at least you're trustworthy, you're investable, you know all those things. Then the ecosystem Most economies that you see is it will have a percentage of. Okay, let me narrow it down to work ethic. Does the ecosystem that supports entrepreneurship has the right work ethic? I've been in businesses where a good work ethic can drive the business, drive down the cost. Other than trying to hire 10 people, the five people are diligent enough to follow through on the few objectives and the business grows that reduces the cost of running the startup.

Bramuel Mwalo:

But then now you find, in terms of if the support ecosystem has a bad work ethic from your partners, they're necessarily drugged. Like, let's say, you're working a partnership with a corporate, they take six months to close you know a business, so that technically somebody has to pay. They just keep stacking up. So if you put those three things together and I like the way there are all these theories Like every week I think there's somebody influential writing a synopsis of what's happening to African startups and I think you see there are market force, you see there are who, who, there are all these records and even me I get for some of the things I've gotten what's happening to your company and you're looking at you're like I wish you know it's not as simple as we're trying to make it, because it's not a one person job, it's a community job. Everything is connected. So I think those three things in the sense of how do you inspire your generation of founders to emerge? What's the inspiration? Have you tormented them to be so hungry that the only thing they want to work for is their stomach? That's a problem. What's the different other?

Bramuel Mwalo:

And then, in terms of the founders, do they have a value system? Do they have the right support infrastructure? If their support infrastructure is just hungry people who want to make money, that's a problem. The work ethic of their support infrastructure, their employees, their shareholders, their partners, their customers those play a role, Because if I have to bribe you to get a job and that's the only way I'm going to maintain my shareholders either I run out of business or I bribe you. The options are two Then I'll run out of a business and then there will be a synopsis written about my company just because I stood for something.

Tesh Mbaabu:

Let me ask then, as a parting shot this is not. I don't expect an answer. I was about to throw you out anyways. Yeah, so I'll throw myself out. But question is why are the people who are actually in the arena, people who are actually building, not saying anything? That is what I don't like to see, and I just hope that that can change, because a lot of people writing synopsis haven't built shit like they haven't done, they haven't built anything. Like you ask them what they're.

Bramuel Mwalo:

I mean whatever they're writing doesn't have a head or a tail, so I question a lot because of that.

Tesh Mbaabu:

I really love to hear more stories of people who are actually building, whether it worked or didn't work.

Ben Singh:

What you get a lot of times is you know people who are actually building things that obviously don't have that much time.

Bramuel Mwalo:

No, I think it's just judgment, because even some of the things I've said in the podcast, if you distribute it well, the internet might come, for me might come for me.

Ben Singh:

You know like you know. Okay, then, if they come for you, it's fine. I hope they don't come for us.

Tesh Mbaabu:

You know, and when I read the internet, it will come for you.

Bramuel Mwalo:

Just see for me, it's that most of the it's a silence culture. Like you know you will be silenced for having a contrary opinion. Like I, have been in situations where the consequence of standing for my principle means that the louder voice in the room will make me look like the devil, but I stood for my principle. So if you really think about it most, as as tess is saying, but you see, we are here, we are talking about it and I think probably will inspire more people to talk about these things.

Bramuel Mwalo:

so I think it's just that culture of you know, we have a lot of opportunists. People want to be relevant, they want to make a comment on everything.

Ben Singh:

But I just think that our I think, they're just.

Bramuel Mwalo:

It gets to a time when the people who really, really care about learning and discovery all these open conversations, can be From an entrepreneurial point of view. Entrepreneurs need to be honest with themselves what mistakes did you make? Learn from those mistakes, have a value system so that at least we are not talking about fraud.

Bramuel Mwalo:

You see, when you're talking about fraud and you're trying to come with this PR cosmetics to get rid of. That's something else. But if there was no ill intention, you did everything right. Learn from your mistakes. Maybe you didn't have the right market fit, maybe you didn't have. Then being honest with yourself provides a template for the next generation. If we are not being honest with ourselves, we fill the internet with a lot of PR and nobody's learning anything from it.

Ben Singh:

And I think just to like wrap this up, because we're having to throw Tesh out now, right, but I think it's quite good what you said, because in the end as well, if you're thinking about it, freedom of speech also requires us to be open and honest with one another and to be able to have opinions which are maybe conflicting or contrary, but still have that conversation about it, to understand the other person's perception and experience, and then maybe learn from it and maybe take what I like, abandon what I don't like, and then you can grow more, because you know that's how all of us grow by hearing each other out, by learning from one another, or by just falling flat on our faces ourselves.

Tesh Mbaabu:

I love it. I love it and you mentioned that entrepreneurs. We all do this for different reasons, so there's somebody who's comfortable starting a small business profitable from day one and there's another one who has big dreams and wants to create thousands of jobs. Their paths and their ways of doing things are different, but all of them are needed in the ecosystem so we just need to respect each other right.

Ben Singh:

Absolutely Cool.

Bramuel Mwalo:

Okay, cool. Thank you so much, good to see you.

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