#78: MNT-Halan - How the lending platform is providing financial services across Egypt and other developing markets

[00:00:03] Welcome to Afrobility, a conversation about African business and technology. Today we're going to talk about MNT-Halan, the Egyptian lending and financial services company. We'll explore the MNT-Halan story across the following areas. First, we'll give some context about the African and Egyptian financial sectors. Second, we'll discuss MNT-Halan's early history. Third, it's product administration strategy. Fourth, it's competitive position, potential exit options. And then fifth, we'll end with our views on its overall outlook. This episode was recorded on December 11, 2024. MNT.

[00:00:31] What is MNT-Halan and why are we talking about them?

[00:00:34] In corporate speak, MNT-Halan is the leading fintech and e-commerce ecosystem platform in Egypt, offering micro-lending, BNPL, which means buy now, pay later, payment solutions and e-commerce to underbanked and unbanked individuals and businesses. A lot of words, a mouthful. Basically fintech player.

[00:00:51] My favorite overview of the company is large fintech player that offers services such as loans, payments to consumers and small businesses. And small businesses is a key part of the story, which we'll talk about later.

[00:01:02] Part of the reason we're talking about them is, one, they're one of the relatively fewer North African tech success story startups. If you look at the entire landscape of Africa tech, the second is they've raised over $600 million, which is not nothing. It's a large number. And they're a unicorn. They're valued over a billion dollars. They have a very fascinating history of mergers and acquisitions.

[00:01:26] Yes. And not only did they raise the $600 to $700 million, that is only if you count their founding around 2017, 2018. It's $600, $700 million in about six to seven years because we shouldn't count some of the money that was raised before 2018, 2017. It's a lot of money in a few years.

[00:01:44] I was also going to add that they are one of the few Africa companies, African fintechs, African startups that operate outside of Africa.

[00:01:53] Other reasons we're talking about them. Scale, they're the seventh largest financial institution in Egypt, which is crazy. They hold around 25% of the microfinance market. Incredible.

[00:02:02] One of the few Africa tech unicorns, along with Valerie, biggest tech companies in Egypt, they've dispersed over $4.4 billion in loans, billion with a B.

[00:02:11] They claim to have around two-ish million quarterly active users. When I saw quarterly active, I was like, wait, who, what?

[00:02:18] I mean, if you work in a tech company, we do mouse, 30-day active, 70-day active, quarterly active. I don't want to say anything negative, but it's a strange metric. Let's put it that way.

[00:02:27] I don't know anyone that detracts that. I listen and read all the quarterly earnings for Alibaba, and they had 365, like yearly active.

[00:02:34] I was like, come on. The user signed in 2023, December 7th. It's a user now. Come on.

[00:02:40] But anyway, hey, it is what it is. Yeah, they've raised a lot of money. They also are focusing on this super app, aka ecosystem business model, which when we started Alibaba, it was actually quite common.

[00:02:53] A lot of companies trying to become super apps. We'll talk about that. And the most important, I just think it's a fascinating story.

[00:02:58] They started ride hailing thing. They pivoted. They bought another company. They combined with another company.

[00:03:03] They added FinTech. They did lending. FinTech, great story. They offer a lot of services, lending, BNPL, asset financing, payroll financing.

[00:03:13] We'll get through all of that. Big company, big story, raise a lot of money, potentially interesting deep dive. Biases.

[00:03:19] My biases, I do not know much about M&T Haaland, but when you read the story and read the stuff that's coming out, you end up being very positive.

[00:03:27] It's hard for me to figure out, like, as I prepped and thought about my summary, it's hard for me to wrap my head around a bear case, but I'm sure it will come out as we come to discussion.

[00:03:37] So my bias is just like, oh, what an amazing founder, founding story.

[00:03:40] And they're going to win everything because old businesses are slow and everybody can make it.

[00:03:46] And they're the best and the fastest.

[00:03:48] We have very positive biases.

[00:03:51] Yeah, sounds positive. We have similar biases.

[00:03:53] Before we started, before I, I didn't know that much about them before I dive, before I was diving deep into the research.

[00:04:00] After I did a bunch of research, I realized that it's, it's like, it's a company I can really appreciate.

[00:04:06] It has a bunch of things I like.

[00:04:07] First of all, they're in a very large market, which means international expansion, whatever happens is not necessarily a big factor for them.

[00:04:14] They have a longstanding founder.

[00:04:15] Depending on how you count it, the founder has been there between 15 and 20 years.

[00:04:19] Depending on how you count it.

[00:04:20] All his former experience.

[00:04:21] And then it's just, they have good press.

[00:04:23] They raise a lot of money.

[00:04:24] They have good supporters.

[00:04:25] They offer a wide range of services, which means they're sort of hedged.

[00:04:29] Their customers seem to be happy.

[00:04:31] You know what I'm saying?

[00:04:32] Yes.

[00:04:32] Customers don't hate them.

[00:04:34] Correct.

[00:04:34] They have good brand marketing.

[00:04:36] Their YouTube videos are all lovey-dovey.

[00:04:37] High five.

[00:04:38] It seems mostly good.

[00:04:40] Maybe as we explore, we'll go a little bit deeper.

[00:04:42] We can understand more of the nuances of what do they actually offer?

[00:04:45] What's the 80-20 of the potential?

[00:04:47] And then what parts of the business models make sense, don't make sense?

[00:04:50] How much of it is just marketing versus actual operational expertise?

[00:04:53] We'll get into it.

[00:04:54] But on the surface level, it seems like a great company, great story, a lot of progress,

[00:04:59] and just a nice backstory showing layers of building expertise over time.

[00:05:03] But we'll see.

[00:05:04] Yeah.

[00:05:05] Let's get into it.

[00:05:06] PSAs.

[00:05:06] Let's start.

[00:05:07] PSAs.

[00:05:08] Public service announcement.

[00:05:08] Listeners, founders, operators, investors.

[00:05:10] Love to link up with you.

[00:05:11] You can email both of us, info at Afroability.com.

[00:05:13] You can email bankawley at Afroability.com.

[00:05:14] You can email me, limitafroability.com.

[00:05:16] You can join our sub stack.

[00:05:18] We post every couple of weeks, episodes, notes, episode transcripts, and some more information

[00:05:23] about that, Afroability.com.

[00:05:24] And with that, we'll start with some context about Egypt more broadly as a country.

[00:05:29] And then we'll also talk about African banking infra in general.

[00:05:33] Here's a clip from our Fowry episode where we spoke about Egypt.

[00:05:37] Egypt, North Africa, transcontinental country.

[00:05:41] Population of 100 million, I think.

[00:05:44] GDP of $360 billion.

[00:05:47] Comparatively, Nigeria GDP is $400 billion.

[00:05:50] South Africa GDP is $301.

[00:05:52] It's a bit more in South Africa based on current GDP numbers.

[00:05:56] Population 1.

[00:05:57] A quick tidbit for people that have listened to all the Afroability episodes.

[00:06:01] You remember when we did Bcash, we were talking about Bangladesh, which was $160, $170 million.

[00:06:05] So Egypt is actually quite large.

[00:06:07] Because if you look at the most populated countries in Africa, Nigeria, $200 million, you said.

[00:06:10] Ethiopia, $114 million.

[00:06:12] And then Egypt, $100 million.

[00:06:13] Really looking at these numbers just makes me think about the scale.

[00:06:15] The scale of Nigeria is massive.

[00:06:17] But Egypt is not that far behind with 100-ish million people.

[00:06:19] Especially when you then look at GDP per capita, right?

[00:06:22] Basically, the productivity is a measure of the population.

[00:06:24] Egypt is about $3,500.

[00:06:26] South Africa is about $5,000.

[00:06:28] And Nigeria is about $2,000.

[00:06:29] Nigeria has a lot of people, but not a lot of economic activity.

[00:06:32] And even all that economic activity in Nigeria is low-income farming, subsistence farming, and also lower-income people as well.

[00:06:41] I'm always biased to look at PPP-adjusted GDP per capita.

[00:06:44] I'll look at those numbers.

[00:06:45] And I'll do it in order of smallest to biggest.

[00:06:49] Kenya, which I thought would be way higher, is actually quite small.

[00:06:51] So $4,500 PPP per capita.

[00:06:53] Nigeria, $5,000.

[00:06:55] Bangladesh, $5,300.

[00:06:57] Ghana, $7,000.

[00:06:58] Egypt, $12,000.

[00:06:59] And then South Africa, $13,000.

[00:07:00] I was surprised.

[00:07:01] I thought Kenya would be way higher and Egypt would be lower.

[00:07:04] But those are the numbers.

[00:07:05] I think the relative gap between both makes sense.

[00:07:08] PPP numbers as well.

[00:07:09] The relative, the numbers for me are important as it's the gap between them.

[00:07:14] Like Egypt and South Africa are basically in a different plane when it comes to individual.

[00:07:19] Correct.

[00:07:19] The wealth as a function of the size of the population versus Nigeria could be a bigger economy.

[00:07:24] But given the number of people in it, it's smaller.

[00:07:27] It's probably one way to read that data.

[00:07:28] Oh, yeah, yeah.

[00:07:28] Don't get me started.

[00:07:29] All that matters is per capita.

[00:07:30] The overall number, I don't even care about.

[00:07:32] Because it's like saying, oh, I have a million dollars, but I'm going to share it with a thousand

[00:07:38] people versus I have a million dollars for myself.

[00:07:40] Obviously, all that matters is the denominator because it's about each person's wealth, not

[00:07:44] the overall thing in the atmosphere.

[00:07:46] Median age?

[00:07:47] Median age?

[00:07:47] No, I don't know.

[00:07:48] Do you want to see this?

[00:07:48] Go ahead.

[00:07:49] It's probably 19 or 17 or something.

[00:07:52] Oh, my God.

[00:07:53] Yeah.

[00:07:53] I'm going to go from youngest to oldest.

[00:07:55] Nigeria, 18.

[00:07:56] Yeah.

[00:07:57] The whole of Africa, 19.

[00:07:58] Kenya, 20.

[00:07:59] Ghana, 21.

[00:08:00] Egypt, 25.

[00:08:02] Older than I thought.

[00:08:02] I know.

[00:08:03] I know.

[00:08:03] Bangladesh, 26.

[00:08:04] South Africa, 28.

[00:08:05] Old people in South Africa.

[00:08:07] Egypt.

[00:08:07] Another thing to note is even though Fowry is a superstar in Egypt, there are some other

[00:08:12] big-ish companies that are coming behind them and the tech sector is actually accelerating.

[00:08:15] So most notably, Swivel.

[00:08:17] Swivel, they just went public via SPAC and they already valued at $1.5 billion.

[00:08:21] And that just happened a few months ago.

[00:08:22] There's a lot of enthusiasm and growth in the tech sector.

[00:08:25] And we're going to focus today on Fowry, but maybe in the future, Swivel may be a follow-up

[00:08:28] episode because they're also a unicorn.

[00:08:29] To just put a pin on that section, the right way to frame Egypt is it's as far as African

[00:08:34] countries go, it's probably in the same ballpark in economic development.

[00:08:39] Social stuff may be differently, but economic development is something like South Africa.

[00:08:43] Like the diversity of the economy, the strength of the industry, the size of the businesses,

[00:08:49] the size of the stock market is in the same ballpark as South Africa for being sort of very

[00:08:55] much open to the West and progress and development.

[00:08:57] That correlates and matches the numbers we're seeing with the GDP and PBE stock.

[00:09:01] Exactly.

[00:09:01] It's closer to South Africa than it's closer than Nigeria or Ghana.

[00:09:04] But when you look at financial inclusion, it starts to become in sub-Saharan, it starts

[00:09:08] to become like a sub-Saharan African countries that is not a part of definition.

[00:09:12] Right?

[00:09:13] But that's funny.

[00:09:14] Yeah.

[00:09:14] That's hilarious.

[00:09:15] So there's a low number, 30% have access to financial services.

[00:09:19] So maybe 65% don't have access to financial services.

[00:09:21] AKA unbanked.

[00:09:22] AKA unbanked.

[00:09:24] They are among the 10 countries most reliant on cash in 2021.

[00:09:28] Nigeria is not even on that list.

[00:09:29] It's Morocco, Vietnam, Egypt is number three that are most reliant on cash.

[00:09:33] So let me make sure I'm understanding.

[00:09:35] This is interesting.

[00:09:36] If you look at broad average data, we'd say the economic development, quote unquote, is

[00:09:41] similar to South Africa.

[00:09:42] But if you look at the financial aspect of the economy and financial services, we're

[00:09:45] saying it's not as good, more similar to sub-Saharan Africa.

[00:09:48] Because I remember we have stats that say sub-Saharan Africa, the average is 60 to 70.

[00:09:52] And they were right in that average of 60%.

[00:09:53] It's fascinating.

[00:09:54] I think it's because I don't want to project, but I'm sure if you look at the income inequality

[00:09:59] data, you start to see some things.

[00:10:01] Like you only need 3,000 people to work in Farway, for example, to make it a big business

[00:10:06] versus the entire population data is what you're looking at here.

[00:10:09] Anyways, not a lot of ATMs and bank branches, depending on how you think about the importance

[00:10:15] of ATMs and bank branches in financial services.

[00:10:17] That's an old world, old model for FinTech now in 2021.

[00:10:22] Interesting perspective.

[00:10:23] You say that, do you mean that?

[00:10:25] Or are you joking?

[00:10:25] You don't think right now, ATMs and bank branches say nothing about financial inclusion or financial

[00:10:29] access.

[00:10:30] If I think about Nigeria, I'm most familiar, for example.

[00:10:32] We have a massive agent network that's a primary source of bank branching, a lot of mobile

[00:10:36] banks.

[00:10:37] That has nothing to do with it.

[00:10:39] Quarter banks, 1.6 million customers don't have bank branches or ATMs, for example.

[00:10:43] That's what I'm saying.

[00:10:44] It will not be reflected in the numbers in 2021, right?

[00:10:47] In 2016, ATMs and bank branches have something to say about access.

[00:10:50] In 2021, it's cool information.

[00:10:54] Right.

[00:10:55] Anyways, but it's worth thinking about.

[00:10:57] They're just low relative to the others.

[00:10:59] There are one interesting piece, though, about they have the national post office in Egypt.

[00:11:04] It's one of the biggest providers of financial services and has 24 million customers, right?

[00:11:09] That sounds horrible.

[00:11:10] Scary.

[00:11:10] But I remember when I worked in consulting in Nigeria, there was a lot of conversation,

[00:11:16] there probably still is, about using the Nigerian night post postal office networks to do financial

[00:11:21] services.

[00:11:21] Because they are the only ones that have offices in all these remote areas in Nigeria.

[00:11:26] Still the only ones, as a matter of fact.

[00:11:27] Yes, that's the pro.

[00:11:28] The pro is they have offices.

[00:11:30] The con is they have government employees.

[00:11:31] The con means they're going to be completely fucked.

[00:11:33] But more interestingly, I think on Safaricom, we actually said Safaricom was trying to partner

[00:11:37] with the Kenyan post office to make this work as well when we did that episode.

[00:11:41] But I don't know.

[00:11:41] It seemed like it was more marketing because they never actually followed up.

[00:11:44] They've been trying to do something for years and years.

[00:11:45] Even Bcash, if you look at their own distribution through Grameen, that's a huge chunk of it.

[00:11:52] Forget the financial services.

[00:11:53] Forget who the international post office is using for the APIs or core banking software is.

[00:11:59] Because the post office has a distribution mechanism or using existing distribution mechanisms.

[00:12:03] There's something there, right?

[00:12:04] I feel like there's something there.

[00:12:05] But then it comes back to what you were saying 10 minutes ago.

[00:12:08] Is there something there?

[00:12:09] Or should you just leave agency banking where people can just go on the streets?

[00:12:12] Like it's sort of, it's basically a branch, right?

[00:12:14] So it's maybe there's something there.

[00:12:16] It just worries me.

[00:12:16] Like how do you incentivize government employees who have a regular job to do something which

[00:12:20] is different from their job when the salary structure is rigid?

[00:12:23] I don't know.

[00:12:23] It may be.

[00:12:24] I don't know.

[00:12:25] What you said about agency banking just makes me think maybe not.

[00:12:27] But it's worth trying, I guess.

[00:12:28] Might as well try all the avenues and see what sticks.

[00:12:30] But I'm not optimistic.

[00:12:31] I'm less even concerned about the post office.

[00:12:33] I'm more concerned.

[00:12:34] I'm less optimistic about the post office part, more about the co-location piece.

[00:12:38] So you know how in Africa, all across the world, right?

[00:12:41] Somebody builds a telco, another company.

[00:12:43] A telco puts up a tower.

[00:12:44] Another telco pays for space in the tower in the same facility.

[00:12:47] Yeah, share agreement.

[00:12:48] Yeah, to share facility.

[00:12:50] Like that's what the post office can be, right?

[00:12:52] It's like all of a sudden I have a space, a physical space to either deploy agents in because the concept of what makes a branch versus an agent is not that meaningful.

[00:13:00] But I find that whole post office piece very interesting.

[00:13:04] If you know anything about this or anywhere this has been tried, just please email info at affordability.com.

[00:13:09] Love to hear about all about those stuff.

[00:13:11] The barriers to financial inclusion, again, I'm just going how much similar when it comes to financial inclusion it is with the rest of sub-Saharan Africa is the barriers are all the same.

[00:13:20] Accessibility, affordability, identity.

[00:13:23] But one new one is religious beliefs.

[00:13:25] And Islam has prohibitions against interest-bearing products.

[00:13:30] That's something that affects the kind of products that people can get.

[00:13:32] That's a very interesting nuance.

[00:13:33] Coming back from the clip, that's some general information about Egypt.

[00:13:36] The biggest takeaway is it's just a very large market.

[00:13:38] One of the most populated countries in Africa and also underpenetrated in terms of underbanked and unbanked population, which you'd expect for any developing market.

[00:13:47] We're not going to talk about banking infrastructure and the opportunity for neobanks and fintech ecosystem players in Africa.

[00:13:54] Here's another clip from when we spoke about this episode on neobanks and fintech players.

[00:13:58] We said 67% of people in sub-Saharan Africa don't have a bank account.

[00:14:01] They're unbanked.

[00:14:02] And then in Nigeria, it's 60%.

[00:14:04] And then in most African countries in sub-Saharan Africa, it's even higher.

[00:14:08] Some countries have as high as 70%, 80% of people are unbanked.

[00:14:11] And unfortunately, most of the unbanked people tend to live in rural areas and they tend to be female.

[00:14:15] So unbanked, being banked, being underbanked, however you want to frame it, is a massive issue across many different sub-Saharan African countries.

[00:14:22] But if you look at the opportunity for African neobanks is there's so many people, forget the people that are banked, like Olumide.

[00:14:28] There's so many people that are unbanked.

[00:14:29] There's, it's, I saw, only in Nigeria, only 40% of adults have a bank account.

[00:14:34] I'm not surprised.

[00:14:34] You don't find many people with percentage of only total lending.

[00:14:38] So in South Africa, consumer credit is 40% of total lending in the economy.

[00:14:42] South Africa has a much more developed banking system.

[00:14:44] In Kenya, it's 28%.

[00:14:46] In Nigeria, consumer lending is only 8% of total lending.

[00:14:49] Right?

[00:14:49] It's, it's just not something that is, that is deep or growing.

[00:14:53] And there's all these different gaps in the market that you can assume fundamentally that people need lending.

[00:14:57] Like people need credit.

[00:14:58] That's almost like food, water and credit.

[00:15:00] Right?

[00:15:01] And there are many different pieces as to how people engage with their banks that are coming up in Africa as well.

[00:15:06] Mobile first generation, young generation, 80% mobile penetration across Africa, 350 million people unbanked.

[00:15:14] And that makes you go, well, that's, that's an opportunity, right?

[00:15:17] If everybody has a mobile phone, everybody has internet access.

[00:15:22] Nobody has a bank account.

[00:15:23] It makes you go, hmm, I got to think about that.

[00:15:26] The audience can't see me right now, but I'm dancing.

[00:15:28] I have a few issues, a few things to raise.

[00:15:30] African-specific challenges when you compare traditional banking model with new banks.

[00:15:36] Yes, the other side of the opportunity.

[00:15:37] Traditional banks, you normally have issues, difficulty opening bank accounts.

[00:15:41] For example, when I, when I lived in Nigeria 2012, I tried to open a bank account, two bank accounts.

[00:15:45] Stampik IBTC, one of the big banks, and then GTB.

[00:15:48] This is the process, and I'm not, I'm not making this shit up.

[00:15:50] Probably not the process anymore, but hopefully not.

[00:15:52] Yes.

[00:15:52] Who knows?

[00:15:53] Well, yes, CTBD.

[00:15:55] You need to get three references.

[00:15:57] Why do you need references to open a bank account?

[00:15:59] I'll never understand.

[00:16:00] You need to get passport photos.

[00:16:02] You need to fill a form.

[00:16:03] You need to take the form to the branch.

[00:16:05] You probably need to queue for a while, deposit the form, and then wait three days for them to get back to you.

[00:16:09] I'm not making this up.

[00:16:10] It's almost.

[00:16:10] You didn't even add the utility bill to confirm your address.

[00:16:13] Yes.

[00:16:14] Oh, oh, right.

[00:16:15] Thank you.

[00:16:15] Yes, I forgot.

[00:16:16] I wish I were making this up.

[00:16:17] Let's just say there's a lot of difficulty and inconvenience opening a regular traditional bank.

[00:16:21] Maybe it's changed.

[00:16:22] This is six years ago.

[00:16:22] Maybe not.

[00:16:23] I doubt if it's changed.

[00:16:24] Another issue with traditional bank accounts, high fees.

[00:16:26] One thing that struck me when I moved, because I had a bunch of bank accounts in America,

[00:16:30] and I compared it to Nigeria, just the fees.

[00:16:31] They have all sorts of fees for different things.

[00:16:33] They even have, I'm not going to get into details.

[00:16:35] Let's say they have a fee that literally they just charge you every month just for having an account.

[00:16:40] 10 naira per text message, bro.

[00:16:42] I've been trying to unsubscribe from the text messages.

[00:16:45] I don't need you to send me a text.

[00:16:47] Oh, my goodness.

[00:16:47] God.

[00:16:47] That's the second thing.

[00:16:48] The third thing, which wasn't an issue for me, but when I did research, it's actually a major issue,

[00:16:52] is location of banks.

[00:16:53] So I lived in Lagos.

[00:16:55] I lived in Nikoje.

[00:16:56] There were banks everywhere.

[00:16:57] But apparently, it's because I lived in an urban metropolis.

[00:16:59] If you live in more rural areas, banks are actually very, very inconveniently located,

[00:17:02] and people have to travel a lot to get to banks.

[00:17:05] And it's funny, like, you travel a lot to get to a bank.

[00:17:07] When you get to a bank, you wait in line again.

[00:17:09] To summarize it, there are a lot of issues, but three big ones the regular consumers face

[00:17:13] when you compare traditional banks with what could be with new banks is difficulty and

[00:17:17] challenges opening bank accounts, high fees, location of banks.

[00:17:20] There are other smaller reasons, but I won't go into them.

[00:17:22] I'll say these are the three biggest ones.

[00:17:24] Most people would honestly say it's just the fees is the biggest one out of these three.

[00:17:27] It's also like lack of trust, the fees.

[00:17:30] Those are some of the smaller ones.

[00:17:31] Too many banks.

[00:17:32] There's no difference.

[00:17:33] Like, where do I have a bank and where my bank is?

[00:17:34] Because GT Bank, what's the difference?

[00:17:35] Right.

[00:17:36] No difference.

[00:17:36] Like, legacy tech infrastructure, everything gets shut down every now and then.

[00:17:40] Exactly.

[00:17:41] Exactly.

[00:17:41] I feel like we've done, oh my God, somebody should build a new bank argument.

[00:17:44] I want to go to the other side of the argument.

[00:17:46] Like, maybe you shouldn't even bother.

[00:17:48] Right?

[00:17:48] Oh, I can't wait.

[00:17:49] And one of the things is like, a lot of these countries are, depending on the African

[00:17:55] country you go to, Africa is not a country.

[00:17:56] Remember that.

[00:17:57] People don't have money.

[00:17:59] So, as of 2018, 86 million Nigerians are below the poverty line, less than $1.90 a day.

[00:18:06] You don't want those deposits.

[00:18:08] Maybe you do, maybe you don't.

[00:18:09] But the question is, how big is the actual market?

[00:18:13] Well, this is nuanced.

[00:18:14] Are you saying the people that have lower incomes don't need banks?

[00:18:19] Or are you saying the banks don't want people with such lower income because the likelihood

[00:18:23] of profits are super low?

[00:18:24] Which of them are you saying?

[00:18:24] I'm saying it's a chicken and the egg in that, like, those people are not profitable

[00:18:28] to serve.

[00:18:29] And that's one of the challenges you see in new banks across the world is that, first

[00:18:32] of all, they start off by siphoning off the worst customers from the banks, which is

[00:18:36] why they don't notice.

[00:18:37] Right?

[00:18:38] They take the bank, the customers that the biggest banks in Brazil don't want in the

[00:18:41] first place because they are making $3 a day or whatever it is, and they siphon

[00:18:45] off those worst customers.

[00:18:46] And you could argue in Nigeria, like, even if you've got this 86 million people with these

[00:18:50] numbers, is it a big enough market to build a big enough profitable business versus I

[00:18:55] have 3 million customers accepting deposits?

[00:18:57] And that's the other cynical point of view is, like, if people don't have money, can you

[00:19:02] build something, a business model, a cost profile that can allow you to serve these people?

[00:19:07] It's very hard.

[00:19:08] And it's not going to be-

[00:19:09] It's very hard.

[00:19:09] I agree.

[00:19:10] You're not going to win by stealing people off.

[00:19:12] You know, Chime is not taking the customers who need Chase's entire profile of banking

[00:19:18] services because they just do more.

[00:19:19] And if you're a sophisticated customer, you want more from your bank than, like, a new

[00:19:23] bank on average.

[00:19:24] You end up taking off, siphoning off the worst set of customers, which can only be profitable

[00:19:30] to you either because you need customer account to raise money or you're just not trying to

[00:19:35] be profitable.

[00:19:35] You're going to operate at much lower margins.

[00:19:37] Yeah, we discussed this twice.

[00:19:39] You can go and listen to our first ever episode, episode one, Afrability.com slash FinTech.

[00:19:43] We also discussed a little bit on the M-Pesa episode, Afrability.com slash M-Pesa or slash

[00:19:47] Safari.com.

[00:19:48] The comeback would be the way M-Pesa built their business model.

[00:19:52] Most of the people that use it were lower income anyway.

[00:19:54] That's one comeback.

[00:19:55] Except the other comeback to the comeback is M-Pesa was like a top-down government thing.

[00:19:59] If you don't have the government supporting you, how will you, like, manage the low profitability

[00:20:02] for long enough before you get scale?

[00:20:04] And does scale actually solve all problems?

[00:20:06] If you multiply 100 million by 0.000, it's still almost zero.

[00:20:10] Yeah, it's an interesting problem.

[00:20:11] Well, not even zero points.

[00:20:12] I'm talking negative.

[00:20:13] I don't know if I'm a...

[00:20:15] To win, you need patient investors, long-term capital.

[00:20:18] Because I don't know if when I was in university, right, and getting an allowance of some sort,

[00:20:26] I don't know how good a customer I would have been to GT Bank, right?

[00:20:30] And over time, you can grow.

[00:20:31] And as I've grown, as I've gotten jobs, gotten money through the system.

[00:20:34] But if you're a large portion of your customer base, you have to have different ways of monetizing

[00:20:38] them.

[00:20:38] What helps?

[00:20:39] Credit helps.

[00:20:40] Interchange-based revenue helps.

[00:20:42] Transactions help.

[00:20:43] You need a sort of a different business model than, like, I'm taking deposits and I'm doing

[00:20:46] stuff with it on the back end.

[00:20:48] It's also that neobanks could be successful, but they could be successful without actually

[00:20:54] solving their own banked issues.

[00:20:55] For example, a neobank could just, like...

[00:20:57] Yeah, they could just get, like, richer customers.

[00:21:00] And then the richer customers will just use it and they can get profitable that way.

[00:21:02] But the challenge, I think, and we'll talk about this towards the end when we summarize,

[00:21:06] is a lot of the customers that neobanks want that could be profitable may already be satisfied

[00:21:10] with their current banking services.

[00:21:12] There's high switching costs to switching banks in Nigeria.

[00:21:15] And because I use a lot of neobanks, I use Kudo Bank, I'll talk about it later.

[00:21:18] I'm not sure the functionality differential is enough to get a lot of people to switch.

[00:21:21] Coming back from the context about Egypt and the context about African banking infrastructure,

[00:21:26] we're actually going to start the episode now with the MNC Halan founding story and early

[00:21:31] history.

[00:21:32] So let's talk about this.

[00:21:34] MNC Halan was founded by Munir Nakhla.

[00:21:36] I'll start off with his background first.

[00:21:38] He was born in the 70s and went to London for his undergrad and graduate education.

[00:21:44] Around 1996, he went to London to study international business studies at Regents University.

[00:21:50] So 1996, 2000, business.

[00:21:53] Strangely enough, business seems to be a more common topic for study than I would have expected,

[00:21:58] although most founders do MBAs.

[00:21:59] Anyway, he ended up writing his thesis around the end of 1999 on the impact of microfinance.

[00:22:04] And this is going to come back later in the story.

[00:22:06] He said he also traveled a lot around the country just to see and understand the types

[00:22:11] of people that would need microfinance, which of course would be lower income, underbanked,

[00:22:16] unbanked, rural, potentially woman and people that don't really have access to banks and the

[00:22:21] formal banking infrastructure.

[00:22:22] So that's what he did in his undergrad in London.

[00:22:24] After he finished his undergrad degree around 2000, he moved back to Egypt and he joined EQI.

[00:22:31] What was EQI?

[00:22:32] Environmental Quality International.

[00:22:34] He joined them in 2000 after his degree.

[00:22:37] And EQI was basically a consultancy firm, but a consultancy firm specifically focused on

[00:22:42] environmental and sustainable development.

[00:22:44] And apparently it was the first consulting firm to USAID.

[00:22:48] And they worked on a bunch of different projects around community development, ecotourism,

[00:22:54] environmental management, and not just in Egypt.

[00:22:57] They also eventually expanded to the rest of the whole Middle Eastern region.

[00:23:00] And one important thing you should know about EQI is EQI was actually founded by his uncle.

[00:23:05] There was like a whole family relation back then.

[00:23:07] And if you read a lot about EQI, he seems to have a good reputation around innovation, local empowerment,

[00:23:14] environmental conservation.

[00:23:15] That's what he did at this time.

[00:23:17] And this didn't really have that much of a finance component.

[00:23:20] It was much more on the environmental side.

[00:23:23] I find the career at this point is you go abroad, you study business, you do a master's,

[00:23:32] you come back, work for a consulting firm, which is what you do, what you do with your consulting firm.

[00:23:35] And also subsequently, he became managing partner for five years very quickly in short order.

[00:23:43] Of family business, of course.

[00:23:44] Performed very well, all of that stuff.

[00:23:46] Seems fairly conventional up to this point.

[00:23:48] Yes.

[00:23:49] After around three to four years working at EQI with his uncle, he went back to London for grad school.

[00:23:55] Around 2003, 2004, he went to LSE.

[00:23:57] Shout out to LSE.

[00:23:58] LSE is actually famous on Afferability.

[00:24:00] So let's do a quick divergence.

[00:24:02] Bancoli, can you guess any of the founders?

[00:24:04] Just pick any founder that went to LSE on Afferability.

[00:24:08] For some reason, I'm thinking of the M. Farmer dude.

[00:24:12] No, not M. Farmer.

[00:24:13] You have three guesses.

[00:24:15] M. Farmer's gone.

[00:24:15] The M. Farmer founder did not go to LSE.

[00:24:17] Oh, and Babs from Grida.

[00:24:19] Babs did not go to LSE.

[00:24:21] But close, close.

[00:24:22] One more.

[00:24:22] Never guess it.

[00:24:23] Never.

[00:24:25] Never.

[00:24:25] I'll win with you $10.

[00:24:27] The woman from Sabi.

[00:24:28] I know from Sabi.

[00:24:30] Oh, yes.

[00:24:33] At the end, finally, I owe you $10.

[00:24:36] You do owe me $10.

[00:24:36] Shout out to LSE.

[00:24:37] Here are the former Afferability founders that went to LSE.

[00:24:40] So Anu, founder of Rensource, who also later founded Sabi.

[00:24:44] Not the woman, the man.

[00:24:45] Actually, I don't think you don't get the $10.

[00:24:47] Because I said, I know the woman.

[00:24:50] No, Anu is a female name.

[00:24:51] I was definitely, I know it's predominantly a female name.

[00:24:54] I was definitely getting my wires crossed.

[00:24:55] But wires crossed.

[00:24:58] And then the second was Ladi Delano, who was one of the founders of Move.

[00:25:02] But you guessed the other founder.

[00:25:04] Not correct.

[00:25:04] And then Pascal Dozier, the founder of Diamond Bank or the dad of the founders of Carbon.

[00:25:10] Say that three times.

[00:25:11] Shout out to LSE.

[00:25:12] Also, I found out something very weird.

[00:25:14] The full name is not just London School of Economics.

[00:25:16] It's London School of Economics and Political Science.

[00:25:18] Political Science.

[00:25:18] Yeah.

[00:25:19] I did not know that up until three days ago.

[00:25:22] Anyway, back to the mainstream after that divergence.

[00:25:24] Munir said after he finished his master's at LSE, he came to a fork in the road.

[00:25:30] And he had to decide whether to focus more on the development side or the environment side.

[00:25:37] And by development side, he means like financial development, economic development, microfinance,

[00:25:42] all that stuff.

[00:25:43] And he decided to focus on finance and development because he thought it would have more near-term

[00:25:47] impact in Egypt than environmental stuff, which is a longer term.

[00:25:52] He ended up staying at EQI for another five years.

[00:25:54] So even though he said he did that after his master's, he stayed at EQI for another five

[00:25:59] years up until 2009.

[00:26:01] Eventually, Ryzen had become a managing partner, like we said.

[00:26:03] That is the EQI story.

[00:26:05] Now we're going to talk about the second story, which is the Mashruri story.

[00:26:10] In the late 90s...

[00:26:11] Your Arabic is good.

[00:26:14] You have to roll the R's.

[00:26:15] You got to roll the R's.

[00:26:16] In the late 90s and early 2000s, rickshaws, specifically three-wheel rickshaws, were becoming

[00:26:21] more popular.

[00:26:22] We call them tuk-tuks, tricycles, moto-taxis, pedicabs.

[00:26:26] But they're low-cost three-wheelers that enable you to get around faster in Egypt and other

[00:26:32] developing markets.

[00:26:32] We also spoke a little bit about this on our transportation and ride-sharing episodes.

[00:26:37] And the reason they were becoming more popular is because they were low-costs.

[00:26:40] They were easy to navigate in crowded regions, and there was a growing demand for reliable

[00:26:45] transportation based on how ineffective public transportation options were.

[00:26:51] And the way the rickshaws worked were driver entrepreneurs would purchase the rickshaws

[00:26:56] and then give rides to customers for free.

[00:26:59] They would give...

[00:26:59] For free, I wish.

[00:27:01] They would give rides to customers for income.

[00:27:03] For income.

[00:27:04] The drivers in Egypt around this time, late 90s, early 2000s, they typically got these rickshaws

[00:27:09] from GB Auto.

[00:27:10] And what was GB Auto?

[00:27:12] GB Auto was not the manufacturer.

[00:27:13] It was the distributor.

[00:27:15] They got the bikes from a source, and then they would distribute these bikes to those

[00:27:20] entrepreneurs, the drivers who then buy them and charge drivers.

[00:27:24] And GB Auto was successful.

[00:27:25] They had around 90% market share in the mid-2000s.

[00:27:29] But even though they had 90% market share, they thought they could expand the market by offering

[00:27:33] loans, aka credit, aka asset financing to the drivers.

[00:27:37] The more drivers could get the rickshaws without a large initial cash outlet.

[00:27:41] Because right now, the market was limited.

[00:27:43] Only drivers that had a lot of money or borrow...

[00:27:46] Who had access to a lot of money.

[00:27:47] Access, thank you.

[00:27:48] A lot of money could get it.

[00:27:50] The plan was GB Auto would give loans, asset financing, and then the drivers would only

[00:27:54] have to make installment payments, which would be lower than the initial cash outlet.

[00:27:58] GB Auto approached our friend, our superhero, Munir, about forming an asset financing

[00:28:04] JV.

[00:28:05] And asset financing JV was what we called before.

[00:28:08] It was called Mastrodi.

[00:28:09] And this company was 90% owned by GB Auto.

[00:28:14] Yeah.

[00:28:15] It's one of those JVs.

[00:28:16] I was like, wait, 90% owned?

[00:28:17] Damn, that's vicious.

[00:28:19] I mean, they are bringing the car, the money, and the financing.

[00:28:24] They are bringing the labor.

[00:28:26] They're bringing the labor.

[00:28:27] I'm like, bro, relax.

[00:28:29] 90%.

[00:28:30] Wow.

[00:28:30] But 90% is vicious, man.

[00:28:33] It's not.

[00:28:33] 90% is more than fair.

[00:28:36] I guess we don't also know...

[00:28:39] There's some more specifics we don't know about this story because it was a little bit old.

[00:28:42] For example, was it 10% just to Munir?

[00:28:46] Or was it 10% for like 15 other people?

[00:28:49] You're asking all these questions.

[00:28:52] Because I spend a lot of time trying to figure out ownership.

[00:28:55] I spend a lot of time when I'm looking up Afro-Belis companies trying to figure out ownership percentages.

[00:29:00] And you start with back of the envelope, and then you see the range be wide as to be completely useless.

[00:29:07] So you stop.

[00:29:08] This is an example of that.

[00:29:09] For sure.

[00:29:10] Our superhero left EQI, started Mashroori with GB Auto, and with a 10% equity stake.

[00:29:18] And right from the start, it was quite successful.

[00:29:21] They reported they had a small initial loss in the first quarter.

[00:29:24] And then they started to make a bunch of money and even turned slightly profitable after the first year.

[00:29:30] And they expanded to not just do asset financing for the tuk-tuks.

[00:29:34] They also started to offer things like refrigerators and other household appliances like TVs.

[00:29:39] That is the founding story of...

[00:29:42] I think if you take a step back, you think about how big this was.

[00:29:48] It's a distributor that sells motorcycles, two-wheelers in Egypt.

[00:29:52] And how much credit was able to unlock their business.

[00:29:57] So it's like 10% of sales in the first year or so.

[00:30:02] So by 2015, they had sold a million, a million tuk-tuks taxis from this partnership by itself.

[00:30:11] A lot of the lessons that he took from this was about this being profitable, about financial services being profitable.

[00:30:15] And if you work in a space where you see the impact that meant, all we did, at least maybe, I'm definitely simplifying a lot.

[00:30:25] But what we did was provide credit and you unlock this core business while being profitable as well.

[00:30:30] It definitely stays with you as a founder.

[00:30:34] Where you have only 10%.

[00:30:36] Yes.

[00:30:37] And I'll add something which was non-obvious until I started to do deeper research.

[00:30:41] As you listen to this story, you may think, oh, tech-enabled, tech platform.

[00:30:46] No, they had actual offices where the driver entrepreneurs would come, sign documents, have interviews, and then get the loan.

[00:30:54] It was very, very manual.

[00:30:55] Just something to know about this story.

[00:30:57] It's like so much pent-up demand that you can provide an ostensibly bad service when you look at, I don't know, California standards.

[00:31:07] And there's still like a crazy high demand.

[00:31:10] There's still so large volumes because there's so many people that want it.

[00:31:13] And it says almost no defaults, which is asset-backed credits.

[00:31:17] It's kind of impressive.

[00:31:19] Right.

[00:31:19] That's the story.

[00:31:20] Next, we'll talk about Tassel Hill, which is a related business, related but different.

[00:31:27] In 2014, something happened.

[00:31:29] Egypt introduced the microfinance law, which was a way to boost financial inclusion, support the underbanked, support the unbanked, and provide access to credit for small businesses and individuals that needed it.

[00:31:42] Specifically, they were trying to drive entrepreneurship and small business development.

[00:31:46] But what this specifically meant was they would now offer a license.

[00:31:50] And if you got that license, a private company could directly give credit, aka loans, aka asset financing.

[00:31:57] And because Munir, our superhero, already had this experience with asset financing for the bikes, for the tuk-tuks, he immediately applied for this loan and then started a business.

[00:32:09] But before I talk about the business, I just want to give a little bit more context why this is important.

[00:32:12] Before 2014 in Egypt, if you were a regular person, how did you get loans?

[00:32:18] The automatic answer would be, of course, banks.

[00:32:21] The actual answer is no banks.

[00:32:23] The banks were much more conservative.

[00:32:25] The banks wanted to give money to other large enterprises or businesses that already had a large profile sector, a large credit profile.

[00:32:32] They were risk-averse and were not willing to give loans to regular people because they didn't have that much information about them and they didn't need to.

[00:32:39] So how people actually got loans before 2014 in Egypt was informal lending sector.

[00:32:45] Which informal lending sector means what?

[00:32:47] It means borrow from your friends, from your family, from your neighbors, or you go to informal money lenders who, I mean, they don't have any legal protections because they're not really acting legally right.

[00:32:58] So a lot of bad things can happen.

[00:32:59] First of all, the interest rates could be high.

[00:33:01] There could be repercussions.

[00:33:02] It was just not a good situation to be in.

[00:33:04] This law is actually very, very important.

[00:33:05] Anyway, 2014 to 2015.

[00:33:07] It's amazing how similar that is to, honestly, many other sub-Saharan African countries.

[00:33:13] It's just like everything you said, just remove Egypt from it and it could be very true.

[00:33:17] Exactly.

[00:33:17] Exactly.

[00:33:18] Because in fact, if you remember when we did, I don't remember what episode we did.

[00:33:20] I was making fun of the sharing mechanism.

[00:33:23] Oh, I think it was the last episode we did actually, where people were sharing.

[00:33:28] They have like a joint pool of assets and then each member contributes.

[00:33:32] Then in the fourth or fifth, like all those sharing things, there's a lot of risk, even if the person in your family or friend, but this just makes the whole market bigger.

[00:33:40] It was actually a very important point.

[00:33:41] 2015, 2014, our superhero, Munir Nahla, he founded a microfinance venture, Tassel Hill, that leveraged GB Auto's existing capabilities.

[00:33:51] And again, they had the exact same setup.

[00:33:53] GB would own 90% and then the firm would own 10%.

[00:33:57] So extremely similar to what they set up earlier with Mastery.

[00:34:02] The lesson here is when you find big companies who are willing to continue to take similar kinds of bets, right?

[00:34:10] Yes.

[00:34:10] Because like, if it works, how can we go bigger?

[00:34:13] How can we do more?

[00:34:14] Right.

[00:34:14] Yeah?

[00:34:15] Right.

[00:34:15] And they just went and did the exact same thing again because distribution, distribution, distribution.

[00:34:21] Once you build the pipes, you have stuff you put on the pipes.

[00:34:24] So that's the Tassel Hill story.

[00:34:26] Now we're going to talk about the MNT story.

[00:34:28] You see, the MNT Halan story is actually really four stories combined.

[00:34:31] So we started with M.

[00:34:33] Yeah.

[00:34:33] We've done N.

[00:34:34] Now we're going to talk about MNT.

[00:34:35] What happened to MNT?

[00:34:36] By the end of 2018, Mashory and Tassel Hill were successful.

[00:34:40] They ended up generating 40% of GB Auto's revenue.

[00:34:44] Four zero percent.

[00:34:44] Forty percent.

[00:34:45] They were massive.

[00:34:46] They were growing.

[00:34:46] It was clear they were going to be successful.

[00:34:47] So GB Auto decided to combine both of them to form a company called MNT.

[00:34:52] And the case is not obvious.

[00:34:53] The name MNT is a combination of both their names.

[00:34:55] It's M and T.

[00:34:56] Yeah.

[00:34:57] MNT was created as a Netherlands.

[00:34:59] Not Munir Lakhla, which is what I was like, oh, very cool.

[00:35:03] It's not named after him.

[00:35:05] That's what I was like.

[00:35:05] Oh, very cool.

[00:35:07] No, no.

[00:35:08] It's Mashory and Tassel Hill combined.

[00:35:10] So they decided to create a Netherlands domiciled holdco company, which we could do a quick

[00:35:15] 10 minutes diversion.

[00:35:16] Oh, I was based in the Netherlands, but we're not.

[00:35:18] This episode is already going to be three hours.

[00:35:19] Anyway, let's just say it.

[00:35:20] I was, I was, no, we're going to do that diversion.

[00:35:22] I was.

[00:35:23] Oh, we're going to do a Jesus.

[00:35:24] No, it's a short version of it.

[00:35:26] I was.

[00:35:26] Okay.

[00:35:26] Okay.

[00:35:27] I basically, what I was researching is like, oh, the Egyptian fintech.

[00:35:31] I'm like, is it though?

[00:35:32] Is it?

[00:35:35] It's like NASPERS, the South African.

[00:35:36] Is it though?

[00:35:38] It's like, like, but really, what does it actually mean for a company to be dumbest out somewhere

[00:35:43] is a real philosophical question?

[00:35:46] Maybe we start talking about things like the spirit of the company, you know?

[00:35:50] Where's your soul?

[00:35:52] Where's your soul?

[00:35:52] Your soul is in Lagos.

[00:35:54] Call me.

[00:35:55] That's what my phone is.

[00:35:56] Because you say, oh, PaceTax, the African fintech.

[00:35:59] No, I'm not.

[00:35:59] Ask PaceTax investors that are not invested in it.

[00:36:01] It's a Delaware holdco.

[00:36:04] Show me your Delaware holdco documents.

[00:36:06] So when we keep arguing that like, oh, something is Nigerian or not, it's like, yeah, MTN

[00:36:10] is South African because corporate headquarters is, is, is right there.

[00:36:14] It's an interesting, now it's like, oh, MT is ostensibly Egyptian, make no mistake.

[00:36:18] But at this point, it is headquarters is Dutch.

[00:36:22] Yes.

[00:36:23] And for the audience who's wondering why did they do this?

[00:36:25] Does it make sense?

[00:36:26] Basically for legal protections and for trust and for ease of raising money, sometimes it's

[00:36:32] better to domicile in a developing country where people understand all the legal laws.

[00:36:36] That's the primary reason they did it, but the entire operations team was still based

[00:36:42] in Egypt.

[00:36:43] GB Otto appointed our superhero Munir as the founder, of course, of MNC because he's the

[00:36:48] person that founded Masuri and Tasoheil.

[00:36:52] And they also, they did some financial maneuvering, which I was going to omit this part, but it's

[00:36:57] important to the story.

[00:36:59] 75% of their stake in M and T were put in this holdco, but they kept 25% in the parents'

[00:37:09] company.

[00:37:09] Let me say that again.

[00:37:10] 25% was kept with GB and then 75% was put in MNC.

[00:37:16] 75% of their stake in MNC.

[00:37:20] In 2018, they sold, GB Otto sold 33% of their stake in MNC for $45 million.

[00:37:30] As of 2018, the company already had a potential valuation of around 130 to $140 million.

[00:37:36] Already a lot of international interest and DPI was a PE firm that invested the $45 million

[00:37:42] to get that stake.

[00:37:44] This will come back to be important in the story.

[00:37:46] The only thing for the audience to know is there was much success, much momentum that

[00:37:50] even in 2018, MNC already had a valuation in hundreds of millions of dollars.

[00:37:55] That's the MNC story.

[00:37:56] And this is not MNC Halland, by the way.

[00:37:57] This is just MNC Investment Co., the Dutch holding company.

[00:38:01] So after this, I'm going to talk about the Halland story.

[00:38:03] Yeah.

[00:38:03] Some context also what was happening about that time is this is the golden age of motorcycle

[00:38:08] financing.

[00:38:09] This is Patel, Gojek, Rapido.

[00:38:12] This was, oh my God, this is the future for emerging markets.

[00:38:15] Everybody wants to ride a bike.

[00:38:17] If we gave people money to ride a bike and build financial services on top of that and

[00:38:21] built a super app on top of that, oh my God, look at Gojek.

[00:38:24] This is going to be big and massive.

[00:38:26] And they also shared some of the same founders with some of these companies.

[00:38:29] And it was growing gangbusters.

[00:38:31] It was at this time, it was a validated business model that was growing gangbusters

[00:38:34] based on financial services, pretty much asset backed financial services.

[00:38:38] If you think about ride sharing on one hand and some of this microfinance thing on the

[00:38:41] other hand, and the entire suite on the back of this distribution network from one of the

[00:38:47] largest automobile companies in Egypt.

[00:38:48] Perfect.

[00:38:49] You better, everybody's chomping at the bit to give you money, right?

[00:38:52] You price, you price your round and tell people this is the price, you know.

[00:38:55] If you are, if you are doing, send me one.

[00:38:57] If you are not doing, thank you.

[00:38:58] It was great, great chats, great launch.

[00:38:59] Yeah, they had a lot of interesting assets because they started with asset financing for

[00:39:05] the bikes, then they started a direct lending company.

[00:39:09] And GB still had all those relationships as a distributor.

[00:39:13] That is the MNC investment co-story.

[00:39:15] Finally, we're going to talk about the Halan story.

[00:39:17] In 2017, around a year before MNC was founded in 2018, our superhero Munir visited Jakarta with

[00:39:24] one of his investors.

[00:39:25] The investor was like, I'm going to Bangladesh.

[00:39:27] I've already invested in Patau and I want you to meet the CEO.

[00:39:31] This founder, this investor who invested in Patau and Gojek invited our superhero Munir

[00:39:38] to come with him to Jakarta to visit the CEO of Gojek.

[00:39:41] Munir met Gojek's CEO and he was like, oh my God, I can't believe this is happening.

[00:39:45] Gojek is doing well.

[00:39:47] They're already a unicorn.

[00:39:48] They're building this massive business.

[00:39:50] Why can't I also do something similar back home in Egypt?

[00:39:54] And when he says similar, he means two things.

[00:39:56] He means the specific ride hailing part of it and the super app part of it.

[00:40:01] He wasn't thinking that much about lending per se, because remember at the time, Gojek

[00:40:05] had a foundation of transportation app and then a super app built on top of that.

[00:40:10] Just basically think about it as a motorcycle ride hailing app that became a super app,

[00:40:14] not necessarily lending.

[00:40:15] This is going to be important in the story later.

[00:40:16] And if you want to learn more about Gojek and ride sharing, this is our episode 44.

[00:40:20] And our episode 45, where we talk about Patau, Gokata, Gojek.

[00:40:23] We can't talk about that now.

[00:40:25] The key point to note is Gojek started as a motorcycle ride hailing app and became a

[00:40:28] super app that did transportation, food delivery, and payments.

[00:40:31] But we don't go into the details.

[00:40:32] So that's the feeling he had.

[00:40:34] And because of that, he went back home to Egypt and founded Halan, launched around November

[00:40:39] 2017.

[00:40:40] And the whole goal then was a mobility app that's focused on motorcycle tuk-tuks that helps

[00:40:45] you get from A to B.

[00:40:46] The app initially offered just ride hailing services, but very soon, within five months,

[00:40:52] they started to do on-demand logistics, food delivery.

[00:40:57] And then around 2019, Munir realized profitability would be super hard.

[00:41:02] They were losing a million dollars a month, a million dollars with an M.

[00:41:05] And they pivoted to offer more financial services, BNPL payments.

[00:41:10] And finally, we can combine all the stories together.

[00:41:13] This is how we get to M&T Halan.

[00:41:14] 2021, our superhero Munir Nahla orchestrated a merger between M&T Investments, the whole

[00:41:21] co from the Netherlands, and Halan, the ride-sharing company.

[00:41:24] They combined M&T-Halan.

[00:41:25] And the story now seems beautifully combined because this combined company had the lending

[00:41:30] units of Masuri, Tulsa Hill, and it had Halan, the fintech platform.

[00:41:36] And they'd also bought another startup earlier that got a digital wallet.

[00:41:40] So it had all those assets.

[00:41:41] He was a CEO 2021.

[00:41:43] And that is a combined story.

[00:41:45] It's a lot.

[00:41:45] I'll just quickly summarize for our audience.

[00:41:48] EQI started there after his university, worked his way up, became managing partner.

[00:41:54] 2009, decided to start a financing, asset-backed financing for bikes with GB Auto.

[00:42:00] 2015, got the license, the microfinance license, and decided to do lending, specifically lending

[00:42:07] to working women and SMBs.

[00:42:10] 2017, it started ride-hailing.

[00:42:11] And then 2021, combined all of that to form M&T Halan.

[00:42:15] What a story.

[00:42:16] Wow.

[00:42:16] A lot.

[00:42:17] Incredible.

[00:42:17] Also, the part that jumps out is, man, this dude just keeps...

[00:42:21] Why did he stop at M&T Halan?

[00:42:22] The private equity guys came and said, you better focus on the money that we gave you.

[00:42:27] That's my own cynical, cynical tongue-in-cheek interpretation.

[00:42:31] But from the initial part, from initial founding of the first company, he just kept doing it

[00:42:35] and just kept going over and over and over and over again.

[00:42:38] It's very interesting.

[00:42:39] Very similar to our previous episode on Pig Invest.

[00:42:41] There's a founder.

[00:42:42] Founders that see problems and just go do stuff.

[00:42:45] Like many people from Egypt, many people from Africa had...

[00:42:48] Gojek was not a secret at the time.

[00:42:50] You know what I mean?

[00:42:51] All right.

[00:42:51] People have tried it.

[00:42:52] People tried it.

[00:42:53] There was Gokada in big parts of West Africa.

[00:42:56] But to come and do it successfully, to figure out where the options were and where the risks

[00:43:01] were and cut bait when it wasn't working.

[00:43:03] Very fascinating story.

[00:43:05] Yeah.

[00:43:06] And I'm going to do something unexpected, which I realized as I was doing research,

[00:43:10] as I was doing a lot of research,

[00:43:11] I noticed that a lot of credit for the success of MNC Halan goes to the founder,

[00:43:17] which I think it should, of course.

[00:43:18] But actually, as you read between the lines, GB Auto also deserves a lot of credit.

[00:43:23] Number one, they decided to start Mashori when they noticed that they could expand the market

[00:43:29] by offering asset financing.

[00:43:30] They didn't need to do that.

[00:43:31] They already had 90% market share.

[00:43:32] They did that.

[00:43:33] And then they found him.

[00:43:34] They brought him in.

[00:43:35] And then they did the same thing later on when they spun out the Hold Co.

[00:43:38] They did the same thing when they founded Tassahil.

[00:43:40] It's just like they've made a lot of good movies, especially considering they were like

[00:43:45] a distributor of bikes.

[00:43:46] So it's not as though they had some natural DNA to think about tech, startups, growth,

[00:43:51] marketing.

[00:43:52] I also give them a lot of credit in this.

[00:43:53] They're one of the unsung heroes.

[00:43:54] They made a lot of money, but not a lot of credit.

[00:43:56] If I reflect on the founding stories, a couple of things jump out is Egypt seems to have a

[00:44:01] few of these companies that were seeded or incubated by large pre-existing companies.

[00:44:06] So Fari had a somewhat similar starting story.

[00:44:08] Pesa and Mkopa, Africa stocking much more like Safaricom.

[00:44:12] I don't want to...

[00:44:13] InterSwitch also had the same story.

[00:44:14] Same story.

[00:44:15] Once you say Safaricom, people in Kenya just get mad.

[00:44:17] Once you say Mpesa, people in Kenya just get angry.

[00:44:19] I just got to say...

[00:44:20] Trigger.

[00:44:20] It's like a trigger word in Kenya right now.

[00:44:23] But ultimately, what I find...

[00:44:25] And for context is GP Auto is not a small company.

[00:44:29] It's a massive company.

[00:44:30] No, it's a massive company.

[00:44:31] Like $2 billion of group revenue in 2021.

[00:44:36] Largest automobile manufacturer in Egypt.

[00:44:38] Largest network of after-sales services.

[00:44:40] Like it's pretty sizable.

[00:44:42] So at the point of them to be...

[00:44:44] At that point, to be doing these kind of incubations kind of ideas,

[00:44:49] it's a different kind of company, different kind of initiative.

[00:44:51] And if you consider the fact that you take a step back is,

[00:44:54] why don't we see more of that in many other markets?

[00:44:56] Not to even pick on Nigeria, but we wouldn't see...

[00:44:59] Well, you know what they say.

[00:45:00] Let me know.

[00:45:01] If I say O and you say B...

[00:45:04] We have a whole episode on this.

[00:45:05] We have Affrability, corporate venture.

[00:45:07] So we've explored this.

[00:45:09] It's getting better, but it's not as big as you'd think.

[00:45:11] But it's also not as public as you think.

[00:45:13] It's not fair to say that...

[00:45:14] We're definitely not public.

[00:45:15] If you talk about it, those episodes...

[00:45:17] Don't be in episode 80, Affrability.

[00:45:19] Yeah.

[00:45:20] If you say it wrong.

[00:45:23] Yeah.

[00:45:23] It would be like, I apologize to my family.

[00:45:29] I apologize to my friends.

[00:45:31] I apologize.

[00:45:33] This was a big mistake.

[00:45:34] No.

[00:45:34] But ultimately, you find these large companies...

[00:45:37] That was one.

[00:45:37] It's like large companies that incubate in these ideas.

[00:45:39] I would love to see more of that.

[00:45:40] We talked about this adnosium in a different episode.

[00:45:42] You should go listen to that if you want to talk about...

[00:45:44] If one is here, fully much more evolved thoughts on that.

[00:45:47] The second thing for me is this PE incubated company.

[00:45:52] I also want to give credit to the PE company here.

[00:45:54] As I was also researching this, I thought about...

[00:45:56] I thought about APIS Partners and DPO, the payments company.

[00:46:00] It was like...

[00:46:00] APIS Partners.

[00:46:01] This is what we're going to do.

[00:46:02] Or Helios and Interstorage.

[00:46:03] And I'm thinking also of...

[00:46:05] Here is also DPI in 2018.

[00:46:06] Because that was the...

[00:46:08] Let's call it the formalization of what we now know as MNC Halan.

[00:46:12] And they invested...

[00:46:13] Taking significant amounts of outside capital.

[00:46:15] And really building up to be this large company.

[00:46:17] Not just going across segments in Egypt.

[00:46:19] But also internationally as well.

[00:46:20] So I also want to give credit to the private equity firms for some...

[00:46:23] For what appears to be from the outside.

[00:46:25] Raising the ambition of MNC Halan even beyond Egypt and beyond its current size.

[00:46:30] And providing the capital and opportunity for them to do...

[00:46:32] To get that growth.

[00:46:34] Yeah.

[00:46:35] Shout out to DPI.

[00:46:36] A.K.A. Development Partners International.

[00:46:39] That's the PE firm Bankly was referring to.

[00:46:41] Let's go through the fundraising.

[00:46:43] That story is just like...

[00:46:44] It's a moving story.

[00:46:46] But we have to go on.

[00:46:47] The show has to go on.

[00:46:48] All right.

[00:46:48] 2018.

[00:46:50] GB Auto sold 20% of MNC.

[00:46:54] And minority shareholders sold 13% of MNC to DPI for $45 million.

[00:47:00] Combined, DPI got 20% from GB Auto.

[00:47:03] And 13% from the other minority shareholders.

[00:47:06] And ended up with 33%.

[00:47:07] And if you go through all the math here.

[00:47:09] It implies the valuation of $120 to $150 million I spoke about before.

[00:47:12] After the transaction was over.

[00:47:14] GB had around 65% of MNC.

[00:47:18] The minority stakeholders had around 10%.

[00:47:20] And DPI had 25%.

[00:47:21] And notice I'm saying MNC.

[00:47:22] Not MNC Halan.

[00:47:23] Because this timeline is 2018.

[00:47:25] So they had not yet combined with Halan.

[00:47:27] Those numbers I gave were just MNC.

[00:47:30] 2021.

[00:47:32] GB...

[00:47:33] And by the way, every time I say GB, it is GB Auto.

[00:47:35] But technically, they have GB Capital.

[00:47:37] Yeah.

[00:47:38] Which is a subsidiary.

[00:47:39] But for the sake of simplicity, let's just say GB Auto.

[00:47:41] It's the same company.

[00:47:42] But if you want to be very, very specific.

[00:47:44] It was a capital financing.

[00:47:46] But we're not going to get into that here.

[00:47:48] So GB sold another 5% for around $20 million.

[00:47:53] And this implies a valuation of $400 to $450 million.

[00:47:57] Which is incredible.

[00:47:59] Because it went from 100-ish in 2018 to 400 in 2021.

[00:48:03] They sold 5%.

[00:48:03] They're still the minority.

[00:48:04] They're still the majority shareholder.

[00:48:07] But they're winding down their stake.

[00:48:08] So after 2021, GB now owned 57%.

[00:48:12] Down from the 65% in 2018.

[00:48:15] Because of the two sales.

[00:48:16] 2021.

[00:48:17] Big moment.

[00:48:18] MNC Halan is finally formed.

[00:48:20] Technically was formed by a share swap deal.

[00:48:22] We're not going to get into the details.

[00:48:23] It doesn't matter.

[00:48:24] All that matters is MNC Investment Co.

[00:48:26] Combined with Halan.

[00:48:27] They formed MNC Halan.

[00:48:29] And then immediately after, they announced they raised $120 million.

[00:48:32] Which is...

[00:48:33] I was like, these numbers...

[00:48:34] I was like, did we just hear another $120?

[00:48:36] No, that's different.

[00:48:37] The first number I spoke about was in 2018.

[00:48:39] It's just a coincidence.

[00:48:40] Hilarious.

[00:48:40] It's just a coincidence that it's around the same number.

[00:48:43] So development partners came back again.

[00:48:46] DPI.

[00:48:46] We also had APIS, which is funny.

[00:48:48] The bank was talking about them, what they do with DPO.

[00:48:51] And Lorax Capital Partners.

[00:48:53] L-O-R-A-X.

[00:48:55] In addition, they had...

[00:48:56] Those were the PE firms.

[00:48:57] PE firms have a lot more money.

[00:48:58] They provided the bulk.

[00:48:59] They also had regular VCs, venture capitalists.

[00:49:01] Middle East Venture Partners.

[00:49:03] MEVP.

[00:49:04] Endeavor.

[00:49:04] Shout out to Endeavor.

[00:49:05] And Disrupt Tech.

[00:49:06] So they raised all that money.

[00:49:07] $120 million.

[00:49:08] And technically, it was around...

[00:49:10] It was the Series A.

[00:49:11] Although they don't use all the official terminology.

[00:49:13] Doesn't matter.

[00:49:14] All that matters is they said the goal of this money

[00:49:16] is for further technology and to move into overseas markets.

[00:49:20] Yeah.

[00:49:20] A.K.E. M&A.

[00:49:21] That's when...

[00:49:22] For me, that's when it's like, wait, what's happening?

[00:49:24] That fundraising was the...

[00:49:26] Was like...

[00:49:27] M&T who?

[00:49:28] And yeah.

[00:49:29] That was...

[00:49:30] Magic.

[00:49:30] And then the big one.

[00:49:33] Africa's newest unicorn.

[00:49:34] We're now a unicorn.

[00:49:36] Around 2022, 2023, they raised...

[00:49:39] I'm going to break it up into tranches.

[00:49:41] So first of all, they raised $200 million in equity.

[00:49:45] Another $60 million in equity.

[00:49:47] And then $140 million in debt.

[00:49:50] Total was around $400 million.

[00:49:51] The key part of that is the $200 million of equity was around...

[00:49:55] Was for around 20%, which means their valuation was worth more than a billion.

[00:49:58] It was a unicorn announcement.

[00:50:00] And there was a lot of hype.

[00:50:01] First, unicorn in Egypt.

[00:50:02] Although technically, Fowry had more than a billion valuation.

[00:50:07] But Fowry's technically public.

[00:50:09] Unicorn terminology used for private companies.

[00:50:11] Yada, yada, yada.

[00:50:12] Anyway, they raised $400 million.

[00:50:13] $260 million in equity.

[00:50:14] $200 from a company called Chimera Investments.

[00:50:18] I hope I'm pronouncing that correctly.

[00:50:19] And yeah, a lot of media hype.

[00:50:21] A lot of YouTube videos.

[00:50:22] A lot of blogs.

[00:50:23] A lot of articles.

[00:50:24] I guess the...

[00:50:25] It was just a lot of money.

[00:50:26] Because there are not that many unicorns.

[00:50:28] But in how you count it, around this time in Africa Tech, there were between 7 and 10 unicorns.

[00:50:32] Exclusive club.

[00:50:33] And $400 million is just a lot.

[00:50:35] Now, you have to break it down into tranches, right?

[00:50:37] It's actually $200 plus $60 equals $140.

[00:50:39] But to raise...

[00:50:40] Well, to announce $400 is just almost unheard of in Africa Tech.

[00:50:44] Yeah.

[00:50:45] And yeah, I find that that funding announcement was like a big pay attention moment for everybody else.

[00:50:50] But the other thing that jumped out to me, I saw DPI.

[00:50:54] I tried to find how much they held up until this point.

[00:50:56] And I saw...

[00:50:57] I think the most recent one I saw is that they're holding maybe down to 5%.

[00:51:00] Obviously.

[00:51:01] Been diluted if they didn't like re-up or whatever.

[00:51:03] Yeah.

[00:51:04] But DPI is a private equity firm.

[00:51:05] Now, they must return the money back.

[00:51:06] These ones, they don't pay.

[00:51:07] VCs can still speak English from time to time.

[00:51:12] PELPs are pretty notorious with distributions.

[00:51:15] And if you're, honestly, a private equity company, seeing those kind of returns from a 2018 investment.

[00:51:21] Like if you look at how the...

[00:51:23] You can estimate, you can backfigure how much any IRR you want and multiples of money.

[00:51:28] It's...

[00:51:28] Yo, it's...

[00:51:29] You have to take a...

[00:51:30] Nobody ever got broke taking a profit.

[00:51:32] And they have to take a profit where it exists because that's the business.

[00:51:36] They're not in the business of holding on to home runs.

[00:51:38] They're business of getting in and selling after seven years and making a ton of money in that case.

[00:51:42] And they're doing that.

[00:51:43] That was pretty...

[00:51:43] Exactly.

[00:51:44] Very fascinating.

[00:51:44] Exactly.

[00:51:45] Especially if you have the optionality to not do a full sellout.

[00:51:48] You can do a partial.

[00:51:49] You get some of the cash and then you still retain some of the upside.

[00:51:52] Because it's PE, you don't have the luxury of waiting for the full company lifecycle like a VC firm.

[00:51:57] So it makes a lot of sense.

[00:51:58] Finally, the last one...

[00:52:00] Oof, this company story was a long one.

[00:52:01] Finally, July 2024.

[00:52:03] Around six months...

[00:52:04] We're recording right now in December 2024.

[00:52:06] They raised around $160 million.

[00:52:08] Specifically $157.5.

[00:52:10] And the lead investor was IFC, famous on Afroquillie.

[00:52:14] IFC was around $40 million of the total raise.

[00:52:18] And they had a bunch of former investors re-up and invest again.

[00:52:21] So DPI came again.

[00:52:23] Lorax came back.

[00:52:24] Apis came back.

[00:52:25] And it turns out if you add all these numbers together, you add the equity, the debt.

[00:52:29] They raised between $600 and $700 million over four and a half years.

[00:52:32] And this time, they said the same thing.

[00:52:34] Our goal is to fund even more international expansion.

[00:52:37] And we're going to talk about the M&A they did in a later section.

[00:52:40] But let's just note that in two different funding announcements, the stated goal was specifically for M&A in other countries.

[00:52:47] So that is the founding story and the investment story of M&T Halan.

[00:52:52] Wow.

[00:52:52] Is there anything else that is this?

[00:52:54] That is this?

[00:52:55] You think about the founding story.

[00:52:56] That is this?

[00:52:58] I guess Chipper Cash in the first few years was this.

[00:53:00] Just every milestone for Chipper Cash was bigger than the last milestone.

[00:53:03] Because everyone was like, wait, what?

[00:53:04] And I was like, oh my God, what?

[00:53:06] And now we're having anything for players.

[00:53:07] But Chipper Cash was probably the one that I remember that every time they're in the news, you'd be like, oh my goodness.

[00:53:11] That's a lot of money.

[00:53:12] Could have been kind of a mugged shuttle run.

[00:53:14] But I haven't seen one that was, I would say from 2018, it's been a consistent drumbeat of large numbers almost every 18 months.

[00:53:22] I agree.

[00:53:23] Especially if you don't count Wave.

[00:53:24] Because Wave was a weird outlier situation.

[00:53:26] And Wave was one big one, not multiple.

[00:53:28] If we look at the overall funding end-to-end during the Affirmability Hall of Fame, I think apart from Jumia, which, depending on how you count, like public company diluting itself, is that raising money?

[00:53:40] But Jumia is raised between $800 and $1.6 billion.

[00:53:44] Depending on how you count it, Jumia is the world champion.

[00:53:46] But I don't know how to count that.

[00:53:47] I don't think you can continue counting when they're public.

[00:53:50] But anyway, this company M&T Alana's raised a lot of money.

[00:53:53] Congratulations to the guys that gave all of their money.

[00:53:55] I'm just a podcaster.

[00:53:58] Oh, by the way, sidebar, sidebar.

[00:54:01] LinkedIn keeps sending me notifications about job openings for podcaster.

[00:54:05] It's like, hey, it's job openings for podcaster.

[00:54:08] I mean, I guess I could, but, you know, my other job is kind of important for rent.

[00:54:16] Growth and geographical.

[00:54:17] I'll talk about M&T Alana's growth and geographical expansion.

[00:54:21] First, geographical expansion, some acquisitions that they've gone through, and their partnerships, and how the team is set up.

[00:54:26] M&T Alana today is in four countries in different shapes or form.

[00:54:31] And most of these have been through acquisitions, we'll talk about in a second.

[00:54:33] Then Egypt, the primary country where it was founded, GB Auto's home country.

[00:54:39] GB Auto still has a large portion of investment there as well.

[00:54:43] Egypt is one country.

[00:54:44] In Pakistan, there was an acquisition where they acquired a licensed microfinance bank in Pakistan in March 2024.

[00:54:52] Now, I want you to think of those timelines along with the fundraising announcements that Lumia just went through.

[00:54:56] And that's when they had all that money.

[00:54:58] Turkey, by acquiring also another microfinance or commercial finance company in Turkey, not microfinance, commercial finance, in July 2024.

[00:55:07] And I saw that they launched in UAE, but I couldn't find any news about what they were actually doing versus, oh, M&T Alana launches in UAE.

[00:55:15] That's probably really early.

[00:55:16] I was at the time of recording this in December.

[00:55:18] March, July, and then UAE almost just as we were recording.

[00:55:21] I saw some news about it, but I couldn't figure out how they've done that.

[00:55:24] But I guess the UAE one is like the difference between announcements versus on-the-ground operations.

[00:55:32] It takes a full cycle to get into an actual country.

[00:55:36] Yeah.

[00:55:36] And how do they think about international expansion?

[00:55:38] If you contrast it to their fundraising volume or pace, it's a big part of their strategy stated and executed.

[00:55:46] I think many, we talk about companies on affordability who say they want to expand internationally, but don't do it or don't do it at a scale that is meaningful.

[00:55:54] It's not a big portion of their business or they don't put enough dollars or enough of their, they don't put enough on the line on international expansion to justify that being like a large part of their business.

[00:56:04] I think that's not true for M&T Alana.

[00:56:05] It's very stated and they're putting large parts of their company on the stake for these expansions.

[00:56:10] The other thing to know...

[00:56:11] Is it?

[00:56:12] All of it is undisclosed.

[00:56:13] Do we know that or are you just guessing?

[00:56:15] It's all undisclosed somewhere.

[00:56:15] I'll talk about acquisitions in a second, but it's undisclosed.

[00:56:20] The amount is not as, for me, it's not as important as the fact that a lot of it is like a share swap.

[00:56:25] So they're not necessarily spending money.

[00:56:26] They're saying like, hey, we get a bigger slice of the pie if we work together.

[00:56:29] Win-win.

[00:56:30] It's an interesting perspective versus, hey, here's $2 million.

[00:56:35] Let me buy your company.

[00:56:36] Even though I raised $300 million in the last 18 months.

[00:56:38] So it's not really the same thing.

[00:56:40] Speaking of small sums and sidebars is, I saw MoneyPoint got fined a billionaire.

[00:56:45] But for some, by the Central Bank of Nigeria.

[00:56:48] And my immediate instinct was MoneyPoint and Opay got fined a billionaire.

[00:56:52] I don't know each.

[00:56:52] I saw the headline as I was starting to record this.

[00:56:55] And my amazing thing was, how much is that in dollars first?

[00:56:59] That's always the first question.

[00:57:00] Because investors are going to be like, oh my God, fine.

[00:57:03] So let's talk about acquisitions and MNT Highlands.

[00:57:06] Let's go chronologically.

[00:57:08] Once they started to raise money, they bought RASIDI, which is a digital wallet in Egypt licensed

[00:57:15] by Central Bank to disburs and collect and transfer money.

[00:57:18] No price disclosed, but a share swap here as well.

[00:57:21] This was 2021.

[00:57:22] 2021.

[00:57:24] Yeah, go ahead.

[00:57:25] Some years later, we see that someone said it was a seven-figure USD value.

[00:57:29] We could just assume close to a million.

[00:57:32] And also, they rebranded this to Halan Cash after they bought it.

[00:57:36] They bought it, yeah.

[00:57:37] And then Talabia, B2B e-commerce platform for FMCG supplies.

[00:57:42] So this is probably similar to many of the companies we've looked at on Afferability ad Nauseam.

[00:57:47] And the whole point was building an ecosystem and reaching customers.

[00:57:51] I read the quote from Munir.

[00:57:54] I also love, one of my favorite things in Afferability is calling the founder by that first name.

[00:57:57] I read a comment by Munir on the acquisition.

[00:58:01] You can call him Mr. Nafla if you prefer.

[00:58:03] The acquisition of Talabia is another step in our strategy of building a comprehensive digital ecosystem

[00:58:09] and is a perfect fit for our two companies.

[00:58:11] Talabia has developed an elaborate online catalog, signed contracts with the largest FMCG suppliers,

[00:58:15] and demonstrated solid execution.

[00:58:18] MNT will enable Talabia to scale nationwide and provide access to hundreds of thousands of merchants of retailers

[00:58:23] by announcing their customers' purchases and backing the firm with 120 engineers.

[00:58:28] The whole point was a mutually beneficial win-win situation here as well.

[00:58:32] No price disclosed.

[00:58:34] That was June 2022.

[00:58:35] And by the way, on the two acquisitions, it just makes a lot of sense.

[00:58:38] The first one, Residi.

[00:58:41] They were one of the first mobile wallets to gain traction.

[00:58:45] Instead of building it in-house, it's not going to be that expensive.

[00:58:47] We'll do it.

[00:58:48] The second one is FMCG e-commerce.

[00:58:51] It just makes a lot of sense because those merchants, they're used to purchasing things on the platform.

[00:58:56] Exactly.

[00:58:57] And in order to grow their business, they may need credit to grow.

[00:59:00] They just be like, oh, I'm buying things on the platform, and I'm also going to get credit on the platform to grow my business.

[00:59:05] And because you already have all the transaction information, it's easier for you to figure out the risk profile.

[00:59:10] What does that mean?

[00:59:11] If Banqually typically buys soap, and he buys 30,000 Egyptian pounds worth of soap,

[00:59:17] and then every year he only goes between 30 and 50, you're not going to give him a billion.

[00:59:21] You're going to give him maybe 40,000 because you have that transaction data,

[00:59:24] and you can see what he's purchasing.

[00:59:25] So both acquisitions make a lot of sense.

[00:59:27] Now, I don't know the exact amounts that was paid.

[00:59:29] That may make me have a more negative view,

[00:59:31] but it just makes sense from the common sense perspective of business scale.

[00:59:34] Yeah, exactly.

[00:59:35] And in March 2024, they bought a licensed microfinance bank in Pakistan, Advanced Pakistan.

[00:59:42] They bought the Pakistan branch of a large international microfinance group that operates in seven countries.

[00:59:47] This bank seems to be pretty sizable and big.

[00:59:50] They had some losses.

[00:59:51] More interestingly, it was a public company, and it allowed them to then get into Pakistan.

[00:59:57] Which is one of the biggest markets.

[00:59:58] It makes a lot of sense.

[00:59:59] What I found interesting, obviously, again, price not listed.

[01:00:02] It seems to be a share swap, but we'll see.

[01:00:06] You know how they do.

[01:00:06] You know how they do.

[01:00:07] What I find most interesting is Advanced Pakistan is a part of a big group of microfinance banks

[01:00:15] owned by one bank that owns multiple microfinance banks in multiple countries,

[01:00:21] and they're selling their poor performing.

[01:00:24] The Pakistan business had become a bleeding business for the Advanced Group International.

[01:00:28] I find it interesting that M&T Highland is like, we can fix that.

[01:00:32] So good for them.

[01:00:33] Intriguing.

[01:00:33] Do you have any information about what specifically they mean by the poor performance?

[01:00:38] Basically, it wasn't doing well.

[01:00:40] It was losing money every year.

[01:00:42] Then losses were increasing, basically.

[01:00:44] 2021 made 50 million rupees.

[01:00:47] 20, 22, 100 million.

[01:00:50] And then down become 256 million.

[01:00:53] Losses were accelerating.

[01:00:55] And acclimated losses were 1.3 billion, basically.

[01:00:58] Intriguing.

[01:00:58] 65% of the company's share capital was for accumulated losses.

[01:01:03] So it was bleeding money and would require capital investment either which way.

[01:01:07] Probably was a good deal.

[01:01:08] And there's no good or bad deal until you know the price.

[01:01:11] Yeah.

[01:01:11] And also, it gives them access to one of the biggest markets.

[01:01:14] Who knows how it's going to turn out?

[01:01:16] But from a surface level, it would have been way harder to get into Pakistan by yourself.

[01:01:21] I mean, it's different.

[01:01:23] You can say, oh, it's similar, Middle Eastern, Muslim.

[01:01:26] No, no, no.

[01:01:26] It's very, very different.

[01:01:27] Very different.

[01:01:28] Very, very different.

[01:01:28] Very different.

[01:01:29] And then in July 2024, they bought TAM Finance, a leading commercial finance company in Turkey.

[01:01:35] This one seems to be like a much more viable of all the acquisitions and much more sizable.

[01:01:41] TAM Finance is a commercial finance company in Turkey.

[01:01:43] They have a loan book of $300 million, which is impressive.

[01:01:46] $300 million of assets.

[01:01:48] And that represents 40% of the whole market.

[01:01:51] When I saw 40%, I was like, wait, what?

[01:01:53] Now, I don't know how they define the market as the micro part, the whole market.

[01:01:57] But regardless, they seem to be one of the biggest, if not the biggest player.

[01:02:00] And this company had also raised $30 million before, primarily through debt.

[01:02:05] But people have put $30 million that they expect a return on, whether it's 10 or 12 or 15 or 100% into this company.

[01:02:12] And they got 100% acquisition of the Turkish company.

[01:02:16] Also, it seems to be very offline because reading between the lines, they're like, oh, 39 branches in 26 cities.

[01:02:22] Why do you need that many branches?

[01:02:23] You need that many branches if it requires a lot of paperwork, vetting, signing and stuff.

[01:02:28] It seems as though it's not quite at the level of giving loans just based on data like you'd expect from Carbon or from all those guys.

[01:02:37] It's very offline because 39 branches is a lot.

[01:02:39] They do have that.

[01:02:41] They probably combine that from when you're on the transaction.

[01:02:44] It's like combining time finances, credit models, distribution capabilities, and management team with M&T Halland's technology, customer-facing app, and financial muscle will complete the product offering and give greater confidence to all stakeholders.

[01:02:57] And then something about Tokyo and Egypt.

[01:03:00] Yeah.

[01:03:00] Yeah.

[01:03:00] When I read some of the press releases, a lot of them kept on saying automated credit approval, tech, but 39 branches, I mean, something doesn't match because it's not as though they offer every banking service.

[01:03:13] If you go on their website, they say they're primarily non-bank micro-leasing company and do lending to micro-enterprises and SMEs.

[01:03:20] But I guess every great question is always both.

[01:03:24] Yes, they do a little bit of technology, but 39 branches is a lot.

[01:03:27] Yeah.

[01:03:28] And partnerships, those are the questions.

[01:03:30] Take a step back at this.

[01:03:31] Looking at acquisitions, I couldn't figure out a price for all of them.

[01:03:34] The majority of them were based on ShareSwap.

[01:03:35] If you contrast with it, they're looking to spend all their money on operations and everybody makes money when the pie gets bigger, which is an interesting thing.

[01:03:41] But I'm sure they'll have to pay the founders something to acquire that company.

[01:03:44] You can't just do ShareSwap and say, continue this.

[01:03:47] Get off this bus, enter another bus.

[01:03:49] Get off this bus, enter another bus.

[01:03:50] Don't let me go to the bathroom or give me a snack.

[01:03:52] Leave me a little burger to eat.

[01:03:53] It's fine now.

[01:03:53] Earn out.

[01:03:53] They'll give you the earn out over five years.

[01:03:55] You have to steal.

[01:03:56] You get the things.

[01:03:57] Oh, you have to give me something when it comes.

[01:03:59] You can't just don't give me anything.

[01:04:00] That's it.

[01:04:02] The earn out is the something.

[01:04:03] That's a bouncer outside a nightclub.

[01:04:05] You have to give me something.

[01:04:06] You can't just tell me to get off one bus and get on another bus and say, sit down and put in your seatbelt.

[01:04:11] I've already been on that seatbelt for a while now.

[01:04:13] If you bring a new bus, at least let me drink some water.

[01:04:17] It's a nice strategy.

[01:04:18] I just like, we're going to expand through M&A and we're going to raise money for the expansion.

[01:04:24] Just a clean story.

[01:04:25] Now, is it going to work?

[01:04:26] TBD.

[01:04:27] But it's cleaner than number one, just talking about it, never doing it.

[01:04:30] Number two, being unclear about how you're going to do it.

[01:04:32] Number three, the worst is saying we're going to start from scratch.

[01:04:35] I just don't believe it.

[01:04:36] The markets, no matter, like even Nigerian Ghana, which should be the most similar markets,

[01:04:42] like you speak the same language, similar culture.

[01:04:44] Even then, I would still do M&A because you still need to get the licenses.

[01:04:48] It's not as easy as just popping up in a country.

[01:04:50] Oh, let me start my business.

[01:04:51] When everybody has raised money from Y Combinator and engineers, I learn.

[01:04:54] What are they going to do?

[01:04:56] You just have to wait.

[01:04:59] Swallow it.

[01:05:00] Swallow it.

[01:05:01] You just have to wait.

[01:05:02] Go and find the guys that build GT Bank app.

[01:05:05] Anyways, on their partnerships, they've really focused on acquisitions to help with distribution in their markets.

[01:05:10] They don't really start from scratch.

[01:05:12] And if you think about the fact that the roots of M&T, Hala, and have come from really this distribution advantage that they've had in their home market,

[01:05:20] and really trying to replicate that in their existing markets.

[01:05:22] They're going after people who have a lot of customers where they feel like they can help.

[01:05:25] And that's been, for me, that's one of the biggest lessons here is like the ability to really figure out distribution very early.

[01:05:32] Because distribution really beats product all the time.

[01:05:35] Definitely couldn't have been the only microfinance bank in Egypt.

[01:05:37] But if you're the one that works, that is the subsidiary of the largest car after sales network in Egypt and the largest multi-manufacturer in Egypt,

[01:05:46] then they're the one that people are going to see and use as well.

[01:05:49] 100%.

[01:05:50] In fact, we could tell the story in inverse and say the story of M&T, Hala, is the story of GB Auto, like buying tech stacks.

[01:05:58] Yeah.

[01:05:58] Like they bought M, they bought C, they bought Hala, they bought Tams Finance.

[01:06:05] It's almost all M&A from GB Auto.

[01:06:07] Now, that's not really the right way to say it because someone actually started some of these companies.

[01:06:11] But it's just from GB Auto's perspective, it's like we have distribution, we're not so good at tech.

[01:06:16] Who can we partner or buy to help us with the tech?

[01:06:18] That's another way to tell the story.

[01:06:20] That's actually one way to think about it.

[01:06:21] I actually didn't think, I thought about GB Auto as seeding this versus nurturing this.

[01:06:27] And it was kind of like a different perspective.

[01:06:29] If you say GB Auto has a desk and they have a VC, if GB Auto said they had a VC arm and they have GB Auto Ventures and they had this as a subsidiary,

[01:06:38] basically same outcome, we would definitely think about it very differently.

[01:06:41] I realize that's my own bias, but this is a purely GB Auto incubated majority-owned company.

[01:06:46] 100%.

[01:06:46] It's very similar to the one in Bangladesh we looked at, even more similar.

[01:06:50] Bcash, which is like how many percent they own Bangladesh's bank?

[01:06:54] Everybody's like, yeah, startup.

[01:06:55] But like, nah, dude, the bank that owns it is a backbone of that stuff, you know?

[01:06:59] And the bank still owns a large portion of it because Bangladesh says that a bank must own like only 50% of these guys.

[01:07:05] They have all the rewards and they're selling the other stuff.

[01:07:07] It works, man.

[01:07:08] When it works, it works.

[01:07:09] Do you have any counter examples of when it doesn't work?

[01:07:12] You see a large company incubate something.

[01:07:14] I mean, GT Bank is doing their wet thing with their squad and their various stuff.

[01:07:18] Unfortunately, the whole story of affordability is a story of survivorship bias.

[01:07:22] By definition, we're picking only the successful samples out of the full sample size.

[01:07:27] We're biased by our selection process.

[01:07:29] No, can't even think of one that didn't work if I think about like the CVC that we've heard.

[01:07:34] But by definition, if it doesn't work, it's never going to get to scale.

[01:07:37] We wouldn't know about it.

[01:07:37] If it gets to scale, then it's worked.

[01:07:39] Unless you're talking about ones that seem to work and then reversed.

[01:07:42] Now we're getting into nuanced mattership.

[01:07:44] I mean, GT Bank launched the squad payments product.

[01:07:47] I don't know where that went.

[01:07:48] I haven't seen anything about it in a while.

[01:07:50] Hey, hey, you forgot when these guys were doing blockchain.

[01:07:54] Don't even get me started.

[01:07:55] Everybody was in blockchain, have you?

[01:07:57] No.

[01:07:58] No, man.

[01:07:58] There's some terms where when I hear them in the context of the company's primary business

[01:08:03] and they say they're going to do it, I just shake my head.

[01:08:05] I think once in a safari con, they were going to do some social media app.

[01:08:08] There's always all this stuff.

[01:08:09] It's always like, nah, just leave it.

[01:08:10] Like social media is too far from your core strength.

[01:08:14] It's not going to work out.

[01:08:15] Yeah.

[01:08:16] Anyways, that's that.

[01:08:17] That's that.

[01:08:18] On the partnerships, team strategies, I looked at a team, where their teams,

[01:08:21] the teams are mostly based in Cairo, Egypt.

[01:08:22] It was interesting.

[01:08:23] I looked at their jobs.

[01:08:24] There's really good jobs there.

[01:08:25] If you're looking for a job, definitely check out their website.

[01:08:27] If you're willing to move to Egypt, though.

[01:08:30] I didn't find anything else that was not in Egypt.

[01:08:32] That's to speak to at least some of these acquisitions are still new

[01:08:34] and probably still run their own independent recruitment processes

[01:08:37] for like advanced microfinance or time finance in Turkey.

[01:08:40] However, it does seem to be a very Egypt-centric company.

[01:08:43] For example, no jobs in Netherlands.

[01:08:45] Maybe that's just, maybe that's our criteria for the country of origin

[01:08:50] is where the jobs on the website listed.

[01:08:52] And if by that metric, they are an Egyptian company.

[01:08:54] Oh, yeah.

[01:08:55] Oh, that's a similar metric for like three years ago.

[01:08:57] Like, is this a tech company?

[01:08:58] Is it tech-enabled?

[01:08:59] Is it tech?

[01:09:00] I'm like, how many employees are software engineers?

[01:09:02] Boom.

[01:09:02] That's the answer.

[01:09:03] If 90% of the company works in operations,

[01:09:05] I don't know what they're enabling, but they're not a tech company.

[01:09:09] Yeah.

[01:09:09] You can add PMs to that, I guess.

[01:09:11] But if not engineer PM, everyone else is not part of the core of the business.

[01:09:13] Sorry.

[01:09:14] I'm a PM.

[01:09:15] I don't even add PMs to that.

[01:09:17] It's a lot of PMs.

[01:09:18] PMs are corralling all the cats, man.

[01:09:20] PMs are just making everybody feel good.

[01:09:23] And you realize, oh my God, why do you need people?

[01:09:24] That's valuable, man.

[01:09:26] If people don't feel good, nothing ships.

[01:09:30] Shareholders.

[01:09:31] Executives.

[01:09:32] The board.

[01:09:33] PMs just make everybody just feel like, yo, I'm here for you.

[01:09:36] Talk to me.

[01:09:37] Complain to me.

[01:09:38] Yell at me.

[01:09:39] It's like you're partially a therapist.

[01:09:41] Oh my goodness.

[01:09:42] Oh my goodness.

[01:09:43] Well, he's about to start advancing.

[01:09:44] Barkley, let's just continue with the podcast.

[01:09:45] This is not even therapy for me.

[01:09:47] Off podcast.

[01:09:47] Off podcast.

[01:09:48] Yeah.

[01:09:48] Off podcast.

[01:09:48] Yeah.

[01:09:49] I'm not even complaining.

[01:09:50] I love being a PM.

[01:09:51] Cool.

[01:09:51] That's that on their growth and acquisition.

[01:09:54] They are in four countries.

[01:09:56] They acquire, they're an acquisition hungry company,

[01:09:59] but they don't have a big appetite.

[01:10:02] Outside of Time Finance, which is the most sizable one,

[01:10:04] they don't seem to go with companies that have raised significant amounts of money.

[01:10:07] And they're not into like mergers,

[01:10:08] like Wasoco and they're not into like merger type peers.

[01:10:12] They obviously want to retain control.

[01:10:14] And they're based through primarily in Egypt.

[01:10:18] I'm going to talk about the products and monetization strategy.

[01:10:21] I'll start with the product side.

[01:10:22] How has the MNC product line evolved over time?

[01:10:26] Of course, they started with the ride hailing 2017, 2018,

[01:10:29] which, as we said earlier, they quickly stopped and they shifted into FinTech.

[01:10:34] And when we say FinTech, what do they specifically do?

[01:10:37] So they've been in a lot of different businesses over time.

[01:10:40] I'll talk about it chronologically.

[01:10:41] Then at the end, I'll give the summary of all their current businesses.

[01:10:45] So 2019, 2020, what did they start with?

[01:10:47] Digital wallets.

[01:10:48] That's the easiest to do.

[01:10:50] And they had the acquisition of our CDs.

[01:10:52] They could easily launch that.

[01:10:53] Digital wallets, bill payments, mobile recharge.

[01:10:57] Mobile recharge is when someone buys credit for their phone,

[01:11:01] basically top up, very easy to do because you just hook into a distributor

[01:11:04] and it takes a margin when you sell that.

[01:11:07] And then eventually they started to do lending,

[01:11:08] but they started with micro loans for SMEs and individuals

[01:11:13] who were willing to take the leap to use an app

[01:11:15] versus following the traditional route.

[01:11:16] So that was 2019, 2020, their initial businesses.

[01:11:19] Over time, they started to brand themselves more as a financial super app,

[01:11:25] aka financial ecosystem.

[01:11:26] And they started to offer some more interesting things.

[01:11:29] First, BNPL, buy now, pay later.

[01:11:31] E-commerce integration, because they bought the e-commerce player,

[01:11:35] the B2B e-commerce player, they also added that to that.

[01:11:38] Yeah, thank you, Talabia.

[01:11:39] And then they started to say they would also start to look into things

[01:11:42] like insurance and investments as of 2022.

[01:11:46] So as of today, 2024, let's go through all the products.

[01:11:50] I'm going to put everything together and talk about all the different products.

[01:11:52] Business and consumer lending is their primary area.

[01:11:55] And what's under that?

[01:11:56] Under that is BNPL.

[01:11:57] We spoke about payroll lending.

[01:11:59] You can get a salary advance three to five days before,

[01:12:02] get up to 80%, and then you can pay back when they take it out of your salary.

[01:12:06] They do light vehicle financing, which I was like, wait, light vehicles, what?

[01:12:11] I'm not even going to go into that.

[01:12:12] Let's just say-

[01:12:13] That's the motorcycles and three wheelers versus cars.

[01:12:17] Versus cars or trucks.

[01:12:18] It sounds very formalized to say it that way.

[01:12:21] They also give nano loans, which are basically micro loans, SME lending, of course.

[01:12:26] And then all those things combined are all under the umbrella of the business and consumer lending,

[01:12:32] which you can access on the app.

[01:12:34] Next, digital payments, loan disbursements, P2P transfers, as you'd expect, bill payments,

[01:12:42] virtual cards, payroll disbursement, and then cash in, cash out.

[01:12:46] If you want to go to an agent or go to an official ATM, digital payments.

[01:12:49] Then the last leg is all the commerce stuff.

[01:12:52] B2B, they now do B2C e-commerce as well.

[01:12:55] And you can get home appliances and electronics from the e-commerce site,

[01:12:59] which is integrated to the same sites on the e-commerce slash deals part of the site.

[01:13:03] So that is all their current products today.

[01:13:06] Quite a lot.

[01:13:07] What don't they do is kind of like the real question.

[01:13:10] Ah, that's true.

[01:13:11] We have a list of, I have the personal finance OS.

[01:13:14] You can look at what they don't do.

[01:13:16] List of personal finance OS.

[01:13:17] Yes.

[01:13:18] They don't have a subscription service.

[01:13:21] Yeah.

[01:13:21] Which the most notable subscription service globally is 2, 2, 2, 2, 2, 2, 2, 2, 2, 2,

[01:13:27] and 26.

[01:13:27] They charge like 20 euros per month.

[01:13:29] And then Robinhood have Robinhood gold if you're American.

[01:13:32] What else do they not do?

[01:13:34] They do not do, I don't think they've officially launched stock trading.

[01:13:38] Yeah.

[01:13:39] I don't see stock trading.

[01:13:40] Although I could be wrong, but I didn't see that.

[01:13:43] I don't think they've launched that yet, which is quite popular.

[01:13:45] If you're in Nigeria, think about Bamboo Shaka.

[01:13:47] If you're in America, obviously Robinhood.

[01:13:49] They don't do crypto trading and they don't do remittances.

[01:13:52] I'm looking at the full personal finance.

[01:13:54] Obviously they don't do advertising.

[01:13:56] Advertising is a, hey, I mean, and then data monetization.

[01:14:01] God, we will never know if they do it.

[01:14:03] But the main things they don't do, which are part of the personal finance OS are insurance,

[01:14:08] remittances, crypto, and stock trading.

[01:14:10] They could offer those in the future.

[01:14:11] I'm sure it's on their roadmap.

[01:14:12] Yeah.

[01:14:13] Especially if they figure out the right model and the right way to offer it.

[01:14:16] And if customers are asking for it as well, I think they can offer it.

[01:14:19] Yes.

[01:14:20] And then when it comes to offering it, we spoke about this in a lot of offerability episodes.

[01:14:23] You could just do a plugin to a third party who already offers that.

[01:14:27] And basically it's just a distribution channel and you take a margin.

[01:14:29] Or you could offer it yourself as a first party.

[01:14:31] In which case you need more partnerships, more licenses, but you get a higher margin.

[01:14:35] You have a direct relationship.

[01:14:36] So it depends on like how fast you want to go, how much margin, how much risk.

[01:14:39] They have a bunch of different things.

[01:14:40] But it seems as though the most likely would be, I guess, the stock trading.

[01:14:46] I don't know about remittances.

[01:14:48] Because Bankly, you had a good point on the former episode.

[01:14:50] That's the other way around.

[01:14:51] The core customers are in America, Europe versus here.

[01:14:53] The core customers are in Egypt.

[01:14:55] So it sounds like a good idea, but it's not as easy as it seems.

[01:14:58] Because the opposite, not opposite, the core customers are in different regions.

[01:15:02] Let me just put this way.

[01:15:03] Nobody in Nigeria is asking me to send me money.

[01:15:05] Are you sure?

[01:15:06] Bankly.public.com.

[01:15:08] Nobody has asked me.

[01:15:09] I didn't say that people are not asking.

[01:15:11] I said personally.

[01:15:14] Nobody's asked me to say, hey.

[01:15:15] This is some grammatical shit.

[01:15:16] Explain to me.

[01:15:17] You're saying no one has asked you, but they are asking you.

[01:15:19] Wait, what?

[01:15:20] Do you understand?

[01:15:22] No, I don't understand.

[01:15:22] You're getting it, have you?

[01:15:24] When it comes to money transfer, nobody has said,

[01:15:29] I've died, I've died.

[01:15:30] Make I give you, let me give you $100.

[01:15:33] Let me send you.

[01:15:34] This is your head that is looking anyhow.

[01:15:36] Let me give you something to address it.

[01:15:38] Nobody has asked me before.

[01:15:40] So I've never even thought of the fact that, oh, I need to find a provider that lets them

[01:15:43] do that.

[01:15:43] It's never even got caught to me before.

[01:15:45] But the other way around, they've asked me.

[01:15:47] Then I have to check for what's available.

[01:15:48] Ah, let me use Lemphire.

[01:15:49] Let me use Send by Flutterwave.

[01:15:52] Let me use my head.

[01:15:52] If you say it's a big deal, I would say you say it is.

[01:15:56] All right.

[01:15:56] Let's wrap up this section.

[01:15:58] Those are the things they're not offering on the B2C personal finance OS side.

[01:16:02] On the B2B side, there's some things that they're not offering, which are actually quite

[01:16:06] known, quite well known in the rest of Africa.

[01:16:08] They don't do API calls for access to other fintechs.

[01:16:13] So for example, Plaid in the US or Mono Nigeria, since there's no open banking, you can connect

[01:16:19] other parts of the financial ecosystem by doing an API call and then they charge for

[01:16:23] access to that.

[01:16:23] They do not do that.

[01:16:24] They don't really do SaaS in the same way.

[01:16:27] They do a little bit of that, but not specifically.

[01:16:29] They take a margin when a merchant buys something, which is different than SaaS, which would be

[01:16:32] a service where you pay a recurring fee.

[01:16:34] And then payment processing, they don't do that in the same way Flutterwave and Paystack

[01:16:37] do that.

[01:16:38] They're actually on the B2B side, they don't do as much.

[01:16:40] On the B2C side, they do almost everything.

[01:16:42] That is their product strategy.

[01:16:44] I'm going to talk about monetization.

[01:16:45] Banco, any thoughts before I get into monetization?

[01:16:47] No, let's talk about monetization.

[01:16:49] Monetization, based on the business model, it would be exactly as you expect.

[01:16:52] Their primary monetization is microfinance and lending interest income.

[01:16:57] Because they give me loans, that's what they know them for, that's where they get their

[01:17:00] money.

[01:17:00] The second piece is also BNPL.

[01:17:02] When a user comes to purchase something, they can take a little bit of a margin because

[01:17:06] they're in between the merchants and the purchaser.

[01:17:09] Also, they may have some transaction fees that they charge just for all the different

[01:17:13] transactions that go on the platform.

[01:17:15] When you buy a mobile recharge, when you do a P2P transfer, although that's probably when

[01:17:19] you're cashing out.

[01:17:20] Usually, P2P transfers are free.

[01:17:22] It's the cash out that has a fee.

[01:17:23] In general, bill payments.

[01:17:24] The bill payments will be the same bill for the purchaser, but then they can charge the

[01:17:28] merchants.

[01:17:29] And then finally, e-commerce.

[01:17:31] Since they're not offering their own e-commerce play, they can also make some money that way.

[01:17:34] Those are the primary monetization opportunities.

[01:17:37] But I'll just emphasize, really, the big one is just interest income.

[01:17:39] The rest of the ones are really small.

[01:17:41] And obviously, these have commission on rights, but that's no longer applicable.

[01:17:44] I was just looking this up.

[01:17:45] And the last part, I saw that the Central Bank of Egypt has a benchmark interest rate at

[01:17:49] 27.25%, right?

[01:17:51] If you're getting-

[01:17:51] Lord have mercy.

[01:17:52] Well, benchmark interest rate, right?

[01:17:54] Then everything is benchmarked off that.

[01:17:56] That's the minimum.

[01:17:56] That's the minimum.

[01:17:57] So if you're doing loans, these loans are typically short-term.

[01:18:02] They may end up being higher.

[01:18:03] And if you have USD or you have a portfolio of loans, you can actually be super profitable,

[01:18:09] even if you're adding the currency risk.

[01:18:10] And you basically, with a proper treasury function, may be able to make a decent killing

[01:18:17] on the first part.

[01:18:19] So if microfinance and interest revenue is a bigger part, given the size of the benchmark

[01:18:22] interest rates and the broad diversity of their loan book of different kinds of loans with

[01:18:28] different maturities and how well they say they are, how good they say they are at credit

[01:18:32] scoring, I believe, I'm willing to believe to borrow conviction from Deepay and Co. that

[01:18:39] the numbers are looking nice.

[01:18:41] Yeah.

[01:18:41] I buy it, especially on the asset-backed side, all the ones that are collateralized.

[01:18:47] The other part, I don't know.

[01:18:48] I'm always hesitant.

[01:18:49] Hopefully, yes, but I don't know.

[01:18:50] But you have a portfolio, right?

[01:18:52] That's what I'm saying.

[01:18:53] Yes, exactly.

[01:18:54] Spread out risk.

[01:18:55] Yeah, spread out risk.

[01:18:55] Different maturities as well.

[01:18:57] Yes, yes, yes.

[01:18:57] Even if it's a max of 90 days, different maturities over 90 days allow you to, you can

[01:19:02] even buy, you can borrow money overnight lending if you have access to those markets in Egypt.

[01:19:05] We get into a different perspective that I know or don't know.

[01:19:09] But that spread is looking really nice.

[01:19:13] Even if you just even keep them on an Egyptian pound, the government bonds aren't giving you

[01:19:16] that much.

[01:19:17] The treasury function can generate a bunch of cash for you.

[01:19:20] Hey, that's why they keep raising money.

[01:19:22] I'm going to talk about the cost side now, cost structure.

[01:19:25] As you'd expect, the biggest cost errors would be loan losses or basically risk.

[01:19:33] That's funny.

[01:19:34] I'll have to say it in a nice way.

[01:19:35] Let's just say potential losses if their credit and risk scoring isn't as accurate or

[01:19:40] gets worse over time.

[01:19:41] The second biggest one would be geographical expansion.

[01:19:43] Normally, this is not really a big cost error.

[01:19:45] But every time I listen to them talk about their growth strategy, they emphasize a lot of M&A.

[01:19:52] I'm guessing that could be a cost area depending on how big they want to go with that.

[01:19:57] Next is, of course, salaries.

[01:19:58] CAC.

[01:19:59] CAC is typically unbelievably high for these kinds of companies.

[01:20:02] In this case, I don't know if it'll be that high.

[01:20:03] They have a lot of brand recognition.

[01:20:05] They're well known.

[01:20:06] They have distribution advantages.

[01:20:08] CAC is the sort of CAC.

[01:20:09] You took those out of my mouth.

[01:20:10] Exactly.

[01:20:11] It's typically using CAC as high as because you don't have distribution.

[01:20:13] You have to pay aggressively to get word of mouth, people to know you, and then people

[01:20:17] to onboard on the platforms.

[01:20:19] I guess it could be lower, but it's good to put here.

[01:20:22] I think those are the four or five big buckets of costs for them.

[01:20:25] On the salaries, they repeatedly say they have the largest engineering team in Egypt.

[01:20:30] I can't remember what's in the Middle East, but large engineering teams is...

[01:20:33] I think when they announced the TAM Finance acquisition, they had 120 engineers.

[01:20:37] They do have a quite number of engineers and do have a number of engineering openings on

[01:20:40] their website.

[01:20:41] So they do hire a large amount of engineers.

[01:20:43] And one of the co-founders of, I guess, Halan is also the CTO now, Amin Mohsen.

[01:20:49] They do have like a...

[01:20:50] They're also a repeat founder as well.

[01:20:52] They have like a large bench of engineers and technical talent, which is kind of like

[01:20:56] the underappreciated part of their story.

[01:21:00] Yeah.

[01:21:00] Unfortunately, I didn't have a chance to test the app because I don't have Egyptian citizenship

[01:21:04] or Egyptian ID or Egyptian phone number.

[01:21:07] But from the screenshots and video, it looks clean.

[01:21:09] It looks like it works well.

[01:21:10] I read the Android reviews.

[01:21:13] It looks good.

[01:21:14] I wish I could have tested it myself.

[01:21:15] So I think on the tech side, I didn't see a lot of major complaints.

[01:21:20] Although I'm not sure if it's similar to Nigeria where people complain about the apps

[01:21:23] on Twitter.

[01:21:24] I mean, I've missed a whole...

[01:21:25] I didn't see the Twitter...

[01:21:26] In Arabic also.

[01:21:28] Yeah, I read Arabic.

[01:21:29] Exactly.

[01:21:30] Right, right, right.

[01:21:31] They were like...

[01:21:32] You use Google Translate to be like, you're a guiding tool.

[01:21:35] You'd be like, that's the worst insult you can give somebody else.

[01:21:38] They're like, what?

[01:21:39] Google Translate, guiding yourself so innocent.

[01:21:42] That's horrifying.

[01:21:43] Let's wrap up this section with some quick statistics and metrics on how the company

[01:21:48] is currently performing.

[01:21:49] As of late 2024, as of recording day, the company claims to have disbursed around $4.5 billion

[01:21:55] in loans since inception.

[01:21:58] Not annually, since inception.

[01:21:59] So we got a count from over the past week.

[01:22:02] But that's still a lot of money.

[01:22:02] $4.5 billion with a B.

[01:22:04] They also claim to have 25% of the Egyptian microfinance lending market.

[01:22:10] A lot.

[01:22:11] And then, as we said at the top of the show, they have between 2 and 2.2 million active

[01:22:17] users per quarter.

[01:22:19] Per quarter.

[01:22:20] And then their loan portfolio exceeds that of almost all other banks in Egypt.

[01:22:26] They've done a lot, and they've done quite well, and they seem to be making a lot of progress.

[01:22:30] But I'm sure there is that loan portfolio in this customer segment.

[01:22:34] All you got to do is loan money to two or three port operators or something.

[01:22:38] Yes.

[01:22:39] For some now-dredging projects.

[01:22:41] Not total.

[01:22:42] Yeah, yeah.

[01:22:43] It can be because total is like commercial loans, which are massive amounts.

[01:22:46] That's a completely different market.

[01:22:47] Microfinance is like regular people.

[01:22:50] So, fascinating.

[01:22:51] Also like a super relatively inefficient way to do it.

[01:22:54] Correct.

[01:22:54] And then as of 2020 to 2023, they had around 120 engineers, like you said.

[01:23:00] They used to have 1.3 million monthly actives.

[01:23:04] I tried to find monthly actives just to see if there was a massive gap.

[01:23:06] We've seen monthly and quarterly.

[01:23:08] There's not that much of a gap.

[01:23:09] I don't know why they were reporting quarterly then.

[01:23:11] Yeah, those are the main stats.

[01:23:13] They seem to be doing quite well.

[01:23:14] Also, a lot of growth.

[01:23:16] Okay.

[01:23:17] Coming back.

[01:23:17] As of 2021, it looked like they generated around $100 to $200 million of annualized revenue.

[01:23:25] And that's already three years ago.

[01:23:28] They seem to be doing quite well.

[01:23:29] Although it was unclear.

[01:23:31] Because the Egyptian pound is done poorly.

[01:23:34] Like they're always battling that.

[01:23:36] And I didn't get any more recent numbers.

[01:23:38] 27% inflation as well.

[01:23:41] Imagine.

[01:23:42] Imagine.

[01:23:43] Yeah.

[01:23:43] If you're fighting that.

[01:23:44] And that's annualized.

[01:23:45] If you do three years, you count 20 on 20 on 20 on 20 with devaluation.

[01:23:48] Couldn't find more recent numbers.

[01:23:50] But 100-ish million three years ago, depending on the growth rate, could be quite sizable.

[01:23:53] They seem to be doing quite well.

[01:23:54] And they are raising 160 every 18 months.

[01:23:57] If inflation was not high, how much would they be raising?

[01:24:00] Hey, hey.

[01:24:00] And then the last thing to close is that $100 to $200 million as of 2020, 2021 had a 30% CAGR back then.

[01:24:07] Obviously, the CAGR is not likely to bigger numbers, smaller CAGR, but still a lot of potential growth.

[01:24:13] They seem to be doing quite well overall.

[01:24:15] Yeah.

[01:24:15] Yeah.

[01:24:15] Honestly, with the numbers they are raising, there's two parts.

[01:24:22] One is that with the numbers of money, amount of money I'm raising, there's two parts.

[01:24:25] One is the numbers have to be good.

[01:24:27] Absolutely.

[01:24:28] And the second part is also relative to others.

[01:24:30] Absolutely, it has to be good.

[01:24:31] And relative to others, it has to be like really good.

[01:24:34] I suspect that the second part is really where they shine.

[01:24:36] Like if you want to put money in an African fintech, in an African business, if that's the market you're in, this is the deal you have to take.

[01:24:43] All the times that, I don't know, in 2018, the last time Paystack raised or last time Flutterwave raised, it's like, look.

[01:24:49] So, if you want to do fintech, or you want to do payments processing, this is the deal that you should take.

[01:24:54] Maybe you don't want to do, but this is the deal.

[01:24:57] Oh, it's too expensive?

[01:24:58] Maybe you don't want to invest.

[01:25:00] But I feel like they're in that position in their markets where it's like, you're either playing this game or you're not playing this game, but this is the price.

[01:25:06] Oh, it's overpriced.

[01:25:08] Sucks for you, doesn't it?

[01:25:09] Yeah.

[01:25:10] Because you would expect a unicorn, you'd expect a company that has a valuation in the billion side to have hundreds of millions of revenue, which they seem to have, number one.

[01:25:18] And then number two, it just makes sense.

[01:25:20] They're one of the most populated African countries, and they're offering one of the more attractive parts of the financial stack, which is lending.

[01:25:28] And they're hedged by doing some business part.

[01:25:30] Because the riskiest part of lending is regular consumers will screw you since they do businesses.

[01:25:34] And then they're double hedged by doing business and asset-backed.

[01:25:38] And international.

[01:25:40] Correct.

[01:25:41] And then they're triple, just keep on hedging, by doing the international.

[01:25:44] And then because they have the partnership with GB Auto, they also have distribution.

[01:25:48] It's just like, they have a lot of things which make it like, on the surface level, you'd look at them and be like, oh, they're just like carbon.

[01:25:54] But no, they're completely different because they're bigger, they're hedged.

[01:25:58] They have way less competition.

[01:25:59] They don't have fair money backing down them.

[01:26:01] They're internationally hedged.

[01:26:01] And they have a distribution partner who's the majority ownership that can enable them get into market.

[01:26:06] A 7 to 10x multiple is...

[01:26:11] Not bad for a fast-growing fintech.

[01:26:13] It's pretty good.

[01:26:13] Like, it's like, for fast-growing pre-public VC-backed and you get a 7 to 10x revenue multiple.

[01:26:20] I don't even think that you get that on many other companies.

[01:26:24] Forget public self.

[01:26:25] I mean, it's like pre-public, you don't even get that.

[01:26:27] Like, the insanity happening in public markets now is, you don't even get that.

[01:26:30] If you can get either 100 to 200 million in 2021, and they are valued at 1 billion in 2024.

[01:26:37] So, at least it's gone.

[01:26:38] Revenue is like 200 and 150 now.

[01:26:40] And that's like a 5x revenue multiple.

[01:26:43] That's a deal you should take.

[01:26:45] That's a good price.

[01:26:46] You believe the Egyptian market doesn't completely collapse, which can happen.

[01:26:51] Again, exactly.

[01:26:52] It's horrible.

[01:26:52] But hey, if you're an Egyptian investor, that's what you do.

[01:26:55] I used to tell people, I was like, oh.

[01:26:56] When people say stuff like, oh, the stock market is overpriced, we can't invest.

[01:27:00] They'll be like, yeah.

[01:27:00] If you're Warren Buffett, and you invest your own money, you can wait.

[01:27:04] If you're JP Morgan and Morgan Stanley, you're a stock market investor, oh, it's overpriced.

[01:27:08] Everything is a bubble, bro.

[01:27:10] Your job is not to come to the office and read newspaper.

[01:27:12] Your job is to invest.

[01:27:13] That's funny.

[01:27:14] But most of the investors are in USD investment.

[01:27:17] Your explanation only doesn't take into account that.

[01:27:20] No.

[01:27:20] If you're a USD investor, and an LP is giving you money to diversify their portfolio of returns.

[01:27:25] If you're an LP, if CalPERS is giving you money, it's because they want exposure to different regions and different kinds of return profiles.

[01:27:31] So if they're giving you money because you invest in Africa, you better go invest in Africa.

[01:27:35] If you can't invest in Africa, give me the money back.

[01:27:37] Let me give somebody else who can find me a deal.

[01:27:39] This is the deal that's available.

[01:27:41] Yo, it's funny.

[01:27:42] I like the fact that they're hedged in Turkey and Pakistan.

[01:27:47] And I love the fact that I think Egyptian population is 100-something million, right?

[01:27:51] Yeah.

[01:27:52] Pakistani population, 100-something million.

[01:27:53] They're just in big markets.

[01:27:54] Pakistan is even more.

[01:27:56] 200-something.

[01:27:57] Yeah.

[01:27:58] So big numbers.

[01:27:58] I just love the fact that they're in big markets.

[01:28:01] It takes a lot of the risk out of it.

[01:28:03] Big markets plus distribution partner plus business lending.

[01:28:06] Hedge, hedge, hedge, hedge, hedge.

[01:28:08] Hope for the best.

[01:28:09] Yeah.

[01:28:09] Pakistan is 250 million.

[01:28:12] Egypt is 110 million.

[01:28:14] Oh, very nice.

[01:28:15] Let's talk about competition and options for exits.

[01:28:17] The best way to think about this company is as a super app.

[01:28:23] Because I struggle with, if you look at the BMPL or the lending or the B2B sales platform,

[01:28:30] I try to slice it out.

[01:28:32] But none of them are even at close to scale.

[01:28:34] If you're getting into anything that is close to any kind of scale that is a reasonable competitor to them,

[01:28:38] you'll have to start from super app.

[01:28:40] In Egypt, I found two and a lot more, but two major ones.

[01:28:44] There's MyFauri.

[01:28:45] We've talked about Fauri in a previous episode.

[01:28:47] Egypt's leading EPMS platform, public.

[01:28:49] They went on a tier during the pandemic.

[01:28:51] Like people made a lot of money from just investing in their public stock.

[01:28:53] That was like a fantastic time for people who could invest in there.

[01:28:58] They say they've, these numbers are from 2021, but 2 billion Egyptian pounds, but it's grown quite a bit.

[01:29:04] So that's one option, MyFauri.

[01:29:06] What's that in?

[01:29:07] 2 billion Egyptian pounds.

[01:29:08] That's the revenue valuation.

[01:29:10] No, no, no, no, no, no.

[01:29:10] Transaction volume.

[01:29:11] No, no, no, no, no.

[01:29:12] Transaction volume.

[01:29:13] Yeah.

[01:29:13] I know Fauri's valuation was around 700 something million.

[01:29:17] Yeah.

[01:29:18] Like 700, 605 I saw from Reuters, but it's fine.

[01:29:22] But Fauri is one super app that the competitor that people would use does similar,

[01:29:27] but mostly focused more on users.

[01:29:29] I couldn't find examples of the MyFauri app used for businesses.

[01:29:31] Like this.

[01:29:32] And lending.

[01:29:33] And they don't speak on lending either.

[01:29:34] On lending as well.

[01:29:35] So they do IP, wallets, and transfer.

[01:29:37] Yeah.

[01:29:38] Gift cards, buying gift cards, that kind of thing.

[01:29:40] There's also a Yala super app between PaySky, Asia Post, Visa.

[01:29:44] Launched in December 2021.

[01:29:46] Pretty aggressive.

[01:29:47] They grew very early after launch.

[01:29:49] I couldn't find any more information about that relative size.

[01:29:51] But it seems like between Yala super app and MyFauri, those are kind of like the biggest kind of super apps a little bit there as well.

[01:30:01] Yeah.

[01:30:01] There's a lot of pay mob, but it's unclear how big pay mob is going to be because they're still in the early growth phase.

[01:30:06] But they have a lot of hype.

[01:30:08] And they mostly do payment processing for merchants.

[01:30:11] Yeah.

[01:30:13] There's an Aladdin super app as well.

[01:30:15] Karim, Uber of the Middle East, does payments, grocery delivery, ride-hailing.

[01:30:22] Rezek.

[01:30:23] This is interesting.

[01:30:23] UAE-based app that launched in Egypt in 2021.

[01:30:26] It offers much more services, much more service-based super app.

[01:30:29] You can find a groomer, healthcare, car maintenance kind of thing.

[01:30:33] I don't like those kinds of businesses.

[01:30:34] But if you get a margin on the middle, right?

[01:30:36] What is your business?

[01:30:38] If they're going to use your platform and pay you, what's your business?

[01:30:42] You have to stop them disintermediating you and the person getting directly shipped with the cleaner and groomer cutting you out.

[01:30:47] Because if you're taking 20%, 30%, eventually both counterparties get angry and angrier.

[01:30:51] Because we've already connected the first time.

[01:30:52] And if you have a favorite barber, you don't need to always connect with them on the app.

[01:30:56] I don't know.

[01:30:57] There's a way to solve it if you have trust and you can do some escrow stuff.

[01:31:00] But it's not an easy solve.

[01:31:02] Most companies don't survive that.

[01:31:03] What they tell, I can tell you, the common answer to that, they tell you what they tell the businesses.

[01:31:08] What those businesses will say, and it's still being done whether that's true, is they tell the businesses,

[01:31:12] yes, that's maybe true.

[01:31:13] What I can do is I can help you find new customers all the time.

[01:31:16] You will lose customers from the time.

[01:31:18] If you stay on my platform and you keep paying me, I can help you find new customers.

[01:31:21] Now, I would ideally not like you to disintermediate me with the existing customers.

[01:31:25] But my job, the reason why you pay me 20% is to find new customers.

[01:31:29] And I will find new customers, more than you can find by yourself.

[01:31:32] That's always like a strong sell.

[01:31:34] Because small businesses are really focused on growing their revenue and finding customers.

[01:31:37] They sound like, hey, if you're a barbershop, for example, I'll find you new customers.

[01:31:40] When I was looking for a barbershop, I had to use all these apps.

[01:31:43] And the apps kept giving me people that were sponsored posts.

[01:31:45] I'm like, these guys suck.

[01:31:46] If you're going to pay a barbershop app to get an ad, then you're definitely a terrible barber.

[01:31:51] If you don't speak English.

[01:31:53] You're finished.

[01:31:54] Clean cut.

[01:31:55] You're a Brazilian flag.

[01:31:56] I love it.

[01:31:57] I love it.

[01:31:57] I didn't find them on the app, but I found them on the web.

[01:32:00] Terrible website.

[01:32:01] And I just took a chance.

[01:32:02] I went there.

[01:32:03] I caught fire, man.

[01:32:06] Oh, speaking of which, you have a two and a half?

[01:32:08] That doesn't look like a two and a half at all.

[01:32:10] At the top?

[01:32:11] Yeah, two and a half on the top.

[01:32:12] But you're pressed.

[01:32:13] It's a pressed two and a half.

[01:32:14] It's not flared out.

[01:32:15] Yeah.

[01:32:16] I love this conversation.

[01:32:18] The listeners are like, two and a half billion.

[01:32:21] Nah, bro.

[01:32:21] We're talking about the guard.

[01:32:23] The guard.

[01:32:24] The clipper guard.

[01:32:25] Yeah.

[01:32:26] You go to Lagos and tell Ibaba you want two and a half.

[01:32:28] You will be surprised.

[01:32:29] You'll be surprised.

[01:32:30] So they will go out for you.

[01:32:33] I'm telling you that.

[01:32:35] Oh, you just use ChadGBT.

[01:32:37] They have the voice mode.

[01:32:38] Oh, shit.

[01:32:38] Technologist of the year.

[01:32:39] You leave them looking like Mr. T.

[01:32:45] You'll be pressing your phone.

[01:32:46] You don't look up in the mirror.

[01:32:48] You look up in the mirror.

[01:32:49] You don't see it.

[01:32:50] It's what you asked for.

[01:32:51] Let's talk about exits.

[01:32:54] Also, I always like to on affability.

[01:32:56] We don't underplay it.

[01:32:57] The indirect competitors are mostly the traditional banks.

[01:32:59] The problem is really, and I'm going to use GTV as an example because I like to make fun of them.

[01:33:05] Banks have the potential to offer all these services.

[01:33:07] They probably offer even more services than M&T, Halan, than Fowry.

[01:33:12] The problem is they don't want to take the risk.

[01:33:14] They're too conservative.

[01:33:15] Their business models aren't set up.

[01:33:16] It may not be profitable for them to reach these customers.

[01:33:19] But just if they could find a way to make it work, I feel like there's a lot of potential.

[01:33:24] But I don't blame the CEOs and execs of traditional banks not getting some of these markets.

[01:33:28] If you're making a killing off of large enterprises, large businesses, you're offering them services and solutions and credit.

[01:33:34] Why do you want to take the chance?

[01:33:34] It's just something we should always know that it's a possibility.

[01:33:39] It's just not likely because it's not part of the business model or strength.

[01:33:42] But I also find it's like the innovator's dilemma, right?

[01:33:46] Because they're just never going to fund.

[01:33:48] They will always say they want to do it.

[01:33:49] Like, GTV Bank is a good example.

[01:33:51] Like, we'd score their payments platform and everybody spun out their own independent.

[01:33:54] Like, oh, they're going to use GTP.

[01:33:56] They rebranded GTP as its own payments thing to compare with Pistec and Flutterwave.

[01:33:59] Like, oh, we have the same thing internally.

[01:34:01] But it's never going to be given the same amount of support as, I don't know, online gas lending.

[01:34:06] 100% agree.

[01:34:07] You're going to get stuck.

[01:34:09] That's why everyone always says, innovator's dilemma.

[01:34:10] The only way out is you do your VC arm.

[01:34:13] You have your M&A.

[01:34:14] Yeah.

[01:34:14] You basically get equity states of the company doing it.

[01:34:16] And if they become a really big competitor, you buy them out.

[01:34:18] But trying to do it yourself is always, it just seems easy.

[01:34:20] It's hard.

[01:34:20] It's always easier to do the VC and M&A route.

[01:34:23] It will look expensive, but I'd rather pay 20%, 30% of my equity value than get to 0% equity value in 10 years when we're out of business.

[01:34:31] Shout out to Intel.

[01:34:32] Yeah.

[01:34:33] Oh, no, we're not doing that.

[01:34:35] I want to do a 30-minute rant on Intel, but it's been two hours.

[01:34:38] Let's just finish.

[01:34:39] But it's like, man.

[01:34:41] I respect that.

[01:34:42] I won't talk about it.

[01:34:43] Cool.

[01:34:44] Exits.

[01:34:45] Exits.

[01:34:45] I was looking at this company and thinking, hmm, how would they exit?

[01:34:48] They don't want to be, GB Autos doesn't want to be bought out or they would have been bought out already.

[01:34:53] I suspect that they want to go public, man.

[01:34:56] They want to take this thing public, be a subsidiary, and really run this as a core business.

[01:35:01] This is a, GB Auto is a conglomerate, GB Corp now.

[01:35:06] It's a conglomerate of multiple different businesses around the auto distribution and the added services around them.

[01:35:11] They do many other things.

[01:35:12] This is another business line.

[01:35:14] I suspect that the right option is for everybody to be able to collect their money.

[01:35:18] And those that want to stay, should stay.

[01:35:19] And those that want to go, should go.

[01:35:21] You think that's the, in the next five years, between 2024 and 2029, I think the most likely exit is IPO?

[01:35:27] I actually think so.

[01:35:28] Especially if you look at what happened with Fowry for good or for bad.

[01:35:34] For good or for bad, right?

[01:35:35] Because Fowry had a big pop when he went public.

[01:35:39] And then it's not, it's not really just height since, but you can see many Egypt specifically reasons, many external reasons.

[01:35:46] There will be some lessons from Fowry that maybe don't list in Egypt, or maybe list somewhere else or list in Egypt and do this differently.

[01:35:53] Hey, Netherlands hold co.

[01:35:54] Hey.

[01:35:54] Hey.

[01:35:54] So, so I suspect that there's going to be some version of that.

[01:35:58] That's what I would say is most likely next five years.

[01:36:00] Yeah.

[01:36:00] It's just, in a way, I want to agree with you, but all the stats show acquisitions are like 70 to 90% of exits, not IPOs.

[01:36:11] But instead of looking at the stats, we have to look at this specific unique case.

[01:36:16] They're just worth much money.

[01:36:17] Who's going to buy them?

[01:36:18] They were already a unicorn a year and a half ago in 2023.

[01:36:21] By the time they're ready for an exit in two, three years, they may be five, six, seven billion.

[01:36:25] You need a multiple on top of that.

[01:36:27] I mean, unless you're talking about PayPal, Square, Venom, those guys won't give a shit about this.

[01:36:31] I don't know.

[01:36:32] Yeah.

[01:36:32] Maybe it's IPO then.

[01:36:34] I don't know who's, even now, if you just take the one billion and you add a small multiple, two or three billion, who's going to pay three billion?

[01:36:39] You need to be, in order to buy a company for three billion, you need to be worth three billion yourself.

[01:36:43] How many African companies are worth more than three billion?

[01:36:45] I don't know.

[01:36:45] Less than five.

[01:36:46] I don't think it happens, personally.

[01:36:48] Well, if you look at the DPO one, another angle we may not be, we may be under-emphasizing is they may be a large Middle Eastern.

[01:36:55] Because these guys are part of the Middle Eastern sphere.

[01:36:58] And Middle Eastern fintechs, banks, they have a lot of money.

[01:37:02] Maybe it could happen.

[01:37:03] It's just, I'm not as familiar with that play.

[01:37:05] But I remember DPO, they got bought out by NI, Network International.

[01:37:10] And Network International had a bunch of money.

[01:37:11] And that was like a North Africa sub-Saharan.

[01:37:13] So maybe.

[01:37:14] But that was $300 million, though.

[01:37:15] Like, how much was...

[01:37:17] Correct.

[01:37:17] Yeah.

[01:37:18] I don't...

[01:37:18] Well, $200 to $300.

[01:37:20] $288.

[01:37:21] Yeah.

[01:37:21] Correct.

[01:37:22] This is 10x that.

[01:37:23] This is 10x that.

[01:37:24] This is...

[01:37:24] Yeah, this is...

[01:37:25] Yeah.

[01:37:27] You're reducing like, yo, you have money, but not like that.

[01:37:30] Not money like that.

[01:37:33] Yo.

[01:37:34] Like, everyone was like, hey, I thought you have money.

[01:37:35] And I'm like, yo, this place is carrying me to a launch.

[01:37:39] I can't do it.

[01:37:40] And jog my memory.

[01:37:42] Didn't NI also get bought by another company later on?

[01:37:44] And I got bought by another company, like, sooner.

[01:37:46] Accelerated vest now.

[01:37:47] You already know.

[01:37:49] My guy already said, I'm retired.

[01:37:51] My guy already said, Okpo, thank God.

[01:37:54] I'm already looking at...

[01:37:55] Jesus.

[01:37:56] I'm already looking at 19 more months.

[01:37:58] 18 months, 13 more days.

[01:38:00] 16 months.

[01:38:01] I'm free.

[01:38:01] I'm free.

[01:38:02] Change of ownership and control.

[01:38:04] Yo.

[01:38:05] My guy said, Peace.

[01:38:08] Here's my email address.

[01:38:09] No, the funny thing is they would have said...

[01:38:11] If he's still there, I actually should confirm he left.

[01:38:13] But if he's still there, they would have given him a new check.

[01:38:16] No, new check.

[01:38:17] New check.

[01:38:17] Wait, come on.

[01:38:18] He has to be a new check.

[01:38:20] So, that's my sense on how they can exit.

[01:38:24] It's like...

[01:38:25] Dude.

[01:38:26] Also, the other thing about the exits is why I think it's IPO is that...

[01:38:29] I put in my notes here.

[01:38:31] I said, Someone that is giving an interview with NYSE on a regular basis.

[01:38:35] He's always in the New York Stock Exchange.

[01:38:37] Is he tourism?

[01:38:38] Is he the Empire State Building?

[01:38:40] What's he doing in NYSE?

[01:38:41] All the interviews are him giving interviews like the NASDAQ website or the NYSE website.

[01:38:45] But why he's making relationships and they're making relationships with him as well.

[01:38:48] They're doing the rounds.

[01:38:49] They're saying all the right things.

[01:38:50] I'm optimistic it's going to be an IPO.

[01:38:52] But when they get there, it's not going to be surprising to the Bloombergs and investors of the world.

[01:38:57] Another small outlier option is when we were thinking about acquisitions, we're thinking about fintech acquisitions.

[01:39:04] Another financial company behind them.

[01:39:06] They may also be non-fintech companies that could be interested.

[01:39:09] Because in a way, if you're already a quote-unquote super app in another region, this is the closest you can get to.

[01:39:16] I just don't know.

[01:39:17] It's just expensive.

[01:39:18] That would then leave options like Gojek, even though they don't do transportation anymore.

[01:39:22] I don't think it's likely, but I think it's something to think about because that's a wider group of people with money.

[01:39:30] Grab, Gojek, Alibaba, all these other companies.

[01:39:32] I don't think that they'll do it.

[01:39:33] It's the least likely of the three, but it's still an option.

[01:39:36] Not every company is in fintech.

[01:39:38] Should we wrap?

[01:39:39] Yes, God.

[01:39:40] Yes, let's finish.

[01:39:41] Outlook.

[01:39:41] You want to go?

[01:39:41] You want me to go?

[01:39:42] I can go.

[01:39:43] My outlook is I have two things.

[01:39:45] One on the finding story.

[01:39:46] Another on the distribution benefit for founders.

[01:39:49] One is, I think the emerging markets, especially, all the knowledge about running a business is difficult to be codified.

[01:39:57] There's no startup school 200 videos on YouTube for doing business in Nigeria.

[01:40:02] If Shola made one in 2016, it would be useless in 2020.

[01:40:07] If Benga and I made one in 2018, it would be useless in 2023.

[01:40:11] So there's no hard-fought world lessons other than it becomes like vacuous, like listen to your customer and stuff like that.

[01:40:18] There is, doing business in many emerging markets, many parts of Africa is a minefield.

[01:40:23] And I saw all kinds of tacit knowledge, earned secrets.

[01:40:26] That's the right phrase.

[01:40:27] Secrets that are earned about starting on a place in a business.

[01:40:30] Those are the secrets that GB Auto has, that they cannot teach you, right?

[01:40:35] I have to do it for you.

[01:40:37] I have to do it with you.

[01:40:38] It really helps manage the risk, validate the opportunity and say that it's real.

[01:40:43] Because then you can be like, look, we can give people credit.

[01:40:44] After that thing, or if we buy slippers, go ask Tom's.

[01:40:47] If we buy game shoes in Africa and do this one, nobody cares about that stuff.

[01:40:51] If we make shoes made of wool.

[01:40:53] But when you're in a big company, you can validate an opportunity.

[01:40:55] As you have like men, credit can really unlock businesses, right?

[01:40:58] As they did with the first startup.

[01:41:00] And big companies have been able to incubate that, help companies manage the risk, incubate founders,

[01:41:04] help a founder manage their personal risk as well.

[01:41:06] Because as an employee in a company that you don't own 90, somebody that owns 90%,

[01:41:09] your salary is coming consistently, right?

[01:41:12] And that story is, I want to see more of it in African markets.

[01:41:17] Like I just think that doing business in Nigeria that I'm most familiar with is a scary concept.

[01:41:23] And it should not be that hard.

[01:41:25] There can be partnerships where the sum is greater than the sum of its parts.

[01:41:29] The whole is greater than the sum of its parts, right?

[01:41:31] That's that one on incubation.

[01:41:34] The second...

[01:41:35] I want to add something to that.

[01:41:36] The most optimal partnership would be one where a larger company that has distribution and customer relationships and money partners with a smaller one that hopefully, hopefully has a faster team, proper tech engineers, some excitement and enthusiasm and some MVP that works.

[01:41:57] So there's a combination that makes sense.

[01:41:59] It's not just a random A&B.

[01:42:01] It's that combo.

[01:42:02] Market power, money, distribution, customer relationships, taxing with enthusiasm, raw energy, engineering skillset and growth.

[01:42:09] I don't know how well it's going to happen.

[01:42:10] Listen to our episode 22 on CVC and SoftBank.

[01:42:13] There's some progress, but because most of it is not publicized, so I'm clear how much progress there is.

[01:42:19] There's a founder part of it that is interesting.

[01:42:22] I just love like, and then this was this and I did this thing and then this thing was this and then we did this thing.

[01:42:27] Right now, I'm sure it wasn't linear in the moment, but it does feel very much like a very strong country, very similar to the Piggy Vest story.

[01:42:32] Like you just build things that you think should exist.

[01:42:35] And that's personally inspiring to me.

[01:42:38] The third part of the founding story that jumps out is the international expansion focus.

[01:42:44] Again, probably obvious because of the relative size of the Egyptian market and the ambition, but I feel like it's extremely bold to go wide as well as deeper in their home markets at the same time.

[01:42:56] That's not very common.

[01:42:57] Many successful companies choose to go deep in their home markets.

[01:43:01] Piggy Vest, probably at a similar valuation in the same ballpark, right?

[01:43:06] And choosing to go deep versus wide.

[01:43:08] And that's like something that you see is a specific choice.

[01:43:12] And I do appreciate that whole, like the ambition I appreciate, just don't fly too close to the sun.

[01:43:17] You know, we see the opposite.

[01:43:17] Oh, they took too much and they took too much risk and it was great.

[01:43:21] But right now it's on the positive side of that.

[01:43:22] My bias is to say, wow, good on you.

[01:43:24] You did that.

[01:43:25] The second part really of my summary is on distribution as a core advantage of a startup.

[01:43:32] Right now it's obvious to most startups that distribution, you have to have a national distribution at the beginning.

[01:43:38] And doing things and figuring out distribution.

[01:43:42] Sometimes it's one of the reasons to sometimes just do the thing that you need to do.

[01:43:45] Do the thing that you want to do because you have distribution and all of a sudden it makes sense.

[01:43:48] And there are many examples in tech and in SaaS.

[01:43:51] If you think of Microsoft Teams versus Slack or Google Meet versus Zoom.

[01:43:55] Like it's just, look, if you have already on people's thing and they need to just click a button and use that thing.

[01:43:59] And it's in Calendar app that everybody uses.

[01:44:01] It will be big.

[01:44:02] It doesn't matter if it's better.

[01:44:04] It doesn't matter if it's worse.

[01:44:06] It will be used.

[01:44:07] Or Apple Maps, the power of the default.

[01:44:09] And like you can just put anything.

[01:44:10] I'm surprised you're leaving out Internet Explorer and Netscape.

[01:44:12] That's the most famous one.

[01:44:14] Yeah.

[01:44:15] Netscape was such a good browser.

[01:44:17] In six months.

[01:44:18] Yeah.

[01:44:18] Netscape.

[01:44:19] Yeah.

[01:44:20] To zero.

[01:44:21] Netscape was such a great browser.

[01:44:23] Destroyed.

[01:44:23] It's bundled with the OS.

[01:44:25] Shout out to Internet Explorer.

[01:44:26] It's very challenging and very different and almost nearly impossible.

[01:44:32] We have distribution.

[01:44:33] And as a founder, when people don't think about distribution, it's to not have an answer.

[01:44:37] But everybody can be invested in my JBO.

[01:44:39] You don't have to have something you can piggyback on.

[01:44:43] Like, oh, what come with MTN to do X, Y, and Z?

[01:44:45] But you definitely have to have...

[01:44:46] You're thinking about it at some point.

[01:44:47] You have to have an answer.

[01:44:48] You have to have an answer.

[01:44:48] You can say the answer is we're going to use social media.

[01:44:50] We're going to use word of mouth.

[01:44:51] You have to have an answer.

[01:44:52] You have to believe your answer.

[01:44:53] But not having an answer is we're going to build a great product.

[01:44:55] It's not really a sufficient answer.

[01:44:56] And most of us are like, oh, this is a problem.

[01:44:58] We're going to solve it doing this.

[01:44:59] But how are people going to know about you?

[01:45:01] How are you going to put your product in the hands of customers and users?

[01:45:03] They don't really have a real thought about answer.

[01:45:05] So we're going to buy Facebook ads.

[01:45:06] How much do you have?

[01:45:07] I don't want to buy Facebook ads, for example.

[01:45:10] So those are the...

[01:45:10] I think if I take a step back, it's one on the story of the founding.

[01:45:14] Many different parts of it that jump out to me.

[01:45:17] Corporate sponsor.

[01:45:19] Persistent founder.

[01:45:20] Tension expansion.

[01:45:20] And the final part of that is just distribution being like a core open question that all startups

[01:45:25] need to ask and have answers to how they will address very early in the founding journey.

[01:45:31] Interesting.

[01:45:32] Very good.

[01:45:33] Thank you.

[01:45:34] My summary has four sections.

[01:45:37] It's first of all, the small business consumers, the entrepreneurs, the founder, Muneer Nahla,

[01:45:43] the bear case, and then the bull case.

[01:45:45] Small business consumers, first one.

[01:45:46] I mean, just what a win.

[01:45:48] I'm just thinking about I'm an entrepreneur with a tuk-tuk and like, no, I'm an entrepreneur

[01:45:56] and I want to get a tuk-tuk and I know I can't afford it, but I know if I could just get it

[01:46:02] for a smaller amount, I would get the revenue later on.

[01:46:05] That market is a huge market.

[01:46:07] Not everyone has the access to cash relationships to get it.

[01:46:11] And that's just one example.

[01:46:12] We left out some parts of the story.

[01:46:14] There's some stuff they did with female entrepreneurs in rural regions trying to open market.

[01:46:18] It's just so many things.

[01:46:19] It's just amazing.

[01:46:19] On the business, I'm emphasizing business.

[01:46:21] I'm not going to relitigate how I feel about consumer loans.

[01:46:24] Let's leave that.

[01:46:24] I just like the fact that, and it's a win-win because most businesses that are capped by capital,

[01:46:29] that's not because of expertise or skillset or knowledge.

[01:46:31] That's just a capital constraints.

[01:46:33] It's literally just something that can be solved.

[01:46:35] I love that.

[01:46:35] And I hope it continues to expand for businesses, for merchants, for SMBs.

[01:46:39] You're a neglected part of the market.

[01:46:41] I wish it was easy as just saying, I blame the big banks.

[01:46:43] I don't blame the big banks.

[01:46:44] The business model actually makes sense.

[01:46:46] If you have large enterprises that have detailed risk profiles, what are you doing by taking

[01:46:51] the risk to blow up your whole business?

[01:46:53] I just like the fact that they have more access.

[01:46:55] Shout out to small business consumers having more access to capital to grow their businesses.

[01:46:58] It's a major win, especially for the people that are lower income and poor and are female

[01:47:02] and live in rural areas.

[01:47:03] Those people already have so many disadvantages in life.

[01:47:06] Against them.

[01:47:06] At least let's take away some of the disadvantages and allow them to grow.

[01:47:09] That's the first one.

[01:47:10] Second one, entrepreneur.

[01:47:11] Ah, Moner, what a story.

[01:47:12] I mean, if you count his 1999-2000 thesis, you could say he's been in this microfinance

[01:47:19] lending credit game for 15 to 20 years.

[01:47:23] Now, apart from InterSwitch and Mitch and maybe three other founders, he's one of the

[01:47:32] most experienced founders that's done the same thing for such a long amount of time.

[01:47:36] I feel like I'm forgetting someone.

[01:47:38] Anyway, Mitch is the person that comes to mind because InterSwitch is old, but it's just

[01:47:40] amazing.

[01:47:41] He's done it.

[01:47:42] And he did it with different companies.

[01:47:45] Tassahil and MNHalan.

[01:47:48] I mean, maybe you shouldn't count Halan and MNHalan.

[01:47:50] But at least two different companies.

[01:47:52] And they were doing slightly different things.

[01:47:53] Asset bank financing for a bike is different than a private lender, which is different

[01:47:58] than a super app.

[01:47:59] So he's just been able to build a skill set, grow a little bit, build another skill set.

[01:48:03] And shout out to him for sticking around for all these years and for having such a good

[01:48:07] relationship with GB Auto that they stuck with him not once, not twice, but three different

[01:48:12] times.

[01:48:12] Now, they had 90% equity.

[01:48:15] But still...

[01:48:16] Oh, he stuck with them.

[01:48:19] He stuck with them for a maximum of 10%.

[01:48:22] God knows how many people share the 10%.

[01:48:24] We don't know.

[01:48:25] But either way, amazing story of an entrepreneur.

[01:48:27] And I'm happy that if you read the articles and if you watch the videos, he's getting a

[01:48:32] lot of positive press coverage about what he's done.

[01:48:34] Shout out.

[01:48:35] I hope, fingers crossed, it can continue to be a success story.

[01:48:37] I don't have any negative occurrences.

[01:48:40] Speaking of negative occurrences, bear case, bull case.

[01:48:41] Bear case, obvious.

[01:48:43] NPLs blow up.

[01:48:44] Obviously, they're primarily a credit lending business.

[01:48:46] And the reason NPLs could blow up...

[01:48:47] For the audience, NPLs are non-performing loans.

[01:48:49] The reason that could blow up is misassess risk, improper...

[01:48:53] Improper.

[01:48:54] Inadequate credit scoring algorithms.

[01:48:56] There are a bunch of things.

[01:48:57] This may sound like, oh, they've been doing well.

[01:48:59] Why would it all of a sudden go?

[01:49:00] Oh, these things can unwind quickly.

[01:49:03] The problem with credit scoring models is it's based on your current cohort of customers.

[01:49:07] If you're growing quickly, that your new cohort doesn't match the other cohort, everything

[01:49:11] you don't unwrap will be a bear case.

[01:49:12] Yeah, it was a misassess risk for bear case.

[01:49:15] Exactly.

[01:49:16] It may sound unlikely that the NPLs, the non-performing loans, could blow up.

[01:49:21] Well, the problem is when you're growing quickly, whatever credit scoring algorithms, whatever

[01:49:25] credit profiles you have are based on your initial cohort of customers.

[01:49:29] So unless you can continue to grow, expand, and modify that, NPLs can actually disintegrate

[01:49:34] extremely quickly if the market exchange and now you're growing rapidly.

[01:49:36] It may not happen.

[01:49:37] This is the bear case.

[01:49:38] But it's a primary part of the bear case because your primary business model is around

[01:49:42] credit provision.

[01:49:43] First thing.

[01:49:43] Second part of the bear case is international expansions don't work out.

[01:49:47] It could be due to, I don't know, regulatory, competitive pressure, political risk.

[01:49:53] Anything can happen.

[01:49:54] I mean, Turkey, Pakistan, they're just different from Egypt.

[01:49:59] They bought companies.

[01:50:00] Those companies seem to be performing some of them, but I don't know.

[01:50:03] And the international expansion doesn't work out.

[01:50:05] Luckily for them, they're still in Egypt, which is a large market.

[01:50:07] But it's part of the bear case, obviously.

[01:50:09] Third part of the bear case is I was trying to compare all our former lending episodes.

[01:50:15] And I realized there's a massive difference between lending in Egypt and lending in Nigeria.

[01:50:19] And the biggest difference is competition.

[01:50:22] When I looked at our episodes we did on carbon and fair money, we haven't yet done an episode

[01:50:28] on rent money.

[01:50:29] There's such a long tail.

[01:50:30] And then I looked at this and I was trying to figure out, Fowry doesn't do this.

[01:50:35] It's a little bit different.

[01:50:36] Paymob doesn't do this.

[01:50:37] It's a little bit different.

[01:50:37] Who's actually the primary care?

[01:50:39] It's all the traditional offline stuff, which is not competitive at all with these guys that

[01:50:43] have raised $700 million, $120 million.

[01:50:46] So part of the bear case is entrepreneurs start to read tech crunch.

[01:50:51] They start to read the term news.

[01:50:52] They're like, ha, lending market is big.

[01:50:53] Lending market is one that you could instantly become profitable, high risk, but profitable,

[01:50:57] or at least make some revenues, even without a large market advantage.

[01:51:01] Now, of course you need distribution and marketing and CAC, but competition, if it increases

[01:51:06] to something more similar to Kenya or Nigeria, it could be an issue.

[01:51:09] Right now it's not an issue.

[01:51:10] Bear case, growth slows, lose momentum.

[01:51:12] They have a lot of positive sentiment, which could unravel.

[01:51:15] If the growth rate is slowing, affects the ability to fundraise, blah, blah, blah.

[01:51:20] Bear case is that.

[01:51:21] Bull case is basically the opposite.

[01:51:22] NPLs get better because if you watch some interviews with Munir Nakhala, the CEO,

[01:51:27] he did say that the credit assessment seems to be getting better as they get more experience

[01:51:31] and they had some initial growing pain.

[01:51:33] If that continues, that's part of the bull case because lower NPLs, lower defaults, more

[01:51:38] money, more interest, blah, blah, blah, blah.

[01:51:40] Well, not more interest.

[01:51:43] Technically less interest, but then lower churn.

[01:51:45] You make more money.

[01:51:47] It's complicated the way you make money in lending, but we're not going to say.

[01:51:49] If the consumer continues to come back and they pay regularly, you can make more money

[01:51:53] than if they churn and have a default.

[01:51:54] But if they default and they were not going to come back, you make less money.

[01:51:57] Fine.

[01:51:58] Another part of the bull case is some of the acquisitions actually lead them to huge markets

[01:52:03] that were unexpected.

[01:52:04] So we spoke about the FMCG Talibay acquisition.

[01:52:07] That's actually a potential big market on its own.

[01:52:09] Listen to our episode 67 on Sabi or other episode.

[01:52:14] That business just by itself is leading, could be massive because SMBs, there's many SMBs

[01:52:21] in developing markets, all of them want to sell stuff.

[01:52:24] They all want to get lending.

[01:52:25] And that's just part of, that's not even their core business.

[01:52:28] Let's see how it goes.

[01:52:29] Similarly, the international expansions could actually end up going quite well.

[01:52:33] We said Pakistan is 200 something million.

[01:52:35] It's a growing market.

[01:52:36] Turkey, big market.

[01:52:38] Those companies are doing well.

[01:52:39] We don't know how much they paid.

[01:52:40] If those go well, it's the opposite of what I said before.

[01:52:43] It makes them more interested in doing more international M&A.

[01:52:46] They can raise more money to do M&A because they have a successful track record of M&A.

[01:52:50] It's like a self-fulfilling cycle.

[01:52:52] If the investor sees you've done former M&A, they want to give you more money.

[01:52:56] You have money to do more M&A.

[01:52:58] You can edge out, outpay other people and on and on and on.

[01:53:01] And then the final part is the super app, aka financial OS thing is, it's an interesting

[01:53:07] thing to see how it works.

[01:53:08] The key thing for me is, can you offer enough services to reduce churn such that the customer

[01:53:14] uses your app or service with such frequency that they see you as something they don't

[01:53:18] want to leave?

[01:53:19] Regardless of, you don't always need a loan, right?

[01:53:22] You don't always need FMCG products, but maybe you always need one of the 30 things they

[01:53:26] offer.

[01:53:26] And that churn is one of the things that really, really reduces cac.

[01:53:30] You don't need to pay much for customer acquisition if you have the customers not churning.

[01:53:33] You always need cac if everyone is churning.

[01:53:35] It's like the relationship is sort of like inverse.

[01:53:37] If they can do that, and then hopefully it all ends with some acquisition or IPO, that

[01:53:41] is the bull case.

[01:53:42] So I looked at this, I thought about it based on where I'm at.

[01:53:45] I'm 70% on the positive bull case, 30% on the negative bear case.

[01:53:49] I like the company.

[01:53:49] And the reason I'm more on the bull case is just Egypt's a large market.

[01:53:53] They have first mover advances.

[01:53:54] They've been there for long.

[01:53:55] The CEO and founders have been there for a long time.

[01:53:58] They have really strong investors.

[01:54:01] We spoke about APIS partners, spoke about DPI.

[01:54:03] They have a lot of expertise.

[01:54:04] They have the partnership with GB Auto, which is by far the most important partner.

[01:54:08] They don't have that much exposure to normal consumer lending risk because they have a lot

[01:54:13] of businesses.

[01:54:13] They have collateralized loans.

[01:54:15] They have payroll lending, which is backed against your salary.

[01:54:17] I just think even though they look similar, like I said a few minutes ago, it was typical

[01:54:21] consumer lending startup.

[01:54:22] They're not the same at all.

[01:54:24] Combination of GB Auto's distribution partnership relationships and the collateralized part means

[01:54:29] they're actually quite different and hedged.

[01:54:31] CBD on Turkey and CBD on Pakistan.

[01:54:35] But I feel positive.

[01:54:35] Not 90%, obviously.

[01:54:36] I don't play 90% with stuff I don't know.

[01:54:39] But 70%, I think that I particularly like the hedging and the partnerships on the founder.

[01:54:44] Let's see how it goes.

[01:54:44] Fingers crossed for that.

[01:54:45] I wish them the best.

[01:54:46] Good luck to MNT Halan.

[01:54:49] Good luck to all involved.

[01:54:50] Recommendation, small win, then we wrap.

[01:54:51] Yeah, I can go.

[01:54:52] I have two recommendations.

[01:54:53] First is this article that I read recently, that buying experiences does not make you

[01:54:59] happier than buying possession.

[01:55:00] It's like a common thing where people say buying experience makes you happier.

[01:55:03] Part of it is the article just cites some research about, cites, goes into the original

[01:55:07] paper that does that and points out some very obvious flaws.

[01:55:11] Basically, the research is based on some flaws or important details that will make you think

[01:55:14] differently about the conclusions that it draws.

[01:55:16] I'll link to that.

[01:55:17] Just read it.

[01:55:18] And this is also like your...

[01:55:19] I've never heard a counterpoint because that is so...

[01:55:22] There's so many research.

[01:55:23] There's always got three counterpoints.

[01:55:24] I'm shocked.

[01:55:25] It's a regular reminder that half of the practice of psychology is not reproducible.

[01:55:30] The problem is we are still figuring out which half, just step by step.

[01:55:33] A bunch of things and necessarily scientifically just sound good.

[01:55:36] We want to believe them.

[01:55:37] Also, experiences have such a wide variety of things under that umbrella and things have

[01:55:42] such a wide variety of things under that umbrella.

[01:55:45] Like toothpaste is a thing, but it's going to be gone in two months.

[01:55:48] But your wedding ring is going to last for 60 years.

[01:55:49] It's sort of like what thing...

[01:55:52] But I would love to read the article.

[01:55:53] Thank you for that.

[01:55:54] I'll link it.

[01:55:54] The second one is a more fun one.

[01:55:56] If you watch table tennis, it's a 4-1 shot rally from the Commonwealth Games with Shagun

[01:56:01] Toriola, one of the best Nigerian tennis players.

[01:56:03] Honestly, one of the best tennis players ever in Nigerian.

[01:56:06] It's a beautiful rally if you love watching people table tennis back and forth.

[01:56:09] Those are my two recommendations.

[01:56:10] 4-1 shot rally and this article from Substance.

[01:56:12] Let me guess.

[01:56:13] They're like 10, 20 meters off the table.

[01:56:15] Off the table, just like...

[01:56:17] What I love is how silent the auditorium gets during the rallies and how it's silent.

[01:56:23] And then once the point is concluded, it's like, everybody yells.

[01:56:26] I love that.

[01:56:27] Wow.

[01:56:28] Incredible.

[01:56:28] Incredible.

[01:56:29] I'll check those two out.

[01:56:30] I have three recommendations.

[01:56:32] Three and a half.

[01:56:33] The first one is the Intel Trinity.

[01:56:34] How Robert Noyce, Gordon Moore, and Andrew Groove builds the world's most important company.

[01:56:40] Oh, titles are a tongue full.

[01:56:41] Anyway, it's the history of Intel.

[01:56:44] Just by coincidence, I was reading that around the same time that Intel is basically blowing up and destroying itself.

[01:56:50] It's just fascinating.

[01:56:51] It's not the best book in the world.

[01:56:53] Sometimes you're like, oh, he spends much time on this, not on that.

[01:56:56] But I just like it.

[01:56:56] It's very, very comprehensive.

[01:56:58] Because the history of Intel is simultaneously the history of the microchip, microprocessor, integrated circuit.

[01:57:05] It has like five or six histories all going on.

[01:57:07] It's linked to AMD.

[01:57:09] It's linked to IBM.

[01:57:10] It's linked to Windows.

[01:57:11] It's linked to Apple.

[01:57:11] It's sort of, in a way, sort of like the history of Silicon Valley, except HP started before that.

[01:57:16] But it's a huge chunk.

[01:57:17] Great read.

[01:57:18] I wish there was an audio book because some of the parts are just like drag on and on.

[01:57:21] But I would really recommend it if you like Affrability because it's sort of like Intel story.

[01:57:26] And if you like tech stuff.

[01:57:29] Second is Nexus, A Brief History of Information Networks by Yuval Noah Harari.

[01:57:34] I've read all his books.

[01:57:35] I like this one.

[01:57:36] And it's interesting because I don't agree with the fundamental premise.

[01:57:41] It made me appreciate the book more.

[01:57:42] Basically, he's not a techno optimist.

[01:57:45] And I'm a super techno optimist.

[01:57:47] Almost to a fault.

[01:57:49] But I just like...

[01:57:49] No, I should read it.

[01:57:51] Yeah, yeah.

[01:57:52] It's good.

[01:57:52] I don't know.

[01:57:55] Sapiens is just next level.

[01:57:56] I don't know if it's better or worse.

[01:57:57] But it's a good book.

[01:57:58] I like it.

[01:57:59] I would recommend it.

[01:57:59] If you liked his other books, you definitely like this one for sure.

[01:58:02] If you didn't like his other books, maybe give it a shot.

[01:58:03] It's the opposite of like Marc Andreessen.

[01:58:06] AI is going to love the world.

[01:58:08] He's basically...

[01:58:09] I think he almost does it on purpose.

[01:58:10] Just as a counterweight.

[01:58:11] Because I'm like, dude, you can't believe like...

[01:58:13] Come on.

[01:58:13] Like, you really can't believe this is likely.

[01:58:15] I like it.

[01:58:16] I would also...

[01:58:17] If you like it, if you end up liking that book, also read AI 2041.

[01:58:20] Which for me is way, way better.

[01:58:22] I'm much more balanced.

[01:58:23] I think I've read that one.

[01:58:24] And that's by...

[01:58:25] What I haven't read is...

[01:58:26] I haven't read the Nexus.

[01:58:26] I've been looking at it for a while.

[01:58:27] But I didn't know it was like an anti-information network tech book.

[01:58:31] 100%.

[01:58:31] I gotta read that.

[01:58:31] He tries to be balanced, but then eventually he just shits all over it.

[01:58:35] And then final recommendation, award tool and points yet.

[01:58:38] Award tool and points yet are sites that enable you to find award bookings, but in a better UX.

[01:58:45] What does that mean?

[01:58:46] If you want to fly from Lagos to Paris, use Google Flights or Kayak, right?

[01:58:50] But if you want to find award bookings, aka bookings with points, typically in the past,

[01:58:55] even as of two years ago, you have to go to united.com, american.com, alaska.com.

[01:58:59] It was basically almost impossible to find a way to search all the sites simultaneously.

[01:59:04] These sites are award tool and points yet.

[01:59:06] They search all the websites simultaneously.

[01:59:07] And they've saved me because I book a lot of flights and a lot of flights with points.

[01:59:11] And they've saved me so much time because unfortunately, unlike hotel chains that are

[01:59:15] global, like for hotels, you search four or five sites.

[01:59:17] Every country has their own airline.

[01:59:19] By definition, airline searches were just like a piece of shit waste of time.

[01:59:23] So thank God for these websites.

[01:59:24] They're amazing.

[01:59:25] Even the free versions are quite good.

[01:59:27] I'm getting the pro version.

[01:59:28] I travel all the time, but both are outstanding.

[01:59:31] Good UX, very fast, very comprehensive.

[01:59:33] They support almost all the flight programs.

[01:59:36] And I would highly recommend them if you travel a lot.

[01:59:39] Have you used Seats.aero?

[01:59:41] Yes, Seats.aero is the third one.

[01:59:42] It's just Seats.aero.

[01:59:44] The free functionality is way, way worse than the pro.

[01:59:47] Yeah.

[01:59:47] It only allows a seven day window.

[01:59:49] Yeah.

[01:59:49] But I love Seats.aero, so it's good.

[01:59:51] Yeah.

[01:59:52] I use Seats.aero and I use Rome.travel.

[01:59:56] Oh, I didn't use it, but I saw the reviews.

[01:59:57] Rome is better at finding multiple stops.

[02:00:02] Rome is better, I find, for like, if I'm like, look, I can do like Denver, Houston,

[02:00:07] and then Europe, and then like Asia.

[02:00:10] But I'm more likely to find those flights on Rome.

[02:00:12] If I'm willing to do three plus stops, basically, Rome has way better, way better, way more options

[02:00:18] than I find.

[02:00:18] These guys, I don't know if they drop those searches.

[02:00:21] Okay, three plus stops, man.

[02:00:23] Unless I'm saving a lot of money.

[02:00:24] I mean, I'd do it if I'm saving a lot of money, but otherwise, nah.

[02:00:27] It also has really good, Rome has really good UI as well, but very similar UI to a Word

[02:00:32] tool, actually.

[02:00:33] Very, very similar UI to a Word.

[02:00:34] R-O-A-M-E.travel for the audience.

[02:00:37] And then one last thing is, surprisingly, Pointsier is really, really good with hotels.

[02:00:43] It's probably still worth using the hotel site, but I was surprised.

[02:00:47] Because I was like, oh, hotels, it's not that difficult.

[02:00:49] But I didn't even know.

[02:00:50] I have city points that transfer to Choice.

[02:00:52] I never searched Choice.

[02:00:53] What's my business with Choice?

[02:00:54] Hilton or Marriott?

[02:00:55] What is, spell that Points tier?

[02:00:57] Spell that?

[02:00:58] Points, yeah.

[02:00:59] P-O-I-N-T-S and then Y-E-H.com.

[02:01:02] It's really good, the hotel search.

[02:01:03] I was surprised.

[02:01:04] A Word tool hotel search is shit.

[02:01:05] But, oh yeah, I use it for hotels.

[02:01:08] I use seats that are for themselves as well.

[02:01:10] But they don't have a good inventory.

[02:01:11] No, it's good.

[02:01:12] It does Hilton, Marriott, Hyatt, Wyndham.

[02:01:16] I was surprised.

[02:01:18] Yeah, those are my recommendations.

[02:01:20] I love them.

[02:01:20] We do small wins.

[02:01:21] Yeah.

[02:01:21] We do small wins.

[02:01:22] You'll like those wins, especially for hotels.

[02:01:26] Yeah, I use them quite a bit.

[02:01:28] But yeah, my small win is basically I moved a while back and haven't really set up my office

[02:01:33] and got a new computer and haven't really set up my system in there.

[02:01:36] That makes sense.

[02:01:36] But I finally set it up with like a, now it's like a single cable setup to either of my computers

[02:01:41] when I'm using them.

[02:01:42] Same keyboard, same mouse.

[02:01:43] I have a setup that I'm proud of that is fairly consistent, which took a while to get to.

[02:01:47] But Black Friday was very helpful to get stuff on sale and renew stuff on sale.

[02:01:52] So it was good.

[02:01:53] I feel happy when I come down to my desk in my office.

[02:01:55] That's pretty good.

[02:01:56] Definitely might be smaller.

[02:01:57] So single cable setup is USB type C dock.

[02:02:00] USB C dock linked to both.

[02:02:01] And then the dock has everything.

[02:02:04] HDMI, monitor, cable.

[02:02:05] Everything is linked to the dock.

[02:02:07] Nice.

[02:02:08] And then my keyboard has a receiver linked to the dock.

[02:02:11] Whenever I just switch the cable to whatever computer I want, I can do that.

[02:02:15] No, I love it.

[02:02:17] I used to do the same.

[02:02:17] The problem is when you travel, make sure you just switch to Bluetooth.

[02:02:19] Because I don't travel in my dock.

[02:02:20] One time I traveled, I'm like, oh, because I have another keyboard.

[02:02:23] But then that one is Bluetooth.

[02:02:24] I don't have to remember to take the thing.

[02:02:26] But you have a similar setup.

[02:02:28] Yeah.

[02:02:28] What's funny about the...

[02:02:30] I have a separate keyboard and mouse for travels.

[02:02:32] I never leave that.

[02:02:33] It's like...

[02:02:33] That's like Bluetooth.

[02:02:34] And it's...

[02:02:35] Yeah.

[02:02:36] It's straightforward.

[02:02:37] Yeah.

[02:02:37] Because you need all the ports when you travel.

[02:02:39] You're like, ah, no.

[02:02:40] Bluetooth.

[02:02:41] I'm not sacrificing.

[02:02:42] Yeah.

[02:02:42] All right.

[02:02:43] To wrap us up, my small win is I used to use Squarespace to design my sites.

[02:02:50] And then after a while, I'm like, these are the most basic.

[02:02:53] They're like 8 email sites with links.

[02:02:55] Why am I paying $180, $200?

[02:02:59] It was just something outrageous.

[02:03:00] Now, it's not outrageous if you run an e-commerce site, you're selling stuff.

[02:03:03] But for me, it was egregious.

[02:03:05] It's literally just a site with links and some crappy pictures.

[02:03:07] Eventually, I switched to GitHub Pages.

[02:03:10] Fabulous.

[02:03:11] It was like a full little...

[02:03:12] Like a few hours experimenting.

[02:03:14] How do I get it to look the same?

[02:03:15] GitHub Pages for free.

[02:03:16] If you run a single page with just links, like $200 per year is just insane.

[02:03:21] It's for people running businesses.

[02:03:23] Shout out to Squarespace, but not for me.

[02:03:24] Even more than a single page.

[02:03:25] I used GitHub Pages for my website for a long time.

[02:03:28] Because one, not only is it free, it helps it run faster.

[02:03:32] Because everything is...

[02:03:34] There's no database, right?

[02:03:36] It's single pages and similar links.

[02:03:37] It helps it run faster.

[02:03:38] And you can't have multiple pages with links.

[02:03:40] You can't have a full featured website.

[02:03:42] The reason why I stopped using it is...

[02:03:44] Well, you're saying you can or you cannot?

[02:03:46] You can.

[02:03:46] You absolutely can't have a full featured website.

[02:03:47] Oh, no, no.

[02:03:48] Of course you can't.

[02:03:49] Why do you think you can't?

[02:03:50] Everything, but the challenge is a lot of the changes that I would need to do for my

[02:03:54] website from time to time would require like...

[02:03:57] Of course.

[02:03:58] Code changes that would take me way more time.

[02:04:01] This was also pre-AI.

[02:04:02] Even with my website right now, I have a plan with a bunch of other websites.

[02:04:05] It's maybe not as crazy.

[02:04:06] But if I move to that website, I can just use any of this AI to generate what I'm trying

[02:04:11] to do.

[02:04:11] So now that bar has even dropped even more, right?

[02:04:13] It's like I can actually don't even need to pay for Squarespace anymore.

[02:04:16] I can use...

[02:04:17] There's a bunch of...

[02:04:18] There's a whole ecosystem around it that I was using that was fantastic.

[02:04:22] It's pretty cool.

[02:04:23] Yeah.

[02:04:24] Again, for the audience, if you're running an e-commerce business, you need something

[02:04:27] advanced, not that.

[02:04:28] But for any regular website where you're not doing anything...

[02:04:32] Because I don't think GitHub Pages supports if you want to do merchant processing and selling

[02:04:36] stuff.

[02:04:36] I don't think it supports that.

[02:04:37] I think it does.

[02:04:38] It does.

[02:04:39] I take it back.

[02:04:40] Maybe everything then.

[02:04:41] What it doesn't...

[02:04:42] It doesn't scale past a crazy amount of volume.

[02:04:45] You can't put the Atlantic website on it or something like that.

[02:04:47] It doesn't scale past a certain amount of volume.

[02:04:49] No one listens to this podcast.

[02:04:50] If you are, email us.

[02:04:53] But you have to build...

[02:04:54] The real problem is, depending on the framework you use to host your website on GitHub Pages,

[02:04:58] most people use something called Jekyll.

[02:04:59] You have to build all of these individual components and it can be incredibly complicated.

[02:05:05] I remember when I tried to add comments to my articles maybe four years ago, it can be

[02:05:09] incredibly complicated.

[02:05:10] Because what you don't want is for some of those things to end up plain text somewhere

[02:05:14] else on the website.

[02:05:14] Because again...

[02:05:15] Oh, you don't want that.

[02:05:16] The problem with GitHub Pages is your website is actually going to be a GitHub repository

[02:05:22] that is open and public searchable.

[02:05:24] So somebody can go into that repository and see everything in a way that...

[02:05:28] And engage with it in a way that you may not want.

[02:05:29] But that's fine if it's just a bunch of links.

[02:05:32] Exactly.

[02:05:32] If it's just stuff that was public anyway, then it's fine.

[02:05:35] If it's collecting user data or comments or forms, you have to think very carefully

[02:05:39] about implementation because any kind of leaks and stuff, it's really just all viewable

[02:05:44] and editable.

[02:05:44] I had that for a while.

[02:05:45] You can probably even still see the core of the website on my GitHub.

[02:05:48] Interesting.

[02:05:49] If you look up.

[02:05:49] On that note, what an episode.

[02:05:51] What an episode.

[02:05:51] Thank you all.

[02:05:52] Yes.

[02:05:53] See you on the next one.

[02:05:54] So cool.

[02:05:55] Thanks for listening.

[02:05:56] We'd love to hear from you.

[02:05:57] If you have any feedback, topics you'd like to hear, or just want to say hello, please

[02:06:01] email info at afferability.com.

[02:06:04] Thanks.