#79: Cellulant - How the FinTech payments platform is providing financial services across Africa

[00:00:03] Welcome to Afrobility, a conversation about African business and technology. Today we're going to explore Cellulants, the African payments infrastructure company. We'll discuss the story across the following areas. First, we'll give some context about the African financial sector. Second, we'll discuss Cellulants early history. Third is product monetization strategy. Fourth is competitive positioning and potential exit options. And then fifth, we'll end with our views on its overall outlook. This episode was recorded on January 20th, 2025. Cellulants, corporate speak. It is a financial technology

[00:00:33] company that powers online and offline payment processing, allowing global businesses to collect payments, send payouts and accelerate business growth. Sounds cool. I, the last part is fine, but I just don't think that's even controversial. Like that's probably one of the more corporate speak versus like the electricity that powers small businesses, you know, empowering small businesses to become the biggest they can be. It's kind of like, I don't know what that is, but this is kind of straightforward. Whenever I say corporate speak, it means it's officially taken as a tagline from the world.

[00:01:03] From their website or official LinkedIn page or Twitter page. Some of them sound very grandiose. This one sounds very direct. So it makes sense. Another corporate speak, single API payments platform that enables businesses to collect payments online and offline while allowing anyone to pay from their mobile money and international cards or directly from their bank. A mouthful, but it sort of makes sense. Payments platform, standard vanilla payments platform. Yeah. Payments is also interesting because on one hand, there's a sense that scale is better for payments. You want to be bigger, you want to purchase more payments, you make more money, you can be much more efficient.

[00:01:33] On the other hand, having a single API tends to be better for all the customers you use, especially as they grow to different markets versus having to integrate different APIs. But because scale is better, a lot of the large payment companies don't have single APIs. You do have to integrate separate APIs to process all of these things today. So it's kind of very, like the single API thing is important for their customers because you can only process one that does M-Pesa as well as bank transfer, for example, versus many companies you have to process.

[00:02:03] Connect 15 APIs to accept payments. It's so funny. As soon as you said that, my mind instantly went to like one API to connect other APIs. It's the Dahlberg cartoon of like, there are 15 languages, let's make a 16th one to tie them all together.

[00:02:16] And then at the end of the day, there are now 16 competing languages. So it's funny like that. You get benefits of scale, but then also you need fewer middlemen. Typically, you integrate a different part of the stack and then you need to give proportion of the overall revenue or you need to give some percentage take rates to different partners. So the bigger you are, you need fewer partners and then you have higher margins. It's because of efficiency, but also because of fewer middlemen take rates, you have to give away, makes it more efficient.

[00:02:43] My favorite definition, the one I like is a fintech company that connects businesses, banks and consumers in Africa. Specifically, it enables businesses to collect payments, consumers to make payments, and it allows all users to access various digital financial services. That's the one I like. It's cleaner and simple to understand. So, sell me once. Payments company with a consumer business? It's kind of like how I think about it. Yeah, exactly. It started in Kenya, so it's a little bit different. And this story is unique because it has a lot of twists and turns. It would be a good story to dissect.

[00:03:13] They had several pivots. They started off as a mobile ringtone seller. They transitioned to mobile banking. And then eventually they morphed into what we're known today as a payments platform company. So, when I say mobile ringtone seller, I mean they literally used to sell ringtone and share the revenue with the carriers. Like, think about early 2000s when that was like a thing. They're also one of the first businesses, or like at least tech-enabled businesses, one of the early ones.

[00:03:37] There was EmTech and Nigeria as well at the same time that took advantage of mobile telephones and the internet to build a real business. And they're one of the real, it's amazing that it took us so long to talk about them because they're one of the real tech OGs. Sort of similar era as Intransact and Interswitch in Nigeria. Just really about the same time from 2002 to 2004 was when all these companies came to life. Yeah, they made the cut. Biases. My biases are positive.

[00:04:06] The founder does a lot of public speaking, listening to him speak before this. Yeah. And he also has a clear idea and clear vision of where he wants to take the company. Even before evolving the company, I'm pretty positive about it. And as I read it, I don't think anything changed. As I prepared for this, I don't think anything changed. It continues to be someone that I thought, hmm, great company, great leader. It's funny you'd say that because the founder is no longer at the company.

[00:04:33] So I'm surprised he pulled the opinion, even though he left so many years ago. But fine. I guess the founder's DNA is permanently embedded in the cultural zeitgeist, regardless of when they leave. But he's not at the company. We'll get into it later. Yeah. I feel like the founder leaving didn't change, as far as I can tell, the customer set or the market or the opportunity they're going after. That's how I thought about it. But in any case, I ended up being positive. And through the research, I think very interesting.

[00:04:59] I feel like with these payments companies, we had a bit more information on DPO, but we had to wait for a lot of them to go public. But we'll see. We are here. We'll see how things shape up for them. My biases, right? In any research, I knew a little bit about the company, but I didn't really know enough to have a strong opinion. Basically neutral because of lack of knowledge. After all the research, now we're ready. I'm still not quite sure what my biases are.

[00:05:24] I have a strong emotional connection to the company because the story is nice. It makes sense. It's touching. But intellectually, it just seems a bit, I don't know. Payment platform companies, because I've done so many episodes about them, they don't, I don't know. They just strike me as vanilla. They're basically very, very similar. It's hard to differentiate them. They have slightly different stories. They start from slightly different countries. But there's something about the business model that doesn't make me so interested.

[00:05:52] Overall, maybe slightly negative. But that would be because of all the leadership turnover they've had in the years. But not very strongly so. There's something about whenever leaders keep on quitting, new CEO, new CFO, new CEO, there's something not right about the company. But that's just recency bias. I would say slightly negative, but mostly on the fence. If we leave around the recency bias of all the leadership chain, which we'll talk about shortly. That's where we're at. I think it's more, I agree with that.

[00:06:17] I think what got me a bit calm about that is just the market position and the market opportunity. Just like, yeah, everybody's coming and going, but the market position is not in question. The question may be how big or maybe not as big. But even the one that they've done already is enough for it to be a sizable business in this ecosystem. Fair, fair. P.S. Anything else you want to chat before we do PSAs and we get into it? No, let's do PSAs and get into it. PSA, public service announcement.

[00:06:46] Listeners, founders, operators, investors. We'd love to link up to you. Email us, info at Afroblee.com. Email banklay at Afroblee.com. Email me, olumid at Afroblee.com. You can join our sub stack, Afroblee.substack.com. You can listen to the episodes on any podcast player or on Afroblee.com. And you can subscribe to the sub stack where we write once in a while about all these topics, about these companies we're discussing and then other related things. All right. So we're going to start cellulence.

[00:07:10] Luckily for us, since cellulence is in the payment sector and the banking financial sector, we've discussed and we've given context about the African banking infrastructure, African financial markets context from our episode 24. So we're going to add a clip of that and then we'll come back and start the episode. So here's what we said about context of the African financial sector in our episode 24. We said 67% of people in sub-Saharan Africa don't have a bank account. They're unbanked. And then in Nigeria, it's 60%. And then in most African countries in sub-Saharan Africa, it's even higher.

[00:07:39] Some countries have as high as 70, 80% of people are unbanked. And unfortunately, most of the unbanked people tend to live in rural areas and they tend to be female. So unbanked, being banked, being underbanked, however you want to frame it, is a massive issue across many different sub-Saharan African countries. But if you look at the opportunity for African neobankses, there's many people, forget the people that are banked, like Olumide. There's so many people that are unbanked. I saw only in Nigeria 40% of adults have a bank account. I'm not surprised.

[00:08:06] You don't find many people with percentage of only total lending. So in South Africa, consumer credit is 40% of total lending in the economy. South Africa has a much more developed banking system. In Kenya, it's 28%. In Nigeria, consumer lending is only 8% of total lending. It's just not something that is deep or growing. And there's all these different gaps in the market. You can assume fundamentally that people need lending. Like people need credit. That's almost like food, water, and credit, right?

[00:08:33] And there are many different pieces as to how people engage with their banks that are coming up in Africa as well. Mobile first generation, young generation, 80% mobile penetration across Africa, 350 million people unbanked. And that makes you go, wow, that's an opportunity, right? Everybody has a mobile phone. Everybody has internet access. Nobody has a bank account. It makes you go, hmm, I got to think about that. The audience can't see me right now, but I'm dancing. I have a few issues, a few things to raise.

[00:09:02] African-specific challenges when you compare traditional banking model with neobanks. Yes, the other side of the opportunity. Traditional banks, you normally have issues, difficulty opening bank accounts. For example, when I lived in Nigeria 2012, I tried to open a bank account, two bank accounts. Stamping IBT, one of the big banks, and then GTB. This is the process, and I'm not making this shit up. Probably not the process anymore, but hopefully not. At least, who knows? Well, yes. CTBG. You need to get three references. Why do you need references to open a bank account? I'll never understand.

[00:09:31] You need to get passport photos. You need to fill a form. You need to take the form to the branch. You probably need to queue for a while. Deposit the form, and then wait three days for them to get back to you. I'm not making this up. It's almost... You didn't even add the utility bill to confirm your address. Oh, right. Thank you. Yes, I forgot. I wish I were making this up. Let's just say there's a lot of difficulty and inconvenience opening a regular traditional bank. Maybe it's changed. This is six years ago. Maybe not. I doubt if it's changed. Another issue with traditional bank accounts, high fees. One thing that struck me when I moved, because I had a bunch of bank accounts in America,

[00:10:01] and I compared it to Nigeria, just the fees. They have all sorts of fees for different things. They even have... I'm not going to get into details. Let's say they have a fee that literally they just charge you every month just for having an account. Like, it doesn't have anything. Ten naira per text message, bro. I've been trying to unsubscribe from the text messages. I don't need you to send me a text. Oh, my goodness. God. That's the second thing. The third thing, which wasn't an issue for me, but when I did research, it was actually a major issue, is location of banks. So, I lived in Lagos. I lived in Nikoje. There were banks everywhere. But apparently, it's because I lived in an urban metropolis.

[00:10:30] If you live in more rural areas, banks are actually very, very inconveniently located, and people have to travel a lot to get to banks. And it's funny. Like, you travel a lot to get to a bank. When you get to a bank, you wait in line again. To summarize it, there are a lot of issues, but three big ones the regular consumers face when you compare traditional banks with what could be with new banks is difficulty and challenges opening bank accounts, high fees, location of banks. There are other smaller reasons, but I won't go into them. I'll say these are the three biggest ones. Most people would honestly say it's just the fees is the biggest one out of these three.

[00:10:58] It's also, like, lack of trust, the fees. Yes, those are some of the smaller ones. Too many banks. There's no difference. Like, what do I have a bank in? Where my bank versus a GT bank? What's the difference? No difference. Like, legacy tech infrastructure, everything gets shut down every now and then. Exactly. I feel like we've done, oh my God, somebody should build a new bank argument. I want to go to the other side of the argument. Like, maybe you shouldn't even bother. Right? Oh, I can't wait. And one of the things is, like, a lot of these countries are, depending on the African country you go to, Africa is not a country. Remember that.

[00:11:29] People don't have money. So, as of 2018, 86 million Nigerians are below the poverty line, less than $1.90 a day. You don't want those deposits. Maybe you do, maybe you don't. But the question is, how big is the actual market? Well, this is nuanced. Are you saying the people that have lower incomes don't need banks? Or are you saying the banks don't want people with such lower income because the likelihood of profits are super low? Which of them are you saying? I'm saying it's a chicken and the egg.

[00:11:58] In that, like, those people are not profitable to serve. And that's one of the challenges you see in your banks across the world. Is that they, first of all, they start off by siphoning off the worst customers from the banks, which is why they don't notice. Right? They take the bank, the customers that the biggest banks in Brazil don't want in the first place because they're making $3 a day or whatever it is. And a siphon of those worst customers. And you could argue in Nigeria, like, even if you've got this 86 million people with these numbers, is it a big enough market to build a big enough profitable business versus I have 3 million customers accepting deposits?

[00:12:28] And that's the other cynical point of view. It's like, if people don't have money, can you build something, a business model, a cost profile that can allow you to serve these people? It's very hard. And it's not going to be... It's very hard. I agree. You're not going to win by stealing people off. You know, Chime is not taking the customers who need Chase's entire profile of banking services because they just do more. And if you're a sophisticated customer, you want more from your bank than like a new bank on average.

[00:12:56] You end up taking off, siphoning off the worst set of customers, which can only be profitable to you either because you need customer account to raise money or you're just not trying to be profitable. You're going to operate at much lower margins. Yeah. We discussed this twice. You can go and listen to our first ever episode, episode one, Afrability.com slash Fintech. We also discussed a little bit on the M-Pesa episode, Afrability.com slash M-Pesa or slash Safaricomp. The comeback would be the way M-Pesa built their business model. Most of the people that use it were lower income anyway.

[00:13:26] That's one comeback. Except the other comeback to the comeback is M-Pesa was like a top-down government thing. If you don't have the government supporting you, how will you like manage the low profitability for long enough before you get scale? And does scale actually solve all problems? If you multiply 100 million by 0.000, it's still almost zero. Yeah, it's an interesting problem. Well, not even zero points. I'm talking negative. I don't know if I'm a... To win, you need patient investors, long-term capital.

[00:13:49] Because I don't know if when I was in university, right, and getting an allowance of some sort, I don't know how good a customer I would have been to GT Bank, right? And over time, you can grow. And as I've grown, as I've gotten jobs, gotten money through the system. But if you're a large portion of your customer base, you have to have different ways of monetizing them. What helps? Credit helps. Interchange-based revenue helps. Transactions help. You need a sort of a different business model than like, I'm taking deposits and I'm doing stuff with it on the back end.

[00:14:20] It's also that neobanks could be successful, but they could be successful without actually solving their own banked issues. For example, neobanks could just like... Yeah, they could just get like richer customers. And then the richer customers will just use it and they can get profitable that way. But the challenge, I think, and we'll talk about this towards the end when we summarize, is a lot of the customers that neobanks want that could be profitable may already be satisfied with their current banking services. There's high switching costs to switching banks in Nigeria. And because I use a lot of neobanks, I use Cuda Bank. I'll talk about it later.

[00:14:50] I'm not sure the functionality differential is enough to get a lot of people to switch. All right. Coming back from that clip. Now we're going to talk about cellulence. It's funny. I'll do some quick setup. I'll set up the scene and then we'll talk about the founding story. In a way, our superheroes, the co-founders met in 2001, 2002. But technically, cellulence was founded in 2003, 2003. So for the purposes of context setting, I'll just use 2001 to 2004 as a timeframe to kick

[00:15:17] us off because there's something about when they met and the transition to founding the company. We'll use that timeframe. So what were the things happening? Technology space, 2001. What was happening around the world? Dotcom bubble burst, of course. A bunch of internet startups went out of business. Apparently, the NASDAQ lost 60% of its value and the NASDAQ is heavy on tech stops. Pets.com, all the famous busts. Read about it. Very, very famous. Wikipedia launched in 2001. For some reason, Wikipedia, it's just incredible.

[00:15:45] I always tell people my favorite website in the world is Wikipedia. Now I'd probably say Wikipedia and Reddit, but it's unbelievable that there was internet before Wikipedia. I remember I used to use Microsoft Britannica, which was great, but crowdsourcing eventually leads to higher quality products. You just have more sources and more data. For another episode. Apple launched the iPod. Fabulous. Amazing. Microsoft launched Windows XP. I remember I used to use Windows 2000. And then XP came out. There was ME, which I think was for businesses, which we installed. Shout out to Toru. It was garbage. It was garbage.

[00:16:16] Wow. It was straight garbage. Oh, Microsoft knew ME was garbage. Like Windows Vista. Windows Vista was ME, like, reborn. Like, they do this every couple of years where they have an OS. Thank God we got out of OSs as big announcements. But they do this every couple of years that the OS is just straight garbage. And ME was that like, what is this? Wow. Okay. Okay. Fair, fair, fair. I like all of them. I'm like a Windows person, Windows lover. And then China entered the WTO.

[00:16:44] I'll give some more context about why that's relevant later. But it's something about the manufacturing hub, critical for the tech industry because it enables trade. We'll come back to it later. 2002, Firefox browser launched. I thought Firefox had been around forever. Incredible. eBay bought PayPal. Google launched AdWords. Blu-ray was announced. Yada, yada. A bunch of interesting things. More relevantly for us in Africa tech. What was happening? Founding of MTN Nigeria. This is a big deal because MTN became a very pivotal company. In the telecom space. In South Africa.

[00:17:14] In Nigeria. In Kenya. Second thing that was happening around this time period. Telecoms was getting privatized. The telecom sector was becoming privatized in Kenya, Nigeria and other large markets. Which means the governments were nudging private companies to come and push forward the telecom industry. Very, very important. Seltel was expanding around the world. Seltel, also known as Zane. Also known as Airtel. Listen to Affrability episode 13 where we talk about Airtel. Basically if you put all these things together. There was a bunch of telecom interconnectivity shit just going on.

[00:17:45] And the governments and the private sectors are trying to find a way to incentivize people. And provide mobile services, mobile networks and mobile phones. I like the way Tech Cabal put it. Shout out to Tech Cabal. You can check out their amazing website. So Tech Cabal said. Seltel was born on the cusp of Africa's mobile technology boom. Fascinating. So that's the scene. What was going on globally. And then more relevantly for us in Africa Tech from the 2001-2004 period when Solions was formed. Yeah. Yeah. You can't even... You can't even...

[00:18:12] You can look back and look at that and have all kinds of bias. But it's true though. Like it's like that was the perfect time. It's kind of everything was new. Everything was fresh. And there was so much optimism. Government was open to investors. It was difficult to do business. I mean, Nigeria had the whole farce of the bids that were won and then canceled again. But ultimately, just a lot of people made a lot of generational wealth. But also good things for the ecosystem itself in those years.

[00:18:39] And starting early about that time was a great backdrop for... With also some Kenya-specific content. It was a great backdrop for Kenneth and Jurogate and Balaji at Kimboru. Yeah. Yes. And for anyone who's interested, we've done at least between five and eight telco episodes. So you can go and listen to MTN1, Airtel, Safaricom, Globacom. And they all sort of give some more information about that. So you can listen if you want more depth on telecoms. Okay.

[00:19:04] I'm going to talk about the story of Cellulant instead of what it was like in the beginning. I think I'll talk about the founders and then some about the founding story and the legend of Cellulant. For context, Cellulant is for maybe a Nigeria-leaning audience. Cellulant is in Nigeria as well, but they're pretty significant and pretty big and more known, I would say, in Kenya as well. Right. This is like a really very important company to the Kenyan tech ecosystem, like an OG tech company ecosystem.

[00:19:35] Right. Okay. First, the founders. Two founders, Ken Nijuroge and Balaji at Kimboru. I'll start with Ken and then I'll move to Balaji. Ken was born, some great interview he did with Benji Fernandez on his podcast series, which he started at some point. Ken was born in Nakuru, just outside Kenya, went to school there. Right. In the late 70s, just to be clear. Yeah.

[00:19:59] When he said, he said Nakuru is very rural and he had a small kid in a big city type field when he went to Nairobi. Anyways, he got into universities to, he completed high school in 1992, Monson-Arabi University. He initially enrolled at the University of Nairobi School of Pharmacy was where he got in. And then he spent, he spent time working in tech and IT, as he says, studying computers at Strathmore University. And then after his first year of pharmacy, he realized that pharmacy was not for him.

[00:20:27] And he said he failed, he failed it and he had to drop out, which is very interesting. That was his first failure in academics. And I'm like, I heard his first year pharmacy. Wow. Okay. Additional context for the audience. So he grew up in this rural place. And so Nairobi is the capital and the largest city in Kenya, right? So Nairobi has a lot of people. Let's just say four to five million people. Nakuru has like 500K people, which means Nairobi is 10X bigger and much more urban.

[00:20:56] He said he found the transition difficult. Yeah, he did. Obviously, I'm only being, I mean, I'm being incredibly tongue in cheek. However, I feel like in his own admission, he's like, he just wasn't built for pharmacy. He didn't like it. Moving to the city was a bit hard. He tried to switch into computer science, but he couldn't, wasn't able to transfer his credits from Strathmore to University of Nairobi. So he would have to like redo the whole course and stuff. Because I remember even when I went to uni college in Nigeria, you can't, transferring credits is just like a foreign concept.

[00:21:25] But that's a whole another thing. I was able to transfer credits from University of Lagos to IIT, which was intriguing. I transferred a lot of philosophy psychology courses, which I was surprised by. From Nigeria to the US, right? Right. I didn't have to take all of them. I could just focus on engineering because you have to take a lot of electives. Yeah. Yeah. I figured that could, that's typically, most American universities are pretty open to that. Nigerian universities are not. Well, you can do it because we have like two year, like basic equivalent of where in the US you can do coming to college and then go to university.

[00:21:56] Yeah, yeah, yeah. You can do that in Nigeria as well. Sometimes universities don't have their own programs. They just call it diploma. Well, cash flow. So back, so he didn't like pharmacy. It wasn't a fit. He had some academic challenges and then he felt like he was going to reset things. So I think he left the University of Nairobi. I went back to Strathmore. Yeah. I went back to Strathmore. I was in Strathmore for a year and then decided to be like, I'm just going to work. I feel, in his words, sufficiently educated to go into the market.

[00:22:25] His first job was in an ISP called Interconnect. Yes. And then he moved to another ISP called FormNet. But, sorry, apologies for interrupting you. Just to get the timing straight. Born in the 70s, in the early 90s, went to high school. In the mid-90s, it was a Strathmore. Now that he's left everything, it's around 1996, 1997, right? Yeah. Okay. Yeah, it's around 1997. Yeah. Okay. So he got a job. He worked in one of the ISPs.

[00:22:53] What I find strange in his theory is like, he was in charge of a team that was building websites for the first incentive customers in Kenya. And you look back and you say, man, that must have been a fun time to get, to be able to have all the initial websites and domain names in 1997 and 1998. Imagine. What would you know now? Domain names became something crazy. Absolutely insane. Right. I saw that he was building websites for like $20,000 to $25,000. Now Squarespace is $100 per month. That's just like crazy, man. $25,000 to $10.

[00:23:23] Wow. Yeah. Okay. The nature of tech. Businesses can come and go. Right. The company... So after that time, he... During that time, he met his co-founders for his first business, Three Mice Interactive Media. Interesting name. Yeah. They were... I mean, there were three people, I guess. That's where it came from. I don't know why this just occurred to me. Oh. And they're mice. Okay. And they're mice. I don't know.

[00:23:50] I don't know why they did that, but like, it's just like, were they referring to themselves or like computer mice? But anyways, what do I know? Okay. A quick, a brief segue. If you ever read nature documentaries, they say if there's like some colossal failure, whether it's an asteroid, meteoroid, whatever, natural disaster, the animals that are most likely to survive are like cockroaches and ants and rats. Yeah. Basically, because they're just, they're versatile. They can eat anything, they can survive in any weather. They can be overground. When I saw this, I thought about that for some reason, even though like a mouse is very

[00:24:20] different than a cockroach. Actually, mostly cockroaches. Cockroaches, I believe, are the ones that can survive. I think so, yes. Something nuclear or something. And that's why there's many Silicon Valley startups that have the cockroach name, believe it or not. Cockroach TV. Cockroach Labs, bro. Yeah, Cockroach Labs. There's a bunch of them. Cockroaches have good reputations in America. In Nigeria, they have a really shitty reputation. If you hear Cockroach, you rot. Cockroach is a nasty. Three Mice Interactive Media. He was developing website for other people.

[00:24:48] I realized, fam, I can do this by myself and build a web development firm. So him and these other two co-founders built a web development firm. Three Mice. Which was one of the, which was then acquired by Africa Online, the largest Pan-African ISP. This was in 2000. He had left university, joined a bunch of ISPs, building websites, sired in his own website, development company.

[00:25:15] And then was able to sell it to a Pan-African ISP for 40 million Kenyan shilinds of about $550,000, which is significant. And only after a year and a half. Because I think the timing, he founded Three Mice, 1997, 1998, 1999. And that was in 2000. Depending on the data source, it's either one and a half to two and a half years. Sweet exit. Such a short amount of time. Sweet exit. Sweet exit. Yeah. And. Oh, but by the way, Blanko, have you ever heard of Africa Online?

[00:25:45] I'd never in my life. I mean, obviously they named themselves after AOL, America Online, but they were not popular at all. Or maybe they were too Kenyan-based. I'd never heard about them in Lagos. I, I, they were probably just, no, probably just subsumed by one of the many other companies. I think the challenge with pure internet play, as we have seen, is they tend to be, it can be very, we should talk about Tezzeti, but maybe not, but it can be very difficult to do with no like existing infrastructure or very expensive to do. Right, right. So the Telcos already built it.

[00:26:14] It's just that ISE has been stent to stay a while, but I guess not. Okay. Okay. Anyway, you were saying, so it's 2000, they've been acquired. He has the exit after two years. Yes. He had the exit after two years. And, and, and so this, he had the exit. He and his co-founders from three mice made a bunch of money, a couple hundred grand for each person, at least depending on whatever, how they shared it, whatever. He's a young man in Kenya in his twenties and having a good amount of money. I'll talk about the founder and I'll continue the Selenand story from where they meet. The second founder, Balaji.

[00:26:46] So about, a bit about Balaji, Akimboru. He's Nigerian, probably a good place to start. He went to school in Lagos between 81 and 82. Went to Abafi Melwolo University, studying pharmacy as well. I find that strange confluence of coincidences. Like, how did he do pharmacy as well? The job he got has nothing to do with pharmacy when he graduated. Yeah. The business that they're both most well known for has nothing to do with pharmacy when they graduated. Yes. Anyways.

[00:27:13] Balaji started work as doing sales at Procter & Gamble in Nigeria, as you do, which is fantastic. Yeah. Early 20s. Which is a great job, by the way. It's a great job. Moved to Ghana and successfully established a P&G subsidiary there. Right. And then in 2001, and we're getting to... Just to add some more information. End to end, he joined P&G, Procter & Gamble, 1994-ish, and left around 2001. It looks like it was a P&G for six-ish years. Different roles.

[00:27:43] Customer business, business, business, business, business, business, business, business. Business manager, program. So basically, he had a bunch of roles in that whole CPG space, even though he had a degree in pharmacy. Oh, yeah. So it's like his general skill set seems to be more management and consumer goods marketing versus what the degree was in. So in 2001, he transitioned to the international development sector. Basically, hired by the World Bank through KPMG to lead African Virtual University's business development unit.

[00:28:13] AVU. Yeah. So it was... He was a project manager for the multinational sports project at AVU is what he was saying. It was at this time that he met Ken, right? So it was... The story goes... This is where... Now at 2002 now. So 2001, he moved into international development. I presume also in Kenya. And 2001 is when he met Ken. And we'll talk about now how that like joins up with the founding story of Cellulans itself.

[00:28:43] Can I do just a brief segue? I was intrigued by AVU because I'd never heard it before. Balaji was at AVU African Virtual University from 2001, 2007. I was like, oh, what's AVU? African Virtual University. That sounds cool. Pan-African Initiative aimed at like providing cheap education, low-cost education over the internet across the continent. Sounds good. But apparently now it's completely defunct. I was like, so why is it defunct now? Apparently it was founded around 1997 World Bank. They transitioned it to be independent and be managed by African governments and AU.

[00:29:13] And then that was the beginning of the end of it. You can still find some new forms of it, but it's very clear. Like the website doesn't load properly. When I clicked on programs, they don't have any programs. It's basically, I'll say zombie mode right now, which is unfortunate, but it's fine. It's not the purpose of this podcast, but because it's such a good idea. But as soon as I heard the transition to the government, I knew it was over. Yeah. There's an initial story of Sellerland. There's one version where, I mean, it's not even a version. Who am I to even say what's true or not?

[00:29:43] But the story that they tell is they talked about this for three years. Kimber and Jorige were driven by a mission to build a world-class billion-dollar business for Africa by Africans in Africa. And saw a massive opportunity in the rapidly growing mobile phone market. Sure. And saw a future of mobile tech would change lives. I mean, yeah, and transform economies, transform lives and economies across the continent. I mean, I think a more realistic take on what happened is they were doing the normal ISP business.

[00:30:11] And then somehow they found a more attractive business that made more sense for them to pursue than the ISP business. They said they incubated it within the company. Exactly. Sellerland was officially launched now, according to them, according to Sellerland's website in 2004. Right? Now, at this time, Balajah Kimber was working. What's even more interesting is he had a full-time job to 2012. Yes. For the first eight years of the company. And it was like, yeah, it was working.

[00:30:40] But it also makes sense because I'll talk about fundraising in a bit because you can see if you don't need money from other people, they can't tell you what to do. If you don't need to do. It's why you're asking people for money. They start giving you terms and conditions. You feel like half-16 jobs. Because my first instinct was, how can a founder still have a full-time job for eight years after founding? And I realized that, did they ask you for money? Is it your money? So, if you can have that, I realized that. That's the thing. That's the connection that was missing.

[00:31:07] It was raising external capital and a timeline for that. Yo, that's funny, man. So, 2004, what was their initial business model? What did they start off doing? They started off selling mobile content, ringtones, SMS news. This was not just popular in Nigeria. It was popular across the world at different times. But you could, somebody calls you, your phone will have a specific ringtone. I can imagine if you are young now, you'd probably think this is the most absurd thing in the world. Like, if you're 21.

[00:31:34] Like, people paid 75 cents. Like, hundreds of naira for... Jaro's six-second clip. Jaro's six-second clip for your ringtone. Now, if I hear someone's phone just ring, I'm instantly disgusted. Put your fucking phone on vibrator on silence. Not to mention an actual beat song. But yeah, it was a different world. It was a different time. It's honestly one of my major lessons that you have to... Sometimes, you have to build for the world that is. Some people can build for the world that might come to be. But you build for the world that is. That's funny.

[00:32:04] So, they were selling these mobile content, ringtones, SMS news. They work with the telcos. And all of this is new. 2004. 2004. I think 2003 was when the Nigerian license came up, for example. This was also relatively new. And Pesat had come out... Was going to come out in four or five years. 2008 to 2009. They started selling those ringtones. And how it worked is they would sell, charge through telco. Basically, telco billing. And telcos would take a bunch of the money. Of course. And then they would take some of it. So, that's how they started off the business.

[00:32:33] In 2009, they moved on to... So, Bunkley, let's give some deep dive on the initial business model. Because at the surface level, it seems like a basic B2C company, right? So, we have this. We sell it to consumers. In reality, because of the partnerships needed with the telcos, it actually has a business enterprise partnership stuff that's way deeper than it looks. Because the telcos are going to deliver it to the customer. You need to understand how the telcos work. Build partners with them. Partnership with them. Make sure the UX works. Make sure the billing works.

[00:33:03] Make sure you collect the money. This will come back in the story later. But let's just say they had a good experience of developing partnerships with large organizations like telcos. That was the initial business model. And a lot of this thing, according to the story as well, was funded by the person who had a job. Balajah Kimura. A lot of the stories were he funded it with... Credit cards, I heard. Yeah, Seed Capital and his credit cards at the beginning. And I saw that they became profitable pretty quickly as well. And they were able to fund their own operations.

[00:33:31] And then later in 2009, they moved on to payments. We'll talk about that later. That's why Balajah kept his job. Yeah, I also feel like this is a strange... It's an obvious thing now because they just built a business. I don't think they built a startup, which is an interesting thing. I don't think even looking at Kenneth and Georgie's previous business, they just built a business that took widgets, took sold the service for more than it cost them to create the service,

[00:33:58] had a margin, and kept doing that enough times so they can have a profit at the end of any kind of reporting cycle to pay their costs and pay their salaries. And they went in selling lines with the same kind of figuring that part out versus a startup, a scale-up, for example. Well, technically, a startup is just a small business that moves quickly. When you say not a business, but a startup, that's a bit confusing. No. Startup is a business, small business. Because, no, you make different investment. You're on a different investment timeline typically.

[00:34:26] And I say startup in like a... Silicon Valley. Silicon Valley, Tonga Chip. Jesus. Basically, you invest up front. That's the exact... You invest up front with the expectation of... You lose a lot of money is what you're saying. Yeah. You invest up front... You lose money is what you're saying. With the expectation of getting much more long-term income, long-term revenue from these people. But they built a business that was much more sustainable and not so much... I mean, the Silicon Valley way of doing these ring terms was to be like,

[00:34:55] man, maybe we just start a label and start our own white label songs that we sell. You know, go up and down the value chain and raise $10, $20 million to be the biggest and whatever. Interesting. So, Bangkoli's definition of a Silicon Valley startup is a company that loses a lot of money initially. Interesting. No, a company that makes a different set of bets. Like, it focuses on top line versus bottom line at the beginning. I'm not saying that's a good or bad thing. I think you've got to do what's best for you. You've got to do what's best for the vision of the future

[00:35:25] that you think works for your business. It's just a different mindset. I agree with you. But hopefully that's not the definition of a tech startup. But I know what you mean. But basically, in order to be a Silicon Valley tech startup, you need to have some economies of scale at some point. And then the way to get to scale might almost always involve growing really quickly. And growing really quickly probably means profits are a later priority because you need to get market share on consumer. So, it all sort of makes sense. But I can understand why someone would be critical of that.

[00:35:54] It depends on what you want in life. What you want in life, you need to figure it out from a business sense. I mean, not philosophical in life. Anyway, anyway. Exactly. Anyway, so that's Seller Lant. And let me talk about that fundraising. And you can see if you can spot the time that the founder left his job. Initially, as they tell it, they were self-funded. The first Series A was in 2011. Imagine. For $1.5 million. And they were founded 2003, 2004. So, it's seven to eight and a half years after founding. That's crazy, mate. To be self-funded, right?

[00:36:24] That's crazy. So, some private equity fund. This was 2011. Of course, 2012. One of the founders stopped working and became Nigeria CEO. 14, they raised a Series B for $5.5 million from Velocity Fintech Ventures. 2018 was the big round from TPG Growth's Rise Fund, where they raised $47.5 million. This was pretty big at the time. Also, TPG Growth was a really big pocket of capital coming into Africa Tech at the time.

[00:36:53] TPG had a big Africa fund. They have some really, really, really top talent here as well. And this was the largest... 47.5. Wow. Yeah, it was the largest equity investment for Fintech in Africa at that time. I thought that was... Wow. Wow. They had raised over $50 million, well over $50 million by the time... By 2018, at least. One and a half-ish. Three years later, five and a half-ish. Four years later, 47 and a half. Wow. That's incredible. But 2018 was a time.

[00:37:21] 2018, I think, was the year of Paystack Series A, right? That's Paystack Series A to $10 million. This was the Fintech time. Like, Flutterwave also was... I think it was one of their $20 million, $30 million rounds. So this was the period where there was a lot of interest in payments and Fintech. Stripe was founded in 2009, was already on a tier. And one could easily, easily make the connection to say, look how this is going to expand even further beyond this. Jumia was still doing okay.

[00:37:49] There was a lot more interest in Africa and invest in Africa Tech. You know, you mentioned Africa at YC, you get calls back. Now you mentioned Africa. You get nods. You get good luck. And at the time... Well, this is common in Africa Tech, less common in other regions. They had a wide mix of investors. Some impact investors, some quote-unquote traditional VCs, some PE funds, and then just others. Rise Fund, which is TPG Gross Fund, Endeavor Catalyst, Satya Capital,

[00:38:18] Velocity Capital, Progression Capital. Great freaking name, by the way. I like Progression Capital. Yeah, a wide variety. So it's like, it's common. We've done so many that for billion episodes. But in other geos, a PE firm and a VC firm in the Series C is so rare. But in Africa Tech, hey, PE is VC for we don't have exits in our companies. The whole industry is nascent. It is what it is. Fascinating. 47 and a half. Incredible. They got a lot of good media coverage. If you actually search cellulents, are you researching them? This round, well, and the future layoffs, which we'll talk about later,

[00:38:48] those two things have the highest SEO. Yeah, yeah. I would even say this round was pretty significant when they... It doesn't look like a big number now relative to, I don't know, literally any other company. It's big, it's big. Any other company raising in 2024. No, I mean big in the ecosystem. It doesn't stand out in the ecosystem as it did then. In Africa Tech? In Africa Tech. It doesn't stand out. Okay. The rumors say the valuation was between $100 and between $50 and $100. But another place says it's definitely, let's just say $100. Yeah.

[00:39:18] I guess I meant it more like in that time, Flutterwave has raised hundreds of millions and Paystack was sold for $200 million. And all these B2B companies, Cobble, truck companies, a lot of companies in random industries have raised $60, $70, $100 million. Like retail, SME retail, Wasoco. They've all raised crazy gangbusters. Is that a random sector? That's an important sector now. E-commerce for... Yeah. No, no. It's not even...

[00:39:47] It's more like it's not fintech. But at the time, even for fintech or any business, I think these guys had raised, was crazy. It was a... Wait, what's happening in this industry? A number. Right. $100 million in 2018. Big deal. Strangely, $47 and $100, it just seems the whole... All the numbers are completely off. You'd expect $47 to be $200 and something. But because it's PE, then you can't use normal... Like, PE funds can come and take 40, 50, 60% of the company. Don't think, oh, 20% dilution, $47 is $200. No, there's no $200 rumor.

[00:40:17] It's either $50 to $100 or a source says for sure it's $105. But there's no... It wasn't higher than that because of the PE side of it. Yeah. Which is... Yeah. I mean... A lot of dilution for the founders. As long as everybody's happy. I mean... Hey. They're literally not taking money off the table. They want the money in your pocket. It'll come back to bite them later in the story. But yeah, that's what happened at the time. Yeah, exactly. Yeah. So it's just a wrap up on the story for Sellerland. It started in Kenya. Started off selling mobile content, ringtones, SMS news.

[00:40:46] Working with mobile operators. Eventually switched to payments. For the fundraising, they had raised over $50 million from a multitude breadth of investors across impact, PE, and traditional VC investors. At this point in the story, things are going... Things are chugging along relatively. Okay. I will take over and talk about their growth and geographical expansion. I will do it chronologically. And then I'll deep dive on some of the more interesting expansion parts of this story.

[00:41:14] So 2003, 2004, they were founded, like we said. Immediately in 2004, 2005, they changed their business model. And then around 2011, which is when they got their initial Series A, they started to do more international expansion. But they started to do international expansion with a different business model. So they started with the ringtone seller. By the time they started to do international expansion in 2011, they were firmly like a mobile banking solution for banks. They're now doing something different. They expanded to Zambia, Botswana, and Ghana.

[00:41:43] And when they expanded to these countries, the way they branded themselves was a converged payments ecosystem platform. Which is a lot of words, but they enabled payments. And then also, they enabled banking. They enabled banks to offer more banking products. They also had like a vast bank. That's what they did in 2011. On this one, what I saw, even before 2011, is they sort of built up doing a lot more payments integrations as well. Like you said, payments integration, but primarily started from Kenya and then moved on to the other markets. Yes.

[00:42:12] And technically, I skipped this, but in 2004, they were already in Ghana. Because they had a partnership with SpaceFond. But that was a different business model, not really part of what they're doing now. 2012 to 2015, they did a lot more international expansion. So Kenya, Tanzania, deeper in Ghana again. Uganda, Zambia, Mozambique. So let's say Eastern to Southern-ish Africa plus Ghana, which is in West Africa. And most of their expansion was with a more B2C product, but not mobile ringtones now.

[00:42:42] It was like a payments platform that enabled users pay their bills, do money transfers, like standard consumer payment platform. That's what they expanded to those countries with from 2012 to 2015. Around 2015 to 2020, though, they stopped really talking about specific countries. They just started to say, look, we're in 15 to 20 countries. And we serve 30 to 35 countries. So the differentiation is physical presence with actual employees. And serving is they serve them internationally.

[00:43:09] So the messaging around 2021 to today is physical presence, 15 to 20 countries, serving 30 to 35 countries. And we process 12% of Africa's payment volume. That's the whole geo expansion story. Unfortunately, around the same geo expansion story, they also started to have some leadership turmoil. So I'll talk about this now. Before you get to the leadership turmoil, I wanted to talk about the 12% of African payments volume. Yes. Because I thought on one hand, I was like, that's impressive.

[00:43:40] That's 2018, right? So not as intense in Nigeria or Ghana. Definitely very intense in Kenya, which is pretty all mobile first. So volume versus value is important because government payments are the biggest value. And government payments you find, at least in Nigeria, it's going to be like two or three companies that do that processing, which are not the startups that are popular. Right. And then you'll be like, maybe it's volume. I'm like, yeah, of course you do volume. And once you do Kenya, you do volume.

[00:44:06] I guess I was trying to parse how impressive that 12% for one customer in all of Africa is because the answer would change based on how big is Kenya by volume in all of Africa. And I suspect Kenya is probably, at the time, 70% or 80%, if not more, of volume of transactions. If you're using it for multiple small and large transactions, and they're the ones that connect the layer towards and pays out to everything else.

[00:44:29] I think 12% is big and impressive, but probably not as impressive as it would sound at first, given Kenya. I don't know. Am I thinking about that right? Because I feel like that's kind of my intuition here. Yeah, I think you're thinking about it right. I just wish we had more longitudinal data. I don't like single data points. I wish we could see 12 in 2019, 11 in 2025. Because if it's just one data point, you start to say, like, how has it changed over time? What's the denominator? I have a lot of questions. Immediately, it looks good. It looks high.

[00:44:58] Like one company doing just 12. And they're not saying SSA. They're saying the whole of Africa. It sounds good, but I just don't know. There's something about it that they never updated the number over time, which is a negative signal. Probably going down. So, short answer is looks good, but I'm uncertain. I think it looks good because Africa, not SSA. And because it's just one company. But I'm pretty sure if I were betting man, it's gone down significantly. And it's in low single digits. I'm actually going to even go further and say zero information content.

[00:45:27] Because nobody can really say what it actually means. Yes, yes, yes. Because what would make this information more useful is we have the chronological data, number one. And then number two, they actually tell us what payment volume are we talking about and how does it differ by country? So, we can see the split. Basically, they need to segment it. I never trust any data point any company gives to me as a general sense. Now, we're going to talk about the leadership turmoil. The reason I'm talking about the leadership turmoil at this point is because it really affected the way they started to think about geographical expansion and growth.

[00:45:57] It stagnates a lot after 2020 and 2021. So, what happened? There were rumors that they were having some issues with one of their products. They had a product called Agricore. Banco will probably talk about it more in the product side. But the short side was it was supposed to enable farmers and the agricultural sector to become more digitized. Specifically, enabling faster payments to people in the ecosystem and faster transfers.

[00:46:24] Unfortunately, there were some rumors that there was some financial impropriety and some employees at Southlands had been diverting the funds to their own accounts. Basically, the money that was supposed to go to the farmers and people were taken, stolen by employees. Eventually, yada, yada, yada. One of the founders actually resigned. So, Bolaji, the Nigerian founder, quit. And then just a year later, Ken retired. Ken didn't have anything to do with it, but he also left. Around 2021 now, they had a new CEO called Akshay Grove. And Akshay Grove was a former CFO and he took over from Ken.

[00:46:54] You can see now there have been like two or three major, let's say, leadership transitions, if you put it nicely. And at this point, they just stopped really talking about growth and expansion. They still expanded to South Africa in 2022. And they expanded to Egypt in 2023. But the rate of geographical expansion, those two countries, South Africa, Egypt, pales in comparison to when they were launching in five or six countries from 2015 to 2018. So, I'm not saying it's nothing. I mean, SA, South Africa is one of the biggest markets and Egypt is a massive market.

[00:47:22] But I'm just saying the rate of geographical change slowed down a lot. Let's summarize. Let's summarize the geo. They are massive in Kenya. They've expanded to Tanzania, Uganda, which was big in East Africa. They have a little bit of a foothold in Ghana with different products. I'm not sure how big they are. They launched really, really late in South Africa 2022. And they launched really, really late in Egypt. Let's say Egypt and South Africa, probably smaller players, especially if you think about DPO and all the players there in Egypt. But they're there in those markets.

[00:47:50] I would say, to summarize, their biggest markets would probably be Eastern Africa because they launched there first and they have deeper product partnerships there. That's the summary of that piece. Yeah. And Lepa integrations with the existing payment providers in there as well, which is a bit of a unique beast. Because, in fact, I'm glad you said that. One of the things that made them stronger when they launched was Safaricom and M-Pesa. It was starting to become a thing 2007, 2008, 2009.

[00:48:15] So the banks felt like they needed to offer competing products that worked just as well as M-Pesa from Safaricom, which meant Sellins was able to use that as leverage to get deeper partnerships with those banks. So that helped them expand from that 2008 to 2011, which enabled them to get the Suise. That's it. All right. Partnerships. Easy. They partner with three or four different groups of people, financial institutions, MNOs, a.k.a. telcos, a.k.a. mobile network providers, retailers, and, of course, global payment networks.

[00:48:41] I'll go through some of the biggest partnerships they've done in their history, but I'll spend more time on what I think are the significant ones. So in 2004, they partnered with SpaceFund. I was saying before, SpaceFund is now empty in Ghana, right? Basically, they partnered with the telco to help launch payment services in Ghana very, very early in their history. I mean, basically the same way they were formed. 2011, they partnered with KCB, KCB's Kenya Commercial Bank, one of the biggest banks in Kenya, to offer mobile services. 2014, they did a partnership with Mpesa.

[00:49:07] And, of course, Mpesa is really part of SafariCon, which is part of Vodacom, which is part of Vodafone. And this was to enable salient to integrate Mpesa across other services that Mpesa wasn't already embedded in. Airtel Africa in 2015, MTN Group, so the bigger group, not just MTN Ghana in 2015, Visa 2016, MasterCard, Jumia in 2019. What did they do with Jumia? Enable people have different payment options on the e-commerce site. Like, Echo Bank 2020, Nala 2021, what did they do with Nala? Enable remittances, go faster.

[00:49:37] 2021, deeper partnership with MasterCard, 2023 WorldPay. A lot of different pieces. Just think, always telcos, always banks, and then once in a while, retailers and other people in the ecosystem. So they've done a good job. Their product is very, very dependent on partnerships because partnerships basically means integrations across the stack. Yeah, and it's also like how they... I mean, on one hand, if you have a large enough volume with any payments company, you can usually get better rates and you can make it like brand-er.

[00:50:04] So they do a lot of stuff with, honestly, anybody and everybody when it comes to partnerships. Just how the nature of the beast. Acquisitions in M&A. They haven't really done any major acquisitions that I could find. They're primarily going through... They're primarily going organically and through commercial partnerships. And then team strategy. It's funny, normally this is part of Afrobil where we're like, ah, the team is made of this structure, blah, blah, blah, blah, blah, blah. But this team strategy is basically what I was saying with the drama. This episode is weird in that there's a lot of drama.

[00:50:34] I won't repeat everything I said. I'll just quickly summarize it. 2020, Balaji resigned because of all the stuff around AgriCorps, financial, and propriety. 2021, Ken left. 2022, 2023, there was a new founder. I'll also add that in 2022, Balaji was cleared of financial misconduct. I can't believe it took them two years. Ah, companies are so funny. It took them two years to do all the research. Whatever, none of our business. But eventually, they said there was a thorough forensic internal investigation.

[00:51:03] And Balaji was cleared of, quote unquote, any financial misconduct or personal impropriety, whatever. That happened. And then there were a bunch of layoffs. When the new CEO came, Akshay Grove, it was around the same time they were trying to do a Series D. So what time are we in? We're in 2022, 2023. Remember, the two co-founders are gone. There's a new CEO. The CEO is trying to do this Series D. It didn't work out. And they had to do massive restructuring. Between 20% and 30% staff reduction.

[00:51:31] And they said, quote unquote, we're doing a leaner product-led structure. I don't know what that means. It basically means they didn't have that much money and they needed to fire people. Yeah, we're going to let people go. That's what that means. A lot of these people did not come in as we thought. Leaner product-focused structure. That's 2023. More nimble, fast speed. At the end of 2023, again, even more layoffs. This was the third or fourth round of layoffs, I don't know who you believe. And after this third or fourth round of layoffs, this CEO left again. Another CEO departure actually left.

[00:52:02] And he said he was resigning for, quote, personal reasons. They are playing with TPG now. That's what TPG is learning. These people are playing with TPG. TPG gave full target, did not hit it. And now they're all gone. 2024 April, they hired a bunch of executives. A lot from Stripe and a lot from InterSwitch. And the former CFO became the new CEO, so Peter O'Toole. And remember, Akshay was also the former CFO. A lot of leadership changes. A lot of turmoil. Depending on if you count, depending on how you count all the layoffs combined. Between 30% and 40% of employees let go.

[00:52:31] A bunch of restructuring. We're not going to go into all the detail. Let's just say every time they fire people, they reorg and restructure themselves a little bit. And, yeah, that's the team strategy for Cellulence. Crazy. Very unique in Afro-Builder. A lot of turmoil. But they're still here. They survived, but barely. Of all of these companies, the only one I can think of the founders are still involved is still Mitch. Not just Mitch now. I mean, there are a lot of long-term founders. You're forgetting Piggy Vests.

[00:53:01] They've all been doing it for- No, 2003. This era. 2003, 2004 is what I'm saying. Ah. Then Paga 2 now. Tai has been in it since around- 2009. Paga was 2009. Oh, yes. 2009, yeah. So, from 2003. Three, four. Founder, they're still there. Let me think. Yeah. MFS Africa was formed when? Probably later. Definitely. It doesn't sound like it's 2003. I wouldn't- Because MFS connects all the telcos.

[00:53:29] And the telcos only became big in 2001. So, MFS must be way later. Intriguing. Ah, Mitch is a- MFS connects instead of connecting mobile money platforms. So, even definitely like must be later. Yes, because mobile money became only a thing when they got the licenses. Okay. Intriguing. Shout out to Mitch then, CEO of InterSwitch. One of the longest sounding founders. Any comments you want to make on the whole team strategy? MFS is 2009. I would say like overall, I'd say like it wasn't-

[00:53:59] On one hand, the Nigeria agriculture stuff was very interesting. Just the nature of the business. Talk about what that was in a second. But it's unsurprising. I think it's- Unsurprising fraud. Jesus. Wait, it was not that the fraud is unsurprising. It was unsurprising that the founders left. What was surprising to me was how they left. It's not surprising to me that the founders are no longer there. After what happened, you mean? You're not surprised after what happened that they had to leave, you mean? No, after PE funding. It's just very easy for- Oh, got it, got it, got it.

[00:54:26] ... to think about like much more like preparing the company for whatever their own internal return targets are. Yeah. And that doesn't quite necessarily align with like a founder-led business. Doesn't always. So at the mixed point, it's much more striking. Right. But what was surprising that it was like a fraud situation that was not fraud. You know, it was very funny. It was- It was not fraud? Okay, yeah. I mean- Money was missing- Thefts. Thefts. Whatever you want to call it. The fund that wasn't there, it was kind of like, so who got into trouble for the money that was missing? It's not-

[00:54:55] So it's kind of like a weird thing that happened that is still not clear from the outside end. Part is very surprising, but- Yeah, but really, really bad for the reputation. If you search them on Google or Bing, this agri-core financial diversion, financial impropriety, whatever, almost always comes up. And it's been a while. We're in 2025 as time of recording. It happened in 2020, but hey, reputations are destroyed very quickly. It's there on the internet forever, unfortunately. Yeah, nothing you can do about that. Nothing anyone can do about that. All right, I'll round this section up.

[00:55:23] Bankhole will go into details on products and monetization strategy. I'll give a few metrics data. How many users do they have now? Approximately 220 million users across 34 countries. And when I saw it, I was like, 220? No way. I'll come back to my criticism of that number later. Transaction volume. They say 300 million transactions per year. It looks high. TPV, total payment volume process through the platform. 2021, 6 billion.

[00:55:52] 2022, 12 to 13 billion. 2025, which is this year, estimated to be 30 billion. Let's talk about these numbers. Honestly, the only number I put my hat on is the 2022, 13 billion process. The 2025 is a projection, right? We don't trust that. 2022 million consumers is completely useless. Because they're a B2B business, right? So it doesn't matter. No one cares how many consumers are using it. Because what happens, what they care about is the volume.

[00:56:20] If you have a billion consumers and they're doing five cents, it's useless. So the volume dollar-wise is the most important thing. And then we need to define and segment that. The most useful metric to me is the 12 to 13 billion done in 2022. Which is not bad considering all the stuff they've been through. Yeah. I also, the 220 million is neither here nor there. Yeah. I see so. But honestly, I feel like with payments, you've got to be in the right position. And hopefully you ride the inevitable arrow of progress that's pointing towards digital payments, right?

[00:56:50] And at least you can't question a number that's going to be big. Whatever the number is on their growth or metrics, you're going to find it big. Right. I have a high Kager. The 12 to 13 billion in 2022 doubled. When they announced it, they said it doubled from 2021. 100% growth rate in one year is quite significant. I don't know if it's slowed down, but that's good. Good signal. No. It's going to be big relative to their competitors. Even if you look at all the numbers and all the books of the payments companies to the side. Side by side.

[00:57:18] And the other thing is, I'm sure if you're TBG, you're looking at whatever Flutterwave does. Or InterSwitch does. Or DPO. DPO exited to NI. NI exited. Like there's an exit and there's a player doing it. Now that was focused on South Africa. But DPO is also sort of big in Kenya. There's an example of a big exit. Yeah. I actually even mean in terms of the actual books. Because you can basically, they're all waiting for each other to then say like, hey, if this guy can get that XYZ valuation. Because Flutterwave went to the market multiple times since 2018. Right? And raised a large amount of money.

[00:57:47] And if you're looking now and Flutterwave is talking about IPO in for billions. And your last valuation was like a couple hundred million. If that. You're like, hmm, maybe we too can. And everybody's just looking at each other and pointing InterSwitch as well. Because it's like, let's see what this guy's, whoever goes first is going to set the market. And then we'll see what that means for us. We'll see. Flutterwave is lucky because Flutterwave has a bigger home market. Significantly bigger. Like Nigeria is 200-ish. Kenya is 50-ish. It's at least four population. And then GDP is like 7x.

[00:58:17] You expect Flutterwave to just be bigger. Now, also you can say international market expansion. But I prefer to focus on home markets. But Kenya is deeper. But Kenya is deeper. So that's what you say. So maybe Nigeria is bigger. But Kenya is, the digital payments is deeper. So maybe it's not 4x. Maybe it's 2x. Maybe it's 1.5x. Fair, fair, fair. It's just that I always laugh because every time I think of international expansion, I remember our InterSwitch episode. And then we see the stat that, what was it?

[00:58:44] 97% of the, it was like some high 90s percentages all from Nigeria. What the hell, man? Like 99% or something like that. 98% of our revenue from Nigeria. That's why I like piggy bears. They're like, forget about it. We'll just stay in Nigeria forever. Oh, Lord. You can save money. All the founders that are, you're just flying to all these places for conferences. Like, why are you in Kigali for a conference? I'm launching a new market here. Why? Why? Other quick.

[00:59:11] Your flight to a hotel is more than your revenue for the last two years. Other quick miscellaneous stats, and then we'll go over. Connected 210 banks across Africa. A lot. Connected 75 million bank accounts. Okay. 150 million mobile wallets. Completely useless. We've partnered with 45 of the largest mobile money operators. Completely worthless. And 12 plus, we've connected 12 plus local, global, and regional banks, which is completely useless. So a lot of useless stats, but that's what's on their website. I would ignore all of it, personally.

[00:59:41] Nigeria alone has, so if you connect to the interbank settlement system, does that mean how you're connected? We're not doing that right now. All right. I'll talk about product strategy and how they make money. So first, the evolution of product strategies. The first phase we've talked about this a bit is selling mobile content. Just one point. You know, phone, news, ringtones, news, digital content. Basically, the way it worked is subscribers will pay between, and thanks to, there's a

[01:00:10] tech about that's called our link in the show notes. Shout out to Tech The Bomb, man. These guys are just a good source. Okay. Subscribers pay between 60 cents and a dollar with prepaid call credit. So you pay with the airtime that you've preloaded your phone with. Yes. Telcos took all the money, basically. And that was kind of what they did for a long time. Between 60% and 80%, right? Yeah, 60% and 80% is what I saw. Leaving them with a few cents. Yeah. The way these guys thought about it is they wanted to get the money directly from the customers.

[01:00:39] Why can't I get the money directly from the customers and deliver it? Either deliver the goods to the telcos as a text or data or something for them to download. And keep the 60% and 70%. And keep the money. And the telcos were like, and everybody was like, are you joking? Like, so nobody let them do that. Nobody, of course, nobody let them do that. And then finally the story goes, Safari Com decided to give out ringtones for free because digital goods have zero marginal cost.

[01:01:06] And somebody figured out that they can make your entire profit margin a compliment to their own product of airtime and phone. So they decided to just give it out for free. Yeah. That was the end of there. Cause you can't imagine buying something, Microsoft Teams and Slack. That somebody big gives out for free. But even, even in, in the U S those examples are much more, even you can argue that Slack is differentiated from teams. If you want to, you can argue that you love Slack is built with love, whatever.

[01:01:36] But you can't argue it's the same exact song, the same exact Jeroen song. You can't even. You can't say. This six second clip is built from love. Oh, your Nokia 6310 speaker. It sounds exact same. It's not like better audio, better bit rates. It's like, nah, it's all the same. They weren't able to, to do this. When Safari Com announced this, and I'm moving to how they pivot to payments and B2C to B2B. They decided, well, they said when, when Safari Com announced this, they struggled for a while.

[01:02:03] They couldn't pay salaries for four months because of, again, people stopped paying the 60 cents for ringtones that they were already getting for free. Right. They were trying to do, they said they were prototyping a mobile payment system for banks because, again, they were trying to get the money directly from the customer instead of going through the, going through the telcos. But of course the banks didn't want to do it. But something happened in 2007 and Pesat launched, right? And in the first year, Pesat reached a million customers.

[01:02:29] Basically, Pesat launched and it became big and everybody was trying to figure out how to make it work. Because of Sellerland's work, at least in part because of Sellerland's work, trying to connect to the banks before, trying to do a round trip around the telcos. Because they were kind of like the first to really connect the banks to M-Pesa's mobile money system. Because you can imagine the banks, a piece of money, and you worry about in a cash-based economy, the banks losing all the deposits that the banking system needs to function,

[01:02:57] moving into Safari Com slash M-Pesa's wallet and becoming that closed system. And having a way to connect money in and out was kind of Sellerland's first major gig. Yes. I think Ken said they were lucky that they were already having ongoing conversations with the banks about integration and offering new products. When it happened, when Safari Com and Pesa happened, it was easier for the banks to understand. The analogy I want to give, which I think is a fabulous analogy if I say myself, so Instacart. Yeah.

[01:03:25] Instacart, for people who live in other markets, they partner with grocery and different retailers. And the way you go to Instacart, you can order anything you want from the retailer. And it basically aggregates all of them and it ships to you for a monthly fee or for free. But at some point, Amazon bought Whole Foods. And the CEO of Instacart said, as soon as that acquisition happened, everyone was like, oh my God, how's this going to affect you? You're screwed. But he used that as leverage in his conversations to get more retailers on board. Because like, look, Amazon is getting bigger. Amazon is going to be doing this. So in a way, it was easier for him to have conversations because something had changed

[01:03:54] in the ecosystem. Like, all the dancing chairs have changed. What are you going to do? So this is exactly what happened here. It was easier for Ken and Balaji to have the integration of the banks. It was like, look, Safaricom is big. Mpesa is big. They're backed by the government. They have a million customers. They're growing. What are you going to do? Literally, the government owns 40% to 50% of Mpesa. And the growth rate was staggering. Everyone was already using it. A market has changed. It makes it easier to have your new business model. Yeah. No, I was going to make a joke and say it was Ken. Balaji was to do performance review. I resumed it at eight. I'm kidding.

[01:04:24] I'm sure they were both involved. Yes, yes. And by the way, do you see the crisscross? When they launched, Ken went to live in Nigeria. And Balaji lived in Kenya. They had an interesting geo-global dynamic. But I'm sure Ken was still part of the conversations here, even though he was in Nigeria. I think he came back to Kenya when they did the business model change. I don't think the Nigerian talking to Kenyan banks is kind of like a solid move. Even in 2009, reputation was already screwed. So banks became their major clients.

[01:04:52] Building these integrations for banks, they signed up in a few multinational banks, Standard Chartered Bank, expanded to cover new countries in just a year after Ghana, Zambia, and Botswana. Keep in mind, all of this was self-funded and figuring it out. I'm figuring out the actual business. So they figured out the self-funded part of it. And then they used that to then build this payments platform and continue to serve B2B payments companies, which is just kind of impressive. I think the transitions are very impressive.

[01:05:22] You start from, just to recap, how the product strategy has changed. From the mobile content to building these integrations to much more B2B across the stack, well, across the stack of businesses that you serve and helping them process payments as well because you've done integrations across the banks to the payment systems, which is just impressive as far as the story goes, which is what they do now. They have payments processor, single API. You have an API, you call them. They probably support, definitely support a ton of payment methods that you can then use,

[01:05:51] and they still do that business today. Yes. I can summarize because I have some notes on the way their business is today. So basically, they have three broad business lines. They have payment solutions for banks and financial institutions, the B2B side. And what that means is if you're a financial institution, it'll help you with payments infrastructure. They enable banks, offer cross-border transaction, mobile money, whatever, whatever. Basically, it's an extension of what they started to do with M-PESA in 2009. That's the first part.

[01:06:20] Second part is merchant payment solutions, also B2B. If you're a business and you want to collect payments, they'll help you collect payments. So if you're a merchant, they'll help you. It's different than the first one because the first one is for banks. The second one is for merchants. And the last one is they still now have a direct consumer business that they've sort of rejiggered. It's tank. Basically, it's a basic app. It's a basic app, right? Payments, pay bills, standard that. So they have three businesses, one for banks, B2B, one for merchants, aka retailers, also B2B.

[01:06:49] And then one which is direct-to-consumer, which is a basic standard app. The last one seems like it just duplicates a lot of what M-PESA does. I don't know how much traction it has, but they definitely still have it. It's on their website and they advertise it. So three big businesses today, but really just two. I have no faith in the third one. And the app is available for download. They had a couple of products they had before. So a bit more on the products. Their main product is Ting. This is their big consumer product. That's the app that Lundi was just talking about.

[01:07:17] Basically, it looks like any fintech app, basically. They are available in eight countries or so, eight or ten countries primarily, but this is available in 35 markets. The app says otherwise. It does cross-border transactions, multi-current support. But as far as I know, they talk about it, but it's not even first thing you see on their website, for example. But they do have a consumer business. Just to let you know how bad it is, I've never heard or seen anyone make any reference to it ever in Nigeria. Ever. Yeah, yeah, yeah. Exactly.

[01:07:47] And obviously, Saliant is not Nigeria's big country, but they are in Nigeria. But this specific product, I've never even seen anyone mention it before. Is it even on the App Store? I don't know. It's on the App Store. It's on the App Store. It's on the App Store. Nigerian App Store. If I use a VPN, it'll show. I don't know if it's on the Nigerian App Store, but I can find it on the App Store. Because you can select the App Store globally and see stuff that you can't get. Correct. But you know, it's geofenced. If you use specific VPNs in this country, it won't show.

[01:08:11] But just regardless, I'll just make a point that in a large market, not their largest market, but the largest market, it has zero consumer traction. Yeah. Yeah, it's an interesting thing. Two products that they used to have before. They had a bill management app called Moolah that is supposedly incorporated into Ting. Good luck. And then they had a product called AgriCorps, which was kind of like the center of the scam. Talk about what AgriCorps is. AgriCorps works. AgriCorps was a seller land solution built for the Nigerian Fajal government.

[01:08:39] In Nigeria and many emerging market countries, many agricultural dominant societies, there's a push where farmers are a large, smallholder, subscale farmers are a large part of the electorate or ecosystem. There's a push to be able to share money or resources to farmers. And being able to distribute that is actually like a big challenge. Seller land was the big contractor. And you want to do it directly to reduce leakage.

[01:09:04] Because yes, you can say this middleman, this middleman, but then it gets to the farmer and 40, 50, 60, 80% of it is gone. Part of the goal is hopefully, since you're providing most of the value for them to directly get the cash. That's the high level goal. In reality, it's very difficult. So you get, you register the farmers, you distribute the inputs, you connect them to buyers, but essentially built on settlements like tech infrastructure, right? Right. When it was at its peak, they said they reached 15 million farmers in Nigeria. Wow. I don't know if I believe that, but hey, okay.

[01:09:34] But this was where like in 2020, the report surfaced of, by the way, this was in 2012. So it's surprising that it took to 2020, which was very interesting as well. They found that some staff members have inappropriately received funds from Agricorp Wallet. One of the challenges with distributing in a way there's no real identity is a strong problem. It's very hard to know who is who. So there are 14 staff members apparently just getting money from, or 14 staff members were fired, maybe more.

[01:10:02] But they're apparently just getting money from Agricorp Wallet. God knows how much or how many, but it seemed to be significant enough. And a bit of a deep dive for people that are not familiar with like developing markets and the way it's set up. In some developing markets, there's amazing identity verification. Look at India, right? In some other markets like Nigeria, it's atrocious. This is how bad it is in Nigeria. There's a BVN number, which is a bank verification number. There's an NIN number, which is sort of like a social security number. There's a voter's registration number. These are like six or seven numbers.

[01:10:31] But if you look at the stats, none of them have more than 60 million users. But the country apparently has 200 million. Like what's going on here? BVN is 50 to 60. NIN, I think it's 70 to 80 or I believe probably 40 to 50. The voter's registration one, I couldn't even find any stats on it. But there's basically no systematic social security stuff that almost everyone uses, which leads to the identification problem Banker was talking about. It's actually quite bad. It's a bit sad. I thought the BVN would eventually get higher. It turns out not that many people have bank accounts.

[01:10:58] I thought NIN would eventually get higher because it was mandatory, but apparently it's capped out. So there's some issue there, which is like, like I said, so if there's no identity, like I'll just say I'm the farmer, right? I want the money and I'll take it. Especially if I already worked there. It's a bit sad, but hopefully one day will be solved. Everybody was adding names for salary. The game is the game. The game is the game. The game is the game. But they went to court. They blamed the fired Nigerian CEO who eventually took them to court for $10 million, by the way. Oh, wow. Which was settled out of court. Yeah, it was settled out of court, basically. And he was cleared about allegations.

[01:11:28] And he said, you all must be joking, accusing me of fraud. But it eventually settled out of court that he didn't do anything. And it was cleared of all liability. That's AgriCorps, but AgriCorps doesn't exist anymore. We're not sure what happened to this program. They usually figured out new and better ways to distribute it. Nothing. They don't mention anything on their website. Nothing. Yeah. Cleaned out. That's kind of like all they have. I think the way to think about the entire product line is they do payments. They do payments facilitation for all these companies. How they make money.

[01:11:57] Only is interesting, actually, you distinguish the payments for banks as customers versus payments for business as customers. It's just the same thing. Just banks are just bringing payments volume to them. Right. From a monetization side, it's the same. From a product side, it's slightly different. Because one of them is like you are a merchant collecting payments versus your bank offering financial services. But from monetization, it's the same. Like transaction fees for the volume. Yeah. It would be for any of these companies anyways.

[01:12:26] So they charge transaction fees. They probably do some B2B services. Of course. We talked about partnerships earlier. They have it with Marketforce where they work with SME retailers. Yes. They have it with DHL where they get lower rates. They work with some other company for payments. Probably for bill pay, they're going to have some partnerships and B2B services. Right. Some of those are going to not just involve the transaction fees, but also probably some kind of bespoke deals as well. They also make money from bill payments, airtime top-ups, stuff like that as well. I'll take it. That's kind of it.

[01:12:54] But if I had to guess, it's going to be mostly transaction fees, just a percentage. I'm sure. Or the volume or a flat fee or a combination of both, to be honest. Yeah. And from other companies we've done, the threshold is typically 1%. But when you get to high volumes, it would be like 0.5% to 1% of the overall volume that they get to keep. So a small percentage. I also saw they may do BAS, which is banking as a service, but I'm not sure how big that is. I'm sure it's tiny. So they probably have some SaaS subscription fees, like you said.

[01:13:20] But if I were betting, 90% plus is the percentage transaction fee from the volume. Yeah. I mean, I can see that because if they built for the agri-core, they had to build like a wallet for the farmers to use. So maybe there's something reusable there that they tried to sell. Yes. But yeah, that's kind of like how they make money. On their cost in particular, nothing in particular really jumps out. Yeah. I don't see them travel more than the average African startup. Nothing jumps out. I think we start with salaries. Staffing and salaries.

[01:13:49] About Korean is traveling. Their salary profile is probably similar as what you'd expect. Yeah. It's probably like it does. Nothing really jumps out for the employees and like. Right. And like what their cost drop, especially in a payments company. Like AssetLite, it's about the same assets that you already have on infrastructure and labor as well. So super straightforward. No, it's standard. The biggest cost, which would be non-obvious, is all the partner commissions and take rates they give across the stack, depending on how they're connected.

[01:14:19] That's the only one that would be non-intuitive. But it's actually intuitive if you're familiar with the financial sector, but it's not as obvious. Sometimes, if you're not connected deep enough, you may actually pay so much. It's almost more profitable to just do an acquisition of someone else more vertical in the stack. The whole financial ecosystem is interesting. You're like, oh, how can you expand so quickly? Yeah, you can expand. Now, of course, you could be in any country. Isn't it just to sign a contract? But then if you've expanded by signing all the contracts, you're hardly going to make any money because a partner on the ground is going to take a percentage of the transaction that's processed through that part. So, yeah.

[01:14:49] I will talk about competition and options for exit. Competition, easy. Even though Kenya is their biggest market, if you believe what they say, that we have a fiscal presence in 20-ish markets and we serve 30-ish markets, their biggest competitor is probably Flutterwave. Because Flutterwave basically does the exact same thing. They're a fintech that allows payments and they have payment gateways and APIs and whatever. They also have a consumer app. Exactly. I guess the guys don't know. They also have a consumer app.

[01:15:16] And then depending on what you believe with Stripe slash Paystack, Stripe and Paystack were in Nigeria for most of their history. They just started their expansion two and a half years ago. But now they're in Kenya. In the long term, they'll be a bigger competitor. InterSwitch, also not a big competitor unless you look at Nigeria, which of course, they'd be a massive competitor. And then, of course, DPO Group, aka Network International, aka Brookfield Asset Management, the bot NI and the bot DPO.

[01:15:42] So that'll be big because DPO was massive in South Africa, but then they expanded to East Africa. Other specific competitors in Nigeria would be, we spoke about InterSwitch, we spoke about Paystack. Like MoneyPoints and Opay, a little bit. MoneyPoints is a little bit indirect. And Opay, a little bit indirect. I'll say the biggest ones would be InterSwitch and Paystack in Nigeria and then Flutterwave globally. Those are the big competitors because they do 99%.

[01:16:05] Now, obviously, like we say on Afferability, the biggest competitor is actually offline cash status quo. That's the real big competitor. But for the sake of conversation, for the sake of this podcast, we're talking about actual companies. The real status quo is to get people to accept payments as the economy grows. Exits. How could they exit in the next five years? I will go from most to least likely. So most likely, I would say acquisition by another large fintech.

[01:16:35] And the acquisitions would likely be by the companies we spoke about in the competitor section I just spoke about. Now, most of those companies are not big enough to acquire them. The only one that's sort of big enough would be Flutterwave. But I don't think Flutterwave has on their minds to do anything. What could be interesting if Canada's BAM, Brookfield Asset Management, the company that acquired NI, they're like, we're going to do a roll-up strategy. Roll-up strategy is when you combine, is when you buy different companies and then you roll them up into a big one. Because in a way, DPO became successful because of a roll-up. Listen to our DPO episode.

[01:17:05] They got a massive investment from APIS and then they bought like six or seven companies. This could be a roll-up of a roll-up. Because even though DPO is big in East Africa, they're not as big as Salians, obviously. So it could be sort of complimentary. I don't know if they would do that. But hey, it's an idea. I wouldn't do that for them unless the price is good. But it could make sense if they want to have a larger footprint. That's the first one. Second, likely is again an acquisition. But by a financial institution that's not a fintech. So more traditional. Maybe, maybe not. Traditional companies tend to shy away from M&A. It's an option.

[01:17:34] Third is acquisition by any broad tech company. I would say that's less likely. But it could happen. And then at least likely in the next five years IPO. They're definitely not ready for an IPO. I mean, the CEO just quit two years ago. They got a new CFO. They haven't been able to raise money in five years. They're going through turmoil. They need to fix. They need to get a growth story. Get some positive momentum. Go through a normal round. Get back on the growth curve. And then get on that. I think the IPO is unlikely. Unless something drastic happens in the short term. You know what's funny?

[01:18:02] I actually don't agree with... I think there's one thing. I think there's one thing on the IPO. It's more like, once any of these companies should go public, and it works. Like, I feel like then it changes the game a little bit. But that said, I remember Farrow went public. And I thought InterSweets would be like next to it following week. But InterSweets is still delaying. But you never know. My hunch is their numbers are really good. And they are worried that their numbers are not good. Because that's what you do if you own a business or you see only one.

[01:18:32] And at some point they see everybody else's numbers. They're like, huh. Maybe it's not that bad. If the numbers are good, why did the CEO quit a year and a half ago? I think you think the CEO quit. But you've got to think about TPG first. But that's the same question. Why did TPG nudge the CEO to quit? Because the numbers aren't good now. How can the numbers be good and there's CEO turnover? You and I are saying the same thing. Yeah, because I guess the point is numbers aren't good objectively. But what if they are not that bad relatively? That's so funny.

[01:19:02] They should do an IPO. Wait, but hold on. You're saying they should do an IPO because their numbers aren't so bad. Lord have mercy. No, I'm saying that the assessment of the quality of the numbers is based on only their own numbers. That's what I'm saying. Is that a reason to do an IPO? Or the IPO should be we have so much positive momentum. Our growth story is up onto the right. Our margin story is up onto the right. What you're saying is lowest common denominator, not so bad, maybe manageable. That's not an IPO story. Well, we can agree.

[01:19:31] Obviously, it's not a traditional IPO story. Definitely not. We're not the one. But I can disagree. You're saying we thought our numbers were horrible. No, we thought our numbers were horrible. Our numbers were not so bad. What kind of IPO story is that? No, no. They're pretty good compared to the others is what I was going to say. They're pretty good compared to the others. My assessment of their growth potential may be wrong. Because this is the way I think about it. If you think you run, like I run a lot. If you think you run a certain distance or run a certain pace and you're trying to train for a race and whatever.

[01:19:59] And you're doing it for a race with people you've never run with before. And you start seeing people's average times. They'll be like, oh wait, I can actually compete. I'm not as slow as I think I am in this race. That's what I mean. My assessment of myself has been based on a very weird Western notion of what I think my growth and return is. Maybe the baseline from businesses like mine is different. That's the outside horse from position eight coming to take the thing. All right. That's a good place to close.

[01:20:27] Unless you wanted to give some more feedback on the exit, please. No, let's close. No, let's close. I agree with you on the order. I think the IPO thing is interesting because of the investors in there. But then again, the PE guys can't take a small amount of money. They don't need 10 or 20x. Just give me 5x 70% IRR. We'll collect our money and go back. Of course. Because it's over the time. 5x. Yeah. I mean, forget about 5x. 2x sounds horrible until you hear 2x was in five months. Then you open your eyes. I realize it was amazing.

[01:20:56] So once you get the money out, but we'll see. Right. We'll see. We're here. We're rooting for them. You want to close us out or you want me to close? Yeah, I can close. I can close. I had a couple. I had like kind of three areas. One is just the founder archetype. Is knowing that you want to build a business, not a startup. One. And knowing that like we'll just have to figure it out. Like we're just going to have to figure out what is profitable versus what is investable. And those may not be the same thing. Those are very often not being the same thing.

[01:21:24] And the story of the mobile payments and all those mobile payments and then bank infrastructure and then payments infrastructure as well starts to be like for me and like an inspiring founder story. Related to that is building for what is not so much what could be. Like, and that's a very tempting thing because the future tends to evolve. Like the, what Satellite built for at first was feature phones, not smartphones. Like they built for feature phones. They didn't build anything that was a smartphone approach building for payments because everybody had feature phones.

[01:21:54] It was the 3310 and the 8310 and those kind of Nokia phones and the Ericsson T29. And they built, they sold goods for those. So understanding that reality rather than like figuring out or what works in the US or what app fest or any of those kinds of things at the time. And that was a very interesting thing because that, again, it changes between building a business versus building a startup. And a startup traditionally would focus on like the future and a big opportunity and being the first with the app and things like that.

[01:22:23] And it's like, no, we can build something that sells something now. That part was looking at that story, just like the repeat founder and being flexible for what to build for what is. Second part is just founders in seeding the ecosystem. I saw that like Ken and Jorogay invest in startups himself. I think of EE and GB that invest in startups themselves, Shola that invest in startups themselves. And it's like, it's good for these people to be rich because the rich people make, there's

[01:22:49] a communist China saying where it's good to be rich with China as this communist capitalist environment. And the philosophy is that it's good for people to be rich. This was previous Chinese premier, not the Korean one, two whole different things. Anyways, it's good to be rich. And I added like an addendum, like because rich people make other people rich. And within tech, it's good that EE and GB and all these guys raised a bunch of money and got some capital because they can then put some money back in the ecosystem, Shola, put some like ecosystem. So it's just a network of people that are able to just fund and seed all of these startups

[01:23:18] themselves because they've been able to either raise money, either have exits, either have stuff in their pocket. And this is just, I think the bull case for Africa tech broadly, we just need a few people to get rich. We don't have enough yet. We just need a couple of people to get rich and it becomes this snowball that can grow. And we just don't have enough people getting rich yet in tech. I'll just add people that are rich that understand the way tech works because there's a lot of rich people. But if you're rich from real estate or if you're rich from oil and gas, your risk profile

[01:23:47] and your understanding of the dynamics of the tech industry may be completely misplaced. Like even someone, you're like, oh, my money back in a year and a half. Come on, bro. Like, what are we doing? We're not doing real estate. Go and do real estate, man. Don't be hammering people after one year to get the money back. So it's like the people don't understand the way the tech goes and it's very nuanced the way it works. And also the risk appetite needs to be different. You can't expect 90% home runs. It's just the nature of the business is very, very different, especially I do a comparison to real estate because real estate and oil and gas are very popular in some developing markets, especially Nigeria. Yeah.

[01:24:16] And I find that like just the founders in tech who have gotten rich, like just the tech people who have gotten rich are the people most likely to put money back in tech. It's good for tech to get rich. It's just good for everybody to get rich. The last part is a bit more like a meta point around the talent in Africa ecosystem. Like, what's a good kid from like a tier two city in Kenya, right? And Kenya is... It's like 500,000 population. But like Kenya is not the largest or biggest African economy. Top five. I know. Right? Top five. Yeah.

[01:24:46] Top five, right? But it's not number one or number two. But there's just a... There's a spread of talent everywhere. And so people are able to like go to China and get opportunities. But there are many more people like these founders that may not have just had the opportunity and the talent. And I'm just very curious about like how we can just start to unlock those things and create a path where they start to look at someone like Ken or Balaji and think that it's possible for them too, even though they're in these markets and these countries.

[01:25:14] And the talent exists everywhere widely, even in small towns in Africa, which is what is much more optimistic for me. And like, I love that. Because unlike Ken, I'm from a big town in Africa. Lagos. I don't know if you've heard of it. I don't know who you believe. It's between 10 and 20 million people. You know, exactly. Depending on the time of the day, to be honest, 10 or 20 million people when everybody comes in from Ogilvy State. But yeah, overall, it's like the founder archetype, role of founders in the ecosystem.

[01:25:39] And the quality of talent in Africa is just insane relative to the outputs that the economies have. And the sooner we can start to unlock these, not even just as entrepreneurs, the sooner we can start to unlock these, the better for everybody. Nice. What Wal said. Your distinction between a small business and a tech startup is an interesting one to digest. From a technical definitional perspective, a startup is a small business.

[01:26:06] From a reality on the ground perspective, their view of profitability and growth business model is completely different. Okay. And a startup you get to have, just very quickly, startup you get to, it's more allowable. If I told you, hey, I'm starting a small business and I'm spending $10 million on customer, I'm spending $100,000 on customer acquisition. You'd be like, that doesn't seem like a good small business is what you'd say. You'd be like, what are you doing?

[01:26:34] Like, what are you doing? Like $100,000 on customer acquisition? Like, hey, I'm doing a startup. I'm spending $100,000 on customer acquisition. Without knowing anything about what those businesses do, startup or small business, you have a different reaction. I think that distinction is important in the story because people who are doing small businesses are much more focused on the near term as well as long. We have to survive today to think about tomorrow, right? The startup is more like we have to survive the investor meeting to think about tomorrow. But anyways. Real shit. Yeah.

[01:27:01] Also, as someone looking at startups, you understand that there's a track record of let's pick randomly Instagram, right? There's many track of companies where they lost money hand over fist and the outcome was amazing. I just picked a random one. It's not like, oh, I'm scared to spend this money. It's happened. Yes. We're not sure what the business model was. We lost over and over and over and over. I can write a whole book of companies where they lost millions per week. Uber. Uber lost money. Lost money. YouTube. YouTube. We're about to go out. Uber is funny.

[01:27:30] Uber is still. Are they still making money? Nobody even knows. The accounting. You need a PhD in accounting to even just read their accounting statements. Every four years, we're profitable. And everybody's like, hmm. Adjusted. Adjusted. Adjusted. What? Adjusted. As soon as you see the word adjusted, just run. Run for the hills. Adjusted for all the other money we're spending, we're profitable. Like, yeah. All right. My clothes section. This one is actually very short. I only have two sections. I think this is the shortest clothes I've ever done. Just bare case, bull case. Bare case is very, very obvious.

[01:28:00] If they start to have stronger competitors in their main markets, so let's say Eastern Africa, that would be a massive problem. Because I think the biggest differentiator is they started early in one of the bigger markets and they built relationships in that market and those relationships have persisted. It would be something like Flutterwave, which is already in Kenya getting bigger. Stripe, pay stack combo, which got into Kenya last year, now getting bigger. Big as well. Yes? The second biggest is obviously reputational risk. Just like the agri-core thing was just not hot.

[01:28:30] Having a second similar thing is just so bad. Like, especially, it's not just that they didn't do their job well. It's like criminal. There's one thing where, like, you weren't able to perform fine, right? Whatever. Not everyone could do everything perfectly. But to do something criminal is just, like, really bad. Hopefully it doesn't happen. It would be horrible. Because then there will always be references to the first one. They're like, oh, is this some friend? Literally happened. So hopefully it doesn't happen. But we're talking about the bear case, right? So, hey, fundraising difficulty. Fundraising doesn't mean success. It's not correlated to success.

[01:28:58] But the fact they've had so many issues raising funds, and the last time they raised money was the Series C in 2018. In 2025. Seven years. It's extremely strange for companies to not raise money in seven years. Now, if you read between the lines, and you see they had a failed Series D in 2021, you start to understand. Maybe it's fine. Maybe they're profitable. Maybe they don't need to raise money. It's just, it's going to be a challenge if they can't convince people to give them money. Because inevitably, even if you don't need it now, you may need it for growth. You may need it for expansion.

[01:29:28] You may need it for hiring. You may need it for anything. We'll see how that goes. It's definitely that they haven't fundraised. It's that they tried and failed. I think that's the part. You'll be like, maybe they don't want to fundraise. Maybe they're like, I don't know. Wave Mobile Money raised a ton of money. And they're just like, that was maybe four years ago now. But it was a lot of money. Flutter raised a lot of money. And they're like, ah, you can believe. But this guy is like, oh, we are in the market fundraising to even put that in the press, which means that they weren't getting people knocking at doors to fundraise. And then they couldn't fundraise. It's like redflags.com.

[01:29:58] A lot of red flags. Now, they've done a lot of restructuring, right? I think between three and five layoffs, between 20 and 40%. Maybe now they've quote unquote right-sized the company where it's fine. It's just like a right-sized company based on layoffs is not the story for an exit. Like, that's just strange. Unless you want to do bargain price stuff, let's see how it all evolves. And then the last one, of course, even worse. Even more leadership changes. I mean, it's been horrible, right? Balaji left in 2021-ish.

[01:30:26] Ken left 2021-2022-ish. The last CEO left and they have a new CEO in 2024. So they just need some stability. Three to four CEOs. Balaji technically was not the CEO, was the head of the Nigerian office. But let's just say three-year CEOs in five years. It's not a good look for any company. Hopefully there's some stability there. See how that evolves? The negative bear case is quite bad. Competition risk, reputational risk, fundraising risk, leadership risk. Horrible. Positive case. Let's focus on positivity and try to be optimistic.

[01:30:55] Stable leadership is the opposite. They do a fundraise. They gain market share. They have a new product that gains traction. They're able to build deeper relationships. Maybe they do some sort of... Maybe they expand in one of the countries that's unexpected. We know they're in Ghana. We know they're in Zambia. We know they're in Uganda. There is a positive bull case somewhere. But the foundation of the positive bull case is just like a leadership team that's stable and has like a track of growth. And like a strategy that makes sense and is agreed with the current investors. So, of course, overall, I'm negative, obviously, if you hear what I said about the bear case.

[01:31:24] 17% to 80% of the negative bear case. 20% to 30% of the positive bull case. I mean, they're just going through a lot. They failed to raise money over and over again. They lost both their founders. They had a reputational issue over thefts. The new CEO quit after a year. It's just like, it's not so hot. I really hope they do well. And competition is coming. That's a problem as well. Yeah, they have good in the home market, but competition is coming. And this guy's okay, man. Yes. And Flutterwave, valiant competitor, Stripe, paystack combo is big. Like, I hope that they do well. I like the company a lot, but it's hard to be positive.

[01:31:54] I mean, three CEOs in five years and a scandal over thefts and failed fundraise. There's no way to sugarcoat that they've been through some stuff. But I tend to have a positive, optimistic mindset. So, I hope they'll turn it around and they'll do well. I wish them all the best of luck. But there's no sugarcoating that the company is doing well. Obviously, they're not doing well. So, we'll see. Yeah. Yeah, we'll see. We'll see. Should we do recommendations in small ones? I can actually go. Yes, yes, yes. Recommendations in small ones. Take it away. I have two. So, one is there's a Dwarkesh podcast with Francois. Can you spell that?

[01:32:23] It's D-W-A-R-K-E-S-H. It used to be called Lunar Society, but I don't know if it's still. I don't know why it's not called Lunar Society in my podcast player. Maybe it's the same one. With Francois Chollet and about ARC and AGI and O3, OpenAI's new model. So, basically, the point being like, you should listen to the podcast. But, essentially, how will we know that AI is smart enough to do stuff? And they worked on a benchmark of puzzles that is easy for any five-year-old to do, but apparently very difficult for AI.

[01:32:52] And this was recorded maybe a year ago. But, actually, a month ago, OpenAI's O3 model, which is difficult to get through, scored 75%. And the bar for AGI for this startup was 85%. For context, the first GPT-3 did 10%. GPT-4 did, like, 12% or 15%. Like, not much. 15% to, like, 75% is pretty massive. But it's interesting, like, how we think about the quality of the test and what approaches the AI get us to, like, really smart AI that is smart as a five- or seven-year-old.

[01:33:21] But an interesting thought conversation to listen to. If you're interested in AI, worth listening to. Listen to it on a long, long, long, long, long drive. It was just really good. On that one, I remember some years ago, pre-COVID, I read a Ray Kurzweil book. For the audience, Ray Kurzweil is a semi-famous science technical person who's written a lot of books. He works in research. Great, very smart guy. But specifically, he's famous for his thoughts on artificial intelligence and the singularity, which he defines to the point where superintelligence, whatever, whatever.

[01:33:50] But I remember reading the book, and I was looking, because for some reason, that's why I love the guy. He's very, very specific. He's like, oh, I think it's going to be in this time range. Like, he tries to give more specificity around his thoughts. And he's not just known for prediction. He's known to be a generally smart guy. But when I saw the prediction, I don't remember what it was, but I was like, oh, wow, this is so soon. There are different definitions of the threshold for AGI and ASI, whatever. Let's not talk about the definitions of the threshold. Just the fact that his timelines were within range. Because what I didn't understand then was everything happened so quickly.

[01:34:20] Like this, and then three months, six months, nine months, and then there was just... But the book was shout out to people who were willing to put specific dates. It's shocking how accurate he was. Not just on the timing, but the fact he thought about the exponential nature of it. Really interesting, Ray Kurzweil. Yeah. Really interesting concept if you're interested in this stuff. The second recommendation is much of a fun one. It's 20 mechanical principles in one useless Lego machine. Like Schmidt coupling and gear ratios.

[01:34:48] And if you're like an engineering nerd, I stumbled upon this on YouTube. And I watch it from time to time. And I was trying to go buy the Lego set. The Lego set is like $400. And I was like, first of all, why is it $400 for a Lego set? I don't think that's... It's for adult rich people that want to... Adult rich people that love mechanical engineering, right? But second is I used... Know your customer segmentation and take it price accordingly. I mean, it's a custom Lego set. Hey. But I didn't get it.

[01:35:17] And it's actually made out of actual Lego blocks. Actual Lego blocks. Yeah. And you can use it on all these mechanical principles and heat transfer and stuff. It's pretty cool. The video is just as cool. Recommendations. I have four recommendations. The first one, Titan, Rockefeller's autobiography. I'd heard about this book for years and years. Somehow, I just never got around to it. It wasn't my reading list. And I started reading it. Oh, my God. Now, first, it's just brilliant.

[01:35:44] The author goes into some places, which I don't know. I don't know if he needs that much depth. But it's a great book if you like it. And then because I really liked it, I read the 38 letters from J.D. Rockefeller to his son. So, basically, these letters were not supposed to be public, I guess. But it's him, J.D. Rockefeller Sr. to J.D. Rockefeller. And it's just every chapter is a letter. And then he goes through timeless principles. And he would refer, oh, I saw we had this conversation. I was sad because this happened. Brilliant to put both of them together. Highly recommended. And then Google Notebook LM.

[01:36:14] Oh, my God. So, someone told me about this a year ago. And I was like, well, whatever. Absolutely incredible. It's particularly useful if you are a researcher. Now, I am technically not a researcher. But I am a researcher because of the nature of the things I do with afferability, firedom, all those things. Incredible. Highly recommended. And the way it works is you put in different sources. The sources can be a website. It can be YouTube. Or it can be raw text. And it synthesizes. It goes through all the information in the link and the source content.

[01:36:44] And then you can ask it, like, natural language questions. You could put, let's say, 100 videos about weight loss, right? You don't have to watch the videos. Just put it in. And then you could ask it, based on all the videos, what are the four major things? And it will tell you. And it will link to the transcript of the video. It will link. I mean, it's brilliant. It will be like, this is one, two, three, four. If you click on four, it will show you the transcript of the video where it got it from. Fucking incredible. Highly. And it's free. Highly recommend. It's very stable. You can generate an AI podcast. It's super fast.

[01:37:12] You can ask it nuanced questions about combine this and this. You can do timelines. You can tell it to make an intro. I mean, it's just incredible. Wow. I just started using it two weeks ago. I'm already sold. Notebook LM is fire. I've been using it for a while. Like, I was thinking about it just replacing a bunch of other AIs. And part of why it's so good is the grounding. Perplexity Pro and Cloud and now OpenAI, they all have like a projects feature where you can bring in the files. And you can use the files to grind your answers. But combine it with the LLM and the internet.

[01:37:42] Those are interesting for some use cases. I think notebook LM is good. One of the challenges is that it doesn't quite do well when you don't give it things. Like, if you want to give it... I think actually the internet will make it complete. The other piece that it's special about it, it has a two million context window, which means that you can never put too much stuff in it. Like, it's just impossible to hit. You put a lot of books. You can put a lot of full books in it. And it's like, fine. And it'll tell you where exactly it is. And each book is a source. It's 50 sources maximum.

[01:38:11] What if the book is 2,000 pages? It's one source. Wow. I love it. And the tokens it can have, it's... Yeah, very, very little. It's brilliant. I use it as well. Like, it's just fantastic for some of the work I'm doing also. I highly recommend it. When I told someone about it a few days ago, the person said, oh, there's a pro version. I can't even imagine... Like, maybe I'll test it later. What additional features do I even want? I need to just figure out, like, why do I even need a pro? The free version is so good. When the person told me, I'm like, wait, what? So, I'll try out the pro version. Maybe the next episode, I'll see what's on the pro version.

[01:38:41] But I don't know. I shall test. Yeah. I'm surprised that there's even a pro version. Someone just told me this a few days ago. I needed to test it out. And we'll see. I don't even know what it would offer. Everything seems too good. Last recommendation is Arete. A-R-E-T-E. Activate Your Heroic Potential. It's basically a personal development book. But it's brilliant because it's from someone who... Like, his thing is he reads books and then he summarizes those books on his YouTube channel. And he creates, like, snippets and summaries of books.

[01:39:08] So, his own book is a combination of every other book he's read. He's been reading and summarizing books for, whatever, 12, 15 years on YouTube. His book is brilliant because of, like... Oh, he references things across other personal development books he's read. Highly recommend it. It goes into incredible detail. Literally has 451 personal development principles. It's a lot. But I love it. And I would highly, highly, highly recommend it if you like books. Oh, man. I'll try it. I'll try it. Well, what does it offer? Did you see what it offers? I'm curious now.

[01:39:37] 5x more audio overviews, notebooks, queries, and sources per notebook. 5x more? My God. You have to be a professional on the job. With Notebook LM, you can have up to 100 notebooks. With each notebook containing 50 sources. LM plus? 5x more? 5x. 500 more notebooks. I never need to pay for that. 300 sources per notebook. Jesus. With daily query limits. You also have a high... 500 queries is not a lot, actually. 500 queries? You get 500 in LM plus.

[01:40:06] Per day is not a lot. 500. 500 is LM plus. But Notebook LM, you get only 50 per day. That's how they get. 50 per day. I've never hit the max. But imagine if it was a full-time job. Imagine if it was a full-time job. If you're a professional, you do more than 50. Yeah, yeah, yeah. Yeah, you definitely will need that. How can you get more than 500? I mean, yeah, I see. There's some value. The 51 is if you do it for a professional. I've never gone close to 54. But if I combined my chat GPT and everything, it'd be more than 50.

[01:40:34] I only use Notebook LM for a specific use case. Yeah, exactly. But anyways, all that is... No, no, no. One more thing. I mean, since we're already here, might as well close it. How much is it per month or per year? I think it's like... I don't even see a price. They're going to include it in... Hiding the price. No, they're going to include it in 1AI Premium this year. I don't even know how to sign up for it. I don't even know how to upgrade to it. It's just like they just announced the launch. Yeah, they just announced the launch. And I'm like, can I please sign up for this thing? And they're like, no. Okay.

[01:41:02] Yeah, upgrading to Notebook LM Plus. There's no way to even upgrade. It's good they're going to have central billing versus like having three different billings with three different things. You can share a chat-only notebook. You can choose a preferred response style. Create a custom style. Notebook analytics. You can share a notebook with others, which is so cool. Well, that's so cool. Okay, today you can share. You can share with other people. That's very useful. You can share your notebook with others. No, you can view analytics when you share a notebook with others.

[01:41:32] How many queries do you make per day? You doubt you can share your notebook with others, which is crazy. I didn't even think about that. Because then you can just put a research and just share with people and have people like... Mind blown. Anyways, we have digressed quite a lot. Yeah, people love it. I do my small win. I have kind of like... As I thought through the small win, the world part of the small win is this year I've been trying to work out every day. I've been trying to do that since like last year actually. And I rarely ever miss a day. And I think I missed a day yesterday because yeah, it was a bit crazy. But in general,

[01:42:02] that's been like just a very different, very different feeling. Doing it every day. I was only trying to do it for this month. I just don't think it's sustainable. But just working out every day continuously has been interesting. And I'm just glad to keep it up. But what's your combo of cardio to resistance? Honestly, not a lot of resistance. Probably 80% cardio. That's good now. 80-20 is good. I think I love cardio. 20 resistance, not as much. Like it's almost like... Sometimes if I'm doing like a boring, sometimes I do like a stationary bike,

[01:42:32] I have like weights with me. But not even... Like to do dedicated strength workouts, not as much. I also have like something wrong on my wrist. So I've been staying away from weights and push-ups and stuff. From basketball? Or you slap someone? I don't even know. I think it's like... I think I slept on it. I don't know. Just something stupid. I didn't slap somebody, I wish. Ah, this is not leg ups. Not since King's College. Not since King's College. Even at King's College, really hoping we're not going to go off on that. Okay, thank you. Cool small ones. I have two small ones too. I'm now doing stretching and yoga before my workouts.

[01:43:02] It's been an interesting learning. First of all, just to realize that I'm not very flexible at all. Because when you start to do it, it's not that I expect to be as flexible as the teacher. Obviously not. That's like their thing, right? But I expect they're doing X. I can get to 20% of X. And you're like, no, I can't even reach. So it's intriguing to see. And then different body parts, shoulders versus back versus arms. It turns out my upper body is more flexible than my legs. Cool process. I've learned a lot. I really like it. I'll definitely continue.

[01:43:30] It's been a good way for me to understand more about just like mobility in different body parts. And I think it makes my workout better. Because in a way, as soon as I get to the gym, I can just start lifting weights. Because before I had to stretch at the gym, but it was very inefficient. I'm just doing junk. I'm just like left arm, right arm. And then I noticed I had to buy so only do upper body stretching, even though it's a leg day, which obviously you should stretch your legs. You're going to do leg day. It wasn't part of my stretching routine. Like how do I stretch my legs? First small win. Second small win is we had a picnic.

[01:43:59] Well, the person that organized it called it a picnic for me was just a hangout. It was good to hang out in a place called South Point. It's the southernmost part of the beach, of the island, Miami Beach. And it was nice standing there, talking with friends by the water. You see some cruise ships walk by. And it's a combination of people doing something super formal. Like, oh, I'm wearing a sports jacket and nice shoes on a date versus like, oh, yo, I'm just out with my dog running with a t-shirt. It's like a nice combo of people plus the water, the fish. It was cool to hang out with friends. That was a nice small win a week and a half.

[01:44:28] Love it. And somebody's birthday is coming up. Yes, my birthday is in three days. I'm so excited. It's going to be so much fun. I can't wait. I can't wait. I'm always, always very, very happy because it always coincides like New Year's happened, then birthdays happened, and it's nice. I'm excited for that. Maybe it'll be a small win. I mean, it'll definitely be a small win when we record this. If I want to expose. Expose the lifestyle of the rich and famous and fabulous. Hey, hey. If you got it, flaunt it, right? Happy birthday.

[01:44:58] And wrap. On that note, we wrap it. Yes. So cool. Thanks for listening. We'd love to hear from you. If you have any feedback, topics you'd like to hear, or just want to say hello, please email info at afferability.com. Thanks.