From rags to riches: Re-afric make colourful shoes from recycled African fabric that sell worldwide


This week’s episode comes from Kibera, Kenya’s biggest, and one of Africa’s largest, informal settlements.

Life is tough here, and many talk about the “slum mentality” where a lack of opportunities leads to drug abuse, crime and a general sense of despair.

Julius Otieno is an inspiration for those in his neighbourhood.

After dropping out of high school as his family could no longer pay his school fees he combined the talents of his mother (a tailor) and his father (a cobbler) to make colourful, hand-made shoes from discarded pieces of African fabric.

The shoes are a hit, with both Kibera residents and expatriates (such as myself).

Julius and I talk about his story, how the shoes are made, and the impact of the business in reducing environmental waste and providing meaningful employment to the Kibera youth.

We also discuss Julius’ trip to Paris, after he was selected by an ambassador to present at a trade show there.

This involved Julius needing to get funding to get a passport in order to leave the country, let alone have his experience on a plane.

For more information on the business, head to the show notes where you can find the Re-afric website, as well as a blog post I wrote several months ago about meeting Julius for the first time.

You can also head to where you can learn about opportunities to help companies like Julius’, whether that be expertise or funding, should you so wish.


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Social Media Links



Twitter: @reafric

Pictures of me and my shoes

My feet getting measured in Julius’ shoe shop
Finished pair of my Re-afric colourful shoes


Sam:                                      00:08                     Intro.

Sam:                                      03:11                     Cool, so we’re here today with Julius from Reafric, Julius, welcome to the show.

Julius:                                    03:17                     Yeah, thank you so much.

Sam:                                      03:18                     And so to get us started, can you tell us a bit about, a bit about Reafric?

Julius:                                    03:23                     Okay, thank you so much. Once moreI’m Julius Okoth Otieno, I’m a young proactive Kibera resident and the founder of Reafric social enterprise. So Reafric simply means redoing it in Africa, the mission behind the innovation was, I mean, motivated by us being after restoring the original natural state of Africa as a continent and generally, Reafric drives three concepts in our social innovation as a social venture. One is waste management as you know, generally in Kenya both County and national level of our government they are overwhelmed with taking care of waste and this one is very dangerous to environmental pollution majorly in the informal settlements as a pure example kibera slum where I’ve been growing since childhood and the motivating factor was how best can we engage onto activity to clean, bring forth sanitation and reduce the risk of disease outbreak in the slum environment. And in due process of waste, I mean collection with the engagements with the youths and the local County government over here, Reafric thought it wise, part of this waste could be reused to do something tangible. That is what inspired innovation of shoe production whereby we engage into the shoe production of unique, different type of shoe style designs that embrace the nature of Africa and the culture of the population of Africa. And we collect waste like fabric, we call them Kitenge attire, the cut off pieces from the various existing tailors within the slum we also collect like suede, leather, jeans from the carpenters as we know there are a lot of carpenters…

Sam:                                      05:17                     They often use a lot of those things, don’t they?

Julius:                                    05:21                     Yeah, which we collect.

Sam:                                      05:21                     Fantastic. Well, we’ll go through sort of some about how it’s made, but sort of fundamentally you’re making shoes from waste material that otherwise would have been discarded burnt.

Julius:                                    05:31                     Indeed. So we make the shoes out of waste and, apart from waste, we inspire the job creation, to the jobless youths that are, I mean, in the slum. So we mobilize them, those that have expressed their passion through their artwork, we train them and give them work. Whereby now the skilled artisans that are confirmed work and at the end of the day they get paid, and this through sustainable development goal agendas in the whole world, we ensure we improve the livelihood of our employees and 20% of the profit we generate out of the shoe we sell, we plough it back to offer scholarship to the bright needy children. Also, you know, like the informal settlement of Kibera and general slum communities. There are so many existing, bright needy children who cannot afford to pursue their career dreams due to lack of school fee support since even getting three meals a day at the table in their family’s a big deal, which is just but a dream to each and everyone. So we try to mobilize them and after we’ve interviewed them and confirm from their performance and their seriousness with pursuing their career dreams, we offer them scholarship of which the business sponsors their school fee.

Sam:                                      06:40                     Very good.

Julius:                                    06:41                     Yes.

Sam:                                      06:41                     Alright, so there’s a lot, a lot happening in Reafric. So we’ll sort of go through a few different parts. So perhaps just to sort of give, give some context, when did you begin to do this enterprise?

Julius:                                    06:56                     This enterprise, before I officially gave it the full thought and a full attention, so to speak. I began it when I was in form two.

Sam:                                      07:05                     In form two. How old were you then?

Julius:                                    07:06                     I was in form two 2013, 2013 I was 17 years old.

Sam:                                      07:12                     17 years. Okay. So when you were 17. Okay.

Julius:                                    07:15                     Yeah.

Sam:                                      07:15                     And for context you so you grew up in Kibera?

Julius:                                    07:19                     Yeah.

Sam:                                      07:19                     This is the informal settlements, sort of in the center of Nairobi.

Julius:                                    07:23                     Yes.

Sam:                                      07:24                     So you’re in school?

Julius:                                    07:28                     Yeah.

Sam:                                      07:28                     And then form two, age 17, you decided to look at it and do that. Why did, why was it at that time you decided to look at it?

Julius:                                    07:36                     Generally I’m a victim of those that have gone through the struggle of life in the informal settlement of Kibera. So like I didn’t have school fees to support my, my education at high school level. That is from two. And by then my parents quit whatever they were doing in the city and they retired back in the rural at home. So I had to remain alone to ensure I achieve my career dreams. And, to them, they didn’t have anything to support my, my school fees. Like I thought of how best can I look on to something that can sustain me. And I began like hawking the shoes as a hawker.

Sam:                                      08:16                     Hawker. What does hawking mean?

Julius:                                    08:18                     A hawker is like these people that are walking in the street selling stuff.

Sam:                                      08:22                     So you’re sort of standing, you don’t have a shop, but you’re just going selling things?

Julius:                                    08:27                     I convinced the various existing people that are making shoes. Then I go and hawk. So from there I realized like the products were not working for me because it was like a holiday of (3 months a year), like April, August and December and I have to gather or collect what can pay for my school fees for the next term. And this one was not working.

Sam:                                      08:49                     Okay. So why was it not working?

Julius:                                    08:53                     A lot of these common products all over, of which there are so many hawkers, so many shops, so like I could not get my market well.

Sam:                                      09:03                     You couldn’t differentiate because you were just selling the same things as the others.

Julius:                                    09:06                     Yeah, the same things that I was not even getting the flow of cash.

Sam:                                      09:09                     Yeah.

Julius:                                    09:10                     I mean, in terms of revenue and profit to sustain me. So like the idea was how best can I venture onto something outstanding that can beat the market, not more competitive and it will sell with ease and get enough cash to take me to school when the school opens. And that is what drove my, inspiration to innovate this unique shoe products that are being made out of different materials, extracted from waste.

Sam:                                      09:37                     So why did you choose shoes? Like why did you not choose to sell food or to do anything else?

Julius:                                    09:44                     Generally my mother is a tailor.

Sam:                                      09:46                     Okay.

Julius:                                    09:47                     And my dad was a Shoemaker.

Sam:                                      09:48                     Oh really? Your father was a Shoemaker?

Julius:                                    09:50                     Yeah.

Sam:                                      09:50                     So I see, so did you, did you know how to make shoes?

Julius:                                    09:54                     Yeah. I know how to make shoes. We grew up, we grew up making shoes, even repairing shoes like yeah, my mum is doing tailoring and she is contributing to the waste emission and my dad is making shoes but does not know and I have not come to realize that this waste that is being emitted by my mother can be reused as raw materials for the shoes.

Sam:                                      10:14                     So their whole life they’ve been doing their current businesses and you’ve come along and said actually… We can combine them and bring forth mutual partnership among the various existing businesses.

Sam:                                      10:26                     Where did you get, because the shoes there are quite cool. Like where did you sort of get the inspiration?

Julius:                                    10:33                     Actually? I didn’t see anything to inspire me but I thought giving it, I had a new unique idea that why don’t we make shoes out of different material that have never been seen. Yeah. And I say no, let me make the shoes out of fabric because most of the Africans are after the fabric attires.

Sam:                                      10:57                     Yeah.

Julius:                                    10:57                     Why don’t I also serve their feet with a similar attire they put on.

Sam:                                      11:01                     Yeah.

Julius:                                    11:02                     And that is how like the fabric kind of shoe products came about..

Sam:                                      11:07                     And I should also note for listeners at the moment, there might be some motorbikes going on in the background, so if there’s a bit of extra sound in the background, that’s just what it is. Actually perhaps let’s talk about it. So we’re, we’re here in actually we’ll get to that in a bit. So you’re age 17, you have the idea, you think actually I can, you know, start to use these tailored product, you know, the off cuts of fabric for making shoes and you already have experience on how to make shoes. What happens then?

Julius:                                    11:37                     I didn’t have the full concept on how best I this bring this dream or innovation into reality. So what I had, it is like and moved from various existing skill artisans that are working on general shoe industry and I went to pick the professionals or the owners of those small shops and I brought them on board. And I told them I have this new unique product that can supplement onto whatever existing shoe product you have, can you try it out. And we test it if it can sell in the market. And I confronted like 10 and only 6 responded, 4 didn’t respond immediately. So when they responded, six because I didn’t have the capital or whatever it takes. So like I could like say, can you use whatever you have to do for me, this number of pairs of shoes. Then I try to Hawk I’ll pay back and through that concept, the first week I did the hawking, I made like four times revenue of the normal ones, I used this normal, I mean shoes that are common in the market, are you getting it. So I told them this things can sell and that one was within just Kibera.

Sam:                                      12:51                     And you were, you were hawking still?

Julius:                                    12:53                     Indeed.

Sam:                                      12:53                     So you went. So this is quite smart. So, rather than trying to get your own, make the shoes yourself, you just went to somebody else who could make them.

Julius:                                    13:04                     Yeah.

Sam:                                      13:04                     And you basically said, here are the materials. If it sells, I’ll give you some money.

Julius:                                    13:08                     I’ll give you some money, if it doesn’t sell. And it is my time to go back to school, I’ll return to you the shoe.

Sam:                                      13:13                     Yeah.

Julius:                                    13:14                     Because you’re the one who incurred the cost of bringing it here. So, and they agreed of which in due seasons during holidays, I come back in the slum and I go to them, they do the production, I hawk and I began to save after clearing my school fees, saved. And I think after form four, that is 2014, 2015, I mean, I went to Tunapanda Institute.

Sam:                                      13:39                     So by this time you’re how old?

Julius:                                    13:41                     I was 20 years. That is like 2015. So like I gained the passion and interest to learn whatever, what business means or what the business world fully entails. So from there I went to Tunapanda, I did basic ICT.

Sam:                                      13:57                     What is Tunapanda?

Julius:                                    14:00                     One of the various existing vocational institutions within the slum of Kibera that offers free basic ICT training in combination with entrepreneurship.

Sam:                                      14:14                     Okay. Who runs Tunapanda?

Julius:                                    14:16                     Tunapanda is owned by Meek and Jay, these are two brothers from the US, yes. It is just just near by within the Olympic estate.

Sam:                                      14:25                     Okay. What were some of the key lessons that you learnt in that program?

Julius:                                    14:31                     Tunapanda? Basic ICT skills generally in programming both website and graphic design and what I enjoyed the most was entrepreneurship, that is business, whatever it entails and basic accountings.

Sam:                                      14:48                     Very good. Okay. And how long did this program last?

Julius:                                    14:52                     The program is only three months. Very intensive so to speak because you’re committed full time.

Sam:                                      14:57                     Yeah. Okay and what did you do afterwards?

Julius:                                    15:01                     What I did is I didn’t even give the business a thought still because I was fearful it would be a struggle since there was no capital or whatever it takes to implement the venture fully. So I, from Tunapanda, I went to work in a company called Samasauce.

Sam:                                      15:20                     Samasauce?

Julius:                                    15:21                     Limited company.

Sam:                                      15:22                     Okay. What do they do?

Julius:                                    15:23                     So Samasauce is a technology company based in Kenya that is building on software developments in partnership with the various existing big companies like Google, LinkedIn, Facebook.

Sam:                                      15:37                     So it’s kind of like outsource, outsourcing?

Julius:                                    15:43                     Yeah.

Sam:                                      15:44                     Cool. So there’s this, so Samasource is the company and then you joined them. So because you have some ICT skills.

Julius:                                    15:51                     Yeah.

Sam:                                      15:52                     You could then go and join them and that’s a way for you to earn.

Julius:                                    15:55                     That is how I begun sustaining myself after that. And they were paying only $200 in a month and then…

Sam:                                      16:05                     You had ambitions for more?

Julius:                                    16:07                     Yeah, I had ambitions for more so like, I worked there for two years. Then after working there for two years, I also used to give a change kind of lecture or speech to motivate the youths because over 80% of employees in Samasource were youths and their lifestyle sometimes is wanting, in our society so like, I used to volunteer and like mentor or nurture the colleague employees, youths that are existing there. And I think from there is where I began realizing my potential and what life means for me because most of them were saying, no, you should not be here. You should be somewhere doing something to our society. Most of them, all my friends, even the managers, my bosses, so to speak. And from there, like one day I thought of making the shoes and display to them.

Sam:                                      16:57                     To the managers?

Julius:                                    16:58                     To the managers. And they bought the shoes and they presented the shoes to the executive team and they showed the shoes to the CEO of Samasource. She’s called Layla Jana. And when she got the shoe, they told me, she told me because she’s running a social venture, with a social impact with it. So when I described for my mission, she like said no, quit this job, go and do whatever.

Sam:                                      17:26                     So the CEO told you to quit your job.

Julius:                                    17:28                     She told me, make sure you are supposed to be employing more people, nurturing more people in this society and impacting lives. So the best thing don’t fix your mind here. Please quit the job. I didn’t even like hesitate, I give it three days, then I quit that job within three days, they allowed me and I came and launched this social venture fully 2017 September. Yes.

Sam:                                      17:56                     Okay.

Julius:                                    17:57                     Yeah.

Sam:                                      17:57                     So what did the what did it, what was your life like at the beginning, was is just you do, did you have other people who could help out with the venture?

Julius:                                    18:08                     It has been full of struggle so to speak because I’ve not yet gotten the hands, both locally, internationally, so to speak enough hands that can help it. And from the beginning I can say like it was a very big struggle because making a team from the informal settlement to build a company with them is the most hectic thing to do. So we began three of us, Peter over there and Selly, the one making beads here. We began three of us. So…

Sam:                                      18:43                     Back in 2017?

Julius:                                    18:45                     2017 September.

Sam:                                      18:46                     Are they your friends? Did you know them before?

Julius:                                    18:48                     I just knew Peter as a shoe maker who could make the, part of the team would make the shoe when I was hawking then I go and sell, but later I came and said can we now form a mutual partnership together and form a team as a company, or a social venture. And he agreed, but Selly was a friend, even though he’s more into sandals, bead work and he also joined the team. Yeah. So because there were only two and the business was growing and there was lots of demand, and I began like dominating the market by testing the product and confirming the interest of the clients in the market. So like we begun now what can we do to ensure we have enough capacity? Are you getting it to deliver the demand?

Sam:                                      19:36                     Who were the first people who were buying these shoes?

Julius:                                    19:40                     The first people were the local Kibera residents.

Sam:                                      19:44                     So other people who are living in Kibera, I’m trying to picture it. So you’d have a bag of shoes and you’d go around to different shops and say would you like to buy these shoes?

Julius:                                    19:58                     Yes, that is how we began. And I used to do sales by myself so like I could do, go and talk to various people and showcase the product. Go to various functions when I’m dressed like a “crazy” African, plus my feet, when you question about i, I direct you to the shop. Then you place an order, we produce and deliver to you. So people around are very well conversant and aware of the products because they were there fast.

Sam:                                      20:27                     And what were you calling them?

Julius:                                    20:31                     I used to call them sick shoes.

Sam:                                      20:33                     As in like I’m sick?

Julius:                                    20:38                     To attract the attention of a client or customer, who might, I mean diminish you or like deny you a chance to communicate or sell your idea or product to him/her. I say no. Have you ever heard about sick shoes? Sick? You want my feet to be sick? No, they’re made out of waste. So like, you know, we extract that which can negatively affect the society, we use it as a raw material, and now we do what, we make the shoe out of it. And that is how people began to entertain and enjoy.

Sam:                                      21:12                     Oh, very good. Okay. So that was those are the first few months. What was the next big break for the company?

Julius:                                    21:20                     The big break was now end of 2017, 2018 February, I joined the Somo project. Somo gave me the full knowledge of whatever entrepreneurship fully entails, in line with the concept of social innovation. And after joining somo, they gave me funding. That is after three months or so. Intensive kind of training.

Sam:                                      21:50                     So I’m trying to explain, the Somo project is an organization in Kibera.

Julius:                                    21:50                     Yeah.

Sam:                                      21:52                     Where people come, people like yourself come with ideas.

Julius:                                    21:54                     Yes.

Sam:                                      21:55                     It sounds a bit like this Tunapanda program,

Julius:                                    21:58                     Indeed, yes.

Sam:                                      22:02                     They kind of take you through how to have an eye to progress.

Julius:                                    22:07                     So with Somo, if I can differentiate it from Tunapanda, Tunapanda just gives you the skills and then they can either help you look for a job. Yeah. But Somo ensure that whatever they nurture you in, is a venture they believe in and at the end 80% of people that are going through their program are invested in.

Sam:                                      22:29                     I see.

Julius:                                    22:30                     Yeah.

Sam:                                      22:30                     So it’s much more about almost an incubator. It’s like that sort of thing. I should note that we’re actually doing this interview in the Somo projects container.

Julius:                                    22:42                     Yeah. This a Somo project container.

Sam:                                      22:45                     The office is like a shipping container. So we just said hello to Amelia and the people who run it. And they’ve kind of let us use their.

Julius:                                    22:54                     Indeed.

Sam:                                      22:54                     Shipping container a bit.

Julius:                                    22:57                     They even offer you the working space, to offer meetings, generally even to do your stuff. Yeah. This is why this container spaces are existing here.

Sam:                                      23:10                     Fantastic. Okay. So you’ve got onto the Somo project program. At the end of it you get investments?

Julius:                                    23:19                     I got a small grant.

Sam:                                      23:19                     Small grant, so that sort of allows you to start.

Julius:                                    23:23                     Yeah. Like the, it was Ksh 185,000.

Sam:                                      23:33                     That’s $2000?

Julius:                                    23:34                     Yeah, two thousand dollars. So like that is what I used to buy the two machinery, you see there and the small grinding machine and there are so many various existing tools, equipment and even a few shoe molds, I used the very grant to purchase them. Yeah.

Sam:                                      23:50                     So after Somo project has been completed, at this stage, who is buying your shoes? Like who else was buying the shoes?

Julius:                                    24:01                     Generally, in partnership with the Somo project, I have been in a good position to have an exposure to not only in Kibera, not only in Nairobi city, not only in Kenya, not only in Africa, but globally. That simply means like we managed to make our website, create our social media pages and Twitter handles, so to speak, whereby we can now speak about our brand products to the world and those that have interest or are after to get the shoes they communicate farther and then we negotiate on how we can build the production, deliver all over the world whereby we segment or market to be both local and foreign and we target our main target are the youths age 15 to 40, who are passionate and much more interested in the shoe products more so in the current trending fashion design crazy world. Yeah. So like we go to university students to, to market the products and even in the various occasions that we apply to either pitch, we have also various existing exhibitions in Kenya which we attend and the showcase our products. And there are clients who walk in, there are tourists who come to Kenya and sometimes find their way to Kibera slum and they can pass by the shop, familiarize themselves on the product and pop in to inquire more and even buy I can say even the Somo staff the Somo board members and generally their network, the mentors Somo organization has, even Tunapanda and that is how we get to access our market.

Sam:                                      26:00                     Very good. Okay. And so now, now you have these various different channels by which people can come in and purchase your shoes. So if we look at the, you know, when you first started it was all quite informal and it was, you had Peter who was making the shoes your other friend as well and you are out Hawking. What does the operation look like now in terms of the production of shoes? How, how is that, how would you explain that?

Julius:                                    26:30                     I can start by saying, I mean like when we were three, now we’ve grown to be 15, 15 pro full time producers and we have another 12 brand ambassadors across the world. And Sam you are part and parcel of our brand ambassadors, as I saw you telling a nice story of our brand products in your website,you are part and parcel. So like there are volunteers who are like can tell a story or can share their experience with our product to their network, which as Reafric, we are not accessible or not aware. Yeah. So that one like and also we have like,I can say a small people, a few people who do like hawking and those that we are in partnership directly to, I mean accept our shoe products in their shops as a supplement product to their I mean, shoe products. Yeah. So these are part and parcel of the team which make it to be 42 in number.

Julius:                                    27:36                     Very good. Okay.

Julius:                                    27:37                     The active shoe producers are 15.

Sam:                                      27:39                     People working, so 15 people every day and, and what, what are those 15 people doing, are the majority of them making the shoes?

Julius:                                    27:46                     Yeah, all of them are making shoes, shoemaking is in different stages.

Sam:                                      27:50                     Okay. So I’m really interested. All of the shoes you make are from hand, so from scratch like…

Julius:                                    27:56                     Yeah.

Sam:                                      27:57                     So what are, how many different types of shoe do you make?

Julius:                                    28:02                     We have like I mean kind of five different types of shoes. Okay. You have the official leather for the official attire in the official nature, we have the Maasai sandals and we have the toughees back to school leather and now we have like the fabricated ones, type and now we have a mixture design. A mixture design can be either leather and fabric combined or suede and jeans combined or like jeans on its own. So these are different designs from the normal four we began with. Yeah. So they are like five different types.

Sam:                                      28:43                     Okay, and then within, for example the fabric, there are different styles. There’s, you have men’s shoes, lady shoes, some with heels, some are boots, et cetera okay. And then I’m interested, the actual fabric that you get on it, see within that, there are lots and lots of different options for what the fabric can be on the shoe. All right. These are bits of fabric that would otherwise be thrown away.

Julius:                                    29:13                     Yes.

Sam:                                      29:14                     So from tailors. How does that work? Do you sort of send people out to go to different tailor shops and see what artwork is available?

Julius:                                    29:25                     We give it different approaches. We have like cleanup programs that are currently organized by the inspiration being driven by Reafric in partnership with the various existing organizations. And the local County government as at now I can say have a hand in it and I see the Nairobi governor Sonko is even currently organizing they clean up, I mean kind of forums. Saturdays, once in a month. So in due process, Reafric now has a team of 356 youths who do like daily, I mean cleanups in different parts of the slum because the slumis segmented into different villages, there are around 13 villages. So you’ll find a team today in Olympic Fort Jesus, 42, Jamhuri Woodley, I mean Katwekera, various existing small villages. They’re like estates, but we refer to them as villages, because it is an informal settlement, where like, they do clean up. So we have a team 356. So out of this 356, each and every team we have, we’ve segmented them to be like in a team of 50 and they have team leaders, so 50 50, that is like I mean 350 and then 6 of them leading these seven. I have on my team, I lead a team, one of the 50 which make it to be 357. So like as leaders we ensure like this 50 are doing cleanups in the various parts, but with us we try to talk to the waste emitters, people who throw waste like these small existing industries. We have a so many tailors, almost 1000 tailors in the slum and there are lots of carpenters. You know why? Majorly, these are the cheap means through which they can generate an income or this like, the easiest kind of job they can learn and adapt to. And they do it from their small production site and they emit a lot of this waste, carpenters also emit waste. And now as leaders who lead these teams, we go to them. So don’t tell me to waste, package them somewhere, then you’ll come and pick them as waste.

Sam:                                      31:54                     Okay. Do you pay them for waste?

Julius:                                    31:58                     We don’t pay, we pay for some of the waste.

Sam:                                      32:02                     Really?

Julius:                                    32:02                     Yeah, when you do sorting and they realize this portion of our waste is going to be used as a raw material, and generate money with it, you have to pay.

Sam:                                      32:10                     Yeah.

Julius:                                    32:10                     Yeah.

Sam:                                      32:11                     Okay. So, so people, I imagine that would make people more thoughtful about, before throwing away something. If any of that…

Julius:                                    32:17                     Initially, when we began, we were not paying.

Sam:                                      32:19                     Okay.

Julius:                                    32:20                     But when we go to sell for them shoes, that shoe is out of this waste you used to emit carelessly, we didn’t realize that they’ll now demand to sell to us the waste.

Sam:                                      32:30                     Yeah, they’re smart.

Julius:                                    32:32                     So we pay for some of them. Majorly, those that they consider we use as a raw material, they know how to sort them themselves, put them different from the waste that will automatically go to the dumping site.

Sam:                                      32:44                     Got i.

Julius:                                    32:45                     Yes.

Sam:                                      32:45                     Okay. So you then go and you collect these things and then do what? You take them back to the shop?

Julius:                                    32:51                     To the shop.

Sam:                                      32:51                     To the workshop. Do you have one workshop?

Julius:                                    32:55                     I don’t have one workshop as at now, I have three. Yes, that space is too small and sometimes you may wonder why is it people a few. That space can only accommodate 9 in maximum. So like I have three more people like Peter, whom I’m in partnership with and like I own that one shop, workshop, but the rest of the two remaining workshops, I partner. I partner in terms of referring the trained, already confirmed skilled artisan youths to be part of that team and then I give them a job.

Sam:                                      33:33                     Why don’t you own the other two? Why don’t you, why do you use two other people that you don’t? Why you partner? Why don’t you just do it all yourself?

Julius:                                    33:41                     The thing is we are limited in capital. Just to set up a fully fledged production capacity or production space to accommodate the entire team.

Sam:                                      33:50                     Okay. So you have to, at the moment, you partner with other people. How does it work? Do you say I’m gonna pay you this amount to produce the shoe?

Julius:                                    34:01                     Yeah, so like when I have orders, I give them or when, because there are a lot of demand of these rendered jobless youths who have passion in artworks. So like after confirming them, because my space currently is very squeezed, I take them to the team, the rest of the two, I mean workshops I’m in partnership with and I say no, take these three skilled artisans, put them under you. Even though they are subjected under them, Reafric is the one who would cater for their cost, payments, salaries and all that. I’ll be giving you order. You watch over them. It doesn’t mean I don’t like, like I own 30% or 40% of the other workshops, yeah because I have to take few tools, equipment, to make these specialized, fabric shoes, which they didn’t have initially before I met them. Yes.

Sam:                                      35:02                     Okay, cool. Are those also near your main workshop, these two places, they are close by. Yeah. Okay. Do you have the fabric? How long does it take to train somebody to be able to make a shoe?

Julius:                                    35:20                     It depends. It is a duration of two to four months. When somebody, yeah two to four months and also like depending like we’re training how many.

Sam:                                      35:31                     So let’s say you’ve got four new people.

Julius:                                    35:34                     Four new people will take me four months, two people will take me two months. Okay. You know why Sam? I have two sewing machines. So space will be shared, which is really limiting.

Sam:                                      35:46                     I see. So in what, is there a part of making the shoes? Is it they have to be able to use a sewing machine?

Julius:                                    35:53                     Yeah. They have to learn it. The theoretical and practical part of it.

Sam:                                      35:57                     What’s the theoretical parts?

Julius:                                    35:59                     When we explain to you how the shoe is being made the way I was like explaining to you. You know practically now you will be subjected and be given somebody who is more professional to, to handle you by you seeing now what he it doing? And he’s like telling you do like this until you become perfect. Yes.

Sam:                                      36:19                     And when people have learned how to do it, do you have like you give them a test and you say here’s an order, you’re going to do this completely on your own. Is that how you know that somebody has the skills to do this.

Julius:                                    36:36                     But it takes a while to confirm somebody to be a full professional, perfect skill artisan that won’t be disapointed with a client or the product and this one relies on the more professional people that I entrust this onto their hands. So like we first give, I mean tests, I say make for me, two pairs of shoes, I’ll put them on for the next two months and be running errands with them. And I’d be, I mean viewing them and the verifying the quality, durability, the mistakes that might cost the defect thereafter. Then with time, as you are being tested on that concept. You improve on your perfection and you will be in a position to be even more professional than even your trainer. Yes.

Sam:                                      37:26                     Okay. Nice did you find that there are many issues with the production cause there, I’m trying to think, it might be quite to me it seems that there’s quite a number of steps along the way. Is it something where there that there is things can go wrong or like how, how do, how would you sort of think about the production side.

Julius:                                    37:47                     Issues might be there in terms of poor coordination, poor communication and sometimes misunderstanding in the team, which some you might give an order, they fail to deliver. And that is what made me to hire the management team. So that before a final product comes to us for verification, the executive team, director, the management team has confirmed, qualified, verified and gotten the product satisfying to be delivered to a client without any defect.

Sam:                                      38:27                     So you kind of at like quite a good stage, you know, like roughly how many, if we were to look at like actual numbers of shoes that you’re making now, what would you say is like in a typical month, what’s like a normal amount of shoes that you’re actually making?

Julius:                                    38:42                     Around 150.

Sam:                                      38:43                     Do you think there is demand for more than 150 shoes?

Julius:                                    38:47                     Yeah, I ignore a lot of orders.

Sam:                                      38:49                     You ignore them?

Julius:                                    38:49                     A lot of orders.

Sam:                                      38:50                     Why do you ignore them?

Julius:                                    38:52                     Sam, tomorrow you can come from UK and tell me I have a thousand clients who have paid for it, but I don’t have the capacity to deliver that in terms of the limited machinery tools and equipment and I’ll ignore that. Also, in accordance to the urgency of the order, which will not be in a position to deliver.

Sam:                                      39:12                     Just talk me through the working capital side of the shoe. So like roughly how much do raw materials cost, where do you buy them from? Do you have to keep inventory?

Julius:                                    39:22                     We have various existing raw materials from different industries or suppliers like the shoe sole itself is from a different, a totally different, I mean supplier because it is a recycled cutter, which is a final product, which in the real term, we use a raw material, we buy it, the only thing like through buying it or using it, we contribute to environmental conservation and preservation.

Sam:                                      39:53                     Where do you buy it from?

Julius:                                    39:55                     We are like Makina, but they are being recycled in the, I call it industrial area, nearby the city.

Sam:                                      40:03                     Got it. So in within Kenya there is a company that takes old tires, recycles them, turns them into soles and so these would need to be, so you have various different sizes. So when you go…

Julius:                                    40:20                     It is a sheet like this.

Sam:                                      40:20                     Okay, this is a big long sheet. I see.

Julius:                                    40:25                     Did you see how we smoothed than the grinding. So let you know when you cut it, sometimes you cut it big or it was not straight or uniform, you have to correct. So that is the purpose of the grinder.

Sam:                                      40:40                     What, and so you obviously you need, do you need to pay cash for that? Can you, can you buy that on credit?

Julius:                                    40:46                     On debt it?

Sam:                                      40:47                     Yeah. Can you get it on that?

Julius:                                    40:49                     You cannot get it on debt because we’ve not signed up an agreement on how to lay a permanent partnership with our suppliers. When does the customer pay you? Do they pay you on delivery? Do they have to put down a deposit?

Julius:                                    41:04                     Clients, we have the percentage deposit will cover the working capital which some hesitate to commit to, they want a final product, just cash on delivery but the clients with whom we are currently serving, that’s why we have limited orders to 150, we get a lot of orders.

Sam:                                      41:28                     Okay.

Julius:                                    41:28                     There are people would say yes I mean the upfront fee to cover the working capital is 75%. Let me commit this and the rest of the remaining percentage of the shoe price, we’ll commit it on delivery.

Sam:                                      41:44                     And then talk to me about the machinery. So what are some of the fixed costs that are necessary in your shoe operation? So you spoke about this grinding machine or, what are some of the other things which are important?

Julius:                                    41:57                     We have the sewing machine.

Sam:                                      41:58                     You’ve currently got two?

Julius:                                    42:02                     Currently I have two, but I have like 10 people, 10 employees, sharing the two.

Sam:                                      42:11                     Sharing it. Okay.

Julius:                                    42:13                     Yeah. So we are really limited with this as a fixed, I mean capital cost. We have the grinding machine which I showed you. We need at least five. We have one. That one is the Old version manual. We’ve just modified it to be electric. So we need like a minimum of five.

Sam:                                      42:32                     Okay.

Julius:                                    42:33                     And also we have the shoe molds, which is a big kind of threat to us as we are growing in terms of delivering the demand. So they shoe molds like we need currently 300 to 500.

Sam:                                      42:46                     Okay. So with the sewing machines. So with all of the shoes, you need to do some sewing.

Julius:                                    42:57                     Yes.

Sam:                                      42:59                     And so every single shoe that you have needs to go needs to have some sewing.

Julius:                                    43:05                     Yeah.

Sam:                                      43:06                     But the fact that you’ve only got two sewing machines makes it so it means that you’re limited by the number that you can make.

Julius:                                    43:13                     Production, yeah.

Sam:                                      43:14                     So does that, so that means that every day, every hour, there’s somebody sat of that sewing machine.

Julius:                                    43:21                     Indeed.

Sam:                                      43:22                     If you were to, is it, so you currently got two, if you were to get eight more sewing machines, does that mean that your production would increase by four times or are there other factors? Which means that that’s not the case?

Julius:                                    43:37                     That is the case because as I know I have, like Sam I have 50 pending, youths who have expressed their interest to be skilled artisans into our footwear industry, but we can not absorb them because the space is small, the machinery feel. So like in regard to your concern or question is like, we need more machinery to ensure people don’t share machinery and somebody at the end of the day, an employee delivers the job, in accordance to the demand in the market. But when they’re sharing, somebody is maybe limited, and all of them are ever limited.

Sam:                                      44:26                     There’s always, always stuff that can be done.

Julius:                                    44:28                     That it’s like a limitation to deliver the demand, are you getting it? And that is what make us to ignore more of the orders. Yeah. So we need like the machinery whereby the number of employees which, whom we’ve already confirmed and are permanently working with us, at least each and everyone has his machine. Yeah.

Sam:                                      44:55                     Okay.

Julius:                                    44:55                     Tool and equipment tool to help them in operating in a harmonious way.

Sam:                                      45:01                     And how much does a sewing machine costs?

Julius:                                    45:04                     So the sewing machines vary. The normal old ersion, which we have cost $750 but, and the best sewing machine that can deliver the work and do a quality, I mean work cost $2,500. Yeah. So that is the cost of the kindly needed sewing machine, with our sensitive, unique kind of shoe product we are making, which we are straining to perfect the quality and keep on our standard. In as far as the competition in the, in the market is also concerned I will prefer that latest version of the sewing machine to be put into consideration.

Sam:                                      45:55                     Yes. How much do these plastic molds cost?

Julius:                                    45:58                     A pair of shoe molds in Kenya cost $40.

Sam:                                      46:03                     $40. Really?

Julius:                                    46:04                     $40.

Sam:                                      46:04                     For just a bit of plastic. Sorry, it’s obviously more than a bit of plastic.

Julius:                                    46:09                     That is 4,000 Kenya shillings. And that one, when I go to buy in bulk, like 10 pairs, that is my recent purchase.

Sam:                                      46:18                     That’s so insensitive. Okay. So that’s, so if you’re looking at the things which are limiting the growth of the company.

Julius:                                    46:27                     Yes.

Sam:                                      46:27                     So machines, these molds and the growing emissions.

Julius:                                    46:32                     We also have the small things as tools and equipment.

Sam:                                      46:39                     Okay.

Julius:                                    46:40                     They are invisible, but without them you can do nothing.

Sam:                                      46:43                     Roughly, what margin do you make on your shoes? So roughly how much they sell for?

Julius:                                    46:50                     For apair of shoe to be completed is $20.

Sam:                                      46:53                     Okay. So $20 and that includes, inclusive of labor?

Julius:                                    46:56                     Yeah. Labor fee.

Sam:                                      46:58                     Includes labour fee.

Julius:                                    46:58                     Yeah. And I sell it at $40.

Sam:                                      47:02                     Okay, so you making roughly $20 per shoe?

Julius:                                    47:05                     Per shoe. So like that is 100% profit. Yeah.

Sam:                                      47:09                     Yeah. Okay. So it’s roughly $20 to get them made, $40 to sell them. But of course if you’re sending internationally, you’ve then got the delivery cost as well.

Julius:                                    47:18                     Yeah, we put the delivery, which goes up to $80, $90.

Sam:                                      47:23                     Okay.

Julius:                                    47:24                     Yes.

Sam:                                      47:24                     Cool. Okay. And so what do you, what do you see next for the business? What, what’s your sort of ambition for where the business can go?

Julius:                                    47:34                     I can say I’m very much hopeful with this social venture because you know, if I could think of even selling the shoe, meeting the world and just getting the profit or investment to expand it and let it grow my passion is what is, what does it do or what is the impact it brings to their society? Because I see so many youths languishing in these streets, the slum, engaging into crime activities like robbery, thuggery. Destroying people’s properties, engaging into riots, being spoiled by politicians. And this one is being driven by the fact that they are unemployed and they have nothing tangible to keep them busy. At the end of the day, they don’t have something to sustain them and they’re just hopeless, and you know a hopeless society is a society that is ready for blood, ready to do something like in the name of crime as their means of survival. Are you getting it? What if not only Reafric, but even the various existing social innovations or institutions. What if we bring these people on board? We tell them life is possible. I realize your passion, let’s help you build on it and then we acquire you fully in our team. And at the end of the day, this one becomes an income generating activity that is sustaining your livelihood. What if we are in a good position to give back by, for example Reafric offering scholarship to these bright, needy children who have very bright future, very sharp and can at one point be great people in their society. Not only in this slum, not only in our nation, not only in Africa, but at one point the entire globe. What if we give them the chance by like supporting their career dreams? Yeah, because most of them are school dropouts and that is what contributes to the high rate of unemployment crisis. These people cannot even, they’re not graduates, they don’t have any skill that can expose them in the job market or can inspire them to initiate something tangible, are you getting it? What if we get hold of their hands and build, help them build on their careers and give them only like, I mean, 10 years maximum, they will be people who are great in the society. Somebody can now go on and further his/her studies abroad or pursue a career of his/her dream with ease, are you getting it? Once their foundations are well laid. Okay. What if you’re in a good position to expose this unique fancy product to the globe? To the global market? I mean, are you getting it? I went to France and Sam, over 80% of the population that I engaged with were interested to buy the shoes. I didn’t have any pair of shoes.

Sam:                                      50:40                     Let’s perhaps talk of this. Do you, were, you recently went on a plane to Paris?

Julius:                                    50:45                     Yes.

Sam:                                      50:46                     And spoke at a conference. How did that come about?

Julius:                                    50:51                     Through the various partnerships which I have in Kenya.

Sam:                                      50:57                     Within Kenya you’ve got, there’s a parnert, you partner with the French embassy or something?

Julius:                                    51:03                     No, I don’t partner with the French embassy as such. I am one of the youth leaders in one of the biggest organization. We call it an umbrella body, umbrella body of the social enterprises in Kenya, this called social enterprise society of Kenya. SESOC. S I’m one of the founders or co-founders of SESOC because when it was starting with that people who get in. So it does over a hundred different entrepreneurs. So the CEO of SESOC always speaks about our social ventures in general and those that are interested either in buying our product, engaging in partnership or networking on either a different way. They just call you. So when SESOC went to speak about our social venture in the French embassy the french commissioner was there and he was the organizer of this summit in France. It is called packed for impact.

Sam:                                      52:02                     Packed for impact, okay.

Julius:                                    52:03                     So when it came to Kenya, he was looking for two Africans, who can accompany him there.

Sam:                                      52:09                     Yea.

Julius:                                    52:09                     Yeah, because it was a global thing. And when this it talked about all the hundred and 50 ventures, he found an interest to come and see my venture. So when he paid a visit in the, in our shop and verified everything, he found an interest that I may go and give a speech of this to the world, yeah.

Sam:                                      52:31                     So you, was this your first time on a plane?

Julius:                                    52:34                     Yeah.

Sam:                                      52:35                     How was it?

Julius:                                    52:35                     Yeah. It was great but I feared the plane, it goes so far.

Sam:                                      52:41                     Yeah.

Julius:                                    52:42                     Yeah, I feared but I enjoyed it. At the end of the day we are over 300 people on the plane. So there’s is nothing to fear. People are just walking here and there.

Sam:                                      52:56                     Did you watch a film?

Julius:                                    52:58                     Yeah, a lot of films. Yeah. I watched films. Yes, indeed. It was a very great, and to me it was an inspiring experience, so to speak. Yeah.

Sam:                                      53:08                     Nice. What did you think of Paris?

Julius:                                    53:13                     I’m sorry, you know, like it was very funny being out of Kenya, my first time and my dream had been to be in London, New York and Dubai, Paris was very cool.

Sam:                                      53:27                     And you, you might be going back again soon.

Julius:                                    53:29                     Yeah. I’m looking forward to go back. I’ve been given an official invitation letter to go back September. Yeah. Because the team which I met had seen the potential behind the innovation and are considering it to be well spoken or communicated to the world. And the summit, which I went in the past was only having a thousand people and this one has 10,000 people. So with my passion or I mean not even passion, with my vision of dominating the global foreign market, I thought it wise that the, so many different people from different ethnic backgrounds in terms of profession, business wise, government officials, investors, donors and I’m just aiming on how best I can get people who will come one-on-one. They position the table to help me set up the shoe shop across the European, I mean markets in the major cities. And I think that is what is driving me to look on how I can go back.

Sam:                                      54:36                     Yeah.

Julius:                                    54:36                     Even though we are still in negotiations as I told you.

Sam:                                      54:39                     Well, that might be quite good placed to, to finish it, Julius. I mean, thanks. Yeah, really, really interesting chat. The whole story from the beginning, you know, you starting out, you seeing the idea, all the influences you’ve had along the way the place you’re at right now where there’s great demand for a product but you’re kind of limited, limited by the capital that you got in the business. If anyone’s listening and they’d like to learn more about the company, they’d like to perhaps buy some shoes or even look at you know, if they can think of any grants that you might be applicable to or perhaps come on as an investor, what is the best way for people to learn more about what you do.

Julius:                                    55:24                     We have our website where we have the full information on the product varieties and how best you can either engage, by either buying or contacting us directly. We also have our Facebook, Instagram.

Sam:                                      55:40                     The website is R E dash A, F, R, I. C?

Julius:                                    55:45                     Yeah, that is R E dash, A, F., R, I, C. Reafric.

Sam:                                      55:51                     Reafric.Com.

Julius:                                    55:53                     Afric of Africa. So yes .com. So that is the website through which once you Google, you’ll find us and see whatever we are doing and the product we are making. Yes.

Sam:                                      56:04                     And you’ve got Facebook?

Julius:                                    56:05                     Yeah, Facebook page, it is just Reafric without the space or hi fen, Reafric page then Instagram too, Reafric, Twitter handle is Reafric.

Sam:                                      56:17                     Got it.

Julius:                                    56:17                     Yes.

Sam:                                      56:17                     And we’ll link to all of those in the show notes as well, so people can head to The East business

Julius:                                    56:24                     Okay.

Sam:                                      56:24                     And they can find the show notes for this interview and we’ll link to all those, as well as some pictures that we’ve taken today. Wow, very cool. Well Julius, thank you so much?

Julius:                                    56:34                     Thank you so much to Sam for the time and having the passion with whatever we are building.


Affordable healthcare for the masses: Ilara Health’s sustainable business model saves lives


This week we’re featuring what has to be one of my favourite business models to date.

One of the dominant themes in East Africa is that individuals and businesses don’t have the cash to afford products and services that would earn them more money, and make their lives better.

To open up access to electricity, off-grid solar power systems are now commonplace, provided on a Pay As You Go basis.

This model is being adopted in other markets too, such as cooking fuel, irrigation pumps and TVs.

Where it becomes especially powerful is, in my opinion, if the financing can be for a revenue-generating asset.

The new owner gets a top of the range piece of kit and is able to pay for it through the additional income they earn from it.

This is what Ilara Health has done for medical diagnostics.

Ilara Health takes the most advanced, modern equipment (often smartphone-based) that offer the same results and cost only a few thousand dollars, and then provide them to peri-urban medical clinics in Kenya who then pay back in installments.

The result – routine ultrasound tests become available to a local population at an affordable rate, (rather than spending hours to travel to have one), medical clinics can grow their business, and Ilara Health has a sustainable business model.

Emilian also has a number of top tips on starting any business in Africa which come from over 20 years of him running and investing in companies on the continent.

I’d strongly recommend following him if you’re interested in building ventures in the region.


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Social Media Links



Twitter: @HealthIlara



Sam:                                      00:07                     Cool. So we’re here today with Emilian from Ilara health, Emilian welcome to the show.

Emilian:                                03:44                     Thank you.

Sam:                                      03:45                     So to get started, can you tell us a bit about you and a bit about Ilara health?

Emilian:                                03:48                     Sure. So I’m Emilian, I’m the CEO and co founder of Ilara health. And we make diagnostics more affordable, accessible and accurate in Africa. I’m an entrepreneur, but also an investor. I spent the past four years building and, and growing growth stage technology enabled venture capital firm focused on Africa, mainly in between South Africa, Kenya, Nigeria and Egypt. Prior to that I used to run rocket internet, the parent company with Jumia in a couple of markets, between China Russia, India, South Africa, and later in Nigeria built one venture with not for us funding in South Africa and run Groupon, South Africa for a year.

Sam:                                      04:46                     Got it. Cool. And when did you start Ilara health?

Emilian:                                04:50                     So we started, Ilara health is a result of over a year, actually year and a half of market research around how to build a sustainable healthcare venture in Africa and emerging markets. We’ve launched commercially in March this year. Well, I spent half of my time last year researching the primary healthcare sector in multiple markets in Africa as well as India and Latin America to find the right business model to build here.

Sam:                                      05:28                     Got it. And if I’m right, you’ve settled on lease financing for a diagnostic test, is that…

Emilian:                                05:37                     Yeah, so, I mean, starting with a problem so 70% of of medical decisions require diagnostics such as blood tests and, but there are half a billion you know, 500 million people in Africa, who struggled to access or afford a simple blood test. So I’ve, you know, as I mentioned to you over over a year, I visited hundreds and hundreds of health clinics across the continent and it’s shockingly poor. So I remember even meeting this lady in one of the clinics, and she actually lost her child from pregnancy complications because she just couldn’t afford an ultrasound before birth. But, but thanks to advances in artificial intelligence, robotics, technology there are companies around the world which create new diagnostic devices, which are much smaller, lower cost and can work directly at the point of care in the doctor’s office providing results in minutes. So at Ilara health we do four things, to get back to your question, so we partnered with those companies and we integrate their devices into our technology platform. Number two, we distribute this bundle of devices into the petty urban and rural clinics where 70% of the patients live. So we’re not in Nairobi itself, but we’re outside the main city in the suburbs. We also offer financing, which is very important because those doctors cannot afford to buy even a much cheaper and smaller diagnostic device upfront. Number three, we charge the doctors an affordable subscription or, or paper test as they use the equipment and we continue helping those doctors growing their revenue by providing new diagnostics devices and new services.

Sam:                                      07:35                     Got it. Okay so you sort of said you were always interested in health care is that it seems like if you went and did it, spent a year going through lots of clinics. That was your kind of…

Emilian:                                07:45                     Exactly. So I’m, I’m super proud, actually, I’m very passionate about health care for myself and it’s been a while. I’m very into prevention and early detection of diseases. I go every six months to see a doctor in Cape town and I do 20, 30 blood tests, you know, to just to…

Sam:                                      08:06                     What’s a 20, 30 blood tests.

Emilian:                                08:08                     So anywhere between the, you know, starting with the basic ones, between all the biochemistry the lipid function, no cholesterol up to more complex tests tumor markers hormones, just to make sure that, you know, if anything goes wrong, I can detect it and I can do something about it. And these communities with you know, with a reasonably healthy lifestyle, you know, doing lots of sports, eating very healthy, sleeping, you know seven, eight hours a night. So that’s my goal. My goal is to make sure that I can, you know, I can live healthy and you know, hopefully longer. So longevity is one of the things I’m looking into. However, in Africa we’re actually not talking about longevity, we’re talking about survival in those regions. So I’ve been looking for a while how to apply my interest in healthcare into a business, a sustainable business model, tackling the basic needs that a patient, you know, sub in, you know, in suburban area in around the main cities in Africa would need and people, you know, during those hundreds clinics, we, you know, one of the first questions that we ask doctors is why, what are the main reasons someone comes to see you? And there are four, five reasons people come with upper or lower respiratory infections and ideally they would need a full hemogram to make sure to, to identify if those infections are viral or bacterial. So to see if they they take antibiotics or not then there are just the infections they will need a stool test. Then urinary tract infections they need a urine test. Then a high percentage of people here are pre-diabetes, pre-diabetes or diabetes. Some are, two thirds don’t even know same for cardiac diseases. And they would need, for diabetes, they will need, not the glucose because glucose, a basic glucose test can not identify, but rather, you know, the spikes can, can obviously influence the test. But you need an HBA one C test, which is a bit more complex, which is on average over three months of your blood sugar same for cardiac diseases, You need the cholesterol, you need the lipid function test and the other reason is pregnancy. We may need one to two, well it’s recommended that they get one to two ultrasounds before pregnancy, and the problem again those tests are normally done in a lab, which labs are far away, too expensive and people would incur costs and time to go. And that’s where the care breaks down.

Sam:                                      11:04                     Right.

Emilian:                                11:04                     And, you know, if someone sees a doctor and the doctor refers the person to a lab, you know, half of the people won’t go.

Sam:                                      11:11                     And so the, well, one of the innovative things that you’ve spotted is, OK part of the reasons that these clinics don’t have, don’t currently have the ability to do these tests, the tests that machines are too big of an expense…

Emilian:                                11:26                     The machines are expensive. So those clinics don’t you know, they don’t make some revenue. And the problem is that the consultations are usually the consultation fees will be too small to make the doctor survive. So it’s 100 to 200 shillings, so $1 to $2 the, every single small clinic will have a pharmacy or dispensary where they sell medication to the, to their patients and they make you know, significant revenue out of it and they would love to provide diagnostics but they can’t buy the machines because they don’t have enough steady revenue to buy the machines.

Sam:                                      12:02                     Am I right, the part of what you’re doing is you actually identified innovations with these machines and then brought them here.

Emilian:                                12:11                     Exactly. So typically, I’ll give you an example so exactly what we, what we’re doing. We identify the latest technology developments in those three, four, five areas which equate into much smaller and much cheaper but high tech devices which can be run remotely through a cloud and which can sit at a point of care so keep typically an ultrasound, right? A full size ultrasound made by one of the big brands will cost between $25,000 and $35,000. Miniature portable ultrasound made also by some of those super innovative high tech companies would cost a fraction of this maybe four times cheaper, five times cheaper. But those manufacturers are actually startups sitting somewhere in the US, in China, in India or somewhere else in Asia far from Africa with no or little plans to come to Africa today because they’ve just launched, they’ve just raised money. They’ve gone through an FDA or C approval and they have enough market where they are. So what we do, we go and then approach those companies at a founder’s level and to try to convince them to let us bring their products into Africa.

Sam:                                      13:28                     Are they, do they have any resistance to that? I mean from branding perspective or from a…

Emilian:                                13:33                     So obviously it’s, it’s easier to it’s easier to talk to companies which are startups because they’re used to you know, they’re much more flexible compared to a big corporate, which may not have a direct interest to come immediately here or which will be, you know, more difficult to work with.

Sam:                                      13:53                     Got it. Okay. So you’ve kind of got this quite good this quite good dynamic by the fact that you’ve kind of, did you say found the founder of these startups they obviously they’re not able to do a little, a little bit cheaper, but I mean is let’s say it now costs $5,000. You’re saying that the clinic is not still not able to pay?

Emilian:                                14:15                     Exactly. The clinics, even a device which is four to five times cheaper than the full size one, a doctor cannot buy it. One of the main reasons is when you look into the revenues of those clinics, no one third of them have are approved or accredited by the national health insurance and they get a certain computation, money on a monthly basis, based on a number of patients they record the day they choose to go to the clinic. This capitation money comes in batches and comes late so the biggest issue of those clinics is actually cashflow management. It’s less as a, you know, at the end of the year they would make money but they will not have money today. They also usually don’t qualify for land for credits because either they don’t have their balance sheet is very thin banks would ask them for a collateral, which is usually two X or even more as the value of the loan. And there are some digital lenderswhich may be able to lend, but digital lenders, would ask the clinic a certain size of the daily or monthly revenue coming through their digital channels, M-Pesa. And if the clinic does not have, either or, assets or significant digital revenue, they will not qualify for credit. So what we try to do is to first of all match them with a lender. If we, if we can, based again on their revenue or on their total revenue. And if we cannot, then we look into potentially lending to them ourselves on balance.

Sam:                                      15:55                     So it’s not, the default is not for you to do that.

Emilian:                                15:59                     The default. We’re not a lender actually, we’re an, we’re a technology company. So our business model is again, identifying those you know, high tech diagnostic devices somewhere else in the world, bringing them here, placing them. So distributing or placing them in clinics, linking them into a tech platform that we’re building connecting them, being able to turn them on and off collecting data.

Sam:                                      16:28                     When you say being able to turn them on and off, does that mean being able to turn off the ultrasound?

Emilian:                                16:33                     So typically if the, the device becomes a collateral for a loan. So, if the clinic in this case stops paying for any reason, we could potentially turn off the device. Obviously now it’s not our goal. Our goal is to make sure that we have that. But our goal is to make sure that we can, our goal is to make those clinics make more revenue and we work with them, we’re flexible and we try to understand how can we help the clinics make more money because we believe that if the doctors make, if those clinics make more revenue, they can deliver better health eventually. We may not be able to completely control the prices today to make the ultrasound cheaper or the blood test cheaper. We hope that we will about in the future, but at least we can bring accessibility and the rapidity of those tests and more revenue for the clinic. And by doing this, we’re also looking to into how to streamline the processes with the clinic. Once we’re in the clinic, we have a foot in the door, we see their financials, we see the processes, we understand how do they order medication we, both myself and my co-founders come from a consulting background. So we also sometimes put our consulting hats and think how can we improve the processes of our clinics?

Sam:                                      17:58                     Yeah. Okay, cause one of the things, the thing just to touch on is this idea of, you’re giving people a revenue generating assets.

Emilian:                                18:08                     Exactly.

Sam:                                      18:08                     So it’s not like somebody’s getting financing and it’s, they’re getting often consumer or is it, one of the things I always find with with financing is yes, it’s all well and good to, you know, be given some money and then being told you need to pay back 10% in 30 days or whatever. But is there a path towards peak people legitimately increasing their revenue? So…

Emilian:                                18:30                     A massive path, it’s massive but let’s take the ultrasound the modern ultrasound, if a clinic receives a pregnant woman and the clinic does not have an ultrasound machine in most of the cases, the doctor will reffer that pregnant women to a third party ultrasound clinic the lady would pay 1500 shillings for a pregnancy ultrasound, the referral clinic would receive anywhere between 200 and 500 shillings as a referral fee. In our model, if we place an ultrasound machine on the clinic desk, another doctor can perform an ultrasound, can receive that full price, which is 1500, even more if the clinic is accredited by NHIF. So up to 3000 shillings, full revenue and they will be able to pay us back a certain amount a month, which will be somehow equivalent of a two year loan at a reasonable interest rate, so this interest rate actually includes a market interest rate plus a surrogacy as if it we’re to be able to count the number of tests, we just were approximate it for now but we always look to make it affordable for the clinic, we would not place an ultrasound in a clinic where we know personally that they would not be able to get enough patients therefore per day or per month for ultrasound or for other blood tests therefore they would not be able to pay back the loan.

Sam:                                      20:14                     As I said, is there, there is pent up demand this, isn’t it? It’s not like you’re suddenly going to put these ultrasounds machines in and the local population are going to be like, well, I can’t afford this or I’m not going to…

Emilian:                                20:25                     There is a demand. There is a, the demand is there. It’s just concentrated and takes time and the logistics to go and then, you know, do those tests.

Sam:                                      20:35                     So this setup is basically opening up the market in terms of making it easier to access thesethese sites. And as such that is going to grow the market.

Emilian:                                20:47                     And eventually hopefully more affordable.

Sam:                                      20:49                     Yes, got it. Okay. You’ve had a lot of experience running companies in across East Africa and Africa. What are some of the lessons that you’re taking from your past that you’re applying to, to running Ilara?

Emilian:                                21:05                     Actually a couple of lessons one is every successful business I’ve seen in Africa has a financing component. And you know, there are businesses distributing fruits and veggies in the market. They lend eventually to those merchants they lend cash or they lend products, their business is distributing FMCG products. They also end up lending they are you know, there are a number of asswr leasing businesses, you know, lending for people to buy or to lease a motorbike, a pro a commercial asset. What am I feeling is that the successful business, the businesses amongst the six or 700 companies, I’ve seen my, in my venture capital career across, you know, around four years, across a continent, most of the successful ones have a FinTech component, even if they are health tech or education or distribution or logistic or something else, it’s always a FinTech or a financial component. So what we do here, we, yes, we we build a health technology business but with a strong FinTech component through the lending and through the cash collection from the clinics, which we try to automate. The second the second learning from us at leasing is if we can avoid to have those assets on our balance sheet. So match the existing clinics with the lenders it’s better. I know that we won’t be able to do in every single case but our first approach is enabling the clinics to access lending and only if we believe that the clinic can not access lending for a specific reason, but if they still, if we still assess them from a credit perspective as a good payer, then we lend the assets to them. Another learning is, and if I put my investor hat, you know, the market is massive. We can always think there are five, six markets around or the needs are the same. However, what we build here is a strong operational business. So some of the, some of the things we build need time. We need time to learn how to scale this business in an effective manner, in a profitable manner before we go to another market, even in another city. So we have enough clinics around Nairobi where we need to focus. So focus is super important cash management for ourselves, right? I mean, one of the main reason of startups failing is they don’t have money because they spend too fast too soon.

Sam:                                      23:51                     Okay. So then they said, forget it. And I sort of get that from a investor top down. What’s, you know how to do it, but I think what’s also interesting about you Emilian is that you’ve always had experience being the operator. So I’m interested in, I mean, can you perhaps give us an idea of how many people are currently working at Ilara? What are some principles of the way in which you’ve decided to run the day to day operations of it?

Emilian:                                24:15                     Sure. So we’re a small and nimble team for now, we’re three confounders we have two salespeople we have a couple of advisors whom we may onboard on a full time position soon. We have a medical advisor slash chief medical officer. We brought 2 other people now one on operational finance and another one on corporate development on a specific new project that we look into those clinics. So we try to keep the team small for now and indeed, each of us does a number of things there is no you know, I do the CFO, the credit manager, the HR, the legal while my cofounder Aman focuses on product and my cofounder Hannah focuses on sales and operations. Very important is the, the dynamics and the team. I’ve seen so many startups failing because founders misalignment.

Sam:                                      25:17                     What does that mean?

Emilian:                                25:18                     Founders may be misaligned in terms of goals for the company and then…

Sam:                                      25:23                     So one wants this to happen and the other…

Emilian:                                25:23                     Yeah, so, you know, luckily we’re aligned and we will continuously work on, on communication, spending time together, making sure that we, we focus on the same goals and going very fast. Speed is super important because what we miss is actually time and that’s our our most I would say scarce resource before we need to raise the next round. So we try to achieve, we have very specific goals. We’re even implementing OKRs now in the company…

Sam:                                      25:56                     And OKRs are?

Emilian:                                25:58                     So goals basically similar to KPIs, but…

Sam:                                      26:02                     What’s the difference between?

Emilian:                                26:04                     The KPI is a very specific it’s a very specific goal.

Sam:                                      26:15                     Key perfomance…

Emilian:                                26:15                     Exactly. OKR is more on a longer term.

Sam:                                      26:21                     Alright. OKRs are the thing to be doing these days?

Emilian:                                26:24                     So you know, big, successful companies always look at you know, accountability and longer goals with also with specific numbered goals for, each of the team members. So we’re implementing we have very clear objectives and we try to align on a weekly basis to make sure that we steer the company into the right direction. Yeah.

Sam:                                      26:51                     And are you doing this in an office?

Emilian:                                26:53                     So we are, we spend most of the time in the field I’m actually, we share, we have a shared office space we spend time in Nairobi garage or in key guy. But I try to spend most of my time and my team’s time in the field because I strongly believe that this is a field business. If we are not in the field, then we become too comfortable and then we stop understanding the needs of the market. One of our advisors was telling us a few a few months ago saying, you know, you can always, you know, fail to achieve a certain revenue goal, but what you can’t fail to achieve is understanding the needs of those doctors better, even than the doctor themselves. So we spent time with the doctors understanding what they need, understanding how can we help understand their behavior to be able to bring the products, the technology and the solutions that would make them make more revenue and thrive and serve better eventually their patients.

Sam:                                      27:58                     Yeah. Okay why is it called Ilara health?

Emilian:                                28:03                     It’s a good, a good question actually. The idea is that we started we wanted initially to launch this business in Nigeria and we called the company Ilera with an E instead of an A, Ilera in Yoruba means health. And then we changed from Nigeria to Kenya for a number of reasons that, you know, we understand better. Kenya, we felt, I’ve been in and out Nairobi for the past four years. Aman, my cofounder, his family comes from East Africa easier to do business that we decided to start in Kenya. And we changed the name from Ilera to Ilara.

Sam:                                      28:45                     Does Ilars mean something in Kenya.

Emilian:                                28:48                     Not really, I mean there’s a, I know that there is a milk brand, there’s a dairy brand here, but nothing, nothing else.

Sam:                                      28:58                     And will, will I certainly think so that the patient, the lady who’s coming in for the ultrasound what’s her experience? What’s her relationship with the ultrasound? Should we say? So is it that she’s feeling this is a white label product which my clinic is offering? Is it that, Oh, this is actually an Ilara health ultrasound. Is it that this is the actual manufacturer’s thing, where does the name Ilara health? Who does that?

Emilian:                                29:27                     That’s a really good question. So specifically for ultrasound, women know that they need an ultrasound the question is do they afford or not? Can they get an ultrasound? Some are close to there, to the place where they livbe. And that’s where the smaller clinics are. And they’re plenty they may not afford to come to Nairobi, take a matatu, spend, you know, 150 shillings back and forth when they’re pregnant and take time off work. Are they, I mean, those, those ultrasound machines, they’re not an Ilara brand but they come from reputable companies around the world, which have been already have gone through the approval process. They’re in the US or Europe and in Kenya so the quality of the, of the brand and actually the quality of the result, which is a color image, which is very clear for a sonographer finally is less of the patient. But is the sonographer, the person who performed the ultrasound, who needs to vouch for the device and before choosing the rights the brand that we have today, we’ve been testing a number of brands. 3 of them actually which sonographers in their offices and in the field and we’ve done the same thing for the, the blood test machines that we have currently in the market to make sure that the one that we placed in the clinics is a right one, which answers to the needs of the market. Typically, you know, a color ultrasound is, is needed versus a black and white, a certain mode is needed to identify certain conditions of the baby. The fuetus, and that’s how we, we’ve got to the products that we distribute today. Now Ilara brands so we believe that what we can build here is really bringing those clinics to a certain level. They’re very different. They’re small, they miss, they don’t have a name, they don’t have color on the wall. They don’t have assets, they don’t have processes, they don’t have IT, they may not have even beds. So there’s a lot of stuff to do within, inside those clinics, so diagnostic devices is just the first step to put a foot in the door of the clinic. But as we are in, we can help with other things with, as I said, with platform, with processes and eventually bring all those clinics, or some of them at least to a certain level which where they could become a clinic X by Ilara health where Ilara health can become a brand, which would equate with the quality service of devices, of doctors, of processes and finally, quality of care. That’s what the patient needs, in sickness needs, needs care.

Sam:                                      32:21                     At the moment, your ultrasound devices or whatever, you know, they’re in a clinic, a patient could come in, have an ultrasound, get their receipt from the, get the receipt from the clinic, walk out and have no idea that Ilara health has had any involvement with that?

Emilian:                                32:38                     Today. No. They don’t know.

Sam:                                      32:40                     But the idea is in the future it’s almost like this, you’re a franchise model.

Emilian:                                32:45                     It’s a, yeah, it’s a franchise or reverse franchise model, indeed.

Sam:                                      32:48                     Reverse franchise?

Emilian:                                32:50                     Somehow the models where you basically don’t go and your brand don’t go and then find someone to open a store, but going to an existing…

Sam:                                      32:59                     Okay…

Emilian:                                32:59                     Establishment, call it franchise.

Sam:                                      33:02                     You go and you sort of say, right, you’re a business, you’re an independent business. You’re already here. If you play by these rules, then you can call yourself Ilara.

Emilian:                                33:09                     You become part of the network.

Sam:                                      33:11                     And not only that, I imagine the sell is, you know, we’re also going to make you better?

Emilian:                                33:15                     Exactly, that’s the end goal.

Sam:                                      33:16                     Yeah. Got it is there something which is like quite a few years down the line or is it something where it’s like might be a bit sooner?

Emilian:                                33:25                     It’s going to take time, I mean, there are a couple of examples here there’s, you know, tunza brand which is a tunza NGO, which you know, gives training and I think some financing to some clinics and it has become a brand Tunza clinic is recognized as a good clinic. This model exist in education in India, exists in hotels in India, China, US, Europe. So the model were, you know, one comes the brand or a brand comes and, and brings a number of individual businesses to a certain level exists. It’s gonna take time, we’ll take time and diagnostics is a first step, probably pharmacy. The second step. Education training of those doctors is another step and eventually bringing other assets, other devices, you know, so a lot of clinics tell us, we, if, you know, if we had you know, $10,000, we would love to buy a small operating theater for C-sections cause they, they could make revenue, they could provide this you know, small surgeries to patients and they can’t. As we go, we’ll discover more opportunities.

Sam:                                      34:40                     Okay, cool. And what have been some of the surprises that’ve sort of come in the months you’ve been here?

Emilian:                                34:48                     So one interesting thing is before we started this business, I thought that there is a high demand for financing but those clinics, which are businesses finally can just not access financing. What we find now, we found also a number of cases where the owners of those clinics run away from, from financing they have that perception that banks would never give them loans, and the banks ask them for collaterals, which are impossible to provide. And they have this image of these how do you call them, shark loans. Some of them actually take loans at 30% interest rate per month to be able to pay salaries knowing that they will get revenue in the future. So some of them are actually concerned when we talk loans. So we actually have changed significantly the way we present these. It’s not alone, it’s an asset that we place and they pay back for a service so there’s no interest rate as such, it’s a bundle payment.

Sam:                                      35:57                     This is, I think one of the nuance, one of the, one of the features of the solar industry here in the solar panels is that, you know, effectively people, you know, someone comes along and puts a solar panel on the house and they pay $5 a month to keep the electricity on behind the scenes. Actually, that’s quite a sophisticated asset, it’s quite simple as a financing, but it doesn’t feel to the end customer like, Oh, this is my exact thing that I’m paying. So you’re basically taking it off…

Emilian:                                36:30                     I’m taking this experience from several companies, which I’ve looked at or invested in the past and being close to. So we apply a lot of, we try to take from solar what, what has worked and avoid what hasn’t worked. I think another thing which changed my perception. I was under an impression that they’re not enough medical establishments. I actually started, I’ve started to change my perception. There are so many we see every day. So we have a database of 10,000 clinics across Kenya, which is the government database. I found already about 50% of the clinics that we see. They’re not in the database. So I think there are more than that are they 13,000, 15,000. I don’t know yet so I don’t think there is a lack of establishments, but there’s a clear lack of training and skills amongst the 200 killings that we’ve stepped into. To date. I may have seen five doctors, like doctors, all the students have nurses or clinical officers which can perform, you know, can perform computer, can, can do consultations. They can even perform basic surgeries but they’re not doctors, so they need, they badly need training. So that’s where we come now. And typically with the ultrasound device, we provide training. We teach them how to perform a pregnancy ultrasound. We cannot teach a clinical officer to become a sonographer. Absolutely not. That’s a one that’s a one to two years you know, medical or pre-medical school. But we can teach someone to provide basic pregnancy ultrasound potentially with a real sonographer on the other side of the line. So the device that we’re bringing now has an embeded telemedicine, tele-sonography functionality.

Sam:                                      38:30                     You’re almost like you’re on Skype.

Emilian:                                38:32                     Exactly. So because the device is to a camera and then the doctor or the sonographer on the other side has access to the image and can actually freeze the image, can do whatever. A sonographer in front of a big ultrasound with buttons can do, freeze the image, increase the image stop the image, print image measure and as same for the, for the blood. So we have a device now which does a lipid profile and HBA one C. So the diabetes markers we’ve seen actually in the beginning that was for one of the tests. The results were actually fluctuating a lot and we tried to understand why, the device come from Taiwan has been CA approved, has been tested in Europe, even in India. And they haven’t had these problems before. And we realize that the problem comes from the manual part of the process, which actually equates to training, training how to drop that blood drop exactly in the place for the blood, where the drop needs to go for the device to function properly. So training plus automation or just automation. So this is the other thing that we discovered. We thought that just automation can actually replace a skill natural. And finally, finally it’s just about people. People perform, people give care that a machine cannot deliver the feeling of care, can deliver results but you know, they were feeling you still need people, doctors or clinical officer or nurses. It’s very difficult to replace them and I don’t think that the pure machine or tele-medicine will work anytime soon here. So we are in a people business but we train, we want to train an upscale those medical officers or clinical officers to get to the level of skills to operate our devices while performing or giving care.

Sam:                                      40:28                     Got it. Yup. I see that.

Emilian:                                40:31                     So we also have an education part of that.

Sam:                                      40:36                     As you, I mean, when it comes to learning how to use this company’s blood test machine, I mean, is that cost that you incur, that Ilara incurs.

Emilian:                                40:47                     So we blend this in our service fees. Obviously we perform a training initially, which is part of the sales process and we even this morning I had a meeting with a potential partner on tele training for the clinics. Face to face is very important. Face to face in the clinic is super important, but we need continuous training so we haven’t yet figured out how will we do that at scale. We do it now for the ultrasounds. We do it for the blood, for every, every device we, we deliver, we place, we train but we need to find a sustainable solution to perform continuous training.

Sam:                                      41:30                     And if we just sort of go back a few steps, I’m interested in exploring this, this crinkle you mentioned about the financing and how you’ve got these third party financing organizations, which are the ones actually putting up the money. I sort of can get how from the perspective, not having those assets on your balance sheet is useful. Is a, is a good characteristic to have? How does that complicate the operation you’ve got when you’ve then got this extra party who’s needing to

Emilian:                                42:00                     Actually, it simplifies, simplifies because the reality in this case would broker a relationship between a clinic and a lender. And we’re in a business of enabling.

Sam:                                      42:14                     So is the clinic, are they paying one payment to you and one payment to that…

Emilian:                                42:18                     They would, the clinic would pay actually a down payment to us and they will pay a principal part plus interest to the leaser, to the loan provider. So in this case, there won’t be a usage fee. There will be a one off fee that, so of clinic pays us a certain amount. In the beginning.

Sam:                                      42:41                     Say if they pay like 10% down?

Emilian:                                42:42                     10% down and they will enter in the lease agreement with a provider. So in this case, for those those clinics, we would be just an asswt provider and a trainer while the credit risk and the lending relationship will be, is between the lender and the clinic. In the clinics, which cannot, well we believe that they can not they cannot get a loan for a number of reasons and we pre-assess them, then we lend or then replace the device.

Sam:                                      43:16                     With the case where yoiu’ve got this external lender, so the clinic is paying a monthly fee?

Emilian:                                43:21                     They’ll pay a monthly fee or a daily fee actually.

Sam:                                      43:23                     A daily fee. Okay.

Emilian:                                43:25                     Which is equivalent to an interest rate, a market based interest rate.

Sam:                                      43:30                     I’m more interested in dynamics of like you, being that you have this relationship with the clinic and saying like, we’re the ones who are finding this ultrasound machine and then the payment actually going somewhere else. And like if, if you understand some of these breaks like who…

Emilian:                                43:44                     So those machines are actually, they have a manufacturer warranty for the first year. We priced in the price of the asset. We priced another year, it’s an additional year of local all risk warranty or all risk insurance actually, which covers everything from breakage to tests to malfunction.

Sam:                                      44:09                     Okay. So if the two years…

Emilian:                                44:11                     For two years the clinic, basically for the length of the loan. The clinic is, is covered. Post this, obviously we are still finally like any distributor of medical devices. We are we present, we ended up representing the brand so we’ll provide a service obviously at a cost if needed.

Sam:                                      44:38                     And that that will be basically from the finances perspective by saying, right, we’re going to put down this money every day, we’re going to get paid and the duration, two years at the end of it. Thanks very much.

Emilian:                                44:49                     Yeah.

Sam:                                      44:50                     Got it.

Emilian:                                44:51                     Because you tell lease to own, finally the goal is us to become the owners, the full ownership of the clinic. So the clinic can capture the full revenue instead of paying the interest and the principal back.

Sam:                                      45:04                     And who are these financers?

Emilian:                                45:07                     So we’ve been we have a couple. We started to work with the medical credit fund which is part of farm access here. The medical credit fund offers a digital loan as well as an asset loan, both of them based on the digital revenue potential of the clinic and they collect payments on a daily basis actually on the person’s action basis from those clinics. The medical credit fund currently focuses on bigger establishments so we were trying to you know, bring them into those small, medium to small size, and then low income clinics. We are working with a bank here CDN bank to enable the same type of lending but on a pure bank type loan and we look at other debt providers. We’re in touch with two others. So we’ll see how these relationships will evolve. We actually have the first five clinics with ultrasounds. We already have four clinics in the market part of a plan of that we started in March with smaller devices which we did on balance sheet. We just bought them and placed them just to understand the clinic processes and how we can perform to do the collection. The real business starts now with the first five clinics, which we train this week, this coming weekendwith ultrasound devices and to, you know, a couple of them will be financed through the medical credit fund and the rest will be having the other half will be on balance sheet, so that’s the first trial to see which, you know, how this is going to evolve. And as I said, we’ve been stepping into about 200 clinics and some of them are in various stages of discussions in the sales or placement process. And as soon as we’re done with those five, we’ll move into selected clinics from the pipeline. The goal is to get to you know, 60 to 100 clinics 60 things by the end of the year. And probably another hundred in the next six months, for six months.

Sam:                                      47:23                     Fantastic, we’ll just do a few more questions.

Emilian:                                47:26                     Sure.

Sam:                                      47:27                     Alright. So we’ve spoken sort of a bit about the supply side, but on the demand side, I mean from your perspective in working in this health or you’re working in the health markets, should we say I think what’s quite interesting is you’re saying you’re viewing medical devices as the first step into opening up this potentially much bigger market around improving clinics and potentially one day doing a reverse franchise or franchise with it. What are some other interesting opportunities that you’re seeing within that medical area, which you’re like, that’s really great. It’s not for us right now, but someone else should do that.

Emilian:                                48:05                     Sure so a clinic, if you look at what’s, you know, what are the needs of one of those small clinics, so they need diagnostic devices, they sell medication, so pharma products, and that’s a massive market. We’re not yet there other people do it now, we may be there one day, so we’re looking into it. They need education training face to face or distant they may need remote tele-medicine solutions and they need other assets apart from the diagnostic devices. I think I mentioned earlier, some of them need beds, others need operating theaters. So I believe that there is a huge opportunity into enabling those clinics to perform whatever they need to and where they have patients for and you know, provide better care, through training devices, inpatient surgeries and education.

Sam :                                     49:11                     And you may not have that much exposure to it, but I’m interested, outside of clinics, are there any other areas where you think other entrepreneurs should come in and do particular…

Emilian:                                49:20                     Specifically in healthcare?

Sam:                                      49:24                     Sure, I mean actually you’ve looked at lots of businesses.

Emilian:                                49:28                     Oh, in general?

Sam:                                      49:29                     Yeah, let’s go in general. Yeah.

Emilian:                                49:30                     Sure. So one thing, I think it comes from seeing a lot of businesses in Africa, is, and I have this, I always compare Africa to China, to the US and you know, in the US, you can build a pure tech platform because you have the infrastructure, you have the infrastructure there. In China, most of the, you know, technology businesses today have built infrastructure over time. And you look at Alibaba. Alibaba even has clinics by the way, or Tencent actually has clinics. So they build technology alongside infrastructure, right. In Africa, the problem with infrastructure is in existence. So Africa is in my opinion, very much about distributed things, distributed solar, distributed diagnostics. That’s what we do, right? We bring pieces of a lab into a clinic distributed everything, distributes logistics. So there’s a massive opportunity, a number of sectors and we’ve seen very successful companies here tackling the biggest needs of the consumers, which are actually still fairly basics. People need to eat. So they need to get fruits and veggies. They need to get FMCG products, there are companies tackling this with distribution and financing. Businesses selling various products, you know, there are companies doing lending market, B2B lending, which is massive. And there’s still a lot of place here. Education with a fund, I was involved for four years. We invested into one of the most successful or the most successful education technology company in Africa, based in South Africa, which sold to a US listed education online company. So education is massive. I haven’t seen too many education companies across the continent unfortunately, but I think there’s a still a huge needs, someone will need to come and find the right model, the right profitable model, how to deliver online education or on mobile education. Within financial technology there’s so much need Kenya is somehow lucky with mobile money. But there’s so many other countries in the continent where it’s very difficult to pay, very difficult to send money somewhere, very difficult to capture money as a merchant very difficult to get money as a merchant on a product loan. So bottom line, the kind of the biggest sectors that I think are the most interesting are FinTech. Obviously, you know, within the, within the $1 billion venture capital money invested in Africa last year about 35% I think was FinTech, I don’t remember exact, the number from disrupt Africa or from Partec, so FinTech is a massive sector. Within FinTech, there are a lot of sub-sectors, some of them more profitable or more interesting than others, more impactful than others. But financial inclusion is super, super you know, super needed, education mobility, massive. People need people move, right? Those cities you know, Kenya is still a, you know, massively rural or actually moving from rural to very urban but those cities in this African cities will actually double in size in the next 10, 15, 20 years and people need to move from one place to the other. Finding using technology to help those people moving is super important. Yeah. So healthcare, education electricity, so distributed electricity, solar renewables moving, moving people from A to B, moving freight from A to B, moving, you know, food or other things inside of cities.

Sam :                                     53:06                     And any words of warning or words of caution for people who are thinking of coming into this business in this part of the world?

Emilian:                                53:13                     So this is not a, this is not Silicon Valley, this is Africa. Those are emerging markets where I think the point of caution is you know, what other people think that they can, you know, build top line revenue with no or no profitability or vision for profitability and they can raise another round and another round and another round, that’s less possible in Africa because you know, from an investment perspective, if we look at macroeconomics in Africa, it’s still far in terms of returns compared to Europe or US or Asia, right? So a P firm would say, why should I invest in Africa when I can, you know, make a great return in the US, Europe or China or Southeast Asia but Africa is the future. I think Africa is the only place in the world which still has this massive potential of huge population growth, huge mobile penetration, huge, very, very young people and it’s funny, a very good friend of mine Ron, is one of the, you know, successful technology companies based in Barcelona. And I was having a call with him a few weeks ago and he was sending me why are you spending your prime, even if I’m not yet prime, but what prime years in Africa? And I was laughing. I said, well, let’s talk five years from now. So I have a massive belief in this continent. I’ve been in Africa, even if I’m not born in Africa, but I’ve been in Africa for the past 12 years plus, in and out and mostly leaving actually out of those 12 years around, so I see the massive opportunity and I still think it’s going to take time because it’s not just about technology, it’s about increasing the, growing the, the spending power of people to be able to buy those products and services. But again, I would be very careful and that’s what we try in a Ilara health as well. Very careful on how to go towards profitability, towards building a profitable high margin business, but which can be impactful at the same time and bring value to everyone, bring value to our clients, our customers, bring value to oyr investors, bring value to us.

Sam:                                      55:36                     And people listening home. How can they learn more about Ilara health, more about you? What are the best ways to learn more?

Emilian:                                55:42                     Sure. We are online. We have a website there are a couple of articles which got published last week as we closed our first seed round. So we’ve been in the media lately. People can find me on LinkedIn.

Sam:                                      55:59                     Very good. Cool. Well it looks like it’s about to start raining, so we should probably call it.

Emilian:                                56:04                     Excellent.

Sam:                                      56:05                     But yeah. Thanks so much Emilian.

Emilian:                                56:07                     Thanks a lot. And then yeah, thanks for the time.


The opportunities and challenges of making affordable socks in Kenya


This week we’re talking with two friends who have set up a business making socks in Kenya.

Both Vidyesh and Bishell grew up in Nairobi to entrepreneurial families, and after education in the UK returned home to begin a business.

They are also friends with Sumit, who featured in the board game cafe episode.

Vidyesh and Bishell decided on socks, as they felt there was a gap in the market and that by starting with a relatively discrete market (school socks) they could grow the business.

It’s a very interesting conversation that goes through the practicalities of building a manufacturing company in Kenya.

One of the challenges they state is, for example, the high cost of electricity, and its unreliability, but also the opportunities that come from getting a loyal customer base in an emerging economy.


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Sam:                                      00:07                     Intro.

Sam:                                      01:51                     So we’re here today with Vidyesh, Vidyesh welcome to the show.

Vidyesh:                              01:54                     Alright, thanks.

Sam:                                      01:56                     So to get started, can you tell us a bit about your business?

Vidyesh:                              02:01                     Yeah, so it’s a manufacturing business. We manufacture socks and hosiery products. We started the business about two and a half years ago. We sort of looked into the market and identified a sort of gap in the quality of products that were manufactured locally. And we thought we could do it a lot better than what was actually being offered in the market. And then we sort of went ahead and did a bit of market research and found that this is something that’s, something we can get into, something where there’d be a decent return for us and where we could do something better than the, our competitors are currently doing.

Sam:                                      02:39                     Very cool. Okay. So mainly socks, is the thing you’re doing, like why did you choose socks of all the things?

Vidyesh:                              02:46                     I think it’s one of those products that everyone will always need so they’ll, I don’t think demand for it will ever die down. So yeah, but although that being said, we manufacture mainly for schools. So 90% of our production is catered for all of the schools in Kenya.

Sam:                                      03:05                     90% of your production is for all of the schools in Kenya?

Vidyesh:                              03:08                     Basically the schools.

Sam:                                      03:10                     Okay.

Vidyesh:                              03:11                     Based in Kenya, yea.

Sam:                                      03:11                     Cool. How difficult is it to make school socks?

Vidyesh:                              03:15                     It’s not, I wouldn’t say it’s like the hardest thing. It’s just finding the right recipe or raw materials testing them and then offering that to the market obviously taking into account the price sensitivities. So of course you can go for like the most expensive raw material, but the market locally, domestically is very price conscious. So then you’ve got to turn around and find something that works and is affordable by the local people, by the local parents. So we went around and, you know, got a bunch of different raw materials, tested them, you know, checked out the qualities, found the one that we were happy with but also was affordable by the local market. And still we are, we do manufacture the highest quality product currently in Kenya.

Sam:                                      04:03                     Perfect. Cool. Okay. So if we take a sort of step back. So have you always had an interest or have you had experience in the textiles industry? How did this come about?

Vidyesh:                              04:13                     Personally, you know, I mean, as a family, we’ve had businesses in textiles, we’ve had a, we had a textile mill early seventies, and then we then sort of as competition grew, became harder against you know, China and imports coming into Kenya we found that we weren’t competitive, so then we switched from, you know, manufacturing the fabrics into, and then we went into garments. And when I say we, this is, I guess my family. My dad and his brothers and then we’ve been in retail for garments and we did a lot of export back in the day as well.

Sam:                                      04:56                     When you say garments, what does that mean?

Vidyesh:                              04:56                     You know, shirts, trousers. Yeah, yeah. And then Bashil’s family was also involved heavily in distribution of garments. So there is that background of being in sort of the textiles, garments industry. But in terms of personally, between the two of us, not really. We, I think both of us have always had an interest in manufacturing, in setting up business in East Africa. So we actually were, we both studied in the UK and then you know, I worked out there for a couple of years. Bashil, he studied there further on and then we moved back and we set the business up basically. But yeah, for us, I mean I think there’s a strong interest in manufacturing and not just specifically within textiles and garments but there is a wider interest within manufacturing.

Sam:                                      05:48                     I should note we’ve got Bashil in the room as well and whose sat next to us.

Bashil:                                   05:53                     Hi.

Sam:                                      05:53                     Cool. So, that’s interesting, so you’re sort of, both of your families have had this heritage in producing garments in Kenya. Just out of interest, what were you, what were you doing when you’re in the UK? Were you in…

Vidyesh:                              06:05                     Yeah, so you want to go first?

Bashil:                                   06:07                     I studied economics, university of Manchester after finishing, I lived in London one year. Did a bit of work experience Vidyesh came up with the idea. So we did both the research on it yeah, I decided to move. He moved a few months earlier. I moved after, three months after him. Yeah.

Sam:                                      06:32                     Alright, so the idea for it came…

Vidyesh:                              06:34                     Once we were there.

Sam:                                      06:35                     When you put, you weren’t living in Kenya at the time?

Vidyesh:                              06:38                     No.

Sam:                                      06:38                     Interesting. Okay.

Vidyesh:                              06:39                     So yeah, for me, I was I went to school in the UK. I had been in the UK for almost 12 years. And then of course after school, went to university of Nottingham graduated. So I studied finance and then I was in banking for about four years. So I used to work for one of the big banks in the UK. It was fun. It was good experience. It wasn’t something that I was going to be doing indefinitely. It was, for us we’ve just always had an interest in going into like entrepreneurship or, and specifically manufacturing so…

Sam:                                      07:13                     You’re like, let’s go ahead and make socks.

Vidyesh:                              07:15                     Yeah. Pretty much. You know, everyone’s going to need socks. No one’s going to stop buying socks. I mean actually socks are the most common Christmas gift in the UK. So you know, like it’s just one of those things that people won’t ever stop buying unless, you know, we start wearing alternatives. But yeah.

Sam:                                      07:34                     Okay, cool. So let’s perhaps sort of talk a bit about the Kenyan sock market and so what’s the, what’s the current state of play in terms of producers here and yeah, let me just talk on the supply side first, what’s the current situation in terms of producers?

Vidyesh:                              07:50                     So I guess we can break that down into two segments. There’s the importers and then there is the manufacturers. Importers is a huge diverse sort of there’s many players and the businesses that import socks and hosiery products into East Africa with that, I think the biggest is something called ‘Mitumba’ which is basically second, yeah, second hand clothing. So the Kenyan government many, many years ago formed an agreement with the United States government where we would export garments, finished fabrics to the US but you know, as a bilateral part of that agreement, we were to import secondhand clothing from, from the US and then that slowly grew into Europe, China, India, Dubai. Actually Dubai, funny enough, is one of the biggest exporters of secondhand garments into Kenya and it’s not necessarily that there’s an agreement with Dubai, but it’s more, it’s a, as you say a hub of consolidation from all over the world and then it’s a good tap and it’s comes into West Africa and East Africa and Kenya. So we’ve got a huge secondhand clothing market and there’s a lot of socks there and then of course there’s the importers of socks that are then targeted at the middle class market. The middle, I think I should just…

Bashil:                                   09:15                     Also, since many Chinese have moved here, so now instead of secondhand, there are many replicas coming from China as well.

Sam:                                      09:24                     So for example, like if there’s a Ralph Lauren brand…

Bashil:                                   09:28                     So they’ll be much cheaper than the second hand ‘mitumba.’.

Sam:                                      09:34                     Really? The Chinese socks will be cheaper than secondhand?

Bashil:                                   09:36                     Yeah.

Sam:                                      09:36                     Really? Why is that?

Bashil:                                   09:36                     They’re not paying duties or anything on it. It’s brought in illegally basically.

Vidyesh:                              09:49                     They’ll just fill up their suitcases when they come here and then offload everything.

Sam:                                      09:54                     I see. And that can undercut?

Vidyesh:                              09:57                     Yeah. So for people who then bring it in legally playing, all paying all the duties, VATs you know, all the freight charges of course they can’t compete against something coming in as a second hand product or also illegally. So there is a, the market is restricted in that way, but yeah, there’s again, like I said, so there’s importers of all sorts of socks. So happy socks are in Kenya, there’s importers of people bringing in happy socks.

Sam:                                      10:24                     What’s happy socks?

Vidyesh:                              10:24                     Happy socks is actually one of the, I’d say in the last four years it’s become a very big brand. They do very funky, colorful designer, not designer as in like labels, but you know, cool designs, lots of animation and very bright and bold and loud. So it’s actually a Swedish company which gets it socks manufactured in Turkey, but it’s a huge, huge, huge…

Sam:                                      10:54                     So currently they are exporting them to Kenya?

Vidyesh:                              10:57                     Yeah, so not in a big way because there’s a very limited market. You know, like I said in Kenya you’ve got the low income, the middle market, and then the high end. So there’s a lot of price sensitivity. Those socks would typically be targeted at the high end and then the upper end of the middle, middle class market.

Sam:                                      11:14                     So that’s the imported, what about in terms of local manufacturing?

Vidyesh:                              11:20                     So there are at least, I’d say a handful of manufacturers five to six of us. We, very few of us will be doing socks for the mass market and that’s because it’s very difficult to compete against the ‘mitumbas’ they are, you know, there’s stuff coming in illegally and also the very cheap, very poor quality products and that’s because of course there’s challenges with logistics. We’re bringing in our raw materials from a country that’s far, far away and then you’ve got a lot of bureaucracy in Kenya, which sort of makes it harder for us. And I guess the other biggest, the very huge important factor for us is the cost of our electricity. So if you compare Kenya to Ethiopia and Uganda and Tanzania our costs are almost double relative to Ethiopia. Yeah. It’s higher than Ethiopia it’s higher than Uganda so for us to then manufacture and compete against some of the varying low cost socks which are coming in is almost impossible.

Sam:                                      12:38                     What percentage of the cost of the sock is electricity? Is it, I mean, is it like 5% or is it, is it relatively significant?

Vidyesh:                              12:46                     Again, it varies based on the capacities of the factories that are the scale of the factories. But you know, typically I would say actually it’s way high. It’s about 15%.

Sam:                                      12:59                     15%?

Vidyesh:                              12:59                     Yeah.

Sam:                                      13:01                     The cost of electrricity?

Vidyesh:                              13:01                     Yeah.

Sam:                                      13:02                     And so if you were in Ethiopia, that would be 7.5%.

Vidyesh:                              13:08                     Yeah. Or less even. But yeah, a lot lower than us. And you know, that for us is a huge thing. Again the other challenge, and like I said, you know, the logistics side of it historically you could import a container of your raw materials from, you know, anywhere in the world and it would dock at, the ship would dock at Mombasa port, and then you can put your container onto a truck and bring it directly to your factory, which was, it was done within five days. So five days from landing at the port, it would be in your factory, whereas now, yeah, three to four weeks.

Sam:                                      13:49                     Three to four weeks? Why is that?

Vidyesh:                              13:49                     Yeah. So it’s a double edged sword, this one. But basically, there was an SGR that was built.

Sam:                                      13:58                     This is the train?

Vidyesh:                              13:59                     The railway. Yeah. And of course for it to become feasible, there needs to be volumes moving on it. And so there was a blanket rule that was placed by the government that said any importers what not. Yeah. Any importers outside of Mombasa. So Nairobi, any other place outside of Mombasa, have to put it on the SGR. Now the SGR is, you would think that it would be cheaper than, you know transporting the containers on a truck but it’s actually a lot more expensive. So because of these certain factors we are slightly uncompetitive relative to manufacturers, you know, based in Asia other parts of Africa.

Sam:                                      14:47                     I mean, I imagine that would have been, they would like the government or whatever would have known. Okay. If we’re going from a truck system to a train system, there’s going to be a bit of a shift in prices, is it always going to be the case or is it that there just needs to be other infrastructure?

Bashil:                                   15:07                     They’re trying to recover the cost of building the SGR.

Sam:                                      15:09                     Okay. So they’re just saying regulation, you must do this and the price is as is so they can recoup the cost. The people who are feeling the pinch are…

Vidyesh:                              15:20                     Everyone who’s importing anything and yeah, because for us, again a lot of the raw materials that we use are not manufactured locally in Kenya so we don’t really have an option so we have to import it, and then we obviously manufacture here, but I think for us, the two biggest, those are like our…

Sam:                                      15:42                     The two big challenges.

Vidyesh:                              15:43                     Yeah. Of course with the delays, drops in production in the factory and…

Sam:                                      15:54                     Yeah. Is this a bit more unpredictable?

Vidyesh:                              15:57                     Yeah, I think, like I said, the bureaucracy and red tape that is, it’s kind of the…

Sam:                                      16:04                     Yeah. Right. Well, those are some fairly significant challenges. Talk about talking about the upside, like what’s the, what’s the positive thing?

Vidyesh:                              16:12                     So of course like doing business anywhere in the world I think is fun. It’s exciting, there’s a lot to learn you know, it’s always it’s nice to kind of make changes in other people’s lives. So, you know, we’ve got a staff of 35 people and they, they have families that depend on them. So it’s always nice to know that, you know, you’re kind of indirectly improving other people’s lives and of course for us, you know, started from where we are and we’ve grown and grown and grown. So it’s actually a very exciting journey for us. And along that journey we’ve learned a lot and understood the market and you know, understood how to get better at what we’re doing you know, of course without compromising the quality of the product. So for us it’s always we want to manufacture something that’s going to be very, very good, if not the best but always sell it at a very affordable price to the, to the mass market, to the local market, our target market basically.

Sam:                                      17:08                     And how, how big do you think this market is?

Vidyesh:                              17:11                     I wouldn’t say it’s very big because like I said to you, our we have, we don’t have a very big factory, but 90% of our production is purely for schools.

Sam:                                      17:20                     I’m not quite sure what the best way to like gauge capacity, but like how many socks are you producing in a year. What’s the, what are some of the ways in which you…

Vidyesh:                              17:30                     In a in a day we do again, it depends on the type of socks that we manufacture, but typically we could potentially do about 2,400 pairs of socks a day.

Sam:                                      17:44                     Okay.

Vidyesh:                              17:44                     Yeah.

Sam:                                      17:45                     Right. And those are, then maybe we’ll get more into that, but okay. You’re current 2,400. Is that after the, my impression of manufacturing is that sort of capacity goes in steps rather than in a straight line. Is that, is that kind of your capacity or is it something where you could quite easily?

Vidyesh:                              18:06                     So for us, we’re almost running at 95% of our capacity on those numbers. We would, we are looking at bringing in new machinery and then of course we’ll be able to do a lot more, but also that helps us because then we get economies of scale. So the more machinery we have, the more output we get and therefore our unit costs also drops. So again, I wouldn’t say it’s like, it’s a simple equation where the bigger you grow, the lower your cost becomes. It does kind of stagnate at some point before us were acquired, you know we’re in the infant stage so to speak. And so we’re finding that sweet spot where the more output we get, you know, the more we can split our costs across that and become a little bit more competitive, but not enough to still fight the illegal imports and the imports and all sorts of stuff.

Sam:                                      19:00                     Okay. What sorts of startup capital was necessary to, to get this going? You don’t, you don’t need to sort of say specifics, but just rough figures.

Vidyesh:                              19:12                     We put in about, I think $750,000 into the entire project. Yeah. And then of course now it will be, as we grow, we’ll be putting in more and more. Yeah.

Sam:                                      19:23                     And so you’ve sort of said you’ve got the double whammy of high quality and affordable price. Does that mean your margins are quite thin?

Vidyesh:                              19:35                     Yeah, right now our margins are thin because we’re still you know, our brand is still quite new in the market, so we’ve got to stay lean. We’ve got to keep our prices low so that people, you know, sort of accept the product. And then with time, I think once it’s been accepted, they will turn around and say, okay, we’re confident in the plan will buy it. So the price sensitivities will remain, but our penetration will be higher basically. And, and then there’s a knock on effect into the neighboring countries of Uganda and Tanzania.

Sam:                                      20:11                     Okay. How do you brand yourself?

Vidyesh:                              20:14                     H and F.

Sam:                                      20:14                     H and F?

Vidyesh:                              20:15                     H and? F, yeah. So we’ve got a couple of other brands in the pipeline as we’re growing, we’re bringing in new machinery. We are going to be launching a couple of new designs, different types of socks. Like I said, predominantly right now we’re just doing schools. So our school brand is H and F, but you know, when we do launch our new products in the pipeline, they are going to be new brands coming in for those. Yeah.

Sam:                                      20:37                     How did you land on H and F as your?

Bashil:                                   20:40                     It’s our grandparents initials.

Sam:                                      20:42                     Your grandparents are friends as well?

Vidyesh:                              20:44                     They might’ve been, we’re not too sure, I don’t think so. I don’t think they are. Yeah, we are. We are at some, there is some connection between the two families but yeah,

Sam:                                      20:54                     But why did you choose your grandparents initials and not your initials?

Vidyesh:                              20:59                     So again, okay, now I guess it’s an important point that we, like we discussed earlier, our families have been in business in Kenya for, you know, mine since the 1940s and yours around about the same time before that. Yeah. So because of that there is people, I wouldn’t say people, but a lot of businesses are aware of who our families are. And so we wanted to capitalize on that from the marketing point of view, from sort of market penetration point of view because it’s easy to leverage on that and you know, and get cross sells and new introductions. So that was kind of the thinking rationale behind…

Sam:                                      21:47                     Anytime your grandkids will be using your initials. Okay. So what, so you’re currently making 2,400, you have the ability to make 2400 pairs of socks a day. What happens when they leave the factory? Where do you…

Vidyesh:                              22:09                     Yeah, mainly it’s retailers and distributors and wholesalers and then they turn around and sell it on to, so the retailers of course and customers, but the wholesalers will then, it might go to another wholesaler or another distributor by the time it gets to retail, but ultimately we’ll end up at a retailer.

Sam:                                      22:31                     Retail is just like a shop?

Vidyesh:                              22:31                     Yeah.

Sam:                                      22:35                     Has it been straightforward to get into these retailers?

Vidyesh:                              22:39                     It was difficult in the beginning. The market in Kenya is not one where, you know, if you offer something that’s cheaper at a lower quality, sorry, at a better quality it’s not necessarily that they will go for it. So like I was saying to you earlier, our product is the cheapest in the market right now and it’s the best quality. So we’re offering a Mercedes Benz at the price of a Toyota but you know, the market here is a bit different in the sense that they’re skeptical. So it takes time to sort of assure them. And it’s not necessarily that it’s the owners of the businesses that we’re selling to. It’s more the end market user.

Bashil:                                   23:24                     The reason why is because it’s very seasonal. When school starts, parents by socks for their kids for school, so when they go to shop, the process of them going to that shop and it’s really hard for the shopkeeper to explain to them that this is a better quality. It the one that’s at the shop I get at that it’s really difficult for them to explain which one to go for.

Vidyesh:                              23:51                     They’re used to seeing a particular brand, which they’ve seen there for years, and then they’ll just pick up that brand and go with it. The other thing is also, you know we use materials that are a lot nicer, a lot nicer to feel, they’re more comfortable to wear, but like Bashil said, you know, they don’t always have time to showcase or explain that, but equally, you know, when, when they might pick up our socks, again and compare it to someone else’s but it’s not, it’s, it’s the decision. The thought process is in, you know I’d say a very normal one where you know, you see something that’s, it feels nice if cheaper and you’d go for it. So because of that, it was very difficult for us in the beginning. We also did contract manufacturing, which meant we couldn’t launch our brand immediately after we started the business. So we did a contract manufacturing for about a year.

Sam:                                      24:54                     Why did you decide to do that?

Vidyesh:                              24:55                     So for us it was good it was one of those things where anything and everything that we made, we’d sell it to one buyer and they would pick up everything that we made in our factory. So it was a good sort of start, a good boost for us. Of course then we faced our own internal challenges and we said we need to get our brand recognized as well you know, customer concentration, there’s all sorts of risks that come along with them having one big customer. So we wanted to just diversify our risks and we said that it’s now, we’re now ready to sort of go in with our own brand and sort of hit the market hard.

Sam:                                      25:36                     How did your buyer take that?

Vidyesh:                              25:38                     They still buy from us, but they, it’s now just on a purchase order basis as opposed to, yeah.

Bashil:                                   25:45                     Theres a lot of product awareness.

Sam:                                      25:49                     Yeah, I’d say it must be a difficult one because as well, I mean even though the socks are going to be worn by the kids, that’s right. It’s still the parents who are going to making those decisions. I mean, stressful, buying uniforms and stuff for your kids, I imagine is very stressful experience and your side, Oh my God. Just like make this as easy as possible. I’ll have what I had last year, get in, get out. I’m interested in how you try and break that, how you try and break that mold. Like can you go in and do like demos at schools or like what, what’s what are some ways to try and break that?

Vidyesh:                              26:27                     I think, I think that is one of the ways that we could do it or anything is then we are, we’re kind of limited with time and we’d be too stretched out if we went to individual schools trying to sell the product, we will be sharing the products to the students who may not necessarily have a say but with time what’s happened is that the, like I was telling you we’ve leveraged on our network to give that assurance of a very good quality product. They will then turn around and push our product. So the historic way of kind of selling the product without, you know, really taking time to teach or educate the parents on what, what, what’s available. They starting to do that slowly. And then, you know, the first time a parent buys a sock you know, they’ll see that it lasts a lot longer. It’s a lot more comfortable. So then they’ll buy it again. And what we found then is that the more shelf space we were getting, the more people would, they’re getting, they’re warming up to our brand.

Sam:                                      27:41                     Signals?

Vidyesh:                              27:42                     Yeah. It’s still difficult, you know, having said that, you know, even though we’ve got now bigger market share than we had last year, it’s still difficult for us to then fight the big guys because their brands are very strong in the market. They’ve been in the market for 20 years or so. So you know, it’s, there’s always that challenge when a newbie comes in to sort of persuade the consumers to shift but with time and with a bit of education that will change. The thing is, as a, as a new business, we don’t undertake any marketing, you know, adverts or commercials it’s quite expensive. We try and stay as lean as possible. So we’re just letting the brand and the quality speak for itself but yeah, it’s like Bashil said people are accepting it. It’s getting better and we’re seeing that and it’s, it’s, it’s getting better.

Bashil:                                   28:42                     The main season in December, January, so about, I think two, three seasons.

Sam:                                      28:46                     School socks were you’re sort of first thing, do you think you’ll soon start going into other types of socks?

Vidyesh:                              28:58                     Yeah, I mean we’re definitely gonna try it wouldn’t be a big market for us.

Sam:                                      29:03                     What would it be?

Vidyesh:                              29:05                     So socks for the mass market. So for if you go to like you know, high end retail stores, we might have a couple of very high quality socks in there, but we won’t be able to manufacture something that will be bought by the mass market, you know, anyone that needs socks, we’ll be like, Oh, we’re going to buy H and F socks. No. That’s going to be very difficult, purely just from a price point of view you know, even a difference of 10 shillings for a buyer here is, it’s a game changer.

Sam:                                      29:38                     Is the plan to sort of do do socks until we’ve nailed it and then go into other product lines or we begin to look at other product lines before you’ve…

Vidyesh:                              29:49                     Yeah, we’ve actually already started looking at other lines. It’s just the thing is we don’t want to jump too quickly. We want to make sure that this business is doing as well as it can and then it’s kind of becomes a cash cow for other businesses that we invest in.

Sam:                                      30:08                     What’s you don’t have to disclose, but you, how do you think about what you do next? Do you think about growing trends in fashion or do you think about the types of products that people buy as incomes rise or similarities in the production process to socks?

Vidyesh:                              30:26                     Not really, actually. It’s just for what the market requires.

Sam:                                      30:30                     How do you gauge that?

Vidyesh:                              30:32                     Just understanding the market. So market research, basically speaking to people, how they’re spending the monies. I mean simple things. Just like us last week I was speaking to a couple of guys who were painting a property ours and yeah. It’s like asking them, you know, where do you spend most of your money and how much do you end up saving? And from what you save, what are you spending your money on? So just understanding the, what striving consumerism or and if there’s a better word to use, yeah.

Sam:                                      31:00                     Aspirational?

Vidyesh:                              31:00                     Yeah.

Sam:                                      31:03                     Okay. So you basically based on that, we think that…

Vidyesh:                              31:06                     If there’s a gap in the market somewhere where we can do something a little bit better than what is being offered, then that’s something that we would, yeah.

Sam:                                      31:14                     Okay. In terms of what makes a better sock, like what are the, what are the characteristics you mentioned, you mentioned raw materials.

Vidyesh:                              31:24                     Yeah. So I mean when you wear socks, you, for anyone that wear socks, you know, you don’t want to wear socks that get sweaty. Yeah. You want something like, yeah. And it’s gonna last, no marks on your legs.

Sam:                                      31:39                     I hate marks on my legs, yeah. How many sort of distinct processes are there to go from raw material in to socks out, is it like first you do this then this then this then you’ve got sock, like how many of those things are there?

Bashil:                                   32:00                     So first the machine spins the yarn to produce the product.

Vidyesh:                              32:05                     Knitting.

Vidyesh:                              32:07                     And, and it goes, so, Oh yeah, it’s all open. Then it gets linked with another machine, after that it gets checked, if there’s any coils or like if it’s perfect, the yarn is perfect. And after that, it gets boarded and steamed and after that it gets packed.

Sam:                                      32:32                     It gets steamed?

Bashil:                                   32:32                     Yeah, for the shape.

Sam:                                      32:36                     Oh, okay. So the same idea.

Vidyesh:                              32:37                     So the fibers in the socks then basically you get sort of glued together and this improves their elasticity and also the life of a sock. So it doesn’t loose shape very quickly. So yeah, there’s a…

Bashil:                                   32:54                     Many companies have this process.

Sam:                                      32:56                     Many companies do you have that process? And that means that they are…

Vidyesh:                              33:06                     Say cheaper.

Sam:                                      33:07                     Elastic. And what is the raw material? Is it wool?

Vidyesh:                              33:11                     No. So you’ve gotten many different types of raw materials. You can have, wool is one that you couldn’t use. You can use cotton, you can use nylons, you can use polyesters, you know, you can use acrylic yarns. So there’s a lot of synthetic yarns, which are the polyesters, nylons, acrylics, and then you’ve got the natural ones, which are cottons and you know, you’ve got bamboo and you’ve got…

Sam:                                      33:37                     Bamboo?

Vidyesh:                              33:38                     Yeah.

Bashil:                                   33:42                     It’s like really, it’s one of the best right now.

Vidyesh:                              33:42                     Yeah. So we are, we’ve actually just trialed bamboo socks and we’ve got some really nice socks that we made for the two of us with bamboo yarn.

Bashil:                                   33:50                     It’s expensive.

Vidyesh:                              33:52                     But it’s also more…

Bashil:                                   33:53                     Really good quality.

Sam:                                      33:54                     So they just sort of take, cause bamboo’s quite hard, do they sort of soften down?

Vidyesh:                              34:01                     Yeah, yeah. Yeah. So they break down they pulp it up and then they from fibers, then they spin it into yarns. The thing is with bamboo, you get very short fibers. Whereas like with cotton you can have really long fibers. So harder to make bamboo socks. It’s not necessarily the shortest, but it’s just it’s a harder yarn to make.

Sam:                                      34:25                     Okay.

Vidyesh:                              34:25                     Yeah.

Sam:                                      34:26                     And what are the advantages of bamboo socks?

Vidyesh:                              34:27                     So, you know, like the world is becoming more and more environmentally conscious. So for example, cotton requires more water to cultivate. So the same amount of cotton if you take a kilo of cotton yarn and kilo of bamboo yarn, bamboo yarn requires less land and less water.

Sam:                                      34:48                     Okay.

Vidyesh:                              34:50                     Yeah.

Sam:                                      34:50                     In terms of the, the wearer,

Vidyesh:                              34:54                     It’s just like cotton, if not better. Yeah. You can’t really tell like, if you give it to someone.

Bashil:                                   35:00                     It absorbs sweat much better.

Vidyesh:                              35:00                     Yeah.

Bashil:                                   35:00                     It’s breathable.

Vidyesh:                              35:04                     Yeah. If I gave you a pair of socks between cotton and bamboo and I didn’t tell you what was what, I don’t think you’d be able to tell the difference. But they both nice. They both feel good on the feet breathable, comfortable. One’s obviously more environmentally friendly than the other.

Sam:                                      35:22                     And so, just a few more questions, if that’s alright. That’s interesting, since you, so you said you’ve been going for about two and a half years, what have been some of the biggest insights you’ve, you’ve had since starting?

Vidyesh:                              35:37                     Wow.

Bashil:                                   35:38                     When we got feedback compared to our competitors, they tell us that the customers like, now just want to buy our product. It’s like a good feeling.

Sam:                                      35:50                     Yeah.

Vidyesh:                              35:51                     Yeah, I think, I think like again, with the insights, you can break it down into two parts. Yeah, you can for us as a learning experience and you can, I can segregate that into a silo of doing business better. And then also on the other side where we get customer feedback. And so like Bashil said, we’ve got very good product and everyone buys it, Will buy it again and keep buying it. And there’s not a single person that’s ever given us negative feedback on our socks not one that we can recall, like that’s said that to us directly and that’s why we’ve been able to grow year on year. And then on the other side it’s learning about the business and learning about the economy. Cause like, you know, the two of us, we had no experience of running a business in Kenya and so that was a lot of fun. It can get very frustrating at times as well. So I would say that, you know, we discussed well like being in Rwanda, being in Tanzania and being in Uganda, being in Kenya. And if you look at the sort of data which is available on the internet, you know, Rwanda is easier to do business in than Kenya and it’s not necessarily that Kenya is a bad place to do business. It’s just, it has its own challenges. So for us, like there was a lot of learning, you know, how to deal with the bureaucracy, how to get the best out of our people of all of our staff, you know, how to motivate them better.

Sam:                                      37:22                     I mean, have you found any interesting ways to motivate people?

Vidyesh:                              37:25                     I think for us the main thing is just treat them that the way you want to be treated. I think we just keep them happy. We keep them you know, when there’s something good we can talk about it.

Bashil:                                   37:40                     Of course add some incentives like once they hit theior targets, they get their bonuses.

Sam:                                      37:43                     Okay. And so would you say when something’s good it’s in like we nailed production today, there were no difects.

Vidyesh:                              37:48                     Yeah. I mean, you know, the more you talk about something that goes well, then everyone just naturally feels better about it. They feel motivated.

Sam:                                      37:58                     And in terms of the incentives, that’s what are some of the targets or metrics that you…

Vidyesh:                              38:04                     So we’ve got targets that they have to hit every day for each department, you know, packing, plating trimming, linkingknitting itself. So, you know, it can be as simple as giving them a kilo of flour. So either as simple as that.

Sam:                                      38:26                     And is that explicitly made known as in if you beat your target today, you’re getting a kilo of ‘unga.’

Vidyesh:                              38:33                     It’s not on a daily basis, but yeah, we, they are aware of it. The thing is…

Bashil:                                   38:39                     You can’t just do it for one day, you know, if they hit their targets at least 80% of the month, then they’ll be rewarded with the ‘unga’ or bonuses.

Vidyesh:                              38:53                     Yeah. They get bonuses, end of month bonuses, all of that sort of stuff.

Sam:                                      38:58                     So that sort of gets them.

Vidyesh:                              39:00                     Yeah. Yeah.

Sam:                                      39:01                     Has there been anything that surprised you in running the business?

Vidyesh:                              39:05                     I think for us it was just more how we managed to get into the market and like we’ve hit it really hard and then, you know, we were bullied when we started, you know, there were people who discouraged us from starting, like, why you’re putting up a socks factory. You know, you won’t know. You don’t know what you’re doing you, you won’t be able to last. You know, this is not a job for you guys, but all of those things. And it happens, you know, even with our customers, you know, at one point they said, you know, don’t buy these guys’ socks but we overcame that and, you know, we hit that, we passed that hurdle. And I think for us that was quite nice. The others, I think the other positives, I mean, there’s a lot of course, like the growing the business, you know, seeing our turnover grow year on year that was naturally enough forecasts anyway, but you know, to see that as a tangible result and that’s also quite satisfying.

Sam:                                      39:59                     And if we were to come back, let’s say that again a couple of years time, well, what do you think H and F would be looking like then?

Vidyesh:                              40:05                     So, yeah. Socks. We want to be the market leaders in East Africa we’re kind of making big strides in…

Sam:                                      40:11                     Just how many songs do you think is, is possible to sell in a year in East Africa?

Vidyesh:                              40:17                     In East Africa? I mean, I wouldn’t be able to give you a…

Sam:                                      40:19                     Maybe 13 million pairs.

Vidyesh:                              40:22                     I guess to put this into perspective, right Primal across the whole of Europe sells, there’s a number that I read about 200 million pairs of socks.

Sam:                                      40:37                     200 million across Europe, okay. So imagine, I’m trying to think.

Vidyesh:                              40:42                     So that’s one company.

Sam:                                      40:43                     Yeah. How many pairs of socks do you buy a year?

Vidyesh:                              40:46                     So on average people will have like 10 to 15, well, I used to buy 10 to 15 pairs of socks when I used to live in the UK and that generally lasts you. But yeah.

Sam:                                      40:56                     And then there’s, what the general population?

Vidyesh:                              40:58                     So in Kenya there’s 44 million people. 48 million.

Sam:                                      41:01                     So across the region, you’ve got 150 million?

Vidyesh:                              41:05                     Across the region. Yeah, probably about a hundred million. Ethiopia, I mean, you take that Ethiopia, so you just look at Uganda, Tanzania.

Sam:                                      41:12                     Kenya and Rwanda.

Vidyesh:                              41:14                     Yeah. Yeah. Easily Over a hundred million I’d say. But again, you have to remember that not everyone wears socks. Yeah. So you’ve got to, it’s different market segments that you need to then kind of break down into.

Sam:                                      41:33                     Is this the sort of thing where people buy, they buy it fairly regularly so everyone buys more than that on buys. So it’s potentially hundreds of millions of pairs of socks. Obviously you kind of reduce that down, but it’s not like you’re selling some niche products which people are going to buy once and they never buy it. I can see how if you have that brand, it’s something which gets…

Vidyesh:                              41:55                     It’s something that will keep growing. I think for us more it’s like we want to really get into the export market getting into like shops in the UK, Europe, US, Australia. For us that would be great. I think that’s where now we can really hit volumes. I mean, we can do it in East Africa but it’ll, it’ll be a lot more difficult than…

Sam:                                      42:18                     Yeah. If you’ve got your export markets so cool. And people who are listening, how can they learn more about H and F and sort of the journey that you’re on?

Vidyesh:                              42:28                     Okay. We was just in the process of developing a website but coming by social Kenya. Yeah, we’ll have a website up in a couple of months. I mean, I’ll share that with you at we don’t really, like I said we don’t really focus heavily on marketing but we relying on just brand awareness and the customer loyalty. Now the customers that we have they’re going to keep growing, but yet in with time we’re going to invest in, you know, social media marketing, have our website up. Just right now our market is quite small in terms of the specific market that we’re focusing on and they don’t necessarily use the avenues that we’re discussing. Where in the future we will have these things. Yeah.

Sam:                                      43:18                     Cool. Well, Vidyesh, Bashil, thanks so much.

Vidyesh:                              43:21                     Yeah, thanks.


Cracking the nut industry: how Kenya adopted the world’s most valuable nut, with Charles Muigai


Do you know what the world’s most expensive nut is?

It’s the macadamia nut.

Similar in shape and colour to a chickpea, but up to twice the size, it’s originally from Australia and is now grown in several tropical locations around the world.

In Kenya, the first trees were grafted and planted in the 1970s with a few disparate growers and aggregators each individually trying to generate a market.

Ten years ago Charles Muigai founded Nutpak an industry body for nut processors in Kenya.

They deal with peanuts and cashews too, but the real business in macadamias where they represent Kenyan producers both at a national government level and internationally.

Charles and I chat about all angles of how this industry is growing in Kenya including the minimum “farm gate” price set for macadamia farmers, the process by which they are packaged and ultimately exported, and lessons other burgeoning industries can take for their role on global stage.


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Sam:                                      00:08                     Intro

Sam:                                      01:58                     Cool. So we’re here today with Charles from nut pack, Charles welcome to the show.

Charles:                                02:03                     Nice. Thank you Sam.

Sam:                                      02:06                     And so to get started, can you tell us a bit about you and a bit about Nut Pak?

Charles:                                02:10                     My name is Charles Muigai. I’m the chief executive officer of Nut processors association of Kenya. The association that is the umbrella body for industries that are processing macadamia, cashew peanuts and also adding value to the same for the end market. The industry is as old as, say 45 years old. But the initial years it was a more of a monopolistic industry. But towards the year 2005 more players came into place and the industry from then started to expand. By 2009, there were four processors and based on the competition and the competitive lobby of the industry, there was need to consolidate. And this is when, now we founded Nut Pak or nut processing association of Kenya, in 2009. And the main thing was to create a platform that one will back, will support production and make the industry more sustainable in terms of what it produces and through our smallholder farmers and also to interact globally. So it was now back and forward from production to the marketing and also placing the Kenyan product at the global level as a competitive product that can compete alongside South African or Australia. The major driver of the industry in Kenya is macadamia, however, peanuts and cashew nuts are still allied to the same because most of these processes are composite and, they do these three nuts. So this platform has, over the years, engaged the government about policy influence also advocacy. And in 2009, we managed to lobby the government to put a ban on export of unprocessed macadamia nuts and cashew nuts. And that has seen the industry grow five fold because at that point the industry was producing around 10,000 metric tons of macadamia. But right now we are towards 45 to 50,000 metric tons. So, and the plantings across the small holder farmers in Kenya is growing by leaps, then it’s growing very fast.

Sam:                                      04:48                     Very good.

Charles:                                04:49                     So what you can say, that the consolidation of the industry and this platform has done a lot to bring the industry to the limelight because hitherto the registration of this organization, not to many people knew about macadamia. Right now as we speak, we have 27 licensed processors. So you can see from 2009 from 4 to 27, that tells you a story that many people came to understand the industry, found it attractive. They have come in. But now the next challenge is how to create a sustainable industry.

Sam:                                      05:25                     Yeah. So we’ll perhaps go into some of those a bit later in the interview. So just to be clear, Nut pack is a, like an industry body like you said. Yeah. So you basically represents the process but not processes that exist. And whereas before it might be difficult for one individual company to go and lobby the government, when they, when they come as part of a group, you then have much more power.

Charles:                                05:49                     Have legitimacy and the voice.

Sam:                                      05:51                     Exactly. Is it, out of interest, is your, is your background in nuts?

Charles:                                05:56                     No.

Sam:                                      05:56                     Alright. How did you, how did you come into it?

Charles:                                05:59                     I would call myself an agribusiness you know, consultant.

Sam:                                      06:04                     Okay. Alright.

Charles:                                06:04                     I’m an exert in trade and also agribusiness.

Sam:                                      06:07                     Sure.

Charles:                                06:07                     So, and I think that at that point, that’s where I came to organize a workshop for the industry. And…

Sam:                                      06:14                     Why did you choose nuts?

Charles:                                06:17                     Well, it just happened by chance. I was facilitating a workshop on sustainability of the industry, sponsored by their ministry of agriculture as a consultant. And then the thing we discussed then was that why should we look at it as a hostile competition arena? But I said it can be complimentary again. So it’s a question of how you look at it. And I think the wisdom that revealed then was that we can bake a bigger cake and then we would get a healthy slice of it.

Sam:                                      06:47                     Yeah.

Charles :                               06:47                     So and that is how, now they, want called the focys of NUT pak is, create a more sustainable industry, stimulate more plantings, stimulate more production, and then everybody gets a share of a sizable amount of produce.

Sam:                                      07:05                     So basically you said you should do this. And they said, go on the Charles, you do.

Charles:                                07:12                     And here I am, 10 years down the line, I’m still doing it.

Sam:                                      07:14                     Very good. Okay. So for people who are perhaps unaware could you give like just a brief overview of, of like the Kenyan, Kenya’s’s history with nuts. So you mentioned macadamia cashew and peanuts. So those are the three. Historically, those always grown here or have they been a recent recently like…

Charles :                               07:35                     Macadamia was first introduced in Kenya by an Australian, Bob Harris early seventies, in Thika.

Sam:                                      07:46                     Thika is like an hour from Nairobi?

Charles:                                07:48                     Yes, an hour from Nairobi. And from there the first plantings were not commercial but eventually the commercial production started, by around 1974. That’s when the fast company, the Kenya nut company started processing macadamia.

Sam:                                      08:05                     Okay. And what does it look like? So nuts are grown on trees or are they not plants, is they, how are they when you say that the first macadamia nut were brought here…

Charles :                               08:17                     It was brought as a seed, a seed nut.

Sam:                                      08:19                     Brought as a seed, and then…

Charles:                                08:20                     Then it was planted. And then multiplication through propagation and grafting, that now gives, multiplies the seedlings. So macadamia is a tree.

Sam:                                      08:32                     A tree, Okay.

Charles:                                08:33                     Right.

Sam:                                      08:33                     Is it a big tree?

Charles:                                08:34                     It’s a big tree yes. Is a sizeable tree. So medium, medium sized tree.

Sam:                                      08:38                     Okay.

Charles:                                08:38                     Yeah. That can produce even up to 50, 60, 70 kilos depending on how you feed the tree. Is a tree that has a lot of longevity.

Sam:                                      08:47                     Okay.

Charles:                                08:48                     In terms of the tree can span 50, 60 years still in production. So once you farm the siblings, it takes around five, six years for optimal production.

Sam:                                      08:58                     Okay.

Charles:                                08:58                     You’ll get enough produce from the sixth, seventh, eighth, ninth, 10 year, all the way to maybe another 50 years the tree will still productive.

Sam:                                      09:05                     Okay. So the first macadamia trees were planted when Bob, was it Bob Harris, when he came, they are still producing.

Charles:                                09:14                     They’re still producing.

Sam:                                      09:15                     Yes.

Charles:                                09:15                     Yes. And they’re still okay. And what’s sort of, and then eventually the tree will die?

Charles:                                09:19                     Eventually the tree will die, yes as…

Sam:                                      09:20                     As altruistic.

Charles:                                09:23                     Yeah.

Sam:                                      09:24                     Okay. And so what does it with the macadamia nuts, is it like a pod? How does, I’m trying to visualize whether or not it’s all on the tree.

Charles:                                09:32                     No, they’re not. It’s a fruit. Let’s say it’s a fruit.

Sam:                                      09:35                     So basically, so you’ve got a macadamia tree. It has these, so imagine that it’s a fruit that’s growing on it. And then within that fruit, when you crack it open, they’re really, they’re nuts. Similar thing with cashews?

Charles:                                09:45                     Yes, similar thing with cashews. Cashew is an apple, is an apple like, but with an offshoot of a nut also that you you crack again to get the kind of insight. Yeah.

Sam:                                      10:01                     Yes. And then what do you do with the Apple?

Charles :                               10:03                     Well, in other places in the world, especially West Africa, I have seen they’re making apple, you know, cashew apple juice.

Sam:                                      10:10                     Cashew apple juice?

Charles:                                10:11                     Yes. Making that they are also making cashew wine…

Sam:                                      10:15                     Really?

Charles:                                10:15                     From the apple, yes. So…

Sam:                                      10:17                     Do you do that here?

Charles:                                10:18                     No, we don’t do it here.

Sam:                                      10:19                     Why not?

Charles:                                10:20                     We are not doing it because we don’t produce enough cashew. There are challenges that are particular to where it grows, especially at the costs. They think…

Sam:                                      10:29                     Cashews grow at the coast?

Charles:                                10:29                     Yes, majorly grows at the coast. Although we have some belts in the Eastern province in Tharaka Nithi county where we also growing some cashew nuts.

Sam:                                      10:40                     What is a reason why they grew at the coast?

Charles :                               10:43                     I would say because of the Sandy soil. It’s also a coast base crop, I think that’s the ecological zone for it? Yes. So are there other parts in East Africa or Africa where…

Sam:                                      10:54                     It’s still growing at the coastline?

Charles:                                10:56                     If you come from Kenya, Tanzania all the way to Mozambique, you will find, yes. If you go to the coast of West Africa from Cameroon there you will goal the way to Senegal, are not native to…

Sam:                                      11:16                     So macadamia is not native to Kenya. It’s native to Australia.

Charles:                                11:19                     Australia.

Sam:                                      11:20                     So they’ve come, are there any…

Charles:                                11:21                     And Kenya is a first African country to start macadamia production.

Sam:                                      11:26                     Are there others that have now followed.

Charles:                                11:28                     Then South Africa followed and then other smaller countries. Mozambique, Malawi, Zambia, Zimbabwe, Rwanda have now started and Uganda is coming up also.

Sam:                                      11:42                     Yeah.

Charles:                                11:42                     But Kenya is the third major producer of macadamia in the world.

Sam:                                      11:48                     So Australia…

Charles:                                11:48                     Australia number one, South Africa number two or thereabout, Kenya number three. Then we have other countries like Guatemala, we have Brazil, we have Vietnam. They also grow macadamia.

Sam:                                      12:00                     And so they’ve all taken this, this seed from Australia and taking it and began their own production in other parts

Charles:                                12:08                     In other parts of the world, yes. Yes.

Sam:                                      12:10                     Okay. So it takes about, so from the, it’s quite interesting. So 1970, this is when the first macadamia nut came and since then it’s been sort of flourishing who, who is growing the macadamia nuts?

Charles :                               12:24                     Right Macadamia in Kenya as opposed to the rest of the world, especially the big two South Africa and Australia. They grew macadamia through plantation, large scale plantations. But in Kenya we are majorly on smallholder scale and these small holders, you’re talking of a farmer with 10 20 trees, whoever is doing it more is maybe putting one Hector or two hectares, but majority you you’ll see it’s a number of trees that is a main denominator here as in we have 10, 50, 30, 40 or something like that.

Sam:                                      13:02                     Yeah.

Charles:                                13:03                     And macadamia grows within the central Mount Kenya region.

Sam:                                      13:06                     Okay.

Charles:                                13:07                     That is the home of macadamia.

Sam:                                      13:09                     And so what happens, so the, the farmer, smallholder farmer, they will buy some macadamia seedlings and develop a tree and then five years later it begins to…

Charles :                               13:22                     Yeah. What happens is that most of the processors in their own interests propagate seedlings.

Sam:                                      13:28                     Okay. So the process. Got it, so it’s not the farmer that starts the process. It starts the cycle…

Charles :                               13:35                     It is the processor who propagates the seedlings and then they avail the seedlings to the farmer at some price. Then the farmers, now plant the trees take care of the trees. Then the processors of take the produce from the farms process package.

Sam:                                      13:51                     Yeah.

Charles:                                13:52                     Export.

Sam:                                      13:52                     Export.

Charles:                                13:53                     Yes. The main export destinations being Europe and the US.

Sam:                                      13:58                     Got it.

Charles:                                13:59                     Though, also, Japan is also a buyer.

Sam:                                      14:01                     Really?

Charles:                                14:01                     Yes.

Sam:                                      14:02                     Japan. Is that a recent thing? Japan wanting to buy macadamia nuts?

Charles :                               14:07                     Yes, it’s a traditional buyer of macadamia since macadamia processing started in Kenya.

Sam:                                      14:11                     Okay.

Charles:                                14:11                     Yeah.

Sam:                                      14:12                     Okay, so the main agents to sort of the main person to get this thing going is macadamia nut processing plant. Nobody said, right, we’re going to set us up and then right. In order for us to process, we need to get some macadamia so we’re going to go out into the local community and give people these trees to them.

Charles:                                14:33                     Yeah. I would call macadamia processors the epicenter or the business as in the business both ways oscillates or revolves around them. In terms of, as I said, the production, they reach down or upstream, whichever you want to call it. And they go down, shoot to the market after they process. So they are in between.

Sam:                                      14:56                     Got it.

Charles:                                14:56                     Meaning that there needs to be, and this is what the association is up for, to make sure that the farmer and the processor are tied to the hip. They must collaborate because the processor doesn’t have his own orchard. He’s relying on what the smallholder farmers producing. The smallholder farmer doesn’t have his factory to process so the two must work together. Right. So it’s a partnership of win-win and that is why now the processors find it in their interest to propagate the seedlings, supply the farmers, create some intimacy with the farmer to make sure that the farmer is supported on production and best practices. And then the processor will off take the produce right from the farmer through different buying stations across the farmlands. And then after that they will bring to the factory process and then forward the processed material now to the end markets in the US Europe or wherever.

Sam:                                      15:59                     Very good. Okay. What does, in what state do the processes by the macadamia nuts, as in are they still shelled? They still in their shell?

Charles:                                16:11                     Yes. They macadamia. Macadamia is ideally supposed to drop on the ground when it’s ready for harvesting.

Sam:                                      16:17                     Okay.

Charles:                                16:18                     Yes.

Sam:                                      16:18                     The farmer just goes around and collects.

Charles:                                16:20                     Yes. They’re supposed to drop.

Sam:                                      16:21                     How many seasons does it have exactly once a year? Does it happen all year around?

Charles:                                16:26                     There are trees that are all year round, but there is a peak and the peak season for macadamia is between April, June, July and August. Then we have a short crop. November, December. Yes. So, but basically what happens is that the farmers now will consolidate the produce, they will remove the outer casing. We call the, the outer casing, the green outer casing, so that now they, they, they can now produce the nut itself, right. Once they get the nut, the nut itself is what the processor will buy.

Sam:                                      17:03                     So the farmer will remove the outer pack. The outer casing?

Charles:                                17:06                     Yes.

Sam:                                      17:07                     Okay. And then take a, take a bag and go to the processor.

Charles:                                17:12                     They will go to different buying centers that are located within the villages.

Sam:                                      17:19                     Okay.

Charles:                                17:19                     Who watch are sponsored by respective buying companies.

Sam:                                      17:24                     The smallholder farmers, they can choose which processor…

Charles:                                17:27                     Which processor to sell to, they’re at liberty to sell to any, they are not bound by one. However, they are processors who have contract farming arrangements with particular farmers, especially those farmers who are producing organic macadamia. So they have a pact between the two.

Sam:                                      17:48                     And if they were to do contract farming, the processor would say I promised so long as they meet certain quality,

Charles:                                17:55                     Yes,

Sam:                                      17:55                     I promise…

Charles:                                17:57                     They’ll put the parameters in.

Sam:                                      17:58                     Yeah.

Charles:                                17:59                     And then they’ll put the price index for it and then the processor will go for the nuts probably the nearest point. Where the farmer is.

Sam:                                      18:10                     Okay roughly how much does it cost for, let’s say, kilo of unprocessed macadamia?

Charles :                               18:17                     We call it farm-gate price for the clients, and farm-gate price for macadamia in Kenya is, I think the closing price for the season 2018, 2019 was $2

Sam:                                      18:32                     $2? So $2 per kilogram?

Charles:                                18:35                     $2 Per kilogram.

Sam:                                      18:35                     Is the Farm-gate price. Okay. So the, the processes there, if they want to buy a hundred kilograms, they’ll pay $200 and they got up cooked

Charles :                               18:47                     And that makes macadamia the most lucrative crop in this country. Yes.

Sam:                                      18:52                     It’s a pair of kg, basis,

Charles:                                18:54                     On per Kg business, is the most lucrative.

Sam:                                      18:56                     And why. Is that? Just because it’s…

Charles :                               18:59                     It’s just purely an export. Next port. It’s 97% export. Okay. So what I can tell you is that the global production of macadamia, is under 220,000 metric tones.

Sam:                                      19:12                     Okay.

Charles:                                19:13                     Yeah. And it represents 2% to 3% of the tree nut or the tree nut family.

Sam:                                      19:24                     What do you mean the tree nut family them.

Charles:                                19:25                     Any nut that grows on the tree cashew included, peanutnut, walnut yeah.

Charles:                                19:32                     So it’s 2%, 3%. Okay. So the farm is Ivanka is $2. What are the main things that the processor is doing?

Charles:                                19:41                     The main thing is that because the farmers don’t have that technology to, to preserve macadamia at the farm level because macadamia is sensitive, you need to dehydrate.

Sam:                                      19:53                     Okay.

Charles:                                19:54                     To remove moisture from it. So the first of the first thing that we need to do is to remove the moisture. Most of the times that farmers will give their produce at 20 to 30% moisture content and the processor has to drive that down to 1.5.

Sam:                                      20:09                     And how do do that?

Charles:                                20:11                     They do it through dryers , there are dryers that are blowing out. I could be the first year with a fund years on boilers and all that to kind of expel the excess moisture in the nut to around 1.5.

Sam:                                      20:23                     But what happens then? So they’ve be en dried out. What’s the next step.

Charles:                                20:26                     Then? The next step is a cracking crack.

Sam:                                      20:30                     Cracking?

Charles:                                20:30                     Cracking. Yes. Cracking is now. Shelling, removing moving the shell.

Sam:                                      20:34                     Okay, so you drive them whilst they’re still in their shell.

Charles:                                20:36                     Yes. You dry while the’re still in shell.

Sam:                                      20:39                     I would’ve thought it makes sense to do it.

Charles :                               20:42                     No, no, no. It will change its biochemistry if you are to break it and then you’ll be roasting it and the roasting is the last stage.

Sam:                                      20:49                     Okay. I’m getting ahead of myself. Alright, so then you crack the shell.

Charles:                                20:54                     Yes. You crack the shell and then from there you start the grading process. Yes. Remember you have bought from everywhere, macadamia is graded according to sizes, they are like seven or so grades from stair zero to stair seven.

Sam:                                      21:13                     Okay.

Charles:                                21:13                     Yeah. Well that is Kenyan, but the other origins that have different classification for it.

Sam:                                      21:19                     And the basic thing they’re looking for is like size.

Charles:                                21:23                     Size is the basic premium size.

Sam:                                      21:26                     The bigger, the more expensive?

Charles:                                21:27                     The bigger, the more expensive.

Sam:                                      21:28                     Okay.

Charles:                                21:29                     Yeah.

Sam:                                      21:29                     So you get graded and then what happens? So then does that mean there’s like the all the grade seven going one bucket, all the grades…

Charles:                                21:36                     No. You see different customers require different sizes for different purposes. For instance, the small that pieces and all that may be required to go for the ingredients market. Well you want to make cakes using macadamia, you want to make cookies using macadamia as an ingredient?

Sam:                                      21:51                     Ingredients. Yes. Sorry. So they, yeah, they don’t care if it’s a really big executive, just what…

Charles:                                21:57                     You see now for the snacking sector of the market, you want to have that good appealing big nut.

Sam:                                      22:06                     And then they get roasted or was there…

Charles:                                22:08                     It gets roasted, salted and whatever people want to do with it up there.

Sam:                                      22:13                     This all happens in the same?

Charles:                                22:14                     No, it doesn’t happen basically in one factory because some of the buyers in the US would want to roast it near the end market so it will be sent to the US or the Europe in that intermediate form.

Sam:                                      22:26                     At which stage do they normally get sent off?

Charles:                                22:29                     At the kernel, we call it the kernel, kernel meaning you have removed the shell.

Sam:                                      22:36                     Okay.

Charles:                                22:36                     And you have graded based on size and then you can send it as such. Then it will go on the final step in the end market. We are by now the final value addition will be done.

Sam:                                      22:47                     Some so…

Charles:                                22:50                     But some are done here and that’s why you find their products in the supermarket, the finish products that you can, ready to eat.

Sam:                                      22:56                     Do you export to some countries when you have rest of it?

Charles:                                22:59                     Yes, there are some people who are sending their brands to Europe.

Sam:                                      23:04                     Okay.

Charles:                                23:04                     Yeah.

Sam:                                      23:05                     So that means that, so you, you basically said, you know, here it is. Did you package it for those European…

Charles:                                23:13                     Yes. You package for them. You will find them also in the airlines. You find British airways is using Kenyan macadamia product, go to Kenya airways, you’ll find they’re using Kenyan macadamia products.

Sam:                                      23:26                     But the branding is…

Charles:                                23:28                     Yes. The branding is, is a joint branding between the airline and the local company.

Sam:                                      23:33                     Yeah.

Charles:                                23:33                     Yeah.

Sam:                                      23:34                     Okay. There were four, there are now 27.

Charles:                                23:36                     27 players right now and counting.

Sam:                                      23:40                     And counting. Alright. Have you got some new ones?

Charles:                                23:42                     Well people get into the business every year. New people. We definitely have to get excited.

Sam:                                      23:48                     I mean, how attractive is it as a business, like what’s the sort of rough startup capital you’ll need? What are the sort of returns?

Charles:                                23:58                     I think that the major challenge to new entrants is what I can call “barrier to entry” because you have to buy the produce from farmers upfront.

Sam:                                      24:13                     Okay.

Charles:                                24:14                     You either have the cash or you don’t.

Sam:                                      24:16                     Yeah. And typically in order to make it, in order to do it properly, how many kilograms do you think you’re going to need to buy?

Charles :                               24:23                     I would say you will be sustainable, you’ll breakeven at around 300.

Sam:                                      24:29                     300 tons?

Charles:                                24:29                     300 tones.

Sam:                                      24:31                     Okay, so you need, you need to pay $600 of raw material if it’s 300?

Charles:                                24:36                     So what we’re saying is that you need 300 tons. The metric tons.

Sam:                                      24:40                     Tons not Not kilograms?

Charles:                                24:41                     No.

Sam:                                      24:42                     So three, so 300 times a thousand times two. Alright. So you need one that’s about 600 600 thousands?

Charles:                                24:50                     Yeah.

Sam:                                      24:50                     Six. Right? So in order to be valued…

Charles:                                24:52                     US dollars.

Sam:                                      24:54                     $600,000 dollars, that is what you call a barrier to entry. Yeah. Okay, so…

Charles:                                24:58                     You can see the figure is prohibitive.

Sam:                                      25:00                     Yes.

Charles:                                25:01                     Yeah.

Sam:                                      25:02                     And then how much would the equipment cost?

Charles:                                25:05                     Depending, you can go manual and crack with a ball pain hammer, which is now labour intensive again, that pushes the cost of labour high and they also, there is food handling and all that where you can go now for roller crackers that now are mechanical that you will now crack, crack bigger volumes at a time, you know, bigger batches at a time. It depends on the size that you’re buying, but I think at the processing point you will need to probably put $20,000.

Sam:                                      25:43                     Okay,

Charles:                                25:43                     $20,000. Maybe the infrastructure you need at the processes stage.

Sam:                                      25:49                     Okay.

Charles:                                25:49                     You will need to put down…

Sam:                                      25:50                     So looking at roughly $620,000 to get going, but what, what’s the upside? So how, let’s say you’ve got 300 tons, let’s say, so a kilogram costs $2 at the farm-gates. Once it’s processed, how much, how much might you be selling?

Charles:                                26:09                     You are starting to understand for you to process one kilo, you need 4 to 5 kilos.

Sam:                                      26:16                     Really, Oh there’s that much?

Charles:                                26:17                     Yes. There’s that difference because you see the shell is heavy also and you don’t need the shell. You need the inner.

Sam:                                      26:22                     Okay.

Charles:                                26:22                     Yeah. So it’s not kilo to kilo.

Sam:                                      26:25                     Okay.

Charles:                                26:25                     There’s a ratio between now the kernel you get that is now the consumable part and now the fruit, the farmer sales to the processor. And then remember you bought this macadamia at 20 to 30% moisture content. You’re going to dehydrate that to 1.5. So it’s not, as in corresponding, there are several processes that are here and that’s what I’m saying, a factor of four.

Sam:                                      26:52                     Okay, so…

Charles:                                26:53                     One to four.

Sam:                                      26:54                     So for every four kilograms of macadamia.

Charles:                                26:56                     In shells, in not form will yield.

Sam:                                      27:02                     Okay.

Charles:                                27:02                     Yes.

Sam:                                      27:03                     So when you say they need to buy 300 tons, they need to get 300 pounds…

Charles:                                27:07                     Divided by four.

Sam:                                      27:09                     Okay. So they’re going to end up with 75 tons making. So, okay. So how much does a kilogram of processed.

Charles:                                27:20                     It depends again on a good and a bad year, but I could put and again the grades that I could probably put per kilo at around $15.

Sam:                                      27:35                     Okay, so four to one. So basically you’re saying you need to pay roughly $8 at the farm-gate to gets $15. Okay. Is this what most companies, most procssors are doing? They’re basically playing the volume game.

Charles:                                27:52                     It’s a volume game. If you’ve seen the minimum is like 300 tones, what’s the maximum capacity that a processor has?

Charles:                                28:01                     The big processors are doing a 8,000,

Charles:                                28:05                     8,000 okay.

Charles:                                28:06                     8,000 metric tons. But then you will find that people who are doing 1000, 2000, 3000, 4,000, but the largest in Kenya is doing around 8,000.

Sam:                                      28:17                     You said that most of is going to exports.

Charles:                                28:21                     Yes, it’s 97%.

Sam:                                      28:24                     How’s that sort of like facilitated as in, is this, is this the sort of thing where you need to have trade ageements or is it? Buyer to buyer so to speak? As in, I’m there several buyers in the U S and commodity traders or brokers who are linking to the end users and supermarkets and such.

Sam:                                      28:48                     Okay. So it’s made me going through, it makes me a minute. So basically you’ve been treated as a commodity, so it’s going to say that…

Charles:                                28:56                     It goes as a commodity. So it’s not like distributed in different places. I see. So is that like the macadamia nut exchange? I’m sorry, is that like no,

Charles:                                29:05                     There’s no formal exchange like the coffee.

Sam:                                      29:08                     Okay. There’s not, there’s no auction.

Charles:                                29:10                     It’s not auction driven. What there is is that they are commodity brokers who collect and then sub end markets.

Sam:                                      29:18                     I see.

Charles:                                29:19                     Yeah. Or there are also directives to supermarkets. Big supermarkets that are, will go on value and even roasters, independent roasters who also will buy go and roast and then have their own, they’re a retail brands.

Sam:                                      29:32                     Okay.

Charles:                                29:32                     In the end markets.

Sam:                                      29:33                     Is it that the macadamia nut industry is still in its infancy and that one day it will get like an auction like there is with coffee and tea or is it that the dynamics are, or the characteristics different?

Charles :                               29:49                     I would say that maybe there would be an auction market for macadamia, but again, it must be voluminous for it to modify to be in an auction system.

Sam:                                      30:04                     Okay.

Charles:                                30:04                     It must also attract enough players for, you know, enough players to, for it to qualify to be at that stage. So it’s a volume and players kind of dynamics that are critical here.

Sam:                                      30:16                     Okay.

Charles:                                30:16                     And again, it depends, will it be necessary? What solution will it be solving because if the market to market, business to business model still works, then maybe the need for an independent auction system, is not necessary, because price discovery between major buyers and sellers, the interacting one on one and still they’re finding it comfortable because the price points they get is agreeable. So again, that may not make the auction necessary.

Sam:                                      30:50                     Yeah. Okay. So the fact that there is enough transparency in the market.

Charles:                                30:54                     Yes.

Sam:                                      30:54                     Doesn’t, doesn’t probably make it necessary. Okay. Interesting. And when you say things like the supermarket, so we’re talking about like a US supermarket.

Charles :                               31:06                     Yes, you’re talking of the Costco.

Sam:                                      31:08                     Okay. And so they will say they will be wanting to do Costco own brand Macadamias. So I’m trying to think. So if I own Costco I’m like, but I’m the head of Costco and I say, right, we need to get our own in brand macadamia nuts and I’ll, I’ll then say, right go out and find a broker, someone who can go and source them. That broker will be speaking directly with the macadamia nut processes in Kenya.

Charles:                                31:36                     Yes.

Sam:                                      31:37                     Understood, understood. And then they’ll say, okay, well these are the conditions we’re going to buy. We’ve been engaged in a contract, we’ll buy this many tons for the next 12 months and where does Nut pak play in that sort of interaction that’s happening.

Charles :                               31:53                     What happens? You see we are, what we can call, we’re also are trade facilitator.

Sam:                                      31:57                     Okay.

Charles:                                31:58                     Right. Because as the association that, our interest is to make the business environment, local and international conducive and supportive of the entrepreneurs and the processors to do business.

Sam:                                      32:13                     Yeah.

Charles:                                32:14                     Right. And we also are the voice of the Kenya macadamia, Kenya nuts family with other origins because others associations, there’s SAMAC of South Africa, there is AMS of Australia and other others in different countries. You see all of us now form the international macadamia symposium, which is our biannual meeting point to share best practices in terms of production and, especially majorly on production.

Sam:                                      32:53                     Okay.

Charles:                                32:53                     Then we have the annual meeting that is under the auspices of the international, nut council.

Sam:                                      33:00                     International nut council?

Charles:                                33:01                     Yes. That now is what we can call the market benchmark.

Sam:                                      33:05                     Yes.

Charles:                                33:06                     Whereby now the buyers and sellers and all, you know, meet annually, kind of to share their experiences, the love innovations their statistics.

Sam:                                      33:15                     Where do they meet?

Charles:                                33:17                     We meet in different capitals of the world.

Sam:                                      33:19                     Okay. Where was the last one?

Charles:                                33:21                     The last one was in the US. We met in the United States in Miami, Florida.

Sam:                                      33:26                     Miami, okay.

Charles:                                33:26                     Yeah.

Sam:                                      33:26                     International nut council. That sounds quite a fun organization.

Charles:                                33:29                     Yes. It’s a huge organization that is based in Spain, Barcelona.

Sam:                                      33:34                     Based in Spain, okay. And so that’s basically any nut people, anybody in the nut industry would want to attend.

Charles:                                33:43                     Wow! That is the mega, you know, the Mecca of the nuts industry, everybody wants to do, to do that.

Sam:                                      33:53                     Did you go?

Charles:                                33:53                     Yes, I was in there.

Sam:                                      33:54                     I mean, was there, is there any sort of rivalry between nuts, if you meet someone and they’re like I’m a macademia nut farmer, and they’re like Oh, and I do cashews or, or someone’s like, I’m wondering purely of like, are there certain nuts which are seen as more prestigious?

Charles:                                34:14                     Definately. Macadamia is more prestigious than all the other nuts, it’s called the King nut.

Sam:                                      34:18                     So in, so when someone meets and you say, I do macadamia nuts, Oh my gosh, I only do walnuts like you’re not.

Charles:                                34:24                     Not necessarily to that extent. Because you see when you talk all the walnuts and you talk almands, you know the dynamics of how they grow is different from macademia. So they are voluminous like produce a lot.

Sam:                                      34:38                     Yeah.

Charles:                                34:38                     So it’s not a question of which is superior than the other.

Sam:                                      34:43                     Okay.

Charles:                                34:44                     Not necessarily, so.

Charles:                                34:45                     Okay. Alright. And there’ll be various people who are giving talks about best practices. What I’m interested, what are some of the innovations that are happening in the macademia nuts industry?

Charles:                                34:56                     You see the major innovation and especially at the international nuts and dried fruit council is looking at nutrition research, is looking at different ways and cuisines that can take macadamia. How many other ways can we consume the nuts in general?

Sam:                                      35:18                     Okay.

Charles:                                35:18                     Right. Do we go heavy on snacks? Do we go heavy as ingredients in other food items? So it’s a question of the versatility of consuming these nuts in different forms in different homes, in terms of also demographics, how your children find there nuts more palatable. So that’s a research point, right? If you’re talking about nutrition challenged people, in what form is it pulpy, how do you give it to them and all that. Again, that’s a research point? We’re talking about now that people want to eat more nutritious foods, we want to run away from issues of heart attack from issues of cholesterol, you see you got, that’s a research point again because we’ll say macadamia is cholesterol free. So you see, you need to disseminate that research needs to be done. So most of the things is about doing research across the board. Innovations in terms of processing what are the new machines that are more efficient, more cost effective and all that, that require. So what I can say is that the conference around international nut council is around the innovations, production, marketing, consumption, data sharing, statistics, what’s the market outlook. So it’s quite dynamic it’s full of information that is across the industry, that makes you now more prepared to do business.

Sam:                                      36:56                     Got it.

Charles:                                36:56                     If you’ve got now to the international macadamia symposium, it is majorly now on the production side, the agronomical post-harvest management systems around it just to see how can we produce the best nuts. What is the research on the best yielding varieties, what’s the best research on crop husbandry, best practices in crop post-harvest management and all that pest management. You know, there’s all those issues around production. How do we optimize production. So that is majorly the symposium issue.

Sam:                                      37:31                     Very cool. Okay. Has one of the, the themes recently been this trend of people eating less meat and nuts being a good source of protein?

Charles :                               37:44                     That’s the thing we’re talking about, it’s substitute. They’re saying macadamia oils or macadamia nuts themselves, it has unique nutritional parameters that are better than animal proteins or animal fat or something. Right. But anyway, that is the progress now of the medical nutrition research people. Yes.

Sam:                                      38:07                     Okay. Alright, cool. Okay. Is there a, is there scope, do you think that if and more, you know, if supply was able to increase…

Charles :                               38:19                     If supply was able to increase and the farm-gate prices what to go down, then the end market shelf, supermarket shelf price or retail price would go down.

Sam:                                      38:30                     What do you recon is a realistic farm-gate price?

Charles :                               38:34                     We did a gross margin on macadamia production at farm level and it cannot go beyond 0.4 of a dollar, right?

Sam:                                      38:46                     So currently it’s at $2 and they weren’t able to go below…

Charles:                                38:49                     It’s good. Their production costs can not go above 0.4 of a dollar.

Sam:                                      38:54                     I don’t quite understand when you say the production costs.

Charles:                                38:55                     You’re talking of, you see production cost means all the investment you put in place before you harvest or before you sell.

Sam:                                      39:06                     Before you sell. Okay.

Charles:                                39:07                     And I’m saying it cannot in any way be more than 20% of the sale price.

Sam:                                      39:17                     When you say it cannot…

Charles:                                39:19                     Because we have done the gross margin analysis for the crop, what does it take for you to produce a kilo of macadamia, and we’re saying in Kenya for you to produce a kilo of macademia, your investment cannot go beyond 0.4 of a dollar.

Sam:                                      39:37                     Okay.

Charles:                                39:37                     Yes.

Sam:                                      39:39                     What are some of the ways in which macademia nuts are being eaten?

Charles :                               39:42                     It’s majorly, the major market for it is snacking, the way you get a snack on the way, but the growing one is macadamia being incorporated in other speciality foods.

Sam:                                      39:58                     Okay.

Charles:                                39:58                     Yes. As an ingredient. Yes. And that is now the growing area.

Sam:                                      40:02                     Cause what is it about macadamia nuts which makes them, what do they have which other nuts don’t have?

Charles:                                40:08                     One, they have a very nice taste profile. Probably that’s why you like eating them, they have a superior taste profile, they are crunchy very palatable. They have quite a good character around it. And then as I say, the nutritional analysis for it, they are one cholesterol free, they will give you, I don’t know how they, all the nutritional parameters, but you will see…

Sam:                                      40:35                     It’s very good.

Charles:                                40:36                     It’s very good. Yeah. It’s recommended as a healthy snack, especially for weight, choolesterol lowering and all that. So it has a good position in the nutritional matrix.

Sam:                                      40:50                     Okay. So we’ll just do a few more questions if that’s all right. What I’m interested in is, as you said, 10 years ago, you were an outsider. You didn’t, you didn’t really know much about the industry and now your here sort of the head of the industry body. What have been some of the biggest insights you’ve had along that journey?

Charles:                                41:13                     I think the thick of the insight is that it’s looking at the sustainability factor for an industry and for you to make an industry competitive, you got to understand the issues of the denominator.

Sam:                                      41:31                     Of?

Charles:                                41:31                     Denominator issues.

Sam:                                      41:33                     Okay.

Charles:                                41:33                     Understanding that you must protect denominator issues and then fight above or compete above the denomination and denominator issues means the fundamental issues that you need to sort out first.

Sam:                                      41:46                     Okay.

Charles:                                41:46                     You need to sort the issues of production. You must produce enough in terms of good quality. You must produce enough also in terms of good pricing points, right? You must produce through smart agriculture so that, you know, whatever you’re doing is in tandem with best practices for it. You must also work within an environment, create the conducive environment for you to be able to acquire the raw materials. Remember most of the processors here don’t have their own farms. So they are relying on the farmer. So they must do production support and that’s what I’m calling the denominator issues first. Then you compete when you have sorted the fundamental issues. If you start fighting below the fundamentals, you collapse the industry. Right? So to create competitiveness, the word competitiveness is very important. Competitiveness at farm level, let the farmer earn their due margin then let the processor earn he’s due margin and let the customer get the best value for the product they buy. Yeah. So that trajectory is what will create a stable industry. Then again, the learning point is about the collaboration with government. Government requires to understand that for an industry to thrive, you got to provide the right policies for it. And as I have said, I have seen the ban on exporting unprocessed macadamia in Kenya has accelerated the growth of the industry from four to 27 from 10,000 metric tons to 45,000 metric tons in a span of 10 years. That tells you the growth factor is good.

Sam:                                      43:38                     And I mean, and I guess that also means that rather than selling produce at $2 a kilogram and selling it at $15 a kilogram.

Charles:                                43:46                     That’s the thing, value extraction is high.

Sam:                                      43:48                     And that all the extra $13 is kept.

Charles:                                43:52                     It’s captured here, it’s retained in the country.

Sam:                                      43:54                     Yeah.

Charles:                                43:54                     So value addition is important in my view because they retain the value to the origin country’s high. Why would you want to export dollars and jobs?

Sam:                                      44:07                     I mean was, was there any backlash?

Charles:                                44:09                     There was a backlash because you see people will have their own vested interests around every issue, but you see the bigger picture or the bigger agenda will always prevail.

Sam:                                      44:19                     I was about to say how did you overcome it?

Charles:                                44:21                     We lobbied the minister responsible for, for agriculture to really understand what is this value capture that we are fighting for? Because what you’re saying is that can we keep as many jobs local? Can we earn as many dollars and bring them to the country? That’s foreign exchange and such. How do we do that? We do that by manufacturing. There’s no country that develops by exporting raw materials.

Sam:                                      44:52                     And what, what do you think is next for Nut Pak, in the next…

Charles:                                44:55                     The next thing is now to consolidate the industry further.

Sam:                                      44:58                     Okay. We say consolidate, what do you mean?

Charles:                                45:00                     Consolidating means that we are looking at the success factors and how those success factors hinge on making the entrepreneurs and processors more profitable.

Sam:                                      45:12                     Okay.

Charles:                                45:13                     Right. We are looking at how rather than having it fragmented is a question of how do we bring everything together so that everybody benefits from the synergies that accrue from joint effort.

Sam:                                      45:26                     What does that look like in practice?

Charles:                                45:28                     In practice. What we mean is that we are looking at what are the issues that we need to address. We need to have early warning systems around the crop. Will there be a crop failure and next year we need to have an early warning system around it. We need to understand what are the agronomical challenges facing our farmers and address those issues including extension. How do we go and disseminate best practices across our farmers, crop quality, how do we manage the crop quality across these diverse farmers, what are the programmings that we need to put in place to make sure that we consolidate and standardize production across many farmers so that we can have a crop that is as good as what you find in Australia, as good as you find in South Africa because all of it is competing in the same marketplace. Yes.

Sam:                                      46:23                     And that’s something which nut pak will probably…

Charles:                                46:25                     Yes. That is a cutout for the association to make sure that synergies are brought together and people are achieving the grand picture or the strategic picture together.

Sam:                                      46:42                     How does nut pak make money?

Charles:                                46:44                     The association gets its money from subscriptions.

Sam:                                      46:48                     Because of the 27 processors.

Charles:                                46:49                     They each pay based on the size.

Sam:                                      46:54                     Okay. So you’re basically saying based on your production?

Charles:                                46:57                     Based on the, not production, processing, the amount of nuts you process.

Sam:                                      47:03                     Okay.

Charles:                                47:03                     So we have a formula.

Sam:                                      47:05                     And now they’ll pay an annual fee.

Charles:                                47:06                     They pay us at an annual fee. Yes.

Sam:                                      47:09                     And so just to sort of finish up, you know, fit people who are looking to learn more about what, nut pak does or looking to perhaps you know, buy some very nuts, buy nuts that grown in Kenya. What are some of the best ways that people can learn and learn more about what it is that you do and perhaps get in touch with some, some other producers?

Charles:                                47:28                     I think what do is that we have our learning platforms especially at the farm level. We do a lot of field days to educate farmers on the emerging best practices and giving them my expectations as processors on what we required them to do so they can produce the right quality material. We also disseminate the research, the new research that we get from our international partners that are doing macadamia and such. We also lobby and educate government, especially the county governments to really understand the position of the crop and how it can change and impact the lives of the common person, especially the farmers in the radius. As we have said, it’s one of the most lucrative crops on our farms. That means it’s an engine that can be very formidable in poverty eradication and such. So more resources needs to be put there naturally if something has the potential to change the lives of people. But you see that comes from awareness. We need to disseminate this picture, quote to the value proposition across to the counties so that they can see the value of the crop also. And then again to kind of support the environment around processing lobbying issues on energy, costs of power, cost of doing business across a country, licensing law that, you know, we will get involved where we feel that it’s adverserial to doing business.

Sam:                                      49:09                     And people who are listening at home, how can they learn more about some of these things, is there…

Charles:                                49:14                     We have radio programs that we do with vernacular radios that disseminate our information.

Sam:                                      49:19                     You have radio programs?

Charles:                                49:20                     Yes. Yeah.

Sam:                                      49:23                     You’ll go on the radio and talk about?

Charles:                                49:25                     Yes, we gone radio, we do announcements based on when we expect the crop to be ready and all that.

Sam:                                      49:31                     Okay.

Charles:                                49:31                     So we do announcement to say where we have some educational platforms, you know in collaboration with key stake holders. So the messaging to farmers. We also use mobile phone, a s ystem whereby we disseminate now SMSs based on different parameters or different information points that we feel are necessary to farmers.

Sam:                                      49:53                     And if people want, if people want to buy macadamia nuts in Kenya, what’s the best way for them to do that?

Charles:                                49:59                     The international buyers?

Sam:                                      50:00                     Yeah.

Charles:                                50:01                     The international buyers, as I said, we have a platform for the international nut council where the buyers and sellers mingle make their deals.

Sam:                                      50:10                     Okay.

Charles:                                50:11                     So yeah.

Sam:                                      50:12                     Fantastic. Very good. Cool. Well Charles, thanks so much.

Charles:                                50:14                     Thank you Sam, excellent.


(Chia) Seed Investors: the surprising story of how chia seeds came to be grown in Africa


In this episode, I speak with Sabina Karumba about how she and her husband started Chia Africa.

Most businesses have an interesting formation story, though this one is one of the best I’ve heard in a while.

Sabina and her husband were watching TV one evening in 2012 when a doctor came on the show and explained the health benefits of chia seeds.

Compelled to learn more they undertake research and a few months later are planting their own chia plants in Western Uganda.

This is the first commercial plantation of chia seeds on the continent, and after going around with samples of what they grew they both quit their day jobs and go full time on the business.

A few years later and they are the premier producer in the region, trying to keep up with demand despite other people entering the market too.

Sabina and I talk about lots of interesting things such as how chia seeds should only be grown within 5 degrees of the equator, the genesis of becoming Africa’s first chia seed producers (despite never having farmed), and keeping up with the demand for the superfood.

One thing which Sabina downplays, but I thought was particularly impressive is her attitude to sales.

Two of the biggest breaks for the company came with being listed by a major supermarket, and then one of the region’s largest distributors.

In both cases, she just turned up unannounced at their offices, asked to see the owner and after sitting down with them, sold them on making big orders for Chia Africa in just one meeting.

The reason I think is that Sabina is clearly incredibly passionate about the power of chia seeds, and believes everyone should have them in their diet.

Her pitch is pretty simple: it has amazing health benefits that can change people’s lives,  people just don’t know about it yet, make sure you have some in stock.


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Pictures from the farm

Preparing to plant the chia seeds
Preparing to plant the chia seeds
Chia plants growing in Western Uganda
Chia plants growing in Western Uganda
Scouting for places on the Chia Africa chia seed farm
Scouting for places on the Chia Africa chia seed farm
Chia Africa's Dr Chia range
Chia Africa’s Dr Chia range

Social Media Links




Sam:                                      00:00:00               Intro.

Sam:                                      00:03:37               Cool. So we’re here today with Sabina from Chia Africa, Sabina welcome to the show. So just to get started, could you tell us a bit about you and a bit about Chia Africa.

Sabina:                                 00:03:48               Thank you so much Sam, as you’ve heard, my name is Sabina Wanjiru Karumba, I am a Kenyan. We do run Chia Africa with my husband who’s also my business partner. His name is David Kisembo and he’s based in Uganda. Chia Africa is registered in Kenya with offices in Kenya, but our farmlands are in Uganda. That’s where we do our farming since the 2012, that’s when we started, or that’s when we first heard about chia seeds. Amazingly, we heard about chia seeds from one program on TV called the 700 Club. There’s a gentleman who had been brought in, who is a medical doctor who was talking about chia seeds, and we were like, what wonder seed is this? We were so excited and were like, let’s find out more about this seed, what this seed is all about because it was so amazing. Whatever they talked about the chia seeds, it was so amazing, it was something like everybody must know about. So our journey began and the research began. Initially, we were calling it chai. Chai in Swahili or in East Africa is tea, that is tea. And we were like, we’re looking for this chai, chai, but we couldn’t find the chai.

Sam:                                      00:05:14               Looking for tea?

Sabina:                                 00:05:14               Yes. Yes. So we had to replay The 700 Club once again, and then we released it is chia.

Sam:                                      00:05:20               Okay. So a TV program?

Sabina:                                 00:05:23               Yes, The 700 Club.

Sam:                                      00:05:23               Why is it called the 700 club?

Sabina:                                 00:05:26               It has its membership probably, I believe its membership. They started with a membership of about 700 people who were supporting, it’s a Christian program.

Sam:                                      00:05:35               Okay.

Sabina:                                 00:05:35               With somebody called Pat Robertson, yes.

Sam:                                      00:05:38               Okay. It’s a Tv program and Pat, he invites some guests?

Sabina:                                 00:05:44               Yes. They do talk about politics, they do talk about health, they do talk about business so amazingly on this particular day, besides the normal question they do and all that, they also discussed about the health, human health.

Sam:                                      00:05:57               What was the medical doctor, what was he saying about chia seeds?

Sabina:                                 00:06:01               He was talking about how amazing this chia seed is and what it does? What it is able to give the body from very small quantities of what you consume? The minerals in it, the vitamins, the proteins, the omega 3 in it. We were like from that one tablespoon or 20 grams that you consume in a day, and you’re able to get all this, it was amazing. Yeah.

Sam:                                      00:06:22               Wow. Okay. So this is in 2012?

Sabina:                                 00:06:27               That was in 2010.

Sam:                                      00:06:28               And how long was it before you realized it was called chia and not chai?

Sabina:                                 00:06:31               Amazingly, at around that time, we were, me and my husband were discussing about career change and all that. He’s a mechanical engineer by profession. I am an accountant by profession. But we wanted to venture into something that we would be able to do and work on together? So actually at that time, we were thinking about the agribusiness and amazingly, this important information comes to us so immediately we didn’t take long. We started finding out what this chia seed is, so we went like three, four days. We were not able to find out what this chia seed is because we’re looking for chai and we’re like, the chai we know is the normal chai I take every morning. It has never given me, yes, of course, it has benefited me, but it hasn’t even given me these amazing benefits as what I heard from the 700 club, so eventually were able to find out that it is not chai, it is chia and the research went on and barely a month after that we’re able to even get contacts of some Americans who had come to East Africa. They had done a bit of groundwork, some research to try and find out if they can introduce this seed to the East African region.

Sam:                                      00:07:42               Okay.

Sabina:                                 00:07:42               Yes.

Sam:                                      00:07:44               And what did they say?

Sabina:                                 00:07:44               They had just engaged the first group of farmers, of which sometimes because of probably the education background and all that, people up country in rural areas, they find it difficult to embrace new crops that they don’t understand about.

Sam:                                      00:08:02               Yes.

Sabina:                                 00:08:02               But amazingly because we had already heard about it and when we looked around and were able to talk to them, actually we talked to them, we were in Nairobi, they were somewhere in a place called Masinde, that is West of Uganda. They were there at that particular moment, this the same place that my husband, area. That’s exactly where he was born.

Sam:                                      00:08:19               Really?

Sabina:                                 00:08:19               Yes. So it was very easy for them to understand and to, for us to integrate and they were also excited because they were like, no, we’ve gotten people who are willing to, understand this whole project that we are getting into. Yeah.

Sam:                                      00:08:34               Cool. Okay. Wow. So I mean there’s lots to sort of talk about but I think, sort of, let’s keep on the supply side of the business.

Sabina:                                 00:08:42               Yes.

Sam:                                      00:08:43               What does it, what does the chia plant, is it chia plant, chia seed from chia plant?

Sabina:                                 00:08:48               Yes, the chia seed comes from the chia plant, and, okay, chia seeds, it’s generally South American, basically Mexico, but its scientific name is salvia Hispanica.

Sam:                                      00:09:03               Salvia Hispanica?

Sabina:                                 00:09:03               Yes, that’s the scientific name.

Sam:                                      00:09:05               Okay.

Sabina:                                 00:09:05               But the common name, which is known everywhere, and it’s embraced, if you go to North America, go to South America, go to Europe. It’s been called chia, come to Africa, we’re calling it chia and not chai anymore.

Sam:                                      00:09:15               Yeah.

Sabina:                                 00:09:15               Yeah, exactly.

Sam:                                      00:09:17               Okay. What does chia, what does a salvia Hispanica plant look like?

Sabina:                                 00:09:21               It’s just a plant that grows that with, let’s say not very big leaves, medium-sized leaves, which grows to about two to three meters in height.

Sam:                                      00:09:35               That’s quite tall.

Sabina:                                 00:09:35               Yes, yes, yes. And you achieve that if you having good weather, the soils are good, but if your weather is not good, the rains are not coming well, it will flower, even when it is like even one foot high, which is not good. Yes, it will flower, but if you put that in the labs, you are going to find that the nutritional content is very low. But in good environment, actually it can go even as high as a three meters.

Sam:                                      00:09:59               Okay.

Sabina:                                 00:09:59               Yeah.

Sam:                                      00:10:00               Cool. And how long does it take to grow to three meters?

Sabina:                                 00:10:02               It takes about three to four months on the higher side, four months. If you have some delay in the rains because we are using rain feder, it’s rain farming that we are doing, if you have a bit of delays, within four months, at most four months, you will have harvested. But if there’s no delay with the rains, even three and a half months. You’ll do your havesting.

Sam:                                      00:10:23               And can you do all year round or does it have to be, so can you do, if it’s four months, can you do three cycles a year?

Sabina:                                 00:10:34               Okay. First, let me take you a little bit back on the good conditions for the growth and germination of the chia seed. Basically the seed, the reason why it has gotten this high popularity, It is because of its nutritional content. It also has to be in an optimal area, where it can develop or manufacture these particular nutrients that you’re looking after and basically it needs about five degrees within the Equator, North or South of equator. Exactly.

Sam:                                      00:11:07               Really?

Sabina:                                 00:11:07               Exactly.

Sam:                                      00:11:07               Not very many places are conducive?

Sabina:                                 00:11:09               And that is why you see, it’s around the Mexico area. The South America. That is where it does very well and that is why the group of first people who came to invest here, they came from North America and they came in the region of East Africa, reason why, East Africa generally lies between five degrees, North and South of Equator. That’s where you get the optimal.

Sam:                                      00:11:34               Yeah.

Sabina:                                 00:11:34               Exactly. So if you come here, you will find that even within the Equator, there’s Kenya, Uganda, Tanzania, Rwanda, we are lying within the Equator, but in some regions, the rainfalls, they vary, for any seed basically to germinate, it needs some moderate reasonable amount of rainfall. Some regions they do get rainfall like twice, two good seasons in a year, although in as much as we’re falling within the Equator, so where we are farming it in Uganda, we are able to do it comfortably. We can do it twice. Although there’s another short season in the month of June, July in Masinde, but it’s quite unreliable. So basically we do opt to do it between February and then we harvest by end of April, May, latest by June. And then the next season we start it in October and we do our harvesting by December, January.

Sam:                                      00:12:25               Got it.

Sabina:                                 00:12:26               Yes. So two seasons in a year comfortably. Although when the rains are sufficient, we can do three seasons. Yeah.

Sam:                                      00:12:34               If you could irrigate, could you definitely do three seasons?

Sabina:                                 00:12:38               You can do it all around. If you can do irrigation, you can do it all around because the sunshine within the Equator is more or less consistent throughout the whole year.

Sam:                                      00:12:49               Yeah.

Sabina:                                 00:12:50               Yes. Yeah. Now, unfortunately, the part that comes with farming chia, the productivity per acre. If you look at the product, the yields are not as high because when the rains are good under optimal weather, you get about 400 Kgs, 400 kilos per acre.

Sam:                                      00:13:08               Yeah.

Sabina:                                 00:13:09               People who do maize farming, that is corn. They’re able to do like 40 bags of a hundred that is like a 40 bags. You’re doing here four bags of chia, with the maize, you’re doing 40, you’re doing 10 times.

Sam:                                      00:13:26               I see.

Sabina:                                 00:13:26               Yeah. So, because the seed is equally very, very small. You have a look at it, it’s a very, very tiny seed. So the productivity is low. So what does it tell you? You need a very high acreage for you to be able to produce a lot. Likewise, when you do irrigation it means you’ll be irrigating a very vast area and investment on that will equally be very high.

Sam:                                      00:13:52               If the potential for it to yield, if it had a greater potential to have high yields, it would make more economical sense to do irrigation.

Sabina:                                 00:14:00               To do irrigation.

Sam:                                      00:14:01               So at the moment, it’s not quite a good investment?

Sabina:                                 00:14:04               Unless, let’s say, because for me I can say we as Chia Africa, we’ve had so many enquiries, especially from Europe. Europe is a very big consumer of the East African products. Like for Kenya we are doing a lot of horticulture and if you look at the flowers which are being done now in Europe, like almost I think four out of ten roses in Europe are from Kenya, actually basically in Kenya. So Europe is a good market for the East African agri-products. We’ve been having enquiries here and there and very, very positive, because we do send small quantities as they’re developing also their markets because they also need consistency, but I do believe in a very short time sooner than later because we are having very advanced discussions with quite a number of big time suppliers with some huge supply chains in Europe, we should be able to get to a point where we can say. We are not willing to invest so much into irrigation to harbour an all year round production.

Sam:                                      00:15:04               That’s very interesting so at the moment is Chia Africa exporting?

Sabina:                                 00:15:08               We do export. We do export small quantities. We’ve sent to Germany, we’ve sent to our clients who were still based in Nairobi, but has clients in Europe, but It’s a US company based here. They do oil, crude oil-pressing.

Sam:                                      00:15:25               Cool.

Sabina:                                 00:15:26               Yes.

Sam:                                      00:15:29               Are you selling it to them packaged in your packaging or are you selling it just as a commodity?

Sabina:                                 00:15:35               It depends on the preference of the customer. There are those who are ok with our packaging. There are those, because of also the regulations within their area, they need to have different kinds of packages and also language barriers. Like for clients who are coming from Arabic regions, we do translate our stickers and everything, even our own, the same, same branding, but we do translate it into their, into the commonly used language wherever they’re coming in, they’re coming from. Yes. And for that who are not willing to, to do, they want to develop their own brand because sometimes it’s also wise to develop your own brand. Yes. For those who are willing to develop their own brand, we do get them in bulk.

Sam:                                      00:16:16               Yeah.

Sabina:                                 00:16:16               Yes.

Sam:                                      00:16:17               I see. Is chia seeds, is there any real difference in chia seeds that are grown here versus in Mexico versus growing elsewhere or, like can you say that yours is a high one, chia seeds is a high quality than another? Or is it just really about the packaging or like that? Or the method of delivery?

Sabina:                                 00:16:44               Let me say this, the reason why I took you back to the optimal regions for growing the chia seed and why chia seed is becoming so popular. It is because of the nutritional content. They’ve said within the equator and it has been researched and they are these information out there, researched information about the most optimal area. Reason why actually when you do plant it within the five degrees North and South of the equator. You do get the nutritional levels being very, very high. It doesn’t mean pride elsewhere and that’s why I was saying the first group who introduced the chia farming here generally, basically in East Africa. They had come from the US. They had done a bit of research here and there and they, they had understood that if we do it. Within the Equateur you’re going to have the optimal, if you do it in other areas, they’re still going to get the chia seeds, but the nutritional levels, especially things like the Omega three it hasn’t been confirmed, the levels were very, very low. When the Americans came here, they did a comparison of the chia, the first habits we had with the chia seed in Masinde and generally in Uganda area, they compared to what they got from Mexico, I’m proud to say it came out six times better.

Sam:                                      00:18:00               Six times…

Sabina:                                 00:18:02               It was amazing. Yes, exactly. And then I knew you would ask me again, why do you want to do it in Uganda? We’re based here in Kenya. There’s a reason for that. If you look at the history Uganda, let’s go to the history of Uganda, there was a lot of civil unrest after they got their independence. So as a result, people never got to settle and do the farming as such. So their land was not very much over utilized. In Kenya, we’ve had basically and we thanks God for that. We’ve really enjoyed civil stability, especially after independence. That is in the early sixties. We’ve had stability, political stability, whereby, people able to do their farming, they all that and all that. So as a result, spaces here, have been quite over utilized. And again, if you look at the percentage of arable land in Kenya compared to that in Uganda, Uganda is a much smaller country than Kenya, but you can say 34% of the land in Uganda is arable. That’s quite a good percentage as opposed to here in Kenya we have a very, way much smaller percentage which is arable, so there are soils not over utilized. Secondly, most of the area you can do your farming, so it becomes quite an optimal place for us to do the farming.

Sam:                                      00:19:21               Ok, and also your husband is from there.

Sabina:                                 00:19:25               He’s there so it makes it even more convenient. Yeah.

Sam:                                      00:19:29               So talk me through how it works, so you watched the 700 club in 2012.

Sabina:                                 00:19:33               Yes.

Sam:                                      00:19:34               You had the conversation with the Americans a month, two months later?

Sabina:                                 00:19:38               In fact, barely a month after that.

Sam:                                      00:19:41               And how long was it before you were planting your first chia plant?

Sabina:                                 00:19:44               In 2012 October.

Sam:                                      00:19:49               October of 2012?

Sabina:                                 00:19:50               October of 2012, we did our first trials. We had never farmed before.

Sam:                                      00:19:54               Oh.

Sabina:                                 00:19:57               We didn’t, actually even at that time, I was still employed somewhere, doing accounts for somebody. My husband was still doing he’s a technical things.

Sam:                                      00:20:06               Yeah.

Sabina:                                 00:20:07               There we go to the farm. We now think we’re equipped with all the knowledge that we need to do the farming. And we failed miserably the first time we did it. We harvested so little. But thank God, the little that we had enabled us to do the, at least the lab analysis and it gave us encouragement. Yeah. And besides we also knew now if we do it better and at the right time we’re going to get the yields that we expected, so the next season, there we were, we went full board and we also began to also try and sensitize it because the whites, the Americans, the Western world, they are aware, they were aware of what chia seeds were, they were beginning, a high population was aware of what chia seeds were. Here locally, you would talk of chia seeds and they would be like, what is that you’re talking about?

Sam:                                      00:20:50               Yes.

Sabina:                                 00:20:51               So just to impact on making people understand what chia seed is and all that. Because we were fully convinced this something that should be in everybody’s diet on a daily basis.

Sam:                                      00:21:00               Yeah.

Sabina:                                 00:21:00               Yeah.

Sam:                                      00:21:01               Okay. And how much work is needed, is necessary on the farm? Do you have to engage with some of the population?

Sabina:                                 00:21:10               It is a lot of work. The first time we did, we did, we started with 30 acres, you know we were like no, this is the right thing to do…

Sam:                                      00:21:17               How did you get 30 acres?

Sabina:                                 00:21:17               In Uganda as I’m telling you, they are still having huge chunks of land. It’s possible to even get a hundred acres of land consolidated so you can run a farm of up to a hundred acres. Because what happens in Uganda with most of it being fertile, you’ll find people, even with two acres, they’re able to produce their own food sufficient for the family. So there’s also quite a lot of land laying up there. Still not being utilized. Yes. It makes it easier to be able to acquire that land.

Sam:                                      00:21:42               And the fact that you’re husband is Ugandan, that means you can, did you own the land or do you leas the land?

Sabina:                                 00:21:47               They do have land, fortunately, in his family, the grandfather had invested in a very huge piece of land because we have like 400 acres of land.

Sam:                                      00:21:56               Wow.

Sabina:                                 00:21:56               Yes, yes. So with 400 acres of land, there’s part of that land that has never been ploughed completely. So 30 acres ia a drop in the ocean, considering what is within the exposure.

Sam:                                      00:22:09               So you do that and then who, how many people could you have to sort of cultivate that?

Sabina:                                 00:22:16               We did mechanical farming, ploughing. There are certain things you just, we’ve got a tractor. We also had to do a lot of bush clearing. That entails a lot of work. It’s a lot of work. Then we did a plan. We got a tractor, two, three days, it does the ploughing. Yes. And the disking, that we do it mechanically, but now when it comes to the planting, we had a planter, we had acquired one planter from China. Yes, a planter, a simple handheld planter.

Sam:                                      00:22:49               Its a machine?

Sabina:                                 00:22:50               Yes. Yes. A planter because we’re looking at it and we’re saying, you know to do 30 acres, when are we ever going to finish this. Yes. we said, okay, let’s get a planter. So we had gotten a planter, which unfortunately didn’t work.

Sam:                                      00:23:07               Your husband being an engineer, he couldn’t fix it?

Sabina:                                 00:23:09               You know you fix it, these other part falls off tomorrow. So we gave up on that and we had done I think like at most four, five acres with the planter.

Sam:                                      00:23:19               Yeah.

Sabina:                                 00:23:19               And it wasn’t as effective as we had been made to believe it would be. We’d drop a seed here, the next one will be dropped there. So he had to go back again and… Exactly, yes. Yeah. And then after that it would drop a whole half a kg in one place. But we said it’s a learning experience and we were ready for it. We had, it was an exciting journey for us, we’re looking at the future, more of the future. So at that point we got people, a whole group of people, a whole village, just gather the whole village.

Sam:                                      00:23:59               You call like a village meeting?

Sabina:                                 00:24:01               That’s how they work, yes. That’s how they work. Actually they work in groups.

Sam:                                      00:24:05               Yeah.

Sabina:                                 00:24:05               Yeah.

Sam:                                      00:24:05               And you said like 50 people?

Sabina:                                 00:24:07               Yes. We’ve got about a group of about 50 people and in like two or three days, we had done it.

Sam:                                      00:24:13               So did you have to pay them?

Sabina:                                 00:24:16               You negotiate in their groups. You know they come like a group of 50 people, but they’re not in one grouping. They have a leader, actually, they have someone who negotiates on their behalf because you see some of them, they’re not educated, they’re having so many challenges. So they prefer working in groups. They have like a chairman who comes and negotiates on their behalf. So for an acre they charge about Ugandan shillings, that’s about thirty thousand Ugandan shillings, which is about 3000, which is about $30, 30 US dollars.

Sam:                                      00:24:45               $30 per acre?

Sabina:                                 00:24:51               Per acre, yeah.

Sam:                                      00:24:52               And then once they’re planted the seeds…

Sabina:                                 00:24:54               Yes.

Sam:                                      00:24:56               Does there need to be continual watering?

Sabina:                                 00:24:58               No, good thing here now, we now, depend on their rain fed. We do rain fed.

Sam:                                      00:25:05               So once it’s planted?

Sabina:                                 00:25:05               Yes.

Sam:                                      00:25:05               Is there much more work to be done.

Sabina:                                 00:25:07               There’s a lot of work.

Sam:                                      00:25:08               Okay.

Sabina:                                 00:25:09               The other major and challenging thing that comes on board, actually it is the weeding part and the weeding actually you cannot even do it mechanically, because you’re going to mess up a lot of your crops. So that one also has to be done manually. Yeah.

Sam:                                      00:25:23               Okay.

Sabina:                                 00:25:23               Yeah. Again, bringing the whole village, in groups, for about another one week and they’re able to do it, manually.

Sam:                                      00:25:31               Yeah.

Sabina:                                 00:25:31               Yeah.

Sam:                                      00:25:32               Okay. And then, so that was sort of when you started, what does the operation look like now? Are you still at 30 acres?

Sabina:                                 00:25:39               Initially when we started, we did the 30 acres and from the experience we had we realized we can do even much more. And again, at that point we had done a lot of sensitization. We did a lot of, especially here in Nairobi and in Kenya, let’s say in Kenya because people are more exposed, there is more exposure here, the Kenyan market embraced the chia seed quite well, and quite fast. We did not even have first to go to the export market because we were still having challenges of volumes, we could not do the volumes. So for the Kenyan market, once it accepted we are able now to feel like we can project, we can do this number of acres. So the first time we did the 30 acres, we did at the wrong time because we had never farmed before we, we did plant when it was slightly late. Remember, we’re depending on rain-fed water, we did it a bit late, so our yields, were a bit, In fact, they were just very low, let’s be very honest, they were very low, so next season we got very ready for it. We did partner with somebody else who was also willing to come on board because we wanted also, remember we were having the challenges of building a market and also production. We got a partner, based in Uganda full time, to manage the operations of the farm and here we did the marketing and sensitization. Yes. And it worked quite well.

Sam:                                      00:27:02               How did you find that partner?

Sabina:                                 00:27:05               He was among the first few people who were also in touch with the first, with the Americans who came with the first seed. Yes. So when people started getting, feeling like, this is something I don’t want to do, these things, you know, because chia seed, unfortunately for up country, I don’t know whether you’ve been to any of these up country areas of East Africa or Kenya for that purpose. Basically, they depend on their farms. Whatever they produce on the farm, that’s what they sell. If they’re not able to tell it, they can feed their kids on it. Chia seed, you cannot cook this and give it to your kids.

Sam:                                      00:27:37               Yeah.

Sabina:                                 00:27:37               So they felt, Okay, this is too risky business, we are not going to do it, let them do it. Once they succeed, we’ll come on board. So we, the few of us who are courageous to continue with it. We did. That lady was among them so we went again did farming. This time, we put in a hundred acres, did the ploughing at the right time, just on season, as the season was starting, we did it and it went very well until harvest time. Yes. Chia seed is not like any other crop, you see like when we plant, when we do farm, let’s say like maize because that’s basically the main thing which is being farmed around here in East Africa, Uganda, Tanzania, Kenya and it happens that it is raining during the last one week when we were anticipating to harvest. What you do, You don’t remove your crop on the farm. You just leave it until the sun comes out and then leave it there for about a week. It’ll dry up and you’ll be able to harvest it and it will be okay. Dried. It’s okay. Chia seed, once it comes into contact with water, It forms a gel.

Sam:                                      00:28:36               Yes.

Sabina:                                 00:28:36               It can not separate. Now, unfortunately, We just watched helplessly as it rained. The rains, It became a havoc in 2013. There were so much rains in East Africa, so much, actually it even brought down a few buildings here.

Sam:                                      00:28:50               Yeah.

Sabina:                                 00:28:51               Unfortunately it was harvest time. There’s nothing we could do. We cannot remove it. It’s not yet fully matured. It needed about a week and within that week it decides to rain and rain heavily, we just lost chia worth like 30,000 40,000 tons, metric tones.

Sam:                                      00:29:07               Just from that rain?

Sabina:                                 00:29:10               Yes, and that became another learning lesson for us. Now what we’ve done since then, we’ve still expanded our operations, but we’ve tried to see how we can reduce our risk. I’d rather lose 5 acres instead of losing a hundred acres. You’d also rather lose 5 acres instead of you, you lose a hundred I lose a hundred, another person also loses a hundred so what have we done? We’ve gotten farmers to come and invest. We’ve provided the land because the land is available, we still have about a hundred to a hundred and fifty acres available for chia farming. We bring farmers on board, we give them the seed, we facilitate them whenever they do not have finances because somebody made to come buy the seed, put it on the ground. But when it comes to the weeding point, this person doesn’t have the finances. We don’t just let the crop get, go to waste. We facilitate them to do the weeding then eventually, at the end of the harvest, we all come and sit down, I facilitated you with this and this and this, and we are going to buy this chia, in as much as we’ve given you the land, we facilitated you. We’re still going to buy it from you at this cost. Why? We’re trying to spread their risk. Yeah. And it’s beneficial for everyone because even the people now, the farmers who are not willing to come into cheer for me, they’ve seen us lose a hundred acres and they’re like these people are still going back. What is it about it?

Sam:                                      00:30:35               Yeah.

Sabina:                                 00:30:35               And again, now with the consumption of chia and the benefits they get out of it. They’re like, okay, I think it is still worth doing the chia seed. If you give somebody two acres, they’re able to manage two acres because with two acres they can do it. Even within the family members, the husband with their kids, they can manage two or three acres. So it means they’re the cost of input is reduced and then when they harvest, and able to get money or when they do not have any money for their school fees and we are facilitating them with the school fees, for us to be able to recover it when we harvest, we’re okay.

Sam:                                      00:31:05               Very good, so that’s sort of the main supply side of the business, you’ve got these sort of different farmers who are coming in and using the land.

Sabina:                                 00:31:18               Yes.

Sam:                                      00:31:25               Talk to me a bit about the demand side. So you’re saying that even if Kenya picked up quite fast, chia seeds are not something that’s really on many people’s radar. Even a few years ago. How have you seen the demand for chia seeds? What’s the story of the market of chia seeds in East Africa?

Sabina:                                 00:31:35               Okay when we started sensitizing, I would talk of chia seeds, even people would not listen to me, they would wonder now what is this person just wants to sell me the things? There are so many things that we keep hearing about health foods and all that and at that time actually the first harvest that we did, the majority of that went into sampling. The first 30 acres we did and we harvested so little. We decided fine, we’re going to take the full loss of this, but whatever we’ve harvested, we are going to use this as our Sampling, we give samples, actually, we give out a lot of samples. But thank God, chia seed is a very effective seed because in a short period as three days, you’re able to feel a difference in your body. So we were like so certain it is not a loss. We’re investing for the long term, not for them for the short term, but we knew in the long term, it was going to pay off because everybody who would use chia seeds, after three days would come back and tell us, my joint pains. I can tell you there’s a very big difference, I’m feeling much better. After a month, someone with arthritis will come and tell, you know me, I’m just a different person.

Sam:                                      00:32:41               It cures arthritis?

Sabina:                                 00:32:41               It does take care of arthritis very effectively, actually for somebody with arthritis, severe arthritis, after one week they tell you there’s a remarkable difference in the way they’re feeling.

Sam:                                      00:32:52               Wow.

Sabina:                                 00:32:52               Yeah. And actually even medical doctors, they’re now even telling people go and find chia seeds. At that time, these people, they don’t even know whether it is a plant, it is an animal, but they all go looking for chia because it is something which has been proven and now, good thing there is a lot of researched information on the effectiveness of chia seeds.

Sam:                                      00:33:11               So who, who are the main people who are buying chia seeds?

Sabina:                                 00:33:15               Initially when we started basically the people with arthritis.

Sam:                                      00:33:21               So it’s mainly medicinal. Like people…

Sabina:                                 00:33:24               It has nutrients… Okay, let us address what is disease. Disease is, it comes as a result of the body lacking vital nutrients. So the moment the body gets the vital nutrients that it is required and in correct quantities, the body will feel eased, it will be okay.

Sam:                                      00:33:40               Yeah.

Sabina:                                 00:33:41               Yeah, exactly. And because chia seed does that, it provides the nutrients that are needed in the body. It makes the body feel like, now I was unwell, now I am well.

Sam:                                      00:33:50               Okay. And if you, do you like segment your customers or do you say, you know, we’ve got these, this type of customer, we’ve got this type of customer, that probably I think that the people who have got ailments, you’ve got the people who just want to be a bit healthier. We’ve got the mum’s who give it to their kids every day. Did you, do you sort of have different types of customers that you can talk about?

Sabina:                                 00:34:15               Initially when we started, we basically were going for people who are having conditions, so they wanted relief on.

Sam:                                      00:34:22               How did you find them?

Sabina:                                 00:34:24               We used to have conferences. We used to have like a workshop. We’d hear there’s a workshop going on, we would register for those workshops. We would go there, talk about it, like whatever it is that I do attend…

Sam:                                      00:34:36               When you say workshops, you mean like?

Sabina:                                 00:34:36               We do have organizations that do organize workshops, like women’s organizations. We have agricultural organizations that do organize workshops from time to time.

Sam:                                      00:34:50               What are they, like what’s a typical workshop? What might it be about?

Sabina:                                 00:34:51               It depends, us, we would go for any, because at the end of the day, it is their awareness that we want to create. Maybe there’s a women’s conference, we’re there, there’s an agribusiness discussion going on, business investment, we are there because this one will fall under business investment, under health. Anything, any workshop that they’ll allow us to go and have a discussion, we would go and talk about it. And as a result we’re able to reach out on so many people and in those workshops would give away actual samples. Yeah.

Sam:                                      00:35:18               And you’d say, so the first day you go, wherever it was you know, people have got ailments…

Sabina:                                 00:35:25               Exactly, yeah.

Sam:                                      00:35:26               You’d give them samples to try out?

Sabina:                                 00:35:30               Exactly.

Sam:                                      00:35:30               Yeah. Then how would people buy, if people had wanted to come back and buy them?

Sabina:                                 00:35:35               Thank God, the few people and the effectiveness of the chia seed, for every person who we would give a sample, they would definitely come back and buy for their own and they would know somebody else who has a similar condition or somebody else who has another condition that would benefit from it. So as a result initially we get, we got a lot of referrals. Very many referrals.

Sam:                                      00:35:57               What kind of referrals? Did they say call…

Sabina:                                 00:35:57               Yes, yes, yes. We would give out our business cards and in all of our packages, we do have our contacts. So they would call up. Yes.

Sam:                                      00:36:06               So at the beginning…

Sabina:                                 00:36:08               It was on a one,on one, at the beginning it was one on one.

Sam:                                      00:36:13               How are you packaging chia seeds?

Sabina:                                 00:36:16               This is how we’ve always packed our chia seeds.

Sam:                                      00:36:19               This is like clear plastic?

Sabina:                                 00:36:20               Exactly. You can see exactly. You can see what it is. And we’ve also provided a lot of information that will, that is eye catching first of all. It’ll make you curious. What is this? Are you telling me that this will give me all these? You know that curiosity will just make you, okay, let me just give it a try to prove them wrong. Amazingly, as I’m telling you, being a very effective seed, in three days, this person is already…

Sam:                                      00:36:45               They’re like I want some more.

Sabina:                                 00:36:46               And then they get it. Most, most of them, they got it for their parents, elderly parents. People with arthritis, it helps manage diabetes type two. It helps manage hypertension and those are very common, common, common conditions that people are having. Actually statistics shows that out of every 10 people in Kenya, 3 people, they do have either diabetes, hypertension, arthritis or all of them.

Sam:                                      00:37:12               Really?

Sabina:                                 00:37:12               Yeah, so you can imagine for every 10 people you talk to around here, there are 3 people who would be willing to give it a try.

Sam:                                      00:37:18               I’m just reading the back of the packaging, two tablespoons is the recommended amount?

Sabina:                                 00:37:23               It is recommended and basically this is just food. You can take more than two tablespoons, but ideally, what the body does when you give it more than it needs, it discards so don’t take more than what you need. Just take what is sufficient and you’ll be ok.

Sam:                                      00:37:38               Eight times more omega 3 than salmon. When you say salmon, that’s a portion of salmon or two tablespoons of salmon?

Sabina:                                 00:37:46               Three table, two table spoons?

Sam:                                      00:37:49               So it says 2 tablespoons of chia seeds contain eight times the amount of omega 3 in salmon.

Sabina:                                 00:37:50               Exactly. Omega 3.

Sam:                                      00:37:52               Is that like a proportion of salmon or is that like, how much salmon?

Sabina:                                 00:37:57               Yes. In a normal portion of salmon.

Sam:                                      00:37:59               Three times more higher than Spanish. 64% more potassium.

Sabina:                                 00:38:08               And good thing, you see, if you look at that information, you’d feel like it’s a bit exaggerated, you might feel like the information provided here is a bit exaggerated for marketing purposes. It is not because nowadays, we’re in the era of the internet.

Sam:                                      00:38:22               Yeah.

Sabina:                                 00:38:23               In fact, I used to tell people who are like curious about what we have indicated here, please do not go even into my website, can you go and check other research websites, which is totally independent, impartial. And they’d always come back.

Sam:                                      00:38:36               The branding here is Dr. Chia or Dr. Chia plus. Why is it not Chia Africa?

Sabina:                                 00:38:44               We are Chia Africa, the company is called Chia Africa, but we are calling it Dr. Chia Plus because after we had registered our chia here and our chia Africa, and Dr. Chia, we realized there’s another chia, Dr. Chia, I think somewhere in Australia.

Sam:                                      00:39:01               Really?

Sabina:                                 00:39:01               Yes, and you see that can bring about legal issues and not even that, we are developing a brand, we don’t have to develop a brand and then somewhere along the way we have to lose after working so hard. Yeah. Actually Dr. Chia Plus is patented here. Yes. We do have a patent for this.

Sam:                                      00:39:17               You have a patent for Dr. Chia Plus?

Sabina:                                 00:39:17               We do have a patent for this. Yeah.

Sam:                                      00:39:20               The best way to do is to put two teaspoons of Dr. Chia Plus seeds in a glass of water or any other liquid and take after five minutes. Why do you have to wait five minutes?

Sabina:                                 00:39:31               Because what you’re trying to do is to allow it to form the gel. What this does, once it comes into contact with any fluid, it absorbs water and becomes larger.

Sam:                                      00:39:42               Yeah.

Sam:                                      00:39:42               It does not dissolve.

Sam:                                      00:39:44               Okay.

Sabina:                                 00:39:45               We do not want that whole process to happen within your body. Actually, you can even scoop it and put it in your mouth, but you can see now the process of it absorbing water and expanding will be happening in your body. It will be expanding using your body fluids, which is not dangerous. There’s nothing wrong with that, but you’re going to get so dehydrated. It means you’ll need to take a lot of water. Yeah, so the best way, just make it easier for yourself. Make the gel and then just drink. It has no flavor. It’s tasteless. It basically has no flavor. If you put it in water, it won’t alter the taste, you won’t get some other funny taste on your water. You can put it in your juice. There are people who are not able to take it in plain water. You can put it in your juice, it blends basically with almost anything. Your milk, your juice, yoghurt, soup, anything. It’s user friendly.

Sam:                                      00:40:33               The best thing is to get it to do it’s gel for me otherwise, it makes you thirsty?

Sabina:                                 00:40:40               Yeah. You know, actually this seed, when it gets into contact with any fluid, it can even become like even a 20 times its size. So you can imagine you’ve taken this…

Sabina:                                 00:40:55               20 times its size?

Sabina:                                 00:40:58               That is happening actually in your body, can you imagine the amount of water being absorbed from your, from your body, your fluids. Yeah. Yeah.

Sam:                                      00:41:05               How much does, so this is 100 grams. How much does 100 grams cost?

Sabina:                                 00:41:10               Okay. I’m a wholesaler, basically, I don’t sell pieces.

Sam:                                      00:41:15               Yeah.

Sabina:                                 00:41:17               I think, I bet I’ll take you back now to how we got to where we are. Yes, yes.

Sam:                                      00:41:24               So the beginning when it was one on one?

Sabina:                                 00:41:24               Exactly.

Sam:                                      00:41:27               So maybe just tell me the story, starting from one on one to where you are now.

Sabina:                                 00:41:27               Yes. So when we got to a point whereby we had created enough base of awareness, we realized we’re getting no phone calls. We would run up and down every single day. You deliver here, you deliver, it become too hectic. The supply chain…

Sam:                                      00:41:47               What year is this?

Sabina:                                 00:41:47               That was in 2013. Yes. Let’s say around mid 2013. Yes, we did 1st October…

Sam:                                      00:41:55               The first one you did samples, the second one failed because of the rains.

Sabina:                                 00:41:58               Yes, exactly.

Sam:                                      00:42:02               So you did another harvest?

Sabina:                                 00:42:02               Yes, yes.

Sam:                                      00:42:04               So after you’ve done that, and there was no problem with that one?

Sabina:                                 00:42:08               Okay. Of course, now, that’s when we decided we’re not going to do large scale farming again. We’d rather spread this risk. Come do your five acres here, we also do our minimum, every season, we do our minimum of 15 to 20 acres, now plus the other small scale farmers who come in and do three, five acres, like that, like that and we’re able to do our hundred metric tonnes every other, every other season. Now, having established awareness, we were getting phone calls here and there, give me five pieces, give me 20 pieces here and now we realized we can even develop the brand. Remember initially we didn’t have the brand.

Sam:                                      00:42:46               Okay.

Sabina:                                 00:42:46               We’re just selling chia seeds.

Sam:                                      00:42:49               In an empty packaging?

Sabina:                                 00:42:49               In a packaging without a brand. So we realized now we have to develop a brand because if you want to take it, probably in the supply chain, you must have, you must be a recognized brand, because now there’s enough awareness and we are running helter-skelter every day, supplying here and there. So we started approaching the retail owners, retail shops. We went to Chandarana. In fact…

Sam:                                      00:43:14               Chandarana is one of the biggest supermarkets.

Sabina:                                 00:43:17               We do have Tuskys and Naivas, they’re quite big, Chandarana, they’re also equally big, but not to, if you look at the outlets.

Sam:                                      00:43:25               For people who are not in Kenya, Chandarana is a big supermarket. So you went to Chandarana?

Sabina:                                 00:43:31               Yes. We went to Chandarana, and amazingly some of these entrepreneurs, they always have a gut for this is it. It’s something new. We went there and we spoke to the owner, Mr. Amir. He had never seen chia seed, he had not heard about it and he was like. He orders all his branches. Supply each dozen, dozen, dozen across the board across the different sizes, taking a risk, that much risk, it is in December, towards the Christmas season. And you know what we supplied by 22nd, 23rd, by the time we were coming back in January around 15th, he had sold off everything. Yeah. And then there’s also another one lady, her name is Shanice. Shanice runs a shop called Elixir at the village market. She’s also another person who said, even before the branding, she would just buy and put in small packages and put in her shop. So she was like we’ve branded it, and she just took the leap with us. Yes. And from there, there was no going back.

Sam:                                      00:44:34               Okay, great. So to sell it to Chandarana, that would’ve been the end of 2013?

Sabina:                                 00:44:42               2013 December, yes.

Sam:                                      00:44:42               Okay. And then what’s it, what was the next big win after that? What was the next like thing which came after Chandarana?

Sabina:                                 00:44:49               We do have so many outlets and you see, like even for Chandarana, they do have many outlets. It’s not only one outlet. So you supply here today. Tomorrow there. We started moving to other retails. Big retailers, it became quite a challenge. One, first and foremost, they view you as a very small supplier. They’re dealing with food suppliers and not just Chandarana, we also had so many other local shops, like even out here, there’s a small supermarket, just before the Uchumi, I also do supply them, so many small, small outlets. So every day we were supplying everywhere. We are running down, up and down everywhere. We’re having now trouble with credit control, your supplying.

Sam:                                      00:45:33               But that would mean you delivered, but they paid thirty days late.

Sabina:                                 00:45:36               Yeah. There are those who are paying cash. There are those who are, they just don’t want trouble. They just pay you cash and they’re managing their finances very well, they don’t want to believe they’re having money yet it’s other people’s money because once you supply on credit and you’ve sold, that’s not your money. That’s somebody else’s money, so they don’t want to get caught up in that. So for them, they, there are those who pay cash, it will keep us going, but there are those who are also big, big time buyers, credit, credit, thirty days. So you can imagine by the time you’re getting money for the first supply, you’ve supplied somewhere in between another like four, five supplies.

Sam:                                      00:46:08               Yeah.

Sabina:                                 00:46:08               So we began to have trouble with our cashflow. We realized if we go on like this, it’s going to be so difficult for us. And again at that time, remember we are still small players in the supply chain because we’re not, these supermarkets are not only selling chia seeds. They’re selling sugar, they are selling floor, they’re selling all sorts of things.

Sam:                                      00:46:25               Yeah.

Sabina:                                 00:46:25               No, you are coming here, maybe you want your 200,000. They are owing somebody 20 million. They don’t even want to hear about you. So we realized nowhere, we are having trouble with our cashflow and we decide now we must have a solution for this. As we used to go round, there’s one major distributor that we would find, everyday you go supplying, you’d just find them. You go here today, he’s there. We realize this is a big muscle in the market, we did approach him, another very interesting person. Mr. Raju and his brother Asmok, and we appreciate them a lot. He had also not heard about this. He looked at it.

Sam:                                      00:47:05               So he’s a distributor?

Sabina:                                 00:47:05               He’s a distributor. Big time distributor, but he was a very receptive person.

Sam:                                      00:47:10               Okay. And how did you get a meeting?

Sabina:                                 00:47:13               We walked in, you know we looked around. We saw, we came, googled, realized it’s somewhere in Babadogo. We walked in there and imagine the first thing you walk in there, we had no prior appointment. We were just going there to ask around. We find the brother, he tells us no, today my brother is not in. Come on this day, we are going to give you a call. They called, we just went, discussed and he was very receptive, he said this is it. I’m going to give it, a shot on it. He said go do this. There are a few modifications we’ve done along the way, since we started the first packaging and all that but it hasn’t been so far away from from this. We just did that, he made his first order, first month he moved things around second month before we knew it. Sometimes he overwhelms us and we appreciate a lot, we’re so thankful to him because even the credit period that we agreed with him, he keeps to it. Today if I ran out of cash flow and they found it’s harvesting, he will not fail to give me the cheque. He’ll give me the check and tell me to go do your harvesting, it will not wait for the 30, 60 days, no, he’ll give me the cheque. So that resolved our cashflow issue.

Sam:                                      00:48:22               Wow. All because of you…

Sabina:                                 00:48:22               We just picked on the right person. He’s a big, big-time supplier. He’s a very smart and intelligent person. I like the approach of, he’s approach of doing things, he’s a risk-taker.

Sam:                                      00:48:37               I think you need to give yourself more credit for how good you are at the chia seeds. You got to two very senior people, one of the biggest supermarkets, one of the biggest distributors and one meeting. You convinced them to…

Sabina:                                 00:48:50               Let me tell you they also, they’ve been in the business for long. They can smell business. They had realized there’s a niche for superfoods because like the chia seed was just coming up, and they had not, and because they’ve been in the business for long, they just knew this the right time for this.

Sam:                                      00:49:09               Were they importing chia seeds from anywhere else?

Sabina:                                 00:49:12               There was no chia seed in the market? There’s only one supplier helping. I used to supply her in bulk and she would pack in her, because she has her own brand. It’s only Healthy U you who was importing it actually they were importing it I think from somewhere in Europe and they were exporting it at a very high price.

Sam:                                      00:49:33               Importing from Europe?

Sabina:                                 00:49:33               Yes

Sam:                                      00:49:33               That person has imported from somewhere else.

Sabina:                                 00:49:36               South America, it was coming from South America that time, yes, exactly. Yes. The logistics, it was becoming very expensive. Yeah.

Sam:                                      00:49:43               Cool. So how much, you now just sell wholesale?

Sabina:                                 00:49:51               Yes, we give the distributor and then he takes, actually even to these neighbours. If you go to these neighbours, you’re going to find chia seeds, there’s another shop here, if you gp, you go to Naivas country-wide, you’re going to find my chia seeds.

Sam:                                      00:50:01               And do you have an account with Naivas or you do it through the distributor?

Sabina:                                 00:50:05               I do it through the distributor. Even with the Aneal and all that, we all channeled them to Raju. The amazing thing is that Raju and Aneal, they had worked before, together before. Yeah.

Sam:                                      00:50:17               So what’s the exact numbers? I’m just interested like what’s rough figures, like how much does it cost to produce? How much does it cost for you to get it in the packet, how much you, what margin are you giving to the distributor, what margin is then gauged to the consumer, roughly what are we looking at?

Sabina:                                 00:50:37               I think I better talk, we do have our recommended retail prices, which we do expect people around to be sticking to, but there’s certain things if you look at very well, they might not work as you would want them to because today you might have your shop here. I know these neighbors will not pay rent the same as they’re their rent maybe in Hurlingham. Might probably be a bit higher, but we do have a certain percentage. We do play around within about 15 to 20% along the chain. I keep my 15% somebody else keeps their 15% and they don’t keep their and everybody feels it’s a fair deal.

Sam:                                      00:51:17               So that means, so how much does a pack of 100 grams cost in a regular Naivas, like what would…

Sabina:                                 00:51:23               This one we’ve recommended 195 shillings. These are a hundred grams? It’s about a 195, that’s the recommended retail price.

Sam:                                      00:51:34               $1.85?

Sabina:                                 00:51:35               Exactly. It’s about $1, 2 dollars, let’s give it $2, yeah.

Sam:                                      00:51:40               And we’re saying the supermarket…

Sabina:                                 00:51:43               They do have their margin there.

Sam:                                      00:51:46               So they’ll take about 15% to 20%?

Sabina:                                 00:51:46               Exactly.

Sam:                                      00:51:47               The distributor another 15%?

Sabina:                                 00:51:47               Exactly. And I also keep my 15%.

Sam:                                      00:51:52               So then it’s like, is, that what it costs for manufacturing?

Sabina:                                 00:51:58               Exactly. For the production and all that.

Sam:                                      00:52:00               Got it, I knew in terms of the supply chain, you know everything from the plants all the way up to putting it in this package, so there’s no other people involved?

Sabina:                                 00:52:11               No.

Sam:                                      00:52:11               Okay.

Sabina:                                 00:52:12               Yeah.

Sam:                                      00:52:12               Right. Okay. Did you think this will continue? This would be the main, if you look at how you’re going to expand the business will you continue to use this channel, you’re going to keep producing. Sell it to the distributor, or will you look for other channels?

Sabina:                                 00:52:29               Let me say for now, we’ve had a bit of good working relationship with DB and Herman Fear, and they have a Countrywide coverage and being a distributor because he does nothing else but distribution, what all these big companies, people who are doing biscuits, people were doing jams, people who are doing pasta and all that. They’re channeling their products to him. And again, having been in the market, he has reasonable muscle to be able to manage the credit part of it, because in the recent past we’ve seen supermarkets that have gone down with people’s finances, he has a muscle to manage that and to cushion you, to cushion basically people. Because for me, I’ll go and get my money from him, whatever business he’s having with the retail chain, he is, he’s able to handle that and because we’ve had very good relationship with him so far, I’m not planning of… And again, I am, the only other way would be I do it myself, it’s a big challenge in investment, I’d need to have a whole logistics center set up for the vehicles, the staff, and all that. Yeah.

Sam:                                      00:53:45               So if you look at kike how you might look to grow the business. What are the, what are the main, how are you thinking about, what are the main areas that you should focus on?

Sabina:                                 00:53:52               I would want to do much more than just the basic product, because the chia seed as it is, there’s nothing added to it. We just harvest, clean it, get it packed. I’d rather want to, I’d want to add even more value to it.

Sam:                                      00:54:06               Okay.

Sabina:                                 00:54:07               That is why we’ve tried to do high energy biscuits, this is what you call high energy biscuits. Yes, yes, yes.

Sam:                                      00:54:16               How does this work?

Sabina:                                 00:54:16               This one, we wanted it to work in such a way that it has lots of chia seeds, such that for people who were not able to consume it the way it is, they can still have the benefits of chia seed probably in their breakfast with a biscuit with reduced sugar because at the end of the day, we don’t want to give you a health product and then we dilute it. Yes, yes. So reduced sugar or we go natural and do it, do use stevia or something like natural honey.

Sam:                                      00:54:41               Yeah.

Sabina:                                 00:54:41               Plus the chia seeds. Even the kids would enjoy that even as a snack.

Sam:                                      00:54:46               Fantastic.

Sabina:                                 00:54:46               Yeah, we do have, we’re working on morning serials. We want to do morning serials that are friendly with our chia seeds.

Sam:                                      00:54:54               What’s this going to look like? So chia morning serial. How is, what’s the value addition that happened to it?? Is it like cornflakes with…

Sabina:                                 00:55:02               Exactly we are saying, the way you have cornflakes, which is also good for you, you can have some twist of a bit of chia seeds in it. Yeah.

Sam:                                      00:55:13               Okay. That sounds good. Currently, most of the, most of the business is happening in East Africa, but you’re beginning to look at exports. You’re doing some export at the moment.

Sabina:                                 00:55:28               We do get those inquiries. People will take like half a ton, one ton, actually, the American took a whole container of 6 tones. Yes. We cannot fail to do any export business. Besides that, there’s one challenge that has been affecting us, especially when it comes to the first one, the market, they prefer the organic. This is, we call it conventional.

Sam:                                      00:55:54               Conventional.

Sabina:                                 00:55:55               But ideally there’s no fertilizer. We basically, it’s a very, chia seed is a very resistant seed. You plant it, as long as you’ve weeded the place very well, you do weeding at the right time, it will grow and germinate without much trouble.

Sam:                                      00:56:10               Yeah.

Sabina:                                 00:56:10               It repels actually some insects and diseases by itself. So ideally, when you’re farming this, we do a put any fertilizers, we do not use any pesticides, herbicides, we don’t do that. But I the end of day for something to be recognized as organic, it has, it must have a certificate from recognized organizations.

Sam:                                      00:56:31               Yeah.

Sabina:                                 00:56:31               Yes. Again, it’s quite an intensive, cost-intensive exercise.

Sam:                                      00:56:38               Really?

Sabina:                                 00:56:38               Yes, it is. Because for you to get that, you’d invest almost like 30,000 USD.

Sam:                                      00:56:45               30,000 USD?

Sabina:                                 00:56:46               Yes. For that season, for you to be able to get actually that certification and you know you have to keep doing that for every other season because you see it might be organic, this time does not necessarily mean I have done it organically. And that is just for the certification. Besides the cost of the farming. Now, they want the Organica certified seed which is very much okay. But even, in fact now this coming season, October you also want to do it organic and keep it, whether somebody has ordered for it or not, because previous what we’ve done is get somebody who’s willing to get the organic and then we do specifically production for them.

Sam:                                      00:57:26               Yeah.

Sabina:                                 00:57:26               Yeah.

Sam:                                      00:57:27               Okay. So maybe just a few more questions. So when it comes to sort of the supply chain, so you’ve got this farm in Western Uganda, does the packaging, what is the packaging format? How is the logistics of physically getting the product from Masinde in Western Uganda through to the distributors in Nairobi? Where is some of the processing?

Sabina:                                 00:58:06               From the farm? The only thing we do is grow, harvest it. We just do the basic cleaning at the farm. This thing. By the time it looks this, there’s a lot of work that has been done to it.

Sam:                                      00:58:16               Yeah.

Sabina:                                 00:58:17               There’s no single husk here. Initially, when we started the farming, we had trouble with the sun because during the dry season, when it is harvest time, it’s windy and there’s dust being blown all over.

Sam:                                      00:58:30               Yeah.

Sabina:                                 00:58:30               So it used to have a lot of small sands, particles of sand. We do have a machine which is based here in Nairobi. That is why we have to bring it, farm clean, get it properly and thoroughly cleaned here before the packaging. There’s a machine also in Uganda, but the person uses it also for other things like sim-sim to, They are also farming a lot of sim-sim, sesame seeds.

Sam:                                      00:58:51               Sesame?

Sabina:                                 00:58:54               Yes. We call it sim-sim here.

Sam:                                      00:58:56               Yeah.

Sabina:                                 00:58:56               They’re also doing large scale farming there. So they use that machine basically to do that so it’s perpetually busy. You can almost have no time to have your chia cleaned there, but because we have a facility, there’s somebody who has invested about a hundred million Kenyan shillings in that equipment, so we’re able to do our cleaning.

Sam:                                      00:59:14               How do you know him, a hundred million dollars.

Sabina:                                 00:59:16               It’s a lot of money. We’re just here depending on that one machine. Yeah, it’s a huge investment, and we appreciate and whenever we walk in there, he’s always ready to do the cleaning for us, yeah, we walked that journey with him. He knew he wanted to invest in that. So as he was shopping around, we did provide him with a lot of the chia seed, for them to do their trials and eventually decide this is the machine they’re going to do their cleaning with.

Sam:                                      00:59:42               Yea.

Sabina:                                 00:59:42               Yeah, and we appreciate a lot.

Sam:                                      00:59:44               Very good.

Sabina:                                 00:59:44               Yeah. So basically after the cleaning, we do the cleaning here in Nairobi, packaging is done here in Nairobi.

Sam:                                      00:59:51               Yeah.

Sabina:                                 00:59:52               Yeah.

Sam:                                      00:59:53               I mean, do you have a warehouse or do you go straight from the packaging?

Sabina:                                 00:59:56               What you do is, because it’s bulky, chia is bulky. Yeah. The same facility where we do our cleaning, once we come with it from Uganda, he, he rents a space. We keep it there, do the cleaning, we keep it there. Then we just pick what he needs to pack. And again, because we are doing bulk packing and giving it to the distributor, we do the packing a week or so. And we do bulk supply to the supplier and he keeps, he has a warehouse, big warehouse, so we do have where we can put our raw materials. After the packing, we take it to the warehouse distributor’s warehouse.

Sam:                                      01:00:30               Have other people started farming chia seed?

Sabina:                                 01:00:34               Yes. Yes. We do have, we do have, actually most of them are Kentans. There’s also another Kenyan who’s doing farming in Uganda.

Sam:                                      01:00:40               Yeah,

Sabina:                                 01:00:41               They’ve also taken up land there, here in Kenya, we also didn’t want, we had already lost so much initially by doing the trials we arm, we lose, we knew the Americans had done quite extensive research on the farming in Uganda. Even in Rwanda, they opted for Uganda, they opted for Rwanda because of the Congo forests, it gives them very good climates. Yeah, so we decided we also don’t have the finances now to go and start researching and see how much omega 3 is going to be in my, when I do it here in Kenya, but as we speak we do know the people who are, who have done trials done trials and then funding it here and there.

Sam:                                      01:01:16               Yeah.

Sabina:                                 01:01:16               Yeah. It is good for business because you can see, when I said, even today, I know there’s somebody who has never heard about chia. Even today as I speak, even I’ve done this for so many years now, but they know even right now I speak. There’s somebody who has never had a boat chia. Go and reach out to that person. There’s somebody, somebody has to reach out. It might not be me.

Sam:                                      01:01:41               Yeah, it could be somebody else. Yeah. What do you think is you about your journey so far? What do you think the biggest lesson you’ve learned?

Sabina:                                 01:01:49               Farming is a very risky business, but it’s also fulfilling.

Sam:                                      01:01:54               Okay.

Sabina:                                 01:01:55               Once you’re able to understand the dynamics of about of activities the farming activities. It’s very fulfilling and more so, the chia seed. Basically, I want to be known for super foods, as we speak, I’d be soon doing black seed. It’s also very nutritional. We do have pumpkin seed. We have things like moringa. These are beneficial to the human body. Today as we speak. We’re dealing with many, many health issues. We have cancer small kids are getting cancer. You find a nine year old with diabetes, you wonder how did this happen when you give them this at times it comes from, you know what, I’m not limping anymore. My arthritis is good. It brings some kind of fulfillment. It gives me Joy and happiness and keeps me going. And honestly I’m passionate about farming. I’m an accountant by professional. But when it comes to, even when I talk about chia, somebody had told me that I go and work for them and, I’m not a marketer but i’m very very passionate about the chia seeds, so I’m able to talk about each with lots of passion. Yes. And the outcome is that chia seeds dance of disappoints never disappoints. Yeah.

Sam:                                      01:02:58               People who are listening at home,. What were the best ways that they can learn more about what you do?

Sabina:                                 01:03:04               Cheia Africa. We do have our website, 2013 [Inaudible]. We are also available. Our products are available on all super markets or all retail shoes, go to naivas, go to tuskys, go to chandaana, go to zucchini, go to Elixir, you’re going to find us there, even you’re locals now shop around you. You’re going to find chia, Dr. Chia seed products.

Sam:                                      01:03:26               Did you menton, should they just contact you about…

Sabina:                                 01:03:30               You can also contact, If you are internationally out there and you’d want to reach us, we do have a Africa, and we also do have our contacts there. We do have our telephone numbers for David Kisembo and also for Sabina Karumba.

Sam:                                      01:03:44               Fantastic.

Sabina:                                 01:03:44               Yes.

Sam:                                      01:03:46               Perfect. Cool. I’ll put a link to those in the show notes.

Sabina:                                 01:03:50               Thank you.

Sam:                                      01:03:50               Well Sabina, thanks so much.

Sabina:                                 01:03:52               Thank you so much and I’m glad about this. Yeah.


How Lynk raised $1.3m and evolved from “TaskRabbit for Kenya” to micro-franchising and construction


In this episode, I catch up with Johannes, co-founder of Lynk.

We initially spoke back in late 2016 along with his co-founder Adam. You can listen to the interview by searching for the episode on ‘How Lynk is building a “TaskRabbit for Kenya”‘.

The company has continued to grow over the years, and this time we meet in the new Lynk house/ office. With a new round of funding secured their employee numbers are up to 45 and, well, they need a new place to house people.

Johannes and I dig into how the business has grown and evolved over the past few years.

The company began by offering services to individuals, and whilst this is still part of their platform, a much bigger side of the business that has grown is B2B.

One of the things Lynk now it is effectively a construction company.

They use their roster of workers to effectively and efficiently build factories, as well as do the interior design and facilities management.

Regarding the individual services that are offered, such as beauticians, the model has also evolved into more of a micro-franchise. Practically this means that Lynk defines the services and how they should be delivered, and then give new workers on the platform a start-up loan to purchase the necessary materials and build their business on Lynk.


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Social Media Links



Twitter: @Lynk_Kenya



Sam:                                      00:07                     Intro.

Sam:                                      02:51                     Cool. So we’re here with Johannes from Lynk.

Johannes:                           02:54                     Hey guys,

Sam:                                      02:54                     Again. So we were last here with your colleague Adam, in the old Lynk house and Adam is away sealing big deals today.

Johannes:                           03:03                     He is, yeah, he’s signing contracts.

Sam:                                      03:05                     Signing contracts, so…

Johannes:                           03:06                     Doing other things.

Sam:                                      03:07                     Doing other things. So we’re having a catch up on what you’re up to. We initially had this chat around the corner in your old house, Lynk’s offices.

Johannes:                           03:18                     Yep. We are still, we were a smaller place then.

Sam:                                      03:20                     Yeah. So you know what I’m saying. So, so today we’re going to sort of, basically get a catch up of where Lynk is, but just sort of to get started, can you give us a brief overview of like what Lynk is what you’re doing at the moment?

Johannes:                           03:30                     Cool. Awesome. So we focus on two things at Lynk. We work with informal sector workers, so these are workers that often work without labor contracts, they form about 80% or so of Kenya’s population, right? People that don’t have access to the protection that comes with the work contract, right, like health insurance and whatever else. So that’s one side of what Lynk does. And then the second side of what Lynk does is technology. So we try to find ways that these informal sector workers can find more reliable work can build a career and can get access to the labor market that normally they’re locked away from.

Sam:                                      04:10                     ‘Fundi,’ That’s the word.

Johannes:                           04:13                     Yeah. So in Kenya I think an important word is ‘fundi’ that’s the general handyman, I guess. So that’s one part, I guess maybe like about 25% or so of our worker population could be described as ‘fundis.’ We, I mean, the word is nice, but what we don’t quite like about the word fundi is that often it implies that people don’t specialize, and we would, we want our worker population to try and specialize, right? So to get really, really good at one thing and then focus on that one thing. So we have fund in our platform, general handyman, but then we also have things, you know, like in segments such as, you know, like beauty. So you can get a, I don’t know, manicurist to come to your house. You could get a hairstylist to come to your house. We have things around you know, like cleaning and cookings, so you can get somebody to house your pins for you, or cooks for you or whatever it is. So any kind of service that’s designed at your house, but then also you know, like even physical things that somebody makes for you. So furniture making, carpentry, tailoring all kinds of diverse services. But then in addition to your informal sector workers who are as independent service providers on our platform, we also bundle products for business customers, so we work with our workers together to do things around facilities management and maintenance, right? So we have a team of key account managers that work with large-scale property management companies to do repairs and maintenance for their property space. And then we also do construction and fit out we call it the boutique construction firm where we have product managers, interior decorators, architects, who are working with our workers to deliver construction projects to our clients. So a diverse set of products.

Sam:                                      05:56                     Yeah, I mean, that’s definitely new because I seem to remember when we first chatting, it was sort of the, the analogy was a task rabbit.

Johannes:                           06:02                     Yeah.

Sam:                                      06:02                     If you need somebody. And we’re saying, you know, most requests are reactive, so, you know, I need some plumbing done…

Johannes:                           06:10                     Something’s broken. I need to fix

Sam:                                      06:11                     Are you saying, is the company taking more of a direction of this sort of bespoke work or yeah, how would you sort of describe it?

Johannes:                           06:20                     So we’re still kind of spread out in different segments. One thing that we did realize is that there is a lot of opportunity on the B to B side, right? So initially we did indeed focus quite heavily on the household side. Now we do a lot of work on the B to B side. So we have two different products for business customers, right? One of them is the maintenance and facilities management product we call that Lynk for business. And then the other one is the construction product. We have realized that there’s a lot of potential in that space construction is a thing in Kenya that is booming, right? So like developing countries usually grow with construction quite heavily. And on the customer side it was always kind of clear that it would take us time, and I guess also money to develop the household customer side, specifically because a lot of behavior, like our product relies on a lot of behavior trends, right? So we need to work in, we’re working in a space where there’s a lot of mistrust, right? So customers don’t trust workers. They think workers are out to, I don’t know, steal from them, lie to them and whatever else. And in many cases that may even be true, right? So they have kind of learned that behavior and we need toit would take us time and it is taking us time to build a brand where people are then trusting us and saying, yes, generally in the informal space, reliability’s an issue quality’s an issue or whatever else. But if I do it with Lynk, I do get a quality guarantee. I get a hundred percent money back guarantee if something goes wrong, right? They will help me when there’s any kind of issue and afterwards I will not be left with a bad taste in my mouth. I will actually be satisfied, happy with the job. And whatever else and I’d come back. So we think on the household, on the customer side and the personal customer side there’s a lot of behavior change that still has to happen for us to be able to access the whole market. I mean, we’re seeing Jumia needing a little bit of time to explain e-commerce and make it work and similarly fast, right? Essentially an eCommerce experience for services. So that’s something that before us didn’t really exist.

Sam:                                      08:10                     So how did the whole B to B side, how did that, that side of the business, how did that emerge? Was that, was it that a cold inquiry came in?

Johannes:                           08:20                     Yeah. It’s kind of like that, so initially I mean it actually emerged kind of at the time when we first spoke. What happened is that businesses came to us and said, you guys have plumbers, right? So like, maybe you can help me with my renovation project where I need a couple of plumbers, I also need some masons or whatever else. And we said, yeah, I guess we can, I mean, it’s not quite how we operate, right? We’re like an automated platform where, that sort of thing doesn’t really fit in. But like, let’s see. Right? So, and then we started hiring project managers to deliver those projects to have all work as coordinated, right? Because if we would just send, I don’t know, three, four different kinds of workers to project site and hope that they will organize it, that obviously wouldn’t work, right? So you need to manage a construction site. So we started hiring a key account managers and project managers would then go to our customers and work with them to deploy our work as effectively. And this product just grew. So we started adding things like design around it so somebody can come to us and can say, I want a design for my new office. And then afterwards I want somebody to build it. So now we have a team that delivers designs and then afterwards a team that delivers the bid out. And since this market isin some ways very difficult and specifically the construction space is maybe not very efficient. We are able to deliver higher quality at a lower price, then whatever the market is able to deliver. So that product has grown tremendously.

Sam:                                      09:42                     We see the design as in, someone will say, right, I’ve got a empty office.

Johannes:                           09:47                     Yeah.

Sam:                                      09:48                     And I kind of want you to do not just construction, but also the creative. How do you source interior designers?

Johannes:                           09:54                     We hired them on like full time on staff. So it’s a normal hiring process. And like many hiring process, it just takes time, right? You need to identify the right talent and whatever. So we have a team sitting right behind us, essentially in the room right behind us that fulltime works on designing and building different…

Sam:                                      10:12                     Okay. So the design, interior designers are in house. They don’t ask. They’re not, it’s not another…

Johannes:                           10:19                     This is not the platform approach. This is designers we have on staff architects we have on staff and project managers, we have on staff. Deploying our workers on construction sites. So from the worker site, this means for them that they get access to project sites that they normally wouldn’t have access to. Right. Because unless, I don’t know, maybe they somehow got lucky or something like that. But it gives them the ability to work on project sites, on days that they’re not busy on our platform.

Sam:                                      10:45                     Yeah, and I imagine as well, if you’ve got like, I actually got no idea how the interior design world works, but I imagine a big part of the thing is, yes, here’s my vision, but actually I need someone to deliver it.

Johannes:                           10:56                     Yup.

Sam:                                      10:56                     So I imagine…

Johannes:                           10:57                     Yeah that happens quite a lot. So I mean, frequent projects that we have is restaurant build outs. So we’ve built quite a lot of restaurants that you may know or may have been at, for example, Bao Box, J’s in Westlands, The Alchemist, we put down some work there. There’s a lot of different places. And in those cases, there’s often quite a strong vision that the customer already has where they say, I want my place to look like this. I want my furniture to be rustic. I want my, I don’t know what and then other types of customers that we have is actually start-up offices. So quite a few startup offices we’ve built out and in those cases, usually customers come to us and they say, I have this space. I want to maximize it for people to be able to work effectively, or I want it to be you know, like cozy and a nice work environment and quiet. So I need, I don’t know, phone booths to be quieted and so on and so on. And then we make a proposal and they say, yeah, I like it. Or they say change these three things. So quite traditional, I would say.

Sam:                                      11:49                     Okay, do you make foosball tables?

Johannes:                           11:53                     I don’t think we’ve made a foosball table yet, but what are you looking for one? We can ask our head of carpentry if he can make a foosball table.

Sam:                                      12:01                     You’re going out and kicking out all these startup offices. That might be something which you have on your list of your things. Okay. So that’s quite cool. Oh, so that’s like part of the business switch which came by, and one of the things which I remember speaking about was that the approach you were taking was to go broad and shallow rather than just try and do one vertical because there just wasn’t the demand for it.

Johannes:                           12:22                     Yup.

Sam:                                      12:23                     Are you seeing that? I mean from the sounds bit, you’ve kind of, you had your whole households and your actually this whole other vertical in the B To B side. Is that kind of how it’s panned out?

Johannes:                           12:32                     Yeah, so I think one thing that has happened is that we discovered the B to B side. I mean we knew it was there before, right? We started experimenting with some customers in the B to B side before when we spoke last. But now we know that there is a lot of potential. Now we’re actively going out and pitching to businesses to take over all of their maintenance.

Sam:                                      12:49                     So what’s the main, so the maintenance side is just that, some sort of recurring business that you’ve got.

Johannes:                           12:54                     Essentially recurring revenues.

Sam:                                      12:55                     And, so that would otherwise have been done by some sort of facilities management company.

Johannes:                           13:01                     There is a lack of supply in the market in this space, right? So this, this market is very inefficient there is a lot of corruption in this market there’s a lack of formal established companies that can deliver at a decent price point, high quality work. So when we go and pitch to property management companies, all of them say, wow, that is awesome. I want it. Can we please sign a contract with you guys? But the operational modality of it is difficult, right? So like we are realizing, and not only in the, in the B to B space, but in other, like in other products as well. The operational logic that we need to apply in many cases is actually it’s quite complicated. Right? So like, just to give you an example I talked about corruption, right? So like in the property management space, a lot of these companies are maintaining their own operations team, right? Their own maintenance teams to do maintenance for all of their commercial properties, right? So if you’re talking about the malls or whatever else and the people who they have on the ground often receive kickbacks from their suppliers, right? So they get paid by their suppliers to give them a contract.

Sam:                                      14:05                     This suppliers being?

Johannes:                           14:07                     The suppliers being the repairmen or companies that deliver work for them, contractors or whatever. So there’s a lot of, you know, like corruption in that space and we obviously don’t have any of that on our platform, which makes us very attractive to the owners of those companies, but maybe makes us not so attractive for the people on the ground. So we have to kind of navigate that in a way, which is interesting, right? Like, that’s not something we had thought about before but clearly the value add is tremendous, right? If we can cut out corruption in that space, deliver higher quality work and for a lower price, it’s obviously a tremendous opportunity.

Sam:                                      14:41                     I see. And what’s like your deliverable? I’m trying to think. So, do you basically say, right, you’ve got a fit, you’ve got a call out charge or you’ve got X. And then basically, let’s say that one of the malls, and they’re like we’ve got a broken pipe. Do you, is it like request comes into Lynk and you’re like, cool, who’s the nearest plumber or…

Johannes:                           15:03                     So we now have fixed prices so we have prices for our customers, right? So that they wouldn’t have to kind of guess what the price would be for that repair or whatever else, right? We can then tell them beforehand with quite high degree of certainty what the price would be. Right? So there’s certain rates for labour there are certain rates for specific types of materials and so on. And obviously there has to be variations depending on the complexity and so on. But we can usually tell, give them an indication beforehand. The way that we usually work is that or the value addition of us is that we send key account managers to these properties and we give them a regular report, right? So you get an inventory at the beginning when you sign up with us where we say we recommend these five things to be done. Here’s a respect of quote, write it across such and such. And then all they have to do is click and it will get confirmed and we will do it and then we will send them at the end of the week a report of what has been done, what has not been done, what else has been discovered that should be done? Right? So like maybe in the, while we were doing repairs, we discovered that you know, like one of the wash rooms has been leaking and it needs to be fixed as well, or something like that. Right? So good communication, consistent updates, notifications about what is happening and transparency also about like, what are you paying for What? Right? So like pictures being taken on site and embedded into the report. And then the transparency of what kind of money flows where I think is something that people find quite attractive.

Sam:                                      16:20                     That’s really cool. Okay. And did you have any, I suppose yeah, you mentioned you sort of were thinking this might happen one day. This is just something which I, when I first thought Lynk I was thinking yeah, like someone have a, if you’re going to have like a beautician come around or something. So it’s quite cool how it’s nowadays like a full on facilities managing company.

Johannes:                           16:43                     But let’s say a facilities management company with a technology component.

Sam:                                      16:47                     Okay, okay, so that’s that one of the things that you were quite, you personally were quite excited about, I remember, was all the data that you were collecting. So I can only imagine it’s gone. There’s more data. What are some of the cool stuff you do now?

Johannes:                           17:04                     Just to quickly explain this, my background is in data science and actually Adam and I met I think when I was running a data science meetup ages ago and that has since gone to sleep cause I didn’t have the time to keep it up anymore. But so that’s my background and that’s why I’m super excited about what we’re doing. Right. We’re learning pieces of information, data points about a space where there just isn’t a lot of data, right? Like there’s a lot of economic activity but there just is not a lot of data about what these workers are doing, what they’re earning, how they’re spending their day, and what else they can be doing. So super exciting. So we are collecting very, very interesting data. And we actually had I would say the first serious use of our data has been a loan. So we wrote out a loan product together with and supported by a company called BFA, bankable frontiers association, who’s been helping us to develop this. So they approached us actually and said, you guys are sitting on this worker data, why don’t you do something with it? And we said, yeah, great, we’d love to we’re going to focus on other things first, but I mean, you guys have got the expertise, so please work with us and we work together. And what we’ve come up with is one, a, I guess regular loan product where, because we understand what our workers are making, right? They’re making their money through our platform, we can more easily credit score them and it’s more reliable information than just transaction information that people have on their phone, right? Because, and also it’s kind of collateralized, right? It goes through us. So at the moment where it is generated, we can withhold a certain percentage and send the rest of the workers. It’s quite attractive to the workers because we are sending them jobs, which is additional income, right? So they don’t have to actually send us cash, right? It gets withheld at the moment when they’re generating cash where they’re making income. And it’s not fed so strongly as if you have to actively send money back to, to one of those something else. So we have a traditional product where we said, okay, who is eligible for a loan? Okay, you have to have certain levels of activity, do we have enough data about you also that so that you understand the value of the platform enough and you know, like we don’t accidentally incentivize you to leave the platform because we have given you a loan or something like that. And that worked quite decently, I would say. Like it wasn’t, it wasn’t glorious. But then what was glorious is that at the same time we’ve changed operational modality a little bit. So what we said is we want to be more heavily involved in what our workers are doing. Back when we spoke Sam, we actually had a quoting platform, right? Where all work were Auctioning essentially, right? They were, they were bidding for jobs. They were giving quotes and customers choose, chose who they worked with. We changed this, right? We said we want more, we want to be more directly involved in the value that our workers are delivering. Right? We want to define better what it is that is expected, right? If you’re a beautician like what kind of materials do you have to have? What kind of prices do you charge and what kind of cut quality expectation does the customer then get in return? Well, to better define this so that the customer experience would go up, but then also we made it a lot easier for our workers, right? If we define more or less what the work is that they’re doing, it is less hard. There’s less ambiguity for workers to have to figure things out, right? It used to be that people had to have quite a lot of experience with pricing and other things to be able to participate on the platform and that’s not the case anymore. Now it’s, we have an onboarding day essentially where a lot of things are explained and the products that people can deliver through our platform. I explained, and if you do have the right vocational background, you can already join the platform, right? You don’t have to have, I don’t know, five years of work experience to be able to join. And now together with the loan program, we’re actually able to give people start-up packs into jobs, right? We can say as a beautician you have to have these five colors of nail Polish, its more like 20, actually of nail Polish. And then, and those are the ones that we know lead to high customer satisfaction, right? Whereas, you know, in the status quo, before it used to be the case that people kind of had to guess, right? Workers had to gues., I’m a beautician, what kind of nail Polish do I bring to a job so that the customer gets what they want? And if they guess wrong, the customer is unhappy, right? You lost a customer right there.

Sam:                                      20:56                     And they’ve bought, and they’ve spent cash on…

Johannes:                           20:59                     Exactly, and they’re carrying it around through the city, right? Like, it’s not easy and so on. So but we know, right? So we have this understanding from our platform. So we give our workers a start pack. We start them off with a loan, which might sound a little bit crazy, but we start them off with a loan but because we are able to consistently give work to them, we actually don’t see other, right. We don’t see workers taking this and running away and instead of just giving them money, we’re giving them something to work with and then we’re giving them a means of generating income using that starter pack which is super attractive and the repayment rates are through the roof. Like, we have not lost almost any money on this. Right. We have not had any cases of workers not repaying. We had a couple of cases where we actually like two cases, where we, deactivated workers and that’s the reason why they weren’t able to repay, right. Because something went wrong or they weren’t able to follow the, our quality guidelines or things like that. So that is an awesome non-profit because it’s repaid just at the moment where workers are generating income. And it is not disincentivizing them from generating that income. Right. So like that is, that’s been working super well.

Sam:                                      22:02                     Wow. Is that money coming from your balance sheet?

Johannes:                           22:04                     We had had support so we have been given up to $100,000 from, I think ultimately it was MasterCard foundation but it came via DDD, digital divide data, and was managed by BFA.

Sam:                                      22:18                     We always get the acronym.

Johannes:                           22:20                     Exactly but again, like it wasn’t only about the money, it was also about these guys having a lot of experience, being interested in platform businesses and marketplace businesses, who were able to offer additional value add services and financial services and they approached us and said, you guys have to do this, like this, is the work.

Sam:                                      22:38                     You have to do this, you have to take this money.

Johannes:                           22:39                     I said, okay, fine. I was super excited and it was very successful and we’re using it everyday. So we, we built tech into our platform that we otherwise maybe wouldn’t have built yet and would’ve spent more time making do without, and now we have this product and it’s working awesomely and obviously our customers feel it right, because they get services delivered to them by workers who have the right tools and materials to deliver them well.

Sam:                                      23:03                     Yeah, because it’s really sort of I mean one of the things we spoke, I think I remember us talking about, was like the analogy to maybe Etsy or like or something and this idea of like, it’s quite interesting how you basically said yes, you know, there is free markets and Everyone, anyone’s free to do anything. But really we know that if you make a bench with these dimensions, it’s going to sell.

Johannes:                           23:26                     Yep. It’s quite similar. So what we’re talking about now is, I guess, or what I just said. Where I said that the operation with LGS changed a little bit. We sometimes explain this as micro franchising of services, right? So where maybe Coca-Cola used to give unemployed people some merchandise and a small cart to be able to sell Coca-Cola, we can give a prepackaged service to be delivered to customers for anybody who has the right kind of vocational training, which in Kenya is quite a lot of people actually and they can then deliver it and the likelihood of it going well is decently high. Right? So it’s, we call it, we like to call this micro-franchisees of circumstance.

Sam:                                      24:01                     Okay. And so does that mean they’re kind of going under the Lynk brand?

Johannes:                           24:04                     Yep, exactly.

Sam:                                      24:05                     Yeah. So that’s…

Johannes:                           24:07                     Often part of the startup pack in many cases actually a uniform. Right. So, because it makes such a big difference. If you are a beautician and you are, you know, like dressed in a uniform, you look so much more professional than if you’re just coming in your regular everyday clothes, maybe you’re smelling a little bit and so on.

Sam:                                      24:22                     So you’ve got Lynk deodorant as well?

Johannes:                           24:23                     Lynk deodorant, we don’t have. We need to work on that, that’s actually a great idea.

Sam:                                      24:29                     Okay. So what have been some of the, some of the projects in the last few years that you found really exciting? So maybe ones that we’ve not spoken about yet?

Johannes:                           24:39                     Yeah, I mean we had a, a lot of them, A big one was definitely the loan program, which is very interesting. I think a big game changer is also the realization that it is better for us to provide more clarity to our workers, more guidance to all workers. Right? So on one hand, on the one hand somebody might say you know, like we are restricting a little bit the choice that workers have on our platform. But the flip side of that is we’re making it a lot easier for people, right? They don’t need to think about the choices and they don’t need to successfully choose which choice would give them work and which choice maybe doesn’t. Right. But instead. We’re making it look easy for people. So that was a big, big change.

Sam:                                      25:19                     Yeah.

Johannes:                           25:19                     Then I think something that we discovered that is very interesting is and we don’t yet have a project to like change things at Lynk, but what we discovered was very interesting is that there is a lot of synergies between our projects business and the B to B side of our business, right? So when we’re talking to business customers, we’re saying let us take over your maintenance. The project team often comes in first and says, and builds out somebody’s office or somebody is, I don’t know, build somebody a factory or warehouse or something like that. And then afterwards they able to say, look, we built this out for you. What did you know that our company also has a maintenance service that you can subscribe to. Here’s a contract you can just sign here, done. And that is super interesting, right? These synergies that we now discover within. You mentioned earlier, right? We set ourselves up horizontally, but shallowly. I think the horizontal aspect of the platform is now showing its strength. They were able to find these synergies between the different products and serve as household customers, business customers, and then people who want projects, construction projects, built. And often there’s a lot of overlap between those services that we initially were a little bit worried about. Like we thought there might be but we weren’t quite sure turned out there is, so we have a couple of projects around, well, I mean we’ll start, a couple of projects are on, bringing those together.

Sam:                                      26:38                     How many, how many workers do you have now?

Johannes:                           26:39                     1,300 active, I don’t know the exact number. 1,350-Ish active. And then through the lifetime of the platform, maybe some 5,000 that we signed up but then maybe left the platform or, or we removed.

Sam:                                      26:54                     Sure. Active is has done a project in the last 30 days?

Johannes:                           26:59                     Has done work and can do, can continue to do work. Work will be sent their way is what this means. Okay. So active means the platform will send them, when a customer makes a request, the platform will send them that request.

Sam:                                      27:10                     Okay. What might cause a worker to be deactivated?

Johannes:                           27:14                     So, I mean, first of all, we don’t charge our workers anything, right? So joining the platform is completely free. What we do in return is we tell our workers, okay, you’re joining for free, right? We’re sending you work. So you must follow our quality standards. And our quality standards are one, two, three, and it depends on categories. Right? Every category has slightly different ones, but one big one for example is around timeliness, right? So we don’t, we don’t want our workers to be late. If you have to be late as a worker, as long as you communicate that fact there will not be any kind of consequence. However, if you don’t, there will be consequences, right? So then when you say, okay, you got warning, number one, strike number one if you get the second strike at some point you get temporarily deactivated and should you get the third strike, you get deactivated. And we communicate those. So like initially when we set up these quality standards we maybe weren’t transparent enough to all workers, right? So like we assumed if we send a message out to our workers who really understood. But now we actually handing them out, right? We’re telling everyone activity when we onboard them actually even several times what those are and why they’re important and why they make a difference and then we write them down and hand them to them. And it is quite well understood but those would be the reasons why we would deactivate a worker. Whereas it’s like if you do something bad, if you steal, obviously. Right.

Sam:                                      28:22                     Yeah. Okay. And was, was there always this onboarding process?

Johannes:                           28:26                     Yeah, so we have extended it. We started kind of without it. We never had workers who can register just without seeing us. So you had to kind of come and we create a profile with you we explain to you what, what you can and cannot do on the platform and so on. But it used to be that it was maybe like, let’s say one hour or two hour process in the very early days, right. Where we just kind of create a profile, that’s it. And then we hope that the marketplace nature of the business, will sort out, will weed out the bad actors and we promote the good actors and so on. Nd that is maybe where we are a little bit naive. I think in the early days, I came from Europe and I was like, let’s build a technology platform. But it turns out one has to be quite heavily operationally involved in order to make sure that some things work well, but you also have to immerse yourself to really understand what kind of issues are workers dealing with, right? Because we need, we realized, and maybe this isn’t so similar to other startup stories, that we have to immerse ourselves quite deeply and involve ourselves quite deeply with the work that all workers are doing, right? We have to really dive into the value chain, understand exactly what the value chain is and get involved at every aspect. Fix things that are broken, promote things that are working right. So like really, really deeply get involved in it. And that, that was a big realization. And that that’s what has changed I guess since maybe about like two or three years ago.

Sam:                                      29:34                     Yeah. What’s your favorite category on Lynk?

Johannes:                           29:37                     My personal favorite category. My favorite category is not doing so well. My favorite category has always been floor sending and vanishing, wooden floor repair.

Sam:                                      29:47                     Okay.

Johannes:                           29:47                     It is a very high value category, right? So like wooden floor when you sand and vanish it, that can cost like $2,000 or something like that. Unfortunately, people aren’t investing a lot in the wooden floors in Kenya. And secondly it’s just like if something goes wrong with the wooden floor, it’s very bad.

Sam:                                      30:02                     Yeah.

Johannes:                           30:02                     So we have very, very few requests there. That is my personal favorite, I think currently it’s actually deactivated even because we didn’t have enough good wooden floor senders and Varnishers. That’s my personal one.

Sam:                                      30:16                     The Lynk house does have wooden floors.

Johannes:                           30:20                     They have not been managed by us. I mean, we would have to like throw everybody out and tell them the floors are repaired, you can’t work today and then have them come back a couple of days later.

Sam:                                      30:29                     You could work in the garden actually.

Johannes:                           30:31                     Yeah, that’s true. It’s not big enough, everyone, I don’t think. Anyway. So like the, the most successful category. So one, one very successful category is a furniture making. Right. So, a lot of both like personal customers, households come to us for the furniture that they, that they want, right? Like let’s say somebody moves to Kenya and they need to furnish the house and it’s often quite nice to have something made for you as opposed to, I don’t know, buying imported furniture. So that category is growing quite nicely and is quite big. It also has a lot of synergies with the projects business and with the…

Sam:                                      31:01                     Would you call it like Lynk, soft landing or something like…

Johannes:                           31:04                     Exactly. You’re right, you get a massage, then you get like your furniture delivered the next day and you have a caterer come in the evening. Yeah, we should definitely do that. Packaging is something I haven’t done enough yet. We should do more.

Sam:                                      31:15                     Yeah. All right. So just a little bit about the company. So how many employees, how many Lynk employees?

Johannes:                           31:21                     Do you know what? I don’t know. I’ve lost track. I think it is 45.

Sam:                                      31:25                     Wow.

Johannes:                           31:25                     We’ve gone enough in the last few days.

Sam:                                      31:27                     Last few days?

Johannes:                           31:30                     So many people have been joining. Wait, we raised a lump sum, So…

Sam:                                      31:32                     Okay.

Johannes:                           31:32                     We had some money to spend. Not like I think a big difference is we’re now hiring more senior people, which, which is a lot of relief to us. There’s now people in the company who are a lot smarter than us, a lot better than us at the things that they’re doing and the things that they’re focusing on which is a big relief, right? We had to, for a while, be the smartest in the room and that’s a lot of burden. And now people are better than us, which is just great.

Johannes:                           31:56                     Yeah.

Johannes:                           31:56                     So I think about 45 people and we would like to grow to somewhere in the range of 70. However, we cannot do this in this house. We have to move office.

Sam:                                      32:07                     Okay, so, and so, yeah, I mean, I guess related, how has this whole funding been for the last like few years?

Johannes:                           32:17                     Very difficult. So I mean, we’ve been quite good at it to be honest, but still it took us quite a while to close our current round. We, I mean we all know the stories where people speak to hundreds of investors and before they can close their rounds or sell their companies, so I don’t know what it was seven of us. We had, we had lots and lots of conversations with lots and lots of different people. I think it was like, while it costs a lot of time and a lot of energy and a lot of head-space and I think it helped us a lot to really refine exactly what it is that we’re working on, right? Like to really understand given the criticism that we sometimes receive and given the feedback that we sometimes receive, really refine, like this is the right thing to focus on because we’ve gotten all of this feedback and we can distill it and make ourselves be smarter as a result of it. So it was quite a nice process.

Sam:                                      33:05                     Okay. Well what do you think was the clincher?

Johannes:                           33:09                     I think the clincher is has been that we have interesting traction to show in almost all of them. I think they serve different purposes for different business units, and I think it has been quite attractive for a lot of the investors that we are so active in the business side.

Sam:                                      33:27                     So, basically you raised a bunch of money a few years ago, and that’s kind of just been seeing you through all that. How is it, how’s that be doing in terms of operational profitability, things like that.

Johannes:                           33:37                     Operational profitability. The tough questions. No, I mean we’re very much a marketplace business and, and it is a well understood by us and our investors that those need time to grow. Right? Like you, you can usually not expect to just live off your margins. We do have an opportunity for this, right? Like in theory we could say, let’s scale up our margins a little bit and let’s scale down our team and we’d be profitable but we are not interested in running a small economy, right, like Adam and I both want to build a big business that has the opportunity to scale across Africa and operate in a similar model in different countries. So what we’re doing now is really figuring out how growing in a market looks like for us. Right? So like figuring out the commercial side a little bit better, refining, for example, our business product, which isn’t fully defined, right? Like we’re still in the process of really understanding what exactly is the best value proposition that we can offer. There’s a couple of things that we think might be it, but we need to validate them with our customers, right? We can’t just go out there and say, this is what we think is the best value proposition and afterwards it was wrong. And then in the next round would be around expansion, right? So we will maybe towards the end of this round we will maybe have boots on the ground in a second market, but probably not.

Sam:                                      34:49                     So just Kenya.

Johannes:                           34:51                     At the moment just Kenya.

Sam:                                      34:51                     Just Nairobi?

Johannes:                           34:53                     Yeah.

Sam:                                      34:54                     Just Nairobi.

Johannes:                           34:54                     I mean our project team is active across Kenya. So we, we’ve built houses, we’ve built, we have done projects in Kisumu and in other places.

Sam:                                      35:03                     Yeah.

Johannes:                           35:03                     So we are active across Kenya a little bit. We do have even a, what we’d like to call a special project that is spanning multiple Kenyan counties, but the marketplace, the platform is only active in Nairobi.

Sam:                                      35:15                     Okay.

Johannes:                           35:16                     And most of OUR workers are here.

Sam:                                      35:17                     Yeah. Okay. So how much do you actually want to scale. Like it might be, I don’t know, not about straightforward, I’m thinking it might not be that straightforward in order to scale, let’s say you just go to Rwanda.

Johannes:                           35:31                     Yeah, we’d have to set up operations in the new places. Right. So I mean, in terms of the platform and the market place, it’s not crazy, right? Because what, a lot of the work that we have been doing in the last few years, it’s actually understanding exactly what are the services that we’re offering them. How are they exactly defined? And what I told you earlier about the micro franchising, right? We really understand what is a good definition for a product that a beautician might offer. And taking that and packaging and repackaging it for Rwanda isn’t very difficult to do. So what you have to do in Rwanda then is find enough workers, which is honestly at this point we don’t need crazy amounts of workers so like given the beautician example, a beautician can do four, five, six jobs in a day, right? And that, if you translate that into monthly numbers, you can do something like 80 to a hundred jobs and that’s just one person. So when you start setting up in a specific location, you don’t need crazy numbers. It’s not, it’s we really need an operations team. We need brand presence and we need our tech to be translated for different occasions. That’s kind of it.

Sam:                                      36:35                     Is it a safe assumption that the beautician service will be the same in Rwanda as it will in Kenya? Right. Are you gonna, or is it safe to say people like to have orange nail Polish and stuff?

Johannes:                           36:47                     Yeah, I mean obviously there’s cultural differences and those kinds of things to take care of. But I think the principle is the same. Right? And if its not polishing your nails then it’s cutting your hair and if it’s not cutting your hair then it’s, I don’t know, cooking something. I don’t know what but like the services aren’t so different. They are not even so different if you compare them to Europe, if you compare them to India, if you compare them to other places. So it’s not crazy. But obviously there’s cultural nuances to take care of. And that’s specifically true when we’re talking about, you know like completely different places. Like where exactly, for example, one market that we find quite attractive is Egypt, right? And then language is different. There’s other cultural nuances to take care of, right. To like, especially delivering, I don’t know, beauty services and things like that. Right. So that is a little more complicated but it’s not crazy. I think the translation of service to other places, is probably the smaller problem to deal with.

Sam:                                      37:33                     Cool. Okay. So there’s the, most of the heavy lifting has been done. In fact you’ve done it for this one market so once there will be some refinement, yeah.

Johannes:                           37:42                     Obviously there’s refinement and I think it is always complicated to have a multinational company that you’re running right with operation teams in different locations and stuff like that. But it’s probably not that we have to redefine whatever Lynk is doing in a different market completely. And they’re probably be quite similar.

Sam:                                      37:56                     Cool. All right. Have you started feeling competition from other companies?

Johannes:                           38:01                     Not at all. I mean this is both a blessing and a curse, right? So this market is difficult. Working with informal sector workers is hard. Asking them to be on time, it’s hard, right? And we think we have quite a good handle on it where like we think we understand the quality that we are actually delivering quite well. We think for somebody to catch up to that level, it’s going to be hard. Right? Like we’re even not very worried of international players coming in, right? If somebody said they want to set up the service market place in Kenya, we’d say ‘karibu,’ good luck and then maybe afterwards they’d buy us because they realize what we’ve built.

Sam:                                      38:35                     Is that still a plausible exit strategy for an international company to come in and buy you Lynk?

Johannes:                           38:42                     Yeah. So in terms of exit strategies, there’s a couple of things that we think could be interesting. I mean, primarily we want to be a scale game, right? Like primarily, we want to build something massive and then hopefully realize opportunities because we’re big but I think services actually synergize quite nicely with a couple of companies that are expanding quite heavily in the markets around us. Right? So like if you’re talking about, I don’t know, motorbike delivery businesses, so stuff like that, or motorbike taxi businesses or stuff like that. And in Southeast Asia you have Go-Jek and others who have both services and deliveries and taxi businesses. And the reason they synergize so well is because for us, a big part of our costs, of our workers costs is transport. Right? If you, if you keep them very busy, then labor doesn’t have to be crazy. And materials is obviously substantial but maybe not, not crazy either. And transport then starts being substantial. Whereas I think margins is one of the big problems that most delivery or taxi companies have, right? Like margins are low in that space. There’s a lot of competition. So there’s probably an interesting opportunity there. We think eCommerce companies often find it attractive to look into services. Amazon has Amazon home services and in Asia, I think in Asia, I’m not sure where they have it. So there’s a couple of opportunities like that that would be interesting.

Sam:                                      39:58                     The reason being is that they’ve got the customer.

Johannes:                           40:01                     Exactly.

Sam:                                      40:01                     What, you know, there’s only so many electrical items that a customer’s gonna want to buy.

Johannes:                           40:06                     Yeah. So then how do you expand the value of that customer? Maybe send them some services. Yeah. We think that could be interesting. Then what I think is very interesting is that we are one of the few companies that are offering products made in Kenya made by the informal sector specifically. And that maybe goes nicely with e-commerce as well, right? If you’re saying, okay, we have furniture made in Kenya and most eCommerce businesses in Kenya are actually just importing stuff from China and selling it here. Maybe there’s a story there as well, right. Where we say we have local guys make local furniture at high quality and decent prices. I think there’s something to be explored there as well.

Sam:                                      40:40                     Yeah. Very cool. Alright. We’ll just do a few more questions. So we last spoke just under three years ago. If we were to speak in another three years, what would you recon, I imagine headquarters would still be in Nairobi, I guess.

Johannes:                           40:58                     Yeah, very likely. I haven’t actually thought about headquarters so much then about expansion markets.

Sam:                                      41:02                     Yeah.

Johannes:                           41:03                     So in three years I would say hopefully we have expanded to let’s say two other markets, we will start thinking about really scaling this business out. We will have saturated the, not saturated, hopefully. I mean, hopefully the market is bigger than that, but we will have started properly owning market share in Nairobi. And we will have gone to two other countries.

Sam:                                      41:28                     Okay. So that’s not like you speak some companies and they’re like boom, we’re going to be in 50 countries in the next year it’s still, it’s a bit of a slow burner.

Johannes:                           41:37                     I mean in three years that’s not a crazy amount of time. Right. So like in three years. So we really do want to spend the next two years in a row. Right. So like as I said, maybe we’ll have boots on the ground in the second market, but only some boots. Right. Not many boots. And then you do need some time to figure out how exactly you’re going to do this. I think it might actually be prudent to take it one at a time in the beginning as opposed to just expanding like all over the place. We do think that most of the conclusions that we’re drawing here in Kenya will apply for other markets as well and we will most likely choose larger markets than Nairobi as our expansion markets. So probably in terms of like market opportunity and potential, those will be quite attractive.

Sam:                                      42:15                     Okay.

Johannes:                           42:15                     So we should also be fast to go to those markets to make sure that we have some kind of first move advantage.

Sam:                                      42:23                     Nice. And when you run out of money you’re gonna have to like raise some more money.

Johannes:                           42:27                     We have to raise more money.

Sam:                                      42:28                     Okay. I’m sure by then you’ll have lots of lovely examples of like how it’s all…

Johannes:                           42:34                     Of course.

Sam:                                      42:35                     And what’s been like, what projects or thing are you most looking forward to in the next 12 months?

Johannes:                           42:43                     You mean like special project? Like things that we want to do in addition, like the loan product, other things? Yeah, I think something that I’m quite excited about and that could offer opportunities as well. I think it would be the inclusion of a wallet in Lynk. I think that’s what we see some of the other marketplaces do, especially in Southeast Asia, right? Like Go-Jek is maybe an example, right? Where they expand the value that their platform has by going into financial services.

Sam:                                      43:10                     These are the value for the worker?

Johannes:                           43:12                     So this will be better for the worker but potentially also for the customer. So we already have a semblance of that. Right? So like customers can hold a balance with Lynk just because they, you pay us money and then use that money to buy services. Right. So yeah, it’s obviously not fully your wallet. There’s also legal question to be answered when you really want to have a woman and stuff like that. On the workers side, I think this is special especially interesting because I think savings is something that the workers really need and usually don’t have in this market. Right. Informal sector workers struggle with savings specifically, right? Like no one says something they find very interesting, but what they actually do need a savings. So you’re going to say, cause I mentioned the payment’s coming quite they coming lumped regularly. Yeah. And l umps. Exactly. And then you don’t have anything for a week and then you have something again and then and with Lynk, yes, we provide you more consistent opportunities. Right. In the more heavily utilized categories. It’s like three, four jobs a day. Right. So that’s, that’s nice but imagine if you can say, okay, I want to keep 5% of all of the money that comes to me through Lynk in a savings account. Right? Like what does that mean for, I don’t know, like a single mother or something like that to be able to save put it, lock it away. Right. So that it doesn’t get touched. I think that has the potential for huge impact. And I think it would make the platform a lot more valuable. So that’s something I’m excited about. I mean, the biggest thing to be excited about right now is scaling out, like starting actually marketing activities, right? Like commercial deep, being commercially more active and present than we have been to date, we were cash constraint until now and now we can actually do interesting stuff. It’ll take us about three, four months to get ready for these kinds of activities. But we’re super excited about it.

Sam:                                      44:40                     Very cool. And as before people can go to

Johannes:                           44:45                     Yes.

Sam:                                      44:46                     Do you ever get called up, like is there an, do you ever get called out by LynkedIn’s back in the funny name? What does he wanna know?

Johannes:                           44:53                     I mean people do get confused quite a lot. That’s true. We don’t get called out. I think there is a product by Microsoft called Link L. I. N. K. so people often confuse it with that…

Sam:                                      45:02                     There are worst associations for people’s house.

Johannes:                           45:03                     But just to be very clear guys, you should go to

Sam:                                      45:07                     Is there an app?

Johannes:                           45:09                     There’s also an app. We, so resource constraints, we have to take it off the play store because it fell behind and features. So like we adjusted, we expanded on the feature set that we had and we just at some point said, okay, we can’t offer net that has less, has fewer features than the website. That’s kind of embarrassing. We’re, sometime this year.

Sam:                                      45:29                     Sometimes this year.

Johannes:                           45:29                     Sometime this year, you haven’t even started working on it. There’s so many things to do.

Sam:                                      45:34                     But yeah, as a first protocol, Okay.

Johannes:                           45:37                     That’s it.

Sam:                                      45:37                     Fantastic. Awesome. Well Johannes, thanks so much.

Johannes:                           45:39                     Awesome. Was a pleasure.


From Uber to call centre: why Flare decided on the human touch for emergency dispatch in Kenya


In this catch-up episode, I chat with Caitlin who runs Flare.

Caitlin and I first spoke in late 2016, and you can listen to the original interview by scrolling down to the episode named Ambulances.

The premise then was that Flare would become a technology platform to connect people with ambulances much in the way that Uber has developed the model of hailing a driver through their app.

Whilst the vision of providing world-class emergency dispatch services remains unchanged, the company has developed more of a human touch.

As Caitlin and I discuss, a core offering they now have is a 24/7 dispatch hotline where trained medical professionals consult with callers before dispatching them to the appropriate provider.

We also talk about other things that have come from running the business over the past three years.

How they’ve been cautious to not scale too quickly, how large corporates are signing up to the service, and their considerations for international expansion.

The interview takes place in the garden of the Flare house (you may notice a number of companies such as Lynk and SunCulture operate from residential homes) and so there may be some background noise, not least from Koko – the office dog who comes over halfway through.


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Social Media Links



Twitter: @RescueByFlare



Sam:                                      00:07                     Intro.

Sam:                                      02:37                     Cool. So we’re here today with Caitlin from Flare again. Caitlin, welcome to the show.

Caitlin:                                  02:42                     Thank you so much.

Sam:                                      02:43                     So we first chatted nearly three years ago, would you believe it, and we went through bit of an overview of what Flare was doing, what you were sort of getting set up to do. But yeah, just for people who perhaps haven’t listened, could you just give us a bit of an overview as to what Flare is and what your doing at the moment?

Caitlin:                                  02:59                     Absolutely. So at Flare we are building next generation emergency response systems. So what that actually means is that we’re building 911 for the 60% of the world that currently does not have an existing system.

Sam:                                      03:13                     Very succinct. And that was pretty much, that vision has not changed?

Caitlin:                                  03:17                     That vision has not changed. Definitely, the way that we’ve gone about it has changed. And how, you know, we operate. But as it relates to what we focus on, the vision has been the same since beginning.

Sam:                                      03:30                     Fantastic. And it started off sort of version one, I seem to remember was talking about was there’s a real problem with ambulances, like calling an ambulance in Nairobi in particular and that you’ve got I think it was 43 private ambulance companies. And then if you need to call an ambulance you’d need to go through in theory all 43, and it could be that there’s one around the corner but you don’t give them a call and you are basically looking to aggregate them all together, so that you can call, I think the dream was that you could call one number and then the one that was closest would be dispatched to you. How did that go in building that out, is that basically been built out?

Caitlin:                                  04:09                     Yeah. So from three years ago to today, we’ve actually made that a reality and have today responded to thousands of calls and dispatched thousands of ambulances to patients in Nairobi and also across Kenya. Our fastest response time is four minutes, which was amazing. And it was the exact same scenario that I described where someone calls us distressed and we knew that there was an ambulance around the corner, based on our technology and were able to dispatch. The part that’s changed is that we actually today operate the 24 seven dispatch center. So when someone has an emergency, they do call one single number, that single number routes to our dispatch center. It’s picked up by a paramedic or nurse who triages the call, provides care over the phone and uses our technology to dispatch. So I think the change is that we realized the value of a human in emergency response and that there is absolutely and was opportunity to digitize a lot of it, but there’s still is that value of having a voice at the other end of the call to calm you in some of the worst moments of your life.

Sam:                                      05:14                     Got it. Because the initial awareness was that it was, you know, Uber for ambulances and you’d kind of press a button and, you know, so and so is on his way. So you’ve sort of tweaked the products in such a way that there’s now, when, when you say they call a number, do they call Flare?

Caitlin:                                  05:33                     Yeah, so they call us, our consumer product is called rescue and so they call rescue. So we have a number that is…

Sam:                                      05:41                     Is it like a 07…

Caitlin:                                  05:43                     Yeah, incredibly easy to remember.

Sam:                                      05:45                     What is it?

Caitlin:                                  05:45                     So you are provided it once you sign up as a member.

Sam:                                      05:47                     Okay, very good, so I’ll sign up first.

Caitlin:                                  05:49                     So you should sign up at and then you’ll be given the number, but you make that single call. And what we realized again, in the moment of emergency, you don’t necessarily need to download an app or press a button is you just want to call instantly that one number and hear someone at the other end of the line reassure you that you’re going to be okay. That other individual at the other end of the line needs to be enabled by technology such that they can quickly make the right choice. And that’s where our technology is built in, is that it’s on the back end. And it allows our dispatchers to, you know, quickly find the right resource and get that ambulance moving towards you.

Sam:                                      06:26                     Got it. Okay. So when somebody signs up to rescue, they save the number in their phone?

Caitlin:                                  06:33                     Yep. It’s as simple as that.

Sam:                                      06:35                     Alright, very good. And then the dispatch team, so these are employed by Flare or employed by rescue. So you’ve got like a team and it’s 24/7?

Caitlin:                                  06:44                     Absolutely. So we have a team that works 24/7, 365 and is there to pick up your phone and phone call in seconds. And they’re all medically trained and so that they can provide directions over the phone. So if you’re having a heart attack, they can give the caller the step-by-step directions in layman terms such that you can actually provide that care over the phone while they’re also dispatching the ambulance.

Sam:                                      07:07                     Really? So 4 a.m. On a Wednesday morning, you’ve got a trained paramedic on an end of the phone?

Caitlin:                                  07:12                     Absolutely.

Sam:                                      07:13                     Is that quite expensive? To like, I’m thinking, if I’m a trained paramedic, would I want to be at work at 4:00 AM on Wednesdays? Do you have to pay them quite a lot?

Caitlin:                                  07:21                     I mean, we make sure they’re taken care of, but I don’t, I think one of the things is medical professionals here are a little bit more affordable, but at the same time, like we saw the actual value of having someone trained at the other end of the call. Also, because the system here is so fragmented and chaotic, there are more medical decisions to make. In the US or the UK, it’s pretty straight forward. You call 911, they dispatch an ambulance and they know exactly what hospital you’re going to because it’s based on your location. Here, there’s a lot more that needs to be decided, so they need to decide at 4:00 AM on that Wednesday, if you have a heart attack, where do you go? And you don’t know that there’s only one 24/7 facility that has a cardiologist, our dispatchers do. And they can make those decisions using our technology, which helps guide them, you know, to make the best decision. But otherwise, you know, if you just have a nonclinical person, we believe that you wouldn’t have as meaningful of a service.

Sam:                                      08:18                     Makes sense. So is there like a big sort of database of hospitals? If I click this button, click, click, click, click, click, cool, here’s your list of three.

Caitlin:                                  08:26                     Exactly. So it’s based on proximity and then what we say appropriate. So appropriate means does the hospital actually have the service that you need or we suspect you need to provide you that care. So some of it is pretty straight forward. Like if you think about it’s a woman who goes into emergency labor or has obstructed birth, does that facility have the ability to do emergency C section or you’ve broken your ankle, does that facility have an x ray machine so they can actually see whether or not you know, you have a fracture. So it’s some really basic stuff, but all of that is in our system such that our dispatchers are enabled by that technology.

Sam:                                      09:04                     Yeah. I can’t remember if we spoke about this on the podcast or at another time, but you basically had to go out and build that database of categorizations of everything. That doesn’t exist.

Caitlin:                                  09:14                     Exactly.

Sam:                                      09:14                     That sounds like a massive headache if you’re, not headache, but that’s quite job to get around to.

Caitlin:                                  09:22                     It was quite a job, but I would say now because we have a lot of throughput, meaning we have a lot of calls, we’re validating that information every single call, in the sense that if today Nairobi hospital has a functioning CT scan, but tomorrow when we call them for a dispatch, they don’t have a CT scan that will be turned off in our system. So we’re constantly revalidating that information. So once you’ve built out the system, we were able to kind of quickly adapt and kind of adjust. But it is an unbelievably like powerful set of data that no average individual will ever know or understand.

Sam:                                      09:53                     Are you utilizing it just for Flare? Or could you, I don’t know, sell access to that database to another organization?

Caitlin:                                  10:01                     Maybe if the price tags is big enough.

Sam:                                      10:03                     Yeah. Alright. I was thinking like it’s quite a lot of work that you’ve done. And I’m just wondering if there are other ways, if you’re sitting on it, like are there other companies like, I’d really like to be able to tap into this and yeah, maybe you could start like medical equipment leasing or something where you could, if you notice that these particular, sorry, I’m getting off topic.

Caitlin:                                  10:20                     I think for right now, our focus is on just making sure that we provide an unbelievably lifesaving service and that we do that in seconds and we make sure that not only do we save your life by getting you an ambulance, but that we also make sure that you get to the right hospital. That hospital is ready to actually provide you that care.

Sam:                                      10:36                     And you’re also doing fire engines?

Caitlin:                                  10:39                     So we are, so the kind of longer term vision meaning longterm in startup land is like six months, is that we build out our service capabilities such that we can provide, you know, not only medical emergency support but fire as well as security, police so that you can call, just like in the UK where you call 999, they then, you know, triage the call, is this, you know, police matter is this medical. Sometimes it’s both, you know, and so you need both resources. And so that’s the kind of future that we’re working towards is bringing all of those services together.

Sam:                                      11:13                     Yeah. How have the government been, I tend to say, are they sort of aware of what you’re doing? Have you had to like go through some regulations and things if you’re doing this or is it as a private company, are you perfectly legit? Is it perfectly legitimate for you to offer these services which could in other places be done by the States?

Caitlin:                                  11:31                     Yeah, I mean I think that’s an interesting question. I think a lot of countries, actually you think of it as a public service, but it’s actually offered by a private provider. So I’ll give you one European country, Denmark. And it’s, actually the largest providers called Falck and they’re a private provider. So I think there is actually a lot of historical precedents across the globe…

Sam:                                      11:50                     That’s a medical or fire?

Caitlin:                                  11:51                     Ambulance.

Sam:                                      11:53                     Ambulance, ok.

Caitlin:                                  11:53                     And so they do that. I think here we have engaged the government at a national level. So as probably most are aware in January there was the terrorist attack. And so I think another big use of our system is that during a mass casualty or a natural disaster, this was not obviously a natural disaster, but if there were to be a landslide or something like that, the need for emergency services is heightened. Like, you know what only need one ambulance, you might need dozens. And so from that level we’re starting to work with them to figure out how do we plug into that system because we are the largest provider and network of ambulances. And so we’re actually best able to provide that support. So at a national level, we’re working on that. And then Kenya is divided into 47 counties. And every single County manages their own emergency response. We’re starting to work on a pilot basis with some governments to understand how we could best work with them.

Sam:                                      12:51                     They’re basically saying, we’re currently trying to do this on our own, but we could just use Flare, and that basically take that problem away from us.

Caitlin:                                  12:58                     And it would, yeah, help optimize their services, make them more accountable, give them the data that they need and be able to provide a service back to their constituency.

Sam:                                      13:06                     Okay. So who are the main customers of Flare at the moment? So is it mainly just consumers, you know, individuals that are paying for flare?

Caitlin:                                  13:20                     Yeah. So the individuals pay for it through the membership. So you can sign up at

Sam:                                      13:25                     Yeah.

Caitlin:                                  13:25                     And it’s 2,400 shillings per year per person. It gets cheaper as you add on additional family members, but that includes everything. If you ever have an emergency, you never pay for the ambulance. And so the brilliant part about that is…

Sam:                                      13:37                     We never pay for that? Cause you were saying before, it’s like anywhere up to a hundred dollars.

Caitlin:                                  13:41                     Exactly. So we lowered the price so that a membership, because we know that every year you’re not going to experience an emergency and you should never think twice about having our product, you should always have it.

Sam:                                      13:52                     Yeah.

Caitlin:                                  13:53                     And so when you have an emergency, we don’t want to ever have to collect or ask you for money. Cause if you can imagine that you’re like choking and we’re like, “and our paybill number is 500134, put your account name as your name,” you know, or whatever. Like we don’t have the time to deal with that. And so it’s just a super simple product, highly affordable, meaning that you know, most can actually afford it. Today we sell to big corporates or small corporates. A lot of our clients are schools, factories, taxi companies, anyone who has the likelihood of experiencing an emergency tends to be a good client of ours. But we also sell direct to consumer online so you can buy it as a family or as an individual to make sure that you’re covered.

Sam:                                      14:33                     Okay. So, how did you land on 24, to 2,400? How did you, did you, is there a spreadsheet somewhere of like, Yeah.

Caitlin: 14:45                     There is a spreadsheet. So it’s basically a calculation of risk. Meaning how often will you actually need an ambulance?

Sam:                                      14:51                     How’d you get that? How’d you get a gauge for that?

Caitlin:                                  14:53                     Well, so every country is different. And the amazing thing is, is no one has that data in emerging markets or places we’ve never had 911 system. So we’re starting to build that up. So there so our membership prices, you know, may become cheaper or may become more expensive as we get smarter about the actual data. But generally you need an ambulance more likely in the first five years of your life and then in the last 10 years of your life. So there’s a big spread of like little babies and kids and then once you’re, you know, in the last 10 years of your life.

Sam:                                      15:23                     Yeah. Okay. And how many people have signed up?

Caitlin:                                  15:29                     So in total we have over 30,000 members.

Sam:                                      15:31                     Really? 30,000 members.

Caitlin:                                  15:33                     Yeah.

Sam:                                      15:33                     That’s incredible.

Caitlin:                                  15:34                     Yeah.

Sam:                                      15:34                     How have you done that? What have been some of the successes? Have there been any, I’ll rephrase. Have there been any things which like worked surprisingly well or things which worked surprisingly unwell or didn’t work surprisingly well or anything that you were like, this is going to be dead set and it didn’t work. And other things where you’re like, Oh, we’ll give it a go. And it ended up being really good.

Caitlin:                                  15:54                     I think the one strategy that we had is just said, who are the corporates that potentially have the greatest risk? And actually focused on that, which is opposite of what you think of insurance or insurance-like products, it’s usually they want the lowest risk people. But what we realized is that that was a captive market. These are, you know, companies that have experienced an emergency before and maybe it has, likely has not gone well.

Sam:                                      16:20                     Yeah.

Caitlin:                                  16:20                     And so if you look at what are the greatest reasons why you would need an ambulance you would realize that a majority of it is because you’re on the road. So car accidents and so focusing on taxis or mobility companies are a huge, you know, opportunity or factories or schools cause kids are more prone to injury and accidents and things like that.

Sam:                                      16:42                     And does your coverage apply only when they’re during work hours? Was it also when they’re back home?

Caitlin:                                  16:47                     It depends. Depends on like how the corporate would like to structure it. We’re pretty open to like structuring it in whatever way they like. Ideally we would like it to be again, simple such that no matter where you are, whatever time it is, you’re covered. So the ideal is that it covers you 24/7.

Sam:                                      17:03                     Yeah. I imagine also from your perspective you’ve got to factor in, you know, if you’re kind of looking at it from a factory perspective and then someone goes home and like falls over. Exactly.

Caitlin:                                  17:15                     Yeah. So some of it, and it depends on are they casuals, are they full time employees, all that kind of stuff. So we’re, I mean we’re very open to customizing and kind of working with the corporate to find what the best plan is for them.

Sam:                                      17:26                     Yeah. Sounds great. Now, note that we’re currently in the rescue garden and your dog has come over. So if there was any sort of panting or anything in the background, it’s not me, it’s just the dog.

Caitlin:                                  17:36                     It’s the Coco. She’s doing an internship.

Sam:                                      17:38                     Is she? Yeah. Is she gonna get the job. Do you think, what’s your sense?

Caitlin:                                  17:41                     You know, she’s got a couple more months left, but we’ll see.

Sam:                                      17:43                     I’m positive on it, I think. Okay, cool. So you’ve got rescue. Got the fires. Okay. what have been some of the things where you’ve been surprised that the company’s taken this direction? Why, actually I’ll rephrase, what have been some things where you’re like, I really would’ve thought we would’ve been doing this, but actually we ended up not doing it?

Caitlin:                                  18:06                     Yeah. I think one of the things was that, when we talked three years ago, we thought very much we were going to be a SAS product in the sense that we were going to offer this technology and charge our ambulance companies and that was going to be kind of our strategy or that we were going to use kind of like an Uber like model where we take a commission and things like that. And I think that was a big shift for us, just realizing that in emergency the last thing that we need to deal with is money, is that that actually creates an ethical quandary in the sense of do I help or do I not? And just how important that was for us to make sure that no matter what, we always help. So I think that was a big shift and kind of reason that we went to that process.

Sam:                                      18:48                     How did you land on that conclusion? Like was there like a series of team meetings? Was it like you were doing a company away day and you were like Oh my God, this is what it needs to be, how did that sort of…

Caitlin:                                  18:58                     Yeah, one of our, so we’d been stewing over it for a while and one of our ambulance partners was just like, you need to launch this, like it’s time. We actually launched officially during the Kenyan elections in 2017 so the first elections during August. And then between then and the second election, then we had launched the membership product. So we just realized that there was a huge need for it. And that, you know, we had built this amazing network of ambulances and it was time that we finally launched

Sam:                                      19:25                     Get into the world. Okay. How do people react to it? Was there, do people get it or they, did it take a bit of time for people to warm up to what’s going on? Like I’m paying this money but I might actually use it. Was there any sort of behavior changes or things we can say?

Caitlin:                                  19:43                     I think less so. I think that it’s hard to sometimes understand, especially even for myself growing up in a country that has 911 and you never even think twice. But I think that every time we go into a sales meeting or we have a conversation, if you ask anyone, have you ever had an emergency personally or a friend or relative, where you need to get an ambulance? And the question, the answer is always yes because it might feel very rare at an individual level. But at a population level, it’s not rare at all that someone needs an ambulance. And so I think that just the power of like having that experience and knowing what it feels like to not actually be able to get an ambulance really sits with people. And so it’s not a hard product. Most people are like, why didn’t I think of that? It’s, you know, it’s not a thing that you have to really, you know, sell. It does not take a lot to sell, to be honest.

Sam:                                      20:35                     OK.

Caitlin:                                  20:36                     I think that interestingly though, a lot of people have a lot of questions about it cause you know, now that they’ve started to think about it and they have a lot of experience of what didn’t go well when they tried to get an ambulance. So there is some kind of cynicism of like, Oh my God, is it going to really work? But I think the incredible thing is, is like we’ve gotten past that we’ve done thousands of calls and dispatches and there’s tons of proof points and testimonials and stories. And so if you didn’t believe it before, you do now.

Sam:                                      21:04                     Yeah. I was once with my so my friend works for a company that did online surveys and part of their sales pitch was cool, I’ll just right now go on a platform and ask the question and then suddenly be like demo like there and then. I guess you can’t really demo your products in a Live way. You can’t really say…

Caitlin:                                  21:25                     We can do it. But we do a lot of drills. So a lot of times like for some of the corporates they want to do a drill because I mean like a fire drill, you know, it’s always best to plan or like we work you know, with the US embassy to do drills as well. So drills are a good way, but yeah, you can’t really test in the same sense. But I think a lot of it just comes through having the testimonials and having a number of big corporates that have signed up. And so therefore the kind of confidence that if someone else bought it, then, you know, we must be okay.

Sam:                                      21:57                     What would you say is your like sales cycle, the typical sales cycle for let’s say, let’s say you’ve got a pretty big customer. How long would you expect it would take?

Caitlin:                                  22:05                     You know it’s so different. Our biggest thing right now is that we focus just on like really big corporates that we know will be kind of game changers and so.

Sam:                                      22:12                     Yeah.

Caitlin:                                  22:12                     It’s hard to say. It’s not.

Sam:                                      22:15                     I suppose each one’s different.

Caitlin:                                  22:16                     Yeah,

Sam:                                      22:17                     Isn’t it? Okay. And does it basically involve, you going on for meeting, you have a series of meetings. Figuring out the decision makers.

Caitlin:                                  22:24                     Yup.

Sam:                                      22:25                     Yeah.

Caitlin:                                  22:25                     Exactly. It’s pretty straight forward as it relates to that.

Sam:                                      22:28                     What are some of the objections that people have or think maybe not, you sort of mentioned a bit of cynicism around whether it works. Are there any of the parts which people find they need clarification or they’re not clear about?

Caitlin:                                  22:41                     Less than that. I think that sometimes people get confused about us and insurance and so they may say like as a company we have taken out a health insurance policy with Jubilee resolution or whomever and don’t they cover ambulances and that’s the only thing that people sometimes scratch their head on. The incredible thing is, is like sure they do technically, but they have no connection to those ambulances. So there are no more able to get an ambulance than you are yourself.

Sam:                                      23:08                     Yeah.

Caitlin:                                  23:08                     Which is kind of frightening. So a lot of times what we do is we double insure someone in the sense that we’re giving you access to our services that maybe you technically have access to anyway. But the insurance is never gonna help you.

Sam:                                      23:21                     Could you partner with insurance companies?

Caitlin:                                  23:23                     Absolutely. That’s part of the plan.

Sam:                                      23:25                     Very good. Have you had any of those conversations yet?

Caitlin:                                  23:29                     Of course. Yeah.

Sam:                                      23:30                     Are they, are they open to it or do they see it as, why would they, why would they not be open to it?

Caitlin:                                  23:37                     I don’t know why they would not be open to it. I think the only thing is then insurance generally don’t have such a strong touch on the actual service provision. They’re more a financial instrument. And so I think that getting closer to the actual services maybe is just something they’re not used to.

Sam:                                      23:54                     And if, would they, would the dream be take out Jubilee insurance, comes with Flare.

Caitlin:                                     24:01                     Exactly. Yeah. The dream is is that like everyone literally has access to our service that it becomes a national number. It’s recognized by all and whether it’s embedded into, you know, a product, you know, sold by this company or your car insurance, it doesn’t matter. Is that you have access to our system.

Sam:                                      24:19                     Yeah. So last time I was here, I think I mentioned Flare house everyone was around one table and now you sort of spread out a bit. So how many people have you got now?

Caitlin:                                  24:28                     We have a total of 23.

Sam:                                      24:30                     Okay.

Caitlin:                                  24:31                     About a third dispatchers, third kind of general ops strategy and then a third that are software developers.

Sam:                                      24:38                     Got it. Okay. Which is the most difficult section, which is the most difficult thing in terms of like this is the bit which is causing me headaches. Not in terms of the actual employees, but in terms of like the way the workers are?

Caitlin:                                  24:51                     I think the hardest part about the team is just that constant evolutions that we make and is how do you hire the right people that can grow with the company and at the pace of the company? Cause you can’t always foresee all of the needs that you need. So all of the needs that you will have. And so just having that foresight of someone’s like potential and allowing that individual to continue to morph into new roles and positions. And I think that’s a big piece of it because it’s not, every company does it differently. Some people like automatically hire a CFO and COO and all these kind of things. For us it’s very much about emergence of those leaders and that talent. And so how do you hire people with that potential and that are open to also constantly changing their responsibilities and roles.

Sam:                                      25:40                     Have you defined the rescue culture. Have you defined the company culture?

Caitlin:                                  25:46                     It’s a work in process. You know, it’s a lot of, I think, you know, initially, where you could choose, you know, several adjectives or tenants, but ultimately it’s something that evolves over time and it’s more that, you know, what you don’t want to be. And.

Sam:                                      26:02                     So what do you not want to be?

Caitli:                                     26:05                     What we don’t want to be is we don’t, we want, well, we want to remain human is that at the end of the day we’re doing incredibly lifesaving work and to always kind of remember that. So yeah, to keep that kind of passion in us incredibly collaborative is that, you know, that we realize that what we’re doing requires multiple, you know, partners and stakeholders and companies and everything that we do so that we’re never trying to just section ourselves off, is like, it’s always about kind of the power of many.

Sam:                                      26:40                     Okay. And that’s been quite easy to do. Or like how do you kind of test for some of those qualities in people, when you interview them?

Caitlin:                                  26:48                     I don’t know. So that’s what I’m saying. Cause I don’t know, I think that’s the hardest thing is like sometimes I think the easier thing to do is to hire, well, to make sure that you check off the boxes of like, it’s easier to check off technical skills like Kevin A, are they analytical or can they compose, you know, nice emails and texts and stuff like that. Some of those, those skills, it’s easier to test for, but I think the culture is like, you gotta almost have a trial and see, and…

Sam:                                      27:18                     So did you do that? Did people come in for like a week?

Caitlin:                                  27:22                     Yeah. And I think that that’s how you actually see, do they fit and jell. Cause I think what I’m saying is there’s not like a check box of like, do they have this, do they have that, and it’s also like, we’re so complex as individuals. Like it’s really hard to understand all of those things and the dynamics and a lot of it’s also the other people on the team and how do they fit in, and I don’t think we’ve totally figured that out, except that you got to try.

Sam:                                      27:47                     You got to try and just, if there’s a fit.

Caitlin:                                  27:48                     Yeah, yeah.

Sam:                                      27:50                     What are the next employees that you’re going to be, or the next positions you’re going to be hiring for?

Caitlin:                                  27:56                     So I’ve kind of, across the board, we need to increase on all fronts from dispatchers to developers to more people on kind of our ops side to scale. So we definitely believe the lean kind of team. But yeah, we need to kind of add in all of those three spaces.

Sam:                                      28:14                     Get a little bit more fat.

Caitlin:                                  28:15                     A little bit more skim, skim milk,

Sam:                                      28:19                     And the company, funding wise, you’ve obviously stayed afloat and things. Have you, and it sounds like you’re making some good revenues if you’ve got 30,000 paying customers. How’s the company sort of looked from the sort of fundraising perspective?

Caitlin:                                  28:39                     Yeah, so we still, I mean, we’re still growing much faster than you know, our revenue, but at the same time, but our revenue is growing really quickly as well. But we continue to raise from private investors VC funds, have gotten some grants and awards along the way. So externally funded to be able to support the kind of rapid growth that we’re seeing.

Sam:                                      29:01                     Yeah. What were the grants for? Was it just like, here’s some money to keep going? Or was it like, oh, we’d like to do these specific projects, we would like you to do so…

Caitlin:                                  29:10                     Like general funding, not specific.

Sam:                                      29:12                     That’s quite handy, yeah. And then I remember you mentioning that there is a company in India or a couple of companies in India that have been doing something similar and so they’ve been quite useful. It’s been quite useful. Like barometer, barometer is the wrong word, just like idea of what could be going down the line. How have those Indian companies been doing?

Caitlin:                                  29:34                     I have no idea.

Sam:                                      29:35                     Yeah.

Caitlin:                                  29:35                     I’ve totally lost track to be honest. I think one of the things that we’ve just done is like focus on what we’re doing and yeah. Who knows? Yeah.

Sam:                                      29:43                     Nice. I just felt like that kind of makes some sense isn’t it? Like you focused on your own.

Caitlin:                                  29:50                     I think it was like I was curious in the beginning to understand because we were all sorting out some of the same decisions, but I have no idea if like we reconnected and if they’re one, still operating or two, what their business looks like. I’m sure that we’ll cross paths at some point, but I really have no idea.

Sam:                                      30:08                     So I’m just wondering, I can imagine that might be something that an investor asks is you’re doing this quite innovative business model, like has it worked elsewhere? Or are they not really that concerned?

Caitlin:                                  30:19                     No, because I think what we’re doing is we’re building a basic infrastructure that everyone understands is required for growing cities, countries. And that’s not innovative in the sense that 911 and 119 and 999 exists in parts of the world that had the resources and could put that system up. So I think that that’s never a question. That’s the cool thing is we’ve gotten past that stage is everyone recognizes the invaluable resource of having that three digit number to call upon. And regardless of how, what we’re doing of how we did it is we’re using, you know, cloud based technology and we don’t need landline phones to build 911 any longer. And so that’s what we’re doing is innovative as on the tech side. But the actual businesses itself is not the innovative part.

Sam:                                      31:05                     Got it. You say at the moment, currently Kenya or all across Kenya. Views to go elsewhere?

Caitlin:                                  31:12                     Yeah, we’re trying to identify where that elsewhere is. There’s tons of opportunity. I mean 95% of the continent is without 911. So there’s no lack.

Sam:                                      31:23                     Where’s the 5%?

Caitlin:                                  31:23                     The 5% is Egypt, and then Botswana and then parts of South Africa.

Sam:                                      31:28                     Only parts?

Caitlin:                                  31:28                     Only parts.

Sam:                                      31:29                     Why is that? Like local government?

Caitlin:                                  31:32                     Some of the local government outside of the cities, it’s pretty hard to get access to the provincial ambulances. And there’s not like a strong central system, and the cities, it tends to be privately run.

Sam:                                      31:44                     So it will be Africa, it won’t be anywhere else in the world?

Caitlin:                                  31:49                     I think that makes, proximity-wise, the most sense.

Sam:                                      31:52                     Yeah.

Caitlin:                                  31:52                     But there is definitely opportunity elsewhere. But I think for right now we’ll stay closer to home.

Sam:                                      31:57                     One of the things that kind of shocked me, on our last interview, was you saying how like the system you’re building is much better than, or has the potential to be much better than elsewhere in the world, where it’s built on a landline system. I was wondering if there’s going to become a point where countries like Denmark or the UK or Germany are going to pick up the phone and say, can we just use your system even though they already have it, that 911provision.

Caitlin:                                  32:26                     Yeah. I mean that would be incredible. But yeah, I don’t think we’re that far off from being at a place as it relates to our technology that that would be a conversation that we could start.

Sam:                                      32:35                     Yeah. Because is the premise that everyone has a smart phone when they make the call. Is that what is necessary to get the location or kind of, can you get a lot of the benefits from Flare on a smart, on a feature phone?

Caitlin:                                  32:50                     You could, I mean there’s some creative ways to get location information. It depends on how precise you want that location information to be. If you have a smart phone, it’s obviously much better. But even for places like Denmark or the UK that have landline based technology, it’s very difficult for them to get any type of geolocation information from your smart phone. So we’re already kind of lept over that.

Sam:                                      33:13                     Yeah.

Caitlin:                                  33:13                     Because we’re able to pull your geolocation.

Sam:                                      33:16                     And so people, the 30,000 users in Kenya, they are all using it on a smartphone?

Caitlin:                                  33:22                     No, no. So we have a hotline, they just call a number. If they don’t know where they are, we can then ask for their location.

Sam:                                      33:28                     Yeah. And you can identify them.

Caitlin:                                  33:30                     Yeah.

Sam:                                      33:31                     Very cool. Okay. What have been some of like the big lessons you’ve learned, you think over the last few years? Like in terms of either things, which on reflection you’re like, Oh, we should’ve figured that out more. Or just, yeah, just generally things that you’re like glad that you know now, from the last few years.

Caitlin:                                  33:54                     I think one of them is to stay lean and that, as a founder, is to try to do everything in a little way in the sense of really understand the business from start to finish because you can quickly, in the beginning you’re always in the weeds and then you need to quickly get out of the weeds to be able to pitch to investors. But to always have your hand deep in the business as well because I think you could easily lose touch with what’s actually happening because you’re just changing so quickly. And so I think being lean has helped us do that, such that we don’t have a ton of layers, we don’t have a massive team, is that we hire highly skilled, experienced individuals and we try to always kind of stay at the high level but also stay in the detail. I think the second lesson is just that everyone scales in different ways. And I think sometimes the focus is always on one metric and realizing that a business is so multidimensional and just making sure that you confidently, or we confidently kind of tell the story that we want to tell because we ultimately know our business kind of better than anyone. And so making sure that yeah, that you understand how your business is going to scale, but that it doesn’t need to follow the same path as say for example, Uber and that it can follow a very different pathway. And I think for us being in healthcare or preventing an emergency service quality is everything. And so just making sure that you scale at the right pace to show your potential but also don’t ever compromise the actual service that you’re providing.

Sam:                                      35:27                     Yeah. Do you have like some high level metrics that you keep an eye on each month or each week?

Caitlin:                                  35:33                     Yeah, we look at a lot of different things from, you know, number of ambulances on the system to number of memberships to number of dispatches to response time. So it’s quite a complicated number of different metrics to really understand like how are we performing, but definitely something that, you know, we look at regularly to kind of understand are we scaling too quickly, are we not to be able to kind of readjust.

Sam:                                      35:58                     Yeah. Okay. And so just a few more questions, if that’s all right. You said that a long term, for startups along the longterm view is six months. If you were to extend it a little bit further, 12 months, what do you think Flare could be doing?

Caitlin:                                  36:15                     Ideally we’re operating in multiple countries. We’re offering a more holistic emergency response. So beyond medical and yeah, I sleep a little bit more. Yeah.

Sam:                                      36:34                     Okay. All good goals, And at the moment we’re, we’re here in the Flare house. Would you need, are you kind of at capacity here or would you need to, would you need to move to a new location?

Caitlin:                                  36:46                     I think we’ll be good for the next like 12 months. I think if we operate in another country, we will open, you know, an office there. But for right now, I think we’re good.

Sam:                                      36:55                     Yeah.

Caitlin:                                  36:55                     We’re going to try to stay lean as long as we can.

Sam:                                      36:58                     Yeah. Okay. I’m sure your investors love to hear that.

Caitlin:                                  37:00                     Yeah.

Sam:                                      37:00                     Yeah. What would be like a dream customer for you to get at the moment if you were to sort of just like think about it, what would be like, what would the characteristics be to get a dream customer? Like what does the dream customer have to have?

Caitlin:                                  37:20                     I think it always helps to have a customer that has, you know, high visibility or credibility in the market and whether they’re kind of a leader in whatever field, whether it’s a premier school or premiere factory or also any international company tends to be high profile. So I think,

Sam:                                      37:37                     Yeah,

Caitlin:                                  37:38                     Some of those.

Sam:                                      37:38                     Okay. I imagine it’s, yeah. What is your, cause is this, from their perspective? Is this just a cost which they didn’t have previously or an internal account whose budget this comes from?

Caitlin:                                  37:53                     Yeah, that’s not really the question. I mean like people, it is a cost, but it’s also on the other end, there was another cost if you lost an employee’s life on the job, someone was paying for that.

Sam:                                      38:05                     Yeah.

Caitlin:                                  38:06                     Whether it was PR and your image, your reputation that you were actually paying out an insurance claim for death and disability. So it’s not such that we’re just adding an additional cost. Oftentimes it’s offsetting a huge risk that you actually had.

Sam:                                      38:21                     I say that like I’ve sort of had, sometimes I’ve experienced yes. Sounds good. Sounds good. Sounds good. But, you know, budgets, are fixed and yeah, I’ve, like, this department, yeah, it can’t come from this department. And so I’m just wondering, is there, like, do you need to speak, do you need to be speaking to, yeah, who do you speak to when you go to a corporate? Who’s the, who’s the agent? Who’s the sort of decision-maker that you talking to?

Caitlin:                                  38:45                     You know, it highly varies whether or not it’s like the CEO or the HR person or a managing director or there isn’t, I wouldn’t say there’s a rubric.

Sam:                                      38:56                     Okay.

Caitlin:                                  38:57                     It’s really understanding that company understanding why they would want the product and also making sure that we’re quite strategic about how and who we sell to.

Sam:                                      39:04                     Okay. And after that they’ll just make it happen.

Caitlin:                                  39:07                     Yeah. Or if they don’t, we try to get them to push to a yes or no quickly.

Sam:                                      39:10                     Okay. That makes it sound like you’ve had a few experiences where a no has been dragged out.

Caitlin:                                  39:18                     Yeah. But that’s what, I mean, I guess that’s okay. It’s like you kind of learn. I don’t think that, to be honest, that’s not, our issue is not about selling. That’s which most people don’t, I guess have that luxury. Our issue is how do we maintain quality and how do we scale in the right way such that we don’t overextend ourselves and we provide that service. The same service that we provide to the first a hundred customers that we provide to our current customer base that we can provide to the next hundred thousand, to the next million.

Sam:                                      39:44                     Yeah. Fantastic. And people who are listening, they can sign up and that’ll just take them through the whole process.

Caitlin:                                  39:53                     Yeah. It will take no more than five minutes, hopefully even less to sign up here. It’s integrated directly with M-Pesa or credit card. Yeah. And you can sign up. It’s 2,400 shillings per annum and it covers everything. Once you start adding households and family members, it becomes even cheaper

Sam:                                      40:09                     When you say everything like any ambulance?

Caitlin:                                  40:13                     Any of those.

Sam:                                      40:13                     Yeah. Very good. And in theory, not you would want to, you can take six ambulances a year and it was still getting covered.

Caitlin:                                  40:21                     So technically it covers you up to two ambulances, but the chance that you need two ambulances in a year is pretty rare. Yeah.

Sam:                                      40:27                     In the spreadsheet, it’s like not point, not.

Caitlin:                                  40:29                     Yeah.

Sam:                                      40:29                     Very good. And so And if they want to learn more about the company, perhaps sort of understanding, see if they’re a fit with the culture, et cetera. What’s the best way to learn more about you?

Caitlin:                                  40:40                     You can go to also or you can visit us on Facebook or Twitter or any of our other kind of communication channels.

Sam:                                      40:49                     Fantastic. Cool. Well Caitlin, thanks so much.

Caitlin:                                  40:51                     Yeah, thank you.


Why Zamgoat believes goats are the next big meat in Zambia (and the world), with Paul Nyambe


In this second episode from Zambia, I speak with an entrepreneur who has found his niche and is fully focused on it.

Paul Nyambe grew up farming goats in rural Zambia. He and his family were unable to earn money from the animals which always struck Paul as frustrating.

Years later he built a career in food sales, specifically ice cream, which meant had relationships with large supermarkets and restaurants.

One noticeable thing missing from the menus and shelves was goat meat.

In 2012, Paul quit his job and started Zamgoat.

The vision is simple: to sell high-quality goat meat to the public.

In our conversation, we talk through various parts of the business such as the profit margin on a goat, the barriers to entry for getting a goat in supermarket aisles, and the reasons why Paul is so positive that goat products are the next big thing for consumers around the world.

We also chat about the potential for more value creation in goat products, such as making rugs from goat skins and various other products.

If, on the off chance, you happen to know someone who’d be interested in advising Paul in this regard, please let me know via the contact form.


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Social Media Links



Twitter: @zamgoat



Sam:                                      00:07                     Intro.

Sam:                                      02:35                     Cool. So we’re here today with Paul from Zamgoat. Paul, welcome to the show.

Paul:                                      02:40                     Thank you so much. Sam

Sam:                                      02:42                     So to get started, can you tell us a little bit about you and a bit about Zamgoat?

Paul:                                      02:46                     Okay, so like Sam you’ve put it, I’m Paul Nyambe and I’m the founder and CEO of Zamgoat. I was born in the Southern part of Zambian, I currently live in Lusaka and I started Zamgoat in 2012 and I’ve been actively running it since since then.

Sam:                                      03:02                     Very cool. And we should note that you’ve got a bit, you’re recovering from a flu at the moment, so your voice is not…

Paul:                                      03:08                     So my voice is a bit, a little bit Husky.

Sam:                                      03:11                     And from the name. So I mean Zamgoat, you’re in the business of goats in Zambia.

Paul:                                      03:18                     Exactly, exactly. Yeah. So we’re in the business of goat processing and distribution. Essentially what we do is we aggregate goats, we do not keep our own goats. So we buy goats largely from small holder farmers. We then process and distribute goats to get the emerging urban consumer base in Zambia, initially starting out with the Lusaka urban market.

Paul:                                      03:41                     Very cool.

Paul:                                      03:42                     Yeah.

Sam:                                      03:42                     Great stuff. Okay. So you so I’m sure there are lots of things that we can talk about both on the sort of supply and the demand side. I’m interested though, how did you spot this opportunity? How did the business sort of, what’s the founding story of the business?

Paul:                                      03:56                     I guess so, it started from a combination of two realities of my life, one of which is my rural upbringing. Growing up in a village set up as a child and keeping goats, my family keeping goats, with no economic impact whatsoever on our lives, you know, but just for village prestige, like any other villager would do at the time. Reason being or why there was no economic baring, more or less through our good keeping activities was because of lack of access to a readily available market. So later on, growing up in the city and working the city as a country sales person for, you know, a food company in Lusaka. You know, my experience with that, working experience, exposed me to a gap in the market. I used to do mostly with supermarkets, restaurants and hotels in supplying out food orders at the time for the company that I used to work with. But then I observed there was no goat meat sold in those supermarkets. And goat was also a rare feature in most restaurants. I mean most restaurants and hotels in Lusaka, whereas on the other hand, again, I’m an ardent consumer of goat. I love goat meat. So that, you know, opened up my eyes to the opportunity and that’s how Zamgoat started in July, 2012.

Sam:                                      05:18                     Very cool. What was the other food you were selling?

Paul:                                      05:21                     So my last job before I started Zamgoat, we used to, I used to work for a company that used to deal in ice cream.

Sam:                                      05:28                     Okay.

Paul:                                      05:28                     So yeah, I’m a former ice cream sales person. I used to sell ice cream.

Sam:                                      05:35                     At times, did you get paid to try out new ice cream? I mentioned that when there was, when you were selling ice cream, you had, you were given free samples and things?

Paul:                                      05:45                     Yeah, sure. So yeah, we would give out free samples to try to our customers during our field sales.

Sam:                                      05:53                     Okay. So basically you went from ice cream to goat?

Paul:                                      05:56                     I went from ice cream to goat cause that was my last job.

Sam:                                      05:58                     Yeah. Very cool. Okay. Right. So what should, so let’s start on the let’s start on the demand side.

Paul:                                      06:04                     Yup.

Sam:                                      06:04                     Okay. So the, you were saying that the supermarkets, restaurants, hotels weren’t selling goats. Is that because the consumer, the end consumer wasn’t demanding it or was, was it because they just didn’t have a reliable way to get on, to get it on the menu?

Paul:                                      06:22                     At that time there was a gap in the supply side. There was no company that was processing and you know, making goat available in those…

Sam:                                      06:30                     So people were still wanting it.

Paul:                                      06:33                     People would still want goat but at that time, I think the only source where people could, consumers could get goat meat from was from the informal market setups and these mostly are open markets, you know, setups that have a lot of litter and hygiene issues with them.

Sam:                                      06:51                     Yeah.

Paul:                                      06:51                     So that to a large extent tended to, you know, limit the uptake of goat among consumers.

Sam:                                      06:57                     Got it. Is goat quite, is it something which is eaten across Zambia or is it just particular regions that sort of eat it?

Paul:                                      07:06                     Goat meat is eaten right across Zambia and now, more consumers ought to actually love to eat goat more than any other meat products. And this, I think can be attributed to the health and nutritional benefits and values that you know, are associated with goat meat as compared to other red meat.

Sam:                                      07:26                     Such as what?

Paul:                                      07:29                     One of which, I think the key health benefit for goat is it’s lean, you know, it’s leanness, It’s a lean meat and that means it poses less challenges that associated with that cholesterol, you know, cholesterol levels in in mid, in mid consumption.

Sam:                                      07:50                     Okay. What are some traditional ways that goat is eaten?

Paul:                                      07:53                     Traditionally the goat is mostly eaten in a stew form, but that stew, normally people don’t add, you don’t add any other ingredients apart from salt. So just boil the goat and then add your salt and then they take it as a goat soup, which sometimes they also eat with the local staple, which sima.

Sam:                                      08:13                     Sima?

Paul:                                      08:13                     Yeah. The other common way that goat has eaten traditionally in Zambia is through Bryce.

Sam:                                      08:19                     Like a barbecue?

Paul:                                      08:21                     A barbecue, yeah. Most people eat it in barbecue foam, but that is mostly, again, common in social joints, drinking places, stuff like that. Yeah.

Sam:                                      08:33                     Okay. And so when, we’ll sort of get to a bit about how you’ve done it, but you’ve basically been able to say, go to supermarkets, hotels, restaurants and say I’ve now got a high quality supply of goat. What’s been the, what’s been your sales pitch when you’ve been going to, have you found it an easy pitch or have you found that they’ve said, Oh, well I’m not sure if people are actually going to eat it?

Paul:                                      08:58                     Sure. Our pitch in trying to upscale the goat, you know, the distribution of goat meat in Zambia is our emphasis on one wanting to transform the entire quotive value chain through value addition and improved of distribution of goat meat, which in turn would then also create a sustainable market opportunity for smallholder farmers. So our pitch out there is unlocking the availability of goat in convenient places where consumers would easily find goat meat, at the same time also creating a sustainable market for small holder farmers. So most of our customers engage with us on those two fronts. Wanting to make goat available conveniently to the growing consumer base of goat meat, but also wanting to contribute to the greater good out here, by creating a sustainable market opportunity for the small holder farmers who are the main producers of goats in Zambia.

Sam:                                      10:10                     Got it. Okay. So when you’re going to, I don’t know, the Radisson hotel for example or you know, like one of your big suppliers or one of the, one of your big customers you’re partly saying by putting goat on the menu, you can tell your customers that they are supporting small holder farmers.

Paul:                                      10:28                     Exactly.

Sam:                                      10:28                     Yeah.

Paul:                                      10:29                     Yeah, sure.

Sam:                                      10:29                     Does that resonate?

Paul:                                      10:30                     Yeah, sure. That’s what we do and most of our customers actually buy into that. Okay. So they buy into making goat available for their consumers but also stocking it as a way of supporting small holder farmers out here.

Sam:                                      10:46                     Yeah. When you go to your sales pitch, you bring along some goat for people to try?

Paul:                                      10:52                     We do so, especially like when we introduce a new product range, cause we have quite a number of goat products that we supply. So besides the fresh, ordinary goat meat as in it’s fresh or frozen state, we also do smoked goat meat. We do goat buton. We do goat burgers as well.

Sam:                                      11:17                     Oh, burgers.

Paul:                                      11:17                     Yeah, sure. So like in terms of, when I introduce a new, we just introduced a new product line we normally go with the samples, you know, for our customers to try out.

Sam:                                      11:29                     Very good. Okay. So company’s been going for about, like seven years, seven years now?

Paul:                                      11:35                     Yeah, about seven years.

Sam:                                      11:37                     What sort of scale are you at now?

Paul:                                      11:39                     We are quite at a good scale right now, starting out with just one goat in 2012, with under $200 in startup capital. We have at least to date, you know, done over 5,000 goats. Okay. And generating revenues, you know, slightly above $400,000 now. So for us, I think that’s a good traction, but we would have loved to do more than that. Would have loved to do more than that.

Sam:                                      12:08                     Yeah.

Paul:                                      12:08                     But we understand, you know, the Strata of our industry as a whole, they goat industry. Historically it has been underdeveloped. But, you know, we are still satisfied, I think with the strides that we’ve made so far, though we feel, I think we should have gone more, more than that.

Sam:                                      12:28                     Okay. So let’s sort of talk about the, the process that you have. So you’ve, sort of stage one is going and collecting live goats?

Paul:                                      12:38                     Live goes from small holder farmers. Yes.

Sam:                                      12:40                     Yeah. And then maybe just sort of, can you sort of walk me through the whole process from receiving a goat, all the way through to it being sold as a goat burger.

Paul:                                      12:51                     Okay. So it all starts from first engaging with small holder farmers whom we mostly organize in supplier groups and cooperatives. And then from there on we agree on the terms of business with them, we offer them a good buying price. Good in the sense that our price is actually better than the prices that most of the informal traders do, you know, of our farmers out here, and then from there on after we buy those goats from the smaller farmers. We take them to our processing facility in Lusaka, currently operating out of market. From there we do process goat, which we sell in two, or rather through two main ways, through the butchery set up where we, sell, you know, goat meat in its fresh frozen state as well as other value added products, that includes smoked goat, buton and goat burgers. And then we also have another sales channel which is a take away. This is a recently added sales channel where we are doing ready to eat goat products. Okay.

Sam:                                      14:05                     So within your processing plant you will be cooking?

Paul:                                      14:10                     Yeah, so currently we are trying to optimize the space that we have at our store, which also serves as, you know, a processing facility at the back end of it.

Sam:                                      14:20                     Yeah.

Paul:                                      14:21                     So we have, on the other side of the store, adjacent to the butchery section, we’ve recently opened up a take away offering, and the brand, we are calling Zamgoat express, so that offers good goat amd chips. We do smoked goat and chips, we do goat burgers. We do goat sausage and chips. Yeah. And those, we do an upscaled vision of goat soup, which is different from the traditional goat soup that, you know, has been common on the Zambian market.

Sam:                                      14:59                     Very cool, Okay what, in terms of the, sort of the economics of it, how much do you buy it? How much roughly do you buy goat for, roughly what ptice?

Paul:                                      15:10                     So roughly we buy our goats at about $30 from a small order farmer, $30 per goat.

Sam:                                      15:17                     Okay.

Paul:                                      15:17                     Yeah.

Sam:                                      15:17                     And how much, what’s the process to value of that goat?

Paul:                                      15:22                     On average, the minimum processing value of the goat that we sell is around $45.

Sam:                                      15:30                     $45, okay. So you;re making about $15.

Sam:                                      15:32                     Okay. And so what’s been the cost? What’s been the total cost to sort of set up the processing plant? I’m just trying to work out how…

Paul:                                      15:42                     So to date I would say we haven’t really had a formidable processing plant, so we’ve kind of you know, been bootstrapping our processes whereby we are doing everything that we do using very limited that means so far we’ve invested over $40,000 into our current, into our current processing facility, but we are actually current working on setting up an ideal processing facility,which is estimated to cost around $400,000. So we’re currently actually active in the market trying to raise the capital to set up an ideal processing facility so that we could then supply more good products out there. So satisfy our market as well as also increase our impact in working with smolder farmers.

Sam:                                      16:41                     Yeah. Okay. So $400,000. And you’re making about $15 per goats, so you’re gonna have to do like 250,000 goats, is that right? No, no, 25,000 goats.

Paul:                                      16:52                     About 1200.

Sam:                                      16:53                     25,000 goats?

Paul:                                      16:55                     Yeah.

Sam:                                      16:56                     Is there demand for that? 25, like at the moment you, you’re sort of production’s about, you’ve done about 5,000 goats. I mean that’s increasing the capacity of your operation by five times.?

Paul:                                      17:12                     Yeah. So actually our target increase in capacity is about 10 times more than what we’re currently doing.

Sam:                                      17:20                     Okay.

Paul:                                      17:21                     Sure. So we’ve done about yeah, you’re right. So it’s close to about 10 times more in terms of production output.

Sam:                                      17:32                     And I mean, I don’t, I know nothing about the goat industry, but I’m just thinking if you’re making $15 per goat and there’s, it seems like there’s a lot of, you’d like, you’re adding a lot of value. You’d be processing it, you’re packaging it, you’re distributing. I was wondering if like, do you need to get a certain scale before it’s become, before you make money off this, like, or is it already profitable? Like?

Paul:                                      18:00                     It is already profitable, except that the current state of profitability is limited by scale by our current scale. So we can only do so much for now, given our limited capacities. We Believe that once we grow capacities, then even our profitability should also be able to.

Sam:                                      18:24                     So that means that out of that $15 per goat that you’re making your, costs would you reduce?

Paul:                                      18:30                     Exactly, the cost will reduce because of optimize…

Sam:                                      18:32                     Yeah.

Paul:                                      18:34                     You know, our processes.

Sam:                                      18:35                     Okay,

Paul:                                      18:35                     Sure.

Sam:                                      18:37                     Do you think that you’d ever pay less for a goat? Ket’s say at the moment, if you’re going to a small holder farmer and you’re buying 10 goats off them for $30 each, would you ever get to a place where you’ll say, right, I’ll buy 50 goats off you for $25?

Paul:                                      18:54                     Exactly. So with increased the capacity operating capacity on our side, there is the possibility of us incresing our costs

Sam:                                      19:01                     But do the, do these kind of small holder farmers sell 50 goats for $25?

Paul:                                      19:10                     They would sell.

Sam:                                      19:11                     They would.

Paul:                                      19:12                     Yeah, they would sell, they would sell. Again, it all gets back or it all borders on our capacity at any given time. So with capacity at any give timeit is a fault to negotiate with our suppliers to look, we are buying so many at a go, so we’ll then negotiate for a bulk discount.

Sam:                                      19:34                     Yeah.

Paul:                                      19:34                     Okay. And then also that would make sense for the farmer because instead of just selling 10 goats, you know, they’ll sell at least more and make more money at a go than to make the same amount of, say in my photo.

Sam:                                      19:48                     Exactly. Like, yeah. And they get, Just sent a lot of cash, which they can then use to invest in…

Paul:                                      19:53                     To invest in that, in other activities that also, in enhancing their livelihood. Yeah.

Sam:                                      19:59                     How do you transport the goats? You said, I’m forgetting…

Paul:                                      20:02                     Yeah, so for now we outsource transport. We hire delivery trucks, we hire open trucks that move our life goods from the farmers to…

Sam:                                      20:14                     Do you have to take a Zamgoat representative to like tick off this number of goats have gone on.

Paul:                                      20:19                     Yeah. So we normally have people on the ground.

Sam:                                      20:21                     Okay,

Paul:                                      20:21                     Sure.

Sam:                                      20:22                     How many people are employed?

Paul:                                      20:24                     Currently, our establishment is still small. We have a total of four staff when I was that, I’m sure.

Sam:                                      20:31                     So there’s you and three other people.

Paul:                                      20:33                     Yeah. There’s me and three other people.

Sam:                                      20:35                     Each time that you go and buy goats, one of the four of you has gone.

Paul:                                      20:40                     Yeah, it has to be. Yeah.

Sam:                                      20:42                     Yeah.

Paul:                                      20:42                     But then we also have times when farmers bring themselves, so they come through to Lusaka. So we’ve made ourselves so popular among the small holder farmers, such that every farmer out there who’s living in the outskirts, whoever wants to sell goat, they know that there is Zamgoat. So they give us a call and then we make arrangements for the delivery. And sometimes, you know, there are those that you’ll be dealing with for some time, we know that they’ll bring us the right quality of goats. So we give them a go ahead. Okay. How many are you ready to supply this time around? They give us their number and then we give them a go ahead. Okay.

Sam:                                      21:26                     Yep.

Paul:                                      21:27                     Move them over to Lusaka, show.

Sam:                                      21:29                     Nice. What’s your quality assurance process when you see a goat? Do you, do you like how do you…

Paul:                                      21:38                     Yeah, so we look, we look at quite a number of things. One of which include the general wellness wellbeing, the physical stature of the goat. Okay. It has to appear to be in its, you know, perfect state. Okay. To go out to guarantee us quality meat, then two, it’s the age. We look at the age.

Sam:                                      21:58                     How do you tell the age?

Paul:                                      21:59                     There are a number of ways to tell the age. It’s the general appearance of the goat. You can tell this goat, I think. You know.

Sam:                                      22:05                     Okay.

Paul:                                      22:05                     Yeah, ths goat is too old. Then the other technique we use is looking at the teeth for measure, yeah.

Sam:                                      22:15                     The teeth, is that a good gauge for the size, the age of the Goat?

Paul:                                      22:21                     Yeah. To some extent it, it is to some extent, yes.

Sam:                                      22:26                     Yeah.

Paul:                                      22:26                     Sure. I think the best technique is just the general physical state of the goat in its appearance has to appeal to you as a buyer.

Sam:                                      22:37                     It’s gotta be…

Paul:                                      22:38                     It has to be safe. Okay. And not, you know, you’re looking at a goat, you’re able to see the ribs exposing, you know, protruding from out. So that it will give you an indicator. No this might not be, I think, in order to give us good quality meat. So it has to be well rounded.

Sam:                                      22:59                     Yeah. What’s the best age for a goat?

Paul:                                      23:03                     So we’re prefer goats that are not more than three years in age for meat production. Yeah.

Sam:                                      23:09                     Yeah.

Paul:                                      23:10                     I’d say between one and a half years and three years there about.

Sam:                                      23:15                     Okay.

Paul:                                      23:15                     Sure.

Sam:                                      23:16                     And then goats enter your processing plant. And at the other end, we’ve got goat meat like in between, what happens to, so obviously like the goat is killed. What happens to like the other parts of the goat that aren’t used for meat?

Paul:                                      23:34                     Yeah. So you’ll be shocked to learn that to date nothing much happens to, except for the offers. We sell the offers in our butcher section, then we use some also for the takeaway section, but then for the other parts of the goat like the skin to date, nothing that much has been done, you know, in terms of adding value to the goat skins.

Sam:                                      24:00                     Yeah.

Paul:                                      24:01                     So mostly goatskins in Zambia are just thrown about. But, you know, being pioneers in this industry as Zamgoat, we’ve taken it upon ourselves or seen an opportunity in that area as well to start adding value to goat skills.

Sam:                                      24:16                     What could be done?

Paul:                                      24:20                     So one of the things we’re looking at is adding value to, you know, to, to goatskins to save the local market coming up with finished products like belts you know, device poaches you know wristbands and stuff like that.

Sam:                                      24:36                     Can you make rugs?

Paul:                                      24:37                     Yeah. You can also make rugs, you can make bags.

Sam:                                      24:40                     Okay.

Paul:                                      24:41                     You can make shoes like the final leathershoes, most of them are actually made out of goat skins. The other opportunities doing maybe just basic processing and then exporting the semi processed goat skins.

Sam:                                      24:55                     Okay.

Paul:                                      24:55                     To the other parts of the world.

Sam:                                      24:59                     So if there are any goat skin artisans listening to the podcast, they should get in touch with you?

Paul:                                      25:05                     You’re right.

Sam:                                      25:05                     They would be able to come sort of help with the, making nice things.

Paul:                                      25:10                     Excellent.

Sam:                                      25:10                     Okay, cool. How long does it take between goat enters and like processed meat at the end?

Paul:                                      25:20                     Okay. On average takes about 15 minutes. Let me say 15 minutes.

Sam:                                      25:28                     Yeah. Okay.

Sam:                                      25:29                     You do one at a time?

Paul:                                      25:31                     Yeah. So we do, slaughtering, given our current limited capacities, we do slaughter them one at a time.

Sam:                                      25:37                     Is it by hand?

Paul:                                      25:38                     By hand. Yeah. Currently slaughtering is done by hand and then flailing also by hand.

Sam:                                      25:43                     Flailing?

Paul:                                      25:43                     Yeah. Removing of the skin is manually done for now because of our limited capacities.

Sam:                                      25:49                     But this $400,000 investment.

Paul:                                      25:51                     So this $400,000 investment, we are looking at investing in some, at least close to state of the art, you know, kind of facility that would enable us to, you know, to process our goat in a much commercial like manner unlike, you know, how we are currently doing it.

Sam:                                      26:13                     And would that be like a machine?

Paul:                                      26:15                     Yeah. So we are looking at, you know the slaughtering line where you have some conveyor belts that, you know, that electronically move the goat from the slaughtering stage, the flaring stage. Yeah. Up to the, you know.

Sam:                                      26:34                     Where do you, where do you buy that machine from?

Paul:                                      26:36                     So for now it has to be imported from outside the country.

Sam:                                      26:43                     Made in China, India?

Paul:                                      26:44                     Made in China. China will always be the cheapest, you know, the cheapest source, I’ve had some discussion with a number of our suppliers of slaughter house equipment in China. Yeah, sure.

Sam:                                      27:01                     Purely out of interest, do they eat goat in China?

Paul:                                      27:05                     They do, yeah.

Sam:                                      27:07                     Okay. So they probably got it. They’ve got these machines that would be that would be perfect, got it.

Paul:                                      27:14                     And they do slaughter goats there as well.

Sam:                                      27:16                     Yeah. Okay. Because you’re going to get one of these machines and then you’re going to be able to, once you’ve got that, your capacity and then you can just go out and buy more goats. What’s like, if you’re saying that you buy at $30 and you sell at $45, roughly how many days does it take for you to keep the money?

Paul:                                      27:37                     Ideally, it doesn’t take, sort of like through our, our butchery section. So we have a two revenue model, which is retail and wholesale. So wholesale, I mean retail is cash sales.

Sam:                                      27:52                     The cash.

Paul:                                      27:52                     So you slaughter the goat then within a day or two you have, you know, you recoup your money.

Sam:                                      27:59                     Yeah.

Paul:                                      27:59                     And then we also have another revenue model, which is wholesale supplies to these other intermediaries that include supermarkets, restaurants, and hotels. So that in most cases comes with credit, you know hotels. And at most for now, we, we, we accept at least two weeks.

Sam:                                      28:18                     Okay.

Paul:                                      28:18                     Yeah.

Sam:                                      28:19                     So 14 days is your max?

Paul:                                      28:22                     Sure.

Sam:                                      28:22                     So it’s not 30 days?

Paul:                                      28:24                     For now, it’s not 30 days, given our current, you know capacities we can’t do 30 days because then that would wipe out the much needed cash that we need to manage the operation.

Sam:                                      28:35                     Okay. So let’s say you’ve got an, and how does it work? Does it, have you kind of got like a constant flow of buying goats, processing them, selling them? Or is it kind of like up and down?

Paul:                                      28:51                     So it’s up and down. And it mostly depends on two factors, one of which is the demand on our markets marketing side. Okay. And the demand of products from our customers who we’ve signed up with, then two, it is our capacity in terms of you know, working capital, to procure at any given time.

Sam:                                      29:15                     Yeah.

Paul:                                      29:15                     Yeah. So it depends, again, it fluctuates Nothing.

Sam:                                      29:19                     Yeah. But there’s, okay, so there’s demand. So what might cause a fluctuation in demand?

Paul:                                      29:26                     A fluctuation in demand is caused by a number of factors. One of which is the marketing of goat in the manner that we’ve been trained to do it is still relatively a new thing on the market. So a lot of you know, customers and partners through which we sell our products are still getting, you know, acclimatized to our concept and distribution.

Sam:                                      29:59                     Are they still sort of saying, okay, we’ll buy a hundred goat burgers and see how it goes as opposed to we’ll have 200, so they’re still in that sort of testing.

Paul:                                      30:09                     So there’s still a bit of market development activities, you know, going on.

Sam:                                      30:13                     Yeah.

Paul:                                      30:13                     On our end here.

Sam:                                      30:14                     How do you, do you go around with leaflets, how do you sort of…

Paul:                                      30:18                     Yeah, so we, yeah, we do leaflets and then we also do online marketing through you knowplatforms like social media, useing Facebook, Twitter our website as well as just, you know,physical visits to targeted clients.

Sam:                                      30:42                     Okay. So let’s say, are you in shoprite?

Paul:                                      30:46                     Not yet. So for some reason we are yet to start dealing with most of these big retail chains. And the major limiting factor for now is our luck luck over the right, I do, operating scope in terms of processing as well as distribution capacity in terms of…

Sam:                                      31:13                     As in, they’ll only deal with you if you can do a thousand goats.

Paul:                                      31:16                     Yeah. So you need to have a certain level of capacity, you know, we don’t want to engage with you and then tomorrow you’re unable to supply. They need to, again most of these large retail chains are very particular in terms of hygiene and sanitary requirements. So your products, your processes must meet certain, you knowcriteria?

Sam:                                      31:43                     Yeah.

Paul:                                      31:44                     Like how you go about slaughtering, processing and also delivering your goods to market, you need to meet a criteria, which to date I think,e’re still working on and that’s the more reason why we’re also trying to raise money, so that we can scale up our operation and move, you know, our business from this state of,you know, proof of concept like. I think we’ve overstayed at this stage and now we need to grow our capacity and just,ou know, flood the market with…

Sam:                                      32:19                     Flood the market with goat meat. Yeah. I mean you’re right. I mean it seems like you’ve been going for seven years now. You’ve kind of worked out visa the basic functions, you’re going to go off, buy goats, process them, sell them. Okay. Well you go…

Paul:                                      32:37                     So now I think the only missing link is just, you know, aligning our capacities with the, the process that we’ll develop so far. So I do get to fully take advantage of, you know, the market opportunities.

Sam:                                      32:51                     Do you think that there’ll be any resistance or any hesitation from let’s say Shoprite, so one of the biggest supermarkets here, will they perhaps say, okay, well, we’re going to buy this goat from you, but we don’t think people will buy it. Like, do you think you’ll have to do some?

Paul:                                      33:10                     No.

Sam:                                      33:11                     No?

Paul:                                      33:11                     There’s no that hesitation, right now we have actually we have an active conversation with another large retail chain, Choppies. Okay. So they are ready to engage with us.

Sam:                                      33:24                     Okay.

Paul:                                      33:24                     By the end, they’re just waiting on us to be ready in terms of capacity setting up a formidable slaughtering facility, processing facility and also having the right distribution you know.

Sam:                                      33:38                     Set up in cold, you’d have to have some cold chain.

Paul:                                      33:41                     You need a cold truck cause you can’t deliver meat, you know, at the back of a cab. So you need, you need the right distribution tools, you need a cold truck, you need cold storage, sufficient cold storage so that you keep your meat, you know, in the perfect state at all times.

Sam:                                      33:59                     How similar is, how similar is that process to beef and pork?

Paul:                                      34:05                     It is very much similar.

Sam:                                      34:07                     Okay.

Paul:                                      34:07                     What process are similar.

Sam:                                      34:09                     What’s stopping an existing beef producer or pork producer just saying, okay, we’re going to go out and buy some goats and put on and just,

Paul:                                      34:20                     Yeah. I think until recently what was stopping them is really lack of the edge to try out new things or getting used to what they’ve been used to over time. And then two, I think most of these other general meat processors, you know, because of their size, scope. Again, at least most of them reached, a level where they, you know, they’ve gotten used to their routine, the products and the processes and, cause the goat, the goat industry really, you know, is one area that has been overlooked. So there’s never been a, you know,

Sam:                                      35:08                     Did he run, considered it? They haven’t really been thinking about that. Right. If I’m just saying like, are you worried at all that one day, one of these pork producers or cow producers, or beef producers just says, just thinks, Hm, maybe we should try goat and they’ll suddenly be able to do at a really big scale. And does that worry you at all or are there are other reasons why…

Paul:                                      35:33                     It doesn’t, it doesn’t worry me at all. Ourselves, we have an upper edge in the goat industry given our dedication to the, to the industry. So we’ve given ourselves our full focus to the goat value chain, that gives us an edge in terms of supply engagement. Then two also in terms of you know, the room to innovate within the industry. Okay. So we are not preoccupied with you know, many, you know product lines. So we are preoccupied with perfecting, our core product is the goat offering itself. So that gives us an edge as it enables us to, to be more innovative in our product offering. You know, than the general meat processors except to say perhaps the only worry like right now is or as regard to, you know, economic meat processor wanting to add goat, you know, to their offering. The only aspect in which that worries me is yeah, mainly, given their scale, they may get to market much more faster than us. So the only worry is maybe our lack of timely access to scale our lack of timely access to resources to scale up the business. I think that’s the magic. Once we have the right operating scope, I do not see anyone outdoing. Then two, the other thing, again that gives us an edge is our brand. Okay. Zamgoat is a…

Sam:                                      37:14                     I mean there’s no escaping what you do is there?

Paul:                                      37:16                     Exactly, so Zamgoat, I think is already growing into a very popular brand out there it’s growing into a household brand. Everyone who want to eat goat, they would think of Zamgoat.

Sam:                                      37:29                     Yeah.

Paul:                                      37:29                     Okay. So that’s another yeah.

Sam:                                      37:33                     This might sound like a strange question, but is there any issue with you using Zam in your name? So like, isn’t it that there’s a telco company called Zam? Yeah, I did, It is the, does the government have any sort of rights to organizations that have Zam in the name? Do you know what I mean?

Paul:                                      37:57                     No.

Sam:                                      37:58                     It’s not like, cause I don’t, when I, you know, when I see Zamgoat, I might think, Oh that’s like the national Institute for goats. Awesome. So it’s like, it’s a great, it’s a great industry you’ve got, I was just wondering if there are any any issues you have with naming

Paul:                                      38:11                     Yeah, no issues at all. We don’t have any issues. Even that’s, there are number of businesses out there that have got the Zam prefix to their names. Yeah. So for us we chose Zam prefix to own it, to make it Zamgoat, because we wanted to be really the leader of the goat industry in Zambia. Okay. And not only in Zambia, we wanted to be the company here in Zambia to be identified within the region, around the world, you know, as the company that is the pioneer of you know, activity in the goat industry.

Sam:                                      38:53                     Yeah.

Paul:                                      38:54                     Yeah.

Sam:                                      38:54                     I guess if you wanted to go across the border, you’re going to have to know Zamgoat.

Paul:                                      38:58                     Yeah. So if we want to go across the boarder, yeah. So again, depends on, on the, on the particular markets. There are markets that will be comfortable to go trade as Zamgoat, but for some markets we’re also looking at you know, coming up with other brands that are targeting particular international markets to make us more relevant and appealing to those local markets. Yeah, sure.

Sam:                                      39:20                     What are some names you’ve thought of?

Paul:                                      39:22                     So currently there is another food service outfit that we’re working on, which we know we are calling Pizzagoat Africa and this is pizzagoat.

Sam:                                      39:32                     Pizza?

Paul:                                      39:32                     Goat, pizzagot.

Sam:                                      39:34                     P pizza. Have do you spell.

Paul:                                      39:37                     Pizza as in pizza? P I Z Z A.

Sam:                                      39:44                     Got it.

Sam:                                      39:44                     As one word.

Sam:                                      39:45                     Okay.

Paul:                                      39:46                     So this is a brand that we want to use for our international market penetration on the food service side. Yeah. So we are calling it pizza goat Africa. Okay. So what, is what we want to use in growing, in penetrating or in having a physical presence in the, you know, African.

Sam:                                      40:07                     Why did you go with Pizza goat?

Paul:                                      40:08                     So pizzagoat, again it gets back to to our desire to value add and disrupt the distribution of goat meat or good products. So pizzagoat is a brand that is focused on providing exclusive goat pizza and pastries. Okay.

Sam:                                      40:28                     Goat pastries?

Paul:                                      40:29                     Yeah. Pastries. We’ll have goat pies, goat samosas, goat spring rolls.

Sam:                                      40:35                     Yeah.

Paul:                                      40:35                     Yeah. So, but the key product, you know, within that offering is goat pizza itself. Yeah. So we are currently doing a test run on the same, we’re yet to, you know, fully launch it out there. But so far we’re getting a lot of positive responses from our customers who get a lot of, you know, positive inquiries. People looking forward to, you know, to have goat Pizza.

Sam:                                      41:07                     How many goats are in Zambia?

Paul:                                      41:09                     Currently, the population of goats I think is slightly under 5 million.

Sam:                                      41:13                     How do you know that?

Paul:                                      41:16                     Livestock censuses that are normally conducted by the ministry of livestock and fisheries and their last update I think indicated, you know, somewhere around 4.8, 4.9 million goats.

Sam:                                      41:29                     How many people are there in Zambia?

Paul:                                      41:32                     Currently we’re around 17 to 18 million. The last census I think was around 16 million.

Sam:                                      41:38                     Okay. So it’s pretty thin. Basically one goat for every three humans. Just purely out of curiosity, I’m interested if there are, what the goats to human ratio is what, like goats per capita is in other countries. Do you know, do you have any, are there any other countries where there’s a higher goat per capita or is Zambia a particularly goat heavy country?

Paul:                                      42:05                     My recent discoveries, I think I’ve indicated that countries like Ethiopia, Somalia, and you know, Somalis in African countries Tanzania, Kenya do have quite a higher, you know, number of goats as well.

Sam:                                      42:19                     Is that because the…

Paul:                                      42:24                     Because of the religious, you know, factor.

Sam:                                      42:26                     Yeah, I think it’s with like nomadic tribes, looking after goats and so there’s more of a culture of…

Paul:                                      42:31                     Yeah, yeah. That’s another, another attribute. But, the other attribute is on the consumption patterns. You know, most of the mentioned countries, Somalia, Kenya, are Muslim countries. So they tend to prefer, you know, eating more goat than the other regions.

Sam:                                      42:52                     Yeah. Is Zambia more or less purely Christian? Or is there a Muslim population here?

Paul:                                      43:00                     There is a Muslim population. Yeah. But obviously Zambia is predominantly, you know, Christian in terms of population. But we do have quite a big number of Muslims as well here.

Sam:                                      43:15                     Is Zamgoat halal?

Paul:                                      43:17                     We are positioning ourselves to halal, but again, currently given our limited operating capacities, we have not yet reached that level, where we would be officially, you know, certified halal, but we are working on,

Sam:                                      43:30                     Okay.

Paul:                                      43:30                     On certifying, having Zamgoat certified as halal.

Sam:                                      43:34                     At the moment a Muslim customer wouldn’t be able to buy…

Paul:                                      43:38                     At the moment, yeah. That’s another market that we are currently missing out. So part of our plan actually in setting up the planned sloughter house facility is to be able to enable us, you know, qualify to meet that halal standard certification. Sure.

Sam:                                      43:57                     Okay. Do you ever think, would you ever deal with like goat milk, or is that like different?

Paul:                                      44:03                     So again, it gets back to the strata of the industry as a whole, totally under developed, no much activity in any specific area of it, be it milk, skin. So even with new products, nothing much has been done with, you know, goat milk in the country. But again, as a business, that’s something that becomes opportunity for us. So as we keep growing, we are actually seeing ourselves grow into a fully verticallly integrated business across the goat value chain, doing something, you know with everything about goats, including, you know milk products. So we are looking at getting into the nutritional market, you know segment with time, riding on, goat milk as a highly nutritional product as you know, which, you know, some people out there say goat milk is as good as a human milk. So with that…

Sam:                                      45:07                     Do some people give goat milk to babies or is that…

Paul:                                      45:09                     Yeah. I think some do but it’s not yet a popular trend but there’s a lot of positive vibes out there. This is another industry for the future within the, you know, goat value chain. So we are looking at with time we should be able to venture out in coming up with goat based nutrition, you know, products.

Sam:                                      45:36                     Yeah. Like internationally, are there other countries where there is a or other companies that have said we’re going to vertically integrate in just goats?

Paul:                                      45:52                     Yeah, there’s been a few countries where at least it’s recently beginning to be some activity.

Sam:                                      45:59                     There are sort of Zamgoat equivalents. Whereabouts in the world is it?

Paul:                                      46:04                     In Somalia, there are countries that just, yeah, I mean there are companies that just focus on goat processing and distribution.

Sam:                                      46:12                     Are they sort of, are they a similar stage as Zamgoat?

Paul:                                      46:16                     There could be some, I think I must have heard of, I’ve forgotten the name but is one company that is, that is doing pretty well in Somalia. So they’re quite an advanced, at an advanced stage in terms of their development as compared to Zamgoat.

Sam:                                      46:31                     I’m just curious cause it’s always useful, I find, when there’s a company, you know, a country another part of the world where they’re never gonna come and enter the Zambian market, but you can still learn some good lessons from them. I was just wondering if there were, I don’t know. Vietnam for example, you know, pick a country. If there were any companies where you can say, okay, well in five years time we want to be like, yeah, “Indonesia goats.”

Paul:                                      46:58                     I think there’s one common phenomenon across the world. The goat industry. I don’t know for some reason, somehow, it is an industry that has been overlooked. Okay. And for me, I think this is what, becomes the biggest opportunity. It’s a pretty, you know, under developed industry and that to me as an entrepreneur, you know, rings a lot more opportunity than most of these industries that are fully saturated. That the traditional, you know, meat industries, beef, pork and chicken. Then two, goat meat and the other assorted products are becoming the talk of the day, okay. Around the world. Goat meat is seen to be more healthier than these other meat products, goat milk, you know, is also seen to be a very healthy, you know, product, you know, with some data out there equating it to human milk, you know, to be as good as, you know, breast milk, you know, goat skins. Okay, that’s fine leather, it’s one of the most treasured you know, leather out there, but somehow again, to some extent, there’s still some slowness, you know, inactivity not to fully capitalize on these products.

Sam:                                      48:30                     Why do, why do you think that is?

Paul:                                      48:33                     The lack of innovation? Yeah, so this is, this is the time now innovative entrepreneurs, you know, prying their trade in the innovative age, like now to come up with innovations that add value to these products that have got a yearning market out there.

Sam:                                      48:51                     Are there any countries where the goats are not indigenous or the goat, or there’s not many goats? One thing here is like in let’s say one of the biggest meat producers in the world is the U S and they’ve got loads of pigs and loads of cows, so they probably developed all of their machines and factories just around that because there’ve been lots of meats, beef cows and pigs around and so they’ve really sort of like grown the beef and pork industry. I’m just wondering had, if by historical accident, there were goats in America and they, 50 years ago, you know, 80 years ago, started factory producing goats. Whether that would have, is it that the fact that goats aren’t in places where there’s currently been big areas of meat production? Is that why it’s not seen as a popular product

Paul:                                      49:48                     To some extent, yes. In fact you’ve just reminded me, one of the countries in the world that seems to have made headways in processing of goat products is Australia. Okay, there are companies in Australia that have made, you know, serious strides in adding value to goat meat and distributing it around the world. I was surprised during my stint in the US, I found, you know, Australian goat in some supermarkets in the US.

Sam:                                      50:18                     I can imagine.

Paul:                                      50:19                     Yeah.

Sam:                                      50:19                     Any country you go to, you go straight to the goat, to the meat section and you check out where all the goats come from, yeah.

Paul:                                      50:26                     Yeah. So they’ve made strides, and then yeah, their country, I think goats. Goats are there in most parts, but I don’t know. I think it’s just lack of there’s some stereotype perhaps that has been associated, you know, with goats.

Sam:                                      50:46                     I guess as well if, yeah, if you’re saying that most people consume, choose what food to consume by, let’s say going to the supermarkets and if the supermarkets have a barrier where they say you’ve got to hit a certain capacity before we can even enter, then lots of people might not realize that they’re missing out on goat because they go to the meat counter and there’s beef, chicken and pork. Suddenly if goat producers like Zamgoat are able to hit a certain capacity and making them looking at beef, pork, chicken, goats, Oh, actually I’ll try goat. And that introduces it to, and that generates the demand. I can see that. I can sort of see that logically being something.

Paul:                                      51:25                     Yeah, sure. So I think there’s just a general stereotype that is somehow you know underplaying or downplaying the efforts or the opportunities that exist within the goat industry like, you know, experience. Okay. One of the challenges that we have been facing, for instance, even in trying to access, you know, growth, financing opportunities out there is this seemingly unattractive, still unattractive state of the industry as a whole. Not for us as a business, but the Industry as a whole, you know, to attract financing from traditional financing sources that want to find us businesses, operating industries or in proven industries in other words, industries That have got a proven track record. Industries that have got a proven record for commercial viability. Whereas, you know, theygoat industry has never been exploited, fully exploited. So the financial markets out there are still a little bit skeptical, you know, especially the traditional sort of funding or finance.

Sam:                                      52:37                     So where, where do you get your financing from?

Paul:                                      52:39                     So given that reality, we’ve mostly be looking at non traditional financing sources, we’ll be looking at, like here in Zambia, the commercial, the most common source of financing for any start up business would be, you know, to go to the bank and ask for a bank loan. But then the banks look what industry dynamics, the goat industry, they have no experience with it so they don’t have that, or technically, you know, cuts you off their books. So we’ve been looking at nontraditional financing sources like, you know, venture capital, equity financing, we’ll be looking at impact financing and especially like in our case, especially given the impact, the social impact aspect of our business. We’ve been trying to take advantage of, you know, development, financing opportunities that exist out there.

Sam:                                      53:36                     As you say, you, are improving livelihoods of small holder farmers. And that must be…

Paul:                                      53:41                     Sure.

Sam:                                      53:42                     A really big impact push that people want to have.

Paul:                                      53:45                     That’s sort of what I’ve been trying to do. I’ve been trying to ride on, you know, impact aspect as a business in accessing impact financing opportunities, which we hope we should then be able to use as catalytic, you know, financing that help us grow the business to reach a level where at least now the business and the industry as a whole should be able to prove a point and become more attractive to a traditional finances. Yeah.

Sam:                                      54:14                     Got it.

Paul:                                      54:15                     So it needs a lot, a great deal of catalytic financing from non traditional, yeah.

Sam:                                      54:22                     Get it in motion. Yeah.

Paul:                                      54:23                     Sure.

Sam:                                      54:24                     Okay. So we’ll just do a few more questions, that’s right. What have been some of the surprises in running the business? So if you were to say compare, what, how Zamgoat is today with what you thought it would look like today? How is it different? Maybe in a positive way, and in a negative way.

Paul:                                      54:46                     It’s not as easy as I thought it was going. Okay. Yeah, that’s one thing obviously. So running the business hasn’t been as easy as I thought it was going to be. It has been a lot tougher, stressful, and sometimes you know, tempting, you know, you just want to quit. But then again you look at, you know, the time invested and the beaconing opportunity ahead, okay. The fact that there’s no track record for commercial viability of the goat industry does not make it, you know, a bad industry as a whole. Okay. I think there are a lot of positive indicators that this is the next big thing in the meat industry, this is the next big meat industry in the world. The goat meat industry.

Sam:                                      55:42                     Yeah.

Paul:                                      55:42                     Okay. Yeah. So just getting back to your question, my experience has been that, I think still a lot more harder. I didn’t think it was going to take us this long, you know, to grow the business, by now, I was projecting that, we are now doing seven years, by now, my initial projections were that by now we should be able to at least saturate the local market and looking at export markets. But it’s been difficult because it’s been hard to raise, you know, growth financing. Yeah.

Sam:                                      56:18                     Okay. And, if you sort of fast forward, project maybe three years time, what do you think Zamgoat will look like?

Paul:                                      56:27                     So in three years time, especially if we manage to raise the initial $400,000 that we are looking at, one, Zamgoat should be able to fully become a household name on the Zambian market in terms of goat consumption. We’re also looking at changing the consumption patterns of goat among consumers. Okay. For instance, we’ve introduced these revolutionary products, goat burgers. Okay. These are products that have never existed in the Zambian market, but now have, they’re only on the Zambian market. People are getting hooked to our concept, goat pizza, pies and pastries, you know, so in three years from now, yeah, we should be able to really spread our footprint in terms of our distribution outlets across the Zambian market, by the fourth year, there about, who should be looking at exploiting the export market. We have a yearning regional export market, the Congo DR, Angola, is just one of them. Okay. Historically, Zambia has been supplying goats to these markets, but this has been done through informal trade, not through formal trade.

Sam:                                      57:44                     Yeah.

Paul:                                      57:44                     So there’s no really, you know, greater benefit that can be tracked down. And then, yeah. And also in four years we’re looking at increasing our capacity in, you know, engaging with smal holder farmers, in improving their economic wellbeing, giving them an alternative in terms of their livelihoods, especially in the wake of climate change where their traditional agricultural practices are failing. Rainfall has become more predictable. So we want small holder farmers to continue earning a living even at least through raising of goats, which are much more adaptable to the harsh, you know, climate conditions that we are currently experiencing.

Sam:                                      58:35                     That’s good. Okay. Yeah. Cool. And people who are listening, how can they learn more about that and Zamgoat?

Paul:                                      58:41                     So people can visit our website, We’re calling it because we envisage ourselves to grow into a group of companies. You know, it’s time. So zamgoatgroup.Com, people can visit that website and get more information. Alternatively, they can find us on Facebook. We have Zamgoat products limited on Facebook. They can, or simply key in Zamgoat online. There’s a whole lot of information and they’ll get links to sites that they can then, you know more about Zamgoat.

Sam:                                      59:15                     Fantastic. And I’ll put some links to these in the show notes.

Paul:                                      59:18                     Sure. That will be great

Sam:                                      59:19                     Cool. Well Paul, thanks so much.

Paul:                                      59:21                     Thank you so much Sam. Its been a pleasure talking to you.

Sam:                                      59:21                     You too.

Sam                                       59:22                     Much. So here’s a pleasure talking to you.


No credit card to drive! How City Drive Hire have opened up the Zambian car hire market


The landlocked country is just south of Malawi, Tanzania and DRC, and has the great Zambezi river as it’s border with Zimbabwe, Botswana and Namibia.

Economically there’s a lot of copper and mining exports, and my sense is that the development of local services is most in line with Uganda or Tanzania, rather than Kenya (more developed) or Rwanda (less developed).

In this episode, I speak with Greg, who runs a car hire company from the capital Lusaka.

It started 10 years ago and now has operations across the country.

I really enjoy hearing how businesses in the region adapt traditional business models to provide a superior service to existing alternatives.

Yes, there’s a lot of excitement in developing off-grid solar solutions using mobile money,  but there’s also a lot of merit in running a business with professional service that an emerging economy is going to demand.

In this case, good quality and reliable car rentals.

Greg and I discuss the company’s formation, how they modify their cars for Zambian roads (such as switching out the Japanese cold weather tyres), how their fleet is now over 500 cars through an innovative leasing programme, and how the payback on vehicles they purchase, is just 4-6 months.

There’s also lots of good advice from Greg about building a company organically and strategically thinking about where you can be valuable to clients.


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Twitter: @CityDrive4You



Sam:                                      00:02                     Intro.

Sam:                                      02:43                     Cool. So we’re here today with Greg from City drive. Greg, welcome to the show.

Greg:                                     02:47                     Thank you for having me.

Sam:                                      02:48                     That’s all. And so to get started, can you tell us a bit about you and a bit about City drive?

Greg:                                     02:53                     Okay. So my names are Gregory Charmer. I was born in Zambia, Luapula province, but I grew up mostly in Botswana, and I came back in 2004 to Zambia for college. Basically. I’ve been back in Zambia since 2004 and I completed my college in 2007. I did ACCA which is basically…

Sam:                                      03:23                     Accounting.

Greg:                                     03:23                     Accounting, Yes, correct. Yeah. And I did that for three years. When I completed, I went and worked as an accounts assistant for a company called Global Logistics. I worked there for about two and a half years from 2007 to December, 2009. I then left to go and found City drive and run it full time.

Sam:                                      03:51                     Cool. Okay. And City drive is car hires, is that right?

Greg:                                     03:56                     City drive is car hire, but basically what we really are, we are, we consider ourselves to be a transport solutions company. The vision really has always been to provide and develop innovative transport solutions at the best possible prices. But then we had to start from somewhere because transport solution is broad. So we had to start from somewhere and we started with car rentals.

Sam:                                      04:21                     Got it. Okay. So out of interest, where do you see transport solutions? Where could that end up?

Greg:                                     04:28                     So for us really, we consider our transport solutions really covering not just car rentals, but when, and anything that will enable us to help our customers out there, move people or goods from one place to the other, to another from point A to point B, in a much more efficient and cost effective manner. That should include obviously car rental itself. But also we’re looking at a taxi hailing, we’re looking at a courier service, we are looking at several other services that have to do with transportation, but obviously with the aim of making it a different and better in a way that will save our customers money and time.

Sam:                                      05:20                     Okay. Okay. So let’s sort of talk about what the situation was like in Zambia before City drive.

Greg:                                     05:29                     Yeah.

Sam:                                      05:29                     So when you say you’re sort of looking, let’s as we currently looking at car hire, car rental?

Greg:                                     05:37                     Car rental yeah.

Sam:                                      05:37                     So what was, what was the process like before City drive?

Greg:                                     05:42                     Yeah, so the current industry in Zambia at the time that we were coming into the scene was still not very developed. It’s still not that developed, though we’ve made some significant progress. But I think when, when you came into the scene, we had a few car rental companies, and a number of them. We had about two, which were sort of dominant, right. But then one of the main problems that we discovered when we did our market research is that the most of the current companies then we’re mostly catering to expatriates, basically customers coming from outside the country. Because one of the conditions was was that they needed someone to have a credit card in order for them to hire a vehicle.

Sam:                                      06:33                     Interesting.

Greg:                                     06:33                     Yeah. Now, when you look at the majority of the Zambians, majority of the Zambians don’t have credit cards. So what that meant was that a large chunk of the people in Zambia who are not receiving car rental services.

Sam:                                      06:48                     So even if they wanted to.

Greg:                                     06:51                     Even if they wanted to.

Sam:                                      06:52                     The fact that they don’t have a credit card…

Greg:                                     06:53                     They don’t have a credit card, they wouldn’t actually hire vehicles. So that was an opportunity that we saw. And when we founded the company, it was really with the vision of enabling ordinary citizens out there to access affordable and efficient car rental services. So, over the years I think we’ve stayed true to that mission. And we have actually provided services for customers, not only in Lusaka but basically across the country because we operate in four provinces in four towns. And we believe we, we have made significant progress in attaining our mission and vision of enabling ordinary citizens out there access affordable and efficient car rental services.

Sam:                                      07:46                     Very good. Okay. I’m interested why is, I know very little about the car rental market. Why did the, the two incumbent car rental companies, why did they insist on people using credit cards?

Greg:                                     08:04                     It’s much safer, right? Because then the credit card becomes security.

Sam:                                      08:10                     What does that mean? Security?

Greg:                                     08:12                     Yeah. So basically the credit card becomes the security deposit. Yeah. So you say maybe there are damages to the car or the car is a right-off they would actually charge.

Sam:                                      08:26                     So they can get the money back?

Greg:                                     08:27                     Can get the money back. There’s a percentage that they’d actually charge immediately on the credit card to get to, to recover their money. So that was one of the reasons which they, you know, they believe that it would actually be safer for them to actually hire out vehicles to people with the credit cards. The, I think, but I think the other reason was was that perhaps the just possibly, maybe we’re not just not interested. They, I think, they thought that it was more lucrative dealing with people coming from outside expatriates, rather than the local market. I think they didn’t really see much business sense in the local market and also concerned with the fact that local market was much, much, much riskier compared to the international market. Yeah. I think those were the, there could be other reasons, but I think those were the two main reasons that we actually discovered when we were doing our research.

Sam:                                      09:33                     I mean, the first, so the second one, I mean, that’s just, I guess the judgment that they’ve made. With the first one though, I mean, that sounds quite sensible. If you’re giving someone a car that you’ve got a way to get a security deposit.

Greg:                                     09:47                     Yeah.

Sam:                                      09:48                     If you don’t take credit cards, how do you get over that issue?

Greg:                                     09:52                     Yeah, because I think that’s, that’s, that’s a question that we had to think hard about when we’re, when we’re setting up the company because I think for us, the vision was just not to cater to expatriates, but also most importantly to the, to the local market, because, you know, I think we believe transportation is very critical in driving the economy forward. And we really wanted to participate in the growth of the Zambian economy. So, we just really had to come up with a plan. What we call a risk management system, which would actually enable us, to hire out vehicles to people without credit cards. And it essentially involved putting in place a screening process. Yeah. So for example, anyone who has a car, we need to they need to bring forward a copy of their utility bill because we need to ensure that we know where they stay. Okay. So there has to be a copy of a utility bill, which can either be an electricity bill or a water bill or a tenant’s agreement. Right. And then of course also when thEy’re filling in the contract, they need to give us at least two emergency contacts. Okay. And we need to know the names of those emergency contacts, where they stay, their contact numbers, where they work. Yeah. And also when they come through there are just a few questions that we ask them. Yeah. It’s part of the screening process. We developed a screening process to manage that risk which we use to actually assess the credibility of everyone who comes to hire a vehicle. So that is the first stage. If that first stage fails, we’ve put compressive insurance on all our vehicles. So in the event of them being stolen, then now insurance will cover the vehicle and have the vehicle replaced. Yeah. So it’s a two-stage risk management system that you have in place, which has actually enabled us to be able to hire out vehicles to people without credit cards. And from the time that we, we actually started operating, we’ve had very few incidents of you know, vehicle theft clients not wanting to pay. Yeah. Et cetera, et cetera. Yeah.

Sam:                                      12:44                     And I mean, rough, say if, I mean, that sort of makes sense. If you’ve sort of come up with your own risk-mitigating criteria and just in terms of the rough scale, how many customers have you got or have you had?

Greg:                                     13:02                     We operate in four provinces and I think over, over the years our customer base has been growing. So roughly in terms of numbers maybe we are looking at a 200, 300 division, 200 and 300 customers.

Sam:                                      13:22                     Yeah.

Greg:                                     13:23                     Yeah.

Sam:                                      13:23                     Are many of them repeat customers?

Greg:                                     13:27                     Perhaps a quarter of that.

Sam:                                      13:29                     Okay. What’s the, what’s the main demographic or like what’s the main reason that people come to City drive?

Greg:                                     13:37                     The main, our main strategy really has been to provide a unique experience. Right? We ensure that from the time you make an inquiry to the time you confirm a booking, the time you get a vehicle and the time you return the vehicle, we ensure that we actually give you an experience which is unique and you can’t get anywhere else. So we, we are into car rental and you know, transport solution. But what we sell is the experience, a unique experience. And I think over the years, that’s really what has made us to stand out.

Sam:                                      14:20                     So, in terms of the purpose. Yeah, that people use the cars, are they doing it for a holiday, are they doing it to move, to move house. Are they doing it to do a long business trip? Like what are some of the reasons that they’ll hire a car?

Greg:                                     14:35                     Yeah, it really depends because you know, we, we have got about four market segments, right? Basically we’ve got about two primary market segments. So those are the international clients and the local clients. With international clients, mostly they come, they come to Zambia and hire vehicles basically for two main reasons. One, they’re coming here as just, you know, business travelers, so they would want a vehicle to move from point A to B. So other than the business travelers. And then the second one is the tourists, right? So they’re coming here and they want to tour Zambia, they want to go to the Victoria falls, national parks, and other parks. So they would rather, most of them will either hire a plain four by four. Okay. Others would hire what we call a fully equipped four by four safari camper. So this basically, the camper basically comes with all the company equipment you need on there. It comes with a rooftop tent, a car fridge, comes with cooking utensils, everything that you need for you to go out there camping. So yeah, so those are the main two reasons for the international market. They’ll come either as business travelers or as tourists. On the local market, we have really clients hiring vehicles for two main reasons. The first one obviously, is for, is for them to, you know, get around. Right.

Sam:                                      16:16                     Just like, like day to day, getting around or?

Greg:                                     16:19                     Yeah. If they want to travel from one town to the other and they don’t want to use the bus.

Sam:                                      16:27                     Okay. Yeah.

Greg:                                     16:28                     They’d hire a vehicle some, if the, they’re coming from one town to the other, perhaps the, they get they use a bus. If they’re coming from Livingston, they’ve come into Lusaka, they get a bus, and then when they get here, they’d want to move around using a vehicle. So they’d actually hire a vehicle. The second reason is now the B to B business. And here we are looking at companies who don’t want to tab their funds in bank vehicles and maybe they’re doing a project. I saw they’d rather hire a car for two, three months for the duration of the project. And yeah, so they’d hire a vehicle as opposed to buying it. And then also we also provide services to insurance companies, so if you’ve got a if you’re insured with an insurance company, and your vehicle is involved in an accident your insurer would hire a vehicle from us for you to use.

Sam:                                      17:39                     You’ll have the replacement.

Greg:                                     17:39                     The replacement, exactly. So you would actually utilize that vehicle as you wait for your vehicle to come out from the garage. Yeah. Yeah. So basically those are the main reasons why people hire vehicles on the internet, on the local market. Yeah.

Sam:                                      17:54                     Very cool. And the, how regular does the insurance one happen?

Greg:                                     18:01                     Every month.

Sam:                                      18:02                     Really?

Greg:                                     18:02                     Yeah. Cause we have accidents every month. Yeah. Actually, I think it’s two fold. It’s sad that you know, your vehicle is involved in an accident, but again, it’s good because we still, the insurance to give you a vehicle to use.

Sam:                                      18:19                     Yeah.

Greg:                                     18:19                     Yeah. You know, there’s continuity on your part in terms of transportation. Yeah.

Sam:                                      18:27                     Did you go to the insurance company and say, I think you should, like, I think this is a service you should provide, or did you, did you displace an existing car hire?

Greg:                                     18:40                     Actually when, when we started and I think we are, we are proud to, to actually have, having you know, contributed to the growth of the insurance market, with regards to replacement vehicle because when we started, most insurance companies used to payout. Right. So if your vehicle was involved in an accident, they’ll say ok, you know what, sort yourself out, go and hire a vehicle, just brings us the bill. But then what we did is that we, we came up with the proposal. Yeah. And we visited most of the insurance companies and we presented to them that look, would be more beneficial for you if you hire a vehicle on behalf of your policy holders as opposed to letting them, you know, just giving them a blank check and telling them to go and hire a vehicle because one, you won’t have control over the costs. Right. And then you also won’t to have control over the quality of the vehicles they are hiring. So if you hire a vehicle for them from a reputable company like us, you can be assured of, one, ensuring that you have control over your costs because you only pay, you will know what you’re paying for upfront. Right. And then we have a good fleet of vehicles, cyclists, you know, you can be, you can rest assured your clients will have access to quality vehicles, which they can, you know, continue driving around as they wait for their vehicle, which in turn will also, enhance your reputation as an insurance company. So in the beginning, the majority of them liked the idea. And I think a couple of them, we, we started off a world of them, decided, you know, getting vehicles. And over the years the industry has basically moved to that. So insurance companies don’t actually pay out any money today. They would rather hire a vehicle for you because they’ve actually realized that they get to save money, and it’s more beneficial in their part. And also they are, their policy holders get to have access to a vehicle much quicker as opposed to the way it was before. Because the way it was before, they would just tell them, look, go and look for a vehicle. Right. But then if they call us and tell us, look, we’ve got this policy, please arrange for a vehicle, we say ok, fine, there’s a vehicle we can deliver to where they are. So it’s much quicker. So yeah, it’s been an interesting and good journey.

Sam:                                      21:22                     Yeah, that’s really good. Great. Can we talk a bit about the economics of car rental? So I’m interested sort of roughly, how much did it cost to buy a car and then what’s your sort of expected payback in terms of being, and maybe some other additional costs that might have to be considered when you’re buying a car to hire as opposed to just to, to drive for yourself.

Greg:                                     21:50                     Yeah. So, you know, buying vehicles in Zambia is quite expensive, especially if you’re going to be buying new cars, right. Because, you know, like say Toyota, Alex, the new Toyota Alex will cost you between $40,000 and $50,000, which is a lot of money. So when we started we started with basically, because, you know, we had to start from somewhere, right. And we started with basically buying second-hand cars yeah, so we would buy second-hand cars from Japan and those are the cars that we were actually hiring out. And so, buying a second hand, a good second hand vehicle from Japan would almost cost you a quarter of the price of a new vehicle in some way. So because of that, we were able to actually you know, grow our fleet over time. And we actually had the payback period for the second-hand vehicles from Japan, the payback period is between, is between four and six months.

Sam:                                      23:08                     What?

Greg:                                     23:09                     Yeah.

Sam:                                      23:10                     Four and six months?

Greg:                                     23:11                     Yeah, between four and six months. Yeah. So you’d get back all your money.

Sam:                                      23:14                     What’s the, what utilization do you need for that? Like how often does the car need to be in use?

Greg:                                     23:19                     Well, the utilization in a month, if you can have at least a utilization of at least 20 days.

Sam:                                      23:27                     20 days in a month?

Greg:                                     23:28                     20 days in the month, between 15 and 20 days in the month, you should be able to get your money back between four to six months.

Sam:                                      23:36                     Are you calculating the total cash amount? Or are you saying, are you factoring in a depreciated value of the car if you were to sell it?

Greg:                                     23:47                     Yeah, so basically the initial investment on the vehicle.

Sam:                                      23:50                     Okay. So let’s say, let’s say it costs $10,000 to buy the car. Are you saying you’ll recoup $10,000 in six months?

Greg:                                     23:58                     Yeah, six months, guaranteed.

Sam:                                      24:00                     Really?

Greg:                                     24:00                     Yeah.

Sam:                                      24:00                     Okay. So it’s not, cause it’s not even, cause you might, cause even after six months, you want to say, right, I know I want to sell this car. You might be able to sell the car for $5,000. Yeah. Get some cash back or…

Greg:                                     24:11                     After six months, yeah. Possibly you might sell it for three quarters of that. Yeah.

Sam:                                      24:17                     Yeah. Wow. So how much does it cost for a day?

Greg:                                     24:21                     For a day, it depends on the vehicles. So our smallest vehicle, which is basically the hunchback vehicles, that the likes of the runx those their costs are 33 Kwacha per day. 33 Kwacha, which is which is about $38.

Sam:                                      24:41                     $38?

Greg:                                     24:42                     $38, So cause I think that’s the other thing, one of our strengths is that we, we actually have got very competitive rates. We have got one of the lowest rates in the industry. And it’s deliberate because we believe that it’s the only way that we can enable people out there to, ordinary people to access car rental. Yeah. So they range from $38. The sedans range from $38 to $55, and then we have the four by fours which range from $90 to $130.

Sam:                                      25:18                     Okay.

Greg:                                     25:18                     Yeah.

Sam:                                      25:19                     Wow. So with this, with a sedan, you were saying in six months, thats maybe a hundred days driving. So it’s about $5,000 to buy car?

Greg:                                     25:27                     To buy a car from Japan?

Sam:                                      25:29                     Yeah.

Greg:                                     25:30                     Yeah, you can, you can buy, you can have it landed for about that much, basically between 5,000 and 6,000. Yeah.

Sam:                                      25:38                     Are there any things that you need to do to the car? I mean, you said one is to prepare them for Zambian roads and the other is to prepare them for being rented out. So yeah. Are there any, so are there any things, I’m trying to think. There might be more potholes in Zambia, there might be, the roads might be hotter. Are there any sort of changes or modifications you need to make to the car?

Greg:                                     26:07                     For the majority of the cars, no. The only thing you need to do is really just when, once, once it arrives, have it registered and maybe at that time what we found is that the tires that the vehicles come with, they are mostly meant for the cold environments in Japan. So once they get here, you need to change them. Yeah.

Sam:                                      26:29                     What do you do the old times?

Greg:                                     26:31                     What we do with the old tires, usually if there are people who are interested in buying them, we sell them, but we explain to them the look, this tires came from Japan. So you’re gonna have to buy them at your own risk. Yeah.

Sam:                                      26:43                     I would say that, is there any use for cold tires? What would you call it, cold surface tires. Have you?

Greg:                                     26:52                     Yeah, in Zambia, usually the tires just don’t work, because if you continue with them, they usually, they’ll either burst or the top part will just come out.

Sam:                                      27:04                     Okay.

Greg:                                     27:04                     Yeah. Just shut off. Yeah. Which is not good.

Sam:                                      27:08                     So is there any other purpose for cold weather tires?

Greg:                                     27:12                     Cold weather tires, here in Zambia we haven’t found any.

Sam:                                      27:17                     Ok, have you just got a pile of these tires?

Greg:                                     27:21                     Yeah, we do have a, I think what we usually do is that we try, by all means to get rid of them. So if we have, if we can find a buyer, we sell them.

Sam:                                      27:34                     Okay. Yeah. But I mean most of the people who are buying them are kind of doing it slightly risky.

Greg:                                     27:41                     Yeah. You usually, it’s usually those who live in the, the, in the rural areas they’ll use it for what we call, this, in a way, you, you have a trailer and then it’s been pulled by either a cow, donkey.

Sam:                                      27:56                     Like a cart.

Greg:                                     27:57                     The cart, exactly. So they’ll usually use them for that.

Sam:                                      28:00                     They’re not going very quickly. Okay. And then are there any other things that you need to do to the car before you start?

Greg:                                     28:08                     I think the other thing that we’ve discovered also is that usually the engines come with what they call a thermostat.

Sam:                                      28:15                     Okay.

Greg:                                     28:15                     Because of the cold whether there. Now, the thermostat, usually only works best in cold weather in Japan. When it comes here it tends to expand and blocks the radiator.

Sam:                                      28:29                     Okay.

Greg:                                     28:29                     Yeah. And if you’re not careful, it might actually lead to the car over boiling and then it might damage the engine, So one of the things we do is that we actually remove it.

Sam:                                      28:41                     Okay.

Greg:                                     28:41                     Yeah, we remove the thermostat.

Sam:                                      28:43                     Alright.

Greg:                                     28:43                     Yeah.

Sam:                                      28:44                     Okay. And does that have any adverse effects?

Greg:                                     28:47                     None.

Sam:                                      28:47                     No. Okay.

Greg:                                     28:48                     The car continues to operate.

Sam:                                      28:50                     And so that’s kind of, you get the car from Japan and you kind of make it Zambia ready.

Greg:                                     28:55                     Yep. And customize it.

Sam:                                      28:56                     Do you need to then put anything like a tracking device in the car or anything? Any other things like that?

Greg:                                     29:02                     Yeah, so yeah, we do, we do. We do actually install tracking devices in our vehicles. In fact, I think that’s one thing actually left out as part of our risk management system. So we track all our vehicles. Yeah. Because obviously, I mean, if, you know, God forbid someone who’s not credible has the vehicle and they’ve got other plans. I would actually be able to track the vehicle. And just if they’re still not continuing. If they’re not bring back the vehicle, we would actually track the vehicle and switch it off, yeah.

Sam:                                      29:47                     Switch it off? So, so, wow. So how does it, so what, what, what data can you collect? So this is like a little device you put in the car.

Greg:                                     29:54                     Yeah, it’s a tracking device that we install on the vehicle, which enables us to track the vehicle and…

Sam:                                      30:00                     So you’re getting the GPS location. It gives you…

Greg:                                     30:04                     So it will tell us the real time location of the vehicle at any time. It will also, it’s able to tell us the speed at which the car is moving to be able to tell us whether the vehicle is stationary or it’s moving as well. It’s about to also tell us,some devices are able to tell us how much was in the vehicle? Yeah.

Sam:                                      30:30                     So have you, have you got sort of a theatre border or like a bit on you on your computer where you can sort of click a button and you see a map and you can see where your car is? Yeah, yeah. We’ve got an admin panel where we’re able to track all our cars. Yeah. And I think I’ve asked you, how many cars have you got?

Greg:                                     30:49                     Yeah, so that’s a good question because the model we use is one which, which we use our own cars and also third party vehicles. In 2016, we launched an online platform, which enables people from the public to list their vehicles. So you list your car and then we hire it out for you. Right. so our own cars, we’ve got very few cars, which are our own.

Sam:                                      31:18                     Really?

Greg:                                     31:19                     Yeah. So our own cars, they’re just about 25.

Sam:                                      31:23                     So you’ve got, on your City drive balance sheet.

Greg:                                     31:26                     Balance sheet?,

Sam:                                      31:27                     You know, under assets, 25 cars.

Greg:                                     31:29                     Just about 26 cars. Okay. Yeah.

Sam:                                      31:31                     How many is in your fleet?

Greg:                                     31:32                     Yeah. So basically on our platform, we’ve got a close of about 500 listed vehicles.

Sam:                                      31:41                     500?

Greg:                                     31:42                     Yeah. 500 listed vehicles. Yeah. So those, those listed vehicles in our own cars, when we combine them that’s the fleet that we basically used to hire out.

Sam:                                      31:54                     Wow.

Greg:                                     31:54                     Yeah.

Sam:                                      31:55                     That’s interesting. Okay, so 25 so, the initial ones that when you started the business, did you own all the cars?

Greg:                                     32:02                     When I started the business, we started one vehicle.

Sam:                                      32:04                     One vehicle.

Greg:                                     32:04                     Yeah. And yeah, and we did own it. Yeah. That’s in 2009 yeah.

Sam:                                      32:09                     25 and then say, well wow. So you’ve now sort of invented this marketplace for people to, so the people who are listed, who’ve listed their cars, what do they, do they kind of drive and then they get a phone call from you saying, can you, can you rent it for a week or have they got extra cars? What’s the sort of demographic?

Greg:                                     32:33                     So the way it works is that when you have your car listed, you get to keep it, right. So the, the, the, the marketplace is not a peer to peer marketplace, whereby a vehicle owner gets to actually just get to interact with the customer and then the, they handle everything, we’re not there yet. But basically what happens is that you have your car listed and then when there’s a booking on your vehicle, we give you a call, okay, we’ll give you a call and then we make arrangements.

Sam:                                      33:07                     Is it basically, so let’s say that you’re paying $50, let’s say that the customer is paying you $50 a day. Do you then go to the people, the five, people who’ve listed and say, we’ll give you $25 a day.

Greg:                                     33:19                     So, so basically the rate in our commission on the vehicles are actually prearranged, right? Yeah. So we usually typically get between 20% to 35% commission or niche higher.

Sam:                                      33:34                     Okay.

Greg:                                     33:35                     Yeah.

Sam:                                      33:35                     And out of that 25% to 35%, that’s all your servicing costs. So your, the team who come and do the initial checks, all that sort of stuff that gets paid out tt that.

Greg:                                     33:46                     Yeah. That gets paid out to you, so that, well our commission is, does cover all our operational costs. Yeah,

Sam:                                      33:54                     Yeah, yeah. Wow. Okay. That’s interesting. So 500 cars, is it 500 people or like to certain people have multiple cars, have some, some people like made a little sub business out of this.

Greg:                                     34:08                     Its actually quite interesting because when we launched the platform, some people started one vehicle. Right. And over time they actually had to buy extra vehicles from the money that they were making on the platform. So it is not, it’s not like, you know, one-to-one, but you have a number of people who have got maybe two, three, four, five vehicles listed on the platform. Yeah.

Sam:                                      34:35                     Nice. And all in Zambia?

Greg:                                     34:37                     All in Zambia, currently we’re just operating in Zambia.

Sam:                                      34:39                     Okay.

Greg:                                     34:39                     Yeah.

Sam:                                      34:40                     Do you have plans to go elsewhere?

Greg:                                     34:41                     Definitely. Definitely. We’ve had plans to go abroad. So yeah, that’s what we are working on.

Sam:                                      34:46                     Where do you want to go?

Greg:                                     34:47                     Well, you know, we really want to focus on, for the meantime, we want to focus on Africa. So we are looking at Southern Africa the neighbouring countries. Yeah. You know Botswana, Malawi, and then the other countries.

Greg:                                     35:05                     And how are you gonna, what framework are you going to use to decide which country to go to next?

Greg:                                     35:11                     Yeah. You know, obviously we need to start with a country which has got an investor friendly environment. Yeah. And…

Sam:                                      35:28                     Because you’d be coming in as foreign investors?

Greg:                                     35:30                     Yeah. We would become foreign investors. And obviously a place where, you know, it’s the, the people, the people there are more accommodative to technology. Yeah. Because our platform is a technological platform and we’d want to ensure that wherever we go, it has to be a place where you know, people are accommodative to technological things. Yeah. Because in many parts of Africa you know, people, this is when people are just getting to learn about these things. Yeah. So, yeah, I would want to go to a place where, you know, it would be easier for us to, you know, get established and have our platform be welcomed into, you know, people will find it easier to use, technologically.

Sam:                                      36:32                     Yeah. And when he’s talking about technology, is this because City drive is a website where they, people go on and select their cars?

Greg:                                     36:39                     Yeah, well actually we actually working on a mobile app because currently the platform is a web app. So you go, you go on the site, on the web and then you can list yoUR vehIcle there. But what we are currently doing that we’re working on a mobile app and yeah, once it’s ready then, you know, it’d be easier for us to scale the service, it’s, easier to scale, the service using a mobile app as compared to using web app so once the mobile app is up and running, then we’ll be able to then look at how we you know, have it exported outside the country.

Sam:                                      37:27                     Hmm.

Greg:                                     37:27                     Yeah.

Sam:                                      37:29                     So most people, most customers, how do they, do they hear about you through a friend? Do they, are they Googling Zambia? Car hire? Like how do they find out about you?

Greg:                                     37:39                     Well, so we, we have we market our products in many different ways. One of them is obviously using Google ads. Yeah, we use Google ads a lot, drives traffic to our site. And then also we have got listings on a number of sites as well. We’ve listed our services. And then also on the, on the local scene you know, we do do a lot of we put billboards we put billboards around and then we just have got a sales team which goes around just doing direct marketing. Yeah.

Sam:                                      38:26                     Cool. How big is your team?

Greg:                                     38:30                     So our team is basically spread across the four provinces. So we are talking about a 10 man team.

Sam:                                      38:43                     10 man team. Okay.

Greg:                                     38:45                     10 people.

Sam:                                      38:46                     10 people.

Greg:                                     38:46                     Yeah.

Sam:                                      38:47                     You say 10 men, are they all men?

Greg:                                     38:48                     No, sorry. Both. Both men and women.

Sam:                                      38:53                     Okay. And we’ll go, we’ll just do a few more questions if that’s all right. So City drive has been going for nearly 10 years.

Greg:                                     39:02                     Nearly 10 years, yeah. This our 10th year.

Sam:                                      39:04                     Yeah. Since you started, what have been, if you sort of think about yourself 10 years ago, if I was to sort of ask you, when you started the company, what will City drive look like in 10 years? How do you think today is different from what you initially set out? Both positively and negatively.

Greg:                                     39:22                     You know, in initially the vision was really to be an international company by the seventh year. Yeah. We’re supposed to have at least opened up branches outside the country. But I think one of the main hurdles we faced is that I think we realized as we went on that some of the assumptions we made were wrong. Yeah. Some of the assumptions we made were wrong and…

Sam:                                      39:48                     Such as?

Greg:                                     39:50                     Well, you know, we discovered that it is going to take a bit longer for us to actually you know, open offices outside the country. Mostly because of two main reasons: One, we found it extremely difficult to access capital to grow at the pace at which we had, we actually wanted. And then the other thing also is that we found it also difficult to, you know, to find skilled personnel who’d from whom we’d actually build a team that will enable us to scale the company quickly. So, because of those two main challenges we faced, we’ve taken rather longer than we thought to, you know, grow, grow quickly and open offices outside the country basically. Yeah. That’s what we faced. So we are currently operating in four provinces. Our hope is that in the next, in the next two years, we should open an office office office outside the country.

Sam:                                      41:09                     Okay.

Greg:                                     41:09                     Yeah.

Sam:                                      41:11                     Well how have you, how have you financed the business? So I guess you’re having to, well, at least with 25 vehicles you’ve had to buy them upfront, how have you financed that?

Greg:                                     41:22                     The acquisition of the vehicles has been done in two main ways. The first one obviously has been, we’ve been reinvesting our profits into the company, so I think the majority of the profits we make we’ve just been reinvesting in the company, in buying more vehicles. And then secondly, we financed the acquisition of vehicles through loan capital. Yes. So we’ve been fortunate enough to have to maintain a good credit rating. And we’ve been able to get loans from the banks and from private individuals.

Sam:                                      42:05                     Okay.

Greg:                                     42:05                     Yeah.

Sam:                                      42:06                     Is this, are you, is this a kwacha financing or dollar finance?

Greg:                                     42:10                     I think when we started in the early days, we were able to get kwacha.

Sam:                                      42:13                     Yeah.

Greg:                                     42:14                     But, over time we also managed to organize and negotiate for dollar loans. Yeah.

Sam:                                      42:23                     Do some of your customers pay you in dollars?

Greg:                                     42:26                     Yes. So we have, I think in terms of ratio dollar to Kwacha revenue, we have, it’s about 40 to 60.

Sam:                                      42:37                     $40. 60.

Greg:                                     42:38                     Yeah. 40% dollar revenue, 60% Kwacha revenue. Yeah. So because of that we’re able to actually get dollar loans, because then we just match the two right, the revenue against the expense.

Sam:                                      42:54                     Yeah.

Greg:                                     42:54                     Yeah.

Sam:                                      42:55                     Very cool. Nice, great, people who are listening at home, how can they learn more about City drive and also, yeah. What’s your presence online like? How do people find out more about the company?

Greg:                                     43:06                     If you just Google ‘City drive rent a car’ or ‘City drive,’ we’ll definitely pop up. So you can find us on Google business. You can find us on some other listings that we have. You can go to our website, You can also find us on Facebook. ‘@city Drive rent a car’ and then you can also find us on Instagram and Twitter.

Sam:                                      43:32                     Oh, you’re on Instagram?

Greg:                                     43:33                     Yeah. We’re on instagram.

Sam:                                      43:34                     What’s your, what’s your, like what has been a popular recent post?

Greg:                                     43:38                     A popular recent posts has been we recently hired out a camper to some tourists who came all the way from Netherlands and yeah, they had no problem in us getting photos of them with the camper. So we managed to share that on our instagram.

Sam:                                      44:02                     Whereabouts was the photo taken?

Greg:                                     44:05                     The photo was taken at our office.

Sam:                                      44:07                     Really?

Greg:                                     44:07                     Yeah, when they were collect the vehicle at our office.

Sam:                                      44:09                     Nice. Yeah. And then they took it all around…

Greg:                                     44:11                     They took it around and actually they still have it. It’s they’ve had it for three weeks. Yeah, they’re touring Zambia.

Sam:                                      44:20                     Oh, nice.

Greg:                                     44:20                     Yeah.

Sam:                                      44:21                     Very cool. Nice one. And that is City drive on Instagram. Just like City drive.

Greg:                                     44:25                     Yeah, City drive Instagram, yeah, so @city_ drive.

Sam:                                      44:31                     Awesome. Very cool. Nice. Well Greg.

Greg:                                     44:34                     Yeah.

Sam:                                      44:34                     Thanks so much.

Greg:                                     44:35                     Thanks a lot.

Sam:                                      44:36                     Cheers.

Greg:                                     44:37                     Thanks a lot for the time.


Moringa revisited: catching up with Audrey Cheng on the coding school’s international expansion


In this episode, I catch up with Audrey Cheng, the founder of Moringa School.

We first did an interview in October of 2016, and so it had been over 2.5 years since we last spoke.

The initial episode is called “Coding Schools”, and so be sure to scroll back through the archives to give it a listen, if you’re interested.

Moringa School is still going strong, and now has a presence in Rwanda, as well as having taught over 1,500 students.

The fundamentals remain the same – providing a relevant skill set to people entering the workforce in emerging markets – and we chat about how the company has evolved recently.

This includes expansion into different fields from just coding (such as data science), greater outreach (such as programmes for low-income students), partnerships they’ve brokered with international agencies, and how they are at the stage of codifying their culture for the next phase of expansion.

We did this interview in a hotel lobby and so at times, you might hear some background noise from other tables.

I hope, however, that this doesn’t detract from what is a very interesting interview from the founder of a company clearly on an upward trajectory.


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Sam:                                      00:00                     Intro.

Sam:                                      01:51                     Cool. So we’re here again with Audrey from Moringa School, Audrey welcome to the show.

Audrey:                                01:55                     Thank you.

Sam:                                      01:56                     So we initially did our first interview, was it nearly like two and a half years ago. It was about coding, well, coding schools and sort of talked about Moringafor those people who have not listened to the show, could you start with a brief summary of what moringa school is and, you know, what they do? What you do.

Audrey:                                02:14                     Yeah, absolutely. So Moringa school, we were founded in 2014 and we aim to be Africa’s leading workforce development platform. And so our big goal is to train 200,000 knowledge workers through marketship and education in emerging markets by 2030. And so we have a, it’s quite a big goal. And we’re excited to start moving there. The current courses that we offer now are a fulltime course in software development that currently has a 90% job placement rate. We’ve also just launched our second course in data science and looking at a number of other courses that are very relevant to the needs of employers and how we can get young people the skills they need in order to get those jobs.

Sam:                                      02:51                     Very good. Okay. Yeah. Cause I remember when we, when we first spoke you’d there was the, was Moringa school like core and prep?

Audrey:                                02:59                     Yeah.

Sam:                                      03:00                     So it’s the cool one. Is that, is that the one that’s still going?

Audrey:                                03:03                     Yeah. So actually now we have a pre prep of prep in a core.

Sam:                                      03:06                     A pre prep?

Audrey:                                03:07                     Yeah. So, so we brought it into access to our program for low income students. And so actually right now as part of our classes, 20% of our classes are made of low income students. And so the pre prep course is actually to get low income students up to speed on you know, basics of computers getting them, you know, started on software development. So by the time they enter into prep, they’re on the same level with the rest of our students.

Sam:                                      03:31                     And how many people have gone through Moringa now?

Audrey:                                03:34                     Right. So at this point, we’ve, we’ve had over 1500 students go through Moringa since we started our first class in January, 2015.

Sam:                                      03:41                     Does that mean roughly linear growth or has that, how has that looked over the years?

Audrey:                                03:45                     Yeah, so we’ve actually been doubling our total number of students each year.

Sam:                                      03:48                     And are they all, all these students going through in Nairobi?

Audrey:                                03:51                     So we have students in Nairobi and also now students in Kigali. And so we opened a campus in Rwanda last September. And so, you know, we’ve been enrolling a number of students out there. This year is around 150 to 200 students going through our, our pre-prep prep and core in Rwanda. Yeah.

Sam:                                      04:10                     Why did you chose Rwanda?

Audrey:                                04:10                     So Rwanda was an interesting opportunity that came up. We wanted to test how our school model with our systems and processes could scale into another country. And also we want us to understand the nuance of moving into another country. So in terms of building a team, in terms of scaling culture scaling our, our classroom, our TMS, our teachers, et cetera. And so Rwanda is obviously much closer to Kenya than let’s say as an example, like Ghana or Nigeria, et cetera. And so we wanted to start first with Rwanda, and we also had funding from GIZ and the Rwandan government and a lot of backing to move there. And so for us, in terms of financial risk, it was relatively low.

Sam:                                      04:49                     They’re making it easy.

Audrey:                                04:49                     Yeah.

Sam:                                      04:51                     Like, Rwanda is close, but Uganda is closer.

Audrey:                                04:54                     It is closer. But I guess for us is more of making sure that public sector was also very excited to bring us into, like in, so in Uganda, you know, we, we had a lot of interest from the private sector, from tech hubs, et cetera, and we actually ran a short pilot there last year. But we realized that you know, running a full program end to end in Kigali would really help us understand how we could scale into new markets.

Sam:                                      05:19                     So, what was the process like? You said that you had some help from the Rwandan government, like did you just send them an email and say we want to do this or like, how did that sort of happen?

Audrey:                                05:26                     Yeah, so, the writing, the Rwandan government actually had a delegation of just a lot of different players. So whether tech companies or of course public sector, come to Kenya and actually learn from the Nairobi tech ecosystem. And so as part of that process, a number of them came to Moringa school. And when that happened, I think they were, they’re a little bit blown away. They’re like, wow, you guys are training so many students, you have such great outcomes. What can we do to bring a program like this to Kigali? And so from that visit, you know, we had a lot of conversations with GIZ, with around the and then formalized the contract to move to Rwanda.

Sam:                                      06:00                     So what was the time between the delegates coming to Moringa in Nairobi and the office opening in Kigali?

Audrey:                                06:07                     Honestly, I would need to go back and check, but it was between three to six months.

Sam:                                      06:12                     Is that it? Really? The first paying customers were arriving on Moringa Kigali offices within three, six months of that first meeting?

Audrey:                                06:22                     Right, right. So actually the way that’s funded, cause I think Kigali that the nuance there is that we’re training especially low income women you know, through our program. And so I think that’s, that’s been a really interesting learning experience for us, is having full classes of either low income or middle income students and all women. Right. Which, which isn’t what we do in, in Nairobi. And so the program is actually being fully funded by GIZ. And also partially by the government.

Sam:                                      06:51                     Got it. Cause you didn’t need to worry about like marketing.

Audrey:                                06:54                     We still did. Yeah. We still did, in terms like finding quality students, but in terms of converting them to paying we didn’t have to worry about that in Rwanda.

Sam:                                      07:03                     Let me see, with a room full of only women, is, does like the teaching style change or do you have to like adapt any of the teaching methodology? Because compared to like if you have guys in the room.

Audrey:                                07:14                     Yeah, absolutely. I think I think culturally it was just very, you know, Rwanda is very different from Kenya, right? I think when people think East Africa, a lot of them, like lump it together, but actually in terms of,you know, confidence levels, soft skills, what we realized was that the students that we were training in Rwanda, they actually needed a lot more, you know, confidence training, a lot more presentation, skill training, et cetera, more than our Kenyan students. And so, you know, we had to reshape our, our content, our curriculum for that. Right? Because we knew that when we talked to employers, sorry, employers always expect a certain level of communication skills, teamwork, presentation. And so we needed to bulk our content in Rwanda too, you know, grow to reflect that more and take out some of the technical content.

Sam:                                      07:56                     I see. Okay. So is it the, so terms of, like, so a cultural difference you’re saying between Rwandan people and Kenyan people is that. Rwandan people generally less confident? Is that right?

Audrey:                                08:07                     So I wouldn’t generalize, mostly like the population that we were serving. And maybe because there are, at least for first-class or primarily low income, it did make it that, you know, we had to do a lot more of like confidence training. Right? So even the example I would give us in our access program in Nairobi, we also have to do some of that confidence building, you know, imposter syndrome, et cetera. But to do that instead of 20%, we’re doing that 100%. I think we did have to rethink the way that we’re working with students. The other thing is also language barrier. And so a lot of students were speaking French or Kinyarwandan and you know to work professionally. Like they would have to speak English. And so our tech, our teachers, our team members in Rwanda had to spend a lot of time making sure students were, you know, even interacting with each other in English as opposed to in French or Kinyarwandan.

Sam:                                      08:54                     Wow, okay. And the, cause the business model is, at least it was, two and a half years ago, was you would get the, you get payment for doing the training and then you had, the big sell was you then place people into, into jobs. With the Rwanda operation. Was that also going into Rwandan companies? So people, people were being employed into Rwandan companies, these big companies, small companies. What were the graduates from Moringa Kigali going into?

Audrey:                                09:23                     Yeah, absolutely. So there were, there are a number of you know, private tech companies in Kigali. Again, not as many as there are in Nairobi. I think public sector so government, is actually a big employer. There’s also a number of like software development shops. So, you know, these software deployment shops from Europe that were actually opening up offices to create more opportunity for young people in Rwanda. And so, you know, we’ve had a number of them also.

Sam:                                      09:49                     We say software development shop that’s kind of like they’re outsourcing.

Audrey:                                09:53                     Exactly.

Sam:                                      09:53                     Okay.

Audrey:                                09:54                     Yeah.

Sam:                                      09:54                     Cool. And so, you’re able to, so people who go through Moringa, Kigali can then feed into, they can then get employed by one of these software shop, software development shops. Are there many of them?

Audrey:                                10:06                     I think it’s definitely growing. I think the, the one thing with Rwanda that’s quite impressive is I think the president has done a really great job, you know, drawing up interests to Rwanda. And so I think because of that, you know, I think there is interest. People are excited to invest, but they just need to see the talent first.

Sam:                                      10:22                     Got it. Okay. And so your, that’s what you’re providing. So you’re fitting into the big picture.

Audrey:                                10:26                     Yeah.

Sam:                                      10:28                     Do you have plans to go to other countries?

Audrey:                                10:30                     Yeah. So I mean, we are doing a lot of like strategic work right now, so it’s exploring our options. So exploring, do we want to go deeper in Kenya? Do we want to expand regionally or into other countries outside of East Africa? And so we’re, we’re in the process of finalizing on that right now.

Sam:                                      10:47                     You don’t have to divulge trade secrets, but I mean, how do you sort of think about this? How do you think, cause this thing’s quite an interesting problem like you’ve, you know, you’ve got set up in one place. How do you think about the next country to go to? Like, did you have any sort of rules of thumb or ways in which you think about it?

Audrey:                                11:00                     Yeah, for sure. I mean, there’s always, like a lot, like certain factors that we look at, right? So it’s either, you know, middle-class you know, like number of students who can actually pay for our program. It’s the level of education that they have. Right? So like the input of their skills into our program. And when they graduate you know, are we actually able to get them into jobs? Right. So what does job market look like? We have we look a lot at regulations around accreditation, how easy or hard is it to run our program in that country? We look a lot at, you know, the partners that are on the ground, and again, like the opportunities that come out from those partners as well. And so the, there’s a number of different factors that we, that we look at to explore this. I mean we look at other things like corruption levels, you know, and kind of pulling all these different factors so that we can pull levers to understand which countries we should really be moving into.

Sam:                                      11:48                     Very cool. Alright. So I remember when we spoke last time you said that the Kenyan government didn’t really know how to define you, didn’t really know how to like just because you weren’t quite higher education company, but they weren’t quite sure quite what box to put you in. Now, have you had any sort of, any developments of that in terms of being able to, for regulators to understand, okay, Moringa are X and therefore we need to have better regulations for them?

Audrey:                                12:13                     Yeah, absolutely. So Moringa school, we are registered under TVET which is the technical and vocational education training authority. And so TVET is kind of the, I guess the body that, that probably in other countries we’re also looking to, to get accreditation from.

Sam:                                      12:30                     Okay. And what do they, what do they need to do in order to accredit you?

Audrey:                                12:34                     Yeah. So they look at our space, right? So making sure our spaces actually meets their, their rules and regulations. They credit our contents, our courses, and also our teachers as well.

Sam:                                      12:46                     How do they accredit your courses? Do they have technical experts who say this is a good way of learning how yo code?

Audrey:                                12:54                     Yeah, so I guess I mean, you can get accredited through a number, number of different channels. Either the government can accredit you themselves or you can get accredited through one of the like one of the big technology companies, right? So Google, Microsoft, IBM, they all have certain courses that have already gone through the accreditation process in Kenya and gotten approval, right? So if you get approval or accreditation by one of those partners like that could also go through and last one is by like more accrediting bodies like Pearson. And so, you know, like there are number of different ways and it depends on, you know, strategically which direction people want to head in.

Sam:                                      13:26                     Right, and which way did you go?

Audrey:                                13:28                     Through, corporates.

Sam:                                      13:30                     Through corporates.

Audrey:                                13:30                     Yeah.

Sam:                                      13:31                     Very cool. Alright. When we sat last you, were saying that you’re about to pack up for a bit and go to the U S and Europe, to raise some money you said up to that point, you were only being self funded. And this was like the time to think about getting that taking the, expanding that, accelerating the growth of the company. How did that trip go and how did, sort of the funding situation go?

Audrey:                                13:53                     Yeah, absolutely. So something that’s actually quite interesting at Moringa is that technically up until now, we’re still bootstrapped. So we were actually in the process of closing around now, so like very soon, so it should be this month. But I think that’s actually been a really good experience for us because I think when, when there are certain constraints around how we spend money, we’re actually a lot more thoughtful about what we spend money on. I think that discipline within our team, within our finance team, within like the rest of the team of do we actually need to be spending this money? Will it generate a certain level of ROY? And what are we committing to, you know, what goals are we committing to actually hit versus what are we experimenting on? Right? So I think we, we’ve been really disciplined on, you know, how are we allocating resources? And really questioning whether or not we need the people or we need to spend money in certain ways. And so I think that’s quite good for us. Cause even as we bring in external money, we’re still gonna have that discipline. Right. So it means that, you know, no matter whose money we’re spending, whether it’s ours or investors, we’re, we’re still able to be really thoughtful in the way that we grow and who we need on our team.

Sam:                                      14:53                     Oh. So all this last few years has been self-funded. That’s very cool. How big is the team now?

Audrey:                                15:02                     Oh man. We’re about 95 right now. And by end of the year we’ll be around 120.

Sam:                                      15:08                     Okay. Ninety five is made up roughly of what?

Audrey:                                15:11                     So we have a number of teachers. So I think our classroom team is our biggest team. And we have our learning team, of course our backend office support of finance, HR people tech. We also have our marketing team of course our Kenyan country team, which includes our space operations, you know, admissions. And then our employer relations team that works with employers and make sure that we’re actually able to get people into jobs.

Sam:                                      15:36                     Nice. And which is the most difficult to hire for, out of those?

Audrey:                                15:41                     So actually currently we are building out a product team. So I can, I can speak on the hard hires right now. But I think product is very hard to hire for. Because I think in this market, you know, I think a lot of people might call themselves product managers, but in terms of what they actually do, they might actually be more like project management. And so I think as we’re looking for like true product managers that, that’s been quite hard for us to find.

Sam:                                      16:05                     How do you differentiate between project management and product management?

Audrey:                                16:09                     So project management is more of like managing the work plan, right? So, so the product manager, managers thinking more about the roadmap. So the strategy of the product, right? Where is it heading? What problem is it solving? What opportunities are there? So it’s, so it’s almost like the mini CEO, like for that product. So like thinking about end to end of, from, you know, marketing to admissions to classroom.

Sam:                                      16:29                     And for you, the product is just the Moringa experience or do you subdivide into like, I don’t know, take a science course or…

Audrey:                                16:36                     Exactly. Yeah. So our staff engineering course will be one product like data science would be another.

Sam:                                      16:41                     Okay, cool. Nice. so 95 people on payroll? Self funded, that’s pretty cool. Yeah. Nice. So when you look at, you say looking to take on external investors, what’s that gonna look like? Are they going to be based in East Africa or are they going to be international? What’s, what’s the sort of view and what, how have you joined to think about the types of people you want on board?

Audrey:                                17:06                     Yeah. So for this round we paid a lot of attention to investors who have like quite a strong reputation here among entrepreneurs. And so, you know, I think definitely entrepreneur friendly investors are really important. So people who are really willing to, you know, be curious, ask questions and back us right. Especially when times are potentially hard. So that was really important to us. You know, investors that have experience investing here in Kenya and East Africa, et cetera. And can really add a lot of value to us. So that, that’s primarily what we were looking for. Yeah. We also brought in there’s an investor we brought in from the U S as well called Entangled group and so Entangled, they’re like an education venture builder and they also invest in education companies around the world. And so they’re, you know, thought leaders in education, you know, they have Michael Horn as one of their partners who founded that, the concept of blended learning. And so people who are just like very, very sharp in the education field who can again add a lot of direct value to the work that we’re doing.

Sam:                                      18:03                     Yeah. That’s fantastic. That’s very good. And then the idea is with this money you can then go and expand to either new markets or new markets, whether they be new countries or deeper and wider in Kenya. Very cool. How’s the, how’d you feel the company’s changed in the last like two and a half years. What bits have stayed the same about Moringa and what bits have changed in terms of, let’s call it like the internal culture?

Audrey:                                18:33                     Yeah, so I think what stayed the same, I mean, I, I think, you know, I was reading this article that like 70% of a company’s culture is a reflection of the founder. And so I think I’ve noticed also that as, as I’ve kind of matured in some of my thinking, like, so has the way that we work in the company. And so I think, you know, that’s probably something that’s changed. I think what’s stayed consistent is, you know, I’m a huge believer of having a lot of humility and empathy, especially in the workplace, right? Cause I think a lot of times, especially when we’re stressed, we’re really quick to judge and say, Oh, you know, like this person is not doing their work or, you know, they’re wrong, or, you know, just, you know, like moving quick to judgments. But I think really trying to instill this culture of seeking to understand but before we judge. And so I think that that’s something that’s been really important to me is that, you know, we’re always learning, right? Like I feel like I’m learning all the time and I can’t imagine how much everyone at the moringa team is learning all the time. And so I think it’s just a constant reminder that, you know, it’s okay to fail, but let’s, let’s, you know, even this idea of failure is a little bit silly to me. It’s more of like, like what are we learning? Right? And how do we add more to our repository of what we’ve learned? And so I think that that’s been big, cause I’m really big on this, like constantly like asking people, what are you learning today? Like, you know, what’s, you know, like from that, you know, what are we going to try next time? Right. So there’s just, just, just like staying curious. I think for me it’s also making sure that like, everyone’s still like having fun, like enjoying their work. Like feeling motivated. And so in the last a couple months, I think we’ve been able to spend a lot of, a lot more time like really solidifying our culture. You know, cause I think up until a certain point in terms of the number of people you have on the team, you know, like the culture is quite organic, you know, everyone adds to the culture. It’s really exciting. But at the stage that we’re at now, I’m also really clear that if we don’t almost like codify our culture you know, it won’t be clear to people how do they actually interact, right? How do they show up to work? Right? What are the ways of working ways of interacting with each other against our values and our culture. And so, you know, we’ve been spending more time like building a culture champions group at Moringa school really piloting that, getting that off the ground and making sure that people all across the team like buy into our culture and understand what it is. And so it’s definitely still a work in progress. We’re not there yet, but I think it’s just being more intentional about just documenting and putting these things.

Sam:                                      20:52                     Okay. So what’s that, what’s that been like? So, you now have like a vision statement that you’ve, I forget what the words are, but you know, you’ve got like a big vision statement and you’ve got like, I dont know, here’s the five pieces that fit into our culture like that, How does that sort of practically, let’s say I was, and you can even like twist it a bit. So you can say this in an idealized world, if I was in an ideal world going to join Moringa, what would I sort of, what would be part of my welcome back? How would I be onboarded on say, the company?

Audrey:                                21:24                     Yeah, absolutely. So a lot of what we look for within our team members is alignment to our values. And so right now we have six values. And so our values include, you know, collaboration, bold, humility accountability, growth mindset, and fun, right? And so I think when we run interviews, especially our culture interviews with candidates, we look a lot at, you know, is this someone that we think can actually fit well into those values, right. And it doesn’t mean that like, that, you know, when we meet this person we think that, you know, like, like we’re the same person cause we actually were really big on diversity and making sure that our team, you know, has many different vantage points, like very many different perspectives. But I think there’s a core set of roles like that which are values that everyone needs to kind of hold true to. And soI think that’s really big for us. And then when people get onboarded you know, we’re, we’re actually revamping our onboarding system this quarter. So making sure that we’re able to explain to new team members, like, again, how do our values show up like how do we work together like with those values and what are the artifacts that we see around the company, even what we visually see that remind us of our culture. Right. How do we celebrate successes, you know, and so I think a lot of that is, it’s a work in progress for us.

Sam:                                      22:32                     Yeah. Does that mean you’re going to have a document which says when someone does something good, this is what, would we buy them a cake or like, yeah. How do you sort of document celebrating success?

Audrey:                                22:43                     Yeah. So we essentially have like a work plan right now that our culture champions have come up with. And again, this is a group of individuals at Moringa school that are really passionate about culture and maintaining our culture at scale. And so they’re coming together as essentially build out like a roadmap for like, how do we actually think about our culture? How do we codify our culture for the next three to six months? And so, I mean, it’s kind of up to that, right? If they feel like, you know, for everyone to really understand our culture, we need to codify it to that detail, then yeah, that’s something that we can test and see. Does that work? Is that too, too prescriptive? Do we need to open it up a bit more. But I think a lot of it will just be experimentation and trial and error.

Sam:                                      23:20                     Okay, cool. One thing I had recently was a way to gauge company culture is to ask employees what happens at Moringa that would not happen at, I don’t know. What happens at Moringa that would not happen at other, other companies, I mean so for you, what do you think happens at Moringa that wouldn’t happen at other companies?

Audrey:                                23:41                     That’s a good question. I think I’m, I’m very biased. I would love to ask team members that. Yeah. Cause I think I might have one vantage point where, for example, I think something at Moringa that I hear quite often from new team members think sometimes I say it with a little bit of surprise is, you know the, like when they walk around the office, they don’t know who the CEO is. They don’t know who the directors are or who the frontline team members are. That we actually are all extremely collaborative. And because we’re so collaborative, like when we hit a certain milestone or a certain success, we all feel it, right? It’s not like, Oh, that team has succeeded, good job them. But it’s like, no, we collectively work together to make that happen. And so I think that’s something that, that we value a lot is not you know, not like this typical Kenyan company that’s very hierarchical, but how do we really just celebrate as a community the work that we’ve been doing,

Sam:                                      24:32                     Is that a conscious effort? Or was that just sort of naturally the way, if we’re saying that 70% of the culture is from the founder, is that just naturally the way you work or have you been quite conscious of this is something I need to be doing?

Audrey:                                24:43                     No, I think it is something that I am very I’ve been cognizant of since starting wearing the school because I think, you know, I’ve had experiences working for other companies where I felt really demoralized because, you know, I thought like, I have all these ideas and I have these things that I really think will like push the company forward, but it didn’t feel like anyone was listening to me. Right. And it didn’t. And I was always very frustrated cause I felt like, look, I’m talking to the customers all day or I’m, you know, I feel like I have really great insights, but the people at the top like just weren’t listening or weren’t hearing anything I was saying. And so I think by going through that, through that experience and feeling that myself, I realized like when starting Moringa school that I want to make sure that no matter how big we get, right, we always remain grounded, right? We can always be excited by new ideas, but we have to have enough empathy and we need to stay grounded. And so whether that means we’re, you know, directors, managers, right? To members that are far away from, like, from our students are spending X percentage of their time with our students and X percent of their time with our staff in general. Right? So it’s not just running from meeting to meeting, but how do we actually be more intentional about spending time with people in the frontline, right. People who are really talking to the students, all the time and employers and actually talking to the students themselves. Right. To see are we actually making an impact? You know, what else can we change to make their experience better?

Sam:                                      25:57                     Very cool. Nice. And if you look back over the last few years, have there been any sort of like significant events or things where you’re like, boom, that’s a game-changer or something where it’s just like you sort of, you know, you might be going months and months and things are generally improving, but then something happens and that’s just like next level, are any of those good?

Audrey:                                26:20                     Yeah. I think it’s funny. I think in the earlier days, those were things that were more like trying than anything else in terms of, you know, how much do I really like want this and why am I doing this? I think especially the first few years, and I think also around the time when we talked last I had a lot of questions in 2015, 2016 so our first few years, on, you know, are we actually going to survive as an organization, you know? Does our business model make sense? Is there enough demand for what we do? But a big pivotal point happened in August of 2016 when we moved from what I would consider Moringa 1.0 to Moringa 2.0, and so we, you know, spent a lot of time like rethinking our classroom model, right? So who are our teachers? How do we ensure that we have market driven content? Are we actually getting students you know, to a certain level of quality so that they’re able to, to graduate and get high quality jobs. And so when we kind of like asked ourselves those questions, went back down to first principles we revamped our whole teaching system. And so I think that was a huge game changer for the organization, because we were teaching more effectively, it wasn’t as expensive as it was before and it was also way more scalable. And so, you know, that was real, very clear proof from 2016 to 2017 and then 2018 when we ran our classes in different countries around the world to test how well does this education model scale and realized that was actually very, very scalable. And so I think that was, you know, it gave us, it was a huge confidence boost. I think this year, just recently we launched a partnership with Mastercard foundation. And I think that was also a, like quite a big confidence boost to the organization just in the sense where, you know, Mastercard, they really only work with companies that they feel like have scaled and will scale like very significantly. And for us, that felt good to know that, you know, we have this big dream and also other people believe in it and are willing to support our work.

Sam:                                      28:06                     Talk to me a bit about this partnership then. So you said like where did it come from? What’s the goal? Like shared vision, all that sort of stuff.

Audrey:                                28:13                     Yeah, so Mastercard foundation, they have a strategy called Young Africa Works that’s aiming to get 5 million young people in Kenya in the next five years into dignified employment.

Sam:                                      28:23                     So 5 million young people in Kenya. That’s quite a lot. That’s like, how many young people are there in Kenya in the next five years?

Audrey:                                28:30                     They’re many. Many more than that.

Sam:                                      28:32                     But no, but not like loads more, isn’t that, is that like 20%, I’m trying to think if you had, if you tell me in the next five years, what’s the population in Kenya, like 50 million? Yeah, I don’t know, if you say 5 million. And if you count young as what, what’s the definition of young?

Audrey:                                28:49                     Young is, I think it’s, so I’ve seen many different definitions, but I think their definition is 18 and 35

Sam:                                      28:54                     That’s fine. Okay. Alright. Anyway, I’m just saying like that’s a stretch target. Alright. So 5 million young people in five years into dignified employment. How do they define dignified?

Audrey:                                29:07                     So they have a very particular definition. I have to go back and look at it, but it’s like dignified, fulfilling employment, right? So it’s not just work that is very repetitive that that doesn’t feel like the young person is able to grow and really, you know, grow within the, like their career. So.

Sam:                                      29:22                     Okay.

Audrey:                                29:22                     Yeah.

Sam:                                      29:22                     Cool. And why did Mastercard foundation want to do this?

Audrey:                                29:25                     Yeah, so they last year and the year before, they spent a lot of time kind of reviewing like what their next second would look like. Right? So like, you know building a new strategy and I think over time as they, you know, since the time that they were started, they’ve always been really big on education, so they’ve always funded a lot of scholarships. So they’ve been a huge proponent on education. But what they realized was that, you know, just education in and of itself isn’t enough, right? You have to be thinking of of the supply side, the linkage, and also the, the demand side. Right. And really kind of investing in the whole ecosystem. And when they were thinking about this or I mean, you know, everyone’s talking about how the populations across the content are just growing rapidly every single year, right? Like massive, massive populations. But then the question is like, where are these young people going to go? And are the current systems actually well equipped with both quality and access, right? Is education high quality enough that young people are able to get the skills that they need in order to get into the jobs? Right. Right. Now the overwhelming opinion is no. Right. And the, and the second question is around access, right? So in Kenya for example, this year only 13% of secondary school students who passed the KCSE were able to get a spot in public university.

Sam:                                      30:31                     Really?

Audrey:                                30:33                     Yeah. So that’s 87% of students who don’t have that access, right. And so that number just keeps rolling over every single year because the demand is quite high, but the number of spots is quite low. And actually, even once, when those students get into university, it takes five years on average for them to get a full time job afterwards. Right. And so that speaks about the access side and also the quality side. And so I think, you know, we just need to fundamentally rethink education and training and skills development in Kenya and across the continent if we actually want to get these young people the skills that they need to succeed and to build their economies ultimately.

Sam:                                      31:05                     Yeah. Wow. Okay. So they come to you and they’ve said, we think Moringa can pipe out this bottle. Have you had some, like maybe not commit, but what was your pitch to them as this, why, what was your pitch to them as to why you fit into that picture and have you had to commit to say, we’ll put X number of people from Moringa school or whatever?

Audrey:                                31:24                     Yeah. So I think for us we were really aligned with them because, you know, for us, all the skills that we teach our kind of skills for today and skills for the future, right? So they’re not skills that will be automated in this next generation. The skills that every person, whether they’re in Kenya or around the world, need in order to compete globally. And so I think Mastercard foundation, they were excited about that. They’re excited about our track record, about our success today, in terms of getting young people into jobs. And to be honest in the education space, there haven’t been that many programs that have reached a certain level of skill and also certain level of quality as well. And so I think, you know, we were able to prove that in the last couple of years, you know, we had focused and made sure that this program can actually scale and that we’re ready for that next step. And so I think, you know, when they saw that they were excited to say, okay, great. You know, we see that you’ve proven yourself the last couple years and that you have a clear plan for where the next couple of years is going and we want to support you to scale up.

Sam:                                      32:17                     Okay, cool. And so, they just said, here’s some money, no strings attached or does it come with some conditions or like what does it even look like?

Audrey:                                32:26                     Yeah. Yes. So, I mean there’s definitely conditions. So you know, they gave some like technical assistance for, you know, certain areas around like research and development, right. For product development, et cetera. Investing in our teachers or our teacher training. So how do we really think about you know, our teachers at scale, so when we’re potentially in other markets or we’re in different products, how do we think of scaling up our teachers? And so I think that was a big yeah, a big conversation we had with them. A good amount of our partnership also is on scholarships. So with, for low income students, how do we, again, like keep to our 20% of all classes are low income.

Sam:                                      33:02                     Very cool. Nice. Have there been any standout graduates from Moringa school you can think of?

Audrey:                                33:09                     Yeah. 100%. Yeah. We have actually quite a lot. It was actually earlier this year when I, was going into, you know, a few conferences and I kept running into our graduates. Which is really crazy. And so even for example I went to South Africa to speak at this like women in tech conference earlier this year. And actually one of our graduates was there as well speaking on stage. Right. And she’s talking about like very technical topics, you know, went over my head. I was like, Oh my God. And you know, I was blown away. Right. And there’s this other graduate that I met I went to Harvard this year, earlier in the year to speak at the Harvard Africa business conference, and, you know, I was also there to like meet people, recruit, et cetera. And it was super interesting cause you know, I was like talking to one potential candidate. And I had, you know, like all of a sudden this person came up to me is like, hey, like are you Audrey from Moringa? And, you know, I was like yes, you know, like a little bit surprised. And he ended up telling me, you know, I, you know, I went to Moringa school, actually I’m Kenyan, you know, I went to Moringa school. And from Moringa school I realized that, you know, software engineering, computer sciences is something I really want to pursue. And so he ended up, you know, applying to Harvard and he got in and now he’s an undergrad at Harvard. Yeah. So we just heard some like really wild stories recently. And it just, you know, also those really incredible stories of, you know, both low income students getting really great jobs. Some of our students are senior enough in their companies that they’re coming back to Moringa to actually hire more graduates. And so, you know, we’re really seeing a ripple effect for our work.

Sam:                                      34:41                     That sounds fantastic. Great. So we’ll sort of finish up now, but if we were to be chatting again in another three years, what do you think we’ll be talking about when it comes to Moringa?

Audrey:                                34:53                     That’s a good question. I think hopefully what we’re talking about is how do you go from, how do you actually scale from your core? Right? Cause I think right now we have a proven you know, product service, which is our software engineering course. And we just launched our data science course, which is going really well. But how do you actually scale up from your court, right? How do you go into new courses? How do you go into new markets? What do you have to think about? How do you resource yourself and really prepare yourself for scale and how do you know when you’re actually ready? And so I think we’re asking ourselves a lot of these questions now and creating like really strong and thoughtful plans on how we actually get to scale. And so I’m hoping in three years we’re actually able to look back and reflect on, you know, what did we learn in that process, now that we’re in potentially, you know, multiple courses, multiple markets, multiple offerings for our students. You know, like where do we go from there.

Sam:                                      35:44                     Fantastic and again, people can find out more at moringaschool.Com?

Audrey:                                35:47                     Yes.

Sam:                                      35:48                     All that sort of stuff. Fantastic. Cool. Well Audrey, thanks so much.

Audrey:                                35:51                     Thank you.