How One Critical Pivot Saved GLOO
Prior to Q3–2017, we had been experiencing good growth and had been soldiering on with the expectation we would soon get to break even by the middle of 2018 at the rate we were previously growing. Below extract shows the specific problem we had set out to solve, the target customers — busy homemakers — we sort to solve this problem for, our value proposition to this customer segment, the products and services we had developed to solve this problem and the business and logistics model we had designed to deliver the value proposition(s) to this target customer segment.
And we were succeeding. At least, our numbers suggested this. Customers loved the service. It was sticky — that’s what the brand name meant, the homophone of “glue,” because we observed customers were getting “glooed” to the service, as can be seen below.
The fact that customers loved the service translated into our numbers in the level of increasing basket sizes they were increasing trusting us with as we expanded into adjacent categories like cosmetics, electronics and white goods, etc, for which our core customer demographic of busy homemakers still controlled the buying decisions in their respective households.
Furthermore, our trajectory showed we should hit company profitability by mid-2018 at the earliest — or end of 2018 at the latest. We had already hit break-even as far as fulfillment centre costs were concerned — and, in fact, momentarily touched company-level break-even during the peak yuletide season of November/December 2016.
Dateline: September 2017
It’s Q3–2017, the impact of the 2016 recession was being felt across the country. Growth at Gloo.ng had stalled and our YoY net revenue growth by that time was a paltry 35%. Yes, we were far better than Jumia and Konga (Konga 1.0, if you will), the two biggest ecommerce players in the industry at that time, whose financials were publicly available and who had experienced negative YoY growths. Jumia, just like Konga, had just publicly reported terrible negative growth numbers a couple of months prior in May 2017. (I don’t have the Konga’s at my finger tips, sorry.)
However, we had not raised anything near what these guys had raised in financing. Whereas these two had raised over $600million combined VC$$$ by this time, we had only managed to raise, since inception in June 2012 up to that point in September 2017, a total in Naira equivalent to ~$570k in today’s USD rates. (No, that wasn’t a typo. You read that right! We had, over the space of ~6 years, used an average of <$100,000 per year to build Nigeria’s Biggest Online Supermarket with international brand recognition arguably close to these other two, as our story had been featured on CNN, Mashable, Forbes, Washington Post, Economist, Financial Times, The Next Web, etc, to the extent that we were even ranked higher than them a couple years before by Mashable in their list of 20 Startups to Watch in Africa.) I even had a slide in my pitch deck we used to “brag” in this regard.
Anyway, growth had stalled as far as I was concerned — to boot, also we had ran out of runway! Below is screen capture of my quarterly investor update I had sent out at that time. (I have consistently sent out, initially monthly, but now quarterly, investor updates since onboarding the first investor.)
And yes, you also read that “Zero Runway” comment I’ve just edited into above extract. There was no cash in the bank! (Below is the bank balance showing US$260 equivalent in Naira we had on that very date I sent out above investor update.)
I hope by now you get the picture I am trying to paint of how bad the situation that had hit the country in terms of recession was that had put a funk on our trajectory to break-even, running our uniquely designed ecommerce business model for online grocery targeting busy home-makers in Lagos? Horrible, right?!
Nah! I and my team had seen and been through worse by this time and already internalised a mindset of “how to think” and “how to act” in these scenarios. Yes, I know many a founder that would have panicked and freaked out in this situation. Or, even have thrown in the towel with this “catastrophe” I seemed to have in my hands. I knew a few founders personally who had — and had read online, daily, many such throwing in the towel with 6 months runways. (Lol! Lol, because at no point in the life of PayMente Limited, save till H2–2018 last year, when we secured funding for the new business/model we pivoted to, did we ever have more than 2–3months runway — at ANY time in the foregoing 6 years. 6 months runway?! A BIG luxury!!! Lol!) But, if you understood the Glootian Culture and Glootian Creed, you would understand why the mindset I and my team had was that of Leonidas, the emblem of our Glootian culture and my twitter avatar — when he led the 300 Spartan hoplites to face the Persian hordes of Xerxes at the Straits of Thermopylae in a seemingly impossible to win situation. (You see, the 300 film is the inspiration of our Glootian Culture at Gloo.ng.)
The Glootian Response
What is the Glootian response to situations like this that is seemingly unresolvable and “impossible” to win? Was I scared? Oh, yes. Everything, I have in my life is ALL into PayMente Limited, the corporate entity behind Gloo. I sold ALL my assets and cash from the previous cash out I had had from my previous venture two years before Gloo to fund Gloo.ng’s Pre-Seed and Initial Seed until I had liquidated every single thing I had as networth that could be liquidated before seeking external funding. Plus, three months in, I had asked my wife to resign a very lucrative job to join me in building out this vision. So, ALL the source of income for my family therefore came from Gloo.ng. At this point Gloo.ng had not been able to pay me a salary for over 8 months! My battle-hardened management team, including my wife, had only been drawing half of their paltry salaries for the 8 months! All of them with wife and kids of their own and were as well the primary income earners for their respective families. I had a son who had not asked to be brought into all of these. I was 45years old and pretty much consider myself “unemployable.” So, yes! The fear bubbles up. But I knew and had internalised how to USE it…how to channel it. But my biggest success was that I had replicated this mindset and internalisation in my management team and even the junior staff such that we did not lose a single staff at that perilous time when Konga and Jumia were laying off as much as 60%-70% of their staff. My team rallied! Like the Glootians they are!
So what did I do? How did I respond? How did my team respond?
I have run out of inspiration to continue blogging but will just push this out now and continue in as many parts as I need, when I get inspiration, to complete this story. (If I don’t push it out this way, I will just never come back to doing this: I still have a rapidly growing company — and a public launch of a “new” product/service — to run! It’s not new, really.) So bear with me, for now. Adios. BRB.
P.S: ignore the typos, I didn’t review. I need to go pick by son up from school!
I’m back from picking son and I have totally lost interest in completing this blog post until further notice. The inspiration for this blog post came from this one by Ben McKean: How a critical pivot saved Hungryroot. Below is how Hungryroot’s successful pivot looks like on a dashboard:
For those reading and do not understand what a startup business pivot is, I took the time to break it down for a correspondent of an international news organization who had reached out to me on twitter in a bid to do one of the countless “the company Gloo.ng has died like other ecommerce ventures in Nigeria” stories I have seen flying all around social media this week.
Below is how GLOO’s 16 months-old pivot looks like on a dashboard in its initial 3 months post-pivot. You be the judge yourself of whether it is successful or not. But the US Hedge Fund that gave us the funds to complete and publicly launch the pivot certainly think it a success because they voted with raw $$$ cash! And that is what counts. So all ye naysayers can fuck off! As for me, I’m done from these fake news streets and back to building: in line with our Glootian Creed, I’m heads down ignoring the noise of people wanting to fit our pivot story into a narrative they have already made up their minds on— of GLOO failing like the other hyper-funded ecommerce ventures that have gone up in smoke. I’m staying hungry and focused on shipping out the pivot for public launch per date we have set for this internally. Gradatim Ferrociter! (Or ahead, ahead — as they say in Warri!)
P.S: the clearance sale store is now open on the website! Visit Gloo.ng to shop up to 50% off on the inventories we are selling off ahead of resting the ecommerce website: https://www.gloo.ng. (The clearance sale promo categories and subcategories are tagged with a red “promo” icon. Hurry now!)