5 years of Entrepreneurship : fears and failures along the messy journey to “success”
Every time you meet “grownup” strangers, the first personal question they ask is : “What do you do for a living?”.
For the last 5 years, I always had my traditional quick answer : “I develop an online marketplace for African inspired products”. Notice that I avoid using the word entrepreneur or the company name, the goal is to pass over it and enjoy the night. A few months ago, for the first time, someone’s reaction changed my whole night.
He said “Oh, something like Afrikrea ? “ … “Yes, it actually is Afrikrea!” I replied.
Now this might sound like a minor brag, but it was a major shift for me, as I realized that our team actually built something that became a reference point for people! , he was shocked that I was the guy behind this and proceeded to ask, “How did you make it”?
Short answer I gave that night: “I overcame fear after fear”.
So today, this is my long answer to this short but heavy question.
In my previous retrospective of our first 2 years, I started with a quote by our Startup Pope, Paul Graham. In talking about our subsequent years, I wanted to continue that tradition, as he once again shared an amazing graph for this answer :
As you can see, the main message here is that the startup journey is not a straight one. It is messy, and even more hellish, as Black entrepreneurs working out of Africa. But rather than just copying his structure for my message, I would rather use another one from my favorite podcast — Masters of Scale with Reid Hoffman. In it, Dharmesh Shah, Co-Founder of Hubspot, repeats during each episode that every startup faces 3 major fears :
- Fear of Death
- Fear of Stagnation
- Fear of Complexity
This rang truer and simpler to my ears than any other structure, so I will use it to describe our journey from 0 and 3 guys to now over $15 million transactions in 170 countries and a team of 20 on all 5 continents!
1. Fear of Death : 2016 to 2018
For this part, most of the story, events and facts can be found in my earlier retrospective of our first years. Throughout this article, you can tell we had an obsession with surviving (and making it to 12k$ a month of GMV).
Every decision, every action and every thought was channelled towards fighting off fear in our heart that we would fail. The future for us was getting through the next 4 weeks… Moving forward, learning and improving was the only way to battle inertia. Because, every night, when you are alone, these actions are the only thing you can rely on to feel like you did enough.
Only your co-founders share this weight, but even there, you each have to pull your own weight, otherwise like in “300”, you all die. You have to forget yourself and dedicate each part of your life to that one goal. We gave up money, comfort, friends,family, love and then gave every hour of every day, including our weekends to serve our sellers. Our opinions, interests and each aspect of our lives became focused like a laser beam on reaching THE milestone. And even then, you also had to convince investors to trust you with the green to keep fighting.
I know this might sound dark and not “inspirational” , but it is truly what every entrepreneur I ever met faced, to varying degrees of course. Yet, all the “successful” ones are those who powered through. People often ask us “how?”, and if you read carefully, the answer is above :
You need to be all in, all the time, no plan B, learn and improve and prove by your actions that you are valuable.
And then you need to be each week more valuable than the last and quickly enough to survive on your little savings.
Pffiou …
However, rereading that recap today, with the benefit of hindsight, I feel especially uncomfortable with the last part of my previous blog post called “Cruise control” : October 2017 to today”.
First, because now I know that this impression of control was a lie, it was just bliss. We were ecstatic because we knew we were valuable enough to not die right away. We were happy to finally have the means to have a team and live and work on the continent. We were relieved that we proved the world and ourselves that this crazy choice was the right one.
Just like climbing a mountain, you bask in the glory of the achievement and assume that all mountains yet to come will require the same effort.
However, this is not the case — trust me!
This too, makes me uncomfortable when reading that first blog post — we believed freedom was simple, and profitability was the end game.
But I underestimated that achieving either or both requires overcoming two major hurdles : the gap in expectations and the weight of time.
2. Fear of Stagnation : 2018 to 2020
When you know you are not dying, you start to plan eagerly. And when you plan, a small but dangerous aspect is that you presume the speed you had surviving will be the same you will have growing. Or at least, that as you get bigger and you just need more of the same thing.
This truth was first uttered to us by one of our investors as soon as we recruited a team. And it was especially important as this same investor was the one to awaken us to the reality of the startup paradigm.
To simplify, at that time we felt like pilots of a small airplane, as you can guess by the “cruise control” choice of words. But the thing is, our investors did not sign up for riding in a plane. They invested in a rocketship and expected us to keep reaching new heights, until we reach space, and beyond !
Our volume grew 50% ytd, and we had our first profitable month. We were proud — our investors were worried.
At the time, we could have just accepted their criticism of our “small SMEs rhythm” or “lifestyle business ambition” and kept going. But, we needed time, and that time required money . Why?
Because at this new level of volume and sales, we experienced two huge failures :
- We tried our first TV Ad , as it was the last channel we had not not experimented with. We mastered social media but were seeing degressive results the more we invested. Physical events no longer met our needs, so we tried advertising. But that cost us a lot of money (around one and a half our team salaries) and focus. And it was a massive failure ! Despite sharing amazing content on this famous channel, we saw no change in traffic, sales or users that month.
A bust, pure and simple, with all the hurts!
- At the same time, we grew the team, which meant higher salaries, but also less room to adjust in case of downturns. Meaning, when we had a worse month than expected (as we planned for an increase after the TV ad), we could not just skip a salary, like we used to. Our employees were not supposed to live that and that is the major difference between building a company and just growing a business. This was clearly one of the lowest points of our entrepreneurial life. Our mistakes of planning could not just be fixed by bearing on ourselves. And when we had to pay our employees a few weeks later than usual, it set out a chain reaction of demotivation, delayed results and unusual questioning that stopped us from sleeping for days.
Now at this moment, we realised that these mistakes were largely due to my personal restlessness. I was convinced that the market was much bigger than we tapped. And my impatience coincided with the frustration of my co-founders that also felt in their bones that we could build a better product and experience, if we had more resources. And that is exactly what the fear of stagnation causes : you would rather not invest time but burn through more money and take more risks to grow faster. You feel like you owe it to yourself, you already beat the odds once, you can do it again, and prove your investors, team and clients, that you are even more valuable than what they see. I do not know if that fear would affect similarly a non-entrepreneur, but I suspect the same bold pragmatism that propels us is what makes us so sensible to this fear. Entrepreneurs shape themselves to change things and move where no one else went, however, that caused us to “fail fast” rather than cultivate patience. Because, reaching profitability is not the same as sustaining it. And all the resources needed for freedom takes much more time than you can imagine maintaining. It requires more abnegation than surviving and more control than fighting death. Stagnation is the hidden internal nemesis of all change makers, and we almost lost to the fear of her.
Thankfully for us, our investors came to the rescue and gave us perspective, but also the precious sesame : time. Time to try smaller bets. Time to invest in long term progress. Time to find our way back to the rocketship inclination of growth.
So, we used that time to go back to our fundamentals : serving our clients.
And thus, we did what we could not do before : rather than trying to go bigger on what we created, we asked our clients what we could do that we were not. And we not only listened, but actually went to see them live.So during most of 2019, we toured African countries from Nigeria to Kenya, passing by Senegal, Togo and Cameroon.
It is incredible what you learn while spending physical time compared to what you can learn through questioning no matter how deep. And what we learned was mostly that our sellers were selling alright, could do more but were held back by regular infrastructure problems. May it be shipping or payment, they each had different solutions, but none had really found a combination that felt right.
This stemmed first from another failure we had, when we tried to have a small warehouse of six months in Europe, and dropshipping for sellers. This was actually ok for some sellers, but was not radically cheaper nor faster for most. So we set out to build that infrastructure, country by country, relying on our biggest asset : our local communities.
From this, we built a unique system integrating DHL panafrican shipping to our platform and relying on the numbers/consistency of our sellers to achieve never before volumes. In addition, by meeting locally multiple sellers, we built a clearer understanding of their clients and habits. They not only needed better prices, but also a better experience, and so that is what we set out to build !
All of this topped off in the summer of 2019, when we used the lessons learned from our failed TV ad to push our most successful online ad campaign. This campaign garnered over 2Millions views over the summer, and propelled our sales to new levels !
What ultimately ended our obsession with stagnation was when we noticed in January 2020 that the volume of shipments through our new service was almost a third of all transactions ! Houra, not only was our GMV growing again significantly, but we had a new booster on top.
At this moment, we knew we were back into rocketship mode, but we did not realize that we were not yet equipped to pilot this new level of growth.
3. Fear of Complexity : 2020 to everyday now
Thing is, the more our shipment services grew, the more trouble we had to classify this new revenue and activity. Most marketplaces do not provide this type of service, and if they do, it is an add-on strictly limited to orders on the platform. Yet, from the beginning, this solution was built to fix ALL our sellers problems for ALL orders, even outside our marketplace. And these services were bringing more accounting revenue than our existing commission revenue …
How do you explain that to your accountants, investors, and even team?
Launch ready: focus
Thankfully, another lucky event happened right at this time: we got to meet one of entrepreneur idols, Jack Ma of Alibaba ! We got selected as one of the Top 10 African entrepreneurs with other amazing business heroes. And more than the money, we got to talk with an hour with Jack Ma, his partner Joe Tsai and Ibukun Awosika.
As you can see in the picture, I was obsessed (and Kadry is a better poser than I am) and this is one of the best moments of our life.
Not just because of the meeting itself, but for the impact it had on us for the weeks and months after it. Indeed, through our exchange and Jack’s answers to our questions but more importantly his reactions, teached me one clear lesson:
“focus on your strengths, rather than trying to compensate or improve your weaknesses.”
This resonated with us on so many levels, but especially on the contradiction lying in our strategy : our marketplace grows only when our sellers are more engaged, putting more and more products or replying better and quicker to customers for instance. Yet the commission model pushed them to come, drop their products and then leave us the task of finding customers. In our case, this was even worse because it meant they come to us mainly for marketing. We probably do that better than most startups but it is also our least favorite and efficient activity in growing our business. My co-founders and I are all distribution, tools and solutions oriented and our company reflects that in more than one way… So for years this contradiction was at the core of our strategic discussions, and after that talk with Uncles Jack and Joe, we knew we had to find a way to break through this stalemate. Especially as our shipping service was growing faster than the marketplace and we had multiple other services incoming…
Luckily, another effect of our Jack Ma’s distinction was that we were finally able to close our first seed round just at the end of 2019. As we were looking forward to growing our services, in the first two months of 2020, we doubled our team from 8 people to 20. The goal was to get ready for the summer high season and reach 100% growth with our new dream team to pass half a million dollars of transactions each month !
Onward and Upwards !
Right ….
Then, in March 2020, COVID-19 hit the world and provided us with the last push to dive into complexity.
Houston, we have a problem named COVID-19
Once the US closed their borders and Europe initiated this foreign concept of confinement, the sales and new products addition on our marketplace both drastically reduced. For context, the last two weeks of March had sales around 30% of usual volumes.
So, we were knee deep in a new crisis of planning, except this time, the whole world was too. … so when sales dropped to unprecedented levels, we knew right away that we had to act. Every dream of growth was put aside, now was the time to get back into survival mode. With the current team, even if we officers took no salary, in 2 months, we were dead. In our company, 80% of our costs are salaries and this meant taking tough decisions.
Like Jason Njoku explained clearly in this Walking dead analogy : “Take a leg. [Or two, plus the arms, in our case]. Just f****** survive”.
So we did, laid off the best we could most team members with one month severance and focused on planning for the most impossible scenarios. Another low in our entrepreneurial journey, in many ways …
Jettisoning into the change
Yet, among that chaos, years of conjecturing came into focus, catalysed by our fated meeting with the Uncles. Despite all the risks, and as the only way forward anyway was to have our sellers more regularly engaged than ever, we decided on a radical business model change : we slashed our commission in half, to as low as 5% but introduced a monthly subscription fee of 10€ .
With a subscription, just like a gym membership, the model puts tools at your disposal, but it is up to the subscriber to use or not the services. In our case, we might make less money per transaction, but then every month our sellers would get a financial incentive to use us or leave us. Our experience shows us that sellers leaving and coming is natural, as long they are fully engaged when using our services. So this strategic change also directly aligned us as a regular partner rather than just an occasional additional channel, which was our goal.
First stage separation : consequences
Despite our best efforts and putting 2 months between the decision, communication and implementation, when we effectively changed the business model in June 2020 we had our both our best sales and shipment month ever AND the worst customer backlash ever. Obviously the already engaged and performing sellers were unbothered (and some even happy as they paid less) but, as expected, all the sellers that only came to us for visibility and were not performing screamed for blood everywhere they could. The change also revealed another hidden complexity of our model : the heterogeneity of our sellers.
Mainly, sellers based in Africa needed and loved the new services orientation as they immediately saw the benefits of it. But at the same time, the sellers in the Western world that already had the infrastructure in question, were struggling to grasp the vision behind the change. And we could not blame them, but we needed them to trust us like they did before.
Ignition : back to growth
Ultimately, thanks to the right timing of our change in the high summer season (enhanced by the COVID “masks” effect on sales) and huge communication plus flexibility efforts of the whole team, we pulled through our objective of the year : process over half a million dollars of GMV in a month !! And less than 10% of our active shops closed due to the change.
But the best part was that volume was not going away. Especially as in June also, for the first time, we processed more shipments through our services than we did sales on the marketplace. So, for the best part of 2020 we tried to precise our vision for this new business model and strategic orientation. And just to be clear, the confusion caused by the complexity of juggling new types of services, usages and clients was also very strong in our team.
It was probably there that we had to do the most efforts, including to align ourselves officers on the priorities at the end. Because despite the success, we still had to grow back our team to decent levels, just to absorb the growth, and at the same time add more services.
Before the end of the year, we managed to also launch our first payment product : direct payment links, à la Gumroad. And early 2021, we added to it our first Afrikrea VISA card and the ability for subscribers to create personalized storefront, à la Shopify.
So how did we manage to ultimately clear out the complexity of such changes ?
We did not completely yet, but a strong solution came through our analysis of the current ecosystem of ecommerce and our new brand of services : ANKA.
What is ANKA and how does that defeat our current complexity?
The world is vastly different from 5 years ago, and the web is even more different. Now for someone selling online, the age of the single channel is over. As buyers have their attention spread across 2 to 3 social media applications, their expectations are higher than ever and their need for a customised and unique service is stronger still..
Sellers need the ability to run business on multiple channels, while being efficient in their operations, pricing and production; all while being creative. Especially in Africa, where infrastructure is lacking, multiple intermediaries and costs are incurred and vendors spent most of their time juggling rather than serving.
So, that is why we believe they needed an unified service, for multiple channels and at each step of the sale process. That is what ANKA is built for.
An unified product for multiple channels and at each step of the sale process.
ANKA is an all-in-one partner for selling African products globally, by combining services at each step of the selling process and centralizing it all in a single place. An African exporter can save money on shipping prices, save time on the packages to be shipped, and save energy from errors and being able to manage regular updates with their customers. ANKA can also be used by social commerce vendors that reign on Instagram or WhatsApp. They could use a payment links solution to get paid from anywhere and yet have all messages, inventory, orders on one dashboard. And the said dashboard helps them keep track of the status of each order, and also does so for orders on their personal storefront and/or marketplaces, what a relief!
Finally, ANKA is the last block missing to have a global African dropshipping wave. Meaning, what separates Africa from the China powered dropshippers was mainly the inability to manage shipments and payments from a distance. ANKA does all that plus allows your local partner on the ground to save time and get involved just when and how you need.
A SaaS solution AND a marketplace
So, in conclusion, ANKA is a completely different set of tools from AFRIKREA. It serves different needs and maybe even different clients in addition to our existing ones. But more importantly, this brand will help clarify that we are now a company with two products : a marketplace and a Software as a Service(SaaS) solution. The latter helps the former grow. Although the client base may not necessarily be the same, ANKA is for everyday needs and is billed regularly as such. AFRIKREA works best when also used regularly , yet clearly has its high and low seasons. But ANKA will help in that regard by simplifying the hardest part of the business and making AFRIKREA a no brainer channel to add and maintain.
This new launch at the time of our 5th anniversary shows how much we have conquered, and how much we are looking forward to achieving. We overcame the fear of death with pragmatism, learned how to defeat the fear of stagnation with patience, now it is time to deliver simplicity all the way through. When we started, we dreamt of enabling 12k$ of transactions in a month. We now do that in a half a day or less !
Plus, by all accounts, rather than just the notoriety of our first baby “Afrikrea.com” , we allowed entrepreneurs, mostly African and women, to sell millions every year. That is already success in our eyes, yet we want more. We can now proudly say that we are entrepreneurs, our future changed thanks to the trust of our clients and our everyday life is filled with the passion of serving them even better, further and everywhere. Like a fellow warrior said, we are Africans building for the world.
To conclude, just like another famous Uncle’s gospel: “It remains Day 1”, our team of 20 heroes at AFRIKREA is ready for another 10 years at least, and probably more, as we accept our bolder new quest: bridging Africa and the World.
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