Inside Founders Factory Africa with Sam Sturm, Part One
Before I came to MIT, I had the pleasure of spending a few months as a product manager for Founders Factory Africa, a Pan-African venture development company based in Johannesburg, when they were kicking off their Build program. Their portfolio spans five markets and includes a mix of homegrown and accelerated start-ups, including logistics platform Tripplo and employee financing app Floatpays.
I spoke to Sam Sturm, who leads the Build program, for a straight-up take on what it takes to successfully drive innovation at scale. Here’s the first part of our conversation. (The second part is here.)
Could you tell us a bit about your role?
At Founders Factory Africa, I am our Chief Venture Architect. It’s a fun title that is a little mysterious, but what it means is that I lead our build program, which is where we bring new businesses into the market, building them from the ground up in collaboration with entrepreneurs. It is fundamentally working with entrepreneurs to go from zero to one over and over again.
Thinking back to when you started working with early stage ventures, what made you decide that this is the kind of work for you?
My path here is kind of circuitous. As an undergraduate, I designed my own major. It was a combination of English, history and theatre, all about how they are essentially different mediums for telling stories. I ended up doing a documentary film as part my Senior thesis, and I planned eventually go back to film school. After I left school I became a middle school teacher: After four years in the classroom I realized I loved teaching but didn’t like being a teacher. And so I left the classroom to join the founding leadership team of an edtech startup. It was supposed to be a hiatus while I applied to film school.
As employee number four, being the founding director of strategy and development — which really just meant raising money — I discovered that building a business is something I really enjoyed. I had no background in it, I had no foundational knowledge. But I found that building a business combined both the strategic/analytical parts of my brain and the creative parts of my brain and I’d always wanted that in a job. And, I discovered that working in an early stage company was something that I loved and that provided something for me in both those temporal hemispheres, as it were.
I decided that if I wanted to keep doing it, I was at a disadvantage because I had no fundamental business training. So I went back and got my MBA (which is a little bit different from going to film school). I focused on the intersection of design, venture capital and entrepreneurship. This is at the same time that Kleiner Perkins hired John Maeda as the first design partner at a venture firm. I think design — not as an output, but as a process for solving problems — was really entering the mainstream conversation about being the best way to solve problems, and the most scalable, efficient, effective and the most investable way to solve problems.
When I left grad school, I knew I wanted a role where I was working with early stage startups and helping them define sort of using this design-led process to define not just their products, but what their business looks like. Roo Rogers, our CEO at Founders Factory Africa hired me out of grad school (sort of serendipitously) and we quickly won a contract to design, develop and lead the implementation of an accelerator in across East Africa and South Asia.
How have those diverse experiences shaped the process of creating ventures at Founders Factory?
We’ve been talking about this balance between process and principles a lot recently. I think it is important to have a process because as an organisation, bringing in new people, scaling and getting outside agents to participate, you need a process that people know how to engage with so they know what to expect.
The idea that there is no such thing as process in creative endeavours is a dangerous myth. People think you just go away and this individual brilliant person thinks something up. We know that’s not the case, right?
But I do think the process exists to enable creativity and I think principles in addition to process can be valuable. We shouldn’t be holding to our stage gates if they’re not enabling the process.
So in Founders Factory Africa, the first phase of our build program is venture design, and the idea behind venture design is not that you can create the blueprint for the perfect business, but that you don’t need to rely on serendipity.
It means that you can make informed educated hypotheses that undergird a business and that if you are asking the right kind of questions and going through a process of validation then you can be really successful.
In venture design, we start by looking at the market, looking at our partners and we start to develop focus areas. Those focus areas are informed by where is there a lot of investment, where there are a lot of interesting startups and what’s happening in the world. Why is now a good time for this? What assets do our partners have that can inform this? And we say, Great, let’s do some discovery. Then we say, Great, let’s ideate. It’s this constant cycle of generative, then analytical, generative analytical generative… and going through that constantly and being able to always apply that lens is really valuable. Our partners — Netcare and Standard Bank — are very good at the analytical lens and part of our role is to help create the environment so that they can be part of the creative and collaborative part of it as well.
We have five stages in our venture design process: focus, discover, generate, challenge and check. But what they are and what we call them doesn’t matter. Everyone calls their framework something different, because that way you can codify it, you can package it and productize it and sell it, but it’s all the same thing. It really is about enabling, having the right stimulus and asking the right questions and creating the right conditions to enable creativity. At the same time, you have to be bringing in an analytical, strategic lens and asking the right questions about viability, feasibility, defensibility, desirability and so on.
How would you describe Founders Factory Africa? What is the positioning of the studio and what makes it different?
We describe ourselves as a venture development company and we do two things. We invest in and support existing businesses through our Scale programme, and then we work with founders to bring new ideas to market through our Build programme.
Holistically, we say our role is to fuel the founders that drive the startup ecosystem and economy of Africa.
Our role is to help founders and startup ventures go further and faster than they would without us.
The way we do that is obviously through capital, but I think there are three ways that our approach and model is different. Number one is that we are not a one size fits all programme. We don’t describe ourselves as an accelerator or an incubator, partially because those have been so bastardised that they cease to mean anything (particularly in Africa, where there’s also an element of colonial capitalism that goes along with them, but that’s a different story).
We are not a one size fits all program. We don’t have a curriculum that says ‘here is how one ought to go about this’. Businesses want to know how to solve their problems. How you move quickly is not theory, but practice.
So we work directly with our businesses to solve their biggest challenges to scale. We’re able to do that through an in-house team of technical and operational experts that we deploy to support the businesses. That doesn’t mean sitting down and writing their code. It means working hand in hand with the businesses to put the right processes in place and build the right things, the right ways. We do that through product management, product coaching, growth support, marketing, investment support and helping them build the right investment case. We support across business development, product design, growth, investment: all these pieces that a startup venture needs to be successful that they often don’t have access to. So we have that operational and technical team which is very different because it allows us to be very bespoke in the way we help a business solve their problems.
Number two, our investors are corporates. Some people might think it’s pedantic, but I think it’s important that corporates are our partners, not our sponsors. In this early stage space, you often see corporate sponsored programs, and when something is corporate sponsored, that usually means the money comes from marketing, or CSR. The whole idea is putting a logo on a website and saying that you support innovation.
But our corporate partners are our investors. They have an equity stake in us and they have an equity stake in our ventures.
As a result, they are incentivized to help them grow. We are able to tap into their assets and their resources and their infrastructure and their experience and expertise to help solve challenges to scale. We’ve seen it work in distribution, in product integration, in product development, in navigating regulatory constraints. In an African context, the economy is driven by these large corporations who have scale, so if we can tap into that scale that can provide a real advantage to our portfolio in market.
The third piece is the global Founders Factory family. Founders Factory started in the UK, we exist as an affiliate in Africa and it’s now in Paris and New York. When we think about the businesses we are building, we are building not just South African or Nigerian businesses. We are building pan-African businesses and we believe we should be building global businesses. We recognise the huge difference in markets, but the shape of the challenges faced in many developing countries is the same. And you see now a not insignificant number of businesses that have scaled in one developing market in Africa looking to India or to elsewhere in South Asia or Latin America.
Being part of that global family and having the resources that we can draw in is important. There’s an element of championing African entrepreneurs on a global stage that is also important and the fact that we have a bit of an outsized platform to enable that because of our affiliation with this global brand is a responsibility that we take seriously.
What is different about Founders Factory in Africa and how does the team operate? These are some of the questions covered in the second part of my conversations with Sam.
