Leaping from your daily job to starting up a business could be one of the most dangerous career decisions you could ever make, mostly because it would seem like suddenly quenching the source of your livelihood, and starting a journey of uncertainty. Not many people, of course, would have such certainty of purpose as the world’s richest man, the billionaire owner of Amazom.com Jeff Bezos, who in 1994 was already so sure and secure that one of the world’s most valuable hedge funds, D.E Shaw & Co, where he was already a highly successful employee, with fat pay packages and bonuses, held no further future for him.
As a matter of fact, David Shaw, partner at D. E Shaw & Co (then) could not understand why Jeff would want to gamble his life away, to ‘do this crazy thing’ which was supposed to be a better idea for somebody who didn’t have a job or any financial security.
So David Shaw was quick to suggest that Jeff joined him for a walk down Central Park. But after two hours of such walk along Central Park, Jeff had never been more convinced that he was ready to resign from his role at D.E Shaw &Co.
For startup founders, this obviously would remain in the past because they have already crossed the Rubicon, and would probably have to confront whatever they are faced with currently. But for regular work goers, this is a very long leap yet to be made.
Nevertheless, there remains the stories of certain yet-to-be founders who are still skirting the boundary of indecision and the thought of quitting their daily jobs to start up a business. Below, we consider how a few African founders came to this point in their lives.
Mostafa Kandil — Co-founder Swvl
Swvl is the Egypt’s startup that competes with Uber, Careem and other internet-enabled bus sharing services. In 2018, Swvl was the top Egyptian startup to raise the most funding, raising more than US$30 million at a valuation of approximately US$100 million. Mostafa Kandil was just below 30 years of age when he co-founded SWVL. Leaving Careem where he had always worked would appear to be a bit less tough a decision to make.
“I had graduated in Petroleum engineering, but as I started working I hated it; I felt it was too stiff for me,’’ he said. ‘‘I was also part of something called the Growth Team, which directly reports to the CEO [Mudassir Sheikha]. I remember it was my first week and he came to me and said: “when I quit McKinsey [& Company], I knew I could come back. The same goes for you; if you leave Careem now to start something and fail, you can always come back.”
That support to ‘‘always come back’’ would seem like an insurance against the adventure he would later take at Swvl.
‘‘That was on my first week,’’he said. ‘‘I kept meeting him every day. We used to check something at the Growth Group: the average trip fare, which in Egypt was about 3–4 dollars. I knew that was a lot for an average Egyptian; so in February I decided I would leave to create something new.’’
However, the crucial point for Kandil would be learning that ‘‘around the world, public transportation is a loss-making machine. If you can take this load off the government and privatise it in a way that is super cheap and create job opportunities, you are revitalising a sector.’’
With that confidence, albeit naivety about the sector he was about to disrupt, and still backed by the guarantee of always coming back, he left Careem.
‘‘We now have a huge fleet,’’ he said. ‘‘We have 40 routes and 300 buses on the road, but we don’t own any assets, so it’s super scalable”
Of the total amount of about $686.4 million raised by African tech startups last year, Egypt got a share of $68 million. SWVL got about $38 million out of Egypt’s share, making the startup the most-funded Egyptian startup. The startup has expanded to Nairobi, Kenya, with plans for Manila, Jakarta, and Dakar
Obi Ozor — Co-founder Kobo360
JP Morgan Chase is one of America’s largest banking institutions, with reported 2018 revenue at 109 billion USD. If Obi Ozor, co-founder of Nigeria’s Kobo360, was still at the bank’s headquarters at New York , his average salary per year should have been in excess of $100,000 (converting to Nigerian naira, his home country’s currency, at the current exchange rate, would be close to NGN40 million). To complicate matters, Obi Ozor had no background in technology, except a degree in Biochemistry from the University of Michigan, USA and further studies in international Relations with focus on trade and finance at The Wharton School of Business in Pennsylvania, USA. Abandoning his well-paying job in a country 53 times richer than Nigeria, and in preference for a space — technology — he was no master at would appear like throwing caution to the wind.
‘‘In 2014, while at JP Morgan, I played a role in a team that was negotiating on a $5 billion project with Dangote group,’’ he said. ‘‘By 2015, I had developed strong relationships with key members of the Dangote group. On the team, I saw a lot of smart people who went to top schools in the States and had great careers but had moved back to Nigeria. They seemed to be doing better financially and appeared to be more fulfilled than me, this reality was another nudge in my gut to consider moving back.’’
Ozor said by March 2015 with a team from Dangote at the Wharton Africa conference, he heard that a lot of the issues with businesses in Nigeria seemed to center around electricity and logistics.
‘‘I asked Dangote’s chief strategists if they were open to outsourcing their logistics and surprisingly he gave me a nod. I came back to J.P. Morgan, and after months of strategising with my future Kobo co-founder, I decided that I needed more logistics technology experience, and so when Uber came along I hopped on it,’’ he said.
However, it does not appear that Ozor was ready to launch himself from frying pan to fire. He was obviously grooming himself for what he wanted. One more job stint as the director of operations at UBER Nigeria prepared him roundly for quitting job in the future.
‘‘My mandate was to grow Uber’s supply in Nigeria,’’ he said. ‘‘This involved getting thousands of cars on the road so anyone in Lagos metropolis can get a ride within 5 minutes. Onboarding 50 cars is one thing, but securing hundreds and thousands for of cars required some serious business development with banks and wealthy individuals. Of course, you can’t forget the issue of smartphone penetration and millions of people who want to use Uber while paying with cash.’’
After Bezmo (his first startup), Ozor said he had learned how to build a company, how to say ‘no’ to lots of funding in the first year of a startup, how to be a CEO and not second guess himself all the time or be too democratic.
‘‘With Kobo,’’ he said. ‘‘I see what we are doing as a career, so hardly make rash decisions or get depressed by normal business fluctuations like the recession we are in now. In fact, I like the recession; it’s giving us the time to build capacity and has been instrumental in re-routing capital back to hardworking entrepreneurs instead of oil deals or trade finance which doesn’t create job or add real value to the economy.’’
In August, 2019 Kobo360 raised a US$30 million debt and equity Series A funding led by the American multinational investment bank and financial services company Goldman Sachs. The startup is set to scale its operations in more African countries.
‘‘Kobo is in the first phase of that mission to provide logistics solution to more than 200 million SMEs across Africa,’’ Ozor said. ‘‘The journey has not been easy but there seems to be light at the end of this tunnel. 5 months from launching beta operations in August 2016, Kobo ended 2016 with close to N1 billion naira in revenue, helping create and retain 156 jobs, and looking forward to a prosperous 2017.’’
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Aretha Gonyora — Co-founder at Payitup
Aretha Gonyora was already a senior business analyst at Ernst & Young, Zimbabwe when she started Payitup Technologies, a Zimbabwean fintech startup. As difficult as the economic situation could be in Zimbabwe, where inflation reached as high as 89.7 sextillion percent year-on-year in mid-November 2008, quitting job has to be the toughest decision Aretha Gonyora, who was already reaching the peak of her career at Ernst and Young, could ever make in her entire life.
Payitup has since raised US$13 million in funding from the UK-based Thawer Fund Management. The new round of funding is the largest ever by any startup in Zimbabwe. This would put the startup’s value at US$20 million . Although Payitup has secured seed funding in the past, it has faced challenges securing this larger round.
“We had been engaging our investor for over a year. The startup ecosystem in Zimbabwe is not that vibrant at the moment, and the current economic condition makes it difficult to get funding. There is still hope. What saw us through in the back and forth of the last 15 months was a combination of having a strong vision and finding people that believed in us,” she said
“Our goal is to build a more connected financial life for the African people and beyond. Through our mobile and web applications our customers will be able to pay for various goods and services, access loans, investments, insurance and a wide range of financial products. We will be working towards financial inclusion for all and maximising on technology. A lot of people still do not have access to basic financial services, while the people with access to banking services are not fully capitalising on the power of technology,” she added.
Although facts largely remain sketchy, it does appear that Aretha Gonyora started her journey to building a startup while still at EY, before fully transitioning to Payitup.
From the above, Aretha Gonyora would probably fall into Richard Brandson’s school of thought, that “some of the world’s most successful companies began as side projects, with their founders working evenings or weekends to turn their ideas into realities.’’
‘‘ Virgin is a prime example of this — all of our Virgin businesses started while we were working on something else,” Branson writes. “Virgin Records was originally a side project as part of Student magazine,” while Virgin Atlantic started “as a side project while we were running Virgin Records.”
“We’ve found that those who apply and plan to grow their idea while still working their day jobs are more confident in their ability to manage their money and time. Not having to be reliant on their new business to provide them with a full-time income, they are given a bit of breathing space and time for their idea to gain traction,” says Branson of a startup loan scheme he’s involved in.
“If you have an idea for a business that is keeping you up at night, it would be such a shame to waste it.” So go ahead and get started even if you can’t afford to quit yet. Some in the startup world will sniff at your efforts, but not the Virgin boss,’’ Brandson concludes.
Jason Njoku — Founder IrokoTv
In 2010, the Nigerian Jason Njoku and the German Bastian Gotter launched irokotv, a web platform that provides paid-for Nigerian films on-demand, which is usually dubbed ‘the Netflix of Africa’ and which is believed to be one of Africa’s first mainstream online movie streaming websites. With its headquaters in Lagos, Nigeria and offices in London and New York. iROKOtv brand was so valuable that Jason said in less than a year old at the time, investors paid $80,000 for 10% of the iROKOtv but sold to other existing investors, for $2.4 million. In some of his posts, he made the following points about starting out.
‘‘When people ask me about when I started or how I started I always think back to those summer days of 2004, when I was only 23 years old with the world as my oyster,’’Jason said.
Njoku grew up in South-east London, launching his first startup — a student magazine called Brash which failed afterwards.
‘‘I blew almost £5,000 over that fateful summer. As an ordinarily working class, poor student approaching his third and final year in a Chemistry degree I had no business doing anything like that,’’ he said.
4 years later in the corporate world, Njoku quit his job, a decision he said he had made in his ‘youthful gusto’.
Njoku thereafter proceeded to make a failed attempt at a T-shirt business, which failed again. He also had a stint at web designing and still failed.
‘I spent three years making every mistake there was to make about how to run a business,’ Njoku said. ‘But that taught me about hard work and focusing on the right things.’
In 2008, Jason decided to come back to Nigeria and that journey sparked the vision of his company — iROKO Partners.
In a blog post Njoku explained, in 2016, his journey with investors:
$80k for 10% of iROKO. That’s an $800k valuation. At the time it was crazy for a less than one year old company, which had generated $200, $1k and $6k in the previous 3 months. I was a terrible negotiator then, so was pretty desperate. I actually offered an old university friend of mine 35% for about $50k. Thank God Bastian [iRoko co-founder] did the negotiation and was a less generous than I. In the end? He passed.
Earlier this year, after 5.2 years, the same investors sold their entire stake for which they paid $80k for in 2011. For $2.4m.$2,400,000.00. With Naira at N300, that’s N720m. Thats a x30 ROI. 3,000%. It took 5 years.
Five years after launch, iROKOtv remains a leading player in the video-on demand space. In January, only weeks after Netflix announced its Africa launch, iROKOtv raised $19 million from French cable service Canal+ and the Swedish-based media company Kinnevik AB. The money, the company said, will be invested in producing 300 hours of original content this year and double that by 2018. iROKOtv has grown popular, particularly outside the continent where 55% of its subscribers are located.
Bottom Line
Finding yourself at crossroads on your way to building the startup of your dream could be one of the hardest situations you could find yourself in. The above founders have made out their own paths, and it has been successful for them in different ways. The key points to draw out from their experience are that to effectively transition from jobs to startups:
- You need to leverage your job experience to learn more about the startup sector you would want to venture into.
- Starting a hustle viz a viz your regular job could eventually transition into a full-blown startup that may finally lead to quitting your job, without having to feel the discomfort of suddenly quitting job.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.