About StartUps Having Challenges and/or Shutting Down – My Tiny Bits of Thoughts (1) – KIPPA

About Startup Having Challenges and/or Shutting Down

I’ve read a lot of pieces and write-ups in the last couple of days that either criticize startups, their CEOs, or their strategies, and literally claim to understand better “how they should have done it.”

Some have attributed the failures to the laziness of the founders, who sit in offices and use the millions of dollars raised to create agent networks, letting others do the work for them.

Sadly, in every sport, the best and faultless players are often in the spectator seats, while the players actually playing the game are always guilty of even trying to play. In many sports, the basketball player often wants to teach the football player how it could work better. Sometimes it’s wise counsel, and sometimes it’s the other way around.

__ My Abuja Kippa Story

In early 2022, I guided a startup to launch a bookkeeping app across six selected states.

But I was actually on the ground in Abuja as we tested the offline market for the acceptance of the bookkeeping app.

As a marketing and sales strategist, I didn’t want to give theories; I wanted to see what’s happening firsthand. So, I joined the CEO and the sales team to get into one of the main markets in Abuja.

I remember entering a store and asking them how they managed their books. They used ledgers.

So I pitched our app, and they liked it. But I got a bit of a shock when the woman brought out her phone, and there I saw the “Kippa App.” “Ah ????… you even have Kippa… what happened?”

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I got to know that Kippa had entered the location, and many people had downloaded the app and used it in their presence. But a week or two later, some got tired, while others didn’t “understand this bookkeeping or records thing.” Their ledger was good enough.

I asked, “But if you use the app, the credit rating and transaction flows will help you get access to loans.” Only for me to hear another interesting answer, “See, I get loans from my fellow brothers.”

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Then, as we went on, I conducted a survey in the market. About 60% of those I asked didn’t take loans from banks or other companies; they got them from their Ajo groups. So, the value proposition of “better bookkeeping for access to finance or loans” practically didn’t hit home as a “need to have.” But they would take the loan if it came to them.

Of course, I wasn’t surprised. I’ve been involved in informal market finance since 2018/19, so I understand some truths. This begs to answer a real question people have been asking, “Is financial inclusion a reality or just a myth?” ????

I’ll write about my experiences later on financial inclusion, at least as an award-winning driver of FI.

__ My Banking Experience

Years ago, in my articles, I would claim that “Banks are wicked; they don’t care for SMEs.” Now, I’ve been in the credit and lending business for some years, and I understand their plights and how it works. So what I now say is: “Banks are not doing enough” (because they really aren’t). Two different perspectives from the same person.

What changed?

• Driving a product from 0 to 170,000 users with the lowest total operating budget (not marketing budget) ever (less than $200,000 – at the then #conversion rate 420).
• Practice and experience, and getting my hands dirty.

At least, our 30 million naira+ unrecovered loans till date, plus Nigerians telling you there is nothing you can do to them, and failed or lengthy justice systems, is a scar that reminds me that banks aren’t stupid. So, imagine the banks with billions as NPLs, but I never understood. I literally believed I had better strategies. I believe Kuda also thought the same, that maybe their credit scoring AI would do it. But their 2021/2022 NPL numbers are there as a witness that things may not go as planned. But it is what it is; the market leads all of us.

__ The All-Knowing App Builders vs. Kippa Pay Pullback

Many assume they know how it should be done better, especially the tech developers who haven’t built startups or sat in the founder/management seat before. Someone implied that the Kippa guys raised money and then became lazy. If they knew the hard work required to build and manage just 500 agents, let alone 10,000 or 15,000, they wouldn’t assume they just sat in offices. I’ve built agent networks, traveled to states, and got translators in states where I couldn’t speak their language.

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It may be good for these people to ask whether Kippa ideally turned to an agent network for payments or to serve as support for the bookkeeping app. I personally don’t know, but what I do know is this: When we launched the bookkeeping app into the market, the first challenge we saw was that some people installed the app but couldn’t use it. And no, it wasn’t due to bad UI/UX; it’s a matter of literacy and the response to change. How many people understand accounting? So, by default, we had to create a support system and attempted to delegate agents within the markets who understood the app and accounting at a basic level. They could become bookkeeping guides/agents to help these market women and serve as a support system. We were even going to launch a stock-taking or bookkeeping academy to train unemployed accounting graduates and turn them into stock takers and accounting agents. But that isn’t sustainable because no one is paying them. Business owners may pay for their service for a while and then stop. There has to be a way to let them pay themselves. Hence, we also thought of the need to add a payment layer so that the agents could process funds and get paid, especially as many of these retailers also needed to transfer money. It’s a no-brainer, a strategy that anyone with funds would want to attempt. But it wasn’t in our initial plan; the market taught us all these.

So, when I see tech personnel who think a good product will sell itself and call those who failed stupid, I often laugh because this startup game is turn by turn, and no one is immune to failed strategies. I mean, what’s the definition of a startup, in the first place? Untested models. Could they have just focused on the bookkeeping app and charged people? My experience shows me that the average Nigerian doesn’t want to pay for subscriptions. Even many of these so-called strategists struggle to pay for Google Cloud or subscribe to stock pictures websites, making their designers look foolish. But they automatically assume that the tomato seller or the small kiosk owner will keep paying 1,000 per month for a year to use a bookkeeping app when their notebook costs 100, lasts six months, and doesn’t need charging.

__ What do Nigerians Pay For?

Let this be driven into your mind, O ye strategists: the only things Nigerians pay for easily are what they can’t survive without (fuel, food, housing, etc.), what fuels their ego (iPhones, nightclub spending, etc.), and what makes them money almost immediately. If your app doesn’t fall into any of these three categories, you’ll spend excessively on marketing and user education, and you may still lose the business. Ask Netflix about the password-sharing issue and DSTV customer service personnel why they keep calling everyone to come back to subscribe, even though it’s entertainment.

__ My Last Thoughts

When I drove credit and lending, I didn’t design an agent network in our business plan or BMC, or even accelerator programs. The market taught us that we wouldn’t last without an on-field support system. I don’t think many are wiser than MTN folks, and if they are, I apologize, but at least I know that MTN succeeded because of that distribution and support system. My experience on these streets tells me that many people have loads of assumptions about how businesses are built. But then, like I did, I wish them and every other person well. The street remains the best teacher for all of us.

__ Kudos to the Heroes, Legends, and War Lords

To those who failed (and didn’t embezzle or mismanage money), you are unsung heroes. To those who have fought the battles and won (exited, sold out, or IPOed), you are legends. To those who are raising their heads high, despite the challenges of policy, a dwindling market, and more, you are great warlords. To all of you who delight in the news of a startup’s fall or some challenges (aside from the MMMs), you are what you are: pure losers.

Let’s keep winning.

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Olatunde Victor Adeoluwa SalesPlat

SalesPat