How to Pivot with Union54's Perseus Mlambo

Perseus Mlambo: Every founder or every company's got one mission that they might not say out loud, and that mission is…. 

Justin Norman: That's Perseus Mlambo, the Co-founder and CEO of  Union54. They started as Zazu, the ag tech startup, which pivoted to Zazu, the neobank, which pivoted to Union54, the card issuing API, which pivoted once more to its newest product, ChitChat.

Justin Norman: Union54 was the first Zambian company to get into YC. You had raised a $3 million seed, followed by a $12 million seed extension. Everything seemingly was flying until you had to pause operations because of the chargeback fraud… 

Perseus Mlambo: When we figured out what was happening, one of the The first painful call that we had were to our major investors. Some smaller investors were like, I'm done with Africa. I'm done with, like, intake. I just want my money back. 

Justin Norman: There's a general narrative around concern about sharing bad news in a nascent ecosystem. Foreign investors might say, “Well, I'm not going to invest in that region if this is the problem that they are having.”

Perseus Mlambo: I think it's very important that we are as transparent as possible about what's happening. And the mistake that I made was… 

Justin Norman: This episode of The Flip is sponsored by Onafriq, formerly MFS Africa. Onafriq is the leading real-time payments network for Africa, which connects over 500 million mobile wallets across over 1,300 cross-border corridors and in over 40 countries across the African continent. Throughout this season, we'll hear from the Onafriq team about their work to create a borderless world.

Justin Norman: I n this episode, we're joined by Rachel Balsham, Onafriq's Managing Director for Southern and East Africa, to talk about the evolution of the company.

Rachel Balsham: We made four acquisitions in three years between 2020 and 2022 and with those acquisitions, of course came teams and products and ways of working. And naturally you kind of speak about that in a way of you do this through Vionic, or you do this with the GTP team and the backseat team and those brands and had real meaning in terms of the product, in terms of the legal entities, but it also ended up kind of separating us. And so I think there's a lot of value in the unification and the kind of the harmonization of our offering that we're offering a multi-channel, omnichannel solution to our partners partner. We used to be very segmented product organized. So we had a team focused on money transfer operators, a team focused on banks, a team focused on enterprise, a team focused on mobile network operators.

Rachel Balsham: Our regional structure today reflects that the person or people who are focusing on Zambia and Mozambique are focusing on those markets and the solutions needed in those markets across the payment space to say, all right, what are the problems in this market? What are the payment trends in this market? What are the payment players and what can we as Onafriq with our range of solutions offer these players? And I think because we've made a much more dramatic change in our name and celebrated it rather than just sort of explaining around it, it gives us an opportunity to tell a few more parts of the story. Not just, oh, we are this and not that but now we're so many more things.

Justin Norman: Perseus, I was looking through my notes and you and I first connected in 2020 around the African Renaissance Conference that we both participated in. Back then you were the CEO of Zazu, which as I was looking back, it started as an agriculture or an agtech helping farmers to connect to new markets. And then you pivoted to a neobank offering its users virtual cards. Through that experience with Zazu, you launched Union54, a card issuing API, which powered many of the FinTechs in the African tech ecosystem. And now after some troubles with Union54, which of course we'll also get into, you're launching a new product, ChitChat. So that's just a crazy journey. I think by my count four pivots. So before we get into the weeds of sort of why everything and how everything has happened, I just want to know like what has it felt like to be on this entrepreneurship rollercoaster and what sorts of things have you learned and how have you sort of engendered the resiliency to keep going through all of these pivots and such a winding journey over the past seven or eight years?

Perseus Mlambo: It's kind of funny hearing somebody just listing out the pivots one after the other 'cause when I look back, I don't look at a time when we said we're gonna actively make a decision to change strategy. I guess we've always been responding to challenges or to opportunities, but in any case, it is something that is quite tolling both mentally and physically. But at the end of the day, I think every founder or every company's got one mission that they might not say out loud and that mission is just don't die. Do whatever it takes to stay alive and that's what we've always been aiming to do.

Justin Norman: So Just looking back to last year, you guys came out with some challenges that you had with Union54, which you launched in 2021. And we talked a little bit before about you were building Zazu, you had a hard time with your card partner, so you decided to build a card issuing API. Union54 was the first Zambian company to get into YC. You had raised a $3 million seed followed by a $12 million seed extension led by Tiger Global. So I think everything seemingly was flying until you had to pause operations because of chargeback fraud. And you gave this incredible interview, which we'll link to with TechCrunch a few months ago about this $1.2 billion of attempted fraud. So can we sort of go back maybe a painful trip through memory lane to what happened? And then we can talk a little bit about how you rectified the situation and how you went forward from there.

Perseus Mlambo: When we started off in FinTech, we realized that a lot of consumers were being overcharged by local banks. So we got an electronic money issuing license in Zambia and that license allowed us to be able to actually issue a companion card, which was tied to a mobile wallet. So to issue this card, we had to go through a lot of hoops, mainly engaging with Visa, with MasterCard to be able to understand how do they work with FinTechs, with younger companies because their bread and butter is issuing, but maybe they're used to doing that with commercial banks who've got like 50, 60 years of history. When we came up with one of the first companies, we were looking into these, but other comparable companies in Europe were able to do that a lot faster and a lot cheaper than us who were in Zambia.

Perseus Mlambo: So when we started doing issuance for the Zazu cards, we started to receive a lot of interest from FinTechs who were based in Nigeria, who were based in Angola. And they were all coming to us and saying, "Hey, you have this ability to issue your own card without going through a bank and we can issue our own card because the banks locally don't like us or they don't want to work with us." So the idea for Union54 came about trying to solve that challenge that a lot of our peers were having. And what we quickly figured out is that we could allow this FinTechs to issue the card using our infrastructure, using our relationships with the card schemes. So we started to do a test I think in September and we could quickly see that this was going to be a viable business, which is the same month that we had gotten accepted to Y Combinator.

Perseus Mlambo: A few months after that, we started to issue and the transactions were flowing, we were processing millions and millions of dollars, and word was going around. It doesn't look like it now because a lot has changed. Like the CBN in Nigeria have made it a lot easier now for Nigerians to be able to transact on the internet without any prejudice, right? But back then, if you wanted to subscribe to either Netflix, Spotify, or buy yourself something nice on the internet, you couldn't do that because you were limited to spending a maximum of $20 using your local card. So for a lot of people, that was basically a new version of torture where you had money in your account, but you couldn't use it because of central bank restrictions. So Union54 was filling in this incredibly challenging gap and these FinTechs were happy to pay a lot of good money for it, which is how we were able to attract the likes of Y Combinator, the likes of Tiger Global and just really provide a solution that millions of people around the continent were happy to subscribe to.

Perseus Mlambo: But as you know, when you're issuing cards, you quickly attract, in our case anyway, very serious nefarious elements from across the globe. So we would get... FinTechs would be in a hurry to show their investors that they were working and they'd want to do a quick integration in 48 hours, 72 hours, and they'd want to start issuing. And in the process, they'll start making a lot of marketing or a lot of spending to be able to attract users and some of those users unfortunately were criminal elements. So we started to see that the transactions that we were processing, maybe our FinTech clients couldn't really explain when we asked them and this was primarily because they didn't know who the customer was. So in the end, we were paying over half a million dollars a week to MasterCard in fees and chargeback fraud and we didn't want to continue this because we would've run out of money.

Perseus Mlambo: So we took the very painful but necessary decision to stop processing transactions so we could just adjust strategy and figure out a way how we could resuscitate the API or altogether pivot. And I'm glad we did that because we didn't want to become an index for fraud about what was happening with some of these FinTechs. So by pushing them away, we stopped a lot of bad things from happening. So that was a very painful decision that we took, but ultimately it saved the company because we had raised a lot of money, as you'd said, the seed extension and we were left with enough money in the bank to be able to adjust our strategies, speak to our main customers and figure out a way, how can we make as much revenue as we were making before, but in a way that insulates the business and gives us sustainability.

Justin Norman: There's one question that I have in hearing you retell the story, which is, if this problem of chargeback fraud is a solvable one or are we just sort of resigned to the fact that many of these products can't exist because of the preponderance of fraud? Is it a situation where with enough resources or talent or I don't know something, right? My understanding is there are other card issuing APIs in the market now and I'm wondering the extent to which they're experiencing similar challenges or why you guys in particular had such a wide chargeback fraud issue that you had.

Perseus Mlambo: It is a solvable problem, but uniquely Union54 was processing transactions for FinTechs who were coming from over 15 different countries. The way that you solve these chargeback fraud is you have to really do difficult things in the beginning and you have to... At least in my view and our experience, you have to harmonize the way that you do KYC. So in South Africa where you are, in Zambia where I am, we've got very different KYC requirements, what financial institutions are expected to provide. And if you want to issue cards at scale and you're targeting the rest of Africa, then you really have to be able to cater for those differences, you have to be able to adjust your strategy as and when developments happen. And even though it's a solvable problem, I don't think we had enough money to be able to do that, I don't think we had enough time to be able to do that.

Perseus Mlambo: I think it's something if you look at maybe let's say places like Europe where they've got one digital ID that shows you a true list of your wealth, that's something that you can then introduce so that you can say if I get a fraudster by the name of Justin, if he's using his driver's license, I'm still gonna be able to block any attempts that he makes using his passport. And for a lot of African markets, there's maybe two or three different identification documents that they could use, and up until all of those are fully digitized. And the main challenge right now is that you get groups who are coming from other parts of the continent where you've never visited as the executive team. So you don't really know when they produce a document that this is legitimate or not. The best thing you can do right now is to allow a third party KYC provider to tell you with a certain degree of accuracy that this is a legitimate document, but even then, they're not integrated into the home affairs databases, so they can't really tell you definitively that this is true or fake. So there's always gonna be elements who are gonna abuse this gap. So I think the model that we're seeing right now for card issuing is where people are partnering with local banks so that limits their potential scale opportunity.

Justin Norman: In the TechCrunch interview that you gave a couple of months ago, you talked about the importance of having this hard conversation. You said that FinTech in Africa is hard and that it's not child's play. And I think there's a general narrative around the concern about sharing bad news in a nascent ecosystem, right? What does it mean to talk about this degree of chargeback fraud when foreign investors might hear that and say, well, I'm not gonna invest in that region if this is the problem that they are having? So can you say a little bit about why you decided to share and tell your story and what your general perspective is on having these important and hard conversations about, for example, fraud in FinTech in Africa?

Perseus Mlambo: So when we figured out what was happening, one of the first painful calls that we had were to our major investors. So we must have spent like two, three hours, maybe like three or four consecutive days just going through our findings and just trying to look at what the strategy should be if and when we decide to stop and resuscitate the business. And I'm glad that we went through that experience because we were able to actually bring along our major investors so they could understand what was going on behind the scenes. And the mistake that I made was when people were talking about the chargeback fraud that was happening at the time, we just preferred to just put our heads down and just continue building and trying to figure out how we can save the business and come back with a stronger product versus actually articulating what was happening at the time.

Perseus Mlambo: And that's partially because I didn't wanna do that up until we had all of the necessary information, which took a really long time to be able to find out, right? And in doing so, in talking to some of our smaller investors who were also sharing some of their experience with some of their portfolio companies, it just became very apparent that it wasn't an issue which was isolated to Union54. And when you speak to some of the portfolio companies, they're incredibly worried about speaking out about what's happening because there's this term that everybody keeps throwing around, which is protecting the ecosystem. But an ecosystem comes to be because it's got good actors, it's got bad actors, and at the end of the day, you hope that the good actors triumph over the bad actors. And if we really want to get to a point where the industry is moving in concert where we get to a point where consumers can fully trust these service providers, I think it's very important that we are as transparent as possible about what's happening.

Perseus Mlambo: And I think there's always been a disadvantage when you talk about the experiences in Africa because everybody just lumps Africa together. So as a result, less sophisticated investors would say, I don't want to invest in Africa because I went to a country A and I got hit by a bike, therefore everybody in Africa is gonna hit me with a bike. Whereas actually, when you talk about what's happening, the reality is that people actually feel confident in what they're doing and the strategies that they're pursuing and they come to actually realize that by sharing ideas, we could develop solutions that could benefit everybody else. So in our experience, and as we've kind of shown, just being transparent with consumers and being transparent with the stakeholders is ultimately the good thing to do in the end.

Justin Norman: Yeah, and I think that there's also a challenge around the power dynamics between investors and founders and this challenge of just sharing bad news with investors. So can you say a little bit more about that experience of having to tell investors, this is what's happening, this is the fraud, and the chargeback fraud that we're experiencing, and we're thinking about pivoting. What was that experience like and what was the sort of response or reactivity from your investors when you were having those conversations? 'Cause it's also something that it sounds like you've done a couple of times before, right? You've made some pivots as well. So I don't know if you felt well-versed in those sorts of conversations or if this was different too.

Perseus Mlambo: I wouldn't say it gets easier, right? The longer you've been around, the difficult it becomes just because the gravity of the news is just very different in each case. When we spoke with some of our investors about what was happening with the chargeback fraud, it was, I would say, varied experience. So the much more major investors were a little bit shocked about what was happening, but when we started to explain and to actually show some of the things that we were finding out, they actually came to a point that there was no alternative but to stop the business. And we stopped the business, the API just because we had what I would say a fiduciary duty to the rest of our shareholders. We just raised a seed extension. We could either spend that extension paying for MasterCard fees, paying for chargeback fraud, or we could stop the business, stop making revenue, but still have enough operating capital to be able to do any other idea.

Perseus Mlambo: So a thousand lifetimes would always choose that decision again. But then there were much other investors who were very attracted to the idea of a card issuing business, which is scalable, can be sold for like billions and billions of dollars in the next six months and they didn't want to take that long-term view about actually this is not a good business to be in. Maybe it is for other markets or other parts of the world, but where we are in this point in time, it's not a good business for us. So people were like eh, maybe you can just continue going and you continue negotiating with the card schemes and you just try to kick out the bad FinTechs. People trying to make compromises versus actually dealing with the root issue just because they as investors had chosen a field to invest in and that maybe was specifically B2B solutions to help people have access to Visa or to MasterCard solutions.

Perseus Mlambo: So the thought of us pivoting was a bit scary because they didn't know how we would fit in as part of their portfolio going forward. But at the end of the day... And I've spoken to a lot of founders who are in the same boat. At the end of the day, if you are the CEO, you are the person who's spoken to all of these investors and you are the person who's employing all of these people and you're the person who's responsible to all of these customers, then you have to do what's right by the company. And that company is made up of very different elements whose interest might change over time. So the quicker that you do it, the better. If you just continue to wait on it and think, oh, maybe they'll change their mind and they'll come around, they won't. And it's nothing to do with you. It's just because they've got other thoughts that you're not aware of.

Justin Norman: No, I imagine that from an investor perspective, it's a challenge to say, well, I invested in this card issuing API and that's what I'm interested in and if I wanted to invest in a social commerce app, I would've invested in a social commerce app. But was there ever any other alternative paths or conversations? I think sometimes you hear about people even like shutting down companies and returning the money. Like as then you decided to close down the card issuing API and then move to pivoting to a new product. Was there a range of paths that you were talking to your investors or some investors like, "I just want my money back"? Or what did that process look like?

Perseus Mlambo: It was mixed. The bigger investors were kind of like looking at it and saying either this thing is gonna go to zero, or if it does well with the new strategy, we make money. And there were... Some smaller investors were like, "I know I'm done with Africa, I'm done with Perseus, I'm done with like FinTech. I just want my money back." And at the end of the day, I think when we were speaking to some of our advisors who've been through the same thing, I think if you feel like you've still got the fight in you, then you should continue, right? Because at the end of the day, people, when they're investing in companies, they're doing so maybe because of the product, they're doing so because of the market opportunity, but the only thing that makes all of this work is the people that you've put together. In our case, we had and we have a very good team and we were like feeling very upset, feeling very robbed about what's happened and we were like, there's no way in hell we're gonna stop the company altogether because we still think A, the fundamentals are still there.

Perseus Mlambo: There's still a fat ton of people in Africa who need what we're building, we still have a lot of money in the bank and we know that we can get to a point where we're making as much money or equal to the same amount of money we're making at the apex of Union54. And that's the challenge, because when you go through something that difficult or that painful, you have to ask yourself, do I really want to go again? If you still think that there is a chance in you somewhere else of hitting out the pike, then you should do that. You owe it to everybody around you, your employees, even your investors. When we went through the same thing, there were a lot of conversations that were happening. There was a group of investors who's got experience in maybe M&A and they were thinking, okay, Union54 has raised a lot of money and they don't necessarily have an active product right now and I've got a portfolio company who's run out of money and that portfolio company has some product market fit. So two plus two, can it be five? So they introduce portfolio companies and you're like, yeah, I'm not really interested in buying a company which is selling chairs. This is not... I'm not interested in growing through M&A without an active product.

Perseus Mlambo: So you have to go back to those investors and just say, I think it's a good idea, but this is not the right time. And some investors are thinking, okay, maybe I can get some money back here. But then you look and you speak with the rest of the investors. If you've got like the support of the major investors and 80% of the cap table, then I think you have to do right by the majority. So in our case, it's kind of like a difficult set of conversations, which happened maybe all together at the same time. And once you resolve that, then you've got the support of everybody to be able to do and do bigger and wonderful things.

Justin Norman: I just think that you must be a resilient or maybe even borderline crazy guy to say after that, I'm ready to keep going and figure out something next. But I suppose you said before conviction in the team and in the sort of scope of opportunities. And I also think it should be said. This is not a uniquely African problem or a problem that's unique to the African region. There's tons of examples. The one that comes to mind obviously is Slack. Slack was like a video game and they were going to return the investors money. And then they said, well, we built this internal tool that might have some interest as an external tool and the rest is history. So you never know. And it's not just... These things happen in every ecosystem, not just here. I think that that's an important thing to be said as well.

Perseus Mlambo: But you have to be willing to fight for it. I think if you just capitulate at the first sign of trouble, then the market founders who are in Europe, they don't have to worry about the devaluation of the local currency, they don't have to worry about being on a call and then electricity goes off, they don't have to worry about somebody being stuck in transport. There's so many things that you have to go through as a founder in Africa. And the reality is our investors, they understand all of these things, but not to the same extent that we do. And I think it's our responsibilities as founders to be able to walk through that acceptance criteria to say, we had issued all of these cards with Union54 but we were doing so B2B, but right now, we can't necessarily go B2B because it attracts a lot of trouble and we still think that there's a universe in which we can actually issue the same amount of cards but that strategy have to be adjusted a little bit. So versus trusting another FinTech to do KYC for the ultimate cardholders, we're going to take on that responsibility. We're going to be responsible for the marketing. Is it extra work? Yes, it is. But at the end of the day, we've got the capital and we've got the relationships which can enable us to be able to scale in all of these different countries. And when you look at it in that lens, some things have changed, but the base product is still the same.

Justin Norman: This season of The Flip is all about sharing lessons and insights from some of the most experienced and esteemed founders from across the African tech ecosystem. And it's a mission for which we're proud to partner with Norrsken22 to share wisdom and insights from the fund's unicorn board as well. We know that advisors and mentorship are an important part of the venture funding process. And throughout this season, we are speaking to and learning from the successful founders, operators, and investors from Norrsken22's unicorn board.

Justin Norman: In today's episode, we're joined by Chinedu Echeruo, founder of a startup studio called the beloved ecosystem and formerly the founder and ceo of Hopstop, which he sold to Apple in 2013. 

Chinedu Echeruo: I think the hearts and almost the biggest challenge of anyone who's focused on early stage product development is really figuring out that human pain to find an articulation of a consumer pain point. You can't create it. It's either there or not. And so I think that's one of the biggest lessons, is really the brutal truth, honesty of really where is that high needs customer who's ready to act. And once you find that, then everything flows. And if you don't find that, everything is hard. The African opportunity is to really ground solutions in the human pain points. Not in an abstraction of some SaaS service, but really what is driving human action. What technology actually does from a human perspective is to help us get to our dreams, make our story come true and the thing that's between where we want to be and where we are now is the same thing which is complexity. Once you think of human problems as complexity, then now we can frame what technology does. And what technology does is slay the complexity monster. So I think of technology as the tool. We all have to slay the thing that's in between us and what we want in our lives. So that's my poetic way of saying it, but obviously there's some physics and math around it. So you can frame what I just said as entropy reduction around a complex system is what technology ideally would do.

Justin Norman: So tell me about ChitChat. You guys just announced earlier this month July that you're launching a social commerce platform in partnership with MasterCard. I read secure messaging paired with dollar-based virtual cards. So I think some people are comparing it to WeChat. Can you just tell me a little bit about what you're building now as ChitChat?

Perseus Mlambo: Yeah. So after our experience building Union54, we issued over 2 million debit cards to as many people across the entire continent of Africa. And when we started speaking to those customers to just get research, one thing kept coming up. People were using very different services to be able to do trade or to earn money or to sell their products or services. And when we started looking deeply into how we can offer a service like that, it just became clear that we needed to have a chat interface. So this is where the messaging comes through. And looking at some of our customers where they might not have the ability to have a Squarespace website or the ability to have a Shopify integration because Shopify is not available in the region, the idea of ChitChat just basically came alive and its sole purpose is to help people like you and me to list their products and services so that people near their communities, people further away from them can purchase directly from them without necessarily asking people to download an SDK or to do an integration into an API just because they've got various levels of technical literacy. So ChitChat at its base level is a chat interface which allows people to have a physical debit card in local currency.

Perseus Mlambo: So if I'm in Zambia, I'll have a Zambian kwacha debit card, but with also the ability to have a US dollar virtual card. So if I want to buy bread, I use my ChitChat physical card. If I want to buy stocks on Amazon or on Alibaba, I use my USD virtual card. And that way I'm not losing much money when the currencies are being converted.

Justin Norman: And today, a lot of commerce looks like messaging on WhatsApp and then the payments not being integrated or fragmented or maybe being cash based. So it sounds like that integrated payments layer is an important part of what you're building.

Perseus Mlambo: Yeah. So the experience right now is not very great. Like if I'm selling hair materials, if I'm selling shoes, I get a customer on IG, I get a customer on WhatsApp, I get a customer on Facebook Marketplace, I get a customer who's walking into my house or walking into my shop. And if somebody is coming online on IG, on WhatsApp, they have to ask me if I'm in Kenya, can I M-Pesa you? If I'm in Zambia, can I Airtel you? Can I Zazu you? So it's just a very different experience where you end up with like six, seven different tools and you end up losing track of what's actually left in the inventory. How much money am I actually paying to all of these different financial service providers? And more importantly, you're not spending so much time engaging with your customers because you're having to manage all of these different channels. So the idea of ChitChat is that, look, everybody's familiar with WhatsApp, they're familiar with what WeChat does or Telegram, so they already have a chat interface they can use. We just want to go a step further to allow small businesses to allow creatives to be able to list their available times, their pricing, and just really communicate better and engage much more personally with their customers.

Justin Norman: What other lessons have you learned? I read that there was a maybe unique cap table structure with ChitChat and that was a function of a lesson you learned with Union54. So can you talk a little bit about that and any other lessons that you've learned from the chargeback fraud and/or previous pivot experiences that you think leave you better equipped as you launch this new product?

Perseus Mlambo: When we were going through the Union54 experience, I think it was quite clear that in some of the markets that we didn't always have the best understanding or awareness of the operating realities. And that's true for a lot of businesses where you're kind of servicing people over the internet. And what we want to do with ChitChat is to identify partners in each market who can help us to be able to accept deposits or partners who can help us to distribute debit cards or partners who can help us to sell airtime or other value-added services in the app. I can do that using internet-based research but the best people who I'm going to find to do that with me are people who live in those markets, people who've already been regulated and people who understand what the vision of the product is. So I can go to them and say, hey, look, we've got experience with Union54. We know what scale looks like and this is what ChitChat is supposed to do and we want you to come on board. You've got two options. Either you come on board and you've got minority rights in that market. So if I partner with you in South Africa, you would end up having a joint venture agreement with us where you've got 40% of the company. So you know that on every dollar that we make, you are making 40%. Or you can just say, I'm going to help you to do this, but I just want you to pay me on a transaction basis.

Perseus Mlambo: And either way, that's fine. What I really hope that we can do well is by having this unique ownership structure, we can actually allow founders in those markets who might not have a chance to maybe go through Y Combinator or to speak to other VCs around the world and actually get the money that they need to invest in their business. So that when ChitChat works, it's not just the executive team that I work with who are making money, but it's those founders who are enabling that vital last mile distribution to happen. And I think that's maybe a function of the times, because when we raised, it was a very different environment in 2021. Right now, it's incredibly difficult to be able to attract people to invest in a business anywhere around the world, let alone in smaller markets like maybe, let's say, Zambia, without the possibility of going to neighboring countries. I think people just look at the market and they say, maybe come back in 18 months. So what I want us to do with ChitChat is to be able to provide those scale opportunities using local infrastructure in such a way that everybody who's associated with the product sees value from it from day one.

Justin Norman: That's interesting. Where did you get that idea or what were the seeds of that idea that made you decide to approach that as opposed to, again, this like sort of centralized top-down mechanism that we've seen from expansion otherwise?

Perseus Mlambo: When you look in most African markets, like some of the oldest companies which have been around, in my experience, they tend to be like cooperatives because these cooperatives know each other. It's like a democratic institution. You've got the right to say something, I've got the right to say something as long as we're paid up members. And when you look at the last many years of FinTech in Africa, there hasn't been anything that has been able to scale across the continent because we're still limited by the reality that you've gotta have as many relationships with central banks or with regulators. And for you to be able to actually make it work and promise a big return to these foreign investors, the only way you can do that is by trying something new 'cause if everybody keeps raising $20 million, they're going to run out of steam after four markets and they won't be able to raise like $40 million to go the extra mile. But in this route that we're taking, that we're betting that with the little amount left that we have, we can gather up enough of a network to be able to actually deliver something that a lot of users in as many different countries can find useful. And when it's successful, it works for everybody, not just a few. And there's a few models like this.

Justin Norman: Can we zoom out a little bit? I want to take an ecosystem wide lens. And you talked a little bit before about the environment today is very different from the environment in 2021 in terms of funding availability. We hear about the market downturn and it's a more austere fundraising environment and I think we've seen some companies that are shutting down. I think there's certainly some companies that are zombies, that aren't going to be able to raise and are just on a sort of slow death path. And you talked about M&A before as well. I'm wondering if you have perspectives that you want to share, or maybe it's founders are coming to you looking for advice because you've been through the multiple pivot story before. But what sort of vibe are you getting from the ecosystem today and what sorts of conversations are you having with founders from your experiences?

Perseus Mlambo: That's a very good question. So over the last few months, we've been receiving a lot more decks from our mutual investors with other portfolio companies, people who are trying in the background to make deals happen because they can see what's coming and they know what's happening in some of these companies internally. And I think the most common thing is that founders are still working extremely hard behind the scenes to make it work. Some of the discussions that we've been having are people just trying to understand how do you go from idea A to idea B and how do you take along your investors? How do you communicate that to your customers? And more generally, how do you make sure that you don't die? Like what other funding sources are available? So people are kind of like helping each other in these scenes. And that's kind of again, you don't need to protect the ecosystem because the ecosystem will protect itself. So companies that are meant to do well, I think will eventually find a way and companies that maybe were like zero interface phenomenons will kind of just naturally go south.

Perseus Mlambo: And that's a really set outcome for most of companies, especially for most founders that you might have a relationship with. But at the end of the day, I think there's a lot of people who are trying extremely hard behind the scenes. And it's not all doom and gloom. There are still companies right now who are still raising. Like seed rounds are still happening, seed extensions are still happening. I think what it means is just founders have got a much tighter deadline to be able to actually show that this is a promising idea and this is how we're going to make money once we are up and running at scale. So for a lot of people, that's a really good constraint to have because it's no longer the times as it was before. So you have to think fast and you have to think quickly and make it work.

Justin Norman: Yeah. And I also think that the benefit of the ecosystem evolving in this way, at least in my opinion, and I know I think you'll share the same opinion just considering your transparency and willing to share, is the lessons learned, right? And hopefully a lot of founders are learning a lot of valuable lessons. Hard-won lessons, I think, will benefit the ecosystem and it's inevitable that that's how it grows.

Perseus Mlambo: Absolutely. You end up with ex-founders who are willing to join another company because they know what the good times look like and they could actually advise you on avoiding the bad times. So there is positives and negatives, but obviously the positives is that a lot more people become aware of what a startup could look like if it goes well. A lot more people come with experience of having run some of these companies which died prematurely and then make the ecosystem as a whole healthier as a result.

Justin Norman: So what's your vision that you're building towards? I think the particulars of the vision it sounds like have changed a little bit with the different products and services that you've launched over the past seven to eight years, but something is keeping you going. We talked a little bit about maybe the scope of the opportunity in Africa, but what sort of vision are you building towards and what do you want to see as a result of all of this effort that you and others in the ecosystem are putting in?

Perseus Mlambo: Despite our many pivots, I think one thing has always remained constant. We've got opportunities to, you know what, say Africa is not working. Let's just do one and go try to build in Europe. Or we've got opportunities. Let's just go to do them in Latin America. The only constant which has always been there is that we're building digital services or digital tools for a much better Africa. Initially, it was building tools to be able to allow consumers to participate without prejudice on the internet. So just giving you a US dollar card, that means you protect whatever income you have from negative forces of devaluation.

Perseus Mlambo: And through that experience and actually speaking to the users like, "Why did you ever have a Union54 card through this FinTech?" People are like, "I've got a side hustle. I buy trainers from China and I sell them here." Or, "I'm a gardener and I operate in these hours." And I think for us right now, it's just trying to build those tools so that as many people as possible can have access to a better earning opportunity. So if you've got ChitChat, you can chat to your customers directly, you can chat to your friends and family, you can list your operating hours, you can get paid through the interface and you can use the cards to be able to buy things on the internet without the hassle of going to a bank who might not like you because you don't qualify for certain criteria. And I think that's a really incredibly powerful set of tools if we're able to pull it off.

Justin Norman: The particulars of the vision may have evolved over time, but the vision for you remains pretty much the same.

Perseus Mlambo: It's giving Africa the tools it needs, homegrown solutions.

Justin Norman: I kind of like to ask purposely broad questions at the end is is there anything else that you've been thinking about as you're going through this journey and pivot and building the new product? What have you been thinking about? Or is there anything that you think is worth sharing that we haven't yet talked about?

Perseus Mlambo: I think if you look at the evolution of this ecosystem, "over the last few years", it's been like a wonderful thing to witness and that's only possible because people are willing to take risks. They're willing to take risks because there's more money in the markets, or maybe there was, but they're also doing it because they're listening and they're reading about people's failures and people's successes. So I think as people who've got some influence, it doesn't have to be a lot. As long as you've got like three or four customers and if you're learning things, the more that you share those learnings, the more that you actually help other people who are considering taking on this journey as founders, the more that you just remove that fear in people. So I think people should jump on more podcasts a lot more, they should talk about the realities of running a business, they should just be really honest like you know what, some days it's fucking hard, but some days it's amazing. Like it's really amazing. You wouldn't change it for the world. And you want to keep going and keep going. As long as you figure out a way not to die, you know that you're going to win.