Justin was so fortunate to be paid a visit by Rebecca in Johannesburg, where they sat down for a conversation on how to best help entrepreneurs in the ecosystem, her views on doing business in Francophone Africa, her journey as an entrepreneur as the founder and CEO of AppsTech, and about how one particular telecom owes them a lot of money and caused her to miss out on a multi-million dollar exit opportunity.
Rebecca [00:12]: We all want to show how much we suffered to start our business. It’s not a requirement to be a successful entrepreneur is to really suffer the way our entrepreneurs suffer. So if there’s anything that I can do to ease the way so that they can be bigger and at scale, because that’s one thing is that , we don’t want a few examples of success. We want thousands of successful tech entrepreneurs on the continent.
Justin [00:46]: That’s Rebecca Enonchong – who many of you may know as Africa techie on twitter – one the utmost evangelists and builders of the African tech ecosystem. This episode of The Flip is a special episode. As we work on our regular, editorial-style episodes for season two, which is coming soon, we’re excited to share our full-length interview with Rebecca. I was so fortunate to be paid a visit by Rebecca in Johannesburg, where we sat down to discuss how to best help entrepreneurs in the ecosystem, her views on doing business in Francophone Africa,her journey as an entrepreneur as the founder and CEO of AppsTech, and a story about how one particular telecom owes them a lot of money and caused her to miss out on a multi-million dollar exit opportunity.
While many of you know her from twitter, or as an entrepreneur at AppsTech, Rebecca is also the Board Chair of AfriLabs, a co-founder of the Africa Business Angels Network, also known as ABAN, the Cameroon Angels Network, as well as the tech hubs ActivSpaces in Cameroon and I/O Spaces in the Washington DC area. She does a lot – and that’s exactly where we started our conversation.
So without any further ado, Africa Techie, Rebecca Enonchong.
VO [02:02]: You’re listening to The Flip, the podcast exploring more contextually relevant stories from entrepreneurs around Africa.
Justin [02:11]: Can you just start by introducing yourself? I think you probably need no introduction, but who you are, what you do.
Rebecca [02:17]: You know what? It’s funny because I do feel like I do need introduction because people know me as somebody that’s on Twitter talking about tech. Some people know about AfriLabs. I’m board chair for the last three years. Some people know about ActivSpaces, about Cameroon Angels Network, about ABAN, but few people really realize that I’m an entrepreneur first, you know, and I’ve built a business and I’m 20 years in and so I’ve done this.
Justin [02:48]: Yeah. So I hate the question. What do you do?
Rebecca [02:50]: Yeah.
Justin [02:51]: Do you feel the same way?
Rebecca [02:52]: Yeah, yeah. I do a lot of different things that are all interlaced and interconnected, but they’re very different hats. You know, sometimes I’ll walk into a meeting and I’m CEO of AppsTech or of I/O Spaces, or I’m board chair of AfriLabs, or I’m there for ABAN or, so, I have so many different hats that, yeah, like I don’t have a business card because I don’t know what to put on it anymore.
Justin [03:21]: It’s bad for the environment.
Rebecca [03:23]: There you go. I’m easily found on social media.
Justin [03:27]: I think a first question just in light of this is how do you manage all of that stuff at once?
Rebecca [03:33]: Oh, I have a lot of people that help me manage. So each of the organizations is run by various people who are amazing, talented people that make me look really, really good cause I can go run my mouth and then promise things and they’ll execute. And, I have people that help me with my scheduling and so I’m very, very well surrounded, and I have been for many years. I have some people that have been working for me for 20 years since day one. And so, I don’t have to say anything, they know what they have to do. And, that allows me a lot of freedom.
Justin [04:08]: Yeah, I’m learning that in my view, that real definition of leadership is being able to surround yourself with the people who can buy into a vision and can help you do way more than just one individual could do.And I say that with envy because I’m a one man show on this podcast who’s doing literally everything. And I need to learn how to be a leader.
Rebecca [04:26]: 20 years ago I didn’t have, well, yeah, maybe 25 years ago I was really on my own.
Justin [04:32]: So in the context of African entrepreneurship, you’re really an evangelist, but it’s more than just talking. I’d like to talk about ways in which entrepreneurs ought to be supported and your view, and then how you’ve participated in actually supporting them through AfriLabs and ABAN and so on.
Rebecca [04:47]: So I think what entrepreneurs need most, everybody’s going talk about funding, but it’s a plan. And how do you put that plan together? What are the components of that plan? You know, you can call it whatever you want, business model canvas, how do you put that together to be a successful business? I think that’s what we all need as entrepreneurs, and so how do we provide that to the entrepreneurs? And some of it, yeah, it is funding, but before the funding, what is getting funded? What is it that you’re trying to do? Who’s your customer? How do you identify that customer? How do you make that customer buy your product? How do you complete your product?
Justin [05:30]: And I imagine that the markets in which we’re dealing, the complexity of the problems, the regulatory environments, the expansion questions, market size, all of that. Funding scarcity. I mean, it makes answering those questions especially difficult in this environment.
Rebecca [05:44]: Yeah, I always say that, you know, to be an entrepreneur, you have to be crazy. Anywhere. But to be an entrepreneur in Africa, you have to be raving mad because no one in their right mind knowing all the challenges that are before us – yeah opportunity – but the challenges are enormous. And there are challenges that you can’t even describe. Like when I travel around and there’s like, Oh, what is it like to do business in Africa? We’ve had no power for two days, you know, or, our internet got cut. Those types of conversations are just beyond what people would imagine. So imagine that you have all the same challenges as entrepreneurs in the rest of the world, and then you have the added environmental challenges and it just makes it so difficult.
Justin [06:37]: And yet there’s plenty of entrepreneurs still doing amazing things.
Rebecca [06:39]: Yeah. Because it’s, it is rewarding,, and I think there is so much possibility, that we need to encourage it and try to make it not so hard for entrepreneurs to succeed. I know it’s like the whole, I slept on a couch for, which I did actually, I was couch surfing for two years. We all want to show how much we suffered to start our business. It’s not a requirement to be a successful entrepreneur is to really suffer the way our entrepreneurs suffer. So if there’s anything that I can do to ease the way so that they can be bigger and at scale, because that’s one thing is that, we don’t want a few examples of success. We want thousands of successful tech entrepreneurs on the continent. And in order to reach that scale, you have to use a more methodical approach. So you have to see how you can work through the hubs that are already supporting the entrepreneurs, really scale early stage investment. How do you do that? Because we need to start talking about not just scaling individual businesses, but scaling the ecosystem. And that means that it has to be a much more concerted effort.
Justin [07:57]: One thing that I’m super interested in when you talk about when you use the word scale, I think there’s one conversation to be had about enabling the environment where people are succeeding already and then the other is lifting the bottom up. And there’s 54 countries but we talk about three four, five, six markets mostly. So in that vein can we talk a little bit about the rest of Africa? How is AfriLabs, how is the work you’re doing with Cameroon Angels enabling the vision of creating these things at scale, and the ecosystem being more than just a few major markets?
Rebecca [08:27]: So one of the things that I noticed traveling around the continent is that there are a lot of stories that we’re not hearing about. Not just Francophone Africa but a country like Ethiopia is doing amazing things. They have their Uber nobody knows about it and it’s a woman created business, most of the team is women and everybody uses Ride. Nobody talks about this, because I think that they’ve built so many local solutions. Because it’s an even more difficult environment their internet access is just really difficult and I think that through language, through history they’re a little bit more independent and not necessarily connected to the rest of the ecosystem the way we would like to see. There’s a lot of things happening in Ethiopia that we’re not talking about and we’re not seeing.
Francophone Africa is a little bit different. I think part of the problem is that the business environment is even harder and even more difficult than in a country like Nigeria because we talk about the regulatory environment being difficult in Nigeria – it’s just as difficult in Francophone Africa. The advantage Francophone Africa has is that it shares a common business law and common accounting practice across all of the what we call OHADA. It’s a zone in which all the business laws are identical and all the accounting systems are identical, which is an advantage. And of course the currency in many of those countries is also the same. So once you’ve figured out how it works in one place then it’s very easy to scale across the other countries in the Francophone zone. So I think that it’s harder to get in and to start because nothing makes business sense. And I think there are a lot of startups that want to scale into Francophone Africa that make a lot of mistakes doing so. I know because I was one of them. So you kind of have your list of the things that you have to do when you’re opening into a new market and you kind of go check check check check check. The thing is, is that there are a whole bunch of other checkmarks on the Francophone side. For instance, in most English speaking countries you would go to a lawyer. In Francophone Africa you go to somebody called a notaire. There are lawyers that will take your money, but that’s not their role. The lawyers in most of those countries are more litigators. And again, they’ll take your money but then you’ll find out that you still have to end up going to a notaire to set up your business. And the notaire is actually a government official. They’re independent but they’re appointed by and they’re part of the Ministry of Justice in those countries, which is a really unusual setup. The fees are set by the government even though, as I said, they’re independent. And so those are things that you would never imagine because it just doesn’t happen that way. And then the way businesses are taxed is also very different. Now you have some countries like Senegal or Mali that are really trying to work hard to improve the environment for small businesses, including startups, but still just the whole way they think. Imagine trying to open a business in France. It’s not an easy place. How many multinationals have their European headquarters in France? Almost none, because it’s so bureaucratic. That culture, that bureaucratic culture ,that paperwork culture has really been entrenched. And that’s something that we suffer from a lot in Francophone Africa. They’ll say okay you can go online – in Cameroon and we can go online to create a company, but to go online to create that company you need all these documents to upload. And each of those documents is like a headache to obtain. For instance, in order to get a business license they’ll say okay your business license is free for your first three years. Fine. But then to get that business license you have to get a certificate to show where you are where your office is, and you get that from the tax office. And in order to get that certificate you have to bring a lease. And in order for the lease to be valid it needs to be registered. So here you are, you’ve made no money, you’re maybe working in a co-working space, or out of a hub, you’re paying no rent. You can’t get a business license.
Justin [13:00]: So a co-working space doesn’t count towards a business license?
Rebecca [13:03]: No it does not. So you actually have to get the co-working space to give you a proper lease, but then you pay a tax on that. In Cameroon it’s 10% of the value of the lease. So if you found a small space and you got a cheap rent and you’ve signed for five years you’re going to pay 10% of the value of the five years, and you pay that upfront. And again, you haven’t even started your company yet and nobody has thought that this is a bad thing. So all contracts need to be registered with the tax people. Let’s say you sign a contract with a big multinational. Wow, you’re so excited. Or with government, God forbid. Before the contract is valid and so you can bill and start collecting on it you have to register it, and so you’re paying upfront to register, and it’s 2% to 5% of the value of the contract. There’s so many of these things that like, what tax book or what invest in our country book o they tell you about all this? So you don’t know. The salaries are also much higher because of the exchange rate between the CFA Franc and the Euro. Since it’s tied, you’ll find that the salary levels are a lot higher, but you can also charge a lot more for your product. So those people that want to go in and then they’re like “Oh my God the salaries are crazy”. And then they’re trying to bill the same as they were billing in Kenya. And you can’t do that because the cost basis is very different.
Justin [14:35]: In spite of that though now you’ve set up an angel network in one of these absurdly complex places. So what was that experience like and what is that conversation with HNIs like? And what is the response? Are people saying “yes, absolutely” or are they saying “why on earth would I do that based on all the complications”?
Rebecca [14:54]: Well I think that we’ve had angel investors for forever, they just don’t know that they’re angel investors. And I think part of what we’ve tried to do is say “hey, you are angel investing. That money that you put into your nephew’s business, that’s angel investing”. I think for a long time we worked on giving entrepreneurs the tools to negotiate. So they know about term sheets, they know about valuation, but the investors didn’t have that. And I think through ABAN, so the African Business Angels Network, one of the purposes, one of the goals of the organization is really not just to promote angel investment but to help train, do masterclasses and bootcamps, and really help people that are already investing get better skilled at it. But in Cameroon, and we’ve seen this across the continent, you’re not really looking at the same type of investor as in Silicon Valley. So you’re not really looking at the high net worth individual, the HNI in the same way. Executives at multinational companies are the ones that are more likely to invest. They’re generally under 40 or under 50, and have a career somewhere. A few are entrepreneurs or have been entrepreneurs but most of them work for multinational companies and so they have some extra money but they don’t put in $50,000 or $100,000 tickets. So it’s very limiting. They can’t have a proper portfolio and I think that success once we as angel investors start making money from angel investment, then the high net worth individuals will say “hey maybe there’s something to that”. But until we start really making money it’s going to be really hard to convince. We’ve tried. I mean even in Nigeria Tomi Davies and his whole, they’ve tried so hard to talk to the billionaires and they’re just not interested. They see entrepreneurship more as a charity, something charitable to do versus I need to this innovation in order for my business to succeed beyond the way we’re doing things together to be more competitive. So how can I invest in the future? So they’re seeing it as a cost, as a charity, and not as necessary. That will change, I think, with time.
Justin [17:24]: It’s interesting that you mentioned what success looks like, and I think that that’s important too, this notion of success isn’t necessarily where funding unicorns. And it’s just having the expectations and the right measurement models what success looks like in this environment and at this stage.
Rebecca [17:41]: Yeah, and I think there’s been a lot of discussion about African unicorns and how many are going to achieve that. And should we talk about gazelles and not unicorns and zebras. You know, it doesn’t really matter. I think what we want are lots and lots and lots of numbers. Versus for me, it’s more important to have many, many, many, many of them, even if they are at $50 million. I mean, that’s enormous for our environment. The jobs that are created, the wealth that’s created with a $50 million company is amazing. Maybe we won’t get the 100 million or the 200 million or 1 billion, or maybe we’ll see them and there’ll be exceptional. But my goal is to see lots and lots and lots of between $10 – 15 million. To me that does look like success.
Justin [18:32]: Yeah, I agree. And, maybe, the last thing on Francophone Africa. How do you capture the opportunity and better enable the environment? How do you stimulate or better catalyze opportunities that exist?
Rebecca [18:43]: So because we’re all involved i4policy framework, which was put together by the hubs, which is, this is what we want to see in our regulation. You know, the startup act that was just passed in Senegal is based on the i4policy policy framework. A lot of Francophone hubs are very, very involved in the policy discussion. And so I think that the outcome is representative of what the Francophone countries need. But I think a lot of Francophones don’t understand how much easier it is elsewhere, because they haven’t done both. You know, you have a few people that have done both, and they’re like, “why? Why are we going through this?” You know? But there’s a lot of collaboration between the hubs in Francophone Africa. A lot of collaboration.
Justin [19:35]: My general feeling is that these types of businesses given just how tight they run their ship and how they focus on revenues, know how to sell B2B. I mean, they’re going to be well positioned should the environment become more enabling for them in the future.
Rebecca [19:50]: I believe so. I really believe so. And there is an opportunity. I think there’s a study that says that in the CFA zone people don’t take advantage of cross country trade. Only 11% of trade is done between those countries, but that is something that tech can completely change. I think people are starting to understand that, wow, we can do some cross border stuff and we’re within the same currency. There’s so many disadvantages to the CFA. I’m an anti-CFA advocate, like I am so against that currency because it’s controlled by France. Anything that we can do to get France out, and they’re starting to ease out. Not as fast as some of us would like, but we’ve already seen that the West African countries have decided that they’re not gonna store their reserves in the French Central Bank anymore and that France won’t be an active member of the operational, which is the case right now. So at least they’re on a trajectory towards some level of independence. But I hope that the common currency remains. And then there’s the conversation around the ECOWAS, West African currency which is West Africa, Francophone and Anglophone, sharing a common currency. They’ve been talking about it for 20 years. It would be great if it happened.
Justin [21:12]: Think about how many startups are just focused on remittances because that’s such a hassle.
Rebecca [21:16]: yeah. So one of the benefits of the Francophone area is that you’re dealing with two central banks. So if you get regulatory approval for those two, you really have that whole entire zone covered, and that’s a huge benefit. Also from a legal standpoint, our legal environments are so difficult, right? Getting a contract enforced in most of those countries, we’re at the bottom of the World Bank doing business. But we have a common final court. So business disputes end up in Abidjan, and people don’t realize that. I really encourage anybody that’s interested in doing business in the Francophone area, get somebody that’s an expert on OHADA and the CFA to accompany you, and it won’t be a lawyer. It’ll probably be a consulting firm. And then when you actually have to go register, you’re going to go to a notaire.
Justin [22:10]: So I’d like to go back to the journey you’ve been on as an entrepreneur, when you built a business in the US, you expanded it globally and how it informs the work that you’re doing now as an advocate on behalf of he African tech ecosystem. So can you take us back to the beginning?
Rebecca [22:26]: Yeah. So interestingly, I’ve always been an advocate for tech entrepreneurship in Africa. Like even before I was a tech entrepreneur in Africa, I was an African, I was an entrepreneur, and saw the opportunity that tech could give us to develop the continent. I was looking at the Indian population and how their diaspora was so involved in developing the whole tech industry in India. I’m like, why can’t we do that? We’re more educated. So Africans are the highest educated members of the diaspora in the US, which people never understand and don’t realize. We actually, with the help of some Indian entrepreneurs that had an organization, one of them really was instrumental in helping us when we created something called the Africa Technology Forum, which was the first pro-tech organization. I think it was early 2001 that we created this organization with other African diaspora entrepreneurs. I started my company in the US in 99. I came from corps, Oracle. I had been traveling around for them and kind of just wanted to be on my own. And one of my friends said, you know, If you set up yourself as a company, you can bill more than if you do it as an independent. So I really first wanted to do consulting, So I did, I went and created a company and I was able to download. You know, that’s how easy it is in the US and this is 1999, so this is pre a lot of apps and doing everything online. But I was able to download the incorporation documents off the Maryland state website, filled it out by hand, went in, paid like $60 and came out with my incorporation documents. And so the first name of my company was FinTech, the Financial Technologies Group, because we wanted to do financial systems. And then a few months later when we grew, the name FinTech didn’t make sense anymore because we wanted to do other business systems that weren’t necessarily financial. And so AppsTech, was created, we started in 2000, early-2000, we became AppsTech. Application Technologies. And by 2001 we were in five countries. By 2003 we had seven offices on three continents, we had over 27 different countries.
Justin [24:47]: And who were your customers?
Rebecca [24:49]: Multinationals. You know what? Early I talked about plans. So I actually sat down and did a business plan. And I didn’t do it for any investor. I did it because I wanted to know where I was going. I wanted to have a plan. And I sat down and I realized that the people that paid the most for what I had to offer were multinationals. And so I had to be a multinational from day one. Because how do you sell to a global company is by being global. And so I started globally from day one, in my brain. Like, I wasn’t physically global, but this is again, back in 1999 all the systems that I purchased to use had to be available online. Now we call them SaaS. Back then I was using NetSuite, we were one of the first to use Salesforce. So all the tools had to be available globally. And every single person that I hired had to have lived or worked overseas and speak more than one language. I just wanted people that were open-minded. And maybe they weren’t expert at how business works in Mexico, but they knew that it would be different. I think that’s what made us so unusual. And I think one of the reasons we grew so fast is because we went on a subscription model, which nobody did in services. And so most of our revenue was recurring revenue. I would say over 75% of all our revenue was long term support contracts. And because I don’t like bureaucracy, the first contracts where you’re like, you’re going back and forth and they want to see this person’s resume and that person’s resume, and then they look at the names on the resume and they can’t pronounce the names because most of my staff was African. And this is something that I had to do. How do you hide the fact that you’re an African company even though you’re in the US? would say 85% of our staff was African, and you’re trying to sell to a French telecom. They’re never going to buy from you. Like, they’re never gonna buy from you. Right? Unless they’re buying from AppsTech. So what we did is we sold AppsTech. We focused a lot on branding the company, positioning it as a global company, hiring people in different countries, opening country offices, even though we may have just two people in that country, multi-lingual website. You know, those types of things were really important because the brand of the business was what we’re trying to sell. And then to avoid the going back and forth and looking at resumes and like, this person is I don’t even know what this university, you know, it’s like, are they really good at what they do? And so we ended up saying, oka we’ll sign a contract and we’ll guarantee that your systems are going to work. You choose, nine to five, seven to seven, 24/7. We’ll sign an SLA. And if the system goes out and you start charging us. Because I knew we were really, really good at what we did. But I didn’t want to have to justify my Africanness, you know? So that caught on because as much as I hate bureaucracy, it’s a lot easier for the procurement process from our customers. So our multinational customers that are dealing with another multinational, like a PWC or something, and the complexity of the new contract negotiations going back and rates and this person is that rate and that person is at rate. I’m like, “hey, you pay us $20,000 a month, we’ll get it working for you”. So I productized services and we just kept selling contracts and selling contracts and selling contracts, all over the world. And that helped us scale tremendously because the type of support that we provided requires very, very specialized people. And if you have one specialized person working on one contract, and I’ve had this discussion with Andela.I’m like, if you really want to scale – hide! Sell Andela, don’t sell people. Because you can’t scale people. It’s so hard to scale people, but that same expert that is really good with Oracle general ledger but doesn’t know crap about Oracle inventory then can work on several different customers at the same time. And the technical layer, that database administrators, for instance, can work on multiple databases and keep them up, but it requires such expertise that if you’re selling them to one person, one customer, then you can’t scale. But this really allowed us to scale. So our team size increased, but not nearly to the extent that our client base increased. And so we were running 24/7. We’d had a team in Paris that were running and then running in the U S and then running in Cameroon. And I would rotate people. I would pull people out of one country and then send them for a couple months to another country, just so they could get a sense, they could get to know each other not just through conference calls. Get a sense of the differences, like the French guys, they had lunch. Like they had like a real lunch. They had like two hours at lunch. And you know, it’s those types of things that the others, they just couldn’t imagine. It’s like, why are they not available during those hours of like? Because they’re at lunch. And then we had other companies copy our model.
Justin [30:20]: Yeah. And you mentioned just being an evangelist for African tech, but at what point did things start to formalize? At what point you move from just doing apps tech to then also some of additional work you’re doing?
Rebecca [30:32]: So right away, I started off second 99 and I started the Africa Tech Forum in 2000. Even though there were other co-founders to this organization, we were the main driver. So, the offices for the Africa Tech Forum were within our offices, we paid the salaries for the staff, most of the costs came from AppsTech. But it was right away. Which is interesting because I met a lot of other founders, including Marc Benioff from Salesforce, and he started in 99. And he was really shocked that I was a customer of his, cause I met him in 2001. He’s like, “are you serious?” I’m like, “yeah, I’ve been a customer.” But he also had that idea that you don’t have to wait until you’re profitable to start giving back. You can build it into the culture of the organization. Your company culture can be one of giving back. The idea of using staff to volunteer, to contribute to these organizations and to promote tech entrepreneurship and Africa. As I said, most of our stuff in the US was African. And so, that really helped reinforce this sense of we’re on a mission, you know, it’s not just a company, but we have something to prove. We can succeed in tech in the US, but we also want to make sure that our brothers and sisters back home are taking advantage of this tech opportunity.
Justin [31:56]: And were there benefits? You know, the notion of bringing up the tech ecosystem, given that you hired a lot of African people for your company, and you had offices in Cameroon was the benefit to Appstech, a driving factor in that as well? Or was that…
Rebecca [32:10]: I think it hurt us more. Yeah, I think I was very naive when I opened my Cameroon office. I believed the Kool Aid. All the evangelizing that I was doing and going around the world, saying how people needed to go invest in Africa, invest in tech in Africa.I did it late, late as in we opened our office in Cameroon in 2002, invested a lot of money, right? And it wasn’t a choice that some of my team was happy about. But I convinced them that Cameroon was not just, it’s not just because I was born and bred there, even though…
Justin [32:47]: You can understand that argument.
Rebecca [32:49]: Well, yeah. But because I thought that it was a gateway to both English speaking Africa and Francophone Africa. It was centrally located and the currency issue, the whole OHADA thing was just starting to be implemented in the zone. So there were a lot of reasons that, I thought justifiable reasons. And actually there’s a very interesting paper written by Columbia University students. They followed me around for almost six months, and they did their MBA thesis on me opening my Cameroon office. And when I read it, I sound really, really smart, right? Like I really sound like I know what I’m talking about. But the reality is, is that I had no clue. I had absolutely no clue. I had no clue what I was doing. I mean, it’s such a different place. It’s such a different place to do business. And one of the lessons that I learned, the most important lesson that I’ve learned in the difference between doing business in the US and doing business in Africa is a lesson that I actually learned just a few years ago. It’s a question of business trust. In the US you sign a contract, you do the work and they pay you. One of the issues that we had, we had, a large customer in Cameroon. So we went out of our model. Mistake number one. We did a project, which I did not like to do. We only did projects for support customers. So you subscribe and then you can buy hours of development. So we can create some reports for you, we can work around, but we were not going to come and implement. And we didn’t like doing those projects. It really wasn’t our model. There are lots of other people that could do it for you, we did not want to do that. But we did it because this customer wanted it that way, and it was a big customer and it was a significant contract and it was going to be our first large African contract And it was a multinational – I’m going to say their name. It’s MTN. And so, the promise was if this is successful, and then you can roll it out to all the other entities. That’s like a $50 million opportunity! And so we’re like, okay. We put a lot of money into it. We put our best resources into it. And, they didn’t pay. This is MTN Cameroon. And, so many lessons, right? So lesson number one, don’t go out of your model. Like if your model works, stick to it. And us trying to adopt it for the African market, we could have done it differently. We really made a mistake there. And I think that the other mistake, and I guess going back to the lesson I learned is that people expect you not to respect a contract. We’re still trying to collect, by the way. So, I remember taking the contract and the discussion to an official one day, and he’s like “why? Why didn’t you protect yourself?” I’m like, “we have a signed contract that was negotiated over seven months”. He’s like, “yeah, but that’s the contract”, and it was like, that’s so silly that you’d expect that a contract would be. If you look at how people do business on the continent, everything is prepaid. Everything is prepaid,
Justin [36:05]: Is that what you would’ve done differently? It was gotten payment upfront.
Rebecca [36:08]: Oh yeah. But we didn’t do business that way. You know, we didn’t expect, and this was not a government entity. Like I’m not doing business with government and so we really didn’t expect that. There were a lot of other challenges in that project beyond the fact that they didn’t pay us. That made our entry into doing business in Africa was almost like a reality check. It’s hard. The things that would come at us, that we didn’t have because we’d been shielded from that, right? Because we were shielded from our customer. We were shielded from being confronted with our race. And our national origin. We hadn’t had that problem. We never expected to have that problem on the African continent, and it was a huge problem. I think if we hadn’t been African, we would’ve gotten paid. So I think that, again, looking at business and saying, “okay, you have to do everything prepaid”. I don’t like having to do business that way. That’s not how I grew my company, through distrust. But that’s one thing you almost have to incorporate that into what the other person is like. You go into these, like one of us is going to screwed and it’s not going to be me. So your expectation is that somebody gets screwed in a transaction and that’s not… That’s what I want. If I have to change one thing, that’s what I want to change is that, “hey, you know what? It can be a win win”. We can both get something really great out of this, and there’s not enough of that. If we want to really develop our continent we’re going to have to build in trust.
Justin [37:43]: So, I want to talk a little bit more about, especially in your experience, on the opportunities to tap into the diaspora. I think just generally speaking, a lot more people are interested in coming back or just more intrigued than ever before in what’s happening here. So what’s your view on that? Especially balancing the skillset and the expertise that comes with building a business or working in a business in a place like the US and then needing to understand the realities, the dynamics of doing business in Cameroon or Nigeria.
Rebecca [38:15]: So one of the things that I’ve been able to do is, as I said, I co-founded a co-working space in the Washington DC area called I/O Spaces. And our main target market is the African diaspora. And so we have lots of African diaspora entrepreneurs that are working out of the space, but more so we have a lot of events that are around how to get involved on the continent or sharing our culture. The Made In Africa event, for instance, is a mix of conference and culinary experience and fashion shows, so that we can start to come together and organize as a diaspora. Because there are a lot of things happening. For instance, the Nigerians get together, the Cameroonians get together. But doing things as the African diaspora, we haven’t done much of. And I think this is one way that we’re contributing to that is through I/O Spaces. We’re seeing a lot of people interested in going home. Or investing back home. Part of Cameroon Angels Network, by the way, is in Silicon Valley. We have members that are in Silicon Valley that are also working for multinational tech companies, have been investing in Silicon Valley for years and now are using us, since we’re on the ground, to do the due diligence, to really look at opportunities. I think there are a lot of people that really want to invest, and so if we can create vehicles to allow more members of the diaspora to invest in qualified opportunities that have been vetted, we can transform the continent.
Justin [39:51]: And I’d have to imagine it’s happened at an increasing the larger amount and will continue.
Rebecca [39:57]: Yeah. But we haven’t built the structures to do that. the Cameroon Angels Network is a one-off thing. Wouldn’t it be great if all of the angel networks had their diaspora component? So in AfriLabs, for instance, we started admitting diaspora members. So I/O Spaces is a member, and also Afrobytes is a member. So we’re starting to admit diaspora members because we want the contributions of the diaspora and we want to create one community that includes the diaspora, their talents and their ideas, and the reality that we can share with them. Again, we really need to structure this if we’re going to scale. Stop doing one-offs and really start scaling.
Justin [40:42]: In terms of things that you want to see, you mentioned the business trust, you just mentioned building structures. Are there other things that excite you, trends, models, or mistakes that entrepreneurs are making? Or just general things that you want to see more of or less of?
Rebecca [40:59]: I’m often amazed at how little entrepreneurs know about the expectations of investors. Investment is not charity. I was surprised. I got the question a lot. What’s the difference between an angel investor and a venture capitalist? I was surprised that a lot of people didn’t know. So I think sometimes we think that the entrepreneurs know things that they don’t. The main difference is, angel investor, it’s my money, right? Venture capital, he or she has gone out and gotten money from other investors and has to show a return on that investment. So the angel advice, I’m like, so the money that I earned through my blood, sweat and tears, if you want it, you’re going to have to show me blood, sweat and tears.
Justin [41:48]: What are the implications of knowing that? Is it just better equipping entrepreneurs to have the right conversations?
Rebecca [41:53]: Yeah. Because we need to set expectations. It’s like, you have an idea and you want it funded. Nobody, I’m not going to fund an idea. I have ideas all the time. You really need to have a product, get it out there, and then start raising money. But, we’re not going to fund ideas no matter how nice your idea is.
Justin [42:11]: Yeah. To that point also just think, I know I’ve said this in a past episode that I dislike the general narrative around investment readiness.
Rebecca [42:17]: Yeah, I remember hearing that. Where you think that startup, you absolutely have to think about getting investment. I think the difference is when you need to scale, when you have a viable business, you have traction, but you really want to scale, then you’ll go for investment.
Justin [42:35]: Yeah. I think that’s an interesting segue into this $50 million exit opportunity story that you have. So I’m very curious to know what that is.
Rebecca [42:42]: Yes. I think I talked earlier when I was talking about how we had built and grown so fast at AppsTech. One of the other things that we did, this is in 2001, we built a subsidiary called Mobile AppsTech. And we were building mobile applications before there were smartphones. We actually won a prize with the Pennsylvania government, and they incubated us and gave us $20,000 to run that initiative. And we were doing a lot of innovation around facilitating business solutions for our customers. You know, this is before any of the companies like the Oracles built this in. We built it in for our customers. We were trying to automate business processes. And, we ran into some Nigerians that had built this platform, and it was amazing. And so we acquired them. And that became Mobile Appstech. And this is a period where data centers started getting popular but some data center companies needed more to attract customers. And one of them contacted us because they’re like, “we want our customers to host their enterprise software on our platforms but we don’t know the products. We know how to do that as centers. We just don’t know how Oracle functions”. And so we started discussions for them to acquire us. And we were going back and forth and doing valuations and some due diligence. And then the MTN thing. We weren’t getting paid, right. So I was like, I think this is also a woman thing. Because a guy, would have continued. For me, I wanted all my ducks in order. And looking back, it probably didn’t make a difference whether we collected that money or not, because it was not recurring money. It was just a bill that was owed. And so, I took my focus off of my US business and I was in Cameroon with internet that was very unreliable back then. And so I was not accessible. Like every day I thought that next week I’ll be going to collect. I spent two years in a hotel, because I was convinced that …
Justin [44:52]: Oh that’s what you were saying, how you didn’t mean to move.
Rebecca [44:54]: I didn’t mean to move. Yeah. I went with, I took a bag, like a suitcase with two weeks worth of clothes. For me, it was such a cut and dry thing. And we were willing to, like, maybe if they’re having cashflow, I don’t know. So I’ll just go meet the CEO, we’ll work out an arrangement. And then…
Justin [45:10]: Just out of interest, what was their justification for not?
Rebecca [45:13]: They could get away with it.
Justin [45:14]: It wasn’t you failed service delivery?
Rebecca [45:16]: No.
Justin [45:17]: They just said, “ok, what are you going to do about it?”
Rebecca [45:18]: Yeah. “What are you going to do to us?” So that is all happening while these guys, they’re trying to close the deal and I’m not responding I’m not responding I’m not responding. And I’m like “I’m just going to get this done, and then next week I’ll be back in the US and it’ll be fixed and dah dah dah dah”. You know? And the next thing I knew they ghosted me when I finally started giving back cause I was like this is dragging on. And I read in the press that they acquired a competitor that had basically Copied our model and they called themselves, it was just a few letters different from us. They had one tenth of our revenue. And they were acquired for $45 million.
Justin [46:03]: So the moral of the story to me is MTN Cameroon owes you money for the services plus interest and $50 million.
Rebecca [46:11]: That’s actually, we did, we had to go to court and so we sued them. We actually filed two different lawsuits and because we them before that ended we were still in discussions with this company that was later acquired by AT&T.
Justin [46:25]: So, they actually owe you more money.
Rebecca [46:27]: Yeah, so I think that they were in a rush because they were also positioning themselves to be sold to a larger entity. And so we actually sued MTN for A, the bill that wasn’t paid, the contract. And so we did it separately because of the OHADA business law there’s certain mechanisms for collection of contract, which is supposed to be fast. It’s supposed to be fast. They call it a simplified debt recovery method.
Justin [46:54]: So fast is, what, 20 years?
Rebecca [46:55]: Yeah, like 15. That’s 2004. And then we filed a separate lawsuit for damages because we were like Cameroon courts which I mistakenly allowed into the contract. So that was a last minute change because the contract had been negotiated as I said for seven months between our lawyers in the US, their lawyers in South Africa, eventually their lawyers in Cameroon and we’d settled on everything. And then when we got to signature the day I went to sign the contract they changed it right in front of me and I should have said no.
Justin [47:30]: Oh and so they wanted the adjudicating law to be Cameroon.
Rebecca [47:34]: Yeah. And then we signed with our Cameroon entity. It was our US entity that had bid for the project, cause our office in Cameroon was relatively new, we didn’t have that much staff there.
Justin [47:43]: So if the legal entity with South Africa or the US this would have been settled a long time ago,
Rebecca [47:47]: A long time ago. absolutely. Yeah, yeah, lessons learned.
Justin [47:50]: So don’t let anyone change a contract right in front of you That’s a moral of the story And if you have an exit opportunity, focus on that!
Rebecca [47:57]: Yeah, absolutely. And, you know, part of me of course regrets it because imagine how much money I could pour into the tech ecosystem in Africa if I had that cash. Because I didn’t have VC so it was one-hundred percent mine. But then I’m also saying that I wouldn’t have been able to understand the continent. Everything happens for a reason I think, and I never would have had the depth of understanding and the knowledge of what it’s really, really like to do this business on the continent.
Justin [48:27]: Maybe we can convince MTN to do a matching fund with ABAN in the amount equal to $50 million.
Rebecca [48:33]: Yeah, after I’ve collected! I’m like, “I’m going to go to my deathbed but I’m going to collect from you”.
Justin [48:38]: But then the 50 million we can use as a matching fund.
Rebecca [48:41]: Yeah. I mean they put 300, they basically threw that money away when they invested in Jumia. When you look at the amount of money they put in and what that investment is worth today, if they had taken that money, and somebody suggested that instead of investing huge $300 million investments, invest in smaller, local funds. Even if you’re doing $10 million, 20 million that will have a much, much greater impact on the ecosystem then a huge…
Justin [49:10]: Yeah. In my view, there just needs to be more startups, more little bets And it’s a numbers game.
Rebecca [49:15]: It is a numbers game. Yeah.
Justin [49:17]: So maybe this can be the last question. As an angel investor what sorts of things do you look for? What are you excited by?
Rebecca [49:24]: The entrepreneur. I have to fall in love with the entrepreneur and know that no matter what you’re going to come through, you’re going to make it happen, you’re going to make it work. You might have to pivot a million times but you can make it work. You listen. It’s important. You’re methodical, you’re organized, you’re disciplined. I think those are much more important than the product because that can always change I will definitely change.
Justin [49:49]: So thinking about the innovator’s bias, you can’t have that.
Rebecca [49:52]: Yeah absolutely.
Justin [49:54]: That’s it for this episode of The Flip. We’ll be back soon with our regularly produced thematic episodes for season two. In the meantime, if you liked this episode or any other episodes, please do share with a friend or leave a rating and review on your favorite podcast app, so that others can enjoy too. And don’t forget to follow us on social media for bite-sized insights and other updates @theflipafrica. Thanks for listening, and we’ll see you next time.