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19 September, 2019
CEO Speeches

Prof. Njenga Munene, Vice Chancellor of Zetech University; Deputy Vice Chancellors, Deans, academic staff, administrative staff and all staff of the university; students, invited guests, ladies and gentlemen, good afternoon.

I am really humbled and thankful to have been invited to give a talk at Zetech University, given that Zetech itself is a product of, and living example of entrepreneurship, so I thought the topic was very relevant. In fact, your entrepreneurial spirit is captured in your tagline, Invent your Future. When your Vice Chancellor asked me to speak about “the entrepreneurial mindset”, I jumped at the opportunity, because it is one of the biggest problems we face in this country. We are more interested in tender-prenuership, where you make the most amount of money as quickly as possible and with the least amount of effort as opposed to entrepreneurship, which is really about designing and launching a new business idea that makes an impact.

At its best, entrepreneurship is mainly about making an impact. It is about an inner drive to right a wrong in the marketplace; it’s about delivering a better solution or product to the marketplace that improves the community or even the world. Let me give a few local and global examples of entrepreneurship at its best.

The first example is Uber. It used to be that you would have to go look for a place where taxis lined up, take the first taxi on the line, and haggle about price. If it was at night, you had no negotiation power; you would just pay what the driver demanded. Then, you would have to give directions to where you were going. You would also need to ask in advance if the driver had change. The whole experience could be very nasty sometimes. Then came Uber. Today, you don’t have to go look for a taxi line; the cab comes to you. You don’t have to haggle about price – it is known in advance; and you don’t need to give directions, it’s in the app. Uber has made taxi riding a better experience.

The second example is Equity Bank. There was a time when the banking hall was a privilege for corporates, the wealthy and the salaried. Then came Equity Bank, which opened banking for the unbanked – for the farmers, the mama mbogas (small-scale trader), the Gikomba mitumba (second hand clothes) trader and so on. And Equity didn’t just provide banking to the unbanked, it gave them a sense of dignity and belonging by calling them “members”. Today, Equity is the largest bank by market capitalization.

I hope we see that entrepreneurship is not just about starting a business, it can be about enhancing an existing business model in an existing company. Equity Bank simply took an existing business and changed its business model to be more impactful, whereas the founder of Uber started a company and made cab hailing a more enjoyable and much cheaper experience. So, don’t think that you have to start a company or a business to be entrepreneurial. You can be entrepreneurial right where you work, but you can also start a company. What you must do though, is to solve a pain point for society if you want your ideas to survive. Remember that the first step in developing an entrepreneurial mindset is that it has to be about the society, the community, and the client.

So, what are the things you need to keep in mind? A common mistake people make is to start businesses because they want to be their own boss, or they want to run away from employment, or they want to make money. Being your own boss, running away from employment and making money: all these are by-products of entrepreneurship, but at the core, the driver has to be solving a pain point for society. Starting a business for yourself and not the society dramatically increases your chances of failure. The need to solve a pain point is not something I talk about in abstract. For the Cytonn founding team and I, our goal has always been delivering a better return to the investor than they would have gotten in the prevailing markets. For example, today if you have 100k that you want to put aside for one year and you go to a bank, you will be lucky to get even 4% interest rate on your one-year deposit. Then as a developer, if I go and borrow, say one million shillings, which is just that same 100k from 10 different savers, I would have to pay an all-in cost of anywhere between 14% to 16%, and that is after a lengthy loan application process. Think about what has happened here. We have two frustrated people: the saver, who is not getting a good return, and the borrower who is not getting a quick process. We wondered, if we went directly to the saver and asked them to give us the same 100k for the same 14% to 16%, wouldn’t we move quicker? You see, we solved a pain point for the saver and also for ourselves. Through that process, we have raised over Kshs. 11 billion, which is what we have used to fund our developments. Imagine if we had set out to raise eleven billion shillings from banks?!

Once you have identified the crucial foundation, which is the pain point, then you need to build the core team to take advantage of the opportunity. As Steve Jobs says, “Great things in business are rarely done by one person, they are done in teams”. You increase your odds of success if you have a team around you. Now, a team is not necessarily people who agree on everything, but one that sees the same opportunity, has a shared vision, and a unified commitment to pursue it. Actually, the members of your team don’t have to even like each other; they just have to be able to work with each other. Often, they may not even agree on how to pursue the opportunity, but they agree on the fact that there is an opportunity. It is crucial that you settle how decisions will be made or the governance structure, so that you don’t spend too much valuable time debating instead of executing. An entrepreneur needs to think about the team, the shared vision and how to make decisions.

Once you have your team, you need to think about your strategy. As they say, there are many ways to skin a cat. How you approach building your business to address the pain point depends on your unique resources. Do you have the skillset? Will you depend on technology? Do you have the capital? It is necessary that your strategy is designed around your competitive advantage. For example, if you don’t have technological knowhow and you can’t afford to buy the technology, then you can’t build a business model based on technology. Look at your strengths and build a strategy based on them. Also ensure you have cured for the must haves. Going back to my Cytonn example, if we wanted to get money directly from the savers, then we needed to have a salesforce, so we had to build that capability. If we wanted people to trust us, then we needed to demonstrate that we know about markets, so we analyzed the markets for free and sent out a weekly report, called the Cytonn Weekly. Then lastly, given that at the time we didn’t have a Capital Markets Authority (CMA) license, we had to look at regulations and find a clause that would allow us to collect funds, so we went with a private offers’ funds collection strategy. As an entrepreneur, you have to figure out how to actualize your idea given the resources that you have.

Once you have figured out your strategy, the next step is to execute, and that is where most businesses fail. We spend a lot of time talking about what we want to do. We dream big. But you need to wake up every day with a list of things you want to achieve as a team and go ahead and achieve them. There are several execution things I urge entrepreneurs away from. First, is too much debate; it is better to execute an imperfect strategy than having a perfect strategy on the shelf or debating it endlessly. Debates must come to an end. Second, people will never miss stellar reasons for why they didn’t deliver: “My kid was sick,” “I had a funeral,” “I was sick,” “My phone was faulty,” “My computer crashed,” – all these are perfectly reasonable explanations for not delivering, but unfortunately, the market just wants goods and services that work. It does not accept great excuses. Therefore, try to create a culture that is intolerant of excuses, even as you acknowledge that we are still humans going through life and there are times we cannot deliver. Good entrepreneurs deliver against all odds. Certainly, we must take time to attend to personal matters, but we have to make arrangements on how initiatives run even when we are not available to run them ourselves.

If you get these 4 pillars right: a pain point you are trying to solve for society, the right team, the right strategy, and as Jack Welch says, you execute like hell, your chances of success are incredibly increased. But we are not there yet – we have talked about pain point, team, strategy, and execution, now you have to deal with the soft challenges, which begin with yourself. To manage people, you must first manage yourself. Understand that you are human. You will doubt yourself, you will want to quit, your will be fearful about losing your life savings, and your reputation. Competitors threatened by your business model will spend a lot of time and money trying to distract or bring you down. You have to be incredibly resilient – emotionally and physically. After managing yourself, then you now have to manage other people, which is in itself a whole other challenge. An entrepreneur has to be a lifelong student of management and leadership.

I will end by saying that entrepreneurship in our country is not even an option, it is a necessity. Our shilling is always depreciating, because we are importing more than we are exporting. We still import sugar and pencils; we export coffee beans and then import refined Nescafe. We have rampant joblessness, and we also need to uplift our standards of living. This can only be done by entrepreneurship.

I wish you the best of luck and if we as Cytonn can ever be useful, do not hesitate to contact us.

God bless you and God bless Zetech.