Tesh Mbaabu is the Co-founder and CEO of MarketForce, a Kenyan-based B2B platform for the retail distribution of consumer goods and digital financial services in Africa.
In this interview with Founder Africa, Tesh takes us through his journey, the challenges faced along the way, and some insight into fun facts about himself.
How did you come about the idea for Marketforce?
Since high school, I had always been curious about how tech platforms were built and so, after university, I was certain that I wanted to build African solutions to African problems by leveraging my tech background. So, we started a software consulting company with my co-founder, Mesongo Sibuti, to help bring small and medium size businesses into the digital age by automating their processes.
While doing that, we became the go-to guy for tech. We got referred to a large lending company with thousands of field agents who resorted to pen and paper to manage loan applications for customers – sometimes taking up to three days to process a loan.
We were asked, by the lending company, to come up with ways to increase productivity for field agents using tech. So, Marketforce was initially born to address that challenge, we built a software-as-a-service platform that would enable sales agents to manage all their customers and originate loans in 3 hours or less.
While doing this, we realized that this problem was even more prevalent in the FMCG sector, where manufacturers had sales agents going out to book orders from merchants. We extended the solution into the FMCG sector. In 2020, when COVID-19 hit and forced lockdowns, we asked ourselves “Why can’t merchants order directly from brands without having to rely on the physical agent?’’.
The answer to this question caused us to pivot into the B2B commerce marketplace, with a product-branded RejaReja, enabling merchants to order inventory directly from multiple brands at a go, delivered within hours. We had already built relationships with FMCG brands, the financial service providers, and we’ve been scaling this solution since then.
Can you tell us what is Marketforce’s value proposition?
If you think about neighborhood merchants, they face a couple of challenges. First, sometimes they have to leave their shops and go out to look for inventory, which is very time-consuming and also money-consuming because they spend money on logistics as well as lose out on sales when the shop is unattended. So, having an auto-ordering tool enables them to access stock conveniently and cost-efficiently.
Secondly, only 33% of SMEs on the continent have access to credit. A large portion of this is neighborhood merchants that do not have access to credit that could help them grow their businesses by boosting sales and revenue. One main reason for the lack of access to credit is the absence of business records. Marketforce makes it possible for MSMEs to order digitally which in turn helps them to get their transactions recorded in a way that enables us to give them a credit score – enabling them access to credit.
Lastly, we enable merchants to earn extra income by acting as agents for popular financial services such as airtime top-up and other bill payments.
If you have to streamline your target market, who would you say your platform is more useful to?
Our platform is a marketplace hence by default, it’s important for us to create value on both our suppliers’ and buyers’ sides. We target the buyers who are merchants as the primary customer but we also add great value for the seller by opening new market opportunities for them and enabling them to optimize their distribution and marketing based on a better understanding of what products they are selling across various regions, with granular data such as flavor and SKU preferences.
What has been your biggest setback or challenge?
Initially, you have strong ideas but you need capital, and talent to bring those ideas to life, I think initially those are the biggest challenges. As the founders, we had to wear multiple hats and sweat it out to bring the idea to life and create noticeable traction.
Second, finding talent was a real challenge. Over time, we have been blessed in that regard. I am working with a brilliant co-founder, we’ve worked on other startups together, so we built a strong relationship over time, 11 years now. We have complementary skills and we have been able to get the right investors and partners who have been supportive in recommending more talent.
The third one is access to mentors. Personally, I had to figure out things on my own for the most part, so this is something I became deliberate about, making time for younger founders because when I was starting, I would reach out to more experienced founders but I didn’t understand why they weren’t creating time to support me. Now I realize that they were just too busy growing their own businesses.
In Nigeria, we have issues with “brain drain”. How have you been able to manage that?
That’s a challenge we’ve faced in Nigeria. In Kenya, there are challenges with large tech companies such as Google or Amazon setting up shop and picking up the best talent, especially in tech engineering from startups like us. We’ve addressed it by being keen on the culture we build within the company. The starting point for culture is hiring for the right fit. It’s very tempting especially when you are growing fast to focus on skills. The challenge with focusing on skills is that if the person is not aligned with the mission of the company then it’s easier for them to leave the business. So, we hire, rewire and polish, until we get culture fit. This is something we were very keen on.
The second one is incentivizing through stock options (ESOP), which we set aside a pool for early in our journey. Team members act like owners of the business which is invaluable.
Are there things you started doing in the beginning that you do not find useful today?
As founders, you need to reinvent yourself and re-invent your business at every stage and changes need to happen at various stages of the business, especially in the processes. For example, we used to be very nimble, making decisions and moving swiftly but now we have developed stronger governance structures and controls which means we may not move as fast as we did in the past. So I would say every strategy was right depending on the stage.
What has been the industry reaction to Marketforce thus far?
We were naive when we came in and started building our market place and that’s probably how a lot of disruptive startups succeeded because if you understand the industry too well and the processes that have worked for many years, it becomes challenging to disrupt because you do not know any other way of doing business.
So, we came into the industry of retail trade with a fresh perspective as Technology guys, and thinking about it; there are opportunities for efficiency to be created, and that helped because I feel if we had an understanding of the challenges, we probably would have been afraid to try in the first place.
There is a very large addressable market that is very traditional so, we have built one brick at a time. We’ve had a great reception from both merchants and the suppliers because we brought a perspective of partnership on both sides like – how we work with the existing players and manufacturers to access new markets and more sales. How do we support existing logistics providers to be more efficient rather than owning our fleets for example? How do we support merchants to earn extra incomes, and live better lives by being able to source or run their business more efficiently? Generally, we’ve had a great reception and I think that has helped us with strong growth
Do you see a difference in the way customers behave depending on the countries you’ve started operations?
Addressing the merchant or manufacturer and changing their behavior is not easy because they are used to a particular way of doing things. A manufacturer knows that the best way to enter into a region is finding their key distributor, give them the product and pray that they sell. If they don’t sell, I look for another distributor to do it. A merchant knows that if I need a product, I go to the nearest market to fetch the products. Innovating is where you are observing a market and seeing a better way of doing things on behalf of your customers and educating them about that – showing them a new, better reality, then they realize that if it took them two hours in getting the product for the same price, I can get you the product in 30 minutes and at the same price. So, they realize there’s a better way to do it.
I think that’s a position Marketforce has taken to win our customers. Our ideal merchant is one who we feel is experiencing a problem that they don’t even realize, we educate them on the possibilities and show them the benefits they are missing out on. We have made tremendous progress through that approach.
In terms of the different markets, there are lots of similarities and a few differences but we chose markets based on having enough similarities. We ask ourselves, does our product (Marketforce) empower the merchants in that market? if we think it does, then we go into the market and repeat the same thing to show them a better future. Another thing I love is the pool of players doing it, which shows we are not doing it ourselves and that’s helping quite a bit. We have a group of players trying to solve similar problems.
How do you manage cultural differences in Markets?
They differ quite a bit. Case in point; how people interact with money in Nigeria versus Kenya. Mobile money penetrated the Kenyan market, it is almost second nature to pay money or send money to somebody, or pay for goods using mobile money. In Nigeria, banking and cards are more highly penetrated while in Kenya, most people especially the low pyramid don’t have ATM cards. I think in terms of innovation appetite, this is where there are a lot of opportunities for companies as there are a lot of challenges to face as long as you can solve and educate the market and get adoption then the market becomes massive. Then on the flip side, as you think about scaling to be a pan-African business, you have to localize your business for every market. We’ve had to customize how we do things in Kenya, Uganda, Nigeria, Tanzania, and Rwanda and that becomes a challenge in terms of scaling because of the difference.
Where do you see things in the future for Marketforce? Are there things that excite you e.g. location, innovation, or technology?
As much as Africa is fragmented – many different countries with different dynamics, I am excited about building a Pan-African global business. The exciting reason is that we need to continuously prove that we can build impactful businesses, especially as Africans. We are just borrowing a leaf from the telcos and banks that have been able to scale and have a pan-African presence, it shows that it is possible to build a business at that scale. For example, MTN, Eco-Bank, etc. That’s something I would love to come to life for Marketforce where we exist in 20 to 25 markets, and successfully at that.
The other big one is the potential we have to bring merchants into the real digital age. Today, we are seeing a lot of smartphone adoption across various markets and industries. I am excited to be part of this shift. We challenge ourselves, as a startup, to have a very compelling value proposition, that necessitates people to have these devices.
An example is how Whatsapp necessitates people to own a phone. Marketforce becomes the reason why people have those devices; I would like RejaReja to be one of those services that necessitate a merchant to own a smartphone and connect to the internet. I would like our value proposition to be so strong.
The tech ecosystem has seen some significant milestones in the last three to four years. What are your observations about what has been happening or any challenges that we are beginning to see? What are the things you would like to change in the Tech startup ecosystem in Africa?
I would love to see more maturity. I feel there’s a lot of competition among startups but I would like to see more consolidations happening especially because of the differences in the market. I would love people from strong pan-African businesses from the north, west, south, and east to merge to build bigger businesses i.e. own smaller pieces within bigger pies.
The second area of maturity will be in the media, whereby people in the Tech ecosystem refrain from bringing others down or blowing things out of proportion on social media without knowing the backstory or truth. We need to be telling great stories of entrepreneurship and encouraging founders who are doing a great job especially, founders who are building unicorns and supporting them to get to IPO, as these are things that build ecosystems. A focus on negative stories only reduces the overall confidence in the Ecosystem, which means harder times for startups raising capital, and harder for startups that are doing well to get talent. I am not saying we shouldn’t expose the negatives, but I sense the current trend focuses more on the negative than the positive.
What do think are the biggest things you’ve learned as an entrepreneur so far?
The first is to understand and appreciate your strengths and weaknesses as a founder and invest more time in the area where you add more value to the business. I feel there is a lot of pressure on founders to be rock stars, to be great storytellers, to be great with tech, and more. I think what you have to learn is to capitalize on areas where you are stronger and find people in areas where you struggle so they can help you and that makes it easier to build an exceptional business compared to where the founder is trying to build everything on their own.
Secondly, is being able to manage adversity or hard times. One of the things I have learned is how tough building a business is. It is easy to give up and it can be very lonely. I have learned to build and manage my AQ (Adversity Quotient) – which is how you manage failure, stress, and pressure – because I know it defines how far I can go as a founder. As much as you are improving emotional intelligence, you should also improve how you manage stress and tough times. When you can show up strong in tough times, then again you can be quite exceptional and your business exceptional too.
If you read books, we would love to know the books you’ve read in the last year or two or the ones you will strongly recommend for founders.
Speaking to founders, I think “The hard things about hard things” by Ben Horowitz is a fantastic one, I have read it more than once, it talks about building, stories on facing challenging times and sometimes he came out stronger and better. It’s a very good book on understanding that solving a business problem or building a startup is not one set of problems instead, it’s a set of variable problems and I found that knowledge quite helpful when building a business.
On management, I like the series of books by Jim Collins, especially ‘Built to last. You know it’s a common plan or question; what’s your exit plan or strategy? I think that leads founders to build businesses that don’t last but if you think about passing your business to your children then you will think about the business differently to be able to last.
When you’re not working what do you do?
I love soccer a lot, I watch and play. While growing up I wanted to be a footballer, I support Arsenal and I love to spend time with friends and my family – my wife and son.
We know you have several operations in Africa so, have you been to all?
I have been to all operations. I came back from Uganda last week, I will be in Rwanda this week. So, I spend six months of the year traveling and I have come to enjoy traveling because of the exposure. I have been to forty countries so far.
If you had a chance to build something else asides from Marketforce, what would it be?
I am fascinated by the movement of money and also money habits. I would probably have built a Fintech – and that explains why I am an angel investor.
Are you a Petrolhead? What would be your pick if you are to pick any car?
I am a Petrolhead and a huge BMW fan. Any car? I would pick the range rover sport SVR.
