Bulls n Bears Entrepreneurship Zone :: ‘We sell bananas’: Twiga Foods CEO on building a market-relevant business in Kenya

[Bulls n Bears]

Twiga Foods, based in Kenya, is a mobile-based supply platform for Africa’s
retail outlets, kiosks, and market stalls. Twiga Foods allows grocers to
access better-quality products, at lower prices, delivered directly to their
shops. The solution gives vendors simple mobile-based ordering platforms to
purchase their stock, and provides farmers with predictable pricing for
their crops. Grant Brooke is the co-founder and CEO.

Three years ago, on the stage of an international pitch competition, I
stood in front of judges and a thousand entrants with a single PowerPoint
slide of a banana, which simply stated: “This is a Banana”. Its simplicity
got a big laugh.

A few months prior to this event, Peter Njonjo and I had launched Twiga
Foods: A B2B marketplace platform that sources produce from farmers at
above-market prices and delivers them to retailers at below-market prices.
Vendors no longer have to walk to large-scale open-air markets at 4am.
Instead, we deliver better-quality products, at lower prices, to their
doorsteps. Farmers can stock their products on Twiga, and have a persistent
and predictable market partner. We accomplished this through technology and
some economics rules. The reason prices were high is that the retail sector
is very fragmented – 96% of African commerce occurs in SME shops. The way to
solve this was to get a number of retailers onto a single platform for just
one product to start with: bananas. For farmers, this meant a reliable
market in an agricultural sector that is rife with market uncertainty.

The service proved extremely popular, and has now scaled beyond bananas.
Today, Twiga is Kenya’s largest seller of fresh produce, as we have become
the digital commodities market we set up to build, with logistics as a
service beneath. In a country where 42% of consumer spending is on food,
it’s a massive problem to tackle.

I’ve always wondered what a venture capital limited partner (LP) meeting
would be like for a venture capitalist (VC) when they explain that they are
investing in a Nairobi-based company that, on the outside, looks like a
tech-based banana distributor. Africa’s challenges and opportunities are
remote from the realities of most VCs and LPs; thus, these could look
strange to the world’s venture capitalists. Bridging this gap is the core
job of any early-stage CEO.

Tackling problems

Not only do Africa’s venture-backable challenges look different from what
many VCs are used to, its most successful venture companies also look
strange to many VCs. Entrepreneurs cannot easily satisfy preconceived
notions of venture-backed businesses, while solving problems in a scalable
and sustainable (and profitable) way. This is why so many international
companies and well-funded cookie-cutter models have failed on this
continent: these businesses have been removed from their contexts.

So, I would like to explain how our core values – ‘Own your problems’, ‘Be
good’ and ‘We sell bananas’ – are guiding us in building a business
differently and fully in its context.

Own your problems

‘Own your problems’ is fundamental to the Twiga business design: we do not
outsource core business functions. That would simply be too risky at this
point. We do not easily trust outsiders, consultants, brokers and
contractors. In our experience they will let you down more often than not.
While it is great to have eco-systems where you can outsource 50% of your
work to pre-existing providers, I have a giant list of examples showing that
this is not the case here. Hence, if you can control it, control it.

Buy assets: When we started, finding a lorry (truck) to lease in Nairobi
meant walking down the highway, picking them out of a queue and negotiating.
Over time, we learned that it was easier and more capital efficient for us
simply to buy vehicles. We have found as we have scaled that more options
have emerged to take them off our balance sheet. Fadi Ghandour, founder of
Aramex and one of our board members, gave me some good advice on this:
‘Whatever the finances say, you’re going to be the one managing the
vehicles.”

The “buy high, sell low philosophy”: We made a commitment early on to pay
farmers more and sell to vendors for less. This meant customer acquisition
was not a challenge, but our ability to execute on our promise was. Choose
your battles carefully, and be sure of winning them. Know your unique
selling point (USP), and use it.

Make oneself redundant: For Twiga there is not a pre-existing talent
pipeline. Nobody had built Twiga before. We are one of the few organisations
where making oneself redundant is a key performance indicator. We try to
grow people into new layers of management that are always ready. Making
oneself redundant is how to grow the organisation.

Be good

Where the easy thing to do is the wrong thing to do, do the right thing.
While we have faced challenges in the near term, I am thankful that we have
stuck to this. The first few years of a startup can be an experience of
dodging ethical bullets concerning who invests, who you hire and how you
work with government. The company you decide to be when you are small is the
company you will be when you are big.

Get arrested: This does not have to be literal, but for us it has been.
Several of our senior managers, myself included, have been arrested for
defending our staff when they do what is right, generally in refusing a
shakedown or a bribe. Take the opportunities to stand for what is ethically
right, and that way of working will stick as one of the core cultural
stories in your business. As your business grows, your reputation will grow
for being a good actor, you will get friends in high places who will support
your vision, and ethical challenges will become less of a problem.

Create trust: I was once asked whether Twiga was not just the biggest
“broker”. Reflecting on it, I realised our biggest USP is being a trusted,
good, formal actor in a market full of informality and uncertainty. What
separates us from brokers is that we are only interested in the farmers and
buyers who want to build long, lasting relations with us, and we design our
products around them. In a market full of traders, we are the only ones
waking up every day, asking how we can make food cheaper.

Kenyan-only hiring: While at times controversial with investors, this
principle has been essential in building Twiga. It is hard to call yourself
good when you are allowing global inequalities into your business. Foreign
developers earning more than locals is not only unfair, but it also creates
resentment in your company, and resentment is the single biggest corroder of
culture. As we prepare to go international, we will necessarily become
international, but the principle of not reflecting inequalities that breed
resentment will not.

We sell bananas

When in the African e-commerce space players were aiming for tens of
thousands of stock-keeping units (SKUs), our banana revenue alone made us
one of the largest tech commerce players in Kenya. While we are doing more
than bananas now, it is worth keeping in mind that the average Kenyan
household buys about 50 different consumer products a month. To build a
unicorn in Africa – a relatively small consumer economy – you had better be
in a segment with a lot of spending.

Say no: We are good at saying no as an organisation. Lots of people want to
partner with us, use us to distribute their products, to build things on our
platform, to photo op with us, and so on. We are not easily distracted from
our core objective of ‘selling bananas’. I was once given the academic
advice: “Early in your career, say something specific about something
specific, and once you do that, you can say it all.” The same holds for
business: do something specific about something specific, and a few years
down the line you can do it all.

No advertising: We do not make markets, we make them more efficient.
Eyeballs in Kenya are extremely expensive relative to user spend. We have
focused on keeping our acquisition cost low (a direct visit and a crate of
free produce), our acquisition rate high (92%), and our payment rate short
(one delivery). Your USP should be evident without massive spend to convince
people.

Stand and deliver: Every Monday, Twiga managers send a pre-read on what
they accomplished in the previous week, what they will accomplish in the
current week, what help they need to get it done, and any topics they would
like to discuss.

I do this once a month in a board meeting, and spend my weeks helping our
managers accomplish their ‘stand and delivers’. It is painful, time
consuming, often disappointing, but will make you a much better company. The
job of a CEO is to create pressure, while at the same time creating safety,
two seemingly opposed goals. I do this by being rigorous on structure, but
soft in person. Your board needs to do likewise. The repeated check-ins will
help to ensure that nobody gets off the core mission: for us, selling
bananas.

Our pathway is not the only pathway to success, and we have miles to go.
Hence, I am extremely hopeful about the hundreds of emerging companies in
this market who will be entering the world of VC-backed startups to both
create value for investors and, more importantly, build meaningful things
for our communities. --howwemadeitinafrica



Grant Brooke

 

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