SaaS in Africa: 10 Things We Learned From Scaling to 1M Users (Video + Transcript)

Join Anish Shivdasani, CEO of Giraffe, as he provides unique African experiences learned from scaling to 1M users.

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Anish Shivdasani, CEO @ Giraffe

FULL TRANSCRIPT BELOW

How’s it guys? You guys good? How’s everyone feeling?

Yeah, great.

Awesome, man. It’s great to be here. You guys have been through three days of presentations. I’m realizing that you’re probably a bit tired now, and I’m the only thing that’s keeping you from the bar. I’m probably the most hated person in the room right now, but please indulge me. I’ll go easy on you. So my name’s Anish. I’m from South Africa. I’m the founder and CEO of Giraffe. Giraffe is a mobile job matching platform that helps medium skilled workers get access to opportunities and helps businesses to recruit staff faster, and easier, and more affordably than any other way.

How many of you are from Africa or have been to Africa? Okay, so quite a few. I guess selection bias, probably why you’re here. What do you think about when you think of Africa? I mean, those of you who’ve been probably understand it and know it, but those of you who haven’t. Often people have very negative perceptions or stereotypes of what Africa is about. When they think of Africa, they think of really negative stuff like disease, Ebola, and HIV and malaria. They think of corruption, fat cat dictators hoarding billions of dollars whilst they’re compatriots have to sleep rough on the streets, kind of like San Francisco if you think about it. Poverty, famine, babies with bloated bellies and flies all over the face, and finally war. People hacking each other’s limbs off with machetes for no reason. To be fair, you would be right. I mean, all this shit does happen there, right?

But it’s not the full story. It’s not the full truth because the reality is that Africa is booming. Between now and 2050, half of the world’s population growth will occur in Africa. Think about that. Between now and 2050, another 2.4 billion humans will enter the Earth, and 1.2 billion of them will be in Africa. Last year, of the 10 fastest growing economies in the world, half of them were African countries. Also last year, of the 10 fastest growing Internet penetration markets in the world, 8 of them were in Africa. So on the one hand, Africa’s kind of a mess. On the other hand, it’s booming population wise, economically, and technologically. This is giving rise to this phenomenon called leapfrogging, whereby African countries are circumventing the normal pathway of economic development and jumping straight to the latest thing.

An example of this is in telecoms, for instance. Most African countries never had fixed line telephony. When mobile came along, they just leapfrogged straight to mobile. This is having very important implications across other sectors. For example, banking. Most African markets never had a banking infrastructure the like of which we used to here. It was largely a cash economy, but with the advent of mobile, all kinds of interesting things are happening. For example, in Kenya. More than half of Kenya’s GDP is now transacted through a mobile, through arguably the most successful mobile banking and payment system called M-Pesa. With electricity, a lot of African nations never had legacy electrical grids. So with off-grid solar becoming a thing now, a lot of African countries, in fact 9 of the top 10 adopters of off-grid solar, are in Africa.

So you can see how technology’s starting to play a very important role in development of Africa. What does this mean for startups and tech companies? Can they be done there? Now, unfortunately there are a lot of constraints in Africa, major constraints when you’re talking about setting up and scaling a startup. First of all, capital. There isn’t any. Unlike here, where you have billions, and billions, and billions, maybe trillions of dollars of capital, over there you have very little. There are hardly any VCs. In fact, the concept of a VC is barely understood in Africa. It’s only starting to happen now. There is no startup ecosystem to speak of. Here in Silicon Valley you have Google, and Facebook, and a ton of other massive organizations that are just churning out people who then go on to found other startups. There’s a solid ecosystem of mentorship, and talent, and stuff like that that you have here, which we just don’t have that.

Also in Africa, users are not particularly tech savvy. You guys are at the bleeding edge of tech, but in Africa it’s not the case. Tech is a novelty there. Talent, major problem. Here developers are dime a dozen. Over there there are no developers, hardly any. Finally, and importantly, the market size is tiny. South Africa’s GDP is 50 times smaller than the US’s GDP, and South Africa is the biggest economy in the continent, right? When it comes to setting up a startup, you’re probably thinking, “Why the hell would you do it there? Why the hell would you do it in Africa?” Well, I’m going to tell you why we did it, and how we did it. I’m going to talk about some of the lessons that we learned along the way.

First of all, in Africa you’ve got to focus on a massive uniquely local pain point. We cannot possibly compete with Silicon Valley when it comes to building the next big thing or solving big global needs. I will guarantee that the next Facebook or Google will not come from Africa. We simply do not have the resources to compete, or the market size to compete. Where we can play, however, is when it comes to solving local problems, uniquely local problems, that no one cares about. No one else will be interested in it, and an example of this is unemployment. In South Africa, the unemployment rate is about 40%. It’s one of the highest in the world. It’s crazy when you think about it, right? One of the reasons why unemployment is so high is because people just don’t have access to opportunities because of apartheid, because of the difficult history of South Africa.

You have large sections of the population that live geographically very far from business areas, and so they simply just don’t have access easily. They never had access to Internet, and public transport is very expensive. Just in terms of seeing what opportunities are out there, it was very difficult. However, back in 2013, in my previous career as a strategy consultant, I was doing a lot of work with telecoms companies in South Africa. We noticed that mobile penetration was starting to increase. By 2013, mobile penetration probably exceeded the 50% mark, and people who were up until then offline were now coming online with mobile as a primary means of accessing the Internet. So you had millions and millions of job seekers, who never had any means to access opportunities, suddenly having a mobile device and an Internet connection.

We saw an opportunity to use mobile, and the ubiquity of mobile, as a tool to solve the fact that people struggled to get access to opportunities. That’s how Giraffe was born. I think if we had focused on solving a niche problem, the market’s simply not big enough to scale. You’ve got to focus on a massive problem that is unique to that particular location. You’re probably wondering what that picture is about. Maybe some of you are wondering what that picture is about, and why it’s there related to this point. Well, every year about two million Wildebeest migrate from the Maasai Mara in Kenya to the Serengeti in Tanzania. They all come to this river, and they stand on this river bank, and the river is infested with the crocodiles. They spend days there figuring out how to cross it without getting eaten. It’s an example of a uniquely local massive problem in Africa. You see the metaphor, perhaps.

The next thing I would say we learned is really about removing all barriers to user acquisition. Here in the US you have disposable income. Businesses have disposable income, consumers have disposable income, and so you can spend money on trying out new stuff. In South Africa, the average salary is about $500 a month. What that means is people are confronted with the reality of should I buy data or should I buy groceries? You need to have a really compelling reason why someone should try your product, and you need to remove all the barriers to adoption. Let me perhaps give you some concrete examples about what this was about. Our first MVP was actually an SMS based app where job seekers would send six SMSes in order to register on our platform. It probably cost about $1 for someone to register. We thought, “What’s $1? It’s not a big deal.”

We went into the townships to see how job seekers would interact with this app, and we noticed that none of them were signing up. Why? Because they didn’t have any airtime. They didn’t have any cell phone credit. They use their cell phones primarily to receive calls, and they would buy small data bundles for WhatsApp and Facebook, which were becoming common at the time. So we basically said, “This SMS thing ain’t going to work. We have to go back to the drawing board.” So we built a .mobi site, which basically used a mobile website for them to register. Because they had some data, we figured that that would be less of a barrier to adoption. Sure enough, we built that version, went back to the townships, and people started signing up. It started working, but people still had to spend a couple of cents to sign up. We were like, “How do we make this thing completely free to sign up?”

So we went to speak to some of the cell phone operators, and we said, “Look, this is what we’re doing. Why don’t you zero rate our .mobi site so that you can go above the line and say, “Hey, we’re trying to help solve unemployment in South Africa,” and we can simultaneously get more and more people jobs? So they did this, and we made it completely free for job seekers to sign up, and that’s when we started to see the thing explode. As soon as people would hear about it, then they would sign up. So you’ve got to build barriers to acquisition in any African market within which you operate.

The third thing is you’ve got to build for non-tech savvy users. You guys here in the States have been using smartphones for more than 10 years now, and before that you were using PCs. Smartphones are only becoming a thing now in the last couple of years in Africa, and up until now, people have never used PCs. The smartphone is the first means by which people accessing the Internet, and it’s a novelty. People are still used to doing business offline, and so people are not particularly tech savvy. What does that mean when you’re trying to build a tech product? Well, you have to build it in a very simple way. You have to leverage existing behaviors that the market already understands so that you don’t need to educate users.

An example of this is in South Africa all banks use this thing called one-time PIN, whereby to authenticate a user or to authenticate a transaction, they SMS you a four digit code and use that four digit code to be authenticated. Every South African understands that. We use exactly the same mechanism to authenticate our users. The cool thing was, when people started using Giraffe, and they saw that we had this OTP thing, because they associated OTPs with banks, it meant that they trusted us because they recognized, “Okay, cool. Banks use this, and Giraffe uses this.” It helped us gain credibility without necessarily needing to educate the market because it was an existing thing. This, I think, was quite important to stimulate usage and to get people to come onto the platform.

The fourth thing that we learned is… and this is interesting, right? Here in the US and other developed markets, people are so used to buying stuff online that they’ll go online, they’ll just do self serve, right? In Africa, business is done on trust. They need to speak to a person. They need to see a person, have a conversation with them. It’s really important to have that face to face interaction in order to sell. The challenge, however, is that because of the limited disposable income that both consumers and businesses have, you can’t charge a lot of money for services there. You’ve got to be very sensitive to price, and so you’re caught in this conundrum. On the one hand, you can’t really afford to hire salespeople because your CLTVs don’t justify it. On the other hand, you can’t sell anything if you don’t have your salespeople. So what do you have to do?

Well, you have to build a direct sales force. It’s something which you have to do in the beginning because until you gain trust, and your brand becomes trusted, you need to have a direct sales force to bring in those initial customers. This was actually a blessing in disguise because by getting direct sales, and I mean, I sold myself in the beginning for quite a long time. I mean, the negative economics of having this direct sales force actually funds your education of the market because you spend time with customers, you understand what their real problems are, and you’re able to tweak your product to address it. It’s interesting. As entrepreneurs, we normally come up with an idea, and we build a product, and we don’t really understand what the customer actually wants. Having this direct sales force is invaluable in educating and informing where your product is going.

I’d say the next thing that we learned is you’ve got to know when your customers are lying to you. Here in the US people are very direct. They’ll tell you what they think, and they’ll mean what they say. Whereas in Africa, I think in many African cultures people are very nice, right? They’re not going to say anything that will piss you off. Even if they have a problem with their product, they’re not necessarily going to be very candid about it. I remember a situation where we had closed quite a big customer in the very early days. They were a supermarket, and they were using our product. They were hiring tons of people, and we were like, “Okay, cool. This customer seems to be getting a lot of value out of what we’re doing.” We started talking to them, and we asked them a couple of questions. We said, “How important is Giraffe to you in your recruitment process?”

They were like, “It’s just extremely important.” I asked them, “How disappointed would you be if we took Giraffe away from you, and you couldn’t use it?” They said, “Look, it would be a disaster. I’d be very disappointed.” We were like, “Cool.” At this point we were offering the service for free. After having these kinds of conversations, I was like I think we’ve reached a point where we’re ready to charge these customers now because they seem to be deriving immense value. we went to them a couple of months later and said, “Okay, your free trial is over. We need to start charging you,” and they refused. They said, “No, we’re not going to use the product anymore,” completely diametrically opposed to the conversations I’ve had with them before. This is the kind of thing that you see there, and so it’s so important to really not listen to what your customers are saying, but listen to what they’re doing, how they’re behaving.

From that moment on we’ve spent more time looking at data on customer usage to give us insight into whether customers would like to continue using our product or not. I’d say the next thing is it’s super important if you want to scale in Africa to become a thing. What do I mean by this? Here in the US and again other developed markets, people are interested in novelty and innovation. They are interested in trying new brands, experimenting with new things. This phenomenon of a startup is well understood, and people have embraced it. In South Africa it’s quite the opposite. Incumbent brands rule, and newcomers are treated with suspicion. New brands are treated with a lot of cynicism and suspicion. That’s very difficult for startups because startups by definition are new brands, right?

There’s a couple of things that we did here to manage this situation. We couldn’t use paid marketing because incumbent brands had all the share of voice, and simply by using paid marketing we would have blown all our funding, and that would have been that. We had to find alternative ways of marketing and really getting the word out there. There were a few things that we did. There was no silver bullet, I would say. There’s no silver bullet, but there are a couple lead bullets that I want to share with you. The first thing we did was really pulled the unemployment angle quite aggressively. Unemployment was a massive social problem in South Africa, still is actually, massive topical problem. Every day on the news you hear something or the other about unemployment. So when we launched this app that was intending to help reduce the employment situation, we got massive amounts of press, mainstream press, mainstream TV, prime time radio, news, newspapers.

That did two things for us. It brought a massive amount of trust and credibility to our brand, and what we were doing, and it brought a ton of leads, massive number of inbound leads. The PR thing is extremely powerful when the problem you’re solving is a important social problem. That was the first thing we did. I’d say the second thing we did was really about building alliances with brands that were already trusted, and this was a cool logo acquisition tactic that we did. We basically looked for the biggest call center in South Africa. We went to them, and we said, “We’ll give you unlimited hires for the next six months, in exchange for which you need to write a bunch of press releases about our partnership, and the fact that you’re going to hire 600 people from us in the next three months,” to which they agreed. As soon as we started launching these press releases, we had tons of their competitors phoning us up saying, “Hey, can you come and talk to us? We’d really like to find out what you’re doing.”

Literally in the space of a few weeks, we managed to close a number of quite big subscriptions just off the back of FOMO, effectively. The competitors of the customer that we offered the free service now wanted to pay us for it. That was another tactic that really, really worked well for us. I’d say the third lead bullet that we did, and I think this is quite common now, especially in marketplaces, is we built viral loops on opposite sides of the marketplace. What that means is as soon as a job seeker would sign up and make their CV on the Giraffe app, we would enable them to send their CV, there’d be a send button, and we’d email their CV to any employer they wanted. The email would contain Giraffe and Giraffe branding.

We basically got our job seekers to market to our employers. Vice versa, whenever an employer wanted to use our service, we gave them a dedicated link that they could put anywhere, and it would enable job seekers to find out about Giraffe through the employer. So we built viral loops on opposite sides of the marketplace. I’d say those three things, combined together, helped us to grow really, really fast. It was all guerrilla stuff, very little paid marketing. I think it’s super important that if you’re going to build a brand that’s going to see explosive growth, you cannot rely on the traditional forms of marketing, in my view anyway.

Okay, so I’ve talked about product, and market, and customers, and brand, and sales. I want to take a step back now and talk about some more existential or abstract elements that I think are really important. Product/market fit. This is one of our favorite topics, and I’m sure we’ve all read The Lean Startup and stuff. Often we have to manage this lean situation where we have limited resources, and we need to make sure that we iterate until we get to the answer. That sounds all very well in principle, however, if you’re going to do a startup in Africa, you’ve got to be ultra lean, right? You’re not going to be able to raise millions and millions of dollars of funding. You’re going to be ultra lean, and we were very, very lean. In fact, for the first 18 months we had one developer who built the entire first version of our product.

Even today we have just three developers, and with such limited developer resource, you have to be super careful of how you build and prioritize products. Now the funny thing is, when it comes to product/market fit, I had initially assumed that it was a binary event. That it would just happen. It wouldn’t be there, and then the next day it would be there. This is definitely not the case, or it wasn’t the case for us. I think product/market fit is a gradual process, and you can think that you’ve reached it even when you haven’t reached it. I’d say the first 18 months of monetization we were seeing double digit revenue growth for the first 18 months, and ostensibly you could take that as an indication that, fine, you’ve read product/market fit right. Revenue’s growing, customers are happy, etc., etc. After about 18 months, we started noticing some weird stuff. It started to become more difficult to sell.

In terms of operations, things started to get a bit creaky, and then we felt actually the product that we are trying to scale up on is not the right product. We felt that we’d… It wasn’t the right product, and so what do we have to do? We basically had to change the product. Now by that time, if you can imagine, we’ve done all this with one developer. We had built an immense amount of technical debt. You build stuff super quickly, so it becomes a bit dirty the way you build it. We had a massive amount of technical debt, but it wasn’t just technical debt. We had to change our pricing. We had to change our sales processes. We had to change our operations. We had to educate customers about the fact that we were changing our product, and that was quite painful because you got customers saying, “But I liked your old product. Why are you changing it?”

You have the team who’s basically now having to change the way they work together, and that wasn’t the first time that we did it. We had to do this again maybe about six months later. What we realized is that every successive attempt a product/market fit gets harder. It’s not like you can just keep experimenting until you find the answer. Every time you change something, it gets much more complex. The energy that you have to muster in your organization is very significant. This is something which we hadn’t realized, and it’s funny because, if you think about it, almost all startups are at the verge of extinction. The thing that is often the difference between life and death is reaching product/market fit, and the number of bullets we have in our gun to get it diminish over time. Each successive attempt is more difficult than the previous one.

I guess this brings me to the next point, which is around recruitment. One of the biggest mistakes I think we made, ironically enough, being a recruitment company this was very ironic, is we really screwed up our recruitment. You see, the thing is in Silicon Valley you have tons of really, really talented people who want to work at startups. Everyone knows what a startup is. In fact, it’s cool and sexy to work at a startup, right? If you’re a startup, and you’re looking for people, I don’t think it’s particularly difficult. Sure, there’s a war for talent, but there’s an abundance of talent as well.

In South Africa, there are three problems regarding talent. The first one is that 70% of the workforce is employed by corporates. Corporates dominate the economy in South Africa, and so people don’t really understand what a startup is, right? People just don’t get it. They just say, “Well, I want to work for a bank or a telecoms company.” They don’t understand what a startup is, but I think more pertinently, there just isn’t the talent there. We don’t have lots of developers. We don’t have anyone who’s a growth hacker. It doesn’t exist. There are no digital marketing people, right? It’s such a new space. There’s no ecosystem, right? So the talent is scarce as it is, but you’re competing with well-funded or well-capitalized corporates.

When we closed our first seed round, we were funded by Omidyar Network, which is a Silicon Valley investor. We’re one of the only Silicon Valley companies that are funded in South Africa by… Sorry, one of the only Silicon Valley funded companies in South Africa. We expected that thousands of people were going to come to our door saying, “Hey, I want to work for you guys.” That didn’t happen at all, and it was a slog. We had to find these people who are needles in haystacks, and this was something which was very difficult for us. I think the key learning is you’ve always got to be recruiting. Even if you don’t have any open roles, keep recruiting because the time it takes you to find the right person, you will have an open role. I think when it comes to choosing someone when you’re working in a place like Africa is you can’t compete on money, or financial benefits, or bean bags, or free lunch, or whatever it is.

You’ve got to compete on the mission. You’ve got to hire for the mission. When I interview people, I ask them, “Why do you want to join Giraffe?” Some people say they want to work in a small company where they can have a big impact. Some people say they want to work in tech. The ones who I only really take seriously are the ones who say, “I want to work for you guys because you’re trying to help solve unemployment. I want to be a part of that.” That is super critical to hire for people who are mission-aligned, and it’s not just the founders have to be mission-aligned. It’s the whole company because it’s the people who are mission-aligned are the ones that are going to be most resilient when you inevitably go through tough times, so you’ve got to hire for mission.

I think the next learning is you’ve got to hustle. In Africa you’ve got to hustle. Everyone in Africa hustles. What do I mean by this? Well, here in the US, and developed markets, you have established ways of doing business. You have business norms. In Africa it’s much more informal, much more chaotic. Because you’re operating in a very lean environment, you have to be able to hustle to leverage to the max the resources that you do have. I’ll give you some examples of this, right? We acquired job seekers when we had no jobs to offer them, and that was hustling. we pitched to customers when we didn’t even have a product, and we only started building our product after we closed a sale, because we couldn’t do it any other way. We had to do this because we didn’t have the resources to build our own product. We had to sell it first. When you’re operating in this kind of environment, hustling is key.

I’d say the final learning that I’d like to leave with you is this. When we set up Giraffe in 2014 and quit our fairly high paying consulting jobs, most of our colleagues and friends thought we were completely mental. They thought we were crazy. They were like, “Guys, what are you doing? You can’t do this in South Africa. No one is doing this. It’s never going to happen. It’s never going to be successful. People don’t even have smartphones yet. How do you expect to build a company like this?” But we’ve kind of done it. Not that we’ve finished, we’ve still got a long way to go, but the point is that we’ve shown that the infrastructure, the mobile infrastructure, the Internet penetration, the digital infrastructure is there, right? It is possible to build and scale a company in South Africa, and I believe the rest of the continent, as mobile penetration and smartphones become more abundant.

Also, I guess when I look around the room, you guys are some of the smartest, and most intelligent, and wealthiest, and privileged people in the world. Right? It’s funny, I’ve been here a lot of talks. Everyone’s talking about unicorns, and decacorns, and making tons of money, and you guys really have a choice. You can use your talent to solve high class problems, First World problems, and help big corporates earn more money, and help big VCs, fat cat VCs, make more money, or you can use your talent to help the people who need it the most. Right? This world is full of suffering and pain, right, yet most people use their talent just to make more and more money. The inequality that we’re facing in the world is very significant.

I guess my appeal to you is, instead of trying to build the next Slack, or Dropbox, or whatever high class problem these guys are solving, use your energy and your talent to help solve humanity’s problems, because I believe a lot of problems in Africa can be solved using tech and software. So my closing remark would be this. I would love it if you could join me, either in South Africa or any African country, and help us to build the future, because the last 30 years was Asia’s time. We’ve seen how Asia has emerged. The next 30 years will be Africa’s time, but Africa just needs the talent, the capital, the ecosystem. With those things, we can build an amazing continent. Thank you very much.

Published on July 9, 2019

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