Throwback: David vs. Goliath with Mike Quinn of Zoona

Aid, Evolved
Aid, Evolved
Throwback: David vs. Goliath with Mike Quinn of Zoona

Mike Quinn was co-founder and CEO of one Africa’s earliest major financial technology (FinTech) companies, Zoona. He raised over 35 million dollars of international investment for this Zambian startup – before its heartbreaking crash and Mike’s exit from the company.

In the conversation today, Mike shares how this Canadian engineer found himself leading a Zambian mobile money company. He opens the door to the power and pressures of international financing, and the toll it takes on African entrepreneurs. In just a few years, Mike grew Zoona to a company that served millions of unbanked consumers in Zambia and Malawi. But that all changed when their Series C round of financing fell through at the last minute.

This is a classic David vs. Goliath story. Mike and his co-founders were a group of young, ambitious techies who wanted to make life easier for millions of Zambians. To do this, this small company needed to go head-to-head with billion-dollar international phone companies.

The craziest part? They almost won.

Want to hear more?

All of this and more is covered in Mike’s recently published tell-all book, Failing to Win, available around the world through Amazon (available in audio, paperback and kindle format) or in South Africa at Takealot and Exclusive Books.

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This is an automatically generated transcript from the full interview. Like humans, machines aren’t perfect, so there may be some inaccurate or amusing transcription errors.

Mike: I developed a business card that had a picture of a Baobab tree and a logo for African enterprise partners, and I said, like, I’m Mike, the founder of this organization, but there was nothing that existed other than the card and went door to door for a while, got a lot of rejections, but then ended up getting a very lucky break with an impact investor in Washington called the Grassroots Business Fund, and they bought me a plane ticket to Zambia. This was early 2009 and said, Go find us. Go find his deals. And that was when I had probably this the stroke of lightning because I arrived. I’ll never forget it on like a Sunday in Zambia, in Lusaka, in the capital city, and I sent an email to an American guy that I had worked with when I was a volunteer there a couple of years earlier, saying, I’ve got this investment fund behind me and I, you know, do you know any entrepreneurs? Because I didn’t? And he connected me to to these two brothers, Brad and Brad McGrath, and said, Go meet these guys. And I had a meeting with him on Monday morning at 10 o’clock. So it was like one email, one meeting. I meet these two guys and then they start telling me about like their vision of of a cashless Africa and how they have this technology that they they took from a previous business in the airtime industry where they were looking at like mobile payments and working with companies that were paying smallholder cotton farmers.

Mike: And meanwhile, there was this this other company that was emerging in Kenya called M-Pesa, which is now really well known. But at the time it wasn’t well known and it was really one of the first fintechs on the planet. And it developed this model where unbanked people, which was, you know, 90 percent of adults in Africa at the time could use their cell phones to store electronic money and send and receive money transfers to each other and pay their bills. But really, the innovation of M-Pesa was was they figured out how they could turn a bank branch into a small like micro entrepreneur with a cell phone and somebody who had like a cash box. So you could go into your mom and pop shop and a consumer could deposit or withdraw cash to get the funds onto their mobile wallet. And then they could use those funds to pay bills and send money transfers. And so they kind of decentralize banking because before, you know, nobody had bank accounts because there were a few branches, there were high like, know your customer and registration processes. Atm machines don’t work in areas without electricity, and they require like cash in transit to stock them. So now you can have like, you know, these these mobile agents, like all over the place that could be like bank like human bank branches.

Rowena: Now, I remember in that in that period of time, you would fly to Africa and you’d have to bring like just a pack of American cash in your bag because you had no idea when you would find a working ATM. So I can imagine access to cash was a huge issue at the time.

Mike: It’s actually even if you had a bank card and a bank account, the ATM machine probably wouldn’t work. That was like the reality.

Rowena: Certainly didn’t for me.

Mike: Yeah, it’s before smartphones and so long story short, but you know, I met these two brothers and they had this vision and there was this mobile money model emerging in Kenya, and I had the invest investor behind me and then we did a $200000 investment, I believe, July 1st, 2009, which we didn’t know at the time, but I could very well be like the first like seed investment in an African fintech because there is really nothing else happening at the time.

Rowena: Yeah, and I think that’s one of the key things about your story. That’s that’s easy to omit in the current era is that in 2009, no one was investing in fintech in Africa. You know, it was it was a wasteland, which is why you were there to find those those opportunities. It must have been quite a meeting that you had with Brad.

Mike: Yeah, I ended up working with them for the next 10 years and became kind of like the third brother for like the third wheel, but it did become the third brother and we’re still very close.

Rowena: Mike McGrath.

Mike: But yeah, because, you know, and they had never they had never even conceived of foreign investment like the I remember telling them about, like, hey, there’s an investment fund in Washington DC that wants to invest in Zambia. And they hired me to go find entrepreneurs to invest in. And and then my proposition to them was, I said, like, I’ll facilitate this deal and then I’ll stick around and work with you guys and help build the business. And and then we did. We did a deal where I would get some sweat equity in the business to have have some shares and then to become a true co-founder and partner. Several months later, I went all in and convinced my parents back in Canada to mortgage their retirement house and and led me to invest in the company.

Rowena: Bless your parents. They seem

Mike: Yeah,

Rowena: Like good people.

Mike: They never [00:05:00] made a risky investment in their entire life, and they weren’t there weren’t rich, so it wasn’t like they had expendable cash. It was just my my mom said she she believed in me and I made a very strong sales pitch of how we were going to have all this impact and change the world. And I said at the time, I’m like, you know, I’m not asking you to give me a down payment on a house, I’m like, it’s something that’s going to be much more impactful. So.

Rowena: Nicely done. Nicely done, Mike. And to your family, obviously, did you know anything about fintech before you met Brad and decided that you were going to, you know, invest this amount of time in your life when you signed up? What made you take the leap?

Mike: I didn’t even know anything about technology, and I never heard of him paisa. I

Rowena: Yeah, that’s the crazy thing.

Mike: Know and but I knew I kind of knew internally I was an entrepreneur and I’d had feedback from others, and like all the projects that I I had worked in, like in Ghana and Zambia before, like I had the ability to hustle and to turn something, nothing into something. And when I was at Oxford, I learned this this classical definition of entrepreneurship from from a Harvard professor named Howard Stevenson that is entrepreneurship is the pursuit of opportunity without regard to resources controlled. And that was something that always stuck

Rowena: Oh, boy.

Mike: Into me. And so just like the relentless pursuit of opportunity, so you know, you don’t have a budget, you don’t have a salary, you don’t even have an investor, but you see the opportunity and then you like you kind of crystallize into a vision and you hustle to, like, make something happen. So I kind of back to myself and knew that, you know, I knew I could be a connector and a facilitator, and I’m like, there were people like Brad and Brett that were building businesses and were amazing entrepreneurs and had vision. And then there were people like the Grassroots Business Fund and investors that just like we’re on the other side of the world that weren’t on the ground or didn’t know how to find these entrepreneurs. And so that was really what the problem I was seeking to solve initially where, you know, I’ve said, I’m like the go between because I’ve got this experience in Africa and I can relate. And I’ve got this network now from my MBA and just from like the privilege of where I come from. And with engineers without borders as well to to find the money. And can I facilitate the two and then one other kind of side story I should share? Related to this as well that I think is is relevant is so the chairman of Engineers Without Borders, who is the very first angel investor. There was a gentleman named Patrick Bassett who when I met him, I was a volunteer and he was working at a telco in Canada. And then he got the job as the Google CFO.

Rowena: Oh, nice.

Mike: And

Rowena: That’s a good connection

Mike: Today,

Rowena: To have.

Mike: Today he’s actually the Twitter chair.

Rowena: Really?

Mike: And and so

Rowena: I hope you guys keep in touch, right?

Mike: He’s he’s an investor and boost. But I just actually I started harassing him because

Rowena: Nicely, nicely, though, yeah.

Mike: I’m like the guy who knows the Google Google CFO. So I just started sending him emails and pitch decks, and it led to like a phone call and he got interested. And then he actually came in in kind of early 2010 as our angel investor, EDGE Zoona. So we were like a Zambian fintech startup with the Google CFO as an angel investor, and he he became like an amazing force for us and helping us develop the business model and just mentoring me over the next 10 years. And he got more and more involved as well. But that was kind of, you know, to your question of like, I didn’t know technology, but I knew I could kind of like, bring these soft connections and and help build the business. And yeah, over time, we built it to something that ended up serving a quarter of the adult population in Zambian. And at our peak, we were moving 80 million U.S. dollars a month in like 20 30 dollars transaction. So it was a pretty big, big operation.

Rowena: That’s wild, particularly when you think of a country like Zambia, like there is not like relatively not that much cash nets don’t have that much of it flowing through, Zoona says a lot about the amount of the market that you were capturing. I also really like the story that you pulled out there about really working your network and speaking up for this, this vision of this cause that you believe in. When I speak to other African entrepreneurs or, you know, entrepreneurs in Africa, I think there’s there isn’t as much of this. Like, I think one thing that is missing, particularly ones that don’t get the funding, is that ability to really work that network. And that’s something that that you’ve done a lot of in order to get the interest in Zoona and the international attention that it that it deserved. Mike, can I read can I read a quote from your book that I really loved about just about like the early days of you working with Zoona, which for me, I think was one of the moments that, like sort of captured that that initial hustle of what it was like to get that organization off the ground. It’s about when you when you recruited the CFO, Keith, you brought him into the organization. This is the quote. In Keith’s first month, in October 2010, he took over the financial accounts from Brett and set up a new cash flow forecast. He [00:10:00] called me from Cape Town to explain that things were way worse than we thought. We are eight weeks from being broke. He said Brett, when he heard this news, clapped his hands and let it allowed belly laugh. Today is going to be a great day, he said. Keith face contorted with a confusion. Why was his partner laughing? Brett. Your co-founder carried on. We are always running out of cash, but this time we have revenue and we have visibility. Mike That sounds like a stressful a couple of first years. What was it like living from paycheck to paycheck to paycheck like that?

Mike: I’m doing it all over again now,

Rowena: Familiar territory, huh?

Mike: But it’s actually something that every entrepreneur relates to. And so it’s probably not actually shared enough that all these people that are creating new businesses and startups are making huge personal sacrifices and doing it under huge stress. And and, you know, like you mentioned before of like like most people don’t have the networks to actually get the funding, even though like the funding would like dramatically change their business and their their prospects for success. It’s always stressful. I think you have to kind of like, I think I’m sure I’m addicted to it. You kind of have to love it and like, thrive under those conditions because if you want certainty or stability, it’s just like the early phases of a startup are probably not for you. And I learned I learned this really as a volunteer because when I first moved to Ghana, I spent my first, I think, four months living in a slum in Accra on an all inclusive budget of three hundred dollars a month. And you know, and but it was it was an incredible experience, and I made like friends with people who like that was their life. Like for me, I’m like, this is a short term experience where I can immerse myself and try to empathize a little bit.

Mike: But then I’m looking around me and I’m like, You know what, for these people and all my friends and everybody in this community like this is like day to day forever, right? And there’s no way out of it. And so I learned to get by with with very little and and I think in a startup mentality, you do that as well, too. It’s like and you’re just constantly problem solving and and making these like these trade offs. And when you get to like you’re running out of cash and you’re like, Well, you know, we can’t pay ourselves salaries. So this month, but you always try to like, do do right by the people that are working for you and see who can sometimes defer things or what expenses you can push out and what suppliers can like, you know, not pay. You cannot pay. But like you always trying to build relationships, I think that’s like, really important where everybody. If people believe in your vision and what you’re doing like, it’s amazing the sacrifices they will also make on your behalf as an entrepreneur.

Rowena: Like

Mike: And

Rowena: How you got Keith to liquidate his retirement plan?

Mike: Yeah, exactly right. And it’s just like, it’s like a dumb business investment at the time, but it’s because, you know, we all believe and like this could become something that is very, very impactful and also could ultimately be valuable for a lot of people. And that’s why, you know, that’s why you do it, but it’s not easy. And one of the things that maybe I can also share is that it’s been incredibly important to me is having my wife. And then later, my kids like kind of behind me because to do it alone. You know, it sometimes makes the decisions a little bit easier because you’re not affecting other people, but you. It’s also very lonely, right? And you just like, work yourself to the bone. But a lot of the stress I’ve gone through, like my, you know, my wife shared all the ups and downs. She couldn’t read the first few versions of of the book that I wrote and and just only recently read the final version because she was like reliving all of these times. And and I look back to the quote you read and I’m laughing and I’m like, I remember this like, so, so

Rowena: You

Mike: Viscerally.

Rowena: Remember being in the car.

Mike: I remember being in the car and I’m like, and I was a great day because we made all these decisions that we were delaying because, you know, we were focused. We’re like, How do we generate revenue or how do we change our pricing? How do we push out expenses? What costs are we carrying that we don’t need to? But my my wife, you know, read these early parts and there are some things that were like amazing, but there are other parts where she was just like, you know, really stressed. And like, I didn’t even know that at the time because I was just like in the zone, like in my business. But she was behind me supporting me and and and didn’t want to bring me down by by sharing kind of what I was stressing her out at the time.

Rowena: Is there something is there an example of that, like in the book where you didn’t realize that she was feeling it the way that she was?

Mike: Well, so the one that jumps out, there’s lots of examples, but the one that I’m kind of like immediately pops into my my head is at the end of the book. By the end, the end of the book is a happy ending spoiler.

Rowena: I hope so.

Mike: Yeah, because it’s how, you know, failing in order to win, [00:15:00] which I set up a new a new venture. But my departure at Zoona was, you know, I’d been there for 10 years. We had had a $40 million investment round collapse. We had to lay off most of our staff. We went from that like two million active customer base and lost most of them to competitors because we were running out of cash and we couldn’t even cut prices to to keep them. And you know, and as I was, I was getting my head around that I had no moves left in order other than to step out. And that’s why I left. I kind of stayed on as long as I could and then got to the point where I’m like, You know, the only thing that I can do in service to this company is actually step down and exit. And and that facilitated my my co-founder Brad to take over.

Rowena: Yeah, that sounds super hard.

Mike: Yeah, and I was getting my head around these decisions, but my my wife was then thinking around like, are we going to lose our house because we had, you know, we bought our first house a year earlier and we had a big mortgage and we did a renovation and it was looking like, you know, I wasn’t going to get any kind of severance because the business had no cash. So. So it immediately jumped into like, you know, we’re going to lose our house. Like what? What are the financial constraints that are coming down the pipeline? And I’m like the classic, overly optimistic entrepreneur Mike. It’s going to be fine. It’s going to be fine. But.

Rowena: You got to be. And I’m sure she saw that you were under so much stress and she didn’t want to burden you with this additional thing, but which obviously playing a huge part in her life, you know, and how things are going play out for your family.

Mike: Yeah, you have to like you have a community that kind of carries you as a founder. Like a family, a community and and writing the book, like one of the things I did was a crowdfunding campaign because I actually I had no money and initially I was like, Well, I need to. I need to professionally edit this and figure out how to publish it. But it was amazing of like how many people like, supported that and and wanted me to tell this story and kind of put it in in words on paper and now promoting the book. And that’s one of the things I’m like so proud of. And I look back very fondly at my time of Zoona like the network and community we were able to build and how that’s now propelling me in my in my new venture going forward.

Rowena: Yeah, for sure, I was actually just speaking with some former Zoona employees who have a book club around your book and they’re they’re saying that it’s a it’s sad because they’re reminded of all the good times, you know, they had a really good community together, and they’re reliving it through this book that you’ve written. Mike. Before we move on, you know, before we skip ahead of this too far and I mostly for the benefit of our audience, can you can you explain in a little bit more detail what the offering was, you know, like how how the technology worked with the agent market that you had. So it’s a bit sort of clear like what was the change that you were trying to bring separate from NPS model?

Mike: Yeah. So great, great question, and I probably need to paint the picture of what it was like in two thousand nine.

Rowena: One other thing I’ll say about it, as well as I think one aspect of the the product or the idea that you had, which is uniquely where you were uniquely well situated for it, is this combination of the software expertize, but also the agent network, which only a company in Africa like founded, you know, you know, with with Brad and Brett like, you know, with strong connections in Zambia and South Africa could make that. And like a European or an American tech up cans. And so I’d love to hear you just describe it a little bit more detail what that what that offering was.

Mike: Sure. So if you if you go back to two thousand nine and every year before that. And imagine yourself in in like as a person like living in Zambia, which is a country of 13 million people at the time, you don’t have a bank account. Nobody, you know, has a bank account. And let’s say you’re like the breadwinner in your family and you have several dependents that you need to take care of. You need to pay school fees for your, your kids and your nephews and nieces. You may have a relative that’s sick. You have to send money to your mother somewhere else in the country because you’re you’re working, maybe in Lusaka. So you have all these dependents, but there is no way to move money around because nobody has bank accounts. You can’t just go into online banking and download your app and like, press a button. And what people did at the time? Yeah, as they would, they would physically take cash either of themselves and just like drive places, or they would go to like a taxi rank or where a bus stop and like pay a bus driver, a taxi driver to physically move cash to where it was going. And there was a parastatal post office that you could at the end of every month, like hundreds of people would go stand in these very long queues and and send money through the post office at a fee of like probably 13 plus percent. And and then but then the Post Office is in the rural areas wouldn’t actually have cash, so it could take like two to three weeks for the money you put into the post office to come out the other side.

Rowena: Yeah, and just the idea of like taking a wad of cash and giving it to a taxi driver like that just sends chills [00:20:00] down my back.

Mike: Everybody was carrying cash, right, and business trade like like so our very first money transfer, which which will answer your question about like the use case was from a small town on the Tanzania Zambia border called Nyakundi to another small town just outside of Lusaka called Mazibuko. And this was I described this in the book, but it’s like, I think it’s like a day and a half drive, like it’s it’s a far, far distance, right? And so the when we did this transaction, the person in darkened on the Tanzania border paid money to one of our agents. The agent had a cell phone because now this is what’s changed right now. Everybody’s a phone and an internet connection. And it wasn’t 4G. It was like EDGE or GPRS at the time. And not a smartphone. It was like, Yeah, but we had internet enabled phones with Opera Mini browsers, web browsers. So it was like the user interface sucked, but it worked. And and so the consumer went up to this little shop that had a sign that said Mobile Transactions, because that’s what we actually called before, before we rebranded as Zoona.

Mike: The agent had a phone, would take the cash from the consumer and enter some push some buttons on his phone. And then the money electronically would like go through our system. And then there’s another agent in this other town a day and a half drive away called Mazibuko that had a corresponding increase of electronic money in that agent’s account. And then a customer, the receiver would come and then withdraw cash from that agent. And so. So one agent receives cash, the other agent pays out the cash. But the experience for these consumers is the money is now moved like in a matter of minutes from like the point of giving it to one agent and the cash coming out the other side. And I remember our sales agent who who is present at the time, asked the the first customer what he normally did because he had to move money once a month to this to this person. I think it was like for a business reason. And he said he normally drove like he normally drove with cash.

Rowena: For

Mike: And

Rowena: A day and a

Mike: So,

Rowena: Half.

Mike: So the the light bulb for him was he’s just like, You have just changed my life, right?

Rowena: Yeah,

Mike: Like you

Rowena: I

Mike: Have

Rowena: Can

Mike: You’ve

Rowena: Imagine.

Mike: Obviously saved me so much time. And he’s like, I’m going to use you forever. And he

Rowena: Like

Mike: Did.

Rowena: Three working days, the fuel associated with that, just like no

Mike: Yeah.

Rowena: Knowing that the money is going to arrive on the other side. I know there’s people say there’s low resources in various different countries, but at least this aspect, this transfer of cash like this is this is infrastructure in which the economy runs. And you can imagine how much how much of a game changer it is to have that

Mike: Look

Rowena: Kind

Mike: Like

Rowena: Of

Mike: We

Rowena: Service there.

Mike: All we all talk about now, like when the internet’s too slow because it like you can’t refresh your browser and it takes like more than one second, but like this was and where that problem was especially acute was when somebody was sick. So they, you know, they need to pay their hospital bills because they can’t get treatment unless they do. And and oftentimes, like almost all of our very early transfers for many years, like the the person who was receiving the money like like had already spent it like they they needed the cash urgently because there was an urgent need. And and so it was always like feeling that emergency. If, like I, you know, this person needs medicine or treatment for malaria, and they could die if they if they don’t receive money to get this medicine or this treatment. And so send her like it’s, you know, you don’t have like a day or two to like, drive across the country or you can’t take time off your job. And so to be able to go to like the nearest Zoona agent, that could be like 100 meters from your street or close by and then just put money like to one of the agents and it pops out. The other side was it was pretty revolutionary.

Rowena: Yeah, I wonder how many lives Zoona has saved just by being able to pay for those medical bills? We’ll never know. But.

Mike: But the second part of your question, I’ll touch on the Asian network and a combination of technology that was really like the magic we had of like this two sided business because it, you know, it meant we needed a technology platform and my co-founder Brett and a couple of developers he had worked with before built it from Cape Town. So we always had this split office with like the technology in South Africa because there was no technology developers in Zambia like that. That was an ecosystem and a talent pool like that didn’t exist. Whereas in Cape Town, in South Africa, you know, it’s a very multicultural and quite international community. And there were like banks and a couple of startups emerging. So there was technology talent there, and it’s now become like a real fintech hub, as you know, having living there. And so like, the technology was super important. But really, what made it work was having like this agent network, this human-powered like ATM network and what we figured out there was the best agents we had to create from scratch. And what we would do is we would take young women and men straight out of high school that had like a high school diploma, but like unemployment rates were sky high, so they there weren’t any job prospects. And [00:25:00] especially for women where the the kind of career prospects where you go be like a domestic worker, a cleaner or a secretary or you, you get married to somebody who can support you and you start having children like the, you know, children at a very young age.

Mike: And so now we provided this micro franchise like business and a box opportunity where you could get a kiosk, a phone, digital loan and then a T-shirt, and you could sit in this kiosk and do cash in cash out transactions for people sending and receiving money. And every transaction you do as an agent, you would get a commission on that. And initially, it was really hard to kind of get up and running and like getting the first agents going. And just everybody was taking big leaps of faith and and like, we didn’t have a brand, nobody knew who we were. But over time, what happened was word of mouth started spreading and then some of these young agents got so busy. And we’re making so much money from commissions that they started hiring their relatives and then opening up new locations. And we got to the point where I just share like one example of like we had this young woman named Masuzoe, who I think started with us when she was 22. And by the time she was 27, she was turning over a million dollars U.S. a month in cash and employing, employing over 20 people. And all the people she was employing were like, I think, like 90 percent of them were women, and they all wanted to be agents like her. And so it created this whole ecosystem of of agents where we had a tremendous amount of impact.

Rowena: That’s amazing, I need to get her on the show next. Desmond Albano, it’s great to hear that. And again, like what I think is amazing about that story is that there are other examples of technology products out there that you could build anywhere in the world and maybe like import, you know, into different markets and such. But like this particular offering, you could only have built with your agent network, and because you had the agent network, you could work really closely with them. There’s there’s one part in the book where your team comes to you. You have the revelation that, like, creating jobs for these entrepreneurs is is your mission. It’s like part of it’s what you’re trying to do with Zoona. And I thought that was that was inspiring just to hear like, you’re serving directly those those entrepreneurs that you’re that you’re creating and you’re serving in those communities. I love to talk a bit about how this the business that you had played out in in the broader market, like when you know, you mentioned M-Pesa as another example, and M-Pesa, I believe, is run by the telco operator there. And when we hear about mobile money, it’s almost automatic like, oh yeah, Airtel money like different kinds of money that is provided by telcos, which, you know, they come to market with a very different thing. But they they do have a huge advantage. They’re huge, they have massive pockets. How did forgive me if this is a bit cruel, but like, how did you ever hope that Zoona could succeed against the telcos?

Mike: It’s such a good question, and in the end, we didn’t. It is is another spoiler alert, but for a long time we did. And when we started, we were paranoid and we didn’t believe we could succeed, but we were first to market and what we always envisioned Zoona would become was we would we would build out this agent network and this money transfer service and then then the telcos in the market. We knew they were going to copy what was happening in Kenya and roll it out in Zambia and everywhere else, which is exactly what they’ve done. We knew they had big brands, deep pockets, big consumer bases, so we didn’t think we could compete with them. But we we figured that they would want to use the agent network we were building so that their customers could come do like cash in, cash out at our agents and and Zoona could become like this interoperable agent network like serving the entire market of mobile money. That was

Rowena: Oh,

Mike: Like

Rowena: Interesting.

Mike: Our first plan.

Rowena: So the human capital, the human collateral, was a key part of your competitive advantage.

Mike: Yeah, and and we put that strategy to the test when it was a few years later like they were, they were slow to rollout, but when they did, they they they came with with a lot of noise. And MTN Big South African owned telco was was first and they and then Airtel bought a company called Zain that was in the market and also rolled out. And what MTN first did was everywhere. We had a green zone, a kiosk. They put a yellow MTN kiosk right next to every one of ours in the country, like overnight, and all of their kiosks were like one meter taller. Right. It was like, Yeah, it was. It was. It was a show of strength, and some of them were so close to our our kiosks like our agents couldn’t even open the door.

Rowena: That’s ridiculous, I mean, it’s I guess it’s business, but like, come on.

Mike: Yeah, so that well, that woke us up and we felt like we had a sustainable advantage at the time because we had a network effect going and our service was so good.

Rowena: Did but does does MTN and Airtel, don’t they have their own, you know, those guys that sell scratch cards is that

Mike: Yeah.

Rowena: Their equivalent of an agent network?

Mike: Well, so they they tried that and [00:30:00] it wasn’t working, but then they copied us, they said, Oh, zonas got kiosks, so it must be the kiosk that must be why they are getting customers. So then they just rolled out all of these like yellow kiosks. So just a copycat move. But it scared us. But internally we were saying we’re like, You know what, if our entire business is only about the kiosk, then we actually don’t have a business we deserve to lose because it’s really about the service. It’s like getting the the right person inside that kiosk who provides a good service to the consumer. They always have the cash to pay out the money transfer like. So, whereas with the mobile money guys, consumers could go to like one of their agents and they’d be like, Can I send money or deposit cash? And the agent would say, I don’t have I don’t have enough float like electronic currency to receive that money. So. So they would they would have to reject the transaction. So we were competing on service, but we were scared enough that we went and tried to do a partnership with MTN’s competitor, Airtel, and we actually integrated with them. We did a commercial deal. We did a huge national launch. We got a small side note, but we we got an aviation license to fly a blimp, a Zoona blimp, which are one

Rowena: Oh, man.

Mike: Of our our marketing managers, managed to get permission from somebody to put it above the Airtel head office. And then

Rowena: That’s awesome,

Mike: Our

Rowena: I

Mike: Call,

Rowena: Want a picture of it.

Mike: Our call center, got lit up with calls from people asking if we bought Airtel and we heard we heard that their senior management was not impressed at all. They were like, who? Who approved this?

Rowena: Well

Mike: But it

Rowena: Done.

Mike: Was. It

Rowena: They

Mike: Was

Rowena: Built

Mike: A great.

Rowena: The kiosks. You got a blimp,

Mike: Yeah.

Rowena: You know. All’s fair

Mike: But

Rowena: In love and war.

Mike: Yeah, long story short, like, we launched this partnership with them, branded all our kiosks, and then they still rolled out their own kiosk network right next to ours, like overnight. So like in the background they were, they were partnering with us in the foreground, in the background. They were planning their own attack and then suddenly Zoona was sandwiched between like a yellow MTN kiosk and a red Airtel kiosk. And what happened was that actually catalyzed our growth because it created all this noise in the market and all these people would go and they would try Airtel or try MTN and their service sucked, and then they would try to Zoona. And it worked. And then we became like the business that consumers trusted because every time you go to a Zoona kiosk, you could send or receive money. The agent was friendly to you. Our brand was local. We weren’t a foreign company. We were the underdog. And we you can see it in our in our numbers where it’s like we went from like slow linear growth to like starting to like upwards exponential growth after that point.

Rowena: Wow, that’s that’s wild. And it’s really it’s really inspiring to hear like, I think looking and hearing, how about how you were able to win the aspects of the market because of your service to the customers, because you were able to provide float? I think there’s a message in there about the value of the market that exists, like you were able to prioritize these mobile money services and the quality of the service and the quality of your application in a way that the telcos weren’t. And you know, again, feel like, you know, teaser, I guess, like in in the book, there’s there’s other reasons, at least in my read about why things went south later. But like you had the chance, there was a clear opportunity there for you to win despite the telcos. And we could even see now in other things that are going on in the market with the $200 million that’s going into Wave in Senegal for doing basically the same thing. Like it’s the opportunity is there and it’s possible to beat the telcos, you know, like that’s that I think is is a key thing about your story that really struck me.

Mike: Well, I kind of I think fast forward a little bit to what happened at the end with this because I completely agree with you and I’m still convinced we could have won. And it’s I have very few regrets, but one of them was not not having the opportunity to really like, evolve and and take the next step. And we made a lot of internal mistakes. And like with hiring and just like scaling challenges and going into other markets prematurely and a lot of things that I do write about in the book, but at the end, like towards like twenty seventeen and going into twenty eighteen, we had developed a new platform called Zoona Plus, which was like a full stack digital bank for micro savings, microcredit, money transfers, bill payments. It was on, there was an Android app and it was leveraging our brand and our agent network and our two million consumers. And this was it was an incredible product. We had like a whole fresh brand behind this and we actually rolled it out and we acquired like fifty thousand customers like the first three months. It was like very successful. And our head of product at the time was it was a woman named Christine Webber, who then went on after she left on her to become the head of product at Twenty Six Digital Bank in Berlin in Germany.

Mike: So we had an incredible team and I’m still convinced like this was the best product in the market and it would have won. But what we needed was money, right? And and that [00:35:00] was the point where we were raising a $40 million Series C investment round and we needed to like properly capitalize this this. It wasn’t really a pivot. It was like a transformation from a money transfer legacy business that had reached the top of the curve. And it built us this like all these assets. But we wanted to evolve into like this digital bank and then roll it out, also in Malawi and Mozambique. And that’s what we felt faced some severe tailwinds where we had a lead private equity investor that pulled out like not only at the last minute, like the last second of the last minute where I got a I got on a plane from Cape Town to London, where I thought I was going to go sign documents and have a celebratory dinner and found out that their their new management team at the investment fund had decided they’re not going to go forward with the investment. And this was after like four months of due diligence.

Rowena: That’s heartbreaking.

Mike: Yeah, and then then that kind of led to like the last nine plus months that of my time at Zoona, where when we should have been rolling out Zoona plus and going out really going for it, what we were doing was just like cutting costs and laying off staff as fast as we could. And because we were running out of money because we didn’t have the investment. And you know, anybody who’s run a business knows that actually to downsize costs money, but you have to do it. But it’s like you have to pay. Severance is and it like destroys the culture and you have to let people go that have been with you for a long time and that you you kind of bought into your vision and we’re ready to like, really go to this next level like our whole staff had. Like we had 200 plus people and they would all be building out for over a year to this investment, closing for the launch of Zoona Plus to like take on the telcos. And then then it didn’t end and it just like it just reversed everything so quickly. And I learned from like a lot from that like one is like if you have like the best business or the best culture and product and brand, like if you don’t have the money to compete, you can’t. If we had our $40 million round close, even though we were getting aggressively attacked at that time by the telcos, like I think we we would have pulled it off because our product was great. Our brand was still strong, but it was just that lack of being able to get the funding we needed to compete and it was hard. We were in. We were in a small market and the timing wasn’t right. Right.

Rowena: I

Mike: So it’s.

Rowena: Believe you, I think there’s when you look at the story of successful or unsuccessful start ups, there’s there’s always that aspect of like, you know, like on the books, you have the sale, but maybe maybe the numbers don’t. The cash doesn’t come in on time, you know, like you’re cutting it so close in some sometimes it’s a little bit too close. And my understanding what happened with Zoona was just like it was like a little bit too close, but it could easily have gone the other way. I don’t know if you’ve read the shoe dog the story of Nike,

Mike: Yeah.

Rowena: But

Mike: Love

Rowena: There’s

Mike: It.

Rowena: A similar moment where the guy is like, like hiding from his debtors because he literally doesn’t have the cash to pay someone and like the difference of a day was all that it took for Nike to be the company that it is.

Mike: So, so that book very much was an inspiration for me while I was writing and I had already I already had the title in my head, but it was like, you know, I started off like, you know, I failed to win EDGE Zoona Mike Zoona failed to win and we didn’t achieve the vision that we set out to. But but then it was like this you know this this second meaning around, like everything we achieved, we had failed so much until we had a breakthrough. And so it was like really this theme of like failing in order to win. And then I started realizing, I’m like, you know, we were winning the whole time. It’s just like, I felt like it because we were failing and failing and failing, and it felt like we were always failing. But then you look back and you’re like, No, we like all these failures kind of led up to this, to these like milestones and successes and breakthroughs. And then then I read Phil Knight’s shoe dog kind of. While I was, I was processing this and everybody knows Nike. How many people know about blue ribbon? And like you know, 80 percent of that book is about blue ribbon, which was like his company that that eventually turned into Nike that almost, you know, crashed and burned and died over and over and over and over again. And and that was like a big inspiration for me because I was like trying to think about like, what am I going to do next? What company like? I knew I wanted to do this again, and I wanted to start a new company. And then, you know, I was like, You know, Zoona is my blue ribbon and boosts my new company. Like, could be my Nike and can I can I use the fit like my failures at Zoona and really harness and embrace them and learn the lessons to launch something that could go on to become, you know, to fulfill, like like my true potential and the vision that we, you know, we started off with its own.

Rowena: Tell me a little bit more about Boost. Tell me about how you were able to pick up after everything that happened at Zoona and the heartache and the roller coaster there to lend a bit boost.

Mike: Yeah, so the vision for Boost is to power the growth for Africa’s one hundred million plus informal retail entrepreneurs that are still still largely offline, underserved employees. Seventy six percent of people in urban areas like this is the economic backbone of the continent. [00:40:00] And these are providers of essential services. So groceries, small restaurants, small independent pharmacies, Mike, fruit and vegetable sellers. And this is where how the economy functions. And the other thing about Africa, you know that that those of us who know it. No, but outside you don’t often know it’s like the demographics, how it’s a very young population and the average age in Africa is like just under 19. And so in the next 20 years, Africa is going to balloon to two billion people, and some of the big cities are going to be like tens of millions of people. Right. So the informal economy right now is this huge market that is is the primary economy and primary market, and it’s going to become huge. And and I kind of see this as like a moral imperative because I think if we don’t help and enable help is not the right word, but enable the entrepreneurs that are creating value and creating jobs in these economies to to grow and to thrive in the digital economy that’s now emerging. There’s there’s going to be a growing divide between rich and poor and all the the negative aspects that come from that which you see very much in South Africa, like the parallel economy that exists.

Mike: And on the flip side, it’s like obviously an enormous market opportunity similar to like in the early 2000s, where you have like hundreds of millions of businesses in the, you know, in the rich parts of the world that are offline. But now there’s the internet and there’s like Google and, you know, an Amazon and Shopify, which started then too. But all of these small businesses have to make the leap to go from offline to online. And now you have e-commerce and, you know, the digital economy that’s emerging. So we’re at this really interesting inflection point in Africa, and I believe Boost is going to play a pivotal role to to bridging that gap. And we have a starting off with like a very simple value proposition of helping informal retailers in these different segments that I mentioned order stock with a very simple stock ordering experience. It’s not we don’t even have an app, so it’s like a no app ordering experience that you can use their phone. They can see a catalog of all the products and the pricing that they would get, and they they order what they need that they can sell, and then it shows up at their door. But normally these entrepreneurs would have to go to like big open air markets or to dozens of wholesalers just to discover prices, and they would physically need to move goods to the goods back to themselves because nobody’s doing last mile delivery or it’s a very underserved, underserved part of the market.

Mike: So we’ve we’ve got that component. We’re also bridging the working capital gap. So there’s like a 500 plus billion dollar working capital gap for small businesses in Africa, and that is mostly acute in like, say, Christmas time or peak seasons where the demand will rise. But the working capital is fixed and so prices go up in the market. But all these entrepreneurs generally get squeezed and they they can’t stock their shelves with what they can sell. And one other component around that is we. We’re doing this multiple market because one of the big lessons I learned Zoona was how hard it is to scale multi country. And so I wanted to set off the challenge of like, can we design a business that actually goes pan-African from day one? And so we started in April 2020. I was working from my bedroom in Cape Town during one of the hardest lockdowns in the world. You know, the world was closed at that time. And yeah, and I got two co-founders in London that were working remotely, CTO and chief operating officer and then two co-founders in Ghana in Accra that I had worked with at Zoona before and then a couple of months later found a couple of co-founders in South Africa.

Mike: And then a few months after that, some in Nigeria and completely remotely, we were able to in like a just over a year during COVID without even really meeting each other. I didn’t meet my co-founders for the first nine months, build, build a business in South Africa, Ghana, Nigeria and now this that’s piloting in Egypt that is growing at like plus thirty five percent month on month. And and just I’m really convinced that it’s actually going to work. And it’s like it’s the very early phases. And it wasn’t easy. Like, I had a lot of the challenges. I actually expected the fundraising. I thought I thought that would be a lot easier because I thought with my my track record at Zoona and what I built, you know, I’d heard the stories of Silicon Valley. Like, if you’re a failed entrepreneur and you do it again, everybody wants to throw money at you. My experience is very much the opposite where, you know, like I’m kind of back into the pool of like, you know, first time entrepreneurs. The ecosystem has evolved immensely and and so there’s a lot more startups now and and so needing to get to the same [00:45:00] level of traction as everybody else. Raising money, remotely hustling. So our first million and a half dollars, we pulled in like my smallest check was $2000 from a woman in Argentina. We have investors in every single continent

Rowena: Every

Mike: And

Rowena: Dollar

Mike: It goes

Rowena: Counts.

Mike: Back to yeah, to that point where you mentioned at the beginning of our conversation around like just working the network and I started trying to like find a fund that would, you know, just anchor us and say, here’s the money, so you don’t have to focus on fundraising and go build this vision. But I realized like that, at least in Africa, that doesn’t yet exist. So I I do this. I still spend most of my time fundraising and just view it now very much in service to my co-founders that are building these businesses in Africa so that we have four companies now that don’t have to spend any of their time fundraising because I can fulfill that need. And and as much as it like, it pains me at times and I I just like it. I still kind of realize I’m like, you know, we’re getting huge leverage from doing it this way. So I’m quite excited.

Rowena: Yeah, I mean, it’s a huge need, and I think it is an unfortunate like a an unfortunate and inequitable truth that it’s so much harder to access funding even if you have the quality and the team and the ideas. If you’re working in Africa also for the same structural issues you highlighted in your book, how everyone wants you to work in multiple markets. But then it’s actually harder to launch in multiple markets at the same time and all the tensions related to that.

Mike: Well, I would also just say one other thing Rowena is like, so I’m a I’m a white male Canadian with an Oxford MBA and like a 10 plus year track record of building like this business Zoona. And it is incredibly hard for me, and I can’t even imagine if you are like a, you know, a Ugandan woman like female entrepreneur, like with a startup or, you know, like how many thousands of entrepreneurs they are that just, like, don’t even have the network or the access or know how to get the money and like the barriers that that they must face and how frustrating that might must be. And the one thing I would say about like the funding ecosystem in Africa is it’s like it’s exciting because money is like plowing in now, but it’s like it’s only the tip of the iceberg of what is needed at all stages. And it’s it’s if you compare like the total Africa like funding for the startup ecosystem. It is like, you know, the I may get this statistic wrong, but I saw it on Twitter like a reliable source of all information. But it’s like, it’s like it’s like equivalent to like the funding that’s gone into like the Pittsburgh startup community in the U.S., right? So it’s

Rowena: It’s sad

Mike: So drop

Rowena: Because it’s

Mike: In the

Rowena: True.

Mike: Ocean. Yeah, still a drop in the ocean of what’s needed to really support the ecosystem development and. And one other thing I would I would also share too is like that. I think we all collectively as entrepreneurs and like investors and people supporting the startup community need to get over the over the mindset of like, there needs to be a company that wins for all of Africa, everywhere, always like forever. Right. So like, I often get asked like, you know, like, how are you going to compete with this company in Kenya? I’m like, Well, they’re in Kenya. I’m not Bruce Susan, right? And like, yeah, like Ghana, like Accra to Cape Town. It’s the same distances like London to Moscow, and you’re like, No, no investors in the UK would say, like, Hey, there’s another company in Germany, like, how are you going to compete with that company in the UK market? And I I feel there’s too much of that in Africa now, like there’s a huge appreciation of like the startup ecosystem that needs to emerge and the role of of competition in driving forward innovation and providing the goods and services to like all of these underserved communities and what value that can unleash. Like as Africa grows to like two billion people, like what is going to be needed to actually really serve all of these people and create jobs? And you know, we are like one percent of the way there right now.

Rowena: And just the recognition that Africa is not a country, there’s many countries within it with many different diverse markets in there, and so treating it all like one country is is both ridiculous. It’s just like a ridiculous way to look at the issue.

Mike: I agree. I couldn’t agree more.

Rowena: Thank you, Mike. In the last couple of minutes that we have, we’re going to switch over to a short set of rapid fire questions. First question for you, Mike. If you could take a step back in time, what advice would you give your younger self? And I know your book is peppered with this, so if there’s just like one or two key points to pull out there?

Mike: One of my core principles now that I wish I knew then was to build build a business or a team with the fewest right people, fewest is important because a like, you know, more people equals more costs and more overhead, and that requires more money and money is hard to get. But also, the smaller the team, the faster you can move, the easier it is to stay aligned, the more agile you can be. So I think just staying super small is important and [00:50:00] like not hiring ahead of the curve or just like there were points at Zona where we are like high fiving each other when we didn’t know the names of all our stuff because we’re like, Hey, we’re growing. But that should have been a big, big red flag. And then the right people, because it’s extremely hard to find people that fit the like the culture of the organization are aligned with, like the the values and vision and purpose, have the skills and abilities and experiences to do the role and like our good people to work with. There’s so many variables that that go against that that make like misfits easy. And so I think really taking your time to to make sure that you’re working with people that you want to work with for the next 10 years and you can grow together. And I’m very deliberate about that now how I select co-founders and investors and partners. Just thinking of like, you know, the boxes of and like the the roles that people will play and and assessing the people fit.

Rowena: Nice.

Mike: So that’s probably the biggest advice that I would give that to all entrepreneurs.

Rowena: Yeah, absolutely. Thank you, Mike. Next question is if you have any requests for donors or policymakers looking to foster organizations like Zoona.

Mike: Yeah. Two things for donors and policymakers, I think really focus on the enabling environment for startups. And there are so many things that need to be done, like things like startup acts, which I know is is kind of in motion. It’s been in motion for a long time in South Africa, but tax regimes ease of setting up company, ease of moving money in and out, removal of exchange controls like all these things like make doing business in emerging markets, in places like Africa so hard and like you can’t focus on your customers and business. You have to get like a PhD and like transfer pricing and like multi country tax policy. And because to get money like you like, that stuff’s really important. And it’s a sad reality. Like in many countries like investors don’t want to invest directly into those locations. They want to put their money into, you know, a topcoat which is in like the U.S. or U.K. or Ireland or Netherlands or Mauritius or somewhere. And I think this is because the enabling environment is not always beneficial and making also like a fair playing field for startups to compete with the big, big players like the telcos that have a lot more market power. There were definitely times where we were struggling to get partnerships and having to compete for tenders that the telcos didn’t, even though we were, we were small and they were big. So for policymakers and donors, I think there’s a big role there. And then for, like other investors, just taking more risk is the general advice I would give because like, we’re like, it’s a risky, it’s a risky environment.

Mike: Entrepreneurship is risky. But a lot of the times I heard this, I was rejected by an investor last week who told me that our bar for investing in Africa is just much higher than it is for anywhere else, like in the U.S. or Europe or anywhere else in the world. And I can put myself in their shoes and I completely get it. And the bar in terms of like traction. And I’m like, yeah, like it’s a rational thing where it’s like you, you know, you want to see more traction, a more revenue and more validation. But what it means is all of these like really good businesses and purpose driven companies that are starting have to get a lot farther with a lot less. And that’s hard, right? And it just people burn out. And and I think we need like more more money, especially at seed stage funding. It’s getting better, like for the angel investing. And it’s like kind of easier now to like, get started than it was when we started Zoona. But like, it’s really, really hard. Once you get going to access the capital, you need to start scaling because all of these investors are looking for like the one winner that’s going to take over the whole ecosystem when we need like thousands of winners, right? So I would say like that would be my advice to other investors coming into the space.

Rowena: That makes a lot of sense to me, and I do I do hear from a lot of entrepreneurs in Africa that the biggest barrier is cash. That entry point, you know, the initial seed funding just to get off the ground and then the funding that comes after that, obviously Mike. Is there someone in the industry who has inspired or guided you that you want to give a shout out to you on this podcast?

Mike: So many people,

Rowena: Maybe one or two.

Mike: But yeah, I’ll pick Katlego Maffei and Carl Wei-xun, two of the co-founders from Yoco that I’ve gotten to know Katlego gave me a wonderful endorsement for my book, so. So thank you. And I was watching their journey from when they were just just getting started and they were visiting the Zoona office and having conversations about being customer centric and culture and and and seeing how those guys and the Yoco team survived the lockdown during COVID in South Africa and had a business that nearly collapsed and then took off and then ended up raising [00:55:00] like a ground breaking $83 million investment round recently. And I think they’re building the the business in the right way and they’re having tons of impact and they’re just genuinely like really good human beings. And I’m I’m like, always inspired to connect with them.

Rowena: That’s awesome. And on the reading front, is there one resource you use to stay up to date on what’s going on in this industry?

Mike: It’s a great question, I I was joking before this with you, Rowena, I wish I had more time to read and I don’t, but

Rowena: He seemed

Mike: I

Rowena: Like a busy

Mike: Probably

Rowena: Guy.

Mike: Wouldn’t. Yeah, when I when I do, I’m probably probably going to Twitter more more than more than I should

Rowena: Don’t

Mike: At times.

Rowena: We all?

Mike: And yeah, yeah, I would just maybe give a shout out to Elizabeth Yin, who’s who’s also an investor in boost and and did a cover quote for my international version of failing to win. And she’s she started Hustle Fund. She’s out in Silicon Valley, but to what does she say, like to to invest like ridiculously early, like in founders, like before anybody else back like idea stage. And I really think she’s on to something. And she she has like amazing tweets that add a lot of value and democratize learnings around, like fundraising and marketing and customer acquisition. And so I didn’t follow you encourage everybody to follow her and follow. Follow me to at Mike Mike Quinn, but I don’t say anything nearly as insightful as Elizabeth.

Rowena: Yeah, I love the idea of it. Yeah, I love the idea, but also because investors are like herd animals, and so they tend to all invest in the same things once it’s got traction, once everyone else is looking at it, whereas it really takes courage to invest earlier on in the lifestyle of a of a new company. Last question Mike just for fun is there a book, a blog or a podcast that you enjoy in your personal time? Because I’m sure you have lots of personal time?

Mike: Yeah, I have kids, so.

Rowena: Or maybe they enjoy? You could do that,

Mike: Yeah,

Rowena: Too.

Mike: Maybe they enjoy anything by Roald Dahl right now is

Rowena: Excellent

Mike: Great.

Rowena: Choice.

Mike: Yeah, I would recommend. So we talked about Shoe Dog earlier, which is amazing. Another book I would I would highly recommend is educated by Tara Westover. It’s an incredible story of a young woman who grew up in a in quite a I don’t know what to like, how to call it like extreme isolated family in, I think, Idaho in the U.S. and didn’t get an education but wasn’t allowed to go to school, wasn’t allowed to go to a doctor. And then just her experience of kind of like growing up. And I know it’s won tons of awards, but it’s something that I read about a year ago and it was it was very much an inspiration for me writing the book. I was just thinking about it, but I read this story and I was like, You know, it was incredible. And I like, like, I want to actually just start writing more.

Rowena: Nice. That’s

Mike: So

Rowena: Awesome.

Mike: I think people, people would love it. Everybody that reads, it’s like, Wow, what a book. So.

Rowena: It’s been on my to read list for a while, but I think you

Mike: Yeah.

Rowena: Just bumped it to the top. Thank you so much for your time, Mike. It was lovely speaking with you of so many more questions about your book and your life, but unfortunately we’re running out of time. That’s great. It was great talking to you.

Mike: Thank you, Rowena.