When most entrepreneurs write this kind of post, they are usually sitting in a bathtub, cigar in mouth and counting their dollars after a successful buyout of their start-up. This, unfortunately, is not the case for me. I chose to leave Pesatalk, the consumer finance info business I had started, handing over the reins to 88MPH, the seed fund, at of December 2012
Pesatalk started in earnest in mid February 2012 when I ported content over and pointed the domain from moneyacademy.co.ke to pesatalk.com. The name pesatalk was arrived at from trying different permutations of Swahili, Sheng and English words, to seek a .com name. I harassed people at the iHub, testing their Swahili skills, and going through names such as pesapress, helanation, pesadaily, chapaa, pesanews, before settling on pesatalk. I felt that it embodied the social conversation element that I wanted to make a key part of the site. The original plan had been to carry news, tutorials, financial products price comparison, a Pesatalk forum and a stocks tool with real time prices and analytics.
We made our first big splash on March 5 when we created the Outsmart MPESA tariff. The article got remarkable response; it was shared so much on email that it got forwarded to me by four different people. We’d broken the news that MPESA rates had been increased a day before Safaricom started their campaign to inform the public. It hadn’t been the result of brilliant journalism or insider information; rather, it a stroke of luck. The response to those two posts marked my entry into the world of online content, and the start of a remarkable trip.
Laying the Foundation
I wasn’t a newsman. I still am not, but as a traditional entrepreneur, I knew what I needed to get done – pull resources together to profitably take advantage of an opportunity. Capital was in place. It was now to figure out how to get content flowing, grow the audience and then… make money.
The first thing I set out to do was to build a strong team. The bulk of my work would lie in helping my team be the best they could be. Hire. Delegate. Inspire. Set the vision. Set the guidelines. There was one problem, though. I had never done this before. I had never worked in news, never run a web business and had never had a large team. I had pretty much worked alone all my life but it was a challenge I was ready to tackle. In 2 months, we had grown to a team of 7.
I spent most of my time quickly learning what needed to be done and letting the team figure out the ‘how’ and teaching them what I could. I developed the Pesatalk Way, a guide book for writers and editors to make it easier to build excellence in writing as a habit. We focused on building a great culture, and making sure we were having fun. At the Garage, we built a reputation as the class clowns, but at the same time built a product our readers came to love and cherish. In addition, pesatalk had become a reference point for money news that made sense. Michelle Morgan Citizen TV often quoted our analyses. Some members on the motley crew became so good at what they did that while all other media outlets were predicting increases in fuel prices, our guy predicted a decrease and gave an estimate which came in with a 0.5% margin of error
I’ll admit that our growth was not spectacular. Traffic peaked at 25,000 monthly unique visitors. About 6 months in, we realized that the original plan, which was to grow traffic rapidly, raise additional funds from VC then try and monetize that audience, wasn’t going to happen. We began to focus on monetizing the content we created, and the expertise we had garnered. We were on track to break even this month through content marketing deals, and content supply deals.
The Cookie Crumbles
Pesatalk had begun to crumble barely 3 months in.
When we’d kicked off Pesatalk with 88, a key part of the deal had been that we would set up a completely new company, with me as a minority shareholder, but with majority control. We signed a basic MOU to hold for 3 months, while we got the incorporation and other documents underway, with the fund setting up the company in Mauritius. This was a big mistake, on my part. I was eager to get started, and didn’t take sufficient time to make sure we were on the same page, and to legally cover my ass – our discussions before signing must have taken a total of 6 hours, spread over 3 or so days. It was later that I came to realise that we had started off with different ideas of what my role was – to the fund I was a cheap employee. To me, I was investing a couple of years to gain invaluable exposure, experience and shareholding in a business that I could count amongst my assets.
So why take an evidently bad deal? At the time, 88MPH was in the process of closing a US$300,000 round of funding by offloading 15% of their football news start-up futaa.com. This essentially gave the 10 month old site a $2M valuation, and the CEO, holding 10%, a $200,000 paper value (KES 17M ). In one year, we projected that pesatalk.com would have a greater valuation than futaa.com, and about $5-6M in 2-3 years, meaning that, even at 20pc, I would have been holding KES 48M or thereabouts in value. Should I have been skeptical? Hell yeah. And I was indeed. But they raised one point that made sense:
“We are not telling you about what we can do, we are showing you what we’ve done.”
The second reason I took the deal was that it provided me with an opportunity to see if I had what it took to run a team. The largest team I had ever had was one employee and an intern and even then, I could barely keep the team afloat. I had always fantasized that with a bit of money, I could build a company with the kind of culture I had always envisioned; highly productive while having a lot of fun. I was going to become a local Hsieh.
Third, working on a VC backed business provided me with an opportunity to get a stamp of approval within the venture capital community. I knew that at the point I left pesatalk.com, I would have no problem raising money for the next venture I set up, if I needed to.
I spoke at length to my friends, and my mentors and they all said the same thing: “Go for it, padawan. If for nothing else, you’ll be able to buy a new shirt.”
When the 3 months lapsed without the company set up, and with no clear plan or evident effort to resolve that, we begun to drift apart. The separation was expedited by the fact that the fund principal wasn’t in the country for several months and his lackey on the ground became belligerent whenever I raised the issue. I tried to salvage the situation about 8 months in, meeting with the fund principal, and agreeing to get the company done. A week later, he told me the documents were being prepared by his lawyers. However, later that month, he sent me a contract with their company name, rather than the Pesatalk Limited documents I was expecting, and went further to hold my pay ransom to get me to sign.
It was a decision I should have made much earlier, but entrepreneurial optimism had me expecting that things would change for the better. Of course, the uncertainty around the commitment by the fund made it impossible to work at 100%. I held back implementing a lot of the ideas I had so as not to lose the IP. This decision is evident in the fact that the site never progressed much from the news outlet that had served as the starting point and that the Pesatalk Way never went past its initial draft.
In trying to be smart, the fund lost one of the few people that could have made anything of Pesatalk. There have been reports that the start-up will be shut down meaning that they lose pretty much all of their investment. Karma’s a bitch, yo.
Pesatalk is the unfortunate victim of teething problems in Kenya’s nascent tech start-up funding environment. There will be several more as the field evolves, undoubtedly. Some VCs come into the country with a god mentality, and this will lose them money.
I had a great time, working with Mathias, Ishuah, Ndinda the Henditor, Brian, Bryan, Michael, Nick, Vic, Dennis, Steve and an intern we nicknamed The Department. I tested out my ideas, laughed, loved and learned. I made tonnes of mistakes, but, by jove, it was one hell of a ride.
I have no regrets. One thing I have learned in my entrepreneurship – and entrepreneurshit – journey is that everything serves a purpose, the primary one being to learn. Some things will be fleeting, some will be long, but all are a part of the trip, all are a part of what makes it makes it worthwhile.
I still believe there is an opportunity for a publication like pesatalk to thrive, driven by innovation and a focus on high quality journalism, not on pursuit of page-views and exits. It is an opportunity that I will be making a play in again. I may be down, but I am definitely not out.
For now though, I am focusing on a new phase in my entrepreneurial journey. I am sad that something we dedicated a huge part of ourselves to is over and I am hopeful that the people I worked with will find success in their endeavours. Some have already moved on successfully.
But, abdicating my own Pesatalk Way guideline on clichés, life goes on.
Part 3: What I learned running a VC backed Web start-up in Kenya