My post today was supposed to be on the things I learned while running Pesatalk, but the post on leaving Pesatalk garnered so much attention and generated so many questions that I have to address, choosing to do so here, than flood your Twitter timeline.
I’d like to point out that I chose to leave Pesatalk. I could afford to. Pesatalk was not my primary business, hence the need for us to incorporate a new company. Inasmuch as I put in tonnes of effort into building it, it was never going to be my life’s work. My initial time commitment was to be 18 months, 24 months at most, by which time we would built a team to run it.
This, in retrospect, might explain my recklessness and foolishness with the deal, letting 8 months expire without the necessary paperwork. Nonetheless, it was still a mistake on my part.
On the deal itself: I had no qualms with a minority deal. Start-ups often get caught up in mistaking shares for control. To detour a little, Zuckerberg holds 28% of Facebook, but has 56% control. Safaricom, originally, had a 60/40 split with the KE govt as a majority shareholder, but had almost no control on the strategy and running of the business. I struggled with it at the beginning, undoubtedly, but discussions with my mentors, particularly Sam Gichuru the start-up mestro over at the Nailab, helped me see a different picture.
The original plan was to follow the Futaa path and raise additional funding in 12 months. Minority shareholder protections would have ensured that dilution arising from the additional investment would be limited to the majority holder with no dilution of my stake and the 20 stake retained for key staff. In addition, a larger stake meant the fund invested almost 3 times as much as they did in their first batch of start-ups, and 6 times as much in their second batch. That, in itself, gave my minority stake a greater valuation than a majority stake in an alternative deal would have. Had 88 followed through with their part of the deal, and seen to the incorporation and such, I’d be chronicling a different story, a struggle and success. As it is, I have spent good chunk of my time closing the sales pipeline and trying to keep the relationships; a lot of Pesatalk business, prospective and definite, was based on my personal relationships.
I am also not out to knock 88MPH. Yes, we’ve had our fights, but I’ll be the first to admit that they are doing a much better job than anyone at getting money to start-ups. They have their issues – a ridiculously patronizing approach to doing business in Kenya; most symptomatic thing being that they hired a British national as a receptionist/secretary citing a lack of talent in Kenya – but they are investing and providing entrepreneurs a chance to make something of their ideas. For that, kudos to Kresten and his team.
If making money is the end all and be all of the entrepreneurship process, I have no doubt that I will make a lot of it. I chose to chronicle, in almost too much detail, what happened, in an attempt to nucleate a culture of sharing and an acceptance of failure. I picked this particular story to tell because Pesatalk’s shut-down, if the fund does proceed with it, is a public one. I have fought a battle with myself about this post, written and re-written it several times before making it public. I could have let it pass and only the people around me would know what happened. I am hoping this does get start-ups to tell their own stories and not have them written for them; success, failure, struggles or otherwise.
I am sharing my experiences so that people may learn from me. I could leave Pesatalk; what happens to the man with a family that quits his job and ends up snookered in a start-up that is his life’s work?