Dotun:
00:00
Hello. My name is Doctor. Dotun Olowoporoku, and this is Beauty in the Future podcast.
Uka:
00:09
I
Dotun:
00:14
believe the African story will be written by Africans and there are people crafting the narrative now. This podcast is a series of conversations with people whose ideas and work is shaping the African future.
Speaker 3:
00:28
Doctor Dotun Oluwoporoku is the managing partner at Ventures Platform, a leading Pan African venture capital firm that invests in mission driven founders, building the most compelling technology companies in Africa. All opinions expressed by d'Arton and podcast guests are their personal opinions and do not reflect the opinion of Ventures Platform Limited. To learn more, visit venturesplatform.com.
Dotun:
00:54
My guest today is uka Eje, the cofounder and CEO of Trivacry. I've known Oka since 2017 when he and his cofounder got their first institutional investment from ventures platform. Trivacreek subsequently became an important portfolio company for the firm and a significant startup with a major impact in Nigeria. In this episode, Uka and I discussed the uniqueness and importance of Thrive Agree's business model in enabling market access for smallholder farmers and organizing them into efficient production clusters. We also talked about the trials and triumphs of scaling the company from an idea by 2 university classmates dealing with operational and financial hurdles, the near death of the company during the COVID 19 pandemic, the need to pivot, and decision to step down temporarily as CEO to preserve the company's reputation.
Dotun:
01:44
I'm grateful to Oka for having an honest conversation with me and sharing for the first time its viewpoints and mental models for decision when the company was on a brink of collapse and how they turn it around to become one of the fastest growing and profitable startups in Africa. I hope you enjoyed this episode as much as I did. Luca, welcome to Building the Future podcast.
Uka:
02:07
Thank you so much, Tatum. It's nice to be here.
Dotun:
02:10
It's been a long time coming. I've always followed your business. Of course, we invested early on, ventures platform. My partner, Collinor, is one of the cofounding investors in Trivacreek. But I think the good way to start is to talk about the complexity and the depth of Thrive Agreeq business because a lot of people have a different expression of their business.
Dotun:
02:29
To some, it was acquired sourcing platform for investing in agribusinesses. To some, maybe your offtakers, you are the guys that collate and aggregate different farming produce, sell to them. To the farmers, the best is in sliced bread. You are the one that give them the inputs and buy stuff from them. It might be good to talk about the complexities and the depth of your business model.
Uka:
02:50
We started with a lot of problems that rural farmers in Africa faced. Assisted finance has been an age long problem. Ability to get seeds, fertilizers, agrochemicals, and also one of the biggest challenge was access to market. Now we have different customers that wanted to solve their problems. There was the pharma end and also the massive supply chain for blends or the optakers.
Uka:
03:16
Who wanted to be sure that for an entire year, they want to know where their products was coming from. Imagine an obstacle wants a 1,000,000 metric tons of say corn or soybeans. Right? They want to be confident that it's coming from a particular source. So they can plan.
Uka:
03:30
We have to deep down, see how can we solve this problem. Our limit is that it has to be organizing that production chain with the small I think this was in 2015, 2016, I was in Ben West. We noticed that with the period of something called the tomato Ebola, production was a huge problem. Farmers' goods were sold at about 500 naira in the rural communities, and it might solve markets. So sold about 20 times that price.
Uka:
03:57
The farmers didn't have an option. If they take the goods back, it was gonna perish. To a good degree, that problem is being solved gradually. We started trying to be able to direct farmers to access to markets. We started giving them access to inputs, seeds, fertilizers, agrochemicals.
Uka:
04:15
The first thing we did was to collect money from friends. Think about 3 of them. And then we looked at that. Look. This is working.
Uka:
04:22
And this this was just about 600,000 Naira, if I remember, about 2 of our friends. This was how we started off the first pilot, which was on, say 20 6 2016. And in 2017, we got selected in ventures platform. It was a full in house solution program. In 2016, we started by working with 1,000 farmers.
Uka:
04:47
And then we agreed that, and we agreed that where we at the and as I think we're working with about a 1000000 farmers with quite a lot of obstacles present in about 3 markets in Africa, Nigeria, Ghana, Kenya, and recently Uganda.
Dotun:
05:04
Uka, thanks for that origin story and the problem you're solving. I really wanna break it down into the core model itself. How does it work from you getting the input, working with the farmer, and what happens afterwards? And how do you capture value along that value chain?
Uka:
05:18
What we do with the smallholder farmers is pretty simple. We identify the crops of focus that we want to work with. And right now, we are working around the maize, rice, soybeans, soybean, wheat value chain. We identify geographies where these farmers are, and then we onboard these farmers. We started working with about 50 farmers.
Uka:
05:39
We piloted it. And first it begins with identifying the farmers. If I remember in 2017, it was not as robust and automated as it is now. But as of that time, the model simply onboarding the farmers, mapping their fields, putting them in a cluster, and then providing access to inputs to them. Every cluster has a cluster leader and they cross guarantee themselves.
Uka:
06:01
The idea for cross guaranteeing themselves is to ensure that there's no default. So far we've been able to ensure that default has been about 2 to 3% from what we've seen over the years.
Dotun:
06:13
How does default happens? I thought you'd given the imp and you are also responsible for collecting that input from them.
Uka:
06:20
Okay. 1st, some of the things we learned over the years was giving farmers cash was a problem. We started off by giving farmers cash. We noticed that if you give a farmer money, they probably would use it to go to marry a second wife or go to beauty house, go to do something, to do whatever aside alone. So what we noticed was we had to engage on a very rigorous community approach.
Uka:
06:46
In every community, we have our agents there. At the moment, we have about 2,500 to 2,000 agents who live in the communities. Right? So we've been able to control default by engaging a community based approach in onboarding of farmers. All the farmers who onboard are who who they know.
Uka:
07:05
The people who onboard them are people who they know. And the onboarding system works primarily via the technology we built. It's called an AOS, agriculture operating system. We go to map the land. But before going to map the land, we do a psychometric test.
Uka:
07:19
The idea for the psychometric test is to check that if a farmer sees that he has been a maize farmer for 20 years, 10 years, we try to verify that. So think of this like a credit checking system, like what is done in finance. We do is about the 21 to 30 questions to be able to know what is the farmer ability the knowledge of farming practice since he or she has been able to see that he has been planting for so years. So at the points where we do that, we will do scoring. And the output of the psychometric tests to score the farmer's ability to farm and the knowledge of farming of the crop of focus.
Uka:
07:58
At the end of the day, we rate that vis a vis the farmland, the location of the farm, the geography, and then ensuring that farmers are in cluster, ensuring that in this cluster, they have cross guarantee themselves. There's a cluster leader. And then this cluster leader is pretty much the head of this cooperative. Right? They ensure that every single member of that cluster pays their loan.
Uka:
08:21
And by loans, since we are not giving them cash, we're giving them seeds, we're giving them imputes, we're giving them advice. At the end of the harvest, if anybody, let's say the entire cluster is supposed to bring a 1,000 bags of corn or rice. We call it paddy rice, whatever output from the farm. If one person is defaulting, another person within the cluster is for the other person. It's important for continuity because they know that private group is always present to give them credits.
Uka:
08:50
If the farmers are alone, they are not going to get access to credits. This community approach is a way of someone vouching for someone. I know this person. He's strength of the cluster and reduce defaults drastically. You talked about the strength of the cluster and reduce defaults drastically.
Dotun:
09:11
You talked about the cluster. I assume that part of the benefit of the cluster will include the ability to aggregate crops and products in bulk, but also reducing cost for you guys to be able to deliver stuff to them, the imputes, and make it more efficient. But beyond those, what are the ways in which you also get benefit from that cluster? Also, how do you aggregate cluster? Are they existing cluster, or do you participate in bringing together that cluster and encouraging farmers to do things together?
Uka:
09:43
Yeah. Thank you for that question. So every cluster we create, first of all, we create the cluster, right, to ensure that we have visibility on every single thing, to ensure that nothing is corrupted from the beginning. And these are real people doing the real activities we are hoping to get from that cluster. Those are the kind of things we ensure we create the clusters.
Uka:
10:04
The value we expect is the economies of it. The cost of logistics to loan farmers is pretty difficult, just loan farmer. As opposed to moving goods within rural communities to about a 100 farmers who are in a particular geography. It's a lot easier. And collecting goods from farmers who are already in a group Because when they are paying the loan, they are paying it as a group.
Uka:
10:25
When we are buying the excess of their commodities, we are buying as a group. And that helps the ease of the model. Another thing I must add, every member of the cluster wants to be a lead cluster farmer one day. And that has primarily helped us clearly the number of farmers we currently have. We bear zero marketing cost in expanding pharma to because one farmer wants to perform well.
Uka:
10:47
And the incentive for them to be a cluster leader is that you paid your loan. You performed well. You did well. You followed the advice of the leader of the cluster that comes to your field. And that has helped to increase the number of cluster leader and also farmers who work under them.
Uka:
11:03
So these cluster leaders, they break out of 1 cluster and form new clusters.
Dotun:
11:07
We've spoken a lot about the model from the farmer's perspective, which is very important. That's a key part of your business. Can you shine more light on the offtake, how that is developed? And then the other question is how you get the financing.
Uka:
11:20
So on the offtake bids, they represent a huge chunk of the stakeholder from the marketplace perspective. We had to ensure that we aggregate demands from these obstacles earlier during the season or even during the season. This demand usually give us an idea of how much farmers we are going to aggregate. We currently have close to a 1,000 of stickers right now who we sell these goods to. We try to sense check the amount of goods they have.
Uka:
11:46
We've been able to grade them into large, medium, and lower scale softakers and food processors. It's an intense business development activity to know what is their demand, what are the seasons when they they would want to procure a lot of goods, will they come to the warehouses to collect these goods, how do they want receipt of the goods. I mean, we follow a lot of onboarding process to make sure that we're fitting their demand. They are a customer segment on their own. Right?
Uka:
12:10
It's very important that it start of the season to know what is the demand like from our off the guys. It's not just demand alone. What kind of quality of grains, products, commodity they expect? Because every commodity we produce is primarily based on the demand of the optical in question. Because at the end of the day, if you produce something that is outside their demand, nobody's gonna buy it.
Uka:
12:32
So it's a rigorous conversation to know. And many of those customers will be able to successfully work with over the years. I've been because we spend time understanding that these are the kind of goods they require and produce primarily to suit that need. On the funding aspect, which is the ports of wheat, financing is a big problem for agriculture. And I just say that agriculture is under finance.
Uka:
12:56
You don't see a lot of VCs and the likes coming to play in the sector. Right? But we noticed that this has been because there's lack of visibility of what happens on the field. People really have understanding of the operations from the farmer end down to the obstacle. And these are some of the things that we've been able to spend the past years to do to be able to create some sense of visibility of the farmers we have, mapping their land so that we have to ease our financing.
Uka:
13:20
We started at the early stage. We didn't have access to any commercial bank or any DFIs funding us at the start. This was the reason why we started off crowdfunding, started with 2 friends. Then we went out publicly to connect to retail investors to fund agriculture. It started off well.
Uka:
13:38
Of course, managing retail investors is a lot different from managing institutional investors. You did that for, I think about 3 years, 2017 to about 2020 when we stopped. And we noticed that the business was growing fast and we needed to attract a lot more patient investments for the kind of skill we were looking for. And again, in 2020, we had the COVID crisis, which was a big bump in our operation. And then we're lucky enough to get access to other structured investment and we scale to where we are from.
Dotun:
14:12
You talked about the challenge of raising capital. Originally, you tested it with friends and family, and then you scaled it to the retail crowdfunding and which a lot of similar business, some that I've spoken to on this podcast before, by doing something similar. And everybody seems to read the pump to use the word. Can you talk a little bit more about what is that pump? What are the challenges?
Dotun:
14:33
When you stretch that model of crowdfunding for this kind of business, where does the model break from your own experience?
Uka:
14:40
Thank you for that question. We noticed that first of all, there was no problem with crowdfunding at the scale that we're working on. At the end of 2019, we're able to build the largest single supplier of poultry beds to many of the poultry obstacles in the country at the time. And our demand for scale versus the kind of financing we required, I mean, it was not the most appropriate because at that time we needed a lot more patient investments. Crowdfunding required that you're going to pay people you raise funds from just to get a lot more on crowdfunding.
Uka:
15:15
It meant you're gonna pay, in most cases, 6 to 9 months. And the more we did the business and the way we're scaling, we're running largely on debts. Right? If we're gonna scale the way we wanted to scale, it means we're gonna hire a lot more people. The strength of our human resource was going to be a lot stronger on the field and out of the field.
Uka:
15:32
Right? Crowdfunding goes and is not sufficient to handle that scale. The one thing We noticed that in 2020, we have stopped beds, We noticed that in 2020, we have stopped beds. We have planned to draw about a 1000000 beds. From January, we have raised the funds.
Uka:
15:54
About a €1,000,000,000 at the time, we have raised the funds with the plan to make payments 6 months later. And we got the first notice of COVID in China sometime in December. And then we felt it was not going to come to Nigeria. In March, we heard there was COVID. And then a few weeks later, we heard there was going to be a lockdown.
Uka:
16:12
The impact of the lockdown was that we already have poultry beds on the field, and we always move feeds every 2 weeks. And at the time, because of the scale, trucks of 5 agreed poultry beds were moving around the southwest every other day. So constant, these were moving. And then because of the restriction, these trucks of goods could not move. Now I'm thinking about over a 1,000,000 beds spread across major poultry production regions of the country.
Uka:
16:39
And because of that, I mean, we struggle to get persons to move this equipment. And then if you understand how the poultry sector works, the beds are very fragile. Any tiny cause of infection from one death is spirals, dams, water. So think about a pain, a poultry pain that takes as much as a 100,000 beds. Right?
Uka:
17:01
And a loss of one bed can lead to the loss of a 1,000. And a1000 to another 1,000. These birds were getting hungry. And for the farmers who had access to their don't forget, we sponsor these farmers, right, to be able to get access to their feed. The farmers who had access to feed, they had problem with evacuation.
Uka:
17:18
Evacuating these beds from the feed, they couldn't move. So they have to feed the beds a lot more. We are supposed to evacuate the bed at 1.3 kilograms Right? These are chickens. If you are managing them for more than a week or 2, it means you have to spend a lot the economics becomes outrageous.
Uka:
17:34
It means you are going to run at a loss. So what we did was to see how we could evacuate rapidly, but we couldn't. Most of the beds died. Don't forget I said about the 1,000,000 beds we had stopped. Over 400,000 beds were lost.
Uka:
17:48
And then we fixed another problem. We give the beds to some partners we're working with. So there was a whole receivable delay. And then interestingly, another thing that came up was the fact that we had retail investors we had to be accountable to. Right?
Uka:
18:02
Because at the time, there's no explanation you can explain to them because people needed their cash. It was a lockdown. There was a strong need for cash at the time to be able to make ends meet. And you can't blame anyone who's in rage, especially when certain promise is made, so so time they're going to get their cash. That was the finance bit, especially with crowdfunding.
Uka:
18:22
And again, we had to work around multiple processes to ensure that we sorted that out.
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18:30
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19:11
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Dotun:
19:22
It's incredible what you just described about how a fragile part of the model affects the other parts. Your model got strained through COVID. And because it's a significant part of your business, it affects your source of capital. But you also mentioned the processes that you put in place, and I really want to double tap into that. What are the processes that you put in place to optimize against those challenges that you just described now?
Uka:
19:46
When I look at 2020, I'm rather thankful for what happened because it made us a lot more proactive founders and business people because it comes with a lot of uniqueness that we had to solve, especially from the finance end, our choice of finance and the entire operational dynamics. It was very overwhelming, especially online. The business had close to 20,000 to about 30,000 subscribers at the time who we needed to manage. They had not gotten payments for the investment they had made, and they are expecting it 6 months from then. I think April, May, June, July, sometime in August.
Uka:
20:23
At the time, it was ballooning online, and it was difficult to think. I think that was the biggest challenge for me as the CEO to be able to think, how do you solve a problem like that? And at the same time, focusing on the operational elements of the business. We're combating trust and reputation versus focusing on the business to ensure that is a growing concern. Thankfully, we had the support of the venture platform team, very active alongside a number of folks who were present to help at that time.
Uka:
20:54
I think the goal was clear how to make sure that we, as the founders, we could focus on the operations of the business, making sure that every single thing was going well. I think that initially, some of the things that went on the rounds were did these guys steal money? One of the things that was online on Twitter and everywhere was I took cash. I went to build a house in Banana Island, all sorts of things. Right?
Uka:
21:16
It was a really intense season. What we wanted to do and what was very primary for us was to make sure that everybody assess their phones. At that point, I spoke with the team at Venture Platform. I spoke with Carla. I think I remember that clearly.
Uka:
21:30
It was in front of my office gate. I had to come out to make the call. Right? It was a very vulnerable place for me because at that point of the business, faced anything like that. It was a question of how are you not paying?
Uka:
21:42
What can we do to solve this? I had to solve the reputation issue by stepping down. And during that period, founders asked me, did you need to step down to solve the problem? And I think there's something that we had to do if the reputation of the business was important to us and the future of the business was important to us. So that's why I remember the day I was making that call.
Uka:
22:03
What do I choose that this business is a growing concern and reputation and integrity was important to me.
Dotun:
22:10
I wanted to maybe pause you there because I want to really double tap a lot on that. What led to you stepping down and why and the lessons from there. Well, let me step back a little bit. So the problem was a cash flow situation where you had a COVID related loss of products and off takers, and then you have investors who are asking for their money back. Do you also have some because I understand that there was also some payments from off takers who are who are not paying on time.
Dotun:
22:40
Can you maybe talk a little bit about what was the challenge itself? And when did you start seeing the sign, the first sign of that problem bring before you went on Twitter?
Uka:
22:51
So first of all, two things. We try to move feeds to the field, and there was a truck that was delayed for 3 days. I got someone from my team called to say this truck could not go. So there was that halt, right? It was already one problem we had to solve.
Uka:
23:08
Now the second big challenge that Inotis was at the point where even the beds we had in the field, when they moved to the obstacles, they had received the goods because of their shutdown. A lot of factories had delays. Right? Factories are working for 24 hours, been working for 12 hours. And some that are working for 7 days, working for maybe about 3 to 4 days.
Uka:
23:28
It entirely damaged their payment cycle. Right? So for many companies that used to pay us within 2 weeks, they stretched that to about 6 months. We saw payments that came 6 months later, 3 months later. And one of the things that can destroy a business like this and many businesses is where your payment cycle is affected.
Dotun:
23:47
If you had to go back in time, given those signs that you are seeing, what would you have done different? What changes would you have made? Micro changes. If you are to advise Okaa of that time, given what you know now, what would you have done?
Uka:
24:01
We ignored a lot of things when we had a lot of COVID. Right? What are these that would have protected us? It beats for managing the skill and diversifying to other things we could come through. Now we did have a big team in 2019.
Uka:
24:15
After COVID, we had to strengthen our team. So if I was going to advise the car at the time, whatever news you hear, whatever story you hear, even if it's costly, examine it and see how we can impact the business. Many entrepreneurs and many founders can be very ambitious and ambition is very good. Right? Sometimes you need a very strong operations team to let you know, okay, these are the kind of things you shouldn't do.
Uka:
24:38
And then manage your ambition within this prism. Right? These are conversations we had not properly answered at that time. The second thing was it was just this single off the carriers. So we had sold over 50% of all the goods we had to 1 offtaker.
Uka:
24:53
So there was a single buyer risk that we had to manage. What we would have done was to sell the goods to multiple people and manage the risk because there are quite a number of people who needed that goods at the time.
Dotun:
25:04
One of the key themes that came out of this, and I've seen that in other businesses too, is that start up grow faster than humans, especially the leaders of those companies, unlike traditional SMEs. The differentiating advantage of startup is exponential growth. And the flip side of that is that you will grow faster than the leaders that started it. And there are many ways in which you can navigate that disparity in growth. You can suffer by hiring someone that can fill in that gap.
Dotun:
25:34
That was what Facebook did. And Mark Zuckerberg, I had a very good COO. In some cases, startup founders might step down and allow someone to come in. Google did that where the 2 founders have to step down, and then Eric Smith came in and became the CEO for a time. In some other cases, the leader developed himself and grew as quickly as they can and lead the company.
Dotun:
25:55
In your own case, you went through that growth disparity, and you had to step down. If you were to draw out some lessons from that, I wanted to just talk about first confronting that for yourself and admitting that. And I'm very sure it's not easy because this is your baby. Then when you did that, what did you then do after when Adia came in to lead the company? What did you do specifically, you and your cofounder, to make it work?
Dotun:
26:19
And now you then came to take it over afterwards.
Uka:
26:23
I've never had the opportunity to talk about what happened in terms of people. Very important question. As you just said, the different dynamics or challenges that start to go through. In my case, I noticed that it would require stepping down at the time. In some other cases, it could require hiring CO.
Uka:
26:39
In other cases, it might require closing down the business. Right? Quite a number of people wondered why was stepping down the solution for private group. And my response was pretty simple, although the process was not the easiest for me emotionally considering we built this business, myself and my cofounder. Right?
Uka:
26:58
And watching that I would have to step down was not an entirely easy process. But we had to ask ourselves a question. What is most important to us? The business we built that it survives and it continues to be a skinny blue business or the idea that is on record that there was a step down. I had to ask myself that question.
Uka:
27:18
Why should a step down happen? I remember that the night that I was advised to bring in Adia, I got a lot of contradictory advice. But the reason why I had to take this decision was that we were not trusted as a business and especially our kind of business that is holding on to people's cash. Right? A lot of people need to trust you enough to do business with you.
Uka:
27:42
And then there was a lot of things around reputation, integrity that we needed to uphold. We We also had to think about the future of the business. We wanted to build something for the long haul. Right? So these were the things that made me make the decision on stepping down.
Uka:
27:56
So the next day, I flew to Lagos. I went to meet Adia. I went to her house immediately, and I spoke with her. I just had to break the challenge of the business end to end. Right?
Uka:
28:07
And she understood, as she said, she was gonna get back to me the next day. I booked the next flight back to Abuja waiting for her response. One thing that was important, she did a lot. She had to stick her reputation on a business that would collapse because reputation was a challenge to solve. She had to contribute proof to everyone that, see, this business is a going concern and we paid the loan.
Uka:
28:30
And thankfully, we worked hard. They're talking about working hard. Don't forget, I needed the help. Right? I needed to be able to convince people that we are not thieves.
Uka:
28:39
Right? And we're gonna pay the money, and we're gonna solve this problem of agriculture. Right? Because we had a bad reputation in the industry at the time. It was just important that we took that move.
Dotun:
28:50
How did you reconcile that with the rest of the team who see you as a leader and also your ego as well? How did you reconcile that?
Uka:
28:58
Thankfully, I was able to have a general meeting with a number of people. For many members of the team, they did not agree with the decision, both myself and my cofounder, I had to do. Before Adia spoke with the team, we had to let everyone know that this was our decision, and this is something that we believe was going to be good for the future of the business. It was important we carried everybody along because it was not just myself and IO that was going to support Adia to get the work done. Right?
Uka:
29:28
It was gonna be a whole family. And we had to make sure that we're not frustrated because it would be easy to frustrate our effort if it was me against you or Adi against the rest of the team. What we did was to make sure that we spoke with everyone. We had constant meeting. We had physical meeting.
Uka:
29:44
They visited us in the house. Who car you show? And all of that. So I said, see, this is great. And we are lucky to have more than anything.
Uka:
29:51
They trust the the integrity of the founders and the decision of founders, and we're able to get past that. In 6 months, we came off and everything was sorted out.
Dotun:
30:00
What are the lessons that you will want to highlight out of all of that? Because there's so many that I could dive into with you here, but I'm keen to hear from you. If you are to do a masterclass on this for founders, who have to make that kind of decision? What are the key things that you want them to, first of all, resolve personally with themselves, do afterwards, and keep things that they need to take note of in order to make that post stepping down work?
Uka:
30:24
Yeah. I think a few things. The business is more important than you. Right? And sometimes founders tend to personalize their business, and that causes a lot of problem.
Uka:
30:34
You are counting to multiple. Right? And I think that was the things that I learned early. And as much as many people were not seeing what I was seeing then, I was able to know that as much as I want to personalize this business and I know that it's important, The future of this business is important. And we need to put the business ahead of ourselves.
Uka:
30:52
One of the things I learned from that occurrence was to ask myself really deep, sincere question. You can what can you do? What can you not do? You can't you cannot do this. I literally wrote it down.
Uka:
31:04
Now these are It's already hard approach. People telling you that, see, this is out of your capacity to and taking that in good fits. Right? Thinking of how to solve for the gaps because the things you cannot do, you get someone who will do it. I think that's just part of leadership.
Uka:
31:20
It doesn't mean you are terrible. It just means that somebody else is out there who can solve for it. And I think that those are things I've learned and I'm still imbibing to date because the business is going even faster after 2020. And again, because 2020 was a public challenge. The we faced bigger challenges even more than 2010s.
Uka:
31:40
The principle of the COVID crisis that we had helped me and what we learned helped me to know, okay, At this point, we're facing this challenge. This is kind of person we'll need. And these are the kind of hiring decision we have to think about. These are the kind of things that Ouka, you and your cofounder cannot or this core management team cannot solve. Then let's get this.
Uka:
32:02
Let's do this. So I think that approach has helped in navigating all the challenges we've seen as we keep building.
Dotun:
32:09
What was the darkest day for you in the whole of that 2020 crisis?
Uka:
32:15
So the darkest day I was in, that was I I can't forget that it was 9 PM thereabouts. I called my dad and he said, why am I seeing my name on Facebook? I bear his surname. So he was thinking it's on his name. And he said, what's going on?
Uka:
32:34
At that point, I did not know the extent to which stepping down was not my problem. But the fact that my dad had called me and told me that he was seeing all of these things growing or making the rounds in the Internet. Woah. This thing has got some really deep. And this was getting out of control at the point.
Uka:
32:51
We faced a lot of problem. We we got locked in a station by one of the subscribers. In fact, some people came to the office. We have a 2 floor office, and the person went up and said he was gonna jump down to get money. It was a combination of all of that that was truly intense that year.
Uka:
33:09
I think that these are some really personal moments for me, and then it's steered in me in me to make a decision that was out of myself. Because I noticed that the impact of this is not about me alone. We're young teens. There are a lot of people who travel because their first job. And I was just thinking to myself, you guys are gonna lose their jobs if anything happens in this business.
Uka:
33:29
I didn't steal anybody's money. We're working hard. Right? And this didn't happen. So we have to be able to solve for them.
Uka:
33:36
A lot of farmers were complaining. Right? It solved for the farmers too. So it was a place where I had to be where couldn't afford to think about myself, you know. So this was the reason why when I say stepping down was not so much of the problem.
Uka:
33:49
That's why I did that.
Dotun:
33:50
That's so deep. I'm sure this is one of the first time you're talking about this publicly, and I'm really privileged to discuss it with you. You've been through fire and the business has come out now. The business is doing close to a $100,000,000 revenue, I may say that publicly. You're profitable.
Dotun:
34:06
You're solving problems for a million farmer, which by itself is huge. You are also making good money for your finance providers who are no longer retailers now, but institutions. Your investors are happy with you. Your team are proud to work for your business. But if you are to distill down the core or the impact of this business from the point of view of 1 person, what would that be and what would that study be like for you?
Uka:
34:31
If I dispute that who and what you want to solve for is the smallholder farmers. We want to be able to see how a smallholder farmer who is doing 0.2 hectares can increase to 0.8 to 1 hecton is doing the large scale channel. And why is that important? We believe it is hard to solve global hunger if the scale of the farmers cannot increase, if a set of financing is not solved. And the reason why that is important, as long as there are lots of variable land in Africa, farmers have to be equipped to be able to know how best to find the right seeds, the right approach, and then the assessed markets.
Uka:
35:07
And that's why we exist really. What we've been able to do over the years has been to connect financial institutions so that we can provide them with inputs, seeds, and then the assessed markets. We've done this for about the medium farmers right now.
Dotun:
35:20
And can you tell the story of any particular farmer that maybe started with you and the scale of their success since the time that they started with you?
Uka:
35:28
There's a guy who's recording it's a name that's used to call for a prosperous farmer. So in many of the regions we are in, we call it bunkasamanu. Right? That means a prosperous farmer. So the goal is to grow every farmer to a big farmer, a prosperous farmer.
Uka:
35:46
What we do is we monitor the goods where did the farmer starts with. So there's a female farmer, Fatima, who I think this farmer is in Katsina. What we worked with her with was the soybeans farm. I think she was under 0.2 hectares. And we skewed that from 0 point 2 until she's currently farming over 5 hectares today.
Uka:
36:04
We started working with her in 2021. There are farmers in Kaduna, in Bornu, in Penu Estates, and Taraba around in Middlebelt. New Zealand's killed their production significant. And what is primary for us is not too much about the number of farmers, but the youth that farmers are able to produce. Today, we need to produce 3 times the national average.
Uka:
36:27
Nigeria does for maize as lead to us, see 1.5 metric tons per hectare. Most of our farmers do as much as 5 tons. Right? Five tons per hectare. The tone is $10.
Uka:
36:38
Right? So 5 tons is about $50. So that's what we see as impact. And we need to create VCB prosperity for these farmers, and that's really what gets everyone excited.
Dotun:
36:49
That's so good. That's so good. I'm gonna end this conversation with you, fire and question I know I ask all my guests. The first one is, what view did you hold before now that you no longer hold?
Uka:
37:01
I thought it was possible to scale this without technology. And the more I look at the business, the more I see that what has helped us, especially in putting farmers in clusters in organizing the entire infrastructure, creating visibility, mapping them, and everything we've done because it's a humongous operational model. We've been able to do that with technology. Technology has helped us.
Dotun:
37:24
Which book are you reading now or have read lately, stuck with you?
Uka:
37:29
Oh, it is. I read in 2019, but I had to read it again. It was the book by Ben Horowitz, Heart Sins About Heart Sins. That is helping me to have a better perspective about challenges and how to manage things. And I think that has given me a good perspective about Key also, managing it and how emotional and tough it is building a business that will solve massive problem.
Dotun:
37:53
That's good. It's a pleasure talking to you, Ka, and I'm really privileged that you are able to talk about some
Uka:
37:59
of these Thank you.
Dotun:
38:00
Challenges that you went through. And I'm very sure that a lot of founders will find it very helpful. And you are creating huge impact beyond just your business to other founders as well. Thanks for
Uka:
38:09
coming to the show. Thank you very much. Thank you for having me.
Speaker 3:
38:12
Building the Future season 5 is hosted by doctor Dotun Oluwoporoku, produced by Osarome Osamuiyi for the subtext, edited by Osarome Osamuiyi and Chinedu Anatine, who is also the recording engineer, show notes by Grace of Obaloluwa, designed by Jonathan Nwachukwu, and video editing by Chukuka
00:00
Hello. My name is Doctor. Dotun Olowoporoku, and this is Beauty in the Future podcast.
Uka:
00:09
I
Dotun:
00:14
believe the African story will be written by Africans and there are people crafting the narrative now. This podcast is a series of conversations with people whose ideas and work is shaping the African future.
Speaker 3:
00:28
Doctor Dotun Oluwoporoku is the managing partner at Ventures Platform, a leading Pan African venture capital firm that invests in mission driven founders, building the most compelling technology companies in Africa. All opinions expressed by d'Arton and podcast guests are their personal opinions and do not reflect the opinion of Ventures Platform Limited. To learn more, visit venturesplatform.com.
Dotun:
00:54
My guest today is uka Eje, the cofounder and CEO of Trivacry. I've known Oka since 2017 when he and his cofounder got their first institutional investment from ventures platform. Trivacreek subsequently became an important portfolio company for the firm and a significant startup with a major impact in Nigeria. In this episode, Uka and I discussed the uniqueness and importance of Thrive Agree's business model in enabling market access for smallholder farmers and organizing them into efficient production clusters. We also talked about the trials and triumphs of scaling the company from an idea by 2 university classmates dealing with operational and financial hurdles, the near death of the company during the COVID 19 pandemic, the need to pivot, and decision to step down temporarily as CEO to preserve the company's reputation.
Dotun:
01:44
I'm grateful to Oka for having an honest conversation with me and sharing for the first time its viewpoints and mental models for decision when the company was on a brink of collapse and how they turn it around to become one of the fastest growing and profitable startups in Africa. I hope you enjoyed this episode as much as I did. Luca, welcome to Building the Future podcast.
Uka:
02:07
Thank you so much, Tatum. It's nice to be here.
Dotun:
02:10
It's been a long time coming. I've always followed your business. Of course, we invested early on, ventures platform. My partner, Collinor, is one of the cofounding investors in Trivacreek. But I think the good way to start is to talk about the complexity and the depth of Thrive Agreeq business because a lot of people have a different expression of their business.
Dotun:
02:29
To some, it was acquired sourcing platform for investing in agribusinesses. To some, maybe your offtakers, you are the guys that collate and aggregate different farming produce, sell to them. To the farmers, the best is in sliced bread. You are the one that give them the inputs and buy stuff from them. It might be good to talk about the complexities and the depth of your business model.
Uka:
02:50
We started with a lot of problems that rural farmers in Africa faced. Assisted finance has been an age long problem. Ability to get seeds, fertilizers, agrochemicals, and also one of the biggest challenge was access to market. Now we have different customers that wanted to solve their problems. There was the pharma end and also the massive supply chain for blends or the optakers.
Uka:
03:16
Who wanted to be sure that for an entire year, they want to know where their products was coming from. Imagine an obstacle wants a 1,000,000 metric tons of say corn or soybeans. Right? They want to be confident that it's coming from a particular source. So they can plan.
Uka:
03:30
We have to deep down, see how can we solve this problem. Our limit is that it has to be organizing that production chain with the small I think this was in 2015, 2016, I was in Ben West. We noticed that with the period of something called the tomato Ebola, production was a huge problem. Farmers' goods were sold at about 500 naira in the rural communities, and it might solve markets. So sold about 20 times that price.
Uka:
03:57
The farmers didn't have an option. If they take the goods back, it was gonna perish. To a good degree, that problem is being solved gradually. We started trying to be able to direct farmers to access to markets. We started giving them access to inputs, seeds, fertilizers, agrochemicals.
Uka:
04:15
The first thing we did was to collect money from friends. Think about 3 of them. And then we looked at that. Look. This is working.
Uka:
04:22
And this this was just about 600,000 Naira, if I remember, about 2 of our friends. This was how we started off the first pilot, which was on, say 20 6 2016. And in 2017, we got selected in ventures platform. It was a full in house solution program. In 2016, we started by working with 1,000 farmers.
Uka:
04:47
And then we agreed that, and we agreed that where we at the and as I think we're working with about a 1000000 farmers with quite a lot of obstacles present in about 3 markets in Africa, Nigeria, Ghana, Kenya, and recently Uganda.
Dotun:
05:04
Uka, thanks for that origin story and the problem you're solving. I really wanna break it down into the core model itself. How does it work from you getting the input, working with the farmer, and what happens afterwards? And how do you capture value along that value chain?
Uka:
05:18
What we do with the smallholder farmers is pretty simple. We identify the crops of focus that we want to work with. And right now, we are working around the maize, rice, soybeans, soybean, wheat value chain. We identify geographies where these farmers are, and then we onboard these farmers. We started working with about 50 farmers.
Uka:
05:39
We piloted it. And first it begins with identifying the farmers. If I remember in 2017, it was not as robust and automated as it is now. But as of that time, the model simply onboarding the farmers, mapping their fields, putting them in a cluster, and then providing access to inputs to them. Every cluster has a cluster leader and they cross guarantee themselves.
Uka:
06:01
The idea for cross guaranteeing themselves is to ensure that there's no default. So far we've been able to ensure that default has been about 2 to 3% from what we've seen over the years.
Dotun:
06:13
How does default happens? I thought you'd given the imp and you are also responsible for collecting that input from them.
Uka:
06:20
Okay. 1st, some of the things we learned over the years was giving farmers cash was a problem. We started off by giving farmers cash. We noticed that if you give a farmer money, they probably would use it to go to marry a second wife or go to beauty house, go to do something, to do whatever aside alone. So what we noticed was we had to engage on a very rigorous community approach.
Uka:
06:46
In every community, we have our agents there. At the moment, we have about 2,500 to 2,000 agents who live in the communities. Right? So we've been able to control default by engaging a community based approach in onboarding of farmers. All the farmers who onboard are who who they know.
Uka:
07:05
The people who onboard them are people who they know. And the onboarding system works primarily via the technology we built. It's called an AOS, agriculture operating system. We go to map the land. But before going to map the land, we do a psychometric test.
Uka:
07:19
The idea for the psychometric test is to check that if a farmer sees that he has been a maize farmer for 20 years, 10 years, we try to verify that. So think of this like a credit checking system, like what is done in finance. We do is about the 21 to 30 questions to be able to know what is the farmer ability the knowledge of farming practice since he or she has been able to see that he has been planting for so years. So at the points where we do that, we will do scoring. And the output of the psychometric tests to score the farmer's ability to farm and the knowledge of farming of the crop of focus.
Uka:
07:58
At the end of the day, we rate that vis a vis the farmland, the location of the farm, the geography, and then ensuring that farmers are in cluster, ensuring that in this cluster, they have cross guarantee themselves. There's a cluster leader. And then this cluster leader is pretty much the head of this cooperative. Right? They ensure that every single member of that cluster pays their loan.
Uka:
08:21
And by loans, since we are not giving them cash, we're giving them seeds, we're giving them imputes, we're giving them advice. At the end of the harvest, if anybody, let's say the entire cluster is supposed to bring a 1,000 bags of corn or rice. We call it paddy rice, whatever output from the farm. If one person is defaulting, another person within the cluster is for the other person. It's important for continuity because they know that private group is always present to give them credits.
Uka:
08:50
If the farmers are alone, they are not going to get access to credits. This community approach is a way of someone vouching for someone. I know this person. He's strength of the cluster and reduce defaults drastically. You talked about the strength of the cluster and reduce defaults drastically.
Dotun:
09:11
You talked about the cluster. I assume that part of the benefit of the cluster will include the ability to aggregate crops and products in bulk, but also reducing cost for you guys to be able to deliver stuff to them, the imputes, and make it more efficient. But beyond those, what are the ways in which you also get benefit from that cluster? Also, how do you aggregate cluster? Are they existing cluster, or do you participate in bringing together that cluster and encouraging farmers to do things together?
Uka:
09:43
Yeah. Thank you for that question. So every cluster we create, first of all, we create the cluster, right, to ensure that we have visibility on every single thing, to ensure that nothing is corrupted from the beginning. And these are real people doing the real activities we are hoping to get from that cluster. Those are the kind of things we ensure we create the clusters.
Uka:
10:04
The value we expect is the economies of it. The cost of logistics to loan farmers is pretty difficult, just loan farmer. As opposed to moving goods within rural communities to about a 100 farmers who are in a particular geography. It's a lot easier. And collecting goods from farmers who are already in a group Because when they are paying the loan, they are paying it as a group.
Uka:
10:25
When we are buying the excess of their commodities, we are buying as a group. And that helps the ease of the model. Another thing I must add, every member of the cluster wants to be a lead cluster farmer one day. And that has primarily helped us clearly the number of farmers we currently have. We bear zero marketing cost in expanding pharma to because one farmer wants to perform well.
Uka:
10:47
And the incentive for them to be a cluster leader is that you paid your loan. You performed well. You did well. You followed the advice of the leader of the cluster that comes to your field. And that has helped to increase the number of cluster leader and also farmers who work under them.
Uka:
11:03
So these cluster leaders, they break out of 1 cluster and form new clusters.
Dotun:
11:07
We've spoken a lot about the model from the farmer's perspective, which is very important. That's a key part of your business. Can you shine more light on the offtake, how that is developed? And then the other question is how you get the financing.
Uka:
11:20
So on the offtake bids, they represent a huge chunk of the stakeholder from the marketplace perspective. We had to ensure that we aggregate demands from these obstacles earlier during the season or even during the season. This demand usually give us an idea of how much farmers we are going to aggregate. We currently have close to a 1,000 of stickers right now who we sell these goods to. We try to sense check the amount of goods they have.
Uka:
11:46
We've been able to grade them into large, medium, and lower scale softakers and food processors. It's an intense business development activity to know what is their demand, what are the seasons when they they would want to procure a lot of goods, will they come to the warehouses to collect these goods, how do they want receipt of the goods. I mean, we follow a lot of onboarding process to make sure that we're fitting their demand. They are a customer segment on their own. Right?
Uka:
12:10
It's very important that it start of the season to know what is the demand like from our off the guys. It's not just demand alone. What kind of quality of grains, products, commodity they expect? Because every commodity we produce is primarily based on the demand of the optical in question. Because at the end of the day, if you produce something that is outside their demand, nobody's gonna buy it.
Uka:
12:32
So it's a rigorous conversation to know. And many of those customers will be able to successfully work with over the years. I've been because we spend time understanding that these are the kind of goods they require and produce primarily to suit that need. On the funding aspect, which is the ports of wheat, financing is a big problem for agriculture. And I just say that agriculture is under finance.
Uka:
12:56
You don't see a lot of VCs and the likes coming to play in the sector. Right? But we noticed that this has been because there's lack of visibility of what happens on the field. People really have understanding of the operations from the farmer end down to the obstacle. And these are some of the things that we've been able to spend the past years to do to be able to create some sense of visibility of the farmers we have, mapping their land so that we have to ease our financing.
Uka:
13:20
We started at the early stage. We didn't have access to any commercial bank or any DFIs funding us at the start. This was the reason why we started off crowdfunding, started with 2 friends. Then we went out publicly to connect to retail investors to fund agriculture. It started off well.
Uka:
13:38
Of course, managing retail investors is a lot different from managing institutional investors. You did that for, I think about 3 years, 2017 to about 2020 when we stopped. And we noticed that the business was growing fast and we needed to attract a lot more patient investments for the kind of skill we were looking for. And again, in 2020, we had the COVID crisis, which was a big bump in our operation. And then we're lucky enough to get access to other structured investment and we scale to where we are from.
Dotun:
14:12
You talked about the challenge of raising capital. Originally, you tested it with friends and family, and then you scaled it to the retail crowdfunding and which a lot of similar business, some that I've spoken to on this podcast before, by doing something similar. And everybody seems to read the pump to use the word. Can you talk a little bit more about what is that pump? What are the challenges?
Dotun:
14:33
When you stretch that model of crowdfunding for this kind of business, where does the model break from your own experience?
Uka:
14:40
Thank you for that question. We noticed that first of all, there was no problem with crowdfunding at the scale that we're working on. At the end of 2019, we're able to build the largest single supplier of poultry beds to many of the poultry obstacles in the country at the time. And our demand for scale versus the kind of financing we required, I mean, it was not the most appropriate because at that time we needed a lot more patient investments. Crowdfunding required that you're going to pay people you raise funds from just to get a lot more on crowdfunding.
Uka:
15:15
It meant you're gonna pay, in most cases, 6 to 9 months. And the more we did the business and the way we're scaling, we're running largely on debts. Right? If we're gonna scale the way we wanted to scale, it means we're gonna hire a lot more people. The strength of our human resource was going to be a lot stronger on the field and out of the field.
Uka:
15:32
Right? Crowdfunding goes and is not sufficient to handle that scale. The one thing We noticed that in 2020, we have stopped beds, We noticed that in 2020, we have stopped beds. We have planned to draw about a 1000000 beds. From January, we have raised the funds.
Uka:
15:54
About a €1,000,000,000 at the time, we have raised the funds with the plan to make payments 6 months later. And we got the first notice of COVID in China sometime in December. And then we felt it was not going to come to Nigeria. In March, we heard there was COVID. And then a few weeks later, we heard there was going to be a lockdown.
Uka:
16:12
The impact of the lockdown was that we already have poultry beds on the field, and we always move feeds every 2 weeks. And at the time, because of the scale, trucks of 5 agreed poultry beds were moving around the southwest every other day. So constant, these were moving. And then because of the restriction, these trucks of goods could not move. Now I'm thinking about over a 1,000,000 beds spread across major poultry production regions of the country.
Uka:
16:39
And because of that, I mean, we struggle to get persons to move this equipment. And then if you understand how the poultry sector works, the beds are very fragile. Any tiny cause of infection from one death is spirals, dams, water. So think about a pain, a poultry pain that takes as much as a 100,000 beds. Right?
Uka:
17:01
And a loss of one bed can lead to the loss of a 1,000. And a1000 to another 1,000. These birds were getting hungry. And for the farmers who had access to their don't forget, we sponsor these farmers, right, to be able to get access to their feed. The farmers who had access to feed, they had problem with evacuation.
Uka:
17:18
Evacuating these beds from the feed, they couldn't move. So they have to feed the beds a lot more. We are supposed to evacuate the bed at 1.3 kilograms Right? These are chickens. If you are managing them for more than a week or 2, it means you have to spend a lot the economics becomes outrageous.
Uka:
17:34
It means you are going to run at a loss. So what we did was to see how we could evacuate rapidly, but we couldn't. Most of the beds died. Don't forget I said about the 1,000,000 beds we had stopped. Over 400,000 beds were lost.
Uka:
17:48
And then we fixed another problem. We give the beds to some partners we're working with. So there was a whole receivable delay. And then interestingly, another thing that came up was the fact that we had retail investors we had to be accountable to. Right?
Uka:
18:02
Because at the time, there's no explanation you can explain to them because people needed their cash. It was a lockdown. There was a strong need for cash at the time to be able to make ends meet. And you can't blame anyone who's in rage, especially when certain promise is made, so so time they're going to get their cash. That was the finance bit, especially with crowdfunding.
Uka:
18:22
And again, we had to work around multiple processes to ensure that we sorted that out.
Speaker 4:
18:30
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Speaker 4:
19:11
Each number in MoneyPoint's success story represents a dream they have helped turn into reality. Visit moneypoint.com to find out more. MoneyPoint, powering dreams.
Dotun:
19:22
It's incredible what you just described about how a fragile part of the model affects the other parts. Your model got strained through COVID. And because it's a significant part of your business, it affects your source of capital. But you also mentioned the processes that you put in place, and I really want to double tap into that. What are the processes that you put in place to optimize against those challenges that you just described now?
Uka:
19:46
When I look at 2020, I'm rather thankful for what happened because it made us a lot more proactive founders and business people because it comes with a lot of uniqueness that we had to solve, especially from the finance end, our choice of finance and the entire operational dynamics. It was very overwhelming, especially online. The business had close to 20,000 to about 30,000 subscribers at the time who we needed to manage. They had not gotten payments for the investment they had made, and they are expecting it 6 months from then. I think April, May, June, July, sometime in August.
Uka:
20:23
At the time, it was ballooning online, and it was difficult to think. I think that was the biggest challenge for me as the CEO to be able to think, how do you solve a problem like that? And at the same time, focusing on the operational elements of the business. We're combating trust and reputation versus focusing on the business to ensure that is a growing concern. Thankfully, we had the support of the venture platform team, very active alongside a number of folks who were present to help at that time.
Uka:
20:54
I think the goal was clear how to make sure that we, as the founders, we could focus on the operations of the business, making sure that every single thing was going well. I think that initially, some of the things that went on the rounds were did these guys steal money? One of the things that was online on Twitter and everywhere was I took cash. I went to build a house in Banana Island, all sorts of things. Right?
Uka:
21:16
It was a really intense season. What we wanted to do and what was very primary for us was to make sure that everybody assess their phones. At that point, I spoke with the team at Venture Platform. I spoke with Carla. I think I remember that clearly.
Uka:
21:30
It was in front of my office gate. I had to come out to make the call. Right? It was a very vulnerable place for me because at that point of the business, faced anything like that. It was a question of how are you not paying?
Uka:
21:42
What can we do to solve this? I had to solve the reputation issue by stepping down. And during that period, founders asked me, did you need to step down to solve the problem? And I think there's something that we had to do if the reputation of the business was important to us and the future of the business was important to us. So that's why I remember the day I was making that call.
Uka:
22:03
What do I choose that this business is a growing concern and reputation and integrity was important to me.
Dotun:
22:10
I wanted to maybe pause you there because I want to really double tap a lot on that. What led to you stepping down and why and the lessons from there. Well, let me step back a little bit. So the problem was a cash flow situation where you had a COVID related loss of products and off takers, and then you have investors who are asking for their money back. Do you also have some because I understand that there was also some payments from off takers who are who are not paying on time.
Dotun:
22:40
Can you maybe talk a little bit about what was the challenge itself? And when did you start seeing the sign, the first sign of that problem bring before you went on Twitter?
Uka:
22:51
So first of all, two things. We try to move feeds to the field, and there was a truck that was delayed for 3 days. I got someone from my team called to say this truck could not go. So there was that halt, right? It was already one problem we had to solve.
Uka:
23:08
Now the second big challenge that Inotis was at the point where even the beds we had in the field, when they moved to the obstacles, they had received the goods because of their shutdown. A lot of factories had delays. Right? Factories are working for 24 hours, been working for 12 hours. And some that are working for 7 days, working for maybe about 3 to 4 days.
Uka:
23:28
It entirely damaged their payment cycle. Right? So for many companies that used to pay us within 2 weeks, they stretched that to about 6 months. We saw payments that came 6 months later, 3 months later. And one of the things that can destroy a business like this and many businesses is where your payment cycle is affected.
Dotun:
23:47
If you had to go back in time, given those signs that you are seeing, what would you have done different? What changes would you have made? Micro changes. If you are to advise Okaa of that time, given what you know now, what would you have done?
Uka:
24:01
We ignored a lot of things when we had a lot of COVID. Right? What are these that would have protected us? It beats for managing the skill and diversifying to other things we could come through. Now we did have a big team in 2019.
Uka:
24:15
After COVID, we had to strengthen our team. So if I was going to advise the car at the time, whatever news you hear, whatever story you hear, even if it's costly, examine it and see how we can impact the business. Many entrepreneurs and many founders can be very ambitious and ambition is very good. Right? Sometimes you need a very strong operations team to let you know, okay, these are the kind of things you shouldn't do.
Uka:
24:38
And then manage your ambition within this prism. Right? These are conversations we had not properly answered at that time. The second thing was it was just this single off the carriers. So we had sold over 50% of all the goods we had to 1 offtaker.
Uka:
24:53
So there was a single buyer risk that we had to manage. What we would have done was to sell the goods to multiple people and manage the risk because there are quite a number of people who needed that goods at the time.
Dotun:
25:04
One of the key themes that came out of this, and I've seen that in other businesses too, is that start up grow faster than humans, especially the leaders of those companies, unlike traditional SMEs. The differentiating advantage of startup is exponential growth. And the flip side of that is that you will grow faster than the leaders that started it. And there are many ways in which you can navigate that disparity in growth. You can suffer by hiring someone that can fill in that gap.
Dotun:
25:34
That was what Facebook did. And Mark Zuckerberg, I had a very good COO. In some cases, startup founders might step down and allow someone to come in. Google did that where the 2 founders have to step down, and then Eric Smith came in and became the CEO for a time. In some other cases, the leader developed himself and grew as quickly as they can and lead the company.
Dotun:
25:55
In your own case, you went through that growth disparity, and you had to step down. If you were to draw out some lessons from that, I wanted to just talk about first confronting that for yourself and admitting that. And I'm very sure it's not easy because this is your baby. Then when you did that, what did you then do after when Adia came in to lead the company? What did you do specifically, you and your cofounder, to make it work?
Dotun:
26:19
And now you then came to take it over afterwards.
Uka:
26:23
I've never had the opportunity to talk about what happened in terms of people. Very important question. As you just said, the different dynamics or challenges that start to go through. In my case, I noticed that it would require stepping down at the time. In some other cases, it could require hiring CO.
Uka:
26:39
In other cases, it might require closing down the business. Right? Quite a number of people wondered why was stepping down the solution for private group. And my response was pretty simple, although the process was not the easiest for me emotionally considering we built this business, myself and my cofounder. Right?
Uka:
26:58
And watching that I would have to step down was not an entirely easy process. But we had to ask ourselves a question. What is most important to us? The business we built that it survives and it continues to be a skinny blue business or the idea that is on record that there was a step down. I had to ask myself that question.
Uka:
27:18
Why should a step down happen? I remember that the night that I was advised to bring in Adia, I got a lot of contradictory advice. But the reason why I had to take this decision was that we were not trusted as a business and especially our kind of business that is holding on to people's cash. Right? A lot of people need to trust you enough to do business with you.
Uka:
27:42
And then there was a lot of things around reputation, integrity that we needed to uphold. We We also had to think about the future of the business. We wanted to build something for the long haul. Right? So these were the things that made me make the decision on stepping down.
Uka:
27:56
So the next day, I flew to Lagos. I went to meet Adia. I went to her house immediately, and I spoke with her. I just had to break the challenge of the business end to end. Right?
Uka:
28:07
And she understood, as she said, she was gonna get back to me the next day. I booked the next flight back to Abuja waiting for her response. One thing that was important, she did a lot. She had to stick her reputation on a business that would collapse because reputation was a challenge to solve. She had to contribute proof to everyone that, see, this business is a going concern and we paid the loan.
Uka:
28:30
And thankfully, we worked hard. They're talking about working hard. Don't forget, I needed the help. Right? I needed to be able to convince people that we are not thieves.
Uka:
28:39
Right? And we're gonna pay the money, and we're gonna solve this problem of agriculture. Right? Because we had a bad reputation in the industry at the time. It was just important that we took that move.
Dotun:
28:50
How did you reconcile that with the rest of the team who see you as a leader and also your ego as well? How did you reconcile that?
Uka:
28:58
Thankfully, I was able to have a general meeting with a number of people. For many members of the team, they did not agree with the decision, both myself and my cofounder, I had to do. Before Adia spoke with the team, we had to let everyone know that this was our decision, and this is something that we believe was going to be good for the future of the business. It was important we carried everybody along because it was not just myself and IO that was going to support Adia to get the work done. Right?
Uka:
29:28
It was gonna be a whole family. And we had to make sure that we're not frustrated because it would be easy to frustrate our effort if it was me against you or Adi against the rest of the team. What we did was to make sure that we spoke with everyone. We had constant meeting. We had physical meeting.
Uka:
29:44
They visited us in the house. Who car you show? And all of that. So I said, see, this is great. And we are lucky to have more than anything.
Uka:
29:51
They trust the the integrity of the founders and the decision of founders, and we're able to get past that. In 6 months, we came off and everything was sorted out.
Dotun:
30:00
What are the lessons that you will want to highlight out of all of that? Because there's so many that I could dive into with you here, but I'm keen to hear from you. If you are to do a masterclass on this for founders, who have to make that kind of decision? What are the key things that you want them to, first of all, resolve personally with themselves, do afterwards, and keep things that they need to take note of in order to make that post stepping down work?
Uka:
30:24
Yeah. I think a few things. The business is more important than you. Right? And sometimes founders tend to personalize their business, and that causes a lot of problem.
Uka:
30:34
You are counting to multiple. Right? And I think that was the things that I learned early. And as much as many people were not seeing what I was seeing then, I was able to know that as much as I want to personalize this business and I know that it's important, The future of this business is important. And we need to put the business ahead of ourselves.
Uka:
30:52
One of the things I learned from that occurrence was to ask myself really deep, sincere question. You can what can you do? What can you not do? You can't you cannot do this. I literally wrote it down.
Uka:
31:04
Now these are It's already hard approach. People telling you that, see, this is out of your capacity to and taking that in good fits. Right? Thinking of how to solve for the gaps because the things you cannot do, you get someone who will do it. I think that's just part of leadership.
Uka:
31:20
It doesn't mean you are terrible. It just means that somebody else is out there who can solve for it. And I think that those are things I've learned and I'm still imbibing to date because the business is going even faster after 2020. And again, because 2020 was a public challenge. The we faced bigger challenges even more than 2010s.
Uka:
31:40
The principle of the COVID crisis that we had helped me and what we learned helped me to know, okay, At this point, we're facing this challenge. This is kind of person we'll need. And these are the kind of hiring decision we have to think about. These are the kind of things that Ouka, you and your cofounder cannot or this core management team cannot solve. Then let's get this.
Uka:
32:02
Let's do this. So I think that approach has helped in navigating all the challenges we've seen as we keep building.
Dotun:
32:09
What was the darkest day for you in the whole of that 2020 crisis?
Uka:
32:15
So the darkest day I was in, that was I I can't forget that it was 9 PM thereabouts. I called my dad and he said, why am I seeing my name on Facebook? I bear his surname. So he was thinking it's on his name. And he said, what's going on?
Uka:
32:34
At that point, I did not know the extent to which stepping down was not my problem. But the fact that my dad had called me and told me that he was seeing all of these things growing or making the rounds in the Internet. Woah. This thing has got some really deep. And this was getting out of control at the point.
Uka:
32:51
We faced a lot of problem. We we got locked in a station by one of the subscribers. In fact, some people came to the office. We have a 2 floor office, and the person went up and said he was gonna jump down to get money. It was a combination of all of that that was truly intense that year.
Uka:
33:09
I think that these are some really personal moments for me, and then it's steered in me in me to make a decision that was out of myself. Because I noticed that the impact of this is not about me alone. We're young teens. There are a lot of people who travel because their first job. And I was just thinking to myself, you guys are gonna lose their jobs if anything happens in this business.
Uka:
33:29
I didn't steal anybody's money. We're working hard. Right? And this didn't happen. So we have to be able to solve for them.
Uka:
33:36
A lot of farmers were complaining. Right? It solved for the farmers too. So it was a place where I had to be where couldn't afford to think about myself, you know. So this was the reason why when I say stepping down was not so much of the problem.
Uka:
33:49
That's why I did that.
Dotun:
33:50
That's so deep. I'm sure this is one of the first time you're talking about this publicly, and I'm really privileged to discuss it with you. You've been through fire and the business has come out now. The business is doing close to a $100,000,000 revenue, I may say that publicly. You're profitable.
Dotun:
34:06
You're solving problems for a million farmer, which by itself is huge. You are also making good money for your finance providers who are no longer retailers now, but institutions. Your investors are happy with you. Your team are proud to work for your business. But if you are to distill down the core or the impact of this business from the point of view of 1 person, what would that be and what would that study be like for you?
Uka:
34:31
If I dispute that who and what you want to solve for is the smallholder farmers. We want to be able to see how a smallholder farmer who is doing 0.2 hectares can increase to 0.8 to 1 hecton is doing the large scale channel. And why is that important? We believe it is hard to solve global hunger if the scale of the farmers cannot increase, if a set of financing is not solved. And the reason why that is important, as long as there are lots of variable land in Africa, farmers have to be equipped to be able to know how best to find the right seeds, the right approach, and then the assessed markets.
Uka:
35:07
And that's why we exist really. What we've been able to do over the years has been to connect financial institutions so that we can provide them with inputs, seeds, and then the assessed markets. We've done this for about the medium farmers right now.
Dotun:
35:20
And can you tell the story of any particular farmer that maybe started with you and the scale of their success since the time that they started with you?
Uka:
35:28
There's a guy who's recording it's a name that's used to call for a prosperous farmer. So in many of the regions we are in, we call it bunkasamanu. Right? That means a prosperous farmer. So the goal is to grow every farmer to a big farmer, a prosperous farmer.
Uka:
35:46
What we do is we monitor the goods where did the farmer starts with. So there's a female farmer, Fatima, who I think this farmer is in Katsina. What we worked with her with was the soybeans farm. I think she was under 0.2 hectares. And we skewed that from 0 point 2 until she's currently farming over 5 hectares today.
Uka:
36:04
We started working with her in 2021. There are farmers in Kaduna, in Bornu, in Penu Estates, and Taraba around in Middlebelt. New Zealand's killed their production significant. And what is primary for us is not too much about the number of farmers, but the youth that farmers are able to produce. Today, we need to produce 3 times the national average.
Uka:
36:27
Nigeria does for maize as lead to us, see 1.5 metric tons per hectare. Most of our farmers do as much as 5 tons. Right? Five tons per hectare. The tone is $10.
Uka:
36:38
Right? So 5 tons is about $50. So that's what we see as impact. And we need to create VCB prosperity for these farmers, and that's really what gets everyone excited.
Dotun:
36:49
That's so good. That's so good. I'm gonna end this conversation with you, fire and question I know I ask all my guests. The first one is, what view did you hold before now that you no longer hold?
Uka:
37:01
I thought it was possible to scale this without technology. And the more I look at the business, the more I see that what has helped us, especially in putting farmers in clusters in organizing the entire infrastructure, creating visibility, mapping them, and everything we've done because it's a humongous operational model. We've been able to do that with technology. Technology has helped us.
Dotun:
37:24
Which book are you reading now or have read lately, stuck with you?
Uka:
37:29
Oh, it is. I read in 2019, but I had to read it again. It was the book by Ben Horowitz, Heart Sins About Heart Sins. That is helping me to have a better perspective about challenges and how to manage things. And I think that has given me a good perspective about Key also, managing it and how emotional and tough it is building a business that will solve massive problem.
Dotun:
37:53
That's good. It's a pleasure talking to you, Ka, and I'm really privileged that you are able to talk about some
Uka:
37:59
of these Thank you.
Dotun:
38:00
Challenges that you went through. And I'm very sure that a lot of founders will find it very helpful. And you are creating huge impact beyond just your business to other founders as well. Thanks for
Uka:
38:09
coming to the show. Thank you very much. Thank you for having me.
Speaker 3:
38:12
Building the Future season 5 is hosted by doctor Dotun Oluwoporoku, produced by Osarome Osamuiyi for the subtext, edited by Osarome Osamuiyi and Chinedu Anatine, who is also the recording engineer, show notes by Grace of Obaloluwa, designed by Jonathan Nwachukwu, and video editing by Chukuka
