🦁 YC, 10B $, Nigeria, G63 AMGs and international car trade w/ Shekel Mobility founder Ben Oladokun

Another Founder Wisdom podcast today with Benjamin Ola Dokun. He is co founder at Shekel Mobility YC Company Y Combinator Winter 23 batch. So we're gonna have a nice convo about Africa, about car dealerships and about Fintech and yeah, me and Ben had a nice pre talk last time we talked about G64AMGs and Lexus trucks. So had a good time. Hopefully it's going to be that way today too. Ben, can you introduce yourself, tell us a bit more about check on.

Yeah, thanks a lot, Charles. You know, hello everyone. My name is Ben Benjamin, as I mentioned, co founder of the Shekel Mobility. So essentially, Shekel mobility is a B2B marketplace for, you know, auto dealers in Africa. What we do is we help them find, finance and sell better, essentially like optimizing the business transactions. Right. You know, you know, should I go on? Like there's a lot to say.

Yeah, go on. I'll stop if it's, if it gets too much.

Got it. So, yeah, we officially launched this company, you know, last, last year again. We've been in mobility space for quite a bit and this is not our first company in the mobility space, but yeah, so we launched Shekel fully last year as of now. So the first pilot year, you know, we did transactions of about $5 million. So right now we're doing transactions of $5 million on a monthly basis, you know, and pretty much this is all spirit transaction, about 200 dealers, local dealers as of today. And we do have like a wait list, a long waitlist of over a thousand local dealers that want to use, you know, our service. So our vision is to be the first mobility, you know, Africa first. Africa's first mobility unicorn, you know, powering about $10 billion transactions, you know, by 2025. And we're very much on, you know, on the way to do that.

Pretty ambitious. Okay, $25 billion. That is $10 billion. Okay, 10 billion. I mean, still very ambitious. How many auto dealerships are there in Africa? Is my first question.

Ah, so the, the unique thing about the, you know, auto dealership space is that in Africa it's pretty, pretty fragmented, right? So there's a lot of, you know, auto dealers that, you know, so we've segmented them to like two types of dealerships, right? There's a lot more than that. But classically too, right, there are the local dealers. The local dealers are the ones that have, you know, the car lots, you know, they have a bit of resources, right, to do their business. However, we have agent dealers, right? So agent dealers are a lot more. So if we're looking at all these categories, we'd say we have right now conservatively over 100,000 dealers in Africa.

That is quite a lot. And it surprised me. I checked some numbers in Africa the other day, so French speakers, 160 million of them. Um, that. That was quite surprising. I didn't know that, and I didn't know that Africa had that much population. You started in. In Nigeria, right? And yes, tell us a bit more about, like, Nigeria itself, how you started and how much, folks, how much population is there in Nigeria?

So Nigeria is like the, you know, is the largest, you know, country in Africa. We're over 200 million at the last count, you know, and so, I mean, again, by 2050, we're estimated to be more than United States, you know, in population, you know, because Africans, you know, we give birth a lot, you know, so. So then, like, you know, the population is big. You know, Nigeria is like the biggest economy. Again, we've had, like, very terrible leaders at some points that are sort of not, you know, really lived up to our potentials, you know, in a lot of things. But then I feel like there's a lot of hopes with this new regime. There's a new president. It's just May 29, we had a new president, and there's a lot of hopes he's got running. So Nigeria is really a very vibrant economy. And even in Nigeria alone, we have a market size which is even $10 billion that we're speaking to. We can actually do those transactions in Nigeria alone, right? Yeah, pretty much. So as of today, the value of the used cars that come into the country is about 4 billion, you know, 4.5 billion. Nearly 5. $5 billion. Right. On a yearly basis. Right. And most of our transactions are transactions that, you know, we do. Even beyond those, we capture a lot more transactions. For example, dealers doing business with themselves. You know, we captured those. So $10 billion can actually be done in Nigeria, even though we're going to scale to a couple more, you know, countries.

Interesting. You have a couple of features that you're deploying. One is funding a. Another is like a kind of new bank, you know, and the third one is the marketplace. So what folk, what feature are you focused on right now and tell us the logic and the needs, the problem you're solving behind each of these products. Slash, features.

Yeah, I got it. All right, so good points. I mean, you. You've detailed it. So we have three core products. Right. You know, the first is shekel credits, you know, the second is Shekel Trade, or Shekel business, as it's called. And then we have Shekel pay. Right. So I'll go to the first one. So Shekel Credit essentially is offering, you know, credits for auto dealers to buy more cars. And trust me, like, that's the. That's the flagship product, and that's still the. One of the key drivers, because a lot of dealers, I mean, they want money, you know. So again, we know that, you know, finance is lifeblood of any business, you know, but one of the things that's happened is that is how, you know, we entered into the space dealers sort of like, you know, we had a meeting with a group, you know, while running our last company with a, you know, company called CAS45. We're providing another type of service for them. And then they. Basically, what they do is like Cavanagh Kazoo and all the likes. Right. Online, you know, buying cars online. Right. So. But they had a lot of dealers, you know, and they. So they wanted to, you know, better their business. And it was. It was during COVID period. Yeah. Where, you know, there was a lot of things going wrong. Right. So. And then essentially, like, we had a meeting with the CEO, you know, so Bronto, you know, he's from. I think he's from India. Yeah, it's from India. We had a meeting with him that day. We just had a chat. And then he was talking about, like, can we help? You know, because we had just launched a product, Easy Finance. That's story for another day then. So, like, absolutely, we can do that. Like, you know, and it's like, do you guys have a billion? You know, Naira, you know, like, yeah, we can do it. Because it's so huge in markets. Right. And somehow, you know, a lot of people, no one focuses on dealers, Right. I think it's because the dynamics of their transactions are very unique. Right. So, you know, having that combination, like, in terms of understanding the dynamics, able to understand finance, and also technology to be able to solve their problem is sort of a bit tough. So credit is what we started with, and the demand is continuously huge, but then stepping down to the other one. Right. You know, I mean, if I have more time, I'll talk a lot more about even how we do our credits. So we just don't give credit like that. We have. We've built an operating system, right. That helps these dealers buy. Buy cars. So they buy the cars, you know, they fund their wallet to 30. We provide 70, and they buy the cars within Our operating system, which is one of the reasons why even after doing, you know, over $30 million, you know, transactions, we still have 0% defaults. Right. And the banks right now are really, you know, really looking forward to working with us on that. Yeah. So but like the other products is checkout trade. So what it does, like you said, the marketplace where people can buy and sell, like we said we do, we help buy, finance and sell. Right. So that sort of helps people buy cross border. Like, you know, a car is not selling in the States, he's selling another city. So we help optimize connect dealers and then the pays because right now the dealers want more credits, right? So they're limited to, let's say a dealer starts and we give him a hundred thousand, you know, dollars credits, you know, and he's these dealers, some dealers, a lot of dealers do $1 million. You know, some of our part dealers that are users, they do $1 million transactions on a monthly basis and like they want more credits for them. The banks that they currently work with are really useless to them. You know, Nigerian banks are very, you know, they're not as, I mean they're very unique sets of people. Right. So, and they're like, my bank is useless to me. I will bank with you. Right. So they want, they are the ones even because they want to see this as helping them, helping us give them, you know, or helping them qualify for more credits. Right. So we've not fully launched that, you know, this also is where they can then leverage our Pay Shekel pay app, you know, to be able to pay if they want to buy cars from other, you know, countries, you know, payments. But then there's a lot of things that we're solving, you know, check out pay will launch maybe before the end of the year, you know.

Well, let's talk about dealers themselves. So obviously dealers are somewhat different in Africa from the rest of the world. Although I do think there must be like some Toyota dealerships and so forth, which I do not think it's is your target market. From now I have a visual on, on dealership and what it kind of looks like in, in Africa. What are their margins? Let, let's start with that. Let's say that I go on Sheikh island, buy a Mercedes for 20,000 USD. Like how much can I resell resell it for? Is it like 30k? And my markup is 50%. What does it look like?

Okay, so let me give a background. So we, we, we deal with, you know, for the most part, you know, the the purchasing power of the country. Right. A lot of people can afford to buy like reused cars, pre owned vehicles. Right. Not a lot of people can buy the brand new vehicles. Right. The companies still do. Corporates and a few HNIs and others can buy brand new vehicles. Right. So they're the Toyota dealerships. They still have all those ones, right. But that's not our focus because that is not the majority of the market. The, you know, 85%, you know, deal in Tokumbo, what we call Tokumbo. So what Tokumbo is called is, you know, cars coming in from overseas. Right. Tokumbo is Yoruba term. Right. And even locally used. So there's foreign used and there's locally used cars. So those are the cars that sell the most. And for us we're supply agnostic. Right. We don't, we can power any transaction. But you know, that's what the majority of transactions are today. Right. So. And this. You want to see something? Should I go ahead?

Yes. Why are these cars coming from elsewhere? The first thing I had in my mind were like, are they stolen? So like tell it, tell me a bit more about that.

Okay. No, so first of all, Nigeria does not produce vehicles, right? Even the, yeah, even the Toyotas, they don't have their, you know, they're not set up here. So if you have to, they have to bring, you know, from overseas, right. You know, and then, you know, most of the time what. Because the cheaper cars are the cars that have been used before, right. In other markets, right. So someone buys a, you know, Toyota, you know, you know, Prado in, you know, in America uses this for like four years, then somebody now then buys it. So it's cheaper, right? So it's sort of like. So that's why most of these cars coming however, you know, because there's, you know, as much as we have, you know, in any economy, we have like the bad business people, right. You know, and so a lot of times they're accidented cars. You know, there are cars that have been badly used abroad and they bring fact we hear a lot of stories around. Cars have been flooded, you know, that have water issues and they just bring it there just to sell them for profits. Right? So we see all these things happen. But of course, which is one of the reasons why, you know, on our platform we do all of these checks and most of the cars that we sell, we don't have this, you know, issue journey. There are also issues of stolen vehicles, you know, everywhere it's. But of course perpetrated mostly by people abroad, whether it be Nigerians there or, you know, Africans there or anyone there that then ship it here for people to use. Right. So there are all the stories around. You know, I've seen all sorts of documentaries, like, you know, cards appearing, you know, in America and then you see it here, you know, in Lagos. Right.

And who sells these cars? It's like scrap yards. And isn't there an opportunity to build a platform to facilitate that international cartridge?

So, like, when you say who sells it, you mean here, who sells it there?

Like dealerships, scrap yards. Like who. Who actually exports these cars? Because that's an unknown market I didn't know about.

Okay, yeah, so. So they're generally auction platforms, right? In the US they're big auction platform. You have ACV in auction platform, you have Manningheim. You know, we have a lot of, you know, auction platforms that dealers buy from. Right. So what happens a lot of times there are people abroad, like I mentioned, a friend of mine in Houston, he buys, he works in Shell, but on the side he does dealership business, right. So what he does is like he buys from Mania, right? And he ships it down. So he has people here that buy from him. Dealers buy from people. So some dealers buy enough to buy directly from Manheim, but most, for the most part, they buy from people that buy, you know, that resell abroad. Right. So, but in terms of building the platform, the, the thing is, you know, definitely there are platforms. So there's also, I don't know if you know, a company called Trade X, right. They're, you know, they're looking to partner with us now. And we're, you know, we're in talks with the CEO, Ryan, you know, so basically what tradex does is trying to connect those markets. Right? Okay. You know, in terms of outside and inside, you know, maybe from America too. But for us, because we're starting with credits, right? Our credit offering, you know, just sort of like in terms of doing our risk assessments, we don't want to, you know, get involved in that play yet because, you know, in terms of that cycle, that, you know, value chain, there's, there's customs issue, you know, immigration. There's so many things there that, you know, you don't want to get involved and you don't want your money to get stuck. Again, payments platforms, you know, will definitely cater to this. So ensuring that, you know, all of the payments for this transactions cross border are, you know, but again, there's so many problems to solve, really, in Africa, you know, and there's obvious, obviously, opportunity to create that platform.

It looks kind of risky though. If I'm this small dealership in Africa and I drop like 20k to buy my Mercedes overseas, like first, well, I guess all about trust, right? So there must be an escrow payment, there's a reputation of the person that sells it to me and there must be recourses if like my money gets lost in the process. But coming back to, to my question, if I'm taking that risk, I'm buying that Mercedes for 20. I expected to sell it at least for 30 in Africa. And 10k can be a nice payday, granted that I sell it in the next two months. So, so what are the margins on the car? Why are dealerships so attracted to this business?

So dealers are general terms. Dealers are big boys, right? So dealers make money. Right. And apart from even so there's a high ticket, you know, our business, right. There's a lot of transactions. One car in some cases can be like $100,000, you know, a lot of that depending on what level you operate on. So typically for pre owned vehicles like, or for rather for locally used vehicles, right. Their margins can be as high as 50, you know, depending on the deal they get. Right. So which, what did, you know, it's all about getting right deals, right? Somebody wants to sell a car, you know, use this and then you price it down, you tell him that there's so many things wrong with this car and then you bring the cost down to, you know, $10,000, right. And then you're able to sell it for $15,000. So but for the, for the average transaction, right, Dealers make roughly about 30%, you know. 30%, right. You know, on a transaction, however, for the brand new vehicles, the profits goes down a little bit.

Yeah. And the interest here being twofold. One, Africa is growing in terms of population and two, car adoption is going up. Why? Because public infrastructure, roads are getting developed. And also people are kind of globalizing, slash Americanizing, Westernizing and realize like, oh, I can get there quick and I can have my nice little vacation or I can get to the restaurant quicker. So I think these are the, these are the pigs you're piggybacking on. The hypergrowth. Piggybacks, I would, I would call them. Is that correct?

Absolutely, absolutely. It's a, it's a huge market and which is why for us, like, you know, we're stuck in demand. Right. You know, one of the things that we're trying to do now, right, is just integrate with the banks with the big Banks, Right. We have a local, you know, bank already, microfinance bank they were working with, but, you know, working. I mean, the opportunity is really there for the banks. Just that for the most part, the way banks are set up, right. They're not innovative enough to work with people. Like, but even at that, you know, we're talking to CEOs of this like selling bank, you know, talking to even higher power people in the banks and they're, they're all interested and it's just that their process a bit bureaucratic, you know. But in terms of the, the size of the market is, trust me. And the growth is, you know, like you said it is. Right now the car ownership in Africa is about, you know, 1%, you know. Right. Vis a vis the population. Right. So a lot of people don't own cars. You know, as, you know, the economy sort of starts, you know, developing. A lot more people can afford it, you know, and can buy their own vehicle, you know, and the need would always be there. So it's a huge market.

You know, one challenge was that, for example, in Nigeria, I had. I heard that it was one of. I think, I believe it was Lagos that had the largest traffic problem in the world. Or was it Nairobi? I forgot. But it basically was like huge traffic problems. Sometimes people got stuck for, for like 10 hours in traffic. So I guess like the, the government infrastructure needs to follow.

Yeah, no, Lagos, Lagos used to have traffic and like you said, so it's. I mean, we sort of used to have leadership problems, but trust me, it's getting better. And so now even in the past, you know, administration, we have like, you know, trains, you know, working better. So. And also the roads. Because Lagos is a. One of the problems that we had in Lagos, like, just like London. Even when I'm in London, like the traffic in London is annoying, you know. So it's, it's, you know, you find out that most of the roads have been constructed for a while. You know, it's, you know, small vis a vis like the people that come in like Lagos. People coming to Lagos every day in like in thousands. So the population is about, you know, 25 million. Right. For just a city. Right. You know, estates, you know. But it's actually in terms of land mass is the smallest states, you know, even in Nigeria, small, but a lot of people, because of the economic power, a lot of people are coming in. But again, like you said, you know, this, you know, in terms of water, you know, waste, transportation are being developed. And you know, the roads are, you Know, in fact, even wider roads have been you know, constructed. And, you know, it's. It's. I think it's a problem, you know, in a lot of cities that have this kind of even, maybe, I don't know, New York or stuff like that.

And in terms of transportation, that brings a lot of opportunities. We've seen a lot of entrepreneurs start their Uber, like amp in Nairobi and Nigerian. I guess the opportunity is that most humans are completely foreign to what life looks in some cities or some parts of the world. Even myself as a nomad, you know, I've never been to Nairobi, but if I would have my foot there and if I would see the reality, I would understand that opportunity. But not. Not a lot of people see it. And you're there. And I guess that's why Africa, Nigeria and Nairobi could be one of the best investment that there is. And I guess that's why you've got YC behind you.

Yeah, absolutely. Absolutely. No, I mean, so you're right. Like, there's nothing like, you know, even when you scale, you know, people, you've seen brands that scale, but they have to adapt, you know, locally, because culture is a big deal. You know, the people is really big. You know, so you need to understand the local markets and you. Until you're there, even when companies want to launch, right. Sometimes the Senate teams to really understand or probably leverage somebody's experience, you know, that is on ground. So the opportunities here, trust me, like, I know a lot of you. When we're in a Y Combinator program, a lot of my friends, like, they. They really, like, they're surprised, you know, as some of the things I was saying. But until, in fact, I have a lot of friends that are coming in in December trying to, like, you know, based on our conversations, trying to come in and see a lot. But trust me, there are enormous opportunities, and some of them you can only. I mean, especially in Africa, in. In Africa where. Or even Nigeria, where data online is not as, you know, accurate. Right. So there's some. A place like San Francisco, like, even before you go there, you can literally see San Francisco online. You can see everything that exists there. There's a lot of data. There's a lot of things you can get without going there. Right. But trust me, like, you know, most of the things you get are not up to date, you know, in Africa. So you really need that context of being there, you know, or leveraging somebody, you know, that understands the markets.

Right. I was about to say, you were saying. Believe me, I believe you And I invest in you, slash advise you. But as I was thinking about that, I'm like, yeah, Africa. I mean, I've done business in Africa. I do gtm, I do biz dev as a service. And like you said, the listings are not necessarily there because one of the main tool that I use to prospect, let's say dealerships, it would be like people that are on LinkedIn for example, but not everyone's on LinkedIn. And in Africa then like Facebook, probably a bit more. Right, Facebook, Google Maps. So I could like scrape these people and make list and reach out to them. How's the, does that like cause a job? Because there's also a bunch of challenges like in front of you. Right. The opportunity is humongous. But I think the work is somewhat equalizing the equation. I think it's somewhat hard. There's the government infrastructure, there's the fact that, yeah, like not all people have their info online. People are still somewhat old school. They might not take a call with you. They might want to do things physically. So what are the challenges ahead of you?

You know, so I, I think, I think for us, right, yeah, there are industries where, you know, it's developed, you know, you can sit anywhere. Most of the players there are, you know, you know, online today and all of those things. There's a lot of development, there's a lot of progress. You know, I must be honest. But I think one of the unique things about dealerships are, you know, most of the, the average dealer in Nigeria is not the, you know, for the lack of, for a lack of better word, like the educated mind. Right.

Sophisticated.

Yeah, sophisticated in that sense, that's the better word. Thank you. So pretty much, you know, most of the dealers are just like, you know, they get their stuff done, they're just on the streets, you know, Oslers trying to make stuff happen. Exactly. So I think that, you know, a lot of times, you know, for, for us, like, we've had to like encounter a lot before we, you know, got our dealers to, you know, start using, you know, apps. You know, again, most of them use Instagram because they're smart. You know, don't, don't take that away from them, you know, for, for the average dealer, the smart guys, you know, but maybe they don't, you know, just not, you know, exposed enough to certain tools. For example, on LinkedIn, you probably not find them, you know, what are they doing there? Right. You know, so you probably don't find the average dealer on LinkedIn. Yeah.

And I think that's Your boat, you know, that's your little castle that you have there because you have a foot on the ground, you understand them. And you're kind of the liaison between the tech and what they don't know. Apart from your offer being just too, too good to refuse. Right. Financing, you're probably one of the only guys that can give that to them. I see. I use a food ordering app here in, in Mexico and in Latam, it's called Rappi. So it's like food ordering. And I think they've been in YC too, but they also offer credit now for restaurants, for consumers. So I think most businesses will, or platforms or companies with network effect, I think they will fintech itize, or however you want to call that word. You know, we've been saying that software is the world. Every company is going to become a software company, every company is going to become an AI company, every company is going to be going to a media company. And now I do think that most businesses are going to become fintech companies as well if they do have the platform in the community. Right. Also, every business is going to become a community. I have one last question for you because. And that was related to the challenges with who are you banking with? Are these Western banks, European banks? Because my guess is that enough. Well, you're probably banking also with some African banks, but the banking ecosystem is like not as advanced. So with. Who are you. You banking with? On the back end.

So on the back end operation for operations, you know, because we have to look, we're localizing our operations in terms. We don't want the risk of, you know, Forex, which is a big deal in Nigeria now. So, you know, where, you know, we're banking with local partners. Zenith bank, you know, you know, Sterling bank, you know, these are big banks actually, like the kind of profits, you know, Nigerian banks make. Trust me, American banks don't even make it, you know, because they charge unnecessarily. There's, you know, so many charges to send, you know, money. You're having like different crazy charges. Like, you know, my other, you know, banks, you know, abroad. Like, I don't. It's almost like my money is still there. But for Nigerian banks, they just have a lot of. So we bank primarily with, you know, local banks. You know, we do have, again, for our international, like, investors, we have our, you know, international banks, American banks, but for operations, you know, we do essentially with local banks.

Right, got it. And how much of that is VC money? Do you also use VC money for loans? Or what do you do you separate boats?

No. So initially, like I said, when we started this company, we started with our own money, money we took from the last company, $500,000. And we also had a couple partners join us and then we raised the precision of about 1.95 million. So for the most part, that was before YC, right. We leveraged. We were, you know, using some of the money to alongside partners. Right. But the demand was huge and we kept on using our money. But post yc, the model, because for us now is to scale it. And if you want to scale it, you can't keep using your money. You know, you want to do transaction of $20 million on a monthly basis, you want to transaction 100 million on a monthly basis. You can't keep raising that kind of money. You know, it's not sustainable. Right. So we're at the point where we're sort of, you know, slowing down on using. We're facing that out of using our. On lending our. On our balance sheet and then we're scaling, you know, lending on partners balance sheets.

Right. Well, thank you so much for showing up today, Ben. Where can people find out more about you?

So my LinkedIn, Benjamin Oladukun, you know, maybe our website, Shekel Mobility, you know, dot com or Shekel Africa, you know, so for the most part, that's it for now. I don't have, I'm not a, you know, I'm not really. I'm just stuck my head down in working. I don't know if. Is there any other. I think LinkedIn is, is perfect. You know, I always find time to, you know, respond, you know, on LinkedIn.

All right, thank you so much.