SAAS in Africa: 10 Things We Learned From Scaling to 1M Users | SaaStr Software Community

Please welcome Anish Shivdasani, CEO, Giraffe. How's it, guys? You guys good? How's everyone feeling? Great. Awesome, man. It's great to be here. You guys have been through 3 days of presentations and I'm realizing that you're probably a bit tired now and I'm the only thing that's keeping you from the bar, so I'm probably the most hated person in the room right now, but please indulge me, I'll go easy on you. So my name is Anish, I'm from South Africa, I'm the founder and CEO of Giraffe. Giraffe is a mobile job matching platform that helps medium-skilled workers get access to opportunities and helps businesses to recruit staff faster and easier and more affordably than any other way. And how many of you are from Africa or have been to Africa? Okay, so quite a few. I guess selection bias, probably why you're here. You know, what do you think about when you think of Africa? I mean, those of you who have been probably understand it and know it, but those of you who haven't, often people have very negative perceptions or stereotypes of what Africa is about, you know. When they think of Africa, they think of really negative stuff like disease, Ebola, HIV, and malaria. They think of corruption, fat cat dictators hoarding billions of dollars whilst their compatriots have to sleep rough on the streets. Kind of like San Francisco, if you think about it. Poverty, famine, babies with bloated bellies and flies all over their face. And finally, war, people hacking each other's limbs off with machetes for no reason. And to be fair, you would be right. I mean, all this shit does happen there, right? But it's not the full story, it's not the full truth. Because the reality is that Africa is booming. Between now and 2050, half of the world's population growth will occur in Africa. Think about that. Between now and 2050, another 2.4 billion humans will enter the Earth, and 1.2 billion of them will be in Africa. Last year, of the 10 fastest-growing economies in the world, half of them were African countries. And also last year, of the 10 fastest-growing internet penetration markets in the world, 8 of them were in Africa. And so on the one hand, Africa's kind of a mess, but on the other hand, it's booming population-wise, economically, and technologically. And this is kind of giving rise to this phenomenon called leapfrogging, whereby African countries are circumventing the normal pathway of economic development and jumping straight to the latest thing. And an example of this is in telecoms, for instance. Most African countries never had fixed-line telephony. So when mobile came along, they just leapfrogged straight to mobile. And this is having very important implications across other sectors. For example, banking. Most African markets never had a banking infrastructure the like of which we're used to here. And so it was largely a cash economy. But with the advent of mobile, all kinds of interesting things are happening. For example, in Kenya, more than half of Kenya's GDP is now transacted through mobile. Through arguably the most successful mobile banking and payment system called M-Pesa. With electricity, a lot of African nations never had legacy electrical grids, and so with off-grid solar becoming a thing now, a lot of African countries— in fact, 9 of the top 10 adopters of off-grid solar are in Africa. And so you can see how technology is starting to play a very important role in development of Africa. And so what does this mean for startups and tech companies? Can they be done there? Now, unfortunately, there are a lot of constraints in Africa, major constraints when you're talking about setting up and scaling a startup. First of all, capital. There isn't any. Unlike here where you have billions and billions and billions, maybe trillions of dollars of capital, over there you have very little. There are hardly any VCs. In fact, the concept of a VC is barely understood in Africa. It's only starting to happen now. There is no startup ecosystem to speak of. Here in Silicon Valley, you have Google and Facebook and a ton of other massive organizations that are just churning out people who then go on to found other startups. There's a solid ecosystem of mentorship and talent and stuff like that that you have here, which we just don't have there. Also in Africa, users are not particularly tech-savvy. You know, you guys are kind of at the bleeding edge of tech, but in Africa it's not the case. Tech is a novelty there. Talent, major problem. Here, developers are a dime a dozen. Over there, you know, there are no developers, hardly any. And finally and importantly, the market size is tiny. South Africa's GDP is 50 times smaller than the US GDP, and South Africa is the biggest economy in the continent, right? So when it comes to setting up a startup, you're probably thinking, why the hell would you do it there? Why the hell would you do it in Africa? Well, I'm going to tell you why we did it and how we did it. And I'm going to talk about some of the lessons that we learned along the way. So, first of all, in Africa, you've got to focus on a massive, uniquely local pain point. We cannot possibly compete with Silicon Valley when it comes to building the next big thing or solving big global needs. I will guarantee that the next Facebook or Google will not come from Africa. We simply do not have the resources to compete or the market size to compete. Where we can play, however, is when it comes to solving local problems, uniquely local problems that no one cares about, no one else will be interested in. And an example of this is unemployment. In South Africa, the unemployment rate is about 40%, it's one of the highest in the world. It's crazy when you think about it, right? And one of the reasons why unemployment is so high is because people just don't have access to opportunities. Because of apartheid, because of the difficult history of South Africa, you have large sections of the population that live geographically very far from business areas, and so they simply just don't have access easily. They never had access to internet, and so, you know, public transport is very expensive, and so just in terms of seeing what opportunities are out there, It was very difficult. However, back in 2013, in my previous career as a strategy consultant, I was doing a lot of work with telecoms companies in South Africa, and we noticed that mobile penetration was starting to increase. By 2013, probably half— mobile penetration probably exceeded the 50% mark, and people who were up until then offline were now coming online with mobile as a primary means of accessing the internet. And so you had millions and millions of job seekers who never had any means to access opportunities suddenly having a mobile device and an internet connection. And we saw an opportunity to use mobile as a tool and the ubiquity of mobile as a tool to solve the fact that people struggle to get access to opportunities. And that's how, you know, Giraffe was born. And I think if we had focused on solving a niche problem, the market is simply not big enough to scale. You gotta focus on a massive problem that is unique to that particular location. You're probably wondering what that picture is about. Maybe some of you are wondering what that picture is about and why it's there related to this point. Well, every year about 2 million wildebeest migrate from the Maasai Mara in Kenya to the Serengeti in Tanzania, and they all come to this river and they stand on this riverbank, which is and the river is infested with crocodiles, and they spend days there figuring out how to cross it without getting eaten. It's an example of a uniquely local, massive problem in Africa. You see the metaphor, perhaps. The next thing I would say we learned is really about removing all barriers to user acquisition. Here in the US, you have disposable income. Businesses have disposable income, consumers have disposable income, and so you can spend money on trying out new stuff. In South Africa, the average salary is about $500 a month. Now what that means is people are confronted with the reality of, should I buy data or should I buy groceries? And so you need to have a really compelling reason why someone should try your product, and you need to remove all the barriers to adoption. And let me perhaps kind of give you some concrete examples about how, you know, what this was about. Our first MVP was actually an SMS-based app where job seekers would send 6 SMSes in order to register on our platform, and it probably cost about $1 for someone to register. And we thought, okay, what's $1, it's not a big deal. We went into the townships to see how job seekers would interact with this app, and we noticed that none of them were signing up. Why? Because they didn't have any airtime, they didn't have any cell phone credit. They use their cell phones primarily to receive calls, and They would buy small data bundles for WhatsApp and Facebook, which were becoming common at the time. So we basically said, "This SMS thing ain't gonna work, we have to go back to the drawing board." And so we built a mobi-site, which basically used a mobile website for them to register, and because they had some data, we figured that that would be less of a barrier to adoption. And sure enough, we built that version, went back to the townships, and people started signing up, and it kind of started working. But people still had to spend a couple of cents, to sign up. So we were like, how do we make this thing completely free to sign up? So we went to speak to some of the cell phone operators and we said, look, this is what we're doing, and why don't you zero rate our Mobi site so that, you know, you can go above the line and say, hey, we're trying to help solve unemployment in South Africa, and we can simultaneously get more and more people jobs. So they did this and we made it completely free for job seekers to sign up, and that's when we started to see the thing explode. And as soon as people would hear about it, then they would sign up. So you've got to build barriers to acquisition in any African market within which you operate. The third thing is you've got to build for non-tech-savvy users. You know, you guys here in the States have been using smartphones for more than 10 years now, and before that you were using PCs. Smartphones are only becoming a thing now in the last couple of years in Africa, and up until now people have never used PCs. So the smartphone is the first means by which people are accessing the internet, and it's a novelty, and people are still used to doing business offline. And so, you know, people are not particularly tech savvy. So what does that mean when you're trying to build a tech product? Well, you have to build it in a very simple way. You have to leverage existing behaviors that the market already understands so that you don't need to educate users. And an example of this is in Africa, in South Africa, all banks use this thing called one-time PIN, whereby to authenticate a user or to authenticate a transaction, they SMS you a 4-digit code and you use that 4-digit code to be authenticated. And every South African understands that. So we use exactly the same mechanism to authenticate our users. And the cool thing was when people started using Giraffe and they saw that we had this OTP thing, because they associated OTPs with banks, it meant that they trusted us because they recognized, okay, cool, this— banks use this and Giraffe uses this. So it helped us gain credibility without necessarily needing to educate the market because it was an existing thing. And this I think was quite important to stimulate usage and to get people to come onto the platform. The fourth thing that we learned is, and this is interesting, right? You know, uh, here in the US and other developed markets, people are so used to buying stuff online that, you know, they'll go online, they'll just do self-serve, right? Um, in Africa, you know, people— business is done on trust. They need to speak to a person, they need to see a person, have a conversation with them. And so It's really important to have that face-to-face interaction in order to sell. The challenge, however, is that because of the limited disposable income that both consumers and businesses have, you can't charge a lot of money for services there. You've got to be very sensitive to price. And so you're kind of caught in this conundrum. On the one hand, you can't really afford to hire salespeople because your CLTVs don't justify it. But on the other hand, you can't sell anything if you don't have any salespeople. So what do you have to do? Well, you have to build a direct sales force. It's something which you have to do in the beginning, because until you gain trust and your brand becomes trusted, you need to have a direct sales force to bring in those initial customers. And this was actually a blessing in disguise, because by getting, you know, direct sales— and I mean, I sold myself in the beginning for quite a long time— you almost— I mean, the negative economics of having this direct sales force actually funds your education of the market, because you spend time with customers You understand what their real problems are, and you're able to tweak your product to address it. It's interesting, as entrepreneurs we normally come up with an idea and we build a product and we don't really understand what the customer actually wants. So having this direct sales force is invaluable in educating you and informing where your product is going. I'd say the next thing that we learned is you gotta know when your customers are lying to you. Here in the US, people are very direct. They'll tell you what they think, and they'll mean what they say. Whereas in Africa, I think in many African cultures, people are very nice, right? They're not going to say anything that will piss you off. And so even if they have a problem with your product, they're not necessarily going to be very candid about it. I remember a situation where we had closed quite a big customer in the very early days. They were a supermarket, and they were using our product. They were hiring tons of people, and we were like, okay, cool, this customer seems to be getting a lot of value out of what we're doing. We started talking to them, and we asked them a couple of questions. We said, you know, how important is Giraffe to you in your recruitment process? They were like, it's extremely important, you know. And I asked them, how disappointed would you be if 'If we took Giraffe away from you and you couldn't use it on it?' And they said, 'Look, it would be a disaster. I'd be very disappointed.' And so we were like, 'Cool.' At this point, we were offering the service for free, but after having these kinds of conversations, I was like, 'I think we've reached a point we're ready to charge these customers now because they seem to be deriving immense value.' So we went to them a couple of months later and said, 'Okay, your free trial is over. We need to start charging you.' And they refused. They said, 'No, we're not going to use the product anymore.' completely diametrically opposed to the conversations I'd had with them before. And this is the kind of thing that you see there, and so it's so important to really not listen to what your customers are saying, but listen to what they're doing, how they're behaving. And from that moment on, we kind of spent more time looking at data on customer usage to give us insight into whether customers would like to continue using our product or not. I'd say the next thing is, it's super important if you want to scale in Africa to become a thing. And what do I mean by this? You know, here in the US, and again other developed markets, people are interested in novelty and innovation. They are interested in trying new brands, experimenting with new things. This phenomenon of a startup is well understood and people have kind of embraced it. In South Africa, it's quite the opposite. Incumbent brands rule, and newcomers are treated with suspicion. New brands are treated with a lot of cynicism and suspicion. And so that's very difficult for startups, because startups by definition are new brands, right? And so there's a couple of things that we did here to kind of manage this situation. We couldn't use paid marketing because incumbent brands had all the share of voice, and simply by using paid marketing, we would have blown all our funding and that would have been that. So we had to find alternative ways of marketing and really getting the word out there. And there were a few things that we did. There was no silver bullet, I would say. There's no silver bullet, but there are a couple of lead bullets that I want to share with you. The first thing we did was really pulled the unemployment angle quite aggressively. Unemployment was a massive social problem in South Africa, still is actually, massive topical problem, you know, every day on the news you hear something or the other about unemployment. And so when we launched this app that was intending to help reduce the unemployment situation, we got massive amounts of press, mainstream press, mainstream TV, prime time radio, headliner news, newspapers, and that did two things for us. It brought a massive amount of trust and credibility to, to our brand and what we were doing, and it brought a ton of leads, massive number of inbound leads. The PR thing is extremely powerful when the problem you're solving is an important social problem. So that was the first thing we did. I'd say the second thing we did was really about building alliances with brands that were already trusted. And this was a kind of cool logo acquisition tactic that we did. We basically looked for the biggest call center in South Africa. We went to them and we said, "We'll give you unlimited hires for the next 6 months, in exchange for which you need to write a bunch of press releases about our partnership and the fact that you're going to hire 600 people from us in the next 3 months," to which they agreed. As soon as we started launching these press releases, we had tons of their competitors phoning us up saying, "Hey, 'Can you come and talk to us? We'd really like to find out what you're doing.' And literally in the space of a few weeks, we managed to close a number of quite big subscriptions just off the back of FOMO, effectively. The competitors of the customer that we offered the free service now wanted to pay us for it. And that was another tactic that really, really worked well for us. I'd say the third lead bullet that we did, and I think this is quite common now, especially in marketplaces, is we built viral loops on opposite sides of the marketplace. And so what that means is as soon as a job seeker would sign up and make their CV on the Giraffe app, we would enable them to send their CV. There'd be a send button and we'd email their CV to any employer they wanted, and the email would contain Giraffe and Giraffe branding. So we basically got our job seekers to market to our employers, and vice versa. Whenever an employer wanted to use our service, we gave them a dedicated link that they could put anywhere and it would enable job seekers to find out about Giraffe through the employer. So we built viral loops on opposite sides of the marketplace. And I'd say those 3 things combined together helped us to grow really, really fast. And it was all guerrilla stuff, very little paid marketing. And I think it's super important that if you're going to build a brand that's going to be kind of see explosive growth, you cannot rely on the traditional forms of marketing, in my view anyway. Okay, so I've kind of talked about product and market and customers and brand and sales. I want to kind of take a step back now and talk about some more existential or abstract elements that I think were really important. Um, product-market fit, you know, this is one of our favorite topics, and I'm sure we've all read The Lean Startup. And, and stuff. We're often— we have to manage this lean situation where we have limited resources, and, you know, we need to make sure that we iterate until we get to the answer. And that sounds all very well in principle. However, if you're gonna do a startup in Africa, you're going to be ultra lean, right? You're not going to be able to raise millions and millions of dollars of funding. You're going to be ultra lean. And we were very, very lean. In fact, for the first 18 months we had one developer who built the entire first version of our product. Even today we have just 3 developers, and with such limited developer resource, you have to be super careful of how you build and prioritize products. Now, the funny thing is, when it comes to product-market fit, I had initially assumed that it was a binary event, that it would just happen. It wouldn't be there, and then the next day it would be there. And this is definitely not the case, or it wasn't the case for us. I think product-market fit is a gradual process, and you know, you can think that you've reached it even when you haven't reached it. And I'd say the first 18 months of monetization, we were seeing double-digit revenue growth for the first 18 months, and ostensibly you could take that as an indication that fine, you've reached product-market fit, right? Revenue is growing, customers are happy, etc., etc. After about 18 months we started noticing some weird stuff. It started to become more difficult to sell. In terms of operations, things started to get a bit creaky. And then we felt actually the product that we are trying to scale up, scale up on is not the right product. We felt that we'd— it wasn't the right product. And so what do we have to do? We basically had to change the product. Now by that time, if you can imagine, we've had done all this with one developer, we had built an immense amount of technical debt. You know, you build stuff super quickly, so it becomes a bit dirty the way you build it. We had a massive amount of technical debt, but it wasn't just technical debt. We had to change our pricing, we had to change our sales processes, we had to change our operations, we had to educate customers about the fact that we were changing our product. And that was quite painful because you got customers saying, but I liked your old product, why are you changing it? You know, you have the team who's basically now having to change the way they work together. And that wasn't the first time that we did it. We had to do this again, maybe about 6 months later. And what we realized is that every successive attempt at product-market fit gets harder. It's not like you can just keep experimenting until you find the answer. Every time you change something, it gets much more complex. and the energy that you have to muster in your organization is very significant. And this is something which we hadn't realized. And it's funny because if you think about it, all startups, almost all startups, are at the verge of extinction. And the thing that is often the difference between life and death is reaching product-market fit. And the number of bullets we have in our gun to get it diminish over time. And each successive attempt is more difficult than the previous one. And I guess this kind of brings me to the next point, which is around recruitment. One of the biggest mistakes I think we made, ironically enough, being a recruitment company, this was very ironic, is we really screwed up our recruitment. You see, the thing is, in Silicon Valley, you have tons of really, really talented people who want to work at startups. Everyone knows what a startup is. In fact, it's cool and sexy to work at a startup, right? So if you're a startup and you're looking for people, I don't think it's particularly difficult. Sure, there's a war for talent, but there's an abundance of talent as well. In South Africa, there are 3 problems regarding talent. The first one is that 70% of the workforce is employed by corporates. Corporates dominate the economy. In South Africa. And so people don't really understand what a startup is, right? People just don't get it. They just say, "Well, I want to work for a bank or a telecoms company." They don't understand what a startup is. But I think more pertinently, there just isn't the talent there. We don't have lots of developers. We don't have anyone who's a growth hacker. It doesn't exist. There are no digital marketing people, right? It's such a new space. There's no ecosystem. Right? And so because the talent, the talent is scarce as it is, but you're competing with well-funded or well-capitalized corporates. And so when we've closed our first seed round, um, we were funded by Omidyar Network, which is Silicon Valley investor. We're one of the only Silicon Valley companies that are funded, uh, um, in South Africa by— sorry, one of the only Silicon Valley funded companies in South Africa. We expected that thousands of people were going to come to our door saying, "Hey, I want to work for you guys." But that didn't happen at all. And it was a slog, and we had to find these people who were needles in haystacks. And this was something which was very difficult for us, you know. So I think the key learning is you've always got to be recruiting. Even if you don't have any open roles, keep recruiting. Because the time it takes you to find the right person, you will have an open role. And I think when it comes to choosing someone, when you're working in a place like Africa, is you can't compete on money or financial benefits or beanbags or free lunch or whatever it is. You've got to compete on the mission. You've got to hire for the mission. When I interview people, I ask them, "Why do you want to join Giraffe?" Some people say they want to work in a small company where they can have a big impact. Some people say they want to work in tech. The ones who I only really take seriously are the ones who say, "I want to work for you guys because..." you're trying to help solve unemployment, I want to be a part of that. That is super critical to hire for people who are mission-aligned. And it's not just the founders have to be mission-aligned, it's the whole, the whole company, because it's the people who are mission-aligned are the ones that are going to be most resilient when you inevitably go through tough times. So you've got to hire for mission. I think the next learning is you've got to hustle. In Africa, you've got to hustle. Everyone in Africa hustles. What do I mean by this? Well, here in the US, in developed markets, you have established ways of doing business. You have business norms. In Africa, it's much more informal, much more, you know, chaotic. And because you're operating in a very lean environment, you have to be able to hustle, to leverage to the max the resources that you do have. And I'll give you some examples of this, right? We acquired job seekers when we had no jobs to offer them, and that was hustling. We pitched to customers when we didn't even have a product, and we only started building our product after we closed the sale. And because we couldn't do it any other way, we had to, we had to do this because we didn't have the resources to build our own product. We had to sell it first. And so when you're operating in this kind of environment, hustling is key. I'd say the final learning that I'd like to leave with you is this: when we set up Giraffe in 2014 and quit our fairly high-paying consulting jobs, most of our colleagues and friends thought we were completely mental. They thought we were crazy. They were like, guys, what are you doing? You can't do this in, in South Africa. No one is doing this. It's never going to happen. It's never going to be successful. People don't even have smartphones yet. How you— how do you expect to build a company like this? This. Um, but we kind of done it. Not that we've finished, we've still got a long way to go, but the point is that we've shown that, you know, the infrastructure, the, the mobile infrastructure, the internet penetration, the digital infrastructure is there, right? It is possible to build and scale a company in South Africa, and I believe the rest of the continent, as mobile penetration and smartphones become more abundant. And also, you know, I guess when I look around the room, you know, you guys are some of the smartest and most intelligent and wealthiest and, you know, privileged people in the world, right? And it's funny, you know, I've been here a lot of talks, everyone's talking about unicorns and decacorns and making tons of money. And you guys really have a choice. You can use your talent to solve high-class problems, first-world problems, and make big corporates— help big corporates earn more money and help big VCs, fat cat VCs, make more money. Or you can use your talent to help the people who need it the most, right? This world is full of suffering and pain. Right? Yet most people use their talent just to make more and more money. And the inequality that we're facing in the world is very significant. And I guess my appeal to you is, instead of trying to build the next Slack or Dropbox or whatever high-class problem these guys are solving, use your energy and your talent to help solve humanity's problems. Because I believe a lot of problems in Africa can be solved using tech and software. And so my closing remark would be this: I would love it if you could join me, either in South Africa or any African country, and help us to build the future. Because the last 30 years was Asia's time, and we've seen how Asia has emerged. The next 30 years will be Africa's time. But Africa just needs the talent, the capital, the ecosystem. And with those things, we can build an amazing continent. Thank you very much.