Marathon Series: The Amazon of South Africa

Every country needs an e-commerce giant. Today’s guest helped create one in South Africa in a very unique way.We’ll talk about how he did it in this interview.

Manuel Koser is the Managing Director at Silvertree Holdings, an entrepreneur-led investment growth partner — Scaling consumer and digital brands in Africa. He is also a Co-Founder of Zando, an online shopping platform.”

Manuel Koser

Manuel Koser


Manuel Koser is the founder of Zando, an online shopping platform.


Full Interview Transcript

Andrew: The interview you’re about to hear was recorded in South Africa thanks to Toptal. Toptal is a place where . . . well, you know this. You can go to Toptal when you want to hire the best developers. They pride themselves on creating a process that makes it hard for anyone but the best of the best developers to be in their network. Anyway, you know all that. What you may not know is that they are a truly completely remote company. It feels like everywhere in the world that I go, I bump into somebody who works for Toptal remotely. And so one of the things that I’m especially proud of is that they, as a remote company, have sponsored Mixergy and enabled me to fly to South Africa and record this interview for you.

So if you’re looking to hire developers, go to Toptal. Yes, you will get the best of the best developers. You will also, if you use this special URL I’m about to give you, get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period. But you’ll get to talk immediately to somebody at Toptal who will understand what you’re looking for and help match you with a developer or a team of developers that you can get started with quickly.

And now you know that person, the matcher who you’re going to talk to, who’s going to help you find the best developer for you is not in an office here in San Francisco, is actually somewhere around the world and I can’t even predict where and they may not know where they’ll be next. One of the things that I love about Toptal, truly remote team of experienced phenomenal people. If you’re looking to hire, go to to get the extra exclusive bonus. That’s

Hey, there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy where I interview entrepreneurs about how they built their businesses, and I’ve come here to South Africa because actually because of an entrepreneur who you invested in, Adii Pienaar, Pienaar. You pronounce it Adii, like the strong . . .

Manuel: He’ll hate hearing that, but it’s fun.

Andrew: It sounds strong. So he was a listener. He built a company, sold it, built another company, sold it. He said, “Andrew, come to South Africa, see what’s going on here.” I came here and he introduced me to a bunch of entrepreneurs and investors. You happen to be both. And joining me, the person who I’ve been addressing whose voice you heard is Manuel Koser. Am I pronouncing your name right?

Manuel: Yeah.

Andrew: I’m out of my element here so I don’t do my usual check on pronunciation and everything. I’ve heard that you created the Amazon of Africa, that you’re the founder of it. Is that fair to say?

Manuel: Yeah, I think I was part of the founding team. I think there’s more people than one generally. Also, it’s a longer kind of story how the genesis happened.

Andrew: I had so much trouble trying to figure out the story, but we’re going to get to it here.

Manuel: You’re not the only one.

Andrew: It’s a unique way of building a company. The company is called Zando. They are part of Jumia and Jumia is this big now publicly traded company that has e-commerce all over South Africa. The original brand name that you created was Zando, am I right?

Manuel: Yeah.

Andrew: You guys sell everything from I think shoes and belts to booze. Alcohol, right?

Manuel: No alcohol, just fashion.

Andrew: I could’ve sworn that I saw, booze. Okay. No wait, Zando is just fashion. But can I buy everything from Jumia?

Manuel: Yeah.

Andrew: Yeah. Okay. Jumia, the parent company that’s this big brand will sell me booze, will sell me everything. We’re going to find out what the connection is between these two companies and we’ll find out about why you moved on to create Silvertree Holding. It’s an investment firm that has basically said, “Hey, look, we want really big. What if we went in a different direction, a different way, and supported entrepreneurs who were doing it differently?” I want to hear about that. The company’s public. Do you know what the revenue is?

Manuel: Of Jumia?

Andrew: Yeah.

Manuel: Yeah. It’s about $150 million net revenue.

Andrew: $150 million. It was a unicorn, a billion dollar company for a while there. It’s gone back down a little bit over the last few months, right?

Manuel: Yeah.

Andrew: Is there some moment that makes you feel especially proud where you saw somebody use it and you said, “I created that”?

Manuel: I think the first order, the first customer’s always memorable. That’s actually kind of the pipe dream you had and the hard work is paying off and it works. And then the second and the third order mostly goes wrong. Because you’re not managing it yourself.

Andrew: I actually was looking at your website from the early days and I saw that you basically said to people are . . . you said, “Our shipping is not up to snuff. Sorry about that. It’s going to take a few weeks to deliver, but we’ll get it right.” So it was that. So was there someone who was ordering something and you said, “I did that”?

Manuel: Yeah, I think it’s kind of the first customer most often is, or most of the time is someone you know, then you’ll do everything yourself. Like there’s no real scalable process whatsoever. You’re proud of that. And then you’d realize order number two and three gone miserably wrong. And once that is fixed, because kind of early days, you need to figure out a lot from ranging to pricing to logistics and then it’s different locations. And then I think kind of the first kind of unrelated customer, I think that’s generally always a proud moment. Like I didn’t know you, we randomly chatted somewhere in a coffee shop and the story comes and somebody bought and kind of it worked and you’re like, ooh, [poo 00:05:22]. Now I can say kind of that I’m linked to it.

Andrew: I tell you the time that I realized how big it was. Yes, I saw the numbers, I saw that it was listed on the New York Stock Exchange and all that. But I needed a haircut. My hair was really poofy. I went to this guy and I got a haircut and at the end I wanted to take a picture of him and me just for an Instagram story. And immediately, this guy who works with him put a backdrop with his logo up and made sure it was positioned right with the lighting. And I took a picture and I said, “Hey, listen, do you happen to know about this company? Do you know Zando?” And he said, “Yeah man, it’s really hard to buy your shoes around here, to find the right one. So I go to Zando and I buy my shoes.” And I realize, this is actually pretty good. This is a stylish place for a guy who needs a backdrop before taking the photo. I’m amazed. I’m excited about it. So it was founded kind of differently. It’s not that you lived here in South Africa and you said, “Damn it, the world needs an Amazon and Africa doesn’t have it. I’m going to do it.” Instead, the idea originated where?

Manuel: In Germany. So I’m German originally. Kind of in . . . I started after university in ’07, and I think kind of the first kind of German maverick started to start e-commerce business probably was sometime before. It was the first time I got connected with it. And there was the first kind of moment where I got connected to Oliver Samwer who’s kind of this very one on German e-commerce entrepreneur and investor. And I think I stayed in contact and I think over time, he wanted to roll out their kind of e-commerce approach to emerging markets. And with BCG, I worked in South Africa, so.

Andrew: Boston Consulting Group.

Manuel: Yes.

Andrew: Got it. And so, but he said every country is going to need an e-commerce giant. We should be creating it. Who do I know who can do it? This guy who worked in South Africa. And when you were in Boston Consulting Group, you were in South Africa?

Manuel: Yeah.

Andrew: Doing what?

Manuel: Mostly marketing and mining consulting for the large mining companies. It’s a very different space. But for me, it was a great opportunity to combine like entrepreneurship-like structure.

Andrew: Entrepreneurship-like because he’s basically saying to you, “I see the market, I see the business plan, I’ve done this type of thing before. I’m going to give you the money, I’m going to give you the business plan. I’ll get you started. You’ll get equity as you build this up. But if you don’t, I’m ditching you and I’m going to go find someone else even if it’s a month after we started.”

Manuel: Exactly that.

Andrew: That’s it.

Manuel: Exactly that.

Andrew: Okay. That’s the model. And you said, “I could understand it.” What I’m curious about is why you? How did they even know you?

Manuel: No, I think the talent strategy Rocket had at the time was if I send people all over the world, I want smart, young, hungry people. I think I need a kind of a recruiting pool and it was quite clever, right? You essentially outsourced recruiting to BCG and McKinsey and then grabbed people with two, three, four years’ experience. They’re hardworking and kind of [inaudible 00:08:34] and semi-smart to, “Hey, cool. Like I have an idea. I know it works, I have capital, I know these different markets and base of recourse,” which is your home country. It’s like the same cultural background. And I can’t just run away with the money because I have family in Germany. They still some recourse like being coming out of the same kind of cultural backgrounds and the same nationality. So the original courting was McKinsey, BCG, German from the Munich office.

Andrew: Got it. And was he just looking to see who in Boston Consulting Group and McKinsey happen to work in South Africa?

Manuel: No, I think it’s a numbers game, right? So you meet as many people as you can.

Andrew: That’s his plan. He’s just trying to meet as many people who work in South Africa, different countries who work for the big management consulting companies.

Manuel: No, I think it wasn’t a prerequisite that I worked in South Africa. It was my part of my story that was important to me. But I had ex-colleagues who went from Munich to Australia and were part of that team or Zalora.

Andrew: Just the fact that you happen to be in management consulting. How did they meet you? How did they recruit you? Was this at a dinner, coffee, something else?

Manuel: I think it was first calls and then I think I met him at 11:30 p.m. on a Friday night at his home for an hour conversation.

Andrew: Were you in awe?

Manuel: Yeah, I think he’s an inspirational, very hard working, detail-oriented person.

Andrew: Why? What has he done?

Manuel: He’s one of the first internet entrepreneurs in Germany and one of the key ones.

Andrew: Created what?

Manuel: He created the predecessor of eBay Germany. So that was the first and then a ringtone business that got sold for $300 million and then Zalando, Rocket and kind of involved in the kind of starting up of the German . . . It was like, if you look at San Francisco, you have the PayPal mafia that you can like pinpoint a lot of things back to. In Germany, that would be the Samwer mafia essentially. Like everyone kind of were a large part is linked to him and his brothers and what they have created.

Andrew: What I noticed about everything that you mentioned, I was trying to see which companies you would bring up and how you described them. They’re all copies, right?

Manuel: Yeah.

Andrew: And so what he is good at is, unabashedly, seeing what works. Saying this has not come to this other country. They’re ignoring it. I’m not going to, I’m going to bring it in, right?

Manuel: Yeah, good artists copy, great artists photocopy. So I don’t think there’s anything wrong with that.

Andrew: I don’t think so either. I’m not passing judgment, I’m just trying to understand the model.

Manuel: And I think it’s kind of . . . it’s also a model that inherently works with kind of Germans because they’re not known to be risk takers. So you’ve actually de-risk a lot of things by doing that saying, “Cool. This is a model that works in lots of countries. What is the local adaptation I can do?” And for that piece I need to understand the market, I need to, because at Zalando or Zappos type business model, it’s very different between Germany and U.S. It’s already very different between France and Germany because consumers are different. Infrastructure is different. Payment gateways are different. So you need to have a different approach how you execute things.

Andrew: Is it weird that the camera just gives recording and stopping on us? It is for me.

Manuel: Yeah. And now it’s opposite, it’s upside down.

Andrew: Yeah. That does it for a moment. So what we’re doing is even though it’s a video and audio podcast and still recording video, and I’m glad that this is not a video podcast because it just keeps shutting down on me. I get that. He says, how much money is? And he didn’t just want to invest on his own, right? It wasn’t just Rocket Internet that was putting the money in. It was a handful of other . . .

Manuel: So in the beginning was Rocket. It was like he had proof of concept.

Andrew: How much money?

Manuel: Five million euros.

Andrew: Five million euros. How did they decide it’s going to be South Africa?

Manuel: I think just by lack of dominant player, GDP size, GDP per capita and then it’s a numbers game again, right? You go in as many markets as you can.

Andrew: And one of them is going to work.

Manuel: And out of the 10 markets I’m going to, 1 is going to hit the lights out, 3, 4 are going to do okay, and maybe some will die. So it’s a de-risked venture approach with entrepreneurial economics for the investor.

Andrew: Okay. And one of the things that I remember reading was when you started, I think internet penetration back in 2012 here was what, 20% or so?

Manuel: I am . . . yes, probably. I still remember one anecdote which was I asked, I think we hired 200 people in like 4 or 5 months. It’s absolutely crazy and I wouldn’t recommend anyone doing but I asked in the office there, who of you has broadband internet at home? I think it’s like 5 or 10 or 15 hands went up. If I asked the question now, it’s probably 80%, 90% of who will put up their hands.

Andrew: If they’re working with you. What about on cell? Did they all have cell coverage?

Manuel: They all had cell coverage, but then no unlimited data contracts. Data is still very, very expensive here. So for me, the kind of the big change has been broadband internet at home. So I still remember . . .

Andrew: More than mobile?

Manuel: Because mobile internet is very, very expensive.

Andrew: Okay. So if they have it at home, they’re going to be able to shop from home.

Manuel: So to give a few . . . I have a unlimited contract and it’s $200.

Andrew: Really?

Manuel: Mm-hmm.

Andrew: Wow.

Manuel: That’s just for the data side. So I left Germany, I had unlimited calling, private TV channel, broadband internet at home for 30 euros or something. So it’s an oligopoly on the telco side, hence they’re still trying to keep the data costs up. So for me personally, the experience was, as soon as I considered the internet as electricity, as a commodity, my complete purchasing behavior change because I didn’t . . . I should write this email offline and then log onto the internet.

Andrew: Right. You stopped thinking about it.

Manuel: I stopped thinking about it completely and that like when I moved, it wasn’t the case. It’s still not 100% the case. I think there’s still lots of people that don’t consider it as a commodity.

Andrew: What I was getting at was there was a time when there wasn’t much internet and you knew the world was going to move to more internet and so you saw that the trend was going to make sense to jump in here and . . .

Manuel: Like it happened a lot slower than I thought to be quite honest. I still don’t think the inflection point is here yet. So it’s always a good lesson that this prediction, I still 100% believe consumers, will move from offline to online. E-commerce penetration will go up because it’s a more efficient channel to communicate through the phone. We all have it in our pocket. But when that inflection point will happen and why is a very complicated question because there’s so many variables you need to consider from cost of data to kind of the infrastructure being laid, to how big is your market? How much can people invest in offerings? How good are the alternatives? Can I build a competing product that is 10 times better than the alternative? And alternatives can be in informal structures or in formal structures and yeah, that’s their kind of, if I look at the South African economy, the retailers are just very, very strong. So it’s very hot to outcompete.

Andrew: What do you mean by retailers? You know, actually, let me take a moment here and understand. You had 5 million euros. You’re ready to create a product. I saw the website. It was a fairly simple, straightforward website that you guys built. Did you create it on a platform or do you call . . .

Manuel: It was Rockets own [inaudible 00:16:37].

Andrew: Rockets on version of Shopify.

Manuel: Yes, exactly.

Andrew: Got it. Okay. So you built it on that and that helps a lot, too. One of the things that I noticed was you couldn’t count on FedEx the way we could in San Francisco to deliver. You had to create . . . was it your own delivery network?

Manuel: Yes. So in South Africa we created on delivery network in Cape Town just because it was better customer experience.

Andrew: Meanwhile, that means you hired dozens of people who are going to ride on scooters?

Manuel: Cars.

Andrew: Cars, drive around the cars. They take the stuff and they deliver it. And so you also needed to have warehouse and you focused on clothing instead of electronics or something else. Why?

Manuel: I think the biggest point was that fashion is one of the kind of more emotional purchases you can do. It’s higher margin and less structured in comparing and there wasn’t a lot of strong offering from a brand perspective.

Andrew: Less structured in comparing meaning a sweater on your site, could . . . no one’s going to compare it to a sweater . . .

Manuel: Because you can’t, right?

Andrew: . . . sold in a store because it’s your own . . .

Manuel: It’s my own brand, yeah. It’s very hard.

Andrew: But I went through Zando. Zando uses other people’s brands like Legit and Legit is really big with you guys.

Manuel: But like the problem is if I sell an iPhone, right, and iPhone is an iPhone, the finished, you can compare it very, very easily . . .

Andrew: You’re just comparing on price, then.

Manuel: You’re comparing on price and that’s about it. Right? And then here it’s, I want a t-shirt, I want to be fashionable. I can, in my consideration phase, lots of brands that could be own brand, could be third-party brand. So it’s variety that matters, how you display, it matters. And then it’s an emotional purchase very often for a female consumer who is the largest part, whereas for men is the functional.

Andrew: What about what Tariq was saying, the guy who cut my hair. He said, “I can’t find the sneakers or shoes that I’m looking for at the local store because they only carry so many and I want a specific look.” It seems like it’s harder to find.

Manuel: Yeah, it’s, again, it’s a market size topic, right? So as a retailer like the South African fashion market is described as fast fashion sourced from China, sold on credit. That’s about the . . .

Andrew: Sold on credit.

Manuel: Sold on credit.

Andrew: Meaning at the local store, if I wanted to buy a shirt that looked nice, I might owe them money?

Manuel: You buy it on credit.

Andrew: By credit card?

Manuel: No, by store credit. So you have a retailer-specific credit offering, which then incentivizes you to lock you in and say, “Cool, you can buy products from me. You don’t have to pay interest rates for six months . . .

Andrew: I didn’t know that.

Manuel: . . . principal down only in three months.”

Andrew: Not the mom-and-pop stores.

Manuel: No, it’s the big retailers.

Andrew: The bigger retailers have that. Okay. Got it. So you said, we’re going into this, you had to buy how much product and warehouse it?

Manuel: I think we had a . . . the first warehouse was with 400 or 500 square meters and here, it was 2000 and it was 4,000 square meters.

Andrew: And now you’ve got the drivers, you’ve got the website, you’ve got the product, you’ve got the warehouse, you’re ready to go. Your first customers you said are friends. You said, go to my site, go and buy something, you went to the site and bought something. Then, what’s the first real marketing that you did to get customers?

Manuel: I think online marketing we started with and then we went very, very quickly on all channels that we could get onto. So we did radio, we did TV, we did billboards.

Andrew: For people who are very structured, very anal, very methodical. How did you know that all of these different methods were . . . ? How were you keeping track of what worked and what didn’t from all these different ad methods?

Manuel: We tried tracking everything. So obviously, the online channels are lot easier. Although, technically if you look at it, it’s not always easy. How do you allocate and sell to different channels because it’s not a simple world where you only visit Google search and that’s it. You probably have seen a Google display ad before or you’ve gotten an email or further radio ad. But we tried to find mechanisms to track rights and radio, we tried to understand the baseline on branded traffic before and after the spots and then you . . . then you place cookies on the ones after and then you calculate how much revenue made from that.

Andrew: Got it.

Manuel: And the same for TV, right? You have a baseline before the TV spot airs and then you assume kind of the brand of traffic uplift before, after. It’s kind of a crude mechanism, but at least gives you an indication. And then of course the other element on radio and TV is brand building. So you try to keep a track on unaided and aided brand recognition of the brand.

Andrew: How did you do that.

Manuel: We did it through surveys and just asking people and then you see if it goes up. How often have you heard of any of those fashion online stores or which fashion online store have you heard of? That’s the aided, unaided kind of brand recognition survey.

Andrew: What I was doing was I was searching to see how many people were searching for your company name versus searching for Legit, just happens to be a brand that was sending a bunch of traffic when I looked at your search engine traffic and I saw that it was considerable at this point. And so you did all that. At this point, it feels like no brainer. It makes sense. It’s easy. Was there?

Manuel: No.

Andrew: What am I missing? Because right now it feels like cookie cutter. You’ve got the platform from Rocket Internet, you’ve got the product, you’ve got the people. What’s the challenge?

Manuel: The challenge is understanding the market and understanding market size. So South Africa is a very different market to the markets I grew up in. Like B2C, so direct to consumer delivery didn’t exist from a logistics perspective. Consumers are used to going to malls. South Africa is the second highest mall density in the world after Dubai, I think. So people would go to malls for entertainment purposes because I can go to the cinema, I can go to restaurants, I can go shop. If you grow up like that, then you’re used to going Saturday morning mall, do your shopping, do groceries, go for lunch, go to the cinema, go back home. So it’s actually quite a destination that’s convenient and that’s one of the consumer archetypes you are competing against, right?

And on top of it, the retailers are strong. They give you credit, it’s fast fashions, right priced product. So understanding how big is actually the market and how can I change consumer’s mind to move from this mall experience that I’m emotionally loaded up in because I did this with my dad or mother. So for the last 25 years, that’s hard to change. Consumer behavior is very hard to change and the only way you can do that, if you have an offering holistically, that’s significantly better. So I always say kind of needs to be 10 times better, which is huge.

Andrew: So what did you do to make it 10 times better?

Manuel: It’s difficult. So we tried, right? So you’d try on . . . so if you consider and describe the fashion space on-label from China-sourced, fast fashion, sold on credit. So you need to go into on-label, you need to have attractive price bond, you need to be kind of in the right ecosystem to understand what consumers actually are wearing, what are the latest trend. You need to consider price matching. You need faster delivery, time delivery, and then it gets to a point like how much of this can I actually do? Because all of these topics I mentioned require investment and infrastructure. So how much can I actually invest? What are the kind of payback periods I’ll get on this? Because the market is very small in comparison.

Andrew: Let me pause for a second. Let’s go back into the decision to go after clothing. So, I introduced you as the Amazon of South Africa because I read that online. It’s kind of an easy shorthand, but let’s compare to Amazon. Amazon went the exact opposite. They didn’t want differentiated products when they started. They wanted clearly identical products. There’s nothing more similar than one book that you get from a bookstore versus another bookstore, right? They want to just compete on price and delivery, right, and convenience. Why not go after that? Why not say we’re going to be the . . . I get it because this isn’t the market that . . .

Manuel: So if Jeff Bezos would have built Amazon for the State of Michigan, State of Michigan is roughly the GDP size of South Africa, he would have built it very, very differently because the infrastructure investment you need to do to offer the service that Amazon offers is incredible. Huge logistics tech investment to be able to deliver in such a quick manner. And then, obviously, you have time lag, right? Because at the time, book purchase was still very, very difficult and it was a niche he found to compare. And it’s probably a million other tricks I don’t know about. So like, I don’t know a lot of people who read hard copy books, right? So like in terms of the niche to go after, it’s a very, very tricky space because you need a minimum amount of customers for your infrastructure to actually make sense.

Andrew: I see. Because you’re saying you had to go after something that was differentiated because if you were just to compete on price, you’d have to do massive volume and you can’t do massive volume here.

Manuel: Because you’re on a channel that is just growing and you have a competitive set that is strong because the South African retailers are very, very strong.

Andrew: What makes them strong? That they have low prices?

Manuel: And so in terms of how well they operate. I don’t know if you’ve been to a Woolworths food store, it’s very, very strong offering on the fresh fruit side. If you go to the fashion retailers, very strong on-label, sourced from China, good buyers. They do this for 20 years. They know the South African consumer. They offer credit product. You have a store readily available, close by in a mall where you can drive past work and you attach this with a cinema visit or kind of other stores. So it actually is not a ball lag. It’s actually like the part that you own the internet and it’s convenient. It didn’t even count that much in the beginning.

Andrew: It even takes away because now you’re taking my fun away for what?

Manuel: Yeah, and the delivery offering in the beginning was terrible because yeah, I couldn’t tell you, I’m going to give you the delivery between 10:00 and 11:00 on the Tuesday, which is the next day. They’ll come in three days and then it might come in four days and I don’t notify you before and then you’re not at home and then I’d need to deliver to your office address and then you have this bulky things standing in your office. Now, you need to schlep it to your car. So that’s the point around Amazon, like the logistics was just incredibly smooth.

Andrew: Did you at any point here say, “What am I even doing here? I got to stop. I’ll go do something else”?

Manuel: No, not really. I think at some stage Peter, my business partner and I said kind of the strategy shareholders wanted to take for Jumia Group wasn’t the right one. We thought kind of to go differentiated after niches was the right approach. And we needed the kind of more long-term capital structure and more long-term thinking. Because this supercharged venture approach I’m generally skeptical about in the U.S. and most recent topics of WeWork, etc. I think I’m not completely wrong. In a small market like South Africa, it’s even worse because the customers I can go after in that segments maybe 3 million people. So the infrastructure I can build and get capital for to get the adequate return is a lot smaller than an Amazon can or WeWork can, hence, it’s a lot harder for me to differentiate against the retailer who’s doing this for 20 years and already has $3 billion in turnover.

Andrew: And once you figure it out here, it’s not like it’s an easy jump to the next country and the next because they’re all different.

Manuel: Yeah, completely different.

Andrew: One of the things that I noticed was I asked the Uber driver who dropped me off here if he buys anything online and he said, “It’s too much trouble, man. It’s too much trouble to figure out like if it’s the right product and then you have to spend time opening it up.” And that’s when I realized, wait, people are actually opening up the product before they take possession of it. That doesn’t happen anywhere else, does it? So you send it out, your delivery droppers will take it to someone’s home who ordered it. That person will say, “Wait, go and open up the box, try on the outfit.” If they like it, they pay or they accept it. If they don’t, they return it. Is that right?

Manuel: I think in South Africa this hardly happens. In Nigeria that happens a lot because most of the sales are cash on delivery and the trust topic is a very different one. I think most of the sales are direct debit cards or credit cards and people look at it. If they don’t like it, they return it. So it was quite . . .

Andrew: After they take full possession of it.

Manuel: They take full possession of it. They don’t like it . . .

Andrew: It’s not like they’re opening it. Because I did look at an early version of the site. I don’t have the screenshot of it here to show you, where you specifically said you can go and take a look. Oh, here. “Our delivery times are not up to scratch just yet. For now, expect to receive our your product within 10 to 15 days.”

Manuel: Yeah, I think that was . . .

Andrew: This was an early [time 00:26:56].

Manuel: When we went live in January because we wanted to launch very, very quickly. We had a just-in-time warehousing system because we couldn’t buy inventory quick enough. So we purchased all the inventory and was about to be delivered in March or April or something like that. So we had just-in-time, we loaded up SKUs, and as customers placed orders, we placed them in Australia and New Zealand.

Andrew: It would arrive to you and then you deliver it to them.

Manuel: So obviously the delivery system was terrible, but it was a kind of a crude way to test demand on certain products and get better data on the buying side. What actually to buy and what quantity, well, how size sort of [looks 00:30:40], etc.

Andrew: But then it went on to say, “At delivery, while the courier services are at your site, you’ll be given the opportunity to inspect, try on the product, and if you’re not satisfied for any reason, the product can be returned for free of charge at any [cost 00:30:52].”

Manuel: Yeah. So we tried a lot of things to differentiate.

Andrew: That was just an experiment.

Manuel: That was an experiment.

Andrew: I see. Okay.

Manuel: So we tried it a lot. It never really worked. We also tried cash on delivery, but you almost get a biased selection. So if a customer doesn’t have credit card, if he doesn’t trust the internet to shop at, he’s a very unprofitable customer because he’s just more difficult to deal with and most likely will return and he probably doesn’t have a long customer lifetime value because he’s not ready. Right. So it’s just very unprofitable customers per definition. And we experimented to figure that out and hypothesis was we’ll have a larger market that way and we’ll convert them and they’ll come back here very often and have a kind of better break even. But it wasn’t the case and it was very, very hard to implement.

Andrew: They like to let the person take cash and make sure that you got it back and all that.

Manuel: Just very, very [inaudible 00:41:38] . . .

Andrew: You do still take cash though? I tried it.

Manuel: Yeah.

Andrew: It’s a cost a little bit extra to pay cash. But you guys still accept cash?

Manuel: Yeah.

Andrew: You still shareholder?

Manuel: No.

Andrew: No. At what point did your co-founder Eugene Peterson leave?

Manuel: So my co-founder was Peter, I started with. I’m still working with him, so we left together to start Silvertree.

Andrew: How did I see Eugene then?

Manuel: Eugene was hired by Rocket to help out in the beginning days.

Andrew: So Peter was your co-founder?

Manuel: Yeah.

Andrew: And then, so Peter stuck around for a little bit longer. Got it.

Manuel: No, he’s like, I think in 2013 we decided to go and build our own like entrepreneur hardcore business, Silvertree now. And kind of we decided to phase out, told the shareholders and kind of phased out over time and we still working together to this day.

Andrew: Tell me if I’m wrong here. This was a . . . I’m looking at your shoes to see if you wear nice shoes. You are wearing very nice shoes. Come from your site, Zando?

Manuel: It’s from Zando’s competition, Superbalist.

Andrew: Really? Why?

Manuel: Because I preferred the shoes. They run a good campaign. Gave me a good discount.

Andrew: All right. So this was just a job. Am I right? It was a job with . . .

Manuel: There’s equity . . .

Andrew: . . . co-founder title.

Manuel: Yes.

Andrew: It was.

Manuel: Equity incentivized manager. Yeah.

Andrew: Okay. And you, in fact, you were called co-founder, but also they refer to a lot as an MD managing . . .

Manuel: Director.

Andrew: . . . director. I’ve never heard that phrase before for somebody at that level. Okay. And so you went in there because you wanted to learn entrepreneurship with some guard rails. What did you learn? What did you pick up?

Manuel: A lot.

Andrew: You did?

Manuel: Yeah, it’s probably in the most intense learning period in my life. Very, very raw. I mean we hired in South Africa, I don’t know, 300 people in a couple of months. In Nigeria, we hired 2000 people in, I don’t know, a year or something like that. Trying to figure out consumer behavior, trying to figure it out online marketing, logistics, finance, manage different management styles.

I still remember I went to, we had a big problem in the logistics space because we couldn’t deliver orders quickly enough. So we had it all comes out is in customer service. So customer service had a huge backlog. So I still remember I came with my consulting skillset, brought a slide deck of 25 slides to talk to all the customer service agents and I came with all these random KPIs that I looked at and kind of all these recommendations and it made total sense to me. It’s like this is now the game plan. But from my consulting skillset, I only learned kind of the analytical sides and kind of fixing the problems, not actually how to translate it into actions and lots of restrictions I kind of couldn’t think of. So I got nowhere with this 25 slide decks.

Andrew: So you were going to the person who was answering email, answering phone calls and saying, here’s my 25 slides.

Manuel: Here, all the KPIs that are wrong and you’re like, you’re not fast enough. The system doesn’t work, etc. And kind of they didn’t understand what I was talking about because the extra problems on the ground look very different because like I could answer quicker but I don’t know what to tell them because there was so many broken communication points from the logistics provider. He didn’t have a good IT system so it was very hard to tell anything to the customer.

Andrew: So for you as a manager, you need to know that call response times need to be faster. The person who’s doing customer service doesn’t need to know that as one KPI. They need somebody to help them do it faster to understand what’s missing.

Manuel: They actually could respond faster but with zero content because they didn’t know what to tell the customer because nobody knew where the parcel was.

Andrew: Ah, okay.

Manuel: Because the career companies, yeah, it’s somewhere in Cape Town and it’s maybe going into delivery tomorrow.

Andrew: So how do you deal with that? What did you do?

Manuel: Oh, so either the career partner you’re dealing with finds a better IT infrastructure and invest in that again. When can you afford to do that? Like in terms of you need the volume to justify that investment, or you build your own? So we kind of had redundancy.

Andrew: To build software.

Manuel: We had redundancies and started our own kind of last mile delivery and started investing in software, right? So it wasn’t, it’s way more complicated topic because all these different work streams in terms of questions that come out have very different solutions and you’re not building upon an incredible infrastructure you’re building on something that’s very, very crude and there are lots of things broken. The IT system isn’t there. So even if I would respond faster and like I will tell you, your parcel may arrive in two days to three days. Like that doesn’t really answer the question because as a customer, what I want to know is you delivering it tomorrow at 10:00 a.m. because then I can plan to be there or somebody else is there or I redirect it to my office. Right.

Andrew: Did you solve that problem?

Manuel: It took a long time. I think it’s still . . .

Andrew: It’s still an issue.

Manuel: It’s still an issue.

Andrew: And the way to solve it is to recreate the software from the ground up.

Manuel: No, I think there’s, there’s two parts to it. You need a certain volume to make this worthwhile because otherwise you can’t invest in proper software. And then the other piece is just why you’re not at that break-even point that you can properly invest in structures? You try to do as much yourself and find little hacks to solve this. And that was fast, probably area by area, finding redundancies for delivery partners if they’re not performing because already around Black Friday, you know, they’re going to fall over, etc. So it’s a difficult topic in a young ecosystem.

Andrew: So you know what, one of the things that I learned when I went to Mexico City was there were a couple of entrepreneurs who were trying e-commerce and every time they try it, there would be little issues that kept them from doing the thing that we take for granted, which is just selling online. Like I’m just looking here at my notes. Hector is the guy who created an e-commerce site said, “People can’t even pay me because they don’t have credit cards in Mexico. That’s a big issue. So he created a payment process where people can go into stores, pay cash, and then their money gets transferred to the online store. It’s called Conekta. It’s super huge. Drive through Mexico City, you see them on the stores everywhere. I wonder then, would have it made sense for you to have done that here too, to say, “Yeah, we started as e-commerce, but in order to do e-commerce, we need all these pieces in place. Let’s pick one of those because all the other e-commerce [inaudible 00:38:50].”

Manuel: So that was the case in Nigeria. So we expanded into Nigeria in June, July 2012 and Nigeria is a very different ecosystem. So, South Africa doesn’t have the problem on credit cards. They have roughly 30 million credit cards circulating. So it’s not really the biggest topics.

Andrew: By the way, 50 million people here just to give people a sense of.

Manuel: So it’s not the biggest topic . . .

Andrew: But delivery is.

Manuel: Delivery is, but look, you need an inflection point for this to make sense. And either you fund this through equity capital to get there or you just wait and it’ll be crude until somebody will come out as the winner because he performs the best. If you’d look at . . .

Andrew: What I mean is would it have made sense for you to say we’re going to be the delivery company that has up-to-the-minute data because nobody else has that.

Manuel: So I mean, already building one company is difficult enough. If you tried to build two, which that comes back to the kind of operating in Nigeria point, it’s just, it’s not two times harder. It’s five times harder because I’m building two companies now.

Andrew: Were you basically building two companies because you ended up having to do both the e-commerce site and having this team of couriers and software for it?

Manuel: Yeah, but it was a small add on, right? So not the whole delivery ran on that. So it was just Cape Town. It’s close by. It was 20 drivers to test it, to test the software. But you’re not fully reliant on this. Like operating in Nigeria, you needed everything. Like there’s no local manufacturing, so everything is importing. Importing is very tough in Nigeria and there restrictions on certain things. The job of a buyer didn’t exist like talent very, very rare. There’s no postal code system. So suddenly you’re not building one e-commerce business, you’re building five. You’re build a logistics business. You build a payment business because credit card didn’t exist because everything is COD. You build an e-commerce business.

Andrew: It seems so easy to me. When I was actually, honestly, when I was outside researching you, it seems like a no-brainer. You know that e-commerce is the future. It’s not here in South Africa. This guy who’s working with a company that’s done it in other places is bringing the concept here, lickity split. It’s a no-brainer. And of course, it went public. No wonder it did well. Now that you’re talking, I’m so scared of it, that I wonder why are you even bothering now investing in South African entrepreneurs considering all the pain. Let’s get to that in a moment. But first, close this out for me. Your decision to leave was based on what and what was it like when you said I’m walking away?

Manuel: Because it’s very complex already to run an e-commerce business in one country. So this, we raised capital from MTN and . . .

Andrew: That’s the phone company, right?

Manuel: Yeah. It’s the phone company. And the strategy with that was, “Hey, we’re going in 10 plus countries and besides e-commerce we’re doing classifieds, we’re doing payments.” So complexity level times a million because . . .

Andrew: You get into classifieds?

Manuel: Yeah, Jumia has classifieds and payments and kind of that roadmap was clear. And I said, “Look, this is very tough because we already like struggling to differentiate ourselves in South Africa and Nigeria. And I think you can only build a long-term viable business if you have a differentiated offering. And you have this . . . have a competitive mold around that for the long term. And just because I can put products on the internet doesn’t mean I have a business.” So, and to figure this out, I really need to understand the customer and I really need to figure that in and I need to trial a lot for that.

So if I know I need to launch in 10 countries, that sounded like a suicide mission to me and very, very tough to do. And yeah. I think Peter and I said at some stage cool, that’s not a journey for us and let somebody else do that. And we’d rather go after entrepreneurs that follow the ethos of having a smaller niche where it’s easier to differentiate. So one of the first investments was in a green Amazon type business called Faithful to Nature, was an incredible founder and she had a thesis, which was, “Yes, I’m selling products on the internet, but everything follows a certain ingredient policies. So everything good for you, good for your body, good for your mind.” So she checks every product, mostly small manufacturers that produce these products and about 12,000 or 13,000 SKUs. And somebody chose from a family who’s had beef farm of 100 years, the best kind of honey and bee wax etc. And that, for me, is a long-term differentiator. So they can send a box, which is plastic free and recycled, and the content is around veganism and the content is around healthy, holistic lifestyle and yoga and what to use. And that’s your differentiator.

Andrew: And no one’s ever going to say that’s going to be the Amazon of South Africa or anything else.

Manuel: No, of course not.

Andrew: It’s going to be this differentiated thing. And so that is what you see. The opposite of what you are creating is what you’ve invested in.

Manuel: Yes.

Andrew: But then how does she get anyone to even notice that she exists? How does she compete with the Amazon of wherever she is, when Amazon will always have something that’s maybe a little bit less eco-friendly but still a cheaper and deliver more, [simple 00:44:07] to deliver?

Manuel: So the differentiator on the content side, because you create content around veganism and you go in detail in that book. Then you are differentiated on the offering side. Or she’ll have 13,000 SKUs versus the Amazon Africa take a lot. They’ll maybe have 2000 or 3000 SKUs, the offline retailers similarly because all these small manufacturers she’s dealing with, they will not pass the buying process. They’re too small volume-wise. And then you can differentiate on delivery. So, and then obviously you have the same marketing strategy. Let’s say you do radio and you run campaigns too, like they’ve run campaigns to clean up beaches. Everything is geared towards natural, organic, good for you. And suddenly, you have built a brand around that ethos, which is almost difficult to do for anyone else because you’re a general merchandiser, you offer everything to everyone.

Andrew: And what’s the name of the company?

Manuel: Faithful to Nature.

Andrew: Faithful to Nature. She is here in South Africa?

Manuel: Yeah.

Andrew: And does she sell beyond South Africa?

Manuel: No, just South Africa.

Andrew: Got it. And her plan is eventually to grow to other places?

Manuel: I’m not sure. I think it’s very much South Africa focused, big push into yeah, just getting a larger share of the conscious organic green consumer and there are lots of like all the other businesses we looked at and invested in have a similar differentiator. So with the meal delivery kits called UCook and that it’s very differently done if you compare it to HelloFresh or Blue Apron because it’s, again, goes under healthy, good for you, good for society. So very, very different in the execution. So when there was a water shortage, they run waterless dishes. Lots of the suppliers they use give back to society because they have sourced in townships. And I think the wages they paid it in the warehouse is doubled the minimum wage to make it sustainable . . .

Andrew: What do they source from townships?

Manuel: Salads mostly.

Andrew: So vegetables come from townships.

Manuel: Yeah, like organic farm that they support. So it again goes into this 360 sustainability play.

Andrew: Okay. How would you describe a township to someone who’s not here?

Manuel: It’s a shack off a villa in Brazil like informal settlement.

Andrew: All right. I didn’t know that there are farms on townships.

Manuel: There are a couple of projects to create employment and UCook uses one of them as a supplier.

Andrew: I went to a township yesterday, I was so curious about it. I wanted to see what it was like. It’s not all shacks in this township. Apparently, some people who grew up in this tin roof housing ended up liking the community so much. When they did a little bit better, they came back and they lived in brick buildings, but still the kids can go run through the streets with all the other kids. It was fascinating. How’d you get the money to make all these investments?

Manuel: So this was entrepreneurship hardcore. So we started with all our savings, whatever was left.

Andrew: How much did you guys have left?

Manuel: So it was Peter and me who did Zando, what is now Jumia Group and then Paul is Peter’s ex-colleague from McKinsey, has more of a tech background, theoretical physicist from CalTech. They met at a project at McKinsey and we said, “Cool. With the three of us we have the diverse skillset to operationally support,” because it’s not investing here is very different to investing in the U.S., right. Because the market is smaller and . . .

Andrew: There you are.

Manuel: . . . you need to actually operationally support.

Andrew: Make yourself a little more relatable. How much money did you guys have in savings to invest?

Manuel: I think we started with $1 million roughly.

Andrew: Amongst four people.

Manuel: Amongst three people.

Andrew: Three people.

Manuel: And didn’t pay ourselves a salary for two years and went all in and said, “Let’s start businesses. Let’s back entrepreneurs and see if this works.”

Andrew: Weren’t you paranoid? I was just listening to Naval Ravikant’s podcasts. He has like this one episode that he broke up into five minute clips and one piece he says, “Take risks but don’t allow yourself to go bankrupt, don’t allow yourself to lose everything.” And you were basically saying I’m going to take a risk where I could lose everything.

Manuel: So I have a very different approach to risk, right, because what is actually my personal biggest risk? I lose everything and I get a job somewhere.

Andrew: And you start again at . . .

Manuel: And I start again.

Andrew: . . . Boston Consulting Group or something.

Manuel: Or with some other corporate jobs. So the risk is actually not that big if you think about it. Like at that time I was single, no obligations. So look, in five years’ time I would look at this differently and probably but at that time, like worst case, I get another job. My ego was a little bit bruise because I couldn’t make it work. I have no savings and I get another job and try it again or not. Because this trying to do two things at a time or like compromising might not work out. You’re not giving it your all.

Andrew: Okay. But you kind of stuck with your company for a while. You’re still listed as the co-founder. Watch it expand, get all the credit, make more money. No? And then find a way to just use other people’s money to invest. And you decided, “No, I’ve got to do this now. I have to quit my job. I have to go all in and risk bankruptcy.” Risk losing it all.

Manuel: Yeah, which is fine. I think the bigger question is are you happy in what you’re doing? Like if you don’t, like money shouldn’t be a driver for anything unless you can have your basic needs aren’t covered. So you need to actually believe in a strategy and you need to believe that you can create value long term. And if you don’t, then it’s the wrong place. Like I’ve never taken a decision by, “Hey, where can I personally make more money?” There are a lot easier ways to make a lot more money than being in the entrepreneurial ecosystem in South Africa.

Andrew: Like what?

Manuel: Like you could go to New York and work for hedge fund and like it’s a lot more scalable business model. You clip 1, 10 on billions of dollars. It’s a very different skillsets, it’s a very different ecosystem, very different rat race, but there’s so many easier places.

Andrew: What about this? My assistant looked you up with me and she sent me a list of things that she discovered about you and one of it, one of them was that you practice meditation, use Headspace. Adii was telling me that he got to a place where, I don’t know if you’d call it burnout, but it was something like burnout and then Headspace and meditation and mindfulness helped him. I get the sense that you went through that kind of low also.

Manuel: Of course.

Andrew: Tell me about what your low was. I feel like that’s something that we could all get a lot out of.

Manuel: So I have lots of lows like work-wise. I think I went into this is an entrepreneurship-lite business model, but it wasn’t, of course.

Andrew: Still hard work . . .

Manuel: No, entrepreneurship-lite doesn’t exist. It’s nonsense. Because I was still responsible for staff. There were certain points, if we didn’t raise money, I would need to tell a thousands of people they’re unemployed. And that was realistic.

Andrew: What did it do to you? Is there a night when you couldn’t sleep? Give me like that one incident.

Manuel: You can’t sleep. You become paranoid, you get depressed and you need to find a way to work through this.

Andrew: Before we get way to work through it, I still want to like see what those things look like in your life. I’ll tell you what it is for me. I went to a period where my company was really well, millions of dollars in revenue, everything was great, and then suddenly I had a $5 million in debt for computers and hardware. There’s stuff that I signed personal guarantees on without paying attention. Not without paying attention. I felt I was superhero.

And as I walked into work, I remember feeling like I’m sleep walking into work. I see everyone, but I’m not seeing them. It’s like my body’s being carried in and all I could think about was someone made me an offer for my company that was tens of millions of dollars. I could have been cashed out. Why did I not take it? Look at the life now and I was just focused on that instead of paying attention to traffic that could hit me. Do you have anything like that, a specific incident that just shows how painful it was? Let me see it through your life.

Manuel: I think there were a couple of moments where I would walk into the office and you can see like if this continues like this, this is going to blow up and blow up means hundreds of people unemployed. It means your identity is linked to your business, right? Which, like I’m now kind of learning is not like a good thing, like you need to differentiate your identity from your business, but at the time, my identity was my business, right. Because you spend 20 hours a day with it. It’s your baby.

Andrew: Like your identity with yourself or with other people, too?

Manuel: Just with the business. My identity was my business.

Andrew: The way that you personally saw it, it wasn’t that everyone else saw you and said . . .

Manuel: No, no, my identity. I’d identified myself with the business. So personally, it would hurt if a delivery is late or stuff doesn’t work right. And that’s not generally not a healthy space to be in because you need to detach from this. It’s very dangerous. So but at the time that was the case. And now, you know, cool. Like this like runway over months or two, if there’s not this capital raised into the business, this show can’t gone. So luckily we raised capital and we had the same experience at Silvertree similarly after we funded our cash and ran out. We needed external money. And then we started several rounds with family offers and also had worked out. But there were moments where, cool, if not in the next three weeks, I get a commitment from outside money. And that was a big step for us because we didn’t want to be in a position where we couldn’t change the strategy. Because is in a structure before, Peter and I said, cool, we don’t agree with the strategy if we can’t convince the other shareholders to follow us, which we couldn’t, then we’re out.

Andrew: We’re done.

Manuel: We’re done. We’re out, right. So we’d never wanted it to be in a position like that. So hence we created a structure that we are in control of. So we’re still the majority shareholder today. And if we don’t agree with the strategy as a team that operates can change it and we’re not determined by external shareholders completely and be at their mercy. So we had a similar situation , we didn’t have cash. Our private cash was running out and say, “Cool. Either in the next three weeks, this happens or . . . ”

Andrew: We’re done.

Manuel: We’re done. That’s it.

Andrew: So that’s when meditation started helping you.

Manuel: Yeah. I think that started five, six years ago. I go to a life coach once a week. I don’t do Headspace anymore. I’ve used it very in early days to just to kind of get a breather and a kind of clear head when . . .

Andrew: What’s your meditation practice now?

Manuel: Morning routines. And I just tried to find quiet space on the weekend.

Andrew: To do what?

Manuel: And do breathing.

Andrew: So sit and do breathing. Did you do that this past weekend?

Manuel: No.

Andrew: You didn’t.

Manuel: I did it the weekend before.

Andrew: And when you did the weekend before. How did you do it?

Manuel: And I normally to do it at home and find a quiet spot either on a balcony or at home.

Andrew: Just sit and breathe by yourself looking at the view.

Manuel: No, close my eyes and just like see what comes up and how you feel and why you feel a certain way to try to integrate all the external influences you have and that come up.

Andrew: And that helps you?

Manuel: That helps me. Plus life coaching.

Andrew: So what does life coach help you think through?

Manuel: So it was neurolinguistic programming. It’s thinking everything through from private life, work life. I mean everything is a personal topic like in the . . .

Andrew: Neurolinguistic programming meaning like you’ll come up with the gesture that fires you up?

Manuel: No, it comes up with, I mean it’s a hard definition. It’s hard to describe. It’s more of a question of describe what happened and what’s . . . how are certain things made me feel and why. And you tried to integrate it into your personal life because very often there’s is related to a childhood memory. I know someone died in your family and you . . . and it comes up somewhere else in a very, very different form and you don’t see that. So kind of to figure out what is my issues in a certain business deal or problem that unconsciously creep into you, why you kind of react so harshly versus maybe that’s a problem on the other side where there’s a similar situation because everyone is human. Everyone has their kind of issues and topics and insecurities to deal with. So, and yeah, I mean for me there are lots of those, like my father committed suicide when I was six, so that’s a topic that might creep up or what other topics, loss of a lover.

Andrew: How does it affect you like your dad committed suicide when you were six?

Manuel: Lots of ways because you don’t really have a father figure from your early childhood on. So you as a child, you tried to find a father figure somewhere else, right? So you deal with authority very differently. Like you look up to things very differently. So there’s a part role model missing and you try to find them somewhere else.

Andrew: Did you feel like Oliver was that?

Manuel: Yeah. Maybe in some degrees somewhere, right? You look at someone and say, “Oh, this is kind of this strong male character,” and that can be very dangerous, right? Because obviously it’s not . . .

Andrew: They don’t care about you.

Manuel: I’m not their son. Right? So you’ll find you can’t replace that person. You just need to try to figure out for yourself who you are and not compensate. And that is a concrete example the where it helps.

Andrew: Why South Africa? Why aren’t you leaving?

Manuel: Cape Town is a beautiful city. And then I think there are lots of opportunities in a very different form and shape.

Andrew: What do you see? What are the opportunities that you see here?

Manuel: Lots of them. I think that lots of little niches where because the market is small, no one is considering them and I can build a very sustainable, good long-term business. It’s not a unicorn and it doesn’t need to be, but it can easily be $10 million, $20 million, $30 million size.

Andrew: Something like Faithful to Nature. You’re not trying to get them to $1 billion. They’re probably not going to be a billion dollar business, but even in $20, $30 million, you could do well with it.

Manuel: Yeah, of course.

Andrew: And that’s what you’re trying to do. Assemble companies like that and invest how much money into them?

Manuel: Depends like some businesses was $50,000. Some businesses was $3 million, $4 million or $5 million. Very different approach, very hands on. Twenty-five people team that supports all the different entrepreneurs. Generally, we take route to majority in all those businesses.

Andrew: You take the majority of the business.

Manuel: Route to majority. So we might start in 40%, but Faithful to Nature, we own 90%.

Andrew: Oh, you grow to that. Got it.

Manuel: So we don’t have an exit. We don’t want to sell any of the businesses. We want to build long-term winners in a certain category.

Andrew: And take the profit out.

Manuel: No, not really. We are investing profits to make it bigger. The exit event, maybe at some stages to this thing of the holding company, but we building a business to stay. We’re not in a business to flip businesses. And hence, you support entrepreneurs differently. I always had this problem with the structure of was Zando was built was built to sell and you already with one foot out of the door before you’ve even started.

So you need to be very disciplined and motivated to kind of actually build a good culture, to actually build a big infrastructure because you already know like in three years you’re not having to deal with it. Versus when we support a business like UCook or Sprout these days, it’s yeah, this infrastructure, this IT backend system is going to be there forever. And the problem that comes up in three years, I want to address now.

Andrew: Because it’s going to be your problem.

Manuel: Exactly.

Andrew: Not the market’s problem.

Manuel: It’s not somebody else’s problem. It’s going to bite me in the butts in three years’ time and I already know that. So let’s address the hard topics now and not open up the cupboard and put the problems under it.

Andrew: Which frankly is what happened at your previous company. Right? There’s a reason why the stock went down. There are all these different issues that were . . . I don’t know that you want to comment on it, but it seems like they were not paying attention to and then they ended up causing problems.

Manuel: It’s very hard for me to comment because I’m out six years operationally so but I mean my topic was I just, I personally want to run a different strategy and I think there’s strategy running now I’m personally a lot more happier with because I can see that all shareholders can profit of it. And you’re fundamentally solving a customer problem better.

Andrew: You’re basically building a collection of companies that you’ll own large parts of. That’s what it is. It’s basically a conglomerate that’s based in South Africa with largely South African customers of each. Right?

Manuel: Yeah.

Andrew: And the one exception that stands out for me is Conversio, Adii’s company. Did you invest in that personally?

Manuel: Personally.

Andrew: That’s what it is. Because it doesn’t seem to fit this model and you just invested a few dollars into it or I don’t know how much, I think you said it took a few hundred thousand tops.

Manuel: I think I put in $50,000.

Andrew: Fifty thousand dollars and his goal was to go all over the world. He was building a big software company.

Manuel: That’s a typical angel investment opportunity.

Andrew: Got it. But the others like UCook, is it only South Africa? It’s a meal kit only in South Africa. What are you guys doing differently that from Blue Apron and all these other companies where they’re not doing well?

Manuel: Yeah, I think it’s, again, you need to find a differentiator for consumers. So in that case, food is already very well covered by a retailer like more Woolworths, Checkers or Pick n Pay. But the fundamental question of what’s for dinner is one that creeps up in every kind of family or relationship. So similar to Blue Apron, you’re trying to solve this problem, but you solve in a South African way, right? So you find South African chefs that are on vogue, on trend, and then you create recipes that are water related, electricity related, Eskom load sharing last weekend, again. There was a huge water crisis. You try to be sustainable in terms of how you pay your staff, where you source from. You try to see meal kit delivery for what it is. It’s an incredibly strong customer acquisition channel, but the longevity on the product is not forever . . .

Andrew: High churn, people will cancel.

Manuel: Yeah, because life circumstances change, right? You travel a lot, this product doesn’t work. You have kids that have a say in the menu selection, this product won’t work. So you have unforeseeable plans for the next week, you travel or whatever. We get sick. This is a terrible product because you open up the fridge and there’s all these bags that you haven’t eaten. Then you feel bad to throw them away. So you need to check. You need to see it for what it is. It’s an incredible, novel idea. It’s great to build brand, but then to have longevity you need to add different products and different channels. So in that case, you can go for ready meal, you can go for frozen, you can go offline retail.

Andrew: You can, with UCook.

Manuel: Yeah.

Andrew: Got it.

Manuel: So in a way to increase your time, it doesn’t need to do UCook Nigeria. It can do UCook frozen, UCook ready meal. It can do UCook offline retail. You can go into different channels and into different delivery options.

Andrew: It’s not necessarily a meal kit with all the ingredients being sent to you, so you can chop it up and put it together. It’s, we’re going to make cooking at home easier. And if it means frozen because you’re heating, not technically cooking we’re fine.

Manuel: All ready meal, whatever else, like you need to figure out what the customer wants.

Andrew: So that’s on the entrepreneur . . . thought this, is it David who runs, yeah, it’s on him to go on and do that.

Manuel: And obviously we support it, but like it’s always the approach we’re not biased towards technology. We just invested in the natural and cruelty free skincare brand. It’s not a that, yes, there is a direct to consumer online part of it, but the larger part is delivered through offline retailers. But the core of it is again, a consumer who is interested in natural and organic, it’s cruelty free. It’s kind of these millennial-friendly brands that have heritage and have history that is local and differentiated. They sell themselves that way and then how you deliver, I think omni-channel is going to be the way, and I think you don’t need to go on one delivery method or one core product, you just extend it and then you can weigh up the risk of going to a different country. I think that we’ve done the same. We’ve done with Silvertree a mistake as well. We went to Nigeria, Ghana and Kenya. We had businesses there that failed because the complexity to move from South Africa to Nigeria is a million times. You have not a lot of [inaudible 01:05:50].

Andrew: Why South Africa? Why not say I’m German, I’m going to go to Germany. The market’s bigger, everything is easier that way. We’ll just start there. Why do you have to be the Silvertree of South Africa and not the Silvertree of another country?

Manuel: So with a bigger market comes higher competition. So there’s probably a hundred to a thousand if not 10,000 people that are smarter than me, there’s probably as many people who are there working there, there are probably as many people who are better network, as many people who are . . . have bigger pockets, or better access to capital, and there’s probably 100,000 people who have all of that.

Andrew: So you’re a big fish in a small pond that happens to have a big enough customer base to support all these different ideas. That’s your model.

Manuel: Yeah.

Andrew: And I’m thinking about the person who’s listening to us, who’s, it’s largely in the U.S. where people are listening, but imagine someone who’s listening from a different country who’s been thinking, how do I create software that goes all over the world? And maybe it’s now sitting there and say, no, how do I take what’s already working somewhere else? Put a local spin on it and stay here make it the local thing. And if they’re in a part of India, that happens to have a big enough market go after that. That’s what you’re saying.

Manuel: Because actually the easy one, because I’m in market, I understand a little bit about the market now after seven years. I understand the local ecosystem and what needs to happen. If I am trying to build a business in . . . from here that attacks the U.S., it’s going to be very tough because I’m far away from the market. I don’t know the ecosystem. So that doesn’t happen often that this gets done right.

Andrew: Though Adii did it with Conversio, the company that sends out receipts and other marketing on behalf of e-commerce places. What do I need to know about his success when I interview him?

Manuel: Yeah, it’s the jockey.

Andrew: It’s him. So what is it about him?

Manuel: So he understands B2B SaaS. He understands the distribution channels. He understands how to build product. And because he’s been in the space for so long, he is in the ecosystem of the U.S. and Canada. Maybe not as strong as someone who’s done this 10 years in San Francisco or . . .

Andrew: But you’re saying people know him. If he’s talking to somebody at Shopify, they know who he is.

Manuel: Yeah. It was like they are . . . Right. He’s in the right ecosystem to understand how to distribute. Because B2B SaaS, you need to be on the big platforms. You need to understand how they work and how to rank up and that changes quickly. But if you figure it out quite well, you found a really clear niche with receipts. You’ve got early traction in terms of usage and then found a way to monetize. That’s a very specific skillset and you’ve done this for 10 years. Cool. In the second company, there is a likelihood of winning because of that distribution platform you can plug into because it’s mostly Shopify or WooCommerce, which happens to be his first company. So you have an advantage that way. It’s not direct to consumer. Hey, I need to sell via SCM or affiliate marketing. And that’s a very different, is there a multiplier distribution advantage if you really know how to get at the top position?

Andrew: I went to his house for dinner. I think he did a UCook dinner for us.

Manuel: Dd he?

Andrew: I don’t think he cooked it. He was trying to explain it. Someone else did, but he felt a little sheepish so I didn’t push it. After I went back to the hotel that we were in. I looked and tweeted about the dinner and then he wrote a blog post on it. Does that help him that he’s so open that he’s blogging like this or is this just a personal passion?

Manuel: I think it’s personal passion.

Andrew: That’s it. It’s not helping his business where people get to know him, no?

Manuel: Look, I think it makes it relatable and personal and I think it’s his style. It’s probably very hard to pinpoint if like what the impact on the business is. But I think it’s a clever experiment and . . .

Andrew: He’s been doing it for 10 years. Like every little bit of his life. He even like posts photos of his family. I thought maybe analyzing it that he is kind of disconnected from the world in a way when I want to talk to him, time zone’s a pain in the butt, right. If I wanted to fly to get to see him, do you know how many planes I need to take to come here to get to see him? It’s not easy, but the fact that he is blogging constantly and tweeting and photo Instagram this and all that makes me feel like he’s always around. And even think he wasn’t nearby.

Manuel: Makes you feel connected.

Andrew: And I thought maybe that was some kind of business strategy and I want to know from your side if you saw that, but it seems like you’re not putting that much weight on it. It’s his ability to rank in the marketplace that’s big. It’s his ability . . .

Manuel: No. Maybe the ads, like the different techniques so you can stay in touch if you fall away. Right. So for me, this is, you speak to two or three people a week on the phone, which I found more personal, like I don’t do much on social media, but I very often try to just bring a gift or like a handwritten note on a book that I’ve read and think of that person. So there are other ways to do this. I think that it helps you stay connected for sure. And because that’s a huge topic and he doesn’t live, he live in Cape Town. He lives in Paarl. Right. So that’s it’s even further away. Yeah.

Andrew: Which I thought was close. It’s an hour away. And if you’re in traffic, it took us an hour and a half. Yeah. Which I didn’t understand. Okay. Who do you give books to? Who are you networking like this with?

Manuel: Friends, entrepreneurs, interesting people . . .

Andrew: Anyone you might want to invest in or work with?

Manuel: Yeah. Which is like might not even be in an investment thesis behind it is just like, we had a great conversation. I think you would like to book. There is no . . . sometimes there is, “Hey, hope. Maybe one day I can invest or support your business.” But sometimes it’s just like, I think you’ll enjoy the book and that’s it.

Andrew: What’s the best part about it? Let’s close it out with this. I’ll tell you one of the things that I love about being here in South Africa that I could see loving if I lived here. Why don’t you start with one of the best things for you because you’re the guy who actually is living here.

Manuel: Good wine, good food, amazing weather, it’s double the sun radiation to Germany. I think in winter in Germany I was depressed because when I woke up it’s dark and when I left office, it was dark. I see the sun every day. Great hikes and very chilled environment in terms of people you meet, not hung up on anything. And from a business perspective, lots of small niches and nooks of opportunities we can build. If you have a long-term approach, has small winning business, $10 million, $20 million, $30 million and you here to stay and you have a high probability of winning.

Andrew: I like that on a personal level. My wife found some winery that we can go stay in and she felt so guilty cause she’s a do-gooder, $500 a night. Should we really . . . ? Like 500 is nothing. You should see what I spend when I travel on my own. Dude, the level of care that we had at this place, there was a whole stock bar for us with like different alcohol, beer, if you needed mixers, they had that in there, a whole thing. There were bikes everywhere so that we could just go pick up a bike anywhere and go ride through the vineyard. There was wine bottles everywhere and there was every little thing was taken care of us. Well, taken care of for us, $500.

I’m saying that you can live really good if you’re making dollars, if you’re making a little bit of money. Now obviously there’s a big issue here between the haves and have nots. There’s no middle-class from what I’ve been hearing, right? The people who are not making money, who are unemployed. It’s a real challenge that I keep trying to find someone who’s solving it even a little bit to get to know how they’re doing it. So I don’t want to minimize that. But I want to say that on the other side, if you’re out of the U.S., you start to realize that though the rest of the world’s got some really good things to offer.

Manuel: Yeah. The quality of, and if you adjusted for purchasing power and price of food, wine and living is crazy. Crazy good. So I still had this eye-opening. Good friend of mine moved from Denmark to San Francisco to run on one of the WPP entities and he told me with his two kids and wife he can’t live off of half a million dollar salary in downtown San Francisco. And I fell off my chair and like when he did the math and say, look, cool. Yeah, I’m not like, it’s complaining on the high horse, but I’m not saving anything. Like I can give my kids everything. It’s like that’s mind boggling.

Andrew: Yes, absolutely.

Manuel: So here you can have, you can live fantastically on $50,000 to a $100,000.

Andrew: Yeah. By fantastic, I mean fantastic. All right. Thank you so much for being and for anyone who wants to go check out your site and find out about this portfolio of companies that you invested in and read your . . . Do you guys even have a blog on the site? I don’t think you do.

Manuel: Yeah, we have some press news there, some updates.

Andrew: This section right here. I think actually what you guys do really well is the portfolio section. You guys really let me understand the companies that you invest in. A lot of other investors, I go to their website, they just have a bunch of logos, but I want to see what it is.

Manuel: So actually the most interesting one, if you go to the entrepreneurs, you actually get some videos of all of us.

Andrew: That’s how I got to know David and why I could like rattle off his name. Yeah. So if you go to the entrepreneur section, you could see the different people that they backed. The website is Thanks so much for being here.

Manuel: Thank you very much.

Andrew: You bet.

Manuel: Pleasure.

Andrew: Now that the interview is over, I want to thank, once again my sponsor, Toptal. If you’re looking to hire developers, go to the place that so many of my listeners have gone to and have been happy with. You’ll get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period. But yeah, go use that URL because of that and stay because of the beautiful model they’ve got on that site. That’s,

Who should we feature on Mixergy? Let us know who you think would make a great interviewee.