How Two Undergrads Laid Foundations For Their Start-Ups

In 2013, two like-minded second-year Computer Science undergrad students, Mutethia “Tesh” Mbaabu and Mesongo Collins Sibuti, registered Mesozi Systems Limited in Kenya as a software company. Their mission: to combine industry expertise with tech genius and create business-changing digital solutions. Five years later, the duo restructured the business to form Mesozi Group, a collection of companies offering tech-enabled products across various industries and focusing on Africa. I catch up with Mutethia “Tesh” Mbaabu, co-founder and CEO to talk about the Mesozi Group formation.

What was Mesozi Systems originally meant to be when it was founded in 2013?

Mesongo and I registered Mesozi Systems Limited in Kenya as a software company with the mission to combine industry knowledge with tech genius and create business-changing digital solutions. We were second-year undergrad students at the University of Nairobi at the time. We called ourselves “the go-to guys for SMEs looking to go digital.”

What was your experience running the business while still in school? Was it just as active then?

It was fun and we learnt a lot about entrepreneurship in the early days! We started off with building websites and web applications to create an online presence for our customers and enable them to receive orders online. Tesh would spend a lot of time pitching to businesses after classes, while I would code applications at night and during the weekends. Our customers were very happy with our work.

So why and what was the nature of the restructuring?

We graduated in late 2015 and spent the next two years building the software consulting business, now known as Mesozi Labs, and mastering the technology and automation space through interacting with tens of customers across various industries. Our mission did not change. During this period, we saw a gap in the tourism sector to build a marketplace that would make it easier for both local and international leisure seekers to discover and book the best leisure experiences from tours and activity providers. This is how we launched Cloud9.co.ke and started generating revenue. We got a lot of accolades for this, including getting recognized by the ICT Authority and leading in the Connected Kenya Oracle Innovation Awards – Tourism Category.

In 2018, we started noticing a recurring challenge in another industry, retail distribution of consumer goods and services. We were approached severally with a similar problem, businesses lacking reliable information on the performance of their field sales teams, products and services in the market. This inspired us to develop MarketForce 360, a sales and distribution automation platform that gives businesses a complete view of their sales cycle and helps them increase efficiency, save costs and identify opportunities in distribution.

At this point, we realized that we had built three separate businesses and decided to restructure the business to form Mesozi Group, which is a collection of companies offering tech-enabled products across various industries and focusing on Africa.

What was it that drove you into the tech space with such passion?

Mesongo and I come from very different backgrounds but were brought together by tech. We met in a Computer Science classroom. We are both very inquisitive and solution-driven, and quickly become friends. We knew how much technology was already changing people’s lives and had the potential to solve a variety of problems across various industries and geographies. We were eager to be part of that change. In fact, Mesozi is a spin-off of the word Mesozoic, which is an era (65 million years ago) that saw drastic changes in the world’s fauna. The general idea is that Mesozi was born and exists in a period where drastic changes are happening as the world transitions from the information technology age, to the data technology age. And Mesozi aims to be part of that change.

How did you reskill/upscale your talent as BPO consultants to stay in touch with the industry?

In my opinion, nothing really beats practical learning. We had gotten plenty of theory from our undergraduate studies in management information systems, project management, system architecture, cloud computing, machine learning and all that jazz. Next, we just went out there and got our hands dirty. We would spend a lot of time with clients and system users listening to their challenges and proposing solutions. We also read a lot and participated in various relevant business and technology conferences to stay abreast of the industry.

You have this expression, ‘informal network.’ What do you mean by it?

Across Sub Saharan Africa today, it is the traditional trade market which includes table-tops, kiosks and small grocers, also referred to as the bottom of the pyramid markets, which service over 90 per cent of the consumers. It is a market that is underestimated and largely unexplored. There are over 15 million such retail stores in the continent; being serviced by an equally fragmented network of distributors, wholesalers and salesmen.

Do you think training their staff to be more efficient or upskilling would have the benefit of bridging the gap that you noticed?

Definitely. We leverage the power and availability of mobile devices, through our mobile app, to enable field agents to record all customer interactions as they happen in the field, and retailers to re-order for stock conveniently and affordably. Therefore, training these people is key to successfully digitising the supply value chain.

Describe the moment you realised there were gaps in the systems and/or industries?

There are many indicators that have continued to reveal themselves. The most obvious one being that almost every neighbourhood in Africa has a corner shop that serves hundreds of families weekly. Even in high-end estates, consumers will visit the chain supermarket for the monthly bulk purchases but daily fruit, vegetable, perishables, impulse and urgent once-off purchases will remain with the corner shop due to ease of access. However, stock-outs on essential items are very frequent in these shops, because of the inefficiencies in distribution. A Nielsen report noted that “Even in Kenya, regarded as one of Africa’s most developed retail markets, traditional trade still accounts for 70 percent of sales.”

At which level of consumerism do you think Africa falls at on a scale of 1 to 10, 1 being the lowest and 10 the highest, and why do you think so?

I would rank Africa at a 5 (average) because there is a lot of potential linked to the population of over one billion people, but more than half of the population still lives below the poverty line. A huge part of the population experiences irregular and informal income streams and thus often lack disposable income to purchase goods. However, the middle class and number of households with discretionary incomes are expected to more than double over the next 10 years, reaching 128 million. These people want consumer goods, better food, fashionable clothes, electronic goods, savings products, insurance, better healthcare, better education, and so on. According to McKinsey, by 2030, the combined spending power of the continent’s top 18 cities will be $1.3 trillion.

As someone who noticed the problem of the last-mile challenge, what would distribution be like if it worked?

We envision an Africa where access to goods and services is improved through digitisation and enhanced visibility across the value chain. Our aim is to enable consumer brands to easily and effectively monitor and analyse their distribution channels across multiple shops and regions, informing them about who is buying their product, when they are buying it, where they are buying it, at what price, and what they’re buying it in conjunction with; enabling them to estimate demand and tailor their sales and distribution channels, marketing efforts and promotions based on real-time market trends and consumer purchasing habits; and to finally tap the potential of the African market, increasing revenue and market share.

Digitised retailer ordering not only saves informal shops time, but also gives them access to a credit score, allowing them to access working capital loans that ensure they never run out of stock; and gives them the ability to act as trusted distribution agents for important financial services such as insurance in their communities; giving them the opportunity to make greater margins in their business than ever before, while impacting the lives of the people around them.

Could you walk me through the entire value chain from end to end?

The route to market for consumer brands in Africa is rather long. It consists of manufacturers, regional distributors, mini-distributors and wholesalers, retailers, and finally consumers. In between all these stages, there are millions of sales and delivery agents.

Is mobile penetration as it stands right now high enough to support your business model?

Yes, it is. According to a 2019 report from GSMA, an association of mobile network operators worldwide, there are 747 million SIM connections in sub-Saharan Africa, representing 75 per cent of the population. We find this to be accurate because so far, over 70 per cent of the agents we work with have access to a smartphone, while the rest at least have a feature phone. Our app is very user intuitive. However, our network of sales agents is trained on how to use the app as we onboard each customer.

Have you noticed a distinction in terms of consumer culture across different countries in East Africa?

Not yet. We are still learning the ropes as we make inroads into the other East African markets.

What are you seeking fundraising for and what is your target?

We have just closed a seed round of funding that will go into building and stabilizing our technology further as we roll out new revenue channels and accelerate the build-out of existing operations. We are hiring top talent across business development, operations and customer success to fuel growth through aggressive sales and marketing to increase our market share in the markets where we operate; Kenya and Uganda. We raised the capital through a mix of strong local angel investors and global, experienced VCs. Before the end of the year, we intend to raise more capital for expansion into more markets.

To what degree does the credit score of a supplier affect how you do business with them?

We are currently working on this issue by building on our credit scoring through artificial intelligence AI and have partnered with third-party credit providers to fill the working capital gap for our suppliers and retailers. We intend to roll out this solution in the near future.

What is your vision for Mesozi and Mesozoians in say the next two to five?

We believe that we have the perfect combination of a strong value proposition and a relentless culture of delighting both customers and employees to become the leader in field sales and distribution technology for emerging markets. We target to serve 1,000,000 retailers, through 100,000 field agents and reach over 100,000,000 consumers within 5 years across Sub-Saharan Africa.

How do you hunt for, and find, a Mesozoian?

Our company culture is embodied in the MESOZIAN code: Motivated, Empathetic, Savvy, Optimistic, Zealous, Inquisitive, Ambitious and Nimble. This is what we constantly hunt, interview and appraise for, with every career opportunity that opens up at the company.

Who is the corporate partner you have partnered with and can you talk about how the partnership came about and what they are bringing to the table as well as what they saw in Mesozi that made them want to be part of the dream?

We are not able to disclose this now. Hopefully, we will publicly launch the partnership before you publish this.

If you had to pick a CSR project, what would it be and why?

Last month, we launched a project called MarketForce Troops. Through crowdsourcing, we leverage a community of thousands of field contributors aka troops, that use our app to collect orders and information on the ground on behalf of manufacturers and distributors at the shop levels and get paid through commissions. Through this, we create employment for thousands of youth across the country. We believe that the best way to create a better Africa, with better standards of living is not by fishing for Africans, but by showing them how to fish and giving them the platform to do so.

This article was first published in CIO Africa magazine.