Being a 90s kid, the first thing that comes to my mind when I hear the word ‘founder’ is Shina Peters: a popular afrojuju musician (and my personal fave) who aptly described a founder as a creator, oludasile in Yoruba. Founders create something out of nothing, so it makes sense that the titles Founder and Cofounder are revered in the startup world.
This description however doesn’t cater for CEOs, Directors or other titles assigned to people who have built businesses from scratch. Afterall, the success of startups is in their execution and not conceptualisation.
A great example is Ayodeji Balogun; CEO of AFEX Commodities Exchange Limited (AFEX); who I interviewed recently for Founders who Dared.
My conversation with Ayodeji started with a brief background into his entrepreneurial journey which interestingly started from a rather young age. Being born into a family business that dealt in the distribution of commodities across southern Nigeria, he was exposed to the intricacies of running a million-dollar enterprise. Before 25, he had closed large ticket transactions with top FMCG brands including Dangote, P&G and Sumal Foods, structured credits, raised capital and was growing their family-owned business to become one of the top distributors in the south.
AFEX set out to simplify commodities trading across the continent, solve small holder farmer problems including access to credit, storage and markets, improve food security; thereby solving for UN SDGs including Poverty and Zero Hunger among others.
Even though the company was clear on the value they wanted to deliver, the path to solving this problem was not clear. Following elaborate market analysis evaluation across African countries and with a seven-year runway in which the company was expected to have delivered on its promise and achieved profitability, they set out to testing the waters.
The first thing that struck me was that they weren’t focused on building technology systems right away. Understanding peculiarities of their target market on the farmer spectrum (majority of whom are uneducated), their approach to sensitization had to be creative with clear value propositions before introducing any complexities into their operation. According to Ayodeji, the first time they knew they had found their sweet spot was when they were able to structure a transaction based on the forward value of the commodities– facilitating trade between several smallholder farmers and industry buyers.
the team employed methods such as engaging local community heads, facilitating proof of concept transactions that were fully simplified for the farmers despite the complicated operations involved. For example, one of the first ways the company was able to drive adoption was to create simple barter-type transactions were the farmers traded produce for fertiliser. The value to the farmers was clear and simple – they needed fertiliser to prepare for their next season, they also needed to offload their harvest. They also provided storage facilities with their digitised warehouse solution.
As simplistic as these offerings seemed on the farmer end, they involved complex operational processes including data collection and analysis, bulk negotiations across multiple players, and financing.
The takeaway from this is clear – in providing a service or solving a problem, the target market needs to be able to directly relate to the value they will derive from adopting your solution. To the farmers, AFEX was solving their existential problems with ease.
As a marketplace that facilitates transactions between multiple entities, you are faced with the catch 22 question – what comes first? The chicken or the egg? Their approach to solving this problem was to simplify the more complicated part of the value chain – aggregating the commodities. In their case, getting buyers was a function of establishing and leveraging direct sales relationships (B2B).
With some marketplaces, the reverse is the case. What is clear however is – understanding of your target market is the key to answering the question of the chicken or the egg.
Once they were able to unlock their value delivery process, their next steps were clear. They needed to leverage technology to automate their process, improve their time to market, unlock the next level of their operation and scale. My next post discusses how they went about conceptualising their first technology products, how they stumbled and eventually found working solutions.
Watch Ayodeji’s FWD interview for the full gist
Note: FWD interviews are typically broken into episodes so we can address key issues without boring you 😁.
