Thriving Beyond the Crisis

I had an interesting conversation with Eloho Gihan-Mbelu who is the MD/CEO of Endeavor Nigeria. Endeavor not only funds, but also provides advisory and networks services to high-growth companies. Eloho is a private equity investor with decades of experience, and her wisdom shone through this conversation. Many thanks to her for speaking to me.

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Transcript

Tobi: Hi and I am on today with Eloho Gihan-Mbelu, the Managing Director and CEO of Endeavor Nigeria. You're welcome.

Eloho: Hi Tobi. Thank you for having me.

Tobi: The way I think about this now is that, whether we like it or not, going forward, there will always be a pre-Covid and a post-Covid world. Either socially or otherwise. What I want to know is - recovery, going forward. Adapting. What is the most important node in getting things back to the new normal? Is it government interventions? Is it investors, or the adaptability of businesses? What are your views on that?

Eloho: I think this sort of pre-and-post Covid type dynamic, the reality is post-Covid is not post-lockdown. Post-Covid is post recovery and so we will only really be able to assess the impact of post-Covid in another, by all indications, if we're lucky, depending on the pace of the recovery, maybe 18 to 24 months' time. Because what Covid has done is it has triggered this... you know, we now have two crises, right? There's the immediate health crisis which some countries are coming out of, we are still sort of trying to manage and navigate a little bit here and then, of course, there's a broader economic crisis that Covid was the catalyst for. So in terms of just what post-Covid means first of all - it's today, and it's 18 months' time. I think the element then with regards to what that recovery looks like or could look like and what the biggest influencers could be - whether it's government, whether like you say its investors and whether it's the companies themselves. I think the elements play against each other.

The first is on the company side, I think there are [a] certain profile of companies that will have a higher likelihood of survivability through the crisis to get to that post-Covid world. I think the easy way to look at that on almost, there are certain sectors that will tend to sort of be a little bit more resilient, I think that's true, there are some which are much harder hit, that's also true. But I also think within the companies themselves there are all kinds of individual questions and dynamics and criteria that will mean that a certain profile of company survives. So the companies that survive will be the companies, very simplistically, that have the most cash in the bank so they are able to almost sort of hunker down and navigate the crisis and wait for it to play its way through. I think it will also be those founders who are you able to adjust their companies to thrive, who are you able to potentially have capital structures and profitabilities that allow them to respond very very quickly.

It will also be the ones that are able to spot trends and spot trend waves that their companies can ride to get to the end of the crisis. It will be the ones who have taken the time to get the right investors behind them, if they had that opportunity to begin with - investors who are experienced, who have a deeper pocket and are able to...and the one who have been better performers, I guess, historically as well...so they are able to count a little bit on that as investors support as they go through [the crisis]. That's on the entrepreneur's side. I think on the Investor's side, then a couple of things also - people who have the capital support the companies through the crisis. But of course, investors are not going to necessarily protect or support companies that are not doing well through the crisis. I will actually expand that investor bracket to say... to my mind, it's really a private sector bucket and that we can talk a bit more about it later if you want. I think there are so many different actors within the private sector that should be part of and helping to define that post-Covid future, whether they are philanthropic organisations, whether they are investors but not necessarily funds. Whether they are family offices, whether they are commercial banks and lenders, I think the toolkits around what that support for the innovation sector should look like relies on all of these different players playing different roles to meet the needs of startups and scale-ups and SMEs through this crisis. And then finally, the government, I will say... I really view the role of the government as a galvanizer of capital.

The role of government as helping to organise this different actors and players, but really taking a step back and letting the private sector do what it does best which is allocate capital to the companies that are likely to have the strongest and the most robust responses through the crisis. Because I think we must also be careful that in a scenario where there is limited resources, limited capital and we're under a bit of time pressure to make sure that we're able to navigate to the recovery quickly, I think we must be careful...this not really a time, frankly, to worry about things like mass programs etcetera etcetera. I would much more prefer a response that is targeted and focused on making sure... of course, there are issues with the way that capital sometimes is declared in Nigeria under these public sector programs ...but in ways that are making sure that the best founders with the highest chances of surviving and the highest chances of driving returns with the capital that they will have access to are the ones that get access to the capital. And we're not funding businesses that probably would not have...before, the crisis was one more thing but they were probably not financially healthy propositions before. I think those are how I will view those three things playing in terms of what the post-world could look like and what the different roles could be.

Tobi: If I'm a founder or a business owner, I'm thinking one of the dilemmas I would be facing if I make it through this crisis, going forward, is to build some resilience into my business model and how my organisation is structured and at the same time, I would be looking at some form of future growth.

Eloho: Sure.

Tobi: So, how can businesses balance those two things going forward?

Eloho: I think the most important thing is surviving. The most important thing is not taking your eye off the ball so that you have business at the end of it that you can then...I'm not saying you necessarily only at that time think about growth, but the business should grow, right? There's nothing to grow if you've taken your eyes off the business because you're focused on revenue opportunities that may not necessarily be that immediate and that actionable. I think that the way that we have tried to advise some of our founders to think about it is: first of all, to just sort of batten the hatches, secure the business that you have today, create a war room, know what your sort of critical scenarios look like, know what your critical responses are going to look like so that you're not making last-minute decisions, emotional decisions as the crisis kind of unfolds - there's a bunch of unknowns, and you'll be hit by a range of unknowns. But I think you are able to sort of think about the kinds of triggers they would sort of provoke certain responses as you go through. And then, once that happens, I think it creates a little bit of flexibility for you to then be creative I think about what the future could look like. Creative around "okay, so, where have I seen..." in the stark case, for example, of a full lockdown "where have I seen vulnerabilities in my business model?" The vulnerabilities might come through the fact that, for example, I'm only selling through one particular channel which might be more of a physical channel, and if you accept that we are going into a world where...I am not a full believer that we're going into this zero-touch models, especially not in Nigeria, but I do think that you will find that we are lower touch for a while, but also that we might have finally seen that big boost to a digitisation change that we been waiting for for a while and that in and of itself create opportunities. So I think having the bandwidth to take a step back and say "okay, so how can I take advantage of these opportunities, how do I access the vulnerabilities that my business has exposed, through the crisis, and how do I then respond to those opportunities?"

I think the third thing I would say in terms of, again, being ready to respond and being ready to grow is there's a lot of people at the moment that are cutting back assets, they're liquidating assets or they're cutting back on investment spend. They're not spending on marketing, they're letting some of the people go...taking all kinds of actions in response to the advice to shore up capital. I think it's a fine line, but the entrepreneurs are going to have to find where that line lies between taking all the right prudent actions to make sure that there is a business that survives but also then making sure that you've not cut so far and so deep that when the recovery comes you have to spend so much time reinvesting in these things. So if, for example, you are a consumer-facing business that, of course, the brand in and of itself is a major asset, then investing nothing in that brand for the next 12 to 18 months because you take the view that "marketing spend is discretionary, and I have a core base of customers that are doing work with me or transacting with me, I just need to sort of maintain that level" may not be the most prudent thing. If you're a business that has... I don't know, you have a sales team, for example... and you've potentially cut that too far and you also have a sales team that if you brought new people on you would have to sort of spend quite a bit of time training, it means that you probably want to be a little bit careful, one: who you even let go. Two, careful that you're timing your recovery right so that you are able to bring them back.

So I think that's the way I would think about it. I would think about securing the business that you have today, creating a war room - having a set of decisions (having a playbook around how you make decisions through the crisis) and then creating a recovery kind of response and scenario where you say "here are the different assets that I need to sort of keep productive or I need to be able to quickly and readily turn on when that recovery starts to come. And it's a little thing. It's in the way that you even engage... if you have to let people go, it's the way you engage with them through that process. That's the difference between, for example, being able to quickly call on some of your lieutenants and say "look, I can offer you another job back if you want it" for example, versus having burnt a bunch of those bridges. And I think as that business owner that you described at the top of the conversation, I think that's the difference between surviving through the crisis and I would say thriving in the post-recovery.

Tobi: If I ask you to construct an opportunity profile for companies and some industries, and please, be specific if you want to... so what would the picture look like for thriving through this crisis? Is that even possible or are we stuck in some kind of medium to long-term risk management/survival mode?

Eloho: I think, to begin with, there are a couple of industries that...so not everybody has done badly. So the picture is not all bad. I think that there are some industries that are benefitting through a crisis like this. Businesses that are built digital first - I think that's the first factor that separates a couple of businesses and I think you are finding that, for example, businesses that addressed people's healthcare needs, mental health needs, but are doing them virtually, digitally, are actually doing relatively well through this crisis. Businesses that are providing critical equipment and infrastructure through the crisis are doing relatively well. Businesses that are helping people to educate their kids whilst they are at home through this crisis, like to say post lockdown into this lower touch world, those ones are doing relatively well broadly as a category. I think businesses that are allowing...we all know the Zoom story, right? The crazy growth numbers that are [indinstinct words] through this crisis. But businesses that are also helping teams to be more productive are doing super well. In more traditional sectors, businesses that have been able to pivot very quickly to switching on digital channels - for example in places like food and groceries retail have actually fared better than the alternative which is businesses that were not able to turn on or open up some of those channels as quickly. There are examples of that happening and I hope those are specific enough.

The second part of your question is how does one thrive rather than just survive through it, and I certainly don't want to paint a picture and sort of be glib in suggesting that, you know, just thrive through the crisis and therefore it must be relatively easy but I think this is really where the mettle of entrepreneurs really gets tested. I think that we will also see, of course, businesses that are built through this crisis, in response to the opportunities that open up by virtue of the crisis. But the thriving point is a little bit of an alchemy of a bunch of things - It's an alchemy of the business model that you had to begin with, it's an alchemy of those things that I talked about before around...in the response, what are those critical assets that you preserve and you maintain and you keep warm so that you can turn some things back on relatively quickly. It's also an alchemy of the investors and the advisors that you have around you. So from the investor perspective, especially if you're a portfolio company that has done well through the crisis, that has historically performed well for your investors, you have a good relationship with them etcetera, you're more likely to find that you are funded through to the crisis by your existing investors. There's also something around the mentors and the networks that you have around you and your ability to rely on all those and apply course learnings and look for advice and things like that. I think that's really, ultimately, what will help a bunch of founders not just survive but thrive.

I think the last piece that I don't want to sort of underestimate its importance is tied to that investor point but it's not necessarily related to investors. So the point I made, again, about the role of the organised private sector should play into stepping in at a time like this. I think liquidity becomes critical. I think that this is when we should see and we're seeing it in other parts of the world but I think particularly in an environment like Nigeria (where the government is under fiscal pressure, we all know the story), I think this is when I would love to see for example a Covid fund...but for the innovation sector - that is focused on startups and scale-ups. Designed to deploy different kinds of instruments into these businesses, but the ones that you can genuinely access and say the direct impact on this business has been due to the Covid. It has some great founders behind it, the underlying business model is fundamentally sound, but they need some short term liquidity or medium-term liquidity support. Or they need a bridge to their next major equity round. How do we do that? This is also when you should see, I believe, grant structures being created or grants being created or grant programs being created for some of these other businesses as well. And I really genuinely believe that that is a role for the private sector. Like I said at the beginning of the chat, I think that government should play an organising role, perhaps. Government should help to galvanise capital into the innovation sector in Nigeria. Government should help to create a conducive investment environment etcetera, but the actual capital and the allocation of capital should be done by the private sector, they have deeper pockets anyway as a collective.

Tobi: Yeah, yeah, thanks for that. Moving away from that a bit, one distinction I encounter often is social versus market ventures. Well, it's usually not put that starkly...

Both grinning

Tobi: But yeah, so is that a helpful distinction? Is it even a real distinction and what are the differences, if any?

Eloho: I think that it's not a new distinction. I think fundamentally you're talking about for-profit businesses or pure for-profit businesses versus what I think today people think about as double or triple-bottom-line businesses. So that's on the social impact side where, of course, you want to run the business sustainably but you're not driven by pure profit motive and you have a bunch of other goals around environmental, around social impact, typically [a] sort of bottom of the pyramid or addressing under-represented or unrepresented segments in whatever your area of focus is versus a business that is being run purely for-profit and I want to maximize my shareholder value, I want to give a great return to my investors and I want to walk away as a nice happy rich entrepreneur myself. So I don't think that's a new distinction. I'm not sure, are you asking me which I think is better?

Tobi: No, not really. I'm just asking what really are the distinctions because to my mind, even triple or double bottom-line businesses like you said still need a profit formula, so I'm not...

Eloho: They need sustainability, I agree with you. But I think they don't need to maximize their profits. So, it might be the difference between me setting a margin on my business, a gross margin, I don't know...a fifty percent gross margin versus a twenty percent gross margin. If I'm a profit maximiser and I have space to drive a greater per-unit profit on whatever it is I'm selling or better unit economics on whatever it is I'm selling, then I will do that. But as a double or triple-bottom-line business, I might look at it and say "well, if I'm able to sell this thing at a lower price to people in certain segments then...I'm also tracking things like access, I'm also tracking things like the number of people that came in touch with our product because there's a greater good or there's a social good that I viewed as part of that product or that service. I think that's fundamentally it, but I agree with you that I think at their core, that both of those businesses, but certainly the social impact business needs to be profitable, otherwise it's not sustainable. And to be fair to a lot of the very successful social impact entrepreneurs, I don't think that the ones that you and I admire from afar, people who are not running their businesses as sustainable propositions, right? I think they're very aware of the fact that the businesses ultimately need to be sustainable, they're just not so worried about necessarily delivering a maximum [return] to their investors. And in fairness to them, their investors are not invested in them for that reason either. Their investors have a bunch of other metrics as well as the financial return that they track.

Tobi: Looking at the African startup ecosystem now, I don't want to generalize to all markets and, of course, all markets have their unique challenges and context but looking at the African startup ecosystem generally, there is a common problem - which is, public goods, policy, and the overall business environment. Now, do you think that African startups can really leapfrog some of these challenges or we are just ahead of our time so to speak? Because, here is what I have in mind...if you look at China I think the startup ecosystem, for example, started growing and started getting a lot of traction when the economy itself has already gotten some mileage in terms of overall economic growth, but when you look at Africa, of course, we have diverse policy environment that but the general growth environment is poor. So are startup ecosystems in Africa ahead of their time and is there hope on the horizon?

Eloho: I think that your question even in the way it's phrased paints a very dismal picture when you say "is there hope on the horizon?" [indinstinct words] looks like there is gloom and doom which I don't believe that there is. I think the first thing I would say is there's always a counter-narrative, right? So you talk about a low-growth environment and the second you say that, to me... I think about, for example, Endeavor companies in Argentina in the worst of their economic crisis - double-digit inflation, negative GDP growth year-on-year that were counter-cyclical in that they were growing very quickly, they were generating jobs. I think in the data, there's something like about six of the first companies that we selected or eight of them...Between them, I think over something like maybe a 5-year period created 20,000 jobs at the time when low-growth environment etcetera. So it does happen. We've seen it happen, of course... in Nigeria, we've seen examples of periods when broadly the narrative is not exactly exciting or encouraging, but you see spots, bright spots of success. So I don't think it's all doom and gloom. Now, the question of what do I think the role of the government is which is where I think you started. You said that even, for example, in China, the government sort of created that enabling environment and there was growth, and then on top of that the Chinese, I guess, e-commerce or tech consumers are able to build their company on top of it. 

I certainly think you're on to something. I think that it's important that there is a layer of... there's a conducive layer. I think that conducive layer has elements to it. It has hard infrastructural elements depending on what it is you're trying to do, it has software infrastructural elements and the touch on things like policy. But I also think that the beauty of being part of an ecosystem that is increasingly organised, increasingly advocating, increasingly influential is that you don't necessarily need to wait for those things to have happened, you can put those things in place and be a part of pushing for those things as you build. And I think that's why it's so important that you have organisations like CC-Hub etcetera, but you also have organisations like Endeavor at the scale-up stage that are focused on making sure that the ecosystem works. That then means that you can always put on a policy hat and say "what should we be doing, for example, through this Covid-19 crisis and then how do we then use the networks and the influence that we had to make sure that the right actions are being taken and the right conversations are being had, and the right voices are being heard where those conversations are being had?" So I don't think you necessarily have to weight one for the other, I don't think you need to have a perfect environment to build. But like I said I think that there are some enabling infrastructures and the great thing about the way we think about this organised ecosystem-type entrepreneurship at least today, not just in Nigeria, in many other parts of the world including silicon valley is that the ecosystem itself is a driver of change towards those infrastructure needs. The companies themselves sometimes can be the solutions that bring in...or can provide the solutions or build the solutions or iterate around solutions that solve some of these harder infrastructural challenge. The quick answer to the first question - which is can you leapfrog? - is that I don't believe...I've never believed in this leapfrog theory, I've always found it a little bit silly. I think that what would happen is you potentially just sort of accelerate a little bit faster to creating the layers around which other things get built. And I think the classic example is a fact that we cannot leapfrog is when 8 years ago, we were all talking about e-commerce in Nigeria and it was always a very difficult story to sort of close the loop on because I remember I would always ask people "have you ever ordered anything from Jumia? It was 8 years ago, and they would say 'yes'". Well, some people will say yes. 

To be honest, a lot of people would say "no, I've never used it." So I could never quite understand this thing that was meant to be exploding but beyond that, people who did say yes, I'll say "well, what was your experience?" and I've never heard a story about it being delivered on time and I don't think that was Jumia per se, I think it was just really the fact that we had these core infrastructural challenges around which we were trying to bring build certain things on top of. I remember trying to do, at the time, diligence on a couple of these companies and the question around cash on delivery was always a big one of course and that comes with all kinds of issues. It comes with massive return rates, it comes with security issues and cost on top of that. So it's really really hard to build and to build profitably when the foundational elements are not done. The other side of that story though is to think about what's happening in fintech today. And think about the fact that a company like Interswitch and others as well, but I think the most prominent one that we will all be aware of is Interswitch - Mitchell Elegbe has built that business over 17 years. And a lot of what he has done has been to build the infrastructure and the layer on which a lot of companies are building today. I don't think he necessarily thought to himself when he started “I am going to build the rails and build the infrastructure under which great companies like Flutterwave and Carbon and PayStack and Mines and the like are going to be built on top of in 17 years' time. But I think at some point he was probably aware of the fact that “we kind of have to lay the infrastructure here”, and I think that's what the entrepreneurs that you and I, again, probably get the most excited about - I think there is that level of consciousness around what they’re doing. So in as much as often, their businesses are for-profit, I think their missions are always bigger than themselves and are always bigger than the exit story in necessarily. Those are the entrepreneurs that excite me the most, those are the entrepreneurs we get the most excited about at Endeavor, the ones whose broad missions are around things like building sustainable models in their local ecosystems, and galvanizing multiplier effect and paying it forward and those big galvanizing missions and stories are the ones that tend to end up building the infrastructure on top of which the next generation of companies come. 

Tobi: Yeah...sorry if I'm being gloomy in my picture...

Laughs

Tobi: But here's a bit of what I have in mind...great point about Latin America but when you look at countries like Argentina, Brazil and co. and here is what I have in mind - these are countries that are middle-income economically. These are countries that are averaging between six to ten thousand dollars in per capita income. Yeah, they may be having slow growth and there's always problem in the policy arena, public finance that regularly distress some of these economies but the market, the nature of the market is really different. These are countries that are a third or a fourth bigger than even the richest economy in Africa and even the infrastructure environment is different. I don't wanna use the word better, but different. So what I'm saying is...I'm not saying it's impossible but what I'm saying is given the nature of the investment effort, are we going to see the explosion in that startup ecosystem space in terms of growth? Or are we going to see anytime soon or a lot of these things...

Eloho: I think you’ve used the example of Latin America.

Tobi: Yeah.

Eloho: I think you used the example of Latin America but you’ve ignored the example of SouthEast Asia.

Tobi: Okay.

Eloho: So, yes...GDP per capita is slightly higher than in some of our African countries but by no means are countries like Vietnam high-income countries and you have some really really interesting high growth businesses being built there and you have really really compelling flows of capital into those businesses and into those founders. I think that where it really gets interesting is on the digital play when there is a digital adoption story and when there is an access story around it. But for example, I don't know that you need a high...well, I think you're probably right to a certain extent, but I don't know that you need a middle-income country’s level of GDP per capita to be able to build a lending business sustainably...a digital lending business sustainably in Nigeria, for example, you probably need the opposite to a certain extent. So I think it depends [on] what you talking about, I think it depends [on] what sectors, things like that but I certainly don't think that it cannot be done. I'm not a big big fan of the narrative that Nigerians are too poor to build a business around them. It's not tech but one of my favourite stories and I know this one of the stories that a lot of our entrepreneurs in Endeavor actually really like. It is the story of what Promasidor has done or did in the FMCG sector. So they have lots of dairy products things like that and they basically went on a whole new strategy with their distribution and their sales, whereby they were basically distributing in product sizes at price points that were accessible and affordable for the bulk of Nigerians. It was not people sitting in Lagos, but it was distributed all over the nation, in environments that are much lower GDP per capita at the sub-national level than we have even in Lagos and did that successfully.

I think it comes down to a business model fundamentally. I think there are certain businesses that you will struggle to get the unit cost of what you're trying to do so low that you're able to scale it profitably, and I think that's fundamentally some of the issues that e-commerce face in Nigeria - that the unit economics fundamentally just didn't work because it was just so expensive and so hard to ultimately get the product to the end customer and people were often doing things like...and I think some of the blame also potentially lies with some of the companies themselves but people were doing things like they were only going to the e-commerce businesses to buy for their phones. And the phones, because these companies were competing with each other for customers and for growth, the margins on those 3C units...so whether it was phones, whether it was whatever else but typically phones...were so thin, sometimes even negative that of course, you're not going to drive any kind of profitability off that sale but the idea was that I'll bring you onto the platform as a customer and you will come back and you buy other things. I don't think there's any escaping the question or need to sort of build a business fundamentally profitably, but I also don't believe that because Nigerians are poor then we’re not able to do it. I think if you also take a step back and really think about what we're talking about, we are so early in this journey towards finding the sustainable business model. Because like I said to you when we started, from my perspective, it's in the last 10 years that the potential of entrepreneurship to really fundamentally shift our regional economies, for example, in Nigeria has become clear. Because [it's] so much more accessible, so much more democratic than the idea used to be. People are actually building business in Nigeria now in a way that they were not even thinking about doing 15 years ago, 20 years ago. I think those success rates will come. I think we already have some of them. I think the next generation of future business leaders are emerging. I think many of their businesses will continue to survive and would be sustainable and I think scale takes time but I think businesses are scaling every day around us.

Tobi: You're probably right. I certainly don't think that Nigerians are too poor for businesses to be built around them. It depends on what your building, right?

Eloho: Yeah.

Tobi: So, maybe I'm being impatient here.

Laughs

Eloho: And it's hard, right? Because you want to see your environment change and you want to see lives touched and you want to see the successes that entrepreneurship is...and we’re seeing it. But I'm also a little bit impatient like you, I want to see more of those stories as well, and they're coming. I’m in a privileged position whereby I get to see what's coming, we have a pipeline, we have a bunch of founders that we are very excited by, we know what's going on within the companies that are within our portfolio as well, that I think I'm excited by what the future looks like.

Tobi: Yeah, so, I want you to solve another puzzle for me.

Eloho: [Laughs]

Tobi: Let's talk about domestic capital. The startup ecosystem, that space, is really interesting. There's a lot of things that's going on that personally excites me, but one of the things I'm not seeing is domestic capital - funds, banks and other forms of traditional finance rushing to take advantage of that opportunity, even when you have policies like the loan deposit ratio for banks, and... I don't know how the CBN defines real sector in this case, so I'm not going to get into that, but why aren't banks, for example, starting VC funds? Solve that puzzle for me. Is it a case of exit?

Eloho: I think it’s a couple of things. Well, I don't think many banks set up VC funds anywhere in the world. The skillset and the risk appetite is pretty different. I think that as a banker, you grow up in an environment where your entire training is: extend the loan, earn some interest on it and don't lose your capital. Whatever you do, don't lose your capital. That's how you fail. I think in a VC environment, you appreciate some risk around potentially losing your capital and you price that in. But of course, the return for that is: what if I don't lose my capital and I make 10 times on this investment? So I think those mindsets are just fundamentally different, and of course, then the infrastructure, and the teams, the models and the approaches and all of those things and the cultures are just built differently in those two ways. But the question around why do we not see more local capital more generally going into businesses? I think it's a little bit of... I think it's a complex answer. I think there's also something around the exits as well. I think that if you're investing same way as I said, you know, the first rule on the banking side is don't lose your money, the first rule on the VC side is - where is your exit? If you can't see an exit, then what are you doing? This 10x is 10x on paper if there is no exit. And so I think there is an issue around the... I want to say "the depth" I guess, and the quality of the investment ecosystem more generally so that you know that I can see a path to a company circling through its potential points of capital... potential funders of capital. So that I'm coming in, for example, as an angel and I can see where they're going to get the first institutional round. I can see where I'm coming in as a growth investor and I can see where potentially that business is going to IPO and give me my liquidity. I think a lot of the exits that we've seen, for example, at the later stage or at the private equity stage in Nigeria/Africa, a lot of them are secondaries. I know that there's not very much in terms of IPO exit etcetera. And all of those things compound. So I think, again, it will come. I think one of the ways that we solve for that, interestingly enough, is by attracting foreign capital into the ecosystem so that you know that the liquidity is there for your exit. I also think there's also something around how and where Nigerians invest. I think that there is something around the fact that we are in a high inflation environment. At the moment we are even now worried about things like foreign-exchange, devaluation etcetera. So you've got to really be sure of some massive or be comfortable with the risk anyway of some massive outsize returns probably before you're putting your money in such an asset class versus keeping it in foreign exchange potentially offshore. I think all of those things coming into play. I would like to see more local capital going into earlier-stage businesses. I think it will come. I think it's one of those things where success breeds success a little bit and once you start to see the exit, once you start to see the liquidity come into the ecosystem, it will come. But also, of course, we're now going into a broader recessionary environment and that doesn't bode favourably for broad investment trends whether it's local capital, whether it's foreign capital into Nigeria. But I actually think an environment like this also creates an opportunity for local capital providers because it's harder for some of these companies...it will get increasingly harder to raise capital offshore and so if you are an entrepreneur-friendly investor, if you're writing fair cheques on fair terms, I think this really is an opportunity to...and if you have the conviction around what's happening in the ecosystem and the growth that our founders are able to deliver, then this really is an opportunity, potentially, to write some of the interesting deals.

Tobi: Interesting. What has been the most challenging thing for you running Endeavor, so far?

Eloho: Explaining what we do. I remember 18 months ago when I first started talking about how we focus on the scale-up companies, a lot of people didn't even know what scale-ups were. And I don't think that was because it was a brand new term that I discovered...I think it's just because it wasn't something that we talked about very actively or openly in our ecosystem. It comes back to what I was saying earlier about how we assume that once a company has, for example, raised a Series B, then they're already successful and let's worry about the earlier stage companies. Interestingly, when I sit one-on-one with people and I explain it they get it immediately but most people from the outside don't get it, so what they say is "you're are helping people who are already successful to be even more successful." And I suppose that's one way of looking at it, but the way that I see it, really, and the way that at Endeavor we see it, our theory of change is actually really really simple and super powerful, and effective - we believe fundamentally that it's actually the entrepreneurs that do more than just think big, but they're successful, they will successfully scale their companies. And for us, you've scaled your company successfully when you are able to employ a couple of hundred people.

But critically we also want people that are then going to turn around and say "okay, so I've been successful and I've scaled my company in this ecosystem, how do I then help this ecosystem and reach back and help the next person do something similar? So how do I invest in that founder as an angel? How do I mentor that founder" etcetera? And we find that by creating that culture, by having that sort of almost virtual feedback loop, of course by selecting the great entrepreneurs to begin with, having them role model, having them play this sort of mentorship investing role, you then create a multiplier effect that means that you're able to scale an ecosystem much quicker at the scale-up stage. So we would be a little bit counter that theory if what we are worried about was "how do we help a hundred ideation stage founders launch their companies? There [are] people that are doing that and doing it much better than we would because it's not our area of expertise. But like I said, if you think about an ecosystem and think about the different needs of founders at different stages, we're very lucky to be in this unique position whereby we are very very laser focus on scale-up stage founders because we think that people who have successfully navigated to [the] scale-up stage, are really the people who then understand what it takes to scale a business in that ecosystem. And helping them, then go back and plough that experience back into the ecosystem, from our perspective, is what will be the most effective thing that you can do from a support perspective

Tobi: That's interesting, and I don't want to ask this because it can easily get controversial and also...

Eloho: [Laughs] But you're going to ask anyway.

Laughs

Tobi: Yeah, I'm going to ask you anyway. Also because it distracts from some of the real important issues sometimes... but have you had gender-related challenges and in what colours do those come?

Eloho: Ooh...that it distracts from the issues, I disagree. I think this is a very very important front and centre issue, so I'm glad you raised it. Have I had gender-related challenges? I think we all do, as women, unfortunately. I'm not sure if you mean professionally but I'm just going to hatch this out and answer your question broadly because I think that it kind of all just blends into one experience as a woman.

Tobi: Okay.

Eloho: I find that I have up till a point in my career, I would have told you categorically that at work I didn't have gender-related challenges because I was so certain that I was being treated absolutely the same as all my male peers, has getting compensated exactly the same as all my male peers and I was respected in exactly the same way. Interestingly, the more that I understand how these things play out, the more I understand that that was probably a voice of naivety that was speaking in that actually the way that these kinds of biases play out is in little things like, for example, microaggressions - which mean that you say certain things and you're teased in the office in a way that your male colleague might not be...and of course, I had a lot of that when I was growing up in my career. It is in things like you're nervous about asking too many questions during your review because you don't necessarily want to be seen to be aggressive when, really, all you're doing is being assertive. But it's in your male colleagues not having to worry about things like. It's in being nervous about negotiating and not taking the first offer that you are given, again, because you don't want to create the impression that you this pushy woman. I think that's how, indirectly, some of those things play out. In terms of direct challenges by virtue of being a woman, the kinds of things I noticed as I got more senior in my role is things like... you know, I've had men come into my office to meet the boss and they will turn and speak to my male colleagues, to my male staff, not understanding that I was the boss which I always found funny and end up ultimately embarrassing the male staff. I've had people come into my office...it's been one guy and this story always makes me laugh. And then he comes into my office and I think when he realised... I think he also went through that thing of "oh, he wanted to talk to the boss" and he was surprised that it was me, then when he realised that it was me, he recovered very quickly and then he sort of made a couple of comments as he was leaving "oh, hmm, I wonder what the average age is of everybody in this office?" and he kind of made this nervous comment twice and it was funny because he wouldn't have cared what the age was if he was talking to a room predominantly full of men. So he was confused, my team is mostly women not by design but he was confused, there [were] all these women and you could see he was flustered...and so the next thing that came out was "ah, that's interesting, you must have a very young team" and of course he left and even the guy in the team was like "what the hell kind of comment was that?"

So you see it play out in a different way, but I've never had any direct confrontations or direct issues by that... I think the issues play out for me or have played out for me much more subtly. But like I said, the colour of those issues has changed over time by virtue of my experience as well and by virtue of just the fact that I think there's a lot of more information out there as well with regards to what the experience is as a woman, as a professional woman and I think it's empowered me and I hope it's empowered lots of other young women as well to... when you have that niggling doubt in the back of your mind and you have one more question under review, I think the younger a lot Eloho would not have asked the question. The older Eloho, today, probably would because she's now aware of the fact that these biases are actually real, so you don't have that struggle of trying to convince yourself that what you suspect is actually a real issue that you're facing. I also think we're in an environment where more men are listening. I think it's helped by the fact that there's a lot more data, there are many more male advocates and male allies as well. I think corporates and institutions have the issue of diversity and gender balances on their agendas, so it's a corporate agenda. Not as many as they should but it's on their corporate agenda as well so it's a legitimate topic of conversation and I think all of that helps to mean that the experiences that I had when I started out my career 20 years ago are very different from the experiences that I would hope that a young lady who was charting the same path was having today.

Tobi: I'm so happy you brought that up, thank you.

Eloho: Did I bring it up or did you bring it up?

Laughs

Tobi: I did. Okay. I'm so happy you answered my question. Because this is one area where I would easily admit my ignorance, so...

Eloho: Yeah, and I'm glad you've admitted it openly... the truth is I think we are all a little bit ignorant because first of all, even for women, not every woman's experience is exactly the same. So sometimes you hear stories and you see the data, and you're like "absolutely, I believe that cause I directly went through it" and there are times that even for me I'm like "oh my gosh, I didn't know that women went through this." For example, the concept that I could have been paid less than my peers in exactly the same role was foreign to me. I was just like "what do you mean? I got the job, I was given an offer, it was on paper" but the difference is the guy probably walked in the room...for multiple reasons including probably the way that he socialized in the way that we're not socialized women... he probably walked into the room and said "I want 20 percent more" and they said, "okay, fine." But I think that you might be ignorant of certain things, the most important thing is that you are open to understanding certain things and to learning. But I think there's probably a level of learning that can and should happen on gender biases in general for men and women, I don't think gender biases are the exclusive purview of men, I think it's a societal thing. It affects all of us. It affects all of us and it plays out in all of us.

Tobi: Yeah. So it's kind of a tradition on the show. So I'm going to ask you if you have one idea... I know you have many ideas...but I'm restricting you to one.

Eloho: One.

Tobi: Yeah. So if you have one idea you want everybody to be excited about that you would like to see spread far and wide, what would it be?

Eloho: Ohh, I'm a big big big fan and I'll tell you a secret. I'm working on a project where hopefully... it's been a dream of mine and hopefully, I get to be a part of making this happen... is I think that people should tell stories more. I don't think we tell stories more and I think it's critical in Nigeria for people to tell stories of their journeys more. And I think we need to get into a mode where... for some reason, we only tell two kinds of stories I think, at the moment. We tell stories of success - so everything is up and to the right and, you know, here you are slaying and breaking barriers and that's the only story you tell. Or we tell stories of extreme disenfranchisement and somebody is hard-done-by in some really horrible way. And I think the truth is, the path that we each take, for the most part, is not always the case for everybody, unfortunately. But for the most part, the path that we take kind of oscillate between those two things. You're massively successful in certain things. Every once in a while, you probably fail at things more often than you're successful at them and it's not this up and to the right journey. So one big idea I think that I'll like to sort of encourage people to do and one that I'd like to be a part of [is] role-modelling... is just telling frank candid stor[ies]. I think there is this myth that if you tell the truth it's not going to be interesting. If you tell the truth and it's not a sad story or it's not a story of overnight success it's not going to be interesting. And I'm testing that and I'm finding that there is a lot of energy around using platforms just to tell stories. So people kind of have something to relate to and connect to as they navigate the different inflexion points of their lives, whether it's family, career, jobs, marriage, having children, what have you. I don't think we do enough of that as a society.

Tobi: So when you say you are involved in that, are you telling your own story, because I'll like to get an exclusive?

Eloho: [Laughs] I was told off by somebody who said it that I didn't tell enough of my own story and I guess she's right if people are interested, I don't do much of that. But aside from that, I think rather my own story, I want to tell other people's stories but I think it would be inauthentic for me to push people to tell their own story if I wasn't telling my own. So hopefully, that will come. In terms of exclusives, let's talk about the exclusives later because I'm not quite ready for it. But I'm actually trying to put together a small project around the storytelling. And I'm happy to talk to you about it off the podcast.

Tobi: Alright. Thank you very much, Eloho. It's been fantastic talking to you.

Eloho: Thank you, Tobi.