Founder Advice

How We Got (or didn’t get) Our First Customers

Defining your customer base is tricky before you have completely defined your product/service. For this reason, it’s important your early conversations are full of questions and observations, rather than pitches for your idea.

There are a few things I think we did wrong in the beginning, so hopefully I can save you the trouble by sharing our learnings.

Definitely startups in Kenya may think about this in other ways than in the US or Europe, but I think most of these insights are fairly universal.

Your time is valuable (even if your product isn’t finished)!

Startups always think the hardest thing about getting their first customer is convincing someone to buy your service or product. But I think the hardest thing for startup founders to make their first sale is actually convincing themselves that their product or service has value.

I remember the early days in Nakuru – we didn’t have a developer team in Kenya, and had a very bare-bones MVP. In order to match clients to job seekers, we would go to our trusty Excel document, and Ctl + F specific skills until we found the right job seekers for the job. To us, it seemed ridiculous to charge for this service – two recent grads in an office, huddled over their computers, manually sorting through CVs and candidate profiles to find a match.

Duma Works - the best online recruiting platform in Kenya. Here I am hard at work in the Nakuru office helping job seeker in Kenya get connected to jobs.

At the time, we didn’t realize that even just using our time to find these job seekers was value – even if we weren’t using the fancy software we pitched clients on. The method was a bit different about how we matched people, but the results were somehow the same.

That is value, and you can’t just give value away for free.

Don’t just pitch – learn about your potential customer

Instead of having a conversation with our potential customers to learn more about their current hiring challenges, we just tried to push our product. We walked around Nakuru, scouting potential customers – from the small hotels on the outskirts of the muddy central market – passing out business cards, and assuming we would eventually get lucky and get clients.

Our pitch was – “You can find people through SMS! You don’t need to just rely on your friends anymore!”

We thought this was great, but is this a service everyone needed? Probably not. The super small shops mostly hire family members, as do companies operating in very informal sectors. Their entire basis of operations is informal, therefore their recruiting is as well.

Had we sat down to have a discussion about what their company looks like, how many staff, how often do they hire, what is typical salary expectation, do they have any challenges with their current way of doing things…we may have learned sooner who would be a good target client and who wouldn’t.

(As a PS – the best sales technique in general is to ask tons of questions and get the prospective client to open up…who knew? :))

This all is not to say that we don’t think a more formalized hiring process is beneficial to these small, informal shops. I believe they would be able to grow more effectively if they were able to hire higher quality people.

However, they are certainly not our earliest adopters, and since they have such a low ability/desire to pay – the sales required to get them on board simply wouldn’t make sense in terms of unit economics.

Duma Works visited the Nakuru Marketplace to explain to companies how to connect with qualfied job seekers more effectively

The Nakuru market – these ladies selling vegetables were certainly not our ideal first customers

Which brings me to my next point – Segmentation.

Segment, then sell

In our minds, all of the small businesses in Nakuru (and Kenya…and the world!!) were our customers. Every storefront in Nakuru, every vegetable stand, every individual person who ever needed a plumber to come fix their pipes at home…

Probably what would have made segmenting easier for us would have also been to understand that our customers would need to pay. Then, in our conversations with potential clients, we could not only ask – “Do you need this service?” But also – “Would you be willing to pay for this service?” Then, we could have assessed how many people were willing to pay, how much, and how much it would cost us to get them as customers and to keep them.

Eg.

(1) Assess who is a great early customer:

Low Willingness to Pay + Slow Adopter = Bad fit
Low Willingness to Pay + Fast Adopter = Good evangelist, bad customer
High Willingness to Pay + Slow Adopter = Bad fit (too high cost of acquisition in time/money)
High Willingness to Pay + Fast Adopter = Great early customer

(2) Gather all the great early customers and compare market opportunity sizes → Focus on the biggest opportunity!

…Easier said than done, and assessing market size for both current and potential is not a straight shot. But it’s a good place to start. If you want to learn more about advanced customer segmenting, check out this awesome post about how to quantify your customer segments.

You learn something new everyday!

Of course, during our slow testing period, we were learning a lot. I don’t regret all the days avoiding the sun, and asking mechanics to sign up via paper forms that Christine and I would later input manually. And it was good that this process helped us understand how culture, and time, and language, and meetings work in Kenya.

Duma Works old paper CVs helped job seekers get connected to job opportunities in Kenya

“Ungependa kufanyiwa CV mzuri free”? …VERY proper Swahili for “Want us to make you a great CV for free?”…Our paper sign up forms from Nakuru that have received many laughs from our current team members

But! Perhaps we could have come to a conclusion about our customer needs + core target market + value proposition a bit faster had we understood this initial sales process (for a pre product-market fit startup idea).

Side-point about defining value as revenue-based or user growth based

Maybe in the US & Europe where markets are flush with capital and there are startups exiting all over the place, there is less value placed on the startup’s ability to actually make money from clients. More value is then placed on the ability to grow and scale the userbase/network virally for revenue streams down the line in advertising or data etc.

Probably until the digital advertising space in Kenya is more mature, the value for Kenyan/African startups will be focused more heavily on revenue stream than userbase.

And! Until the general population embraces their “digital life” more, there isn’t a big enough customer base to make a B2C platform viral in most industries. Yes, Facebook, Twitter, and MPESA have spread like wildfire, but that’s about it. (And let’s not call MPESA a startup people, please.)

Just my two cents – I’m sure there are a lot of opinions about this out there – and go ahead and comment with yours!

Current mindset

So now, whenever we think about rolling out a new product, or feature, we think about who is going to pay, and who will be the most valuable client. I know that if I pay a sales guy $10 to get a client that only gives us $20 over their entire lifespan with us, that is less valuable that a client I pay $1 to acquire and has a lifetime value of $1,000.

This isn’t to say that I don’t value growing our network virally and getting the smaller, harder to reach guys on board. But they shouldn’t necessarily be your first customers.

We also ask tons of questions in every sales meeting we have, and make sure to convey the value we bring clearly and confidently.

Final point

Total addressable market is not just a slide you throw into your investor deck! It should be something that is always in the back of your head whenever you make any significant product/service decisions or developments AND when you are figuring out who your first customers should be.


These are my thoughts on getting your first customers and how to think about the whole process. I hope they are helpful! Please let me know via the comment section below if this has been helpful and if you have any questions.

This was our latest post in Founder Fridays, where we dig into the story of Duma Works and try to tease out some valuable insights to share. If you loved this, you can also read our last post on fundraising in Kenya.

Enjoy, and see you Friday kutwa! 😉

Fundraising in Kenya

I remember standing outside of our host family house in Nakuru, next to a cow and a few chickens, talking on the phone with a mentor of ours who would soon tell us that he wanted to invest in DUMA. At that point, Christine and I were huddled around the phone figuring out what having an investor would mean, and feeling both excited and terrified.

Competitions are King

As everyone knows, a startup cannot move forward without capital.

Because we started DUMA in University, we were exposed to many opportunities to win money with no strings attached. Sometimes the winnings even came in the form of giant cheques.

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DUMA began as a sah-weeeet idea in Startup Weekend, and we took home our first prize money – $750. YESSS. That got us server hosting, and led the way to many other competitions.

Incubation + Free Money = ❤

We were accepted in the spring of 2012 to join Princeton’s first accelerator program through the Keller Center for Entrepreneurship, the eLab. Given that the dream of many Princetonians is to follow their passion of consulting, the eLab needed to incentivize students to stay on campus over the summer rather than go to NYC for internships. They did so with a $4,000 stipend. That’s $8,000. Boom.

Thanks to student groups and entrepreneurship listservs, Christine and I were lucky enough to find out about a few competitions with Ashoka, Intel, and MTVu – which we then won. We even got a mention in Forbes!

With the $20,000 or so we had raised at that point, Christine and I bought round-trip plane tickets to Kenya. September, we landed in Nakuru in our new homes, to launch DUMA.

That’s when we got the phone call in the cow pasture and launched into the world of angel investors.

Calling All Angels

A few things we learned –

1- Company set-up – Angel investors are more likely to invest in US-based companies, so to all the Kenyan startups out there, if you are planning on raising money from outside Kenya, check out a Delaware C Corp.

2- Accredited – If you plan on raising from an institution (eg. VCs) later, you should make sure all your angel investors are accredited, so there are no complications down the line. A lot of crowd-sourcing platforms can cause issues for accreditation, so make sure to check into that before receiving crowd funding.

3- Stage – Angel investors come when you have an idea, but no real product (yet). They believe in your dream and are incredible resources.

For our seed round, we chose to raise with convertible debt. Convertible debt means that you are in debt – but instead of giving them back money, you can also give them back equity stake in your company.

As a note – you can also raise a seed round from a VC, but we didn’t – Cool Kahn Academy video here.

To Debt or Not to Debt

Startups often raise convertible securities (convertible debt or convertible equity, for example) when setting a valuation for your company is a challenge – usually when you are pre-revenue and can’t say – “Well, I’m making $100,000 a year, and typically startups in my vertical ie. e-commerce, hardware, etc. get 5x multiple for their valuation. Therefore, my valuation is $500,000.” (Not that I think early-stage startups should be valued only for revenue multiple).

There are a ton of articles about convertible debt online. You can find some here and here. Just keep in mind a lot of these articles are debating the merits of convertible debt in relation to giant rounds – millions. Your considerations will be different if you are raising $100,000.

Convertible debt is cool because you don’t have to set a valuation. But typically, you do put in a market cap, which you can read about here & here from people much smarter than me. It’s essentially a clause to make sure your convertible debt investors don’t get screwed with a $100M valuation and get 0.00001% equity stake in return for their early belief in you.

So that was our convertible debt round. We LOVE our angels. One, we met at that first startup weekend, one we met at Princeton through technology-for-development circles, and all are family of some sort. And they are super supportive.

Welcome to the Grant Life

At some point, one of our friends from Princeton (shout out, Eleanor!) told us about this awesome opportunity to apply for a grant from the Rockefeller Foundation Centennial Innovation Challenge. This grant targeted companies that leverage SMS technology to help connect informal sector workers to jobs (hello, DUMA!). So we won, along with 9 other mission-driven organizations, and it was great.

Screen Shot 2015-05-15 at 11.48.07 AM

For us, the grant was important because it helped us flesh out our plan for building our SMS-based screening test to pre-screen people for jobs. It could not have been better timing.

Real-time Update!

The next step of our fundraising process is ongoing. We are currently raising a series-seed round. That is a cross between a seed and series round in terms of documentation and legal work. We decided to raise from angels and family funds rather than VCs. The reason we decided not to primarily target funding from VCs for this round is because typically, VCs come in at a later stage, when you have solidified your growth model, and you also typically raise a huge sum of money from VCs (often minimum $1M) in order to grow super quickly. And they usually don’t want to put in too little money, because they want to get a big enough chunk of equity. That being said, certain VCs do put in money at an early stage, and at smaller amounts.

Given our round size and targets to hit from this investment, we weren’t ready for VC yet. So for a Series-A round, yes. And most likely, it will be to expand outside of Kenya.

Wrap Up

So that’s how raised funding! There are multiple ways to go about it but this is our story.

I had a ton of questions around fundraising while were were going through the process initially (and trust me, I still do). So if you are also someone with a lot of questions, write a comment and I’ll get back to you about my thoughts. I am definitely not a professional, so for anything over my head, I can refer you to an article from an expert.

Last Thought

And by the way – remember that you don’t need to raise capital all the time. There are tons of articles about how to raise capital online, but many from investors and VCs – you can see why they would want you to seek funding…right? If you can build an awesome product, get paying clients, and immediately start reinvesting profits into growth, you are good to go!

A Startup is Born

Open Minded Beginnings

There comes a time in your life, usually while you’re in the middle of pursuing a Bachelor’s in Chinese Language and History (with a theater minor, of course), that you decide that it is of the utmost importance to launch a job marketplace startup in Africa.

Myself and my co-founder Christine (though granted she was pursuing a medical career and a major in Anthropology) fell prey to this plot line somewhere in 2011 and haven’t looked back since.

There are different schools of thought about whether you should try planning out your life or not. Does a person wait for the right opportunity to come along, or does a person create their own opportunities. Eg. Does one wait for Mr. or Ms. “right” to come along, or does one scout out marriage potentials like it’s hunting season. 😉

Personally, I never had a clear idea of what I was going to be when I grew up. Sure, I had fantasies about opening a jewelry store called the Treasure Chest (with very curly script lettering), or turning into a fish (when I was younger I didn’t quite get the species barrier), but even when college rolled around, I still had no idea. So, naturally, I majored in Chinese Language and History, and waited to see what would happen. I studied Mandarin in Beijing and interned in consulting in Shanghai and was pursuing an interest in advertising, but hadn’t completely settled on anything.

This is why in my senior year in University, when I returned from Kenya, totally ablaze with ideas about how to connect my friends to jobs in their towns, moving to Kenya wasn’t completely crazy. My mind was open and my life plans flexible enough to conspire with Christine over Facebook about going back to Kenya after graduation.

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Beatles, Friends, and Figuring it out

Let me just leave a philosophical mind dropping here – The way I see it, if I decided to attempt control over my future, it would be because I am scared to lean on others. Let’s face it – when something happens that you’re not sure how to deal with, you need to get advice. Whereas, if you control every step of the path, you know what to expect, can prepare yourself, and don’t need any faith in the goodness of others. That’s how I now deal with risk – I don’t know how to do this? Ask someone. I don’t know how to file taxes? Ask an accountant. I don’t know how to write a press release? Ask someone in PR. I don’t know how to design an investor deck? Ask another entrepreneur. (This is also why Nairobi desperately needs more experienced entrepreneurs as mentors and collaboration between startup founders – yes, we are making progress – but another story for another day)

I think that the beginning of every startup is a meeting of the minds. And you want as many minds as possible thinking about your startup idea – poking holes in it, supporting it, introducing you to more minds to poke more holes to build a higher tower. It’s like a giant game of Jenga (a game with a tower of wooden blocks where you literally remove blocs to poke holes and build a higher tower – pretty apt metaphor, patting myself on the back right now) and you kind of hope the whole time that the tower won’t fall.

For us, a team of 2 liberal arts ladies, who (obviously) launched our tech startup idea at Startup Weekend (as all liberal arts ladies do), we had 54 hours to build our tech prototype. I’m not sure our mouths were even comfortable saying “prototype” at the time…

But whatever! I get by with a little help from my friends.

Startup Weekend Success

At Startup Weekend, through sheer energy and excitement, we wound up getting a small team of computer science majors, plus mentors from what was then a very small and little-known startup, called Venmo. And we won! 3rd place.

Our room was also the best room (non-biased opinion). We had African music blasting and bags of potato chips everywhere. We even had a cheetah run across the screen on the home page and music in the background. (Listen to that song, which is apparently about prostitutes, here.)

old website

Everyone was having a huge amount of fun and was genuinely excited about building a platform that could help workers connect to jobs in Kenya.

Our Startup Weekend Team!

Our Startup Weekend Team!

Looking back, I think that collaborative attitude is what has propelled us along so far. We didn’t have technical backgrounds at the time, but we knew what we wanted to build and were confident we would have an awesome team to build it with. We were also pretty convinced that anything is possible with a bit of brain juice and team power.

Screen Shot 2015-04-14 at 2.40.16 PM We not only left with $750 from Startup Weekend, but also the small seeds of a network of DUMA supporters who would follow the company to this day (and a Kindle Fire! Thanks, Twilio!). We then went on to apply to every entrepreneurship competition school offered, plus things like the Kairos Society and Echoing Green. We even got into the Princeton eLab incubator program that summer and worked with geniuses (Holla, Eric & Luke!!) to build our minimum viable product. These networks in turn lent us credibility and paved a way for our network to grow exponentially. And we honestly couldn’t have done it without them.

Again, I get by with a little help from my friends.

One of our first website designs!

One of our first website designs!

Moving to Kenya

We flew to Kenya in September 2012, once we had raised enough money to buy round-trip plane tickets – (remember, we were college grads with close to $0 in personal savings prior to any competitions), and landed in Nakuru for 10 months – a smaller city in the Rift Valley and about 3 hours outside of Nairobi. Yes that is the same Rift Valley where the first human is said to originate.

So there you have it, ladies and gentlemen, the beginning of DUMA!

Lessons learnt? At the end of the day, if Christine and I hadn’t been open to a pretty significant change in our expected life course, DUMA might have remained a dream and we would be stuck behind desks at consulting firms wondering what could have been.

In Summary

DUMA now has an office in Nairobi, has worked with over 250 very happy clients, has matched over 2,000 people to jobs, and has received awards from Google and Rockefeller Foundation for Social Equity and Poverty Reduction! We are also now a team of 11 people, working single-mindedly to create a smarter job marketplace in Africa.

Just goes to show that the world can sometimes transpire against you and force you to succeed. Sure, you can plan for things. But most of the time, opportunities come storming through the door, knock you down, and if you’re lucky, force you to look around for other people to help you up.

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If there was any part of this post you want to talk about, or have me go into more detail about, please let me know in the comments! 🙂 And make sure to stay posted on my next post by clicking the follow button.

This was the first post of the series – stay tuned for “Friday kutwa” (the Friday after next Friday…in fake Swahili) where we will be diving deeper into one of earliest challenges – understanding the market.

Introducing Founder Fridays

This section of our blog is set up to provoke honest, insightful, and sometimes even funny conversations about the crazy awesome world of startups in Kenya. There are tons of learnings each founder has along the way, and I think it’s really important we share them – to learn from one another. The first Friday of every month, I will share a new story on this section of the blog – follow along and enjoy!

– Arielle