TWEKOBE: THE STORY OF A PROPTECH STARTUP (PART 2 OF 3) By Jonathan Ntege Lubwama with edits and inputs by Digest Africa Team

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In Part 1, I started a proptech startup in Uganda in November 2018 targeting coliving with a view to get revenue as a cut off rental fees but quickly realised all the trust and pitfalls with coliving. The market seemed to be demanding for a technology assisted real estate agent to more efficiently source properties for rent but with low entry barriers (everyone is a real estate agent). Beta product with zero revenue 6 months from Day 1.

 Search for a product market fit, navigating the COVID19 pandemic

In August 2019, we were joined by co-founder 2, Emmanuel Odelle. He had been working on a startup similar to Twekobe and he figured it would be better if we joined forces. He cold called me one day and asked for a meeting. A few minutes in, I knew he had “it”. You know that “it”. You can’t explain “it”, but you can tell that someone has “it”. And that was “it”. It turned out to be a smart decision. 

We spent the rest of 2019 brainstorming how we would eventually make money. We were living stone broke, spending any and all the money we could find on Facebook Ads mainly. I unrealistically, and in hindsight naively, tried to raise money from various sources, but who would want to touch a startup without consistent revenue or validation of a revenue model? 

At that moment, we were so focused on being a technology company. I could not bear the thought of us becoming a traditional real estate agency just to ensure our survival. I hated survival. I wanted to thrive (imagine the irony!). I always thought of myself and was in love with the idea of a very ‘innovative entrepreneur’, and now to become a traditional real estate agency like everyone else? No way! I was an extremist when it came to startups. I was never willing to compromise even if it was the logical thing to do. 

We ambled through 2019.

2020 started on a bright note. We managed to get $5,000 (UGX 18 million) in seed capital in February from an Entrepreneurship Program as part of its 2019 cohort. For the first time, I felt like we had the resources to execute how and what we wanted. We immediately rented a 2 bedroom house and camped there with two coders that we hired. From the onset of the covid19 lockdown, announced March 18 in Uganda, we spent the entire lockdown with our coders building an app. 

The Fight of Our Lives

You know one of the most famous commencement speeches was delivered by Steve Jobs to Stanford University and he talked about how you can only connect the dots backwards. I did. 

We ignored conventional wisdom and threw logic out of the window. We had one job. To build something simple like an app where people could find the agents, contact them and move on. But guess what we did? 

We built a highly complex app that no one could use without our direction. You had to book a tour, then the agent on the other side confirms the tour, then you pay the tour fee using mobile money. The agent receives his cut and we get our cut. After that, you get the contact of the agent. When the agent & client meet, the client was supposed to scan a QR Code on the Agent’s app so that the tour can officially start. You should have seen our faces when we tested and refined this process. We were so excited. This work took us over 3 months. With amateur, highly inexperienced and fresh out of school coders. 

But all people wanted to do was get on the app, and contact an agent. Not book a tour then wait for confirmation. In most cases, the confirmation never came. And for cashless, people just weren’t willing to do that. I remember a meeting we had with Maxime Deudonne post total lockdown, and he told us it was important to keep the app simple and not to deviate so much from the offline model, at least for the start. But we wanted to believe we were special. 

After realizing our gross error, we started rebuilding the app backwards. Removing feature after feature to slim it down and simplify it. The costs of building app from scratch are unbelievable. I didn’t know it then, but I know it now. The time it takes, is also mind boggling. Now for many people, $5,000(shs 18m) might be good money, but in the startup world, it’s just honestly not good enough. Especially when we were burning through it to build an app, which we rebuilt about 3 times in total. What was supposed to take 3 months, ended up taking 9 months. We were not making enough money. We were burning through cash. Our runway was edging closer and closer.

One time, I read a pitch deck of a certain startup. They needed funding and their budget for app development was about $10,000. I thought they were crazy. Only until I was building one from scratch did I realize just how much resources are required to build an app from scratch. 

More Pivots

We changed our business model multiple times. First, we wanted to get a cut of the tour fee. This failed because our agents weren’t willing to pay us our share, and cashless just wasn’t cutting it. Then we had a business model where we had to force clients to pay us shs 5,000 ($1.40) for a connection to a verified agent. This too failed to pick up steam. 

And then we realized that we will have to run our proptech just like other proptechs. We had to provide value for our agents so that we could charge them a monthly subscription. For the agents to be willing to do this, we had to ensure that they get clients almost everyday. This required a hefty investment in advertising for a long time, without the prospect of revenue. Waive the subscription fee so that you can attract more agents. But we needed revenue to finance such an operation. It was like a chicken & egg question of who came first. 

The Roadblock of Agents

We also faced problems dealing with agents. Everyone in Uganda is a broker. A boda guy, a shop owner, area LC1 chairman, basically everyone. There is no regulatory authority when it comes to agents, at least one that is effective. Most of these people are not even tech savvy. We could teach them how to use the app multiple times. They couldn’t get it. It was like asking a blind man for a description of a peacock. If we couldn’t partner with these agents long term, what was going to be our way out? 

I always believed in making bold moves. Even when a bold move leads nowhere, I believe in making an even bolder move to fix the errors of the first bold move. So I told the team that we were going to set up our own Twekobe Agent Academy. 

We were going to train our own real estate agents, young & tech savvy agents. We put out ads on our Facebook, Twitter & Instagram and got many applicants. We taught them online through videos and PDFs.(Large gatherings were illegal). A good number signed up on our app. But many posted houses in the first few weeks, and then quit. Most of these were idle university students who were home due to COVID lockdowns. We wanted them to be agents in their neighborhoods. 

They wanted to make quick cash. There is nothing like quick cash in real estate in the middle of a pandemic. 

You Cannot Run A Race You Didn't Train For

The gravest error we made with Twekobe was thinking it was an 800m race, not a 42km marathon. We were very ill equipped to survive for the long term. This was true even in our marketing campaigns. I was a huge fan of Blitzkrieg, which is German for lightning fast! We wanted to throw a lot of cash via advertising for a few weeks in the hope that it could be enough to make our app go viral. 

But when you are in the marketplace, you realize that you need to consistently advertise. Instead of spending shs 1m($300) on ads in one week, it’s better to spend just shs 350,000($100) a month for 3 months. But at this point, we had put all our chips in one go. We had over 15 Twitter influencers marketing our app. We did trend, but it didn’t necessarily translate into users or revenue. 

We were still struggling to figure out the exact revenue model. For some reason, this eluded us 2 and a half years later. The only model that made sense to us at the end was a subscription model for agents, but this needed a very long runaway of cash. We didn’t have those resources. The COVID pandemic and its lockdowns weren’t  helping our cause either. 

COVID 19 Pandemic

You can never prepare for a pandemic, can you? It beat up the biggest of companies in the world, so what about a 7 team startup? Well, it didn’t beat us up, it decimated us. 

For the first three months, the three founders were in different locations and our only way of communication was Zoom and phone calls. We were building an app where everyone had to come up with input. It put a strain on our communication. We had to do some things without consensus. 

We had a team of 4 coders. On the eve of starting the work, two jumped ship and went home upcountry to spend the lockdown with their families. The other two had to do the work of four. And we had to host them in our 2 bedroom house. We had to take turns sleeping because we didn’t have enough beddings. 

But staying together also made us enjoy the happy moments of startup building. A closely knit team. We enjoyed the thrills of near fatal coding mistakes and solving them instantly. We enjoyed the flexibility of working in vests and boxers while blasting music on the TV and binging Netflix on Sundays when everyone needed a rest. We spent Easter together and cooked a heavy meal. This was impressive for an All male team. 

The coders worked throughout the night because that was when we could afford a lot of data. Thank you MTN for that GAGA Bundle of 4GB at shs 5,000 ($1.40) that ran from midnight up to 10:00 AM on weekdays. You are truly “Everywhere You Go”. We also used a lot of Africell data on weekends. 7 GB at shs 6,500 ($ 1.70) was an absolute steal. On weekdays, the coders would go to bed at 10:00 AM then the rest would wake up. 

But the effects of COVID were more felt in the market. We had almost 3 months of being home. People ate up all their savings and rent wasn’t really a priority. Our business survived on people changing houses. In that time, no one was really shifting. Everyone was busy cutting deals with their landlords on the payment terms. If you visit downtown, go to the third floors of buildings. They are empty. The effects are still being felt. The agents that we had were struggling to get clients, and it was even much harder to close a deal when a client had to pay 3 months upfront. 

There was still a lot of experimentation that we needed to do on our side. At the back of my mind, I knew that we would figure it out. But the bigger question was; “Would we be alive when that day came?” 

In part 3, we will explore that question and my biggest take away from this 3 year journey.

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