2018 has been a wonderful year for Kevin Lubega, the Group General Manager at Ezeemoney. Not only was he named among the Forbes Under 30 for Africa, he was selected among the 200 Obama Emerging Leaders and won himself a scholarship to do an MBA at Stanford Graduate School of Business.
I had a sit down with him and we explored how he started Ezeemoney and EasyTicket, what he thinks has propelled him to these achievements and what they mean for him as well as his ventures at large. Enjoy.
Malinz: So Ezeemoney, 2012 right?
Kevin Lubega: Yes! So we registered in 2012 and started doing the groundwork about July and then officially launched in 2013 January.
And what did you launch as? As the company you are today?
It was a very different company then. Initially what we were targeting was to empower the population that did not have mobile phones. It was mobile money at the time and people could send money to each other.
At the time I believe there was about 30% of the population with phones. So we were thinking, ‘the other 70% how do they get their money?’.
So we came up with a solution, very similar to Western Union, where you can transfer money between people and they can receive it whether they have a phone or not. But now we are primarily focused on payments and extending financial access through agents.
Did you begin as one person or a group?
Right now we are 5 shareholders and we started that way. There are some Ugandans, a Kenyan, a Tanzanian guy and a Malaysian.
So the five, was it financial pool or different resources brought together?
A bit of both. For example, the guy from Malaysia owns a company that is providing our system so we outsourced the technology function. It's called mobile money international.
They were doing this for about 7 years before we started.
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So we thought it does not make sense to reinvent the wheel. We might as well partner with someone who has the existing knowledge who can be able to help us scale. And so we found this guy in Malaysia. He had a great system and the partnership has been great so far.
The company has also helped us with the expansion. It's not as expensive as this guy knows the part of the business and so we are working together to grow the company.
How many countries are you in currently? And, what is your market entry strategy?
We have managed to grow to another 5 countries. The model is that every country we go into, we find a local partner who understands the market, preferably someone whose business involves a distribution network or someone in Mobile money.
The reason we do that is that these people understand what it takes to build an agent distribution, and also to maintain it.
We also thought it does not make sense for us to go into a new market and think Ugandans can entirely run the show. We wouldn't have a clue what to do there. And so we try to partner with people who have that local knowledge.
Did you have any prior experience of running a business before Ezeemoney?
Yes and No. We started Ezeemoney about a year after I graduated. For the first few months from when I moved back home, I worked with Comtel Integrators Africa doing IT consultancy.
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I had also started a company, again with some of my EasyTicket partners. That failed miserably. So I guess I was gaining experience of what you should not be doing.
When did you start EasyTicket?
We started EasyTicket and Ezee money at the same time.
So is there a coincidence in directors apart from you being on board?
No. I’m the only common factor in the two companies. The rest are all independent.
But, do the two companies crisscross anywhere?
Not in the past. We are just starting to try and create those synergies. So EasyTicket, for example, we sell tickets online. What we are trying to do now is to use EzeeMoney’s distribution to sell those tickets.
So far we have done the technical work and piloted the solution. Fully operationalizing the concept is all that is left. EzeeMoney has about 3000 agents across the country. We are trying to see how EasyTicket can leverage that distribution to create more points for our event owners to vend their tickets.
You had a partnership with Quicket, is it still running?
Yes, it is. So we got this partnership in 2016. We were looking out for a system at that time and tried to reach out to already existing players on the continent but everyone was quoting a figure of over $100,000, an amount that we didn't have.
When we had just started, we thought it did not make sense to spend much money on systems—we didn’t have the money to spend anyway. We ended up developing our own internal system.
Funny enough, we had already contacted Quicket when we had just started as well, but they were also a fairly young company at the time and they were still making their mark on the South African market.
So in 2016, they emailed my partner John. And I think our old system had run its course and for us to expand we needed something a lot more versatile. The partnership with Quicket made a lot of sense. So they brought in a new online system which is working perfectly.
But also they helped us now expand into the physical ticketing aspect. Right now we actually print tickets and distribute them. These tickets come with security features like barcodes and holograms and we also have a means to validate all tickets that are sold through our platform.
I have seen the branding change over time. Now it is more of Quicket than Easy Ticket. Did you get an equity stake in Quicket?
No. We thought it made sense to have a uniform brand across the continent. So we are working with Quicket to expand that brand on this side of the continent. We are already doing so in places like Rwanda as they are working on expanding into other Southern African markets.
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But for us, together, it makes sense to put one brand as opposed to two and yet we are in a partnership. Easyticket now has other business lines, and so we decided to separate the ticketing function (Quicket) with those new businesses.
And both ventures, what was the range of capital that you guys started off with?
EasyTicket wasn't that much initially. So we came up with a few thousand dollars in the first few months. I think slightly under $10,000 for the first few months to do the system. We didn't hire anyone. It was just the directors working and we had free space here [at Ezeemoney] to use so we didn't pay rent. But all the time we have kept increasing the capital.
Ezeemoney started differently so we raised about $3million to start in Uganda, Kenya, and Tanzania. And since then, we intentionally haven't raised any more capital.
Was that external factor or internal?
Shareholders still. So we haven't looked to raise external capital yet. But it is something we are thinking about. We haven't made that decision just yet. We think in order to scale faster, it might make sense to raise more capital.
And in your space as Ezeemoney, who is your direct competitor? Is it the Telecoms or the banks?
It’s not the telcos or the banks for that matter. We work with both. I think the direct competitor would be someone like PayWay. They are providing a very similar service although we have very distinct offerings.
Payway, for example, has the Kiosks, that they put in high traffic areas. That's not our model. We only extend our service through agents. We put people in high traffic residential or commercial areas and 65% of our agents are in urban areas. The telcos and banks are therefore not really our competition.
It's actually shocking because when we started we had a very big fight with MTN over the same issue. They said we were competing and yet in our mind, we were not. I suppose that feeds into the initial product offering that we were trying to give in money transfer. So you could see how they could interpret that as us trying to directly compete with them.
But it wasn't in our interest to compete with the telcos. We identified areas where we could have collaborations and we thought that would be a good place to play.
But has that affected your relationship with MTN since then?
We don't work directly with MTN. They stopped providing their service in 2014 I think. We haven't worked directly with them since.
But do you foresee any future partnerships between the two?
We are willing to work together. The case is still in court because they appealed the initial ruling. Once it is dispensed off and the people at MTN are willing to work with us, we are ready.
Right now, where would you put your team sizes?
EzeeMoney in Uganda specifically, we are about 45 people but close to about 80 in all the countries. The agents in Uganda are about 3000 and across the region close to 8,000.
EasyTicket is a much smaller operation and I also took a little step back from EasyTicket as well because of the demands at EzeeMoney. But we directly employ about 4 people as the permanent staff, and then for each event, we have temporary staff who help us run the operations. That team can be as big as 20.
Are your financials publicly available or confidential?
For Ezeemoney yes. We are turning over about $50 million annually.
Yes. Slightly profitable but still growing. And it has been very organic growth. So you will get a month on month growth of maybe 7-10%, which is not bad.
But right now, what is your main focus, is it growth or profitability?
It's growth. Profitability will come. We are carrying our costs now, so we are finding that we just need to keep increasing our distribution, increasing our service offering and growth in more countries. Then profitability will come.
When you talk about more countries, do you look to cross to Southern Africa or West Africa?
Both. We already have Mozambique and Zimbabwe and are looking to do Zambia. West Africa is an appealing market. I am currently engaging someone in Cote d'Ivoire, so that could be a possibility. Though we haven't really found the right partners in countries like Nigeria or Ghana, or North Africa. But we are looking to do that expansion.
There are very few Ugandan companies that have scaled and done it well. What are the main challenges with scaling?
Even before scaling, the main challenge I have seen in Uganda affecting many companies is mathematics. People do not do the right calculations. Let me give you an example; if I am pricing a product, I have seen many companies here that will just pick a number and say ‘I will charge ten thousand shillings’. Which is not how it should be.
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And so you get to a year or 2 years down the line and realize that ‘you know what, it will cost me twice this amount just to develop this product’. That's really one of the biggest problems. And you can't scale without having a right pricing model.
The other one I believe is people or companies seem to be pushing out products that are not scaling. And you can't build a company like that. So many companies struggle to find products that can easily scale or products that are solving huge problems as opposed to individual customer problems.
In a world of external funding, how can one still achieve organic growth?
Yes, definitely. Though, right now, I don't think it's as sustainable anymore to have just an organic growth when all your competitors are raising ridiculous amounts of money. But also, capital gives you a lot more flexibility to experiment with your innovations.
When you don’t have a lot of money, you’ll end up being very risk-averse with whatever you are going to do because you want to be sure it will bring you a return. But there are other things you need to do in order to grow your business. You need to experiment with different new products for you to be able to identify what might work and what might not, for example.
So, I think there is a need for external capital. The problem I see in Uganda and many African countries is companies are not prepared to receive that capital. Many won’t have audited books, some won’t want to give up a lot of equity, other have a board but it is only comprised of the people who are running the company.
An investor might not be willing to put money in a company where managers are the exact people on the board, auditing yourselves so to speak. I believe having a few independent and highly competent people on your board can go a long way.
What do you think it took to you to be part of the Forbes list?
So in the back end, I have been doing too much to try and get to that level of Forbes. It has taken 7 years to get there. So 7 years of failing, iterating and trying to build the business. It has not been overnight for sure. I told you before, I had a failed company. We have been doubling down and continuously experimenting at EasyTicket for the last 6 or so years.
I have failed sometimes and succeeded others. So it has been quite a journey to get here. I think there have been a lot of sacrifices to do that, both professionally and personally as well.
What impact do you think Forbes will have on you and your businesses?
I am yet to predict the long-term impact that Forbes is going to have on my businesses. But, already, I am seeing people getting a lot of interest in my companies. Some are trying to see how we can have collaborations together but it’s still very early days. It has just been about a month. But I am eager to see what we can get [out of this].
You hinted at the fact that you may be considering external funding as a company. Do you think Forbes might accelerate that?
I hope so. I have noticed that many companies that have raised funds in the region seem to have a connection to the countries where the funding is coming from. For example, the directors went to school there, or they worked there for a bit, and venture capital is a very network-based industry.
So it will depend on who you know. But also, its based a lot on credibility. So I hope this publicity will give me the credibility so when I go to raise capital, people will know that I am half serious at least.
But then you have enrolled for the Stanford Business School. And that's the center for Venture capital. Do you think it will also accelerate that process?
Well, that is one of the reasons I chose to go there. One because Silicon Valley is a tech hub but also a lot of the Venture Capitalists are based right outside Stanford on Sand Hill Road. So building those networks will be super important.
And I believe many of them might have reservations about investing in Africa, I think because they don't know much about the region. But also there might be a trust issue. How do I get in there? Who do I speak to?