#46 What's in Store for 2022

Looking back on my personal journey last year and an update on 2022

Hi all - This is the 46th edition of Frontier Fintech. A big thanks to my regular readers and subscribers. To those who are yet to subscribe, hit the subscribe button below and share with your colleagues and friends. 🚀

Why I started Frontier Fintech

2021 was the breakout year for Frontier Fintech, when I started writing it back in January 2021, little did I know the impact I’d have on the Fintech scene not only in Africa but across the world. Back in November 2020, it dawned on me that I needed to make a strategic change in my life and that I needed to figure out what I should do next. Around that time, I used to spend some evenings putting my daughter to sleep and I’d always listen to podcasts as I did this. One of the podcasts that I really used to enjoy a lot was “The Tim Ferriss Show”. On this specific podcast, Tim Ferriss was interviewing Naval Ravikant on a range of topics including happiness, crypto, anxiety amongst many others. 

I really enjoyed that show and dug deeper into Naval’s thoughts by reading all his tweets and reading all about him. One tweet that stuck with me was his famous tweet storm back in 2018 that started with the line “How to Get Rich (without getting lucky)”

Naval @naval

How to Get Rich (without getting lucky):

In the tweet, which must be consumed after listening to the podcast interview, he talks about how the world has changed and how the internet has created an infinite space of new possibilities and careers. To maximise on the opportunities, the following were the recommendations that shaped my thinking;

1. Pick an industry where you can play long term games with long term people;

2. Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest;

3. Arm yourself with specific knowledge, accountability, and leverage;

4. Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now. Building specific knowledge will feel like play to you but will look like work to others;

5. Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage. The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon;

6. “Give me a lever long enough, and a place to stand, and I will move the earth.” - Archimedes. Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).

7. Code and media are permissionless leverage. They're the leverage behind the newly rich. You can create software and media that works for you while you sleep. If you can't code, write books and blogs, record videos and podcasts.

8. Leverage is a force multiplier for your judgement.

Armed with the above principles, how could I leverage them to create an opportunity set for the 21st century? I needed to pick an industry where I can play long-term games with long-term people. I also needed specific knowledge that was driven by a genuine curiosity and passion. I had to embrace accountability by embracing the vulnerability that comes when you put yourself out there and I had to leverage media since I can’t code.

When I thought about all these. It struck me that given all the changes that are being driven by technology, it was important that I play in the “technology” industry. This included focusing on themes such as start-ups, VC, Big Data, Digital Transformation and sector specific analyses of how technology is reshaping business. With regards to specific knowledge, I had a lot of knowledge around finance, fintech and economics that was borne out of genuine curiosity and passion. Additionally, I had proven myself as a good writer before. In fact, 10 years ago, back in 2012 I wrote a segment for the Business Daily newspaper in Kenya. 

All these factors led me to the conclusion that a newsletter talking about Fintech with my face and name on it would match all the criteria that Naval had pointed out. I spoke to a few friends about it and everyone encouraged me to go ahead.

Looking back, it’s one of the best decisions I’ve ever made.

The Journey

My first article was around Open Banking in Kenya. The timing was strategic because I wanted it to coincide with the ongoing debate at the time on Open Banking that was instigated by the Central Bank of Kenya issuing their Payments Strategy document. Immediately, it became viral within at least the Kenyan banking and fintech community and I Immediately got a bump. That raised my spirits and encouraged me to keep going. I was even interviewed by local Kenyan TV at the time after my childhood friend Julians Amboko featured me. Some high profile personalities in the Kenyan banking space also reached out and this was exactly the confidence boost I needed.

The next few weeks were the exact opposite. I felt like I was writing to myself and only a few subscribers, mostly family members. However, compounding feels like that at the beginning and only consistency matters. I knew that there would be great weeks and mediocre weeks in terms of traction but the key was consistency. 

From the start, I made some very critical editorial decisions.

1. I would focus on high quality deep dives that needed focus and attention to read. I was doing this partly for myself so that I can get be able to learn better but also, to curate a premium product and not a tabloid;

2. I’d maintain a weekly cadence and ensure that the newsletter was sent out every Monday morning at 06:00hrs EAT;

3. I’d focus strictly on Fintech and it’s associated vectors only veering into other industries if the industry dynamics touched on Fintech elements;

Slowly by slowly my readership grew and I settled into a productive routine where I could be both productive at work whilst ensuring that I got time to do the newsletter. Additionally, a ton of emails started streaming in from people who read my newsletter. I grew my network exponentially and started moving around spaces that I didn’t even know existed. Global VCs would reach out to have calls on the African fintech space and serendipitously, African Fintech was the hottest property on the market. I could see myself starting to play long-term games with long-term people.

Overtime, I seem to have inspired many people. Founders have reached out telling me how they have discovered PMF after reading my articles. VCs have gotten to understand their target investees much better and most importantly, a number of VCs have developed nuanced understanding of the continent. Importantly for me, a number of individuals have been inspired to either make career changes, start their own podcasts or newsletters and start their own companies. This has been my biggest achievement in 2021.

Most Successful Articles;

The most successful articles measured by engagement both on the newsletter and offline were;

1. #17 on Core Banking Platforms - This was by far the most popular newsletter where I delved into the core banking system industry highlighting its history, current structure and future iterations. Core Banking Platforms decisions are some of the biggest decisions bank leaders are having to make. Recent decisions by JP Morgan to partner with the Thought Machine for its US Retail business shows that banks are slowly coming to the realisation that cloud native solutions are critical in driving true transformation;

2. #44 B2B Payment Operations - This article focused on the B2B segment that doesn’t get as much attention as B2C. In the article, I wrote about the key pain points business face, how payment ops are structured across most companies and what are the main companies in this area. In the time since I’ve written the article, I’ve come across many other companies that are doing great work in this space. One of the realisations that I’ve made is that B2B innovation will be the main beneficiary of open banking in Africa;

3. #34 Will we be Wave-ing Goodbye to Telco Led Mobile Money - Mobile money has been very successful in Africa but over time, most deployments have developed monopoly like characteristics such as high tariffs. Wave is seeking to change this by rebuilding mobile money from scratch outside of a traditional telco structure. So far, Wave has been extremely successful culminating in a US$ 200 million Series A that made Wave a Unicorn. The funds have been used for expansion and currently, Wave are in Uganda executing impressively. Wave in my view is one of the companies to watch over the next decade. It’s a case where if they do manage to execute their vision, given current valuations, it could easily be a decacorn in 5 years time;

4. #45 My Fintech Wishlist for 2022 - Based on the lessons I learned from writing the newsletter for the whole of 2021, I developed a wishlist of things I’d like to see in 2022. These were mainly around crypto and De-Fi finding product market fit in the continent, open banking regulations being developed and implemented, more pro-active regulation rather than a reactive regulatory climate and the maturing of embedded finance models;

5. #40 Cross Border Payments - In this article, I delved into a number of considerations around cross border payments in Africa ranging from illiquid currency pairs, expensive payment rails to broken UX for a number of payments. One of the key points I made that was echoed later in this podcast where Justin Norman interviews Dare Okoudjou is that cross-border trade is a key driver for payments modernisation rather than the usual focus on remittances.

Frontier Fintech in 2022 and Beyond

First a general life update. I decided to join Sote from January of this year and I’ve moved back to Nairobi. I’m joining Sote as the Director of Fintech and Financial Services where I’ll be leading the efforts to embed finance into the trade platform.

Sote is a licensed clearing and forwarding agent in Kenya offering a comprehensive logistics solution to cargo movers in Kenya. Sote’s grand ambition comes from the insight that trade plays a key role in economic growth. This insight is almost indisputable. If a country can trade more, its economy will grow. Enabling Africans to trade through the provision of affordable, digital and reliable trade infrastructure can over the long-term enable Africans to grow. Starting with clearing cargo and booking freight, Sote intends to build a Pan-African trade and logistics solution that in my view can lower the barriers to becoming a big trader in Africa.

I joined Sote after speaking to the founder Felix Orwa and doing my own research. Some of the key determinants for me were;

1. The biggest opportunities in Africa will revolve around giving people the opportunity to grow their income. In Europe and USA, consumer fintechs that focus on spend and investment management do well in my view because consumption is a major contributor to GDP. In essence, people have money to spend. Fintech that solves the other side of the equation i.e. earnings could do well in Africa;

2. In my experience as a banker, creating visibility in the trade and supply chain can unlock significant opportunities for financiers. Having an insight into this is one thing, it will be interesting to be at the forefront and try to fix this. Hopefully problems such as asymmetric information and moral hazard can be solved through reliable trade data;

3. Trade and trade related issues such as customs brokerage, freight forwarding and clearing suffer from extreme schlep blindness. Schlep blindness is a term coined by Paul Graham that describes how people willingly ignore or avoid opportunities that seem too difficult to execute. Paul Graham describes it below;

The most striking example I know of schlep blindness is Stripe, or rather Stripe's idea. For over a decade, every hacker who'd ever had to process payments online knew how painful the experience was. Thousands of people must have known about this problem. And yet when they started startups, they decided to build recipe sites, or aggregators for local events. Why? Why work on problems few care much about and no one will pay for, when you could fix one of the most important components of the world's infrastructure? Because schlep blindness prevented people from even considering the idea of fixing payments.

Customs brokerage, clearing and forwarding and all the related issues particularly in Africa are schlep. Surprisingly even large companies that have traded for decades in this continent consider these areas to be tedious. For me, if this can be abstracted, then there could be an opportunity;

4. Amongst most players in the sector particularly tech-start ups, Sote was actually clearing cargo and thus had direct relationships with cargo owners.

5. I also had a personal preference to move back to Kenya and work in a start-up. I wanted something new and challenging and mostly to be operational. I like day to day ops.

It will make for an interesting 2022, I ask that you help me out with intros and connections that may be useful for me and if you’re moving cargo into Kenya, please give me a call.

To this end, my writing schedule will have to change. I will not maintain the weekly cadence that I had in 2022 nonetheless I will continue to write. Critical for me is to maintain quality standards and dive deep into whatever I’m talking about. This will mean sacrificing cadence. I may shift to a fortnightly writing schedule and sometimes I may not write at all although I’ll strive to ensure that this is not the case.

I thank all the readers and subscribers for making my 2021 so successful and I hope we can all win in 2022.