There are only a handful of Nigerian tech companies that have existed for over 20 years. This is owing to a number of reasons. Leading among these will be the fact that technology is volatile and are particularly hostile to innovation, especially indigenous ones.
I am often fascinated by the stories of people who have once created businesses that have withstood the unremitting politic and economic upheavals. My interest took me to Dr Yele Okeremi and the good work he has done with Precise Financial Systems in the software and payment space.
Dr Yele Okeremi is also the president of the Institute of Software Practitioners of Nigeria (ISPON). The most part of our conversation centred around lessons from his entrepreneurial journey, the need for professionalism in the practice and how the new generation of entrepreneurs can maximize their opportunities.
I hope you learn a thing or two from the excerpts:
Q: We know you started Precise Financial Systems about 25 years ago and you have been in the game that long. Do you still code?
YO: No, not at all. The last time I did that was many years ago.
Q: Starting a company in Nigeria is not so very easy due to the unique ecosystem and the way Nigerians perceive businesses in Nigeria. But how were you able to navigate and how have you been able to stay for 26years continuously long. So, how were you able to break in and how were you able to survive for that long?
YO: What I tell people interested in stories like ours which a lot of younger people may not find inspiring anymore and I will tell you is that money is good but having a vision is better. And vision trumps everything.
Because I see some young people who are much more interested in raising funds. They assume that once they are able to raise up to 5 million dollars they are good. I am not trying to criticise that but what I say is that capital is not all you need to run a business.
Traditional economy says that the factors of production are land, labour, capital and the Entrepreneur. The new economy tends to limit capital to money but those in business (and I have a doctorate in entrepreneurship so I have some bragging rights to speak from a standpoint of knowledge) but we know that capital is also emotional, capital is intellectual as much as it is financial.
If you look at the story of PFS, it is different from what people are celebrating today. We started PFS with just 8,250 Naira more than 26 years ago. We haven’t finished spending that money until today. We have spent millions of dollars just within this pandemic.
How did N8,250 become millions of dollar?
Grit is a lot more important than raising money. This means tenacity the will to just keep going. Grit means knowledge based on resilience. The fact that you can see a picture of tomorrow and that picture of tomorrow keeps you going despite the challenges of today. That is one of the things that has kept us going for more than 26 years.
There were days in our early days where we didn’t know how we would open our shop the next day but faith and the understanding that there is a better future for us kept us going. And that’s what I will like to see in the new generation.
I say this without apologies, we are giving our wealth to foreigners with these investments. As long as these investments are not internal, what we are actually doing is building a colony. And so I say to people if you can, internalise your wealth, keep building, after a while you will be able to raise money.
That is the way I feel about it.
Q: Some of the reasons young founders have given is that you need to scale fast, hence, funding. How were you able to scale with just N8,250?
YO: There is a theory called the resource-based theory. It is a theory that says the more resources available to a firm the better the firm is likely to perform. But that logic falls on its face.
Because you have raised 5 million dollars, you think you are better positioned to compete with a company that has 300 million or 5 billion dollars. The question is how prepared are you? What is the difference between your 5million dollars and zero dollar when you are dealing with someone that has the war chest of 3 billion dollars?
If you look at the scriptures, David would never have defeated Goliath using Goliath’s technique. Because if you remember when David was going to battle, the king offered him his personal amour. Which is equivalent to let me raise 2 or 5 million dollars to compete with somebody that has a war chest of 3 billion. But David turned it down and used a strategy he has tested and proven. You know how the story ended.
The thing is that people have not understood the importance of strategy. The only way to compete with them is to position yourself as somebody that has an understanding of the local market. Rather than compete on the same turf because you can never win.
And that explains many typical situations where our people have raised money and yet they couldn’t stay long. And you will see many companies that have existed for more than 10 to 15 years and yet have never raised money. That is because they understand the game.
Therefore, I say if you are going to succeed you need to have a different strategy and that is what PFS does all the time. You can’t compete with us. It doesn’t matter how big you are because you don’t have what we have.
Q: Share with us some instances where you have used the David and Goliath strategy.
You would probably know PFS has developed and is maintaining the national Automated Clearing System (ACH). That is the clearing system in Nigeria for automated clearinghouses. How do you think we got that kind of project?
There are about 6 to 7 renowned companies in the world that own this niche before us and one of them was in the works for handling it for Nigeria. How do you think we changed the game? It’s the David and Goliath strategy!
The first thing we did was that we didn’t keep our eyes on the lofty things. We knew that if we went to the big banks at that time they wouldn’t even listen to us. Prior to that, we have been called all manner of names: by-night operator, one-man shop etc. And, that was good for us. Because they are not aware of our backend structures they underestimated us.
We saw that the way the international companies (all of them without exception) had approached the problem is in the same manner. They were looking at documentation management. But we said no, this is not a documentation management problem it is an operations challenge.
What did we do? We designed a simple application that will allow bank staff to be able to close by 5 pm. The solutions by the bigger guys made them almost run for 24 hours a day and 7 days a week.
How do you think the market first received the solution?
They were laughing at us. They called us an insignificant company dealing with an insignificant bank. But these insignificant banks were getting better results after a while because they approached the problem differently. So after the solution was getting recognised, I began to speak publicly about it, I began to challenge the big guys.
We couldn’t fight them on the terrain of document management but we can talk about value creation and invited the banks to come and see what delivers more value. The first thing that happened was that when the central bank wanted to do a check of their operation, they ran into a challenge. They had to call us.
Remember we are a small company, we are agile. Remember we are a local company, we understood the requirements. Also, remember we invested a lot of money in knowledge acquisition. Just like the Titanic, the big players could not easily manoeuvre.
Young people need to learn the art of patience. Don’t try to come in at the top, learn to come in as underdogs.
And actually people have not understood the real meaning of disruptive technology. A lot of young people talk about disruptive technologies. Go and read about it. It is usually technology that is underestimated.
It is not about money. It is about wisdom. It is about resilience. It is about continued development, ensuring that every day you learn something new and contribute something new. That way, I guarantee your survival and a bright future.
Q: A look at software engineering practitioners in Nigeria, why do we have that gap between the young and the old generation? And what should be the way forward to have a proper mentoring system?
Thank you, David. People don’t realize that we shoot ourselves in the foot because what I know is that a child that sits on the shoulder of the parent sees further than the child on the ground.
I’ve seen people deliberately misinforming people. I belong to a WhatsApp forum where some young boys say things that I laugh at because it’s not their fault. It is the kind of confusion we all found ourselves in.
I have heard people say that until we had the IDEA hub and CCHub there was no innovation in Nigeria and I say that is nonsense. They forget that before what we call the Yaba cluster there were Surulere. That was where everybody went to at that time.
It is in everybody’s nature to think much about themselves when they get big. There were people that were before me and I still look up to them till today. I still pay tribute to them and recognise them. But it is ok if the younger folks are saying that they invented this and that. But, I am not interested in joining issues with anybody.
So because you have raised 10 million dollars you now assume that you are successful. That is not the meaning of success. How long has your company been around for? I am not trying to deride anybody. But for anybody to assume that they brought Nigeria to life is a lie. There are many innovative companies that have been before.
When Dr Omobola Johnson was the Honourable Minister for Communication, she came up with this startup ecosystem idea and I worked with her. She invited me to be the chairman of Demo Africa for the 2 years Nigeria hosted it. And Demo-Africa brought a lot of these young kids into the limelight.
And I remember when I was giving the address I gave a note of caution. Incidentally, that is what is playing out now. I said to the smart Nigerians that have scaled through who are now going to pitch for investors that they should remember this Africa on whose sweat and blood that you are standing on when they suddenly become rich.
What I see now is that a good number of them have not even become rich at all, they are deriding the source, the platform on which they stand.
Nollywood perhaps has more sense than we have. There was a time some people came up with the concept of the old Nollywood and the new Nollywood and the people who were wise among them said ‘what do you mean by that?’ There is nothing like the old or new Nollywood.
Or will Jay Okocha say that he began football in Nigeria because he played abroad and earned more dollars than Segun Odegbami? Or will Enyeama say he is greater than Patrick Okala? We should be able to generate and keep our wealth and not become appendages to other countries.
That is the way I feel about it. That is where I stand.
Q: We heard people were rejected by Institute of Safety Professionals of Nigeria (ISPON) because they did not study computer engineering in school before becoming software engineers. How true is that?
Like I said if you want to hide something from a black man, write it in a book. Because they don’t read. It shows how people did not even study and yet they come into conclusion.
I am the president of ISPON. Yesterday, we had a webinar and one of the speakers on that forum, a young Nigerian I am very proud of, doesn’t have a degree in Computer Science and he is a member of ISPON. He is going to get elected into the council.
There are people in council in ISPON who didn’t study computer science. We understand it and we say the institute is about people who derive and create value from software engineering.
First of all, let’s look at the history of regulations. People are talking about CPM. What CPM is saying is that they want to have a register of professionals. The question is can you fly an aeroplane without being a pilot? Can you run a clinic without being a doctor? Without registering?
I have seen a lot of shallow conversations. They think computer science is about programming. It shows to me that they don’t even understand it. People need to know the difference between being a technician and being a professional. And that’s the honest truth.
The technicians know what they do. Some of them even know how to do what they do very well but they don’t understand why what is what. And, when you change the dynamics, they are unable to function appropriately. So, what we go to do in college is to understand the essence, the basics of computing and that is what actually makes you a professional.
However, we understand the field is an octopus today. People have smart ideas. You might be an investor but what we are saying is let’s even maintain a register to know who is where.
Q: Please share with us some of PFS’ exciting future ideas
When you’ve run a company for more than 25 years, your expectations need to be recalibrated. I want to be remembered when I am no longer alive as a man who has invested in people.
And one of the things I said to myself and my partner when we started is that this company is not about making money. We will make enough money by the way. We have done that by building the very best people. I feel excited when I see people tell me: “I am so and so. I did my internship at PFS. I am the Vice-President Software at so and so”.
I want a company that will live forever. I want to see men and women who will carry that torch and make this race proud. I want to see men and women who make it clear abundantly that we will only come to the table with anybody as equals.
That is what I stand for.
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