How to Build a $200m Tech Company in 5 Years – Paystack’s Template
A giant Tech company in the United States, Stripe by name, recently acquired another Nigeria-based Tech company, Paystack for more than $200 Million – and this is currently the talk of the town in Nigeria. Paystack is one of Nigeria’s largest payments startups, processing nearly 20% of all online transactions in Africa’s largest economy. Paystack as a Nigeria based online payment processing company that prides itself as a growth engine for modern businesses in Africa. Paystack builds technology to help Africa’s best businesses grow – from new startups to market leaders launching new business models. Their goal is to make it easy for businesses to accept secure payments from multiple local and global payment channels and then provide tools to help businesses retain existing customers while acquiring new ones. As a business entity, Paystack is inspired by a vision of millions of exceptional businesses across the continent who’re profitable, envied, and loved. Paystack believes that while it exists, businesses in Africa will routinely go toe to toe with the best companies on the planet, and win.
When Stripe invested in Paystack a few years ago, many noted that it was certainly a way to understand the market. Now, Stripe has understood well enough and now wants to buy out the whole company, making Paystack co-founders overnight billionaires in Nigeria. Yes, I know you are speechless – as much as I do. I mean, I have never seen this type of transaction before in Nigeria. Their multiples are better than anything in the history of Nigeria including Interswitch, Andela, Jumia, etc. – and so many giant companies and corporations in Nigeria are barely worth as much as what Paystack’s value now is, especially when you look at the time it took them to build the company into such a net worth. Yes, from Andela to Jumia, etc. you are talking of truckloads of cash that have been pumped into those giant companies, so to say. But these two boys used largely nothing to create this type of value, in just five years! Paystack’s financial velocity ratio is amazing. Yes, with only 60,000 customers, not millions of them! How can anyone explain that some reputable giant companies in Nigeria, including some banks – after over 15 years of operation and network of branches, millions of customers, several thousands of staff all over the country, and myriad of activities – are barely worth $200 million? This could be one of the most successful startups in Nigerian history by merely looking at the efficiency in the utilization of factors of production. Yes, the founders would be controlling a huge part of this company which means the bulk of that $200 million would go to them. From left to right, village to town, and across all domains, what the Paystack boys have done is uncommon in Africa, and most especially Nigeria.
Now, if you are not, I am definitely interested in knowing how to build a $200m company in 5 years using PayStack’s Template – or has anyone else being able to do it? Maybe I am not aware, please gist me. But as far as I am concerned, the only template that I currently have to look at as a guide for building a super-successful company within a short time period is Paystack’s template. So, shall we get started?
- It’s all about being a Tech company
To my mind, the first and the most important thing to consider, as we begin to look at this Paystack’s template, is the fact that only a Tech-based business scale that fasts within a few years. In terms of automation and productivity, smaller businesses can compete with large businesses by being more swift and agile, and responding to change faster. Information technology can improve a company’s efficiency and decrease human error by developing automated processes. In turn, small business owners can focus on their overall business strategy and their employees are free to work on other things while the computer runs their reports, creates queries, and tracks projects. This leads to one of the biggest benefits of automation and technology in businesses. Aside from this, tech-based businesses or companies largely tend to make high returns while utilizing very little or no significant resources. For instance, you could develop an app that is sold for a one-off amount of N1 million when, apart from your laptop, the only other resource that was used to create the solution was your ‘brain’. Unlike production companies that spend so much on raw materials and other production and labor costs which may be overwhelming and almost swallowing up profits at times, a tech company typically may spend nothing in terms of financial inputs to create a money-spinning solution.
- Focus on the market need
They (Sola and Ezra – Paystack cofounders) identified a ‘problem’, ‘need’, or ‘gap’ in the financial sector and B2B payments, and they moved to provide a quick solution to this gap. It was only a few years ago when these young chaps founded Paystack after identifying the said payment gap. They figured that they could use their background in software engineering and development to build world-class software to tackle this issue, and so they got to work, developing the software even with little funds. Selling a product or service customers actually need (and want) is important. The market must be willing and able to pay for what you’re selling. This may seem straightforward and obvious, yet many startups struggle with defining their product-market need. According to a CBI Insights report, 42 percent of failed startups attributed their failure to a bad market fit. A savvy tech entrepreneur will first determine that their innovation meets a need in the market and is something that customers are willing to purchase.
- Work with a great team and empower the people on your team
Michael Cannon-Brookes, co-founder and co-CEO of Atlassian said in 2017 that, “Phenomenal products are usually built by a phenomenal team”. Build a healthy culture and invest in the growth of your employees like your company depends on it—because it does.
- Is sharing some of your powers with others a problem?
The greed for power and control is the sole reason why many Nigerian entrepreneurs want to be the CEO of a company without wanting to share that power with anyone. This is one primary reason why many Nigerian startups that could have had a monumental success is failing woefully because they lack this ability to want to part with something small for much bigger wins in business.
- Faith, focus and simplicity
You see, having a dream is one thing, believing in the dream is another thing entirely. The belief you have in your dream is what gives you the energy to pursue your dream. These guys had faith and believed what they were doing would work. The strong belief Paystack’s cofounders had in their dream was seen in the amount of work they had to do to get the dream off the ground, even in the midst of seemingly insurmountable challenges in the Nigerian business terrain.
Additionally, if you have ever used the Paystack payment platform for any transaction before, you would agree with me that their underlying approach is really simple, and this is actually one of the things that endeared Stripe, the company which ended up buying Paystack, to them in the first place. Just so you understand what I am saying, I want you to read what comes next – it is a statement by Patrick Collison, the CEO of Stripe:
“A lot of companies have been, let’s say, heavily influenced by Stripe,” Collison said. “But with Paystack, clearly they’ve put a lot of original thinking into how to do things better. There are some details of Stripe that we consider mistakes, but we can see that Paystack ‘gets it,’ it’s clear from the site and from the product sensibilities, and that has nothing to do with them being in Africa or African.”
So, clearly, the success of Paystack cofounders and the popular business they have created is well-deserving, and Nigerian entrepreneurs have a lot of lessons to learn from the radical business template that these guys have created.
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