Episode 008: Daniel Yu: How to Pivot with Courage
EPISODE 008 FEATURES DANIEL YU, FOUNDER OF SOKOWATCH.
If you travelled anywhere throughout Sub-Saharan Africa, you will have noticed the tiny Mom and Pop shops that dot the continent’s large cities.
Even though these informal shops represent well over 80% of African retail, the large wholesalers and distributors for major consumer goods companies aren’t interested in this fragmented and unorganized sector of retail.
And, this is where Sokowatch steps in.
Using a simple SMS app, duka shop owners – that’s what these informal shops are called in Kenya – can send a text ordering their maize flour, soap, cooking oil and other basic goods to Sokowatch which will deliver all goods for free.
It’s a powerful B2B inventory management and ordering system that is seeing exploding growth.
Daniel has a fascinating story. He’s a college drop out polyglot and self taught computer programmer who got the idea for the first iteration of his business while learning Arabic in rural Egypt.
The backstory of the pivot from healthcare to consumer goods is even more fascinating. Daniel honestly recounts how difficult it was to realize that not only was his first business model not workable in the long-term but that he didn’t know what he’d pivot to.
That was very tough to explain to his investors who had given him $600,000 for his first idea, which he knew, ultimately, was not going to work.
I had a great time chatting with Daniel. We talked about why he dropped out of university, the challenges of pivoting from the health care to consumer goods sector, how he’s able to predict his deliveries with 95% accuracy using data, and why a bad decision is better than none at all.
Without further ado, here’s my conversation with Daniel Yu.
SHOW NOTES
The origins of Daniel’s love for travel and adventure. [00:25]
His interest in technology and software development. [01:38]
Daniel taught himself how to code. Most software and web developers aren’t formally trained, which is liberating. [02:23]
Why he dropped out of university. [04:30]
How Daniel got the idea for his business while studying Arabic in rural Egypt. [08:03]
Daniel developed the original prototype using SMS. [11:00]
He entered the prototype into the Social New Venture Challenge business plan competition at the University of Chicago. While the company was still Relief Watch, he raised a total of $600,000. [12:25]
Daniel’s approach to pitching investors. [13:35]
Why he pivoted from Relief Watch’s model of targeting health clinics to consumer goods. [15:30]
How he dealt with the stress of the pivot. [22:10]
Why Daniel switched to focus on consumer goods. [26:35]
The backstory of why he moved to Nairobi, Kenya. [28:50]
How he stumbled across the 2nd pivot in his business model [30:45]
Sokowatch fills a niche that it outside of the business model of large scale distributors [33:57]
Daniel can preload his trucks with delivers for each neighborhood as he can anticipate orders and sales by analyzing the data. [35:36]
How Sokowatch makes money. [36:45]
The average delivery size is $13. [39:47]
Sokowatch’s delivery values have grown x9 since March 2017 to $120,000. [39:56]
Customer acquisition model for Sokowatch. [40:37]
Popular products delivered are mainly food staples. [41:24]
Daniel’s biggest failure as an entrepreneur and what he learned from it. [42:30]
His most important mentor. [45:10]
The best advice he’s ever received as an entrepreneur -- "A bad decision is better than none at all." [47:06]
Where Daniel would go in Africa to learn and improve his business. [49:05]
His one piece of actionable advice for aspiring African entrepreneurs. [51:14]