A Year in Review

Dear all,

I would like to congratulate everyone on a year of big achievements at Mobile Transactions. Some key highlights include:

• $15.5 million in transaction value processed over our system (1,100% increase from 2009)
• 100,000 consumer money transfers
• 250,000 electronic voucher transactions across 30 districts with the World Food Programme, Food and Agriculture Organisation, and Conservation Farming Unit
• $1.7 million of Dunavant cotton farmer payments
• $500,000 in unbanked microfinance loan disbursements paid out through our agents
• $1.5 million in banked payments
• 9 Champion Agents successfully launched
• 272 active agents (up from 69 at the end of December 2009)
• Successful launch of our supplier payments product with two milling companies and a dozen retail agents
• Translation of our voucher system into Portuguese for roll-out with WFP Mozambique

These achievements should be celebrated as they did not come easily. It took a tremendous amount of hard work from everyone on the Mobile Transactions team in the face of adversity and very limited cash flow.

In addition, we added key members of our team over the course of 2010, including Keith Davies (Operations and Finance), Hans Hesse (Vouchers and IT Integration), Jon-David Steffen (IT Developer), Dave Vosburg (Finance), Bronwyn Baker (Financial Analyst), Hope Okoronkwo (Bulk Payments), Gertrude Makando (Supplier Payments), Tasira Nkhata (Customer Care), Michael Bwalya (Agents), Chris Mwaba (Vouchers) and Patrina Mwila (Admin).

Sadly, Claudius Fundi, one of our first employees, will be moving on in the new year. We wish Claudius all the best as he tackles the next challenge and the Mobile Transactions door will always be open.

We also received some great consultancy work, starting with Leanne Viviers, an Oxford MBA graduate who stayed on after a 2 month pro-bono consultancy by a team of 4 Oxford students (Santiago Alvarez, Natalie Miller, and Simon Jebreel). Engineers Without Borders Canada contributed a volunteer, Ben Campbell, to lead our Dunavant farmer payments project based out in Katete, Grassroots Business Fund pitched in with Sarah Taylor (legal), and PROFIT funded a regulatory consultant (Loretta Michaels). All of these individuals and organisational partnerships have added tremendous value to our business.

Finally, I would personally like to thank John Schroeder and Christine Phillpotts (GBF) for spearheading our advisory board, and Patrick Pichette for the personal mentorship and support. We are very humbled at Mobile Transactions to have such a great network to fall back on.

I am very confident 2011 will be a break-out year for Mobile Transactions. As the World Food Programme winds down their e-voucher project in January as part of their normal funding cycle we will focus on filling the gap with a boost in transaction volume from our very promising supplier payment product. Thulasy Balasubramaniam will be re-joining us to manage our Supplier Payments division, and there couldn't be a better person at a better time.

Our big target for 2011 is to close a Series A investment round to secure the necessary financial resources and investment partners to realise our full potential in Zambia and beyond. We are very excited by the interest investors have already shown, and if we can continue to grow and demonstrate our capability as a team, I have no doubt we are on the path to success.

On behalf of the Mobile Transactions team, I wish everyone the happiest of holidays and look forward to an even bigger year in 2011.

Best,

Mike Quinn

CEO

MTZL and NEXT year end highlights

1. Introduction

Next Retail Limited made a donation of US$142,600 from the sale of its "Dare To Care" cotton range to the development/marketing costs associated with Mobile Transactions Zambia Limited (MTZL) in its Rural Community Individual Transaction Accounts and Payment Accounts in rural Zambia.

The overall objective of the project is as follows:

Small scale cotton farmers in Zambia improve their livelihoods using the Mobile Transactions Payment Services and MaKwacha Account Transaction services facilitated by Mobile Transaction Agents.

To this end, MTZL has been working with Dunavant Zambia Limited to provide improved payment and transaction services to their 70,000 outgrowing cotton farmers.

Dunavant’s outgrower management system was initially developed by MTZL and is currently in use as their core agricultural management system. Within one agricultural season, the Dunavant outgrower system moved from decentralised Microsoft Access databases at each of their nine agricultural offices to a centralised web based platform hosted within their Geneva head office.

Now, these agricultural offices and rural sheds (with laptops powered by solar charged car batteries that can connect to the internet via mobile GPRS modems) can capture real time data into a centralised system.

In 2009, MTZL and Dunavant began to develop a system that interfaces with the outgrower management system to pay farmers electronically. At the end of the 2009 buying season (September to December), a trial was done with payments made to Dunavant’s distributors.

During the 2010 buying season, an MTZL team was dedicated to developing a scalable implementation model in Katete to find ways to pay Dunavant’s farmers faster using this payment system.

This report summarizes the work that was done in 2010 and describes some of the highlights.

2. Project Summary

MTZL’s farmer payment system has one overall objective: To pay farmers faster. Dunavant’s current cotton buying process is a manual one and takes a great deal of time to turn around. This process was expedited when lap-tops that are connected to Dunavant’s central database were introduced in the field, allowing farmers to be paid in as little as three days. However, this is still far too long for most farmers to wait, for reasons that are described below. In a competitive season, farmers can be tempted to sell to other companies that offer on-the-spot payment.

Thus, Dunavant’s goal is to simply pay farmers faster. MTZL’s system offers two of doing this:

1. MTZL built an online payment interface that can be accessed using a mobile phone and that allows Dunavant’s paymasters to pay farmers in less than one day. Since most farmers do not have phones themselves, this is an excellent payment option. And for Dunavant, it decreases the chance for fraud.
2. MTZL also built a payment system that allows farmers with mobile phones to be paid into their MaKwacha Account the instant their Crop Receipt Voucher (CRV) is processed. Dunavant believes this is the future of farmer payment and that it benefits both the company and the farmer greatly.

These two payment options are contrasted to the current, manual process in the diagram below.

During the 2010 buying season, the MTZL team trained 6 sheds in Katete, 2 in Chipata, and an MTZL Agent in Monze to offer the online payment option. Trial payments were also made in all these locations. The system offers a drastically different way to pay farmers, thus a great deal of time and effort was spent on adapting the system for specific field realities and in communicating the change to Dunavant’s field staff. As the system is scaled up, this will remain an important part of the process.

In developing a model to implement this new system, we learned several things:

1. The process and system should be ready earlier in the year, as during the buying season (April to August), Dunavant staff and farmers are incredibly busy.

2. The field-based accountants require a great deal of technical support in adopting the new system thus resources should be allocated to this during scale-up.

3. The main lag in time is in collecting the CRV’s from the buyers and verifying them at the shed. During the 2010 season, many Shed Area Managers (SAMs) spent a great deal of time on this. Since they are responsible for other duties as well, it may be wise to develop an alternative method for collection.

4. The more competitive the area, the harder it is to adopt this system. People have less time to learn how to use a new system when there is cotton that needs to be bought and transported. In less competitive areas like Monze, the payment system was easy to use and staff were quick to learn. In either case, the earlier staff gets training, the better.

5. Farmers are understandably mistrustful of new companies and need time

to build trust with the system. They already have a great deal of trust with Dunavant, so it was important to make sure Dunavant was at the fore and that MTZL was seen as a partner and service provider. “Dunavant Pays Farmers Fast…Powered by Mobile Transactions.”

6. In future, as described in the diagram above, it would be best if Dunavant’s buyers are made into "MaKwacha Buyers" that can use phones to pre-process payments before the CRV's are verified.

The field team also trained and advertized to several hundred farmers and other people in Katete, Chipata, and Monze. MTZL’s overall presence in rural Zambia is quite low, making the overall knowledge and trust of MTZL small as well; however, our brand credibility is spreading by word of mouth. Many people are testing the system right now by buying talk time and depositing K100,000 (£14)into MaKwacha Accounts and withdrawing small amounts to make sure it works properly.

MTZL Agents connect the end users – the farmers – to the system we’ve described above. In developing an implementation model in Katete, we learned that there is a need for three kinds of Agents:

1. The Champion Agent – the Champion Agent is a franchised operator of MTZL and offers all of MTZL’s products and services. By working directly with Dunavant, the champaion becomes a guaranteed point of service for Dunavant’s farmers and casual workers for withdrawing or depositing money from and to their MaKwacha Accounts.

2. Sheds as Agents – Dunavant’s sheds are distributed deep in Zambia’s rural areas and can reach customers than no other Agent can. Therefore, the team trained the SAMs – who essentially manage the business – and stocks clerks at each shed in Katete and Chipata to act as MTZL Agents. Now, eight sheds are successfully operating as Agents, four in Katete region and four in Chipata region.

The SAMs are willing and proud the support the sheds as Agents because they feel it increases face time with their farmers, builds “field presence”, relationships and trust, and does not pose a hindrance to their work.

At the sheds, farmers have a reliable way to save money (instead of buying animals as savings) for essential farming costs (e.g., planting and weeding). Farmers, and not just Dunavant’s, are also coming into sheds to receive money (before the marketing season) and send it (during the marketing season).

3. Schools and Co-operatives – The field team’s first objective in setting up Agents was to “follow the money”, to see where and what farmers spend their money on. There were two overwhelming responses: Farmers spend money on school fees and fertilizers.

Accordingly, the team approached schools in Katete to see if they would receive payment using MTZL’s system and offer other products and services as an Agent. The team set up 3 schools as Agnets, two in Katete and one in Msoro.

The remotest boarding school is now a high performing Agent. Boarding schools, especially remote ones, have the biggest incentive to be Agents and the most resources making them the best Agents.

The team also approached several local farmers‘ co-operatives, as farmers are able to access subsidized fertilizer through membership in them. Co-operatives use the Agents to deposit money into their bank account. The season for fertilizer purchases has not yet come, but we are keen to see how this will pan out.

As it stands now, engaging schools and co-operatives to offer MTZL’s services allows both MTZL and Dunavant to build relationships with farmers, which is an invaluable asset in Zambia. It also is a great way to attract other rural customers for MTZL because these are institutions which people can trust.

3. Highlights

A farmer in Msoro used to ride his bike 6-8hrs round trip to pay his school fees, but now he can just send them from Dunavant’s Msoro shed. Boniface Mwale used to travel to Petauke to pay his K150,000 (£20) school fees, spending K150,000 on transport along the way, but now he can send money to his child for a K8,000 (£1) fee.

Charity Tembo (Below) is not with Dunavant but still deposited k900,000 (£120) into a MaKwacha account for safekeeping after selling a bull. She withdrew half to buy a calf and pay school fees 3 months later. Ganizani Chilumbu (left) is a 22 year old farmer/buyer who is using his MaKwacha account to save for his future.

In July 2010, Bernice Leppard (left)) and Pamela Batty (Right) of NEXT Retail Limited visited the project.

Making IT happen

Before I start let me introduce myself. My name is Brett Magrath and I am one of the co-founders of Mobile Transactions. Today my position is Chief Technology Officer as well as being part of the senior management team focused on the strategic direction of the business and general management. As the last member of the senior management team to post a blog the pressure is definitely on and hopefully I can provide some interesting insights into what is definitely an interesting industry.

Within this blog I am going to provide some thoughts into the following:

1. M-Pesa – The industry leader causing a confusing theoretical standard
2. So where did our strategy and IT approach come from
3. Find a source and follow it…as many times as possible
4. Where to from here

M-PESA: THE INDUSTRY LEADER CAUSING A CONFUSING THEORETICAL STANDARD

The question around how do you compare to M-Pesa always comes up and therefore I thought before jumping into too much around Mobile Transactions that there would be value in making a few comments on M-Pesa. Firstly, the success of M-Pesa has been amazing and I am in awe of what has been achieved. This said before anyone considers trying to “copy” M-Pesa or believe that their strategy should be the industry standard it is important to assess some of the reasons for the M-Pesa success.

There a probably a million articles on this on the web and the below certainly does not catch them all, but my opinion is that the below are the key components:

1. The Kenyan people
2. Full buy-in from senior management
3. Understanding that mobile money is a service rather then a product
4. A strong and trusted brand
5. The market share of Safaricom
6. Initial donor support
7. Management team

These dynamics make for a challenging or near impossible industry standard to try and replicate.

Having been educated in South Africa, rugby is in my blood and I love watching rugby and any sport for that matter. The reality though is that my playing days are long gone and I have settled in nicely to the world of the armchair critic. As an industry mobile money is still very young. The potential mobile money has in terms of social and economic returns are great, but one down side of this is it has lead to a large number of very inexperienced purely theoretical based armchair critics.

My concern is that this combination of the massive success of M-Pesa with the large number of theorists commenting or driving the industry direction is leading to a situation where much of the most creative and real value added services are not being focused on as many people have been brainwashed into believing the only route to success in mobile money is following or trying to be an M-Pesa.

As more and more solutions and models are implemented and more in field knowledge of different models come to life this mindset with start to shift. The challenge will be for those supporting or investing in this space and companies like Mobile Transactions who are involved in implementing services to always reference the successes achieved in other markets, but to focus on building strategies and business plans applicable to what their markets are telling them.

From the Mobile Transactions perspective our views on this remain as they have from day one. Don’t over complicate the strategy, listen to the market, understand the needs of the market and build solutions that meet these needs, then listen and learn some more to evolve and improve our product offering and importantly make sure it is the correct offering. The approach has always been a simple one and one you can only learn from implementation. I would strongly recommend any company looking to launch within this sector to understand what M-Pesa has achieved, but to build a model that is based on market requirements not the M-Pesa effect.

SO WHERE DID THE STRATEGY AND IT APPROACH COME FROM

BANGLADESH NOVEMBER 2004

My original experiences in mobile money started in Bangladesh in November 2004. At the time we were involved in a project to implement a SMS based electronic airtime distribution system. We had implemented the system in a few African markets and through a connection to Telekom Malaysia via Telekom Networks

Malawi we ended up doing a deal with Aktel a mobile network in Bangladesh. The characteristics of the African airtime market were characterised by a network, a super dealer, a sub dealer and then the client. The difference in

In essence we build a money transfer service where the sole purpose of the solution was to sell airtime. The main take out of this for me was the amazing potential a market like Bangladesh has. Within a few months the system was processing 500,000 airtime sales per day.

ZAMBIA PILOT JULY 2007

From Bangladesh it was back to Zambia where we were approached by PROFIT a USAID funded organisation to implement an electronic payment system to pay rural cotton farmers in July 2007. Instead of spending time and effort trying to build a system to do this we utilised the same SMS based airtime system from Bangladesh. Yes SMS is not overly secure, but for a pilot in the far Eastern parts of Zambia it worked perfectly and provided a bunch of insights in terms of where we needed to take our technology and the kinds of services we needed to offer. Some of the key findings were linked to providing the ability for Money Transfers whereby employees working in the areas near the ginneries were able to transfer funds to their family back home. Based on this we developed our money transfer service which has growth successfully since the commercial launch last year. Other developments obviously included moving away from unsecured SMS to now offer a Mobile and PC based Internet interface, Java mobile application and soon to be implemented USSD interface.

COMMERCIAL LAUNCH MARCH 2009

Based on the success of the pilot and the progress being made with the Money Transfer service PROFIT again approached Mobile Transactions with the dynamic of the Zambian fertilizer support programme. This is an existing government programme that distributes fertilizer support to rural farmers. Again the IT approach was driven by a business / market requirement and the solution to how best to support this is what has today become our successful voucher solution. Any IT solution we provide we try to make it as generic as possible to support multiple industries and multiple uses. With the voucher product we achieved this and we were able to very quickly launch a slightly adjusted version of the fertilizer solution for the World Food Programme. Last month we handled nearly 40k vouchers and transacted over $1.4m dollars in value.

To summarise our IT approach to date it has been built on the following foundations:

1. Listen to the market and develop solutions to requirements
2. Solutions win the day not technology – don’t over engineer the solution or put too much effort into the solution until you know it is the correct one
3. There must be an IT vision for scalability, but vital this is always kept in check with the realities of what is happening on the ground and relevant to the market

FIND THE SOURCE AND FOLLOW IT…AS MANY TIMES AS POSSIBLE

MONEY TRANSFERS

Core to the success of any mobile money business is getting electronic funds into the system.

For M-Pesa this source is agents putting cash into electronic and then individual customers doing cash deposits to get this electronic and then transacting off this. For Mobile Transactions when we launched our core product was our agent to agent money transfer service. The source was similar to M-Pesa in that it first came from the agents, was transferred to the money transfer then moved to the agent who did a send to bank and the electronic was gone.

There were a few issues with this:

1. Getting the source from the agents is difficult – For a new company providing a new service to get agents to put funds into a product that is not their core business is a challenge and although something we achieved it took a lot more time and effort then we imagined. I think even for networks they will find this more of a challenge then they expect.
2. Once we had created this the product we were offering meant the source came in was transacted as a money transfer and then quickly moved out.
3. Because the source came from the agents the working capital amount of this source was not sufficient to add additional transactions and products to this amount
4. The source was a value added service to the agent so the amount of working capital they invested was always competing against the working capital the agents invested in their core business offering

VOUCHERS

Once our voucher system was launched we were able to create a new source. This time it came from the voucher project companies who put in funds to distribute vouchers. The dynamics of this electronic source was very different:

1. The electronic put into the system was towards their core business or strategy or distributing vouchers
2. The source was being used to add real value to this core business
3. The working capital of this source was enough to look to start to add new products that transacted of the original electronic source therefore increasing the number of times we could transact on the source
4. The voucher source created a pool of electronic at our agents through the agents selling products that were core to their business

BULK PAYMENTS

What was also interesting is our next product we launched was our bulk payment solution whereby companies could pay both banked and unbanked customers via our system. I am going to focus this discussion on the banked side rather then the unbanked as they has different dynamics. On the banked side there is a market inefficiency whereby cross bank transactions are very expensive and our strategy was to offer a lower cost bank payment solution to any bank at one lower rate whereby we then switch between the different banks. Logical yes, but the issue is we needed to create a new source of electronic. Referencing the points above we were trying to create a new source that did not add real value to the companies core business and the real benefit was a cost saving. As we have taken the product to market we have learnt similar lessons to our money transfer product in that getting this source into the system is often more of a challenge then expected. And again once the source is in if it is used for banked payments is departs very quickly. Again similar to our agent to agent money transfers service. Like money transfers I am fully confident that our bulk payment product will turn the corner and achieve the growth we have seen in our other products, but the error we made was focusing on a new source rather then following an existing source.

ORDERING

So with lessons learnt about following the source in early December we will be launching our latest product called our ordering system. The beauty of this product is we are not creating an electronic source as it already exists. Our voucher agents have electronic funds and they have a need for an improved and more efficient ordering process from suppliers. The suppliers too have a need for a more efficient ordering system meaning we are offering a product that adds real value to the company’s core business and we are following the source of the electronic funds we are creating and facilitating multiple transactions off the original source.

What will be interesting to follow is that as we get this electronic to move from the agent to the supplier will our bulk payment solution become more desirable once we have overcome the core challenge of getting in the electronic source.

WHERE TO FROM HERE

In any new industry to make any widespread comments about where Mobile Transactions will go is a bit of an unknown.

What I can say is that the direction will we go will be focussed on a few keys areas:

1. Listening to our customers and markets and taking our solutions towards the direction the feedback we get wants to take us
2. As we grow as an organisation be in the more privileged position where we can start to analysis the directions we are drawn into to determine which are the best routes for our company

The other component I would add into this is that although the current strategy focuses on following the source and transacting off this I believe future strategies will evolve that focus on analysing the data that we are obtaining. I don’t understand the Micro Finance sector, but I find it fascinating how an industry can boasts about a +97% repayment on loans when the interest rates they are charging are so high. I understand there are large costs involved, what I don’t understand is why they are needed. Is it a lack of financial transaction knowledge of the customers to make sound lending decisions or is it a lack of a low cost payment and repayment solution. As highlighted this lending space is a big unknown to me, but something I look forward to applying my mind to in the future but I guess if I fall back on what I have written in this blog only when the market pulls me into this direction.

The four pillars of a great organisation

Hi everyone,

The reality of starting a business from scratch is that at the beginning, you don't really know what will work. So you try a whole bunch of things and follow the traction. We launched as a money transfer business, chasing the dream of M-Pesa's success in Kenya. In 18 months, we have grown our money transfer business to over $600,000 turnover per month. To achieve this growth, we quickly learned that we had to become an agent business, and we now manage a network of over 220 agents in every region of Zambia. And to lock-in this agent network, we became an electronic voucher business, with our agents redeeming over 56,000 agriculture and food vouchers worth over $1,000,000 in October alone.

For an organisation to scale, it must have strong foundations. Below are the four pillars that are transforming Mobile Transactions from a good idea to a GREAT organisation:

1. Focus

As a business matures, it must constantly refocus its scarce resources for growth to accelerate. This is no easy feat, especially for a start-up business like ours that is building a new industry from the ground up.

Our focus is on increasing transaction volume. This means two things: a) capturing more value on our system by locking-in existing and new strategic customers in our sales pipeline, and b) growing the overall liquidity of our agent network. We have created two separate teams tasked with these objectives with clear KPIs to measure their progress.

2. Alignment

Alignment means orienting every single staff member in a common direction where every individual is adding value. This must start at the most senior level, and then filter downwards with buy-in at all levels.

We recently took our entire management team away on an off-site retreat to get everyone on the same page. The first day was limited to Brad, Brett, Keith, and I getting aligned on high-level strategy as Senior Management. The rest of the management team came the next day and we had two very productive days mixed with fun and work. We went through a process of redefining roles and responsibilities in a new organisational structure, identifying quick wins and game changing new deals to go after, and revisiting our guiding principles. Perhaps most importantly, we created shared stories and experiences that have re-energized everyone to push forward during these critical next few months.

3. Ownership

Businesses are only as good as the people who work in them, and good people must be enabled to succeed. We are very fortunate to have an excellent management team who are all 100% committed to achieving our vision of a cashless Africa.

One outcome of our retreat is to create cost and profit centres that will give our managers the ability to run their own units as if they were business owners. Managers of these centres will have real decision making power over who is on their team and how best to manage them to achieve measurable results. This new structure will need to be matched by each individual stepping up and taking full ownership over his or her role.

4. Accountability

Accountability is the feedback loop that ensures what is agreed is implemented to the best of our ability. Without accountability for both individual and team performance, the above three pillars are significantly weakened and we will not become the great organisation we all want to be.

We made a big step in creating a culture of accountability by bringing Keith in as our Chief Operations Officer. The first think Keith did was set deadlines for managers to present their quarterly budget and KPIs, which their performance will be measured against. He sent a strong message that there is no excuse for missing deadlines, and that we should all embrace this culture as it is the fastest way to accelerate both our business growth and individual careers.

Keith and I have divided responsibilities around these four pillars. My job as CEO is to keep our business focused on what's important, and ensuring everyone is aligned around our overall strategy. Keith is responsible for creating the right conditions for everyone to take ownership over their roles, and for holding each individual accountable for performance.

If we can continue this progress, I have no doubt we will be successful and one day make that infamous transition from "good to GREAT".

Best,

Mike

What attracted me to Mobile Transactions

At the time of writing, I have been with Mobile Transactions for almost two weeks. So much has happened in this short time. I considered writing about my early experiences in this exciting company. But it has all gone by in such a blur and it is too early for me to put my thoughts in a coherent way. So instead I decided to write about why I made the decision to leave the cosiness of the corporate world for a young, growing company.The obvious question many people have asked me is why would I give that all up, pack up my life and join an early stage company? I can answer that question very easily with any of the standard clichés (which all happen to be true by the way):

· “I was looking for an exciting new challenge”

· “I wanted to get away from the politics and bureaucracy of a corporate”

· “I was bored of being pigeon-holed in a single function and wanted the variety that comes with being in a young business”

· “I was sick of having an anti-septic, throttling corporate culture imposed on me and wanted to be part of building something different”

· “I wanted to be able to wear jeans to work”

I could go on and on. But that is only the first part of the answer and is the far less interesting part. What is more pertinent is why Mobile Transactions? What is it about Mobile Transactions that made it stand out amongst all the other possibilities I was considering?

The easiest way I can explain it is by telling the story of how it came to be.

Mike (CEO) and I met whilst studying at Oxford a couple of years ago. He immediately struck me as a highly intelligent man with great integrity. Our friendship grew through what turned out to be an amazing year. He came to visit me in Johannesburg during the soccer World Cup in South Africa. One evening, we were out for dinner with his lovely wife Isabelle. I was ranting (as is my wont) about my frustration with all the points mentioned in bullets above (and a few others I have no doubt). When eventually I stopped my self-indulgent diatribe, I asked him more about what he was doing. When he told me he was helping to run an exciting new mobile transactions business, my immediate thought was: “oh no, not another one”. For several months up to that point I had been leading a team investigating the possibility of opening a retail presence in Africa for the bank I was working for. A key part of this investigation was whether we could use mobile to deliver our strategy. I had been to several conferences and presentations on the topic. Although the promise mobile banking held was palpable, nothing I had seen got me particularly excited.

In an effort to be polite, I asked him more about it. During his enthusiastic description, my scepticism slowly changed to interest and ultimately to an incredible sense that I was at last hearing something different. The subtle tweak in the way in which Mobile Transactions was approaching this market all of a sudden made so much sense. (Feedback from Mike on his recent whirlwind trip the UK and USA indicates that scepticism, evolving to gradual awakening, culminating in that Aha! moment is a common reaction from people who hear about the business for the first time.)

With an increasingly affluent and growing population almost the size of India’s, the consumer opportunity in Africa is huge. But consumers are too heterogeneous and too widely dispersed across too many borders to be viewed as a single market. Contrary to what many people think, this is not the United States of Africa! What is common and spans borders however is Africa’s continued reliance on foreign flows (remittances, donor funding/NGO’s, micro-financing, multinational corporatesetc) and the massive role of the State within these economies. Fail to understand that, and you fail to understand Africa as it stands. Mobile Transactions acknowledges this and has set about trying to capture the consumer opportunity by first trying to capture the institutions for which the vast majority of consumers rely on in their day-to-day lives. That is the Aha!of Mobile Transactions to me and what sets them apart from all the other companies clambering for a piece of this very big, meaty pie.

Joining a business you wholeheartedly believe in comes with an increased responsibility to help make sure you do your bit to ensure it reaches its potential. Our recent good results are proof of how Mike, Brad, Brett and the rest of the team have the ability to make the business grow as fast as it can. But all great businesses are built on complimentary skills. So for the time being, I see my role as ensuring that while we grow as fast as we can, we also grow as slowly as we need to. Making sure the right processes, structures and systems are in place to de-risk the business to allow us to grow our markets and products in a controlled and deliberate way. This I hope will allow the rest of the team to focus on what they’re good at without worrying about being capsized by an internal or external black swan that inevitably comes from growing too quickly.

My concluding remarks are aimed at Mobile Transactions employees.

Upon leaving the aforementioned bank a couple of months ago, the consistently predictable counter-offer followed soon thereafter. I was offered the position of heading up what will become a retail presence in Africa for the bank. Whilst the offer was interesting (more for the timing than its substance), I didn’t consider it for longer than it took for me to explain to them that the place I am going to will be part of making theestablished financial model redundant. Our continued success in this space will render the incumbents that fail to adapt irrelevant. Why would I take a horse and cart into battle when there is an armoured tank in the garage?

Through our platform, we have the unique opportunity to change the transactional landscape forever in a very real and significant way. The best part of all this, is that we get to do all this whilst making a positive difference to the lives of the people who most need it. As employees of Mobile Transactions, we need to cherish that privilege and feel the weight of responsibility to ensure that it is nurtured. This is big stuff!

I thoroughly look forward to meeting the rest of the team in Zambia when I head up from Cape Town in a few days.

Passing the Torch (and trying hard to let go of the reins...)

Hi my name is Brad Magrath, and I am one of the founder shareholders of Mobile Transactions with my brother Brett. This is my first blog ever anywhere so I thought I would share some of my thoughts and experiences that every entrepreneur will probably go through as they ramp and scale their business: bringing in and retaining new skilled people, and empowering and trusting them to take the business to new heights.

Having two teenage daughters of my own I certainly relate to this story as told to be by a mate: When his daughter was 22 she was reversing out of his drive way in her new car and she crashed into the gate. She jumped out the car in tears and distraught and ran towards him. He opened his arms to console her when she ran straight into her boyfriend (now husband) arms. He just stood there in shock and still is not sure who was more upset – him or his daughter. I guess the moral is everyone has a time and place of influence and time stands still for no one. As a founder of a business getting your head around bringing in new managers to manage yourbusiness, is certainly an interesting and challenging concept.

Entrepreneurs by their very nature are passionate and committed. Certainly my brother and I have always been very passionate about Mobile Transactions. Similar to the cartoon TV show “Pinky and the Brain” who are lab rats who wake every day with one mission: World Domination, we wanted to create an awesome business and one that would scale across Africa. An early concern was how we would create a culture and organization that could get and keep the very best people. The nature of our business: Mobile Payments has both commercial and social impacts, has in many ways allowed us to be able to successfully do that. No mean feat having our first operations in Lusaka, Zambia – not a hot bed of world best recruiting talent.

As a company we have transitioned in highly skilled, qualified and experienced new staff: CEO, CFO as well as over 5 senior management staff and as founders we have realigned our roles as part of this team. Was it easy, absolutely not. Could it have been easier, I am not sure. In many ways we did a lot of things right and we actively sought to bring in the new skills but the reality is as strong willed individuals in an emotional hot bed even with the best intentions you can expect fireworks and we certainly had them. As we went through the mincer we certainly had some blood on the meeting room table, most of it constructive conflict but at times just conflict. In hindsight being brutally honest with myself I probably had visions of being a benevolent dictator: a democracy when I say so. Equally new management I am sure would equally face up to mistakes made during this time.

Some of the outcomes of this process we took on have been a far more focused, accountable and productive team. Incidentally over the 9 months we have been in this process the business has grown over 950% with platform revenue in September 2010 of over $2 million for that month.

Pretty staggering growth and born mostly out of this transition – I guess a great product helps but getting the skills and management to drive the business was fundamental.

Having outlined some of the issues, I think the following points contributed us going through this and coming out a stronger performing business with more capacity to scale. Again these are just lessons we learnt so take then with a pinch of salt when reviewing other businesses.

Trust, integrity, egos at the door

Even when heads were clashing there was an absolute trust in the integrity of all players round the table, and that differences aside everyone had the business best interest at heart. Also nearly every manager has filled numerous positions and job roles as required.

When things are not yet aligned this is a key factor

History

Coming from a team sport background you always get an understanding of the person next to you once you have won and lost together. It tells you a lot about them. I can remember Mike, now our CEO and fully fledged partner taking Brett and I out for a first strategic meeting (with us maintaining we were too busy for it) and then sitting there, arms folded behind my head thinking: OK, Mr. Oxford MBA what have you got to teach me. Needless to say we have come a long way a year down the track and have history to fall back.

Understanding Cultures

With a management team that has consisted of people from Zambia, South Africa, Canada, USA, UK, India, Polish and now we are adding Kenya and Nigeria it took us awhile to get to grips with the dynamics. We are not there yet but there is certainly more understanding - if the United Nations ever need help we can add some insights.

Alignment

Make a plan and get things done. As a start up that has to be a call to arms and we have adopted it. It does mean feet get stamped on and ego’s bruised but it is critical that while defined roles and responsibilities are important and have value, sometimes stuff just has to get done and the closest person is often the best.

Ownership

Mistakes happen, deal with it. Make a plan. There is no value in yes men or people who think just like you.

The first time I did not get my way, and I guess even now when I do not, the person standing in my way had best be able to stand their ground. This business means a lot to me and I certainly start every discussion thinking I am right. We have been fortunate to have solid individuals and professionals who have backed themselves and their role in the business. You just do not need to know everything that is happening every day.

This might sound incredibly obvious but for nearly two years we had two employees, the other one being family. Fast forward to this agriculture voucher season and Hans joining the team and working with Graham, employing 14 new short term staff, creating plans and budgets and then most important implementing an awesome project that generates over 50 new agents and $1.6 million revenue with little or no input from you, and certainly no control of the process by you. I have needed at times to remind myself to step back and not jump in. Trust their and Mike's judgement and focus on my job: selling. Once you get your head around it and just let go, it makes a difference.

Pig and Chicken

An oft quoted role in our business is that when you sit and have bacon and eggs for breakfast – the chicken is involved but the pig is committed. We like people in Mobile Transactions to be able to say “oink “. Certainly staff at all levels have put in sweat and long hours to show commitment. As a company we have started to roll out share options, cash incentives at a senior level and moving to the 2011 we will be extending various incentive plans across our staff network. Commitment works both ways.

Manage by numbers

If an entrepreneur does read this then this is the only paragraph of the whole thing worth remembering. Once we recruited Dave as our CFO and he got on top of the numbers and we identified our key value drivers and he was able to give us weekly up to date dashboards of our financial metrics around these same drivers: bam. Every dynamic around the team changed. Meetings stopped being about opinions, and who could voice their opinion loudest or longest but became fact based. The numbers were there and they were indisputable – everything started to flow and decision making was easier and lots of bottlenecks removed. If you want to make changes like these get on top of your real value drivers and measure them to the nth degree.

Celebrate victories

Something we have not yet got right, but when you are in dog fight you cannot celebrate false dawns but saying that we work hard, are making progress but seem not to take stock of the wins. The reality is this team has grown nearly 1,000 % in 9 months. It is normally only when you tell people our story that you take a moment to reflect on the progress. I think we also know what mistakes we make and how we could have done things so much better

Next Steps

As a senior team, led by Mike we are aware of some key challenges we will need to address going forward.

We are confident that this is the team that can scale regionally but are also aware that as and when we grow each and every senior person has no claim to a chair and as we grow and attract potential new investors change dynamics at all levels of the company remain possible.

More importantly in the short term we have some key management positions that are at key points in their careers. We will go to the plate to keep them but these are not done deals in any way.

To date we have not yet shown an ability to advance our Zambian staff up through the ranks. We have identified our Next Generation of Zambian Managers Claudius, Memory, Teddy, Charles and Agents like Michael and Thersford and others will be given opportunities but it is an important that both they and us as a company step up to get them to a level they have shown glimpses of but not yet achieved.

We are also setting up an independent and professional advisory board. It is important we know what we do not know and where we are short. Corporate Governance, investor readiness etc are all good buzz words but are also things we want to engrain in our culture through good advisors, while remembering that these can be implemented and in no way dilute our work culture and need to remain a cutting edge start up.

Conclusion

Well I have rambled on for 4 pages so if anyone has managed to wade through the whole thing I finish with what I said to Mike, our CEO on his handover. We got the business to $ 4 million; you and the team have to take it to $ 40 million. I look forward to supporting him every step of the way.

Best,

Brad