Just 4 months before Zumi shutdown, I told a friend of mine who had just been hired at Zumi the previous month as a developer that they would be closing shop soon thus it would be best for him to keep his job options open.

To be exact, I told him that they would not be existent by January of 2023, I was off by 2-3 months, they closed shop in March.

There are certain patterns that startups tend to follow just before they close shop and this has been mainly so for VC funded startups in Africa. For instance, the recent Wasoko and MaxAB merger was less of a big play move and possibly more of a way to be able to stay alive a little longer.

Just before Zumi shutdown, they had let go of most of their development team and retained one or two full-stack developers, laying off key personnel or downsizing is usually a big sign of a cliff ahead. This has also happened at many other VC funded startups that have shut down in Africa, most recent being Jumia Food.

But the biggest telltale that a startup will close shop in Africa is that even while taking certain measures such as downsizing that could help keep them lean and last longer, they are still usually building for expansion or even trying to expand their operation on the ground at the same time, they are usually doing this for the investors and not to benefit the customer.

This usually means that the customer does not find value in whatever is being offered thus the solution is to build quickly for the investor in the hope that more money will be raised so that they can eventually start to understand and build for the customer. In a proper system, it should be the other way around.

What this does is that it increases their spending while their revenues remain extremely low. Survival then becomes a game of Russian roulette, in this case with only one chamber empty.  

During their toughest times, instead of keeping it small and really trying to solve for their current customer or maybe pivoting while still solving for a small segment of the market, Zumi was expanding their operations to be something like Sokowatch (currently Wasoko) or Marketforce, when even this has not yet proven to be a winning formula.

This specific trend of trying to expand when things are tough can also be seen outside tech especially in retail supermarket chains that closed shop in Kenya such as Uchumi and Nakumatt.

Startups such as Marketforce have to be commended for taking steps such as slowing down growth/expansion plans and trying to find new ways of innovating for and around their customers to improve sustainability for the business.

There have also been many cases of VC funded founders mismanaging funds so much so that the startup gets shut down, such as in the case of Dash, 54Gene to mention a few.

I write this as someone who’s had to shut down a bootstrapped startup that looked quite promising. There were major learnings from building and running this startup and I think it is time that we begin to openly talk about the things that did not work so that it becomes even easier to build sustainable Tech businesses in Africa.

Why? Because when you start again after a failure, you are not starting from scratch, you are starting from a place of knowledge, and this knowledge can also improve the odds for those who are starting from zero.

It is also time to build truly for the customer as the primary investor.

Before LEGO was a household name, at some point in the toy manufacturer’s existence they were making yo-yos. When the yo-yo craze ended in America, the toy manufacturer was left with a ton of yo-yos and zero buyers for months. They later had an idea and chopped the yo-yos in half and used them as wheels for another toy.

When times are tough, innovate around and for the customer. Provide real Value.