The Fun-Dumb-Mentals of Modern Business: why everything you've been taught is wrong.

Summary

The speaker discusses the role of venture capital in entrepreneurship, emphasizing the need for a culture shift in how banks and investors view startups. He highlights the importance of innovation, using examples like Netflix and McDonald's, and urges financial institutions to adapt their perspectives to better support entrepreneurs.

Takeaways

• 🌍 The speaker emphasizes the importance of understanding global economic history and the exponential growth of GDP, suggesting it's the best time to be an entrepreneur due to the world's wealth and technological advancements.
• 🏦 The banking system was not originally designed to provide venture capital, which is why entrepreneurs often face challenges in accessing the right kind of finance through banks, which typically offer debt, not equity.
• 💡 The speaker highlights the need for a culture of venture capital and private equity in Africa, pointing out that African entrepreneurs often reinvest created value outside the continent instead of within it.
• 🔥 The invention of fire is used as a metaphor for the first step in improving human existence, illustrating the concept that any invention that betters our lives is a form of technology.
• 🚀 The speaker discusses the transformative power of inventions like the combustion engine and flight, which fundamentally changed global economics and the way goods are moved around the world.
• 📈 The historical shift of global economic power, particularly the rise of the United States, is attributed to technological advancements, suggesting that Africa's lack of such contributions may be why it remains peripheral in global economics.
• 👎 The speaker expresses disdain for the patronizing attitudes of Europe towards Africa, advocating for African self-reliance and the removal of artificial borders that hinder intracontinental trade.
• 🌐 The Internet is described not as a technology but as a catalyst for change, being an ever-present, ever-changing entity without a single point of creation or ownership.
• 📊 The difference between transformation and change is highlighted, with the speaker advocating for transformational thinking in business to adapt to the ever-changing rules of competition.
• 🎾 Using the example of Serena Williams, the speaker illustrates how mastery within a set of rules can be disrupted by changes to those rules, drawing a parallel to the need for businesses to adapt to new market conditions.
• 📚 The final takeaway is the call for financial institutions to understand and adapt to the realities of the entrepreneurial world, including the life cycle of businesses and the need for innovation rather than just efficiency.

Q & A

What is the main theme of the speaker's presentation?

The main theme of the speaker's presentation is the fundamentals of modern business, focusing on the role of venture capital, the importance of innovation, and the challenges faced by entrepreneurs in accessing finance.

Why does the speaker mention the Medici family in relation to banking?

The speaker mentions the Medici family to highlight that banking institutions and their functions were not originally created to provide venture capital, which is often needed by entrepreneurs.

What is the significance of the speaker's comment about the culture of venture capital being poor in Africa?

The speaker is emphasizing that the lack of a strong venture capital culture in Africa is a major obstacle to the growth and success of entrepreneurial ventures, as it limits access to the necessary long-term, patient capital.

How does the speaker describe the role of technology in economic growth?

The speaker describes technology as a catalyst for change and a driver of economic growth, highlighting how innovations like the steam engine, combustion engine, and the internet have fundamentally shifted global economics.

What historical economic shift does the speaker highlight in the 18th and 19th centuries?

The speaker highlights the radical exponential increase in global economic output during the 18th and 19th centuries, marking a significant shift from the linear growth seen in earlier centuries.

Why does the speaker argue that Africa remains at the periphery of global economics?

The speaker argues that Africa remains at the periphery of global economics because it has not produced and brought to the world technologies that have shifted the global economic structure, unlike other regions that have driven significant technological advancements.

What is the speaker's view on the role of borders in African economic development?

The speaker believes that the artificial borders dividing Africa into numerous independent countries hinder economic development by creating unnecessary trade barriers and costs, suggesting that a more unified approach could be beneficial.

How does the speaker use the example of Serena Williams to illustrate a point about business and finance?

The speaker uses Serena Williams' dominance in tennis to illustrate the importance of understanding the context and rules of the game. He suggests that just as Serena's success is tied to her mastery of the sport's rules, entrepreneurs need to understand the financial landscape to succeed.

What does the speaker suggest is the key to Netflix's success?

The speaker suggests that Netflix's success is not merely in streaming content, but in the production of original content. This shift in focus from distribution to content creation has been a key driver of the company's growth.

How does the speaker relate the story of Mr. Caveman to the concept of innovation?

The speaker uses the story of Mr. Caveman discovering fire to illustrate the fundamental human drive to innovate and improve living conditions. This early technological advancement set the stage for all future innovations, emphasizing the importance of creativity and problem-solving in human progress.

Outlines

00:00

🎙️ Engaging Audience with Humor and Business Insights

The speaker starts with an interactive session to energize the audience after a long sitting period, employing humor and light-hearted banter. He thanks the audience for inviting him to Kenya, mentioning his multiple visits, and humorously hints at the Zulu tradition of having multiple wives. The speaker then introduces the theme of his talk, which is about the fundamentals of modern business, and acknowledges the time constraint, promising a concise presentation. He also addresses a common misconception among entrepreneurs regarding the role of banks in providing venture capital, explaining that banks primarily offer debt, not equity, and that the culture of venture capital is underdeveloped across Africa.

05:02

📈 Historical Economic Growth and Entrepreneurship Opportunities

The speaker presents historical global GDP data, highlighting the exponential economic growth since the 18th century and emphasizing that the world has never been wealthier, making it an ideal time for entrepreneurship. He also discusses global life expectancy improvements since the 16th century, noting that it's the best time to be alive. The speaker then delves into the historical shifts in the world's largest economies, pointing out that India was once the largest until the industrial revolutions in the UK and the US shifted economic power. He concludes by questioning Africa's lack of technological contributions to global economic structures, suggesting this as a reason for its peripheral status in global economics.

10:03

🌍 Africa's Potential and the Harm of European Patronage

The speaker expresses his disdain for European patronage towards Africa, arguing that it is demeaning and debilitating. He encourages Africans to recognize their own capabilities and to work for their own betterment. He criticizes the division of Africa into many independent countries with artificial borders, which hinders the free movement of goods and the integration of economies. The speaker advocates for the elimination of intracontinental trade barriers to build a stronger African economy.

15:05

🔥 The Evolution of Technology and Its Impact on Humanity

The speaker takes the audience on a journey through the evolution of technology, starting with the discovery of fire, which was a game-changer for early humans. He humorously introduces a fictional character, Mr. Caveman, to illustrate the point. The speaker then discusses the progression of technology from the medieval ages to the invention of the gun, which changed warfare and the formation of nation-states. He emphasizes the importance of innovation and how it has shaped human history and existence.

20:06

🛫 Inventions and the Transformation of Business and Society

The speaker continues the narrative of technological evolution, discussing the industrial revolution and its impact on business operations, such as the specialization of corporate functions. He touches on the invention of flight and the principles that made it possible, highlighting the importance of continuous innovation. The speaker also addresses the shift from traditional libraries to digital information access, emphasizing the internet's role as a democratizing force for knowledge distribution.

25:10

🌐 The Internet as a Catalyst for Change, Not Just Technology

The speaker challenges the common perception of the internet as a technology, arguing that it is more accurately a catalyst for change. He discusses the nature of the internet, its lack of a single point of creation or ownership, and its omnipresence. The speaker also differentiates between transformation and change, urging entrepreneurs to think transformationally rather than linearly when it comes to business and innovation.

30:12

🏸 Serena Williams and the Importance of Adapting to Change

The speaker uses Serena Williams' dominance in tennis to illustrate the importance of adapting to change. He discusses how rule changes in tennis have impacted the game and how Serena has adapted to remain a top player. The speaker then extends this concept to business, emphasizing the need for entrepreneurs to be disruptive and to innovate in order to stay relevant in a constantly changing market.

35:12

📱 The Disconnect Between Entrepreneurs and Financial Institutions

The speaker addresses the gap in understanding and communication between entrepreneurs and financial institutions. He points out that the financial instruments used in Africa were developed long after the economic conditions that necessitated them, leading to a disconnect. The speaker suggests that bankers need to understand the entrepreneurial mindset and life cycle to better support businesses, and he uses the example of McDonald's losing market share to Shake Shack to illustrate the need for perspective change in business.

40:13

🎥 A Change in Perspective for Financial Support of Entrepreneurs

The speaker presents a video example to demonstrate how different photographers portrayed the same subject in unique ways, reflecting on how financiers perceive entrepreneurs. He emphasizes that the entrepreneurial life cycle is constant and that businesses will face challenges and need different types of leadership at various stages. The speaker calls for a shift in how financiers view entrepreneurs, rather than a change in the entrepreneurs themselves.

45:14

📺 The Evolution of Netflix and the Need for Business Adaptation

The speaker discusses the evolution of Netflix from a DVD rental service to a content production giant, illustrating how businesses must adapt to remain relevant. He points out that the core business of Netflix is now creating original content, not streaming, as evidenced by their significant investments in series like 'House of Cards' and 'Orange is the New Black'. The speaker urges financial institutions to understand the entrepreneurial ecosystem and to innovate in their approach to supporting businesses.

🚀 Embracing Innovation and Courage for Transformative Change

In the concluding paragraph, the speaker calls for a new conversation between entrepreneurs and financial institutions. He emphasizes the need for bravery and internal conflict resolution within organizations to embrace innovation. The speaker highlights the importance of understanding the entrepreneurial spirit that starts businesses and the need for managers to connect with that spirit to avoid becoming obsolete, as exemplified by the decline of Nokia.

👏 Closing Remarks and Acknowledgment

The speaker ends his presentation with a round of applause from the audience, expressing his gratitude for the invitation and looking forward to further discussions.

Keywords

💡Public Speaking

Public speaking refers to the act of addressing an audience in a formal setting. In the context of the video, the speaker uses humor and audience engagement techniques to connect with the audience, setting a lively tone for the presentation.

💡Venture Capital

Venture capital is financial backing provided to early-stage, high-potential, growth companies in exchange for equity. The speaker discusses the misconception that banks are the primary source of venture capital, emphasizing that banks typically offer debt instruments, not equity.

💡Debt Instruments

Debt instruments are financial tools or securities in which the buyer loans funds to the issuer in exchange for the issuer's promise to repay the principal with interest. The speaker points out that banks primarily offer these, which contrasts with the equity investments typically sought by entrepreneurs.

💡Global GDP

Global GDP (Gross Domestic Product) measures the total economic output of all goods and services produced within a country's borders. The speaker uses historical data on global GDP to illustrate the exponential growth in economic output, highlighting the current era as an opportune time for entrepreneurship.

💡Life Expectancy

Life expectancy is a statistical measure of the average number of years a person might expect to live. The speaker mentions the increase in global life expectancy over time, suggesting a correlation between economic development and health improvements.

💡Industrial Revolution

The Industrial Revolution refers to a period during which agrarian societies became industrialized. The speaker discusses the impact of the first and second Industrial Revolutions on global economics, emphasizing how technological advancements like the steam engine and combustion engine transformed economic structures.

💡Entrepreneurship

Entrepreneurship is the process of designing, launching, and running a new business, which is typically a small business. The speaker emphasizes the importance of entrepreneurship in creating value and driving economic growth, and the need for a supportive financial ecosystem.

💡Cultural Exchange

Cultural exchange involves the sharing of ideas, knowledge, and practices among different cultures. The speaker argues for the importance of cultural and economic connections within Africa, suggesting that the removal of trade barriers could foster greater economic integration and growth.

💡Innovation

Innovation refers to the creation of new ideas, devices, or methods. The speaker discusses the need for African entrepreneurs to innovate and create technologies that can shift the global economic structure, similar to how past innovations have done.

💡Transformation

Transformation involves a profound and thorough change in form, appearance, or character. The speaker differentiates between transformation and change, suggesting that businesses need to think transformationally to adapt to rapidly changing markets and consumer demands.

💡Financial Institutions

Financial institutions are organizations that manage financial transactions, such as investments, savings, and borrowing. The speaker critiques the disconnect between financial institutions and entrepreneurs, advocating for a shift in how these institutions assess and support entrepreneurial ventures.

Highlights

The speaker humorously engages the audience with interactive activities to combat the effects of sitting for long periods.

The speaker expresses gratitude for the invitation and mentions his multiple visits to Kenya, humorously suggesting getting a second wife.

The speaker emphasizes the importance of understanding the historical role of banks, which were not created for venture capital purposes.

A critique of the current banking system is presented, suggesting that it offers debt rather than equity, which is less suitable for entrepreneurs.

The speaker discusses the poor culture of venture capital in Africa and the tendency to invest outside the continent rather than within it.

The importance of patience in business is highlighted, with examples of companies like Facebook and Amazon operating for years without revenue.

The speaker advocates for a unified voice among entrepreneurs and a shift in the conversation about finance and investment.

A detailed analysis of global GDP history is presented, showing a linear growth until the 18th century followed by an exponential increase.

The speaker argues that the current era is the best time to be an entrepreneur due to unprecedented global wealth and life expectancy.

The historical shift of the world's largest economies is discussed, with a focus on the rise of the United States and the decline of India.

The speaker challenges the audience to consider why Africa has not produced transformative technologies that could shift global economics.

A call to action for African entrepreneurs to be self-reliant and eliminate artificial borders to foster intra-continental trade.

The speaker uses the story of Mr. Caveman to illustrate the fundamental role of technology in improving human existence, starting with the discovery of fire.

The evolution of technology from the cannon to the airplane is discussed, emphasizing their impact on history and global economics.

The speaker criticizes the European patronage of Africa and calls for Africans to take charge of their own development.

The importance of intra-African trade and the elimination of customs duties to facilitate the movement of goods within the continent.

The speaker discusses the role of the internet as a catalyst for change rather than a technology and the need for a transformational mindset in business.

The concept of transformation versus change is explored, with a call for entrepreneurs to think in transformative ways to adapt to shifting market conditions.

Transcripts

he is the rock-solid public speaking

ladies and gentlemen

whooping and the quiet jumbo so let's

try this because you've all been sitting

down for about an hour now let's all

stand up stand up let's get a good

stretch of our legs touch the person

next to you

some of you have been really looking

forward to touching that person so keep

touching turn around look at the person

behind you and say I'm better looking

than you are all right great let's get

job so first let me just say thank you

very much for having invited me to your

beautiful country it's now my I think

ninth or eleventh time here in Kenya and

I was saying to the executive team at

CBA that invited me that perhaps this

time I get a second wife here so I have

an excuse to keep coming back

I am Zulu so we Zulus are allowed more

than one wife and for some of you ladies

who want to put in an application will

have a pink box at the back start your

name with your ID number and your

contact details good I have exactly

about what was supposed to be 60 minutes

I've cut it down to about 35 cognizant

of time and the fact that you've been

sitting for some time now I have in

essence three simple ideas I'd like to

share with you and I hope at the end of

those three simple ideas you and I can

agree on kind of where we are where we

are at before I start let me just make a

very quick statement one of the

challenges we have and I work and run a

venture capital fund that we're busy

raising now our second fund to operate

across the continent but one of the

major challenges we have as

entrepreneurs often is we don't

understand what the role of banks is so

if you study the history of banking you

start first with the Medici family you

will realize and recognize that the

institution of banking was not created

nor are the functions of it for the

specific purpose of providing venture

capital that's why most of the products

that banks offer are debt instruments

not equity instruments the reason I make

this point is very important because if

we are as entrepreneurs talking about

how banks are not helping us access

finance which an often should be

long-term patient capital forego equity

we're not having the right conversation

you're going to the wrong institution

but asking for the right thing the real

problem we have is the culture of

venture capital and you could read into

that venture and private equity is quite

poor not only here in your beautiful

country but actually across the

continent we live in one of the few

places in the world

where we create value create equity

value and real liquid capital we are

more likely to invest it outside of our

own continent than we are in our own

continent

you know nobody talks about the fact

that it wasn't for the first seven years

of Facebook's operation that it wasn't

even generating revenues how many

African entrepreneurs can create a

business and operate and pay salaries

for seven years without generating a

single cent in revenues Amazon to this

day is still not profitable they make

the nominal gross margins but if you

look at their capital structure as well

as their income statement you'll realize

that Amazon actually isn't a profitable

business

Jeff Bezos does that quite deliberately

he keeps his marginal costs low so that

he can use that to finance growth and

capital expansion by pushing out

competitors now you can't do that when

you're going to traditional debt

instruments to acquire funding so what I

hope to do here this morning is perhaps

bring a different complexion to the

conversation talk not only about what is

required and why it's required but also

how I think as entrepreneurs we should

be mobilizing ourselves to speak a

unified voice my presentation is aptly

entitled the fundamentals of modern

business you see it behind me what I'd

like to do now with your permission is

the clicker picking up let's try again

it's not could you just take it out

chips and put it back in by the way

there is a single group of people who

are here who never get any mention or

any round of applause and that's the

ticker at the back so maybe we could

just give them a round of applause for

the work they do

the Gravlin screen is quite powerful

graphs I want to spend a moment on it

and pause what you're looking at is the

history of recorded global GDP what we

know as the global domestic outputs of

all economies in the world since the

first century now it's produced by the

United Nations as well as The Economist

it uses purchasing power parity on

currency as a part 1998 but effectively

what you see is something very

interesting the thick blue line is

global GDP economic output by all

nations of the world I want you to

notice how from the first to the 17th

century the rate of GDP growth across

the world was linear you see that right

you then notice in the 18th and then

specifically 19th but even more

pronounced 20th century there is a

radical exponential increase in global

economic output I could spend an hour

breaking down what this means but in

simple English the world has never been

wealthier than it is today

there has never been a better time to be

an entrepreneur than it is today the

second graph I want you to notice is the

lighter blue line looks teal that speaks

about global life expectancy and notice

how that graph too is quite linear and

then begins to increase specifically

around the 16th 17th 18th and 19th

century in simple English there has

never been a better time to be a specie

called a human being on this little rock

called Earth never so if you and I who

work and function as entrepreneurs whose

entire purpose for existing is the

creation and extraction of value for the

benefit of communities and societies

this is the best age to be alive have no

doubt about that second graph I want to

show you this one is quite interesting

it breaks my heart each time I have to

look at it but it's also quite an

interesting graph what this shows you

the history of the world's largest 8

Nations since the first year of recorded

economic history you'll notice how

contrary to popular belief did you know

in the first cent

first year of our existence or recording

of economic data on earth the largest

economy actually was India not China

that's a very interesting part of the

narrative that people don't speak about

and the specific question to ask is why

India and then of course what happened

after that Indian state the largest

economy all the way to the first

thousand years and then a picture

changed radically around the year 1600

now most of us here can't imagine a

world without the United States but I

want you to remember that the United

States is effectively a teenage country

it is born what 1776 in the context of

something like the Roman Empire which

was four five six thousand years ago the

u.s. is a teenager the world's most

powerful country today is a teenage

institution the question you and I must

ask ourselves is notice how the US 1776

gets created jump to 1820 then 1870 it's

the Sikh blue line it becomes a

preeminent player in global economics

the question really is why well it turns

onto the first graph I showed you

remember that exponential rate of growth

first industrial Ellucian preeminent is

started in the United Kingdom they say

Great Britain not sure why they put

great there it was just britain and for

those of you are curious the difference

between England Britain and the United

Kingdom is England is England Great

Britain includes England as well as

Scotland so even the Scottish people are

British and the United Kingdom is all

the Scotland England Wales island as

well as the Channel Islands Jersey and

Guernsey that's the difference but the

first Industrial Revolution was

effectively fuelled by the steam engine

that was preeminent in the United

Kingdom the United Kingdom today is one

of the top seven largest economies on

earth effectively fuelled of the back of

a technology that was 200 years ago the

second Industrial illusions indigent in

the United States was the combustion

engine a simple idea that you could take

power residents in large animals like

horses an ox wagon compound it and put

it together into a single steel

structure called an

and use that to move goods today it

sounds rudimentary but in its day it

fundamentally shifted global economics

because until then to move goods from

one part of the world to the other you

are the used steam technology or you

used live animals with a combustion

engine we started using air more

efficient forms of rail it fuelled the

entire convergence and emergence of the

American age today the u.s. is the

world's largest economy because it all

started with a single technology if you

want to understand why Africa remains at

the periphery of global economics you

must ask yourself a single question how

many technologies has Africa produced

and brought to the world that has

shifted how the world in its global

economic structure works until the

answer to that question is answered in

the affirmative we will continue to

remain at the periphery of global

economics mind you by the way and I live

both in Silesia and in London I spend a

week every single month in London let me

tell you I hate absolutely hate European

patronage for Africa I hate it I hate

the idea that Africans must always be

the recipients of pity from other parts

of the world

it's denigrating by its nature but also

quite debilitating because it means for

as long as we exist we always look for

somebody else to come from somewhere

else to better our better living

standards it's rubbish it's rubbish as

Africans we need to learn that we are

capable our selves by ourselves for

ourselves and it starts first by the way

with us eliminating those fictional

lines drawn by men called boarders we've

divided this continent into 53 maybe 54

independent countries and as a function

of that you can move goods from here in

Kenya to South Africa go to pay customs

and excise duties you've got to pay

ridiculous amount of agency costs in the

process you're to the power of the US is

you can make a product in the East Coast

and move it to the west without paying

those duties that's why it is the United

States of America if there is a single

thing as African entrepreneurs we should

be arguing for lobbying for particularly

to our political powers is when we start

businesses we don't want to pay duties

too

goods incontinent because you can sell

only so many my prints here in Nairobi

but I guarantee you you will move a

million of them in Sandton and Joburg I

can only sell so many zulan but that the

shoes in Joburg but I would move a

million of them in Accra Ghana it is the

exchange of our cultures and the

connection of our economies that gives

us an opportunity to build a better

continent a better continent so here's

what I'd like to do I want to take in a

bit of a fictional journey MIT the man

on screen his name is mr. caveman why he

was a man lived in a cave mr. cave man's

life was quite difficult he lived in

perhaps the most difficult period in

ever in human history he had zero

technology in the cold winters he had to

live in the cold winters when the nights

was dark he had to exist in the night

dark winters one day mr. caveman is in

his cave with his friend we'll call his

friend Martin hi Martin

mr. caveman and his friend Martin were

in their cave because their wives was a

sunday had given them downtime now it

happens in my country I'm sure it does

in yours but my diary and my life is run

by my wife so she makes decisions and

determinations about how much downtime I

get and when it's usually on a Sunday

and it's usually before about two to

three hours and it's time that I take

and cherish it's important time I have a

part of my home called the man cave

where only I as the man I'm allowed and

now my son who's six he's getting his

excess rights into the man cave under

supervision the man cave is an important

part of my life by the way because I

have my playstation set up it's where I

watch my my MotoGP i watch my f1 I can

make as much noise as I want that is my

solace in this particular version of the

man cave this was it they were given

time off by the lady partners and I was

sitting doing something arbitrary that

the today's version then of PSP or the

PlayStation they were knocking together

some rocks and stones it was interesting

what happened as they knocked together

these rocks and stones The Rock's parked

so Martin ran outside

and found some dry grass put it together

in a mount and I put together some twigs

and sticks they kept knocking these

rocks until would you believe it they

discovered as we have it today fire why

is this important

you know we talk about technology and

all the research now being done globally

his resting on a single logic I key is

not technology IT is a manifestation of

technology ergo information technology

technologies anytime man invents or

create something that makes his material

existence on earth better the very first

version of it was fire why because with

fire man could fight off much larger

predators he could warm up the cold

winters he could light up the dark

nights it changed his experience in

existence on earth fast forward a couple

of hundred years when I won this time

called the medieval ages and

specifically before the medieval ages

for those of you who don't follow

history

you wouldn't know but but specifically

before the Middle Ages the idea of the

nation-state wasn't born we existed in

our tribal lands as tribes you might be

wondering I am Zulu so I can tell you

now as a matter of fact that there are

only two tribes in the entire African

continent Zulus and everybody else we

Zoomers by the way are quite renowned

for being tall strong men sturdy in our

nature we give guidance and direction

and we're radically attractive

feast your eyes on Exhibit A now I'm

joking I'm kidding of did it but with

the idea of the nation-state it meant

that smaller tribes were being conquered

by larger tribes and larger tribes

conquering even smaller tribes they then

created the very idea of nation-state

you and I would know because we're in

business

but the only way to conquer competitors

through conflict and war you go to the

markets you compete and when you win you

conquer the competitor it was exactly

the same then the problem was that for

man to wage war they had to be in a

proximity in a distance there to fight

seeing an enemy in a space that they

could fight and see if it had more

soldiers and better tactics they would

compete and win somebody thought that

problem was broken and invented they did

the gun or what are the gun do it meant

that you could fight off larger people a

larger tribe the new head you could fire

them and hurt them from a greater

distance but specifically with the

introduction of the cannon you could

conquer land with a fractionally army of

your component that second mode of

technology fundamentally changed history

it changed the course of the world's

history as we know it now let's

fast-forward to the first Industrial

Ellucian man is working in day to day

functions maybe just to give you a sense

pre the first industrial lucien we all

existed in something called nodal

functions of works have simply said ro a

would be a farm and you would farm goods

then you would take the goods and

package them and after packaging them

you would brand them after branding them

you distribute them and after

distributing them you would sell them

you would do all of that the first

revolution somebody thought that that

problem was broken so that so why don't

you farm you package you brand you

distribute you sell you collect and you

build the actual corporate structure

because if we can create lines of

functions and specialization we can

reduce the cost of doing business and we

can build more competitive businesses

and that of course was fuelled by the

discovery of electricity we then move to

a narrower man was travelling using

ships somebody thought that problem was

broken why does the what is a ship have

to sail through the elements one is a

sail rather above the elements and

invented was the principles of flights

that we use in flying today anybody here

but private pilot's license

anybody here fly yeah the people have a

ppl will tell you that when you take

your private pilot's license you're

taught that only the screen what you'd

have as the winds

screen to the car but effectively the

screen of whatever object you're flying

there are two strings on adjacent ends

of a single rod that hangs in the middle

those two strings are the very same

principles of flight the Wright brothers

invented all of those years ago now 80

something years ago and effectively what

they tell you that the two strings are

up straight it means you're flying and

are at balance and if the two strings

ever tilts to either side it means

you're off balance you get an appalling

747 when a380 even today if you go to

the cockpit and look you'll find those

two strings hands up if you ever had a

library card come on don't be shy

hands up if you didn't that explains why

you're in entrepreneurs I am I had a

library card so how this is how the

model worked I would if I wanted to get

a book I got in a taxi in my country of

a taxi here you brought aboard us but I

got in a taxi went into the taxi would

catch another taxi than a second taxi

then I would walk about four or five

kilometres to get to the town library

I've talked to the librarian who was by

the way a genius of indexing systems you

knew what shelf what book next to which

also I would ask her for the shelf and

the book she tell me go to that shelf

next to that author you'll find the book

that you're looking for then go and take

the book she'd give it to me for a week

the exchange was I gave her my card you

would stamp it and you keep a record you

give me the book for the week and I'd go

home and use the book now for those of

you who've ever been to a library hands

up if you have ever been to an empty

library the library that was so busy

there was no books in it yeah you know

what that tells you that they were

inefficient that's the very first rule

of learning any business with assets

that your inventory should always be

zero you should always try and push

inventory to zero

so if there are books in the library it

means there is knowledge sitting that

nobody's using well some people that

problem is broken so what do they do

they took the knowledge put it online

and made it available for everybody all

the time I'm speaking it today if I say

something you don't quite agree with you

go on your phone and you check on the

internet whether or not what I'm saying

is true the knowledge is no longer

sitting in a central place it's sitting

everywhere all the time we make a

mistake about the internet I want to

spend a moment on this you know people

think the Internet is a technology but

an interesting paper published by the

way buy into your business school and

they talk about the Internet not as a

technology but as a catalyst and I think

they quite right so they say for

something to be a technology it must

passed three laws the first is somebody

must create it second somebody must own

it and third it must hit residents

somewhere but anybody here like to tell

us who created the Internet there's a

lot of argument in a lot of literature

wasn't the United States paramilitary

service was it is academics at MIT it

was at Steve Bernstein was it bigger but

was it because the argument in what's

coming on today is he built an iteration

of what later became the Internet in

truth the Internet has been an iteration

of an iteration of an iteration of so

many technologies that nobody owns the

proprietary knowledge upon which is

built in essence nobody owns the

Internet nobody created it the very idea

of what the internet is just think about

it logically I have a website the

wireframe built by crew and caked on the

user interface built by crew and in

Srilanka I'm speaking here in Kenya

which means somebody in Kenya went into

my website and found my information

tomorrow when I leave from Kenya I'll go

to London somebody in London went and

found my information I'm in South Africa

when I Thomas on a transaction is coming

out of Mauritius so would somebody tell

me anytime I do a business deal where is

the business deal done because it's

transacted online the Internet is

everywhere all the time

it's its residents nowhere if you don't

believe me somebody says something nasty

about you on Twitter and they do this

about me quite often try and find the

head office of Twitter and then bomb

them just to collapse the service and

you very quickly realize that even if

you found the head offices of Twitter or

the servers where the information was

setting the backup has so many backups

for so many backups that the Internet is

available all the time everywhere so the

internet is not a technology it's a

catalyst for change that's the first

thing I wanted to say the second point I

want to make is specifically around

understanding the difference between

transformation and change these are not

the same things and I think it's

important for us as entrepreneurs

perhaps to spend a moment on this many

societies tend to think and function

what we call change thinking and change

logic it's linear by its nature it

starts off with an input and the input

pre determines the output that is

perhaps the process of you might want to

think about it how the Frog becomes

starts a tadpole

and a tadpole at the tail disappears it

manifests and it grows and it becomes

the Frog but the beginning state of the

tadpole is in same in substance and and

form as the end state of the frog what

we have to do if we really want to get

financial services to work for

entrepreneurs is we have to start

thinking in transformational ways that's

the difficulty when I studied corporate

finance I was taught a particular way of

thinking that there is a certain set of

information you glean from an income

statement the importance of the cash

flow understanding capital structure and

the balance sheet but of all of the

technologies I think free mentions to

you do you think the Wright brothers had

a capital structure in a balance sheet

when they invented the principles of

flight that fuels global aeronautical x'

today I doubt it let's assume it allows

timber nesting that created the internet

you think yet a capital structure in a

balance sheet that fueled the invention

of the Internet is technology yeah I

doubt that

here is what is past the greatest

disconnect and this is why CBA paid me

before I came here because I can't

really guarantee what I'm going to say

here is perhaps the greatest disconnect

cost your mind back to that graph I

showed you that spoke about global GDP

remember that graph yeah did you know

did you know that our current modern

version of capital structure and

corporate finance what we have as

venture capital and private equity

wasn't in Europe until the 1800s so just

to be clear Europe had a thousand years

of recorded economic history and data

before it built its model of corporate

finance and private equity yet here we

are in Africa with Ghana being the first

liberated nation after colonization only

60 years old the other day and we're

using financial instruments that were

found fit for a continent more developed

than ours close on a thousand years

after that continent had come into its

own economic profit

do you see why there is a disconnect

between entrepreneurs and financial

institutions we're not even talking the

same language the instruments were using

any entrepreneur will tell you we see it

all the time and entrepreneurs come to

us by the time the funder wants to give

you money you don't need it yeah by the

time they want to give you access to

finance you don't need it you're self

generating access to finance so the only

reason you might take that capital is

because you don't want to run a lazy

balance sheet the quick point of the

bank isn't by the way for the

entrepreneurs want to know who the

bankers are find anyone here in a suit

and tie

that's the bank that's why I'm not

wearing a tie I am repented ladies and

gentlemen please allow me to introduce

the world's most attractive woman ever

Serena Williams now I can say this even

though we're streaming it because my

wife knows how I feel about Serena

Williams I can also confirm to you that

my wife has given me a celebrity pass

when it comes to Serena Williams my wife

knows very well but if I ever meet

Serena Williams I am NOT going home I am

very happy to be Serena Williams is

anything as I said that's been friend of

mine is a designer called toolless

Indian Serena Williams was also asked

about 2-3 years ago and he got to dress

her now Tula is what you might say of

the other brigade so so he didn't quite

appreciate the acid infrastructure upon

which Serena's body is so beautifully

constructed so I can't ask yes it is the

balance sheet balancing says I don't

know what you talk about of it oh man

Serena Williams is beautiful she's

absolutely stunning you know Serena

Williams is the most dominating female

tennis player of all time of all time if

you play a game of tennis with Serena

Williams she will serve a ball in your

direction at an average of about 147

km/h so that's you'd be on the other end

doing this and all you'd hear is

and you still be waiting for the ball to

come in your direction she is phenomenal

she is attractive to watch even more so

when she's sweaty I don't wait to take

this too far but I would lick Serena

Williams and sweat off my words it's

like I'm like the winner you don't need

a towel just call me call me Carlos

please I will be your towel

I hope she's watching this so but let's

talk about why Serena Williams is the

most dominating female tennis player of

all time this is the layout of a tennis

court it's looked like this for now 890

years of modern tennis history

it hasn't changed in 890 years of modern

tennis history 19 1981 the WTA world

Tennis Association published a rule

change and the rule change went

something like this the golden oldies in

the room would remember it used to hold

in tennis it as you serve a ball you had

to keep one foot on the ground they said

now you could serve and lift both feet

it was such a shattering announcement

that they published it on the sports

section of the Wall Street Journal

unbeatably

how do you deal with this kind of change

so Weiss win Williams the most

dominating female tennis player of all

time she has done her 10,000 hours a

couple of thousand times over in a sport

that hasn't changed the set of rules in

close on a thousand years to get it I

wonder if Serena Williams would still be

as powerful though if the tennis ball

was a cricket ball if the tennis racket

was a baseball bat what would happen if

we took the tennis court and made it

circle rather than rectangular what

about having two umpires rather than one

what would happen if we remove the

tariffs and made it Tomic would she

still be the most dominating female

tennis player alive today who's the best

soccer player of our generation

Cristiano Ronaldo if he was black he'd

be Zulu course Lionel Messi be Kikuyu

but Cristiano would be subtle no

question there's no question how we even

arguing about this

why's Christiana the best of his

generation simple he's done his 10,000

hours a couple of times over but I

wonder what Christiano still be as good

as he is

if the soccer ball was the weight as

well as the texture of the basketball

you know sweeper is still arguing in

2017 about whether or not to introduce

goal line technology in 2017 what would

happen if we remove the penalty distance

and doubled it or made it in half if we

took the goal posts and made them

cylindrical rather than rectangular the

problem we make in business is we use

the rules of sports to apply in business

and they don't the single reason they

don't apply is because in business every

single day the set of rules along which

you compete is changing your markets

changing your competitors are changing

they need the change and as the shift

happens we too need to change so I heard

the conversation early about disruption

wind disruption occurs you know the

theory tells us now the disruption

occurs when you do simply very simple

things we clouded in a lot of academic

data if you do these three things you're

disruptive if you do something that your

competitor does cheaper or better or

faster or all three as an entrepreneur

you're being disruptive how do you

attract customers to you well it's about

understanding of thinking of Jeff Bezos

right and I don't want to spend much

time on this but if you can save your

customers time resource and energy being

cheaper better and faster you give

yourself an ability to compete in

markets that is harder for your

competitors to attract and much harder

for your competitors to duplicate hands

up if you've ever heard of the company

on screen now yeah fans I've ever heard

of a Nokia hands up if you had a Nokia

hands up if you do now yeah it's

interesting because for those of you

who've ever owned a Nokia hands up if

you knew who the CEO was what the market

share was market cap strategy yeah you

know the mistake we make I think often

in businesses we assume whether or not

our customers care whether or not you

succeed if there was a single thing I

learned from grants specifically grant

story was customers don't care if you

succeed they care if you're relevant in

their lives and if you're relevant in

their lives you have a path to continue

living if you don't

well you don't knock is an interesting

company because it is very

entrepreneurial in its early days I

started out in the world of paper moved

from paper into the world of milling and

then permitting into the agriculture

space and much later by the way

moved by accident by complete accident

into the world of mobile telephony Nakia

went from paper to pulp to agriculture

to phones to dead

why because and you learned this when

you look at entrepreneurial businesses

is there is a different stage at which

entrepreneurs need different types of

leadership and understanding the

different levers of disruption and I'll

speak to that in a minute

so what are we asking of the finance

here is and this is specifically to the

bankers here I think what you'll find

most entrepreneurs are asking for it's

just a change of perspective but for me

to speak about it is perhaps one thing

so what I've done is I brought with a

video to show you what it is I mean by a

change of perspective have a look at

this

sorry guys could you press play press

play you're about to meet Michael it is

fast as a self-made millionaire we

didn't have to dress up all right you're

going to photograph Michael he's

actually saved somebody's life Michael

is an ex-inmate is a commercial

fisherman my fault claims that subject

it's native Michael's former alcoholic

is your camera I would like you to flesh

out the essence a few years what would

you like what would you like to

photograph to say right you find it be a

psychic impacts much on your day-to-day

life I can see is emotional for you

likes it like get to know the folks it

only goes ten minutes right I think

you're a guy that put yourself out there

you're not hiding anything

my plan was to find out about whoever it

was and to try and get that and what I

learned from him is he's incredibly

great

I was really sorry I wanted to see the

nature of the person which then present

a challenge how do you portray him as

super chef that's perfect he's a

self-made millionaire but a little bit

intimidating that I wasn't going for a

beautiful knife perfectly lit portrait I

just kind of try three on something of

who you are I think that you just treat

people like their everyday people like

everybody

pleasure thank you so much I hope I've

got that guy's bravery little film it

was a very intimidating environment

I like the empty chair almost looks like

six different people but not everything

I told you today was true not a

fisherman I am NOT an alcoholic

the GFP hit me hard but I've never been

a millionaire

we've never been in prison I am a bond I

like stable but the story we talked

about never did not psychic can barely

spell it before I knew that were

different casually I thought that's

really friendly don't look like

portraits of the camera I can work you

always got your own preconceptions and

got ideas when pushed me into a position

and basically I would normally that's a

big ugly but instead of me I think

you're a lot more creative to work out

how you roll place isn't that true

did you notice how given the character

each of the photographers went and found

the character in the person the

substance of the person never changed

and this is true true for what

entrepreneurs experience Willie deals

specifically with financial institutions

you're the same person it's the person

on the other end and how they see you

that frames how far your business goes

and whether or not you're able to get

access to finance so in truth the work

that needs to be done is about shifting

the perspective of the other end not

changing ourselves because the

entrepreneurial life cycle is the

entrepreneurial life cycle it exists

just like the laws of physics your

business is going to take a certain

amount of time before it gets cashflow

positive you can burn and stream and do

whatever you want that's just a cycle

you will face at the very least three

near-death experiences in the growth

phase of your business that's the cycle

there is a point at which the set of

skills you have will no longer because

consistent with what's required to build

your business that's the cycle it's

existed just like gravity what's

important for us is to have a

conversation about how do we shift the

thinking of the people to whom we're

asking for and so the point I want to

make here is it's not the solution

that's required it's the problem that's

broken Erik it's the problem in how we

framed it let me put it to you this way

has anybody ever been to McDonald's

hands up you've definitely been to a

McDonald's with your belly gave it away

you look like you're a shareholder in

McDonald's is an interesting foo is an

interesting business but more recently

McDonald has begun to lose rather

significant market share to another

incumbent business called Shake Shack

those of you who travel specifically to

the US and Europe would have seen the

shake shake brand and what Shake Shack

is as a business started by former

McDonald's executives now just close on

seven years ago who went to McDonald's

and said something was interesting they

said to them you know the world is

shifting we have become really good at

the world of fast food we know how to

make food really quickly but the

emphasis is fast not food that's why

would you believe it a McDonald's burger

isn't a real burger it's soy the coke

you buy the McDonald's is not real coke

it's the syrup with ice and water the

other world's largest fast-food company

but they don't sell real food why

because their business model is built on

the speed at which they dispatch the

food not the quality of the food you're

buying but in changing consumer cycles

as we are in we're you and I'm moving

not to wearing wearable technology that

tells me how many steps I'm taking what

I'm eating how many calories I'm

consuming I'm worried not only about

what I put into my body but also what I

make my body do the quality of the food

is important now so McDonald's didn't

listen they continued in the world of

fast food rather moving into the world

of food fast and as a result you would

have seen over the past four years it's

for the first time in the history of

McDonald's in four years the bun through

three different CEOs it's the change of

perspective that's required it's the

change of perspective understand that

entrepreneurs function in the world of

nodes not lines I want to spend a moment

on this in the world of lines an idea

comes in and we get really good and

efficient at executing that mode of

thinking think about what mobile money

for instance did here in Kenya there are

now er iterations of how the mobile

money platform system ecosystem

functions and changes people's lives all

of those iterations are effectively

lines on the node of Mobile Money

entrepreneurs tend to discover new modes

will go into new nodes and because of

that we move into markets that are not

tested where there is no logic whether

it's not yet a business case and there

was an a disconnect

between the instruments of capital and

the capital that we require ask for some

more participation hands up your Netflix

account should be more woodhope hands up

if you're in YouTube dump it go on

Netflix you know I have a Netflix

account I live on Netflix by the way my

team will tell you and the reason I'm on

the Netflix account is because I hate

having to pay a premium for consuming

content you know what that premiers

called advertising so I don't watch TV

and I'm watching less and less of

YouTube because I don't want to be

served advertising content when I'm

consuming if I want to watch a series I

want to watch the series don't make me

pay for watching the series by watching

ads now Netflix is an interesting

business started first moving and

distributing rentals then went and took

the rentals put them up on stream

started streaming them as anyone you

know what the core content and the core

business of Netflix is today anyone it's

not streaming if you're wondering that's

right so let's just be clear first

business of Netflix was to collect DVDs

and distribute them for people to wear

to watch then they took the content to

the DVDs put it online and you could

stream it and watch it the core business

of Netflix today is the production of

content house of cards the very last

season they spent 120 million US dollars

on season four of house of cards in a

year with a eBay doll was seven hundred

and forty two million that is a

substantial amount of capital on one

production one series the last series of

orange is the new black I'm talking

about the series not Donald Trump they

spent eighty four million dollars on

season six of orange is the new black so

if you want to understand any businesses

core business you're going to look into

their balance sheet you understand where

they allocating capital that's their

core business the core business of

Netflix isn't even in streaming it's in

creating their content cherubim on

Netflix watch a series called knockos I

spent an entire weekend watching novels

about the life of Pablo Escobar

the man who evicted Lee created the

world's drug trade as we have it today

the idea of moving drugs from South

America and North America is using

tunnels trains and corrupt officials

that was public Escobar's thinking in

his heyday he was the world's seventh

wealthiest man

a phenomenal story it's told over two

seasons thirteen episodes of season all

of it in Spanish I don't speak Spanish

but I braved two seasons thirteen

episodes of season forty-eight minutes

in episode watching subtitles because

the content was so strong you may not

know by the way that Netflix is just

commissioned a show to come and tell the

story of months Almanza it was a

refreshed show told about an African in

the light of an African as a ruler and a

leader so how does this work I'll close

with this very simply I think it's time

that finances need to understand the

world that entrepreneurs are in you know

it ultimately comes down to what it is

that you're seeing on screen when there

is a disruption introduced in a

marketplace we all have a way in which

we build businesses those businesses

starts at a point get built and we get

really efficient at managing and running

those businesses if you want to

understand why not Kia had the great

disconnected had it's a simple answer by

the way it's because the entrepreneurial

spirit that started Nokia did not

transcend into the management talent

that ran Nokia the disconnect often is

that managers don't understand that

every single business was one to start

up just think about that even CBA was

one to start up every single business

where you work where you get employed as

we run our side hustles these large

institutions that we work in that was

once an idea in somebody's head but when

we go to these institutions and talk to

them often you find that the

decision-makers are disconnected from

the entrepreneurial products that

started that business it's driven by

systems compliance and processes and you

I love compliance heavy cultures one of

the things I noticed by the way about

your beautiful country I suppose

owing to the very unfortunate more

recent incidences you've had around

terrorism is how the security compliance

culture in this country is very high so

yesterday I went into NTV to do a

TV interview with Larry and we waited

for an hour at the security because we

were not carrying our passports now

probably doing it for a good reason but

there is a point at which compliance

just becomes counterproductive because

if it was a live show we would have

missed it completely I would have flown

thousands of kilometres for hours on air

to get here to be on his show and

somebody would have stopped me because

we were not carrying a passport now

they're probably very genuine reasons

why we were not told we needed a

passport and very good reasons why he

needed a passport just like their good

reasons why banks are asking you to put

together a set of complex financial

projections when in truth you don't even

know what the retail price of your

product is going to be the management

prowess that builds the business gets it

to a point where it matures when it

matures it must make a single decision

we keep continuing what we do the

habitual pursuit it may take time but

eventually we will die this is the law

of history study what happened with the

Medici family who created the

institution of banking as we know it it

will happen all and this is the one that

happens more often hire very

well-trained finance people process

engineers bring them in and ask them to

make the business more efficient cut

costs reduce the marginal cost per

commodity and we become more competitive

yes in the old world you become a

McDonald's that sells more burgers

cheaper they still unhealthy all and I'd

like to think this is what perhaps the

entrepreneurs have been trying to say

it's time for a new conversation it's

time for a fundamental rethink about how

you're assessing us and the data and the

information we keep and how you're

building products to answer the needs

that we have and that is about getting

into the space of innovation it requires

bravery a lot of courage internal

conflict within those organizations but

done and done correctly it transforms

ecosystems

I'm humbled that you've invited me here

and I look forward to spending some time

with you after this I'll call Larry back

on stage but I hope you found value in

the ideas and thoughts that I've shared

now over the past 35 minutes thank you

very much

[Applause]