What’s It takes to Launch a Company in Ethiopia?

The best starting place, is to think through how to serve a completely vacant market waiting to be developed and seek to grow fast enough to own it.

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Having helped set-up four companies over 6 years attracting over $200mn in committed capital in Ethiopia, I get asked all the time, “How do you do it?”

So here is my best and most obvious advice:

 

Think Big

Most of the entrepreneurs I run across in Ethiopia are working on small ideas, neither inspiring nor able to scale into meaningful segment-dominating businesses. They generally are developing a “marginal improvement” idea to someone else’s already successful company, just another ‘me-too” idea. In a market as immature, fragmented and strewn with under-capitalized companies as Ethiopia, there are white spaces on the chessboard everywhere you look.

The best starting place, is to think through how to serve a completely vacant market waiting to be developed and seek to grow fast enough to own it. harnessing resources to feed the pace of growth is key and usually, that means three types of capital resources: financial, human, and intellectual. Those three resources are inescapably essential to scaling fast.

Partner Carefully

Finding great people to partner with is very challenging in Ethiopia. Nevertheless, finding co-founders / team-members who are: smart, reliable, sacrifice-oriented, lacking envy, good-hearted, and execution obsessed is essential. But there is more to finding great people than that.

As Hakeem Belo-Osagie pointed out,

It seems everyone in the market wants a big title, top salary, 9-5 hrs, generous maternity/paternity leave, a corner office, and a well developed enabling environment (preferably created by someone else).

Moreover, they don’t want to invest their own savings or unpaid time. Whenever I run across those types, I am reminded of the following joke, “What’s the difference between the chicken and pig at the bacon and eggs breakfast?”, Answer: “The pig is committed, but the chicken is only involved!” I look for the pigs whenever pulling together founding management teams as only then are interests truly aligned.

Every time I’ve been seduced by a chicken dressed up with a fancy resume, I’ve regretted the messy omelettes that ensued.

Finally, at all costs avoid people with toxic personalities, or those that are prone to dodging commitments, or excuse-makers, or people you could characterize as “Big hat…no cattle”. As Warren Buffet says, “Who you spend the most time with, will largely determine who you will become.” Hence, consciously choose to team up with the best and the brightest who have the highest integrity and also believe enough in the idea that they will invest in the project. Every time I’ve been seduced by a chicken dressed up with a fancy resume, I’ve regretted the messy omelettes that ensued.

 

Do the Work

Many say business plans are useless but business planning is essential. In my experience business plans rarely play out as anticipated. But the work that goes into a thorough, excellent, deeply researched b-plan is invaluable, in:

A) Identifying the risks that inevitably must be mitigated to increase the likelihood of success.

B) Building the depth of credibility required to foste