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Kenya Report

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InterviewsSeptember 07, 2023

The Village Formula: CEO Joram Mwinamo Explains How SNDBX is Revolutionizing SME Services

Joram Mwinamo, CEO at SNDBX – The Village Formula
Joram Mwinamo, CEO at SNDBX – The Village Formula
Written by Sandra Francisco
Published: September 07, 2023

Interview with Joram Mwinamo, CEO at SNDBX – The Village Formula

SNDBX is a fascinating concept. Could you please tell us more about it and elaborate on your competitive advantages compared to existing alternatives?

The SNDBX concept aims to address multiple challenges. Over the years of assisting entrepreneurs in developing their businesses, we have recognized that the necessary services were scattered throughout the city. This fragmentation made it arduous for entrepreneurs to locate high-quality, cost-effective professional services. Previously, they often relied on personal contacts, such as friends or relatives, for recommendations. However, this approach sometimes led to subpar services, as these contacts might not specialize in business law or other specific areas. Additionally, such services often proved to be quite expensive.

What we do at SNDBX is curate customized services tailored to the needs of small and medium-sized enterprises. We also centralize these services in one accessible location. Consequently, entrepreneurs no longer need to navigate various locations to find the expertise they require. They can simply visit our platform, where they will discover a wide array of experts who are well-versed in the needs of small and medium-sized enterprises. These experts offer tailor-made services at pricing that is designed to be affordable for businesses of this size. This streamlined approach makes it exceptionally convenient for entrepreneurs to access high-quality, dependable services.

How many companies and clients do you work with?

Since 2020, we have successfully brought together 37 non-competing professional service providers, each specializing in a distinct area. These services cover a broad spectrum, encompassing governance, HR, marketing, logistics, travel services, legal expertise, and even more specialized offerings like photography and videography. These services are consolidated under one roof, right in the heart of Nairobi, Kenya, effectively creating a hub where entrepreneurs can access these 37 different services. This is why we refer to ourselves as a "village," a collective of seven distinct companies coexisting under a single roof, supported by a substantial workforce.

Our larger community comprises over 150 specialized experts distributed across these 37 companies. Together, we currently serve more than 2,400 small and medium-sized enterprises (SMEs) and startups. These businesses engage with us for various purposes, be it programs, projects, or direct utilization of specific services. Our platform also fosters internal referrals and collaboration among these expert service providers, resulting in an enhanced quality of service delivery. This contrasts with the previous scenario where finance, HR, or marketing consultants operated independently due to their physical separation in different buildings. This collaborative ecosystem is what we have successfully established.

Furthermore, we collaborate with numerous large corporations that incorporate SMEs into their value chains or client portfolios. Our involvement extends to assisting them with product development research tailored to SMEs, product testing, and hosting events that facilitate interactions between these corporations and SMEs. We have also organized innovation challenges and startup competitions on behalf of these large companies. Additionally, we manage substantial projects for donors seeking to engage with SMEs. As a result, our client base in Nairobi encompasses a diverse range of customers and partners.

Are you the sole provider of this unique service?

Since our launch, we have conducted extensive research, both in Nairobi and beyond, looking across Africa, Europe, and the US. While many places have incubators and accelerators targeting a similar audience, they often focus on running programs without offering a comprehensive range of in-house services. Even when they do, it is usually a limited selection, perhaps five, six, or seven services, as opposed to our extensive list of 37. We pride ourselves on providing a well-rounded and extensive list of services. To the best of our knowledge, we have not come across any competing brand worldwide that offers services in the same manner as we do.

Some might argue that they prefer the convenience of turning to a major consultancy group that offers an all-in-one solution. They see this as a way to avoid dealing with various personalities and different companies. What would you say to individuals with this perspective?

When you examine how large companies and consultancies are structured, you will notice a distinct pattern. At the top tier, firms such as McKinsey, BCG, Bain & Company, and Roland Berger, primarily focus on strategy, occasionally delving into implementation services. Moving down the hierarchy, you encounter the "Big Four" – PwC, KPMG, Ernst and Young, and Deloitte. What is interesting is that this part of the market is compartmentalized. Financial services are often associated with the Big Four, marketing services tend to align with entities like WPS, and creative services are typically found within firms like TBWA and WPP. Legal services usually operate independently. So, they are not consolidated under one roof.

In contrast, we offer the full spectrum of services, encompassing financial, creative, legal, and more, all conveniently housed under one roof. If you were to visit PwC, Ernst and Young, or top legal and creative firms, you would find that they lack this diversity of services. We not only cater to creatives, legal experts, and financial professionals, but also provide additional services like travel and mental health support. We have built a comprehensive ecosystem around our services.

Furthermore, our unique positioning is specifically tailored to entrepreneurs, aligning closely with their needs. While we might consider expanding into serving larger businesses in the future, our primary focus remains on entrepreneurs. We offer services that cater to them individually, addressing aspects such as personal finance, travel, and work-life balance. We provide services ranging from therapy to assisting with personal savings and investment. These services cater to the entrepreneur's personal needs. For their businesses, we offer a wide array of services, covering areas like legal, marketing, HR, branding, process quality, Occupational Safety and Health, and much more. In essence, we provide an extensive range of services that, to the best of our knowledge, sets us apart from any other business globally that combines such a comprehensive suite tailored to the needs of entrepreneurs.

Can you walk us through the client journey when they approach your services, especially if they do not require all the available services? They might only need one or two companies. How does the process work?

Our approach varies depending on the client's specific needs. To provide some context, think of us as a hospital for entrepreneurs and businesses. Sometimes, clients come to us with urgent needs, akin to seeking emergency services at a hospital. These urgent needs often revolve around compliance, legal matters, taxes, or HR, perhaps involving a compliance issue with a government agency. In such cases, we step in to assist promptly. For example, we can help them with tax compliance or manage tax disputes. If they are facing labor issues with an employee or a government agency, we can provide guidance in that realm as well.

At times, clients approach us without a clear understanding of their problem. They meet with a consultant, usually a startup or strategy consultant, who helps them pinpoint the areas that require intervention. We then guide them through the journey, connecting them with the relevant experts they need to see.

Alternatively, we have assessment tools that can identify gaps in their businesses. Based on this assessment, we prioritize the most critical issues to address immediately. We create a plan that spans several years to address their other business challenges systematically. Clients can engage with us at any stage of their journey, even when they are unsure about the nature of their problem. We start by addressing the most urgent pain points in their business, similar to stabilizing a patient in the ICU. Once these immediate concerns are addressed, we move on to tackling more long-term issues. This could encompass strategy, product development, automation, web development, or infrastructure services. We have experts in each of these areas, and the beauty of our approach is that once you embark on a journey with us, it becomes an ongoing partnership. We are always here to assist with whatever challenges your business faces on a day-to-day basis.

Can you explain how the revenue-sharing works within your organization? Do all parties contribute towards SNDBX?

We have established various revenue models within our organization. Different service providers pay a base fee to SNDBX on a monthly basis for being a part of our platform. Additionally, we closely track referrals that occur between companies within our ecosystem. This leads to the payment of commissions or referral fees to both the referrer and SNDBX. Moreover, when SNDBX makes referrals to the experts, we also earn referral fees or commissions, which flow directly from business accounts through SNDBX to these experts.

Furthermore, we collaborate with large companies, and we charge them project management fees. This fee covers the coordination of different experts as they engage in various assignments. Sometimes these large companies require services for a substantial number of SMEs and startups they support. In such cases, we provide services on a bulk scale and offer guidance on how to enhance the impact of their programs. These are some of the key revenue streams that contribute to SNDBX's financial health.

In total, we have 14 different revenue streams, but I will not delve into all of them. The main sources of revenue include the license fees paid by the experts to SNDBX, referral and commission fees, and the project management fees we charge for overseeing complex projects. Our system is designed to create a win-win situation for all parties within SNDBX, offering incentives for everyone to achieve greater financial success than they might on their own in a traditional office setting.

Could you shed some light on why you believe a system like this has not been implemented before? On the surface, it seems quite logical, but we are curious to understand what obstacles or challenges might have prevented this idea from being realized.

Indeed, I often tell people that I might be the only person in the world who truly comprehends why this has not been done before. The reason is rooted in the complexity of the endeavor, which involves a multitude of moving parts. While the idea itself may seem logical, the actual execution is far from straightforward. Surprisingly, I have encountered numerous individuals who admit to having contemplated this concept in the past but never took action. It is logical to think about creating a one-stop shop, but the real challenge lies in assembling the right mix of attitudes, values, cultures, and a sharp focus on small and medium-sized enterprises (SMEs).

Since our inception, we have been on a quest to find individuals and partners with a collaborative mindset, a genuine commitment to addressing SME challenges, and a willingness to accept the reality that SMEs are often small in scale and may not yield substantial individual fees. Instead, it is about consistent, steady revenues generated through innovative business models and the application of technology to facilitate DIY services. Our journey has involved extensive product development and research aimed at structuring services that are not only accessible and affordable for SMEs but also profitable for service providers due to the cumulative volumes.

Consequently, we offer a diverse range of services tailored to startups, small businesses, medium-sized enterprises, and large enterprises. This allows us to cater to businesses at various stages of development. One week, we might conduct workshops for a group of small businesses, while the next, we could be engaged in an in-house consulting project for a larger enterprise. The cumulative revenues from these diverse sources are sufficient to sustain our service providers profitably over the course of a month.

Can these companies be part of SNDBX while also serving clients outside of the SNDBX ecosystem?

Absolutely, we not only allow this but also encourage it. When a company or service provider joins SNDBX, they become part of our ecosystem. They can continue to network and acquire clients outside of SNDBX. For instance, they might meet a potential client at a networking event and schedule a meeting with them the following day or week. When these clients visit SNDBX, they often discover the wide range of services we offer under one roof, which can be quite impressive.

Within our ecosystem, there is an inner village comprising our service providers. However, we are also building a broader community of small and medium-sized enterprises who see themselves as part of the larger SNDBX village. Many of them are increasingly participating in our social events and celebrations, like Christmas parties, because they genuinely feel like they belong to a thriving community. Being an entrepreneur can sometimes be a solitary journey, and having a supportive community can make a significant difference. It is not just about services; it is also about having someone to listen to your story and empathize with the challenges you face.

It is worth noting that all 37 businesses within SNDBX are run by entrepreneurs who started their businesses from scratch. This shared entrepreneurial experience creates a strong sense of empathy within SNDBX for fellow entrepreneurs. This is why many individuals find that SNDBX is a place where people truly understand them, empathize with them, and comprehend their journey. Regardless of how challenging it may seem, you will always find someone at SNDBX who can say: "we have faced even tougher situations, and we managed to overcome them." We are here to encourage, support, and connect entrepreneurs with programs and support groups that can help them navigate the challenges inherent in their entrepreneurial journey.

What are your plans for expansion?

Since our launch, we have garnered significant attention, not just locally, but from all around the world. We have received inquiries and expressions of interest from various countries, including China, Thailand, Singapore, India, Bangladesh, the UK, Mexico, Brazil, and the US, among others. Additionally, We have been approached by individuals and organizations across Africa who are curious about our unique model and are eager to explore partnerships or even franchise opportunities.

Currently, we have active contacts in approximately 20 different countries who are interested in setting up a version of what we are running here, whether it is virtual, physical, hybrid, or a franchise model. We have been diligently working on developing these different models and establishing partnerships in these countries. For example, we are in the process of setting up operations in the US and have identified potential locations in Europe.

In the US, we have engaged with individuals in four different states who have experience in small business incubation and acceleration. They see our model as a more effective way to provide services to startups and SMEs. We are looking for champions in each location who can act as central coordinators, recruit suitable experts, and build a community within the village. We have developed a methodology for identifying the right experts to fit our model, and we continue to expand our pool of experts. Once we reach a critical mass of about six to ten experts, we can start collaborative activities and grow from there.

We support these initiatives with marketing materials, websites, and a backend methodology that ensures the village remains vibrant. We hold regular meetings and engage in weekly activities to foster collaboration and referrals. We also collect and analyze data, tracking metrics such as revenue growth, the number of customers served, and customer satisfaction. This data allows us to assess the effectiveness of our model and address any issues promptly.

It was challenging at the outset, but as our brand has grown, we now have multiple applicants for each position, allowing us to select the experts who can provide the most value in each service area. Overall, we have observed a doubling of aggregate revenues year-on-year since our inception, demonstrating the significant value that collaboration within our ecosystem brings.

When it comes to expansion, is there an initial cost that the champion in the US or elsewhere would need to bear? Or is the model flexible enough to accommodate champions who may not have significant financial resources but are skilled organizers?

We have designed this model with the entrepreneurial spirit in mind. So we have a flexible approach. Champions can start with very limited resources, as long as they possess a deep understanding of the small business, entrepreneurship, and startup ecosystem. It is advantageous if they have strong connections within their city, such as affiliations with chambers of commerce, small business groups, or associations. Having access to a network of quality consultants who are willing to participate in the model is also valuable.

Champions with these attributes can start by recruiting and convincing consultants to pay for the model's services. This allows them to establish the foundation. Others may have access to slightly larger amounts of capital, enabling them to set up on a larger scale and cover franchise fees. With adequate resources, they can provide a comprehensive package of services from the outset, including events, networking opportunities, and conferences.

Our approach is to evaluate the champion's financial capacity, their connections, and their ability to get the services up and running. Based on this assessment, we determine the most suitable model for them. Some champions are already organizations actively supporting entrepreneurs and view SNDBX as an excellent value-add to their existing efforts.

Looking ahead, what is your vision for SNDBX in the next five years? Do you see this model, successful in Kenya, expanding globally, and becoming a new collaborative paradigm for businesses worldwide?

In the next five years, our vision is to establish, every year, at least three virtual SNDBXs, a few hybrid setups that are integrated into existing spaces like co-working facilities or entrepreneur support organizations, and one physical SNDBX in various locations around the world. As we set up these SNDBXs in different regions, we aim to create interconnections among the experts in these networks.

For instance, we will have a legal network serving SMEs in different cities, each with its own forum for sharing ideas, collaborating on projects, and offering combined services. If a client in Atlanta, for instance, wishes to set up a business in Kenya, they can be seamlessly referred to a Kenyan lawyer within our network for assistance with business registration and related tasks. We will establish similar networks for branding and tax experts, among others.

These interconnected networks will facilitate the crowd-sourcing of valuable knowledge and expertise from various corners of the world. When clients require solutions that span multiple countries, our experts can collaborate more effectively than a single firm would. Since our focus is on SMEs, our pricing will be much more affordable compared to larger consultancy firms like the big four.

We intend to create a global ecosystem where businesses can easily collaborate, share experiences, and access expertise. It is possible that tools, technologies, and innovations from one country could benefit businesses in another. This exchange of ideas and resources will be a key aspect of our network's value.

While I do not want to sound overly optimistic, I believe that as we grow and expand, the SNDBX network will become increasingly valuable. Just as people speak highly of firms like McKinsey or BCG today, we hope that in the next five to ten years, people will recognize SNDBX as a global network that supports SMEs across the world.

 

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