MELVYN LUBEGA: How to build a billion-dollar tech business

A business can only become as big as the size of the problem it solves. In other words, if your solution is limited to a local problem that’s your total addressable market, whereas if you solve a global problem your potential market is worldwide.

EdTech Go1 is SA’s first and only unicorn — a tech scale-up that surpasses a billion dollars in value. Starting as an idea among friends before being invited to join Silicon Valley-based YCombinator, today Go1 provides an education platform for millions of people in thousands of organisations around the world. In 2017, when the business reached an inflection point (in terms of scale), we joined Endeavor, the prestigious global scale-up accelerator headquartered in New York, to help scale up internationally.

When Go1 reached a certain size and became a scale-up — which is where a company is ready to grow beyond its current market, be that geographically or otherwise — the team came across Endeavor, which is a community of, by and for entrepreneurs.  Its superpower is that it is full of people and mentors who have been there and done that, but also — importantly — it has global reach and trusted networks.

Global reach, mentoring and networks are important, and in the case of a scale-up they are non-negotiable. Entrepreneurs would do well to focus on five key areas, such as the ones Endeavor enables, to ensure the best chance of success. This is how a scale-up can best embark on a journey towards unicorn status.

Entrepreneurs should think big, whether they are building a big business or a small business.  Yes, it is going to be tough, with many nights working late and plenty of stress to contend with, so why not build something big?

Another important trait entrepreneurs should cultivate in their efforts to become a unicorn is an appreciation of the journey. It’s vital that an entrepreneur never loses sight of “now” and the small things when they plan for the future. A saying on walls in the Go1 company offices around the world proclaims: “If you take 1.01 to the power of 365, which means growing incrementally every single day for a year, the outcome is 37.78.”

In layman’s terms this can be interpreted as: “If you aim to grow 1% every day, it is the small things that add up over time. In a year you will be 38 times bigger than where you were a year before. This is the 1% principle.”

When I look back over Go1’s journey another key focus area that stands out is looking actively for areas of collaboration. Co-operating with a business partner that complements your skills and shares your vision can take you further, quicker. Collaboration in the form of skills in the business is crucial as it grows, especially if a business needs to grow in an area or geography where it is not yet proficient or present.

Another aspect of collaboration, and a good tactic in the scale-up journey, is growing with your customers into new markets as they grow. For example, if a customer goes into a new region and you need to develop products and solutions for them, it introduces you to the market and provides the opportunity to develop a playbook for that new market, territory or business vertical.

I believe working together is key, particularly when aspiring to build a unicorn, because on that level of scale an entrepreneur must take advantage of the net effect of collaboration with human capital — encompassing employees, partners and customers. 

It’s absolutely key for high-growth entrepreneurs to be intentional. When my cofounder, Andrew Barnes, and myself went through the Endeavor local and international selection panels in SA, we were very intentional about pursuing and being introduced to networks in Malaysia because we knew a presence in the Southeast Asia region would catapult us along our global journey.

I unequivocally advocate being intentional. It’s about unlocking the potential of your business and being willing to take risks. Yes, we could have limited our growth to SA and Australia and built a successful company. Would we have become a unicorn though?

Success depends heavily on remaining true to your core competency and purpose and zoning in on what you do best. It is better to have 100 customers who love you and can’t live without you, than 1,000 who kind of like you. When looking at collaboration and intentionality it is easy to see how 100 customers who love your product will grow with you and become your launching pad.

Turning the lens to the broader picture, I can see that it is no coincidence that the countries and regions that purposefully build enabling environments for start-ups and entrepreneurship, attract the most funding and house the highest number of high-growth scale-ups and unicorns.

Capital is highly mobile. An investor would be less inclined to invest money that is locked in a single country if they are looking for multi-territory investments with pan-African value, for example. In addition to this, countries that make it easy to attract and work together with skills from other countries tend to nurture more unicorns. South Africans would do well to understand that many venture capitalists who have capital to invest are looking for pan-African or global investment opportunities and not necessarily solutions to uniquely local problems.

Naturally, access to capital is vital right from start-up to scale-up to unicorn. Reflecting on my journey, since Go1 achieved unicorn status, I have begun to pay it forward and reinvest in high-potential start-ups myself. Raising money wasn’t always easy for us, so it is my mission to become the investor I wish I had.

In Africa there are so many real-world problems and blue-sky opportunities that technology can address. Being able to pay-it-forward is both a privilege and a duty. This is the type of legacy I’d like to leave.

• Lubega, a former Rhodes scholar, is founder and director of EdTech Go1 and an Endeavor SA board member.