Ben Oladokun, Shekel Mobility: YC, Nigeria, G63 AMGs and international car trade

Another Founder Wisdom podcast today with Benjamin Oladokun. He is co-founder at Shekel Mobility, YC company company, Y Combinator winter 23 batch. So, we're going to have a nice convo about Africa, about car dealerships, about fintech.

And yeah, me and Ben had a nice pre-talk last time. We talked about uh G63 AMG's and Lexus trucks. So, had a good time.

Hopefully, it's going to be that way today, too. Ben, can you introduce yourself? Tell us a bit more about Shekel.

Yeah, thanks a lot, Charles. You know, hello everyone. My name is Ben, Benjamin Oladokun.

As I mentioned, I'm co-founder of Shekel Mobility. So, essentially, Shekel Mobility is a B2B marketplace for, you know, auto dealers in Africa. Um what we do is we help them find, finance, and sell better.

Essentially, like optimizing their business transactions, right? You know, um You know, should I go on? Like, there's a lot to say.

go on. Uh I'll stop if it's uh if it gets too much. Got it.

So, yeah, um we officially launched um this company, you know, uh last last year. Again, we've been in mobility space for quite a bit, and this is not our first company in the mobility space. Um but yeah, so we start we launched Shekel fully last year.

Um as of now, so the the first pilot year, you know, we did a transactions of about $5 million. So, right now, we're doing transactions of $5 million on a monthly basis. Um you know, and pretty much, this is all spanning across about 200 dealers, local dealers as of today.

And we do have like a wait list, a long wait list of over 1,000 local dealers that want to use, you know, our service. So, our vision is to be the first mobility, you know, Africa first Africa's first mobility unicorn. Um you know, powering about $10 billion transactions you know, by 2025.

And we're very much on, you know, on the way to do that. Pretty ambitious. Um okay, 25 billion dollars.

That is 10 billion dollars. Okay, 10 billion. I mean, still very ambitious.

Um how many auto auto dealerships are there in Africa is my first question. Ah, so the the the the unique thing about the, you know, auto dealership space is that in Africa is pretty pretty fragmented, right? Um so you there's a lot of, you know, auto dealers that, you know, so we we've segmented them to like two types of dealerships, right?

There's a lot more than that, but classically two, right? There are the local dealers. The local dealers are the ones that have, you know, the car lots, you know, they have a bit of resources, right, to do their business.

However, we have agent dealers, right? So agent dealers are a lot more. So if we're looking at all these, you know, categories, we'd say we have right now, conservatively, over 100,000, you know, dealers in, you know, in Africa.

That is quite a lot. Um and it surprised me. I checked some numbers in Africa the other day.

So French speakers, 160 million of them. Um that that was quite surprising. I didn't know that and I didn't know that Africa had that much population.

Um you started in in Nigeria, right? And Yes. Tell us a bit more about like Nigeria itself, how you started, and how much folks how much population is there in in Nigeria?

So Nigeria is like the, you know, is the largest, you know, country in Africa. Uh well over 200 million at the last count, you know, and um so I mean, again, by 2050, we're estimated to be more than United States, you know, up in population, you know, um cuz Africans are, you know, we give birth a lot, you know, so so then like, you know, the population is big, you know, Nigeria is like the biggest economy. Again, we've had like very terrible leaders at some points that have sort of not, you know, really lived up to our potentials, you know, in a lot of things, you know, but then I feel like there's a lot of hopes with this new regime.

There's a new president. There's just, you know, he just May 29, you know, we had a new president and there's a lot of hopes he's got, you know, running. So, Nigeria is really, um, a very vibrant, you know, economy.

And even in Nigeria alone, uh, we have a market size which is even so $10 billion that we're speaking to, we can actually do those transactions in Nigeria alone. Right. Um, yeah, pretty much.

So, as of today, the, you know, value of the used cars that come into the country is, um, about 4 billion, you know, um, 4.5 billion, nearly 5 5 billion dollars, right, on a yearly basis. Right. And most of our transactions are transactions that, you know, we do even beyond those we capture a lot more transactions.

For example, dealers doing dealers business with themselves, you know, we capture those. So, $10 billion can actually be done in Nigeria even though we're going to scale to a couple more, you know, countries. Interesting.

You have a couple of features that you're deploying. Uh, one is funding, a another is like, um, a kind of new bank, you know, uh, and the third one is the marketplace. Um, so what what feature are you focused on right now and tell us the logic and the needs the problem you're solving behind each of these products / features?

Yeah, I got it. All right, so, um, good points. I mean, you you've detailed it.

So, we have three core products, right? Um, you know, the first is Shekel Credits, you know, um, the second is Shekel Trade or Shekel Business as it's called. And then we have Shekel Pay, right?

So, I'll go to the first one. So, Shekel, um, Credit essentially is offering, you know, credits for auto dealers to buy more cars. And trust me, like that's the That's a flash flashy product, and that's still the one of the key drivers because a lot of dealers, I mean, they want money, you know.

So, again, we know that, you know, finance is the lifeblood of any business, you know, but one of the things that's happened is that is how, you know, we entered into the space. Dealers sort of like, you know, we had we had a meeting with a group, you know, while running our last company with a, you know, company called Cars45. We're providing another type of service for them, and then they, basically, what they do is like Carvana, Cazoo, and all the likes, right?

Online, you know, buying cars online, right? So, but they had a lot of dealers, you know, and they So, they wanted to, you know, better their business. And it was It was in COVID period, yeah, where, you know, there was a lot of things going wrong, right?

So, and then essentially, like we had a meeting with the CEO, you know, Sombronzo, you know, he's from I think he's from India. Yeah, he's from India. I had a meeting with him that day.

We just had a chat, and then he was talking about like, can we help, you know, because we had just launched a product, Easy Finance. That's story for another day then. So, I'm like, absolutely, we can do that, like, you know.

And he's like, do you guys have a billion, you know? Nah, you know, like, yeah, we can do it because it's so huge a market, right? And somehow, you know, a lot of people No one focuses on dealers, right?

I think it's because the dynamics of their transactions are very unique, right? So, you know, having that, you know, combination like in terms of understanding their dynamics, able to understand finance, and also technology to be able to solve their problem is is sort of a bit tough. So, credit is what we started with, and the demand is continuously huge.

But then, stepping down to the other one, right? You know, I mean, I if I have more time, I'll talk a lot more about even how we do our credits. So, we just don't give credit like that.

We have We've built an operating system, right, that helps these dealers buy cars. So, they buy the cars, you know, they fund their wallet to 30%. We provide 70% and they buy the cars within our operating system, which is one of the reason why even after I'm doing, you know, over 30 million dollars, you know, transactions, we still have 0% defaults, right?

And the banks right now are really, you know, um really looking forward to working with us on that. Yeah, so but like the other product is Chekout Trade. Um so, what it does, like you said, the marketplace where people can buy and sell.

Like we said, we do we help buy fi- finance and sell. Right. So, that sort of helps people buy cross-border, like, you know, a car is not selling in his state, he's selling in another city.

So, we help optimize, connect dealers. And then the pays because right now the dealers want more credits, right? So, they're limited to let's say we a dealer starts and we give him a hundred thousand, you know, um dollars credits, you know.

And he's this dealer some dealers a lot of dealers do one million dollar, you know, some of our part dealers that are users, they do one million dollar transactions on a monthly basis and they they want more credits. For them, the banks that they currently work with are really use- useless to them. You know, Nigerian banks are very, you know, they're they're not as I mean, they're very unique set of set of people, right?

So, and they're like, "My bank is useless to me. I will bank with you." Right? So, they want they are the ones even because they want they see this as helping them helping us give them, you know, or helping them qualify for more credits, right?

So, we've not fully launched that. You know, and this also is where they can then leverage our pay Chekout pay app, you know, to be able to pay if they want to buy cars from other, you know, countries. You know, payments and but then there's a lot of things we're solving, you know, Chekout pay will launch maybe before the end of the year, you know.

Well, let's talk about dealers themselves. Um so, obviously dealers are are somewhat different in Africa from um the rest of the world, although I I do think there must be like some Toyota dealerships and so forth, which I do not think it's is your target market for now. I have a visual on on the dealership and what it kind of looks like in in Africa.

What are their margins? Let's start with that. Let's say that I go and check out and buy a Mercedes for 20,000 USD.

Like how much can I resell it resell it for? Is it like 30k and my markup is 50%? What does it look like?

Okay, so let me give a background. So we we we deal with, you know, for the most part, you know, the the purchasing power of the country, right? A lot of people can afford to buy like used cars, pre-owned vehicles, right?

Not a lot of people can buy the brand new vehicles, right? The companies still do corporates and a few H&I's and all of those can buy the, you know, brand new vehicles, right? So they're the Toyota dealerships, they still have all those ones, right?

But that's not our focus because that's not the majority of the market. The, you know, 85% you know, deal in tokunbo or we call tokunbo. So what tokunbo is called is, you know, uh cars coming in from overseas, right?

Tokunbo is a Yoruba term, right? Um and even locally used. So there's foreign used and there's locally used cars.

So those are the cars that sell the most. And for us, we're supply agnostic, right? We don't we can power any transaction, but, you know, that's what the majority of transactions are today, right?

So and this Do you want to say something? Should I go ahead? Yes.

Um why are these cars coming from elsewhere? Um the the first thing I had in my mind were like are they stolen? Like tell me tell me a bit more about uh that.

Okay. No, so first of all, Nigeria does not produce vehicles, right? Even the Yeah, even the Toyotas, they don't have their, you know, they're not set up here.

So if you have to they have to bring, you know, from overseas, right? You know, um and then, you know, most of the time, what because the cheaper cars are the cars that have been used before, right? In other markets, right?

So, someone buys a, you know, Toyota, you know, Prado in, you know, in America, uses it for like 4 years, then somebody now then buys it. So, it's cheaper, right? So, it's sort of like So, that's why most of these cars come in.

However, you know, because there's, you know, as much as we have, you know, in any economy, we have like the bad business people, right? You know, and so, a lot of times, they're accidented cars, you know, they're cars that have been badly used abroad, and they bring In fact, we hear a lot of stories around cars that have been flooded, you know, that have water issues, and they just bring it here just to sell them for profit, right? So, we see all these things happen, but of course, which is one of the reason why, you know, on our platform, we do all of these checks, and most of the cars that we sell, we don't have these, you know, issues there.

There are also issues of stolen vehicles, you know, everywhere. The It's but of course, it's perpetrated mostly by people abroad, whether it be Nigerians there, or, you know, Africans there, or anyone there that then ship it here for people to use, right? So, there all the stories around, you know, I've seen all sorts of documentaries, like, you know, cars disappearing, you know, in America, and then you see it here, you know, in Lagos, right?

And And who sells these cars? Is it like scrap yards? And isn't there an opportunity to build a platform to facilitate that international car trade?

So, like, when you say who sells it, you mean here? Who sells it there? Uh there, like dealerships, scrap yards, like who who actually exports these car cars?

Because that's an unknown market that I didn't know about. Okay, yeah. So, so, they're generally auction platforms, right?

In the US, they're big auction platform. You have ACV, you know, auction platform. You have Manheim, you know, we have There There a lot of, you know, auction platforms that dealers buy from, right?

So, what happens that a lot of times, there are people abroad, like like I mentioned, a friend of mine in Houston, he buys he works in Shell, but on the side he does dealership business, right? So, what he does is like he buys from Manheim, right? And he ships it down.

So, he has people here that buy from him. Dealers buy from people. So, some dealers buy enough to buy directly from Manheim, but most for the most part they buy from people that buy, you know, that resell abroad.

Right. So, but in terms of building the platform, the thing is, you know, definitely their platform. So, there's also I don't know if you know a company called Trade X, right?

They're you know, they're looking to partner with us now and we're you know, we're in talks with the CEO, Ryan. Um, you know, so basically what Trade X does is trying to um connect those markets, right? Okay, you know, in terms of um outside and inside, you know, maybe from America to but for us because we're starting with credits, right?

Uh our credit offering, you know, just sort of like in terms of doing our risk assessments, we don't want to you know, get involved in that play yet because, you know, in terms of that cycle, that you know, value chain, there's there's customs issue, you know, immigration. There's so many things there that, you know, you don't want to get involved and you don't want your money to get stuck. Again, uh payment platforms, you know, will definitely cater to this.

So, ensuring that you know, all of the payments for this transactions cross-border are you know, but again, there's so many so you know, problems to solve really in Africa, you know, and there's obvious obviously opportunity to create that platform. Right, it looks kind of risky though. If I'm this small dealership in Africa and I drop like 20K to buy my Mercedes overseas, like first well, I I guess it's all about trust, right?

So, there must be an escrow payment. There's the reputation of the person that sells it to me. Um and there must be recourses if like my money gets lost in the process, but coming back to to my question, if I'm taking that risk, I'm buying that Mercedes for 20, I expect it to sell it at least for 30 in Africa and 10K can be a nice payday granted that I sell it in the next 2 months.

So, what are the the margins on on the car? Why why are dealerships so attracted to this business? So, dealers at general service dealers are big boys, right?

So, dealers make money, right? And apart from even so, there's there's a high ticket, you know, a business, right? There's a lot of transactions.

One car in some cases can be like $100,000, you know, a lot of that depending on what level you operate on. Um so, typically for pre-owned vehicles like or for rather for locally used vehicles, right? Um the margins can be as high as 50%, you know, depending on the deal they get, right?

Um so, which what did you know, it's all about getting right deals, right? Somebody wants to sell a car, you know, used it and then you price it down, you tell him that there's something wrong with this car and then you bring the cost down to, you know, $10,000, right? And then you're able to sell it for $15,000.

So, um but for the for the average transaction, right? Dealers make roughly about 30%, you know, 30%. Right.

on the transaction. However, for the brand new vehicles, they the the the profits goes down a little bit, you know, for vehicles, yeah. Yeah.

And the interest here being twofold. One, Africa is going in growing in terms of population and two, car adoption is going up. Why?

Because public infrastructure, roads are getting developed and also people are kind of globalizing {slash} Americanizing, Westernizing and they realize like, oh, I I can get there quick and I can have my nice little vacation or I can, yeah, get to the restaurant quicker. So, I think these are the these are the are the the the pigs you're you're piggybacking on um the hypergrowth piggybacks I I I would call them. Is that correct?

Absolutely. Absolutely. It's a huge It's a huge market.

And which is why for us, like, you know, we're stalking demand, right? You know, one of the things that we're trying to do now, right, is just integrate with the banks, with the big banks, right? We have a local, you know, bank already, uh, microfinance bank that we're working with.

But, you know, uh, working I mean, the opportunity is really there for the banks. Just that for the most part, the way banks are set up, right? They're not innovative enough to work with people like Wave Power.

Like that, you know. We're talking to CEOs of those banks. You know, like, Sterling Bank, you know, we're talking to even higher power people in in the banks, and they're they're all interested, and it's just that their process a bit bureaucratic, you know?

But, in terms of the the size of the market is trust me, and it grows is, you know, like you said, it is right now the car ownership in Africa is about, you know, 1%. You know, right? Vis-à-vis the population, right?

So, a lot of people don't own cars. You know, as, you know, the economies sort of starts, you know, developing, a lot more people can afford it, you know, and can buy their own vehicle, you know? And the the need would always be there.

So, it's a huge market, you know. One challenge though is that, for example, Nigeria, I had I heard that it was one of um, I think that I believe it was Lagos uh, that had the largest traffic uh, problem in the world. Or was it Nairobi?

I forgot, but it basically was like huge traffic problems. Sometimes people got stuck for for like 10 hours in traffic. So, I guess like the the government infrastructure needs to follow.

Yeah. No, Lagos, um, Lagos used to have traffic, and like you said, so, it's I mean, we sort of used to have leadership problems, but trust me, it's getting better. And, um, so, now, even in the past, you know, administration, we have like, you know, trains, you know, working better.

So, and also the roads, cuz Lagos is a One of the problems that we had in Lagos is like, just like London. Even when I'm in London, like, the traffic in London is annoying, you know? Um, so, it's you know you find out that most of the roads have been constructed for a while, you know, it's you know small vis-a-vis like the people that come in like Lagos people coming to Lagos every day in like in thousands.

So the population is about you know 25 million, right? For just a city, right? You know, a state, you know, but it's actually in terms of land mass is the smallest state, you know, even in Nigeria.

Small but a lot of people because of the economic power a lot of people are coming in. But again, like you said, you know, this you know in terms of water you know waste transportation have been developed and you know the roads are you know in fact even wider roads have been you know constructed and you know it's it's I think it's a problem you know in a lot of cities that have this kind of even maybe I don't know New York or stuff like that. And in terms of transportation that brings a lot of opportunities.

We've seen a lot of entrepreneurs start their Uber-like app in Nairobi and Nigeria. And I guess the opportunity is that most humans are completely foreign to what life looks in some cities or some parts of the world. Even myself as a nomad, you know, I I've never been to Nairobi but if I would have my foot there and if I would see the reality, I would understand that opportunity.

But not not a lot of people see it and you're there and I guess that's why Africa, Nigeria and and Nairobi could be one of the best investment that there is and I guess that's why you've got YC behind you. Yeah, absolutely absolutely. No, I mean so you're right like there's nothing like you know even when you scale, you know, people you've seen brands that scale but they have to adapt, you know, locally because culture is a big deal, you know, the people is really big, you know, so you need to understand the local markets and you until you're there even when companies want to launch, right?

Sometimes they send in teams to really understand or probably leverage somebody's experience, you know, that is on ground. So, the opportunities here, trust me, like I know a lot of you were in in the Y Combinator program, a lot of my friends, like they they really like they were surprised, you know, at some of the things that we're saying. But until in fact, I have a lot of friends that are coming in in December trying to like, you know, based on our conversations trying to come in and see a lot but trust me, there enormous opportunities and some of them you can only I mean, especially in in in Africa where or even Nigeria where data online is not as, you know, accurate, right?

So, there's some a place like San Francisco, like even before you go there, you can literally see San Francisco online. You can see everything that exists there. There's a lot of data, there's a lot of things you can get without going there, right?

But trust me, like, you know, most of the things you get are not up-to-date, you know, in Africa. So, you really need that context of being there, you know, or leveraging somebody, you know, that understands the market, right? I was I was about to say you were saying believe me, I believe you and I invest in you {slash} advise you, but as I was thinking about that, um I'm like, yeah, Africa, I mean, I've done business in Africa.

I do GTM, I do biz dev as a service. And like you said, the listings are not necessarily there because one of the main tool that I use to prospect, let's say dealerships, um it would be like people that are on LinkedIn, for example, but not everyone's on LinkedIn and in Africa, uh then like Facebook, uh probably a bit more, right? Facebook, uh Google Maps.

So, I I could like scrape these people and make lists and reach out to them. How's the Does that like cause a challenge? Because there's also a bunch of challenges like if you write the opportunities, you mongous, but I think the work is somewhat uh e-equalizing uh the the equation.

I think it's it's somewhat hard. There's the There's the government infrastructure, there's the fact that yeah, like not all people have have info online. People are still somewhat old school.

They might not take a call with you, they might want to do things physically. So, what are the challenges ahead of you? Um you know, so I I think I think false right.

Again, there industries where, you know, it's developed, you know, you can sit anywhere. Most of the players there are, you know, you know, online today and all of those things. There's a lot of development, there's a lot of progress, you know, I must be honest.

Um but I think one of the unique things about dealerships are, you know, most of the the average dealer in Nigeria is not the, you know, for the for the lack of for a lack of better word, like the educated mind, right? Yeah, sophisticated. Yeah, sophisticated in that sense.

That's the better word, thank you. So, pretty much, you know, most of the dealers are just like, you know, they get their stuff done, they're just on the streets, you know, hustlers trying to make stuff happen. Exactly.

So, I think that, you know, a lot of times, you know, for for us, like we've had to like encounter a lot before we, you know, got our dealers to, you know, start using, you know, apps, you know, again, most of them use Instagram because they're smart, you know, don't don't take that away from them, you know, for for it for the average dealer, they're smart guys, you know, but maybe they don't, you know, just not, you know, exposed enough to selling tools. For example, on LinkedIn, you probably not find them, you know, what are they doing there, right? You know, so you probably not find the average dealer on LinkedIn.

Yeah, and I think that's your boat, you know, that's your little castle that you have there because you have a foot on the ground, you understand them, and you're kind of the liaison between the the tech and what they don't know. Apart from your offer being just too good too good to refuse, right? Financing, you're probably one of the only guys that can give that to them.

I've seen I use a food ordering app here in in Mexico and and in LatAm, it's called Rappi. Um so, it's like food ordering and I think they've been in YC too, but they also offer credit now Um, for restaurants, for consumers, so I think most businesses will or platforms or um, companies with network effect, I think they will fintechitize or however you want to call that word. You know, we've been saying that software eats the world.

Uh, every company's going to become a software company, every company's going to become an AI company, every company's going to become a media company. And now I do think that most businesses are going to become fintech companies as well if they do have um, the platform and the community, right? Also, every business is going to become a community.

Um, I have one last question for you because and that was related to the the challenges with who are you banking with? Are these Western banks, European banks? Because my guess is that in Af- well, you're probably banking also with some African banks, but the the banking ecosystem is like not as advanced.

So, with who are you you banking with on the back end? Um, so on the back end, um, operation for operations, you know, because we have to look at we're localizing operations, um, in terms we don't want the risk of, you know, forex, which is a big deal in Nigeria now. So, um, you know, we're you know, we're banking with local partners, Zenith Bank, you know, um, you know, um, Sterling Bank.

Um, you know, these these are big banks actually. Like, the kind of profits, you know, uh, Nigerian banks make, trust me, American banks don't even make it, you know, because they charge unnecessary debts. You know, there's so many charges.

To send, you know, money, you're having like different crazy charges that, you know, my other, you know, banks, you know, abroad, like I don't It's almost more like my money's still there, but for Nigerian banks, they just have a lot of charges. So, we bank primarily with, you know, local banks. Um, you know, we do have, again, for our international like investors, we have our, you know, international banks, American banks, but for operations, you know, we deal essentially with, um, local banks.

Right, got it. And how much of that is VC money? Do you also use VC money for loans or what do you do you separate both?

No, so initially, like I said, when we started this company, we started with our own money, money we took from the last company, $500,000. And we also had, you know, couple, you know, partners, you know, join us. And then we raised a pre-seed of about $1.95 million.

So, for the most part, that was before YC, right? We leveraged we were, you know, using some of the money to alongside partners, right? But the demand was huge and we kept on using our money.

But post-YC, the model because for us now is to scale it. And if you want to scale it, you can't keep using your money. You know, you want to do transaction of $20 million on a monthly basis, you want to do transaction of $100 million on a monthly basis, you can't keep raising that kind of money.

You know, it's not sustainable, right? So, we're at a point where we're sort of, you know, slowing down on using we're phasing that out of using our on lending our on our balance sheet and then we're scaling, you know, lending on partners' balance sheets. Right.

Well, thank you so much for showing up today, Ben. Where can people find out more about you? So, my LinkedIn, Benjamin Oladokun.

You know, maybe our website, check out mobility.com or check out Africa. You know, so for the most part, that's it for now. I don't have I'm not a, you know, I've not really I've just stuck my head down in working.

I don't know if there's any other I think LinkedIn is is perfect, you know. I've always find time to, you know, respond, you know, on LinkedIn. All right, thank you so much.