# Becoming an Analyst

An episode of [The Mwango Capital Podcast](https://invisiblenetwork.ai/podcast/1583367792), 7 Oct 2025, 58 min.

Audio: https://api.substack.com/feed/podcast/175442692/d28796e570ff54a3830364509c284d81.mp3

In this episode recorded on July 31, 2025, we are joined by Kishan Popat as we trace his path from computer systems to leading research at Kestrel Capital, and his journey through MIT. We cover lessons from the 2008 financial crisis, the value of cold emails, the impact of AI on financial analysis, and improving African markets Subscribe to get notified when we make a new post. Show Notes 00:00:00 Introduction 00:05:19 Understanding the Financial Crisis & The Role of Structured Finance 00:08:06 Lessons from the Financial Crisis, Investment Strategies and Mistakes 00:13:28 Building a Research Desk at Genghis Capital 00:17:26 The Value of Cold Emails 00:20:15 Day-to-Day Life of an Analyst 00:23:43 The Impact of AI on Financial Analysis 00:27:05 Advanced Education and Business Strategy 00:37:11 Humility and Learning from Top Investors 00:49:40 Critical Minerals and Africa’s Future 00:51:04 Advice for Young Analysts and Improving African Markets 00:57:50 Closing Remarks Get full access to The Mwango Weekly at mwangocapital.substack.com/subscribe

## Transcript

[0:00] SPEAKER_00: Welcome all to Mwangus Papers.
[0:02] We do hold this conversation every Thursday evening where we
[0:06] have conversations on
[0:07] SPEAKER_00: capital markets and start mic.
[0:09] So this week we are having a conversation with Kishan on
[0:12] becoming an analyst and
[0:13] SPEAKER_00: what you can learn from his journey,
[0:15] especially focusing on his story during his time when he was at
[0:18] Kestrel Capital.
[0:20] SPEAKER_00: To get started, Kishan, welcome.
[0:21] SPEAKER_00: Maybe introduce yourself a little bit.
[0:23] Tell us a bit about yourself and a bit about your journey from
[0:27] computer systems to
[0:28] SPEAKER_00: finance across Kenya,
[0:29] SPEAKER_00: UK and the US.
[0:30] Eric,
[0:30] thank you so much for having me and I appreciate everyone
[0:34] listening in.
[0:34] SPEAKER_01: I hope everyone's having a good evening.
[0:36] SPEAKER_01: It's afternoon here in Boston.
[0:39] So my journey really has been a bit different from most
[0:42] people's when it comes to
[0:43] SPEAKER_01: capital markets.
[0:44] When I was in high school,
[0:46] I was originally very interested in software development.
[0:50] SPEAKER_01: coding, programming, systems engineering.
[0:53] And I decided that I wanted to do my class degree basically in
[0:56] computer systems engineering.
[0:58] SPEAKER_01: At that time when I graduated from high school,
[1:00] SPEAKER_01: which was in 2003,
[1:00] the computer science field and educational system in Kenya were
[1:05] not that great yet.
[1:06] We still didn't even have broadband access or we were still
[1:10] many years behind the
[1:11] SPEAKER_01: West at that point.
[1:13] SPEAKER_01: I was very fortunate.
[1:14] SPEAKER_01: I got accepted into Warwick University in the UK.
[1:17] SPEAKER_01: Went in and studied a master's in computer systems engineering.
[1:21] SPEAKER_01: Loved it.
[1:21] SPEAKER_01: But then during that journey,
[1:23] I did an internship with Deutsche Bank in London through my
[1:26] computer science in
[1:27] SPEAKER_01: their FX rates IT team.
[1:29] SPEAKER_01: But that was where I got my first taste of capital markets.
[1:32] SPEAKER_01: I didn't know what a stock was.
[1:33] SPEAKER_01: I didn't know how investments worked.
[1:35] SPEAKER_01: But at that point, I got my first exposure.
[1:38] But I really fell in love with investing when I watched a
[1:41] single YouTube video by
[1:42] SPEAKER_01: Warren Buffett.
[1:43] At the end of that one hour video,
[1:45] I basically decided this is what I was going to do.
[1:48] SPEAKER_01: It's called the Warren Buffett MBA talk.
[1:50] SPEAKER_01: It's highly recommended.
[1:51] And when I watched that,
[1:52] I realized,
[1:53] wow,
[1:53] there's so much more companies that I did not know.
[1:56] I was very fortunate that Warwick Business School was one of
[1:59] the top business
[1:59] SPEAKER_01: schools in the UK,
[2:00] SPEAKER_01: got into their MSc finance program,
[2:03] SPEAKER_01: and then graduated right in the middle of the financial crisis,
[2:06] SPEAKER_01: September 2008.
[2:06] SPEAKER_01: At that point, all global capital markets had frozen.
[2:10] SPEAKER_01: It was pretty scary times.
[2:13] But Kenya had seen some slowdown,
[2:14] but was largely shielded from the whole kind of environment.
[2:18] SPEAKER_01: So I made the decision, let me come back to Kenya.
[2:20] SPEAKER_01: And in hindsight,
[2:21] that was actually one of the best decisions I made because
[2:23] that's put me on the
[2:25] SPEAKER_01: career path that I am on today.
[2:27] SPEAKER_01: So I started this company called Winton Investments.
[2:29] It was an offshore investment company where I was tasked with
[2:32] research in global markets.
[2:34] SPEAKER_01: But very quickly,
[2:34] SPEAKER_01: I realized that one of their affiliate companies,
[2:38] SPEAKER_01: sister companies,
[2:38] SPEAKER_01: Genghis Capital,
[2:39] SPEAKER_01: was looking for an analyst.
[2:41] SPEAKER_01: And I threw my name in the ring and I pushed the management and I said,
[2:45] SPEAKER_01: let me be employee number one for the research team at Genghis.
[2:48] That was an unbelievable experience because I got to basically
[2:52] try and set up a
[2:53] SPEAKER_01: research team from the ground up with no experience in effect.
[2:56] SPEAKER_01: The management team believed in me.
[2:59] SPEAKER_01: I got to have some pretty interesting conversations.
[3:01] SPEAKER_01: One of the most interesting conversations I think I had was I emailed Dr.
[3:05] SPEAKER_01: Bitange Demo at the time.
[3:06] SPEAKER_01: And I wanted to understand the fiber optics space in Kenya.
[3:10] SPEAKER_01: I was not expecting any response.
[3:11] SPEAKER_01: But they called me.
[3:12] SPEAKER_01: We had a one-hour conversation.
[3:14] And that was a defining moment in my life because it made me
[3:16] realize that through
[3:18] SPEAKER_01: this industry,
[3:18] SPEAKER_01: you could have conversations with some very senior people.
[3:21] SPEAKER_01: And that can unlock a lot of kind of learning.
[3:24] SPEAKER_01: But within a year,
[3:25] the British government was giving these special visas if you
[3:27] had graduated from
[3:29] SPEAKER_01: their universities.
[3:30] SPEAKER_01: So I returned to the UK.
[3:31] SPEAKER_01: I realized,
[3:32] SPEAKER_01: okay,
[3:32] SPEAKER_01: the Kenyan market was incredible experience,
[3:35] SPEAKER_01: but the size of the UK market was substantial.
[3:37] SPEAKER_01: And so there was a lot of skillsets I felt like I could have built up.
[3:40] SPEAKER_01: I stayed there for a few years.
[3:41] I ended up working in structured finance,
[3:43] which was going through a massive reset.
[3:46] Structure finance was really interesting because parts of it
[3:48] had been responsible
[3:49] SPEAKER_01: for the global financial crisis.
[3:51] So I was very intrigued how these products worked and what
[3:53] about them made them so
[3:55] complex and what effectively drove the biggest financial crisis
[3:59] since the Great
[4:00] SPEAKER_01: Depression.
[4:01] SPEAKER_01: But every weekend,
[4:02] I would go to the British Library and other libraries in London
[4:05] looking for cheap
[4:06] SPEAKER_01: companies to invest in.
[4:07] SPEAKER_01: By that time, I already had studied Buffs.
[4:09] SPEAKER_01: I'd studied a lot of the books, Ben Graham, Peter Lynch, all these guys.
[4:14] And I knew this would be a good opportunity to find some pretty
[4:17] cheap companies.
[4:18] SPEAKER_01: So I did that for a few years.
[4:20] SPEAKER_01: And then Kestrel Capital was hiring, looking for a research analyst.
[4:24] SPEAKER_01: And I came to know, I spoke with them, interviewed with them.
[4:27] And I realized if I wanted to come back to Kenya,
[4:29] this would be one of the top institutions.
[4:32] SPEAKER_01: They had a phenomenal culture and a lot of learning opportunities.
[4:35] SPEAKER_01: Came back, got unbelievable exposure.
[4:38] They used to fly us to the US,
[4:40] the UK,
[4:41] South Africa for investor roadshows.
[4:43] SPEAKER_01: Worked with incredibly smart people.
[4:46] SPEAKER_01: deep dives with CEOs, CFOs.
[4:48] SPEAKER_01: It was incredibly hard work, but phenomenal growth.
[4:51] And then from that journey,
[4:52] I wasn't expecting that I would ever apply to MIT,
[4:55] get into MIT.
[4:56] SPEAKER_01: It's always an institution that you dream about when you're young.
[5:00] SPEAKER_01: And effectively,
[5:01] SPEAKER_01: through my work at Kestrel,
[5:02] SPEAKER_01: the relationships I built and the profile I built,
[5:04] SPEAKER_01: I interviewed with MIT,
[5:05] SPEAKER_01: got accepted.
[5:07] SPEAKER_01: And now it's been a very different experience.
[5:09] SPEAKER_01: It's been a very life-changing experience,
[5:11] SPEAKER_01: I would say,
[5:12] SPEAKER_01: and happy to go into it in further detail.
[5:14] SPEAKER_00: That's a pretty broad and wide start to break down a bit by leaks.
[5:19] SPEAKER_00: I think one of the intriguing part is joining the financial crisis.
[5:23] SPEAKER_00: From your understanding of structured finance,
[5:26] what's triggered the financial crisis a little bit for those
[5:28] who are not that
[5:29] SPEAKER_00: familiar with the financial crisis?
[5:31] SPEAKER_01: So structure finance is basically where you take a lot of,
[5:34] let's say you have car loans or you have mortgages and the bank
[5:38] has lent you this
[5:39] SPEAKER_01: loan,
[5:39] SPEAKER_01: this money,
[5:40] SPEAKER_01: but they don't want to necessarily hold your loan for 30 or 40 years.
[5:43] SPEAKER_01: They want to increase business.
[5:45] SPEAKER_01: They want to lend further.
[5:46] So they package up all these mortgages or loans or credit card
[5:50] receivables into a
[5:51] SPEAKER_01: vehicle and they then sell it onto the market effectively.
[5:55] SPEAKER_01: Market means you could have pension funds, could have
[5:58] SPEAKER_01: hedge funds,
[5:59] you could have any number of investors who are looking to
[6:02] invest in these products
[6:03] SPEAKER_01: because they offer higher yields and higher yields relative to government
[6:07] SPEAKER_01: securities.
[6:08] But at that time in 2007,
[6:09] 2008,
[6:09] a lot of these securities were rated per A,
[6:15] Now,
[6:15] the way ratings work is that AAA has a very low probability of
[6:19] default.
[6:20] So in effect,
[6:21] AAA security is close to the risk that you take from lending to
[6:25] the government.
[6:26] SPEAKER_01: In that case, it was the UK or the US government.
[6:29] And so what Structure Finance Securities did was they offered
[6:32] you a slightly higher
[6:33] SPEAKER_01: yield,
[6:34] SPEAKER_01: but for the same perceived risk.
[6:36] And so it was very attractive for investment managers because
[6:39] why not put your
[6:40] SPEAKER_01: money into something that is giving you a high return,
[6:42] SPEAKER_01: but in theory,
[6:44] SPEAKER_01: had the same amount of risk.
[6:46] It turns out that the mathematics behind a lot of these
[6:48] products were flawed in the
[6:51] sense that a lot of structured finance securities have what we
[6:55] call a base level of
[6:57] SPEAKER_01: default.
[6:57] SPEAKER_01: So you have a portfolio of, let's say, a million mortgages.
[7:01] SPEAKER_01: or 100,000 mortgages.
[7:02] SPEAKER_01: And on average,
[7:03] SPEAKER_01: in a good environment,
[7:04] SPEAKER_01: these many loans or this percentage of the portfolio will default.
[7:08] SPEAKER_01: And then you say,
[7:09] SPEAKER_01: okay,
[7:09] SPEAKER_01: in a stressed economic environment,
[7:12] SPEAKER_01: 2x or 3x of these loans are going to default,
[7:15] SPEAKER_01: but the rest of the kind of loans are going to perform.
[7:18] And what happened was basically,
[7:20] think about it from a regression perspective.
[7:22] SPEAKER_01: You say,
[7:22] SPEAKER_01: oh,
[7:22] SPEAKER_01: this is what I think the worst case is going to be,
[7:24] SPEAKER_01: and the worst case ended up being much more worse.
[7:28] SPEAKER_01: And these were incredibly complex portfolios.
[7:31] And it was an incredibly complex kind of legal frameworks
[7:34] underlying those cash flows.
[7:35] SPEAKER_01: And,
[7:36] SPEAKER_01: you know,
[7:36] SPEAKER_01: when the crisis hit,
[7:37] nobody really knew in a lot of these assets what was in it and
[7:41] how bad it was.
[7:42] SPEAKER_01: And so that's why a lot of these grew up.
[7:45] Now I came in after that and I got to see how the system was
[7:49] repairing itself,
[7:50] SPEAKER_01: how the assumptions were changing,
[7:52] SPEAKER_01: how there was stress testing,
[7:53] SPEAKER_01: how they're being more conservative,
[7:54] SPEAKER_01: how lending was being more conservative.
[7:57] SPEAKER_01: So I got this unique perspective into these securities.
[8:01] SPEAKER_01: And I think that's actually something that I was not anticipating,
[8:04] SPEAKER_01: but has helped me quite significantly in life as well.
[8:06] SPEAKER_00: From my reading,
[8:08] I noticed that people who enter the financial markets at the
[8:10] point of crisis,
[8:11] they become a bit more risk-averse when you go forward because
[8:15] you have that muscle
[8:16] SPEAKER_00: memory of having dealt with the financial crisis and how tough it can be.
[8:19] SPEAKER_00: Do you think that bit is something that can relate to yourself?
[8:23] SPEAKER_00: Indeed,
[8:24] SPEAKER_01: the beauty of it was Ben Graham,
[8:26] SPEAKER_01: who basically was a teacher of Warren Buffett,
[8:29] SPEAKER_01: was practicing during the Great Depression.
[8:32] SPEAKER_01: And I graduated effectively during kind of the next Great Depression.
[8:36] SPEAKER_01: And because of that timing of graduating then,
[8:39] getting into the industry when it was resetting and seeing just
[8:43] how cheap stocks
[8:44] SPEAKER_01: were,
[8:45] Like it gave me an entirely different perspective into
[8:48] investments than perhaps
[8:49] SPEAKER_01: somebody who's graduating now where stocks are a bit more expensive,
[8:54] SPEAKER_01: that we've not had a crisis period and things like that.
[8:57] Part of the research that I ended up doing was looking through
[9:00] these companies and
[9:01] SPEAKER_01: you found what Ben Graham says are net nets.
[9:05] SPEAKER_01: Now,
[9:05] SPEAKER_01: for the younger generation,
[9:07] net nets are basically when cash minus total liabilities of a
[9:11] company or current
[9:12] assets minus total liabilities of a company are greater than
[9:15] market capitalization.
[9:16] SPEAKER_01: So you get a lot of the assets for free, right?
[9:18] SPEAKER_01: You get all the long-term assets for free.
[9:21] And everybody thinks that I don't want to invest money in these
[9:24] companies.
[9:25] SPEAKER_01: There's something wrong, blah, blah, blah.
[9:26] SPEAKER_01: But if you do your due diligence...
[9:28] you might be able to see something that the rest of the
[9:31] investors have not.
[9:33] And if you buy into the stock,
[9:34] you can make two,
[9:35] three,
[9:35] four times your returns.
[9:36] SPEAKER_01: For example,
[9:37] SPEAKER_01: for me,
[9:38] some of the companies that I looked at and invested in were
[9:41] like French Connection
[9:42] SPEAKER_01: UK.
[9:42] SPEAKER_01: So I don't know if many people remember,
[9:44] SPEAKER_01: but there used to be these shirts which were called FC UK.
[9:47] SPEAKER_01: And it was very famous and popular when we were teenagers.
[9:50] SPEAKER_01: But that company was a net.
[9:52] SPEAKER_01: I bought it at 20p.
[9:53] SPEAKER_01: Eventually, it went up to 90p, which was Warwick's plus return.
[9:56] SPEAKER_01: Or Krispy Kreme donuts, which was $3, went up to $19 within three years.
[10:02] SPEAKER_01: So I got to see some pretty mispriced companies,
[10:06] SPEAKER_01: and I realized,
[10:06] SPEAKER_01: okay,
[10:07] SPEAKER_01: capital markets are not necessarily efficient.
[10:09] SPEAKER_01: But at the same time, I did also make a few mistakes.
[10:12] SPEAKER_01: I bought into a Ukrainian egg company.
[10:14] I bought into this Chinese shoe company,
[10:16] which turned out to be not having any real assets.
[10:19] SPEAKER_01: And so you got to see a lot of these companies.
[10:22] An interesting one that I'm pretty sure that almost no Kenyan
[10:26] is aware of is Kakuzi.
[10:28] So Kakuzi used to be listed on the London Stock Exchange and
[10:31] the Kenyan Stock Exchange.
[10:33] SPEAKER_01: It was listed on the London Stock Exchange in the 1950s.
[10:36] And it was trading at about 50p,
[10:38] which at the time for Kenya was about 90 shillings.
[10:41] SPEAKER_01: But the same share in Kenya was trading at 300 shillings.
[10:44] SPEAKER_01: In theory,
[10:45] SPEAKER_01: you could buy the share in London,
[10:47] SPEAKER_01: move it to Kenya and sell it for a 6x profit or a 4x profit or whatever.
[10:52] SPEAKER_01: I never did it, but it was pretty interesting.
[10:54] But I always say that a crisis is an incredible opportunity for
[10:57] a young analyst.
[10:59] SPEAKER_01: And so when there's a crisis,
[11:00] you should be doing the most homework of your life because
[11:02] you're going to learn
[11:03] SPEAKER_01: some pretty incredible things about the market.
[11:05] SPEAKER_00: In basic terms, then how does someone start the investing process?
[11:10] There's a bit of the overwhelming concept,
[11:12] like you have so many stocks to pick from.
[11:14] SPEAKER_00: How do you narrow down to a specific company to be invested in?
[11:18] SPEAKER_00: And if someone is getting started,
[11:19] how do they make sure they don't get overwhelmed by the sense
[11:22] of how much is there
[11:24] SPEAKER_00: to be learned in the process?
[11:26] SPEAKER_01: It is actually quite an overwhelming process, right?
[11:28] SPEAKER_01: Especially pre-ChatGPT.
[11:30] SPEAKER_01: You don't know what the frameworks are.
[11:32] Maybe you've studied a degree which doesn't relate to finance
[11:35] or accounting.
[11:36] SPEAKER_01: And so it is for a young person,
[11:38] SPEAKER_01: it's certainly even today,
[11:39] SPEAKER_01: I think even with ChatGPT,
[11:40] SPEAKER_01: it is somewhat overwhelming.
[11:41] SPEAKER_01: I think it came back to this whole Genghis Capital experience, right?
[11:44] SPEAKER_01: I was very fortunate that I got into that business.
[11:47] I was very fortunate that I graduated in the financial crisis
[11:50] and it was years of work.
[11:52] SPEAKER_01: So I studied Warren from like 2007, 2008 onwards.
[11:55] SPEAKER_01: I was studying all these other investors.
[11:58] SPEAKER_01: I read every shareholder letter from like Buffett's 1957 letters,
[12:02] SPEAKER_01: Ben Graham's letters,
[12:03] SPEAKER_01: all these other famous investors.
[12:05] SPEAKER_01: Actually,
[12:06] the most interesting book that I read was Security Analysis
[12:08] from the 1934 edition
[12:10] SPEAKER_01: of Security Analysis because he gave exact companies.
[12:14] SPEAKER_01: He said, this is what the assets were.
[12:16] SPEAKER_01: This is what the cash was.
[12:17] SPEAKER_01: This is what it's trading at.
[12:19] SPEAKER_01: And Buffett says the 1940 edition is better.
[12:22] SPEAKER_01: But the 1934 edition for me, for example, was very interesting.
[12:25] SPEAKER_01: And it gave me that perspective that,
[12:27] SPEAKER_01: okay,
[12:27] SPEAKER_01: you don't need to necessarily build complex cash flow models.
[12:31] SPEAKER_01: You don't need to do this.
[12:32] SPEAKER_01: You can get a sense that,
[12:33] SPEAKER_01: hey,
[12:34] if a company is trading less than its current assets minus
[12:37] total liabilities or
[12:38] SPEAKER_01: cash minus total liabilities,
[12:40] SPEAKER_01: on average,
[12:41] SPEAKER_01: as a portfolio,
[12:41] SPEAKER_01: it should be reasonably safe if you do a bit level of homework.
[12:45] I think the way I would do it in a chat GPD world is I'd create
[12:48] all these hypotheses.
[12:49] SPEAKER_01: Is this company like this?
[12:51] SPEAKER_01: How should I be thinking about this?
[12:53] SPEAKER_01: Where can I get wrong?
[12:54] SPEAKER_01: What can I get wrong?
[12:55] SPEAKER_01: You can ask it.
[12:56] SPEAKER_01: It's like this brain trust that you have.
[12:59] SPEAKER_01: And then from there, you can develop this thesis.
[13:02] SPEAKER_01: And after that, invest, start very small.
[13:05] SPEAKER_01: Like you will probably lose money for some time.
[13:08] SPEAKER_01: You will get it wrong.
[13:10] SPEAKER_01: But over time, you'll learn.
[13:11] SPEAKER_01: The other thing I think is a necessity,
[13:13] SPEAKER_01: or at least close to a necessity,
[13:15] SPEAKER_01: is actually working with an investment bank,
[13:17] SPEAKER_01: working with a financial institution,
[13:19] SPEAKER_01: where they'll actually pay you a salary to do all this work.
[13:22] SPEAKER_01: And you'll have mentors,
[13:23] SPEAKER_01: you'll have people who guide you,
[13:25] SPEAKER_01: and you learn from kind of other people's mistakes as well.
[13:28] Let's circle back a bit to the beach where you're working at
[13:32] Genghis Capital,
[13:33] SPEAKER_00: and you built the research desk itself in Scratch.
[13:36] So I want you to take us through the process involved setting
[13:38] up the research desk,
[13:40] SPEAKER_00: establishing a credible research function in a frontier market.
[13:43] SPEAKER_00: And then after that,
[13:45] SPEAKER_00: I would ask you about the day-to-day of research,
[13:47] SPEAKER_00: and then you would go through the research process that you'd go through.
[13:49] SPEAKER_00: So first, the building process.
[13:52] SPEAKER_01: It was very scary.
[13:53] SPEAKER_01: I was freaking out, am I going to make a mess of this?
[13:57] SPEAKER_01: But of course,
[13:58] I had people that I could talk to and my managers who told me
[14:01] do it this way,
[14:02] SPEAKER_01: that way.
[14:03] The way I did it was I started off somewhat limited
[14:06] information,
[14:07] somewhat blind.
[14:08] SPEAKER_01: I relied a bit on kind of my Deutsche Bank experience.
[14:11] SPEAKER_01: I had a lot of friends in the UK who were in the financial services,
[14:14] so I tried to get information from them on how I should be
[14:17] thinking about this.
[14:19] I picked up the equity research reports from some of our
[14:22] competitors at the time.
[14:24] SPEAKER_01: So African Alliance, Darren Blair, Kestrel.
[14:27] SPEAKER_01: I tried to deconstruct what they were doing and rebuild it up and seeing,
[14:31] SPEAKER_01: okay,
[14:31] SPEAKER_01: how can I build that up?
[14:33] SPEAKER_01: The next thing was, there were a few obvious things that we needed to do.
[14:36] SPEAKER_01: We needed to have a weekly report, a market open report, a closed report.
[14:40] Our equity research reports needed to have a few kind of
[14:43] factors,
[14:43] positives,
[14:44] negatives.
[14:44] SPEAKER_01: Maybe at that time, I used to think about SWOT analysis.
[14:47] SPEAKER_01: ratios and maybe a financial model and evaluation.
[14:51] SPEAKER_01: So these are the things I learned from other people.
[14:53] SPEAKER_01: And then the other thing that I quickly realized was data, right?
[14:57] SPEAKER_01: So Kenya at the time had very limited data was not freely available.
[15:01] SPEAKER_01: It was limited.
[15:02] So I actually convinced the board of the company to get a
[15:06] Bloomberg terminal.
[15:07] I think they were the third investment bank in Kenya to get the
[15:10] Bloomberg terminal,
[15:11] SPEAKER_01: if I'm not mistaken.
[15:12] That gave us a bit more data and that allowed us to scale the
[15:16] foundation of what we
[15:17] SPEAKER_01: needed to do.
[15:18] SPEAKER_01: But then from there,
[15:19] SPEAKER_01: you have conversations with CEOs,
[15:21] SPEAKER_01: CFOs,
[15:22] SPEAKER_01: portfolio managers,
[15:23] SPEAKER_01: research analysts.
[15:24] SPEAKER_01: You see what questions they're asking you.
[15:26] SPEAKER_01: And the first few questions,
[15:27] SPEAKER_01: you're not going to be able to answer very well as a junior analyst.
[15:30] SPEAKER_01: But then you learn from them.
[15:31] SPEAKER_01: So the more questions you ask, the more you interact with them.
[15:34] SPEAKER_01: It's a positive cycle.
[15:36] SPEAKER_01: And you learn from that.
[15:37] SPEAKER_01: And then I realized then on as well,
[15:39] SPEAKER_01: if you do a bit more research,
[15:40] SPEAKER_01: if you do a bit more deep dives,
[15:42] SPEAKER_01: you have an edge,
[15:43] SPEAKER_01: right?
[15:44] SPEAKER_01: So that's why I emailed Dr. Demo.
[15:46] SPEAKER_01: And we had a one-hour conversation.
[15:48] SPEAKER_01: With that information, I went to investors.
[15:50] I was like,
[15:50] okay,
[15:50] hey,
[15:51] this is what's happening with the Kenya government.
[15:53] SPEAKER_01: This is the fiber optic network.
[15:54] SPEAKER_01: This is who has access to it.
[15:56] SPEAKER_01: This is how it's going to help.
[15:58] So these are the things that were not necessarily readily
[16:01] available through a
[16:02] SPEAKER_01: Google search,
[16:03] SPEAKER_01: but you did what Phil Fisher calls cuttlebutt.
[16:06] You do the deep tags and build a mosaic of this is how it's all
[16:09] going to fit together.
[16:10] SPEAKER_01: And that was basically the learning step.
[16:12] SPEAKER_01: What was your second part of the question?
[16:15] SPEAKER_00: How do you go about setting up the team then,
[16:17] SPEAKER_00: bringing in the key people together,
[16:19] SPEAKER_00: and then who are you learning from as you build that?
[16:22] SPEAKER_01: Two ways.
[16:22] The first is within a company,
[16:24] identify your mentors and identify mentors early.
[16:27] SPEAKER_01: The reality is even today, I don't have all the skill sets, right?
[16:32] SPEAKER_01: I still have a lot of mentors, people who guide me, advise me.
[16:35] SPEAKER_01: So even from day one,
[16:36] SPEAKER_01: you should be thinking about mentors,
[16:38] thinking about friends from your university or high school who
[16:41] are going to head a
[16:42] SPEAKER_01: few who can guide you.
[16:44] SPEAKER_01: And then from a hiring perspective,
[16:45] SPEAKER_01: it was interesting because I didn't have too many networks,
[16:48] SPEAKER_01: too many relationships in the industry.
[16:51] SPEAKER_01: So, yes, I got a few CVs of people coming through from senior management.
[16:55] SPEAKER_01: But then I started mapping out, OK, who is the top analyst?
[16:58] Whose research do I like and who should I be talking to and who
[17:02] can I contact?
[17:02] SPEAKER_01: And then from there,
[17:03] I try and get the number or the email address and then in
[17:06] direct contact them and
[17:07] SPEAKER_01: say,
[17:08] SPEAKER_01: hey,
[17:08] SPEAKER_01: would you be interested?
[17:09] SPEAKER_01: Of course,
[17:09] SPEAKER_01: the trick was like,
[17:11] SPEAKER_01: it's scary because somebody experience comes in and you're like,
[17:13] SPEAKER_01: oh,
[17:14] SPEAKER_01: I'm going to be junior to them,
[17:16] SPEAKER_01: which at that time was like,
[17:17] SPEAKER_01: OK,
[17:17] SPEAKER_01: I actually do need to be junior to them because I need to learn.
[17:20] SPEAKER_01: So there was that fear.
[17:21] You get to learn that if you're good,
[17:23] the market rewards you very quickly.
[17:25] SPEAKER_00: That's very true.
[17:26] SPEAKER_00: And then one thing I also picked up in the process of your speaking,
[17:29] SPEAKER_00: which I really like is the bit of cold emails.
[17:32] SPEAKER_00: I do love a cold email, a cold call.
[17:34] Sometimes you never know what the people on the other side can
[17:37] do to your career if
[17:39] SPEAKER_00: you reach out.
[17:39] So being a beneficiary of it and some of the people that end up
[17:42] maybe working
[17:43] SPEAKER_00: alongside me said,
[17:44] SPEAKER_00: oh,
[17:44] SPEAKER_00: they also do the same.
[17:45] Could you speak a bit about the value of cold emails,
[17:48] especially when you're new to an industry?
[17:51] SPEAKER_01: The most interesting thing is because I've worked in the UK,
[17:54] SPEAKER_01: Kenya and the US,
[17:56] SPEAKER_01: I've seen the culture differences.
[17:58] SPEAKER_01: So in the US,
[17:59] SPEAKER_01: it's actually required that if you're a junior analyst,
[18:02] SPEAKER_01: you will be emailing more senior people,
[18:04] SPEAKER_01: messaging them on LinkedIn,
[18:06] SPEAKER_01: saying,
[18:06] I'd love to have a Zoom chat with you or I'd love to have a
[18:09] coffee with you.
[18:10] SPEAKER_01: Without that, you probably will not get a job in the US.
[18:14] SPEAKER_01: In Kenya, in the UK, there was a bit of that.
[18:17] SPEAKER_01: But in Kenya, I think a lot of people hold themselves back.
[18:20] Like they are not sure what they want to do or they're not sure
[18:23] if it's the right
[18:24] SPEAKER_01: thing or they're not sure like culturally if it's acceptable.
[18:28] SPEAKER_01: I would say just message people on LinkedIn and be like,
[18:31] SPEAKER_01: hey,
[18:31] SPEAKER_01: I want to set up a 15 minute call with you.
[18:33] SPEAKER_01: I want to learn about you.
[18:35] SPEAKER_01: This is my profile.
[18:36] SPEAKER_01: And maybe the success rate will be 10% or 50% or 20%.
[18:39] SPEAKER_01: But some people will say yes.
[18:41] SPEAKER_01: And that's how you get your name out.
[18:43] SPEAKER_01: Now,
[18:43] SPEAKER_01: when you're having that 15,
[18:45] SPEAKER_01: 20 minute call,
[18:45] SPEAKER_01: it's not just asking the person kind of questions about them,
[18:49] SPEAKER_01: even though that's how you present it.
[18:51] SPEAKER_01: For five or 10 minutes, you want to talk about ideas that you have.
[18:54] SPEAKER_01: You're like, you figure out, hey, this company is particularly cheap.
[18:57] SPEAKER_01: Have you looked at it?
[18:59] Figure their mind into thinking about stuff that's outside of
[19:02] their day-to-day vision.
[19:04] SPEAKER_01: And for example,
[19:05] SPEAKER_01: for Kenya,
[19:05] SPEAKER_01: I'd say,
[19:06] SPEAKER_01: look,
[19:07] SPEAKER_01: a lot of the analysts,
[19:07] SPEAKER_01: everyone covers the ABL,
[19:09] SPEAKER_01: Safarcom,
[19:09] SPEAKER_01: all of these pretty well.
[19:10] SPEAKER_01: But there's so many companies that have no analyst coverage, right?
[19:14] SPEAKER_01: Some of these companies have pretty significant assets,
[19:18] SPEAKER_01: which are not carried at true market value.
[19:20] SPEAKER_01: Land assets, for example, dig through those annual reports, study them.
[19:24] SPEAKER_01: You've got ChatGPT now so you can be like,
[19:26] SPEAKER_01: hey,
[19:26] SPEAKER_01: this company,
[19:27] SPEAKER_01: what happened to its assets over the last 25 years?
[19:30] SPEAKER_01: And somehow it's able to find some of this information.
[19:33] SPEAKER_01: So I'd say create an investment thesis.
[19:36] If you have a report that's ready to go,
[19:38] it doesn't need to be complicated.
[19:40] SPEAKER_01: Send it through with your LinkedIn message or email.
[19:44] SPEAKER_01: Let them have a quick read through.
[19:45] SPEAKER_01: Don't be scared of following up two or three times.
[19:48] SPEAKER_01: And then after three times,
[19:49] I think it would be safe to leave it because they could either
[19:51] be very busy or
[19:52] SPEAKER_01: they're ignoring you,
[19:52] SPEAKER_01: but most likely they're very busy.
[19:54] And I think Kenya,
[19:55] we need to cultivate that culture of like just having a
[19:59] conversation.
[20:00] SPEAKER_00: I agree with you,
[20:01] because starting Mongo Capture and building along the way has
[20:04] also been a great
[20:05] journey in terms of learning how to create and maintain strong
[20:08] relationships with
[20:08] SPEAKER_00: people.
[20:09] SPEAKER_00: They say twice or twice reaching out to think that should be a max.
[20:12] I think at the end of the day,
[20:13] you should start and get started somewhere.
[20:15] SPEAKER_00: So in terms of building a research team,
[20:18] SPEAKER_00: what does an analyst do day to day,
[20:21] SPEAKER_00: week to week,
[20:22] SPEAKER_00: month to month,
[20:22] SPEAKER_00: and throughout a calendar year?
[20:24] SPEAKER_01: I would say that it's pretty intense.
[20:27] SPEAKER_01: At Castrol,
[20:28] I found myself on most weeks of the year working Monday to
[20:32] Sunday in some fashion
[20:33] SPEAKER_01: or the other.
[20:34] If it was answering investor queries,
[20:35] building a model,
[20:36] reading,
[20:37] gaining knowledge.
[20:38] Do not go into this thinking it's a nine to five and a nice
[20:41] paycheck at the end of it.
[20:43] SPEAKER_01: Those are stereotypes which are on videos and movies.
[20:46] It's a very intense kind of industry and a lot of people might
[20:50] not like it.
[20:51] SPEAKER_01: The way I did it,
[20:51] it was different when I was a junior analyst and then as I
[20:53] gained expenses a bit
[20:54] SPEAKER_01: different.
[20:55] SPEAKER_01: As a junior analyst,
[20:56] SPEAKER_01: a lot of my effort was spent focused on reports,
[20:59] SPEAKER_01: research,
[21:00] SPEAKER_01: financial modeling,
[21:02] SPEAKER_01: understanding the basics.
[21:03] SPEAKER_01: When I started, we didn't have Wall Street prep that we paid for.
[21:06] And by the way,
[21:07] I would recommend everyone here to look at Wall Street prep.
[21:10] SPEAKER_01: It's a great foundational educator for how to build models.
[21:14] SPEAKER_01: So that's where a lot of energy went,
[21:16] SPEAKER_01: building a model,
[21:17] SPEAKER_01: making those mistakes,
[21:17] SPEAKER_01: getting into balance.
[21:18] SPEAKER_01: Like this was stuff that was not easy initially for me.
[21:22] SPEAKER_01: But then as I got better at it,
[21:23] SPEAKER_01: then I started realizing,
[21:24] SPEAKER_01: okay,
[21:25] SPEAKER_01: I can add value through research reports in specific ways.
[21:29] SPEAKER_01: I started speaking to clients.
[21:30] SPEAKER_01: I realized,
[21:30] SPEAKER_01: okay,
[21:31] clients are actually one of the best ways I can learn because
[21:34] they're asking me
[21:34] SPEAKER_01: these difficult questions.
[21:35] SPEAKER_01: They have years of experience.
[21:37] SPEAKER_01: So I built relationships with them.
[21:39] SPEAKER_01: Now, clients can be a fickle thing, right?
[21:41] Because if they really like you,
[21:42] they will want to talk to you,
[21:44] engage with you very frequently.
[21:46] SPEAKER_01: Some clients,
[21:46] SPEAKER_01: some investors might be like,
[21:47] SPEAKER_01: okay,
[21:48] I don't know what this guy is saying or I don't think he knows
[21:49] what he's doing.
[21:51] SPEAKER_01: So they may not engage with you.
[21:52] And so the trick is to become an expert faster than other
[21:56] analysts and give
[21:57] SPEAKER_01: perspectives which are different,
[21:59] SPEAKER_01: but also need to be correct.
[22:00] You cannot just be different all the time because eventually
[22:03] the market will be
[22:04] SPEAKER_01: like,
[22:04] SPEAKER_01: hey,
[22:04] SPEAKER_01: he's just saying the opposite of everything everyone else is saying.
[22:07] SPEAKER_01: So then a lot of my time got into client conversations.
[22:11] SPEAKER_01: As you gain managerial experience,
[22:13] SPEAKER_01: you have to lead the team,
[22:15] SPEAKER_01: you review,
[22:15] SPEAKER_01: you mentor,
[22:16] SPEAKER_01: you develop strategies for your product.
[22:19] And then the final bit really was this roadshows and kind of
[22:23] C-street relationships.
[22:25] SPEAKER_01: So what I realized was that as I proceeded on my journey,
[22:28] SPEAKER_01: the investors that I had were very important,
[22:31] SPEAKER_01: but then the relationship with the senior executives were very important.
[22:35] And you could see senior executives,
[22:37] CFOs,
[22:37] for example,
[22:38] will speak to analysts.
[22:40] SPEAKER_01: There are 20, 30 analysts in the room.
[22:42] SPEAKER_01: But see who they're engaging you with more.
[22:44] SPEAKER_01: You can observe them and say,
[22:46] SPEAKER_01: okay,
[22:46] they might like this analyst more or they are more comfortable
[22:49] with this particular
[22:50] SPEAKER_01: analyst.
[22:51] SPEAKER_01: You want to get comfortable with them.
[22:52] SPEAKER_01: You want them to trust you that you're a good analyst.
[22:55] They also want you to push them back because it also gives them
[22:58] a different
[22:58] SPEAKER_01: perspective about how they're thinking about their business.
[23:03] They sometimes operate somewhat blind because they're not
[23:05] speaking to investors all the time.
[23:07] SPEAKER_01: And so you have an edge in that if you're speaking to US investors,
[23:10] SPEAKER_01: UK investors,
[23:11] SPEAKER_01: South African investors,
[23:13] you're giving them a perspective of how different pools of
[23:15] investors are looking at
[23:16] SPEAKER_01: their company.
[23:18] And so that's value add to them that they go to their board and
[23:20] senior manager will
[23:21] SPEAKER_01: be like,
[23:21] SPEAKER_01: hey,
[23:21] SPEAKER_01: this is what's happening now.
[23:23] SPEAKER_01: So it's quid pro quo almost.
[23:24] SPEAKER_01: So I'd say focus on that as well.
[23:28] SPEAKER_01: Don't discount it.
[23:29] SPEAKER_01: But you have to have the foundations done well.
[23:32] If you don't have the foundations done well,
[23:33] people will quickly realize that.
[23:35] SPEAKER_00: And how do you build those fundamentals?
[23:37] And on another note,
[23:38] also,
[23:38] what separates a really good analyst from an average analyst?
[23:43] SPEAKER_01: Interesting question, because with AI, everything's changing.
[23:46] SPEAKER_01: I think the technical know-how at a minimum has to be there.
[23:49] SPEAKER_01: Like you need to be able to build financial models, cash flow.
[23:53] SPEAKER_01: You need to have the right assumptions for revenue projections.
[23:57] SPEAKER_01: When I started,
[23:58] the first model I built was GDP is growing by X percent and
[24:02] therefore revenue will
[24:03] SPEAKER_01: grow by X percent.
[24:04] SPEAKER_01: That's not how you model, right?
[24:05] SPEAKER_01: Yeah.
[24:06] SPEAKER_01: You have to do units.
[24:07] SPEAKER_01: You have to think about product lines.
[24:08] SPEAKER_01: You have to think about margins.
[24:10] SPEAKER_01: All of these feed into your financial model.
[24:12] SPEAKER_01: It also talks to your thinking because the more kind of detailed you are,
[24:15] SPEAKER_01: the more granular picture you have,
[24:17] the better questions you can ask and the better kind of left
[24:21] field kind of things
[24:22] SPEAKER_01: you can see coming.
[24:22] SPEAKER_01: So things that are not necessarily...
[24:25] SPEAKER_01: that analysts are thinking about, but are on the edge of perspectives.
[24:29] SPEAKER_01: So I think that is how we should do it.
[24:31] SPEAKER_01: I think for today's analysts, Chad GPT is a phenomenal educator.
[24:36] SPEAKER_01: I think AI is going to change a lot of how we do research.
[24:39] SPEAKER_01: For example,
[24:40] SPEAKER_01: three days ago on LinkedIn,
[24:42] SPEAKER_01: I saw one startup here who you say,
[24:44] SPEAKER_01: I want you to build a cash flow model.
[24:46] SPEAKER_01: And this is this.
[24:47] And it goes and builds an entire cash flow model in Excel with
[24:50] multiple sheets and
[24:51] SPEAKER_01: sensitivities and everything else.
[24:53] SPEAKER_01: It's shortcut.ai.
[24:55] SPEAKER_01: Oh, there are plenty of them.
[24:56] SPEAKER_01: At this point, there must be 100.
[24:58] SPEAKER_01: Not a unique idea, but it's coming fast.
[25:01] An analyst will be tempted to just say,
[25:02] hey,
[25:03] build this capsule model,
[25:04] blah,
[25:04] blah,
[25:04] blah.
[25:04] SPEAKER_01: But then the guy that has actually done the homework to see how it works,
[25:08] SPEAKER_01: had made mistakes,
[25:09] SPEAKER_01: he will have or she will have that competitive advantage.
[25:13] SPEAKER_01: I would say that in an AI world,
[25:14] it's easy to say I'm a good analyst because the machine is
[25:17] doing all the work.
[25:18] SPEAKER_01: But don't let it be a crutch.
[25:20] SPEAKER_01: Let it be an educator.
[25:21] SPEAKER_01: I think that's how I put it.
[25:23] SPEAKER_00: I agree with you.
[25:23] SPEAKER_00: And I think most importantly is to not neglect the basics.
[25:28] SPEAKER_00: Like you have to read the annual report yourself.
[25:30] SPEAKER_00: You have to take time to understand the balance sheet,
[25:33] SPEAKER_00: the cash flow statements,
[25:34] SPEAKER_00: the income statements,
[25:35] SPEAKER_00: in and out.
[25:36] And then you can leverage AI to actually 10x your output in the
[25:40] sense of it gives
[25:41] SPEAKER_00: you the information it's able to process.
[25:44] And if you've built the basics and you're able to know when the
[25:47] AI itself makes the mistakes.
[25:48] SPEAKER_00: Do you agree with me on that?
[25:50] SPEAKER_01: Yes, and data, right?
[25:51] SPEAKER_01: So AI is,
[25:54] SPEAKER_01: you can say,
[25:54] SPEAKER_01: hey,
[25:55] SPEAKER_01: ChatGPT,
[25:55] SPEAKER_01: write me an equity analyst report,
[25:57] SPEAKER_01: and it'll go and generate something for you and say,
[25:59] SPEAKER_01: okay,
[25:59] SPEAKER_01: it's a buy.
[26:00] But if you ask questions in a different way,
[26:02] you can convince it to tell you it's a sell.
[26:05] SPEAKER_01: It doesn't know the difference, right?
[26:06] SPEAKER_01: It's just looking at things and saying,
[26:08] SPEAKER_01: okay,
[26:09] SPEAKER_01: on average,
[26:09] SPEAKER_01: this is what other people have said that a stock would be like this,
[26:12] SPEAKER_01: and therefore,
[26:13] SPEAKER_01: I would think it's a buy.
[26:14] I think the way to do it is one of the things we saw coming at
[26:17] Kestrel was this
[26:18] SPEAKER_01: need for transcripts,
[26:20] SPEAKER_01: historical annual reports,
[26:22] SPEAKER_01: macro,
[26:23] SPEAKER_01: CBK reports,
[26:24] SPEAKER_01: everything in one central repository.
[26:26] SPEAKER_01: So we built this thing called the Kestrel Research Portal.
[26:28] SPEAKER_01: And we went back into the history of companies.
[26:31] SPEAKER_01: We tried to collect as much information as we could.
[26:33] SPEAKER_01: So today for the Kestrel clients, every transcript is there.
[26:37] SPEAKER_01: Every annual report going back 15, 20 years is there.
[26:40] SPEAKER_01: Quarterly statements, analyst reports.
[26:43] SPEAKER_01: So as and when they invest in AI,
[26:45] SPEAKER_01: at some point,
[26:46] SPEAKER_01: it's going to be a value add,
[26:48] SPEAKER_01: right,
[26:48] SPEAKER_01: for customers because they'll be like,
[26:49] SPEAKER_01: oh,
[26:50] SPEAKER_01: how did EABL perform in 1993 when there was hyperinflation in Kenya,
[26:53] SPEAKER_01: for example?
[26:54] SPEAKER_01: That could be a question, right?
[26:56] SPEAKER_01: So I think that data will be the other edge.
[26:58] SPEAKER_01: And I think Wangu Capital,
[26:59] SPEAKER_01: for example,
[26:59] could easily create a database of this sort and sell it to mass
[27:03] market for a
[27:04] SPEAKER_01: reasonable fee.
[27:05] So how has working as a research analyst now and being close to
[27:10] operators and
[27:10] capital allocators shaped how you evaluate a business and a
[27:14] business model and how
[27:15] a business is able to take execution risk and minimize it at
[27:19] the end of the day?
[27:20] So what are your reflections on that journey from research
[27:23] analyst to evaluating
[27:24] SPEAKER_00: business models and all?
[27:25] I think the way I look at it is my entire journey in life has
[27:29] been about how do I
[27:30] SPEAKER_01: understand companies better,
[27:32] SPEAKER_01: right?
[27:32] SPEAKER_01: So when I started out,
[27:34] SPEAKER_01: I would,
[27:35] SPEAKER_01: in the British Library in London,
[27:36] SPEAKER_01: I'd study thousands of companies to something called company refs.
[27:39] SPEAKER_01: So I got a quick map of how all these companies were performing,
[27:42] SPEAKER_01: what industries were performing well.
[27:43] Buffett used to look through this emergence manual and I was
[27:46] trying to replicate it somewhat.
[27:48] Then I realized if I really wanted to be a good analyst,
[27:51] I cannot do it as a weekend thing.
[27:53] SPEAKER_01: I need to be in the thick of it.
[27:54] SPEAKER_01: I have to be in a country that I understand.
[27:56] SPEAKER_01: I need to be good at it.
[27:58] And through Kestrel,
[27:59] I got to learn a lot in terms of how to be a better analyst.
[28:02] My managers,
[28:03] other people,
[28:04] it was a collective kind of knowledge base,
[28:06] right?
[28:06] SPEAKER_01: And on how to improve modeling, how to improve your forecasting.
[28:10] SPEAKER_01: And if you have the best of people around you,
[28:12] you tend to feed off each other's positive kind of traits and
[28:15] learn faster.
[28:16] But then I realized after a few years of Kestrel that I'd be a
[28:19] decent analyst for
[28:21] SPEAKER_01: East Africa,
[28:21] SPEAKER_01: perhaps for Africa,
[28:23] SPEAKER_01: but I wasn't convinced that I knew business particularly well.
[28:27] SPEAKER_01: So that's why I applied to MIT.
[28:29] I could do it at a surface level,
[28:31] but business is a very complicated process.
[28:34] What a CFO or a CEO presents to you is a very sanitized version
[28:37] of what's going on
[28:38] SPEAKER_01: in a business.
[28:39] SPEAKER_01: So I came to MIT.
[28:41] The beauty of MIT is you get to study from the faculty members
[28:44] themselves who have
[28:45] SPEAKER_01: written the books that other universities are using.
[28:48] SPEAKER_01: I got to learn about not just financials,
[28:51] SPEAKER_01: but strategy,
[28:52] SPEAKER_01: business strategy,
[28:53] SPEAKER_01: operations,
[28:54] SPEAKER_01: organization behavior,
[28:55] SPEAKER_01: branding.
[28:56] A lot of the education here was about leadership and how you
[28:58] think about problems,
[29:00] SPEAKER_01: pricing of products.
[29:01] SPEAKER_01: How do companies negotiate game theory in an industry?
[29:05] And one of the more interesting things that I learned here was
[29:07] systems modeling.
[29:08] SPEAKER_01: So at MIT,
[29:09] SPEAKER_01: there's something called system dynamics,
[29:11] SPEAKER_01: where you model not just a company,
[29:13] SPEAKER_01: but you model an entire kind of organization at the entire industry.
[29:17] So if EABL is like dropping prices,
[29:20] how are other players going to react?
[29:21] If EABL is introducing a new product,
[29:23] how are other players going to react?
[29:25] SPEAKER_01: Within EABL,
[29:26] SPEAKER_01: for example,
[29:27] how should they be introducing Senator Keg versus kind of the
[29:30] traditional task?
[29:31] These are the kind of questions that the education is designed
[29:34] to elucidate that thinking.
[29:36] The beauty also was that I got to cross-register at Harvard
[29:39] Business School and
[29:40] SPEAKER_01: Harvard Kennedy School for certain classes.
[29:43] SPEAKER_01: At Harvard Business School,
[29:44] I did two in particular called Building Businesses at the Base
[29:47] of the Pyramid,
[29:48] SPEAKER_01: where you look at very successful businesses,
[29:50] SPEAKER_01: but focused on the people which do not have much purchasing power.
[29:54] SPEAKER_01: So a lot of it was Latin-focused, there was some Africa-focused.
[29:57] Equity Bank,
[29:58] for example,
[29:59] is based off of microfinance institutions from Latin America.
[30:02] SPEAKER_01: I can't say based off it, but the similarities.
[30:05] SPEAKER_01: Ether has been a huge kind of win, a positive win for Kenya.
[30:09] Building and sustaining successful enterprises was the flagship
[30:12] strategy class.
[30:14] And it taught you basically how to look at product fit,
[30:16] customer fit,
[30:17] culture of the business.
[30:19] SPEAKER_01: How should you be scaling it?
[30:20] SPEAKER_01: Should you go all in, you scale it slowly?
[30:22] SPEAKER_01: When do you decide to extract value from your product?
[30:26] SPEAKER_01: How should you be thinking about the team that you're forming?
[30:28] SPEAKER_01: How do you get the talent together from a larger organization?
[30:30] SPEAKER_01: So there was all these other kind of benefits.
[30:33] SPEAKER_01: And then Harvard Kennedy School had discussed leadership from inside out,
[30:37] which I would say was life-changing because you look at a
[30:39] leadership problem,
[30:40] your own personal leadership problem that really affected you
[30:43] and you failed in it.
[30:44] SPEAKER_01: You have to talk about your failures.
[30:46] SPEAKER_01: And then you look at it,
[30:47] SPEAKER_01: but not from the lens of,
[30:48] SPEAKER_01: hey,
[30:49] SPEAKER_01: okay,
[30:49] SPEAKER_01: this failed because of disagreements,
[30:51] SPEAKER_01: whatever.
[30:52] SPEAKER_01: You actually look at it all the way from your childhood.
[30:54] And that class had a way of teaching you just how much of a
[30:57] decision a person makes
[30:59] SPEAKER_01: in a management meeting or a boardroom or whatever.
[31:02] But it's based on so much stuff from their childhood that they
[31:05] are not aware of.
[31:06] SPEAKER_01: It's like a secret part because when you're speaking to people,
[31:08] SPEAKER_01: you can quickly start kind of repetitions about,
[31:10] SPEAKER_01: hey,
[31:11] this person might be approaching this problem using these
[31:13] thinking points,
[31:14] SPEAKER_01: but you learn how to engage with them at a deeper level.
[31:17] SPEAKER_01: And then you can see what their perspective is.
[31:20] And then you make the decision,
[31:21] okay,
[31:21] do I agree with that perspective or not?
[31:23] SPEAKER_01: And if I need to change it and how do you address it?
[31:25] SPEAKER_01: So there were all these other kind of value added things.
[31:28] SPEAKER_01: I would say that all this MBA stuff is not necessarily like for everyone.
[31:32] If you want to be an analyst and you're a good analyst,
[31:35] you don't necessarily need it.
[31:36] SPEAKER_01: But I think for me,
[31:37] SPEAKER_01: I'm passionate about continuous like growth,
[31:39] SPEAKER_01: continuous learning,
[31:40] SPEAKER_01: disrupting myself.
[31:41] SPEAKER_01: And so that's why I decided to go through that process.
[31:45] SPEAKER_00: Some of these lessons and especially courses available online,
[31:49] SPEAKER_00: by the way,
[31:49] SPEAKER_00: that you're referencing,
[31:50] SPEAKER_00: so people can also look them out.
[31:52] SPEAKER_01: You certainly can.
[31:53] SPEAKER_01: MIT has a phenomenal culture.
[31:55] SPEAKER_01: They share a lot of this stuff,
[31:56] SPEAKER_01: but it's very different to see it from an online perspective,
[32:01] SPEAKER_01: and it's very different to experience it.
[32:03] I would say you get maybe 10 or 20% of the class out of an
[32:06] online perspective,
[32:07] but when you're in a room with your classmates and everyone's
[32:09] brilliant at what
[32:10] SPEAKER_01: they do and like dominant in the field,
[32:13] and they bring all these perspectives,
[32:14] you get a lot more learning out of that,
[32:16] I think.
[32:16] SPEAKER_01: That's the bulk of the education, I would say.
[32:19] Then you would recommend for someone who's an analyst stationed
[32:22] in Kenya to perhaps
[32:23] consider going abroad for a master's to get that perspective
[32:27] experience and
[32:28] SPEAKER_00: networks that can also enrich your life as an analyst,
[32:31] SPEAKER_00: right?
[32:32] SPEAKER_00: It depends.
[32:33] SPEAKER_01: Some of our business schools in Kenya are scaling up.
[32:35] SPEAKER_01: MIT actually partners with some of these institutions to try.
[32:38] SPEAKER_01: MIT has a very open culture in terms of
[32:40] SPEAKER_01: They want that knowledge.
[32:41] SPEAKER_01: They want that thinking to be shared globally.
[32:44] SPEAKER_01: So it's not necessarily the case.
[32:46] SPEAKER_01: I think higher ed in the US is life-changing.
[32:49] SPEAKER_01: For me, it was life-changing.
[32:51] SPEAKER_01: But if you do your homework,
[32:52] SPEAKER_01: you may be able to get institutions,
[32:54] SPEAKER_01: maybe in Kenya,
[32:55] SPEAKER_01: maybe in South Africa,
[32:57] SPEAKER_01: UK,
[32:57] SPEAKER_01: I'm not 100% sure how the educational system is now,
[33:01] SPEAKER_01: but you can get some of this,
[33:03] SPEAKER_01: I think,
[33:03] SPEAKER_01: at home.
[33:03] SPEAKER_01: It's not necessarily, we idolize it, we aim for it.
[33:09] SPEAKER_01: I think it's great from a network perspective.
[33:11] I've learned things that I would have never learned in 100
[33:14] years of my life had I not been here.
[33:16] SPEAKER_01: It's a trade-off, right?
[33:17] SPEAKER_01: It's as with everything in life.
[33:19] So I'll ask the next question and combine it with an audience
[33:22] question,
[33:22] which has come in.
[33:23] SPEAKER_00: You manage quite a bit of projects at Kestrel.
[33:26] SPEAKER_00: You looked at reports.
[33:27] SPEAKER_00: What are some of your reflections from that time that you're proud of?
[33:31] SPEAKER_00: And then at the same time,
[33:32] SPEAKER_00: when you're looking for someone to join your team,
[33:34] SPEAKER_00: this is an audience question.
[33:36] What are some of the traits or factors that you guided your
[33:39] selection of to join your team?
[33:41] I'll start with that at first because I think that's valuable
[33:45] for the audience.
[33:46] You could quickly see somebody who was faking an interview and
[33:50] you could quickly
[33:51] SPEAKER_01: see somebody who was really passionate about her role.
[33:54] We tended to hire for passion as long as they had a basic
[33:57] foundational kind of understanding.
[34:00] If somebody came in fresh out of university and they had one or
[34:03] two business kind
[34:04] SPEAKER_01: of investment cases,
[34:06] SPEAKER_01: Even if they are not that good,
[34:07] SPEAKER_01: but you could see,
[34:08] SPEAKER_01: hey,
[34:08] SPEAKER_01: they were like really into it and they've done the homework.
[34:12] And let's say they've spoken to distributors and done an extra
[34:15] mile of work.
[34:16] SPEAKER_01: I think it was very quick in terms of first 10,
[34:19] SPEAKER_01: 15 minutes,
[34:19] you could tell if this person is going to make it to second
[34:21] round and most likely
[34:22] SPEAKER_01: be hired.
[34:23] SPEAKER_01: Passion is number one.
[34:25] SPEAKER_01: Other thing is radar, right?
[34:27] SPEAKER_01: Beyond people's radar.
[34:28] SPEAKER_01: Now,
[34:28] you don't want to corner an analyst at a quarterly results
[34:31] conference because the
[34:32] SPEAKER_01: only thing they're thinking about is like,
[34:33] SPEAKER_01: hey,
[34:34] I need to publish this for my investigative so that we do it
[34:36] quickly and properly.
[34:38] SPEAKER_01: You may want to like say,
[34:40] SPEAKER_01: hey,
[34:40] I want to just have a coffee with you at some time and then try
[34:42] and arrange it.
[34:43] remembering that the success rate is going to be 10 maybe 20
[34:46] maybe 30 percent so
[34:47] keep in their radar and read the research reports of what
[34:51] they're publishing try
[34:52] and find if you can get access to their research reports if an
[34:55] analyst has written
[34:56] SPEAKER_01: a particular report and you agree with or disagree with something
[35:00] SPEAKER_01: Ideally, you can say, hey, I came across your report.
[35:03] SPEAKER_01: I just thought this was cool.
[35:04] SPEAKER_01: I agree with this or I disagree with this and here's why.
[35:07] SPEAKER_01: And you send them just a LinkedIn message.
[35:09] SPEAKER_01: Actually,
[35:09] SPEAKER_01: that can do quite a lot of wonders for you because if you do it three,
[35:13] SPEAKER_01: four times at the back of their head,
[35:14] SPEAKER_01: they know,
[35:15] SPEAKER_01: okay,
[35:15] SPEAKER_01: this analyst is following the work we do.
[35:17] SPEAKER_01: I like the questions they're asking.
[35:19] SPEAKER_01: But all of that requires that foundational understanding, right?
[35:22] SPEAKER_01: That basic modeling, that basic thinking about companies.
[35:25] SPEAKER_01: Not just like spurious messages, oh, I liked your report, full stop.
[35:29] SPEAKER_01: No, it's nice, but fundamental is what we're looking for.
[35:32] SPEAKER_01: So cover the basics first.
[35:34] SPEAKER_01: Yeah.
[35:35] SPEAKER_01: And to answer your second question,
[35:37] SPEAKER_01: of course,
[35:37] SPEAKER_01: as an NE analyst,
[35:38] SPEAKER_01: you have a few kind of reports that you're particularly fond of.
[35:42] And I'm going to put a challenge out there to all the analysts
[35:45] who are listening in right now.
[35:46] SPEAKER_01: I want you to,
[35:47] SPEAKER_01: in 2017 to 2019,
[35:49] SPEAKER_01: we published something called the Kenya Debt Sustainability Analysis,
[35:52] SPEAKER_01: where we projected the revenues of the government,
[35:55] SPEAKER_01: the expenses of the government,
[35:56] SPEAKER_01: interest costs,
[35:57] SPEAKER_01: and kind of debt levels.
[35:59] SPEAKER_01: And we projected all the way to 2022-23.
[36:01] SPEAKER_01: And we said, hey, this is a problem.
[36:03] SPEAKER_01: Like, this is going to become a problem if things don't start changing.
[36:06] SPEAKER_01: And Kenya is going through its challenges now.
[36:09] But for the investment analysts,
[36:10] take a look at Kenya's interest expense to revenue ratio.
[36:14] Look at how it's evolved and look at where it stands relative
[36:16] to other countries
[36:17] and look at which countries have done well and have not done so
[36:21] well with interest
[36:22] SPEAKER_01: expense to revenue ratios of where we are at.
[36:25] SPEAKER_01: I think it's more relevant today that we start reducing the deficit.
[36:29] SPEAKER_01: Because even if you run a 3% deficit,
[36:31] your debt will still accumulate for a couple of years before it
[36:34] starts coming down.
[36:35] And that means your interest expense and all that will still
[36:37] continue to rise.
[36:39] So I would say that the Kenya debt sustainability analysis was
[36:41] something that was
[36:42] SPEAKER_01: really something I'm proud of.
[36:44] SPEAKER_01: And I think it's even more relevant today.
[36:47] SPEAKER_01: Of course, the other reports were particularly focused on events.
[36:50] So when we had the interest rate caps or when the excise duty
[36:54] system changed for EABL,
[36:56] Like these are quick moving reports that we needed to publish
[36:59] and investors appreciated those.
[37:01] And when you're doing that heavy lifting and you have to really
[37:04] figure something
[37:05] out and then you successfully publish a report and then you get
[37:07] positive feedback,
[37:08] SPEAKER_01: that's I think one of the most rewarding things as an analyst.
[37:12] Maybe the next question should be,
[37:13] how does an analyst stay humble after winning?
[37:17] SPEAKER_00: And how do they also pick themselves after making a wrong call?
[37:21] SPEAKER_01: Oh, I don't have any good analyst who has overconfidence.
[37:25] I think every analyst out there that's good has a deep sense of
[37:28] humility because
[37:29] SPEAKER_01: the market can whipsaw you and make you be wrong very quickly.
[37:33] SPEAKER_01: Look,
[37:33] one of the things that I did at MIT as part of this journey was
[37:36] I interviewed some
[37:37] SPEAKER_01: of the top investors in the world.
[37:39] So I interviewed Michael Morbusier,
[37:41] Mark Mobius,
[37:42] Whitney Tilson,
[37:43] Howard Marks,
[37:45] David Einhorn.
[37:46] SPEAKER_01: And it was all focused on this journey.
[37:47] SPEAKER_01: Like, how are they talking to as an investor?
[37:50] SPEAKER_01: How are they looking at it?
[37:51] SPEAKER_01: How are they looking at these problems?
[37:53] SPEAKER_01: And how are they behaving?
[37:54] SPEAKER_01: Because most of these guys are multimillionaires, billionaires.
[37:57] SPEAKER_01: They've made it right as investment professionals.
[37:59] SPEAKER_01: I even managed to reach Ali Munger,
[38:00] SPEAKER_01: and he confirmed as I speak,
[38:02] SPEAKER_01: and that passed on a week later,
[38:03] SPEAKER_01: unfortunately.
[38:04] SPEAKER_01: But here's the deal.
[38:05] SPEAKER_01: They are all incredibly humble people.
[38:07] I think they've seen so many mistakes that people make that
[38:10] they understand,
[38:11] SPEAKER_01: hey,
[38:11] SPEAKER_01: this is not something that you're going to be winning 90% of the time.
[38:15] SPEAKER_01: It's 52% of the time, 53% of the time you'll be winning.
[38:18] SPEAKER_01: For example, Michael Morbusin spoke about premortems.
[38:21] SPEAKER_01: So you have an investment thesis.
[38:23] And at the same time,
[38:24] at the side,
[38:24] you have a diary and you say,
[38:26] I think this is going to fail.
[38:27] SPEAKER_01: I think my kind of assumptions are going to be wrong because,
[38:30] SPEAKER_01: and you list down all the ways you're going to be wrong.
[38:32] SPEAKER_01: I think that's an incredibly humbling experience.
[38:34] SPEAKER_01: David Einhorn told us, look at it from the perspective of both sides.
[38:39] SPEAKER_01: So you write a bull case and then you write a bear case.
[38:42] Both of them have to be done by you because then that kind of
[38:45] plugs you to the ground.
[38:46] SPEAKER_01: Hey, I could be wrong, right?
[38:47] Same thing goes for Howard Marks and all these guys basically
[38:51] spoke about the same thing.
[38:52] SPEAKER_01: Look at it from the perspective.
[38:53] SPEAKER_01: I'm right, but I'm most likely going to be wrong.
[38:56] SPEAKER_01: And there's so many smart people.
[38:58] SPEAKER_01: who are focused on the same thesis.
[39:00] SPEAKER_01: Chances are I will be wrong.
[39:02] SPEAKER_01: So I really need to be sure, like I'm correct.
[39:05] SPEAKER_01: And then I need to be sure that I can make that bet.
[39:08] SPEAKER_01: And on average, I will be wrong as well, like even after all that work.
[39:11] SPEAKER_01: So humility is, I think, a key part of the whole process.
[39:15] SPEAKER_01: And to be uplifted and all that, I think you need to have that stomach.
[39:20] SPEAKER_01: It's something you'll need to just grow with time.
[39:22] Every analyst has a story or two about how they got a
[39:25] recommendation wrong and they
[39:26] SPEAKER_01: carry it with them.
[39:27] You just have to use it as your educator and keep it with you
[39:31] and let it be your guide.
[39:33] SPEAKER_00: There's a famous quote,
[39:34] I think from last year from Roger Federer also says that his
[39:37] win rate in even the
[39:38] SPEAKER_00: best competition was around 54%.
[39:40] So I don't think the best always get it right,
[39:43] but when you get it right,
[39:45] you go big on it.
[39:46] SPEAKER_00: So that's been a reflection of mine.
[39:48] SPEAKER_00: And I think that's what I'm also picking up from your conversation.
[39:50] What other things did you learn from interviewing some of these
[39:53] top investors and
[39:54] what are some of the books or resources you can recommend as
[39:57] regards them?
[39:58] SPEAKER_01: First of all,
[39:59] SPEAKER_01: I was surprised that they didn't even speak to me because I just,
[40:02] SPEAKER_01: I sent an email.
[40:03] SPEAKER_00: Start by sharing how you got them to speak to you in the first place.
[40:06] Because I know some are really easy to get to,
[40:08] but that is also more difficult.
[40:10] SPEAKER_00: But what's the process like?
[40:11] It was interesting because I think I sent a total of eight or
[40:14] nine emails.
[40:16] SPEAKER_01: And six or seven of them said, yes, and we'll be doing more.
[40:19] SPEAKER_01: But I was humbled by just how approachable they are.
[40:22] SPEAKER_01: I think there's a sense that once they've hit a certain level,
[40:25] SPEAKER_01: I think it's a lot of the Buffett thing,
[40:26] SPEAKER_01: Graham thing.
[40:27] SPEAKER_01: They want to teach.
[40:28] SPEAKER_01: They want to guide.
[40:29] SPEAKER_01: They believe in that value of giving back.
[40:30] SPEAKER_01: There were so many interesting things like Michael Malbussin,
[40:34] SPEAKER_01: for example,
[40:34] SPEAKER_01: spoke extensively about behavioral biases,
[40:37] SPEAKER_01: looking at return on invested capital.
[40:40] SPEAKER_01: Culture, we asked them questions like, where should you work?
[40:43] SPEAKER_01: How should we be thinking about working at an institution?
[40:46] SPEAKER_01: I think one universal thing from every single one of them was specialize.
[40:50] SPEAKER_01: So if you're doing Kenya, specialize.
[40:51] SPEAKER_01: If you're doing Africa, specialize.
[40:54] Because if you think as a person researching Apple and reading
[40:57] the 10K and you're
[40:59] SPEAKER_01: having investment bet on it,
[41:00] If you think that you're going to be better than the market and
[41:03] all that kind of
[41:04] SPEAKER_01: investment of people into that investment thesis,
[41:07] SPEAKER_01: chances are we will be wrong.
[41:09] SPEAKER_01: So they said,
[41:09] SPEAKER_01: double down Africa,
[41:11] SPEAKER_01: focus deeper,
[41:12] SPEAKER_01: be sure that you can speak well to certain investment themes.
[41:16] SPEAKER_01: I think Monish Fabrice said something very interesting.
[41:18] SPEAKER_01: He said, I'm a do-nothing guy.
[41:20] SPEAKER_01: He's very artistic when he speaks.
[41:22] SPEAKER_01: I'm a do-nothing guy.
[41:24] SPEAKER_01: But then when the time comes to pounce,
[41:26] SPEAKER_01: like you have to be ready,
[41:27] SPEAKER_01: the thesis has to be correct and you have to go in.
[41:29] He says he spoke about Buffett and having 12 successful super
[41:32] hits,
[41:32] right?
[41:33] SPEAKER_01: And that's what made Berkshire.
[41:34] SPEAKER_01: If you think about 12 in your lifetime,
[41:37] SPEAKER_01: you know,
[41:37] you're doing nothing for two or three years and then you have
[41:39] to make a decision.
[41:40] So he's like deep dives and then know the knowledge base and
[41:43] then be ready to
[41:44] SPEAKER_01: bounce when the market is ready.
[41:46] Mark Mobius is an MIT alum and he was considered to be the Pied
[41:50] Piper of emerging markets.
[41:51] SPEAKER_01: That's the nickname given to him.
[41:52] He went into emerging markets when nobody was looking at
[41:55] emerging markets.
[41:56] SPEAKER_01: He spoke at length about how he went about the process.
[41:59] He looked for disruptive technologies and best has been
[42:02] disruptive technology for Kenya.
[42:04] Sometimes it's easier to find companies that are disruptive in
[42:07] those emerging
[42:08] SPEAKER_01: markets than in these developing markets,
[42:10] SPEAKER_01: because it's a more freedom into a kind of experiment and learn.
[42:13] SPEAKER_01: It's not everything is set in stone.
[42:16] SPEAKER_01: A couple of them spoke about investing in hyperinflationary markets.
[42:19] SPEAKER_01: They've made some good returns despite hyperinflationary markets.
[42:23] SPEAKER_01: And so we discussed that at LEND.
[42:25] SPEAKER_01: What else?
[42:25] SPEAKER_01: Howard Marks.
[42:26] SPEAKER_01: Howard Marks was interesting.
[42:27] SPEAKER_01: He's predominantly a debt investor.
[42:29] SPEAKER_01: Here's a fun fact, right?
[42:30] SPEAKER_01: Howard Marks was actually pushed out of his equity research position.
[42:34] SPEAKER_01: So this guy who is now a billionaire was pushed out by his bosses.
[42:37] SPEAKER_01: You're not good enough, whatever.
[42:39] SPEAKER_01: Imagine that, right?
[42:40] SPEAKER_01: So he went into debt and their thesis is the other way around.
[42:44] As long as the investment doesn't default,
[42:46] we're going to get our money back.
[42:48] And they focus all of the energies and legal teams and
[42:50] everything else focus on how
[42:52] they recover that the investment doesn't go wrong and why
[42:55] everyone else is thinking
[42:56] SPEAKER_01: about it incorrectly.
[42:57] SPEAKER_01: And if it does go wrong, how are they protected?
[42:59] SPEAKER_01: It's been phenomenal, like in terms of that knowledge base.
[43:02] SPEAKER_01: I'm just going to my notes as well.
[43:04] SPEAKER_01: These are the opportunities that I think I didn't expect to have.
[43:08] SPEAKER_01: I thought I'd be learning about business, those kind of things.
[43:10] SPEAKER_01: So I think this is where kind of the U.S.
[43:12] was different because they have this culture of being able to
[43:15] reach out to people
[43:16] SPEAKER_01: and say,
[43:16] SPEAKER_01: hey,
[43:17] SPEAKER_01: can I grab a coffee with you?
[43:19] SPEAKER_00: Absolutely.
[43:19] SPEAKER_00: appreciate sharing that experience that you've had with them.
[43:22] SPEAKER_00: I want to finish up on the U.S.
[43:23] experience and then reflect a bit on African markets and what
[43:26] you're doing currently.
[43:27] So perhaps you can share a little bit about what you do at MIT
[43:30] and what you've done
[43:31] there and how that experience has shaped you thinking about
[43:34] investment and markets.
[43:35] SPEAKER_00: And also you've done a bit with the Harvard Business School,
[43:38] SPEAKER_00: a bit at the Harvard Kennedy School.
[43:40] SPEAKER_00: You can drop all that and just film for us.
[43:43] SPEAKER_00: What are some of the reflections that you've had during your time there?
[43:46] SPEAKER_01: I think the one thing that's important for me is,
[43:48] SPEAKER_01: look,
[43:49] I've lived now on three continents and I've gone through the
[43:52] whole process of
[43:53] SPEAKER_01: growing as an analyst and proving it and all these things.
[43:56] SPEAKER_01: But now it's all about value addition, right?
[43:59] I think for me,
[44:00] the important thing was,
[44:01] and I see this for Africa,
[44:02] right?
[44:03] SPEAKER_01: We have about 1.3 billion people as Africans right now.
[44:07] SPEAKER_01: We're going to get to 2.6 billion by 2055.
[44:10] SPEAKER_01: We're going to be, what, 38% of the world's population by 2100.
[44:14] The amount of infrastructure and capital Africa needs is so
[44:18] significant that even
[44:20] SPEAKER_01: what we have right now is whatever's coming in is just way not adequate.
[44:24] Like venture funding was,
[44:25] what,
[44:25] 20 billion,
[44:26] 25 billion between 2010 and 2025.
[44:29] SPEAKER_01: Or if you're looking at about World Bank IMF investments,
[44:32] SPEAKER_01: they are a bit more substantial,
[44:34] SPEAKER_01: but it's still thinking about all the investments that's needed.
[44:38] SPEAKER_01: It's just our capital markets are not deep enough, are not strong enough.
[44:41] SPEAKER_01: Look, I'll give you some statistics.
[44:42] SPEAKER_01: So in the 1930, 1929, the U.S.
[44:43] had 2,000 listings,
[44:43] 2,000 listed companies for a population of about 130 million.
[44:51] SPEAKER_01: Kenya has a population of maybe 50 million at this point.
[44:54] SPEAKER_01: We have how many listed companies?
[44:56] SPEAKER_01: 63, maybe 62 with a 15 billion market cap as a market.
[45:00] SPEAKER_01: Tanzania is at 6 billion.
[45:01] SPEAKER_01: Uganda is at 2 billion market cap.
[45:03] SPEAKER_01: Think about the amount of companies we need to list.
[45:05] SPEAKER_01: Think about how deep a capital markets need to be.
[45:08] SPEAKER_01: And that's just one small part of the situation.
[45:10] SPEAKER_01: We need venture capital.
[45:12] SPEAKER_01: We need diaspora flows.
[45:14] SPEAKER_01: We need impact investing funds, DFIs.
[45:16] SPEAKER_01: We need all of the above.
[45:18] If Africa kind of has to scale out,
[45:20] how are we going to build our industries?
[45:22] How are we going to build disruptive technology,
[45:25] not just for now,
[45:26] but 30 years from now?
[45:28] SPEAKER_01: The government cannot invest as much on capex.
[45:30] SPEAKER_01: How are we thinking about these issues?
[45:32] So I felt that maybe that this is a place where I can play a
[45:35] part with all the
[45:36] SPEAKER_01: networks and education and everything else.
[45:38] SPEAKER_01: So I'm experimenting.
[45:39] SPEAKER_01: I'm seeing as my life has shown that you could be all over the place.
[45:42] SPEAKER_01: It doesn't matter what you think right now.
[45:44] SPEAKER_01: It could take you anywhere.
[45:46] SPEAKER_01: So I think that's an interesting area.
[45:48] And then part of that effort was I wanted to continue my
[45:51] research efforts within
[45:52] SPEAKER_01: the institution.
[45:53] SPEAKER_01: So I work with one of the centers here to publish research.
[45:56] SPEAKER_01: But I'm also focused on critical minerals.
[45:58] Critical minerals is talking about copper,
[46:00] cobalt,
[46:01] all the rare earth metals.
[46:02] SPEAKER_01: The U.S.
[46:03] SPEAKER_01: has had a very strong focus on deepening the critical minerals ownership.
[46:07] SPEAKER_01: And I felt that I could benefit the U.S.
[46:10] SPEAKER_01: effectively and Africa through my experience and networks.
[46:13] So I'm helping investors navigate the critical mineral space in
[46:16] Africa and securing
[46:18] SPEAKER_01: those assets.
[46:19] I think after a long time,
[46:20] Africa is having competition for these critical minerals.
[46:23] SPEAKER_01: So I think this is an opportunity to leverage this competition.
[46:27] And if you think about like DRC is what,
[46:29] 70% of the world's cobalt exports.
[46:31] SPEAKER_01: That goes into nearly every EV battery in some form or another.
[46:35] SPEAKER_01: It goes into defense.
[46:36] SPEAKER_01: It goes into all these kind of youth cases.
[46:39] SPEAKER_01: But there's no kind of value accumulation.
[46:41] SPEAKER_01: There's no ownership of the whole value.
[46:44] SPEAKER_01: So there are these opportunities Africa has.
[46:46] SPEAKER_01: And so I thought that it's an interesting thing to explore, try out.
[46:49] SPEAKER_01: I learn a lot.
[46:50] SPEAKER_01: I leverage a lot of my MBA.
[46:52] SPEAKER_01: I focus on operations, strategy, all these other things.
[46:55] SPEAKER_01: And I don't know, maybe it's going to be valuable.
[46:57] SPEAKER_01: Maybe it's not going to be valuable.
[46:59] SPEAKER_01: But I think on average, like I'm learning a lot.
[47:01] SPEAKER_01: It's fun.
[47:01] You get to hear from senators and the like as part of some of
[47:04] these discussions.
[47:05] SPEAKER_01: So I think it's a cool place to be.
[47:07] SPEAKER_01: And we'll see.
[47:07] SPEAKER_01: We'll see how that pans out.
[47:09] SPEAKER_00: In terms of value addition then from the African context,
[47:12] SPEAKER_00: we do have the critical minerals ourselves,
[47:16] SPEAKER_00: but as a continent,
[47:17] how do you maybe advise practitioners or at least governments
[47:20] to think about their
[47:22] SPEAKER_00: role and their place in the value chain,
[47:24] SPEAKER_00: perhaps electric vehicles,
[47:27] SPEAKER_00: AI and all,
[47:28] SPEAKER_00: and how critical minerals can play a role in that?
[47:31] SPEAKER_01: It's a complex system,
[47:32] SPEAKER_01: so it's difficult to boil it down,
[47:33] SPEAKER_01: but I think about it from two perspectives.
[47:35] SPEAKER_01: You could be involved in extraction,
[47:37] SPEAKER_01: you could be involved in value addition,
[47:39] SPEAKER_01: and you could be involved in final processing.
[47:42] SPEAKER_01: The demands of capital at each stage go up substantially, right?
[47:46] SPEAKER_01: So,
[47:46] SPEAKER_01: for example,
[47:47] SPEAKER_01: I don't know how much of the U.S.,
[47:49] SPEAKER_01: the DRC-Rwanda deal has been finalized,
[47:52] but the argument was that Rwanda can add some sort of value
[47:55] addition to the
[47:56] SPEAKER_01: critical minerals being derived from DRC.
[47:58] SPEAKER_01: If you look at critical minerals in southern Africa,
[48:01] SPEAKER_01: there are certain markets that they can use to ship their products out.
[48:05] Tanzania is in a phenomenal position because they could take
[48:08] critical minerals from
[48:09] SPEAKER_01: any of the central and southern African states and ship it out from DAW,
[48:12] SPEAKER_01: for example.
[48:13] SPEAKER_01: There's a railway network that's being built and also the U.S.
[48:16] SPEAKER_01: has gotten involved.
[48:17] SPEAKER_01: It's called the Lubito Corridor, U.S.
[48:19] SPEAKER_01: and EU, $600 billion investment.
[48:22] SPEAKER_01: That can help.
[48:23] SPEAKER_01: So it depends, right?
[48:24] Because if there's a country that has very cheap power,
[48:27] for example,
[48:27] they could be value adding.
[48:29] SPEAKER_01: If the country has a specific know-how or skill set,
[48:31] SPEAKER_01: they can be value adding to that perspective.
[48:33] SPEAKER_01: The truth is,
[48:34] SPEAKER_01: as you go up the value chain,
[48:35] the more intense the competition gets because you're competing
[48:38] with players with
[48:39] SPEAKER_01: rock bottom electricity rates,
[48:40] SPEAKER_01: for example,
[48:41] SPEAKER_01: who are able to process this.
[48:43] SPEAKER_01: It's a mass market, low margin, high volume business.
[48:46] SPEAKER_01: Is it worth getting into it?
[48:47] SPEAKER_01: Can we compete effectively in it?
[48:49] SPEAKER_01: So these are all these schools of thought that need to be built out.
[48:52] And it's not going to happen if we're just going to sit at home
[48:56] and think about global markets.
[48:57] SPEAKER_01: You have to get out there.
[48:58] SPEAKER_01: You have to invest some.
[49:00] SPEAKER_01: You're going to burn your fingers.
[49:02] SPEAKER_01: The problem is the amount of capital you need,
[49:03] SPEAKER_01: you only have limited opportunities to try things.
[49:07] SPEAKER_01: But you have to try things.
[49:08] SPEAKER_01: Look,
[49:08] SPEAKER_01: one of the interesting things is there's a company in Kenya that actually
[49:11] SPEAKER_01: manufactures chips,
[49:12] SPEAKER_01: like computer chips.
[49:13] SPEAKER_01: Most people don't know of this.
[49:14] SPEAKER_01: And I think it's the only chip manufacturing plant in Africa.
[49:17] SPEAKER_01: There's an opportunity here to increase that value chain,
[49:20] SPEAKER_01: invest in that business,
[49:21] SPEAKER_01: be supportive of that business.
[49:23] SPEAKER_01: We want to write a case study on that business, for example.
[49:26] SPEAKER_01: So these areas where there has to be key KPIs,
[49:29] SPEAKER_01: there has to be key deliverables,
[49:30] SPEAKER_01: there has to be returns on that,
[49:32] SPEAKER_01: and not just like fluffy,
[49:34] SPEAKER_01: but like actual discipline and an ability to say,
[49:37] SPEAKER_01: no,
[49:38] SPEAKER_01: this is not making us money.
[49:39] SPEAKER_01: We should not be investing here.
[49:40] SPEAKER_00: But that requires a lot of critical thinking.
[49:43] What's your role in this space then in terms of enabling Africa
[49:47] and to become a
[49:47] SPEAKER_00: lead in this aspect of critical minerals?
[49:49] SPEAKER_00: And for those who don't understand,
[49:50] what other critical minerals perhaps you could name one or two
[49:53] to be able to give
[49:54] SPEAKER_00: perspective on that?
[49:56] SPEAKER_01: So critical minerals is a broad term that is applied to key metals,
[50:01] SPEAKER_01: key materials,
[50:02] raw materials and metals that are being extracted and processed
[50:05] and used in kind of
[50:06] SPEAKER_01: high value equipment and high value kind of production aspects.
[50:10] SPEAKER_01: I think at the moment,
[50:11] SPEAKER_01: look,
[50:12] SPEAKER_01: I can't share too much about it,
[50:13] SPEAKER_01: given kind of the sensitive nature of it.
[50:15] But I would say that at the moment,
[50:17] I'm still finding my seed understanding.
[50:19] SPEAKER_01: how I can provide that value add.
[50:21] I think there's a significant gap between kind of the knowledge
[50:24] base of US
[50:25] SPEAKER_01: investors into Africa and African opportunities.
[50:29] SPEAKER_01: So I think there's an opportunity there.
[50:31] SPEAKER_01: And I think that over time, as you build the experience curve, right?
[50:34] So as you start as an analyst,
[50:36] you start off very simple,
[50:37] you gain experience.
[50:39] SPEAKER_01: Over time, maybe that's where I can add the most value.
[50:42] SPEAKER_01: I could end up going public policy, for example.
[50:44] SPEAKER_01: I don't know.
[50:45] SPEAKER_01: I could be some other aspects.
[50:47] SPEAKER_01: I cannot put my finger on it and say, okay, this is where I'm going.
[50:50] SPEAKER_01: And any young analyst on the call will be thinking,
[50:53] SPEAKER_01: saying the same thing about where their careers are at.
[50:55] SPEAKER_01: But it's fun.
[50:56] SPEAKER_01: It's interesting.
[50:56] SPEAKER_01: You learn a lot.
[50:57] SPEAKER_01: And so that's where I'm at.
[50:59] I want to experience all of these things and see how that
[51:02] builds up into a life's
[51:03] SPEAKER_01: work,
[51:03] SPEAKER_01: basically.
[51:04] Suckling back a bit to what you've said so far and reflecting
[51:08] on your journey,
[51:09] what would you tell young analysts or professionals who also
[51:12] want to contribute to
[51:13] SPEAKER_00: the African capital markets today?
[51:15] SPEAKER_00: So that's part one of the question.
[51:17] SPEAKER_00: And the second bit,
[51:18] SPEAKER_00: I don't know how in touch you've been with Kenyan markets since you left,
[51:21] SPEAKER_00: but perhaps when you left the Kenyan markets,
[51:23] What are some of the things or at least some capabilities the
[51:26] Kenyan markets can
[51:27] develop to help us move from being just frontier markets to
[51:31] more developed and
[51:32] SPEAKER_00: developing markets,
[51:33] SPEAKER_00: so to speak.
[51:34] Some of the things,
[51:34] for instance,
[51:35] like when I came in,
[51:36] there was no earnings calendar.
[51:38] SPEAKER_00: We've been working on it and the market suddenly does have that.
[51:41] So what are some of the small things that we can do to improve
[51:43] our markets?
[51:43] SPEAKER_00: So first of all,
[51:44] SPEAKER_00: advice and then secondly,
[51:46] SPEAKER_00: reflect on the African markets and what we can do to make them better.
[51:49] SPEAKER_01: Beautiful question.
[51:50] SPEAKER_01: I'd say for an analyst,
[51:51] SPEAKER_01: we've touched on some of this from the perspective of experience curves,
[51:55] SPEAKER_01: thinking about it from financial modeling and starting off knowing the
[51:58] SPEAKER_01: fundamentals,
[51:59] SPEAKER_01: scaling it up over time.
[52:01] As you get good with one or two names,
[52:03] the market kind of rewards you for that.
[52:06] SPEAKER_01: You learn other companies, other industries.
[52:08] SPEAKER_01: Don't be scared.
[52:09] SPEAKER_01: You lose your experience curve and start afresh.
[52:11] SPEAKER_01: It's difficult, but collectively it may be more value-adding.
[52:16] I think the other thing I would say is focus on compressing
[52:19] your time to proficiency.
[52:20] SPEAKER_01: You could take two years to get good at something.
[52:22] SPEAKER_01: You could take three months to get good at something.
[52:25] SPEAKER_01: Have mentors, networks, have projects.
[52:27] SPEAKER_01: Do the CFA.
[52:28] SPEAKER_01: Become a judge on the CFA research challenge.
[52:31] SPEAKER_01: Become a mentor.
[52:32] SPEAKER_01: See how the more junior people are also learning.
[52:36] Use the CFA kind of competition to become more proficient
[52:39] because they give you
[52:40] SPEAKER_01: access to mentors.
[52:42] I do think that investment banks and kind of capital markets
[52:45] players need to work
[52:46] SPEAKER_01: more closely with our educational institutions.
[52:49] I think that MIT has a modern mind and hand where you would
[52:52] learn the theory,
[52:53] but you have to go into the field to practice the theory and
[52:56] see what sticks and
[52:56] SPEAKER_01: what doesn't.
[52:57] I think we need to focus a bit more on that and then always
[53:01] have this perspective
[53:02] SPEAKER_01: on like non-obvious failure points.
[53:05] SPEAKER_01: and hidden upside levers.
[53:07] We spoke about companies that have significant assets but are
[53:09] not carried at market value.
[53:11] SPEAKER_01: Think about looking to those annual reports, non-obvious failure points.
[53:15] SPEAKER_01: Think about the debt sustainability, for example.
[53:17] At the moment,
[53:17] everyone's not thinking about it,
[53:19] but maybe that's a different angle to explore.
[53:21] SPEAKER_01: It could be a dead end.
[53:22] SPEAKER_01: It could be a very rewarding kind of idea to explore.
[53:25] So think about all these kinds of different perspectives and
[53:28] always be learning.
[53:29] SPEAKER_01: I think on average,
[53:30] SPEAKER_01: like the fact that you're here listening to this,
[53:33] SPEAKER_01: it means that you're learning.
[53:34] You always want to push the boundaries and always be in a room
[53:37] full of people that
[53:38] SPEAKER_01: are smarter than you.
[53:39] SPEAKER_01: That's what I think would help the most.
[53:42] SPEAKER_01: I think from a capital markets perspective, you're right.
[53:45] SPEAKER_01: The Castro Research Portal,
[53:47] SPEAKER_01: thinking about it from a data perspective,
[53:49] SPEAKER_01: it's not yet readily available.
[53:51] And I think the framework that applied to that is creating
[53:54] value and capturing value.
[53:56] SPEAKER_01: So the Nairobi Securities Exchange,
[53:57] SPEAKER_01: for example,
[53:58] creates value by being a marketplace for investors to come and
[54:01] buy and sell shares.
[54:02] That goes back all the way to the first markets in the
[54:04] Netherlands in the 1600s.
[54:06] SPEAKER_01: But at some point, you want to monetize that value.
[54:09] SPEAKER_01: And the question is, at what point do you monetize the value?
[54:11] I think at the moment,
[54:13] if the NSC were to provide the data for free,
[54:15] completely free,
[54:17] SPEAKER_01: all the annual reports,
[54:18] SPEAKER_01: all the transcripts,
[54:19] SPEAKER_01: all this kind of stuff for free,
[54:21] SPEAKER_01: it creates more value than you're trying to capture immediately.
[54:24] SPEAKER_01: It's a trade-off.
[54:25] SPEAKER_01: I think frameworks for investors,
[54:27] SPEAKER_01: legal frameworks,
[54:28] SPEAKER_01: I think liquidity in markets,
[54:30] SPEAKER_01: free float of currency and availability to purchase.
[54:33] SPEAKER_01: When we had the dollar issue a couple of years back,
[54:36] a lot of investors left our market and it took two years really
[54:39] to come back.
[54:40] SPEAKER_01: Safarico went from, what, 35, 37 to...
[54:42] SPEAKER_01: I think part of it was also concerns around Ethiopia.
[54:45] SPEAKER_01: But still, a lot of it was liquidity flows as well.
[54:49] SPEAKER_01: So there's all these other things that need to be done.
[54:51] SPEAKER_01: The amount of capital we need is absolutely crazy as Africa, as Kenya.
[54:55] SPEAKER_01: We really need to invest on systems development, convincing investors.
[54:59] SPEAKER_01: There's a branding problem.
[55:00] Kenya is a bit better than most African countries because it
[55:03] has mindshare.
[55:04] SPEAKER_01: Safaricom has been a key driver of that mindshare in the U.S.,
[55:08] SPEAKER_01: Kenyan need to give wins to investors.
[55:11] SPEAKER_01: Large investors coming in, they get a win, they talk about it.
[55:14] Other investors get excited,
[55:15] they come in,
[55:16] and then there's like a steady return.
[55:18] SPEAKER_01: There has to be a steady return and those kind of things.
[55:20] SPEAKER_01: It's such a complex system.
[55:22] SPEAKER_01: Like there's going to be no one pair that can do it.
[55:24] SPEAKER_01: Everyone needs to be knit together.
[55:26] And there has to be a collective effort,
[55:27] a national effort to be like,
[55:28] hey,
[55:29] okay.
[55:29] SPEAKER_01: This is what we're focusing on.
[55:30] SPEAKER_01: This is how we want to develop this ecosystem.
[55:33] SPEAKER_01: This is our strategy for the next 10 years.
[55:36] SPEAKER_01: And if we fail at certain points,
[55:37] SPEAKER_01: we need to be quick to say,
[55:39] SPEAKER_01: okay,
[55:39] SPEAKER_01: we failed here,
[55:40] SPEAKER_01: let's adapt and move on.
[55:42] SPEAKER_01: I think that's the way I'd look at it.
[55:43] SPEAKER_00: It's a tough one.
[55:44] To get people to reflect a mission like you have,
[55:47] but I think there is hope.
[55:48] SPEAKER_00: That's what I take from you.
[55:50] SPEAKER_00: So Kishan, thank you so much for sharing with Danny.
[55:52] I should say there are a couple of really good positive
[55:54] comments that have come in
[55:55] SPEAKER_00: and I should read them for you because then you get inspired.
[55:58] SPEAKER_00: Catherine is saying, I like the many life and business lessons shared.
[56:02] SPEAKER_00: Most leaders have similar goals, but very different results.
[56:06] SPEAKER_00: So thank you for sharing your journey.
[56:07] SPEAKER_00: And Sanjay, I think he has known you for a while.
[56:09] He says your ability to get the best investor engagement is not
[56:13] about persistence,
[56:14] SPEAKER_00: it's about smart persistence.
[56:15] SPEAKER_00: You kept tweaking up,
[56:16] SPEAKER_00: kept tweaking,
[56:17] SPEAKER_00: kept learning,
[56:18] SPEAKER_00: alternate path,
[56:19] SPEAKER_00: first angles,
[56:20] SPEAKER_00: and agreed to keep reaching out.
[56:21] SPEAKER_00: So that's another positive one.
[56:23] And another one is asking if you would want to become a
[56:26] professor one day to share
[56:28] SPEAKER_00: some of these insights in the Kenyan business school.
[56:30] SPEAKER_00: So perhaps you should consider that now that you're at MIT.
[56:33] SPEAKER_00: So those are like very kind comments which have come in.
[56:36] So since you've interviewed a lot of people,
[56:38] so one of my favorite podcast hosts is Patrick.
[56:41] So he always ends the podcast by asking what's the kindest
[56:45] thing someone has ever
[56:46] SPEAKER_00: done to them in their professional personal journey.
[56:48] SPEAKER_00: So I'd end there and ask you to share that if you wouldn't mind.
[56:52] SPEAKER_01: First of all, thank you so much for all the positive comments.
[56:55] SPEAKER_01: Look, reach out to me.
[56:56] SPEAKER_01: I want more Kenyan students.
[56:57] SPEAKER_01: I want more East African students to be here at these institutions.
[57:01] SPEAKER_01: I want them to explore.
[57:02] SPEAKER_01: I want them to learn because we desperately need that growth.
[57:05] SPEAKER_01: We need that mindset and we need that passion.
[57:08] SPEAKER_01: Look me up on LinkedIn, message me.
[57:09] SPEAKER_01: Let's have a chat.
[57:10] I think from the perspective of the kindest thing,
[57:12] I think it's believing in me.
[57:14] SPEAKER_01: Look, when I started, I didn't know much.
[57:16] SPEAKER_01: People believed in me.
[57:17] SPEAKER_01: They guided me.
[57:18] SPEAKER_01: They spent hours teaching me.
[57:20] SPEAKER_01: Even today,
[57:21] SPEAKER_01: like if I don't know all these investors who are billionaires,
[57:25] SPEAKER_01: imagine how much demands they have on their time.
[57:27] SPEAKER_01: But they took an hour and a half to speak to students to guide.
[57:30] That kindness and that mentorship,
[57:32] I think,
[57:33] is the most,
[57:34] most valuable thing.
[57:35] SPEAKER_01: And I think as Kenya,
[57:36] SPEAKER_01: we need to incultivate that culture through our schools,
[57:39] SPEAKER_01: our high schools,
[57:40] SPEAKER_01: our business schools,
[57:41] SPEAKER_01: universities.
[57:42] SPEAKER_01: I do think that part that the U.S.
[57:45] SPEAKER_01: has is really beautiful.
[57:46] SPEAKER_01: And I think that we need that.
[57:48] SPEAKER_01: And I hope that we can scale that.
[57:50] SPEAKER_01: Closing one station for the people.
[57:52] SPEAKER_01: Do not let setbacks affect you.
[57:54] Setbacks are part of the game and persist and be good at what
[57:57] you do because we are
[57:59] SPEAKER_01: lucky that the market rewards that quickly and recognizes it quickly.
[58:03] SPEAKER_01: Be good at what you do.
[58:04] SPEAKER_01: And remember,
[58:05] all these big investors have been super humble about kind of
[58:08] their stuff and stay
[58:10] SPEAKER_01: humble and keep trying.
[58:11] SPEAKER_01: I think that's what I'd say.
[58:13] SPEAKER_00: Kishan, thank you so much.
[58:14] Thank you so much to the audience for taking time to join us
[58:17] and see you again next
[58:18] SPEAKER_00: week for another edition of Mongol Spaces.
[58:20] SPEAKER_00: Thank you so much.
[58:21] SPEAKER_00: I appreciate this.

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