Daniel Yu sounds like a really, really intelligent guy, but that's a lot of keywords and verbiage from someone accustomed to VC-pandering. Let me briefly break down what he really did. I really...
Exemplary
Daniel Yu sounds like a really, really intelligent guy, but that's a lot of keywords and verbiage from someone accustomed to VC-pandering. Let me briefly break down what he really did. I really don't have any complaints about the endeavor itself, but I do find these kinds of "you can get rich by doing what I did" kinds of self-help articles/books tiresome. It's even more funny (in a sad way) when you find out he fired 100 employees and axed several C-levels when he sold the company to a competitor and then went to work on an NGO in India.
Anyhow, here's what he did without the marketing speak (and a little peek at what he did after posting this essay):
What I kept noticing was a simple, persistent problem: the neighborhood shops kept running out of basic items, such as soap, cooking oil, flour, and sugar.
He found a market sector that hadn't been exploited yet and became the only business performing the necessary functions in very select regions that could be profitable. That's phenomenal and exactly what people should be doing in a capitalist system. No complaints from the capitalists.
Wasoko replaced that trip with a mobile phone order and same-day delivery.
Wasoko was founded by three people including Yu. They raised over $125 million in private equity and venture capital across several rounds of funding, purchased warehouse space in countries with favorable tax scenarios for such situations (i.e. as little as 0%), employed extremely inexpensive labor, and bought up enough assets and inventory across the region that they could resell their goods cheaper than smaller companies -- and then offered delivery. We don't know how many people got run out of business by being undercut by this new wholesale distributor, or whether local wages got depressed as a result of Wasoko's success, but maybe it more than made up for it.
Like the theoretical case Yu is making, employing people who don't have jobs or lack access to regular sources of income is extremely important for helping developing regions and keeping them stable. My only nitpick is that he doesn't provide hard numbers here and it would be nice to see.
Wasoko eventually grew to serve more than 100,000 small businesses across six countries in Sub-Saharan Africa, with a team of 2,000 people.
Wasoko, formerly Sakowatch, raised over $125 million in capital (not sure where the money came from, but one of the investors might've been the University of Chicago along with an American investment management/private equity company) to provide services in areas where they could dominate, but not in areas that were unprofitable (otherwise they'd be an NGO, right?). Good business acumen. Not sure how that supports the argument against NGOs when NGOs can operate in areas that aren't profitable. Yu should know that, considering where he "works" now.
By the time I left the firm, it was serving 100,000 small businesses.
Hm, very vague number from an article written in 2023. Quarterly active accounts? Total accounts? Total businesses within the service delivery area? A later article claims "In August 2024, it claimed to serve 450,000 merchants who reached 65 million consumers." Hugely different numbers between 2023 and 2024, so maybe the 100K small businesses is their active accounts.
It doesn't matter. A few months after writing the essay submitted to Tildes, Yu and his board "reorganized" the company and merged/sold it to a competitor. They also paused operations in Uganda and Zambia, closed their offices in a Silicon Valley-like part of East Africa, and laid off some employees. The Kenyan tax situation for the company also changed in 2025, and may have changed in other African countries, which might've made the buyout/merger look like a good way of saving a company damaged by recent economic tides. As of 2025, Yu of course still has an advisory role on the board of the new company, but has apparently moved to India to work with an NGO focused on education.
So I don't really feel inspired by this? And, supposing that Sokowatch/Wasoko did benefit from extremely lenient taxation (some might call loop-holes), that exploitation has perhaps led to the current situation where many African countries are implementing a minimum corporate tax structure mirroring (or due to) recent American reciprocal tax policies. So someone with the money and initiative to do this can't because, like many self-help books on getting rich, the system has already been abused and the market has already been cornered.
The thing about Yu's premise is that what people and economies need is liquidity. They need cash infusions in the right places and in the right ways (economically as well as morally -- people feel good when they are getting paid to do honest work). Businesses of all sizes do this, but they need liquidity and often it's foreign capital investment that makes the biggest waves because they bring the biggest cheques.
However there are alternatives, and the part mentioning Floramérica's $2.4B annual revenue is an interesting number. It's the same amount of disbursements through Kiva to borrowers in developing nations over the non-profit's lifetime. So it's an order of magnitude different and the Googler-founded non-profit is using micro-lending in a P2P-adjacent format to help people who don't have access to traditional banking or lending services (and are also at-risk of predatory lenders, corruption, and organized crime). Yet Kiva is able to service borrowers in regions that aren't traditionally profitable which is why many of those lending services don't exist -- because capital markets have deemed it not worth the investment. So a non-profit (that literally "issues cash transfers") like Kiva and a corporation like Wasoko aren't comparable at all ... and Yu's premise that for-profit corporations and non-profit corporations are comparable ... must be wrong. It's also a little bit lazy to raise $125 million (or more) and then compare yourself to organizations that didn't.
Through that decade of venture building in Africa, I came to understand a harder truth: the path to widespread prosperity would not come from simply helping local businesses operate more efficiently. Wasoko was a start, but local purchasing power was deeply constrained. Creating genuine engines of income growth requires businesses built to serve markets beyond developing countries—using global purchasing power to drive convergence.
But if there is a takeaway, it's what Yu wrote above. Wasoko was one business and it helped to provide jobs and a regular source of income for at least a couple thousand people who might not have had that income security. But it's not the only solution and there is not a single solution that fixes everything -- as Wasoko didn't. There need to be multiple solutions at every level and in different ways so that wealth isn't solely concentrated in areas where it pays dividends. Purchasing power that drives the economy can come from many sources and the reins of that equity shouldn't be in the hands of the few.
Broadband rollout in the US is a perfect example. Rapid private sector deployment in dense cities, other areas more or less told to pound sand. Everyone likes to shit on the public sector, holding...
There need to be multiple solutions at every level and in different ways so that wealth isn't solely concentrated in areas where it pays dividends
Broadband rollout in the US is a perfect example. Rapid private sector deployment in dense cities, other areas more or less told to pound sand.
Everyone likes to shit on the public sector, holding up the private sector as a beacon of cost efficiency and service, but the reality is that most of that is manufactured out of the private sector gobbling up the low hanging fruit, leaving the public sector to eat the responsibility of the unprofitable needs, thus insuring the public sector appears to be a bloated leech by the numbers.
Of course private schools are going to have better metrics than public schools if they kick out all the lowest-performing students. Of course their costs will be lower if they kick out all the special needs kids. And often, they're allowed to do this.
The problem is that we gate serving needs based on investment dollars (and returns on investment dollars in the private sector), and not the ability to serve the need.
Exactly. The response I have cue'd up for when I hear this from people is "What are you optimizing for, efficiency or effectiveness? Efficiency says the post office shouldn't deliver mail to the...
but the reality is that most of that is manufactured out of the private sector gobbling up the low hanging fruit, leaving the public sector to eat the responsibility of the unprofitable needs
Exactly. The response I have cue'd up for when I hear this from people is "What are you optimizing for, efficiency or effectiveness? Efficiency says the post office shouldn't deliver mail to the family living 20 miles from town. Effectiveness means every citizen receives regular mail service."
I’ll point out that governments are also not required to serve people outside their jurisdiction. There are public school districts for rich communities that poor people have a hard time getting...
I’ll point out that governments are also not required to serve people outside their jurisdiction. There are public school districts for rich communities that poor people have a hard time getting into. Selection effects can make their numbers go up, too.
Thanks for the additional context. (The first two links go to the same page; did you mean to link to something else?) You’ve said some positive things about the author too, but some of what you...
Thanks for the additional context. (The first two links go to the same page; did you mean to link to something else?)
You’ve said some positive things about the author too, but some of what you wrote makes me wonder if we read the same article.
It seems rather cynical to summarize it as “you can get rich by doing what I did" when he didn’t appeal to greed or write anything about how he personally benefitted? Instead he made some claims about how what his company did benefited others. It’s appealing to an imagined reader who is interested in making an impact on the world rather than setting out to get rich, because they’re also considering working for an NGO.
(I suppose one would expect that he earned something from co-founding a business employing a so many people, but that’s left to the imagination.)
He found a market sector that hadn't been exploited yet
This seems like a rather cynical way to describe doing a better job at delivering food. I think you’re making assumptions going far beyond what we know, using loaded words like “abused” and “cornered.” When paying workers more means charging poor merchants and their customers more for food, it seems like there are tradeoffs to be made and we don’t know much about them. No prices are even mentioned. So how should we know whether their prices are too low or too high in the local context?
You’re also assuming that some competitors were harmed but we don’t know anything about them or what happened to them. If they charged more for worse service and lost to a more efficient competitor, maybe it’s for the best?
So maybe they did some things wrong, but we don’t actually know that. This is just a sketch using a few anecdotes and some round numbers for flavor.
And that seems like a downside of starting a business. There’s no scientific study because they didn’t need to do one to appeal to donors. So we know a lot less about what really happened.
I do think you’re right that there’s a place for nonprofits too.
It's not that we read different articles, it's that we're looking at this through different lenses. And I'm glad you picked up on the fact that I do like what he did -- solving poverty through...
It's not that we read different articles, it's that we're looking at this through different lenses. And I'm glad you picked up on the fact that I do like what he did -- solving poverty through investment, solving unemployment through job-creating enterprises, and creating local stability for goods/services/salaries -- is uniformly good in our system. But contrary to his argument, it is something he still could have done without profiting (and I do wonder if the company is profitable ... that bears more research).
Not that he should have operated at a loss or that I'm advocating for it to have been a non-profit, but his contrast of NGOs to for-profit businesses falls flat when his success story literally is the proof that he found a market sector to profit from at a scale that people in the region clearly weren't able to do themselves (otherwise, all things being equal they would have already, right?). Venture capital followed the newly-created investment potential of Sokowatch/Wasoko not because they were investing in the people or the philosophy of creating jobs and stability, but because they wanted a return on their investment (and Yu hasn't disclosed what that was, just $125M+ in funding at a $650M+ valuation).
If they charged more for worse service and lost to a more efficient competitor, maybe it’s for the best?
The example that Yu gives about small businesses having to travel to restock basis necessities like soap, cooking oil, flour, and sugar is a common one throughout these developing regions and you will see it in ALL developing parts of the Middle East, Asia, Africa, and South America. The local governments lack the infrastructure for big vehicles to deliver large quantities of items to wholesales who can sell direct to small businesses. It's a vicious cycle of not enough tax income for services, not enough money being made by people who are employed, too little employment, too much unskilled labor to develop the region quickly, a general lack of upward mobility, etc etc.
People on Tildes have posted lots of articles about what happens when a Walmart-type company (a sort of vertically-integrated wholesaler in their own right) moves into town, so I'll let you decide if the creation of a new wholesaler like Wasoko is always a good thing, sometimes a good thing, or can have mixed results for the other business that were clearly staying afloat but not providing the same margins that Wasoko was (and we know Wasoko was because they were competing with those same businesses and offering a delivery service, right?).
Maybe it is for the best for the long term, but I felt it appropriate to point out that economic competition isn't all roses; whoever Wasoko out-competed will never have the opportunities to ask for outside investment like Yu and his co-founders did. They never had that opportunity because the fundamentals didn't exist and what Yu did in creating a whole distribution network to save small businesses time and money is great, but he was able to do it because he saw an opportunity that he capitalized on and was capable of asking for the outside investment required to build what he built. He did not bootstrap himself the way the locals were, playing on a level playing field -- and that's fine. He bypassed a lot of that grief by using a huge amount of funding over a period of years that he might not have even been required to pay back (because he sold equity in Wasoko, rather than taking a loan or depending on donors like a non-profit). So if it worked, that's phenomenal, but I am skeptical that his conclusion about NGOs is wise. Kiva is certainly a counter-example and I think that his essay might not be much of a success story when we get into Wasoko's numbers and lasting impact.
I have more to say on this, but have to step away again. Perhaps you can look into the VC investors and see if its true that the Swedish investment firm sold their stake at a much lower valuation a year before Wasoko was merged/acquired. That's not typically a good sign. With $125M+ raised in venture capital and a cut valuation, it worries me that Wasoko might not have made much profit on their revenue (Yu said himself they were not an asset-light company) and the VC investors felt it wasn't a business with enough growth potential. But hey, I'm all for taking VC money and dumping it into developing regions that actually need it. But did the money grow? It would be pretty funny if Wasoko was a for-profit business that didn't turn a profit. But yes, the upshot is that jobs were created and hopefully many of its long-term employees are still employed with the new company.
The line between for-profit and non-profit organizations can sometimes be blurry because for-profit companies can operate at a loss for a while and non-profits still need to worry about budgets...
The line between for-profit and non-profit organizations can sometimes be blurry because for-profit companies can operate at a loss for a while and non-profits still need to worry about budgets and where the money is coming from. There are incentives to cut costs to improve efficiency at whatever they're doing. Formally non-profit companies can still benefit some stakeholders - for example, paying managers a high salary.
When evaluating what Wasoko did, we don't know what their operating margin was and whether they were profitable or losing money in each market. We can guess that they were places that they pulled out of because they were losing money there.
And then the issue is that even if we figured that out, operating margins aren't enough to decide whether we approve of what they did. It doesn't tell us how much the people they served benefited, or what would have happened instead if they weren't there.
From the article: [...] [...] [...] [...] [...] Easier said than done and I'm not going to do it, but I think it's good for someone who's been there to highlight the positive impact of...
From the article:
In developing countries, many people become entrepreneurs by default. Most have informal, cash-in-hand jobs. There is no certainty in entrepreneurship. At any given time, there could be a glut of opportunities, or income could completely dry up, and individuals have little control over this. When your income can differ markedly from month to month, it is hard to plot a path forward. Should you take out a loan to grow your hustle when your income could disappear the following month?
[...]
To lift the floor for the 800 million people living on less than $3 a day, we don’t need more projects; we need more payrolls.
[...]
Non-governmental organizations often try to limit the damage from this massive deficit of employment opportunities. Cash transfers can allow people to invest productively, and asset transfers mean that people do not have to save for those purchases. But NGOs are inherently limited by the generosity of donors. What if there is a better option?
A successful commercial firm does something no NGO can: it issues “cash transfers” to a large group of people every month, indefinitely, funded by the market rather than donor whims. Indeed, private sector growth is the key to the structural transformation required to create hundreds of millions of jobs. No rich country today has become wealthy through the intervention of NGOs.
Rather, it is businesses that make a country rich. Take Singapore as an example. It became an export hub, first in goods and later in services. As the private sector grew, the state had more money to invest in public goods and advanced infrastructure, enabling further private-sector growth. Growth laid the foundation for everything else.
[...]
I started Wasoko in Kenya in 2015. The seed of the idea had come from a month spent living in a rural village in Egypt a few years earlier, where I was doing remote coding work while learning Arabic. What I kept noticing was a simple, persistent problem: the neighborhood shops kept running out of basic items, such as soap, cooking oil, flour, and sugar. The shopkeeper then faced a half-day trip to the nearest city’s wholesale market to restock, at a significant cost in time and transport.
Wasoko replaced that trip with a mobile phone order and same-day delivery. By consolidating dozens of individual restocking runs into a single route—one driver, one truck, serving many shops—the marginal cost fell significantly for each shopkeeper. What had once taken half a day and eaten into thin margins could now be done on the phone in two minutes.
Wasoko eventually grew to serve more than 100,000 small businesses across six countries in Sub-Saharan Africa, with a team of 2,000 people. Most held entry-level logistics and customer support roles—the vital first rungs of the formal economy. Each drew a monthly paycheck; that payroll helped support the lives of more than 10,000 family members. Those paychecks paid school fees, covered medication, and funded improved housing.
[...]
There are legions of historical examples. Consider Floramérica, the first cut-flower exporter in Colombia. Floramérica was founded by a few Americans in their early thirties who brought US-style business management to their pioneering venture. Within six months, they were exporting to the US and, within three years, employed 400 people.
But Floramérica didn’t just grow flowers; it engineered a multinational cold chain from scratch. It negotiated with airlines to create cargo space, designed specialized refrigerated trucks to navigate Andean mountain roads, and mastered the stringent plant import standards of US Customs. This required a level of organizational knowledge that Colombian domestic business did not have at the time. By solving these complexity problems, it created a high-productivity blueprint for an entire nation.
The knowledge didn’t stay inside Floramérica. Local employees mastered the trade and left to launch their own ventures, seeding an entire industry. Today, Colombia is the world’s second-largest flower exporter, with an ecosystem generating US$2.4 billion in annual value with 200,000 formal jobs as of 2025.
It is difficult for an NGO to compete with that level of impact. This outcome was achieved through entirely different mechanisms outside of standard aid practices: The founders of Floramérica didn’t write policy papers, disburse cash transfers, or run a randomized control trial. They built a scale-up business in a poor country selling to global markets. In so doing, they catalyzed the structural transformation that gave hundreds of thousands of people exactly what June Jambiha spent years looking for: a reliable paycheck and a path forward.
And it’s repeatable. One of the Floramérica founders, Thomas Kehler, went on to launch SalmoAmerica in Chile—one of the first salmon exporters in what is a $6.5 billion industry employing 86,000 people in the country as of 2023.
[...]
Through that decade of venture building in Africa, I came to understand a harder truth: the path to widespread prosperity would not come from simply helping local businesses operate more efficiently. Wasoko was a start, but local purchasing power was deeply constrained. Creating genuine engines of income growth requires businesses built to serve markets beyond developing countries—using global purchasing power to drive convergence.
Easier said than done and I'm not going to do it, but I think it's good for someone who's been there to highlight the positive impact of international trade every now and then?
This was a great topic. Re: your comment about trade -- this is also increasingly the direction taken by thought leaders on the continent -- see, for example, Dambisya Moyo's work. Aid can save...
This was a great topic.
Re: your comment about trade -- this is also increasingly the direction taken by thought leaders on the continent -- see, for example, Dambisya Moyo's work. Aid can save lives as a stopgap and plug holes temporarily - but it's got to be temporary. More than anything else Africa needs innovation and economic development. Historically, capitalism has proved to be the best engine for both of those. Not the only engine! Not the best engine in every possible sector/area! But the best engine nonetheless.
Daniel Yu sounds like a really, really intelligent guy, but that's a lot of keywords and verbiage from someone accustomed to VC-pandering. Let me briefly break down what he really did. I really don't have any complaints about the endeavor itself, but I do find these kinds of "you can get rich by doing what I did" kinds of self-help articles/books tiresome. It's even more funny (in a sad way) when you find out he fired 100 employees and axed several C-levels when he sold the company to a competitor and then went to work on an NGO in India.
Anyhow, here's what he did without the marketing speak (and a little peek at what he did after posting this essay):
He found a market sector that hadn't been exploited yet and became the only business performing the necessary functions in very select regions that could be profitable. That's phenomenal and exactly what people should be doing in a capitalist system. No complaints from the capitalists.
Wasoko was founded by three people including Yu. They raised over $125 million in private equity and venture capital across several rounds of funding, purchased warehouse space in countries with favorable tax scenarios for such situations (i.e. as little as 0%), employed extremely inexpensive labor, and bought up enough assets and inventory across the region that they could resell their goods cheaper than smaller companies -- and then offered delivery. We don't know how many people got run out of business by being undercut by this new wholesale distributor, or whether local wages got depressed as a result of Wasoko's success, but maybe it more than made up for it.
Like the theoretical case Yu is making, employing people who don't have jobs or lack access to regular sources of income is extremely important for helping developing regions and keeping them stable. My only nitpick is that he doesn't provide hard numbers here and it would be nice to see.
Wasoko, formerly Sakowatch, raised over $125 million in capital (not sure where the money came from, but one of the investors might've been the University of Chicago along with an American investment management/private equity company) to provide services in areas where they could dominate, but not in areas that were unprofitable (otherwise they'd be an NGO, right?). Good business acumen. Not sure how that supports the argument against NGOs when NGOs can operate in areas that aren't profitable. Yu should know that, considering where he "works" now.
Hm, very vague number from an article written in 2023. Quarterly active accounts? Total accounts? Total businesses within the service delivery area? A later article claims "In August 2024, it claimed to serve 450,000 merchants who reached 65 million consumers." Hugely different numbers between 2023 and 2024, so maybe the 100K small businesses is their active accounts.
It doesn't matter. A few months after writing the essay submitted to Tildes, Yu and his board "reorganized" the company and merged/sold it to a competitor. They also paused operations in Uganda and Zambia, closed their offices in a Silicon Valley-like part of East Africa, and laid off some employees. The Kenyan tax situation for the company also changed in 2025, and may have changed in other African countries, which might've made the buyout/merger look like a good way of saving a company damaged by recent economic tides. As of 2025, Yu of course still has an advisory role on the board of the new company, but has apparently moved to India to work with an NGO focused on education.
So I don't really feel inspired by this? And, supposing that Sokowatch/Wasoko did benefit from extremely lenient taxation (some might call loop-holes), that exploitation has perhaps led to the current situation where many African countries are implementing a minimum corporate tax structure mirroring (or due to) recent American reciprocal tax policies. So someone with the money and initiative to do this can't because, like many self-help books on getting rich, the system has already been abused and the market has already been cornered.
The thing about Yu's premise is that what people and economies need is liquidity. They need cash infusions in the right places and in the right ways (economically as well as morally -- people feel good when they are getting paid to do honest work). Businesses of all sizes do this, but they need liquidity and often it's foreign capital investment that makes the biggest waves because they bring the biggest cheques.
However there are alternatives, and the part mentioning Floramérica's $2.4B annual revenue is an interesting number. It's the same amount of disbursements through Kiva to borrowers in developing nations over the non-profit's lifetime. So it's an order of magnitude different and the Googler-founded non-profit is using micro-lending in a P2P-adjacent format to help people who don't have access to traditional banking or lending services (and are also at-risk of predatory lenders, corruption, and organized crime). Yet Kiva is able to service borrowers in regions that aren't traditionally profitable which is why many of those lending services don't exist -- because capital markets have deemed it not worth the investment. So a non-profit (that literally "issues cash transfers") like Kiva and a corporation like Wasoko aren't comparable at all ... and Yu's premise that for-profit corporations and non-profit corporations are comparable ... must be wrong. It's also a little bit lazy to raise $125 million (or more) and then compare yourself to organizations that didn't.
But if there is a takeaway, it's what Yu wrote above. Wasoko was one business and it helped to provide jobs and a regular source of income for at least a couple thousand people who might not have had that income security. But it's not the only solution and there is not a single solution that fixes everything -- as Wasoko didn't. There need to be multiple solutions at every level and in different ways so that wealth isn't solely concentrated in areas where it pays dividends. Purchasing power that drives the economy can come from many sources and the reins of that equity shouldn't be in the hands of the few.
Broadband rollout in the US is a perfect example. Rapid private sector deployment in dense cities, other areas more or less told to pound sand.
Everyone likes to shit on the public sector, holding up the private sector as a beacon of cost efficiency and service, but the reality is that most of that is manufactured out of the private sector gobbling up the low hanging fruit, leaving the public sector to eat the responsibility of the unprofitable needs, thus insuring the public sector appears to be a bloated leech by the numbers.
Of course private schools are going to have better metrics than public schools if they kick out all the lowest-performing students. Of course their costs will be lower if they kick out all the special needs kids. And often, they're allowed to do this.
The problem is that we gate serving needs based on investment dollars (and returns on investment dollars in the private sector), and not the ability to serve the need.
Exactly. The response I have cue'd up for when I hear this from people is "What are you optimizing for, efficiency or effectiveness? Efficiency says the post office shouldn't deliver mail to the family living 20 miles from town. Effectiveness means every citizen receives regular mail service."
I’ll point out that governments are also not required to serve people outside their jurisdiction. There are public school districts for rich communities that poor people have a hard time getting into. Selection effects can make their numbers go up, too.
Thanks for the additional context. (The first two links go to the same page; did you mean to link to something else?)
You’ve said some positive things about the author too, but some of what you wrote makes me wonder if we read the same article.
It seems rather cynical to summarize it as “you can get rich by doing what I did" when he didn’t appeal to greed or write anything about how he personally benefitted? Instead he made some claims about how what his company did benefited others. It’s appealing to an imagined reader who is interested in making an impact on the world rather than setting out to get rich, because they’re also considering working for an NGO.
(I suppose one would expect that he earned something from co-founding a business employing a so many people, but that’s left to the imagination.)
This seems like a rather cynical way to describe doing a better job at delivering food. I think you’re making assumptions going far beyond what we know, using loaded words like “abused” and “cornered.” When paying workers more means charging poor merchants and their customers more for food, it seems like there are tradeoffs to be made and we don’t know much about them. No prices are even mentioned. So how should we know whether their prices are too low or too high in the local context?
You’re also assuming that some competitors were harmed but we don’t know anything about them or what happened to them. If they charged more for worse service and lost to a more efficient competitor, maybe it’s for the best?
So maybe they did some things wrong, but we don’t actually know that. This is just a sketch using a few anecdotes and some round numbers for flavor.
And that seems like a downside of starting a business. There’s no scientific study because they didn’t need to do one to appeal to donors. So we know a lot less about what really happened.
I do think you’re right that there’s a place for nonprofits too.
It's not that we read different articles, it's that we're looking at this through different lenses. And I'm glad you picked up on the fact that I do like what he did -- solving poverty through investment, solving unemployment through job-creating enterprises, and creating local stability for goods/services/salaries -- is uniformly good in our system. But contrary to his argument, it is something he still could have done without profiting (and I do wonder if the company is profitable ... that bears more research).
Not that he should have operated at a loss or that I'm advocating for it to have been a non-profit, but his contrast of NGOs to for-profit businesses falls flat when his success story literally is the proof that he found a market sector to profit from at a scale that people in the region clearly weren't able to do themselves (otherwise, all things being equal they would have already, right?). Venture capital followed the newly-created investment potential of Sokowatch/Wasoko not because they were investing in the people or the philosophy of creating jobs and stability, but because they wanted a return on their investment (and Yu hasn't disclosed what that was, just $125M+ in funding at a $650M+ valuation).
The example that Yu gives about small businesses having to travel to restock basis necessities like soap, cooking oil, flour, and sugar is a common one throughout these developing regions and you will see it in ALL developing parts of the Middle East, Asia, Africa, and South America. The local governments lack the infrastructure for big vehicles to deliver large quantities of items to wholesales who can sell direct to small businesses. It's a vicious cycle of not enough tax income for services, not enough money being made by people who are employed, too little employment, too much unskilled labor to develop the region quickly, a general lack of upward mobility, etc etc.
People on Tildes have posted lots of articles about what happens when a Walmart-type company (a sort of vertically-integrated wholesaler in their own right) moves into town, so I'll let you decide if the creation of a new wholesaler like Wasoko is always a good thing, sometimes a good thing, or can have mixed results for the other business that were clearly staying afloat but not providing the same margins that Wasoko was (and we know Wasoko was because they were competing with those same businesses and offering a delivery service, right?).
Maybe it is for the best for the long term, but I felt it appropriate to point out that economic competition isn't all roses; whoever Wasoko out-competed will never have the opportunities to ask for outside investment like Yu and his co-founders did. They never had that opportunity because the fundamentals didn't exist and what Yu did in creating a whole distribution network to save small businesses time and money is great, but he was able to do it because he saw an opportunity that he capitalized on and was capable of asking for the outside investment required to build what he built. He did not bootstrap himself the way the locals were, playing on a level playing field -- and that's fine. He bypassed a lot of that grief by using a huge amount of funding over a period of years that he might not have even been required to pay back (because he sold equity in Wasoko, rather than taking a loan or depending on donors like a non-profit). So if it worked, that's phenomenal, but I am skeptical that his conclusion about NGOs is wise. Kiva is certainly a counter-example and I think that his essay might not be much of a success story when we get into Wasoko's numbers and lasting impact.
I have more to say on this, but have to step away again. Perhaps you can look into the VC investors and see if its true that the Swedish investment firm sold their stake at a much lower valuation a year before Wasoko was merged/acquired. That's not typically a good sign. With $125M+ raised in venture capital and a cut valuation, it worries me that Wasoko might not have made much profit on their revenue (Yu said himself they were not an asset-light company) and the VC investors felt it wasn't a business with enough growth potential. But hey, I'm all for taking VC money and dumping it into developing regions that actually need it. But did the money grow? It would be pretty funny if Wasoko was a for-profit business that didn't turn a profit. But yes, the upshot is that jobs were created and hopefully many of its long-term employees are still employed with the new company.
The line between for-profit and non-profit organizations can sometimes be blurry because for-profit companies can operate at a loss for a while and non-profits still need to worry about budgets and where the money is coming from. There are incentives to cut costs to improve efficiency at whatever they're doing. Formally non-profit companies can still benefit some stakeholders - for example, paying managers a high salary.
When evaluating what Wasoko did, we don't know what their operating margin was and whether they were profitable or losing money in each market. We can guess that they were places that they pulled out of because they were losing money there.
And then the issue is that even if we figured that out, operating margins aren't enough to decide whether we approve of what they did. It doesn't tell us how much the people they served benefited, or what would have happened instead if they weren't there.
From the article:
[...]
[...]
[...]
[...]
[...]
Easier said than done and I'm not going to do it, but I think it's good for someone who's been there to highlight the positive impact of international trade every now and then?
This was a great topic.
Re: your comment about trade -- this is also increasingly the direction taken by thought leaders on the continent -- see, for example, Dambisya Moyo's work. Aid can save lives as a stopgap and plug holes temporarily - but it's got to be temporary. More than anything else Africa needs innovation and economic development. Historically, capitalism has proved to be the best engine for both of those. Not the only engine! Not the best engine in every possible sector/area! But the best engine nonetheless.