Zero To Scale (ZTS) is a new web series that focuses on the journeys of African founders and their startups from day zero until the day they achieve scale. ZTS is produced in partnership with Oneroute.io, an all-in-one tool for your customer communication needs.
Since its days as a digital agency in 2009, Terragon Group has worked with top African and international companies to connect with African customers. Today, the company uses AI/ML to drive customer connection at scale.
In this edition of Zero To Scale, we speak with Ayodeji Balogun, CTO, and Co-founder of Terragon. He talks about the challenges of pivoting from a digital agency to a tech-first company and how Terragon has been able to achieve scale.
How did Terragon go from a digital marketing agency to a tech company?Terragon’s journey has actually been a long and eventful one. We actually started as a value-added company providing digital content like caller ringback tunes and mobile games on telco networks in 2009. Then we saw an opportunity in the digital agency business. A number of companies were trying to come online and we were positioned as a “new media” company. What that essentially meant was that we helped a lot of top brands get on the internet and drive engagements.
While we were doing that, we saw an opportunity to organise and aggregate the publisher-advertiser landscape. The top news publishers (Guardian, Punch, etc.) were just adopting the internet. So, we helped them build websites and manage advertising demand. So, between 2009 - 2013, we were running three businesses.
Those three businesses led us to where we are today. The projects we had done helped us grow trust with our customers and understand their problems. Around 2013/14, we started having internal workshops with our team to talk about the opportunity we see, the bottlenecks we were dealing with and how to deal with them permanently.
One of the things we discovered that our business model was not scalable. As an agency, the more brands you work with, the more people you have to hire to do strategy, media buying, analytics and reporting, etc. Naturally, this raised concerns with our employees, especially around job safety. We had to help them understand that they were best-placed to build the solutions we were working on. A number of them ended up doing product management, customer success and other roles.
Thinking about it now, it was daring. There were not a lot of local companies building products at that time. Typically, people would license foreign companies to build the solutions they needed for their agencies, but there we were, building something of our own. I think we were lucky to have people who believed in what we were building.
How were you able to win the trust of legacy companies?
Our pivot was a long-term plan, so we had built a lot of relationships before then. Even as a digital agency, we would go above and beyond to deliver value and get our clients to trust us. We always told ourselves that we had to help our customers shine. When we used to be a digital agency, we worked directly with the brand managers of those top companies. It’s a tricky place to be because depending on the internal structure, brand managers can get concerned about the agencies making them look bad. They can see you as competition.
We recognised this and did everything we could to make our internal partners look good. We would sit in strategy sessions with them, provide them reports, prepare future plans that we weren’t guaranteed to be a part of, and even helping some of them win global awards. So, you’d hear that a brand team at a company won the award for the most excellent marketing campaign, and Terragon would be behind it.
We had to invest a lot in relationships because what we were doing was new. There was a lot of hand-holding and helping people understand what we did. We also invested in a lot of research and reports that we released periodically. Those reports were used to defend budgets, write proposals and do a lot more. All of these helped us grow trust with the companies.
When we transitioned into a product-led company, they were willing to give us the benefit of the doubt. So, we had one foot in the door from the get-go and it was up to us to deliver.
Were there any challenges you faced moving from a service-led company to a product-led company?
There were a lot of them. We had to engage a lot of deep thought and manufactured optimism. Many of the companies we were pitching to had a lot of options, so it was a lot of work to convince them. The B2B landscape often has a lot of options, even if you’re the first in there, it won’t be long before the competition comes around.
We had to educate stakeholders in the businesses we were trying to get because sometimes you go in there and you get blank stares like “What are you even talking about?”. Even as recently as 2019, we still get questions like “Oh, aren’t you a digital marketing agency” after giving a presentation. Sometimes, it’s frustrating and feels like we’re too early. Other times, it feels like the market is not ready.
We invested in building platforms and some businesses still wanted us to operate as an agency. We’ll send them log-in details and they won’t use it. They’ll still send emails asking for their reports when it’s something they can generate by themselves.
Sometimes, businesses also have unrealistic expectations for the product. For instance, a business might want to get 100 million downloads, and you’re asking “how many smartphones do we even have in the country?”. It has taken a lot of education, listening, working with the clients to achieve their goals, and sometimes, just being a sounding board for them.
Internally, as well, sometimes we’ve seen the team members questioning certain decisions. Strategy is about knowing what not to do, and sometimes we’ve had to leave money on the table to achieve the bigger vision. You can see people question those decisions. Sometimes, we lost some customers, not a lot luckily.
What are the strategies that you have employed to scale your business?That’s an interesting one. We’re pretty heavy on partnership. We’ve developed an extensive partnership channel over the years. It allows us to leverage our distribution channels to reach other customers.
For instance, we’ve worked with all four telcos since the age of voice communication, but as voice revenue began to go down and people moved to internet-based communication, we were also able to partner with them. We leveraged on brands that wanted to partner with telcos since a lot of their campaigns would have to pass through our platform. So, in a sense, the telcos have become partners to Terragon.
The same thing happened with global partnerships. Today, we’re partners with Facebook and we did some conversion tracking API project together with them on the continent. Tarragon was the only African company in the 25-partner list. So, what that means is that any direct pitch from the Facebook sales team in Africa goes through Terragon. That helps with credibility and access. And it’s a win-win for Facebook and us.
We’ve also done something similar with Microsoft where our customer data product is available on the Azure marketplace. So, what that means is that every enterprise company using Microsoft Azure can integrate Terragon with a click of a button.
We invest heavily in those kinds of accelerators to help reach more businesses.
Concentration risk is a huge problem for B2B companies. How do you handle it at Terragon?
That’s something we’re still trying to figure out as well. We try to spread it as much as possible. We look at our numbers in terms of pipeline and revenue. Once we notice that a particular partner is giving us a lot more than other people, we start to actively invest in the next two or three.
The interesting thing, however, is the proprietary nature of our technology and the local nuances we have, make it difficult for us to lose customers. Many people have built CRMs before us, but we have been able to build in a local context that matters to our partners. We try to ensure that we bring very clear value to the table and there’s no incentive for our partners to not want to work with us.
We’re always thinking of how to ensure customer success as a way to help us keep our competitive edge. I think it is important for any company in Africa to be product-focused. In other markets, you can afford to have just one API or product, but here, you have to build a suite of services to be able to defend your position. If you don’t do that, one day, a person can click a button and you’re out of business.
What were the top lessons you have learned from running Terragon?There are a lot, and depending on what stage you are they may change. However, a few things come to mind that are universal. One is that is resilience—you have to have a thick skin. There are many problems you’ll have to deal with as founders that you ordinarily should not have to. I remember a couple of years ago when we looked at the cost of diesel and it was a lot.
Building is difficult, but that difficulty is where your opportunity lies as a founder in Africa. You should go into it knowing that it will be tough.
Another part is a need for talent—having the right team is something that’s underrated in this part of the world. There are so many people behind the scenes that keep things working. These people go through a lot of things to make magic happen. I think founders should put a lot of work into hiring the right people and making them feel appreciated.
Finally, I’d say the power of belief. Sometimes, you have to manufacture your own optimism. Sometimes, it’s my team that inspires me. I come into the office and see them arguing some work-related issue and analysing a process, and it just inspires me.