"Don’t get too emotional, distance yourself and build through evidence and data"

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eWorks is the Esade venture creation program; it provides a series of activities and services designed to foster and support new venture creation by Esade students and recent graduates.

The Esade Doers podcast series, led by eWorks manager Davide Rovera, focus on entrepreneurs from the eWorks Community who present their startups and share experiences, learnings, sources of inspiration and tips with fellow entrepreneurs. Today, we can learn from Iman Jamall and Hasib Malik, two Esade students who started a company empowering small businesses in Pakistan with technology, Creditbook.

Davide Rovera: Hello and welcome to the Esade Doers podcast about entrepreneurs and innovators. Our guests today are Iman Jamal and Hasib Malik. Hi guys, and welcome.

Hasib Malik: Hi David, good to speak to you again.

Iman Jamal: Hi David, always great to speak to you and catch up.

Davide Rovera: Thank you very much for taking the time to join us. Let’s start with a very quick intro. You are the cofounder of a company called CreditBook, give us a 30-second pitch about the company and what does it does.

Iman Jamal: Sure. CreditBook is empowering small businesses in Pakistan with technology. And what we are doing is using smartphones to digitise the workflows of millions of micro, small, and medium businesses with the aim of increasing their cashflows. We started by digitising their credit ledgers.

Davide Rovera: Fantastic. We are going to dive deeper into that in a moment, but before getting into more details about your current project, let’s hear your stories. How did you become entrepreneurs, it is something that you always knew was going to happen. Was it a deliberate choice? Did this just happen by chance, or were you inspired somehow along the way?

Iman Jamal: I didn’t really set out to be an entrepreneur. It was a series of decisions that led me here. My focus is on solving emerging market problems with a human-centric lens. And slowly those problems started having much to do with technology. So using my research background, using qualitive and quantitative information, I started to understand these problems better. About two years ago, I went back to Pakistan after living in Europe for a while and I was invited to lead a service design project for one of Pakistan’s largest financial institutions. They were trying to understand was what the future of fintech for Pakistanis under the age of 30 – because that’s about 60% of the population of 220 million. The by-product was that I gained many insights on micro, small, and medium enterprises. I felt like there was something that could be done.

Hasib Malik: I grew up with two strong figures in my life. My grandfather and my father. My grandfather started trading in the street and built up his own business. My father’s family, on the other hand, struggled through the partition of India and from a very young age he was selling kebabs outside of school to fund his education. At the age of 15 he got a scholarship to study in the USA. And that was his first entrepreneurial adventure and he did not try again until he was in his 40s. When I was growing up I got to see the struggles, the highs, and the lows, and for me it became a way of living in a very passive way. When I came back to Pakistan after my graduation, I worked in a media company. I had a politics degree and I thought that you can change the face of a country with politics by bringing people together.

Pakistan was going through an election cycle and I very fortunate to be able to go out and meet the people and hear their stories. And I saw just how broken the system was in Pakistan. I realised that public intervention is going to take a very long time to catalyse movements. So, I thought that private enterprise is the way to resolve some of these inefficiencies. But I had no background in business, and no formal tech training, and so I decided to study at Esade. Iman and I started a company together for a brief period – but it didn’t work out. But I got exposed to the idea of financial inclusion and later I got to build a company from scratch addressing that pain point. I was always thinking about how to solve the problem of financial inclusion and Iman later gave me some insights and we decided this is an opportunity worth going for.

Iman Jamal: One thing I would add is that we have Mateo Bergato working with us at CreditBook and he was also at Esade. He started the first company with us called Easybuy when we were at Esade doing the Halt.

Davide Rovera: Do you want to expand a little bit on that.

Hasib Malik: Well, Antonio, Mateo, myself, and Iman, had seen this problem with public transport. I kind of presented the problem to these three and they put up a working value proposition and we then entered the Halt competition and ended up third. After that we were so convinced by this business model that we said let’s keep going forward. We were completely consumed by the idea and were working late nights on its development.

Iman Jamal: The problem focused on Karachi which is a city of 22 million people with a broken public support transport system. So, we approached the problem with something of a naïve lens and convinced Mateo to come and live with us in Karachi. After studying the problem more deeply and testing things we realised we couldn’t grapple with the transport company. Which is who we would be technically competing against. We dropped that idea – fast-forward about five years – and Mateo is with us at CreditBook leading the data side.

Davide Rovera: Amazing story, such early teamwork can lead five years later to having somebody joining your team and leading an area of your business. Let’s jump into the story of CreditBook. When did you start operating CreditBook? How did you do the early validation, and how has it evolved?

Iman Jamal: I was conducting this research on the financial situation in Pakistan – which has one of the lowest rates of financial inclusion in the world – only 30%. I went to crowded urban areas and observed the behaviour of small corner shops. Essentially, what I observed was that you have a lot of daily wage earners and although cash is king, people don’t always have enough cash in hand. So, when you are on your way home and you buy your groceries, you end up buying some of those groceries on credit. You won’t default on that credit, you always pay it back, but you won’t pay it back on time. When that happens it start affecting the cash flow cycle of the business because there is another sort of system of credit that is functioning with the suppliers and the distributers and everybody else who is supplying the goods. People always use paper legers to record the transactions, and papers get lost or spoiled, and there are also problems with the calculations as they are done manually – and so there a lot of errors in profit and loss. So, I went to Hasib – was working at a Bain & Company affiliate in the UK – because he had been very interested about financial inclusion in Pakistan.

Hasib Malik: The research that Iman did was an analysis of this cash conversion cycle in Pakistan. Mediators make anywhere between 2% to 8% of margin on every late repayment. So the focus of the experimentation was about solving the cashflow and cash conversion cycle. We launched a series of experiments from November 2019 to February 2020. But the experiment that really worked was this very simple system that just informed your customers every week via SMS or WhatsApp about how much they owed you and when it should be repaid.

Davide Rovera: So, a simple reminder sends messages by SMS or WhatsApp, saying ‘hey, dear customer, you owe me this amount’.

Hasib Malik: Yes, David, you borrowed 500 rupees last week and you are supposed to pay me back on the 30 July – for example.

Davide Rovera: Because also, as you were mentioning, there is one side for the retail operations but it’s true as well for the supply chain side. So, this can go back all the way in terms of supplier businesses.

Iman Jamal: When we started we had no insight into the fact that we would be working on both sides of the chain. We were just focused on one side of the chain. Only when we launched and went back into the data did we see that there is an effect happening on both cycles.

Davide Rovera: So, you started just on the retail side…

Hasib Malik: Yes, exactly. What we saw in the first four weeks was that cashflows improved by at least 50% just because of better repayment behaviour from the customers, but what was really cool was because the cashflow had consistently stabilised, the users asked for loans or other services a few weeks later. Typically they had been borrowing money from non-institutionalised providers because of sudden needs, but now they were borrowing money to exploit an opportunity – make their shop bigger, buy new machinery, or hire more people. They were doing this because they had more confidence in their business. And that was a real ‘aha’ moment for us at CreditBook.

Iman Jamal: Simultaneously we were talking to a close friend of ours about the sort of research we were doing. And through him we met our third cofounder, Hisham. He had been studying the same pain points because he had been working in this sector for about 15 years. He had just heard news coming out of India and Indonesia about a business model that was solving these pain points. So, he had started building a management by project (MBP) for the business, and another firm had just announced a series A funding So everything clicked for us at that point, so together with Hisham we hired a team of six including a software engineer in March. We tested the MBP for about a month, and then launched in June of last year in the middle of the pandemic. And within a month we had 18,000 retailers on the platform.

Hasib Malik: And not only did we launch the business in the middle of a pandemic but Iman and I also got married!

Davide Rovera: And congrats for that. I think it’s even more difficult while doing all these things to still be able to find the time for personal space.

Hasib Malik: I remember telling the team on the day we got married: ‘hey guys, we are not available for four hours because we are getting married’.

Davide Rovera: That’s high level of commitment! Now how was the business financed? Because you mentioned hiring people and building an MBP, so, did you get any external financing, or was it bootstrapped by you?

Iman Jamal: Yes, we made a very conscious decision at the beginning to bootstrap everything. And because it’s a software business the costs are quite low. So, we made sure we knew where every dollar was being spent. And that set the company culture early on for the funding team.

And after we had some sort of traction, we decided in about September to start looking at the local market and the local ecosystem to find strategic angels who could accelerate the business model because Pakistan is a very fragmented market in both the fintech and retail space. We had two really strong strategic angels come onboard from within the industry and only after we saw quite significant traction and that all the ingredients for scaling were there, did we go out and raise institutional funding early this year.

Davide Rovera: I think that was a successful round as well.

Hasib Malik: Yes, and one thing to highlight is that we were very deliberate about who we were going to raise money from and when. We had milestones for each stage, and we didn’t go out to raise even angel money until we believed that this model could be scaled. We were very careful about who we bought onboard and why. And we used the money to show VCs just how scalable this model can be. And then because of painting this picture and telling this narrative the fund raising was quite frictionless. We had a lot of interest and we had worked hard to make sure that the investors we wanted onboard were included. This year we announced $1.5 million round led by a VC called Better Tomorrow Ventures, as well as NerdWallet and VentureSouq.

Davide Rovera: Amazing, congrats also for that one. It’s easy to raise money if you have a good model that is scalable. So, let’s go back to the model for a second, because you explained the value for the users, but what is the actual business model behind it? How is CreditBook sustainable as a business?

Hasib Malik: Yes. I would love to be in a room at Esade and talk about this and see which lecturers are giving us hard stares and which are supporting us. As Iman mentioned, Pakistan is a nascent ecosystem and user base. People are coming online every day, we just reached 100 million connected devices this year. Our original business model is completely free that we don’t add any friction to the decision-making process. And because of that it’s more about what can we do, and what can we learn from our customers, and then how can we can create revenue channels from those learnings. Also we are not addressing a specific category or addressing an industry. We are addressing people in different kinds of businesses and business verticals and this learning has been very valuable for us. At the end of this year and the start of next year, we will start adding financial services online. But, again, after we validate them, and do our own experiments.

Iman Jamal: So to wrap it up, CreditBook today is basically a free platform and it sends automated reminders out for the credit that people upload on digital ledgers. We have also started digitising their cashflows, such as sales and expenses. We are moving into invoicing and based on the data collected we will start offering value-added financial services with our partners.

Davide Rovera: So you have the data, you are growing with the user base, and you are thinking about building something on top. We assume you will keep growing and then see what you can do. One last question on the operations side – how has the pandemic situation impacted you?

Iman Jamal: The pandemic has accelerated fund raising quite a bit in terms of the market and in terms of business launch. This 100 million smartphone user threshold in Pakistan that was reached means connectivity was accelerated by the pandemic and lockdowns, and because of that you have also seen a lot of people go online in digital mediums like TikTok, YouTube, and Facebook. So, digital marketing and access to the population is much easier right now. And the pandemic has allowed us to set up a culture that is ‘remote first’ in the company. Which means that a lot of our ways of working are based on remote and hybrid environments – and this is why we can have people from different parts of the world join the company. Mateo is sitting in Milan right now and we have somebody working from Muscat, we also have people distributed in different teams throughout Pakistan. It’s worked throughout the year and so I think remote working has helped set us up.

Davide Rovera: The pandemic situation accelerated the digitalisation and the adoption of mobile connections and that helped you and other entrepreneurs who are moving into that space for growing their businesses. That’s very interesting and hopefully will continue growing for all of you.

Hasib Malik: Yes, for sure.

Davide Rovera: So, congrats for what you are doing so far, for the achievements and for the stories, as well for the impact. I think it’s very important that you try to build a sustainable business that is solving tangible and specific problems and helping a lot of small and medium businesses. Now, the first of the more personal questions that I like to ask is which book are you currently reading?

Iman Jamal: I’m really enjoying a book entitled ‘Debt: The First 5000 Years’ by David Graeber and it’s basically an anthropological history of debt and social relationships with money. So, I guess it relates to CreditBook.

Hasib Malik: I don’t read fiction at all. Everyone is obsessed with Amazon and its culture and scalable processes. Right now I’m reading a book called ‘Working Backwards: Insights, Stories, and Secrets from Inside Amazon’ by Colin Bryar and Bill Carr. And I think the next one on my list is ‘Amazon Unbound’. The author, Brad Stone, came on this podcast called Acquired and that got me hooked.

Davide Rovera: Interesting to see the commitment to nonfiction books. I think that’s common among entrepreneurs – so that doesn’t surprise me. What do you think is an interesting startup to follow – excluding your own?

Hasib Malik: Something that came into the limelight very recently is a US start-up called Mello. They were operating in stealth mode are addressing the small-medium businesses sector in the States. They started by becoming the accountants for five wineshops in New York, and so instead of doing user research with an interview process they embedded themselves in the workflow.

Davide Rovera: That’s kind of the concierge model.

Hasib Malik: A concierge service just to understand the pain points – that’s how they built the company. I think it’s a fascinating story, and they are just doing incrementally cool stuff every time I hear about them.

Davide Rovera: We will take that as a shared suggestion. Okay. What is an interesting trend that you think people thinking about starting a new company should investigate?

Iman Jamal: Depending on what people are looking for, but in terms of the high goal story and the scale story, there is so much happening in fintech, in ecommerce, and social ecommerce. We heard lots of stories from investors moving into these spaces.

Hasib Malik: I think building this company is giving me an insight to the next set of problems that I would possibly like to solve around data as a service and data engineering and the data economy. But I think that in terms of how you build your data stack and your infrastructure, we are only just getting started with extract, transform and load software, data lakes, and warehousing. But how you automate some of those relationships is going to create exponential values similar to what Facebook and Google have achieved for marketing.

Davide Rovera: Absolutely, data operation and data management in general is going to be increasingly important. Okay then, now we kept the most difficult questions for the end. As entrepreneurs and managers, is there some advice you often give to people but don’t follow yourselves?

Hasib Malik: I think when working with another entrepreneur or another of our partners within CreditBook, we say ‘don’t get too emotional, distance yourself and build through evidence and data’. The key advice is don’t get too emotional so you can make hard decisions. But for us that’s been hard!

Davide Rovera: Because you get attached to your project.

Hasib Malik: Yes, it’s one piece of advice that we give and it’s sometimes very hard to follow ourselves.

Iman Jamal: Yes, we try to do a lot of research to develop empathy for the user, right? And so we embed ourselves in that environment. We have inherited a lot of western schools of thought that we should apply to local problems. But when you have to solve hyperlocal problems, you have to get a bit emotional, because you have to empathise with the user in a completely different context But, then there is the difficulty of not getting too emotional, and so ensuring that you are solving a problem from an objective position.

Davide Rovera: So, you must find the trade-off between getting to an empathy level but without losing rationality in understanding the problem and being able to help.

Iman Jamal: Sure.

Davide Rovera: Okay, then, the very last question for you. What has been as entrepreneurs, your biggest mistake so far?

Hasib Malik: Okay, there are a lot of mistakes I can talk about, but I think the biggest mistake I had is squashing my own entrepreneurial instinct and mindset for a very long time. I was just leaving others to solve problems, thinking that other people are smarter than me, and as a result they will be able to succeed. And I think the entrepreneurial mindset is not about being the smartest, it is about having the talent to take risks. I think that’s a skill in itself, so, yes, I think that subduing that spirit has probably been my biggest mistake, and I feel I could have learned much more if I had embraced that mindset earlier.

Iman Jamal: Yes, or me the mistake that comes up over and over is a result of the contention between growing a business and the pressure of fundraising in the market. Sometimes the mistake is listening to the narrative that you are pitching, which is a true narrative to some extent but it is also what the market needs to hear. And at times you know yourself where the business direction is going, and where values are coming from. And I think that insight should always take precedence over the market narrative. So, making sure that you don’t fall into the trap of convincing yourself of that narrative and ignoring the additional value and the value you are researching is a mistake that I keep making – and I keep having to catch myself.

Davide Rovera: That was very insightful from both of you and thank you very much for your transparency. It’s a difficult journey, but it’s hopefully a fulfilling journey as well. Iman and Hasib, thank you very much for taking the time for the podcast, for being so honest, transparent, and natural while sharing your story.

Iman Jamal: Thanks. Bye, bye.

Davide Rovera: If you still want to learn more, remember, you can register in our platform dobetter.esade.edu. Now was all for today, until next time, thank you. Do Better.