A tough week for startup employees
Is this the end of the full-stack dream?
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Before we get into it, Joyce Imiegha answered some of the “questions without easy answers from last week,” and I quite like her framing.
“When storytelling becomes instrumental rather than cultural, it stops being about shared values and becomes a performance to attract capital.
Disclosure shifts from building trust to managing perception, which only serves investors in this case, and not their customers or the public. I’m not a fan of inflated narratives.”
Let’s get into today’s newsletter!
Sabi is done with e-commerce, and 50 people are out of jobs
This week, the B2B e-commerce startup Sabi announced it was pivoting to a commodities exchange. The company is “doubling down on the part of our business seeing the most demand,” but the real news is in what they’re leaving behind and how.
The pivot isn’t new. Sabi first hinted at this shift back in March, but the messaging was buried in soft language and flew under the radar. This time, the pivot came with layoffs and a clearer tone. It was a clean break. A quiet backspace on a strategy that once defined the business.
And that strategy? It was ambitious, if not always easy to understand.
“We are a platform that enables other businesses to grow,” the CEO once said. “We build interventions in different value chains that add up to commercial infrastructure. Being our client means accessing services... credit, logistics, free software, everything.”
It wasn’t a pure distributor like Alerzo. Not quite TradeDepot’s route-to-market platform. Sabi looked more like a cousin to Omniretail: working capital, logistics, sales tracking, and a sprinkle of SaaS.
In 2023, it claimed it crossed $1 billion in GMV and had onboarded over 200,000 merchants. That narrative, boosted by slick PR and big topline numbers, positioned Sabi as the rare startup cracking B2B e-commerce in Nigeria.
But clearly, the numbers didn’t tell the whole story.
This pivot poses questions about whether the working capital-heavy model was sustainable at scale, or whether merchant acquisition and retention costs made the margins unworkable. And if Sabi is now leaning into commodities exchange, it’s because the new model demands less heavy lifting and promises more predictable upside.
Still, credit where due: the announcement was clean and the language was confident. The press release didn’t feel like it had been ghostwritten by legal and scrubbed of meaning. I’ve read enough of these over the years, you’ll know that’s a rare thing.
Vendease: A Familiar Retreat
I first wrote about Vendease in November 2022, when tech layoffs were rolling through Nigeria like a cold front. Vendease had announced a $30 million raise in September 2022 and was already laying people off two months later. If you’ve forgotten about the uncertainty of working at a startup, here’s an excerpt from that 2022 newsletter:
“I basically slept an employee and woke up to a termination letter,” one former staffer told me. Emails went out at 2 a.m.”
Vendease has always been complex. At one point, it was doing everything: buying food in bulk, warehousing it, and delivering to restaurants in multiple cities. The idea was to cut out the chaos in Nigeria’s food supply chain.
In theory, this was vertical integration. In practice, it was a logistics company wearing a SaaS hoodie.
The company invested in infrastructure: trucks, warehouses, and inventory, high-fixed-cost bets. It also waded into the waters of working capital financing (no matter the language you use, lending is a very tough beast to master). And as VC-backed startup sometimes do, Vendease spread itself thin attempting to grow its business, expanding beyond the hotels and restaurants.
With all those expensive assets on its books and even more spending on expanding into new market segments, Vendease struggled as its cash flow worsened. It was stuck with expensive assets and began owing vendors.
In 2023, Vendease experimented again. It invested in what it hoped would be a game-changer: a tech platform and hardware combo for restaurants and food businesses. Think payments, inventory management, all rolled into a single, sleek system.
The restaurants didn’t want it. Many already had simple tools they liked. And the timing couldn’t have been worse: cash was tight, investor sentiment was frosty, and there was no margin for vanity moonshots.
With its back against the wall and the exit of its founding CEO, Vendease is unwinding the complexity and hopes that one final Hail Mary can rescue it. No more warehouses, no more fleet. It’s back to being a “platform.”
If this sounds familiar, it’s because we’ve seen this movie before.
Asset-light models are all the rage these days. Twiga, the Kenyan food logistics darling, reversed course after investing in farming and distribution and is now restructuring its business.
The lesson, beyond the obvious questions about corporate governance which this article raises, is that vertical integration is a seductive but risky play. It looks good on a pitch deck (“we own the entire value chain”), but the costs stack up fast. Trucks break down. Petrol prices spike. Suppliers demand cash. And if your margins are thin (as they often are in food distribution), one bad quarter can put you in a hole that’s hard to climb out of.
To be clear, not all vertical integration strategies are bad. But in Nigeria, if you’re going to build a full-stack logistics business, you better have patient capital, ruthless cost control, and an exit plan that doesn’t involve unpaid vendors.
What’s also clear is that Vendease has struggled to tell a story that investors like in the last two years. It told employees it was looking to raise money and, in the interim, cut salaries and replaced them with stock options. I said at the time that I couldn’t think of a worse time to want to own a company’s stock. I also can’t imagine there’ll be a worse time to be raising money.
Yet, like I said two weeks ago when we discussed Moove, if the old story is outdated, write a new one, but preferably before your founding CEO leaves the company.
That’s it. See you on Sunday!
Got a scoop? Email me: olumuyiwa@notadeepdive.com