Pray for your friends in big tech

2023 is kicking off with layoffs, and SweepSouth shows us how not to treat employees

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Pray for your friends in big tech 

As rocky as 2022 was, many analysts said to brace up for an even bumpier 2023. To be clear, 2022 was the year where all we talked about was funding dry runs, layoffs and how literally every tech startup overestimated how long covid-fueled growth would last. Some tech startups which were already dealing with wonky unit economics and shaky fundamentals overhired, and the chicken came home to roost. With all of that, we still learned in Q4 that 2023 would likely be much worse. Cue the World Bank predicting a global recession for 2023 and slow growth for two of Africa’s biggest economies, Nigeria and South Africa. 

Yet, for many people, a recession is just a word driven by numbers like -2% growth. What’s easier to understand are rising prices and the raft of layoffs we’re seeing. This week, Microsoft and Google announced that they would be cutting headcount by a combined 22,000 people. We heard the regular soundbites, with CEOs “taking responsibility” and saying that these decisions are tough. It’s easy to forget in all of this that we’re talking about 22,000 human beings–it’s tough when being at the biggest tech companies cannot guarantee job security. 

Closer to home, I reported today on how SweepSouth, a company that has appeared in this newsletter a few times, botched the closing of their Kenya and Nigeria operations. While decisions like this are often complex, it’s critical not to throw employees under the bus while at it. Several sources told me how they were blindsided by the closure and that the company let them down. Yet, one of the biggest questions for me from SweepSouth’s story is this: whatever happened to the $11 million the company said it raised in 2022? There’s no doubt that the funding helped it to expand, but why did it make the decision to close the Nigerian and Kenyan offices so quickly? 

While SweepSouth blames “trading pressures” and the economy, it’s difficult to believe those excuses given that they entered Nigeria in 2022. They didn’t expand to Nigeria and Kenya with the assumption of a stable economy, so it’s worth asking what drove the decision to expand and why it spent only five months before packing it all in. If you’ve got any theories, feel free to share them. 

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Nigeria’s Central Bank Circus

I had an interesting conversation last week Friday with a journalist who was trying to make sense of the rumors that Nigeria’s Central Bank Governor, Godwin Emefiele, was hiding out in the UK. While we agreed that it would be difficult to get people to speak on the record and make sense of the story, one thing I know for sure in Nigeria’s political circles is the strangest things are often true.

In any case, Godwin Emefiele returned to Nigeria this week, and the drama only continued with more reports that the DSS was still trying to arrest him. Today, Bloomberg reported that there’s a standoff between the Secret Police and Godwin Emefiele, so this has left the realm of rumor. Here’s an excerpt of the Bloomberg article: “The probe uncovered “emerging facts pointing to the alleged mismanagement” of Central Bank of Nigeria programs by Emefiele that financially benefitted himself and other unidentified individuals, according to the SSS affidavit. The agency didn’t say when it started the investigation or expand on intelligence it claims to have linking the governor to terrorism financing.”

If all of this is what does Emefiele in, it would be difficult for the irony of it all to be lost on anyone. As CBN governor, Meffy led several agric-led programs like the Anchor Borrowers scheme and even seemed to become Nigeria’s ambassador for local rice production. He also engineered the most significant arbitrage opportunity in Nigeria’s FX market, resisting common sense calls from the World Bank to maintain a single market-determined exchange window. Who benefited from such arbitrage? Your guess is as good as mine. 

Let’s bring it home this week with the somewhat surprising news I saw in my email of Gokada trying to raise funding. The startup is trying to raise $750k at a valuation of $10 million. I’m curious to see if Gokada can hit its target without a similar community. Does this speak to a difficulty in raising money from previous investors? Again, your guess is as good as mine. 

Right before I say, “see you on Sunday,” check out our new sponsor, Native Teams and look up what they’re about. If you’re a freelancer, they’re an easy way to get paid from those foreign gigs you pick up. School’s got me by the scruff of the neck this weekend, so make sure you grab a cold one on my behalf. See you on Sunday!

What I’ve been reading:

This article on Microsoft’s layoffs

This article on Brazil’s fintech scene and how regulation can make or break things

And just because I can, my TechCabal article on SweepSouth 

The art and science of spending money