The next stage of African entrepreneurship is not eliminating small businesses; it is building institutions capable of organising and scaling .

Builders Africa Thursday thesis about aggregation

Focus: Home Depot a home improvement company.  Largest in the world and a multi billion dollar company 

AFRICA, STOP BUILDING ANOTHER SHOP. BUILD THE ECOSYSTEM.

Click link:

https://youtu.be/9SRYQApB3k4?si=RvEm5WKy4Ebi_mim

We have the plumbers. We have the painters. We have the carpenters. We have the hardware shops. We have the customers. What we often don't have is the system that brings them all together.

BUILDERS AFRICA | BUILD AFRICA

MN COLLECTIVE | INSIGHTS UNFILTERED

BELIEVE. BRAND. BUILD AFRICA.

I recently listened to Arthur Blank, co-founder of Home Depot, speaking on,The School of Hard Knocks.

Something caught my attention.

He was asked:

How much is Home Depot worth?

His response?

Probably $350 billion with a B.

Pause there.

$350 BILLION.

That is approximately KES 45 TRILLION, depending on the exchange rate.

But there is an important distinction.

Home Depot became a publicly traded company, and today it is owned by shareholders. Blank eventually retired from the company in 2001.

But the business he helped start became one of the largest home-improvement companies in the world.

And according to Forbes, Blank himself became a multibillionaire, with his fortune estimated at around $10 billion.

But perhaps the most interesting number isn't his wealth.

It is this:

470,000+.

That is approximately how many people Home Depot employs today.

One business.

Hundreds of thousands of jobs.

And that made me think about Africa.

Not because Africa needs to copy Home Depot.

But because Africa needs to understand the thinking behind it.

WHAT EXACTLY DID HOME DEPOT INVENT?

Here is the fascinating part.

Home Depot did not invent paint.

It didn't invent plumbing.

It didn't invent timber.

It didn't invent tools.

It didn't invent electrical supplies.

It didn't invent gardening.

It didn't invent carpentry.

It didn't invent construction.

Most of those industries already existed.

What Home Depot helped do was something different:

IT ORGANISED FRAGMENTATION.

Arthur Blank and Bernie Marcus founded Home Depot in 1978 after being fired from Handy Dan Home Improvement Centers.

Their vision was essentially a huge home-improvement warehouse where customers could find an enormous range of products at competitive prices  supported by knowledgeable people who could help customers understand how to complete their projects.

Think about the customer problem.

Instead of:

Go here for timber.

Go somewhere else for paint.

Call someone for plumbing.

Find another person for electrical work.

Look for someone else to install the tiles.

Ask your neighbour if they know a carpenter.

Call somebody's cousin who apparently knows a painter.

Negotiate five different prices.

Coordinate six different people.

And pray everybody actually shows up.

Home Depot gradually built an ecosystem around the customer's entire home improvement problem.

And today, that ecosystem is enormous.

HOME DEPOT ISN'T JUST A HARDWARE STORE

Walk through the Home Depot ecosystem and you begin to understand its scale.

You can find products across categories including:

Building materials.

Lumber.

Paint.

Plumbing.

Electrical.

Lighting.

Flooring.

Tiles.

Doors.

Windows.

Kitchens.

Bathrooms.

Appliances.

Storage.

Tools.

Hardware.

Garden supplies.

Outdoor living.

Décor.

Smart-home technology.

Safety equipment.

And much more.

But then the model goes beyond products.

Home Depot's services ecosystem covers hundreds of types of home-improvement projects.

Need flooring installed?

They can connect you.

Need a bathroom remodel?

Possible.

Need windows installed?

Possible.

Need plumbing?

Possible.

Electrical?

Possible.

Painting?

Possible.

Kitchen installation?

Possible.

Landscaping?

Possible.

Assembly?

Possible.

And if you are a professional contractor, Home Depot has built an entire Pro ecosystem around your needs.

Bulk purchasing.

Special pricing.

Delivery.

Tool and equipment rental.

Rewards.

Project support.

Professional supplies.

Home Depot essentially serves three customer groups:

DIY — Do It Yourself.

DIFM — Do It For Me.

PRO — The professional tradesperson or contractor.

That is not simply retail.

That is infrastructure around an industry.

NOW COME TO AFRICA

Walk through many African towns and cities.

What do you see?

Hardware shop.

Hardware shop.

Hardware shop.

Paint shop.

Paint shop.

Plumbing shop.

Electrical shop.

Furniture shop.

Carpenter.

Welder.

Painter.

Plumber.

Interior designer.

Tile shop.

Curtain shop.

Another hardware shop.

And another one.

Thousands upon thousands of entrepreneurs doing legitimate, necessary work.

There is nothing inherently wrong with that.

SMEs are critical to African economies.

But I keep wondering:

WHAT IF WE STRUCTURED IT?

What if instead of only encouraging another 1,000 people to open another 1,000 small shops selling similar things beside one another, somebody asked:

How can I build the ecosystem that connects 1,000 entrepreneurs?

That is a very different entrepreneurial question.

IMAGINE AN AFRICAN HOME-IMPROVEMENT ECOSYSTEM with all skilled professionals.

Forget the whole continent for a moment.

Let's start with Kenya.

Imagine one enormous flagship centre in Nairobi.

You are building your house.

Renovating an apartment.

Opening a restaurant.

Fitting out an office.

Repairing your rental property.

Building a hotel.

Or simply fixing your bathroom.

You walk into one ecosystem.

BUILDING MATERIALS?

Available.

PAINT?

Available.

TILES?

Available.

PLUMBING?

Available.

ELECTRICAL?

Available.

LIGHTING?

Available.

DOORS AND WINDOWS?

Available.

KITCHENS?

Available.

BATHROOMS?

Available.

TOOLS?

Available.

GARDEN?

Available.

DÉCOR?

Available.

But then comes the game changer.

You buy the tiles.

Would you like installation?

Yes.

A vetted tiler is assigned.

You buy paint.

Would you like painting?

Yes.

A verified painter is booked.

You buy bathroom fittings.

Do you require a plumber?

Click.

Booked.

Need an electrician?

Booked.

Need curtains measured and installed?

Booked.

Need furniture assembled?

Booked.

Need landscaping?

Booked.

Need kitchen cabinets designed?

Designed. Manufactured. Delivered. Installed.

Need solar?

Assessment. Equipment. Financing. Installation. Maintenance.

Need equipment for only three days?

Don't buy it.

Rent it.

One ecosystem.

One app.

One physical destination.

One payment platform.

One service standard.

One customer-care system.

One warranty framework.

One database of vetted professionals.

One logistics network.

Suddenly, you haven't simply created another hardware store.

YOU HAVE CREATED INFRASTRUCTURE.

AND HERE IS WHERE IT GETS EVEN MORE INTERESTING

Somebody may immediately object:

But what happens to all the small plumbers, painters, carpenters and hardware businesses?

My answer?

Don't destroy them.

ORGANISE THEM.

The plumber doesn't disappear.

They become a verified Pro on the platform.

The painter doesn't disappear.

They receive jobs through the ecosystem.

The carpenter doesn't disappear.

They become a manufacturing or installation partner.

The small Kenyan furniture manufacturer doesn't disappear.

They become a supplier.

The transporter becomes a logistics partner.

The young electrician becomes an accredited installer.

The interior designer becomes a service partner.

The architect becomes part of the professional network.

The SME manufacturing doors in Kiambu gets access to a much larger market.

The young person who cannot raise millions to open another hardware shop doesn't necessarily need to.

They can become:

An installer.

A technician.

A sales specialist.

A warehouse associate.

A logistics partner.

A designer.

A customer-service professional.

A franchise operator.

A contractor.

A manufacturer.

A maintenance specialist.

A technology specialist.

A procurement professional.

Now entrepreneurship starts producing ecosystems instead of islands.

PERHAPS AFRICA HAS AN AGGREGATION PROBLEM

We constantly tell young Africans:

START A BUSINESS.

And they should.

But perhaps we need to add another conversation:

BUILD A SYSTEM.

Because sometimes everybody owning their own tiny piece of an industry creates enormous fragmentation.

My salon.

My barber shop.

My hardware shop.

My plumbing business.

My logistics company.

My cleaning company.

My catering company.

My farm.

My small shop.

My everything.

And frequently the founder remains everything:

Founder.

CEO.

Salesperson.

Accountant.

Marketer.

Procurement officer.

Customer service.

Operations.

Sometimes even delivery person.

When the founder stops, the business stops.

When the founder dies, the business sometimes dies.

When the founder gets tired, growth stops.

That is entrepreneurship.

But it is not yet necessarily institution building.

AFRICA NEEDS ENTREPRENEURS.

Absolutely.

But Africa also needs:

AGGREGATORS.

PLATFORMS.

FRANCHISES.

SUPPLY CHAINS.

INSTITUTIONS.

ECOSYSTEM BUILDERS.

People capable of looking at 10,000 fragmented businesses and asking:

HOW DO WE CONNECT THESE? through a functional management company with verified suppliers or a fully fledged company.

Because perhaps the next enormous African company will not invent something completely new.

Perhaps it will simply organise something that already exists.

THE PIECES ARE ALREADY HERE

Africa already has plumbers.

Africa already has painters.

Africa already has carpenters.

Africa already has electricians.

Africa already has welders.

Africa already has interior designers.

Africa already has architects.

Africa already has manufacturers.

Africa already has hardware shops.

Africa already has furniture makers.

Africa already has logistics businesses.

Africa already has builders.

Africa already has customers.

Africa already has millions of young people looking for meaningful work.

THE PIECES EXIST.

The opportunity may be in structuring the pieces.

LOOK AT WHAT TWO FIRED MEN BUILT

Arthur Blank and Bernie Marcus were fired.

In 1978, they started Home Depot.

The company went public in 1981.

Decades later, Home Depot has grown into a business generating more than $160 billion in annual sales, operating thousands of stores and related facilities and employing more than 470,000 people.

Arthur Blank himself became a multibillionaire.

But when Blank was asked about becoming a billionaire in that interview, something about his answer stood out.

Wealth wasn't presented as the original objective.

The focus was building the business, serving customers and creating something around strong values.

His  emphasis on customer is always right. 

The money became an outcome.

That is another lesson for African builders.

STOP ASKING ONLY:

WHAT BUSINESS CAN I START?

Start asking:

WHAT PROBLEM CAN I STRUCTURE? SYSTEMS CAN I SET?

What industry is painfully fragmented?

Where are customers frustrated?

Where are thousands of SMEs doing the same thing independently?

Where is quality inconsistent?

Where is trust low?

Where is pricing opaque?

Where is service unreliable?

Where are talented informal workers struggling to access customers?

Where are customers forced to coordinate ten different suppliers themselves?

Where could technology connect everything?

Where could financing unlock demand?

Where could logistics remove friction?

Where could standards improve quality?

Where could a brand create trust?

THERE MAY BE A BILLION-DOLLAR BUSINESS HIDING INSIDE THAT CHAOS.

AND IT DOESN'T HAVE TO START WITH AFRICA

This is another mistake we sometimes make.

We hear:

Build an African Home Depot.

And immediately imagine 54 countries.

No.

Start with one problem.

One location.

One flagship.

Imagine proving this in Nairobi.

Then Mombasa.

Nakuru.

Kisumu.

Eldoret.

Then Kenya.

Then perhaps East Africa.

Then carefully selected African markets.

BUILD. TEST. LEARN. STANDARDISE. SCALE.

Home Depot didn't begin with thousands of stores.

It began with an idea.

IMAGINE THE EMPLOYMENT

This is the part that excites me most.

Africa has one of the youngest populations in the world.

Every year millions of young Africans enter the labour market.

We cannot solve that challenge only by telling every young person:

Become a founder.

Not everybody needs to become a founder.

We need companies capable of employing:

100 people.

1,000 people.

10,000 people.

100,000 people.

And beyond direct employment, imagine the livelihoods created through an ecosystem of:

Suppliers.

Manufacturers.

Installers.

Contractors.

Drivers.

Warehousing.

Technology.

Finance.

Design.

Training.

Maintenance.

Customer service.

Professional services.

Property.

Construction.

Marketing.

Data.

And thousands of SMEs connected to the platform.

That is why scale matters.

MAYBE THE NEXT HOME DEPOT ISN'T HOME IMPROVEMENT

And this is where the conversation becomes bigger than Home Depot.

Look around Africa.

What other industries are fragmented?

Beauty?

Agriculture?

Transport?

Tourism?

Healthcare?

Fashion?

Food distribution?

Automotive services?

Construction?

Education?

Hospitality supplies?

Professional services?

Repair and maintenance?

What if the opportunity isn't another business inside the fragmentation?

What if the opportunity is the company that organises the fragmentation?

That is platform thinking.

That is ecosystem thinking.

That is institution thinking.

That is builder thinking.

AFRICA, WE HAVE ENOUGH PIECES.

Now we need people courageous enough to assemble them.

We need entrepreneurs.

But we also need entrepreneurs who graduate into institution builders.

We need founders who stop asking only:

What can I own?

WHAT CAN I SELL? FROM CHINA?

And begin asking:

What can I organise?

What can I standardise?

What can I aggregate?

What can I scale?

How many people can participate in what I build?

Because the greatest measure of a business may not ultimately be the wealth of its founder.

It may be the economic activity that continues happening because the institution exists.

Home Depot helped make its founders billionaires.

Impressive.

But hundreds of thousands of people showing up to work because that institution exists?

Millions of customers served?

Thousands of suppliers and contractors connected to its economic ecosystem?

A company capable of continuing long after its founders stopped running it?

That is scale.

That is institution building.

That is what Africa needs more of.

So here is today's question for every African builder:

WHAT FRAGMENTED INDUSTRY ARE YOU LOOKING AT?

And instead of opening one more business inside it...

COULD YOU BUILD THE SYSTEM THAT BRINGS IT ALL TOGETHER?

The next great African company may already be sitting in front of us.

Scattered across thousands of shops.

Thousands of tradespeople.

Thousands of SMEs.

Thousands of suppliers.

Thousands of entrepreneurs.

Waiting for somebody to see not the piece.

but the ecosystem.

MN COLLECTIVE | INSIGHTS UNFILTERED

BUILDERS AFRICA | BUILD AFRICA

BELIEVE. BRAND. BUILD AFRICA.

Less waiting. More building.

The future belongs to builders.

AFRICA, STOP BUILDING ANOTHER SHOP. BUILD THE ECOSYSTEM 

The next stage of African entrepreneurship is not eliminating small businesses; it is building institutions capable of organising and scaling them.