Oct 16, 2018 · 56m · y-combinator
Helping African Businesses Get Paid, Shola Akinlade of Paystack · Y Combinator
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In this interview, Paystack co-founder Shola Akinlade details how his company built payment infrastructure for African merchants, participated in Y Combinator, and scaled operations across the continent. He shares insights on fundraising, navigating regional financial systems, recruiting senior engineering talent, and fostering the broader African technology ecosystem.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The partners as informed peer 1.3 Guest teaching 3.8 Guest disagreement 0.1 The partners pushing back 0.1
speaking balance: gold is the partners, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:11 Clarifying USSD banking vs telco billing
Shola politely corrects Craig's assumption that USSD payment codes charge directly to mobile telco billing by clarifying they link straight into bank accounts.
Hardest push from the partners ▶ 40:45 Drilling down on physical road and logistics qualityCraig pushes back on broad generalizations about infrastructure to demand specific details on the quality of road networks and logistics in Nigeria.
Biggest teaching moment ▶ 44:20 Designing payment UX for first-time digital card usersShola illuminates the baseline reality of emerging market UX design, explaining how first-time digital payers enter their birthdays into MM/YY expiry fields and need visual diagrams to locate a CVV.
The partners hold their own ▶ 27:25 Validating the junior vs senior engineering talent crunchCraig steps in with relevant industry observations, noting that startups everywhere struggle to find senior engineers for complex distributed problems despite an abundance of junior frontend talent.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The partners as informed peer | Guest teaching | Guest disagreement | The partners pushing back | Why |
|---|---|---|---|---|---|---|
| Shola Akinlade's Background and Founding Story | 1 | 4 | 0 | 0 | Craig prompts Shola to share his founder journey. Shola narrates his transition from Heineken to building an on-premise Dropbox alternative and founding Paystack. | |
| YC Application Metrics and Recent Funding | 1 | 3 | 0 | 0 | Craig asks about early metrics and application data. Shola reveals Paystack processed only $200 in their application month compared to $20M monthly at the time of recording. | |
| The Y Combinator Interview Experience in Silicon Valley | 1 | 2 | 0 | 0 | Shola shares an entertaining recount of flying 22 hours to Silicon Valley for their YC interview and forgetting their prepared talking points while demoing live. | |
| Navigating YC and the Nigerian Startup Ecosystem | 2 | 3 | 0 | 0 | Shola discusses the culture shock of youth in Silicon Valley startups and learning that genuine networking happens through building great products. | |
| The Dynamics of the African Payments Market | 1 | 6 | 0 | 0 | Shola provides a thorough breakdown of Nigerian macroeconomic data, explaining that under 2% of consumer spending happens via cards and highlighting electricity purchasing bottlenecks. | |
| Paystack Growth Strategy and Merchant Community | 1 | 4 | 0 | 0 | Shola outlines Paystack's two-pronged focus: guaranteeing payment reliability/dispute automation and fostering a community for emerging merchants. | |
| Pan-African Expansion and Strategic Investors | 1 | 5 | 0 | 0 | Shola explains the nuances of Pan-African expansion, recounting an experience in Cairo with Arabic license plates and why global strategic partners like Stripe and Visa were brought on board. | |
| Hiring Challenges and Engineering Talent Development | 1 | 4 | 0 | 0 | Shola discusses his primary operational hurdle: recruiting senior engineering leadership to mentor local talent and scale high-throughput infrastructure in Lagos. | |
| The Value of the Y Combinator Founder Network | 3 | 2 | 0 | 0 | Craig relates to Shola's point regarding the difficulty of hiring senior developers over junior JavaScript developers as Shola highlights YC's internal network resources. | |
| Cryptocurrency Trends in Emerging Markets | 2 | 3 | 0 | 0 | Craig asks about cryptocurrency in emerging markets. Shola clarifies that most current activity is speculative trading while real utility use cases are still nascent. | |
| Audience Q&A: Overcoming Skepticism and Mindset Barriers | 1 | 4 | 0 | 0 | Shola discusses the psychological hurdle of starting a payments startup in Nigeria when legacy competitors held billion-dollar dominance and laughed at new entrants. | |
| Audience Q&A: Key Lessons in Team Building and Fundraising | 1 | 3 | 0 | 0 | Shola shares leadership lessons on relinquishing individual tasks to hire specialists who outperform the founder in specific domains. | |
| Audience Q&A: Product Ideation and Ecosystem Maturity | 2 | 5 | 0 | 1 | Craig asks about physical infrastructure constraints. Shola contextualizes Africa's demographic growth by comparing Nigeria's rapid population surge against European nations. | |
| Audience Q&A: Regulatory Compliance, Tech Stack, and UX Design | 1 | 6 | 1 | 0 | Shola educates the host on UX challenges in emerging markets, such as users confusing expiration dates with birthdates, and clarifies USSD bank integrations versus mobile billing. | |
| Founder Accountability, Work-Life Balance, and 5-Year Vision | 1 | 3 | 0 | 0 | Shola discusses founder accountability, describing how having capital and resources removes excuses and drives focus toward powering Africa's next wave of digital businesses. |
Statements from this episode (24)
Paystack was the first Nigerian startup admitted to Y Combinator
“We became the first Nigerian company to get into YC.”
Over 10 Nigerian startups joined YC within two years of Paystack
“Now I think there are over 10 other companies that I've gotten in just two years.”
Paystack raised a Series A round from Stripe and Visa
“We just raised a Series A million dollars from Stripe and Visa.”
Paystack processed only $200 during the month of their YC interview
“On the interview day, I actually remember they asked us how much had we processed that month. I said, 200 dollars.”
Paystack hit $20 million in monthly volume three years after YC
“Now last month we did over twenty million dollars. That's just three years, you know.”
Paystack's vision remains identical to its original Y Combinator application
“Exactly. Nothing has changed. It's been, it's the same vision.”
Paystack reduced Nigerian online checkout flows from seven steps to two
“It's a payments company, we've made a huge leap over what currently exists. It used to be about seven steps before, it's now two steps”
Historically, Nigerian startup founders were older than Silicon Valley peers
“In Nigeria, oh well, when I was starting up. The kind of people that were building cool stuff, but really like in the, Thirties and their forties and their fifties.”
Building impressive things is the best way to network
“Startups, founders think they want to be the way to network, like the way to get out there is to network and just be everywhere, you know, but the way to build a strong network is to build something impressive”
Less than two percent of Nigerian consumer spending uses cards
“So, but just less than two percent of consumer spending is spent for cards.”
Legacy Nigerian payment infrastructure was built for enterprises favoring complexity
“I think before now, A lot of the payments infrastructure was built for enterprise companies. And of course, enterprise companies like complexity.”
Paystack was the only Nigerian payments company with automated disputes
“So we started building where the first company, I think was still the only company that has like An automated dispute process and all that.”
Payment fundamentals are identical across Africa, only local context varies
“We've spent a lot of time thinking about this, and these things work the same way in these markets. You know, the part that just changes is the local context.”
Paystack brought on Stripe and Visa for cross-border scaling expertise
“That's one of the reasons why just thinking about that series A, we had to think about companies that have figured out skill. Companies like Stripe, companies like Visa. Like if there's a company, the companies that have thought about moving payments from one …”
Foreign payments companies struggle in Africa due to local context
“And that is why when people say, oh, why won't an international company just come? To Africa because it's very difficult. This local context is difficult and it really takes a team that believes that this is why they're here.”
Akinlade: The best part of Y Combinator is observing Bookface discussions
“And now I think the best part of YC is just book face, just passively seeing conversations happening.”
Engineering challenges require seasoned mentors who have seen problems firsthand
“Because I know with engineering, some things you just have to have seen the problems before. You can't really anticipate some things, you know, so just having someone having a 10 X engineer, just sit with a team of five engineers. I think it helps everybody.”
Most cryptocurrency activity in Nigeria is focused on rapid trading
“Most of the activities around trading, you know, people are buying and selling very quickly.”
Getting into YC is easy if founders clearly articulate their business
“If you have like all the right components, it's extremely easy, you know? I think the hard work is, can you, Clearly articulate how impressive your business is. Can you just even explain what you're doing and can they understand what you're saying?”
Critics mocked Paystack for challenging a 14-year-old, $1B incumbent
“Two years ago, like, when I told people I was doing a payment company, like, people laughed at me, like, ha, ha, ha, ha, like, how your competition is a, like, fourteen-year-old company that has a billion dollar.”
Akinlade in 2018: Nigeria's population will exceed the US in five years
“Like in the next five years, I think Nigeria is going to be even more than the US.”