Mark Essien is an engineer at heart and a passionate entrepreneur. As a young boy he watched his Nigerian father in amazement build various mechanical devices from scratch like a manic inventor.
Fast forward over 20 years later, he is following his father’s footsteps. He has built software products and companies that have been bought by large companies in Europe and the US such as Walt Disney and the US military.
The go-getter is now the founder and CEO of the most successful online hotel booking platform Hotels.ng, a company that has grown into the multi-million dollar valuation in a short year. He shares his insights on the hotel industry, anecdotes of the most transformative moments of his life, coming back to Nigeria and building a technology company with Oladipo Akinkugbe
Tell us the hotels.ng start up story
The whole thing started early 2012 and by the time I was studying for my MSc in Germany in Computer Science. Then I decided I wanted to do something in the technology space in Nigeria.
I did my analysis and found out that travel is what works the quickest in emerging markets. If you look at emerging markets such as India, Brazil and the like, the first kind of technology business that always works is e-commerce businesses because it’s very straight forward. No matter what, people are buying things and technology just makes it easier for them to do that, and then it gets delivered to them. We have seen that in Nigeria with businesses Like Konga, Jumia, Dealdey and the rest. Then after the e-commerce sites the next online businesses that usually develops and grows is in travel. In India, there is Yatra . There is Hotel Urbano, Decolar and many more in Brazil. These are sites that opened between 2001-2005 when those economies just started really developing in terms of technology and they took off right away. So looking at the technology space in Nigeria I analysed the market because I feel a successful business is mostly driven by the market and less of the idea itself. If you have a very great idea and there is no market for it yet then you cannot make a business out of it.
When it comes to Nigeria and Africa in general we don’t have the same luxury as in other markets where investors can put in a lot of money in technology business for long time before it starts making any money. You need to start making money from the get go. So from this analysis I was able to see that travel made sense. So I looked at the travel space in Nigeria and saw that we had was Wakanow which was mainly focused on flights and ticketing. They left the hotels space completely open and hotels is even more lucrative than flights because you can have higher margins. So I thought it was a good idea and I started applying for support and investment. I even applied to Rocket Internet and sent them a business plan detailing the opportunity and the benefits but I never got a reply. So I said let me find a way to start it up myself. I bought the domain name hotels.ng then I started buying lists of Hotels and just putting them up on the site. In the following months up until when I finished my MSc. In Germany, the site was gaining traffic. Then I decided I was not going to stay in Germany to find a job and all that. I felt there was a lot more opportunity in Nigeria to make this into serious booking portal. So I came back to Nigeria and got to Calabar where there are a lot of hotels and is close to where I am from which is Akwa-Ibom. So I asked a friend of mine to join me, and we started taking pictures of the hotels, signing agreements with them and so on. From the very first day we enabled booking on the website people already started reserving hotels. Around that time things just started to happen for me and I did one or two press articles which led to a call from the founder of the successful Iroko TV-Jason Njoku. He told me about the spark fund that he was starting and he was looking for people like me building good internet businesses. After a bit of negotiation he put in the first investment of $75,000 and that’s when I moved down to Lagos and a few months later the spark fund put in another $150,000. From there we have just been growing our hotel listings and our customer base.
How has the business grown since?
Well for the past six months we have been profitable. Every single month for the past six months, we have made more money than we have spent comfortably. Right now, I would value the company at over $5 million which is not bad for a company that is one and a half years old.
Tell us about your personal background leading up to this point?
I grew up in Akwa Ibom state in a town called Ikot Ekpene where I attended primary and secondary school. After that I went to Germany to do my bachelors degree because my mum is a German who has been living in Nigeria for the past 40 years of her life. So I went to Germany and the first thing I had to do was learn how to speak German and find a job because I didn’t have any money. So I got a job watching over a man paralysed from the neck down and the thing with being paralysed is that the body could on its own shift itself into an awkward position that could be life threatening to the patient. I was the night watch man taking care of the guy and ensuring that his body doesn’t suddenly shift and cause him to choke or something like that. I was not allowed to sleep because that could lead to the man dying. Since I could not sleep I always had my laptop there with me but I couldn’t use the house’s internet because it was not my house and this was 1999, even in Germany internet was still very expensive then. So, while I sat there watching over this guy I decided to learn how to program and it was during that period of taking care of this man that I learnt how to program and developed my first software which was a file sharing software. I released the software and four months later it was acquired by a very big company Bertelsmann Media for quite a significant amount of money at the time and I also started working for them. This was even before I started university. I have always been interested in technology and building things with motors, light bulbs and all that.
What influenced your interest in technology to this extent?
I think it was my dad. My dad wasn’t an engineer, he was a teacher. He actually studied teaching but his passion was engineering because when we were little he was always building various machine like things in our compound. He would find different parts around, bring them home and put them together (like Mark Wahlberg in the new transformers movie). He built a dredger from scratch that extracts sand, a kind of robotic arm that handles objects and different kinds of contraptions. Seeing my dad doing all that stuff just made the whole thing very interesting for me. That’s what influenced my passion for engineering and technology. I am basically an engineer and this background influences the way I look at my business and solve problems.
How do you balance an engineering approach to your business with a sales approach?
Right now we are mostly all about product development and engineering. We are very light when it comes to marketing. I think it’s because we are relatively still early in the Nigerian market. I say that because if you look at the Internet population in Nigeria, I estimate that we have 6-8 million effective internet users. The NCC says they are 60 million internet users but they are only 12 million Facebook users. Where are the rest? So it’s not everybody that uses the internet that can use it sophisticatedly or as a lifestyle. So I think investing a lot in marketing at this stage might be wasteful because the market will not justify the investment with its response. Instead it is better to focus on building a very good platform and product offering, then as the market grows you ramp up the marketing and sales. That is my philosophy but over the next 6-8 months we intend to increase our marketing and sales activities significantly.
Tell us about some specific challenges you faced in building a hotel booking platform
One of the challenges we faced was getting to all the hotels including the very remote dangerous parts of Nigeria without spending a lot of money. Even though we raised some capital it wasn’t a huge amount. The total amount that was invested is equivalent and even less than a CEO’s salary for a large company. We immediately had to buy two cars for up to $40,000 dollars from a $225,000 investment which left us with about $180,000 for staff of 15 people. What we did was to find a way to crowd source this data collection. So instead of deploying people, we found people in those towns looking for jobs and put them to work and paid them. We even retained some of the very best of those people such as the guy that did Adamawa and some of the hardest places to reach in the North. Another challenge which I think businesses generally face in Nigeria is getting the right people because in Nigeria a lot of the unemployed in Nigeria are actually unemployable. They don’t have the necessary skills that we need and we don’t have the time or money to train them up to the level that we need. So they can become a burden rather than an asset.
What do you look for a in new hire?
What I really look for is intelligence such that when something new is thrown at you, you are able to research further, get to know about that problem and come with great ideas to solve that problem. I am not really interested in prerequisites in terms of degrees and certificates. I just need people who can think on their feet and come up with great ideas. I think we have mastered the techniques in identifying who is smart and who isn’t by interviewing them. If someone is smart I can always move the person around until he/she becomes an asset but if you are mentally lazy no matter where I put that person he cannot perform as expected.
What are some unique development trends you are seeing in the hotels industry?
I have observed that there are some regions that are much under served in terms of hotels because there is always full capacity. Places such as Yenagoa in Bayelsa is very undeserved and they are some other locations in Ogun state such as around the Covenant University area is also under served because hotels around are always fully booked and it’s hard to get a booking there a lot of the time because of full capacity. There is obviously a shortage of rooms in these areas. One of the side benefits of our business is that we are in a good position to observe where people should be building hotels. There are also a lot of foreign hotel chains coming into Nigeria such as intercontinental, Protea and many more foreign hotel chains are investing more in Nigeria and more are coming in. The hotel booking market in Nigeria is worth about $2billion which is spent on booking rooms annually and this is just going to keep growing. Another thing is that Nigeria is a very expensive hotel market. We have the most expensive hotel rates next to Russia which demonstrates further, the supply and demand gap. There are too few hotels in Nigeria but let me further qualify that statement because I have noticed also that the most expensive hotels get booked out far more than the cheaper hotels. The hotels in Nigeria that have the highest quality but are also very expensive are harder to get a room in. For example take the Wheatbaker Hotel, it is always filled up and it’s one of the most expensive hotels in Lagos. Then you look at the cheap hotels which one would think will be filled up but it is easier to get the booking there. So I observed that Nigerians would pay for quality and the people that want to pay for quality are there. If you build a high quality hotel with high standards of service people will go there. Hotel owners are not investing back into their hotels as they should be.
How do you differentiate yourself from the competition?
Where we differentiate ourselves is from our product and developing great added value offers that people would like. For example there is a new feature that we are about to launch which is an events page. When you have an event we can partner with you so that anybody who is going to attend that event can go to that page on our website and view a number of hotels available in different class ranges and book those hotels at a much discounted rate. So it’s those kinds of added features that are specific to our products that differentiate us.
What is it like working for Mark Essien?
I would say that I am very demanding and I am probably harder to work for than the average employer because I always request that you think for yourself, make your own decisions but don’t make mistakes. You might make some but I don’t like it when people just sit down and wait for orders. If you are here, think of what you should be doing and go ahead and achieve it. At the same time don’t go and do something that just doesn’t make sense and waste time and money. I think a combination of those two things makes it difficult to work for me but at the end of it I think you’ll benefit more by being able to think more independently.
What is the most transformative advice you have ever received?
There was a time in my life from 2001 to 2004, where I wasn’t doing much or achieving much in my life. It was around the time I just sold my software and I had quite a lot of money in the bank. I was just programming for fun. I wasn’t proceeding very far in terms of what I was doing. Then I met a friend in 2004 that I hadn’t seen since 2001 or so. I was just riding my bicycle when I was in Germany and I randomly bumped into this guy. So we decided to sit down at the beach and have a drink. Then we started talking and he kept asking that what are we doing with our lives? Are we just existing or are we working towards something? There was no great wisdom that came from that particular speech but it just opened my eyes to the fact that we shouldn’t just be living but we should have a goal that you have set and are working towards achieving. It was at that point I decided that I am not going to exist for existing sake. I am going to exist because I am going somewhere. When I wake up everyday I should have in my mind what I want to achieve and when I want to achieve it. I believe it’s from that time that I actually started achieving things and I would set a goal then go and achieve it. I built another software product which was a software based mpeg encoder and it was very technical. I built that in 8 months and within 6 months I had about 15 big enterprise clients that were using that software. Disney was one our customers and the American army. So it was from that seemingly insignificant conversation that I decided that I was going to start living my life with goals. I think it’s a decision that everybody should make because when you have set clear and realistic goals, you’ll wake up every day with purpose.
So what motivates you?
What motivates me is building a successful African technology company and to expand the base of people using technology to solve problems in Africa. I believe it is primarily through this new frontier of software technology that Africa can compete with west. This new wave started barely 10 years ago. We can be on an equal footing when it comes to the knowledge and we don’t need big, complex factories and all that. So I think we collectively need to focus on this technology to transform this country and this continent into a society as developed as Germany, U.K and the US.
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