Leonard Mcharo — transcript

Tsavo

This transcript is generated automatically by YouTube and has not been checked by a person. It misspells names and mishears words, particularly around Kenyan English and company names, so read it as a guide to the conversation rather than a quotable record. Each timestamp opens the video at that moment.

0:02 good morning welcome to African do podcast episode number three today we are very privileged to have with us Leonard mucho I call him SoMo because we are both Leonards and um he is um the founder of Savo and Savo is a revolutionary real estate company many of you must have seen it in the market and the Nairobi Market they are revolutionizing real estate both as an investment and as a living space and it's something that we're going to discuss in great detail today so Leonard mucho welcome thank you thank you sir good so Leonard let's let's I like to start at the beginning so let's go back you're you're an architect yeah you you're an architect by training uh but now you run let me let me call it a 360 degree real estate company because you offer a wide variety you build from scratch yeah uh but um you also Innovative in the way that you build um when people ask me about sa i' like to

1:07 give them the example of when we are younger because we are peers yes um and we moved out first job out of home a lot of us lived in escuse or servant quarters yeah and I remember we used to say uh at that time we weren't thinking that way but when we grew up we're like I wish we could have been able to buy an excuse at that time you know I would have dedicated my resources there um and acquired real estate early in my life and at that time we didn't have the the the assets to acquire of that nature exactly uh but you you kind of cracked it so maybe walk us through that journey of transitioning from an architect who's drawing for me I know we did a couple of projects together to now someone who's seen this opportunity how was that journey and how did come to pass wonderful thanks s um I'm a passionate architect uh I think I I dedicated my life to that craft uh

2:11 very very very deeply uh through school and after school uh we did some pretty interesting work within the city but I think it's a bit disheartening to be in a room where you think probably the sharpest guy in the room probably but definitely the most broke guy in the room that that uh that's that's not a very nice thing I think very many professionals have have experienced struggled with that yeah yeah but we kept pushing uh for 10 years I had my own company and AR I so I worked finished had my own architecture company I think that's how we met yes um but I go to a place where I asked myself does anybody wake up their wife in the middle of the night and tell a baby if we had more architecture in our lives our lives will be much better my answer was no like we have this great craft it's a wonderful thing called architecture but people don't have architectural problems people have

3:10 financial problems they have relationship problems they have health problems so they realize I solving the wrong problem it's a great tool but it's not the solution it is not it's not it's a it's a great tool but it's not it's not the thing that people are looking after so I said what can I do to use this tool to solve real world problems okay yeah now as it so happens I I have this hot wife my I have a hot chick for a wife uh and she's sharp yes so she's beautiful and she's sharp so she's CPA she's an economist she's CFA and she had been working in banks for a long time so I'm here I understand real estate this girl understands money and both of us are curious so we got reading decided to just read and then I think the idea um struck and they AA came from so first we said let's get out we can't solve architectural problems let's move out and start something different yeah

4:07 so I built this company from scratch it was doing very well we winning all competitions we didn't have enough money to pay ourselves every month but we were on the outside we were doing really well we do the architectural company we're doing important buildings within the city um but I decided I need to start a freshh where was I going I I didn't know I was not I was not quite sure so I left my partner I told them you guys we on to a good thing let's carry on cuz first I tried to change the company from within yes to move from what we doing to Pivot into something else but was not clear that's that's the problem of of of Entrepreneurship you not quite you have an it yes but you don't know exactly where it is you need to go yeah so I left and I think seven people were crazy enough to follow me I told them they asked me where where we going I was like

4:55 I I don't know so we left this land of Egypt with its systems and plans and everything went into a Wilderness yeah and for 18 months we looked for ourselves we tried and failed at seven seven or eight different business models yeah but with every failure we learn something with every failure we learn something with every failure we learn something then one day we were in a meeting so I used to meet my people like every day so my office was like it was like a university classroom yeah so it's teaching and meetings we have not we have not no product we have no business model we have nothing yeah we are just looking for ourselves um so one day somebody Char you and your wife have been investing in small units so with this very intelligent wife we started investing in in real estate when you were fairly young yes and we got this little excuse so we buil 10 x 10 10 ft by 10t little rooms for University

5:54 students so the person said you have that business and you able to take these risks because your rent is sorted because you don't have to worry about that why don't we start a business that allows other Kenyans to enjoy the same benefit boom MH yeah yeah after 18 months of getting lost and searching the answer was always right in front of us right in front of you right in front of us yeah so I said okay we're going to start this real estate investment company so we pivot now from it was first Architects and somehow I had started a company called Sao City I never it was registered it had never done anything MH a year before sa Architects okay yeah so said okay we have Savo City why don't we just start Savo City and start um and that's how we got into this uh into this space um so the first project we did we have no name the the track record

6:50 is not there's no track record there's no proof of concept so we obviously went to our friends so I went to my class my former classmates yeah my wife went to her former workmates okay meaning I went to good schools and she did she had good jobs I couldn't go to my former workmates the university lecturers and and Architects they were broke like I was so these guys invested in us they invested in us because they knew us intimately so somebody you've been with in school since the 80s yeah somebody my wife has worked with for 10 years so these are the people who first invested with us and then they told their friends we went to the next project their friends told their friends until now the movement was uh was born so walk me through that first project uh what was it h and and what were you asking your friends and and workmates former work

7:40 colleagues what were you inviting them to invest into okay so I keep referring to my wife because I think our story is so intimately related to the story of Savo yes so when my wife and I met we met in the University yes we were told that the university is a is a branch office of the marriage if marriage is are made in heaven University of Nairobi is a branch office I sort of took that literally okay yeah so we met when both our families were were really really low financially my dad was a senior civil servant yes he retired early for reasons I might not want to go into uh my wife's dad was um was a businessman who died early okay so we met about 10 years eight years after the M had passed and about five years after my dad had retired and both of those all those eventualities retirement or death brings a lot of Havoc to the family so we started talking about money

8:43 very very early but in this discussions and watching our parents I also had my grandfather my father my grandfather who was never a senior person in in at his workplace yes but he was very meticulous he saved and he invested so he never had you know know he retired and what have you he had many children but he never had Financial issues why every month he had something coming into his pocket not much but sufficient enough to keep his life so he lived his life on his terms until he died he he didn't he didn't bow down to his children or to any pressure so we we were very we really desired that so that's why we started our own our own Investment Company so when when we when we started um laser place in M those are two bedrooms of 60 units uh 40 of them two bedrooms 20 of them one bedroom okay um what we are selling is not the real estate per say m it is the income from

9:45 the real estate so we're not selling to you to come and leave in those units yeah we are selling to you so that we able to get tenants to come and stay in those units to give you a return that's that's we were very clear about that then yeah and it is still the story today because selling Financial Independence selling Financial Independence because see when we realize that nobody has architectural problems we said everybody wants to be financially secure whether you rich whether you are poor whether you're young old employed unemployed it didn't matter you want Financial Security and that's what we that's what we grabbed on so we started the first project um and people keep asking me um so who who the first question inevitably is who's financing in you yeah second question inevitably who is your contractor yeah but we realize those are the two people we didn't want

10:37 in our system okay yeah we didn't want financiers in our system because a financier is a is a is a is a middleman there's the person with the solution the person with the need then this person comes sort of to come and bridge that yeah I said what if we went directly so we don't call them customers we call them investors what if I went directly to the investor you give me your 3 million Bob you give me a 2 million Bob and you give me a 2 million everybody gives me their bit I put this thing together boom I have 100 million I can do that and what did we give in return I think the biggest thing we gave in return was on him so people invested in credibility yes yeah yeah so we we didn't we we felt if we went the route of um of getting financing then build and then sell we can't I the model doesn't work the model will not work that way I'm not

11:25 a deal maker mhm um I was not very well connected uh I don't own suits so if I walked into a bank like this they look at me like out of my mind um so he deci said no we we'll get financing directly from from the customer so we just sort of Bo stopped away um to where we are today so uh I'd like to to touch on that lack of a finance bit because I think it's uncommon in this market and very few people build with that model yes but I think you have I think I can say with a lot of confidence that you have now hit your stride in the sense that um you have a brand that's visible the trust element has evolved to um Beyond you I have a lot of people who I refer to your your to invest in your in your units who never who don't know you don't get to meet you but you have built this ecosystem but I want to touch a bit around the banks yeah and uh what is it

12:29 around our financing ecosystem that didn't appeal to you uh such that that maybe when you were 60 units you know laser place which was your first project and your projects have gone systematically increasing in size I think now you you you there are some Sometimes some projects come out at 600 plus units exactly so what is it that made you say that I don't want this guys in my business because they make the not work which is uncommon because most of us start thinking okay where will I get the money can I start talking to the banks and the banks maybe could ignore you once upon a time and there's this guy doing a 60 uh unit project in in on but now you really do stand out and I think banks and financiers are scratching their heads wondering how did this one slip past us because this guy is now doing you have what is six seven projects live at any given time like now now we have nine

13:34 nine on site 12 completed nine on site 12 completed so soon when those nine are completed you'll be at 21 projects and now you average about maybe 500 plus units per project project yes exactly so those are those are some big numbers you know those are some big numbers you're talking about you know so tell me a bit about our financing ecosystem and why didn't appeal to you okay I think um I get a lot of my inspiration from Reading yes and the Bible is one of my places I go to for for principles okay several times in the Bible the guy concerned is asked by God what do you have yeah we are 5,000 hungry people we don't have the food what do you have we need to cross the Red Sea what do you have so I realized I I didn't have the I didn't have deal making skills yes that that I don't have okay I didn't have the look and the corporate you know that thing that that I didn't have yeah

14:40 um but I I understand human psychology I think that bit that that I have and I was a I had learned in my prev before I started Serv I had learned how to put together a team okay I had read all the books about building a strong team with a cult like mentality so realized this thing is good then I had I had learned strategy not you know the how to make strategy I i' had never done anything corporate yes but I'd learned how to create strategy from scratch yes so I realized instead of doing what other people are doing and doing it better that do not take you anywhere is you sort of have to take whatever exists and dismantle it so what do you eliminate so I think for us that's that that's the first thing we did we realized the most expensive thing in real estate is financing okay that is the most expensive thing on several levels not just interest the biggest is that it

15:40 makes you arrogant MH you you have a loan of 100 million you don't have capacity to handle 100 million but you think because you you have the loan yeah you have you have it you think you can do it said no no so I I have to avoid that I think cuz I also know my I think just understanding yourself the the founders DNA is so important because you in who you are into the organization yeah so I realized okay that arrogance we can't afford it um we can't afford the interest and then if I'm getting financing it means inevitably I have two customers yeah there's the bank who I have to please yes there's the the customer who I'm building for who I have to please then of course I have to add the workers and d and the guys on site and K and it's too many people so I wanted to really eliminate simplify simplify so I realized why am I going to

16:33 the banks to get money okay and if I go to to the banks to get money I need collateral which I didn't you don't have yeah but I can also get money from my customers and there are the only collateral they're asking for is my name which is yeah so again the Bible says a good name is worth more than gold I used to think that's metaphorical for me it's real actually my name is in the company lose a company money we can we can talk yeah cost us a name we we we have we have a problem yeah yeah so I think for us just realizing that this thing is expensive at several levels and then I'll be charged interest I'll go through all the hustle I have to take all that cost and pass it on to my customer then my model would would sort of Crash yeah say if I go directly to these guys I get the financing I require all I need to convince them is I can build I can sell

17:29 you and then I build later that's that's all I needed to do and that's the trickest bit yeah yeah because there's a strong trust trust element there it is the it's it's so huge yeah unfortunately people have taken advantage of it unfortunately in the market in the market people have taken advantage of that but we decided we're here for the long the long game as long as we keep that trust and that's why so now you know 21 projects later uh over 9,000 units uh sold to the market um that yeah yeah over 4,000 something investors people have just built on the same thing let let's go into the S let's go into Savo and uh speak about uh what Savo the product is that you have invited both the investors but you have the investors on one hand uh who uh buy the units but you also have the the lived experience in a and from um it comes through when you into a your passion for architecture

18:31 because there are some architectural principles the spaces may be small but they well thought out exactly exactly what has been the reaction of the market to that product and what do you see its future becoming because um and and when I'm speaking to that I'm speaking to uh when a Servo comes into an area yeah it it commands a rental income that is slightly above yes the the the the same size units or larger in the same area yeah so there are some things that you have seen and there are some things that you have addressed in your architecture which are quite interesting for me because um same H location H slightly different execution and branding commanding a higher rental return so walk us through that and what's the thing thinking within the Ser organization around that okay so once we realize that our customers are looking for Financial

19:35 Security you need a vehicle yes Financial Security can't just be an idea you have to have a product so the product was affordable investment M so we needed we knew that affordability was was critical yeah but also people needed access to financing so Financial Security affordable Investments accessible financing these are the three problems and they go they sort of go together exactly we had to solve these problems so for US Financial Security is is I realized is first of all in the mind uh we were told to so many nobody told us what to do yeah so we had to teach so I moved now into a teaching mode of telling guys look you don't have to have a good life when you're young and then have a miserable life when you're old when you're older yeah you can actually be financially independent and you don't have to have the millions and the affordable Investments were these

20:38 apartments so we started with the two bedrooms and the one bedrooms then we realized the people buying were our agates and older these are people in their 40s and 50s yes we realized wrong Market yeah that's those are the guys who have the most money yes but how many are we yes if we can't get the 30-y old to buy to buy we are lost so then we now moved smaller to the studio now our second project now went to the studio and a five year payment plan that's when we cracked it we sold our second project 100 units between the two elections of 200 2013 mhm no 2017 yes there was an election in in in August and an election in yes and then the rerun yeah exactly yes so we sold we sold everything in that window in that window like what that's like a three Monon two Monon window yeah yeah change yeah yeah the year before we had sold I think 22 units

21:36 and we thought we were done well yes we sold 100 units so we realized so there we we give now the financial Independence our teaching was strong and you know very strong on social media uh Financial I mean affordable Investments small units accessible financing payment plan yes don't go to borrow you just pay pay so so that that of of solutions sorted us out on the on the on the buying side yeah and to date that's what we doing the only thing we did was remove deposit we realized beginning you know we need a deposit of of maybe 600k 300K we realize not everybody has that to start with yeah so it's a barrier so yeah so we brought it down to an empa transaction 35k a month you know that's M people spend on a Friday night that's M people spend on the weekend you know so people just transfer that and people are able to invest without without changing their Lifestyles yes yeah they just do a

22:37 little adjustment here and there and they able to invest fairly easily and buy the units exactly but now the story doesn't end with with you buying an apartment or with us completing the apartment that's that's easy to do yeah yeah the story ends with you getting an income every month into your pocket so who are we building for okay yeah so again a little statistic Kenya National Bureau of Statistics has all the information you need yeah then we realize the age group between 19 and 30 yes I think that's like 11 years huge yes so we we we decided we will not do affordable housing per se because affordable housing means I get you and I the 50y olds who have little money to give them a solution housing solution we decided that's not where we're going mhm we are going into a lifestyle solution okay for these young people yes right so we get the highest earning of the

23:35 youngest lot okay so first time job first second time so among your peers you are the one who's paid the most mhm but you can't so you you work in a place like this Riverside Drive yes with your boss mhm he drives his big car you drive your little car he has his iPhone you have your techno you but you both all both of you have something yes now you have nice nice office nice car nice internet but where you live doesn't look like your life mhm so we sort of wanted to Marge My Lifestyle my house my phone my little car my Instagram my selfies we wanted them to be the same yeah so that's why we now Target this complete cycle complete cycle of your lifestyle exactly exactly exactly CU you know you you had a good job then you're living in an esue right might be good neighborhood you have no control it's not your house yes if your landlord decides Beyond 10

24:32 you're not coming in or you can't invite five friends because you'll make noise for his 2-year-old daughter true you you know but now we have this product that's in a good location it's welld designed again you talk about um the spaces are small we have to look at this guy and ask what do they require so if you if I have 15 friends over or 20 or 50 friends over we go to the roof I've given you a whole quarter acre of space you can now have a good time you can do youry and do your music and do whatever you in your space you want space that that is just enough for you and then the things that are free light people don't make houses small windows so we give you lots of light and then the small space is well designed I mean remember computers how they used to be yes now a computer fits in your hand so it's not about size it's about how the thing works yeah yeah and

25:25 then over and above that I think the most important thing we give to these young people is that feeling remember my touch on psychology Pride you want when my boss is living in an apartment in Westlands and me who is living in a s apartment inaki or thiga or whatever our feeling is exactly the same so the whole idea is this I'm paying 15K I have a lift boss you LIF I'm welcomed respectfully at the gate the same as you have a swimming pool on the rooftop chances are you don't where you live so we give the same level of amenities and dignity dignity yes yeah yeah because people don't pay for space people pay for something very interesting you know research the capacity to boast yeah I come and say damn this a nice place that you'll pay for I mean you and I know I can buy a half kilo of meat yeah for 700 B yes but I can also buy 200 g of meet for 8K very true yes

26:31 very true so you let let's let's move away from numbers and finances and and and and let's talk about something that you have brought up uh which is dignity and and I like that topic because I think it's such a powerful topic yes that we don't discuss enough yeah and um in episode two the guest that we had actually said something um that she said that really I've been reflecting on since did that interview and she said that we need to love ourselves more that part of the challenge with the African experience is a lack of love for ourselves yes and it's very interesting that you bring out dignity in where people live yes because I think you are then creating a different kind of Kenyan or a different kind of African when this person lives in this space and has this confident about confidence about his environment Liv what does does he go to you know

27:34 does that extend into the city you know does that extend to what he demands of leadership does that extend so I know that working for Savo and you're very passionate you said earlier that you're very good at building teams but and you use the word cultish and but in a very positive sense at least the way I have seen it your teams uh you have been very good at uh building this Army of people who now sell your story you know I I even the people that I deal with in in in your organization I started dealing with some who have become senior now and the junior ones have the same ethos that's not very easy to do so how have you managed to achieve it okay so let's start with dignity because that that it was it's where everything started yes um the first thing for us was old people living undignified lives that's that's a terrible thing yeah you and I think we

28:36 have seen uncles and what have you you know it's not it's not a good thing so the idea about investing and um and and and getting a return in your old age it means once you have some money they'll invite you for to sit in the church board you know the court of Elders to make decisions about your community M they'll invite you to sit in the board of management in your local high school you know people call you your grandchild come to visit because they know they have nice food you know nice environment but if you're broke men especially if you're a man and broke and old the life is not nice so you took the same thing and and and and and just sort of made it h Pate through so first we came to the team I said okay I don't want employees I want Partners yeah yeah we sit down we develop this Vision together and you own it that's why Ian if you been with me my

29:38 my phone never rings my I never receive emails you probably send me invites sometimes I wonder okay my my schedule is never busy why I have 150 people in the office and each one of them owns their space this space and they own it fully when I go to interfere they tell me uhuh CH don't don't don't come okay either you do the job or I do the job you choose yeah yeah this whole genz thing we can talk about it now but well I saw the power of these guys from way back maybe because I was a university lecturer so I think I was I was I was intimately connected to how young people work and how they think um so we give them dignity give give a 24 year old the power to make decisions and and ability to make mistakes yes it comes always comes because they always make mistakes you make a mistake it's okay I'll have your back and they're able to do amazing

30:33 things so we take that then say okay even for our residents let's give them dignity now when somebody comes to a place that's clean well done well lit they stop throwing cigarette butts these are young people at the beginning when they come they move in you know throwing alcohol all over the place then after a while they begin to just behave themselves then the person comes to the office and says okay I'm busy drinking maybe some of them a parent is paying is paying their rent say I'm drinking at 11: and yet the guys who are in the office I can see them cuz our offices are within our buildings we we don't want to separate ourselves from our product so you come and say how does your product look like it looks like this you're right next what are the problems in your product they these ones we can see them so we can hear all the noise we can hear all the complaints we

31:22 can get all the feedback right so somebody says I'm drinking it's 11:00 but my AGG mate is making important decisions then they come and ask how do they do it ah now that's an opportunity cuz I told myself if I can't impact this young group of people in Kenya and then I've lost I've lost the plot so then we teach them yeah we teach them about financial Independence about hard working hard in the in the office about you know and those things now you know they sort of have a ripple effect cuz now there people are used to living well some come after a while maybe they can't take it they want a better place they move then they come back it's okay General I'm married I can't live here anymore but I need two bedroom somewhere you guys need to start thinking about CU they come they meet they marry each other but their minds on how to live have changed they they are no longer

32:10 satisfied with living exactly exactly because I've seen theyve seen how good living happens yeah yeah and you can do that without without breaking the bank yeah yeah so you're very you're quite connected to your teams to to to because this is a revolving um I recall earlier this year we were chatting about something and saying okay this is interesting and you're constantly challenging yourself to grow and develop so Savo as it looks now is not Savo when you are starting n years ago different organiz the same yes the purpose is the same but the the look and the feel and things those those those have to evolve yeah and for us the people impact cuz impact is really key we call them s rights the team is now 8,500 your invest everyone every Ser right okay so these are 150 in the office mhm 350 that we are educating okay so you get some profit you don't just again some people

33:09 you can make them be Financial independent in 5 years others in 20 others require whole generation yes so your your philanthropy thing exactly uh we have about 1300 on sites so people who build our buildings and take care of them when the ones they done repair and maintenance and cleaning and what have you 1300 of them that's very close to me 4,000 investors 3,000 residents wow so 8,500 people who every month either pay something to SVO or earn something from Savo or ideally both wow yeah yeah now let's a you have brought in Jango let's go there a bit yeah because you you you build at scale I think I can now say that you build that scale and I I've I've become a big convert narratives yeah I'm very cautious about narratives because I think narratives are used to sometimes exploit extract or take advantage of so you've taken a group of people sadly to

34:10 say that don't have a very good reputation you know everyone saying hjo you have to be careful they'll do this they'll do this you'll not end up yet youve cracked it you know you're now building at scale yeah with a I would say 100% local teams yeah you are very Innovative in your local Solutions yeah um like you rightly say at the beginning uh Capital was a was an issue you cracked that but you've also cracked how to build MH so maybe tell us a bit about your team that you have all the way from um all the way from the ER when you acquire a site you break ground you come you build till you're 600 and and units are finished and ready for occupation okay okay if I forget the last part you'll remind me yeah but let's start with thiso you and I we went to school in Nairobi I don't know National schools University sometimes you become blind yes to how to the face of Kenya mhm yeah

35:16 this guy this Kenyan yes wakes up in the morning and goes to aite I might get a job today I might not M now can you imagine you have created a system for those guys where some of them for five six seven years have never lacked a weekly wage yeah now that might not be a big deal for you and I yeah but for these guys that's a really really big deal yeah knowing that as long as I'm good at what I do yes whether I'm a lady I'm a man we have a lot of women who are doing who are doing this work I'm a lady I'm a man and I'm doing my job whether I'm pushing the wheelbarrow or I'm a mason or whatever it is I'm doing there I will not lack a job year in year out even during Co when we close our SES we actually buy these guys food every week I three four five weeks before we open before we reopen our sides so just making sure that these guys are well taken care of now that a

36:15 that's a strong message they hear it when they come do they have their Bad Manners yeah of course we we do of course for the higher people we sanitize it for the for the low on we call it theft as you go high in society that the same man just you still at scale and sanitize it and give it other names yeah but when somebody knows that you care so when someone else steals you get somebody to come and snitch on them so I mean it's not without these challenges but for us just doing things like that first people have jobs every single day that's important number two somebody comes and they are will B person after two years you come this person is helping a m after 3 four years this person is actually a Mason are you seeing you moved his wage from 5 600 Bob to 1,200 2,300 B somebody came as I don't know Junior something after five years or four years they are now a

37:11 supervisor they are now doing you know more important work somebody comes their welder you teach them a few business skills now you give them subcontract to make the windows can you imagine you have a unit a building that has 600 units that's about 1,000 windows or 1,200 windows and a thousand do and and this person has done it and they came they used to come walking now they have their B they have their motorbike don't go gu comes he has a car and you know I have grown here I came here as a boy I came here as a young girl now look at me yeah yeah and those guys are now building for their for their people back home so I think for me that that is important and then some of them have kids in high school we School them we pay we pay we pay for their fees Your Child So the the ones we get who are strangers who the their pass Mark is high but these ones we have a lower passar Mark for

38:04 affirmative action yeah that you know we want we want you to and once you're paying a GU fees he's there for four years he's not going anywhere yeah yeah yeah so able to get that loyalty again give them dignity I think I think again it all just comes down there we we recognize the work they do and it's nice when sometimes I'm working and they don't know me what so you can imagine people each of them will be saying he has ownership he has ownership and ownership is what we require so ownership again dignity ownership they go together so whether you are owning a title as an investor whether you're owning a space as a as a resident whether you're owning your space as a as a site who works there whether you're working as a manager or you're working as aono or a cleaner yeah there's a lady who does our Gardens and she she loves those flowers you come to thiga our office

39:04 [Music] something will happen it looks very nice now but after two months so I cut it now and start a fresh so those are things I don't know yeah yeah and they have learned they've never gone to any Landscaping school but they have learned but you've empowered them to learn exactly exactly exactly you touched briefly about mistakes MH and I find mistakes and failure is demonized in a way that I think we need to change our thinking and you said that you are fortunate that you taught in the University so you saw the potential of gen and I believe genz has unbelievable potential ex yeah so talk us through this your style of leadership that is accommodating to the mistakes and the challenges because most people look at the mistakes from a perspective of cost it's very expensive they make mistake make sure people are doing things properly if not out is the door exactly

40:02 exactly but you have a different Outlook you say you will not you'll tolerate H you you'll tolerate mistakes uh that are not fraudulent is not a mistake but you so walk us through that thinking and how you over the last nine years of doing Sao how that Journey how it has impacted you and how it has reinforced that that line of thought M okay you see first of all I think it's a wonder that I was able to finish high school and able to finish university cuz I was always contrarian I always thought these guys don't know what they're doing who that that people are teaching you yes yes yes yes I always thought things should be different from the way they were yeah but know a generation you just beaten put in line yeah you obey and you sort of work hard yes then As I Grew Older I realized I was actually right A lot of these guys didn't know what they were

40:57 doing yeah so questioning is okay yes taking you know the less is fine so even starting Ser that's why we started with failure eight business models because we knew for us the product is not the product the business model is the product so try and fail try and fail try and fail try and fail so now we're at a place where I've given these people these young people and you've met them you know my head of sales she's maybe 26 now and she's been in the company since she was 19 yeah so she's probably one of the best sales people in this country but she's young yeah and so is the head of build the building team a little little girl yeah I mean little in terms of size yeah she's young and she's small and she talks to these huge fundies and you know and she puts everybody in line these people will make mistakes yeah yeah yeah so we we have a method we have a method

41:55 for making decisions everything here you want to move from this microphone to the here what it so we have things that follow this and this and this and this and this and this but inev right now let me give you an example we have about 40 to 50,000 transactions per month 40 to 50,000 per month rental income so from rent to to investors to paying laborers to I don't know subcontractors all those little transactions B you'll find mistakes yeah some of them are systemic some of them are because of decisions some of them so every time a mistakes happens okay is this a oneof is it systemic if it's systemic okay let's let's let's improve it yeah you know so those things are always happening and and we are not perfect we are not perfect but I think for us we have this kaen philosophy in the office improve every single day yeah my tomorrow needs to be better than

43:00 yesterday my tomorrow needs to be better by how many how many do you sell last week or last quarter this time week four last quarter how many are we selling now we need to be a bit better yeah so sometimes even if we are not running even if we not making big strides we need to be constantly moving yeah so now we improving our our our it systems we're improving our culture we're improving every so but that means that Savo is in a constant state of personal dissatisfaction mhm yeah we are always seeing what is wrong with us you don't arrive we we we don't arrive we realized the obstacle is the way the path is the destination there's there's no anytime we have done something and we feel damn this is good yeah something something happens yes and then it's better when you when you realize the mistake yourself than when the mistake comes from your investor outside that's very painful yeah so of the things every

43:54 day every day I receive um the sales report the financial how much you have made how much you have spent and the big mistakes you have made wow every single day yeah yeah so your people have become comfortable with reporting their mistakes to you exactly exactly and my my my training probably helps because as an architect you you you present your work every day and the lecturers will never tell you this is good they just see the mistake so we have sort of inculcated that at the beginning it's hard for new people is very difficult you take them through salinization indoctrination after a while then they they get it they understand the philosophy behind it exactly exactly exactly I'm not blaming you yes I will take ultimately I take the fall for everything and I've got your back yeah I've got your back yeah you'll never be fired for making a mistake yeah you'll

44:43 never be made for noise for making a mistake that's fine yeah very contral from a Kenyan perspective because the General market yes is the opposite and I'm glad that you have scaled to the level that you are so let's go back now and and and speak about the projects yeah so you you you started with laser place then you moved to embassi yes and then I think thiga thiga thua was a sunset coral Coral Bells and now um I was driving by H Royal subbs Roy and I saw this huge complex um so on the acquisition of land perspective you also don't really outrightly buy land you you partner again it's another partnership conversation with with the land owners how has that evolved um so let me first start with the with the with with the project yes so rambu I mean laser was our our friends isn't it and then 90° was our friends and our friends friends mhm by the time we go to our third project now these are people

45:55 we don't know okay I can I could quite draw the link yes yeah where do these people come from yes yeah yeah and even by that time I remember the first time I posted something on social media I'm not very good so I said let me try this this know was Facebook or what I can't remember I said um 1.4 million Shillings house in embassi hey the comments scam yeah we got out of social media I think for three years what yeah yeah until it's done then we can we can post a picture yeah yeah yeah so now after that now the other project now came you know different people so now but Word of Mouth Still Remains the main thing referrals and Investments make up 70% of our new business referral referrals and Investments 70% 70% and then 30% is now strangers yeah which for us is a good thing yeah um and then the question was what I I veed off so no you don't buy

46:57 land Oh Land yes so at the beginning we didn't have money again you know you have to you have to be Innovative yeah yeah so um we partnered with people so we come in I was told that don't talk about profits with land owners no profits I only I know so I will give you this percentage of everything I build yeah if you're happy we sign if you're not happy we stop if you have brothers seven brothers and 21 you we all have 21 children Everybody Must sign yeah if one of you is unhappy we stop again because it's about reputation yeah so that's how we started But as time went by I realized uh we have a good name yeah so I can come to you uh we get learned in an interesting way CU people now trust us I can come to you I give you the deposit 10 20% for the land then you agree that the balance within 90 days then I ask you only for two things allow me to submit the Dr to the counil

47:58 allow me to Market them as we as we waiting for these 90 days to elapse so immediately do people do that then people would pay then I'll pay the balance so then I'm able to get landar cheaper okay yeah yeah but all these things just require you to work on your name and and and it can be a game it can be a PR I think a good name cannot be a PR stand it has to be something that is real yeah so right now we partner but on very rare occasions mostly we we buy okay yeah yeah yeah and buying now we also don't need a lot of capital as long as I have 20% and that's simple agreement and people have done it and they by it works yeah you but we but oh yeah oh yes I forgot yeah yeah a lot of people say Okay instead of me partnering with you and waiting for three years for the project to be finished I want to start earning from my income now one old

48:49 man told me you know I don't to to to invest for tomorrow my tomorrow has reached I did my investment when was a young man I want my return today so now those ones now we give you value for Value you given us land worth 10 million we give you units worth 10 million all right so it starts renting immediately exactly exactly so these people even as you and because you now have multiple projects yes units can be where they can diversify their portfolio and their risk exactly giving you land here but taking units across exactly that that actually makes majority of our land acquisition model nice and I've noticed you have now you you you are not you have started coming up toown if I dare say you you stay coming Uptown some of your developments have some addresses that not the cas few years but now we couldn't we couldn't dare we couldn't dare but but we learned lessons from say

49:50 one of the Kenyan um oil manufacturers yes they started out in The Villages m m that time I think I don't East African Industries was the main thing yeah yeah and they just started from there by the time we saw them in Nairobi the competition was finished true yeah so we also started from the periphery yes we were very scared of U of of up yes yes yes but now you have come and and you're doing your thing so we we have talked a lot about I think we have a very good understanding of what it is where you came from you're doing MH let's talk about the future let's talk about the future let's talk about where it is you are um where you're going uh you're I know you're Nairobi based you're you're Nairobi based only um but what does it look like um there's a lot of chatter around the region East Africa there's so much I I say Africa is like a blank cus so where are we now what what what are

50:56 we looking at okay so what will not change Let's uh let's start there the purpose will not change our our quest to enable investors Achieve Financial Independence that will not change in my lifetime okay yeah yeah maybe after wherever you go whatever you do that is that is why we do what we do that that's that's not changing yes um affordable Investments That is not changing yeah yeah yeah just giving people things they can afford that is not changing M um access to financing that is not changing yes yeah yeah giv making people giving people passive income yes I don't want you to have a house then you have to worry about plumming yes that is not changing yeah yeah we have to make it passive for you we have to give you dignity you know treating our people well those are things that are constant Innovation and looking for different things those are things that will not

51:52 change um what will change I think regions will change um so right now it's been Nairobi why Nairobi we need to learn yeah we need to learn the geography of the area how where do I buy things from how do I take care of them who do I talk to where do I get my fundies where do they live you know how do we transport them from home to site you know all that so moving to other regions requires a little more knowledge that area but we said we will wait for pressure internally mhm so we have a lot of internal pressure right now to go to Mombasa from from our existing investors yes to go to Mombasa yes to go to kumu you know the major towns so there's a lot of pressure for that so right now we are balancing between the cost of production and the rent the see ultimate is about the rent so are we able to get enough rent to give you a good enough return seeing as prices of things are going up yes yeah

52:50 so we have to balance cost of production how much we can sell it for and the kind of rent we can get because the determine our price our price is always determined by rent how much can we charge um in rent comfortably and then how much can we sell it and then work sort of work backwards we don't we don't start with cost and then load up Margin yeah we start with investor returns and invest Returns come from rent and then work backwards yeah yeah so that that that method determines where we can get landar so even the decision to come into town was purely um uh a financial decision in terms of what what returns we able to give and produce a product that we can we able to produce effectively so hopefully we will get to other towns within um but also capital cities are important because when you're talking about Nairobi or Kali or Cala or

53:46 da you're talking about the country so all the elite of that country really are based there yes so we've began to do moved around quite a bit now um d I did a week study there just to see how the place is I was in Kigali very organized place um obviously those are much smaller markets than than Kenya um in some sense very very streamlined um there still more opportunities here and I think I think Kenya is is just you can't compare it with the region just in terms of the opportunities and the level of development but we also have a lot of investors from other countries who are pushing us to go there nice yeah yeah yeah so within East Africa we have many you're seeing it here investing in Nair very many Rond investing here um a number of Nigerians investing so those are people are saying why don't you come to where we are why do you have to follow you to yeah so I'm I'm taking

54:44 this a lot of this year and may most most of next year just thinking through because right now I can't I can't keep thinking through daily operations those are taken care of so I'm really thinking through how does the future look like in terms of geographical expansion in terms of scale so we started with small apartments then we mve to Big Apartments now we are doing multiple apartments in the case of Tia we doing we have three Ro we are doing six we not Royal five Royal Six is coming very soon yeah so there will it will be one big development so what will it be like now when you go and start the Hall of Royal City at once yes so we doing you know 6,000 units Boom at once so I'm not thinking about that nice I'm thinking about technology um so the building technology is critical we have started a production company for making building materials because we've been building the same way

55:42 they been building in Egypt yeah you take stones and pile them on top of one another surely and so what are you like just a snap we now want to turn construction into an industrial process yeah so we are now making wall panels nice from wall panels internal wall pan internal internal wall panels from there we want to make beams and slabs and all structures everything done so our sites become assembly sites not construction sites nice yeah that's still a long way off but we started you started the journe yeah yeah yeah yeah yeah yeah greato as usual very interesting conversation when we sit down to talk but I'd like to touch um I think my big take home overarchingly is just the power of dignity and how digy lives can be a profitable Venture yes but let's talk a bit about your philanthropy and I'll give you a chance as a parting shot to just speak about what you do

56:36 something that that I admire greatly I know you you're um from ta is it ta taba from ta and you do have a scholarship program that you run there that's impacting lives and and maybe you can tell us a bit about that okay yeah now um the those government say I went to Alliance yeah I didn't go there I went I went to stud you went to stud okay yeah and I I I saw how one life educated can change the trajectory of of a family yeah cuz my classmates most of them didn't come from they came from you know poor backgrounds but they're doing big things across the world yeah doctors Engineers name it so for me I always knew know it's touch one life and you have touched their parents and their children I mean the whole thing is changed so right now we we we last year I think the last the last intake we had uh was 200 200 200 students that we took in like at once no 160 160 we took at

57:48 once and the way we do it is um if you have worked with Savo for 3 years you have a right to take to get children from where you come from okay yeah yeah so if you grw up in kibir that's your shs if you grow up in kinangop you get kids from there cuz I I to bring kids from my shags so we want I want everybody dignity I want my people to have a name when you go back home yeah yeah yeah yeah so we have a lot of kids from all over the country but where s rights come from yeah yeah yeah so then the school I mean the company gives you that right to pick these kids and we educate them we pay their fees you help in in mentoring them yeah so we majority of them obviously are from home that's where I come from and we meet them and we Mentor them so um we have had we have a few who are already working um there's one who was having a trouble picking between KQ and

58:46 the World Bank and a scholarship to Canada wow like Chief you have deep problems those are good problems to have yeah we have a couple in the University now but majority in high school yeah we have 25 who are doing their form four now next year we'll have 75 the year after we have about 110 and then the ones who are in for one are 160 excellent yeah yeah yeah so that that is something that is now my my thing for for the for the future excellent no leard thank you very much I mean a very very inspiring story but what I like about the story is that it's not the end of the story it's the beginning and the story keeps on evolving so long may Savo last and long may it continue to have this immense impact that it's having on the society on dignifying the African experience is something that really really hits home with me ER dignity you know dignity is a Priceless tool it's a

59:46 Priceless tool and when you impact people from that perspective then it's wonderful so thank you very very much for being our third guest we enjoyed having you and we enjo enjoy the conversation and maybe sometime in the future we'll have you back when you can tell us what the next 5 to 10 years have been for Sao so thank I don't know if you have any pting words something I for me I think Africans can do it you've been my inspiration for many years I was I was running the arital company and I think you always kept pushing it so whether it's those who know how to make deals those who know how to sour for Capital those who are tinkerers like myself those who not build teams I think we can do it yes yeah yeah cuz i' built a thing that done by Kenyans for Kenyans funded by Kenyans excellent consumed by Kenyans and now Outsiders so we getting an external Market to our local product

1:00:39 for me I think it's a something that is wonderful excellent uh check them out um if you have a chance sa. yeah is the handle on the website and they're on all socials now after that initial social media hi us they came back full force so you find them on Instagram you'll find them on Facebook you'll find them on Tik Tok you'll find them on a whole host of social media platforms thank you very much ladies and gentlemen for joining us in this third episode and we look forward to having you again asant Sana [Music]