The case of Ghafla and tens of gaps in narrative

Ghafla! Kenya has been in the news for many reasons. Recently it’s for the wrong reasons. There is a blog that claimed they were ejected by the investor Ringier after (overdue) due diligence showed that they had manipulated things to create an image of very good performance. Other circles claim that the changes in leadership created conflict between new leadership and old Ghafla team.

Of course there has been questions on why they launched before completing due diligence. Something also worth noting is that with a change in CMS and migrating content afresh, there’s bound to be changes in traffic that would take time to recover from.

What looks like the truth? Did Ghafla create a fake successful image that was discovered by the investors to be, or did the investors to be have their own problems with the change of a gossip site to a general news site and were too optimistic about this change and it didn’t work out?

Is there mud-slinging? Why did they launch before completing due diligence? Why has there never been money exchange up till now? Why was Ghafla allegedly running on it’s own funds, while the real idea behind investing is to give more resources to a platform for growth? Too many questions.

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Ringier should have unearthed these during their own due-diligence before they bought Ghafla. My opinion.

Naturally, you wouldn’t expect such a big organization that has had experience in acquisitions and mergers to fail that way in due diligence. Especially considering that the Ghafla acquisition has been a talk of more than 5 months before they went public. This whole things smells of malice.

I hope techweez is working at finding this story. Too many times in this ecosystem stories go untold, only to be whispered at drink ups.

I see Alai has quite a lot of information on this matter

Ringier offered a surprising Ksh 60million for Ghafla. The offer not only surprised Kenyan tech community, but key local bloggers and tech pundits questioned the valuation. Some of us saw it as a blessing to Ghafla but there wasn’t anything unique to make anyone value Ghafla at almost one million dollars.

The back and forth between Ringier and Ghafla set in with a clear rush to take up the offer. Ringier smartly introduced an exclusivity clause which made it impossible for Ghafla to speak to other suitors when the two were seriously looking at at deal. Majani reportedly demanded a small amount to enable him give Ringier an exclusive period to enable the Swiss company focus on the deal, locking out any other suitor.

Before Ringier and Ghafla could ink the Ksh 60million deal, a clause was introduced by Ringier in the contract which gave 88mph a stronger voice. 88mph owns 25% of Ghafla after investing Ksh 2.5million or $25,000 then. When Majani sought the view of 88mph on the deal, the investors demanded a down figure while clearly indicating that they were not going to take any figure lower than Ksh 28million as their share of the pie. Majani went back to Ringier and informed them that they needed to put down a figure to which they agreed that they were willing to make a deposit but only after take a sweet month to go through the books and site data. The Ghafla investors were opposed to Ringier being given undue access to the properties without any cash changing hands. Majani owns 75% of Ghafla so he had a stronger voice and bulldozed his way.

Ghafla immediately migrated their town office into the Ringier offices along Kindaruma Road. The new “owners” advertised for a new CEO and demanded that the site be migrated from Joomla to premium Escenic CMS. Major changes were made in record time like anything else didn’t matter. Tim Kollman was the man handling the transition and the whole Ghafla operation. Nation Media’s Benjamin Muindi was immediately hired at a salary of Ksh 400,000. Majani was made the head of sales, replacing an employee at Ringier who was demoted and offered a salary less Ksh 100,000.

From the initial 7 employees, Ringier hired an extra 8 employees to boos the operations.

Despite all the changes, nothing was improving. Instead, it seemed like Ghafla was drastically losing traffic. The bloggers were writing stale stories and meeting targets but nobody knew what Ghafla readers wanted except Majani. The morale of the employees was also at an all time low, having moved from town office to Kindaruma road without the considerations for their commuting needs. Ringier top echelons insisted on not giving even a Ksh 1,000 raise to cover the cost of transport. In Switzerland, everything looked ok since the spreadsheet on who met target and who didn’t was looking good. Nobody at Ringier cared to look deep into the analytics. Nobody at Ringier knew what bounce rate, page loyality, conversion rates or even the exit pages. Majani understood the limited knowledge of Tim Kollman on matters web and so decided to show him 2014 stats.

In 2014, Ghafla was seeing 1.3million unique visitors, a figure the blog currently dreams of.

The new CEO at Ghafla didn’t last for even two weeks. He convinced the company to give him an advance payment and left. Another CEO was recruited. This time it was Alphonce Shiundu of Standard. He also couldn’t last for a week. Ringier then decided to shelve the recruitment and take up some 22 year old German who was interning at Ringier. The story of the intern called Marx is for another day. He was too naive and clueless than when the Ghafla team informed him that the website should be optimised for opera since many Kenyans on mobile used the browser, he asked, “what is Opera?”

When Ringier finished sabotaging any chances of Ghafla walking away from the deal, it demanded the website for Ksh 12.5million. Majani said he couldn’t do less than Ksh 30million. Ringier was not ceding ground so Majani demanded Ksh 18million. Ribgier agreed to the deal of paying Ksh 18million for Ghafla but demanded to pay Ksh 8million cash and Ksh 10million performance based. Majani didn’t like the idea. He sneaked from Nairobi to clear his head and went to Lodwar. When Majani came back, he only demanded his website back and walked away from Ringier badly bruised.

Majani is currently running the blog from his house in Gachie supported by less than 5 writers who are struggling to get stories. The writers are working from their own homes but with Ghafla computers.

As far as I can tell, this is the most balanced view of things we are yet to see clearly. Majani has promised to tell his story as soon as he’s back on his feet. This story, unlike the one on Business Today does not try to present Majani and Ghafla as the culprit, but does show the misses both entities (Ringier and Ghafla - alongside 88MPH) had. It also makes me wonder whether for such a business with a tricky IP there is no way for a clean exit, seeing as Radio Africa tried buying and ended up accessing documents and information that gave them an idea how to start Mpasho, and Genesis how to start Tuko.

Thanks Martin for bring this to our attention, do you mind elaborating on the part below, particularly the bolded part? I’ve not heard anything about these companies pretending to buy Ghafla to steal the IP

It also makes me wonder whether for such a business with a tricky IP there is no way for a clean exit, seeing as Radio Africa tried buying and ended up accessing documents and information that gave them an idea how to start Mpasho, and Genesis how to start Tuko.

That’s how it is in Nairobi, as an innovator people will steal your IP and launch theirs with big pockets. That Radio Africa story wasn’t publicized but few people know what went down, add to the fact they hired Ghafla staff.

You have not heard this because we cannot present this as facts but assumed outcomes. According to the story quoted above, both entities tried buying Ghafla, after fall-out in talks, proceeded in starting their own entity, Mpasho with a similar site, Tuko diversifying. Mpasho went as far as poaching the Ghafla team.

Damn,sounds like the ugliest tech acquisition story i have heard since the Angani story.