August 15, 2022 8 MIN Read

A Message From Our Founder & CEO

Is your startup a Painkiller or Vitamin? 3 lessons I’ve learned from launching The ROOM

As many of you know, talent has always been my passion. Few things motivate me more than enabling extraordinarily talented people—often from disadvantaged backgrounds—to fulfil their potential.

This is what led me to establish the African Leadership Group, which today includes African Leadership Academy, African Leadership University, ALX and The ROOM. All these entities select, develop, and connect top talent to opportunity.

Over the years, I’ve come to see that the way talent connects to opportunity is broken. While talent is evenly distributed, opportunity is not. For example, 75% of jobs are never advertised and 80% are filled by word of mouth. This means that so many amazing people remain undiscovered simply because they don’t have the right social connections. What’s more, it’s hard for talented people to stand out–LinkedIn for example, has almost a billion people on it. Finally, research shows that 50-85% of people lie or exaggerate on their CVs, so it’s difficult for employers to tell who is legit and who’s faking it. I felt there was a better way.

As I explored various ways to solve this problem, I was struck by how high-performing talent like celebrities, professional athletes and entertainers have always had agents to help them stand out and access incredible opportunities. I thought, what if we could do that for non-celebrity/ non-sports professionals? This is what led me to envision The ROOM: a ‘talent-agency’, that would ‘represent’ top professionals who were not in Hollywood, the NBA, or the Premier League. We would fill this ‘ROOM’ with top professional talent at all levels—from CEOs, entrepreneurs, and senior executives to rising managers and recent graduates. We would connect our members to their first job, second job, and so on; support them to raise venture capital for their start-ups, help them join boards, find speaking engagements, and much more. We would help people build great careers, not just find a job.

We launched The ROOM in late 2019 based on that vision and grew it within a year to 2,000 carefully selected members from across the African continent and the globe. This exceptional community includes some of the most influential and impactful people in the world.

Today, I want to share 3 lessons I’ve learned about entrepreneurship in the 3 years we’ve been going:

1) Make sure you’re offering a Painkiller, not a Vitamin: If you’re like most people, vitamins are a nice-to-have. Something you take every now and then when you’re reminded about your nutritional habits in the latest issue of some fitness magazine. But painkillers are a must-have. When you’ve got a headache, you’ll stop at nothing to take that tablet. Venture capitalists often advise founders to launch ventures that are true painkillers, not vitamins. In our case, we learned that for one segment of our membership—accomplished senior executives and CEOs–The ROOM was a ‘vitamin’, not a painkiller. Just think about it. For most people at the top of their corporate careers, they’re already inundated with opportunities! They don’t need more. For example, a typical successful CEO might get 10-20 speaking requests a week. The last thing they want is a platform to give them more speaking opportunities that they have to turn down. Such people also have enough influential relationships to navigate their careers. They don’t need The ROOM. It’s a nice to have, a luxury ‘option’.

Two examples—among many others—illustrate this learning. First, we offered our members a chance to pay a subscription fee, ranging from $20/month to $100/month for various premium services and opportunities we could provide. Less than 100 out of our 2,000 members took us up on the subscription. Second, we tried—twice—to launch an online member portal—our own private version of LinkedIn, where members could connect with each other and discover cool opportunities. Both times, less than 5% of those we invited bothered to set up a profile and almost no one engaged on the content on the platform. Logging on was like listening to the sound of crickets.

If users are not using your product, and they are not willing to pay for it, those are signs that you’re offering a vitamin, not a painkiller.

In contrast, we discovered that there was another segment of The ROOM community that was hungry for almost everything we were offering. The people in this segment didn’t have powerful networks or relationships. They didn’t have multiple job or speaking opportunities each week. They didn’t have someone who could guide their career. This was the younger talent in our community. For them, The ROOM was a painkiller.

Again, the evidence speaks for itself: After two unsuccessful launch attempts of our online portal for our more senior members, we eventually decided to launch our portal for the junior professionals in The ROOM. This time, the results were like night and day. 60% of them joined within 2 days of being invited (compared to 5% with the more experienced folks). Today, the platform is buzzing! The younger, digitally native members are connecting and sharing their experiences. They’re eager to get career advice and opportunities. They’re sharing opportunities with each other almost every hour. We’re finding that all the other aspects of The ROOM—a guide who can help you navigate your career, cool convening spaces or “clubhouses”—resonate much more with this early-career pool than with the more experienced and accomplished talent.

What’s the implication of this? Going forward, The ROOM will cater mainly to entry-level and rising talent (people with, say, less than 10 years experience). The evidence is showing us that for such talent, The ROOM is a painkiller, not a vitamin.

2) You can’t be everything to everyone. Focus matters: We were working with talent from all industries and across all levels. We were offering everything from career opportunities, venture capital and mentorship, speaking opportunities, cool events and conferences for our members. We stood for everything, which in the end meant we stood for nothing. In our increasingly inundated world, where consumers are bombarded with an advert for a new service multiple times each hour, you need to become known for one or at most two things. People struggled to understand—what’s the one type of talent The ROOM is known for?

As we listened to the market, observed global trends, and spoke to our members and corporate partners, we noticed something. The global pandemic had accelerated the digital revolution, and almost overnight, every company in every corner of the world was looking for one type of talent above everything else: technology talent. In fact, various sources estimate that 50-85 million people will be needed to fill roles in technology (software engineering, data science, UX design, cloud, cyber, product, etc) over the next decade. And the traditional sources of such talent—China, India, and the West—all have shrinking, ageing workforces. Given our position in Africa—a continent that will have 40% of the world’s population by the end of the century and the largest workforce in the world by 2035—we realised that this was a problem we were distinctively positioned to solve.

We began leveraging our training arm, ALX, to train tech talent—predominantly focusing on software engineers, which are this century’s most in-demand professionals. Currently, Africa only has 2.6% of the world’s software engineers, yet will be 40% of the world’s population by the end of the century. We saw the potential to claim a unique niche.

We found that young Africans quickly rose to the challenge, with 100,000 people enrolling in our software engineering programs (growth of 2,000X in just 12 months). The massive potential the African continent has to fill this global void has just blown us away. So we’ll continue scaling up, training millions of skilled young Africans for technology careers. While the rest of the world is chasing after the same, limited pool of tech talent, we’re building up a new, untapped pool of tech talent and putting that talent in The ROOM [hence our recent acquisition of the Holberton School in Silicon Valley. That acquisition will help us create one of the largest communities of new technology talent in the world]. This is something that we are uniquely positioned to do.

So that explains why you may have seen our increasing focus on tech talent. This is the ‘one thing’ we will be known for.

What’s the lesson here for any aspiring entrepreneur? Focus. Make sure your venture is known for just 1 or 2 things. That will enable it to stand out in an increasingly noisy world.

3) Go where the big market is: Originally, we envisioned The ROOM as a B2C company, where we would charge members a membership fee. But as shared earlier, we found that most of our senior members were reluctant to pay (because The ROOM wasn’t a painkiller). We also learned that the revenue we’d get from the younger members (who were more willing to pay their lower fee of $20-50/month), would be to the tune of $1-2 billion (if we scaled to say 2 million young members paying $600/year). That was in essence our obtainable market. In contrast, we realised that employers spend $500 billion on recruitment services, and another $500 billion on outsourcing services. That’s a trillion-dollar market!

So, earlier this year, we stopped trying to charge our members fees and are instead charging employers to access our unique talent pool. It’s a potential market 1,000X bigger than what we were originally going after. It’s now much easier to generate revenue (and much easier to collect!).

Don’t be surprised when you see The ROOM’s website and some of our branding efforts shifting towards corporate partners and employers. We’re responding to those who will actually pay our bills, and provide the funds to support the long-term training and development of our talent.

The lesson here is simple: Whenever possible, chase bigger markets. Watch this talk from Don Valentine, founder of Sequoia Capital (one of the most successful venture capital firms in history), who shares how they learned that big markets tend to be the single most important factor determining the success of the ventures they backed.

What does this mean for the future of The ROOM?

Previously, we were offering a vitamin, not a painkiller. Now, we have the opportunity to provide the solution every founder and senior executive on earth needs: the talent that can help them navigate and thrive in this digital transformation. With an abundant source of software engineers, data scientists, cyber security engineers and cloud developers, we will enable businesses around the world to stay ahead of the curve. The ROOM will be a painkiller that addresses one of the greatest problems of today: the global shortage of technology talent.

With our now much more sustainable, relevant, and scalable model, the impact on the next generation of talent–who as demographics indicate will mainly come from Africa– will be significantly more than was possible with our original plan. And impact is ultimately our goal.

I’ve started many different ventures, and the only thing that has been consistent is the countless unexpected twists and turns that arise along the way. But if you stay hungry, never give up, keep learning, and keep adapting, you’ll eventually figure out a model that is even bigger and better than you originally envisioned.


Fred Swaniker
Founder & CEO of The ROOM