We built a website to cut out middlemen. Now we are the middlemen.
The middleman is an endangered species.
Right? The travel agent. The cab dispatcher. The insurance salesman.
Entire professions have been decimated by the internet and its ability to draw consumers closer to the source of what they want. And, of course, by all the apps and platforms explicitly designed to deliver instant access to previously mediated goods and services.
We built one of those platforms. Sort of. Our company, NINAYO, connects independent farmers in East Africa directly with markets; I’ve been known to describe it as “Craigslist for crops.”
And after enabling thousands of these direct connections — transactions that would traditionally have been routed through various middlemen — we’re doing something kind of weird.
We’re becoming one of those middlemen.
Why? To answer that, let me start by sharing a bit about why we built NINAYO in the first place and how we got here.
What’s the Problem with Middlemen, Anyway?
If you’re an independent farmer in Tanzania (where NINAYO is based), a typical small trade goes something like this.
You’ve got a crop ready to harvest. You expect that a traveling trader will be arriving in your village sometime soon, though you can’t be completely sure. You live hours outside of any city, and the roads are not only rough but dangerous. (Road deaths in Tanzania occur at triple the rate they do in the United States, even before you control for the vast difference in vehicle ownership.) Still, you might try to transport your crops and seek out your nearest trader yourself, risking a half-day journey by bike or motorcycle.
Once you meet with the trader, you can try to negotiate, but you’re working with limited information. The trader has bought from plenty of other farmers this season and has a pretty good sense of what they’re selling for. Meanwhile, your own view of the market is pretty much limited to your neighboring farmers.
If the price seems too low, you have a tough decision to make: you can turn down the offer, but you might or might not get a better one. While a little money is better than no money, too low a price means you won’t be able to invest in the supplies you need to grow a good crop next year.
It gets complicated, even if you know and trust the middlemen who visit your village. A worst-case scenario can be much worse. Especially if you’re a woman.
Though women make up a majority of Tanzanian farmers, they don’t yet have proportionate power in a still-patriarchal society. Traditional land ownership practices have officially been supplanted by equal-access laws, but in practice many women are blocked from ownership and wind up leasing from landholders who require a portion of each harvest as rent.
That means margins are already extra tight. Add the potential for sex-based discrimination in a trading system that’s far from transparent, plus the too-common reality of outright sexual exploitation — and you can see why a meritocratic, tech-based trading platform might be the superior option.
So we built that platform. We traveled to dozens of farming communities, met with hundreds of farmers, and signed up 25,000 users.
Then we did something new. This summer, we found a NINAYO farmer selling 50 kg of coffee, purchased that coffee, and resold it at a 15% markup. It was successful for everyone: the farmer, who got a good price for the crop; the end buyer, who got a lower price because we’d simplified 5–8 trades down into one and eliminated the corresponding markups; and NINAYO itself.
We’re planning to do it again. And maybe many more times after that. Here’s why.
How to Be a Good Middleman (and Why It’s a Good Move for Our Company Right Now)
The thing is, there’s nothing inherently wrong with being a middleman.
Far from it. Middlemen can add real value. In rural Tanzania, they take on the risks of transportation, storage, and marketing, leaving farmers more time to concentrate on managing their farms. That’s a big deal.
At the same time, Tanzania’s traditional system of middlemen has a real disadvantage for farmers: dramatic information asymmetry, which feeds the wild volatility of a market already at the mercy of forces of nature.
But that disadvantage can be avoided. If you can give farmers a better view of their market — and then act as an intermediate buyer based on that view — everyone wins.
So why did NINAYO decide to evolve in this direction? There are three main reasons.
1. Make farmers and buyers very happy very quickly
I take seriously the advice of Y Combinator cofounder Paul Graham’s advice for startups to “do things that don’t scale.”
Dig back behind the origin stories of many successful tech companies and you’ll find… well, a total mess, a lot of the time. Clunky manual work powering things that end users assume are automated. Door-to-door customer acquisition. Wires sticking out all over, basically, mashed into place with chewing gum.
You can’t always launch with elegant, scalable processes for everything. But the one thing you do need to do well and quickly is find users who love your product.
At NINAYO, it’s been easy to get people to understand what we’re about. Our audience is generally excited to sign up for an account. But the road from signup to first successful trade can be slow, hitting obstacles like low tech literacy or just wariness of an unfamiliar process.
By making trades ourselves, we can get past those hurdles faster and instantly demonstrate the ease, value, and trustworthiness of NINAYO. That can build a foundation for many more successful trades to come.
2. Learn more about our market and improve our product faster
There’s no better way to see how your product’s working than becoming a user.
Sure, you can sort of fake it. Set up test accounts, watch what “real” users do, incentivize employees to use it on the side.
But you’ll learn and iterate a lot faster if some portion of your business actually depends on your product working.
By stepping into the middle of our market, we’re getting as close to it as we can. That’s invaluable for product development.
3. Develop a new revenue stream to support the platform’s growth
This most recent evolution isn’t the last for NINAYO. We want to transform the agricultural supply chain for Africa’s independent farmers, and we’re not stopping with improving trades.
But it takes time to do big things. And sometimes, when you’re thinking big, you also need to think medium. By acting as traders ourselves, we’ve set up a source of ethical profits to sustain us as we innovate and grow.
Are the deals we’re making going to scale in the same way as the tools we build? Nope. But the experience we gain through them is going to help make those tools better and more widely used in the long run.
As a society, we’re still figuring out where human expertise is irreplaceable within an economic landscape overwhelmingly mediated by technology. Jumping into the middleman role with NINAYO might continue to be an occasional experimental arm of our business. Or it might be a permanently viable path forward.
We’re still in the middle of our story. But I think we’ll continue to see hybrid business models like this for a long time to come, with sophisticated technology and human savvy working side by side.