Phares Kariuki Talks Founding Dilemma, Dealing with Co-founder Conflict

Phares Kariuki is the brain behind cloud computing startups Angani, Node Africa and now Pure Infrastructure Limited. With 17 years of experience in the virtualization space, Kariuki continues to make his mark in the African tech ecosystem, save for the drawbacks that led to his exit from the aforementioned startups. 

According to Phares, improper practices caused huge disparities between him and his co-founder at Node Africa. In a move to shield his integrity, Kariuki left the last company and has since founded Pure Infrastructure. 

Business Elites Africa spoke with Phares in a conversation  that reveals the difficulty of founding in Africa’s startup ecosystem, the mistakes he made in his previous ventures, and his plans to inculcate a culture of cloud computing among African businesses.

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BEA: When did you leave Node Africa?

Phares: I left Node Africa over two years ago. I generally do not want to be affiliated with the firm anymore because I left after discovering that one of my shareholders had performed a criminal act against the company; the matter is currently under prosecution, so I don’t want to comment further on this. I left the firm to the other shareholders who were willing to work with him.

BEA: Was it only you that made this move, or were you joined by the other founder?

Phares: That’s the person who committed the crimes. So that’s why I left.

BEA: Are you the CEO and the founder of this new firm?

Phares: Yes, I am the CEO and founder. I’ve learned a lot from previous ventures insofar as founding teams. The current venture is going well. Bad cofounding teams, or co-founder wars and woes, are and perform worse than solo-founding teams. Ultimately, I believe businesses succeed or fail based on who is behind the shareholding..

BEA: Is Pure Infrastructure also a cloud computing platform?

Phares: Yes, we are, though our primary point of entry into accounts is managed services.

BEA: Have you taken any legal actions so far regarding Node Africa?

Phares: There’s a book I recommend a lot of people read, and it’s called Co Founder’s Dilemmas by Noam Wasserman.

If you get your co-founding arrangement wrong, you’re never going to be able to fix it because if your business partner is a criminal, they have property rights accrued to them by the state. You cannot take away their shareholder power.

And that’s why I left. Ultimately, I was not willing to work with a criminal, because that’s a person you have to work with every day. And so I just decided to cut my losses and start again. I reported the matter to the authorities and cut ties. It was a very difficult decision.

BEA: Do you still have some equity in this company?

Phares: Yeah, I still do; that has yet to be settled. When you start a company, there’s a chance you will lose. It’s the game. 

BEA: What about in Angani?

Phares: No, I sold off my interests in 2019. 

BEA: Do you think there’s anything you might have done in the past to have prevented this fallout?

Phares: Yes. There’s a lot I could have done. Ultimately, I take responsibility for where I ended up.

In my first startup, I diluted the shareholding structure too early on. That was the biggest mistake I made. And so, ultimately, I think all of us in Angani were young and immature at the time. I think some things were mishandled on my part and on the part of the other shareholders and directors, and we parted ways. 

With Node Africa, I founded a business with people I considered my friends, and that was a mistake. You tend to forgive red flags you see in your friends’ behaviour as you go along. 

I will never accept working with somebody of compromised integrity, because it makes your life orders of magnitude worse, and there’s no telling how far they can go or how deep the well is. You may not be able to contain the fallout, as its immeasurable.

BEA: What would you like to tell other entrepreneurs that are currently facing these kinds of challenges?

Phares: To be honest, my conclusion from this is that everyone faces a certain sort of challenge in their entrepreneurial journey. Mine ended up being co-founder challenges. 

Ultimately, you are going to have issues with your startup. It’s a long journey. It’s a marathon, it’s not a sprint. Follow your conscience and act with integrity.

But, the most important decision you’re going to make as a founder is who to have on your table. That’s an irrevocable decision because it’s protected by law.

And that’s how you should think about it. It is easier to divorce your wife or your husband than it is to dispossess a fellow shareholder and get rid of their rights.

BEA: If you had a time machine, what would you like to change?

Pares: It’s not useful to overanalyse the past. You’re supposed to learn from it.

If I had waited until I was 40 and I had not partnered with those people, I might have ended up making the same mistakes.

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