“At HKS, the ability to make change and have an impact was normalized by peers doing incredible things.”
By Mari Megias
February 20, 2018
“Industrialization is one of the key drivers to economic growth,” says Josh Sandler MPA/ID, MBA 2016. “Essentially every country has gone through this. And on the African continent, what is preventing industrialization?” he asks. In his view, the answer is logistics.
Sandler, who hails from South Africa, became aware that inefficient logistics were significantly constraining growth when he interned with the Kenyan government on an agriculture supply-chain project, an opportunity he learned about from a classmate at Harvard Kennedy School (HKS), Amandla Ooko-Ombaka MPA/ID 2016. He says the data on how goods in Africa get from point A to point B compare unfavorably to similar data in other parts of the world. “Studies show that when you buy an export from Rwanda, up to 75 percent of the cost goes toward logistics,” he says. “In the U.S., that number is 6 percent!”
For his second-year policy analysis (SYPA) exercise, Sandler explored what was constraining the East African supply chain. “A majority of the costs were from truck haulage. So the next question was, What is going on at the firm level?” he asks, referring to the trucking portion of the goods’ journey. “Companies would call 20 different trucking companies, engage with 16, contract with 6, and only 2 would show up,” which led to costly delays and overhead. He discovered not one single cause, but many. “There were so many market externalities that companies could not control,” he adds. “For example, if a key machine in the port breaks, truckers could sit around for four days while it was fixed.”
Sandler saw an opportunity. “We decided to develop a marketplace system to organize the industry and bring down costs, with the intention of improving regional competitiveness.” The result of his thinking is a new, private company called Lori Systems. Headquartered in Kenya, the company provides a centralized platform and communication system for logistics, whereby cargo owners and transporters have tech-driven, real-time updates for tracking and streamlined invoicing —in other words, a one-stop logistics solution for manufacturers and transporters.
Lori has experienced rapid growth: it expanded from six employees last May to more than 50 within six months, while reaching the breakeven point. “We’re training dozens of low-cost laborers and have been able to increase their salaries over time, while providing new opportunities.” Sandler identifies the company’s biggest competition not as the global players in this space, but rather as the status quo and entrenched behaviors. To achieve its vision, Lori attracted capital from industrialists across the continent as well as from emerging, market-focused venture capital firms and Silicon Valley executives. Others are starting to take notice. TechCrunch, a media site focused on startups and new technology, hosted a competition in Nairobi last fall called Startup Battlefield Africa. Among the 15 competing companies, Lori Systems not only placed first in the productivity and utility category; it won best of show.
“I think, and I want to stress this, that across the African continent, there are incredible opportunities to make a relevant mark on the system. You’re not just fighting at the margins, but influencing a greater ecosystem,” says Sandler. In deciding to work in Africa, Sandler says, “The continent boasts some of the fastest-growing economies in the world. It is an exciting place with a lot of energy and growth. I wanted to be a part of this narrative and be a part of positive systematic change.”
Sandler is, in his words, “obsessed with macroeconomic systemic failures.” That’s why this veteran of the private equity industry decided to come to Harvard for his MBA and MPA/ID, where he was a Rubenstein Fellow his first year and a George Fellow his third year. “In private equity, we found niches in health care that were facing major headwinds in the United States, then found the best company in that niche, with the goal of improving health care. I thought I needed to go to business school to improve my management and operations skills. I’m very interested in a macro, top-down approach, and wanted to better understand how companies can impact the greater society, so I did the MPA/ID at the Kennedy School to ensure I gained a greater perspective on this,” he says.
He is glad he did. “The Kennedy School was beyond all expectations,” he says. “The exposure it gave me to ideas and people and the relationships I developed have been instrumental to everything I’ve done since graduation; it’s the reason I started this company and a large reason why we have been able to build what we have built,” he says. At HKS, he was immersed in a place where he “met people who did things on such a large scale and weren’t intimidated by the scale. The ability to make change and have an impact was normalized by peers doing incredible things.”
One thing is certain: the supply chain in Africa is poised for a revolution. And, thanks to the vision of Sandler, Lori Systems is driving this change.