“My Father’s Spirit is our Competitive Edge..”
Yehdego Abeselom CEO, Keste Damena
Abeselom Yehdego was a legendary businessman, humanitarian, patriotic Ethiopian, and a champion of the underdog. He made a name for himself with his forward thinking and his ability to see far beyond his years in how he operated and conducted himself. Abeselom had humble beginnings but eventually established Keste Damena Foam & Plastic Industry in 1995 – a mega business that is going strong today. When the legendary businessman passed away in 2012, his eldest son – Yehdego Abeselom – took over the helm.
Having completed his education in the US, Yehdego returned to Ethiopia in 2008. As someone who studied filmmaking, he made his first splash as the producer and director of “13 Months of Sunshine” – a film that debuted successfully. Yehdego’s first attempt to make a name for himself as an independent businessman and step out from under the shadow of his father was the launch of Jolly Bar, whose motto “Think Outside of Bole’’ made a lasting impression on Addis Ababa’s nightlife.
Since his father’s passing, Yehdego has been heading Keste Damena and expanding its horizons. He has introduced a new marketing model that has benefited dozens of family businesses and retailers as well as improved the company’s market reach. Unlike his father, who did not think very much about advertising, Yehdego sees it as a crucial tool in expanding business. The mentality has led to deals with the likes of the international popstar Akon.
The strategy has been paying off, and Yehdego recently embarked on Kynetic Dawn, an ad agency helping artists and businesses promote themselves and their image.
So how exactly does a business person come out from under the shadow of their towering father and make a mark on their own? EBR’s Addisu Deresse sat down with Yehdego at his father’s lavish residence to talk about the challenges of filling those shoes and navigating the challenges posed by the Ethiopian business world.
What are the advantages and disadvantages of running your own business?
There are many advantages and disadvantages to running your own business. Let me highlight a few of them from my own experience, my sector of business and the location of my business. The main advantage of running your own business might be in the freedom to make all the decisions. You have the ability to make a difference inspired by your vision and the need you see around you. You can work and easily implement process improvement based on your assessment of what works, what doesn’t and what needs to happen. You get to see the changes you are making in real time as they unfold. As a decision maker you can take ownership of the decisions you make whether they are right or wrong. Now, with every advantage comes a disadvantage. In my role as CEO, I have seen the disadvantages that come along with running specifically a manufacturing business. You are responsible for all decisions whether they are right or wrong. As a result, you can beat yourself up and blame yourself when things go wrong. There is a pressure that comes with the fact that everything falls on you at the end of the day. Your mind is always on and it never shuts off. It is hard to compartmentalize your life. You breathe, live and are your business. Running a business is time consuming and can take a toll on your physical, emotional and mental health.
You have lived and studied in the US. What do you think are the challenges of running a business particularly in Ethiopia?
Working in an environment and a society that is not conducive for entrepreneurship is challenging. The ecosystem truly does not really support business and it is almost like you have to build that hand in hand with your business. Doing business in emerging markets and particularly in Ethiopia, more things go wrong than they go right and it can feel like you’re always putting out fires. It’s mentally, physically and spiritually exhausting which goes against the grain of business that requires physical, mental and emotional stamina. Eventually the system drains you and derails you from your vision and your why. Business requires momentum and laser-sharp focus on the ultimate goals and visions you have set. Anything that detracts or deviates you from that is a challenge anywhere but even more so in Ethiopia.
An emerging market also requires you to wear many hats and not work on the projects and the ideas you love and enjoy. The lack of the right people and skills requires you to engage in areas that you might not be passionate about. I know I enjoy my work as a whole but there are many days I spend doing and engaging in things that don’t align with my skills and passions. Americans say that if you truly enjoy your work, and you love what you do, you’ll never work a day in your life. That is not the case in emerging markets as the system does not support that and all the elements go against you, sometimes to the point of giving up.
A country like Ethiopia has so much potential but needs to build the infrastructure to support entrepreneurship, make it easy for people to get into business and create the ecosystem for businesses to scale up and grow. I think there is a lack of understanding of the direct and indirect benefits businesses and their growth bring to a country. Business can offer more money and more economic activity. On a most basic level, businesses provide a means of income for the population. In exchange for their labor, businesses give money to people which they can then use to purchase and meet their basic needs. In an emerging market, where there are not a lot of government subsidies, this helps the population survive and sometimes even thrive. Businesses also foster innovation and competition. By having multiple similar businesses in a market, healthy competition can create better goods and services for the people.
There are so many members of the Diaspora with the skills, education and resources who move back to Ethiopia with dreams of investing and making an impact but get lost in the system. They are so used to formal and systemic thinking, they have a hard time adapting and changing with the informality and outside the box thinking that the Ethiopian business ecosystem requires. Let’s build the infrastructure and systems to help them succeed, do what they have to do and utilize their education, skills and talents to make an impact for themselves and their people. My hope is that new governments, policies, and change makers grow and evolve to build a strong infrastructure to bring much needed change in the country.
We should take notes from China for example. I think one of the things that made China so incredible is that they saw the value of the education and work experience their citizens were getting abroad and created avenues to bring their education and talent to build China.They encouraged and created a pipeline for people working in large institutions in the US, to learn as much as they could, and then come back to build China, which eventually was seen as espionage. That is what slowly propelled China to powerhouse status and made it a major player in the global economy. As someone exposed to and educated in the West, I think a key takeaway is that the business climate in Ethiopia is a hard one to operate in and does not foster entrepreneurship. Changing this narrative is pivotal and instrumental to the growth trajectory of Ethiopia. There is potential but potential needs a proper environment to bloom and become what it needs to be.
What advice would you give to up-and-coming businesspeople?
Don’t give up! Just keep pushing yourself and continue inspiring others. I think that’s what you can do. If everyone is discouraged and leaves, then what’s left? And who will build this country if the brightest, most educated, and strongest keep leaving for greener pastures? Adapt to change! Try as much as possible to network and get what you want. Always be positive and open to change if it is leading to the right thing and ultimately your goals. Network with the right people! Meet the right people that have the same goals and visions as you. But also meet those whose visions and ways of conducting business are different from yours. Understand your why before you network and align with people. Have a succession and a growth plan! Whether it’s in the government or private sector, don’t hold on to power for too long. Understanding limits and replacing outdated ideas with new, innovative thinking will always be the best way to grow and scale up businesses.
What has been your greatest achievement to date as far as business is concerned?
To be honest, I have more small wins than one great achievement. Creatively, one of my greatest achievements is making my movie ‘13 months of Sunshine’ with limited resources. I made the movie happen against all odds and when people expected me to fail. The making of the move made me realize that I can actually develop a product, market it and become successful. I can still remember the feeling I had at the premiere of my movie at Edna all. It was a memorable night with the presence of my mom and my dad, as well as all that showed up to support my movie. I know how hard I worked and to see it culminate to a great reception by the audience was a feeling I can’t put into words.
Another win or achievement for me was also renovating and bringing Jolly to life against all odds in 2010. I remember reporters taking a picture of my entire staff and what that moment meant to me because I knew the battles and fights I had to get there. I had to fight with my dad to let me take over Jolly and to finally see him fully put his trust in me will be something I will forever consider one of my greatest achievements to date.
I actually had a lot of fights with my dad over business decisions, especially concerning Rainbow (Keste Damena), which is one of the biggest ventures that I currently run. I had to make some changes in terms of branding, the way the company presents itself, the way we do marketing, and several other areas of the business. Initially my dad saw me as this kid who does not know anything with so much naivete. He didn’t think I would survive in the Ethiopian business world with my western ideals and education. Slowly, people started to notice the visible changes that I brought in at Keste Damena and with that my dad for the first time started believing in me. It was a great achievement when my dad said to me ‘You’re right’, and started to step away from the business and gave me full control.
Business is growing significantly in Ethiopia; new competition is on the rise. So what do you think is your competitive advantage in this increasingly competitive market?
The brand itself is one of our greatest competitive advantages. Our competitive edge is the spirit of my father with his values and strong legacy he left behind. It’s something that I refused to change and will forever be at the core of our business model. When my father built the foam factory, he refused to compromise on quality and actually bought a European machine when people tried to deter him and make him buy a cheaper model. A European technician that came to install the machine explained to my father that you need to use fillers, which are ingredients that you add to enhance the foam. My father asked what fillers were and was told that fillers bring down your costs but are chemicals that create the illusion of stronger foam. He was further told that while cost effective and a good business move, fillers are harmful and have severe side effects. Fillers can be toxic and cause asthma as well as other severe respiratory problems. My father stood his ground and argued that he is not going to compromise quality for the sake of making money. We have continued to follow in his footsteps and continue to uphold the same quality standards set by my father. I know for a fact there are only two companies in Africa that currently do not use fillers. One is a company in Tanzania and the second is Keste Damena right here in our beautiful Ethiopia. Even by European standards, 4% of fillers are allowed and regulated. I have heard that some plants in India use 80% of fillers in their foam as it is a price sensitive economy just like ours.
We are so confident in the quality of our mattresses, we recently ran a campaign: “Bring your old mattress, and we’ll give you a new one”. It didn’t matter what mattress you brought in; we offered up to 30 percent off, with very little to no margins, because we wanted people to experience the quality of our products. Some of the mattresses that came back were so thin they looked like blankets. I understand the desire for businesses to use fillers as we live and operate our businesses in a price-sensitive economy. It is not hard to see and understand why price will take the front seat, and quality will take the backseat. However, our loyal customers know we have stayed consistent and operate from a quality first perspective and why we give a 100 percent warranty, no questions asked.
What have been some of the biggest obstacles faced in running Keste Damena?
Running a manufacturing business in Ethiopia is difficult. Manufacturing is a very raw material intensive industry and the whole environment in this country does not make it easy to get access to the necessary goods, raw materials, or accessories that you need to manufacture. In other parts of the world, all you have to do is have a vision and strategize without worrying about access to the basic things you need to produce products. Here, it’s literally a game of cat and mouse. As a CEO, you never walk into your business to talk strategy and vision. You are dealing with what seem to be mundane tasks but important to the survival of your business. You have to solve simple things like ‘do you have enough light and power to operate?’ There are no clear ways to solve things, and you almost always have to solve problems by finding someone in the system that might solve it for you. This will usually cost you and is not straightforward.
Of course, we have also had incidents such as the fire that happened in late 2019 at our factory that almost threatened our existence and broke the morale of our team. It was a big obstacle in our journey as a company but thankfully we came out strong by coming together and focusing on our ultimate goal which is to provide quality foam and sleep to all Ethiopians and beyond.
Do you feel pressure to expand the business and keep it growing? Is it hard to follow in the footsteps of a legendary father?
Business-wise, no. I don’t feel pressure. I am confident in my ability and I know that I could take the company to the next level. My father was not a businessman and was truly an artist at heart. He left my brother and I a beautiful business to build upon and did so in a system that doesn’t make it easy for people to run businesses. More so, I feel pressure to fill his shoes in terms of who he was as a person and a humanitarian. Not a day goes by without someone, upon hearing I am his son, shares with me how he helped or touched their life. Everywhere I go, whether here in Ethiopia or in the US, I meet people who have these great stories on how my father helped them to become a better person and had a deep impact on their success today. In Ethiopia, my father is more known for his philanthropy, huge support of athletes and his deep love for this country than as a businessman. My father’s name is synonymous with goodness and those are very big shoes to fill. Definitely something that keeps me up at night.
Keste Damena is known for being a big player in the promotion and advertising arena. Deals with the likes of Akon, Dibe Kulu and Selam Tesfaye are some of your biggest to date. Tell us how these deals came about.
The Akon deal came about simply by going through his wife. His wife Rosie arranged a meeting with him,we presented the idea, and he agreed. To be honest, I was shocked initially by how easily he agreed but in retrospect it was not a hard sell as Akon is pan-African and he was promoting a big African foam brand by working with us . He was actually very humble and easy to work with during the shooting. He took instructions well and was committed to all the shooting until we got the perfect shots for the ad campaigns.
To be honest, the same thing happened with Selam Tesfaye. I first contacted her to be part of a music video we were doing as part of an album for DibeKulu’s first solo album through our newly formed ad agency – Kynetic Dawn. People kept telling me how famous actors and actresses with huge following don’t like to be in music videos and don’t do them as a rule. I don’t know who sets precedents like this in Ethiopia but we were not deterred and approached her. At first, she was not sure about it but we were finally able to make the deal and she is now the brand ambassador for Keste Damena. We definitely made a good choice with her as she is super talented. We were able to see that first hand during the “Yelibe Zema” music video shoot as she didn’t need any direction and everything just came naturally to her. We paid her to be our brand ambassador because she is more than a pretty face, she is talented, she is a hard worker, and she has so many qualities that align with our brand.
You have mentioned that you are an artist and filmmaker at heart and actually made13 Months of Sunshine. Tell us how you got into filmmaking and your journey in the industry.
I studied filmmaking in college. Growing up, my father was in the arena of business and so initiallyI went to college to study business in Boston. I hated business and hated studying business even more. I knew that was not who I was.
I had two uncles and cousins that were staying in Orange County at the time. I ended up staying with them to go to a very exclusive private school called Marymount. As I wasn’t doing much, I started taking summer classes at a junior college until I started at Marymount which was very private, very individualized, and very costly. What shocked me the most about going to junior college was the prices. Even though I was paying as a foreign student, it was still very cheap compared to Marymount, where I was set to start. I told my mom that junior college was the way to go, especially since I was undecided about my area of study. She agreed and I started taking different classes in junior college. I did two years at junior college and now it was time to transfer to a four year college. Getting into film school was very hard and competitive in those days.
I started off in the graphic design program at Chapman University with the intent of switching to the film department. I was allowed to take classes but at the last minute was told I can not be in the film school. Students spearheaded by one fellow classmate petitioned for me to graduate from the film school successfully. My film education culminated into making my first movie, which was the first Ethiopian movie to premiere at Edna Mall at the time. As I mentioned before, the premier of my movie alongside western movie giants was probably one of the highlights of my life and my film journey.
This experience also taught me how hard doing business in this country and the film industry was. When my film was showing at Edna Mall, the people there wanted to take it down for no apparent reason even though they were making money as more and more people were lining up to watch the film. Later, I found out that I actually had to pay them a bribe so that my film would not be taken down. They insisted on taking it down even though there was no shortage of time slots for other films. I had to fight back and they had to form a committee to evaluate whether my film actually was worth their market. A committee was formed and finally decided the cinema had to give my film a chance but they took it down again because I was not getting the memo that bribing was a form of doing business here.
Tell us about how the ad agency idea came about, what you have done so far, and what you wish to achieve through that business.
As I said, I have always been an artist and a storyteller. My first love was film and will always have a special place in my heart. My first movie and the challenges I faced made me realize that filmmaking is not easy. A big part of my film school education was on how to market and advertise films to the masses. I truly loved it and had a knack for the marketing and advertising side so I decided to pursue that. The ad agency really came about as I felt that there is a space for Africans to tell our stories in our own voice. Oftentimes, our stories are told by others. I wanted to create a platform for sharing, narrating, and putting our stories out into the world.
To date, we do all the advertising for our sister company Keste Damena. We have a special talent management side to the agency where we signed DibeKulu as our first artist. We are slowly picking up advertising and marketing jobs that align with our goals and missions. In the future, we hope to strengthen and build a powerhouse ad agency that is focused on solving client needs and serves as a support as well as a tool to propel brands and businesses forward.
An often overlooked and misunderstood part of your business is your retail operations and more specifically your franchise business model. Tell us about that aspect of your business model.
We started as manufacturers and went into the retail side of the business as we grew and scaled up. We currently have 18 retail stores operated by Keste Damena while we have 60 retail stores that are owned and operated by our Franchisee Partners. Operating and navigating a manufacturing business on its own is challenging in Ethiopia and even though we were running a successful retail operation, we knew our expansion strategy had to be different. Our franchisees have retail stores where we are not able to have a presence and are our biggest partners and assets. Our franchisee business model has truly grown in the last couple years and has become more systematic. Franchisee stores are held to the same company standards of quality, superior service, and customer first approach. Without our franchisee’s, our expansion and growth would be slower, especially in areas outside of the capital. We are so proud of our franchisees and love seeing them run successful businesses and family legacies alongside us.EBR
11th Year • Jan 2023 • No. 114