How Blue Label Telecoms Manages Stratospheric Growth Without Losing The Entrepreneurial Edge

How Blue Label Telecoms Manages Stratospheric Growth Without Losing The Entrepreneurial Edge


Vital Stats

  • Players: Brett and Mark Levy
  • Company: Blue Label Telecoms
  • Established: 2001
  • Listed: 2007
  • Turnover: R22 billion
  • Market Cap: R11 billion
  • VISIT:

The growth of Blue Label Telecoms has been phenomenal. Since conceptualising and launching in 2001, founders Mark and Brett Levy have managed to turn the business into a massive global operation that boasts revenue of R22 billion and gross profits in excess of R1,64 billion for 2015.

These are staggering figures that are difficult to even comprehend. And considering this stratospheric growth, an obvious question presents itself: How do you grow so quickly and so successfully without losing your edge — without losing that entrepreneurial mindset that made you successful in the first place?

A hint can perhaps be found in one of the company’s committee rooms, which boasts rows of Blue Label bottles.

“These bottles represent the whole history of the company,” says Mark. “Each one represents a story of a deal that was signed.”

Early on, it was decided that a bottle would be shared amongst the parties every time a deal was signed, and the details of the deal written on the label.

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The Blue Label way


Celebrating a new deal with a toast to Blue Label is a tradition that survives to this day. Indeed, the two founders believe that a big reason for the company’s continued success is the fact that it has managed to maintain its culture despite the fact that it has grown massively and even has operations in other countries.

“We like to think that nothing much has changed in the way we manage, even though the company is much bigger now,” says Brett. “We’ve realised that we have to empower people to run with projects. You can’t micromanage.”

“The secret lies in hiring people who are smarter than you are,” adds Mark. “You also need to grow them fast within the company, and then let them go — allow them the freedom to do what they’re good at.”

The company looks for employees who are proactive and efficient — and doesn’t mind paying to get hold of the best talent.

“We don’t fire people for making decisions,” says Mark. “We encourage people to take ownership. It’s the only way to make sure that things happen. And we don’t believe in salary caps. If you want the best people, you need to be willing to pay them what they’re worth.”

Going corporate

So how did Blue Label maintain this culture once it became a large listed corporate?

“We were never worried about whether our culture was ‘right’ or ‘wrong’. What mattered was that it was our culture and we wanted to maintain it,” says Brett. “So, if something works for you, stick to your guns. Don’t allow your organisation to become that stereotypical ‘corporate’. Don’t let people hide behind that corporate veil. Why send an email when you can get up and talk to somebody? It’s important to fight tendencies to change the way you operate. As a company grows, new processes become a necessity, but the basic ethos on doing business should not change.”

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Building a multi-billion rand business

In May 2001, The Prepaid Company was granted a national licence to distribute Telkom fixed line prepaid cards. Today, if you use any form of prepaid technology, from mobile airtime to prepaid electricity, chances are you’re using a Blue Label Telecoms product.

In just 15 years, Blue Label Telecoms has evolved into a super distributor of virtual and physical prepaid airtime and telephony products for South Africa’s mobile and fixed line telecoms operators.

Getting listed

It would be naïve, however, to think that listing a company will not impact it in a very meaningful way. Make no mistake, taking a company public is a game-changer.

“A listed company is a whole new world,” says Mark. “You’re not just responsible for your own money any longer, you’re dealing with other people’s money as well.”

Because of this, governance is a huge issue. Understandably, a different level of reporting is needed when a company is listed, and many entrepreneurs underestimate the amount of time and money that goes into getting a company ready to go public.

“It requires quite a mind-shift,” says Brett. “We were lucky, as we already had third-party shareholders, our reporting was already diligent.”

Public expectations

blue label telecoms boardmembers

When the company went public, did this change impact it? “There are a lot of good reasons to list,” says Mark. “One of the most obvious advantages is the fact that it allows you to raise capital and even reduce debt, but it also allows you to incentivise staff through stock options and gain a certain visibility and credibility. Because your performance is public, companies trust you more and are more willing to do business with you.

“That said, there are certain sacrifices that come with being listed. As mentioned, you are working with other people’s money, so you need to think every decision over very carefully. Entrepreneurs are typically more open to risk, but being listed demands that you are sometimes more constrained. You are ultimately beholden to your shareholders.”

Of course, this doesn’t mean that you should allow public pressure to prevent you from running the company that you created.

“You need a careful strategy, and you need to be strong enough to stick to that strategy when people are pressuring you to do something else,” says Brett.

“For example, we received quite a bit of flack when we moved into Mexico. We lost money there for a while, but our strategy is now starting to pay off, so we’re glad we stuck to our guns. You need to deliver for your shareholders, but you also need to have long-term strategies in place and be willing to follow them through.”

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Ignoring the share price

Another thing to keep in mind is the fact that running a listed company will eat into your time. “I’d say that about 30% of our time is spent on things related to being a public company — doing presentations, speaking to shareholders, going on roadshows and governance matters,” says Mark.

The biggest issue related to running a listed company, though, is the fact that it becomes all too easy to view the share price as a ‘performance score’. And focusing too much on the share price is a great way to lose focus and stop doing what you do best.

“You can’t ‘manage’ the share price,” says Brett. “So there is no point in even trying. Both the CEO and the employees need to try to ignore the share price to an extent.”

This can be difficult, especially when the share price is the metric that the company is most often judged by.

“Directly after listing, it is almost impossible to ignore the share price. You will find yourself looking at it all the time,” says Mark.

“But in time you learn to ignore it and refocus on the important things. Fundamentally, our approach to business hasn’t changed. We want to offer our shareholders value accretion. We want to make an impact in the world. We operate in countries where there are a lot of poor people, and we want to make a real difference in their lives.”

Key Learnings

  • Listing a company allows you to raise money and eradicate debt, but it is a long and expensive process. Taking your company public doesn’t happen overnight.
  • Entrepreneurs can struggle to adjust to the reality of being beholden to shareholders. Taking on shareholders brings with it a lot of responsibility.
  • While it is important to provide value to shareholders, it is equally important to stick to long-term strategies, even if the value is not immediately evident to all. Leaders can’t be swayed too easily by the opinions of shareholders.
  • Ignore the share price, regardless of how hard that is to do. Focus on the long-term trajectory of the company.
GG van Rooyen
GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.