- Player: Stuart Minnaar
- Company: Yappo
- What it does: Yappo is a mobile payment solution company that turns a smartphone into a wallet.
- Launched: 2009
- Visit: yappo.co.za
Building a great business doesn’t always happen on the first try. When Stuart Minnaar launched Studentology.co.za, his idea was to create a digital platform for students to interact with each other – a Gumtree for campus, instead of the traditional noticeboards that everyone used.
“Within two weeks we had 13 000 users,” says Minnaar. It seemed great, but unless you can monetise what you’re building, you don’t have a business.
“We had a user base, so now what? Trying to get businesses close to the UCT campus to advertise wasn’t easy – we couldn’t convert the sale, because there was no guarantee that students would see the advert and follow through.”
Minnaar’s first pivot was a student discount card. 125 stores came on board. Stores were now able to track conversions, and Studentology charged a once-off fee of R90 for the card. “It was quick and provided easy cash to keep the business going, but we knew there was no longevity in the model.”
Minnaar used the time and income to evaluate what he had. “Here was a captive audience with spending power, and we were gathering an incredible amount of information on them, particularly on their spending and point-of-sale habits.”
Knowing When To Pivot
Understanding when to pivot is vital to overall start-up success. Entrepreneurs should always be careful not to be too enamoured with one idea – instead, pay attention to the market, and keep adjusting your offering to suit market needs in such a way that you can also make revenue, and maximise the data, skills and growth potential at your disposal.
“At this stage I was looking for the best way to service students, but also monetise a business. I started investigating if students could use their phones to pay for things in and around campus.
I was very focused – there are one and a half million students in South Africa. It’s a captive market. They’re on campus.
It’s a contained space. They’re quite a homogenous market – they all have similar needs, and best of all, they’re tech savvy and tend to be early adopters, so it’s a great space to play with something new.
“I had also recognised a few key points. First, students have money. There are roughly two groups: Students with disposable income from their parents, and students with bursaries. Students spend around R24 billion a year, including food, clothing, accommodation and entertainment.
I number crunched, and realised that on average, students spend R3 500 a month. A mobile wallet would make a lot of sense for them – the money would be easy to send and receive, and they could spend it at all participating stores.
“Then there was the social element. Bursary students get their money in lump sums and they tend to transfer some to their families, and spend the rest. They end up under financial stress and then academic stress. Too much money is given all at once and then not tracked or managed.
“We saw an amazing business model in the high levels of student spending that could also play a social role. We could measure, manage and track spend – it’s an app, so it can do reports, and allocate funds to categories. For bursary students, certain amounts could be allocated to food, entertainment, rent and so on – and once you’d reached your budget, the app wouldn’t let you spend any more at those stores. We could help students control their spending. Yappo mobile payments was born.
“The idea was strong, but the mobile payment space is very regulated. The banks were all working on their own solutions, and didn’t want a partner. Any requests for collaboration were shut down. “So where did that leave me? I needed two things: Contacts, and money.”
Getting Immersed in the Industry
Minnaar recognised the benefits of getting active in the tech and entrepreneurial space.
“In those first few years I did a lot. I went to every event I could find, tech, start-up, mobile, payment solutions – I wanted to know what was happening in South Africa and abroad, and make connections.
“I heard about SAB Kickstarter and entered. We won the regionals in 2010, and the nationals in 2011, which came with a very welcome R250 000 in prize money. Any income went towards development of the app and platform. I’m not a tech guy. I had the vision, but the development was outsourced.
Recommended: How PayPal Perfected the Art of Pivoting
“The game changer was being selected as one of 12 entrepreneurs at a Silicon Cape event, called Pitch London. We were invited to pitch to a panel of angel investors in London. They all had ties to South Africa and wanted to invest in local businesses. It was an amazing opportunity, both for the experience and the chance to pitch to real investors.”
It’s All About Networking
Minnaar is candid about the importance of getting out there, and finding as many platforms, associations and events as possible.
“I secured investment in London, but what I didn’t realise at the time was how important the investors would be to my business in non-financial ways. They’re connected. They open doors. For example, I spent months trying to get a meeting with Cape Union Mart, and one phone call from one of my investors, who knows the director, and I was in.
“The same thing happened later when I joined an organisation called the Power of Youth, a UK network of young entrepreneurs. They have a partnership with the EY Vantage Programme. Through the programme I was paired up with an international EY consultant for six weeks. He came into the business and made me realise how much I didn’t know – legalities, admin, finance, the list goes on.
But he also opened doors for me. On my own I’m a small start-up, but once you have people vouching for you, you’re no longer a small guy – there’s incredible power in a referral. I’ve learnt the power of networking, and getting into amazing programmes that give you access to business people with strong networks that they’ve built up over the years.
“It’s just such powerful advice: Build up your own network, attend events, get out there, and find a mentor. There’s no such thing as too many connections, especially well cultivated connections.”
Minnaar’s first foray into securing funding was the Silicon Cape initiative in London. “We did a practice pitch in Cape Town with one of the investors before we travelled to London. The feedback I received following my practice pitch wasn’t good.
“One of the mentors told me that I wasn’t ready, and that I wasn’t clear on what my product was. His feedback really bothered me. I asked him if we could meet. He then helped me to get clear on how to pitch my idea. It was a real eye-opener for me. Just because you understand what you do and why it’s important doesn’t mean anyone else will. You need to really create a picture in their minds, and tap into something that they care about.
“Once in London, the actual day of pitching was in a massive boardroom, Dragons’ Den style. There were 12 of us, and we started at 11am. By 7pm I still hadn’t pitched. I was last in the queue, and cocktails had started being served. Everyone was tired, and I knew I wouldn’t have anyone’s attention.
“Just before my pitch, the cocktails were being pushed past me, and I knew I needed to be different, maybe even crazy, if I wanted to be noticed. I decided that I would draw a picture on a flipchart, no fancy presentation and no video, and that it would take me two minutes instead of the stipulated 15 minutes.”
Longer Isn’t Always Better
“Everyone else in the room had fancy presentations and suits and ties. They also had the right words. I didn’t want to compete with them in terms of suits and presentations. I wanted to compete on the viability and scalability of the business.
It’s not that I wasn’t taking things seriously, I just wanted to be noticed for the right reasons. I also knew that despite my strong desire to secure funding, it had to be with the right person. Someone who didn’t want to work with me because of the fact that I dressed in jeans and a shirt, isn’t someone I’d want to work with.
“I approached the pitch head-on, and was short, quick and to-the-point. When they asked me what language the code was written in, I said it’s written in English. My point was that I’m not the tech guy – I’ll find or hire someone for that. I’m the big picture guy.
“I was the only company they invested in. The investors made me an offer for a 24% equity stake. I didn’t want all the money upfront, but staggered. On the way back to South Africa, one guy stared at me, as if to say, ‘I don’t understand how you got the money. You’re just mucking about.’ I didn’t understand either. I felt so free, knowing that someone else bought into my vision and what I was trying to do. But I think there’s also value in being yourself. Don’t try to be what you think an entrepreneur is. Just be yourself, it’s so much easier.”
One of the reasons Minnaar asked for staggered finance was because his issue wasn’t lack of finance, but managing what was going to happen once the money was invested in the business. “I knew that I needed to be coached, guided, and managed through the process. I didn’t want to make any mistakes.
“I had three investors. The first only wanted an update every three months. The second told me to contact him if I needed more cash. The third became my mentor. Without him, I wouldn’t have managed what I did. Too often we think that money will solve all start-up problems, but that’s not the case. Money can facilitate you, but so can networks, and people who can open the right doors for you.
“An outside perspective that can help you critically evaluate your business and its gaps is also so important. I could do it all again in half the time now. I’ve learnt so much.
“The head of acquisition of a large multi-national approached me to discuss a possible buy-out. I’m not out there convincing buyers to come and look at me. There’s interest and a lot of that comes from putting the right foundations in place. When I was chosen for the EY programme, I knew that I needed to get the most out of it. And so my starting question was: How do I wrap this business up so that it’s attractive enough to sell? You have to think about the exit and find a company that will buy your database and tech.
“Since securing investment, I’ve been working on proving the concept, making sure it works, and then scaling it. The tech needs to integrate into point of sale systems in South Africa, and we’ve partnered with WiGroup to do this.
Recommended: How Curve Concepts Gets Customer Satisfaction Right
“We’re integrated into their systems at Pick n Pay, Shoprite, Famous Brands and a host of other franchises. There’s solid integration now – and that sells itself. If you take care of the foundations, the rest will follow.”