- Company: wiGroup
- Player: Bevan Ducasse
- Est: 2007
- Visit: wigroupinternational.com
The growth stats
- 2008: wiGroup makes no money. It’s living off investment finance while developing and tweaking the platform.
- 2011: Breakeven
- 2012: R7 million
- 2013: R20 million
- 2014: Projecting R40 million
- 2015: Goal is R65 million
- 2016: Goal is R100 million
What strategic decisions did you make in your start-up phase that are still paying dividends today?
The first and biggest has been taking great care to get the right people onboard from day one. Businesses are essentially their people. If you get the people part right you set the foundation and the environment for success.
The second was to find the right funding partner. I was 24 years old and I’d left my job to start something on my own. I’d been working for another start-up and realised that I wanted to be in that environment – I wanted to be an entrepreneur, taking risks and creating new things.
The problem was that I had only a few months of rent in hand, and I needed a few million rands to get my idea, which centred on point-of-sale transactions from a mobile device, off the ground. I needed an investor, but I also didn’t want to just take money from anyone.
I wanted an investor who would add strategic value to my business, specifically a company with retail and point of sale (POS) relationships in place. When I met Capital Eye Investments (which was UCS Group at the time) I knew it was a good match.
They were looking for innovative software companies to invest in, and I was looking for a company to add strategic value to my business. That relationship still holds today, and it’s been a strong contributing factor in our growth.
Did your start-up strategy align with today’s growth figures?
Absolutely… not. The initial incarnation of the business was wiWallet, a solution that enabled you to load your credit card details onto your mobile phone and pay in participating stores using your mobile phone.
Initially, we had partnered with some small innovative coffee shops, and launched on 8 August 2008: I remember walking into Café Neo and buying coffee using my phone linked to my credit card. It was an incredible feeling.
However, wiWallet was a consumer play and one that was probably seven years ahead of its time. We learnt a lot of very quick lessons in launching the business, the key one being that big retailers were not going to integrate a point solution to their POS for every new application that launched.
It was too risky for them; they were wary of backing the wrong horse knowing that there would, in the near future, be a slew of mobile applications all wanting to integrate to them. Equally, the banks were very hesitant about the idea.
We realised that what the market really needed was a platform that would sit between the retailers’ POS and the growing number of applications that would begin entering the space, so we pivoted our business from a consumer play to a business to business play.
This is when we changed the name to wiGroup, and built our new platform, an open and interoperable solution that enabled retailers to integrate once to their POS to then be able to accept any mobile transaction application, including vouchers, coupons, payments, loyalty and money transfer applications.
From the outset we knew that we needed to attract the big retail players for our business to be successful. Once you’ve got two or three major clients on board, the rest will follow. But it’s a chicken and egg situation. We’re a platform for mobile applications aimed at the retail market. We needed apps on our platform to attract retailers and we needed retailers to attract applications.
How did you get your foot in the door?
Step one was proving we had the technology. Step two was making sure that we were able to articulate the value proposition delivered by the wiPlatform clearly and at the right level within the big retailers.
In any software business, real growth comes when you can scale the product. Your development costs are high upfront, but at a certain point your sales exceed your investment, and because you aren’t manufacturing a product, this results in great margins. But it’s dependent on uptake.
It’s also a slow process – you can spend up to a year going through the motions with a retail group before an agreement is reached.
Our value proposition resonated with the retailers. They don’t want to spend months vetting and negotiating with each app developer that presents them with an idea. Similarly, for app developers, getting an integration to a large retail chain is extremely difficult.
Our platform solved both those problems. It works on a similar principle to Apple’s iOS or Google’s Android in that it enables app developers to build on to it and get reach and scale. In our case this reach and scale is through the retailers that have integrated to our platform.
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How did you sign your first big deal?
With a lot of hard work, patience, persistence and timing. We’d proven the technology through our pilot with Vida e Caffé, which is a brand people want to associate with, so we had something innovative to show Shoprite and Pick n Pay, the retail groups we were targeting. We also understood that landing such big clients takes time, but they were vital to our growth plans. You need to be prepared for a lot of meetings, and reiterations of the concept. That’s how big corporates work, and you have to play by their rules. You won’t sign the deal if you can’t put in the time.
We also had a number of things going for us. First, we were speaking to them at a time when they were beginning to be approached by app developers on a weekly basis. The need for our platform was clear. Second, both retailers knew that enabling mobile transactions at their POS was strategically important.
What is interesting is that Pick n Pay and Shoprite went live on our platform within a matter of weeks of each other, but they each launched with very different use cases. Shoprite launched with their mobile coupon offering, Eezicoupons, and Pick n Pay launched with MTN Mobile Money.
Through the Pick n Pay integration to wiPlatform, MTN Mobile Money users are able to deposit, withdraw and pay from their mobile bank account at any Pick n Pay till point across South Africa. The success of the MTN Mobile Money integration opened doors for discussions with other tier one networks such as Vodacom.
Having the two biggest FMCG retailers and two biggest networks on our platform was the cornerstone of our growth strategy, and once we had them, the momentum really shifted.
What was your most strategic decision when it came to laying the foundations for your growth?
Our integrations are essential. Who we’ve targeted was, and is, crucial to our goals. So important, in fact, that having them as clients is almost priceless. Getting them on board was therefore essential, and we were willing to lower our revenue to ensure the integration and strategic positioning we needed happened.
We didn’t want to set our price point too low though – once you do that, it’s very difficult to raise your prices – so we offered them a good discount instead. They know they’re getting a discounted rate, but we won’t need to change our price point later.
Always work out what your most important strategic goal is. Ours wasn’t getting as much money in the bank as quickly as possible. I’d rather invest heavily in the business this year to see our goal of R100 million realised in 2016, and to do that, the platform needs to grow quickly and sustainably.
Our whole growth model has followed this same path. From 2008 to 2010 we were living off investment capital as we had projected. In 2011 we broke even. By 2012 our turnover was R7 million, which grew to R20 million in 2013. We’re projecting turnover of R40 million this year, and R100 million by 2016.
Our investors have seen a good return on their investment, and all growth for the last two and a half years has been organically funded through our own cash flow.
At this stage in the business, I’d rather invest a few million into new product ideas that add value to our platform and our clients than keep that money on our bottom line. We spend a lot on developing new opportunities and solutions to support and stimulate the market and on enhancing our platform.
How is your current growth stimulated?
MTN Mobile Money alone has over one million users in South Africa, generating huge transaction volume through our platform. Our business model supports exponential growth as we leverage the marketing and expanse of the applications that integrate into us.
Being POS integrated, our mobile coupon capability enables our clients to close the marketing loop with any campaigns they run. We’ve found that mobile money transfer, digital coupons, vouchers and loyalty have driven the growth, and our belief is that payments will follow once mobile transacting has become more widely accepted.
Start-up app developers are increasingly finding wiGroup when they carry out their research ahead of launching their businesses. The capability our platform offers them is clear. They’re approaching us to get onto our platform, and some of them are developing amazing, leading edge apps. It means we’re not doing it alone – we’re all growing together, and benefiting from joint exposure to the market.
Similarly, when app developers approach our clients, the retailers are sending them our way. So for example, if a developer approaches KFC with a loyalty programme, they direct them towards us, since KFC tills are already integrated with our system. We currently have R1,9 billion in transactions that have gone through our system, and it’s growing each day.
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What additional value do you offer your clients?
Over and above the fact that they just need to integrate with one platform, we give our clients unprecedented access to track and engage with their customers.
We have built tools and products that can link to basket information and deliver deep analytics and reporting. The reporting is real time and invaluable to retailers and restaurants.
We also work hard at finding applications that will suit our retailer partners and assist in both pairing the application with the retailer and allowing them to leverage from the benefits.
How much focus is placed on development at this point?
It’s still our major focus. Of the 50 employees we have, 20 work on development, while the remaining 30 are in admin, sales, business analysis, account management and project management.
All new product sign off and direction resides with myself, but everyone in the company provides input and ideas, ensuring the product and value is always prioritised.
We also have a team that deals exclusively with agencies. So for example if Unilever and Quirk develop a campaign that rewards customers for buying Nivea products, we’ll build the app that supports the campaign.
In addition, mainstream apps will be hitting soon and we look forward to seeing the innovative and exciting ways that these applications make use of our platform. At this point the market is in its infancy in South Africa.
This is an easy and convenient platform, and we’re ready for even greater growth, particularly because we pay a lot of attention to what consumers want, and to what our clients need.
- wiGroup is currently in discussions with one of the biggest switching companies in Nigeria. With an agreement already in place to integrate the company’s tech into one of Africa’s fastest growing economies, wiGroup’s reach into Africa is poised for explosive growth.
- wiGroup is currently launching with partners through the SADC region.
- Talks with large retail groups in the UK have already begun.
Dealing with competition
wiGroup might be a first mover, but success breeds competition. Ducasse’s strategy to deal with competition is threefold.
Continue to expand wiGroup’s platform as fast as possible.
By definition the strongest competitive advantage a platform can have is reach — Facebook, Google and Apple have all proven this model.
Continue to add valuable products to the platform,always striving to be innovative and leading with creative ideas. Every new product wiGroup bolts onto its platform puts it another step ahead of anyone else wanting to enter the space.
Ensuring excellent service and relationships.
“We strive to be the most reliable partner to our clients, always providing them with excellent service,” says Ducasse. It’s easy to pay lip service to the importance of focusing on the customer, but in wiGroup’s case, there is a strong understanding that through these relationships the company ensures clients trust them, and more importantly, like working with them.
“We believe this is critical to keeping their business and assisting us in gaining further market share through their positive word of mouth.”
“I read a lot of business books and biographies of top entrepreneurs. I’m inspired by the drive for perfection, out-the-box thinking and passion of people like Steve Jobs, the genius of Larry Page and Sergey Brin, and the energy and passion of Richard Branson.
“There are also so many excellent business lessons in top business books. We’ve built the entire company around Jim Collins’ advice in Good to Great on finding the right people and getting them on the bus. One person doesn’t run a business, especially as we grow. A business is only as good as the team you have, so make sure that you’re hiring well — and giving your employees a great environment within which they may excel.”
5 Winning Ways To Strengthen Your Bottom Line This Year
Let’s get down to the nuts and bolts of your profitability.
The beginning of the year is upon us, and the question everyone is asking is, “How are we going to make this year more profitable than 2018?” Break away sessions to strategies are always good, however, the most effective organisations know that the best ideas didn’t come from high-level planning, rather, they come from the field.
1. Your winning market
The saying goes, ‘The riches are in the niches.’ This year, stop spreading your sales focus thinly across several markets. Review your data on the which niche or subgroup of buyers make up your best customers. Then laser focus your best sales efforts and talent on these prospects this year. If you don’t have data on your buyers, then make a commitment to invest in your CRM software this year, so that next year your focus can be accurate.
2. Your winning product or service
Don’t let chance dictate which sale you focus on, rather identify which of your products or services has the highest margins. Your data will tell you which products or services you should focus your sales efforts on this year, and which you should phase out, or simply terminate immediately.
3. Win more customers
You have a big budget for your lead generation, but invest more this year on optimising your lead conversion rate. No matter what industry you are in, or if you convert leads digitally or face to face, your ability to turn leads into sales is a potent leverage point to increase profits. For example, if you increase your conversion from 20% to 25%, that 5% increase in conversion will lead to a 20% or more increase in profitability (assuming your costs stay steady.)
4. Whittle down waste
One immediate way to see your bottom line improve this year is to keep a tight rein on your sales team giving out discounts and freebies, and on your production team’s unregulated wastage. You’ll be surprised when you add it all up how much profit you’ve lost this way. Set boundaries over what is and isn’t okay for your sales team to do during the sales cycle.
Rather create bonuses or value adds that they can add in that have high perceived value but low cost of goods sold. For example, you might offer two free training classes to a new customer when they buy a year’s subscription to your software service.
A training class has a high value, but likely costs very little to add more seats to the room. As far as your production team goes, if you haven’t already, you should invest in business software that tracks productivity in your team, as well as in your machinery and equipment, to improve efficiency and reduce wastage. This alone is worth the investment costs of the software.
5. Say ‘No’ to scope creep
Scope creep is when your customer alters the scope of your product or service after the initial agreement of work has been signed off, but with no alteration to the initial quote. It is excessively common and can be very detrimental to a bottom line in service businesses.
This year, be clear about what is and isn’t on offer in the quote, and if there are any adjustments down the road, inform the client upfront of these additional costs. Wait for approval before starting the work. Be clear about prices for common extras that clients may want and let them know you’d be happy to provide these additional items for them at these pre-agreed prices. This could also be an opportunity for gentle upselling.
With this in mind, may 2019 see your bottom line grow from strength to strength.
Are Your Scalable?
Here’s how you can assess if you’ll make it, or if you need to first make some fundamental adjustments before pursuing your growth goals.
Pete is a classic entrepreneur. He spent 15 years building his manufacturing firm to a R30 million outfit, before his big opportunity came to take on contracts worth R120 million, allowing him to scale to R150 million within five years. This was everything he’d worked towards. This was his retirement plan.
Five years later, instead of running a R150 million business, Pete is burnt out and broke. His company is closed and he’s lost everything. The crisis has even torn his family apart. How did this happen?
A common fate
Unfortunately, it’s a far more common story than most of us would like to admit. 70% of the top 1% of businesses (by growth potential) land up failing to scale. Sometimes, like Pete, they lose everything and close the doors. Other times, they land up bigger, but managing a chaotic hell of their own creation: A daily sprint to survive, a never-ending treadmill of frantic hustling to keep things together, with the horizon never coming closer.
The most common reasons? Either scaling something that fundamentally is not scalable, or scaling poorly; not making the right changes at the right time.
In this article, I’ll be focusing on the first reason: Attempting to scale a business that is fundamentally not scalable — because not every business can be scaled. If your ambitions are focused on high-level growth, step one is to determine if you have the right business model to do so. Because if you don’t, that’s the first change you need to make.
Some companies scale easier than others. And some don’t scale at all. Let me illustrate with two extreme examples:
Very scalable: Dropbox makes an extra $10 for every user they add, while adding $1 of cost, and zero operational capacity. That is very scalable.
Not easily scalable: A start-up ad agency is soon faced with a growth ceiling created by the limits of the founder’s time and energy. This normally occurs somewhere between ten and 20 people. An ad agency is not a scalable business model because growth requires top, senior creative talent. Such individuals are rare, have attractive options, and usually prefer to either work for big multinationals, or run their own businesses. It’s therefore tough for smaller agencies to attract and retain talent without offering large chunks of equity, which can be a zero-sum game. It sometimes even works out net-negative. Unless you find a way of breaking that constraint, this is not a scalable business model.
So, what makes me scalable?
Building a scalable business is a bit like picking a spouse. There are a number of criteria to consider, the absence of any one of which is a deal killer, even if all other criteria are amply present. A suitor may exceed your fantasies in every regard (looks, smarts, fun, caring, etc), but if they are also prone to parallel relationships, that’s enough to pull the plug and look elsewhere.
Just as in relationships, a number of things must come together to make your business scalable. Here are the ten most fundamental drivers of scalability grouped into three core areas: Scalable market, scalable business and scalable team.
- Size (Total Addressable Market, or TAM): The market must be big enough to achieve your ambitions. As a rule of thumb for ambitious entrepreneurs, TAM must be at least 4X your business size goal. If you want to build a R500 million business, you need a R2 billion market.
- Economics: It’s expensive to scale. You need to invest in great management and top talent, plus spend on infrastructure ahead of actually seeing growth. To make that sensible, it must be very profitable serving your market.
- Growth: The market must be growing, and preferably faster than the rate of new competition.
- Number one: Highly scalable businesses almost inevitably are number one, or will become number one in their market or niche. If you can’t lead the market, you must be able to lead a sizable niche.
- X-Factor: Every market has a bleak outlook: More competition, lower prices, lower margins. Unless you have some fundamental reason to continue to lead the market despite competitive intensity, such as proprietary tech. It must be good enough that you can be and stay number one in your market.
- Scalable channels to market: Some customers are just impossible to reach profitably. A scalable business has access to channels to effectively target, market to and sell to customers profitably.
- Scalable operating model: Scalable businesses have unconstrained access to all critical materials and talent, without breaking the economic model.
- Scalable economics: You can calculate the scalability of your economics with a simple formula: [Gross Profit per R10 million new revenue] / [new cost required to manage each R10 million new revenue (managers, systems, facilities, etc)]. Highly scalable businesses have a 2X or higher ratio. 1 to 1,2 is borderline and scaling will be like walking on glass. Most businesses have a ratio <1, which means they will lose money by scaling.
- Scalable founders: Statistically, most founders are not scalable. They lack the experience, skills and personality profile to make the required shifts as the business scales, and to develop the organisation through its various lifecycle stages. Scalable entrepreneurs are able to:
- Build a great culture for >100 people
- Attract and build an A-Team of truly impressive senior leaders, and delegate large parts of the business to them
- Be ‘builders’ and ‘managers’ — that is, graduate from ‘entrepreneur’
- Submit their interests to the best interests of the organisation, even when it’s painful — we see this when founders step down in favour of CEOs with corporate experience
- Lead the transition of the business to a professionally managed company, introducing systems, processes and policies in a way that does not break the company’s culture.
- Leadership team: Particularly in the most painful scale up stage — going from ten to 100 staff — the key driver of scaling well is the quality of the top team. That’s why quality of early hires is a great predictor of scalability. Leaders who can adapt and be effective in a business of ten, then 20, then 50, then 100 staff are truly remarkable, and therefore exceptional. Not many manage this transition. These leaders can be effective in three completely different ‘modes of organisation’: The hustle (at ten people); The build (from ten to 100 people); The operate and grow modes. By implication, they are — or can grow into — executives. They can hustle. But they can also shift from a tactical focus (immediate fires and opportunities, action focus), to a strategic focus (future focus and system focus). They are able to run operations while transcending operations, bridging the long-term strategy, the short-term strategy, operations, culture, team, and finances, and they can do that in a company of ten people, or 100 people. Of course, you can bring in new leaders and you can replace leaders that are not scalable, but this dramatically slows the scale-up journey and can even derail it.
The result of having founders and leaders who are capable of scaling with the organisation will be the automatic development of the other key ingredients for a scalable team: Great talent, a highly engaged team, a great culture, and an effective organisation.
The key to growth
If you’re following the path to scale, or investing in a scale-up, it’s important to be aware of the causality amongst the above ten factors. Typically, the main factor that drives the speed at which a business can scale is how quickly founders can delegate major areas of responsibility, so that the business can continue to make rapid progress at scale.
This in turn is driven by the ‘next level’ (non-founding) leaders, as well as the leadership abilities of the founders. The problem is that early-stage companies struggle to attract top talent, unless they find people who want to be a part of the equity-incentivised leadership team pursuing an exciting opportunity. This type of career opportunity can usually attract top talent, despite the various reasons these individuals gravitate towards well-paid corporate roles and their own ventures.
But that sort of opportunity does not typically happen by accident: It’s the function of the founders getting points 1 to 9 right. In a nutshell, the first thing you need is an amazing team of founders who work smart to nail points 1 to 9, find and pursue an amazing opportunity, and then harness that to attract amazing talent in order to delegate effectively, so that you can scale beyond the limits of the founders’ time and energy.
Leon Meyer GM At Westin Cape Town Shares 4 Experience-Driven Tips On How To Keep Your Team Productive
Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins.
Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins. But what’s the best way to ensure employees remain productive, and happy in their day job?
The answer is simple and highly effective and I choose to sum it up with three short phrases – respect, trust and teamwork.
In partnership with my management team, which consists of about eight staffers across various disciplines, we strive to tick these boxes.
In total we’re ultimately responsible for managing roughly 500 employees.
Five hundred employees across several departments is a mighty job. But with teamwork, good listening skills and the right attitude from the top to filter down, any business can run like a well-oiled machine.
I’d like share with you the essentials for building and maintaining a productive workforce, and these apply to all industries, not just the hospitality sector:
1. What’s your definition of a productive team and how do you achieve that?
We need to keep in mind that productivity is a result, one that CEOs and managing directors strive for with their teams. But what happens beforehand in order to achieve that result determines whether it will be achieved at all, and is equally important. I suggest the following to ensure a productive team:
Define roles and responsibilities: Direction is incredibly important; everyone needs to know exactly where they’re going and how they need to get there, so KPIs are essential.
Often when roles and responsibilities are unclear, things go pear-shaped. I am an advocate for setting clear KPIs, it’s a good way to steer us in the right direction, and in turn helps to grow the business and the individual in his/her role.
Be flexible: Rigid environments are the worst kind, allow your employees some flexibility and the opportunity to be themselves in the workplace. We spend so much of our time at work, we need to be ourselves there.
Celebrate the team: When there are achievements, celebrate them, single out individuals who are excelling and living the company values. This builds morale and is indicative of appreciation, which is fundamental when running and building a business.
2. What has and continues to be your philosophy since managing a large team?
Know your strengths and weaknesses, as well as your team’s and leverage off that. Be prepared to learn from others, no one can operate in isolation, regardless of the level on which you operate. Accept criticism and don’t bulldoze someone’s ideas, that’s how you build trust.
3. What in your view are the top characteristics the team look for in a leader?
- Be consistent – inconsistency screams bad leader
- Provide guidance – this is key, don’t turn a blind eye, give input and council
- Listen – always listen intently
- Be impartial – always be fair
- Give credit – it builds morale and shows you recognise good work
- Be patient – Rome wasn’t built in a day, and remember not everyone thinks the same as you do
4. What’s your view on an open door policy and how does it assist with managing a team and ensuring everyone remains productive?
I believe in an open door policy. It’s essential to build and develop trust. I’m the first to admit that it takes a while to build that trust, but once the team (on all levels in all departments) know your door is always open, and that they can trust you implicitly, half the battle has been won.
I host a GM’s roundtable every two months, just to establish how everyone is feeling and where everyone is at. It gives staff the opportunity to bring their challenges to the table, and I deal with them the best I can.
It’s 100 percent confidential and line managers are not allowed to attend. During this meeting we try reach common ground, and I commit to addressing and ultimately solving the problem(s).
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