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How Guzzle Tapped into their Consumer Needs and Gobbled their Way to the Top

How start-up’s can successfully tap into consumer.

Nadine Todd

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Vital Stats

  • Players: Ric Meulemans and Oliver Bryant
  • Company: Guzzle
  • Est: 2011
  • Visit: www.guzzle.co.za

Guzzle is the result of two entrepreneurs carefully evaluating the market and asking the questions: How are consumers evolving, and what can we do to tap into this shift in thinking?

It’s an interesting entrepreneurial combination. Ric Meulemans is an ex-commercial pilot who returned to South Africa in 1994. Oliver Bryant was a UCT physics and maths graduate.

Related: 8 Keys to Award-Winning Startup Customer Service

The two have been in partnership since 2006, and friends even longer, and the success of their second start-up, Krugerpark.com, a reseller for the national park, funded the launch of their third venture, Guzzle, and fuelled Meulemans’ entrepreneurial bug.

“It’s a different way of seeing the world. You start evaluating how you do things, and questioning what would make your life easier – and whether it would make other peoples’ lives easier too.”

The big idea

In fact, it was while he was still in varsity that the big idea struck: Why not create a form of ‘Bonnie’s Best Buys’ for the Internet? “Oliver pitched the idea of a tech platform that could aggregate deals and help consumers avoid buyer’s remorse,” says Meulemans.

“The interesting thing was that the information was out there – it was all in the weekly catalogues that the big retail chains print. We just needed to figure out how to make use of that information.”

Step one was research. Meulemans soon found the stats to back up what Bryant, as a young tech savvy student, already inherently knew – people use the Internet for everything.

“It’s call ROPO – research online, purchase offline,” says Meulemans. “Just because ecommerce is still slow – and was very slow in 2011 – doesn’t mean buyers aren’t doing their research online. The sales cycle has changed. Today, before a consumer even walks through your door, they’ve done their research, they’ve compared prices, read reviews – and it’s all happened outside your store.”

However, there was still a gap for Guzzle, because that information wasn’t aggregated in a single site, anywhere. They’d spotted an opportunity,

now they needed to make it work. Which is where their experience in start-ups really kicked in.

The plan

Guzzle

“I would have rushed to market, the retailers and even investors much sooner if Ric had let me,” laughs Bryant.

“Launching was a slow and expensive process, and I didn’t have the patience Ric had. He had to keep reminding me of the plan to keep me on track.”

So what was the plan? Krugerpark.com would fund the start-up, and they wouldn’t approach a single retailer until they had 10 000 daily unique visitors. “We had two challenges,” says Meulemans.

“We had to prove our solution worked, but more importantly, we had to educate the retailers that this was the way to go. Our product promotes complete price transparency.

“A user can sit on their phone, or in a store, and compare the price of a fridge across multiple retailers. Consumers are our users, but the site would be monetised by the retailers – those were our clients, and I didn’t want to go to them until we had a product that worked, whose value we could prove.

“We also wanted to show them that they couldn’t avoid changes in consumer behaviour, and give them added value to get them on board.”

The launch

Though Bryant felt the pressure of market risk a bit more than Meulemans, the partners proceeded to launch and lived the tough reality of start-ups: Launching a product always takes longer than you expect it to, and growth is slower than anticipated, which is why it’s so important to have goals and to stick to them.

“Basically, we collected all the catalogues we could and sent them to India, where a team captured 200 000 products, spliced them, and put them through a number of filters – we needed a user-friendly site, which meant streamlining categories, prices, regional areas and so on. It was extremely intensive, and of course, you had to go through it all again at the end of each week once the special expired,” explains Bryant.

The founders kept the business as lean as possible, but still spent R150 000 a month proving their product worked, and very slowly gathering unique visitors.

“If we hadn’t had a firm plan when we launched, we might have rushed the process. Instead, we stuck to our guns, even when Caxton approached us to buy the business six months in. We only had 5 000 unique visitors, and we knew it wasn’t ready.”

The follow-through

Six months after that, the partners had the unique visitors they wanted and a model that worked. “We had begun the slow process of securing retailers, and there were a number of challenges.

“First, we needed to convince them that they needed to be on our platform, which took a lot of educating. By then though, we’d added functionality that was to their benefit – they could see who had searched what and where, and what consumers were purchasing.

“We’d also added functionality where a customer could purchase off the catalogue, by clicking on the product. Adding this functionality to a catalogue can increase conversion rates by over 30%, as customers no longer need to dig around and search for the product after looking at the promotion.

“Slowly retailers started coming around, but you need to know that the process takes months, and a lot of meetings,” says Meulemans.

Related: Turn Your Company into a Money Machine

Meanwhile, Naspers approached Meulemans and Bryant. This time, the founders were prepared to talk about a joint venture. It wasn’t an equity deal, rather a partnership aimed at disrupting print media and reaching as many unique visitors per month as possible.

“The joint venture means we collectively reach six million unique visitors through MWEB, Pricecheck, News24 and Guzzle, using our platform.”

”It’s meant incredible growth for us,” says Meulemans. And of course, it proves that patience does pay dividends.

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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Launch

The 3 Blueprints For Starting A Business

There are three templates to starting a business. Get this first step right, and success will fall into place.

Douglas Kruger

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“One reason that America continues to do so well as a market,” an economist explained to the audience at a recent conference, “is that they are still leading the charge to do new things. In addition to pioneering new products, they are still pushing the boundaries of frontiers like space-travel and technology. They don’t merely copy the products made in other countries. They make and do entirely new things, and that matters.

“By contrast,” he explained, “many of the older economies, like Europe, are just ‘kicking the can down the road’. They don’t really have a vision for the future. They’re just trying to maintain what is, to survive a little longer.”

Grow or shrink

Companies, countries and entire economies are all broadly following one of these two approaches. One is the bold, growth option, while the other is only about maintaining what already exists. The trouble with maintaining, however, is that, in a dynamic system, you tend to be either growing or shrinking. A dynamic system rarely tolerates anything simply standing still. To stand still is, often, to shrink.

Related: The Hard Truth About Launching A Business

Once in a lifetime chance

Your company, team or organisation’s founding moment is a once-in-a-lifetime opportunity to get this one right. Are you simply going to kick the can down the road? Or do you want to build spaceships? Are you going to be a soulless ‘also played’? Or would you prefer to do something new and meaningful? Mission matters greatly.

In Exponential Organizations: Why New Organizations are Ten Times Better, Faster, and Cheaper than Yours (and what to do about it), Salim Ismail calls it a ‘Massive Transformative Purpose’. The stronger your purpose, the more you attract tribes of people, both as aspiring employees and as a supporting community of customers.

This is not to say that you are obliged to invent something brand new and original. A good deal of research is showing that pioneers in a new industry do not tend to do as well, or last as long, as the ‘settlers’ who come after them. One reason is that the pioneers have to make all the initial mistakes. The settlers get to enjoy greater leverage, by observing what has already worked or failed, then capitalising on that learning.

The idea of founding a company that thrives on meaning has more to do with how meaningful the work is, and how much of a drive to achieve goals is built into your corporation.

Elon Musk’s SpaceX is certainly not the pioneering organisation in space-travel. We have left earth’s atmosphere before, decades ago. In that sense, SpaceX is a settler, and not a pioneer. That said, it is nevertheless a strongly goal-oriented, purpose-driven organisation. You don’t have to invent something entirely new to create a mission-driven company.

The Israeli Defense Forces is highly mission-driven, because it has to be. Pixar is mission driven, because it chooses to be, and because it believes in magic.

Being mission-driven, from the top to the bottom of an organisation, changes the energy. It converts ‘mere work’ into ‘shared purpose’.

Which blueprint?

blueprint

Sociologist James Baron and his group of experts led a study in the mid-90s looking at how people founded their companies, across a wide spectrum of industries, including hardware, software, medical devices, research and manufacturing.

The study asked about their original blueprints. What organisational models did they have in mind when they started?

Baron determined that there were three templates for starting a business. You might start your company based on:

  1. A Professional blueprint, in which you hire people with a preference for specific skills (prior to its fall from grace, Kodak hired people based on specific educational qualifications)
  2. A Star blueprint, in which you hire ‘superstars’ based on future potential, placing a premium on choosing or poaching the brightest hires. You look for raw potential, not current knowledge
  3. A Commitment blueprint, in which you believe that skills are nice, but cultural fit and buy-in to shared values is more important. You build strong bonds to the company. Employees tend to be passionate about the mission.

Baron and his experts tracked the firms through the 1990s and into the next decade. Those that used the Commitment blueprint, which prioritises a shared sense of mission and values, greatly outperformed the others. The failure rate for firms with a Commitment blueprint was zero.

Failure rates were substantial for the Star blueprint, and more than three times worse for the Professional blueprint. It seems these approaches don’t keep people going in the same way that buy-in to a mission does.

Nevertheless, the Professional blueprint, which prioritises the specific skills on people’s CVs, tended to be the most common.

There were two other rare blueprints: Autocracies and bureaucracies, focusing on detailed rules and procedures. These blueprints were the most likely to fail, and autocratic was most likely to fail out of the two. This is an important point: Rules-based organisations and dictatorships, according to this finding, are so likely to fail that investing in them is not worthwhile. But where a culture of people is part of a mission, they are most likely to succeed. Translation: Autocracy rarely ever works, and systems of intense rules and guidelines work slightly less badly.

Rules and dictatorships = likely to fail.

Mission-driven culture = 100% success rate.

Most real-world autocrats would probably agree with this finding, if they heard it. Then they would continue to run their business as autocrats, because, they’d say, “My situation is different, I happen to be right, and people should do what I say.”

When you’re an autocrat, it’s hard to know that you’re an autocrat. When you create your business to follow a mission from the word go, and you allow a degree of genuine democracy in which others can outvote you for the good of the mission, you instil the possibility of overcoming this blind spot, sometimes in spite of yourself.

Related: Bongiwe Mhlongo Knows Launching a Business Means Starting What What You’ve Got Now

But wait

Now, here’s the kicker: The Commitment culture is extremely effective in starting an organisation and ensuring its initial survival. But over time, the same study found, it is not the best performer.

The challenge is that when organisations mature, encouraging layer upon layer of like-minded people tends to discourage innovation and original thinking. Too much shared value = groupthink.

So, what’s our total moral? In a best-case scenario, we need to start with a common mission and committed people, and focus on growing. Once we’ve matured, we need to make a point of bringing in diverse thought, in order to avoid too much homogeneous thinking and yes-mannery.

In Originals: How Non-Conformists Move the World, Adam Grant shows how these findings map perfectly onto the rise and fall of Polaroid. Like-mindedness worked well to get the brand going initially, but then, ultimately, the same like-mindedness prevented them from learning, growing, changing and adapting in a volatile market.

Like the IDF, they had a strong sense of shared purpose. But unlike the IDF, they were incapable of a belief system that said ‘the only tradition is that we have no traditions’. They were not a learning and growing organisation.

The more a company develops a culture, the more it will tend to hire for that culture, and the more resistant its own people will be to new ideas or contrary views.

So what if…?

What if you decided to be an organisation on an important mission, rather than merely a group of people kicking the can down the road?

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The 7 Culture Pillars That Will Skyrocket Your Start-up To Success

Culture can make or break the future growth potential of your start-up. Are you giving it the focus it deserves?

Matt Brown

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Culture eats strategy for breakfast. Every time. This is especially true in the world of start-ups. I liken a start-up to flying a plane, and then attempting to build the engine in mid-air. The engine in this case is the team, and culture powers the plane. Without the right culture ,  start-up founders can quickly see their perceived Concorde unravel and turn into the business equivalent of the Hindenburg disaster.

Culture vs Strategy

The reality today is that a start-up’s strategy is often forced to adapt to shifting market conditions, changing customer needs and to an increasing extent, disruptive competition. But regardless of the strategy, it still requires a team and, ultimately, culture to drive its agenda internally and its execution in the market place.

In my interviews with some of the world’s leading CEOs and entrepreneurs, the influence of culture is often credited with playing a key role in business success. It’s ironic however, that even though a high-performance culture is a critical aspect of succeeding in business, start-up founders commonly overlook and often under-appreciate its role in building and running a successful business.

Related: Alan Knott-Craig Answers Why You Should Focus On One Thing And Have Trust In Your Partners

The Seven Pillars

A business culture can also be described as an expression of the dysfunction of management. The strategic management function is critical in creating and developing a winning culture. Here is my view on how to do just that.

1A Landmark Methodology

The lean start-up methodology by Eric Ries is designed to eliminate the uncertainty in the product development process by validating iterations of product developments with customers. It has become the status-quo in terms of building a new start-up. While it is an excellent methodology in the product development context, the value and impact of culture dwarfs the value that is created by the lean start-up methodology.

Let’s take Steve Jobs for example  —  imagine if he attempted to validate the iPhone using the lean start-up methodology. My guess is that it simply wouldn’t work. What differentiates Apple, is their innovation-led culture, and their unique approach (‘Think Different’) to product innovation and its underlying business model. It’s what fundamentally makes them the company they are today.

I recently interviewed the serial entrepreneur Vinny Lingham and he said: “If Henry Ford asked his customers what they wanted, they probably would have said faster horses!”

When start-ups are establishing a play on the edges of what’s known to be possible, it becomes increasingly harder to validate ideas. This puts a greater emphasis on the engine  —  the culture of the business  —  to redefine what innovation means and the categories within which they operate.

2A Compelling Narrative

The human brain is hardwired for stories. We find messages that are framed as stories more memorable, easy to understand, and convincing. Because of this, a brand’s story is equally important to its customers and to the staff that serve them. Seeing things through the lens of narrative can lend a start-up’s culture meaning and texture, and they can galvanise a team around a single purpose and goal.

To quote Elon Musk: “A company is just a team of people working towards the same goal.” His space exploration company SpaceX has one ridiculously compelling narrative  —  to enable humans to become a multi-planetary species. Besides showing that innovation is truly iterative, their attempts at creating reusable rockets is a classic narrative that they uniquely own and it’s a narrative that speaks volumes to their business culture and ambition. 

3A Forward-Looking Business Model

In today’s digitally enabled economy, if the rate of innovation inside your company is slower than the rate of innovation outside it, then you’re likely to run into trouble. Disruptive competition is on the rise, and legacy traditional business models are paying a heavy price because of it.

The same can be said for start-ups. Even if you have first mover advantage, it’s likely that before long you’ll be joined on the ‘beachhead’ by a competitor who’s learnt from your initial mistakes, and has since come up with a shiny, new and improved product and business model designed with the sole purpose of eating into your existing and hard-won market share.

Future-proofing a business relies heavily on business model innovation i.e. the process of defining new ways to deliver existing products to existing customers using existing technology. A tool I’ve found helpful is the Business Model Canvas  —  it’s an attempt at providing a common framework that all businesses can use to create new or improved business models.

Related: 4-Step Formula To Pursuing Your Dreams

4A Powerful Belief

Steve Jobs

Steve Jobs

One of the more striking commonalities between successful CEOs and entrepreneurs that I’ve interviewed, is their unwavering belief in what they are doing in business. Successful founders and executives use belief to inspire mass corporate action, and to align organisational behaviour towards a common goal.

To quote Steve Jobs: “A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.”

5A Striking Motto

Mottos have been used to express cultural beliefs for centuries. From America’s ‘In God We trust’ to Airbnb’s ‘A World With No Strangers’, Apple’s ‘Think Different’ and Nike’s ‘Just Do it’  —  they are simple but essential forms of communicating cultural beliefs. Mottos (or slogans) impart a key message into the minds of consumers and most importantly, the staff that serve them.

6A Strategic Vocabulary

The enablement of a strategic vocabulary in a business’s culture goes a long way to driving the organisation’s collective understanding of a top-down business strategy. One could even argue that it is a pre-cursor to the strategic alignment of disparate business functions and ultimately the enablement of business performance through collaboration.

Creating and implementing strategies that ultimately create value for customers, stakeholders and shareholders, all need to be aligned with a broader business vision and communicated in a similar fashion and at all customer touch points (both offline 
and online).

It is also vital that executives give their staff the tools and training they need to acquire their own rich strategic vocabulary as it relates to specialised departmental functions and disciplines.

Related: How To Successfully Open An International Office

7An Open Talent Policy

Businesses with the best people win. Period. An open talent policy should creatively address the way start-ups acquire, develop, reward and retain their staff to address ‘the future of work.’  This means that employers and employees must come to terms with a new working environment in which flexibility and adaptability take priority over job security and long-term employment, structured environments, and standardised roles. A fresh approach should be adopted by start-up founders so that their staff can enjoy better work/life balance, autonomy and career control.

Early to bed, early to rise, work like hell and merchandise. But take heed of your culture  —  it’s important to get it right to truly enable disruption and challenge the status quo. Happy flying.

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How The Sanlam Enterprise And Supplier Development Programme Is Helping Start-up Businesses

The balance between funding, business development and mentorship can make or break an enterprise development programme

Francois Adriaan

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Sanlam Enterprise and Supplier Development

165 new employment opportunities, 172 SMEs developed and 1046 jobs sustained. These are some of the numbers recorded by Sanlam as the company prepares to wrap up the fourth year of its Sanlam Enterprise and Supplier Development (ESD) programme.

The flagship incubation scheme has turned around loss-making enterprises, helped some participants get critical accreditation and funding, but most importantly, R12.6 million was spent procuring goods and services from the participating businesses by the end of 2016.

Related: Enterprise Development Programmes For Black Entrepreneurs

Receiving funding isn’t the secret to start-up success

Francois Adriaan, head of Sanlam Foundation says the secret to a successful enterprise development programme is not the amount of funding big corporates can give SMEs: “It’s having the right mix of mentorship; business intervention and procurement spend flowing from your corporate to small businesses.

You have to show the entrepreneur you are mentoring that you trust them enough to do business and walk the journey with them instead of giving them a once-off grant and leaving them to their own devices,” says Adriaan.

Financial support that’s timed to business need

Like in many other ESD programmes, participants in the Sanlam ESD programme also have access to funding. But what sets the programme apart from others, says Adriaan is that the amount of funds disbursed to each participating businesses is directly linked to its need, its commitment and progress record.

“Financial support is timed according to the specific needs of each SME. Those who qualify for funding are then provided with a further seven years of SME growth support through the ASISA Enterprise Development Fund.”

The Sanlam ESD programme

The Sanlam ESD programme was launched in July 2013 in collaboration with the Association for Savings and Investment South Africa (ASISA) to empower SMEs, create jobs and contribute to economic growth in South Africa. An independent evaluation shows that participating enterprises have grown their annual revenue by 19% on average.

D&P Auto participants

One of the programme participants is D&P Auto, a panel beating business based in Retreat. For two decades, the owners of the business (husband and wife) poured their life savings, bank loans and even pension policy pay-outs into the business to keep it afloat because it was not making profit. Three years of focused business incubation and mentoring under the Sanlam ESD programme resolved D&P Auto’s 20-year loss-making battle.

“Our business has grown from a non-profitable business to the extent that we now have to pay provisional taxes to SARS for the first time in 24 years,” said Pam Douglas on their business maiden profit.

Successes of the incubation programme

The incubation from the programme has helped other participants brush up their bookkeeping skills, file successfully for tenders and get accreditation that took their businesses to the next level.

G&T Auto, the only fully accredited Major Structural Repairer in the programme, bagged Mazda accreditation last year, a rare accolade that will see the enterprise repair Mazdas that are still under warranty. The owner, Thembi Sithole says the programme has given her confidence to approach bigger clients as she now understands the requirements to get big contracts. She has also become more knowledgeable about financial statements and their impact on obtaining funding.

Related: Why Employee Engagement Programmes Backfire And What You Can Do About It

Adriaan says enterprise development initiatives of this nature give big corporates an opportunity not only achieve their business objectives, but also impact broader South African society.

“This commitment is around impacting issues of inter-generational poverty, unemployment and inequality. It is also about aligning around public-private-civil society partnerships in sustainable ways,” concludes Adriaans.

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