In 2001, Jad Pereira founded and headed up a small but phenomenally successful division of Metcash called Unitrade Management Services (UMS). Then in 2004, a few bad decisions made by Metcash management started to cripple the group.
Pereira moved quickly and raised R50 million to buy UMS in 2006. Today, under his leadership, UMS is one of the country’s top trading groups, providing products and services to 150 independent store owners and turning over R12 billion a year.
Unsurprisingly, he says that looking back, there’s nothing he would have done differently, except start sooner. Here’s how he did it.
Describe your career before you started the business
For some 20 years I was employed in the operations division of Shield Buying & Distribution, which was an independent buying group run by three entrepreneurs.
It was during this time that I met a man named Sid Mcglashan who became my mentor. Working with him, I developed an admiration for South African entrepreneurs – men and women who had built substantial businesses from virtually nothing. I had a great desire to become one of them, but I had three young children and at the time would not take the risk.
In 1994 Shield Buying & Distribution was taken over by Massmart, which is Africa’s third largest, high-volume, low-margin, low-cost distributor of consumer goods.
This was a key factor in my decision to make my move and start a competitor. Corporate culture was simply not for me. Added to that, I did not believe that the buyout was in the interests of independent entrepreneurs in the FMCG industry, as the group would be more likely to focus on its many corporate-owned businesses which would undoubtedly take priority over businesses they did not own but certainly benefitted from. In addition, the group’s businesses were competing with its associated independent retailers.
I resigned in 1998 and went to Bible College while serving out my restraint of trade period. I began to plan my vision for a new independent buying group. It was scary as I had given up a top post in a very progressive corporate group and I had nothing concrete ahead of me.
Why did you decide to join Metcash?
To start the business I had in mind, I needed a partner with buying power so that we could provide independent retailers with benefits similar to those that corporate trading groups were offering. Choosing this partner was important as I needed a group that was progressive, had suitable buying power and understood my need to remain autonomous.
After many meetings with numerous groups, Metcash – then under the chairmanship of Carlos dos Santos, an entrepreneur himself – seemed the most suitable. The downside was that I had no ownership, but time was not on my side as independent stores were being snapped up.
The major groups were expanding rapidly into the previously disadvantaged areas. Wholesaler Masscash was buying up the best of independents and opening up stores wherever Metcash was dominant. Market share battles were raging everywhere and business analysts were forecasting doom for the independents.
By 2001, I was the MD of UMS, a wholly owned division of Metcash, and the business soon became known as the miracle baby of the industry. We grew quickly and in three years we went from R150 million turnover per year to R1 billion.
Our success was based on three elements: The model itself, our knowledge of the independents and the team I had built.
In 2004 Metcash management made a significant decision – to buy out the group from its institutional owners. Sadly, this left the group with insufficient working capital and within two years the business was crippled. This had an impact on UMS and we were eventually threatened with a total shut down. It was then that I had to move quickly – after the Metcash board agreed to sell off its non-core assets we began to look for funding.
What was your vision?
To be the leading wholesale and retail group specialising in the lower end of the market. We want to be the group that is trusted by the consumer to have their interests at heart by offering them product at the right price in a safe, comfortable environment.
How did you finance the purchase of UMS?
This was a miracle. I was introduced to two potential investors who worked closely with me and together we approached financial institutions for the R50 million we needed.
Understandably, the banks were cautious. What were they buying? We had an income stream but we didn’t own the stores so there was no real asset to purchase.
I decided to approach our membership base, store owners with whom I had built strong, trusting relationships. Their faith in me was a most humbling experience. Between about 15 members we raised R10 million to put towards the purchase price. Meanwhile, one of the investors had convinced Absa to invest R40 million and in December 2006 we bought the business. Today, those original members own 15% of the group.
Where is the business today?
The number of member stores has grown steadily by about 10% every year. We have a group of 150 stores that have a turnover (sales out) of R12 billion per year.
Our ’sales in‘ number is R3 billion. That has been achieved as the result of a very loyal partnership base, supportive suppliers and a business model that serves the needs of our partners and their customers.
Our member stores are known by the brands Powertrade, Food Town and Best Buy. They are a mix of retail, wholesale and hybrid stores that cater for low income consumers and are entirely community-focused.
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The business model
What is your business model and has it changed over time?
Essentially, our model is like that of a franchisor, but we do not charge our partners any fees. Our core business model has not really changed at all. Our mission remains to be a business dedicated to the task of building better businesses.
Other groups are what the industry terms as ’buying groups‘; they provide buying power for their members and they do that well. We did not want to be just another buying group. We wanted to build a business that provides all the services and products that any ’head office‘ would give to its own stores:
- Skills development and training
- Marketing that is uniquely tailored to their communities
- Administration support and a top buying team negotiating the best deals
- Credit facilities
- Sales and operational support
- Store development
- Private label programmes
- Business development plans
- Customised promotional plans.
We do not take away the entrepreneurial factor from the individual – we simply add to it. Each of our partners is a business owned by the entrepreneur, but with the added benefit of being part of a group without the associated costs.
Because of the market we serve, we have to keep costs as low as possible. The industry norm is to keep as much as possible. Our norm is to give as much as possible without compromising the much-needed range of products and services we provide to independents. Our profits are less than 1% of our turnover where the industry norm is anything from 2,5 to 5%.
What’s the worst knock you’ve taken?
In 2008, Orient Cash ‘n Carry in Kliptown went into liquidation and we lost R60 million. Fortunately, we have great relationships with our bank and our suppliers. It’s not in their interest for a group like ours to go bust, so they helped us to get through this very bad patch.
Give an example of the ongoing value-add you provide for UMS members
One of the most exciting recent developments is the launch of our state-of-the-art classroom-based training facility for the UMS Academy, which is one of the most innovative added value initiatives in the history of UMS. This will help to address the lack of formal, focused skills development initiatives for independent retailers and wholesalers, their management and their staff.
There is a massive need for knowledge transfer and skills development in our market. The UMS Academy will provide training for business growth, and will ultimately facilitate community upliftment through the development of people. This is our way of giving back to the communities we serve.
How has your business strategy evolved?
We have to compete with large corporate buying groups like Shoprite, which has a more than R90 billion turnover. One of the ways we are doing that is by creating the Amalgamated Buying Consortium (ABC) 18 months ago.
It’s a 50/50 joint venture between UMS and buying group IBC. ABC has a combined turnover of R29 billion at store level through more than 220 wholesale and retail members. IBC and UMS have similar business models and are two of the few trading groups (excluding Massmart’s Shield) that offer central accounting to suppliers and guarantee payment on their members’ purchases.
How is it possible to operate like a franchisor without charging fees?
We take our partnerships with our members very seriously. We may not own their stores, but we behave as if we do. These people are men and women who are without doubt amongst the finest entrepreneurs in the country. We don’t just take anyone on as a partner. We take members who are progressive in their thinking, dedicated to their businesses and understand the need to always evolve.
There is a cost to the business, but not to the members. Where other corporately owned buying groups make more profit than we do, we choose to be less profitable and invest more back into the members’ businesses by producing products that enable them to compete far more effectively.
By building a brand that has become well known in their respective communities, having an academy that constantly upgrades their skills, and employing buying and field operational teams, we don’t just survive in the communities, we succeed.
What impact has the economy had on the business, and how have you responded?
There isn’t a business in this country that has not been impacted by the economy. Because we deal only with the lower end of the market, we have probably been impacted more than others. Strikes and the rising costs of electricity and transport have seriously impacted us all.
How do we respond? We work harder and smarter and we keep the independent competitive. If the cake is smaller, we fight for a larger slice for every individual member. Our marketing initiatives at both a group and an individual level remain the most innovative in the industry. We have many examples that have worked well.
Describe your organisational structure.
We are extremely careful about who we employ. Our culture and values are paramount to our success and we seek out people who are passionate. Mediocrity is not tolerated at UMS. Great companies are not built by average people, and good is not good enough in our culture.
The organisational structure is a flat one divided into operations, IT, merchandise, financial, marketing and academy. Each of these is led by people who live the business, three of them are my own sons. No division is more important than another and we all understand how interdependent we have to be to achieve greatness.
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How do you differentiate the group in such a competitive market?
’United Yet Unique‘ is our payoff line. We build our business through building the brand, and we build members’ businesses within the community by helping them to run community-based promotions in conjunction with our suppliers.
We do not have the budget for expensive advertising, so we do lots of in-store promotions. This works well because it results in direct contact with that target market. Instead of competing with corporates that have millions to spend on advertising, we go local.
Over and above this, members also have their own strategies within the local market. Being owner-run, our stores are all quite unique and the members are fiercely competitive. What we add to these independents results in a formidable partnership.
How do you ensure the business generates a profit?
We have a financial team led by a financial director that matches any big corporate organisation. We manage our costs well and we provide sales services to our suppliers and members, always ensuring turnover remains at a maximum level. As a team we ensure that the productivity level from each and every person is at its best.
How has your management style contributed to UMS’s success?
I live the business when it comes to culture, values and discipline, and my team is committed to the same. I continuously seek to improve my own leadership skills. I also have ongoing contact with many of our members and I believe those relationships are the business’s greatest asset.
What advice do you have for other entrepreneurs?
Write the vision down. See the business in your mind’s eye before you start, then remain focused on your goals. Surround yourself with the best.
8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion
It’s taken 12 years, but not only is Priven Reddy a self-made millionaire at the age of 36, he sits at the helm of five companies and 380 employees, and his companies have R4 billion in assets. Here’s how a kid from Chatsworth in Durban stopped blaming his fate on everyone else and took control of his destiny.
- Player: Priven Reddy
- Company: Kagiso Interactive Media
- Launched: 2006
- Start-ups: Krypteum (launched 2017). Krypteum allows traders to buy a cryptocurrency coin and have their investment managed by artificial intelligence and machine learning capabilities.
- Dryvar (launched end-July 2017)
- Shypar (launched January 2018)
- Net worth including crypto assets holdings: Over R4 billion
- Visit: www.kagisointeractive.com
As a kid growing up in the 90s, Priven Reddy had a rough childhood after the passing of his dad. “After my father unexpectedly died, my mom settled down with a man who later became an alcoholic. There were times when we wouldn’t have food to eat,” he candidly recalls. It’s a stark reality, but one that laid the foundations for the man Priven would become, and he doesn’t shy away from unpleasant memories.
Instead, young Priven soon figured out that he needed a paradigm of how he viewed the world or he would be consumed by it. Over the years he has built up a framework of eight codes that he not only lives by, but believes has shaped his success and more importantly, the mindset that has been instrumental in achieving that success. By adopting them he has turned his life around and then used them to rapidly climb the success ladder of the corporate world once his foundations were in place.
Code 1: Find your inner drive and keep feeding it
For Priven, the pivotal moment that forced him to shift his attitude in life is still a fresh memory, despite the intervening years. “I was 20 and waiting tables at a restaurant at the Gateway Theatre of Shopping. One of my customers had finished eating and gestured over his plate containing some left over, half eaten pizza. ‘Here, this is for you,’ he told me with mistaken generosity. ‘Put it in a doggy-bag and take it home.’ His words were like a sucker punch to my dignity. I couldn’t believe it. Was this how our society treated its poor?”
It was the last straw in a series of blows that Priven had endured that day. He’d been rejected by a girl whom he’d asked out, on the basis that she wouldn’t date anyone who didn’t own a car. That morning his family had also once again shared their disapproval over the way he was living his life.
“They called me an embarrassment. It stung — and it stuck in my mind. To top it off, I arrived at work that day and the owner of the restaurant took me aside and told me that I had too much potential to be working as a waiter my whole life. He was thinking of firing me so that I would get out of my comfort zone and do something else.”
After his run-in with the customer later that day, Priven went outside the mall, reflecting on what had happened that day and his life in general. “It was like someone snapped their fingers and woke me from a bad dream. I would never let anyone belittle me or impinge on my dignity again. Then and there I made a decision: I would no longer be the victim of my own fate. I was going to be the master of my own destiny.”
Hungry to prove himself, the promise was more than just words for Priven. He knew that he needed to take matters into his own hands and start making some real changes. “Once I stopped blaming the world for everything that went against me, I started to grow. I began to see challenges as opportunities and I was able to channel that energy into a positive inner drive. I began to understand that things don’t happen to you, they happen for you. That shift changed everything for me.”
Code 2: The biggest opportunities are found where things are the most difficult
“The first principal I learnt is that in adversity lies opportunity. In a business sense this means being able to identify the challenges people have and create a solution that takes away these difficulties.”
It was a lesson Priven was already learning in primary school. The school had a small tuckshop catering for over 1 000 kids. Long, frustrated lines meant many kids ended up missing their entire lunch break waiting to be served. The young entrepreneur immediately spotted a gap. “I borrowed some money and bought bags of chips and chocolates and sweets from a local wholesaler. I started at the back of the queue and sold to the kids one by one all the way down the line. I sold out quickly and made more profit than the tuck shop vendors because I didn’t have any overheads.”
The small business only lasted a few weeks before the school shut it down, but Priven took something away from the experience more valuable than some extra cash in his pocket — he’d found validation that his approach to business worked.
“How do you make things easier for people? Answer that and you’re making money. Difficulties can be found everywhere, regardless of class or creed. It doesn’t matter what the circumstances are. It could be a blue-collar factory worker at the end of the day not being able to go to the supermarket to purchase groceries because they’ll miss their taxi home. Or it could be wealthy early-adopters interested in investing in blockchain technology, but not having the time or know-how to manage their cryptocurrency portfolio effectively.”
Priven doesn’t let insurmountable tasks discourage him. “If it’s difficult, there are fewer competitors who will enter that field. It’s that simple. Most people are daunted by the challenge and find something else to do. However, that’s where the real opportunity lies. I believe the impossible is not unachievable — it’s just a niche market.”
This same philosophy has driven Priven to explore highly technical sectors, including augmented reality (which he began exploring over six years ago), and how to incorporate artificial intelligence into crytocurrencies.
“I love doing difficult things. That’s the space where a lot of money can be made,” he says.
Code 3: There’s no substitute for hard work
According to his close friends and family, Priven’s capacity for burning both ends of the candle is legendary. He’s proud that entrepreneurship runs in his DNA, a trait fostered by his late father, Christie Reddy, from an early age. The founder of a national logistics company, Christie owned a fleet of more than 100 trucks and boasted a client base of multi-national accounts when he was killed in a fatal road accident. A series of hijackings, theft and mismanagement quickly saw the company crashing into bankruptcy. Priven was just 11 years old and his world was ripped apart.
“My dad taught us the value of working hard from a young age,” he says. “My four siblings and I were always competing in entrepreneurial games. He even sub-divided the back garden into five small vegetable plots and gave us each a packet of seeds. The challenge was to see who could grow their own veggies and herbs and then sell them door-to-door. ‘After paying your mum and me for the cost of the seeds and fertilizer, the one who makes the biggest profit is the winner,’ he told us.”
For Priven the challenge wasn’t work though — it was fun. And that sense of fun has always persisted. To this day he says it’s not hard work if you’re having fun.
“I think my dad knew that by giving us these business principals, skills and tools at a young age, he was laying the foundations for our future independence. He knew this was more valuable than any trust fund he could set up.”
Today, all of Priven’s siblings are successful entrepreneurs operating their own businesses in diverse industry sectors, ranging from one of the leading app development companies in Africa and the Middle East to a large independent events management company, to South Africa’s only business consultancy for tech start-ups, to a niche organic farm in the Western Cape.
Code 4: Perseverance always pays off
Priven launched Kagiso Interactive as a web design agency 12 years ago in what he calls ‘the wild west days’ of the IT industry in South Africa. “I had learnt graphic design at my brother-in-law’s design studio and was making a little money doing a few below-the-line advertising projects for clients. I had a chance meeting with a guy in a coffee shop who said ‘You need to meet my brother — he does web design. Maybe you can work together.’
“Web design was still pretty new. We met, and ended up launching a small start-up from his garage, combining my graphic design and business skills with his web-building skills. We began attracting some clients and even employed a few people. But it was tough. The garage flooded every time it rained. We moved into an office block but we weren’t stable yet. After eight months my business partner left, along with most of our employees.”
For Priven, it felt like he was in a downward spiral. He was 24 years old and finally feeling like he was building something worthwhile. At this point, after everything he’d been through, quitting wasn’t an option.
“With only one employee left, I advised him to find a job at a larger company as well. It was a steep learning curve, but I hung in there. I wanted him to find security, but I was determined to make a go of it for myself.”
One of Priven’s customers, the owner of Tudor Hotel in Durban, offered him some space, furniture and equipment so that he could continue working, and told him he could start paying rent once he brought in revenue. It gave Priven the start he needed.
Code 5: Don’t be afraid to leave your comfort zone
With his fledgling business downsized, Priven looked online for new markets. He registered his company’s services on eLance to broaden his market-base and tap into an international client-base.
“I met an IT entrepreneur who was based in India through an online platform. We became friends and spent a lot of time discussing our companies, our clients and troubleshooting any business problems we experienced. He planted the seeds of app development in my head. I remember telling him it was a ridiculous idea, but he wouldn’t let it go.”
It was 2009 and the Indian Government was largely investing in IT and mobile applications, two things that were virtually unheard of in South Africa. The Google Play Store was only launched in 2012. Priven wasn’t sold on the idea, but he eventually allowed himself to be convinced, largely because he just needed to sell it.
“I didn’t need to build up a team because I could outsource any development to India, so the risk was really low,” he says. “We’d basically do a web search and contact any companies we found who made money from their websites and we’d offer them an app. It wasn’t the easiest sell. We were trying to convince people that you could make money from a smartphone — a device that had just been launched in South Africa. We were telling them it was a computer in their pocket, which was true, except there was no iStore, Internet speeds were slow and mobile data was expensive.”
Once he starts something though, Priven sees it through, and so he stuck at it. “I was feeling a bit like a fish out of water, and kept asking myself what I was doing. But the more I did it, the more I learnt, until the idea of app development started to feel familiar.”
Because of that friend’s persistence, Priven ended up on the ground floor of mobile applications development. “By the time other companies recognised the value of apps, we had learnt a lot of lessons and really understood the space. Plus, our clientele was largely international.
Code 6: Believe in your product, always
Kagiso Interactive spent years outsourcing its work to India, which worked well because it allowed Priven to keep his overheads low while he built up the business. “I reached a point where I didn’t want to be a factory though,” he says. “I wanted to offer a lifetime warranty on the applications we built. Most apps only really start to show problems once you’ve scaled your users, and that takes 18 to 24 months, long after most warranties have run out.
“With this in mind, I started building my own team, upskilling and moulding them with a service-first culture. We don’t charge maintenance either. If you’re confident in your product, it shouldn’t need maintenance. We back ourselves.”
By 2014, when the Saudi Royal family contacted Kagiso, the company had built over 1 000 applications and had developed a strong reputation in the market. “Working with the Saudi Royal family has been a game-changer for us — a lot of our clients are based in Dubai — but none of that could happen overnight.
“We got into a space early, focused on becoming the best in our field, built a solid word-of-mouth and referral reputation, and ten years later started reaping the rewards.”
Priven is also fanatical about giving clients what they need, instead of what they ask for. “We’re here to build real solutions and we understand this space. It’s not always the popular move to tell a client that they actually need a different product to the one they’re requesting, but it’s the right move, and it will cement an excellent relationship.
“Over the years I’ve turned work down that wasn’t right for us, or if I knew the company couldn’t afford what they were asking for, or wouldn’t be able to take it to market. We also never tender for business. Our work should be on our merits alone.
“I also oversee everything — nothing is sent out without my final approval. This means I need to always be available, and respond to things quickly. As far as I’m concerned, that’s my job.
“It also fosters a culture of putting the client first. We need to respond to every single client within 15 minutes of receiving a call, email or message through our website. It’s an ethos that has shaped everything we do, and is the reason why it took ten years to build the foundations for a business that has accelerated in growth in the past four years. We live for this.”
Code 7: Mindpower is real
“When you grow up in adversity you have two choices: You can either allow the negativity around you to consume you or you can focus on the positive and see the challenges as opportunities. Wallowing in self-pity will only make you bitter. You end up with a victim mentality — and that cripples you. I don’t like focusing on the negative, so I search for the rainbows in the storm instead.”
In 2010, Priven’s sister gave him The Secret by Rhonda Byrne. “It changed everything for me. I realised the power of thought and what it’s done for my life. Mindpower is real — picture it, really want it, and then focus on how to get it. You can attract people and things to your life. You just need to be able to visualise it and then go out and get it.
“That doesn’t mean it’s easy — you will still bang into walls and face challenges. But when you have a determined mindset, you can push through them to the other side. You can overcome anything. A positive mindset is a powerful weapon that you can use to transform your reality.”
Code 8: Never stop learning
Priven is an avid learner. It’s a secret he believes too few people take advantage of: There’s so much out there, so many free online courses, and so many ways to upskill yourself. So why aren’t you taking advantage of all of those resources?
“I’ve never let the fact that I didn’t get a degree hold me back. We all have the potential to be great — you just need to be willing to put in the work. I taught myself design, then web development, then app development, and then AI and VR and how blockchain and cryptocurrencies work. The information is out there. You will also be amazed at how forthcoming people are and willing to share their knowledge.
“I hire experts, but I need to understand everything that we do within our business, and I need to know enough to see what’s coming and where technology will take us.
“I use the same philosophy when I hire. We do need senior engineers, but I also hire kids straight out of university. I learnt this from Google — you need a degree, but top companies don’t hire based only on that degree. We hire based on potential and attitude. What can you teach someone, and how much are they willing to learn?
“An individual who believes they should be promoted purely on their degrees isn’t the right fit for us. We want people who will seize any opportunity to learn and really better themselves. Those are the people who do well in our organisation.
“We live by what we believe in. The head of our Shypar team used to be our cleaning lady. I saw the potential in her right from the beginning. She was hungry to learn. Even as a cleaner she found time during her lunch breaks to learn on the computers in the office. She was given the opportunity because she never stopped learning.”
Priven’s philosophy is clear: Expose the right people to skills and they will grab that opportunity — and you will have helped them change their lives. “We don’t always get this right. We hire slow and fire fast. But I prefer to give everyone the best opportunity I can and to do that you have to start by taking a chance on them.
“I try to hire people who are better than me. I believe it’s important to surround yourself with people who are progressive and positive. They up your game. Negative people are energy vampires.
“In 2010 I had one employee. By 2014 we employed 188 people, and four years later we have 386 staff members. I’m incredibly proud of the skills we have built over that time.”
Put the right foundations in place
That’s the real secret to growth. In the last three years I’ve really started focusing on other passion projects because Kagiso Interactive has grown to a point where it can bootstrap other start-ups and take some mitigated risks.
We’ve also been learning all this incredible tech that we can now put into action. Focusing on AI in 2012 gave us the know-how and technology we needed to build Krypteum, an AI platform that is going to change the face of AI and what it can do for business. It reads hundreds of thousands of lines of code and information in seconds. Krypteum is also the world’s first AI-powered investment cryptocurrency. If you put the right foundations in place, the sky is the limit.
Collaborate with key stakeholders
When we launched Dryver, a local ride-sharing app, we immediately started engaging with the taxi associations. We want to create a business that supports drivers and small business owners, and is branded and safe for everyone — drivers and customers alike. We knew it would be important to get the taxi associations on board — the right partnerships always enable growth.
Always put your users first
When we built Shyper, our delivery app, we focused on the drivers: What did they need? What helped them to deliver a good service? This was all important, but we ended up with a really complicated app that consumers found too difficult to use. We’ve now made the decision to rebuild the architecture from scratch. We’ve learnt a lot, and we can simplify the platform to make it a lot more user-friendly. Yes, it means losing money short-term, but long-term we will have a much more successful business.
In any sales discussion, make sure you have a solution for your client
Sit back, spot the problem and determine the solution. That way you’re having a discussion that focuses on a solution for a problem that you know needs solving.
Always treat people in the way that you would want to be treated
I’ve been on the other side of this, and it can be emotionally damaging. Be kind with your actions as they will ultimately define you.
Who Is Lyle Malander? – Winner Of The SAICA Top-35-Under-35 CA(SA) Competition
The daring and driven entrepreneur Lyle Malander launched Malander Advisory, a chartered accounting and financial advisory firm, in 2015. He has since also launched Malander Placements, a recruitment firm, and Malander Digital, an IT firm. And they just recently opened a branch in London.
- Lyle Malander
- Age: 30
- Designation: Director
- Company: Malander Advisory, Malander Placements, Malander Digital, Malander UK
- Visit: www.malander.co.za
At just 30 years, Lyle Malander is not merely a trendy businessman but a trailblazer whose ambitions are fuelled by making a difference and creating a legacy. The co-founder and director of the Malander Group of companies’ core focus is providing professional advisory and resource solutions to various large and listed entities. Lyle is proud to say that in 2,5 years the Malander businesses have derived revenue in excess of R40 million. His hard work and arduous hours have turned his dreams into reality.
Through the Malander Advisory business, Lyle oversees the team that provides managed chartered accountant and finance resource solutions to an array of clients in various sectors and industries and has created employment opportunities for over 70 chartered accountants and finance professionals.
Malander Placements is a team of trained professionals that provide recruitment solutions, particularly in the fields of finance, law and IT, to various clients. And pursuant to his keen interest in the technological environment and the ways in which it can enhance business operations, Lyle established Malander Digital, which provides temporary IT resourcing, IT outsourcing, and digital marketing solutions.
‘Lyle’s story of persistence, growth and vision is an inspiration to anyone who is daring enough to start their own business,’ says Dineshrie Pillay, one of the Top 35 judges.
‘I think as entrepreneurs, we are always looking forward and striving to achieve more and as soon as we reach a goal, we change the goal posts to want to achieve more,’ says Lyle Malander. ‘That being said, I wasn’t always fortunate enough to have enjoyed the luxuries life has to offer. I remember the struggles we faced as a family when I was growing up. I think what sets me apart is that I have always seen these struggles and challenges as a learning opportunity which fuels my desire to want to make a difference and create a legacy.’
Lyle humbly attributes the success of his businesses to his strong team with an aligned vision: ‘My co-director and team have all been pivotal to the growth of the business and their motivation and dream is what keeps us going on a daily basis,’ he says.
Lyle admits that growing up, he didn’t always have the most fortunate of circumstances. As a young coloured kid from Cape Town, he was exposed to his fair share of financial and social challenges. But he held on to his dreams to make a difference. Today he says that his perseverance and dedication has been a key factor in overcoming his challenges in life.
‘I remember a time when I was younger and wanted to become a doctor because at the time I considered it to be the only really “prestigious” profession I knew of. Later on, I realised that I couldn’t spend time in hospitals and fainted at the sight of blood. My mom then came across the CA(SA) profession in conversation with a colleague at work and proceeded to tell me about it. I then started doing some research,’ he says.
He liked what he found and avidly began pursuing his studies to be a CA(SA) at the University of Stellenbosch. But at the end of his honours year when he received his end of year results, he learnt to his shock and dismay that he had received the bare minimum mark of 40% required to get access to the final exam. He distinctly remembers his lecturer saying, ‘To those of you who have a 45% year mark, don’t worry, there have been people in the past who have ended up passing the year.’ Being in the unfortunate position of having a year mark lower than that, Lyle immediately had that sinking feeling that he might have to re-do honours.
However, when he chatted with some of the graduate recruiters at Deloitte, they encouraged him that it was still possible to make it through the year. He decided he wouldn’t be giving up as yet!
‘I managed to pass honours that year and since then, I have realised that giving up isn’t the answer. We should always continue to follow our dreams no matter what odds are stacked up against us,’ he says proudly.
Lyle relocated to Johannesburg to complete his articles at Deloitte in 2012. He then went on secondment to Deloitte LLP in Chicago for three months before returning to join an accounting and advisory division at Deloitte South Africa. He worked on various clients including the Aveng Group, where he assisted in raising a R2 billion convertible bond.
‘I believe the training we get as CAs(SA) requires us to get an in-depth understanding of not only the finance environment but the business environment in general. Gaining this understanding of the mechanics of business and the importance of controls within business has equipped me for the entrepreneurial journey in the sense that I have had exposure to various operating environments and have garnered an understanding of what it takes to run any operation,’ he says.
‘I think great entrepreneurs are the ones who not only learn from their failures but also learn from those they are surrounded by,’ says Lyle. ‘As entrepreneurs, it is so easy to get consumed by our own ideas and vision that we forget to listen to the needs of those around us, and more specifically the needs of our clients, teams or employees. Great entrepreneurs not only identify these needs but also develop solutions to address them.’
Lyle has been instrumental in the companies’ recent expansion into the United Kingdom through the opening of a London office. This is pursuant to the companies’ expansion strategy to gain international exposure and the ability to service their clients with both their local and offshore financial advisory and resourcing requirements, as well as provide their finance and recruitment professionals with international exposure.
They have also recently started a programme called ‘Malander for Change’, which is aimed at providing technological resources such as laptops and Internet access as well as development training to institutions and organisations that need it most.
‘Our Malander for Change programme is aimed at providing training and guidance on not only how to find a job but also how to get access to resources to further education and training, as well as foster entrepreneurship, in the hope of contributing to a decline in the high rate of unemployment we face in our country,’ Lyle says.
Although Lyle admits much time is spent planning business, his free hours are spent with his girlfriend, family and friends. And when he has time, he also enjoys a good game of sport.
Lyle says his mom has always been the glue that held the family together and was a significant role model for him. ‘She was always the one that drove me to become somewhat of an academic, and I will always be grateful for that.’
His father, a serial entrepreneur, and his brother, also an entrepreneur, have taught Lyle many valuable lessons and he has drawn a large amount of inspiration from them.
Lyle’s describes his gran, to whom he is very close, as one of his number one supporters. ‘I think for any individual it is always important to have someone who believes in you and in everything you do. My gran has always been that person.’
‘Coming from a background where I was exposed to poverty and growing up in areas of poverty where I witnessed the imbalances in society, I believe that we as professionals have the ability, and potentially even a responsibility, to contribute to social change,’ he says.
‘The single greatest lesson that I have learnt so far is that nothing is impossible!’
What mantra do you live by?
Dream it. Believe it. Achieve it.
Where do you see yourself in five years’ time?
I hope to lead the Malander Group to greater heights and growing it into a reputable brand within the South African and even international business environment.
6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up
Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.
- Player: Appanna Ganapathy
- Company: ART Technologies and ART Call Management
- Launched: 2016
- Visit: art-technologies.co.za; art-callmanagement.co.za
Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”
Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.
“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.
Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.
1. You don’t just need a product – you need clients as well
Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.
“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”
So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.
“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”
2. Price and solution go hand-in-hand
As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.
In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.
“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”
The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”
It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.
“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”
Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.
“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”
It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.
“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”
3. Get as much on-the-ground experience as you can
The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.
“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”
Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”
4. Stay focused
Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.
“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”
“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”
Appanna chose his partners carefully with this goal in mind.
“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.
“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.
“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”
5. Reputation, network and experience count
Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.
Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.
“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”
Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.
His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”
Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”
One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”
“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”
Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.
6. Start smart and start lean
Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.
Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.
First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.
Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.
“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.
“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.
The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”
Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.
“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”
From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”
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