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Adrian Gore – The Disrupter

When Gore launched Discovery, it was because he wanted to fix an industry that he believed was profoundly broken.

Juliet Pitman

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This is no fly-by-the-seat-of-your-pants, winners-know-how-to-wing-it, make-it-up-as-you-go-along rebel dissenter.

Rather, Adrian Gore is an actuary who built a business empire based on sound economic principles and a clear vision of finding a sustainable solution to a market-wide challenge. The disruption is what happened along the way.

“I’m not even sure I really think of myself as an entrepreneur,” he says — a startling statement from a man who’s held up as one of South Africa’s proudest examples of entrepreneurial success, and who speaks widely on the topic of entrepreneurship (Gore is chairman of the South African chapter of the global entrepreneurship organisation, Endeavor).

What he means, however, is that he’s not a serial start-up entrepreneur.

“What I really like is the institutional scale of large organisations and what they can do for society. Those are the two things that got me going when we started Discovery. I saw a clear challenge in society that needed addressing and I wanted to start a large organisation that could do it,” he says.

The need was to bring about a fundamental change in the medical schemes industry, which Gore, as a young actuary working at Liberty, could see was unsustainable.

“Medical schemes were running into real trouble, and as we tried to figure out how to change things to make them sustainable we hit on the profound underlying reason that things weren’t working,” he explains, before launching into an analogy that is at once so simple and so brilliant it leaves you wondering why no one thought of it before.

“Imagine you bought groceries in the same way that you consumed medical services under the traditional medical scheme model. You’d pay a monthly premium and then walk into a supermarket whenever you felt like it, take whatever you wanted off the shelf and go home. Food inflation would be stratospheric. That’s exactly what was happening in healthcare. People were paying a monthly premium, and then consuming every benefit available to them because it was in their interest to do so. If they didn’t use it, they’d lose it.”

This paved the way for the establishment of the medical savings product for day-to-day healthcare. It incentivised people to be more prudent with their benefits so they could retain what was their money, and in so doing revoluntionised the entire medical insurance industry.

It was the start of great things, but selling an entirely new concept to the market is hard work, as Gore discovered.

“I learnt that the ability to excite people about your product is critical. And I don’t mean in a counterfeit, marketing-hype kind of way. I mean in a real, academic way,” he says.

Gore was able to demonstrate the brilliance and elegance of the medical savings product concept in such a way that clients could make a clear link between what the product offered and how it could solve a problem they were experiencing.

“We were selling health economics, there was real academic rigour behind it. So we could explain to the CFO of a company why his medical scheme was experiencing health inflation and what our remedy was. When the penny dropped for people, they wondered how the old system could ever have worked — which of course it hadn’t been doing for a long time,” he says.

The pioneering nature of the medical savings account cannot be over-emphasised, but its true genius lay in its approach to incentivising behaviour, something that lies at the core of Discovery’s approach to solving problems even now. It underpins the slew of groundbreaking incentive-based innovations that were to come, including Vitality and the recently-launched Discovery Insure, with its Vitalitydrive offering. Not everyone was a fan, though.

Read Next: Meet the Dealmaker

 Vital Facts

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“We were slated by competitors when we launched Vitality rewards. They said we were wasting healthcare rands on gym memberships and flights and that this money should be channelled to healthcare,” Gore explains.

It was not the last time Discovery’s detractors would be proved wrong. It was precisely the introduction of the Health & Racquet Club (now Virgin Active) membership incentive that truly launched Vitality into the stratosphere.

And since then, the power of incentivising healthy behaviour has become globally recognised. In a world where, as Gore explains, 50% of morbidity can be attributed to four lifestyle diseases that originate from three poor lifestyle choices (smoking, unhealthy eating and poor physical activity), healthcare has become intensely focused on how to get people to make healthier lifestyle choices.

“And if anything, this kind of incentivisation works even better with driving behaviour than it does with health,” says Gore, citing the success of the Discovery Insure insurance product which incentivises and rewards customers for good driving habits.

Gore’s vision is to scale the Vitality model and insurance model across the world, but while the company already has a foothold in China, the UK, the US and Singapore, he’s quick to point out that it’s in its infancy on the global stage.

Whenever the issue of Discovery’s offshore ventures arises, so too does the question of its initial ‘failure’ in launching Discovery in the States. A venture undertaken just after the company had gone public, Gore is adamant that the concept was well-received but that the size of the big-hitters and the discounts they could command meant Discovery was out-priced.

“We found we were paying 20% more per hospital event than the big guys were paying and we couldn’t compete,” he says. The company took a decision to call it a day and pulled out.

On the topic of failure, Gore has some interesting views. “I don’t buy into the idea that you need to fail first in order to be successful. I think the less you fail the better. But if you do fail, which sometimes happens, I think you should be able to start over again without a stigma. Failure is not desirable but it should be acceptable,” he says.

Americans seem to have got this right, he believes, but South Africa still punishes those who try and fail. Which leads us back to the topic of entrepreneurship, about which Gore has two deep-seated beliefs:

  1. Entrepreneurship is the only solution to the country’s unemployment problem; and
  2. Mentorship is the most powerful force for good among entrepreneurs.

On the second point he speaks from direct experience. Ex-RMB Laurie Dippenaar was chairman of Discovery for 15 years, after having originally agreed to invest R10 million in 27-year-old Gore’s idea for the company.

“When you start a business there are things that not only have you never experienced but you’ve never even considered. Many entrepreneurs think they don’t need a Board — that it’s a waste of time — but having a bunch of smart, experienced people giving you input is a gift from heaven. If I had not had a Laurie Dippenaar when I started, Discovery would be a very different company today,” he says.

He still draws on the collective input of a strong team. Discovery’s Exco meets on average for seven hours a week every Monday.

“We go through everything. Sometimes it’s a bun fight. We don’t stick to the agenda. Some things we’ll spend three hours on, other things we won’t get to. There’s rigorous debate and arguments, but it means that every week 20 really smart people are all thinking and providing input. No one is making buy/sell decisions. Everything is debated until consensus is reached,” he explains.

Reaching consensus is the path Gore prefers, which is surprising when one considers how he describes himself:“I’m actually an impatient and frustrated person. I’ve got a thin skin. I don’t take criticism well. Because of that, I don’t like to command because I don’t like the push-back that I get. So I far prefer consensus.”

One of the marks of a good leader, he believes, is the ability to instil hope, inspiration and a sense of possibility among people — and to do so authentically.

“Some of the most amazing people I work with give me a sense that ‘it is possible.’ In my best times I hope I do that but in my worst times I know I don’t. I slip into ‘Command and Control’ mode and I’m hard. But I always walk away from those sessions knowing they weren’t optimal,” he says.

But, he adds, leadership skills can be learnt. “No one leadership style is necessarily right, and it’s important to be authentic to who you are. But I do think you can identify your weaknesses and work on them. I’ve learnt how to motivate people when they are at each other’s throats by continually deferring to the common purpose at hand,” he explains.

Where he leads the company to next is clear. “We’re trying to build the best insurance organisation globally. Not the biggest, but the best. And I believe we can do it. It’s about changing financial services based on the idea of helping people to make the right choices — whether that’s to do with health, saving or driving,” he outlines.

But while he’ll accept that Discovery has come a long way, he adds, “We’re still a speck globally. There is a great deal still to build.”

This is perhaps why he finds it difficult to answer questions about what he’s most proud of when looking back on what’s been achieved: “I suppose I don’t really feel I’m in the position of having finished the race where one looks back and takes stock of it all. I’m only halfway through the marathon.”

Read Next: Zero start-up capital, Zero debt, R600 million order book

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Entrepreneur Profiles

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.

Nadine Todd

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Vital Stats

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

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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.”


Into Africa

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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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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