- Player: George Mienie
- Company: AutoTrader
- Est: 1992; Local ownership from 2013
- Turnover: R185 million digital revenue from AutoTrader.co.za
- Visit: AutoTrader.co.za
- Twitter: @GeorgeMienie
- Facebook: Facebook.com/georgemienie.co.za
- Blog: www.georgemienie.co.za
It was 2007. The recession had not yet hit and markets were booming. AutoTrader magazine sold 108 thousand copies each month, and it had so many pages that the company’s printers needed to import special equipment to bind it. Even then, the magazine was capped at approximately 1 000 pages.
Business couldn’t have been better. And yet CEO George Mienie and his management team decided to completely pivot from a print publication to a digital and tech business — against the advice of highly paid consultants.
It was a huge risk, but George knew it would be even riskier to rest on their laurels and do nothing. Truly innovative and disruptive businesses know that to survive and thrive, business models need to be continuously adapted to current and potential future market conditions. More than that, they need to lead the innovation curve.
History is littered with companies, large and small that ignored this pivotal rule. AutoTrader South Africa wasn’t going to be one of them.
The road to Stasis
AutoTrader had been operational in South Africa since 1992, and George had joined the business in 2004. The UK holding company was completing its own transition into a digital business, but AutoTrader South Africa was still a print business. In fact, 2005 to 2008 was its boom period in print.
No one foresaw the recession, or the exponential change from print to digital. And yet, George and his team were looking to the future.
“We knew that at some point the market would shift, we just didn’t know when or how fast. We consulted our parent company at the time, who were invaluable in helping us with insights and resources from their more developed market.
But the UK wasn’t the same and we knew the South African market would be different, and it was. We decided to contract a consulting firm to give us their insights into our market and where we should be focusing in the future,” says George.
“They told us that print wasn’t dead, and that South Africa wasn’t ready for the Internet yet. Their advice was not to focus on a digital platform, but to grow AutoFreeway.
AutoTrader was a premium print product, with a cover price for consumers, and AutoFreeway was a free magazine distributed to consumers through retailers. The advice we received was that consumers wanted a free print model.”
It was expensive advice that George and his team luckily ignored. Why? Because even though South Africa wasn’t quite ready for the Internet in 2007, there would come a time when it would be, and AutoTrader could either have a market solution that was an industry leader, or be one more business behind the innovation curve and entering permanent stasis.
Changing the entire trajectory of a business and migrating its revenue model from one extremely successful product to an unknown entity is risky. But with high risks come high rewards, and for George and his team, doing nothing was by far the greater risk.
Today, AutoTrader.co.za’s online consumer base is exponentially greater than the size of its print readership at its height. The risk paid off. The business’s print revenue for the car marketplace has successfully transitioned to digital, and the company is now poised for growth in the digital market of buying and selling cars.
But even though George and his team knew the pivot was crucial, they couldn’t envision the scope that digital offered.
“We couldn’t conceive of being 20 times bigger in magazine sales because we were already so big. We needed a different model to achieve it. But even as we recognised the need to shift, we couldn’t imagine the scope.”
And that’s the secret to being ahead of the innovation curve — understanding the need for change, critically analysing a market and implementing the right changes — without fully envisioning what the future market will look like.
Get it right, though, and you become the market leader; determining the shape of your industry and adjusting consumer and customer perceptions of what’s possible.
“There’s a cliché that change is like boiling a frog. The water warms up so slowly you don’t notice it’s happening until it’s too late,” says George. “The only way to avoid sure market death is to get out of the pot, without jumping into the fire. That’s what we did.
It wasn’t easy, but today we’re an agile, disruptive tech business. We could have been an irrelevant print company that once used to be a household name. We got off the road that led to stasis, and got onto the road less travelled.” Here’s how they did it.
The art of the pivot
To pivot the business, two key areas had to be addressed. First, the team needed to determine how a digital business could potentially eradicate the limitations of print. Second, they needed to understand the customer and their needs, which would inform what AutoTrader’s new products should deliver.
“Print businesses offer limited strategic opportunity,” explains George. “A magazine is a one-dimensional brand. You can change its size, the paper stock, and the way it’s bound. You can determine where to sell it, and how much to charge to purchase it or advertise in it. But that’s it. There’s very little data you can extract from it.
“There are two ways of expanding with print: You can increase your readership in your existing geography, and you can expand your geographic footprint, which was what the UK business originally did when it began entering international markets.
“Our own magazine expansion had been capped at 1 000 pages and just over a hundred thousand copies sold each month. We were a successful print business, but there was no room for real, scalable growth.”
AutoTrader’s pivot was driven by dual motivations. George and his team recognised that the market would be shifting, but he also knew that in its current format the business model did not support scalable growth. The second challenge was that any change to a business model must take its customers into account.
This means not only asking them what they want, but focusing on what they need. As in many cases, customers don’t know what they want until you give it to them. In the case of AutoTrader, the company has two distinct customer segments: Consumers (readers), and customers (car-sellers).
“Early on we defined ourselves as a two-sided marketplace; without our readers (now Internet users), we have nothing. Even though they don’t spend a cent with us, we have nothing to sell without them, and so we took most of our early lead from them. What did they need, and how could we ensure they found it?
As South Africa shifted onto the Internet, we knew it would be simpler for consumers to find information online. We had to have a product ready for them.”
But what were car sellers looking for? “There’s only one thing that’s important to the car seller, and that’s selling cars. Whether this is achieved through magazine advertising or online listings is largely irrelevant to them. Once we had an online product that delivered value to car sellers, we could transition our customers onto the online platform.”
From theory to practice
Step one was being able to track how buyers engaged with sellers in the printed product, and this was a challenge for AutoTrader. The print publication had for more than a decade targeted serious buyers — consumers who had already moved down the sales funnel, and were ready to make a purchasing decision.
“The magazine had a cover price, and we believed that this ensured it was purchased by serious buyers. Magazine sales are easy to track, and based on how many magazine’s were sold each month and advert positioning within the magazine and paper stock, sellers were charged different prices.”
But what’s the online equivalent of this model? There isn’t one. The metric is users, and comparing users to magazine readership is largely irrelevant.
A website can attract consumers anywhere in the car buying funnel: Browsers, people at the very beginning of the car buying process who are unqualified leads and in some respects still in the ‘tyre kicking’ stage, through to serious buyers doing final comparisons and actively looking for a vehicle.
The problem was that there was no way of determining which users were serious buyers. “This had always been our selling point — we connected sellers with serious buyers. The digital platform was different, and it presented a challenge for us,” explains George.
The answer took a large upfront (and ongoing) investment to build a value proposition that sellers would buy. “This was a long-term growth strategy, so we believed the investment was worth it. We saw it as a calculated risk. Yes, there were costs involved, but without them we couldn’t develop a successful digital product, which would be the new foundation of the business.
“We designed a call tracking system that we gave to all our car sellers for free, with one telephone number and a line that we paid for. That number was printed on their magazine adverts, so we could track which in-bound telephone calls were a direct result of an AutoTrader magazine advert.”
While this sounds reasonably simple, AutoTrader is one of the few companies world-wide that has successfully transitioned all of its clients onto a call tracking system. “This is now a way of doing business with us and in the market,” says George.
“Car dealers love this call tracking system. Besides tracking calls from the buyer to the seller, the system includes a number of other benefits that add enormous value to dealers. And it’s all for free.”
This solution cost AutoTrader millions every year, but it was an essential cost for the successful transition to a digital business. “Even today it holds enormous empirical value for the dealerships,” he adds.
“In those early days, 90% of consumers called dealerships if they were interested in a vehicle. Today the ratios between calls, emails and dealership visits have shifted in favour of dealership visits without calling or emailing, but it served its purpose.
Online and print ads ran different telephone numbers at times, and we were thereby able to track print versus digital telephone calls. By 2013 twice as many people as those buying the magazine were online, but the telephone calls between the two platforms were equal. Without this ratio, the transition between print and digital would have been damaged. We needed equitable measurements that made sense.”
The solution also served a dual role. As users grew on the digital platform, this ratio informed the business’s pricing model. This was the team’s introduction to clever leveraging of data.
Innovation and product development
The secret behind AutoTrader’s success is that it didn’t just place its magazine online. Specific products were developed for sellers (or customers) at different price points with different value propositions.
But that doesn’t happen overnight. George and his team needed a product that customers could use, and a plan to start migrating revenues from print to digital.
Bundling print and digital products would ultimately be the key to pivoting the business model.
This was achieved in two ways. First, all magazine advertisers were listed on the AutoTrader website for a minimal monthly subscription from 2007 to 2008, while the team developed its first iteration of online packages. Then, all advertising was converted to print and digital packages.
“We called this our multi-media product bundle. A print advertiser could choose print or a favourably priced multimedia option to encourage our advertisers to have an online presence.
“We maintained our print revenues while the transition was taking place and only unbundled the offerings in 2013 once the digital platform had reached a point where it could sustain the business.”
Second, to ensure that online advertisers on different packages received value, data was continuously collected and monitored and online packages adjusted to deliver the best results for buyers and sellers. It was a process, but the team accounted for it. “We couldn’t transition our buyers or sellers overnight.
The online product offering needed to be tweaked continually. Doing this while we still had strong print revenue allowed us to build a robust digital offering with revenues that increased at the same rate that print revenues decreased. We were able to transition to a digital and tech business where revenue was now coming from the Internet, which is a massive achievement.”
Key to this was understanding what a digital product should look like. “We did a lot of ongoing research to fill data gaps. This started with our core — you need to understand and define who you are. For us, this was a two-sided marketplace for buying and selling cars. Everything else was secondary.
“We were clear about the magazine’s consumers and where they were in their buying journey. We needed to understand online consumers, the best way to reach them and move them through the car buying journey.
For example, display advertising creates brand awareness and influences browsers at the top-of-the-funnel and this becomes important as a consumer becomes a more serious buyer. What have they been exposed to up until that point? What has influenced them.
“Over time, we have created our online offering to buyers (consumers) to tap into the different stages of the car buying journey. On the seller side, we created products to enable them to take advantage of the consumer offering by buying higher-end packages.
The higher the package bought, the more attention they get from the consumers, the more chance they have to influence the consumer to choose them, which means more value, exposure and consumer touch-points sellers receive on the site — leading to better conversions if the seller uses the online levers/influencers in the right ways.
While there’s a definite science to it, car sellers still have to influence car buyers to choose them no matter what package they’re on. This leaves a large part of the online selling up to the dealers in the way the vehicle is presented online, it’s pricing, descriptions, photographs and stocking the right cars for the dealers geographic and target markets.
Related: The 50 Richest People In The World
We constantly research how the packages are performing in aggregate, which means we can present listings and reviews to buyers in the best possible way, and we see better performance for dealers in our higher-end packages.”
The value of trust
An integral part of this journey has been creating trust between AutoTrader and its consumers.
“We’ve now become content creators as well — this was never our space before. The sellers understand that they have such incredible access to serious buyers because of us, and that’s because we offer a trusted motoring marketplace to the consumer.
Our users know that they’ve seen everything when they come to us — they don’t have to go anywhere else to do additional online research. The only way to achieve this is through honest reviews (that are also humorous and entertaining).
“Our job — and success — lies in our ability to create online offerings that grab consumer attention first. This is the crux of how we’ve managed to transition our revenue — we’ve given the consumer market something it wants, and our upper-end dealers are willing to pay premium prices for the additional value we have to offer.
“It’s taken a lot of planning, ideating and changing. As a team, we meet weekly, monthly, quarterly to avoid developing silos within the business. If the marketing director doesn’t know what the product director is doing, that’s a problem for me. We work best together — it’s the only way to create products that offer the highest value to everyone involved.
“For two weeks each year we get together, analyse all the data we’ve seen and argue about what to do next, what mistakes we have made and what to change — what is the data telling us about the online consumer and dealer offerings and the challenges that they face?
The online offerings and changes are less drastic today than they were; we’re more established now, but you should never rest on your laurels. Always be tweaking, iterating and asking if you’re still relevant to the market.
“We define ourselves as an organisation that brings buyers and sellers together. How we do this will continue to change over time. Recognising this important fact keeps us relevant. For instance, Facebook is a potential future competitor — and we’re planning ahead.”
“Successful disruption doesn’t lie in recognising you need to be disruptive, or even coming up with bold, innovative ideas — it’s all about execution,” insists George.
“I get bored in a room full of ‘ideas people.’ The world is full of great ideas and idea people. But successful execution is extremely rare — and it accounts for nine tenths of success. You can’t stay ahead of the curve without being an innovative organisation, and that all comes down to how well you execute your ideas.
“It’s an ongoing process. The moment you stand still, you become a template for others to follow. We are copied all the time, we change something and competitors follow suit. You grow, plateau, decline — that’s the innovation ‘S’ curve that business courses love to discuss.
But innovators understand that when one ‘S’ is declining, another is conjoined and on the upward swing. The trick is to recognise when you’re going to plateau so that you’re already planning for your next business model shift.
There’s a lull between the two. I call it the valley of tears. It’s painful. It requires serious change, and if you stay there your business is in trouble — but it also gives you the gift of time to re-engineer the business.”
Delivery is everything
Because execution is so important, the processes and team supporting innovation, and particularly business model adjustments, are crucial.
“Balanced scorecards play a big role for us,” says George. “When we began this process, top management had a vision that needed to be executed by the whole team.
“The balanced scorecard was our link, our sounding board for execution. It takes a lot of work. You have to break up what you want to do into little parts to ensure people and activities are all working together. It’s particularly challenging breaking old, established silos apart, but we managed to do it.”
Innovation is not a once-off activity. It’s a process that needs to become entrenched in the organisation. Integral to this is the constant re-evaluation of what the business has that adds value to its customers.
“The business needs to view change as a constant, not just as a concept, but something deeply entrenched in our people’s DNA,” explains George.
Prepare for future market conditions
It’s taken AutoTrader ten years to complete the transition from a print company to a disruptive tech and digital business. If the team hadn’t been prepared to disrupt itself then, it would be struggling with a radically new market, instead of being the company shaping what that new market looks like.
Understand the need you’re solving
AutoTrader’s product isn’t print or digital — it’s connecting buyers with sellers in such a way that leads are converted. It took thought and focus to develop and tweak digital products that deliver what the magazine had previously achieved. This allowed the correct pricing models to be developed as well.
Understand what you have — and how it can increase your offerings
Moving onto a digital platform has opened up a wealth of data for AutoTrader, from where vehicles are more popular, to price points that are below or over market expectations. This has allowed the business to continuously improve its offering to customers, as well as launch additional products of high value to the market.
The Nuts and bolts of innovation
The internal culture of AutoTrader has played a vital role in the company’s transition from a print classifieds company to an innovative tech business.
This has been possible due to a few key adjustments:
1. Balanced Scorecards
Clear outputs allow teams to progress without being micro-managed. Implementing a balanced scorecard system takes time, and managing it takes effort, but the results outweigh the costs in time and effort.
Organisations that follow a balanced scorecard system first develop overall objectives for the business. Departmental scorecards are then developed that link directly to what each department needs to achieve to deliver those objectives.
This is then broken down into what each team member needs to achieve. AutoTrader took two years to implement the system, but the benefits have been felt across the organisation.
The system gives employees accountability for their own time and workloads, which enables them to handle personal responsibilities during work hours and vice versa.
“Giving people personal and professional freedom encourages loyalty. Our employees and managers go to their sons’ rugby games for example, but voluntarily work nights and weekends to ensure projects are completed on time and to our standards. Acknowledging personal lives makes people more willing to give their all professionally.”
2. Open plan environments
The whole organisation is open plan. Different departments are encouraged to work and socialise together, ensuring no silos are created, and information and advice is shared freely. George and his PA sit at desks side-by-side in a communal area.
3. Tech innovation is embraced
Other than HR and finance, AutoTrader is a paperless office, embracing technology as a tech innovator should. Desks don’t even have drawers as each person is allocated a locker to store personal items. The company lives and breathes tech, ensuring tech solutions are at the forefront of everything it does.
4. Culture is more than just words
AutoTrader has five key pillars outlining the business’s ethos and culture.
Each employee has to be able to demonstrate how those pillars impact and inform their work — with specific examples — in each of their balanced scorecard reviews.
This keeps the cultural framework of the business a living, breathing thing, and managers quickly pick up if there’s discord between employees and the culture.
7 Foundational Values Of Brand Cartel And How They Grew an Iconic Business From The Ground Up
Marco Ferreira, Renate Albrecht and Dillon Warren built Brand Cartel, a through-the-line agency, that delivers exactly what they wanted — and has grown exponentially as a result.
- Players: Marco Ferreira, Renate Albrecht and Dillon Warren
- Company: Brand Cartel
- Launched: 2013
- Visit: brandcartel.co.za
“We’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do.”
When Dillon Warren, Renate Albrecht and Marco Ferreira launched Brand Cartel in 2013 they were in their early 20s with zero agency experience between them. The idea had started when Marco recognised that social media was taking off, but no agencies were playing in that space yet. It was a clear opportunity.
Printing flyers that said ‘Your social media is so last season’, Marco and Renate went from store to store in Sandton City, pitching their services. When Dillon joined them a few months later because they needed someone to handle the company’s finances, they had two laptops between them, R6 000, which Dillon had earned from a Ricoffy advert, and sheer will and tenacity.
“We shared a house to save on rent and split everything three ways,” says Renate. “At one point we hadn’t eaten in two days. My mom lent me R500 so I could buy Futurelife and a bag of apples for the three of us.”
The trio hired their first employee soon after launching Brand Cartel, and after prioritising salaries and bills, there wasn’t much leftover. “Dillon actually paid us R67 each one month,” laughs Marco. “That’s what was left — although I still can’t believe he actually sent it to us.” It was at this point that the young business owners realised they needed credit cards if they were going to make it through their start-up phase — not an easy feat when your bank balance is under R100.
“Looking back, those days really taught us the value of money,” says Dillon
“We spent a lot of time with very little, and we’re still careful with money today.” Through it all though, the partners kept their focus on building their business. “It almost didn’t work for a long time. We were young and naïve, but in a way, that was our strength. We didn’t have any responsibilities, and we’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do. All of our business has been referral business. It takes time, but we focused on being the best we could be and giving everything we had to our clients. Our differentiator was that we really cared, and were willing to offer any solutions as long as they aligned with our values.”
This is how Brand Cartel has grown from a social media agency into PR and Media Buying, SEO and PPC Strategy, Digital and Print Design, Web Development, Campaign Strategy and now an Influencer division. “It’s an incredibly competitive space with low barriers to entry, which meant it was easy to launch, but tougher to build a client base,” says Renate. “I’d sometimes cry in my car between sales pitches, and then walk in smiling. We had no idea if we’d make it.”
The perseverance has paid off though. Strong foundations have laid the groundwork for exponential growth over the past year, with turnover growing almost ten-fold in 2017 thanks to relationship-building, strong referrals and fostering an internal culture and set of values that has driven the business to new heights as a team.
Like many start-ups, Renate, Dillon and Marco have made their fair share of hiring mistakes, but as the business grew and matured, the young entrepreneurs began to realise that the success of their business lay in the quality of their team and the values they stood for.
This meant two things: Those values needed to be formalised so that they could permeate everything Brand Cartel does, and they needed a team that lived, breathed and believed in them.
“We’ve had some nasty experiences,” admits Dillon. “You should always hire slowly and fire fast, and for five years we did the opposite. We’ve hired incredible people, but we’ve also ended up with individuals who didn’t align with our values at all, and that can destroy your culture.
Dillon, Marco and Renate realised they needed to put their values on paper. “We did an exercise and actually plotted people based on a score grading them against our values, so we knew where our issues were. We knew what we wanted to stand for, and who was aligned with those values. We were right; within a few weeks resignations came in and we mutually parted ways.”
The team that stayed was different. They embraced Brand Cartel’s values, and more importantly, it gave the partners a hiring blueprint going forward.
“Values are intangibles that you somehow need to make real, so it’s important to think about the language you use, and how they can be used in a real-world work context,” says Marco.
The team has done this in a number of ways. First, they chose ‘value phrases’ that can be used in conversation, for example, ‘check it, don’t wreck it’, and ‘are you wagging your tail?’ Team members can gently remind each other of the value system and focus everyone on a task at hand simply by referring to the company’s values. “In addition, when someone is not behaving according to those values, you can call them out on the value, which is an external thing, rather than calling them out personally,” explains Dillon.
Second, all performance reviews are based on the values first. This means everyone in the organisation begins any interaction from a place of trust, knowing they are operating according to the same value system.
“When you’re in a production environment with jobs moving through a pipeline, there can be problems and delays,” explains Marco. “Instead of pointing fingers when something is over deadline or a mistake is made, our team can give each other the benefit of the doubt and work together. They trust each other, which creates cohesion. We all work as a team, which impacts the quality of our work and the service we offer our clients.”
The system is simple. Coaches will step in first if there is an issue before it escalates to the Head of Team Experience, Nicole Lambrou. If Nicole is called in, she will address the problem head on. “Inevitably it’s something fixable,” says Marco. “By addressing it immediately and in the context of our values it can be sorted out quickly. Ultimately, the overall quality of our team improves, and we are a more cohesive unit.”
The founders have seen this in action. “I recently arrived at a client event and three different people came up to me and complimented my team on the same things — all of which aligned with our values. Everyone at Brand Cartel lives them, internally and externally,” says Renate.
The value system has also shaped how the team hires new employees. “We used to meet people and hire for the position if they could do the job,” says Renate. “But then we started realising that anyone can hold up for an hour or two in an interview. You only learn who they really are three months and one day later.
“We need people who walk the talk, and we really only had a proper measurement of that once we articulated our values. Our interview style has changed, but so has what we look for.”
Here are the seven values that Dillon, Marco and Renate developed based on what they want their business to look like, how they want it to operate, and what they want to achieve, both internally, and in the market place.
1. Play with your work
Our goal is for everyone on our team to become so good at what they do that it’s no longer work. Once that happens you love your job because you’re killing it. It’s why sportsmen are called players, not workers, and it starts with the right mindset.
2. Wag your tail
The idea behind this value stems from Dale Carnegie, who said ‘have you ever met a Labrador you don’t like?’ In other words, we all respond well to people who are friendly. It needs to be genuine though, so again, it’s a mindset that you need to embrace.
We live these values whether we’re at the office or meeting clients. If you go into each and every situation with joy and excitement, from meeting someone new to a new brief coming in, you’ll be motivated and excited — and so will everyone around you.
3. Check it, don’t wreck it
The little things can make big differences. Previously it was too easy to pass the buck, which meant mistakes could — and did — happen. Once you instil a sense of ownership and create a space where people are comfortable admitting to a mistake however, two things happen. First, things get checked and caught before there’s a problem. Second, people will own up if something goes wrong. This can help avoid disasters, but it also leads to learnings, and the same thing not happening again.
4. What’s Plan B (aka make it happen)
We don’t want to hear about the problem; come to us with solutions, or better yet, already have solved the problem and made it happen. We reached a point where we had too many people coming to us with every small problem they encountered, or telling us that something wasn’t working so they just didn’t do it.
That wasn’t the way we operated, and it definitely wasn’t the way we wanted our company to operate. We also didn’t want to be spoon feeding our team. It’s normal for things to go wrong and problems to creep in — success lies in how those problems are handled.
Ignoring problems doesn’t make them go away, so we embrace them instead, encouraging everyone on our team to continuously look for solutions. For example, the PR department holds a ‘keep the paw-paw at Fruit & Veg City’ meeting every morning, where we deliberately look for where problems might arise so that we can handle them before they do. We start with what’s going wrong and then move to what’s going right. You need to give your team a safe and transparent space to air problems though. We don’t escalate. We need to know issues so that we can collectively fix them, not to find fault.
5. Put your name to it
It’s about pride in work and making it your own. When someone has pride in what they’re doing, they’ll not only put in extra time and effort, but they’ll pull out all the stops to make their creative pop, or go the extra mile for a client.
We need to find the balance between great quality work and fast output though. One way we’ve achieved this is by everyone reviewing the client brief and then committing to how long their portion will take.
When someone gives an upfront commitment, they immediately take ownership of the job. It took time for us to find our groove with this, but today we can really see the difference. Our creative coaches also keep a close eye on time sheets and where everyone is in relation to the job as a whole to keep the entire brief on track. If someone is heading towards overtime we can immediately ask if something is wrong and if they need assistance.
We also celebrate everything that leaves our studio. Every morning we have a mandatory 15-minute catch up session where we check in on four core things: How am I feeling (which allows us to pick up on the mood in the room and the pressure levels of our teams); What’s the most important thing I did yesterday; What’s the most important thing I’m going to do today (both of which give intention and accountability); and ‘stucks’, issues that team members need help with. We then end off with our achievements so that we can celebrate them together.
6. Keep it real (aka check your ego at the door)
We believe in transparency. At the end of the day we’re all people trying to achieve the same thing, but it’s easy for ego to creep in — especially when things go wrong. You can’t be ego-driven and solutions-orientated. If clients or team members are having a bad day, you need to be able to focus on the solution. Take ego away and you can do just that. It’s how we deal with stucks as well. We can call each other out and say, ‘I’m waiting for you and can’t do my job until I receive what you owe me,’ and instead of getting a negative, ego-driven reaction, a colleague will say, ‘sorry, I’m on it.’
7. Walk the talk
For us, ‘walk the talk’ really pulls all our other values together. It’s about being realistic and communicating with each other. If you’ve made a mistake or run into a problem, tell your client. Don’t go silent while you try and fix it. Let them know what’s happening and fill them in on your plan of action.
Walk the talk also deals with the industry you’re in. For example, if you’re a publicist, you need to dress like a publicist, talk like a publicist, and live your craft. In everything we do, we keep this top of mind.
John Holdsworth Founder Of Tautona AI Shares 4 Disruptive Strategies That Are Changing The Insurance Industry
What can we do now that we couldn’t do before, thanks to changes in technology?
“Disruption isn’t just doing things in a different way which doesn’t resonate or go any further — it’s about changing the game. Being disruptive means taking a look at an industry and finding a way to do it differently, giving you an advantage over the incumbents.”
- Player: John Holdsworth
- Company: Tautona AI
- Est: 2016
- Visit: www.tautona.ai
Disruptive innovation is the catchphrase that defines the last 20 years. New technologies, business models and media have disrupted the way we do just about everything. Conventional wisdom has it that the new kids on the block are the ones who are going to own the market at the expense of industry stalwarts, but this innovative South African disruptor is showing them how it’s done.
1. It’s the experience economy, stupid
Regardless of how the world changes, organisations that consider their customers’ emotions and experience first, win. That’s exactly what Tautona did. They put themselves in the customers’ shoes and asked one key question: ‘What’s wrong?’ Few industries are as ripe for disruption as insurance. When John Holdsworth co-founded cognitive automation business Tautona AI in 2016, he knew that there had to be a better way for insurers to handle client claims.
Tautona AI emerged out of a consulting engagement John had with a large insurance company. With a background in IT, he is a highly experienced technology executive and entrepreneur who has started a number of successful companies. He says he loves the energy and adrenalin associated with start-ups. He pioneered the use of digital signatures in South Africa, founded mobile payments company PAYM8, and converged voice and data provider ECN, which he sold to Reunert for R172 million in 2011. The experience acquired over this time meant he was ready to take on a massive challenge.
“When a policyholder submits an insurance claim, that action should trigger an instant decision, with the outcome immediately communicated back to the policyholder,” John says.
“Customers want swift claims handling, communication, and compensation. They want the same instant gratification that they get from online banking. So that’s what we set out do — to revolutionise the entire claims process. We have made traditional claims processing a thing of the past by pioneering a cognitive solution that is making the claims process faster, smarter and more efficient.”
2. Automating judgment tasks once reserved for humans
Tautona’s claims automation solution uses artificial intelligence to instantly approve or refer claims for further investigation. By using machine learning algorithms to identify patterns in the data, Tautona’s solution identifies fraudulent claims, enabling insurers to halve fraudulent claim losses.
Tautona also uses Robotic Process Automation to integrate to legacy systems, removing the need for traditional programming techniques. This means that Tautona’s claims automation solution can be implemented with minimal disruption to a business. By automating decision-making, communication, and compensation, Tautona enables insurance companies to take a major step towards becoming true digital insurers.
3. Ditch the legacy systems, start from scratch
Disruptive innovators invest in digital strategies so that they can find new ways of responding to their customers’ evolving needs. The founders of Tautona AI agree on several principles, but one that stands out specifically because it goes entirely against traditional thinking, is the importance of starting from scratch.
“You cannot take a non-digital business model and expect it to work online,” says John. “Instead of using old methods, you need to start from the beginning. Ditch the legacy systems, take a leader mentality and imagine the art of the possible.”
This iterative, modular approach typically begins with defining the strategy and programme plan upfront, delivering a core capability fast so it can provide benefits immediately, and then continuously improving with regular, incremental capability improvements to achieve the objectives of the strategy. It’s an approach that fosters closer collaboration between stakeholders, improved transparency, earlier delivery, greater allowance for change and more focus on the business outcomes.
4. Shaking up an industry
How do you launch new solutions and educate customers who are used to doing things the way they have always been done? John says resistance to change is inevitable. That’s why you need more than good technology.
“When you introduce something ground-breaking to the market, you encounter many different types of personalities asking diverse questions. That demands an approach that is client-centric and entirely customer focused. It also means you have to spend time developing a sound business case to present to decision makers.”
A solid business case documents the justification for the undertaking of a project. It’s the way you prove to your client and other stakeholders that the product you’re pitching is a sound investment. You need to justify the project expenditure by identifying the business benefits the innovation will deliver and that your stakeholders will be most interested in reaping from the technology.
“Essentially, it’s about proving you can deliver,” says John. “When you have an entirely new proposition, the only way you can hope to get your foot in the door is with a value proposition so profound that clients are forced to take a look at it.”
Tautona has convinced a number of South Africa’s top insurers to implement their AI-powered claims automation solution. The results to date have been ground-breaking, with insurers dramatically reducing turnaround times and processing fees. As a result, Tautona’s sales pipeline is full to the end of the first quarter of 2019.
“But there’s no rest for disruptors. Nokia and BlackBerry crumbled because they were slow to react to market changes, and they underestimated the challenge from Apple and Samsung. The only way to retain leadership is with relentless innovation, that is, a constant flow of new versions and features. That applies in any industry today.”
Tim Hogins Started Out As A Security Guard, Today His Has A Turnover Of R150 Million And Has Self-Funded Three Huge Lifestyle Parks
As a poor township kid, Tim Hogins watched kids pile into buses heading to Sun City every weekend, knowing he couldn’t afford to join them. He was a youngster, but he made a promise to himself. One day he would build parks that anyone could visit — especially underprivileged kids like himself.
- Player: Tim Hogins
- Company: GOG, formerly Green Outdoor Gyms
- Est: 2012
- Turnover: R110 million
- Projected Turnover: R150 million (2018)
- Visit: gog.co.za
“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that – I want to employ people, develop them, push boundaries and see where we can take this.”
“Poverty can be a good thing, because growing up poor makes you creative, and that’s an incredible power if you know how to use it.”
Seven years ago, Tim Hogins drove out of an office park and pulled onto the side of the road because he was having a panic attack. His car was closing in on him, he couldn’t see and he couldn’t breathe. After months of hard work, it was all over. His dreams were shattered.
Tim isn’t the first entrepreneur to find himself here, and he won’t be the last. What separates him from countless other aspiring business owners is that despite a massive setback, he didn’t back down. He sat in his car, phoned his wife, and told her what had happened. Instead of telling him it was time to move on and find a job, she asked him how they were going to cobble together the money he needed to start again.
And that was the beginning of Green Outdoor Gyms, a vision Tim had been nurturing for almost two years. A business idea that had led to his retrenchment and was almost ripped away from him by his business partners and investors.
But he didn’t quit. He pushed on. And today his business has a projected turnover of R150 million and has self-funded three huge lifestyle parks that Tim hopes will impact the lives of thousands of underprivileged children while providing jobs for hundreds more.
The in-built art of tenacity
To understand Tim, you need to understand where he came from. As a township kid growing up in Randfontein on the West Rand of Johannesburg, Tim always helped his parents to sell stuff. They were traders. His dad had a small café selling burgers and chips, and his mom baked. While other kids in the area piled into buses for Sun City on the weekends, or visited a local bird park, Tim had to work or the family didn’t eat.
“I matriculated in 1996, and even though I had an exemption, tertiary education wasn’t on the cards for me,” he says. “We just couldn’t afford it.” But Tim had a plan. His cousin told him about a free four-week course to become a security guard, and Tim aced it, securing a position at one of the firm’s top industrial sites.
Here’s the first secret to Tim’s success. Instead of seeing a dead-end job, Tim saw an opportunity. If he did his job well, he would progress to a driver, and then a cash-in-transit guard. From there the plan was management. Becoming a security guard wasn’t his fate because he couldn’t get a degree — it was step one to the rest of his life.
“I was raised to be the best version of myself. Everything is what you make of it. In primary school I was head boy, and in high school the head of the SRC. There’s always a way to grow and improve yourself.”
Two years into his career as a security guard, Tim heard about another opportunity — a free programming course teaching COBOL, a back-end system used by the financial services industry.
“I grew up 500 metres from Stafford Masie, who would go on to become the first head of Google South Africa and is one of our country’s greatest tech entrepreneurs,” says Tim. “I had zero programming experience — I’d never touched a computer — but I knew how valuable these skills were, and here was an opportunity being handed to me.”
It wasn’t quite as easy as Tim imagined. He failed the aptitude test and had to take it again. Once he was on the course, he failed that too — it was a programming course after all, and Tim needed a far more basic introduction to IT. He didn’t give up though. He’d quit his job and needed to make this work while he was still living with his father and didn’t have financial responsibilities, so he begged the course administrator to let him retake the programme. This time he passed, and found a job at a small IT firm.
Once there, Tim built up his IT acumen. Over the course of his IT career Tim worked for Dimension Data, EOH and SITA. In his final three years he applied for an account management position and moved into sales. His goal was to become a business owner, and so he diversified and learnt what he could about business.
He also paid attention to the world around him, looking for a business opportunity or problem he could solve. He dabbled with some ideas, but the one he kept coming back to was outdoor gyms.
“I saw kids in parks doing sit-ups, push-ups, pull-ups on trees, and kept thinking there must be a better way than this for them. I knew that a proper solution would be good for the whole community — giving kids and parents a safe and free environment to play in and focus on their health. I focused on poorer communities, where gym fees weren’t an option, and kids needed safe places to play and keep out of trouble.”
The more Tim unpacked the idea, the more he began to believe in it. And then his employers found out, and made it clear that they did not like Tim’s attention divided between his job and his business idea. Despite this, Tim continued to focus on his entrepreneurial play, and within a few months he’d been retrenched, ostensibly due to a restructuring of the business, yet Tim was the only person let go.
It was October 2010 and Tim had no job, two-months’ salary and he was about to get married. But it was the best thing that could have happened to him. “That retrenchment catapulted me into business. From then on, my full focus became outdoor gyms.”
Winning and losing
Tim had approached Joburg City Parks who where interested in the idea. He had also met with an engineer and they had begun to design the equipment. There was just one small problem: Money.
“I knocked on doors, approaching anyone who would listen. One investor laughed at me. He said I’d gone from IT to playing with steel — what was wrong with me? A contact at SITA said flat out that she wouldn’t help me. Looking for funding can be incredibly demoralising. I had an idea and a letter of intent from Joburg City Parks, and it still wasn’t enough.”
And then Tim was introduced to a group of investors who wanted to instal kids play areas in municipal parks. Tim had the City Parks connection; they had the funding. They entered into a business partnership and built a prototype together. This was when Tim’s wheels fell off.
“I was invited to a meeting by my three business partners, and when I arrived there were five people in the room — my partners and their two lawyers. We’d entered into the agreement as 50/50 partners, and they wanted us to all be 25% shareholders. I couldn’t agree to that. This was my idea, my connection, my baby.”
By the time Tim left the meeting, he had no funding, no partners and no prototype and he knew City Parks was getting impatient. All he’d done was create competitors — and they had a demo model.
Tim had spent most of 2011 looking for funding and then building the prototype once he found his partners. He wasn’t just back to square one, he was behind where he’d started months ago. Hence the panic attack.
It was a pivotal moment. Give up or push on? Tim chose to push on. That night, Tim and his wife, Rona Hogins, sat down and came up with a plan. They would sell one car and Rona would apply for a bank loan. Together, they managed to come up with R200 000. Tim approached a friend who was interested in a side business and they launched LXI, an importer of screens for media companies. LXI brought in enough to pay the bills while Tim concentrated on getting Green Outdoor Gyms off the ground.
Then luck stepped in. “I drove past a warehouse and saw some play equipment. Instead of driving on, I pulled in and pitched my business idea to the owner.” The owner, Neta Indig, agreed to build Tim’s prototype at cost, in exchange for a long-term partnership. Tim agreed. His R200 000 would be enough to get the business back off the ground. Green Outdoor Gyms was officially launched in February 2012.
Here’s the thing about luck though. Unless you’re open to opportunities, paying attention and willing to step out of your comfort zone, luck alone will get you nowhere. By the time Tim drove into Neta’s parking lot, he’d spoken to countless investors, had doors shut in his face, lost a partnership and his prototype, and was still willing to look for any opportunity that might present itself. Through sheer will and tenacity, he found it.
After the first outdoor gym was installed, two things happened. The competition Tim had feared from his old partners didn’t materialise. It was Tim’s first real lesson in the power of passion. He’d doggedly pursued his idea for over two years. His partners, who didn’t share that passion, did nothing with the prototype they’d acquired. Tim was still — at that stage — in blue ocean territory.
The second was how quickly an idea can take off once the foundations are in place. GOG’s turnover was R3 million in its first year, and orders were flooding in from municipalities throughout South Africa.
Tim was invited to present his solution in parliament, and it was included in the National Development Plan. “Everything escalated faster than I could have imagined,” he says.
“The reality is that we’re an obese nation. It’s a real problem. On top of that, 90% of the country can’t afford commercial gym fees. Under the National Development Plan, every community was earmarked for an outdoor gym. Government saw my vision and they bought into it.”
Tim had to tender for each new site, but he had a first-mover advantage. By the time other players entered his space he’d already built up a track record. His team’s turnover times are impressive and the business doesn’t only design and instal the equipment, but can also overhaul a derelict park. The quality of his products ensures that equipment lasts at least eight years with no maintenance, although once an outdoor park is installed, the community takes ownership of it, cleaning it regularly and maintaining the area.
In six short years, GOG has installed over 1 000 outdoor gyms for local municipalities around the country, and there’s still room for growth. There are currently between 5 000 and 10 000 sites available, and while Tim doesn’t believe they will get all of them, the business will continue to expand. “I believe we still have a ten-year run with government-funded outdoor gyms, but this is no longer our core business.”
In fact, GOG has grown and changed considerably since that first outdoor gym was installed in February 2012.
“I’m an opportunist. I pay attention to developments around me and am always on the lookout for where we can add value,” says Tim. As a result, GOG is now developing its own sites and supplying equipment to the industry — across private and public sectors.
“You need to know that competitors are coming,” says Tim. “When we started out we had a niche with outdoor gyms and government, but someone will always want to eat your lunch. If you know that someone’s paying attention to what you’re doing and that everyone needs to diversify, you can stay ahead of your competitors.
“Our business is centred around health, fitness and family, and this understanding has allowed us to grow into lifestyle spaces that support our core focus.”
As a result, GOG has expanded to the installation of play areas and outdoor gyms for hotels, private and public schools, beach parks and lifestyle estates, including Steyn City.
“We also have a registered landscape company,” says Tim. “We can take vacant land and transform it into a park with grass, trees, water and pathways. We have a Geotech division that does soil testing and environmental studies.”
None of this happened overnight. It takes time to build a reputation, but if you’re focused on four key things, you can build a sustainable business. “You need to diversify your product range, diversify your customer base, nurture relationships and push outbound sales,” says Tim.
Tim has geared the business for scale, which is critical in a production and manufacturing context. “We have always outsourced our manufacturing, first with Neta, and later to a Chinese manufacturer who has become integral to our success.”
Tim’s relationship with Neta was critical in the start-up phase, but after two years the manufacturer decided to focus on his core. “We were too big — it wasn’t a side project anymore, and Neta wanted to remain in construction,” says Tim. “I needed to either find another manufacturing partner, or move into that space myself.”
Tim visited manufacturing facilities in China and sourced samples until he found a plant that could handle GOG’s volumes and quality. “Chinese manufacturers value loyalty and they’ll do whatever you want at the price point you ask. If you want a cheap product, you’ll get it — and the quality to match. Good quality costs more. I have an excellent relationship with our supplier — so good that he flew out to South Africa to see our operations, because he was impressed with the volumes he produces for us.”
It’s this relationship and the capacity available to Tim that has allowed him to take the next step towards his ultimate vision for GOG: Lifestyle parks.
Living the dream
GOG’s first lifestyle park stemmed from Tim’s need for a showroom and his life-long dream to give underprivileged children access to entertainment parks that he couldn’t afford when he was a child.
“We were manufacturing outdoor parks and I started thinking about other ideas in this space that aligned with our vision and niche. I needed a showroom that could showcase everything we can do, from ziplines to climbing walls, swimming pools to spray pools and outdoor gyms. A lifestyle park was the natural answer to everything I wanted to achieve.”
GOG Lifestyle was opened in November 2016 and is situated off the N14 near Lanseria Airport. It’s close to a number of townships, including Diepsloot and Cosmo City. “The revenue model is corporate team building events, family days and launches, which allows us to run specials for kids, the elderly, and CSI projects for schools and churches.”
The next lifestyle park, GOG Gardens, was opened in Soweto in December 2017. Bigger than the first lifestyle park, GOG Gardens caters for picnics, outdoor events and concerts. It’s a multi-purpose venue with seven venues in one, and also focuses on corporates, the general public and events, with CSI projects that support children.
“We have launched some smaller projects, such as GOG Kids at Chameleon Village in Hartbeespoort and a play area in Vilakazi Street, but our next big project is Happy Island, a 36 hectare water park off Beyers Naude Drive in Muldersdrift.”
Happy Island is GOG’s first joint venture with an investment partner, Tim’s Chinese supplier. Unlike the other lifestyle parks, which GOG self-funded from cash reserves, Happy Island is a multi-hundred million rand project with large capex needs. “The idea came to life when the chairman of our manufacturing supplier visited our operations in South Africa. There are no water parks in South Africa similar to those I visited in China. We are doing something completely new and exciting, and we broke ground in April 2017.”
All of GOG’s lifestyle parks have required high capex investments and have not yet reached break-even, unlike the smaller projects that will reach break-even within a few months. “Our projection for the lifestyle parks is three years, and five years for Happy Island,” says Tim.
“My long-term goal is to have ten lifestyle parks across South Africa, one in each region, and that’s what I’m investing in. We want to make a difference, give kids access to these parks and employ people.
“I’m here today because of my childhood experiences, but before I could invest in this dream, I needed to start small and build up my reputation and cash reserves. To achieve my ultimate dream will take a lot of investment, so that’s the focus.
“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that — I want to employ people, develop them, push boundaries and see where we can take this. When someone says something is impossible, I want to know why, and then try anyway. That’s how you achieve great things. That’s how you realise your dreams.”
In 2016, GOG launched its first lifestyle park, GOG Lifestyle. Since then, two more lifestyle parks have been added, GOG Gardens in Soweto, and GOG Kids in Chameleon Village in Hartbeespoort. The company’s biggest venture, Happy Island will soon be open to the public as well.
GOG’s genesis was outdoor gyms, and the company continues to grow from these original roots: Catering to a growing focus on healthier lifestyles, from public parks to beaches, corporates and residential estates.
Types of Businesses to Start1 week ago
(Infographic) 5 Best Online Businesses To Start Before The Year Ends
Start-up Advice1 week ago
(Infographic)The Do’s And Don’ts Of Naming Your Business
Entrepreneur Profiles1 week ago
Tim Hogins Started Out As A Security Guard, Today His Has A Turnover Of R150 Million And Has Self-Funded Three Huge Lifestyle Parks
Entrepreneur Profiles3 days ago
John Holdsworth Founder Of Tautona AI Shares 4 Disruptive Strategies That Are Changing The Insurance Industry
Lessons Learnt2 weeks ago
How BrightRock Is Disrupting The Insurance Industry With These 2 Pivotal Strategies
Business Ideas Directory2 days ago
12 Cannabis Products You Can Legally Start Selling Right Now
How to Guides7 days ago
Making Money Online: 10 South African Entrepreneurs Doing It
Company Posts1 week ago
5 Insider Tips Every Trader Needs to Know