- Players: Jonathan Liebmann (founder and CEO) and Ricky Luntz (MD)
- Company: Propertuity
- Launched: 2007
- Current property portfolio: R1 billion
- Visit: propertuity.co.za
It’s called the founder’s trap, and it’s the hardest part of building a high-impact organisation: As the entrepreneur, there comes a time when you have to let go. You have to trust others (an exco, management team, and perhaps even an MD or CEO) to take your vision and implement it. You have to learn that truly scalable and successful businesses are built by teams. And you have to let those teams do what they were hired to do.
The entrepreneurs who have successfully transitioned from start-up ‘jack of all trades’ to visionary founders who rely on strong management teams for the day-to-day operations of their businesses include Elon Musk, Richard Branson, Mark Zuckerberg and Jeff Bezos.
Those who can’t — or won’t — make the transition, either continue to run reasonably successful businesses that are unable to scale, and will never be sold as assets of value, or they slowly stop moving forward, which is followed by irrelevance and eventually decline. Why? Because great businesses are built on incredible teams. That’s the role of the visionary leader, and that’s how business owners avoid the founder’s trap.
Related: Maboneng Precinct: Jonathan Liebmann
At the crossroads: From start-up to high-growth
When Propertuity’s current MD, Ricky Luntz walked into Propertuity’s offices four years ago, he was greeted by the very definition of a lean start-up: Six people in a single, open plan office. No systems; no processes. There wasn’t even a bookkeeper.
At that point, Maboneng had already established Arts on Main, as well as a portfolio of residential buildings, a hotel and some retail businesses and restaurants. Founder Jonathan Liebmann’s vision was clear, and people were buying into it. They wanted to be a part of an urban city renewal project, to get in on the ground floor and be integral to the growth of a new community. Walking the streets of Maboneng, you could feel the buzz of energy and excitement.
This is what visionary entrepreneurs do. They take a dream and not only turn it into a reality, but bring hundreds — thousands — of people along for the ride. That’s Jonathan’s super-power. But he’s not an accountant.
Hire-in the talent you need
Ricky had completed his articles at Grant Thornton, and Propertuity’s investment partner had reached out to their internal recruitment division. “The business was looking for a financial manager, and they thought I might suit the position,” he recalls.
Ricky didn’t want to join an established firm, where his role was rigid and clearly defined, but wanted to play a key role in a start-up instead. He wanted to help build something unique and ground-breaking. Propertuity was an ideal fit.
“Jonathan and I clicked immediately, and I could see that he was a visionary who had a big idea, and the scope and vision to see it through. We both believed that for Joburg to work, the inner city must work — the path to economic growth is through the inner city.
“But I also knew that successful businesses need both a grand vision, and a strong back-end to support that vision. And this was what Propertuity was lacking.
“When I agreed to join the business, my handover pack was ten pieces of handwritten, A4 papers. There were no books. No processes. No structures or operational management to speak of. My wish had come true: I was joining a business with a handful of successful projects under its belt, but with a massive vision. It was time to get to work.”
It was 2013. Jonathan had convinced an investor (Buffet Investments) to come on board and support his idea a few years earlier. He’d started with Arts on Main, because he knew that if you can get the artists to support you, the rest will follow. Every project, product or service needs early adopters, and in the urban space, that’s artists. Maboneng stretched across a few blocks. It was on the map. It was generating great PR and public interest.
But as a business, Propertuity was at a crossroads. It could remain a ‘one man band’, or become a full-fledged business able to achieve Jonathan’s vision.
More than R1 billion has since been invested in Maboneng, with a further R1 billion earmarked for the urban renewal of a six-block land parcel recently purchased by the business. Propertuity has launched Rivertown, an urban renewal project in Durban, and a bespoke JV in Hyde Park. It also has plans to launch in Cape Town once a suitable project is found; the team is currently reviewing a number of potential deals.
Rand Merchant Holdings has invested in the business (its second ever property investment), and in June this year, Jonathan launched DiverCity, a R2 billion property fund in partnership with Tallis and Atterbury.
On high-impact growth: 5 lessons
In 2013, Jonathan was at a crossroads. He chose to avoid the founder’s trap, lay strong foundations, build an incredible team and take Propertuity to new heights. This is how he did it.
1Know who you are
“Theoretically, I’ve been aware of the founder’s trap since I became an entrepreneur,” says Jonathan, who was 24 years old when he registered Propertuity ten years ago.
“I owned laundromats before I launched Propertuity, so I’ve been a business owner all my adult life. An awareness of what I don’t know has driven me to learn as much as I can — from biographies, business books, magazines and other entrepreneurs — anything I can get my hands on and learn from. I’ve exposed myself to business theory, and used it to figure out my entrepreneurial path.”
A critical element of Jonathan’s business journey has been to determine who he is as an entrepreneur. “We all have multiple influencers who shape who we are and how we understand our roles in business. The first successful person I was exposed to was my dad. He’s a perfectionist and micro-manager who ran his own law firm. It was cash generative and successful, but unscalable because of his management style.
Learn from different leadership styles to find what works for you
“My second exposure to business leadership was through my first mentor and founding investment partner. He’s a delegator. Through my exposure to two completely different leadership styles and personalities, I started to understand where I was on the spectrum, and that you need to lead from a point of example and energy.
“I’m comfortable in a leadership position because I’m happy to delegate and I don’t micro-manage. I’m inspired by Jack Welch and Mark Zuckerberg. I want to grow and lead teams. This realisation helped me to shape the organisation we have today. We’ve achieved scale and success because of the people we’ve brought in, such as Ricky. He joined us as financial manager and is now MD because he’s grown with the business and been instrumental in putting proper operational controls in place.
“That’s not where my strengths lie. I’m the innovator and strategist. Elon Musk has been a huge inspiration to me in this regard. You need to know yourself, and most importantly, you need to be able to hand the operations of the business over to concentrate on your core areas. Where do I provide the most value? What do I do that pushes the needle? And where should I not get involved? Where could I actually do more harm than good? I’m not good at the small details. But I have been able to step back and let people who are take ownership and run with it.”
2Strategies need to evolve
In the beginning, Propertuity’s mission was simple: How can we contribute positively to the city? The first four years of the business were focused on catalytic growth, getting early wins and breaking the mould to gain a foothold in the sector and neighbourhood.
The lynchpin of the strategy was Arts on Main — bring in the artists, and use culture-led regeneration to gain traction. “We learnt so much in the early years. Our original focus was on retail, but we realised that to build communities, we needed to start with the residential component. For a community to work, you need people living there, working there and being able to shop there.
“This has become our north star: Community numbers. How do you get a community to a size big enough to sustain itself?
Believe in your business enough to use it personally
“I’ve lived in eight different apartments in Maboneng. I don’t know another entrepreneur who literally lives in their product. But it’s allowed me to understand what we’re doing from the ground up, which has shaped how we’ve grown and developed the business and our focus.
“In particular, we’re a development business. Our first model purchased buildings and reconditioned them, maintaining the original structure as much as possible. Because many inner-city buildings are only a few stories, we’ve had to build up in some cases, but the idea was regeneration, not knocking down and starting from scratch. We’ve wanted to preserve beautiful architecture in the inner-city as much as possible. Going forward, and to meet market needs, most of our future pipeline is new builds.
“Ultimately, to continue developing the area, we need cash moving through the business. Our model is to buy, develop and sell but we hold onto the management of the buildings. Cash from sales is reinvested into new developments and projects.”
Upgrade your strategies as your business grows
As a company achieves its goals, strategies need to shift. What worked in the early days of Maboneng has developed into a model that can be replicated, enabling Propertuity to achieve sustainability and scale.
“Our next phase is to use the principles we’ve learnt and expand into other markets. We opened a Durban head office in 2014 and have started regenerating an old industrial area near the ICC and beachfront called Rivertown. I’m from Durban, and even though we’re replicating our model, we know that it’s not plug and play. Durban has a different economic cycle to Joburg and Rivertown is about combining beach and city life.
“If you don’t pay attention to your market, you won’t deliver the right product. That’s been a big lesson for us, and one of the drivers behind adjusting our strategy where necessary — communities will buy into your vision, but you also need to allow them to lead. If we tried to exert too much control, we wouldn’t have achieved so much in such a short space of time.”
Develop your business model to accommodate your business’ growth
As Jonathan has grown as an entrepreneur, and as his business has developed, his business model has had to follow suit. He started out small: A catalyst to bring people in, keep them here, then lay roots and a foundation, and finally, help shape a vibrant, self-sustaining community.
“It was my fascination with Elon Musk and his Master Plan — and Master Plan Part Deux — that helped me pull the various threads together of what we were trying to do, and concretise them into the need for our new volume-based product that we can roll out and scale to achieve real urban renewal.”
Elon’s Musk’s Master Plan
In a nutshell, here are Elon’s Musk’s Master Plan, and Master Plan Part Deux (published ten years later as the first Master Plan was coming to fruition):
- Create a low volume car, which would necessarily be expensive
- Use that money to develop a medium volume car at a lower price
- Use that money to create an affordable, high volume car
- Provide solar power. No kidding, this has literally been on our website for ten years.
In short, Master Plan, Part Deux is:
- Create stunning solar roofs with seamlessly integrated battery storage
- Expand the electric vehicle product line to address all major segments
- Develop a self-driving capability that is 10X safer than manual via massive fleet learning
- Enable your car to make money for you when you aren’t using it.
Lay the foundations for a much grander vision
The reason behind the first Master Plan was to help consumers see that Tesla wasn’t meant to be a new, expensive sports car because there was a shortage in the market. It was a very specific way to lay the foundations for a much grander vision.
Tesla’s scale is larger than Propertuity’s, but the foundations are the same: Build something that matters, and use each step of the strategy to bring you closer to an ultimate, enormous, audacious goal.
As of 2016, Tesla and Ford were the only American motor companies that hadn’t gone bankrupt post the recession, so it’s safe to say Musk is doing something right.
Related: The 50 Richest People In The World
3Strong teams build incredible businesses
Integral to Propertuity’s overall strategy has been to put strong teams in place, starting with the appointment of Ricky Luntz as financial manager in 2013. Over the past four years, Ricky’s role has grown and today he is MD. Alongside this growth has been the development of an exco, including a director of asset management, a CFO and an HR strategist.
“We hired an HR strategist five years ago as part of our second phase of development. HR is a huge focus for us because we know that great businesses are only built with the right people in place,” says Jonathan.
The key is finding people who want to be involved in entrepreneurial businesses, because the rewards can be great, but it takes hard work and dedication.
“I came in as a financial manager, but what I actually did was my role, plus data capturer, bookkeeper and financial director,” says Ricky. “Most early start-up positions look like this. It looks flashy and fun from the outside, but the reality is that it’s the hardest work you’ll ever sign up for. You need to be willing to
roll up your sleeves and help out wherever you’re needed.”
This takes a strong focus on staff appreciation and incentives. Ricky worked 20 months straight without a break, and he wasn’t the exception to the rule. “There are no segmented approaches in start-ups. You can be the operational director and the plumber, and you need to always be willing to put in 15 out of 10.”
Find the right people to better your business
Finding the right candidates, who are willing to pour passion and hard work into your business, isn’t always easy. When you find the right individuals, you need to keep them.
“I’ve always believed in sharing risks with rewards,” says Jonathan. “It’s one of the ways that our philosophies align with RMH. They believe that there should always be an alignment between exco and the rest of the management structure to ensure continuity in a business. They encourage wider participation. It promotes scalability as well because people perform better when they have ownership over something.”
This was one of the reasons why Ricky was promoted to MD in 2016, when the RMH deal closed, and why he received shares in the business as part of the deal.
Implement your own incentive strategies
Across the organisation, Jonathan has always implemented shareholder-aligned bonus schemes, as well as creative incentives for all staff members based on outcomes and outputs that are more creative than a thirteenth cheque.
Over the past four years. Propertuity has grown from seven employees to over 120. “One of the first things we did was open a Durban office so that we could have a dedicated team with a strong GM on the ground. If you don’t trust your people,
you’ll never reach true scale. They make
Having a dedicated GM in Durban has played an integral role in helping the business to scale geographically.
4Make marketing work for you
Urban renewal projects will naturally garner attention. On the one hand, this means marketing is happening for you, without even lifting a finger. On the other, there are certain responsibilities the business needs to take on to ensure a consistent message is heard and understood. The first is putting your golden thread in place.
“We’ve focused on ensuring that the precinct is easy to navigate. We pay a lot of attention to detail, and we’ve developed certain urbanism and design principles that we implement in everything we do. Propertuity buildings and areas are easy to pinpoint as a result,” explains Jonathan.
“This ties in with our understanding that successful precincts and neighbourhoods must be accessible and desirable. That’s the secret sauce. No marketing in the world will be successful without those core ingredients. Businesses don’t operate in isolation — your product or service must have a symbiotic relationship with your customers.”
This understanding of how to market property as an idea, and not just a building or collection of buildings, has led to Propertuity’s current JV with Narrative. “The Hyde Park venture is new for us — it’s bespoke and high end, which hasn’t been our mandate in Maboneng, but the principles are the same. We’re the design and marketing guys. This has become our niche, based on our experiences building a precinct and community from the ground up.”
5Focus, focus, focus
When you’re an innovator, you’re bound to make mistakes. You’re travelling new paths, trying different things and learning a multitude of lessons along the way. This may mean you have to pivot as well. But that doesn’t mean you should lose focus.
“We haven’t always been right first time round,” says Jonathan. “Some mistakes are more expensive than others, but we always learn from them and make sure we don’t lose focus when something derails us.”
A recent example is 8 Morrison, a building in Durban’s urban renewal project that started out as a retail centre. “Within a year we realised it was too soon for retail to succeed there. We converted the building into an office space. We were wrong, and we had to take the hit and move forward.
“When that happens, it’s essential not to lose focus. That’s been my biggest shift this year. I’ve evolved as an entrepreneur and founder. I’ve built an incredible team, and I leave them to do what they do best. This has opened up my time to focus on what I do best: Innovation and strategy. I have a list of 13 key things that I’m focusing on this year. Every day I look at that list and remind myself that these are the most important things for 2017. Everything, unless it’s an urgent operational issue, must link back to one of the 13 things on my list, or I don’t do it. That’s how you push the needle.”
4 Lessons From The Pivotal Group Founders On Growing And Disrupting All At Once
Here’s how they’ve built what they believe to be the foundations of a successful group of businesses in five years.
- Company: Pivotal Group
- Players: Paul Hutton, Joel Stransky and Bruce Arnold
- What they do: Pivotal pioneered voice biometrics in the financial and telecommunications market. Over time, the company has grown to include nine divisions across multiple sectors.
- Launched: 2012
- Visit: pivotalgroup.co.za
How do you build a disruptive business while also focusing on growth? Disruptive ideas are by definition new and unknown to the market. They defy traditional and established solutions and ways of doing business, and they require the market to be educated before you can really onboard clients or even sell your product or service.
The answer is to build parallel solutions: Business units that bring in revenue while the more disruptive ideas are being developed and introduced to the market. Here are the four top lessons the founders of the Pivotal Group have learnt while building their business and pursuing disruptive opportunities simultaneously.
1. Know who your competitors (and potential competitors) are
Great ideas that are economically viable and solve a need that consumers are willing to pay for are few and far between. Great ideas alone are a dime a dozen, but if you’ve spotted a need, chances are someone else has as well. You then need to step back and critically evaluate why someone else hasn’t done this before; if they have done it and they’ve failed; or if you’re entering shark-infested waters riddled with competitors.
Once you’ve determined there is a gap in the market, you need to evaluate who your potential competitors are, and the impact if they suddenly started offering a similar solution to the market.
For Paul Hutton, Bruce Arnold and Joel Stransky, the founders of OneVault, competition was always a factor, particularly as a start-up, and given that potential competitors included Bytes and Dimension Data, this was a very real factor to consider. After careful analysis, however, the founders decided to go for it. Their differentiator was their business model. They wouldn’t be selling OneVault as a software solution, but as a service.
The idea had taken root while Paul was still CEO of TransUnion Credit Bureau. “I came across voice biometrics in Canada. There’s been a surge in identity fraud around the world, and I really understood the value of voice recognition as a verification tool,” he explains. “It can’t be faked, and it’s the only remote biometrics solution available, because you don’t physically need to be there to verify yourself.”
Paul had presented the idea to Transunion’s global board, and while they were intrigued, nothing came of it. “TransUnion’s model is to buy companies that are experts in their specific fields, not launch a new disruptive division from scratch.”
But this meant there was an opportunity for Paul to pursue the idea independently. Joel (former MD of Altech Netstar and CEO of Hertz SA) and Bruce (formerly Group CFO of TransUnion Africa and CFO at Unitrans Freight) were immediately interested in partnering with Paul. Both wanted to pursue entrepreneurship, although neither could do so immediately. The commitment was enough for Paul to get directly involved and start working on the business while he waited for his partners to join him.
In January 2011, Paul and Joel travelled to the UK and started investigating voice biometric solutions. “Voice biometrics was fairly new, but good technology was available, and there were global leaders in the sector,” says Joel.
It was important to choose the right product for the South African market, as this would form the basis of their offering. A contact at Dimension Data (one of whom became an investor in the business) offered this simple and straightforward advice:
When you’re choosing a technology partner, go with the company whose tech you’re confident in, and whose leadership is stable. You’re basing so much on this company and their longevity, so don’t disregard this criteria.
For Paul, Joel and Bruce, a US-based company, Nuance, ticked those boxes. But, from a competitive perspective, OneVault wasn’t the only potential player in the market. “Neither Bytes nor Dimension Data had gone into voice, but they had the potential to do so,” says Bruce. “The products were available to them through their partners.”
To mitigate this very clear risk, the founders made two critical decisions. “Our intention was to sell voice biometrics as a service, instead of a software solution that customers bought and owned, with the necessary infrastructure to go with it. The idea for OneVault was that there would be one place where your voice print lived, and different businesses could plug into our solution.”
The business model of large technology players in South Africa is to sell integrated software solutions, so OneVault’s business model was a differentiator. The next differentiator Paul, Bruce and Joel focused on was becoming specialists in their field.
“This is Paul’s baby,” says Bruce. “We’ve needed to build up a niche, expert team that specialises in voice biometrics. Because we aren’t generalists, 100% of our focus goes into this, instead of 5% or 10%.”
To attract the best in their fields, the founders needed a very appealing culture and a strong recruitment strategy. “We focused on what we wanted from our work environment, and then applied the same rules across the business,” says Joel. “Our goals were to drink good coffee, have no leave forms — ever; be able to take the time to ride our bikes and watch our kids play sports. If someone can’t make it work, or takes advantage without putting in the work, they come and go, but on the whole, we’ve had extremely low churn, and we’ve attracted — and kept — incredible talent.”
This differentiator would prove to be important for two reasons. First, two and a half years into the business, with investors on board and having pumped a significant amount of their own capital into the business, the team hit a major stumbling block. For a few weeks, they didn’t even know if they had a business.
“We had been operating on one major, and as it turned out, faulty, assumption,” says Paul. “We thought South African companies had the right telephony structure to implement our solution. We’d been building our solution on top of Nuance’s software, and were ready to start piloting the entire system with a few key customers, and we found out that in order to meet global voice biometric standards, the telephone technology had to be G711 compliant. South Africa was operating on G729.”
This was OneVault’s make or break moment. The team had six weeks to come up with a solution that ensured it met the necessary levels of accuracy. Without a highly skilled team this would have been impossible.
Even as a start-up, the strategy had been to only bring the best of the best on board. “We didn’t interview,” says Bruce. “We approached people whom we knew. We approached the best in the industry, and convinced them to take a chance with us. There was risk, but there were also rewards.” One of those people was Bradley Scott, a brilliant engineer whom both Paul and Bruce had worked with at Transunion.
Today, OneVault is one of the most specialist companies in the world, and often asked to speak at events in the US.
Being the niche specialists paid off, and OneVault achieved the almost impossible. But this had its downside.
Once you’ve shown something can be done, the bar of what’s impossible moves. Competitors enter your space.
This was the second reason why being such focused, niche experts paid off. “We demo’d the solution for a large local corporate, they loved it, and then went to a ‘then’ competitor to implement it,” says Paul.
“We always knew this was a real danger. Players like Bytes and Dimension Data have solid, existing client relationships with the same companies we’re targeting.”
18 months later the project still wasn’t working. “This is deep specialist knowledge,” says Paul. “Knowledge we built while we created our offering.” OneVault won the contract, and developed a partnership with Bytes at the same time. Today, OneVault works with all the major software integrators in the market. “We’re a specialist service they can offer their clients, without needing to put the same time and energy we needed to put in to become the specialists.”
Through a focused strategy, OneVault has become a partner, rather than a competitor, of some of the largest players in the industry.
2. Understand the nature of disruption so that you can prepare for it
In today’s ever-changing and fast-paced business world, most business experts are in agreement that as a company, you’re either the disruptor, or you’re being disrupted. The problem is that disruption comes with its own set of challenges.
“Our entire business model was built around a subscription service. Instead of a company buying a software solution, installing it and running it internally, we would do all of that. We would carry the infrastructure burden, and the high upfront cost,” says Joel.
In theory, this sounded like a clear win for businesses that would benefit from a voice biometrics solution. The reality is never so simple, particularly when you’re a disruptor.
“The software is expensive, and so we thought this would be seen as an excellent solution,” says Paul. “Instead, we faced a lot of reticence over the cloud. Businesses didn’t trust it yet.”
On top of that, first movers are often faced with a lag in corporate governance guidelines. As technology becomes more sophisticated, so governance guidelines change — but it’s a slow process, and the lag can impede disruptors.
“You also can’t give proper reference cases, because it’s all brand new to your market,” says Paul. “The best we had was a case study of how well it had worked in Turkey.”
To compound matters, proof of revenue is essential for businesses wanting to trade with large corporates, but non-existent in the start-up phase.
So, what’s the solution? According to Joel, Bruce and Paul, it’s all about being patient, never giving up, building gravitas and getting a few clients on board, even if it’s free of charge to build up your reputation and prove your concept. Finally, you need to bring in revenue from more traditional channels to support your disruptive products and solutions.
“Disruptive solutions are by their nature new and different, which means change management for your customers. This makes the sales cycle long and complex, and you have to be prepared for that,” says Bruce.
Don’t stop laying your groundwork. While disruptors are ahead of the curve, you need to be ready for the uptake when it arrives. “We’ve now concluded a partnership with South Africa Fraud Prevention Services,” says Paul. “When an imposter calls we won’t only terminate the transaction but we will alert the identity being compromised in the attempt and we will actively prevent fraud by contacting Fraud Prevention. The ultimate vision is for every South African’s voice biometric signature to live in our vault, and we are already receiving imposter information.”
3. Cultivate additional revenue streams
So, what do you do while you are living through the extremely long sales turnaround time of your disruptive, game-changing solution? Bills still have to be paid and investment is needed to develop truly disruptive ideas.
First, the team realised that while an annuity subscription service was their ultimate goal and where the industry was heading, initially they needed to be able to sell and implement the software.
It’s worth noting that one of OneVault’s earliest customers who bought the software has since launched a new business, which is on OneVault’s annuity service model. The shift has just taken time. “The change is happening, but it’s been slower than we anticipated,” says Bruce. “We needed to accept that fact and sell the software to bring revenue into the business while we were waiting for the market to catch up.”
It’s an important lesson. You don’t want to get distracted from your vision, but you need to be bringing in revenue, even if that means your short-term strategy differs from your long-term goals.
“It took three years before we really started seeing a move towards hosted solutions,” he adds. “Outsourced and offsite solutions are opex environments, not capex. They are more cost-effective for customers, but they require a shift in thinking. It’s a move away from how things have always been done, and that takes time.”
But, while Paul, Bruce and Joel were learning the art of patience, they also needed to start bringing revenue into the business.
“It was clear that we needed to find other opportunities,” says Joel. The result is the Pivotal Group, a diversified holding company with different businesses that are interlinked and complementary.
The group’s first business outside of OneVault, Pivotal Data, was based on a large call centre contract Joel, Paul and Bruce secured. “You can’t be an expert in everything – when you specialise you will always be more successful. The trick is to partner with other experts,” says Joel. In this case, three entrepreneurs were opening a call centre — this was their area of expertise; they were absolute subject matter experts. What they weren’t experts in was technology or facilities management. Instead of doing it themselves, they were looking for partners.
“We manage everything aside from the people element,” explains Joel. “We found and leased a building, built the bespoke workspace, put in the technology, and managed the facility and IT on an opex basis back to them.”
The business immediately had a good anchor client, and Pivotal Data has built on that. The annuity income has supported further growth.
“This was a base for us, but we’ve acquired a few businesses on the back of this success, and created our own cloud contact centre solution — which also feeds into what we’re doing with OneVault,” says Bruce. “Our vision is to create a technology stack that’s world-class and provides a range of services that no other businesses provide as a single solution.”
Because of this pivot into call centre management, a new opportunity has presented itself, and Pivotal’s ambition has grown to include a solution that calls, authenticates, and then analyses all the data that is collected during those calls.
“Through partnerships, my team has developed a predictive analytics system that gives contact centres deep diagnostic tools. We can predict why agents are having the conversations they have, and what to tweak to improve them. We see the agent’s problem before they do. This isn’t just value add, it’s a revenue generating tool if it improves lead conversion rates and customer service. It’s also all geared to lowering call volumes.
“We know we need to keep looking forward. OneVault is starting to gain real traction, but we need to be working on the next disruptive solution and model. We can’t sit back and relax,” says Bruce.
“Three years ago we said that’s it; no more start-ups or investing in pre-adoption phase businesses. From now on, everything we do will be revenue generating,” says Paul. “We’d stretched three years of runway to five years in OneVault, and we didn’t want to keep doing that. We wanted instant revenue businesses. And the very next thing we did was invest in a start-up. It’s a crazy space, but it’s also very rewarding.”
To sustain it, the group continues to grow, focusing on investing in businesses and entrepreneurs who are subject matter experts and therefore already know and understand the market, and then positioning each new business or service to plug into the current offering.
“Data is our golden thread — technology and the disruptive space,” says Joel.
4. Be open to new ideas and opportunities
Integral to the Pivotal Group’s positioning is Paul, Bruce and Joel’s focus on supporting other business owners whose offerings align with the group’s own growth goals, and who would benefit from joining a group.
“If your goal is to be disruptive, you need to be open to all kinds of new ideas,” says Joel. Some will be better than others, and the co-founders have made the decision to focus on the ‘jockey’ rather than the business as a result. Business offerings and ideas need to pivot. If you have the right partners, finding a solution is all part of the challenge.
Pivotal’s move into the world of artificial intelligence is due to one such partnership. “One of our clients approached us with a concept. But he needed a partner to develop it into a proper AI solution,” says Joel.
It’s an augmented intelligence solution that focuses on recruitment, talent management and career guidance. The solution screens, ranks and matches candidates against a job profile, or a number of profiles. It’s a multidisciplinary platform that predicts the performance of the individual in a role.
“Our partner is a former Accenture consultant and a leader in this field. His focus is on the IP and science of the product, ours is on the business component.”
The challenge is how to commercialise and scale the business in as short a time frame as possible. Like many disruptive products, the adoption process is a stumbling block. “We invest at the pre-adoptive curve — not at the revenue generating stage, which means a big focus is always on how we can take an idea and build it into a revenue generating business,” says Bruce.
The business uses capital selectively. “We want to invest in and drive our own agenda,” says Paul. “We’re in charge of our own destiny, but it’s not comfortable or simple. We came from corporate. Big machines that you need to direct and keep on course. This is an entirely different challenge and we are still learning.”
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Matt Brown interviews Paul, Joel and Bruce and discusses what it’s like to invest in pre-adoptive start-ups and staying ahead of the curve.
To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.
The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.
Afritorch Digital An Overnight Success That Was Years In The Making
By any standard, local start-up AfriTorch Digital has seen phenomenal growth and traction. But, while the company’s success might seem quick and effortless, there is a lot of hard work behind it.
- Players: Michel M. Katuta and Thabo Mphate
- Company: Afritorch Digital
- Established: 2017
- Visit: afritorchdigital.com
- About: Afritorch Digital assists research agencies in conducting market research through its in-depth knowledge of the African continent and its use of the latest digital technologies.
There is a saying that goes: It takes years to become an overnight success. While a company or individual might seem to enjoy sudden (and seemingly effortless) success, there is often more to the story. The results are usually public and well-publicised, but the years of hard work that came before go unnoticed.
Local start-up AfriTorch Digital is a great example of this. Since launching in May 2017, the business has seen excellent growth. “To be honest, we were very surprised by the level of success. Things progressed a lot quicker than we anticipated,” says co-founder Thabo Mphate.
“All the goals we had hoped to reach in four or sixth months, we managed to hit in the first month. It was just amazing.”
Preparing to launch
While AfriTorch Digital has certainly seen quick growth and success, it would be a mistake to assume that the same is true of the two founders. For them, the creation of AfriTorch was years in the making.
“The goal was always to start our own business,” says Thabo. “I think we’re both entrepreneurs at heart, and we saw an opportunity to create a unique kind of business that offered an innovative solution to clients, but we also realised the value of getting some experience first. Without the knowledge, experience, network and intimate understanding of the industry landscape, getting AfriTorch off the ground would have been incredibly difficult.”
Entrepreneurs tend to dislike working for other people. They want to forge their own path. However, as AfriTorch Digital’s case illustrates, spending time in the industry that you’d like to launch your business in is tremendously useful.
“Finding clients when we launched AfriTorch was relatively easy,” says company co-founder and CEO Michel Katuta. “One reason for this, I think, was that we were offering potential clients a great solution, but the other was that we had established a name for ourselves in the industry. People knew us. We had worked for respected companies, and we had done work for large clients. So, when we launched, we were able to provide a new start-up with credibility in the industry.”
The Lesson: Becoming an entrepreneur doesn’t always start with the launch of a company. Spending time in an established business, gaining experience and making contacts, can be invaluable. Very often, it’s the relationships you build during this time and the knowledge you accumulate that will help make your company a success.
Solving a problem
Everyone knows that launching a successful business means solving a burning problem, but what does that mean in practice? Aren’t all the burning problems already being addressed? And how do you attempt this without any money?
Thabo and Michel identified a small group of potential clients with a burning problem. Crucially, it was a problem that no one outside of the research field could have identified. Having spent years in the trenches, they saw a massive gap waiting to be filled.
“A decade ago, researchers were still debating whether the future of the field was in the digital space. That debate is now over. Everyone agrees that online is the way to go. What once took months now takes days or hours, and the cost of research can be reduced by a factor of five,” says Michel.
“But researchers are not technology specialists. If made available, they are eager to adopt digital tools, but they aren’t eager to develop these tools themselves. That’s not their area of expertise.”
AfriTorch Digital stepped up to provide these tools. Katuta has a background in software engineering, so he could approach research problems with the eye of a tech specialist. Very soon, research agencies were lining up to make use of AfriTorch Digital’s services.
“We work with research agencies that conduct research on behalf of their clients. We provide the digital tools needed to conduct research online, and we provide the online communities. A big reason for our success is that we understand Africa. A lot of companies want to conduct research in Africa, but traditionally, this has been very hard. There was a lack of access and a lack of infrastructure that made research very hit-and-miss. Thanks to the continent’s adoption of mobile technology, it’s now much easier. If you have the technological know-how and an understanding of the environment, you can do amazing things,” says Michel.
The Lesson: Find a niche and own it. Research agencies might not have seemed like an obvious and lucrative market, but having spent time in the industry, the AfriTorch founders were able to identify clients who would be desperate for their offering. Spending time in an industry will help you see where the opportunities lie.
Before launching a business, get to know an industry from the inside out. This will give you an unparalleled view into gaps you can service.
Jason English On Growing Prommac’s Turnover Tenfold And Being Mindful Of The ‘Oros Effect’
Rapid growth and expansion can lead to a dilution of the foundational principles that defined your company in its early days. Jason English of Prommac discusses how you can retain your company’s culture and vision while growing quickly.
- Player: Jason English
- Position: CEO
- Company: Prommac
- Associations: Young President’s Organisation (YPO)
- Turnover: R300 million (R1 billion as a group)
- Visit: prommac.com
- About: Prommac is a construction services business specialising in commissioning, plant maintenance, plant shutdowns and capital projects. Jason English purchased the majority of the company late in 2012, and currently acts as its CEO. Under his leadership, the company has grown from a small business to an international operation.
Since Jason English purchased Prommac in 2012, the company has experienced phenomenal growth. At the time he took over as owner and CEO, it was a small operation that boasted a turnover below R50 million.
Today, Prommac is part of a diversified group of companies under the CG Holdings umbrella and alone has grown it’s turnover nearly ten fold since Jason English took over. As a group, CG Holdings, of which Jason is a founder, is generating in excess of R1 billion. How has Prommac managed such phenomenal growth? According to Jason, it’s all about company culture… and about protecting your glass of Oros.
“As your business grows, it suffers from something that I call the Oros Effect. Think of your small start-up as an undiluted glass of Oros. When you’re leading a small company, it really is a product of you. You know everything about the business and you make every decision. The systems, the processes, the culture — these are all a product of your actions and beliefs. As you grow, though, things start to change. With every new person added to the mix, you dilute that glass of Oros.
“That’s not to say that your employees are doing anything wrong, or that they are actively trying to damage the business, but the culture — which was once so clear — becomes hazy. The company loses that singular vision. As the owner, you’re forced to share ‘your Oros’ with an increasing number of people, and by pouring more and more of it into other glasses, it loses the distinctive flavour it once had. By the time you’re at the head of a large international company, you can easily be left with a glass that contains more water than Oros.
“Protecting and nurturing a company’s culture isn’t easy, but it’s worth the effort. Prommac has enjoyed excellent growth, and I ascribe a lot of that success to our company culture. Whenever we’ve spent real time and money on replenishing the Oros, we’ve seen the benefits of it directly afterwards.
“There have been times when we have made the tough decision to slow growth and focus on getting the culture right. Growth is great, of course, but it’s hard to get the culture right when new people are joining the company all the time and you’re scaling aggressively. So, we’ve slowed down at times, but we’ve almost always seen immediate benefits in terms of growth afterwards. We focus heavily on training that deals with things like the systems, processes and culture of the company. We’ve also created a culture and environment that you won’t necessarily associate with engineering and heavy industries. In fact, it has more in common with a Silicon Valley company like Google than your traditional engineering firm.
“Acquisitions can be particularly tricky when it comes to culture and vision. As mentioned, CG Holdings has acquired several companies over the last few years, and when it comes to acquisition, managing the culture is far trickier than it is with normal hiring. When you hire a new employee, you can educate them in the ways and culture of the business. When you acquire an entire company, you import not only a large number of new people, but also an existing organisation with its own culture and vision. Because of this, we’ve created a centralised hub that manages all training and other company activities pertaining to culture. We don’t allow the various companies to do their own thing. That helps to manage the culture as the company grows and expands, since it ensures that everyone’s on the same page.
“Systems and processes need to make sense. One of the key reasons that drove us to create a central platform for training is the belief that systems and processes need to make sense to employees. Everyone should understand the benefits of using a system. If they don’t understand a system or process, they will revert to what they did in the past, especially when you’re talking about an acquired company. You should expect employees to make use of the proper systems and processes, but they need to be properly trained in them first. A lot of companies have great systems, but they aren’t very good at actually implementing them, and the primary reason for this is a lack of training.
“Operations — getting the work done — is seen as the priority, and training is only done if and when a bit of extra time is available. We fell into that trap a year ago. We had enjoyed a lot of growth and momentum, so we didn’t slow down. Eventually, we could see that this huge push, and the consequent lack of focus on the core values of the business, were affecting operations. So, we had to put the hammer down and refocus on systems, processes and culture. Today Prommac is back at the top of it’s game having been awarded the prestigious Service Provider of the year for 2017 by Sasol for both their Secunda and Sasolburg chemical complexes.
“If you want to know about the state of your company’s culture, go outside the business. We realised that we needed to ‘pour more Oros into the company’ by asking clients. We use customer surveys to track our own performance and to make sure that the company is in a healthy state. It’s a great way to monitor your organisation, and there are trigger questions that can be asked, which will give you immediate insight into the state of the culture.
“It’s important, of course, to ask your employees about the state of the business and its culture as well, but you should also ask your customers. Your clients will quickly pick up if something is wrong. The fact of the matter is, internal things like culture can have a dramatic effect on the level of service offered to customers. That’s why it’s so important to spend time on these internal things — they have a direct impact on every aspect of the business.
“Remember that clients understand the value of training. There is always a tension between training and operational requirements, but don’t assume that your clients will automatically be annoyed because you’re sending employees on training. Be open and honest, explain to a client that an employee who regularly services the company will be going on training. Ultimately, the client benefits if you spend time and money on an employee that they regularly deal with.
“For the most part, they will understand and respect your decision. At times, there will be push back, both from clients and from your own managers, but you need to be firm. In the long term, training is win-win for everyone involved. Also, you don’t want a client to become overly dependent on a single employee from your company. What if that employee quits? Training offers a good opportunity to swop out employees, and to ensure that you have a group of individuals who can be assigned to a specific client. We rotate our people to make sure that no single person becomes a knowledge expert on a client’s facility, so when we need to pull someone out of the system for training, it’s not the end of the world.
“Managers will often be your biggest challenge when it comes to training. Early on, we hired a lot of young people we could train from scratch. As we grew and needed more expertise, we started hiring senior employees with experience. When it came to things like systems, processes and culture, we actually had far more issues with some of the senior people.
“Someone with significant experience approaches things with preconceived notions and beliefs, so it can be more difficult to get buy-in from them. Don’t assume that training is only for entry-level employees. You need to focus on your senior people and make sure that they see the value of what you are doing. It doesn’t matter how much Oros you add to the mix if managers keep diluting it.”
When Jason English purchased Prommac late in 2012, the company had a turnover of less than R50 million. This has grown nearly ten fold in just under five years. How? By focusing on people, culture and training.
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