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Avoid The Founder’s Trap And Learn From Propertuity’s High-Impact Growth

This is how you take one small idea — to bring communities, development and businesses back to the inner city through an ambitious urban regeneration project — and turn it into a reality. Welcome to Maboneng, place of light, nestled in the heart of Joburg’s inner city.

Nadine Todd

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jonathan-liebmann

Vital Stats

  • 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

propertuity

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.”

Related: Meet The 40 Richest Self-Made Entrepreneurs On Earth

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

Propertuity

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.”

Related: How Mark Sham Earned His Suits & Sneakers

2Strategies need to evolve

propertuitys-canteen

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):

  1. Create a low volume car, which would necessarily be expensive
  2. Use that money to develop a medium volume car at a lower price
  3. Use that money to create an affordable, high volume car
  4. Provide solar power. No kidding, this has literally been on our website for ten years.

In short, Master Plan, Part Deux is:

  1. Create stunning solar roofs with seamlessly integrated battery storage
  2. Expand the electric vehicle product line to address all major segments
  3. Develop a self-driving capability that is 10X safer than manual via massive fleet learning
  4. 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

propertuity-building

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
it possible.”

Having a dedicated GM in Durban has played an integral role in helping the business to scale geographically.

Related: 27 Of The Richest People In South Africa

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.”

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

Entrepreneur Profiles

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.

Nadine Todd

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brand-cartel

Vital Stats

  • 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.

Related: What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew

“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.

Related: How Matthew Piper And Karidas Tshintsholo Launched Their First Business From Their UCT Dorm Rooms

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.”

brand-cartel-south-african-agency

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.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

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.

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Entrepreneur Profiles

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?

Monique Verduyn

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“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.”

Vital Stats

  • 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.

Related: 5 Key Areas Pratley Are Using For Current And Future Growth

“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.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

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.”

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Entrepreneur Profiles

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.

Nadine Todd

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tim-hogins

Vital Stats

  • 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.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

The in-built art of tenacity

green-outdoor-gyms

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

gog-water-park

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.

Related: The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk

Seizing opportunities

gog-exercise

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-exercise-park

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.”

Related: 6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Next level

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.

Healthy Living

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.

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