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Blue Label Telecoms: Mark and Brett Levy

Growth and innovation has been the Blue Label Telecoms hallmark since its inception. In a few short years, co-founders Mark and Brett Levy have created a global company worth billions

Juliet Pitman

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Mark and Brett Levy of Blue Label Telecoms

Lining the wall of the newly listed Blue Label Telecoms boardroom are hundreds of Johnnie Walker Blue Label bottles. “You can track the company’s entire history in those bottles. Each one tells a story,” says Mark Levy, who, together with his brother Brett, started the company as Blue Label Investments in 2001.

The bottles tell a story worth listening to and one that will no doubt serve as inspiration to all entrepreneurs who dream of making it big. Looking at the wall, you’d be forgiven for thinking you were in the company of ardent whisky-lovers, but this is not necessarily the case.

The Blue Label bottles are important because of what they signify. “The bottles are part of a company tradition that started at our inception. Brett and I decided that every time we signed a deal, we’d buy a bottle of Johnnie Walker Blue Label whisky and write the details of the deal on the back.

It’s not so much because we love whisky (although we’ve both drunk our fair share of what that wall represents), but rather because Blue Label is such an exclusive and aspirational brand. It symbolised success to us,” Mark explains.

From that tradition came the company’s name, which today has brand equity of its own. And thanks to the many deals signed, it produces and distributes a wide variety of pre-paid secure electronic tokens of value and transactional services, including pre-paid airtime, pre-paid electricity, bill payment, electronic funds transfer, gift vouchers, loyalty programmes, stored value cards, location based services and other pre-paid tokens of value (both physical and virtual) that are allied to the telecoms, utilities, insurance, financial services and transport industries.

On listing in November last year, Blue Label Telecoms which has a global presence, bought out its minority shareholders, raised R1,3 billion and entered into a strategic partnership with Microsoft’s Unlimited Potential Group. So, it’s unsurprising that the Levys are currently riding the crest of a wave. But rewind a couple of years and you’ll find them selling radios out of the boot of a car. “We’ve always been traders.

Our mother used to joke that if something wasn’t nailed down, we’d sell it. So while I was studying and Brett was still at school we used to drive to Pretoria to buy stock and then sell it from the boot of the car,” recalls Mark. After building up some capital, the brothers registered the company as Sounds Alive, operated out of a house and then eventually owned their first store.

“They were humble beginnings but we learned two things that have remained important. Firstly, consumers are generally lazy so if you make it convenient for them, they’ll buy from you. Secondly, we learnt about the importance of building and interacting with a distribution network and to this day, that remains one of our strengths,” he says.

Within a short while the brothers started bringing in their own products to sell to chain stores. Over time they built up a national distribution footprint which was to stand them in good stead in 2001 when they tendered for a nationwide Telkom distribution license for public payphones.

“We already had some experience in the pre-paid environment and had started trading in handsets and pre-paid vouchers through what was then The Prepaid Company. So when we landed the Telkom deal, the distribution network was in place. We were at an advantage because no one else was really interested in focusing on Telkom,” says Mark.

Even in those early days, Blue Label was starting to innovate. “We realised early on that the physical world is very limiting when it comes to things like pre-paid cards and the like, and there are a range of challenges that physical cards pose,” he explains.

Among these, the brothers identified as key issues, card pilferage at both a manufacturer and merchant level, the logistics and cost of moving and distributing stock (especially to small-time merchants) and stock management. So they came up with a solution that no one else had thought of and did away with the physical card altogether.

“If you think about it, the card was just a vehicle to get the secure PIN to the customer and we realised that there were better, more efficient ways of doing that, and if we could bypass the physical world we could save on costs and logistics and pilferage, and all those other hurdles,” explains Mark.

It was the tipping point of a business that today is built on providing a range of different enablers that get a pre-paid product from a supplier to a customer, all in the virtual space. The devices vary but all have in common the fact that they bypass the physical world.

For one application, Blue Label developed software that could be integrated into the mainframe solution of chain stores, allowing them to print pre-paid airtime PIN numbers from their till points, thus obviating the need for pre-paid cards. Another application is built into an ordinary credit card machine, turning it into a vending device that connects to Blue Label’s own back-end, thus providing smaller merchants with the ability to sell pre-paid products.

The company also pioneered the development of virtual vending machines that print pre-paid airtime PINs but don’t stock any physical cards. “The beauty of these is that you never miss a sale because you never run out of stock as you ordinarily do with a regular pre-paid vending machine,” explains Mark.

South Africa’s pre-paid market holds almost unlimited potential, particularly in the emerging sector and it was here that Blue Label turned its attention next, developing an application for informal pre-paid public phone street vendors. Mark explains:

“We wrote software for a very inexpensive handset that would allow a pre-paid vendor on the street to resell pre-paid minutes, decide how much he wanted to charge for them so he could make a small profit and tell him how much change to give a customer. The only thing it couldn’t do was print, but that wasn’t important because the customer writes the PIN down and uses it immediately.” The next major breakthrough came with the development of a bulk printing solution for pre-paid PIN numbers. “Still focusing on the emerging market, we developed a printing solution for wholesalers that allowed them print pre-paid products on demand. Because there is no physical stock and the numbers are printed only as and when they are required, there is no pilferage risk for the wholesaler, and they can sell the pre-paid PIN numbers in bulk to smaller spaza shop owners,” he explains.

But while Blue Label was first out the blocks with innovation, it had to wait for the market to catch up. One of the biggest challenges the Levys faced was how to re-educate the market about virtual pre-paid products. As Mark says: “People were used to a physical card that they felt held a store of value, and it has been a constant re-education process to convince customers that the value is held in the PIN and that it doesn’t matter what format the PIN comes in. We also had to gain the confidence of the merchants.”

But importantly, he goes on to add that once the market had accepted the new method of transacting in pre-paid, the sky was literally the limit. “It enables you to sell other things in the same way and when it comes to pre-paid, we haven’t even started,” he says.

Blue Label’s view is that the world will move increasingly towards greater use of pre-paid applications and that South Africa is a prime market. “There are tens of thousands of South Africans with cash who don’t have bank accounts or credit cards and they are willing to transact in First World products if you only provide them with the opportunity to do so. And we believe there’s no reason why they shouldn’t, so we’ve developed things like pre-paid funeral insurance in partnership with Hollard, and there are other opportunities in pre-paid electricity or pre-paid tickets to events such as soccer games. Although telephony is where pre-paid started, the future is in no way limited to that sector. Once you’ve built the environment, the doors start to open and in cash dominant emerging markets, the possibilities are almost endless,” he says.

The First World too is increasingly making use of pre-paid products. “In the UK for example, you can buy pre-paid bus tickets.” Where pre-paid buyers were once penalised because they weren’t loyal to a particular service provider, this practice is becoming less frequent, particularly when it comes to products that are not loyalty dependant.

Going global has been both exciting and challenging. “The challenge has been to find the right partners in the countries where we have a presence but in all instances we’ve been very lucky in this regard. I believe in the laws of attraction and I think that we’ve managed to attract the right people because of what the company is,” says Mark.

Undoubtedly one of its most important partnerships is the one with Microsoft. The relationship will further the company’s strategy of establishing a global transactional services platform in emerging markets and with Microsoft’s support, it aims to increase its global footprint of contact points with customers.

Microsoft will provide the company with advertising services, and access and licenses to various web-based and mobile technologies and services. “They’re a fantastic partner to have on board and we intend making the most of the synergies that exist,” says Mark.

The deal came at the time that the company listed in November 2007, a development that Mark says has definitely lent it credibility and weight in the global arena. The listing was, however, somewhat marred by reports and an investigation into directors’ contraventions of the JSE Limited Listing Requirements.

Three directors of a major subsidiary were found to be in contravention of the requirements and have been since been disciplined. The company has accepted the JSE’s findings and points out that the trades did not take place during a closed period or in respect of which there were any insider trading irregularities. The brothers are confident that the matter is now behind them.

Mark describes the listing process as very positive, particularly because of the growth opportunities it has created. “A number of factors influenced our decision to list, including the desire to eradicate some debt, create additional visibility on the global stage, incentivise staff, buy out some of our minorities and create a bigger coffer of expansion and organic growth funds,” he says.

R450 million is now available for growth, and he indicates that the company will be looking at different vertical growth opportunities and strategic acquisitions, both locally and internationally, that dovetail with what it hopes to achieve across a number of markets.

“I think the biggest challenge now is to manage that growth, but what’s exciting is that we’re not under pressure to do anything yet. The R450 million has not been earmarked and there’s no need for it to burn a hole in our pockets. We need to grow for the right reasons.”

Growth and innovation has been the company’s hallmark since its inception. In a few short years, the Levys have created a global company worth billions (its interim results for the year showed pro-forma revenue of R6,17 billion). Looking to the future, Mark concludes:“We’ve only just begun.”

Learn cash management early on

Blue Label’s business has always been about cash management, says Mark Levy, and the company’s accountants still run a tight financial ship. He believes that the best time to learn effective cash management and good financial habits is early on.

“When you’re making big money, you don’t notice if you lose money here and there. But when you’re small and you’re making small margins, those losses hurt you, so you learn to manage your money wisely,” he says. “Because we didn’t have money and our margins were small, it really taught us to watch our money, because every missing buck was a big one. That culture and mind-set is now a part of the company and has filtered down everywhere. What we’ve lost in stock in seven years of trading is minimal because of that culture,” he concludes.

Juliet Pitman is a features writer at Entrepreneur Magazine.

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Going The Extra Mile With Neil Robinson Of Relate Bracelets

In business, your offering is only as good as your relationships. Neil Robinson from Relate Bracelets explains how FedEx Express has helped the business grow into Africa and beyond.

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Vital stats

  • Who? Neil Robinson
  • Company: Relate Bracelets
  • Position: Managing Director
  • Visit: relate.org.za

Neil Robinson, MD of Relate Bracelets understands the importance of business relationships. While Relate is a non-profit organisation, it is run like a business. It does not rely on donors, but instead produces and sells a product.

For each bracelet sold, one third of the income goes towards the materials and operating costs, one third supports the people who produce the bracelets, and one third goes to the charity for which that particular bracelet is branded.

In order for the business model to work and be sustainable, Relate’s partners are incredibly important. These include the retail chains that stock the product and who provide prime point-of-sale positioning, the charities who Relate works with, and most importantly, Relate’s logistics service provider, FedEx Express.

“Retail is all about visibility and availability,” explains Neil. “A brand is a living, breathing thing. People can see it, use it, and comment on it, but if they can’t access it, it’s all for naught. And so, at the point of purchase, it’s both visible and available, or it’s not.

“Logistics is key. You need to get your product to the retailer on time, 100% of the time. The expertise and focus that FedEx displays in supply chain and logistics encompasses far more than just retail, they understand our specific needs, making them a strategic partner, rather than merely a supplier.”

Related: Zenzele Fitness’s Clever Tactics To Grow In Next To No Time

Building a relationship

The FedEx/Relate Bracelets relationship stretches back to 2009, when Relate Bracelets launched its first campaign with ‘Unite Against Malaria’ leading up to the 2010 FIFA World Cup.

“We did the first campaign in partnership with Nando’s,” says Neil. “Robbie Brozin was passionate about the cause, and he pulled in strategic partners to launch the campaign. Within two years we’d shipped hundreds of thousands of bracelets. FedEx was an incredible partner, ensuring the integrity of our product and time-sensitive deliveries, and we’ve worked with them ever since.”

As with all good B2B relationships, the FedEx and Relate Bracelets teams understand that regular strategy sessions and updates are important.

“FedEx understands the inner workings of our business,” says Neil.

“A successful campaign has multiple elements, from planning and strategy, to marketing support, pricing and distribution planning. Of these, distribution planning is the most critical. For us, the bridge between our brand and the consumer is logistics. FedEx have delivered beyond expectations. They literally and figuratively go the extra mile for us.”

Protecting a brand

FedEx has customers across different industries and each of their needs are different. In the case of Relate, who operate in the retail sector, buying patterns are important. “Retailers run a tight ship,” explains Neil.

“They have planning cycles and seasons. Besides the fact that penalty clauses are built into contracts, you can’t miss a deadline by two days, or you’re in the next cycle, and that might be two weeks later. Not only are you missing out on valuable shelf time, but this can affect an entire campaign. Lost sales can also influence the retailers’ buying decision the following season. FedEx has made it their business to understand our business, so they know what’s at stake and what’s important to us.”

Supporting growth

FedEx has also played an integral role in the overall expansion of Relate Bracelets, particularly into new markets. “As a global organisation, FedEx has been absolutely critical in supporting us to grow our business into Africa, the US, Australia, the UK, Western Europe, and now New Zealand. They play an enormous role in the delivery of our products, with sophisticated tracking systems ensuring that the quality and integrity of our products are maintained.”

Through the relationship with FedEx, Relate experiences the benefits of working with a globally recognised and credible brand. “When you work with quality, you get quality.”

Related: Entrepreneur BB Moloi’s Inspiring Story of Rise To Success Through Grit And Hard Work

The business

If you’ve ever bought a beaded bracelet that supports a cause (for example: United Against Malaria, Operation Smile SA or PinkDrive), chances are it was a Relate Bracelet. If you bought it at Woolworths, Clicks, Sorbet or Foschini, it most definitely was.

To date, Relate Bracelets has raised more than R40 million, which supports various charities and ‘gogos’, women living on government grants and supporting their grandchildren, and who desperately need the additional income Relate Bracelets provides.

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Entrepreneur Profiles

Lichaba Creations Founder Max Lichaba’s Inspiring Journey To Entrepreneurial Success

Max Lichaba finished school with a Grade 10 and no prospects, except for a burning desire to do more with his life than become a miner like all the other men in his community. This is the story of how he started a jewellery business, lost everything, and painstakingly built it up from scratch again.

Nadine Todd

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I grew up living in the garage of a friend’s house in the small town of Virginia outside Welkom. My dad lived on the mines, my mom had five kids and nowhere to live, and he gave us a roof over our heads. It was a mining town, and I was expected to become a miner. But, my mom wanted us to have an education. She never blamed anyone for our situation — she just tried to make a plan. School was one of those plans. But, it needed to be a school close to home, and free — or as close to free as possible. That left only one option: A remedial school in Virginia.

Looking back, it had its pros and cons. I got to work a lot with my hands, and discovered I was really good at it. But the school ended at Grade 10, which meant I would never matriculate, and my maths and language literacy skills weren’t great by the time I left. I was never challenged, and an unchallenged mind doesn’t grow.

I’ve only recently completed some financial literacy courses so that I can run my books and understand my numbers. I’d left that to my accountants, and learnt it’s unwise — you have to be on top of your numbers. I didn’t have these skills from my youth, so I needed to go out and get them, ten years after starting my own business. But, if you’re serious about growth, it’s never too late.

By the late 1990s I was 16, helping my mom sell fruit and vegetables on the side of the road, and my school career was over — but then another opportunity presented itself. Harmony Gold owned the mines in our area and had developed the Harmony Gold Jewellery School to upskill the local community.

I wasn’t satisfied with my Grade 10 qualification. I didn’t want to be a miner, and I wanted more than selling fruit and veg on the side of the road. I knew I was good with my hands, and I saw the jewellery school as an opportunity.

Related: How To Build A Disruptive Attitude

I applied late, but that didn’t stop me. Every day I went to the school, and sat in the waiting room, determined to secure a spot if one opened up. There was one student who hadn’t pitched at the start. I pestered the registrations office to let me take her spot. I was relentless. One day I received the call: “Fine, the place is yours. When can you start?” I replied that I was on my way.

Everyone at the school had completed matric. I was the youngest person in the room with the lowest qualification — but I was good with my hands and hungry for success. Six months later I was one of the best in the class. I spent all my time there, practising and getting better and better at my new craft. I realised that I wanted to make beautiful things I could sell — I was already thinking about a small business.

As we were finishing our course, a local jewellery manufacturer, Regal Manufacturing came to the school and asked for two of their best students. I was chosen, which secured my first job in the sector. The company manufactured jewellery and exported it to South America. With 3 000 employees, it was a major employer in our community, predominantly of women. After nine months, I had the down-payment for my first car, and had just moved into my first flat, when we arrived at work to closed gates. Overnight, and with no warning, the company had closed down. We were all given a letter, stating that we would receive our salaries at the end of the week, and that the business had been liquidated.

Finding a light

max-lichaba-entrepreneurThe women around me — many of whom were the sole breadwinners in their households — were kneeling and wailing in shock. I was also in shock, coupled with a good healthy dose of anger. And then I started thinking. I had no dependants. No children relying on me to be fed. I was 19 and I’d find a job. But what about these women? I couldn’t help everyone, but there were four gogos I knew. In my community, gogos are the backbone of everything. I didn’t hesitate, I just said to them, let’s start something together. Let’s meet at my house tomorrow. We can make this work.

Here’s the problem. A machine costs between R50 000 and R100 000. We didn’t even have R5 000. We needed to start small. Putting our heads together, we realised that the simplest thing — and one we could afford — was beads. We needed to start bringing in cash, and this was the fastest, simplest way.

Between us we collected R1 000 to buy beads and start working from my flat. The local Nigerian market loved them, and then we had a stroke of inspiration — we approached church choirs, offering to make each member a unique set of beads that they could wear at competitions. This became a steady source of income.

We spent 18 months focusing on beads, and then I started looking at our growth opportunities. The business was very hand to mouth — we used our cash to buy more materials. There wasn’t room for expansion, and after a year and a half I wasn’t any closer to buying machines. So, what could we do?

Related: 20 Quotes On Coping With Change From Successful Entrepreneurs And Leaders

After researching SME support programmes, I found SAB’s Kickstarter competition and we entered. We won in our region, and with the R20 000 prize money were able to buy small machines. We didn’t have an innovative business, but we were operational. I believe that gave SAB faith in our business.

Start small, but start — that’s the key. I could have gone out and tried to figure out how to raise R100 000 for fancy machines. I didn’t do that. Instead, I focused on trading — bringing in cash to feed and support us.

The equipment took us to the next level, and I was able to look for our next opportunity, which was a programme run between the Free State Department of Tourism and the Dti that helped local manufacturers market their products overseas. There were many forms to fill in and our capacity to deliver if orders came in was checked, but eventually we were approved for the programme.

We were still in my flat, and we needed more space — but we couldn’t afford rent. We found a tiny shop and convinced the landlord to let us move in, if we agreed to start paying R500 per month as soon as we could. Always ask — you never know what the answer will be. If you’re polite and friendly, people often want to help you — or at least give you the benefit of the doubt.

When everything goes wrong

kwa-lichaba-founderWhile we were gearing up for our first foray into global markets, I concentrated on local growth — and that meant Joburg. I didn’t have a car, and couldn’t afford transport, so I hitched rides, wearing a suit and tie. I had a jewellery business and needed to look the part. I made sure I was always the smartest looking guy in the room. If you take yourself seriously and project where you want to be, others will take you seriously too.

I really struggled to get our jewellery into local stores, but we finished the dti’s six-month programme and were considered export-ready.

Step one was making the products. The African element was popular, so we focused on that. Our choir market had grown, and we were able to use the cash to manufacture more products for export from those sales. Our first trip was to Nairobi and we received immediate orders. Our second was to London, and we realised we were onto something.

The Dti gave us an incredible opportunity. They work on turnovers, and move you into different regions based on your level. We worked with them until 2015, and gained a foundation for growth. They also helped us build up our cash reserves.

At the time, we were exporting our jewellery successfully, we’d won Kickstarter and had deployed those funds into the business. But, I was looking for more. Success makes you feel invincible, and my experiences with the Dti had been positive. Then I found another opportunity: We could open a school, similar to the one Harmony had run, and give youth the opportunity I’d received. The Dti funds initiatives like this, which meant we could give back to our youth, with government support.

I achieved the NQF accreditations I needed, and set up the school at a cost of R900 000. We were told we’d be paid within 60 to 90 days of each student enrolling, and we took the plunge.

But harsh reality stepped in. I took my eye off Lichaba Creations to concentrate on the school at a time when we’d moved into new, bigger premises to handle our increased international orders. The first payments came through 12 months later than expected. Lichaba Creations was effectively carrying the school, and the result was that we couldn’t pay rent for the jewellery business.

Related: Successful People Always Chase the Impossible – Here’s Why

After two months our landlord told us he was locking our doors. I begged him for more time, promising I’d pay him soon. I kept hoping the Dti payments would come through, but they didn’t. I was in Joburg trying to get paid when I received a call from someone I thought was my friend — he was laughing. Our doors had been locked and all my equipment was being auctioned off. I raced back to Welkom but couldn’t stop it. I owed R30 000 and couldn’t pay it. I watched my machines get sold for R300, and I couldn’t even afford to buy them myself.

At the same time, I realised that as I’d built the business, I’d paid less attention to family, and more to friends — and I was learning that they weren’t very good friends. They’d laughed at my fate and told me that they hadn’t expected my good fortune to last. I realised I was surrounded by people who didn’t truly care about me, or believe in me, and some were even satisfied at my loss. It was time for change.

One of the toughest things you’ll ever do

Starting over is one of the hardest things in life. I had nothing, and worse, I’d failed the people I had wanted to protect. They were all jobless, my old ladies and my new staff. The younger staff who hadn’t been with me at the beginning were particularly angry and wanted their salaries. I was devastated.

The one light at the end of my tunnel was the support of my brothers, who came back to Welkom from Joburg to help me. It was a stark and humbling reminder of the value of family. I’d been open and shared my story, asking my friends for assistance. They all said no. I realised these were just ordinary people, and I’d put too much faith in them. My brothers were the opposite. They each took out a R3 000 loan that they couldn’t afford to help me pay my staff and settle some debt. And they did it in faith, believing I would make a plan to pay them back. I would never neglect my family again.

I needed to get back on my feet, and I no longer had a business, or the school. I started by reaching out to my old school — could I teach there? For six months, that’s what I did. I taught and saved every cent I could. I sold most of my furniture, and slept on a mattress on the floor. When I had enough cash in the bank, I started visiting all the pawn shops in Welkom. I knew my equipment was specialised, and I had a feeling that the people who had bought it wouldn’t be able to use it. I was right — I started to find my machines at different pawn shops. Piece by piece, I bought them back.

It took eight months, but I was able to get back up and running — at a very small scale. I worked from my flat, exporting to India and the UK. I was totally focused. I vowed I would never lose sight of my core business again, even if I pursued other ventures.

I finally got the cash I was owed for the school, and paid my gogos’ retirement packages. I then made my second biggest mistake. No matter what we did, we couldn’t get into retail stores in South Africa. There isn’t enough of a funnel for gold jewellery in the local market. But, we didn’t want to admit defeat, and so we opened our own stores in a Pick n Pay centre in Welkom, in Randburg, and in Orange Grove. The money we made overseas went into these black holes — and we did it for three years. Having a personality that won’t admit defeat has its pros and cons. It’s kept me going in the face of enormous adversity, but it’s also sustained me when I should have admitted defeat and moved on. We spent too much on stores for limited returns. Maybe it was because I didn’t want to admit a second defeat so soon after the failure of the school. Whatever it was, I held on too long.

But, you live and you learn. Sometimes you just have to cut your losses and move on.

Starting over and pursuing passions

I wasn’t done trying new things though. I’ve always loved cars. When I was at school, we learnt to fix cars. I’d had this idea for a while: A luxury car wash where you could sit comfortably and eat chesa nyama and drink a beer while you waited. I thought the combination would attract more people. At that stage, we’d closed down two of our Lichaba Creations stores and only had one still operational. I bought a plot on Vilakazi Street in Soweto and started building my dream, brick by brick. It’s a big building, and it took my whole family a year to finish. It was funded through the jewellery business, so we built on and off, depending on cash flow.

I wanted to launch in December, so towards the end of 2013 we all put our backs into getting it finished. My brothers travelled from their homes in Vereeniging every day, and together we got it ready. We opened on 16 December and haven’t looked back.

Related: 4 Success Lessons From The Entrepreneur Who Quietly Grew Pinterest Into A $12 Billion Company

Kwa Lichaba gives us incredible returns. We chose to charge an entrance fee to attract a specific clientele. It was trial and error at the beginning, but slowly we’ve shaped one of the go-to venues in Soweto, with a vibrant, loyal clientele.

We realised we had something worth more than gold: Access to a captive, middle to upper-middle class black market. It took us a year to get traction with the concept, but we now host corporate-sponsored functions throughout the year, giving brands access to our clientele. It’s an incredible model, and one we replicated in Lesotho — my grandmother’s place of birth — in 2016, and this time we didn’t lay a brick ourselves.

Lichaba Custom Rides, a car customisation and sound business, followed, reflecting my passion for cars. We also opened a refinery to recycle precious metals ourselves, so that we can supply the gold we need for Lichaba Creations, which continues to do very well overseas.

I’m in a good place. I know that life — and business — have their ups and downs, and I have no doubt there are more lessons to learn on this journey. As long as I apply those lessons and keep picking myself up, I will always have something to show for my hard work, and a legacy to leave for my children and the people I love.

Lessons Learnt

kwa-lichaba-event

Know your numbers

This sounds so obvious, but I trusted people with my books for years — mainly because I wasn’t financially literate. I reached a point where I would no longer accept that I couldn’t run my own books, and so I upskilled myself. I took business management, bookkeeping and finance courses. It’s never too late to learn something new.

Education is everything

This is one area where I’m lacking. I’m filling the gaps as much as I can in my later life, and determined to give my children a better education than I had. I also want to help other children. Through the Lichaba Foundation, we close Kwa Lichaba on Wednesdays so that we can feed Soweto’s children and gogos in need once a week. We also have social workers and educators on site, to try and do as much as we can. Once a week isn’t enough, but it’s a start — and you always need to start somewhere.

Pay it forward

There are so many people who have helped me over the years. Never forget that you don’t achieve success alone. It always takes a village. I believe it’s our duty to give back if we succeed. We started out making boerewors rolls from the boot of our car and handing them out in townships. Today we have the Lichaba Foundation. We support the children of Soweto, have a magazine that supports local businesses and gives them free marketing, and the Miss Lichaba competition, an annual pageant for Soweto-based teens. The winner receives free university tuition, and is the face of all our businesses for a year. She is also expected to give back to her community, paying the idea of social awareness forward.

Work as a community

All of our businesses operate within a community — which is true of all businesses. You can’t operate as an island, and ignore those around you. And why would you want to? It creates goodwill, a vibrancy that operating alone could never achieve, and encourages everyone to work together towards shared goals.

Look for your own opportunities

When I look back at my life, it was tough as a kid. There was so much pain and embarrassment. Kids laughed at me because I sold fruit and vegetables at the side of the road and went to a remedial school. I was driven to prove myself. I’m a human being and a man. It’s my life, and only I can prove myself. I wouldn’t let my circumstances hold me back. I saw these things as challenges and obstacles I had to face, but also as opportunities. You need to look for opportunity. No one else will do that for you.


Listen to the podcast

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Matt Brown interviews Max Lichaba and unpacks his incredible journey from small-town kid to successful entrepreneur.

To listen to the podcast, go to www.mattbrownmedia.co.za or find the Matt Brown Show on iTunes or Stitcher.

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Co-Founder Of DataProphet Daniel Schwartzkopff Talks AI And How To Prepare For The Coming Change

Artificial Intelligence is set to change the way all companies do business, says Daniel Schwartzkopff of DataProphet. Those who don’t prepare for this inevitability right now run the risk of getting left behind.

GG van Rooyen

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Vital Stats

  • Player: Daniel Schwartzkopff
  • Company: DataProphet
  • Position: Commercial director and co-founder
  • Established: 2013
  • Visit: dataprophet.com
  • About: DataProphet is comprised of a diverse team of skilled computer scientists, statisticians, actuaries, engineers and mathematicians who deliver actionable Artificial Intelligence solutions to organisations.

Can you give us some background on yourself? What sparked your interest in the fields of AI and machine learning?

I first developed an interest in AI and machine learning when trying to build a system to play poker against humans and win in 2011. Subsequently, it has been proven that heads-up limit hold’em poker is a solved game, meaning there are now unbeatable AI bots in this variant of the game.

How did DataProphet come about, and what does the company do?

DataProphet started as a machine learning consultancy in 2013 after noting the lack of such businesses in South Africa. This was at the beginning of the machine learning renaissance — the advent of graphic processing unit (GPU) processing had enabled techniques developed in the 1950s (neural networks and deep learning) to finally become viable. The use of a GPU as opposed to the CPU to perform the calculations necessary for deep learning brought about a 100x increase in calculation speed. This allowed companies and individuals access to the technology that only a nation-state with a supercomputer would have previously had.

DataProphet developed expertise across many industries with a major focus on insurance, financial services and manufacturing and began to develop products. It is now primarily focused on the global expansion and distribution of its Omni manufacturing product that is able to massively reduce defect rates by optimising with machine learning. This software is in production at several global sites.

One of our clients, Atlantis Foundries, the largest foundry in the southern hemisphere has been using our software since the beginning of the year and has achieved a 0% defect rate on shipped parts for several months — a very exciting milestone for us.

Is there a difference between AI and machine learning?

This is a fairly contentious question and largely depends on who you ask. In my opinion, Artificial Intelligence refers to the broader concept of enabling machines to perform tasks that previously only humans would have been able to do. In some narrow applications machines can now perform these tasks much better than humans.

Machine learning is one way to enable Artificial Intelligence and refers to the idea that machines can perform as more than just calculators, essentially discovering the underlying patterns/equations that govern a system just by providing them with enough data.

These can seem like such high-level concepts, so can you give us concrete examples of how they can affect of a business?

All industries will use machine learning as a fundamental part of their operation in the future. For example, machine learning can provide more accurate pricing models for insurance. It can reduce defect rates in manufacturing by predicting whether a part will be faulty, and then adjust the operating parameters to produce less faulty parts in future. Netflix and Amazon use machine learning in their recommendation systems to provide you with content and products that you want and thereby increase sales.

Self-driving cars are entirely powered by machine learning. For retail, machine learning can predict what a customer will buy and generate personalised specials based on anchor items that will draw the customer back to the store. It can perform more accurate demand forecasting than any linear model.

The opportunities for implementing machine learning in business are vast and most of the S&P 500 either have in-house data science teams or are using machine-learning powered products already. The only requirement is data. Data is extremely valuable and generally enterprise-size businesses have the quantity of data necessary to build an effective model.

How will these two concepts disrupt the working environment?

Rules-based professions can and will be displaced entirely by AI systems. Lawyers, doctors, accountants and so on. Jobs requiring empathy and human interaction will be the last to go, along with engineers, programmers and other professions that have a design or management element.

How should companies prepare for the coming change?

Businesses should begin to aggressively store and utilise their data. Machine learning can significantly improve efficiencies in almost all businesses.

In 1965, corporations remained in the S&P 500 Index for an average of 33 years; by 2012 this had shrunk to 18 years. In a single year, Kodak’s net earnings dropped from $1,29 billion to $5 million. All they did was fail to act on a market shift with the introduction of the digital camera. Machine learning is having the same effect on other  industries. Uber’s core business model is based around machine learning and they are effectively shutting down the metered cab businesses in every city they operate in.

Taxi businesses faced no competition for decades and grew complacent and failed to innovate. Now some of the largest cab companies in the world have split up and filed for bankruptcy protection. Lemonade Insurance Company is disrupting the insurance industry with crazy growth figures and much lower pricing because of their use of machine learning and an app to radically change the status quo. This is not the distant future. The time to engage with machine learning is now.

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