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Building A Multimillion Rand Event Business

The special events industry has grown enormously in the past decade. In South Africa, two event entrepreneurs stand out from the crowd. Find out how they did it and what they learnt about starting and growing event-based ventures.

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Design Indaba

Ravi Naidoo turned the Design Indaba into the world’s top design conference generating R115 million in sales

Designing a Winning Business Model to Showcase SA Talents

An academic at heart, Ravi Naidoo, spent his youth engrossed in his studies. He completed a degree in medicine at UCT and was reading for his masters in the early 1990s – a time when change was in the air and South Africa was on the brink of a socio-economic revolution.

There was something big happening and Naidoo wanted to be part of it. In addition to his love for learning, he has always had a fetish for all things creative. Even as a serious undergrad med student, he had completed several arts courses and was a seasoned speech and drama enthusiast.

“I wanted to do something new and challenging,” Naidoo recalls. “So I wrote a wacky, irreverent letter to a whole lot of ad agencies.” He won’t be too specific about the content, but it had something to do with not wanting to spend the rest of his life nailed to a stool in a dingy lab. He received two replies. One agency wanted him to do a graduate degree in advertising. The other, Young & Rubicam, had just launched a pharmaceutical division and was only too keen to welcome him on board.

That’s how he got into advertising. Within six months he was an account director. But come 1993, Naidoo was ready for another challenge and he convinced his wife to enrol with him to do an MBA. They were the only two people of colour in the class, and as usual Naidoo excelled and was named MBA student of the year.

It was eight months into the programme that he launched Interactive Africa, the company that was to become best known for the Design Indaba, an internationally recognised conference and showcase of design talent that attracts around 40 000 people today from all the creative industries – graphic design, advertising, film, music, fashion, industrial design, architecture, craft, visual art, new media, publishing, radio, television and performance art.

How it all started

Interactive Africa started life as a marketing project management company. “I had found the ad industry a trifle too formulaic, and I was convinced that we needed other models and platforms to help marketers help clients beyond the ‘picture, logo, promise’ advertising formula. Instead, we focus on creativity, media leverage and business strategy, all governed by a measurable process.”

One of his first successes under the Interactive Africa banner was the creation of the Vodaworld magazine in 1994. Today, Interactive Africa is Vodacom’s longest-serving marketing agency. More recently, the company was instrumental in getting South Africa’s 2010 World Cup bid off the ground.

But it’s the Design Indaba, a brand that Naidoo created from scratch, that he is most proud of, and rightly so. This annual event was launched at the Mount Nelson in 1995 and attended by just 200 delegates. At the time, Naidoo was driven by the conviction that the South African economy had to become less dependent on raw commodities and start to leverage value-added products. It was a reality that Naidoo set out to change.

“We had great skills sets in this country at that time, but what we needed was to look at things afresh. I was coming at the problem from a strategic point of view – by 1994 our economy was moribund, and we were merely selling commodities without producing anything of real value. “As the world’s top gold producer, for example, the country has not been known for its jewellery design. Yet, when a gold ingot is turned into beautiful jewellery, the value goes up enormously. My goal was to work towards creating a society that places greater value on design and innovation.”

That first Design Indaba delivered way beyond Naidoo’s expectations. “I hadn’t realised just how starved people were for creativity and inspiration,” he says. “Not only had we been isolated from the rest of the world, but we had also become insular and narrow-minded as a result.”

One of the highlights of that first event was a presentation given by the creative directors behind the Atlanta Olympic Games bid. They gave the delegates some deep insight into what it takes to package a city. People were blown away and those working on Cape Town’s 2004 Olympic bid got a nice little wake-up call. They realised they had to up the tempo and increase their workload.

A post-conference survey showed that 92% of delegates had responded positively and wanted Naidoo to do it again. “I was a bit of an accidental entrepreneur,” he laughs. “I had a permanent staff of two at the time so I made a pledge to the design community to make the Design Indaba a biennial event. I really had no idea that it would become such a money spinner at the time.”

Subsequent events were held in 1997 (attendances doubled), 1999 (attendances went up by 70%) and 2001 (attendances doubled again), with the Design Indaba outgrowing its venue every time. From taking over the entire V&A Waterfront, it moved to Artscape and then to the Cape Town International Convention Centre after it opened in 2003.

Building revenue streams

Following the 2001 event, Naidoo decided that it was time to make it an annual happening. However, creating an event-based business is not about an annual three-day frolic, Naidoo cautions. “You actually have to build a solid business with strong revenue streams and professional staff, not casual labourers. Don’t think you can earn money in a few days to make that business sustainable for the other 362 days of the year.”

That’s why he introduced additional income channels such as the Design Indaba magazine, a multi-award winning quarterly publication that champions local creativity, features international expertise and investigates how design can create a better world. On diversification, Naidoo points out that you can diversify only when you know exactly what you stand for. In 2004, he launched the Design Indaba Expo, a 100% South African celebration of the country’s best creative talent across all the creative industries.

“The Design Indaba was in its eighth incarnation by then and we had to find a way to really differentiate it – we had to actually spend ahead of where the market was. There was not enough of a critical mass to justify the expo, but that is what turned it into a multi-sectoral event. And rather than just selling space to exhibitors, we curate the expo and we have an independent curatorial board of leading creatives to do this.”

That’s because standards are important, he adds. “We only feature what is home-grown, high-end and exportable. We are not interested in derivatives and mimicry. No knock-offs from Milan.”“While the conference has always been fiercely global, the expo is entirely local. What we have today is a global, best-in-class conference with speakers from around the world, accompanied on the flip side by an exhibition of top local talent.”

Making it all work

One of the great lessons Naidoo learnt along the way is that  in the events business, you have to get out there and campaign, canvas and forge relationships with people and organisations. The design Indaba has thrived because he has never run it like a creative or cultural event; instead it’s managed like a sports event. That means securing robust sponsorship, ensuring accountability and strict auditing processes, and partnering with media organisations all around the world. These are what Naidoo calls the building blocks of success.

“As we grew, we set out to be the best – to become the Cannes of the design world. That’s why we now have around 40 000 people attending. We are intensely competitive.”

He straightforwardly declares the Design Indaba to be better than similar events held in design hot spots like London and San Francisco. It’s a claim borne out by EIBTM, a top global exhibition for the conference, incentives, events, business travel and meetings industry, which in 2005 voted the Design Indaba the best conference in the world. To date, it’s the only African event to be awarded this status.

Naidoo is also aiming to open up another revenue steam through the Design Indaba’s web strategy which includes an e-commerce channel.

“The retail side of the expo has been very successful,” he explains. “In 2009, we had a total of R115 million in sales in three days. Our goal now is to build a design portal that will enable people here and abroad to buy South African artefacts, like Imiso ceramics, online.”

Having built a strong brand, Naidoo and his team are often invited to speak at conferences around the world. He was invited to Singapore to speak about the relationship between design and farming, and paid $50 000 for the favour.

Partners have played a major role in ensuring the sustainability of the event, with Naidoo having big names on board, including Woolworths, Absa, DSTV, Grolsch, Jupiter Drawing Room, Sappi, South African Tourism, Chaywa, and One & Only. It’s also key to remember, Naidoo says, that the Design Indaba is owned by Interactive Africa, itself a big business with clients like Vodacom and FIFA.

Managing Money Matters

Naidoo recalls that in the beginning, he was interested in breaking even, but had to tighten up his infrastructure and his team as the business grew. Financial modelling was vital, and he spent a great deal of time working out what the market could bear from a pricing point of view.

“The Design Indaba is the cheapest creative event in the world, priced at around $500 to $600. Compared to similar events that come in at 2 000 Euros, that’s a compelling offer – you have access to a whole world of design at a rand-based cost. It was important to price the event so that it’s accessible to South Africans.”

When it comes to finance, money is nothing, Naidoo maintains. Leading with passion is what counts. Nonetheless, he had to raise R50 000 to launch the first Design Indaba. He did so through trade exchanges, barters and payments in kind.

Raising money was doubly difficult for Naidoo because his idea was untried and no-one knew who he was. Added to that, he was tackling a market that is known less for its appreciation of culture and design and more for its obsession with politics and sport. “I got the money because I had a big idea, a great concept, a unique proposition.” Call it what you will, the clincher was his ability to articulate his vision clearly. It’s one way in which he has benefitted from his speech and drama classes.

“You need to have persuasive powers to get people to buy into your idea. You need to know how to package and present your plan. Everything we do has style and a compelling narrative attached to it.” The conference turned a profit from the word go. In that first year, turnover was referred to in terms of hundreds and thousands; today it’s at around R20 million. When the expo was launched in 2004, Naidoo took a big risk and spent a lot of money to start it. It was a move that began to pay off only two years down the line. At first, he struggled to find 80 exhibitors when he knew that he needed 200 to break even. Today there are more than 300. He notes that early bird offers are the lifeblood of a young events company and that’s what has enabled the expo to grow alongside the conference.

How the Design Indaba become a worldwide success?

Naidoo attributes the prestige of the event – reputation being a key factor in his industry – to maintaining global competitiveness and aiming extremely high. There is simply nothing like it in the world – 60 creative leaders in one room over three days and around 300 exhibitors of local merchandise across a range of industry sectors in a top quality venue.

“One of the key differentiators is the fact that while industry sectors generally are siloed, we have done away with the traditional lines between things like design and biology, design and agriculture.” He also warns against the cut-and-paste approach applied by many events companies. “When we look for speakers, we do not deal with speakers’ bureaus, nor do we choose MCs from the celebrity circuit. We want uniqueness, not the same messages that are trotted out at every function.”

The toughest challenge for Naidoo has been the relationship with local, provincial and national government. Where private companies have supported the Design Indaba and invested in growing it into what it is today, the Government has done the opposite.  “Government does not do multi-term agreements, so what goes one year does not apply to the next, despite what the Design Indaba contributes to the Western Cape’s GDP. This confounds planning. We can only do so much to promote the event; it would be gratifying to have support form the public sector that goes beyond cutting ribbons for an event that has won awards.” Harsh words, but the challenge is a very real one: the Arts and Culture ministry dropped the Design Indaba ahead of the World Cup, favouring a once-off event over a perennial attraction.

What’s next?

Having successfully leveraged the success of the Design Indaba for other areas of growth, Naidoo is proud of having built a prodigious global network which Interactive Africa is able to tap into for many other client projects. “We can talk to industry professionals in most cities around the world; we are not solely reliant on Cape Town’s talent. It really is an unfair advantage. We are very trend aware and in touch with what is happening.” He plans to use that knowledge to kick-start the web business and take the Design Indaba beyond the borders of this country.

Who is it for?

  • 65% of the Design Indaba board are practitioners in creative fields
  • 35% are people who commission creative work
  • 20% of people who attend are overseas visitors
  • 60% are from Gauteng

Design Indaba Milestones

1995: The Design Indaba is launched and 200 delegates attend

1997: Second Design Indaba event is held and the number of participants doubles

2001: Design Indaba becomes an annual event

  • Design Indaba magazine is voted
  • best new design magazine in the world in New York

2004: Design Indaba moves to the Cape Town International Convention Centre to accommodate participants

2005: Design Indaba voted best conference in the world by EIBTM

2007: Design Indaba wins Loerie gold award in the live events category


Case-Study

ABSA Cape Epic

Kevin Vermaak built the Absa Cape Epic into the race of choice for mountain bikers globally

How a Cape-Based Cycling Race Became a Global Epic
Written by Greg Fisher

The majority of theories and models on entrepreneurship and new venture creation focus on business opportunities orientated around day-to-day operations – such as a retail business that trades on an ongoing basis, a manufacturing entity that continuously produces output, or a service organisation that is always available to clients. Yet many new business opportunities are linked to events – either once-off events (such as a music concert or a trade convention) or regular events with significant amounts of time between each edition of the event (such as an annual sports event or a biannual exhibition). Under such circumstances the focus areas for successfully creating a new business are subtly different from those of an ongoing business operation. I call this concept event-based entrepreneurship. In this article I unpack some of the critical elements of event-based entrepreneurship by examining the intriguing case study of the Absa Cape Epic, an annual mountain bike race in the Western Cape.

Absa Cape Epic: The Learning

The business development process behind the race provides key insight into some of the most critical elements in the creation of a sustainable and profitable event-based business. Such elements include the following:

1. Funding. The development of the race as a business was largely self-funded (i.e. bootstrapped). Aside from a bridging loan from the IDC that was granted three years after launching the venture, Vermaak and his team developed this enterprise with true global reach using only internally generated funds supplemented by limited personal funds.

2. Sponsorship. The business focuses on a very niche, secondary sport, which seven years earlier had enjoyed only limited spectator or sponsor interest in South Africa. Yet through the Absa Cape Epic, Vermaak has elevated the prestige, professionalism and competition of the sport to the point where it now has television appeal across the globe and has blue chip companies vying to be associated with the race.

3. Business Model. In developing the Cape Epic as a business, Vermaak realised that there are multiple potentially profitable revenue streams associated with a single popular event. He has effectively exploited many of these additional revenue streams in a way that benefits all stakeholders and enables the business to turn a profit from the R30 million in revenue it generates from a single race.

In unpacking the intricacies of building an event-based business, I will discuss each of these elements in detail in the context of the Absa Cape Epic.

Funding

Many prospective entrepreneurs believe that funding is the most significant barrier to starting a new business in South Africa. They spend huge amounts of time and effort trying to convince financiers to invest in their business and enable them to launch a new product or service. Sadly, many fail to realise that it is highly unlikely that any financier will provide capital for a business that is not yet operational. Thus, much of their early passion and energy is focused on something that yields very low returns – trying to raise money. Vermaak went about things very differently. He focused primarily on just getting the first race off the ground and in so doing tackled issues with the philosophy of “how can I make this happen” instead of asking “how much money will I need to raise to make this happen”.

This meant that instead of putting a PowerPoint presentation together to persuade banks and venture capitalists to fund his idea, he put a presentation together to go out to sports marketing firms and sponsors with whom he could partner to sell his race on a global platform. Instead of engineering the business plan to make the returns of the venture look attractive he engineered the marketing material to make the actual race look attractive to mountain bikers across the world.

In June 2003, he opened entries for the inaugural race at a cost of R7 800 per team and the 275-team slots were taken up and paid for in just three days. With that uptake in entries he quickly had about R2 million in the bank that he could use to deliver the first event. Although R2 million seems like a large sum of money to deliver a mountain bike race, because of the quality, logistics and length of the event it was not enough to cover his costs for the first race. Vermaak worked incredibly hard to persuade suppliers to extend payment terms – a tough thing to negotiate for a company with no track record. “These were highly stressful times,” he recalls, yet his tenacity and persuasive skills resulted in a number of suppliers agreeing that he could settle his debts 90 days after invoice.

This meant that if the entries for the following year’s race could be opened up within three months of the 2004 race, then Vermaak could use entry fees for the 2005 race to cover the deficit from the 2004 race. The difference in timing between collecting revenue and paying expenses enabled Vermaak to creatively build the business off a very low capital base. By 2006, two highly successful editions of the Cape Epic had been staged and Vermaak and his team now had the credibility and track record to approach the IDC for a bridging loan. Because of the good work they were doing to expose South Africa on a global stage, the IDC agreed to give them a bridging loan at preferential rates. That same year Absa agreed to come on as a title sponsor of the event. The title sponsorship deal helped reduce the deficit between income and cost on each race yet it still took another two years of hard work for the company to finally break-even and make a profit.

Key lessons: funding an event-based business

  • Be patient – building a profitable event based business takes time. You may not make any profit on the first few events but if you learn through the process and deliver a good experience for customers, over time you can start to generate a profit.
  • Get operational – do whatever you can to get the business off the ground. It is much easier to get loan funding once you are generating cash flows.
  • Use timing of cash flow creatively – speed up revenue collection and slow down payments to suppliers.

Sponsorship

Sponsorship is a critical element of the Absa Cape Epic’s business model. Vermaak concedes that “the business of sport is built around sponsorship” and he has set out to create “the Formula 1 version of mountain bike racing”. He cannot rely on rider entry fees to cover the costs of the race; he and his team therefore need to create an event that is highly attractive for big companies to be associated with. From the outset, Vermaak set himself the goal of attracting a title sponsor with global recognition and a minimum of R100 million in marketing budget. His intuition told him that the race had to be associated with “big blue chip brands” for it to be a long-term success. Initially he spread his net far and wide, doing presentations to whoever would listen. He was thrilled when his marketing partners secured Adidas International as a sponsor for the very first event. As he has built this business, Vermaak’s secret to success for securing sponsorships was Gary Player’s mantra, “the harder you work the luckier you get” – he just kept plugging away until he got a positive response.

The route to securing Absa as the title sponsor was a little more strategic. Vermaak realised that the title sponsor was likely to be a South African company and he targeted companies with a marketing budget of R100 million or more. He exploited every personal relationship possible to find a way into the executive offices of SA’s blue chip companies – calling on people who had ridden the race, family, friends and long lost acquaintances to get an introduction. In this process, he discovered that the executive assistant to Steve Booysen, then CEO of Absa, was entered into the following year’s race.

Using this as an access point into Absa, one of South Africa’s largest financial services organisations, he went through a series of meetings with the right people, and finally Absa agreed to be the title sponsor. Having a title sponsor has significantly improved the financial viability of the event but for Absa it has also created a unique marketing opportunity. Firstly, the average South African rider spends approximately R40 000 in preparing for and getting to the race, which suggests that the majority of the riders in the race are fairly wealthy and influential. The riders of the race are therefore an attractive captive market for Absa. Secondly, Absa has the opportunity to invite some of its most important clients to ride the race with senior employees. The relationship bonds that are forged with important clients during an eight day mountain bike race are more valuable than a relationship forged over a beer at a rugby game. Over the years, more and more sponsors have expressed an interest in being associated with the Cape Epic but one of the fundamental lessons that Vermaak has learned is that “lots of sponsors is not the answer”. The relationship with each sponsor takes time and effort to nurture and it is thus much more productive to have a few high value sponsors rather than many less significant sponsors.

Key lessons: Sponsorship for an event-based business

  • Know what you want – establish criteria for the type of sponsors that are going to best serve your event and be best served by it in the long-term, then spread your net wide across those companies that meet your criteria.
  • Leverage relationships – use whatever access point you can to get a meeting with the decisionmakers in the companies that you are targeting as potential sponsors.
  • Quality is better than quantity – don’t be tempted to take on too many sponsors. Each sponsorship relationship takes time, effort and energy to nurture and manage.
  • If you take on too many sponsors you may not be able to manage any of them effectively.

The Business Model

The two broad categories of events in the business of sport:

1)     The mass participation event in which the organisers rely primarily on many thousands of relatively small entry fees to generate revenue for the event (e.g. the Comrades Marathon, the Pick ‘n Pay Cape Argus Cycle Tour).

2)     The professional event in which the organisers attract companies to sponsor an event, pay professionals to participate in the event and charge spectators to watch the event (e.g. The Nedbank Golf Challenge, FIFA World Cup).

Kevin Vermaak realised that his concept of the Cape Epic did not fall directly into either of these categories. He wanted to attract the world’s top professional riders to the race but also provide an opportunity for the aspiring amateur mountain biker to participate. He wanted to charge an entry fee for participation but he knew there was a limit to the number of people he could allow to participate (due to limited route access and safety). He therefore needed to create a new business model that would enable him to create a profitable “pro-am” (professional and amateur) sports event. Over the years he has been open to experimenting with a different mix of revenue streams for the business. As early as the second year of the event he realised that there was an opportunity to “introduce extra rider service products – ‘margin sales’ – like pre- and post-event hotel accommodation, accommodation upgrades during the race, mobile homes, hospitality, etc.” Many of the riders travelling to the race were willing to pay for extra services before the race and along the route.

By packaging and selling these extra services Vermaak uncovered an extra revenue stream that is seldom exploited by organisers of similar events. Over the years this offering has grown to include rider DVDs, clothing, massage services and nutrition services, among other things. The ‘margin sales’ revenue stream now constitutes 20% of the company’s revenue (approximately R6 million). The other two primary revenue streams are sponsorships (40%) and entry fees (40%). Because the Cape Epic is shown on so many TV channels across the globe, many people perceive that TV rights should be a significant revenue generator for the business but as Vermaak points out: “Mountian biking is not football, we pay an agency to give our TV products away for free.” He recognises that he needs to increase the profile of the sport of mountain biking significantly to create value for his sponsors and make the business sustainable in the future.

Thus, he invests heavily in getting the race onto TV screens across the globe. Being a first mover and an innovator in an emerging industry is often expensive.

One needs to invest heavily in increasing the legitimacy and profile of the entire sector which opens the door for others to move in and establish their businesses on the back of the hard work of the innovating company. Similar examples are evident in the coffee and airline industries. In the coffee industry, a multitude of premium coffee shops emerged after Starbucks established a market for gourmet take away coffee. In the airline industry, a stream of new low cost carriers popped up after Southwest Airlines worked hard to establish the credibility of low-cost airlines.

In most cases where an innovating company needs to invest heavily to establish a new industry they will retain the highest market share in the sector but it is often a lot easier for other players to come in and quickly turn a profit, even though they may have lower market share than the early innovator. Kevin Vermaak sees the effect of this in mountain bike stage racing.

A stream of new events has emerged locally and abroad in the wake of the success of the Absa Cape Epic.

Key lessons: building a profitable event-based business

  • Look for alternative revenue streams associated with your core product but don’t over-engineer the additional offerings – recognise where you have the opportunity to package and sell other products or services linked to what you currently do. Don’t feel locked into just one or two revenue streams; look for alternative sources of revenue. As you do this, be careful not to over-engineer your additional offerings such that they take excessive work to deliver. The team behind the Cape Epic is very careful to create ‘standard products’ for their margin sales so that people buy the service that is offered or not at all. They don’t offer customised versions of any of these services as that creates more work than it is worth.
  • Recognise whether you are a leader or a follower in your industry and invest accordingly – evaluate whether your company needs to establish a market and legitimise the industry in which you operate. If so, take a long-term view, seek to be the leader in the industry but recognise that it may take time to get to profitability. If you are entering an established industry, recognise that your market share may be restricted but look for ways to get to profitability quickly.
  • Experiment and learn as you go – in a new industry no-one really knows what the standards are and thus the best way to learn is to experiment. The people behind the Cape Epic have used online auctions and premium charity entries to test price points and they have experimented with route changes and race formats to increase rider appeal and decrease logistical overheads. They are also continually evolving their company structure to make the business more efficient and effective as they grow and learn.

As Kevin Vermaak reflects on his journey of building a world-class event-based business from scratch, he passionately acknowledges the role that mentors and role models have played in influencing his decision-making processes. I have no doubt that his willingness to share aspects of his journey in building the Absa Cape Epic as a viable business will influence other entrepreneurs with aspirations to build world-class event-based businesses and, as such, his own function as a role model should be highlighted.

Absa Cape Epic: The Event

The Cape Epic is a two-person team mountain bike stage race over eight days, covering approximately 800 kilometres through the mountains of the Western Cape. The race is limited to 600 teams (1 200 individuals).  Some 35% of the participants are international riders coming to South Africa from more than 40 countries. Entrants in the 2010 race paid R25 200 per team to enter the race and the lottery for entries into the 2010 race was oversubscribed. The Cape Epic is one of only four bicycle stage races and the only mountain bike race in the world to be classified by the UCI (the International Cycling Federation) as Hors Categorie (beyond classification). The other three stage races with the Hors Categorie classification are the Tour de France, Giro d’Italia and Vuelta Espana. The 2009 edition of the Cape Epic was broadcast in 175 countries, on 205 TV stations attracting 4 300 hours of global TV coverage. This makes the event the most televised mountain bike race of all time.

Absa Cape Epic: The Business

Beyond being a truly world-class cycle race The Cape Epic is a remarkable entrepreneurial story. With the impact that this race has had on global cycling it is hard to believe it is just less than seven years old and was started by a single individual. Kevin Vermaak conceived the idea while lying on the beach in Costa Rica in November 2002. He had travelled from London to Costa Rica to do the La Ruta mountain bike race. “La Ruta was popular for what it was but it was very expensive,” reflects Vermaak, who grew up in the Eastern Cape and attended the University of Cape Town. He knew that South Africa was a much better venue for a world-class mountain bike event. “The terrain, beauty, people, services and facilities in the Western Cape would make it possible to organise a far superior race.” Vermaak went about creating a business plan for his new venture and “three months later I’d packed up eight years in London and was starting a new life in Cape Town,” he remembers. Recognising the need to market the race on a global platform, he first forged a relationship with marketing partners in Munich and then focused on developing the brand, the logo, the ethos and refining the basic concept so that he could begin selling entries for the inaugural race in March 2004.

Over the past six years the race has grown into a global phenomenon and has been referred to as “the Tour de France for mountain bike pros and the best week of the year for recreational riders” by Christoph Sauser, the multiple mountain bike world champion and overall World Cup champion from Switzerland.

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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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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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john

“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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