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Dreaming Big, Making It Happen: The Story of Integr8

A combination of hard work, dedication and innovation has enabled two Cape-based entrepreneurs to grow a business and sell it for more than 40 times the original value of their investment – R126 million to be exact.

Monique Verduyn

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Three steps to high-impact growth

  1. Build a culture of continuous innovation
  2. Create a unique differentiator
  3. Corporatise the business

When Rob Sussman and Lance Fanaroff founded Integr8 IT in March 2001 in the wake of the dotcom crash, they each invested R150 000 to get it off the ground. Although they were fired up by their passion for technology and enabling it to work better for customers, neither of the two high-impact entrepreneurs had any idea they would grow Integr8 into the largest privately-owned ICT company in Africa.

Exactly 12 years later they sold it for R126 million to the country’s largest publically traded technology company, the Business Connexion Group (BCG), in a cash deal. Both remained on board as joint CEOs.

Sussman says many high-growth businesses have two people at the helm. “We’ve had a very successful partnership because we bring different things to the company, while sharing the same core values of integrity, honesty and hard work.

It can be extremely difficult to achieve as much as we have in such a short time, and I believe we did it because of the strength of the partnership. Business is tough, and to have someone with whom you can share the burden and the wins makes all the difference. When you’re working late and travelling all over the country, it’s great to have a friend by your side.”

The partners have created hundreds of jobs along the way and generated millions of rands in revenue. Their story is inspiring because it reveals exactly how powerful entrepreneurship is as a force for sustained economic development.

“We don’t come from wealthy families,” says Sussman, an electrical engineer by profession. “No one gave us money to start the business, and we could not borrow it either. We scraped together a total of R300 000 and we shared a room while we were working on it in the early days. Lance is married to my sister, which means that our families are close. Whenever we travelled to Johannesburg for business, we would stay with family members and borrow their cars to get around. We kept our initial expenses very, very low and ran the business extremely lean. We built it strictly from the ground up, and that initial investment was the only personal money we ever had to put into it.”

The business has been characterised by exceptional growth since day one. “We re-gear and restructure the company every few years to accommodate the next growth spurt and as a result we are able to continue growing,” says Sussman.

“With the experience we have gained over the past decade, we can scale the business a lot faster today. It’s critical to place the right people in the right positions — the most difficult part has always been the people — technology is easy.”

Looking ahead, the company aims to penetrate the public sector, to continue to grow into the African continent, and to eventually internationalise.

“Now, as part of the Business Connexion Group, we are listed as a multi-billion rand enterprise,” says Sussman. The deal with Business Connexion, a leading black-owned ICT services provider, creates a single organisation with 7 000 highly skilled employees who will be delivering services from the mid-market corporate to enterprise space across Africa.

Sussman and Fanaroff have held onto the various other businesses in the Integr8 group — including fax, telecoms, property and asset finance companies — and will change the name of the group now that the IT business is owned by Business Connexion.

1. Always focus on innovation

Sussman points out that the business has had a strong focus on innovation from day one. It’s a claim many business owners make, but what does it actually mean? Innovation has been defined as the process of translating an idea or invention into a product or service that creates value or for which customers will pay.

The idea has to be replicable at an economical cost and must satisfy a specific need. In business, innovation is usually the result of ideas being applied by the company to satisfy the identified needs and expectations of its customers. It’s no secret that innovation is synonymous with risk-taking: The risk is so great because it’s about creating a new market.

Rob Sussman and Lance Fanaroff

Sussman says that in a rapidly changing world, it’s not the biggest companies that will succeed, but the fastest. “Constant innovation and change are required in line with what is happening outside of the business,” he says.

“You can never take your eye off what your competitors are doing and where the market is moving.”

He says Integr8 has always had in place a two-year roadmap for the business, and that the company tries to obsolete its own model before the market does because lagging behind is fatal.

“Our people spend about 10% of their time looking at new ideas and new projects. When they bring these to us, we evaluate them and if the proposition makes sense, we implement. We don’t wait for days, weeks or months. We look at it and we make a decision. Never allow bureaucracy to stifle a great idea.”

2. Find a killer differentiator

It’s not the services Integr8 provides that differentiate the company, but the way it provides them.

“We are the owners, innovators and operators of the only ‘Nerve Centre’ on African soil,” Sussman says. He describes the Nerve Centre as the nucleus of Integr8’s IT management offering. Based in Johannesburg, it’s a hub built on some of the world’s best technology. It gives the company’s engineers access to clients’ ICT systems and enables them to conduct running repairs, security updates and remote audits to ensure optimal operations.

“Designing the Nerve Centre was key, as it has allowed the business to scale. When your business is privately owned and has no financial backing, you have to be very careful with every bit of money you make and use it as smartly as possible. As we got more clients, we needed more people. The key question was how to build our customer base without having to employ more people as this would raise our costs. The solution was to put our best people in a purpose built technical hub where each one of them is able to look after multiple clients over the Internet.

Instead of placing employees on-site at the clients’ premises, which is far more expensive, we leveraged technology. We needed a network to manage clients so we used the Internet. This had never been done before in South Africa, and it’s what allowed us to scale rapidly.

Sussman says he and Fanaroff knew that companies like theirs would be unable to grow without a platform in place. They had spent a lot of time evaluating the systems and tools that other companies were using, documenting where they were falling short, and then building their solution on top of that. Today, this digital hub manages and regulates the ICT environment of many of the country’s leading corporations.

3. Corporatise the business

The concept of corporatisation is a dirty one in many entrepreneurial circles, but Fanaroff insists that corporatising Integr8 was what prepared the company for growth and ultimately for its acquisition by the Business Connexion Group.

Essentially, it’s the process of structuring an organisation to reflect the structure of a publically owned corporation and giving it the features of a large commercial business. Is it possible to corporatise and still maintain entrepreneurial flair and flexibility? Sussman says it is.

“We grew the business from the ground up, and we have always focused on maintaining an entrepreneurial and innovative culture, but we also knew that it was essential to put in place controls, process and good governance to enable the business to ‘grow up’ properly. We don’t advise that an entrepreneurial business corporatises immediately, but as additional clients come on board and enable you to do so as a result of growth. You can‘t corporatise too quickly as you risk hindering the spirit of a start-up.”

Corporatising, says Sussman, is quite simple. It’s about acting professionally and having the systems and controls in place that make business sense.

“That’s why, when the Business Connexion Group came to see us, they saw a professional, well managed business that was structured and organised.”

He’s keen to point out, however, that Integr8 has a young, fun culture. “We like to see ourselves like Facebook or Google — they are deeply serious businesses, but they have an energy and a culture that makes people want to be employed by them. I think that’s one of the reasons why we have CVs pouring into the business. As an organisation, we have a great reputation and people want to be  a part of what we do.”

Key Lesson

“One of the mistakes we have made is having the right person in the wrong position for too long. After we addressed the situation and restructured, the company was forced to take a few steps back before it could move forward. The lesson is that problems don’t age well.”– Rob Sussman

We asked Rob Sussman what he would do today if he was a young entrepreneur having to bootstrap himself to success.

“I would choose an annuity business. In today’s environment, a transaction-based business is tough because it’s impossible to predict income and cash flows. I would also go for the most exciting industry, which is the world of high-tech. The sale of Instagram to Facebook for a cool billion in April 2012 was the ultimate Silicon Valley fairy tale – 18 months from launch to offer.

We have a relatively new, separate and self-funded venture we are working on. Called ZunguZ, it’s a social payment system that allows anyone on Facebook to pay anyone else, directly from within the social network. We’re hoping it will give shopping a social element and that it will become a serious payment platform on Facebook.

We’ve spent a lot of time in Silicon Valley, and we’d been searching for a social-based payment platform for many years. Facebook has enabled us to look at ways of placing people at the centre of the payments ecosystem.

We’ve taken ZunguZ to Facebook in Palo Alto, and to Citibank in New York, as well as other companies involved in social media and banking. The aim is not to compete with PayPal, but to enable real currency transactions between people, or from people to retailers, or any other organisations, such as non-profits, which have a Facebook presence. Users simply install the ZunguZ application in Facebook and can then transfer money to one another.

ZunguZ has gone live in Latin America and Mexico, and will soon be available in India, the US and South Africa. We are hoping that at some point it will become hugely attractive to a company like Facebook or PayPal and that we’ll sell it to them for a lot of money.

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

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1 Comment

1 Comment

  1. Luke

    Aug 31, 2013 at 20:31

    They have a great partnership, I really hope ZunguZ takes off for them.

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Entrepreneur Profiles

Rich List: 2019 Richest People In The World

They’re worth billions, and their wealth continues to grow each year. Here’s the top 10 richest people globally in 2019.

Catherine Bristow

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jeff-bizos 10. Jeff Bezos

Net Worth: USD 139,5 billion

Jeff Bezos founded e-commerce giant Amazon in a garage in Seattle, USA in 1994. He also purchased The Washington Post for $250 million in 2013.

Bezos believes in always taking a long-term view and living in the present moment.

“I think this is something about which there’s a lot of controversy. A lot of people — and I’m just not one of them — believe that you should live for the now.

I think what you do is think about the great expanse of time ahead of you and try to make sure that you’re planning for that in a way that’s going to leave you ultimately satisfied. This is the way it works for me. There are a lot of paths to satisfaction and you need to find one that works for you.”

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Entrepreneur Profiles

7 Self-Made Teenager Millionaire Entrepreneurs

These teenager entrepreneurs have already made their first million and more. How did they do it and what’s their secret to success?

Catherine Bristow

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1. Evan of YouTube

evan-of-youtube

Evan and his father Jarod started a youtube channel ‘Evantube’ to review kids’ toys. The channel was a resounding success with other kids – so much so that today it boasts just over 6 million subscribers.

Evantube brings in more than USD1.4 million a year from ad revenue generated on the channel.

How did it start? With a father-son fun project making Angry Birds Stop Animation videos, and morphed into doing reviews on toys and video games. But Jarod’s dad is aware of the responsibility of Evan’s sudden fame and hopes to teach Evan about the importance of being a good role model for others.

“Most recently, we had the opportunity to work with the Make-a-Wish Foundation, and were able to fulfill the wish of a young boy whose dream was to meet Evan and make a video with him at Legoland,” explains Jared. “It was a really incredible experience. YouTube has definitely opened many doors, and the kids have gotten to do some pretty amazing things.”

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Entrepreneur Profiles

Expert Advice From Property Point On Taking Your Start-Up To The Next Level

Through Property Point, Shawn Theunissen and Desigan Chetty have worked with more than 170 businesses to help them scale. Here’s what your start-up should be focusing on, based on what they’ve learnt.

Nadine Todd

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Vital Stats

  • Players: Shawn Theunissen and Desigan Chetty
  • Company: Property Point
  • What they do: Property Point is an enterprise development initiative created by Growthpoint Properties, and is dedicated to unlocking opportunities for SMEs operating in South Africa’s property sector.
  • Launched: 2008
  • Visit: propertypoint.org.za

Through Property Point, Shawn Theunissen and his team have spent ten years learning what makes entrepreneurs tick and what small business owners need to implement to become medium and large business owners. In that time, over 170 businesses have moved through the programme.

While Property Point is an enterprise development (ED) initiative, the lessons are universal. If you want to take your start-up to the next level, this is a good place to start.

Risk, reputation and relationships

“We believe that everything in business comes down to the 3Rs: Risk, Reputation and Relationships. If you understand these three factors and how they influence your business and its growth, your chances of success will increase exponentially,” says Shawn Theunissen, Executive Corporate Social Responsibility at Growthpoint Properties and founder of Property Point.

So, how do the 3Rs work, and what should business owners be doing based on them?

Risk: We can all agree that there will always be risks in business. It’s how you approach and mitigate those risks that counts, which means you first need to recognise and accept them.

“We always straddle the line between hardcore business fundamentals and the relational elements and people components of doing business,” says Shawn. “For example, one of the risks that everyone faces in South Africa is that we all make decisions based on unconscious biases. As a business owner, we need to recognise how this affects potential customers, employees, stakeholders and even ourselves as entrepreneurs.”

Reputation: Because Property Point is an ED initiative, its 170 alumni are black business owners, and so this is an area of bias that they focus on, but the rule holds true for all biases. “In the context of South Africa, small black businesses are seen as higher risk. To overcome this, black-owned businesses should focus on the reputational component of their companies. What’s the track record of the business?”

A business owner who approaches deals in this way can focus on building the value proposition of the business, outlining the capacity and capabilities of the business and its core team to deliver how the business is run, and specific service offerings.

“From a business development perspective, if you can provide a good track record, it diminishes the customer’s unconscious bias,” says Shawn. “Now the entrepreneur isn’t just being judged through one lens, but rather based on what they have done and delivered.”

Related: Property Point Creates R1bn In Procurement Opportunities For Small Businesses

Relationship: “We believe that fundamentally people do business with people,” says Shawn. “There needs to be culture match and fluency in terms of relations to make the job easier. As a general rule, the ease of doing business increases if there is a culture match.”

This relates to understanding what your client needs, how they want to do business, their user experience and customer experience. “We like to call it sharpening the pencil,” says Desigan Chetty, Property Point’s Head of Operations.

“In terms of value proposition, does your service offering focus on solving the client’s needs? Is there a culture match between you and your client? And if you realise there isn’t, can you walk away, or do you continue to focus time and energy on the wrong type of service offering to the wrong client? This isn’t learnt over- night. It takes time and small but constant adjustments to the direction you’re taking.”

In fact, Desigan advises walking away from the wrong business so that you can focus on your core competencies. “If you reach a space where you work well with a client and you’ve stuck to your core competencies, business is just going to be easier. It becomes easier for you to deliver. Sometimes entrepreneurs stretch themselves to try to provide a service to a client that’s not serving either of their needs. This strategy will never lead to growth — at least not sustainable growth.”

Instead, Desigan recommends choosing an entry point through a specific offering based on an explicit need. “Too often we see entrepreneurs whose offerings are so broad that they don’t focus,” he says. “Instead, understand what your client’s need is and address that need, even if it means that it’s only one out of your five offerings. Your likelihood of success if you go where the need is, is much higher.

“Once you get in, prove yourself through service delivery. It’s a lot easier to on-sell and cross sell once you have a foot in the door. You’re now building a relationship, learning the internal culture, how things work, what processes are followed and so on — the client’s landscape is easier to navigate. The challenge is to get in. Once you’re in, you can entrench yourself.”

Desigan and Shawn agree that this is one of the reasons why suppliers to large corporates become so entrenched. “Once you’re in, you can capitalise from other needs that may have emanated from your entry point and unlock opportunities,” says Shawn.

Building a sustainable start-up

While all start-ups are different, there are challenges most entrepreneurs share and key areas they should focus on.

Shawn and Desigan share the top five areas you should focus on.

1. Align and partner with the right people

This includes your staff, stakeholders, partners, suppliers and clients. Partnerships are the best thing to take you forward. The key is to collaborate and partner with the right people based on an alignment of objectives and culture. It’s when you don’t tick all the boxes that things don’t work out.

2. Make sure you get the basics right

Never neglect business fundamentals. Do you have the processes and systems in place to scale the business?

3. Understand your value proposition

Are you on a journey with your clients? Is your value proposition aligned to the need you’re trying to solve for your clients? Are you looking ahead of the curve — what’s the problem, what are your clients saying and are you being proactive in leveraging that relationship?

Related: Want To Start A Property Business That Buys Property And Rents It Out?

4. Unpack your value chain

If you want to diversify, understand your value chain. What is it, where are the opportunities both horizontally and vertically within your client base, and what other solutions can you offer based on your areas of expertise?

8. Don’t ignore technology

Be aware of what’s happening in the tech space and where you can use it to enable your business. Tech impacts everything, even more traditional industries. Businesses that embrace technology work smarter, faster and often at a lower cost base.

Ultimately, Desigan and Shawn believe that success often just comes down to attitude. “We have one entrepreneur in our programme who applied twice,” says Shawn. “When he was rejected, he listened to the feedback we gave him and instead of thinking we were wrong, went away, made changes and came back. He was willing to learn and open himself up to different ways of approaching things. That business has grown from R300 000 per annum to R20 million since joining us.

“Too many business owners aren’t willing to evaluate and adjust how they do things. It’s those who want to learn and embrace change and growth that excel.”

Networking, collaborating and mentoring

Property Point holds regular networking sessions called Entrepreneurship To The Point. They are open to the public and have two core aims. First, to provide entrepreneurs access to top speakers and entrepreneurs, and second, to give like-minded business owners an opportunity to network and possibly even collaborate.

“We believe in the power of collaboration and networking,” says Desigan.

“Most of our alumni become mentors themselves to new entrants to the programme. They want to share what they have learnt with other entrepreneurs, but they also know that they can learn from newer and younger entrepreneurs. The business landscape is always changing. Insights can come from anywhere and everywhere.”

The To The Point sessions are designed to help business owners widen their network, whether they are Property Point entrepreneurs or not.

To find out more, visit www.ettp.co.za

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