Wally Fry is the kind of man who jumps in with his boots on. He never intended Fry’s Foods to be an international company, shipping 6 000 tons of food products a year. In fact, he never intended there to be a company, having started making the meat alternative products for which the brand is now famous as “something of a hobby.” But, having made the decision to build something in 1992, he’s been relentless in pursuing his chosen course of action.
“He’s also an absolute perfectionist,” says Debbie, his wife, with whom he started and now runs the company. Wally happily agrees. “I’m pedantic about absolutely everything. There is a process and a system for everything in the company. There’s a process for how you walk into my factory – and if you walk in the wrong way, you have to know I’m going to klap you for it, because that system is there for a reason. It has its foundation in the mistakes that we’ve made and the solutions we’ve found to challenges,” he says.
Doing it all
It might sound overly dictatorial (and Wally uses the word klap in a strictly figurative sense) but, if anything, he has earned the right to his fastidiousness. He’s the kind of entrepreneur who’s done absolutely everything in the company, so he should know what works best and what doesn’t. After all, this is a man who devised the recipes and developed the products and who, along with Debbie and a single employee in the early days of the company, weighed and measured ingredients, cooked the food, packaged it, boxed it and delivered it. He’s fixed the factory machines, run the finances, done the marketing, secured supermarket listings, run the operations, managed the payroll, hired and fired staff, and steered the strategic ship.
Of course today the company has structures in place to run the different functions and Wally and Debbie have been freed up to focus on strategy and growing the business. But Wally gave up control of each function incrementally, and only once he was happy he’d put in place the right person with the right training to run things the way he believed they should be run. “The food we make is unique. No other company does it. It’s not like we’re running a bakery, for example, and can just hire someone who’s worked in a bakery before. We have to make sure everyone understands our processes and systems, and our way of doing things. I had to write the manual on how things worked because every job was so specific,” he says.
It’s that perfectionism talking again, along with a healthy dose of being a stickler for detail. But it’s not like Wally is one of those entrepreneurs who refuse to relinquish control, believing only they have the magic touch to make the company a success — the company wouldn’t be where it is today if he’d refused to delegate responsibility. It’s not even that he believes he has a line into the one right way of doing things. It’s rather that he knows what the right way is. He’s learned what it is through trial and error, through working 18-hour days, and having done it himself. He’s gone from making 20 sausages in his kitchen in his KwaZulu Natal home, using a Kenwood Chef, an AMC pot and a two-plate burner, to running a factory that produces 500 tons of food a month, and has cornered the vegetarian and vegan markets. And that has to count for something. So when he stipulates that things follow a particular course of action, he expects to be listened to.
Setting up systems has been central to the success of the business. Processes and well-defined ways of doing things are vital to any business, but particularly in an area where you want to maintain the same standards and quality throughout. Systems allow a business to scale up and repeat its initial success over and over again.
Sit up and listen!
On that note, there’s something commanding about him in general that demands you listen. Interestingly, what drives this hard-nosed, tough, uncompromising businessman is a deep passion for saving the planet. Get him talking on the subject of the environmental havoc being wreaked by animal farming and that passion flares. He was invited to speak on the topic at the World Preservation Foundation’s 2010 Westminster Conference in the UK, addressing MPs, local government and the media, and got a standing ovation. People listen to him. This is not some peace-and-yoghurt hippie who makes vague hand-waving gestures in the direction of ‘green issues’, or even a fundamentalist who engages in heated rhetoric. He talks straight facts. He knows his stuff. He grabs your attention. Uncomfortably (for a sworn meat-lover) what he says makes sense.
And yet Wally wasn’t always a vegetarian (how many people who’ve been raised on a farm are?). “I’ve been a vegetarian since I was very young but Wally always loved meat, and it caused some degree of difficulty in our home because I wasn’t used to cooking or preparing meat,” says Debbie.
The change came by degrees but started, Wally says, when their daughter Tammy was born. “Since she could understand where meat came from, she refused to eat it. She’d ask me what she was eating and I’d say, “A drumstick” and she’d say, “Drumsticks are for playing drums” so I’d tell her it was the leg of a chicken, and that was it. She wouldn’t touch it,” he relates. The influence of his daughter and wife got him thinking and reading. “At the same time I studied Eastern religion, which of course is centred very much on vegetarianism. I started learning about the environmental collapse being driven by intensive animal farming, and I eventually decided I couldn’t in good conscience continue to eat meat,” he said.
Turning personal passion into a business edge
The fact that he had previously been a meat-eater was, in fact, the driving force behind the development of Fry’s products. “Just because I believed it wasn’t ethically right to eat meat, didn’t mean I didn’t miss it. It was really tough to give it up,” says Wally. That’s when he started experimenting with the creation of a meat-alternative. “I wanted something that had the same taste, texture and mouth-feel as meat,” he says.
And therein lies the uniqueness of Fry’s products. “No one else is making a vegan meat alternative range of products,” says Wally. Not only is the product both vegan and vegetarian, it’s also Kosher, Halaal, Suddah and non-GM, making it very special in its category. Wally’s conviction about environmental responsibility and ethics has driven him to extraordinary lengths in developing the product range. “We look at the ethics of every one of our raw material suppliers, and make sure that neither the company nor any of its shareholders is involved in any way in another company that might have interests in animal farming,” Wally explains. The brand has been voted the Best Buy label in the UK, based on the company’s ethics.
This was all driven by the Frys’ passion, but it’s had a positive business spin-off too, giving it a unique competitive edge in a market that’s increasingly focused on sustainability and the ethics of animal farming. It’s opened doors to a substantial international market and the company now exports to 23 countries around the world.
Passion is a significant motivator, and the Frys have it in spades, but is it enough to take you out of a home kitchen and into a global market? How does someone with no knowledge of food science or food manufacturing get to where Wally is today? Part of the answer lies in being willing to put in hours, days and years of hard, hard work. “We weren’t particularly clever but my goodness have we worked hard. I think we’re living proof that if you work hard enough at anything, you will succeed,” says Wally.
Mastering through learning
He’s also proof that you can master an industry about which you know absolutely nothing, having learned most of what he knows from reading books and through trial and error. “I’d read up on the different properties of food ingredients and then experiment by putting together different combinations. I learned that if I put together two different ingredients, it would give me a particular taste or texture, and that’s how our products evolved,” he says.
Wally also put himself through a crash course in machine engineering. “I bought all of our first machines for the factory on auction and I had no idea what they did or even if they were the right ones,” he says. He started learning and in a short time he was carrying out repair work on the factory machines.
And there’s the thing. Wally is the kind of person who masters whatever he puts his mind to. He doesn’t do things in half-measures. This is a ‘go big or go home’ kind of guy. Other entrepreneurs could learn a lot from him. “Someone once asked me what course I’d recommend an entrepreneur should take before starting a successful business and my answer was ‘None’. You need vision and enthusiasm and you just need to go for it,” he says.
Grab opportunities and run
The story of how the company got started is testament to this willingness to grab opportunities and run with them. Wally relates the story of how an encounter with a marketing expert really got things going.
“A vegetarian friend of a friend heard about the products I was making, purely for family consumption, and asked if he could come over and try them. When he tasted them he tried to convince me that they needed to be marketed and listed in supermarkets, but I wasn’t really interested in setting up a business. I was doing this as a hobby really,” he relates.
So convinced was the marketer of the potential success of the product that he offered to conduct market research and compile a full marketing plan for free. “His words were that I owed it to society to commercialise these products and that he himself wanted to be able to buy them in supermarkets,”
Being a natural businessman and entrepreneur, the realisation that there was a market out there was enough to galvanise him into action and he couldn’t walk away from the opportunity once it had been pointed out to him. “The marketing person helped us with the package design, which we hand-drew on pieces of cardboard, I got my kids to make little flags stuck on toothpicks to identify the different products and I set off to go visit the supermarkets to get listings,” Wally recalls.
Getting a foot in the door
Anyone who’s run a business in the food industry knows just how hard this can be. Getting listed in significant supermarkets is the make-or-break tipping point, but it’s notoriously tough to do. Large supermarket chains hold all the cards and competition is fierce.
Here again Wally’s ability to make people listen and to push where necessary stood him in good stead. “I took all my pre-cooked sausages and other products and prepared them in the boardroom tea room before the meeting, sticking all our little home-made flags into the products. When the guys arrived for the meeting they told me they didn’t do taste testings in these meetings, but I said, ‘Well humour me. I’ve done all this work so you might as well eat it,” he relates. “They started tasting and then called in people from outside to taste as well, and when I left they wanted to know when I could start supplying them.”
It was a good question. “We had no factory, no equipment, no staff. I had an AMC cooking pot! I didn’t even know what equipment I’d need to buy,” he says. Machines bought at an auction were loaded into two 20 ton trucks and delivered to a small factory space the Frys owned. Wally snapped up an experienced factory worker who knew how the machines worked – the company’s first employee – and within 15 days Fry’s was up and running. The first delivery was made within three months.
Slowly does it
This makes it sound easy but the reality was anything but. “I had to learn everything from scratch. Food is a highly regulated industry – I needed to learn about food safety standards, how it should be prepared, cooked, frozen, packaged and distributed. I was also used to ordering raw materials in batches of a kilogram and I now had to order them in bulk,” Wally says.
The first orders required large quantities, but thereafter Wally and Debbie would call the supermarkets every day to find out how many boxes had been sold as this told them how much new product they would need to prepare. “We did it very, very slowly, only making as much as was required. If they had only sold two boxes, that’s how much we would make,” Debbie indicates.
It’s a far cry from the dream many entrepreneurs have of reaching a tipping point and ‘making it big’, but Wally stands by his experience of slow, steady, risk-averse growth. “I don’t subscribe to the notion that you need to sit down before starting a business and draw up a detailed SWOT analysis. If you look at the pitfalls too closely, they will become your reality. You don’t need to build an empire overnight. Just start something small and see if it works,” he advises.
‘If I can’t afford it, I don’t want it’
Growth was incremental but continuous – and entirely self-funded. Wally’s
personal rule is, ‘If I can’t afford it, I don’t want it’ and he’s applied that rigorously to the company, which has never borrowed a cent.
“If we had borrowed money the growth might have been quicker but we only know now that the product was a success. Back then, we didn’t know that so we grew organically and we’ve been very happy with that,” says Debbie.
The company was able to make use of factory space that it already owned, and some might argue that it’s easy to make a business succeed if you are lucky enough to have access to such assets. But here’s the thing. The reason the Frys owned that space in the first place was because Wally had already built up and then sold a construction company. This is the second time he’s made a success of a business, the second time he’s put in the long hours and the hard work to make something happen. So luck has nothing to do with it. And it’s worth bearing in mind that while the Frys have never borrowed money, they risked their early retirement money to make the business work.
Developing a brand people fall in love with
As Fry’s initially had no marketing budget, the product became known only through word of mouth. However, it was unique enough to make itself felt. “One supermarket told us they would have to delist us because they simply weren’t selling enough. Three months later they called us up and asked us to deliver stock because there’d been such an outcry from the vegetarian customers who had been purchasing our products,” Wally explains. Listings grew incrementally, until the product reached that golden ‘critical mass’ where stores would be out in the cold for not stocking it.
Creating something unique that meets a previously unfilled need is one thing, but how do you develop a brand that people fall in love with? Ask Wally and he’ll tell you it all comes back to passion. “You can’t start a business just because you want to make money. You need to start it because you are inspired to deliver a service or a product to people that will make their lives better or easier in some way. You need to have conviction that what you are supplying is really great for people to use. Believing in and being passionate about your product will inspire other people to believe in it too. People buy into passion. You can’t manufacture it,” he says.
Fry’s offers its customers an alternative to meat products, giving them the opportunity that Wally hoped for – to eat a meat-free or, at the very least, a reduced-meat diet. But it also offers them a chance to go green, save the planet, prevent animal cruelty and, ultimately, make a difference. That’s what builds brand loyalty and getting it right is what every brand is trying to achieve.
Taking on an international market
Customers’ demand for Fry’s products indirectly drove its penetration into international markets, as expats who wanted to continue to buy the product contacted the company to find out if they could distribute it in their new home country. “We’re represented in other countries by people who have the same passion and conviction that we do, and that makes all the difference to our success,” says Wally.
The international market currently accounts for just 25% of the company’s business, but Wally has a vision to grow aggressively on the international stage. “We just got into the States and the response has been phenomenal – our first container was sold before we had time to get the second one on the water,” he says. He’s certainly not about to ignore the South African market, but indicates that if the scales of economy are right in another country, the company would consider setting up an operation outside South Africa’s borders. “It’s not something that’s on the cards right now but yes, we’d look at it,” he says.
Wally’s drive is relentless and sometimes surprises even him. “When we were packing 500 kilograms a day I said to myself, ‘Now I’ve reached my goal. This is enough, I need to take a rest.’ But somehow I never did and today we pack 16 tons a day,” he says.
His drive propels continuous improvement in the company and the development of new product lines. A few years ago the company turned its attention to reducing the salt and fat content of its products. Today fat content is down from around 12% to between 3% and 4% while sodium content has been halved.
“We’re researching new ingredients all the time. We look all over the world, and of course where we source from has to be aligned with our ethics and values. This means R&D can take months or even years, but it’s worth it,” Wally says.
“I’m working harder now than I ever have, but I’m loving every minute of it. I’m doing something I really believe in.” It’s something nearly everyone wants to be able to say, but in the case of Fry’s Vegetarian it’s no accident – it’s integral to the business’s success. And there must be a lesson in that for other entrepreneurs.
The impact of animal farming
“The world is currently raising over 50 billion farmed animals for slaughter each year and, in addition to its major impact on global warming, this is contributing significantly to the destruction of tropical rainforests and other valuable habitats. Because of its high degree of inefficiency compared to plant protein production, animal agriculture is disproportionately depleting the planet’s dwindling reserves of fresh water, land, fuel, and other resources,” says Tammy Kelly.
The company draws on hard facts to support its position. Here are some of their stats:
- At least half of all the greenhouse gases are due to livestock production
- If all Americans ate no meat, chicken or fish for just one day a week, this would result in the same carbon savings as taking 19,2 million cars off the road in the USA for an entire year, or save gas emissions equivalent to 46 million return flights from New York to Los Angeles
- It requires 500 times as much land to produce 1kg of beef as it does to produce 1kg of vegetables
- It takes 250 litres of water to produce 1kg of wheat, and 25 000 litres of water to produce 1kg of meat
- Cows, pigs and sheep bred for human consumption discharge millions of tons of methane, a more potent greenhouse gas than carbon dioxide. Livestock accounts for about 18% of greenhouse gases, more than all the world’s transportation systems including
4 Lessons From The Pivotal Group Founders On Growing And Disrupting All At Once
Here’s how they’ve built what they believe to be the foundations of a successful group of businesses in five years.
- Company: Pivotal Group
- Players: Paul Hutton, Joel Stransky and Bruce Arnold
- What they do: Pivotal pioneered voice biometrics in the financial and telecommunications market. Over time, the company has grown to include nine divisions across multiple sectors.
- Launched: 2012
- Visit: pivotalgroup.co.za
How do you build a disruptive business while also focusing on growth? Disruptive ideas are by definition new and unknown to the market. They defy traditional and established solutions and ways of doing business, and they require the market to be educated before you can really onboard clients or even sell your product or service.
The answer is to build parallel solutions: Business units that bring in revenue while the more disruptive ideas are being developed and introduced to the market. Here are the four top lessons the founders of the Pivotal Group have learnt while building their business and pursuing disruptive opportunities simultaneously.
1. Know who your competitors (and potential competitors) are
Great ideas that are economically viable and solve a need that consumers are willing to pay for are few and far between. Great ideas alone are a dime a dozen, but if you’ve spotted a need, chances are someone else has as well. You then need to step back and critically evaluate why someone else hasn’t done this before; if they have done it and they’ve failed; or if you’re entering shark-infested waters riddled with competitors.
Once you’ve determined there is a gap in the market, you need to evaluate who your potential competitors are, and the impact if they suddenly started offering a similar solution to the market.
For Paul Hutton, Bruce Arnold and Joel Stransky, the founders of OneVault, competition was always a factor, particularly as a start-up, and given that potential competitors included Bytes and Dimension Data, this was a very real factor to consider. After careful analysis, however, the founders decided to go for it. Their differentiator was their business model. They wouldn’t be selling OneVault as a software solution, but as a service.
The idea had taken root while Paul was still CEO of TransUnion Credit Bureau. “I came across voice biometrics in Canada. There’s been a surge in identity fraud around the world, and I really understood the value of voice recognition as a verification tool,” he explains. “It can’t be faked, and it’s the only remote biometrics solution available, because you don’t physically need to be there to verify yourself.”
Paul had presented the idea to Transunion’s global board, and while they were intrigued, nothing came of it. “TransUnion’s model is to buy companies that are experts in their specific fields, not launch a new disruptive division from scratch.”
But this meant there was an opportunity for Paul to pursue the idea independently. Joel (former MD of Altech Netstar and CEO of Hertz SA) and Bruce (formerly Group CFO of TransUnion Africa and CFO at Unitrans Freight) were immediately interested in partnering with Paul. Both wanted to pursue entrepreneurship, although neither could do so immediately. The commitment was enough for Paul to get directly involved and start working on the business while he waited for his partners to join him.
In January 2011, Paul and Joel travelled to the UK and started investigating voice biometric solutions. “Voice biometrics was fairly new, but good technology was available, and there were global leaders in the sector,” says Joel.
It was important to choose the right product for the South African market, as this would form the basis of their offering. A contact at Dimension Data (one of whom became an investor in the business) offered this simple and straightforward advice:
When you’re choosing a technology partner, go with the company whose tech you’re confident in, and whose leadership is stable. You’re basing so much on this company and their longevity, so don’t disregard this criteria.
For Paul, Joel and Bruce, a US-based company, Nuance, ticked those boxes. But, from a competitive perspective, OneVault wasn’t the only potential player in the market. “Neither Bytes nor Dimension Data had gone into voice, but they had the potential to do so,” says Bruce. “The products were available to them through their partners.”
To mitigate this very clear risk, the founders made two critical decisions. “Our intention was to sell voice biometrics as a service, instead of a software solution that customers bought and owned, with the necessary infrastructure to go with it. The idea for OneVault was that there would be one place where your voice print lived, and different businesses could plug into our solution.”
The business model of large technology players in South Africa is to sell integrated software solutions, so OneVault’s business model was a differentiator. The next differentiator Paul, Bruce and Joel focused on was becoming specialists in their field.
“This is Paul’s baby,” says Bruce. “We’ve needed to build up a niche, expert team that specialises in voice biometrics. Because we aren’t generalists, 100% of our focus goes into this, instead of 5% or 10%.”
To attract the best in their fields, the founders needed a very appealing culture and a strong recruitment strategy. “We focused on what we wanted from our work environment, and then applied the same rules across the business,” says Joel. “Our goals were to drink good coffee, have no leave forms — ever; be able to take the time to ride our bikes and watch our kids play sports. If someone can’t make it work, or takes advantage without putting in the work, they come and go, but on the whole, we’ve had extremely low churn, and we’ve attracted — and kept — incredible talent.”
This differentiator would prove to be important for two reasons. First, two and a half years into the business, with investors on board and having pumped a significant amount of their own capital into the business, the team hit a major stumbling block. For a few weeks, they didn’t even know if they had a business.
“We had been operating on one major, and as it turned out, faulty, assumption,” says Paul. “We thought South African companies had the right telephony structure to implement our solution. We’d been building our solution on top of Nuance’s software, and were ready to start piloting the entire system with a few key customers, and we found out that in order to meet global voice biometric standards, the telephone technology had to be G711 compliant. South Africa was operating on G729.”
This was OneVault’s make or break moment. The team had six weeks to come up with a solution that ensured it met the necessary levels of accuracy. Without a highly skilled team this would have been impossible.
Even as a start-up, the strategy had been to only bring the best of the best on board. “We didn’t interview,” says Bruce. “We approached people whom we knew. We approached the best in the industry, and convinced them to take a chance with us. There was risk, but there were also rewards.” One of those people was Bradley Scott, a brilliant engineer whom both Paul and Bruce had worked with at Transunion.
Today, OneVault is one of the most specialist companies in the world, and often asked to speak at events in the US.
Being the niche specialists paid off, and OneVault achieved the almost impossible. But this had its downside.
Once you’ve shown something can be done, the bar of what’s impossible moves. Competitors enter your space.
This was the second reason why being such focused, niche experts paid off. “We demo’d the solution for a large local corporate, they loved it, and then went to a ‘then’ competitor to implement it,” says Paul.
“We always knew this was a real danger. Players like Bytes and Dimension Data have solid, existing client relationships with the same companies we’re targeting.”
18 months later the project still wasn’t working. “This is deep specialist knowledge,” says Paul. “Knowledge we built while we created our offering.” OneVault won the contract, and developed a partnership with Bytes at the same time. Today, OneVault works with all the major software integrators in the market. “We’re a specialist service they can offer their clients, without needing to put the same time and energy we needed to put in to become the specialists.”
Through a focused strategy, OneVault has become a partner, rather than a competitor, of some of the largest players in the industry.
2. Understand the nature of disruption so that you can prepare for it
In today’s ever-changing and fast-paced business world, most business experts are in agreement that as a company, you’re either the disruptor, or you’re being disrupted. The problem is that disruption comes with its own set of challenges.
“Our entire business model was built around a subscription service. Instead of a company buying a software solution, installing it and running it internally, we would do all of that. We would carry the infrastructure burden, and the high upfront cost,” says Joel.
In theory, this sounded like a clear win for businesses that would benefit from a voice biometrics solution. The reality is never so simple, particularly when you’re a disruptor.
“The software is expensive, and so we thought this would be seen as an excellent solution,” says Paul. “Instead, we faced a lot of reticence over the cloud. Businesses didn’t trust it yet.”
On top of that, first movers are often faced with a lag in corporate governance guidelines. As technology becomes more sophisticated, so governance guidelines change — but it’s a slow process, and the lag can impede disruptors.
“You also can’t give proper reference cases, because it’s all brand new to your market,” says Paul. “The best we had was a case study of how well it had worked in Turkey.”
To compound matters, proof of revenue is essential for businesses wanting to trade with large corporates, but non-existent in the start-up phase.
So, what’s the solution? According to Joel, Bruce and Paul, it’s all about being patient, never giving up, building gravitas and getting a few clients on board, even if it’s free of charge to build up your reputation and prove your concept. Finally, you need to bring in revenue from more traditional channels to support your disruptive products and solutions.
“Disruptive solutions are by their nature new and different, which means change management for your customers. This makes the sales cycle long and complex, and you have to be prepared for that,” says Bruce.
Don’t stop laying your groundwork. While disruptors are ahead of the curve, you need to be ready for the uptake when it arrives. “We’ve now concluded a partnership with South Africa Fraud Prevention Services,” says Paul. “When an imposter calls we won’t only terminate the transaction but we will alert the identity being compromised in the attempt and we will actively prevent fraud by contacting Fraud Prevention. The ultimate vision is for every South African’s voice biometric signature to live in our vault, and we are already receiving imposter information.”
3. Cultivate additional revenue streams
So, what do you do while you are living through the extremely long sales turnaround time of your disruptive, game-changing solution? Bills still have to be paid and investment is needed to develop truly disruptive ideas.
First, the team realised that while an annuity subscription service was their ultimate goal and where the industry was heading, initially they needed to be able to sell and implement the software.
It’s worth noting that one of OneVault’s earliest customers who bought the software has since launched a new business, which is on OneVault’s annuity service model. The shift has just taken time. “The change is happening, but it’s been slower than we anticipated,” says Bruce. “We needed to accept that fact and sell the software to bring revenue into the business while we were waiting for the market to catch up.”
It’s an important lesson. You don’t want to get distracted from your vision, but you need to be bringing in revenue, even if that means your short-term strategy differs from your long-term goals.
“It took three years before we really started seeing a move towards hosted solutions,” he adds. “Outsourced and offsite solutions are opex environments, not capex. They are more cost-effective for customers, but they require a shift in thinking. It’s a move away from how things have always been done, and that takes time.”
But, while Paul, Bruce and Joel were learning the art of patience, they also needed to start bringing revenue into the business.
“It was clear that we needed to find other opportunities,” says Joel. The result is the Pivotal Group, a diversified holding company with different businesses that are interlinked and complementary.
The group’s first business outside of OneVault, Pivotal Data, was based on a large call centre contract Joel, Paul and Bruce secured. “You can’t be an expert in everything – when you specialise you will always be more successful. The trick is to partner with other experts,” says Joel. In this case, three entrepreneurs were opening a call centre — this was their area of expertise; they were absolute subject matter experts. What they weren’t experts in was technology or facilities management. Instead of doing it themselves, they were looking for partners.
“We manage everything aside from the people element,” explains Joel. “We found and leased a building, built the bespoke workspace, put in the technology, and managed the facility and IT on an opex basis back to them.”
The business immediately had a good anchor client, and Pivotal Data has built on that. The annuity income has supported further growth.
“This was a base for us, but we’ve acquired a few businesses on the back of this success, and created our own cloud contact centre solution — which also feeds into what we’re doing with OneVault,” says Bruce. “Our vision is to create a technology stack that’s world-class and provides a range of services that no other businesses provide as a single solution.”
Because of this pivot into call centre management, a new opportunity has presented itself, and Pivotal’s ambition has grown to include a solution that calls, authenticates, and then analyses all the data that is collected during those calls.
“Through partnerships, my team has developed a predictive analytics system that gives contact centres deep diagnostic tools. We can predict why agents are having the conversations they have, and what to tweak to improve them. We see the agent’s problem before they do. This isn’t just value add, it’s a revenue generating tool if it improves lead conversion rates and customer service. It’s also all geared to lowering call volumes.
“We know we need to keep looking forward. OneVault is starting to gain real traction, but we need to be working on the next disruptive solution and model. We can’t sit back and relax,” says Bruce.
“Three years ago we said that’s it; no more start-ups or investing in pre-adoption phase businesses. From now on, everything we do will be revenue generating,” says Paul. “We’d stretched three years of runway to five years in OneVault, and we didn’t want to keep doing that. We wanted instant revenue businesses. And the very next thing we did was invest in a start-up. It’s a crazy space, but it’s also very rewarding.”
To sustain it, the group continues to grow, focusing on investing in businesses and entrepreneurs who are subject matter experts and therefore already know and understand the market, and then positioning each new business or service to plug into the current offering.
“Data is our golden thread — technology and the disruptive space,” says Joel.
4. Be open to new ideas and opportunities
Integral to the Pivotal Group’s positioning is Paul, Bruce and Joel’s focus on supporting other business owners whose offerings align with the group’s own growth goals, and who would benefit from joining a group.
“If your goal is to be disruptive, you need to be open to all kinds of new ideas,” says Joel. Some will be better than others, and the co-founders have made the decision to focus on the ‘jockey’ rather than the business as a result. Business offerings and ideas need to pivot. If you have the right partners, finding a solution is all part of the challenge.
Pivotal’s move into the world of artificial intelligence is due to one such partnership. “One of our clients approached us with a concept. But he needed a partner to develop it into a proper AI solution,” says Joel.
It’s an augmented intelligence solution that focuses on recruitment, talent management and career guidance. The solution screens, ranks and matches candidates against a job profile, or a number of profiles. It’s a multidisciplinary platform that predicts the performance of the individual in a role.
“Our partner is a former Accenture consultant and a leader in this field. His focus is on the IP and science of the product, ours is on the business component.”
The challenge is how to commercialise and scale the business in as short a time frame as possible. Like many disruptive products, the adoption process is a stumbling block. “We invest at the pre-adoptive curve — not at the revenue generating stage, which means a big focus is always on how we can take an idea and build it into a revenue generating business,” says Bruce.
The business uses capital selectively. “We want to invest in and drive our own agenda,” says Paul. “We’re in charge of our own destiny, but it’s not comfortable or simple. We came from corporate. Big machines that you need to direct and keep on course. This is an entirely different challenge and we are still learning.”
Listen to the podcast
Matt Brown interviews Paul, Joel and Bruce and discusses what it’s like to invest in pre-adoptive start-ups and staying ahead of the curve.
To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.
The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.
Afritorch Digital An Overnight Success That Was Years In The Making
By any standard, local start-up AfriTorch Digital has seen phenomenal growth and traction. But, while the company’s success might seem quick and effortless, there is a lot of hard work behind it.
- Players: Michel M. Katuta and Thabo Mphate
- Company: Afritorch Digital
- Established: 2017
- Visit: afritorchdigital.com
- About: Afritorch Digital assists research agencies in conducting market research through its in-depth knowledge of the African continent and its use of the latest digital technologies.
There is a saying that goes: It takes years to become an overnight success. While a company or individual might seem to enjoy sudden (and seemingly effortless) success, there is often more to the story. The results are usually public and well-publicised, but the years of hard work that came before go unnoticed.
Local start-up AfriTorch Digital is a great example of this. Since launching in May 2017, the business has seen excellent growth. “To be honest, we were very surprised by the level of success. Things progressed a lot quicker than we anticipated,” says co-founder Thabo Mphate.
“All the goals we had hoped to reach in four or sixth months, we managed to hit in the first month. It was just amazing.”
Preparing to launch
While AfriTorch Digital has certainly seen quick growth and success, it would be a mistake to assume that the same is true of the two founders. For them, the creation of AfriTorch was years in the making.
“The goal was always to start our own business,” says Thabo. “I think we’re both entrepreneurs at heart, and we saw an opportunity to create a unique kind of business that offered an innovative solution to clients, but we also realised the value of getting some experience first. Without the knowledge, experience, network and intimate understanding of the industry landscape, getting AfriTorch off the ground would have been incredibly difficult.”
Entrepreneurs tend to dislike working for other people. They want to forge their own path. However, as AfriTorch Digital’s case illustrates, spending time in the industry that you’d like to launch your business in is tremendously useful.
“Finding clients when we launched AfriTorch was relatively easy,” says company co-founder and CEO Michel Katuta. “One reason for this, I think, was that we were offering potential clients a great solution, but the other was that we had established a name for ourselves in the industry. People knew us. We had worked for respected companies, and we had done work for large clients. So, when we launched, we were able to provide a new start-up with credibility in the industry.”
The Lesson: Becoming an entrepreneur doesn’t always start with the launch of a company. Spending time in an established business, gaining experience and making contacts, can be invaluable. Very often, it’s the relationships you build during this time and the knowledge you accumulate that will help make your company a success.
Solving a problem
Everyone knows that launching a successful business means solving a burning problem, but what does that mean in practice? Aren’t all the burning problems already being addressed? And how do you attempt this without any money?
Thabo and Michel identified a small group of potential clients with a burning problem. Crucially, it was a problem that no one outside of the research field could have identified. Having spent years in the trenches, they saw a massive gap waiting to be filled.
“A decade ago, researchers were still debating whether the future of the field was in the digital space. That debate is now over. Everyone agrees that online is the way to go. What once took months now takes days or hours, and the cost of research can be reduced by a factor of five,” says Michel.
“But researchers are not technology specialists. If made available, they are eager to adopt digital tools, but they aren’t eager to develop these tools themselves. That’s not their area of expertise.”
AfriTorch Digital stepped up to provide these tools. Katuta has a background in software engineering, so he could approach research problems with the eye of a tech specialist. Very soon, research agencies were lining up to make use of AfriTorch Digital’s services.
“We work with research agencies that conduct research on behalf of their clients. We provide the digital tools needed to conduct research online, and we provide the online communities. A big reason for our success is that we understand Africa. A lot of companies want to conduct research in Africa, but traditionally, this has been very hard. There was a lack of access and a lack of infrastructure that made research very hit-and-miss. Thanks to the continent’s adoption of mobile technology, it’s now much easier. If you have the technological know-how and an understanding of the environment, you can do amazing things,” says Michel.
The Lesson: Find a niche and own it. Research agencies might not have seemed like an obvious and lucrative market, but having spent time in the industry, the AfriTorch founders were able to identify clients who would be desperate for their offering. Spending time in an industry will help you see where the opportunities lie.
Before launching a business, get to know an industry from the inside out. This will give you an unparalleled view into gaps you can service.
Jason English On Growing Prommac’s Turnover Tenfold And Being Mindful Of The ‘Oros Effect’
Rapid growth and expansion can lead to a dilution of the foundational principles that defined your company in its early days. Jason English of Prommac discusses how you can retain your company’s culture and vision while growing quickly.
- Player: Jason English
- Position: CEO
- Company: Prommac
- Associations: Young President’s Organisation (YPO)
- Turnover: R300 million (R1 billion as a group)
- Visit: prommac.com
- About: Prommac is a construction services business specialising in commissioning, plant maintenance, plant shutdowns and capital projects. Jason English purchased the majority of the company late in 2012, and currently acts as its CEO. Under his leadership, the company has grown from a small business to an international operation.
Since Jason English purchased Prommac in 2012, the company has experienced phenomenal growth. At the time he took over as owner and CEO, it was a small operation that boasted a turnover below R50 million.
Today, Prommac is part of a diversified group of companies under the CG Holdings umbrella and alone has grown it’s turnover nearly ten fold since Jason English took over. As a group, CG Holdings, of which Jason is a founder, is generating in excess of R1 billion. How has Prommac managed such phenomenal growth? According to Jason, it’s all about company culture… and about protecting your glass of Oros.
“As your business grows, it suffers from something that I call the Oros Effect. Think of your small start-up as an undiluted glass of Oros. When you’re leading a small company, it really is a product of you. You know everything about the business and you make every decision. The systems, the processes, the culture — these are all a product of your actions and beliefs. As you grow, though, things start to change. With every new person added to the mix, you dilute that glass of Oros.
“That’s not to say that your employees are doing anything wrong, or that they are actively trying to damage the business, but the culture — which was once so clear — becomes hazy. The company loses that singular vision. As the owner, you’re forced to share ‘your Oros’ with an increasing number of people, and by pouring more and more of it into other glasses, it loses the distinctive flavour it once had. By the time you’re at the head of a large international company, you can easily be left with a glass that contains more water than Oros.
“Protecting and nurturing a company’s culture isn’t easy, but it’s worth the effort. Prommac has enjoyed excellent growth, and I ascribe a lot of that success to our company culture. Whenever we’ve spent real time and money on replenishing the Oros, we’ve seen the benefits of it directly afterwards.
“There have been times when we have made the tough decision to slow growth and focus on getting the culture right. Growth is great, of course, but it’s hard to get the culture right when new people are joining the company all the time and you’re scaling aggressively. So, we’ve slowed down at times, but we’ve almost always seen immediate benefits in terms of growth afterwards. We focus heavily on training that deals with things like the systems, processes and culture of the company. We’ve also created a culture and environment that you won’t necessarily associate with engineering and heavy industries. In fact, it has more in common with a Silicon Valley company like Google than your traditional engineering firm.
“Acquisitions can be particularly tricky when it comes to culture and vision. As mentioned, CG Holdings has acquired several companies over the last few years, and when it comes to acquisition, managing the culture is far trickier than it is with normal hiring. When you hire a new employee, you can educate them in the ways and culture of the business. When you acquire an entire company, you import not only a large number of new people, but also an existing organisation with its own culture and vision. Because of this, we’ve created a centralised hub that manages all training and other company activities pertaining to culture. We don’t allow the various companies to do their own thing. That helps to manage the culture as the company grows and expands, since it ensures that everyone’s on the same page.
“Systems and processes need to make sense. One of the key reasons that drove us to create a central platform for training is the belief that systems and processes need to make sense to employees. Everyone should understand the benefits of using a system. If they don’t understand a system or process, they will revert to what they did in the past, especially when you’re talking about an acquired company. You should expect employees to make use of the proper systems and processes, but they need to be properly trained in them first. A lot of companies have great systems, but they aren’t very good at actually implementing them, and the primary reason for this is a lack of training.
“Operations — getting the work done — is seen as the priority, and training is only done if and when a bit of extra time is available. We fell into that trap a year ago. We had enjoyed a lot of growth and momentum, so we didn’t slow down. Eventually, we could see that this huge push, and the consequent lack of focus on the core values of the business, were affecting operations. So, we had to put the hammer down and refocus on systems, processes and culture. Today Prommac is back at the top of it’s game having been awarded the prestigious Service Provider of the year for 2017 by Sasol for both their Secunda and Sasolburg chemical complexes.
“If you want to know about the state of your company’s culture, go outside the business. We realised that we needed to ‘pour more Oros into the company’ by asking clients. We use customer surveys to track our own performance and to make sure that the company is in a healthy state. It’s a great way to monitor your organisation, and there are trigger questions that can be asked, which will give you immediate insight into the state of the culture.
“It’s important, of course, to ask your employees about the state of the business and its culture as well, but you should also ask your customers. Your clients will quickly pick up if something is wrong. The fact of the matter is, internal things like culture can have a dramatic effect on the level of service offered to customers. That’s why it’s so important to spend time on these internal things — they have a direct impact on every aspect of the business.
“Remember that clients understand the value of training. There is always a tension between training and operational requirements, but don’t assume that your clients will automatically be annoyed because you’re sending employees on training. Be open and honest, explain to a client that an employee who regularly services the company will be going on training. Ultimately, the client benefits if you spend time and money on an employee that they regularly deal with.
“For the most part, they will understand and respect your decision. At times, there will be push back, both from clients and from your own managers, but you need to be firm. In the long term, training is win-win for everyone involved. Also, you don’t want a client to become overly dependent on a single employee from your company. What if that employee quits? Training offers a good opportunity to swop out employees, and to ensure that you have a group of individuals who can be assigned to a specific client. We rotate our people to make sure that no single person becomes a knowledge expert on a client’s facility, so when we need to pull someone out of the system for training, it’s not the end of the world.
“Managers will often be your biggest challenge when it comes to training. Early on, we hired a lot of young people we could train from scratch. As we grew and needed more expertise, we started hiring senior employees with experience. When it came to things like systems, processes and culture, we actually had far more issues with some of the senior people.
“Someone with significant experience approaches things with preconceived notions and beliefs, so it can be more difficult to get buy-in from them. Don’t assume that training is only for entry-level employees. You need to focus on your senior people and make sure that they see the value of what you are doing. It doesn’t matter how much Oros you add to the mix if managers keep diluting it.”
When Jason English purchased Prommac late in 2012, the company had a turnover of less than R50 million. This has grown nearly ten fold in just under five years. How? By focusing on people, culture and training.
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