Connect with us

Entrepreneur Profiles

How Dial A Nerd Managed To Dial Up Profits

Dial a Nerd’s enduring success is realising that profits matter more than bright lights and courting equity partners. To grow profits brothers, Colin and Aaron Thornton, have strategically brought their turnover down and today run a simpler, consolidated and more sustainable company. This is their story.

Nadine Todd

Published

on

Dial-A-Nerd-brothers

Vital stats

  • Players: Aaron Thornton and Colin Thornton
  • Company: Dial a Nerd
  • EST: 1998
  • Visit: dialanerd.co.za

What is success?

It’s a question that the founders of Dial a Nerd, brothers Colin and Aaron Thornton, have often thought about and debated with their fellow directors, Roberto Caprio and Phil Case. Is it massive top-line growth? Check.

We-recommend-tickWe recommend: Dial-a-Nerd: Staying on Top While the Market Changed

Growing from one retail store in Joburg to 14 nationwide, with another 26 on the cards? Check. Drawing the attention of a large ISP who wants to acquire you, and then signing a three-year structured buy-out deal? Check.

By 2008 it seemed like nothing could go wrong, and the brothers would be in their 30s and retired by 2011. And then the wheels fell off.

“In hindsight, the writing was on the wall,” says Colin.

“At the time, we felt like we were flying. We were signing expensive leases, chasing top-line growth and focusing on getting bigger and bigger and bigger. We were no longer just Dial a Nerd either. A few years into the business we formed Nerdworks as a holding company for Dial a Nerd and Network Nerds. We had home, software development and website divisions. We were doing a lot — and fast.”

What they didn’t see was how the buy-out would negatively impact their business, the effects of a global recession on the horizon, and how the home IT market was about to radically shift.

Growing pains

dial-a-nerd-car

The ISP’s interest and the buy-out deal just accelerated Dial a Nerd’s growth, which meant 100% of Aaron and Colin’s focus was on the top line, instead of paying careful attention to the market. Before long, the cracks started to show.

“It was a perfect storm,” says Aaron. “We were chasing turnover growth without properly considering what it was costing us, or if there was a smarter way to be making better margins and higher profits. We were blinded by the beautiful retail stores we were opening and the brag factor of the growth we were experiencing.” It soon became apparent that there were some fundamental flaws in the buy-out deal.

“The ISP that we’d signed the deal with was aggressively gaining market share, and wanted to partner with a support company. They also wanted to break into the SME space. They saw us as the ideal partner for this. One of their goals was for us to grow to 40 branches nationwide. We were all for it, and used their cash for aggressive expansion,” explains Colin.

Unfortunately, the reality of the deal was quite different to how it looked on paper.

“We’ve learnt that in a successful partnership, 1 + 1 = 3,” says Aaron. “Then it’s worth it, and you have real, sustainable growth that everyone benefits from. This just wasn’t the case for us. The synergy wasn’t right.”

“We all got carried away with the value of our organisation, and when we joined the ISP, we didn’t do enough homework on the market, what they were purchasing, where the gaps lay, and who our competitors in the space were,” adds Colin. As it turned out, a lot of those competitors were actually resellers for the ISP.

”By marketing ourselves to their end-users we would’ve alienated the resellers who, as you can imagine, weren’t happy. Once they got wind of our plan they threatened to stop selling the ISP’s services – and that obviously wasn’t acceptable. A major ‘synergy’ we had identified just evaporated.

“To make matters worse, the ISP’s board wanted us to cover South Africa as fast as possible to help accelerate their own growth. We were trying to grow too quickly, which was putting enormous pressure on the business’s sustainability,” says Colin.

Finding an exit and facing new challenges

“We stood back, took stock, and realised the whole deal wasn’t working out the way we’d planned,” says Colin. It’s never easy to admit that you’ve made a mistake, let alone face the fact that the deal you thought would make you rich just isn’t delivering on its promise.

Colin and Aaron could have ignored this realisation and kept pushing, hoping they could turn it around or that they could still make it work. Instead, they decided to take their company back and build it on their terms, at their pace.

“We were lucky. The ISP’s focus was shifting, and we no longer represented the core market they wanted to concentrate on. Roberto approached the board and asked them if we could take ownership off the table, walk away and pay back the money they’d already given us,” says Aaron.

“They were happy with the proposed deal. We agreed on a payment structure, and it took us three years to pay them back.”

Not only were the brothers now free and clear to rework their entire business strategy, but they managed to salvage a good relationship with the ISP, which remains to this day.

They might have extricated themselves from a poor partnership, but the business’s problems were far from over.

“Our relief at ending the partnership was short-lived,” says Colin. By 2011 the market started to shift rapidly. First, operating systems were getting much better.

Second, while the 2008 crash took a while to get to South Africa, by 2011 it was starting to impact consumer buying trends. Both would have a significant impact on Dial a Nerd’s business model.

We-recommend-tickWe recommend: Dial-a-Nerd: Colin Thornton

Shifting markets

aaron-and-colin-thornton

“IT costs were dropping and the home consumer market was becoming incredibly competitive,” says Colin.

“Consumer electronics were becoming commoditised, and large retail chains were squeezing suppliers for better prices.”

What did this mean for the business? When Dial a Nerd had first launched 11 years earlier, Colin made the decision to focus on the home user market, which needed assistance, but wasn’t being serviced. Desktop computers couldn’t just be bought out the box.

They were custom-made from specific components based on the customer’s needs. There were only a handful of computer brands on the market, and these were high-end products.

“It was actually worth personally spending an hour or two with each customer who wanted a laptop or desktop to find out exactly what their needs were at their homes or offices,” says Aaron, who would then take the specs back to a technician who would build it from components and then set it up for the customer — again at their homes.

“Everything was complicated. We had a document a page and a half long with instructions on how to connect to the Internet.”

Fast forward a decade and things were very different. Laptops were standard, and could be bought out the box.

Apple had launched the iPad, and suddenly consumers didn’t need desktops at home anymore — they had laptops at work and tablets at home. Nothing needed to be custom-made, and there was a range of out-the-box products to choose from.

Large retailers bought and sold on price, and Dial a Nerd, which had retail stores and sold products, but at a much smaller scale, just couldn’t compete on price.

Disappearing margins

“At this stage around 50% of our revenue was hardware sales, and we had all these fancy retail stores,” says Aaron.

“However, our FD Phil, kept warning us that margins were disappearing. We began to seriously question not only our original strategy of opening 40 stores nationwide, but even keeping the existing 14 stores.”

“It’s amazing how you can be blinded by the trappings of looking successful,” says Colin.

“We loved opening stores — they were beautiful, and you’ve got this showcase that you feel incredibly proud of. Of course, there was a reason behind them. We needed a way to present the hardware on offer, and it meant that technicians had a base to work from.

“They’d waste so much time travelling from Bryanston to the East or West Rand, so it made sense to open offices in each major area. But as the market changed, rents were going up, and margins were shrinking. What’s the point of a high turnover if you’re working so hard for small margins? The model just wasn’t making sense anymore.”

We-recommend-tickWe recommend: To Fund Or Not To Fund?

Start-up story

dial-a-nerd-store-front

“Launch is the wrong word. We fizzled into existence,” is how Colin Thornton describes Dial a Nerd’s beginnings. It was August 1998, and Colin was 19 years old. He’d just dropped out of his first year of university — an interesting choice, considering his father was a professor and his mother was a teacher — and he needed to make an income. His dad had been clear: If he wasn’t studying, he needed to pay rent.

“I had always been interested in computers. In 1984, when I was six years old, we got our first computer. It was one of the first private computers of anyone we knew, and I was always fiddling with it — playing games, breaking it, fixing it. I loved it. From a young age, friends and family asked me to look at their PCs when they broke, and to train them.

“By the time I was in high school I was charging R50 an hour for my services. When I realised that I didn’t want to study, this was the natural place to turn to. I had some clients, I had skills and most importantly, I had a passion for technology. What I didn’t have was a business — or enough clients.”

Colin’s solution was simple. He paid his rent, and every cent he made above that he spent on flyers.

“They were cheap flyers that I printed in bulk, and I handed them out everywhere – at robots, in car parks, at malls. We got chased out of more car parks in Joburg than I can count. We paid car guards to put them under people’s windscreens, and students did mailbox drops for us. If I could have hired a helicopter to blanket them over the city I would have.”

Gaining customers

It worked. Home users needed help, and Colin was affordable. Word started spreading, and as the business grew, three other friends who knew PCs came on board.

By 2000, Dial a Nerd had offices and a receptionist, and then Aaron, who had made it to his second year in varisty, decided to drop out as well.

“I knew tech, but we needed someone who could focus on marketing, business growth and clients. Aaron was a perfect fit, and I asked him to join us.”

Eight years later, the business had grown substantially and the brothers attracted the interest of a large ISP. A deal was signed. By 2010 that deal was reversed. By 2014 the debt to the ISP was settled, and consolidation began. Today, Dial a Nerd is a smaller business, but a far more profitable one. And growth is more on the cards than ever.

Time for a new strategy

Dial-a-nerd-founder

The brothers took stock yet again. Turnover was good, but profits were not. Because they couldn’t compete with large retail chains on price, the validity of the retail stores was called into question.

They were still helping clients set up their home tech systems, even if the tech was being purchased elsewhere, but this side of the business didn’t require a showroom.

“In addition, even the home user market was shrinking — operating systems were getting better and much simpler to use. People with very little tech-savvy were able to plug and play without technical assistance. Tech was also getting cheaper, which meant in most cases hardware would be replaced instead of fixed.

“Instead of lamenting how tech developments had harmed the business, we decided to focus on how they could help us instead,” says Colin.

“We’d built a great brand over the years. It was well known, respected and trusted. That was a really excellent base to start from. We just needed to accept that we could no longer do what we’d always done if we wanted to continue to grow the business.

“In terms of the retail side, our options were to enter into a pricing war or start importing ourselves. We didn’t want to do either. Tech support was what we were good at, and that’s where we needed to focus. We made the decision to close the retail stores and stop actively selling products. We also made the decision to shift from home users to businesses.”

We-recommend-tickWe recommend: Mark Pilgrim On Authenticity In Business

A revenue problem

2012 became Dial a Nerd’s first year of consolidation. “Over the past three years we’ve wrapped up a branch every six months,” says Aaron, who spearheaded this side of the business.

“We were watching our revenue evaporate, and as a branch stopped making cash completely, we shut it down.”

“We also started focusing on the business sector,” adds Colin.

“We tried to ramp it up at the same pace that the consumer side was dropping. It took longer than we thought it would, as it so often does, but we were on the path. Corporate has a much longer sales cycle, and you need to take the time to really build trust and put proper service level agreements in place. There’s a lot more at stake in corporate IT support, because downtime costs money — sometimes millions per day in lost revenue and productivity.”

The fact that things were moving more slowly than planned was alright, though. “We knew that this was where we had real scope to grow, unlike the consumer side, which was the exact opposite,” says Colin.

At the same time, business support was getting exciting. “Servers, networks, security, the cloud — there’s so much happening in the tech space; so much scope. Business is now impossible without IT. It’s one of the most important functions of any business.”

Balancing costs with growth

dial-a-nerd-entrepreneur

The past three years have been a balancing act for Colin and Aaron. They split their roles: Aaron would wind down the consumer side of the business while Colin concentrated on building the business side.

“It’s a strange position to be in, because you still have to give good support, watch the bottom line, and make profits while decreasing the size of the business and closing branches,” explains Aaron.

“As we shut branches the best operators stayed and became ‘mobile’ operators. They were on the road anyway; now it was just official. To manage technicians who were always on the road, we needed different systems and support to control and get live reporting from. We bought off-the-shelf, yet specialised software to do this. We needed to keep our best operators and the highest billers, but we didn’t need to keep the offices and branches.”

As a result, although the business continued to focus on home users for the next three years, it got rid of overheads.

“We had no company cars, offices or scattered administrators. We focused on creating a mobile workforce with all admin consolidated in one central office with robust systems to support the shift.

A shrinking market

“The market was shrinking, and we shrank with it, keeping only the higher LSM. Today our home users account for 30% to 40% of our turnover, but without the overheads of rent and admin it’s become a very profitable revenue stream.”

An additional revenue generator has been the direct result of technological advancements.

“Robust systems have allowed us to create a low-cost mobile workforce, but on the business side, technology has allowed us to offer off-site support. Our business technicians can monitor our clients’ servers and systems from our offices, without getting in their cars and driving to the client. This means we can spot and solve problems before the client even realises they are there, but it also means technicians can now offer eight hours of support in one day instead of four,” says Colin.

“It’s been amazing for our profit margins. The costs associated with time on the road have just evaporated. The advances of tech meant we had to shift our business model, but the benefits of those same changes have been immense. We just needed to recognise them and make the best use of them.”

Reaping the rewards

Ultimately, while the last few years have been tough, and radically changing a business model can be daunting, for Dial a Nerd, the rewards have been well worth it.

“With the home division we’ve always waited for the phone to ring. Business customers are different. We’ve put contracts in place, which has created an annuity income. This means we know how much revenue is coming in each month, and can plan (and spend) accordingly,” says Colin.

“While getting here has been scary as hell, our lives are simpler as a result and we’ve substantially grown our profits. Our turnover might be down by 35%, but our year-on-year profit growth over the past three years has been 100%.”

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

Entrepreneur Profiles

7 Foundational Values Of Brand Cartel And How They Grew an Iconic Business From The Ground Up

Marco Ferreira, Renate Albrecht and Dillon Warren built Brand Cartel, a through-the-line agency, that delivers exactly what they wanted — and has grown exponentially as a result.

Nadine Todd

Published

on

brand-cartel

Vital Stats

  • Players: Marco Ferreira, Renate Albrecht and Dillon Warren
  • Company: Brand Cartel
  • Launched: 2013
  • Visit: brandcartel.co.za

“We’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do.”

When Dillon Warren, Renate Albrecht and Marco Ferreira launched Brand Cartel in 2013 they were in their early 20s with zero agency experience between them. The idea had started when Marco recognised that social media was taking off, but no agencies were playing in that space yet. It was a clear opportunity.

Printing flyers that said ‘Your social media is so last season’, Marco and Renate went from store to store in Sandton City, pitching their services. When Dillon joined them a few months later because they needed someone to handle the company’s finances, they had two laptops between them, R6 000, which Dillon had earned from a Ricoffy advert, and sheer will and tenacity.

“We shared a house to save on rent and split everything three ways,” says Renate. “At one point we hadn’t eaten in two days. My mom lent me R500 so I could buy Futurelife and a bag of apples for the three of us.”

The trio hired their first employee soon after launching Brand Cartel, and after prioritising salaries and bills, there wasn’t much leftover. “Dillon actually paid us R67 each one month,” laughs Marco. “That’s what was left — although I still can’t believe he actually sent it to us.” It was at this point that the young business owners realised they needed credit cards if they were going to make it through their start-up phase — not an easy feat when your bank balance is under R100.

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

“Looking back, those days really taught us the value of money,” says Dillon

We spent a lot of time with very little, and we’re still careful with money today.” Through it all though, the partners kept their focus on building their business. “It almost didn’t work for a long time. We were young and naïve, but in a way, that was our strength. We didn’t have any responsibilities, and we’d never worked at agencies, which meant we had no idea how much you need to run an agency. We grew into it. It’s made us really good at what we do. All of our business has been referral business. It takes time, but we focused on being the best we could be and giving everything we had to our clients. Our differentiator was that we really cared, and were willing to offer any solutions as long as they aligned with our values.”

This is how Brand Cartel has grown from a social media agency into PR and Media Buying, SEO and PPC Strategy, Digital and Print Design, Web Development, Campaign Strategy and now an Influencer division. “It’s an incredibly competitive space with low barriers to entry, which meant it was easy to launch, but tougher to build a client base,” says Renate. “I’d sometimes cry in my car between sales pitches, and then walk in smiling. We had no idea if we’d make it.”

The perseverance has paid off though. Strong foundations have laid the groundwork for exponential growth over the past year, with turnover growing almost ten-fold in 2017 thanks to relationship-building, strong referrals and fostering an internal culture and set of values that has driven the business to new heights as a team.

Like many start-ups, Renate, Dillon and Marco have made their fair share of hiring mistakes, but as the business grew and matured, the young entrepreneurs began to realise that the success of their business lay in the quality of their team and the values they stood for.

This meant two things: Those values needed to be formalised so that they could permeate everything Brand Cartel does, and they needed a team that lived, breathed and believed in them.

“We’ve had some nasty experiences,” admits Dillon. “You should always hire slowly and fire fast, and for five years we did the opposite. We’ve hired incredible people, but we’ve also ended up with individuals who didn’t align with our values at all, and that can destroy your culture.

Dillon, Marco and Renate realised they needed to put their values on paper. “We did an exercise and actually plotted people based on a score grading them against our values, so we knew where our issues were. We knew what we wanted to stand for, and who was aligned with those values. We were right; within a few weeks resignations came in and we mutually parted ways.”

The team that stayed was different. They embraced Brand Cartel’s values, and more importantly, it gave the partners a hiring blueprint going forward.

“Values are intangibles that you somehow need to make real, so it’s important to think about the language you use, and how they can be used in a real-world work context,” says Marco.

The team has done this in a number of ways. First, they chose ‘value phrases’ that can be used in conversation, for example, ‘check it, don’t wreck it’, and ‘are you wagging your tail?’ Team members can gently remind each other of the value system and focus everyone on a task at hand simply by referring to the company’s values. “In addition, when someone is not behaving according to those values, you can call them out on the value, which is an external thing, rather than calling them out personally,” explains Dillon.

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

Second, all performance reviews are based on the values first. This means everyone in the organisation begins any interaction from a place of trust, knowing they are operating according to the same value system.

“When you’re in a production environment with jobs moving through a pipeline, there can be problems and delays,” explains Marco. “Instead of pointing fingers when something is over deadline or a mistake is made, our team can give each other the benefit of the doubt and work together. They trust each other, which creates cohesion. We all work as a team, which impacts the quality of our work and the service we offer our clients.”

The system is simple. Coaches will step in first if there is an issue before it escalates to the Head of Team Experience, Nicole Lambrou. If Nicole is called in, she will address the problem head on. “Inevitably it’s something fixable,” says Marco. “By addressing it immediately and in the context of our values it can be sorted out quickly. Ultimately, the overall quality of our team improves, and we are a more cohesive unit.”

The founders have seen this in action. “I recently arrived at a client event and three different people came up to me and complimented my team on the same things — all of which aligned with our values. Everyone at Brand Cartel lives them, internally and externally,” says Renate.

The value system has also shaped how the team hires new employees. “We used to meet people and hire for the position if they could do the job,” says Renate. “But then we started realising that anyone can hold up for an hour or two in an interview. You only learn who they really are three months and one day later.

“We need people who walk the talk, and we really only had a proper measurement of that once we articulated our values. Our interview style has changed, but so has what we look for.”

brand-cartel-south-african-agency

Here are the seven values that Dillon, Marco and Renate developed based on what they want their business to look like, how they want it to operate, and what they want to achieve, both internally, and in the market place.

1. Play with your work

Our goal is for everyone on our team to become so good at what they do that it’s no longer work. Once that happens you love your job because you’re killing it. It’s why sportsmen are called players, not workers, and it starts with the right mindset.

2. Wag your tail

The idea behind this value stems from Dale Carnegie, who said ‘have you ever met a Labrador you don’t like?’ In other words, we all respond well to people who are friendly. It needs to be genuine though, so again, it’s a mindset that you need to embrace.

We live these values whether we’re at the office or meeting clients. If you go into each and every situation with joy and excitement, from meeting someone new to a new brief coming in, you’ll be motivated and excited — and so will everyone around you.

3. Check it, don’t wreck it

The little things can make big differences. Previously it was too easy to pass the buck, which meant mistakes could — and did — happen. Once you instil a sense of ownership and create a space where people are comfortable admitting to a mistake however, two things happen. First, things get checked and caught before there’s a problem. Second, people will own up if something goes wrong. This can help avoid disasters, but it also leads to learnings, and the same thing not happening again.

4. What’s Plan B (aka make it happen)

We don’t want to hear about the problem; come to us with solutions, or better yet, already have solved the problem and made it happen. We reached a point where we had too many people coming to us with every small problem they encountered, or telling us that something wasn’t working so they just didn’t do it.

That wasn’t the way we operated, and it definitely wasn’t the way we wanted our company to operate. We also didn’t want to be spoon feeding our team. It’s normal for things to go wrong and problems to creep in — success lies in how those problems are handled.

Ignoring problems doesn’t make them go away, so we embrace them instead, encouraging everyone on our team to continuously look for solutions. For example, the PR department holds a ‘keep the paw-paw at Fruit & Veg City’ meeting every morning, where we deliberately look for where problems might arise so that we can handle them before they do. We start with what’s going wrong and then move to what’s going right. You need to give your team a safe and transparent space to air problems though. We don’t escalate. We need to know issues so that we can collectively fix them, not to find fault.

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

5. Put your name to it

It’s about pride in work and making it your own. When someone has pride in what they’re doing, they’ll not only put in extra time and effort, but they’ll pull out all the stops to make their creative pop, or go the extra mile for a client.

We need to find the balance between great quality work and fast output though. One way we’ve achieved this is by everyone reviewing the client brief and then committing to how long their portion will take.

When someone gives an upfront commitment, they immediately take ownership of the job. It took time for us to find our groove with this, but today we can really see the difference. Our creative coaches also keep a close eye on time sheets and where everyone is in relation to the job as a whole to keep the entire brief on track. If someone is heading towards overtime we can immediately ask if something is wrong and if they need assistance.

We also celebrate everything that leaves our studio. Every morning we have a mandatory 15-minute catch up session where we check in on four core things: How am I feeling (which allows us to pick up on the mood in the room and the pressure levels of our teams); What’s the most important thing I did yesterday; What’s the most important thing I’m going to do today (both of which give intention and accountability); and ‘stucks’, issues that team members need help with. We then end off with our achievements so that we can celebrate them together.

6. Keep it real (aka check your ego at the door)

We believe in transparency. At the end of the day we’re all people trying to achieve the same thing, but it’s easy for ego to creep in — especially when things go wrong. You can’t be ego-driven and solutions-orientated. If clients or team members are having a bad day, you need to be able to focus on the solution. Take ego away and you can do just that. It’s how we deal with stucks as well. We can call each other out and say, ‘I’m waiting for you and can’t do my job until I receive what you owe me,’ and instead of getting a negative, ego-driven reaction, a colleague will say, ‘sorry, I’m on it.’

7. Walk the talk

For us, ‘walk the talk’ really pulls all our other values together. It’s about being realistic and communicating with each other. If you’ve made a mistake or run into a problem, tell your client. Don’t go silent while you try and fix it. Let them know what’s happening and fill them in on your plan of action.

Walk the talk also deals with the industry you’re in. For example, if you’re a publicist, you need to dress like a publicist, talk like a publicist, and live your craft. In everything we do, we keep this top of mind.

Continue Reading

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

Published

on

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.”

Continue Reading

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

Published

on

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.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending