- Players: Sam Paddock (chief executive officer) and Rob Paddock (chief of education)
- Launched: 2008
- Turnover: R128 million
- What they do: Online short-courses, focusing on business, finance, marketing, design, law, systems and technology, writing and teacher education, and working with top academic institutions.
- Philosophy: If our business is growing at 100% year-on-year, we have to be growing very fast in our personal capacity, otherwise we’ll be left behind.
- Visit: www.getsmarter.co.za
We communicate the same challenge to our leadership team.
Big hairy audacious goal: To improve one million lives through online education.
GetSmarter’s exponential growth is nothing short of remarkable, but brothers Sam and Rob Paddock are quick to point out that getting one business right doesn’t mean that everything they touch turns to gold.
“We’ve had some ideas that have completely tanked, even though we still can’t figure out why they didn’t work,” they laugh, chronicling some of their greatest ‘non’ hits. First, there were the steel frame houses that Rob had seen in Australia. “I was convinced they were the next big thing,” he recalls.
“We spent so much time and effort on an idea that just wouldn’t take off. It wasn’t for lack of trying, but people weren’t interested, and we couldn’t change that.”
Learning from mistakes
There was one plus side to the whole experience: “We really know what to look for when choosing office space now; we’ve got a great understanding of construction.”
Bad idea number two was Back-up Box, which seemed like an amazing idea during the 2008 period of load shedding. “Again, we still don’t really know why it didn’t take off,” says Sam. “Theoretically, there should have been a market banging down our door to get their hands on alternative power sources, but it was a complete flop.”
They were two important lessons for the young entrepreneurs to learn. “At the time, we were both working in our father’s law firm, Paddocks,” says Sam.
“We’d joined in 2006 as equity partners, bringing tech and marketing expertise to the firm, but we were involved in multiple areas, including conveyancing, consulting, property development (the seeds for the ill-fated steel frame houses idea) and education.
“We were in our early 20s, and the success of Paddocks gave us a lot of confidence. We started thinking we were ‘serial’ entrepreneurs who could do anything. I think it’s natural for success to lead to some arrogance, but while confidence can be channelled into taking calculated risks to build something great, hubris will often just make you fall flat on your face. In our experience, serial entrepreneurship is rubbish. If you want to really build something amazing, focus on what you know, and do that really, really well.”
The art of the pivot
“Once GetSmarter was off the ground and doing well, we started thinking about other products and ideas that we could potentially add to our stable,” says Sam. “One of those was Kwiksta. The ‘Kwik’ was an acronym for ‘know what I know’, and the idea was to give teachers a DIY tool and a platform to create and sell their own
“We thought this was a really great idea,” adds Rob. “Unlike some of our previous ideas, it wasn’t a massive departure from what was working for us, which was online education. We had the platform and the knowledge around how to design a course, and we reasoned that all teachers are always looking for a way to make some extra income. We thought they’d jump at the product.”
They didn’t. Despite the sound reasoning behind the idea and the solid business model, the brothers had made one key – and as it turned out, flawed – assumption, which was that it’s easy to create content. The reality is that it’s hard, and the majority of their target market didn’t want to do it.
Finding their customer
“What was really interesting about the product was that while it didn’t suit our original target market, the corporate sector loved it. They didn’t want a DIY tool though. They wanted us to guide them and help them to build their own internal courses. We had to pivot completely, and ended up creating a bespoke and complex product, but we finally got the traction we were looking for,” says Sam.
The product gave birth to GetSmarter Business Solutions, a separate business entity with its own MD, which was rebranded Hubble Studios in 2014.
A few setbacks aside though, GetSmarter isn’t just a highly successful business, it’s been instrumental in shaping the online education landscape in South Africa. Sam and Rob might not have made all of their ideas work over the years, but their really big idea has been masterful, both in conception, and execution. Here are their top lessons.
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Do what you know (and what works)
GetSmarter wasn’t launched in a vacuum. It was the perfect culmination of passion, skill and great partnerships, coupled with a lot of hard work and dedication.
“I love tech and marketing, Rob is passionate about education, and has a background teaching music, and Paddocks already had a great partnership with UCT’s Law Faculty,” says Sam, who had also been involved in designing a virtual campus while completing his degree in business science.
“It was my first introduction to online education opportunities, and the success of my dad’s online course with UCT just cemented this impression.”
Graham Paddock is one of South Africa’s top sectional title lawyers, and a collaboration with UCT allowed him to build an online course that could be accessed across the country, with only the final component involving a workshop.
“It was a very popular course, but it was also one of the most profitable activities that Paddocks was involved in,” says Sam.
“It was 2005 and there was some resistance to online learning, but the prestige of UCT as a partner made a difference. Between my dad’s industry reputation and UCT’s brand, people were willing to try it out.”
Finding the natural fit
One of the key reasons Sam and Rob had joined the business was to spearhead growth. “This meant we were constantly looking for growth opportunities,” says Rob, once more laughing about their brief foray into steel frame houses. Online courses on the other hand, were a natural fit.
“The short course had the fastest growth and the best margins, and we realised that we definitely had something worth pursuing,” says Sam. “We added a blended-learning property course in Johannesburg, which was an online short course with a workshop at the end.”
Again, the course did well, and the brothers started realising that the best opportunities are the ones closest to you.
“I had started an ecommerce wine site with a friend,” says Sam. “It was called Getwine, and it was enjoying nice, steady growth. I started thinking about how we could leverage that business and data-base, and came up with the idea of doing a short online course on wine evaluation. We approached a professor from the University of Stellenbosch, and he agreed to come on board.”
Step two was branding. It didn’t make sense to run a wine evaluation course under the Paddocks brand. “We set up in a small room in Paddocks and roped in the marketing manager to brainstorm some name ideas. We wanted to stick with the ‘get’ concept of Getwine, which led to the name GetBrains,” laughs Sam.
“My dad took about two seconds to veto it once he heard it. He convinced us it was a terrible, terrible name, and we settled on GetSmarter.”
The birth of GetSmarter
“There was a huge demand,” says Sam. “281 students signed up. It was the two of us and one sales person, who doubled up as the course co-ordinator. But we could see the potential, and we could incubate the business inside Paddocks. We did a cut and paste of the Paddocks shareholder agreement, and with four shareholders, us, our mom, Mandy Paddock, and our dad, we launched.”
They were right. The brothers soon exited from Paddocks to focus exclusively on GetSmarter, and today the business has 200 full-time employees and 60 contract teachers, many of whom are consultants with real-world practical experience.
When asked why this idea succeeded, the answer is simple: The passion for education, coupled with making a real difference, a laser focus on marketing and execution, as well as an existing relationship with UCT were all the ingredients this young, hungry and above-all bullish team needed to launch a business that would prove to be an industry game changer. “And we were doing something we understood from the ground up,” adds Sam.
Create amazing partnerships (and respect the hell out of them)
The brothers are quick to point out the integral role that working with top brands has played in the business’s success. “We’re a digital university without a brand or smart professors,” says Rob.
“The partnership with UCT has been crucial to our success, as it gave real credibility to the brand from start-up,” he adds. “We have earned the trust of the country’s leading university brands and this means a lot to working professionals who want credible validation of their skills.
“There are key individuals in academia who have actively supported us from the beginning, and it’s very important that we continue to deliver quality. What we deliver affects their reputation in their sectors as well.”
As in any partnership, it’s important to understand how each party benefits from the association, and to be able to work well with each other. “We were a lean, flexible start-up, but UCT is a 100-year-old brand. That comes with bureaucratic structures, and we knew that in order for the partnership to be a success, we needed to understand this and work with it, not against it,” says Rob.
“We’re working with their brand, and that’s so important for our own success. At the time, they didn’t want to be in this sector themselves. It worked because we weren’t competing with them; we were adding to their offering. It was the perfect model, an incredible brand and a hungry market, and we were the conduit between the two.”
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“The digital revolution has led to micro-sizing and economies of scale that enabled us to unbundle education into short courses that are ten weeks long,” adds Sam.
“This model doesn’t work for universities. They generally aren’t focused on short courses, so it’s the perfect synergy. We’re basically a plug-in for them that generates revenue but doesn’t add to their overheads. However, we’ve had to be very conscious of two key points: First, we have to value our partners’ brands as much if not more than we value our own; and second, professors already have large workloads. We needed to add as little as possible to those.”
“We’ve developed a system which allows the appointed faculty member to inject their immense intellectual capital into the design and delivery of the course, and have full academic control, without taking too much of their time away from their on-campus responsibilities,” says Rob.
“It’s taken us many years of working closely with faculty to get the balance right, with both the faculty and GetSmarter leveraging their core competencies to deliver this innovative educational experience to students throughout Africa.”
“Ultimately it’s a relationship game,” adds Sam. “We need to create a relationship with the faculties, and they need to trust us enough to give us a chance – and then we work day and night to deliver.”
Prepare for growth (and put systems in place before you need them)
Today, GetSmarter is a far cry from where it was in 2008, launching with three people operating from a small room in Paddocks. “This is a complex space for us,” says Rob. “We have 200 full-time employees who focus on course development and delivery, technology, marketing, sales, and support functions like HR and finance. There’s a lot going on in the background.”
“We made sure we put systems-thinking in place from the beginning,” says Sam. “A danger for many businesses is that you hit the market, there’s a large demand, and then chaos ensues as you try to meet that demand.”
“This quickly leads to operational failure. This wasn’t a possibility for us — we were working with a very established brand that had its own reputation to consider, and that partnership was at the heart of the business. In addition, we needed to go out into the market and deliver consistently. Word of mouth and repeat business were particularly important because we were operating in a new, largely untested and unknown space.”
The business’s systems and technology were initially driven by Sam, who taught himself a lot of the skills needed to ensure the company was keeping up with its own growth. “It’s a fine line,” he explains.
“Ordinarily, systems and technology add a heavy overhead to the business. We found that we reduced this a bit because I was so involved, and we made the decision to invest in anything I couldn’t do myself. We focused heavily on marketing and sales, and pumped the money we made back into creating a strong back-end and systems. From the beginning we’ve been in this for the long-term, and so investing in the company’s growth just made sense. Taking tiny salaries to help achieve this was an easy choice to make.”
You have no business without great people (so make sure they’re all on board)
“We’ve learnt two big lessons over the past few years,” says Sam. “The first is that if you want buy-in from your staff, you need to be communicating with them all the time. Everyone needs to understand and embrace the business’s strategy. The second is that performance management, particularly in a growing company, keeps everyone focused.”
“We come from a very nurturing household,” adds Rob. “Our mother always encouraged us to believe that we could achieve anything we set our minds to. While this is a great entrepreneurial attitude, it caused some problems when we were dealing with non-performing employees. We were captain guilty of fuzzing the edges. We had this idea that with the right encouragement the problem would go away. It took us a while to realise that some employees can’t be coached into better performing team members. You need to be honest and clear upfront. If you’re not clear on good performance or bad, how can you expect your team to know?”
And then the brothers received invaluable advice: They were told to read Mastering the Rockefeller Habits, by Verne Harnish, and to implement the learnings from the book.
“Implementing the Gazelles system was a complete game changer for us,” says Sam. “It gave structure to employee management and staff reviews, it rewards team members who are focused and achieve results, and it gives everyone a clear framework of what’s expected of them, which in turn makes employee management objective instead of subjective.
“We’re too nice,” adds Rob. “This helped us to follow a system where everyone else knows exactly what’s expected of them – no grey areas.”
Gazelles follows a clear and regulated path. “First, you need to clarify the performance expectations of each and every role in the company. It’s important to be clear, we’ve really learnt this. The performance criteria follows a 90-day cycle and includes five priorities,” says Sam.
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“These priorities are evaluated every three months and aligned to the company’s six core values. Because the priorities are in black and white and agreed on upfront, managers can have honest discussions with their team members and credible reviews. Each review is rated on competence and attitude.”
“We never, ever push the reviews out,” adds Rob. “They’re time consuming, but they’re non-negotiable. Take the time to complete them properly, it’s worth it. A top-performing team is the most valuable asset your business has.”
“Two years ago we had a massive spike in growth which has continued, year-on-year. We’ve built a team of people that’s 200-strong. This system keeps our priorities aligned across departments as well. Monthly inter-departmental meetings allow everyone to see which priorities affect whom, how we can support each other and where the bottlenecks lie,” says Sam.
“If you know your KPIs and everyone else’s you can get a heartbeat of the business. This is as important for us as it is for all of our managers and employees.
“We’re very good at execution. That’s at the heart of our success, and through our growth spikes, this methodology helps us solve more of the right problems. Instead of putting out fires, everyone knows where they stand; we will navigate the next few years of growth well because of this.”
“We’re two people, we can’t touch everyone,” agrees Rob. “The way our management and team think and behave affects our business, brand and the way we operate and are perceived in the market. This helps everyone know exactly what’s expected of them. However, culture lives, and that’s a core responsibility of ours. It comes from us and how we behave and engage.”
Without sales there’s no revenue (so make this a core focus)
“We’ve always been very focused on student recruitment and marketing,” says Sam. “Start-ups often ignore this element because they see it as a cost that the business can’t afford until revenue grows. We always looked at it as the only way to grow revenue, and kept everything else as lean as possible to make it work.”
This doesn’t mean the brothers splashed cash on marketing – they were careful and strategic in how they approached their sales strategy – they were still a bootstrapped start-up after all.
“Step one is paying attention to what’s happening around you. We were one of the first companies to start advertising on Facebook. We understood that great marketing led to student recruitment, and we re-invested everything into the business, drawing tiny salaries,” says Sam.
Another strategy was email marketing. “We’ve always been very high-touch. We work hard. We contact you. We keep in touch and we keep returning to our database. Sales don’t happen by accident. We keep adding courses so that students return and build on their own competencies and skills, but we’ve also become the go-to brand for short online courses in marketing, finance and business, and that’s because of strategic marketing campaigns – people know who we are. And then we keep getting in touch, reminding you who we are, and what’s on offer.” It’s clearly a strategy that’s working.
Gazelles in action
- Every team member has a PDS document that includes their promise agreement (title, job purpose, responsibilities, annual priorities, core competencies and strengths), with the company values and behaviours review (linked to the company’s six values and personal behaviour that aligns with these values), quarterly priorities and professional development details.
- The quarterly evaluation is conducted by line managers and is done according to a four-point colour scale. Super green is way ahead, green is on track, yellow is behind and red is badly behind.
- The quarterly review: Includes a review of the individual’s role (has it changed, expanded, shrunk), a review of their alignment with the company’s values and behaviours, a review of how they performed on their quarterly priorities (operational), and a review of their progress against their learning objectives. As part of the review, each person receives a review from their peers which is included in the quarterly meeting. The team member’s prior review is included to ensure continuity between reviews and to identify trends. Managers also ask reports how they can support them better, and do better in their roles. Because priorities can change based on changes in the business, teams are prompted to review their priorities half way through each quarter to ensure any changes are reflected in their PDS documents, which means they are set up for a high-quality review at the end of the quarter.
- Weekly meetings: Each person has a one hour meeting with their direct line manager. This follows a structured agenda in which priorities are reviewed according to the green to red colour scale. This ensures managers and team members know if anyone is falling behind, and course corrections can take place before the quarterly review.
- Daily stand-up meetings: These are a few minutes, and allow each team member to share their wins and ‘stucks’ from the previous day, and priorities for the day ahead.
- Management meetings take place quarterly (two-day strategy sessions) and monthly (five-hour leadership meetings to ensure priorities are aligned across departments).
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.
- 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.
“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.
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.”
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.
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.
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?
“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.”
- 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.
“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.
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.”
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.
- 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.
The in-built art of tenacity
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
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.
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’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.”
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.
GOG’s genesis was outdoor gyms, and the company continues to grow from these original roots: Catering to a growing focus on healthier lifestyles, from public parks to beaches, corporates and residential estates.
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