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Inside The Mind Of The Travelstart Risk Taker – Stephan Ekbergh

R648 million. That’s how much Stephan Ekbergh recently sold 49% of his company Travelstart for. How did he do it?

GG van Rooyen

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Vital Stats

  • Player: Stephan Ekbergh
  • Company: Travelstart
  • Established: 1999 (Sweden), 2006 (South Africa)
  • Investors: UK-based Amadeus Capital Partners and MTN
  • What they do: Online travel booking portal
  • Visit: travelstart.co.za

There’s a secret weapon in the arsenal of the successful leader that, when wielded correctly, has the ability to literally change the world.

It’s called a ‘reality distortion field’, and while a first reference to it can be found in the annals of science fiction television — in an episode of Star Trek called The Menagerie — it’s also been ascribed to Steve Jobs, Bill Clinton and Elon Musk in the real world.

Basically, it’s the ability to make everyone around you see the world as you do; so powerfully in fact that incredible feats are achieved — often against all odds.

Related: Security Sector Success In Africa With Securitas SA

Inside the reality distortion field

In The Menagerie, the crew of the USS Enterprise encounter a race of aliens called the Talosians who were able to alter the nature of reality through mental force alone. This ability was called a ‘reality distortion field’.

Now, had this ability remained the stuff of science fiction, it would long ago have faded from the lexicon of popular culture, but it was eventually discovered that some people indeed possessed a real-world version of this power — and with it they could accomplish what seemed utterly impossible to most.

The chess player Bobby Fischer was said to possess a reality distortion field that made it incredibly hard for other chess players to compete against him. When Bill Clinton began his political career, his potent charisma was said to emit a reality distortion field that drew massive crowds.

Elon Musk says he’s taking humanity to Mars, and a lot of smart people are starting to believe him, thanks to a distortion field that has him looking like a real-life version of Iron Man.

And, most famously, Steve Jobs was said to possess a reality distortion field that would force those around him to adopt his dreams, deadlines and delusions.

When Jobs insisted in 1981 that the complex Macintosh would ship early the following year, despite the fact that it was nowhere near ready, Mac developer Andy Hertzfeld had the following to say:

“Steve insists that we’re shipping in early 1982, and won’t accept answers to the contrary. The best way to describe the situation is a term from Star Trek. Steve has a reality distortion field. In his presence, reality is malleable. He can convince anyone of practically anything. It wears off when he’s not around, but it makes it hard to have realistic schedules.”

The point is this: A company lives and dies by the vision of its leader. Their approach to life and business will bleed into every aspect of an organisation. So whenever you’re confronted with a company that doesn’t believe in ‘business as usual’, you can be sure that it’s the result of a founder with a unique outlook on things.

This is certainly true of Travelstart. It’s a company composed of interesting dichotomies: Disruptive yet simple and minimalist in its approach, proudly South African yet cosmopolitan in nature and global in reach, cheeky and irreverent yet focused and professional.

How has Travelstart grown into the company it is today? It’s thanks to the reality distortion field of its Swedish founder, Stephan Ekbergh.

Let the crowd follow you

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To really understand Stephan Ekbergh’s approach to business, we need to visit the Swedish dance floors of the 1970s and 1980s. Ekbergh was working in his homeland as a DJ. He had his fair share of raving fans, but he also had to contend with loads of people who absolutely hated what he was doing.

“There was a very specific kind of music that I enjoyed playing, and it had nothing to do with what was popular in the charts at that particular moment. I was really into what was happening in the New York scene and in Chicago,” says Ekbergh.

“The hip places liked what I was doing, but other places didn’t, so I would be very careful about where I chose to play. To me it was about being paid to do what I love. My approach has remained the same over the years. I love creating something that I’m passionate about and that people are willing to pay for.”

Instead of following the crowd, Ekbergh stuck to what he loved and literally got those around him to dance to his tune.

“I was amazed by the fact that I could influence a crowd — I could capture people and influence their moods and actions. It also taught me to read people — something that I’ve been able to use in business ever since.”

Related: 7 Up And Coming SA Businesses To Watch

Fear leads to bad decisions

In 1989 Ekbergh launched a company in Sweden called International Tours. As its name suggests, it specialised in organising global holiday trips.

“I visited South Africa with my brother in 1989 and I immediately fell in love with the country,” says Ekbergh. “It also gave me an idea for a business that would facilitate upmarket tours to places like South Africa for European tourists. Of course, because of the country’s political situation, it was being vetoed as a holiday destination by many people, and International Tours received a lot of flak for promoting South Africa.”

Still, the company grew, and soon it had become a substantial industry player. The success should have filled Ekbergh with pride — instead it left him intensely fearful.

“I couldn’t believe my own luck. I didn’t trust it. The company grew so quickly that I didn’t think it would last, and I couldn’t help worrying about what would happen if International Tours failed,” he says.

Thanks to this fear, Ekbergh was eager to cash out his chips, so when the biggest real estate company in Sweden approached him to acquire a large stake in International Tours, he jumped at the opportunity and sold 91% of the company.

“It was a huge mistake,” says Ekbergh. “I sold too quickly and too cheaply. Moreover, the real estate company wasn’t nearly as solid as it looked. About 18 months later, it went bankrupt, taking International Tours down with it.

“It was a very important moment for me. I realised that the failure of International Tours had not come about because of the bankruptcy, but because of my fear. My negative thoughts had been the ultimate cause of the disaster. I made the conscious decision not to let that sort of thing happen again.”

Failure breeds success

Steve Jobs was famously ousted from Apple for being a tad difficult to work with. It is not an uncommon situation. Entrepreneurs are notoriously headstrong, especially those who operate within their own reality distortion field. Like Jobs, Ekbergh was fired from a company he started in August 1997 called Mrjet.com.

“I was fired by the investors for being a pain in the ass,” he says. “But I view it as a good thing. You can’t become a good rider until you’ve been thrown from a horse a few times. The same is true of business. It teaches you humility and empathy. As a founder or CEO of a business, you will inevitably need to fire people at times, so having been on the other side of the table is an invaluable experience. I also learnt from the mistakes I made at Mrjet and made sure to avoid them when I founded Travelstart.”

But Ekbergh is ultimately quite sanguine about the mistakes he made at both International Tours and Mrjet.com. He sees mistakes as inevitable. The important thing, however, is to learn from them — both your own and those of your competition.

“The difference between failure and success often lies in making fewer mistakes than your competition. You need to ride in the slipstream of your competitors and wait for them to mess up. Over the years, we’ve made some good decisions at Travelstart, but at least some of our success is attributable directly to the mistakes of our competition.”

Related: Less Than 10 Years Got 3 Way Marketing Crashing Through Glass Ceilings

Low risk results in low reward

Travelstart-South-Africa

Stephan Ekbergh founded Travelstart in Sweden in January 1999. The company grew, but it wasn’t doing particularly well. It was perpetually spending ahead of revenue, always on the cusp of running out of money. Travelstart was — to use a bit of start-up jargon that is too apt to resist — quickly running out of runway.

So it seemed like a godsend when Ekbergh was offered $10 million for his failing company. He could trade his bad bet for a quick windfall. But very little of that amount turned out to be in the form of cold hard cash. Most of it was equity in a company that was failing at an alarming rate. If anything, the new owners had managed Travelstart into an even more precarious position. So Ekbergh made a stupid bet. He bought the company back and decided to turn it around.

It was brutal. Ekbergh had to let 34 of the company’s 40 employees go. He had to plead and negotiate with creditors to extend Travelstart’s line of credit. He even had to take out another mortgage on his house to pay his remaining staff in December 2001. It was a very bleak time, as the 9/11 attacks had brought air travel to a virtual standstill.

In 2002, however, as airlines tried to coax travellers back with irresistible deals, the tide turned, and Travelstart started to become exceptionally profitable. Most people would have sat back and enjoyed the spoils. Ekbergh didn’t. In 2004, he decided to move to Cape Town and launch Travelstart here.

“I don’t believe in playing it safe,” says Ekbergh.

“Low risk will give you a safe result with low yield. I believe in embracing risk and choosing life. You always need to count the cost, but you can’t always play it safe. You have to follow your dreams and never give up.”

Naivety is actually an asset

Here’s the problem with embracing risk: It’s scary. And, as Ekbergh learnt with the quick success of International Tours, the more you focus on the risks, the more risk-averse you become. The solution? A kind of blissful naivety.

Naivety is rarely seen as an advantage, especially within the business world, yet Ekbergh is adamant that it is one of his most useful attributes.

“Naivety allows you to dream big and aim for things that really should be unattainable,” says Ekbergh.

“It also prevents you from realising how unsuited you are to the role you’ve assigned yourself. If you look at some of the truly great companies in history, many of them tried things that they shouldn’t have tried. Most people thought they’d fail, but they didn’t. Somehow, they succeeded. They had a vision and they pursued it, regardless of what people thought.”

Related: 8 Pertinent Lessons Bos Tea Learnt That You Should Ponder

Naivety is a crucial component of the reality distortion field. Steve Jobs was not an engineering genius, so he wasn’t particularly aware of (or interested in) the demands he was placing on the Macintosh team. Once you get too bogged down in the details, that moonshot starts looking impossible. Sometimes you just need to approach a project with the wide-eyed optimism of a child building a spaceship out of cardboard.

With a fresh injection of cash, Stephan Ekbergh and Travelstart are setting their sights on the rest of Africa. Their goals are clear: Keep things simple, do things better, and never play it safe.

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Entrepreneur Profiles

6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.

Nadine Todd

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appanna-ganapathy

Vital Stats

Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”

Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.

“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.

Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.

1. You don’t just need a product – you need clients as well

Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.

“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”

So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.

“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”

2. Price and solution go hand-in-hand

As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.

In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.

“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”

The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”

It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.

“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”

Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.

“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”

It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.

“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”

3. Get as much on-the-ground experience as you can

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The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.

“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”

Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”

4. Stay focused

Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.

“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”

“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”

Appanna chose his partners carefully with this goal in mind.

“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.

“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.

“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”

5. Reputation, network and experience count

Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.

Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.

“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”

Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.

His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”

Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”

One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”

“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”

Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.

6. Start smart and start lean

Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.

Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.

First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.

Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.

“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.

“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.

The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”


Into Africa

Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.

“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”

From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”

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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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