- Player: Joshin Raghubar
- Company: iKineo Ventures; includes iKineo marketing agency, Sprout Performance, Explore Sideways and The Field
- Launched: 2000
- Turnover: R115 million
- Visit: ikineo.com; exploresideways.com; sproutperformance.com; www.thefieldinstitute.com
When Joshin Raghubar was 23, he found himself heading up the Africa Connection Rally, an ambitious project that spanned the African continent and aimed to break the world record for the amount of days taken to drive across Africa. The logistics involved were staggering. How did he find himself in such a trusted and important position? Because he showed up. He was at the office at 9pm when his boss and the chief of staff of the Minister of Transport were brainstorming it. By the next day he was spearheading the project.
When we started out, we had a desk in CiTi’s offices and were hooked into its Internet cable. We were bootstrapping the business, had no money, and couldn’t afford connectivity costs until CiTi’s Bandwidth Barn helped us share those costs. I’m still involved with the Barn today, because I know how essential that support is to start-ups.
The secret to business success isn’t just having the right product or idea and product market fit. It’s not only cash flow and getting paid. It’s the culmination of your ideas and mindset; making connections, helping other people and businesses and operating within a community. Often, it starts with just showing up.
Success often begins with understanding yourself. I’ve been laser focused on some things, and at other times I’ve had a number of different things on the go. That’s when I’m happiest. You need to know yourself and play to your strengths. If you’re better at focus, do that. I need a few things on the go — not too many, because then I get frazzled. But there’s a sweet spot, and I’ve found mine.
I’ve been like this since varsity. I was on track to become a CA, and I did the normal vacation work at large consulting firms for years one and two. By year two I realised that the work was interesting, but not a full expression of myself.
By years three and four I was doing all kinds of things after hours and during term breaks: I was a runner on a film set, a barman, I started a few small businesses. I was interested in the world and I didn’t pigeon-hole myself. I was on the lookout for different experiences.
I was even on the management of the UCT chapter of AIESEC, the largest student organisation in the world for business students. This gave me access to University labs and computers. Raymond Ackerman was on our board and we ran business incubation clinics. I wanted to be involved in everything and still do.
I’m multi-dimensional, and so are my work and interests. When I’m working on a few projects at a time, I’m more productive. But to focus on different things in business, I need a team that plays to my strengths and weaknesses. I’ve built up an incredible foundation. It doesn’t happen overnight, but if you’re interested in scale and growth, you need to build an infrastructure that supports your passions, goals and dreams.
For example, learning is a big part of what drives me. In a fulfilled and happy life, learning and growth are important. I’ve pushed myself into many incredible spaces because of this love for learning. Opportunities have opened up for me because I’m out there. For example, I was selected as a Yale Greenberg Fellow in 2016. This required four months away from the office at the Yale campus, and I was able
to do it because of the team I’ve built up around me.
Many entrepreneurs are so focused on the day to day needs of their businesses, they miss the bigger picture. This programme is Yale’s flagship global leadership programme, and it was an inflection point in my career. If I’d only been focused on the time away from the office, I wouldn’t have even applied. Instead, I took the risk, and ended up with a group of 16 incredible emerging leaders from around the world: A human rights worker from Syria, a female politician from Afghanistan, China’s largest independent media entrepreneur, artists and film makers. It’s designed to be diverse, and for us to learn from each other and contribute to the Yale community. We had unlimited access to all courses on campus. It was incredible.
Nine times out of ten, success begins with just showing up. This was how I ended up project managing the Africa Connection Rally when I was just 23.
I’d done some vacation work for Ravi Naidoo’s business, Interactive Africa. By the time I finished my degree, I had an interview lined up with JP Morgan in London. But I’d graduated in December, and would only be leaving for London in March. I wanted to fill the time, and so I went back to Ravi and arranged to work for him for a few months.
I loved it. I joined an entrepreneurial business rather than becoming an investment banker. I was young, but I could speak the business lingo, and I was eager to learn. I developed a habit of leaving the office at the end of the day and then returning after supper to do some extra work in the peace and quiet. I’m not great in the mornings, but I’m creative at night.
One night I got back to the office and the Transport Minister, Jay Naidoo’s chief of staff, was brainstorming with Ravi about the Africa Connection Rally. The rally was celebrating a historic telecomms agreement that stretched across Africa. The idea was to break the world record and drive across Africa in 26 days.
I was called into the session, and by the next morning I was running the project. That’s when I started appreciating the power of showing up. No one was going to seek me out and ask me if I wanted to be involved. I had to speak up, offer real opinions, and more importantly, a passion and willingness to get involved and give it my all. That’s what entrepreneurship is, but it’s also the basis of any success we have in life.
As a start-up, you need to be confident. What you’re doing is tough; you have to keep taking risks. Once you’re through start-up phase, you need to grow. But you need to find a balance. You can’t be so self-assured that you don’t learn from mistakes, because you will make them.
For us, the Cool Aid was a discussion group called the Idea Collective, run by myself and a few friends. We were fresh out of varsity, employed, and interested in how tech was changing business, marketing and the way we communicated. We launched a series of exclusive events to discuss these topics and invited business and social icons. This helped us to build a great network and repository of ideas. We were a think tank for tech, and were often invited to comment on tech-related issues.
On the one hand, it was incredible. We had put ourselves out there, and were developing a network that would be invaluable. When you’re building a business, your network is exponentially more important than funding.
But in other ways, it blinded us to the realities of launching a business. We were all employed, with this great idea that we could create our own ventures. We had no venture capital and were incredibly naïve about the realities of a start-up, but we were fuelled by our own cleverness, and the fact that we could see what the future held.
With that in mind, I resigned after 30 months at Interactive Africa. Working with Ravi made me want to test my own entrepreneurial chops, and I thought I was ready.
I was the only one in our group who quit my job and we had no cash flow. While I believe a business can be bootstrapped without funding, the secret to success for any bootstrapped business is cash flow. Without it you’re dead in the water. Our idea had been to build cash flow and then raise capital, but we hadn’t considered how long that would take.
To make the business work, we needed to stop drinking our own Cool Aid. We were smart, tech-savvy guys who had built a great network and gained exposure, but that wasn’t going to build a business. We also needed to bring in some cash — immediately. Without cash flow there was no business, and so we needed to sell something.
My experience was in the convergence of marketing and data. I believed in the concept of mass customised communications and targeted database-driven marketing. We designed flash mailers, and these became our biggest revenue stream.
Based on this and big email campaigns, we built a marketing division called iKineo that focused on customer engagement and one-on-one marketing. We believed we were uniquely positioned to solve a new marketing need. We could speak tech, we understood development and we had business and marketing backgrounds. But we were ahead — we spent more time educating our customers than selling to them for the first five to six years. We needed another ‘big’ idea while the market caught up.
We might have had a reality check, but we were also still young and ballsy — and we believed we’d embarked on a journey that was changing the way brands would market in the future. One of the key areas we identified as ripe for disruption was the tobacco industry. With restrictive smoking laws coming into effect, the tobacco industry needed new ways to market its brands.
I’ve always believed in being an open source person. It’s a term that covers everything — being open to new experiences, new ideas, and particularly new people. It’s an essential trait for successful networking.
It also gave us the confidence we needed as a start-up founded by kids who weren’t yet 25 to approach British American Tobacco (BAT), the largest tobacco manufacturer in the world, to pitch our new marketing idea that we believed would solve their problems.
At that stage, BAT had no plan to counter the new advertising laws, and no understanding of the power of data. For decades, big tobacco had sold a lifestyle through sponsorships, billboards and big screen advertising — all of which was about to end.
We pitched something completely different for Lucky Strike: An exclusive opt-in party that required fingerprints, joining a database and the excitement of a surprise. It created high target engagement, and grew a database for the brand. They asked us if it was possible. We said absolutely. There were two of us in the business and we believed we could drive BAT’s entire customer engagement model in South Africa. Maybe we were still drinking our own Cool Aid.
The Lucky Strike parties worked, and slowly the power of data and digital marketing began to take hold. Fewer customers needed to be educated on what iKineo could do, and more were asking us for quotes and solutions to their marketing needs.
As the business grew, we never lost sight of what worked well for us, and we created a new exclusive networking group with Moët & Chandon as our partners. Members took turns to invite industry icons to speak at the events. It was an incredible networking experience, and has opened many doors for me over the years. Maria Ramos, Paul Harris, Russell Loubser, Robbie Brozin, Wendy Luhabe, Herman Mashaba and Isaac Shongwe were all guests at these evenings.
Through these relationships, I was invited to join the Aspen Global Leaders Network, the Africa Leadership Initiative and the Bertelsmann Foundations’s Global Transformation Thinkers Programme, all of which required nomination. Once you’re out there, and people know you, your ideas and what you stand for, offers and opportunities follow. This is how I learnt about the Yale Fellowship. 11 000 people applied and only 4 300 completed the application. This was then shortlisted to 50, and 16 were chosen after an interview process. This opportunity wouldn’t have arisen without my connections. This is my best advice — be open. Network. Build relationships. There is nothing more powerful than people.
Through these experiences, one thing became clear: Much of leadership and business success comes down to the art of storytelling. I’ve taken a Harvard course on narrative leadership, and I’ve watched great industry captains over the years, and they all share this trait — they can tell a story. They know how to capture your imagination. Looking back, that’s what we did with Lucky Strike and all of our early clients, while we were educating them on the direction marketing was taking. It’s also why the Idea Collective and our Moët & Chandon evenings worked so well. They were all about story telling. You need to be authentic, and willing to share. Great leaders are open, honest and transparent. They are willing to share their successes and failures.
You can only join networks like these if you’re adding value. Relationships are additive, not extractive. Even as a young person I felt like I was adding value because my perspective was different.
These experiences taught me two things. First, I did have a story. The reason I went into business when I come from a family of teachers and doctors was because half of my life was pre-1994 South Africa. I turned 18 and voted in 1994. I was conscious of our country’s political liberation, but the economic liberation still hasn’t happened. I wasn’t a political change driver, but I can make an economic impact. My biggest lever for change is business. It’s why I’m still so involved in the Bandwidth Barn and CiTi.
The second is that it’s in my nature to understand future trends and tech drivers, pain points and challenges. Innovation and funding opportunities are all about pulling these together, spotting the gap and then telling the story so clients understand it. It’s one thing to have an idea, but you need to be able to sell it. You have to explain it, unpack it and pull those threads together. And that’s where the art of storytelling is so vital.
Understanding the new texture of business has also been important. It’s no longer just about the bottom line. Business needs to connect to social dividends. This is at the core of everything we do.
We thought we’d be a venture creation business when we launched. The reality is that this takes money, which we didn’t have. We bootstrapped everything, which always takes longer than you think it will. So we built iKineo as an agency to generate cash flow.
If you don’t have capital you will always build a services business first. They’re cash flow generative, because all you need is an idea that you can deliver on, and then you get paid — no manufacturing is required, and your cash cycle is good.
For years, 90% of my day was focused on this, and not venture building. Today that ratio has shifted, but it’s taken time.
In 2003, two years after we launched, a friend invested enough capital to buy out the other partners. He’s still a shareholder today. Since then, we’ve grown organically, self-funding iKineo until we could start incubating new ventures within the business.
We’ve been able to do this because I never lost sight of the long-term strategy: To accumulate capital and create an environment and infrastructure that could support new ventures and realise our dream. We tried it earlier, but we didn’t have capital, time and infrastructure for new venture development. We systematically built our capabilities, learnt by failing a few times, and put those learnings into our model and new businesses.
Although the agency has been our backbone, it’s also an increasingly challenging business model. When we were smaller we were more profitable. In this industry, as you grow you change from a value or IP-based model to a resource plus model. While we were building the business and coming up with new and innovative solutions for our clients, we were able to price ourselves according to our IP and ability to deliver.
But, as we grew and targeted larger clients and advertising contracts, we started following the industry and large corporate template, where clients tell you how many people they expect on their account, estimate your costs and then give you a percentage mark-up. The problem is that an account is measured by the people on it, and they’re dedicated resources. If you lose that account, you can’t redeploy them back into the business unless a new account is landed. You end up employing more people at lower margins.
I fought this model and lost a large corporate client because we said no to the resource plus model, but eventually we had to align with our industry. We knew this wasn’t where our future growth lay. It’s been an important part of the path to get there, but it’s never been our final destination.
When you reach a stage where you have to follow set procurement models to land big clients, you either agree or reposition, and that’s what we’re doing with our new ventures: Sprout, Explore Sideways and The Field.
Sprout is a programmatic media business that we’ve developed with partners from Silvertree Capital, which was launched by the co-founders of Zando. Peter Allerstorfer and Manuel Koser came from Germany to launch Zando in South Africa. In two years, they built a business with 200 employees, and an incredible model for hiring people and mastering online marketing and retargeting.
Three years ago, there was an entire issue of The Economist dedicated to programmatic advertising. We started asking ourselves where online buying was going, and where programmatic media buying would be. I called Manuel to ask his opinion, and discovered he was leaving Zando and launching a tech investment firm. We realised we were ideal partners. They had the knowledge and experience in this field, and we could incubate the new venture in iKineo.
Explore Sideways is an internal start-up. It’s the product of two distinct business developments. The first is that we believe the future of agencies lies in the ability to be strategically involved with a client’s R&D. To test our theory, we developed an app for Western Cape Tourism. They couldn’t afford it, so we carried it ourselves in return for their endorsement. It was designed as a platform to find all 500 Cape wineries in one place. It’s a fragmented industry, and there was a need for this information, particularly to put the smaller wineries on the map.
But it was difficult to monetise, and we realised that its users were mostly tour operators, who tended to only use the wineries they knew well.
The second development involves the consumer shift from products to experiences, and international spend on luxury experiences is on the rise. The result is that Explore Sideways has developed into an immersive luxury travel tech business.
In two years, we’ve built up an incredible team. We’ve had 3 000 guests to date, including various international celebrities and their families. We’re in our niche, and on a growth path. The plan is to take the business international, and we will be in Napa Valley in California by the end of 2018.
The Field is our third start-up. It’s been incubated within iKineo with three managing partners who are all experts in their fields, Ann Lamont, Alison Jacobsen and Barbara Dale-Jones.
The Field helps large organisations through the digital transformation process to become future fit. We partner with the best educational brands in the world, including Stanford, to offer African and European executives global programmes at a fraction of the cost.
Like iKineo, the business is generating cash flow through consulting and coaching to big corporates while the rest of the programmes are developed, and we’re focusing on people change management, product development and an innovation lab.
Our venture build strategy is based on three pillars: Create the space to excel, have the required investment and working capital, and then attract the best talent.
The third pillar is absolutely vital to the success of these ventures. Today I can spend 90% of my time on new ventures, but I can’t focus equally on three start-ups and two more in development. Our success lies in the people driving these businesses.
In Sprout we have a CEO and CTO who moved here from the Netherlands because programmatic is new in South Africa and the skills don’t yet exist here. Before we could convince Stijn Smolders, who was newly married with a baby boy, to take a chance with us as Sprout’s CEO, we needed to derisk the business and create the right space for him.
Explore Sideways is run by Brittany Hawkins, who is an American wine marketing expert. She will be instrumental in our international expansion.
Ultimately, you need strong back-end and support systems and the ability to pay competitive salaries and offer shares. We’ve learnt that running a business takes on a different dimension when management feels ownership. Our managers deliver and have a great attitude, but shares reward and focus those abilities.
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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