- 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.
4 Lessons From The Pivotal Group Founders On Growing And Disrupting All At Once
Here’s how they’ve built what they believe to be the foundations of a successful group of businesses in five years.
- Company: Pivotal Group
- Players: Paul Hutton, Joel Stransky and Bruce Arnold
- What they do: Pivotal pioneered voice biometrics in the financial and telecommunications market. Over time, the company has grown to include nine divisions across multiple sectors.
- Launched: 2012
- Visit: pivotalgroup.co.za
How do you build a disruptive business while also focusing on growth? Disruptive ideas are by definition new and unknown to the market. They defy traditional and established solutions and ways of doing business, and they require the market to be educated before you can really onboard clients or even sell your product or service.
The answer is to build parallel solutions: Business units that bring in revenue while the more disruptive ideas are being developed and introduced to the market. Here are the four top lessons the founders of the Pivotal Group have learnt while building their business and pursuing disruptive opportunities simultaneously.
1. Know who your competitors (and potential competitors) are
Great ideas that are economically viable and solve a need that consumers are willing to pay for are few and far between. Great ideas alone are a dime a dozen, but if you’ve spotted a need, chances are someone else has as well. You then need to step back and critically evaluate why someone else hasn’t done this before; if they have done it and they’ve failed; or if you’re entering shark-infested waters riddled with competitors.
Once you’ve determined there is a gap in the market, you need to evaluate who your potential competitors are, and the impact if they suddenly started offering a similar solution to the market.
For Paul Hutton, Bruce Arnold and Joel Stransky, the founders of OneVault, competition was always a factor, particularly as a start-up, and given that potential competitors included Bytes and Dimension Data, this was a very real factor to consider. After careful analysis, however, the founders decided to go for it. Their differentiator was their business model. They wouldn’t be selling OneVault as a software solution, but as a service.
The idea had taken root while Paul was still CEO of TransUnion Credit Bureau. “I came across voice biometrics in Canada. There’s been a surge in identity fraud around the world, and I really understood the value of voice recognition as a verification tool,” he explains. “It can’t be faked, and it’s the only remote biometrics solution available, because you don’t physically need to be there to verify yourself.”
Paul had presented the idea to Transunion’s global board, and while they were intrigued, nothing came of it. “TransUnion’s model is to buy companies that are experts in their specific fields, not launch a new disruptive division from scratch.”
But this meant there was an opportunity for Paul to pursue the idea independently. Joel (former MD of Altech Netstar and CEO of Hertz SA) and Bruce (formerly Group CFO of TransUnion Africa and CFO at Unitrans Freight) were immediately interested in partnering with Paul. Both wanted to pursue entrepreneurship, although neither could do so immediately. The commitment was enough for Paul to get directly involved and start working on the business while he waited for his partners to join him.
In January 2011, Paul and Joel travelled to the UK and started investigating voice biometric solutions. “Voice biometrics was fairly new, but good technology was available, and there were global leaders in the sector,” says Joel.
It was important to choose the right product for the South African market, as this would form the basis of their offering. A contact at Dimension Data (one of whom became an investor in the business) offered this simple and straightforward advice:
When you’re choosing a technology partner, go with the company whose tech you’re confident in, and whose leadership is stable. You’re basing so much on this company and their longevity, so don’t disregard this criteria.
For Paul, Joel and Bruce, a US-based company, Nuance, ticked those boxes. But, from a competitive perspective, OneVault wasn’t the only potential player in the market. “Neither Bytes nor Dimension Data had gone into voice, but they had the potential to do so,” says Bruce. “The products were available to them through their partners.”
To mitigate this very clear risk, the founders made two critical decisions. “Our intention was to sell voice biometrics as a service, instead of a software solution that customers bought and owned, with the necessary infrastructure to go with it. The idea for OneVault was that there would be one place where your voice print lived, and different businesses could plug into our solution.”
The business model of large technology players in South Africa is to sell integrated software solutions, so OneVault’s business model was a differentiator. The next differentiator Paul, Bruce and Joel focused on was becoming specialists in their field.
“This is Paul’s baby,” says Bruce. “We’ve needed to build up a niche, expert team that specialises in voice biometrics. Because we aren’t generalists, 100% of our focus goes into this, instead of 5% or 10%.”
To attract the best in their fields, the founders needed a very appealing culture and a strong recruitment strategy. “We focused on what we wanted from our work environment, and then applied the same rules across the business,” says Joel. “Our goals were to drink good coffee, have no leave forms — ever; be able to take the time to ride our bikes and watch our kids play sports. If someone can’t make it work, or takes advantage without putting in the work, they come and go, but on the whole, we’ve had extremely low churn, and we’ve attracted — and kept — incredible talent.”
This differentiator would prove to be important for two reasons. First, two and a half years into the business, with investors on board and having pumped a significant amount of their own capital into the business, the team hit a major stumbling block. For a few weeks, they didn’t even know if they had a business.
“We had been operating on one major, and as it turned out, faulty, assumption,” says Paul. “We thought South African companies had the right telephony structure to implement our solution. We’d been building our solution on top of Nuance’s software, and were ready to start piloting the entire system with a few key customers, and we found out that in order to meet global voice biometric standards, the telephone technology had to be G711 compliant. South Africa was operating on G729.”
This was OneVault’s make or break moment. The team had six weeks to come up with a solution that ensured it met the necessary levels of accuracy. Without a highly skilled team this would have been impossible.
Even as a start-up, the strategy had been to only bring the best of the best on board. “We didn’t interview,” says Bruce. “We approached people whom we knew. We approached the best in the industry, and convinced them to take a chance with us. There was risk, but there were also rewards.” One of those people was Bradley Scott, a brilliant engineer whom both Paul and Bruce had worked with at Transunion.
Today, OneVault is one of the most specialist companies in the world, and often asked to speak at events in the US.
Being the niche specialists paid off, and OneVault achieved the almost impossible. But this had its downside.
Once you’ve shown something can be done, the bar of what’s impossible moves. Competitors enter your space.
This was the second reason why being such focused, niche experts paid off. “We demo’d the solution for a large local corporate, they loved it, and then went to a ‘then’ competitor to implement it,” says Paul.
“We always knew this was a real danger. Players like Bytes and Dimension Data have solid, existing client relationships with the same companies we’re targeting.”
18 months later the project still wasn’t working. “This is deep specialist knowledge,” says Paul. “Knowledge we built while we created our offering.” OneVault won the contract, and developed a partnership with Bytes at the same time. Today, OneVault works with all the major software integrators in the market. “We’re a specialist service they can offer their clients, without needing to put the same time and energy we needed to put in to become the specialists.”
Through a focused strategy, OneVault has become a partner, rather than a competitor, of some of the largest players in the industry.
2. Understand the nature of disruption so that you can prepare for it
In today’s ever-changing and fast-paced business world, most business experts are in agreement that as a company, you’re either the disruptor, or you’re being disrupted. The problem is that disruption comes with its own set of challenges.
“Our entire business model was built around a subscription service. Instead of a company buying a software solution, installing it and running it internally, we would do all of that. We would carry the infrastructure burden, and the high upfront cost,” says Joel.
In theory, this sounded like a clear win for businesses that would benefit from a voice biometrics solution. The reality is never so simple, particularly when you’re a disruptor.
“The software is expensive, and so we thought this would be seen as an excellent solution,” says Paul. “Instead, we faced a lot of reticence over the cloud. Businesses didn’t trust it yet.”
On top of that, first movers are often faced with a lag in corporate governance guidelines. As technology becomes more sophisticated, so governance guidelines change — but it’s a slow process, and the lag can impede disruptors.
“You also can’t give proper reference cases, because it’s all brand new to your market,” says Paul. “The best we had was a case study of how well it had worked in Turkey.”
To compound matters, proof of revenue is essential for businesses wanting to trade with large corporates, but non-existent in the start-up phase.
So, what’s the solution? According to Joel, Bruce and Paul, it’s all about being patient, never giving up, building gravitas and getting a few clients on board, even if it’s free of charge to build up your reputation and prove your concept. Finally, you need to bring in revenue from more traditional channels to support your disruptive products and solutions.
“Disruptive solutions are by their nature new and different, which means change management for your customers. This makes the sales cycle long and complex, and you have to be prepared for that,” says Bruce.
Don’t stop laying your groundwork. While disruptors are ahead of the curve, you need to be ready for the uptake when it arrives. “We’ve now concluded a partnership with South Africa Fraud Prevention Services,” says Paul. “When an imposter calls we won’t only terminate the transaction but we will alert the identity being compromised in the attempt and we will actively prevent fraud by contacting Fraud Prevention. The ultimate vision is for every South African’s voice biometric signature to live in our vault, and we are already receiving imposter information.”
3. Cultivate additional revenue streams
So, what do you do while you are living through the extremely long sales turnaround time of your disruptive, game-changing solution? Bills still have to be paid and investment is needed to develop truly disruptive ideas.
First, the team realised that while an annuity subscription service was their ultimate goal and where the industry was heading, initially they needed to be able to sell and implement the software.
It’s worth noting that one of OneVault’s earliest customers who bought the software has since launched a new business, which is on OneVault’s annuity service model. The shift has just taken time. “The change is happening, but it’s been slower than we anticipated,” says Bruce. “We needed to accept that fact and sell the software to bring revenue into the business while we were waiting for the market to catch up.”
It’s an important lesson. You don’t want to get distracted from your vision, but you need to be bringing in revenue, even if that means your short-term strategy differs from your long-term goals.
“It took three years before we really started seeing a move towards hosted solutions,” he adds. “Outsourced and offsite solutions are opex environments, not capex. They are more cost-effective for customers, but they require a shift in thinking. It’s a move away from how things have always been done, and that takes time.”
But, while Paul, Bruce and Joel were learning the art of patience, they also needed to start bringing revenue into the business.
“It was clear that we needed to find other opportunities,” says Joel. The result is the Pivotal Group, a diversified holding company with different businesses that are interlinked and complementary.
The group’s first business outside of OneVault, Pivotal Data, was based on a large call centre contract Joel, Paul and Bruce secured. “You can’t be an expert in everything – when you specialise you will always be more successful. The trick is to partner with other experts,” says Joel. In this case, three entrepreneurs were opening a call centre — this was their area of expertise; they were absolute subject matter experts. What they weren’t experts in was technology or facilities management. Instead of doing it themselves, they were looking for partners.
“We manage everything aside from the people element,” explains Joel. “We found and leased a building, built the bespoke workspace, put in the technology, and managed the facility and IT on an opex basis back to them.”
The business immediately had a good anchor client, and Pivotal Data has built on that. The annuity income has supported further growth.
“This was a base for us, but we’ve acquired a few businesses on the back of this success, and created our own cloud contact centre solution — which also feeds into what we’re doing with OneVault,” says Bruce. “Our vision is to create a technology stack that’s world-class and provides a range of services that no other businesses provide as a single solution.”
Because of this pivot into call centre management, a new opportunity has presented itself, and Pivotal’s ambition has grown to include a solution that calls, authenticates, and then analyses all the data that is collected during those calls.
“Through partnerships, my team has developed a predictive analytics system that gives contact centres deep diagnostic tools. We can predict why agents are having the conversations they have, and what to tweak to improve them. We see the agent’s problem before they do. This isn’t just value add, it’s a revenue generating tool if it improves lead conversion rates and customer service. It’s also all geared to lowering call volumes.
“We know we need to keep looking forward. OneVault is starting to gain real traction, but we need to be working on the next disruptive solution and model. We can’t sit back and relax,” says Bruce.
“Three years ago we said that’s it; no more start-ups or investing in pre-adoption phase businesses. From now on, everything we do will be revenue generating,” says Paul. “We’d stretched three years of runway to five years in OneVault, and we didn’t want to keep doing that. We wanted instant revenue businesses. And the very next thing we did was invest in a start-up. It’s a crazy space, but it’s also very rewarding.”
To sustain it, the group continues to grow, focusing on investing in businesses and entrepreneurs who are subject matter experts and therefore already know and understand the market, and then positioning each new business or service to plug into the current offering.
“Data is our golden thread — technology and the disruptive space,” says Joel.
4. Be open to new ideas and opportunities
Integral to the Pivotal Group’s positioning is Paul, Bruce and Joel’s focus on supporting other business owners whose offerings align with the group’s own growth goals, and who would benefit from joining a group.
“If your goal is to be disruptive, you need to be open to all kinds of new ideas,” says Joel. Some will be better than others, and the co-founders have made the decision to focus on the ‘jockey’ rather than the business as a result. Business offerings and ideas need to pivot. If you have the right partners, finding a solution is all part of the challenge.
Pivotal’s move into the world of artificial intelligence is due to one such partnership. “One of our clients approached us with a concept. But he needed a partner to develop it into a proper AI solution,” says Joel.
It’s an augmented intelligence solution that focuses on recruitment, talent management and career guidance. The solution screens, ranks and matches candidates against a job profile, or a number of profiles. It’s a multidisciplinary platform that predicts the performance of the individual in a role.
“Our partner is a former Accenture consultant and a leader in this field. His focus is on the IP and science of the product, ours is on the business component.”
The challenge is how to commercialise and scale the business in as short a time frame as possible. Like many disruptive products, the adoption process is a stumbling block. “We invest at the pre-adoptive curve — not at the revenue generating stage, which means a big focus is always on how we can take an idea and build it into a revenue generating business,” says Bruce.
The business uses capital selectively. “We want to invest in and drive our own agenda,” says Paul. “We’re in charge of our own destiny, but it’s not comfortable or simple. We came from corporate. Big machines that you need to direct and keep on course. This is an entirely different challenge and we are still learning.”
Listen to the podcast
Matt Brown interviews Paul, Joel and Bruce and discusses what it’s like to invest in pre-adoptive start-ups and staying ahead of the curve.
To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.
The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.
Afritorch Digital An Overnight Success That Was Years In The Making
By any standard, local start-up AfriTorch Digital has seen phenomenal growth and traction. But, while the company’s success might seem quick and effortless, there is a lot of hard work behind it.
- Players: Michel M. Katuta and Thabo Mphate
- Company: Afritorch Digital
- Established: 2017
- Visit: afritorchdigital.com
- About: Afritorch Digital assists research agencies in conducting market research through its in-depth knowledge of the African continent and its use of the latest digital technologies.
There is a saying that goes: It takes years to become an overnight success. While a company or individual might seem to enjoy sudden (and seemingly effortless) success, there is often more to the story. The results are usually public and well-publicised, but the years of hard work that came before go unnoticed.
Local start-up AfriTorch Digital is a great example of this. Since launching in May 2017, the business has seen excellent growth. “To be honest, we were very surprised by the level of success. Things progressed a lot quicker than we anticipated,” says co-founder Thabo Mphate.
“All the goals we had hoped to reach in four or sixth months, we managed to hit in the first month. It was just amazing.”
Preparing to launch
While AfriTorch Digital has certainly seen quick growth and success, it would be a mistake to assume that the same is true of the two founders. For them, the creation of AfriTorch was years in the making.
“The goal was always to start our own business,” says Thabo. “I think we’re both entrepreneurs at heart, and we saw an opportunity to create a unique kind of business that offered an innovative solution to clients, but we also realised the value of getting some experience first. Without the knowledge, experience, network and intimate understanding of the industry landscape, getting AfriTorch off the ground would have been incredibly difficult.”
Entrepreneurs tend to dislike working for other people. They want to forge their own path. However, as AfriTorch Digital’s case illustrates, spending time in the industry that you’d like to launch your business in is tremendously useful.
“Finding clients when we launched AfriTorch was relatively easy,” says company co-founder and CEO Michel Katuta. “One reason for this, I think, was that we were offering potential clients a great solution, but the other was that we had established a name for ourselves in the industry. People knew us. We had worked for respected companies, and we had done work for large clients. So, when we launched, we were able to provide a new start-up with credibility in the industry.”
The Lesson: Becoming an entrepreneur doesn’t always start with the launch of a company. Spending time in an established business, gaining experience and making contacts, can be invaluable. Very often, it’s the relationships you build during this time and the knowledge you accumulate that will help make your company a success.
Solving a problem
Everyone knows that launching a successful business means solving a burning problem, but what does that mean in practice? Aren’t all the burning problems already being addressed? And how do you attempt this without any money?
Thabo and Michel identified a small group of potential clients with a burning problem. Crucially, it was a problem that no one outside of the research field could have identified. Having spent years in the trenches, they saw a massive gap waiting to be filled.
“A decade ago, researchers were still debating whether the future of the field was in the digital space. That debate is now over. Everyone agrees that online is the way to go. What once took months now takes days or hours, and the cost of research can be reduced by a factor of five,” says Michel.
“But researchers are not technology specialists. If made available, they are eager to adopt digital tools, but they aren’t eager to develop these tools themselves. That’s not their area of expertise.”
AfriTorch Digital stepped up to provide these tools. Katuta has a background in software engineering, so he could approach research problems with the eye of a tech specialist. Very soon, research agencies were lining up to make use of AfriTorch Digital’s services.
“We work with research agencies that conduct research on behalf of their clients. We provide the digital tools needed to conduct research online, and we provide the online communities. A big reason for our success is that we understand Africa. A lot of companies want to conduct research in Africa, but traditionally, this has been very hard. There was a lack of access and a lack of infrastructure that made research very hit-and-miss. Thanks to the continent’s adoption of mobile technology, it’s now much easier. If you have the technological know-how and an understanding of the environment, you can do amazing things,” says Michel.
The Lesson: Find a niche and own it. Research agencies might not have seemed like an obvious and lucrative market, but having spent time in the industry, the AfriTorch founders were able to identify clients who would be desperate for their offering. Spending time in an industry will help you see where the opportunities lie.
Before launching a business, get to know an industry from the inside out. This will give you an unparalleled view into gaps you can service.
Jason English On Growing Prommac’s Turnover Tenfold And Being Mindful Of The ‘Oros Effect’
Rapid growth and expansion can lead to a dilution of the foundational principles that defined your company in its early days. Jason English of Prommac discusses how you can retain your company’s culture and vision while growing quickly.
- Player: Jason English
- Position: CEO
- Company: Prommac
- Associations: Young President’s Organisation (YPO)
- Turnover: R300 million (R1 billion as a group)
- Visit: prommac.com
- About: Prommac is a construction services business specialising in commissioning, plant maintenance, plant shutdowns and capital projects. Jason English purchased the majority of the company late in 2012, and currently acts as its CEO. Under his leadership, the company has grown from a small business to an international operation.
Since Jason English purchased Prommac in 2012, the company has experienced phenomenal growth. At the time he took over as owner and CEO, it was a small operation that boasted a turnover below R50 million.
Today, Prommac is part of a diversified group of companies under the CG Holdings umbrella and alone has grown it’s turnover nearly ten fold since Jason English took over. As a group, CG Holdings, of which Jason is a founder, is generating in excess of R1 billion. How has Prommac managed such phenomenal growth? According to Jason, it’s all about company culture… and about protecting your glass of Oros.
“As your business grows, it suffers from something that I call the Oros Effect. Think of your small start-up as an undiluted glass of Oros. When you’re leading a small company, it really is a product of you. You know everything about the business and you make every decision. The systems, the processes, the culture — these are all a product of your actions and beliefs. As you grow, though, things start to change. With every new person added to the mix, you dilute that glass of Oros.
“That’s not to say that your employees are doing anything wrong, or that they are actively trying to damage the business, but the culture — which was once so clear — becomes hazy. The company loses that singular vision. As the owner, you’re forced to share ‘your Oros’ with an increasing number of people, and by pouring more and more of it into other glasses, it loses the distinctive flavour it once had. By the time you’re at the head of a large international company, you can easily be left with a glass that contains more water than Oros.
“Protecting and nurturing a company’s culture isn’t easy, but it’s worth the effort. Prommac has enjoyed excellent growth, and I ascribe a lot of that success to our company culture. Whenever we’ve spent real time and money on replenishing the Oros, we’ve seen the benefits of it directly afterwards.
“There have been times when we have made the tough decision to slow growth and focus on getting the culture right. Growth is great, of course, but it’s hard to get the culture right when new people are joining the company all the time and you’re scaling aggressively. So, we’ve slowed down at times, but we’ve almost always seen immediate benefits in terms of growth afterwards. We focus heavily on training that deals with things like the systems, processes and culture of the company. We’ve also created a culture and environment that you won’t necessarily associate with engineering and heavy industries. In fact, it has more in common with a Silicon Valley company like Google than your traditional engineering firm.
“Acquisitions can be particularly tricky when it comes to culture and vision. As mentioned, CG Holdings has acquired several companies over the last few years, and when it comes to acquisition, managing the culture is far trickier than it is with normal hiring. When you hire a new employee, you can educate them in the ways and culture of the business. When you acquire an entire company, you import not only a large number of new people, but also an existing organisation with its own culture and vision. Because of this, we’ve created a centralised hub that manages all training and other company activities pertaining to culture. We don’t allow the various companies to do their own thing. That helps to manage the culture as the company grows and expands, since it ensures that everyone’s on the same page.
“Systems and processes need to make sense. One of the key reasons that drove us to create a central platform for training is the belief that systems and processes need to make sense to employees. Everyone should understand the benefits of using a system. If they don’t understand a system or process, they will revert to what they did in the past, especially when you’re talking about an acquired company. You should expect employees to make use of the proper systems and processes, but they need to be properly trained in them first. A lot of companies have great systems, but they aren’t very good at actually implementing them, and the primary reason for this is a lack of training.
“Operations — getting the work done — is seen as the priority, and training is only done if and when a bit of extra time is available. We fell into that trap a year ago. We had enjoyed a lot of growth and momentum, so we didn’t slow down. Eventually, we could see that this huge push, and the consequent lack of focus on the core values of the business, were affecting operations. So, we had to put the hammer down and refocus on systems, processes and culture. Today Prommac is back at the top of it’s game having been awarded the prestigious Service Provider of the year for 2017 by Sasol for both their Secunda and Sasolburg chemical complexes.
“If you want to know about the state of your company’s culture, go outside the business. We realised that we needed to ‘pour more Oros into the company’ by asking clients. We use customer surveys to track our own performance and to make sure that the company is in a healthy state. It’s a great way to monitor your organisation, and there are trigger questions that can be asked, which will give you immediate insight into the state of the culture.
“It’s important, of course, to ask your employees about the state of the business and its culture as well, but you should also ask your customers. Your clients will quickly pick up if something is wrong. The fact of the matter is, internal things like culture can have a dramatic effect on the level of service offered to customers. That’s why it’s so important to spend time on these internal things — they have a direct impact on every aspect of the business.
“Remember that clients understand the value of training. There is always a tension between training and operational requirements, but don’t assume that your clients will automatically be annoyed because you’re sending employees on training. Be open and honest, explain to a client that an employee who regularly services the company will be going on training. Ultimately, the client benefits if you spend time and money on an employee that they regularly deal with.
“For the most part, they will understand and respect your decision. At times, there will be push back, both from clients and from your own managers, but you need to be firm. In the long term, training is win-win for everyone involved. Also, you don’t want a client to become overly dependent on a single employee from your company. What if that employee quits? Training offers a good opportunity to swop out employees, and to ensure that you have a group of individuals who can be assigned to a specific client. We rotate our people to make sure that no single person becomes a knowledge expert on a client’s facility, so when we need to pull someone out of the system for training, it’s not the end of the world.
“Managers will often be your biggest challenge when it comes to training. Early on, we hired a lot of young people we could train from scratch. As we grew and needed more expertise, we started hiring senior employees with experience. When it came to things like systems, processes and culture, we actually had far more issues with some of the senior people.
“Someone with significant experience approaches things with preconceived notions and beliefs, so it can be more difficult to get buy-in from them. Don’t assume that training is only for entry-level employees. You need to focus on your senior people and make sure that they see the value of what you are doing. It doesn’t matter how much Oros you add to the mix if managers keep diluting it.”
When Jason English purchased Prommac late in 2012, the company had a turnover of less than R50 million. This has grown nearly ten fold in just under five years. How? By focusing on people, culture and training.
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