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Kevin Vermaak And His (Cape) Epic Adventure

This year, for the very first time, Absa Cape Epic founder Kevin Vermaak will be a rider in the race he created 13 years ago. It’s been a gruelling journey, from R8,5 million in debt and facing certain failure, to refusing to give up and tackling challenge after challenge head on. But he wouldn’t have it any other way.

Nadine Todd

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Kevin-Vermaak-bicycle-rider

Today the Cape Epic is the largest and most prestigious mountain biking event in the world and from where Vermaak’s standing, actually taking part in one of the world’s most physically demanding events will be a Sunday cycle in the park compared to the challenge of growing this business.

A tough start

It was 2am on an April morning in 2005. I was lying on the floor in my office, staring into a black hole of debt. Thanks to creative accounting I’d managed to pull off two successful Cape Epics, but the numbers weren’t working, and the gap was getting bigger. I was prepared to mortgage anything to make the business work, but would it be enough? A bridging loan from the IDC had helped keep my head above water, but it hadn’t solved our money problems.

There was a blip from the office PC. An email had come in. To distract myself, I sat down and started reviewing entries for the 2006 race. One of the mails was from the executive assistant to Steve Booysens, Absa’s CEO at the time. He was riding the 2006 race and was enquiring about a mobile home booking.

I saw an opportunity and responded to him personally — Hi Pierre, any chance I can speak to your boss and present for a title sponsorship? I was looking for any personal connection that could get me through the door. I currently had proposals out to eight top- 40 firms, and every one of them had closed the door in my face.

Mountain biking wasn’t yet the ‘new golf’ for corporate South Africa, and the value of the event wasn’t clear to them. But here was a rider who knew about the race, and he had the ear of the CEO. Was my luck finally changing?

Related: 6 Epic Quotes From Absa Cape Epic Founder Kevin Vermaak

Money troubles

Cape-Epic-bike-race

I’d pushed so hard to get the Cape Epic off the ground, and from the outside it looked like an incredible success. In the first year we’d sold out in three days. By the second year that was down to under five hours, and by the third year we had to implement a lottery system to handle the amount of entries we received. Riders loved the race. In a short space of time it had become incredibly popular, both locally and internationally.

The problem was that the numbers weren’t working. I was hiding the truth from everyone: The riders, my staff, my suppliers. No one knew how bad things were. The riders paid their entry fees upfront, nine months before the race. They’d never trust me with their money if they knew I was using it to pay for the previous year’s race. I understood that their perception might be that the race might not take place, even though I would never, ever have let that happen.

I would have moved mountains before I cancelled a race. My staff were leaving other companies to join me, and I couldn’t let them know how risky that move had been; and many of my suppliers had agreed to three-month payment terms so that I had the next year’s entry fees in hand before I needed to pay them.

I felt like I was standing on quicksand, and I had no one to confide in. It was an incredibly lonely time in my life. I’d taken a lot of big risks to get there, but I’d built this amazing platform and I was determined to make it work.

The vision

When I first moved back to Cape Town after eight years in London I had enough saved up to support myself for the next year, and to bootstrap the business until I sold some entries. I had a lot of adventure tours and riding experience from my time in London, and I’d planned the logistics around elaborate mountain biking, climbing and extreme snowboarding trips to the Karakoram and Himalayan mountains.

I knew exactly what I wanted the Cape Epic to look like, which meant I was armed with a PowerPoint presentation highlighting the route and, most importantly, the mix of luxury and extreme physical challenge that riders would experience.

I had some great early wins. I’d reached out to a Munich-based company that organised Europe’s largest mountain bike stage race, the TransAlp, and they entered into a marketing partnership with me. I then created a local company with a similar name so that people thought the Cape Epic’s organiser was international, rather than me alone. With their help, I also managed to secure Adidas International as a sponsor, which was a major coup.

This gave me enough traction to start marketing like mad. I didn’t want to attract only the local mountain biking community. At that stage, MTB as a sport was dominated by festivals and a grungy sub-culture. My time in Europe had shown me that high LSM, A-type personalities loved adventure races and pushing themselves physically.

This was my target market: Corporate execs and business owners who had the time to train, and kept fit and healthy by running marathons and road cycling. I needed to convince them to take on the challenge of an epic mountain bike stage race.

Related: The Creative Counsel’s R1-Billion Business Deal

Off to the races

Cape-Epic-2015

I printed fliers and set up a stand at the Argus. To this day, many riders still tell me they first heard about the Cape Epic while I was shoving a flier in their face. I connected with Club100, a road cycling club, and spread the word there as well. For the international crowd, myself, Adidas and the team in Munich managed to get a team of young black cyclists from Khayelitsha to the TransAlp. It got fantastic media coverage, and showed the European market that South Africa was a mountain biking destination.

The pro riders already knew this because they used South Africa as a training destination, but they didn’t see our country as a race destination, and I needed to attract the amateur tour riders as well. The Western Cape was an ideal destination — our time zone is the same as Europe’s, our weather’s great and the scenery is spectacular.

My marketing drive worked. I filled the 550 inaugural spots in three days once entries opened, and at R7 800 per team that meant I had just over R2 million in the bank. Once I sold the entries, I secured the three main suppliers I needed to make this work: Spier Wine Estate in Stellenbosch, where the race would end, Imperial Logistics, whose trucks and teams would move the race village each day, and Mediclinic, the vital EMTs at the event.

Things were going great, except for two small problems. First, I needed 700 tents, and I had no idea where to find them. Second, I’d pitched the entire event on the idea of a deluxe experience. The riding would be tough, but the race village would be the lap of luxury. Now that I’d sold the tickets, I was realising that my numbers didn’t work. To provide that level of comfort, I’d actually be paying the riders to compete.

Making a dream a reality

That’s the thing about a vision that consumes you though. You’ll find a way to make it work. When I first came up with the idea of the Cape Epic, I was 30 and it was a way to spend a really cool year and create something special while I figured out what I wanted to do next.

That lasted for about three months, and then I started looking at the event like a real business — the potential to do something great and leave a legacy. I wanted to create the largest, most prestigious mountain bike stage race in the world. I accepted that this meant bumps in the road, and losing money upfront for a game-changing event down the line. If that meant ploughing money into the business now for rewards later, so be it.

To make ends meet, I came up with the idea of convincing my key suppliers to let me pay them in June, three months after the first event. I knew if the race delivered, that I’d be able to sell out again, which would mean cash to pay my suppliers. I was using the following year’s race to pay for this year’s race, and it worked — for two years. I’d increased entry numbers, but the problem with more riders is that they also come with more costs. The gap was getting bigger and without a large sponsor, I was struggling to see my way out.

Which is how I found myself on the floor of my office at 2am in the morning, looking into an abyss of debt.

I needed a blue-chip sponsor to make this work. I’d said no to a lot of smaller brands, as well as normal cycling brands. I understood that there was an opportunity cost to just taking any money that came my way.

I needed a company with a R100 million marketing budget that wanted to engage with high LSM execs and business owners, and so that’s what I’d been holding out for. The problem was that no one was biting, and I was running out of time and options. And then Pierre’s email arrived, and I had my foot in the door.

Related: David Perel Of Obox On Chasing Multiple Dream

Attracting a sponsor

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Getting Absa on board wasn’t initially a game changer. It was the Corporate and Business Banking division, and it signed just five weeks before the third event. But it did introduce the bank to what I was trying to do, and laid the groundwork for a major sponsorship with Absa Group down the line, which would be the game-changer that helped the event become what it is today.

At the end of the day, Absa saw the value in the event because a few crucial individuals recognised that some of their key private clients, who were high net worth individuals, participated in the Epic. The realisation gave them insight into the kind of event I had created, who I was targeting, and who they would be engaging with through their association with the Cape Epic.

It wasn’t by chance that the people at the race were the people Absa wanted to engage with. From the beginning this had been my target market. We’d already implemented the lottery system for the third event, which meant I could also show them the calibre of people entering and how oversubscribed it was.

One of the draws for title sponsors going forward was that they would also have a number of fixed entries to the event. Nowadays, Absa virtually has its own registration office, with banking clients from around the world applying for their coveted reserved spots in the race. You can’t place a value on the engagement this gives them with their private clients for months before the race even takes place.

But back to 2006 and the third race. Getting Absa on board was a major win, but it didn’t immediately solve all of my money problems. Our third year ended up being our biggest loss. A title sponsor meant glitzy press events, PR agencies, and sponsorship agencies, all of which come with a price tag.

In fact, five events in a row made a loss. By 2008, our turnover was R22 million, but our accumulated losses amounted to R8,5 million. We even extended our bridging loan from the IDC to R5 million to ensure we had sufficient cash flow to stage the event.

But I knew we were playing a long game. We were in debt, but all lines were going in the right direction. Plus, by this stage we were so far in, the only way to get out was to make this work.

Hitting rock bottom and rising again

The fifth event in 2008 was my absolute low point. I’d spent the whole year trying to find ways to reduce our budget; it was time to start making a profit. From the outside, everything looked amazing. There were eight of us working full time on planning the race, 1 200 cyclists and we were massively oversubscribed. All of us, sponsors included, were turning people away.

I’d tried to find additional revenue streams by leveraging our assets. The idea was that we used what we had to host two additional but shorter and smaller events. It was a terrible idea. We were actually expanding from a place of weakness, which just ended up with a bigger accumulated loss. Our so-called solutions were making things worse.

At the time, my main contact at Absa, Oscar Grobler, the marketing executive at Absa Corporate and Business Bank, knew how bad things actually were, and that I needed someone to talk to. He introduced me to Neville Crosse, the youngest CEO of a JSE listed company in the 1980s and the chairman of Omnia Holdings in 2008. This was a massive shift for me. Neville becoming my mentor made a huge difference in how I viewed my business and managed my stress levels.

Related: How AutoTrader Anticipated Change

A need for change

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Photo credit: Sam Clark

We spent a few months going over the business, and then in January 2009 we sat down for a massive strategy session. Something needed to change drastically if we were going to make this work, and we needed to figure out what that was.

First, we would cancel all other events. They weren’t helping; if anything they were a drain. We needed to stay focused: We’re the Cape Epic, not an event management company. Next, Neville suggested we simply increase our entry fee by at least 50%.

This had always been a sticking point for me. On the one hand, the level of luxury we offered just wasn’t covered by the entry fee. In a very real way, for five years I’d been paying the way for riders to participate. But, while the entry fee was high enough to align with a premier event, it wasn’t so high that it discouraged participants. The fact that we were oversubscribed and there was so much hype around securing an entry to the Absa Cape Epic was a massive pull for sponsors, which had always been my focus. To monetise this event I needed sponsors, not more riders.

This is where a mentor is so crucial and adds such huge value. Neville forced me to evaluate my own preconceived ideas around entry fees. The following two years we increased the price again. In 2010 we made a profit. By 2012, we were in the black. We’d paid off our debt and were now finally a sustainable, profitable business.

Leveraging the platform

This wasn’t all the result of increased prices though. Don’t get me wrong, it made a big difference, mainly because we weren’t incurring large debts anymore. But the business model had always been about monetising the event, and by 2011 this finally started coming together.

Growth was never going to be about more riders, which is the model for most amateur events around the world. More riders means more costs. We needed a way to leverage what we had without incurring more costs. The Tour de France only has 198 riders. You don’t need to be a huge event by participation numbers to be successful. You need to monetise what you have.

I’d always been aiming to create a strong media product, which is where the pro-am formula came into play. By 2011, this really started to come together and we became a live TV event.

The riders

Amateurs are the bulk of our entries. Out of 600 teams, 95% of these are amateurs. They pay the high price tag to compete, and they’re the target audience of our local sponsors, who get to engage with them for months leading up to the event. The local/international mix means that people from around the world are interested in the Epic as well, making us a mainstream brand.

The 5% pro riders are the ones that attract the media attention and give us massive sporting media value. In Europe, top mountain bikers are household names. For really great TV coverage, I needed these riders participating in my event, which is why I’d chosen March in the first place. It’s before the international world cup circuit begins, we’re in the same time zone, and it’s a great race to condition the pros for the rest of their racing season during the northern hemisphere’s summer.

It was a fine balance: Build an event that is tough, prestigious and sufficiently high profile to draw the pro riders, create amazing visuals that audiences around the world will watch, and then the MTB team sponsors will make sure that their teams are there. The Absa Cape Epic has more viewers than all six World Cup events combined, so it’s pure gold for sponsors trying to associate globally with mountain biking.

It’s taken years to achieve, but everything has come together. It was all about building a strong base though, brick by brick.

Related: The 10 Strangest Secrets About Millionaires

Next level growth

I’ve now reached a point where it’s time to step down. In the early years I played an operational role. I often worked through the night getting everything ready for the event, and then spent time with our sponsors during the race. As our team grew, some amazing people took the reigns, allowing me to step away from various aspects of the business and concentrate on our growth strategies.

My fingerprints are on everything though, and if I want to leave a legacy, if I want this brand to grow beyond me, I need to step away. An amazing CEO, Lynn Naude, who has a phenomenal track record in the South Africa sports and sponsorship industry, has taken over.

I have no plans to sell the business, and will continue to contribute creatively and in matters relating to the brand and event concept, but I’ll no longer be the face of the Absa Cape Epic. Which means that this year, for the first time, I can ride. I can experience the race as a participant. And I can’t wait.

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

Entrepreneur Profiles

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

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

Nadine Todd

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Vital Stats

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

brand-cartel-south-african-agency

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

1. Play with your work

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

2. Wag your tail

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

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

3. Check it, don’t wreck it

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

4. What’s Plan B (aka make it happen)

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

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

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

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

5. Put your name to it

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

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

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

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

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

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

7. Walk the talk

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

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

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Entrepreneur Profiles

John Holdsworth Founder Of Tautona AI Shares 4 Disruptive Strategies That Are Changing The Insurance Industry

What can we do now that we couldn’t do before, thanks to changes in technology?

Monique Verduyn

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“Disruption isn’t just doing things in a different way which doesn’t resonate or go any further — it’s about changing the game. Being disruptive means taking a look at an industry and finding a way to do it differently, giving you an advantage over the incumbents.”

Vital Stats

  • Player: John Holdsworth
  • Company: Tautona AI
  • Est: 2016
  • Visit: www.tautona.ai

Disruptive innovation is the catchphrase that defines the last 20 years. New technologies, business models and media have disrupted the way we do just about everything. Conventional wisdom has it that the new kids on the block are the ones who are going to own the market at the expense of industry stalwarts, but this innovative South African disruptor is showing them how it’s done.

1. It’s the experience economy, stupid

Regardless of how the world changes, organisations that consider their customers’ emotions and experience first, win. That’s exactly what Tautona did. They put themselves in the customers’ shoes and asked one key question: ‘What’s wrong?’ Few industries are as ripe for disruption as insurance. When John Holdsworth co-founded cognitive automation business Tautona AI in 2016, he knew that there had to be a better way for insurers to handle client claims.

Tautona AI emerged out of a consulting engagement John had with a large insurance company. With a background in IT, he is a highly experienced technology executive and entrepreneur who has started a number of successful companies. He says he loves the energy and adrenalin associated with start-ups. He pioneered the use of digital signatures in South Africa, founded mobile payments company PAYM8, and converged voice and data provider ECN, which he sold to Reunert for R172 million in 2011. The experience acquired over this time meant he was ready to take on a massive challenge.

Related: 5 Key Areas Pratley Are Using For Current And Future Growth

“When a policyholder submits an insurance claim, that action should trigger an instant decision, with the outcome immediately communicated back to the policyholder,” John says.

“Customers want swift claims handling, communication, and compensation. They want the same instant gratification that they get from online banking. So that’s what we set out do — to revolutionise the entire claims process. We have made traditional claims processing a thing of the past by pioneering a cognitive solution that is making the claims process faster, smarter and more efficient.”

2. Automating judgment tasks once reserved for humans

Tautona’s claims automation solution uses artificial intelligence to instantly approve or refer claims for further investigation. By using machine learning algorithms to identify patterns in the data, Tautona’s solution identifies fraudulent claims, enabling insurers to halve fraudulent claim losses.

Tautona also uses Robotic Process Automation to integrate to legacy systems, removing the need for traditional programming techniques. This means that Tautona’s claims automation solution can be implemented with minimal disruption to a business. By automating decision-making, communication, and compensation, Tautona enables insurance companies to take a major step towards becoming true digital insurers.

3. Ditch the legacy systems, start from scratch

Disruptive innovators invest in digital strategies so that they can find new ways of responding to their customers’ evolving needs. The founders of Tautona AI agree on several principles, but one that stands out specifically because it goes entirely against traditional thinking, is the importance of starting from scratch.

“You cannot take a non-digital business model and expect it to work online,” says John. “Instead of using old methods, you need to start from the beginning. Ditch the legacy systems, take a leader mentality and imagine the art of the possible.”

This iterative, modular approach typically begins with defining the strategy and programme plan upfront, delivering a core capability fast so it can provide benefits immediately, and then continuously improving with regular, incremental capability improvements to achieve the objectives of the strategy. It’s an approach that fosters closer collaboration between stakeholders, improved transparency, earlier delivery, greater allowance for change and more focus on the business outcomes.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

4. Shaking up an industry

How do you launch new solutions and educate customers who are used to doing things the way they have always been done? John says resistance to change is inevitable. That’s why you need more than good technology.

“When you introduce something ground-breaking to the market, you encounter many different types of personalities asking diverse questions. That demands an approach that is client-centric and entirely customer focused. It also means you have to spend time developing a sound business case to present to decision makers.”

A solid business case documents the justification for the undertaking of a project. It’s the way you prove to your client and other stakeholders that the product you’re pitching is a sound investment. You need to justify the project expenditure by identifying the business benefits the innovation will deliver and that your stakeholders will be most interested in reaping from the technology.

“Essentially, it’s about proving you can deliver,” says John. “When you have an entirely new proposition, the only way you can hope to get your foot in the door is with a value proposition so profound that clients are forced to take a look at it.”

Tautona has convinced a number of South Africa’s top insurers to implement their AI-powered claims automation solution. The results to date have been ground-breaking, with insurers dramatically reducing turnaround times and processing fees. As a result, Tautona’s sales pipeline is full to the end of the first quarter of 2019.

“But there’s no rest for disruptors. Nokia and BlackBerry crumbled because they were slow to react to market changes, and they underestimated the challenge from Apple and Samsung. The only way to retain leadership is with relentless innovation, that is, a constant flow of new versions and features. That applies in any industry today.”

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Entrepreneur Profiles

Tim Hogins Started Out As A Security Guard, Today His Has A Turnover Of R150 Million And Has Self-Funded Three Huge Lifestyle Parks

As a poor township kid, Tim Hogins watched kids pile into buses heading to Sun City every weekend, knowing he couldn’t afford to join them. He was a youngster, but he made a promise to himself. One day he would build parks that anyone could visit — especially underprivileged kids like himself.

Nadine Todd

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tim-hogins

Vital Stats

  • Player: Tim Hogins
  • Company: GOG, formerly Green Outdoor Gyms
  • Est: 2012
  • Turnover: R110 million
  • Projected Turnover: R150 million (2018)
  • Visit: gog.co.za

“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that – I want to employ people, develop them, push boundaries and see where we can take this.”

“Poverty can be a good thing, because growing up poor makes you creative, and that’s an incredible power if you know how to use it.”

Seven years ago, Tim Hogins drove out of an office park and pulled onto the side of the road because he was having a panic attack. His car was closing in on him, he couldn’t see and he couldn’t breathe. After months of hard work, it was all over. His dreams were shattered.

Tim isn’t the first entrepreneur to find himself here, and he won’t be the last. What separates him from countless other aspiring business owners is that despite a massive setback, he didn’t back down. He sat in his car, phoned his wife, and told her what had happened. Instead of telling him it was time to move on and find a job, she asked him how they were going to cobble together the money he needed to start again.

And that was the beginning of Green Outdoor Gyms, a vision Tim had been nurturing for almost two years. A business idea that had led to his retrenchment and was almost ripped away from him by his business partners and investors.

But he didn’t quit. He pushed on. And today his business has a projected turnover of R150 million and has self-funded three huge lifestyle parks that Tim hopes will impact the lives of thousands of underprivileged children while providing jobs for hundreds more.

Related: 8 Codes Of Success That Helped Priven Reddy of Kagiso Interactive Media Achieve A Networth Of Over R4 Billion

The in-built art of tenacity

green-outdoor-gyms

To understand Tim, you need to understand where he came from. As a township kid growing up in Randfontein on the West Rand of Johannesburg, Tim always helped his parents to sell stuff. They were traders. His dad had a small café selling burgers and chips, and his mom baked. While other kids in the area piled into buses for Sun City on the weekends, or visited a local bird park, Tim had to work or the family didn’t eat.

“I matriculated in 1996, and even though I had an exemption, tertiary education wasn’t on the cards for me,” he says. “We just couldn’t afford it.” But Tim had a plan. His cousin told him about a free four-week course to become a security guard, and Tim aced it, securing a position at one of the firm’s top industrial sites.

Here’s the first secret to Tim’s success. Instead of seeing a dead-end job, Tim saw an opportunity. If he did his job well, he would progress to a driver, and then a cash-in-transit guard. From there the plan was management. Becoming a security guard wasn’t his fate because he couldn’t get a degree — it was step one to the rest of his life.

“I was raised to be the best version of myself. Everything is what you make of it. In primary school I was head boy, and in high school the head of the SRC. There’s always a way to grow and improve yourself.”

Two years into his career as a security guard, Tim heard about another opportunity  — a free programming course teaching COBOL, a back-end system used by the financial services industry.

“I grew up 500 metres from Stafford Masie, who would go on to become the first head of Google South Africa and is one of our country’s greatest tech entrepreneurs,” says Tim. “I had zero programming experience — I’d never touched a computer — but I knew how valuable these skills were, and here was an opportunity being handed to me.”

It wasn’t quite as easy as Tim imagined. He failed the aptitude test and had to take it again. Once he was on the course, he failed that too — it was a programming course after all, and Tim needed a far more basic introduction to IT. He didn’t give up though. He’d quit his job and needed to make this work while he was still living with his father and didn’t have financial responsibilities, so he begged the course administrator to let him retake the programme. This time he passed, and found a job at a small IT firm.

Once there, Tim built up his IT acumen. Over the course of his IT career Tim worked for Dimension Data, EOH and SITA. In his final three years he applied for an account management position and moved into sales. His goal was to become a business owner, and so he diversified and learnt what he could about business.

He also paid attention to the world around him, looking for a business opportunity or problem he could solve. He dabbled with some ideas, but the one he kept coming back to was outdoor gyms.

“I saw kids in parks doing sit-ups, push-ups, pull-ups on trees, and kept thinking there must be a better way than this for them. I knew that a proper solution would be good for the whole community — giving kids and parents a safe and free environment to play in and focus on their health. I focused on poorer communities, where gym fees weren’t an option, and kids needed safe places to play and keep out of trouble.”

The more Tim unpacked the idea, the more he began to believe in it. And then his employers found out, and made it clear that they did not like Tim’s attention divided between his job and his business idea. Despite this, Tim continued to focus on his entrepreneurial play, and within a few months he’d been retrenched, ostensibly due to a restructuring of the business, yet Tim was the only person let go.

It was October 2010 and Tim had no job, two-months’ salary and he was about to get married. But it was the best thing that could have happened to him. “That retrenchment catapulted me into business. From then on, my full focus became outdoor gyms.”

Winning and losing

gog-water-park

Tim had approached Joburg City Parks who where interested in the idea. He had also met with an engineer and they had begun to design the equipment. There was just one small problem: Money.

“I knocked on doors, approaching anyone who would listen. One investor laughed at me. He said I’d gone from IT to playing with steel — what was wrong with me? A contact at SITA said flat out that she wouldn’t help me. Looking for funding can be incredibly demoralising. I had an idea and a letter of intent from Joburg City Parks, and it still wasn’t enough.”

And then Tim was introduced to a group of investors who wanted to instal kids play areas in municipal parks. Tim had the City Parks connection; they had the funding. They entered into a business partnership and built a prototype together. This was when Tim’s wheels fell off.

“I was invited to a meeting by my three business partners, and when I arrived there were five people in the room — my partners and their two lawyers. We’d entered into the agreement as 50/50 partners, and they wanted us to all be 25% shareholders. I couldn’t agree to that. This was my idea, my connection, my baby.”

By the time Tim left the meeting, he had no funding, no partners and no prototype and he knew City Parks was getting impatient. All he’d done was create competitors — and they had a demo model.

Tim had spent most of 2011 looking for funding and then building the prototype once he found his partners. He wasn’t just back to square one, he was behind where he’d started months ago. Hence the panic attack.

It was a pivotal moment. Give up or push on? Tim chose to push on. That night, Tim and his wife, Rona Hogins, sat down and came up with a plan. They would sell one car and Rona would apply for a bank loan. Together, they managed to come up with R200 000. Tim approached a friend who was interested in a side business and they launched LXI, an importer of screens for media companies. LXI brought in enough to pay the bills while Tim concentrated on getting Green Outdoor Gyms off the ground.

Then luck stepped in. “I drove past a warehouse and saw some play equipment. Instead of driving on, I pulled in and pitched my business idea to the owner.” The owner, Neta Indig, agreed to build Tim’s prototype at cost, in exchange for a long-term partnership. Tim agreed. His R200 000 would be enough to get the business back off the ground. Green Outdoor Gyms was officially launched in February 2012.

Here’s the thing about luck though. Unless you’re open to opportunities, paying attention and willing to step out of your comfort zone, luck alone will get you nowhere. By the time Tim drove into Neta’s parking lot, he’d spoken to countless investors, had doors shut in his face, lost a partnership and his prototype, and was still willing to look for any opportunity that might present itself. Through sheer will and tenacity, he found it.

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

Seizing opportunities

gog-exercise

After the first outdoor gym was installed, two things happened. The competition Tim had feared from his old partners didn’t materialise. It was Tim’s first real lesson in the power of passion. He’d doggedly pursued his idea for over two years. His partners, who didn’t share that passion, did nothing with the prototype they’d acquired. Tim was still — at that stage — in blue ocean territory.

The second was how quickly an idea can take off once the foundations are in place. GOG’s turnover was R3 million in its first year, and orders were flooding in from municipalities throughout South Africa.

Tim was invited to present his solution in parliament, and it was included in the National Development Plan. “Everything escalated faster than I could have imagined,” he says.

“The reality is that we’re an obese nation. It’s a real problem. On top of that, 90% of the country can’t afford commercial gym fees. Under the National Development Plan, every community was earmarked for an outdoor gym. Government saw my vision and they bought into it.”

Tim had to tender for each new site, but he had a first-mover advantage. By the time other players entered his space he’d already built up a track record. His team’s turnover times are impressive and the business doesn’t only design and instal the equipment, but can also overhaul a derelict park. The quality of his products ensures that equipment lasts at least eight years with no maintenance, although once an outdoor park is installed, the community takes ownership of it, cleaning it regularly and maintaining the area.

In six short years, GOG has installed over 1 000 outdoor gyms for local municipalities around the country, and there’s still room for growth. There are currently between 5 000 and 10 000 sites available, and while Tim doesn’t believe they will get all of them, the business will continue to expand. “I believe we still have a ten-year run with government-funded outdoor gyms, but this is no longer our core business.”

In fact, GOG has grown and changed considerably since that first outdoor gym was installed in February 2012.

“I’m an opportunist. I pay attention to developments around me and am always on the lookout for where we can add value,” says Tim. As a result, GOG is now developing its own sites and supplying equipment to the industry — across private and public sectors.

“You need to know that competitors are coming,” says Tim. “When we started out we had a niche with outdoor gyms and government, but someone will always want to eat your lunch. If you know that someone’s paying attention to what you’re doing and that everyone needs to diversify, you can stay ahead of your competitors.

“Our business is centred around health, fitness and family, and  this understanding has allowed us to grow into lifestyle spaces that support our core focus.”

As a result, GOG has expanded to the installation of play areas and outdoor gyms for hotels, private and public schools, beach parks and lifestyle estates, including Steyn City.

“We also have a registered landscape company,” says Tim. “We can take vacant land and transform it into a park with grass, trees, water and pathways. We have a Geotech division that does soil testing and environmental studies.”

None of this happened overnight. It takes time to build a reputation, but if you’re focused on four key things, you can build a sustainable business. “You need to diversify your product range, diversify your customer base, nurture relationships and push outbound sales,” says Tim.

Tim has geared the business for scale, which is critical in a production and manufacturing context. “We have always outsourced our manufacturing, first with Neta, and later to a Chinese manufacturer who has become integral to our success.”

Tim’s relationship with Neta was critical in the start-up phase, but after two years the manufacturer decided to focus on his core. “We were too big — it wasn’t a side project anymore, and Neta wanted to remain in construction,” says Tim. “I needed to either find another manufacturing partner, or move into that space myself.”

Tim visited manufacturing facilities in China and sourced samples until he found a plant that could handle GOG’s volumes and quality. “Chinese manufacturers value loyalty and they’ll do whatever you want at the price point you ask. If you want a cheap product, you’ll get it — and the quality to match. Good quality costs more. I have an excellent relationship with our supplier — so good that he flew out to South Africa to see our operations, because he was impressed with the volumes he produces for us.”

It’s this relationship and the capacity available to Tim that has allowed him to take the next step towards his ultimate vision for GOG: Lifestyle parks.

Living the dream

gog-exercise-park

GOG’s first lifestyle park stemmed from Tim’s need for a showroom and his life-long dream to give underprivileged children access to entertainment parks that he couldn’t afford when he was a child.

“We were manufacturing outdoor parks and I started thinking about other ideas in this space that aligned with our vision and niche. I needed a showroom that could showcase everything we can do, from ziplines to climbing walls, swimming pools to spray pools and outdoor gyms. A lifestyle park was the natural answer to everything I wanted to achieve.”

GOG Lifestyle was opened in November 2016 and is situated off the N14 near Lanseria Airport. It’s close to a number of townships, including Diepsloot and Cosmo City. “The revenue model is corporate team building events, family days and launches, which allows us to run specials for kids, the elderly, and CSI projects for schools and churches.”

The next lifestyle park, GOG Gardens, was opened in Soweto in December 2017. Bigger than the first lifestyle park, GOG Gardens caters for picnics, outdoor events and concerts. It’s a multi-purpose venue with seven venues in one, and also focuses on corporates, the general public and events, with CSI projects that support children.

“We have launched some smaller projects, such as GOG Kids at Chameleon Village in Hartbeespoort and a play area in Vilakazi Street, but our next big project is Happy Island, a 36 hectare water park off Beyers Naude Drive in Muldersdrift.”

Happy Island is GOG’s first joint venture with an investment partner, Tim’s Chinese supplier. Unlike the other lifestyle parks, which GOG self-funded from cash reserves, Happy Island is a multi-hundred million rand project with large capex needs. “The idea came to life when the chairman of our manufacturing supplier visited our operations in South Africa. There are no water parks in South Africa similar to those I visited in China. We are doing something completely new and exciting, and we broke ground in April 2017.”

All of GOG’s lifestyle parks have required high capex investments and have not yet reached break-even, unlike the smaller projects that will reach break-even within a few months. “Our projection for the lifestyle parks is three years, and five years for Happy Island,” says Tim.

“My long-term goal is to have ten lifestyle parks across South Africa, one in each region, and that’s what I’m investing in. We want to make a difference, give kids access to these parks and employ people.

“I’m here today because of my childhood experiences, but before I could invest in this dream, I needed to start small and build up my reputation and cash reserves. To achieve my ultimate dream will take a lot of investment, so that’s the focus.

“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that — I want to employ people, develop them, push boundaries and see where we can take this. When someone says something is impossible, I want to know why, and then try anyway. That’s how you achieve great things. That’s how you realise your dreams.”

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

Next level

In 2016, GOG launched its first lifestyle park, GOG Lifestyle. Since then, two more lifestyle parks have been added, GOG Gardens in Soweto, and GOG  Kids in Chameleon Village in Hartbeespoort. The company’s biggest venture, Happy Island will soon be open to the public as well.

Healthy Living

GOG’s genesis was outdoor gyms, and the company continues to grow from these original roots: Catering to a growing focus on healthier lifestyles, from public parks to beaches, corporates and residential estates.

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