- Player: Quinton van der Burgh
- Company: Quinton van der Burgh Investments
- Turnover: In the billions
- Launched: 2008
- Visit: quintonvanderburgh.com
Quinton van der Burgh Investments is the holding company that owns equity shares in 32 businesses. Eight of those businesses are mining concerns co-owned with his two brothers. The mining and prospecting business (Burgh Group) was launched in 2002.
Van der Burgh currently focuses the majority of his time on growing Innovatec Africa, a start-up he bought 85% of in 2013. Van der Burgh is also the creator of reality show Clifton Shores.
The entrepreneurial mindset
I was a terrible student at school. I didn’t listen, I was ADHD, and I didn’t like to attend class. To be honest, I’m not even sure how I passed; I tend to think I was lucky. But school was a great place to sell things, because I had a captive market with lunch money to spend. I almost got kicked out twice because of my little side businesses. As long as I was trading, I was alive.
My dad owned a number of supermarkets, and on weekends my two older brothers and I would work in the stores doing stock take, pricing goods and counting tills.
It gave us a strong feeling for figures, but it was also an opportunity to work and save, and to buy things like Ghostbuster stickers which I then sold at school.
My dad was successful, but he taught us to work for the things we wanted. It was also a great introduction to the basics of trade. And that’s what entrepreneurship is – trading. Money in and money out, buying and selling. Cash flow.
Heart of a trader
That’s what drives me. I love a challenge, and I want to be involved across the whole value chain. My passion is business, and I love all aspects of the market – I enjoy learning about new sectors that I know nothing about. I want to look at new industries and touch it all.
I haven’t succeeded in everything, but that’s where the real learnings happen. All industries are different. What succeeds in one doesn’t necessarily work in another, but it’s so rewarding figuring that out.
Follow your passion
Succeeding at something I’ve never done before is what drives me and gets me up in the morning. I like guiding from the sidelines. I manage, run, strategise. I need to be a part of the success, not just invest money. But, you can only do so much.
I’ve built a team of experts to assist me, and I believe in hiring the best. When we invest in a business, we look for the loophole – that thing that we can take, tweak and triple the company’s valuation in a few short years.
It’s not about the money
I could retire right now. But it would bore me to death. And I wouldn’t be giving anything back. I don’t build businesses to have a good life. I build businesses because that’s what drives me, and what I live for.
I just didn’t want to be there anymore. By this stage the family business had grown, and included supermarkets, car dealerships and cellular stores. I had a colleague at one of the car dealerships who had contacts at Eskom. He knew what their needs were, what they were purchasing and how they chose suppliers.
We decided to start a business selling filters to Eskom. This was the mid-1990s and I was 17 years old. I had R50 000 saved up, and used it to buy stock.
The money was saved up partly from working, and partly from buying, suping up and then selling cars. I had access to scrap yards, and was always on the lookout for parts. I made a profit each time, which I saved, and also used to invest in my next car. I eventually saved enough to buy a BMW 318.
A complete disaster
We didn’t need R50 000. We needed a few hundred thousand. It was a great idea, but it couldn’t sustain itself. We couldn’t run without cash flow. It was a big lesson to learn.
I was 18 and my first business had failed. And so I went back to working for my dad, first as a salesman at an Autopage Cellular store he owned, then working my way up to becoming area manager.
And then my oldest brother and I had an idea for a side business. At the time, the big mobile companies in the UK had a policy that second-hand phones and 14-day returns were all stored in warehouses, and then packaged and sold in bulk to other markets.
We started importing these – 1 000 phones per package. We’d buy them, unlock them, package them and sell them. I’d go over to the UK to get them, and then we’d literally drive around Witbank and Pretoria selling them. I’d pack 500 phones into my BMW and head to Pretoria. We were a completely turnkey operation.
There were eventually five of us trying to sell 15 000 phones a month. Our little operation got my dad’s attention, who decided that we weren’t ready to be running a side business of the size it had grown to. He put a friend of his in charge. Just like that, I’d been circumvented in my own start-up and I realised that if I ever wanted to build something that was really my own, I needed to leave and actually go out on my own.
I believed the only way to do that was to go to the UK. I made contact with the broker who sourced and sold the phones. I wanted a job in London.
He agreed, but said he’d pay me commission only, no basic salary. Meanwhile, my dad said that if I left, I was leaving with nothing. I did it anyway. This was my chance, and I had enough faith in myself to believe I’d make it work. I had no idea.
I shared a room with four guys. It was a whole new experience for me. I was used to people doing stuff for me. This was a whole new way of life. It was also unbelievably liberating.
I wanted to make a name and career for myself, and this was my chance. I’m never happy. I never will be. Things are just things; they come and go. I care about achievements. It was time to start shaping my future.
I began working immediately. I opened the office at 5am each morning (we traded internationally, so had to start early), and then I sold phones. My agreement was 10% of the gross profit on each phone, which was £1. The first month I sold 30 000 phones.
The next 60 000 and the third 80 000. In rand value, I’d made R3 million. Not that it mattered, because he never paid me. He was shocked and completely unprepared for how much I sold, and decided he wanted to review the agreement. Since I was earning on a commission basis, this meant I was earning nothing.
In month two my dad came to visit. I had to borrow cash from a housemate so that I could take him out to lunch. I didn’t want him to know I had no money. By month three things were getting desperate. By this stage my boss had a new partner who promised to sort things out. It never happened.
They gave me £100 pounds to tide me over, and that was the last cent I saw from them. I learnt a lot about taking people at their word, and how quickly someone will go back on their promises.
A new opportunity
And then a new opportunity presented itself. By this time, I’d built up real relationships with my clients. They knew me. They trusted me. They knew I stuck to my commitments, even if that sometimes meant going head-to-head with my boss. They wanted to do business with me, but they didn’t want to do business with my boss.
They told me they would give me upfront cash, I could find the stock, and they’d deal directly with me. It was my first introduction to the power of OPM – using other people’s money to fund your business.
I did it. I was now working even harder than before. The money would get transferred into my bank account, and I’d wait at the bank for the funds to clear, and transfer them immediately to my suppliers. With a money order in hand, I would then go and fetch the stock, and get it loaded by the end of the day. I worked from 5am to 10pm each night. Missing my targets and deadlines was not
And then I made my next big mistake. I found an amazing deal. A company in China was selling Nokia phones at 20% below market. I’d built up profits, and I had a South African client who I told about the deal. He sent me £300 000 (about R6 million at the time) and I put all my savings into the deal as well.
We were going to buy up stock and test the waters. I paid, and then the guys (whom I’d vetted) disconnected and disappeared with the money. Just like that. Everything I’d saved, gone, but even worse, my client’s money was gone too.
I knew my only option was to be completely upfront with him about what had happened, and to promise to pay him back within six months. I managed to pay him off — everything I made went to that debt. It was worth sticking to my word. He’s still a client of mine today, almost 20 years later. Money comes and goes. Your reputation doesn’t.
I’ve lost a lot of money over the years
It wasn’t the first time I’d lost money, or the last. But through it all, I’ve built up an unshakable belief in relationships. They come first. When markets shift (as they do, particularly in the import/export game), I take the hit. Over the years I’ve taken a lot on the chin. These principles are so important to me.
Too often I’ve seen markets dip, and people start panicking, which leads to cutting corners and doing shady deals. That’s how you burn bridges. It might be a short-term solution, but it’s not a long-term one, and I always look long-term.
Don’t rip people off and jump ship
My number one rule is to have integrity. Always honour what you say you’ll do. Think long-term. Where’s the next goal? What’s happening in ten years? In tough times people want to milk the system. It’s a short-sighted, big mistake. I’d rather go broke, back to nothing and build myself up again than do that. Today’s failure could be a much bigger opportunity down the line.
After six years in London I started looking back to South Africa. I’ve maintained business interests overseas, but it was time to come home. By this stage, my brothers had shifted into the industrial sector, focusing on belting, earthmoving and hydraulics. They were still involved in the family business though. They were also very interested in coal mining.
They’d been researching prospecting and development of coal assets in South Africa. It was a very risky play, and would involve all of our collective savings, but if it worked, the rewards would be huge.
Taking risks with big rewards
At 26, I was given the opportunity to buy my way back into the family business with a 25% equity stake. I decided to do it, and moved back home. Their prospecting idea was incredibly risky – and incredibly exciting, which is what I live for. I’m the cowboy of the three brothers. I’m the gambler and highest risk-taker.
My middle brother, Stanley, is the most conservative. He’s a hard worker, likes things simple, and isn’t afraid to get his hands dirty. He’s built an earthmoving business from scratch, going from one machine to 300, and he’ll change a tyre himself if needed.
He’s a tradesman who always haggles for the best price. He’s grounded, not flashy, and all about family. My oldest brother, Wayne, is more like me. He’s a networker and a dealmaker. He’s willing to take risks, although not quite as aggressively as I am.
As a trio we work well together. Stanley covers earthmoving, I’m the numbers and strategy man, and Wayne focuses on operations. We support and complement each other. But we’re also very different – I always look a few years ahead. Wayne and Stanley like to focus on the now.
Boardroom meetings have been known to get heated, with three brothers who want to end up punching each other. We don’t back down. We’re all opinionated. And yet it works. This big risk we took has paid off – tenfold.
Becoming coal miners started with a big gamble. My brothers had found land in Mpumalanga to prospect. It was risky.
Mining for opportunity
Experts told us that while it could be a very lucrative seam, it might also not be what it appeared to be. It was a 50/50 risk, and it would take almost everything we had to find out. If it worked, it would be like striking oil. If it didn’t, we’d all be back to square one. I was 26, but my brothers were older, with families to support. We decided to go for it.
It was two years of digging holes before we found the seam, and four years of making no money, while pouring money from our other ventures into prospecting and development. We all refused to take a loan. We’d rather do it slowly, and debt free, or not at all.
Every year we had the same discussion: Should we carry on doing this? Is it worth it? We’re not the majors. We’re not a big mining house. What the hell are we doing? But persistence pays off. We stuck to it. Our reputations were on the line, and a stubborn streak was evident in all three of us. We wanted to prove we could do it, and that this wasn’t rocket science. We could make this work.
This is true of everything – you can do anything. And if you don’t have the knowledge or expertise, get stronger people than yourself into the right positions, and put your heads together and work – hard! And learn, learn, learn every day. Today, that business’s turnover is in the billions, and it all started on a calculated gamble, and a desire to build a legacy.
Currently, van der Burgh spends most of his time on Innovatec Africa, a start-up he bought 85% of in 2013. “Real innovation is happening in the tech space, and I’m chasing the opportunity that will make me a global brand,” says van der Burgh.
“I want to be in the top ten futuristic tech companies in the world. That’s what I’m aiming for, and so I’ll never stop looking for the next big thing.”
Van der Burgh believes Innovatec Africa is the vehicle for that. “We have very talented teams here; lots of innovative development is taking place. We look for ideas that are in concept stage that we can run with.”
Innovation is expensive though, which is why van der Burgh is concentrating on building a sustainable brand that can support that innovation.
“There are 12 companies under Innovatec Africa; we’re aggressively acquiring companies and distribution rights for large brands. There’s a huge opportunity for us to develop these brands in markets they haven’t previously dominated, particularly in Africa.
“Through our acquisitions, which are all companies that excel in their fields, with excellent teams at the helm, there’s very little that we don’t do that corporates need, from software and hardware integration, to consumables, boardroom outfitters, landline and VoIP connectivity, integration of data solutions, cloud services, servers, and even training. But at our core, while we’re building this big machine, we have an amazing innovation arm, which is sustainable because of all the other areas we focus on.”
The show Clifton Shores was the result of a bee in my bonnet. Two things were happening simultaneously. I wanted to be involved in TV, and I also wanted to give my personal brand some exposure. I’ve got big plans for who I want to be, and where I want to go. Elon Musk, Mark Shuttleworth and Richard Branson all have something key in common – they’re been very savvy at building their brands. People know them, and as a result, they’re trusted, and entrepreneurs bring them ideas. They make a difference.
I saw a reality show as a way of both satisfying my desire to create a successful TV show that could be distributed in the US, and growing my personal brand. I have an eventing and marketing business, Quintessential, and this became the vehicle for the show.
We had four US girls and three South African girls, all based in a house on Clifton beach. The US element was important – US audiences love seeing other Americans and what they’re doing, even if it’s not in the US itself. It was a ‘fish out of water’ idea. They ran my company for me and put together glitzy events, and we filmed their interaction, and dealing with daily challenges.
I was a secondary character. It was unscripted, but of course we had to add some drama, so we’d pair up people who we knew didn’t get along, or wouldn’t work well together. The show cost more than we made, but the exposure was incredible. We really got the message out there that if you’ve got a business idea or contact, come to Quinton.
We’re currently getting ready to launch the second season, now rebranded as The Shores for the US market. I took two years to be ready to do it again. It takes a lot out of the participants. This time we’re going online only. Each episode will be available free on Youtube.
This is where TV is headed anyway. I’ll make money on the clicks, but the idea is to really build up a subscriber base for future projects. I’m looking long-term here. Right now it’s costing money, and I’m having a blast. In the future though, I’ll see real returns with a dedicated subscriber base. That’s the plan.
The non-profit Generosity was launched seven years ago by Jordan Wagner and his father. They’re very, very passionate about global access to water. I met Jordan on a movie project in the US two and a half years ago. I loved his story.
Our partnership works perfectly: He’s the NGO guy, I’m the business guy. Generosity already had a lot of celebrity endorsements before I came on board. The big idea is to solve the water crisis, step by step.
The NGO has already built 570 wells globally, giving communities access to clean water. But there’s always more to be done, and ultimately, in order for an organisation to be sustainable, it needs to produce its own income rather than relying on donations. This is where I came into the picture.
Generosity needed a ‘for-profit’ arm that would give the NGO an annuity income and create a business around a water brand.
We’ve spent two years developing the best technology for the healthiest drinking water possible, bottled in BPA free bottles. This is not spring water — we don’t want to take more resources from the ground in poor areas. It’s government water, treated with reverse osmosis. The result is a level ten water that is not only extremely healthy for you, but tasty as well.
All bottles have a QR code, so the consumer knows which well that batch of water is funding, and where it’s being built. 20% of every bottle goes to the project. In the US, bottled water is a $10,8 billion industry.
We’d like to see some of that going towards solving the global water crisis. We’re also targeting the corporate market because they’ll get tax rebates, and high volumes mean we can lower the price, although this is a premium product, and it’s packaged and marketed as such.
We’ve already made plans to enter the Australian and New Zealand markets. The idea is to eventually have Generosity everywhere — you can launch your own company in your country — we’ll give you the product as a turn-key operation.
You do the marketing and sales to corporates and throw a big yearly event. We’re looking for well-connected JV partners who also want to give back.
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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