Rico Wessels and Christopher de Bod are not your typical entrepreneurs. For one thing, they didn’t dream of starting their own business.
When they finally did launch their company, PHAT Brand Activation in 2008, they went from an idle discussion about starting something of their own instead of building other people’s businesses, to resigning, to start-up in two weeks flat. They also broke all the rules doing it.
Every business book, coach and expert will give you the same start-up advice: Have a business plan, develop a clear strategy, have a structure in place, do market research, and have some cash in the bank. Wessels and de Bod had none of the above.
What they did have were complementary skills sets, contacts, and the fact that they were going into the business together.
Key entrepreneurial partnerships automatically raise the chances of success, and in Wessels and de Bod’s case, this was a vital ingredient in their business’s eventual growth – de Bod brought in the business (and in the early days they would take any business that came their way) and Wessels made sure they delivered.
Their early days were haphazard and organic. They entered the events industry because they knew it took the same amount of work to put on a R100 000 event as it did a R1 million event.
They also knew you could ask for upfront deposits, which meant they could do business without cash in the bank, and since they only had R3 000 start-up capital and enough saved up to pay two months’ worth of bills, this was a deciding factor.
So, putting out the word to everyone they knew, the partners made it known they were open for business, and they would do any event, no matter how big or small. Bar mitzvahs, weddings and corporate functions were the order of the day.
They soon realised an important fact: They hated weddings, largely because mothers of the bride are evil, but they loved corporate events. As they managed to get cash in the bank, they were able to become more and more selective about the work they chose, until eventually their sole focus was corporate clients.
Today, they run a R100 million business with a laser focus. But the ride hasn’t been without its bumps in the road – and lessons to be learnt.
“I promise clients the world, Rico makes sure I’m not a liar.”
As partnerships go, de Bod and Wessels have very different skills sets and personality traits. Wessels’ background is in advertising agencies. His forté is project management and execution.
Give him a brief and he’ll get the job done, to spec, within budget. He’s all about the deliverables. De Bod is more people-orientated. His background is in call centres and client services.
He’s finely tuned to client needs, and is able to determine what a company needs, not what a client thinks they actually want. Together it’s proved to be a winning combination, with de Bod able to discern the best course of action for each client (and then promising them the world) and Wessels making those promises happen.
But it’s not just about the partners complementing each other’s skills set.
“We both started at the bottom of a corporate structure and worked our way up,” says Wessels. It’s an important point.
Neither is afraid of hard work and learning new things, but more importantly, they also learnt business from the inside out.
“We didn’t realise it at the time, because neither of us was specifically trying to learn as much as possible about business to prepare ourselves to become entrepreneurs, but if you’re naturally ambitious, inquisitive and want to do the best you can in every role you’re in, you learn a lot about business along the way,” he adds.
“My corporate career prepared me to understand business strategy, finance, profitable accounts and how to streamline processes. Christopher’s career taught him about people and the importance of customer service and he also developed a talent for translating those needs into actionable deliverables for the project management teams.
“It’s one thing to get client feedback. It’s another matter entirely translating that feedback into useable data for the company. These would be invaluable skills once we launched PHAT.”
Related: Meet the Disrupter
“Cash is your lifeblood. Without it, you’ll never grow.”
These skills attracted early clients and ensured the duo could deliver on their promises. Jobs well done led to word-of-mouth referrals and bigger projects, but it wasn’t until cash flow stabilised that the business could really start growing and taking shape.
“Even though we’d started with nothing, we quickly learnt that our most valuable asset was cash in the bank. Healthy cash flow allowed us to start choosing our clients and which jobs we wanted to do, but more importantly, it meant we could start branching out from events,”says de Bod.
With a keen eye for identifying gaps in the needs of their clients, he soon realised that brand promotions was a marketing area that they would be good at – they had the necessary skills and backgrounds to pull promotional activations off, and more importantly, they now had the upfront cash.
“At first, we wanted to outsource this function,” admits Wessels. “Promotions require a lot of contract workers, most of whom tend to be university students and highly unreliable. It’s an area we didn’t want to be in. But we could see a client need, and we soon realised two things.
“First, if we were simply the middle men we’d be adding management fees onto management fees, pricing ourselves out of the market. More importantly though, if we outsourced our activations department, we wouldn’t be able to control our service delivery, and it might actually end up hurting us. What’s the point of growth to the detriment of your brand?”
And so their focus on getting cash in the bank began to really pay off. “Activations are tricky because you need to pay your contractors long before the client pays you,” explains Wessels.
“Many clients take up to 60 and even 90 days to pay you, and your single biggest expense is your promoters (or activators). Without a healthy cash flow you won’t be able to honour your agreement with them.
“Reliable, trustworthy activators are hard to find, and we’ve developed our brand around the fact that they’re ‘living’ media, which means they can intelligently interact with consumers, answering their brand questions and discussing the products they’re promoting.
“This takes training, which is an additional investment. You want to keep your activators happy, and to do that you can’t take weeks or even months to pay them.”
As the business has grown, so too has PHAT’s client base and the size of the activations they’re responsible for. None of this would have been possible without keeping a keen eye on cash flow. “So many businesses are unable to scale because they don’t have a healthy bank balance,” says Wessels. “It doesn’t matter what your balance sheet says. If you don’t have cash in the bank, you’ll never grow.”
“We lost a lot of good people before we realised they were the backbone of business.”
Growth brings with it new challenges though. Sure, you can now take on bigger jobs and hire more people, but it’s also easy to get so caught up in doing the work that you forget how important systems, structures and above all people are to the business’s success.
“Our first round of hiring activators had gone well,” says Wessels. “Chris and I personally chose 500 CVs, shortlisted those to first 300, and then 120, and then with client input we settled on 80. Most of that first group was with us for four years, and many went on to be hired by our clients, and some have even joined our core staff.
“But we also got things wrong. We were running like a sweatshop. We worked 18-hour days and we expected our team to do the same. We had a job to do, and both of us are hardwired to work hard and get the job done to the best of our abilities.
“The problem was that we didn’t have the systems in place to support the workload we had undertaken, and we expected a lot from our employees without giving them any autonomy or seniority.”
The result? It took Wessels three days to pay 400 activators (a task he did himself), which is just one indication of how poor the business’s overall systems and back-end were.
“We lost a lot of good people in our early years. And then one day we realised the secret. If we wanted to be a big business, we needed to act like a big business, and that started with a proper back-end, putting systems in place, and appointing account directors who had full control over their accounts.”
In a large corporate or agency environment this is obvious, but as a small business trying to save costs, it’s often forgotten. It requires an investment in what is seen as a non-revenue generating area, and it can’t work unless the business owners take a step back from the day-to-day functioning of the company.
“Two things happened simultaneously for us,” says Wessels. “We realised who we actually were as a company, and we put systems in place to support that.” This sounds so simple and obvious, but it’s easy for companies to get waylaid by the who, what and how of business.
In PHAT’s case, they are a brand activation agency that focuses on living media and variable media (or activations and events).
But the reality is that this is what they sell to clients. What they actually are is a massive employer of contract staff who activate or promote a brand and its products. The ‘how’ is then how well they manage people – they need to be trained, booked and managed. They’re the face of a brand, and they’re also an excellent collection point of data for the client.
Understanding all these things makes PHAT very good at what it does, but it also requires systems to operate smoothly. These systems encompass everything from ensuring activators are paid on time, and keeping their training and knowledge up-to-date, to supporting the company’s core full-time staff who look after client accounts and the activators.
“We can track our sudden massive growth curve to two things: We put systems in place, and we established a PHAT exco that gave our account directors and executives autonomy but held them responsible for their accounts. It was a complete game changer in our business,” says Wessels.
“We reward teams that excel, but let non-performers go.”
The systems took a three-day job down to 15 minutes. They also promoted a strong back-end, which is the backbone of any business. Sales and account executives bring in revenue, but they’re hobbled if they have no admin and HR support. The change in company morale and productivity was almost immediately discernable. But that was just the first step. PHAT’s real secret growth weapon is its exco structure.
“Our PHAT exco serves two key purposes,” explains Wessels. “It frees up myself and Chris to focus on high-level client service and strategy sessions, and it allows us to work on our own internal strategies. That’s obvious. What’s important to understand is that none of this works without real autonomy on behalf of your account directors, and with responsibility comes accountability.
“Our system is highly transparent and straight forward,” explains Wessels.
“Each account director has full financial and managerial control over their department. They’re given a budget to work with and targets to meet. We then have an exco meeting every second week to track those targets and change direction if needed. It keeps us in the loop, it ensures our account executives are keeping their eye on their targets and client delivery because they have to report back to us, and it means we can trouble shoot early.
“If targets aren’t being met, we evaluate why, and develop strategies to keep the account healthy. It’s vital that everybody understands what the deliverables and their duties are. If an account runs at a deficit, the strategy will be revisited and we will then develop the appropriate structural solution.
“Obviously this is done within reason – if a major client suddenly has to pull its budget for example, this isn’t necessarily the team’s fault, and we might move everyone into different positions and teams. We make sure they all know exactly what that pressure is and what they need to achieve.”
According to Wessels, transparency plays a big role in this strategy. “We share financial information with clients which allows us to show the client exactly what the agency makes versus what the client thinks the agency makes. In this way we can come to a mutually beneficial solution.”
However, a strategy that is so dependent on employees who are responsible, driven and accountable relies on getting the right people in. “This is obviously a challenge,” agrees Wessels.
“We like to employ leaders with entrepreneurial spirit, but these skills and responsibilities come at a price. But, we’ve learnt that in the long run it’s a price worth paying. Upfront investment ensures healthier client accounts, it’s that simple.”
However, Wessels does admit that people have left PHAT to start agencies of their own in the past. “If that’s their dream, it’s obviously a loss to us, but we always encourage their ambitions, support them, and give them any advice we might have. That’s the flip side of employing entrepreneurially-minded people, and we understand that. We’re realistic that people – like accounts – move on, and that we just need to make the most of them while they’re with us.”
“If you’re looking for a master/slave relationship, you’ve come to the wrong agency.”
“Many big corporates will treat their service providers like slaves if they let them. That wasn’t us. We wanted partnerships. It’s the best way to ensure your clients get the most from their campaigns because you’re able to offer them real advice, and even tell them when they’re dropping the ball,” says Wessels.
All good partnerships are based on relationships built on trust, and transparency is the foundation of trust.
“If you’re able to have in-depth, honest and up-front conversations about the business, you’ll be in a much better position to advise clients on what they need to do to achieve the results they’re looking for,” says de Bod.
These principles extend to everyone understanding exactly what they’re getting from the partnership as well.
“We are very clear about our fees and what our clients are getting for their money,” says Wessels.
“I’ll present a document that shows our management fee, what it covers, our mark-up and percentage profit. Clients know exactly what our gross profit is, or what figure we’re trying to get to. Based on that, we can then offer them our services according to what they’re willing to spend.
“Ultimately, the profitability of an account defines the size of the structure that will support the account. More profit equals more ‘wow’, including exclusive versus non-exclusive structures and dedicated versus shared teams. We also all agree on the profit margin upfront.
“We understand that unless you value your own services and what you have to offer, you can’t expect your clients to value you. We’re in the business of helping our clients see real return on investment in their marketing strategy, but we’re also here to make a profit. We’re always very clear about it, and our question is always simple and polite: Would you run at a loss?”
PHAT also has client rules. “We won’t mess with the system. Don’t ask for a R1 million event in three days. This ruins our pipeline and affects our other clients. We value the service we give them, and that means we need to stick to our schedules. The only way you’re above that schedule is if you’ve got your own dedicated team.
“First, should we accept the brief it will push back all current work by two to three days. Second, the brief will more than likely not be done to the standard and quality that we normally deliver.
“If you take the two points into consideration, someone will lose out – either the current client or the new client. We follow a simple rule: Never let the money make the decisions.”
“You quickly learn when starting an agency that the more you give in to a client’s whims the less they value your input as a subject matter expert,” agrees de Bod.
“We’ve learnt over the past six years that open cards and total transparency allow clients to understand our reasoning. We’re subject matter experts in our industry, just like our clients are in theirs. They’re paying a fee for a professional service. We never negotiate on our quality and standards, just like a doctor would never negotiate on quality and standard when performing an operation.”
- Players: Rico Wessels and Christopher de Bod
- Company: PHAT Brand Activation
- Est: 2008
- Growth stats:
2010: 32% 2011: 77%
2012: 81% 2013: 176%
- Current turnover: R102 million
- Projected 2014 growth: 80%
- Contact: +27 (0)12 348 5070
- Email: firstname.lastname@example.org
- Visit: www.phat.co.za
John Holdsworth Founder Of Tautona AI Shares 4 Disruptive Strategies That Are Changing The Insurance Industry
What can we do now that we couldn’t do before, thanks to changes in technology?
“Disruption isn’t just doing things in a different way which doesn’t resonate or go any further — it’s about changing the game. Being disruptive means taking a look at an industry and finding a way to do it differently, giving you an advantage over the incumbents.”
- Player: John Holdsworth
- Company: Tautona AI
- Est: 2016
- Visit: www.tautona.ai
Disruptive innovation is the catchphrase that defines the last 20 years. New technologies, business models and media have disrupted the way we do just about everything. Conventional wisdom has it that the new kids on the block are the ones who are going to own the market at the expense of industry stalwarts, but this innovative South African disruptor is showing them how it’s done.
1. It’s the experience economy, stupid
Regardless of how the world changes, organisations that consider their customers’ emotions and experience first, win. That’s exactly what Tautona did. They put themselves in the customers’ shoes and asked one key question: ‘What’s wrong?’ Few industries are as ripe for disruption as insurance. When John Holdsworth co-founded cognitive automation business Tautona AI in 2016, he knew that there had to be a better way for insurers to handle client claims.
Tautona AI emerged out of a consulting engagement John had with a large insurance company. With a background in IT, he is a highly experienced technology executive and entrepreneur who has started a number of successful companies. He says he loves the energy and adrenalin associated with start-ups. He pioneered the use of digital signatures in South Africa, founded mobile payments company PAYM8, and converged voice and data provider ECN, which he sold to Reunert for R172 million in 2011. The experience acquired over this time meant he was ready to take on a massive challenge.
“When a policyholder submits an insurance claim, that action should trigger an instant decision, with the outcome immediately communicated back to the policyholder,” John says.
“Customers want swift claims handling, communication, and compensation. They want the same instant gratification that they get from online banking. So that’s what we set out do — to revolutionise the entire claims process. We have made traditional claims processing a thing of the past by pioneering a cognitive solution that is making the claims process faster, smarter and more efficient.”
2. Automating judgment tasks once reserved for humans
Tautona’s claims automation solution uses artificial intelligence to instantly approve or refer claims for further investigation. By using machine learning algorithms to identify patterns in the data, Tautona’s solution identifies fraudulent claims, enabling insurers to halve fraudulent claim losses.
Tautona also uses Robotic Process Automation to integrate to legacy systems, removing the need for traditional programming techniques. This means that Tautona’s claims automation solution can be implemented with minimal disruption to a business. By automating decision-making, communication, and compensation, Tautona enables insurance companies to take a major step towards becoming true digital insurers.
3. Ditch the legacy systems, start from scratch
Disruptive innovators invest in digital strategies so that they can find new ways of responding to their customers’ evolving needs. The founders of Tautona AI agree on several principles, but one that stands out specifically because it goes entirely against traditional thinking, is the importance of starting from scratch.
“You cannot take a non-digital business model and expect it to work online,” says John. “Instead of using old methods, you need to start from the beginning. Ditch the legacy systems, take a leader mentality and imagine the art of the possible.”
This iterative, modular approach typically begins with defining the strategy and programme plan upfront, delivering a core capability fast so it can provide benefits immediately, and then continuously improving with regular, incremental capability improvements to achieve the objectives of the strategy. It’s an approach that fosters closer collaboration between stakeholders, improved transparency, earlier delivery, greater allowance for change and more focus on the business outcomes.
4. Shaking up an industry
How do you launch new solutions and educate customers who are used to doing things the way they have always been done? John says resistance to change is inevitable. That’s why you need more than good technology.
“When you introduce something ground-breaking to the market, you encounter many different types of personalities asking diverse questions. That demands an approach that is client-centric and entirely customer focused. It also means you have to spend time developing a sound business case to present to decision makers.”
A solid business case documents the justification for the undertaking of a project. It’s the way you prove to your client and other stakeholders that the product you’re pitching is a sound investment. You need to justify the project expenditure by identifying the business benefits the innovation will deliver and that your stakeholders will be most interested in reaping from the technology.
“Essentially, it’s about proving you can deliver,” says John. “When you have an entirely new proposition, the only way you can hope to get your foot in the door is with a value proposition so profound that clients are forced to take a look at it.”
Tautona has convinced a number of South Africa’s top insurers to implement their AI-powered claims automation solution. The results to date have been ground-breaking, with insurers dramatically reducing turnaround times and processing fees. As a result, Tautona’s sales pipeline is full to the end of the first quarter of 2019.
“But there’s no rest for disruptors. Nokia and BlackBerry crumbled because they were slow to react to market changes, and they underestimated the challenge from Apple and Samsung. The only way to retain leadership is with relentless innovation, that is, a constant flow of new versions and features. That applies in any industry today.”
Tim Hogins Started Out As A Security Guard, Today His Has A Turnover Of R150 Million And Has Self-Funded Three Huge Lifestyle Parks
As a poor township kid, Tim Hogins watched kids pile into buses heading to Sun City every weekend, knowing he couldn’t afford to join them. He was a youngster, but he made a promise to himself. One day he would build parks that anyone could visit — especially underprivileged kids like himself.
- Player: Tim Hogins
- Company: GOG, formerly Green Outdoor Gyms
- Est: 2012
- Turnover: R110 million
- Projected Turnover: R150 million (2018)
- Visit: gog.co.za
“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that – I want to employ people, develop them, push boundaries and see where we can take this.”
“Poverty can be a good thing, because growing up poor makes you creative, and that’s an incredible power if you know how to use it.”
Seven years ago, Tim Hogins drove out of an office park and pulled onto the side of the road because he was having a panic attack. His car was closing in on him, he couldn’t see and he couldn’t breathe. After months of hard work, it was all over. His dreams were shattered.
Tim isn’t the first entrepreneur to find himself here, and he won’t be the last. What separates him from countless other aspiring business owners is that despite a massive setback, he didn’t back down. He sat in his car, phoned his wife, and told her what had happened. Instead of telling him it was time to move on and find a job, she asked him how they were going to cobble together the money he needed to start again.
And that was the beginning of Green Outdoor Gyms, a vision Tim had been nurturing for almost two years. A business idea that had led to his retrenchment and was almost ripped away from him by his business partners and investors.
But he didn’t quit. He pushed on. And today his business has a projected turnover of R150 million and has self-funded three huge lifestyle parks that Tim hopes will impact the lives of thousands of underprivileged children while providing jobs for hundreds more.
The in-built art of tenacity
To understand Tim, you need to understand where he came from. As a township kid growing up in Randfontein on the West Rand of Johannesburg, Tim always helped his parents to sell stuff. They were traders. His dad had a small café selling burgers and chips, and his mom baked. While other kids in the area piled into buses for Sun City on the weekends, or visited a local bird park, Tim had to work or the family didn’t eat.
“I matriculated in 1996, and even though I had an exemption, tertiary education wasn’t on the cards for me,” he says. “We just couldn’t afford it.” But Tim had a plan. His cousin told him about a free four-week course to become a security guard, and Tim aced it, securing a position at one of the firm’s top industrial sites.
Here’s the first secret to Tim’s success. Instead of seeing a dead-end job, Tim saw an opportunity. If he did his job well, he would progress to a driver, and then a cash-in-transit guard. From there the plan was management. Becoming a security guard wasn’t his fate because he couldn’t get a degree — it was step one to the rest of his life.
“I was raised to be the best version of myself. Everything is what you make of it. In primary school I was head boy, and in high school the head of the SRC. There’s always a way to grow and improve yourself.”
Two years into his career as a security guard, Tim heard about another opportunity — a free programming course teaching COBOL, a back-end system used by the financial services industry.
“I grew up 500 metres from Stafford Masie, who would go on to become the first head of Google South Africa and is one of our country’s greatest tech entrepreneurs,” says Tim. “I had zero programming experience — I’d never touched a computer — but I knew how valuable these skills were, and here was an opportunity being handed to me.”
It wasn’t quite as easy as Tim imagined. He failed the aptitude test and had to take it again. Once he was on the course, he failed that too — it was a programming course after all, and Tim needed a far more basic introduction to IT. He didn’t give up though. He’d quit his job and needed to make this work while he was still living with his father and didn’t have financial responsibilities, so he begged the course administrator to let him retake the programme. This time he passed, and found a job at a small IT firm.
Once there, Tim built up his IT acumen. Over the course of his IT career Tim worked for Dimension Data, EOH and SITA. In his final three years he applied for an account management position and moved into sales. His goal was to become a business owner, and so he diversified and learnt what he could about business.
He also paid attention to the world around him, looking for a business opportunity or problem he could solve. He dabbled with some ideas, but the one he kept coming back to was outdoor gyms.
“I saw kids in parks doing sit-ups, push-ups, pull-ups on trees, and kept thinking there must be a better way than this for them. I knew that a proper solution would be good for the whole community — giving kids and parents a safe and free environment to play in and focus on their health. I focused on poorer communities, where gym fees weren’t an option, and kids needed safe places to play and keep out of trouble.”
The more Tim unpacked the idea, the more he began to believe in it. And then his employers found out, and made it clear that they did not like Tim’s attention divided between his job and his business idea. Despite this, Tim continued to focus on his entrepreneurial play, and within a few months he’d been retrenched, ostensibly due to a restructuring of the business, yet Tim was the only person let go.
It was October 2010 and Tim had no job, two-months’ salary and he was about to get married. But it was the best thing that could have happened to him. “That retrenchment catapulted me into business. From then on, my full focus became outdoor gyms.”
Winning and losing
Tim had approached Joburg City Parks who where interested in the idea. He had also met with an engineer and they had begun to design the equipment. There was just one small problem: Money.
“I knocked on doors, approaching anyone who would listen. One investor laughed at me. He said I’d gone from IT to playing with steel — what was wrong with me? A contact at SITA said flat out that she wouldn’t help me. Looking for funding can be incredibly demoralising. I had an idea and a letter of intent from Joburg City Parks, and it still wasn’t enough.”
And then Tim was introduced to a group of investors who wanted to instal kids play areas in municipal parks. Tim had the City Parks connection; they had the funding. They entered into a business partnership and built a prototype together. This was when Tim’s wheels fell off.
“I was invited to a meeting by my three business partners, and when I arrived there were five people in the room — my partners and their two lawyers. We’d entered into the agreement as 50/50 partners, and they wanted us to all be 25% shareholders. I couldn’t agree to that. This was my idea, my connection, my baby.”
By the time Tim left the meeting, he had no funding, no partners and no prototype and he knew City Parks was getting impatient. All he’d done was create competitors — and they had a demo model.
Tim had spent most of 2011 looking for funding and then building the prototype once he found his partners. He wasn’t just back to square one, he was behind where he’d started months ago. Hence the panic attack.
It was a pivotal moment. Give up or push on? Tim chose to push on. That night, Tim and his wife, Rona Hogins, sat down and came up with a plan. They would sell one car and Rona would apply for a bank loan. Together, they managed to come up with R200 000. Tim approached a friend who was interested in a side business and they launched LXI, an importer of screens for media companies. LXI brought in enough to pay the bills while Tim concentrated on getting Green Outdoor Gyms off the ground.
Then luck stepped in. “I drove past a warehouse and saw some play equipment. Instead of driving on, I pulled in and pitched my business idea to the owner.” The owner, Neta Indig, agreed to build Tim’s prototype at cost, in exchange for a long-term partnership. Tim agreed. His R200 000 would be enough to get the business back off the ground. Green Outdoor Gyms was officially launched in February 2012.
Here’s the thing about luck though. Unless you’re open to opportunities, paying attention and willing to step out of your comfort zone, luck alone will get you nowhere. By the time Tim drove into Neta’s parking lot, he’d spoken to countless investors, had doors shut in his face, lost a partnership and his prototype, and was still willing to look for any opportunity that might present itself. Through sheer will and tenacity, he found it.
After the first outdoor gym was installed, two things happened. The competition Tim had feared from his old partners didn’t materialise. It was Tim’s first real lesson in the power of passion. He’d doggedly pursued his idea for over two years. His partners, who didn’t share that passion, did nothing with the prototype they’d acquired. Tim was still — at that stage — in blue ocean territory.
The second was how quickly an idea can take off once the foundations are in place. GOG’s turnover was R3 million in its first year, and orders were flooding in from municipalities throughout South Africa.
Tim was invited to present his solution in parliament, and it was included in the National Development Plan. “Everything escalated faster than I could have imagined,” he says.
“The reality is that we’re an obese nation. It’s a real problem. On top of that, 90% of the country can’t afford commercial gym fees. Under the National Development Plan, every community was earmarked for an outdoor gym. Government saw my vision and they bought into it.”
Tim had to tender for each new site, but he had a first-mover advantage. By the time other players entered his space he’d already built up a track record. His team’s turnover times are impressive and the business doesn’t only design and instal the equipment, but can also overhaul a derelict park. The quality of his products ensures that equipment lasts at least eight years with no maintenance, although once an outdoor park is installed, the community takes ownership of it, cleaning it regularly and maintaining the area.
In six short years, GOG has installed over 1 000 outdoor gyms for local municipalities around the country, and there’s still room for growth. There are currently between 5 000 and 10 000 sites available, and while Tim doesn’t believe they will get all of them, the business will continue to expand. “I believe we still have a ten-year run with government-funded outdoor gyms, but this is no longer our core business.”
In fact, GOG has grown and changed considerably since that first outdoor gym was installed in February 2012.
“I’m an opportunist. I pay attention to developments around me and am always on the lookout for where we can add value,” says Tim. As a result, GOG is now developing its own sites and supplying equipment to the industry — across private and public sectors.
“You need to know that competitors are coming,” says Tim. “When we started out we had a niche with outdoor gyms and government, but someone will always want to eat your lunch. If you know that someone’s paying attention to what you’re doing and that everyone needs to diversify, you can stay ahead of your competitors.
“Our business is centred around health, fitness and family, and this understanding has allowed us to grow into lifestyle spaces that support our core focus.”
As a result, GOG has expanded to the installation of play areas and outdoor gyms for hotels, private and public schools, beach parks and lifestyle estates, including Steyn City.
“We also have a registered landscape company,” says Tim. “We can take vacant land and transform it into a park with grass, trees, water and pathways. We have a Geotech division that does soil testing and environmental studies.”
None of this happened overnight. It takes time to build a reputation, but if you’re focused on four key things, you can build a sustainable business. “You need to diversify your product range, diversify your customer base, nurture relationships and push outbound sales,” says Tim.
Tim has geared the business for scale, which is critical in a production and manufacturing context. “We have always outsourced our manufacturing, first with Neta, and later to a Chinese manufacturer who has become integral to our success.”
Tim’s relationship with Neta was critical in the start-up phase, but after two years the manufacturer decided to focus on his core. “We were too big — it wasn’t a side project anymore, and Neta wanted to remain in construction,” says Tim. “I needed to either find another manufacturing partner, or move into that space myself.”
Tim visited manufacturing facilities in China and sourced samples until he found a plant that could handle GOG’s volumes and quality. “Chinese manufacturers value loyalty and they’ll do whatever you want at the price point you ask. If you want a cheap product, you’ll get it — and the quality to match. Good quality costs more. I have an excellent relationship with our supplier — so good that he flew out to South Africa to see our operations, because he was impressed with the volumes he produces for us.”
It’s this relationship and the capacity available to Tim that has allowed him to take the next step towards his ultimate vision for GOG: Lifestyle parks.
Living the dream
GOG’s first lifestyle park stemmed from Tim’s need for a showroom and his life-long dream to give underprivileged children access to entertainment parks that he couldn’t afford when he was a child.
“We were manufacturing outdoor parks and I started thinking about other ideas in this space that aligned with our vision and niche. I needed a showroom that could showcase everything we can do, from ziplines to climbing walls, swimming pools to spray pools and outdoor gyms. A lifestyle park was the natural answer to everything I wanted to achieve.”
GOG Lifestyle was opened in November 2016 and is situated off the N14 near Lanseria Airport. It’s close to a number of townships, including Diepsloot and Cosmo City. “The revenue model is corporate team building events, family days and launches, which allows us to run specials for kids, the elderly, and CSI projects for schools and churches.”
The next lifestyle park, GOG Gardens, was opened in Soweto in December 2017. Bigger than the first lifestyle park, GOG Gardens caters for picnics, outdoor events and concerts. It’s a multi-purpose venue with seven venues in one, and also focuses on corporates, the general public and events, with CSI projects that support children.
“We have launched some smaller projects, such as GOG Kids at Chameleon Village in Hartbeespoort and a play area in Vilakazi Street, but our next big project is Happy Island, a 36 hectare water park off Beyers Naude Drive in Muldersdrift.”
Happy Island is GOG’s first joint venture with an investment partner, Tim’s Chinese supplier. Unlike the other lifestyle parks, which GOG self-funded from cash reserves, Happy Island is a multi-hundred million rand project with large capex needs. “The idea came to life when the chairman of our manufacturing supplier visited our operations in South Africa. There are no water parks in South Africa similar to those I visited in China. We are doing something completely new and exciting, and we broke ground in April 2017.”
All of GOG’s lifestyle parks have required high capex investments and have not yet reached break-even, unlike the smaller projects that will reach break-even within a few months. “Our projection for the lifestyle parks is three years, and five years for Happy Island,” says Tim.
“My long-term goal is to have ten lifestyle parks across South Africa, one in each region, and that’s what I’m investing in. We want to make a difference, give kids access to these parks and employ people.
“I’m here today because of my childhood experiences, but before I could invest in this dream, I needed to start small and build up my reputation and cash reserves. To achieve my ultimate dream will take a lot of investment, so that’s the focus.
“I’m a visionary, and I’m not scared to invest in my vision. I’ve lost millions, but I’ve made more because of that. Business is about making money, but I’ve grown beyond that — I want to employ people, develop them, push boundaries and see where we can take this. When someone says something is impossible, I want to know why, and then try anyway. That’s how you achieve great things. That’s how you realise your dreams.”
In 2016, GOG launched its first lifestyle park, GOG Lifestyle. Since then, two more lifestyle parks have been added, GOG Gardens in Soweto, and GOG Kids in Chameleon Village in Hartbeespoort. The company’s biggest venture, Happy Island will soon be open to the public as well.
GOG’s genesis was outdoor gyms, and the company continues to grow from these original roots: Catering to a growing focus on healthier lifestyles, from public parks to beaches, corporates and residential estates.
How Fever-Tree Is Burning Up The Mixer Market With Their Unique Selling Point
When it comes to targeting the mixer market, Charles Rolls and Tim Warrillow of Fever-Tree, have hit the nail on the metaphorical head. Their unique selling point, drive for quality and passion for innovation has put the business into a prime position to grow their business – with a little help from well-sourced ingredients.
- Company: Fever-Tree
- Launched: 2005
- Founders: Charles Rolls and Tim Warrillow
- Visit: fever-tree.com
What is Fever-Tree’s Unique Selling Point (USP)?
For us, it’s always been about putting the quality back into the mixer category, from the packaging, imagery, even style of serve but nowhere more so than the ingredients themselves. When creating Fever-Tree, the mixer category was dominated by a couple of multinational conglomerates that had become driven by manufacturing efficiency, rather than quality or flavour.
Our meticulous focus on quality resulted in a very different approach to product development – we delved into the history books to find the most authentic and highest quality ingredients we could, then we went out into the field to track them down, spending time with specialist producers and experts to create our products.
There’s no other company going to the lengths we do to source these fantastic ingredients.
Watch the video below on how it all began …
Since it’s listing on the London Stock Exchange, Fever-Tree has seen an impressive 20x increase in the share price. Can you expand on the some of the challenges that were faced, as well as how you overcame them, when listing Fever-Tree?
The listing was a great opportunity to attract long term investors in the business as well as enabling the Company to reach a wider consumer audience as we discovered lots of our shareholders are also advocates of our products!
What do you wish you had known before starting the business 13 years ago, or what advice can you give to entrepreneurs?
My advice to any entrepreneur is to do your research, but also listen to your instinct. There were definitely some nay-sayers for us in the early days, and it’s fortunate we did our best not to listen to them.
When it comes to ingredient sourcing and packaging – where do you begin?
Within a couple of months of meeting my co-founder, Charles Rolls, we set off on a pursuit to find the very best ingredients, literally travelling to the ends of the earth.
Our initial research took us to the British library, where we learned that quinine, the core ingredient in tonic water, comes from the bark of the cinchona tree – colloquially referred to as the ‘fever’ tree. In search of the best quinine in the world, I discovered the last remaining plantation in the Eastern Democratic Republic of Congo, one of the most dangerous parts of Africa. So I travelled there to meet with the growers and to this day, this is where our quinine is sourced.
The journey continues to this day, whether it’s our fresh green ginger from Ivory Coast, Cochin ginger from India or closer to home, our lemon from Provenance or hand-picked elderflowers from Gloucestershire.
Similarly for packaging, from the very beginning we would not compromise on quality, using single serve glass packaging to premiumise the mixer category in every way we could.
We see you’ve launched a new ‘Aromatic Tonic Water’ – what is your key to innovating and creating a product?
With any product innovation, it is key to listen to your consumers, look at the trends, find out what people are talking about, what they are buying, what they want more of. This is how it all began when creating Fever-Tree. Charles and I had noted, from different ends of the sector, that premium spirits were driving the growth in spirits category. Consumers were increasingly seeking out craft ingredients and flavours in place of commoditised, mass produced products, but this movement towards premiumisation had passed the mixer category by. There was a clear opportunity to put quality, choice and excitement back into a long-forgotten, stagnant category.
The whole company is built on innovation and we are constantly developing new mixers, new flavours, new ideas and in doing so, creating an array of flavours to pair with the myriad of premium spirits out there.
Our unique Aromatic Tonic Water is a great example of this – it is perfect to mix with gin to create the ultimate pink G&T, a hugely popular drink amongst consumers. This tonic water is made using angostura bark from South America and pimento berries from Jamaica to create a sweet, spicy flavour with a wonderful pink hue.
Where do you see Fever-Tree in 5 years?
What’s so exciting, is that we’ve only scratched the surface! Whilst G&T consumption is still in strong long-term global growth, the spirits category is not just about gin; and the mixer category is not just about tonic. The trends that we identified at the outset are only accelerating. We’ve seen that quality has broad appeal – people are wanting to drink better quality spirits in greater numbers.
Here in South Africa, the same trends that drove the G&T revolution in the United Kingdom are beginning to emerge. There’s a real ‘gin explosion’ in South Africa, with the emergence of an abundance of craft and local gin brands, as well as more established premium brands becoming ever more present. We’re already seeing some great opportunities for co-promotional activity both in retail but also across hotel, bars and restaurants and we believe there is a significant opportunity to increase our footprint and visibility across South Africa, capitalising on this revival of simple, long mixed drinks such as the gin & tonic.
But Gin only accounts for 6% of global premium spirits, presenting a significant opportunity for us with other spirit categories. Dark spirits, for example, accounts for 10 times as much as gin, and we are the first company to develop a full range of mixers specifically designed to address this very notable opportunity.
What is Fever-Tree’s mantra?
Charles and I created Fever-Tree with one simple premise, which still holds true to this day, that if ¾ of your drink is the mixer, use the best.
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