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Lessons Learnt

10 Lessons From Andrew Brand On Shaping Organisational Success

Ten lessons in growth to implement in your business today.

Nadine Todd

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Andrew Brand

For Andrew Brand, founder of 99c, going for their first big client took guts and determination. After landing Checkers’ entire retail advertising portfolio, he had ten weeks to hire 30 people, find premises and start working. It’s an incredible start-up story.

But building a business with almost 300 employees and a turnover of R175 million has taken strategic focus and a winning employee culture.

Here are the ten lessons that Andrew and his team have learnt about shaping organisational success.

1Client relationships are everything

One of the key reasons 99c won Checkers’ retail marketing business was Andrew’s personal relationship with his client’s marketing team. When he left his previous agency, not only did Checkers have no other point of contact, but they trusted Andrew.

They had faith in him, his understanding of their business, and the fact that he would put their needs first.

“I built that relationship on open and honest communication, and by always delivering what we promised. I put the client first. When I left, it was a valuable lesson for me going forward as well — business is all about relationships, but that relationship should be with the organisation, and not an individual. We’ve structured 99c based on this understanding. No client has only one single point of contact with us. They work with a team that always delivers on its promises.”

2Don’t be afraid to debate everything and anything with your client

“Successful relationships are built on transparency and respect. We play a key strategic role in the Shoprite/Checkers marketing strategy, for example, and we take this role seriously. We’re involved in our client’s business and take their success personally, which means we also can’t be scared to speak up when we believe a campaign or specific advertising strategy will miss the mark.

“Retail advertising is immediate — you can see the results of your campaign within a day — but the next set of specials comes out a week later, and so you can tweak, adjust and review within days as well. There are so many matrixes to measure and map out, but everyone has to be able to share their views.”

Related: Advertising Legend, Ivan Moroke on the 5 Questions Your Marketing Strategy Absolutely Has to Answer

3Fair remuneration and a great culture foster loyalty

“When the agency I previously worked for merged, it became clear that even though retail sometimes bills more than traditional above-the-line advertising, it’s not glamorous and it doesn’t win awards, so even though the retail creatives and client service team worked longer hours than everyone else, they were often paid far less.

“This never sat well with me. We’ve created a different remuneration structure that rewards hard work, loyalty and efficiency, no matter the client, product or campaign you’re working on. When we do lose people, it’s often because they’ve grown to a point where they need to find their next big challenge, and we support that.

“There’s nothing like watching an individual grow, even if that means they need to eventually leave your nest to spread their wings.”

4Stay on your toes

“Retail is fast-paced. You need to be plugged in to market sentiment and able to respond to it. More than that, you need fast turnover times with no errors. This takes focus and discipline, but it’s also testament to what can be achieved when you put your mind to it.

“If you have the right systems and processes in place, and employees who follow them, you can achieve almost anything.” In other words, don’t rest on your laurels, think you know what you’re doing, or that you’ve found the best solution. There’s a real danger in thinking that way. There is always a competitor looking for a way to out-innovate and outperform you.

5Be pragmatic and realistic

This may be one of the hardest business lessons to put into practice, because it requires business owners to put emotion aside to practically evaluate clients, products, services and the organisation as a whole. “I’ve never been the greatest creative, but I am pragmatic and practical. I’m a realist.

“This has allowed me to approach every problem from a solutions-oriented mindset, instead of letting fears and emotions hold me back. If I thought too long about what would happen if we landed the Checkers account, we never would have done it. Instead, we focused on the solution, and made it happen.”

Related: Why You Should Scrap Writing That Business Plan And Become a Lean Start-Up

6Run a lean organisation

One of the biggest factors separating corporates from small entrepreneurial businesses is cash flow. However, while corporates tend to have healthy cash flows, the ability of a start-up to run lean is invaluable as the business grows, because its built into the company’s DNA to be careful with expenditure.

“We needed to hire a team, purchase equipment and find premises. We also couldn’t afford to run with fewer people than we needed, and so our first round of hiring was over 30 people. We haven’t stopped growing since, and I believe in investing in people. That said, there are so many ways you can run a lean organisation without skimping where it matters. Don’t be a bloated, top-heavy organisation.

“Rather invest in the core of your business. What will enable you to offer your clients the best service possible? That’s where you should be investing. We were incredibly lucky in that Checkers gave us a really big platform to start from. We launched as a medium-sized agency, with an infrastructure that was working and paying its way from the word go. We used that to grow, but not to add frills and luxuries that the business didn’t need.”

7Don’t sprint until you can walk

Andrew and his team could have scaled earlier than they did. They had the infrastructure and the experience. But Checkers had taken a big chance on them, and they not only honoured this trust, but chose to use the time to build strong foundations instead of chasing quick growth.

“We had a mutual agreement with Shoprite/Checkers that we wouldn’t go out looking for other business for one year. We ended up extending this to even longer. We were completely focused on Checkers, and on our internal processes and systems. It was the best decision we could have made. It really gave us the right focus — we could dive deep without distractions.”

After 99c’s first operational year, they were named Shoprite/Checkers’ national supplier of the year. “This wasn’t a design award, but a customer award. It was a glowing commendation. It gave us confidence that we were doing something right, and more than that, it was shared by the entire company.

“It wasn’t recognition of one person’s creativity. It was acknowledgment that the entire organisation — our ethos, how we do business, how we deliver — is exceptional.”

8Be loyal to your clients, and they’ll be loyal to you

In 2014, when Shoprite’s agency closed overnight, Andrew received a call from his first and biggest client: They needed 99c to take on all of Shoprite’s campaigns — over the course of a weekend. “We immediately jumped into action.

“By that Monday we had inherited it all. We had interviewed 80 people from the old agency and hired 55 of them, and put out the first ad campaign. Everyone, from IT to HR to the design teams activated so quickly. Shoprite was putting all of their eggs into one basket — our basket — with the move, but they knew there would be an enormous dent to their revenue if they didn’t get that week’s ads out, and so they came to us for help. It’s incredible what you can achieve when you put your mind to it.”

9Never stop learning

“Lewin and Rob are our ‘greybeards’. Technically they’re non-executive partners, but Rob’s in the office every day. We have an open forum, and they offer me advice, affirmations and points to consider. They also gave our business gravitas when we launched and I was still in my mid-30s and an art director at heart. No one knows everything, not even Stephen Hawking.

“Media moves so fast, and our industry is full of constant flux and changes. You can’t know it all, which is why you need to keep learning, and looking for insights and advice. I screw up every day. I make assumptions, some good, some bad. Gut feel can only give you so much.

“I’ve found that I need honest advice and feedback. They might not have all the answers, but the action of asking often makes you think deeper about the problem and solution at hand. I have mentors and I’ve had coaches as well. If you want to increase your chances of success, surround yourself with incredible people.”

10Understand the role of a leader

“My key role is to identify business partners to run the business with me, to give people the space to grow and deliver, and to foster a passion to service clients. This isn’t my business, it’s our business. Operations is a team effort. Our creative director and deputy MD came on board at an executive level to ensure we make things happen. All of the operations partners have shares in the business, because I believe that this is how you find — and keep — the right people.

“Ultimately, success breeds success. Organic growth with a client is a fantastic endorsement of our team. If you price fairly and deliver what you promise, that’s the recipe for growth, and you can’t do it without the right team in place.

“Along this journey I’ve learnt that leadership is not what we often think it is. It’s not top down. You need to serve the people under you. As a leader you need to be able to roll up your sleeves, help, and get on with it. Our number one priority isn’t our clients, but our staff. You can’t look after clients if you aren’t looking after your staff. They need to be passionate, engaged, growing and given opportunities. If they’re happy, your clients are happy. At the end of the day it’s a pretty simple equation.”

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

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Lessons Learnt

Entrepreneur Erik Kruger On The Importance Of Clarity And Embracing Failure

Erik Kruger has walked his own personal development journey, and now he’s helping other entrepreneurs find their ‘best’.

Nadine Todd

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erik-kruger

Vital Stats

How does a physiotherapist who dreamed of touring the world with sports teams become a mental performance coach for high-impact entrepreneurs? Ask Erik Kruger and the term he’ll use is ‘accretion’, the process of growing and adding layers through experiences.

The point is key: No journey is ever a straight line from point A to point B. Most of us spend years figuring out what we want to do through a process of elimination. It’s by doing that we figure out what we like and don’t like; what ignites passion in us, and what we’re good at.

Erik’s journey began in physiotherapy. He graduated in 2007 and started his own private practice with a friend in 2009. He was quickly realising that his dream wasn’t aligning with reality though. “My goal was to be the physio who toured with the springboks. Instead, I was locuming at hospitals and travelling two hours a day to reach my private practice offices,” says Erik. “I couldn’t see my future in it.”

It’s an interesting lesson: Until you do something, you won’t always know if it aligns with your expectations and goals. But no experience is ever a waste. “Physiotherapy ended up allowing me to have a side hustle. I could pay the bills while I figured out my entrepreneurial journey, because I had no idea what I wanted to do when I started. I registered 45 domain names before I settled on Better Man, and Better Man led me to the Mental Performance Lab and my coaching business.”

Launches and lessons

While he was still in private practice, Erik met fellow entrepreneur and Shark Tank investor, Marnus Broodryk. “Marnus was still in his own start-up phase. We were at FTV and he was handing out business cards for his accounting business, The Beancounter, to everyone he met. I took one, but only ended up contacting him months later because I needed to set up a website, and I thought he’d be able to give me some guidance.”

The website was for the practice, and Marnus helped Erik via skype to set up his first WordPress site. In Erik’s own words, it was a terrible website, but the bug bit. From that moment onwards, Erik’s newfound love affair with the digital space began.

“I liked the idea that you could just create something and people would come,” he says. “I found out very quickly that’s not how it works at all, but by then I was playing around with as many website ideas as I could think of.”

Related: Erik Kruger Explains How You Can Become A BetterMan And What That Means For Your Business

Marnus and Erik played around with some ideas, and settled on directory sites. “The idea was that people would pay a monthly retainer to be on the website and that’s all you’d need to create annuity income. You also wouldn’t need advertising revenue, which requires ongoing sales.”

Because of his own area of expertise, Erik thought a directory for physiotherapists would work well — one of the regulating bodies disagreed. They viewed the monthly retainer as a kickback, which is illegal in the medical profession.

So, Erik moved on to his next idea. “I was doing everything over eLance and Odesk, from web development to graphic design. I started thinking that we needed a local freelance community that entrepreneurs could tap into. My brother agreed to invest in the idea and we hired developers from India to build the site. I directed them to a few sites I liked and briefed them on what we wanted.”

Six months and R70 000 later, Erik received a cease and desist call from one of the big players in the freelance space. “He was furious. It turned out that the developers we had hired had copied his website, section for section, header for header. I had been focused on client acquisition, not the development of the site — I hadn’t even checked what they were doing. I’d only focused on the feedback from beta testing. Faced with being sued for infringement, we took the site down immediately. I was trying different things and failing miserably, but I was also okay with that.”

Finding a niche

erik-kruger

Erik didn’t let his failures deter him. “I was trying to figure out how to make money from digital assets. I registered 45 domain names, and for every one of them I built a WordPress site and developed a marketing strategy. I’d go to work, get home and just do digital for the rest of the day.”

To upskill himself, Erik also took courses on digital marketing, Facebook, Google marketing, WordPress and DNS set-ups. “I created a fitness website for brides-to-be, a mentor site for models and websites for girlfriends to help them run their businesses. Each website would be up and running for a few weeks, and then I’d lose interest, close it and move on.”

And this is where the foundation of Erik’s journey really begins. The fact that he hadn’t yet found what he was looking for was a lesson in itself. “Clarity is a process; I can see it with my clients all the time,” he says. “I didn’t know it then, but I can see it now. Clarity only really comes from wanting to find clarity, trying to find clarity. We often talk about evolution in entrepreneurial circles, but the reality is that evolution can only happen when something already exists, which means you have to be out there trying new things to find your purpose, or big idea.

“When I started coaching, what I was doing with my clients back then versus now is vastly different. No matter how much I read about coaching, thought about what coaching should be like, or listened to different coaches and how they do it, I would never have reached the point I’m at now, if I hadn’t been doing it myself. That’s how we learn and evolve.”

For Erik, the 45 websites he created led him to Better Man, and that’s where his journey started to pivot. “Better Man was the idea I stuck with. Up until that point, I’d been looking for things to do and ways to monetise them, but they were all external and not what really came naturally to me. There’s no such thing as a lightning bolt idea that hits you and that’s it. Amazing, masterful ideas are the result of trial and error.

“People think clarity is a switch, illuminating everything. But it’s actually like striking a match, and that match keeps burning, and you strike another and another and another, and slowly the room fills with light. Even then, you have clarity for a moment, and then the matches burn out, and you have to start again.”

In the case of Better Man, Erik was tired of trying to find something that would work, and instead decided to create something for himself. “I’ve always been into self-development and the idea evolved from there. I decided to create a website based on interviews I’d do with successful South Africans — I’d learn from them, and share the interviews online.”

Erik’s first interview was with Maps Maponyane, followed by Tim Noakes. The site wasn’t getting a lot of traction, but Erik was having fun. “It was the first thing I’d done where I didn’t have any real plans to monetise the site. I was just doing something I enjoyed and figuring it out.”

Erik did want to grow a community though, and so he concentrated on Facebook and email marketing to build up a Better Man database.

“I wanted to experiment with different mediums of communication,” he explains. “The two things that really moved the needle were the group, which was 18 000-strong, and the daily emails I started, which quickly reached 16 500 people.”

Through the community he had built up, Erik then found a way to monetise the business through events. “I was sharing content and ideas that struck a chord with me, which meant they were valuable to other people. That’s how I built up a community, and from there I could offer access to that community to brands.”

For 18 months, there were regular Better Man events, all sponsored by top lifestyle brands. The business was doing well, but through the platform and the community, Erik discovered a new direction: Coaching.

“Once I’d built up the community, I played around with a few different ideas, looking for ways to monetise the platform over and above events. We launched a fitness eBook, an apparel line and partnered with brands for events, but the one thing the community kept asking for was coaching. The events worked as marketing platforms — the next morning I’d sign up clients — and even though I hadn’t known that this was where Better Man would lead, I discovered it was a direction I wanted to explore.”

Related: Fear As Foe And Friend: How To Master This Important Relationship

Focused direction

Up until that point, Erik had been trying a lot of different avenues to see what stuck. He also admits he had shiny object syndrome — even with Better Man. “I was too responsive to every question and query. You can’t just jump around and hope you’ll find success; you need focus and direction.”

Interestingly, even coaching didn’t offer that at first. Erik tried group coaching and Mastermind groups before realising he needed to really focus. It meant stopping the events and even pulling back from the community he’d built, although his daily emails continue, and all group members are the first to hear about workshops and seminars.

“Finding my path required me to sit down and take a long look at what was — and wasn’t — working for me personally. You can try and figure out what people want, and that’s important, but you also need to understand your personal drivers, or you’ll never stick with something long enough to make it a success.

“I was trying out mentor calls through the Better Man community, and I realised that they weren’t working for me. They felt superficial; like I wasn’t driving results. When I spoke to someone, I’d get off the call and I wouldn’t feel good. I’d feel like I’d just spent time telling someone what to do, but where were the results?”

Once Erik made the decision to be a coach though, his focus shifted to being the best coach in South Africa. It was that decision and direction that made all the difference. “I went out and bought every book I could find on coaching. Then I wrote all the models that spoke to me up on white boards and started creating my own coaching framework.”

From there, Erik, signed up for his Master’s Degree in Management, with a focus on business and executive coaching. By 2017 he was coaching full time.

“I had to build up my confidence, which is evident in my early pricing models, but my masters has been the biggest game-changer for me. It shifted a few fundamental things for me, from my coaching approach to developing better listening skills. Ultimately though, internal drive is the biggest differentiator. I want to be the best coach I can be, and that’s making all the difference.”

Because of that drive, Erik has also found his niche. “I want to have a big impact on the world, which means I need to help people who in turn impact the lives of others. CEOs and entrepreneurs are my focus area. My influence and impact are amplified when I’m coaching a CEO of 500 people.”

Since finding his niche, Erik has worked with a number of high-calibre clients, including some of South Africa’s top executives and entrepreneurs.

Action, not words

Better Man gave Erik the platform he needed to launch his coaching business. Although the journey has been organic, once he made the decision about what he wanted to focus on, each step forward has been far more intentional. “I believe in visualisation and intention. Intention is determining where you want to go and then breaking that down into goals. My intention is to become the most sought-after speaker and coach in South Africa. Everything I do works towards that goal.”

In line with this goal are Erik’s own experiences. “Everything we do and think is the culmination of our experiences. In my case, it’s personal experiences as well as what I learn from my clients. Coaching is a gift for me. I can spend time with the CEO of a multi-national and come up with solutions and insights that I can then share with the owner of a 30-man business. With an outsider’s perspective you can start seeing patterns. Coaching is practical, and it draws on the human experience, even in a business context.

“It’s easy to believe that you’re too busy for a morning routine for example. When I see someone who does have the time and still isn’t following a routine, I ask why. What is the deeper value or belief that they aren’t tapping into or living? What experiences of highly busy people who still find the time can I draw from and share? Every experience that is shared broadens our collective exposure.”

Personally, Erik follows many of these practices himself. “I learn about them and implement them. It makes me a better coach. We’re all human, but at the top of the business ladder, we need to perform optimally. There’s a metrics side to business, and a human side, and you can’t ignore either.

“Founding the Mental Performance Lab has been about developing a high-performance state of mind. It’s not just about smashing metrics, but functioning at an optimal level. You need to do the right thing at the right time, and to achieve that, mindfulness is key. You can function flat out, always racing ahead, stressed and busy, or you can function optimally. That’s my focus.” EM


acta-non-verba-book

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Acta Non Verba: The Playbook For Creating, Achieving And Performing At Your Highest Level

Erik Kruger’s first book is a collection of 160 thoughtful reflections on what it takes to live a life of action and not words. Acta Non Verba’s purpose is to get people moving, creating, and generating an unstoppable drive in both their business and personal journeys.

This is not a book to read from cover to cover, in one sitting. Each day there is a new chapter waiting to be read. Put this book on your bedside table, and read a new chapter with your first cup of coffee every morning. Each message is short so you can read it quickly, in the moment, and then reflect and act on it for the entire day. It’s a book that demands action.

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Lessons Learnt

(Slideshow) Top Advice From Local Entrepreneurs That Will Change Your Business In 2019

Here’s my collection of game-changing words of wisdom from top local entrepreneurs.

CEOwise

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If I had to summarise my own learnings since starting CEOwise, it would be these ten points:

  1. I need to know the critical numbers in my business.
  2. The magic number is two co-founders. Teams build entities, individuals might start them, but teams build them.
  3. Don’t be scared of failure, that’s how we learn.
  4. It’s better to earn 10% of a bigger pie than 100% of a smaller one.
  5. Businesses in the service industry should create products out of their services, or sell value and not hours.
  6. Stick to your core competencies and outsource the rest.
  7. Make small incremental changes everyday.
  8. Your team is your biggest asset.
  9. It’s cheaper to retain clients than attain new ones.
  10. If you’re worrying about paying too much tax, you’re not earning enough.

After each interview, there is generally one main word of advice that sticks in my mind, and which I ponder on for days afterwards. The following advice from local entrepreneurs may stay with you too:

  • Benji Coetzee, Empty Trips
  • Allon Raiz, Raizcorp
  • Joel Stransky, Pivotal Group
  • Gideon Galloway, King Price Insurance
  • Adriaan Rootman, Luxury Time
  • Brian Mills, New Concept Projects
  • Byron Clatterbuck, SEACOM
  • John Sanei, Global speaker and trend specialist
  • Ryan Kahan, CallCabinet
  • Regine Le Roux, Reputation Matters
  • Miles Kubheka, Vuyo’s brand
  • Eben Uys, Mad Giant
  • Mark van Diggelen, GameZBoost
  • Erik Kruger, Mental Performance Lab
  • Musa Kalenga, Public speaker
  • Marnus Broodryk, SME Africa
  • Rich Mulholland, Missing Link
  • Mike Sharman, Retroviral
  • Cairo Howarth, EFC Worldwide
  • Dinesh Patel, OrderIn
  • Andrew McLean, Cycle Lab
  • Albé Geldenhuys, USN
  • Ran Neu-Ner, The Creative Council
  • Nic Haralambous, NicHarry
  • Mark Sham, Suits & Sneakers
  • William Wertheim Aymes, Artemis Brands
  • Matt Brown, Matt Brown Media
  • Pat Pillai, Lifeco Unltd
  • Vuyo Tofile, EntBanc
  • Ian Fuhr, Sorbet
  • Colin Timmis, Xero
  • Felix Martin-Aguilar, ReWare
  • Fritz Pienaar, Advendurance
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Lessons Learnt

How Yoco Successfully Secured Capital And The Importance Of A Pitch

Yoco entered the market in 2015. In 2018, the founders raised R248 million in Series B Funding. Here’s how they’ve built a business that funders will back.

Nadine Todd

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yoco

Vital Stats

  • Players: Bradley Wattrus (chief financial officer), Katlego Maphai (CEO), Carl Wazen (chief business officer) and Lungisa Matshoba (chief technology officer).
  • Company: Yoco
  • What they do: Yoco is an African technology company that builds tools and services to help small businesses get paid, run their businesses better and grow.
  • Visit: www.yoco.com

From scrappy start-up to professional contender

Yoco launched in 2015 as a Silicon Valley-type fintech start-up (above). Today, the brand is an established business that wants to change the way SMEs are supported in the payment, funding and financial management space.

When Yoco went live with its card machines in 2015, it wasn’t just a late entry to market, it was a full nine months behind many other entries. The founders weren’t worried. They had a very specific business model and weren’t going to let a noisy market distract them from their vision.

In fact, instead of rushing, they spent the next year growing the business to 500 happy merchants. They were late to market, but getting the model right was more important than being fast.

Since late 2016, the team has closed Series A and Series B rounds of funding, totalling close to R300 million. Slow and steady has worked. That doesn’t mean raising capital was easy, just ultimately successful. Here’s how Yoco did it.

Starting with Angels

“In a strange way, we were lucky that we didn’t receive venture capital funds early on,” says Katlego Maphai, founder and CEO. “We had a funder pull out at the last minute, which was scary, but also a blessing in disguise. It meant we had only angel investors and family offices invested in the business, which gave us the capacity to think long term and not take shortcuts. We’ve since realised the importance of only taking on VC investment at the last possible moment. It’s imperative to have product/market fit before you chat to VCs, and we only really achieved that at the end of 2016.”

The team learnt this lesson in hindsight though, and like so many start-ups, did approach VCs too early. “We tried to raise VC in early 2015 when we started our beta programme,” recalls Katlego.

“In our minds, we’d been running the company for two years. We thought we had two years’ worth of traction. When we started talking to investors though, the conversations didn’t go as expected. As far as they were concerned, we’d only been operating for two months, and the valuation we were asking for just didn’t make sense.”

Related: Fitbit And Adidas Know Something That Venture Capital Doesn’t

Two years later, Yoco was in a completely different position. “From the beginning, we recognised that although tech is important, our business model would differentiate us. We needed to be fast, cheap, use digital channels to onboard clients and aggregate our merchants so that our banking partner has only one point of contact — us. This was what we were quietly investing into, removing friction for merchants who were onboarding themselves onto our platform.

“This was our big focus — to make the entire process as simple, efficient and low cost as possible. Merchants need to be able to onboard themselves, with no hand-holding. The problem in this market has always been one of distribution. How do you get to market in the cheapest, most efficient way possible, when the traditional people-intensive distribution model doesn’t work because it’s just not economically viable? Once we achieved that, the ability to manage merchants at scale became a reality, and that’s when we were ready for VC funds.”

In reality, Yoco only achieved product market fit and growth at the end of 2016. “By then, we’d grown ten times our size over the space of 12 months to 5 000 merchants, we had traction, incredible unit economics, and we’d built up infrastructure that allowed us to be efficient. We could really concentrate on growth. In particular, we weren’t worried about anything breaking or the system toppling over.”

It’s an important point for any start-up to consider. Often, the unit economics of businesses experiencing growth are out of kilter, as the business’s efficiencies struggle with the increased pressures of growth. By the end of 2016, Yoco was growing while remaining efficient, which was a big advantage when they started approaching investors again.

Teams and ecosystems

In the two years preceding Yoco’s official launch, the founding team, Katlego Maphai, Carl Wazen, Bradley Wattrus and Lungisa Matshoba, didn’t just research the technology to make card payments possible for merchants in the informal, rural and SME sectors, but were working on a business model that could achieve their business vision at scale.

“We were a multi-disciplinary team that had come together wanting to make a real entrepreneurial play,” says Katlego, who brought the team together. Having grown up with Lungisa, Katlego met Carl while working for a telecoms advisory and investment firm in Dubai, and Bradley at an incubator for online businesses in Cape Town that hired ex-management consultants to assist 
start-ups.

By 2012, all four partners were living in Cape Town and had savings they could live off while they planned their entrepreneurial play. “We kept coming back to the payment space. I’d seen Square, a mobile point of sale system, in action in San Francisco in early 2011, and experienced a small restaurant business that would have been cash-based accepting cards. We knew how under-serviced SMEs were in South Africa, and that card payments presented opportunities to support them. We also knew we could build a suite of services to help our micro and SME clients run and grow their businesses once they were on our platform.”

The team didn’t focus on the tech — it existed elsewhere and could be outsourced. Instead, they focused on their business model. “We focused on why banks hadn’t traditionally serviced this sector,” explains Katlego. “Our business model needed to address those challenges and the pain points of our target market, and it needed to do so in a way that allowed the business to scale efficiently and cost-effectively.”

Yoco’s team came from the mobile space. “You walk into a mobile store, fill in forms, have a credit check, get approved, sign the agreement, receive your phone and sim card and walk out the store. You’re now a customer, and hopefully you grow in value and don’t leave the network. That’s what we wanted to do for the card payment space. We wanted to take a process that takes weeks and strip it down to minutes by applying mobile thinking and using ecommerce as 
a channel.”

Until that point, merchants would source card payment tech from providers, but sign the bank’s merchant agreement, and this was where many small and micro merchants struggled to access services: Banks were just not set up to validate small businesses. It wasn’t economically viable, mainly because it tended to be a high-touch process. It was also a lengthy process.

“We knew that for us to reach smaller businesses, we needed to be able to sign up, vet and onboard applicants digitally, limiting people in the process, as this adds time and costs. This was probably our single most important insight. Once we understood this, we knew we needed to aggregate merchants, so that the partner bank we signed with would treat us like a ‘super-merchant’ — they manage the risk with us, vet us, take us through a rigorous process, and then allow us to aggregate sub-merchants under our umbrella.”

There was just one catch — for any of this to work, Yoco needed a partner bank that would agree to them aggregating merchants. “We moved to Joburg, moved back in with our parents and spent a year lobbying our partner bank,” says Katlego.

Consider what that took — ex-management consultants who had been earning impressive salaries had to return to their childhood homes so that they could focus on building their business and securing the trust of a partner bank.

“Our backgrounds had taught us how to gather information, package it and present it in such a way that we could build credibility quickly and effectively,” says Katlego. “We also knew what we didn’t know, which in this case was the payments space.”

To fill that gap, the team built an advisory board and approached the ex-head of Visa Sub-Saharan Africa to join their board for an equity stake in the business. “LinkedIn gives anyone access to the experts in every field, and networking plays a part as well. We were asking the right questions, and ended up with a few introductions to the same person.

“From there, you just need a strong value proposition. This was a vital component for us. Not only did he coach and advise us on the payments space, but he had a strong network, and it helped convince the banks that if we could convince him that we knew what we were talking about, we were worth meeting. The same was true of funders. You need a strong team, and that includes domain expertise, which at the time we didn’t have.”

There was a challenge though: In order for Yoco to secure a licence from a partner bank, they needed to show they were capitalised, but to secure funding, they needed a licence from a partner bank, as this was core to their business model.

“It was a bit of a conundrum,” says Katlego. “We solved it by approaching investors and getting firm commitments based on the licence. With that, we could secure the agreement with our partner bank, which in turn enabled us to trigger the draw-downs with our investors.”

The entire process taught the team how to de-risk the business at every stage of the journey. “We learnt to always think in milestones, and each milestone increases the value of the business. For example, securing the licence was a stage of value. By the end of 2014 we had moved back to Cape Town and were certified by Visa and Mastercard. We launched our first early beta with 20 merchants. The next milestone was our first transaction.

Related: Is Venture Capital Right For You?

Securing funding

yoco-funding

The fact that Yoco’s founding team had four members with varied and successful backgrounds dramatically increased the business’s chances of securing funding, but they still needed to learn some lessons.

“In mid-2016 we went on our Series A road show, and it was a choppy start. First, we realised that we were thinking globally, and those were the conversations we were having, which didn’t match up with the conversations local VCs were having with us. You need to all be on the same page, and 
we weren’t.”

Once the team realised this key point, they started looking at international investors, but things still weren’t going smoothly.

“We started recognising that part of the problem was the way we were approaching the whole funding process,” says Katlego. “We’d just had an investor meeting that didn’t go well, and we weren’t feeling good. We knew we needed funding — our runway was almost out and our current funding model wasn’t sustainable.

“Instead of focusing on investors, we looked at ourselves. What were our objectives? What were we looking for? We ended up with six key objectives.”

These were:

  1. Completing an investment round that gives us at least 12 to 18 months runway
  2. Working with an investment partner who has experience growing a fintech business
  3. Working with an investment partner that backs the team, and understands that one of our core strengths is our ability to operate autonomously
  4. Taking on investors who have respect for our existing stakeholders, who had walked a long path with us when very few believed in what we were doing
  5. Arriving at a fair deal, with terms negotiated in the right spirit
  6. Having the Yoco founder group, organisation, and stakeholders coming out feeling energised and ready for the next phase after the round. The wrong terms and conditions can have the opposite effect, crippling our sense of self-belief and achievements to date. Something not to be trivialised for an organisation that is looking to win.

It was a powerful exercise. From that moment onwards, the team walked into meetings knowing what they wanted, which in many ways levelled the playing field. “We had more confidence and we asked more questions, which lead to richer discussions with potential investors. We could also walk away if we saw a key objective wouldn’t be met, which saved everyone time.”

Through this process, Yoco secured Series A funding from Velocity Capital in the Netherlands and US-based Quona Capital 
for $3 million in new capital and a further $1 million in secondary buyouts, allowing some early angel investors to exit.

Since launch, Yoco was run based on formal governance and structures, which also played a big role in securing investment. “When a business is run pristinely and the due diligence is based on well-organised numbers and data, investors have comfort that their money will be managed properly. Our advice is to run your business clean from day zero. Keep good books and don’t put any other expenses through the business. We learnt this lesson from a real estate developer who told us to always be ready for the exit. She didn’t mean selling the business, but rather that if someone took a look, within moments you could produce whatever they want to see. I can’t stress enough how this has helped us.”

Related: Venture Capital 101: The Ultimate Guide To The Term Sheet

Understanding your pitch

Yoco raised $16 million in its Series B fund, which closed in 2018, and although it was the same process, the focus of the pitch was very different. “Series A is often about survival. Series B is about how big this thing can become.

“During our Series A roadshow, a big part of our pitch was proving that there’s a market for people who want to accept cards, and that there was a new way to reach this market that is not people intensive.

“In the Series B round, we could show that we’d been able to grow our base to three times its size with continued good economics and a healthy, good payback. We also showed that the market is ready to be taken with the right type of capital.

“The message was simple: We’ve figured it out and we think we can win with additional capital. There’s a huge opportunity to build an entire SME operating system, bringing payments, software and capital into one home that can essentially look after a small business and build an ecosystem around them. This in turn allows third parties access to our distribution network.

“There’s an overarching need that we’re plugging into. SMEs lack access to tools, capital and payment acceptance. It’s a big gap that we want to solve, and we’re open to partnering with anyone who wants to help solve it. It’s an open commerce ecosystem.

“Our next step of growth was to democratise access to software, because software is where the magic happens. Our app allows small businesses to manage their business finances through what is essentially a mini ERP for micro enterprises and SMEs. We are making a deep investment into building this out, because we believe it’s where the stickiness and value of our product lies.

“Customers came to us for a card reader, but they’ll stay for a much wider service offering, including access to capital and a platform that they can run their businesses from. Up until this point Yoco has signed up innovators and early adopters. Now we’re taking the brand to the mass market.”

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