Today, Demographica’s SA Consumer Initiative (SACI) has a database of 3,5 million users. That’s 3,5 million of the 14 million Internet and mobile phone users in South Africa. It’s an impressive opt-in database, and most definitely worth its weight in gold. After all, what would you pay to be able to target your exact consumer in terms of sex, age,
demographics and income level?
“Direct marketing is the most efficient form of marketing there is, particularly if you are able to target your exact consumer bracket,” says Warren Moss, founder and MD of Demographica. “Our database has huge value, especially because it’s entirely opt-in. Members of the SACI have given us permission to send them direct marketing emails, which our clients can then use to reach their clients.” Demographica’s clients currently include Shoe City, Telesure, Nissan, HP, Look & Listen, Marmite and the AA.
Demographica’s success in this space is nothing short of very impressive, but the business today looks very different from what Moss and his then-partner, Marc Pozniak, set out to do in 2006. Some hard lessons needed to be learnt first, and business plans needed to change
before the SACI came into being.
Taking the plunge
In 2005 Moss was working at Digital Planet, an online retailer. He was given R100 000 and tasked with growing the company’s small database of 80 000 people. To achieve this, they struck on the idea of ‘refer a friend’ viral give-aways. Anyone who joined the database and referred Digital Planet to as many friends as they could was eligible for a prize. Within two weeks they had grown the base from 80 000 to 800 000.
“It got me thinking about what could be achieved with an investment of R1 million,” says Moss. “Information is incredibly valuable in today’s consumer-driven world, and I started wondering what companies would pay for that information. For example, what would one bank pay for all the customer information of another bank? I had discovered how to create permission-based lists, where people opt-in to databases and share their details, and was determined to use that.”
So, in 2006 Moss approached his best friend, Marc Pozniak, and asked him if he was interested in starting a company together. Pozniak agreed and Moss resigned from Digital Planet. They raised R300 000 from friends and family and called the company Global Acquisition, but the partners soon found that R300 000 did not get you very far. “We were running out of cash, so we approached my old bosses at Digital Planet and asked them if they wanted to invest in us. They believed in us and our idea and ended up giving us a facility of R4 million, for which we gave them a 50% equity stake and immediately paid back our first investors.”
With R4 million available to spend, the partners were able to give huge giveaways to generate databases. “Everyone we pitched the idea to loved it. We spent money developing lists, but we made a lot selling them too — and then we discovered our problem. We had no repeat customers. The lists were expensive and when we went back to our clients, we discovered they weren’t using them. By this stage we had spent R1,8 million and our investors were insisting that we not throw good money after bad.”
It was at this point that Moss and Pozniak went back to the drawing board. “We were bringing in around R40 000 a month. Without touching what was left of the original investment, we needed to cut our expenses and re-evaluate our business model.”
Moss and Pozniak gave up their lease, sized down and started working from home and coffee shops. “We had no expenses, and could use the money coming in to grow the business, but grow what?” he says. “All we had were 40 000 email addresses. What could we do with that? And then we realised that what we were good at was growing databases. Instead of selling them, we could grow a database for ourselves.”
The partners used the 40 000 addresses they had to start selling advertising contracts. They would send emails to the people on their bases who suited client requirements and contracts would ensure a steady income. They created the South African Consumer Initiative and their first clients were delighted with the service: they didn’t own the list themselves, but the service was far more affordable and the work was done for them.
By mid-2008 the company was growing again — the database was bigger and there were now four divisions: lead generation (the corporate lists), CRM, social media and email advertising. The partners got new offices and began hiring a team.
But change was soon in the air again. “We were now doing too much, and Marc and I had different visions for what the company should be. We just weren’t clear on what direction we should take,” says Moss.
The solution gradually worked itself out. Two divisions, lead generation and CRM, were closed and the social media contracts were handed over to Cerebra. The company turned its focus completely to database marketing. “It was at this point that Marc and I mediated a buy-out of his shares. We were headed in different directions.”
Now the majority shareholder of the company, Moss changed its name to Demographica and began concentrating on growing the SACI. “Our biggest expansion took place in 2010,” he says. “We grew the database from one million to 3,5 million in under a year.” According to Moss, reaching 2,5 million through promotions was easy — and then they hit a wall. “Again we had to change strategy and start doing joint ventures with other companies with their own databases to grow our own, but the risk paid off.”
Today Demographica’s list includes 25% of all email accounts in South Africa and the company has paid back its financiers. It’s 100% debt free and offers to buy the list are rolling in from big corporates — but as Moss says, he’s not selling.
Taking It To The Malaysian Market – Karl van Zyl Of Antipodean Café
Karl van Zyl approach has always been logical and simplified and he highlights three principles that he believes to be critical in the food and beverage industry.
Karl van Zyl has a 17 year history in the food and beverage industry in South-Africa and now applies his skills and knowledge in the extremely vibrant and competitive Malaysian market. I had a very interesting conversation with him to explore both similarities and differences of both markets and to share his accumulative learning of this industry to those entrepreneurs considering to open a restaurant or café.
He has a history working for the Mikes’ kitchen and Fishmonger groups in South-Africa fulfilling a range of roles from being a General Manager to Operational Manager. Currently he both manages an well-known Café called Antipodean and facilitates the opening of new cafes’ in Klang Valley, Malaysia.
Karl shared that his approach has always been logical and that applying sound basics has always served him well. Would you eat the food served at your restaurant and really enjoy it? Posing questions such as the aforementioned to yourself as a restaurant owner or manager helps you to be aware of the quality of your operation and to always keep the customer in mind when making decisions.
One of the key learnings that he shared was to get a very good and experienced team of waiters together that has previous restaurant or hospitality industry experience. He strongly advises quality over quantity when it comes to waiters and fondly remembers one of the waiters that he managed whom could take orders from a group of twenty people and remember each order from the top of his head.
It is not only about quality of service to the customer but also when there is a small but quality team of waiters operating then their earnings are much higher and they will feel valued and happy as opposed to a large group of waiters competing for relatively small rewards.
Karls’ approach has always been logical and simplified and he highlights three principles that he believes to be critical in the food and beverage industry:
- Quality of food
- Quality of service
He adds that in addition to the above principles your location should of course be in area with very good ‘foot traffic’.
When the entrepreneur venturing into the food and beverage market considers the right suppliers it is a critical factor to go and visit their facilities, thoroughly check their quality and enquire which other quality brands they are supplying in addition to buying at good prices.
In his view comparing the Malaysian food and beverage market to the South African market there are a lot more Malaysians eating at restaurants than in South Africa. One of the reasons for this is that there are a lot of ‘street café/restaurant’ options with quality food at a very low price due to the restaurant not being air-conditioned and making use of for example plastic chairs and tables.
Personally the author has found much more twenty four hour food options and countless varieties of food compared to the South African market. If you are awake and hungry at 3 am in the morning in Kuala Lumpur, no problem! You also will not be limited to only 24 hour fast food options, almost any type of food that you desire will be available that is if you know where to go off-course.
As a matter of interest Karl regards the prices of restaurants in general in Kuala Lumpur to be better than in South Africa and holds the service levels in KL in higher esteem due to it being more ‘personal’ and customer orientated. He believes that South African food matches the quality of Malaysian food but that there is however much more variety of food available in Malaysia.
Karl pointed out that it is possible to have people from all five continents represented in one night at a restaurant as the food culture in Malaysia is very diverse and so is the cultural phenomenon in general in Kuala Lumpur.
What Comfort Zones? Get Comfortable With Being Uncomfortable Says Co-Founder Of Curlec: Zac Liew
Zac Liew was offered to be CEO and Co-founder of Curlec at the age of twenty six and took up the offer knowing that he would be engaged in a steep learning curve. Curlec is a FinTech company that is redefining the customer experience for Direct Debit.
Botanica Deli, Bangsar South, Malaysia a vibrant environment where a number of entrepreneurs and office workers go to meet and have great food and coffee. I walked into the Deli to meet a man that might just possess the ‘entrepreneurial gene’ if indeed that gene exists.
Zac Liew always wanted to venture onto the exciting yet challenging playing field of entrepreneurial ventures having his dad and mother as examples. His father a lawyer, whom ventured into property development and his mother whom started the first chain of liquor stores in Malaysia.
His parents’ ventures interested him from a very young age and helped to ignite the entrepreneurial fire in this very young CEO and co-founder of Curlec. Zac is a qualified lawyer whom also did a stint in the banking industry but at all times he had a burning desire to do something entrepreneurial and always had an interest in tech.
To him tech was always logical and simply made sense within this ever changing business environment within which we as entrepreneurs launch our start-up ventures. He also enjoys the challenging demands that the tech environment places upon his problem solving skills.
The Creation of Curlec
Zac Liew was offered to be CEO and Co-founder of Curlec at the age of twenty six and took up the offer knowing that he would be engaged in a steep learning curve. Curlec is a FinTech company that is redefining the customer experience for Direct Debit. They are the first Malaysian software company to enable online Direct Debit payments in Malaysia. One of the core principles that Curlec was founded upon is to Build great tech that solves a basic need.
Zac together with his co-founders Steve Kucia and Raj Lorenz found a simplified and effective solution to collecting money on a recurring basis. Normally recurring billing and collections is a big issue for SMEs’ and other options were exceptionally costly and timeous.
Zac pointed out that the size of the issue of recurring collections exceeded all expectations and that is one of the reasons that their start-up phase has been successful and gained very good traction in the market.
Curlec has a razor sharp focus on only two products which enables them to focus on giving a great service and customer experience. Curlec cuts through the normal levels of bureaucracy of big companies and has a laser focus on their customers.
How does this apply to start-up entrepreneurs?
Create a product or a system that is simplified, very user friendly, cost and time effective, and more importantly that solves a very challenging issue within the market place that adds great value to customers. Underpin this by being customer centric.
I asked Zac to enlighten me on the key learnings of his journey thus far and also share success principles that has served him well in business and in his life in general. He pointed out that he believes that every entrepreneur should get comfortable with being uncomfortable and venture outside the boundaries of their own comfort zones.
‘Be comfortable with making mistakes’ he says. Get feedback learn from it and integrate the useful feedback in your thinking and in practically applying solutions.’
As business and life has a natural and general ebb and flow to it persistence is a key factor to your success. Accept challenges as they occur and realise that the mind of the entrepreneur should always have a problem solving focus. As a fan of combat sports, Zac shared the following quotes that resonates with him:
“The more you seek the uncomfortable the more you will become comfortable” – Conor McGregor
“I have been training under the dark lights so that I can shine in the bright lights’ – Anthony Joshua
As a writer I have always been fascinated by the wisdom imparted by philosophers and masters of their respective fields. I am even more excited and hopeful for our future when I hear wisdom ‘rolling of the tongue’ of a twenty six year old entrepreneur:
‘Be idealistic in your ideas but be pragmatic in actualising them. If things are not working out do not be stuck in that. Take what you can learn from your experiences and move on.’
Tech has the inherent power to reach the far ends of the world seamlessly and when we have more and more tech entrepreneurs solving big consumer issues and thereby making this world a better place we can be more and more hopeful of a better future.
Don’t Be ‘Outside Standing’ On Your Own Exponential Growth Says Serial Investor, Jimmy Phoon
Serial investor Jimmy Phoon is proud of his and his team at Alps Global holdings in achieving a $300 million valuation.
It was a usually warm and humid afternoon in Malaysia as I walked into the foodbar at Fashion library in Kota Damansara, to meet a man who has a deep understanding of leveraging capital mechanisms in order to achieve exponential business growth.
Serial investor Jimmy Phoon is proud of his and his team at Alps Global holdings in achieving a $300 million valuation. He doesn’t speak to the ‘wrongs and rights’ of investments as he believes there are many ways in approaching an investment opportunity. He does however, firmly believe in the MOC (Miracles of Capital) organisations’ (of which he is a senior alumni member) approach to exponentially grow a company and having a clear exit strategy such as selling at a desired price or publically listing the company.
Jimmy enthusiastically highlighted the difference between them, as he names it a ‘feasible’ and a ‘bankable’ business investment. In offering a simple differentiation between the two terms he explained that ‘feasibility’ simply means that the business is making money, whilst ‘bankable’ means that the business is not only making money but that there is a clear succession plan and exit strategy in place.
As an experienced international entrepreneur and investor he recognises that a vast number of entrepreneurs are very well versed in the market mechanisms of their respective industries yet not equally adept at the capital mechanisms that underpins the exponential growth of companies. He points out that when a company has very good management in place, has a clear and attractive dividend policy to its shareholders, and in addition a well-defined and practical exit strategy it will increase the appetite of investors in general.
He describes the MOC to be an international platform to teach the mechanisms of Capital to entrepreneurs and investors. The MOC is the trifecta of business incubation, acceleration, and investment. One of the core principles of business investment that the MOC teaches and which Jimmy firmly believes in is collaboration between companies and entrepreneurs.
This means the willingness and openness to merge your unique skills as an entrepreneur, the unique offering of your company, profit and loss, with the skills, products and offerings of other companies with the end goal of exponential growth of a newly formed company. This approach can create a big win for all involved.
But what is ‘Outside Standing’?
The aforementioned discussion led to Jimmy sharing one of his favourite sayings:
“Be outstanding or outside standing” – a tongue in the cheek way of saying that by truly understanding and applying both the mechanisms of the market and capital you can experience the exponential growth of your company or alternatively by not fully applying both mechanisms it is then highly likely that you will be a witness from the ‘outside’ to the exponential growth of other companies and unfortunately not your own.
Jimmy’s’ accumulated learnings allows him to assist his team in building an ‘IPO’ compliant company that is formed with a collaborative approach towards a planned and well executed exit. That is part of his mind-set which is to do ‘big things’ and keep a distance from ‘small things’ for as an investor this man is always after exponential growth. He fosters a creation mind-set which is to create a bigger picture through leveraging and combining market and capital mechanisms.
One of the key ‘take always’ for me as an entrepreneur is to be much more open to collaboration in order to add value to others and in turn receive value such as exponential growth. Understanding the market mechanisms within your industry is not enough to multiply business performance, taking a keen interest in the capital mechanisms at play will take major strides towards actualising your bigger picture.
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