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How Khudusela Pitje Built GX Capital Into A R1.6 Billion Turnover Company

South Africa’s future is in the hands of entrepreneurs and industrialists. Khudusela Pitje is embracing his role in the economy and his part in positively impacting communities. From his first pay cheque of R1 250 per month at Lindsay Saker Rosebank to spearheading a R1,6 billion turnover business that in many ways is still just getting started, here’s how he’s laying the foundations of exponential growth.

Nadine Todd

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Vital Stats

  • Name: Khudusela Pitje
  • Company: New GX Capital
  • Est: 2005
  • Turnover: R1,6 billion
  • Visit: newgx.co.za 

Khudusela Pitje spearheads New GX Capital, a R1,6 billion turnover company that he still calls a family business. Having built a diversified utilities infrastructure-focused investment holding company structure, his ten year goal is to reach a market cap of R10 billion. He’s focusing on utilities infrastructure projects and companies because of their social and economic impact across the African continent. His strategy delivers on a clear market need as well as meaningful community upliftment. Infrastructure development boosts economic growth and in the process creates much needed jobs in South Africa and across the continent.

But that’s all external success. What Khudu is achieving is much more personal. When his father passed away in 1997, he kept the newspaper article announcing the death of the former Mayor of Mamelodi and wrote five words across it: I will make you proud.

HM Pitje isn’t here to see what his son has achieved, but that isn’t stopping Khudu. He has a vision that is vast and long-term in what he sets out to achieve. There are no shortcuts to greatness. Just focus and dedication to the end goal.

Khudu has a life and business philosophy that he follows unwaveringly: Be a good person and the rest will take care of itself. He doesn’t mean be a perfect person — no one is perfect — just be good. Have good intentions and be aligned with the universe. Don’t take shortcuts. Have a long-term view. And if you feel yourself drifting into areas that make you uncomfortable, pull yourself back before they start to become comfortable. Draw a line in the sand and stick to it.

Hand-in-hand with this is transparency, clear communication, and having a bigger vision and mission that leaves a lasting legacy. Some of these practices have been ingrained in Khudu his whole life. Others he learnt the hard way.

“Business takes its toll on family. You put everything into it, particularly in the early years. There’s no off switch. This entrepreneurial journey has partly cost me one marriage and I’m determined it won’t cost me two. I also always tell my team that mine will be the only divorce in this company. There is nothing more important than family. We need to remember why we’re doing this in the first place.”

After his divorce, Khudu spent over a hundred hours in personal development workshops that focused on wellbeing, brought him clarity on the Foundation he had launched and helped him to stop his endless procrastination in implementing township school programmes. He discovered what he stood for and what his inner core was telling him. “I’ve become very honest and direct in the way that I deliver a message. I’ve been told I’m often too direct, but it’s a lesson I learnt from my divorce process. You need to be tactful, but also direct.

“It’s too easy to not communicate; to get drawn into daily ‘busyness’ and not touch base. I approach my marriage today with absolute honesty and directness, but it’s a critical element in my business as well. If there are no grey areas and everyone knows where they stand, then we can all move forward on a basis of trust.

Related: Watch List: 50 Top SA Black Entrepreneurs To Watch

“If one of my shareholders hears I’m having a meeting with a competitor for example, they know I’m not doing something behind their back, but something that’s in the best interests of our business together. If I’m unhappy about anything, they’re the first to know. My team all know exactly what’s expected of them.

“I’ve done more deals post my self-understanding and it’s because I’m more at peace with myself and clear in my direction, mission and vision.”

This clarity has helped Khudu build up New GX, but it’s also given him the mental and physical room to focus on the HM Pitje Foundation, which he founded in 2009 in memory of his late father. The Foundation is managed by his wife, Kgomotso Moloantoa, who grew up five houses from Khudu’s home in Soshanguve and is as passionate about the same community.

“New GX is essential to the Foundation because you need a strong sponsor to make a difference, but I realised that I also hadn’t fully understood that I was the custodian of my father’s legacy. I needed to find something that would give me direction — I knew I wanted to give back to the communities from our upbringing and that I wanted to do it in the name of my father, but I was always too busy. Now I understand that you will always make time for something that’s truly important.

“Khudu in Sepedi is a turtle. What I discovered during my personal development workshops was that I needed to articulate the vision. Turtles outlive humans. They have a shell that’s hard and that you can’t pierce. The turtle as a legacy-builder and protector of the HM Pitje vision is something we captured in the emblem of the Foundation. We all need a vision that we can articulate. We need something to believe in. Once I could visualise what I was doing, I had a better direction that I could follow through with.” Within six years, Khudu plans to spend 40% of his time on the Foundation. His focus is becoming clearer and clearer.

“You also need clarity to be able to share it. The first person to benefit from my first dividend was my mom — I bought her a house and a car. You need to start at home. But from there, it’s become an ethos not just of the Foundation, but also New GX. The Foundation is part and parcel of the family business and my staff know it. A Foundation function is a company function.”

For Khudu, life goals and business goals are interwoven — they each feed the other. And nothing has happened by accident. There is a degree of luck — right place at the right time deals — but on the whole it’s been a carefully planned and constructed journey, always focused on the long term.

Laying the right foundations

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In 2006, Khudusela Pitje was one of the shareholders of Community Investment Ventures Holdings (CIVH) listening to a pitch: A friend of one of the shareholders had seen a truck in France that could cut slits along the side of suburban roads for fibre lines. His pitch included the truck and the rehabilitation of roads after fibre was installed. All he needed was R7 million.

This was the launch of Dark Fibre Africa (DFA), an open-access fibre company that has invested in over 10 000 km of fibre infrastructure in South Africa, and has positively transformed the local telecommunications sector.

New GX has a direct and indirect stake of 35,3% in CIVH, DFA’s holding company. It’s not his only impact on this sector. At age 35, Khudu was part of the team that connected the first privately-owned undersea cable, SEACOM to mainland South Africa in Mntunzini, unlocking potential for research institutions in South Africa.

In addition to DFA, three operating companies of New GX’s businesses didn’t exist pre-2007.

So, where did New GX begin? In 2004, Khudu and a friend invested in their first business, Shangoni Management Services, a South African-based environmental risk management business whose largest
contract was in the Nigerian delta region.

The business’s annual turnover was R5 million and the founders wanted to strengthen their base in South Africa. The problem was that for them to secure additional mining clients in South Africa, they needed a BEE partner. Khudu needed a business that he could invest in, and he needed something relatively small that he could afford. It was a win-win. They bought 51% of Shangoni for R500 000, paid for from the dividends of his shareholding because he didn’t have upfront capital.

It was Khudu’s first deal. The second was AlanDick, a large multinational entering South Africa. By 2005, New GX was a start-up born from Khudu’s vision to launch an operational BEE investment company that could execute larger deals, with the support of Absa Capital private equity.

Khudu is a dealmaker, but from the word go, his goal wasn’t to just be another holding company. He was 30 years old and his aim was to become an African industrialist. Why? Because if experience had taught him anything, it was that in developing countries, governments will always fail in delivering utilities services. New GX’s 2028 goal to reach a market cap of R10 billion is based on a micro-utilities strategy that recognises an opportunity to implement private-public partnerships or outsource the running of utilities, from fibre to waste management, water and energy.

Related: 10 Dynamic Black Entrepreneurs

“The days of large-scale water plants are limited,” says Khudu. “Instead, if someone is building a large commercial park or residential estate, they’re going to look for water and waste solutions that can be funded and run by institutions with capital and skills — and that’s where we come in. Everything we do is tied together by this golden thread.

“South Africa and Sub-Saharan African governments are drowning in debt. Our GDP growth is lagging behind the rest of the world and it’s because there isn’t enough power and infrastructure investment across the continent. You can’t rely solely on parastatals, and so we have a business opportunity as well as an impact investment opportunity to grow economies and communities through access to infrastructure.”

Khudu is currently raising R4,3 billion from local and international investors to build on the foundations he’s already laid over the past 14 years. New GX recently concluded a R1,6 billion capital raising mandate with Nedbank and is working on raising R2,7 billion in infrastructure equity in 2019.

“All relationships are important and you need to treat them as such. Never burn bridges. Don’t step on someone else to get where you’re going. If you’re always focused on the long-term, you won’t take short-cuts that damage relationships.”

Becoming an industrialist

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Khudu didn’t wake up at the age of 29 and decide he was going to become an industrialist. This level of growth and planning doesn’t happen by accident. It takes time, practice, an extraordinary vision — and the right background.

“From an early age, I planned to do something that would take my family out of the circumstances we were in after my father lost everything when politicians in those days destroyed his businesses. I didn’t know exactly what it would be — that would only come later — just that I needed to do something.”

Khudu was a trader’s son. His father, HM Pitje, was a township businessman in the 1970s and 1980s who poured everything he had into the communities of Soshanguve and Mamelodi. “When I was doing my articles, I’d meet colleagues in the profession who’d recognise my name and ask me if I was HM’s son. Some of them were there because he’d helped them pay their fees when they couldn’t afford to do so.”

HM loved his community. Mamelodi Stadium is named after him because, as Mayor of Mamelodi, he built it, raising the funds himself and encouraging soccer teams to play there. He set up the first Post Office and was planning Mamelodi’s first mall.

“His politics didn’t align with the local council. When I was 14, they went after him. They either needed to kill him, or kill his businesses and so that’s what they did — they went after him for R400 000 in rates and taxes. He had a bad lawyer and eventually he was sequestrated.”

A commission of enquiry proved that HM was targeted, but by then it was too late. He had gone from prosperous businessman to bankrupt. “I grew up listening to my dad talk about community upliftment and business around the dinner table. By the time I was in my early teens I could read bookkeeping ledgers. I understood cash flow and trading. I’d watched my dad build everything we had from the ground up.”

At the time, Khudu and his brothers were all in a private school. “My dad was uneducated, but he wanted more for us. He had to pay our school fees in cash when he had the money. He’d arrive at school with envelopes and pay for a few months, until he could get enough cash together again for the next payment.”

It was this determination to make sure his sons got a good education that put Khudu on the path he’s on today. “When everything was taken away from us, my mom got a job at Netcare in Rosebank. She was able to cover our mortgage and keep us alive, but she couldn’t afford our school fees.”

Khudu left St Andrew’s College (SAC), but two months later, SAC contacted him — the headmaster had reached out to Lindsay Saker, who had agreed to pay for Khudu’s all-inclusive bursary. “If I hadn’t already been there, that wouldn’t have happened. My dad laid this foundation for me.”

More than that, his dad’s attitude and perseverance shaped Khudu’s mindset as well. “My dad was 76 when he lost everything, and his response was, ‘I think if I save enough money, I can buy a bakkie and we can sell vegetables.’ That was it. He just picked himself up and carried on. My mom and dad pulled us together and made sure we all believed it would work out.”

As a result, Khudu didn’t resent what had happened to his family. He focused on the future instead — on how he could make a difference.

“I was in Standard 7 (Grade 9) when our family lost everything, and then my dad died seven years later. He had laid such an incredible foundation for me by then.

“What we do at New GX is a culmination of being a trader’s son and the technical expertise that I got from being a chartered accountant and working at JP Morgan in London and South Africa. The trader’s son loves risk. He sees an idea or a person and wants to back it. The technical person asks how they can raise enough money to execute the idea and grow it into a big organisation.

“I studied accounting — that was clearly my strength at school, I was always top of my class in high school — and from there I went into investment banking. Accounting and auditing is the opposite of risk, it’s all about mitigating risks, and I needed that to balance the inherent appetite for risk that I got from my dad. After that, I needed to learn how to structure deals. That was my focus.”

Know yourself and where you’re going

While studying to be a CA, Khudu convinced Lindsay Saker to let him go to follow his dream. “My bursary from Lindsay Saker had continued after matric. I was studying at Wits University and working full time through their traineeship programme, earning R1 250 a month. But I wanted to work in an accounting environment — I knew that was the foundation I needed if I was going to build something incredible.”

Khudu still sees himself as a product of Lindsay Saker’s support and recently organised a meeting with the CEO of Imperial Holdings to discuss what they can do together to help educate disadvantaged kids. “We need to better people’s lives. I’m doing what I do today, through the business and the Foundation, because SAC and Lindsay Saker took a chance on me and supported me. Imagine how many kids are out there with the ability to change the world. They just need support and a solid education.”

Once Khudu was qualified as a CA, he started looking into investment banking. “I very purposefully went out to secure the skills and experience I needed. JP Morgan offered me a position and one of my conditions was that I be deployed to an international office. Nine months later I was on my way to London.”

Khudu had been completely upfront in his interview — he only planned to be an investment banker for five years. After that, he would strike out on his own. It was hard but rewarding work. “We worked 18-hour days. If someone left the office before midnight we’d jokingly refer to it as a half-day.”

By the time Khudu returned to South Africa, he’d saved enough money to support himself for 18 months and he understood the investment banking landscape. He’d also started building a network. He got off the plane, and the next day arrived back in the Joburg office with his letter of resignation.

“I’d always been upfront that I wouldn’t leave JP Morgan for another bank, but that when the time came, I would leave to start my own business. When I resigned, I was clear that the time had come, and I didn’t want to use their money to launch my company because I was still working there, earning a salary, but focused on my side business. I was going to sink or swim on my own.

Related: Watch List: 50 Black African Women Entrepreneurs To Watch

“Every person, every entrepreneur, needs a code that they won’t break. You have to have lines in the sand. The bigger we get, the more important this becomes. I have an understanding with all of our CEOs and MDs: When you think your toe has touched that line, call me. Let’s discuss it. I do the same. I call someone I trust or one of my mentors if anything makes me feel uncomfortable. We can then openly and honestly discuss what we’re comfortable with, whether we should walk away or if there’s a way to restructure things in such a way that the toe is no longer on that line. We’ve walked away from many projects because things have entered grey areas that don’t align with our code.

“Once you start straying over that line, it moves further away, and you don’t stop. Eventually, you lose sight of it entirely. That’s not how I want to operate. We’re thinking long-term, large-scale infrastructure investment projects. Reputation is everything. It takes years to build and yet you can lose it in an instant if you don’t have clear lines that you stick to.”

That’s not to say Khudu and his team haven’t faced serious challenges and litigations. “We discovered that one of our businesses, which held a large contract with Eskom, was being lied to by the management team — a team I knew and trusted. We were missing R60 million and didn’t know where to begin.”

It was devastating for Khudu and his team, not only because of the personal betrayal, but from a business perspective.

“It was value-destroying. This was not why I went into business. I always want to have fun while working hard, but our reputation is everything. We parted ways with the entire management team of this business to send that message home. It has a short-term material cost, making a decision like that, but long-term I believe it’s the only way forward.

“I had to take personal responsibility — I hired and trusted the CEO of the business — and part of that responsibility is acting decisively. All we have is our name and brand.”

This attitude extends to everything New GX is involved in. “Always look at your exposure to any decision or deal holistically,” says Khudu. “We’re currently invested in a project that is facing some challenges as a result of the client not complying with its part of the contract. Our exposure is  R20 million, but I also used my name to convince another partner to invest  R20 million in the deal — which means our exposure is actually R40 million. I need to take responsibility for decisions that were made because my brand and reputation are trusted in the market.”

Building on success

It’s a reputation that has taken over a decade to build, but it’s been done slowly and consciously. It’s the reason Khudu can climb onto a plane to the UK to raise R2,7 billion in funding. “I’m able to explain to the investors I meet who has given me money in the past, what their returns have been, who we’ve supported as an owner-managed business, the returns they’ve received, and what our returns were — and I’m covering 14 years. I’m immediately lowering the risk of any investment we receive.”

The journey started off slowly, but soon gathered momentum, thanks in large part to the networks and industry knowledge Khudu built up before he launched New GX.

Khudu launched his business career with Shangoni, but it was his second investment that put him on the map. “My financial advisor, Michael Strauss, told me that AlanDick wanted to enter the South African market. But they were facing two obstacles. First, they needed a BEE partner. Second, even though AlanDick is a global telecoms company and local telcos like MTN and Vodacom were asking them to enter the market, it would be a small local subsidiary — too small for the big players in this space to take any interest.”

This made it the ideal play for Khudu and his partner. “In corporate finance I’d spent a lot of time structuring telecoms deals. I understood the telco space and it ticked the infrastructure box that interested me. I pitched for it.”

Khudu’s bid secured him a 30% stake in AlanDick’s R2 million South African start-up, with the international holding company retaining a 70% stake. Khudu became the business’s MD and got to work.

“In many ways, AlanDick was a launchpad for us. I started doing deals with Vodacom, MTN and other big local telcos — relationships that have been crucial to my growth. It was also a big factor in Absa’s R97 million private equity investment in one of my later deals through New GX.”

At the time, Absa’s private equity arm was looking for BEE investment vehicles to invest in. “They’d only executed a meaningful  BEE partnership deal with Mvelaphande and were looking for other models to back. I managed to get a meeting with the heads of wealth and private equity and pitched New GX to them. Their key question was what I’d done so far, which at that stage was invest in the environmental risk business and launch AlanDick in South Africa, but what really piqued their interest was my plans for AlanDick — I had a strategy to buy AlanDick Africa operations, a $100 million business, off the back of the R2 million turnover entity I was involved in.

“They liked that idea. A few months later we were on a plane to the UK to pitch the deal to AlanDick’s head office. They turned us down, but the Absa team had seen my potential and wanted to invest in New GX, provided I found a ‘grey-hair’ to support me. At 30 they felt I was too young to be doing this on my own.”

Once he found a ‘grey hair’ partner, Absa pitched its offer: An equity stake in Pretoria-based holding company, CIVH, set up by ex-Dimension Data executives who were investing in other owner-managed businesses.

“It was my first experience in structuring an en commandite partnership, which is often used by private equity investors, and I needed to use some of my personal savings to come up with R100 000 to put some skin in the game. In return, I managed a 37% equity stake in CIVH as a general partner.”

It was CIVH that developed DFA into South Africa’s leading open access fibre network. “New GX Partnership II owns a significant  stake in the asset, but the family, through New GX, has also invested a significant amount into CIVH. The platform is poised for growth and we see enormous potential.”

To date, New GX has invested in multiple businesses across the infrastructure sector. As a business entity, it plays an active role as an advisor to all of the companies it invests in, for the benefit of all investors.

For the most part, New GX has funded its own growth through dividends and by gearing its balance sheet. To take the business to its next level of growth, it is now necessary to raise additional capital.

“Over and above the capital we are raising and the preference share facility we’re secured, we’ve created a Joint Venture with RMB Ventures. The JV gives us R1,2 billion to invest in education, health tech, Fintech and general industries.”

How did Khudu get here? “We promote our track record and our niche sector focus in micro-utilities, which together with proactive portfolio management has delivered superior historical growth. Our future is in infrastructure within the continent and the Middle East. We are a socially conscious impact investor with a strong management team. We focus on both economic and social returns.” It seems to be a magic formula.

Lessons learnt

  • As an entrepreneur, you’re a storyteller. If you can tell it well and accurately and make sure everyone can understand the punchline, you will get buy-in.
  • Understand which risks make sense and which don’t. One of our powers as entrepreneurs is that we love risk — we embrace it. But be careful: Risk that you can control is good. Risk that is outside of your control and that relies too much on the integrity of others is a danger.
  • Ask yourself this question when you make a decision: If I cut this, what drops? What will be affected down the line? There are always consequences to every action. Have you considered them all and mitigated against them?
  • Always know where you came from. I am the product of my parents, St Andrews College, Lindsay Saker… don’t forget who helped you get to where you are today. Give back to the people and organisations who have supported you, and then, when you have the time and finances to do so, give back to the community at large.
  • Cash flow is king. Find an honest, good and dynamic Financial Director. New GX has that in Graham McGregor. Have a budget for everything and stay liquid.

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

Lessons Learnt

Scaleup Learnings From Our Top Clients – What The Most Successful Entrepreneurs Do Right

So, how do our successful clients move through these constraints to scaling up? We see four key drivers of success, and they are: people, strategy, flawless execution and finance.

Louw Barnardt

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You’re out of your start-up boots, staff is increasing, your client base is growing, revenue is up and you’ve proven your case to the market. Now it’s time to scale up. The challenges of this vital growth phase are different and it’s a time that demands different mindsets and different actions. In a world littered with small business failures, it helps to be well-prepared for scaling up using a proven methodology. At Outsourced CFO, we get an inside look at the success factors of our clients who are mastering the transition.

On the one hand, scaling up is a really exciting phase; this is what moves you into real job creation and making an impactful contribution to economic growth. On the other hand, it is really hard to scale up successfully. We see three major constraints that limit companies’ transition from start-up to scale-up:

Leadership

The business has to have the leadership that can take it to the next level. When you start scaling up, especially rapidly, the founders can no longer do everything themselves. The team must grow and include new leadership talent that can take charge and execute so that the founders are working on the business instead of in the business.

Infrastructure

The processes, procedures, networks, systems and workflows of the business all need to be scalable. This is imperative when it comes to your infrastructure for the financial management of your business. You’re only ready for growth when your infrastructure can seamlessly keep pace.

Market access

Scaling up demands more innovative marketing and storytelling so that you can more easily connect and engage with the new employees, clients, network partners, investors and mentors that need to come along with you on your scale-up journey.

Businesses that build a market conversation and a compelling brand narrative during their start-up phase are better positioned to have this kind of market access when they need to scale up.

People

It is critical to have the right people on your team. Our successful entrepreneurs have what it takes to attract, inspire and retain top talent. A strong team of smart, ambitious and purpose-driven people who love the company and want to see it succeed contribute greatly to a world class company culture. They are adept at communicating a compelling vision and establishing core values that people can take on. These entrepreneurs are tuned into the aspirations of their people and focus on developing leaders in their teams who can in turn develop more leaders.

Strategy

It is planning that ensures that the right things are happening at the right times. At successful scale-ups strategies and action plans are devised to ensure that the most important thing always remains the most important thing.

Strategy includes input from all team members and setting of good priorities for the short, medium and long term. Goals are clear and everyone always knows what they are working towards. The needle is continuously moved because 90-day action plans are implemented each quarter to achieve targets and goals that are over and above people doing their daily jobs.

Flawless execution

Top entrepreneurs are not just focused on what operations need to achieve, but how the business operates. They have the right procedures, processes and tools in place so that everyone can deliver along the line on the company’s brand promise. Frequent, quick successive meetings ensure the rapid flow of effective communication. Problems are solved without drama. There is no chaos in the office environment. Everyone is empowered to execute flawlessly to an array of consistently happy clients.

Finance

Everyone knows that growth burns cash. A rapidly scaling business faces the challenge of needing a scalable financial infrastructure to keep the company healthy. Our successful entrepreneurs pay close attention to finance as the heartbeat of the business, ensuring that everything else functions. They look at the tech they are using for financial management and for the ways that their financial systems can be automated so that they can be brought rapidly to scale. The capital to grow is another vital finance issue.

The best way to finance a business is through paying clients on the shortest possible cash flow cycle. However, when you are scaling up and making heavier investments in the resources you need for growth, it is likely that you will need a workable plan for raising capital. Our scale-up clients know the value of accessing innovative financial management that provides high level services to drive their business growth.

Navigating the scale-up journey of a growing private company is one of the hardest but most rewarding of careers to pursue. Having people in your corner who have been through this journey before helps take a lot of pain out of the process. No growth journey looks the same, but there are tried and tested methods that will – if applied diligently – lead to definite success. Happy scaling!

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Lessons Learnt

That Time Jeff Bezos Was The Stupidest Person In The Room

Everyone can benefit from simple advice, no matter who they are.

Gene Marks

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When you think of Jeff Bezos, a lot of things probably come to your mind.

You likely think of Amazon.com, a company he founded more than twenty years ago, that’s completely disrupted retail and online commerce as we know it. You probably also think of his entrepreneurial genius. Or the immense wealth that he’s built for himself and others. You may also think of drones, Alexa and same-day delivery. Bezos is a visionary, an entrepreneur, a cutthroat competitor and a game changer. He’s unquestionably a very, very smart man. But sometimes, he can be…well…stupid, too.

Like that time back in 1995.

That was when Amazon was just a startup operating from a 2,000 square foot basement in Seattle. During that period, Bezos and most of the handful of employees working for him had other day jobs. They gathered in the office after hours to print and pack up the orders that their fast-growing bookselling site was receiving each day from around the world. It was tough, grueling work.

The company at the time, according to a speech Bezos gave, had no real organisation or distribution. Worse yet, the process of filling orders was physically demanding.

“We were packing on our hands and knees on a hard concrete floor,” Bezos recalled. “I said to the person next to me ‘this packing is killing me! My back hurts, it’s killing my knees’ and the person said ‘yeah, I know what you mean.'”

Related: Jeff Bezos: 9 Remarkable Choices That Shaped The Richest Man In The World

Bezos, our hero, the entrepreneurial genius, the CEO of a now 600,000-employee company that’s worth around a trillion dollars and one of the richest men in the world today then came up with what he thought was a brilliant idea. “You know what we need,” he said to the employee as they packed boxes together. “What we need is…kneepads!”

The employee (Nicholas Lovejoy, who worked at Amazon for three years before founding his own philanthropic organisation financed by the millions he made from the company’s stock) looked at Bezos like he was — in Bezos’ words — the “stupidest guy in the room.”

“What we need, Jeff,” Lovejoy said, “are a few packing tables.” Duh.

So the next day Bezos – after acknowledging Lovejoy’s brilliance – bought a few inexpensive packing tables. The result? An almost immediate doubling in productivity. In his speech, Bezos said that the story is just one of many examples how Amazon built its customer-centered service culture from the company’s very early days. Perhaps that’s true. Then again, it could mean something else.

It could mean that sometimes, just sometimes, those successful, smart, wealthy and powerful people may not be as brilliant as you may think. Nor do they always have the right answers. Sometimes, just sometimes, they may actually be the stupidest guy in the room. So keep that in mind the next time you’re doing business with an intimidating customer, supplier or partner who appears to know it all. You might be the one with the brilliant idea.

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

How Sureswipe Built Its Identity By Building A Strong Company Culture

Culture is unique to a business, it’s the reason why companies win or lose.

Nadine Todd

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A company’s culture is its identity and personality. Since this is closely linked to its brand and how it wants to be viewed by its employees, customers, competitors and the outside world, culture is critical. The challenge is understanding that culture contains unwritten rules and that certain behaviours that align to the culture the company is nurturing should be valued and cherished more than others.

At Sureswipe, the core of our culture is that we value people and what they are capable of. We particularly value people who are engaged, get on with the job, take initiative, are happy to get stuck in beyond their formal job descriptions, and who sometimes have to suck up a bit of pain to get through a challenge.

We include culture in everything we do, so it’s a fundamental element in our recruitment process. In addition to a skills and experience interview, each candidate undergoes a culture fit in the form of a values interview. We look for top performers who echo our core values (collaboration, courage, taking initiative, fairness and personal responsibility) and have real conviction about making a difference in the lives of independent retailers. If we don’t believe a candidate will be a culture fit, we won’t hire them.

If we make a mistake in the recruitment process, we won’t retain culture killers, even if they are top performers. This is such a tough lesson to learn, but it liberates a company and often improves overall company performance.

Culture should be cultivated, constantly communicated and used when making decisions. At Sureswipe, we often talk about what it takes to win and have simplified winning into three key elements: A simple, yet inspirational vision; the right culture; and a clear and focused strategy. The first and third elements can be copied from organisation to organisation. Culture on the other hand is unique to every business and can be a great influencer in its success.

Catch phrases on the wall are not the definition of culture

A strong culture is purposeful and evolving. It’s what makes a company great, but also exposes its weakness. No company is perfect and it’s important to acknowledge the good and the bad. Without it, we cannot ensure that we are protecting and building on the good and reducing or eradicating the bad.

Mistakes happen. That’s okay. But we are very purposeful about how mistakes are handled. Culturally we’re allergic to things being covered up or deflected and have had great learning moments as individuals and as an organisation when bad news travels fast. It’s liberating to ‘tell it like it is’ and almost always, with a few more minds on the problem at hand, things can be rectified with minimal impact.

Related: Starbucks Coffee Is All About Culture… For A Reason

Culture should be built on values that resonate with you and that you want to excel at. In our case, some are lived daily and others are aspirational in that we’re still striving for them. In each case we genuinely believe in them and encourage each other to keep living them. This increases the level of trust within the team, as there is consistency in how people are treated and how we get things done.

We are always inspired when, after sitting in our reception area, nine out of ten visitors will comment on the friendliness of staff. We hear their remarks about how friendly the Sureswipe team is or a potential candidate will talk about the high level of energy and positivity they experience throughout the interview process.

These are indicators that our culture is alive and well. It’s these components of our culture — friendliness, helpfulness and positivity — that cascade into how we do business and how we treat our customers and people in general. Being able to describe your culture and support it with real life examples is a great way to communicate and promote the type of behaviour that is important and recognised within the organisation.

Culture doesn’t just happen

We are fortunate that culture has always been important to us, even if it wasn’t clearly defined in our early days. As we grew it became important to be more purposeful in the evolution of our culture. About four years ago, the senior leadership team and nominated cultural or values icons were mandated to relook all things cultural.

A facilitator said to us, “You really love it when people take the initiative, and get very frustrated when they don’t.” That accurate insight became core to our values. We love to see people proactively solve problems, take responsibility for their own growth, initiate spontaneous events, change their tactics or implement new ideas. It energises us and aligns to the way we do business.

We celebrate growth and love to see our staff getting promoted due to their hard work and perseverance. We recently had one of our earliest technicians get promoted to the Regional Manager of Limpopo. It was one of the best moments of 2018.

Be purposeful with culture, describe it, communicate it and use it in all aspects of business. Culture should change. Don’t allow phrases like ‘this is not how we do things,’ or, ‘the culture here is changing,’ to stifle the growth and development of your culture. When done correctly change is a good thing. Culture is driven from the top but at the end of the day it’s a company-wide initiative. Design it together with team members from different parts of the organisation to get the most from it. And then make sure everyone lives and breathes it.

Cost Cutting

The best ROI is achieved when you stop wasting money.

Peter Drucker once said that businesses have two main functions — marketing and innovation — that produce results. “All the rest are costs.”

If you agree, that means that the average business has a lot of fat to trim. Obviously you can go overboard trying to cut costs too. My philosophy has been to look at some of the general areas where you can add some efficiency but not at the expense of impairing your most valuable resource — your focus.

The following cost-cutting measures will do that. Think of these as adding value to your company, whether it’s time, creativity or a closer connection to your consumers.

Related: Wise Words From wiGroup On Building A “Wow” Company Culture

Uncover inefficiencies in your process

This is where I begin. In fact, it was analysing the inefficiencies of legal communication and knowledge sharing that led me to create Foxwordy, the digital collaboration platform for lawyers. I noticed that attorneys in our clients’ legal departments were drafting new documents from scratch when they could pool their knowledge and save time by using language that a trusted colleague had employed in a similar document. Business is all about process. When you create a new process, or enhance an existing process, you will drive cost efficiency.

Refine your process, then automate

If existing processes are lacking, it is time to create process. If you have processes, but they are not driving efficiency, it’s time to redefine your process. Either way, a key second step is refining processes that are needed in your business. Only then can you go to automation, since automating without a process will result in chaos — and won’t save time or money. Similarly, automating a poor process is not going to give you the cost-saving results you are looking for.

Thanks to the Cloud, there are very accessible means of automating manual processes. For instance, you can automate bookkeeping functions with FreshBooks and use chatbots to interface with clients — for very basic information. If you’re a retailer, a chatbot on your site can explain your return policy or address other frequently asked questions. Automating such processes allows you to spend more time focusing on clients and customers. Technology alone isn’t a panacea for all business functions, but if you find something you’re doing manually that can be automated, take a look and consider how much time and process definition automation would save you.

Rethink your outreach

Marketing and outreach are usually big and important challenges for an organisation. In my experience, there are two main components to successful marketing — knowing your customers and using the most effective media to spread your message. For the first part, I recommend polling. There are various online survey services that offer an instant read on what your customers are thinking. You may think business is humming along, but a survey could reveal that while consumers like your product, a few tweaks would make it even better.

For the second part — marketing messaging — once you have a firm idea of your marketing messaging, Facebook is a great vehicle for outreach. The ability to granularly target customers and create Lookalike audiences (from around 1 000 consumers) can help grow your business.

Related: Take Responsibility For Your Company’s Culture To Boost Productivity

Scrutinise your spend history

There are tools that can help you assess spend history and find cost-cutting opportunities. For example, you might be able to take advantage of rewards or loyalty programmes to reduce common business expenses, like travel, or consolidate vendors for a similar function. If you have a long-standing relationship with a vendor, negotiate better pricing.

The most important elements to keep in mind are resources that make your company special. Your company may be built on one person’s reputation and expertise. Guard against tarnishing that reputation with inappropriate messaging in advertising or social media. If your company’s special sauce is intellectual property, protect that too. But everything else — ranging from physical property to salary and benefits — are costs and should be considered negotiable. — Monica Zent

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