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How PFE International Remains Relevant By Creating Value

No product or service — regardless of how great it may be — will be able to compete effectively for more than a few years. So if you want to grow your business, you need to innovate consistently.

GG van Rooyen




Vital Stats

  • Player: Dr Mehran Zarrebini
  • Position: CEO
  • Company: PFE International Inc.
  • Turnover: R560 million
  • About: PFE International Inc. is a manufacturing-orientated organisation with an emphasis on floor coverings (carpet tiles, broadloom carpet, DIY carpet tiles), polypropylene fibre and yarn, master-batches, recycled rubber flooring, artificial hair and recycled rubber crumb. Companies include Sapy, Easigrass, Van Dyck Carpets, PFE Extrusion and Mathe Group.

PFE International is a vertically-integrated group of companies that include well-known brands such as Easigrass, PFE Extrusions and Van Dyck Carpets. The business focuses on manufacturing, an industry where margins are often tight and competition is fierce and global. Yet, despite this, PFE International has shown impressive growth and currently boasts a turnover of more than R500 million. It also employs more than 500 people in the economically-challenged areas of Hammarsdale and Imlazi.

Entrepreneur spoke to company CEO Mehran Zarrebini (who holds a degree in chemical engineering, a PHD and an MBA) about the approach and mindset needed to compete effectively and grow a business in the modern environment.

Related: How Flick Visual Foundry Found High Rewards By Taking A Narrow View

Every business in its growth journey will hit certain ceilings. Can you think of any, and how you overcame them?

In business, you will always face barriers. For instance, during the life cycle of a product, sales will eventually diminish as competitors release products to market that have similar, or better, characteristics and features than yours. In the manufacturing environment that we operate in, this has the tendency to suppress growth.

Overcoming these types of strategic challenges requires a different kind of thinking. To launch products that are successful, sustainable and can out-compete other incumbents in the industry, one has to do four things.

Firstly, you need to challenge conventional wisdom. Look at alternative industries where complementary products are being utilised, and look at other industries where product innovation plays a pivotal role.

Secondly, research your customers. Understand their pain points and the buyer experience cycle fully. Most companies have an inside-out mentality instead of an outside-in mentality. Customer research is critical in reaffirming that the value drivers in the organisation are actually correct.

Thirdly, when developing a product or service, what are the factors that need to be created and improved, and what are the factors that need to be removed or eliminated. There is no point developing products that do not create value for your clients, or provide them with attributes that they do not need. These just add to cost and creates waste.

Lastly, identify a non-customer opportunity. It is not only existing customers that we must focus on but also non-customers. What can you learn from non-customers about your product? Why aren’t they buying from you? How can you turn them into customers? If you want to grow your business, you can’t just focus on existing customers. The truth is, you can often learn more from the people who aren’t buying from you.

What, do you believe, are some of the biggest barriers to growth that businesses face?


Many of the barriers to growth we often face are internal and not external. As you scale up a business, many businesses are forced to add complexity and bureaucracy. Growth, no doubt, creates complexity, but complexity can easily become something that inhibits companies reaching for or sustaining profitable growth.

It is very difficult to achieve your external goals if your issues internally stifle that growth. You need to take a critical look at the systems and processes of your company. Are they still making sense? They might have made sense at some stage, but are they still helping you to drive growth, or have they become inhibitors? How can you simplify things and make it as easy as possible for everyone to do their jobs?

Insufficient investment in people is another common problem.

It is necessary to continuously invest in human capital. Growth brings new challenges and needs for any business, so ensuring the right human capital is in place is paramount to success.

Organisations also often fail to see the merit of creating partnerships and leveraging from the successes of other organisations. The world is incredibly dynamic and organisations cannot cultivate all they need internally. Companies cannot be innovative and efficient if they do not have alliances and partnerships with other organisations. In other words, you need to deploy knowledge efficiently from one network to another.

Finally, an inability to adapt to changing market conditions is a massive barrier. As companies grow, market dynamics change and organisations are required to adapt their business models accordingly. Many companies fail in this regard as they do not continuously scan the strategic landscape. Failing to adapt and doing things as you’ve always done them is a sure way to fail.

Related: Urban Property Development Brand Blok’s Niche Designs For The Urban Dweller In Mind

What growth advice have you received or used in your own business?

I have received some great feedback in the past. I think the management of family-owned businesses, like mine, has different dynamics to deal with compared to non-family owned businesses.

A piece of advice that will always resonate with me is that it is imperative to focus on building organisations around resilience, and not only performance. Forgo the excess returns during the good times in order to manage the turbulent times.

One may not grow to the extent that a performance-orientated company may grow, but over the long term, I believe that a resilient organisation is far more sustainable. As a family-based organisation, we often invest with a ten-to-twenty year horizon and not necessarily for the short term. Resilience, therefore, becomes incredibly important.

Another great piece of advice that I have received regarding growth is that diversification is often crucial to long-term sustainability.

As the economy becomes more volatile and industries experience more unpredictability, it is important to diversify either organically or through acquisition.

We have to find new ways of protecting our interests so that in the event of one industry suffering a downturn, business in another sector can generate funds that allow us to invest for the future.

How does a business owner embrace a growth mind-set?

easigrass-carpetingI think, in order to achieve a growth mind- set, business owners must believe that their talents can be developed through hard work, good strategies, being humble and by having the ability to listen. While these requirements seem trivial, they are often a challenge for many business leaders. Power and influence will often inhibit a business leader in developing a growth mind-set.

Continuous learning should form part of our daily business lives and we must never operate with the assumption that we are qualified for the job. There is so much to learn from working with others, especially in a diverse environment like South Africa.

If we can create and provide a collaborative and participative approach to business within the organisations that we work in, then our employees feel empowered and committed, which ultimately drives growth.

Related: Business Partners Limited Explain What It Takes To Have The X (Fundable) Factor

How do you stay motivated and focused on growth, even when you’ve been operating for quite a while?

I think it is important for any business to continuously challenge conventional wisdom. Having spent some time at INSEAD at the Blue Ocean Strategy Institute in Fontainebleau, I realised the importance of being able to tap into latent demand and creating organic growth by learning from non-customers.

There is a lot of insight that one can gain from non-customers, especially when trying to understand why they shun a particular product or service. A better solution to an existing problem is simply not good enough and being able to capture new demand requires focus on the demand side (non-customers). What are their key commonalities, and where can we create a leap in value?

How do you stay at the forefront of innovation in an industry where there are constant technological advancements? How do you keep your offering relevant?

Doing this successfully is dependent on the strategic choices one makes. The traditional view of strategy — to stay at the forefront of innovation — requires organisations to focus on differentiation. In a world of increasing competitiveness, with diminishing barriers to entry and increased complexity, this is no longer good enough.

The difficulty in pursuing a differentiation strategy is that over a period of time it can be easily replicated, forcing individuals and organisations to differentiate yet again.

The result is that the value/cost trade-off both move in the same direction.

End-users will only use innovative products that add some perceived value to their lives. Over and above financial benefits to the user, perceived value can be achieved either by user-centred design (where the design qualities of the technology are matched with the needs of the end-user; i.e. perceived usefulness, perceived ease of use, social pressure, etc.) or through persuasive design (where the design qualities of the technology actively encourage adoption). Understanding the market and how human behaviour influences uptake of technologies is critical to success.

Related: From Simple Idea To Sideline Business: How Nkosenhle Hlophe Spotted An Opportunity

Key learnings

  • Challenge conventional wisdom. How can you do things differently?
  • Research customers, competitors and non-customers.
  • Create great partnerships. Don’t try to do everything on your own.
  • Diversification can help you survive tough times.
  • Focus on differentiation.


  • It’s imperative to build organisations around resilience and not only performance.
  • Resilient organisations will not always be the biggest in their industries, but they will be the most sustainable.
  • Diversification is crucial to long-term sustainability. Markets and industries are volatile, so spread your risk.
  • On a leadership level, talents can be developed through hard work, good strategies, having the ability to listen and by staying humble.
  • Collaborative businesses that encourage participation create environments where employees feel empowered and committed. This leads to long-term employee loyalty and growth.

Do This

Pay as much attention to non-customers as customers. Why aren’t they buying from you? How can you turn them into customers?

GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.


Lessons Learnt

How To Build A Billion-Dollar Brand

Being an entrepreneur is one of the most difficult tasks you can take on.

Lewis Howes




Being an entrepreneur is one of the most difficult tasks you can take on. In fact, some people find it soul crushing if not done right. When done properly though, it can be the greatest thing you can do in your life.

Starting as an entrepreneur means knowing what you really want to do, what your passion is and how to deliver that to consumers. It’s not about pushing it on them but listening and seeing how you can serve them.

Most entrepreneurs stop as soon as they hit success and sell off their company, but not all of them. On this episode, we are joined by Michael Mente, who has been a massively successful entrepreneur since 2003 when he helped create the incredibly popular clothing company: Revolve.

Michael Mente dropped out of an entrepreneur program at the University of Southern California to become an entrepreneur by profession. He’s Currently the CEO and co-founder of Revolve and is set to bring in $400 million in sales this year. His company is considered the one-stop shop for clothing items designed by some of the hottest emerging designers.

Over the years, Michael began developing organic relationships with bloggers to represent the brand on a more realistic level. To do so, Revolve regularly holds trips for influencers to gather, relax and recreate the lifestyle of an ideal Revolve customer.

Related: How DJ Dimplez Built His Brand And Business From A Passion

Michael saw a gap between affordable and high end items, which provided grounds for him to create an online shopping experience that falls in the middle. Supporting up-and-coming designers and digital influencers has become the core of Revolve’s growth and they decided to expand their digital offerings by launching a sister company, Forward, in 2008. Since then, Forward has grown to become a fashion powerhouse and go-to place for premier luxury fashion.

I loved Michael’s humble wisdom about what it has taken to create this kind of success in such a competitive industry.

Discover all of that and much more, on Episode 583.

This article was originally posted here on

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Lessons Learnt

What Top Venture Capitalists Are Looking For In Your Start-Up

Keet van Zyl, one of South Africa’s top Venture Capital investors unpacks what he looks for in a start-up, what your pitch deck should include, and the red flags that investors walk away from. Would your start-up make the cut?

Nadine Todd



keet van zyl

Vital Stats

  • Player: Keet van Zyl
  • Company: Knife Capital
  • Claim to fame: Keet is a Venture Catalyst with extensive high-growth investment experience. In 2010 he co-founded growth equity fund manager Knife Capital.
  • What they do: Knife Capital is an independent growth equity investment firm focusing on innovation-driven ventures with proven traction. By leveraging knowledge, networks and funding, Knife Capital aims to accelerate the international expansion of entrepreneurial businesses that achieved a product/market fit in a beachhead market. They have offices in Cape Town and London and invest via a consortium of funding partnerships, including SARS section 12J Venture Capital Company: KNF Ventures and Draper-Gain Investments.
  • Visit:

Why would you choose to back Gazelles over Unicorns, and what does this investment strategy mean for start-ups looking for investment in South Africa?

Unicorns are start-ups (sometimes without an established performance record), valued at $1 billion or more, normally pre-public listing (IPO).

Gazelles are young post-commercialisation phase businesses that are able to scale and maintain a high revenue growth rate off a decent base over a prolonged period. In the US, this is usually well in excess of 20% year-on-year for a period of three to four years or more, starting from a revenue base of at least $1 million. My view is that in South Africa this range should be a sustainable year-on-year growth rate of 30%+ for three years or more off a revenue base of at least R5 million.

Related: Is Venture Capital Right For You?

If I could know for sure that a start-up was going to turn into a Unicorn, I would obviously choose to back it over a Gazelle. But that is just the thing: The risk/return ratio of chasing mythical African Unicorns with a very low probability of actually achieving Unicorn status is not necessarily a viable investment strategy. There are enough entrepreneurs out there who are building sustainable high-growth businesses requiring opportunity funding to accelerate growth through access to knowledge and market access networks.

Many South African start-up investors require businesses to have proven traction to de-risk investments to some extent (and many of those who don’t, do so after gaining a few battle-scars). Start-ups looking for investment should first bootstrap to some extent or get enough funding from the so-called ‘three Fs’ (friends, family and fools) to gain some momentum in one or more key traction verticals before approaching the more formal early-stage investors.

As an investor, do profitable businesses that solve real, meaningful problems attract your interest? Why?

Absolutely — profitable businesses that solve real, meaningful problems attract our interest for investment as long as they are still in their growth phase (as opposed to maturity/ harvesting phase). At the core of any successful start-up lies a good product/service and a large addressable market for that product/service. This enables a start-up to grow or scale and become sustainable. Businesses that solve real, meaningful problems have a better chance of aggressively penetrating their identified target market and profitability is a great traction milestone. Too many start-ups focus on building a solution looking for a problem to solve — instead of the other way around.

What separates a good pitch from a great pitch?

I’ve seen thousands of start-up pitches through the years, and unfortunately most of them miss the mark by a long way. The better ones contain all the key components of a pitch, but the really great ones tell a brief but engaging story that follows a ‘Hearts — Minds — Wallets’ narrative in a true authentic way.

This includes first appealing to the ‘hearts’ of potential investors by taking them through a journey to get them excited about the opportunity. Then the entrepreneur has to augment the story with facts and a solid business case to win their ‘minds’, concluding with a clear ‘ask’ of the funding requirements and how this investment could positively affect their ‘wallets’.

How can an entrepreneur determine whether their business is funding ready or not?

Venture capital should not be the go-to funding choice for everyone starting a business. It is an inspirational metaphor at the bleeding edge of entrepreneurship. There are many other credible funding mechanisms out there across the debt/equity spectrum, and entrepreneurs should assess the criteria based on where they are in their business growth cycle, and then gauge their funding readiness.

A venture backable business has a high growth trajectory of at least 30% to 40% year-on-year for the foreseeable future with a clear exit strategy for investors to realise returns of at least five to ten times the money invested (in South Africa this is most likely a trade sale to a large strategic investor that can scale the product, intellectual property or team by utilising its already established distribution channels).

Entrepreneurs have to ask themselves whether their growth goals can be achieved without venture funding — in which case bootstrapping is the way to go. And lastly whether the current founding team can embrace trading ownership (and thereby some element of control) in the business for a financial partner.

In order to facilitate the funding process, it is advisable for entrepreneurs to always have the following elements at hand: A one-page teaser document containing a summary of the business and funding requirements; and a business pitch deck, with a detailed financial model and a virtual data room containing key business documentation for investor scrutiny. (See table)


Related: The Truth About Venture Capital Funding

What do so many start-ups not understand about funding?

The largest deal origination sources of start-up funding in South Africa come through warm referrals. It is simply not good enough to find the email address of a venture capitalist and send through a cold email expecting a positive outcome. Study the investment mandates of potential funders, build an investor universe of preferred partners and do some homework to figure out a way to get referred.

And then: The 8020 principle is as alive in entrepreneurship today as it was in Pareto’s pea garden. 20% of start-ups have 80% of the disruptive solutions and will receive 80% of the funding. One only has to watch one episode of Idols to realise that many people have an inflated sense of their own abilities. There is a very fine line between a tenacious entrepreneur who does not take no for an answer where success is inevitable despite the setbacks, and a lost cause. Start-up entrepreneurs need to figure out on which end of this spectrum they are.

Lastly: Like it or not, at some level all roads lead to the assumptions behind your financial model. We’ve heard it all from the ever-present ‘these projections are conservative’ to ‘real life won’t mimic excel anyway so what’s the point of building a model?’… Build a model! And make it granular. We know there will be pivots, delays, underestimation of costs, corporates who pay late, and so on. But we need to agree on the basic set of metrics that reflect the commercial DNA of the business at this point in time.

Do you believe most businesses can be bootstrapped?

Yes and no — to some extent and at certain stages of the business. The one thing that start-ups who believe in themselves must jealously guard is the management team’s equity ownership in the business. Risk funding will generally result in the start-up founders having to share this equity with outside parties. The more one can bootstrap while increasing value, the better in the long run for the founders — but not to the detriment of the business.

What is the role of bootstrapping versus funding in a vibrant market?

Bootstrapping is a viable option for most lifestyle businesses where growth is slower, but a start-up is a high growth potential company in search of a repeatable and scalable business model. If the business solves a real, meaningful problem and the business model is scalable, it’s a question of time before competitors establish themselves in the market. This means that the window of opportunity for growth and market penetration is closing, and while bootstrapping could be ideal, by the time the start-up gets to ‘Point B’ — the goalposts may have moved. Funding in a vibrant market can accelerate growth and ensure that windows of opportunity are not missed.

Related: How To Get Venture Capital

What red flags immediately warn you off investment opportunities/start-ups?

My number one red flag is a culture clash. Either between us as investors and the entrepreneurs, or subtle politics within the entrepreneurial team. We’ve learnt the hard way that the one thing that you can’t fix with money is a toxic corporate culture. Most other fundamental business gaps can be closed with enough investment. Knife Capital has an internal [subjective] measure for assessing corporate culture in companies called the ‘Speed of Climbing Stairs Index’. The theory is that there is a direct correlation between staff morale/corporate culture, and the speed at which employees will climb a proverbial staircase at the office. If it’s not fast enough, we will not invest.

Other red flags include questionable ethics, lack of product/market fit, cash flow management issues and entrepreneurs betting on a product as opposed to building a multi-product sustainable business.

What specifically do you look for in your investments?

  • A Solid Investment Case: This comprises a good product/ service with a competitive advantage; a large addressable market for that product, a strong management team, a scalable business model, funding to accelerate growth and an achievable realisation strategy.
  • Awesome People: Start-up investment is a long journey to success and we feel that we may as well embark on that journey with amazing people.
  • Strong Culture: The company culture needs to be solid in order to celebrate the successes as well as survive the setbacks.
  • Execution Capabilities: The value of an idea without execution capabilities is zero. So we look for the ability to execute.
  • Proven Traction: There needs to be some element of momentum that can be demonstrated or quantified.

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Lessons Learnt

How Robert Brown Achieved Next Level Growth And Long-Term Success

It’s not often that an individual manages to bootstrap a business, substantially grow it over two decades, and then successfully negotiate an acquisition by an overseas company. DRS CEO Robert Brown managed exactly this — so successfully, in fact, that he is now also the CEO of Nasdaq-listed company, Cognosec.

Nadine Todd




Vital Stats

  • Player: Robert Brown
  • Position: CEO and founder
  • Company: DRS (Dynamic Recovery Services)
  • Est: 1997
  • About: DRS is an ICT company that specialises in information security, IT risk management and IT governance services and solutions. The company was launched more than two decades ago with just R2 000, but today counts many listed companies amongst its clients. It was acquired a few years ago by Swedish company Cognosec AB. In January 2016, Robert Brown was appointed as CEO of Cognosec.
  • Visit:

When it comes to bootstrapping a business how important is cashflow? What role does it play?

Cashflow is everything. If you want to be successful, you need to know exactly what’s going on in your business’s bank account.

  • How much is coming in?
  • How much is going out?
  • Who owes you money?
  • Who do you owe?
  • When will they pay?
  • When do you need to pay?

These questions are all crucial. Many people see money coming into a bank account and assume that the business is profitable. Of course, this is not the case. Only when more is coming in than is going out is the business actually profitable. Unfortunately, if you want to know what is really going on in your business, you need to pay attention to the paperwork. Many entrepreneurs hate paperwork and are pretty bad at it, but it can’t be ignored.

You have to sweat the details. You can bring on a bookkeeper or accountant, but that doesn’t absolve you from all financial responsibility. As the founder or CEO, you should have detailed knowledge of the company’s financial situation at all times.

Related: 8 Valuable And Inspirational Web Series You Should Check Out

Where does budgeting feature in this?

Budgeting is very important. You need to create a detailed budget. However, the budget is useless if it doesn’t reflect reality. Don’t exaggerate income and minimise expenses. Entrepreneurs are naturally optimistic people, but this is one instance in which a serious dose of reality is very useful. In fact, don’t just be realistic — assume that a disaster will hit. Create a ‘worst case’ scenario.

As the saying goes: Hope for the best, but prepare for the worst.

What would you identify as one of the DRS’ key inflection points?

Probably when the company passed that 50-employee threshold. In my experience, once a business grows beyond 50 people, things change fundamentally. Systems and processes that worked well until then, suddenly start breaking down.

So, once your business reaches that size, I think you need to be willing to reevaluate the basic structure of the organisation. Chances are, some big things will need to change. When the business is growing quickly, it’s easy to blow past this point without giving it much thought, but you’ll end up paying for it down the line. Once again, sweat the details. The earlier you start implementing the necessary systems and processes, the less painful the experience will be.

How did you manage the growth of DRS? How did you know that the time was right to enter that next cycle of growth?

In my opinion, you should find the work, and then find the people needed to do that work. In other words, you don’t want to be over capacity. If you do this, you run the risk of spending more than you’re making. Instead, go out there, find work, and then expand.

Don’t expand and then hope that you’ll be able to find work to keep everyone busy. Also, landing a couple of good long-term contracts can give you the breathing room needed to grow.

If you know that some steady money will be coming in over the next couple of years, you have more freedom to grow.

Related: Which Of These 7 Personality Traits Do You Share With The World’s Richest People?

How do you minimise risk when growing a company? How do you set it up for long-term success?

Never have one product and never have one customer. Too many companies become over reliant on a single product or a single large client. That’s incredibly risky. Instead, you want multiple revenue streams. You want to sell multiple products to lots of clients.

There are plenty of examples in history of companies that built an empire on a single piece of technology, and when that technology became obsolete, these companies disappeared. Similarly, young companies sometimes land a huge contract that becomes the engine for massive growth. When that contract suddenly disappears, the company folds. If you want to create a company that thrives in the long term, don’t put all your eggs in one basket.

DRS became a Cognosec AB subsidiary a few years ago. What made you decide to sell?

If you want your company to grow and prosper beyond you, the founder, you need to be willing to accept change. The last thing you want is to remain central to the success of the company decades after the launch. You need to think about your exit, even if you don’t plan on leaving the company in the near future.

Even if you don’t intend to exit at all, you still don’t want to be responsible for every decision.

That’s not how you create a large and healthy organisation. Start putting the people and structures in place that will allow you to exit as soon as you can. For me, Cognosec AB made a lot of sense. It was a company that I believed would increase the options available to DRS and its people. By joining an international organisation, we really went to the next level.

Related: 15 Great TED Talks For Sparking Creativity (Infographic)

What is the key to long-term success?

It’s the people. A lot of business leaders say this, of course, but that just proves how true it is. Without great people, you cannot build a great business. You might enjoy some short-term success, but the business won’t last for decades. When your business grows, especially if it’s growing quickly, it’s all too easy to hire the wrong people or to lose control of the culture. When you do this, the business suffers.

One of our greatest achievements as a company, and what I believe has been key to our success, has been our ability to help individuals grow and prosper. We have many long-time employees who have worked themselves up from incredibly junior positions into leadership roles. That’s given us a depth of knowledge and a feeling of family that have been instrumental in our success.

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