- Players: Tom Goldgamer and Danny Aaron
- Company: 3 Way Marketing and Benater Production Group
- What they do: Data, analytics and performance-based marketing
- Est: 2008 and 2012
- Turnover: R200 million+
- Visit: 3waymarketing.co.za
When Danny Aaron and Tom Goldgamer launched their business in 2008 they had no grand strategy, five year plan or a physical product. But they did have an idea, a few business philosophies they planned to develop as they went along, and a willingness to take on a lot of risk as they built their company. They wanted to make it as easy as possible for clients to take a chance on them, and their focus was on big blue-chip companies.
“We operate in an industry that changes frequently, so strategising too far ahead is difficult and often counter-productive,” says Goldgamer. “But we knew we needed strong foundations if we wanted longevity and growth, and so we focused our energy on developing business philosophies that we could implement across our various companies.”
As philosophies go, they’ve worked. Turnover is over R200 million, with staggering year-on-year growth.
1. Leverage a great partnership
Local investor and dragon on SA’s Dragon’s Den, Vusi Thembekwayo, believes that the best businesses are run by partners. ‘Great entrepreneurs often come in pairs,’ he says. Ex-Accenture COO and venture capitalist Clive Butkow agrees. He will rarely — if ever — invest in a business with a sole founding partner. He believes that running a business alone is too hard, as no-one embodies all of the characteristics required to successfully run a high-impact business.
Goldgamer and Aaron are a perfect example of this simple rule in action. With a fluid management philosophy and roles that change with the business needs, Aaron manages the business development and Goldgamer is more focused on operations.
“Because 3 Way Marketing’s clientele leans towards the financial services sector, the business is regulated and must adhere to strict corporate governance guidelines and KPIs,” says Goldgamer.
“This means we need to be incredibly familiar with the regulations that our clients are subject to. It also means that we’re very hands-on with all of our customers, who interact with both of us depending on their needs. No client is either mine or Danny’s. We’re a single unit with almost interchangeable parts.”
It also helps to be good friends. The lines between business and personal aren’t just blurred, they’re non-existent. “We’ve spent hours and hours on the business during non-business hours,” says Aaron.
“This is our passion, and so it can’t be confined to an 8-to-5 day. Thank goodness our wives get along as well as we do. A business partnership requires a huge amount of trust and respect.”
Aaron and Goldgamer lived next door to each other for the first six years of setting up the company, which also helped to ensure that all of their focus and time was invested in the business.
2. Hire people you like
Conventional business practice says hire for skill. Goldgamer and Aaron have done the opposite. Most of their early hires were friends or friends of friends with strong referrals and they only hired people they liked. Today 3 Way Marketing has grown to more than 180 employees, with over 300 people in the Benater group, but they still follow this basic principle.
“We hired people who we thought could help us grow the business, not necessarily because they possessed the right skills — those could be learnt — but because they had the right attitude,” says Aaron.
Today, those early hires are managers, instilling the company’s values in their own teams, hiring based on values and continuously focusing on upskilling.
The partners met at Hollard. Aaron was a data analyst in the marketing, insurance and risk management sectors, and Goldgamer was a GM. “Hollard has an excellent corporate advancement project,” says Goldgamer.
“Every new graduate has a line manager and a senior person overlooking their development, so training and mentorship continues on the job. You don’t need to hire for skill if you’re willing and able to upskill internally.”
Aaron and Goldgamer work in such a niche industry, it’s almost impossible to just hire someone who does what they do. “In our early days our core focus was hiring people who shared our values, were driven and who we knew we could teach our industry to. Above all we knew these people could be trusted. We then did a lot of informal mentoring, both during and after office hours. We had a small team, but everyone was engaged and hungry for success,” says Goldgamer.
“This was how we found great people at the beginning,” adds Aaron. “We’d call guys we knew, who we’d gone to school with or were our mates. Greg Canin, who runs the call centre business, went to school with me. Tom and I wanted a numbers guy, not a traditional call centre guy, and he fitted the profile. We gave him his own budget, bank account and created an environment where he has autonomy. Most importantly, we gave him the trust and space to create something amazing. With zero experience in call centres, he’s almost single-handedly built this into a very successful business.”
Canin is not a unique example to the group of companies. Dov Slowatek, previously a serial entrepreneur with a BSc in mathematics, now runs Benater’s operations environment. Kirill Levchenko started his career working in a call centre, and now heads up the group’s account management team, and Devin Karpes, who joined as 3 Way Marketing’s first designer, now forms part of the group’s exco.
So, how do you make something like this work?
“You need to accept that in a relatively new industry there are going to be a lot of growing pains. It’s important that you and your teams are open and transparent, and you give them a chance to learn from their mistakes. You’ll not only create an environment where everyone wants to try new things and find innovative solutions, they’ll treat your business like their own,” says Goldgamer.
“With friends this can be a bit trickier. It forces you into a more meaningful discussion with give and take, because you want to maintain the relationship. This has always worked for us, and if we’ve parted ways with friends, it’s been on a business level only, and on good terms because we’ve approached the relationship from a place of respect.”
“We learnt this lesson from friends in the private equity space who told us that you never fight over money, especially if it’s in your circle. That’s rule number one,” adds Aaron.
3. Find big clients and build loyalty
Goldgamer and Aaron’s first entrepreneurial venture was called Web Smart, and it focused on SEO for the SME market. “We had a third shareholder who bought us out within 12 months,” says Goldgamer. Although the company was a success, the partners learnt that they would rather focus on fewer clients with mass volumes. In this way, their time, energy, systems and funds would go a lot further, with more focus placed on each client.
“Our idea was to start with our core and then expand into different verticals,” says Aaron. That core was 3 Way Marketing, a data-driven lead generation business.
“Our first client was Hollard,” says Goldgamer. “I’d spent eight years with the organisation and we had a good relationship with them. They were open to our ideas, and had encouraged us to pursue our entrepreneurial dreams with our first business. Now we had a product that they could benefit from. Securing Hollard gave us traction to approach other blue-chips with a track record.”
Since Goldgamer and Aaron were determined to work with a select number of corporate clients and not hundreds of SMEs, they needed a way to get corporates to give them a chance, and they needed it fast.
To achieve this aim, they embarked on a business model and sales pitch where they carried all the risk.
4. Carry the risk to make the sale as easy as possible
“Businesses find it difficult to quantify the value of a lead,” says Goldgamer. “How qualified is the lead? How warm is it? And if no sale results from it, is it worth anything at all? Since our business starts with lead generation, we realised that we needed to put our money where our mouth is.
“Instead of asking, what is a lead worth to you, we now ask potential clients, ‘What is a sale worth to you?’ This is a completely different discussion, because it’s something they can quantify.”
Armed with this insight, Aaron and Goldgamer created a business model that is largely risk-based. “Clients only pay us for a pre-agreed result,” says Aaron. “This makes it much easier to close the sale, but it also means we only make money if we deliver. Until that point we’re actually running at a loss.”
“To make the business model work, we fire ourselves before a client can fire us,” adds Goldgamer. “We evaluate if we can come in with the numbers we need to make a client contract worthwhile. If we can’t, we’re not doing the client or ourselves any favours by continuing with the contract. Occasionally we’ll run at a loss if we can see long-term value, and of course we need to make provisions for poor response cycles and bad data patches, but on the whole it means that we only chase clients and businesses where we are sure we can deliver value and meet our targets.”
“The value to our clients is two-fold,” says Aaron. “First, they only pay us for hot leads and sales. Secondly, irrespective of the result of a campaign, they get brand awareness and exposure, which is a by-product of the lead generation process — and something they aren’t directly paying for. It’s win-win for them and it gets our foot in the door.”
In order to generate leads, 3 Way Marketing uses a wide range of digital channels including email marketing, sms, social media, search engine marketing, affiliate marketing, foot soldiers and content marketing.
“Typically each channel is tested separately and the ones that yield the best results in terms of client sales delivered will be focused on, with the poorer performing channels stripped out,” says Goldgamer.
“This is an important process because we can’t afford to spend time or money on channels that don’t work, so we measure everything. After this filtering process, which typically takes three months, the platform is set for our clients to receive leads from only the top converting channels.”
5. Don’t spend cash on anything until you know it works
Start small, test quick and measure to see if the yield is there. Every new idea, product or service must follow this path. “The upside is that we only invest significant funds on ideas that have already been market tested,” says Goldgamer.
“The downside is that we often have many processes running at the same time. We build something simple to see if it works. We then evaluate if we can make it profitable, or if it adds significant value to something else that we are working on. It’s a piecemeal and patchwork system, but it’s really worked for us.”
This philosophy directly impacts a value that everyone in the organisation embraces, which says that nothing is ever finished, complete or the best it can be. There’s always more: Another solution, a faster way of doing something, a smarter way to reach a better result.
“We’re continuously revising our system,” says Aaron. This means the team needs to really listen to their clients’ needs. “We’re always ready to make tweaks and adjustments. That’s how you keep improving. We know that systems never work like you think they do, or how you plan for them to work. You need client feedback, and then you need to adjust your systems accordingly.
“For example, we originally had one lead channel. We collected leads, sent them to our client. Because we get paid per lead or a sale, and their sales weren’t as high as we’d expected, we were able to determine that they weren’t receiving all the leads we sent. The problem was that we didn’t know why. So we built a component that tracked and pinged each lead.
“It worked incredibly well, except that now the client felt like they were being flooded with leads. They only wanted a set amount of leads per day. No problem, we adjusted the system for that too. The end result is that you’re providing a service or product that meets your business objectives as well as those of your clients, and that leads to longevity. We’ve lost only one client in eight years.”
6. Cross pollinate once you have scale
Today 3 Way Marketing has close to 60 blue- chip clients, so its risk is spread out, but this wasn’t the case in the early days. “Having only a handful of large clients meant that losing one of them would have a significant impact on our sustainability,” says Aaron. This was the driving force behind developing different but related verticals.
“We wanted a business model that spread our risk across multiple clients and verticals.”
It’s a solid growth strategy: Determining what else you can do based on your core product, service or expertise. Goldgamer and Aaron have done this particularly well. “We started as an intermediary matching affiliates with brands,” says Aaron.
“Then we realised we could create our own site and push leads through it. Today, we own thousands of comparison site domains. Our ‘engine’ is constantly profiling and running data analytics, and whether this is for 100 000 people or one million makes no difference to the system.”
“We then started looking at the lifecycle of a lead,” continues Goldgamer. “First, a lead is collected. Next it’s converted. How can we get involved there? We can make them warmer by asking qualifying questions. This led to the development of our call centre.”
“Next we looked at industries that worked in a similar way to the industry we knew from the inside out: the financial services sector,” says Aaron. “The pure risk model works just as well in automotive, travel, accommodation and education. For example, we generate hot leads for vehicle test drives for some of South Africa’s most prominent brands. We take this one step further by actually pre-qualifying every lead in our call centre and booking test drives on the client’s behalf. In this model our clients only pay once a test drive has been booked.”
As the business grew and diversified however, 3 Way Marketing was no longer an appropriate name for all the businesses Aaron and Goldgamer were involved in.
“3 Way is the golden thread that runs through everything we do,” says Aaron. “But it’s now just one business in a group of companies we launched in 2012.”
This has allowed new verticals and divisions to be added without diluting each business unit’s focus, team or skills.
The founders liken the group to a venture capitalist model. “The group and its companies were built from internally generated funds. Each new company begins as a lean start-up within the group. If we don’t have the specialised skills necessary for the business, we’ll find the right partners. We understand the power of dedicated leaders for each company within the group. This gives us the necessary skills and focus in each vertical, but it also frees us up to concentrate on overall group growth and strategies,” says Goldgamer.
7. Invest in people, processes and clients upfront
“From launch we decided to spend money on client campaigns before we made cash. This meant investing in people and processes, and following the risk model philosophy. We did it carefully, testing and measuring everything each step of the way, but it was a philosophy integral to our growth,” says Aaron.
“For example, we place conversion managers on-site at each client’s office. This is an upfront cost for us, and it’s one we shoulder before they’ve paid for a single lead. Our team member assists the manager with analytics, and best practice to ensure all leads are converted into sales.
“We also know that in sales, there are crucial touch points that ensure higher conversions, such as the time it takes to touch a lead, scripting, closing techniques and so on. An on-site resource makes the likelihood of successfully addressing these principles much higher.”
8. Embrace agility and openness
“Our industry is constantly changing,” says Goldgamer. “Technology and channels continuously morph, which means we need strong individuals to grow within our organisation, and they’re hard to find. Once we have them, we need them to stay. We’ve found the best way to keep talent is to align them with the company’s performance. This incentivises them and aligns us all to the company’s goals. Our numbers and performance are transparently reported to our teams, which allows and empowers our employees to treat the business as if it were their own.”
Goldgamer and Aaron are the first to admit that it’s an important part of their business model. “What we do isn’t for everyone. It’s a tough, busy working environment. It’s full of daily lists, requires laser focus and you’re pretty much always on. But the rewards are great, both monetarily and from a growth and autonomy perspective.
“As a start-up we looked for passion and made a lot of promises to attract and keep rising young stars. As we’ve grown we’ve needed to deliver on those promises. Part of this is finding the right people who want to work within an organisation, but are also entrepreneurial enough to want to be exposed to deals, run budgets, and see a direct impact on what they do. Our senior managers have been with us since the beginning. They’ve earned their positions, and they run each business unit as their own. They go out and sign deals. Create a trusting environment where people can grow and feel in control, and they will flourish.”
The Benater Production Group
Since the Benater Production Group was formed in 2012, 3 Way Marketing’s role became the marketing engine for 14 other businesses within the group.
- Phonefinder, South Africa’s first mobile aggregator.
- Fix My Life, an online portal that allows you to virtually connect and transact with service providers for your home. The service includes plumbers, painters, electricians, handyman and builders.
- Hudlr, a data mapping software tool that allows marketers to easily pinpoint and send instant direct messages straight to their target audience.
- BMI, one of South Africa’s largest AVM (automatic voice recording) businesses, backed by a 6-seater call centre that pre-qualifies each lead before it hits a client’s environment.
In Place Recruitment, created to service the recruitment functions of the group as well as other blue-chip companies with a strong emphasis on financial services and digital.
Lessons From The Rich And Famous: Manage Your Money Like Oprah To Avoid Going Into Debt Like Nicholas Cage
Have a plan in place for your money, no matter how much you earn.
Seven-figure pay cheques are enough to buy a lifetime of financial security, right? Well, not exactly. Despite making millions, seemingly wealthy celebrities often have a tough time keeping their heads above the financial waters.
Johnny Depp spending $3 million to fire Hunter S. Thompson’s ashes out of a cannon, or Nicholas Cage shelling out $150,000 for a pet octopus, are both prime examples of how lavish lifestyles can quickly lead to debt. The two A-listers are part of a long list of actors, musicians, athletes, etc. – including Floyd Mayweather, 50 Cent and Curt Schilling – who have all experienced financial troubles.
While there’s nothing wrong with celebrities enjoying their earnings, a little budgeting can go a long way. Just take a look at Tori Spelling. After failing to pay a balance of more than $35,000, the actress was taken to court by American Express. Another example is 80s movie star Corey Haim. He became so desperate for cash after filing for bankruptcy he tried to sell his own tooth on eBay for $150, which didn’t get any buyers.
Avoid falling into any of these situations by keeping a close eye on your spending. Regardless of how much you make, the following few budgeting tips promise to help you practice safe and responsible money management.
Put a plan in place
Nearly everyone lose sleep over their finances. Get a good night’s rest by figuring out where your money should be going long before it’s in your bank account. Spending without a plan, even if it’s only splurging on a one-time event, can have unintended consequences.
One example of this is former NFL star Vince Young – after dropping $300,000 on his own birthday party he was forced to file for Chapter 11 bankruptcy. Another example is Mike Tyson, who went into debt after overspending on Bengal tigers, 110 cars and a $2-million bathtub.
That doesn’t mean you can never treat yourself, but make sure you’re not spending money faster than you can earn it. Set up a series of “fun funds” each month to splurge on nonessentials. Depending on what else you have going on that month, each fund should be adjusted accordingly.
If, for example, you’re heading out to a friend’s wedding, there may be a little less left over for eating out. Stay up to date on your spending by downloading a budgeting app. The easier it is to see where you are for that month, the better chance you have of staying under budget.
Carry around some cash
Credit cards are becoming the most common payment method among consumers. The average American currently carries around three credit cards at any given time. While they may be more convenient, credit cards can easily lure consumers into a false sense of security.
After all, a simple swipe or tap is often all it takes to complete a purchase. However, it’s important to take time to research any costly items thoroughly and ensure you won’t regret them like Nicholas Cage. He learned this lesson the hard way when he blew $276,000 on a dinosaur skull that he was forced to return after it was discovered to be an illegal import.
Curb some of your impulse spending during a night out by bringing enough cash for the occasion. In addition to avoiding spending money you don’t have, you’ll also sidestep costly ATM fees at establishments that only accept cash.
Whether it means stopping by your bank on the first of every month or getting cash back at the grocery store, do whatever it takes to have a little bit of cash on hand. As you cut back on credit card purchases, your chances of falling into debt should begin to dwindle.
Lean on an expert
When it comes to your finances, take a lesson from the likes of Oprah, Tyga and Hugh Jackman, who invest in financial and life coaches. Many celebrities, including Oprah, attribute their success to their coaches helping put them on the right path. Even celebrities are human and can find it difficult to stick to budgeting goals.
Personalised features of a comprehensive coaching programme, such as daily check-in texts and bi-weekly budget reviews, promise to provide you with the encouragement needed to remain accountable even as the going gets tough.
Better yet, a financial coach can take your individual goals into account. Say you decide to start a family or need to make a cross-country move. Instead of wondering what that might mean for your budget, you can work with a financial coach to modify your spending habits and investments long before a change comes to fruition.
Budgeting goes beyond class. No matter how much you make, responsible money management has shown itself to be a necessity. Avoid following in the footsteps of celebrities who face serious financial trouble by keeping a close eye on where your money is going.
As we’ve seen all too often, failing to do so can mean losing millions. Simple steps – including creating a spending plan, occasionally relying on cash and reaching out to an expert – can help you achieve financial security sooner rather than later.
And if you plan carefully enough, you might just end up with the funds you need for that pet octopus.
This article was originally posted here on Entrepreneur.com.
The 5-Hour Rule Used By Bill Gates, Jack Ma And Elon Musk
The most successful people on the planet are also the people likeliest to devote an hour a day to reading and learning.
You just walked in the door from an exhausting day at work. You’re hungry and spent, just wanting to catch your breath for a minute. You grab something to eat and then veg out in front of the TV. Next thing you know, you’ve just binge-watched five episodes of “Jessica Jones.”
While that’s OK occasionally – we all need ways to decompress and shut down – this isn’t a healthy habit. That’s why the most successful people in the world spend their free time learning.
It’s not exactly breaking news. During his five-year study of more than 200 self-made millionaires, Thomas Corley found that they don’t watch TV. Instead, an impressive 86 percent claimed they read – but not just for fun. What’s more, 63 percent indicated they listened to audiobooks during their morning commute.
Productivity expert Choncé Maddox writes, “It’s no secret that successful people read. The average millionaire is said to read two or more books per month.”
As such, she suggests everyone “read blogs, news sites, fiction and non-fiction during downtime so you can soak in more knowledge.” If you’re frequently on the go, listen to audiobooks or podcasts.
Maybe you’re thinking: Who has the time to sit down and actually read? Between work and family, it’s almost impossible to find free time. As an entrepreneur and a father, I can relate – but only to an extent. After all, if Barack Obama could fit in time to read while in the White House, what excuse do you have? He even credits books to surviving his presidency.
President Obama is far from the only leader to credit his success to reading. Bill Gates, Warren Buffett, Oprah Winfrey, Elon Musk, Mark Cuban and Jack Ma are all voracious readers. As Gates told The New York Times, reading “is one of the chief ways that I learn, and has been since I was a kid.”
Breaking down the five-hour rule
The five-hour rule was coined by Michael Simmons, founder of Empact. The concept is wonderfully simple: No matter how busy successful people are, they always “set aside at least an hour a day (or five hours a week) over their entire career for activities that can be classified as deliberate practice or learning.”
Simmons traces this phenomenon back to Ben Franklin. “Throughout Ben Franklin’s adult life, he consistently invested roughly an hour a day in deliberate learning. I call this Franklin’s five-hour rule: One hour a day on every weekday,” Simmons wrote.
For Franklin, his learning time consisted of waking up early to read and write. He established personal goals and tracked his results. In the spirit of today’s book clubs, he created a club for “like-minded aspiring artisans and tradesmen who hoped to improve themselves while they improved their community.” He also experimented with his new information and asked reflective questions every morning and evening.
The three buckets of the five-hour rule
Today’s successful leaders have embraced Franklin’s five-hour rule by breaking the rule into three buckets.
Self-made millionaires including Mark Cuban and Dan Gilbert, owner of the Cleveland Cavaliers, read between one and three hours daily. Elon Musk learned how to build rockets, which lead to SpaceX, by reading.
Besides expanding your knowledge, Jack Ma, co-founder of Alibaba, says that “reading can give you a good head start; this is often what your peers cannot obtain. Compared to others, readers are more likely to know other industries’ strategies and tactics.”
Even if you can’t commit to an hour or more of reading every day, start with 20 to 30 minutes. I always have a book with me so when I’m waiting for a meeting to start or in the waiting room of a doctor’s office, I can read instead of waste time on my smartphone. You could also try audiobooks during your daily commute or when exercising.
So how do they find the time to read daily? They adhere to the five-hour rule.
Other times, the five-hour rule includes reflecting and thinking. This could be just staring at the wall or jotting down your thoughts. Jack Dorsey and LinkedIn CEO Jeff Weiner are well-known thinkers, while entrepreneur Sara Blakely is a longtime journaler.
Focusing on the past gives you a chance to learn from mistakes you’ve made, as well as assess what you did correctly. As a result, you’ll be better suited to achieve your goals and improve your life. The University of Texas also found that mental rest and reflection improves learning.
Need help getting started? Schedule reflection time in your planner. I’ve found blocking out 15 to 20 minutes after lunch is ideal because I’m coming out of that post-lunch slump. But start small: Allocate five or 10 minutes per day, and then work your way up so you’re not overwhelmed.
Know the questions you want to ask. Stick with just two or three questions focused on that specific day. For example, if you attended a conference, ask, “What were the key takeaways?” and “How can I apply this to my business?”
The third and final bucket is rapid experimentation. Ben Franklin and Thomas Edison became leading inventors and thinkers because of their experiments. We have Gmail because Google allowed employees to experiment with new ideas.
The reason experiments are so useful is because you have facts, not assumptions. Experiments show you what’s working. You can learn from your mistakes and obtain feedback from others. Best of all, experimentation isn’t that time-consuming. Most of the time, you’re testing through the same activities you’d perform without testing.
Jack Ma even recommends applying the knowledge you’ve learned to a real-life scenario. For example, after reading a book about collaboration and teamwork, you could take on new volunteer work to put that knowledge to use.
When you make learning a habit, you’ll be more successful and productive in life. By investing in a reading habit, you can ensure you’re growing yourself – and your company – every day.
This article was originally posted here on Entrepreneur.com.
How Matthew Piper And Karidas Tshintsholo Launched Their First Business From Their UCT Dorm Rooms
Matthew Piper and Karidas Tshintsholo launched their first business in their first year at varsity. They found a niche, but they also realised it wasn’t as sustainable as they’d like, or solving a big enough problem. Their next start-up, KHULA, is through its proof of concept phase and proving that two young entrepreneurs can find big solutions for even bigger problems.
- Players: Matthew Piper and Karidas Tshintsholo
- Company: KHULA
- Launched: 2016
- Visit: www.khula.co.za
You don’t always hit your game-changing idea on your first take. In fact, most start-ups look very different after a few pivots and course corrections.
If you have a real sense of purpose however, and know that ultimately you want to build your own company and hopefully change lives in the process, each of those adjustments will bring you closer to a sustainable business.
Matthew Piper and Karidas Tshintsholo (both 24), have learnt these lessons first hand. The business they launched together while studying finance at the University of Cape Town is very different from the business they’re running today, but it’s the lessons they’ve learnt over the past five years that have helped them to bootstrap an 18-month pilot project proving their business model, and find a solution to a systemic problem that will hopefully change hundreds — and eventually thousands and even hundreds of thousands — of lives.
Matthew and Karidas launched their first business, Money Tree, from their UCT dorm rooms. “We recognised the realities of South Africa and that financial inclusion is one of the biggest barriers to any kind of growth facing our country,” says Matthew. The business partners met through the Allan Gray Orbis Foundation, for which they had both been selected.
They wanted to start a business that would solve a real, endemic problem. As finance students, financial literacy seemed the best fit.
“We were both studying finance and interested in investing, and the business actually started out as a hobby,” says Karidas. “We wanted to share what we were learning in class and through our own research with anyone who was interested. We started a website and posted videos and content and shared it with other students.”
Once they had the platform up and running, the budding entrepreneurs strategised how they could take it to other universities and high schools. “We wanted to monetise what we were doing instead of just sharing insights,” says Matthew.
“So, we got our friends together and created a group of about 20 students from all over South Africa. Everyone went home for the December holidays, but universities go back a full month after schools. This gave us four weeks to go on a national roadshow, visiting 50 schools, sharing financial literacy lessons with their students and adding them to our network.”
Next, the young entrepreneurs met with a printing house, and convinced them to print a magazine without an upfront payment. “Our plan was to approach financial institutions who would sponsor the magazine, which was aimed at financial literacy for students,” says Karidas.
But, the magazines arrived before the funding came through, and Matthew recalls writing his first exam and returning to boxes of magazines at his door. “We started getting calls from lawyers and people wanting their money, but we didn’t have any funding,” says.
“We needed to go all out,” says Karidas. “We were calling everyone we knew and going to as many events as possible. At one of those events — hosted at the Reserve Bank — we met someone interested in investing in us. He put up our initial capital, which was how we were subsequently able to do more roadshows and build a network of universities and high schools. We ended up with an incredible network of ambassadors and a quarterly magazine, which ran for two years.”
Lessons learnt and changes made
It wasn’t smooth sailing though. The magazine’s margins were low, and the young entrepreneurs were aware that the concept was a hard sell: Students didn’t have money and the corporates that were able to pay did so from CSI budgets. “CSI initiatives tend to be project-based, and we didn’t want to base our whole business model on them. We knew it wasn’t sustainable,” says Karidas.
Money Tree had also done some business with Government. “We waited 14 months to be paid.”
By that stage, the business partners had moved from Cape Town to Joburg and had dropped out of UCT. They wanted to focus on their business full-time, but they knew the model needed some serious work and adjustments. Although they would start studying part-time again to finish their degrees, they first gave their business their full attention to pivot it.
So, freewheeling everywhere because they couldn’t afford fuel — or food or rent — Matthew and Karidas took their business to pieces and examined it from every angle.
“The first decision we made was that we weren’t going to pursue any more Government projects,” says Matthew. “We wanted to remove the bad stuff from the business and keep the good stuff, and we needed to be brutal about which was which.”
The magazine had to go — it was a lot of work for low margins with no clear revenue model. The ambassador network that Money Tree had built up on the other hand had a lot of value. “We had two ambassadors at almost every university campus across South Africa, including SRC presidents and the heads of societies — all influential people on campus,” says Karidas. “We packaged that network and started approaching banks. Banks were always on campuses trying to speak to students, but they didn’t have our network. We built a relationship with the Banking Association of South Africa with their start saver programme and closed a deal with Old Mutual. We currently run the biggest funding show and education programme across South African universities.”
The deal wasn’t the ultimate game plan, but it brought money into the business, helped the entrepreneurs pay rent and salaries, and gave them the breathing room to start seriously thinking about what they wanted to achieve.
“We started thinking about our long-term play. Financial education is good, but we were still relying on the budgets and current strategies of banks,” says Matthew. “Instead, we started focusing on what had always been our core, and that’s financial inclusion. This is our highest value, and we wanted a business that solves this challenge for South Africans.”
While they were mulling over this problem, Matthew and Karidas secured a spot on an Ennovate programme to Israel. It was on that trip that they were exposed to the fact that Africa has 60% of the world’s arable land, and yet still spends billions importing food.
“There are many inefficiencies in agriculture,” says Matthew, “and yet half of Africa’s population is dependent on small-scale subsistence farming.”
Determined to learn as much as they could, the partners approached Due Crisp to conduct a project in Pretoria. “We’re just finance guys,” says Karidas. “We needed to understand how agriculture works — and we were shocked. When you actually take the time to look at it, the problems are glaring. There are so many emerging farmers in South Africa, and yet they’re excluded from the market. They can’t fill big orders, and so they have no access to market.”
Suddenly, Karidas and Matthew had a problem they could solve — and they knew the solution would be found through technology.
Creating a proof of concept
“If we’ve learnt one thing about agriculture, it’s that it’s impossible to solve one specific problem — everything is interlinked,” says Matthew. “Our main aim is to give farmers access to market, and we’ve developed a platform and app to help them do just that, but we can’t work in isolation.”
As a result, the entrepreneurs have partnered with the University of Johannesburg and the City Of Joburg and will continue to look for other partners who are as interested in solving this systemic problem as they are.
In the meantime however, they have launched their new business, KHULA, and self-funded and bootstrapped their pilot programme, proving their concept and solution.
“The farmers’ app can be downloaded on any phone that has whatsapp capabilities,” explains Karidas. “Most phones that can be bought for R100 or R200 work, and in our initial research we realised that farmers are pretty tech savvy.”
Farmers go to the app store, download the app and sign up. They then need to provide all their details: Who they are, where they are geolocated, what they grow, and when they expect to harvest different produce. Matthew and Karidas then do a site visit to verify
them and accept them onto the platform.
“Our pilot has been mainly focused on Gauteng and the North West, but we’ve driven 17 hours to Jozini,” says Matthew. “Some of these farms are incredible,” adds Karidas. “One of our farmers in Magaliesburg has this incredible farm in the middle of a dump site. You can’t even believe it’s there. No one knows about them though — which is exactly what we’re trying to solve.”
Through their partnerships, the system has been tweaked and honed throughout the proof of concept phase. “UJ has a farmers’ school that meets every two weeks, and they became our focus group for the app’s beta version,” says Matthew. “We had a focus group of 300 helping us fine-tune the look, feel and usability of the platform.”
The business has also partnered with government. “Government needs data on emerging farmers, but they collect it through extension offices, and it’s often old and irrelevant by the time it’s collated — our data is real-time, so this could make a huge impact to them.”
Key to the success of the platform is the ability to link farmers with customers, which is where KHULA’s key focus has been.
“We have 104 farmers on the platform, and 26 customers, including Rocomama’s, Munching Mongoose and the Michaelangelo,” says Karidas.
The solution is simple: Farmers can click on product and show exactly what they currently have available and what they will be harvesting and when. Customers can then either browse the produce, follow their favourite farmers, or put in orders that farmers can then elect to fill. In some cases, multiple farmers might fill a large order, which is one of the key solutions the aggregated platform offers, giving small-scale farmers access to large customers. In addition, KHULA has one of the biggest organic offerings available, and the platform offers complete transparency.
“Our customers love knowing exactly where their produce is coming from, and the fact that they are supporting small-scale local farmers,” says Matthew. “The entire system is geolocated, so you can put clear parameters in place. If your carbon footprint is important, you can select farmers within a 10km radius for example.”
The platform has also revealed how much high-end produce is locally available. “Elderflowers are niche and typically imported, and yet there are quite a few farmers in Joburg who grow them,” says Karidas. “Through KHULA, there is now supply and demand for this product.”
The market incentivises farmers to update their data weekly because they see orders coming in. “If they don’t update their data they aren’t able to contribute,” says Matthew.
Related: Khula SME Fund
Creating systemic change
During the pilot phase Matthew and Karidas handled packaging and collections and deliveries — going so far as to don jerseys and jackets and turn their Polo into a refrigerator with the aircon cranked up to ensure fresh deliveries.
Today they have partnered with a delivery and logistics service company on an uber-type basis. “Mospa Logistics has 30 trucks, but at any given time, ten are in the parking lot,” says Matthew. “We’ve created an app that triggers a pick-up when needed. The whole system is designed for a just-in-time service for both the farmers and our clients.”
In fact, the entire business is focused on finding solutions — for their clients, farmers, and in streamlining their solutions. “We need to mitigate the risk of non-delivery to ensure our clients are satisfied with the platform. We have had instances where a farmer has disappeared on us and we had to deliver, so we went out onto the network and another farmer in the area could fill the order. It’s important to have a large network to ensure this is possible.”
The solution is also based on a win-win-win model. Farmers, clients and KHULA all need to benefit from the platform. “From our side, we need to provide value. This means giving the farmers access to market, but also providing real value to our clients,” says Matthew.
“We have different types of clients and farmers, and it’s important to classify the produce they offer and are looking for. For example, Rocomamas chops up their jalapenos, so how they taste is far more important than how they look. The Michaelangelo on the other hand requires tomatoes that look perfect, while Spaza Sun is concerned with edible produce that is available at wholesale prices. These gradings and classifications give an added — and valuable — dimension to the platform.”
The pilot project has performed so well that in 2017 a large telco offered to purchase the platform for R5 million, but the entrepreneurs turned them down. “This is our business, and we want to see how far we can take it, and how many lives we can change,” they say.
In fact, the more time they spend in the market, the more solutions they are finding to endemic problems. “Emerging farmers often aren’t bankable because they don’t have track records,” explains Karidas. “Our system tracks everything; we send out invoices, collect payments and make payments to our farmers, which means they have banking records and a guaranteed market. This, in turn, makes them bankable.”
“Our system tracks everything; we send out invoices, collect payments and make payments to our farmers, which means they have banking records and a guaranteed market. This, in turn, makes them bankable.”
- There is nothing more important to a start-up’s success than word-of-mouth. Build your network — the more people who know about you and what you’re doing, the more people will share your story. This is particularly true if you’re solving a need. We would also suggest only relying on word-of-mouth at the beginning and not marketing — this will tell you if you’re on the right path. If no one is talking about you, you might need to adjust your business model.
- Partnerships lead to more partnerships. Most communities are small; the more you’re doing, the more people will hear about you. Every one of our partnerships grew from a previous partnership.
- Start by solving a problem. We didn’t start with an app — we started with an idea. We used paper to record everything and called farmers directly to get them onto our books. We had already traded close to R50 000 before we built the app, and by then we had some experience and knew what the app needed to include.
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