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OpenTenders And The Art Of The Pivot

How OpenTenders learned the art of the pivot and lean start-up basics, all while building their business-to-business social network and tender portal.

Nadine Todd

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  • Players: Mnive Nhlabathi, Sivu Maqungo and Madoda Khuzwayo
  • Company: OpenTenders
  • Est: 2013

How did the idea for OPENTENDERS come about?

Like most business ideas, it was the product of our own frustrations. Joburg is very competitive, especially for hosting companies and branding; you’re competing against major players and agencies.

We wanted to find markets where we would be the only company pursuing the business; areas where resources were scarce. The problem is that you never know what tenders are available. They get posted on notice boards at municipalities, so there’s a lot of driving involved. In 2006 we put 120 000kms on Madoda’s car, which completely messed up the motor plan. That’s how much we drove.

We-recommend-tickWe recommend: Paycorp Saw an Opportunity… and Took It

The whole time we kept thinking that there had to be a better way to access tender notifications, and that there were probably a lot of companies that would love access to those lists. And the idea for OPENTENDERS began to take shape.

What was the big idea?

National departments have to tender any jobs that are worth more than R500 000, municipalities R200 000, and state-owned entities like Transnet generally tender jobs above the R2 million mark.

Anything less than that and it’s a simple quotation system. That was the bulk of our business – smaller quotes, but more of them. You’d know within seven days if you got the job, and all of your eggs weren’t in one big job. The problem was finding out about the work.

We knew there had to be a better way. After years of driving around the country, we knew how the system worked, we’d built up great contacts across the country, we knew how to build websites and we understood branding and marketing. What did that amount to? There are 660 entities in South Africa all doing their own thing. What if they were all in one place, on one website? And that’s how OPENTENDERS started.

Did the idea immediately gain traction?

It took eight months to build the first platform, and as soon as it was live we realised that some of the key assumptions we’d made were wrong. Our first idea was to create the website, get all calls for tenders and quotes onto it, and charge SMEs R500 per month to access it. It didn’t work. Entrepreneurs don’t like spending money. It’s that simple.

So what was your response?

We needed to learn from our market and adjust our product accordingly. We pivoted, and our second iteration was a subscription model of R99 per month. Now we had a new problem – you wouldn’t believe how many debit orders bounced – and that cost us money.

We went back to the drawing board and evaluated what we had. There were SMEs on the site, and we knew from our own experiences that we looked for smaller opportunities as well as bigger ones. SMEs are other SMEs’ best opportunities. What about a business-to-business social network?

A place where smaller businesses could market to each other? Madoda created a social network platform where business owners could set up a profile, explain what they did, ‘friend’ each other, and potentially do business.

The site now has two layers: A tender portal and procurement opportunities, and a business social network. It’s also a freemium model. As a business owner you can sign up for free.

How do you make money?

We realised that the real value in the site was how many people we could get signed up and creating profiles. We’d learnt that the only way to build a large community was to make access to the site free. However, as it grows, it becomes an incredibly valuable database, and so our revenue model now focuses on advertising.

To create a profile you need to fill in exactly what you do and the industry you’re in. Our algorithms are targeted. So, for example, an insurance company can target construction companies only, if they so wish.

We also send out notices every time a tender comes up, and those have an advert on them as well – push notifications that are tailored to your industry sector. It’s targeted, niche and automated. We’ve also made the rates affordable enough for SMEs, and because they are so targeted, you can choose exactly who you spend your 1 000 or 10 000 impressions on.

We-recommend-tickWe recommend: How Innovo Networks is Landing Big Corporates

How have these pivots helped the business?

We’ve had between 80 and 100 new members per day since we switched to the freemium model. It’s been an incredible lesson in the lean start-up methodology. In start-ups it’s all about what works and what doesn’t work, and often you’ll only know the answers to those questions once you’re out in the market, testing your product.

You learn and unlearn things at pace in a start-up. You need to be shifting and pivoting all the time, learning from and responding to the market.

How else has the business offering grown?

We now have four key channels to the business. The first is our original core offering – a place to access all tender information; the second is funding – Sivu is involved in an investment house that funds between R70 000 and R2,5 million on a per-project basis.

The third is a B2B social network, and the fourth is training. We’ve developed a six-month online course that SME owners can complete in their own time. We noticed a big gap for many SMEs was a lack of business skills. We’ve created a ‘business in a box’, with training and all the templates SMEs need.

A meeting of minds

Madoda Khuzwayo was always good at maths. So good that it landed him an Eskom bursary to study electrical engineering.

“I was a rural boy, and so the first time I ever touched a computer was my first semester at varsity. It changed my world.”

From that moment he wanted to switch degrees, but Eskom didn’t need IT professionals, and Khuzwayo needed the bursary. As soon as he finished his degree, he packed his bags and headed for London. His plan was to work and save enough to study IT.

“I arrived willing to do anything, from picking potatoes to working at Tescos. I eventually found my way to Oxford, where I got a job as a dishwasher. This was the worst job I’d ever had, but my English wasn’t good enough to be a waiter, and I couldn’t understand British accents. It was me and a Serbian guy in the kitchens.”

And then he saw a sign for engineers wanted at the local BMW/Mini plant. “My engineering degree got my foot in the door to study IT. It’s funny how these things work out.” For the next few years, Khuzwayo worked weekends at the plant and studied during the week.

“By 2003 I had my IT degree and I was ready to come home. We’d won the bid for the 2010 FIFA World Cup, and I thought there’d be some great business opportunities around the event.”

Khuzwayo’s idea was simple: Tourists would need accommodation, and locals had rooms to rent. He designed a website that matched prospective rentors with rentees. “The idea won me the Gauteng SAB Kickstarter title, but by then FIFA had changed the rules, and all accommodation had to be accredited.”

Undeterred, Khuzwayo looked for a way to pivot his idea. “I’d been working on a free mail plugin for the site, and realised this was a business in itself. I called the business MyNextMail and began focusing exclusively on that.”

Mnive Nhlabathi has been an entrepreneur since age 22. “I’ve only worked for someone else for three years of my life,” he says. “My background is IT and brand development, and in 2006 I also entered the Kickstarter competition with my branding agency.”

That was to be the year Khuzwayo won, and although Nhlabathi didn’t walk away with the prize money, he’d made a new friend. “We worked from coffee shops together, and gradually the idea grew that we should be working together.”

Yet another pivot

Khuzwayo was working on MyNextMail — a hosted email solution — but he was hitting brick walls trying to secure funding. “We both believed that in the future, IT would move from the work place into the cloud, but MyNextMail was competing with Yahoo and Gmail.” Gradually, the idea developed that together they could offer website and hosting solutions, as well as branding solutions.

We-recommend-tickWe recommend: Yolanda Sing from Chloé Consultants on Leading by Example

Joining forces, they targeted municipalities — not in main centres, but off the beaten track.

Sivu Maqungo joined the team immediately upon being approached by Khuzwayo with his idea for OPENTENDERS. A lawyer who had closed his practice to join the Department of International Relations, Maqungo had wanted to travel the world from a young age. When the opportunity to do so presented itself, he grabbed it with both hands. By the time Khuzwayo and Nhlabathi met him, he was back in South Africa running the East Africa desk, which consisted of 14 ambassadors.

“There’s a high level of appreciation for South African products and talent across Africa. Few companies realise this, so I started running seminars. I’d invite ambassadors from various countries, and they would pitch to local companies about the opportunities available in their countries.”

Khuzwayo attended one such event, introduced himself to Maqungo and explained OPENTENDERS. Maqungo was the third partner they’d been looking for: He was involved in an investment company that funded SMEs, he had contacts across Africa, and he understood training and SME needs. For Maqungo, here was an opportunity to re-enter the entrepreneurial world. With his desire to travel sated, he was ready for the next chapter.

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

Lessons Learnt

7 Pieces Of Wise Advice For Start-Up Entrepreneurs From Successful Business Owners

Launching a business is tough, but with perseverance, a willingness to learn from mistakes and a focus on the future, you can turn your dream into a reality. Seven top South Africa entrepreneurs share their hard-won start-up lessons.

Nadine Todd

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“What seems like an expensive lesson is actually the best thing that could have happened to you.” 

So you want to start a business? Seven successful entrepreneurs share their words of wisdom for start-up entrepreneurs

1. Offer advice and share your expertise freely

The more your clients are educated, the more empowered they will feel, and the more they will view you as a trusted advisor. I gave my clients material to help them develop the best labour policies and procedures. It didn’t make my service redundant — it built trust between us. — Arnoux Mare, Innovative Solutions Group, turnover R780 million

2. Stop planning and start doing

We all tend to complicate business with planning and processes. These shouldn’t be ignored, but you need to also just start — start your business, start that project, start walking the path you want to be on. — Gareth Leck, co-founder, Joe Public, turnover R700 million

Related: Watch List: 50 Top SA Small Businesses To Watch

3. Play your heart out and the money will follow

I learnt this valuable lesson when I was a student and busked at Greenmarket Square. You don’t stand with your hat, waiting for cash and then play — you play your heart out and the bills pile up in your hat. It’s the same in business. You can’t look at the bottom line first; it’s the other way around. — Pepe Marais, co-founder, Joe Public, turnover R700 million

4. Love learning lessons

What seems like an expensive lesson is actually the best thing that could have happened to you. I wasn’t paying attention to my partner or my books in our early days, and I didn’t realise the debt he was putting us into. We ended up owing R1 million. In hindsight, it was a cheap lesson to learn. Imagine if that happened today? The fallout would be much greater. We have 19 stores and nearly 100 staff members. It would hurt everyone, not just me. — Rodney Norman, founder, Chrome Supplements, turnover R100 million

5. Landing an investor starts with your story

A great story and data are the two golden rules of attracting an investor. You need both if you really want to access growth funding that will take your business to the next level. — Grant Rushmere, founder, Bos Ice Tea

Related: Watch List: 15 SA eCommerce Entrepreneurs Who Have Built Successful Online Businesses

6. Offer solutions

If you’re not solving a problem and creating value, don’t ship it — throw it away. That’s cheaper than selling a bad product. — Nadir Khamissa, co-founder, Hello Group

7. Small, clever decisions lead to big profits

One of the most important lessons any business owner can learn is that success on profit is nothing more than the accumulative sum of rand decisions. Lots of small, clever money decisions lead to big profits, and without the disciplines of frugality, money gets lost. It’s that simple. Question every single line item on a quote. Do we need it? Can we get it cheaper? This is what it’s about. — Vusi Thembekwayo, founder, Watermark

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Lessons Learnt

Here’s How Bosses From Hell Helped 6 Entrepreneurs Grow

From control freaks to being unco-operative, founders share what they learned from their worst boss.

Entrepreneur

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In business, sometimes the most valuable lessons come from the worst teachers. We asked six entrepreneurs: What’s the greatest thing you learned from a bad boss?

1. Bring everyone in

“A former boss was very hierarchical and discouraged collaboration. Everyone reported directly to her, and interdepartmental meetings were practically prohibited. It meant that only our boss had the full picture – we missed a lot of opportunity for alignment and cooperation. Today at our company, it’s a priority to hold regular team meetings and foster a strong culture of collaboration. It’s crucial that our team members weave collective sharing into the fabric of their day-to-day interactions.” – Melissa Biggs Bradley, founder and CEO, Indagare

2. Be vulnerable

“Don’t be afraid to show your emotions! I worked for a partner at McKinsey who was an incredible person but an awful manager because he kept his feelings bottled up. After a client presentation went awry, our team didn’t know where we stood with our manager. It was tense, awkward and demotivating. Showing vulnerability and letting others know when you’re genuinely upset can help everyone externalise their emotions, build trust and reassure employees that they aren’t alone. It sends a clearer message than stone-faced silence.” – Leo Wang, founder and CEO, Buffy

Related: 5 Factors That Make A Great Boss

3. Lend a hand

“I worked for someone who would never help out the junior staff with their work, even if he was finished with his own – he’d simply pack up and leave early. I now make an extra effort to ask my staff if they can use a hand when my own workload is light. It’s created a culture that feels more like a tight-knit team and less like a hierarchy.” – Adam Tichauer, founder and CEO, Camp No Counselors

4. Move as a group

“When I was a nurse manager, I had a boss with no experience in healthcare. She wanted to change our process for keeping patients from getting blood clots. I knew it was a mistake, but she insisted. Ultimately, the change failed. It taught me the importance of empowering staff to speak up. At Extend Fertility, we collect feedback from customers via surveys. Results are shared with our staff, and together we develop action plans to address negative experiences. It’s the employees who interact with patients on a daily basis who have the best solutions.” – Ilaina Edison, CEO, Extend Fertility

5. Trust your team

“I once worked for a woman who joined our team after I had been working there for a while. Every time I stood up, she’d ask me where I was going, whether it was to the bathroom or to the printer. She had a fear of not having control over my time and work. As a young adult, this behaviour really demoralised me, especially since I had excelled at the job for years prior. My leadership style is less neurotic. Once my team members have my trust, I’m pretty hands-off.” – Denise Lee, founder and CEO, Alala

Related: 5 Leadership Questions Every Boss Should Ask

6. Respect others’ time

“Early in my career, I had a project manager who’d wait until the very last minute to review work, then convey lots of new information and requests. This happened at the end of the day or, worse, after hours, when I was home. It was demoralising, inefficient and disrespectful. In my career, I’m conscious about reviewing work in a timely and complete way so my team can successfully incorporate my feedback without generating a last-minute crisis – or lingering resentment.” – Kirsten R. Murray, principal architect and owner, Olson Kundig 

This article was originally posted here on Entrepreneur.com.

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Lessons Learnt

11 Things Very Successful People Do That 99% Of People Don’t

Consistency is a big part of succeeding. The top 1% of performers in the world know this is the secret to their success.

John Rampton

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successful-entrepreneurs

Becoming wealthy and leaving an impact on the world is not an easy feat. If it were, everyone would go around doing it. At that point, it would not be much of an accomplishment at all.

Rather, being extremely successful requires an extreme amount of work. Especially when there is nobody looking. The best people have developed habits that help them reach their goals. These routines are not necessarily challenging to form, but they take consistent effort over extended periods of time. Creating these tendencies in your own life will propel your success.

Here are 11 things, that 99% of people (myself included) do not do, but really should.

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