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- Players: Ryan Bacher, Lawrence Brick and Jonathan Hackner
- Company: NetFlorist
- Launched: 1999
- Visit: www.netflorist.co.za
NetFlorist launched on Valentine’s Day in 1999. It seemed like the perfect day to test out a flower business, which is exactly what Ryan Bacher and his partners, Lawrence Brick and Jonathan Hackner, were trying to do.
Not because they wanted to start an online floral and gifting company, but because they wanted to prove to Makro that they could design and run an e-commerce site.
Between the three of them they couldn’t name one flower other than a rose, but floral arrangements seemed less complicated than books. They were dead wrong about how complicated it would be, but they were also wrong about the potential of the business. And the rest is history.
“I was the sales manager at NetActive, an Internet service provider,” says Bacher. “Johnny and Lawrence were the founders of the business, which was listed on the JSE. We were approached by one of our shareholders, who also owned a number of large retail brands, including Makro, about putting their brands online. We were excited by the idea. Online retail was in its infancy, not only in South Africa, but internationally, and it would mean new business for us.
“In order to get the business however, we had to build something to show what we could do. We picked flowers. We thought we’d deliver a few bunches, test it and close the site. We just needed to transact something to prove we knew how to build and run an online retail site.
“We had no idea how to get flowers delivered, so we contacted a florist in Sandton. We told them that we were getting orders (we hoped), and that we’d send them the details, pay them, and could they deliver? We had to fax them the orders because they didn’t even have a PC, let alone email.
“They agreed, and we built the site. It had one page, with 12 floral arrangements to choose from. There was a search bar, because we’d seen that other sites had one, but anything you typed in just redirected you to the same page. The ‘pay now’ button requested your credit card details and then an egg timer would turn on the screen while we captured the details on our side, manually running them through a credit card machine and then accepting the order. Technically, what we were doing wasn’t even e-commerce.
“Our plan was five orders to prove it worked. And then Valentine’s day arrived. We had a lot of email addresses because we were an ISP, so we sent out a mail to everyone on our database, advertising the site and the ability to order flowers online. All you had to do was click on a link, choose an arrangement, order and we’d deliver. The response was unbelievable. We sold R30 000 in one day. At the time, this was the equivalent of a month’s worth of orders for a single florist.
“And so 15 February came along, and we just didn’t turn off the site. I carried on managing my customer accounts for NetActive, and each day I’d also check for orders, fax them through to the florist and swipe credit cards. Orders kept coming in based on the original mailer we sent out.
“What’s really crazy is that people were paying for us to provide a service. We had no stock. We’d never even seen the stock. We knew nothing about flowers! And that’s how our e-commerce journey began. We were way too early in South Africa, but we decided to do it anyway.”
The Lean Start-Up Journey
Long before Eric Ries coined the phrase Lean Start-Up, Bacher and his partners were following the core ideals of building a lean business.
“Step one was doing research. We needed to know something about the product, and be able to name at least one flower other than a rose. Step two was understanding how consumers were using the Internet in the retail space.
“We knew our best bet was to get the website out, hack it, and keep changing it. We would learn more from the site being out there in the market than we could ever learn in-house, trying to develop a perfect product. It was basically always a work in progress. We incubated the business inside NetActive, which also helped to keep our infrastructure costs down. I was still handling my NetActive work and running NetFlorist part-time until 2003, when I finally moved over full time. Johnny and Lawrence followed later, in 2009, once they sold NetActive to Mweb.
“To date the total investment into this business has been R5 million, and that includes our warehouses and fleets.”
Building a Moat
“Great businesses are the ones where there’s a really high barrier to entry, and that’s what we had. It allows you to build a moat around your business that’s difficult for competitors to cross. Luckily for us, we liked the hard journey. Delivering a perishable good is a real challenge – especially in a hot climate. We initially thought books were complicated. We had no idea! But complicated businesses are harder to copy. This gave us a great opportunity, provided we could get it right ourselves.”
In keeping with their lean start-up approach, for the first few years NetFlorist didn’t touch the product itself, using a network of smaller florists across the country to fill and deliver orders.
By 2007 however, the business had grown sufficiently to invest in warehouses and delivery vehicles.
“This was always in the business plan, but it was a difficult transition because we knew it meant taking business away from our smaller suppliers. We tried to do it in the gentlest way possible. We employed staff from shops that had hired extra people to handle our orders and bought vehicles from those who had increased their fleet size to handle our deliveries. It was painful, but it was also a core part of our strategy – we had always planned to own the entire value chain, because it was the only way we could scale and have the flexibility and margins that the business needs.
“It was also an important ingredient in building and maintaining our moat. Same-day delivery is not easy to achieve. Next day delivery is pretty common, but the fact that we offer same day is a real differentiator, and very difficult to get right. Our gifting is about more than just flowers: It’s about roses, champagne, chocolates and a host of other options.
“We couldn’t do this properly with myriad suppliers. We needed it to all be in-house. We didn’t create the ‘flowers delivered’ category in South Africa, but we did introduce all the non-floral gifts. This didn’t exist before we started doing it, mainly because you need everything under one roof to do it.
“We’ve even gone so far as to open a confectionary operation, from strawberries dipped in chocolate, to cakes – all baked and delivered on the same day. This doesn’t scare us. We’ve had people ask ‘how do you deliver a cake?’ We deliver red roses in the middle of summer. A cake is a piece of cake.
“In order to get this completely right though, we’ve made the decision to keep everything in-house, and that includes managing our fleet. For many businesses, it makes sense to outsource this function. Not for us. You want to always focus on what your core business is, and the delivery of our gifts is core. It’s at the heart of our strategy, and so we wanted full control of our supply chain.”
Even though Bacher is head of marketing today, he had no marketing background when NetFlorist launched. Understanding his limitations, and knowing that start-ups (and even established businesses) should always leverage their networks, he approached a friend, Brett Morris, who was a creative guy at FCB.
“Today Brett’s the CEO of FCB, but then he was just a guy I grew up with who worked at a great agency. He convinced the then-CEO to take a chance on us. We were a small business with no budget, who needed a great partner to help us grow. That chance paid off. Today we’re a major market player, and we’re still with FCB. They helped us grow, and at the same time grew a client within their brand.
“I was protected from being ‘dumb’ by Brett. So many business owners are clueless when it comes to advertising. It’s a very specific skill and talent. Thank goodness for Brett. I came up with ideas, and he gave me honest guidance and advice. It gave the brand consistency that fledgling brands often don’t have – and when you’re building a brand, consistency is everything.
“We chose to be a tongue-in-cheek brand. We knew our budget was small, but we still needed to stand out from the clutter. People noticed us because of our cheekiness. Our campaigns led to massive exposure relative to spend. We’re small compared to Nando’s and Kulula, and yet we’re seen in the same light. The association immediately made us look bigger than we were, which has really worked in our favour.”
No brand journey is without its hiccups, and NetFlorist is no exception.
“Between 2001 and 2003 we were just focused on gaining traction in the market. All we cared about was transacting; getting revenue into the business. We’d seen the concept of a white label site in the US in 2001, and so we created an ‘affiliate’ marketing strategy of our own, and offered our services to other brands. For them it was a value-add to their customers, and revenue for us.
We turned so many big South African brands into florists at that time. 083 139 was MTN’s flower business for example. We thought it was great. They were marketing to their customers, which meant we were transacting without spending any money on marketing ourselves, and they loved it because it was a big branding exercise for them.
“It boosted our sales, so from that perspective it really worked, but it was actually detrimental to our brand. In retail, all you are is your brand. You need to be one or the other, the brand, or the company behind the brand. You can’t be both.
“We had loads of orders, but no-one knew who we were. It was an incredibly precarious position to be in. We were reliant on a few big contracts. What happened if those went away? We realised we needed direct control of our market.
“So by 2003 we changed our strategy and took the brand back. Instead of Discovery Vitality Flowers, it became ‘Discovery Vitality brings you NetFlorist.
“Many of our clients were fine with the switch, but some weren’t, and we had to make the painful decision to let those clients go. It meant losing revenue, which is hard for a start-up and even established businesses to do, but we needed to stick to our guns.”
The business’s second big mistake came almost a decade later. “The Internet in South Africa really only took off in 2012, but by 2011 we were getting impatient, and so we opened eight retail stores. I still can’t tell you exactly why we decided to go the brick and mortar route, because it ended up being a terrible idea.
“The Internet is really scalable. Retail stores aren’t. We’d have needed 50 stores to make the business work. It was the first time we consciously stepped away from our core offering, and it ended up being a costly mistake. We’ve digested it and moved on, and we still have two signature stores that we’ve kept open, but on the whole it was a bad foray into an area that isn’t our core focus.”
Joel Stransky Shares His Insights On What Makes A Great Leader
Enter Joel Stransky just as friendly as the rest of the team, also casually dressed, also wearing a smile. As a founding director of the innovative Pivotal Group, he explained that their value proposition particularly in Pivotal Talent.
Posters displayed on companies’ walls representing the business’ Vision and value system are a common occurrence. A general value that numerous companies share is to be client centred and to provide excellent service. Yet, unfortunately a proportion of companies do not live according to their values as tools to actualize their collective Vision.
An observant individual would take only a few seconds to notice that the Leadership group at Pivotal has gone to great lengths to establish a definitive and value driven culture as well as a motivating climate for their team members. As I waited in the reception area I was met with smiles from several people passing by and there was generally no way to assess what their position was as they were all casually dressed, friendly and approachable.
Enters Joel Stransky just as friendly as the rest of the team, also casually dressed, also wearing a smile. As a founding director of the innovative Pivotal Group, he explained that their value proposition particularly in Pivotal Talent, is the use of Augmented Intelligence and data analytics within the “human capital space”. The application of AI and data makes talent acquisition and career guidance much less of an enigma and challenge as opposed to the recent past where traditional talent acquisition and career guidance methods became less and less successful and more and more time consuming.
The “pivot” of the 1995 Victorious Springbok world cup team shared that he always starts off an employee-employer relationship with the assumption of mutual trust and respect. He believes that once you have put in the sincere effort to understand people better, bigger belief in them is a natural result.
“The greatest asset in business is people,” Joel passionately explained and added that it is possible for a brilliant product to fail in the long run when the wrong people are employed.
“Hiring the right people that would not only help sustain the current culture but add more value to it is critical to any team or companies’ sustainable success,” Joel explained. The Millennial generation think differently and have different expectations from a working environment, therefore it is a critical factor for any manager and/or Leader to understand what drives the emerging generation and also how to manage the polarity of generational gaps.
Related: Servant Leadership – Will You Serve?
As a result of diversity and generational gaps Leadership and management has become a fascinating space to operate within South-Africa as not only cultural and language barriers might offer a challenging HR environment, the millennial generations unique behaviours amplify the need for useful adaptations within all spheres of work.
As a practical example, employee X is twenty-three years old. Some of the key questions that management needs to figure out, that is if they sincerely want the best for, and the best out of employee X, are:
- Is X motivated by monetary rewards and/ or does she/he need a regular hug to feel part of and add to the company culture?
- Does X need to interact with management socially for example be taken out do dinner?
- What skills does X have or lack that impacts his/her performance?
- It is impossible to motivate someone else. In what way can I create an environment for X wherein he/she can motivate himself/herself and excel?
How you satisfy Xs’ needs and manage all related factors to his or her needs has become critical success factors in how we as leader’s approach career development in general.
Reflecting on the development of his own sports and business career, as well as his family life Joel is adamant that whatever drives you in sport also drives you in business and within your family life. Whatever he has achieved within all aspects of his life came as a result of setting goals and making those goals a reality.
Both in sports and in the business world within South Africa there is a general tendency towards over structured management and coaching. Although a structure and daily management is an integral part of business and sports, a paradigm shift towards inspirational Leadership that empowers other leaders to succeed is key in terms of serving others and creating a motivating and sustainable environment within which all team members can thrive.
Reflecting on Joels’ observation: “Our countries’ value chain is broken” the moment has most certainly arrived within which more and more value driven and ethical Leaders, emerging from all generations must arise and collectively work towards an improved future.
Critical to the actualisation of a collective future vision is the development of Leadership skills therefore one of the keen interests of the author is to recognise and learn from other Leaders’ character traits. Joel’s’ highly effective communication skills underpinned by the core people skill of active listening quickly came to the fore as he could quote part of my question and comments in each of the very insightful answers that he provided. His keen willingness to innovate and to create inspiring working environments makes his enthusiasm and skill as a Leader tangible.
Let us all challenge ourselves to learn from prime Leadership examples offered by individuals such as Joel Stransky and leave more and more Leaders behind for only in such a way can an inspiring future be built.
Nhlanhla Dlamini Not Only Has Guts, But Grit – In Spades
An alumnus of WBS and Harvard Business School, Nhlanhla Dlamini did some soul searching when he was doing his MBA at Harvard, and knew that the corporate ladder, although tempting, was simply not going to be enough.
It takes guts to venture into entrepreneurship. And when you’re in a ‘cushy’ job with a top global auditing firm who are grooming you for partnership, it takes even more guts.
Nhlanhla Dlamini not only has guts, but grit – in spades.
An alumnus of WBS and Harvard Business School, Nhlanhla did some soul searching when he was doing his MBA at Harvard, and knew that the corporate ladder, although tempting, was simply not going to be enough.
“I started thinking, ‘what is the best thing I can do with my life?’”, recalls Nhlanhla. “I always felt a pressing need to get involved in lowering the unemployment rate in South Africa. It’s a notoriously difficult space, but entrepreneurship is the real engine of job creation and I felt compelled to rise to the challenge.”
When he left his job at McKinsey in March 2015, Nhlanhla decided to explore the agricultural sector – having no idea what product or what part of the value chain he would end up in. He spent until December that year exploring the agri-food sector, gaining as much understanding as he could about the entire industry by talking to famers, co-ops, agricultural associations and various other stakeholders.
“I wanted to export products to the US and I looked at tree nuts, blueberries, dairy products or meat. Because of stringent FDA regulations, meat wasn’t an option – but a friend of mine from WBS days suggested meat in the form of pet food.”
And so Maneli Pets was born, and Nhlanhla moved his fledgling business into a factory, which he re-purposed for meat processing, in October 2016. By June 2017, he had started operations with 30 employees on board, and by September he had 50 employees.
What makes Maneli different from other US-bound pet food products in an already saturated market? The answer is high protein meat from animals that are unique to South Africa.
“I discovered a market for the off-cuts of meat from specialist butcheries – so crocodile, warthog, ostrich etc,” Nhlanhla explains. “The result is a very high quality, high protein pet snack with a difference – and US pet owners are willing to pay for the best they can get.”
Under the brand name ‘Roam’, Maneli Pets products are exported to a pet food wholesaler in Boston, US, owned by the family of Nhlanhla’s former WBS classmate, who had planted the seed of the idea in the first place. Nhlanhla is now preparing to launch the products under another brand name for distribution in South Africa and export to the EU.
But pet food is only the start. Maneli Pets is an offshoot of the Maneli Group, a diversified food company which is looking ooking to build further businesses in the green energy sector, while boosting black entrepreneurship.
According to a City Press report, South Africa has relatively few black-owned food production businesses, which is why government is actively promoting agro-processing and the manufacturing sector in general to spur economic growth.
Nhlanhla has worked tirelessly to secure government funding, and was thrilled to obtain R26 million from the Industrial Development Corporation (IDC). Just last month, he received the news that Maneli Pets had been awarded grant funding of R12.5 million from the Department of Trade and Industry’s Black Industrialists Scheme (BIS).
Nhlanhla, who was also a Rhodes scholar at Oxford University, considers his PDM at WBS a “superb” way of preparing a student for the real world of work. “The group dynamics was an essential learning experience in terms of delivering on a mandate with a group with entirely different skill sets.”
Describing himself as a “passionate and active WBS alumnus”, Nlhanhla still stays in regular contact with a core group from his PDM class, proving that one of the enduring benefits of a PDM (and an MBA) is the opportunity to connect and network with like-minded people and form life-long friendships.
Apart from what he learnt in the Entrepreneurship Management module of the PDM, such as the pillars of entrepreneurship, macro trend support and financing an idea, Nhlanhla considers the keys to success are threefold: Recognising the value of a social network, tenacity – and just a little luck!
See Will.i.am And Malcolm Gladwell Live In South Africa
The BCX Disrupt Summit has gathered some of the world’s most innovative and disruptive thinkers to guide you and your business into the future.
As one of the largest technology players in South Africa, BCX embraces disruption. As an organisation, one of its primary focuses is to move its customers into the future, not just with products and services, but a shift in mindset as well.
What tools and ideas do we need to embrace today to be ahead of the curve tomorrow? With this in mind, BCX has partnered with BrainFarm to launch the inaugural BCX Disrupt Summit.
“The BCXDisrupt Summit is a platform for South African innovators and businesses to learn from and be inspired by some of the greatest examples of possibility in the world,” says Dean Carlson, founder and CEO of BrainFarm, the event organisers.
A gathering of minds
The BCXDisrupt Summit is bringing some of the world’s greatest minds together under one roof for two days. The speaker line-up includes will.i.am, Malcolm Gladwell, Rapelang Rabana and Nick Goldman and topics covered will range from where technology is heading, to how playing games can extend your life expectancy by up to ten years.
Seven-time Grammy award winning hip hop artist will.i.am is also a significant player in the tech and entrepreneurial space, as well as a philanthropist. He was a partner in Beats Electronics, which was sold to Apple for $3 billion in 2014. “When will.i.am was 16 years old, music was where it was at,” says Dean.
“And so, he focused on building a music career, and creating products for that industry. Today he’s learning to code, because that’s where it’s at. He’s got an unparalleled handle on where the world is moving to, and so many insights to share.”
Dean has built BrainFarm on a portfolio of incredible local and international speakers, each of whom he’s seen live. “I regularly attend international conferences to get a sense of which speakers and idea-shapers I’d like to bring to South Africa,” he explains.
“will.i.am is one of those global shapers whose ideas take everything to the next level. To get maximum value from him for our delegates, we’ve chosen an interview set-up instead of a key-note talk. Local tech expert Aki Anastasiou will be interviewing him, and the audience will be able to ask questions as well. This will give us an opportunity to localise will.i.am’s knowledge and ideas.”
Author of five New York Times bestsellers, including David and Goliath and Outliers Gladwell is well known for introducing the concept of the 10 000-hour rule, which states anyone can become an expert in anything given enough time and practice. Dean first brought Malcolm Gladwell to South Africa in 2009.
“When I dropped him off at the airport, Malcolm signed his book for me with the words ‘Please invite me back,” says Dean.
“We’ve tried to bring him out a few times since then, but the timing hasn’t worked out. This was the ideal summit for Malcolm’s ideas, and this time, the timing worked.”
Having seen Malcolm in action many times over the years, Dean knows that he’s a speaker that always leaves his audiences wanting more. And so, the BrainFarm team thought about the best way give their delegates exactly that.
“Malcolm has developed a masterclass for the second day of the Summit that will focus on what makes a person successful, both in life and business. He’ll be unpacking tools our delegates can use to personally drive success.”
Nick is that rare breed of academic who is also an engaging and entertaining speaker. A UK-based mathematician and genome scientist, Nick is passionate about how we can store and preserve digital data.
“If you want to feed your brain, Nick is the person who will do that for you. His team recently coded five documents of historical significance onto a strand of DNA,” says Dean.
Each day, what we thought was possible changes. What does the future look like, and are you ready for it?
Born in Senegal and sold into sex slavery, Marieme Jamme refused to accept the lot life had given her, and instead taught herself to code. It was a skill that enabled her to change her conditions and life. Today, through her latest venture, iamtheCODE, she has one giant, global goal: To teach one million women and girls to code by 2013.
“Marieme has a consultancy that helps tech companies get a foothold into Africa, the Middle east, Latin America and Asia, and she’s also focused on her mission to help other women and girls escape their fates by learning to code,” says Dean. “She’s one of the most interesting and inspiring people I’ve ever come accross.”
Heralded as the controversial CEO and saviour of Telkom, Sipho has helped the company rack up gains of 150%, making Telkom one of the best performing companies on the JSE. “A major focus of Telkom is getting businesses across Africa ready for tomorrow’s customers,” says Dean.
“To be ready for tomorrow’s customers though, you need to know who they are, and have a sense of what the future will bring.”
A game designer, Futurist and New York Times best-selling author, Jane’s TED Talk, The Game That Can Give You Ten Extra Years of Life, has over six million views to date.
Local tech-star Rapelang Rabana is the CEO and founder of Rekindle Learning, a company she has positioned at the crest of a rapidly rising online community across Africa.
Her mission: To deliver learning in bite-sized chunks across the continent.
CEO of BCX. BCX has invested millions in computer programming education so that young people from all social and economic backgrounds have the opportunity to become programmers at no cost to them.
When Lars joined LEGO as Senior Global Director of Social Media and Video, the company didn’t even have a Facebook page.
“Today LEGO has well over 12 million followers on Facebook and more than three million on YouTube where they’ve just knocked up five billion lifetime views,” says Dean.
“The big idea behind their social media campaigns is to leave the thinking to their fans. Lars understands the creative power of the crowd, and what harnessing that power can do for your business.”
Bringing it all together
“We focus on projects that excite us, and that will change the perceptions and world views of our delegates,” says Dean. “We’ve partnered with BCX to put together an incredible event that will leave you inspired, amazed and driven to change your life and organisation – with the tools to do so.”
To find out more about the BCX Disrupt Summit or to book a seat, visit https://www.bcxdisrupt.com/
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