So I rejected the offers I received and concentrated on Black Like Me, gradually building it up again. It took eighteen painstaking months for the company to get back on its feet, and by the end of 1994 our limited production line had grown by about 40%. On average, four 18m shipping containers were being delivered to distributors daily, and the staff complement had grown to 160. Black Like Me had finally emerged from the ashes.
With the company’s local production stabilised, I had to look ahead and mark the next target on the board. Convinced that our future lay in going global, I started to investigate foreign markets and tried to marshal my ideas into a coherent strategy. Initially we established distribution contracts in Zambia, Malawi and the DRC, and also in Lesotho, Namibia and Swaziland, and then Louis and I visited Kenya and Zimbabwe to forge links with suppliers there.
It was only by being in charge of its destiny that I could lead Black Like Me in the direction I wanted. I saw no benefit in taking on a partner who would merely be retracing my footsteps – and I was certainly not prepared to follow anyone else’s trail.
Chapter 15
By 1996, the euphoria that had followed in the wake of the elections was over. The rest of the world recognised the genuine reforms that the new government was undertaking, and the United Nations lifted the trade embargo against South Africa. The government forged ahead with foreign trade deals, specifically with India and China, but, more importantly for Black Like Me, locally it was fast-tracking black empowerment.
In order to comply with BEE legislation that was in the process of being ratified, many white buyers were making offers to buy black-owned companies in various configurations; a black face would entitle the buyer to BEE status. I was not interested in any of this: I did not even bother to analyse the legislation. Black Like Me was successful in its own right, and the companies that were approaching me needed me more than I needed them. I stuck firm to my principles, refusing to entertain any of these bids.
In just two years, Black Like Me had increased turnover to a level I was happy with. Diplomatic ties with countries further afield, such as Ghana, Mali and Senegal, had been established, opening up even more trade with countries that offered lucrative markets for our products. But our forays into Africa were hampered by unpaid debts as well as the usual problems with the clearance of goods at ports of entry. Communication was also a problem, and I began to view these new markets with scepticism.
It serves no purpose to harp on about the inequalities of the past, yet I must admit that the limits in my education had resulted in my relying largely on gut feel in the running of my company. I knew that Black Like Me needed to expand internationally, but at the same time it needed the benefit of mature business experience. So, when Colgate-Palmolive approached me eventually, I looked at the offer coolly and decided to give it due consideration. That company’s penetration into international markets was well established, and it had a body of corporate expertise that would fill the gaps in my style of management. Expanding Black Like Me on a continental scale required the enormous capital reserves of a company such as Colgate-Palmolive, whose credibility would be an asset in helping to reach the level of success I’d envisaged.
Networking with managers in the corporate world had given me access to advisers, and I had benefited greatly from their experience and advice. Shortly before the Colgate-Palmolive offer, I was having a conversation with my friend and business colleague, Rod Fehrsen, who was with the PG group – South Africa’s oldest and largest plate glass manufacturer.
“I need a good tax adviser,” I mentioned.
“I’ve got just the man for you – Shane Ferguson,” was his instant reply.
Our first meeting was scheduled for an hour, and Shane ended up staying three. I’d immediately felt at ease with his unassuming manner. Shane was late for our second meeting and every subsequent meeting, and I realised that this was to become a pattern. It soon became apparent that Shane likes to focus on the matter at hand and to resolve issues there and then, before moving on to the next client. Waiting for Shane to show up for a meeting became the norm rather than the exception.
At one of these meetings, I said to him, “Listen, I’ve had two offers for my business – one from Carsons Holdings. And now there’s also one from Colgate-Palmolive.” I explained the situation. “Carsons want to buy the entire company, but this Colgate deal allows me to retain a working position in it.”
Shane nodded, and I went on. “The Colgate deal is more to my benefit. I’d be able to realise my ambitions for Black Like Me – and I’ll also retain a 25% share in it.”
“Yes, the Colgate deal sounds good, Herman. Knowing what I do of you, it’ll suit you better. You’ll still be active in the company, and still have some control,” Shane said.
I was relieved to hear him say this, and said, “Do you think you could help me negotiate a deal with Colgate-Palmolive?”
He was eager to assist me to conclude a deal with Colgate, even though it would be an awkward situation. I had been negotiating with Carsons, and they had already made a media announcement about the deal they were hoping to conclude. I provided Shane with details, which he tackled immediately and energetically.
After much careful discussion of the Colgate offer with Shane and my advisers, I felt satisfied that I had a viable deal. I set down very specific conditions for the buy-out. I did not want to lose control of the company; I would not consider any relationship where I’d become an overpaid employee gathering dust in a corner office; and I wanted a clear vision of the growth and expansion that Colgate-Palmolive had in mind for Black Like Me.
From the preliminary negotiations with Colgate-Palmolive’s David Conn, it was clear that we shared the same aspirations for the merger.
“The Colgate-Palmolive/Black Like Me partnership should be a win-win situation for both companies,” Conn said as we shook hands on the deal. Colgate had recognised the vast potential of the ethnic haircare market, but their efforts to penetrate it had been unsuccessful. Black Like Me had expert product knowledge and extensive experience of the market, but we did not have the well-established distribution network and the technical and marketing resources that Colgate-Palmolive enjoyed. We indeed had much to offer each other.
When the agreement was finally drawn up, it was the size of the Bible. Colgate had lawyers from the United States, Canada and South Africa working on the draft agreement, but Black Like Me only had just Shane looking after its interests. We sat down to sign the agreement, but it took till 4am to conclude the negotiations.
During post-election South Africa, the rail transport system underwent changes, and Black Like Me could no longer rely on its services. When awarding contracts, I had, where possible, always used a black contractor – and I make no apologies for this. But many of these distributors were erratic in their delivery because they lacked a disciplined, professional business ethic. Building a brand depends on reliability and consistency, and because of the poor supply-chain distribution, Black Like Me was not able to maintain the requisite consistency of supply to other African states.
In addition to these logistical problems, crime was rampant. Informal retailers were a high risk to insurers and as a result salon owners were unable to secure insurance against losses. So, whenever they were burgled or burnt down, it was Black Like Me that ultimately bore the risk. We had implemented a credit scheme that proved ineffective, and it became necessary to review our customer base and reconsider whether we wanted to continue with distribution to informal traders or whether we wanted to concentrate solely on national supermarket and trade wholesaler distribution.
The situation was further complicated by strong competition from other beauty and haircare companies – especially Carson Holdings and Procter & Gamble. Increased pressure from competing products forced Black Like Me to up its game. This meant reformulating products, but the research and development involved was costly and time consum
ing, even though we had a team of four chemists working under Dan Pooe. I hoped that Colgate’s technical resources would help us cut down on the research and development phase. Another issue was packaging. Our international competitors had invested a lot of money in this, thus forcing Black Like Me to upgrade its packaging if we were to compete on the shelves.
Bearing all this in mind, Black Like Me married Colgate-Palmolive on 1 July 1997. It felt rather as if I was letting go of my first “child”, but I had not realised that selling 75% of our company to Colgate would also be an emotional experience for Connie. However, sentiment has never been a feature of my business dealings, whose primary focus has always been profit. Colgate’s motivation for wanting to buy the company resonated with me: the deal made good business sense.
All marriages have their settling-in period as partners get to know each other, and the merger between Colgate and Black Like Me was no different. However, both companies sought to minimise the uncertainty that the merger presented to the Black Like Me staff, so we appointed a consultancy company to work with the staff, explaining the reason for the merger – increased production and market penetration – and also to clarify the benefits of increased staff training and development. My request to retain my position in Black Like Me was honoured, and I was appointed Managing Director as I knew the industry inside out – Colgate also realised that I would not be content to sit on the sidelines while they took over the reins.
In spite of the buy-out, our market share continued to slide. Yet I went against my better judgement, ignoring my gut feeling that things were not going according to plan. I persevered, patiently allowing alien systems and controls to be implemented. But soon the situation became all too apparent, and after three years, I could no longer continue ignoring it. Finally, acknowledging my frustration, I said to Connie, “It’s not working. There’s not the synergy that either side expected. And I can’t, in good conscience, just stand by and watch as Black Like Me slides into obscurity.” Then I phoned Shane Ferguson.
“Shane, this marriage is over, you need to negotiate a divorce,” I said.
It was one of the lowest ebbs of my life.
I had established Black Like Me on the whiff of an oil rag, built it into a multi-million-rand corporation, watched as it burnt to the ground, and then rebuilt it again – I was not going to watch another meltdown. This time, there seemed no way that I could resuscitate Black Like Me.
I had hoped that Colgate’s buy-out would be the boost that Black Like Me needed, but I realised that if they couldn’t help me take the company to the heights I’d hoped for, then it was time to finally let go of the reins. I mandated Shane to negotiate with Colgate-Palmolive for the buy-out of my remaining 25% of Black Like Me shares. Negotiations went on for six months, and my plans were not resolved in quite the way I expected. Then Shane came to see me and said, “How would you like to buy your baby back?” Instead of Colgate-Palmolive buying my shares, they offered me the opportunity to buy back all my Black Like Me shares.
This was a completely unforeseen development. I had sold 75% of the company for a large sum of money.
“Where the hell will I get the money to buy it back?” I said to Connie in despair. “I have no idea what price tag Colgate will attach to the shares. I don’t know if I’ve got enough capital to buy it all back – in fact, I don’t even know if I want to buy it back.”
I’d reached a stage where I felt I no longer had anything to prove. I had built a successful and respected business; there were offers of BEE deals everywhere I turned; and I had a beautiful young family – Connie, Nkhensani and Rhulani – who’d have welcomed my undivided attention. Connie said as much when she reminded me, “Herman, we can live comfortably for the rest of our lives, even if you don’t ever work another day.”
I was faced with a dilemma. My own security and comfort were irrelevant concerns, but I did have to consider the staff at Black Like Me; they had been with me on all the ups and downs of the company’s roller-coaster ride. Also, there were all the community projects that Black Like Me sponsored and supported. I soon realised that I wasn’t ready to let it all go. And, most of all, I wanted to be in charge of my own business again.
Through some difficult negotiations, Shane and I managed to buy back the 75% share for less than Colgate had paid. It was a significant coup, and it re-energised me. On 1 August 1999 Black Like Me was mine again – I was determined that nothing would hold me back from returning the company to its former position in the beauty industry.
Once again, Shane Ferguson had brokered a good deal for me, so I gave him shares in the company. Although Shane and I are business partners first, we are also friends. His finest quality is his fairness in all his dealings. Since our first meeting, Shane has served as my adviser in almost every business transaction that I have undertaken – his lack of guile and honest approach to business have helped to ensure sustainable business transactions, and have also prevented corporate headaches that may have occurred. He is a true business professional who knows how to structure a deal and how to get funding; he also has an excellent network, and an innate ability to add value to business transactions. I have watched Shane get married, and Connie and I have also celebrated the birth of his two lovely daughters, our families becoming close friends.
Although we operate independently, Shane is a shareholder in some of my businesses; he also does most of my legal and corporate work. If I could learn to enjoy fishing or Shane could learn to enjoy golf, we’d spend a lot more time together.
The dawn of the millennium heralded the beginning of a new era for Black Like Me. It had taken three years for corporate rigidity to near-strangle the flexible and organic company I had built up over fifteen years or so. “I won’t allow it happen again,” I said to Shane. “I must think very, very carefully about the next step I take.”
While I didn’t want to sell Black Like Me, I realised that there would be other business opportunities, and that I needed to elevate my presence and profile in the corporate world. I became more accommodating of the media, who wanted to profile me as a business success; it would have been selfish and counter-productive to continue to safeguard Herman Mashaba, the man, from media attention. I was regularly asked to deliver motivational lectures to various organisations that sought to elevate an emerging black management, and who regarded the success achieved by Black Like Me as a positive model. New managers needed to see black success stories.
With this in mind, I put myself at the forefront of reforming Black Like Me. Buying back the company had used up almost all my financial reserves, and for a while we operated on a hand-to-mouth basis. But by getting back to basics, re-hiring key staff, and re-establishing the company’s focus, we were able to achieve phenomenal sales in 2001, and accelerated earnings a year later – realising an astonishing 40% growth. Black Like Me had expanded its product range, modernised the packaging, and included French wording on products so that they could compete on shelves against our competitors in Francophone Africa. I employed an export manager to attend to communication with port authorities and to focus on our business networks in Ethiopia, Cameroon, Mauritius, Zambia and Kenya. We concentrated on revitalising our waning support in Botswana, and Louis led the re-launch there by holding a promotion for Black Like Me as well as our Perfect Choice and Special Solutions brands. Perfect Choice was aimed at creating a black urban professional identity, and Special Solutions was formulated to appeal to trend-conscious teenagers – a market we hadn’t considered up to then. We also sponsored the “Face of Africa” pageant.
In spite of its growth, Black Like Me had managed to acquire only 10% of the South African haircare market, which was worth about R600 million at the time. But from previous experience I knew that we also had to look ahead to the next logical step – international penetration.
The previous year, during a British trade visit to South Africa, I’d met a representative of haircare company Re
nbow International. But in spite of my keenness to co-operate with them, it took me a full two years to study the UK market and formulate a penetration strategy. The UK black haircare business model was quite different from the South African one. With 40 million people, the South African market was valued at R800 million, while the UK market consisted of a mere three million people, with an astonishing market value of about R740 million. The British black hair-care market was worth a lot, and I wanted Black Like Me to have a shot at securing a share of it. I was convinced that we had a superior product, so I took a gamble and threw the Black Like Me dice onto the board, clearly announcing its presence in the game.
I approached Renbow, and on 17 April 2002 Black Like Me was launched in London. We entered into a joint venture by which Renbow undertook the UK distribution of our product. During the early days of Black Like Me, Walter Dube used to joke about my extravagant marketing exercises – and now, inspired by my deal with Renbow, I decided to go really big. With the UK launch pending, I approached the Department of Trade and Industry and requested the use of South Africa House on Trafalgar Square for the British launch of Black Like Me. It was a bit of a bold move, so I was not really surprised when an official from the department phoned and asked me to explain. He politely asked, “What is your reason for wanting to host the launch at South Africa House?”
I explained that I was competing in an international arena against multinational companies, and that it would be good for South Africa to demonstrate that they too had credible heavyweights in industry. This satisfied the official, and soon we were making plans for the launch. Her Excellency Ms Lindiwe Mabuza was the High Commissioner at the time, and she graciously welcomed us at the embassy. It was a poignant moment for me as I stood outside South Africa House to welcome guests at the very spot where so many South African activists had toyi-toyied against the apartheid regime. It was a glittering occasion attended by the elite of London’s black hairdressing community, trade diplomats and expats; Jean Pascal Brunas of Renbow addressed the gathering as we sipped champagne under crystal chandeliers.
Black Like You Page 17