Searching Through Dustbins

by Abed Tau

  At the time, he thought nothing of this strange behaviour – but then it became clear that Uber had become a serious contender in his industry. He eventually reached a point where he was making just one trip a day. Then, one day, one of his regular customers asked why he didn’t solve the problem by joining Uber. He replied that he couldn’t, because he couldn’t afford to buy a new car. Imagine his surprise when that customer offered to buy one for him. At first, he thought that it was all a joke – until he found himself the proud owner of a brand new BMW 3 Series. The customer bought him the car on the proviso that he would be the registered Uber partner, while the driver would be a 50/50 partner.

  Ten months later, as an Uber Black driver, the former taxi driver is now grossing more than R50 000 a month – a lot more than the R100 he’d take home during his metered taxi days.

  There were quite a few aspects of this story that really impressed me. The first was how much the driver appreciates his partner, recognises the opportunity he was gifted, and does his best always so that he can honour the trust that was placed in him. At the same time, I was struck by the customer, an Englishman who visits South Africa maybe twice a year and forges a relationship with a stranger that becomes so strong that he eventually partners with him on a life-changing venture. Even more astonishing is that the driver told me that his partner doesn’t hassle him for spreadsheets and reports. Their partnership really is based entirely on trust.

  What does this happy tale teach us? Firstly, be kind to strangers. You never know who you’re going to meet, and how they may change your life. Secondly, give people a chance. Often, they’ll surprise you by exceeding your expectations. This is especially true of small business owners. Most are so hungry for an opportunity that if you give them one, they’ll surprise you. Finally, when the house is on fire, get out. We’re not trees; we’re not rooted anywhere. When this metered taxi driver realised that Uber had come for his lunch, he took the first opportunity to join the behemoth and is now making more money than ever before.

  I’ve seen some of these principles at work in my own life. Tebz and I were once invited to celebrate the birthday of one of our dearest clients, the co-founder of a highly successful catering and event management company. When they signed on with us (the third client to do so), we were working out of a room in a flat; we had no office and no employees. In fact, it was thanks to them that we took on our first staff member.

  Our clients, Vicki and Nikki, took a chance when they decided to sign on with us. Tebz had found them when she decided to cold call clients as part of a new client recruitment drive, specifically targeting com­panies in the event and catering space. Vicki and Nikki had been on her list. I still remember how excited Tebz was when she told me that Nikki had agreed to give her a meeting.

  We took that chance that they gave us, and we made the most of it. That relationship has led to more work over the years and, more than that, it’s been an absolute pleasure to watch their business grow from strength to strength, and to know that we’ve played a small part in this growth.

  I wish that more members of Corporate South Africa would give small businesses a chance, as Vicki and Nikki did. Most graduates are familiar with the expectation that they have some experience before a company will even consider looking at their CV, a concept I’ve always battled with. How on earth does someone, fresh out of university, gain experience, when no one is willing to give them a chance to do so? The same holds for small businesses. Most corporates want to know that a small business has already undertaken a sizeable assignment before they’ll take them on – but the reality is that most SMEs have an incredible work ethic, and will deliver superb service because they want to prove themselves.

  My message, especially to Corporate South Africa, is: take a chance on an entrepreneur. Not only will you receive outstanding service, but you’ll also be giving a small business the wings it needs to fly – and contributing to the growth of the critical SME sector.

  CHAPTER 14

  IDEAS ARE LIKE BILLS:

  EVERYBODY HAS THEM

  One of my friends observed that ‘ideas are so cheap, everyone has them’. That resonated with me, because it makes a lot of sense. But, before I explain why, I want to tell you a story.

  It’s a story about a high school buddy who went on to start a tech business. He was in New York to raise money for his start-up and had reached out to a few tech hubs for this purpose. One hub, in particular, stuck out for him – not because of what he learned there but because of the value that its community members placed on ideas: a big, fat zero. He learned this when he was chatting with a fellow start-up owner who didn’t hesitate to tell him everything about her business. And I really do mean everything, from the workings of her business model to her strategy for acquiring clients and the tech she was using – even her unique selling proposition. She all but handed him her business on a plate.

  My mate was pretty shocked. He was accustomed to the South African mindset, which is all about protecting your ideas in case someone tries to steal them.

  When he pointed this out to his new friend, she gave a priceless response: ‘Dude, if you’re able to beat me at my own idea, you deserve to win.’ She added that the most shared ideas are often the successful ones. Her rationale? ‘When you tell a lot of people, you get to indirectly test its rigidity in the market, so you already have real time feedback and know what you can improve on.’

  Although I admit that I used to be very attached to ideas, I’ve come to realise that it’s not the idea itself that counts. It’s how that idea is executed. After all, no one ever became rich by exiting an idea without executing it. They all died with their ideas in their heads.

  Don’t get me wrong. I know that coming up with a really good idea is hard work, but commercialising that idea is even more difficult. Monetising an idea and finding customers and a product market-fit is a painful process – and that’s what most entrepreneurs are doing when they talk about working 18-hour days. I can assure you that none of them worked 18-hour days dreaming of their ideas.

  So, are ideas cheap? Absolutely, in my mind. I accept that many would argue this point, but I would much rather invest in a team of executors with an average idea and outstanding execution intelligence rather than the other way around.

  CHAPTER 15

  UNPACKING THE BUZZWORDS

  Blockchain, cryptocurrencies, nanotech, wearables, ICOs, AI, cloud computing, open source, machine learning, self-driving, automation, chat bots, Internet of Things, SaaS businesses, quantum computing. These concepts might be unfamiliar to you, but they’re the buzzwords of the tech community.

  At first, this jargon was the sole preserve of Silicon Valley but, as my high school history teacher used to say, ‘when America sneezes, the rest of the world catches a cold’. In other words, whatever the latest situation in America, the rest of the world tries to follow suit. Certainly, I think that South Africa’s tech scene has caught Silicon Valley’s cold, and I’m sure our industry isn’t alone in this. It’s a phenomenon the world over.

  Now, there’s nothing inherently wrong with this. However, I feel that start-ups don’t have the full picture when they try to replicate solutions from the West. Our market isn’t as mature as America’s, where there is patient capital, connected and functional ecosystems and, most importantly, a large consumer base. America has a population of around 325 million, 52 per cent of which is middle class and 20 per cent upper middle class. That’s approximately 200 million potential customers who can afford your product.

  In contrast, our total middle and upper middle class accounts for approximately 17 per cent of our 55 million-­strong population. That’s nine million people and, while that might sound like a big number, it hardly stands up to America’s 200 million.

  It’s important to understand these figures because the reality for those wanting to create the ‘Uber of cleaning’ or the ‘Airbnb of office space’ in S
outh Africa need to realise that we don’t have the scale that allows businesses of this type to enjoy the mass adoption and market penetration of a similar business in America. Worst of all, your investors will continuously compare you with the real Uber and Airbnb, and the comparison will inevitably be unfavourable. Meanwhile, you’re not a poor entrepreneur; it’s just that you’re working in a different market space.

  Business owners have to understand their landscape and its parameters before they try to localise a foreign AI solution or blockchain technology, or any of the other exciting businesses that we hear about over the seas. I think it’s also important to note that several of the businesses that we have come to love and which have become part of our everyday vocabulary (think of how often you suggest ‘getting an Uber’, ‘Googling that’ or ‘we will Airbnb’) were started by people who were initially looking for a solution to a local problem. They later realised that the problem went a lot deeper than the local context, and that’s when they proceeded to the global stage. It’s very difficult to start a business that solves a global problem from Day One, without first solving the problem in the most testable micro environment.

  South Africa obviously faces a plethora of challenges, from poverty to inequality, the state of our education system, citizen safety and security, joblessness, food security, basic services, health care and social welfare. My assertion is that once entrepreneurs tackle these problems head on, and find a way to innovate around them, they might find that they’re able to take their solutions to other countries experiencing the same problems.

  The beauty of this is that South African problems are often a lot more simple and straightforward than the ones we’re focusing on. Instead of trying to create a South African Uber or attempting to bring a drone business from America into the country, why not look at the fact that South African children need quality school shoes that will last longer, or adjustable school blazers that don’t need to be replaced so often. Items like this might not be glamorous, but there are a lot of parents who can’t afford to buy new uniforms every year.

  Please don’t get me wrong. There’s nothing wrong with starting a business in the ‘buzzword’ category. But you need to be aware that it’s going to be an uphill battle, from scalability to raising funding, surviving in tough market conditions and finding an addressable market size. Make sure you know the facts before you start preparing to build the next AI bank.

  CHAPTER 16

  DO YOU WANT TO BECOME FAMOUS OR RICH?

  I once watched a video clip where a South African entrepreneur spoke about some of the challenges and failures he’d experienced while building his clothing retail business which, from what I could gather, is a consumer facing enterprise.

  Right after watching the interview, I went online to check out the entrepreneur’s Instagram account. There was his title: Celebrity Entrepreneur.

  I thought that was something of an oxymoron – ‘celebrity’ and ‘entrepreneur’ are two words that should never follow each other. You see, big movie stars, musicians and rock stars can have their cake and eat it: they get to be both famous and rich. However, in the world of entrepreneurship, very few entrepreneurs are both rich and famous – and I really do mean very few. It’s really just the likes of Jeff Bezos, Mark Zuckerberg and Elon Musk. There are no Robert Downey Jnr’s in entrepreneurship. There is only iron and hard steel that you must somehow cut through.

  I think the reason entrepreneurs want to be famous or well known is because they don’t understand their business models, or what it will take for those business models to work.

  When I first started my business, if you’d asked me if I prefer a B2C or B2B model, I would have wondered what you were talking about. I wasn’t yet familiar with the lingo, and how B2C (business-to-consumer) or B2B (business-to-business) models compared. Since then, I have come to believe that this is the epicentre of all business, and the reason why so many businesses fail.

  It’s vital to understand not only your business model, but also the audience for your products and services. Here’s a quick summary: a business-to-consumer model sees you selling your product directly to a consumer. In contrast, with a business-to-business model, your customer is typically another business. Think of when you buy milk from your local retailer, for example. The retailer is typically a ‘business-to-consumer’ organisation; they sell a product directly to you, the end consumer. On the other hand, the dairy company which sells the milk to the retailer follows a business-to-business model, selling their product to another company. The farmer who originally produced the milk is also business-to-business, because he sold his product to the dairy company. You could take this example even further: the company that produced the packaging, the dairy’s distribution company – these all operate according to a business-to-business model. Their consumers are either the dairy company or the retailer.

  The problem with a business-to-consumer model, in my opinion, is that its success depends on having a strong brand. Consumer businesses are driven by volume, so you have to target a large number of purchasers – but consumers can’t buy a product unless they know about it. That means you have to spend hundreds of thousands on advertising. Even if you don’t advertise on formal channels like print or TV (which is almost impossible for a start-up), you still need budget for social media campaigns and Google AdWords. Business-to-consumer models are, essentially, marketing companies – and they’re hard work. These markets are highly competitive, because in most industries there are already established companies that have larger marketing teams, budgets and billboards. Behind every consumer item you can think of, there is a behemoth to compete with.

  Nonetheless, most people continue to think of entrepreneurship in terms of the business-to-consumer model. People are driven by the desire to open the next cool restaurant, bar, hair salon – those ‘famous’ businesses I discussed earlier. Now, there’s nothing wrong with these businesses, but it’s important to know the challenges upfront. And here’s a question for you: you might know the owner of restaurants like Saint or Gemelli Cucina Bar, but do you know the name of the biggest supplier of toothpicks in the country? Probably not – but I can assure you that they probably make more money than those restaurant owners.

  No one is ever going to invite the toothpick guy to share their entrepreneurial insights at the next finance indaba. They’d prefer to hear from the business-to-consumer entrepreneur. Okay, so they’re famous – but here’s the secret. The famous restaurateur has to pay the toothpick guy thousands every month, even while he’s struggling to pay the rent. And so do all his fellow restaurateurs.

  Probably, the restaurant will eventually close – but soon another hopeful, eager restaurant owner will rush in to fill the gap, and the toothpick manufacturer will have yet another client.

  Don’t get me wrong. There are, of course, thousands of successful business-to-consumer companies, and it is possible to make it big in this market. But it is incredibly hard to do so.

  Not that making it in the business-to-business market is easy. The difference, though, is that you don’t need as many clients to be sustainable. Returning to the example of the toothpick manufacturer: all he needs is around 20 clients, and he has a business worth almost R100 000. Compare that with the restaurant owner, who would need to seat hundreds of clients every day to achieve the same results. And while you cannot rely on patrons to pick your restaurant every night, the toothpick manufacturer has the assurance of a guaranteed income, thanks to monthly retainer agreements.

  Of course, business-to-business models have their own challenges. They have longer sales cycles, and they need strong problem-solving skills rather than the creativity and flair required by business owners in the business-to-­consumer space. The rewards are worth it, though: think bigger cheques and more sustainable earnings.

  My opinion is that we’re wired to crave fame. We want to be lauded as the next business guru; we’d love to be featured
in magazines and invited to give speeches. But the older I get, the less I buy into this view. I’ve come to realise that the most successful business owners are the ones we haven’t heard of, and that’s because they’re working behind the scenes instead of serving the consumer market.

  Long story short: understand the challenges of the market you operate in. Is yours a consumer-facing business, or a business-facing one, and do you understand the pros and cons of each model? It might not be possible to have a blueprint, but you still need to know, upfront, what you’re in for.

  Do you want to be famous or do you want to be rich? Now go and find your own toothpick solution.

  CHAPTER 17

  I HAVE NEVER MET A MILLIONAIRE DRESSED IN A SUIT

  You might wonder what on earth I mean by this chapter’s title. After all, there are tons of millionaires who do, indeed, wear suits.

  Let me explain: I received my training at Deloitte, one of the global Big Four audit and consulting firms. I worked mostly with multinationals and big, JSE-listed companies. I had no mom-and-pop-shops on my client list, so I didn’t have much exposure to the world of SMMEs. My world consisted of meetings where I would see the partner arrive at the client’s office, and it would be like a scene from The Matrix or Men in Black. The room would go silent – or, at least, the Facebook screen would be minimised and replaced with an Excel spreadsheet. My point is this: I developed a mental picture of success that always included an older man or woman dressed in a fitted suit, carrying a briefcase (or, even better, one of those laptop bags on wheels). I never, for one moment, considered that success could exist outside of this image, or that there could be a millionaire who didn’t fit the stereotype.