by Abed Tau
And so we decided to build the app ourselves. We had the advantage of being first to market in South Africa with an on-demand tutoring solution. As you know, this earned us instant kudos: we won the MTN App of the Year category award for breakthrough developer of the year and second place at Hack.Jozi, and made it to the Superbalist 100 list of leading influencers. Within three months of launching, we had signed up 900 tutors and 600 learners, and our downloads grew daily.
We were very pleased with the numbers, but we should have been paying closer attention: the data showed us that one particular student viewed every single tutor profile in the app, an action we found weird, but not weird enough to act on. Within a few weeks, the same ‘student’ had gone on to start his own tutoring app, which resembled ours and had a few better features. Adding insult to injury, he followed all our tutors on Instagram, and added them to his tutoring app page. Our friends called us to ask if we’d heard of the company, and to warn us that it was calling itself ‘the Uber of tutoring’, a title we had thought belonged to us. It was official: we had our first competitor. Dylan and I were ready to fight.
Over the next few months, we added more and more features to our app. We integrated Skype into the app, we added plug-ins to WhatsApp, and created a range of features that far exceeded our competitor’s. Within eight months, we’d added four new features, and we added six more four months later.
I don’t regret much in our business journey, but I do regret this. We got swallowed up by our emotions, and spent all our time focusing on the wrong things: the competition. You see, with hindsight I came to understand that the people that compete are the ones who lose. I learned this the hard way: we spent so much time trying to compete that we took our eye off our most important stakeholder, the customer. We completely forgot about the problem we were looking to solve and, in the process, forgot to build a proprietary user experience which would serve as a moat around our Tuta-Me castle.
If I could go back in time, I’d have built that moat strong enough to keep out the Night King and his army of the dead. If, like me, you’re a Game of Thrones fan, you’ll know that the Wall shielded the people of Westeros for thousands of years, until the Night King got hold of one of Dany’s dragons. What does this have to do with your business? Simple: you have to build a wall so impenetrable that the only thing that can make it collapse is the breath of a dragon.
Here’s the thing: you don’t build a moat by focusing on your competitors. You do so by focusing on your customers and constantly asking yourself how you can make their experience better, how you can draw them closer to the service or product you’ve created to solve their problem.
Dylan and I only realised the error of our ways after months of trying to fight every new competitor. By that time, it had become clear that we had stopped trying to solve a problem. We had started to compete and, as I’ve said, those who compete lose. If you don’t believe me, watch Usain Bolt running: he looks straight ahead and runs as though he is the only person on the track. He is running his own race. It’s only at the last millisecond that he takes a quick look to the right and left, as if to confirm that he ran a good race and is still Number One. Dylan and I were running a completely different race: we were wasting our energy, constantly checking how everyone else was doing and using the wrong tools (like better shoes or steroids) to help us do better than them. We hadn’t yet realised that we were competing against no one except ourselves.
We recently met up with one of our competitors, a Cape Town-based outfit, to exchange war stories. It was refreshing to hear how similar our problems are, and even more fascinating to hear how they are tackling the problems they encounter. I can see now that our start-ups are both very different. Even if we are both working to solve challenges around education, we have targeted different markets and could probably both benefit if we became collaborators instead of competitors.
Our decision to stop competing and instead focus on building a moat around our castle changed our view on everything we do. Your moat will always start, and end, with your customer experience, followed by the culture in your organisation. The competitor is never involved, not even peripherally. Please know that if you are concerned about your competition to the point where all your decisions are based on what your competitors are doing, you are already chasing your own tail.
Those who compete are the ones who lose. Competition is for losers.
CHAPTER 27
WHEN YOU FINALLY ARRIVE, DON’T FORGET THE TASTE OF TWO MINUTE NOODLES
When I was at university, my staple diet was two-minute noodles. I had a batch of recipes to try to make them taste better, or at least different; I’d add Viennas, eggs, cheese, anything to mask the fact that I was eating noodles for the fifth night in a row. I couldn’t wait to start earning the big bucks that came with a career as a Chartered Accountant. I imagined being able to switch the noodles for caviar, or at least having takeout for a change.
When I finally graduated with my Honours degree in 2009, it didn’t cross my mind to carry on with the businesses that I had started as a student. I was desperate to get on with my life and start earning money.
Fast forward to November 2012. I have just handed in my laptop at Deloitte; my CA articles are finally over. What feels like a three-year prison sentence has finally come to an end. I think I speak for members of all professions when I say that the end of your articles feels like the loosening of shackles.
But here’s the problem: instead of relishing that freedom, we go on to place ourselves in even tighter shackles. We replace our rusty old ones for shiny new ones. We tie ourselves to mortgage bonds, to expensive German cars. We take on responsibilities very quickly.
The irony is that this is not the time to play it safe. In fact, this is precisely the time when you should remember your childhood dreams and the things you once imagined doing. Now is not the time to take the job at a listed company as group accountant or legal counsel; now is not the time to take that job as a life insurance derivatives specialist. Now is not the time to be safe.
You have just spent the better part of your varsity years and early working life writing the most difficult exams of your career. You have sacrificed so much to get that degree and make your parents proud. If you’re particularly driven, you may have worked so hard that you earned a recognition badge for being a star performer. You have arrived; you have carved yourself a middle-class life that will make you comfortable whether you stay in South Africa or leave to explore overseas opportunities. But here’s the question: why would you not use everything you have at your disposal, including all your new-found knowledge, to pursue all the things you’ve always dreamed of doing?
As a kid, did you want to start a business? Live overseas for a bit? Did you want to be a singer? A dancer? An actor or actress? Good. You need no extra incentive to politely turn down the job offering a salary with an extra zero and suffer just a little longer. You can eat noodles for just a few more months. Because here’s the thing: if you’ve tried and it still doesn’t work out, you can still go back to your Plan A and get a great job. Remember: you’re a young professional. You’re in the top 1 per cent of the world’s most privileged people. Stop complaining.
A lot of people feel like they need to start earning well as soon as they can, often because they’re facing a specific set of circumstances like the need to pay black tax. I get it, I understand it, I respect it, I’ve lived it. But, at the same time, I need to tell you that I have never attended a funeral where people say, ‘Here lies a loving father who died because his child decided not to take the job as a financial manager and pursued his dream instead, meaning he could no longer provide for the family.’
I think that the time after you graduate or qualify as a professional your greatest assets (above your degree and professional designation) are your time and energy, plus the fact that you have yet to accumulate serious responsibilities. Talk to any older person, and t
hey’ll tell you that their greatest regret is how they spent their time between the ages of 21 and 35. They’ll tell you that they wish they’d travelled more, that they’d started a business, that they’d have taken more time to become an adult.
My experience is that, in the world of business, age, energy, desire and passion are instrumental in starting and running a successful business. That’s why you should use this ‘in between’ time to do just this.
Of course I’m not saying that it’s impossible to start a business when you’re older, but the inalienable truth is that it’s much harder when you have kids, bills and mortgages – plus, our energy tends to taper off as we get older.
So, again, if you are in your final year of articles, if you’ve recently graduated or if you’re close to getting your professional qualification, maybe it’s time to take that year off and go teach English in Bali, like you always wanted to. That’s a great story around a campfire one day. Following the path of least resistance is fine, but if you have the awesome privilege of pursuing your goals and dreams, and know for a fact that you can always get a job that grants you immediate VIP access to the middle class if it doesn’t work out … well, then you have no excuse. Get going. Stock up on noodles, because you’ll be eating them a bit longer – and that’s just fine.
CHAPTER 28
YOUR FIRST HIRE COULD BE YOUR LAST
We all want our children to outlive us. This is a basic and widely understood premise of parenting. Business is no different: your goal is to create a business that will outlive you. After all, your business is your baby. You get to see that baby grow from an idea to a fully fledged business that invoices clients, hires employees, has deliverables to customers, and grows.
It would be a travesty if your business did not outlive you. That’s the premise that creates businesses of value and businesses that endure. Jack Ma, founder of Alibaba, is well known for saying that when he makes important decisions for the company, he always asks his board a key question: will this decision hold for the next 100 years? It’s quite a thing to be able to think like that. It means that you accept the notion that your business will be around long after your own life has ended.
It’s also an incredible mindset to adopt when your start-up is in its early stages – at least, that’s how it’s been for me. Often, I’m focusing on nothing more than trying to meet our monthly obligations, like rent, VAT and salaries. We can’t imagine what the business will look like in a few months’ time, let alone 100 years.
This was especially true in the early days of Tuta-Me, when we faced one challenge after another. Some challenges are positive, because they stretch you – but this was not the case. I would describe our challenges as ‘life-threatening’. Our start-up was always in ICU with a prognosis of stable but critical. Life at the office felt like a scene from Grey’s Anatomy: one of us would yell ‘Tuta-Me is crashing’ and some doctor would speed in with a stretcher, get us into triage, and somehow we would get that flat line to beep again.
The question of what makes a company able to live on for 100 years is an interesting one. It certainly got me thinking about why some companies are able to endure, and what they need to be in order to do so. I encountered some of these companies when I was an auditor, working with companies listed on the JSE. I was always struck by the realisation that although the founders of these companies were long gone, their vision had been so great they had created a business giant. I find that hard to fathom: In my own experience, when your business starts out, it’s all about building a product or service. From there, you look to develop a company around that product or service. However, the reality is that it doesn’t matter how great your product or service is; if your company isn’t great, whatever you’re offering won’t endure. At the core of any business, there’s nothing more than people, a logo and a building – so, really, a company’s essence comes down to the people you hire. Those people are the backbone of the company.
Of course, it’s difficult to think of major global brands like Apple, Microsoft or Coca-Cola as nothing more than a logo that has organised its people to deliver consistently exceptional products and services – but that’s precisely what they are.
At Thamani, we quickly found a product market fit; a concept we grappled with for months – make that years – at Tuta-Me. People wanted the services Thamani offers, because everyone, even small businesses, has needs related to accounting, payroll and taxes. Because of this, we were able to find traction at a relatively fast rate.
Once we realised that we had a useful service, we spent all of our time selling this product market fit to new customers. The problem was that in a quest to sell and convert clients, we neglected our duty to build a company. Nor did we invest time in finding talented people who could help us do this. As a result, we had a service, but we didn’t have a business.
This eventually took its toll. In the beginning, everything worked perfectly: new clients agreed to a retainer, paying a fixed service fee in exchange for monthly services tiered according to their requirements. However, we hadn’t hired people to deliver these services so that we could retain the clients. Initially, Tebz and I got by delivering the services ourselves but, as we started to scale and acquire more clients, we lost our existing ones. In fact, for every three clients we added, we lost one. The problem was that we couldn’t scale ourselves. Our clients were so used to us being involved in their business, but as we grew we just didn’t have the time to provide that personal touch they had come to expect.
This problem is a common one for businesses built on a business-to-business model, like Thamani. That’s because, as the founder of the company, you’re naturally focused on building relationships with new and existing customers and when you’re not spending time on this, you’re in client acquisition mode. But this is where things get tricky: obviously, you cannot make another ‘you’, so it’s impossible to create personal relationships with every single customer. Nor can you be the sole salesman.
As soon as you reach that tipping point, it’s time to start building a brand which can serve as a proxy for you. But you can only build a strong brand if you have a strong internal culture, and you cannot build a strong culture if you have hired the wrong people. Your brand is the sum of your people or, put another way, the people you hire become your brand.
Tebz and I realised that we had reached a stumbling block because we hadn’t yet built a company culture, let alone a brand. This was accompanied by another realisation: we hadn’t hired people who would be able to carry the baton forward and, ultimately, develop into a company that could endure.
I have always thought of culture as a fluffy concept. What on earth is it, and how do you hire for it? In that sense, culture is kind of nebulous and ‘out there’, but it makes sense when you look at it as a shared way of doing things between people. This might relate to behaviours but, because behaviours may change over time, it should also encompass core values and beliefs.
Brian Chesky, CEO and co-founder of Airbnb, famously took four months to hire Airbnb’s first employee, an engineer. Chesky pored over thousands of CVs and personally interviewed over 100 people, but he considered this time well spent. After all, he maintained, the first employee lays the DNA of the business. If the company was to be successful, it would have to be able to hire people who shared the same values and outlook.
I’m intrigued by the concept of your first employee injecting DNA into the company. Our first hire was based on a referral from a friend. He was a great guy with a very likeable personality, and our clients loved him. Unfortunately, his work ethic didn’t quite match the standard of what we were trying to build, and he needed more focus, attention to detail and consistency. He had many strengths, but the professional services firm is not an environment where he could thrive. Unfortunately, we didn’t address the areas that needed improvement – a pity, because we found that the people we employed subsequently tended to have simi
lar weaknesses. That first employee cemented the culture of Thamani, and we only realised that this was a problem when we started losing clients because they weren’t entirely satisfied with our staff.
We’ve since realised the value in the advice ‘hire slow and fire fast’. Because we didn’t follow this counsel when we discovered areas where our first employee was lacking, our business deteriorated in a very short space of time. Without the right people on board, Tebz and I found ourselves spending a lot of time putting out fires, managing clients who wanted to cancel their retainers, or fixing the work of our employees. We took our eyes off our real job: building a business, selling and growing.
All of these problems could have been avoided if we had taken time to really invest in recruiting, asking the right interview questions and hiring for the culture we wanted to create. This was a work hard/play hard, client-centric environment embedded with deep integrity and a desire to see our clients thrive. Because this culture was not in place, we started losing the traction we had only recently gained.
Over the next 12 months, we made a conscious decision to let go of employees who didn’t fit in with our corporate vision. This wasn’t at all easy: we knew all these guys, and we knew their stories. We knew that they all needed the money, either to support their families or to finish their studies. However, sometimes – not always – you need to make decisions not with your heart, but with the health of your business in mind.
Hiring is an art rather than a science. I think what makes it particularly difficult when you’re just starting out is that it’s really difficult for a start-up to attract the most talented people. You simply cannot compete against big corporates with their huge hiring budgets. People will work for you only because they can’t get another job, because they are desperate, or because they are truly aligned to your corporate mission. Happily, this sometimes works in the start-up’s favour: many millennials are eager to work at a company with a strong mission that resonates with them, especially if they feel that they can be part of a growth story. This works well for companies in the States, which have made themselves even more attractive as employers by giving vesting equity options to deserving employees, so that staff feel as though they own the company and that their effort directly affects their future value in the business. That’s important, because you’re looking for someone who is driven, passionate and determined to succeed, no matter what.