by Abed Tau
Actually, what this translates to is the fact that you’re ultimately looking to hire another version of yourself, with your passion. The problem is that those people are doing exactly the same thing that you’re doing: they’re out there starting and building businesses, rather than looking for jobs. That’s not to say that you won’t find gems. We certainly have; we have amazing people working for us. But we had to kiss a lot of frogs before we found them.
Here’s the lesson: it’s worth investing time in finding the right people. It might be a painful and expensive process of elimination, but it’s even more expensive to hire the wrong people. In fact, the wrong hire could be your last. It takes just one employee to ruin your business. Remember that when you’re making your first hire: they just might be your last. On the other hand, they could be the DNA that creates a company that endures for 100 years and more.
CHAPTER 29
FISH WHERE
THE FISH ARE
A little while ago, a mate invited me to go fishing. Now, I had never been fishing before. I don’t own fishing rods, and I honestly thought that I had to buy worms for bait. Everything I knew about fishing came from the movies: you stick a worm on the hook, and within a few minutes you catch a fish. My friend didn’t exactly disabuse me of this notion. Instead, he assured me that it’s an easy activity once you get into it. Let me tell you, there is nothing easy about fishing. It’s almost impossible to catch a fish. We caught nothing that day, not even a sardine, even though we spent six hours waiting for that fishing line to move.
The fishing debacle reminded me of one of our first clients at Thamani Consulting. He’s the father of one of my friends, a medical doctor by profession with a practice in Springs. He quickly graduated from client to father figure and eventually became a mentor – one of my favourites – to both Tebz and me.
This doctor had a personal relationship with all his clients. He wasn’t just a leader and the community doctor; he was also the resident psychologist, life coach and mentor to his patients, and touched many people’s lives. There was always a line of people waiting to see him, but whenever we went to visit him, I would always brace myself for a two-hour conversation that would start with an opener like ‘Abed, I’m paying too much tax’, or ‘Abed, I just received a letter from SARS. I need to sort out my taxes’. The conversation would eventually lead on to business, life, family, and purpose.
One of the great lessons – in both business and life – I learned from the doctor is that starting a business isn’t vastly different from going fishing for the first time. I heard this advice before my first fishing expedition, so initially I struggled with the metaphor; all I could think of was the sardines and pilchards I grew up on. I told myself that if starting a business was like sardines and pilchards, I wanted nothing to do with it. I wanted kingklip, sole and salmon. I wanted to be the guy in the picture holding the fish that was longer than he was.
I quickly learned that what the doctor meant was this: fishing is a sport of patience, and success depends, more than anything else, on knowing where to fish. He told me that when you go fishing, you simply don’t know where the fish are, so you cast out as many lines as you can, maybe seven lines all at once. You cast those lines in different places, and you try a new spot every week. Some of those spots might yield a fish or two; in others, the rod will remain absolutely still, with the bait failing to attract a single fish. Sometimes you might catch a single sardine, and that’s also okay.
The point is this: as you gain more experience as a fisherman, you’ll realise that you need to let go of some of the lines and focus instead on the rods that are yielding the tunas and barbels. This is a terribly hard thing to do, because you’ll always wonder if a fish might have come along if you had left the rod in just a little longer.
Business is exactly the same. As an entrepreneur, your biggest obstacle is finding focus. Your head is swimming with all these ideas, and there are a hundred different services and products that you have launched or are launching or want to launch. Letting go of some of them so that you can focus on others seems counter-intuitive. That’s why many start-ups think of scaling as an opportunity to add more things to the basket, when in fact it should be about taking things out of the basket and focusing on what’s left. It’s about letting go of the unproductive rods so that you can pay more attention to the ones that are working for you – a concept I admittedly still struggle with.
It’s perfectly acceptable to cast your net wide when you’re a start-up entrepreneur or early stage business; in fact, you should. Your job at this stage is to explore different customer segments, offering them a wide range of products and services. These products and services are like the worm bait; you’re using them to get the customers to take a nibble. That’s precisely what we did in the early days of Thamani: we did everything for everyone, often for very little money. We were running an accounting practice, but I was also outsourcing DJs for corporate gigs from the same company. If I’d uncovered a demand for cutting grass, we probably would have started a new service line. We didn’t know where the fish were, so we looked everywhere.
This is great for a short while, until it isn’t any more. You will notice that you become extremely busy, but that busyness is not yielding any real rewards. You are catching sardines only, no tuna. This is frustrating, and you’ll probably find yourself wondering why you left the safety of employment. And this will continue until you find your focus, and keep your eye trained on the fishing line that brings the best returns.
As I’ve said, this is something I still haven’t mastered. It took us a while to focus, and I think we’re still struggling a little. I’m particularly guilty of this. I’m involved in all our businesses: Silicon Maboneng, Tuta-Me and Thamani. I’m not entirely sure if I’m so bound up in them because I’m convinced the businesses need me, or because I’m scared of losing control – probably the latter (just as an aside, contrary to popular belief, the founders of a business are not indispensable. We are never needed as much as we think we are. Businesses carry on, even when people leave or resign). Even so, I really do believe that the most successful entrepreneurs are those who are able to find focus early on. The sooner you find your focus, the fewer mistakes you’ll make and the fewer pivots are required.
My mentor’s lesson was simple: you have to fish where the fish are, and if there’s nothing happening at your chosen spot, you have to move on. Once you’ve found the fish, you need to invest in the best fishing rods, the best fishing boats and nets, and the best bait. In the business world, this means that once you have found your product market fit, your ideal customer segment, and the correct customer acquisition costs and strategies to support your customer lifetime value, you need to stop everything else you are doing and focus on that.
While you’re at it, it’s also important to remember that every business is built on one of two models: you’re either structured to make a little from a lot, or a lot from a little. You are either going to sell bread at R10 a loaf to a million customers, or you are going to sell R5 million Lamborghinis to 2 customers. Again, this relates to fishing: you can either catch a ton of sardines, or you can go after a few lobsters. The value is the same.
Either way, unless you know where to fish, the business model you adopt is irrelevant. The real task is to figure out where the fish are, and zone into that.
CHAPTER 30
THE POPCORN I REGRET GIVING UP
This is the story of Pop-It, a popcorn company I wish we had taken to great heights.
I don’t have a lot of regrets in my short business career. Sure, I’ve made mistakes, I’ve lost money, I’ve dropped the ball on clients – but there’s nothing I really kick myself about. Except for Pop-It.
The company started with a crazy idea I had to start a popcorn machine franchise back in 2011. Why popcorn machines? Because I saw them as an ideal vehicle for parents to teach children about business. My plan was to create
my own brand of popcorn machines, complete with an operating manual explaining how to run a successful popcorn business. I would supply the potential franchisee with the machine as well as supplies like spices and branded popcorn packets. My own role would be like that of a franchisor: I would evaluate the franchisees’ chosen locations, I would check in with them monthly to ensure everything was on track, and I would keep an eye on the entire operation. In the meantime, I’d also be building a popcorn empire that stretched across the whole country, with parents imparting valuable skills to the next generation. I could see the whole thing, and in my imagination, there were no limits. Popcorn was the key to making my first billion.
I knew that no one would buy into this idea until I had made it work myself. For that, I needed to set up a few successful popcorn sales sites. Step one was to find a popcorn machine, easily achieved through a quick Google search which led me to a manufacturer not far from my home. The next step was to create the right brand for my ground-breaking business. I spent days mulling over possible names, and eventually settled on Pop-It. I know it’s a bit cheesy, but I never claimed to be a creative; plus, I thought it had a nice ring to it and that people would immediately understand what the business was about.
I placed an order for the machine, had a friend design a really good-looking logo, and by January 2011 was the proud owner of a branded popcorn machine. It looked incredible. I could practically smell my popcorn – not to mention the billions that would soon be mine. I had just one small problem: where to place the machine? I needed a busy location, but I had no clue how to find the right place. And then I met Giveous Ndou.
Have you ever had the feeling that something was just meant to happen, almost like destiny? That’s how I felt about meeting Giveous. Giveous was the senior on my very first job as a trainee auditor at Deloitte. We quickly became friends, and he told me about a cell phone repair shop he owned in Malvern, an area east of Johannesburg. He admitted that he was an entrepreneur at heart: the shop had been operating for two years, and he had employees manning the store while he completed his articles.
In return, I told him about my own aspirations, and about my big popcorn dream. Giveous was immediately interested, and invited me to bring the machine to his store. I didn’t hesitate: I drove to his store that same afternoon and found that he was absolutely right. It was the perfect location to test my popcorn business: it was in a busy area, with lots of foot traffic. I accepted his offer, and delivered the machine to his shop. We placed it outside the store where it caught the attention of passers-by, and one of Giveous’ employees was at hand to serve people who wanted to make a purchase.
Obviously, I understood that I wouldn’t be able to get ahead simply by selling popcorn – anyone can do that, and there were already a number of popcorn brands available. I knew that I had to make my product different, and that’s why I settled on spices. I wanted to give my customers an experience that was just as good as anything they’d buy at the movies, and that meant offering the best flavours. My search for spices led me to a gem of a shop in the Johannesburg CBD, where I selected four flavours: sour cream and chives, cheese, salt and vinegar and chutney. I don’t mean to brag, but my popcorn really was the best tasting in town. The spices were just what I needed to kickstart the business. Even the woman who served the customers mentioned how much the customers enjoyed those spices – they really were my secret to success.
It was such a great experience, running this little business. I visited the site every day after work to collect the day’s takings, reconcile the revenue to the number of packets I had left the night before, and replenish stock like the popcorn kernels, oils, spices and bags.
I wasn’t making big money. Most days I collected around R300, R500 if it had been busy. Three months into the business, I felt that things should be picking up a little. I knew that I wasn’t ready to operate another location and, even if I had been, I had no idea where it could be. However, I had a friend, Floyd, who had already expressed an interest in becoming my first franchisee. He wanted to set up his machine near a taxi rank in Springs, where he lived. The location ticked all the boxes: it was busy and had plenty of foot traffic. I sold him the machine at a premium, and – boom! – he was ready to go.
As a serious franchisor, I made sure I attended the launch of Floyd’s machine. His launch was certainly much more exciting than mine. He set up a small tent to house the machine, blasted music to create a vibe, and even handed out Pop-It T-shirts. Perhaps unsurprisingly, Floyd made R5 000 on launch day, recovering 83 per cent of the cost he had just laid out for the machine. I was overjoyed for him, and for me too: it was confirmation that I made the best popcorn in town.
All the same, Floyd and I kept up our busy jobs while operating our popcorn machines (like me, he was also an audit trainee at Deloitte). We were making marginal profits – but then, four months into the popcorn dream, I decided we needed to expand. I wasn’t talking about popcorn machines any more. I was so convinced that my popcorn was the best that I wanted more people to experience it. I felt it was too good to keep hidden in Malvern and Springs. The answer? We needed to create a product so that we could get into retail.
After sharing my new goal with Floyd, I contacted Ben, the friend who had designed Pop-It’s original logo. I told him that we needed to redesign the logo in four new colours to match Pop-It’s four flavours: purple for chutney, yellow for cheese, green for sour cream and chives and blue for salt and vinegar.
That done, we needed to get serious about manufacturing. We spent the next few weeks immersed in research, learning about the intricacies of packaging, finding the best type to use and how to micro-seal it, investigating distribution options and finding out more about machine capacity. We retired our trusty machines from their former locations, and found a new home for them in Floyd’s grandmother’s garage, which would become our factory.
We also raised R20 000 capital from a mutual friend, Ofhani, who had a keen interest in our popcorn machines and had ambitions of eventually buying his own. This was my first experience in raising funding and, to be honest, I pretty much winged it. I had registered Pop-It as a company, but I don’t remember what percentage we promised our investor, and we never signed any contracts. Seasoned entrepreneurs would shudder, but this type of transaction is typical of me – I tend to go on trust rather than paperwork. It’s not a style of working I would recommend, though!
Ofhani’s investment enabled us to procure three more machines, along with litres of oil, see-through packets, branded stickers and, of course, our signature spices. Finally, we were ready to produce.
Floyd was now my official partner in this venture. His duties included production and ensuring the smooth functioning of the factory, while I was to oversee customer acquisition. Our first two customers came easily: Ofhani’s family owned a few garages, and they agreed to take on our product. I still remember the first day Floyd and I dropped off our packets at the garage and loaded them onto a shelf. What a feeling! Our popcorn dream had finally come true!
From then on, everything became a blur. Our growth was explosive: after those first two customers, I managed to get us into convenience stores on the UJ and Wits campuses. But things were getting messy. Although we were producing kilograms of popcorn every week, we just couldn’t keep up with demand. In fact, demand exceeded supply by five times!
By this point, Floyd had employed two more full-time staff members to man our factory in Springs. We also decided to buy another machine and to hire another employee to provide an extra pair of hands.
Even so, the pace was insane. Our management of the company was haphazard, to say the least: every day after work, Floyd would drive to our little factory to check on production. Quality control comprised inspecting the little packets and, once he was satisfied that nothing looked amiss, Floyd would load hundreds of packets, crammed into plastic bin bags, into his car. He’d drop these off at my doorstep around 5am
, and I would deliver them to our retailers before I checked into the office.
Then, just when we thought things couldn’t get crazier, they did. Floyd had shared some of the popcorn with his work colleagues and, predictably, they had been impressed. One of them organised a meeting with her father, who also owned a few garages – and by the end of the meeting, we had agreed to stock 12 new stores.
It all felt surreal. In just three months, we had gone from making 200 packets a week to churning out 4 000 packets a week. With a wholesale price of R5, we were quickly making more than R80 000 a month.
We were flying – and then we started to fall. Looking back, I think we bit off too much. It wasn’t just that we couldn’t chew; we couldn’t even close our mouths. All this was happening at the most frenetic time in our lives: I was studying for my second qualifying exams for my CA(SA), and work was keeping us busy till the early hours of the morning. We tried to manage the situation by investing in a delivery vehicle, which we managed to buy cash from profits, and we hired a driver to handle deliveries. We were still having fun, and we loved being known as the Pop-It boys – but then the music came to a halt. We started encountering problems that had a massive impact on the business. Because the machines weren’t intended for industrial use, our machines started packing up weekly. At one point, we had a mechanic in our factory twice a day. Added to this, our van kept breaking down. And all this time, demand continued unabated. In fact, our popcorn had become one of the fastest selling goods in 18 of our 25 locations. We couldn’t keep up; we kept dropping the ball, we started avoiding calls from garage managers who wanted to know when they could expect stock. It was mayhem.