by Abed Tau
An encounter with a stranger showed me how badly things had spun out of control. I was at a garage in Midrand, Gauteng, one evening when I noticed someone buying our popcorn – five packets of it. I approached her, introduced myself and asked why she was buying so much popcorn. She replied that her kids would kill her if she didn’t bring home their favourite snack – they had become true Pop-It fans. When I told her that I was one of the company’s co-founders, she told me that she was head of procurement at Simba. She gave me her business card and suggested we set up a meeting, hinting that Simba might be interested in buying us out. Although this would have been a lifeline, as well as a major achievement, I never got round to making that call. I was completely overwhelmed: all I could think about was my approaching board exam, the calls I was avoiding from angry garage and retail managers who had been promised stock that had not yet arrived, and the empty shelves that were awaiting Pop-It deliveries.
When one of the owners contacted me directly to complain about delivery issues, I came clean about our challenges. Instead of being angry, he was reassuring. He told me he understood how hard it is to run a business, then told me he would like to invest in Pop-It so that we could build a proper factory and develop systems and processes that would enable us to take the product to a broader market. In exchange, he wanted a significant equity stake in the business.
Floyd and I were excited about the prospect, but we couldn’t look past the equity figure he had proposed. I remember fretting that we’d be left with only a little equity – and so we respectfully declined the offer.
The story of Pop-It ends here. When we realised that we simply couldn’t keep up with demand, and that we couldn’t balance our crazy working schedules while running the factory, we decided to call it a day – 14 months after we got our start.
I don’t regret anything about how we ended Pop-It. Given the circumstances, it was the right thing to do – we just wouldn’t have been able to keep going. What I do regret, though, is rejecting the offer to build a factory because we didn’t have the foresight to see past the equity; such a small matter, as it turns out. We fell into the trap that most entrepreneurs face at some stage in their business. I call it the grape versus watermelon theory. Entrepreneurs are often so desperate to hold on to their equity that they turn down offers of much-needed investment. They’re scared to lose their shares in the business. There’s nothing wrong with holding on to equity; however, sometimes we hang on to 100 per cent of a grape without thinking that if we gave up just 40 per cent of it, we could swap it for a watermelon. Or, as in Pop-It’s case, we’d rather own 100 per cent of a company worth R1 million, than give up 50 per cent equity to create a company worth R100 million, which would be far more lucrative. Our potential investor was able to offer us distribution, market access and connections into more big box retailers. They would have been able to get us into places we could only dream of, and still we said no because we were fixated on losing equity. We might have become a huge business, but we will never know.
I also regret failing to follow up with the head of procurement from Simba. I often wonder what that might have led to.
The story isn’t a sad one, though. Our Pop-It days were an amazing time for both Floyd and me. We made some money and, in a very short space of time, learned valuable lessons about business, gaining insight into pricing, hiring, market access, business-to-business models, business-to-consumer models, raising capital, the power of distribution and a whole lot more.
My advice to aspirant entrepreneurs is this: don’t hold equity too close to your chest. Before you say no, evaluate all the opportunities that a partner could bring. It’s entirely natural to want to own 100 per cent of your business; after all, that business was built with your pain, sacrifice and effort. But make sure you don’t lose sight of the watermelon you may be passing up while you’re trying to hold on to 100 per cent of the grape. Get the right partner on board, and you’ll be able to grow an even bigger business.
I know this from my own experience: having accepted help from partners, we’ve been able to grow and become more successful. These days, my discussions focus on finding the watermelons, rather than clinging on to the grapes. Remember, 50 per cent of a watermelon beats 100 per cent of a grape, 100 per cent of the time.
EPILOGUE
PART OF THE JOURNEY IS THE END
Dylan and I have regular board meetings with our Tuta-Me investors, where we update them on our progress and plans for the coming months.
They’re usually pretty standard, but at one of our most recent meetings, the investors asked us something rather out of the ordinary: ‘What are you guys going to do after Tuta-Me? What’s next on your path?’
I paused for a moment, trying to come up with an articulate answer, but before I could say anything Dylan responded: ‘Abed and I are entrepreneurs. We are going to spend the rest of our lives figuring out businesses, establishing start-ups, growing businesses and creating value.’ He went on to compare us to a bird that’s been caged, and that longs for the day it is released so that it can be free to fly and roam the skies. ‘Both of us are out of the cage, and we’re going to do everything possible to remain outside.’
I couldn’t have given a better answer. My truth is that I’m so in love with business and its entire process. Building a business is one of the hardest things I have had to do in my life, but I would choose to do it all over again – and again – if given the chance. I quit my job five years ago so that I could dive into business and learn as much about it as I could, and instead I found myself embarking on a journey that taught me about life. My journey into business has been a journey of self-actualisation; a journey of discovery. I will never stop thinking, with wonder, about the impact the businesses we started have had on my family, friends, employees, communities and the other companies we work with.
Even though I agreed 200 per cent with Dylan’s answer, the question was a personal one, and I continued to reflect on it for weeks after that board meeting. To be quite honest, I think I will consider the question of ‘what’s next?’ for the rest of my life. I don’t have all the answers, and probably never will, but I do know that I will continue to do more of what I am doing now.
My hope and desire is that our businesses – Thamani, Silicon Maboneng and Tuta-Me – outlive us and continue to employ young people and create value for the communities and customers they serve. It requires an insurmountable amount of energy and effort to start a business, and an even greater effort and energy to sustain it, so I’m not sure if I will be starting any new businesses anytime soon. That said, as I write this, I have ideas for three new start-ups – so who knows what the future holds?
I think the next stage in my journey can be summed up by three poems I learned in my matric English classes. They’re timeless in both their message and their meaning, and they hold special resonance for me.
Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
… I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I –
I took the one less traveled by,
And that has made all the difference.
The Road Not Taken – Robert Frost
This really encapsulates how I feel about the decision I took on 26 February 2014, my crown birthday, to leave employment and all its comforts – most of all, the SMS I’d receive on the twenty-fifth of every month, telling me that I had just received my salary and that I could still pay my rent, my car and groceries, and the occasional night out with friends.
I was venturing into a space where there would be no stable salary (and certainly no reassuring SMS), and indeed I could be telling this story with a sigh �
�� but the truth is that we have been very lucky. Things seem to be working out; we are carrying on, we are paying the bills.
Entrepreneurship is definitely the road less travelled. It is less grassy, it has thorns and potholes, but it also holds rich rewards for those who are prepared to take the risk and put up with the discomfort. I know that the choice I made was right for me (and I know that my business partners feel the same way) – even though I’m equally certain that we’ll encounter more forks on the road as we go further along our path. I know that we’ll be confronted with more tough decisions, but I’m confident that we will always choose the adventure over the predictable.
J
I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived. I did not wish to live what was not life, living is so dear; nor did I wish to practise resignation, unless it was quite necessary. I wanted to live deep and suck out all the marrow of life, to live so sturdily and Spartan-like as to put to rout all that was not life, to cut a broad swath and shave close, to drive life into a corner, and reduce it to its lowest terms ...
Walden – Henry David Thoreau
They say that you should not test the depth of water with both feet. Well, that’s exactly what I did. I jumped into entrepreneurship with both feet, without knowing what lay beneath the surface. I became an entrepreneur to learn about business, but the process has turned me into a scholar of people, love, patience, humanity and life. I have learned more about myself than I have learned about business.
You’re probably already aware of Maslow’s Hierarchy, a pyramid of human needs which is topped by self-actualisation. This is defined as ‘realising personal potential, self-fulfilment, seeking personal growth and peak experiences’. It’s a desire ‘to become everything one is capable of becoming’. I think that entrepreneurship has brought me closer to this state. I have grown, as a person, in leaps and bounds, and continue to grow every day.
I found life’s marrow in entrepreneurship, and I intend to keep sucking that marrow out of life, just as Thoreau did. Steve Jobs once said, ‘Death is the single best invention of life … It replaces the old with the new. It’s a constant reminder that our time on earth is limited.’ He was right: life is short, and I don’t want to feel that I wasted my life because I didn’t live out my dreams – and you shouldn’t, either. You don’t have to choose entrepreneurship, but you must choose happiness, whatever that means for you. Maybe it means leaving that job with the tyrant manager and going to work on boats in the Mediterranean. Maybe it means starting your own business.
I’ll say it once more: we are not trees, rooted to one place or circumstance. We have the power to change our lives and, most importantly, the lives of others.
J
How dull it is to pause, to make an end,
To rust unburnish’d, not to shine in use!
Ulysses – Alfred Lord Tennyson
These lines mean everything to me. Life is an adventure, and you should never stop seeking the thrills and joys it brings. I am extremely fortunate to have found this in Startup-Ville.
I remember watching a documentary about the Comrades Marathon, called The Ultimate Human Race. It was brutal: especially the last five minutes before the 12-hour cut-off when there were people crawling to the end. Some of them were rolling just to get to the finish line. It looked gruelling, but it held an important lesson: don’t stop moving, even when things seem impossible. Keep moving, even if you’re going at a snail’s pace – just don’t stop, whatever you do.
We are meant to shine. We are meant to rust from a life well-lived.
And then we bought a bakery!
After all our adventures (and misadventures) in business, our wolf pack of four guys and a girl, four accountants and a software developer, decided to buy a bakery. None of us can bake, none of us know anything about food (except that we enjoy eating it), and still we decided to venture into this uncharted territory.
This wasn’t an entirely unexpected development for me. I had always thought that our natural evolution would see us move into investing in other businesses and helping them grow; a space you’ll remember Tebz and I had already tested (with disastrous results) during our first foray into entrepreneurship. Of course, back then we didn’t know very much about business. We hadn’t yet searched through enough dustbins of our own, so how could we possibly help anyone in their own search?
I’m not claiming that we know much more now. We’re not the business gurus of the twenty-first century, and we don’t have a blueprint that creates instant success for any business. But we’ve put in our time on this road, and we have the scars to prove it. We’ve learned invaluable lessons, and we want to share them.
Our bakery ticked all the boxes that are important to me: it’s built on a business-to-business model, supplying cakes, desserts, all sorts of biscuits and treats to over 50 coffee shops in Johannesburg and Pretoria. It’s not famous, and it doesn’t have to build a brand to be in business. It’s boring – which makes it perfect. We have enjoyed seeing this business tick along with ease, and our next challenge is to develop its distribution into a national footprint.
We have also invested in our-venue.com, a brilliant SaaS (‘software as a service’) business led by Jason Scott and Tiaan Naude (https://our-venue.com/). Dylan and I love this start-up. Again, it works according to a business-to-business, retainer model, and the system has a lot of stickiness, very little attrition and, most importantly, serves a massive market that it’s growing into at a steady rate. It’s a sound business but, more than this, Jason and Tiaan are the type of founders that you really want to support with investment. They’re super-talented, smart, hardworking, and passionate. They have also made me really consider my investment philosophy. I’ve come to realise that it’s about the jockey, not the horse. The horse is a bonus but, even if you have the best horse in the world, you won’t win any races without the right jockey. At the end of the day, you have to back the people behind the business. You want the guy who never falls off the mechanical bull, even when it’s spinning out of control.
Our goal is to continue to find the ‘our-venues’ and bakeries of the world and grow our investment portfolio and, who knows, maybe list an investment company in the years to come.
Boring. Exciting. Difficult.
If there is one thing I really want you to take away from this book, it’s this: when you are looking to start a business, stay away from the exciting businesses and focus on the boring and mundane instead. Every industry has them – retail, food, services, software – find the one thing that no one wants to do in those industries, and own that space. It’s easy to find them: look through the financial statements of companies in the industry you’re interested in, and zero in on the expenses. Most businesses are paying for services they don’t want to do themselves, like accounting, gardening, security or training – basically, anything that’s outsourced.
Find comfort in the fact that although you won’t become famous (no Time magazine covers for you), you will find stability and increase your chances of success.
In all the madness, remember to have fun – and don’t fret the small stuff.
No divorces here. We want more weddings!
Our wolf pack of four guys and a girl are all still happily married, and it looks like we may get married to more people in the future as we continue to grow our businesses. We are going to continue searching through dustbins.
In fact, our search is just beginning.
STAY IN TOUCH WITH ABED TAU
Website: www.searchingthroughdustbins.com
Facebook: https://www.facebook.com/abednigo.tau.1
LinkedIn: Abed Tau
Instagram: https://www.instagram.com/abed4free/
ABED’S BUSINESSES:
THAMANI
Website:www.thamanisi.co.za
SILICON MABONENG
Website:www.siliconmaboneng.co.za
TUTA-ME
Website: www.tuta-me.com
Website: www.mobi-tuta.com
ABOUT THE AUTHOR
ABED TAU is a Chartered Accountant by profession, a wannabe chef by night and a serial entrepreneur by day. His passions lie in community development, education and entrepreneurship. He believes that empowering youngsters with entrepreneurial skills will equip them with the core skills needed to create their own jobs and ultimately impact on job creation in South Africa.
Abed is the co-founder of three companies. Thamani is a group of professional services companies founded in 2013, consisting of Thamani Consulting (focusing on assisting SMMEs with accounting and compliance services); Thamani Advisory, which provides specialised financial services such as internal audit, talent and resource management as well as corporate finance; and Thamani Assurance, which focuses on external audit. Thamani has created over 100 jobs in the five years since inception.