Searching Through Dustbins

by Abed Tau

  In Graph 5 we see that the more boring the business, the greater the chance of sustainability. Simply put, boring is stable. You may not get to list your boring business on the Nasdaq or JSE, but you will be able to put all your kids through private school, live mortgage-free (in the best neighbourhood) and still enjoy three overseas holidays each year.

  Graph 6 shows, the more boring the business, the fewer the competitors in the marketplace – just as with difficult businesses. Unlike difficult businesses, however, the reason for this is not because of high entry barriers or limited resources. It’s simply because people do not want to be plumbers or sell toasted cheese and ham sandwiches. It’s not competitive because telling a new acquaintance that you’re doing a complex valuation for your new venture capital firm is far more impressive than describing the toilet you fixed earlier. But know this: the guy who has just spent his day unblocking toilets has a far greater chance of owning a beach house than the guy working on his next merger and acquisition deal.

  Exciting businesses

  The more ‘exciting’ the business, the greater its chance of failure, as the above graph shows. That’s because new business owners are naturally attracted to what they perceive as exciting spaces; industries they believe can deliver instant celebrity or glamour, like vlogging or influencing. What’s more, these industries are typically characterised by low barriers to entry, so there’s nothing to stop the hordes who show interest from setting up shop.

  The more glamorous the business, the harder it is to create sustainable value. This is because ‘exciting’ business models have little defensibility. An exciting business quickly becomes a difficult business, but not for the right reasons.

  Let’s go back to the example of the restaurateur. Imagine that in Johannesburg the fine dining segment has a market value of R1 million per month. Now, imagine that there are 20 restaurants competing for a slice of that pie. Even if the market were distributed evenly between the restaurants, they’d earn revenue of only R50 000 per month.

  But it’s not only the number of competitors that affects the sustainability of an exciting business. The market’s extreme competitiveness means more costs for the business owner because money must be spent on marketing and advertising. Many business owners lose money because they discount their products and services in an effort to lure customers away from their competitors.

  It all comes down to supply and demand: when customers have a choice, they’ll choose the cheapest.

  As I’ve said, the graphs have not been tested, nor are they absolute – but I guarantee that if you find yourself in conversation with a plumber, a restaurateur and someone who owns a water desalination plant, it’s the plumber whose lifestyle you’ll envy most.

  I’m not saying that you shouldn’t follow your passion – but it is important to be realistic about what’s achievable.

  CHAPTER 4

  THE FIRST

  100

  DAYS

  In early 2009, the world waited with bated breath as the United States finalised its presidential election. With the country about to appoint its first black president, Barack Obama, this had become one of the most highly anticipated elections in history. Obama had garnered support all over the world thanks to the resounding positivity and optimism of his election campaign and its rallying cry of ‘Yes We Can’, so it wasn’t surprising when he went on to make history by winning the election.

  Winning was one thing; carrying out his presidential duties was quite another. Obama had inherited a tough state of affairs: the States had sunk into a terrible economic depression just one year earlier, with hundreds of thousands of people losing their homes and their jobs.

  Those people were looking to him for answers and, since the States is one of the world’s largest powerhouses, the rest of the globe was looking to him too. Everyone wanted to see what policies he would implement and how he planned to stimulate growth and help turn the global crisis around. Obama’s first hundred days in office would prove to be key.

  This wasn’t really anything new. The first hundred days is a well-known concept, referring to the beginning of a president’s first term. This period is considered crucial because it’s usually a sound indicator of the success of policy implementation and lays the foundation for a fruitful term.

  I’m fascinated by this idea because I believe it applies as much to business as politics. Imagine, for example, you’ve just left employment to take the leap into entrepreneurship. You’ve enjoyed the first few days of your new-found freedom, but how are you spending this time? Are you doing everything you can to accelerate the growth of your start-up?

  I find that new entrepreneurs usually invest copious amounts of time on what I deem non-essential business activities during these early days. They concentrate their energies on things like the look and feel of their business cards or the plug-in to a Twitter feed they believe is critical for the website. I fell into this trap, too: I was ridiculously pedantic about getting our email signatures ‘right’. Of course, our logo had to look great, too. I was obsessed with making sure that the whole thing made an incredible impression.

  The irony is that absolutely no one emailed us during those early days. I can’t tell you how many times I refreshed my mail, just to make sure that it was working properly. I phoned our hosting provider to make sure that our emails weren’t blocked, and the answer was always ‘Sir, we have just sent a test email, please check.’ I’d receive the mail almost immediately, forcing me to hang up in embarrassment.

  Business cards, websites, corporate identity – of course all of these things are important. But my argument is that they’re not going to make or break you, especially not when you’re just starting out. I believe that your time would be far better spent doing one thing and one thing only: talking. Talk to potential clients, talk to potential investors, talk to the people who are going to drive your sales numbers up. And while you’re doing all of this, never lose sight of the fact that finding a customer is the single most important task you can embark on.

  Tebz and I set ourselves a goal of meeting with 100 people during our first 100 days of entrepreneurship. And we did it.

  We had endless lunches with people who didn’t convert into clients (my worst was paying when these people had ordered the most expensive thing on the menu, while we stuck to two glasses of tap water – especially when it was already clear halfway through the meeting that we were being taken for a ride). We endured and carried on meeting potential clients. By Day 200, we had collected over 300 business cards.

  It might sound excessive, but if you’re just starting out, or even if you have already established a business and you’re not experiencing the kind of success you’d hoped for, you need to know that it’s got nothing to do with your product or service. You’re simply not meeting enough people – because people are potential customers. Set yourself a goal of meeting two people who may buy your product or service, or who may invest in your business, every day (yes, even on Saturdays and Sundays), and during your first month you will have met around 60 people. Keep that up for four months, and you’re almost certain to meet someone who can have a positive impact on the business.

  That’s certainly what we found. Maybe it’s all to do with the law of averages, but we found that the more people we met, the luckier we were. We’d land a client here and there, and this would increase our confidence as new business owners, making it easier to land the next client. More than this, though, the experience was a great lesson in sales. What we found in those early days was that no matter how beautiful your business card, if you didn’t have people to hand it out to, it didn’t matter. If you don’t have people visiting your website, it doesn’t matter how many fancy plug-ins you add. The most important lesson was that you don’t win a client based on how beautiful your email signature, website or business card is. You win clients because you’ve taken the time to meet with them, built rapport and delive
red a great service or product.

  Looking back on our first 100 days, I realise that I wouldn’t change much (well, maybe I would be more discerning about who I invited for lunch, so that I wouldn’t have to fork out for so many filet mignons). We had the right focus: securing a customer base first, and worrying about everything else later. I cannot over-emphasise the need to find clients, the earlier the better. The survival of your business depends on this.

  The lesson? Spend your first 100 days finding creative ways to attract customers. Do something every day that will get you closer to a sale, even if it’s the dreaded cold calling.

  CHAPTER 5

  CRICKET: THE GREATEST BUSINESS METAPHOR IN THE WORLD

  After a year in business, Thamani Consulting started landing some regular clients.

  Back then our clients paid us, on average, between R2 000 and R3 500 a month to perform their accounting and payroll functions.

  At the time, it felt as though we would never scale. It was painful. However, as the months went by, we landed more clients. We became more efficient in our delivery, and we started getting in small project work, which supplemented our income.

  I have a clear memory of May 2015: that month, our income hit a high of R88 000 and Tebz and I felt like millionaires! We’d never seen that kind of money in our bank account before. We bought the most expensive sparkling wine we could afford to celebrate: a bottle of J.C. Le Roux. The next month, we made a pact to break May’s revenue numbers. We felt that we were onto something – and we were right. We knocked on more doors, tried harder, and in June we brought in R96 000. For the rest of the year, we challenged ourselves to bring in more money than we had the previous month, and every month we surprised ourselves. We didn’t even notice that we’d started working 18-hour days in our pursuit of success. By December that year, our revenue had reached R172 000 – and that was when Tebz and I realised that we’d established a business with the potential to grow …

  Through all our trials, I came to think of success in business as the ultimate cricket match: you just need to stay on the pitch and keep batting. Most people expect to hit a six the minute they walk on to the pitch, and they’re surprised when they’re bowled out for a duck. I’ve learned that the secret is to hit singles, and focus on doing that over and over again. The time will come when you recognise a slow ball, and that’s when you can go for the six. You just have to stay on the pitch until that happens – and, eventually, you’ll get to a century. The most important thing is to remain on the pitch, even if you’re simply stopping the ball from hitting the stumps.

  In our business, the clients paying up to R3 000 per month were the singles. They kept the lights on and made sure we were able to pay salaries, and it was thanks to them that we were able to stay on the pitch to hit more singles the next month. The longer we did this, the more prepared we were when we were bowled a slow ball. Sometimes we’d even step out to take a six, and that led us to greater opportunities.

  Remember that business is a Test match, not a T20 session. You’re in it for the long haul, so concentrate on building predictable income and building slowly.

  CHAPTER 6

  THE ART OF SHOWING UP

  Thamani Consulting was finally starting to gain traction when I was introduced to Dylan Hyslop in May 2015. This wasn’t, in fact, the first time we’d met – that was through a mutual friend some years before – but the first time we really got chatting was at a braai.

  It didn’t take long to discover that we had quite a bit in common, most notably an interest in technology and its potential impact in South Africa. We spoke about this the whole evening, barely noticing that the food was running out! By the end of the evening, on a gentleman’s handshake, we had committed to starting a tech business together. Dylan showed up at my offices in Parktown the very next day to discuss the possibilities of Tuta-Me – and that was how the business started.

  We met a few more times over the next couple of months, did a little research and, on the strength of another gentleman’s handshake, decided to form a partnership. Our roles were clear: Dylan would develop the tech, I would build a business and raise the money for our start-up. I’d never raised money before, mind you, but I’d watched the television series Silicon Valley. How hard could it be? I was about to find out …

  Dylan started coding in August that year. Because he was still working a corporate job, he’d wake at 4am to get a start on our project Tuta-Me, then he’d rush to work at 7am. He’d start again on Tuta-Me after putting in a full day’s work, and he’d slog away until midnight – then follow the same routine the next day. He went on like this, Monday to Sunday, for several months. It was quite something to watch; he seemed never to tire, and I was completely taken aback by his work ethic.

  When he handed over the app in March 2016, he literally said, ‘Tag, you’re it.’ Now it was my turn.

  Now that I was playing a more active role, I had even greater respect for everything Dylan had achieved. I’d watched him spend eight hours a day, every day, coding an app for nine months. As his 50/50 partner, I had to devote just as much time and effort – and I felt overwhelmed. I wondered what I had got myself into.

  There were some lucky breaks, though. In the week that Dylan handed me the app, I entered us into a competition called the #Hack.Jozi Challenge; a contest sponsored jointly by Wits University and the City of Johannesburg. The initiative was about creating a platform for technology start-ups and entrepreneurs offering solutions to address common challenges facing South Africans.

  I entered the competition with just 30 minutes to spare before it closed. From then, we pitched our lives away, attending workshops three nights a week so that we could learn how to better our business model. Our hard work paid off: three months later we were named the second place winners, earning a R350 000 cash prize.

  From there, things seemed to snowball. Armed with our prize money, we gained a further R600 000 in seed capital from friends and family. Now, with almost R1 million in start-up capital, we felt ready – so ready that Dylan quit his job so that he could work at our start-up full-time. It was a risky move, and it showed me something: Dylan has an incredibly rare skill, one that most people lack. No matter what, he always shows up and rises to the occasion.

  Our Hack.Jozi win helped us in other ways, too. All of a sudden, we were media sensations. For six months, every radio and TV platform in South Africa wanted to feature ‘the next big thing’ in tech: us.

  To the outside world, it must have looked like we were stars in the making – but our daily reality was a lot less glittering. The app simply wasn’t taking off; we weren’t solving the education problems we had set out to address. Although the app had been downloaded many times, we weren’t converting downloads to paying users. Our start-up was seven months old, and was certain to shut down if we couldn’t get things right. We were tech stars by day, and worried entrepreneurs by night.

  Nonetheless, I was still filled with optimism. I realised that tech was a different animal to all the other businesses I had started. It was untameable, and it burned a hole in our pockets. So I told Dylan that we needed to start over. We had to relook our tech and our business model – neither of which were great – and we had to hire developers and find mentors.

  And so we went back to the drawing board, mounting a new search for funding that led us to Cape Town and back and put us in touch with some awesome people, many of whom were willing to invest in our venture. Eventually, we managed to raise a Series A round of funding. We had runway; our start-up had been given a second chance. Our dream of making education a business was alive again.

  That wasn’t the last time we saw the need to change the way we did things. We’ve changed our business model a few times, and every time we’ve benefited. We’ve become agile, nimble and fast moving, able to iterate quickly. These are qualities that will continue to serve us well, because no doubt the time will come when w
e have to reinvent ourselves once more.

  Developing these qualities has been an incredible process, and we’ve learned some important lessons along the way – the most important of which is that most people fail in business simply because they fail to show up. As Dylan taught me, showing up might be the most basic skill, but it’s also the most essential. Do what is required; spend an extra hour on that line of code or proposal, rehearse the pitch one more time, get to work one hour earlier. You’ll be doing things that no one else is prepared to do – and, because of that, you’ve already given yourself a greater chance of success.

  Something else to remember: don’t be taken in by the hype associated with entrepreneurship. I admit that we were completely blown away by our sudden status as start-up celebrities. We overlooked the fact that no entrepreneur takes a selfie when things aren’t working out, when they’ve been staring at a computer screen for 18 hours and there’s absolutely nothing happening in the business. Those scenes don’t filter well on Instagram – but they’re very much a part of owning a start-up. In fact, you’ll encounter more of these moments than the glorious ones. That’s why, when you do get a taste of glory, you have to keep your head down and keep working away at the business problems. Don’t neglect the business, whatever happens.