Searching Through Dustbins

by Abed Tau

  Business is no different. When you’re younger, you can achieve success without really giving up anything – although admittedly this is probably because you simply don’t have very much going on. There are no real consequences if your business fails: you don’t have to worry that your children will be thrown out of that fancy private school because you can’t pay the fees or, worse still, that you won’t be able to buy food for them; you don’t have to worry that the bank will repossess your house or car because you’ve missed a payment.

  Once you’re older, you have to take all of this into account before you start a business – but, then again, it all comes down to one question, succinctly framed by motivational speaker Eric Thomas: ‘How bad do you want it?’ That about sums it all up for me – although Thomas goes on to say that you need to want something as badly as you need to breathe. That’s taking desire to the next level.

  There is an old saying: when is the best time to plant a tree? The answer is: yesterday. When is the next best time to plant the tree? Today. Sometimes, starting doesn’t have to be such a scary and mammoth task. It’s the small actions that lead to success. Never mind pitching your big idea to an investor; how about simply registering your domain name or setting up a professional email, website or blog? None of these actions cost very much, but each step will lead to another until, before you know it, you’ll be all set up for business.

  I’ve yet to meet the business owner who said that the time was just right when they set up their business, that everything was perfect. Almost everyone has a story involving patience and sacrifice, immense sacrifice. There’s no such thing as the ‘right’ time, but I will say this: the sooner the start, the better. Obviously, that’s up to you. If you have a great idea the day you turn 60, the only limitation on making it work is you.

  Either way, remember that starting doesn’t mean you have to quit your job and change your way of life entirely. All you need is to take that first step – register your domain name, and see what happens from there.

  CHAPTER 24

  NOT EVERYTHING THAT’S SHINY SHINES

  A little while ago, Tebz and I took off for Cape Town in search of fresh inspiration, a new energy source, a new sense of purpose. Both of us had been feeling a little uninspired in all the areas of the businesses we look after.

  Tebz had been feeling that Thamani had become a bit of a drag. She’d even considered exiting the business, citing boredom, slow growth, reversing progress and, most of all, the fact that when she left her job five years before, she hadn’t imagined she would be doing tax again five years later.

  My own sense of frustration had a different source. We’d envisaged Tuta-Me as a kind of Silicon Valley start-up that would solve South Africa’s massive education problem. We imagined that we’d grow at a rate of 200 per cent year-on-year, that we’d raise 15 rounds of funding before eventually listing on the stock exchange, and Dylan and I would be hailed heroes of The Fourth Industrial Revolution.

  But our existing company is very far from that ideal. We have a very difficult business, a business that grows in a linear fashion. The problem is too big for us to solve; in fact, we’re nowhere near solving it. Our premises are nothing like the Google campus. We don’t have trees, hammocks or sleeping pods in our offices. Instead, we have a 40 square metre office in Craighall with a pot plant or two, but certainly no sleeping pods. We’ve raised two rounds of funding, but there’s no hint of a third. It’s difficult. In fact, it feels impossible.

  That’s why we’d set our sights on our Cape Town trip. More than just a break, it was supposed to reignite our enthusiasm and inspire us. After all, Cape Town is our own Silicon Valley, our Tel Aviv tech hub. And, yes, we did love it. The Cape Town scene is so vibrant and dynamic, with so many people doing incredible things, from corporate bankers helping to build South Africa’s economy by financing start-ups in the Western Cape, to gin makers, players in design and the creative industries, even members of Uber.

  All these people made a big impression on us, but none more so than an AI business that is working on technology so advanced that it has the potential to change the world.

  We were fascinated by this business, not least because its offices were everything Tebz, Dylan and I had pictured our premises would be. The company has an entire four-storey building all to itself. There are humans everywhere, music playing, beers in the fridge, pot plants – no, make that trees – everywhere. We even spotted, yes, a hammock. There are TV screens in every boardroom, amazing writing boards everywhere and, around every corner, energised humans working to solve major problems.

  These people were basically living our dream, and I was instantly struck by jealousy. I couldn’t help thinking of my office back in Johannesburg which is noticeably bare of any of the accoutrements we envied. At that moment I found myself thinking about my past five years of entrepreneurship, and wondering where they’d actually got me. We have employees, sure. We have revenue, sure. We have profits, sure. But, man, this company had been established one year after ours, and it already employed around 80 people with vacancies for 60 more. A truly global company, they derive 70 per cent of their revenue from the States.

  Tebz and I worked out of this office for an entire day, staying on to have after-work beers with the guys. We were in awe. The culture here was amazing; the staff’s passion was almost palpable. You could tell that they all felt like they were working for a cause greater than themselves.

  I wanted to learn more, so I invited one of the executive members for drinks. Before we met, though, I walked Tebz to our Airbnb. We both hung our heads for the duration of the walk, feeling very solemn. Our conversation centred on the hard, existential questions. What are we doing? Does the work we do matter? Are we making a difference? We had just left the most inspiring start-up we’d ever encountered, a business with mouthwatering valuations, and it made our businesses back home seem small and lifeless by comparison. Our work paled into insignificance in the face of this bustling Cape Town scene. Maybe it would be best for us to shut up shop and pursue something more exciting.

  Rushing back to meet with the executive member, I couldn’t wait to discuss the company’s model. I was completely fascinated by its growth, how quickly they’d raised funding, the valuations, the revenue run rate, the current burn rate – all of it.

  To my surprise, the picture my drinks partner painted was very different to what I’d been expecting. Although the company had predicted great revenue for the current year, they were burning a lot of money; more money, in fact, than was coming in. The burn rate was faster than the revenue run rate. This is typical for technology businesses. Even Uber and Lyft have to keep raising funding, but this was the first time I had listened to someone talk about how truly stressful this can be.

  Obviously, it’s not possible to change the world without experiencing some pain, and that’s exactly what these guys are trying to do – change the world. But the conversation helped reaffirm my old belief that boring is good and that it’s important to stick to your knitting.

  Here’s the thing: although the revenue figure the company has set its sights on for the year is impressive, we managed to make that amount with just one of our companies in four months. In other words, that one company is on track to making four times their revenue. When you add in the revenue our other two businesses bring in, it’s easy to see just how well we’re doing in comparison.

  This made me realise something. We’ve been profitable since Day One, and our companies have continued to grow during all five years of their existence. We create jobs, sustainable jobs. We have incredible clients, we hire fantastic staff, and we do great work. All of this is a reality that we never really celebrate.

  Don’t get me wrong. This start-up has an excellent product and an outstanding team, and I truly believe that it is going to change the world, in a massive way. I’m sure that they’ll become profitable within the next three to six years
. I have no doubt they’ll issue an IPO on Nasdaq and will be valued at billions of dollars. But my point is this: how often do we compare ourselves with others without really knowing the full picture? How often do we look at social media and want other people’s lives, their businesses, without really knowing the stresses that come with that?

  If I hadn’t met the executive member for a drink, Tebz and I would probably have returned to Johannesburg feeling despondent and discouraged about our ‘small’, unexciting businesses, and we may well have given it all up in exchange for something more exciting.

  Here is the secret: stay in the lane you understand best, because you’re doing just fine there. Don’t worry too much about the Facebook and Instagram feeds of all those people who look like they’re doing so much better than you. Give the photo a like, congratulate them sincerely, then move on and focus on your hustle. The grass is only greener on the other side because it has more shit in it, literally. Comparison is the mother of all failure, so remember that you’re fine as you are, and just keep going.

  As for me and Tebz, you will find us continuing our work at our mundane businesses. They may be changing the world only at a snail’s pace, but it’s still change nonetheless.

  Stay in the lane you understand best.

  CHAPTER 25

  IF IT’’S BROKEN,

  DON’’T CONTINUE TO BREAK IT

  It’s the end of March 2017. Our first board meeting with our new investors is coming up in a few days, looming over our heads. Dylan and I have taken some time off to prepare our first board pack; a strange exercise for our start-up since we are more used to making life altering decisions with our team in ten minutes. Now we have to spend a whole three hours discussing our plans for growth, team composition, revenue run rates, burn rates, and contribution margins for our start-up – and all of this feels horribly unfamiliar to people who were working out of a garage until a few months ago.

  Here’s the situation: three months before, these investors had agreed to drop R6.2 million in the business, and this was the first time we were meeting since their announcement.

  This was an amazing development. We’d launched Tuta-Me as the digital answer to South Africa’s on­going problem of unequal access to quality education, a massive challenge which requires a solution that yields massive results. I’ve already told you that the response to our app was, initially, phenomenal. We were dubbed the Uber of Tutoring, a title we embraced because we were certain it would help to net us investors and partners. Our shareholders believed we could become a Unicorn success, just like our much admired nickname namesake in Silicon Valley. The problem was that in our first three months of operating, we had made just R300 revenue. Dylan and I had run through the possible reasons for this, but deep inside I couldn’t help asking myself: what had I done?

  I didn’t sleep a wink the night before the board meeting. I was racked with anxiety, to the point where I had night sweats. In the morning, I felt nauseous and clammy. What if our investors decided they had made a mistake giving us the money? Dylan, who always has a better grip on his emotions, especially when it comes to business, assured me we would be fine. I realised that I could learn a lot from his cool head. It’s important not to take things personally in business. You have to leave things out of the boardroom.

  We drove to our investors’ offices in Centurion, and proceeded with the unfamiliar process of signing the attendance register and declaring other interests.

  Dylan and I had structured the discussion in such a way that we would highlight all the positive aspects of the business, keeping the numbers under the radar. We strategically placed our management accounts at the end of the board pack. We discussed tech, and all the features we still needed to add to the app and how Dylan and our developers were hard at work to make this happen. We mentioned that we’d embarked on a hiring spree so that we could get the best people to join our exciting start-up. The board occasionally asked questions about our presentation, which we were able to answer before moving the conversation on.

  Food arrived just before we presented the management accounts. I thought this was the perfect moment to take a break, but my suggestion was met with ‘let’s look at the numbers and we can eat afterwards’.

  I lost my appetite immediately and a lump formed in my throat, while I moved to the slide revealing that we had made just R300.00 in the three months since we had received their funding, and had burned at least R700 000 of their funding.

  Before I could say a word, one of the board members exclaimed, ‘You have only made R30 000!’ I felt as though salt was being rubbed in the wound but, even worse, I had to point out that he had read the figure incorrectly and that there was a decimal point after the first two zeros.

  None of the people in the room could be said to have poker faces. Some of them went pale; some went red. We tried to gain ground by rationalising that tutoring is a cyclical business, and that a majority of learners hadn’t yet started exams. We added that we expected to shoot the lights out during the next quarter.

  The investors seemed to swallow that explanation, but we knew that we hadn’t settled the worry in the room. I told myself that at least we had left room for another board meeting, where we could test the assumptions we had just presented – but, to be honest, at this stage even I didn’t believe in those assumptions. To be even more honest, at this point of the proceedings I felt uncertain about absolutely everything.

  We started to eat, trying to crack a joke or two to lighten the mood, but the giggles we got were the kind that you make when the bill comes and you’re not sure you have enough money in your bank account.

  After we left the meeting, Dylan and I agreed that we really needed to improve the numbers and increase our marketing spend so that we could attract more parents and learners. Even so, at our next board meeting, we hadn’t made much progress. Revenue now stood at R10 000.00 (I highlighted the decimal point so that no one would be impressed by our sudden jump to revenue of R1 million).

  I told Dylan that we had to pivot. We needed to change the face of our customer; we had to accept that the average South African consumer couldn’t afford our tutoring services, but a corporate or bursary administrator probably could. We decided to change the business model and so, in January 2018, we put an end to the consumer-facing part of our business. This was an emotional decision because this is what we had actually set out to do. We really did want to be the Uber of Tutoring – and now we were saying no to that idea. Giving up the business-to-consumer engine felt a bit like throwing in the towel, but we needed to focus on the areas that were going to grow our business, and we had to be realistic. The Uber of Tutoring just wasn’t working.

  Painful it might have been, but the decision was a good one: It took a while, but we started making millions in revenue. The Uber thing may have yet to materialise, but we have a better groove and we are clear on what we sell and how we are still playing a role in solving the education crisis.

  There was an important lesson for us here: if it’s broken, don’t continue to break it. Don’t be attached to your ideas. Remember that ideas don’t hatch fully formed, so allow yourself the space to change, pivot and question yourself, even if pivoting means a complete transformation of your business. It’s more dangerous to stick to your guns when something clearly isn’t working, than to turn your back on it.

  CHAPTER 26

  COMPETITION IS FOR LOSERS

  Icame across a series of lectures that are held at the prestigious Stanford Business School, titled ‘How to Start a Startup’. These are great, because they feature founders of well-known organisations talking about the business challenges they experienced on their way to success – entrepreneurs like Sam Altman of Y Combinator (an American seed accelerator that was started in March 2005 and is consistently ranked among the top US accelerators), Reid Hoffman of LinkedIn and PayPal, and Brian Chesky of Airbnb.

  All the lectures are gr
eat, and I highly recommend them to any aspirant entrepreneur. The series tackles subjects like the idea, team, product, execution and other issues that are critical in the early stages of a start-up.

  One of the talks that really resonated with me was a lecture called ‘Competition is for Losers’ by Peter Thiel. Thiel talks about what a terrible mistake it is to make price your differentiator or unique selling proposition when you are setting up your business. Instead, you should strive to create a proprietary customer experience and build a moat around your business. Thiel’s most hard-hitting piece of advice is to build a business for a monopoly. Think of Google: there may be people who argue that this giant isn’t a monopoly, but the truth is that it owns Internet search.

  Before we launched Tuta-Me in February 2016, we did an extensive online search to see if there were any other on-demand tutoring services out there. We found that there were none in South Africa (at least not at the time of our launch); in fact, there was only one other service like ours, called Tutree, which had launched in Silicon Valley just a few months before us. We actually reached out to the owner of Tutree to ask if we could license his technology for our South African market. He turned us down, explaining that he was super focused on the market in the States and that he, too, was a start-up, just trying to figure it out.