Secrets of Scale – Event #3 (Powered by Entrepreneur Magazine & MESH Club)

Why Vinny Lingham says you don’t need funding to launch your startup

Fellow Shark Tank investors Vinny Lingham and Marnus Broodryk unpack why you don’t need an investor to launch – and scale – a successful startup. By Matt Brown

Too many startups are impatient, and it’s one of the key reasons why they can’t scale or secure funding, says Vinny Lingham, one of South Africa’s Shark Tank investors, and the founder of Gyft, which he exited for $50 million, and Civic, an identity protection and management startup based in the US.

“If you want to achieve something great, you need a plan,” he said at the third Secrets of Scale event that we hosted at the MESH Club in Rosebank. The aim of my show, The Matt Brown Show, is to give entrepreneurs access to the top entrepreneurial minds in South Africa, unpacking their experiences and top advice, and effectively helping business owners and startups to learn from their growth journeys.

Vinny Lingham and the other panellists at the event, Jason Goldberg, founder and CEO of 10X-e and co-founder of Edge Growth; Vuyo Tofile, CEO of Entbanc Group; and Marnus Broodryk, a fellow investor on Shark Tank with Vinny and the CEO of Transaction Capital SME Services, were all able to share valuable insights around what it takes to build a startup that will scale, and why the necessity of landing a funder is a myth.

Vinny’s advice was particularly on point: “Lay the right foundations and focus on your process. Don’t be impatient. Too many entrepreneurs are trying to run before they can walk or even crawl. Be thoughtful about how you put the business together and above all, go slow. Hiring more engineers and building bigger teams doesn’t necessarily speed things up. You can’t throw money at the problem and think you’ll get there quicker. Business doesn’t work like that.”

Start with the goal in mind

In my experience, based on hundreds of interviews with top entrepreneurs, as well as building my own business and brand, there’s the business you are now, and then the business you’re becoming. You need to always be innovating and keep that end gaol in mind: What kind of business will you become?

Vinny used his own experiences with Gyft to illustrate his point. “From day one we focused on high levels of user engagement. We needed conversion rates. We focused on that first, followed by what percent of return customers we achieved, and then who bought more and more. In other words, we concentrated on the metrics, and on our customers.

“If you’re moving too quickly, you end up with a product that’s not ready, people who aren’t happy and everyone in a hurry. Most importantly, you don’t have a scalable, repeatable product and market offering that’s ready.”

However, if you focus on your customers, not only will you have a revenue stream to build on, you won’t need external funding. “Not every business can be bootstrapped,” he admitted. “If your business is reliant on a product development cycle, you need external investment. But if you have something to sell from the word go, and a runway of 12 months, you can launch without an investor.

“From there, the biggest signs that your start-up is ready to scale are a high customer retention rate and good strong lifetime value of a customer – both of which you can only determine if you’ve been operating in the market. You need to know what each customer can bring in, your profit margin, as well as that there’s only a marginal fixed cost to each additional customer.”

Putting customers – and profits – first

Jason, Marnus and Vuyo all had valuable insights to add, sharing their top lessons in scaling a startup, and echoed Vinny’s sentiments that funding is not the most important element in launching a business.

“99% of business owners don’t start with funding,” said Marnus. “They change something, tweak things here and there and find a way to get revenue from customers.

“That’s how we did. We didn’t want to be the biggest accounting firm in South Africa, we wanted to be the most profitable. We focused on our pricing and product fit and made sure that if we took the business from ten people to 1 000, we could do it with the same model.

“There’s no point in getting 10 000 people onto your platform – all based on VC funding – and then the cash runs out and you realise you can’t monetise the business. It’s pointless and it happens a lot. Scale must be profitable. You can’t keep adding people and scaling the business if the costs are so high that you can’t monetise what you’re doing. Start small, get your customers on board, and use your own revenue to grow.”

Vuyo agreed. “Too many entrepreneurs don’t focus on the product. We all want to scale, but no one starts out trying to cater for 1 billion people. You need to cater for your first 100. Focus on them and make sure they’re extremely happy. If you aren’t focusing on your first customers and they aren’t happy, you won’t grow into other markets. We scaled as a consequence of that early focus.”

“When the market comes to you, you’re ready,” added Jason. “That’s when you have a repeatable model that’s scalable. What you want is mediocre people who can do an extraordinary job through how you’ve set up the business. Once you’ve proven that over and over with very happy customers, then you’re ready to scale.”

His advice was simple. “Silicon Valley has a great analogy – are you selling a vitamin pill, or a headache pill? Your customers can stop taking a vitamin pill and they might not notice for months. If you’re selling a headache pill though, they notice every minute without you. Your customers must feel pain in the absence of your solution – and no one else must be able to take away that headache as quickly or conveniently as you. Shift away from product-based pricing to value based pricing. What is taking the headache away worth?”

Focus on your business

“Don’t waste your time on investor meetings,” was Vinny’s final word to the entrepreneurs in the room. “The percentage of deals closing is extremely low, and it’s a total distraction. You spend so much time chasing investment that you aren’t concentrating on your startup.

“Focus on your business. When you get your KPAs right, you know what your north star is, and you have your metrics, then investors will come to you. Raise as little as possible at the right price at the right time. The wrong price at the wrong time can actually damage your business.”

VIDEOS & PODCAST

PART 1 – BUILDING THE AEROPLANE

This segment will be the majority of our focus and will cover practical “how to steps” for scaling your business. We’ll be revealing how to design a scale ready business and walk you through common pitfalls that all entrepreneurs will encounter as they “build the aeroplane” and how to avoid them. We’ll also reverse engineer how to design a scale ready business from a 150 strong team all the way down to a 5 person team.

PART 2 – BUILT FOR WINTER

This segment is all about how to ensure that you remain profitable as you scale. We’ll unpack how to bring different revenue streams, partnerships and products/services to together to help you weather any storm.

PART 3 – SCALE BLUEPRINT

In this segment we’ll explore the systems that can help you scale, how to automate repetitive processes and outsource non-essential tasks and how to design a business that makes more money while you sleep than when you’re awake.

10 series every entrepreneur should watch

In recent years, a flurry of new TV shows have explored the world of start-ups and entrepreneurship, giving prospective business owners an idea of some of the issues they may face on their journey to success. If being your own boss is something you aspire to, why not use your TV time productively by watching these shows and boosting your business knowledge?

Here are the top 10 shows for budding entrepreneurs:

1. Billions

A fictional drama, Billions takes a look at the world of high finance by tracking the ongoing struggle between hedge fund king Bobby Axelrod and District Attorney Chuck Rhoades. The show explores the themes of morality, wit and wealth, and demonstrates the truth in the phrase “absolute power corrupts absolutely”.

Watch it because while you may dream of becoming a self-made billionaire, Bobby Axelrod’s struggles with being in the public eye and becoming a target for everyone from greedy acquaintances to the justice system will help you to appreciate your ordinary, more modest lifestyle (as much as you may covet his super-cars and mansions and mega-yachts).

Watch now »

2. Silicon Valley

Loosely based on real-life personalities and companies, this series offers insight into the tech industry and gives viewers a chance to chuckle at eccentric entrepreneurs, while providing a look at the frenetic, high-stakes, cut-throat reality of the start-up world.

Watch it because it’s a good lesson in what it takes to turn a good idea into a profitable business – all the things that computer programmer Richard lacks, such as a level head, excellent negotiation skills, a supportive professional network and a trustworthy mentor.

Watch now »

3. The Deuce

Take a look at life in New York City during the 1970s and 80s when prostitution was legalised and the US porn industry was booming. The Deuce examines the impact of this growing market on real estate prices and how entrepreneurs made the most of unexplored opportunities at the time.

Watch it because it proves that opportunities do not come gift wrapped – to have a stab at success, you need to keep a close eye on trends in the market and investigate whether any big external changes and fluctuations could work in your favour.

Watch now »

4. House of Lies

Starring Don Cheadle and Kristen Bell, House of Lies takes a hilarious look at the world of management consultants and the various ways they take their smug, corporate fat-cat clients for a ride.

Watch it because it makes you realise that the decision to outsource services rather than bringing them in-house can make or break your business, and the fact that that high-profile firm you spend a fortune on to improve your profitability may, in fact, be playing you.

Watch now »

5. Power

Delve into the world of James “Ghost” St Patrick, a wealthy New York nightclub owner who lives a double life as the kingpin of the most lucrative drug network in the Big Apple. Power shows the ruthless nature of the business world and how creating a Fortune 500 company often comes at a price.

Watch it because it drives home the message that while having a dodgy illegal gig on the side may seem like a good idea while you’re raking in the cash, it can cost you your family, your “real” business and even your life if you ever try to get out of it.

Watch now »

6. Mr Robot

Follow Elliot, a young programmer by day and vigilante hacker by night, who finds himself conflicted when he gets recruited to destroy the firm he is paid to protect. This show explores the struggle of decision-making and is ripe with examples of how a single individual can change the trajectory of a business.

Watch it because it’s brilliant and clever and critically acclaimed, and also because it’s a great outlet for anyone who secretly wishes they could cause the downfall of the “evil” corporation that employs them without ever being found out.

Watch now »

7. Suits

Set at a fictional law firm in New York City, Suits follows a talented college dropout who works as a law associate despite never having attended law school. The show’s two main characters, Harvey and Mike, provide lessons in confidence and bravado and show how far you can go if someone just believes in you.

Watch it because it offers the message that, sometimes, going completely off-book and making what may seem like a crazy decision can give your career the boost it needs – for a while, anyway.

Watch now »

8. HBO’s High Maintenance

Providing a glimpse into the lives of eccentric New Yorkers, this comedy series about a marijuana dealer explores the ins and outs of owning a business that relies mostly on your people skills and discretion.

Watch it because it shows how client loyalty can be bought with attention to customer service, and that you don’t have to like the people you do business with. Also, if this particular field is something you’re interested in, it’s a reminder to never get high off your own supply.

Watch now »

9. Keeping Up with the Kardashians

Yes, the Kardashians have made their way onto this list! Before you dismiss this show entirely, ask yourself how a leaked sex tape turned into a multi-million-dollar franchise… Worth watching now, don’t you think?

Watch it because as flighty and shallow as they may seem, the Kardashians are a prime example of savvy business minds. Though all the DASH stores recently closed, the family’s dedication to the business shows that when you run a company, there’s no such thing as work-life balance – the business is your life.

Watch now »

10. Boardwalk Empire

Set in the Prohibition era of the 1920s, Boardwalk Empire explores the story of a New Jersey politician who plays both sides of the law as bootlegging booms. Boardwalk Empire offers lessons in negotiation skills, influence and the power of openness when navigating your position within different groups of people.

Watch it because it proves that, if your head’s in the game, even a political climate that may seem hostile to your business could be your greatest opportunity yet.

Watch now »

Watch all these shows and much more on Showmax. Get a free 14-day trial if you are a first-time user when you sign up for Showmax, and if you’re a DStv Premium subscriber, get Showmax at no extra cost. DStv Compact subscribers get Showmax for R49.

This content is sponsored by Showmax and co-created with Brandstudio24 for Business Insider SA.

Source: Business Insider SA

Africa Sustainability Challenge

About the Africa Sustainability Challenge On the 24th of April 2018, AB InBev Africa through it’s local country markets, went live with our very first Africa Sustainability Challenge! We are looking for Africa’s top innovation entrepreneurs to solve our continent, and the world’s Sustainability Challenges. As a global company, we want to continue to brew beer and build brands that will bring people together for the next 100+ years. In order to achieve this goal, we need assistance from Africa’s brightest minds as we cannot do it alone.

Up for grabs is the following for the minds behind the best solutions: 1. A trip to Africa’s very own Silicone Savannah in Nairobi Kenya 2. $50 000 for seed capital funding to scale their enterprise; and or 3. An opportunity to compete in the global stage at our New York based Accelerator

The 5 Challenges

1. Smart Agriculture Challenge: Do you have an innovation that builds high impact, inclusive solutions that improve grower access to sustainable agricultural resources, products, processes, or tools that can increase the quality, yield, and sustainability of farming at scale?

2. Water Stewardship Challenge: Do you have an innovative solution to expand access to water and sanitation services among households with no access to water?

3. Climate Action Challenge: Do you have an innovative solution that support low income communities, to adapt and transform to meet the challenges of climate change with access to renewable energy or carbon reduction opportunities?

4. Circular Packaging Challenge: Do you have an innovative solution that uses waste streams as a resource, generating value, and redirecting them from landfills? Ensuring that we have a waste free, circular future

5. Entrepreneurship Challenge: Do you have an innovative business solution that depends on employing a large number of people in order to solve sustainability challenges such as renewable energy, climate change, access to clean and safe water, waste management and sustainable agriculture?

Application open & closing dates Applications are open from 24 April – 31 May 2018 Interested entrepreneurs can get all the details as well as submit applications at http://www.challengeaccepted.africa/

Application Criteria: 1. All African based nationals that are at least 18 years of age 2. Only entrepreneurs with legally registered businesses 3. Must be green businesses operating for minimum 12 months 4. Business with minimum turnover of USD 16 000 annually

Participating countries Entrepreneurs from the following countries where we operate, can apply: Botswana, Ghana, Lesotho, Mozambique, Namibia, Nigeria, South Africa, Swaziland, Tanzania, Uganda, Zambia

Regional Information sessions We’ll be hosting information sessions in the following areas, where you can find out more details about the Challenge, in addition to networking with like-minded green entrepreneurs!

  • 4 May: Green Hook-Up Dinner (Johannesburg South Africa)
  • 8 May: Green Hook-Up Dinner (Dar es Salaam Tanzania)
  • 9 May: Green Hook-Up Dinner (Maputo Mozambique)
  • 11 May: Green Hook-Up Dinner (Kampala Uganda)
  • 16 May: Green Hook-Up Dinner (Lusaka Zambia)

We look forward to unearthing Africa’s top innovators that will change the face of Sustainability in the continent, and the world!

#AfricaChallenge

Regards ABInBev Family

Go to their website

This black-owned company distributes fire extinguishers that are literally a ball to use

  • Super Fire Ball is a fire extinguisher you simply throw into the fire – without ever getting close to the flames.
  • The idea to distribute it in SA was motivated by the constant need to find creative solutions to problems that are unique to the country, like shack fires.
  • Its South African distributor hopes to capture a significant share of the market in the fire safety industry.

On his last visit to South Africa, Richard Branson hosted inspiring business leaders and budding entrepreneurs with exciting concepts at Africa’s first Business is an adventure series.

Among the hand-picked business mavericks was Mandisi Kibito and his Super Fire Balls.

The idea [to set up distribution in South Africa] was motivated by the constant need to find creative solutions to the problems we experience in the country. We thought it would great to find a creative, lasting, and cost effective solutions for fire safety.
Mandisi Kibito, CEO of Super Fire Ball SA
Super Fire Ball is a fire extinguisher that is simply thrown to the fire without getting close to the flames. It saves 20-90 seconds which are vital to terminate a fire before it gets bigger.

Kibito distributes the Turkish-made product in South Africa.

The self-funded company already has a strong online presence. Now it just needs to overcome the entrenched ways of doing things, Kibito tells Business Insider South Africa.

Elsewhere in the world Super Fire Ball is marketed as a fool-proof automatic fire exstinguisher (when hooked up to a fire detector) or as simple enough for children to use. Its major promise in South Africa is in combating ten shack fires a day on average in informal settlements.

Making boots from hippopotamus and ostrich

The air is heavy with the pleasing smell of new shoes as a team of 16 craftsmen slowly and studiously make safari boots.

With each pair taking two weeks to produce from start to finish, you can never accuse the Courteney Boot Company of rushing things.

Instead the business, one of the world’s most exclusive footwear brands, currently makes just 18 pairs of handmade boots and shoes a day.

Founded in 1991 in Bulawayo, Zimbabwe’s second city, Courteney continues to be a rare business success story in a country whose economy has struggled greatly over the past 20 years.

Using exotic game skin leathers such as crocodile, buffalo, hippopotamus and ostrich – all from Convention on International Trade in Endangered Species of Wild Fauna and Flora approved and renewable sources – its boots remain much in demand around the world.

The company was set up by husband and wife team John and Gale Rice.

John had started making shoes in the UK in 1953 when aged 15 he began working for British shoe company Clarks. His career then took him to South Africa, before moving to Zimbabwe.

The couple ran the business together for 21 years until John died in 2012. Since then Gale has led the company on her own.

Looking back on the early days of Courteney she says that she and John devised a novel way to promote the business.

“Right at the beginning we made boots for all the well-known safari operators in Zimbabwe and South Africa free of charge, and delivered most of them ourselves,” says Gale.

“The safari operators would wear the boots while out in the bush with their overseas clients, and they promoted us – word of mouth.”

The holidaymakers would then find shops in Zimbabwe and South Africa to buy their own pairs of Courteney boots to take home with them at the end of their vacations. In turn they would recommend them to their friends, who would place orders from overseas.

Zimbabwe’s large commercial farmers, typically white Zimbabweans, also became enthusiastic purchasers of the boots.

Gale adds: “We had three main customers – the hunter, the farmer, and the tourist.”

The company grew strongly until the economic and political meltdown that started in Zimbabwe in 2000 saw the company lose most of its local customers. First, many of the white farmers left the country, and then tourist arrivals declined sharply.

To survive Gale focused on increasing exports, which rose from 50% to today’s 85% of total sales.

“From the very beginning we always intended to try to make our boots available to our niche market all over the world,” she says.

“And it is just as well that we did have that strategy. Since 2000 Zimbabwe has deteriorated to almost the brink of collapse.

“For sometime now it has been the case – export or die.”

With global stockists including gun companies such as John Rigby and Westley Richards, Gale says that 70% of its sales are now via the internet, with 20% of that amount via Courteney’s own website.

Every pair of its $145-492 (£105-355) boots and shoes are made to order at the company’s small workshop, and Gale says that the company will never increase production above 30 pairs per day, so as to maintain quality control. “I absolutely follow that strategy,” she says.

“I would say there are several factors to our exporting success, but by far the most important is concentrating on making the best, most comfortable, and durable boot possible.

“Most of our attention goes on getting the product right.”

Explaining the fact that everything is made to order, she adds: “We are manufacturers not retailers.

“We can’t tie up capital by keeping stock, and especially not every style, in every leather, in every colour.”

Fungai Tarirah, a portfolio manager at South Africa-based investment fund Rudiarius Capital Management, says that a key issue any Zimbabwean company has to overcome is the fact that the country is landlocked.

“A fair amount of the challenges faced by Zimbabwean-based exporters are around the fact that the country’s a landlocked country, so if your customers are halfway across the world you essentially have to deliver the goods in two legs.

“That sometimes triples or quadruples the amount of paperwork that one has to deal with – but also the lead times.”

Thankfully, Mr Tarirah adds that at the same time the internet has been a “game changer” for exporters from countries like Zimbabwe.

“It is now a lot easier for manufacturers to produce in a ‘just in time’ fashion, as opposed to building up stocks that may or may not move over the next three, six or nine months.

“It allows them to reach larger further-flung markets which they normally could not have accessed.”

Gale says that “without a doubt our secret to being a successful exporter is attitude”.

She adds: “Shipping overseas seamlessly takes a lot of communication and patience and attention to detail.”

While domestic sales are slowly rising again since former president Robert Mugabe resigned back in November, Gale says it is still not easy to be a business in Zimbabwe.

“Life is very difficult here, but we choose to focus on the positive and keep our heads down. We know what we have to do.”

Source: BBC

 

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