SIKI MGABADELI: Good evening and welcome to this special edition of the SAfm Market Update with Moneyweb. My name is Siki Mgabadeli.
Tonight we bring you a conversation with arguably one of the country’s most prolific speakers. He’s been called the rock star of public speaking and has spoken in four of the seven continents and to over 350 000 each year. He joins my colleague Tumisang Ndlovu.
She started off by asking him who is Vusi in the entrepreneurial space.
VUSI THEMBEKWAYO: I’m just a guy who believes, I suppose as most entrepreneurs do, that tomorrow is better than today. So I’m an entrepreneur who basically subscribes to three ideas. One is that whatever you need to achieve your dreams you’ve already got. Two is that you don’t need external funding to build a business. And three is that as South Africans we need to move away from our obsessive racialisation of everything including, among other things, entrepreneurship.
TUMISANG NDLOVU: Who is Vusi – the man, the individual, the mind, and ultimately the human being born, raised and propelled to success?
VUSI THEMBEKWAYO: I’m naturally curious, I’m naturally inquisitive as an individual, and I don’t like to accept the status quo. The idea for me that something has existed a particular way and then, therefore, it should continue to exist that way, sounds quite archaic. So I like breaking rules. I like challenging convention. I was raised that way.
So my view is money is nothing more than an agent, that’s how I look at money. I think people look at money as something to express something, as a means of self-expression. So why do many people want to make money? Because I want to be seen a certain way, which means I’ve got to dress a certain way and drive a certain car. Really what you’re speaking about are issues of identity. My view is that if within and of your own self you don’t have a strong enough sense of self, money is never going to fill that gap.
As my mother says, there are some things that if you are not enough without them you’ll never be enough with them. That’s my view of money. So I look at money as an agent. The reason today I like to take a bit of my own capital and invest it in entrepreneurs is because I think it’s an agent, it’s an agent to change things, it’s an agent to change society; it’s an agent to allow society to express yourself, to think differently. Money is nothing more than an agent, an agent you and I can use to change, or you and I can use to try and express ourselves in spaces. But if you use it as a means of self-expression I think you’ve missed the point.
TUMISANG NDLOVU: In the entrepreneurial space there are women, we are present, we try hard, we work hard, but the representation on that front is lacking. What’s your view on that?
VUSI THEMBEKWAYO: I think the extent to which you’ve not seen female entrepreneurs succeed in numbers in South Africa has less to do with the fact that they’re there and more to do with the fact that South Africa as a community of people is not yet ready for that dialogue. In truth, most South Africans aren’t ready for the idea of a woman president and having females in the boardroom challenges the very same foundation on which that idea is based on, which is that of the fact that she is female infers a couple of things: one, she’s not of my level; two, she’s not of my intellectual ability; three, she cannot hold her own in a particular space; and four, I must be the man.
So we hold those views and beliefs, sometimes unaware that we hold them. So I hold them and I find myself having to go hold on, why did you just make that statement? Why did you feel the need to do what you just did? You see it expressed in interesting ways in how people converse and how they relate, and then there too in how they do business. So I don’t think we’ve given women enough of a chance to say, try it in business, to be able to say they’ve not proven themselves to be able to hold their own. I don’t think we’ve done that.
If the investment case is ag, shame, women, let’s invest, we’re never going to fix it. It begins first with seeing each other as equals. That here is an individual who is intellectual, who brings value and I like the value they bring and I believe we can do business – in the same way I would if you were male or white or pink, blue or purple. If you eliminate that, you then allow people the space to compete. But unfortunately our society has not yet eliminated that and it’s going to take a while still, I think, for us to get to a point where women can be seen as equals.
TUMISANG NDLOVU: It brings me to my next point. In your contribution on the TV show Dragons’ Den you are seen as very stern.
VUSI THEMBEKWAYO: [Laughing]
TUMISANG NDLOVU: You do not take kindly to shoddy work.
VUSI THEMBEKWAYO: [Laughing]
VUSI THEMBEKWAYO: Ja, it’s my character. I’m very affixed to the fact that once you know you who are, be who you are, and don’t try to be anything that you’re not. So that’s me. The individual that you see on Dragons’ Den is Vusi. My team will tell you that’s how I am. I have very, very high standards and I do not compromise them and I always expect people to bring their A-game. So people will tell you that I’m quite notorious for this. If you and I schedule a meeting, at the end of the telephone conversation the first thing I’ll say to you is, Bring your a-game. So my thing is if you’re going to do anything then just bring you’re A-game, don’t muck about. That’s the first.
The second is – and this is a statement aimed particularly at us as a people – we have accepted the ag-shame narrative, u ya zama, a young black guy, just give him a chance. And to the extent to which we accept it we will never succeed. We must be the ones to hold each other accountable, we’ve got to be the ones saying no, excuse me, I don’t accept this quality of service from your spaza shop.
And if we begin to hold ourselves to a particular standard, then we ourselves will begin to succeed. Success is easy, it’s simply about keeping to those principles. So for me as a young black person – I’ve just turned 30, so in truth I’ve spent the past ten years of my life in my 20s – so when young black people specifically come and pitch and it’s shoddy I take offence, because I say, you’re representing all of us, just bring your best, man, you knew about this, you had the opportunity, just do your best, be present and be in the room. So I know it’s made me quite unpopular.
The other day I as at the petrol station and the guy refused to put petrol in my car, the petrol attendant. He said someone else must do it. And it turned out that he took offence again, to my character on Dragons’ Den. But it’s me. I think people must just bring you’re a-game. Whatever you do, be present in that space, be committed, deliver and, no matter what, always make sure that you do phenomenal work. So we have an expression in our firm called “rock star”, which is would a rock star put this out – whatever it is, an email you’re about to send, a proposal to a client. Would a rock star do it the way you’re doing it and if it’s not rock-star enough, go and redo it and redo it and redo it and redo it. We will answer the entrepreneurship question in South Africa when we begin to demand higher quality of work from all of us.
TUMISANG NDLOVU: I agree. We must talk about this 30-business, we really have to talk about this.
VUSI THEMBEKWAYO: [Laughing]
TUMISANG NDLOVU: Should we still be trying to aspire for a brilliant person outside of the dynamics that you’ve mentioned – the black, the first black the so and so, the white versus …? What are we doing in South Africa? What should we be doing with those who are under 30 for them to get to a point where you are 30 and you know exactly what you want?
VUSI THEMBEKWAYO: I must confess that I think I’ve been fortunate, certainly my fortune has not been without work, but has been fortunate nonetheless. What keeps me awake at night is how many other South Africans who are black have the same fortune as I do. Fortune can be misfortune, by the way. So growing up tough is a fortune, you learn things. I look at my son and daughter now and they just get it so easy. They go to school, they come back, life is nice, the ousie cleans. When I was a little boy my earliest memory, I can still remember, my mother used to buy this thing called Sunbeam. You know what I’m talking about.
TUMISANG NDLOVU: Oh, yes [laughing].
VUSI THEMBEKWAYO: I hated it because I knew what it came with. We had a stoep. Why did black parents have a stoep around the whole house – even the part where the dog was at the back. So the whole house had a stoep.
We had chores at home. When we came back from school it was wash the shirt, wash the socks, polish the shoes, iron your pants for the following morning, do the dishes, clean the house, do the stoep. When my mother came home every day she went through a systematic process of checking those things. So you’d be given Sunbeam and you’d have to go outside and polish. I hated it, not because I didn’t like polishing – I actually quite enjoyed it, I found it therapeutic, a moment just to be on all fours, as it were [laughing]. It was quite therapeutic.
The part I hated was my mother’s standards because she would come after I had spent two hours and I’m sweating and the sun is out and I look at the stoep and say ja, Mandela would be proud here. Here comes my mother and she says nah, and then she puts her finger on it and says nah, look. She had a standard, she called it the mirror test, which was she would look at the floor and if she couldn’t see a reflection of herself you hadn’t polished it clean enough. So you had to do it again and again and again and again.
So I say this to illustrate a simple point that I think a lot of us think fortune comes from growing up privileged and the rest of it. My view is that actually you learn more growing up disadvantaged. If you read the book David and Goliath by Malcolm Gladwell he speaks about this concept; he calls it a desirable difficulty, the advantage of disadvantage. He asks an interesting question: why are the most successful entrepreneurs dyslexics? It’s because they’ve had to learn to deal with difficulty. And what does being an entrepreneur mean? It means dealing with difficulty, it means dealing with cash-flow problems and suppliers who don’t want to give you credit lines, and customers who don’t want to pay on time, and markets that are under pressure, and credit agencies that don’t want to give you access to capital, and shareholders who want a lot from you, and risks that you don’t know how to manage, staff you don’t know how to manage, and unions you don’t know how to deal with. That’s what being an entrepreneur is about.
And you’re dealing with multi-faceted issues. On top of this is whether or not your business has an economic right to exist and competitors who want to see you out of business. So if you naturally cannot deal with difficulty and high levels of standards, you are not going to make it. It’s not rocket science. So for me there’s great advantage in growing up disadvantaged and I think our perspective, especially as young black people, should be first to look for these advantages that we’ve gained in our struggle.
The reason I beat most of the speakers in this country – was I more talented? Maybe. Did I have better content? Perhaps? I was hungrier and I was hungrier because I came from less, and because I came from less I wanted more. And I was willing to do more with less, and I ate more of their lunch and I worked harder and I pleased clients more.
I still, every single month, write a personal letter to the clients who have booked me that month, 12 years into the business, every single month, because it’s an important part of my business. It’s just – keep those relationships strong. If you look for those things and you understand that what in fact you’re perceiving as your disadvantage is your greatest strength, that’s when you really begin to succeed.
TUMISANG NDLOVU: Now there’s this seeming competition in terms of innovation with young entrepreneurs coming up in South Africa, especially in the Joburg space. You have guys like Skinny Sbu Socks, The Lazy Makoti – very brilliant ideas and very innovative in trying to find something that’s already existing and making it work for you. What’s your view on businesses such as that?
VUSI THEMBEKWAYO: I’m optimistic – but I am cautious. Let’s look at the facts, South Africa, as she exists – whether you look through apartheid or even predating that – has never created a class of businesspeople who’ve built industries off the back of the kind of businesses you and I are speaking about. So when people say, ja, but we’ve got black entrepreneurs, the first question I ask is what do they do? One has an event-management company, the other one is in catering, and I say no, not really, no guys, let’s be honest here – that’s not really what we are talking about.
So with respect to Sibusiso – and he’ll tell you I’m a huge fan of his, by the way, I’ve got both of the batches that he’s produced, when I travel globally I wear them and then I market his stuff, I’m a huge fan of Sibusiso – I think the challenge that he and the young lady you speak about will have to answer is how do you industrialise that business? So first, how does he make himself irrelevant in the business and, second, how does he produce a brand that will give him a million pairs of socks sold a month, because anything less than that in my view is just not worth it.
Then in 20 years’ time we’re going to be having the same conversation, where are these black entrepreneurs, right? So that’s my view of that, that’s the reason for which I’m cautious.
The reason I’m optimistic is I like the fact that there are young people who are thinking like that, who are saying well, here’s a space and how do I innovate it? I must tell you, by the way, one of my very first businesses was a finance business, I took money from my public-speaking business and I decided that I was going to create small loans and finance spaza shops. It was a rocket of a business – and I lost everything because there’s no space for innovation. You go to a spaza shop and you say I’ll give you R1 000 this week and at the end of the month you pay me back my R 1000 plus 5%. First, most of them don’t make the kind of margins to pay you back the 5% because of what they’re selling. And, two, your ability to manage and monitor risk in that environment is very, very difficult, so you actually can’t do it. So I did it out of heart and I learnt something – that often where your heart is, is not necessarily where the money is. You’ve got to learn to use both your analytical brain as well as your emotional brain in whatever decisions that you make. So I’m cautiously optimistic about those kinds of businesses but I am certain on this – they must at the very least be given the tools they need to succeed, at the very least.
If I asked you what has been South Africa’s single greatest export of the past 20 years, I don’t think we have one and if we do I wonder who owns it. So I don’t think we’ve created anything that’s global enough to shape the global space – and that’s my thinking. My thinking is let’s be number one, guys, let’s be the best. It’s okay to build businesses that are locally relevant, but we’ve got to start building our own Coca-Colas, we’ve got to build things that will be global in the impact that they have.
TUMISANG NDLOVU: You wrote an article earlier this month on the five things to know when pitching for an investor. What are they and why choose those particular five?
VUSI THEMBEKWAYO: I think the very first one is numbers, numbers, numbers, numbers. Most entrepreneurs say I’m an entrepreneur. Why? Because I’ve found a gap and I’ve created something for that gap. No, that doesn’t make you an entrepreneur; that makes you an opportunist, so two very different things. If you cannot as a person who runs a business right now answer these questions: what is your revenue, what are your margins, net and gross, what is your cash-flow cycle, what is your working-capital cycle, what is your cost of capital in your business, and what are the inherent internal and external risks in your business? If you cannot answer those six questions, the odds are you’re just an opportunist, you’re looking for opportunities to find spaces in different things.
So for me it’s know your numbers. I quite like how accountants call it, so in the beginning I used to really battle with numbers – what is this thing depreciation, what is this thing telling you, why must I bother putting this thing, why must I have depreciation here? Because entrepreneurs think in P&L [profit and loss] form – we think money in, money out, difference – which is interesting because that’s not how you build a business. You build a business by building a balance sheet, not by building an income statement. Building a balance sheet means you build higher net asset value. So the real question we should be waking up in the morning to, is to build assets higher than the liabilities, right? Most of us just want to make more money than we spend. One is the function of the other, but the relationship is linear.
That’s why I like the way accountants look at it. Accountants say you must have your books done. The reason it’s called “books” is because all numbers are is a story, and the minute you understand that this number is telling me a story and I can look at a set of financials and look at a single number and ask what this number is trying to tell me, then your relationship with numbers changes.
That’s how mine changed. I got to a point where I thought, what is this number telling me – and I could then have a conversation with a set of financials. So number one, know your numbers. That’s important. Number two is know why you need to exist. I think a lot of people don’t. A lot of people kind of have a sense but you don’t really know why you need to exist.
My good friend Allon Raiz calls it a compelling economic reason to exist. Beyond the fact that you’re black, beyond the fact that you’re female, what else? Why must you be here, doing what you are doing? That’s number two.
Number three is you must have the ability to build a strong brand, and to an investor you’ll have to demonstrate that ability – to build a strong brand.
Number four is the ability to scale. So I took a lot of criticism on Dragons’ Den because I did the second-fewest number of transactions, but the second-highest in value. And the reason I did the second-fewest is because for me if a business doesn’t demonstrate the ability to be scaled it doesn’t attract me. I want to know how this thing is going to grow and become big. It’s again part of our limited thinking.
Maybe just to give a bit of context, my grandfather had a shebeen, my father had a business, my uncles had a tavern – so we come from spaces where there are entrepreneurs all the time. Interesting, my grandfather started his shebeen/spaza shop in 1978, in the exact same year Shoprite was founded. Shoprite today is R114bn; my grandfather has passed on and he left no legacy. It’s because we think wrong and we don’t think about how do we truly scale this thing, how do we make it big?
So to an investor you’d have to demonstrate the ability I think to scale a business. That’s I think the challenge Sibusiso has – how does he make Skinny Sbu Socks relevant in Yobe State in Nigeria, and equally relevant in Kuala Lumpur in Malaysia? How does he achieve that? Outside of here is a young man from South Africa who’s young and back and entrepreneurial and succeeds because he’s young and black, he has to build a narrative around here’s a product that sells, no matter where in the world you are. People use Facebook, not because the guy who developed it was a young white guy but because we like Facebook, so we use it. So that’s the fourth.
The fifth is a deep technical knowledge of your game. There are just too many chancers out there in truth, too many. There are too many people out there going around talking about businesses they want to get into. So they know the Queen’s English, they can speak the Queen’s English, and they present themselves very well – the comrades are very good – but there’s just no technical expertise. And unfortunately me and my own money cannot be parted for any person who doesn’t understand the nuances of what you want to do – the nuances, the details. The money is always lost in the detail. Every time I’ve made an investment and I’ve come out second best, is because we didn’t understand the detail or we invested in a person who didn’t understand the detail, so you didn’t see it coming. So those are the five things in my very humble view.
SIKI MGABADELI: That was highly acclaimed entrepreneur, Vusi Thembekwayo, bringing us to the end of this special edition of the SAfm market update with Moneyweb..