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Another Saffer makes it big in the US

Pierre Naudé’s nCino makes spectacular debut on the Nasdaq.
To ‘frame the mindset’ of the first seven employees, Naudé put a sign up against the wall of their tiny office that read 'nCino – Worldwide Headquarters'. Image: Supplied

Another South African is making headlines in the United States. Pierre Naudé is the CEO of the global fintech company nCino, which listed on the Nasdaq stock exchange on Tuesday.

It was one of the most successful listings of the year so far, with the share price spiking from its IPO price of $31 a share to more than $91. This briefly valued the company at nearly $7 billion or R110 billion. At this market capitalisation, the company was larger than locally listed financial giants Discovery and Absa. nCino’s share price has subsequently dropped to around $70.

In an interview on RSG Geldsake, Naudé did not want to comment on the success of the listing and the performance of the share price. “I was busy with a media interview when the first trades came through, and I heard the cheers from the staff. From a personal perspective, it was something very special.”

nCino CEO Pierre Naudé. Image: Supplied

Naudé hails from a wine farm near Worcester in the Boland. He joined Boland Bank where he met Johann Dreyer, a former Springbok athlete, who became his partner at several other ventures in the US.

“I was a programmer, and Boland Bank sent me to the US on several occasions, and was part of the team who developed the first ATM system or Saswitch in South Africa.

“I then realised America offered significant opportunities and in 1987 my wife, small baby and I relocated. I was a programmer, or a gun for hire, and travelled to where there was work.” The Naudés eventually settled in Iowa.

Approached

Naudé worked at several fintech companies and was approached by a group of bankers in Wilmington in North Carolina after S1, the company he was working for, was sold. (Dreyer was CEO of S1).

“They asked me to set up a company to develop software solutions for banks to process credit applications more speedily and efficiently. We started in a tiny office in Wilmington with seven employees. I put up a sign against the wall which read ‘nCino – Worldwide Headquarters’ to frame the mindset.”

The business grew quickly and today the company employs 900 people in the US, Canada, Britain, Japan and Australia.

More than 1 100 financial institutions around the world use its range of cloud-based software solutions.

The company’s largest customers include Bank of America, Barclays in London, and McQuarrie in Australia.

nCino does not have a presence in South Africa, although the company is talking to local banks. “We service South Africa from our London office and have built up good relationships, but we haven’t signed with a local bank. I expect that we will sign an agreement in due course, and I will be very proud if and when this happens,” he says.

nCino has received numerous accolades, including being featured in prominent industry rankings such as the IDC FinTech Rankings, the Deloitte Technology Fast 500, and the Forbes Cloud 100 for two years running.

According to the prospectus, nCino’s revenue rose from $38 million in 2018 to $138 million in its 2020 financial year. The company is not profitable and suffered a loss of $18.6 million in its latest fiscal period.

Asked why the fintech company settled in the relatively small town of Wilmington and not in Silicon Valley, Naudé said: “It is fantastic not to be part of Silicon Valley. The staff turnover rate there is between 15% and 25%. I don’t know how you build a company with such a turnover rate. Ours is much lower than 10%.”

He adds that there is much talent available due to the lifestyle North Carolina offers. “Last year I hired 225 people in Wilmington from 10 000 applications. We can choose who we want to employ.”

Naudé still has family in South Africa and visits every two years or so. “I hope to get back when Covid is over.  It’s always fantastic to come home.”

Luister na Ryk van Niekerk se onderhoud met Naudé: 

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Well done Pierre, congratulations.

All the best to him and well played on the value creation. Merit has no limits in the global economy.

Well done, and excellent timing on the IPO!

Another Shining example of South African Brilliance and Dynamism! We are Awesome! South Africans are truly talented and dynamic.

No. Not all of them. Very few of them actually. None of them in Government. Or on SOE’s boards. Like Eskom and SAA.

A shining example of a white South African, Who would have been discarded due to BEE. Well Done Pierre.

There are shining examples of non white people who were discarded due to apartheid….!! Thousands of talented musicians, scholars, sportsman who were never given any opportunity to progress and who ended up doing menial jobs to feed their families because that’s all apartheid and that rotten system allowed them to be. But white privilege would never allow you to see that…..!!

…along with Elon, another fine African American who has made it big outside the Rap/hip-hop-a-dop

Big thumbs up

Love to see this – well done, amazing story!

At a farewell party to his last honours class at Chemistry Department University of Stellenbosch Professor Chris Garbers bade farewell with the words “Chance favours the prepared mind”. The story of Pierre Naudè and nCino recalled these philosophical words. May the success of Pierre Naudè inspires the youth of South Africa to prepare themselves relentlessly for the great local and global opportunities unfolding around them.

“Chance favours the prepared mind” – amen

Another example of the incredible opportunities available to build wealth/ employ people/ change lives in the United States.

Good for him.

I wish the SA government could wake up and encourage more IPO’s in South Africa, instead of all regulations and BEE stuff.

Yeah. Ultimately there is a reason why innovation and entrepeneurs are drawn to america and not SA.
You go where you are welcome and where people appreciate your value and work.

Congrats Pierre! (Just don’t fly SAA when you come home)

Jolly good for him!

But here’s the part I don’t understand. The company has significant turnover, but is “not profitable”. Seems like it never has been much either, or that loss would have been latched on to as an aberration.

Seems the simpletons like me need a whole case of Sensei’s Red Wine to follow the logic here.

Jonnoxx, you touched on the essence of the matter here.

I have been thinking about this situation for a while….with a glass of red wine nearby. Uber generates $14 billion in revenue and made a loss of $8.5 billion. Tesla generated $24.6 billion in revenue during 2019 and made a loss of $862 million. These companies are loss-making but they enjoy huge market capitalisation. How is this possible one might ask? An investor buys the future cashflow, and the cash flow is negative. How do we justify the market cap?

Now we have to consider the matter of Nett Present Value of future cash flow when the discount rate is at, or near zero, or even negative in some instances. This situation turns the entire universe of finance on its head. When the interest rates are negative or near zero, then companies with negative cash flow can have a high market cap, because the risk-free alternative, the government bond also has a negative cash flow. When the government bond has a negative yield, it implies that the price of the bond is high. This phenomenon is transferred to the equity market.

Take a sip of your red wine and see if you agree with me. ☺

at this stage of the game i just want to take a sip & some more of a bottle nederburg baronne ; but alas my beloved ANC government has robbed me of that freedom. but i believe they know what they are doing.

i am fascinated by the idea of interest rates eventually raising & the impact that will have on countries paying back debt and on the stock markets in general.

more bubbles maybe ?

More and more companies with “value” don’t make money.

It is almost beyond comprehension. I can understand a “seed” company being funded by venture capitalists. Sure it will take a while to make money , but then those guys take all your equity and they take it cheaply. These are massive companies , with massive revenue and no money , being sold at premiums – not discounts.

How quickly zoom shares have rocketed this year , they say prosus will buy food delivery companies in the UK at any cost, all these things don’t add up.

Banking with their leveraged products are essentially a GIANT Ponzi scheme (if everyone had to “take their money” at the same time , then it would collapse).

Negative interest rates , another crazy concept .

Oil traded at minus 40 dollars a barrel earlier this year. Who would have thought.

Don’t even get me started on unemployment and the 5th industrial revolution. People will be “paid” to do nothing, as there will be nothing for them to do.

There is really no point to what I am saying here , I guess the world is as crazy as it ever was and we have no idea/way to predict what will happen next.

It’s a game of musical chairs as far as I can tell. My theory is that this round has been extended by virtue of the fact that wealth has reached a point where investors, i.e. ordinary middle-class savers, do not anticipate needing the cash flow, ever. After all in the U.S. now, if you’ve diligently saved a million USD in the form of Tesla stock, and you lose your job: well, the government will pay you $600 / week. No need for Tesla to return actual cash.

By the same token I’m fascinated by the banks behind e.g. our SOEs, apparently happy to just roll over debt indefinitely when it’s quite clear that in the long run, they are not going to get their money back. Call it already!

The idea of a company creating profits for shareholders is great, in the eyes of the shareholders. Some modern businessmen like Elon Musk and Jeff Bezos might differ from the finance textbooks as to what the purpose of a company is. Reaching a goal, achieving a target, having a purpose. The likes of Tesla, Amazon etc. investing all profits back into business makes sense, from that perspective. It confuses investors and anyone attempting a valuation. These people think Loooooong term. Not the average 5 or 10 year free cash flow used to net present value the profits. How do you value market share? Disruptive abilities? And why would you want to pay tax on your profits anyway, when you can re-invest it for future growth. Especially if you can borrow for essentially free, or do a capital raise very easily.

Well done Pierre – Watch out Elon, you have someone coming up from behind…

Well done indeed!

But that valuation is crazy. Or at least at this stage it is. $18m loss on $138m turnover, and the valuation is ~$5bn. The American dream.

I agree Bloukaas, a lot of clawback required, but is scale not a fascinating thing that can turn the numbers quickly, something I have never really grasped having never had the experience! But good on him!

Would never have happened here due to ANC racist policies. The end result is America gets to benefit from our entrepreneurial talent. You don’t need to be a genius to see why we are no longer an economic force. We have donated significant skills and talent to countries that DON’T NEED THEM while WE DO.

If we had an ethical, moral and intelligent political party leading SA the thousands of South Africans of ALL colours who left, would more than likely still be here and growing SA’s economy to its rightful first place in Africa.

But instead ….

Brilliant!!!. Congratulations!

Another great business mind that fled. It continues daily I see. Who will be left?????????????????????????

How can this be perceived to be a great achievement? I explain further:
– Pierre. 1987 University of Stellenbosch (US) etc. Without knowledge of his background (google failed me) I would safely assume (understanding the demographics of SA at time) that
* Pierre grew up in an environement where he enjoyes enjoyed great favour over many South Africans i,e secure and comfortable housing all his life, educated parents(again probably from favourable surroundings etc.) enjoyed decent primary and high schools (v township schools),attended to US (v UWC) et al.
* in comparison to Weston.
We don’t know Weston, but
– He is the third child of a single parent – Alice – a shoe factory worker;
– attended Arcadia Primary and Arcadia High schools. A google search revealed that these schools are located in African townships.
– Weston never attended university
– Weston shared a 2 bedroomed house with his mom, sister and two brothers in township;
– Weston now owns a company that employs quite a few South Africans.
– etc.
The million $ question..Who is the greatest achiever of the two?
– My guess would, without doubt be Weston when considering privilege, lack of opportunities, circumstances eg poor schooling, hunger
poverty, SA law, adversity, lack of capital etc the list is endless.
– As for Pierre. I say he has a modest outcome (v Elon Musk) considering the circumstance and environment in which he was raised.

Regards
RSW.
(township scholar)

End of comments.

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