I have him in the studio to talk to us. Thanks very much, Vusi, for joining us. Welcome to our studio.
VUSI THEMBEKWAYO: Merci beaucoup, thank you Ma’am.
NOMPU SIZIBA: Good stuff. Now, what a year it’s been. You’re an entrepreneur and seek to be a champion to other entrepreneurs by imparting wisdom through your master-class sessions. What are some of the tips and lessons that you’ve been sharing with entrepreneurs to navigate this most horrid year?
VUSI THEMBEKWAYO: The first one is probably the most important one, which is forget everything you know. As human beings, we don’t naturally default to that. In fact, when we’re in moments of crisis, we default to what we know. And if there’s one thing we’ve learned through this period it’s that sometimes what we know doesn’t get us through what we’re going through.
The second has been that you actually don’t have the benefit of poor emotion. I was saying to an entrepreneur – we were invested in his business through our Equity Fund, and he’d had a particularly difficult time – I said to him, you do realise that you either get the emotion, or you get the result, but you can’t have both of those things, particularly when you lead. And I think a lot of entrepreneurs often fail to make that transition between a business owner and a leader. The people you manage look up to you. So sometimes it’s just recognising that you actually don’t have the benefit of wallowing in poor emotion – the time for that will come. But when it’s time for difficult decisions, you’ve got to be there to take those decisions.
NOMPU SIZIBA: Yes. That’s right. Now you talk about being invested in these firms – you’ve decided to put your skin in the game and all of that. What sort of emotions have you gone through in that regard [Vusi laughs] because, like you say, this is an unprecedented time and your approach is obviously quite crucial? You need to continue giving confidence to those SMEs or entrepreneurs that you’re supporting. But were there ever any times when you thought, oh my goodness, where are all these businesses going to land up?
VUSI THEMBEKWAYO: Absolutely. Our first fund was seeded by me, then Dr Maponya joined me, and then we raised around from ultra-high net worth individuals. Our second fund we branched out into family offices. But across both of those funds, we’ve got assets in fuel, we’d got assets in real estate and technology and financial services across the range. And every single sector was affected. But I mean every single sector.
So a couple of times we were sitting with very difficult decisions. We had a manufacturing asset that employed 1 800 people and we had to cut 800 jobs. I chair the board of that asset. So I was the one who had to make that decision. Those are difficult decisions. They’re never easy to make.
I think for me the learning experience, if I’m to be honest, has been this. All of the literature I’ve read, all of the education I’ve got, all of the experience in business I’ve had over the past 16 years, could not have prepared me for this. And sometimes the learning for us is that the moment is the preparation. There’s nothing you can do until you get there. And so a lot of the work I’ve been doing with entrepreneurs that we mentor, that we’re invested in, has been going “this moment is the preparation, and you have to choose how you show up to this moment”. It’s very, very difficult.
NOMPU SIZIBA: Indeed. Now, economically speaking, this has been a really rough year for many. But for others there’s also been a silver lining. I have been watching some of your videos in recent days, and I do see that you say that you’ve managed to strike some really good opportunities on the rest of the African continent. Not that I necessarily want the full detail, but just tell us about the silver linings that you’ve managed to see during this year.
VUSI THEMBEKWAYO: We’ve had soft commitments on a fund of funds for sub-Sahara through our partnership with other funds in the rest of the continent. People who work in the funds space will understand what that means. We did the largest conference of founders and investors in the continent this year, 15 000 founders, over 300 qualified investors. We did it ourselves in collaboration with my partners in Uganda, Tanzania, and so on. We acquired an incubation asset in Uganda. We acquired a venture asset in Tanzania. We’re busy finalising a due diligence now for a financial services asset in Nigeria. And we acquired a health asset in Egypt.
NOMPU SIZIBA: How important is it, do you think? Not everybody is going to cross the borders and work with other people in other countries. But, from your perspective as an entrepreneur, as a business person, how important has it been to be able to exchange knowledge and ideas with other Africans? Sometimes there’s this wall – it’s them and us.
VUSI THEMBEKWAYO: I have to make this confession. Here for me the biggest mental change I had to make was the recognition that competition is for losers. Here’s what that means. My strategy now going forward is collaboration, not competition. So, for instance, we have hubs that we operate here, corporate sponsors of the hubs. And in those hubs we incubate businesses and we help entrepreneurs that run those businesses. We’re 15 years behind what our partners in Tanzania are doing. Now, I could take the next 15 years and learn the hard lessons or, as we’ve done, we can bring them in, acquire part of their intellectual property and roll out, and get a 15-year advantage in 16 months. So the most important lesson for me has been this: If you’re doing something, then generally somewhere in the continent somebody has the skills, competence, and networks to amplify the thing you’re doing.
So think about finding those people and leverage, don’t compete. Collaborate.
I was telling you about our fund of funds that we’re busy working on. We’re partnered with a private-equity firm based in Namibia. They are the third-largest private equity firm based in Namibia that wanted to do something like this. They don’t have the knowledge and expertise for venture. They understand private equity, but we understand venture and rest of Africa. So that relationship works perfectly. So don’t compete, collaborate and synergise.
And I think – this is just a final note for you – as a South African myself, I’ve made this mistake before, so I call myself out on this, but we South Africans do tend to think that the world is South Africa until we leave here. And then you realise actually that there’s an incredible amount of opportunity in the rest of the continent.
NOMPU SIZIBA: You bring your business and entrepreneurial skills and knowledge to bear through public speaking engagements. And you’ve honed that particular craft over the years. During Covid and this whole social-distancing lifestyle that we’ve had to lead, have you had more or fewer public-speaking engagements? And what do you think about the effectiveness of doing these things electronically, as opposed to in person?
VUSI THEMBEKWAYO: I have to confess, I don’t see – let me give you pre-Covid. This used to happen. A client would book me in Colombia, and I would fly from South Africa and connect to Buenos Aires, connect to Colombia. It would be a 24-hour journey for me to deliver a 45-minute keynote. I don’t see that happening again, I genuinely don’t. I think there will continue to be massive mega-events where corporates will invest in that kind of thing, but I think we’ve now naturalised and neutralised the Web, and we’ve weaponised it.
Just before I got here, for instance, I was doing something with a team in Kuala Lumpur. This evening I’m doing something with guys in Colombo in Sri Lanka. So the world all of a sudden becomes your playground, your oyster. Your question was what have I seen in terms of activity? Definitely an increase in activity, but a decrease in the value per transaction. So it has to make it more workable for you in the client. You can’t bill what you were billing pre-Covid. So it becomes about how I work with more clients to make the same kind of numbers. It’s been an adjustment for everybody.
NOMPU SIZIBA: Okay. Now, some months ago, you had a rant about lockdown and how it destroys livelihoods. Thankfully a lot of the restrictions have been eased since then, but that doesn’t discount the damage that’s already been done. But as we head towards the festive season our virus rates are looking worrying. Do you think that government’s approach to deal with hotspot areas is quite sensible? What would you suggest to them if you had their ear?
VUSI THEMBEKWAYO: First I think that it’s really an invidious position, in particular, that the President finds himself in – but just generally, for people in leadership – when you have to make what is a false decision in my mind between protecting an economy and protecting lives. But unfortunately in a South Africa with the kind of income inequalities we’ve got, in the spatial planning we’ve got, where people do have to take trains and taxis to work, you do have to make those decisions. So it was a difficult decision, but it had to be made.
I think the frustration for us grew at the duration of the lockdown and the hardness of the lockdown. We felt it could have been shorter and it didn’t have to be as hard. My anxiety is when I see fellow South Africans still not observing protocol, and now we’re back at the second wave. My advice would be this – that I don’t think we have to choose between the economy and lives. We can preserve both. The real challenge is that as citizens we need to be responsible and we need to call each other out where we are not being responsible. And, as business, we need to meet the process halfway. So for instance, I had a call out with somebody who operates in the restaurant industry, and I said to them, you guys, you shouldn’t be doing this thing that you’re doing. You’re now trading beyond hours, and there were several allegations of this person.
So I think we have to meet each other half way and recognise, finally, that actually everybody’s just trying to do the best they can. I think we forget that sometimes. We’re trying to do the best we can with the limited information that we have at that time.
NOMPU SIZIBA: So with the kind of crazy year that we’ve had with the impacts of Covid-19, I suppose some business organisations will have fallen or remain standing, based on the kind of leadership that they enjoy. And I dare say developments in the United States, for example, and its experience with the pandemic, have really highlighted the importance of focused leadership in a crisis. What’s your take on how important leadership is, especially in a crisis?
VUSI THEMBEKWAYO: At the end of the day, the Titanic wouldn’t have hit that iceberg if the captain didn’t allow himself to be influenced to make the decisions that he made. There is the old expression, isn’t there, that it all rises and falls off the back of leadership? I think the challenge, though, for all of us in society is to recognise that leadership is not positional, that all of us have a role to play. And so, in your own community, in your own household, in your own street, in your own township, you have a role to play in terms of how you lead and how you call people out when people are not leading accordingly.
And I often find that the study which they published yesterday that showed that over 40% of small businesses have just been decimated, they’re completely gone – those are not businesses that are going to come back into the stream, not for the next 18 months. At the same time, the banking sector was given a R200 billion loan guarantee by the government. At last count, they dispersed R16 – it may be R20 billion now. For me, that’s a leadership issue. Somebody needs to sit down with the CEOs of the banks across the range and say, “You’re not playing ball”. The moment is a crisis moment and we can’t approach a crisis moment with business-as-usual credit criteria. We need to find a different way to do these things.
NOMPU SIZIBA: You say there’s a leadership issue, a confidence issue.
VUSI THEMBEKWAYO: Not a confidence issue. It’s a leadership issue. The one precedes the other. Confidence is a function of leadership. Leadership is not a function of confidence, I genuinely do believe. I think a lot of senior leaders in large businesses that are listed fall into the quarter-on-quarter gap. We’ve got to report quarterly to the analysts and to the exchange. But when you are in South Africa, we’ve got five banks that dominate the system of monetary flow, and our money’s distributed into the system, government makes available capital through credit and the debt capital markets are completely dominated by the banks. You can’t, as a bank, then say we’re going to do things the way we’ve done them, by definition.
Just coincidentally on this leadership thing, I remember saying at a public platform that even the government itself could have found a different way to do things. If I was the government I’d have taken R50 out of the R200 billion, I’d have designated it to the private equity and venture capital asset class – which in this country is about R300 billion, so it’s amply capable of managing that money. I’d have gone to asset managers who know how to manage money, given them R500 million each and said, you guys are dealing with small and medium businesses every day, here’s R500 million, write them the ticket sizes and back them. That’s what I would’ve done.
And I think a big part of what we need to do to rebuild South Africa is we need creative thinking around the problems that we’ve got.
NOMPU SIZIBA: Now, the South African economy formally came out of recession with the third quarter GDP reading coming out at plus-66% compared to the second quarter. Business confidence has also picked up, up relative to previous months. And then the government has said that there’s going to be a lot of investment in the infrastructure space. As an entrepreneur, how moved are you by these pieces of information and, ultimately, what is it that you think is going to be the driving force for SMEs and entrepreneurs as we head into 2021?
VUSI THEMBEKWAYO: The single most important input into any economy is sentiment. Most people think it’s skills and supply and technology and labour and capital and infrastructure. It’s not. You can have all of those things, but if you don’t have sentiment, the market will go nowhere. So the reason the things you’ve mentioned are important – finally [there are] green shoots coming out of the GDP numbers, we’re seeing recoveries in manufacturing, engineering, and mining, we’re seeing it looks like there’ll be some return of jobs coming back into the market, certainly at the second half of next year – all of those are fundamental for one thing, they build sentiment.
Sentiment is important because the average household buys or saves based on sentiment. If you think you don’t have income protection for the next 12 months, you’re not going to make big-ticket purchase items – and businesses are built off the back of consumers buying stuff. So this is a cascade effect/. I genuinely believe one of the wins of the current President has been this infrastructure programme. I know it’s received several criticisms, but the question must be asked, what else would you, would we do?
South Africa is today where the US was in the 1930s, and the entire US growth period, the entire 1940s fifties, sixties, and seventies, was off the back of infrastructure development. They are kind of following that same martial-plan thinking. So I think that’s got to be supported.
And I think all of us as South Africans simply need to get our shoulder behind the wheel and recognise that there is a time for criticism. Then there is a time to stop the criticism and get the work done. In my view at a macro level we’ve hit the bottom of the cycle. The market will begin to tick up now. the macros will begin to tick up. So it’s time for us to get our shoulder behind the wheel and build.
NOMPU SIZIBA: Logically, that should have been my last question, but I can’t let you go without asking about one of your big themes that you normally talk about. For those people who are budding entrepreneurs how does one build a brand?
VUSI THEMBEKWAYO: The first thing about branding is it’s got to be authentic – one of those words that’s probably overused, quite simply. What that means is you have to be the same version of yourself every day. So you’ve got to be authentic. The second thing is you can never bring an ego to brand building.
I’ll tell you an interesting story. About 12 years ago, I had the privilege of meeting this incredible entrepreneur called George Sombonos. He was running for Businessman of the Year. George came second. Anyway, George and I exchanged details. I asked, are you really the Chicken Lickin guy? He said, yes, yes, I’m the guy. I grew up watching “It’s good, it’s nice”. He said, yes, it is my business. I said that’s amazing. Two weeks later I was driving in Rosebank, past a Chicken Lickin, and I went into the Chicken Licken. I’m about to go through the drive-in, and I turn and look and there’s a guy picking up what looked like pieces of paper on the floor. It struck me, because he was white. If I’m to be honest, I wasn’t expecting a white guy picking up litter. Then he stood up and walked in, and I realised that was George. So I collected my stuff at the drive-through, I parked the car, I went into the store and said “Can I please see George?” There was a bit of haggling and eventually he hears at the back. He comes out he comes and says, “Hey, Vusi, good to see you again!” I said, “Were you just picking up litter outside?” He said, “Yes”. I asked why. He said “What do you mean?” I said, “You’re George Sombonos. You own Chicken Lickin, why wouldn’t you get someone to pick up the litter?” And he said this: “To the customer it doesn’t matter who removes the litter. What matters is that there’s litter”. And I think a lot of us building businesses sometimes forget that there can be no ego when you build a brand and you build a business. There is no job beneath you. If somebody is waiting at reception and needs a cup of tea, and you’re the CEO, you just walk in, you make the cup of tea. I do.”
And I think if a lot of us learn those very basic humble lessons about building simple stuff – as my mom used to say, if you do the small stuff well, the big stuff takes care of itself.
NOMPU SIZIBA: That was Vusi Thembekwayo. He’s an entrepreneur and the founder of MyGrowthFund. Please consider contributing as little as R20 in appreciation of our quality independent financial journalism.