South Africa: the new hub for entrepreneurs
The last time I went to South Africa was also to speak at a conference shortly after I sold my last business, First Tuesday, which was a hallmark of the DotCom era. First Tuesday was sold to Yazam, a subsidiary of Jerusalem Global, for $50 million in July 2000, and I jumped on a BA flight to Jo'burg to address the global conference of Grey Advertising which was meeting there. While I was there, everyone said that I must go to Cape Town, but I (thought I) had no time – despite being rather unemployed, and cash rich.
So nearly 15 years later, I was delighted to be invited to address the senior execution team of First Rand Bank. At last, an excuse to get myself to Cape Town.
I was impressed with their CEO as soon as I met him. Sizwe Nxasana, CEO of FirstRand Limited led Telecoms SA for 7 years before taking the reins at First Rand Bank, and was also the President of Absa (Barclays SA). They are innovators, and have grasp that their embrace of technology is a key advantage for the firm. In my keynote, I shared with them three visions of the future. The first is that the tech platform firms, most of which are US-based, will take over every industry. And there is a lot of evidence that Amazon, Apple, Facebook and Google are intending to do just that. The second vision of the future is that their younger cousins, the 'Digital Disrupters', the Ubers, AirBnbs and Tesla's of the world, will take over the future and become the new platforms. And indeed, if you just consume the media, you might be forgiven for thinking that the reality of the situation is that vision 1 and 2 are most of what's happening in the world today.
But what about the rest of the world? What about the 95% of the iceberg which is NOT Amazon, Apple, Facebook, Google, AirBnB, Uber etc? What about them? How do they go digital, and what is their 'fight back strategy' vis-à-vis the 1st and 2nd visions?
First Rand Bank is part of the rest of the world. They are not a native digital player, but neither are they traditional. They aren't a technology firm. They are a financial services institution which thinks deeply about its customers, how to please them, and what their business model is.
First Rand was founded by Paul Harris and GT Ferreira about in the 1970's. I sat next to them at the gala dinner, and they are tremendously fun and inspiring. First Rand is a relatively new company, and in many respects, reflects the fact that South Africa is a relatively new country in its current guise. Only 20 years ago did Mandela come to power and hold the country together which could have gone in a very different direction had someone else taken the leadership.
What I found or rather sensed through all of my discussions while I was in Cape Town is at the same time a sense of the possible and a sense of a date with destiny – the feeling of historical events which still need to be worked out.
At the gala dinner, one prominent individual said to me – taking me aback – that clearly there would have to be restitution at some point. I thought about that for a long time as that is quite a can of worms to open up. It made me wonder now that Mandela has passed whether there might be a less than peaceful time ahead for South Africa.
Through my friend, Rob Hersov, and through the founder of one of my portfolio companies, Marcus Swanepoel, CEO of Bitx, an emerging market bitcoin exchange, I met a number of entrepreneurs. About 3 years ago, I decided I had to back bitcoin and drones for their massive impact on the world.
I knew immediately when I met Marcus that I would back him. He's going to build a great firm as he's got the vision, and he knows how to hustle. Marcus' thesis is that the banks have to get into the world of crypto currency.
It seems clear to me that we now live in a world of trustless trust, and that the financial services industry has fundamentally not reformed itself at all. Bitcoin is a reaction to this, and BitX will build key infrastructure to make this a reality.
Another of the most promising is Bruce Good's Our Hood, www.ourhood.co.za - a private, digital platform & social network for safe, happy neighbourhoods. OurHood was launched in May and is enjoying superb traction. They are now live in more than 270 neighbourhoods across South Africa and recently added neighbourhood sites in Botswana and Namibia - with Kenya next. I like the extraordinary capital efficiency that Bruce is exhibiting: he had done a lot with a little money, and was clearly looking at smart angles for growth.
I met entrepreneurs that had sold to Groupon, and all sorts of ex consultants who were advising alongside investing. South Africa attracts smart people who are trying to figure out Africa.
Andrea Bohnert of Knife Capital is part of the furniture of the industry. First she was backed by the founder of SAP with her first fund, and then with Mark Shuttleworth's money for her second. When I met with her in Cape Town, one of her portfolio companies had just been acquired by a Nasdaq listed giant. This was big news in SA.
Net net: I think South Africa is being redefined by its entrepreneurs today. There's a lot of work to do, and still many ways that it can teeter off into socialism, anger and history.
But it has a massive market on its doorstep, and its people have a hunger to succeed and a feeling that destiny has spared them in order to do something great.
I'll be going back soon.