Sunday, July 19, 2015

The Right to Self-Government

This article first appeared on Finweek.com on 22 September 2014.

So after quitting your job (and your boss) a few years ago, you started a business and after much blood, sweat and tears it is now stable. You are able to draw a modest salary. You live in a modest home. You drive a modest car and your kids go to a modest school. The only problem is you that didn’t work this hard to have a modest lifestyle.

The business is ready for that giant leap, and more importantly, you are tired of the ‘modest’ life and want to sit at the big boys’ table. Of course, your business would need a fresh injection of capital to fund any growth. This means getting an investor. The only problem is that you would need to give up a share of your business to someone else.

After all those long nights and near-bankruptcy moments you are now expected to give up a sizeable part of your ‘little baby’ to some stranger. To make matters worse, you probably have to sell down at a price lower than your version of fair value (because we all think our businesses are worth much more!).

Worst of all, though, you are now getting yourself a new boss. Well, at least that’s what it feels like. Someone else, other than yourself, you now need to consult with and account to.

You start thinking: “Perhaps this is not such a good idea after all. Perhaps I should just stay with my small business. At least it’s all mine. At least I retain my autonomy. At least I remain my own boss.” If this sounds familiar, do not despair. You are not alone.

The Oxford Dictionary defines autonomy as “the right or condition of self-government” and or “the ability of a person to make his or her own decisions”. For nearly every entrepreneur, the thought of bringing in an investor means giving up the ability to make their own decisions. To many this essentially means they now have a boss, which goes against every grain of their entire plan – namely to be their own boss.

The consequence of this outlook is that the entrepreneur then stumps the growth prospects of their business, driven by this fear of losing autonomy. They resist an injection of fresh capital and fresh ideas that have the potential to transform their small business into a sizeable operation.

Most times, entrepreneurs are scared of losing ‘control’. They are scared of losing the ability to decide when, how and with whom they do business. Ask most entrepreneurs if they would want a funder who takes equity in their business or a funder who lends them debt, and they will tell you: “Lend me your money. I pay you back. You get out of my life!”

Of course, many entrepreneurs don’t meet the basic requirements of most lenders of debt. First, most don’t have adequate security. Second, most cannot display healthy and reliable future cash flows to service and eventually settle the debt. Very often then, the only people willing to take the leap of faith in the aspirations of the entrepreneur are investors who bring with them good old expensive, but patient, equity.

But is there any reason to be fearful? Does getting an investor really decrease your autonomy?

As far as I can see, the JSE’s largest businesses founded by entrepreneurs are still controlled by their founders. This is notwithstanding the fact that many of these founders now own minority equity stakes and have boards and shareholders to consult with and account to.

I am told that Brian Joffe (and Mervyn Chipkin) founded Bidvest in 1988 with an R8m cash shell. Today it is worth R85bn. According to my calculations, Joffe owns approximately 2.3% of the business. He has been CEO since inception and is likely to retire as the firm’s CEO. Other than transactions of a certain size and nature that require shareholder approval, Joffe essentially runs the business in consultation with his board.

What autonomy has Joffe lost by listing his business and selling shares to institutional investors? Compare that to what investor capital has allowed him to build over the years – it’s chalk and cheese.

The same can be said of Discovery’s Adrian Gore, Aspen’s Stephen Saad and many others.

So, dear entrepreneur, in the real world, at some stage, you probably have to give up some equity to investors. It’s the basics of risk and return. You are probably a very risky investment right now and anyone who comes in and puts their money at high risk will seek high returns.

So stop being “penny wise, and pound foolish” and work on attracting value enhancing investors into your business. Be realistic about what to expect and what you are willing to give up as a return. To sober your own expectations, approach a boutique advisory firm to do a valuation of your business, on the basis of selling a minority stake. This will help give you a sense of the value a potential investor may place on it.

Selling equity to an investor who will add real value to your business does not necessarily spell the loss of autonomy. It may very well result in astonishing success!

Don’t Write The Business Plan, Do It!


This article first appeared in the 11 June 2015 edition of Finweek.

For the right reasons, many funders require entrepreneurs to write a detailed, congruent and bankable business plan. The plan ought to articulate the product, its market and how the entrepreneur will go to market and generate consistent positive cash flows to repay the borrowed funds and create value. This logic works well, except for one problem: a business plan is exactly that: a plan.

Nobody, not even the most passionate entrepreneur, can guarantee that what the plan says will in fact be. It would be useful if both the entrepreneur and the funder had more certainty that the idea in the business plan stood a greater-than-normal chance to gain traction with customers and succeed. If only there was a way the plan could be proven before the entrepreneur invests the countless sleepless nights and the funder commits millions of rands.

Most people start by writing a business plan, or even worse, get a consultant to write it for them. They then take the business plan to a funder, who lends funds on the strength of the plan. Eventually, armed with a plan and some funds, they go out and start the business.
Seems logical? I don’t think so. Why risk all that time, effort and money on something that may turn out to be a bad business idea and a waste of lenders’ funds?

Why not follow the same process, but in reverse.

Instead of starting by writing the business plan, why not start by doing the business plan and write it later?

In his book The Google Way author and management consultant Bernard Girard, who had been analysing the company since its founding in 1998, writes, “had the leaders of Google followed the rules and undergone the typical venture capital rite of passage, they would have written a business plan that laid out a detailed financial model showing how they would make money and how long to would take to make a profit for their initial investors. They did nothing of the sort. Instead, they started by creating user demand and only then did consider how to generate income”.

In doing the business plan, you will learn, very early in the game, the key challenges in sourcing raw materials for your product, your key suppliers, what affects their pricing, the external factors, including foreign exchange rates, interest rates, and commodity prices as well as ways and means to manage their volatility.

On the demand side, once you start selling, you will know and experience first-hand whether customers are prepared to pay for your product.

After a few iterations of manufacturing, promoting and selling your product, you will be in a much better position to pen down a plan for your business. You will be more enlightened to the risks, the competition, customer preferences and also the right price point. You will know intimately what customers value in your product, why they will choose your product over your competitors. Essentially, you will write your SWOT analysis from first-hand experience not from googling your competitors like many do.

Most importantly, you will have the confidence that your business idea actually works and you can prove it.

Wednesday, April 22, 2015

Day 7: Masada, The Dead Sea & Goodbye


Day 7 was our last day in Israel and we decided we would reserve it for all the tourist stuff we need to do in this part of the country.

First stop was Masada, the palace fortress of King Herod and as the Masada legend goes, was also the place of the last stand of the Jews against the Romans in 73 B.C.E.

Words cannot describe what we saw. The remains of Masada are still there and or have been partly refurbished to give you a sense of what life was like in the palace of the King of the Israelites. From the technology they had to keep rooms cool in the scorching sun of the desert to the ways they stored water during flash floods.

But the story that would capture us would be the legend of Masada. Josephus was the only man who recorded this story with incredible precision. The story is not in the Bible or any other recognised literature but it is a firm belief amongst Jews that it took place. Click here for the fully account of the Siege of Masada.

We were told that until the 1980’s the Israeli army would shout out “Masada Shall Never Fall Again” in Hebrew when they were sworn in for military service. Interesting stuff.

At Masada we bumped into another group of South Africans who were also on a discovery of Israel. It was a wonderful chance encounter, and yes we were very noisy when we all starting speaking Sepedi, isiZulu and Setshwana.


 But the highlight of the day had to be our next stop. Swimming in the Dead Sea. The chemical mix of the Dead Sea ensures that you are able to float and not sink. The ground is made up of mud, that if smeared on your body, removes the dead tissue and makes for a very smooth finish. We did it all.

   
When we were done being silly, we made our way back to the hotel to freshen up, then one more reflection session to share our key take outs, and close of the day with a lovey dinner at a local restaurant before heading out to the airport.

It was great to hear that we all had something to take away from the trip, and we all felt it was a valuable experience. Many of us talked about the inspiration we received from each other and how we looked forward to taking some of the relationships established on the trip forward when we get back home. One of the guys, an e-commerce entrepreneur Paul Galatis shared one of his inventions for the benefit of the group, an app called Names & Faces which is a very user-friendly directory that stores everyone’s contact details and pictures for ease of reference when you need to reconnect. A simple yet impactful idea that will ensure we stay in touch. Thanks Paul.

I would like to take this opportunity in this last blog of the trip to extend my gratitude to all the people that put together #YoungTreps2015.

Dan Brotman, the Executive Director of SAIF, Setlogane Manchidi the Head of CSI at Investec, our guides Emily and Muki for taking care of us, scheduling business meetings, and even negotiating taxi rides for us. Of course this trip would’ve been impossible without all the entrepreneurs who were part of the trip, so I would like to thank each one personally.

Akhona Maqwazima: You are one the funniest and smartest guys I met on this trip. You have presence, coupled with a sense of awareness of your world and some of the problems that need solutions. Work hard on that IT business. See you in East London, when we launch the radio station.

Ayala Raichlin: I learned so much from you on this trip. In your youthful exhuberance you shared with me your perspective on Israel which was very insightful. Thanks also for taking us to the West Bank and staying with us, sitting through what could not have been an easy experience for you. You have earned my respect.

Caroline Mutsharini. First of all Caroline, lets agree that number two doesn’t count! J On a more serious note, you are a wonderful soul and very, very caring. Even in business is a valuable quality. Hang onto it. All the best with the contruction business, and yes, we are gate crashing the wedding!

Eddie Majozi: The main man. The deal maker. Thank you for a great outing you took us on the streets of Tel Aviv and treating the whole group. It was a very kind gesture that is truly appreciated. In fact, your kindness came out throughout the week with your support of Neftaly’s community project and potentially investing in some of the entrepreneurs who were with us on the trip. Thanks big guy, and sorry for the bruised elbow, but that’s what you get for now painting your body in mud and floating on the Dead Sea.

Elaine Jacob: My homegirl from Chatsworth. You are such a blessing, I tell you. I am very happy you grabbed an opportunity to get mentored by Jonathan Beare – now that’s how real entrepreneurs do it, they grab opportunities. All the best with the retail and fashion business. I hope you have not forgotten the favour you owe me and I owe you when we get back home. Deal?

Fazlur Pandor: Mr Cool himself. A POWER Man. Thank you very much for your kind words of encouragement for the station. I will ensure we keep making you proud. You have a rare trait,I noticed by the way. You have the ability to listen to everyone, respectfully and decide what you will take on and whats not for you – all the while not making anyone feel out of place or judged. I hope to stay in tough.

Karabo Songo: The Commander in Chief! You are my pedi brother I have never had wena. And yes I have learned that I must shut up and let you finish your trail of thought, because when you hit the punchline it is often worth the wait. Thanks for making the week special my man, and yes we are going to Zurich and Manhattan. But first lets work together in our space back home. Oh, and I think its time you pop that question chap.

Krystyna Blonski: I met you almost a year ago and what I remember was your passion for your business, and you even brought us boxes of pizza with vouchers to redeem to taste your product. That left an impression on me about you. Little did I know we would reconnect. You strike me as someone who know exactly what they want, and if I’m right that is a very good thing! Stay awesome. Oh and you still owe me pizza for my wifi.

Lumka Sibiya: SME!!! And it does not stand for Small Medium Enterprises! I’m not sure you are going to outlive this one with me. An absolute pleasure to meet you on this trip. Your calm approach to things made an impression on me. Your comments about having seen the Holocaust Museum and thinking that back home you would want your children to also know, intimately, their past was an impact on me also. Oh and remember: You didn’t really win the trip.

Marike Groenewald: You were so refreshing Marike. Always cheerful and always truthful. I experienced the latter in a short conversation with you when we were discussing Israel vs. South Africa. Your perspective surprised me, pleasantly so. We need more of you at home. Thanks also for making me okay about not being okay. Like you I struggle to be comfortable in discomfort. I feel the need to solve it NOW. Now I know I’m weird. All the best with the Thinking Environment and let me know how your services could assist our business back home.

Mpodumo Doubaba: The Revolutionary Leader! Lots of fire in your belly, my brother and that is a very good thing. Thanks for the debates that always left me seeing things differently. You are clearly a very intelligent young man. You have built something to be proud of in your business at a very tender age. Now that you told me what you want, and its out in the universe, go out and do the things that will get you there, but make sure it’s the things you are passionate about. And I wont call you ‘Mpo’ ever again.

Neftaly Malatjie: The man I call ‘24’ and which in turn calls me ‘37’. You are a brave son of gun I tell you. St your age, to have done the things you have and built the institution that Southern African Youth is the stuff of champions. Well done young man, and think about that unique proposition we spoke about. Never hesitate to call on us, the old people, if you need some help or just to talk. Oh, and stop sleeping in front of billionaires!

Ntuthuko Shezi. Mr Scratch Mobile. It was awesome to reconnect my brother, and hear the story of your business once again. I am excited for you as you enter other ventures, this time with love and support of your own young family. I thoroughly enjoyed all your quirky questions and comments that led to many people we met having to give us angles and perspectives they would otherwise not. I am reminded of your question to the poor guy in the Kibbutz. Owakithi wena. Never change bro!

Paul Galatis: The President!!! You are a weird dude. Weird in many interesting, intelligent, quirky and funny ways. It was awesome meeting you champ, and making connections with people around us. What you and your partners have done and continue to do with Yuppie Chef is brilliant. Your talk at the dinner was very inspiring and genuine. Thanks for Names & Faces. You didn’t have to do that, but you did. It says a lot about who you are. Thank you. I have a strange feeling we won’t do too well avoiding each other. On that note see you Thursday night.

Pfadzani Mphanama: The fighter!!! Its to late to argue with me now, it’s the benefits of the written word. J Absolute pleasure to meet you my sister. You are making a success in a very tough industry of fashion, and to make it thus far says a lot about your resilience. I think you are very resilient and have learned to take the bad along with the good and move on. That is a very good quality to have. All the best.

Ryan Peimer: The Magician!!! Hitch!!!! The Voice!!!! I give up… way too many titles. It was awesome to meet you champ. You are clearly multi-talented and I suspect that in itself can be a challenge, as you passions are wider but there are only 24 hours in a day and only one of you. I am however, very confident, that you have the intellectual capacity and spiritual capacity to make the right decisions for yourself and your future. I wish you all the best my brother. Don’t hesitate to contact me about some of the ideas we discussed, especially on the radio/ hitch stuff and production.

Shawn Theunissen: The insightful man. Thanks for making the trip interesting my brother. I learned much from your insights and piercing questions. I look forward to working with you to support entrepreneurs back in SA.

Sibongile Shikwambana: The lady who hates selfies! Thank you for making the trip interesting. The back of the bus laughs certainly added spice to the trip. All the best with the business as you change the face of an industry that has been historically dominated by men. I see a future Dr. Thandi Ndlovu in you. Go forth and be great.

Tania Mulligan: My sister from another! You are just too awesome. All the best with Kushesh – I call it, a normal business idea operating in a unique space of medical consumables. I am reminded of your elevator pitch at the dinner with Jonathan Beare, where he kept throwing tough questions at you and you returned each one with an answer packed with even more energy and vigour. All the best my sister, pass my regards to your husband that you talk about all the time!

Thato Mokhothu: The lady I call ‘Mangaung’. If anyone on the trip didn’t know that Bloem gets down, they now know that for sure. The life of our trip (except for the time we lost you at Masada), thank you for wonderful spirit and all the best with your plans to support the young people of your province.

Tlhokomelo Mogale: The Fixer! You, my sister are an awesome lady and professional. I truly wish you all the best with your banking career (what’s left of it, at least . Sorry, I couldn’t resist). On a serous note, continue to kick some butt at Investec and thank you for taking the time to hang with these crazy entrepreneurs.

Willem Janse van Rensburg: The silent intellectual. Please never stop being a dreamer my brother and all the best with the small, medium and big plans you have for the business including the very big plan you have,

Day 6: Jerusalem, Jerusalem

It was such a pity that we couldn’t stay another night in Netanya. What a lovely, cosy, coastal town with great hotels that just make you want stay in bed. Very different to life in the Kibbutz!

We kicked off with a drive to a very special company: Yvel. This is a Jewellery manufacturer that was started by an immigrant couple who are now multi-millionaires. They came from Argentina and built a company that would seek to create jobs for all Jews that were immigrants into their homeland of Israel. The company is now a place of work for many Ethiopian Jews who have immigrated from Africa back to Israel who initially struggled to find job opportunities. The company has grown tremendously and created a Jewellery line called Megemeria, meaning 'genesis', or the beginning which is a reminder of the journey travelled by these Ethiopian Jews leaving their homeland into Africa and then later returning. We took a tour of the facility and also the jewellery store, where a number of us left some hard earned cash behind.


The group made its way to the holocaust museum in Jerusalem while I had to honour a radio interview request with a start-up radio station, Voice of Israel in downtown Jerusalem, Old City.

The talk radio station is an online station with a target audience of the international community with an interest in Israeli affairs. A very specific niche that is multi-cultural with a multitude of differing views on Israel. Entrepreneur Glen Ladau, an American Jew who decided to relocate to Israel, started the company 8 months ago. The radio station is building a strong international brand as an authority on issues in Israel and the Middle East. 

My radio host was Eve Harrow. A talented broadcaster who I’m told is also one of the best tour guides in Israel. What was supposed to be a 25-minute conversation took up the whole show. We had a great time exchanging ideas about South Africa and Israel, and the story of my entrepreneurial journey. I thoroughly enjoyed the interview, and immediately saw opportunities of collaboration with this innovative radio station.

After the interview I spent some time talking to Glen about opportunities I thought his station had with a very vibrant South African Jewish community. I left feeling really good about my connection with Eve and Glen.

I rejoined the group for a tour of the Old City of Jerusalem and we got to see all sorts of sites that are constantly referred to in the Bible.

The night wrapped up quietly with dinner at the hotel, as Fridays are Shabbat for Jews and the city of Jerusalem essentially shuts down on the night. This was to be our last night spent in Israel and perhaps a quite wind down was fitting.

Monday, March 23, 2015

Day 5: Exploring The Start-Up Nation

Israel-Tel-Aviv-2009-1


We kicked off Day 5 with a visit to the manufacturing plant of start-up Woosh, a provider of turnkey solutions for drinking water in public spaces. Israel is a country that is mostly desert, and with a growing need for better water security. Woosh set out to make drinking water available to more people at a lower cost and used Tel Aviv as a pilot. Their innovation is built around a well-designed water filling station that can be placed in public spaces for users to refill their water bottles by swiping their credit cards. The cost of refilling your own water bottle is a fraction of buying bottled water anywhere in the world. The co-founder of Woosh, tells a fascinating story about his personal inspiration for this innovation – proof that inspiration can come from anywhere, what matters is what you do with it.

The company had also extended its services to water purification and desalination (which Akhona Maqwazima taught me is converting seawater to drinking water. Smart guy that!). Furthermore, the need for better access to drinking water cannot be fully served by the retail of bottled drinking water. Lately, many big cities have started to frown upon plastic water bottles.

Plastic-Bottles-672x372


The website www.yovenice.com posted this article on 26 February 2015:

"San Francisco has become the first city in America to ban the sale of plastic water bottles on city-owned property. “A move that is building on a global movement to reduce the huge amount of waste from the billion-dollar plastic bottle industry,” according to The Daily Catch. Over the next four years, the ban will phase out the sales of plastic water bottles that hold 21 ounces or less in public places. Waivers are permissible if an adequate alternative water source is not available. One of the largest supporters of the proposal was the Think Outside the Bottle campaign, a national effort that encourages restrictions of the “eco-unfriendly product.” Americans use 50 billion plastic water bottles a year, according to an anti-plastic bottle campaign Ban the Bottle, and just 23 percent of those are recycled. Should Venice be next?"

A number of entrepreneurs in our group were intrigued by the technology especially since we have our own problems with water supply in South Africa, and we ought to be embracing technologies that help conserve this key life source and protect the environment. We certainly don’t want a repeat of the electricity issue, where we didn’t adequately plan for a future that we knew was coming. So don’t be surprised to find yourself re-filling your glass or steel water bottle from a Woosh in downtown Johannesburg, Durban or Cape Town.

After Woosh, our group made a trip to the University of Tel Aviv to hear about Space IL, an Israeli non-profit founded by 3 young engineers in 2010, answering the Google Lunar X Prize challenge. They are aiming to make history and land the first Israeli spacecraft on the moon. The group also visited The Therapeutic Riding Centre of Israel, which is another non-profit dedicated to improving the lives of disabled people through a unique therapeutic and recreational method of Animal Assisted Therapies.

I missed both these visits as the rest of my day was scheduled with 3 back-to-back meetings before a party at Morris Kahn’s home. The prospect of partying with billionaires later in the day had me looking forward to these meetings.

My first meeting was with a company called Connesta. Eli Doron, the CEO, had made the trip across town to meet with me over a delicious pizza in an eatery not far from the University of Tel Aviv.

Eli is a warm, fascinating guy. Unlike all the tech entrepreneurs I had met to this point, he is also not young. He is grey-haired and I would place at circa +50 years old. In 1992 Eli was part of the team that wrote the protocol for VoIP (Voice Over Internet Protocol). He wrote the actual protocol for the technology that the likes of Skype and others are built on. I should’ve taken a selfie with this guy!

Anyway, his company Connesta has found a way to broadcast LIVE events online, with all the bells and whistles, and all you need is a camera and an internet connection, all at a fraction of the cost of his competitors. I loved his presentation and attention to detail. We promised to stay in touch.

I then had to make my way across town (with a very unhappy cab driver who only spoke Hebrew) to visit the offices of a very impressive tech start up that is seeking the change way we interact with data when teaching, or making presentations.

The company is called MUV Interactive and they have created ‘bird’ a human-machine interactive tool that clips on your index finger and gives you ‘powers’. Gartner named this technology 2014 Cool Vendor in Human-Machine Interface.

The best way to explain ‘bird’? Think Minority Report starring Tom Cruise, meets boardroom presentations and watch this video.

Of course, one would have to use a projector to reflect the images onto a surface, however from then on you will be able to control everything using your finger.

The company is planning mass production for 2016 where they plan to raise $10 million to take the innovation to market. In 2015 however, they plan to have a certain number of units in the market in different geographies to test appetite and traction.

The future is here, ladies and gentlemen!

My last meeting was with a South African entrepreneur, Jason Glick, who had moved to Tel Aviv almost 10 years ago, who has now built a sizeable media business in outdoor advertising and digital media. We had a lovely cup of coffee in Hertzliya and struck up a good rapport.

I then needed to make my way back to Netanya, which is 24km from Hertzliya, to check into our hotel for the night and prepare for a party at dollar-billionaire Morriss Kahn’s home. He is now 85 year-old and he decided to invite the South African delegation to a have a party at his home. I had also been asked to speak at the dinner, so I was a little nervous about that.

I eventually reunited with the crew at the party, which was well attended by Morris’s friends, half of whom had left South Africa +-40 years ago and returned to their homeland of Israel. It was a great night. I made my way through the speech and everyone’s positive feedback, especially from my host Morris Khan and our other new BFF, Jonathan Beare, was a overwhelming

And then the dancing started. We took over the party (as South Africans typically do) and made some of the older folk feel very young with their moves on the dance floor. I can safely say that Israelis know how to get down. Even the host, at 85, was mostly found on the dance floor.

getting down

A good time was had by all!

Unfortunately we had to leave the hotel by 07h30 the next morning for our trip to the holy city of Jerusalem, so we have to cut the night short.

Day 4: Logging Into The Start-Up Nation

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After a night out with the group, we kicked off Day 4 with a reflection session themed on how the first 3 days have made us feel – a sort of midway check-in.

Here are some of the comments from our group:

“I feel like I should appreciate what I have more. After listening to Katya in Palestine, I feel like people back home who are living in pain and could benefit from hearing how other people live and how fortunate we are even though we don’t often see it that way”

“The kibbutz made an impression on me. I saw groups of people who are working together and creating something special in co-habitant space. I work with people and they often let me down. There I saw a communication that works together”

“I struggle to take a step back from the day to day running of my business. I am very scared to leave the fate of my hard work in the hands of people who may not share my passion. I thought about that a lot in these past few days”

“I am learning that it is okay to be in a space of uncertainty. I am learning to be comfortable with discomfort”

“I went for a run along Jaffa, and it reminded me of Jonah. I am thinking about a greater purpose for my business bigger than just making money”

“I feel heavy. I have seen and appreciate more how complex the political situation is between Israel and Palestine. I feel emotionally heavy. But I also woke up and realized that these issues are not mine”

“I feel sense of calmness. I feel like we, as Africans, are going to be okay. We have come a long way, and there is still along way to go, but with us, entrepreneurs, as a pillar of light for Africa, I am convinced we are gonna be okay”

“I appreciate the power of working together. It reminds me of how a group of ants can bring down a cockroach, where even they are smaller insects, working together they can achieve great things”

“I am itching to get on with it. I have a rejuvenation for the opportunities before me, and I just want to get my hands dirty and see how I can do business on this trip”

After the session I left the group to attend the Axis Tel Aviv Start-Up Conference. This is a two-day conference that provides a platform for Israeli start-ups to pitch to global investors. I had set up a meeting with the CEO of Trendemon, Avishai Sharon, a very young man who had founded a company that automatically analyses traffic of websites and improves hits, revenues and engagements for website owners and publishers – all automatically.

I was intrigued by the technology.

He had 5 minutes to convince an audience of approximately 200 investors to inject a further $2 million and thereafter take questions from a panel of 5 carefully selected investors. The audience also had forms where they are able to jot own questions and submit these for the start-ups to respond to via email post-event.

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Trendemon presented in the Digital Media category along with 4 other companies:

Homage – a mobile co-creation video platform that allows users to become a participant in any video content and creating personalized emoticons. Their target market consists of content owners, production studios and content sponsors. The founder used a clip from Idols to embed his image onto the popular TV show and record a trailer that featured him alongside Simon Cowell judging contestants – I wasn’t too impressed, shame.

Sensegon – a technology that uses personality types, as opposed to demography and geography, to target advertising on social media. It is a media-buying platform that analyses the total addressable audience into personality types, and channels the advertising budgets accordingly. Their core market consists of digital media agencies, representing brands, or the brands themselves through a percentage fee of use of the platform or a revenue share on all spend on the platform. The technology is based on machine learning algorithms which cluster consumers into persona categories including risk-averse, practical, emotional, etc. – I was impressed by the idea, but I wondered if leading media agency groups would not quickly catch up to similar technology as they seek more insight into consumer behavior and strengthen their offering to large global advertisers – perhaps Sensegon founders are targeting an exit on this basis should they be able to prove their technology is better than anything else on the market.

Total Boox – this was the best presentation by far! The CEO opened by asking how many people in the room had bought a book they’ve never finished. More than half the room raised their hands with some chuckles in the crowd. He then asked how many people had bought a book they’ve never read. More hands are raised this time accompanied by silent laughter. Then he says: “Imagine if you only had to pay for the pages you read”. Total Boox is an online platform where you are able to ‘buy’ a book (they have over 35,000 books on their catalogue) but you only pay as and when you read a page. If you never finish the book, no problem – you only pay for what you have read. If you never read the book, no problem – you pay nothing at all. What impressed me about these guys is that they had already raised $2 million and were looking for another $2 million. They also have two types of clients. On the one hand, they target consumers who download books on the e-readers, Kindles, iPads and Tablets. On the other hand, they’ve also secured a number of government libraries as customers thanks to an unexpected interest and take up from the United States. How do they make money? They share the revenue with the publishers of the titles, and they market the service on-line via their very popular newsletter that, according to them, is under-pinned by a superior recommendation and discovery engine. I was very impressed!

WeKast: By far, the bravest presentation on the day! The company has developed a technology that lets presenters connect instantly without requiring a lengthy setup, internet connection or even a laptop. The CEO decided to do her presentation using her product to prove that it works (of course!). The only problem is that she had some technical problems when she was setting up, so much so she had to ask the facilitator to tell us jokes. This rather compromised the core brand promise of ‘zero time to connect’. However, eventually the system was connected and she proceeded to do her presentation, controlling it from her iPhone. It looked really cool. The system consists of a USB-style dongle that you insert onto a projector or TV which creates a secure loop or network. You then go into a mobile app where you pull up your presentation, and boom, Bob’s Your Uncle! The system also has other uses. Because of the secure loop, your audience has the ability to make comments, put up questions etc. onto your presentations, which you can follow up after your presentation. Noemie Alliel is the CEO and she was very good in articulating her market and user-friendly nature of her innovation. She and her team have funded everything themselves in proving the concept and was now ready to work on distribution channels and manufacturing the hardware (the dongle), she also had a respectable ask of $500,000 – I was very impressed by the innovation in a space that could do with creative solutions as an alternative to the irritating cables that never work properly.
I met a number of investors from all over Europe and Asia and they all seemed pretty excited about the session and the prospects of the rest of the conference. I spoke to a gentleman from Spain who had attended the FIFA World Cup in South Africa in 2010, who noted to me that there are a number of innovations South Africans could take into their own country and the continent. He was very positive about South Africa and not one word about crime or Eskom from him. Naturally, I enjoyed that chat.

I rejoined the group for a picnic lunch, after which we made our way to LEAD, an organisation that runs programmes to create future leaders of Israel. Young people are recruited at school level and get involved in a programme that develops their leadership potential. As part of the programme, students must think of and implement a community project. We watched the story of a young man who had a passion for football and used that to unite a Jerusalem community of Jews, Arabs and Palestinians

Click here to see what LEAD is all about.

We then had a surprise visit from a gentleman who spent time, sharing with us first hand experience of the situation in Syria. Another very complex conflict there, which is between the people of Syria and also between Syria and its neighbors. This gentleman and his organisation also noted the involvement and support received from South Africa in supplying medical care during this difficult time. I later learned that this was through Imtiaz Suleman’s Gift of the Givers Foundation.
Later than night we had a very carnivorous dinner with the group, and were joined by a young Israeli entrepreneur, Michal, who is part of the Breaking the Impasse initiative that seeks to unite entrepreneurs in Israel and in Palestine. Her perspective was very interesting. The organisation is a platform trying to address common challenges for entrepreneurs and show both sides that the two nations can work together. It was however very difficult to keep the organisation away from the public and to meet openly.

I shared with her our experience with Katya in Palestine and asked her about the practicality of an effective partnership between the two nations when, in my view, the Palestinians essentially have nothing to bring to this partnership. Alternatively, this platform runs the risk of being seen as Israeli entrepreneurs trying to extend an olive branch to Palestinian entrepreneurs, which can have varied outcomes mostly unintended negative ones.

She highlighted that a number of Israeli engineers and professionals were involved in the development of Rawabi, the brand new Palestinian city and this was a good step in the right direction. The conversation became heavier and more complex as the entrepreneurs explored the different angles of the political conflict between the two nations.

I needed a break from this and ended up finishing my delicious bottle of merlot at the bar downstairs with Karabo Songo, the founder and CEO of Joburg-based agency, Olive Communications. Good guy that. We had had enough of politics for one night, and had to plan for a very busy next day, with back-to-back meetings, and checking out and traveling to Netanya.

PS: If you are interested in investing into or partnering with any of the companies above, feel free to drop me an email on ak@mystartupsa.com and I will connect you.

Day 3: Palestine. How The Other Side Lives


Day 3 of our trip coincided with a very important event in Israel – national elections. As a result we took the opportunity to visit the West Bank, but first we had some business to take care of in Tel Aviv.

We kicked off with a visit to The Save a Child’s Heart centre, a Tel Aviv based non-profit medical facility that carries out heart surgery for children from all over the world, including Kenya, Ethiopia, Zanzibar and even Iran, Palestine and Syria at a fraction of the cost of similar procedures in private hospitals.

It was quite difficult watching infants only a few weeks old connected to tubes and machines undergoing major heart surgery. Entrepreneurs shed lots of tears when the doctors were briefed us on each child’s case and circumstances. We were able to visit the children who had either undergone surgery or were waiting surgery and it was amazing to speak to the African children and how they came to be part of this initiative. A young girl from Kenya, named Mary, made a particular impression on me.

The centre is funded and supported by Morris Kahn, the ex-South African dollar billionaire who also supported the young entrepreneurs on our trip – proof once again that capitalism can do good – its really is up to the capitalists.

After dancing to loud Rihanna music with the children at the centre, we started our long journey to the West Bank. The day was to become an emotionally heavy one.

We drove past 3 security check points on our way to Rawabi, the first planned Palestinian City and brain child of multi-millionaire entrepreneur, Bashar Masri. What a sight!

We had a guided tour from Shadia Jaradat, one of the chief engineers of the project in her high heels, no gaal. The development is funded by the Qatari government and promises to be a modern way of living for middle-class Palestinian families – Think of Melrose Arch on steroids!

Our group chat with Bashar was my highlight of the day. He opened by unapologetically telling us that the city is primarily a commercial project and its key objective is to make money. There is only one partner, the Qatari government, who have extended a $1,6 billion funding line for the project and expect a fair return from their investment.


Given that, according to Bashar, the projected IRR is estimated at 2,9%, in a market where dollar cash deposits earn a return of 3% interest per annum, it was clear to see that whilst all business is for commercial return, this development represented much more to him and his colleagues and partners than just commerce.

The project itself carries with it huge political risk, because it is built on land that is under occupation by Israel. Until this political impasse is resolved, his remains clear and present risk. I sensed a subtle hope in Bashar’s voice, that today’s Israeli elections would yield an outcome that takes one step towards such a resolution – That hoped was to be dashed by comments from the re-elected Prime Minister of Israel the very next day.

Bashar highlighted the international coverage that Rawabi had received and why it was important. The man speaks passionately about using the development as a catalyst for economic growth of the West Bank which is home to 3,7 million people, of which a third are under 40 years-old and 74% depend on the state for their livelihood. I guess these are the real consequences of donor-funded economies that are essentially restricted in free trade with the rest of the world.

I asked him about his media interests and why the international community hasn’t covered it in detail, the perspective of the Palestinians in the conflict. He felt that there were many factors at play in the coverage but he chose to focus on the positive coverage that has happened from Germany, the USA, England, and even South Africa. He believes that the more the international community is exposed to the injustices of Israeli occupation, the more likely a sensible solution will be found.
I quickly got the sense that in this region every conversation eventually turns political – How can it not?

Bashar spoke passionately about his love for Palestine, even though he studied and lived in North Africa and the US. Virtually all of his business interests are in Palestine and he constantly turns down lucrative business opportunities, preferring to put his money where his mouth is. Notwithstanding that he continues to hold small interests in Morocco, Egypt and Jordan. He admitted that this approach cost him dearly, between 2000 – 2004, when the political situation was dire and all of his businesses lost money, with most having zero revenues.

I asked him what could the international community do to help make the development of Rawabi a success and by extension Palestine. He spoke of media coverage and also bringing services into the city, such as call centres and other Business Process Outsourcing (BPO) services to create jobs for Rawabi residence and complete the offering of it being a place where people can ‘Live. Work. Grow’.
We left Rawabi in awe. In awe of the charming entrepreneur that is Bashar, notwithstanding the political challenges he and other Palestinian entrepreneurs have to contend with, and in awe of the $1,6 billion development with a 500-seater amphitheatre.

Lunch was at a restaurant in Ramallah, owned by Palestinian entrepreneur, Katya and her brother. What I thought would be relaxed chat over lunch about entrepreneurship in Palestine turned out to be a political debate about the structural challenges experienced by young people.


Katya spoke of how access to finance has become a dependency on the banking industry for young entrepreneurs. According to her, loans are handed out to young people who often can’t afford to pay them back creating a dependency.

However, her biggest challenge by far is the non-existent market. Because of the occupation, and the security situation that created security check points all over the West Bank. She speaks of how a few minutes trip between Ramallah and Jerusalem has become a 2 hour trip because of these checks.
She feels that sabotage is very rife against Palestinian business. To prove this point she related a story of a top Moroccan DJ whom her restaurant had invited to play at her restaurant. She paid the deposit, booked the flights, the DJ applied and received a visa to enter Israel en route to Palestine, but on the day of travel he was refused clearance at the airport, after landing. This led to her having to refund all her customers and making a loss on the event. She is convinced that this was done on purpose to sabotage her business.

Supply of certain basics is also a problem. For her as a restaurateur, she can’t even get furniture because in the whole of the West Bank nobody manufactures high end furniture so she is forced to order this from Israel. This also applies to her alcohol orders – they all have to go through Israel, which means double taxation as there are not double-tax treaties, simply because Palestine is not a recognized state. Add to this the risk of certain foods being spoilt by the time they are delivered at Katya’s restaurant.

Surprisingly, Katya sees a silver lining in all this.

She believes that doing business in the current political climate, has built her character and her resilience. She talks about fighting to build her business and her country. She also makes an interesting point about how this has forced young people to mature much quicker as they inherit lots of responsibility at a young age. She is 29.

The entrepreneurs were very quite in the bus trip back to Tel Aviv. Given South Africa’s history, I suspect the day was emotionally hard on us, and it left most us with more questions than answers.
That night, the results of national elections started streaming in. We had dinner with Jonathan Beare that night and an opportunity to have great conversation on what we had seen and heard in Palestine over well prepared steak and a special 14 year-old Glen Fiddich whisky.

As we wrapped up the night, I realized that the political situation in this region is a complex one and unless you live here and contend with it day in and day out – you have no right opining. So, I wont.