The Big Lie of Small Business | Vusi Thembekwayo | TEDxUniversityofNamibia

let me ask a question for how much longer will you and I be happy with the status quo that exists a status quo that over the past 100 years continues to put you and I as African people at the recipients of all forces shaping the global world so if I asked you a question what's happened in the world over the past few years that we've done that's shaped the rest of it how many of us here would answer in the affirmative and give an example and the truth is is because of the narrative and conversations

that we've had we've had a conversation that makes it okay for Africans to just be okay and a part of the conversation we see it in my environment where we finance businesses is this huge thing now about small businesses like just start a business and just get in and it's okay if it's a small business well I'm here to tell you something new and that is it's not okay so in my own country South Africa we have these things called gutters by the way God does an institution and here's how it works you take a

loaf of bread you cut it in half and then you cut to what's left in half and you're left with the quarter of the bread hence God now what you then do is you remove the centerpiece of it which is the soft bread and inside you put in whatever you like so the innards could be french fries it could be sausages with a bit of ketchup and you overlay it with a soft pot and you eat it and please understand it does something to the soul that a McDonald's burger will never do it is perhaps

our greatest export except here's the thing we're not exporting it so gear to businesses t-bolts cortez operates in Alexander run by an interesting entrepreneur he started his business in the Year 2005 he turned over 53,000 rand for the year last year interestingly there is a listed South African company which started a franchise called quarter Joe and they pumped in a bit of capital they started in 2013 8 years after t-bo's doing the same thing he does and last year they did 20 million round and turnover my point we are big business so maybe this is

an anomaly right here's a question what's a bank a bank ladies and gentlemen is nothing more than a collective investment scheme we all come together we put our money in the central pot we put it there usually as savings with the idea that when you unlock that money and you needed future you can get it what the bank does is it takes that money and it says to people if your credit worthy will lend you money and will price it at a premium hence our ability to buy a car or house in South Africa we

have these advents of things called stock fells it's usually a group of black women who come together they put money in a pot and at the end of the year they have money and they go to the shop right and then they buy stuff and then the next day the cycle starts again right so here's an interesting stock fell called sangoma they operate in the Eastern Cape started a year after we achieved our democracy in 95 last year their collective investment three hundred thousand now if you bundle together three hundred thousand over the past 20

years you can do the math about the kind of numbers were talking that they cumulatively over the past twenty years ever put in the same place in 1991 four years before them a bank was formed in South Africa known as EPSA which does in essence the same thing the stock fell last year 300,000 EPSA is a 4.6 billion around a year turnover business my point our models of doing business are big business you and I need to unlock our thinking it's not okay for us to start small businesses it's not okay for us to be

happy to be vendors on the side of the road anymore selling fruits and vegetables what we need to do is own the place that produces the fruit on the road infrastructure that moves the fruit on the retail infrastructure that sells the fruit and on the banking system that transacts the whole platform and by the way why don't we just take the Texas as well so the idea here is we need a radically new form of thinking now that we clear on this let me explain to you why we're not doing it because we could blame

colonialism and in my country about a fate as long as we want but there is a deeper problem and the deeper problem is our inability to understand the ecosystem and life cycle of entrepreneurship all entrepreneurs start out as startups whether you're Bill Gates or Steve Jobs you start out as a one-man show with an idea what makes the Americans and now more recently the Asians really good is they've created a huge pool of venture capital money easy to access cheap and you can have it as patient money you can have it forever and never have

to pay back that's why they building large institutions so it's not a mistake that Zhao me a Chinese mobile company started five years ago is now the third largest smartphone company in the world where do they sell their phones eighty-seven percent of their sales comes from China the remainder from this continent we are big business we all start out the startups how do you know your startup it's easy you're one guy you go to the customer you deal with him you go back you make the cookies then you come back and you give them the

cookies and then month-end you phone him and say can I please have my money and then he pays you and if he doesn't you go to him and say please I'm going to clap you until I get my money and usually given what I like to call an a a K an attitude adjustment Club but how do you know you're a start-up it's easy if you are the value in the business you're a start-up if the customer wouldn't trade with your business unless you were in it you're a startup move a little above that you

become what I see a lot of happening now and the rest of the continent so for a bit of context I run a VC fund and in our VC fund we own an advisory business where we advise entrepreneurs now to start businesses and enterprise development businesses where we help them get into the supply chains of large organization and then a fund where we actually finance them so the entire ecosystem they need to succeed we're in six countries in the continent so southern Africa Eastern Africa and western Africa I like to call us what we are

the best-kept secret in this continent nobody knows about us and I like it that way because then they can't see us coming so we see a lot of them start up as startups and they become these survivalist entrepreneurs the problem is a lot of them die at the instance at which they become survivalists what are survivalists I really need money month-end to pay my bills and how do you know you are one it's usually one person with three maybe four people in his team he's operating in a small office and he's just barely making it

in every month he must make money to pay for that month's bills level above that is it then become success right and a success you're one guy you have a core group of people who manage people and then a core group of people who deliver the work and then where we should be at growth level here's the question how do we move from startup to growth in as fastest time possible minimize the risk and develop our own industries the mindset has to change perhaps the deepest thing about this is this sub complex entrepreneurs need six

things to succeed just six just six getting an infrastructure and once the chatters we have in our continent if I manufacture something in Joburg South Africa how do I get it to macoco in Nigeria how do I get it to Luanda in Angola it still persists in our own continent that I can't put it on a single rail track and move it to that part of the world so we need an infrastructure that opens up our markets we need capital money funding and dear governments here's the point the money doesn't have to be cheap but

it does have to be patient it's not okay anymore there were entre failed in our continent we bank we Bank them and after that we then put them on these things called blacklist and they can't access credit anymore because what you've done is you've taken somebody who's failed and learned from failing and you've not made him that he can't operate economically for the next five years so they need assets they need access to markets strong administration and then people and here's the thing about the people challenge what is the first thing top talent does in

Africa it leaves think about it if you think about the top Africans shaping the rest of the world today they're not lightly doing it in our own continent there's somewhere else doing it and a part of the narrative we need to reshape is how do we bring them back here to build what is jointly ours there is a huge mass of knowledge in the African diaspora we need to bring them back in here and this is how we reshape it so there's really four reasons people start businesses for to live well to leave something for

your kids to sell it or to change the world that's it so what does google say Google says we exist to do no harm apple says for the because the people who are brave enough to think they can change the world are the ones who do so they live in a philosophy space where it really is about changing the world and the reward is much much higher here we live lifestyles we get access to public sector opportunities we call them tenders and here's the thing about a tender once you get it people must know so

the first paycheck goes to getting you that Ferrari and because because we don't have Ferrari dealership what do we do we import them in and not only that I must NBC the scene to live in a certain suburb so what we do is we encumber our ability and opportunity purely by wanting to live a fancy lifestyle the Asian people are different specifically Indians you see a lot of this in my country they build legacy businesses the great grandfather gets a corner shop and he opens up a drycleaner his son the father opens up a fast-food

joint his son you opens up a hardware store and your son will then open up something else but here's the thing generation on generation on generation they don't close these shops down they keep them running in the family as legacy businesses the environment I work in is where we sell businesses we build them purely for the purpose of selling them why because if you build to sell you're built for value it means you're going to live scrappy you're going to keep costs low you're going to take a long term view because you're building this thing

genuinely to create enough push pressure in the market that you can sell it I was on Dragon's Den in South Africa so I invested in myself and the other dragons actually invested in a business that is fundamentally shaping the entire floral market in the world not just here but in the world they've created an uber but for flowers so imagine a situation where you would go on your phone and you wanted to get flowers for your loved one and when you pull up the application on your screen it would show you the local florist and

what that local first has available right now and the price you would then buy from that local florist he would receive the order and deliver the goods in a split second of a time why because he's closer to you doesn't work cosa does the local forest wants access to the market you want to get the goods to the customer and here's a business that's reshaping it why do we do it because we know it'll disrupt not only here but globally and a huge opportunity to sell so the question really for us is why are we

building our businesses I would argue that we don't build them for the right reasons if this is true and I would argue that it is how do we fix it we need to do four things one we need to change the conversation the conversation needs to be how do you build a business with a philosophy in mind it's got to be greater than you it's got to be about changing the very way our very own continent works it's going to be our bettering other people's lives and making sure that in the innovations that we bring

to market we have something that nobody else has in the rest of the world and they can only get it here it must be based on a philosophy anything else is too weak second we need a strong system of mentorship let me take a moment to pause here so here's the thing about the mentorship thing right in my family and in South Africa specifically we come from a deep past of subjugation of the majority of the population black people my people and because of that black people were never allowed to own businesses so in my

family and I imagine it's the case for most of us in the room when I started my business everybody thought I was crazy because you were raised in a system where you grew up went to school got good grades went to varsity got good grades got a job and got married and when you want to disrupt the system society doesn't understand it what it then meant was when I did start my business I had nobody to whom I could go and seek mentorship why because they themselves didn't know what they didn't know and so incumbent

upon us is to create a system in our social spaces where we can access mentorship to think differently this I would imagine is our deepest challenge socially third we need to start creating a culture of delayed gratification fast money was fast in but it's also really fast out and here's the other problem with fast money and this culture of delayed gratification let's be honest here and this is not political we also live in a continent way in truth we have two economies the connected economy and everything else everything else is where most of us here

live the connected economy is where the uber elite and the politically connected live so it's not by mistake for instance that the wealthiest woman in the continent also happens to be the daughter of the president of Angola I'm not by any means trying to put any spera jizz on her qualifications or her abilities but I would argue differently would she have the same opportunities if she were not the daughter of the president in my country South Africa we've seen a huge accumulation of wealth of family members linked to our own president why because we've created

that narrative and we've made it ok the connected economy where if you're in you're in and if you're not well that's just tough so it's about creating a culture of delayed gratification this is build it build it for the next 10 years next 15 years shaped generations send young people through to varsity's create innovation structures and platforms and processes that we allow ourselves to build a different continent but whatever you do delay your own gratification and finally this is the trick right how do you know somebody is a good entrepreneur that's simple they're very bad

at writing business plans it's true we see a lot of it in our environment if somebody has an MBA odds are they're going to suck at entrepreneurship if they can write a really well-written business plan odds are they're going to be really poor at this entrepreneurship thing and in the context of this conversation about the lie of small business is a part of the conversation we need to have which is how do we take people who are naturally not inclined to writing 60 page business plans and attach an addendum of a twenty page Excel spreadsheets

of projections and by the way eight years in finance as a venture capitalist I have never seen an Excel spreadsheet that says the business won't make money the business always makes money the revenue line is always up costs are always down and profit is a perpetual quest of cream and water people who are good at writing the document are usually very bad in the real world and making the adaptations that they need to make so we need to create a culture that says start start badly start scrappy make mistakes fail start again but whatever you

do just start for our clothes let me tell you a personal story so the air is 2004 I've just been kicked out of its university for something called financial exclusion it's like a bad date but for money it basically means you don't have enough money to pay your fees so I go what am I going to do and I go well I've got this thing called public speaking it's a gift I've won the World Championship maybe I could do that right so I started public speaking business I get a small little office it's a nice

little office I've got a secretary and here's the thing my business plan said I was going to make money from month one the financial model says month three I was cashflow positive six months in I haven't received a single booking not a cent in my bank account I've used up all the little savings I had up to that point my secretary then says listen I'm willing to come to work for another month but after that if you can't pay me I really can't come here anymore the bank's chasing me because I haven't paid off my

car and if you don't pay off your car the bank does this thing I love the term it's called early possession which means when you sign the contract you thought you own that you didn't really we always owned it we just didn't tell you so now we re taking it back and so the bank rang me up and said listen if you don't pay you some pay for your car we need to take it back so I absconded I left my home and I went to live in my office because the other thing about signing

the bank contract is if you ever sign a bank contract it's got that thing called at Domus city MC Tandy at execute Andy which is Latin for where do we find you when we need you so they had my home address right and I've squandered and I went to live in my office in seven months I lived in the basement of my office the only meal I used to have often was driving to my then girlfriend now wives house her father hated me so I always went there during lunch when he was at work and

I would come back and continue around my business was it tough yes have I'm bankrupt absolutely but ladies and gentlemen I am privileged enough to stand here and say to you I have made more money than I never thought imaginable and I have not done it because I am particularly more able than other people I've done it purely because I've been afforded the opportunity to start yours and my task is the next generation of this continent is to have a bit of faith and here's what faith is in my eyes faith is the ability to

see the invisible to believe in the impossible trust in the unknown you and I today need to have a bit of faith in our own continent thank you