My Grade 7 English teacher told me I would achieve great things. Thanks to him, although I did not really set out to be an entrepreneur, I always believed that I would have a career that was out of the ordinary.
My brother and I grew up in Chatsworth. Our mother, a single parent, was a clothing factory machinist. She was also a very industrious woman: because we were so poor, she would supplement her income on the weekends by selling products like clothing, jewellery and cookware.
I was a good student and I got a bursary to study teaching at what was then the University of Westville when I finished high school. But it was 1985, at the height of the political struggle. Student protests were rife, and I did not manage to complete my first year. I had to find a job to support myself so I became a data capture clerk for a Durban-based land surveying company.
Learning the ropes
The IBM XT (with its 10MB hard drive) had been around for just three years. There weren’t many programmes available, so people like me who were using these machines tended to make up the software we needed as we went along. Because data capturing is such a tedious process, I wanted to learn how to develop software that would make it easier. To do that, I had to teach myself programming. I took the computer manuals and other technology books home with me and did that over the course of a year. It sounds simple, but it was a huge amount of work that had to be done every day after-hours. I also signed up for a computer science degree with a distance learning university. But because the industry was developing so quickly, I found the course material to be grossly outdated compared with what we were doing on the job, so I deregistered.
Once I had studied enough on my own, I formalised the learning process by completing a few short courses in IT, all of which I paid for myself. As a data capturer I did not earn a lot of money so I supplemented my income by selling clothes at the flea market on Saturdays.
After two years I was promoted to head of the data capturing team, and I soon became formally involved in programming.
In 1991, I was headhunted by the Aircraft Operating Company (AOC), an aerial photography and map drawing business that was very technologically advanced. AOC created a specialist position for me at the Durban office and over a period of three years I learnt an enormous amount about geographic information systems (GIS).
By then it was 1994 and the future seemed uncertain. It was a different environment back then and affirmative action had not yet come into play. But I had ambition; I felt I was being stifled at work and I wanted to do a lot more with my life.
During this time, I had also developed a software package for the medical profession. It was a simple accounting solution that enabled medical people to manage their practices. I came up with the idea because I played tennis with an optometrist who bemoaned the lack of software available for his type of business.
After I sold him the package, he told others about it and within 18 months I had 40 clients, purely as a result of word of mouth. Because I was working for AOC, I did all the software installations and user training over the weekends.
Taking the leap
I had developed a passion for GIS technology so I partnered with another developer and together we launched Data World. The company was registered at the end of 1994 and by the beginning of 1995 we had moved into our premises in Stamford Hill.
We had no access to finance so my partner and I – who I bought out a few years later – put whatever savings we had into the business to pay the rent and get it off the ground. We kept our costs to a minimum. I remember buying office furniture at an auction.
We didn’t have a business plan either, and we had no specific agenda. But both of us wanted to build the leading GIS business in the country. Remember, the technology was still in its infancy and very much a niche product. When we started the business, we were also one of the first black IT companies in South Africa at the time, so we definitely had first mover advantage on both counts.
The first job we tendered for was some work for the Pietermaritzburg municipality. As a business we had no track record, but as individuals, we had built a vast network over the years as well as a solid reputation; it helped enormously to be well known in what was still a fledgling industry. We won the tender and never looked back.
Managing the money
At holding level, I am a 100% shareholder in the business. Shareholders in the subsidiaries comprise different empowerment groups, but they don’t just have equity in the business, they actually work in these companies.
For the first three to four years, we took no cash out of the business. My wife Vanessa and I lived on her teacher’s salary. Every now and then I would pay myself a small bonus when we had completed a major project. This is one of the most important things to remember when you are building a company. Most people get so taken in by that first cheque. The point is to take the money out of profits, not revenue. That’s the way you build cash flow, which is fundamental to the survival of any business.
Today we have cash flow that would see us through six months even if we did not earn a cent over that period. The holding company, Spatial Data Holdings, has reserves of more than R50 million, net income of the same amount, and liabilities of only about R10 million.
In the first six years Data World grew 100% annually, doubling turnover and staff every year. Even though we stayed in Stamford Road, we had to keep moving offices to accommodate that growth. In 1999 Data World opened a branch in Johannesburg. In 2001 we moved the head office to Umhlanga, and then in 2003 we decided to locate our head office in the Durban city centre.
It took 13 years for the business to reach R200 million in revenue. Bearing in mind that we sell no products, only services, I am very proud of this achievement. Today our annual turnover is R250 million. The company employs more than 500 people, with salaries accounting for 70% of our expenditure.
Data World initially started off as a company offering GIS services, but we evolved the business quite early into a developer of IT solutions built on a GIS platform. Again, that gave us a very definite edge in a sector that has grown steadily over the years. I made that decision in 1999, after looking at what was happening internationally. It was clear that government departments stood to gain huge benefits from the evolution of GIS. The province’s municipalities, as well as Umgeni Water and Statistics South Africa were among the first of our clients to really benefit from our innovative approach to the development of solutions built with this technology.
Growing through diversification
With all the international competitors that have come into South Africa, it was important for us to diversify and to move into different business sectors. That’s why I founded several start-ups over the years. It also helps to do that because it can get a bit boring to focus only on one business.
A word of caution – don’t even think about branching out into other areas of business until you have built an unshakeable base. Timing is everything. If you diversify before the primary business is ready, you could end up draining your cash reserves badly and killing off the company you worked so hard to build.
By 2003 Data World was pretty much running itself, so we partnered with Indian company Ramco Systems to launch City Works, which provides solutions for municipal and government organisations. Ramco had been looking for a local partner and there was a perfect fit between our organisations.
In 2004, we partnered with ImvoTech to launch Bizworks, a company that offers contact centre and business process outsourcing solutions. We have some big UK-based clients like British Telecom and Marks & Spencer. It was not easy to break into the UK market, but we did it by taking advantage of trade missions organised by the Department of Trade and Industry.
It worked well because we were selling South Africa as a collective, and the customers we targeted wanted to move their contact centres out of India. A year later we launched e-Valuations, a property valuation, consulting and development company. It’s now the largest valuation company in South Africa and we are in the process of expanding the business into India and China.
Vista Imaging was launched in 2007. It delivers digital imagery content using immersive spherical video technology. It basically gives you 360° views of surroundings that are seamlessly stitched together. Two years ago we launched Xcallibre, which provides business process systems to clients in the financial services, healthcare, manufacturing, public service, communication, transport and research and development sectors. This is the business that will enable us to expand outside of the public sector.
I want to decrease the dependency of the group on the public sector over time, but it’s extremely hard for a South African IT company to target corporates. Winning the Ernst & Young Emerging Entrepreneur Award last year will go a long way in helping to raise the profile of the group.
It’s been quite an experience to do business overseas. I have found that people from India and China are extremely loyal to the companies they represent, and they will do their utmost to maximise the deal for their employer. That means we have to work doubly hard to ensure a win-win situation for both sides.
In the US, people are driven by margins. We are currently in negotiations with an American company, but it’s a tough market to break into. Mostly, that is achieved by acquisitions.UK companies are the easiest to do business with – they are really fair and they tend to be happy if the deal benefits both parties equally.
I aim to learn something new every day. When I turned 35, I realised that I was never going to get a university degree, and that I actually did not need one. I set aside time to read business books, but I have no space in my life for formal courses.
Because 90% of our work is in the public sector, most of our contracts are won as a result of tendering. I spend a great deal of time networking and the company exhibits regularly at conferences to ensure that we maintain the strength of our brand in the public sector. It goes without saying that I have learnt a lot about how to tender. It’s so easy to be disqualified, which is why you have to make sure that all the statutory requirements are in order. It’s vital to have all your tax payments up to date and to ensure that your VAT and PAYE are paid. As an entrepreneur, you should never fear a tax audit. I sleep well at night by making sure that we are fully compliant.
Another point that’s key is to write your marketing proposal in layman’s terms when you respond to a bid. You may have a technical background, but you need to articulate that you have a good understanding of what the customer wants in language they can grasp. And always be concise and precise. Possibly the most important part of a tender is to get the costing done as efficiently as possible. I also ask as many questions as I can when I’m preparing a bid – not only does the nuisance factor help to build relationships with customers, but it also gives you keen insight into the business problem. I like to be curious. If you lose a bid to another company, find out how they are able to provide the service at a cheaper rate.
Confronting the challenges
Probably the biggest challenge we have faced is finding the right skills. And once you have done that, it’s often a struggle for a small business to retain those skills – they simply get snapped up. As a result, the company has placed a big emphasis on staff retention and we have a fairly low attrition rate. That said, we recently lost five people in quick succession to another company.
I have worked hard to build a very strong management team. I retain the title of CEO in each business, but every business in the group has its own MD. I maintain a firm hold on the companies and all the corporate offices are situated in one place. Because we are in the services game, I look for people’s people – it’s all about relationships in this business. I also like to employ people who have good project management skills as that is a key element of what we do. As far as possible, I try to grow people from within the group.
Succession planning was once a concern, but I have taken care of that. In the beginning, my biggest challenge was that there weren’t enough of me around. It’s an age-old concern for entrepreneurs – the limits of what you can achieve on your own. I have learnt to delegate even though it was a struggle initially. In the business’s first decade, I had no confidence in anyone else; now, if I drop dead tomorrow the business will continue to run smoothly.
Looking to the future
Last year was a difficult one for us – and for everyone. We saw a dip in revenue in some of the businesses, though not all, but we still remained profitable. Our main objective was to reconsolidate at the end of 2009, which we have done. We did not retrench any staff. What we did instead, was shift our focus to several internal projects. We got our employees to develop new software products which we will be turning into additional revenue in the course of this year. It’s great to be able to use your existing resources to do that.
They say that cash is king, and it’s absolutely true. I’m going to be looking at growing ours in the future by going into property development and investing in the construction sector.
My next big goal is to get to R1 billion turnover in the next five years. But that is not the sole driver of the business. We want to maintain profitability levels even in declining revenue situations, which is something we have succeeded in doing. We grew our profits last year even though revenues dropped. We will probably realise the bigger part of that objective with acquisitions and we will use some of our cash reserves to accomplish those.
There’s no easy path to success. It requires absolute hard work. There are no comfort zones. I had no life outside work for ten years; now I have weekends. Technology has played a big role in helping me to work smarter and free up some hours. Nonetheless, because I play an oversight role in each business in the group, I am connected all the time. Our customers are global and I respond to their emails within 24 hours maximum. That is my promise to them.
What is GIS?
A geographic information system (GIS) captures, stores, analyses, manages and presents data linked to location. It includes mapping software and its application to cartography, remote sensing, land surveying, mathematics, photogrammetry, geography, and tools that can be implemented with GIS software. In the simplest terms, GIS is the merging of cartography and database technology.
GIS technology provides municipalities with a common platform for data collection, storage, authorised and secure access to spatial and non-spatial data, harmonising the work flow of departments and disseminating information for the benefit of the public at large.
Charting the growth of a R250 million business
Data World Awards and Achievements
1995: Data World is established
2001: Data World nominated as one of the Top 20 Unlisted Companies in South Africa by Business Day.
2002: Data World rated one of the Top 5 Black ICT Companies at the African ICT Achievers Awards.
Special Achievement Award given to Data World for its client the Municipal Demarcation Board at the ESRI User Conference (ESRI is a world leader in GIS spatial modelling tools and mapping software).
2003: Data World rated one of the Top 300 Empowerment Companies in South Africa.
Data World partners with Indian company Ramco Systems to launch City Works, which provides solutions for municipal and government organisations.
2004: Data World partners with ImvoTech to launch Bizworks, which offers contact centre and business process outsourcing solutions.
2005: Property valuation, consulting and development company e-Valuations is launched.
2006: Data World named CSSA ICT company of the year.
Data World starts overseas operations in New Delhi, India.
2007: Vista Imaging is launched. It specialises in the delivery of digital imagery content using immersive spherical video technology, providing 360˚ views of surroundings that are seamlessly stitched together.
2008: Xcallibre is launched. It provides business process systems to clients in the financial services, healthcare, manufacturing, public service, communication, transport and research and development sectors.
2009: Willy Govender wins the Emerging Entrepreneur category at the Ernst & Young World Entrepreneur Awards.