Three steps to high-impact growth
- Build a culture of continuous innovation
- Create a unique differentiator
- Corporatise the business
When Rob Sussman and Lance Fanaroff founded Integr8 IT in March 2001 in the wake of the dotcom crash, they each invested R150 000 to get it off the ground. Although they were fired up by their passion for technology and enabling it to work better for customers, neither of the two high-impact entrepreneurs had any idea they would grow Integr8 into the largest privately-owned ICT company in Africa.
Exactly 12 years later they sold it for R126 million to the country’s largest publically traded technology company, the Business Connexion Group (BCG), in a cash deal. Both remained on board as joint CEOs.
Sussman says many high-growth businesses have two people at the helm. “We’ve had a very successful partnership because we bring different things to the company, while sharing the same core values of integrity, honesty and hard work.
It can be extremely difficult to achieve as much as we have in such a short time, and I believe we did it because of the strength of the partnership. Business is tough, and to have someone with whom you can share the burden and the wins makes all the difference. When you’re working late and travelling all over the country, it’s great to have a friend by your side.”
The partners have created hundreds of jobs along the way and generated millions of rands in revenue. Their story is inspiring because it reveals exactly how powerful entrepreneurship is as a force for sustained economic development.
“We don’t come from wealthy families,” says Sussman, an electrical engineer by profession. “No one gave us money to start the business, and we could not borrow it either. We scraped together a total of R300 000 and we shared a room while we were working on it in the early days. Lance is married to my sister, which means that our families are close. Whenever we travelled to Johannesburg for business, we would stay with family members and borrow their cars to get around. We kept our initial expenses very, very low and ran the business extremely lean. We built it strictly from the ground up, and that initial investment was the only personal money we ever had to put into it.”
The business has been characterised by exceptional growth since day one. “We re-gear and restructure the company every few years to accommodate the next growth spurt and as a result we are able to continue growing,” says Sussman.
“With the experience we have gained over the past decade, we can scale the business a lot faster today. It’s critical to place the right people in the right positions — the most difficult part has always been the people — technology is easy.”
Looking ahead, the company aims to penetrate the public sector, to continue to grow into the African continent, and to eventually internationalise.
“Now, as part of the Business Connexion Group, we are listed as a multi-billion rand enterprise,” says Sussman. The deal with Business Connexion, a leading black-owned ICT services provider, creates a single organisation with 7 000 highly skilled employees who will be delivering services from the mid-market corporate to enterprise space across Africa.
Sussman and Fanaroff have held onto the various other businesses in the Integr8 group — including fax, telecoms, property and asset finance companies — and will change the name of the group now that the IT business is owned by Business Connexion.
1. Always focus on innovation
Sussman points out that the business has had a strong focus on innovation from day one. It’s a claim many business owners make, but what does it actually mean? Innovation has been defined as the process of translating an idea or invention into a product or service that creates value or for which customers will pay.
The idea has to be replicable at an economical cost and must satisfy a specific need. In business, innovation is usually the result of ideas being applied by the company to satisfy the identified needs and expectations of its customers. It’s no secret that innovation is synonymous with risk-taking: The risk is so great because it’s about creating a new market.
Sussman says that in a rapidly changing world, it’s not the biggest companies that will succeed, but the fastest. “Constant innovation and change are required in line with what is happening outside of the business,” he says.
“You can never take your eye off what your competitors are doing and where the market is moving.”
He says Integr8 has always had in place a two-year roadmap for the business, and that the company tries to obsolete its own model before the market does because lagging behind is fatal.
“Our people spend about 10% of their time looking at new ideas and new projects. When they bring these to us, we evaluate them and if the proposition makes sense, we implement. We don’t wait for days, weeks or months. We look at it and we make a decision. Never allow bureaucracy to stifle a great idea.”
2. Find a killer differentiator
It’s not the services Integr8 provides that differentiate the company, but the way it provides them.
“We are the owners, innovators and operators of the only ‘Nerve Centre’ on African soil,” Sussman says. He describes the Nerve Centre as the nucleus of Integr8’s IT management offering. Based in Johannesburg, it’s a hub built on some of the world’s best technology. It gives the company’s engineers access to clients’ ICT systems and enables them to conduct running repairs, security updates and remote audits to ensure optimal operations.
“Designing the Nerve Centre was key, as it has allowed the business to scale. When your business is privately owned and has no financial backing, you have to be very careful with every bit of money you make and use it as smartly as possible. As we got more clients, we needed more people. The key question was how to build our customer base without having to employ more people as this would raise our costs. The solution was to put our best people in a purpose built technical hub where each one of them is able to look after multiple clients over the Internet.
Instead of placing employees on-site at the clients’ premises, which is far more expensive, we leveraged technology. We needed a network to manage clients so we used the Internet. This had never been done before in South Africa, and it’s what allowed us to scale rapidly.
Sussman says he and Fanaroff knew that companies like theirs would be unable to grow without a platform in place. They had spent a lot of time evaluating the systems and tools that other companies were using, documenting where they were falling short, and then building their solution on top of that. Today, this digital hub manages and regulates the ICT environment of many of the country’s leading corporations.
3. Corporatise the business
The concept of corporatisation is a dirty one in many entrepreneurial circles, but Fanaroff insists that corporatising Integr8 was what prepared the company for growth and ultimately for its acquisition by the Business Connexion Group.
Essentially, it’s the process of structuring an organisation to reflect the structure of a publically owned corporation and giving it the features of a large commercial business. Is it possible to corporatise and still maintain entrepreneurial flair and flexibility? Sussman says it is.
“We grew the business from the ground up, and we have always focused on maintaining an entrepreneurial and innovative culture, but we also knew that it was essential to put in place controls, process and good governance to enable the business to ‘grow up’ properly. We don’t advise that an entrepreneurial business corporatises immediately, but as additional clients come on board and enable you to do so as a result of growth. You can‘t corporatise too quickly as you risk hindering the spirit of a start-up.”
Corporatising, says Sussman, is quite simple. It’s about acting professionally and having the systems and controls in place that make business sense.
“That’s why, when the Business Connexion Group came to see us, they saw a professional, well managed business that was structured and organised.”
He’s keen to point out, however, that Integr8 has a young, fun culture. “We like to see ourselves like Facebook or Google — they are deeply serious businesses, but they have an energy and a culture that makes people want to be employed by them. I think that’s one of the reasons why we have CVs pouring into the business. As an organisation, we have a great reputation and people want to be a part of what we do.”
“One of the mistakes we have made is having the right person in the wrong position for too long. After we addressed the situation and restructured, the company was forced to take a few steps back before it could move forward. The lesson is that problems don’t age well.”– Rob Sussman
We asked Rob Sussman what he would do today if he was a young entrepreneur having to bootstrap himself to success.
“I would choose an annuity business. In today’s environment, a transaction-based business is tough because it’s impossible to predict income and cash flows. I would also go for the most exciting industry, which is the world of high-tech. The sale of Instagram to Facebook for a cool billion in April 2012 was the ultimate Silicon Valley fairy tale – 18 months from launch to offer.
We have a relatively new, separate and self-funded venture we are working on. Called ZunguZ, it’s a social payment system that allows anyone on Facebook to pay anyone else, directly from within the social network. We’re hoping it will give shopping a social element and that it will become a serious payment platform on Facebook.
We’ve spent a lot of time in Silicon Valley, and we’d been searching for a social-based payment platform for many years. Facebook has enabled us to look at ways of placing people at the centre of the payments ecosystem.
We’ve taken ZunguZ to Facebook in Palo Alto, and to Citibank in New York, as well as other companies involved in social media and banking. The aim is not to compete with PayPal, but to enable real currency transactions between people, or from people to retailers, or any other organisations, such as non-profits, which have a Facebook presence. Users simply install the ZunguZ application in Facebook and can then transfer money to one another.
ZunguZ has gone live in Latin America and Mexico, and will soon be available in India, the US and South Africa. We are hoping that at some point it will become hugely attractive to a company like Facebook or PayPal and that we’ll sell it to them for a lot of money.