The year was 1993. Schindler’s List was showing in cinemas, humans were cloned for the first time, the European Union was formally established and at CERN, just west of Geneva, the birth of the World Wide Web was announced.
In Johannesburg Ronnie Apteker and Thomas McWalter, two Wits University graduates, were dabbling with the Net and discovering how easy it was to access real time solutions to IT problems. The Internet was being used largely by academics to swap documents but Apteker believed it would become an important business tool. He began persuading South African companies to incorporate it into their business systems, and thus Internet Solutions was born. In 1994, Apteker graduated cum laude with an MSc in Computer Science. Technically, he and McWalter excelled, with Apteker’s knowledge and selling skills opening doors for him all the way. But their debt was rising, so Alon Apteker and David Frankel were brought in to turn the finances around. The company focused single-mindedly on providing corporate customers with Internet access, a factor which enabled IS to dominate the market from the beginning.
In 1996, when most organisations were embracing the concept of the corporate website, IS needed to grow, and it required the finance to do so. A deal was concluded with networking giant Dimension Data, which bought 25% of IS. One year later, Dimension Data bought the remaining 75% of the company, paying its directors Apteker, his brother Alon, David Frankel, Thomas McWalter and Andras Salamon R300 million. Today, IS provides e-business services to more than 80% of South Africa’s top 250 listed companies and has over 4 500 customers.
Entrepreneur: What was your vision for Internet Solutions?
RA: At that tender age we did not have a sense of purpose, but we wanted to do something magical with computers. We were involved with corporates from the start, but we first focused on dial-up home users. After six months we realised that we wanted a people-oriented business and you don’t get close to people when you have a mass consumer business like a dial-up Internet service provider (ISP). With corporates we could grow relationships and we could invest time and resources in building things like online banking, reservation systems, media archiving, payment gateways and complex security solutions.
E: How did you identify the market opportunity?
RA: It wasn’t so much about identifying the opportunity as it was about doing what we loved. We were crazy about technology and we knew the Internet would be something everyone would want to explore.
E: How did you finance the company?
RA: We used furniture from home, our own computers and whatever we had lying around to set up the office. It was a tight and humble operation and didn’t need too much money to start. The biggest cost was the fixed line infrastructure from Telkom. Fortunately, Telkom supplies a service and only bills you months later which helped us from a cash flow perspective. Start-up finance for a new venture is largely about attitude. You can start a new business in your garage, or you can sign a five-year lease in some fancy building in Sandton and before you know you will be in the hole for a small fortune. Having fancy offices doesn’t make a company better.
E: What were the most difficult obstacles you faced as a start-up?
RA: We were all very young and didn’t know what it meant to lead people. As we grew we started getting older people on board who had more world and work experience and who were more set in their ways. The biggest challenge was to align everyone. On the business side, there was competition all around us. We had to be smarter than the rest, and we had to work harder to carve out more market share. And that we did. IS is still the dominant corporate service provider by far. The company’s culture plays a central role in this. There is a drive and a determination that goes back to the issue of alignment and purpose. We wanted to win, all the time. Complacency will kill any business and as a bunch of young leaders we were never satisfied. We always tried to stretch ourselves, month on month, and we never took “no” for an answer. This, coupled with chutzpah, a sense of humour, a love for technology and some sharp skills made for a selling and marketing tour de force.
E: Can you identify what your big break was?
RA: Our big breaks came from our first few customers who included Price Forbes (now known as Alexander Forbes), Sasol, Times Media (Johnnic), Q-Data, The Argus Group (Independent Group), ICL, IBM, Sybase and a host of others. As the virtual online community grew so we formed a critical mass of Internet users. Also, our timing was really good. We were there from the start of the global Internet phenomenon. Many people say we all got lucky, and yes, we all admit that we were there at the right time, with the right people. But luck did not make the venture work. Making IS work was about hard work, sacrifice and risk taking. There was competition all around us. We were selling people on e-mail, but, who were they going to e-mail? Well, I volunteered for the job. Yes, every time we got a new customer up and running, the majority of emails they would send and receive would be to and from their new IS friends. And so the online community grew.
E: How did you build your client base?
RA: We were relentless. We knocked on every door we could find. We also asked our customers to help us. We learnt that happy clients multiply. I remember in the early days asking a customer if they were happy. When their face lit up I would then ask them if they would help us get more customers. All corporates have partners: auditors, IT providers, advertising agents, furniture suppliers, landlords, bankers. We made it our mission to connect everyone in the chain, and so the virtual network grew. When you love what you do it is not work any more. When you love your products and services it is not a sale any more. We were simply out there evangelising with anyone who would give us five minutes of their time.
E ;What are your views on leadership?
RA: A key thing we learnt at IS was “who works for whom”. Leaders work for the people they serve, not the other way round. When you hire 10 people, it means you have to work 10 times harder to grow and inspire these people. And of course, your ultimate job is to develop them into future leaders. We went on many leadership courses and we sought enlightenment all the time. We learnt that leaders command respect, whereas bosses demand it. We learnt that leaders lead through goodwill, where as bosses lead through authority. We learnt to say “we” instead of “I”. Another key and fundamental element we embraced early on was how to have fun. It is important to celebrate victories. Remember to laugh, often. Having fun is the most important aspect of any venture. If you are not loving it then something is fundamentally wrong.
E: What was your key sales strategy?
RA: Selling is about listening. I am not a good listener so this was an interesting realisation for me. We learnt that the more we listened the more we would get business. I remember going to a presentation at Edgars over 10 years ago. The CEO there loved to talk. I was the guest speaker at their corporate lunch. After a minute of my presentation I said “Sir, I would be more interested to hear your views on how you see the Internet playing a role at Edgars.” He perked up and started going on and on. After an hour he said that was the best presentation he had ever been to. I had hardly said a word, but while he spoke I wrote it all down. When we sent our proposal, they said that we seemed to know so much about their business and their strategic direction – of course we did, the CEO told us everything.
E: What is the most important lesson you have learnt about sales?
RA: If you are waiting to close a deal and it is not happening then one way to find out what the problem is, is to ask the customer “What do we need to do to get your business?” But then, also offer that prospective customer a set of answers, like a multiple choice exam. There are a bunch of reasons there could be a hold up. Perhaps they can’t afford the service. Or perhaps their budget cycle is six months away and they can only commit the funds then. Or perhaps the guy you are selling to needs to get sign off from the board. Yes, there are a bunch of common reasons that generally strike a chord when trying to close a deal. Then there is one big fundamental question: does the person you are selling to like and trust you? If you don’t know that answer then all bets are off.
E: What was your marketing strategy?
RA: Like our selling strategy, it was relentless. When we started IS we never had big budgets to spend on marketing so we had to be as vocal with limited resources. What emerged was a creative culture. The Internet was an intriguing place in the early 90s. We would get calls from people asking us why “they should Internet”. We weren’t selling IS as much as were selling the benefits behind networking technology in general.
E: How did you differentiate your marketing?
RA: We learnt to become story tellers. The more we made people feel comfortable, the more we established trust, and the more we did that the more the business grew. People were afraid of this new technology and what it would mean to their business. So we made them laugh. And we told them colourful anecdotes about people who would call us up and tell us that they wanted to buy the Internet. I have a friend whose husband thought he had broken the Internet. I remember people asking Dave Frankel and me for discounts. And we would say “I’m going to have to check with the board.” What we didn’t tell them was that we were the board. Of course, the board always said no. Paul Harris once told us that when they started RCI (Rand Consolidated Investments) they would call people and say “We are calling you from our Johannesburg office.” What they didn’t say is that there weren’t any other offices. The name of the company was also a big bonus. When Time magazine ran the first big Internet story at the start of 1994, with the word “Internet” in big letters on the cover, a lot of people thought they were writing about us.
E: What was your growth strategy and what it is now?
RA: When I was at the helm our growth strategy was to work seven days a week until we collapsed. We continually tried to find new leaders and we always empowered people to make their own decisions. In effect, my task was to work myself out of a job. I have done this quite a few times now in my life. Now I am quite removed from the running of IS. I am there helping out on a few ventures and cultural activities. The company is stronger than ever and the CEO, Gus MacRobert, is the greatest guy, with the biggest heart. The business is in a new and inspiring chapter in its history.
E: How do you develop your knowledge and skills?
RA: You learn by listening. I have developed my knowledge and acquired new skills by spending time with inspired people. A mentor is always an asset. I have been very privileged in my life to have had some humble and brilliant mentors share their wisdom with me. At IS we also bought a lot of books – on leadership, values, purpose, business, you name it. We loved sharing and swapping books. We also would organise a lot of team building events where people went on leadership courses. We were always looking to be provoked.
E: What have been the key elements of your success over the years?
RA: Investing in people. Empowering people. Growing people. Trusting people. Listening to people. From the first day we were aligned. The original team were aware of their individual strengths and weaknesses. Entrepreneurs always surround themselves with good people. We never had to meet and have long discussions. We met to celebrate, to brainstorm and to discuss challenges and obstacles, but we never wasted time with politics and power struggles. There was a healthy respect for each other and there was a common set of values which bound everyone together. We also learnt early on about money and motivation. A motivated person is someone who is enthusiastic, happy, passionate, thrilled, excited, energised and inspired. Imagine I ask you to wake up tomorrow morning at 4:00am and to come to my house to clean my driveway. Imagine it is the middle of winter and I will be fast asleep as you do this uninteresting task. Would you be excited or enthusiastic? Would you be inspired or passionate? Of course you wouldn’t. Even if I paid you a million rand, you would do it in a flash, but you still wouldn’t be motivated. Money moves people, but it doesn’t motivate them.
How do you define innovation?
Innovation is about attitude.
It’s about changing the way we think.
It’s an emotional construct.
Innovation is about taking risks, and doing what is in your heart.
Innovative ventures involve the most fundamental things we know: chicken, soft drinks, fashion, watches, music systems.
Someone once asked Ronnie Apteker how to make a small fortune in the movie business. He replied: “Start off with a big fortune.” He has spent over R80 million on films in the last seven years. Apteker pumped a significant amount of money into Purpose, the first film he produced, in 2002. In South Africa it earned R175 000, although it did earn much more around the world for its distributor. A movie set during the height of the dotcom boom, it has been said to reflect his own life. In 2005, he put $400 000 into the horror flick Reeker. That year also saw the release of teen flick Crazy Monkey, Straight Outta Benoni, a film which Apteker acknowledges was not to everyone’s taste. The budget for that was R8 million and it made around R3 million at the box office. His latest venture, Footskating 101, had a budget of just R1 million and is said to have achieved the quirkiness Apteker and co were trying to capture in Crazy Monkey. It’s due for release next year.
The business of making a film can be a lot of fun, but that of selling it is another story altogether, Apteker says. “I stay motivated because I am still inspired, still excited, still enthusiastic. But I often get anxious about the money side of things.” He says, however, that his experience in the industry is starting to pay off; for the first time, he is making a return on his investment in Reeker. He’s had a lot to say about the local movie industry and its shortcomings, so it will be interesting to see what comes out of his stable next.
What is your key advice to anyone seeking to start a business?
- Having a good idea helps, but starting a business is all about investing in good people. I would rather invest in a bad business with good people, than in a good business with bad people. Arrogant, lazy, obnoxious people can take the best plans and mess them up. But good, humble, enthusiastic, honest people can take the most arbitrary plan and bring you joy
- Don’t ever abandon your sense of judgment. If something is not feeling right then you can place a bet that something is going to go wrong. We all suffer from pride; we all tell ourselves things like “the train has left the station”. Rather pull the plug on something before the wheels come off
- Always stick to the fundamentals
- Mean what you say, and say what you mean
- Be tough minded, but don’t be hard hearted. Make small decisions with your head and big decisions with your heart
- Listen, and you will learn
- Always remember, luck favours the persistent
Apteker vottles the classifieds market
It was American computer scientist Vinton Cerf who said: “By placing intelligence at the edges rather than control in the middle of the network, the Internet has created a platform for innovation.” Ronnie Apteker continues to take advantage of that platform with his new concept, The Vottle Project. A free Internet service that allows people to interact via a virtual marketplace, it enables users to buy and sell goods and services, to engage on a social level, and to promote local arts and culture. Vottle also includes a crime watch facility where people can report on criminal acts in their areas. “We were inspired by Craigslist in America and we are trying to establish an online community here in South Africa where people can interact, socialise, and trade,” says Apteker. “Our goal is to build critical mass over time and then roll out further enhancements and value added services. If we ever do build that mass we will be in a strong position to leverage this for further online business activities.”
Craigslist is a network of online urban communities featuring free classified advertisements. It was founded in 1995 by Craig Newmark in San Francisco. By June 2006, Craigslist had established itself in approximately 310 cities across the globe. Its sole source of revenue is paid job ads in select cities, and paid broker apartment listings in New York City. Apteker says the online classifieds space is one of the fastest growing areas of the Internet. In South Africa there are almost a dozen websites focused on second hand goods. Vottle recently introduced a payment facility that allows eBucks members to pay with eBucks currency. “This is the first facility of its kind in South Africa,” says Apteker. “With Vottle we can now test and perfect micro payment solutions.” This in itself is an important development for the local market. Micro payments are means for transferring small amounts of money electronically. Since it is not practical – or cost-effective – for individual users to charge small amounts of money to a major credit card, this method of payment is needed for sites like Vottle where low-cost items are traded. It’s worth noting that Craigslist serves over five billion page views per month. Although the company does not disclose financial information, it is speculated that its annual revenue approached $10 million in 2004.