How Bevan Ducasse Built a R100-Million Business After His Startup Nearly Failed
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PLAYER: Bevan Ducasse
TURNOVER: R100 million+
It was 2010, and 26-year-old Bevan Ducasse was about to have one of the most painful conversations of his life. He was meeting with his team — five dedicated, passionate people who had been as devoted to his start-up over the past two years as he had been — and they had some difficult decisions to make.
The problem was that the business they had built was based on some key assumptions that weren’t working out. Bevan had a solution. They needed to pivot, and he had a plan for what they needed to do, and how they could do it. But they’d already put two years of their lives into the company, and they all ran the risk of putting in two more, and still having nothing to show for it.
“We’d gone from an absolute high a few months earlier when I’d paid for my first coffee using the mobile wallet we’d built, to realising that our entire revenue model wasn’t going to work,” says Bevan. “We were too early, and we weren’t going to scale quickly enough to break even. It’s soul destroying. We thought we were going to change the world.
“We shared a sense of failure because we had failed. But there’s also no point in continuing down a path once you recognise that it’s the wrong path. We were all in it together though. Our wins were wins together, and so were our failures. That didn’t make the conversation or the decision to pivot any less painful, but it helped. We were all willing to take the risk and carry on.
“I had enough belief in myself to be able to get it right, and I could see it in the eyes of my team that they were hungry for it too. The simplicity of it is that either you throw all the money you’ve already put into the business away, give up and go get a job, or you try a new angle.
“I wasn’t certain the pivot would work — this business has evolved so many times over the past ten years that you can never be certain until you try something — but I knew it was worth a shot.”
In fact, not only did Bevan believe in the idea enough to keep pushing forward, but he’d learnt a lot of lessons about what didn’t work, and these were as valuable — if not more so — than learning what did work.
“We’d spent two years learning our market from the inside out and the idea wasn’t the problem. The uptake was there, but not at scale — cash flow was beating us.” Even though uptake was slow, Bevan was spending a lot of time in front of corporates and large retailers, and it was clear that they all wanted to get into mobile apps, transaction software and mobile loyalty rewards, payments and vouchers.
“In every conversation we had, I came up with ideas and gauged their interest and what they would pay for the solutions we could build for them — and the ideas excited them.” Cut to Bevan’s meeting with his team. “I still needed to meet with my investors and explain that not only was the business not going to work and we needed to pivot, but that I needed more money to make it happen.
“I couldn’t walk into that meeting without first getting buy-in from my team. We needed to put our heads together to come up with a solution that I could present to the board. It’s important to be as proactive as possible. I owed it to my investors to not just give up.
“They had taken a risk and backed me, and I didn’t take that lightly. I needed to apply my mind, look at it from every angle and come up with a plan.” This led to the second most difficult conversation of Bevan’s life — convincing his investors to believe in his new vision.
“I presented my business case to them; it was a hard sell, but the choice was simple — double down, or write the previous investment off. They decided to double down.”
Today wiGroup’s turnover is just north of R100 million, the company has enjoyed 50% year-on-year growth for the past five years, other key investors have come on board, including Investec UK and Richard Branson, who is a shareholder in the business through Virgin Global.
Oh, and Bevan isn’t just planning on becoming a billion-rand business — he wants to be a billion-dollar business, and is already opening offices in Mauritius, Amsterdam, and the UK to achieve that goal.
BOOTSTRAPPING A BUSINESS
Even though he had funding, Bevan kept the start-up lean. “I still consider this business bootstrapped,” he says. “Our burn rate wasn’t high, and so by the time we pivoted we’d burnt through R3 million, but we still had R1 million left, and I raised an additional R1 million. With R2 million in hand, we broke even in 18 months.”
Before launching in 2008, Bevan had spent four months raising capital. He’d quit his job in 2007 with enough saved up to pay four month’s rent. If he couldn’t make his idea work in that time, or find an investor, he’d need to give up and find a job.
Just as he was about to run out of cash, Bevan’s network came through and a previous manager facilitated a meeting with UCS (now Crossfin Technology Holdings), Bevan’s first investor and a key shareholder of wiGroup to this day.
“Even though I believe we bootstrapped this business as much as possible, we needed capital to build out our solution. Our first idea was wiWallet, a mobile wallet that linked your credit card to your phone. My idea centred around the fact that the thing we do the most is make payments.
“I also believed the mobile phone would change the way we did everything, so I thought we should combine the two. SnapScan and Zapper are similar solutions today, but in 2008 there was no iPhone, and we were trying to convince South Africans of a new way of paying that had never been done before. We were just too early.”
Joining Bevan was a friend, Basie Kok, who was building the prototypes. “We needed to develop an application that was secure and could integrate to point of sale software, which would take months and would require other developers as well as marketing capital to let people know who we were and what we were doing.”
Although the business consisted of only four people working out of Bevan’s flat, funding was necessary, and the R4 million he raised was enough if they had an incredibly lean operation. As it turned out, wiWallet wasn’t the solution everyone was looking for in 2009 (or 2010), but it did give Bevan and his team the foundations they needed to build a B2B business that the retail and corporate sector did need.
“At our core, we provide a transactional layer that people can plug into across the retail, banking, telco and insurance sectors. Anyone launching digital rewards can use our software. They also have access to the 85 000 retail lanes integrated into us, which gives them a network to tap into where their customers can redeem their rewards. Consider Discovery’s loyalty programme, or FNB’s eBucks. Customers earn loyalty points through our software, and can then redeem those points through electronic vouchers drawn from other retailers on our network.”
In other words, wiGroup has the software and the network — but it took time and patience to build, and ultimately needed to start with a single retailer.
There is no magic bullet to signing a deal with a major retailer. It takes hard work, perseverance and knocking on a lot of doors. “I cold called,” says Bevan. “I hustled. I had no contact into any of the big retailers, so I started at the bottom and worked my way up. I called a junior person, secured a meeting, got them excited and slowly moved up the chain. On each step of the journey I was selling our dream and the value we could give them.
“If you sell your vision hard enough and long enough, eventually customers will start to buy in. It took us two years to get Shoprite and Pick n Pay integrated and live, but that was a tipping point for us.”
Bevan knows that there’s no such thing as an overnight success. “We closed deals with forward-thinking brands like Vida more quickly, and that gave us the case study we needed to show people. From there we built on each success, no matter how small.”
Like many start-ups, wiGroup’s early days were all about hustling. “We didn’t have a clear strategy, even after we pivoted. A lot of what I’ve learnt over the last few years is about focus and productisation, but back then we were just trying to keep our head above water and make money.”
And the business was making money. Within a few short years wiGroup’s EBITA (earnings before interest, taxes and amortisation) was 30%, which is a sizeable margin. The problem was that it was extremely difficult to maintain while scaling.
Bevan found himself in a position many entrepreneurs trying to scale get into: The business was growing and making good profits, but the management team was making bad short-term decisions for the sake of maintaining those good profits.
“This meant we weren’t productising properly, we weren’t servicing properly, and we weren’t beefing up our staff for growth. We were trying to do too many things and it wasn’t sustainable.” It was at this point that Bevan approached the board and made his case.
“As much as I appreciated that we were a growing business that needed to make profits, I felt we were building the business on sand. It needed to be rock. I pitched that we needed to raise additional capital to productise properly. We needed to hire the right people to grow as well.
“If we wanted to become a billion dollar business, we needed to start building strong foundations.” The board agreed, and an equity deal was struck with Investec Global UK. “We’d had previous investment offers, but the timing hadn’t been right; now it was,” says Bevan.
“We’d grown as far as we could organically, and now needed to formalise the business.” Some changes needed to be made though. After the mobile payment app, wiGroup was operating like a services company instead of the annuity-income business Bevan had always envisioned.
“We focused on mobile, but we would change the product based on what our clients needed,” he explains. So, for example, for Shoprite wiGroup powered all their digital couponing, and for Vida it was all about mobile payments. “We thought we were productising,” admits Bevan.
“For every coupon used we’d receive a small fee, which we viewed as annuity-based income. The problem was that we could only use Shoprite’s solution for Shoprite, because it had been built specifically for them — and that’s not productising.”
IF YOU BUILD IT, THEY WILL COME
Over the past four years this has changed in wiGroup. Since the company’s first big pivot in 2011, Bevan and his team have learnt from their time in the market and adjusted the business accordingly — multiple times. “We needed to be clear on our niche, which is the rewards and digital vouchering and couponing space.
“That’s our bread and butter, and we’ve productised it as a Software as a Service. We’re no longer custom building — this is what’s available, and our clients plug in.” Because they operate in the tech space, wiGroup needs to constantly stay ahead of the curve. “You need to embrace a mindset that understands that everything is constantly changing,” says Bevan.
“If your board asks you for a ten-year plan, you need to know that it’s impossible to give one. If we try to look ten years down the line, by the time we get there, things will have changed so much we will be way behind. Instead, in the tech space, you have to be flexible and learn to hold things lightly.
“If something fails, you have to learn from that failure and move forward. If your mentality is that a failure means you’re done, you’ll never make it in this space. I’ve read many, many biographies, and every single one of them discusses failure. All the top entrepreneurs and business people have failed — but they’ve learnt from those failures.
“A lot of business is sticking it out and giving it the time it deserves, and always knowing that you haven’t made it — we’re always looking ahead. Our senior team has four strategy breakaways a year. Every three months the 12 of us meet, not to change our strategy, but to see where we are, and to sharpen the sword.
“We started out as a B2C business. Then we became a B2B business that services consumers; in other words, a B2B2C. We need to understand our client’s needs and what their customers want. We get a kick out of seeing solutions in the market that use our software.”
It’s an important distinction because the pivot in 2011 shifted wiGroup’s revenue model. “It’s easier to generate revenue from businesses and leverage their brand and reach than try to get customers yourself. We needed to figure out who would benefit from what we could do, and focus on solutions that added real value in that space.”
wiGroup’s transformation didn’t end there, which is why regular strategy breakaways remain so important. “We need to continue to build world-class software and to keep advancing and staying ahead of the game. That means we need to keep coming up with new innovative ideas.
“Our original idea was payments. Ten years later, we can leverage that, even though we don’t make money from it. It’s a commodity now — but the value lies in customer engagement, loyalty programmes and vouchering, and the payment functionality supports everything else we do.”
It’s an interesting lesson for other entrepreneurs. “No one wants to pay for payments — ten years ago our whole business model was built on paying for payments. It’s still a crucial element in our business, but not in the way we envisioned. Your business will always be different. You need to keep flexible and innovating while at the same time being focused on core product verticals, that’s my motto.”
wiGroup has three underlying visions that form the basis of the business’s culture. Bevan calls them the 3Ps.
Passionate people. I loved the idea of starting a business and coming to work each day with passionate people who love what they do. Working in corporate there were too many people who just wanted to get to the weekend, and I found that really sad. You go through your whole life not enjoying what you do. One of the main books I read that got me there was Richard Branson’s Screw it, Let’s do it. His whole philosophy is about fun and loving what you do.
We even have a full-time coach that everyone can access. It’s up to you to book time with him, but everyone does, thanks to a culture of self-growth and personal development. His time is fully booked. I had to build a business case to justify the hire, but I worked out that If I increased the productivity of 100 people by 10%, you effectively have ten more people working in the business.
It’s hard to put a tangible number on it, but what we’ve seen is that the productivity, attitude, leadership and personal growth equates to roughly 20% across the organisation of 150 people. I believe that great organisations find people and make them come alive in what they’re brilliant at. There are things I don’t like or am not good at that other people love.
If you’re not good at something, get the right person in. Focus on what you’re brilliant at to move the needle. But do the same for your employees. We all have aspects of the job we need to do that we don’t love, but the core of what we do should align with our passions.
Remarkable product. We’re passionate about building solutions that add value to people’s lives. How do we add value? We never build products for the sake of it — everything we do fulfils a purpose.
Profit. This speaks to the sustainability of the business, which ultimately comes down to balancing people, product and profit. Just chasing profit without a focus on product isn’t sustainable, and nor is looking after people and not profit. But you can never lose sight of your people either.
If you’re running a company and focusing on your product IP, you’re missing the mark — this speaks to how fast things are changing. Your IP is your human capital. That is the one thing that will give you a competitive edge over five, ten or even fifteen years.
The product you have now won’t give you the competitive advantage in ten years. This vision is completely ingrained across our team: That’s what we’re about, seeing people come alive, building amazing products, and being sustainable in terms of the profits we generate.
1. There’s no such thing as an ‘aha’ moment
It’s not about one good decision I’ve made; it’s about the thousands of little decisions we make every single day as a team that make a business. For me it’s about the fundamentals that you buy into, and that’s people, products and profit.
We’ve launched products that fail and others that are a huge success. To get through the failures it’s important to focus on a philosophy of how and what we want to be as a company.
2. Add value first
Our mindset is to add value. It’s the grit that pushes us through failure and keeps 150 people focused and doing great things. I am one of many people. I have a strong role, but I’m still one of many. When you’re looking outward at what you do for others, you stay motivated. A lot of what we do is helping a retailer understand how to unlock third party value.
We will connect two brands who we believe could work well together, like a Discovery and a Kauai. Did you know that you could drive value to this retailer, and that retailer could add value to you? We all live in our own worlds and verticals, but knowledge is power. The greater your understanding of the landscape and synergies around you, the more value you can add.
3. Business is creativity
You need to be open and teachable and have a mindset that says ‘you’re never there, there’s always something more to learn.’ That’s how you foster creativity and innovation, by always asking what’s next, and how to make something better.
4. Never stop learning
You don’t have to read 50 books a year — two great books a year can give you incredible insights if you implement what you’ve learnt. There’s so much you can learn from the people around you too — ask questions, join networks and find a mentor.
5. Raise leaders, not followers
This is crucial. You need to find the right people, and then empower them to lead. I realised this a few years ago — if I really wanted to scale the business I needed to raise people who were leaders and wouldn’t just follow me. The top level of leadership is the ability to raise other leaders up, and that’s where we should all aspire to be.
This is a big one for me, and we learnt it the hard way. We were doing too much, we lacked focus and clarity. These are such powerful tools. If you can bring clarity to teams, you create a clear picture that everyone can follow. Delve into the details — what are you doing, why are you doing it, what does good and great look like, what are your timelines?
The clearer the picture, the exponentially higher the chances are of a team being successful. This includes targets. These shouldn’t be a shot in the dark — they should be unpacked, examined and clarified.
7. The best defense is a strong offence
Worrying about competitors serves no-one — it just keeps you up at night. Instead, you should be pushing yourself — how can we do this better? Keep looking for the next thing to do and improve, and then execute it properly.
If someone disrupts us and I know we did the best we could and gave everything — I’ll sleep well at night. But if it’s because we became complacent and rested on our laurels? Well then, we deserved it.