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Three Keynote Speakers Announced for the 2015 Endeavor Entrepreneur Retreat

The invite-only 2015 Endeavor Entrepreneur Retreat will take place May 6-8 in Westchester, NY. Three top-tier keynote speakers have been confirmed for the event: – Kenneth I. Chenault is Chairman and CEO of the American Express Company. He joined […]

March 2nd, 2015 — by admin

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Endeavor Catalyst Invests in Argentina’s GoIntegro and Brazil’s ToLife Following New Rounds of Funding

Endeavor Catalyst recently announced co-investments in Argentina’s GoIntegro and Brazil’s ToLife following new rounds of financing raised by both companies. Led by Riverwood Capital and Kaszek Ventures, GoIntegro’s $5 million Series B round will help the growing software firm continue its expansion […]

April 1st, 2014 — by admin

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Thoughts on startup org structures and titles

Reprinted from robgo.org. See the original article here.

By Rob Go

I have the benefit of seeing lots of startups pitch their teams and watching many seed-funded companies establish their early org structures. I’ve found that there are certain types of orgs and titles that I have a naturally visceral reaction towards. For example:

– Having any more “C’s” than the CEO and CTO

– Seeing a head of product that isn’t a founder

– Seeing VPs (the more I see, the worse I feel)

Here are some guiding principles that I think explain why I’m averse to these in most cases.

1. You need DO-ers in startups. You are either building or selling, and if someone isn’t doing one of those two, it’s hard to justify having that person on board. It’s actually pretty extraordinary to find a truly VP level or higher person who is actually a do-er. Most of the time, one becomes a VP because they’ve excelled and have progressed to the point where they are leading a team. Their functional skills are a little dated, their mentality is a bit different, and they are just a little (or a lot) less scrappy. Seed and early stage companies are in need of people who like hand-to-hand combat. There will be a time and place for more senior people, but you want to bring them in when they have the chance to be as effective as their seniority would suggest.

2. You need to create room for exceptions and growth. The problem with having an army of VPs and CXO’s is that it eliminates room to really distinguish extraordinary talent. This is when you start seeing titles like “EVP or SVP”, which again is pretty meaningless and frightening. If you do want to bring in someone much more senior, usually that person is an outlier. Make the outlier role the VP role, not something else weird. I noticed this to be true at many extraordinary companies. I remember looking at the early org at Twitter (even when there were dozens of people) and there was maybe one or two VP’s. Most of the leaders of their divisions (product, business development, etc) were directors and stayed that way. I also am biased because even at Ebay, when it was a public company, VP’s were pretty few and far between. Being a Director meant you were directing something significant. I think that’s appropriate.

3. Some may object to my first two points and say “I can’t recruit people because they won’t take a lateral role or anything less than a VP title.”. My answer to that is – you don’t want those people. Early stage companies need to be free of politics and that kind of ego. Everyone talks about wanting a flat culture. But I find that title focused people don’t really want flat, they just want to be as close to the top as possible. Earlier today, I stumbled upon the team page of a seed funded startup in Boston, and saw 7 VP-level and higher people NOT including the CEO. That’s so not-flat, I guess it’s almost flat!

4. Even better than my suggestions above, how about not even having titles at all? Just describe people based on their areas of focus and responsibility. It’s impractical for a large company, but not for a small company. Check out the team at ThredUp. Aside from the CEO and CTO, you see almost no other titles, just descriptors of what people actually do.

5. I’ll get in trouble with some of my friends on this, but I also think that the best companies are founded by product-oriented founders. As a result, I almost always second-guess a team when there is a senior “Head of Product” that is NOT one of the founders. Usually, I’d hope that the head of product is actually the CEO or CTO, at least at the seed stage. You just can’t punt on product decisions at the earliest stages of the company – the founders need to be able to make the calls. Also, external heads of product are often not folks who are great product designers, but are more librarians than poets. Seed stage products need to be inspired by poets, and you can hire librarians later to build a scaleable product process.

Rob Go is a cofounder of NextView Ventures, a seed stage investment firm focused on internet enabled innovation. He spends as much time as possible working with young entrepreneurs and investing in businesses that are trying to solve important problems for everyday people.

Tough calls: How 40 CEOs made their career-defining decisions

Reprinted from wamda.com. See the original article here

By Knowledge@Wharton

CEOs make decisions — that is their job. Every decision, however, does not carry the same weight. Many are routine; some are significant. A few — a rare few — are momentous. These decisions determine not only the trajectory of the firm for years to come, but also, most likely, define the CEO’s career and establish her or his legacy. Harlan Steinbaum, former chairman and CEO of Medicare-Glaser, one of the largest retail pharmacy chains in the U.S., calls such decisions “defining moments.”

Steinbaum’s own defining moment came during the 1970s when he and his partners decided to buy back their company from the conglomerate to which they had sold it. Before the sale, Medicare-Glaser, which was founded by Steinbaum’s father-in-law in 1923, was a successful chain of drugstores and pharmacies, but it faced increasing competition from rivals such as Walgreen’s. Hoping to compete more effectively as part of a large, well-capitalized company, Steinbaum and his partners in 1972 sold the company to Pet, a conglomerate listed on the New York Stock Exchange. Soon, however, Steinbaum realized that bureaucratic red tape and an aversion to risk threatened to stifle his former company’s entrepreneurial culture. At the risk of taking on significant debt, he and his colleagues bought back the company in a leveraged buyout — but they also set it on track for future growth and success that it could never have hoped to enjoy as part of Pet. (more…)

Endeavor Entrepreneur Rodrigo Jordan: What do mountain guides and entrepreneurs have in common? [Transcript]

Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.

Overview: Endeavor Entrepreneur Rodrigo Jordan, Founder and President of Vertical, combines his mountaineering leadership skills with his professional business leadership experience in this compelling presentation about the importance of developing human resource strategies.

Bio: Rodrigo Jordan is the Founder and President of Instituto Vertical in Chile. He has been an Endeavor Entrepreneur since 1998. He holds a Ph.D. in Organizational Development from Oxford University and a Civil Industrial Engineering degree from the Pontifical Catholic University (PUC) of Chile.

Jordan is considered one of Latin America’s most accomplished mountaineers, having led several successful expeditions to the Himalayas and Antarctica, including Everest in 1992, K2 in 1996, Everest again in 2004 and Lhotse, the world’s fourth highest mountain, in 2006. In 2008, he participated in kayaking expeditions to Antarctica (with National Geographic) and Greenland to document the impact of climate change on the world’s glacial masses. Jordan has authored a number of books and documentaries based on these expeditions including Everest: The Challenge of A Dream, K2: The Ultimate Challenge, Planet Antarctica and Antarctica/Greenland: Expeditions to the Heart of Climate Change.

He is the author of Leadership: From Theory to Practice (Spanish, Prentice-Hall 2008) and was the host of Leadership in Person, a TV show interviewing Chile’s most important leaders. In addition, he serves as Professor of Leadership and Decision Making in the MBA program at the PUC School of Business. Jordan regularly runs seminars on leadership to a wide variety of clients throughout Latin America and beyond, including extensive work with the Wharton Leadership Ventures program.
Jordan also directs Fundación Vertical, the non-for profit arm of Instituto Vertical that serves underprivileged students from the poorest schools in Chile, as well as promoting the enjoyment, responsible use and conservation of the environment.

Full transcript:

Rodrigo: I became an entrepreneur by force. It wasn’t my idea. I climbed Mt. Everest and came back. I decided I wanted to have a foundation to encourage social skills in children in schools which didn’t have the chance to learn anything about human relations. They learned about math or Spanish or sciences, but nothing about how to behave themselves among other people. And that foundation grew up very well. Suddenly we jumped because corporate started demanding our services. So we started the company, because of demand, not because of impulse. And because doing that we started guiding people into mountains – I’m a climber, not a mountain guide – I became a mountain guide. And when I say I became, I really studied hard in the UK and the US and took courses. (more…)

Founder focus: don’t kill your startup with 1,000 trivial tasks

Reprinted from onstartups.com. See the original article here.

By Noah Kagan

A few weeks ago I had wine with some very successful entrepreneurs. How successful? On their best days they were generating $100,000 a DAY in revenue. That’s $36,500,000 a year.

Insanity, huh?

But what was the most surprising thing to me was that they were STILL doing their own data entry and dealing with small clients.

Holy crap. Think of it this way:

Let’s calculate their hourly sales:
$100,000 / 8 hours a day = $12,500
Divided by 2 guys = $6,250 / per hour

Do you see where I am about go with this?

After spitting out my wine, I started berating them with hate words about how dumb they are and why aren’t they focusing on higher-value things for their business?

Their response?

“We want to make sure it gets done right.”

Ahh, now it makes sense. They have Jewish mothers and are control freaks.

This is something I had a problem with myself, once upon a time: We want to do everything ourselves, which means we aren’t focusing on the highest-value things we can be doing for our business.

I used to do the same kind of data entry. I’d write up the emails for AppSumo.com, do customer support emails (which I actually like, most of the time), and other low-level things.

It all changed when my buddy Joe from MyChurch opened me up to outsourcing.

“Come on, Joe. Those people are crappy and it’s so weird,” I said.

He finally convinced me, so I had Nimesh Mehta at $4 / hour start aggregating certain data from me.


It wasn’t about outsourcing to India. It WAS about maximizing the best use of my time.

As an example: what do you think is a better use of my hour?

1. Writing this article that hopefully gets 500+ people to discover and check out AppSumo.com, or
2. Doing data entry to put a new deal in our system.

Take a guess.

Writing this article, of course! It generates way more value which is a way more ROI / value / monetizable use of my time.

Coming back to how you can save yourself before it’s too late:

– Start small. When hiring other people to do your tasks, you need to be concise in your instructions. Delegating is a skill (not a talent) gained from experience.

– Think investment. Don’t think of outsourcing as a cost. I LOVE hiring for AppSumo!

– Guard your time. Next time you think about doing something, think if you are REALLY adding value (i.e. only your special skills can do it) or if someone whose value of time is lower could handle the task instead, thereby freeing you up for better things.

That’s fine and all, you might be thinking, but aren’t there some seemingly trivial tasks that keep me closer to the business? Like customer support– how do you find the right balance between outsourcing/delegating and maintaining the little things that make the business differentiated and special?

Trivial tasks will never go away. Invest in the things that matter. Wow, I can throw a few more cliches just to finish off the article nicely.

Look, if support is going to be a differentiater like we want it to be at AppSumo then we don’t try to pass off phone support, live-chat, email, etc. to a lower wage person. But processing refunds, merging email accounts and helping the customers get what they want can be passed off.

I guess the ultimate balance comes from identifying what is important to you. I still like updating Excel each month with my finances vs. using Mint.com (which I helped build). Doesn’t make it the “right” choice, but it makes me happy.

A helpful tip to see how you can start evaluating what you want to delegate is to literally write out your entire day by tasks. I did this with Andrew Warner from Mixergy.com too and it seemed really helpful. Then pick out the things that are high-value or you personally get value from doing. Keep those. The rest of the stuff, get someone else.

What do you think? Have you identified the key areas to apply your time and energy, and shifted the rest? What’s working for you?

This article was written by Noah Kagan, the Chief Sumo at AppSumo.com (#1 ecommerce site for entrepreneurs). He was employee #4 at Mint.com and employee #30 at Facebook.

James Joaquin on Digital Photography [Video, Transcript]

Endeavor is pleased to make public the following transcript and video from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.


Chairman, Pixelpipe; formerly CEO, XMarks; Venture Partner, Bridgescale Partners, and President & CEO, Xoom Corporation

James Joaquin is a seasoned entrepreneur with 20 years of experience building and growing consumer technology companies. While studying computer science at Brown University in the 80’s, James co-founded Clearview Software, a company later acquired by Apple. James co-founded When. com, an Internet calendar and events service that was acquired by America Online. After that successful acquisition, James was President and CEO of Ofoto, the leading online photo service that was acquired by Kodak in 2001. More recently James served as President and CEO of Xoom Corporation, a global money transfer service, and as Venture Partner at Bridgescale, a growth equity investment firm. Since 2008, James has served as the President and CEO of Xmarks Inc., the bookmark sync startup co-founded by Mitch Kapor in 2006 under the original name Foxmarks. In December 2010 Xmarks was acquired by LastPass. James advises a number of startups including 955 Dreams, IMVU, Nest Collective, Pixable, and Pixelpipe.


How to negotiate with an angel investor

[Photo credit: Sonia Roy]

Reprinted from Under30CEO. See the original article here.

By Rishi Anand

The Internet is saturated with articles on ‘how to pitch your idea’; ‘how to draft and implement your pitch to perfection’ ad nauseam, but there are simply not enough articles and resources out there on how a relatively inexperienced entrepreneur should deal with hard hitting investors when meeting them to raise external investment for their business.

As an established entrepreneur and angel investor network that has featured thousands of investment proposals to genuine, high caliber angel investors (follow link to view our database of investors) that have included investors from the UK Sunday Times Richlist, one of the former Founders of Skype, and even one of the former directors of Morgan Stanley, we have been in a unique position to see both sides of the funding equation between entrepreneurs seeking investment capital for their business and the angel investors that are looking to invest in these high risk ventures. In fact, entrepreneurs that know how to negotiate in the right way, ensures that:

You will receive better terms – in terms of % equity you will continue to own in your company vs. the investment capital you raise.

You will not lose a potential deal because you have failed to value what a business angel investor can actually bring to your company (know-how, experience, network of contacts), and…

You will be able to walk away from the deal (if need be) as getting the right answers to the right questions from an investor will empower you to walk away if it is not right for you. It is wise to always ‘go with your gut’ in these situations but it is important to remain impartial during negotiations and to ask the right kinds of questions that may well uncover red-flags and most importantly not put-off a potential investor.

So you have a full business plan with financials. You are armed with industry stats and have made your investment pitch to an investor. Now what?

Fact #1: Your Investment Summary is NOT your Executive Summary

Angel investors are highly successful business people that have a lot of money behind them which is why they are able to afford to invest in high risk; high reward non-traditional investment propositions (YOU!). As a result of this, they will get approached daily by pie-in-the-sky entrepreneurs and time wasters that just want to talk about their ideas but not really make any of the sacrifices that are necessary to build a truly profitable business. So when you are invited to deliver your investment pitch to an angel investor it will be important to stand out from the crowd by knowing your business plan inside out (including the financial section), having a great presentation that may include PowerPoint slides with graphics demonstrating your key points of your investment pitch and by having a well-written one page ‘investment summary’ (which is NOT your executive summary) prepared especially for the angel investor you are pitching to, ready to be handed out straight after your initial pitch or preferably handed out after the Q&A session when your meeting has ended which will act as a refresher.

The decision to invest will never be made during your initial pitch BUT the decision NOT to invest could be so it is vital that you articulate yourself and speak in a language that a potential investor finds reassuring and knowing your business plan inside out will help with building your credibility in the meeting.


Could your kid be the next Bill Gates?

Reprinted from Under30CEO. See the original article here.

By John Hall

I had drinks the other day with a couple of friends who’d recently had kids. They wanted to know what encouraged my interest in the business world – and what prepared me for success within it. I started thinking about what impacted my entrepreneurial skills, knowingly or not. You don’t need to teach your kids complicated bookkeeping services, or how to code a website at the age of five. There are simple tips that will make a difference. Here are the conclusions I came to; each tip will strategically prepare your kids for a successful business career (without anyone being the wiser).

Cheese and Sausage: Teach Them How to Sell Early

Starting in the first grade, my school held fundraisers selling cheese and sausage. If you aren’t familiar with this concept, I am referring to the cheese-and-sausage gift packs that nobody really eats but gets by the truckload at Christmas time. My parents observed me while I went up to each door and tried to sell a product that I wouldn’t consider eating myself. They allowed me to do the work on my own, rather than rely upon them to pass it around at work to meet the minimum quota. The best way to teach your kid business isn’t to do the work by using your superior status at work to get people to buy your kids’ cookie dough. Most people hate to see you pimping out your work relationships to help your kid not truly earn something. I wasn’t worried about that because I had the overall goal in my head. I had a Schwinn on my mind. Motivation comes in all shapes and forms, but there aren’t many things more motivating than the idea of getting your first bike when you are a kid. If you can get your kid motivated to be successful in the cheese-and-sausage programs, then you can break down the fear of selling very early in life.

Golf and Rosetta Stone: Give Them Opportunities to Differentiate Themselves

What are the skills and experiences that will help your kid differentiate himself and stand out among others? If I could go back 20 years, I would probably put a golf club in my little hands. Being a good golfer can open up numerous opportunities, from networking with clients to always being handpicked to be on your boss’ team. Along with the golf club I handed to little John, I would include a Rosetta Stone Value Pack. Understanding a foreign language can open up doors all over. These are just two examples of ways that children can build a niche for themselves in business. The challenge is being strategic with how you introduce these skills in their everyday lives so they enjoy them. There is a major difference between the parent who makes his kid do sprints after everybody’s left practice, and one who can successfully implement sprinting in his kid’s life without burning him out. Make an effort to introduce these skills in fun ways and reward your kids when they accomplish something.

Packed-Lunch Business: Teach Them How to Negotiate

Everybody remembers the days of school lunch, where trading food was like the NYSE for grade school. I was fortunate to have the Berkshire Hathaway Class-A shares in my packed lunch. I always had some sort of treat that all the other kids wanted. After a couple of deals that ended with me taking another student’s money for an item, my parents got wind of my little “business.” The issue wasn’t so much that I was trading as it was my ripping off other students and leaving them with hardly anything. Reputation is everything in business, and if you learn at a young age to negotiate mutually beneficial deals, then it comes naturally to you later. Show your kids early how to look at both sides of an arrangement to understand the benefits and downsides for each participant. Chances are, not all kids will form their own packed-lunch businesses. However, when given the opportunity, make sure that they know that no matter how much it benefits them, lopsided deals usually aren’t the best option.

Create a Chameleon: Surround Your Kids with a Variety of Experiences and People

The business world isn’t made up of one type of person. On any given day, I deal with multiple cultures and personalities. If you keep your kids at the country club and at private schools their entire lives, they will probably only be exposed to a limited number of personalities and cultures. Being around a variety of people allows someone to become a chameleon and adjust his actions to ensure different people feel comfortable around him. If you try to control everybody your kids interact with, it’s likely to backfire on you. However, if you simply guide them to different activities, they will have opportunities to be exposed to different cultures.

Keep Your Warren Buffett Friends Around: Give Your Kids Mentors

Ask Warren Buffett how important Ben Graham was to the success of his company. Great mentors are an extremely important part of business, and you’re never too young to develop a solid relationship with a mentor. The friends you surround yourself with will have an impact on your kids. Provide them with good role models.

Your kid may or may not have the innate business sense of Bill Gates or Warren Buffett. However, the skills that will make them successful in the corporate world are the same tools that will enable them to be successful elsewhere. Ensuring that your kid is successful is what every parent dreams of – and getting a billionaire in the bargain just sweetens the deal.

John Hall is the CEO of Digital Talent Agents, a company that helps experts build their personal and company brand through producing high quality content for reputable publications.

Seth Godin: Engaging with criticism

Reprinted from sethgodin.typepad.com. See the original article here.

By Seth Godin

If you need to find out how your audience is receiving your work, it’s worth considering how you’ve structured the interactions around criticism. Sometimes a customer has a one-off problem, a situation that is unique and a concern that has to be extinguished on the spot. More often, though, that feedback you’re getting represents the way a hundred or a thousand other customers are also judging you.

Some random ideas:

– If you defend yourself to the customer, quickly explaining precisely why the policy is the way it is, why the product is the way it is, you are pushing the criticizer away because you’re telling them they’re wrong about their opinion. And they might indeed be wrong, but it’s certainly not going to encourage more feedback.

– If your front line people restate the criticism in their own words and are grateful to the customer for sharing it, everyone will benefit. You can always choose to ignore the input later.

– If there’s no way for your staff to easily send the criticism up the hierarchy, it dies before it reaches someone who can do something about it.

– If senior people follow up with the customer with specific acknowledgment and thanks, you multiply the benefits.

Not every company needs to do this right to succeed (Apple succeeds and does not do any of these things–and as far as I know, Bob Dylan is in the same camp), but if you believe you can benefit from a cycle of feedback, it’s worth a try.

Seth Godin is the author of fourteen international bestsellers that have been translated into over 35 languages, and have changed the way people think about marketing and work. His Unleashing the Ideavirus was the most popular ebook ever published, and Purple Cow is the bestselling marketing book of the decade.

Endeavor Entrepreneur Vinny Lingham steps down at Yola to launch new startup

Silicon-Valley based Endeavor Entrepreneur Vinny Lingham has resigned from his position as CEO at Yola to pursue a new startup venture. Lingham, who began his entrepreneurial career in South Africa, will remain on Yola’s board, but will step back from executive leadership of the company while focusing on his new venture, Gyft, an online service which promises “to change the way you think about gift cards.” The service will launch in May, and is offering early signup for members.

Yola, which had over a million users in 2009, will be replacing Lingham as CEO with current President and Chief Operating Officer Trevor Harries-Jones, who joined the company four years ago. “Trevor has demonstrated excellent leadership over the past year, driving Yola into its next phase of exciting growth,” said Jason Young, Chairman of the Yola Board. “The Board congratulates Trevor in his new role and for his tireless efforts in building Yola.”

“I am very enthusiastic about the continued strong growth and prospects for Yola,” says Harries-Jones. “My immediate focus will be on completing the release of our new suite of exciting, high-quality, next generation products to our rapidly growing customer base, and on continuing to manage and expand our strong distribution partner platform.”

Endeavor company Taste Holdings: A matter of taste

Reprinted from bus-ex.com. See the original article here.

[Endeavor-supported] Taste Holdings manages franchises, developing efficient and customer-focused brands tailored towards South Africa’s discerning diners and consumers of jewellery.

A chacun son goût, or so they say—to each his own taste. Taste has a dual meaning in both French and English: it refers either to the relish of food or to the sense of style possessed by the discerning. As such it is a neat name for the JSX-listed company that has its origins back in 2000 with the founding of the well known Scooters Pizza, a brand that really took off in South Africa where it is now the second largest pizza delivery chain, with 131 outlets. The other kind of taste is central to the jewellery trade, separating beauty from bling: the group’s jewellery division is focused on the 29-year-old NWJ chain of stores that now has 87 locations and is the fastest growing jewellery business in southern Africa.

Even before [Endeavor Entrepreneur] Carlo Gonzaga and his father Luigi started Taste Holdings they were both experienced franchisees in the food sector, owning four franchises in the Durban area. Law graduate Carlo was chairman of the Franchisee Council for three years and during this time won Marketer of the Year, and the Franchisee of the Year awards twice. Now CEO of Taste Holdings, he understands this business from the bottom up.

Taste has wasted little time over its short history. It was always the plan to grow aggressively, both organically and by acquisition, says Carlo Gonzaga, and the track record so far is remarkable. In April 2005 it acquired Maxi’s, a chain of breakfast and lunch restaurants that has now grown to 72 outlets. In 2010 it added St Elmo’s, another pizza brand but aimed at a different market from Scooters. Concentrated in the Western Cape, St Elmo’s Woodfired Pizza is a sit-down, casual dining proposition as opposed to the home delivery model represented by Scooters. There are no international brands to contend with in the South African pizza market: the market is entirely dominated by native brands and among these Scooters and St Elmo’s are entirely complementary: you can have them both side-by-side in a small town, according to Gonzaga.

The group has delivered growth every year since its foundation—11 full years of expansion, with annual revenues increasing to R752 million in 2011. “Taste has expanded through a combination of acquisitions and organic growth,” says Gonzaga, “but the key factor can be summed up in two words: vertical integration.” Taking control of the supply chain, as far as practicable, from manufacturing through distribution through to customer service can drastically reduce the cost of these operations and synergies between the businesses can be exploited.

Take the jewellery division: NWJ is the third largest jewellery chain in South Africa, and the only one with a claim to be vertically integrated. From its Durban factory and distribution facility, employing in all about 180 people, NWJ internally sources some 40 per cent of the product it sells, giving it an advantage in flexibility and competitive lead times. All products are procured and styled in-house and distributed to the franchisees and managed stores on the company’s own fleet of vehicles. “We are going to continue to focus on vertical integration in the medium term,” promises Gonzaga. “One important reason for that is to make the businesses simpler to run from the franchisees’ perspective: having one supplier coming to your back door is a lot more attractive and easier to manage than having to deal with 20!”

While every single one of the food division’s businesses is franchised, 23 per cent of the jewellery stores are directly owned and operated by Taste Holdings. “Franchisees usually do a much better job of running service businesses than retail owners,” he says. Food outlets are the ultimate service business. However in the right circumstances it is better to run a retail business as a managed store under corporate ownership, he believes. “On the jewellery side of our business we often find that the stores we own do better than the franchised ones.”

In a high value business like the jewellery trade, a greater level of capital needs to be tied up in stock. This can put excessive strain on a franchisee, he says, and is better handled at group level, with a strong balance sheet. But even in jewellery, circumstances alter cases: while he foresees that a core group of company stores will be retained in the future, the hybrid model will always work well. In the last analysis, a franchisee usually looks after the customer better than a manager, Gonzaga believes.

In the financial year ending in 2011, jewellery revenues increased by 4.5 per cent to R243 million; NWJ won the Daily News Readers’ Choice Best Place to Buy Jewellery Award; and it added 10 new outlets.

The growth in jewellery sales could be called robust under the economic circumstances, but it is modest when compared with the 11 per cent group turnover increase over the same period to R750 million. By 2014, though, the board has set itself the task of doubling these earnings. In the face of continued uncertainty in the jewellery market this will have to come mainly from food sales—and these will be helped by the St Elmo’s acquisition, whose full-year earnings will only begin to show from 2012. But its main boost comes from another acquisition.

From February 1, Taste Holdings became the owner of 220 fish and chips outlets. Fish is the fourth largest fast food category in Africa and expanding rapidly. It has grown considerably over the last five years, during which time The Fish & Chip Co has becomean established brand, with strong marketing ties to the South African football fan base through an association with Bafana Bafana player Siphiwe Tshabalala. It is arguably the largest chain by number of outlets and the market leader in the takeaway fish category.

The purchase price of R66 million included all assets of The Fish & Chip Co including stock, trade debtors, the distribution centre and any payments made in advance to secure new stores still to be opened. It is an excellent fit within the group, since it is 100 per cent franchised and because the concept works just as well in the low-income townships as in the middle class and tourist locations. The pattern of spending may differ, with more people spending less per head or fewer spending more depending on income, but the level of takings per location is comparable across the board. Additionally more than half the existing franchisees have more than one store—it has become a great catalyst for entrepreneurship at a local level.

If the company has a unique selling point, it is low prices combined with high quality, and its insistence on sustainable sourcing of fish. The problem for fish restaurants has often been one of consistency. That is why the fish, mainly hake, is all from sustainable stock. The principal supplier of fish is Sea Harvest, which is certified by the Marine Stewardship Council (MSC), the world’s leading certification and eco-labelling programme for sustainable seafood. The raw material is supplied graded to size and it couldn’t be fresher because it is caught, de-skinned, de-boned and individually quick-frozen at sea on Sea Harvest’s factory ship the Harvest Lindiwe. The involvement of Tshabalala is a bonus: the much loved footballer and role model for the youth of South Africa, who scored the first goal of the 2010 World Cup, is an ambassador for the company—and his involvement has brought in other soccer players who want to invest in a good and socially responsible business.

The takeover will bring in additional sales in excess of R300 million, and Gonzaga sees a massive potential in the brand. “One thing that absolutely drives our business is having good solid brands. Whatever the efficiencies you may be able to achieve through vertical integration, at the end of the day it is all about selling people something they really want—whether it is pizza, a cappuccino or fish and chips.” In a business that stands or falls by creating and managing brands, Taste Holdings’ latest acquisition ticks all the boxes, he adds. “The Fish & Chip Co is the largest business of its kind in the country and a market leader. Its growth potential is huge: we see it growing from 220 outlets to somewhere between 400 to 600 outlets in the coming five years.”

Many future stores, whether belonging to The Fish & Chip Co or Taste Holdings’ other brands, will be beyond the borders of South Africa. Gonzaga has set his sights firmly on expansion into Africa, though he appreciates the difficulty of reaching out into new territories with unfamiliar ways of doing business and challenges relating to infrastructure, lines of distribution, currency exchange and the like. Nevertheless, he hopes to be established in two new African countries—not including Namibia and Zimbabwe, where Taste Holdings already has a presence—by the end of 2012.

Every acquisition is accompanied by integration costs, and The Fish & Chip Co will be no exception. But these are quickly offset by the savings inherent in vertical integration and taking control of the value chain, he says. There are more ‘moving parts’ in the food supply chain than in non-perishable stock like jewellery, and there will no doubt be some ways in which the requirements of the fish and pizza businesses can be synergised. Currently there are four separate offices and manufacturing locations for pizza premixes in Johannesburg, and an office and training centre in Cape Town—as well as a factory that produces mixes, spices and toppings. The only major operation still outsourced by the group is packaging.

Some rationalisation of the manufacturing and distribution facilities can be expected, he says; meanwhile, the group is targeting its carbon footprint and aiming to reduce its energy consumption by 20 per cent by changing to energy-efficient lighting, signage, air conditioning and cookers. The more the number of franchises in the group increases, the greater the opportunity for offsetting the anticipated rise in energy costs.

Taste has a fantastic track record to date, but just look at some of the targets it has set itself in the near term: “Last year, we said we wanted to double our earnings in three years. One year in, I think we will get to that target. The main objective in 2012/2013 is to engage with some of the growing African markets; at the same time, I expect to open 100 Fish & Chip Co outlets and I do believe we will make another acquisition in that period. We have substantial opportunities to grow the business: we have a good model and it is scalable.”

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