South Africa has birthed numerous world-class companies that are global leaders in their respective industries. Businesses such as SABMiller, MTN and Old Mutual all have their roots in the southern tip of Africa. Then there are also entrepreneurs such as Mark Shuttleworth who shot to fame in 1999 when he sold his internet security company Thawte to US-based VeriSign for more than US$500 million.
Besides these celebrated companies and entrepreneurs, there are many other South Africans doing innovative things in the world of business. How we made it in Africa’s Claude Harding looks at five of South Africa’s more interesting companies.[hidepost=9][/hidepost]
1. Optimal Energy Optimal Energy, founded in 2005, is the company behind South Africa’s first electric car, the Joule. Founder and current CEO Kobus Meiring’s vision is to establish and lead an electric vehicle industry in South Africa and to expand globally. The Joule is fully electric with a top speed of 135 km/h. The car’s interior and exterior was styled by South African born Keith Helfet, who was previously a chief stylist at Jaguar. When fully charged the Joule can drive a distance of 300 km.
With many of the world’s major car manufacturers now building electric vehicles, making a commercial success of the Joule was always going to be a tall order. It was recently reported that Optimal Energy has failed to secure adequate funding for the Joule and that it will now shift its attention to electric buses. The company has apparently secured a commitment from government to use the buses as part of the integrated transport plans rolled out in South African cities. The buses would make use of the technology created for the Joule. Optimal Energy expects to manufacture 100 buses a year.
Marketing director Diana Blake told Engineering News that the electric bus market requires a “much smaller amount of capital expenditure up front, with a positive return on investment in a short time, followed by major opportunity for growth”. Optimal Energy says it will, however, continue to look for partners and investors that will make the commercialisation of the Joule a reality.
2. Tourism Radio Tourism Radio describes itself as an onboard travel companion – your very own tour guide. Essentially it is a device that self-drive tourists put in their car that gives ongoing commentary about the area’s history and points out places of interests – a radio station for tourists. Through GPS technology the system knows where users are driving, and gives them information related to that specific area. “The way we describe Tourism Radio is it’s like having 15 locals in the back of your car. So as you’re passing any points of interest it’ll point them out to you,” said founder Mark Allewell in an interview last year.
The device can be hired at no charge online and is also fitted for free by a number of car rental companies. The company generates revenue from location-based advertising. Tourism Radio was started in 2005, and in 2006, after it was featured on the Discovery Channel, is was snapped up by a foreign investor. The service is currently also popular in New Zealand.
With the rise of smartphones, an expansion into mobile was always going to be the next step for Tourism Radio. The company has launched Hummba.com, a travel community that lets travellers download free city guides and share travel experiences directly from their mobile phones. Hummba’s mobile application is also available on iPhone and Android app stores.
3. Reciprocity Companies are increasingly looking at ways to tap Africa’s low-income consumers, or bottom of the pyramid (BoP), as it is sometimes called. Cape Town-based consultancy Reciprocity shows them how. Established in 2007, Reciprocity’s primary mission is to help companies understand the dynamics of the BoP and develop innovative business models to address this growing market. Some of its clients include PepsiCo, Standard Bank and Gemalto, the world’s biggest SIM card manufacturer. Reciprocity is currently being run by Nicolas Pascarel and Pierre Coetzer, and also makes use of independent consultants from around the world.
Coetzer says that when the company started out there was less awareness about opportunities at the BoP. “The field of work in which we are active was very new six years ago, and we were struck by how cautious companies were and how slow their decision-making process could sometimes be.”
The situation has, however, improved. “We see a very clear trend that companies are no longer asking what the BoP is. If you look at the upper-income segment in South Africa, those markets are mature, they are growing at perhaps 1% to 2% per year, whereas your low-income segments are growing at anything between 9% and 15% per year. You ignore such trends at your peril,” Coetzer explains. “People realise they need to have a BoP strategy, but are often overwhelmed by the task and the commitment in human and financial resources that is needed. We also find that sometimes a few managers with a vision have to fight tough internal battles to overcome scepticism, and they need hard data and facts to do this.”
Despite its potential, the BoP should, however, not be over-romanticised and a long-term view is essential. “It is not going to turn huge profits instantaneously, but if you look at a 15 to 20 year strategy, this is the market where future growth is going to come from,” notes Coetzer. He says that companies should also experiment with different business models. “You will get it wrong the first couple of times.”
4. Propertuity Propertuity is the development company behind Johannesburg’s Maboneng Precinct, a previously deteriorated neighbourhood that has now been upgraded into a vibrant community. Four years ago Propertuity founder Jonathan Liebmann identified a no-go area on the east side of the Johannesburg CBD. “I saw this degeneration really as an opportunity and I started thinking of ideas of how it can become a new place for people to live, work and play,” he said during a session at the recent World Economic Forum on Africa.
His first development was Arts on Main, which provides studio and commercial space for the artistic community. After attracting renowned South African artist William Kentridge, many other organisations followed. Since then Liebmann has bought another 19 buildings in the area, of which five have already been converted into offices, hotels and residential spaces.
“Recently we have introduced a transport agency. So we are starting to look at taking over what would normally be a government role in an urban environment. We’ve got a shuttle service and we’ve started bicycle hires. We do all the pavements and all the landscaping in the area. It is a complete infrastructural upgrade of the area,” said Liebmann.
His advice for property developers in Africa? “To see the potential in the dilapidated buildings in our cities and to transform them into spaces that inspire ideas.”
5. World of Avatar World of Avatar invests in mobile web, telecoms and media businesses, with a specific focus on the African continent. “We invest in companies and people that enable Africans to make a better living and build communities using their mobile phones,” reads a statement on its website.
The company was founded by Alan Knott-Craig Jr, former CEO of iBurst and the son of legendary Vodacom CEO Alan Knott-Craig. World of Avatar has at least 13 investments including: boom.fm, a website that allows bands to upload their music and sell it directly to their fans; The Daily Maverick, a popular South African news site; and Shinka, an African-focused digital advertising network.
Last year the company, however, made its most high profile investment when it bought Mxit, a mobile communication platform with 50 million users across Africa. The company generates money from selling advertising and things like mobile phone wallpapers and ringtones. “The purchase of Mxit gives us the biggest social network in Africa. It provides a great platform to roll out a variety of mobile social media services,” said Knott-Craig in a recent interview.
But why a strange name like World of Avatar for what is otherwise a serious business? “It’s a catchy name, so we kept it,” says the company.