SA entrepreneurs sell R22 000 business to global giants for huge dollar figure
JOHANNESBURG - A small team of Cape Town entrepreneurs who invested R22 000 in 2006 to start up a fledgling business recently saw a phenomenal return on their founding capital when they sold their business to US based organisation Ecolab - a major global provider of technologies and services to the water, food, energy, healthcare, industrial and hospitality markets.
Lobster Ink, which is a pioneering technology platform that provides online training to the deskless workforce in the hospitality and tourism sector, was acquired by Ecolab for an impressive multiple on their annual $24 million turnover.
From small beginnings in South Africa, Lobster Ink has grown rapidly and has trained people digitally in 133 countries across 13 languages for the worlds largest and most luxurious hotel groups - from Africa to the Middle East and the US. Lobster Ink is now based in Geneva, Switzerland.
Fasie Malherbe, co-founder and President of Lobster Ink, explains that he and his business partners, Dale Den Dulk, Paul Rowett and Tim Nel, started Lobster Ink out of a desire to travel more and experience the best in hospitality while uplifting and developing skilled employees within the industry.
Together they came up with the idea of providing personalised and customised training to the hospitality staff in order to maximise the guest experience.
“Whether it was food, wine, housekeeping, guest relations etc. The focus was always performance and development, ensuring that a considerable return on investment was presented after every major initiative. We developed training modules for the relevant staff members and went out and conducted this training ourselves. It was centered around providing hospitality staff with the skills required to deliver on the luxury expectations of some of the worlds most discerning travellers.”
“The hospitality industry is one of the only industries where you can take someone with no experience off the street, or fresh from college, or out of the military and rapidly train them with the necessary skills to enjoy years of career success and growth.”
Malherbe, who was a chef and studied hospitality, says that many of the staff they trained in some of the most expensive tourist destinations in Africa had no previous experience in luxury hospitality. “Things like fine wine, for example, were like a foreign language.”
How technology took Lobster Ink to the world
It turned out that there was a huge need for the training provided by Lobster Ink, and things evolved from there. Lobster Ink went from face-to-face training into video production - developing video-based African focused versions of their training modules, which were loaded onto 27-inch Apple Mac screens that were then sent to clients all over the African continent for their use.
Following this, demand saw their product evolving to become mobile friendly and online based. “This was our break into the global space,” says Malherbe. “From there it was an upward trajectory and the business has grown to service over 1 million learners in more than 130 countries. The Lobster Ink training focuses on the five most important key elements in hospitality performance: the guest experience, increased sales, decreased costs, maximised talent and seat time. We connect disjointed workforces. We up-skill them with the expertise, knowledge, and behaviour that is 100% relevant to their job.”
Hard work and careful planning paid off
“Lobster Ink has had a number of lucky breaks along our journey - although we worked incredibly hard to make them happen. We had some big, audacious goals that were strategically targeted and planned and hard work and sales aggression helped us hit those targets.”
“The first pioneering clients who gave us our big break were Singita and Wilderness Safaris, both of whom made huge investments into the training of their teams. Then came City Lodge and Southern Sun and the like. Clients that followed included Hilton Worldwide, IHG, Four Seasons, Marriott Hotels and the International Hotel Group. After that came a major contract with Dubai Tourism to design a training program - ‘The Dubai Way’ - for anyone involved in tourism in Dubai – from taxi-drivers to bar tenders and everyone in between.”
Malherbe advises that Lobster Ink being acquired by Ecolab was neither luck nor chance but was a targeted strategy as Ecolab align 100% with the vision that Lobster Ink have, which is to enable potential in people. “Ecolab find solutions for the globe’s biggest problems – whether it is access to clean water, safe food, abundant energy, or a healthy environment. They are effectively the biggest business-to-business organisation on earth with over one million clients – MacDonald’s, the Marriott Hotel Group, and Walmart are examples of three of their clients.”
The future of education - online training versus traditional education
“Worldwide there is an enormous need for skills development, knowledge and behaviour training – particularly in the tourism sector,” says Malherbe. “However individuals don’t have the time or cash flow to be able to go to a college or a university to study for a full-time diploma or degree. They need to be able to get a job and rapidly learn the skills required for that job, on the job. This is where technology, such as the online training offered by Lobster Ink, enters and changes the traditional way of delivering training to the desk-less worker. It is also important that education evolves from a “one size fits all” approach. Content needs to be aligned with business and what it is that specific businesses require their employees to be able to do, while delivering on the strategic performance metrics for the business.”
Malherbe adds that it is not just about foundation skills for initial employment but also about up-skilling and remaining relevant in the face of constant changes within that particular industry. “Just look at the food industry for example – future trends point toward more and more meat being made in laboratories. The questions then need to be asked: what will the health and safety requirements be? What are the cooking requirements? Large-scale organisations such as Burger King, MacDonalds and hotel chains are going to need to incorporate this change into their day-to-day product delivery and hundreds of thousands of people will need to be trained.”
Re-enter apprenticeship programmes
“In line with online, on-the-job learning that allows employees to earn while they learn is the re-establishment of apprenticeship programmers in South Africa – such as they have in Europe currently. This allows young South Africans to start working, earning and learning at a young age. For example, overseas, young chefs are being trained from the age of 14. By the time they’re 19 or 20 they are qualified and experienced chefs and absolute gurus in their field. Apprenticeship programmes present a huge opportunity for young South Africans.”
Advice for SA Entrepreneurs – the time is NOW!
Malherbe is a serial entrepreneur with a history of business start-up successes. Lobster Ink is the third major business built from scratch before being sold for a solid return - with Malherbe also having founded the well-known Roundhouse Restaurant in Cape Town, as well as innovative beverage distributors Under The Influence.
With his extensive knowledge and experience on entrepreneurial success Malherbe provides some advice for SA entrepreneurs, saying that there is so much money available right now for good ideas, and that the time is now to get in before the large corporations find all the good ideas and come up with the disruptions. “On the global business stage there is more money available than ever before to invest in wild ideas. Wealthy individuals all across the globe all looking for the next great ‘get rich quick’ idea. This means that there are a lot of opportunities for entrepreneurs. But you need to go big or go home.”
“A R1 million investment into an entrepreneurial business in SA may sound like a large sum for a start-up, in rand terms. But if you take this amount to an investment meeting in London and ask for £60k the investors are not going to take you seriously - most of them probably have that amount in their current account and can’t take that business idea to an investment committee. But asking for a £1 million investment is very palatable - in fact, it’s a tiny investment for them, but a massive R18 million plus investment for the South African start-up.”
“I always tell young entrepreneurs that if we could do it – my business partners and myself – then anyone can. We took a risk, had nothing to lose and created a unique business idea that took off through focus and hard work. Get out there while the time is ripe and the opportunities present themselves,” concludes Malherbe.
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