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From Packer To CEO

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When multi-award winning US star, Drake, sang “started from the bottom now we’re here”, he must have had General Thembinkosi Mthembu in mind. He is the definition of starting from the bottom.

As we meet, he holds an Africa shaped trophy in hand. Just moments before, he gave a moving speech to a room full of Africa’s business leaders, receiving loud claps and adoration. He has just been named Industrialist of the Year at the the All Africa Business Leaders Awards (AABLA).

It is a long way from Umlazi, a township in KwaZulu-Natal (KZN), the province on the east coast of South Africa, where he was born. Growing up, life was tough. His father was an underpaid truck driver and his mother sold everything she could to supplement the income. It ushered in his first experience as an entrepreneur.

“I remember when I was going to school my mother would give me a packet of biscuits to sell during break time. I had no choice because my mother would say if you don’t sell there will be no money to buy your school uniform,” he says.

On weekends, he would sell fruit at the local railway station. Tough times at home meant after graduating high school, he went straight to work as a packer in a production line at Nampak Tissue where his father worked.

One day, while working the nightshift carrying heavy boxes of tissue, Mthembu broke down.

“The boxes of toilet rolls were very heavy. One of the managers found me crying. He asked me why, I then said to him for ‘how long am I going to do this?’ He said to me ‘if you want to stop doing this type of work, you need to go to university, then have office work’.”

READ MORE: The 60-Year-Old Industrialist

It is advice he took seriously. Although there was no money to go to university, it changed his life.

He noticed that he was always home at 3PM when working the dayshift. He says he wondered what he was doing with his time from then until bedtime at about 9PM.

It ushered in out-of-the-box thinking.

He noticed the clinic next to his home had no food truck.

“I started doing research to know what people would like to eat when visiting the clinic. I went there Monday to Friday asking questions and compiling a list. From there, I had a business plan written by hand,” says Mthembu.

The next week, on his way to work, he went to a bank to apply for a loan to buy a caravan. It worked. Business boomed and he had an employee to help while he was working at Nampak Tissue.

When time came for him to evolve, he bought a pickup truck, installed seats and used it as a taxi. In just two years, he had saved enough to buy a minibus which he operated as a taxi.

He didn’t stop there. In 1995, while still working at Nampak, Mthembu bought a petrol station.

“I would count money in the morning before going to work, take stock from the tanks [and] if I have to place orders I will order the supervisor to phone Shell to deliver petrol and diesel. I remember it was very difficult because I never had an account with Shell. Every time I needed stock I had to pay cash before they delivered,” he says.

At the time, his dedication had earned him a promotion to plant manager at the Durban Nampak plant. But it didn’t last. The plant was running at a loss. Everybody was retrenched and Mthembu was asked to move and manage the Pretoria plant.

“I could not see myself living in Gauteng. I was born in KZN and I don’t believe if you want to succeed you must move to Gauteng because you can progress anywhere as long you work towards your goals.”

It meant he was also retrenched along with about 70 other employees.

“After two weeks, Nampak came back to me and said ‘what about you buying these machines, converting the same product and selling back to them?’”

It was a good opportunity but a hard decision to make.

READ MORE: The Developer Who Quit His Job To Build An App

Mthembu knew the business had been running at a loss of R6 million ($465,000) per year. He also knew that he understood the operations side of the business, which could yield better profits. Before making a decision, he got help from a finance person to make sense of the opportunity.

It took them two months of punching the numbers before he signed on the dotted line. It was the moment, 12 years ago, Mthembu Tissue Converting was born.

After 24 years, he was now an owner and not an employee. It wasn’t easy.

“I tried to recruit people I worked with from Nampak. Most people did not want to join me. They were saying working for a black person will mean they will not get paid. Eventually though I managed to get 36 people,” he says.

It wasn’t the end of the battle. Suppliers Nampak had used for years also didn’t want to work with Mthembu.

“They did not want to do anything with me when I took over the business. They said to me I must make upfront payments before they deliver raw materials, which was so difficult. I was worried that the business might collapse and how I would pay staff in that event.”

Mthembu says he had to be very strict. For three years he worked with no salary.

The worst period came in 2006 when the products they sent to Nampak in Cape Town failed the compliance test. He lost R280,000 ($21,700) as the tissues had to be sold as rejects.

“This was the worst period. To correct this, I had to implement [a standards] system in the plant to prevent it from happening again… The biggest lesson in my entire journey was to be focused and have systems in the business that work well and to always follow business goals.”

In 12 years, Mthembu Tissue Converting, once the Durban Nampak branch, has grown from employing 37 people to 104 people, from making 400 tons of tissue to 750 tons, and operating at a loss of $465,000 to turning over $18.6 million.

Mthembu, like Drake, sure knows how to start from the bottom.

Entrepreneurs

Leaving Airplane Middle Seats Empty Could Cut Coronavirus Risk Almost In Half, A Study Says

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A new research paper from the Massachusetts Institute of Technology estimates that blocking out the middle seat on airplanes could cause the likelihood of passengers being infected with coronavirus to drop by nearly half, just as some airlines are starting to book flights to capacity again.

KEY FACTS

  • According to the MIT paper (which has not been peer reviewed) the chances of catching coronavirus from a nearby passenger on a full airplane when all coach seats are filled is about 1 in 4,300.
  • However, those odds drop to 1 in 7,700 when all the middle seats on board are left empty, the paper states.
  • Taking into account a 1% mortality rate according to the statistical model, the likelihood of dying from a coronavirus case contracted on a plane is far more likely than dying in a plane crash, which has odds of about 1 in 34 million, the paper stated. 
  • In “Covid-19 Risk Among Airline Passengers: Should the Middle Seat Stay Empty?” the author of the study, Arnold Barnett, wrote that his analysis aims to be “a rough approximation” of the risks involved in flying during the coronavirus pandemic.
  • “The airlines are setting their own policies but the airlines and the public should know about the risk implications of their choices,” Barnett told ZDNet this week.
  • The paper comes just as more flight carriers, like American Airlines, begin booking flights to full capacity despite surges of the virus across the country. 

KEY BACKGROUND

The coronavirus pandemic has been disastrous for the travel industry, and has especially hurt airlines. Major American carriers including American, Delta and United have asked employees to take buyouts and early retirement, Forbes reported, in a bid to cut costs as the pandemic causes them to bleed cash. United Airlines warned this week that it could be forced to furlough 36,000 jobs, or nearly half of its American workers, starting in October if travel doesn’t pick up. In April, the airline estimated that in the first quarter it lost $2.1 billion pre-tax, Forbes reported, and was losing $100 million a day in the last half of March. Boeing CEO Dave Calhoun said in May he expects a major airline to go out of business in 2020 as a result of pandemic pressure.

NEWS PEG

American Airlines announced two weeks ago it would begin booking middle seats again starting in July, although the carrier will allow passengers to switch from a full flight without any extra cost, Forbes reported. United is also selling tickets for middle seats. American Airlines took flak earlier this month when Sen. Jeff Merkley (D-Ore.) tweeted a picture of his crowded flight

WHAT TO WATCH

If airlines continue to extend their policy of keeping middle seats blocked off or if they’ll be forced to book to capacity to turn a profit. Southwest and Delta have both committed to keeping their middle seats blocked off until at least the end of September, while JetBlue will do the same through July, according to the Washington Post.

Carlie Porterfield, Forbes Staff, Business

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From The Arab World To Africa

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Sheikha Hend Faisal Al Qassimi; image supplied

In this exclusive interview with FORBES AFRICA, successful Dubai-based Emirati businesswoman, author and artist, Sheikha Hend Faisal Al Qassimi, shares some interesting insights on fashion, the future, and feminism in a shared world.

Sheikha Hend Faisal Al Qassimi wears many hats, as an artist, architect, author, entrepreneur and philanthropist based in the United Arab Emirates (UAE). She currently serves as the CEO of Paris London New York Events & Publishing (PLNY), that includes a magazine and a fashion house.

She runs Velvet Magazine, a luxury lifestyle publication in the Gulf founded in 2010 that showcases the diversity of the region home to several nationalities from around the world.

In this recent FORBES AFRICA interview, Hend, as she would want us to call her, speaks about the future of publishing, investing in intelligent content, and learning to be a part of the disruption around you.

As an entrepreneur too and the designer behind House of Hend, a luxury ready-to-wear line that showcases exquisite abayas, evening gowns and contemporary wear, her designs have been showcased in fashion shows across the world.

The Middle East is known for retail, but not typically, as a fashion hub in the same league as Paris, New York or Milan. Yet, she has changed the narrative of fashion in the region. “I have approached the world of fashion with what the customer wants,” says Hend. In this interview, she also extols African fashion talent and dwells on her own sartorial plans for the African continent.

In September, in Downtown Dubai, she is scheduled to open The Flower Café. Also an artist using creative expression meaningfully, she says it’s important to be “a role model of realism”.

She is also the author of The Black Book of Arabia, described as a collection of true stories from the Arab community offering a real glimpse into the lives of men and women across the Gulf Cooperation Council region.

In this interview, she also expounds on her home, Sharjah, one of the seven emirates in the UAE and the region’s educational hub. “A number of successful entrepreneurs have started in this culturally-rich emirate that’s home to 30 museums,” she concludes. 

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Kim Kardashian West Is Worth $900 Million After Agreeing To Sell A Stake In Her Cosmetics Firm To Coty

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In what will be the second major Kardashian cashout in a year, Kim Kardashian West is selling a 20% stake in her cosmetics company KKW Beauty to beauty giant Coty COTY for $200 million. The deal—announced today—values KKW Beauty at $1 billion, making Kardashian West worth about $900 million, according to Forbes’estimates.

The acquisition, which is set to close in early 2021, will leave Kardashian West the majority owner of KKW Beauty, with an estimated 72% stake in the company, which is known for its color cosmetics like contouring creams and highlighters. Forbes estimates that her mother, Kris Jenner, owns 8% of the business. (Neither Kardashian West nor Kris Jenner have responded to a request for comment about their stakes.) According to Coty, she’ll remain responsible for creative efforts while Coty will focus on expanding product development outside the realm of color cosmetics.

Earlier this year, Kardashian West’s half-sister, Kylie Jenner, also inked a big deal with Coty, when she sold it 51% of her Kylie Cosmetics at a valuation of $1.2 billion. The deal left Jenner with a net worth of just under $900 million. Both Kylie Cosmetics and KKW Beauty are among a number of brands, including Anastasia Beverly Hills, Huda Beauty and Glossier, that have received sky-high valuations thanks to their social-media-friendly marketing. 

“Kim is a true modern-day global icon,” said Coty chairman and CEO Peter Harf in a statement. “This influence, combined with Coty’s leadership and deep expertise in prestige beauty will allow us to achieve the full potential of her brands.”

The deal comes just days after Seed Beauty, which develops, manufactures and ships both KKW Beauty and Kylie Cosmetics, won a temporary injunction against KKW Beauty, hoping to prevent it from sharing trade secrets with Coty, which also owns brands like CoverGirl, Sally Hansen and Rimmel. On June 19, Seed filed a lawsuit against KKW Beauty seeking protection of its trade secrets ahead of an expected deal between Coty and KKW Beauty. The temporary order, granted on June 26, lasts until August 21 and forbids KKW Beauty from disclosing details related to the Seed-KKW relationship, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”

Coty has struggled in recent years, with Wall Street insisting it routinely overpays for acquisitions and has failed to keep up with contemporary beauty trends. The coronavirus pandemic has also hit the 116-year-old company hard. Since the beginning of the year, Coty’s stock price has fallen nearly 60%. The company, which had $8.6 billion in revenues in the year through June 2019, now sports a $3.3 billion market capitalization. By striking deals with companies like KKW Beauty and Kylie Cosmetics, Coty is hoping to refresh its image and appeal to younger consumers.

Kardashian West founded KKW Beauty in 2017, after successfully collaborating with Kylie Cosmetics on a set of lip kits. Like her half-sister, Kardashian West first launched online only, but later moved into Ulta stores in October 2019, helping her generate estimated revenues of $100 million last year. KKW Beauty is one of several business ventures for Kardashian West: She continues to appear on her family’s reality show, Keeping Up with the Kardashians, sells her own line of shapewear called Skims and promotes her mobile game, Kim Kardashian Hollywood. Her husband, Kanye West, recently announced a deal to sell a line of his Yeezy apparel in Gap stores.

“This is fun for me. Now I’m coming up with Kimojis and the app and all these other ideas,” Kardashian West told Forbesof her various business ventures in 2016. “I don’t see myself stopping.”

Madeline Berg, Forbes Staff, Hollywood & Entertainment

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