Karlie Kloss is sitting in a glass-walled SoHo office holding court with five teenage girls. Over video chat with several more, they are brainstorming how to support scholars of Kode With Klossy once class is out. The teenagers are all graduates of Kode With Klossy summer camps, an initiative by Kloss’ education nonprofit that aims to teach girls the basics of computer programming.
In her off-duty uniform of a Planned Parenthood T-shirt, black jeans and Gucci loafers, the 6’2″ supermodel listens intently. One young woman wearing a white Kode With Klossy top suggests a custom app for students to communicate through. Kloss nods and encourages more ideas. Perhaps Kode With Klossy could upload lesson videos for scholars to look back on, or start a newsletter with events and internships. Another girl in glasses says she posts tricky coding problems on Snapchat and scholars from her camp offer solutions.
As the meeting concludes, Kloss hugs the girls before rallying them to put their hands in for a cheer. “Klossy Posse!” they shout in unison.
A 36-time Vogue cover girl is an unlikely candidate to launch a charity that has taught more than 500 young women how to code. But the 25-year-old has leveraged her giant social audience – some 12.6 million followers across platforms – to grow a burgeoning nonprofit that aims to balance the scales of software engineering’s gender disparity.
“I didn’t go into this with the plan to build an education nonprofit,” says Kloss, a member of the 30 Under 30 Class of 2018, over vegan cupcakes and cookies in her Manhattan office. “I really went into all this out of my own curiosity of wanting to learn what the heck coding was, because it was building massive enterprise value for people in a short period of time.”
Her first taste came in 2014, when she signed up for a two-week boot camp at adult-education company the Flatiron School in Manhattan to learn the basics of computer programming. “I didn’t actually know who she was,” says Avi Flombaum, cofounder of the Flatiron School, who taught Kloss’ class. “She was the best student in that group and I was surprised by how enthusiastic she was.”
Kloss covered the basics of Ruby on Rails, a popular web development framework. But she quickly noticed that her classes weren’t gender equal, an imbalance that mirrored the tech workforce. “I was curious, why are there not more women in this space?” recalls Kloss. An idea for how to help took form: “I realized, here I am with this platform and reach to young women across the country and around the world,” Kloss explains. “If I could just help a handful of girls that would be really meaningful.”
In 2015, Kloss spent more than $20,000 to personally underwrite 21 scholarships for teenage girls to the Flatiron School’s two week pre-college coding class – the very class she had taken the year prior (Flatiron School matched the donation).
But she was itching to do more. Last summer, Kloss took the initiative in-house, launching her own two-week summer camp for teenage girls aged 13 to 18 in New York, Los Angeles and her hometown of St. Louis. Kloss helped pick candidates, design the curriculum and select teachers; its graduates have gone on to win hackathons and land places at Ivy League universities. In June, the program expanded to 12 cities across the U.S., with plans to grow further.
Adults are also included: Last July Kloss launched a year-long online scholarship with the Flatiron School that selected one woman every month to enroll in its full stack web development course. And while other nonprofits with similar missions, such as Girls Who Code and Black Girls Code, are far more established, Kloss’ reach brings her objective to millions.
To date, funding for Kode With Klossy programs has come from Kloss herself and the brands she poses for. According to a familiar source, Kloss has personally contributed into seven figures to Kode With Klossy since 2015. She has also redirected a slice of her modeling contracts with companies such as Adidas, Swarovski and Express to fund and support Kode With Klossy. Ford’s STEAM Experience — an initiative focused on science, technology, engineering and mathematics disciplines as well as the arts, part of the car maker’s philanthropic arm — lent additional support to this summer’s camps.
Such initiatives are sorely needed. Half a million more jobs related to computers are expected to be added by 2024. Though 74% of high school girls are interested in STEM, women only earned 18% of all undergraduate computer science degrees in 2015. That impacts employment, especially among minorities: Women made up just over a quarter of the tech workforce last year, though African-American women comprised a mere 3% and Latina women counted for only 2%.
“There are so many young women who really could change the world with this kind of opportunity, girls who self-select out because they don’t see others in the industry that look like them,” says Kloss.
The daughter of an emergency room physician, Kloss’ favorite subjects as a child were math and science. Had she not been discovered at a charity fashion show in a mall, aged 13, she might have become a doctor or a teacher, she says. Instead, she booked her first advertisement in 2007; that same year she landed her first major runway show, walking for Calvin Klein.
Her career quickly took off, but it went into overdrive with the advent of Instagram. Thanks to social media, says Kloss, “I could be seen as well as heard.” As her followers swelled, her fees increased. She premiered on Forbes’ highest-paid models list in 2014 banking $4 million pretax; this year, her contract earnings soared to $9 million in the 12 months prior to June 2017.
“When social media arrived, models came back into the spotlight because now everyone could see what was behind the velvet rope,” says Maja Chiesi, SVP at IMG Models, the agency that represents Kloss. “The next evolution is brands wanting the full, 360-degree sense of who these women are… They want women with a voice.”
Enter Kloss, who has long presented herself as more than just a pretty face. In 2012, she started a charitable cookie line called Klossies with Manhattan dessert spot Momofuku Milk Bar; the treats donated to meals for children with each purchase. After taking the odd night class at New York University, in 2015 she enrolled (mentor and supermodel-turned-philanthropist Christy Turlington wrote her recommendation letter). With her busy schedule, she has opted for approximately one class a semester, so far notching credits in creative writing and feminism.
She is eager to expand her platform through a YouTube channel, launched in 2015, that documents her travels and baking forays. Next up: A talk show, Movie Night with Karlie Kloss, airing on the Disney-owned Freeform in December.
All of it serves to raise awareness for Kode With Klossy. As she focuses on the nonprofit, she has pared down her modeling contracts to the most lucrative partnerships. Today, says Kloss, she works with “partners that really are excited to work with me because of not just what I look like, but because of what I stand for.” It makes sense that her bookings have shifted from conventional beauty and fashion to tech; she can be seen in recent advertisements for electronics giant Samsung and website builder Wix.
For now, the aim is to grow quickly and cost-effectively. “I’ve been thinking about Kode With Klossy like a startup,” says Kloss. The nonprofit’s team is lean, with Kloss, her manager, business partner and SVP of SB Projects Penni Thow, five full-time employees and consultants plus help from three members of her management.
And, Kloss says, she is just getting started.
“I plan on building a big business at some point, too.”
Startups, you’re on notice.
– Written by ,
The Tall Lawyer, Investor And Philanthropist In A Power Suit
Aluko & Oyebode, Nigeria’s formidable commercial law firm, at No.1 Murtala Mohammed Road in Ikoyi, Lagos, Nigeria, is unusually empty for a Saturday.
It gives one enough time to admire its plush interiors. Describing it would be taking a page out of a John Grisham novel.
The imposing building houses three floors of prime real estate in the heart of the city and on one of the most expensive strips in Lagos.
As you walk in, the blood-red walls are juxtaposed with grey metallic fixtures and fittings. The décor of the building is reminiscent of past cultures of various African countries.
Each floor is delightfully curated with Afro-centric artefacts and in the middle floor of the building is the firm’s seat of power, the office of its leader, Gbenga Oyebode.
For a sweltering Nigerian afternoon, Oyebode is dressed like no other in a 100-mile radius of the elite Victoria Island hub of Lagos: in a two-piece power suit, his signature outfit. Today, it is in black, accented by a deep blue tie.
Oyebode is cordial and pleasant with the team as he takes his position on the ground floor for the first set of pictures for the FORBES AFRICA cover.
He is the Chairman of Aluko & Oyebode, one of the largest integrated law firms in Nigeria with over 70 lawyers and three offices in Lagos, Abuja and Port Harcourt.
The firm provides a comprehensive range of specialist legal services to a highly diversified clientele including top-tier Nigerian, international and multinational clients. In his capacity as chairman, Oyebode coordinates the various practice areas of the firm.
Described as a consummate dealmaker who has received plaudits from clients and peers alike for his corporate acumen, Oyebode’s areas of expertise cover energy and natural resources, power projects, foreign investment and privatization, telecommunications and project finance.
It is not just his formal dressing that is unusual.
Law firms in the country, family-owned by tradition, almost never run their firms like well-oiled machines providing solutions for several sectors at the same time. Oyebode was one of the pioneers of this concept. And it has not been an easy journey.
“It exposed me to these great minds I read about in the The Wall Street Journal and The New York Times and I said very quickly to myself that I wanted to be like them,”
The 59-year-old spent the early years of his life musing over the promises of life in the civil service, a path taken by his father. It was a stable and comfortable job and one had guaranteed employment as well as a good salary. But he was compelled to ponder the possibilities of a riskier career.
“In those days, being a civil servant was the dream of every young person due to the stability of the job. However, as I started reading law, it became clear to me that I wanted to be an entrepreneur and for a lawyer that means opening a law firm,” says Oyebode as he takes a break from the photoshoot to begin our interview.
And that is exactly what he did. But not just any law firm, he wanted to leave behind a dynasty of great lawyers whose work would carry on long after he was gone.
If he had worked for any Nigerian law firm, his future would not have been guaranteed.
“The history of Nigerian law firms in the early 80s and some of them today was that they were set up by great minds essentially to be kept in the family. Their children went to law school and even if you were a great lawyer who worked with them, they make it very clear that you shouldn’t be thinking about your future at the law firm, because they were going to hand over the business to their children. So I understood that it was not going to work for me,” says Oyebode.
At well over six feet, Oyebode has a towering presence in any room, yet his calm and cordial disposition immediately sets you at ease and makes you feel as though you are having a conversation with an old friend.
Sitting in the conference room of his eponymous firm, Oyebode recalls a series of events that shaped the course of his career.
Like the time he was going to university and struggled to get guidance from mentors who would have advised him on the best path to take to become a successful legal entrepreneur.
The prominent Nigerian lawyers at the time were not strictly lawyers who worked at the firm but were mostly also involved in other professions.
According to Oyebode, the earliest nationalists of Nigerian politics were all lawyers, who used the law that they had learned abroad to change the system in Nigeria to gain independence and push the envelope against colonialism.
That would later become the real motivation for Oyebode to become a lawyer. For him, the ability to use law to change the political system with democracy or creating value was a calling he wanted to be a part of.
After graduating from the University of Ife in 1979, he immediately went to the Nigerian Law School and thereafter, completed his postgraduate degree at the University of Pennsylvania (UPenn) in the United States (US).
“What UPenn did for me was show me that there was a different way to do things and that the world was bigger than the opportunities I had in Nigeria. One of the most significant things about going to an Ivy League institution is how they draw from great minds around. So we went to conferences where great minds in the capital markets were and it was a game-changer. It exposed me to these great minds I read about in the The Wall Street Journal and The New York Times and I said very quickly to myself that I wanted to be like them,” recalls Oyebode.
His journey is a textbook case study on how to systematically build a business step by step. He eschews convention. From the minute he finished primary school, his father signed up to a subscription of Reader’s Digest that was to become his monthly diet.
“He thought that it was important for us to read. He said it was important for us to understand what happened around the world. So one of the things that I do continually even today is I read the Reader’s Digest every month. It shaped my view of the world and created for me a situation where I learned more about the things that were happening around me and I was not limited to Nigeria,” says Oyebode.
His tenure as an associate at White & Case, one of the world’s leading law firms, helped him visualize the type of law firm he wanted to build of his own.
“American law firms were the type of law firms I thought we could replicate in Nigeria. Their vision for building big partnerships and for those partnerships to survive named partners was impressive. So it was very clear where I wanted to go and what I wanted to do. I worked with White & Case for a year and I said to myself it was time to come back home,” says Oyebode.
Home had changed a whole lot while he was away. Nigeria had returned to democracy after years of military rule. The business environment was growing and there was a need for competent people to push the envelope and help with the development of law and business.
Furthermore, there were less than 10,000 lawyers admitted to practice law and Oyebode decided he would rather be one of 10,000 in Nigeria than one of a million in the US.
Soon after making that decision, disaster struck. No sooner had he returned to Nigeria did the crude oil market collapse and the Nigerian economy took a dip for the worse. The democratic government that had motivated Oyebode to come back was very quickly removed in a coup d’état in 1983.
“Before we knew it, the [Muhammadu] Buhari government was in power. To make matters worse, the naira had collapsed and the country was looking at a structural adjustment program with the World Bank. So contrary to my plans, things changed very quickly. I couldn’t go back to the US and I had to make do with things in Nigeria,” says Oyebode.
But where there are clouds, there is also a silver lining. Oyebode chose to keep faith and stick it out. He applied to work for the Gulf Oil Company, which later merged with Chevron, and spent two years learning about the oil and gas industry.
“That was very instructive because it gave me an opportunity to work in an industry, which was Nigeria’s biggest foreign exchange earner. I essentially cut my teeth working in Nigeria’s oil industry. I saw through the merger of Gulf and Chevron and then decided it was time to go out and do my own thing.”
In 1985, Oyebode went into partnership with friends and started his first law firm
Ajumogobia, Okeke, Oyebode & Aluko. After eight years of success, the firm was dissolved due to internal challenges. The string of such incidents, be it the country’s economic downturn or disagreements with partners, have all contributed to the success story Oyebode is today.
“What is impressive about Oyebode is his calmness and composure in times of crisis. He has the ability to look beyond that problem and says ‘how do we move on from this and get to the solution’,” says Tunde Folawiyo, Managing Director of Yinka Folawiyo Group in Nigeria.
That steadfastness has been an invaluable trait for Oyebode over the years.
He went on to establish Aluko & Oyebode with his other partner. Perpetual wins translated into mammoth personal gains for the legal mastermind.
Oyebode’s is also the story of a smart entrepreneur who, spurred by the increase in the proliferation of Western companies in Nigeria, spotted an opportunity in corporate law and has methodically worked to cash in on it.
He is currently advising on the Brass LNG Project, a joint venture between NNPC, TOTAL, Conoco Philips and Agip for the construction of a $3.5 billion Liquefied Natural Gas plant. He has also advised on key transactions like the $1.275 billion financing of the Exxon Mobil Natural Gas Liquid II Project, the $1.06 billion financing of trains four and five of the Nigerian Liquefied Natural Gas Plant Expansion Project and the $3.5 billion financing of the NNPC and Mobil Producing Unlimited Satellite Oil Field Project. He sits on the boards of MTN Nigeria, Nestle Nigeria and CFAO, among many others.
“Corporate law was something I was good at. It’s something that is dependent on your network and it is something that comes naturally to me. At White & Case and at Gulf Oil, that was my forte. I had invested a significant amount of my time around that so I was able to very quickly develop as a good oil and gas lawyer,” says Oyebode.
His wife, Aisha, attests to this. “What I admire most about Gbenga is he is very kind and warm and he is a people’s person. I do not know anybody that doesn’t like Gbenga.”
It was what Oyebode did next that distinguished him from his peers.
“One of the people that I studied a lot was Chief Chris Ogunbanjo. He ran the biggest law firms in town and was a lawyer who represented all the multinationals and was a lawyer who got involved in the businesses he represented. So when I came back [to Nigeria], I saw his model as one that I could emulate. I saw that he was able to achieve his objective, which was essentially run a significant law firm and become the advisor of the biggest corporates in the market as well as the repository of knowledge of what it means to work in Nigeria,” says Oyebode.
And that was to become Oyebode’s operating style over the next two decades. His modus operandi was simple.
Find opportunities, which he could maximize, and provide professional services and legal advice to top-tier corporate clients and where there was an opportunity, take a chunk of the business.
“One of the things as an entrepreneur that you tend to look at is opportunities around you, so long as those opportunities don’t divert your from your chosen path. If you ask me what I want to be known as, I would say a lawyer first, then an investor,” he says.
Oyebode sits on boards of companies that he has invested in as well as boards that he has been invited to join due to his significant expertise in corporate Nigeria.
The last two decades have seen a veritable boom in the business. For Oyebode, the key is passion for what you do.
“I am driven to build a big firm. We have 85 associates in three offices. There are 16 partners in the firm across the different practice areas that you expect a full service law firm to have, from legislation to corporate law to intellectual property, to risk and governance. So these are all key sectors that are sectors for growth of the Nigerian economy. The rationale is building a legacy that is driven by return,” says Oyebode.
Ever the opportunist, Oyebode is also looking to capitalize on the growth in demand of global companies looking for local partners in the real estate sector. He has a two-hotel deal with the Fairmont Group to establish hotels in Lagos and Abuja. Given the size in the number of tourists and business people in the country, Oyebode believes there is tremendous growth opportunities in this sector.
“The view is that there is still a gap around the hospitality business in Lagos. I go to Accra and I see the Kempinski and Movenpick hotels and I know that if Accra can do it then Lagos certainly has significant scope to develop hotels. Abuja only has the Hilton.”
But it has not all been smooth sailing. No sooner had he started his second stint at a law firm that tragedy struck.
“Life is about tripping and falling and learning from mistakes, pulling your strengths and moving on. My partner, Bankole Aluko, had a mild illness and called in sick for a couple of days. I decided to pay him a visit after work and on my way there, I was told he had passed away suddenly. It was a big shock because we had built everything together and most of the lawyers that joined us did so because of our strength as a firm. I had the corporate law expertise and he was a litigation expert. I thought it was all over at the point,” says Oyebode.
It was dark times for Oyebode.
“In those days it was very difficult to get clients. They came to you because they knew you and your reputation so it was very personality-driven. Today, clients look at your brand and your track record. So losing Bankole both as a dear friend and a professional was devastating.”
He vowed to continue the legacy they had started together and leave his name on the business as a named partner, which still stands today. These days, Oyebode is more interested in giving back. He mentors the next generation and is finding ways to give back. He has also turned his attention from corporate boards to philanthropy boards and actively seeks out opportunities to contribute to the community.
On the issue of Nigeria’s Economic and Financial Crimes Commission’s (EFCC) fight to retrieve Nigeria’s stolen loot, which is estimated to be billions of dollars from state coffers, Oyebode offers some practical advice.
“My concern about Nigeria is not the lack of law or policy but always about execution. I think we have a robust legal system, we have laws and policies in place and we have a strong civil service. Do people obey the law around the world? Yes, and that is because they are afraid of sanctions. So if you do not obey the law or sanctions, then you pay the price. So our problem is a lack of execution of good policy, inconsistent application of the laws and sometimes, we have allowed federal character and the process of rotating positions to trump skill and expertise so therefore mediocrity is able to rise to the very top.”
But that is an ongoing fight, which Oyebode believes will not be solved overnight. Presently, his focus is on leveraging his expertise as one of the most formidable and accomplished legal minds to add value and give back to Nigeria.
His legal firm is a victim of its own success. And this is a happy problem to have.
Herbert Wigwe, the CEO Access Bank, one of Nigeria’s top banking institutions, calls Oyebode one of the strongest legal minds, not just in Nigeria but also across the world.
“And I say this because I have a strong personal relationship with him, apart from the fact that in Nigeria, he runs the strongest corporate law office. The existence of what is a modern Access Bank would never have happened but for people like Gbenga….All of these attributes have led him to sit on most of the large corporate boards in the country…Saying Gbenga is the new face of business in Africa is not something that is far-fetched; it is something that he has proven over and over again in his career.”
Here’s Why Jeff Bezos Is Not Truly The Richest Person In History
Amazon, the global e-commerce behemoth, has brought incomparable scale to online retailing. In turn, it has brought incomparable wealth to its founder, Jeff Bezos.
As of Monday’s market close, Bezos was worth more than $104 billion, making him the world’s richest person—at least when not factoring in inflation—since Forbes began tracking global wealth 30 years ago. In two years, his net worth has risen over $50 billion, more than the gross domestic product of Iceland, Belize or Monaco over the same period.
Yet Bezos is not truly the wealthiest person ever, despite numerous reports to the contrary. On an inflation-adjusted basis, Bill Gates has previously been worth far more. In April 1999, for instance, Gates’ net worth eclipsed $100 billion for the first time when Microsoft shares topped out at the apex of the dot-com bubble. That fortune would be worth roughly $150 billion in today’s dollars.
Gates, who is now worth an estimated $92 billion, would also be far richer if he had not given about $36 billion of Microsoft stock to charity over time, mostly to the Bill and Melinda Gates Foundation, the planet’s largest private philanthropic foundation.
Bezos’ fortune is nonetheless staggering, and he may well top the list of The World’s Billionaires for the first time when Forbes unveils the 2018 ranking in March. Unless Amazon’s share price unexpectedly collapses, he will have the highest-ever net worth of anyone to appear on the ranks, and by a wide margin.
For context, here are the top members of Forbes‘ list of The World’s Billionaires in each of the last 20 years. Also included are their net worths adjusted for inflation through November 2017, based on the most recent data available from the Bureau of Labor Statistics.
Name: Bill Gates
Net worth: $86 billion
Net worth adjusted for inflation: $87 billion
Name: Bill Gates
Net worth: $75 billion
Adjusted for inflation: $77.7 billion
Name: Bill Gates
Net worth: $79.2 billion
Adjusted for inflation: $82.7 billion
Name: Bill Gates
Net worth: $76 billion
Adjusted for inflation: $79.3 billion
Name: Carlos Slim Helú
Net worth: $73 billion
Adjusted for inflation: $77.4 billion
Name: Carlos Slim Helú
Net worth: $69 billion
Adjusted for inflation: $74.2 billion
Name: Carlos Slim Helú
Net worth: $74 billion
Adjusted for inflation: $81.7 billion
Name: Carlos Slim Helú
Net worth: $53.5 billion
Adjusted for inflation: $60.6 billion
Name: Bill Gates
Net worth: $40 billion
Adjusted for inflation: $46.4 billion
Name: Warren Buffett
Net worth: $62 billion
Adjusted for inflation: $71.6 billion
Name: Bill Gates
Net worth: $56 billion
Adjusted for inflation: $67.3 billion
Name: Bill Gates
Net worth: $50 billion
Adjusted for inflation: $61.7 billion
Name: Bill Gates
Net worth: $50 billion
Adjusted for inflation: $63.8 billion
Name: Bill Gates
Net worth: $46 billion
Adjusted for inflation: $60.6 billion
Name: Bill Gates
Net worth: $40.7 billion
Adjusted for inflation: $54.5 billion
Name: Bill Gates
Net worth: $52.8 billion
Adjusted for inflation: $72.8 billion
Name: Bill Gates
Net worth: $58.7 billion
Adjusted for inflation: $82.2 billion
Name: Bill Gates
Net worth: $60 billion
Adjusted for inflation: $86.5 billion
Name: Bill Gates
Net worth: $90 billion
Adjusted for inflation: $134.6 billion
Name: Bill Gates
Net worth: $51 billion
Adjusted for inflation: $77.6 billion
Bank On This Man
Business in Africa has never been rougher, drop your guard for a second and chances are the new kid on the block will poleaxe you with a right hook. Just ask entrepreneur Adrian Gore, the founder of the $6.5-billion Discovery Limited, who built his empire by turning the health insurance industry on its head.
Now Gore has set his right hook on the banking industry with the launch of a $105-million bank. Just another day in the life of a man who takes a look at a market to see how he can disrupt it.
“It’s been a remarkable 25 years. It doesn’t feel like it. If you build a business and find the organization ages better than you do, then Discovery feels brand new… We are always immersed. No one is sitting here in the boardroom drinking cognac thinking about the past. We are humble because we are building, it’s like day one here,” says Gore.
Gore is seen as an innovator in Africa with plenty to say. This vision has seen the self-taught entrepreneur, and actuary by profession, work his way to a $522 million fortune. It’s a far cry from 1992 when Gore was the hungry new kid on the block tying on his gloves in the far corner.
“It started out as this anecdotally opportunistic idea, and as soon as we did it we knew, s*** this is big. This has got great potential.”
The key to Gore’s success was the idea to reward people for looking after their bodies.
“Health and life insurance are typically grudge purchases. Our fundamental success in this market has been making health insurance sexy, cool, accessible and different,” says Gore.
These days, one in every three South Africans put their money down in the hope of reward. It’s made Discovery the largest supplier of medical aid in the country.
This is just the beginning of a global network that has expanded into 16 countries, including the United Kingdom, United States, Singapore and Australia. Ultimately it leads to one thing: making 10 million people healthier by 2018.
“I believe that it is often during moments of difficulty that the best ideas emerge. Times of crisis can often lead to progress, and hard economic times can be a catalyst for positive change. When we started Discovery in 1992, the country was in a state of political turmoil. We saw an opportunity to create a business that could positively impact the healthcare system and we found a way to move forward.”
BANKING ON DISRUPTION
If you want to bank on something, it should be on Discovery disrupting business. Now Gore believes he can do the same in banking.
“We don’t disrupt for the sake of it. We don’t sit and think ‘how do you disrupt?’ Most markets are not based on behavioral issues. They are not based on the model we’ve developed, so when we come in and we do it right it, by nature, is disruptive,” says Gore.
In 25 years, Discovery’s share price on the largest bourse in Africa, the Johannesburg Stock Exchange, has gone from R10 ($0.70) to almost R150 ($10.40) – an inflow of shareholders’ money that is helping Discovery Bank Limited take advantage of its new banking license. It could be open as early next year pending the Competition Commission’s approval.
“We’ve never made an acquisition here, everything here has been organic. We’ll probably invest, in total, by the launch, R1.5 billion ($105 million). It’s a considerable build,” says Gore.
In Africa’s economically challenging times, everyone is looking for better ways to save their hard-earned bucks.
“We’ve been working on it for two years now, with a good team and very strong people… it’s not an easy thing to do. I’m not sure there is an excellent time to do it. I think it will take a decade long to develop something that has materiality in that space… We came to the conclusion, given our technology and being given the ability to start our own legacy, we said let’s start it slower and proper.”
Gore is playing his cards close to his chest. He has said little about how he intends to integrate banking with his other businesses. What we do know is that he will set his sights on the rising middle class.
At the center of it all is his team of Apple-watch-wielding actuaries, who will also need to come up with something so that the business can stand out in the crowd. It’s a tough crowd too. The territory is already held by heavyweight banks who’ve been there for generations, like Standard Bank, Absa, FNB, Nedbank, and Investec. They also want to modernize and make use of big data.
“We’re not going into a weak market where the banks are useless, that they need to be shaken up. I don’t believe that at all. My sense, anecdotally, I think they are worried. I think they think we will be disruptive. I think they have a healthy respect for us. But there is no panic here. No hubris here,” says Gore.
“We’re going to target the mass affluent. We’re going where our customers are. So it’s pretty broad. It goes from a fairly low LSM to a high one. Our approach is not to focus on [the banks]. We need to focus on our customers.”
The bank has got a lot of people talking. As South Africa grapples with its rocky economy, that faces possible ratings downgrades which could send stock prices tumbling, the markets are looking for something to shake things up, says Michael Treherne, a portfolio manager at Vestact.
“The banking sector is ready for disruption. Capitec has done this for the lower LSM customer base and Discovery will be looking to use their huge database on behavior traits to disrupt the top-end LSM. As the saying goes though, the proof is in the pudding,” says Treherne.
“They offer a product that is unique globally. Their massive database is the moat between them and competitors. Also, their white-labelling strategy of selling their intellectual property and not needing to put in capital upfront means they can grow very quickly.”
Over the long term, Treherne believes Discovery will be able to weather the storm.
Another market commentator, Chantal Marx, Head of Research at FNB Securities, also backs the company.
“[Gore] is the ideal guy to be at the front of the businesses challenging the status quo and changing the face of insurance…They have revolutionized the way companies see their clients. I think they will compete with banks like Investec and the private banking offerings by the big four. If they can get people to be sticky and put their entire financial portfolio together, it’s where Discovery will make their money.”
The only problem, Marx says, is Discovery is seen as pricey.
“The expectation of growth relative to someone like Sanlam doesn’t justify the premium. But I think investors are willing to pay a little bit more for their innovation slant.”
Meanwhile, Gore backs himself by having no investments other than his shares in Discovery.
From a young age, Gore learned business by doing.
“Ironically [my father] was a tobacconist wholesaler. He would sell cigarettes and candies between wholesalers and stores. I remember as a kid having to pack cigarettes, I remember all the brands, Lexington and Rothmans, and having to take them out to the café owners. It was actually an interesting business because as time went on the margins got squeezed and wholesalers started supplying to businesses directly.”
“[My father] is essentially an academic at heart. He hated business. When he retired he went and did a bunch of degrees. He never stopped learning, so I grew up with a belief that knowledge and learning is more important than anything.”
From his mother, Gore learned to push himself towards the intellectual forefront. He grew up in a household where discussions around the dinner table involved questioning the ‘way things are’.
“You never kind of accepted that that was how it is and that’s the way it’s expected to be. In my own journey, my own career, it’s been one of my biggest assets; don’t take things at face value. I just don’t.”
“My parents are not essentially commercial people. They are not excited by scale or profit. They are excited by values and doing good,” says Gore.
BUILDING ON BEHAVIOUR CHANGE
Building healthy lifestyles has been the key to Discovery’s success. Under Vitality’s Shared-Value Insurance model, Discovery rewards clients that regularly go to the gym, eat their vegetables and do their medical checkups. Clients are then given free smoothies and discounts on healthy food, cheap flights, and Apple watches.
The model was born in 1992, when the Health and Racquet Group, who later became Virgin Active, approached Gore to see if they could cross-sell into their base. Gore and his team came back and said why don’t we give people health miles and reward them for living healthier lifestyles with discounted memberships.
“Discovery’s entire investment case is premised on that one brilliant original idea which is Vitality. If you look at Vitality, what it basically did was revolutionize the way insurers look at their clients and the way they made risk on their book… What Vitality did is essentially place the risk management outside of the company and what the actuaries do and put it in the hands of the insurers they are insuring,” says Marx.
“Suddenly they have a better persistence; people aren’t lapsing their policies or moving around. They’ve got sticky clientele who are living longer, happier lives. So, the amount of claims they have to pay out are less on the medical health side and on the life insurance side the longer someone stays alive the better it is for the company, because they can continue to invest and build on their investments.”
Two aspects enabled the success of the model, says Gore. The first is technology, the second is understanding risk is behavioral.
What Vitality has become is unexpected. Gore says it is now the world’s largest scientific, incentive-based wellness solution – this is all thanks to terabytes of data its users send every time they update their apps.
Vitality Active Rewards has found that those that use the app increase their exercise levels on average by 24%, and those using Apple Watch increase their activity sustainably by an average of 81%.
“When I started out, companies had mission statements like ‘we endeavor to make shareholders rich’. Our idea was of making people healthier. We were seen as being mad. But today we see now, since 2008, a sense of purpose is what appeals to people,” says Gore.
“In our case, there is a massive spend on technology. A lot of it is on enterprise stuff, the core. In the case of Vitality we have invested hugely in technology to be able to globalize it.”
Utilizing innovative technology has become the forte of the Discovery team. Underpinning this is using big data, which Gore admits to being skeptical about.
“I don’t think data in and of itself is this nirvana. I mean using A.I. and machine learning, it’s powerful stuff, but it’s the application. The shared-value model, I think, is where we are powerful. I think it’s the DNA and it understanding it through the data, and sharing how people respond is a very powerful thing,” says Gore.
“A.I., without romanticizing it too much, has given us the ability to crunch the data, without upsetting the hypothesis. Overseas we are learning more and more how to use it. In the UK we are using it to help with our pricing,” says Gore.
In a world where Africa is China’s happy hunting investment ground, Gore is heading the hunt in the opposite direction. With 3.7 million customers in China, Discovery has a 25% stake in Ping An Health Insurance, the country’s largest private health insurer; 2016 saw membership grow by 428%.
“The growth is staggering. It’s something we’ve never seen before. I still think it’s early. These things take seven to 10 years. It takes time. Ping An’s relationship is seven years long, and it’s beginning to expand rapidly. Literally the last years, after we figured out the distribution channels, it’s been hugely successful,” says Gore.
“This is a massive industry in China. Ping An itself is the gold standard in China. Today it’s the most powerful and biggest insurer in the world.”
Gore’s confidence stems from the Chinese government’s plan to introduce privatized health reforms.
“We’ve typically gone into developed markets that have been commoditized and disrupted them; it’s our natural target. It’s slower going, it takes time. Ping An is more pioneering, it’s a market that’s growing, the middle class is emerging. Healthcare is becoming a bigger and bigger issue. So I hope we can continue that trend.”
In just 12 months Vitality Active Rewards, with Ping An Life, has reached 2.4 million members. To give a sense of scale, Discovery now has more people signed up in China than in South Africa.
“China remains a huge growth market, with the estimated total healthcare spend expected to rise by over 90% by 2020. Private healthcare spend is expected to grow even stronger over this period,” says Gore.
Discovery has found it difficult to take on the rest of Africa. This is mainly due to the lack of infrastructure and established private healthcare.
“The insurance space in Africa is very underdeveloped and your insurable population is small relative to the population at whole. You need to be careful about which markets you are entering in. For Discovery, it makes much more sense to invest in developed markets where you have broadband capability and most people have a smart device so that you can afford a wearable,” says Marx.
E-HEALTH LEAPFROG AND ITS CROAK
eHealth, could be the massive opportunity where private infrastructure can help solve Africa’s shortage of doctors. Africa, Gore believes, can short-circuit the shortage of doctors and expensive technology by supplementing them with eHealth developers working on apps to treat patients.
“I think we are sitting on the cusp of eHealth starting to do stuff. Through the smartwatch being able to track things more accurately, there is a whole world of stuff that’s happening,” says Gore.
Disruption has the ability to leapfrog older technologies; especially when it comes to cellphone reach in Africa. Those with keen eyes of innovation can spot ideas and gaps in the market, and create unique solutions to Africa’s needs, while at the same time being exportable.
“The interesting thing in healthcare is we haven’t seen technology bring prices down, in fact we’ve seen prices go up. A new biological drug is discovered and the prices go up… Everyone is carrying smartphones around. The ability to give care out on this basic level is an amazing opportunity,” says Gore.
Of course the health industry in his own country faces its unique challenges. The private healthcare industry is anxious to resolve the uncertainty of the South African government’s National Health Insurance (NHI) and its impact on the private sector.
The government claims 80% of South Africa’s population, that’s 40 million people, can’t afford medical aid. Their reality is waiting in massive queues from sunrise to sunset in the hope of seeing a doctor. All this while the other 20% of the people, who can afford medical aid, are treated by 70% of the country’s doctors.
“From our perspective, getting an NHI that bridges the gap and does everything that it needs is crucial. We’ve been involved where we can. I am hoping we can overcome the chasms that are between public and private healthcare.”
Many fear the NHI could be the tipping point for the country’s health system, forcing doctors to emigrate.
“It’s in a complex place at the moment, while the policy details are set and we are going along a process that is right. The details are not clear. I think funding issues are going to be critical. We don’t have the money to fund the kind of services that we need,” says Gore.
Something that could even disrupt the disruptor.
‘You Could Immediately See This Guy Was Different’
In 1992, Adrian Gore raised seed funding from Laurie Dippenaar, the cofounder of FirstRand, and founded the South African medical insurer after years of working with Liberty Life. Dippenaar, who is on the FORBES list of the 40 Richest Africans, was the man who gave Gore his shot.
“You could immediately see this guy was different. He was not the typical chartered accountant nerdy smart. You could see he had intelligence but he also had business sense, all the qualities that make you a success. I think he is actually one of the smartest businesspeople I have ever met,” says Dippenaar.
According to Dippenaar, Gore’s first pitch didn’t go well. His life insurance scheme sounded too much like all the others.
“To this day he says I got it wrong. A year later he comes up and says he’s got something completely different. From life insurance he had gone to a health insurance. He started to describe what he had in mind and I could immediately see he was onto something.”
This something was Discovery.
“When he described that medical savings account, it was a pioneer move in South Africa. I remembered when I was a bachelor and paying all these premiums for health insurance. You are young and healthy you don’t need to claim. All you do is pay premiums. Here was a product where you could carry forward some of the premiums if you were not claiming. In theory you could get into a situation where you didn’t have any premiums to pay,” says Dippenaar.
Gore left his job and Dippenaar gave him three months to draw up a business plan, in Dippenaar’s own offices.
“He never had any hesitation. He came up with the numbers. We liked it. So we backed him,” he says.
The rest is history.
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