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From Rock Bottom To Rolling In cash

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He appears to be soft-hearted behind his infectious smile, but this is a steely franchise mogul who has survived being stripped of all his assets.

On a gloomy day, as gloomy as his worst day, we arrive in Mamelodi, Pretoria, South Africa’s capital, to meet Itumeleng Mpatlanyana.

At the corner of Shabangu and Maake Street in Mamelodi West, is a shisa nyama (township braai restaurant) made with a shipping container painted shocking red. This is Nkukhu-Box, one of his many businesses.

The atmosphere is vibrant. There is deafening house music playing at the restaurant – we had to ask people to turn it down. The street buzzes with taxis and hooting cars.

Finally, 40 minutes late, a white BMW sports car pulls up. It looks out of place, as well as tardy.

A short and soft-spoken gentleman, in a white shirt, emerges. Mpatlanyana, the food man, is ready to speak about his worst day.

For someone seen as successful, it comes as a surprise that seven years ago Mpatlanyana found himself sitting on the floor of his near empty house. The only thing he was able to save from the repossessors was a painting on the wall.

“There was one painting that I bought when I was a student. I actually begged the guys not to take it and I still have it today,” he says.

“It is a happy colorful painting. When you look at that painting in the mornings, it gives new life and meaning. So that is why I begged the guys not to take it. They took everything, but that painting was the only survivor that day.”

This was how bankruptcy felt.

It all began when he was 14 years old, growing up in the township of Embalenhle, in Mpumalanga. He had started a lawn-mowing business in his neighborhood at weekends. His motivation was money for a nice packed lunch.

“Having a tastier lunch meant that I could hang out and trade my lunch with more privileged pupils who were perceived as being cool at school.”

From rock bottom to rolling in cash

While his fancy lunchbox brought him a sense of belonging, his business brought a sense of wealth. He branched out into the food business selling cheese, polony and bacon throughout high school.

With a taste for business, Mpatlanyana then studied a BCom in entrepreneurship at the University of Pretoria.

As a student he sold beanbag furniture to students. He also bought his first car – a 1979 VW Beetle – that he used to transport students.

“The business was successful. At one point I had 20 apartments under my portfolio, but none were owned by me,” he says.

The money rolled in and the friends came with ideas.

In 2008, he and his friend bought Fashion TV Café, a French television channel franchise. He thought it was gold for the grandchildren.

“When we became Fashion TV Café’s first young black franchisees in the world, we were in our twenties and it was a hell of an achievement,” says Mpatlanyana.

It all seemed plain sailing; but the exorbitant rent and overhead costs were to make a meal of them. Mpatlanyana lost his R3.3 million ($252,000) investment. The thought of losing everything was always his biggest fear.

Soon he was to experience his worst nightmare.

“That day I thought, colorful s*** just hit the fan, and it is looking beautiful. I was accepting defeat, because I knew it was coming and I knew I could do it again.”

First, the repossessors came.

“Those guys park their truck and they knock at your door, thereafter they just walk in and they just start taking stuff without negotiating, because it’s a done deal, the courts have given them the order,” says Mpatlanyana.

“I actually helped them to move the furniture, because I tried to make the experience as comfortable as I could. I was not fighting them, I wasn’t crying. I was like, ‘It went bad sharp-sharp, moja (fine), take it.’”

Reality kicked in when he was alone and bereft.

“The tears came later, after they left, when I was sitting on the floor.”

“The remote control is gone, the TV is gone and the ironing board is gone. I was just sitting there asking myself, what was I going to do next? But I knew then, that I could do it again bigger and better,” recalls Mpatlanyana.

“That was the lowest moment of my life. I would sit on the floor with no furniture or anything, wondering where did it all go wrong? At one point you were rolling in cash and all of a sudden, you have hit rock bottom,” he says.

The fear of people was stronger than the fear of loss.

“It’s was not even about the money, it was about the people that knew me and how they would look at me. A few weeks ago, you had this upmarket restaurant and the ladies love you, then all of a sudden, you have zero.”

“How do you even get your friends to come visit you again, if you have no furniture in the house? Your bank accounts are all cleaned up,” says Mpatlanyana

A phone call changed his fortunes four months later.

“I don’t know whether to call it luck or whether it was just my work ethic that came through for me because a customer who happened to be a coalmine owner who was looking for a BEE partner decided to call me. Instantly, I became part of a small mine operation,” Mpatlanyana says with relief in his voice.

”A few weeks ago, you had this upmarket restaurant and the ladies were loving you, then all of a sudden, you have zero.”

“He could have called any other black man, but he called me, because he saw my work ethic and the amount of hard work I had put into FTV Café.”

His journey with the mining company was not long. Four years later, the coalmine was sold. He went back into the food business; his first love.

But this time, he was to do things differently. He would become the franchiser instead of the franchisee.

Spykos Foods was born in 2011, with R1 million ($76,000).

He founded a franchise that was about taking traditional township shisa nyama, fish and chips and bunny chow, into major malls and shopping centers in South Africa.

“You have to have a strong character to try again. I didn’t allow that to discourage me. I got up and I tried again.”

“I still went back into the food industry, the experience and what I learned out of the situation helped me to come up with the next brand. I decided to start my own brand, where I make my own rules and I don’t have to be dictated to by any franchise or international person that is in Paris,” says Mpatlanyana.

Forty Spykos Foods franchises were established around the country, but some collapsed.

“The stores started to close down due to several factors, but the main [reasons] were the escalating shopping center rentals, increase in food prices, especially fresh potatoes as this was our main product line.”

“There were also major competitors dominating the market… Some not so well-skilled franchisees and the lack of adequate infrastructure,” says Mpatlanyana.

Even with the punches that he took, he is adamant he’ll become a franchise mogul.

He launched his first Nkukhu-Box, selling chicken, in August 2016. It is a business that mitigates the rent and overheads of Spykos Foods with a red shipping container that doesn’t cost much.

To date, he has three stores in South Africa and plans to expand to Zambia, Namibia, Lesotho and Swaziland this year.

Mpatlanyana claims that his business is worth R6.5 million ($497,000).

“Being a young black entrepreneur has immense challenges in the private sector. I realized that in business you need to find a business model that doesn’t rely on too many external sources,” he says.

Seven years on from an empty house and empty bank account, his worst day, in many ways, made him.

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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Entrepreneurs

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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