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Survivors and Thrivers: The Women Fronting Some Of South Africa’s Coolest Startups

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The Next Billion-Dollar Startups 2021

The world is awash in streaming services, and Meg Whitman already had her fortune — but then Jeffrey Katzenberg came calling with a mobile-focused startup. With nearly $1.8 billion raised and America on lockdown, consumers may have no choice but to try Quibi.



Minutes after Meg Whitman announced she was stepping down as CEO of Hewlett Packard Enterprise in November 2017, her phone rang. It was Jeffrey Katzenberg, whom she has known since they both worked for Disney in the late 1980s and early 1990s — Whitman was in strategic planning; Katzenberg ran the film studio.&nbsp; ‘What are you doing?’ ” Whitman remembers her friend asking. “I don’t know,” she replied.



“I’m the chairman of Teach for America. I’ll probably do stuff with my husband and travel.” She continues: “He goes, ‘No. What are you doing tonight?’ And I said, ‘Knowing you, Jeffrey, I’m having dinner with you.’ ”



Katzenberg flew to Silicon Valley and, over dinner at Nobu in Palo Alto, pitched his idea for bringing high-caliber entertainment to mobile phones. For Whitman, the idea checked all her boxes: The potential market for the service was huge, prevailing trends were right and it occupied a unique niche.



“I ultimately said, ‘You know what? I think I have another startup in me,’ ” says Whitman, 63, who first got rich (she’s worth $3.3 billion) working with another visionary founder, Pierre Omidyar. She helped build eBay from 30 employees and $4 million in revenue when she joined in 1998 to more than 15,000 employees and $8 billion in revenue when she left a decade later.



“We’re pioneering into a space that only exists because of two things: YouTube, and Steve Jobs and the iPhone,” Katzenberg says. “Those two things have now created a new piece of real estate, and that real estate is 7 in the morning until 7 at night… That’s the thing that’s exciting to me.”



Two years after that dinner, Quibi (an awkward portmanteau of quick and bites) is poised to launch its mobile streaming service offering original movies, reality TV, comedies and news edited into bite sized nuggets of 10 minutes or less, optimized for viewing on phones.



Many in Hollywood think it’s a terrible idea. At a time when viewers are awash in entertainment options, many of them free, who is going to pay for another? “If I’m going to watch Game of Thrones in eight-minute chunks, what’s the difference between what he’s doing and me hitting the pause button?” scoffs one powerful Hollywood insider, who requested anonymity because his clients sell shows to Quibi. Barry Diller, perhaps the greatest Hollywood visionary of his generation, recently called Quibi a “gutsy speculation” for his former protégé (Katzenberg, 69, worked for Diller at Paramount in the ’70s). “He’s so naked out there with this.”



It’s not a new idea. Back in 1999, Katzenberg tried something similar with Pop.com, which was supposed to deliver short animated and live-action films across the internet. With the technology for viable video streaming still in its infancy, it was an uncertain notion at best. Despite being backed by Steven Spielberg, David Geffen, Brian Grazer, Ron Howard and Paul Allen, Pop.com was dead within a year.



This time around, Katzenberg raised enough money to play it out, including $1 billion in August 2018 from the likes of Alibaba, Disney and Sony. It fortuitously wrapped up a $750 million follow-on round in March, just days before the coronavirus froze the country. “I’ve never seen an environment change this fast,” Whitman says. “Every day is a new day, with new data and new concerns.” Luckily, Kevin Hart and Jennifer Lopez already finished work on their shows, and Spielberg has a movie in the works, attracted by a “cash plus” deal that lets them retain rights to their material. After two years, they can stitch together their “quick bites” and release them as a full-length movie.



Inadvertently, America’s lockdown might have created the perfect moment for Quibi. Nielsen projects media viewing will spike by as much as 60% due to COVID-19. People will certainly know it’s available: Quibi is spending a gargantuan $400 million to promote its new service and in mid-March announced that it will offer the service free for three months.



“This is a moment in time in which we have a chance to do something that is putting some happiness and some joy and some fun and some laughter into people’s hands,” Katzenberg says.



Quibi also has the advantage of being loaded with fresh content just as the production of all new shows and movies has been stilled by the pandemic. Quibi has been stockpiling programming since last September in anticipation of a possible writer’s strike, fearing a replay of 2008, when a union walkout halted new production for 100 days.



The service debuts on April 6 with 50 original shows, including movies offered in cliff-hanger chapters such as the thriller Survive, starring Sophie Turner (Game of Thrones) and Corey Hawkins (BlacKkKlansman); 120 reality shows and documentaries; plus news, weather and sports. In all, Quibi promises to deliver 8,500 quick bites from 175 shows in its first year.



But the $1.8 billion question remains: Will anyone pay to watch them? Some Hollywood players are adopting a “DBA Jeffrey” — Don’t Bet Against Jeffrey — attitude.



“Jeffrey has only taken a couple of big swings in his life, and he’s hit it out of the park,” says a senior executive at one of Hollywood’s major talent agencies. “If you had blindly bet on Jeffrey Katzenberg for the past 30 years, you’d have made a lot of money.”



&#8211; Dawn Chmielewski

Young Chinese colleagues working together in a busy co-working space from above

The Billionaire’s Startup

Most edtech startups are idealistic outfits with little revenue and low valuations, but Rachel Romer Carlson’s Guild Education is worth $1 billion and is on track to book $100 million in sales. Her secret? Connecting workers who have tuition benefits to colleges that will gladly pay to meet them.



It’s 9AM two days before Thanksgiving in Arkansas, and Walmart executives are dragging their suitcases around a windowless office building in search of a large conference room. They settle on an interior lunchroom with dull gray carpet, claiming one side of a long table in the corner and gesturing for their guests to sit opposite them. Ellie Bertani, Walmart’s director of workforce strategy, says she’s struggling to find qualified people to staff the company’s expanding network of 5,000 pharmacies and 3,400 vision centers. Her fellow Walmart execs are silent, but Rachel Romer Carlson, 31, cofounder and CEO of Guild Education, sees her opening. Without hesitation she says her team can work with Walmart and find a solution fast. “You guys and us,” she says, “let’s do it!”



Carlson flew to Bentonville from Guild’s Denver headquarters the day before. Dressed in a sensible navy blazer and black slacks, she hasn’t bothered with makeup. Since 7:30 that morning she’s been huddling with teams of Walmart brass, going over options to train workers for those new jobs. They range from a one-year pharmacy technician certificate program offered by a for-profit online outfit called Penn Foster to an online bachelor’s degree in healthcare administration at nonprofit Southern New Hampshire University.



Carlson’s groundbreaking idea when she launched Guild four years ago: help companies offer education benefits that employees will actually use. Many big employers will pay for their workers to go to school (it’s a tax break), but hardly any workers take advantage of the opportunity. Applying and signing up for courses can be cumbersome, and in most instances employees have to front the tuition and wait to be reimbursed. Meanwhile, many colleges are desperate for students because they have small—or nonexistent—endowments and are financially dependent on tuition. Many nonselective online programs spend more than $3,000 to attract each new student. Carlson charges schools a finder’s fee (she won’t say how much) for the students she delivers from her corporate partners.



So far Guild has signed up more than 20 companies, including Disney and Taco Bell. Guild gets paid only if students complete their coursework, so a full 150 of the company’s 415 staffers serve as coaches who help employees apply to degree programs and plan how to balance their studies with work and family. When a company like Walmart requests a customized training course, Guild solicits proposals from as many as 100 education providers (nearly all of them online) and recommends the programs it deems best. It also negotiates tuition discounts and facilitates direct payments between employers and schools, a big plus for workers who would otherwise have to wait months to be reimbursed.



Carlson, an alumna of the 2017 Forbes 30 Under 30 list and a judge on the 2020 list, says she has already channeled $100 million in tuition benefits to workers. She expects 2019 revenue to top $50 million, and Guild investor Byron Deeter of Bessemer Venture Partners predicts 2020 revenue of more than $100 million. In mid-November Carlson closed her fifth round of financing, led by General Catalyst, bringing her total money raised to $228 million at a $1 billion valuation. In the sleepy, well-intentioned world of edtech, Guild is one of only a few startups whose values have soared, says Daniel Pianko, a New York-based edtech investor with no stake in the company. “I can see a path for Guild to be a $100 billion company,” says Paul Freedman, CEO of San Francisco venture firm Entangled Group, who has known Carlson since she was in business school and was one of Guild’s earliest investors.



When asked to detail Guild’s inner workings, like its strategy for soliciting custom courses, Carlson eschews specifics and delivers what sounds like a political stump speech: “The economy’s moving so fast,” she says. “We can’t let higher education dictate the skills and competencies that we need five to ten years from now.”



&nbsp;There’s a reason she talks this way. Her grandfather Roy Romer was a three-term (1987–1999) Democratic governor of Colorado before spending six years as superintendent of Los Angeles’ public schools. Carlson started riding along on his campaign bus when she was 6 years old; occasionally she would even speak at his rallies. When her father, Chris Romer, a former Colorado state senator, ran unsuccessfully for mayor of Denver in 2011, she served as his finance director. (“The loss was devastating,” she says.)



Along with politics, the Romers were committed to increasing access to education, especially for working adults. Roy Romer helped start Salt Lake City-based Western Governors University, a pioneer in online adult education. In the wake of Chris Romer’s mayoral bid, in 2011, he cofounded American Honors, a for profit company that offered honors courses at community colleges (the company struggled, and the brand is now owned by Wellspring International, a student recruitment firm).



After graduating from Stanford undergrad and working briefly in the Obama White House, Carlson launched her first venture, Student Blueprint, while getting her M.B.A. (also at Stanford) in 2014. Student Blueprint sought to use technology to match community college students with jobs. It was a noble idea, but she decided to finish school and sold the software she had developed to Paul Freedman’s Entangled Group in 2014 for a negligible sum. In 2015, after she wrapped up her M.B.A., she pitched the idea for Guild to one of her professors, Michael Dearing, and to seed investor Aileen Lee, of Cowboy Ventures, raising $2 million.



After relocating to her home turf in Denver, she landed her first major corporate partner the summer of 2016 when she sent a LinkedIn message to a Chipotle benefits manager that played up the fast-food chain’s “strong Denver roots and social mission.” With help from Guild, Chipotle’s $12-an-hour burrito rollers are now pursuing bachelor’s degrees from Bellevue University in Nebraska or taking computer security courses at Wilmington University in Delaware. In October 2019, Carlson persuaded Chipotle to lift its cap on tuition benefits above the $5,250 the IRS allows companies to write off.



Guild’s biggest competitor is a division of Watertown, Massachusetts-based publicly traded daycare provider Bright Horizons, which has offered tuition benefit services since 2009. It works with 210 companies including Home Depot and Goldman Sachs. Under Bright Horizons’ system, the companies—not the colleges—pay. Much of the genius of Guild’s business model is that it correctly aligns incentives: The colleges are the most financially motivated party, so they foot the bill. Another competitor, Los Angeles-based In Stride, launched in 2019 with funding from Arizona State University, and like Bright Horizons it charges the corporations.



“I see our competition as the status quo,” Carlson says. “Classically, employers have offered tuition-reimbursement programs, but no one is using those programs.”



The nonprofit Indianapolis-based Lumina Foundation has done five case studies showing returns on investment as high as 140% for companies that offer tuition reimbursement programs. “We saw powerful impacts on retention,” says Lumina’s strategy director, Haley Glover.



&nbsp;“Walmart and Amazon are in a death struggle,” proclaims Joseph Fuller, a professor at Harvard Business School. “If a Walmart worker can say, ‘I got an education that allowed me to get promoted,’ they’re going to be someone who speaks generously about Walmart and they are more likely be a Walmart shopper.”



Like a good politician, Carlson is working to please everyone. “We found a win-win,” she says, “where we can help companies align their objectives with helping their employees achieve their goals.”



–&nbsp;Alexandra Wilson and Susan Adams

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Make The Colleges Pay: How This Entrepreneur Helps Companies Offer Education Benefits That Employees Will Actually Use

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The $100 Trillion Opportunity: The Race To Provide Banking To The World’s Poor

Paul Cook, co-Managing Director of Silvertree Internet Holdings, the investment growth partner behind some of South Africa’s internet brands, on what startup companies must do to survive.

<h3>Resilience</h3>
There are many reasons why a business could fail within the first year. In some cases, the plan itself does not make sense and in some cases, it is the execution of it that fails. Whenever someone starts a business, they are often doing it out of a sense of personal passion or a sense of excitement and that can lead to overly optimistic projections, and we see this all the time.
There is always going to be a tough period during the first year or two when reality bites. It will happen in some way and it will happen in some form – there will be some piece of bad luck or a difficult time. It is at this time a real make-or-break situation happens.
If you have the right people around you, if you have the right personal resilience; that is what gets companies through.
If you don’t get past that point, the business fails. It is about resilience when you start a new company.
By definition, you don’t know what is going to happen…no matter how hard you plan for a new business, you will face unexpected events.
&nbsp;
<h3>Planning</h3>
Make sure that you are good for the good and bad times during your entrepreneurial journey.
Your family too should be ready for the good and bad times&#8230; Try and build the right partnerships earlier on. Make sure that your relationships with whoever might be funding you – if there is an external funder – is right.
<img loading="lazy" decoding="async" class="aligncenter wp-image-37233 size-large" src="https://www.forbesafrica.com/wp-content/uploads/2018/09/Paul-Cook-553-1024x682.jpg" alt="" width="740" height="493" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/09/Paul-Cook-553-1024x682.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Paul-Cook-553-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Paul-Cook-553-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Paul-Cook-553-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/09/Paul-Cook-553.jpg 1241w" sizes="(max-width: 740px) 100vw, 740px" />
<blockquote>&#8220;No matter how hard you plan for a new business, you will face unexpected events.&#8221;</blockquote>
<h3>Finances</h3>
You should not be seeking funding for its own sake. It is very seductive to suddenly have a lot of money in the bank. You can also fail if you don’t have money, but if you have too much money, then you are tempted to focus on the wrong Key Performance Indicators (KPIs). Your objective in a startup is not to raise money; it is not to build revenue for its own sake, it is to build a business.
A business requires cost-control and it requires good unit economics. The more money you have in the bank, the harder it is to focus on cost-control. What you will end up doing is build a business that keeps growing but could never make any money&#8230; Also, if you raise too much money as an entrepreneur, you will end up not taking as many good terms [in deals] as you can.
Have a clear mind about what you want to get out of an investment&#8230;If you have proven as much as you can with a certain amount of money, you will be able to invest in marketing, stocks etc., then that makes sense.
<h3>Communication</h3>
When you are at an early stage of your business and are less than 10 employees, typically, everybody is in, not because of the salary but because of their passion for the business. You need to be a team and everybody needs to be on the same page.The period when you grow, from 10 to 50 employees, then all of a sudden, that is no longer the case. That is an extremely dangerous time for many companies.
We have seen several companies not succeeding, and that is a very sad part of the journey. It is then that you need to think who your core management is, [and] who are staff who don’t necessarily need to know everything. But you can also go too far the other way. Everyone needs to know the broad outlines of your thinking; keep the message simple for your team.
<h3>Transparency</h3>
Be honest about where you need help and make sure your partners are able to help you on those topics. You should look at all the different [aspects] of your business.
<h3>Marketing and sales</h3>
Marketing and sales are absolutely vital, it is non-negotiable. But how you do it depends on your business. In some cases, it is going to be marketing and in some cases, it is going to be sales. So you need to work out the strategy and how it will be different as well.
<h3>Tips ForStartup Success</h3>
<ol>
<li>Build a business that can make money: We are very tempted to copy Silicon Valley’s approach where you come up with an idea and you work out how to make money at a later stage. That makes sense in Silicon Valley but it doesn’t make sense here [in Africa], because there isn’t that tonne of money that is going to postpone your day of reckoning…You need to have a revenue model and whatever you are selling needs to be a lot more than your cost price.</li>
<li>Find the right business partner: If you look for investment, make sure that you find the right partner whose incentives and offerings match your own, for now, and in the future.</li>
<li>Build resilience: Make sure you are ready for tough times because there will be tough times.</li>
</ol>

Work colleagues brainstorming in creative office

Why Most Startups Fail In The First Year

As a teenager it dawned on me that my undergraduate academic ambition was going to be threatened when my father lost his job. My dream to become a petroleum engineer was deflated in a matter of days. I was concerned about my future and afraid I would be tagged as a failure. During this unpleasant and frustrating experience, I questioned the rationale behind my dad’s choice of paid employment. If he had started a business, maybe things would have turned out differently. That was a tipping point for my search for success in life.
In 1999, I found a book that answered the question of how to be successful. The Success Journey, written by John C. Maxwell, sparked my hunger for knowledge, which led me to start visiting a public library built by the Catholic church in my town, in southwestern Nigeria. I made that decision because I had read in the book that knowledge is a prerequisite for success.
My need to be successful and influential was so strong that it birthed inspirational dissatisfaction in me. In the same manner, I have observed that many successful business owners often start with a burning desire and this desire takes up most of their time, most of their resources and almost all of their energy. I believe that is what counts for entrepreneurship.
On the other hand, I have also encountered many African start-up entrepreneurs who have ideas that lack that yearning. All they have is a wish that may or may not be achieved, and a template-guided business plan. Most of these plans remain on paper and are eventually buried. Some that succeed in starting their own business don’t get to live their dream beyond a few years.
<a href="http://www.forbesafrica.com/focus/2017/02/01/little-african-dream-gangsters-paradise/" target="_blank" rel="noopener">READ MORE: A Little African Dream In Gangster’s Paradise</a>
Other than the fact that many African countries have a poor rating on the ease of doing business index, a core factor that accounts for a business’s inability to survive is the lack of a burning desire. Success is for the hungry and desire is the emotion that will see it come to fruition.
It is important that a target is clearly defined before commencing with a business plan and allocating responsibilities. This helps everyone to effectively focus on crucial matters. In the present business space, time is more essential than money. The rate at which business disruption happens is so fast that many business leaders are constantly on their toes to just remain in the game. With this in mind, attention should only be given to what is important – the key drivers of the desired result.
Obviously, entrepreneurs in Africa are finding it easier now than a decade ago to hire tools, and raise capital to produce products. But, realizing the ability to rent time is highly unlikely in the near future. Time is inelastic. Therefore, we must focus on what really matters to get the desirable business result.
To better manage time, an entrepreneur should focus on what they have control over. When you focus on concerns that you can’t control, you may lose sight of things within your control. 
Also, ensure your beliefs and values align with the desired business result because these influence your time and attention.
Setting goals, and planning for them, are instrumental to time management. This will help guide decisions as well as allowing you to delegate where necessary. 
I have accepted the simple paradigm that nothing makes one entrepreneur more successful than the other in an industry as much as what each person does with time. Time creates everybody’s chance, but not everybody creates a chance with the time they have.
&#8211; Victor Mamora

Tag: Startups