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February 15, 2013
SABLE'S Entrepreneur of the Week: Nicholas Haralambous
Being proudly South African and using local manufacturers is becoming an important part of doing business in South Africa, not forgetting the feel good factor. Of late, the local fashion scene is catching onto this too, moving away from the once favoured Asian low-cost model.
Nicholas Haralambous, a serial and mobile entrepreneur, has turned his creative focus to men's socks, founding NicSocks, an online retailer of bespoke men's socks. SABLE was fortunate to get time in his diary to discuss his view on how South African's should overcome their fear of starting their own business, e-commerce as a platform to unlock opportunities, and other key highlights in his journey to date.
Theme 1: You made a drastic shift away from print media towards online and mobile platforms.
Dave (D): What was the moment that you realized the shift was required?
Nic (N): It was less a requirement as a desire. I wanted to push into ecommerce and realised that I was standing on my product for years. There's still a massive boom coming in the ecommerce space in South Africa (and Africa) and I thought that it's better to start early and fail quickly than start late and try to play catch up.
D: How did you go about this and obtaining additional skills required?
N: Like much of my career up to this point I smashed my head (very quickly) against a wall while I learned the necessary skills. These included sourcing fabrics, manufacturers, working out packaging and distribution. On the web side of the business I found help in some of the best web designers around, Obox (http://obox-design.com) hooked me up with an ecommerce store in a matter of days.
D: You spent a few years jumping around before Motribe, how valuable were the different experiences? How did they help you prepare for Motribe?
N: That's a great question and very few people see it the way I do. My various jobs and diverse industry experience set me up perfectly for my Motribe experience. Running a mobile tech startup in Africa leaves very little in the way of steady plans and actions. Most of it is made up along the way and adapted to the market, the climate and the industry as it shifts. The skills I acquired through the media industry helped me when trying to promote Motribe and get the needed PR and Marketing. Obviously the skills I learned at Vodacom helped me considerably when running a mobile startup. I think it's also necessary when employing staff with different skills to have a very high-level grasp of their job and what it means to do their jobs well.
Theme 2: Motribe
D: What drove you towards starting your own thing and what did you feel as you embarked on this high-risk journey?
N: I think I've been moving towards this for my entire career. I started and failed my first business when I was 19 and subsequently started 2 or 3 more that also failed before moving into the corporate world to gather some experience. I think that in the very early stages of the startup you have some fear but then you start drinking your own 'kool-aid' and push those fears aside and grow in confidence and stature.
The world likes to see confident people behind great products. Imagine if Zuckerburg was hesitant about his success and the value of Facebook. But after a while that fear of failure creeps back in when you have massive overheads, staff to pay and clients to manage. The fail fast culture is not ingrained in South Africans, we often feel like our only shot is the one we've got right now so we try to make it last instead of pushing as hard as we can.
D: What was the strategy when forming it? Did you intend to exit it so soon?
N: I think that it was always on the cards. Vincent and I always said that we weren't married to the idea but to the concept of businesses and building products. I don't think I personally planned to exit so soon but if a profitable exit is in front of you, sometimes you need to just take it and start something new!
D: Looking back on the experience, what were some of the highs and lows?
N: Highs include traveling to NYC and London to pitch investors and do business development; the team of people that joined Motribe were fantastic. I loved working with the best and intend to only do so in the future. We also signed our first R1m client within 1 week of launching the product, which was ridiculous but fantastic.
The low point was definitely realising that I hadn't managed cash flow well enough to pay staff without taking a 3-month salary cut myself. So I took a salary cut over the holiday period and paid my staff while hustling to get clients to pay me early. I'll never make that mistake again.
Theme 3: E-commerce in RSA: from blogging to your current venture, NicSocks, you are an avid user and punter, in lined with global growth.
D: What is your impression on e-Commerce in South Africa following the launch of NicSocks?
N: I think that the market is still a newborn infant. The customer base is tiny, the number of people who actually purchase consistently online is small but growing and the number of actual stores online is also relatively small. But this is going to change quickly and over the next five years I think that the South African and African markets are going to explode. This is why I'm getting in it now. However you need to be smart when entering the space. Don't try to compete with Amazon, TakeTwo, BidorBuy, Kalahari, Gumtree and the other big guns. Go Niche, pick your target audience and wait for that segment to expand with your business.
D: How was NicSocks conceived?
N: I was in the middle of signing the Motribe deal and was in limbo - bound by confidentiality, not actually working and waiting to conclude - so I decided to challenge myself and do something. I've been wearing loud and crazy socks for a few years but in SA they are imported, expensive and not great quality. So I thought I could do it all locally, better and cheaper. Turns out I could.
The other challenge I set myself was to do it all in 6 weeks or less. I did this because I often hear people in SA tell me that they can't start a business because it takes too long and it's too hard. I proved them wrong. Six weeks for me to find the fabric, source a manufacturer, do the designs, get the samples, start an ecommerce website, get a bank account and a payment provided. I also made my first sale within that six week period.
D: You have a unique offering in that your product is home-grown, do you feel this drives additional support for the brand?
N: One of our unique offerings is the local aspect, true. I do think it offers a special feel about the brand. We don't look for the cheapest place to make our margins as high as possible. I support the local industry and help create jobs, that is important. It just so happens that the fabric is also fantastic 100% bamboo, which means I get a great product locally too.
Theme 4: South Africans abroad are receiving increased publicity for their entrepreneurial activity and successes.
D: What are the contributing factors as to why South Africans are pursuing entrepreneurial activity abroad?
N: A big part of it for some of my colleagues and friends is the "big fish small pond" syndrome. It's sometimes a desire to compete on a global scale with the best in the world at the best companies that pushes entrepreneurs to go abroad. On a simpler and more obvious line of thought - I think the world is a smaller place today than it was 80 years ago so the ease of going abroad is there and entrepreneurs are taking advantage of that.
D: Do you think it is necessary or is there a sufficient market in RSA and Africa?
N: Not only do I think that there is a sufficient market in Africa (I'll include SA in Africa for this one) but I think it's a preferred market for many of today's entrepreneurs. The African market isn't saturated, the customers and users are still hungry for new services and experimental with what they use and choose. Broadband is still growing and most of the continent isn't even connected. Obviously entering this market means understanding each country as a separate entity with its own challenges, users and experiences. It also goes without saying that having a solid understanding of the mobile landscape is imperative in Africa.
Theme 5: Entrepreneurship in South Africa
D: What is your experience of the entrepreneurial environment in South Africa, i.e. what are the challenges you are experiencing/observing? Skill-set/Market? Mentors?
N: There are a couple of ways to look at the entrepreneurial environment is SA. First off, many believe that startups these days exclusively refer to technology companies and what I'm seeing in Cape Town is a lot of product based businesses with local manufacturers who make use of tech to sell, not tech as the product. Tea, handbags, leather goods, fashion brands, furniture and more in the way of real-world product are taking over the Cape Town landscape. Finally technology is becoming the medium and not the product that I think is fantastic. The tech space is definitely moving forward but we are still very much stuck in a western way of thinking when it comes to plugging holes and finding solutions. We need more African entrepreneurs solving African problems.
D: How should start-ups address the gap in start-up funding that has been wildly documented in South African publications?
N: I don't want to oversimplify this answer but the truth is that startups need to be going after profit before funding is secured. The one good thing that a shortage in funding produces is an automatic culling of rubbish. If you don't have a solid business model with a clear path to revenue in a specified time then you're dead before you start. As I say, I don't want to oversimplify but the more profit (and even revenue) that a young business can generate the more likely they are to raise funding in the SA environment. Also - I know of many startups getting funding. There's no shortage of money, there is a shortage of solid founders, with growing businesses that capture a long-term market.
D: What opportunities exist for South Africans and what mentality/culture is there that is preventing the unlocking of this?
N: I think the entrepreneurial opportunity is there for the taking in SA. Large and established corporates aren't creating employment, they're cutting jobs so the future employment in SA relies on entrepreneurs creating sustainable businesses. I think that the government restrictions that make it so difficult to register a company and get a Tax number are making it incredibly tough for people to start a business. The documentation and processes alone are enough to make you want to quit. This needs to be streamlined immediately.
Most of all I think a fear of failure is crippling young entrepreneurs from really giving their businesses a shot. Young and talented people need to realise that there is no better time than when you are 18 - 30 to really give your business everything. You've got no responsibilities, you should be fit and healthy enough to push yourself and the opportunities are endless. We just have to get over our fear of failure and go after it.
Nic is a serial entrepreneur, having persevered with the formation of start-ups, some failing and others succeeding. Currently he is the founder of NicSocks, a limited edition subscription sock service. We help men dress better and discover the Foundations of Style.http://nicsocks.com. Prior to this he was the co-founder and CEO of Motribe, a platform that allows users, brands and businesses to build, manage and generate revenue from their own mobile social communities. He is a Rhodes alum, graduating with a Bachelor of Arts, Journalism and Politics. For more information on Nic, connect with him via his blog: http://nicharalambous.com/