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Co-Founder and former Executive Vice President and General Manager, Alchemex Pty Ltd, acquired by Sage in October 2011
Gary Boddington, a former South African national hockey player with Olympics experience under his belt, recalls saying to then-teammate and now co-founder of Sage Alchemex, Charles Teversham: “One day, we will play on this stage again; let’s try our hand at business after this.” In 2001, five years after the Atlanta games experience, Boddington, Teversham and Darryl Smith founded Alchemex in a garage in his home on the Berea in Durban. None of them could have predicted the outcome when 10 years later, Alchemex was sold to Sage, a global provider of business management software.
SABLE’s Dave Kitley met with Boddington to discuss the transition from a startup to being absorbed into a multinational company, how important sports experience is in forming relationships and choosing your team, and the importance of culture in a business. As usual, we had to sneak in some extra questions to get his view of how the world sees South Africa following his numerous business trips. Keep reading for the full interview.
Dave Kitley: How was Alchemex conceived?
Gary Boddington: It was almost by accident that Alchemex was born. It was an offshoot of wanting to start a web business to take advantage of the dotcom boom, and we walked straight into a bust instead. So our visions of dotcom wealth and grandeur built on overnight dotcom success would have to wait. But in our learnings, the Alchemex concept was developed, and from this point there was no looking back. From very early on, we had visions of being a global player. In fact, our stated goal from the very outset was to be a global business solutions software vendor, which was important because it helped us stay focused on our vision and shape our products. We set our intentions very early and never wavered.
Dave Kitley: What are some of the key strategic events that took place?
Gary Boddington: From a product perspective in the business intelligence (BI) world, we also had to make a few long term bets, and without fully comprehending at the time that Alchemex was becoming a part of the BI industry, we held the then-contrarian view that Microsoft Excel would remain a BI tool of choice for small and medium-sized businesses. This was the segment of the market we had chosen to address because we felt that the enterprise sector was well served, but SMME also needed BI. Then we got lucky, and some unanticipated but cool trends worked in our favor. BI became the flavor of the month in terms of CEOs and technology investment areas, and Microsoft shared the Alchemex views on Excel and BI; to this day, there is a massive investment by Microsoft in building functionality in Excel that complements the entrepreneurial idea that continues to underpin our business (i.e., automated business intelligence in Excel).
Without going into detail, some of the key pivotal moments include:
- Hiring the right people early and building a team of “A-team” players in a fun and dynamic culture
- In 2005, Alchemex signed an OEM deal with Pastel Accounting, South Africa’s number one accounting and payroll platform.
- In 2006, angel investors bought out a 30-percent shareholder that had originally signed on international distribution rights.
- In 2006, we hired the services of a CFO who had “been there and done that” in North America to help us drive and manage the numbers.
- In 2008, Alchemex signed the first international integration in Australia through an OEM agreement.
- In 2010, Alchemex signed an OEM agreement with Sage North America, which resulted in release across seven ERP and accounting platforms across the U.S. and Canada.
- In 2011, Alchemex was acquired by Sage and became a 100-percent owned Sage subsidiary.
Dave Kitley: With the acquisition by Sage, were there any changes that occured (new business culture, moving from South Africa, joining a global corporation, etc.)?
Gary Boddington: Prior to the acquisition by Sage, we had been pushed to move our game to another level anyway because after 10 years of working predominantly in the South African market, working in the North American markets across the U.S. and Canada made us realize that we had some growing up to do across the organization. That included everything from R&D and the quality assurance processes, product management practices and product marketing checklists through to support infrastructure and internal global communication processes. Once we joined a global operation, going from a team of 50 people and being independently owned to a global organization with thousands of staff members was obviously daunting.
On the upside, joining a global organization opens doors to scalability that is not attainable as a small, self-funded, independent company. This scalability also comes with consequences to the extent that in a large organization, you often have competing product release priorities, and it’s not always easy to get a product into the market by rolling it through massive corporate machinery.
So there really is no short answer to this question; there are more obvious cultural shifts that need to be made, but perhaps the greatest trade-off may be in balancing the scalability opportunity with retaining agility to compete against smaller, nimble competitors.
Dave Kitley: How has your experience in sports influenced your decision-making in the working realm?
Gary Boddington: Sports have been fundamental in shaping me, as well as the approach I take in working with and leading teams. Through sports, I got to know the co-founders of Alchemex, and without them I may never have followed a path in technology. In my opinion, business is similar to a sports fixture. In fact, the similarities between the principles of sports and the principles of business are uncanny. If you are not fielding your best team possible, then you will struggle to challenge any competitor in your market. Individuals who have played sports competitively can also understand the importance of discipline, forming relationships, dependencies, communication, healthy conflict and most importantly, that everyone knows their role in the team and how it is going to contribute to the end goal. Then everyone is expected to go out and perform their particular role exceptionally well and be held accountable to the team for their performance.
At Alchemex, our culture has thrived on and—to a massive extent—was dependent on relationship building, and our team readily adopted this as a fundamental pillar of our business. We also firmly believed in the philosophy that says, “it’s your attitude, not your aptitude, that determines your altitude.“
Dave Kitley: What are your arguments for and against joining a multinational based on your experience of starting up and controlling your own business? Which do you favor?
Gary Boddington: For us to scale globally as we sought to do, retaining control would not have accelerated our global expansion as we wanted, so joining a multinational was the correct course of action to take. You do lose ultimate control of the business, and my personal preference is to retain control over an independent business, but that is also the great thing about business—you need to be flexible to handle any given situation. If we had retained ownership, there is a chance that Sage would have built or bought a competitive product, in which case we would end up competing with an opponent we would rather team up with, so our decision to sell to Sage was the correct one at that time. However, any person that has been an entrepreneur and has led a team of dynamic and entrepreneurial people will attest that the adrenaline takes over and the satisfaction of achieving goals in an independent organization. The feeling of taking a concept from a startup to a commercial success has no comparison.
Dave Kitley: Having worked locally and now in North America, what is the reputation of South African business personalities?
Gary Boddington: The reputation of South African entrepreneurs and business people in general is outstanding, and we should be proud of ourselves wherever we go. I don’t mean that in an arrogant way because I know that by nature we typically are largely humble and reverent in a business sense. On one hand, I know there is a notion that in South Africa, we aren’t 100-percent certain about whether our technology is going to meet international standards and whether our skills and experiences are going to cut it globally. Based on what I know now, I think we need to be more forthright and outspoken—without being arrogant—about our technology as being at the cutting edge and our people being world-class contributors in any organization.
Dave Kitley: What are the barriers or challenges to doing business abroad as a South African?
Gary Boddington: The more obvious challenges are understanding the investment that will be required to make a success of your idea in a foreign territory. There are so many unknowns that need to be considered, and only once you have spent some time in the region can you make more predictable calls in your budgeting and forecasting processes and for provisioning your cash requirements.
Overcoming time zones and innate communication challenges associated with expanding into global territories is also an anticipated challenge, but it can be more challenging than first meets the eye. However, the greatest eye-opener for me personally was to experience the cultural divide between different nationalities and the realization that in a business sense, not everyone does business in the same way as one might be accustomed to in South Africa.
Decision making is a case in point; in South Africa, we generally make decisions—even tough decisions—quite rapidly, whereas when you travel globally, you come to realize that decision making and the process that drives a leader to make a decision differs, in some cases quite starkly, from country to country or from region to region within a country, and that can be fundamentally different to the way we have built our own experience in South Africa. That’s not to say that the decision making process is irrational or irresponsible in South Africa, nor is it a judgmental call on any non-South African territory. It’s simply that things are done differently, and it requires the flexibility to understand and empathize with the regional culture, assimilate the process and conduct business within and according to local business rules and etiquette.
Dave Kitley: What are the key differences in doing business and in the nature of the business environment in South Africa versus globally?
Gary Boddington: In a sense, although South Africa is a part of the ever-shrinking global community, it is still quite insular and protected from international competitors, possibly by way of its geographical location in the world alone, and possibly because from a technology perspective, it is still perceived as a market that offers little return. However, when you step outside of South Africa, and specifically when you step into an advanced first-world market like in North America, you quickly realize that competitors actually do exist elsewhere on the planet, and their products are as good as ours and sometimes better. Moreover, in South Africa, if you do have realistic competition, there is a healthy respect for one another, and you compete on an even playing field. This is not so in North America; any perceived weakness you have will be documented by your competitor and broadcast as far and wide as possible to get a competitive advantage. The direct and aggressive behavior of competitors has been an interesting learning experience, and although it first was more than anticipated, it was used to our advantage to improve our offering and beat the competitors. In a global market, you really are exposed in every way, and you have to have your wits about you as an organization to stay focused and compete.
Dave Kitley: What is your impression of entrepreneurship in South Africa? Is the number of startups growing?
Gary Boddington: Entrepreneurship is tough but incredibly rewarding. I believe very strongly that there is an abundance of opportunity—specifically in technology—but regardless of the industry, it will always take the brave few who are willing to take the risks to venture into new territory. I believe entrepreneurship in South Africa should be something that is encouraged and embraced by everyone; our children should be taught how to identify an opportunity and what it means to create a solution from an early stage, and then how to consider different options to commercialize the solution. Public instruments of society like lending institutions, educational institutions, and public- and private-sector bodies should publicly acknowledge the critical role of entrepreneurs in our economy, and we should invest in ways to create more entrepreneurial success stories that younger generations aspire to emulate.
Dave Kitley: What aspects across the entrepreneurial ecosystem are good and bad with facilitating the development of entrepreneurs?
Gary Boddington: To be brutally honest, it’s fundamentally all about access to capital. Even a well-funded bad idea is better off than the next big thing with no funding. Banks have a hard time understanding entrepreneurs. They won’t give you money when you need it most and then are all over you when you have it; that’s not helping entrepreneurs and small businesses. I am also not so naïve as to deny the need for banks to be prudent about their own risk profiles, but there is a vast chasm that exists between traditional banks and entrepreneurial opportunity. Equally, the venture capital community needs to clear out the unscrupulous operators that give the industry a poor reputation. I understand that this is a complex conundrum to solve, but based on experience I do know that there are people with exceedingly low morals who are more than willing to take advantage of inexperienced and unsuspecting early-stage entrepreneurs.
The good part is the angel investor community, and even though it is difficult to plug into existing networks, once you discover them, they typically have a wealth of information and access to a vast depth of knowledge, experience and expertise, not to mention a pathway to capital in a less hostile environment than the VC world. The work that the SABLE Accelerator is doing is a good reflection of people in the community who genuinely want to share their wealth (monetary, experience, expertise, connections, etc.), and while I recognize they have capitalistic interests and intentions, they also have a sincere interest in the success of the entrepreneurial organization and have more of a personal empathy with the entrepreneur. Meeting and constantly connecting with these people must count as one of the most crucial assets in an entrepreneur’s life.
Dave Kitley:What mindsets or capabilities are critical enablers or current disablers to increasing entrepreneurial activity?
Gary Boddington: Perseverance—without it you are dead meat!
Dave Kitley: Knowing what you know now, what advice would you give to would-be entrepreneurs? How should they go about taking the risks needed?
Gary Boddington: Surround yourself with positive people who are willing to give you an honest opinion, and eject any toxic naysayers from your team. Develop a very thick skin to fend off the people that will constantly tell you that your idea will never fly, but be able to reconcile your perseverance and self-belief with the humility to acknowledge that not every idea is a good idea. Talk to people and be brutally honest with yourself to accept criticism of your idea. Recognize the valuable opinion that feedback and criticism represent—even if it’s conflicting—and be willing to adjust where you believe feedback warrants a shift. Keep talking to as many people as you can in the early idea stages to crystalize your idea, and then focus your plan around some simple and achievable milestones. Then pin your ears back and just go for it, and most importantly, enjoy the ride. The rewarding part of doing your own thing is the ability to determine your own destiny, so once you are clear on what you are trying to achieve, understand that is it a challenging journey and become unrelentingly determined to achieve your dream. But a=always make sure you have fun along the way; your sense of humor can be your greatest ally.
About Gary Boddington
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