I have always been intrigued by ‘strategy’, the thing that ultimately sets a company apart from the next and probably, together with strong leadership, the main driver behind sustained value creation. In a series of interviews, I am exploring the different approaches of different business leaders (all chartered accountants) to strategy.
I had a virtual interview with Abed Tau, CEO at My Dough and ‘a serial entrepreneur’ as he describes himself in his LinkedIn profile. Having started and scaled many successful entrepreneurial ventures, he shared profound insights applicable to the entrepreneurial journey.
Abed’s top six entrepreneurial insights
‘The Why’ of starting an entrepreneurial business is key
One of the reasons Abed is advocating for entrepreneurship is his belief that anyone who is pursuing entrepreneurship is already contributing to creating jobs, alleviating poverty and impacting society.
When it comes to the individual entrepreneurial business Abed emphasised the role of ‘The Why’ − ‘Sometimes we make very philosophical statements when we start a business with a grandiose purpose statement – we want to alleviate poverty, or we want to create jobs – we hear it a lot. I don’t necessarily think that there needs to be this massive purpose at the start of an entrepreneurial venture, because things change so much and so quickly.
What I do think is that there needs to be a really strong why – Why did you leave your corporate job? Why are you starting this venture? When things get tough and you can’t pay the bills, when your employees take you to the CCMA, you are going to have to remember the why, because that is what is going to keep you on the treadmill. Without a strong why, it will be too easy to say this is too much, I did not sign up for this.’
Abed elaborates that he has learned that entrepreneurial companies who do have a strong mission and a strong why in terms of the problem that they want to solve, or the need that they are addressing from a societal perspective, are able to galvanise not only clients but also early employees around that mission.
Strategy means different things to different people at different stages of a business’s entrepreneurial journey
‘From my perspective, during the first phase of starting a business, the strategy is normally to get as many clients as possible. Then, when you reach some sort of maturity, once you’ve picked up some momentum, the strategy changes to how do we build sustainability and how do we start looking for the right people to run the business.’
- Early stage: Abed describes his experience of the early stage: ‘If you are the founder or part of the founding team, around 70% of effort is all about client acquisition and sales – getting the brand name out there, talking to people, galvanising them around what you do, trying to get costumer feet in the door. 20% of effort is making sure you are servicing your customer and you are retaining them − these are the people who will be able to give you referral networks that will allow you to continue to grow the sales pipeline. 5% of effort then becomes about operations, things like making sure you are accounting for everything, you have the right HR policies. The last 5% of effort is then on the strategy, making sure you still have your North Star. You have just came out of the blocks, so it’s unimportant at this stage if you are going to list or not − you are just making sure you are not failing and falling into the mud.’
- Reaching maturity: Abed moves to the middle phase: ‘Three years into the business the percentages start to change. Sales will always be a big focus, but it then might look like 50%, there is still this massive drive for the sales, but now you have built up momentum. 30% are now related to operations, producing even more quality, taking even more due care when you are handling work and handling products. Accounting, HR, legal, finance all starts taking shape. The other 10%, the North Star, also starts to grow – at this point things are becoming a bit clearer, you are no longer in the middle of the ocean not knowing where land is − now you have an idea, somebody has given you a compass, north is this way!’
- Upscaling (or not): Abed explains that between Year 7 and Year 10, the founder is no longer going to be involved directly in sales. ‘The percentages then start looking like 20−25% for sales, 35% is about operations, and the biggest chunk is about strategy. Unfortunately, many businesses fail at around Year 5, so if you get to Year 7 and Year 10, strategy starts consuming you as the CEO.’
Then important decisions need to be made. ‘The CEO then starts thinking about: Am I building a business for lifestyle or do I want to grow exponentially?
Am I happy with this successful business? Or something bigger? Then you start to chart the 10-, 15-, 20-year strategic paths.’
Fluidity of the entrepreneurial process
Abed stresses that in the early stages of a venture, the strategy changes so often that it is not possible to do a strategic session every year or every six months or to go away on a breakaway session and talk strategy and then come back and implement. He adds that there are so many pivots happening − one month can look completely different from the previous month.
As an example, he refers to when they started ‘Tuta-Me’, the strategy changed within the first three months from purely tutoring kids with their moms booking lessons on the app to selling airtime, textbooks, and then three months later they were going to have a WhatsApp service, and so the business grew. ‘We would have spent so much money going on strategy sessions to come up with different strategies, it would have been unattainable,’ he says.
‘I think that during the early stages you want to make quick decisions; you want the founders, the early team, to be able to say: today is Monday, this is how we are going to try and steer the ship and everyone gets galvanised around that.’
He contrasts this to bigger corporates where processes and decisions by the board are informed by management, who in turn are informed by what is happening on the ground. He adds that there is a lot more detailed research, a lot more macro and micro forces at play, and you might even look at consultants who come in to assist. ‘I could not hire Bains or McKinseys to tell us what to do at Tuta-Me; they probably wouldn’t know either! It’s a pioneering space − you are going to pivot so much you’ll find that you will be disproving all your assumptions along the journey anyway.’
Implementation is not easy
‘Strategy is probably one of the hardest things − it is easy to come up with a strategy, but it is harder to deploy it. In the madness of life, unfortunately strategy does not happen in a vacuum where you can just stop the world, silence, go sort it out quickly and come back and deploy it. Everything is still attacking your business, you still have the cash flow issue, the employee issue, that client service issue. In and among that you must still drive a strategy.’
Jokingly (and brilliantly in my opinion) Abed uses the analogy of a new year’s resolution: ‘If by December you want a sixpack and swim in a speedo, it is easy to buy into the sixpack. You cannot wait to wear a speedo and look like the Baywatch people, but people don’t buy into the gym work they will need to do, the personal trainer they need to see three times a week; they don’t buy in into eating lettuce and running on the track when everyone is sleeping. The real work is getting people to buy into the process to achieve the goals that the strategy requires.’
Abed explains: ‘I think with strategy implementation the devil needs to be in the detail, not in that grandiose perfect picture. I do think we all fixate ourselves with the big picture, the fun stuff, the exciting stuff – “can’t wait to list!”. Lots of people buy into the big picture, but they don’t buy into the work, into the detail. If we achieve this goal we going to Mauritius, but they don’t want to work the 15 hours days it is going to take to get to the goal. People need to buy into the process and not the end result.’
Abed drives home the work required to bring strategy to life. ‘Most people get fixated with what does the balance sheet looks like at year-end − have we made progress. What a lot of people don’t do is look at the process to get there; for example let’s look at the income statement.’
He reiterates the challenge again and again. ‘Strategy is a difficult thing − it is so much easier to just carry on how things have been working. We might have been making some money, but what is incredibly difficult to do is try and achieve goals, and that is what strategy really is about. We have this big goal and we are going to try and achieve it, and this is how we are going to try and achieve it. That is incredibly difficult and people don’t find comfort in difficulty − it’s not always a fun place to be: to get up at 5 am to run each morning!’
Embed your corporate culture from the start
‘One of my key learnings in the seven years that we have been growing entrepreneurial businesses is that contrary to common belief, people are not your greatest asset. Great people are your greatest asset! It’s an art to find people that are going to champion the entrepreneurial mission.’
Abed explains: ‘When you hire, you almost hire for culture. You can teach competence, but you can’t fix attitude. When you are hiring for culture, you need to ask, “What are the things that identify us as a company”, “What will remain true about us in 10, 15 years”, “What are our core values” − the things that are true to your cause and culture, and then you hire for that. You need to make sure that the people who are on the boat with you understand the mission and know what you are trying to do. They must want to get to the shore with you.’
About the challenge of getting the right people and competing with corporates for talent, Abed is adamant: ‘The people who are going to champion the mission need to be as hungry and passionate as the founders, barring the difficulty of matching a salary. But the shift has started − talented younger people are already aligning with companies where they feel a cultural fit and with a mission statement that speaks to them, rather than going for a big corporate salary.’
Abed referenced Brian Chesky of Airbnb as an example. ‘When Brian was hiring his first employee, he looked at 2 000 CVs and interviewed 600 people. When asked why he did this crazy thing, he answered that the first person that you hire becomes the DNA of the people that follow.’
Passion for entrepreneurship
Throughout the interview, Abed’s passion for entrepreneurship framed the conversation − from the difficult decision founders must make to hand over their business at a certain stage, to the regular check-ins for staying ‘on the high way’, to the importance of mentorship and the implementation of the sustainable development goals in Africa.
His passion is infectious.
AUTHOR | Christiaan Vorster CA (SA), SAICA Regional Executive
