Profile: Darren Isaacs – Makosi: Disrupting the industry to change the world

Originating in South Africa, Makosi opened operations in the United States and the United Kingdom in 2005.

With the mantra ‘get your hands dirty, figure things out, keep it simple and never give up’, Makosi is making waves and disrupting the traditional way of doing things, much to the chagrin of many.

Darren, who lives in New York, became a CA(SA) because of the broad set of skills it provides. ‘In my mind, it was the biggest bang for your buck in terms of years of investment. It gave me the capability to do many different things. No qualification could come close to the CA(SA).’

A MINDSET OF TAKING SMALL STEPS

As a young man, Darren always knew he wanted to do his own thing, although he admits he had no idea what it would be. ‘I have this mindset of taking small steps. Often, people’s minds get in their way, and they overcomplicate things or take months to develop business plans before they start their business. That works for some people, but for others, it is quite debilitating, because they put up a bunch of barriers before they even hit the ground.’

Darren’s starting point for his business was simply setting up a company and putting his name on the door. ‘While doing my audits, the tea lady used to call me Makosi (which means ‘leader’ or ‘chief’ in a tribal context), although I wasn’t deserving of the name at the time. She thought I was smarter than I was, and a leader,’ he smiles.

So, when it was time to choose a name for his company, Makosi was the perfect choice. ‘Putting my name on the door was the smallest step possible. The plan was to just see what happened from there. It is probably the antithesis of what most people think about as far as entrepreneurship is concerned,’ Darren laughs.

He had no plan, just a spirit of adventure and determination to see what he could learn and do and the rest, as they say, is history …

The Makosi team realised that the problem that has always plagued accounting firms – turnover – remained the largest barrier to building a strong culture, planning for succession, and driving growth.

NO TOLERANCE FOR LOW PERFORMERS

‘Because there is so much attrition at accounting firms, they are finding it hard to have enough staff to fulfil the work. Firms then tend to hang on to low performers,’ explains Darren. ‘Makosi’s feeling is that you shouldn’t have any low performers in your organisation if you want a high-performing organisation and that is a way to build a great culture. If an organisation tolerates low performance, high performers do not want to be there.’

He explains further that organisations who tolerate low performers ‘reward’ high performers with more work, while the others only manage an average amount of work. ‘That is not fair. Your highest performers should be given great work to do, and your low performers shouldn’t be there at all.’

Makosi strives to drive a high-performance culture for their clients by removing what they call ‘workforce compression’. ‘Many of our clients will bill about 60% of their hours for the year in the first three months of the year. The rest of the year full-time employees are very underutilised.’

It is Darren and his team’s mission to flatten that utilisation curve. ‘We say, instead of needing 200 people to get through the busy season with them sitting around the rest of the year, rather have 120 high performers. Remove low performers. You can still get through the work by using our people. In the slower months, you will then have fewer people allocated to less work, which means they will be busier. You don’t need to overwork people but can rather dip into firms like Makosi. This will drive a great culture, boost employee morale and hold people accountable to high performance.’

DISRUPTION IS UNCOMFORTABLE BUT NECESSARY

The traditional world of accounting is very nervous about Makosi’s disruptive influence on the industry. This, however, is not something Darren is worried about. ‘There is so many opportunities. The most important one is the profession – how do we help the profession recover from certain setbacks, such as state capture and so forth? Also, how can we help the profession produce the chartered accountant of the future?’

According to him, the CA of the future will have to be a lot more technically-minded and exposed to the global stage. ‘Disruption is typically a good thing but comes with a bit of pain in the beginning, as the industry recovers from shock and starts adapting to a new way of working. Ultimately, I think the result will be CAs(SA) becoming the highest regarded accountants globally,’ says Darren.

Makosi wants to work with South African firms and share their success and what they have learned. ‘We talk to way more accountants and auditors than any other firms in South Africa and have learned what people want, what they want to achieve, and the impact the COVID-19 pandemic had on them. We do not want to hurt the profession or contribute to the “brain drain”. We want to keep people in South Africa, but also give them international experience and exposure that can improve the South African industry to compete on a global scale.’

A NEW WAY OF DOING BUSINESS

Another issue some firms have with Makosi is the belief that they are labour brokers. ‘They think that we have identified cheap labour in South Africa and because we have international clients, we can charge a lot for them, which means we pay them a bit more. The firms think they can’t compete with us unless they increase their salaries, which means their margins will be hurt. But we poke holes in that thesis in so many different ways. What we should be talking about is ways to encourage more people to enter the industry and slow down the flow of people out of it.’

Makosi is not the run-of-the-mill labour broker or recruiting agency, where they find talent and give them to their clients. ’We manage our people, outcomes on audits, and advisory engagement. We co-manage our people with our clients so that we can deliver outcomes. We have also developed a lot of automation, data analytics, and other capabilities that will assist the audit industry in becoming more value-add, rather than just a compliance requirement.’

Darren is excited about Makosi’s prospects. ’It goes back to my original point of taking things one step at a time. When I started, I took small steps, one at a time, and now we are sprinting. We’ve just got such momentum, such positivity. Our culture off the hook!’ he says excitedly. ’We’re doing great things. We‘re putting 10 000 kids through school. We’re employing thousands of people. We’ve just seen raving fans in all of our clients. It has been an incredible journey, a personal journey as an entrepreneur to start small. Everyone thinks entrepreneurs like Elon Musk don’t get scared, or they all of a sudden just found themselves brilliant. But they started with small steps. Now when I wake up in the morning, I am sprinting, we are taking big steps, leaping and going for it, bringing hope, positivity, purpose and impact to our stakeholders, and that is super exciting.’

BREAKING THROUGH THE ‘GROWTH CEILING’

The ability to do good through impacting the lives of 10 000 kids, improving the profession and helping firms and people in South Africa to get on a global stage, and helping Makosi’s clients are things Darren is very passionate about. ‘It is incredibly rewarding. We’re flying to doing something great here. That is what gets me out of bed early. I wake up at four o’clock in the morning every morning and I just can’t wait to go!’

Makosi’s initiative Room to Grow comes from the idea that there is a ‘growth ceiling’ that current accountants in South Africa are faced with as far as education is concerned. ‘This implies opportunities are abundant, but there are many reasons stopping people from achieving. It’s unbelievable to think of the unemployment in South Africa, across the board, but even more staggering to think of unemployment with accountants in South Africa, where the rest of the world is suffering for accounting talent,’ explains Darren.

For him, the solution starts with a mindset. ‘People need a mindset of “I can achieve incredible things”. You don’t have to be constrained by anything – not the colour of your South African passport or the colour of your skin, you’re background, where you live, or whether you have access to clean water or education. There needs to be a mindset shift that imagines a world without constraints. Firstly you have to win the battle of the mind and then find a way to remove the constraints and create access to things like education and whatever is needed to break through the “growth ceiling”.’

Makosi is endeavouring to build this movement. ‘Instead of growing a brand, we want to create a movement of enlightened people, excited about growth. We also want to create a framework to deliver on growth opportunities. We want to break down the mental barriers and have the structural things in place for multiple stakeholders.’

Their idea around growth is not only that it serves their clients for them to grow and achieve greatness, but also to give at least 10 000 South African kids access to education and other opportunities.

‘We all know how powerful education is. The biggest issue is access to it. This can also impact the accounting profession. If you can educate 10 000 kids, how many of them would maybe be keen on becoming accountants? But that is not our main focus. Rather, if we can educate 10 000 kids, imagine the knock-on effect that they will have on their communities and the amount of good that they will be able to do! It’s about making the world a better place, with room to grow and access to opportunity.’

Makosi recently completed a study about education and will soon be publishing an impact report. ‘The most interesting thing was that 90% of a child’s future, in terms of learning abilities, enthusiasm for life, and creative thinking, is developed before the age of seven. So, if we can impact early childhood education, we can inject a growth mindset, where kids don’t feel constrained and will then have a higher likelihood of becoming problem-solvers.’

Initially, the plan was to put 10 000 kids through school. ‘We did the research. It would cost $350 million to put 10 000 kids through school. We realised that is the problem – it’s not sustainable. The starting point should be changing the mindset of people in communities and encouraging a growing hunger and desire for education in young kids. The immediate thing is impacting mindsets so that a portion of the people that we impact, can problem solve for themselves.’

THE IMPORTANCE OF BEING IMPACT-FOCUSED

Darren feels companies have to be impact-focused if they want to succeed in the future landscape. ‘Research shows this type of focus drives better results in terms of employee retention, morale, innovation, and client retention. Imagine this scenario where all of our clients are excited about putting 10 000 kids through school with us. When we recruit or talk to firms in South Africa and can get them all behind something really big and powerful, it creates a real ecosystem. Instead of a client/vendor relationship or an employee/employer relationship, it gets us all together, working on something way bigger than ourselves.’

Darren firmly believes that the accounting industry can make the world a better place. ‘Accounting firms need to start driving ESG at all of their clients. If they can start pushing real value, instead of an audit perceived as a non-value service, it can create an incredibly symbiotic relationship between the client and the audit firm. Accounting firms can start driving insights and recommendations for companies to be better global citizens.’

For him, it starts with the work that audit does. ‘You have these smart people coming out of college, doing their articles. Currently, a lot of the work they do is boring and mundane, seen as low-value, repetitive tasks. This stuff should be automated. It should have been automated years ago. We need to get public accounting to a point where the work of the people are doing is world-changing and that they aren’t just crunching numbers in a spreadsheet.’

Makosi can do this because of their scale and the ability to continually harbest best practices, to innovate, and ultimately continually polish the industry into a high-performing and value-adding machine.’

Darren’s advice to young aspiring CAs(SA)

• Just keep going. You are on the best track right now. Being a CA(SA) is the best thing you can do. It does not matter what you want to do later in life, being a CA(SA) will set you up on the right trajectory and give you the tools to get there, while giving you the ability to do good things in the world. It is the best stepping stone you can possibly have.
• Acknowledge yourself and your successes. Don’t worry about the next possible failure or challenge. You have done so well to get to this point. Pat yourself on the back and keep going!
• Make a commitment to growth. Define what success looks like to you. Create a timeframe and make it achievable. For example, give yourself 25 years to reach your goal. Measure yourself every three months (1% of 25 years) and make sure that you have moved 1% closer to your goal. You are guaranteed success, and you will probably get there much sooner. Think and dream big but take small steps to get there.