David White: "Entrepreneurial time poverty," DRG's dot-com crash and B-BBEE's "success formula"…

Listen here

"Running a business is really complicated," says David White, founder and CEO of DRG, BusinessFit SA and The Africa Marketing Initiative, and the resulting "entrepreneurial time poverty" is what quietly kills small businesses long before bad ideas do. In conversation with Irakli Rekhviashvili, White explains how BusinessFit's open source self-assessment platform works as a "mentor multiplier" for South Africa's estimated 12 million entrepreneurs and SMEs, since "there are not enough mentors around the world, or in particular South Africa," and why structure changes the odds: "if an entrepreneur is able to better understand what is required for them to build a sustainable business, there is almost no reason why those businesses shouldn't be successful." White also revisits DRG's own JSE listing within two years of founding, and the dot-com crash that followed. "I would never do it again, to be honest," he admits. "It took away that magical essence of why we started the business in the first place." What replaced the chase for money, he says, is something else entirely: "spending time with entrepreneurs who believe the world can be a better place... is a reward in itself." On the B-BBEE Act's push for larger companies to direct 3% of after-tax profit and 30% of supply chain spend to SMEs, a combination he's called a "success formula," White is broadly supportive but draws a hard line on how it's funded: "I'm not a great fan of the grants... when we're giving money and there's no expectation for it to be returned, I think the mindset changes of the entrepreneur."

Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.

Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.

If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Edited transcript of the interview

Irakli (00:02.39)

Most South African entrepreneurs don't fail from a lack of ideas. David White calls the real killer "entrepreneurial time poverty," and he's spent three decades building the systems meant to cure it. 

David White grew up here on the KwaZulu-Natal coast before spending eight years at Shell, and then, in the mid-1990s, founding DRG, a company he took from a standing start to a JSE listing within two years. Today, he's founder and CEO of DRG, BusinessFit SA and The Africa Marketing Initiative, three ventures built around one goal: helping South African businesses build the structure to last. David, welcome to the show.

David White (00:46.962)

Irakli, thank you so much. It's such an honor to be here, and I really appreciate it. Thank you.

Irakli (00:54.71)

You've called "entrepreneurial time poverty" a silent killer of small businesses. Could you please elaborate?

David White (01:45.005)

Certainly, the large organizations have access to resources that the small organizations don't have. Yet they have the same responsibilities, and clients have the same expectations. Staff are also expected to be treated in a similar way. There's just so much complexity in running a business, and the smaller businesses just don't have access to all of those resources that they need to move their businesses forward and to make the right decisions.

The entrepreneur is rushing around making sure that their clients are happy, making sure that they're able to meet the payments to their suppliers, ensuring quality assurance, but they're almost doing it from their own centralized decision-making process, which makes it really, really difficult for entrepreneurs to keep on top of all the activities that need to happen, all the regulations, all the expectations. It just makes it a little bit too difficult for entrepreneurs to meet all of the expectations. So the SMEs are at a huge disadvantage. They don't have access to the skilled people and the access to finances that the large organizations have.

Irakli (03:24.629)

And what are the kinds of resources you've built for SMEs to tackle some of these challenges?

David White (03:32.159)

Our biggest focus is helping SMEs to understand how businesses work.

Very often an entrepreneur has what we refer to as a great business idea. The great business idea, in all likelihood, solves some kind of community or economic problem. It could add value to society or perhaps support the environment. It might be something that they're really passionate about, that it is possible to make a profit ethically from, and they have some kind of plan to make it work.

Sometimes a great business idea on its own is not enough. They also need to have all of the other support structures. So what we try to do is create this "mentor multiplier." Because there are not enough mentors around the world, or in particular in South Africa, we've realized that we don't have time to sit with every single entrepreneur and help them to understand how their business works beyond their great business idea. 

So we've created a model. It has 32 different focus areas and four different pillars. We look at leadership, we look at the functional foundation, we look at measurements, and we look at energy, and we help entrepreneurs to understand how all of these other components help them to meet their governance standards and responsibilities, while also being financially sustainable and making the right impact on the economy, on society, and on the environment. So it's really essentially focused on how we help to fill that gap that SMEs tend to not have, which large organizations have access to through being able to employ highly skilled and capable resources.

Irakli (05:35.301)

And you've also built a digital self-assessment platform, in the event that a human mentor can only take on so many businesses at once, isn't it?

David White (05:45.469)

Absolutely. In our SME quality assurance process, we have five different stages. Stages one, two and three tend to focus more on compliance and quality assurance. When we get to stage three, we have an open-source tool. We've made it open-source for everybody to use, and what it does is help prepare an entrepreneur or business leader for their discussion directly with a mentor.

There are so many different aspects to running a business. Very often people hear the word "governance" and they just close their ears and run. Governance doesn't really have to be that complicated, especially at SME level. There's often a lot of confusion around sustainability. What does sustainability actually mean, and what is the impact of sustainability? We hear terms like "double materiality," which of course is a complicated concept, but in simple terms, it's about looking at how the business impacts the economy, society and the environment, and how all of those factors impact the business in turn.

So we try to decode the complexity of running a business. We say that if an entrepreneur is able to better understand what is required to build a sustainable business, there is almost no reason why that business shouldn't be successful. So our open-source technology says to entrepreneurs, go and run your business through this process. It'll teach you a lot of things, it'll expose you to different components of your business, but it'll actually bring so much more value to the meeting that you have with your mentor.

We have a saying: “the more you bring to a meeting, the more you'll get from it”. It tries to cut out six to eight to ten hours of going through all the minute details an entrepreneur needs to be aware of to run their business. So when the mentor meeting happens, the mentor is now fully informed about how the business is operating, where its pain points are, what it's trying to achieve, and that discussion is able to be energized and really focused on how we move each one of those businesses forward.

It came about during COVID. In South Africa, we probably have 12 million entrepreneurs and SMEs to mentor, and there's no way that the current mentoring companies in South Africa have enough capacity to do all that training. So we just thought, if we could reduce the time that an entrepreneur needs to spend with a professional mentor talking about the business, we'd really help the process become more refined and help entrepreneurs be more prepared for that important engagement discussion.

Irakli (09:14.722)

Fascinating. Taking a step back and looking at your journey, DRG listed on the JSE within two years of you starting it, and then the dot-com crash hit and the share price collapsed. What did living through that teach you about businesses and equipping entrepreneurs moving forward?

David White (09:36.253)

I would never do it again, to be honest. It was very, very complicated. It was such an exciting activity to do, but what I realized is that the business, for me, changed completely. I regard myself as an entrepreneur. I'm constantly trying to solve problems, and that's where my mind works best, and that was exciting for me. When we listed on the stock exchange, my focus changed completely. We were doing reports for the JSE, I was in meetings with newspapers, and it took away that magical essence of why we started the business in the first place.

So I do think that for most entrepreneurs, especially the younger generation, we're more focused on the excitement of watching our ideas come alive in the market than on making lots and lots of money. Because when you try to make lots of money, it's actually elusive. It's really difficult to just have an idea, list it, make lots of money and retire. It doesn't really work like that in practice.

So I learned that wasn't the kind of business I wanted to be part of. I also realized that, even though I had worked at Shell and understood the corporate environment, I wasn't equipped to lead a team of people through the very complicated process of a dot-com crash, re-establishing market credibility and raising our share price.

There were some magical moments in the beginning. Collectively, we made one and a half billion Rand almost overnight, and that was exciting. But maybe 18 months later it started sliding, and for me it was just the greatest thing to be able to come back to the original idea of what we were trying to do, which is to affect other people's lives positively. Our skill is human resources, developing people and developing businesses, and that is, for me, the most exciting aspect of my career and business.

Every time we spend time with an entrepreneur, they tend to have exactly the same perspective. All they're really interested in is their great business idea and how it can help communities, how it can solve problems, and how it can last into the future. So I think there's perhaps a shift in perspectives of what success is. Is success making lots of money? We'd all be glad to do that, but at the end of making a lot of money, I'm not sure that we feel content and happy. I think what makes us feel great as people, as humanity, is when we're helping others. We all have a piece of the puzzle to share, and spending time with entrepreneurs who believe the world can be a better place, who are passionate about something bigger than money, is a reward in itself.

So I think the listing of DRG in those early days, along with some other companies, was very exciting. It was a wonderful learning curve, but complicated enough that I've come to recognize it's a process that should really be left for other professionals to guide.

Irakli (13:35.15)

You've written in the past that the B-BBEE Act pushes larger companies to put 3% of after-tax profit and 30% of their supply chain spend towards small businesses, and you've called that combination a "success formula." Are you seeing it working in the market?

David White (13:58.591)

DRG, in fact, was one of the first SANAS-accredited BEE verification companies in South Africa. We were one of the first eleven. We had a subsidiary called DRG CIA, so I did immerse myself in the B-BBEE Act in some detail.

I can't say that all of it works, and of course we know that not all of it does, but the procurement element is very, very clever. It encourages larger organizations to spend money helping SMEs build better businesses, meet compliance standards and improve their supply chain effectiveness. It also encourages large organizations to look for smaller organizations as procurement partners, to be able to draw services from them.

I think if we didn't have that procurement element on the BEE scorecard, and all of its different incentives... For example, if you help an organization before they become a supplier, your procurement recognition increases by 20% once they do become a supplier. That's all very, very clever. In an international context, we don't have black economic empowerment, and we don't have a procurement element, so there's no real focus for large organizations to procure services from smaller companies. So I think, as a South African initiative in particular, that procurement element, I really like it.

Unfortunately, we still have a collateral-based system for doing loans rather than a transactional-based one. So we have a lot of companies that are doing really well but, because they're young people in business and they don't own houses, they can't put up any sureties, so they don't get the loan. The enterprise and supply development element, with its grants and loans, really creates easy access to funds for SMEs. I'm not a great fan of the grants, though. I think grants should be paid back. When we're giving money and there's no expectation for it to be returned, I think the mindset of the entrepreneur changes. 

So I'm not saying it's a perfect component of building SMEs, but I do think it's something unique in South Africa, and I think it's well supported. I also think larger companies are recognizing that their role in building the SME sector isn't just giving money. When we give money, we spend it on things that maybe aren't as important as focusing on how we make sure a business has a proper governance-based foundation and meets sustainability standards.

So it's a big yes for me. If I was in charge, I would certainly make some tweaks to it, but I think we have so many smart people in South Africa that if we actually drew those minds together, I think quite quickly we'd have a framework that would not only be great but hugely effective, and making a massive impact on our SME sector.

Irakli (17:52.898)

David White on building systems behind South Africa's next generation of businesses. David, thank you.

David White (18:04.575)

Thank you, Irakli. It's such a great privilege to speak to you and the BizNews team. Thank you.