Fasie Malherbe: Chef who turned training idea into business worth billions

Here's the Rational Radio interview with Fasie Malherbe, co-founder of Lobster Ink. He and three partners started the business in 2006 with seed capital of R22,000. After years of bugging Ecolab, they eventually sold the business to this major multinational for "a handsome multiple of its $26m annual revenues". Malherbe, a chef, shares his entrepreneurial journey and offers some advice for fellow SA business builders. – Alec Hogg

Fasie, we are talking to you from Geneva. But as everyone will hear in just a moment, you are very South African. Your story is an inspiring one. A company called Lobster Ink. Which you guys started – you and three partners Dale den Dulk, Paul Rowett and Tim Nel in 2006 with R22,000. It's a kind of a story that dreams are made of and you've sold it out for gazillions. Just take us from the beginning and how you started and where did Lobster Inc came from?

Thank you Alec. I worked as a chef in South Carolina in Charleston, US. While I was working there the slogan was – "The world is your lobster" rather than the world is your oyster. I came back to South Africa thinking that and met up with Dale den Dulk, and we decided to go into a training business called – " let's sell lobster" using the word lobster as a catch phrase. That's how "let's sell lobster" was born. A face to face training company. Our role was essentially to go into the most extraordinary destinations around Africa and train up team members that had come from the local villages who hadn't necessarily ever been exposed to education, and never been exposed to discerning traveller's and luxury goods. Our goal was to teach people – who had never slept in a bed before, how to make a bed. Someone who had never cooked on gas before, how to do this. Essentially, all the hospitality and care around the discerning traveller. Bearing in mind that in Africa you've got three out of the 10 most expensive destinations in the world and you're taking people from the local community, training them to serve what the most discerning travellers are expecting. Whether it's the Ritz Carlton or a service from New York, or the Peninsula in Hong Kong. That was our role and it developed from being face to face, through to videos that we used to put on 27-inch Apple Mac screens and ship them all over Africa.

Because we're South African and we've got a heritage of being slightly insecure of what we are and what our products are, we didn't realise that this was a solution that was needed globally. A number of the large global groups cottoned on to our remote video based training solution, which was mobile first and they pulled us through to the UAE. We did some pilot projects in the UAE and from there we were taken to the US. That's what sparked it and created a frenzy around Lobster Ink for quite some time.

So it exploded into the global community but it's that first step that often trips up entrepreneurs. How did you get in first? I understand the idea and it's a great idea and I'm sure there are many other people who've had similar ideas in their minds but not managed to hook a fish like you did. Who was the first fish that you guys got?

We were incredibly lucky in the sense that a company called Singita – which is a South African company we can all be tremendously proud of delivering the greatest hospitality on earth. There is no hospitality company around the globe that delivers such a luxurious experience as Singita and they took a chance on us. They asked us to assist with their hospitality and delivery in their lodges. We also had Wilderness Safaris that gave us a massive break. They had 70 odd camps and they said "let's take on the solution". All of a sudden we knew there was something there because these two clients were ripping it out of our hands in order to be able to use it within their remote locations. The interesting thing about being able to get product market-fit rapidly, is to just spend a huge amount of time with clients. If you want to make great things or things that people want, then make sure that you are asking the right questions and you are listening to those answers. You don't necessarily have to listen to the answer that someone is giving you in order to shape your product. As Henry Ford said if I asked people what they wanted they would have said faster horses. The importance is to be at the client coalface where their needs analysis is, find what the value is and deliver a product that ensures that the value is being created and that value is sustainable for you and for your business and then keep on rolling with the innovation that comes off the back. We were incredibly lucky and we are incredibly grateful to Singita and Wilderness Safaris.

Then we had some big hotel groups – a US hotel group that gave us a lucky break in the UAE and the east. The importance about going into the US is, we didn't go in there first. We went outside of the US to their regional offices in the UAE and Southeast Asia. Those regional offices took their new shiny toy that had proved value and took it into the head offices in the US. The US headquarters are inundated with solutions and just can't listen to every single one. When we took a data driven, value solution into the corporate head offices, all of a sudden they sat up and took notice. That was our strategy there, as well as a number of lucky breaks. That being said we started understanding luxury hospitality globally, because we were four relatively straightforward South African gents with very little budget, what we would do, is go to major cities around the world and sit in the lobbies or in the coffee shops of those luxury hotels and we would just drink hundreds upon hundreds of cappuccinos and watch the ebb and flow of how the hospitality was delivered. We'd speak to the concierge, ask them questions and all of a sudden we found alignment and then we manoeuvred the product rapidly in order to be able to gain that alignment.

No substitute then for opening your eyes and your ears, and just watching and do your research.

And not being insecure. South Africans are so insecure. What we must understand is that the minds that come out of South Africa are incredible. The resourcefulness the South Africans have is far beyond anything that we see in many other countries. The work ethic of the Americans is absolutely extraordinary and it takes a lot of beating to work as hard as the Americans do. That being said the resourcefulness of the South Africans -because of our heritage, is absolutely paramount to our success. If we could eliminate the insecurities that we have, that everything from overseas is better, South Africa is an extraordinary testing ground. If you can test something and it works and you find product market-fit in South Africa, I guarantee you will be able to tweak that slightly and it will work globally. South Africa is the great testing ground, so make sure that it makes sense locally and works locally, and then start scaling.

You decided to sell to Ecolab recently and cash in your chips as it were. What shaped that decision?

We did decide to sell to Ecolab – it was a long time coming. I essentially pursued them for three and a half years. They didn't hear me because they had many other projects – it's a $50bn organisation and there was this plump Ginger head trying to sell them his company. Ecolab is the biggest B2B organisation globally. So Marriott is a client of Lobster Ink but it's also kind of Ecolab. Marriott is one out of one million odd clients of Ecolab. McDonald's is two out of 1 million, Starbucks is three out of the 1 million.

So essentially Lobster Ink is a desk-less worker platform. In other words we are focused on teaching the two point seven billion people, out of three point three billion people that do not have a desk. Ecolab's biggest clients is a man on the ground. Yes they deal at a corporate level but Ecolab's biggest client – the lady at the counter that is essentially using their chemicals, dispensing with their products, they need to teach those people how to do that as well. The alignment was critical and that came to fruition where all of a sudden they did a big assessment of all their clients needs analysis and it came back that the training was an enormous need of their clients and we were in the right place at the right time. They bought a great company – Lobster Ink for a good price, but more importantly with their access to all those clients they are going to create a global desk-less solution that focuses on those two point seven billion people at scale and they're going to do that rapidly.

It's almost like a merger between a very formal business and an informal business. One that's remote, that can reach people through cell phones and new technology

Absolutely. The interesting thing about about what we did in Lobster, was always mobile first. There were two things that Africa taught us. It was teach to the WHY and make it relevant and secondly was mobile first because Africa is the world leader in mobile. We were a while ago the world leader in mobile and because mobile technologies were adopted quickly because people don't have laptops and desk computers etc. The importance here – from an Ecolab perspective, is that while they are a global formal institution, they spend over a billion dollars on innovation every single year. So it is very formalised, but they are trying to align and disrupt continuously with a huge billion dollar fund. So it was a natural acquisition for them. That being said they are going to take Lobster Ink to a whole new level.