The hidden cost of selling your business: Andrew Smith’s Yuppiechef story

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What really happens after the entrepreneurial dream comes true? Andrew Smith, co-founder of Yuppiechef, opens up about building a business from a side hustle into a retail powerhouse, taking venture capital, navigating rapid growth, surviving Covid, and ultimately selling the company. Drawing on years of handwritten journals, he shares candid lessons about ambition, control, investors, partnerships and the emotional cost of letting go. It’s an honest, thought-provoking look at entrepreneurship - and a powerful reminder that success doesn’t always mean getting everything you wanted.

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Edited transcript of the interview

Alec Hogg: I get sent a lot of books. If I could show you my bookcase at the moment, I must have thirty that are waiting to be read. Most of them I just toss in the waste paper basket. Why would you spend time reading a second rate writer when you have got Andrew Ross Sorkin's 1929? That is on the back burner, and many other of the great international books. But I will tell you something different. I read this book and I have got to show it to you. It is called Handwritten. It is by Andrew Smith. It is self-published. And he is with me in studio. Andrew, nice to meet you. It is two years old, this book? How old is it?

Andrew Smith: No, no, recent. June.

Alec Hogg: Only June.

Andrew Smith: But I started writing four years ago, so to some extent it is older.

Alec Hogg: But you have been on the circuit.

Andrew Smith: Yes.

Alec Hogg: You have spoken to various people. And I am wondering, has anybody who has interviewed you actually read the book?

Andrew Smith: There is a big difference when they have and when they have not. Some have.

Alec Hogg: Why have they never spoken about a guy called Sam Paddock?

Andrew Smith: Sam Paddock. Well, there are a lot of characters in the story, so we can, I am very happy to go into Sam. What do you know about Sam?

Alec Hogg: What do I know about Sam? I know that Sam and Rob were the Shuttleworths of the second generation. They got unbelievably lucky. Let me tell you the story. They had a Cape Town business called GetSmarter. They sold it to 2U. 2U's share price at the time was 98 dollars. They got a hundred million dollars. Just like Shuttleworth, although VeriSign did not go bankrupt. But they hit it at the best possible time. I am going to talk about him a little bit later, because your story to me is almost a cautionary tale for entrepreneurs. It comes across as the entrepreneurial dream: start something, sell it, make a lot of money, and go off into the sunset. But actually, the way I read this book, I think you are a thoughtful person, I think you are a deep thinker, and I think you must be looking at your journey with some circumspection. And I want to start with your journaling. You started journaling at the age of eighteen. That is very mature.

Andrew Smith: I am very glad I did. And one of my sons also started journaling at eighteen, so maybe it is in the DNA. I started writing, and the very first journal was a little A6 book, and it was almost just one page of A6. I would write down something from the day or the day before. And I have kept that up pretty much nonstop until now. So I have a big box of journals in the cupboard and I do it every morning. Because the book is called Handwritten, it is based on my journals and also on Yuppiechef's handwritten cards. So there is a bit of a play on that. I get a lot of questions now about how did you journal, and how did you keep it going, and do you still journal? And the answer is yes. And there is really not much to it. In the morning I write down a few things about the day before.

Alec Hogg: What does it do for you?

Andrew Smith: In the moment, there is a lot of banal writing. If you pick up a random page, it just says, yesterday I watched my son play cricket and went to the office. But every now and again there are some real gems in there. What it does in the moment is it helps me reflect on the day before, and what am I going through, and capturing that. But what it does in the future is what is really interesting. When I read back on some journals, which does not happen very often, but it happened a lot in writing this book, I go back a year, ten years, twenty years, and I read about what I was going through in the moment, and the relationships that I had, and my assessment of other people that turned out to be very right or very wrong. And it gives me a lot of perspective on today, because whatever I am feeling today, I realise that in the passage of time it could change and things can be brought into focus. And what it really did for the book is that I have a terrible memory. If you asked me what did I do last week, I would battle to write it down. But it really helped in extracting from the past what the story was.

Alec Hogg: It made the book, surely. Having a resource like that, so much deeper, so much richer. And for those who have gone a similar path, so much more meaningful. So Yuppiechef, well known today, but you had the entrepreneurial story which many will be able to relate to. It was almost a side hustle for a long time. And famously you did not take a salary for five years. I did not take one for seven years at Moneyweb. It is what you do as an entrepreneur. But in your case, how did you live while you were building Yuppiechef? The obvious conclusion for most people is that he must have been rich, he must have had lots of money to keep himself going.

Andrew Smith: No, not at all. I started my career, I dropped out of university at eighteen.

Alec Hogg: Why did you drop out?

Andrew Smith: That is a long story, and I try and capture some of that.

Alec Hogg: It is a long story because you got bored.

Andrew Smith: I think I did, although it was only three months, so it is hard to say.

Alec Hogg: Steve Jobs only did six months. So that is why he is twice as successful.

Andrew Smith: I was studying a BSc in computer science and I had an idea as to what that was going to be, after going through school where you do some subjects you like and some that you do not like. I thought university is where it is all going to be unlocked and I will be able to focus on just the things that I want to do. And it disappointed me in how slow it was, how much debt I knew I was getting myself into, and I thought, what was it for? So I had some reasons at the time. And then when I look back, I realise there are probably some other reasons as well. I failed a test, which was probably the first time in my life. And I thought, do I want to be doing something that someone else says I should be doing? They say you must study this, then they test me on it, and then I fail. And I think, I am going to go and do something where I am more in control. So to some extent it is a story of control, which is perhaps what drives a lot of entrepreneurs. They do not want to sit in an environment that they are not in control of, that they are not setting the course for. And so I left. This is 1999, and I started working in web development, which was the very early days of the internet. We were building the most basic of websites that were just starting to become a bit more interactive. And I worked in Pietermaritzburg for two and a half years and then moved down to Cape Town.

Alec Hogg: Whose website did you build?

Andrew Smith: We built all sorts. We did a lot for the transport industry, like Stuttaford Van Lines and some other big names.

Alec Hogg: Those are big names.

Andrew Smith: We were building their intranets, so internal websites that they would use to run their business. There was no e-commerce. If we did marketing websites, it was for lodges or B&Bs or something like that. And fibreglass swimming pool sites and all sorts. And some online marketing, some digital marketing. And it was all time being sold by the hour. Someone would come to us and we would do a job and you quote for it, and then afterwards you maybe do some maintenance. And in all of that you think, if I do not work, I do not get paid. And an hour of my time that I am not working, if I am on leave or I am sick, is zero. And so there was this desire in us around 2005. Shane and I, who have been partners for a very long time, and two others with us, Fred and John, we said we want to create a product that we can sell. We can wake up on a Monday morning and look in the bank account and go, someone paid us money while we were sleeping over the weekend. And so that was the transition to e-commerce. It was taking the skill that we had but trying to shift it into a product-based thing. A lot of people have that desire and they never quite make the switch. And so we did an event, a three day event, where we were going to create a site that sold something. And it ended up being not Yuppiechef, but Bug Zapper, selling an electric racket that swatted flies and mosquitoes. This was 2005. And the first sale was to my mom, who bought one. And that was on the Saturday of the three day event. And nothing changed overnight, but over time you thought, there, we made another sale, we made another sale. And we did not have to work on the site and slowly revenue was coming in.

Alec Hogg: So while you were sleeping, you were starting to make money.

Andrew Smith: It was about a flywheel, and I think that is the difference between a services company and a product company.

Alec Hogg: Did you get that from Jim Collins?

Andrew Smith: Maybe now I call it that. I do not know what we called it at the time. But we were trying to have this idea of, even if I do not get paid for this hour, can I just create a bit of momentum in the business? And so we thought we would start a whole lot of sites. We started selling flags online, we sold rat traps, which were in the pest extermination field. But we wanted something that we could believe in the brand. And 2006, that is when we had the idea for Yuppiechef. But the five years that you talk about is 2006 to 2011. While we are trying to sell products, we still have to sell our time. And we are doing web development and online marketing and things for clients, at least Shane and I, and then Paul who joined us as a third partner, for five more years before we could stop everything else and it was just Yuppiechef in 2011.

Alec Hogg: During those five years where you were essentially funding the continuation of Yuppiechef, were there any times when you thought this may be a dream that will not be fulfilled?

Andrew Smith: I have got some quotes from my journals where I say, have I chosen the right path? My first son was born in 2006, the second at the end of 2007. And about 2008, so my second son is one and he did not sleep well, he had a lot of health problems in that first year. And I could not afford to take him to the doctor. Our medical savings had run out. And so this is 2008. And when I write that in my journals, it is not sort of a woe is me, we have no money. There are lots of people who have no money. But what I was grappling with is that this is a choice. I am choosing to do this.

Alec Hogg: How much time were you putting into Yuppiechef?

Andrew Smith: A lot. As much as we could. By 2008, 2009 we knew this was where we wanted to go. In 2009 we moved out of my lounge into other offices. We started hiring people, but we still had to live on very little and still work on other jobs to make ends meet. And so the grappling there is that this thing, which is still a dream for the future, is taking time, is preventing us from actually getting a decent income, so that I cannot take my son to the doctor.

Alec Hogg: But surely that was a question of balance? Because if you are doing it as a side hustle and you need more money, spend more time earning more money. Or was it just so obsessive that this thing was something you needed to grab?

Andrew Smith: One of the reasons that Yuppiechef could succeed is that between Shane and Paul and I, we had all the skills that we needed. Shane is a great product guy and he knows the difference between a good brand and a thing that is going to sell or not sell. And Paul was design and marketing, and I was the tech and finance and operations. And so that is why we could bootstrap. We did not have to go and raise a bunch of venture capital money. We did not have to hire a big team. We had a few people, but they were fulfilling some of the administrative or order processing or customer service. So if we wanted this thing to grow, we were able to do it, but it took up a lot of our time. And the balance comes, particularly in a business where you start chasing cash flow. We order stock, we have to sell it in order to pay for it, and you are almost forced to grow. We cannot say, just take the foot off the gas a little bit, because if we do, then we cannot pay the suppliers and we have broken contracts.

Alec Hogg: Hard costs with the stock makes it very different from a normal tech business.

Andrew Smith: This is the transition that we realised. We considered ourselves as technologists, as tech people, but we actually ended up being retailers. We almost slid into retail without knowing and without any experience. None of us had ever worked for a retailer. We did not really know what we were doing. I remember early on where we were trying to figure out the terms. We knew we needed to hire someone and we said, what is the difference between a buyer and a planner? And we did not know. We had never worked in retail. We think there is a difference, but let us see. And we had to Google what the difference is between the roles in retail. So we were making up retail as we went along. It was all online until the first store, which was only 2017, but it had all the same elements as traditional retail. You have to negotiate with suppliers and order stock and figure out how to sell it and serve customers, with all the extra complexity of the technology and delivery companies and payment that was not very mature. Taking payment from a credit card in that era was a lot harder than it is now. There was not the same infrastructure. Even just getting packaging, getting boxes and packing tape and things, was not set up. There were not the same type of suppliers. So we were pioneering in that field while also figuring out all the basics of retail.

Alec Hogg: And then you had someone called Denise. It is lovely to look back, especially for someone like you who reflects every morning and goes back into your journals. And the impact of Denise. I know you have probably told the story a hundred times, but maybe one more time.

Andrew Smith: I have told the story hundreds of times, because we used to tell this to everyone who came in and worked for us. Everyone who joined Yuppiechef, we wanted to tell these origin stories to explain the strange things that we did. So we handwrote cards, quite famously. We wrote over a million handwritten cards in the time that I was there. And so when we are trying to explain it to a new person, we tell the origin story. We launched this website in August 2006, and the first sale was to Shane's dad, because the trend continued. And then we made another sale to a family member and a friend. And it took until November before we made a sale to someone who we did not know. And her name was Denise. And I said to Shane, do you know Denise? And he said no. I said, I do not know Denise. So here is a stranger in 2006 who has gone onto a website that she has never heard of before, and we did not even have credit card payment at that stage. So she has EFT'd money into our bank account. And now she is trusting that what she has bought is going to get to her, and that we are not just a scam site out there. Everyone listening to this has probably bought online in the last week, but very few people were buying online at that stage. So there was an enormous sense of trust that our customers were putting in us, and we wanted to say, hey, we are real. If something goes wrong with your order, you can get hold of us. And so we wrote to Denise. At that stage it was on a piece of paper, and Shane probably wrote it, and he said, dear Denise, thank you for shopping from us. It was really just to say there is a human on the other side of the internet. It is not just a robotic arm picking something off a conveyor belt and putting it in a box. And we sent her that letter, and it was in a silver envelope. And from then on we wrote cards with every order that left, until pretty much until Covid. Things became a bit more complicated then, when everyone was working from home. But cards are still written today, as far as I know. And it became our way of smiling at someone, of looking them in the eye and saying something in this cold internet. So the story was to tell everyone who joined, because everyone who joined wrote some cards. I wrote cards up until the end. I think I tried to do about five a week. You look at what a customer has bought, you look at whether they have bought from you before, and you write something. And it reminds a fairly technical company that we are actually serving humans. And that was something that was very important.

Alec Hogg: There are a lot of those kinds of gems in this book, and clearly, as you said earlier, it took you a long time to write. But the part that I want to talk about now will really impact many entrepreneurs. We had a conversation on this at the BizNews Conference with Bernard Mostert, who said he would never sell his business ever again. And you went headlong into it in 2011. You met these guys from New York with deep pockets, the Tiger Global fund, venture capitalists. They decided Yuppiechef could be the next best thing. Clearly, from your perspective, you must have thought, why did these guys pick us? Looking back on it, were you naive?

Andrew Smith: I think that there is not, certainly then and maybe still now, there are not a lot of South African venture-backed companies to learn from. And we had not worked for any of those. And so what we know comes from what we have read online, and maybe some movies or stories about the Facebook story or the Google story. You read about the enormous success, but also sometimes we have this idea of what can go wrong, and how investors and shareholders. I actually had stories. Growing up, I remember my parents talking about someone who lost everything because they had these outside partners in. And so naive is probably a good word, because we knew some things that were going to be good and some things that were going to be bad. And so we did not go out looking for investment. By 2011 Shane and Paul and I were now making a salary, we had reached that point. I would not necessarily say we were profitable, because we just kept sailing as close to the wind as we could. We would spend the money that we made to continue.

Alec Hogg: But you would reinvest it.

Andrew Smith: We were reinvesting. But at the end of 2010 Tiger were investing aggressively in South Africa. They invested in Take2, which became Takealot, and SafariNow and Private Property and bidorbuy. This was their global fund, and so this was their play into South Africa. And at that stage I think certain people saw that as the entry into the rest of Africa. Let us start in South Africa. And so they approached us and we initially said no. We did not really know who Tiger was, and we had all these conflicting ideas about what that would mean. And in 2011 Lee, who was the principal we were dealing with, came and really, I am going to go as far as to say, begged us to take their money.

Alec Hogg: That is what he actually did for a living, beg people like you to take his money.

Andrew Smith: And we countered their offer with a much higher valuation and more money, and said yes. One of the arguments he made, which I do believe in to some extent, is that the internet is a winner takes all business. There is really only one Google, or there is only really one Facebook. You can have many dry cleaners in a city or a country because they are all going to compete in their geographic areas, or you have many doctors because they have only got so much time in a day. But online businesses, one can emerge as the winner that dominates everything. And if you are doubling every year and there is a competitor who is tripling every year and they can take the entire market, you will be gone. So you need to take our money and you need to use it to grow as fast as you can. And you should not have to think about capital. You should just be able to invest whatever you want in stock and people and warehousing and technology. And so I think there was part of us which bought into that idea, the idea that we must just grow as quickly as we can. But there was a lot of anxiety to it. I remember standing outside our accountant's office on the street, the three of us, Shane and Paul and me, and we looked each other in the eye and we said, in the future, if we regret this, if we think this was a bad idea, we must remember that right now, with all the information we have, we are deciding to do this. We think this is right. Because it was a monumental shift. As you say, I think a lot of entrepreneurs and founders look back and say, why did I do that? But I am glad we had that moment that I can hold on to, to say we did it with our eyes as wide open as possible.

Alec Hogg: How old were you?

Andrew Smith: I was thirty.

Alec Hogg: And now?

Andrew Smith: I am forty five now.

Alec Hogg: So your forty five year old gets in a time machine, goes back to your thirty year old self, whispers around the corner. What would you say to them on that decision?

Andrew Smith: Life has turned out well for me, and so I do not necessarily want to change that. But an interesting cheat, if I want to cheat your answer, is to say what am I doing now? I am not taking investment now in the business that I am involved in. But that was an amazing journey for me to go on, and that is the best answer I can say. We took the investment in 2011. Up until that point, I was still doing payroll on the twenty fourth of the month at midnight with a spreadsheet, trying to work out what everyone should be earning. And after that we could hire a financial manager. We were constantly dodging calls from suppliers because we did not have the cash to pay them, and we could pay the suppliers.

Alec Hogg: Could you not borrow? Was there no other source?

Andrew Smith: No one was going to lend us money.

Alec Hogg: It was that dodgy?

Andrew Smith: No, we did not have anything. None of us had any personal assets. We did not have any other income. We were not profitable. And there are not many institutions that are going to lend people like us money. And it is one of my sadnesses that in a way we had to give up equity in order to grow the business.

Alec Hogg: How much did you give up?

Andrew Smith: That first investment was 25 percent. And then Tiger invested again in 2013. They put more money in at that stage. And it was amazing how quickly in those two years we managed to burn through a lot of money. And that was encouraged by them.

Alec Hogg: Of course it was encouraged by them. Andrew, that is what they do for a living. They take ten bets and they hope one comes off. Or a hundred, and they hope one comes off. And the poor guy who kind of kills himself trying to win that game.

Andrew Smith: We were very aware quite quickly of how different it is.

Alec Hogg: As entrepreneurs, this is everything you have.

Andrew Smith: Exactly. And for them it is one of a hundred. And they want us to burn brightly and disappear, or shoot, be the next Google. I think that Tiger made something like a billion dollars on Facebook as an early investor at that point, so that is very early on. So they could see that. And actually one of Lee's pitches to me, when we were still deciding whether to take his money, was, do you think you can be a, I think he said a billion, I do not think he said a billion rand. Do you think you can be a billion dollar company? That is what they were pushing us to do.

Alec Hogg: Now, the time machine, forty five year old Andrew talking to the thirty year old Andrew. And this is 2011 money.

Andrew Smith: The time machine Andrew says a couple of things to the thirty year old Andrew. The first is, I do not know if winner takes all is really so true. That there is always space for more than one. And most businesses are not the Googles and the Microsofts. In most businesses, there are some competitive differences that can happen. And then secondly, why do you need to be a billion dollar company? Why do you need to push to be so big? Can you not create a company where you are a little bit more patient, where your ambitions are perhaps a little bit more realistic? But we did it. We went down that journey and we went to New York three times for Tiger conferences. We got to meet people from around the world. It certainly accelerated what we were doing. It was a crazy ride. And I suppose I am glad. I am glad it happened.

Alec Hogg: From what you write, those conferences got you burning ever brighter, did they not? I am reading a book about one of the greatest mathematicians of all time, a Hungarian guy. He died at eighty one, but he popped amphetamines all the time because he said, I have to burn as brightly as possible, I have to keep my brain open. And you think, in a way, that is what the venture capitalists want you to do, and did get you to do, because you guys worked hard. When you made the decision to actually go physical, where did that come from? Because up to that point in time you were all in on the internet. The internet did not deliver what we all expected it to do. And so then you started opening physical stores, which in fact, I think as you write in your book, it was incredible the income that you were getting from that first store compared with what you had built up over many, many years online.

Andrew Smith: So 2011 is the investment, and over the next couple of years we just throw a lot of things at the wall. We start online cooking school courses, which was a digital product that we thought we could take to the rest of the world. We start trying to ship craft beer, which is a very difficult thing to do.

Alec Hogg: That is crazy. I read about it and I thought, no, come on, Andrew. Seriously. Craft beer.

Andrew Smith: We ship into the rest of Africa. We open up Southern African countries, but even as far as the Middle East and Kenya and Mauritius. We are trying lots of different things to see what is going to be within our realm. We always stayed within kitchen and home. We did think about some other categories, but we are trying to say, how big can we get this? Because even though we are growing quickly, e-commerce at that stage is only a low single digit percentage of total retail. Then we are in a category like kitchen and home, and then we are in the premium side of that category. So we are a small piece of a small piece of a small piece. And we grew well and we were doing well, but we still meet people. I would sit next to someone on the plane and they say, what do you do? And I said, I work at Yuppiechef. And they say, Yuppiechef, I love Yuppiechef. I get your newsletters, I enter your competitions. You have done such a good job. And I said, what have you bought from us? And they say, no, I have never bought from you. And that is where we are just missing out. We are missing out on a big chunk of South African retail by sticking doggedly to online. And we had taken the online retail red pill. I remember, I think Paul was quoting someone else who said, in ten years' time no one will go to a physical store to buy something that they know they need. And I do not know when he said that first, but let us just say it was about 2010. And I have been to a physical store this week. And I think what we did not appreciate is that the online revolution, if you think about travel agencies, banks, the post office, there are certain things that once you do it once online, once you have emailed someone, you think, why would I ever post a letter? Or once you have booked your own flight online, you go, why would I go to a travel agent just to book a flight to Joburg? There are some that make complete sense, and then there is retail. Sometimes it is quite convenient buying online, but there are many, many use cases of retail where you think, actually I need this right now, I want to go and fetch it in the store, I do not know exactly what I am looking for, I want to go and look at a whole lot. There are many user journeys where physical retail still works. And we were sticking so doggedly to online that we realised we were just losing out.

Alec Hogg: Was Tiger telling you to do that?

Andrew Smith: I think that they saw how online can scale. You can open up a new country, you could perhaps open up a new category. In their portfolio, I think they had Warby Parker, which is an eyeglass brand in the US that had physical stores and online. But by the time this is 2016, 2017, to be honest, I think Tiger had kind of moved on from us. They had made all their money back and more when Naspers bought Takealot, and they were sort of done. They had moved on to India and China. Even at the 2014 conference, which was the last one we went to in New York, the speakers were already from India and China, where the X axis is the number of months and the Y axis is the number of hundreds of millions of users. And you put that on the screen and you just think, what is South Africa? They had called us fully funded in 2013. I think they could see that, yes, fine. And they were starting even at that stage to say, if there is a buyer, we will sell to someone else.

Alec Hogg: And then they found a buyer that you did not like. And this is the part of the book that I think would grate on any entrepreneur. Here you have a venture capital fund from New York. Their eyes have gone elsewhere, as you have explained. They have made their money in South Africa through Takealot, so all good. And they have got this residual holding in your business. It is everything to you. And they then will sell to you, but at the price that they have invested in you. And now they then offer to sell to somebody else at a different price. And that to me seemed a little unfortunate, to say the least.

Andrew Smith: You have obviously shortened a few months worth of story into a cover.

Alec Hogg: Yes, yes.

Andrew Smith: But the way you describe that, it makes it sound like they are offering us one price and offering someone else the other price on the same day. They were far away. I would have an email correspondence every few months. We had not been to New York since 2014, and this is now around 2018. I do not think we even really had phone calls. And so they would say to me.

Alec Hogg: So they lost interest.

Andrew Smith: They had lost interest, and it was sort of like, we would like you to find a buyer. And I would reply saying, we have looked at a few things, and how much do you want? And they say, we want our money back. And so it was not a really deliberate conversation. I think we were just one of many things. And at the same time there was a local, I guess you could maybe call it more a private equity type of fund, who came to us and said they are collating a few different e-commerce businesses and they would like to invest in us. And for various reasons we decided we did not want that. That was not our preferred outcome. Probably a bit of a lack of control, being bundled together with other stores that we are not in control of, and yet our equity is now becoming part of something bigger. And what if they perform badly and we perform well? So there were various reasons. And we just decided that is not the route that we want to take. And we said, no thank you. And the next we heard, Tiger had made a deal and had sold their shares, which was a significant minority.

Alec Hogg: To these guys you did not want to sell to.

Andrew Smith: To these guys we did not want to sell to. We were basically told, I was at, my boys did Cubs and Scouts, and I was on a Cub camp. And Shane says, check your inbox. And I try and find some cell phone coverage. And it is basically an email saying, we have done the deal, it is finished, here is the new owner.

Alec Hogg: How big a stake did they have at that stage?

Andrew Smith: That was, I think, about 40 percent.

Alec Hogg: So it is a big chunk. But you still had majority.

Andrew Smith: Between Shane and Paul and I we had the majority, but there is a lot at 40 percent that they would be able to do and we would not be able to do. And so it was a deal that, it was actually interesting, I think the buyers were saying, well, if Andrew and Shane and Paul do not play ball, we have got a big chunk of their company at a relatively very low price. And if they do join up with us, well then that is great. And so I think that they were willing to take a stab. And we did not want that as our outcome. So that is where Sam Paddock enters the story.

Alec Hogg: So you go off and find yourself a white knight. And your white knight is a very low profile Mark Shuttleworth, because that is pretty much what they were. And he comes in. But I do not know, was he a white knight? Was he really someone who bailed you out of a situation that would have been untenable for you, and then sold you off a little bit later?

Andrew Smith: The first part of the white knight is that we had thirty days to basically buy Tiger's shares. We had a right of first refusal, or pre-emptive rights.

Alec Hogg: Was that in your contract?

Andrew Smith: That is in our original shareholders' agreement. So there is a white knight nature to Sam, because we have the opportunity to make the deal not go through with Tiger and the new owners, but it has to happen now.

Alec Hogg: How much was it? What kind of numbers are you talking about?

Andrew Smith: It is in the tens of millions of rands.

Alec Hogg: Proper money for somebody who has got a bond.

Andrew Smith: Shane and I could never do it. Even though the valuation was quite low, we had no way of buying it out ourselves. So we had to find someone who at short notice says yes. We knew Sam, but not very well, and we had not worked together. But he had to trust us and the Yuppiechef story and the brand very quickly. And he did a very light due diligence just to make sure that we were okay. But it was based largely, I guess, on our reputation and network of friends, to be able to say, here we go, here is the money now. These are Hilton boys. Or he is not, but I am a Hilton boy and Paul is a Hilton boy. But there is a sense within the South African entrepreneurial ecosystem that we know enough of the same people. So I guess he was confident that there were not major skeletons in the closet, and we were confident that we could take someone on. The biggest benefit of Sam is that unlike Tiger, who is sitting in a New York high rise, Sam had been in the South African landscape. He had grown a business from nothing like us, and he had sold it. And I think by then, perhaps our naivety was that we were kind of saying, yes Tiger, I know you want to sell, but we will just keep going, we will keep going. I think we realised, you know what, we have to now get the business to a point of being sold. We cannot keep kicking the can down the road. We can swap out shareholders, but at some stage no one gives you money unless they get a return. And there are only two types of returns: dividends, and a sale of equity. And we were not really going to be a dividends business because of reinvesting in cash flow. And so it was really then that Sam said, I will invest, but we are going to sell this business in five years' time.

Alec Hogg: So you knew then your, I will not say your dream was over, but the business that you had started, that you had not taken a salary from for five years, that you had put a reservoir of sweat equity into, that was over.

Andrew Smith: It was over, yes. When people say, why did you choose to sell the business? And I say, we chose to sell it in 2011. We might not have known it, but.

Alec Hogg: And I think this is what your forty five year old time machine, or the other person you interviewed, was saying, that when you take on someone from the outside.

Andrew Smith: You have got to know, even if you are still a majority, that something changes.

Alec Hogg: The other person is Bernard Mostert, who sold Tekkie Town to Steinhoff for fake shares, so that is a different story. But the reality is, it is your company. You are thirty years old, it is exciting, there is lots of money, you can be this huge operation. It is very hard to say no. And the decision you take then is something almost like the person you marry, that you are going to look back in fifteen years and you are maybe going to be happy and maybe not so. And maybe we are not always that well equipped to make those decisions at the time. And I think that is pretty much where I am going too, because entrepreneurs do make those decisions. They do sell to helpers and super helpers, as Warren Buffett describes, and people whose whole reason for being in business is to find entrepreneurs like you, squeeze the sweat out of them, make a lot of money out of them, and hopefully the entrepreneur makes a lot of money as well.

Andrew Smith: And this is where the South African environment is interesting, because we just have not had a lot of those. Sam was one of those stories, but we cannot name a lot of that journey. Whereas a place like Silicon Valley has had a lot of entrepreneurs who have started something, sometimes they have failed three or four times, then they have hit it big. And they stay and their money stays and they reinvest in the next generation of entrepreneurs. And even today in South Africa, a lot of entrepreneurs have offshored their companies, they have found other mechanisms for it. So if they sell out, they are not all even willing or able to reinvest in the next round of entrepreneurs. So we are all kind of walking a little bit in the dark here. And part of my motivation to write the book and tell the story is not to be prescriptive, but just to say, hey, this is a story, because there are not many in South Africa. So perhaps there is some learning.

Alec Hogg: This is a brilliant story. And for any entrepreneur, seriously, this is a book that is going to save you many tears. If you can read through this book and just get an understanding of the journey that you and your partners went through, it can save you from making a terrible misstep. And I am not saying that you made a misstep, because it was part of your journey. But then Sam says, he is up front, he says, okay, I will rescue you, but you have got five years. So what was the strategy then? You are not going to go and work for those horrible people that you might have. You have now got another guy from Cape Town who has built a business and made a lot of money from it. But he wants out in five years' time. So it is quite clear what he wants. What do you do in that?

Andrew Smith: And he wants ten times his money back in five years.

Alec Hogg: Ten times.

Andrew Smith: So we had ten times in five years.

Alec Hogg: But at least it was clear. Sorry, were there guarantees for his ten times? Was he going to take your house if you did not do it?

Andrew Smith: No, there were not guarantees for the ten times, but part of the investment was a loan that we had to repay. It was a mechanism that made sure that if the company hit a wobble, it would be very clear. We would not sort of wake up one day and realise that we were in trouble. So it was actually a good mechanism to keep us disciplined and keep us focused, because we could lose everything.

Alec Hogg: Some would say he probably had you buy the, you know where.

Andrew Smith: Well, perhaps. But we just described why that was the case. So we knew.

Alec Hogg: You went in with your eyes wide open.

Andrew Smith: So Sam had sold a business, and in selling a business he knew what a new acquirer was going to look for. And there were a couple of really fundamental things that he put in place. I will mention a few of the big ones. The one was, someone is going to buy a company, not individuals. Venture capitalists tend to back the jockey, not the horse. But in an eventual sale, you are backing the horse, because you know that the jockeys might leave or die or whatever it might be. And so he says, you have to put in a senior team. Where we had been quite hub and spoke, where everything could come through Shane and I, he said, no, you have to have a proper calibre of person leading each of the main departments. So that when an acquirer comes in, they can say, well, even if Shane and Andrew leave, this company is being run properly. So that was the one thing. You have to start having actual real board meetings, and you have to take minutes, and you have to create budgets, and you have to do all of those things that you can get away with when you are small and you are a startup. But you have got to start running this business as if it has got the right discipline to carry on without you. It has to be run more with processes than just with individual geniuses.

Alec Hogg: A lot more order than the chaos which you get in a startup.

Andrew Smith: So it really was transitioning. That was from an internal point of view. Then from an external point of view, knowing that we are selling a story as much as we are selling the business now. By then we had opened stores. As you said, the stores are working. We had started in 2017 and we opened another three, I think, in 2018, another two. We had about seven before Covid hit. But Sam was clear, you have got to sell the future rollout of stores. So do not wait until you have kind of saturated the market and then say, right, this business is up for sale, because then you are only going to get a multiple of whatever today's earnings are. Whereas if you prove that the model works and then you say to an acquirer, you can buy it because of this big upside. And so the timing was important. And then the final thing he said is that businesses are sold and not bought. A bit like a house, no one comes and knocks on your door and says, hey, could I buy your house. Very, very seldom does that happen. So he says you have to think about who the potential acquirers are going to be, locally, internationally, are they retailers, are they other groups, and actually start positioning yourself for that. So 2018 he comes on board, 2019 all of this is happening. We still think it is five years out. And then Covid happened, which was major for the world and for us.

Alec Hogg: For some businesses, ours included, Covid was a very good thing. It rocketed our exposure, because people went online to consume their news and newspapers were dirty and spreading disease, supposedly. And we saw webinars and that kind of thing. With Yuppiechef, the physical footprint would have been a bit difficult, but having your online presence and your very strong brand, this presumably was also turbocharging.

Andrew Smith: The twenty seventh of March is emblazoned in my brain, because that is when we had to close down, and all retail, well except for food and medicine, was ended. On the twenty seventh of March we received stock from suppliers who dropped it off with us, and then the warehouse and stores closed and we all had to go home and we could not sell anything. And we were still even at that stage sailing close to the wind. We did not have big cash reserves because we would rather put the cash into stock and stores than have it in the bank. And even those last few days of March, we need the cash flow from sales to pay suppliers and pay everyone else, because each day we get in a lot of cash from the business. So at that point, end of March, beginning of April 2020, I thought it was all over. I thought we have rolled the dice and it has not worked. And the kind of nonsensical nature of retail being closed down, all types of retail. You could buy stationery, but you could not buy a pot or a frying pan. People are being completely insane. They have to cook at home, but surely we can sell them the tools, and then we cannot sell them the tools. So for a couple of weeks it was terrible. We actually had negative revenue, because we were refunding customers whose goods we had not been able to ship. We had nothing. The stores were closed, but online was closed too. We were all at home. And we reached a very low point in April. And then even before the lockdown is lifted, we start seeing the sales coming in, because you are at home and for the first time you are vacuuming your own carpet and you think, this vacuum cleaner is terrible. And so you go online, and we say, look, you can buy one from us, we do not know when we can ship it to you. And you say, no problem, I am just going to start buying. And so we start seeing the sales come in actually before the lockdowns are lifted. And probably by about May we think, whoa, hang on, this is going to be big. And it then did rocket, because people were forced to be at home, they did not want to go and shop. But also what we sold was about home cooking and home cleaning. So if you could not have a special meal out, you would have a special meal in. And then we reached just the chaos of actually trying to fulfil, with all of the Covid implications of having a team and having warehouse workers, and when someone gets sick, what do you do with the rest of the team? All of those things which we have erased from our memories, but they were harrowing.

Alec Hogg: Harrowing time. Brilliant strategy that could have actually gone the other way, because you could have given up. You could have said, what the hell, let us just close up. But this time you had the idea to say, well, this too shall pass, we will deliver, we will deliver to you at some point in time, as soon as we can. How did that come about? Did you guys sit around a table and say, but that is obvious?

Andrew Smith: This was all being done, and you remember the Sunday night briefings from the president, and it was level this, but not in this province. And then alcohol, we sold alcohol. So alcohol is on and alcohol is off. And it was an amazing team effort. And unfortunately, I guess, we are all at home, but we do have Zoom. Zoom was the big thing at the time. And late on a Sunday night developers are working on the site to make certain things be able to be purchasable and certain not. And so the team came together to create some really incredible bits of technology and policies and marketing campaigns. But every day was just trying to survive, just doing the best to survive. And then actually going back into the warehouse, we did not open stores for quite a while, because we actually could not get stock to the stores. The backlog was in the tens of thousands. We were answering, I think, about a third of the phone calls that came in, because everyone is at home. They have ordered from Yuppiechef and now it is not arriving. And so what do you do? You have got time to phone us, to email us. So all hands on deck, absolutely crazy time. But I think we had seen then how close we had got to it all being over, how well we were doing, and how retailers were realising that they could ignore e-commerce for a long time but now actually they cannot ignore e-commerce any more. And the brand value of Yuppiechef showed that people were prepared to say, yes, here is my money, I will get it when you can give it.

Alec Hogg: And that is what the internet is all about, is it not? Just moving on though, to the sale. So here you have got a white knight who has given you a deadline. Covid, thankfully, is over, and along comes your dream, supposedly. You are going to get sold into probably the best or most innovative of the retailers. The best, if you were to choose, you might not have chosen anyone other than Mr Price. They have got a good reputation anyway. But reading from your book, my goodness, that is bureaucracy city.

Andrew Smith: Just to go back slightly, Paul, who is one of the shareholders, said in October that he thinks it is time for him to sell. And so it was not necessarily our time. October 2020, our head of operations has gone on maternity leave, we are heading into Christmas. That would not have been the time that I chose. But in hindsight I think it was a good time, because of the hype that was around e-commerce and online. And so we actually spoke to all of the big retail groups and there was interest from a number of them. There were people who also knew who we were, and we were talking to everyone, and we received various forms of offers from some of them. But Mr Price, I think, just seemed to work the best. I had been on the board of the South African Council of Shopping Centres. I knew some people from Mr Price. I knew they were interested in us. And I think it fitted not just the e-commerce strategy, but it fitted their strategy of trying to approach home and clothing in the entry level of the market, the mass middle of the market and the upper end of the market. And so I think it seemed like we were going to fit into what they were doing. And they were in Durban, we are in Cape Town, we would be left alone, we could keep on going. But it was always a hundred percent sale.

Alec Hogg: And the shareholders who were exiting, did they not want you to keep any, to incentivise you?

Andrew Smith: There was going to be other incentives, but no incentives from an equity point of view. Being a division within a bigger group, you can almost think of it that way, it gets very complicated when there is shareholding but there are shared services, and how are things being billed for. And I think I was always clear.

Alec Hogg: So you get sold, and you do not last very long.

Andrew Smith: We do not last very long. And I have tried to capture some of why it did not work. I think for a lot of entrepreneurs the timing is always a bit shorter than they think it is. I write various analogies and I am trying to grapple with what it is, but I am motivated, I am going to work like I did to create something out of nothing. Where there was nothing before and now there is an e-commerce site selling premium kitchen goods. And that is what motivates me and excites me. And I think what happens within a bigger group is, well, we have figured out what works, let us now continue to roll it out. Which is what we sold. I think we had maybe nine stores at that time. And we had laid out a vision for twenty, thirty, forty, fifty stores. And we know the formula works. That is what it was. And I think Shane and I looked at each other and said, well, this is, we are done here. Our role is done. And after what we had been through, to actually be motivated every day to put our best into it, we thought that other people could do that better.

Alec Hogg: But Mr Price wanted you there for many years. Why did they not tie you in? Golden handcuffs. Maybe you could say you were good negotiators, or maybe you were not going to be tied in. Was that your idea when you went in?

Andrew Smith: So you have got some shareholders who are going to be leaving and some shareholders who are going to be staying, and we were very clear that a share certificate with one share on it is worth the same no matter who the shareholder was. So we are all selling for the same amount of money per share certificate. And then if you want us, it needs to be incentivised. And I think maybe it is just tricky to incentivise people like me. I am the type of person who has dropped out of university and I do various things. In a way, maybe golden handcuffs would have been worse for me. If I have to do something because I am being told to do it, it is very different to being self-motivated. I am not sure. And if we could replay the story ten times, was there any scenario where I would have stayed and been motivated? I am not sure. I have spoken to many other people who did not last as long as they thought. Sam did not last at GetSmarter as long as he thought he would.

Alec Hogg: But he got cash. He did not have to worry about anything. He had the money in the bank, and dollars on top of it. I suppose it is that dilemma that the purchaser would be looking at a company and saying, I want these guys who have been running it to stay. But their backdoor is that they have got a really good business underlying it. So if the guys who are running it are not going to stay, we have still got a good asset. Was that the way they approached it?

Andrew Smith: I think that is how, what we had been working on for a few years is to say that this business is bigger than us, that this has got the right structure, the right teams, the right brand, the right leaders. And it continues today.

Alec Hogg: And it continues.

Andrew Smith: We handed over to Warren, who had been our head of finance for ten years. The team was very happy with him as the new MD. So I think we left it in good hands.

Alec Hogg: Head of finance. An accountant.

Andrew Smith: Well, not a CA, but yes, finance.

Alec Hogg: An accountant. So an accountant takes over an entrepreneurial business. And he lasted a year.

Andrew Smith: And now it is being run by someone from the Mr Price group. And that seems to be going okay. But I do not have a lot of.

Alec Hogg: Are you not just a bit sad when you walk past the Yuppiechef outlet?

Andrew Smith: There are so many emotions when I do. And sadness is perhaps one of them. If I drive past a house I used to live in, I feel a sadness. I feel like, look what they have done, they took the wall down and they cut down that tree. And it is not mine any more. And so I do have to come to terms with that. I miss a lot of the, maybe you call them nostalgic moments. I think back on the times when we did good stuff together. But I know it is a different business now. I do not know that I would enjoy it if I was there now. I am back to something small again and I enjoy that.

Alec Hogg: Was it not just a place in time? When you started Yuppiechef it was the early internet. Sorry, you started in the internet in 1999. So that was really early, early pioneering days. You could not recreate it today, or could you?

Andrew Smith: This has been interesting. Shane and I left in August 2022. It has been four years now that we have been out, and we took a few months off, but we have started a new outdoor site, which you could kind of call the Yuppiechef of camping and outdoor, called Brave Hardy. And it is twenty years now since we started. And we are surprised at how things are quite similar. The way that suppliers operate, the way that our competitors operate, the way that online operates. And we are doing quite similar things, and we seem to be succeeding. And that is what makes me think that when Tiger said it is winner takes all, it is a land grab, if you do not take it now it is all over, we are thinking, well, we seem to be growing another brand in quite a similar way. And maybe what we do, which really is about care and service and a curation of a range that people really want, maybe those things are not really about the internet. The internet enables that. But there are a lot of opportunities in South Africa. I am grateful. If we had started Yuppiechef and it had succeeded in a market like the US, I mean we would be billionaires. But if we had started Yuppiechef in another market we probably would not have succeeded, because the competition was so big. South Africa is sort of, there are a lot of opportunities because it is not flooded with competitors, but it is actually big enough to create something that is meaningful. And I think there are still a lot of businesses to create today. It is not too late, I guess, for almost all businesses. And if you are chasing the new things, cryptocurrencies or AI or something, I think you can get into that sense of hype, that it has to happen now. But we are doing something as perhaps you might say as boring as selling sleeping bags and backpacks online. And it is working and it is growing.

Alec Hogg: So is Sam Paddock an investor in the company?

Andrew Smith: No, just Shane and I at this stage. We are going to listen to our own advice and not take on outside investors for the moment.

Alec Hogg: Why did you self-publish this book?

Andrew Smith: Look, I think I am in a very privileged position where I do not need this book to make money. And I was able to afford the editing and the printing and everything up front. A lot of people go with publishers because they need help in getting it into the world. And the advantage of going my own route is that I get to decide how long is it, how is it structured, what is it called, what does the cover look like. Not that maybe it would not have been better with a publisher, but it was more that I wanted it to be mine.

Alec Hogg: And you wanted it to break even.

Andrew Smith: I wanted to break even, and it has. It has broken even.

Alec Hogg: How many have you sold?

Andrew Smith: We have sold a few thousand at the moment. We sold a lot at launch time. It is in Exclusive Books, it is in a couple of other independent bookstores, it is on Amazon.

Alec Hogg: At the BizNews Conference I mentioned the book in part, and it was gone. Exclusive Books, our partners, they brought a whole lot of books and I asked them, I told them, please bring this one as well.

Andrew Smith: Excellent.

Alec Hogg: And those that were there were gone very quickly.

Andrew Smith: So I think it might be a slow burn, who knows. But books, you do not make money out of.

Alec Hogg: You do not make money out of it.

Andrew Smith: But what I have, right at the back it has my email address, and maybe every second day I am getting an email from someone. One of the subject lines was, you have reignited my passion for startups. And I think, well, that is what it is for. It is not for making money, it is not to be on a bestseller list. There are going to be people who need to read this for whoever they are in their journey, because they need to feel that they are not alone. That someone else went through something similar, that if they are struggling it is not because they are defective. And it seems like the right people are reading it and letting me know that. And I am delighted. So there is that motivation. And then I want my kids to read it. They have not read it yet, but I want my kids to read it. Well, they are halfway through, I think. They are the new generation, they do not read as quickly. And for it to be recorded, this is what you grew up in, this is the environment.

Alec Hogg: So is it all focused now on the outdoor online selling?

Andrew Smith: I am involved in a number of things. One of the things about Yuppiechef is that it became very linked to my identity. If yesterday's sales were good, I felt good. If they were bad, I felt bad. People knew me as the Yuppiechef guy. And so I am very deliberately now involved in a few different things. In education, nonprofit, I am on a few boards and advisory things. I have got a tech company with somebody who used to work with us at Yuppiechef. But Brave Hardy is probably the thing that will end up being the biggest thing that we do. But for the moment I am quite happy spending time on a few other things, so that if Brave Hardy has a bad sales day, I do not feel like.

Alec Hogg: Bravehardy.com. Where did that come from?

Andrew Smith: Shane is the naming genius. With Yuppiechef, when he came up with Yuppiechef, I said that is a terrible name. And he was right with the name and he has been right with everything else. I do not know, he has a knack for that.

Alec Hogg: Sounds like the Hardy Boys. And Shane is Shane Dryden, to give him his full name. He has been mentioned a lot in this conversation. Were the two of you at school together?

Andrew Smith: No, but we did meet in Pietermaritzburg when I was about nineteen. So we have known each other a long time. We started working together probably in about 2001, so twenty five years.

Alec Hogg: And what is the secret to that relationship?

Andrew Smith: It is one of the things I guess I am most proud of, our teaming together. One of the secrets is that we are different. He says, this is a great name, Yuppiechef should be pink, we should sell this product. And I go, okay, I trust you, I do not know. And I say, from a tech, finance, operations side, this is how we should allocate the budget, or this is the technology we should build it on. And he says, okay, I trust you in that. So it is not that we just divide the work in two, like my kids unpacking the dishwasher: no, you have done half, no, you have not done half. We divide the work according to what we are best at. We lived next door to each other for twelve years. We shared a car, our families are friends. So it has been an incredible relationship in that way. And so the book has my name on it, but really it is the story of our combined twenty five years together.

Alec Hogg: You have not told me what the secret sauce is.

Andrew Smith: The secret sauce. I think the secret sauce is appreciating where we are different, and saying, I wake up and think I would not want to do this without Shane. And he wakes up and thinks he would not want to do this without Andrew. And because of that, I am not worried about, I worked an extra hour today, you need to make that up. We appreciate that I do not want to do it without the other person. And I do not know how you get there. It is not a formula, but that is the source that makes it work.

Alec Hogg: Well, it has been a real pleasure spending a bit of time with you, Andrew. And I am sure that the BizNews tribe are going to enjoy this conversation as well, but not just enjoy it, move forward and take a lot out of it. Please buy the book. I do not say this often, I really do not, but if you are an entrepreneur, or you have a business, or you have ambitions to grow a business, or you are thinking of doing a startup, it is going to prepare you better than many, many other books that are probably being punted at you and thrown at you. This self-published book from a guy who has walked the hard yards is something that I can really strongly recommend. Andrew Smith is the co-founder of Yuppiechef. I am Alec Hogg from BizNews.com.