PREMIUM: Meet Ivan Epstein: Secrets behind the success of SA’s masterful entrepreneur

LONDON — It's 17 years since Ivan Epstein, then not yet in his 40s, was crowned South Africa's Entrepreneur of the Year. Since that accolade he has kicked on strongly, selling his creation Softline into accounting software giant Sage, where he ended up running a large chunk of the global business. Now 56, Epstein retired from Sage last year to give expression to his entrepreneurial instincts – and keep a closer eye on his substantial South African property portfolio. Epstein has also become something of a practical professor of entrepreneurship, serving as the long-time chairman of the EY judges in his home country, and on the international panel of this prestigious annual competition for business creators. I caught up with this remarkable human being at his Johannesburg headquarters where he shared the secrets of his success – and those of other hugely successful entrepreneurs. A must listen for any existing or potential business owner. – Alec Hogg.I'm in Rosebank, Johannesburg with Ivan Epstein who is one of Rosebank's biggest fans (but we'll get into that in a moment). Ivan, we've known each other for 30 years. Last time, I tried to get hold of you was over the story at Sage. You left Sage a while ago. Maybe we must just clear up exactly what involvement you had or didn't have there..___STEADY_PAYWALL___.Yes, Alec. I left Sage at the end of September 2016. I was running the international division as the head of the international division, which was South Africa, Australia, and other parts of the world. I then stayed on as a non-executive chairman of the Sage Foundation but that was purely a non-exec role. It was a wonderful foundation that was started by the current CEO Stephen Kelly three years ago, when he came into the office there in the UK. We ran that foundation globally and I finished my duties as the chairman of the Sage Foundation as of September 2017, so I haven't been running the business since 2016..Alright, so the whole Bianca Goodson story with the whistle-blower whose resignation was then accepted…non mea culpa. .Yes. Hopefully, that's been resolved by now..Ivan, we've known each other for a long time and you've got a fascinating story. You started off in auditing..Yes, that's right. In the early eighties, I did my Articles with PriceWaterhouse and then straight afterwards, co-founded Softline in 1989. It started off as a little consulting firm and then we realised we had to get into content and developed what was then one of the first (not the first) integrated business applications. Bear in mind that in those days, they were all done manually. We were fortunate. You almost have to say we caught the wave of history because from the late eighties through to 2000; that was the era when there was this massive (what was called) computerisation. That term's a bit old-fashioned now but it was the computerisation – the move from manual to computer-based technology, allowing businesses to run online. Obviously, it was remotely. There was no internet in those days. This was a small business app and we had competitors, which we competed with. .Fortunately, it went well and in 1997, we listed the company as Softline Holdings and did a number of acquisitions – in excess of 30 – up until 2003 where we launched a buyback bid due to a failing share price at the time. What I will add is that the profitability never stopped increasing – almost doubling every year up to that point..The market went nuts..I remember that. It was fascinating. I think people…at first experience, when you're going to the US, you're looking at buses. Everything was .com. It was like a new language out there, that was being spoken. We launched a buyback bid, which was a tough situation and it didn't go well, and it resulted in me (with my team) having to find a white knight in Sage. .They were a big, global business..Yes. Well, Sage did exactly what we did, on a global level. We'd also globalised by then, so as an independent South African listed company, we had presence in the US, Canada, the UK, and Australia. It really fitted well with Sage and the management team of Sage at the time, realised what a fantastic fit it was. We did a transaction at the end of 2003, so effective January 2004, we became part of them. I joined the team at Sage, spending a lot of time up in the UK as part of the executive committee of the global group, helping to run the business and I had a fantastic career with Sage. It was wonderful up until last year and I can proudly say that Softline, which was renamed Sage in South Africa some years back, was one of the finest acquisitions Sage had ever done – from a return on investment and capital point of view..Just going back to those PwC days, where you were doing accounting: did that prepare you? Would you send a prospective entrepreneur/businessman to go and learn about accounting before they enter the world of business?.It definitely helped, because if I look how I got into accounting software, it was because I was in an accounting environment. I wasn't a particularly good auditor. I wasn't inspired in that industry but, absolutely, your knowledge and your foundation you get there is amazing, so it was a great foundational base. No, I don't think it was essential. You know, Alec. Entrepreneurs come from all walks of life. Some argue that they're born. Others argue that they're cultivated. Do you learn? I was talking to you the other day. It was interesting watching the Designated Survivor series and in the one question he says, "You're not born a President of the US. You get taught to be a president or you learn" and there are two walks of life. You can argue it. Are entrepreneurs born or cultivated? .You've spent a lot of time on that subject – on entrepreneurship. Before we go a bit further, do you think entrepreneurs are born or cultivated?.I think to some degree, they are born but there needs to be a cultivation/maturity process that enters that, which certainly stimulates the growth of an entrepreneur. Also, it's what you're surrounded by, whom you're exposed to and a number of different facets. We see that because I'm involved in the Ernst & Young entrepreneur program, which is a global program today. I have chaired for many years for the South African chapter of it..But, you won the South African chapter. How long ago was that?.Yes. That was in 1999/2000. I was very fortunate to have had won the South African Best Entrepreneur but I put back a lot of time and effort into the program over the years because I really believe in it. What was fascinating, was two years ago – to be a judge in Monte Carlo. In this past year, I was a coach for the finalists. Then you see the culmination of these global entrepreneurs and that goes back to your question. "Are they born or not?" You watch the trend within the circle of those people that attend there and it's fascinating, so you could argue for both..In 2006, I was at that same event in Monte Carlo/Monaco, where Bill Lynch won the overall thing. He's still the only South African so far, to have won it..He is and I was fortunate enough to be on the panel in South Africa, that appointed him the South African entrepreneur. I remember doing the interview and being part of the interview. It was very humbling because here was a great entrepreneur who had done so much and achieved so much, and he was a tough guy but he understood business. He had a real feel for business and people. He was a clear decision-maker. Entrepreneurs can be entrepreneurs in small business and then you emerge into a larger business, and a different decision-making process comes in. I think back. Even myself, having started a business, which was a tiny business and then listing it (Chapter 2). Now, you have to run a listed company. It was a learning curve on its own. Then, going into a global corporate. It's quite different. Decisive decision-making is vital in those environments and Bill Lynch was a product of that. .What do you mean by 'decisive decision-making'?.I think the biggest failing of businesspeople, is procrastination. When a decision needs to be taken, you need to take it and they're not all good decisions but rather make a decision, than no decision. Often, to sit on a fence on a decision….What causes a procrastination?.Well, uncertainty. If you're uncertain and you're not sure of your decision. You can't ever be that sure of it, though. It's easier for me now, having run a business for 28/29 years to say, "Oh, it's so much easier to make a decision now" because I understand and I've seen the movie whereas when I was in my thirties and I was a public company, you weren't always sure. The irony is, you were much feistier so you'd make a rash decision like that and you'd go – not always good..How do you bring your team along, though? Entrepreneurs will surround themselves (not necessarily with other entrepreneurs). There will be people doing support functions and they might not always see things the same way..Yes. It's interesting because I'm giving a talk on that this evening, on entrepreneurship and attributes of different entrepreneurs and you've touched on a very good point, Alec. It's essential to bring your team along on the journey. How do you bring them along? You've got to engage people. You've got to make them part of the decision-making promise. Autonomous decision-making processes or autocratic behaviour in running a business is dangerous, I believe. If you behave in an autocratic manner, how do you bring people along the journey with you? People have to feel part of it. They have to feel they've made the decision or they were part of making the decision. We're talking about leadership attributes in an entrepreneurial environment and then there's leadership attributes within a very rigid corporate environment..I think in today's world with technology – and we were speaking earlier about how pervasive it is, where you can remote-run a business from a multitude of different countries (one business) – is people need to be able to be part of this decision-making process. They need to feel they've given input into a critical decision. Obviously, with leadership sometimes, you overrule and you have to make a decision in the best interests of what you believe is the business but bringing people along on the journey was something we worked very hard at in the Softline/Sage days and we would measure it through our employee engagement scores. I always believed that if people felt truly empowered/engaged in a business and they felt that they were part of the journey and they loved what they did, you would get performance levels that were actually frightening. .They were amazing and we measured it sometimes in those that left the business – who'd come there for the first part of their career – and had gone out. We watched our return rates back into the business and they were phenomenal..Just explain that a little bit more..Somebody who started a career with us in the payroll business or the accounting business: often, people feel they've been there for a few years and they want to go and try something else. Maybe the grass is greener (and you understand that) – certainly, with young people coming in. Our return rates were high – those same people coming back after they'd experienced something else such as another career or another company..They felt more comfortable with you..Yes. It said something about the business. We'd measured it and we actually ran surveys on it and why that was happening. We knew because you have to always track to see whether you're doing it right or wrong. I just felt that for me as somebody's who's been in that position; having the right levels of empathy and engagement with people did a lot for the business. You got it back ten times. You could feel where people wanted to be at work. Also, creating the right work environment but you have to be profitable. You have to generate revenue. You have to be able to grow to afford the nice environment where you can provide beautiful coffee shops, nice facilities, and a gym and we worked very hard at wellness at work and those various factors. We stimulated. People believed you cared about them, which we did. We really cared..Now, it's ironic because Sage is in the news for all the wrong reasons. That must kind of grate you..Well, it's hard for me to talk about it, having not been there for a year. I know how I liked to run a business. Who knows? Maybe that was just an unfortunate incident..Well, let's hope they do as you said earlier – sort it out. Ivan, who taught you all of this stuff?.I always said I did a PhD at the University of Life and I think that was where I learned but I really taught myself. I learned on the job. I surrounded myself with wonderful people whom I learned a lot from. My partners were amazing..You listened presumably, to the right people. .I wasn't a great listener at the start, if I have to be honest. If I were facing the Truth Commission, I'd have to say I was a bad listener – a bit impulsive – but as I got into the meat of the business and I got further down the road, I think I started to listen a bit better and I certainly do today..How do you stop from falling into that trap of procrastination?.Be decisive. Work at it. Know when you've got a decision to make. You can say that to anyone out there. Make a decision because if something requires a decision today then obviously, don't make it impulsively. Sometimes sleeping on a particular issue/matter does help, but I think you need to make that decision. You won't always be right. Your gut feeling: the longer you've been in business, the more you trust your gut. People talk about 'gut feel' in a very loose manner, but it's not 'gut feel'. Why does your head and your stomach tell you something's right? It's only because you've experienced it and you know, so that 'gut feel' is experience..You say, "Sleep on it." What's your process? How many days do you take?.Oh, no. Not more than a day. I'm more impulsive, possibly. I saw some of my fellow colleagues up in the UK who were probably more measured and they would take a longer time to make a decision, and sometimes that was a good thing. I don't have it in my nature to wait long on a decision. I'm very clear and firm when a decision needs to be taken..So, you would at worst, sleep on it tonight and then make the decision tomorrow and go ahead with it. If it doesn't work out, how quickly do you know or how quickly do you act? .Well, then you've got to act fast because you've got to turn it around and you'll learn. You should never make the same mistake twice. You shouldn't. I think that's the years of experience in a business..How do you remember not to make the same mistakes? A lot happens in a day, a month, or a year..Impulsively, you know it because a bad mistake or an error never leaves your memory. When something similar is re-arising, you'll remember that bad decision that was made that day..So, you retired then from an executive role, just over a year ago. What have you been doing with yourself since? You're still a very young man..Well, that's questionable. I was lucky to have been successful in my career at Sage and Softline and I started to make some investments while I was still there – very passive investments. I'm involved in a business called Cash Connect, which is run by a fantastic guy called Steven Heilbron. He was one of the ex-heads of Investec London. Cash Connect deals with the retail industry. .What does it do, exactly?.It's kind of a Fintech-type of business where it deploys large Smart Saves into the retail industry, which companies are able to securely deposit cash and get credit in their account pretty soon. Then we take the risk out of it by delivering it to the cash centres. That business has also just set up a loan business and is soon to set up a payments business on the back of it. Alec, it gets back to whether business is about the business or about the people. I've got a saying. Like I always said, "I'd rather do an average deal/transaction with an amazing/honourable person than a great deal with somebody I don't really believe in." Cash Connect, while it was a business that had been started, Steven (the CEO) picked it up. I chair the business on a non-exec basis and it was a perfect example of an amazing business person – honourable – with high levels of integrity, whose done an amazing job because he's been there, focused on the business with passion so that business is growing nicely..I'm involved with the property sector where everybody will tell you. If you talk to them, they'll tell you I'm in property. It sounds good – property. We're involved in development with some of my ex-partners – Rob Wilkie (the ex-CFO of Sage who left almost a year-and-a-half ago) set this up with some of our other partners a while back. He's the CEO of the company and we do a number of developments. We own a number of commercial properties. .Are they in South Africa?.In South Africa, yes. The latest one we're doing is the new building going up at the Fire Station in Rosebank – a beautiful building, which has been led by Rob and it's an interesting business. I think you have to have a lot of patience with property. Software: not so much. You don't need the patience because you bring out a product tomorrow. You would deploy it and you'd populate your user base, and you would see an instant return of capital in cash, because the cash generation is high in the margins. With property, you've got to invest, sit tight, wait, and you are very impacted by the economic cycles within a country with property whereas with software, I remember that in bad times, we did just as well because people need an essential item running one's business. In fact, people wanted increased reporting in certain times where they wanted to really, inwardly focus on a business in the SME sector. With property, you have to have a lot of patience. It's a long-term game..It's extraordinary to see how much property development there has been in Sandton and in Rosebank, because all or most of the news is negative, the mood amongst many people is downbeat and yet, people are building properties, which is the ultimate long-term investment. What's going on?.Alec, it's a good question. I can understand why you see and feel that way but if I look at Rosebank as a node; obviously, Sandton has become extremely populated. The rentals we are fetching in Rosebank are equal if not in some cases, slightly above that of Sandton. One of my theories is Rosebank kind of works like a grid. It's easy to access in and out of there. You've got the Gautrain, which is a big factor in stimulating that node and it's become a residential/business mix. It's amazing to see some of the beautiful apartments. I was originally at Houghton Development, which has been a really tough development but we're starting to see the prices, which are being fetched at Houghton, which are astounding. At the moment, the Johannesburg residential market is pretty tough and challenging but on the commercial front, it's been good. We've seen the Rosebank Fire Station sell out, which had a better than expected rate. .Just say that again. You've sold out..We've sold out all the buildings..But, it hasn't been built yet, or it's being built?.It's out of the ground. It's nearly up to the 12th floor and we've almost sold out of there. We've seen the demand pick up there..I thought with Sasol moving out of Rosebank – that was a big story – 25% of the office space in Rosebank was gone because Sasol moved to a building in Sandton, so that was supposed to be an oversupply..A good question because if you saw the Sasol building when it was built, that was built as a fortress. Go back Alec, and look into the history of that building. It's fascinating why they built it like that. In the early days of South Africa during different times, that thing could shut down like a military fortress, but it's a very old building, and something fantastic will be done with it. There is opportunity but we're seeing a fantastic demand for office space in Rosebank at the moment, and residential. I'm indirectly involved with a golf course in the South of Johannesburg, called the Eye of Africa but it's not really a golfing resort. It's a residential eco-estate and the demand out there for that (we sell the land) has been fantastic as well..Where exactly is that?.Near Eikenhof, the old Lido Hotel around there – that area. It's got a golf course but it's really a residential node, which is 2000 acres of land. It's beautiful. Amazing. It's like living out in the country..But, why are people investing in property in South Africa if the news is supposedly so bad?.Again, if you look at the population and the demographics of our population (where it's come from in the eighties and nineties to where it's going) and the emergence of strong middle-class people; there's disposable income and people want to live like that. There's a change in the way people want to live. Why is it that a home in Sandhurst or Houghton on an acre land with sell for that much lower than an apartment not even a kilometre away – a quarter the size – would be double the price? It's the way people want to live. It's the changing habits of people and I guess to some degree, security as well and you're seeing that. Property is as I said to you, interesting. It's a long game. You have to be in it for a long time. That's why generally, you hear about these generations of family who become property barons. If I think back to my software career (and Sage and Softline are still amazing businesses), Sage globally is an amazing business. .I loved their business and that's why I really like Cash Connect. I like what Stephen's doing in that business and obviously, we're dealing with different times where technologies like blockchain and bitcoin, and the crypto-currencies are coming in so the landscape's changing as well as the Fintech models. What I've also looked at lately, is the education sector. I'm looking at Edutech and that's fascinating to see now, how the models – because of technology – are changing. When you look at places like Open University and Singularity University and how remote learning is starting to take shape, I think and believe that Africa as a continent will benefit tremendously because people can't afford to send their kids to these first-world institutes. However, people that are living in areas like Ghana and Nigeria will be able to (soon, sometime down the line) have affordable education delivered remotely to these centres. It's something I'm looking at, at the moment and it's a fascinating sector..It's an opportunity for Africa to leapfrog..Yes, very much and that's why Africa is a hot topic at the moment. Education combined with technology is going to change the way kids learn… If I look at my own kids; some of them went to London University and often wouldn't attend lectures. Kids today will go home and they'll stream a lecture and sit there and focus more on it. It's the ability to have those lectures online, so it's a fascinating industry and because it's combined with technology (and I've always been interested in technology), it's something that fascinates me..Ivan, you are in your mid-fifties now. That is, in Warren Buffett's terms, a spring chicken. He's still going strong. He works seven days per week and he's 86. What's the next 30 years likely to be in Mr Epstein's life?.Alec, thanks but I think I'll probably land up getting involved in a particular sector in the industry and I'll put some focus into it. Who knows? It depends. Maybe we'll build something else. I would like to and I think that's what I'm going to do. One of my board members said to me at the time when we found the white knight in Sage back in 2003, "The hard lessons you'll learn of today will never leave you and they will be an absolute contributor to something else you do down the line." I think that if you take those lessons you've learned in business and the years of experience… You've seen a number of guys in their forties or fifties moving into different sectors, using all the past experiences..Still in entrepreneurship and not in service – not in public service?.No, I don't think I'm cut out of that cloth Alec, to be honest but certainly, with entrepreneurship. You know what's interesting (and you see this with the millennials)? They tell you about it. You see it. You feel it. I believe you need to do something that has a strong sense of purpose. When you wake up in the morning, it's not just about making money. I know it's easy for me to say that now, but I think you have to have a strong sense of purpose in what you do and it's got to be fulfilling. I don't want to do something in a mercenary manner. I want to do something that contributes to some good in the world, whilst it also yields a significant return and with a strong sense of purpose..So, social entrepreneurship with a profit motive..Can I reword that? A profitable industry that has some social spin-off..A bit like what Adrian Gore is doing with Shared Value, with Discovery – certainly, the model that he's propagating in that with Vitality points, you get better because you'll be incentivised to become healthier. Yet, on the other hand, Discovery will benefit because it's helping to save as well..Absolutely. I think Adrian's always had that mindset from his early founding days. Adrian's a close friend of mine whom I look to as an amazing entrepreneur, evidenced by what he's developed and grown globally. I remember many years ago, my motive when I started out in the late eighties/early nineties, I was just focused on generating a return for myself and that was because one had to live. I think he started his business with that incentive of a social spin towards it and if you do something good for the market or for people, it yields a return for the business as well. In fact, looking back on my Sage and Softline days, we stimulated the growth and we continued to stimulate the growth of SME's. In this country, we did a lot for them and we made people's businesses more effective as a result of having good technology in it..Obviously, I don't take credit for the way those businesses grew. That's up to the entrepreneur, but we gave them the tools to be able to do it with, so I feel proud of that..For all these years that you've been serving as the judge, the chairman, and on the panel for entrepreneurs, what are the common themes that you find from those who do succeed – those who do go on and win the competition (both here in South Africa and globally)?.There's a strong sense of purpose. There's drive and ambition and generally, it's interesting. You notice a lot of guys (and when I refer to guys, it's female and male because there's a mixture of entrepreneurs), their stories…a lot of them come from hard beginnings. It's interesting. Some of the guys from Croatia…one guys lived in a caravan. This other person from there. It was just amazing. You see a tough upbringing – something in their life that was tough and building these businesses – so they were driven, surrounded by good people, a strong sense of purpose and often, couldn't function well in a corporate environment. You could see it because they're very independent thinkers. I can see that coming through and on the negative side, a lot of ego. You do see that..Remember Koos Bekker when he won the award from Naspers, saying that all entrepreneurs are dysfunctional? Do you agree?.I think they've got egos, hey. That I have seen. There was book, called 'Egos, the enemy'. It's interesting. Read it. I wouldn't say dysfunctional. I can get what he's saying..He wasn't exaggerating. It was to some extent..Yes, but he's right. There is something crazy about people that build… Certainly, in Monte Carlo, you see it amongst these 50 winners; there's something crazy about them, what they do, and how they've done it if you get into their stories and a lot of good people who really want to do good as well and give back to the world. They're turning the wheels of the economy in many countries they operate in but yes, there is something crazy and very driven in people who want to… everybody wants to succeed for a different reason. One could be money. One could be ego. One could be something in their childhood. Then again, I'm not a psychologist..Okay, so now we're talking about Act 4. Act 1 was doing your learning and becoming an accountant. Act 2 was the growth of Softline. Act 3 was your time at Sage and now, you hinted that Act 4 might be around the corner. Who would your role models be? If you were to sit down and write out, "I take the best from X, Y, and Z", who would those people be and what would they be that you could use in Act 4?.There are a number of role models and I can tell you if I look to our own country here in South Africa, some of the role models here are just amazing businesses that have been created in South Africa, so I look to a lot of my friends or colleagues and people I've worked with over the years..Name a few. Name what you would take from a few of them..Alec, if I look at you; honestly speaking, you're an entrepreneur. I think you're onto your second or third business now and you've had the hindsight of being able to talk to and interact with so many entrepreneurs. I remember you used to run that forum. Remember that dinner forum you used to run? We used to have these amazing discussions and you kindly invited me. In those days, if I look at guys like Paul Harris – the whole crowd from there –, you look to entrepreneurs like Brian Joffe and some of the guys who created the whole Momentum Group as well. Look at some of my friends. Adrian's done it. Amazing. There are a number of South Africans that have created global businesses or amazing businesses (even internally) and it's always good to understand how they did it, learn from them, and listen. It gets back to a central theme, always, of this drive, this energy, and this want to succeed..Then they go on to build these large businesses and then start. The other thing is people make some money and they do quite well. They feel the need to give back, which is a good thing. As you're seeing a lot more in the world today (because you only need X amount to live and enjoy yourself), to give back is an important thing and that's why I was so proud and happy to have led the Sage Foundation for a few years because I think giving back's essential. In today's world, if you're just going to make money and not share it, it doesn't feel the same. I think giving back is a good thing. There are a lot of role models and there are some good guys in the UK I worked with, some amazing guys with a totally different culture and approach to business. If I look at how when I left, the chairman of Sage a guy, Donald Brydon who is chairman of the London Stock Exchange today and you sit and listen to Donald… .Donald's a wise old owl. I shouldn't say 'old' but he's much older than me. You listen to the path he's travelled in life and it's amazing to hear and see what he's done and the different businesses he's been involved in. When you look at his approach, he's thought out and careful. Those are people who are good to interact with. Then there's the younger generation and I look to my own kids as (to some degree) role models because they're coming out of university. They've graduated now and they're learning a whole new set of principles, technologies, and way of working and their thought process is different. You learn from them because we shouldn't be stuck. I don't want to be working on the way a mid-50-year old thinks only because there's the wisdom of the guys over 50 and there's the impulsiveness, talent, and energy of those under us and I think you should combine them.

PREMIUM: Meet Ivan Epstein: Secrets behind the success of SA’s masterful entrepreneur

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