The world is changing fast and to keep up you need local knowledge with global context.
Although most might not appreciate it, Naspers is an integral part of every South African’s retirement plan. It accounts for a staggering 20% of the JSE’s Top 40 index (and an even heftier 28% of the SWIX), obliging every pension fund to hold a chunk of its equity. That puts a heavy responsibility onto the shoulders of 44 year old CEO Bob van Dijk, but as you’ll hear, it’s a challenge he’s up for. Coming up from three years in the job, Van Dijk is an executive very much in the mould of the group’s legendary chairman, Koos Bekker – attentive, focused, entrepreneurial and curious, our interview showed me Naspers (and the big slug it represents of the savings of South Africans) is in very good hands. Have a listen and you’re sure to agree. – Alec Hogg
This special podcast from Davos is brought to you by BrightRock and it’s a great privilege to talk to the man that runs the company that accounts for 20 percent of the market cap of the JSE, it’s quite extraordinary, Bob van Dijk, the Chief Executive of Naspers and that puts a huge responsibility on you, if you think of it.
Well, we will do our best in any case and I would say that we’re proud to be listed in South Africa. It’s obviously where our roots are and the JSE has also been an excellent exchange for us to have our primary listing on.
It’s an extraordinary story of Naspers being described, your investment in Tencent in China as the greatest investment in history. I think from an external perspective, the bigger benefit though for shareholders have been that you were never tempted to sell that.
There have been many occasions where some shareholders have advised us or asked us to sell Tencent’s shares and as the years progressed they’ve been very happy that we didn’t.
Is there a decision, is it in concrete, you’ll never sell Tencent, or every time the investors make these or raise these suggestions, do you have to once again discuss it?
No, so we have no intention of selling Tencent’s shares and it has, in fact, not much to do with our investors, but more with our conviction around the quality of the team and the quality of the business and the further potential.
Do you work closely with them?
We have a good amount of contact, we have two board seats, and we also interact with them on various levels. Obviously, the Tencent business is run by the Tencent team and in no way by us, but we do have a great relationship that is longstanding.
Bob, I remember reading just the other day about the throwing mud on the wall strategy that Koos Bekker and late Antonie Roux implemented in the late nineties and the early two thousands. Which brought you the Tencent investment? Are you still following something along those lines?
I think at the core of our company, is that we realise that we need to change and adapt to stay relevant and alive, so I think we very much still have. I think the necessity to look at the outside world to figure out what is changing and change ahead of it rather than behind it. So if you look at some of the investments we are doing at the moment, actually quite frontier investments in new industries that could either be bang or bust. I think in that sense we still do something quite similar and I think we have to because as time progresses, the business models of today will be different tomorrow and if we don’t change we’ll become irrelevant.
It is extraordinary that you have a big company like yours who would take a view that you don’t really know who’s going to be the winner or the loser, so you had better almost cover the table.
What we try to do is, there’s some thinking around it, is that when we are excited about a business model, but don’t quite understand it, we try to go in carefully and learn and in learning we make mistakes. The only way people really learn is through their mistakes and that’s definitely true for us and as we form our understanding we become either more excited or less excited and when we get more excited we place bigger bets in an industry and that’s worked quite well for us in the past.
Who are you betting on right now?
We are excited about a number of business models we’re in. I think our OLX business, which we got into, I think it’s about four or five years ago, has been one where we made an additional investment, got very excited about it and then rolled it out in 40 other countries in the world and that business is growing very substantially. It has a very large audience with more than 300-million monthly unique users and we believe it can be a fantastic business. There are other business models that are earlier on, I would say that can be as attractive over time. OLX is one I would call out as one that has grown very rapidly and is becoming a very large business on its own.
Now, you ran one of the divisions of Naspers first before becoming CEO, but what attracted you to this group, this South African company in the first place?
I was actually in touch with Naspers and with Koos and Antonie when he was still with us for many years before I joined the group and when I first met Koos and Antonie, I liked the way they are business guys who run a big company, think like entrepreneurs, and move quickly. They are not corporate, they are focused on what they don’t know rather than what they do know and that’s exactly the way I think about the business and it was a great click from the very first meeting and since then we stayed in touch and at some stage there was a right entry point and I had to think about it for all of two minutes.
How old are you now?
I am 44.
So when you took over you were 42, it’s two and a half years ago.
Yes, that’s right.
That’s a young age for such a huge organisation, even by global standards, but I guess to your advantage, it means that you have quite a long way ahead if you keep enjoying what you’re doing.
Well, let’s see. I think the company and the role require you to change and I think that is at the core at what brought the company where it is today and that’s what I see as my mission to add the next set of technology changes, changes in the way consumers interact with the world are the ones we need to anticipate and be successful at and if I do that well, I might stay for a while longer.
Koos Bekker (your chairman) has been very famous at taking sabbaticals and he says that during that time he learns a lot and perhaps discovers what to have a try at and what not to. Do you take sabbaticals, do you take time off?
I haven’t in a while, but I actually do think that pulling yourself out of the fray of the daily business can be useful some time. One of the reasons why I came here, to this meeting is that you get a few days where you can step away from running your own business and think a bit about the world, where it’s going and what your role in all of that is.
Davos is very good at that, giving you the high level picture. Have you been able to engage with people who have maybe changed your views or shaped them differently?
I attended a few really interesting sessions, one was actually on what we can learn from the history of war and it’s an example of a very different subject that I think has some profound learning on the way. People should think about the future, so that’s an example of thinking about something I really don’t generally spend my time on.
Of course, the Chinese President Xi addressed this in his widely acclaimed address, would that have made you, a huge investor in China happy?
I think it’s hard to comment on all aspects. There was, I think, a very impressive presentation where I was really encouraged by the really well-informed global view that the president displayed and I think many other people were as well.
How are you seeing, talking about the global view, how are you seeing this crazy, turbulent world that we now inhabit?
That’s a big question. I think the world is going through different cycles. The warning sign we’ve gotten is around capitalism and the type of democracies that have been the model that most Western people have signed up for does have its limitations and has lost people along the way. I think if the benefits were achieved on an aggregated level, and while there were definite losers in the process and many of the Brexit and other developments have been driven by, in a way, the people that were left behind in the progress that the combination of capitalism and democracy have brought. I think it’s a good warning sign and for us to step back and for politicians, and also business people to make sure that what we do benefits a broader slice of society, I think that’s the real warning sign.
Isn’t that what you do anyway? If you think at Naspers your investments are in technology, which makes things cheaper, which makes things more accessible, which brings greater inclusivity?
Again, you know Koos well, I think that’s his philosophy and we are lucky to also be in the business that actually empowers people and informs people, so the business model lends itself to actually helping society rather than being at odds with society. I think it goes further than that in the sense that we also want to be a responsible taxpayer, we want to benefit the countries we operate in, and I think that’s really important. I think as a group we’ve always been good at it, but I think it’s going to be even more essential to align what you’re trying to achieve as a company with the broader goals of society.
That is one thing that, maybe the overriding message that’s come out of here, that management structures and systems have changed and that companies need a social licence now to even be in business.
Yes, and what one of the key messages from the forum has been around, act long-term. Now I think that is something that is really close to our heart at Naspers. We’ve always been a long-term company, that’s not optimised for short-term returns, so I think that is something that we’ve been practicing way before this became a discussion, but I think it’s relevant across many sectors. I think one of the drivers of tension has been that many companies have actually been short-term optimising, which puts them at odds with many stakeholders, which is a very dangerous thing. I don’t think that’s something we’ve done, but I think it’s broadly something to really watch out for.
Just to explore that a little bit deeper, when you say, “Act long-term” you make many investments as you explained earlier. What kind of time horizon do you give yourselves?
It varies; it depends on the business model. Some business models come to fruition in a few years, others take a long time. We’ve been investing quite a bit in, I mentioned OLX earlier, that’s simply a business model that might take five odd years before you see any return on that investment. We’re comfortable making those investments if we understand the business model and we also are keen to invest in models that matter for people structurally and where we contribute positively to people’s lives.
If you listen to the narrative of the company, it’s always been improving the lives of the people, of customers, and I think that’s the recipe, even if you wouldn’t care about it, it’s the recipe for success of the company as well. So I think having the long-term vision is not just about picking business models that might take long, but also making consumers and customers better off longer-term, I think that’s the only way you build a sensible business.
Also here in Davos there’s quite a lot of exposure to new technology, have you had a chance to look at anything, or is there anything perhaps here that you saw that surprised you?
No, I think I’ve seen a few things and we are quite immersed in technology, so I haven’t seen anything particularly new, but tomorrow we’re going to spend a day looking at a few new things, so we’ll see.
As a broader perspective, the exponentiality model, Naspers’ shares have been bemusing many investors for many years because they keep going higher and higher, but if one can embrace the whole concept of exponentiality and what’s happening at Tencent etcetera, then it’s not such a mystery. How do you look at it inside the company, what kind of growth rates are you projecting into the future for some of these companies that you invest in?
I think we’re a growth oriented company, so the business models we invest in, we believe have considerable runway and that gets us excited about the things and what we look for are two components in any business we invest in. One is, does the business serve a consumer need that is structural and profound, not a fad or a small thing, but something that matters to people structurally. The other component we look for is can technology make this fundamentally better and I think the combination of those two things gets us into business models that can be exponential. Not all of them are, but if you have those two ingredients, I think all exponential models have those two ingredients and that’s what we consistently look for when we invest in a new business.
And you keep looking in the emerging markets, in the emerging world?
I think the priority, I mean we get excited by growth markets; we’ve been in them for a long time. It doesn’t mean we only play there. We have invested with Letgo, for example in the domestic US market. The way we look at investments is really from the first angle, do we think the business model actually serves a big customer need and make sense in a sustainable way and then we look for the quality of the people who can actually run with it, the entrepreneur, the person who has the capability to make it big. The third thing we look at is a return, so I hope that answers your question.
Pretty much and Bob van Dijk, the person, as you said you’re 44 unlike what it tells you at Wikipedia, you weren’t born in South Africa, you aren’t married to Koos Bekker’s wife, you’re from the Netherlands.
That is right, I was born there, I went to university there and I’ve worked abroad for a long, long time and now for about two years I live there again mainly for logistical reasons, it’s an easy place to travel from and travel we do. I spend about 75 percent of my time visiting the different geographies we work in and I think that’s the way it should be.
Give us a tip on how you manage to overcome jetlag.
Sleep when you’re supposed to sleep according to the place you are in and don’t deviate from it and make sure you’re tired enough to sleep.
The 75 percent of the time that you spend looking around the world, what do you actually do at that time, visiting your various investments?
We do spend a good amount of time visiting our investments; we also look at new investments, prospective companies to work with. Obviously, we have a board that actually has their board meeting in different parts of the world where we have significant operations, so we tend to travel with our board as well. I don’t do many conferences. This is actually probably the only general conference I do. There are some very start-up focused gatherings that I do attend too because it’s a great place to get new ideas and to meet entrepreneurs that are building exciting new models.
Does Silicon Valley still have the dominance in that area?
The way we think about it, innovation happens everywhere and the balance of innovation, I think is shifting away from the bay area. However, it’s still incredibly important as a source for new business models. I think it almost had a dominant position in sort of new business models originating a number of years ago. I think the balance has shifted to India, to China, to Israel, sometimes even to a place like Berlin, so it is rebalanced, but it is still extremely important.
Is there a common thread between the entrepreneurs you would invest in, in those areas as you say, that something that jumps out at you that says, “Okay, that company’s worth a try”?
I think it’s an incredible determination to build something fantastic that is true across all the entrepreneurs we’ve worked with that have been successful, the other component is around an obsession with their products and with their technology. The people who have been most successful truly care about what they put on the table and realise that their success is 100 percent controlled by the customers they serve rather than anything.
Do they need a higher purpose?
I think some have in, or many have in some way. It varies; people have their own source of inspiration. I think what does bind the people together is a strong sense of integrity and wanting to make things better.
You said that this is one of the very few conferences that you go to, it’s into day two already, are you likely to leave here disappointed or delighted?
No, I think so far it’s been time well spent. I think I had the opportunity to attend some of the plenary sessions where some very interesting discussions were happening that you’ll take away, good ideas from things that you should incorporate in your view on the world and also met a lot of people who are here anyway to discuss business, which has been extremely useful.
Bob van Dijk is the Chief Executive of Naspers and this podcast was brought to you by BrightRock.
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