Home / The CEO / Understanding business models (Part 1)

Understanding business models (Part 1)

Credit: Strive Masiyiwa

“When did you first see the opportunity?”

When I first started Econet Wireless, I travelled to South Africa to meet the senior leadership of one of the leading mobile network companies. I was looking for investment into our business. I did the customary pitch and offered them 40% of my business. For some of you who have seen Shark Tank on Kwese Inc, it was a similar experience!

Their CEO balked at my price. “No way!” he said. “That is just too expensive!”



For several weeks we haggled over the price but we could not bridge the gap, and we decided to go our separate ways.

More than 10 years later, I ran into the chairman of that company at a reception, and he pulled me aside and said, “I really regret that we did not do that deal with you. Now I realize that your business was worth a lot more than you were asking for.”



He nevertheless congratulated me and we kept close and friendly contact until he died. He was a wise old man.

This has happened to me many times. Sometimes I’m the one who walked away from a potential investment and sometimes I’m the one who missed out on a potentially great deal.

It’s all business!



In that particular case, there was a reason we could not agree: I believed that the potential for growth in mobile phones was multiples higher than what they were projecting.

__Even though we were both in the same industry and could be considered experts in our field, we had a dramatically different view on the impact of a new technology: “Pre-paid payment” system!

(At that time you could only get a contract. The pre-paid technology was invented in Israel, and it totally transformed the industry, allowing billions of people to get access.)

I believed it would change everything. They thought my assessment was exaggerated.

There are so many new technologies coming through these days. Do you know what great technology is going to dramatically impact your business or the company you work for?

Years ago I used to keep a quote from William Goldsmith (one of the first British billionaires) which said:

“If you see a bandwagon, it is already too late.” What do you think that means?

Let’s talk.

End.



Credit: Strive Masiyiwa

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