16 minute read
HOW TO COMBINE PROFIT AND SERVICE
FROM THE BOOT OF A CAR IN ALEX TO SNEAKERS FOR AFRICA:
HOW TO COMBINE PROFIT AND SERVICE
Theo Baloyi, founder and CEO of Bathu Shoes, dynamic entrepreneur and philanthropist, won the 2021 Top Empowered Company: Job Creation Award. This accolade was a true reflection of Bathu’s mission - to reignite hope and create sustainable jobs. The company currently employs 300 people and its business model ensures it is robust and scalable, irrespective of what is going on in the global economy.
IN THE BEGINNING
Theo was born into an average South African family and raised by both his mother and his late father who was a male nurse turned estate agent and who taught him the basics and fundamentals of entrepreneurship.
During the 2008 global financial crisis, Theo was in matric and did so well in accounting that his father would show his reports to his associates in the real estate business. They were so impressed they suggested Theo should pursue a CA career. In order for him to be able to continue his studies during the global meltdown his father sold his car – and then Theo moved to Alexandra to stay with his uncle.
“When I got to Johannesburg, I was very intentional about the man I want to be, and my goals. And how I need to focus on my goals and achieve. One thing I did when I got to Johannesburg was self-introspection, about who I am, where I am from, what it is that I want. The second part of that introspection was sort of a risk assessment. What are the risks? What can stand in my way? There were a few things: one of them was dating; the wrong circle of friends and so forth. So I decided to cut all of that and just focus on my studies. And I did so well in that year that I secured a bursary from Tomorrow Trust. A hundred percent bursary. And obviously my parents were very excited.”
“And the second year I was the top accounting student in the class. While I was studying for my postgrad I realised that I had a lot of idle time, because you only attend classes for a few days [in the week], some days you are off, some weekends you are off. So I thought about ‘how do I keep myself occupied and keep on pushing, pursuing my dreams?’. And that was how I got into entrepreneurship because we started a perfume business.
“We looked at Alexandra, the consumer behaviour in Alexandra how people like dressing up, smelling good, going out for parties; hanging around. Not everyone could really afford perfumes, so we identified a gap in that market.
“We didn’t have the capital to start the business. However, we knew someone who was staying in second avenue, who was selling hampers of ties, cufflinks and pocket squares. We went to this guy and said ‘give us your hampers, on consignment, let’s sell, add a mark-up and give you a cut at the end of the month, and then we take our cut’. We did so well in that business that the proceeds from that were invested into the perfume business. The perfumes did so well because we were selling oil-based perfumes that people could afford. That’s where the entrepreneurial bug bit me.”
“We grew the business, and the clientele, to the point where we didn’t have to go door-to-door to ask.”
At the time, PwC was looking to fund just one student, under the condition that they worked for the organisation after graduating. And, based on his outstanding results, they chose Theo who proceeded to overdeliver, to the point where they didn’t want to let him go, and employed him full time. With this focus on accounting, the perfume business died a natural death – and then Theo went to work in Dubai where out of 700 applicants he was chosen for an asset management position.
“Oftentimes when I came back home, visiting Alexandra township, a township that I spend most of my time in, I would see that our brothers and sisters, predominantly the youth, had lost hope, with no employment and just sitting around, I would realise it’s not because they’re lazy or anything. If you listen to their stories, not everyone has gotten the opportunities I’ve gotten.
“Not everyone has had a father who can sell their car, not everyone had a hundred percent bursary, not everyone had PwC, a top accounting firm, to sponsor them. And not only that, but give them an opportunity to go work overseas.
“So I was like there are two things: either you choose to blame these guys and say they’re lazy or I am actually going to build with them, or build something that will really reignite their hope and create sustainable jobs.”
At the same time, Theo was buying a lot of sneakers on his travels, buying limited editions and had a light bulb moment when he realised that all of the shoes were from international footwear brands – not one from Africa – and that marked the genesis of Bathu (which means, appropriately, shoe).
“When I started Bathu I did about 18 months of research and development, and proof of concept. Basically behind-the-scenes work. One of the findings from my research was that we have about seven continents in the world, and each and every continent has fair representation with a footwear brand. A footwear brand with a strong brand promise that almost everyone across the globe, or the market, can recognise the label.”
“You look at South America, Brazil to be specific, they’ve got Ipanema and Havaianas, doing very well in the global market. Obviously the States, they’re leading with Nike. And they’ve been leading for the longest time. Enormous amounts of money leave the continent each year because we import so many overseas brands.
“All the time that I went back to Alexandra, I could see and I could feel what’s really happening there. And I’ve got the passion to really help, and ‘pay it forward’. And I thought: this is my way of doing that. And in this big vision of building a shoe brand that Africans can proudly affiliate with, as scary as it is, it can help me achieve that and I could say, I could see the impact, I could create the impact. And not only to build from myself but to build with others.”
“We didn’t just want to develop a sneaker, or be a sneaker brand from Africa, we wanted the ‘cool factor’. We wanted a trend, a different sense of style, and that’s how we came about the Mesh Edition. In footwear manufacturing, the mesh material is used as a component of the shoe, either at the back, the top, or the sides.
And I had a vision of building an entire shoe out of mesh, and that’s why we were declined 13 times, because the manufacturers believed that you cannot build a shoe out of mesh but I really believed that something can be done.
“The journey was very lonely."
“But I was very lucky because in my life I’ve done a lot of self-introspection, even when I was in the Middle-East, and especially when I was in Saudi Arabia. I would stay alone, do my self-introspection, reach out to my own core, my own purpose. It was a revelation to say ‘you need to go back home and build from the ground up, and build with the people, with the objective and the purpose of being of service.”
He launched with 100 pairs and sold out “basically in a week”.
“Today we do tens, and tens, and tens of thousands [pairs] per month.”
So, whereabouts did you start, and how did you market the first 100 pairs?
“It started among a circle of friends, as a proof of concept, in three townships initially: Alex, Tembisa and Soweto, selling out of the boot of my car. Quite funny, because I think some of the people still owe me the money from that batch!
“It was such a small number that it sort of became limited, so everyone wanted them. Even when I went to my big batch, the 1000 pairs, I knew that I’ve got a demand. And the more people wore the shoes, the more they spoke about the brand, the more they spoke about what it means, and the brand values, the more it grew.”
GROWING THE BATHU BRAND INTO AFRICA
Congratulations on reaching 300 employees. Please tell us about your plans for reigniting hope, creating sustainable jobs, and expansion both locally and internationally.“We are very intentional about how we want to build our back-end and our strategy around protecting our brand and growing it. One of the things that we did, from day one, the intention was always to own the end-to-end value chain. So we had this big mission: ‘reignite hope and create sustainable jobs’.
“I decided I am going to own the end-to-end value-chain: Means of production, supply chain and distribution. Because if I do that I will be able to achieve my mission.
“Bathu has done very well in the SADC region, I must say.I think we’ve cemented our brand; we’ve built our brand equity.
“One of the things we really want to do is we want to expand into Africa, predominantly east and west Africa. Just this year alone we were part of the top 100 Most Admired African Brands, a brand survey conducted by Brands Africa. Over 28 countries in Africa, constituting eighty percent of African consumers. And here’s this brand from a room in Alex, sitting at number ten on that list. Alongside Dangote Group, MTN, DSTV. In the top ten there are only four South African brands, including us.
“We realised there’s an appetite, and our online data has been telling us about the appetite that is in other parts of Africa. So our strategy is that going into the SADC region, or expanding further into the SADC region, we want to be able to optimise our omnichannel commerce, so that we will be able to service the appetite that is currently there. And going into east and west Africa, we’re going to do the same but we’re probably going to need the relevant stakeholders and partners that are going to help us build that value chain. So we’re planning to expand into Africa for the next five to ten years or so.”
What would be some of your most memorable milestones, personal and business? “I’m just grateful for the man I’ve come to be, throughout the journey and the things I’ve generally achieved. And I’m just humbled by the opportunities that I’ve gotten and how I’ve maximised them
“I am so humbled by what our business has managed to do over the last couple of years, with the people that we employ, and the impact that I’ve seen in people’s lives. We have people in our business who started off as casuals in our retail stores, now they are regional managers for the retail landscape. We have people who started off as drivers, now they’re part of our e-commerce unit. Most importantly we have people who have gotten their first undergraduate qualification through this business, people who have bought their first cars, some are even on their third cars through this business, some have built homes for their parents. Some have actually bought their first homes. Some have erected tombstones for their loved ones and some are role models in their own right, showing that there are many other fields in society. It’s truly humbling. So, that has to be my highlight.
“I just wanted to add that I’m a firm believer that excellence comes through service. Oftentimes we make the mistake of thinking that for you to be excellent, to be great, you need to be a genius, but oftentimes it comes from service and how you are of service to the next person, or to your community. “And I believe that’s where excellence comes from, when you’re of service, and that’s what this business is about: to reignite hope and create sustainable jobs.”
PAIN POINT: HOW TO HAVE A HEART AND BE PROFITABLE
One of Theo’s biggest pain points when building Bathu was actually by default – moving the business from startup to corporate and managing that culture change, taking people out of their comfort zones and ensuring that the processes and systems were aligned with his vision and growth strategy.
“The way we started our business was not about enriching one and making big profit, or anything like that. I had a comfortable job, four times what I was earning in South Africa, tax-free. It was never about wealth, or money, or riches, it was just a bigger calling to say ‘I want to be of service’ and because I started the business within the community, with the people, it was always about ‘one day we’ve got40 orders, we take two people from the street, the next day we’ve got100 orders, you take two more people from the streets, the weekend of month-end you’ve got 600 more orders, you take six more people from the street. You just want to be of service and build together.
“But then the accountant in me, the professional in me knew very well that this is not the way to build a business, I needed to corporatise. I need to have the right skill set; I need to be able to scale it. it was painful because the people I had at the time were people who started the business with me before the fancy offices. My human capital functions were not optimised.
“When you bring in a human capital lead who’s experienced and says ‘This is what the policy is, this is what the process is. The things you used to do in Alex are not going to work here,’ you are building the bridge between startup and corporate. That was key because you need to bridge the two. Because you’ve got a business that started informally, from purpose, basically from the core, and now you have a business that is economically scalable, so you need to ‘yes, we want to be of purpose but we’re still a business, now we need to scale and be profitable.’
“That was my biggest pain point, to still have the passion and the economics merged into two. The economics of business don’t really care about how you feel; it’s about the bottom line. But you are employing people; human beings who are creatures with emotions, and you need to be able to have processes that are going to accommodate all of that.”
SOUTH AFRICA’S TRANSFORMATION JOURNEY
What are your thoughts on the journey to transformation in South Africa and what can we do to increase the pace? “We need to be ‘woke’ to where the world is going. And most importantly we need to be ‘woke’ to our own capabilities.”
“It does not matter what we are trying to introduce, if people are not understanding their capabilities, or we’re not understanding our capabilities, as a continent, as a people, it’s going to be really hard for us to transform. It starts with us as individuals, or citizens, as corporations, and as the corporate sector collaborating with the state.
“Gone are the days when we should be at the receiving end. The receiving end of the latest technology, of the latest app, the latest trends. We need to own our own resources and start transforming it so the rest of the world can receive whatever end-product we develop. Strengthening the voice from the South.”
REMAINING RESILIENT
How did Covid affect your business model? “We were very fortunate to have survived the big negative impacts. Mainly because of the way we started our business. When we started the business we reinvested our proceeds into the right avenues. It’s almost like we knew Covid was coming. The first few years we were just an online business; selling from the boot of my car, even though big retailers approached us and we said ‘no’.”
“We did not fire anyone in our business. We still paid all the salaries even when people were at home, mainly because we reinvested in working capital.”
“We’re selling to people who really don’t need shoes.”
Talks about how being under lockdown means people don’t buy footwear to “look cool” because there is nowhere to look cool, so they won’t buy Bathu shoes.
“Our revenue went down a bit but we managed to still sustain the business.”
Did everything on his own when he started. Sold from the boot of a car. Twenty square metre room.
CELEBRATING 5 YEARS – WATCH OUT FOR BATHU REDEFINED!
“My favourite shoe used to be the Mesh Edition but the new product we’re launching before the end of the year - Bathu Redefined - I think they will take first place.
“In an effort to grow our business and celebrate five years, we needed to redefine a lot of things in our business. And one of the things was our product. We want to give a whole new Bathu experience. Not only instore but in the product. The new product should spark a different response: ‘Wow, this shoe is just amazing.’”
“We want to enhance the customer experience through: Sneaker technology Quality Comfort”
QUICKFIRE ON CHILLING:
How do you relax?
How do you cope with stress? “I read a lot and enjoy non-fiction books, autobiographies about entrepreneurs, great, successful people, and self-development.”
Favourite authors? Judy Collins and Robin Sharma
“I am a car fanatic and spend time at the race track in Centurion doing advanced driving courses with friends.”
AROUND THE DINNER TABLE
If you could have five people over for dinner, past or present, who would they be and what would you have for dessert?
• My late father
• Richard Maponya
• Elon Musk
• Vusi Thembekwayo
• My best friend, Andrew
Baked cheesecake for dessert.
LOOKING FORWARD
What are you looking forward to most in the coming year? “Excited to grow!”
