Here’s How $600m-Rich African Entrepreneur Strive Masiyiwa Makes Investment Decisions

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ENTERPRISE54 – Strive Masiyiwa is inspiring! If you do not know him, I dare say you do not know anything about African business. He is the founder of Econet Wireless’ billion dollar business. A true entrepreneur in every sense of the word. Full of gut and faith sharpened by vision. From creating his own engineering firm the Zimbabwean went up against Mugabe’s tyrannous government for ownership of the country’s private GSM license in an epic 5-year legal tussle! Today, he is Zimbabwe’s richest man. Recently on his Facebook page, he shared insightful lessons on knowing how to decipher between making an acquisition from a minor investment to passing up on lucrative businesses and making no investment at all.

“The fact that a business is a good business, and the fact that it is in a good industry.. Does not mean it is a good business for you, personally,” he says.

Find the text below…

A friend of mine, in South Africa, wanted me to join him, in acquiring a business called a “Feeding Lot”. Something he said, intrigued me:
“They have 50,000 cattle on one farm…”
“Did you say, 50,000 cattle?! Wow! I have never seen that many cattle in one place. I have to see this!” I exclaimed with excitement.

Having walked around the farm, and seeing all these cattle feeding in one place, was pretty cool, for a city slicker like me:
“It would be great to have the bragging rights of saying, “I have 50,000 cattle!” I could just see how they would react back in my village, in Zimbabwe!”

But before, I got carried away, I had to look at the numbers. And when I look at numbers, I look at numbers.
How do they make money, and how much!
“Let me get this?” I asked the Managing Director, of the operation:
“You buy the cattle, from other farmers, and then you feed them. Then you sell them to the guy who slaughters them; and he sells them to the supermarkets?”
“Yes”.
“Interesting.”
“So who makes the money?”
“Its an industry”.
“Tell me about this industry, I want to know everything about it.”

The management were professional and passionate about their business. It was clear they had been in it, all their lives. Most of them had specialist agricultural degrees and MBAs. The more they spoke, the more I realized how sophisticated it all was:
There is a science, to everything:
Now the guy was talking about the type of cattle they use; how they get the cattle to put on weight quickly…disease control…competitors from Brazil…. “Wow, they do that?!”
“Yes, yes, yes.”
“I see”.
I wondered what the conversation with the professional farmer, would have sounded like. Or for that matter the abattoir operator, or the buyer at the supermarket chain.

Respect. Respect.

approachwithhumility

Being business minded, requires you to always approach things with humility and respect. There is nothing out there that is “simple”. Only fools look at what someone else is doing, and say to themselves, “that is simple”.
The process of reviewing their Financial Statements, and Business operations took me several months, working with industry consultants. It was harder than a telecommunications business.
I decided not to buy the business, although I would have gladly invested, for a minority stake, on condition that they stayed to run it. Understanding this distinction will prepare you for the “senior class”, of business minded people.
I read tonnes and tonnes of documents and studies, and also spoke to as many experts as I could. And even then I never got to a place of comfort about my knowledge of it. I needed a few more years, to understand such a complex business. So I did not buy it, even though I might have invested in it, for just a small stake, but not for control. Unfortunately, this was an opportunity to buy the whole business, and take control.

Principles:

1. Superficial understanding is not enough. Don’t rush off based on 1 hour search on the Internet. You have to dig really deep. I would have done this, even if I had been offered an opportunity to buy a chicken rearing business.

2. There is a big difference in the knowledge you need to buy a controlling stake in a business and the knowledge to invest for a small stake. I can bring myself up to speed to invest and have a small stake, in almost any business, but it requires much more knowledge to own and operate a business; in any industry.
… Many people have been burned because they did not understand this difference.

approachwithdiligence
It explains why someone can be a great investor in a business run by others, but when that person takes over a business, to run it, they fail completely. These are profoundly different issues.

3. Respect
Always approach anything you have not done before with deep respect and humility. It’s what positions you to learn what you need to learn. King David, speaking of those who “scoff” (are dismissive of things they don’t understand):
“stay away from such people, they are doomed to failure”; He was a wise king.

4. Motive
The fact that a business is a good business, and the fact that it is in a good industry.. Does not mean it is a good business for you, personally.
I see many business opportunities (much more than you could ever imagine); nine times out of ten, I refer them to someone that I think is best qualified for it.
I always, always want to check my motive. I don’t want to go into a business for the purpose of bragging to others.

There is always space for you to play, but approach it with diligence:

A great King once said:

Be thou diligent to know the state of thy flocks, and look well to thy herds.

 

happywheels

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