The Journey to Creating a Resonance Ecosystem with Allon Raiz #13

Hello, everybody. This is David Goldsmith. And welcome to another edition of Redefining Tomorrow. It's here we discuss topics that may redefine your future, that may redefine how we live on this planet or any other type of redefining. You might consider a quote that I've lived by since I've been. I think it's 12.

It is.

You can't fix yesterday. You can only create tomorrow. And today we're going to be redefining tomorrow. We're going to be exploring on this program today the journey of creating a resonance ecosystem. And we have Alan Reyes today with us. How are you today, Alan?

I am very good, David. Looking forward to this conversation because I know it's going to be as informative for me as it is going to be for you and the listeners.

The Alan and I met through a mutual friend. He lives in South Africa and absolutely amazing individual. He runs the, as the Economist says, the only genuine incubator in Africa supporting over 500 businesses. Raise Corp. Has worked with over 13,000 businesses over 21 years. And the reason he said he's going to learn as much from me as from through our conversation is even coming up with this title. One of the areas that I think Alon is brilliant at is the ability to be able to create this amazing ecosystem. And we had a long, long talk when creating our title, which is why we're here today. So, Alon, do you have a outline for us.

David? I've got a couple of talking points or bullet points, ideas that happy to share.

So what are they? And I'll write them down and then we'll get going.

All right. I think the first point is paradigms is that the concept of paradigms as part of this journey to creating a resonance ecosystem.

Okay.

The creation of the ecosystems or the deliberate creation of the ecosystems, I think the concept of pollinating those ecosystems, the concept of progression. What is the plan for progression of an entrepreneur that's evolving and growing in an ecosystem? Yeah, and there are a few more. But I think just knowing that this is going to go in an interesting meander, I think that's enough.

Okay, so we've got four here. Paradigm. Paradigms. Paradigms. The creation of ecosystems, pollinating the ecosystems, and progression of entrepreneurs in the ecosystem. So we're good.

Yeah.

So let's start with number one, the paradigms. Love the word help me understand.

So you know, you spoke about you coming here to South Africa and you met with me and I met with you and we resonated and there is something about that resonance that makes the relationship work. I suppose at a deep level, it was that I benefit from my interactions from you and you benefit from your interactions from me. I can learn from you, you can learn from me. Or if you want to be more crude, I can get something from you and you can get something from me. So it's very important for me that when we started to build Race Corp, that the people who we allowed into the ecosystem were deliberately chosen. That we chose people with what we call Blue Heart, that ability to stand up again and again, that fighting spirit.

So.

So that everyone in the ecosystem that was selected had some commonality and had the ability to deliver value to one another. So that's really the starting point, is how we select our entrepreneurs and why the Economist. What was interesting is when I was speaking to the journalist from the Economist, one of the things that he kept asking about was our selection process. And. And our selection process is quite interesting in the sense that, first of all, 1 in 100 people who apply get in. And nowhere in that selection process do we ask for a business plan. And that's quite an intriguing thing in a business that is in the business of investing and supporting businesses that we are completely disinterested in. In the business plan, we are only interested in the individual. And we have created a selection process that looks for certain characteristics, 27 different characteristics in entrepreneurs and to different levels. And when we meet an entrepreneur who has those characteristics that we deem to be a fit for us, then they are allowed to enter into our programs.

Okay, so I have to go back. I apologize. I have to ask Blue Heart, where does that come from?

So Blue Heart is a name that we. Our selection process is called the purple process, and it's basically the discernment with those with red blood and blue blood and trying to discern the people with this quality that we called Blue Heart. And it was just a name and it was just a piece of fun that started 20 years ago and just has stuck. And so, you know, Blue Heart is, you know, very much the ethos of what everyone in RaceCorp looks for when selecting entrepreneurs.

Okay, so. And then I'm going to want to hear many of these 27 characteristics. I want to understand them. So we can do that first or we could do that after. I think a larger question. How did you get from before Race Corp to this point to be able to deliberately choose Blue Hearts, to be able to understand 1 in 100 and then be able to navigate where there is no business plan? You understand what I'M asking, I'm kind of going before, before the, before the plan. How did you get to this?

So the quick, high speed version is I grew up to entrepreneurial parents and I was groomed to take over their business. And for reasons I won't go into, I didn't go that route and landed up working for a friend of mine in a retail clothing business. Turned that business around, got into the newspaper, and a dollar billionaire saw the article, phoned the store that I was operating from and told me he was sending a driver to pick me up. I get picked up, taken to this man's offices. I don't know who he is or anything about him. He asked me a whole bunch of questions. At the end of the day he says, at the end of the meeting he says, I'll back you in any business you like. Just come up with a business and I'll back you. And I didn't believe him because that's quite a bizarre incident. And two weeks later he called back and he said, you know, what are you still doing at the store? And I said he couldn't be serious. And he said I couldn't be more serious. And then I started a new journey. And then I had to come up with a business and something that was unique. And to me, you know, being a young 20 something year old, I certainly didn't have experience. I thought maybe I would be passionate. I needed to be passionate about something. I needed something different. And I came eventually up with a business called the New York Sausage Factory, which was a fast food operation selling hot dogs. And everything was run by mom and pop operations in South Africa at the time. And this was a formal franchise that I developed. I sold him the idea and he said to me that you need to go and sell this to an individual which we'll call Negative Ned. That's not his real name. He happened to be an accountant. And I went to Negative Ned and he said, it's a terrible idea, it'll never work. And I said, I promise you it'll work. Anyway, like a spoiled kid, managed to convince this mentor of mine that to back me, I started that business. I launched the business. And I couldn't make that business make money. I couldn't. And then about, sure, about nearly a.

Year into how much, how much did he put into the business and how long?

Relatively speaking, it wasn't a lot. It was probably in US dollar terms, no more than, you know, US$150,000. At the time there wasn't that much.

But it was, it was a lesson. He was letting, letting happen.

It was a lesson. And then I remember, you know, you know, going to bed every night, seeing all negative Ned in the mirror as I was brushing my teeth, you know, and saying, I told you so. I told you so. And in the morning as I got up and I worked seven days a week, I actually put myself in hospital. I worked. I just stopped eating and I just was working because I refused to fail. But at some point, I had to realize that I had failed and finally plucked up the courage to go and admit my failure. Set up a time to go see him in his penthouse suite. I remember going up in the elevator of sweating and feeling all anxious now that I had failed. And I sort of walked through into his apartment and so very dramatically said, you know, if it takes me the rest of my life, I'll pay you back. I failed. And like I was so nervous. And then he shouts out in this big voice, he says, sit down, sit down. And I sat down. And he said, did I back you or did I back the business? And I said, you back me? He says, well, right now the business has failed. If you walk out that door, you have failed. What, what would you do differently if you had to do that again? So I said to him, well, I would change the menu, I changed the venue, I changed the pricing. And I gave him a whole list of things that I would change. And then he said to me, okay, I'm going to back you again, but I'm not giving you money, I'm giving you people. I'm going to surround you with a. He didn't use the word ecosystem, but with a team of people who will support you to set up this up again. I'm going, I own an advertising agency. The CEO of that advertising agency, he's going to help you think about the marketing. I own a distribution business and he basically gave me the CEOs of a number of his businesses to effectively support me in my thinking. And I managed, I don't know how to raise the money for the second store. I opened up a second store and that second store took off. And why I'm telling you the story is because that's the basis for Race Corp. Is somebody gave me a sec. Not just a chance, but gave me a second chance. And then when I failed, refused to give me money, but gave me support. And if you think about what Race Corp is today, RaceCorp is a paid forward for what happened to me. It's an environment that gives people a second chance, A chance and a Second chance, somebody to believe in them, to get them on their feet. And that's really been. Is the core of where race, I mean, RaceCorp started. Seven years later, I sold that business. I got into a vehicle security business for seven years, and then I started RaceCorp. And so, you know, that's. But that was the. Effectively the. The. My purpose, my reason for.

So in. In that experience, it. And I'm asking this because it obviously influenced you tremendously. What. What on a deeper level than he supported me did you get out of that experience that influences you today?

That whole experience is fundamental to who I am today. The one thing about who he is, and he's still my mentor today, is he was a very harsh, hard mentor. There were no frills, there was no nicety. Of course, he was very nice to me and good to me. But if there was a lesson to be learned, it wasn't about, how can I tell this to you in a politically correct way that won't hurt your feelings? I remember just as an aside, going to him talking. I had an hour set up with him. I went to see him at his home. We were talking and he kept looking at his watch and I was obviously picking up the signal that he was looking at his watches. So I said to him, so, are we out of time? He said, no, no, no, no. We've got an hour. Allocate an hour to you, but we half an hour in and you spent the last half an hour telling me how great you are. Do you want to get any real value out of this or do you want to spend the next half an hour talking about how great you are?

Wow.

And that's, I mean, that. That kind. And you know, and then you angry at the time, you know, but you know that he was right. Talking about all the great things I had achieved would give me no value. It was my ability to be vulnerable, my ability to be humble, my ability to look at how I had failed that was more important for my success than just bragging about all the clever decisions that I'd made. So that happened to me in my 20s. And so me as a mentor today to a number of young entrepreneurs, I carry the same. It's called a sharp edge to the way that I mentor as a result of how I was mentored.

Give me an example of how you today are humble and vulnerable at the same time. Having the sharp edge.

Well, I, you know, I was one of the. Well, I don't know if you can talk about with how I'm humble and.

I Know, I know, but you understand you're talking about humble and vulnerable, but at the same time you are acting like this mentor who didn't sound humble, vulnerable. So I'm trying to find a Persona in there just so I can understand that.

So I was involved in EO Entrepreneurs Organization and they have a. Which is a global organization started in the US by Vern Harnish.

I was, I was around at the time with Vernon when this all started. Yes.

Fantastic. So in there is the concept of a forum. And just like ypo, and there is this ability to be in a safe space and a safe environment where you. Where you are amongst a group of people that you trust, feel safe. And I have subsequently left EO and I've carried a number of the people who are in my forum where we meet once a month and there is this 15 years of experience together where if I say something, they call me on my bs, you know, and vice versa, because we know each other that well. You need somebody who can hold you accountable, somebody can tell you that you're talking crap, somebody who can reflect back at you. Now I choose that. I choose to be in that. I choose to have that accountability and that mirror, mirror in my face at least once a month. I also, by the way, I'm married to a psychologist and so I live it every day. So whether. Whether I get it in my home.

You do remember we had. You do remember we had dinner together?

Yes. So I happen to live with somebody who ensures that I understand how unimportant I am.

Are you sure that's a psychologist or a wife?

I cannot answer that question.

Okay. So I love that. And the reason I love it is because the answer you gave, I didn't anticipate, is that you gave an answer of your ecosystem outside of the. The corp, where you are putting yourself in a similar position. And that's. That's what I wanted. That's what I was trying to get out of. This is how are you making sure there's a balance? Because it's very easy with the size of your organization to become arrogant in that you have built it, but you are every month returning back to the roots of being vulnerable and being humble.

You know, David, if I'm completely frank here, in my late 20s, early 30s, when I started becoming successful, I went through a very arrogant phase. It's something I deeply regret. And when talking to my mentor about it, I asked him if he witnessed me being that arrogant. Because, you know, retrospectively, as I'm in my 50s now, I can recognize that that phase was an incredibly arrogant overconfident, and perhaps not appropriately without the appropriate substance behind it. It was just, you know, I'd just become successful. And I asked him if he. If he saw that, and he said, absolutely, he witnessed that. So I said, why didn't you. If, you know, if you were so honest with everything else, why didn't you reflect back on that? And his view was, you need to go through that. If I was watching you and you weren't evolving through it, then I would have stepped in. But it's almost a rite of passage in a way, that you have to go through that to come out on the other side, to have experienced it. So in a weird way, he wanted me to go through it, to come out on the other side.

No, that's a great point, because you had a mentor in that case, and I didn't. And it was a struggle. It's been a struggle for me. So I understand that is you've achieved success, and here you are flaunting it, and you want to know you had someone you were very lucky to help, to reflect on that with you. I think that's a very powerful position you were in.

Yeah. Yeah.

How long was he. How long was he by your side?

He still is. He still is. He's still. That's 30 years now. And, you know, what's interesting is that I still call him for insight advice. And I remember calling around Covid call, calling him and saying, what do I do here? So he goes, I don't know. I've never been through this, but I can tell you something for free. And he shared with me, and maybe I can share that with you now. I mean, it's just a little tidbit. He said that if you do not see this as your ship coming in, if you do not see this as the biggest opportunity of your life, it won't be. So stop. If you are feeling in any way that you want to be defensive in any way, don't. This is the time to actually be aggressive and to seek out where the opportunities are more than any other time. Because this is an incredible opportunity for an entrepreneur, and it changed my mindset.

Fantastic advice. It's. It's brilliant. How did you feel when he said it? Not just what did you think, but how did you feel? Because he's basically slapping you.

I felt. I felt like. Like you were expecting an answer that, you know, save the cash. You know, you almost anticipate what. What the answer would be. And I just felt completely liberated and like wind beneath my wings, like I could now conquer the world. And I took that. What was interesting, that like literally a day later I called all my CEOs of all the businesses that I'm involved in and I shared with them that this, you know, this paradigm, once again, this lens on the world was the right. Was the lens that I believe we should all have. And so then individually work with those CEOs in order to try and crystallize that notion of being aggressive and looking for opportunity into what it could specifically be for their business. So immediately I just passed that on to the people that I meant for the people that I look after as well.

I do love the advice that you were given. I love that you accepted it because it's succinct in a narrative. It's succinct in it's short and precise to give some direction, which I love. So I'm going to take a small jump because I want to get back to the paradigms you have then jumped into. You select 1 in 100. I don't know if you plan on going over this later, but we could do that. And the other one is the 27 characteristics. How did they evolve and how did you get to this one in 100? Because you didn't start off that way. I don't think that's a skill.

No, I didn't start off that way. So it actually starts off once again in a very poetic way through failure. I was very early on in my journey, it was raised corp and I wasn't making any money. I was working my backside of running from one entrepreneur to the next, to the next, to the next and I wasn't making any money. And it was about 4am in the morning and I hadn't slept all night, just very concerned around a whole bunch of businesses. But this time I had accumulated, I think this was very early on in the journey, about 14 businesses, 14 or 16 businesses at the time. And I just drew a line on a piece of paper and I on the one side I wrote keep and other side I wrote Chuck. And I put the names of the businesses, the ones that I'd like to keep and the ones I'd like to get rid of on the other side of the paper. So then I said, well, what makes that decision? How do I choose left from right? How do I choose who to keep? And so the first thing that I thought about was if I'm more worried about their business than they are, then they go into the right side, then I have to Track them. So that was about what is their relationship with their business. And so that was the precipitating moment. And just half an hour later, I had knocked off a whole bunch of emails to a whole bunch of entrepreneurs saying, thank you for the journey, you can have your equity back. If you owe me any money, you can write it off. Just au revoir, goodbye, thank you for playing. And then focused on the other businesses, which was incredibly important turning point for RaceCorp because I. I then realized that if I focused on those individuals that had the right attitude, that blue heart, that whatever it was, that that was more successful, less is more. So that was the beginning.

Before you, before you go too far.

Yeah.

What was the response from the positive and what did you say and what was the response from the negative and what did you say?

The positive people? I never told I was selecting, so they didn't even know the negative people. Some were angry, some were whatever, some were grateful. It was different for each individual.

I asked that because I had five businesses I was advising in San Francisco. I woke up one day, I did the math and I said, they're not going to. Even if I work for five years and I made some money, it wouldn't equate to the time I'd have to put into it. And I did the same thing and I got extremely angry responses and saying, you could have everything back. I'm not taking any equity and I had very small amount. One person will never speak to me again. So that's why I asked. I mean, it's. This is like you're hitting home with me on this narrative, this storyline, but.

It was the right decision for you and it was the right return on effort for you. You look at return on effort, which is a very important part of how we think. So if I come back to the selection process. So that was the precipitating moment. And then I started doing a huge amount of research on entrepreneurial characteristics. My previous sort of selection criteria was I looked for the glint in their eyes. You know, it was as unsophisticated as that. But that didn't really work. So I needed some, maybe a more theoretical base below the selection process. And then I started reading books on what they call the psychological typology of entrepreneurs, only to be deeply disappointed in the fact that according to psychologists, there is no such thing as an entrepreneur. In other words, you cannot say that if an entrepreneur has X, Y and Z characteristics, therefore they are an entrepreneur. It's only a set of probabilities. So entrepreneurs are extroverts they're introverts, they're tall, they're short, they come from wealthy backgrounds, from poor backgrounds. There isn't a definitive set characteristics with an equal sign to an entrepreneur. So then it says, okay, which ones do what are these characteristics? And so over the years we built up the different characteristics. And also it wasn't just in the testing of these characteristics, which was very much around like what would you do in this situation or that situation, multiple choice questions, but it was also interviewing and it was also high pressure environment. So if you look at our selection process, there's an interview, they write a two and a half hour assessment, there's a second interview, then there is the basic due diligence, and then there is what we call a panel, this purple panel, the purple selection panel. And that panel is set up with very highly trained individuals who are there designed to put huge amount of pressure on the entropy. And huge results come, different results come out of that pressure situation. So it's not just the questions but also the methodology that we evolved over the last 20 years.

So it's interview two point, then there's the write up, then there's the second interview, then there's the panel, then there.

Is, and there's a due diligence in between and there is a basic dd. It's really a basic due diligence. It's nothing really intense, it's, you know, just checking that the vehicle has got four wheels. That exists because one of our most successful businesses, a great story, is a business that does funeral home policy management software. So it's the software for funeral homes, Right. But the guys who started that started out selling computers, they were box droppers and then they went into networking and then they went into software and then they built this piece of software which turned out to be incredibly successful. And they've got millions and millions of policies, 35 million people on the software. But when I first brought them into school, they were selling computers. But once again they had, in my opinion, what it took. So I'm also very forgiving of change, forgiving of them reinventing themselves on their journey. And not just for giving. I encourage it if it's, if the reasons are right.

So can you walk me through an example? Like these policy guys, they start off, they find you, you find them, you bring them in, you do the interview. I don't think you and I had spoken as much on what we're trying to build on our end. So this is a very pragmatic question, how did you bring, how did this process happen so that you could find this killer whale?

Yeah. So in the beginning, to be honest, no, I never had a brand at all, a personal brand, nor a business brand. So it was really through networking. I started doing talks and I would have people come up to me, and that was sort of how I met entrepreneurs. They weren't knocking down my door, let's put it that way. I was still hunting them very much in those days. I met the individual and went through this. Actually, there was one sort of senior partner and a junior partner. I met them. The junior partner was very cynical about the deal. The senior partner wanted to do the deal, we did the deal, and then we then supported them on their journey. As they began their software journey, their senior partner got killed in a car accident, and the junior partner became the CEO and he actually built it into what it is today. But the practical thing around after the selection process is that I had to do a deal. We had to do a deal. So we take equity in the businesses. Now, this is just one division in Roscop. It's not all of Rose Corp. In that 500 businesses, we don't have equity in all of them. So there's different models within Race Corp, different approaches, but in this, then you have to do the deal. And the deal, as you know, is always the hardest. Entrepreneurs think their business is worth millions, you think it's worth zero, and you have to find each other somewhere in between. At the time, I had no money. 0,0 cash. So I couldn't buy it. So the deal was to sweat for equity. In other words, I would do X amount of work. I would bring in work, I would support them, I would mentor them. And if they hadn't, I put in a guarantee that if they hadn't reached a hurdle of revenue, it was still revenue at that time, after two years, then they could have the equity back. And so that was the original deal. And, you know, and it just sort of happened to flow from there.

So what did you see in their eyes? What was this glint? Why. Why were you willing to put all this in? Because it sounds like out of this you found some of your characteristics.

Yeah, so. So the one thing, the senior guy at the time was a guy called Barry. And Barry was a phenomenal salesperson. And if I look at all the businesses that are backed, and in fact, I've gone through this, this purge again about five years ago where I repurged. And once, the most important thing that I looked at was the sales ability, the ability of the CEO to Sell. To go out there and sell his or her dream, his or her products, his or her services. It was that. That to me was one of the most definitive things. And Barry at the time was a absolute incredible salesman. You could sell anything. And so to me, I had a lot of. That gave me a lot of faith.

Okay, so then let's go to this list. And I just. For my sake, I mean, I know you can send it to me later, but I'd really like to listen to it, hear it, and go down this list. Do you have the 27? Do you know them by the top of your head? So we could just.

I don't actually have them all over there, but I'll give you a few. Give me a few. Yes, I'll give you a few. So number one is sales ability. Number two is flexibility. That, you know, once again, their ability to change direction is very important. So stubborn, no good. Flexible. Teachability, I think, is a very commonly known one. Can I teach other willing to learn new things? Number four is it would be father issues. Father issues is an interesting one. There are two psychologists, Collins and Moore. I think it was 1969 that showed that if you've got father issues, you're far more likely to become a successful entrepreneur.

And if to define a father issue.

Then father is absent emotionally or physically to you. So, you know, and then that combined with an overdoating mother, is almost the perfect combination.

Do you know me already? Did you check into my back?

So that combination is. So for me, I always say to them, if you've got father issues, come to the front of the queue. You can skip the whole. And then.

But. But you also mentioned mother issues.

Well, not by overdoing. Overdosing mother. So that, you know, that might be an issue for a. Maybe a teenager. But I think from the mother issues that's around somebody believing in you, there's still somebody in who believes in you. Father issues is something to prove. Yeah. And although, you know, there is. So I need to prove to someone. If somebody to the world, specifically my father, who's absent and my mother believes in me, I mean, that's the, you know, the one sentence summary.

So we got. We've got father issues. What's the next one that you could think of?

All right, then what else do we look for? We look for the ability to reframe situations. So when something. And I spoke earlier about my mentor saying, well, you know, this is the best time of your life. This is not like everyone's scared. Everyone's. And you Know, frankly, for good reason. But you know, Covid is not something to sneer at. It's a very dangerous epidemic we're going through. But to reframe that, this is the biggest opportunity of your life. It takes an individual, certain individuals to be able to do that easily. And so we look for people, individuals who have the ability to reframe situations and we look for evidence of that. How something was in one state, they relooked at it and then it basically turned it on its head to look at it in a different way. And then the relationship with the so called problem becomes a relationship with an opportunity. And so that's very, very, very important. That's actually one of the heavyweight characteristics that we look for. Other things are being positive, you know, having, being optimistic. Also very, very important. Yeah, and I think those are just.

Is there anything on there where there's a level of cognitive that you, you don't even have it on the list, but you're looking for a certain ability to do? And I'm going to make this very simple. Just are you looking for a math skill or a something skill or a something skill? Are you looking for the individual to have a standoutish skill set? In one way, it doesn't have to be the one you want, but maybe they're very good at numbers or maybe they're very good at writing, or maybe they're very good at something. Do you have anything like that?

Not at all. Not at all. In fact. In fact, my experience has been that of course, entrepreneurs, some are super smart and some are very average and some are, you know, academically, wouldn't be regarded as smart at all. But. But that's not the problem. The problem is whether you have that ability to have that capability within your business. And so that can either be you, that is you are the smart one, or you can have the charisma and ability to sell to somebody else that they should join your organization. They have it. Steve Jobs, as smart as he was, had this charismatic personality where he, you know, convinced other people to join him. And so you bring that skill set into your business that way.

Okay. And it's interesting because if you hadn't defined it that way, I took sales because you used the word sales and I unfortunately narrowly defined it instead of in the book that you've got that I gave you. Sales is diverse. So I actually write about this, but my mind went to a very small category and I'm glad you said so. The sales to you is as. I don't know if you've got the chapter in the book. But where we talk about sales as the leader is very difficult. It's you have to sell up, you have to sell down, you have to sell sideways, you have to sell legal, you have to sell the media, you have to sell to your vendors, you have to sell to your employees, you have to say to your board. So it's a very diverse, challenging role to be in. And a good person to run a business has a capacity to talk to all of these people, not just to a customer.

Correct. 100%. You hit the nail on the head. And it's very broad in terms of that sales ability. And it's interesting for me when you talk about your vendors, because at the beginning of a business, your vendors very often are the people who are financing you. They're the people to whom you owe money that you are praying that your customers are going to pay you for at some point in time. So having a good relationship with them is critical.

It's interesting that it's amazing how many parallels. And I'm not trying to do this intentionally. One of our businesses, I got rid of a person who was very connected to Vern, one of my first businesses, I got rid of him. And when we did, my wife and I, she was girlfriend. Then where we're looking at, what do we do next? And a person from the previous business, someone had heard about us, called us and said, can you offer acts? And I didn't know we weren't in that business. And I said, let me get back to you. And I looked up, pulled up the old Thomas Register, if you remember those, found a vendor who could supply this. I called them up and said, we're looking for Axe, and we'd like this, and we need it for a customer. And I guess I sounded professional enough. I was in my early 20s. And the person said, oh, great, we would love to ship that to you. We're going to give you net 30. And because they gave us net 30, we were able to start that business.

Yeah.

Without that net 30, we would not have been able to sell and be in that business.

Yeah. And that is. That story you tell is a very important story for many entrepreneurs who very often don't see their suppliers, their vendors as important as they should.

They need to be there when things go right and wrong. And in my opinion, my opinion is that I see it as just part of the ecosystem of the business. It's not. They're as important as the customers. If they don't deliver on time, if the quality is improper. If you can't talk with them, you can't service your customers. So the customer is not more important than them, they're just different. Yeah, that's a way to say it. Okay, so these are great. These are, if you have any, if you remember some of the others, they come to mind, please add them. So this, so let's go circle back to the paradigms. So you had this paradigm, you had the blue heart, you had the 27 different characteristics. You select 1 in 100 through a process. 1 in 100 is very, very, very, very, very little. With 500 at this point. How are you making to finish this off and then finish the paradigms? I want to know if there's any others. How do you know which one? 1 out of 100 means that this is a race. Let me give you an analogy that I see. I see 100 people in the race because they've already, many of them are already pretty good. They're star athletes. So you might have 20 that are good enough, but only one crosses the finish line. How do you know which one is that one?

So the one word answer or two word answers. We don't, we don't, we just get it right more often than not. And we still in a learning process to get that more and more correct. So we have a very high success rate. And so that gives us a lot of confidence that what we're doing is, is right, is correct. But you know, for us, at the end of the day, we also have a fail early story. So we get about 50 to 100 applications a day to join us. And As I said, 1 in 100 will get in a day. A day, A day. But I have got big machinery that, behind that there is, it's incredibly sophisticated today and we've got, you know, I'm sure that 99.9 recurring percent of other. The listeners have never heard of Race Corp. Nor ever will. But in South Africa, in the southern Africa, because we are in Zimbabwe and Angola, in Tanzania and we, we have got a brand. And so I said to you before, I had to very much go out there and hunt today. It's more, you know, people are basically applying and we've got a very strong brand, we've built a great reputation and so people want to be part of that. And people, there are people who try again. If people fail, we say, these are the reasons you failed. Go fix this and come back after six months or a year and reapply.

So again you, if you're getting 700 a week.

About 500 a week.

Okay, so we use the business week. So 500.

Yeah.

You gave, you gave a minimal process then because the first thing is the interview, which can't be the first thing unless you've got so many people. How do you, how do you do the pre before the interview?

So there's a expression of interest which has got minimum criteria on it. It comes through into a system, it's all software driven. It arrives at an individual who then checks the criteria met. If they're not, there's an automatic rejection.

If there isn't, they're filling out a form online or there's. Okay, so there's some data analytics beside you're asking certain questions, they fall into a point system or whatever and if they exceed a threshold they go to a more human based application where someone is now reviewing.

Yes, they get a phone call and we have, we go through a telephonic interview first if they're successful. And then that's all the data is come comes into a piece of software which you've written and the people who are interviewing them over the, the telephone are then scoring them again based on a number of rubrics around each question and listening and this is an interesting one David, is that they listen to language. They listen to the construct of language. They listen to the positivity or negativity or blaming language, they listen to language, they listen for contradictions. They've been trained to do so. So the telephonic is the second phase and if they're successful in that, that they come through for actual physical face to face interview. So that face to face interview is now digital. It's across zoom or teams or Skype. And that interview happens in a digital way. But pre and post Covid it will be, it was and will be back to physical. And the reason why it's so important, the physical interview, in my opinion and this I just maybe if you pushed a button for me and I just maybe want to express this is because you can pick up nuance in terms of body language that you cannot do as well over a zoom or a Skype, etc. There's so much more information coming to you and we train our interviewers on how to do this, how to read that body language. Just as a quick aside, I have sat on credit committees for a number of other organizations who do not have a physical interview with the entrepreneur. And to me it does not make sense. It's completely off this document called the business plan. Read the plan and then they will decide to give credit or not. In one of the credit committees that I was on, we looked at two businesses. One made concrete pipes and the other made this plasticized decking that looked like wood but was actually plastic. And my challenge to the committee, to the investment committee was come up with your decision without seeing the entrepreneur. Then let's bring the entrepreneurs in and interview them face to face and let's see if we get the same result. We decided through the business plan, reading the business plan, this beautiful slide deck that we would choose the concrete manufacturer and reject the plastic deck would look alike deck manufacturer. Once we interviewed them, the decision was completely reversed. We went completely the other way because you can hear things, you can read things that you cannot do on a piece of paper. And so to me the worst possible decision making on whether to invest in an entrepreneur is through this thing called a business plan. You know, I've written a book called Lose the Business Plan. I think it's the absolute worst reason to invest in an entrepreneur. You back an entrepreneur and the team, that's number one, as I did with Barry in that business. And they will adapt. If they're the right people, they will adapt. And I too was that individual for my mentor back me. I then evolved into something else.

I can, I would take this if I was sharing with somebody also to a different level is that as a person, let's say who want to go work for somebody, make sure you go visit. And when, when I do on one part of the business we have on the consulting side, I will take a 13 hour flight to sit down with a prospect. I want to see their office. I want to see how the people greet me. I want to see how they interact with me. I want to see, I want to see these things because they're clues as to how they will treat people, what's important to them, what's the structure. So even if you are wanting to work for an entrepreneur, wanting to work for somebody, this is also very valuable to understand that that human interaction, that face to face where zoom doesn't or any videos, technology doesn't give that. And so yeah this is, it's. What was your team's reaction or what was when? I'm assuming. So I'm going to ask that question. Sorry, I'm going to ask two questions simultaneously. You can ask them answer the way you like is afterwards you. I'm assuming you did a post review. So I'm making an assumption here in that post review what came out of it about this fact that you were just so Far off.

Well, the whole process was changed to then include interviews. It was a no brainer after that they understood. But the issue, and let me tell you where I think the problem is. There is a certain distance created by responding negatively to a business plan. There is there. You don't see the people, you don't create relationship with them, you don't get to understand. So to reject them is a lot easier. So when your accredit committee is completely so called objective, it's easier to reject. I don't think that that's the right thinking. I think you've got to look them in the eye. You've got, and you know, you've got to get over being able to say no, not now, this is not for us right now. And say no after you've met somebody. So yeah, and that's the skill I've had to learn.

Well, look at, look at our interaction is. It was actually not easy to get to you at the day that I was doing it. I had to make sure to get transported to your home. I was able to go to your home and you and I could have had a 10 minute or 15 minute or 20 minute conversation. I could have walked out the door. But before we know it, we're having dinner together, we're taking photographs, we're sharing books and we're creating a different bond that would not have happened otherwise.

Correct. So and if you think about business, business in my opinion is about relationships. It's about relationships, as we said, with your vendors, with your clients, with your partners, with your, your staff. It's about relationships. And so even when you're investing as an investor, it's about that relationship that will see you through some rough times. Even in this, you know, I speak about all these investments as if they've been wonderfully smooth relationships. They don't, they're like marriages. They require work, they require effort, they require faith, they require long term thinking. And that can only come from a two way relationship built on trust and built on a humanness that you have to understand that you're dealing with somebody else who's got a family, who's got personal situations going on. And you've got to take that all into consideration when making decisions. It's not just this cold, these decisions that are so cold based on what the numbers say. You know, they always say that the numbers don't lie. I think they might not lie, but they don't tell the whole story.

So in the topic of paradigm. So let's go all the way back up Is there any other, since we've spoken a decent amount about this, is there any other paradigm that has happened that you think is important for me to know about that would help me to understand moving into this next, the creation of economic, the ecosystems?

No. So to me it's about their paradigm and the relationship. It's about getting the right people into the ecosystem. And when I say the right people, it must be the right people for you, for you as the investor, for you who's creating it. And not just for you, it's for everyone else in that ecosystem. So you become a curator of who gets in and who stays in that ecosystem. And that's really, I think, the important thing to understand about their paradigm and who they are before they come into the ecosystem.

So I've been very much looking forward to this next topic. And as I've mentioned, I don't tend to talk to the audience. We don't tend to talk to the audience while we're talking. It's just, it's the two of us. But I will share this, is that the creation of the topic was originally, when we go through the process, there's a pre interview for those of you who don't know. And it could be very long and ours was fairly long because the first thing that you had said alon was that you were going to, you wanted to speak on as an entrepreneur born or raised. And I really didn't want to hear that that's part of it. I need to be excited about it. And I shared with you that I feel like you bring them into your ecosystem and you make them bigger and better and strong. And you turned your video screen around for me and you showed me your walls and you said, I think in these ecosystems. So I've actually been very much looking forward to hearing the creation of ecosystems. This is something that I've thought about many times since our call. So take me someplace. What are we going to get here?

All right, now, so let me maybe start off with a confession is that it didn't start for me in thinking, putting my chin on my clenched fist and started thinking about ecosystems. It didn't happen that way. It happened naturally. And then I recognized a pattern and then I said, oh, this is working. And then that's actually an ecosystem and that works and sort of was born out of that. So just a confession out of the way that this wasn't by design originally. It stumbled over the fact that it had happened. So now once you think from an ecosystem point of view and you even heard in the paradigms where we were speaking about your vendors, your staff, your customers, that's part of your ecosystem, that's part of your stakeholder ecosystem in your business. But for me, what, what I was trying to ensure is that I had different ecosystems running next to each other. So there was a bigger ecosystem made up of smaller ecosystems. And I spoke to you before, early on in the interview about the fact that not all 500 of the businesses, or 500 plus, and if you include the 13,000 that have been through, which are part of the alumni, not all of those are equity. Some are programs that people come through, one, two or three year programs with no equity. It's just fee. And so there's these different ecosystems that started to be created, made up of individuals who could and did by design, and this was by design, add value to one another. So anyone who's done an mba, and I haven't done an mba, but I've been involved with enough people who have done MBAs, will tell you that one of the big upsides, in fact, very often the only motivation for doing an MBA is the networks that are created by those MBAs. And there are cohorts, and people then start building relationships in those cohorts and doing business with one another in those cohorts. And it's very much about that. What we started right at the beginning of this interview is that what value can I give you and what value can you give me? So at the center of an ecosystem is a commonality and this ability to feed each other with something. So what is that something? And how do you deliberately create these ecosystems with that something or those somethings in the center? So perhaps there's knowledge that people can share, perhaps. And the one that is very common and very hard to do properly is markets. That people can open markets for one another, either directly, as in I am your market, or indirectly I can give you access to my market, so that's valuable to you. And vice versa, or experience, which we spoke about EO with Vernonisch, big part of what that little forum is, is a little ecosystem where we are sharing our experiences and our knowledge with one another and our networks. So what Vern did with EO with Entrepreneur at the time it was Yeo, was created very much like the YPO model, a mini ecosystem. And then my forum would be forum one and there's forum two and there's forum three and the 10 forum are all part of a chapter. So we've got all these concurrent ecosystems working very tightly with one another right next to one another that forms this chapter, which is the grander ecosystem. So I try to replicate that within Race Corp. And instead of a forum, it would be different types of entrepreneurs in different cohorts, either geographic cohorts, the different programs that they were on, the different, let's call it, financial relationships I had with them. That's what was being created. But it came to a point where it was all being created deliberately.

Okay, the. So in your head, tough question in your head, what do you see?

I see a. The picture that I showed you on the wall, I see a circle made up of different segments, all rotating around a core, a central core. That's what I see. And so what's very much for me is very much like an orange, is that in each one of the segments, there is a specific theme that keeps that particular segment together. But all of them are all surrounding this core value proposition. There's something in the center that keeps like a heartbeat. It keeps feeding the whole system and keeping it going.

So you are the heartbeat by bringing in the new blood, or you keep the blood moving?

Me as alon. Not anymore. As Race Corp has been designed. The machine does that. I don't do it anymore.

So the raise corp is the machine. It brings in by bringing new blood, which a body needs new cells and it's reproducing. So you're bringing new blood in which excites, transforms, keeps it healthy, keeps it growing. And at the same time, there's a mechanism in Race Corp to be able to reach out to the ecosystem and make sure that they're functioning.

Yes, number one, it's about bringing in the new. Number two, it's about continuously adding value to that new in terms of knowledge, in terms of all sorts of value, whether it's cheaper input, costs, or advice or whatever the case may be. And then the third thing which is very important is being the bee. It's about the pollinating is cross pollinating. This deliberate, very deliberate cross pollination of the ecosystem, that there is somebody that or somebody or individuals that are charged with moving information, experience, value from one of the ecosystems to the other, very much like a bee moving from one flower to the next. And I still play that role. I enjoy that role. So I'm, you know, I will pick up an opportunity and I'll know that, you know, these individuals can benefit from that. Or so I'm still very much. My role today is I'm more of a bee than the heartbeat in the center. The machine produces the heartbeat. I'm more of the Architect, the designer of the machine. And in a day to day functionality I act in the bee role. But there are many bees. I'm not the only one, I'm just one of them.

So when you're, can you, I'm this many, this group, how do you task them, how do they identify and how do they deliver on the promise of the be?

So I'll give you an example. We have a, a role called Supply Development Manager, SDM we call it. And the supply Development Manager's role is to get access to heads of procurement in corporate South Africa. So the individual would be tasked for phoning up and getting a meeting with the head of procurement for one of the big corporates. And in that conversation they would either come in directly with saying that, you know, we would like to introduce you to X, y or Z Co. But also with an alternative mission to get others into that, into that supply chain. So once you've, you know, you've built a relationship and they trust, they're looking for particular suppliers who are reliable, who are at the right pricing and they know that we can source them for them, then they will start pointing up and say do you have a company that can do this for us and that for us? So then we do that. So we would either do that very directly like the supply development manager role, or we would scan all the tenders that are out from different companies. We've got, there's various platforms that basically publish tenders and we collate that and then transmit that out to the entrepreneurs. And we do that in a selective way. So we do it in a curated way. So not everyone is getting everything. We basically push the opportunities to the individuals who are most likely to be able to take advantage of that. So those are just two examples of adding value.

They're great in the sense that the way I'm now picturing, which I did not, in the beginning of this incubator I had this image of you brought people in, you educated them, you put them on their path, you help them, you give them advice, you do all of those activities. But what you just described is that Race Corp is an entity that acts like a growing entity. So therefore it has an individual who searches for opportunities, who finds, let's say it's caterpillar or 3M or somebody. You go in as the lead and from that lead you are bringing behind you the ecosystem. But that's not always the way in which you enter. You come in, you, you give them one opportunity or two, you say we could supply you on that Knowing all well that Raise Corp's capabilities are to not just do that for one, but actually to sell the ecosystem.

Yeah. And if I take that further. Yeah, you said that perfectly. And if I take it one step further, David, what, what is important is Rice Corp's brand in that. So that a procurement manager would say, I know one in 100 have got into you. I know that there is a. So you're not wasting my time. You've done a lot of the de risking work for me already. And so this is valuable to me as a procurement manager from a large corporate because my big problem is having vendors come and go and explode and disappear and it cost me a huge amount of time and effort and aggravation to get new vendors onto my system. So if you Raise Corp are selecting them, I know there is a higher probability, it cannot be 100%, but there's a high probability that the individuals are going to be more stable and able to scale given further work that we provide them, which is another interesting thing is that many businesses fail not out of starvation but out of indigestion. They eat too much, they bite up more than they can chew and kill themselves in that process. So even as we introduce new markets and new opportunities to the individuals, we're very conscious of the fact that they will experience scaling issues and we have got the experience to allow them to make more rational decisions. In other words, don't offer to sell them 100 if you can only deliver on 50. So we've got ways to help them govern those decisions better that are not ego based or greed based, but what practically the business can provide. You can hear that's a little nuanced piece in there. And there's lots of these little nuanced pieces in there. Another example would be, for example, we have in a certain one of the ecosystems we have a thing called a Rolodex day where we deliberately share our Rolodex in a very fun and novel way with one another through needs and leads. And we do that, spend a whole day doing that with the CEOs passing on leads to one another. And so that's another mechanism. So market creation is a big part of the value of that we create.

So with the it's market creation and market pollination. As you've shared, I've never asked this, how many people in Race Corp I.

Employ directly that is not in the investor in the investment companies where we have equity directly? I pay every month 170 odd people. So that's on my payroll. Then indirectly, then through all our equities. It's way larger than that, I would assume. So we have only 170 people in the.

It's still an impressive business because you have the tentacles. I'm assuming you have a finance banking, accounting arm that helps the companies and this is a question, I guess, do you have that can help them raise the capital if they need it, that can look at their balance sheet and income statement to make sure they're asking the right questions. Is this a big role?

Yes, we do. We have a division called Partner Elite where we actually have own funding, our own cash and we would put that into the businesses in different formats, loans, equity, whatever the case may be. So we don't run a fund per se, it's our own money. And then in relationship, I mean this is, I shouldn't possibly say this on in a public forum, but you know, in many instances when you've had a relationship with somebody for 10 or 15 years and they've got a cash flow issue over a month end and they need, you know, $500,000, it will, you know, it'll be through an EFT just transferred to them with no paperwork because. And send back to you like 10 days later as their money comes in from their clients with you know, just a conversation. It's because you know the individuals, you trust the individuals. So it's even, it's like even a cash flow issue over month end. But that's, I mean that happens from time to time as well. Then the other thing that we do is we have relationships with many of the finance institutions broken up into the formal finance institutions like the banks, etc. And the alternative finance organizations where they specialize in smaller amounts of finance. And once again the relationship is that if they're in Race Corp, from a bank's point of view, it gives a huge amount of credence to the entrepreneur and therefore they have a much higher chance of getting that funding. So we've got relationships there and it even goes to personal. We've had entrepreneurs who are raising mortgages and when they raise a mortgage as an entrepreneur, there is no employer, you know, you self employed. So banks don't like to do that. And then they mention raise corporate and then the mortgage is our brand is very strong from that perspective. And that once again is part of the value is just being associated with that brand is it means that we've been endorsed. It's like saying that I'm a graduate of Harvard or Oxford or Cambridge or whatever the case may be.

Can you give two things that you didn't do properly in building your ecosystems.

Today or yesterday?

No, in the past, like what lessons did you learn? Where you were, where you were building the ecosystem and it didn't work the way you wanted, so you had to pivot.

Yeah, so I was being facetious and making mistakes all the time. Every day, rather I make to every day at least. But if I think about it, you know, in terms of the ecosystem, you can't. The one mistake I think I made many years ago was to force the relationships. In other words, there was a requirement. So I'll give you an example. We own a school, a high school, primary school business and the technology, the IT support is provided by another one of our businesses and the bookkeeping for that is done by another one of our businesses. And so they were having issue with one of those two. I won't mention which one. And like in the past, I would have insisted that they, they use one of our companies in the ecosystem. There's nothing worse than enforcing, you know, forcing that. So you think that, you know, because your models say that they're going to spend X with you and Y with you, that you need to force that ecosystem. So a big say in summary is I learned the hard way that you cannot force supplier relationships. I cannot force you to buy from one of our companies. I need to ensure that you trust that individual and that if you want to not use them, they can use anyone you like. So that was one.

Yeah.

It'S a good question. I haven't thought of it as in like the big mistakes as opposed to all the smaller mistakes, but I think, And this was cleaned up in the model now, but originally I didn't understand the fact that you had to have, you know, as I mentioned, the different fora as in forum one, forum two and we're all in a chapter. For me, I didn't understand that the importance of keeping those ecosystems relatively small and tight. Where you learn that is that if it becomes very, very big, then everyone just starts to feel like a number in that ecosystem. But in a small ecosystem where there's 10 or 15 or 20 business and individuals in that ecosystem, then everyone knows each other and feels important in that particular ecosystem and therefore by default feels important in the chapter version of that because I'm important in my particular invita Commerce forum ecosystem, therefore I'm important in the chapter in the bigger ecosystem. If you don't break, if you don't keep their ecosystems small and try and force it into one big thing, Then to me, I think a lot of people stop feeling, and quite rightly so important and cared for. And on a empirical level, you could be giving them exactly the same value in both situations, but one, they don't perceive it to be the same. So that, that, that I was moving towards like a big, big ecosystem because it was more efficient to, to manage. But it started to then atrophy and, and have its own issues. So those are the two. Two.

Those are, those are very, I'm. I hate to use this word because I'm trying to, I'm using what's coming into my head. They are very powerful because it's very easy to get lost in these larger systems. And my mind went. I don't know if this is helpful to you, but my mind went to a large class at a university and a small class at a university. And the small class doesn't mean it will work. But in the large class you might find that half of the people don't show up and some of them are sleeping or depending on the teacher, depending on how entertaining they are. But the engagement level is very, very, very different.

Yeah.

And it's more work. It's more work to have the small, but once it gets going, it's less work. Does that make sense?

Yeah, absolutely.

So it's challenging in the beginning, you need a lot more energy to get this small group to connect to do you have to make it right? It's, it's got a taste. Right. Gotta look right, gotta smell right, everything. But once it gets going, they, they progress on their own. The ball is roll like.

Yeah.

Okay. Anything more with your ecosystems? Any, anything that you've learned that just was. I should have learned this earlier or.

No. Okay, I think, I think, I think those are the. Keep, Keep them focused, keep them well oiled, keep them healthy. Yeah. And keep them small. And then. Yeah, and then do you get there.

Do you get a monthly report, a weekly report? Do you get a, a cash flow analysis from them every month or.

I sit on. So, so on the equity side, we have monthly financials sent to U.S. management accounts and that's also collated into. I get a monthly report on, on the whole, all of them. So as a, as a, as a cohort, how the whole is doing versus the, and the individuals, I can see it both. And then once a quarter we have board meetings with all the different partners and I sit on some, my business partners, some are the bigger ones. We both sit on and we have, we sit in the board. So I sit on all the boards for those that have been allocated to.

Me and that's quarterly and I'm guessing that you also for many of these companies, entities, whatever they're called, and you have to educate them on finance and numbers and accounting and making sure that it's done right. Do you, do you have. Is that one role of your 170 people to get them up to speed on how to look, review, create, do.

So? That's a very complex answer to that. Most of the businesses have their own bookkeepers Race Corporate itself has 22 of its own bookkeepers which we do the books for many of the the businesses as well. And then we've got a business that does bookkeeping as well. So we've got an equity stake in a bookkeeping business. We do it ourselves and the entrepreneurs that we invest in have their own. So we have a format that they are required to report in and even the board pack has got a template and we train them on how to fill out, how to be in a board, how to fill out a board pack and how to get the financials race Corporate has also got a whole learning training division where we train on finance and on different aspects of finance and then we also provide what we call a finance guide. This is an individual that works with entrepreneur around modeling and finance etc. To help them understand. What's very important for us is that we empower the entrepreneur to understand and more importantly fall in love with their numbers. Many of them are afraid of their numbers. They fall in love with the power of understanding their numbers. And we see that in our experience that in the beginning they're quite reticent around and maybe not reticent is the wrong word, but unconfident around their numbers. Eventually they become confident and understand the power of ratios in order to make different decisions.

The the way it's interesting because I realized while you were giving the answer how mistakenly I was viewing this, you, I had viewed it originally that you were saying you have. I was. The question was about the accounting was do they have. Do they do. But yours is. I go back to that orange is you're using your internal ecosystem which has a bookkeeping system. You have the raise Corp ecosystem of accountants and finance and bookkeeping and all of that. Then you've got the shared community version of the understanding of what's happening in the businesses. So it's an ecosystem of an ecosystem of a connectivity of a network that is not in two dimension and it's three dimensional. So when you outlined, you said you have the 22 accounting. You have a business that does the bookkeeping. You have one that has their own. There's a bookkeeper in the system that's working with them. It's a network effect of capabilities from multiple levels or multiple tiers of capabilities.

And you notice another thing is that they have choice. Which is coming back to the mistakes is that they have choice. I don't force anything on them. If you want to use ours, you can. If you want to use one of our investment companies, you can. If you want to use your own, you can. Whatever you want, you can do so. But here's the one thing that's not negotiable is how you present me with the numbers and that this is what I need and how often you present me with the numbers, that's not negotiable but how you get there, that's up to you.

So you have, per category, whatever, you have a few different models that people can use because different businesses have different components in them. But you. So they give you that. I'm assuming you could tell me if I'm wrong. I'm just making a guess here. Do you also have, in addition to that, do you have them do written reports as to their analysis of the data?

Yes. So they produce this board pack and it's very much, there's two, there's the, let's call it the data, the content. But what's very important is the insights. So we drive their commentary on what's happened and which is more important than what's happened. So I'm very interested in. I can read a graph. If sales are going up, that's fantastic. If sales are going down, that's terrible. I can read that graph. But in the insight, what I want from you as entrepreneurs to tell me why it's happening and will it last for how long and if it's going down, what are you doing about it? If it's going up, what are you doing to make sure it carries on? So that's very much the emphasis on the entrepreneur is that they engage the data from a insight point of view versus just a report back. To me it's not a reporting function, it's more a sharing discussion. Is there rigor in my thinking? How am I thinking as an entrepreneur? It's got more of that tonality than reporting. In fact it's got zero tonality around reporting.

And is your feedback written or oral or both?

Oral. It's oral but you know, it sounds all very quite stiff coloured and quite rigid etc. But in each one of these groupings, whether it's two partners that we've partnered with or one or two or an exco, we have WhatsApp groups that we communicate with all the time, like, on a daily basis. So if somebody's just closed a big deal, they will share that. If somebody's going through a bit of a downer, they will share that. And so even though there are these quarterly interventions, there are some often daily micro discussions or interventions or congratulations or that are happening all the time together with that. There's also, I mean, at the beginning of this year, I'm sitting at home right now. I've had two of my CEOs at my home before in South Africa. We have a December, big December break. And so I was on leave and two of them came to my home, pulled out a good bottle of tequila and sipping tequila, and we started talking about the year ahead and worked with them around, you know, their perspectives, etc. So that's just a call. Can I come see? You can come for a chat. And it's, you know, it's not formal. It's just outside in the garden, chat with some very good tequila.

And if you got the impression from me that I saw it as structured, I actually saw it as a little unstructured. One of the things in the book that you have is. And paid to think that I had, I talk about or think about, which I'm thinking about with you, is it's very easy to say we have a connection with somebody. You have a connection. But what I use is this term points of light. And I say, think of every point of light to an organization or to an employee or to a group is a light going one way and every one that from them to you is another. So then I've asked executives, tell me what the lights look like. And I remember this guy who was running the Middle east for a major company. They had. There were tentacles all over. And he said, oh, my God. Like, it was not a reaction. It was a reaction, not a comment. And I said, what's going on? He said, I see all the lights going out, but not a lot coming in.

Yeah.

And I. So for him, it was. I took him up 50,000ft. I said, now look down. What do you see in these lights? And what he was realizing were there were certain lights coming back, and some lights were very intense. But as an overall group, it was a lot of outgoing messages versus incoming. And with yours, tell me if I'm wrong. You are with the WhatsApp groups with the structure that you've created in terms of the meetings that they have monthly, the financials and the responses back, that you have a network points of light happening not only between you and Raise Corp, between Race Corp and the entities, but between the entities themselves.

Correct. And I've got a team of guides, these mentors that engage with them. So we've got a strategy guide, a finance guide, a marketing guide, a sales guide and a personal development guide who are. That's part of my 175 people that work at Race Corp. These individuals are allocated as the support people for these entrepreneurs as well, who have got specialist understanding around those different fields. To go back to my story, remember I said to you the RaceCorp is a paid forward. That happened to me. If I go back to the story where I started again and my mentor provided me with a finance person and a marketing person and a salesperson, all I have done is very crudely replicated my story in a formal format.

Don't put yourself down. No. You've got 170 individuals, which is, if you think about it, it's a nice size business. But because you have this network effect, you're diminishing how much value you're creating. And I think you duplicated it. I don't think you did it in a hodgepodge or unconnected way. No, you structurally took a core concept and you built upon it into this entity. So it's very impressive. And that's why I'm asking the questions. I am, because of how impressive it is. If it wasn't, I wouldn't be asking. So take it as a compliment that I'm asking questions.

All I'm saying is that everything's when you come connected, if you look at my stuff story is that you have got also these guides. Right. So they interact. Then they meet together every Monday and talk about their different businesses that they are supporting and what they need to do. So they are without. I know nothing about what happens in that meeting. I could access the report, but I don't. And then once a month I have a meeting with the guides. This is the equity side of the business only. This is happening in the non equity side as well. But this is where my connection is. And then we report back on each one of the individuals. So I've got the report, but I want to have the conversation, this is what's happening. And then I give feedback from my perspective because often what happens in my relationship with the CEOs is I am party to information that might not have been shared with the guides and vice versa. So we share that information to make sure that we're all on the same page. So that's also happening. So there's a lot of connection points. And then, you know, if somebody perhaps is going through a rough time, you know, divorce or something, you know, they might have shared that with one individual. Not everyone, but it's good that everyone knows what's going on so that they can perhaps tread a little bit more lightly, you know, at the top. So it's. It's very. There's a huge amount of information flow. The lights are going in both. In both directions.

So two. Two questions, very different. And I try to ask one at a time, but I'm going to ask two again. I keep on asking two with you, which is killing me. One is, how do you bring on the people to identify the people? And then how do you make sure that the ecosystem within the ecosystem. I see you as two ecosystems. I see the ecosystem as the external corporations. But then I also see this internal ecosystem that you're also forming. So you're forming a nucleus of networks that are constantly chatting with one another.

Yeah.

Does that make sense? So how did you. What's in both of those? How do you bring them on to make sure. And then how does this. How would it look like if you were to describe this ecosystem working and operating?

So you're talking about the individuals.

Yeah. How do you find someone to come in to do this? I mean, this is not a traditional business model.

Yeah. So if we're talking about the guides, that's also very interesting because 1 in 104 guides are selected. So that's our selection process around what you might call mentors. We call guides, and it's not the same thing. So we built a. First of all, let's go through guiding. So we started off using mentorship as the model. And mentorship comes from the point of view. I know. You don't know. I'm going to tell you what to do and why. So should I cross the river? No, you shouldn't. There is a crocodile in the river. Look at my arm. It's been bitten off. Okay. So I tell you what to do and give you the why. That's mentorship. I had that. So we were using mentorship very much as the model. I'm being very simplistic right now. And we kept seeing. This was right in the early days of Race Corp, that if we said go left and gave you the reason why, they'd go right and then they would get you know, they'd get their arm chopped off or whatever the case. And they say, well, why, why did you go right? We explained to you to go left. And what we realized is in the entrepreneurial makeup is a rebel. So if you, if you tell them anything, they are going to do the opposite. And you can't tell them to do the opposite because, you know, God forbid they do it and then they end up with the arm chopped off. It's also bad. So mentorship was not working for us at a scale level. It wasn't working for us as a methodology and coaching became the big thing. So we moved to coaching and then, you know, they would say, well, should we cross a river? And then the coach would say, you know, well, how would you feel, you know, about staying on this side of the river? And how would you feel if you got to the other side of the river? How do you feel? How do you feel? And I started getting calls from the entrepreneurs saying, you know, like, I don't like this. I've asked a simple question and I'm not getting a simple answer. And the coaches were coming to see me and saying, this is not working because I keep doing this and they just say, give me the answer. And then when I give them the answer, they'll do the opposite. So coaching didn't work. So we started in 2011, we started to build a different methodology called what we called guiding. And guiding, in essence is giving the entrepreneur the different alternatives. So if you go left, this is what's going to happen. If you go right, this is what's going to happen. These are the consequences. And all up and down side of that, if you go, stay here, this is what's going to happen. If you go up, this is what's going to happen. Can we maybe look through, maybe there's another direction we can go. So. So what we did was we actually gave the answers but not the direction. So we just said, if you go left, this will happen. If you go right, this will happen. You choose versus the coach who said, how will you feel going left? How will you feel? Didn't give the answer, and then. And left. The entrepreneur frustrated versus mentorship, who gave the answer with a reason. And then they would rebel and do the opposite. So guiding became our methodology. We got that accredited by the British government in 2014, 2011, actually, it could have been 2011, we got that accredited. It was as an entrepreneurial intervention. So what we do now is when we bring on these guides who have specific specialities, they all have to have some level of academic background which we specify. They have to have been an entrepreneur. So they are empathetic. They have to understand what month end feels like where you haven't got money and you need to pay your staff. They need to feel that they couldn't have read that in a book and try and express that they all have all our ex entrepreneurs and by default failed entrepreneurs. And number three, they're phenomenal communicators. So we get these applications and we take them through a whole selection process and 1 in 104 of these individuals is chosen. And then once they come into Racecorp, we have, they join what we call the RaceCorp Guiding Academy, the RGA. And then they go through four years of training. They do one year of a thing called CEG, Certified Entrepreneurial Guide, a PG, which is. So CEG is one year, PG is that one year is Professional Entrepreneurial Guide and a two year master's. So that's their requirement is they evolve also as guides. So that's like even at the core of our value, we are making sure that we have an empathetic, highly competent individual who's supporting the entrepreneurs. As you know, if you've got a really crappy teacher, I mean that changes your life. You've got a great teacher, that changes your life. So for us it's very important that we select these individuals as well.

If you could, if you could see inside of me right now, I'm kind of like, yay. That's a great, this is a great insight that I'm glad we got to because I was trying to figure out how you keep that resonance going within the ecosystem. And it's not an obvious question because I think the obvious question is how did you bring a company in and what did you have them do? And why did you pick that brand? Or why did you pick this person? And those are the obviouss. But resident resonance needs vibrational continuous vibration. And it needs, and here now I feel like there's a little bit of a heart to the mechanism which is to make sure these people have failed at it. They know how difficult it is. They are empathetic, they have an academic background so they can answer certain questions that might be necessary. What's an income statement, What's a balance sheet, how does this operate? What's the IT structure, whatever it may be. And then you're looking for this communicative capability which is like the Southwest Airlines in the United States when they do their hiring. This might be the old model, but before you were brought to A room with a lot of other people. There would be a panel of 10 people in the front of the room. And the first question they would ask is, could you please stand up and share in the most exciting way you can why you would want to work for Southwest Airlines? And that's immediately a disconnect for a lot of, I don't want to do that. I'm out the door. And the people who get up, get up, they're excited, they share their energy. And to a panel that goes from pilots all the way to crew that might work at a desk. And you're. They have to be. They have to be able to communicate in a positive manner what they wish to intend to do. So here. I love that you have intertwined this into the pulsation of that resonance. I don't know if I said that well, but that's what I was getting out of what you just shared.

Yeah. And that kind of scrutiny around who we bring in, as we spoke about the paradigm of the entrepreneurs, is equally important for us to who we bring into the center. Our theory of change, by the way, is we find the best, we give them the best, and therefore we produce the best. So for us, it's about the selection. We give them the best is the absolute best we can in terms of the value to them and the model and the people inside. And that produces the results. And we have very strong results as a result of this.

When did you come up with. When did you come up with that theory?

Yeah, I'm involved with the World Economic Forum, and I'd never heard of a theory of change before. Like everyone says, what's your theory of change? I felt like, what are you talking about? It was. This was about 10, 12 years ago at one of the foray, everyone is talking theory of change. And so sort of came back from the forum and then try to work out what our theory of change is. And, you know, it sounds quite simple. Give, find the best, give them the best to produce the best. But that took me about four or five months to derive, you know, because you have to sort of retrospectively fit it onto some something that you're doing and then model it and then bring it down to a simplistic theory of change. So about 10, 12 years ago.

Okay. It's fantastic. It says a lot. And I think it helps to give. It gives a macro tactic. It's an approach that you're using at a very high level to be able to get people to understand what they need to be working on. Then you can create tactics off of it. So, yeah, that's excellent. So you had pollen. Is there any other thing that you want to add to the creation of the ecosystems? And I know we've already touched on some, but the pollinating the ecosystems.

Yes, we've spoken. I think we covered that earlier in terms of the, the supply development manager. The. I think we've covered the pollination.

Okay.

Which leads us finally to the progression, Right? Yep, Deliberate progression. So this is an interesting perspective lens to use on the model. So what you have to realize is in an ecosystem is the ecosystem is alive and evolving. It's growing and evolving. And therefore my needs, just like any individual, that my needs from 10 years ago are not my needs today. So you cannot provide the same value proposition to an ecosystem that's evolving. It has to constantly change. But that's incredibly expensive to do. So, you know, so you and, you know, you and I might be both in the same ecosystem and one of these micro ecosystems, but I might be evolving far slower than you. And so your needs are changing far quicker than mine. So how do you govern? How do you. A system where everyone has got their own growth rates within that. And even at a more macro level, one ecosystem is evolving very differently to another one at a different average rate. So that posed a huge problem for us. The way that we started thinking about that is this concept of a progression model so that you progress through, through your different stages and effectively through the entrepreneurial life cycle. So big business has got very different needs to a small business, which is different needs to pure startup, which is different needs to somebody who hasn't even thought of entrepreneurship, which is a place which we call promulgation. So we created a thing called the enterprise development Continuum, which works like this. It starts off with promulgation, then ideation and commercialization, then incubation, then scale. So those are the five big stages that we have. And so promulgation is like, I never even thought of entrepreneurship as an alternative to employment or unemployment. Just like the place in the continuum where you haven't even thought of it. Right up to scale, which is pretty much about listing or ipoing the business and very different needs. And then within that, we broke this all down into what we've called categories, and we started off with the first category, this is also quite funny, which from incubation to scale was medcba. So why is it medcba? Why not fedbca? Okay, it's because when we told people, they entered the incubation level at F, they said I'm a failure. Why? Why? If an. If you know, it's got a very bad connotation, I failed. So we said, no, no, it's just a letter after E. It's quite arbitrary, you know, it's A is the minimum criteria to IPO on our stock exchange. And so F is just the way that we've worked. They didn't like that. So we changed it from F to M, which stands for mandatory. We just changed the letter arbitrarily. So it's A, B, C, D, E. M is backward, is the journey from incubation right through to ipo. And in each of these categories, we deliver a different value set to the individuals in that category. And we have very specific understanding of how you move from one category to the next, what it means if you are in M, what it means if you're in E in D, and so on. And so the value proposition kept changing. So no matter which ecosystem you were in, if I was in one ecosystem and you were in a different one, we could be different categories in the same ecosystem. I could be in ecosystem one as a category E and you could be in ecosystem two as a category D. But in your ecosystem, you could also have an M in yours and a C in yours as well. We delivered value proposition within that, so we could create at scale. I'm very visual, so I'm looking now at the screen, running my hand sideways and saying, so we could cut and provide a value proposition per category and then deliver it in each ecosystem at scale, because we were still giving a large number of people the same thing, so we didn't have to do it per individual. So that's how we solve that problem. And that has got also further nuance in it, in that how do you progress from one category to the next? It's financial progression, it's what we call your sustainability progression and your entrepreneurial development, your personal entrepreneurial development progression. And we have built mechanisms to measure those. So if you meet a certain amount of growth or revenue growth or revenue size, that's one thing. But if you don't have sustainability built into your business, then it's all very, well, you've grown, but you have a fire or you have a theft and the whole business collapses. So you have to have a whole bunch of sustainability, what we call sustainability bricks in the business. And then we have to look at you as an individual, how you've grown. So those three pillars are measured in terms of how you progress to the next level. So it doesn't mean that let's say a million dollars is the threshold to move into another category. I might have a million dollars, but I don't have the other two. I cannot progress until the other two are fulfilled into the next category.

Is this maybe not the important question, but popular into my mind is, is it public to the ecosystem? Is it just public internally where I was just shared? Because I know I would know that alon is in A is A, B or C. So therefore that organization hasn't grow. How do I. Is it public?

I guess no, it's not public. It used to be. And maybe that would be. It used to be. But we. So in one. Sorry. In one ecosystem it is. It is. And in, in the other ecosystem it isn't. So it's like. So depending on which ecosystem it is in, the answer is yes and no. So in the one where the echo. And I'll give you in the equity side, it's not public. It's not public. Okay. And that's, and that's just to be frank, it's ego based. That's about damaging people's egos that I'm bigger than you. Whereas. Yeah, that's a good, that's a good.

Reason I would want to know that. I didn't ask the question, but it's a good answer to a question I didn't ask. Is it ego driven? It keeps, it keeps, it keeps the resonance going because you're not deharmonizing individuals who feel badly or poorly about where they are and it changes the dynamics of the interactions between individuals. Am I right?

Yeah, correct. And so therefore you know the. And also, what also hides the obvious is if I have a business with a hundred people and you have a euro one man operation, theoretically I'm at a higher level than you. But it could be that I've hit the high revenue, but I haven't hit the other two. I haven't fulfilled on the other two legs of the progression model. So I could theoretically still be at your level. So I can't really tell because the cards aren't all visible to everyone.

So might this be a useful example? My cousin used to work for a major institution in New York and He had only 12 employees or in his team, but he moved up to 4% of the market at any given time. And two individuals might have created an arbitrage situation where they were making $100 million in a matter of half a second because they were able to leverage. So those two people were worth a billion dollars at the end of the year, but yet you'd only see two people sitting at a desk. They didn't have secretaries and assistants doing all these things. So when you look out, you're saying, well, it's only 12 people. No, it's 12 unbelievable people who are at the creme de la creme at the, the Olympic level that are all working and they were all separate, which was distinct when he first shared it to me. He said each one of these people are in different businesses. And I'm looking at him going okay, well he says those two over there, they're one and this to another. And I'm thinking okay. And he says they come to me, we talk about a hypothesis, we create the technology, we put them down at this and then they manage that business. And I was okay, I got it, I understand the. And then he would talk about it. And then I said, well, what do those people do over there? He said that's not part of my team. I said what do they do? He says I have no clue. Now this isn't. They're. They're 2 meters away from this office. He says, I only know how to do my computerized arbitrage at this level. And this thing. I'm expert at this. I don't know how they do what they do over there. And that's finance. I think that's a good way to think about it. A one man operation could be 10 times more productive and possibly profitable than the 100 because they're different businesses, they're different models. Okay, so what else with going into this progression and how. Well actually can you. You said something and I wanted to. They each. So we're still in the. The first one.

Correct.

We're not in the second. Yes, yet, are we? Did we hit the second one? You said there was a. You gave me five. The entrepreneurial development continuation continuum.

Yeah, the continuum. So no. So that the MEDCBA was just an example of incubation and scale. And then there's P for pre incubation and there's. And then. So we effectively and X and I for ideation and X for promulgation. And so effectively the model is how we've dealt with this is by categorizing and then delivering to multiple ecosystems micro ecosystems at the same level. And so that's made us quite effective. I think also just added if just to maybe add another dimension to the progression is that we've taken this one step further. Where we've gone into education to schooling from grade are to grade 12, where we own schools online and physical schools and that's an ecosystem play as well, where we provide entrepreneurship within the school as well as a period. And in each subject in the maths, in the English, in the biology, in each of the subjects, there's entrepreneurship built into it. But the ecosystem play and the progression play is that as they leave school, then they perhaps go to university and then they become an entrepreneur. And our brand is strong because RaceCorp's involved there and we have got a relationship with one of the universities where we. So we're also trying to plug the place after school into before entrepreneur. And last year was the first year where we had one of our school kids who went to our school a few years ago, applied to Race Corp as an entrepreneur. It was such a beautiful moment. It was like it was, I mean there was one individual, but it was just such a play. Like it was the highlight of maybe of the year for me is that that worked, somebody left the school and then became entrepreneur.

I was actually, I was going to ask that question because what I saw was a. The term that came to my mind was cradle the grave. You, you are, you're in the education space. They're growing through your educational program. They're learning about entrepreneurship while they're learning other disciplines when they go to university in the next step. So now what's happening is they become part of this full blown. I see a third ecosystem. I see ecosystem number one which is the internal the 170. I see the secondary ecosystem is the 500 as well as I'm going to kind of partition this in percentages as well as the non equity owned. So I see that as secondary because you work with them as alumni and other things. And then I see this third ecosystem which is the, is filling in from the outside opportunities that could grow into the nucleus. They can start moving towards higher and higher volume and become part of the raised system. Do you see it that way?

Absolutely. So our macro strategy is called from little to listed, listed being ipo. So from little that's the end. There is a whole strategy from little that is from grade R right through to ipo. The terminal point is ipo. The starting point is grade R. And so the whole long term vision, the long term plan is how do we create this ecosystem from a progression model point of view as you progress through your life from one thing to the next to the next. So it's been, I mean we only got into the education side recently as in end of 2015 and we've done it in both a digital and a physical way. We've got physical schools and digital schools and online. And of course Covid has had incredible impact negatively on the physical schools and, and positive on the digital school. So, you know, it's been a mixed bag of results, but it's been incredibly exciting. And in fact, today I came from a meeting to set up a whole bunch of schools in more rural contexts where there was still a market for what we're doing. And so now looking at different, other different geographies around this, also talking in Zimbabwe around education, talking in Mozambique around education, schools there as well. So that's going to have a life of its own. And of course that itself becomes an ecosystem itself. And like our one business within the equity side is supporting one of the schools, as I mentioned before, and accounting businesses supporting the schools. And again, and so everyone starts to feed again of this new ecosystem.

I wouldn't ask this of, I wouldn't ask this of many tier four type conditions in the world. One, being under a dollar a day, two, getting some basic utilities and three, having spare money, being able to do and four, being the industrialized complex where people have homes and cars and everything. So breaking them up. I wouldn't ask this if this was tier 4, Africa having the combination of 1, 2, 3 and 4. My question is, do you find a tribal sense that comes with being in Africa that's built into your system?

I would answer this, that question this way. I think what we, what we driven very hard is that Race Corp. So let me start in a different place. Entrepreneurship in the 60s was poor. David poor alone. He's not too bright. So he couldn't become an accountant, he couldn't become a doctor, he couldn't become a lawyer. So he became an entrepreneur. So the cultural relationship with entrepreneurs in the 60s, globally, it was not just in South Africa or the US it was globally was. They were sort of the people who couldn't get real jobs. And if your daughter brought home an entrepreneur, you know, you'd be fretting that, you know, this was the wrong individual. But in the 80s and 90s, as things started to change and entrepreneurs became celebrities and today, you know, you can't open anything, you know, you can't switch on a channel on whether it's Internet or on TV or open a magazine or anywhere without seeing stories about Elon Musk and the life story of Steve Jobs, etc. Entrepreneurs have been highly celebritized. And so what's happened now is governments across the world have in the last 15 years have started to see entrepreneurship as A silver bullet to solve all the economic problems. And so there's been a huge amount of emphasis by governments to try and support entrepreneurs with various efficacy. The problem is that they have oversold entrepreneurship. So there's a 96% failure rate amongst entrepreneurs in a 10 year period. But no one mentions that too much. There's research showing that by default if you've got the same skill set, that an entrepreneur will earn less in their lifetime than somebody employed with those skill set. No one tells you that. So entrepreneurship has been fetished in a way and they've been venerated and made to be this beautiful thing, this absolute beautiful thing, but has a massive failure rate. So everyone thinks they can become an entrepreneur. So coming back to your question, what we've been very careful to do is to say not everyone is an entrepreneur. Not everyone is a Race Corp entrepreneur. There's a certain type, there's a certain type of entrepreneur that can only get into Race Corp and those are far more likely to be an authentic entrepreneur. So we've created that, let's call it that tribal belonging through our qualities by the exclusion of the 99, that there is some mechanism to say that I'm part of this. And they wear a race called badge with pride. They mention it in their business profiles because it basically says I belong to this tribe. And that happens whether I'm working. And we work in Tanzania in deep rural context there where we're doing entrepreneurship as an alternative to poaching. So in these little villages we do it there and we do entrepreneurship with individuals in Johannesburg with massive businesses. And they both belong to the same thing. They both have been, it's called deemed to be raised corporate entrepreneurs. And you see this when individuals move from one of our incubators, we've got 13 incubators or what we call prosperators, you know, across the southern Africa when they, when they move because there's reciprocity, you can come from one to the other and stay for free. And they talk to one another. You know, there's a sense of no matter whether you come from a rural prosperity or a urban one, that we're part of the same tribe, you know, so if that gives you an answer to Krishna.

You answered it in a very different way. Yet you didn't hit something. I use the word tribal only because of the business that I had in South Africa and the conversations that I had with our team and about how tribalism is a huge part of governance. Who's in government has a tribal component to it. The validation of people who have achieved something often is tribal. In our conversations, these came up. So we were in Joburg and in Cape Town. And so what you did is you've leveraged that tribalism or the terminology or the grouping to be able to identify these as. As connected. And I think that brings back to the residents is you're using a very well understood framework. Is that. I don't know if that's a good word for it, a well understood framework. By using the word, you're part of the tribe. It's easy for someone in Africa as a continent, as compared to Europe as a continent, to. To be able to do that. Does that make sense?

Yeah. So, so just to respond to that, we don't. We never language the word tribe, it's not referred to as a tribe. You know, it's just. It's just that you've got blue heart. You're a blue heart entrepreneur. So the word tribe is never used. It's just that that's the label is your blue heart or entrepreneur whether. No matter where you are. So that's. Let's call it the name of your tribe. You know, it's just that's blue heart entrepreneur. And it doesn't mean you belong to. In fact, the real term that we used for them is racecorpions. And our team, our staff are called race corpuscles, as in the white blood corpuscle. That goes. And you know, but so race corpuscles are our team and the entrepreneurs are race corpions. So they refer to each other as racecorpians. I'm a racecorpian or a racecorpian alumni. They all have that commonality. But just to respond to the whole tribal thing in South Africa, yes, of course tribalism is there in Africa, tribalism is there, but it's very much. It's subtle and it has a hint of, in South Africa, of same flavor as racism in a certain way, in the sense that what South Africa is trying to do is remove tribalism from everything because it has, I would say it's not obviously anywhere near the concept of racism, but it has the same blueprint as racism in that we are different and we are better than you because of whatever. So this is not about a race. It's about my tribe, my language, my culture is better than yours because of X, Y and Z. So South Africa is very much trying to douse that flame. And even though it's there, it's scared at. It's not. It's something that's not spoken about.

I appreciate that perspective because Being in South Africa many times, I was able to. You shared something in a different light because I'm often being Jewish, people will often say, oh, so you're part of the tribe. It's a common phrase. And I've never taken it as a negative. I've taken it as they're saying, oh, maybe because our last names or where we're from or something, some history they're saying you are. It's like saying, you're Catholic, you're another. You're giving a family orientation. So I never took it negatively. And I can say, see how that demarcation on the continent of Africa could be taken that way, especially because of.

The apartheid history and the connotation of X being better than Y because of whatever.

Right. And I appreciate that angle because I had not thought about it in that way, bringing my own. My own history. You land in a country and I'm in Lithuania or Estonia, Latvia, Lithuania, or I'm in. In Colombia or wherever I am, and someone will meet and you've got a similar name or a background or something comes up and it's not an uncommon word to say, oh, so you're part of the tribe. So I appreciate this subtlety and how different that could be represented in. In your space. So when it. Is there anything else that I didn't ask you that you think I should know about?

No, I think I've shared a huge amount of IP today. If you were a spy, you'd get 10 points. You got me to express a lot of IP, just maybe just to say that the entrepreneurship space is ever evolving as it interfaces with the new technology and new zeitgeists in the world, new social compacts in the world, and it's always evolving. And Even in the 21 years that I've been involved with Race Corp, and yeah, there's been a phenomenal change in how entrepreneurship is viewed, how the relationship between government and entrepreneurs evolves globally. Yeah. So it's, you know, and I'll give you a quick example of this. Business plan competitions 10 years ago were all the rage. Like, you know, you couldn't throw a stone without hitting somebody who was promoting a business plan competition. That genre has. And then it became pitching competitions.

Yeah.

And so it evolves all the time. So you just see how even within the whole entrepreneurship support ecosystem, how that too is evolving. So. And that will affect us. And I know you think in a macro way. So that that Zeitgeist, that. That dramatic change in how the world is thinking about entrepreneurship affects how we Think about entrepreneurship, how things are, how it affects how we execute on supporting entrepreneurs, that also changes. So we are equally exposed to change. And so that means that we too need to. If it changes from the outside, it needs to change on the inside. And if a change on the inside, that has impact. So it's very, very dynamic. And what I've seen over the years is only those that are moving, keep moving and evolving are the ones that have survived. I mean, I've been in this entrepreneurship ecosystem, in particular in South Africa for, as I say, 21 years. I've probably seen around 300 incubators start up and close in that time. Some start with massive fanfare and just disappear very quietly. And I would say that the reason for that is because they have not read the market and how it's changed. Well, and they, five years later, are still selling the same goods and services that they were five years before. So even as a, as an organization that supports entrepreneurs, we too have to evolve.

And I think that's a good way to bring it back to full circle. Where your mentor had said to you that look at this as the opportunity or the way you said it was, if you do not see this as the biggest opportunity of your life, it won't be.

Yeah.

And so that was two things. One was that people often say to me, and you are one of them, I've shared things that I've not shared, like the IP where they said I went places. And I don't know if that's just the style, but I'm really interested. I mean, I've taken 16 pages of notes so far. And so I appreciate that you gave that the information. And the second is that it's very impressive what you've put together, and I think it's from an audio sense you and I are talking. I get a huge sense that if I was to dig down into each one of these categories, which we could do for days, that you would say, we have an entire construct for this. We have an entire construct for this. And so while it's a macro level ip, it's not a granular ip, so I know which weighting you put on one or the other. And if you're building an engine and the pistons don't fire all at the right timing, the whole thing fails. So it's, you've built a really impressive machine and mechanism and it's, it's very impressive. It's very impressive.

Thank you. Thank you. And you've hit the nail on the head in terms of the constructs below there's massive amount of thinking and software and algorithms and rules and all those that sit below each of the pillars we've spoken about today. And you know, we invest, you know, millions of dollars a year in system, in building systems and software and what we call mortality coefficients and progress coefficients. And we look at a lot of our big thing for the future now what we're building right now is models where we've got enough data points. I mean we've got an actuary working with us right now where we've got so many data points from our interviews and on our software that we can be starting to try and determine up front in an interview through AI and through various algorithms and machine learning as to who has got the highest probability of success before they enter Race Corps through the and who during the course of RaceCorp what is their probability of actually completing a category. And so that's sort of the next phase and some very exciting phase that we trying to once again, as I mentioned around the, you know, keeping up to speed with what's changing in the world, trying to use AI and machine learning in our industry.

So what you've, I mean, I'm not going to go into it today, but what you just mentioned, the digesting of old data that's been taken in an analog form or in even a website page and you're clicking on something or writing something, still analog type, even though it's produced in a digital form, it's not data driven. I mean it's not going through any algorithm to get that data. Is what you just talked about was the evolution of management and I'd be interested, just you and I on the side is to find out whether the algorithm and it's got to be just right, can do what you just said in the beginning, which was to identify at a granular level what someone needed to physically go and see, to be able to understand based upon the words they use or type or what they select or what they opt for or whatever that mechanism is. So you're almost taking a piece of management thinking and eliminating some of the extraneous off of it. So that's a huge evolutionary leap in the development of businesses.

Yeah, it's super exciting. I mean we're in our second year, we're entering our third year of work on this and it's been so interesting because what you're trying to do is when you create and you'll know better than I do, I'm not, you know, I'm not one of these data scientists but what they are are trying to ascertain is which of the data points what is the weighting. So they try of these in terms of predicting success. So as an example, I'm going to give you a little insight here, a little bit more IP here is that one of the things that we look at is frequency of sales, in other words, not how often it happens. But if this month we're doing $1000 and the next month we're doing 10,000 and the next month we're doing $500 and it's moving up and down, up and down. If there's a massive difference every month in terms of the size of sales, that's far less valuable to a business than if you knew there was going to be $1,000 a month. Even if both produce $12,000 a year, the one that has got $1,000 a month is more value as a business is more valuable and has a higher probability of success than the one that does $500 and 10,000 and then $200 than the one that does it consistently. But to what extent is that more valuable? Is it 20% weighting? Is it 50%? And this is the journey we're on. So it's incredibly exciting.

It's a, it's an even the way you brought it up 1,000, 10,500, my mind went to first of all, is it seasonal business? Which product are they selling? Are they selling the most profitable or are they selling the least profitable? Is it. Are they are. I jumped into my mind and quickly went to is it trending products, meaning it's a color, a size, a shape, Is it because there was a social interaction that happened? Is it repetitive? Meaning you could get the 500 but the 500 is consistent every month where the thousand is an anomaly and they're one one time buy off. So, so then there's a larger question for me. How is your organization changing on the data analytics side or are you using internal of your 500 or whatever to be able to build this?

We've got an internal department and an external service provider. We've got. So we've got a, let's call it somebody who's in charge of the project internally, who's very smart and actually has all the data. He's a data scientist internally. But we're using. The programming is done.

But not in your network, not in your network of 500.

No, no, not actually. Funny enough, in a different, in a different network which is one of. He's one of my mentees. So this Guy is one of the individual who I mentor a whole bunch of entrepreneurs outside where I don't have equity them every year. And he is part of that little ecosystem. Which we call Bitum, which is billionaires in the making. So he's part of that ecosystem.

Will your organization change to more of this type of service offering because of what you're seeing happening?

Absolutely. And I think what, what my journey with this is, you know, if you're hearing these, that these hawking in the background, we have these prehistoric looking birds in South Africa called Adidas. They are quite large and they are. They sort of coming home to roost now. So it's, it's coming to dusk right now and so they're all starting to arrive outside. So it's a very common sound here in Johannesburg. These Adidas, if you can hear them. Yeah. Anyway, coming back to answering your question, the journey that I've had with AI and machine learning etc is that's for clever people and big corporates. Like it's not for. I don't know how to use it. I don't know what it is. I don't know how to use it. I don't, I don't know. It sounds expensive and like, like maybe it's just something with a different name that I'm already doing. So that's. It was sort of the starting point of my relationship with it. And then as you start going and working with it, you start to understand it better and so you get to a point where you can use it. So a lot of the entrepreneurs that I'm involved in are in the same place that I was two years ago. So as I'm becoming more confident around it, so I'm starting to talk about it in a way where I can actually express a real example of how I've used it and what it cost me and what it involved and what investment it took and what benefit it provides. So I'm still in that journey. So the answer is yes, but I don't know when.

Well, well it's, I'll make a projection. It's going to immediately filter into your 500 in certain areas. For example, the dropdown menu when you're on an Amazon or you're looking up a Google search or something. The dropdown menu, just the predictiveness of that is artificial intelligence. It's not a complicated artificial intelligence. So just being able to determine that, so those are additives that we're already using and we, you might not call them AI because we think about these complex capabilities to be able to decipher and discern and. But it's just the term algorithm is confused with complication or mathematics and algorithm is a set of instructions. That's what it is. It's just a set of instructions. So we already are using them and I think that we have to at this point in the future I can projection will be. You'll already, you'll start adding it immediately but within two years you'll have some type of, some type of data analytics throughout your entire organization looking at every organization, every group as to how you can leverage it. I agree because it's not as complicated as it sounds yet. It's because of the past 20 years where AI was considered this foreign entity, this, this really challenging thing to do. But AI is starting to become like object oriented programming. And what that is for those of you don't know who are listening is to the ability to be able to make a website by just moving something. The coding is done in the background. No one actually sit. You don't have to code like you did 20 years ago. So object oriented. I think in your case in the next few years you're going to start seeing this object oriented AI. We already have it but we're going to be more used to using it to be able to do certain functionality. So. You are brilliant today, Alan. Brilliant. I've got some things that I'd like to work on with you and share with you because you kindled some areas, you made me reimagine some areas. You challenged me in ways that I definitely appreciate. So thank you tremendously and thank you for the opportunity.

And as I said in the beginning I was excited about this conversation because I knew I would learn. And you've written 18 pages of notes. I've only written one and a half pages of notes but my excuse is I was talking way more than you.

You were brilliant and the value for me and is that I get to learn from some of the brightest people in the world and, and I appreciate you taking the time. So is there for the audience who did listen in is there a number one best way to connect with you?

Yeah, I think you know the website is racecorp.com r a I z c o r p.com and my email, I'll give my email address. It's alon a double l o n r alonrzcorp.com@r a I z c r p.com As I would, I would say in my country, R A I Z.

C I R S well and living in Hong Kong living in Europe, the the Z I all sometimes I will want to use that type of terminology and having a South African partner in one of our businesses, the AI business we had. So yes. And for those of you who listened in, I want to thank you for taking the time out of your day to listen in. We do hope that you learned something today that will make a difference in your life and the lives of others. Always remember that you can't fix yesterday, you can only create tomorrow. With that said, there are a few ways to get a hold of me. If you want to reach out to Davidavidgoldsmith.com you can connect to me on Twitter at Goldsmith, I'm on LinkedIn. David Allen Goldsmith, A L L E N Goldsmith. I'm on Facebook and the Instagram account Mr. DavidGoldsmith. So for everybody or thank you once again and I'm David Goldsmith and thank you for listening.