Tag Archives: Jannie Mouton

And Then They Fired Me by Jannie Mouton, Carie Maas

Summary
  1. My business philosophy is really quite simple: I believe in strategic planning, and then follow an entrepreneurial approach. I empower the right people completely, enable them to secure a percentage of the shareholding, and then believe in their ability to, with help and proper corporate control, establish good businesses. Perhaps this definition is not all that easy to digest, but as I explain it, it will be clear how simple the principle is. What it eventually boils down to is that my contribution almost shrinks to that of a possible idea or the creation of a culture of ideas. Other guys do all the hard work. The smaller one’s role as so-called chief executive or chairman, the better for any company and its growth.
Key Takeaways
  1. Early Days & SMK
    1. We had a sense of duty from an early age, because my father, Jan, made us work in his shop, even for a large part of the holidays. Initially I thought it unfair, having to work while everyone else could gallivant on their wide-rimmed bicycles, but later I realised how valuable it was, compared with the nonsense of the so-called gap year that pupils and students insist upon nowadays.
    2. We were young and had lots of plans. Added to that, or maybe because we were that young, we were very enthusiastic and hardly anything scared us. Now, in hindsight, I pale with fright because we had responsibilities, wives, children, cars and houses.
    3. I had grown too big for my boots. I remember phoning Kango Beachbuggies to ask in which colours they had the vehicle available, and then saying I would take one in each available colour – five altogether. Now I can only marvel at the memory. To be that self-confident, and with gearing to the point of bursting, was asking for trouble. Like all bubbles, this one also burst, on October 22, 1987, and a lot of us were cut down to size and got quite a kick in the teeth financially. Let me tell you, there was blood on the walls. It was the mother of all market carnages – the decline of about 30% was the most significant in a single day in living memory. I was almost done for. One day we were the kings of the development capital market, the next day humble servants. As in many other times in my life, I should have listened to Dana, because she used to say when I started pretending to be a sage and it was only “me, me, me”, then the end was in sight. Those were prophetic words. From him I learnt that one’s people and one’s clients are the most important assets. He was a humble leader, armed with vision, courage and cool-headedness.
    4. We had gigantic successes and made excellent profits. The listings of Rand Merchant Bank and Richemont were climaxes, and my children still remember my picture on the front page of Beeld with the listing of Naspers.
    5. Because we were partners and not shareholders, the profits had to be divided every year. In other partnerships the managing director would decide what the share of each partner would be, and the mistake we made was trying to do it democratically. Everyone had to give himself and every other partner a mark out of 100 for the value each had added, in his opinion. Nobody ever scored himself lower than any of the other 19. It was my unpleasant duty to convey the auditors’ calculation of the total to everyone. If the group then gave someone an average of 5% and he thought he really deserved 8% of the total of 100%, it raised suspicion. Instead of motivating someone, I had to call him in and tell him he wasn’t as good as he thought he was. Among the changes I wanted to make was to convert the partnership into a company.
    1. A negative person has never started or established anything positive. The people at PSG also know they shouldn’t come and tell me something doesn’t work – they have to come up with an alternative.
    2. After reading for a while, I decided to do a SWOT analysis on myself and, according to the acronym, started jotting down strong points, weak points, opportunities and threats. I realised my and Chris Otto’s frequent (and long) lunches at Late Night Al’s in Auckland Park were no long-term solution and at age 50 I was not ready for retirement yet. I had to persuade myself that I was doing something useful, that I was devising plans and ferreting out opportunities. I knew I had to fight against the threat of stagnation. The personal space in the office forced me to contemplate my future and that of my family. Thinking would be my new project, and it wasn’t at all the child’s play it appeared to be. I wanted to start a new business and I had to find the key for it. With dedication I started reading and focused on books in the investment world, from Warren Buffett and his philosophies to the management approaches of successful business people. What I read made me think, and to arrange my thoughts I summarised many of the books in Afrikaans. Not every book changes one’s life, in a manner of speaking, but there is always an idea or two that one can use. Apart from the work and academic advantages, this study made me reorient myself. Collecting specialised knowledge demands sacrifice, but it stimulated me and broadened my mind in my planning for the future. Now I realise there were quite a few points that prepared the ground for PAG, the precursor to PSG. I can summarise it as a sounding board, a self-analysis, a dream, a plan of action, a positive attitude, decision making and communication. And I can recommend it to someone who has got into a rut like the one threatening me back then. One has to work through a setback realistically. You need someone to help you if your enthusiasm exceeds your realism, but that person can’t be a yes-man. It needs to be someone with good judgement and enough respect for you to answer the difficult questions honestly.
    3. Honest introspection is not always pleasant, but without it one would struggle to work towards one’s better points and eliminating one’s weaker traits. Yet, clever as it might sound after the fact, my old diary is testimony of how I toiled and bothered and reworked my SWOT analysis until later I knew exactly what I wanted to and could do. The simple question is: What’s your personal mission statement, your goal, your dream? If you know the answer, it unleashes a power that draws you towards the destination. My plan that I wrote down in November 1995 and had typed was: I want to be free and not to work for others. I want to make a difference to the lives of others and have empathy with my fellow human beings. I want to write a book (there you have it). I want to tackle something with my children. I want to take on a new game farm after Nokonya. By doing great things I’m happy. I want to develop a new company successfully. Many things have changed over the years, but the framework is still valid. My plans of action had to direct my dreams: I want to be in control of a listed company. I want to focus on the financial services sector. I want to procure capital for a strong capital base. I want to manage in a decentralised and delegated way. I want to draw in good people. I want to move from Johannesburg to Stellenbosch. I want to have a small, creative head office with a relaxed vibe. I want to think more and do less. To know I had figured out what my dream and final destination were, made me positive. Aiming high requires as much strain as aiming low, as is expressed in this little rhyme by Jessie B Rittenhouse I’ve read so often: I worked for a menial hire, Only to learn, dismayed, That any wage I asked of Life, Life would have willingly paid. Without a decision, one is never wrong, therefore people hesitate to take decisions. Taking a responsible risk brings me freedom and joy. Even now a successful business decision like an SMK or PSG or Capitec that works gives me far more pleasure than the money I gain from it. And if something doesn’t work, close that business and move on. From all the business books I read then and still read, it’s apparent: the most important element of success is to speak out. By conveying one’s dreams and plans to friends, you place yourself under pressure to fulfil them. And that truth applies right through the investment world – your shareholders are interested in where you’re going, your successes and your failures. But even more important than speaking is to listen to them in turn.
    4. Success is not the key to happiness, happiness is the key to success
    5. What has remained with me though is that I never want to be in a position again where I don’t have control over a company. Even in subsidiary companies where we have a stake warranting it, I want to have a say at board level, at least.
  2. PSG
    1. PSG Group is an investment company that acquires strategic stakes in established businesses with strong management, good corporate governance, a history of earnings growth and positive cash-flows, and creates innovative ideas at existing businesses.
    2. Maybe I should start by clearing up a misconception some people have: PSG is not a financial services company; we are an investment company. That means PSG is not an operating company. We don’t manage a business like Plascon or Edgars. We invest in and also start other businesses like manufacturers or retailers or service companies. The group comprises of more or less three main parts. Under PSG there are the financial giants like PSG Konsult and Capitec, but under the tradename Zeder we have unified all our agricultural companies like Pioneer Foods. Some of the smaller private equity investments like Thembeka that don’t belong elsewhere reside under Paladin.
    3. Maybe that’s also one of the reasons why I’m such an avid buyer of PSG shares and have never sold a single share. Advisors of readers of financial pages would be horrified, but I often borrow money to get hold of more PSG shares.
    4. My business philosophy is really quite simple: I believe in strategic planning, and then follow an entrepreneurial approach. I empower the right people completely, enable them to secure a percentage of the shareholding, and then believe in their ability to, with help and proper corporate control, establish good businesses. Perhaps this definition is not all that easy to digest, but as I explain it, it will be clear how simple the principle is. What it eventually boils down to is that my contribution almost shrinks to that of a possible idea or the creation of a culture of ideas. Other guys do all the hard work. The smaller one’s role as so-called chief executive or chairman, the better for any company and its growth. For me, strategic planning is the alpha and the omega. In the book The Art of War the principles of the Oriental military strategist Sun Tzu are expounded: “Strategy is the great work of the organization.” According to the book, that determines survival or extinction in situations of life or death. It inspires people to share the same ideals and expectations. Because they’re in the struggle together, they don’t fear perils. The military strategist said that was why leaders who understood strategy could lead people and determine how stable the venture was. Regarding successful warfare, Sun Tzu strongly emphasised that an understanding of one’s own capabilities and limitations, one’s opponent and the circumstances in which the fight would take place, should be thoroughly contemplated and then integrated into a strategy that was applied in a disciplined way by a leader that inspired his subordinates with trust. I love his wisdom: If you have your strategy, you hit fast and hard, then you win. Colleague Chris Otto says I’m the only person he knows who would go to the seaside for four weeks and use ten of those days to draw up a business plan. That’s true, I can’t simply lounge around. I get bored and then I devise schemes. It was also after a holiday that I returned with my Keerom plan for Naspers, a controversial but quite exciting deal I’ll tell you more about in the next section. Chris has also quipped that I should not get time to think, but let him rather do the talking, because I don’t want to say this about myself: I always tell Jannie one day I’ll write on his tomb stone: “Here lies an unreasonable man.” He has a great ability to think and work out strategies. He always has a plan, and then he can’t imagine that something can’t happen. He challenges us and eventually everyone starts thinking like that – how one makes something happen. He’s not interested in technical details about why something can’t work. I think that’s why PSG often manages to do things others thought impossible. If then, according to Sun Tzu’s searching one’s own heart, one of my abilities is to think, or to want to think, one of my limitations surely remains not always working gently with the people helping with those thoughts and applying them – I still struggle with that even now.
    5. By this time our size makes us look at smaller investments more realistically: corporate management, attending meetings and managerial time are expensive. At Paladin and Zeder we have the framework that we invest in businesses that are easy to understand, and have a cash flow and good management. Our share of the profit after tax has to exceed R10 million. That means if we have a 25% stake in a company it has to make at least R40 million before we would look at it. However, many mice can turn into men and PSG never wants to neglect its entrepreneurial approach. That’s what brought us to where we are.
    6. Shareholders are the owners of a company and an owner should always be in control of his own assets. The board is appointed by the owners – and that’s why I like a company with a strong owner. In PSG’s case, 77% of the shares are in the hands of confidants – relatives, friends and directors. While many similar companies are susceptible to takeovers because a large number of their shares are with the big institutions, we are covered against that in this way
    7. At present my children and I own more than 30% of PSG’s shares and, along with the shareholders mentioned above, Thys du Toit (former KWV chairman) and Christo Wiese have huge stakes.
    8. Let me be honest: one can continue ad infinitum about PSG’s ingenuity, but the role luck sometimes plays can’t be ignored. PAG’s sale price was plain darn luck; don’t let anyone tell you a different story. Sheer luck. That’s how PSG started. We started small and slowly achieved success. Success gives one self-confidence and that’s quite contagious on the market. It makes it a little easier to run risks when one is stronger. If you have capital you can grow, and you can even afford to make mistakes.
    9. Whatever investment you do, you should know in what kind of underlying business you invest and understand that some companies won’t yield the kind of investments you hope for overnight. You can start something new, like a Capitec, develop it while you can take pride in a high price/earnings ratio (PE) of 25, or how much you’re willing to pay for the expected earnings in rand. On the other hand you can be extremely patient and make and keep an investment in agricultural companies with a PE of 4. You would buy at a good price, but then you should not be obsessed with a running clock. Few people understand both kinds of investments.
    10. I knew Keerom was a much cheaper way of securing a stake in Naspers. Some unlisted shares can be bought at a rebate. Therefore one could get a big chunk of Naspers through Keerom or Naspers Investments, as well as control with high voting rights. It’s a principle I’ve applied time and again since then.
    11. The trick is to try to buy where limitations are still in place and when the old board is still in charge. Then one buys cheaply – one might even buy only the buildings at 60% of the real value. That’s something we understand very well at PSG. Yet one needs patience, because at these businesses the change towards being more commercially-minded happens rather slowly. The management are not lying yuppies, but down-to-earth people, honest and upright, whose business has been in existence for years. The opportunity is in the fact that for many years co-operatives have been attuned to delivering a service, rather than seeking profits. The best is that one can take this kind of wisdom even a little further, which is what we are doing through our agricultural arm, Zeder.
    12. The biggest value is unlocked where management is poorest.
    13. With decisions one should not hesitate, and rather apply straight away whatever is agreed upon. A major lesson PSG has learnt often is to immediately admit if a purchase had been a pig in a poke.
    14. At Paladin we refer to the “refinement” of a portfolio over time, perhaps because we do business in the winelands. One should try selling the bad companies systematically and rather invest in the winners. You always want to keep your company streamlined.
    15. It took me several years to figure out what the most important objective of a company is. I struggled with “increasing shareholders’ wealth”, for many years the main goal of PSG. Gradually I started thinking it sounded too arrogant and cheeky, with an overbearing focus on the collection of wordly assets or wealth. It was if one only cares about one’s pocket, and I started developing a different philosophy. There are more people involved than shareholders, like staff and clients. One’s staff members are happy when they feel fulfilled, when they have freedom and a goal – in my opinion that’s the main motivation. I wouldn’t be happy if everyone else around me was unhappy. One’s clients need to believe in one too. A company is a success if the client, shareholder and employee are all happy. If you manage that, the company can grow and you’re doing something right. Growth in client numbers indicates profitability, and that’s why for growth in the share price one has to focus on clients. Moreover, over time people don’t really remember all that much about dividends, special dividends, unbundlings and other windfalls. What they do remember is by how much the share price has risen. It’s a simple criterion and it measures everything – risk, past performance, future prospects, management and the integrity of the figures – yes, everything.
    16. Pure pleasure is what PSG Konsult signifies to me. If you’ve ever seen a business that’s running like a well-oiled machine, that would be Konsult. The only reason I’m still on the board of directors is because every time I want to step down, chief executive Willem Theron persuades me otherwise. The management team is so strong that they don’t need even a little support. Konsult’s business plan is so simple that one can’t believe it hasn’t always existed.
    17. The mistake I then made is a classic one. Instead of appointing a single managing director for the bank, I put a committee of four at the helm of the new entity: Botha Schabort, André la Grange, Charles Turner and Hugh Oosthuizen, all of them strong personalities. I thought the four divisions could work together well and with time the best guy would emerge. How stupid that idea was I did not realise at the time. It was a breeding ground for conflict. Because the guys were fighting amongst one another, that was what they focused on, instead of their divisions.
    18. Many of our branch employees are later lured away by other banks with offers of bigger salaries, but it’s great to see how many of them want to return three or four months later – at their old salary. Capitec is an employer of high calibre, and then people enjoy working there too. Capitec is a dream come true. It’s a reality that shows how many opportunities there really are in South Africa, and what fantastic potential its people have. With access to capital, poverty can be eradicated over time.
    19. I reiterate: it’s a gigantic risk to put all your eggs in one basket, but woven grass or not, PSG as an investment company has many divisions. Apart from the properties and art I own, my own money is only in PSG, the furniture group Steinhoff, on whose board I serve, and the PSG Flexible Fund, the unit trust managed by my son Jan. Do I have the right to talk other people into it? I can honestly believe it’s good counsel, but I would neglect my fiduciary duty by only picking one share for someone.
    20. An irrefutable truth is that you have to have time on your side. A young person might not have money to invest, but he has to learn to save right from the start. It’s amazing how much money can grow if one saves. There’s a reason why it’s called the eighth wonder of the world.
    21. The cornerstones are transparency, honesty and sincerity. And every company does have an issue.
  3. Entrepreneurial mindset
    1. The soul of a company – the culture determines the performance
    2. The role of the entrepreneur is the collection and use of knowledge, his ability and readiness to see and use profitable opportunities and to use scarce resources effectively.
    3. The point is: entrepreneurs create value. They create jobs and they make money. But that’s not easy. A unique talent, coupled with hard toil, is what’s needed. Successful entrepreneurs are attuned to what they’re busy with. They have self-confidence and flair. Their need for success makes them restless and they don’t cower in the face of big risks. Such a person doesn’t lie awake because of spelling errors in minutes of a meeting, but quickly masters his field. This guy spots opportunities and can bring theory and practice together.
    4. PSG Capital chief executive, calls PSG a family of entrepreneurs: A family that gives one the security of being together, but doesn’t shy away from asking straight questions or hauling you over the coals. It’s a bunch of individuals who can and want to function independently. It’s a company that provides one with the great opportunity to convert this freedom and independent thoughts into palpable profits in which you can share.
    5. I have a list of what I regard as the characteristics of successful people, probably an obvious bunch of traits. People who are well read, have well-considered opinions, are honest, can communicate and stick it out, are self-confident and care for people and on top of that can think, are the best. Clear goals direct all these characteristics.
    6. So many people who come to present an opportunity uhm and ah so incoherently that I now ask beforehand whether someone would just like a cup of tea or sell or buy something so I can focus. My patience runs out with a wishy-washy presentation – does one really need more than ten minutes to explain how a business works and maybe ten minutes for a possible deal? And then there are those who just come to fish for advice. Those who don’t shy away from setbacks and are prepared to take hold of the future are the people you want at your side.
    7. The assistance to entrepreneurs or management firstly consists of striving to help someone focus on their goals. Directors have to see to it that a business plan is carried out.
    8. We can, however, help them with the negotiations and contracts and they have to stay alert, then opportunities will appear. One just has to be attuned to them constantly.
    9. It’s amazing what one can come across, and then one has to sit and think. One has to think outside the parameters. That way you will come up with an interesting business opportunity. The same alert attitude can also prevail in your daily dealings. One has to keep wondering all the time. When you have your hair cut . . . where does your hairdresser buy, and why? If you have a cup of coffee . . . what would happen if Famous Brands cut off one of its trademark entities like Mugg & Bean? If you’re driving around  . . . why is somebody erecting such a huge building in a new property development? Who owns the mall where you do your shopping when you furnish your holiday home?
    10. What have I learnt? Don’t generate business from technology, but let technology support and drive the business. I believed the clients of PSG Online had wanted to stay anonymous and preferred no human interaction. That was a big mistake. Online clients prefer a computerised service mechanism, but welcome personal contact from Online’s side.
    11. With e-insurance the trick is that the money you save in brokers’ fees because the client buys directly from you, you spend on advertising.
    12. At a dinner hosted by William H Gates, father of the same Microsoft founder Bill Gates, for a number of hand-picked business people, he asked those present to write down on a piece of paper a single word that they deemed of utmost importance in the business world. Coincidentally two of the guests chose the same word: the host’s son and one Warren Buffett. And the word? Focus. When I read that story I realised how important focus was for discipline and success. I always admire Whitey Basson, chief executive of the Shoprite Group, for the same thing. He is incredibly attuned to trends in the retail industry.
  4. Ultimate Empowerment
    1. After many lessons I only invest in companies I understand, whose management I know and whose character and culture I like. Three questions kept me busy for a long time: How does one make a company grow, when are people happy and what’s the key to making a success of a company? The answer is ultimate empowerment.
    2. The former American president Theodore Roosevelt’s encapsulation is the best, in my opinion: “The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint enough to keep from meddling with them while they do it.”
    3. In PSG people are allowed to think and do themselves, and everyone knows that. A company grows when all of the employees perform to the best of their abilities. People perform well when they are happy and people are happy when their talents are recognised and when they are given the space to act and make decisions independently. To me, ultimately empowering someone therefore means delegating authority and responsibility. Empowerment in that sense means everybody is involved and knows how the company is performing. The decision-making process is shortened and the spirit and status are created that no one has terrific titles, but people get a lot of recognition. That creates a company with responsible managers who feel free and proud. People who are encouraged to think strategically themselves take their own future in hand. That freedom means not looking over people’s shoulders, but trusting them. On a more practical level it means that everyone can draft their own business plan, that every unit decides on its own remuneration packages and incentives, and that some services can be contracted out to an entity shared by a few companies in the group.
    4. The group makes significant investments in successful businesses and stands by its entrepreneurs without exception. Jannie’s policy of ultimate empowerment enables entrepreneurs to realise their vision. Ultimate empowerment also means there is no place to hide. It gives you just enough opportunity to engineer your own downfall if you don’t tread carefully. In PSG the prevailing culture entails low overheads, strict financial reporting, a high return on share-holders’ capital and the premise that the shareholder is always king.
    5. That, supposedly, begs the question when a board of directors does step in. A board has to have a relaxed leash on everyday matters and only get involved when overarching problems emanate in or outside the group. One has to concentrate on what’s important.
    6. Jannie builds around the jockey when he sees a business opportunity, provided of course that it’s a special opportunity in PSG’s field of play. Then the business model is almost the jockey’s prerogative, within bounds of course. Often the model is not the point. Jannie would pick the guy and respect his opinion and say: “You tackle it for us.”
    7. Willem Theron, chief executive, got rid of all the stress by devolving all decisions about remuneration to branch level. Each branch may keep 70% of its income and do with it as it likes, including paying bonuses to deserving people. In that way everyone is responsible for their own welfare concerning profits and all is fair in the garden again. Once the thorny issues and the remuneration differences have been sorted out, the satisfaction of the right person in the right job is huge. A testimonial to the calibre of people we draw is how many have remained loyal to the company over the years and how many have even been with us from the time of SMK and the very start in 1995. Another reason for great joy is the number of friends’ children and their spouses working for PSG
    8. Thus I naturally am my own boss, because I believe directors should have big share investments in the companies they represent. They are custodians of the shareholders’ assets and will definitely do a better job if they are big shareholders themselves.
    9. People laugh when I say this, but it’s true. I’ve overdone delegation to the extent that I do almost nothing. I don’t really work at the office. It’s a singular privilege. I want time to think. I want to philosophise and I want to come up with opportunities. There are people who like being involved everywhere, as if that would make them seem important. One should rather become unimportant. It consumes an endless amount of time if you as manager don’t trust people. Chris Otto will also tell you I’m the best delegator he’s ever met. He also knows that in fact I do nothing: Jannie doesn’t want to be on boards. He’s not a control freak, but he expects something to be done, and then it gets done. There’s something else to the art of empowerment. If you trust others to take good decisions, you also have to respect your employees and give credit where it’s due. Labour can never be rewarded with money alone.
  5. On Investing
    1. In a nutshell: start with about four or five good shares in the long term, diversify your investments across more shares for less risk and forget about short-term speculation. Five or six shares are optimal for diversification, as long as you invest in fairly diverse sectors. If you invest over a lifetime, you can afford to keep a cool head. And don’t put all your money in one share. Timing is also an issue to keep an eye on. Look at the profit potential and the net asset value. Long-term investments are like having a happy family – it requires love over a lifetime and not speculative moments. Just as one outburst wouldn’t alarm you, neither would a single share with the hiccups. Just as your good friends carry you through emotional crises, good investments carry you through economic storms.
    2. One gets to know the market over time. If everyone is optimistic and even people who don’t work with the stock exchange every day start chatting about it, it’s selling time, as sure as nails. By that time you have to have the cash in your hand, else you’re going to be very sorry. And if nobody is interested in the stock exchange anymore, it’s buying time. In the long term one has to sit back from the noise, but timing can’t be ignored completely.
    3. In every person’s life there are about four or five investment cycles. One needs to use them and be patient; then you’ll make a lot of money. These five principles are as plain as the nose on one’s face: Even if you’re a layman, you need to understand the company for personal investment, as I’ve written in part three about companies.
      1. If you can’t tell someone else what the company is doing, don’t invest there. I’ve never made money from mining shares, especially gold, because I don’t understand it. Yet one can understand that Sasol produces petrol from gas.
      2. Investigate the people in control of the company. Are they honest and hardworking or flashes in the pan? Through the years PSG has benefited a lot from learning as much as possible about the management before investing in a company.
      3. I’ve tried to explain above that you have to go against the current and buy at a low price-earnings ratio in a bear market, determine a realistic price to the net asset value and be on the lookout for a strong balance sheet and good cash flow. This strategy is as difficult as the opposite, to sell in a bull market, but the pain and insecurity when everybody else keeps swimming with the current will bear fruit.
      4. Do research. Read a lot and develop a feeling for investments. Listen, think and learn from your mistakes and successes. Good investment experts can always help you, but don’t underestimate your own role. The long term is imperative if your focus is on year-on-year growth in the share price.
      5. A share will only grow if the underlying profits of the company grow, which is the challenge of management.
    4. Only once you’ve mastered the management of a first franchise should you dare to borrow money for a second.
    5. Speculation and investment are two different matters. Speculation is short-term positions for which you don’t use your brain and investment is long-term. Speculation is the worst thing there is and you have to stay away from it as far as possible or you’ll get into trouble.
    6. Forget about investment clubs with friends. It only leads to indecision and bad blood. Don’t ever talk about the market as if it’s your pal – nobody ever understands the market. The pain of a loss is worse than the pleasure of a profit. Don’t ever take a loss lightly. If you get worried and sleep badly, you’re in trouble already. Forget about the trendy shares of the day. Don’t invest further in a losing situation. Liquidate your position.
    7. There are many clever investors who only look at listed shares. For those with a lot of perseverance and who want to trust my judgement there might be another option – to watch what PSG is doing and buy the same unlisted ones we buy. As I’ve said in part 3, a share register is public knowledge. With a little effort one can get hold of it. PSG is wide awake and constantly on the lookout for unlisted businesses we can acquire at a discount and where we can help add value. As buyers we want the price to remain low initially, and for that many investors don’t have the patience. But if you have it . . .
    8. Hierarchy paralyses . Colleague Chris Otto will tell you I’ll open a closed door in the office, for closed doors create a vibe we don’t want in PSG. It surprises newcomers that anyone can walk into my office without an appointment. The days of levels have long been numbered and titles are undesirable too.
    9. Drowning in the e-mail ocean of a bureaucracy – formality is stupidity. I detest senseless communication that wastes time and attention. As useful as e-mail can be, there are people who measure “indispensability” by how many e-mails there are in their inboxes when they return from two days out of the office. I simply get worried about my business if I get too many “in case” e-mails. I plainly call it cover your arse, for why do you send me e-mail so you can have the excuse of “I’ve told you about it” if something goes wrong? If something is important enough, someone has to phone me; else I don’t want to know about it. A problem is not solved because you’ve sent e-mail about it.
    10. Directions, rules and regulations stifle a company. We encourage an open, informal and creative environment where decisions can be made quickly. Yes, the more haste the less speed and because of that culture we sometimes make mistakes, but only someone who never takes a decision will go through life without mistakes.
  6. Other
    1. The Scottish-American entrepreneur and philanthropist Andrew Carnegie, the wealthiest American ever apart from John D Rockefeller, used to say one has to use a third of one’s life to get an education, a third for the creation of wealth and the last third for giving it away. Indeed that little yellow note found in his desk drawer after his death indicated that he had got rid of every last cent when he laid his head down.
    2. On a certain income level, giving money naturally gets relatively easy. Time is scarcer. Generosity can also entail giving time and therefore the transfer of wisdom or assistance.
    3. Oh Lord, it’s hard to be humble – humility is admirable
    4. The American columnist and radio presenter Herman Cain rightfully said success was not the key to happiness, but happiness was the key to success – if you’re crazy about what you’re doing, you will achieve success.
    5. “If you can give your son or daughter only one gift, let it be enthusiasm,” said Bruce Baron, American member of congress and author of books on personal success. That same cornerstone I desire for my offspring, PSG. That we don’t break or brake, but build. It took me many years to realise that enthusiastic and positive people inspire me, but the “it won’t work” of negative grumblers make me see red
    6. Next to honesty and work ethics, caring for your company and colleagues and good manners are paramount. I’m passionate about the adages of CJ Langenhoven, one of the fathers of the Afrikaans language, like this one: “Treat your superiors with courtesy because it is your duty; your inferiors because it is your privilege.”
    7. Yet who would one choose: a Warren Buffett who has built up so much; or a Jack Welch who might have managed the largest company in the world, General Electric, but by means of cracking whips and a culture of fear about who would be fired next? PSG subsidiaries have been compelled to retrench people, but I hope I’m leading from the front rather than from behind.
    8. For me, creativity borders on enthusiasm, for the energy levels and success of a business are boosted when people challenge one another with innovative ideas. A sexy plan grabs people and motivates them to take calculated chances. It gives me no end of pleasure to establish something out of nothing.
    9. What has a director contributed by spotting a spelling error in the annual report? If you can generate two or three fresh ideas when the executive committee gets together, it’s a successful meeting, not when you’ve worked through an agenda item by item. I put in some effort to, an hour or two before a meeting like that, come up with a few things that could get the guys to think a little. The possibility of alternatives is what gets the grey matter going. If you think outside of the existing parameters, the result is a Curro; or the investment possibilities of alternative energy; or the financing possibilities of non-redeemable preference shares, where you never have to pay back the loan capital until the business ceases to exist, and which can never land you in hot water during a financial crisis. Curiosity is a winning characteristic. An interesting proposal and a fresh idea or new angle from which to look at an old problem is an approach that needs to be cultivated and encouraged. It has to become a mindset in a company. Creativity is much harder work than the useless buzz-words visions and missions.
    10. One of the major challenges and most exciting aspects of the business world remain identifying opportunities.
    11. Yet I’m convinced that businesses that are started in one’s own interest are more successful and that the impact of successful businesses trickles down into and benefits society as a whole.
    12. The business magazine Finweek published a story in its Piker column on July 30, 2009 about a local economics professor who gave everyone in his class a single average mark in order to illustrate socialism. Before the next test the clever students wondered why they should work hard and the underachievers also thought they didn’t have to do anything, so the second average mark was about 30% lower. And for the third test all of them got close to zero.
    13. The best thing about contributing to a country or a community is that it’s something you do because you want to, and not due to compulsion or for monetary remuneration. It’s great to plough back something of your knowledge and experience or ability because you are so privileged. You often get more out of it than what you put in.
    14. But being generous and wasting are light years apart. And like stinginess is a bad thing and ugly, frugality is a virtue. People who waste money will indeed lose everything, for if you waste something you don’t have respect for it.
    15. We tease him, calling him Radio JFM – and that’s not a station where listeners may phone in and say something of their own! My dad doesn’t believe in complaining and moping in self-pity at all. For him it doesn’t exist.
    16. Apart from PSG I hope what I leave behind for my children are above all a mindset of enthusiasm in everything they tackle, the tireless search for solutions, and the ethos to work hard in order to make a success of whatever they try to achieve.
    17. A negative person sees insurmountable hurdles and the proactive person looks for alternatives
    18. There is a very thin line between being assertive and aggressive, as I probably know better than anyone else. Yet I know even better that stumbling about is an unproductive waste of time. One has to take a decision and that’s it. If you’re wrong, you simply have to take the rap afterwards.
    19. The services of the best lawyer or accountant are for sale, but with a guy with general knowledge you can take anything on, because he can think further than his textbooks. On a board it’s also the guy with the integrated knowledge and well-considered opinion who makes a contribution. The rest only waste your time with superficial questions. Closely connected to that is the will to think. In The fall of the human intellect Swami Parthasarathy writes that people have lost the ability to think and reason. Knowledge is absorbed passively, but it doesn’t develop independent thoughts: “You need to wake up from this slumber. Start thinking, questioning, enquiring as to the cause of all this strife and struggle. Examine the truths of life. Do not accept anything without reason and logic.”
    20. A leader is someone with an interesting vision who knows the environment. He has the power of drawing people to follow him instead of pushing them, and therefore people have respect for him. Eventually leadership is about the ability to get the best from people and to combine their input effectively to reach a common goal.
  7. The PSG Stable
    1. PSG Group is an investment company that acquires strategic stakes in established businesses with strong management, good corporate governance, a history of earnings growth and positive cash-flows, and creates innovative ideas at existing businesses.
    2. Propell is a niche financing company specialising in financial products for the property industry, especially bridging finance, and also…
    3. Capitec Bank is a retail bank that provides accessible and affordable banking facilities to clients via the innovative use of technology, in a manner that is convenient and personalised. Its client base has historically been the… Some highlights have been hidden or truncated due to export limits.
    4. PSG Capital is PSG’s boutique corporate finance division, with teams based in Stellenbosch and Johannesburg. It provides a complete suite of corporate finance and advisory services to a broad spectrum of clients, both nationally and internationally. Its services include capital… Some highlights have been hidden or truncated due to export limits.
    5. PSG Fund Management’s business consists of local and offshore collective investments, asset management, hedge funds and prime broking. The funds include PSG Flexible Fund, PSG Alphen’s bouquet of funds, PSG Preferred Dividend Fund, PSG Money… Some highlights have been hidden or truncated due to export limits.
    6. PSG Futurewealth is an investment facilitator that offers investment solutions to the retail and institutional market. Apart from linked investment products it also offers guaranteed investment… Some highlights have been hidden or truncated due to export limits.
    7. PSG Konsult is an independent financial services company that offers a value-oriented approach to clients’ financial planning requirements. Services encompass investments, short-term insurance, life… Some highlights have been hidden or truncated due to export limits.
    8. Zeder Investments is an investment company that focuses on the agricultural, food, beverages, food-processing and related sectors. It offers investors exposure to the current inherent… Some highlights have been hidden or truncated due to export limits.
    9. Agricol is a seed company with an extended network of branches and agents all over South Africa. Their products include most well-known crops, alternative crops like forage seed and agronomy crops like cereals, canola and hybrid sunflower. It has a strong emphasis on research… Some highlights have been hidden or truncated due to export limits.
    10. BKB’s business entails the handling and marketing of agricultural products; wool, mohair and livestock, the provision of farming requisites and the rendering of related… Some highlights have been hidden or truncated due to export limits.
    11. Capespan is an international integrated logistical supplier of fruit. The company is the major role player in South Africa and sources fruit from 44 countries worldwide and distributes to 55 countries around the world. It is… Some highlights have been hidden or truncated due to export limits.
    12. Capevin is the ultimate investment holding company of Distell, Africa’s leading producer and marketer of fine wines, spirits, ciders and ready-to-drinks. Zeder owns 37% of Capevin Holdings, which… Some highlights have been hidden or truncated due to export limits.
    13. Kaap Agri came into being as a result of the merger between WPK and Boland Agri in 2005. The company’s footprint stretches through the Western and Northern Cape up into southern Namibia where it has recently acquired a number of trading branches. The focus of its retail branches (the Agrimark stores) has… Some highlights have been hidden or truncated due to export limits.
    14. Pioneer Foods is South Africa’s second largest food company and is structured into four divisions that manufacture household food and beverage products: Sasko, Bokomo Foods, Agri Business and The Ceres Beverage Company. Pioneer also has… Some highlights have been hidden or truncated due to export limits.
    15. KLK Landbou is a small but diversified agriculture-focused company headquartered in Upington. The company primarily serves the sheep farmers in the Kalahari and Northern Cape areas through 21 retail branches. The bulk of its profit comes from the distribution and retail sales of BP… Some highlights have been hidden or truncated due to export limits.
    16. MGK Business Investments operates through three divisions: Obaro, Prodsure en All-Gro. Obaro offers agricultural, gardening and pet products and services to the public from 17 commercial retail outlets. Its main clientele requires products and services mainly relating to irrigation agriculture. Its BEE programme has received widespread praise. NWK is a provider of agricultural services and inputs, primarily in the North West province. The company is involved in a wide spectrum of activities in the following fields: grain industry, agricultural management services, trade, financial services and industries. It owns 19% of the country’s grain storage capacity. OVK Operations is a diversified agricultural business. Its primary activities involve general trade, fuel distribution, the sales, servicing and repairs of agricultural machinery, motor dealerships, short-term insurance broking, grain handling, storage and marketing, livestock slaughtering and marketing of carcasses, and client financing. Its service area includes the Free State, Eastern Cape and Northern Cape. Suidwes Investments operates in the maize-producing area of North West, with its head office in Leeudoringstad. It is involved in all aspects of meeting the needs of grain and other farmers, from supplying inputs and requisites to grain handling, storage… Some highlights have been hidden or truncated due to export limits.
    17. Paladin Capital is an investment company with a private equity bias and PSG’s preferred investment vehicle in areas other than financial services and agriculture. Paladin Capital’s investment principles are based on the following: not industry-specific, encompassing listed and unlisted companies; strong sustainable… Some highlights have been hidden or truncated due to export limits.
    18. African Unity Insurance provides illness benefit management, a range of life insurance and funeral schemes for groups and individuals. Algoa Insurance merged with African Unity in 2009 and it has 29% BEE ownership. Curro Holdings is the parent company of all Curro private schools. Their role is to establish new private schools and to back each school with a solid management team experienced in the field of education. The schools offer parallel medium education in Afrikaans and English, have a Christian ethos, positive discipline and balanced academic, sport and cultural activities. Erbacon is a construction company predominantly in infrastructure (roads and bridges) and general construction (through Armstrong). It also has a tool hire division. Civicon operates on contract sites throughout Southern Africa. Its services include general civil engineering construction, industrial and process plants, mining infrastructure and support both surface and underground, and design and construction of turnkey industrial projects. GRW is a manufacturer of steel and aluminium tankers and specialised liquid containers. Apart from South Africa it also has clients in the UK and Middle East. It has a highly advanced robotic plant. Iquad Group is a specialised outsourcing company, focusing on treasury management, investment incentives and BEE verification services. Petmin is a minerals, mining and processing company that services the metallurgical and industrial sectors. It is listed on the JSE and the aim in London, and has two operations mining in silica and anthracite. Precrete specialises in the production and distribution of pre-mixed concrete for the construction, support and other related mining applications. Its wholly owned subsidiary, GFC Construction, focuses on guniting or shotcreting, which involves applying concrete pre-mixes to walls of mine shafts. Protea Foundry is a non-ferrous casting operation based in Gauteng, the largest in South Africa. Top Fix Holdings’ business comprises the following: the supply and leasing of scaffolding and scaffolding personnel to industrial plants and construction sectors; the supply of personnel to the chemical, petro-chemical, power generation, construction and coal mining industries; and supply of safety surveillance and access control equipment on chemical and petro-chemical plants. Thembeka Capital is a broad-based… Some highlights have been hidden or truncated due to export limits.
    19. Think & Grow Rich, Napoleon Hill. The single book that has changed my life and positively inspired me to start PSG. It’s not only about money and wealth, but rather about the philosophy of believing in oneself
What I got out of it
  1. Ultimate empowerment, alignment, people above everything, long-term, speak your mind, be authentic to yourself, speak out for what you believe in and make sure you have a voice/control, delegate fully and the best companies allow the head to be least involved on a day to day level, absolute enthusiasm / curiosity / looking for opportunities and scheming