05/07/2024
Entrepreneur toolkit essentials:
__How to be a fearsome negotiator (Part 2)
As an entrepreneur, you are going to face some cruel setbacks, particularly if you want to do things the right way.
In Part 1 of this series about Effective being one of the most important skills an must acquire, I used the example of our first-ever mobile business, Mascom Botswana. [If you missed Part 1, look for my last post]. I left off at the point where we were requested to set up a full working system within just six weeks, ahead of the visit of an international leader who happened to be a great believer in Africa's huge potential...
It was a spectacular success. The day before the VIP and his entourage arrived in Botswana we rolled out fully operational mobile services in the Botswana capital Gaborone, using just 4 base stations. We also had service in Maun, and in Chobe National Park.
Years later, he himself told me personally just how impressed they all were. After this launch, we doubled down and within months the whole country had service.
Now as you know, the Mobile Network business requires a lot of capital upfront. This required us to raise even more capital. Under the requirements of the license, we were required to have an experienced technical partner with 25% and a local partner with at least 30%. When I approached Portugal Telecom, they said they were interested in being the technical partner on condition they did not have much to do and would send us a few engineers to advise us.
Portugal Telecom at the time saw Botswana as a marginal market and were focused on Europe and Brazil. For our local partners, I chose not to invite well-established players, but instead young entrepreneurs whom I encouraged to set up a local company [I even registered it for them].
My team put together a Business Plan in which we asked each investor to contribute equity, and our local partners approached an official Botswana gov department which offered them the funding.
I struggled to raise our own equity contribution because I had not yet acquired the that I have today. Remember: Raising money is an acquired !
Few investors understood this new "telecom" industry yet, even in South Africa. I asked my Portuguese partners to help me but they said I must play the game by the agreed rules and accept immediate dilution.
There was nothing I could do; I was diluted, even though I still provided the management. One day I went to a board meeting and the Botswana partners together with the Portuguese partner said they had no confidence in my management and voted to remove me as Chairman, and my executives from management. So within a year, I had been reduced to a spectator and a minority shareholder. I turned my attention elsewhere and never attended a board meeting again.
About five years after my removal from management, I got a call from the new CEO of Portugal Telecom. He was very pleasant and asked to discuss Botswana... Part 3 to follow!
In business you can face cruel setbacks. There are no guarantees. In my original deal with my partners, I had failed through lack of knowledge to secure my own position. I accepted that this was the game. I did not rail bitterly at the betrayal of my local partners; it is the way the game is played...
What are your own takeaways so far?
