Allon Raiz: 5 reasons founders fail. The stories, insights and lessons from sleeping on the streets to 500+ backed businesses.

What if the reason most businesses fail has little to do with the market, and everything to do with how founders think and manage themselves? At 23, Allon Raiz slept on Durban beachfront for 13 nights. Weeks later, a billionaire offered to back him in any business he chose. His first venture failed. What he learnt from that failure became the foundation of Raizcorp, Africa's leading business incubator, which supports 500+ businesses. In this episode, we cover: • Why Allon doesn't call hi...

• 0:09Speaker 00

  Hello and welcome back to another episode of Change Wired Podcast. My name is Angela Sharina. I'm your host. I'm your partner in personal and collective change and transformation, your master health executive, sleep stress management and self-actualization coach, and just someone who is really, really passionate about learning how to do our absolute best and continuously trying to unlock and use in this beautiful life more and more of our potential.

• 0:47Speaker 00

  Today, guys, we have a guest that I've been thinking about having on the show and been trying to get on our show for quite some time.

• 1:00Speaker 00

  Picture this: a 23-year-old young man, angry and lost, sleeping on Durban beachfront in South Africa for 30 nights. A few weeks later, a dollar billionaire reads about him in a newspaper and says, "Whatever business you want, I'll back you." Sounds like a movie, right? That business failed. And that young man is our guest today, Alon Race. And we're going to be talking about what he did with that failure and why he's sitting with me today.

• 1:42Speaker 00

  Alon went on to build Race Corp, which The Economist has called the only genuine incubator in Africa. It supports more than 500 businesses and has been supporting entrepreneurs for the past 25 years. Alon hosted South Africa's first national radio show on entrepreneurship, then a prime-time reality TV show. He even created an entrepreneurship cartoon strip. That's how passionate he is about entrepreneurship. For 16 years, he hosted the Big Small Business Show with over 200 million views. Alon's been named a World Economic Forum Young Global Leader.

• 2:26Speaker 00

  He spoke in Davos. He was invited by the White House to speak at the Global Entrepreneurship Summit. He was entrepreneur in residence at Oxford. And one of my favorite facts about Alon is he sits on the advisory board of the International Space University in France. I'm a space geek. You hopefully already know that, a proud Trekkie with a dream of becoming someday a space health coach, maybe on Mars, who knows? Oh, and Alon has dropped out of BGG twice. My kind of person, taking the road less traveled,

• 3:08Speaker 00

  accepting, embracing all the twists and turns and curveballs that life throws his way and making the most out of every lemon and turning more and more of them, not just in lemonade, but continuous growth, improvement and success.

• 3:30Speaker 00

  What I love most about Alon isn't the CV or the accomplishments, but how honest he is about the messy middle, the messy internal side of the journey and transformation of becoming the person he is today, who's built and has all the successes that he has.

• 3:49Speaker 00

  In this episode, you'll hear why Alon doesn't consider himself successful and why that's actually the secret to his continuous, ongoing drive. The four-line rituals Alon's has said in the shower every morning for the past 30 years. "It's simple and you can start it tomorrow."

• 4:10Speaker 00

  Alon's 24-hour rule for failure and why, after a big win, he works twice as hard. The one sentence from his mentor that made him furious at the time and changed everything. And why your real job as a founder is to become the most unimportant person in your business if you want your business to scale, grow and succeed. If you're building something, even if it's building yourself, the most important part of the equation of success. Have you ever felt stuck being your own bottleneck? This one is for you. Stay to the end for Alon's number one piece of advice to reduce your odds of failing.

• 4:54Speaker 00

  Failing with the final F or the final end ending.

• 5:01Speaker 00

  Let's get wired for change. Here is my conversation with Alon Race.

• 5:07Speaker 01

  I slept on Durban beachfront for 13 days. And the truth be told, it was a mixture of two things. It was my situation that I was in, that I didn't have a place to go. But I think I enjoyed, to be brutally honest, I think I enjoyed the drama of it at the time. Look how bad my life is. But that's a 23-year-old, angry young man, who then gets suddenly the need to prove something. And then I finally find a job at a friend's retail clothing store. I turn that business around and I get into the newspaper

• 5:47Speaker 01

  and a dollar billionaire sees the article and engages me to back me. I didn't know who he was. I didn't believe him. But long story short, he gives me, he backs me. And he backs me in any business I like. So it wasn't even, he said, "Go into that business." It was, "Whatever you want, I'll back you," which is kind of a fairy tale story. And the juxtaposition of weeks before I'm sleeping on the streets and weeks later, a billionaire backing me.

• 6:24Speaker 00

  Good morning, Alon Race, and welcome to Change Wired Podcast. I am very excited and grateful to have you here today.

• 6:33Speaker 01

  The feeling is mutual. I'm very excited to spend the next hour with you too.

• 6:39Speaker 00

  After I watched quite a few videos of you and read different articles and just did my research about your work, I was just overwhelmed with this feeling. Like, there is so much passion and so much drive that speaks through all of this body of work. You've created Race Corp, working with thousands of entrepreneurs. And you did a video show about entrepreneurship and cartoons and probably a lot of other projects. You spoke at White House and Davos and Oxford and probably again, I don't know, hundreds of very notable places. First question I want to ask you, what drove all of that?

• 7:20Speaker 00

  Like, how did you get to have that passion, that drive for entrepreneurship and helping others to be successful on that journey?

• 7:28Speaker 01

  I think deeply about now, at my age, 59 right now. I think deeply about what has driven me. I think when I was much younger, what drove me was not so clear. I could feel it, but I didn't understand it. So what drives me is what pushes me and what drives me. And I've got both a fear-based drive, which is what pushes me. And what attracts me is also, let's call it an attraction to something, which is also what drives me. So my story is about, I'll prove. I've got a big need inside me from a sociological point of view, based on my history, to prove myself to myself.

• 8:13Speaker 01

  Initially, it was really to others, if I'm being honest. But as I've matured, that morphed into proving to myself. So that was a journey in and of itself. And on the other side, also part of my story was that I was given a second chance as a young man. It just became my mission to give other people a second chance. I I I felt the power of a second chance. And when you've experienced that, a big part of what you feel is why don't other people get that opportunity? So if you look underneath everything I do, I would say that it is about those two two sides.

• 8:58Speaker 01

  And that is built into, let's call it my spirit, which is that I'm a teacher. It my spirit is a teacher. I'm not a teacher, but my spirit is a teacher. So if you look at from the time I was at university, I was teaching kids. If we were not at university, I've always been in that environment where I have been teaching and I'm happy there. So I express that through teaching and I express that through a machine called Rais School that that teaches, that that gives people another chance through teaching.

• 9:33Speaker 00

  Um, is there a specific reason that you have this passion for entrepreneurs as a group of people, right? What I call builders of the world or that passion for building the builders? Were there a specific moment in your life or your background, maybe your parents, whatever, that they were entrepreneurs as well? Because you could be teaching and helping a lot of different groups of people, right? Was there anything specific about entrepreneurs that you connected with deeply?

• 10:04Speaker 01

  You're talking about, I love the way that you, the people who are building the world. I like building, I'm a builder, I find I build. I'm happiest when I'm in the space of creation, when I create something new and it comes to my mind. And then I have the journey of bringing it to to to life. So when you can enable other people to do that, you have this exponential effect because you have you have leverage through others that they can express themselves. But I think entrepreneurs represent for me a spirit of fighting, of fighting, of getting up again, about persistence, about about resilience.

• 10:42Speaker 01

  And that just talks that I resonate with entrepreneurs because I I find those characteristics incredibly inspirational for me. So when I'm around entrepreneurs and I hear their stories, I'm often in tears. And whether I'm vertically in tears or inside, I get, I feel very deeply about their journeys and about their struggle to success. And just coming back to that and just talking about the struggle to success. The the question one asks is, do you have to struggle to be to get to success? Or why does that have to be the journey? And I think a big part of what I'm thinking about right now, is that just my my understanding of how it has to happen?

• 11:25Speaker 01

  Because it happened to me and I've surrounded myself with those stories. Is there a whole set of other, yes, with successful people, whether they're entrepreneurs, who didn't have the narrative, I need to struggle to get become successful? I can not struggle to become successful. And so I'm very conscious of the two young men as sons, very very conscious right now as to what is the the messaging that I'm sending to my boys in terms of their success, that you have to struggle like me in order to succeed? Because I witnessed that in my parents as well. So I'm repeating the pattern and I don't know if it's a truth, a truism that you have to succeed

• 12:08Speaker 01

  or it's just my made up construct.

• 12:12Speaker 00

  Yeah, that's a good question that I thought also a lot about. And what it brought me to, not necessarily the answer, but a question is, how do you define success? What is success to you? Because I read somewhere that you don't even consider yourself successful. I don't know if it's true or not, but how do you define success for yourself?

• 12:31Speaker 01

  That that is true. I don't define myself as successful. I define myself as succeeding in the process of, I don't think it's an apex moment. It's a terminal moment where you are successful. I don't, I deeply don't believe that. I really, I've seen it also with many of my friends who are in inverted commas, successful. When they have an exit, they sell their businesses for lots and lots of money. And every single one bar none has said, there is this deep excitement in the moment for a couple of minutes. And then literally then by the next day, they are, they feel this deep sense of depression because there's no more purpose.

• 13:10Speaker 01

  So I, in the process of succeeding and until I close my eyes forever, I think I'll still be in that process. And that's a very sincere feeling. And I suppose that comes to the drive, right? That comes down to the why I'm so driven because I'm never there. But I don't then feel exhausted by it. I feel like that's just how it is. So I'm never trying to reach somewhere. I'm trying to just keep going.

• 13:37Speaker 00

  Yes. And I guess what I'm hearing, and correct me if I'm wrong, that it's the feeling that you get from the pursuit that makes life, I don't know, joyful and worth living versus just getting something.

• 13:53Speaker 01

  It's it is exactly, the pursuit is the fun. It's the building that's the fun. And you know that that very cliched thing that as soon as you get to the top of a mountain, there's another mountain. I know that for sure. And so when you reach, let's say, what you want to achieve within a certain amount of time, I'm very aware that all I'm going to do is just change the scope to something bigger. It's just going to be natural because we've got to point A. And if you look how that even manifests in Rais Group, that everything is version controlled as V one point zero, one point one, one point two, one point three, everything is version controlled. They call, and everyone knows this is just a version for today or for this week

• 14:39Speaker 01

  or for this month or for this year or for whenever, there will be, there will be an improvement. It's not the end. There is no terminal point for anything. It can always be improved, it can always be better.

• 14:51Speaker 00

  Yeah, and I guess what I'm also hearing is the process of growth, of evolution, personal or of your business, of your idea that matters and that makes, that fills this of people like yourself, right? And you mentioned this, there is another mountain. I used to think that it was a negative thing. And then I realized, no, it actually means you love the journey that that much and it gives you such a joy. That's why there is another mountain, because you love the climb.

• 15:18Speaker 01

  Exactly, exactly. And and and sometimes I think what, I think how matured. I've just been away for three days on my annual strategy breakaway with my my business partner. And you were looking through, we've been doing this, he's been my business partner for 22 years. And so we've been going away once a year for 22 years and now we go away for three days every year. And part of that is the setting the basic budget or the targets for the next year. We looked at our, he just pulled out our 2013 budget and how we had said how we were going to grow.

• 16:01Speaker 01

  And I was super ambitious in in in 2013. I've become far more accurate in terms of what I believe I can achieve. There's always a stretch in it, but but there is never a point where I'm going to say, that's fine. And I write a thing called the letter from the future every single year, which is a, I write as if I'm in the future. Like now we're 2026 going to 2027. So I'm writing 2032 for 2027 and I write backwards. And I write as if I'm in 2032, I write to my wife and I tell her what's happened in those five years. And in that there's the stretch. So I've got a little bit of more maturity in the budget.

• 16:44Speaker 01

  But in the my letter from the future, there's a little bit of more dreaming and aspiration to push you. So when I come now to look at the mountain, before I used to go, okay, then I'm looking for that one. I'm looking for five more. Now I'm just trying to just get to the next mountain, maybe some of the gray head.

• 17:04Speaker 00

  I don't know. And then maybe it's that wisdom that you get with experience, like, okay, now I know approximately how long or how much effort, etc., it's going to take me versus the younger ones doesn't really have that knowledge. A question, were you always thinking like that? Meaning that success is in the climb, that all the joy and fulfillment is there? Or maybe a younger version of you, they had different mindsets or a different interpretation of what it's all for, what success is all about? Did anything change as you, as far as you can remember from your younger years?

• 17:40Speaker 01

  I think, I think Angela, I think when I was 23, when the journey started, I think that there was in my mind a very cliched view that there was this point of success. I think that's true, that I don't remember it exactly, that's the way I thought. But I know me and I would have thought that way at 23, that when I become a billionaire, then I'm going to be successful. There would have been a number, there would have been, there would have been a, it would definitely have been a numerical number. There might have been a house that looked in a certain way, but I evolved over time. My thinking is not like that anymore, as we've spoken about. But it wasn't like that before.

• 18:24Speaker 01

  It was more, when I get there, then I've arrived.

• 18:29Speaker 00

  Yes. Speaking of that, the whole journey and when you were 23, and if you could speak more a little bit about that moment, failing with your company and then as I read Sleeping on Streets of Durban. And can you tell me what, or what was maybe from what you remember happening inside of your head? Like the stories, the beliefs, the emotions, maybe the goals? And how you had to grow or evolve over years to get where you are today? And again, beliefs, stories, mindsets, habits, systems?

• 19:06Speaker 01

  Okay, so let's just maybe just precede the story. As you mentioned, I won't go into the reasons why I was on the streets in Durban, other than it wasn't drugs, but I was on the streets for thirteen days. I slept on Durban beachfront for thirteen, thirteen days. And the truth be told, it was a mixture of two things. It was my situation that I was in, that I didn't have a place to go. But I think I enjoyed, to be brutally honest, I think I enjoyed the drama of it at the time. Look how, look how bad my life is. But that's a twenty-three-year-old, a young, angry young man, who then gets suddenly the need to prove something.

• 19:48Speaker 01

  And then I finally find a job at a friend's retail clothing store. I turn that business around and I get into the newspaper. And a dollar billionaire sees the article and engages me to back me. I didn't know who he was, I didn't believe him. But long story short, he gives me, he backs me. And he backs me in a, any business I like. So it wasn't even he said, go into that business. He, it was whatever you want, I'll back you, which is kind of a fairy tale story. And the juxtaposition of weeks before I'm sleeping on the streets and weeks later, a billionaire backing me, it was quite a, a hard thing to reconcile in your mind.

• 20:33Speaker 01

  But, and so then I start this, this business called the New York Sausage Factory. And it is become the first, my first iteration of it was in Pine Town, just outside of Durban. And it's an absolute failure. And then you go, then you start looking for excuses, right? Because, and the excuses, why you fail. And then you realize that I actually have no excuses. And that was the thing, a very maturing and pivotal moment in how my, how I saw the world. Because my instinct was to make excuses. And then realizing I had none. I had a private education, I had a university education, I had no mentor, I had money.

• 21:18Speaker 01

  I had every single opportunity to succeed. There is no way I could point fingers anywhere outward but in me. But I had to go through that process first, because now I had to go and say, it's not me, it's because of. And then there's nothing, there's no because of. And then you fall back into it's me. And that was very rough for me for, to realize that it was me and that it was a hundred percent my fault. And that became very instrumental in how I thought, because then I took ownership, I took complete ownership at that point. So to get that kind of insight as a twenty-three-year-old, I think it was, it was one big gift. And then I had the privilege of a very tough mentor.

• 22:03Speaker 01

  And why I say that is not that it was a bad man or anything, he was an absolutely magnificent human being. But he didn't accept my BS. So when I, he called me out directly in the moment. There was no, as I say to my mentees today, there's no, you go girl, you know, there's none of, there's none of that rah rah inspirational moment. But it wasn't that relationship, it was a very tough mirror that reflected at me at a young age. And once again, to have that kind of, what I call today brutal truth, reflected back at you as a young man.

• 22:46Speaker 01

  I thought, at the time I was angry about it, I was upset about it. But as I matured, I realized the gift that it was. And so I had that, you can't blame. Number two, I had a very strong mirror that was then reflected to me. So I think those were two very fundamental shaping instruments in my life. And then you spoke about mechanisms. When I started Rescub, I started without him. We offered, and I started without him because I wanted, I needed to prove to myself that I was able to do it on my own. Relatively stubborn. And, and it's all that ego was, it's, my ego is pacified over time, but it was,

• 23:32Speaker 01

  my ego was really important to me at the time because I needed to prove. Now I wanted to see if I could do this by my, myself. And, and went through absolute hell through that process. And I wrote a book called What to Do When You Want to Give Up, which was, which was really much a reflection of my journey, although I expressed it through storytelling through other people, which were also true stories. Just stylized a little, it was a mixture of people in, into one character, including myself in, in there. And I came up with a, a mechanism. I came up with, I may, I can, I will I. So my, my tagline when I was even, we left the food business was,

• 24:17Speaker 01

  if you think it, write it down and make it a reality. And on my TV show, that was my exit line. So I say, and always remember, if you think it, write it down and make it a reality. So if you think it, if it's something in your mind, write it down, bring it out of the ether into the physical world. And then your role is then, once it's written down, to then create it in, in the, in the physical world. So that is now, let's call it spiritual talk. I didn't know that at the time, which was just how I thought. It was, I was quite naive, yeah, oh, yeah, I wanted there, what's the process in the gene? I need to write it down. It was like quite simplistic. But that became thematic for me in terms of everything I did, I would write down.

• 24:59Speaker 01

  And then I would keep and then make sure then I would then, I'm, I'm one of those people who makes nests. And I just write it down to make sure it happens, makes it, make it happen. Then I needed a mechanism, which I call my shower routine, which is that I would keep me motivated. And it was a process, every morning in the shower, I would say, I may, I can, I will, I am. I may, I would say, I would tell myself every day I have the right to. And I would split in categoric, in categories, I would split it into my personal, let's say my, my weight or my physicality. And then I, and my family on sort of the left and on the right, the business, I have the right to.

• 25:45Speaker 01

  And I would tell myself every single morning, I have the right to be healthy. I have the right to, I have the right to be a billionaire, I will write to it. There's no one has more right or less right than me, I have the right, I gave myself the right to it. But yes, I have the right, there's no one that I know that should have it more. I work hard, I have the right. And then number two, I can. So I have the ability to, right? Get this, I have, and then I have the ability. So in that ability, I would go, I would just do the big steps. This is how I would do it. And it's such a speed of light in your mind.

• 26:26Speaker 01

  It's a soonest, and that's how I will become, let's call it a billionaire, because that's, you know, let's call it childish desire, or I want to be, have big muscles or a good relationship or whatever the case may be. So you'd go through the steps. So I can, I have the ability, nothing in my way, that's how well we do it. I will, it's split into two. It was, I have the will. I have the will, so I remind myself, I have the will, and then I will. And then it's almost that, damn it, I will, I will do it. And then my last thing is I am. And then I close my eyes and I would see it, I visualize it.

• 27:06Speaker 01

  Now, I did this without being in the, it's called that whole spiritual, that when they, I did this before, I saw things like the secret and all those kinds of things. I just needed my own mechanism to take me there. And I'm very visual, so I had to see it.

• 27:24Speaker 00

  Yeah.

• 27:25Speaker 01

  But once I saw it, then I could say, if you think it, write it down, make reality, that was what I wanted. So and then I could see it, I saw what I wanted every day.

• 27:34Speaker 00

  Yeah.

• 27:35Speaker 01

  So every morning, as I came out the shower, I felt like a rock star. Because like you will, and it's a private moment, it's not something that you express in you. It's a private thing with you and you every single morning. So I may, I have the right to, I can, I have the ability to, I will, I have the will to, and I am, I'm already there and I see it. And that's what I, I still do that every single morning. It's a daily routine that I have done for so far, more than twenty, more than thirty years. Yeah.

• 28:05Speaker 00

  Yeah. You know, you highlighted that here, such a beautiful thing that I, such a believer of. This importance of daily practice to keep your mind as conditioned as you would keep your muscle, right? A lot of entrepreneurs would ask, how do I get motivated or how do I get confident? As if you get there and you stay there by doing nothing, right? And I always say, your shower moment, it's like brushing your teeth. You want to have clean teeth for your whole life? Brush it daily, right?

• 28:39Speaker 01

  All right.

• 28:39Speaker 00

  Yeah, so thank you so much for sharing that you're still using it. It's to condition your mind still, so it doesn't default to just status quo or what is and believing what the world has to say. Thank you so much for sharing this.

• 28:54Speaker 01

  Sure. I know that you asked for my, what I use, my tools, that those two are my main tools is think, write it down, make reality. And I'm, I may, I can, I will, I am. That's, that's what I do, it's that simple, it's nothing more. I think the other, if I give one more.

• 29:13Speaker 00

  Yeah.

• 29:13Speaker 01

  Tool is that I've got a failure, you spoke about failure earlier. It's part of the journey. I fail and continue to fail and will continue to fail into the future. So that how do you manage failure is a very important part of success, I think. And my, I've done, once again, is on, nothing I'm going to tell you haven't heard before or in some form or another. My, my mechanism is to accept the failures. I don't, I'm not, I said, okay, I failed, I accepted. I give myself twenty-four hours to, to be upset. Like literally saying, you can be angry with yourself or upset. I allow myself to feel it for twenty-four hours.

• 29:59Speaker 01

  And then I have the discipline to let it go. But I don't dismiss it. I don't not feel it, I, but I don't look beyond that time. And then I kick into action. And that is attached to that action piece is the doubling down, which is another mechanism. So if I win it, I've got a very simple, everything is quite simple. If I fail, my response is to feel it, self-reflect, own the parts I need to own. Then I go into a meta-state, which is where did this go wrong? Okay, where did I go wrong? And I'll come back to that just now.

• 30:44Speaker 01

  And then I go, okay, now work hard, now work twice as hard. So I go into work state. So if that happens, my wife will know that if I've had a failure, I'll be working right probably till four in the morning. I'll get up, I'll, and I'll just work. And then because work gives me a sense of control, that I'm doing something about it. So then I'll work. Okay, and then I go, I get momentum, I think through it and I work through it. I literally do things where I went wrong and build a different process or I just go and do the work that is required. Then the opposite is also true. Because the other side of this is complacency. So when I win, I also double down.

• 31:30Speaker 01

  So every time I have a major success, I have exactly the same process. Why did I win? What made me win? Let me remember that. Okay, let me try and basically amplify that as much as possible. And now I'm so afraid of complacency, I work twice as hard as well. So I've got this double beat because I'm not always succeeding and I'm not always failing. But every time I fail, I work hard and build a process to try and not do that again. Every time I succeed, I knock myself out of a sense of walking around with my cup and going easy. And I get into the work and say, this is, this too is temporary. The failure is temporary, but success is also temporary.

• 32:14Speaker 01

  Okay, that moment is temporary, I need to keep going. And so don't now sit here and think you've arrived and keep going. So those are very powerful mechanisms. And that has translated into Raise Corp, into the organization, into a process here called the four Ws, where we went wrong. So every time we have a failure in the business or we mess up, it is a, the four W process where all the parties are brought into a room. And the rule is no, no human can be blamed. You can't blame anyone, there's no blame. You are looking for where, in the, where we could have saved this or saved this moment in the process.

• 32:58Speaker 01

  So you try and look at it from systemic perspective and not from a human perspective. And the, the argument is that to find out that the areas this left the, the door open is, we can blame her all we like, but there's no one around, she's not around and the plane crashes as a result of leaving the door open. So you need the mechanism, that cross-check mechanism in, in, in play to ensure it never happens. So every time we have our four Ws, I generally cheer them and I go, there is no blame. No one can say, but I told you, no one can do that. Okay, and so there's a lot more that we get out to improve the system.

• 33:40Speaker 00

  Yes, thank you for highlighting this no blame aspect, Obed. Whether you're working with a team in a company or you're just a solo entrepreneur and still by yourself, I think this piece of blame, removing it as soon as possible or any emotionality that is such a powerful tool or just way of doing things that allows one to be a lot more effective. And specifically around blame, I, I love your question that I heard on one of the interviews, to what end? And whenever I experience this emotion, I always ask myself, is it useful to want to end? If I blame someone or myself, what use is in that? And what can be more useful, right?

• 34:19Speaker 00

  And that is those things, looking in the situation and systemically and figuring out what went wrong and where we could have done better, et cetera. Yeah, thank you for sharing this like internal process of dealing with failure. And also maybe another question, you obviously think a lot about entrepreneurship and failure and you want a lot more entrepreneurs to succeed. In fact, you have, as I also researched, a dream to get, of getting a Nobel Prize for reducing this, of creating an incubation model that reduces this, you know, failure chance. And you can speak also about your dream, maybe why you have that. And then also in terms of failure, why do you think, what makes entrepreneurs fail more than anything else?

• 35:03Speaker 00

  If there is such a thing that you noticed with your vast experience, what's the main reason that so many businesses fail and maybe more than they have to?

• 35:10Speaker 01

  That's a big question and it's, it's more than an hour's answer, but I'm going to try and give you a few things that I think about around that. I see a lot of failure and so, no, number one, and this is maybe a controversial statement, is many people are not entrepreneurs. They think they are, but they're not entrepreneurs. And they would be better suited in an environment where they could handle the, the risk, the level of risk. Because the entrepreneurial journey comes with a high risk associated. A physical risk, in other words, your health, your physicality, because if so focused,

• 35:53Speaker 01

  relational risk, and of course, financial risk. It comes with a lot of risk associated around it. And a lot of people cannot handle that risk. And often they land up upfront in what feels like a riskless environment because it's winning upfront in the first few weeks, months. I wouldn't say years because I don't think you can last that long. But certainly the first few weeks and months, it feels quite riskless because you walked into a big deal and it all looks fantastic. And when the risk starts to creep in, then they cannot handle it. So the first thing for me is that many people who are in small businesses, in my opinion, are not entrepreneurs, they are, they are something else.

• 36:39Speaker 01

  Okay, and entrepreneurs, but there's, I won't go into the definition of entrepreneurs, but there is a tolerance for risk required in this entrepreneurial journey. So that, that's not there. The second thing is that this overestimation of what you are capable of and the underestimation of how long it will take. There is this very naive relationship with an Excel spreadsheet, that if the Excel spreadsheet said it would be like that, then it's going to be like that. And, and also what people have told you in your research, that yes, they'll back you, yes, they will buy from you, yes, they will do all these things and they don't do it at the pace or at the amount that they said they were going to do.

• 37:23Speaker 01

  So we overestimate, I think is initially our capability or how quickly it's going to take and underestimate the costs. And this, this inability to scope the problem is a big, is a big part of failure. Is we've scoped the problem incorrectly. And as I said to you earlier, even I scoped the problem in my twenties and even early thirties, I scoped the problem incorrectly. I've, I'm only starting to scope it better now and I'm still inaccurate. So it's, it's a piece of work to do to try and scope the problem properly. And then you've got this voiceover of I need to believe in myself and I need to, the world is my oyster.

• 38:07Speaker 01

  That's fantastic, I don't have to have self-limiting beliefs, I can be whoever. That's wonderful and I do believe that at a level, but I also believe in reality and I also believe that there are outliers and there are, and I know who I am in this world and I know my, relatively my capability in this world and I can still stretch and I can still be very happy and I can still be in, in this process of being successful. So scoping is the next thing. The, the next reason is just in a very practical way is not, not understanding your numbers. One of, it's the, one of the most bizarre things for me

• 38:50Speaker 01

  that there is very little attention to understanding the financials of the business, the income statement, the balance sheet. And this is from somebody who failed accounts one twice, I got it the third time, but I have a deep appreciation for the numbers and what, how they speak to you and what they tell you. And so when I work with investing businesses, one of the first things I do with particularly young entrepreneurs is make sure that they understand their numbers, particularly if they haven't come from a financial background. I spend a lot of time for them to get to understand their numbers and for them to be able to read the income statement, balance sheet, understand the difference between the two and then speak the language of business.

• 39:33Speaker 01

  Because if you're going to be in business, you need to speak business and you have to understand it properly. Now I just want to maybe take you on a quick aside and remember, remember I spoke about brutal truth. So, and I mentioned to you, I failed accounts one twice.

• 39:48Speaker 00

  Yeah.

• 39:48Speaker 01

  When, in, after the New York sausage factory, which was the first business, I went into a vehicle security business and I grew that business in its first year by approximately 10 times its size. But we never had cash, so I went up to my mentor and I said, could he second a clever accountant into the business to help us collect the cash? And he listened to me and he listened to me and, and he said, so then he says to me, what's your title? So I said, I'm the marketing director. So he just looks at me and he says, then change your title and do it yourself. And I was, to the point, I was very angry at the time.

• 40:31Speaker 01

  I'm the guy who grew this all, I'm just asking a simple question here, can you bring an accountant in here? But the subtext of that was you need to own that part of the business too. You, you can't now abdicate that to somebody else, you, you, you need to understand that. And so change your title and do it yourself. It became a very big thing for me is to own, especially the financial part, which I was so afraid of before and then basically fell in love with afterwards, where I understood that because I was forced to go into that space. So understanding the financials is the next thing. And I did that with the. Margin and understanding the concept of value in a business.

• 41:16Speaker 01

  What you can charge and what you can't charge. Most, and I'm going to say most, if this is a general statement, most businesses that I engage with directly and price incorrectly, because if they don't understand their costs properly, they haven't cost it correctly. That's a huge problem and that relates to the previous, understanding the financials. But even at a, like what does cost, they will mostly under cost. They will think it's much cheaper than it really is. So that's, and then they will price accordingly. And they will not understand the relationship between price and value. And so they don't make enough margin.

• 41:56Speaker 01

  And because they don't make enough margin, they land up constantly in this, this cash flow crisis, which absorbs all their time and their energy. And as a result, they eventually lose the will to continue and then, you know, give up. And then the last thing, just so that I just round this off here, maybe on a different note, a non-financial note, is being able to answer, to ask Socratic questioning or Socratic questions. To be able to ask yourself different types of questions that then open new vistas of thinking for new solutions. So a big part, if you think about the power of a mentor's power is actually are the questions they ask.

• 42:41Speaker 01

  A good mentor doesn't give you answers. They ask you, they ask you good questions, which messes with your head. And then you think about that and go, oh, I never realized that. And then you go there. So that it comes from within you. If you have an internal locus of control that was precipitated by a question and you move in a certain direction. So the ability to ask Socratic questioning is hugely important. And that was something I once again learned from my mentors, who as a 23 year old, when you're exposed to this, somebody that's successful and say, how do you become successful? And long story short, but it's, it's around Socratic questioning about understanding how to ask the right questions to yourself,

• 43:26Speaker 01

  to others, et cetera. And so a big part of what I do with my investees, people I invest in, is I teach them how to ask questions to themselves and say, what's the right question to ask you? Instead of me asking the questions, then you were trained them on how to ask the right questions and how to be a little obscure in terms of how you set up a question. So it can open up new, new ways of thinking. And so when they go down, then I go, why aren't you doing that now? If you would do that in that context, why aren't you doing it in this context? And they go, I never thought of that. Yes, okay. And that ability to think about new things and solve problems because you've got, you're not trying to solve the problem

• 44:09Speaker 01

  the same way is a hugely powerful mechanism for success. And so the reason, coming back to your actual question, which is why did they fail? Is they can't ask the right questions, don't know what questions to ask themselves. And that's.

• 44:23Speaker 00

  Yes. Thank you so much for sharing this. Just yesterday I was walking and listening to this podcast by Alex Hermosy on five questions he asked on repeat in so many situations, whether when he's offered a deal or he needs to solve a problem, one of those, what problem are you trying to solve to what, to what end, right? Or what would it take instead of, is it possible or not? So the, and I'm, these are the things that I'm trying to remember to, and then I put it in my Claude. So it also asked me those questions. But yeah, thank you so much for be sharing this. The questions are indeed some of the most powerful tools to unlock the power of the mind to solve different challenges. Right? We don't have a lot of time alone.

• 45:04Speaker 00

  I could be speaking to you for hours about that, but I would like to ask two more questions here. There's something that you also speak a lot about. A, you talked about understanding your numbers and owning different parts of your business. But then isn't that a contradiction to this idea of an entrepreneur becoming their own bottleneck? And for yesterday, I'm still doing, I was doing my invoices, et cetera. I'm like, this is which I need to fire myself from in order to free up the time to take on the next level of my business for me. What, can you talk to that contradiction? How do, how to approach it? What framework do you have for that?

• 45:45Speaker 01

  Yeah, wonderful questions. You know how to ask questions. It wasn't even Claude, it was you. Okay, so let's just, let me frame this properly for you. So in that statement, it was change your title and do it yourself. Was not the, you must land up doing it yourself all the time. It was that in, in order for me to be, I have today, in fact, I have my FD and my head of accounts in a, my motif meeting, financial meeting. I understand those numbers backwards. I don't do the books. I don't do any invoicing. I do none of that stuff, but I understand it. And so I can pick up any mistakes.

• 46:29Speaker 01

  I can pick up contradictions. I can pick up a lot of issues in the financials or in the business as a result of being able to read the books. So the, the instruction is not that you do it. It's that you do it to understand it, to hand it over. So yesterday I was trying to, a whole bunch of actually corporate people and executive committee, which is an interesting thing for me to do because I'm normally in the realm of entrepreneurs. And I say to entrepreneurs, your job is to become the most unimportant person in the business. You have to become the most unimportant person. It doesn't mean you don't understand your business. It means that you have to delegate, not abdicate.

• 47:12Speaker 01

  And that you have to understand, be able to put in the requisite controls in place initially for you and then later for the people who will be controlling and you put the controls for them in place. So this whole idea of you becoming unimportant is so that you can move to the next level and you're not in what I call queen state, which is the operational state versus king state, which is the strategy. So both are important, by the way, you, the king and queen are equally important in a business. But your role as the CEO, as the entrepreneur is to own the vision

• 47:51Speaker 01

  and understand what needs to be done from an operational point of view and from a build point of view, the strategy piece, what do we need to build to take us there? You need to understand that, then you need to delegate that to the right people. Okay, then you have to manage that. Okay. And then other people will manage that and you move up and up. So yesterday when I was with this ex-coach, I'm saying to them, you have to be unimportant. And so they're battled with that because the, their mindset is that they need to be important. Otherwise they're going to lose their job. And so we had that debate and I said, let me frame it to you in this way.

• 48:36Speaker 01

  If, and I told them a real story and this is the real story. I had once a hit a marketing and she was brilliant, absolutely brilliant. She would go to war with me. And if we had a big thing to do, she'd work through the night and that's fantastic. So love, fantastic. The problem was because she did everything, she never delegated. She became the bottleneck in the department and that department became the bottleneck in the business. The business started to go around the marketing department. I kept going to her and saying, we've got to delegate, you've got to delegate. And eventually I forced her to hire people and they would leave because she would give them nothing to do. She wouldn't give them instruction. And then finally I had, I went to her and I said, I have to, you have to go because you are in my way.

• 49:21Speaker 01

  Because you know enough the ability to delegate and grow your department accordingly, because everything comes through you. So I shared the story with them and said, when you, so the fact that she's the only one who knows how to do something and hasn't given it to anyone else, not only is a restriction, but it means that I can't move her because she's weight bearing in that department. And if the department will collapse, whereas if she's got two other people holding that up, I can move, she can grow. And I said, the same thing with you. Your bosses are looking at you and saying, she's the only one who can do that. So we can't, but if they knew that your department ran well without you

• 50:04Speaker 01

  and you were a great leader and you were a great builder of people, et cetera, that as that business grows, they can move to higher positions. And then you could see that there's looks on all these corporate people's faces going, at least light bulb moments going, oh my gosh, I've just thought about this all wrong. So, so that's how I'm responding to you as well to say, you've got to become unimportant, but you can't do that by just abdicating. You've got to understand, delegate, put in the controls and move to the next level.

• 50:37Speaker 00

  Yeah, thank you so much for explaining all of this. And I feel like it's such an important thing to understand this. And it's almost like a switch here of mindset, this light bulb finally that gets people to understand, ah, I am my own bottleneck because I make myself irreplaceable and I stuff my calendar in capacity so much that you, I can't actually move anywhere. Yeah, thank you for explaining how to go around this seemingly like contradicting notion of owning things, but also not becoming your own bottleneck. And maybe the last.

• 51:14Speaker 00

  Question on this, just a lot of contradiction in the world of entrepreneurship. One of those, as you mentioned, you want to be grounded, you want to understand your numbers, you want to understand the market, you want to be hyper realistic almost. But the second thing, being delusional, doing something that maybe nobody did before, not in this way, right? And seeing the thing that is not there and nobody else sees. Like, how do you marry this in your mind? So you don't go crazy and you can do both at the same time?

• 51:45Speaker 01

  I've given you the clues to the answer already in throughout this interview. But let's, let's go through that. So when I meet an entrepreneur, I say, okay, so tell me what you want.

• 51:59Speaker 01

  They're doing in the practical world, let's say they're doing 10,000 rand a month. I'm just going to take this to the extreme. Yeah. So I say, okay, you're doing 10,000 rand a month, no judgment. So where do you see yourself in five years' time? They're going, a billion rand. Okay, so you're going to go from 120,000 rand to a billion rand. Right. Now that's, to me, that sounds delusional. Right? Right? So then I say, without judgment, just explain me just the big steps. How are you going to get there in five years? How are you doing? And what are these big steps? Then they look, you see them back to thinking for a minute and then they go, okay, 100 million. Okay, 100 million.

• 52:45Speaker 01

  I said, okay, no judgment, now they've just dropped by after the power of 10. So no, no judgment. Let's, let's, how do you get to 100 million? You need 10 million. Okay. So we've gone from a billion to 10 million. And then you eventually get to a number. And then that number. Now, what's actually happened is when they're looking up at their thinking, I force them in that question, just tell me just in the big steps, how are you going to get there? Is that actually doing a path? Which is, let's call it a stretch path, but it's, I understand at some logical level that you go from here to there and then you do this and then I would do that and I would do that, et cetera.

• 53:29Speaker 01

  So the answer in is, remember I said I may, I can, and I said, this is how I can. Just doing those, those steps very quickly to say, this is, for me, it's a stretch, but I know how I'm going to do it. And that's the answer between delusion, to me, and practicality is that if you want the billion or you want the, whatever the number is or whatever the thing is, just post the high level steps that you know how you're going to get there. And we've got a wonderful example in Elon Musk who is talking about life on Mars. Okay? An interplanetary life with that we can, civilization that can live on, on multiple planets.

• 54:12Speaker 01

  If he says that, it sounds bizarre, delusional. But he's, I strongly believe he's worked out the big pieces that need the rocketry, the battery, the dish, the thing that, all these pieces that he's putting together are all in, in pursuit of that end goal or end target. Right? And, and so in his mind, if you said, you know, how are you going to do it? He'll say, we did this, then that, and that, and it's going to take 20 years. And even, even if you think about his political aspiration or interference or he's within the political realm in the American government,

• 54:57Speaker 01

  that I believe is also part of that, that story because he needs influence in order to do that. So he's gone and said, how do I get influence to get certain things passed? The way to unblock that is through, through influence in the government. So I need to go and do that to unlock that. He's worked the path out.

• 55:17Speaker 00

  Yeah.

• 55:17Speaker 01

  So that to me is in a long story, unfortunately, sorry for taking so long. But that's the relationship between delusion and, and reality and stretch. Stretch is just the steps.

• 55:30Speaker 00

  Yeah. And you also touched on a very important concept that when you're, when somebody is working on their vision and they're in their hat, if they're good operator, they will know all the steps and will do things that for the rest of the world might feel or seem illogical. But they are working from that state of the future into the present. And that's why it makes sense for them. But obviously you need to think from that, like you said, from the top of the mountain back here, not only one step at a time.

• 56:01Speaker 01

  Correct. And if you look at, even in my environment, I've got eight divisions. And, and all the divisions and even within the divisions, I'm doing exactly the same thing. Obviously not at the scale of Musk, not even close. But I know why I'm building that division. I know why I'm, I know that's the tenure. I know I've worked out that by the time that gets to the right size, that'll be in 10 years. Then that will come together with that. And I'm building out this competency in this thing and that'll merge to this vision. And these are the big pieces that I need to do. So if you asked me if I'm delusional, if you read my letter from the future, if it's, by the way, 117 pages.

• 56:45Speaker 01

  If I didn't explain it in 117 pages and all my ex go write their own letters from the future and we have to read mine. If they didn't read it, they wouldn't understand, they would think I was delusional. Because it's so bizarre, the five where we will be in five years' time. But because I've explained how the thigh bone is connected to the elbow bone and all that, because I've explained it, now it makes sense to them. So they know why I'm doing it. And that's, I share with them, but I don't share that with the market, obviously.

• 57:17Speaker 00

  Yes, because they will not have the full picture. But yeah, again, thank you so much, Alon, for sharing this. This is such an amazing conversation. And again, I have so many questions, but we'll never be able to go through it on this podcast. But the last two quick ones. A, parting advice to every entrepreneur who is listening. What's one, a couple of things, whatever you feel is important, they can start doing to decrease their chance or their odds of failing at whatever it is they're building. And the second, where people can connect with your work, learn more about RaceCorp or whatever work you're doing right now.

• 57:54Speaker 01

  Okay. Let's, in terms of the first question, I think I gave the, the five earlier, but maybe the, one thing I didn't mention here is find yourself a mentor. And in my opinion, a tough one. I think they're instrumental. So I think if you want to reduce failure, find the right mentor. And people ask how to find it, just ask. Many people are good mentors, just find the right mentor that resonates and is tough on you. If you've got a, a real kind of mentor, I don't think that's the right one. That's just my, my style. So find a tough one. And then in terms of the work that I do, I think, and I think the three areas are, let's call RaceCorp, which is raiscorp.com, R A I Z, raiscorp.com.

• 58:39Speaker 01

  Then Flowcode, which is what I'm wearing now. This is my new next 20, 30 year project, which is all around building strategy because I've understood the big correlation between understanding strategy and scale and the relationship between the two. So it's, it's now become the subset of my passion is to get entrepreneurs to understand strategy properly. And I've built, in my opinion, quite a powerful platform to help entrepreneurs build and think through strategy and then manage strategy. So that's Flowcode, flowcode.co.za. And then also I'm always looking for great entrepreneurs and that's on Partner Elite. That's where I invest, I've had about 25 investments.

• 59:20Speaker 01

  Also, in a strategy, it's not just random, it's all part of the big, big plan. And I've got the most incredible partners who've built some incredible businesses with me. And that's on partnerelites.co.za.

• 59:35Speaker 00

  Yeah. Thank you so much, yeah, for this interview, for sharing all your wisdom and not just here, but everywhere through your books, through all of the work that you do. Thank you so much, Alon. I'll link everything in the show notes. Listeners, please do check out the show notes and all the links. And connect with Alon personally from me on LinkedIn, sign up for all the newsletters. There is so much value in it that you can get on a consistent basis to set your mindset right and your strategy and your systems right to achieve more success and fail, less or fail smarter. So thank you so much, Alon. All the best luck with all of your projects. Yeah. Thank you so much for being here.

• 1:00:11Speaker 01

  Thank you. And thanks for the opportunity to spend time with you and with your listeners. Thank you.

• 1:00:17Speaker 00

  Thank you.