Hustling Makes it Happen

Sean and Don Bergsma are below-the-radar Durban entrepreneurs who built a fortune in telecommunications and are now reinvesting in the province that made them. They spoke to Greg Ardé.

The Bergsma brothers mean business. They look you straight in the eye and offer firm handshakes. For the last 20 years, they have quietly built a business empire and the story of their success is legend in small circles, though not widely known.

The Hillcrest siblings started out selling pay-as-you-go airtime using blue telephone handsets on the roadside. Today their Ignition Group is global and employs about 4 000 people, most of them in an uMhlanga campus that occupies a city block.

The understated Bergsma brothers landed in the limelight recently when it emerged that they had bought the the South African arm of the online classified giant Gumtree for an undisclosed sum.

While riots and floods has prompted many to pack for Perth, semigrate to Slaapstad or just run
for the hills, the Bergsmas are doing the opposite.

The Gumtree purchase from Norway-based Adevinta (US multi-national eBay is its major shareholder) is a huge boost for eThekwini.

Gumtree, established in 2005, is a potential rival to Takealot, the country’s biggest online retailer which did R13-billion turnover last year. Gumtree, a free classifieds platform, has a massive online presence but some credibility challenges. Ignition Group plans to change the Gumtree experience by introducing secure cashless payments and deliveries, transforming what some regard as a back alley market into a trusted online retailer.

The idea to buy Gumtree emerged at an Ignition conference and aims to fit many of the Ignition’s “pieces together” and improve an offering that a big group like eBay, headquartered in the US, was not best placed to do.

Ignition Group believes a home-grown entity can be way more responsive to the South African market. Ignition wants to prioritise product evolution and develop more features that consumers want.
Gumtree is the 12th most trafficked site in South Africa. After the big search engines and social media sites like Google and Facebook, the big traffic sites are Takealot and Gumtree.

Sean describes Gumtree’s site as a marketplace for a “lot of engagement”.

“There are a lot of eyeballs on the site,” Don chimes in.

The brothers are a sharp tag team. Each has the other’s back. They are a livewire duo aged 42 and 38. They built Ignition from scratch, using a loan from their father to grow it. Their dad worked at Conlog and their mother was a travel agent. They attended Hillcrest High School. While Sean was living at home and studying for a commerce degree through Unisa, he was introduced to a telecommunications business by his uncle. He realised the profit potential immediately and Don joined him soon thereafter. Ignition’s spectacular growth has been variously attributed to being at the forefront of the burgeoning telecommunications sector, a prodigious appetite for work, and harnessing talent.

In 20 years, Ignition has built a group of interwoven businesses offering an array of services. Their call centres service giants like Vodacom. Their financial services firm offers a suite of insurance products. They did R1-billion turnover selling DStv satellite services to 250 000 customers in remote areas over eight years by financing the set-top boxes.

Ignition Group was one of the first companies in South Africa to provide mobile virtual network operations to clients like Standard Bank and Mr Price. A virtual network doesn’t own cellphone network infrastructure. Ignition has agreements with networks like Cell C, Vodacom and MTN. It secured wholesale rates through bulk access and tailors products for the bank and the retailer to service customers.
Ignition Group uses data science to bring customers relevant messages, using multiple audience segments, and deepening engagements across multiple touchpoints.

This lofty corporate speak is a far cry from when the brothers – then barely out of their teens and not shy of a caper – tried to sell a truckload of fresh sardines for profit. Though quick off the mark the venture was far from a runaway success, but it does, in part represent their ethos: the fast eat the slow, not the big eat the small.

Says Sean: “Sometimes we miss those days of hustling on the ground, now that we are steering the big ship. We used to move much faster. Our challenge is to try to get all our people to be more alive to the opportunities around us, to think and move quicker.”

Having a sense of the hustle will be the key to making a success of Gumtree. The brothers sparkle talking about it. Analysts say the Bergsma purchase is an inspired play in an area ripe for growth. Ignition’s challenge is to make it “a lot easier” to transact on Gumtree.

The platform’s potential is immense. Every month on average 600 000 free adverts are posted on the site. Gumtree is utilised by 180 000 small businesses to trade. Most of them want to participate in e-commerce but either can’t afford to build their own websites or even if they could, don’t have website traffic anywhere near as busy Takealot, which the Bergsmas credit with having done “an exceptional job in enabling e-commerce to happen in South Africa”.

The challenge for merchants using market platforms like Takealot is the cost of holding stock, a painpoint Ignition wants to eliminate on Gumtree by facilitating the quick delivery of goods so stock doesn’t have to be held or handled by the big online retailer at a cost. “There are already a lot of people coming online to buy and sell, new and used. We believe this is a very exciting time to offer a platform that is relevant to South Africa,” Don says.

The ability to plug in a chunk of Ignition’s existing IT and business skills into Gumtree is appealing. Ignition’s ecosystem can help Gumtree merchants and customers experience better ways of buying and selling.
“We’ve always operated in the consumer world,” says Sean.

“In the last five years we’ve ventured into the enterprise world and the business-to-business world of providing services to large corporates. Everyone talks about the SME (small medium enterprise) world, but it is difficult to find a model that services that. Gumtree offers that model. There is a huge quantum of trade in that informal sector and few people are looking at it through the eyes of informal traders. Most of them want to be in the e-commerce space but there are all these limitations. Gumtree has thousands of self-made merchants involved in amazing enterprises, who are incredible successes that aren’t really recognised or helped. We want to help these guys. This market is buoyant and wide, it is everything from guys selling second-hand beds to clothes to farm equipment.

“We have the technology, a whole platform from insurance products to financial services and a host of other tools. We have secure, reliable and trusted payment services that bring security and confidence to that marketplace. This is a super powerful sector with volume, which is why we have negotiated the rights to Africa. We’re very excited by the opportunities.”

The Bergsma brothers are energised by opportunity. While people might at times feel overwhelmed by negativity, many KZN entrepreneurs are profitable and positive. This sentiment is expressed in the Gumtree purchase and the Bergsma’s interests in property (see accompanying story on Westown).

Says Sean: “If there is some hope you can find in South Africa it is the best place in the world to be. It is tough, but it is tough everywhere. We are forward-focused. People draw on hope to feel positive, to be inspired and get direction.”