Episode 18: Intellectual property and entrepreneurship

Synopsis

Summit TV speaks to serial entrepreneur Pierre van der Hoven about his involvement in exciting start-ups ranging from eTV to YFM and a new showcase to show the world the positive face of Africa.

Transcript

Summit TV speaks to serial entrepreneur Pierre van der Hoven about his involvement in exciting start-ups ranging from eTV to YFM and a new showcase to show the world the positive face of Africa.

Stephan Lamprecht: Welcome to another edition of the Intellectual Property show. Pierre van der Hoven is what’s known as a “serial entrepreneur” having been involved in start-ups ranging from youth radio broadcasting to the advertising screens located at airports, gyms and banks around the country. Pierre, how did it all start?

Pierre van der Hoven: It started at the SABC actually - I worked there for a couple of years and met some very interesting people at a very interesting time when the Government of National Unity took over the SABC. Then some licences were available - we had worked on strategy within the organisation, and when I left some guys came to me and said “let’s apply for a TV licence” and that became eTV. They said “let’s apply for a radio licence” and that became YFM. After YFM I did Three Blind Mice Communications (TBM) which was a digital signage business. Now I’m back in television with Southern Africa Direct.

Stephan Lamprecht: Tell us a little more about what that is all about?

Pierre van der Hoven: Southern Africa Direct is a global marketing company - what we are trying to do is give the world the other story about Africa. There is so much negative press and negative input about Africa - we run a 24 hour dedicated TV channel currently in the UK on Sky, so about 11 million households can watch our channel. There’s no news or current affairs - it’s about telling the African story and marketing Southern Africa the destination as 25 countries.

Stephan Lamprecht: That is all done here from Johannesburg?

Pierre van der Hoven: Johannesburg and we have an office in London…

Stephan Lamprecht: That’s quite impressive. From an intellectual property point of view what has been the role of creating unique brands and creating and using unique technology specifically with regards to TBM? What’s the role of IP in your growth experiences?

Pierre van der Hoven: IP has been absolutely crucial on the side of branding. On the other side most of the businesses I’ve done have really been innovative business models - but it’s been very difficult to patent any of the technology. It’s often been a combination of technology - TBM was a world first and we did things that nobody had ever done, but it was almost a process and an idea. We did it in a different way. The other side of IP you mention is branding - and that’s absolutely crucial. YFM is a lifestyle brand - we were a radio station, but the brand meant something to the audience and then it became a magazine and a whole lot of different outlets for the same brand. SA Direct is the same story - and it’s absolutely crucial in that area of IP to understand what branding is, and then to take legal steps to protect your brand or trademark as opposed to patents. I don’t have much experience in patents…

Stephan Lamprecht: Where did you pick up your experience? How did you learn all these things?

Pierre van der Hoven: I’ve had the benefit of a formal education - I’m a chartered accountant (CA) with an MBA so that put me in a better position. But the reality is you’ve got to understand branding - you’ve got to understand that mark means something to your audience, and that’s the value in the business - so I as a person fundamentally believe in the concept of branding. In fact one of the greatest achievements in my entire business career was the creation of the YFM brand - because today it’s still an iconic brand for its audience.

Stephan Lamprecht: In terms of protecting the brand and structuring the brand and leveraging the brand - that’s what’s given it life…

Pierre van der Hoven: I don’t think branding is about lawyers - but you had better get the legal side right. In fact I spent the morning with a trademark attorney because we are a global business and we’ve got a challenge - we’ve got to register our brand, our trademark in every country in the world - which is quite expensive. So you have to decide which categories and which countries do you do first, and what are the risks? So the legal side of it is absolutely crucial. The branding side is a more intuitive thing - you’ve got to understand what your brand means.

Stephan Lamprecht: You mentioned the cost of trademarks and so forth - how did you go about funding your businesses? How did you go about funding the involvement of outside help in developing the businesses?

Pierre van der Hoven: I think as an entrepreneur that’s the biggest challenge especially in South Africa. I believe in the entrepreneurial talent in this country but I also believe that we do not have a venture capital infrastructure - we do not support start-ups. There are people that will totally disagree with me - and be offended by what I’ve just said - but in my experience we do not support start-ups. Raising capital has probably been the most difficult challenge in my career…

Stephan Lamprecht: Do you think there is enough awareness of success stories like yours? Just in terms of the couple of brands that you mentioned - those are real success stories. Often times when you have this venture capital discussion - I know we’ve had discussions a few times as well - the question is from the funder’s point of view but is there is enough deal flow? Do we have enough people doing these kinds of things?

Pierre van der Hoven: I personally think there is a lot of money around - there is huge money in venture capital - but there is no money in private equity depending on what your definition is. Let’s just make it simple - there is a lot of money for existing businesses but there is no money for new businesses…

Stephan Lamprecht: That’s the venture capital side.

Pierre van der Hoven: Exactly. That’s the part where I think we pay lip service to growing the SMME sector - which again I believe is the future of the region and the nation. We can have these big corporates but we need to grow at the bottom level - they are the people who generate jobs, income, wealth - and we don’t support that sector enough. I know the government is trying to do stuff - but I believe it is a challenge. Raising capital for a start-up business is a huge challenge, and raising capital for a media service business is a much bigger challenge. The accountants think “brick and mortar and plant” and “what is your asset base?” I have a business and we have no assets: “That doesn’t sound right...”

Stephan Lamprecht: I know a lot of the funders that fund innovation in South Africa from a public point of view specifically exclude service type innovation - so I fully agree with you that’s a big gap - and if you think about South Africa in terms of where our strengths lie a lot of that is in service innovation, and that’s where we spend a lot of our effort.

Pierre van der Hoven: It’s not only South Africa it’s the future of the globe. A developed economy is actually measured in the percentage of GDP that’s in the service economy. The future is the internet - you don’t need a building for the internet you need a laptop and a connection…

Stephan Lamprecht: I fully agree - I think that is one area where we are missing the ball. We talk about this concept of a knowledge economy but a knowledge economy is services…

Pierre van der Hoven: Exactly.

Stephan Lamprecht: It’s not so much on the hard-core technologies - you need those technologies, and of course you need to cultivate the skills around them - but you cannot neglect the services side. We actually should focus on that…

Pierre van der Hoven: I think in the bigger scheme of things if we try and challenge China in manufacturing we’re not going to win - what we have to do is take our own strengths which is often intellectual and develop businesses out of that which again is service industry.

Stephan Lamprecht: Coming back to the issue of intellectual property given the lack of capital and so on what advice would you give to a start-up entrepreneur if somebody wants to create a new business? How should they go about it?

Pierre van der Hoven: As far as IP is concerned don’t forget it - it’s absolutely crucial in an environment of scare resources where you’ve only got so much money where do you allocate it? It’s easily to say “I’ll register the trademark or the brand or the patent later…” Wrong. We spoke about service industries - the basis of service industries is often an asset that’s not a building. What is it? It’s IP. So you have to take IP seriously and you have to consult a professional - there are some great IP companies in South Africa - and find the money somehow. Because without that you don’t have a base for your business.