Zero to millions in three years...
This article first appeared in Business Report.
Cape Town - Cape Town entrepreneurs Wayne Gosling and Daniel Guasco, joint chief executives of online company Groupon South Africa, started their business in a garage and used some inventive e-mail techniques to grab the attention of the big boss of Groupon USA.
Gosling, 37, and Guasco, 36, jointly run the firm and have turned it into a multimillion-rand operation in just three years.
Gosling started his first business designing websites and selling hardware while at university.
This ignited his passion for entrepreneurship and e-commerce opportunities.
The pair studied and met at the UCT Business School.
They completed their MBAs in 2008.
Gosling said he and Guasco went their separate ways in 2009, worked for consulting companies but were frustrated.
“We were entrepreneurs and started discussions around making plans to get out. In 2010, we saw that Groupon USA had launched. In two or three months it had made a billion dollars. It was the fastest growing company.”
The pair saw this as a potential business opportunity in South Africa as there was nothing similar here.
“We put our feelers out and through Dan’s Network (a group-buy technology firm), a guy named Emilian Popa gave us the licence to start the business. The platform needed a name which we called Twangoo (meaning group buy in Chinese).”
They officially launched Twangoo in July 2010, from a garage.
They quickly saw how the mechanism of group buying worked and the firm went from strength to strength and reached weekly double-digit growth in a matter of weeks.
Gosling said at that stage they made a concerted effort to reach out to investors and contacted local media players, local and foreign venture capital firms and also Groupon USA.
Guasco attempted every possible variation of the e-mail address of Andrew Mason, Groupon’s global chief executive.
“We tried every variation of that to show our exponential growth. He finally replied after about three or four weeks. He said: ‘Fantastic guys, we like what you are doing, someone from our firm will get in touch with you.’ And they did.”
He said at the time they were still reaching out to venture and media companies, and 12 people offered to buy and invest into Twangoo.
“However, the Groupon offer was just too good to turn down. They gave us a term sheet and said we must meet them in Berlin (Germany) the following day. I couldn’t get a visa so Daniel, who has an Italian passport, flew there and within 20 minutes the deal was signed and agreed.”
Gosling said that shortly after launching, the firm grew from an initial staff of four to 200 and had to find a larger office.
They found an office in Loop Street before moving to Newspaper House in St George’s Mall in 2012.
“We quickly started competing with Kalahari.com (which) was already established. Kalahari (was) about 12 to 13 years old at the time. They (Kalahari) reached their millionth customer in 2011. We got our millionth customer in six months.”
Guasco said selling services such as vouchers for restaurants had not been done before in South Africa when they started the firm.
“That’s how we broke into the market. Naturally people saw great value in the service.
“Typically, not many people have bought online. The reason… is that broadband connectivity is very expensive. South Africa is still a very costly place to connect online.”
As the cost of broadband became less expensive, there was a massive opportunity for the online industry.
“It is good that a lot of these technologies are happening in the Western Cape,” Gausco said.
Gosling said the company had no plans to grow into the rest of Africa.
It would rather concentrate on growing in South Africa and had already set up an office in Joburg.
“We... will expand our service offering. We wish to expand by offering our customers a better mobile experience. For our merchants there will be a variety of new technology available such as credit card payment systems, as well as point-of-sale systems.” - Cape Argus