South Africa is facing a decline in its business leadership and economic dynamism due to a combination of factors including overreach, regulatory burdens, and a shift from entrepreneurial "titans" to risk-averse "spreadsheet managers," hindering its potential for growth and prosperity.
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Well, the Biz News tribe was treated to
a fabulous piece. David Shapiro is well
known as a broadcaster. And I I say
that, Dave, because you and I worked
together, sure, for 15 years on national
radio. every night Monday to Friday.
There you were coming into the studio uh
chatting away in giving us your insights
into what's been going on in the markets
on that day and well the wisdom appears
to have just grown and grown but I think
a lot of people don't know the other
side to you. You're a you're a wonderful
artist cartoonist. I suppose if you had
your life over, you might well have been
Zapiro, who's also got a surname of
Shapiro, so it seems to work in the
family. Um, but the other thing is that
you write beautifully. Your piece that
you wrote for business news this week,
man, it was out of the top drawer. And I
think that if you hadn't been a stock
broker, South Africa's favorite stock
broker, you would have been South
Africa's favorite columnist. That's for
sure. So, we look forward to those who
haven't read it to reading it and to
many more of that. But I thought, here's
a great way to start the year. Let's tap
into David's wisdom. Let's find out a
little bit more about why he was
bemoning the departure of South Africa's
business titans. And really, is it just
nostalgia or is there something deeper
at foot here that we need to uncover?
And I think by the end of this
conversation, I've got no doubt that our
uh community will be well pretty sure
that you have got a very very strong
argument. I don't know how we fix it and
maybe you've got some thoughts of that
too. But let's start at the beginning.
Uh it's the titans versus the
spreadsheet managers. Those who are
entrepreneurs and those who are
professional managers.
>> You know, you know how it started. The
last conversation we had, you asked me
that question. You said to me, "Who are
the people we look up to? Who are the
businessmen we look up to?" And I
thought about it. I had no quick answer.
And I said, "Alec, there aren't any." In
other words, we don't have the kind of
businessmen or women that we used to
have in the past. Nowhere near those
kind of people anymore. And it bothered
me. And I had a lot of time over. I I
didn't go away. I went to the game
reserve for a few days and I came back
and I started to mle over what you had
asked me and go back in my past uh about
the time that I'd spent on the market
and the people that uh you know who used
to influence um the direction of the
economy and I think that's important and
there is no answer I you know I I I'm
not a a great academic in that way and I
had to try think through it and I came
with three paths I The first was um obviously
obviously
overreach. We had some great leaders but
we soon as um exchange controls opened a
lot of companies just went overseas
without really thinking about it caused
a lot of damage. The other without doubt
is uh the transformation 1994 onwards be
and so on what that's done to uh to
business people and the third is because
of that as a result of all of that we're
not developing anything we've got no
technology and and so you know I try to
think about it Alec believe me when I
write an article I go through every word
I go through constructing I can't sit
down like you. I've got a son Jonathan
who's with a financial review. He's here
at the moment. He can just sit down and
you know I've read your pieces. They
just flow beautifully. Now with me it's
a labor. It's like I have to construct
these. But it does give you the chance
to to think very very deeply about where
we are. So I think I have no doubt that
if we had the kind of business people
that we had in the past uh we'd have a
different economy if we had that energy
if we had those foresights the courage
to do what they did and you know we can
go through some of them because I I can
go back a lot further than the ones that
I mentioned in the article just how they
shaped it and Alec you if you have a a
um a seminar and then you think about uh
those seminars that we used to have the
financial male whoever they were they
were packed with some really strong
voices um and and I think we miss those
people you know they gave us direction
they gave us confidence so yeah it's um
we need to build those people up we need
to build up business people who are
prepared to take risk who are prepared
to forge this economy you know find gaps
here forge it to go further you know instead
instead
who the kind of managers we have now
they're confident very very competent
but uh not willing to take big risks not
willing to move out of their comfort zones
zones
>> you mentioned Brian Joffy we both know
him well you uh you recall those annual
uh gettogethers that he would have uh
where they just grew and grew and grew
as the bidvest empire got bigger and
bigger uh soul kernner where's the soul
kernner today. Uh, Raymond, where's the
Raymanakman? Sure, the guys at at
Shopright are efficient, but you don't
get a feeling. You don't get a sense
when you walk into a checker store that
the people who work there are committed.
Boy, they're champions.
I don't I don't know if anybody loves
Checkers. They go to Checkers because,
well, it's cheap. Whereas Akaman was
fighting a good fight. He was fighting
the Apartate government. He was fighting
for the consumer, bringing on cheaper
petrol and all the time good business
because people really love that brand.
Of course, Sean Summers got a hell of a
job to to get it right. But maybe that's
the that's where we start. David, where
is where's the Yani Muton? Where's the
GT Ferrer? Where's the Brian Joffy? And
and and why have they why have why have
they gone off perhaps overseas like Elon
Musk and some others? I think one of the
big problems are our industrial
policies. Um we if you want to do
anything in this country, they and I
said it last time when we spoke, I said
they give you a rule book, you know,
they don't they don't open the doors for
you. They don't roll out the red carpet.
And uh and and and I think people misunderstand
misunderstand
what a new business can do, you know. Uh
and and I might have said this before,
when you sank a shaft, you created a
whole economic ecosystem. There was a
whole ecosystem around that shaft. The
people who worked there got money spent
and so on. And that's the same with any
kind of business that we start today. A
new business uh brings in uh energy but
it also creates an ecosystem around it.
A factory, you put a factory there, you
know, everybody wants to work in it.
Those who get worked in it get more
money. They start to spend it and so you
get this multiplier effect. We don't do
that anymore because we can't build
factories. Why? Because when you want to
build a factory, you go to government
and government tells you how you're
going to build it, where you're going to
build it, who you're going to employ,
who your shareholders. You can't do that
anymore. And when you study the success
of our former business leaders, um it
was the energy of a single person I
think that really created these
businesses or a single group of people.
You know, I go back, Alec, to uh Tiger
Oats. I used to do the audit audit at
Tiger Oats, you know, the um the Frankle
family, Jacob Frankle, then Rudy
Frankle, you know. Um you go to these
big opposition, the Blooms of Premier
Milling. This was a bunfight, literally,
figuratively and literally a bunfight,
you know. um of uh who dominated uh uh
those industries, the maze meal industry
and uh and and they were they were huge
huge people that when they went to a
seminar, you know, or if you went to an
event, when they were there, they had a
presence around them that you wanted to
rub off onto you. And I think um if I
can trans if I could fast forward it to
where America is to try to give people
an example of it. You know, I was
listening to Jensen Wang yesterday
talking with the Seaman's boss. And
here's a man that's he's forging where
America's going. He's building trips
that are going to decide the future and
passage of the American economy.
Followed with um well from Gates, you
know, you've got Sachin Adella today.
You've got all those leaders Zuckerberg
whether you like him or not they're all
big big names Jeff Bezos and so they've
created the American economy you know
and the environment has allowed them to
do that
>> Elon Musk hate him whether you like he's
a in his own way he's a genius but
everybody knows who he is and what he
does and he doesn't stop and I think
that's the difference we can there's
there's no reason why small economies
can't produce something very similar and
look at the number of people that we
have that we have built up who have
immigrated to the US and have become
including must ruda you know people like
that who who really have made big big
names for themselves here
>> even in the middle you remember the guys
who started Monster which is one of the
big energy drinks companies that
>> I I remember um
>> yeah here in they were here in Joberg.
They were operating in Jober. Well, Ivan
Glazenberg from Glenor and so on. Dave,
has the JS lost its soul though. Let's
let's look within the JS and is this the
reason that it kind of had a had a
different vibe uh years ago because you
had these giants when Tony Bloom had his
annual results. He would take people to
a restaurant that had been undiscovered.
be something completely new in the south
of Joberg or uh in a I remember he he he
has it he had it in a in an old mole
factory or something like that. It was
different. It was it was creative
thinking. It's almost like our guys
today well a they don't have those
gettogethers for their financial
results. It's all kind of just
distributed online. But secondly, it's
it's almost like they're shrinking
violets, these CEOs with the ex
exception of a Neil Froman and a few like
like
>> that's yeah there are those exceptions
but that's I just mentioned in the
article and I thought about it um the
former business leaders would take on
government. Uh they took on the apartate
government. They weren't scared to share
their views. Um sometimes maybe they
they restrained it their criticism a
little bit. uh today we don't do that.
We tiptoe around as I said we tiptoe
around government you know we don't we
don't challenge them we don't say
anything just in case you know the banks
have you ever heard any of the banks
moan about government no they don't say
anything why because uh there's a threat
that they might lose government accounts
and so on so everybody nobody nobody
challenges anybody and we just allow uh
the rules and regulations to continue
there no big voices who are going to go
out there and say, you know, Mr.
Ramiposa, we can't continue like this.
We can't if you if you want to build a
nation, uh, we've got to change
direction. We can't we've got to
encourage people to come here and not
throw rule books at and, uh, we've got
to create an environment that allows
them to flourish. I don't believe, you
know, I South Africa is an incredible
country. It's an incredible country of
opportunity. Alec, where you are in
Hermanis when you travel around the
coast when you see and and you would go
to Cape Town today and just see flurry,
you know, it's it's a flourishing with
tourists and that. So, it's it's a
country people want to succeed. Uh come
up to and it's just one big pothole
because we've allowed that to happen.
But there's there's certainly
opportunity here. You know, I don't
dismiss it. And that's why when I
criticize an attack, it's not that I'm
I'm I'm saying if we don't recognize
what's wrong, we're not going to be able
to fix it. You know,
>> Dave, you got to you describe
>> you describe the JSC as being having
moved from being a stage for champions
to a battleground for fighters. That's a
I love that analogy. Uh it's What did
you though mean by that? And and maybe
give us some examples. Well, it's
companies that are just fighting for
survival. That's what they're doing.
They're just managing the situation. We
got no electricity. Okay, we'll put up
uh we'll put up solar. We don't complain
and moan and kick out government. We'll
just get along with it. And that's so
you survive under the circum no water.
Okay, we'll put tanks in. and we carry
on along that kind of way just uh
adjusting to the circumstances rather
than saying you know starting a
revolution and saying listen we've got
to change this we can't do this I mean
uh you know I run every day here and
each day I find a a new dam in job you
know which is a big pothole or crater
that is just sunk there full of rain
water and what do we do we just I run
around it you know I don't I don't go
and say hold on a sec our roads need uh
u rebuilding. You know, we've got to do
this or we've got to create an
environment that allows us to have it.
You can't let the infrastructure just
evaporate or just just be destroyed.
Alec, I started in 2007 2008 and I
remember and this is this is I I I'd
come back from Australia and I was doing
my normal runs around the country and I
started to see the institutions that
make a company deteriorate. the law
courts in Joberg which were beautiful
law courts were just being neglected. Uh
the schools that you know the primary
schools around here that were always
beautifully kept just being neglected.
You started to see you know the um
street lights robots all of those kind
of things and when that starts to
deteriorate and decay then you haven't
got the infrastructure. You need that
infrastructure in order to build an
economy. And I started to write
articles, you know, drawing attention
and my own community, you know, and I'm
talking about the Northern Suburbs
community. They used to attack me. They
used to go at me all the time saying,
"Don't write negative articles, you
know, we need clients." I said, "Hold on
a sec. I'm not I said I'm doing this
because it needs to be addressed, not
because I want to attack government. I'm
saying you've got to recognize what's
needed to be done to to to improve the
economy and create the environment or
platform that that on which we can grow.
And I promise you, I I I went through a
lot of issues and I've got a lot of
stories about presentations that I made
where, you know, they throw rotten
apples at me and bananas and get out of
here, you know, like and and I was just
trying to say, hold on a sec, you know,
know what
know how economies grow. Know what you
need. And if we if we just create that
environment and I'm saying fix the
roads, fix the conditions, make schools
safe, make everything, people will start
to spend, they'll start to invest in
this economy rather than taking their
money out.
>> I'm watching with a lot of interest
what's going on in Venezuela right now
because there are some parallels with
South Africa on the basis that Venezuela
was a flourishing country, the richest
country in South America. They were were
delivering three and a half million
barrels of oil a day. That's down to
800,000. The infrastructure was
pristine, lots of reinvestment. It's now
collapsing and needs 100 billion. I'm
just on the oil side uh to get it back
to just normality. And Donald Trump,
bless him, has decided that the way to
change all of this is to go into
Venezuela, whip out the president, and
to basically do what the socialists hate
and are so petrified about this thing
called regime change. But the question
has to be why about the what about the
Venezuelan people? And you think, well,
if the Venezuelan people could see this
and 8 million of them decided, ah, we're
just buggering off. We're just leaving.
and leave leave the leave the rest of
them to carry on with it. And I those
are the parallels that I'm seeing in
South Africa. We've got we've got an
economy which is just on the slide.
You've been writing about it for 15 18
nearly 20 years uh highlighting these
things very politely, very
diplomatically, very kindly. But when
you look around your social group, you
look around people who could make a
difference. Well, most of them have
said, "What the heck? let's just pack
our bags and and go and fight and uh go
and fight a battle somewhere else where
it's just so much easier. What is it
going to take for the South African, the
average South African to say, "Hang on a
minute. This is not what we signed up
for. This is not what we deserve. We
didn't put these guys in power to make
us poorer, to give us a Nicholas Maduro
experience. We want to un un uh unleash
the potential of this incredible place
that we were privileged enough to be
living in.
>> I think you literally start block by
block. You know, you fix a block and
keep going on. You fix a school, you fix
a hospital. Those are the issues that
keep people in a country. When they feel
safe and when they feel safe in their
little houses with gardens that they can
walk out into the road and not be
attacked, you know, when they can go
down to the shops and uh again, you
know, not face crime or not uh those
kind of issues will keep people here and
it's we that those are the simple
issues. People do want to live in South
Africa. I mean um I I bumped into a very
successful business person. Now I'm not
it's not fair for me to mention his name
and he said this is the greatest country
on the earth. There's nothing well he's
very rich you know and he lives in a
very nice house. He can travel. He can
send his kids to whatever schools about
it. But he sees a country like he wants
it to be not like it really is. We've
got to see it how it really is at the
moment in that. And and my I I don't
think it's all that difficult. It's not
about having white papers and green
papers and all these things. It's just
about fixing what we already have, you
know, fixing the roads. You you said we
had the most incredible roads, highways,
we had the best hospitals in the world.
Every doctor will tell you how
foreigners wanted to come to Baraguana
because it was such a an incredible way
to train yourself, to get training, to
understand. Today, it's nowhere near
like, you know, like that. all our
doctors go and um it's it's so to come
down to the bottom line look at the life
that you're leading down in in her manus
that's you're you're happy there you're
wonderful you will invest in her manus
we've got to replicate that around the
country people are going to these habits
where they feel comfortable we've got to
make Jober I love Jober I'm not a
Kontonian you know I'm never going to be
a Capeonian And I loved what Joberg
represented, you know. I loved the gold
mines. I loved to fly over the the the
dumps, you know. That was Joberg. I had
been brought up in the history of crown
mines and I knew every mine that had
ever been developed here. That was my
jobber. And I love the stock exchange
because it it it pumped. You know, we
had gold mines, we had platinum mines,
coal mines, you name it. This was a
vibrant, energetic economy. As a result
of that, we had all the other businesses
that came, you know, the industrial side
that had to service all of these. And
that's the economy, the South African
economy that I grew up with and knew.
And I look at it today and we're nowhere
near that. And that's where my sadness
comes. But it doesn't mean you can't get
there. It and and I'm not saying that
because just using false words or easy
words, you know, I knew what created
that that's not difficult to create. So
let's let's go back to what caused all
of this maybe the hubris era because
post 1994 South African companies those
executives that we've been applauding
they thought they're going to go and
take on the world and they're going to
conquer the world. Maybe maybe some of
them thought oh there's a dangerous
place it's it's going to change. We got
a liberation organization coming in. Uh
the the future's not going to be that
great. Oh we need to diversify rapidly
outside of South Africa. Now we can.
Anyway, whatever caused it, we've had
disasters. Discovery going to the US,
they drop a billion rand back in those
days. Wworth goes to Australia. I don't
know what they dropped, but David Jones
was an unmititigated disaster. Uh Sassel
goes into the United States, biggest
foreign investor in the United States,
builds a plant in Louisiana, eventually
has to sell half of it just to keep the
thing going. And it's still now it's
lumbered with huge amounts of debt.
Another disaster. Old mutual SAB Miller
offshoring themselves. Dimension data.
It's just a litany of disasters of South
African businesses. So on the one hand
we're saying where are these
entrepreneurs? Where are these titans?
But on the other hand post 1994 they did
not exactly do us proud.
>> No. And I think there was a lot of
hudris. There was a lot of arrogance and
self-belief and the things that they had
it it's like running a marathon you know
if you run five marathons or six
marathons you say by the sick n I don't
have to train and I promise you you run
that six marathon without doing the same
training you feel it you fall over and
you know finished and I think they drop
the ball you know where the blame also
lies and I every time there's a deal a
company does a deal I ask the question
did you initiate the deal. You, Mr.
Manager, Mr. CEO, ordered some fancy
investment banker come from London in
his pinstriped suit with his Oxford
accent and uh kind of overwhelm you and
you feel humiliate, not humiliated, you
know, you feel a little insecure about
around him because he's got this snotty
accent and so on and you think that he's
from the aristocracy and you go and do
deals and and that's the biggest beware
of investment bankers. Mhm. They're
after making money. That's it. You know,
when you've when you've gone and done
your research there and you as a very
good operator here have identified
something in some foreign market that
you've believe that you could run
properly, doing the same kind of
investigations that you knew, you know,
that instinct that you had, go and do
the deal, then go and investigate. Alec,
I go to America often. I've got a
daughter in Boston. and I've been going
there for over 20 years and I spend a
lot of time there. I would never
think of opening a business in the
United States. You getting into the ring
with rock violence, not with those
poodles, you know, not with a cocker spaniel.
spaniel.
You you've got to be really really tough
to take on the US. They work. I said to
my son-in-law once cuz uh he was working
for an investment bank. I said, "Brett,
for God's sake, you know, you're working
so hard. It was holidays." He says, "I
don't work hard." He says, "My clients
work hard." In other words, I've got to
work at that pace. He can't help it. And
believe me, Alec, they that's a that's
an environment that you don't want to
take on, you know. And so, if you're
going to go offshore, if you're going to
do these things, just use the same kind
of instincts that you did here to build
up your businesses. Don't don't just sit
at a boardroom and say, "Well, it's not
my money. It's shareholders money. So
what? I'll lose reputation. They'll lose
money." So I I think I I still very very
weary of a lot of deals that are being
done. You know, we've got the Mr. Price
deal now at the moment. You want to
know, listen,
who initiated this? Did you pick out
that company or or did you have some
fancy, you know, US bank, I mean, and a
global banker coming out and say, "We've
got a big deal for you." very important.
>> The problem Yeah. The problem with those
those uh helpers and super helpers as
Warren Buffett called them is that when
you put them on the spot
uh they they seem to be expert in
somehow weedling out of it. I I went
through a billion rand deal that I was
quite involved in. I wasn't involved in
doing it. I was involved in it when it
happened afterwards. And I remember
these investment bankers from Dubai and
I really gave them a gave them gears.
They they brazenly lied about the
projections and the actual numbers that
they put on the table were David. They
were pure fiction, but they' got their
they'd got their money. They put their
their fees in the bank. Their client had
been paid and the buyer was ended ended
up with with the baby. uh it was a South
African deal. So it's not a it's not a
uh can just imagine how much worse it
would be in an international deal. But
that one that you're talking about now
in Mr. Price's case in Germany, it looks
crazy. The the the the market has given
them such a big thumbs down. What would
turn that around for you? What would
make it a something that you'd even give
a cautious uh vote of confidence to to
the Mr. Price team?
>> Not at all. I I I just don't know enough
about it to uh to endorse it. I I
understand that um they're running out
of room in South Africa. It's becoming
very competitive. As I say, we're going
down and down. you know, looking at the
low end of the market, everybody's going
down uh simply because the at the top
end of the market, there's no growth.
So, they've decided to go overseas
again. And I'm very very dubious
um you know about whether this is
successful. You've got to know those
businesses well. You've got to have
followed them for years. You know, it's
one of the problems and I say this to a
lot of young people as well that even,
you know, work for us, especially with
AI, especially with the with with the
technology that we're seeing at the
moment. Everybody every day there's a
new company coming up. And I say, "Hold
on a sec." You know, it's like it's like
going on a date. You go on a date and
you have a lovely time with a a very
attractive lady or partner, whatever it
is, and you don't go the next morning
and and uh propose. you know, you got to
learn about this person. You got to
learn the good times, the bad times. You
got to follow that. You know, you've got
to allow the relationship develop.
That's why I'm saying when you buy
companies, when you start to invest
other people's money, just and I say
other people's money, Mr. Price, if they
want to invest their own money, they can
do what they like. When they've got
shareholders money, pensioners money um
under their control or responsible for,
they got to be very very careful. So
they've got to know that company not
just what they've seen on fact or
Bloomberg's you know tracing earnings
going up and so on. You must have
followed that company month by month day
by day or whatever it is quarter by
quarter and only when you understand
that then you can make those kind of
decisions say look I like this business.
We don't do that, Alec. We're so fast.
We've got so much technology at our
disposal that we think that we know
everything. You know, we construct
charts and spreadsheets and
there's a lot more to a business. Le
let's move on to another area now that
you did tap into in your piece and
that's about the compliance officer trap,
trap,
policy versus prosperity. You know the
days of Harry Oppenheimer standing up
fighting with government saying I'm
going to invest in this mine even though
I know it's a 30 to 50y year venture
because I do believe that eventually
common sense will prevail and then the
this idiotic government will have to
comply with what happens in the rest of
the world. We don't seem to be having
that today. There's no there's no Harry
Oppenheimer um who's saying I know the
ANC are on the wrong track but common
sense will prevail. Why is that? And why
is it that businesses or executives have
just succumbed to this whole compliance
uh tragedy which which they they just
have to be have to be subservient to.
>> They've given up. Yeah, they've given
up. I think the the regulation has just
uh just overwhelmed them that they just
haven't got the energy to go through it.
Alec, start a bank,
you know, just or even a broking firm or
an investment, anything that just
understand what you have to go through
on a dayto-day basis, you know, uh it's
it's it's it just wears you down that
people eventually say, you know what,
I'm out of here. And I think in the, you
know, even if I, if you came to me and
say, David, you've known me for a long
time. I want to open up an account at uh
some Swiss bank or something like this.
In the old days, if you phone me up on
the floor, I'd say, you say, David, I
want to buy a 100 home. I say, okay, I
I'll quickly fill out a form. We get
account open for you, and boom, I'd buy
the 100 because I know you. I know you
and I know that you're going to honor
your obligation today. By the time we've
got that account open, it could be two,
three weeks by which time you say, "Nah,
I don't really want to buy them
anymore." And and and I'm just giving
you a very small example of of what we
go through. I can't tell you how many
compliance offices a business like ours
has as opposed to um where we are, you
know, as opposed to those front-end
people who are developing the business.
And uh so uh we've been worn out and
then add the complexity of be to South
African companies you know constantly
looking at what the what the level of
your staff is who's your who's your head
of research who's head of the trading
you know are they the right color or the
right denominator blah blah. So
eventually there's so many hoops that
you have to go through. You actually
lose that desire to to uh you know to
make things work. America is not like
that. You know, other countries are not
like that. It's it's it's far far easier
to get through. And I think people like
Trump are actually trying to, you know,
break it down and uh do away with this
excess regulation. But Alec, it's it's
it's it's South Africa.
Just if you go back, I know that China
is now the manufacturing or it's going
to Vietnam or it's going to Asia and
just think of the factories that we used
to have going back to when you first
started writing when you first started
on the market. There were phenomenal our
clothing factories. We supplied Harrods.
We supplied all the best um retailers in
the world. Yes. You know, we we had an
incred Rex true form companies like
that. House of Manatic so and so. Just
think of what we used to have here and
where that's all gone. You know, whether
it's placed by Shyen or whatever, Teu,
it doesn't matter. We had those skills
and we still can develop those skills in
in in our own way and and other
manufacturing, industrial manufacturing,
you know, that anyway,
>> it would need
>> I'm getting a bit nostalgic.
>> No, but but it would clearly need a
rethink of regulations. It's like uh
those regulations did not stop the
criminals from taking over South
Africa's criminal justice system. They
did not stop the Guptas from raping this
country. So what are they doing there?
Why are we wanting to have regulations
in South Africa which are not working
for the real crooks but are making those
who would like to uh invest their energy
in growing the economy uh it it makes
them stuck in trial.
>> Yes. I you know that's the answer. I
mean you you how do how do they get away
with this you know um
>> they just manage they just ignore it.
Yeah. They just we've got no bite. Our
government's got no bite,
>> you know. We we don't have a we don't
have strong leadership,
>> you know. It's it's it's very very weak
and we're not the kind of leadership
that can actually change this country or
turn it around. I don't know whether the
DA has got it either. I don't know. But
we need a younger generation of of young
of of leaders to start emerging and
saying, "Listen, we want to build this
country. We really want to take it to
where it is. Africa has not reached the
potential and I don't like the word
potential but it hasn't reached the
levels that we thought it would back in
1994. We were so pumped up there and we
had such good young leadership that was
emerging and I include the Ramaposes at
that stage. You know if you look at the
class of 94 there were some ve very very
good people there who wanted to make
South Africa work. What happened? They
said, "Hold on a sec, you know, we can
actually make money for ourselves." And
one by one, they started emer they
started their own businesses and and it
became the elite that enriched
themselves to levels that are quite
remarkable without doing anything. And
they went to the white companies, you
know, if I can use it that way. They
went to the companies and say, "You need
us, you know, you want me to be on your
board? It's going to cost you 2 million
rand something in fees. I want 25,000
shares and I'm going to tell you
something else. I'm not coming to a
board meeting. Okay? And that's how they
got into seven or eight boards and so
on. And we paid out price. We felt guilt
and that was the that was the beginning
the genesis of the destruction of this
economy. You trace it from from 94.
Well, uh, when you look back now at a at
a business titan, I guess exactly what
you've articulated a moment ago is that
they are often worn down, worn out.
Where do you have the time to think, to
reflect, to to sacrifice, to make the
investment when you've got all these
regulations that you have to first of
all take care of? And it's it's almost
like well your major job now as a CEO is
just make sure you don't break the law
because there's so many of those laws
even but the crooks are breaking the
laws all the time. We know many many
businesses in South Africa don't pay
VAT. They don't they couldn't be
bothered to to pay VAT and we know that
from personal experience. a company will
a guy will often say to you, do you want
uh do you want to pay me in cash or an
extra 14% and I invoice you or 15%
rather and I invoice you. So I guess you
you get that um and you need a really
you need really special person to emerge
from that and I I suppose they say well
let me rather go somewhere where I don't
have those issues. David, what about
your final point that you made in your
column? Clearance sales versus moonshots.
moonshots.
What did you mean by that?
>> I mean, [laughter]
moonshots, I'm talking technology. In
other words, getting to the mood, moving
forward, you know, moving uh I mean,
when I look at AI now, I'm I I I'm
absolutely taken away by what this can
do and where it's going and how it's
going to improve productivity. Um, we
need it here, you know, we need it in a
big way. We need the data centers. We
need the young people to design or to
help businesses now start to use AI and
uh uh to to move forward. I'm sure that
there are a lot of kids like that who
are well. What's happening now is that
when I say clearance sales, where's this
economy going? Just look at the
companies that that we like. They're all
going down to the bottom end of the
market. You know, I uh for example, and
I love the company Pepco that and it's
doing incredibly well servicing the
informal sector, but that's that's where
our focus is. It's down at the bottom.
how can we make money out of these poor
people who have never been banked or
haven't got the money and that and
that's where the the rushes how many
bankers are going to try and get into
that area. um look at who's who's the
most successful retailer boxer, you
know, Shopright or at at those levels.
And I said, "Hold on a sec. Let's let's
get the bar up. Let's become a tech for
Africa or or do things like that. Let's
start thinking that way rather than uh
you know, rather than trying to service
the under um you know, the
povertystricken people or those who
haven't got the money. That's what I
want. you know, let's develop, let's try
and there's going to be room. There's
going to be plenty of room for us to to
build our own apps, to build our own
data centers, to to use those kind, you
know, the these new applications to help
to build factories here. I know that
you're not going to employ people, but
but to become an area of expertise,
you know, and that's that that's where,
you know, that's where we kind of fallen
behind. There's no you go look at the
JSC other than 10 cent through nice
person process. There's not much. It's a
very old economy JSE.
>> David, what what's your advice then to a
young entrepreneur and they're still
being born. They're still coming
through. 10% of the population wants to
work for themselves. They want to change
the world. They want to provide a
service to others that will be an
improvement on what currently exists.
And my goodness, it's not difficult in
in in the place we find ourselves in.
What's your advice to them?
>> Yes, there's another problem. Sorry, I I
should have mentioned it. You go to our
bank. You go to a bank and say, "I want
money to start this business." They'll
look at you and say, "Mm- no, first of
all, you got to give me collateral here.
You know, you got to give me your wife,
your children, your home, everything
before I lend you money." We don't do
that. There's no VC money. There's no
venture capital money here to allow
these poor people, you know, when I say
poor, I meant to people to to advance
businesses. We haven't got that mindset
that is available in America or other
countries. America, there's an abundance
of investment capital to allow these
entrepreneurs to to develop. We don't
have it. So don't tell me Standard Bank,
First Rand, Invest, none of it. You will
not get a dollar, a rand out of them to
start a venture like that. They just
have not got the mentality. And that's a
massive problem. And and I say it's a
massive problem because uh our banks
don't lend money. Even even if you've
got a nice balance sheet, they they it's
it's almost impossible to get anything
done and we've got to find access to the
funds. There's always stories about
those funds, but uh it's very very
difficult. Nobody wants to take that
kind of risk inside. And that's another
big big problem to allow young people to
develop businesses. That's why they end
up offshore or wherever they do they
take their you know they got a great
idea. They're not going to develop it in
South Africa. They'll take what is a
what's a great idea? It's a it's it's
it's some you know you you you take the
idea and you get on a plane and you're
off to somewhere else. So it's
understand that as well. I think it's
it's also a very important point. Um,
our banks are also got to loosen up a bit.
bit.
>> But we do have a world that is
interconnected. We do have access to all
of the tools now that anybody anywhere
else on this planet has got it. The fact
that somebody's sitting in San Diego uh
doesn't mean that they can access Gemini
and I can't. We can both access at
exactly the same time and for the same
resources. the same with Grock and other
incredible tools which are transforming
the way that you can serve the
population or the the community that
that you've chosen to do. So, putting
that on the one side, putting our great
people cuz we got great people. I mean,
despite all our issues, everybody smiles
here. I mean, that's just the reality of
South Africa. I suppose our weather's
got something to do with it. So you got
the weather, you got the people, you got
lots of skills, um lots of smarts, uh
here what is your advice to a young
entrepreneur, a a 20s something guy like
you and I once were who saying, "Okay, I
want to live here. I want to swim in the
sea or I want to go to the Joberg clubs
or whatever it is that motivates them.
I'm I'm committing to to this country.
What is it that I need to do as an
entrepreneur? How can David Shapiro help
me, mentor me, suggest to me that that I
can do that and be successful?
>> I think don't give up and go hammer on
the door of those banks and let them
know what you think about them. You
know, I think you've got to have that
perseverance and energy to get somebody
to listen to your story. And as you
correctly say, you can live very
comfortably here and still do it. um you
can still do it with the technology but
uh don't give up and start you know
formulate your ideas. There's no reason
why you can't have the same kind of
ideas as a kid in New York or in Kansas
City or whatever it is. You did right
and tailor it for businesses around here
or or even take product that you've got
offshore come to businesses here and try
to get them you know try and help them.
But I think you've got to you've got to
have that we've got to create that
energy, you know, and take away entitlement.
entitlement.
Take away that that that
entitlement attitude that we do have
here in South Africa, you know, and uh I
think that that to me is a big problem.
You've got to you meaning that don't
don't use the rules that are in place to
your advantage. You know, become genuine
entrepreneurs. I might be talking in [laughter]
[laughter]
obscurely but um I'm talking at you know
certain other population people just do
it just go out and do it and try
overcome all those kind of obstacles and
that but Alec we need some of the banks
as well there is there's a lot of money
in this country believe me there is
there are fortunes of money in this
country which we which are hit which are
are available to be let loose in the
right kind of environment that so um I
haven't got the exact answer but I mean
if you've got an idea you want to stay
here you've got the skills just don't
give up just do it you know do it
>> now that's I remember that was a uh the
motto not just of Nike but of Bill Lynch
who was South Africa's entrepreneur of
the year in 2006 and was the world the
only time that South Africa South
Africans won it World Entrepreneur of
the Year and Pan Joffy and uh Chris
Becka were got came close but Bill Lynch
actually won it and he used I asked him
uh at I was around I was covering the
the event in Monaco when he was given
that award and I said to him Bill what
do you tell young people what do you
tell other entrepreneurs said just do it
just do it this whole idea we find out
reasons why we can't our background is
tough or you know we haven't had rich
parents or um the the the opposition is
just too powerful and these big
corporations. He says, "Bugger that just
do it." And I think you you you're
confirming it.
>> Can I just give you my own example?
Um where is it about 15 years ago or
even a little when I started handling
client business? Um I had two slides and
the one was you know well I I really one
slide I said why buy in a spaza when you
can buy in a supermarket meaning
exchange col open up let's go overseas
and everyone came to me says what do you
know about overseas I said nothing I
said absolutely nothing I said but
anyway I built a whole business around
offshore and I started to take clients
not simply because they were They had
their businesses. There were some great
companies that we started to invest. And
all I'm saying, what I'm getting at is
that I could compete because of the
technology. And it comes back to the
example. I could compete with the best
in New York, wherever it is, because I
had access to the same information that
they did that they had. And we started
off by themes and say, "Okay, which
companies fit into these themes, you
know, and if it was four, we'd buy the
share." So and as things went so you
started to develop a knowledge of these
businesses to a point where my entire
business now or or you know I have a
very nice little business there um with
most of it 80% offshore which we've been
doing for 15 years and you know the
whole point was everybody said what do
you know you know what do you know you
know and I and I promise you there were
times when we stood in the market and
stayed in in the market. I said, "This
doesn't seem right." When people wanted
to go out, when all the big names would
say, "Get out of tech, get out of this,
get out of this." I said, "No, it
doesn't seem right." And I just stay the
course. Stay the course. So I use it in
my even in my old age you know saying
listen you can learn new tricks and you
not I was never at a disadvantage
uh in fact in sometimes advantage to
some of the big names u you know that we
know about so you can do it and you have
all the access in the world to actually
do that. Dave, just a final point here.
Uh, while the US has produced companies
like Amazon, Tesla with the South
African, uh, Apple and Asia has produced
10 cent with South African uh, funding
from the early days. Here we seem to be
stuck in the old economy. It seems to be
almost like uh we've we've got a mindset
which says let's build factories and
employ lots of people which kind of the
robots have taken that game if not the
robots then the Chinese. So, so I guess
my question is how does one start? You
you spoke about fixing South Africa
block by block physically, but how does
one start fixing the South African mindset
mindset
block by block intellectually that hey
that doesn't work anymore. You can't
build factories that are going to make
things because the robots and the
Chinese have got that. uh you need to
now look at things differently and
you've got huge advantages including
that we have the same access to the
technology that anybody in the world has
got. How do you how do you do that
blockby-block story?
>> You need you need the voices, you need
the powerful uh people, you know, you
need people to start giving that message
and you start to know you need examples.
You know, I'm building this kind of
factory. This is what it does and and
from that other people will follow. You
need those pathfinders, those
trailblazers to to start doing it and to
create that environment that this
happens. And we don't do it, you know.
And also government's to blame because
government still wants uh has an old
mindset of how an economy should
operate. Uh it's not moving forward.
It's it's uh you know its whole attitude
towards what a factory should be and uh
you know what an economy should be
benefitication of metals or benefit you
know of minerals and so on. We still
have that uh we still have that mindset
and they're pretty good people. They're
pretty good people here in South Africa
at our universities who have got those
attitudes who can start it. But we've
got to have an example, you know, where
everybody comes and stares in awe, you
know, at this new factory that's uh
robotic and and some of the modern
factories are just phenomenal. And you
know, when I listen to Seammens and when
you see what you know what they look at
Caterpillar, you know, I mean
Caterpillar, what what is Caterpillar?
You'd think of it as a yellow metal, you
know, but that's becoming an AI company
because not only are they applying AI in
the factories, in other words, to
produce the caterpillars, but the
caterpillar machines themselves are AI
machines where you don't need people to
operate and everything. They will be run
uh autonomously, you know, or is that
the right word here? So, you know, those
are the kind of things that we've got to
start seeing now and doing. I know it
might cost labor but when an economy
thrives regardless everybody benefits
from it because it grows out its
technicals in other ways
>> and we uh I remember visiting India and
being reminded when looking around in
India and at the enormous levels of
poverty I mean the reality there is that
people literally sleep on the streets
every night you go to Mumbai there's
just like millions of people who
literally take their little little
blankets and they sleep on the streets
and and to understand the the
philosophy, the mentality in India which
was all about we've got to get this
right. We've got to turn this around.
We've got to promote enterprise. We've
got to get an economy that is thriving
because that's the only way we're going
to get these people off the streets and
give them some kind of a future. And you
can see that the Indian economy is
thriving and growing despite the
enormous uh challenge of taking a
billion people. Now we in South Africa
have got 60 million people. We're a
fraction of India. We're small by
comparison. It's a much easier fix. And
yet the mindsets of the Indians are just
light years ahead of us. It appears. Who
knows David maybe with with your wisdom
and your continued banging on the drum
or banging on the door one day that door
will finally open. And I I remember
listening to someone talking about uh in
fact it was Peter Major yesterday in the
conversation we had in Mining Weekly. He
said Alexander the Great when he
attacked the Persian cities, he would
put up his uh uh
siege uh warfare and bang and bang and
bang and bang against the walls of these
Persian cities and you couldn't see
anything. But eventually eventually the
cracks came through and eventually the
walls fell down. Now that is how
Alexander the Great conquered an empire
many times his size. perhaps with your
banging away one day um those cracks
well I guess I think the cracks have
appeared already and that the reality of
what we faced with a country with one of
the highest unemployment rates in the
world a company where the criminal
justice system your rule of law has been
infiltrated at the very least
infiltrated by criminals and we know
that from the Mlanga commission and what
Muanazi had to say a country that has
got everything going for it excepting
the wrong mindset. Bring on those those
uh people who will change and look at
things differently. And we don't have to
go the way of Argentina pre uh Malay or
Venezuela during the the Chavea eras. We
can actually make this into a very very
successful country for all people in
South Africa. And I think people like
you David have have played a big role
and will continue to do so. We hope.
>> Thank you. Hope I look I think we all
love being here. We we don't want it to
change. But you've got to recognize that
uh uh change is you and and also don't
don't keep your mouth shut, you know,
don't if you've got something to say as
long as it's not insulting, you know,
when it's constructive. And I think
that's the big difference. Be constructive.
constructive. So
So
>> keep banging away on those walls and
eventually the reality will dawn. David
Shapiro, South Africa's favorite stock
broker. He is the man at Sassin
Securities. We look forward to seeing
more of David in 2026. I'm Alec Hog from biz.com.
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