“In order to support the entrepreneurs we worked with, I spent the first 5 weeks of lock-down working 14-hours-a-day, 7-days-a-week to get the business up and running. We launched on the 1st of May 2020 with 75 different products, a warehouse space, an inventory management system and an automated delivery model,” shares Sebastian Daniels, founder and CEO of Ground Culture. With an insatiable drive and focus on linking the formal and informal sectors in South Africa, he undoubtedly pushes the boundaries of the stereotypical image of an entrepreneur. “That’s really where my passion lies,” he says, “In looking at how we transgress the informal economy into the formal economy without changing the informal economy.”
But it wasn’t always like this – having attended a Model-C school, Sebastian initially was taught that the townships are a dangerous place. But with both his parents being journalists, he grew up watching the news every day and attending protests on the weekends, which planted the seeds to his open-minded approach. Instead of seeing doom and gloom, he shares his inspiration, outlining how the anti-Apartheid activist, Steve Biko, put things across: “We need to believe in ourselves, you need to believe in a future, and once we do that, we will be unstoppable.” That’s what triggered him to get out into the township: “I’m going to figure out what the next movement that we can create is, because we’re so pessimistic about South Africa. But the only way we’re going to move forward is if we do so inclusively. What I think we are ignorant of is the fact that we kind of think the world out there is the “formal sector.” But then you realize the informal economy is like 80%, 70% of that. So it really needs to be making an impact. That’s when I decided to go and check out the main spots.”
“It’s a very safe atmosphere, and you start to realize that African culture actually just wants to protect the people that are coming to visit. I think that’s my biggest learning and the informal economies. People are very prominent, it’s a booming, efficient system that people don’t really understand – and that scares them. But once you go into the informal economy, people welcome you with open arms, they will teach you about the way they do things and the success stories. Understanding where the informal economy exists, and figuring out how we formalize it in a way that doesn’t change it is important. African systems are beautiful, and I believe that by having a way we can formalize them is a way of changing the world – within it, everyone supports everyone, and that’s what the world needs. We tend to be more individualistic, but I believe the informal economy – especially African systems as a whole – have a way of teaching the world about looking after each other. That’s really what inspires me.”
As a practical example of this, Ground Culture aims to reinvest 10% of their profits back into the entrepreneurs that they work with, pioneering a new system of doing things in the process. “The idea behind me investing reinvesting profits,” says Sebastian, “Is actually more to build a fund that allows entrepreneurs access to an inventory capital that they can then repay.” Oftentimes in the informal sectors, there is a lack of initial capital to kick things off. By creating a system that inherently meets that need, with the understanding that the funds will be paid back by the entrepreneur in the future when their endeavours are reaping rewards, develops a far more circular and sustainable model.
“The reason I focus on profit as the most important aspect,” says Sebastian, “Is because you need to have a sustainable way of giving back. You know, we’ve seen over the course of COVID and through lockdown the amount of NGOs that have had to close because they’ve lost their funding. That’s been detrimental for society because a lot of people have come to live and survive on the handouts of NGOs and from the government. But that’s not a sustainable way of building anything. What we need to start doing is finding ways of identifying key township initiatives, identify entrepreneurs, and we need to find a way to redirect our profits to them, so that they can go and they can build businesses that create jobs and create systems that support and inspire healthy living. This can push cash into a new economy.”
Using the example of Ground Culture, Sebastian explains the importance of creating more circular systems that are able to sustain their efforts – and focusing less on the older, more outdated systems that are currently in place. “We need to be finding ways to build cyclical systems that make sure that the money invested in the informal sector comes back to the informal sector. That’s the thing with our team, since we’re helping these entrepreneurs, their businesses are going to grow their products, and they’re going to improve their brands, and that’s all going to help us as Ground Culture – because our success is hinged on the fact that we have good quality products, great entrepreneurs and great stories. And by reinvesting in those entrepreneurs, we are effectively investing in ourselves. And that’s why I say, focus on profits.”
“Social entrepreneurship can be misguided sometimes. I think people get too much onto the side of an NGO or hand-out based approach – becoming too obsessed with the social factor of social entrepreneurship. But when building a social business, you really have to focus on profit first and then people, and then the planet. Because without profit, you cannot build a business.”
Placing profit at the forefront, Sebastian was running a company called Coffee Shop Blues up until February 2020 which distributed 20 locally made products to more than 75 coffee shops in Cape Town. With the abrupt onset of lock-down, all these coffee shops had to close their doors, some temporarily and some permanently. Realising very quickly that he had stock to shift and people relying on him, Sebastian took the opportunity to pivot his efforts – adjusting his pricing on his existing stock, sending his stock list to friends on WhatsApp, and getting a permit to allow him to make deliveries of groceries during that time.
Taking initiative and putting your energies into the execution of ideas is something that Sebastian advocates. “My advice would be just don’t take your startup idea too seriously. Don’t sit there and write a 50-page business plan because it can be a waste of time. Go out and test your products – put a WhatsApp menu together for your products, send it out to your friends and see if people buy it. And if people buy it and run with it, you’ll know it’s worthwhile. But if no one is biting, go into something else, and keep doing it.” Taking such action is not something to be afraid of in Sebastian’s eyes. While it may not turn out as initially expected, you’ll be able to quickly learn and move towards those things that are working. As he mentions, many companies began doing something completely unrelated to what they initially began doing.
This adaptability is something that has stood him in good stead, yet he also highlights the importance of sticking to things and seeing one’s opportunities through. “I think I’ve made that mistake before – where something was growing really quickly and then another little sparkly toy came along and I said, I’m going to try that instead. That means you lose momentum, you know. You want to find something with momentum and stick with it until there’s no more momentum. Then you can adapt your business and look at other sectors.”
And along with the execution of ideas, taking action, creating opportunities and riding with the momentum you generate, one of Sebastian’s most prominent pieces of advice outlines building towards an overall vision, creating something that is sustainable that can be a move towards creating the change you want to see in the world. “This is not something I built for the short run,” he says. “This is something that I see redefining retail and putting the power back in the hands of passionate entrepreneurs that dream of changing the world.”
Having a vision and a dream is something shared by all entrepreneurs. Taking action steps towards turning that into reality is what really makes the difference. Surrounding yourself with the right support and ensuring that you have the tools to carry that dream into your reality is invaluable. The USB-ED Young Minds Programme is tailored to help you to create your own career opportunities, with guided life direction, while equipping you with the necessary business skills required to become a highly successful entrepreneur. To find out more about this programme, click here.