AdviceTop NewsLebo Gunguluza – There’s More To Entrepreneurship Than Money

By Cue Sibiya The beautiful continent of Africa is filled with so-called self-made millionaires, but Port Elizabeth-born, Lebo Gunguluza, 46, epitomises what it really means to be one.With a net worth of $36 million (R480 mil- lion), it is hard to believe that he was only armed with $5 (R60) when he arrived in Durban in 1990. Gunguluza grew up in the depths of Magxaki location in Port Elizabeth without a silver spoon in his...
ABO BALOYIJune 30, 2017
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By Cue Sibiya

The beautiful continent of Africa is filled with so-called self-made millionaires, but Port Elizabeth-born, Lebo Gunguluza, 46, epitomises what it really means to be one.With a net worth of $36 million (R480 mil-
lion), it is hard to believe that he was only armed with $5 (R60) when he arrived in Durban in 1990.

Gunguluza grew up in the depths of Magxaki location in Port Elizabeth without a silver spoon in his mouth. He swore to escape poverty and make his first million at the age of 25. Like all plans in life, they change and one must adapt and that is exactly what he did when he failed to reach his target but that did not discourage him.

His father died when he was a child and his mother worked as a nurse. There was not much money to go round and what she had managed to save for his tertiary education went on getting him, his brother and his sister through high school in the turbulent late 80s.

“There were so many boycotts at the time that I missed two years of school, so my mother took her savings and sent me to Wo-odridge College, just outside Port Elizabeth, which was a multiracial school,” he says. “It was a great move on her part as I managed to get a really good education there, but it meant there was nothing left over for varsity.”

Gunguluza says his dream to study business was enabled by his appetite for risk. He had no money and no place to stay, but he also had nothing to lose. When he graduated in 1994, he had a debt to pay back. But, armed with a degree, some work experience and a formidable ability to sell, he took his pick from several job offers and went to work at the SABC as a sales executive.

Gunguluza did well at the SABC. His drive to succeed was unremitting; he was promoted four times in the space of two years and became marketing manager for Metro FM by age 24. But his impoverished family back in Port Elizabeth was still dependent on him and he was simply not earning enough to take care of everyone, even though they believed he was coining it in Joburg.

That was when he decided to save enough money to go to the US for a few weeks and do a specialised broadcasting course which would boost his earning potential. But his gameplan changed when he got back andwas recruited by advertising mavericks, Herdbuoys. “My salary doubled, but the ad industry is a tough business to be in. I was working really hard but still not making much headway.

There was no way I was going to make that first million. Then something struck me. I was really good at throwing big parties at home. Why was I getting all these people to eat my food and drink my alcohol for free, when I could be making money from them?”

He took the plunge once again, leaving Herdbuoys and he started Gunguluza Entertainment. He had no money for cash flow in the business, but he put his considerable ability to leverage situations to great use. In addition to being a skilled salesman, Gunguluza is a networker of note. It’s a talent that comes easy to a person who’s passionate about entertainment and media.

 

“There was a night club called Insomnia in Sandton that was not doing too well. I approached the owners and told them I would bring the crowds if they let me take the door. That way they could make their money by selling drinks.”

It was a great idea that took off immediately. Why? “Because there were no clubs for young and trendy black people in the north at the time. Most of them were in Hillbrow or in the townships. On the first night I made R7,000 and I knew I was on to a good thing.”

Changing direction slightly, he started to book artists he had come to know over the years and quickly became a popular talent manager. By this stage he was making about R100,000 per event, and also taking the opportunity to build his brand. “I made sure I was on radio all the time and I positioned myself as a local entertainment expert,” he says. Then, in 1997, he heard that a new youth radio station was about to be launched and his skill in sales came to the fore once again.

Eventually, Gunguluza made his first R1 million when he assisted with the launch of YFM. However, he spent that first million in one year. Instead of using that money as seed capital, he bought a GTI and partied like there was no tomorrow. By the end of 1999, he was flat broke. His car was repossessed and he was blacklisted.

“I hit rock bottom for a few reasons. Aside from the flashy lifestyle, I realised then that you have to choose your market sector carefully. Entertainment is a fickle industry and promoters can be unscrupulous. Often we would not get paid on time. I made up my mind that whatever I went into next, it would be in a space that pays well and has structure. Although he did not have much experience in communications, Gunguluza was a media maven. He approached Penta Publications and started to sell media space for them.

It was a steep learning curve and Gunguluza took full advantage of it, getting to know the tough world of magazine publishing and corporate events. Satisfied that he had picked up enough, he left nine months later and started working on his communications business, Corporate Fusion, a name that indicated a new direction for him – the rigour of the world of big business. Within 18 months it was generating more than R2 million. He ran it from his townhouse with a single telephone line.

With his appetite for risk growing stronger, Gunguluza knew it was time for him to go to the next phase if he really wanted to grow the business into something substantial. He contracted with several big clients and, through his knowledge of radio and print media events, he launched several awards shows – lavish evenings that became the talk of the town.

He also began to build an extensive public sector network that saw him consulting on communication strategies with several municipalities. By 2003, at 33, his business was turning over R14 million, a result of several big ticket contracts he had secured with blue chip companies. He’d reached his next milestone before the age of 35 and had become a corporate communications specialist by applying his now considerable media and publishing experience.

But then he dropped the ball once more. Blinded by his success, he bought a Porsche and started travelling the world. Although he did not repeat the same mistake he’d made before with cash flow, this time round he left the business in the hands of others.

He soon lost touch with what was going on in the company and came home one day to the biggest crisis he had yet confronted. An event for one of the country’s largest financial services companies had turned into a shambles. It was so bad that Sunday Times columnist, Gwen Gill, went on about it for several weeks in her social pages, ripping the event to shreds. Gunguluza lost the client, as well as R7 million worth of other business in three weeks. Four months later he was in debt to the tune of R4 million. He could no longer pay salaries and had to retrench staff, a period he recalls as the most painful time of his life.

He sold the office building he had bought back to its original owners for R1 million, and bought a Primi Piatti franchise in Rosebank. With his background in entertainment, he and his wife were determined to build the restaurant and use the cash they made to pay back all their debtors.

As a result of his flair for fun, it soon became one of the most popular Primi sites in the country, and turnover growth was high. It was the place to be in Rosebank. But Gunguluza’s relationship with his wife soured and they separated in 2008.

He handed Primi over to his ex-wife and started focusing on the other business interests he had been growing quietly in the background.

“I hardly ever slept at that time. When I was not at the restaurant, I was developing a new media business and creating new partnerships. I had managed to settle all mydebt and build a company that had already turned R2 million by the time I was out of Primi.”

Media, hospitality, technology, property and investment – those were the five sectors Gunguluza wanted to be in.

“I wanted to use the media business to develop other companies within the GEM (Gunguluza Enterprises & Media) Group of Companies. I was now chasing my R1 billion goal, but I knew that if I started from scratch it would take far too long. My strategy was to acquire an interest in existing companies and triple their turnover by boosting theirsales and marketing. Really, it was the samestrategy I had applied years back to quadrupling the airtime I got from YFM, just on a bigger scale.”

Next, he partnered with Uhuru Communications, the publishers of SAA’s Sawubona magazine, that same year and several other youth and campus publications. He also leveraged his public sector experience by launching Municipal Focus, also in partnership with Uhuru, which covers the business of local government with a nationwide distribution to municipalities and government departments.

He is also growing his capital interest through projects he invests in and which make him easy returns. That’s what’s enabled him to grow GEM into a multimillion rand business in just two-and-a-half years.

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