Bruce Whitfield: Pavlo Phitidis, the founder at Aurik Business Accelerator, with a different hat on this evening. It is a hat of his personal finances. You love money!
Pavlo Phitidis: I love what money can do, Bruce.
Bruce Whitfield: You love what money can do. You love the power of money. Does that equate to the love the money? Because that's a sin, isn't it?
Pavlo Phitidis: Well, I don't really know. You know I think money is very much like... it's a kind of energy in many ways and it can go in a good direction, it can go in a bad direction, it depends who's driving the car that has the money in it, right?
Bruce Whitfield: If you've got a car with money in it you're probably driving away from something you shouldn't have done. So, you know, let's get more serious.
Bruce Whitfield: Now, I mean, do you remember growing up with money? Did you work at being entrepreneurial? Were you negotiating at the age of three to take out the rubbish and boil the kettle and that sort of stuff?
Pavlo Phitidis: No. I was told to take out the rubbish and boil the kettle and do that kind of stuff. It wasn't really an option and it wasn't really a choice. My father was an entrepreneur; it was the only option that he really faced. So from a young age he had started a business, he was involved in the business, he lived through the business.
Bruce Whitfield: What was the business?
Pavlo Phitidis: It was a business that imported stuff and distributed stuff in and around South Africa, up into sub-saharan Africa. So it was largely outdoor equipment and camping equipment and that type of product. It was a good product in those days and in the early years of... of... South Africa's rural population was quite extensive. It was using the equipment extensively and I mean he built a reasonably good, OK business, I suppose.
Bruce Whitfield: You're so judgemental! You're sitting here with your 2017 glasses on. You're going - yeah, not bad, dad. It's okay, it's fine. I would never have backed you.
Pavlo Phitidis: No, my dad did well. And you know one of the benefits that he had in many ways, I think, possibly a benefit, I don't know... Is, uhm, you know he and my mother weren't able to have kids for it for medical reasons for a period of time. And as a result of that I think he was able to focus extensively on the business. Put a lot of energy and effort into it and it started to pay dividends but much, much, much later on in his life. So he did the hard yards in order to get to a point where we could start generating money on a more reliable basis.
Bruce Whitfield: So you were born into an entrepreneurial family. There is there is food on the table; there is money in the bank. Were you ever brought into the family business to start working at it at any point or not?
Pavlo Phitidis: My brother and I had no option. We were... you know, Saturday was work, Saturday was work day for us. We went into the business every single Saturday. The business was located downtown Johannesburg and every single Saturday we were given tasks and the particular task was one of decanting oils, flavoured oils, from very large drums and then having to pour them into small little bottles and this particular product was used in the fishing tackle industry. You basically mix it with pap and meal and it creates a flavour for karp fishing, or what's called papgooi fishing. So we were given a certain number of bottles, we were given a certain number of bottles it was a dirty job. It was a horrible job. We were given a certain number of bottles that we had to to fill and if we achieved that target anything over and above that target we got paid for, and any bottles that we spoiled, and any labels that we spoiled were deducted from what we had overachieved. So it was a very fine balance in teamwork between my brother and I. Me giving instructions and him doing the work.
Bruce Whitfield: [Laughs] That's were it started, ja?
Pavlo Phitidis: That's were it started, but that's that's how we started to make our first money as two youngsters.
Bruce Whitfield: How did your dad determine what the goals should be?
Pavlo Phitidis: I don't really know. I think he... I think he would set... he would just simply set some standards and we would have to meet them. He wasn't unfair but he was quite a firm taskmaster. He let us figure out our problems ourselves and, you know, that evening we sit around the dinner table, as we did every single evening, and every single evening around the dinner table, every single discussion was around new customers, products that worked, products that didn't work, someone who stole, someone who invested... It was a continual discussion because it was a 24 hour existence. Very much so for him.
Pavlo Phitidis: And you know the early years were definitely years that were leaner in the sense that when you are poorly funded and underfunded as he was when he started that business there were months where he could take a salary and months where he couldn't take a salary. So we experienced in the early years, definitely in the first 10 years of my memory, we went through waves; ups and downs around the performance of the business and getting the business to find traction and to get a grip. So we were taught about money and what money can do and can't do.
Pavlo Phitidis: I think at a very young age, almost incidentally, by simply being part of the family.
Bruce Whitfield: Do you remember what you did with that money, the money that you earned in those early days? How old were you? Were you like 12 or 14, roughly?
Pavlo Phitidis: Yes. Look the work in the business started at around 11, 12 odd years of age. What I did with my money is I bought, I bought, you know guppy fish?
Bruce Whitfield: Yes!
Pavlo Phitidis: It's a kind of tropical fish. So I bought a fish tank, I bought some guppy fish. I was always interested in fish and always interested in water and I learned how to breed them and I started to breed them and sell them back to the petshop at the time and in that process the petshop owner - this one was located in Randburg - was impressed with the trade that we were embarking on. He pushed hard on price. I pushed back on price and eventually I took one of the fish tanks and started to breed, uh, mice which were also being sold through pet shops and I had a roaring trade in fish and pets. Well, roaring for me at the time. I can only imagine what my parents went through with that.
Bruce Whitfield: [Laughter] The smell of the mice!
Bruce Whitfield: Was this your first business that you'd sort of set up independently?
Pavlo Phitidis: Yes very definitely. No it was completely independent of of my father, my mother. It was something that just had always appealed to me. I'm not quite sure you know why it was motivated like that but it just struck me as a good idea. When I went to petshops and I looked at the price of guppy fish and I looked at the price of other things relative to guppy fish and I saw people buying guppy fish, I thought well there must be an opportunity to breed them and they're very, very beautiful looking fish as well.
Bruce Whitfield: So you were breeding guppies, you then took them to the pet shop. The pet shop owner bought them from you at however many cents each and then he would have had a mark-up. I mean were you observing the mechanism of the transaction through to the conclusion of the deal?
Pavlo Phitidis: Yes, you know what this particular individual had taken a liking to me for some reason.
Bruce Whitfield: Hold on a second! Up until now I believed everything you said.
Pavlo Phitidis: [Laughter] I think he, I think he, could probably identify with it. You know, he himself being a business owner. He's taken a liking to me and in many ways he inadvertently tutored me. And he would tempt me and say, look if you bring me 20 fish instead of 10 fish,surely you should give me a better price because I'm taking more fish off you. And it was those conversations that started to help me understand the value of "buy, add value to something and sell it", and then the trading started coming out of that, how to trade. And I realised very quickly that you know male guppy fish are a lot more attractive than female gap fish and female guppy fish have a lot more value for me. So I started to take in purely the male guppy fish and argue a higher price on the male guppy fish which, coincidently, cost exact same as breeding the female guppy fish.
Pavlo Phitidis: And I'd kept a little ledger and I started to understand the value of that trade and that business did well. It's very hard to breed guppy fish especially in a home where you don't have the right conditions and you have two very frustrated parents not particularly impressed with the smells and gurgling of the tank and breaking of the lenses and all sorts of things that go wrong.
Bruce Whitfield: But, did they did they get what you were doing? Did they get that this was actually something, that this was an important life lesson?
Pavlo Phitidis: My father, especially. He... he... he saw the value in that... he... You know, I would sit with him and go through the ledger with him from time to time and he would debate certain parts of that ledger and he would reflect back. He wouldn't say you should do this. He would say, if I were in your shoes I would do this for the following reasons. So, there was no instruction ever given. There was always suggestion. And I think that that was probably the earliest stage of mentoring that I experienced. It was always suggested. An option A, B and C were always put on the table and we would debate that and I would be left with my own decision. And the very next week or the next month there would be a discussion. Which route did you go and why did you go that route and how did the turn out and what did you learn? So, it was almost like keeping a journal, really, of very early business activity at a very young age.
Bruce Whitfield: Pavlo Phitidis taking us through his relationship with money and why he thinks about money the way he does. He loves what money can do and what money can achieve. I'm looking forward to wrapping up with Pavlo Phitids this evening the founder of Aurik Business Accelerator, building his own business based on the deep background that he's got in business. His first one guppies and mice, but not in the same tank and certainly not at the same time.
Bruce Whitfield: Pavlo Phitids the founder at Aurik Business Accelerator. And you're used to him telling you how you should be running your small business better. Tonight he's telling us how he got in touch with his... with the sense of money. And the money that he made from decanting oils in his dad's business on a Saturday morning. He used to invest in guppies and mice. He bred them, he sold them, and he started learning about the world of business and the world of margins.
Bruce Whitfield: How long did you do that for? Was it all the way through school or did you evolve the guppy and mouse business?
Pavlo Phitidis: No, Bruce. It lasted about, probably, three years, three or four years and then things got busy at school, time started to become quite scarce and that business... I had to close that business down, it wasn't a sellable business. I had not built it into an asset values of value. Definitely not.
Bruce Whitfield: Anyway, it was a survivalist business and that's how you learn these things. Then what informs what you go and study at university?
Pavlo Phitidis: Well, I really struggled with that. You know I left school at a slightly younger age. I thought that, well, perhaps you know I should do something outdoors, because I enjoyed the outdoors. And I started off studying building science and I had a deal with my father. My father had said that he was able to support me with one degree. It had to be at Wits. I had to live at home. And I could select the degree myself and we debated it obviously but he allowed me to go ahead with that. And that didn't last very long because I changed very quickly from building science into commerce. You know once I had realised what the world of commerce was about and once I realised what the real options were at a university level.
Bruce Whitfield: Okay so you changed a B.Com. You got your B.Com I assume? I'm hoping.
Pavlo Phitidis: Yes I did.
Bruce Whitfield: And was it a great B.Comm?
Pavlo Phitidis: No. Because I've broken the deal with my father, you see. So we had a bit of a... He was a very principled man. He, he, he would always stick to... whatever he said he would do, he would always stick to doing, no matter what happened.
Pavlo Phitidis: And, and, the reason that, that relationship never worked out well, where he would pay for the university, is because I opted to go down to Cape Town. I had businesses in Cape Town. I had two businesses in Cape Town because straight after school I had one year of national service. So I went down to Cape Town and I was in a situation where it was an environment that lent itself to an entertainment industry and I started two small businesses in the entertainment industry and having to come up to Johannesburg, they were cash businesses.
Bruce Whitfield: Did you have decks and speakers and stuff? What kind of entertainment business was this, dare I ask?
Pavlo Phitidis: No, dare you ask. So, in any event, these businesses were operating very well. They were profitable businesses but they were cash businesses and having to come back up to Wits University and study building at Wits meant that I had to leave the businesses in the hands of others. And Bruce, this notion of leaving a cash business in the hands of, let's call it a manager, is really not a good idea. Certainly not a good idea especially in those days where there was little technology available and it was very hard to communicate effectively.
Bruce Whitfield: Did they, did they survive?
Pavlo Phitidis: They only survived, because I went back down.
Bruce Whitfield: Okay.
Pavlo Phitidis: But so, the irony was my father turned round and said to me, where are you off to? I said I'm going back down to Cape Town, I've got to go and help these businesses maintain themselves. And he says, oh wonderful. Nice. Good luck with it. And I went down to Cape Town and I realised that the businesses needed me there. So I applied at the University of Cape Town and they accepted me based on my marks from from the previous year at Wits. And I phoned my dad and I said, dad you know, thank you, I mean, they've accepted me a UCT. And he says, that's wonderful, my boy. And then he said, Where you going to stay? And I said, look, I need to find a place close to university to stay, you know, walking distance, preferably and I'll let you know. And he says wonderful, good luck with that! And then I found a place to stay and I said dad I found a place to stay. He said, wonderful, I'm so proud of you! Good luck with that. You know that's wonderful. And then a week went by...
Bruce Whitfield: Is "Good luck with that" Greek for "your your own kid"?
Pavlo Phitidis: Well, I only realised that a week later when I phoned him and said I need to pay deposits both at university and for the digs. And he said, "Well done my boy!", you know, "Good luck with that". And that was a real lesson of who my father was. He was a very, very principled man.
Bruce Whitfield: But I mean it was tough at the time I'm sure and I'm sure you didn't thank him particularly much at the time but it set you up in the School of Hard Knocks.
Pavlo Phitidis: Yeah, well it certainly did. But, you know, the problem was I paid for three, four years of university attending maybe 20, 30 percent of the lectures because I was constantly looking after the businesses to pay for the university that I was meant to be attending. But what was interesting about it is it really gave me two, two perspectives because the benefit of a university education, that anyone can enjoy that can get access to it, is it gives you a very big picture of business but it's a highly theoretical picture, so it talks to you about all the moving parts and then the benefit of actually doing it yourself - the artisanal road - is that you emotionally ingrain it into the way that you look at how to make money through business. And I think that that combination was quite unique and has definitely set me up and favoured me in my life.
Bruce Whitfield: What is the best thing you've ever done with a rand or lots of rands? But the best money decision you've ever made?
Pavlo Phitidis: Honestly, started my own businesses, Bruce.
Bruce Whitfield: Which one particularly?
Pavlo Phitidis: Well Aurik is a very successful business. I've got a very good co-founder and a good partner there. Prior to that the best thing I ever did with a rand was the worst thing I ever did with a rand. I thought at a young age that I was supremely bright and clever and gifted in the art of entrepreneurship and I found a business... I found a business for a rand. I bought it. The three individuals who sold it to me walked out smiling. They were all grey haired gentlemen. Within the week of selling it to me two went to live in Australia, one went to live in the UK and I couldn't figure out why they were smiling and I was smiling and I thought something was wrong here. End of the month came and I had realised that there was an undisclosed liability of R4 million rand in this business.
Bruce Whitfield: And this is R4 million, how many years ago?
Pavlo Phitidis: This is R4 million about 23, 20.. 20 to 23 years ago.
Bruce Whitfield: That's a lot of money.
Pavlo Phitidis: That was a lot of money.
Bruce Whitfield: Between R15 million and R20 million rand today.
Pavlo Phitidis: Completely. And you know the irony, Bruce, is that when you don't know what you don't know it's probably one of the greatest assets in a business because I stuck with it and I thought, well, how can it be to fix this thing? And it took five years but that business turned around and that business was very, very successfully sold.
Bruce Whitfield: Did you create an asset value?
Pavlo Phitidis: Oh, without a doubt.
Bruce Whitfield: Did you make back the money that you had, that you'd had to pay back?
Pavlo Phitidis: Yeah, very definitely, and there were some good money left over.
Pavlo Phitidis: But the thing is you know it's, it's, it's crazy because those early years, those early years scarred in many ways and burnt a view of money that was very, very hard for me to get over because end of the month would come - and this happened for about two years, three years - at the end of the month, I could never take phone calls, Bruce, because I knew creditors were after, they were after me. They were looking for the money to be paid and when you didn't have answers it was very hard to say something's coming when something's not. And it gave me a sense of how to build so lean. So, so lean. Something that I only really appreciate now in the later years rather than in those exact formative years.
Bruce Whitfield: You waste money on anything?
Pavlo Phitidis: Seldom. Seldom.
Pavlo Phitidis: I think money in the hands of someone that doesn't have an idea bigger than themselves is a very