#80 From an Oudtshoorn ostrich farm to advising founders with Johan Potgieter

TRANSCRIPT: THE bizval PODCAST
Guest: Johan Potgieter CA(SA), Founder — Thornberry Consulting and The Lion Cage
Host: Graham Stephen, CEO and Co-Founder, bizval
LinkedIn: https://www.linkedin.com/in/potgieterjohan/
Company: https://thornberry.co.za

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[00:01:03] Graham Stephen: Welcome back to the bizval Podcast. I’m Graham Stephen, the CEO and founder of bizval, and our mission is simple. We want every business owner to know what their business is worth and what they can do today to make it worth more tomorrow.

[00:01:17] Graham Stephen: My guest today has taken a road almost nobody around him expected. He grew up in the ostrich capital of the world, Oudtshoorn, on a working ostrich farm, and his family still runs one of the most successful farms in the district. But instead of staying on the land, he qualified as a chartered accountant, did his articles in Namibia, spent a few months in Canada with Deloitte, and now he’s based in Cape Town, where he advises funders through Thornberry Consulting and The Lion Cage. Johan Potgieter, welcome to the show!

[00:01:49] Johan Potgieter: Thanks, Graham. Pleasure to be here.

[00:01:52] Graham Stephen: Fantastic. So before we dive into where you’re at now and what you’re doing, let’s start at the beginning. Growing up on an ostrich farm is not something many people can claim. My father-in-law was a farmer, and there are a lot of foundational concepts in farming. Take us back to Oudtshoorn and the farm you grew up on. What was that like as a kid?

[00:02:21] Johan Potgieter: Yeah, for sure. I mean, it’s obviously a big blessing to be surrounded by family and by nature, and you’re absolutely right, it does provide a great grounding element. We’re fortunate to be in the ostrich business, and I’m the seventh generation in it. On a farm, it’s a seven-days-a-week thing. The animals need to eat, they need water, during the rainy season the water flow needs to be checked. There’s always some kind of problem that needs to be solved. I guess that’s where the saying comes from in Afrikaans, a boer maak ‘n plan. A farmer needs to make a plan. On a regular basis, you’re isolated, you might have to do that out-of-the-box thinking. And even at school, my friends might do waitering in town. My job was on the farm, long hours, 40-degree heat. You push through. You learn some grit and resilience in the process.

[00:03:26] Graham Stephen: And lots of early mornings, I’m sure, and the discipline that goes with that. Before we move on, most people when they think of an ostrich think of the head-in-the-sand idea. I think that’s a bit of an urban legend. Can you set the record straight and give us a few facts about ostriches that most people don’t actually know?

[00:03:52] Johan Potgieter: Yeah, for sure. We definitely have a network to blame for that. But the interesting thing is that ostriches have quite a light-skinned or pale-coloured neck and head, which blends quite easily with the ground. And their nest is also in the ground. So most of the time they’re really just tending to their eggs, turning them to get better sunlight, and so on. And that looks like they’ve actually got their head buried in the sand. Actually, quite the contrary. But it’s a fascinating bird. The eggs are massive, about 1.5 kilograms, the equivalent of about two dozen chicken eggs. Their speed is about 60 to 70 kilometres an hour, quite quick. They’ve got no teeth, so they swallow rocks for digestion. And it’s one of the few animals on earth whose brain is smaller than its eyes. Not a very intelligent bird to work with. And it’s got an incredibly powerful backwards kick, enough to easily kill off and fend off any predators. But I think what’s quite interesting from a business perspective is that Oudtshoorn and the ostrich industry still accounts in South Africa for about 70 to 80% of commercial world ostrich production.

[00:05:24] Graham Stephen: Let’s dive into that a little bit. Most people think of ostriches and they think of the Roaring Twenties and feathers and high fashion. But just talk a little bit about the bird from a commercial perspective. What parts of the ostrich does one actually sell? I’m sure every single piece has a use.

[00:05:51] Johan Potgieter: Yeah, indeed. So as you mentioned, feathers are obviously the original product, where it all started, and even in that you’ve got various different classes. We all know the high fashion plumes from Moulin Rouge and Rio carnivals. But then you also get the duster element to it. And then leather is also an extremely luxury, durable product used across the world by Hermes, Louis Vuitton, all the high fashion houses. And then meat has become quite an incredible product as well because it’s lean, it’s a red meat, it’s high in protein, very popular among the health conscious. And then there’s a fourth element that people sometimes underestimate, and that is the pet treats component. The natural, full product. Your bones and all the offcuts, because it’s hypoallergenic, low in fat, and nutrient-rich. Very good for animal use as well. So nothing is wasted.

[00:06:49] Graham Stephen: Wow, fantastic. There was a story, in the late 1800s and early 1900s, there was a feather boom in Oudtshoorn. A bit like the tulip boom in the Netherlands perhaps. Ostrich feathers were incredibly high fashion in Europe, and at that stage it was a bit like Kimberley and the gold rush. People built whole industries off that, and then it collapsed. I guess Oudtshoorn had to kind of rebuild itself off the back of that. Maybe share a little bit about that story and some of the business lessons.

[00:07:35] Johan Potgieter: Yeah, you’re absolutely right. The boom was massive. They still call the houses built during that time the feather palaces. One interesting story I remember from those days is that in 1912, when the Titanic sank, one of the most important items of cargo on board was a shipment of feathers insured for $2.3 million in today’s terms. Because in those days, the only commodity worth more than ostrich feathers was diamonds. Then the First World War came and everything kind of collapsed, especially with the introduction of cars, because you can’t have those big flamboyant hats anymore. But it taught us that you can’t have all your eggs in one basket, even if they are very big eggs. It really is an adapt-or-die principle. Every opportunity brings across a potential new market and you’ve got to work with these cycles. It’s constant risk management. Not just from a farming perspective, but from a business perspective as well. Markets and trends shift, and you’ve got to move with them.

[00:08:49] Graham Stephen: Yeah, that’s so important. Boom or bust, you have to adapt. Just because something’s going well now doesn’t mean it will be that way a year or two from now. And in the 1800s and 1900s, people weren’t thinking about ostrich meat. It was just the feathers. And now there’s a whole host of different products and opportunities.

[00:09:19] Graham Stephen: So grown up on an ostrich farm, lots of lessons around that, but you took a decision to move away from the family farm. You went off and qualified as a chartered accountant. What was behind that decision, Johan? And how did the family feel about it?

[00:09:53] Johan Potgieter: Indeed. I think it actually started when my grandpa sent my dad to varsity back in the day with the words that we need clever, educated farmers. And I think to an extent that was also true for me. The days of a simple, profitable farm are long gone. To not just survive but thrive, every farm has to operate and think in a growing, vertically integrated business concept, with working capital, budgets, margins. And it’s to a great extent also an entrepreneurship journey. Going into a business direction and qualifying as a CA was almost inevitable, because the CA is still the gold standard. It’s the door opener, the entry stakes, that allows you that seat at the table.

[00:10:55] Graham Stephen: Yeah, and you’re absolutely right. People think of farming as sitting and watching the crops grow. But farming is an incredibly complex business. If it rains too much, it’s a problem. If it doesn’t rain enough, it’s a problem. And a lot of the agricultural businesses we work with have debtor’s days of 120, 130, 140 days plus. And then you have a flash flood and everything’s ruined. Having that business grounding is great preparation. And I guess there’s a dream at some point to go back and get involved commercially in the farm.

[00:11:44] Johan Potgieter: Yeah, for sure. And you’re absolutely right. Growing up on a farm and coming into finance is definitely an advantage. The value of hard work, determination, and being solution-oriented has helped me quite a lot along the way, and definitely helps me play the long game. Even while going through these tumultuous short-term cycles, it’s beneficial both for running my own business and for advising clients in theirs.

[00:12:21] Graham Stephen: And you’ve actually seen that in practice. You’ve been through those cycles, bust and boom, what happens in a drought, cash cycles. You’ve lived that firsthand. So you didn’t just go to George up the road, get your accounting degree, and move on. You then decided to go even further. You did your articles in Namibia, did a stint in Canada, and then came back to South Africa. How did those different experiences shape you?

[00:13:11] Johan Potgieter: Yeah, for sure. I used to joke and say Namibia felt just like a bigger Oudtshoorn in one way or form. But it’s still smaller and more relationally driven than most of your South African metros. It allowed me to really get the in-depth workings of telecoms, mining, retail, and banking, and that bodes quite well. And then the contrast to Canada was huge. I remember climbing off the plane on a 40-degree heat on this side and jumping off on minus 20 on that side. Quite a jump. But I think the real value of the CA(SA) designation really showed for me in Canada. It showed me that we as CAs in South Africa cannot just play, but can really dominate on a global stage.

[00:14:22] Graham Stephen: I want to interrupt you there for a second. This is just after South Africa lost to Canada in the Football World Cup. Football aside, right?

[00:14:26] Johan Potgieter: Yeah, we’ll definitely have to put that one aside for now. But at the end of the day, the principles of business remain the same. You need discipline, you need structure. And especially to operate on a global scale, that was my experience from those stints abroad.

[00:14:49] Graham Stephen: Canada is a country built by immigrants, so it’s obviously a very diverse population. You were there doing post-articles work. How did you find working with people from all over the world, and how did you not just cope with that environment but actually thrive and build a reputation for yourself?

[00:15:30] Johan Potgieter: Yeah. Because they’re so open, it was almost more accepted for me also as a foreigner coming in. I remember on one client I had to use Google Translate to get an invoice from Japanese into English just so I could see what was actually bought. It was a very diverse team. People from China, from Somalia. And what was interesting in that environment is you very quickly start to realise that diversity is indeed a strength to embrace, because everyone comes from these different backgrounds and it allows you to also start thinking outside of your own box.

[00:16:18] Graham Stephen: That’s so true. At bizval, we obviously work across the US, the UK, and South Africa. Even though we might speak a common language, you might speak a common language but there are definitely nuances. You have to learn to adapt. How do you think having that experience makes you a better business person and advisor now?

[00:17:10] Johan Potgieter: Yeah. I think initially when I went over, you’ve got the CA behind your name and you almost want to think you’ve got this covered. And in a sense, it humbled me. It made me realise that I don’t have it all. And once you get to that point and realise that if you take a step back and have everyone bring their own background, their life experiences, their multiple views, those out-of-the-box and unique solutions that can be extracted are extremely valuable. I really thoroughly enjoyed being able to engage with people on that front.

[00:18:00] Graham Stephen: 100%. So then after that, you came back to Cape Town. After having experienced Namibia and Canada, was it a culture shock coming back to South Africa, or was it like a duck to water? Or should I say, an ostrich back to the Karoo?

[00:18:20] Johan Potgieter: Well, as I say, no place like home. And I think all these experiences from all over really came together here. That resilience, that bigger-picture thinking, the relational way of working with different people, the discipline, the structure. And now being able to bring that as a package to my clients. I think it’s an extremely exciting thing to be a part of.

[00:18:47] Graham Stephen: Absolutely. We’re going to talk in a second about what you’re doing at Thornberry and The Lion Cage. But something I want to touch on first. At bizval, we obviously talk business valuations, so we talk value. But I want to talk about a different type of values. A lot of people would describe you as a values-driven leader. In the world of finance and consulting, we’re not ultimately selling valuations or consulting. We’re selling relationships and trust. People won’t trust you with their taxes, their accounts, their financial strategic direction if they don’t trust you as a person. Can you talk a little bit about what that means for you in practice?

[00:19:35] Johan Potgieter: Yeah. And especially for us as tax practitioners in South Africa, you’re faced with personal and professional ethics and values on a near-daily basis. There’s something about being comfortable in the uncomfortable, and that is with having difficult conversations with clients too. Sometimes they need to hear something, even if they don’t want to hear it. And sometimes it means walking away when those values don’t align. It might be a very lucrative client, but if it’s lacking in values, it’s simply not worth it. I like to surround myself with like-minded people in terms of those values, because you don’t always realise when there’s a slippage. It’s a slow thing. Having people like Louis, my head of accounting, and my family close by, they help make sure we all keep on track.

[00:20:37] Graham Stephen: Yeah, that accountability is so important. And being prepared to walk away, that’s always tough to do, especially when there’s money on the line. We have a saying in our business: we’ll always tell the client what they need to hear, not what they want to hear. Everyone wants to know their business is worth a billion rand. But if it’s not, there’s good reason for that, and it’s better to have the truth delivered with compassion and empathy than to tell people what they want to hear.

[00:21:12] Graham Stephen: So for you, where does that values orientation come from? Has it always been part of who you are? Does it come from your upbringing on the farm, your faith, the CA profession?

[00:21:34] Johan Potgieter: Yeah, for sure. I’m a firm believer that ethics and values are stored on the knee of your parents, and actually not in the classroom. That has been quite a guiding element in my walk. And with that, my faith in God is also a huge contributor, and a desire to run an honest and high-integrity business. And coming back to life on the farm, you learn to make decisions for the long run instead of for short-term gains. That value element almost becomes more intuitive over time.

[00:22:13] Graham Stephen: 100%. I know you also spent some time involved in an NPO called Zone Talks. Nothing to do with money, but tell us a little bit about that and how it shaped how you see people.

[00:22:26] Johan Potgieter: Yeah. I think at the end of the day, people like doing business with people that they like. Having those relationships matters. We’ve got something in our business where we rate our clients and we also allow them to rate us. One of the tests we do is the braai test.

[00:23:02] Graham Stephen: Little barbecue, for those not familiar.

[00:23:04] Johan Potgieter: Exactly. Would we like to have a braai with them? In short, your relationship with your accountant is always a very personal one. And a lot gets revealed about a person by the way they choose to spend their money. That’s why it’s quite a personal element.

[00:23:37] Graham Stephen: Absolutely. I want to move on a little bit now. You spent a stint working as a fractional CFO when you got back to South Africa, and about three years back you essentially started two businesses: Thornberry Consulting and The Lion Cage. Why did you decide to go it on your own, and can you break down what each business does?

[00:24:24] Johan Potgieter: Sure. At the start, it was really all about being helpful and bringing value to people. Initially I didn’t start out with the idea of building a firm. I just wanted to help people, and through that it organically grew. So Thornberry is my business advisory firm where we do tax and consulting and virtual CFO services. Your external accountant, tax practitioner. We try to modernise that function for the owner and the entrepreneur, bringing them into the cloud, typically Xero, bringing as much automation in as possible. It’s that trust relationship I spoke about earlier, where we’re allowed to scale with them. That’s why our tagline is also “the finance guy in your corner.” It’s really about being helpful and being the one they can rely on.

[00:25:13] Johan Potgieter: Whereas on The Lion Cage side, it’s a bit more on the investor side. The investor-centric boutique advisory side. Any founder that wants to raise capital, we’ve got these weekly investor calls that they can be part of. We prep them, we get them ready for it. My job really is to get the right specialists in the room for them, depending on what the need is. To extract the most value for them for those particular calls and to go with confidence into the boardrooms and speak with the various investors.

[00:26:03] Graham Stephen: Fantastic. You’ve obviously seen quite a few founders over the last few years. You’re there to help them avoid making expensive mistakes and to be in their corner. But I’m guessing a lot of people come to you after they’ve already made the mistakes and then you’ve got to help them fix them. What is the most common mistake you see founders make before they get to you?

[00:26:32] Johan Potgieter: Yeah, so there are actually two. As you mentioned earlier, they leave it too late. When they start thinking about value, there’s already a deal on the table or it’s imminent, and then they want to start building value. We had to start that process three years earlier if you really want to extract the maximum value. And secondly, they just fall in love with their own story, and they escape the defensibility of it. They’ve got a number in their head. Like you said, we all want that billion-rand company. But sometimes there’s just no evidence to back it up. If your value can’t be defended, it’s nothing more than a wish.

[00:27:16] Graham Stephen: 100%. And for us, it hits close to home because the whole premise of bizval is: what is the defensible number, and how do you make sure it is defensible, whether it’s to a court, to a buyer, or to a seller. You have to be able to stand behind those assumptions. How do you talk to a founder about value when you’re engaging them?

[00:27:42] Johan Potgieter: Yeah, so luckily there are a few value-enhancing principles. I try to bring those across to them as regularly as possible. I talk about the long-term vision and goal for them and for their clients. So every decision they make is either enhancing business value or diminishing it. And from an accounting and tax perspective: your customer concentration, your founder dependence, messy numbers, informal contracts, all of those things need to be clean to bring across the best value possible. And coming back to the ostrich, you can’t be on one feather. You need multiple things going for you.

[00:28:33] Graham Stephen: I love that. Yeah, it’s not just profitability, it’s not just owner dependence, it’s not just your revenue mix. It’s all of those things. And one of the things we often see is this conflict when businesses start. They think, how do I pay as little tax as possible? They put through loan accounts and all of that, all legitimate. And then when you get to selling, they start adding back personal expenses. But when a buyer is looking at that, they ask: why are you adding these back now? Sometimes you actually need to be less tax efficient, make sure the books have a clean set of numbers, and it takes time. You can’t do that at the eleventh hour. You need to start thinking about that two or three years before. And I guess that’s where you guys come in.

[00:29:36] Graham Stephen: Let’s go to The Lion Cage for a second. One of the core themes is you bring in the right advisors. Just talk a little bit about how you match the right advisors with the right client, and how you think about that.

[00:30:06] Johan Potgieter: Yeah. I also don’t want to be self-employed. I want a business that’s not dependent on me. There’s an African proverb that says, if you want to go fast, go alone. If you want to go farther, go together. I’d much rather be the person who knows who to call to get the experts needed for the best possible outcome. I love having conversations with entrepreneurs and founders, and generally from those conversations I get a good feel for where the business is heading and which personalities of the different experts we know can bring value to that business.

[00:30:48] Graham Stephen: So again, it’s all that relational understanding you’ve built up. The expertise is a given, but it’s those softer elements that you learn through experience, being in diverse cultures and picking up on those softer cues.

[00:31:06] Graham Stephen: So we’re going to move on to the second-to-last section. A couple of questions, Johan. You’re three-plus years into advising, with a whole journey behind you from the farm to CA to Namibia to Canada. If you look at all the lessons you’ve learned along that journey so far, what are the two or three key things that have stood out for you?

[00:31:34] Johan Potgieter: Right. So coming back to the original premise that we started Thornberry with: add value. We say, be more than a fair trade at the end of the day with our clients. Keep on learning, be curious and teachable. I find it has a flywheel and exponential growth later on in life. And then you only have one name, your integrity and values. That goes before me in terms of bringing clients to me. And then thinking long term and keeping the focus on it. That’s been quite an integral part of how I build and how I see my life moving.

[00:32:17] Graham Stephen: Yeah, that long-term thinking is really critical. A lot of people, especially in the US, are chasing quarterly returns and quarterly profits. You’ve got to think through the cycle. You can have one bad summer or one bad harvest season. That doesn’t mean the farm is not successful. You have to plan for that, think through that. And I guess a lot of the big visionaries, whether you love him or loathe him, someone like Elon Musk is thinking long term, and I think that sometimes makes the difference between doing something that has real impact and doing something that earns you a quick buck.

[00:33:08] Graham Stephen: I want to ask you one more thing, and this is always a hard one. If you had learned this lesson earlier, what is one thing you wish you had known right at the start, before you went out to study and began your career?

[00:33:23] Johan Potgieter: Yeah. I think that patience is a strategy. It’s not a weakness. As you mentioned, the farm runs on seasons. You can’t hurry the rain. At the end of the day, anything worth having or building takes time, takes patience, takes resilience.

[00:33:44] Graham Stephen: Absolutely. So I’m going to give you a chance to wrap up in a second, but before that we have what we call our rapid fire section. Just a few short questions, first thing that comes to mind, a little bit of fun. You ready?

[00:34:01] Johan Potgieter: Let’s go.

[00:34:04] Graham Stephen: Okay. You can only pick one, on the ostrich. Meat, leather, or feather. Which one and why?

[00:34:12] Johan Potgieter: Meat. Health will not go out of fashion.

[00:34:16] Graham Stephen: I like that. Second one, Oudtshoorn or Cape Town?

[00:34:22] Johan Potgieter: Probably Cape Town, for the network.

[00:34:33] Graham Stephen: Fantastic. Third question, what’s the most underrated trait in a founder?

[00:34:40] Johan Potgieter: Adaptability.

[00:34:44] Graham Stephen: I like that. Being able to change with the seasons, so to speak. And you do a lot of fundraising and investment work. What’s the one thing that’s overrated when it comes to a pitch deck?

[00:35:01] Johan Potgieter: Complexity. Keep it simple. Less than 10 slides. And for early-stage founders, stop with the hockey-stick growth projections in year three. That’s fiction.

[00:35:13] Graham Stephen: Yeah, keep it real. It’s got to be aspirational, but keep it real and keep it simple. Second-last question, one thing you’d tell your younger self about to leave the farm for finance.

[00:35:31] Johan Potgieter: Focus on networks and systems. Building your networks, building the systems.

[00:35:39] Graham Stephen: Absolutely. You can’t do it alone. You need that ecosystem that supports you, and surrounding yourself with good people and the right people is critical.

[00:35:49] Graham Stephen: Okay, and then to close it out, finish the following sentence. A business is really just…

[00:35:57] Johan Potgieter: A vehicle for creating lasting value through people.

[00:36:06] Graham Stephen: Absolutely love that. And that people part is important. You know, there’s a lot of doomsday talk about AI replacing jobs. But at the end of the day, it’s got to be for people, for the betterment of families and humanity. We must never lose sight of that.

[00:36:33] Graham Stephen: Johan, this has been a fantastic conversation. I appreciate your authenticity and just the realness behind it all. If people want to get hold of you, how can they reach out?

[00:36:47] Johan Potgieter: The easiest would be through my thornberry.co.za website, or look me up on LinkedIn. Whether you’re a founder wanting to scale, or you need some accounting or tax advice, let’s talk.

[00:37:05] Graham Stephen: Fantastic, Johan. Appreciate having you here. If anyone listening has enjoyed this episode, please share it with a friend, somebody who needs to hear this. If you need a proper valuation done, reach out to the team at bizval at bizvalglobal.com. Until the next podcast, keep building, and we’ll see you soon. Thanks, Johan.

[00:37:24] Johan Potgieter: Thanks, Graham.

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