For a long time now the line between startups and agencies has been blurring. With tech and product becoming so incorporated into daily operations and often determining revenues, it’s not unusual to see a startup act like an agency or the other way around.
South Africa’s Springleap fits the bill of a startup-turned-agency rather well. While the company started out as a platform crowdsourcing T-shirt designs, it recently pivoted to leverage its global community of 800 000 creatives to fulfill other agency needs.
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It was during this time of flux that Springleap got US marketing expert Trevor Wolfe to come on board as marketing director.
Born and raised in New Mexico, Wolfe has worked for ad giants such as TNS, corporate outfits like Gerson Lehrman Group and lean startups like Moveline. Given his extensive network and background in the agency, marketing and startup space, he seems a good fit to help define Springleap’s new goal of becoming a global leader in localised industry insights.
Ventureburn sat down with Wolfe to talk about Springleap’s pivot, current business model and where all these fit in with South Africa’s industry and abroad.
Ventureburn: What drove you to come on board with a bunch of South African guys from Springleap?
Trevor Wolfe: It was a mutual decision. My partner and I made the decision together. I had been commuting from New York to the Las Vegas office every week — fly out on a Monday and spend Sundays with my partner. I got really tired, really quick.
She and I had both been looking for international finance so made the move to Johannesburg. I guess what attracted me about Springleap was that it had a lot of interesting components: the marketplace, the business model, matching supply and demand.
The fact that it also had this really engaged community was really compelling to me. The fact that we had these thousands of professional creatives is really powerful.
VB: Springleap went from selling T-shirts to doing brand campaigns, among other things. How did you help in its pivot?
TW: What we initially wanted to do was swap out the T-shirt competitions for ads, logos or package competitions. That’s how we made that transition, as we thought brands would bring in more revenue than the average consumer. Ecommerce and selling apparel in South Africa isn’t that lucrative.
The problem we found was that the brands and agencies share faith in each other’s abilities and didn’t want to break that up. Going in there saying “I’ll give you 40 designers instead of one” didn’t negate the fact that they were on year-long retainers with each other agencies.
Read more: Life after t-shirts: Ventureburn gets the exclusive behind Springleap’s pivot
So why would I let you in on my revenue stream? Basically, the clients were saying they didn’t want to jeopardise their relationships with their agencies even if we could do a better design.
We did a lot of projects with the likes of Samsung or Marmite and built the technology to facilitate all that, hired a sales team and probably went to 300 or 400 meetings trying to sell all that product. And it just didn’t work.
So we were a bit nervous and started throwing everything out. We started asking different development teams in SA to find out what customers would do.
We found that they don’t need us for pencil on paper design. They need feedback for idea generation and local insight into the market. Our clients want to know what it’s like to be a black person in Soweto. If it’s a Cape Town agency; what’s it like in Johannesburg during the traffic on the N1? That’s how we made that last pivot.
VB: So how do you currently crowdsource all that information?
TW: We launched our creative insights department. One of the products we came up with was a SaaS-based platform that’s now in beta with around 200 users. There’s no big data. It’s not metrics and analytics. It’s literally like trends, insights, influencers, events and impactful brand activity.
Read more: Springleap’s new Creatives Insights platform helps brands expand to foreign markets
It’s meant to give people a better understanding of different demographics and regions. We picked up 50 people and got a central team to manage quality and training of the people who are part of the network.
We just launched in Kenya, Nigeria and Ghana as well.
VB: Do you think the line between startups and agencies are becoming more blurred?
TW: In the States, the lines cross. I mean adtech — which is not fully fledged [in South Africa] — is a booming thing. It’s all fintech in South Africa. Agencies have been acquiring them for days. WPP, Digital Publicis, Omnicom all have digital acquisition venture capital firms that buy digital companies. They’ve been doing that for five years now.
You see that the [American] agencies are building their businesses around these acquisitions. It’s now common to see an analytics department or a procurement department that evaluates startups.
Read more: Springleap goes big: expands into Middle Eastern, pan-African markets
You kind of see this happening in South Africa, where there are all these meetups happening that are creativity plus ad startups. There’s probably a common denominator between those two groups. Maybe creatives are trying to disrupt the status quo which shares the mantra of most startups.
VB: SpringLeap is positioning itself as a global brand. What’s its position internationally?
TW: We have 12 000 creatives in South Africa and have quietly built a database of people we’ve engaged with of around 800 000 creatives from around the world. So far, we’ve reached out to 100 000 of them and the rest haven’t heard about us.
We’ve done work for around 15 to 20 American brands. Not big brands, mostly startups. But we’re testing operations out. We will start marketing it to Western Europe and Asia.
VB: Where does Africa fit in to all this? We hear about all these acquisitions and big tech companies setting up shop here. Does Springleap find itself in a sweet spot?
TW: I think it’s going to be excellent. The Associated Advertisers just put out a big press release saying that we need more insights into Africa. We had nothing to do with that, but it was very important for us to know. We have this network of people around Africa. Our model seems to be powerful for South African brands and the rest of the Western world looking in.
Read more: 2014: the year in digital agency acquisitions
That’s the mission of our North American fundraising — having a global market and global appeal.
VB: Springleap recently won the Techstars and AlleyNYC PitchNite. What does this mean for you?
TW: The owners of Techstars Global hosted this as a way of getting aspiring entrepreneurs a chance to pitch. It was the first one we’ve done in the States. We haven’t even pitched the new model in South Africa.
This was our first pitch to VCs who are going to be poking holes in our business model — see if the startup community will get excited about the idea. We’re nervous about that. Can we get people excited about research? Are we crazy? We really welcomed the fresh eyes.
The event wasn’t there to raise funding but there were investors and the validation helps.
VB: How much funding are you looking to raise in the States?
TW: We’re looking at US$3-million to US$5-million. We’re currently closing our seed round of US$800 000.
VB: You obviously have an extensive network of investors to tap into abroad?
TW: Yes, we have access to Cross Border Angels which is one of the first angel, VC firms in America that is promoting the investment in foreign companies. They don’t want startups that are just going to build a product for the United States. They’re looking for many companies that start in India but have global appeal or starting in South Africa with global appeal.
VB: What should other startups know about tapping into the overseas investment market?
TW: What helped us was the fact that we know another market outside of America, because unicorns don’t happen if they’re confined to the borders of America. That’s an extremely competitive advantage for us. We can get you into Africa. In fact, we can get your portfolio companies into Africa. They can use us and our extensive network.
A lot of VCs invest not just for the potential return, it’s also about knowledge transfer. They are investing into a new vertical they expect — through the board meetings, the due diligence processes — to learn about the industry and its potential. They want to get figures that are not public.
Read more: Choosing a path: when startups act like agencies and why it’s okay
We can show them that this is what Africa and its creative community look like. We’re telling them what brands are doing well in South Africa, what agencies are doing well.
Even if they love our model and they see the potential for us to be global, I think subconsciously they’re also saying “They can help us learn about Africa.” Whether they’re making investments there or helping other companies into Africa, I think there’s tons of value in having local knowledge.
VB: Given your diverse background, what do you think about the South African tech startup landscape?
TW: There are a lot of common complaints that everyone knows about. Getting that first round of angel investing is one of them.
I think let’s discus one that I’d like far more attention to be paid to, which is corporates’ lack of partnerships. Not just like building an accelerator and new office space, but actual revenue-to-startups. Specifically B2B startups. A lot of these corporates are not embracing innovation, they focus on excellence.
What bothers me is that startups are literally losing their hair and building these products that are meant to solve many of the corporates’ problems. And when they go and present to them, the corporates take forever. Payment terms are 90-days, they take them through a three-month dance and come out with no contract.
The corporate community is not embracing these startups.
You do see what’s happening within verticals of the startup market. Fintech now has this crazy ecosystem built. All the major banks are building their accelerator programmes which encourages startups to get attention, finance and revenue. I think this is an opportunity for other sectors like healthcare, government agencies and advertising companies.
