The new Naspers CEO: Dancing with Koos Bekker

Thirty years ago this month, Naspers listed on the JSE. It would turn out to be the greatest corporate success story of South Africa’s first quarter century of democracy, under the control of SA’s own media tycoon, Koos Bekker. Five years ago, Naspers’s offshoot Prosus debuted on the Euronext bourse in Amsterdam. The then CEO Bob van Dijk, who cycled to that event, heralded it as the start of $100bn of wealth creation. It wasn’t. In fact, the opposite happened – to the extent that he’s no longer in the saddle. Enter Fabricio Bloisi, the man who many hope will turn out to be a Koos Bekker 2.0. 

TABLE MOUNTAIN in the background, Cape Town’s business core a dozen storeys below, and Naspers’s newly minted CEO is lamenting how the tech giant has a hundred companies in its portfolio that it is not using to full effect. His tenure will be a time of closer collaboration, he’s about to promise a roomful of financial journalists, who are now bracing for the dreaded phrase “unleashing synergies”. 

Instead, as if on cue: “Ooh, I wanna dance with somebody … I wanna feel the heat with somebody … Yeah …” blares through the room, before Fabricio Bloisi can get to his phone. 

Silence. And then laughter. Who still has a ringtone? And which C-suite executive would choose Whitney Houston at her most upbeat?

Whether a serendipitous oversight or a meticulously planned charade, it seems that the 47-year-old Brazilian will be a different sort of Naspers and Prosus boss, though each of the past few executives has had his own ringtone, if you like.

Bob van Dijk — “Rotterdam, or anywhere, Liverpool, or Rome” — hosed many start-up founders down with cash, most notably to build up a portfolio in education technology that is now worth only a fraction of the several billion dollars the company spent on it.

Van Dijk’s approach was certainly a departure from the modest bets of his own entrepreneurial forerunner, Koos Bekker. Having acquired a large block of high-voting shares during his tenure, Bekker could set his ringtone to “I’ll tell you what I want, what I really, really want” and go about the business of fundamentally transforming a regional media group into a global tech giant.

‘Almost bankrupt’

Ironically, it was cellular phones that put Bloisi on the path that would bring him to Naspers’s attention.

More than a decade before he would sit behind the CEO’s desk, he was standing in front of it, seeking an investment from the company’s then boss, Bekker.

“Initially his products were pretty poor,” recalls Bekker, now the chair of Naspers and Prosus, when announcing Bloisi’s appointment a few months ago. “All sorts of things, ringtones for telephones, kids’ programming and so on.”

But it left enough of an impression. So, in 2009, Naspers invested $2 million in Bloisi’s venture, a company called Movile. By then, Bloisi had actually been going for about a decade. After a degree in computer science, he started grafting; his plan was to build a technology giant in Brazil, one of the world’s largest consumer pools, but where there were no tech champions. So, with a classmate he founded Intraweb at a university tech incubator for new companies. If you’ve ever seen a hall full of newborns, you’d know an incubator is not a spacious affair. They worked in a room the size of a caravan, but in place of camp cots there were two computers.  

“The company almost went bankrupt many times,” Bloisi tells Currency. “The first five or six years, we don’t talk about that a lot, but we had lots of ups and downs.”

In Bloisi’s typical Brazilian lilt (he hails from the state of Bahia), it sounds like “apps and downs”: not an inaccurate description, seeing that he and his team took the business through several iterations – ideas galore – before finally latching onto a winner.

Initially the focus was on software; Bloisi is, after all, a developer (with a master’s in computer science and an MBA at a Brazilian university, as well as stints at Harvard and Stanford).

A brave new world

Naspers, meanwhile, was cheerfully employing Bekker’s investment philosophy of throwing spaghetti at the wall to see what stuck. The biggest noodle was, of course, Tencent, the Chinese start-up in which the South African company invested $32 million in 2001. That investment is now worth north of $100 billion. 

In those days, Tencent was at the coalface of a new tech world. And if the Chinese were onto something, why shouldn’t it work elsewhere?

Fortunately for Bloisi, Tencent was also tinkering with content for mobile phones when he came knocking in 2009, so Bekker and the Naspers team were happy to take a modest punt on something similar in another large market.

And so Movile used the money to deepen management and help its own punts expand faster. Testing innovations and running with the winning ideas was all part of the strategy, and the Naspers investment was the start of making that possible.

“There was one inspiration for me, it was the first Uber app. I used to go to Silicon Valley a lot and I used Uber before it was famous. And I said, let’s try to do that with ticketing and hotels and food delivery,” remembers Bloisi.

Smartphones were just taking hold, and their visual user interface was creating plenty of opportunities, particularly for developers eyeing Brazil’s huge market.

Using mobile technology, Movile was flogging tickets for just about every live event in Brazil, as well as supplying children with educational content. It then hit on food. 

“I wanted to do food delivery, so I bought a 10-person company that did [that],” he says. 

Ten other companies had the same idea, but Bloisi’s mantra is: It’s not the idea, but the execution that counts.

Still, it was only in 2012 that his team developed an app for smartphones. If you look at your device’s home screen today, it all seems obvious. Back then it was a leap, even for the tech-curious Bekker and his team.

“The first conversation I had with [Naspers] about this,” he recalls, “they said: ‘Food delivery, what is this? You do mobile, what’s the connection?’”

That’s exactly what it was — a connection. The business he bought ran a call centre with a few restaurants as clients, and a website. The smarts was to transition all transactions to a mobile platform. iFood was one of the first to do so, worldwide, predating even Tencent’s mobile munching venture Meituan.

Compared to many of Prosus’s other investments (excluding Tencent) it has been quite a success, generating a trading profit of nearly $100 million last year. Prosus has since ploughed in billions to scale iFood up, to the point that 30 million people now use the app every month.

If you’ve ever ordered a meal for delivery in São Paulo you’ll know that iFood is like Uber Eats, but with personality. Or maybe more like a Mr D that went to private school. Slick, clean and quick. The business is now broadening its scope to include credit, both in the form of business-to-business loans and meal vouchers.

Succession

It has curious parallels with Bekker’s own career path. Back in the 1980s Bekker, in his mid-30s, also stood in front of a room of sceptical executives at newspaper giant Nasionale Pers, running through a slideshow explaining why his pay-TV venture would work. The projector got stuck and the then Naspers boss Ton Vosloo ordered someone to help him get the slides running again. The result was an investment in what became M-Net and then MultiChoice. And for more than two decades pay-TV was the cash cow that allowed Naspers to take media and tech punts in different parts of the world.

The pitch went so well that in 1997 Bekker succeeded Vosloo as Naspers CEO, a job that he would hold for 17 years. His own planned successor plan was Antonie Roux, a tech whizz and M-Net and Naspers stalwart, who unfortunately died before he could take the reins. So Naspers settled on Van Dijk, a former management consultant with a master’s degree in economics and a keen interest in surfing.

With Van Dijk, Naspers embarked on a decade-long programme of trying to figure out what it actually was. A holding company for that ever-growing Tencent windfall? A pioneering tech giant in the league of Facebook, PayPal or Alphabet’s Google? Or a venture capital group that would spend everything to find the next big thing?

The problem was, it tried to be all three. As a result, a massive discount developed between the value of Naspers and its stake in Tencent. Of course, having your biggest investment outgrow all expectations sounds like a great problem to have. But the Chinese giant dwarfed everything else and the “discount”, often at more than 40%, became the defining feature of Van Dijk’s almost 10-year reign.

It also did not help that he — much like a management consultant — wanted to organise the rest of Naspers and Prosus into four “verticals”: classifieds (with OLX as the big pilar); food delivery (including iFood, India’s Swiggy and Europe’s Delivery Hero); payments (India-heavy fintech in the form of PayU); and the ill-fated edtech (investments at the top of the cycle in businesses such as Stack Overflow in the US and Byju’s in India).

Billions of dollars were spent to flesh out the portfolio. And billions more on share buybacks (selling down slivers of Tencent to fund the repurchase of Naspers and Prosus stock).

Bekker 2.0?

Though much of the shopping spree has since been acknowledged by interim CEO Ervin Tu as a costly mistake, the large buybacks have been well received by shareholders. And Bloisi is clear: the buybacks will continue until the discount narrows to an acceptable level.

That’s clearly a relief to the market. Equally important, though, is to get the underlying investments in Prosus’s portfolio profitable. The responsibility for that won’t rest on Bloisi alone, however. 

Bekker told investors earlier this year that the new CEO’s global M&A experience is limited and that he — Bekker — favours a team approach. Tu will do the big deals and Bloisi will be tasked with looking under the hood.

This, say critics, has been lacking for a while.

“Given the importance of getting the underlying Naspers/Prosus operating companies profitable and growing in a way that it can create shareholder value, you need an entrepreneurial CEO who drives the right culture in the business,” says Denker Capital portfolio manager Claude van Cuyck.

Bloisi wants to channel the culture of the Naspers he got to know more than a decade ago.

“Prosus is today more ‘siloed’ than it should be,” he says, arguing that Prosus is a tech firm with global reach, not just a holding company.

The difference is that the first innovates, the second simply cashes in on the innovations of the past.

Another issue that Naspers has had to confront is its hefty executive salary bill. Van Dijk made a fortune from his share options, even as his team ended up destroying value. Just as long as the Tencent share price kept humming. This was in sharp contrast to Bekker, who famously took no salary but struck a deal to rake in some 3% of the increase in Naspers’s value. 

Bloisi meanwhile has an incentive that sounds a lot more like the Bekker way. The most arresting aspect is a “moonshot” award that could be worth $100m in Prosus and Naspers stock by 2029. The catch is that the group’s market capitalisation would have to double by June 30 2028 to $168bn – among others.

But, says Van Cuyck, if that happens Bloisi “will not be the only satisfied individual – all shareholders will be happy with the share price more than doubling over a four-year period”.

Still, warns Pieter Hundersmarck, who runs a family office in Amsterdam, the same board that allowed the missteps of the past decade is still there. Bekker, as chair and substantial voting shareholder, still has a firm grip. Not to mention that the structure between Naspers, Prosus and Tencent is something that puts off many would-be investors in Europe.

So will Bloisi be his own man? 

Certainly, he knows the ecosystem and has been on the receiving end of a Naspers/Prosus investment for a decade and a half, which makes him a strange mix of insider and outsider – much like Bekker back in the day, who was able to come in and transform the business.

It was a research project during Bekker’s Columbia MBA that laid the foundation of his M-Net idea. Likewise, Bloisi wrote his master’s thesis about innovation cycles. At Naspers/Prosus the first three were “print, cable and social”, he says. Next is AI.

If Bloisi turns out to be Koos 2.0, many will be pleased. Chief among them, probably, Koos 1.0. He does, after all, stand to benefit hugely if that happens.

♦ VWB ♦

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