[TOP STORY] Koos Bekker’s Billions – a cracking read

SIMON BROWN: I’m chatting now with TJ Strydom – author, journalist, many things – in the studio. TJ, good to have someone in the studio.

Koos Bekker’s Billions is the book that you’ve just published. A cracking read. I’ve got to say what perhaps struck me most at the early pages of the book was that he was just this kid from Heidelberg, which is a town I know, because I drive to Durban on the N3 and it whizzes past. Let’s be clear, I’ve never been in it.

Nothing special from a family perspective, but he was special. He was dux, he was head boy. He was a brilliant kid. He didn’t come from money or sort of Afrikanerdom in a sense.

TJ STRYDOM: No, not money, certainly not, Simon. Hi, and thanks for having me. But no, his family was politically well connected. But he obviously took the leap, went to Stellenbosch, studied there, and he was in that sort of milieu at exactly the right time. He went to the same residence as his long-time business partner, Cobus Stofberg and other guys like Jans Kenel and Michiel le Roux. They were there at the same time – Johann Rupert, Chris Otto.

He sort of picked the right place to go, I think, and then became part of this ecosystem of plenty of forward-thinking Afrikaners – definitely from a business sense. And a talented guy, a good guy to stop and spot an opportunity, I’d say.

SIMON BROWN: It’s weird, because Stellenbosch was almost like UCLA in the seventies – the University of California [Los Angeles] – where you had Gates and all the others, not necessarily on campus but it was that hotspot. Everyone thinks of Koos Bekker, yes, as a one-trick pony. He bought Tencent, okay. We will come to Tencent in a bit, but M-Net, he started that. He was obviously DStv. I had forgotten that he was a founding director of MTN. There was a lot more than just Tencent. He was right there and he was at the cutting edge. M-Net in the eighties was radical.

TJ STRYDOM: Radical. It was the second or third pay-TV business in the world, depending on whom you believe. But it was the first really successful one outside the US. That on its own would’ve been a great life story. A guy goes to America, decides probably not to come back to South Africa, then comes back, pitches a business to press groups, telling them, listen, I’ve got an idea for you guys to stop bleeding all this advertising revenue to the SABC which had this incredible monopoly at the time.

They say, okay. They take a run at it. It has a shaky start but, after 18 months, there’s sort of a tipping point and then suddenly this business starts printing money.

He then has a reputation as a real wealth-creator. It sets him up for a European venture. He’s a partner there with Johann Rupert. They build an interesting business that is not profitable. They sell it to a big competitor.

SIMON BROWN: Is that the one they sold to Canal+, which now has a stake in MultiChoice?

TJ STRYDOM: MultiChoice, yes. So full circle. Every 30 years something returns to its beginning. So there they got a pile of cash and Bekker and Naspers – Bekker heading Naspers at the time. But by 1997 he became the CEO of Naspers, of this company for [which] he had just earned a lot of money because of the investment in MTN, and his European ventures.

With that cash they could then throw spaghetti at the wall, which was the internet then, and see what sticks. They sort of picked the internet and China.

SIMON BROWN: That’s the thing. Sitting here in 2022 [you’d think] of course he chose that wall to throw spaghetti at, which was the internet and China. In 1997 that was not the case. I was online in ’97, me and about five other people. Yes, we knew the internet was going to be something, [but] we didn’t know what. China, even broadly Asia, was not the powerhouse it is today in terms of China [being] the second-biggest economy in the world.

It was intense foresight to know which wall to throw the spaghetti at. That seems to have been Koos Bekker reading the book constantly through his career. Yes, he was throwing the spaghetti, but he knew into which direction.

TJ STRYDOM: He did. And he was lucky that it stuck in some parts. We’ve had a few book launches this week about this book. The funny thing is part of the luck is not just finding the investment, but the scale of the payoff. Had he found Tencent and it grew 30X, nice, but 10 000 times is a different story. That changes lives. It changes the trajectory of the stock exchange in South Africa, where you are listed. It’s a sort of world-changer.

I also say in the book one standout investment, a few ‘okay’ ones, and plenty of bad ones. So he built one business, M-Net, and it changed South Africa. I think culturally it also changed South Africa. It was a sort of watershed moment when a family got M-Net in the late eighties or early nineties. It was a date that people remember. So that had an influence. There’s a sort of an Americanisation of South African culture that happened, I think mostly because of M-Net, because of the kind of entertainment that [was aired on it].

So he had this outsize influence culturally. and then built a great business, found a great other business, but hasn’t really been able to find enough. No one in his team has found another Tencent.

SIMON BROWN: But Tencent is – and this is not just from a South African perspective. People I know in the industry and in the US and even in Europe will say, it is the deal. It’s the best deal in sort of the last hundred years, maybe thousand years – who knows? Maybe there are some others up there. It wasn’t something you were going to replicate, but it was also part of it. Some of the early deals he did, where they didn’t sell and then the prices collapsed, it was the one holding on. I know [as] an investor and trader, when you’ve got losses, it’s easy, you cut them, and when you’ve got winners – [for him] it got bigger and bigger. Every time he said he wouldn’t sell, a year later it would be worth even more again.

That was another skill, particularly considering that he did this and dotcom was collapsing. And here he is in China buying tech companies.

TJ STRYDOM: The time at which they invested is crazy. If you think of it, it’s like buying a restaurant chain in the middle of Covid. It was like that. But yes, he convinced investors – I say investors. Someone brought him the deal, someone he sent to Asia. He then convinced the rest of the team: ‘This is what we have to do.’ They did it. This is after they committed $32 million to Tencent, which doesn’t sound like that much now, but that’s after they had lost $80 million already in what was perceived as a risky part of the world. They stuck with it and yes, he didn’t sell. For 17 years Naspers did not let go of a single share of Tencent.

When they did sell for the first time – and this is what’s so brilliant – they just sold a sliver. They’d paid $32 million initially, and that first sliver they sold for $10 billion. They sold another sliver three years later for another $15 billion dollars –and they still have something worth more than $100 billion. Amazing.

SIMON BROWN: Still there. Amazing. You said M-Net was a cultural revolution for South Africa. I hadn’t thought of it that way. It absolutely was. We never had it, but my friends who had it were my better friends [laughing] because I could go and watch it. We had the Open Hour. In many senses Tencent has changed the face of the JSE – and we can debate whether it’s good or bad, we can park that aside. But from a mining-dominated [stock exchange] 20 years ago to ironically little South African Stock Exchange, Chinese tech dominated; it made South African investors good money.

TJ STRYDOM: Yes, certainly. It made lots of investors good money and also frustrated some other investors because they had to sell out so often when Naspers was the only gig in town growing, and it just outgrew whatever their mandate was, how much they could invest in a single stock. It must be incredibly frustrating, but yes, it has changed South Africa. I mean, Naspers in effect is South Africa’s first true multinational. Well, I’d say it’s also a different multinational from any of the others. You know, SAB would be a great example, but they left to go and list in the UK.

SIMON BROWN: Fair point.

TJ STRYDOM: Naspers is the JSE’s sort of multinational. They went into businesses that no one else really grasped or thought of going into. They have built this empire of investments in consumer-facing tech with the money that they’ve earned from Tencent over the years. And now it’s a funny animal. I mean, it’s food delivery, and it’s education technology, and it’s electronic classifieds, and it’s mobile payments, and the stake in Tencent. It’s a funny business, hey?

SIMON BROWN: And write-downs in Russia. We haven’t got time for that. We’ll leave it there. The book is Koos Bekker’s Billions by TJ Strydom, a riveting read. TJ, I appreciate the time.

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