SaaS business


Pic from when I saw Milford Sound in New Zealand


I’ve started working on a new idea for a software business. I’m looking at both developing my own SaaS business as well as acquisitions.

There are three pillars here that I’m learning about:

  1. What kind of businesses are for sale, at what multiples, and how much competition do these websites have. Perhaps an idea will pop out, as for now, I’m not looking to acquire a SaaS business. I’d rather build my own than spend $100k. Will keep assessing this as I become more competent in #2 below.
  2. Learning software development for Web and Apps. I don’t have experience with newer software in these areas, so am learning how to use Ruby on Rails for Webapps, and Java for Apps. Learning through a combination of building my own software and tutorials.
  3. How do you find a niche and customers. I’d like to combine SEO as well as expensive competitors to eventually carve out a niche.

Key Question: Do I want this as a job? Or a business? or an investment? Needs to be clear, so I can scale appropriately. For now I’m just enjoying learning a new programming language.

Travel hacking – Discovery Credit Card

Been thinking about how South Africans can obtain great rewards and points for travel hacking using local options. One of the popular credit cards is from Discovery. Let’s see how effective the card is.

Conversion rate: 10 miles for R1 used to pay for standard price of flight or hotel. Flights are discounted by your vitality status up to 35%. Further discounts available through their Discovery Bank, which will be investigated one day should there be value in the banking platform.

Partners for flights: unfortunately you need to book with their international flight partners through Kulula hence limiting some of the cheapest flight options you may find through Googles flight search. Partners are Qantas, British Airways, Emirates and Kulula. These will get you to most destinations. Another restriction is that you need to book a return flight to SA or a flight originating from SA. No booking of a cheap flight elsewhere that doesnt include SA (like connections) , open jaw flights if you want to return via another city.

Lastly, can no longer convert miles to other providers like Avios or SAA so the ecosystem has become quite limited to what Kulula offers.

Hotels are limited to South Africa, problematic for overseas travel.

Earning miles: Standard rate is 1 mile for R15 spend, translates to 0.66% cash back which very slow. However some of their partners provide accelerated miles, if you are at Diamond level, you receive 10x the miles for your spend, tranating to a 6.66% conversion rate. Extensive list of partners, but effectively gettinf groceries from pick n Pay, fuel from BP or Shell, consumables from Clicks or Dischem, online shopping from Takealot, etc. Their site lists the full range but lots of options, just requires Diamond status for the benefits.

Cost: R432 annual fee for Miles.

Monthly credit card fee of R95.

Diamond status Vitality R259 per month.

Total annual fees: R4680 (R4284 if you use Gold instead of Platinum card).

Is it worth it?

If you were to buy a return ticket to London for R10k or New Zealand for R15k you could do reasonably well with this card. You’re limited to 2 international flights a year, and if we assume these two examples you’d get R25k worth of flights, pay 65% worth Miles (the 35% discount removes R8.75k from the initial price). The Miles required are 162500. At the ratio of 6.6% you require credit card spend of R240k across groceries, fuel, consumables and household items.

At that spend level then you’d be able to receive these two flights for the cost of R4.7k assuming you’re at Diamond level (not an insignificant achievement), but not really worth it if you only utilise the international flight benefit since you would have been paying for 3 years of Vitality fees already in order to achieve the Diamond status.

Overall, Vitality fees make this a steep, somewhat limited, but still a worthwhile option for travel hacking.

Networth update February 2018

So overall networth has been growing well. This was driven by a combination of strong equity market growth, savings and improving political situation in our country.

In terms of overall NW we’re sitting at 80% in listed equities.

The focus has now shifted from maximising networth to optimising income. The focus is to get as much tax benefit through optimally placing the investments into the correct taxable vehicles. So my waterfall looks as follows:

1. Max out interest allocation, that’s R23.8k per person and at 7-10% interest rate is about R240k-R340K of interest instruments. Ours are fixed deposits, loans and bonds here.

2. Max out Tax free saving account (TFSA) a small r33k per annum allocation that attracts no tax on after tax income. We invest these into high income instruments like property and bonds.

3. Max out retirement annuity, tax free savings but hesitant since a growing balance means more money stuck in SA till we’re 50+ age and big slant towards SA and the income tax rates start to exceed other tax rates once the balance is higher than R1m. Anyway whilst I’m working its better than marginal tax at 40-45%.

4. Pref shares, I like these since can get dividends at high rates but am able to get them at 0%-20% tax depending on vehicles

5. Global property – decent returns at 3.5% yields but am avoiding SA property for the foreseeable future post the expropriation discussions that started in December.

So there you have it. Increase income, probably not with more local or global equities for a while until all expenses get covered by passive. Plans had to change because local property is no longer an attractive option so will instead generate it from preferred shares, fixed income and global property REITS.

New business

Critical to any new business idea needs to be the concept that it wont require me to be present on a day to day basis or even at all. Strategic direction is fine but key man dependency is undesirable.

I want a business to function, I may have a role in the org but it needs to be replaceable by another employee with suitable skills. Also I cannot be the CEO/MD since then I’m unable to get out.

Perhaps while the business is small and starting say in property I could manage them until they reach scale. The plan though needs to be to reach scale as quickly as possible. It also requires to put in my capital into a business that exhibits good steady margins and cash flow. Hence acquiring an existing business is preferable. Or just stick with property rentals…

Five tips for life

I really enjoyed Richard Bransons recent post about five tips on making every day count because it resonated with me in terms of keeping things simple and making life about purpose and purposeful.

My own thoughts in relation to each of the five was as follows:

1. Something fun to start the day – so am exercising but also could do a bike ride, yoga, other sport

2.just do it – stop worrying about what others think and rather work hard and take chances.

3. Set goals and challenge yourself – set short term and long term goals and write them down. I’ve always loved keeping notes, think Ill use this platform in future as I don’t run out of space and can keep writing.

4. Take a break – I love walks for thinking.

5. Do some good – I wish to change jobs or business and have both the benefit of exciting projects whilst helping others be it social good or customers.

5 cool ways of living that I think are a great way to ensure you keep having fun while helping others.

Growing your capital

I’ve had some thoughts about investing and getting to financial independence. Clearly a key part of this is having enough passive income to cover your day-to-day expenses.

To get passive income, I find that dividends from businesses is a great form. One of the easiest for the average guy to access being via dividends from the share market. Business income through owning shares in the private sector are even better, but not easily accessible outside the industry. Listed companies provide great access to dividends and therefore passive income.

Now, what do you really need to get access to dividends?  Money, ie capital. It’s all very well knowing that you got to get dividends, but actually you need capital, meaningful capital to do so. And the best way for me to get capital has been historically?

To earn it.

The quickest way I got increased capital was through earning more. And not spending it all. It was far quicker than growth from my existing investments, or from building a business. It was just earning more. And I did that by, firstly working and billing more hours when I worked effectively as a consultant. Then it was by switching to a career that paid more. Then it was by adding real value and getting share and equity options. These all helped grow my capital the quickest in the beginning, because I had little capital to begin with.

Once I’d built up decent capital over a period of 10 years (like 5x my gross annual salary), it was much easier to compound it, because now a 10% growth rate on the capital base actually made a difference. Prior to having this, I could’ve made a 100% growth and made the same difference as a monthly paycheck.  Now a 10% growth would equate to half a years pay!

Until you get to any decent scale of capital, the best bang for your buck, in my opinion, is to shoot the lights out on active income, ie job/your time for income.  Heavily invest that capital, spend like a business owner (ie low expenses, high margins) and after 5-10 years have a strong base to take yourself to the next level!


April 2017 Net worth

Starting to feel like an expat now! April has been an interesting month, the currency has been fluctuating quite wildly due to political risk changes, the downgrade of the country from investment to speculative grade and all the volatility that goes with it. Despite this our net worth has still been doing well, mainly because we’ve diversified across geographies now so if currency movements happen we come out ahead in rands and hedged on hard currencies.

More importantly is the effect of all this on the psyche, hence my opening comment on feeling like an expat. Starting to move away from being emotionally attached to a market and rather looking at pure investment fundementals. This has always been an issue with home-bias affecting one’s investments. It is also the reason for not being overexposed to local circumstances as we already have a property, jobs etc here.

In terms of figures, most of the increase in net worth came from increases in share values (non rand shares) and savings.





2016 is done! Reflections…


So my 2016 work-year comes to an end. It has been a great journey and definitely one of my nicest ones in recent years.

In terms of financial (why I keep this blog!) the following happened:

  • Settled all outstanding debt by paying off the house
  • Sold my shares in a private business that accounted for the majority of the boost in net worth (+50%) and re-invested all this cash.
  • Watched the currency strengthen from its horrible lows last December.
  • Consistently saved in excess of 50% this financial year excluding the business share proceeds.

All-in-all a great year and we’ve gotten to the stage that we are so close to the 4% to cover expenses that it’s possibly in the bag by next year.

I’ve learnt a lot over the year, am in a happy place than I was last year. Work is done for the year and so can go away peacefully for the end-of-year festivities.

Happy holidays for those taking time off!


November 2016 net worth update

That’s not me kite-surfing, although I wish it were!


November’s increase was pretty non-descript. The majority of the increase came through an increase in cash savings in investment assets.

Savings wise it wasn’t a bad month, we didn’t have any large expenses although as per the graph below you can see we were a bit above our average. Pretty standard month also on the earnings side.

I’m enjoying see the average expenses and 4% Safe Withdrawal rate lines converging steadily, particularly after our big boost earlier in the year.

Till next time, 2016 is a wrap!

Thoughts on financial freedom and doing what you want

Having recently watched Annie, the musical, it struck me as to how out of one’s control life can be. Those made destitute by the Great Depression despite being skilled workers resonated. It would seem this shouldn’t happen and with the best of intentions cannot get back to normality.

It seems it situations like that, there is very little that can be done. Perhaps nowadays it would be easier to move to another country, but a global crisis would limit even this possibility. It just feels like it’s a wake-up call for everyone to do more of what they want, live your life now as things are not in your control and not to work to the exclusion of all else.

I’ve bumped into a number of people lately that say you cannot have time to spend time with their kids due to work committments. Things like making costumes, or attending children’s plays etc are not possible when working and also you have no alternative to working and getting them into private schools. I wonder if people assume they need to work in order to have nice things – there is a mismatch between wants and needs and this causes us to believe you have to work more. I’m pro gender equality, but I think children get a better upbringing with parents that are present. I want to be able to spend time with kids rather than being an ATM. If that requires less consumerism, so be it. Better than financial slavery tied to a desk.