JOHANNESBURG — Many people in South Africa may have never heard of Lobster Ink before. It’s a company that’s quietly gone about its business providing online video training to staff in the hospitality and tourism sector. From small beginnings in South Africa, Lobster Ink has grown rapidly to service the world’s biggest hotel groups from Africa to the Middle East and the US – it’s now based in Geneva, Switzerland. But more interestingly, Lobster Ink was recently acquired by Ecolab for an undisclosed sum. US-headquartered Ecolab is a major global provider of water, hygiene and energy technologies and services to the food, energy, healthcare, industrial and hospitality markets. In this interview then, Fasie Malherbe, the President of Lobster Ink, tells us the story of his company. – Gareth van Zyl
It’s a pleasure to welcome Fasie Malherbe who is the President of online corporate training business, Lobster Ink, which was recently acquired by Ecolab for an undisclosed sum. Fasie, thanks for joining us on the podcast.
It’s a pleasure, thank you Gareth, and good day to your listeners.
Now, your business Lobster Ink is global but it has South African roots. Can you tell us more?
Yes, Lobster Ink is really the story of four young South African gents, Dale den Dulk, and myself we decided that, and this was through a pleasure or a passion project, effectively we wanted to travel to luxury safari lodges, stay in the best accommodation, and drink fine wine and we came up with this cool idea that we were going to go and do training within these properties, whether it was food, whether it was wine, whether it was housekeeping training, and it developed from there. So, effectively, we started in 2006 and developed a training curriculum on how we would train food and wine and the various dynamics on how to deliver on the luxury expectations of some of the most discerning travellers globally.
SA has some of the most expensive room rates on earth and, as a result, the expectation of guests coming to those bucket-list destinations is obviously extremely high, compared to New York, London and the likes. However, we were teaching individuals that had no previous experience in luxury hospitality. Fine wine was a third, maybe a fourth or a fifth language, we’re talking Sauvignon Blanc, Cabernet Sauvignon all these words were completely different things. So, we developed a programme called Bush Logic, which the quick version is that it associates the surroundings and the relevance with wine in order to onboard and teach really rapidly, and make it truly South African or truly African.
Effectively, the quick version is that Cabernet Sauvignon is a grape, it’s a variety of grapes. Cabernet Sauvignon is similar to the elephant and then we talk about the elephant. What is the elephant? Well, it’s the largest out of all the animals. It has the thickest skin, the biggest backbone, the biggest structure, and it’s the heaviest. When it’s young it’s upfront and aggressive. As it gets older it becomes noble and majestic, and all of a sudden there was a rapid onboarding so, a truly South African experience. And this essentially developed into something that was, we didn’t realise at the time, something that was incredibly needed and had huge scale to it within the African Continent.
We started this first business and very rapidly we were very fortunate to have Paul Rowett come on, who’s the hardest working person I know, and then Tim Nel, who’s the cleverest person I know. And the four of us effectively then embarked from going from a face-to-face training company into video production, which we uploaded onto 27 inch Apple Mac screens and that were sent all over the African Continent. Our two pioneering clients were Wilderness Safaris with camps all over the most remote parts in Africa and then obviously Singita, which was a huge proponent because of so much investment in their teams that made a place for us.
We sent those Apple Mac screens with videos of the trainings that we used to do and all of a sudden, Lobster Ink was born. It was a video-based training company initially. Uploaded onto 27 inch Apple Mac screens and it was an African focussed solution. We had no clue that it was going to be a globally relevant solution. Only then once the likes of Hilton Middle East & Africa turned to us and said, ‘guys, the solution that you have, first of all, we can’t do 27 inch Apple Mac screens. It needs to be mobile, number one, and it needs to be online – come up with a solution please.’ And that was our first break into the global space.
When that break happens how quickly did it expand across the rest of the globe, because I looked at a map on your website where your offering now is accessed almost on every continent basically?
We fell into a lot of these things due to enormous amounts of needs. Tourism is two of the five pillars of the UN’s Alleviation strategy for the globe. So, tourism is a huge component and we sat squarely, not only in luxury but in tourism and in general. If you take into account that the globe is approximately 60% short on chefs, there is an enormous need for the skills development, knowledge skills and behaviour training that we are delivering on.
But effectively what happened is a lot of companies feel that they need to go to the US because it’s the biggest market on earth. But our strategy was different. We were focused on an outside-in strategy. We didn’t target Hilton, IHG, Four Seasons, Marriott Hotels, etc., from inside the US. We targeted them from outside the US.
Often what happens is these global organisations is that they have so much focus in the US and so many solutions and they are bombarded by these solutions continuously. This means the outside solutions don’t necessarily have as much focus because it’s further away from the mothership or the head office.
What is your presence now in the US, because you talked about this outside-in strategy? So, you must be present there now, right?
Yes, absolutely. So, once you deliver on expectations outside of the US. All of a sudden those outside regions have a reason to be able to turn to corporate head office and go, ‘guys, we understand that you have given us a whole lot of solutions. However, here are the return on investment statements that we have been able to deliver on within our current solution’ which is Lobster Ink.
Now, the biggest focus of Lobster Ink has always been, how do we appreciate or respect the time more than anything else? So, we always look at the five most important areas of return on investment or performance when it comes to training. So, we’re not just going to go and do training for training’s sake. What we do is, the five most important key elements for us are guest experience, how do we increase sales, and decrease cost, reduce turn or maximise talent and then most importantly, seat time.
With a recent project that we’ve just done with Marriott International – if we look at the amount seat time that they needed to do for the integration between Marriott and Starwood – training over 700 000 associates within that organisation: it went to over 400 hours’ worth of notional hours of training that they needed to train-up all their team members for this integration and understanding all the systems. Now, we dropped that down enormously, to under 100 hours, and that rollout happened within a three-month period to 700 000 people across 7 500 hotels.
So, all of a sudden once you’ve proven the return on investment statements, you can then take that into the US and then have a conversation with corporate head office. But it’s extremely difficult to go and knock on the door of corporate head offices, whether we’re talking about Whole Foods, whether we’re talking about Marriott or Hilton, Nestlé Waters. Whoever you’re talking to it is often far easier to take the outside-in strategy and then also, to take the big-five and best-five strategy.
If we look for instance at who are the best-five globally, within the hotel space, which is our first point of call? It’s Shangri-La, Mandarin Oriental, Ritz Carlton, Peninsula Hotel Group, and then there’s one I forget, but effectively, you target those five and if you get those onboard generally you will have followers in that.
Then the big-five give you the scale, and that either gives you the scale that could break your business — because you have to deliver so much in such a short amount of time — or they squeeze you for margin and they have huge expectations. But they’re extraordinary clients as well and what it does is, it shifts your business really rapidly. Lobster Ink had a number of fortunate, lucky breaks to an extent but we worked incredibly hard to make them lucky. But we had a number of huge bumps in our company.
Our first major bump was getting Singita as a client. That’s the best hotel group on earth and many people can argue with me, but I’ll argue back hard. Singita is the very best luxury guest experience on earth, and that’s an SA company. Then we had another lucky break, which is Wilderness Safaris. Wilderness Safaris is essentially the largest safari organisation and also some of the most extraordinary destinations on earth, and they are the greatest safari experience on earth.
Then came City Lodge and Southern Sun and the like. But then we had a huge bump with Hilton Middle East & Africa giving us a break. Then we got IHG – the Inter-Continental Hotel Group, that was a big bump, which completely consumed our entire business, all our resources, all our focus — which is effectively quite dangerous if you think of it because all your eggs are almost in one basket. So, we had an IHG bump, which we had to deliver on, on a two- or three-year process.
Then we had Dubai Tourism. Dubai Tourism, which is overness by Sheikh Mohammed bin Rashid Al Maktoum, who had an extraordinary vision to train up 800 000 individuals. Anyone that touches a tourist in Dubai, whether you’re a taxi driver, an air hostess, a bartender – anyone who touches a tourist has to go through these courses called ‘The Dubai Way’ and that vision of Sheikh Mohammed is extraordinary. But they needed a platform to roll that out. Plus, all the content to be built so, we did both platform and content.
Then last year we managed to pull-off this Marriott integration, which is an extraordinary achievement from the team. Now, we’ve had Ecolab acquire us. Ecolab didn’t happen by chance or it wasn’t luck. It was an absolute target of ours. They are the biggest B2B organisation effectively, on earth. They have one million clients. MacDonald’s is one of one million. Marriott Hotel Group is two of one million. Walmart is three of one million. So, they service three million locations.
Now, the extraordinary thing about Ecolab is they align 100% with the vision that effectively we had, which was enabling potential in people. But we wanted to align with being able to do good and the cause-effect. What they do is that they find solutions for the globe’s biggest problems, which is either clean water, safe food, abundant energy, or a healthy environment. Now, those elements are all operated by humans, and that’s effectively, aligned with Lobster Ink. We enable potential in people and if we look at the enormous technological revolution that’s happening, or just change in general – large organisations are needing to have a huge focus on connecting the disjointed workforces, and that’s effectively where we sit.
We connect disjointed workforces. We upskill them and onboard them with skills, knowledge, and behaviour that is relevant and 100% relevant to their job. So, in other words, because we appreciate or respect time so much, we are not going to teach people things that they don’t need to know or that isn’t relevant today. I think one of the major differences between colleges, universities and the likes, and there’s all the place in the world for those things and I’m not bumping them.
But what business needs today is they need to take a human, they need to upskill them rapidly in a specific area that they need them to deliver on, and that human needs to deliver on those things. They need constant or lifelong learning attached to that, and then there needs to be the return on investment statement. A lot of people talk about learning and development. It’s got nothing to do with learning and development. It’s got everything to do with learning and performance because business needs to look at sustainable solutions.
So, learning and performance have always been our focus and if we take into account the number of changes in our space: just look at the food industry – all of a sudden, we’ve got meat being made in laboratories – okay, fine. What is the health and safety requirements? What are the cooking requirements for that? All of a sudden, large-scale organisations are going to need to incorporate that into their day-to-day delivery and hundreds of thousands of people need to be trained up. Whether you’re talking MacDonald’s, Yum! Brands, Burger King, or large hotel chains.
The importance is that there is this constant change and there’s an enormous requirement for relevance. The technological revolution is going to be huge. McKinsey said that 900-million people will lose their jobs but there are going to be an extraordinary amount of jobs that come out off the back of that. These individuals don’t have the time or energy or cash flow to be able to go to a college or a university and go for a 3-year, 2-year or 1-year onboarding of a new skill. They need to be able to get a job and learn that rapidly on the job. Work equals learning, rather than go somewhere to learn, and then come back to work – if that makes sense.
Yes, because I guess online training has disrupted the traditional schools/university/Technikon College model, hasn’t it?
It certainly has. The thing is that those curriculums haven’t necessarily changed in step with the business environment. The curriculum needs to be aligned 100% with what the businesses or the economy require. For someone to go through a 3-year or a 10-lesson online training and it’s not 100% aligned or relevant – that doesn’t necessarily align with the world’s most important commodity now, which is attention or time. People have a very clear understanding of how important or how much their time costs and as a result, content needs to be aligned 100% with what they need to do, or the skills that they need to achieve in order to be able to do their jobs.
So, there’s a big difference. We align with business. We understand what business needs to teach their humans. Then effectively, we look at putting that solution together and it’s not necessarily someone learns and then, all of a sudden, they’ve got a certification. We look at the process of how someone learns. They do an assessment. That assessment brings out a need’s analysis, a digital theory assessment. That need’s analysis is then effectively used in a digital assessment or a digital live assessment so, a practical assessment. Is this human competent? Great, then there is a continuous learning loop where there is a continuous audit where that individual can do that skill continuously. So, there is a constant learning loop of not only do they know something. They’ve proven they know something. Then can deliver it practically. They then are continuously assessed and the needs analysis is pulled out continuously, and then redeliver those skills gaps.
So, Fasie, while I’m speaking to you now, you are actually skiing in Switzerland and I’m very curious to know as to where are you based now? You could almost be based anywhere in the world, right?
I’m not actually skiing as we speak but yes, I am in Chamonix, Switzerland at the moment. But yes, we could be based absolutely anywhere. I’m based in Geneva, and have been for the past 5 or 6 years. We had a huge lucky break with a luxury hotel group that had a strategic partnership with Lobster Ink about five-and-a-half years ago. And before things were really kicking off, we moved our head office through to Geneva, Switzerland. But before my two kids were born now, I used to travel between 300 to 320 days a year so, it was huge amounts of time in the market. Huge amounts of connectivity and pulse that was focused on. So, I spent a lot of time in aeroplanes, in meetings, and entertaining. So, I ski now in order to keep the rotund off.
What about your SA links? Does Lobster Ink still have a big presence in SA and Africa?
Yes, absolutely. One of the things that Africa taught is that mobile is first. When we went to global head offices, corporate head offices in the US, and one of the first questions was, ‘is your solution mobile?’ We turned around and we were like, guys, only mobile happens in Africa. So, Africa taught us mobile first is obviously vitally important. Africa has taught us enormous things. We still do have a huge presence in Africa.
I think one of the focus areas or one of the elements that I would love to be able to achieve out of this new phase or new chapter is how do we take SA from being a primary producing resources as in taking something out of the ground and shipping it off to some other country, and then it being sold back to us in a tertiary state or as a product or as a thing. I think SA needs to go from taking something out of the ground, and this is Ian Khama and Seretse Khama in Botswana were so incredible. They turned around to De Beers and said, guys, unfortunately, our diamonds don’t leave our soil unless they’re polished up and it’s a finished product here. There was a huge disruption to others and all the places that finished those things. But effectively, SA should be finishing their natural resources in SA. Creating products like SE Asia, and then selling it to the rest of the world.
Now, that requires an enormous amount of training and skills development but it can be aligned with incredible programmes like apprenticeship programmes in Europe, where young chefs are trained from the age of 14. So, a 14-year-old would suddenly go into a stream of becoming a chef. By the time they’re 19 or 20 they’re all of a sudden a sous chef working with Paul Bocuse or Alain Ducasse and they are absolute gurus at their field. That whole apprenticeship programme is a huge opportunity for us to take young individuals and make them serious gurus. Obviously, lifelong learning is important but how do we take it from a primary resource producing company to secondary?
It would be wonderful if we could turn things into products because we have so many natural minerals so that’s what I’d love to look at for this next chapter, or whatever it is, and there is a huge yearning to work with SA, and I spent a huge amount of time in the bush, which I miss a hell of a lot and the beauty of the safari. It’s a bucket list item so, in other words, every single person on earth is essentially going to want to tick that off. Now, that we’re in the experience economy the beauty of the experience economy is people are valuing a $1k experiencing over buying a new handbag or paying off their home loans.
So, SA has this extraordinary wealth and abundance of tourism dynamics that can happen. The secondary and tertiary industries that can pop off the back of that is absolutely extraordinary. How do we develop that trade around the industry? Obviously, safety is vitally important but let’s park safety for a second. We’re looking at the optimism elements, the handmade elements. Those things are becoming the new trading beauties of the luxury fashion industry. Things that are handmade are among the most expensive things in the world. We’ve got handmade things of such beauty in SA, coming out of our ears – how do we connect that to the tourism industry and how do we create tertiary products over and above from our natural resources?
Just as a final question for people who are listening to this podcast, particularly those in SA, who would look at what you’ve done and think wow, that’s amazing. I want to try and do that. I want to try and launch an online business that goes global, like you have done and that gets acquired. What kind of advice would you give them?
I think the most important thing is that I don’t how I would have done this without my partners so, between Dale den Dulk, who is an extraordinary businessman. Between Tim Nel, as I said, the smallest and the smartest person I know, and then Paul Rowett, the hardest working person I know. They were the bedrock of effectively being able to create Lobster Ink. So, partners are vitally important. But within partners, you have a huge amount of focus on accountability and role differentiation or given people roles and being able to hold people accountable for those roles.
Great ideas are all over the globe at this point in time, so for me, the biggest thing about Lobster or starting Lobster was that we had nothing to lose, Gareth. When we started, I was twenty-two-and-a-half year’s old – I had nothing to lose. I could have gone into any role or profession if this thing failed. All of a sudden it went from ‘I had nothing to lose’ to ‘wow, this thing is becoming serious.’ What I would say to young individuals is that start working younger. I started working at the age of 14 in restaurants, bars, and the likes and not because I had to but because I wanted to. I wanted to gain that experience.
The sooner you start working the sooner you find your tracks in life that you can hit and you can start. For the younger generation, start while you have nothing to lose. The other element, which is becoming scary, is that the largest corporations on earth all now have incubators. Any corporation that takes itself seriously has an incubator. Those incubators are employing incredibly smart people in order to disrupt them daily. Their sole mandate is to disrupt our current business model so that we don’t get disrupted by some young individual out of his mother’s garage.
Now is the time, while all these disruptions are taking place internally in large organisations, there’s a lot of opportunities — there is also more money than there has ever been to invest in the wild ideas. Wealthy individuals all across the globe have been romanced about Netflix, Uber, Amazon and the likes and they’re all trying to find the ‘get rich quick’ or take Bitcoin for example.
Now, there is a huge amount of cash available. It might be a small percentage of these individuals’ wealth but together it makes up a huge portion. Now, because there is so much available cash… I was recently at Lisbon, at The Web Summit, I have never been pitched to so many times why investors wanted to buy into our business. It wasn’t me pitching to them. It was them to pitching to us. If we take into account if young SA companies are wanting investment, R1m investment in SA is a big investment for a start-up, in terms of rand terms. But if I sit in an investment meeting in London and I turn around to the Londoners and I go, guys, we need £60k for this start-up. They’re going to laugh. Most of them probably have that in their current account. So, they can’t take that seriously. But £1m investment is very palatable. In fact, it’s a tiny investment. But that’s all of a sudden, that’s a R18m or R19m investment, and then they go up to R5m those are discretionary investments that they can do.
Effectively, you’re looking at £5m that can be invested and there is so much money available right now for good and bad ideas, so the time is now to get in before the large corporations find all the good ideas and come up with the disruptions. It’s pretty soon, it’s now.
Fasie, thanks so much for chatting to us today, it’s been a fascinating discussion, finding out about you, the business, and Lobster Ink, and Ecolab – it’s really fascinating stuff.
Thank you, Gareth, I appreciate your time.