Welcome to my blog!

In this first blog entry, I would like to share some background about myself, my life as CEO of Auction Alliance, and my current business focus. My goal is to provide regular entries on this blog, with the hope that they will be meaningful, provide some insight into the South African property and auction industries, and our company pursuit of a common goal – to create wealth and value for all of our clients. It is amazing what can be accomplished with focus, careful execution, a great team, and the tremendous resources that comprise Alliance.

My history

I started in the auction business when I was 20 years old, and June 2010 marks my nineteenth year in this exhilarating industry. I’ve worked in almost every capacity and division of the auction business, including sales, marketing, product development, valuations, administration, strategy, education, finance, operations and of course, I have conducted thousands of auction sales myself.

It all started when I was 17.  My mother was an estate agent who schlepped me along with her to show houses from a very young age and I loved it. As a result, I sat for the estate agents board exam and began selling houses on the Cape Flats. I sold my first house before I was allowed to legally drive a car and I qualified as an estate agent while I was still a teenager.

In 1990, I bought my first house for R17 000 while I was studying law at the University of Cape Town. I was in the process of renovating it, when a sheriff of the court stopped to ask me for directions. I’ve always believed that activity is contagious and by helping people it comes back to you, so I took him to the venue he was looking for and discovered he was going to do an auction sale. I was transfixed. For the next three years I attended every auction I could, even planning my lectures around these events. By my twentieth birthday, I had clocked up about 100 auctions, and by my twenty-first birthday, I had bought and sold over 20 properties.

By this time, I had realised that property is an illiquid investment that gobbles up cash flow. I needed to find a way to make money to pay off the bonds of the properties I was purchasing. At the same time, I wrote my thesis on the effects of foreclosure and repossessions on the Cape Flats community.

I am a great believer in building relationships. I believe that before people will lend you their hand, you need to touch their heart and that business is all about connecting people. I had met many bankers at all the auctions I attended as a bidder, so I went to visit them and told them I could auction properties for them. I literally had no experience as an auctioneer. This was one of the first lessons I learnt – if you see a gap, jump in as quickly as you can. When I have spotted an opportunity, I have always moved quickly, sometimes a little too quickly, but over a two-decade career, my speed to execution has largely worked for me.

There was a huge oversupply of real estate at the time, and the interest rate was sitting at 25% – the opportunities were enormous. Difficult times bring huge opportunities to those who are bold, yet cautious. So I approached the newly merged Absa Bank first, making contact with the then regional general manager’s office. Because people in high places are difficult to get to, you have to befriend the gatekeepers. I bought flowers and chocolates for his PA on her birthday and she got me an appointment. At that stage, Absa was losing serious money on foreclosures. I presented him with an idea that I had come up with on an innovative way of conducting auctions that would minimise the bank’s bad debt provisions.

Auctioneers had always been seen as the undertakers of the business world – sheriffs who would sell people’s homes for nothing. My challenge was to give the industry a more corporate and professional edge. It didn’t happen overnight; it takes time to change a market and an industry. I believe that the most successful people in the world create an impact and in business, they use their positions to mould industries – as Apple CEO Steve Jobs says, “These people make a dent in the universe.” I believe that my team and I have made a positive impact in the auction world – by helping our clients and positively influencing the perception of auctions. We have dented our industry and created something that wasn’t there – that is what our business is ultimately all about.

Amongst the many innovations that I found, I moved auctions from the sidelines into the mainstream. As an example, auctioneers in South Africa, always had offices in draughty warehouses on the outskirts of cities in industrial areas, but today, our offices are situated in prime locations, such as Melrose Arch, De Waterkant and Umhlanga Ridge. Many of the innovations we introduced all those years ago, have become accepted practice today. We have relentlessly tried to give the auction industry the respectability it deserves – this has been a lifelong mission.

I taught myself to chant in the shower by counting the tiles on the wall. Because I was shy, it was a challenge for me to become a public speaker. It taught me that opportunity often lies in the things you find difficult to do. I believe that adversity brings out the best in people and that the best people smile in the face of adversity. These individuals understand that life tests the big dreamers and that challenges are good as we grow through them. So in 1990, I took out a student loan of R4 000 to fund my auction house, which I named Levco, and I did not draw any money out of it for the first three years. I ran it on a shoestring, and I constantly reinvested some of the profits back into the business, which is something I still do today. As a result, the business became completely self-funding by 1994. By then, my new approach had made me quite a well known figure in Cape Town and I started to do some high-profile sales. When Allan Boesak’s bookkeeper, Freddie Steenkamp, was jailed for stealing from the Foundation for Peace and Justice, I was chosen to sell off all his assets.

I believe that you become who you associate with. In 1995, I was approached by Lawrence Seeff, who was busy listing Seeff Properties on the JSE, and wanted to buy Levco. I thought this would be a great learning curve, so I sold out for R1,5 million and joined Seeff as MD of its auction business. I absorbed everything I could during my three years there. It was a dynamic organisation and Lawrence Seeff was a brilliant innovator and entrepreneur. The fact that I was able to interact with experienced, senior people at the age of 25, gave my career a huge boost. Seeff delisted in 1998, and I did a management buyout of the auction business. I applied for funding from Boland Bank, which knew me well, and I created Auction Alliance. Within 10 months, I had paid off the loan.

By this time, I had been in the industry for eight years. I contacted all my connections and told them I needed help to build the company, and in addition to that, I literally walked the streets looking for business. To me, leaders get out from behind their desks and know that business is all about connecting to people. One of my greatest successes is that I have maintained the same client base for two decades. I have consistently relied on the same loyal supporters who have trusted me with their valuable assets.

When 2000 rolled in, I realised that the business was solid and stable in terms of revenue and cash flow. The next chapter was to build a management team, which had become critical. Up to then, Auction Alliance had been an egocentric business, based entirely on my personality. One of my greatest challenges has been to grow other leaders. I don’t find this part of business life easy, and I don’t think I am a natural leader of people – I just work hard at it. The ultimate competitive advantage of any company comes down to a single focus – the ability to grow and develop leaders fast, and this remains one of my greatest priorities.

Unlike relationship-building, marketing and innovation, managing people and operations does not come easy to me and I needed to find people to make up for this deficiency. I actively headhunted and sold people on the auction concept, often going for younger individuals who were ready to take more risks. I looked for people who were evangelists, who wanted more than just a job. One of the best things I did, was to appoint well qualified people from other industries. Come 2001, I had built a strong management team in Cape Town and I decided that the next step was to go national. I thus personally relocated to Johannesburg and repeated what I had done almost a decade earlier – I hit the streets of Gauteng looking for business and selling my auction concept to the city.

It was difficult to suddenly run a business in multiple locations and to manage people from afar. It was also a significant personal adjustment for me, as I had grown used to being a big fish in a small town. There were many times when I was tempted to give up, but tenacity really is the breakfast of champions. I persevered, expanded the management team, and focused on building relationships. No matter what, you always have to get new clients and keep your eye on the top line – without that, you don’t have a business. The competition in Johannesburg at the time was ferocious and I used that to my advantage, coming in with a clean, fresh image and a different approach to marketing.

It also comes down to taking some risks, which we did at the end of 2001. The South African economy was improving, which posed a problem, as our business had been dependent on liquidations and insolvencies. We had to do something new. But the truth is that you do not always need to be that innovative, provided you are prepared to open your eyes and look around at what is going on in the world around you.

Emulating others can be clever. I investigated auction models around the world. In Australia, auctions had become the first-choice method of selling. We set out to convince commercial property sellers to use auctions as their preferred method of sale, and we did it – we changed the industry. We copied the Australian model and started doing multiple auctions, grouping properties together – something that had never been done before in South Africa. Within six months, that became a huge first-mover advantage for Auction Alliance. We also moved the auction venues to hotels and other fancier locations.

The pressure comes in when you have to sustain innovation because, of course, soon everyone copies a successful model. Luckily I am a creative, restless soul and I constantly look for innovative ideas that I can implement.  Over the last decade I have tried many things; some have worked and others have not, but I keep on trying. I am also a hard worker – in fact I truly believe that if you work hard you get lucky. Life helps those who help themselves and not one of the highly successful people I’ve ever met got there without outworking everyone around them.

In 2006 we concluded a significant empowerment transaction with Amabubesi Investments. Our empowerment partners collectively acquired a 25,1% stake in the issued share capital of the Alliance Group. This deal was not just about cosmetic BEE, but it was a pure commercial transaction. I went out and looked for an empowerment partner that would add real value to the company. In addition, I wanted to bring people on board that I would enjoy working with, because business should never be a chore. With Amabubesi, there was instant mutual attraction and its CEO, Sango Ntsaluba, is our chairman today. It’s a successful, dynamic group of business people – because I have always worked for myself, with the exception of my three years at Seeff, it’s important for me to be able to learn from others around me.

In 2007, we sold a 31% stake in the business to financial services group, Transaction Capital. The deal valued the company at R250 million and enabled us to introduce financial service offerings to our clients. Transaction Capital was not only an innovative financial services company, but its leaders were individuals that I was immediately attracted to because of their tenacity, entrepreneurship and vision. We have always expanded through a combination of organic growth and strategic acquisitions.

By the time the 2009 recession rolled in, I realised that we had to get back to our core business and that for me, I had to get back to a narrow auction business – enabling it, improving it, and generating more out of it. This was particularly important in a world where there are major capital constraints and focus creates success.

I really liked the Transaction Capital people – they were highly experienced, and I really wanted some grey hair around the table to help us take the business to the next level. That said, since it was time to get back to the core business, we did not require financial services gurus around the table. As such, we reached an amicable deal and they exited our business. We remain solid friends with Transaction Capital and admire their business acumen from afar.

I love this business. I love having the ability to mould it, change it, and move it forward. That’s reflected in one of our values which is “relentless improvement”. I suppose that’s a reflection of my own personality – I like constant change.

The current economic environment has both positive and negative implications for us. Volumes have almost tripled over the past year, and we have experienced huge overnight growth in sales volumes. But at the same time, it’s tougher to sell and average values have dropped substantially. I’ve had to look at the business with fresh eyes to ensure that we can cope with the volumes operationally, while still maintaining profitability. The last 18 months have been tough, but with an innovative ethos, I continue to look at new ways of improving the business and maintaining its growth and profitability.

On the whole though, I see the downturn as an opportunity. Remember, I started in the middle of a great recession. When times are hard, you work more and you work smarter. Tough markets build good business people. This environment will reveal who the great ones really are, and it will also expose weaknesses. It was easy to be successful between 2004 and 2008 – the years ahead represent the ultimate challenge for us, and we’ll be learning more than ever before.

I wouldn’t trade my experience for anything. I’ve always enjoyed looking at where we can go, finding a way to get there, and making sure we achieve our objectives.

Creating a vision, identifying new markets, new market trends and new business opportunities is exciting. Turning all of these into reality is gratifying, especially when that reality involves helping clients become successful while growing Auction Alliance’s business. Doing this well, is hard work, but can deliver tremendous results. By starting in the auction business as a youngster, barely out of school, I have the experience of an old man while I am still relatively young.

Although it may sound old fashioned, a key tenant to my work life is that clients always come first. If we do what is right for our clients, over the long term, it will be good for Alliance as well. Where I am now, is a direct result of where I have been, and the sum of the experiences along the way. The business that I am proud to lead is all about helping our clients and building an industry. Turning my ideas into a vision, establishing that vision, justifying the investment, building the business and then leading the business to success, is a passion for me.

In summary, I appreciate this opportunity to tell you a bit about myself and the business that I have had the pleasure of developing and managing at Auction Alliance. I look forward to sharing more exciting details with you in the near future.

Enjoy this blog. I think I will enjoy it too.

14 thoughts on “Welcome to my blog!

  1. Rael. Well done, you have really revolutionised the Auctioneering industry in South Africa, and you truly deserve all the credit you get. On top of that you are also a nice guy … ok, enough blowing smoke! Regards. Heinrich.

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