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Ivan says “work, work, work”It was back in the late 1980s: Ivan Epstein had just resigned from his job as an accountant and, along with partner Alan Osrin, was discussing possible names for their new computer software company.
Something incorporating “soft” (for software), “micro” (micro-computing) or “line” (for lines of data) was on the table. As they doodled on a sheet of paper, “Microsoft” emerged as one of the possibilities. But somebody in America was already using it, so they eventually settled on “Softline” as the name for their new venture.
While Epstein may lack the iconic global billionaire status of Bill Gates, he certainly has achieved enormous prominence in his own right. Softline has become the dominant player in the South African accounting software sector with a market share of 70%, while Epstein himself is a high-profile industry player.
So much so, that late last year he was named IT Personality of the Year 2009, an accolade that in the past has gone to the likes of Mark Shuttleworth. It is a crown that the charismatic and fast-talking Joburger wears lightly.
An informal character dressed in jeans and an open-necked shirt, he insists it is an honour for the entire organisation. “I may be the front person, but I can’t take credit and say I built Softline on my own. The award’s for all of us and what we’ve achieved,” he says.
One of three founders of the business (the third being Steve Cohen, who joined in the very early stage), Epstein is now chief executive officer of both Softline in South Africa and Sage in Australia. He is also on the executive committee of the Sage Group, the large United Kingdom-based global software company that bought Softline in 2003.
Still looking young and fresh faced despite just turning 50, Epstein is credited widely with building and shaping the business software industry in South Africa – particularly for small and medium enterprises, which remain Softline’s lifeblood.
Co-founding Softline
At the time he co-founded Softline in 1988 – backed only by a loan for the princely sum of R5 000 – accounting and payroll software was simply beyond the reach of smaller local businesses.
Even moderately complex computers occupied large rooms and required expensive made-to-order software programmes written by teams of information technology experts.
The likes of SA Breweries and Sasol were running a computerised set of accounts, but manually prepared accounts and invoices were still the norm for most.
Change was on the horizon, however. The price of personal computers was decreasing and it was possible to build applications to fit on a PC.
“As the PC became affordable, software needed to become affordable, so we set out to develop standardised accounting applications at an affordable price,” Epstein recalls.
It was an unlikely career path for the accountant and auditor, who knew he wanted to be entrepreneurial and “build a business” – but didn’t know what. “It could have been in any industry,” he says. “I didn’t have a passion for IT because I didn’t know much about it. I stumbled on it because somebody told me it was a good business to get into.”
That ‘somebody’ was fellow auditor Dennis Venter, who also was looking to exit the profession for something more exciting.
“He said to me: ‘Ivan, you can make R100 an hour doing software support’; I said: ‘You’re joking’; He said: ‘Go and do it!’. So we did… anything to get out of auditing!”, says Epstein.
Utilising their accounting backgrounds – and with the aid of a computer programmer who agreed, in the absence of funds, to do the hardcore coding in exchange for later royalties – the three founders developed their package and headed into a market that was waiting with less-than-bated breath.
Into the market
There were already three small, homegrown players offering accounting-related packages, as well as a few from the United States. The latter, though, were not popular, as they were based on US business practices and tax legislation.
But many businesses were simply sceptical as to whether they required a new-fangled computerised system at all, and the eager Softline entrepreneurs found themselves battling to make inroads.
It is not difficult to fathom the reason: they were unknowns, offering an untried product to an unconvinced audience.
Eventually, though, perseverance paid off. “Once you have your first customer, you can get your second; then it was word of mouth… we started to get on a roll,” Epstein remembers.
“You have to be pushy and convincing; you tell them that you can… that you’re big enough to deliver.”
As the customer base grew, so, too, did the economies of scale that made it possible to establish the industry.
Softline continued to expand, making acquisitions along the way to fuel the growth – among them the very successful Pastel business for R200 million in 1999.
Softline Pastel continues to be a key division within the group, and is headed by co-founder, Cohen.
By that time, Softline already was listed on the Johannesburg Stock Exchange – a move that was ultimately to cause its share of difficulties for the management team.
As a result of the fallout from the notorious “dot-com crash” (which wiped out $5 trillion in market value of technology companies from March 2000 to October 2002), Softline’s share price tumbled – despite the company trading well and continuing to grow strongly.
Epstein says it came “to such a silly level” in terms of lowly share price versus booming reality, that it was decided to buy back the company.
Two unexpected things occurred: the shareholders and institutions refused to sell their shares, and Softline attracted a hostile take-over bid.
Enter the Sage Group
The management team then went looking for what Epstein calls “a white knight” to ward off the hostile bidder, and ended up talking to Sage Holdings, the British software company formed in 1981 and which had grown rapidly to become a global player.
“It was the most perfect fit for us because Sage was a fantastic company doing business all over the world. We approached them and they decided to buy us,” he explains.
While all Softline’s overseas operations took the Sage name, the South African business remained known as Softline to avoid any confusion with the Sage insurance company (which was subsequently acquired by Momentum in 2005).
The deal has worked out well for Epstein. His role of CEO for the southern hemisphere allows him to keep control of Softline’s South African and African operations, as well as those of Sage in Australia – to which he frequently travels and renews his acquaintance with co-founder Osrin, who is managing director of Sage Software Australia.
In addition, his role on the Sage Group executive committee means he meets six times a year with the international heads of the business to set policy and make group-wide decisions. “I’m proud to be part of Sage now because I’m part of running this global group,” he remarks.
Business lessons
Indeed, it was the dot-com fallout and subsequent saga that taught Epstein his greatest business lesson: to be more measured in approach.
“We were over-ambitious in terms of buying our business back after the fallout,” he says. “We always ran the business on levels of urgency, but the lesson out of that situation was that nothing’s that urgent – things can wait a bit.”
He is something of a business philosopher on other issues, too.
“Vision without execution is hallucination” is a favourite. He preaches the gospel of ‘action’ frequently.
What advice would he give a young business wannabee with limited funds? “Put your head down, start it, don’t worry too much about business plans in the beginning… just put your head down and work, work, work,” he advises.
Another of his lessons learned over the past 20-odd years is “never give up”. “Nothing works easily the first time,” Epstein says.
“Some of the world’s greatest feats were achieved by people not smart enough to know they were impossible.”
People management
Softline’s roots as a freewheeling business with little capital, minimal hierarchy and few rules are also evident in his approach to people management.
While he is responsible for around 1 500 staff in South Africa and many more in Australia, the atmosphere is relaxed at the company’s modern and sprawling headquarters in Midrand.
Dress is casual, clock-watching is not a priority, there is a quality restaurant on-site, a coffee shop and employees have the use of an extremely well-equipped gym.
“If you create an environment where people say, ‘Jeez, this is a cool place to work, I’m having fun here’, then it flows through to the customer,” Epstein believes.
But while his leadership style is relaxed and he admits he is “not a massive disciplinarian”, it is only within reason. “The job must get done and the customer must be getting the service,” he says forcefully.
Epstein is probably harder on himself than he is on his employees. In the early years, he was obsessed – working six days a week and then spending the seventh day at home, thinking about work. “I’d never switch off, I’d go into the shower thinking about a business opportunity. But that’s what I think it takes to build an industry and a business.”
These days, he believes he is a bit more relaxed – something that comes with maturity – but he confesses his work/life balance is not correct and, indeed, probably never will be.
But he is quick to point out that he does not deserve sympathy for the long hours and effort.
“I’m lucky I liked it,” he says. “I don’t want anyone to think it was a hardship – it was much more fun than going to the golf course.”
Indeed, Epstein is uncommon in business circles, in that he does not like golf and says he will possibly be remembered “for not being the world’s best golfer”. But he does enjoy keeping fit in other ways and tries to be in his home gym most mornings.
Like so many busy and successful people, he also admits he would have liked to be able to spend more time with his doctor wife and three children: a daughter who has completed her schooling and two boys still in high school.
The future
Looking ahead, Epstein believes that much will occupy his time and he will continue his all-action style.
“The Internet is going to play a massive role in our business,” he says. “With the growth of the Internet and bandwidth, consumers are going to get a seamless experience wherever they are in the world. You’ll be able to access your phone numbers, your programmes, your software products from anywhere.”
He believes software will move from a desktop to a cloud-based environment. “Cloud computing”, which is also known as “software as a service”, means the software is stored on the Web (as opposed to an individual PC or company system) and customers subscribe to it monthly as a service by accessing it in the ‘Internet cloud’.
Computer users for long have been trying to achieve this ideal of having access to information anywhere and at any time, freeing themselves from machines at their homes
or offices.
“It’s creating opportunities all the time,” says Epstein enthusiastically. “We want to bring out more features, more applications and cater for more technologies.” ?
Mike Simpson
