At the age of 23, Nadir Khamissa was a vice president (VP) of derivatives trading at Deutsche Bank in London and he was good at it. He attributes part of this success to his entrepreneurial DNA: “Throughout my career at the bank, every incremental step, every big promotion of mine was driven by some sort of business that I had built internally.”

It was this entrepreneurial ability to identify a problem that needed solving, and good timing, that led to him creating Hello Group with his brother.

“When I was living in London, I couldn’t understand why it was costing 10 times as much for someone in SA to phone me in London,” Khamissa tells finweek.

At the time he was asking this question (in 2005), two things were taking place in the telecommunications space that gave them the luck they needed, according to him. “The telecoms industry in SA was being deregulated – so they were allowing in a number of new licensees outside of the Telkom, Vodacom and MTN oligopoly that was present.”

Voice Over IP was just being developed, a technology that was changing the way voice traffic was running – something the brothers could tap into.

“The timing was right for us. The rest is history.”

An innovative evolution

It wasn’t smooth sailing from the outset. For Khamissa, the goal in 2005 – when they started their companies in the UK as well as South Africa – was simple at that point: “I was a pure capitalist; I just wanted to make money, there was no heart. I was sort of overly confident with all my success at the bank and I kind of walked out thinking I am a superstar trader. Honestly, if I can trade derivatives, I can do anything. So how hard could telecoms be? I soon took some crash courses in humility.”

Within the first six months of starting out, Khamissa lost 90% of the life savings built up through his job at the bank. Failure was a reality. In order to stay afloat, he sold his car and put that last little bit of money into the business.

It was at this juncture where the business philosophy of the group was born.

“We realised that finding a gap or opportunity to make money in isolation is the quickest way to lose a lot of money, and the quickest way to fail because you are purely focused on the reward, on the output, and you are not focused on the input or the value you actually create for society,” explains Khamissa.

This evolution in their approach turned their focus to creating value for customers.

And in the case of people in South Africa, for example, needing to make international calls to their families back home, the value-add comes not only from offering a low-cost alternative, but improving the entire experience, which at the time saw people standing in long queues at public payphones, come rain or shine, with bags of coins in hand to make the call.

The solution? “You need to make it a far superior experience. Instead of standing at a public payphone, let them do it anywhere, anytime, and lastly, make it insanely simple,” says Khamissa.

By combining different technologies, the group was able to officially launch their low-cost, consumer-friendly mobile service in October of 2005. Business boomed.

Telecoms, disrupted

“Our success was amazing and the big guys tried to kill us, but we managed to survive and business really thrived,” says Khamissa.

In 2006, the group entered into a partnership with Cell C, whereby the operator provided Hello with access numbers that gave them security and longevity.

“Cell C has always been pro competition and pro consumer, and they also had a lot to gain [from the partnership]. At the time, 95% of our customers were Vodacom and MTN subscribers. So Cell C would purely earn revenue from a Vodacom or MTN subscriber with zero infrastructure cost,” explains Khamissa.

By aligning their interests with Cell C, Hello gained the capacity to become even more innovative. And between 2006 and 2010, they were able to route “hundreds of millions of minutes” through the operator.

This was just the beginning for Hello.

“In the spirit of creative destruction, which is something we deeply believe in, we have got to invent a way to destroy or disrupt our own business before somebody else does,” says Khamissa.

He looked for weaknesses in the business model and found two: the two-stage dialling process, which made for an inferior user experience, and the monoline revenue stream as a result of the purely international call focus.

“We needed to tap into some kind of revenue stream through customers’ domestic voice usage as well as data usage.”

In 2010 they entered into a deal with Cell C that saw them create a mobile virtual network operator (MVNO), called Hello Mobile – which is now the largest MVNO on the continent by customer usage, according to Khamissa.

Hello Mobile serves 1.5m customers. International calls can be made for 50c/minute, from a cellphone, anywhere, anytime. This is a huge leap from the R5 to R10 a minute at a public payphone that consumers faced some 10-odd years ago.

“It was a complete game changer and made a huge social impact,” says Khamissa.

Fighting for financial inclusion

When Hello Group started moving Hello Mobile SIM cards, they built a distribution business that allows for distributors to earn commission on the SIM cards they deliver directly to vendors.

“Today our distribution business is the third-largest distributor of prepaid SIM cards in SA. We have 50 000 points of presence in terms of resellers and distributors, most of them in spaza shops and street vendors, and these guys cumulatively earn about R30m a year in commission.”

Previously, the [traditional distribution] channel would have consumed this R30m, adds Khamissa.

In keeping with his entrepreneurial flair, Khamissa is constantly looking for new ways to improve customers’ experiences by solving key needs. From this came financial services company Hello Paisa in 2015 – based on mobile money.

This business has over 300 000 customers and Hello Paisa has moved R4.5bn since launching, according to Khamissa. For him, the important thing is that this is money that pays for food, school fees, clothes and the like.

“We have taken money that was going through informal, illegal money transfer channels and brought them into a formal, regulated space. We’ve given hundreds of thousands of people their first digital financial services experience,” he adds.

Where to next for this constantly evolving group? “I see great potential in our telecoms and distribution business to make incremental gains,” says Khamissa.

It’s in financial services that more disruptive potential lies for Khamissa. “As I see it, we have proven that we can play in financial services, and we have taken a very small slice of that cake. I think there is an opportunity for us to create value for customers across the stack. Our vision here is to serve across the banking stack, which would probably mean expanding our regulatory licensing, whether it is our own bank licence or partnership with a bank. We are exploring multiple options right now.”