How to be a Master Trader, Part 2

Master-traderIn part two of this series Anver Versi looks at the rise of one of Africa’s leading entrepreneurs, Ashish Thakkar, and shares the secrets of his success

In part one of this series, we looked at the basics of becoming a trader and moving up the scale to become a master trader. To recap: master traders have always existed in human history – they have sometimes been called Merchant Princes (and Princesses), at other times ‘Moghuls’ or ‘Tycoons’, and given dozens of other titles. They are admired and respected wherever they go. Every year the British Queen bestows national honours, including knighthoods, on champion traders. France’s Napoleon Bonaparte once dismissed the British as a ‘nation of shopkeepers’; it was this same nation of shopkeepers that defeated him at the battle of Waterloo and brought his empire crashing to the ground.

The Chinese, the Indian, the Ottoman, the Portuguese, the British, the French and the Dutch empires were all built on trading, not military strength. That came as a result of the profits of trade. In Africa, Mansa Musa’s Songhai Empire was based on an awe-inspiring trading network whose influence on the price of commodities and gold could shake the entire civilised world of this time.

The United States rose to become the mightiest economy in the world on the back of its traders and the US President ritually acknowledges the nation’s debt to this extraordinary class of entrepreneurs. Japan rose from the ashes of its World War Two defeat to become, at one time, the second largest economy in the world, thanks to the trading networks it established in record time. Germany, crushed at the end of the Great War, is today one of the greatest trading nations on earth.

In Africa, Nigeria caught up with and surpassed the former economic giant of the continent, South Africa, thanks to the dynamism of its traders who, it is said, will be among the first to go to the planet Mars to trade if that ever becomes possible! Kenyan traders, large and small, always seem to be at the forefront of any new trend and they have gained a reputation all over the East African sub region of never saying ‘no’ to whatever the client demands.

But despite their enormous influence on our lives, traders are sometimes looked down upon. They are often not given the respect that other professionals get and, for some reason, there is a belief that it is easy to be a trader. Yes, anyone can buy a few items and try to sell them at a profit – that is after all the essence of all trading. But to be consistently successful, to be a master, that is something else.

The beauty of trading is indeed that anyone, from any background, can become successful and not only build a full and satisfying life for themselves and their families but create wealth and jobs and connect the peoples of the world.

Creating entrepreneurs
As Africa’s youth population explodes, the need to create entrepreneurs becomes more urgent. I work with the African Centre for Economic Transformation (ACET) and we research ways and means that will enable African countries to put policies into place that will bring about the long-awaited transformation of our economies. The one area that cuts across everything is the need to create jobs, raise skills and unleash the entrepreneurial genius of Africa.

The contribution of our entrepreneurs to the national wealth is now, thankfully, being appreciated. A few months ago, US President Barack Obama came to Kenya to participate in the Global Entrepreneurship Summit. The thousands of young people who were involved made connections with other young entrepreneurs all over the world and have been establishing mutually beneficial trading networks ever since.

Shortly after Obama’s visit, it was announced that Africa’s master trader Ashish Thakkar had been appointed as chair of the United Nation’s Global Entrepreneurs Council, which brings together the brightest business minds, all under the age of 40, to network, pass on skills and training, establish links across the globe and, in short, shift global trade into high gear and in the process reduce poverty and generate wealth.

Thakkar has become a global icon, demonstrating how someone can overcome major odds and, with skill and determination, end up not only becoming a billionaire whose investments are changing the commercial face of several African cities, but also being willing to spend time, money and effort to mentor and nurture a new breed of African entrepreneurs through his various foundations.

What lessons has Thakkar got for the budding new master traders? His book, The Lion Awakes – Adventures in Africa’s Economic Miracle has now been published. It should be a constant companion for any ambitious entrepreneur as they set out on their own journeys into the universe of international trade.

Filling out a suit
What light does Thakkar’s book throw on how he developed his trading sense? It offers a lot of insights and moments of inspiration, and it opens up a fascinating world to reveal the way some of the great trading cities like Dubai work in practice.

But I do not want to spoil the pleasure of exploring the book so I will only take a few excerpts from it that I think will help traders towards their dream of becoming masters.

Imagine a plane load of passengers en route from Uganda to Dubai. Somewhere at the rear of the economy section is a boy in a suit that is too large for him, pretending to be much older than his fifteen years. Perhaps, like you, he is reading through the in-flight magazine and his mind is racing ahead to what the world has in store for him and what he will make of it.

A few months prior to this, he had shocked his parents by announcing that he was ditching his studies and going into business – selling computers which were only just beginning to make their appearance in Uganda. Now here he was, flying alone for the first time on a Kenya Airways plane, heading to Dubai – the hub of all things electronic at that time.

“The air stewards treated me like a little boy lost,” he recalls. “‘Shame, who’s the poor child on his own at the back?’ they cooed, bringing me fruit juice. I hated being that little boy. I decided I had to start shaving. I had heard that if you shaved your face, even if you had no facial hair, you would grow stubble. I needed to grow some stubble in order to look a little older and get some respect.”

He needn’t have worried. His teacher in Kampala had already noticed something about him after the young Ashish sold him a computer for a hefty price and predicted that something called ‘the Internet’ would take over the world in the near future.

“This boy, your son,” the teacher informed his parents at one school gathering, “he is not going to study. School is not for him. He is a businessman – a born businessman.”

He certainly had all the instincts of a successful businessman including money and people management. He stayed at the cheapest hotel he could find in Dubai and enjoyed the adventure; and he began to make friends, mostly other young Africans doing exactly the same thing as he was – buying computers in Dubai to resell back home.

The margins were small. “I knew down to the very last decimal point how much I could spend, how much I would have to pay in taxes and import duty back in Kampala and how much mark-up I would make in a week if I managed to sell everything. Then, after doing my figures, in the afternoons I would visit the exact shops I had targeted and buy exactly what I needed at the best prices,” wrote Thakkar.

Time of self-discovery
A teenager, travelling alone in a city so full of exciting attractions as Dubai, could have easily become distracted. But Thakkar maintained his discipline and did not spend a penny more than was necessary. He never forgot why he was there in the first place – an essential aspect of becoming a master trader.

He also recalls that although he lived as frugally as was possible in a city bursting with ostentatious displays of wealth and luxury, he enjoyed himself by making the most of little things – another vital aspect towards becoming a master trader; he realised that trading is about buying and selling ‘happiness’ in one form or the other and no one wants to buy from someone who is gloomy or miserable.

Back in Uganda, Thakkar rented a small, dusty place and opened his first computer shop in Kampala. He soon fell into the routine of selling his products during the week and going on his buying trips at the weekend. Thakkar began to build a client base by offering competitive pricing and taking a genuine interest in the lives of his customers.

Again we can see aspects of what made him a master trader: keep your prices competitive and become genuinely involved and interested in your customers – you are in for the long haul, not short-term gains. Also, develop a ‘nose’ for products that have great potential even if they do not seem so at the time.  He had ‘discovered’ a software system that he found most impressive – Microsoft. Years later, he became a good friend of the legendary founder of Microsoft, and shares an amusing anecdote about lugging suitcases full of the software all cross Africa with Bill Gates.

In Dubai, young Thakkar joined an informal ‘African club’ of traders who exchanged news and tips during the daily lunchtime break for prayers. Many had been doing the same business for years and he could also have continued in exactly the same way into the future. But something happened. A flash of inspiration changed his life.

Thakkar realised that the market for computers in Africa was growing at an amazing pace and that he and his fellow traders were only scratching the surface because they were limited by the cash they had in hand. Thakkar thought to himself that if only he could break free from this limitation, the African world would be his to conquer. At the age of fifteen, Thakkar discovered the power of credit all by himself and he could hardly contain his excitement.

Problem or opportunity?
But how to get credit? His colleagues laughed at him, believing that no one would extend credit to an African. Another opportunity, he thought. But the initial problem remained – how to get credit? Who would take a 15-year-old seriously (no matter how furiously he shaved his non-existent beard)?

But, as Thakkar says in his ‘Five Golden Rules’ (see box, below), perseverance is the first hallmark of a champion entrepreneur. Every problem is also an opportunity – a belief he shares with Africa’s greatest businessman, Nigeria’s Aliko Dangote. And every problem can be solved.

Needless to say, Thakkar did get credit and he expanded his business a thousandfold, in turn extending credit to the other traders and helping them to expand their own businesses. He recalls that everything was done on trust – and not one person defaulted on a loan. He performed his ‘due diligence’ by judging character rather than looking into books.

Thakkar had been warned against going into Nigeria, where they told him he would be robbed clean – but he did go, and loved it. He refused to be deterred by ‘expert’ advice and followed his hunch – and common sense. If there was a shortage of something that people were prepared to pay for, he would deliver – whether this was a second-hand ambulance or a housing estate. He has never looked back.

In the process, he discovered an Africa that was bustling, thriving, innovating and trading as never before. The Africa he saw was the complete opposite of the gloomy picture of poverty and deprivation that the foreign media continued to feed the world. Yes, there is poverty in Africa, as there is in many other places in the world, but the dynamism and spirit of enterprise he saw on the continent was deeper and greater than anywhere else. Ashish Thakkar is convinced that this is Africa’s time and that it will outstrip all other regions over the next fifty years. He is also convinced that Africa, more than anywhere else in the world, offers the best opportunity to make it big. He is the living example – The Master Trader, Made in Africa.

5 Master Trader Golden Rules
1 Perseverance
Building any business is difficult and takes a great amount of patience and a healthy appetite for risk. But as a 15-year-old, (which is when I started my career) these elements were amplified. Starting out at such a young age with little capital and no network, it was difficult for people to take me seriously – but my persistence pushed me through and I would never take ‘no’ for an answer. I still do not take ‘no’ for an answer.

2 Determination
The single most important quality you need to become a master trader is determination. There is no substitute for hard work. There is a lot of sweat that goes into achieving a perfect supply chain, accurate demand prediction, minimal waste and so on. Never seek instant gratification. The only formula is to keep on trying until you succeed. If you are afraid of failure, get out of business. Try to avoid failure by planning ahead – then go for it and don’t look back.

3 Adaptability
What is the secret of successful trading? Is it negotiating skills, people management or financial know-how? Technical and financial know-how are a huge plus, but not a critical success factor. People management and negotiation skills are critical but can be developed. I think adaptability, the ability to learn and attention to detail are the real secrets of success in trading.

4 Opportunities
Opportunities are everywhere – whether you discover them or you create a new market for yourself is up to you. There are lots of great businesses that were new ideas and many great ideas that never make it big. The key is good execution. Don’t get too bogged down by finding the best opportunity, pick an opportunity and focus on how best to capitalise on it.

5 Handling stress
Trading, and business in general, can be stressful; how can one cope with it? There are times when business can be very stressful. Always go back and ask yourself why you are doing what you are doing. Think about the last stressful time – if you came through that, this too will pass.