EY Honors South African Ridhwan Khan, Affordable Mobile Phone Market Pioneer
Just 17 years ago, a young Ridhwan Khan was pounding pavement and knocking on doors. He had an idea that South Africa was ripe for low-cost cell phones. Through grit and persistence, he went from packaging refurbished phones one at a time to launching Mobicel, which makes and sells 19 million mobile devices a year.
Khan’s inspirational story of evolving from a solo sales maverick into the CEO of South Africa’s top-selling cell phone brand has garnered him the title of EY World Entrepreneur Of The Year™. The EY awards are considered the world’s most prestigious accolades for entrepreneurs, celebrating those who build and lead successful businesses while motivating others. In addition to receiving the country award for South Africa, Khan was honored at the EY global awards celebration in Monte Carlo, Monaco, in June. Three other YPO members from Sweden, Slovakia and the United States were honored as well.
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Focusing on under-served market leads to rapid growth
Khan started his entrepreneurial journey in 2001 after dropping out of college. He moved to London in search of something new. “I met quite a few young people there who were selling second-hand cell phones,” he says. He latched onto that business concept with the conviction that he could do it better.
“It was pure instinct to take that first leap of faith,” he explains. “I decided this is what I’m going to do, and do it well.”
It wasn’t long before he packed up his business and moved it to South Africa — his native country. Most people there didn’t own cell phones at the time because the devices were too costly. Khan saw a way to get affordable phones into the hands of South Africans by importing “seconds” and refurbished devices.
“We brought them in on pallets. We’d come in with toothbrushes and clean them, box them, print the manuals, put them in the car and deliver them,” he says. “From 2002 to 2007, we had a good run. We grew into a really big business, but eventually demand outgrew supply.”
In 2007, Khan made a bold move: he decided to manufacture new, low-cost phones to serve the same market. That led to the founding of Mobicel. “We decided to create our own brand. I received a lot of resistance. People said, ‘you’re insane!’ But I love to be told something can’t happen,” he proclaims. “That’s been my driver.”
Too much of a good thing nearly crashes the company
Khan had plenty of on-the-ground experience in South Africa, so he knew there was a large market for entry-level cell phones. His passion was fueled by a belief that mobile devices are necessities — not luxuries. He wanted his fellow citizens to have access to modern technologies.
Mobicel launched with a tagline that reflected his ethos: You Deserve Better. The company invested heavily in marketing to compete with big brands and to encourage retail stores and wireless carriers to sell its phones.
In the short term, that turned out to be disastrous even though it created name recognition for Mobicel. “We spent a fortune on marketing and that actually bankrupted us,” Khan reveals.
Then, three years later, the investment in marketing paid off. “When Nokia went under, the network operators needed a supplier of entry-level 2G devices. They said, ‘We see you out there in the market. We’ve seen your brand on TV. Would you please come present your product?’ We ended up on all the major carriers,” he says. “I know it’s a cliché, but sometimes what seems bad today can actually be good for you tomorrow.”
Another big turning point for Mobicel was developing the first USD30 smart phone and USD50 tablet. “These devices turned the company around,” Khan discloses. “We design products based on a price-point. We look at the market, see where the gaps are, and reverse-engineer. Big brands can’t customize for specific markets and they are unaffordable in emerging markets, but we can tailor products for those segments.”
Customer service leads to training programs and small business opportunities
For many South Africans, purchasing a mobile device represents a significant investment. Khan affirms, “Our customer’s biggest fear is, ‘If I drop the device, can I afford to fix the screen?’ So, we started offering one free LCD repair for a year. We want the warranty and support to be the same as you’d get for a USD800 device.”
To ramp up for an increasing volume of repairs, Mobicel created opportunities for people to learn related skill sets and even start their own businesses. “We developed an internship program for cellphone repair technicians,” Khan says. “Upon completion, we may employ them, or they can get a job anywhere else. That’s one of the ways we give back.”
“We’ve recently started a program to create repair hubs around the country,” he adds. “After people are trained, we give them support, software and spare parts so eventually they could own a repair franchise.”
Mobicel also employs young people as resellers. “They sell the product. We act as the fulfillment arm. They get commission. It’s a win-win,” Khan declares. “This creates employment, empowers people, and lifts the brand.”
Expanding mobile access across Africa
Mobicel has captured 24 percent market share in South Africa by serving customers priced out by global brands. Khan knows his customers well and intends to continue serving that market. “A lot of brands start at the bottom and move to the top, but that’s one thing we will never do,” he states. “That would move us away from what we stand for. We feel an obligation to our customers; USD40 is a lot of money to them.”
“We’re now expanding into Nigeria, Kenya, Ghana and Uganda — they all have a similar mobile landscape as we have in South Africa. Some are still using 2G!” Khan exclaims.
“It’s massively fulfilling when you see a person using one of your devices and doing a lot with it. We see young people who are choreographers, personal trainers, artists, all showcasing their skills using Mobicel devices and marketing themselves on social media. They’re becoming entrepreneurs because they have access to the globe — access to people.”
EY is YPO’s strategic learning advisor.