After the Bell: Returning to the vexed question of why Bob van Dijk left Prosus

When I go on to YouTube these days, the advert I am served is almost always about narrative writing. I’m not sure why that is but, presumably, my algorithm has clocked that I write for a living, so it is presenting me courses in narrative structure on which I could conceivably blow some of my extraordinary wealth. 

Ironically, the adverts are kinda fun. There is a guy who says to me, “Write like nobody is watching … because nobody is watching”. I’m not sure what that means, but it sounds good.

I actually prefer narrative reality to narrative writing or narrative fiction for that matter. And that’s for the simple reason that if you are not careful, reality can get very real, very quickly. 

Often people (myself included) say, “You can’t make this stuff up”. But perhaps they should be saying, “Don’t bother making this stuff up, the truth is weird enough”.

Just one example: I think most people would agree the most extraordinary South African business narrative has been that of Naspers. Here is the elevator pitch: “A newspaper company which was supported by a racist government becomes a technology giant, buys (among other things) a 45% stake in Chinese company Tencent for $32-million – which is now worth $112-billion.” I mean, who is going to believe that? We’re talking about a 455,900% increase. There’s dramatic narrative nonfiction for you.

Although this is probably one of the most well-known facts about Naspers, now Prosus/Naspers, the story does not end there. Part of it now was the very quick departure of former CEO Bob van Dijk. The announcement was made on 18 September last year and he left the company two weeks later. 

Amazingly, the company presented this news as though it were completely normal. 

Meanwhile, we in the press went into a tizzy trying to find out what actually happened. At the time, the company was full of praise for Van Dijk, who had been CEO of either Naspers or Prosus since 2014. 

Board chairman Koos Bekker said, “During this time, substantial businesses were established in classifieds, food delivery and payments, while we also entered several new fields. We appreciate Bob’s contributions and wish him much success with his future career.”

But this is not the full story and I suspect I now know at least some of what happened: the giveaway was the announcement recently by international bank HSBC that it currently values Indian educational technology company Byju at zero. 

Vestact portfolio manager Michael Treherne pointed out in the Vestact newsletter that Prosus is Byju’s biggest shareholder with a 10% shareholding and had not only invested in the company initially but had invested in subsequent fund-raising rounds, plonking down $500-million in total. 

It turns out that Prosus’ stakes in several other start-ups – Meesho, Pharmeasy, ElasticRun and Stack Overflow – are not nearly as valuable as they once were, and HSBC has cut those valuations in half. 

Treherne points out that Prosus’ previous management used to justify their high salaries on the basis that they were superior allocators of capital. In Van Dijk's defence, this is the way of tech start-ups; often they crash and burn. That’s part of the game. But judging the characters and chances is an essential part of the skill set.

My sources in the tech industry tell me that what happened is that the CEO of Byju, Byju Raveendran, got a “terrible case of the Elon Musks” by thinking he was a deity and his learning app wasn’t performing as stated. 

Shareholders are up in arms and Byju has been removed as CEO. There is now an international court case to find out what happened to, wait for it, $533-million. Obvs.

“Thankfully, there is now a new management team and the money lost on these start-ups is still relatively small in relation to the Tencent stake,” says Treherne. But, clearly, the narrative has not come to an end because if you are known as the company that made extraordinary bets when companies were just start-ups, it’s tempting to believe that history will repeat itself. 

As it happens, the new CEO of Prosus, Fabricio Bloisi, comes from a start-up background himself. One of the companies he started is iFood, which now does 90 million deliveries per month, working with more than 350,000 restaurants. 

Fortunately, narratives are capable of change. DM