Opinionista Ivo Vegter 10 April 2018

Sagarmatha: The super-galactic highway to absurdity

Business Report, part of Iqbal Survé’s debt-ridden, insolvent and terrifically misnamed Independent Media, has made for hilarious reading lately. Its toady-in-chief has been spouting gibberish in defence of the dubious listing of Sagarmatha Technologies, Survé’s grand scheme to keep his business afloat.

Unethical and fake news should be criminalised,” says Adri Senekal de Wet, the former executive for stakeholder relations at Sekunjalo Investment, who was appointed executive editor of Business Report 18 months ago.

One might imagine that when the editor of a major newspaper calls for journalism to be criminalised, we’d get a few more details. But her opinion piece does not elaborate on what would constitute unethical or fake news, why it ought to be criminalised, who would be the arbiter of truth, or why she wouldn’t be the first to be marched off in shackles.

Her ire is directed primarily at Sam Sole, the journalist who penned a damning analysis of the proposed JSE listing of an entity called Sagarmatha Technologies, following a private placement of shares. The intent is to raise R7.5-billion, valuing the cobbled-together company at anything between R12-billion and R50-billion, depending on whom you believe.

It was cobbled together from an old-school media house (with a website), a relatively minor e-commerce retailer (Loot.co.za), a small-time news agency (African News Agency) with an extraordinary valuation, and a second-rate property website.

Its major asset will be Sekunjalo Investment’s 55% stake in Independent Media, bought with the help of government loans by Iqbal Survé’s company in 2013, and driven into the ground since. Independent Media carries billions of rand worth of debt, much of which is payable in the very near future. It has racked up about R750-million in losses, and is, by its own admission, insolvent.

In a press release bylined to a Business Report reporter, Sagarmatha’s joint CEO, Gary Hadfield, denied that the listing has anything to do with Independent Media’s debts, but that doesn’t address the problem of what, exactly, is in the listing vehicle to justify such a huge valuation.

Sole wasn’t the first to raise red flags. On 3 April, the day the news first broke, Ann Crotty wrote a critical article for Business Day, noting that Independent Media’s ability to continue as a going concern is predicated on its need to raise new capital, adding:

The combined collection of businesses [in Sagarmatha] is unprofitable and have a negative net value.”

On 5 April, Senekal de Wet published an opinion piece that ostensibly explained everything, headlined, “How to value multi-sided platform businesses.”

Apparently, we should value them like Apple, Google parent Alphabet, Microsoft, Amazon and Tencent, because they generate “huge margins”. Imagine such a giant, in Africa! Of course, the problem is Sagarmatha is no such thing, and generates negative margins.

A “multi-sided platform” (MSP) is an awesome thing, according to Senekal de Wet, and although mere readers might not be aware of the term, Sagarmatha’s shrewd investors certainly are.

Here’s the thing. The term has been around for at least 15 years. It loosely describes any business that facilitates transactions between two or more markets, as opposed to selling products or integrating services. It is an extraordinarily generic term.

Ebay is an MSP, as is any site that brings buyers and sellers together. Uber is an MSP, because it connects drivers and riders. Paypal is an MSP, because it connects merchants and customers. And according to MIT’s Sloan Management Review, the Windows operating system and shopping malls are also examples of MSPs, because they connect developers and users, and retailers and consumers, respectively. Classified advertising pages were MSPs, before the internet killed them. There’s nothing new here.

Who exactly Sagarmatha will connect in this manner is obscured beneath a steaming pile of buzzwords and adjectives. Her article reads like – sorry, is – a frothy press release.

On the same day, a “staff reporter” wrote another press release for Sagarmatha. The headline alone is clearly opinion masquerading as news: “Why you should be paying attention to Sagarmatha”. Among the reasons, apparently, is that “Sagarmatha’s e-commerce offerings [basically, Loot.co.za] are Africa’s own Amazon, Tencent and Alibaba”. No disrespect to Loot, but Amazon it ain’t.

A day later, even though the listing had been postponed twice (to Friday the 13th, for good luck), at least two of the papers in the Independent stable carried execrable puff pieces announcing the creation of an “African Unicorn”, that is, a $1-billion (R12-billion) listing.

Following Sole’s article, Senekal de Wet penned an even funnier piece. Sole’s critical reporting is more dangerous, she writes, than the Guptas’ attempted takeover of the country. Why her lord and master, Iqbal Survé, entered into an option agreement with Oakbay Investments, run by those very same Guptas, to buy half his stake in Independent Media, is left as an exercise for the reader.

Anyway, Senekal de Wet alleges that Sole’s reporting, far from describing the facts of the matter, are actually intended to “prevent broader economic participation”. He’s a racist, in other words.

He’s also an agent for jealous competitors. Revealing that Survé is selling a reeking sack of expired polony for billions is really a clever plot to undermine a competitor and set back the cause of transformation in South Africa. Daily Maverick is racist too, in other words.

She writes that actually, Independent Media makes up only about 5% of the new company’s assets. That description only fits if one accepts the anomalous valuation of the African News Agency (ANA).

According to Sole, in 2015 ANA had 26 staff, booked revenue of R8.3-million and made an operating loss of R22.5-million. Yet a deal with the China Africa Fund for 5% of the company inexplicably valued it at over R7 billion. Not only does that give it an astonishingly large negative price/earnings ratio, but it doesn’t have anywhere near the revenue to change that. Worse, after the proposed listing of Sagarmatha was announced, the founding chairman of ANA, Ladislas Agbesi, launched legal action that disputed Survé’s ownership of ANA. So it might be worth nothing at all.

No, no, there are no rats to smell. Smelling rats is racist, né Adri?

Senekal de Wet has always been a marketer, specialising in public or investor relations. She has no experience as a journalist, other than a claimed two-year stint at Beeld during the dotcom boom in the late 1990s (which might explain some of her old-fashioned, buzz-wordy prose). Yet she repeatedly questions Sole’s competence. Unlike her, he has 32 years of experience as an investigative journalist and has won numerous prestigious awards for his work.

The difference between media houses that employ Sole’s ilk, and Independent Media, writes Senekal de Wet, is “that Independent Media has jumped on the super-galactic highway and has managed to re-engineer itself to take advantage of technology and the fourth industrial revolution”.

Well, that does blow the hair back, doesn’t it? A super-galactic highway! The fourth industrial revolution! Quick, hand me my wallet! I must invest!

Several people suggested that this galactic highway nonsense might be a reference to the Douglas Adams classic, The Hitchiker’s Guide to the Galaxy, but in that book, Earth was demolished to make way for a hyperspace bypass. Super-galactic highways had not been invented yet.

When the dotcom boom was in full swing, the internet was sometimes referred to as an information superhighway, a term coined by then-Senator Al Gore 40 years ago. In the 1990s, the term frequently popped up in press releases written by snot-nosed kids trying to bamboozle their way into print by using phrases they thought made their clients sound like visionaries. Twenty years later, those of us in the know call it “the internet”.

What on earth (or in space) a super-galactic highway is, is anyone’s guess. People who use such nonsensical words are, ipso facto, either clueless or swindlers.

Re-engineering [a company] to take advantage of technology,” is likewise a decades-old idea. What Senekal de Wet is describing is actually the third industrial revolution, also known as the digital revolution. It isn’t news. And suggesting that a publication like Daily Maverick, which was founded and exists exclusively online, is somehow stuck in the pre-digital era is simply ignorant.

The fourth industrial revolution is a buzzword that refers to technology that blurs the lines between the physical, the biological and the digital. There is nothing in her description of Sagarmatha that suggests it has anything to do with hallmarks of the fourth industrial revolution, like artificial intelligence, nanotechnology, robotics, quantum computing or biotechnology. Sorry, but an e-commerce retailer doesn’t count. In fact, there is nothing in Sagarmatha’s portfolio, whether or not it actually exists, that is remotely innovative. It’s all been done time and time again during the last two decades, including by dozens of South African companies.

Survé’s lickspittle is just making stuff up and dressing it up with glorious adjectives. Talking about a “super-galactic highway” is not even smart enough to be called “fake news”. It’s idiotic blather in the service of corporate masters.

And so we get to her most recent drivel, in which she reckons journalism that contradicts her boss and personal hero’s corporate spin must be outlawed.

In between shameless brown-nosing (Survé has “the spirit of an African entrepreneur, who has at heart the interest of thousands of South Africans, black and white, and millions of Africans”), she reveals how completely out of touch she is with the media. While extolling respect for Survé, she misspells Branko Brkic’s name when she attacks the editor of Daily Maverick. While going on about the “African Unicorn”, supposedly a billion-dollar company, she suggests publications like Daily Maverick seek to monopolise the sector. A small upstart that is less than 10 years old and is dwarfed by the giant media conglomerates is now a would-be monopolist? Does she know how absurd she sounds in defence of her glorious leader?

Of course, I’ll be labelled a racist for all this, despite the fact that the immediate object of my scorn is lily-white, and her master is not much darker. That’s the catch-all tactic whenever anyone criticises someone who rides the cronyist identity politics train.

The truth of the matter – that Sagarmatha is a dubious investment scheme based on an absurd valuation of a company of disputed ownership, probably designed to rescue a media house which has fallen off a financial cliff since its takeover by Survé’s firm – is irrelevant when a purely ad hominem attack can be made against those who say so.

But no, Ms Senekal de Wet. Real journalists critical of corporate skullduggery and its toadies in the captured media are not opposed to transformation. They’re opposed to corporate skullduggery and its toadies in the captured media.

As for using made-up words like “super-galactic highway”, that really is criminal. Oh, no, wait. My mistake. Before judging, I should have checked the top search result for “super-galactic highway”. It has to do with supreme archangel commanders, two moons, a cosmic boo boo and an organ called a “kundabuffer”. All is clear now. DM

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