Vodacom helped build a billion-dollar South African tech empire – MyBroadband

When Zak Calisto founded Cartrack in 2001 as a joint venture with Netstar, they generated cash to fund the business through lucrative cellphone contract reseller deals.

“In the early days, we had a very good agreement with Vodacom,” said in an interview with CNBC Africa.

“In those days, both Vodacom and MTN would give you cash incentive bonuses for taking out a 24-month contract, and that money helped us fund the business.”

Thanks to their deal with Vodacom, Calisto said he could bootstrap Cartrack with only R100 in his pocket.

Calisto’s career in the industry began around 1991 when he started as a self-employed distributor.

“I initially did a lot of the distribution for Netstar,” Calisto told BizNews. “This is even before Altron bought Netstar.”

Calisto built his reputation in the industry in 1999 when he helped Netstar expand into South Africa’s neighbouring countries.

This led to the launch of Cartrack with Netstar two years later.

However, this didn’t quite work out as either company had envisaged. As a result, Cartrack went on its own in 2004.

Initially launched as a stolen vehicle recovery company in South Africa, Cartrack has grown into a multinational powerhouse with operations in 23 countries.

It also expanded from recovery to offering tracking, data analytics, and business intelligence.

Speaking to Alishia Seckam on Daily Investor’s Smart Money in May last year, Calisto said that when he began Cartrack, he knew there was demand for its services.

“What I couldn’t foresee is the big expansion of technology,” he said.

Calisto said it’s obvious to him now that no one really knows what they will be doing in ten years because technology is continuously improving.

“What we’re doing today with our technology has nothing to do with what we initially started out with,” he said.

Cartrack listed on the JSE in 2014, then delisted in 2021 to relaunch on the Nasdaq under a holding company, Karooooo.

Despite Karooooo’s consistently good financial performance, its share price suffered on the Nasdaq — declining by over 20% from 2021 to 2023.

Unfortunately, this wasn’t unexpected. South African companies have not had much success in listing on the Nasdaq.

Companies like Lesaka Technologies (formerly Net1) and Datatec are examples of local companies that did not benefit from Nasdaq listings.

One problem is liquidity. The Nasdaq exchange houses over 3,400 companies, and small businesses could become lost in such an ocean of activity.

Karooooo is thinly traded, and Calisto previously said their low valuation was due to low liquidity.

However, a share buyback programme announced in February has sent the company’s share price soaring, and it now enjoys a $1.15-billion (R21.3 billion) market cap.

When asked whether he regretted launching on the Nasdaq, Calisto said he’s never been one for instant gratification.

He said their rationale for listing on the Nasdaq was that they were looking for a long-term financial platform to service an international company.

“We thought it was important to go to the Nasdaq but also remain inward listening into the JSE, allowing South African shareholders to continue participating in our vision,” said Calisto.

“We now have a great financial platform from which to grow.”

Regarding the holding company’s name, Calisto told BizNews, “First of all, I am South African, and I love the Karoo.”

Calisto said that when he externalised his shares around 2019, he formed a company in Singapore called Karoo to hold them.

Later, when they needed a legal entity to list on the Nasdaq, they tried to buy the karoo.com domain.

However, Calisto told Daily Investor’s Smart Money with Alisha Seckham that the American who owned it wanted a few million dollars for it.

“Then I just registered ‘Karoo’ with three o’s up to ten o’s — so now we own all those domains,” he said.

“Over time, we also learned it’s just a name — you can call it whatever you want.”