A billion-dollar South African tech empire built from R100

Cartrack founder Zak Calisto says that when he founded the company in 2001, he had about R100 in his pocket.

Initially launched as a joint venture with Netstar, Calisto explained that they financed the business through lucrative cellular 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.”

Born in Portugal, Calisto (57) moved to Mozambique when he was two years old. Soon after that, they relocated to South Africa.

Rugby lovers may have noticed that Cartrack sponsored Portugal’s national team when the Springboks played Os Lobos (The Wolves) this weekend.

Calisto began studying actuarial science at the University of Witwatersrand but dropped out after finding that he didn’t “fit” with his peers and professors.

After his compulsory military service, he completed an accelerated training programme at Standard Bank between 1986 and 1991.

After that, he decided to go into business.

“I initially started as a distributor — working for myself — and doing a lot of the distribution for Netstar,” Calisto told BizNews.

“This is even before Altron bought Netstar.”

Calisto established 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, he said it didn’t quite work out as either company had envisaged, and in 2004, Cartrack went on its own.

Ten years later, it listed on the JSE.

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.

In 2021, Cartrack delisted from the JSE to relaunch on the Nasdaq under a holding company, Karooooo.

When asked where the name came from, Calisto told BizNews, “First of all, I am South African, and I love the Karoo.”

Calisto explained 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.”

Thanks to Cartrack’s success, Calisto’s personal stake in the company has quadrupled in the past five years to around R14 billion.

Calisto controls 20,028,811 of the company’s shares, giving him a direct 64.81% stake worth around R11.8 billion. He also controls an additional 3,140,000 shares through a group called One Spire.

This gives him an effective 74.97% beneficial ownership of the company, valued at R13.6 billion.

Karooooo’s excellent run continued in its first-quarter results for the period ended 31 May 2024, released last week.

Cartrack subscription revenue increased to R960 million, representing a 15% year-on-year increase.

Subscribers increased by 15% from 1.76 million in the same period last year to 2.05 million. Net subscriber additions grew by 88% to nearly 76,000.

Cartrack also reported record operating profit, which grew by 24% to R287 million, up from R232 million for the same quarter the year prior.

Calisto said that when he started 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.