Stellenbosch-based social networking company MXit has a one-year window of opportunity to improve and expand its products and services if it’s going to fend off an onslaught of rival services like instant-messaging application WhatsApp, says its new CEO, Alan Knott-Craig.
“The main risk [for MXit] is the Americans are coming,” Knott-Craig says. “They are starting to develop [their applications] for feature phones. Our user group is getting better phones [and] for us the window of opportunity is this year.”
Knott-Craig’s company, World of Avatar, acquired MXit from founder Herman Heunis and media group Naspers in 2011 for an undisclosed sum.
“We have this year to get it right,” he says, adding that MXit has to have a “totally device-agnostic” approach, meaning the software experience must be seamless across tablets, smartphones and cheaper feature phones.
“If we don’t crack that, then I think we’re dead,” Knott-Craig says. “If we get it right, though, we are on the right ticket. If I’m talking to you this time next year, that means we’re still alive and I haven’t been forced to emigrate because I won’t be allowed back in the country.”
Since acquiring MXit, Knott-Craig, who is a former MD of telecommunications operator iBurst and the son of the former Vodacom Group CEO (they share names), has moved quickly to consolidate the business, merging a number of operating businesses into a new company to house the assets. Four separate offices were combined into one new facility based in Stellenbosch. Some divisions have been closed and some staff retrenched, which, he admits frankly, led to a “lot of chaos and uncertainty”.
A staff trust has been created, where profits accrue to employees at the discretion of the trustees.
Knott-Craig says MXit makes most of its money — about 70% — from the sale of content and access to premium chat rooms. Chat rooms generate R30m/year in revenue for the company, he says. It pays content suppliers 70% of sales generated, retaining the other 30% — the same ratio used by Apple in its popular iTunes and App stores. Most of the rest of MXit’s revenue comes from advertising.
Knott-Craig says MXit’s principal focus will remain on Africa, even though the service is enjoying strong growth in other developing markets, including Mexico and Indonesia. He says the company needs to focus its efforts on the continent.
The company has 3,5m e-mail users (using the @mxit.im address suffix) and 3,5m South Africans log into the service each day (10m every three months). Its Gallery cloud-based file storage system — which allows MXit users to store their contacts, photos, music and other content online — also has 3,5m users. The service was launched in 2006 and Knott-Craig likens it to Apple’s recently launched iCloud offering. He hints that MXit is working to make it possible to share content in Gallery with other users.
The company recently launched an e-wallet with First National Bank for payments using its Moola virtual currency and on 1 April will launch a range of new services on the platform.
“We are currently the sixth most downloaded free app in the Android Market, but WhatsApp does better.” About 19% of users connect using BlackBerry devices, despite the rival BBM application that comes bundled with BlackBerrys. “I’m kind of just waiting for [BlackBerry maker Research in Motion] to go out of business, which will take care of that one,” he jokes. — Duncan McLeod, TechCentral
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