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Knott-Craig takes gamble with MXit

Jul 15 2012 12:50 Edward-John Bottomley

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Cape Town – In February Alan Knott-Craig took a big gamble.

Shortly previously he had become the new owner of the highly popular but struggling Mxit chat service.

The figures looked good: There are about 650m cellphones in Africa, the chat service’s target market. Mxit has 50m users in 120 countries. Each month more than 23bn messages are sent across the service.

When Knott-Craig bought the service for R330m from founder Herman Heunis and Naspers last year, Mxit had yet to make a profit. It had the users, but not the money.

In February, when the “new” Mxit 2.0 was announced, Knott-Craig told the media the chat service had to make a profit this year – “or we are dead”.

How are things five months later? “We are busy taking over the world,” he says half-jokingly – but only half.

“No, it's going well. We have had a couple of lucky breaks. Everything’s going smoothly and I’m actually no longer concerned about Mxit,” he says.

What now? When Knott-Craig bought the chat service through his investment company, World of Avatar, he made, inter alia, one small but critical change to the company’s business model. He opened the technology backing it for others to write and sell their own software for the MXit platform – their own games, sales services, whatever, as long as they were small and simple enough to work on Mxit.

Mxit receives a portion of the money and the software developer the rest.

It worked. The company was flooded with new software and the financial pressure has largely been lifted.

He now wants to expand the service even further, says Knott-Craig in his book, Mobinomics. “We could become a distribution channel for cellphone providers.

“It makes sense to sell airtime on Mxit. We can even start offering things like insurance.

“Many things are untested because people just assume they won’t work. But they underestimate the size of Mxit.

Even if only 10% of our users use your service, it's the biggest market you have ever seen,” says Knott-Craig.

For instance, more than 100 000 MXit users have registered to buy electricity through the chat service. Now Knott-Craig wants to offer books and newspapers on Mxit as well.

The first will be his own book, as well as magazine magnate Jane Raphaely’s biography. “We are still experimenting with the prices,” he confesses. “People can’t afford a R260 book.”

But could one read a book on a small cellphone screen?

“It might not be convenient for the middle class but, as one young lady told me, it’s much better on a cellphone than by candlelight.”

The power of cellphones and Mxit to help communities is important to him. When asked to define the chat service, he says: “We are building and investing in a programme to help Africans make money and build communities by means of cellphones.”

To expand offshore is (not yet) a focus for Knott-Craig. “But Mxit is already being used across the world. We recently added a bunch of new users in Syria.

“And we now have five users in Tajikistan. How on earth did they hear of us? I had to look it up on the map.”

World of Avatar does not own Mxit alone. It is a sort of incubation company for young technology companies, like Pondering Panda, a research company that uses mobile data and which Knott-Craig says will “totally change the playing field”.

Then there is the music service Boom.fm and the information management service TrustFabric.

“The future is mobile. The web will never be as relevant as the mobile internet – there will never be enough computers and laptops for everyone,” he says.

“All that is needed is someone to create the right program or technology that will make mobile internet dominant – and that person won't come from the developed world. He or she will come from Africa or India.”

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

 
mxit  |  alan knott-craig
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