See More

MXit targets ‘micro-entrepreneurs’

Feb 19 2012 15:25 Edward-John Bottomley

Related Articles

Facebook taking lead in low-income market

Third of Mxit users favour secrecy bill

Naspers, Heunis sell MXit stake

MXit targets users' wallets

Cape Town – The Americans are coming, says the new owner of chat service MXit – and they are coming with guns blazing.

If he cannot succeed in turning around the MXit business, social media in Africa will belong to the Americans, says Alan Knott-Craig Jnr, chief executive of investment group World of Avatar.

“And they will dictate what we should eat and drink. They will create the culture.”

Knott-Craig is serious about the role of the popular chat service in the lives of the continent's youth.

According to him there are now almost 50 million MXit subscribers in 120 countries where more than 10 million use the service on a daily basis. Between 35 000 and 50 000 subscribe to the MXit service every day.

MXit, which was founded in Stellenbosch in 2006, has so far been content to think (relatively) small.

But no longer, says Knott-Craig, who bought the company for an undisclosed amount last year after Herman Heunis, the previous chief executive, decided to dispose of his interest. Naspers, which owns the remainder, also decided to sell out to World of Avatar.

MXit is currently restructuring to improve, among other things, its versions for smartphones, particularly the Apple iPhone. The chat service has also been thrown open to outside programmers so that they can create their own software. MXit’s policy was previously to itself create all the games and services it offered.

Anyone will now be able to create an application and sell it to other users, much like in Apple’s very popular App Store. Facebook has had great success with this concept. After it took this decision a couple of years ago, it was soon flooded with software.

These days, for instance, Zynga, the creator of the FarmVille farming simulation social network game among others, makes up more than 10% of Facebook’s turnover.

“We want to create an economy of micro-entrepreneurs,” says Knott-Craig. MXit is involved in a philosophical dispute with Facebook. Knott-Craig believes consumers are streaming to MXit because of the anonymity – they want to escape their everyday lives.

Facebook places great emphasis on consumers' personal information to sell advertising, says Knott-Craig. MXit’s policy is to derive no more than 10% of its turnover from advertising.

Where would the money then come from? Knott-Craig wants to create a mobile payment system so that its millions of users can all use MXit Moola to pay for coffee in a coffee shop.

The company recently persuaded First National Bank to significantly lower transaction costs for MXit Moola, to make the service more attractive. By April, when the restructured company is to be announced, MXit wants to have a least one large South African retail chain allowing MXit Moola.

As part of its restructuring, the company last week opened its books to show revenue of around R100m for last year – although it still made a loss.

According to Knott-Craig MXit has to show a profit this year, “or we are dead”. He has every confidence in the new MXit. “If I did not believe this possible, I would not have bought the company.”
mxit  |  entrepreneurs


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

The Fast and Furious R40 million

With the Fast and the Furious 7 hitting South African cinema’s this April, all eyes are on the cars and we’re in for a treat!


Luxury living

This is the most expensive burger in the world!
Exclusive food items that WILL break the bank
Top 10 most expensive homes in the world
You can permanently live on a ship and sail the world!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How will you manage Vodacom’s price hike for contracts?

Previous results · Suggest a vote