What I have realised is that Aduity was much like a first girlfriend, you know – your “first love”. However, once you have parted ways, you realise that you never really knew what love was but you now have a slightly more mature understanding. I think somewhere along the line the long term vision of Aduity was lost and therefore it ultimately never made any meaning (nor was it going to based on the new direction).

I’m not sure I want to build a startup around another “me too” idea. I’m not sure how important aggregating social commerce status updates from multiple platforms via mobile is (hint: sarcasm)? I’ve learned that startups are an order of magnitude harder to build than you expect.

I’ve slowly stopped exploring the ideas in the first category and have started thinking more deeply about the ideas I have placed into the second category. If I am to pursue an idea in the second category, I know that I will need to emotionally and psychologically prepare myself for the long haul. While the beginning might be humble and there might be no justification that I am on the right track for some time, I still need to maintain conviction that I am on the right track. I know it’s not easy because I’ve been there before.

I know ideas are a dime a dozen and that it all comes down to execution. However at the same time great execution on a crap idea still makes it a crap idea. And that is why I want to ensure I pursue the right idea. The idea that inspires me every day, the idea that I can build a great team around, the idea that makes meaning and then money, the idea that I fall in love with.

I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.
- Michael Jordan

It was mid 2008 and Younique was doing reasonably well. However, I had an itch that I needed to scratch. I wanted to build a mobile advertising platform – think DoubleClick meets AdMob. At the time the mobile advertising market wasn’t as competitive as it is today. Towards the end of 2008, I decided to forgo the R3m+ revenue Younique was likely to generate for 2009, shut it all down and found what would today be known as Aduity.

Unfortunately things haven’t turned out as planned. I’m not going to go through exactly what went wrong, it’s still a little too early. However, as the founder, I have to take responsibility for the failure irrespective of what went wrong. I am publishing this because I want to force myself to become more comfortable with failure and to also encourage other tech entrepreneurs to share their failure(s).

1. Great Technology isn’t the Silver Bullet

We built some great technology. I think the most impressive piece of technology we developed was a version of iAd for Nokia devices, which was no easy task. Unfortunately you need more than technology. Just because you build it, doesn’t mean they will come. It is important to pay attention to market timing, sales and marketing that equals, if not trumps, your product development efforts.

2. Release Early, Release Often

It’s something that has been said over and over again, but when you’re in the driving seat it’s easier said than done. I am a perfectionist and want things to be perfect. We had our first trial run after 3 months of development but it took us almost a year to put out our first major release (and quietly too). After a few months it was clear that our mediation layer feature was most used, so we ended up ditching everything else and turning the mediation layer into the product. If we released earlier, we would have known that sooner and saved ourselves precious time and wasted code.

3. Raising Capital is Time & Energy Consuming

I wasn’t 100% familiar with the process of raising capital until I actually did. It takes time to find the right investors, never mind those who will actually back you. It takes time to negotiate the term sheet. Once you’ve got a signed term sheet, there’s still due diligence, then drafting of agreements and once those are signed, you finally get the money. In an ideal world it should take less than 3 months (once you’ve got a yes), but it can take up to 6 months and in some cases longer. It is time and energy consuming and will affect you and your team as it remains top of mind.

4. It’s a Priceless Learning Experience

I can only become a better entrepreneur by learning from both success and failure. Arguably you learn more from failure. I would have preferred to fail faster, but then I would have missed out on some of the other learning opportunities. I have definitely learned to manage a team of developers and designers much better. I am now more intimately familiar with the process of raising capital. I have also picked up a few more skills along the way and more importantly have learned and grown more than I had expected to.

Conclusion

One might think that I have wasted almost 3 years and the large sum of capital I personally committed. One might think I was foolish to even attempt it in the first place. I like to look at this way. I have no regrets. I was able to pursue an idea that allowed me to meet incredible people along the way that have contributed to my growth as an individual. I have failed at a young age, and might do so again, but everything I go through now makes me a better entrepreneur – like wine I get better with time!

We chatted about how both iThawt and Compass came about and how they convinced an impressive client list to host important documentation in the cloud. We also discussed how they solved their problem of subscription billing and how they went about determining their monthly subscription prices for iThawt.

I was particularly interested to hear how iThawt pivoted and their future plans of introducing social business into the platform. Even though iThawt has only recently launched, I was impressed with it after playing around with it for a while. Chris and Jean would really love feedback so they can progress in the right direction, so sign-up and give it a go.

Before I go any further, I would first like to commend Herman Heunis who certainly risked it all. I am personally inspired by him and after 6 years of hard work, I hope he enjoys his well deserved break.

Since news of the acquisition broke there have been more questions than answers. Why did Naspers sell? Is it because they don’t see a future for MXit? What will Alan do at MXit? Is he aware of BBM, WhatsApp and all the other competing mobile IM services?

I am going to take a step back and first look at how BBM ate MXit’s lunch and why it lost out on smartphones. Essentially there are two important reasons why MXit lost ground to BlackBerry’s BBM.

1. Device Integration with Push Notifications
2. BlackBerry Internet Services

MXit’s biggest problem was that you had to keep the application open in order to receive messages. They tried SMS notifications in the early days, but that obviously became too expensive. And this is where BlackBerry moved in. BBM has tight integration with the device and therefore they have made BBM work just like SMS. I can close the application and receive a notification (just like SMS) when I receive a new message. Obviously this is coupled with their BIS offering which gives you unlimited data for around R59 per month (although that might change).

I used to be an avid MXit user until I got an iPhone. MXit’s biggest strength was (and still is) in being able to support thousands of devices, predominantly low-end devices or feature phones. However they were very slow to adopt smartphone platforms (iOS and Android) and when they did, the experience could have been better in my opinion. It felt as if I was still using an old application, it just didn’t feel as easy to use or as well designed as the competing applications. However, their metrics didn’t show that smartphone platforms where that important did they?

So yes, it is widely known that MXit has faced some stiff competition in the smartphone space, especially from BlackBerry. It also appears that BlackBerry will continue to grow in South Africa. Ah, South Africa? We shouldn’t forget that MXit is a global company. We need to take the other markets they operate in into account. I don’t have statistics available, but I know they have experienced massive growth in Southeast Asia and other developing markets over the last few years. With 40 million users and 14 million of them in South Africa, you can do the math.

The MXit Opportunity

Alan has mentioned that there is a window of opportunity to get MXit’s “ducks in a row”. And this is where some people ask isn’t it too late? I definitely don’t think so. Essentially MXit are in the perfect position to stage a comeback over the next few years and become a dominate player in mobile IM space globally (yes, I am ignoring the “social network” part of MXit).

I think that Alan will be looking to the rest of Africa for new growth (without excluding the rest of the world). Using MXit’s biggest strength, support for thousands of low-end / feature phones and now Alan’s network too. What about smartphones? I mean feature phones won’t be around forever right? This is the comeback opportunity I’ve been alluding to. Smartphones are becoming cheaper and will become more widespread in developing markets over the next few years. MXit will need to leverage this change over. With their large user base, if done right, they can make it happen.

I don’t know why Naspers sold, maybe Herman wanted to leave and they didn’t want MXit without him? Perhaps Alan made the right offer. All I know is that the future potential of MXit is immense. If somebody had to ask me if the acquisition was worth the money, I would reply by saying definitely! Remember, I touched on the instant messaging service. MXit has additional products, and as they grow the potential for solving problems like mobile banking throughout Africa (even globally) become possible. Maybe they will go head-to-head with Facebook.

Update: Arthur Goldstuck has interviewed Alan Knott-Craig on the future of MXit and it seems I wasn’t too far off on my analysis.

Now before I carry on, I’d like to reiterate the definition of innovation I subscribe to, which can be found in a recent post where I share my thoughts on innovation in South Africa. I would also like to mention that I think Koos is probably one of the few high profile executives in South Africa that “get” this space. One just needs to look at the Naspers tech investment portfolio to understand that.

I agree with Koos’s sentiment. Almost no transformational innovation in the online space has come from South Africa. We only see incremental innovation, clones of services from abroad. Now I maintain that a market will justify clones and that there is nothing wrong with them. However, I think Koos (and myself) would like to see the next Facebook, Twitter, Square or PayPal come from South Africa and more importantly more tech entrepreneurs along the lines of a Sean Parker, Jack Dorsey, Mark Zuckerberg, Larry Page and Serg Brin (to name but a few).

I would like to explain why we haven’t seen this transformational change come from South Africa. I hope my perspective from the front line as a tech entrepreneur will add some context. I think the problem doesn’t lie with every tech entrepreneur but more so our conditions and circumstances.

Koos outlines the characteristics of internet entrepreneurs as “young, men, who are geeks and engineers”. Now that describes me. So why haven’t I invented the next big thing that will take the internet world by storm? Even if I did come up with the ideas, and trust me I have bag full, unfortunately the gate keepers are still older people – guys like Koos, except they don’t “get” it.

Do you really think Facebook, Twitter or YouTube would have survived and become as successful as they are if they came from South Africa? I will wager anyone that they would have all done much worse. Can you imagine somebody actually investing in a website that allows people to post what they are doing in 140 characters? I can’t.

And that’s the point. Often we don’t even know what innovation looks like until it succeeds. It requires failure, as Koos mentioned, and it requires betting on unknowns. I have yet to see a South African investor or startup that is playing in the unknown, because our culture is too risk averse. And more importantly, we have no eco-system to support the anomalies and those who fail.

The reason Silicon Valley is so successful at producing innovative internet companies is because it has rich people and nerds who take risks (coupled with great education and bandwidth). However the culture is all about moving forward, building the next big thing and everybody works in tandem to achieve this. Nerds have ample access to capital, even for the dumbest ideas, and are allowed to fail time and time again.

I know there are many factors that contribute to the success of an innovative startup or technology. However I feel strongly that access to the right capital and culture (pro-risk / acceptance of failure) are the biggest hindrances to our internet innovation. Everybody is too focussed on being precise when what we need is the ability to experiment, which would be far more progressive and probably more capital efficient too. And I’ll say it again, we need more technology incubators (like Y Combinator and TechStars).

In closing, I think we will get there. It will just take time, everything is slowly coming together. I know that I am hungry and my ambition for tech startups will never fade – I hope to play a role in the tech scene, both in continuously founding startups whether I fail or succeed and at some point investing in them too.

Side Note: I tried to be a bit controversial on purpose and some statements were absolute but please try and read between the lines and not troll on every single point. Also, this was written between 02h00 and 04h00 so be kind on spelling and grammar mistakes.

In this first episode of withTy I sat down with Jaco van Wyk and Josh Yudaken the founders of SnapBill, an automated billing system, based in Pretoria (and soon Cape Town).

We chatted about how the company was founded, how they were able to finance the company and some of the challenges they have had along the way. I also asked them about their recent experience of pitching at Y Combinator and TechCrunch Disrupt.

Side Note: It is the first recording, so it isn’t perfect. I have learned a few lessons, the first being that cellphones should be switched off as there is some cellphone interference. I’ve also edited out some banter. I’d love to hear thoughts and feedback though.

Before I go into detail, I would like to state that I subscribe to the definition of innovation as defined by Douglas Merrill (former CIO of Google) which is:

1. Incremental Innovation – Small changes to a process or system, for example evolution.
2. Incremental Innovation with Side Affect(s) – Small changes to a process or system with side affects, for example the opposable thumb.
3. Transformation Change – An introduction of a new process or system that fundamentally changes the way things work. Alternatively, a change to a process or system that has significant impact. For example Google’s introduction of the auction / pay per click model for online advertising.

Even though it is a few years old, I suggest watching a video on innovation by Douglas Merrill. It will certainly give you insight into innovation at Google (a few years back).

Firstly, the internet has brought about a wonderful opportunity, not only to South Africans, but to anyone around the world with access to it. It allows individuals and organisations to communicate and transact across borders with ease (compared to even 25 years ago). Therefore I don’t believe anybody should be discouraged from attempting to satisfy a need in a foreign market, if they have the ability and resources to do so.

Mark Shuttleworth was able to cure a global itch from his garage in Cape Town and it certainly paid off for him. I am extremely glad nobody discouraged him from focussing on Thawte, to rather focus on “African problems”. Otherwise he wouldn’t have had the capital to start Canonical, the company behind the Linux based operating system Ubuntu (now the most used Linux distribution globally).

Secondly, I agree that mobile has a larger presence in South Africa, Africa and the rest of the world. And if we go a step further, I also agree that smartphones have less penetration in Africa than feature phones. However, that doesn’t mean there isn’t significant market opportunity in the smartphone space locally.

I think FNB has shown the above to be true by launching a mobile banking application for Android and iPhone. A move that has allowed them to tap into a market of around 250 000 people, and once the BlackBerry version is available that figure will be over 1 million. By 2014, it’s projected that 80% of South Africans will own smartphones. We all know how fast Android is growing.

I need not say much more, a good innovation focused towards future potential. Not everything needs to make complete sense today in order to make sense tomorrow. In fact many could argue that most innovation doesn’t seem to be innovation at first.

Thirdly, I think South Africans are innovators by nature. I could cite Elon Musk, but that won’t make my point. In fact, I’d like to make a different point. Innovation isn’t always cheap. Many large organisations see innovation as a tax, because innovation is often prone to trial and error. Innovation isn’t often achieved in the first iteration.

Therefore if we couple the lack of or intense requirement of resources (capital, skills, infrastructure, etc) and high failure rates within innovation, we can easily see why many people and organisations are prone to ignore their natural calling to innovate and take the safer option, which is to do what works (perhaps imitate?).

I personally don’t see anything wrong with imitating what works. Zynga is notorious for imitating and they haven’t done too bad (different topic though). Let us not forget that Facebook was not the first social network and Google was not the first search engine. I think that a market will justify a clone. In most cases the clone offers some kind of incremental innovation, albeit be it localised only (see Baidu).

Lastly, I think South Africa is heading in the right direction. We are slowly seeing changes in regulation and our internet infrastructure has made leaps and bounds over the last few years. I believe we are slowly making progress with regards to capital, although I would like to see more technology incubators. I think we have some great innovations out there, in the works and better yet – still to come!

1. Disabling All Data & Deleting All Apps on My iPhone

My iPhone can only make and receive calls or text messages (SMS), which essentially means I have an iPhone 3310. I thought about getting a cheap Nokia, but I really like the iPhone’s interface and won’t be giving it up any time soon.

Why do this you ask? I am rather fed up of always being available. I always feel like I am working because I can access my email and other work related resources whenever and wherever. It’s not mentally healthy as I am never able to just “switch-off” and it’s equally distracting. I have also started leaving my phone on silent mode most of the day too. I answer the calls from callers I know and I call any missed callers back at my convenience, allowing me to be less distracted from the task(s) at hand.

2. Checking Email Less Frequently

I used to leave all my GMail account tabs open before I switched to Sparrow. However, this only meant I was now more aware of new emails as I would be notified via Growl and the Sparrow icon in my menu bar.

I no longer leave Sparrow open nor do I log into GMail. I open Sparrow at 11h00 and 16h00 to check for new emails. I respond to what I need to or send out new emails. I have found that the world does not come to an end if I read emails a few hours late. I am even considering working through email once a day at 12h00 instead. It really does feel liberating not reading every email as it comes in. Once again, I am less distracted and I am free to focus on the work I am busy with.

3. Using RescueTime

I have started using RescueTime to measure and analyse where I spend my time on my Macbook. I have definitely cut down on using Twitter and Facebook and have seen a positive improvement in my productivity. What gets measured gets managed right?

If you are worried about RescueTime costing $9 per month, allow me to say that after using it for the first day, I made up the $9 the following day with increased productivity. Therefore making it the best $9 I have spent in a long time!

These are just a few things I have recently implemented and I have noticed the difference. I often think the world is moving too fast and therefore we often forget to stop and smell the roses. I used to be too busy to make time for myself, now I am extremely selfish with my most precious resource – my time!

TrustFabric aims to solve the sweet spot of CRM and VRM, but from the consumer side. Essentially, you keep your personal data up-to-date in one place and TrustFabric allows organisations you have a relationship with to sync that data. Additionally, you can limit what information organisations have access to and TrustFabric will also verify organisations to ensure they are legitimate.

Joe Botha, the founder of TrustFabric, is a well seasoned tech entrepreneur. Prior to TrustFabric he founded three successful technology companies, namely Frogfoot, Amobia and Teraco. It is clear that Joe is extremely ambitious but why would someone want to tackle a problem this big? A problem that is bound to be a cash burner and take years to succeed?

I believe that every now and again somebody steps up to the plate to change how things fundamentally work, because they can. And this is the case with Joe and TrustFabric. We hear every internet and social media guru talk about how the internet has given consumers more power. In the context of being able to control my privacy and information with the companies I deal with, the internet has not given me any power. In fact, modern technology has given companies more ways to irritate me instead.

TrustFabric aims to put the power in the consumers’ hands by saying I will control the flow of information between us, I will let you know how best to communicate with me. I am the customer and I know better, and this will be better for your business.

Allow me to give one example of how TrustFabric could make life easier. Last year I signed up for MWeb ADSL over the phone, as their online process didn’t work for me. After I had given all my details over the phone, I was emailed a form with my details which needed to be signed and faxed back (who uses a fax machine anymore?).

Firstly, I am tired of repeating the same details over the phone, in online forms and even on paper when doing business with a company. Secondly, the form MWeb mailed me with my details on it had almost everything spelt wrong or in the wrong place. It became a nightmare for me and it has happened before with other organisations. Why can’t I just give an organisation my email address (or any other identifier) so they can connect with my TrustFabric account, where I will authorise access to the information and documents they need? As simple as accepting a friend request on Facebook.

As TrustFabric grows, the use case potential is huge. With a retail partnership, TrustFabric could be entrusted with the burden of RICA for internet service providers. TrustFabric Connect already aims to ensure organisations comply with the new Consumer Protection Act after the DMASA failed dismally by having its “do not contact me” database leaked.

It’s going to take a lot of convincing and integration for TrustFabric to work but I want it to succeed, to make my life easier. I want organisations to see TrustFabric as an opportunity to show your customers that you trust and respect them. I want you to sign-up because they need the numbers. It’s ok, you might not use it today but one day you will and you will be glad you supported their vision from the beginning.

When it comes down to executing on your idea, you will most likely require some form of startup capital. It would be ideal for yourself and your fellow co-founders to self fund. If you can bootstrap your way to success, then by all means go ahead as you might be better off. However some ideas need a little more capital to get going in the early stages (and maybe even more later on).

I thought I would share a few pointers on how to prepare before you go on the venture capital hunt. A few might seem obvious or even a waste of time, but I assure you when things get going it’s easy to slip up and you will be glad you were prepared.

1. Prepare Emotionally

Raising capital for your startup isn’t going to be easy. If you are lucky, you only need to pitch a few times to find the right investors. However many will find rejection to be a long lost friend, back for a few drinks and maybe dinner too. I can’t stress how important it is to prepare for rejection, for valid (and sometimes unfounded) criticism and most importantly self doubt. It won’t be an easy journey and it gets even harder once you have raised the capital as you now have to deliver on the expectations of your customers, employees and investors.

2. Test Assumptions

It’s something some founders don’t do and when a VC starts questioning assumptions during a pitch without much response, it undermines the founders’ insight, knowledge and expertise required for the business they plan to start. In testing assumptions you will get an idea of how to deal with uncertainty. Use the findings when pitching to a VC. It will make you look more prepared and boost the investors’ faith in your business acumen. If you have the gift of the gab, it’s easy to think you can answer on the fly but I assure you the wiser VC’s will catch you out. And then you have to ask, do you really want a VC partner who believes in all your fluff or one who challenges your assumptions? (Quick explanation of testing assumptions)

3. Prototype

A prototype is essential when pitching investors. I like to use the term “visual impact”. Essentially, having a prototype to demonstrate to investors will give them context and illustrate the problem you are solving far better than a slide deck will. Also, don’t strive for perfection when building your prototype. Build enough to show investors where the value lies and, if you can, go a step further by having someone in your target market trialing the product or service. Prototypes also assist with testing assumptions. Is the technology easy to replicate? Does it work as expected? Will trial users be willing to pay for it?

4. Business Model / Financial Figures

Never forget that VC’s are investing for a return of between 10 – 15 times their investment in your startup. This kind of exit is usually found in a company going public or being acquired by a larger company. Unless your business model fits the ability to match those requirements, it is highly unlikely you will find VC’s willing to invest. It’s important to show why you need the money, how you plan to spend it and obviously how the business model works and its revenue potential. It is ok to tell VC’s that you will be raising further rounds of investment and that this first round is for certain milestones (revenue, product, etc). When it comes to projections I suggest showing calculations for the next year. I believe they are more realistic in the early stages of a startup.

5. Clean Deal

Ensuring you have all your accounting, administrative and legal leg work done before pitching. Make it easy for investors to give you money. Have an entity registered and ready to trade. Some investors might want you to use their auditors, which is fine. Ensure that your legal counsel (or lawyer) is kept up-to-speed and agrees to work quickly (hopefully at a favourable rate). Also, it is extremely important to disclose any issues or potential issues to investors upfront. They will come up in due diligence and you will risk losing the deal. If that is not enough, you will have wasted time and damaged your reputation which will probably kill your start-up as VC’s do talk to each other (almost like high school girls).

Applying these pointers will be on a case by case basis and are in no way a template for success. Unfortunately some ideas are just not meant to be commercial successes and there are many factors at play that determine whether you succeed or fail. If you don’t want to raise angel, seed or venture capital just yet and are in the early days, why not try a technology incubator instead. I would love to read other entrepreneurs pointers for raising capital, so please don’t be shy to share.