5 things your startup can learn from the demise of Mxit

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It has been speculated on for years, but now it has finally happened. South African company Mxit, a pioneer in the mobile messaging world, is no more, commercially at least.

Mxit’s story is one of high expectations, initial promise, and eventual slow death. Its shutdown sees South Africa lose one of its most-admired flagship tech companies. But what lessons can your startup learn from its demise?

Plan for the future

Mxit was the pioneer globally in mobile messaging, that much is certain. But its initial success was based on usage of feature phones at a time when this was the norm in South Africa and elsewhere on the continent. It was woefully unprepared, it seems, for the swift uptake in smartphones, which has increased at exactly the same time as usage of Mxit has decreased.

On old Nokia mobile phones, Mxit was the boss. When it came to moving into the smartphone era, frankly, it stank. Though it eventually released Mxit 7, which aimed to bridge the gap between feature phone and smartphone, it was too late, as more recent entrants to the mobile messaging scene such as Facebook, WeChat and WhatsApp had already stolen its thunder.

If you have first mover advantage, make sure you use it

This point is linked to the previous one, but there is more to it than simply being unable to move with the times sufficiently in a market where technology changes almost by the day. Mxit hit the market well before the major players mentioned above, but moved too slowly, and failed to take advantage of its first mover advantage.

While its user base grew to sizeable proportions in South Africa, it was ponderous in reaching other markets. Expansion would have obviously increased its user base, but also served as an excellent marketing strategy, increased interoperability between users in different countries, and boosted revenues. As it was, Mxit was far too late in making efforts to scale internationally – in Nigeria and India – and these efforts were in any case low-key and insufficient when it came to winning market share. The result was it squandered its first mover advantage, and ended up losing ground to those that came later.

Be sure on your numbers

There has always been doubt about the veracity of Mxit’s user numbers. Nobody is suggesting that the numbers were ever “cooked”, but confusion over exactly how many people are using a service, where they are based and how many of them are active daily can be a killer blow to any startup relying on advertising for revenue.

The confusion is clear based on just a few numbers. Having claimed growth from three million in 2007 to 7.5 million in 2009, Mxit claimed it had 27 million registered users in 2010. By the time Alan Knott-Craig Jr took over, the company was claiming 50 million registered users globally, though founder Herman Heunis had recently claimed 42 million. Then, it was 7.4 million active users in Africa, after Mxit claimed it changed the way it reported its figures. Confused? Everyone was. Under its last chief executive officer (CEO) Francois Swart Mxit looked to introduce some clarity on its reporting methods and moved to bring Mxit in line with advertising industry standards. But in the eyes of advertisers, the damage was done, something felt particularly keenly by Mxit at a time when its user base was falling anyway.

Look for stability

It has been one hell of a ride at Mxit over ten years, something which may well have contributed to the general lack of direction at the company. Heunis founded it, Naspers invested in it. Naspers then divested, and Heunis departed, after Knott-Craig’s buyout. Knott-Craig was then unceremoniously dumped as CEO, with Swart taking over, and Michael Jordaan coming in as chairman. A number of high profile hires – such as Peter Matthaei, Andy Volk and Vincent Maher – came and went. There were rounds of retrenchments, couple with unsustained stabs at expansion. After its early years the company never really looked settled and happy enough to succeed.

Simplify your focus

What really was Mxit anyway? A private messenger service? A community engagement platform? A public chatroom? Essentially, it tried to be all of those, especially with the rollout of Mxit 7. Trying to be all things to all people may have been one of the reasons for the companies eventual failure.

Many startup founders will tell you that, in the initial days at least, it is advisable to do one thing, and do it well. Extra features and platforms can be added later, once you have established yourself in one space. Mxit seemed to move to fast in rolling out various tenements of its platform, with the net result it did none of them particularly well and was unable to focus. A more subtle, timetabled rollout plan may have been a better bet.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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