SA’s 8Bit reaches tipping point after Kenya, Scandinavia launches

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It’s been a long, hard journey for South African content recommendation startup 8Bit, but the company’s founders believe it has finally reached a tipping point after delving back into its technology and rolling out in Kenya and Scandinavia.

8Bit is a content recommendations engine with a twist, giving users control over what content they display, both on their own site and to the greater 8Bit network.

The startup’s widget is a content recommendation plugin that suggests articles to readers and drives traffic between sites. 8Bit has also launched an autonomous aggregator, TheDrop.co.za.

Disrupt Africa caught up with the team as 8Bit was set to do its billionth impression, and following successful rollouts in Scandinavia and Kenya. But co-founder Tom Kennedy said it had been a rough ride for the bootstrapped startup, which has not taken on any funding since being involved in the last 88mph accelerator programme in Cape Town.

“We’ve bootstrapped to the point that one of us has been in hospital. There have been moments where we have asked ourselves what we are doing,” Kennedy said.

“Trying to operate a business like ours with three people is a recipe for grey hair, a nervous breakdown and an early death. But we’re through the worst of it now and scaling up. It’s a tipping point.”

The company is also approaching a crossroads, where it must decide whether it has the ability to break-even and scale alone or seek further funding. Getting 8Bit to scale has been, and remain, key, with getting major media houses on board vital to the success of the whole project. Kennedy says this process has been slow, but progress has been made.

“We have to grow exponentially to cover server fees and all sorts of things. But we’re now at the best stage we’ve been for a while. It is now all about going into these media houses and establishing relationships in South Africa,” he said.

South African media houses may have posed a problem, but elsewhere 8Bit has taken off. 88mph co-founder Kresten Buch played a part, helping the startup get into his native Scandinavia and Kenya, where the company also ran accelerators. Both of those countries are now more valuable for 8Bit than South Africa.

Aside from setting up shop in new areas, 8Bit has also revisited its technology. The Drop dashboard is now fully operational, with Kennedy describing it as a “significant upgrade”.

“We’ve been told agencies are looking for something a bit more standard that they are used to. We were maybe trying to be a bit too youthful with our dashboard,” he said.

Prospective customers can now test what their URL would look like, and 8Bit is also going into enterprise models, allowing media houses to create closed networks.

“We’re essentially giving them a white label of our brand to run internally,” Kennedy said.

Revenue is currently around 40 per cent of burn, while the network averages a clickthrough rate of 0.4. Again, scale is key, hence why getting reluctant media houses on board is vital.

“The system certainly operates better at scale. To find an audience you need to have a spread,” Kennedy said.

“Our goal at 8bit has always been to get traffic to as many partners as possible.”

And after all the trials and tribulations, Kennedy now reckons 8Bit is in a good place.

“We feel pretty good about where we are. It was pretty slow and tough to get to this point, but I think that’s why not many startups in Africa with minimal funding go after ad-tech,” he said.

With or without further funding, the startup is also convinced native advertising is on the rise in Africa, something that will only boost 8Bit’s prospects.

“There’s going to be huge growth in the segment by the end of the year,” Kennedy said.

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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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