Do-it-your­self hotspots

Broad­band frus­tra­tions cre­ate busi­ness op­por­tu­nity

Finweek English Edition - - Cover - BENE­DICT KELLY

WHILE THE CEL­LU­LAR NET­WORKS are spend­ing bil­lions set­ting up and punt­ing 3G net­works, the WiFi revo­lu­tion is con­tin­u­ing its steady pace, with more hotspots pop­ping up ev­ery day. While large play­ers such as Telkom and MWEB are fo­cused on the high end of the mar­ket, emerg­ing player Sky­Rove is of­fer­ing a hotspot so­lu­tion that al­lows any­one, from in­di­vid­u­als at home to small busi­nesses, to set up and op­er­ate their own hotspots.

Sky­Rove CEO Henk Kleyn­hans says the com­pany was born out of per­sonal frus­tra­tion at not be­ing able to get broad­band ac­cess at a rea­son­able cost while a stu­dent. “What I re­alised was that it was pos­si­ble to share a con­nec­tion with my neigh­bours us­ing WiFi and share the as­so­ci­ated costs. The prob­lem was I needed a way to col­lect the money with­out phys­i­cally go­ing round to sub­scribers.

“We cov­ered the start-up costs our­selves but were able to se­cure some ven­ture cap­i­tal from an an­gel in­vestor in the US, which al­lowed us to hire some staff and bring in a full-time programmer,” he says.

“Later we had some ad­di­tional in­vest­ment from FFF in­vestors – friends, fam­ily and fools – but the busi­ness has been cash pos­i­tive since Au­gust 2006 af­ter the first hotspot went live at the end of 2005. In ret­ro­spect, we should prob­a­bly have spent less time wor­ry­ing about rais­ing cap­i­tal and kept the peo­ple fo­cused on cre­at­ing value inside the busi­ness. Rais­ing money is a time-con­sum­ing ex­er­cise and in a small com­pany it’s not al­ways the best way to use your re­sources,” he says.

One of the big­gest chal­lenges the com­pany faced was try­ing to con­vince po­ten­tial cus­tomers that part­ner­ing Sky­Rove was a bet­ter way of de­ploy­ing hotspots than build­ing their own so­lu­tions. “Many com­pa­nies suf­fer from the ‘not in­vented here’ syn­drome, where they feel they could build a bet­ter sys­tem in­ter­nally and of­ten waste valu­able time. Luck­ily, as we’ve grown, we’ve seen less and less of this at­ti­tude,” Kleyn­hans says.

The com­pany cur­rently sup­ports just un­der 60 hotspots, mostly in the Cape Town area but with a smaller pres­ence in Gaut­eng and a cou­ple of hotspots in the UK. Kleyn­hans says the strat­egy has al­ways been to build a sys­tem that can be used any­where in the world, and with en­quiries from as far away as the US and Croa­tia, word seems to be get­ting round.

The use of global pay­ment so­lu­tion Pay­Pal to process credit cards hasn’t hurt this strat­egy even though it was cho­sen be­cause it was the cheap­est way to process credit card trans­ac­tions. Pay­Pal doesn’t re­quire mer­chants to pay a monthly fee or make any com­mit­ment, un­like lo­cal credit card pro­cess­ing op­er­a­tions. Cus­tomers buy Sky­Rove cred­its, which go for about 7c/credit and can be re­deemed at any venue us­ing the sys­tem.

The com­pany does not dic­tate how much venue (such as cof­fee shop or restau­rant) own­ers should charge for the ser­vice, but Kleyn­hans says most charge around the equiv­a­lent of 35c/MB (70% of which goes to the venue).

Henk Kleyn­hans

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