“The idea had been forming gradually in my head and then all of a sudden the entire business plan fell into place at 4 o’clock in the morning before a maths exam. I sat there for about three hours frantically trying to write it all down,” remembers Henk Kleynhans, CEO and founding partner of Skyrove. The idea he’s referring to was for paid shared Wi-Fi usage. The solution he and co-founding partner and fellow student, Allister Kreft, hit upon has attracted local and international investment and earned them numerous awards, including the 2005 Enablis / Business Report Entrepreneur Challenge in the Business Idea Category and the 2006 Technology Top 100 Award for Most Promising Emerging Enterprise.
As a student on financial aid, and a self-confessed internet junkie, Kleynhans realised that he would be able to afford broadband (which then cost R1 400) if he was able to share internet usage with digs-mates and neighbours and charge them for it. “Wi-Fi existed at the time but it didn’t have the capability to allow you to measure how much data people were downloading or how much time they were spending on the Internet. I realised that the best way of going about things was to charge people upfront on a pre-paid basis for the amount of data they were going to use,” he says.
So Kleynhans and Kreft set their minds to creating a solution that would enable them to implement the idea. Their first hurdle was funding – they needed capital to develop the prototype so, true to his techie nature, Kleynhans set up a simple website and a blog with one posting. “I explained that I had this idea about sharing Wi-Fi with your neighbours and getting money back for it, and said that I was looking for engineers, investors and the like,” says Kleynhans. Remarkably, one of the people who read the blog posting was Donald Levy in Texas, founder and then CEO of Ski-Wi. After some discussions, Kleynhans and Kreft had their hands on $20 000 and the Skyrove prototype was on its way.
Skyrove has two groups of customers: the first are business people such as coffee shop and hotel owners, who want to sell wireless internet access to customers, and the second are the end-users themselves. The way the system works is simple, as Kleynhans explains: “The businessperson – who has any type of broadband from ADSL to iBurst or 3G –purchases the Skyrove router at cost price (R595), turning their business into a Skyrove hotspot.
Their customers purchase pre-paid Skyrove credits online which relate to a data amount and then access the Internet via their laptop at any Skyrove hotspot they choose. The end-user is charged about 80c per megabyte used in a particular hotspot – Skyrove retains 30% of the payment and passes 70% on to the business owner.” He adds that while most Skyrove users access Skyrove credits online, they can also do so by purchasing vouchers at Skyrove hotspots. Although the business has grown rapidly, Kleynhans says the biggest challenge has been marketing and branding on a tight budget. As he points out: “The lesson I learned is that you can have a fantastic product but it’s not going to sell itself.” To overcome the challenge, the Skyrove team has been creative about using inexpensive online media, especially blogs, to get the word out there. However, Kleynhans still finds that while many people in the IT industry know about Skyrove, there are still plenty of potential end-users who don’t.
Which is where an undisclosed seven-digit venture capital investment from Lingham Capital, secured this year, will make a big difference. “This will allow us to expand extensively in South Africa and develop the brand significantly,” says Kleynhans. In the long-term, Skyrove plans to go global but, as he adds, “We want to establish a strong footprint in South Africa first.” If the interest already generated among those in the know is anything to go by, it’s a plan that could see implementation in the not-too-distant future. In the meantime, Kleynhans reflects on their success to date.
“I think the thing with starting a business is to scratch your own itch,” he concludes. “If you understand the needs ofyour customers from a personal point of view, you have a better chance of creating a product that will provide them with a solution that will meet those needs, and that’s what we’ve done. We’ve created something that we find value in using.”