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Alan Knott-Craig Jnr steps down as CEO of Mxit

Investor Alan Knott-Craig Jnr has stepped down as CEO of Africa’s largest mobile social network, Mxit. The company, which has just received a R100 million investment by shareholders, announced the move today.

Mxit, which was acquired by Knott-Craig Jnr late last year, is available in 128 countries. It is represented in international markets that include Malaysia, Kenya, India, Indonesia, the United Kingdom, United States, Nigeria, Brazil, France, Germany, Italy, Portugal and Spain, where users have access to Mxit’s chat function.

“While the shareholders and I share the same vision, we differ on how to get there. Therefore, I agreed to go my own way. I wish them all the best for the future. Mxit is Africa’s biggest tech success story, and can be a global success story,” said Knott-Craig Jnr.

The company’s current CFO, Francois Swart, will act as the interim CEO. Mxit will be recruiting a new CEO and other new executives to drive the expansion.

In a statement, the company says its strong image is partly credited to Knott-Craig, saying that it is South Africa’s biggest success story which is “in no small part due to Knott-Craig’s involvement and vision over the past year”.

“Mxit has a window of opportunity and is pursuing aggressive growth by increasing the user base in Africa through partners in targeted African countries,” it adds.

Knott-Craig will also be stepping down as the head of Stellenbosch-based Venture Capital company, World of Avatar, the relatively new investment firm that invested in a fair amount of internet startups last year.

Commenting on the move, Steven Ambrose, the head of tech research company Strategy Worx, says that the decision could be a result of both sides no longer agreeing “on the future strategy of the company”. This, he says, could have “created a situation where it was AKC’s [Alan Knott-Craig’s] way, or the highway, and those that hold the purse strings called the shots”.

He also notes that the recent investment of R100-million “changes the nature and style of the company and will result in a completely different operation going forward”.

“The demands of big business and big finance often necessitate a very different and far more structured approach to that of a nimble venture capital style operation which AKC appears to truly enjoy. This more than anything could have resulted in his resignation from WOA,” adds Ambrose.

In a previous interview with Memeburn, the former CEO said that he purchased Mxit because he wanted to tell its story, which he reckoned is “a success story of likes of Facebook in its own context”.

According to Knott-Craig, at the time Twitter was doing eight-billion messages a month, while Mxit was doing 22-billion a month. He said that the average Facebook user spent 15 hours a month on Facebook, while an average Mxit user spends 45 hours month on MXit, “people don’t know this. It is a massively engaged, massively active audience”.

Technologist Arthur Goldstuck says the move comes as a “shock” as Knott-Craig was “invested on a personal level in the future of Mxit and social networking in Africa”. The head of research company World Wide Worx reckons that the former CEO may have been “too relaxed about Mxit’s business model” saying that perhaps he banked heavily “on the rising trajectory of Mxit Moola to look after business while he — in his own words — was having fun”.

The company may also be facing pressure from shareholders as it is seeing very little growth. Goldstuck comments that although Mxit is South Africa’s biggest social network “it’s seeing no growth while the competitors are mushrooming in numbers (of networks) and size”.

“It is likely that they were not overcoming that apparent stagnation, but if that is the reason, it would be surprising, as merely holding on to 9.3-million highly active users is an achievement. The bottom line in such matters is usually just that: the bottom line, i.e. how much money are they making? If investors didn’t like Alan’s answer, they may have decided to find someone who could give a better answer. The “investment” sounds more like a buy-out.”

Mxit has been working hard to create a platform that developers can build products on. In the last few months the mobile social network has launched a set of new developer APIs as well as a redesigned developer centre.

The company recently acquired social network site builder Motribe, a move Knott-Craig felt was long overdue and a “marriage made in heaven”.

Mxit was founded in 2005 by Herman Heunis who stepped down when Knott-Craig acquired 90% of the company late last year.

Author | Mich Atagana

Mich Atagana
Mich started out life wanting to be a theoretical physicist but soon realized that mathematics was required. So, she promptly let go of that dream. She then decided that law might be the best place for her talents, but with too many litigation classes missed in favour of feminist... More
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  • s_e_a_n

    “Mxit, which was acquired by Knott-Craig Jnr late last year […] says its growth is partly credited to Knott-Craig”
    “The company may also be facing pressure from shareholders as it is seeing very little growth.”

    So which is it?


    AKC: “While the shareholders and I share the same vision, we differ on how to get there”
    “[Steven Ambrose] says that the decision could be a result of both sides no longer agreeing on the future strategy of the company”

    Really, Steven??

  • Jimbo jones

    Where does this leave Knott-Craig’s shareholding in both Mxit and World Of Avatar then, is he totally out or still staying active through his stake in the company?

  • zwikid

    REPOST FROM BANDWIDTH BLOG:Insider • 12 minutes ago
    −+Flag as inappropriate
    This is sad news for Mxit. The real story, however, should be the wasteful expenditure that the company has incurred over the last year. Some examples.1. They retrenched about 10 people when Knott-Craig took over. In less than three months he replaced them with a bunch of overpaid special project managers who they bundled into some kind of innovation team (all non-tech people). These guys produced nothing of value, were paid fat salaries and in the end must have cost them more than the people they retrenched.
    2. It is a known fact that the company values form over substance. Read Knott-Craig’s blog post to that effect here: http://alanknottcraig.wordpres… . This is at it’s truest form when you visit them in their ivory tower in Stellenbosch. Mxit occupies the most expensive office space in Stellenbosch. Really? For a ‘start up’. More importantly, for a company that was losing around 1 – 2 million a month, is this really necessary. Do you really need a Barista and some coffee machine flown in from Italy (this is exaggeration: I do not know the origins of the machine. All I know that it is massive, shiny and a paid employee works behind it.) Almost every person I have met within the last year at Mxit sports a new Apple Macbook Pro and a Apple Thunderbolt on their desk. Really? That is around R30 000 worth of computers? There is an entire studio in Mxit where every person has this set-up. Then of course there is the grand finale, Mxit spend more than a million rand on a staff party last year April. A million rand. 3. They keep talking about innovation. I was told in a meeting not long after the acquisition (I also worked with the pre-Knott Craig people) that the iPhone App would be reworked immediately because it sucks. It has been a full year. Apple have managed to launch a new phone and a new operating system. They still havent cracked it. Mxit still looks terrible on a smart phone. I also dont understand what they expect people to accomplish on their new API but as this is not my field I will stay quiet …. what is my field however is finance. The Mxit Wallet (I am sure the name has changed again by the time I write this) changes ona weekly basis. One day Moola is gone, then it is back (currently its Moola+) and then it changes again. They honestly look like they have no idea what they are doing. If they are: they are terrible at communicating it. 4. What is up with their adsales team not sitting in the same building as them? Was there some messy divorce? I once had two meetings – one at Shinka and one at WOA. In the Shinka meeting I was told they could rewrite the code and push my message in anywhere. Afterwards Mxit told me ‘we don’t see advertising as an important revenue stream’. Huh. In any case, WOA should stop preaching about the evils of advertising when their platform has more ad’s on it than any other social network. I like Alan. I find him an honest, good man. But Mxit is a mess. To see such an iconic SA brand go down in flames will be devastating. How do they fix it? Who knows. I fear, unfortunately, that people can and will probably add some more points to my essay above …. I personally hope Mxit gets out of this rut.

  • Jimbo Jones

    Very interesting…

    I’ve personally had friends that worked (and that are still currently employed by Mxit) under both Herman and Alan’s leadership, the feedback on the events that have transpired at Mxit over the last 18 months have truly been fascinating.

    This blows my mind. Where does this leave Knott-Craig though, is he still an active shareholder and does he still have some level of involvement through these interests or has he exited Mxit and World Of Avatar totally and absolutely? If so, where to from here for him…?
    Further, any clarification on whom the outside investors are that are responsible for the R100 million investment?

    Get an interview there memeburn, finance and tech specific please!

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  • Smartie

    Advertising accounted for 50% of their revenue when MXit was sold. This was ‘handed over’ to Shinka when the company was sold. Mxit-generated content accounted for another 25% of revenue, this was stopped in favour of the far less profitable buying in of 3rd party content. And all this before any alternative revenue streams were up and running. Add the new recruits and equipment … I think if I were an investor, I’d also not agree with his chosen path to achieve Mxit’s vision.

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  • Die Nuus

    Of course the 100m is mxit’s buyout of AKCJR – that’s no investment. They wanted him out and thats probably close to the amount he invested originally (if thats the case he actually lost money if you take inflation into consideration).

    I was at a speech thingy for Guss Silber’s book launch about mxit where AKCJR was talking. Given the things he said then and the impression he created, I am not too surprised.

    Oh and by the way… Anyone remember what happened to iBurst

  • hopefull

    These are dark days for Mxit, but I wouldn’t count them out yet. Yes, the last year was extremely stressful for everyone at the company which is why I no longer work there. Retrenchments did not only happen at the point World of Avatar bought Mxit, this went on through the entire one year period. The most recent being one month back and saw the axing of more employees with many years of service. Apart from this the business strategy of Mxit changed from one week to the next so many employees eventually left the company.

    Why I say we shouldn’t count them out just yet is because they still have some of their original staff and they could probably turn this whole thing around with or without a CEO!

    The main development brains working on the actual guts of Mxit are still there along with the original CTO and chief architects. On the business side they still have an experienced administration team dealing with clients and they still have one good senior product manager and some marketers. Mxit has been very fortunate to hire exceptionally skilled and tenacious people who love a good challenge. This is thanks to many of the old management staff now retrenched or working elsewhere. If the future CEO handles this in the right way this situation can be turned around and a great South African icon saved or grown into something all of us in SA can be proud of.

    The pressure is on and all eyes on you. Good luck Mxit!

  • What presence does Mxit have in Kenya? Let us not mention countries just for the sake of it.

  • 91 000 users as of March 2012.

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