Former MXit CEO Alan Knott-Craig Jnr. Picture: FINANCIAL MAIL
Former MXit CEO Alan Knott-Craig Jnr. Picture: FINANCIAL MAIL

ALAN Knott-Craig Jnr’s sudden departure from MXit this week has spurred concerns that the messaging service, which claims to be Africa’s largest social network, will struggle to implement its strategy and hold competitors at bay.

Mr Knott-Craig Jnr, who resigned as both CEO of MXit and its holding company World of Avatar on Thursday, said he had a difference of opinion with shareholders about its expansion strategy.

He told staff in an e-mail: “The good news is that the shareholders and I believe in the same vision ... we just couldn’t reach an agreement on how to get there.”

It is understood that key shareholder Paul Harris was unhappy with Mr Knott-Craig Jnr’s performance and style and was only prepared to invest his share of R100m — which shareholders are ploughing into the company — if the CEO resigned. Neither Mr Harris nor GT Ferreira, the other key shareholder, was available for comment.

Mr Knott-Craig Jnr led a buyout of MXit from its founder Herman Heunis and Naspers just more than a year ago, through World of Avatar, for an undisclosed amount. This was believed to be about R350m, bringing the total investment into MXit to about R450m with the latest fillip.

MXit offers messaging and chat services for so-called feature phones that cannot run apps and is widely used by youth and prepaid users because of its low cost. Unlike most advertising-funded services, MXit earns 70% of its revenue from selling content. It retains 30% of the total amount, much like Apple does, with the rest going to the content provider. MXit also makes R30m from its chatrooms, where users pay to communicate. Advertising makes up for the rest of its income.

MXit has about 44-million registered users, about 10-million of whom are “highly active”,  and roughly 750-million messages are sent daily.

Mr Knott-Craig Jnr shot to prominence in 2008 when an e-mail to staff titled “Don't panic”,  about being optimistic about South Africa despite the bad news about Eskom blackouts and other things, went viral. It led to a book of the same name. This year Mr Knott-Craig Jnr published another book, Mobinomics: Mxit and Africa’s Mobile Revolution, written by journalist Gus Silber.

However, this is the second high-profile resignation for Mr Knott-Craig Jnr, who was previously CEO of wireless broadband provider iBurst but left in early 2009 to save his marriage to his wife Sibella.

Affable and forthright, he has often had to defend his business success because of his eponymous father, who was the founding CEO of Vodacom and now heads its smaller rival Cell C.

He has been dogged by controversy that his father, Alan Knott-Craig Snr, only invested Vodacom's money into iBurst because he was the CEO. Both have denied these claims.

However he was well liked by the industry. He was seen as the "spiritual leader" of MXit and is considered a role model by the talented young programmers and innovators he nurtured.

Somewhat prophetically Mr Knott-Craig Jnr said in February: "We have this year to get it right. If we don’t crack that, then I think we’re dead. If we get it right, though, we are on the right ticket. If I’m talking to you this time next year, that means we’re still alive and I haven’t been forced to emigrate because I won’t be allowed back in the country.”

Love him or hate him, Mr Knott-Craig Jnr, who has co-founded five companies in the mobile telecoms sector, is an entrepreneur. The common mythology is that innovators need to fail so they can learn from their mistakes and become more successful with later ventures. He was named a Young Global Leader by the World Economic Forum in 2009.

Known for talking long walks around his home town of Stellenbosch, Mr Knott-Craig Jnr told staff in an e-mail: "As far as I’m concerned, this is the best bus in the world. And I know that the people on the bus are amongst the most incredibly intelligent and caring people I’ve met in my life."

Of his investors, he added: "Not many people would have supported MXit last year, and their renewed commitment to funding is a testament to their belief in the future of Africa and social media."

* This article was first published in Sunday Times: Business Times