Brainstorm Magazine

 

Ten years on, and despite a severe recession, the energetic spirit of young entrepreneurs that fuelled the dotcom boom survives. But today’s kids are smarter.

It has been a long ten years since dotcom mania reached its absolute zenith. Public companies saw enormous gains in their stock prices by simply adding a prefix such as “e-” to their names. Sure, the Nasdaq bubble only “burst” on 10 March 2000, but it was in 1999 that internet companies were hotter than hot. And they didn’t need to turn a profit. They didn’t even need revenue. The consensus was that pesky things like turnover and earnings would come in time. Valuations soared. When the bubble burst, $5 trillion in market value of these companies simply evaporated.

The failures are well documented. While trying to build a global online fashion store, Boo.com burnt through $188 million in just six months. Pets.com listed on the Nasdaq and went bust in less than nine months. Online grocery business Webvan spent $1bn within 18 months before going bankrupt in 2001. Dotcom companies squandered money on lavish parties in Silicon Valley.

Locally, internet businesses rushed to raise money on the JSE. Only one survives as a listed entity: Moneyweb. Yes, companies like Datatec rode the wave, but these didn’t list as part of the madness. Dimension Data, one of the most spectacular dotcom crashes, made its appearance well before the boom. Now, a new breed of local internet mavericks is quietly building very big businesses – with real revenue models. A decade ago, they were barely starting high school…

Rockstar coder

Imagine working a four-day week. Adriaan Pienaar, known simply as Adii, does. He runs Radiiate, a boutique design and development agency, and is one of the founders of Woothemes, a premium WordPress themes shop. “I believe people work too hard,” he says. “Plus there’s the old mantra that the more time you have, the more things you find with which to fill it. “I wouldn’t call it a ‘rockstar’ life just yet,” Pienaar says, “but I’m trying to revolutionise my own life and create a lifestyle that is balanced and with which I’m comfortable and happy.”

It all started in 2007, during Pienaar’s fourth year at the University of Stellenbosch. “I needed a way to pay the bills, so I started to do freelance web design and development work,” he says. Through this, he met someone who hired him and he joined the corporate world at the start of 2008. Two months later he quit. “My main reason for leaving the job was ambition and my dreams to be a self-sustaining entrepreneur,” Pienaar says. His big aim right now is to continue building Woothemes, which he regards as a “full-time online startup”. Woothemes is run by Pienaar in Cape Town, together with Magnus Jepson in Norway and Mark Forrester, who is based in the UK. “What’s interesting is that the whole Woothemes team has never been in the same room together,” says Pienaar.

“We’re always expanding and the fact that we run a cash business means that we can fuel our own growth,” he adds. The team is growing, and over and above the three founders, Woothemes has two designer-developers plus an admin assistant in South Africa (Radiiate has been put on the backburner, and only takes on exclusive custom client projects). The business hasn’t needed to rely on venture capital funding, and it charges for its themes in dollars (a bonus). “What’s great is that both businesses are also at the level of being self-sustaining in the sense that all the processes [such as marketing, sales, manufacturing] are running smoothly. And our work isn’t time-sensitive, which means we’ve got loads of freedom in terms of how and when we work,” he says. Pienaar confesses that he’s “totally uncorporate”. “I find the way that corporates do stuff tedious and old; they’re just doing what they do out of habit. “And nobody is challenging their views on environment, culture, and processes.”

The fact that the team works in a creative industry means the office environment needs to reflect that, both in the way it looks, as well as its culture. “So we have a nice lounge, a library with loads of design, online and business books, a Nintendo Wii and a huge fl at-screen TV. “And we wear anything we like to work,” he adds. “Barefoot is awesome, by the way,” he grins. Pienaar is forward-looking, but has taken some lessons from the dotcom bust. “Considering I’m only 24, the previous bubble passed me by, and I didn’t take much from it, but I know what went wrong in theory,” he says.

“One thing did come from that and I’d apply this to every business – online and offline – I’m involved with in future. Your value versus cost (of services or products) needs to be in line. It doesn’t help to hype a useless product.” As for the future, Pienaar is an entrepreneur through and through. “The ultimate goal is to never work for someone else again. That, together with experiencing life on a level beyond work or a career.”

And now, the world

Charl Norman and Brad Voges are unlikely bedfellows. Together, they run Blueworld Communities, a company that runs a number of massively popular, local social networks, the largest of which is www.blueworld.co.za. Norman is the face of the business: “I live the local tech scene whereas Brad gets down to business.” Voges jumps in: “I’m more involved with

business development, longer-term strategy, offline marketing, admin, finance, sales, that kind of thing. “We’re a good mix, you should have a meeting with us,” laughs Voges, on a lazy Friday afternoon in Cape Town. The goal is simple, says Voges: “To build Blueworld Communities into a social media powerhouse.” Networking is important, and Norman takes nearly every opportunity to network: “I attend local bloggerati events like 27 Dinner, Heavy Chef. It’s a good place to meet other web workers.”

But there’s a healthy dose of realism. “In the States, guys roll around in Ferraris and live in mansions. It’s not quite the same here,” Norman notes. It all started for Norman when he was 15. He built car-focused site Zoopedup, quite simply because the “thought of building a website that people would access was thrilling” for him. It was a hobby that turned into a way of life. Voges, on the other hand, started Blueworld with the focus on hosting events and parties. “We saw that posting the event photos online drove real traffic to the site, which we then used to market our future events.” It was tough in the beginning. “We didn’t make any money and relied on family to get by, but somehow the passion was there,” says Voges.

“We were working from basements, and lived month to month,” chips in Norman.

They hit payday when Naspers acquired a majority stake in the business at the beginning of 2008. This took the survival strain off the two, but that has been replaced with a different form of pressure. The company has real revenue, a far cry from those that imploded a decade ago. But now, it’s all about growing and reaching targets set by Naspers. The media giant provided venture capital, but Norman says it’s more than that. “They open doors to collaborate with their other units: newspapers, magazines, DStv channels…” Plus, the company provides strategic advice. From the Naspers side, Norman ventures they invested “to gain access to the youth demographic we have across our various properties, as well as the social networking intellectual property [and the human talent]”.

“We have great technology,” he adds. “When they contacted us for a possible partnership it was a no-brainer. Sure, it took a lot of toing-and-froing to get the deal done, but there was intent from both sides.”

The two receive lots of guidance from the CEO of 24.com, JP Farinha, and have tons of role models. “I think we’ve all read Richard Branson’s books, Warren Buffett’s story. But locally there are some guys who are doing great things,” says Voges. Norman jumps in and names Ronnie Apteker as someone who inspires them.

“On a bigger scale, some more obvious names like Donald Trump, Richard Branson, Techcrunch’s Michael Arrington, Facebook’s Mark Zuckerberg, Twitter’s Ev Williams.”

It’s difficult for Voges and Norman to say what they’ll be doing in five or ten years’ time. “It’s a tough one – things change really quickly and significantly for us,” says Voges. “We have great potential for growth with the Naspers group. They have a number of international properties as well, so the scope is certainly not only local.”

The obsessions

It takes balls to shut down a lucrative consulting business and start over. But, when you’re just 21 years old you can afford to take a bet like this and double down. Tyler Reed has already achieved what most people would take a decade to do. He is from the East Rand, and one gets the idea when talking to him that he is born to hustle. After leaving high school, he worked at Mike Stopforth’s well-respected social and mobile media company, before starting his own consultancy (Younique) in mid 2007. This all before he became a legal adult. Now though, Reed’s next big bet is on mobile. “Look, I’m young,” he says matter-of-factly as we chat in an empty Sandton News Café. “I can afford to dedicate capital and time to a project like this. “If I lose the money I’ve invested in this, I can make it back.” Reed, dressed in jeans and surf brand T-shirt, is backing his gut, and is hell-bent on “changing the world in some way”.

His new obsession, TinyImpact, will “enable the mobile web”. Passersby would be forgiven for thinking he has ADD (he doesn’t), as he rattles off a product roadmap. Tiny- Impact will offer an advertising platform, inventory manager, marketplace, analytics and mobile commerce… obviously not all at once. Reed’s first punt is on a mobile advertising network. Reed is a big believer in Guy Kawasaki, who believes the best businesses are those that make other people money. That’s the bet with TinyImpact. “Someone in Africa could create a website and monetise it on the mobile web… from nowhere they could earn $1, $1.50 a day.” Also, it has a large user base to leverage. The company released a WordPress plugin that renders blogs (properly) on mobile handsets. In less than six months, the plugin has been downloaded 17 000 times. That is a lot of blogs to help monetise. It’s not a simple thing to build a platform that can serve the most relevant ad to a user, especially at scale. “We spent three, four months just working on technology scaling,” says Reed.

TinyImpact will be able to target ads to users based on location, handset, network, even time of day. With his relationships and contacts Reed has secured some bigname publishers with very busy mobile websites to trial TinyImpact – a point proven as he flips open his MacBook and demos the system. Reed originally christened the business “Project Wolf”. “I called it that so I wouldn’t cry wolf,” he says. It has been in stealth for a few months and is ramping up for commercial launch this month. Reed’s maturity belies his age. “I’m not worried about competition; in fact, I openly, wholeheartedly welcome it.” All that happens is that it “forces me to push harder and faster”. Currently TinyImpact has two employees: Reed and developer Matt Geri. The two work from a non-descript office park east of Johannesburg. Reed is currently actively negotiating with partners keen on investing in the business. He also has a number of people lined up and ready to join Tiny- Impact once he secures funding. He intends to hire a CEO and step aside from operational responsibilities in time. “I want to add the value I can and move on.” Of course he’ll stay with the company, but wants to play the role of innovator. But what’s the endgame? “I would love a yacht,” he says with a grin. But with Reed, you know he’s serious. “I also want a couple of houses around the world. “And I’m not afraid… in fact, I want to earn it by working hard.”

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BALANCE

Adriaan Pienaar is trying to revolutionise his life.

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ODD COUPLE

Brad Voges (left) and Charl Norman are an unlikely but very successful team.

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Guts

Tyler Reed has a yacht in his sights.