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Alan Knott-Craig: Why SA is perfect training ground for global success

LONDON — Telecoms entrepreneur Alan Knott-Craig Jnr packs a lot onto life and refuses to see a glass anything other than half full. The qualified chartered accountant is excited about the expansion of his newest venture Herotel, and is now looking to globalise the innovative concept that brings high-speed internet to outlying areas. Knott-Craig, who turns 40 next month, has picked up his share of bruises but remains a huge optimist as you’ll hear from this interview we had when he visited London this week. Its thrust – the reason why Saffers are successful everywhere in the world. – Alec Hogg

I’m with Alan Knott-Craig who’s best known for his entrepreneurial pursuits but now the chairman of Herotel, we’re back in London. What are you doing here?

I actually came up because we’re looking at buying a business here in the UK to expand, potentially the model that we’re doing in SA. The last time I saw you I was out to see the same guy, so maybe we’re going to do a deal eventually.

So, it takes a while to put these things or settle them down?

No deal that’s worthwhile doing is an easy deal but the interesting thing is that the operating model that we’re developing in SA for Telecoms has applicability around the world because everybody wants cheap and fast internet.

It’s so interesting that. South Africans have done very well in many geographies but particular here in the UK. What do you think is behind it?

In my opinion, the unique SA environment of not knowing what’s going to happen tomorrow prepares people well for being an entrepreneur because if being an entrepreneur is nothing other than being comfortable with not knowing what’s going to happen tomorrow. So, the guys and girls that have made a success outside of SA in business have benefited from the fact that our country is a little bit uncertain and things aren’t handed to you on a platter.

We all know Elon Musk. We’re starting to know some of the other South African’s like Vinny Lingham and others who are doing well in the tech world. But there are other success stories that haven’t been uncovered. While we were having tea earlier you were telling me about the guys from Monster.

Yes, I’ve recently been told the story how Monster Energy Drink was as a couple of South African guys. They built an enormous business in America who had recently sold a big stake to Coca-Cola. I think Steinhoff recently bought a mattress business in the States, from a South African guy as well, who came out of Durban apparently. All of these great success stories all coming out of South Africa.

The question is why?

South Africa’s First World infrastructure but Third World problems, so you can tackle problems that don’t exist in a place like the UK or in America, for that matter but you’ve got the banking system and the legal system and the skills and the roads, and electricity and whatever you need to solve the problem. Versus living in a place like Nigeria, which has got lots of opportunities but not a lot of infrastructure to tackle the opportunities. SA has got that magic intersection between infrastructure and opportunity.

And unusual challenges, for instance, the Post Office works in the UK. It doesn’t work that well in SA, if at all, so that opens a whole new line of opportunity but even the dark side, even crime does bring opportunities.

Exactly, we’ve recently help the Government launch an alternative to 10111, so in a country like the States, where 911 works perfectly. They’re never going to think of how do we innovate around that but in SA, where we’ve got challenges around language, cost of calling, response times – you can just take the leapfrog logical move of saying instead of phoning a number you can open an app and you can report your location directly to the police. This is something that because SA innovates on because it is something that could also be exported from SA before other countries can realise that that’s the opportunity.

Now, I’ve had the benefit of being shown how the app works by you, but just talk us through it.

This is great, you mustn’t get me started on this. This is exciting – this is one of the most exciting things I’ve been part of. The essence of the idea is that you can use the internet to make the system more efficient, so people who are committing crime – you want to make it easier for people who want to fight crime to find that incident quickly. The traditional way of doing that is you pick up the phone you want to phone 10111. You wait on the line, you tell somebody where you are but you don’t know where you are and there’s a whole delay in the process. It can take up to 15 minutes. The solution is an app we launched about a year-and-a-half ago called Namola. It’s a free app, you download it and anytime you see a crime underway or anything instead of phoning 10111. You open the app, you hold down your location, just like Uber, and just like Uber does it for taxis. This is Uber for the cops and it reports your direct location, your name and photo to all the police in your vicinity and public law enforcement comes to the rescue. For me, it’s just a way of taking this huge capacity in SA for people who are good people, who really want to make a difference and they want to live in safe communities and want to fight crime and match them against the crooks that are making it an unsafe place to live.

What has the reaction been like from police themselves?

Well, the secret to all of this is working with the Government, so all it starts, everything in SA needs to be solved from the perspective – start with working with the Government and then working it into the private sector. In this instance, the angle is that you can’t live in a country like SA if 77% of your population doesn’t feel safe. A lot of the security solutions in SA are addressed to people who’ve got money and living in a leafy suburb but you’ll never be safe in a leafy suburb, like Sandton, if Alexandra is not a safe place to live. So, our starting point is making SA safe for everyone and not just for those who have money. To do that you need to work with the public sector, which is Municipal Police, Metro Police, and SAPS. We’ve been quite successful to date mainly because our Government realises it hasn’t got all the answers to all the questions and as long as you’re being honest with the Government and you’re taking a bit of risk, they’ll work with you. It’s a lot harder to do that type of thing in the UK with Scotland Yard.

Getting back to that, how have the cops reacted? Have they been on the scene when they’ve been given these alerts?

In our experience now, dealing with the cops. I haven’t yet met an officer who didn’t want to fight crime. The guys want to help. They didn’t put on the suit and risk their lives every day just to get a job. There’s a little bit of inefficiency in the system, like matching crime with people who want to respond to the crime. I think we’re a little bit under-resourced, in the country in general. It’s difficult to expect 80 000 or so cops in SA to deal with all the crime efficiently but the stats are right now showing that the response times are much better than people expected, as long as you take out this leg of trying to figure out where you are and communicate that to the command centre. But down the line, I see an absolute necessity that you start involving volunteer crime fighters, like neighbourhood watches and police reservists in the program. Then eventually you move it into the private sector, so the likes of ADT and Thorburn and everybody else who’s got a private business for security they will become part of a bigger network. At the end of the day what you’re trying to do is to create a platform for people who want to fight crime to connect with people who are committing crime and make SA safer.

How many downloads of that app have you had?

Well, Namola has now got 64,000 registered users. It’s only available in the whole of Gauteng and Stellenbosch, funnily enough. You have to get in bed with the local Government so that you can plug straight into the local law enforcement but it’s the most downloaded app in SA in the last month, more than WhatsApp, so it’s a pretty fast-growing app in South African terms, which in global terms is not lots but a nice thing to be part of. Mostly because in my opinion crime is the biggest problem in SA and if my partners and I can play a small part in fighting crime then we can play a small part in making sure that we can all live in SA.

Alan Knott-Craig Jr

Well, let’s keep that app growing rapidly but the other big issue in SA is connectivity and you’ve done a lot of work on that. Last time we spoke or in fact over the years that we’ve been talking about what you’ve done in Tshwane. How’s that project coming on?

The thing I’m most proud about in the world, other than my children and the woman I’m married to, I managed to convince her to marry me, is the Tshwane Wi-Fi Project, which I haven’t really been involved with for the last couple of years but we started it about 4 years ago. It’s become the biggest Municipal free Wi-Fi project in Africa and it’s just a template for treating the internet like you treat water, electricity, sanitation, and roads, so basically good. Everyone in the country should be entitled to do a free quote. Tshwane Wi-Fi there’s a new administration in Tshwane. They seem to have completely bought into the idea that it’s a great campaign and they’re trying to extend it further than the previous administration even. The whole country, hopefully, is going to follow in its footsteps. In my opinion, the internet makes the world a better place, shining a light on whatever is happening. Stuff that you should be proud of and stuff that you shouldn’t be proud of – it’s going to make people behave better but it’s insane to say that if you don’t have money you shouldn’t be on the internet. It’s an insane statement. There are still some people in the world who say that the internet shouldn’t be free. In my opinion, the internet is one thing that should be free for everybody, not unlimited free but enough for everybody to get onto the internet every day and access online education and find out what’s going on in the rest of the country.

Equal opportunity?

Yes, just level the playing field a little bit. The truth is if you’re born in the wrong postal code in SA your trajectory of life can be completely different if you were born in Tembisa versus born in Sandton. It’s just a fact and the internet might not solve that problem but at leaves, it gives that person who is growing up in a community with fewer opportunities and fewer role models and schools that are not working, etcetera. An opportunity to learn something online and see somebody out there that’s got from their circumstances into the big leagues and just made them feel like they’re part of a bigger world rather than trapped in their trap.

Democratisation of opportunity as well as education.

That’s what it is. I don’t think the world should be equal, I don’t believe in equality for all. I do believe that it’s unfair that people have unequal access to opportunity that, for me, is a tragedy and it’s very much a reality in SA right now. A lot of people in SA don’t have the same access to opportunities like a guy like I do just because of where I was born. The internet, as a basic utility that the Government provides for free, for everyone is a way of tackling that in systemic way.

How many people are accessing it now, the Tshwane Internet Project?

I think there’s about 300 000 people every day logging in. It’s pretty fast, it’s about 15Mbps a second. The other big problem in SA is economic growth, and I’m sure your listenership knows that but the Internet boosts economic growth. There’s no doubt and it’s an unarguable fact nowadays that for every say 10% of broadband penetration you can get 1.28% GDP growth. So, in SA where in reality you’ve only got about 30% of people with true broadband. That leaves 70% without access to the internet and if you plug that into the 1.28% GDP growth, multiplied, that The World Bank talks about, we’ve got about 11% of untapped GDP growth just on broadband penetration. So, if the Government took its money and put it into internet access for everyone it could grow its own GDP by over 10%.

View of Pretoria, Tshwane, Gauteng, South Africa.

Well it’s an interesting potential that SA does have when people think differently and we are starting to see change, the logjam being broken up. But Alan this project of yours on bringing internet to people who otherwise wouldn’t have access. You started in Tshwane, you had big ideas and big plans. Have you made much progress?

Well, Tshwane is still the flag bearer and there are some other cities, like Bloemfontein, Mangaung that’s just followed in their footsteps. It really boils down to where the political leadership thinks that the internet is a basic right as opposed to a privilege. At a national level, the Minister has now come out and said internet for all is a basic mandate. The policy seems to be coming right. Now it’s just about getting it right on the ground and I do think that businesses like Herotel, the business which I’m really driving at the moment. That’s at the forefront of trying to make the internet more affordable for everyone. If you think about the internet, like water and electricity, it is a commodity, so it’s going to be the lowest cost operating model that will win and what Herotel tries to do is try to reduce the operating cost of delivering data as fast as possible to the lowest possible unit cost. So, they can have the lowest retail cost. It’s only when you get to economics that are different from South Korea and the UK that you can actually make the dream of free internet for everyone, a reality in a country like SA.

So, we had Mangaung, you’ve got Tshwane are you having any or can you tip any other cities or metros that might be following in their steps?

I think Jo’burg might be. Jo’burg has been talking about it a long time now.

So, we just need to get a hold of Mashaba and say come on Herman?

Herman Mashaba

Mr Mashaba, I think he’s got his hands full at the moment. He’s one of my favourite Mayors, there’s no doubt that he’s doing a great job but again, it will all depend whether Herman Mashaba thinks the internet is a privilege or whether it’s a basic right. I’d like to see Cape Town follow as well, and they’ve been talking about it a long time. Western Cape has been pretty supportive, the Western Cape Provincial Government.

This is a NGO, you’re not making money out of this?

Yes, so my history with Project Isizwe was it’s really just about advocacy. The Tshwane Free Wi-Fi Project is a case study, and Project Isizwe doesn’t do anything other than Tshwane Free Wi-Fi and telling people how to do it. So, the rest of the Government is more about them finding the right service providers to deploy a model that copies the model of Tshwane free Wi-Fi. Just to make it simple, what Tshwane Wi-Fi is about is saying that everybody in the city should be within walking distance of free Wi-Fi. It’s not saying that you should have free 3G or free fibre to your home. It just means you should be able to walk from your house to your free Wi-Fi zone, it doesn’t matter where you live and be able to access whatever you want online. On that basis it’s actually, economically viable for Municipalities and the country, in fact, to fund Wi-Fi as a utility.

So, these are two big projects. Herotel is the one that you’re going to be building your family’s fortune from but those two projects must have taken a lot of your time. What motivates you to do that or what did motivate you to come back to SA because you’re a chartered accountant. You could have lived anywhere in the world but to come back and make a difference?

Well, I’ve been lucky enough to travel a lot and I just think for all of our flaws SA is still the best place in the world for me to be living. Maybe it’s just because I’m South African and what got us started with Tshwane Wi-Fi and Namola was really the realisation that there’s no point making money in SA if you can’t live in SA, so my partners and I tried to start off with the assumption that let’s tackle a problem that is systemic in the country. That can deal with inequality and if we can successfully tackle it maybe out of that comes a commercial opportunity but start with trying to make a difference and then trying to make money rather than the other way around. What’s the point of making money if you don’t have a country to live in one day?

So stop whining and start doing something about it?

Yes, absolutely and I think most South Africans are like that. Not all of them have a platform to say what they’re doing. Most South Africans I meet are, it’s a hot kitchen. The guys who can’t stand the heat are getting out of the kitchen. The real thing for me though is crime. A lot of people who are good South Africans, who are not afraid or are trying to make a difference make a logical decision because they’re worried about their families or something like that and they will leave. If we can just make SA feel safer again then we’ll have a country where a lot more of the skill and capital will stay and make a bigger difference economically.

You say ‘if’ and not ‘when?’

When we make SA safe for everyone and not just those who have money. That will be the first step in really realising SA’s potential, which is, I guess political but people just, in whatever industry you are, you’re trying to fight crime. Crime is the big thing. I think that’s the biggest thing, it’s education, jobs and all of that is very important. They all lead to crime but in the short term you need to make people feel safe when they’re walking to school otherwise they won’t walk to school. The fight against crime, other than my passion for giving everyone free internet, I find that’s an important thing to make a  lay in.

Alan, there’s a lot that’s happened in SA in the last month or so. The tide appears to have turned against the Zuptoids, as they are termed. Are you more optimistic today than you were in the past? Given that as an entrepreneur you’ve been pretty much optimistic your whole existence.

Well, I funded the Daily Maverick right in the beginning when Branko Brkic wanted to get back on his feet and that is something I almost gloat to myself about because it’s just so nice to have been part of the Daily Maverick. For me, it’s like making a huge difference on the ground in SA. Not the most profitable investment anybody ever made but in terms of social return – it just shows the power of the internet and I think Alec, your Moneyweb and your previous businesses were like pioneers around realising the internet is the future of information and news.

You better add BizNews now.

Yes, I only go to BizNews nowadays but I’ve never been more excited about the opportunities in SA and that’s mainly because people are getting a bit scared. The more uncertainty there is in a system, the more opportunity there is. I don’t believe SA will go off the cliff like some people think. I think just like it has for the last 100 years, it will come close to the cliff. But those who believed in it and kept going will benefit from it recoiling from the cliff. The next 2 years are going to be difficult. There’s lots of political uncertainty and fighting. Maybe the next 5 years are going to be difficult but I believe in the long term, the future of SA and I’m trying to make a difference.

Your business at Herotel, just a quick update?

Well, Herotel is going quite well. We’re making a lot of money, which is, I think, the most important thing nowadays. They say revenue is vanity. Profit is sanity. Cash flow is reality and my cash flow situation is quite nice. We’ve got a lot of businesses in the small towns and the dorpies around the country. Wireless broadband is booming. There’s an infinite demand supply. If you want to punish your kids nowadays you take away their Wi-Fi and you make them watch DSTV, so as families are growing everyone needs more internet and I think we’re on a good path there. Hopefully, my partners and I can execute in the next 2 years and then I think we’ve got the potential for changing Telecoms in SA and Africa.

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