Business concerns over Mxit CEO's exit

21 October 2012 - 02:05 By Toby Shapshak
OUT OF THE MIX: Alan Knott-Craig jnr did not see eye to eye with the shareholders
OUT OF THE MIX: Alan Knott-Craig jnr did not see eye to eye with the shareholders
Image: Business Times

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.

Knott-Craig, who resigned as both CEO of Mxit and its holding company World of Avatar on Thursday afternoon, 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 Knott-Craig's performance and style and was only prepared to invest his share of R100-million - which shareholders are ploughing into the company - if the CEO resigned. Neither Harris nor GT Ferreira, the other key shareholder, were available for comment.

Knott-Craig led a buyout of Mxit from its founder Herman Heunis and Naspers just over a year ago, through World of Avatar, for an undisclosed amount. This was believed to be around R350-million, bringing the total investment into MXit to around R450-million with the latest fillip.

Mxit offers messaging and chat services for so-called feature phones that cannot run apps like smartphones 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 R30-million from its chatrooms, where users pay to communicate. Advertising makes up for the rest of its income.

Mxit has some 44million registered users, about 10million of whom are "highly active" and some 750million messages are sent daily.

Knott-Craig 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 Knott-Craig published another book, "Mobinomics: Mxit and Africa's Mobile Revolution", written by journalist Gus Silber.

This is Knott-Craig's second resignation. He left iBurst in early 2009.