I'm really proud to say that last week Skyrove won the Technology Top 100 award for the 'Most Promising Emerging Enterprise'!
In addition, we were also chosen to go to Berlin in October this year to present to investors at the European Venture Market. (Email me if you'd like to meet up!)
Click here to read the recent ITWeb article on the TT100 Awards.
I was still feeling proud and pompous the next day when Tai Schierenberg, a former surgeon who's now in Venture Capital, told me of a saying in the VC community that states: "Awards are like hemorrhoids, sooner or later every asshole gets one"
I thought it pretty funny but thought that VCs might just be jealous for not getting enough credit.
So I did a Google search for 'Entrepreneur Award' which returned 11,900,000 results and then for 'Venture Capital Award' which returned 21,100,000 results, almost twice as many.
At least now we know who gets the most awards...
Wednesday, August 30, 2006
Sunday, August 20, 2006
Software Development Explained
I believe one of the reasons why Skyrove has been succesful on a small budget and with a small team is that we use our own products, i.e. we scratch our own itch!
There is no miscommunication between what the customer wants, what we think he wants and what he actually needs.
37Signals is another good example of a small company that builds software for itself. They are extremely stubborn about adding new features and reject most feature requests straight off the bat. They know that Basecamp (their project collaboration software) is good enough for them and therefore it is good enough for most others as well.
If you are in software development, I'd highly recommend adding their blog to your RSS reader (www.37signals.com/svn)
Tuesday, August 15, 2006
A Positive Way to Reduce Crime and Unemployment
This is an Open Letter to Ms Patty Stonesifer, President of the Bill & Melinda Gates foundation
Dear Ms Stonesifer,
I have a novel idea for how we can dramatically reduce crime worldwide by using technology in rehabilitation and would like to run it by you.
There are 3 reasons I'm contacting you in particular:
1. I admire the Bill & Melinda Gates Foundation's work in Africa
2. You were voted by Time to be one of the 25 most influential people in America (wow!)
3. Most importantly, your background in interactive media!
Here in South Africa, crime gets blamed on the lack of policing, the justice system, poverty, the legacy of Apartheid and the effects of HIV on our society, all of which are valid reasons.
Another large factor is that we have insufficient correctional services. We have a philosophy of rehabilitation, rather than punishment, but the reality is that our jails are overburdened and most all of the criminals are repeat offenders. There simply is no rehabilitation taking place. Inmates join gangs that function inside and outside of the prisons and the only skills they learn are of the criminal variety.
What if we created a social computer 'game' that's targeted at inmates?
What I have in mind is something akin to training simulations like those seen in 'The Matrix'. Now, we don't quite have that technology yet, but we have seen fantastic simulations in the form of games such as Oblivion and the World of Warcraft.
When an inmate arrives at prison, he could be locked up with a computer as his only cellmate. His only way to interact with the world is through the 'game'. He does not get a chance to react with any other inmates, who could contribute to reinforcing criminal behaviour. (A very anti-social kind of behaviour is needed to survive in the prison system, as opposed to the outside world)
In the beginning stages of the game, which will be similar to any online roleplaying game, the inmate would only interact with one real person: His online councillor. He can run around the virtual world and interact with virtual characters, but it's a restricted virtual world.
Along the way he learns skills. Early on, his aptitude could be determined: trading, driving, programming, farming etc, in a similar way to any Role Playing Game. Depending on his aptitude, the inmate is stimulated to develop these skills further. Either to use them when re-entering the 'real' world, or even to start a life selling goods on eBay for example. (no, not 'fencing'!)
He'll need to complete certain tasks and show improvement in behaviour to go 'up a level' and gain access to a wider world, and have interactions with more real people, inside and outside prison.
Some would argue that this 'virtual' world wouldn't really rehabilitate him to re-enter the 'real' world. But that's nonsense, many people these days in the 'real' world spend more time online than offline!
As the inmate learns new skills and shows improvement in behaviour, he's eventually given full online access, outside of the game, but still closely monitored. When the time is ripe, he may re-enter the real world. Very likely continuing to trade online, but also possibly with some high-tech skills such as tech support, programming, web marketing or online trading to name but a few. In South Africa, there is a dire lack of these skills while at the same time we have gross unemployment.
Some would say that such a plan is simply too expensive. But the fact is that it will save us millions if not billions in the long run. Prisoners will spend less time in prison. It will have a dramatic impact on crime, and as we know, crime has a dramatic impact on foreign investment and our economy.
Instead of having 20 inmates in a small room, we can now afford a reasonably comfortable environment for inmates. The idea is not that they have a 'fun' time while in prison, but that we see positive behaviour modification and skills learning.
There's a massive incentive for governments and companies to sponsor this because of medium and long-term benefits: reduced crime & less unemployment that leads to a stronger economy. But there may also be short-term incentive for marketing and software companies to market their products through this 'closed' internet game. Once back in the real world, the prisoner will need a computer, software tools etc.
A games developer, such as Microsoft, could develop such a 'game' through its gaming division in cooperation with correctional services and academics. The games developer can derive ongoing profits from, what is literally, a captive audience.
I realise that this might not be the Gates Foundation's cup of tea, but I do hope that you could perhaps introduce the concept to the right people or that you know the right person to champion such a project.
If we could 'banish' all the world's criminals to a virtual world where they stand a good chance of being rehabilitated, instead of the degenerate and inhumane micro-societies we currently create, it might just be the greatest achievement of the century.
Best Regards,
Henk Kleynhans
CEO - Skyrove Ltd.
p.s. I'm a constant 'idea generator'. Whenver I have a new idea that I feel could make a difference to the world, given the right champions, I share these openly.
Dear Ms Stonesifer,
I have a novel idea for how we can dramatically reduce crime worldwide by using technology in rehabilitation and would like to run it by you.
There are 3 reasons I'm contacting you in particular:
1. I admire the Bill & Melinda Gates Foundation's work in Africa
2. You were voted by Time to be one of the 25 most influential people in America (wow!)
3. Most importantly, your background in interactive media!
Here in South Africa, crime gets blamed on the lack of policing, the justice system, poverty, the legacy of Apartheid and the effects of HIV on our society, all of which are valid reasons.
Another large factor is that we have insufficient correctional services. We have a philosophy of rehabilitation, rather than punishment, but the reality is that our jails are overburdened and most all of the criminals are repeat offenders. There simply is no rehabilitation taking place. Inmates join gangs that function inside and outside of the prisons and the only skills they learn are of the criminal variety.
What if we created a social computer 'game' that's targeted at inmates?
What I have in mind is something akin to training simulations like those seen in 'The Matrix'. Now, we don't quite have that technology yet, but we have seen fantastic simulations in the form of games such as Oblivion and the World of Warcraft.
When an inmate arrives at prison, he could be locked up with a computer as his only cellmate. His only way to interact with the world is through the 'game'. He does not get a chance to react with any other inmates, who could contribute to reinforcing criminal behaviour. (A very anti-social kind of behaviour is needed to survive in the prison system, as opposed to the outside world)
In the beginning stages of the game, which will be similar to any online roleplaying game, the inmate would only interact with one real person: His online councillor. He can run around the virtual world and interact with virtual characters, but it's a restricted virtual world.
Along the way he learns skills. Early on, his aptitude could be determined: trading, driving, programming, farming etc, in a similar way to any Role Playing Game. Depending on his aptitude, the inmate is stimulated to develop these skills further. Either to use them when re-entering the 'real' world, or even to start a life selling goods on eBay for example. (no, not 'fencing'!)
He'll need to complete certain tasks and show improvement in behaviour to go 'up a level' and gain access to a wider world, and have interactions with more real people, inside and outside prison.
Some would argue that this 'virtual' world wouldn't really rehabilitate him to re-enter the 'real' world. But that's nonsense, many people these days in the 'real' world spend more time online than offline!
As the inmate learns new skills and shows improvement in behaviour, he's eventually given full online access, outside of the game, but still closely monitored. When the time is ripe, he may re-enter the real world. Very likely continuing to trade online, but also possibly with some high-tech skills such as tech support, programming, web marketing or online trading to name but a few. In South Africa, there is a dire lack of these skills while at the same time we have gross unemployment.
Some would say that such a plan is simply too expensive. But the fact is that it will save us millions if not billions in the long run. Prisoners will spend less time in prison. It will have a dramatic impact on crime, and as we know, crime has a dramatic impact on foreign investment and our economy.
Instead of having 20 inmates in a small room, we can now afford a reasonably comfortable environment for inmates. The idea is not that they have a 'fun' time while in prison, but that we see positive behaviour modification and skills learning.
There's a massive incentive for governments and companies to sponsor this because of medium and long-term benefits: reduced crime & less unemployment that leads to a stronger economy. But there may also be short-term incentive for marketing and software companies to market their products through this 'closed' internet game. Once back in the real world, the prisoner will need a computer, software tools etc.
A games developer, such as Microsoft, could develop such a 'game' through its gaming division in cooperation with correctional services and academics. The games developer can derive ongoing profits from, what is literally, a captive audience.
I realise that this might not be the Gates Foundation's cup of tea, but I do hope that you could perhaps introduce the concept to the right people or that you know the right person to champion such a project.
If we could 'banish' all the world's criminals to a virtual world where they stand a good chance of being rehabilitated, instead of the degenerate and inhumane micro-societies we currently create, it might just be the greatest achievement of the century.
Best Regards,
Henk Kleynhans
CEO - Skyrove Ltd.
p.s. I'm a constant 'idea generator'. Whenver I have a new idea that I feel could make a difference to the world, given the right champions, I share these openly.
Thursday, August 03, 2006
Dances with VCs
I received notice today from a VC we recently signed a term sheet with that they have chosen not to invest in our company. I'd like to share with you some of the things I've learnt in the process, some of the traps I fell into and what I'd do differently next time.
The gist of the 'Dear John' letter we received:
"1. Maturity of company: [The VC]'s current Fund2 requires an established team and business. Skyrove would for the foreseeable future require a more hands on approach which deviates from this model.
2. Relative size of local market. It is uncertain whether revenue generated by Skyrove in the SA market would be sufficient to achieve [The VC]'s long-term revenue goals.
3. Barrier to entry: It is too uncertain how easy and attractive it will become for competitors to replicate Skyrove's technology and business model.
4. Other trends: It is uncertain what the impact of municipalities providing free data connective (such as San Francisco and Philadelphia) will be on Skyrove and its competitors' revenue."
Although reasons 2,3 and 4 are mostly hogwash they made up to lengthen a short letter, I completely understand their first reason. They launched a new and dramatically different fund halfway through our negotiations, about 4 months ago. The principal on the Skyrove deal resigned 2 weeks ago and things have generally been in turmoil.
A marriage at this stage may well have been to the detriment of both us and them.
Things I'll do differently next time:
1. I will not again accept an offer that gives majority board control to the VC when they're buying a minority share. When it comes to our product, we know our market better. We know free municipal Wi-Fi is much less of a threat to us than free water is to bottled water. We know our product can be replicated, but we're pretty innovative and will work hard to stay ahead of copycats.
2. I will not again accept an offer of more money than I need. We were offered twice as much as we asked for, for almost twice as many shares, in 4 conditional tranches over 2 years. They were effectively getting stock options, rather than outright buying stock.
3. I will not take VC funding before being cash-flow positive. This sounds counter-intuitive to some as you might argue that you need VC funding to get there! However, being cash-strapped has made us extremely focused on making Skyrove the best product for 90% of the market, even though we were only able to implement 10% of the features we first envisioned. When we started talks with the VC 6 months ago, we had zero revenue and zero clients. Now we have hundreds of customers signing up every month and revenues that are growing exponentially. Because of a lack of cash, we've become smarter and learnt more about all aspects of running a business. We've had to build partnerships to get our product out there. If we had cash, we probably would have struggled to manage newly founded 'divisions' headed up by overpaid 'vice presidents' appointed by the board, who could outvote the founders.
4. I will phone the founders of other companies in the VC's portfolio and I will listen to them BEFORE any serious negotiations with theVC.
5. I will more rigorously interview the VC at the first presentation. I will ask them how well their portfolio companies are performing and for more detail on how they intend to influence the running of our business.
6. I will not accept a vague term sheet that asks me to pay for Due Diligence costs in the event that I do not accept their offer. Trust me, the time you'll spend on negotiating a deal with a VC is much more expensive to your company than their costs of doing Due Diligence. In our case, the VC cut us loose, so we weren't liable for any costs. However, I was fearful that they could toss a red herring, forcing us to either accept new terms or to pay a large fine.
Yes, I've read this advice before from the likes of Brad Feld and Rick Segal, but it's a very different story when you're being wooed by VCs, have partners adding pressure and feel that it's up to you to make the deal work.
All in all, it's been a fantastic experience and we've come out of it a stronger company. We're still open to VC funding ($5 routers anyone?), but for now, I simply feel relieved that I can continue focusing on what's most important to me: building the best darn Wi-Fi service on the planet!
The gist of the 'Dear John' letter we received:
"1. Maturity of company: [The VC]'s current Fund2 requires an established team and business. Skyrove would for the foreseeable future require a more hands on approach which deviates from this model.
2. Relative size of local market. It is uncertain whether revenue generated by Skyrove in the SA market would be sufficient to achieve [The VC]'s long-term revenue goals.
3. Barrier to entry: It is too uncertain how easy and attractive it will become for competitors to replicate Skyrove's technology and business model.
4. Other trends: It is uncertain what the impact of municipalities providing free data connective (such as San Francisco and Philadelphia) will be on Skyrove and its competitors' revenue."
Although reasons 2,3 and 4 are mostly hogwash they made up to lengthen a short letter, I completely understand their first reason. They launched a new and dramatically different fund halfway through our negotiations, about 4 months ago. The principal on the Skyrove deal resigned 2 weeks ago and things have generally been in turmoil.
A marriage at this stage may well have been to the detriment of both us and them.
Things I'll do differently next time:
1. I will not again accept an offer that gives majority board control to the VC when they're buying a minority share. When it comes to our product, we know our market better. We know free municipal Wi-Fi is much less of a threat to us than free water is to bottled water. We know our product can be replicated, but we're pretty innovative and will work hard to stay ahead of copycats.
2. I will not again accept an offer of more money than I need. We were offered twice as much as we asked for, for almost twice as many shares, in 4 conditional tranches over 2 years. They were effectively getting stock options, rather than outright buying stock.
3. I will not take VC funding before being cash-flow positive. This sounds counter-intuitive to some as you might argue that you need VC funding to get there! However, being cash-strapped has made us extremely focused on making Skyrove the best product for 90% of the market, even though we were only able to implement 10% of the features we first envisioned. When we started talks with the VC 6 months ago, we had zero revenue and zero clients. Now we have hundreds of customers signing up every month and revenues that are growing exponentially. Because of a lack of cash, we've become smarter and learnt more about all aspects of running a business. We've had to build partnerships to get our product out there. If we had cash, we probably would have struggled to manage newly founded 'divisions' headed up by overpaid 'vice presidents' appointed by the board, who could outvote the founders.
4. I will phone the founders of other companies in the VC's portfolio and I will listen to them BEFORE any serious negotiations with theVC.
5. I will more rigorously interview the VC at the first presentation. I will ask them how well their portfolio companies are performing and for more detail on how they intend to influence the running of our business.
6. I will not accept a vague term sheet that asks me to pay for Due Diligence costs in the event that I do not accept their offer. Trust me, the time you'll spend on negotiating a deal with a VC is much more expensive to your company than their costs of doing Due Diligence. In our case, the VC cut us loose, so we weren't liable for any costs. However, I was fearful that they could toss a red herring, forcing us to either accept new terms or to pay a large fine.
Yes, I've read this advice before from the likes of Brad Feld and Rick Segal, but it's a very different story when you're being wooed by VCs, have partners adding pressure and feel that it's up to you to make the deal work.
All in all, it's been a fantastic experience and we've come out of it a stronger company. We're still open to VC funding ($5 routers anyone?), but for now, I simply feel relieved that I can continue focusing on what's most important to me: building the best darn Wi-Fi service on the planet!
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