Sky rover – The man who plans to democratise the Internet

This article first appeared in FinWeek English Edition 21 January 2010. It is written by Simon Dingle.

HENK KLEYNHANS is on a mission. Internet access in South Africa is expensive and beyond the reach of most of the country’s citizens and he plans to change that. While the realities about telecommunications are changing, challenges still abound. Kleynhans’s company – Skyrove – is focused on empowering people to not only get connected but also use their collective strength to overcome high prices and other challenges. The company hasn’t only been successful in doing so but recently attracted millions in international funding.

Kleynhans founded Skyrove while at the University of Cape Town to enable students staying in digs to share the costs of Internet connectivity. It was at the time wireless net- working was becoming commonplace and he realised it would be a good way for him to share an Internet connection with other students.

“So I installed an ADSL line and wire- less router and started collecting money at the end of every month from other students who wanted to use it. But that wasn’t an equitable way of doing it, because some students would be away for holidays and not want to pay for that month, while others would download larger amounts of data than anyone else while paying the same rates.

“So I looked at billing systems for hotspots overseas. There were some good ones, but they were all time-based – allowing you to bill by the hour, for example. That wasn’t ideal for SA, where bandwidth is expensive and limited,” says Kleynhans. “Some people would go berserk with the connection while others were just checking their email: it didn’t make sense to charge them all the same amount.”

Kleynhans and a business partner developed their own system for billing hotspot users based on usage, not time. It was a new concept and a first of its kind worldwide. “It would allow us to get the Internet to more people at a cheaper price. And the hotspot owners – be it students at res, restaurant owners or anybody really – can then easily sell bandwidth and become entrepreneurs themselves.”

The business soon attracted the attention of investors in San Francisco in the United States, who provided the company with money to get going. Skyrove started supplying its own routers running dedicated software. Anyone can buy one of those, plug it into their Internet connection and begin selling bandwidth, or using the system to connect a group of people. It now has more than 500 hotspots in SA and over 20 000 registered users.

Kleynhans is a serial entrepreneur. His mind tills over the problems we all face and ways we can solve them together. I once attended a conference where he used the group of delegates to brainstorm problems in SA’s electricity supply. He’s also outspoken about the way bureaucracy limits business.

“South African businesses are mired in bureaucracy, with some of it – such as the 1961 Exchange Control Act – being borne of solid apartheid era protective thinking and preventing companies from selling goods in foreign currency to foreign buyers on the Internet – which is the world’s biggest marketplace.”

He says another barrier for businesses in SA is funding. “But I believe once you remove the red tape it will also become much easier for money to flow into this country and thus for entrepreneurs to raise funds,” he says.

Skyrove has been highly successful in that department, having recently signed a multi-million rand investment deal with Jersey-based 4Di Capital. Skyrove also recently closed an investment deal with Internet service provider Cybersmart.

“The most important part of investment in a start-up is the relationship you have with the investor and not just the money he’ll invest,” says Kleynhans. “Our investors ‘get it’. They understand Skyrove’s business model and how critical it will be to connectivity in Africa. Second, my investors are entrepreneurs them- selves. They know what it takes to start a business and how incredibly hard it can be at times.”

However, Kleynhans suggests companies shouldn’t get caught up in funding. “Raising funds is great – but don’t be afraid to bootstrap either. Before we got funding for Skyrove my co-founder – Allister Kreft – and I were selling computers, conducting market research for corporates, teaching students and living on Provitas – literally,” he says. “I rented a five bedroom house and then sublet four of them, with my wife and I staying in the fifth (just married and just graduated) while we started the business in the attic. We didn’t have to pay any rent – either for our room or for the business.”

Those days are long gone for Kleynhans and the company. Skyrove goes from strength to strength and he believes it will remain relevant, even once Internet connectivity in SA is sorted out.

“Skyrove’s primary focus is providing the convenience of fast and stable Internet connectivity without the need of contracts or line rentals. Right now we’re able to do this at much cheaper rates because we’re able to split an expensive Telkom line with many people and bring the cost down. As the price of bandwidth comes down in the future, you’ll see more users using more bandwidth for video, VoIP, social networking and web applications,” he says.


Surfing simply with the hotshot behind the hotspots

Business Day – PUBLISHED: 2009/11/24 06:24:08 AM

TELKOM ’S monopoly over landline communications may officially be over, but its continued control of the “last mile” of copper leading to most customers’ homes will remain a stumbling block to affordable internet access in SA for some time to come.

That means even the prospect of a huge increase in the amount of available international bandwidth in the coming few years, as various new undersea fibre-optic cables are linked up to an upgraded national network, does not necessarily mean that every home in the country will have instant access to cheap and fast internet services.

For existing home internet users that is an annoyance, and for the poor it is one of many bricks in the wall that constitutes the digital divide.

But for Cape-based internet entrepreneur Henk Kleynhans it is a virtual guarantee that the company he founded in 2004 will have a large pool of potential customers for the foreseeable future.

Skyrove enables small businesses such as coffee shops and guesthouses — or entrepreneurs wanting to on-sell wireless internet access — to set up WiFi “hotspots” with a radius of about 50m, and either hand out vouchers as a service to customers or take a share of the fee that can then be charged for bandwidth.

“We realise that there’s nothing we can do about Telkom’s monopoly over the last mile of copper,” says Kleynhans. “But we can stake a claim to the last 50m by helping people set up their own hotspots and gain access to the internet wirelessly and cost-effectively.”

Potential hotspot providers must have an ADSL line in place before signing up with Skyrove and paying a once-off amount of about R1000 for a high-speed modem and wireless router.

That part of the service is unremarkable since there is nothing stopping anyone from setting up a hotspot for their own or customers’ benefit — indeed, many coffee shop franchisees already do.

But keeping tabs on who is tapping into your hotspot is difficult in such circumstances, as is preventing a few individuals from hogging all the bandwidth. And it is impossible to set up a viable business selling internet access if you can’t control usage and bill accordingly.

These were precisely the problems Kleynhans encountered when he was living in a student digs while studying at the University of Cape Town in the early 2000s and couldn’t afford the R1200 a month it then cost to have an ADSL line installed. He realised it would only be viable if he could share the costs with his housemates and students in nearby digs, but in those days the technology to do so wirelessly was not only primitive but using it for commercial gain was illegal.

Kleynhans, who is now 31 and recently became a father for the first time, recalls that he wrote the business model for a service that would allow him to bill people for the megabytes they used in a sudden burst of inspiration at 4am on the night before a maths exam.

“I felt that breaking the law was justified under the circumstances,” he says.

The following year, his last of a four-year computer engineering degree, lecturers and fellow students were roped in to help Kleynhans refine the business plan, and Skyrove was launched at the end of 2004, shortly after he graduated.

The first outside investor came on board the following year, which allowed the company to hire a programmer and go to market with the world’s first prepaid per- megabyte WiFi billing solution. Skyrove now has more than 500 hotspots in operation around SA, and is adding about 20 new ones to the list each month.

Skyrove won the Enablis Business Report Competition in 2005, and the Technology Top 100 Award for Most Promising Emerging Enterprise in 2006. In July this year internet service provider (ISP) Cybersmart took a stake in the company, and in October a multimillion-rand investment deal was signed with US-based 4Di Capital, a venture capital group that is trying to establish Cape Town as SA’s Silicon Valley.

Kleynhans says the injection of cash in exchange for equity, which has left him with a stake in the business of about 25%, will allow Skyrove to invest in a proper marketing strategy for the first time as well as take advantage of 4Di’s experience in taking technology startups to the next level. The goal is to triple the size of the Skyrove network over the coming 12 months, which means creating at least 1000 new hotspots.

The key to achieving this, he says, is the simplicity of the process. “I call it the dad test: would my dad be comfortable using the system?” To gain access to a Skyrove hotspot, users — be they casual coffee shop customers or B&B guests making use of free vouchers or residents of apartment blocks serviced by hotspot entrepreneurs — log onto the company’s website from their laptops and either enter the voucher number and password, or buy bandwidth credits using their credit card.

The amount charged per megabyte, if anything, is entirely at the discretion of the hotspot owner or “Skyrover”. Kleynhans says the average currently is a little over 30c, which seems high compared with the 7c most home ADSL users are paying their ISPs. But that fails to take into account the line rental fee demanded by Telkom, which comes to well over R400 a month for a high-speed line.

So Skyrove’s value proposition remains attractive for casual internet users in particular, at least until they start using more than two or three gigabytes of bandwidth a month. And that will not change much even when bandwidth costs start coming down.

In fact, Kleynhans believes lower line rentals — but not too much lower — would be to Skyrove’s advantage as more potential hotspot entrepreneurs would be able to afford to become Skyrovers.

So far, there has been little penetration in the townships, which he puts down to the difficulty in getting an ADSL line installed and a too-low concentration of laptops, rather than the cost of bandwidth.

The revenue generated by each hotspot varies widely depending on the pricing model being followed, the highest being one serving an 80-room hotel that brings in about R30000 a month. But Kleynhans says many Skyrovers are not in it for the money; they want to be able to offer free internet access to guests or customers while retaining control of their bandwidth usage.

His immediate goal is to ramp up the marketing of the Skyrove concept and get many more hotspots up and running before the World Cup. “Guest houses used to see WiFi as a nice-to-have value add to attract guests, but now they’re realising that it’s an absolute necessity. Foreign visitors expect internet access, and those that come here for the World Cup are going to want to be able to take photographs and share them with their families back home.”

Kleynhans believes Skyrove’s potential SA market is still “absolutely massive”, but the next stage in the company’s strategy is to test the waters in other developing countries in sub-Saharan Africa and South America, where large parts of the population have similar hassles accessing the internet.

The key … is the simplicity of the process. I call it the dad test: would my dad be comfortable using the system?

Skyrove Raises Series “A” Round

South African Internet startup Skyrove announced today that it has signed a multi-million rand investment deal with 4Di Capital. This investment comes on the heels of Skyrove recently securing funding from leading ISP, Cybersmart. “We are focused on developing relationships with companies such as Cybersmart and 4Di Capital as they are pioneers in their field. They can help us accomplish our goals.” says Henk Kleynhans, Founder and CTO of Skyrove.

Both of these deals are strategic in nature. The 4Di transaction injects a significant amount of capital onto the balance sheet, whilst also bringing intellectual capital to the business via the active board participation of recognized industry players. The new investment also brings with it access to 4Di’s worldwide networks and resources and provides capital for additional growth. This funding follows the successful angel round backed by Vinny Lingham of Yola and Michael Leeman, who both retain seats on Skyrove’s Board.

Through the recent Silicon Cape event a conversation began between SMME’s, Government, Academia, Media and various other stakeholders on making Cape Town the next Silicon Valley and taking SA technology startups from ‘garage to global’. What started as a dream for Justin Stanford (4Di Capital) and Vinny Lingham (Yola), boasted into a colossal event with over 500 in attendance and many key note speakers such as the Premier of the Western Cape, Helen Zille, who presented her summation, support and call to action. Skyrove had the pleasure of sponsoring the event with Internet access.

“We are pleased to align ourselves with 4Di and Cybersmart,” says Kleynhans. “This is not simply an investment in our company, but an important addition to our capabilities of providing people with Internet access. Our partnership with 4Di and Cybersmart will deliver important insights that will lead to the expansion of our product offering, competitive advantage as well as increase sales and marketing activities.”

About 4Di Capital

4D Innovative Capital International Limited (4Di Capital) is an early-stage nurture capital Investment Company. Based in Jersey, the company is focused on sourcing and funding promising technology, software, web, media and telecoms opportunities from the earliest seed-stage through to late stage in unique emerging markets such as South Africa. 4Di Capital seeks opportunities which have the potential to be leveraged onto a global stage utilising the worldwide networks and resources which the company has access to.

Nurture capital is a term that has been chosen to differentiate 4Di Capital from the traditional venture capital (VC) model. 4Di Capital is a high value-add, hands-on, evergreen investor without typical fund lifetime constraints, which means that there is no requirement for investee companies to exit within a pre-specified time frame, and reaching long-term sustainable profitability is encouraged as an alternative option. 4Di Capital embodies the entrepreneurial style that it simultaneously seeks out, and to this end is run by entrepreneurs with real world experience in starting and growing businesses.

About Cybersmart

Cybersmart, a leading ISP in SA, has shown its commitment in developing Skyrove’s Wi-Fi Hotspot business by taking a minority stake in the business. Cybersmart’s research showed that running a hotspot business is technically quite challenging and that the cost of an investment in an established player would be significantly less than the cost required to develop a robust service in-house.

“After evaluating a number of hotspot offerings available, it was decided to pursue an investment in Skyrove as the company is currently Africa’s largest and fastest growing Wi-Fi sharing community network; the simple voucher system allows a user to redeem vouchers at any Skyrove hotspot and the credits never expire; the transparent management system is far superior than any of its competitors and the management team is a combination of highly skilled, young & innovative individuals, which really made it a ‘no brainer’”, says Laurie Fialkov, CEO of Cybersmart.

About Skyrove

Skyrove enables anyone to easily start a Wi-Fi Hotspot and share their broadband internet connection to earn an income. From humble beginnings 4 years ago, Cape Town based Skyrove provides all the sales, support and development for the Wi-Fi service and strive to keep it an inexpensive, prepaid way to connect to the internet using your laptop. With many Authorised Partners across the country, 500 Wi-Fi Hotspots nationwide and 20 000 registered users, Skyrove is largest and fastest growing Wi-Fi sharing community.

Henk Kleynhans – B.Sc. IT CE (UCT) – Founder and Chief Technical Officer
Henk is an internet junkie with a passion for social entrepreneurship and Human Computer Interfaces. He came up with the Skyrove concept while a student at UCT because he could only afford an ADSL line by sharing it with digs mates and neighbours. In 2008 Henk was named by the Mail & Guardian as one of “200 Young South Africans… You Must Take to Lunch”. More recently, Henk was also invited by the Nelson Mandela Foundation to their Promise of Leadership Dialogue.

Vinny Lingham – Executive Committee & Strategic Advisor
Vinny Lingham is the CEO of Web 2.0 startup Yola Inc. Yola has raised a total of $25m in Venture Capital and has offices in San Francisco & Cape Town. Vinny was previously the founder & CEO of global search marketing experts, incuBeta and its subsidiary Clicks2Customers, with offices in the US, UK & Cape Town generating over $100M per annum in client revenue. Vinny also serves on the advisory boards of Yahoo! And CommissionJunction. In 2009, Vinny was chosen as one of the World Economic Forum’s Young Global Leaders.

Michael Leeman – B.Bus.Sci (Actuarial) – Executive Committee & Strategic Advisor
Michael is an actuary who initially worked for Southern Life and founded Futuregrowth. In 1998 he joined African Harvest and founded African Harvest Capital. In 2001 he founded Miombo Capital, an independent financial services and marketing consultancy. Michael is based in San Diego, California and is a Shareholder and Director of Clicks2Customers. Michael also has an array of investments and advisory roles with a number of other Web 2.0 start ups, including Yola, ChessCube and Skyrove.
He has extensive experience in innovative financial product development, socially responsible investments and empowerment investment banking. Michael obtained his B.BusSci in Actuarial Science from UCT in 1991, receiving the degree with distinctions in actuarial science, economics and statistics.

Internet More Important than Sex to South Africans

Earlier today I was planning a Google Adwords campaign for a new wireless internet product Skyrove WiFi Hotspots will be launching soon. As some of you may know, Google Trends is a great way to see what people are searching for on the internet.

Unfortunately, Google Trends does not tell you exactly how many searches there are for a particular term. You can only compare terms with each other. One of the most commonly searched terms on Google, believe it or not, is ‘sex’.

So to get some rough benchmark of how often people search for “internet” in SA, I thus decided to compare the ‘sex’ with ‘internet’. This is what it looks like:

Incredibly, more people in South Africa are now searching for “internet” than there are looking for “sex”!

I’m not sure what conclusions to make yet, but it’s certainly interesting! I also did some other searches on Trends, e.g. 2010, internet (2010 recently outranked internet in the US, but NOT in South Africa!).

(Post by Skyrove Founder Henk Kleynhans – You can also follow him on Twitter:

ISPs take a stand for Internet freedom

[ Cape Town | ITWeb, 7 August 2009 ] – Internet service providers (ISPs) have rejected a demand by the music industry association, the Recording Industry of SA (Risa), to block access to two overseas-based free music-downloading sites.

“We view this as an attack on the freedom of the Internet and, pending further legal advice, we will not comply with this blocking notice,” says Henk Kleynhans, MD of Skyrove.

Read more

Cybersmart flexes its muscles

[ Cape Town | ITWeb, 5 August 2009 ] – Cybersmart is flexing its muscles as an emerging telecommunications company by negotiating with the big players to land international bandwidth directly in Cape Town.

It is also entering the WiFi hotspot space, by buying a stake in Skyrove.

“Skyrove is agnostic in its deployment of its systems and the model is one of revenue sharing with the clients. With the ADSL product, we are dependent first on our marketing, and then the ability and willingness of another party to install it,” Fialkov says.

Henk Kleynhans, Skyrove CEO and founder, says the deal with Cybersmart is structured over two years and based on a Skyrove valuation of R12 million.

“The final value and stake that Cybersmart will eventually get depends on various targets and warranties being met, so we cannot yet say just what the final cost of the deal will be,” he says.

Both Kleynhans and Fialkov say the deal shows consolidation is beginning to happen in the market, especially among the smaller players.

“I would rather call it convergence,” Kleynhans notes.

Click here to read all.

Skyrove receives investment from Cybersmart

21 July 2009, Skyrove Wi-Fi Hotspots today announced an investment deal with Cybersmart.

Cybersmart, a leading ISP in SA, has shown its commitment in further developing Skyrove’s Wi-Fi Hotspot business by taking a minority stake in the business, valuing the company at R12 million.

Cybersmart’s research showed that running a hotspot business is technically quite challenging and that the cost of an investment in an established player would be significantly less than the cost required to develop a robust service in-house.

“After evaluating a number of hotspot offerings available, it was decided to pursue an investment in Skyrove as the company is currently Africa’s largest and fastest growing Wi-Fi sharing community network; the simple voucher system allows a user to redeem vouchers at any Skyrove hotspot and the credits never expire; the transparent management system is far superior than any of its competitors and the management team is a combination of highly skilled, young & innovative individuals, which really made it a ‘no brainer’”, says Fialkov.

Henk Kleynhans, Founder and CTO of Skyrove, welcomes the partnership. “Laurie has a very strong entrepreneurial background and is active in the ICT space. He understood Skyrove’s product and could clearly see the potential for growth.”

About Cybersmart

Founded in 1998, Cybersmart is the most economical ISP in South Africa that provides broadband internet access and the cheapest hosting solutions. With various innovative customer centric special offers such as Night Rider and the latest Grow for Life, Cybersmart is continually rewarding their loyal customers while still providing best value bundled packages.

For more information, please visit Cybersmart.

About Skyrove

Skyrove enables anyone to easily start a Wi-Fi Hotspot and share their broadband internet connection to earn an income, while at the same time providing inexpensive, prepaid wireless internet access to end-users. Once you connect your Skyrove router to your network (ADSL, iburst etc), anyone with a laptop computer will see a new network called ‘Skyrove Internet’. They simply connect to this, buy credits online and start to surf the net. To have your very own managed or controlled free Skyrove Hotspot solution, please fill in the enquiry form and we will contact you. To find 500+ other Skyrove hotspots, please visit Skyrove’s hotspot map.

For more information, please visit Skyrove.

Controlled Free WiFi Internet at Grand Daddy Hotel

Leading Cape Town based hotel group Daddy Long Legs has acquired Skyrove’s hassle free and fully supported Wi-Fi solution for its latest expansion, the Grand Daddy Hotel. Situated in Long Street, the Group’s venues comprise of The Art Hotel, Self Catering Apartments, The Grand Daddy and finally 7 vintage Airstreams on the roof of the Grand Daddy Hotel – each of these boasting its own contemporary, unconventional design.

Guests can now stay at any of the Daddy Long Legs hotels and enjoy Skyrove’s Wi-Fi Internet access. At the Grand Daddy all guests will receive a 20 Megabytes venue branded voucher upon check-in. Guests can buy additional vouchers or top up using their credit cards. Skyrove’s limited free hotspot option has already been widely adapted in the hospitality industry as it gives the venue full control over the free amount that they give away, is secure and protects the venue from abuse and is an opportunity to increase customer loyalty by handing guests a free branded voucher.

Sergio Dreyer, GM of Grand Daddy says: “It is a pleasure forming another partnership with South Africa’s leading Wi-Fi hotspot provider. We are thrilled to have found a partner for our group that has delivered such an outstanding level of service. The way Skyrove’s controlled free Internet solution works is the best possible solution for our new 4-star hotel.”

Join Africa’s largest and fastest growing Wi-Fi sharing network and get your own prepaid or limited free Wi-Fi Hotspot solution from Skyrove. Simply fill in the enquiry form for a managed solution and we will call you.

Find the Grand Daddy Hotel and 500+ other Skyrove hotspots on our hotspot map.

First Authorised Partner Training a Big Success

Skyrove launched its new Authorised Partner Training Programme on 20 April 2009 held at the Grand Daddy Hotel. The event was attracted interested SMME’s from across the country to participate in Sales, Marketing and Technical training followed by much welcomed FAQ’s.

Skyrove’s new Mesh technology was also introduced by Skyrove founder and Chief Technical Officer, Henk Kleynhans. The mesh routers make it simple to set up larger, multi-building, wireless networks due to its self-forming and self-healing ability. Skyrove is currently the only company in Africa that provides this innovative technology to venue owners and its partners.

Renier De Jager from Leapfrog Computers in Gauteng says: “This is truly a step forward for providing cheap internet access all over Africa combined with the opportunity to make money from it. Excellent technology combined with great management Team = Success.”

Do you also want to extend your business and earn income from installing and managing multiple WiFi hotspots? Then join our growing team of more than 60 Authorized Skyrove Partners. Click here to apply for your partner status online and to find out about all the benefits you will enjoy as an Authorized Skyrove Partner.

Status Window Changes

We brought back the Status Window (pictured below) in October last year, and the one major complaint we had was that it would pop up to the foreground whenever it refreshed if you use Internet Explorer!

So rather than asking everybody to switch to an Open-Source browser such as Firefox or Opera, we decided to stop automatically refreshing the status window altogether. The status window also would take up some processing power and use a little bit of data every time it refreshed.

The drawback is that in future you will have to click the ‘Refresh Stats’ button in order to see the latest usage statistics.

Please let us know what you think and if there is any way in which we can improve it further!

UPDATE: Due to your feedback, we’ve decided to make a small change. In future, the Status Window will refresh the moment you click on it!