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The Internet of Things (IoT) — or the concept of connected devices — is becoming more prominent by the day. It’s estimated that there will be around 38 billion connected devices by 2020. While still in its infancy in South Africa, it’s growing fast. In fact, Kees Snijders along with his partners Hein Koen, Gerrie Swart and Kristien Wolmarans from South Africa’s Flickswitch are banking on it. And so far, it’s boded them well.
Since bootstrapping Flickswitch back in 2007, the SIM management company is today recording R22-million in annual turnover, generating R1-million in profit.
“The IoT market is ripe in South Africa,” says Snijders, adding that the company is busy expanding its operations into the rest of the continent where there’s a lot of opportunity. “Take Namibia, for instance, there are only one million people. But by next year, there might be two million connected devices.”
Of these millions of devices, many use SIM cards to communicate with other machines or users, which is exactly where Flickswitch steps in.
The company is behind an online SIM card management system. Clients that are involved with machine-to-machine communication (like vehicle tracking, point of sales, traffic equipment, and so on) have the ability to manage and recharge their devices more easily and effectively. This means that instead of sending data providers monthly Excel spreadsheets, clients have real-time access to optimise their devices’ data usage.
Some of its clients include innovative startups like Lumkani, Leash, Nomanini, SnapScan and Asimmetric, which are all setting the bar for IoT solutions locally. While big clients include the likes of Michelin, MultiChoice and Remote Metering Solutions, which is behind pre-paid and post-paid smart metering. In total, it has 400 clients.
“We are the enabling layer between the mobile operators and a lot of these businesses,” Snijders says, who’s based in Flickswitch’s Cape Town base — right above the trendy Bean There Coffee Company. It has two other offices in Johannesburg.
Filled with colourful illustrations painted on the walls, Flickswitch’s Cape Town headquarters comes across as that of your average tech startup’s. Though Snijders insists he wants to “shake that label as soon as possible.”
“If you want to do B2B, they’ll laugh at you when you have the startup tag,” he says. “It’s cute and cool, and gets you in the door, especially when you’re doing something new and novel. But to have people take a leap of faith and entrust you with managing something that’s key to their business, that’s another story. You don’t want to be seen as something that might not be around in a year’s time.”
Snijders got a lot of exposure to the life of an entrepreneur from his father, who ultimately sold his plastic importing business to a JSE-listed company. “It was just him, a partner and a couple of management staff,” Snijders recalls. That model of staying lean was something that Flickswitch carries through to this day. All in all, the company of 15 employees.
The entrepreneur — who has a decade’s worth of experience working as a developer for corporates before starting Flickswitch — argues that while there is a lot of glamour in the life as a startup, at the end of the day, the business has to be meaningful.
“As soon as you have a viable business that has black ink on the bottom line, then you have no need to call yourself a startup anymore,” Snijders says.
“The allure of being a startup wears off pretty quickly if there’s no return for the shareholders,” he continues. “It’s not all about the money, but it has to make sense. It’s often that the media reports [VC rounds] as a triumph. When I see it, I cringe. Taking money always comes with strings attached.”
Rightfully so, Flickswitch has found success in being financially independent since day one. And it’s obviously reaping the benefits. “We want to be masters of our own destiny. We want to build something that has meaning and has value,” the co-founder quips.
IoT as catalyst for innovation
Snijders is positive about Flickswitch’s future and foresees the IoT industry only to grow bigger. While hardware is getting cheaper, processing power is improving, cellular network coverage is almost ubiquitous, and data costs are dropping. This growth will act as a catalyst for innovation on the continent, which is filled with unique opportunities.
All together, Flickswitch has processed more that 2,5 million SIM recharge transactions across various mobile networks, and currently monitors 100 000 active SIMs. Of the 38 billion devices expected to be connected within the next few years, the South African startup has a lot to tap into still.
The founders of Flickswitch have even gone on to invest in a new IoT-focused business called Nervedata, which collects and provides companies with operational data. For instance, the startup recently partnered with a large insurer for risk mitigation. It has wired up kitchens with embedded sensors in some of the restaurants’ kitchens they insure, which gives us real-time reporting and monitoring of temperatures.
It’s solutions like these — that are specific to the various needs of the client — that Snijders believes have a lot of opportunities. Whether South Africa’s entrepreneurs are up to the task to meet these opportunities, however, remains to be seen. Snijders believes that there is a lot of good talent being wasted in the country’s corporate sector.
“There’s still this stigma around failure which are all inhibitors to trying something new and to putting yourself out there,” he says.