Starting a new venture can be as much about timing as it is about the product itself. Leading edge technology can very quickly evolve into the bleeding edge if the idea is years ahead of its time. For Snapt founder and CEO, Dave Blakey, patience could prove to be his biggest virtue. By STYLI CHARALAMBOUS.
The perils of being first to market when there is no market are not as well documented as the myriad of entrepreneur success stories. Having a ‘world first’ product isn’t always a good thing and some of the biggest tech businesses were nowhere close to being the first to market. Microsoft, Google and even Facebook relied on others to blaze new trails of thinking to develop demand for their products and services. But when you’re harbouring a revolutionary idea in your head, it’s difficult not to get stuck in, let alone wait 10 years for the market to develop. And that’s exactly what Blakey had to do.
The idea to customise and enhance Free and Open Source Software (Foss) as an alternative offering to licensed software, came to Blakey even before he co-founded the hugely successful hardware networking company, Opteq, with his father, Paul. “The belief at the time was that licensed software was the only acceptable option for businesses. The perception was that licensed software must be more reliable, better supported and generally a superior product choice to FOSS, which was only beginning to gain in popularity. So I had to park the idea, although I was fortunate enough that the Opteq business did use FOSS in its product offerings. It gave me the opportunity to keep an eye on how things were progressing and how attitudes towards Foss were changing.”
But time wasn’t the only thing Opteq gave Blakey. As chief technology officer at Opteq, he was exposed to the rigours of entrepreneurship as Opteq grew from start-up to a large company, servicing multinational corporations, network carriers and ISPs. Dave was responsible for product development, figuring out new and improved ways to get software working and using Foss as part of that strategy.
Snapt was officially launched in August 2011, when the 27-year-old Blakey finally felt the demand for Foss had grown sufficiently to take his dream from a burgeoning idea into a fully fledged business. The mission was simple. Save business owners thousands in IT investment by offering them a Foss-enhanced alternative to expensive closed-source software. The Snapt interface has a clean and friendly user experience that plugs into various Foss platforms providing management and reporting tools often missing from Foss products.
Before launching, Blakey and his team were certain their products would only appeal to SMEs who were technically minded and already using Unix operating systems. And as is the case with so many start-ups, they were wrong. To their amazement, one of their first paying clients was the National Aeronautics and Space Administration programme of the US. Unbeknownst to Blakey, a technician at Nasa had been searching for load-balancing software and had stumbled upon the Snapt-ui.com website. And, after signing up for an initial trial version of the software, the rest, as they say, is history.
For Blakey, the Nasa sale was a massive affirmation of the product and that the market had indeed made the paradigm shift to Foss. It also helped Blakey seal the venture capital funding he needed to begin growing Snapt to its full potential. Blakey had enquired with his old hacking buddy, Justin Stanford, for advice on who to approach for VC funding. Stanford suggested talking to 4Di Capital, an early stage technology VC firm he had helped launch out of Cape Town. In the negotiations that followed, 4Di accepted the initial pitch offer from Blakey and without the need for haggling, agreed on the terms of the undisclosed investment in Snapt.
In what may seem like a Cinderella story of raising funding, Blakey is quick to point out that his years in business and his support team were instrumental in presenting realistic projections and not telephone number profits, as many first-time entrepreneurs do. “My time at Opteq taught me a lot about running a business and developing new products. We documented what we knew their concerns would be up-front and securing the Nasa deal obviously helped. I was also lucky enough to be able to lean on my father for business plan and valuation advice, and to convince him to act as an ongoing advisor to Snapt. Having raised VC funding before and been through a listing process, he knew what was realistic and what wasn’t, which 4Di appreciated.”
Snapt has now secured funding for the next three to five years, and it’s a business that really excites 4Di partner, Doug Cherry. “Snapt’s strength is that it’s a unique and disruptive platform, but we were unsure about whether a market existed for this. As investors we have to take a pragmatic view on all our potential investments when doing our due diligence, yet we couldn’t fault the Snapt proposal on any of our three key criteria – people, market and product.” Cherry likens Snapt to a Ferrari being built without a steering wheel. “What use is a 600-horsepower engine if you don’t have the ability to control it? That’s what Snapt does. It gives you the tools to get better performance out of your network infrastructure at very little cost. So when Dave pitched what we felt was a realistic deal, we took it.”
For Snapt, VC funding was not only about raising capital, but also the advisory input that VC’s rarely get credit for. “The 4Di team have been great in opening doors for us and putting us in touch with their network. It’s more than just writing out a cheque and hoping we’ll sort ourselves out. And unlike some angel investments where cash tends to be hoarded at all costs, we have to spend our monthly budget to grow the business.”
Since then, Blakey has had strong interest from major ISP’s in Europe and South America for which load balancing is a major concern as well as business reselling opportunity. The USA currently accounts for roughly 55% of the Snapt business with Europe making up around 35% and the rest spread across Asia. The reason for poor South African interest, Blakey explains, is the mindset change to Foss. “America has embraced it, as has Europe and we’re still playing catch-up here. Sometimes prospective clients are concerned that they’re being supported from deep, dark Africa. But when they see our two-hour guaranteed response time in action, their fears are put to rest.”
Snapt currently offers two products, Snapt HAProxy and Snapt Squid, as well as the Snapt platform that ‘snaps’ onto a host of open-source products. Snapt HAProxy is the load-balancing product used by Nasa with pricing plans that start from $200 up to $3,000 a year and allows customers to use significantly lower spec hardware to manage their network needs. For clients, this could mean spending as little as $500 on hardware and software licenses with Snapt as opposed to a $30,000 investment. Snapt Squid is the front-end to the Squid Cache system that provides massive bandwidth savings by caching content locally on the servers as well as management and reporting tools to monitor and control Internet usage.
For Blakey, the immediate goal is to grow the 20 new clients a month they currently sign up to thousands a month. It’s a numbers game, and they have to grow exponentially to achieve their targets. And for that the US is the answer. “Half of all the software sold in the world last year, took place in the US. We may need to establish a physical presence there to up sales, but we’re okay operating from SA for now and we’re actively looking for resellers because that gap between traditional costs and our solution is so huge.”
For his team of six developers and support staff, Blakey and Snapt are just beginning a long and hopefully rewarding journey. We’ll be keeping a close eye Snapt’s progress and hoping for another rare proudly South African tech start-up that can compete on the international stage, and more importantly drive opportunity and job creation in a country that so desperately needs it. DM
Photo: Snapt founder and CEO, Dave Blakey.
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