There's very little elbow room for new startups to establish themselves in the telecoms arena - it's highly competitive and seemingly already over-provisioned. So what does it take to enter this throng as a startup?
An active contender in the telecoms and technology market, Green Connect has a threefold business model to allow its founders to have fingers in many pies by pursuing several niches.
"We found our first gap in the market is in the mobile and airtime sector," says Green Connect's director Jacques Mulder. "The idea for Green Connect came from working on the group risk side of business insurance. We noticed there was a pull between employees wanting benefits (and what they wanted to pay for those benefits) and employers granting benefits (and what they were prepared to pay) so we found a way to help both sides by acting as value-added resellers of MTN mobile and airtime products and services.
"We also help companies with their landline (VOIP) and data needs and offer tailor-made applications for businesses - anything from administration, to training, to HR apps. We focus on ways to make it easier for companies big and small to embrace technology," says Mulder.
What makes Green Connect unique in the South African market, if all they're doing is reselling products and services?
"We cater for the 'forgotten market'," Mulder says. Companies are hesitant to provide mobile phone benefits to employees - too much paperwork, too much hassle, too much risk. Can the employee be trusted not to abuse such benefits? How will the company monitor the use thereof?
The answer is to shift the risk from the company to the employee. By reselling mobile and airtime products and services as a payroll deduction, Green Connect cashes in on the employee-employer relationship and makes it possible for the employee to access previously unavailable products and services previously unavailable to them.
While using Green Connect has perks for the employer, the contract remains between Green Connect and the employee. As a Green Connect user, the employee gets the cheapest airtime rates available and can add on to their contract services like data, BIS and international roaming. These price-sensitive customers are still able to manage their monthly spend and have access to handsets and tablets they can pay off over 24 months.
To the employer, Green Connect provides a service with no financial risk to the business, and still yields a monetary gain. Says Mulder: "By making this service available to staff, companies are actually strengthening employee loyalty as this is a service that's only available because they work for the current employer."
Not only does it give companies a means to communicate within the organisation, it's also a way to keep tabs on staff. It's possible to geo-fence a site (like an office block) to see when employees arrive and leave, and can be used to track movement on site as well.
The right kind of crazy
Mulder admits that it wasn't an easy start for Green Connect. "We were too new in the industry and used operating systems that cost too much and provided too little. One of our initial partners introduced our offering to a large local labour brokerage and that's when we were forced to streamline our processes. A highly volatile client base meant we had to change the way we worked, or we would have had to close our doors.
"The strikes in the various sectors have hit us hard as the churn factor affects both existing and new clients, which is felt in our risk and pricing."
Green Connect had to change its management system completely, two and a half years into the business being operational. "This was a lot like changing a tyre in a F1 car, while still screeching around a vicious corner," Mulder notes. "When you're doing something as sensitive as payroll deductions, the management system you use is critical."
The business is susceptible to factors like external and internal changes at the networks it deals with, industry changes, legislation, strikes and price wars within the telecoms arena, all of which make it a stressful industry to be in. Says Mulder: "We've learned that it takes a special kind of craziness to start your own business and that even more craziness is required to persevere.
"We deal with a price-sensitive market and need to provide great value for money. In a startup, you have to do more than just think outside the box. Sometimes new boxes have to be dreamed up in order to make it work and we went through serious trial and error to find the right combination in operations, management systems and people."
Mulder believes the business' biggest shortcoming is that it doesn't offer airtime from all the networks in South Africa. It's working to change this, and has added two new alternatives in the last month. "As a startup owner, while you need to stay ahead of technology changes, sometimes you need to let certain things go. We've learned we can't be everything to everyone, so focusing on niche sections in such a wide market has made all the difference for our business," Mulder observes. "There is so much potential in this industry that we need to tap into. To do this, we have to focus all our efforts on what we believe we do best, and let others do what we can't."
First published in the April 2014 issue of ITWeb Brainstorm magazine.
Share