Yossi Hasson started SYNAQ in 2004 with an old school friend, and since the company’s humble beginnings it has become a prominent player in the South African e-mail solutions market. Hasson now heads up the company which employs 21 staff members.
The success of the company attracted the attention of big players in the ISP market, and Internet Solutions acquired 50% of the business in March 2011.
MyBroadband caught up with Yossi to find out more about his journey and what inspired him to start SYNAQ.
When and why did you start SYNAQ, and how old were you when you started the company?
SYNAQ was effectively started over a cup of coffee between myself and my co-founder David Jacobson back in 2004. David and I went to school together and hadn’t seen each other for a number of years as he went to live in London. I’d heard that he was back in SA and doing some very cool stuff for an ISP in Johannesburg using open source software and Linux (in school David was infamous for his Linux hacking skills) so I called him and we went for a cup of coffee to catch up. Over coffee we chatted about an anti-spam solution that he had put together using open source software that was beating all the proprietary anti-spam vendors at the time and saved the ISP millions. From that discussion we thought that there had to be an opportunity to start a business leveraging off Linux and open source software. At the time we were both 21 years old, by the time we started the company on 1 September 2004 I had just turned 22.
Where did you get money to start the company (and how much if you can say)?
We managed to raise the funding from a few wealthy individuals that were intrigued about the idea of bringing “free software” to the enterprise and were willing to back two youngsters with no real business experience. The total amount raised was R900,000
What were your biggest challenges in the early days of the company?
The main challenges that we faced back then were around people and pricing. David and I had no “real” business experience and made a number of mistakes early on in terms of finding the correct people for our company. Finding skilled Linux engineers was difficult enough so if the person had the skills we were looking for we would hire them immediately without necessarily checking if they would fit in with the company. We tested for skill and that was pretty much it. After a couple of errors in hiring (which set us back quite a bit) we created a more rigorous hiring process that focused more on the kind of culture we wanted to build in our company and ensured that we first checked the persons culture fit before assessing skills.
The second major problem that we faced was around pricing (although we didn’t know it at the time). We were gaining great traction in terms of new clients and secured a number of high profile brand names in the early days but the business was struggling to be profitable despite its growth in revenue. David and I pretty much thumb-sucked how much we should charge each time we pitched to a client, in the early days there was no real science behind how we priced, some solutions we put together for clients saved them hundreds of thousands to millions but maybe only took us 10 to 20 hours of work so we’d only charge a few thousand and hope to get a small monthly retainer for support. That combined with us having no formal financial backgrounds it took us some time to figure out that our pricing would prevent us from being able to achieve any kind of sustainable business growth.
When you started out what skills helped pull you through and put you on the path to success?
I’d have to say it was our passion and sheer determination to succeed. I wish I could say that we did everything right when we started but we probably got a lot more things wrong than right but we worked together to constantly improve and were always prepared to make changes, try new things and adapt to see what worked. From my side I think I had a bit of a knack for branding and ensuring that SYNAQ was portrayed as a professional business from day 1, not some small “owner run” business – it helped us secure some large brands early on even though we were only a few employees.
What is your current role in the company?
I’m currently the MD of the company and am responsible for overall growth (local and international), company culture, strategy and shareholder relations.
Which skills have you developed through the years to help you in your current role?
Financial management skills. When starting SYNAQ I knew very little about finances, management, accounts, discounted cash flows, etc. I did an MBA 4 years ago which greatly improved my ability to make better informed decisions around the financial viability of the business. The MBA also improved my skills around public speaking and presentations which have been invaluable in terms of pitching to clients, securing speaking engagements and getting PR for the company. There are probably others around improved leadership, ability to manage people and attract talent.
How large is SYNAQ now?
SYNAQ is currently 21 employees. I unfortunately can’t reveal revenues but can say that we’re profitable and growing (we were ranked the 6th fastest growing company in SA by AllWordNetwork in 2011).
Internet Solutions also acquired 50% of our business in March 2011 so we’re working closely with them to expand globally and develop a number of new innovative offerings for the market.
What would advice would you give with new young entrepreneurs in the technology sector?
Get going, start small, you don’t need to raise money from the start (bootstrap for as long as you can), focus on getting your business model right before focusing on growth. Get a mentor. Do a financial management course. Love what you do. Get a kick-ass co-founder (it’s lonely on your own).
What can the private sector and larger corporations do to support tech entrepreneurship in South Africa?
Reduce the cost of telecommunications for startups. We decided in 2007 to move our main SaaS platform from the UK to SA so that we could better serve local clients. It increased our hosting and bandwidth costs 300%. Every ISP in this country should offer special startup pricing.
Give startups preferential payment terms when they are procuring services from you (despite lack of a credit record) and if you’re going to procure services from a startup pay them on time (everytime!). The private sector (especially large organisations) are particularly bad at this and it’s a startup killer, as an example, a R400,000 payment that a startup is expecting can literally kill the company if not paid on time.
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