How Teraco was started, and how long it took to make its first R10 million

Teraco is one of South Africa’s biggest success stories. From its humble beginnings in 2008, it has now become the cornerstone of South Africa’s hosting and Internet market.

Teraco was started by Tim Parsonson and Lex van Wyk in 2008 with a simple idea – offer vendor-neutral data centres in South Africa.

The highly regulated and closed telecoms market in South Africa before 2008 meant that vendor-neutral data centres did not exist locally.

However, the deregulation in the South African telecommunications market changed matters and van Wyk and Parsonson saw an opportunity.

The possibility of providing a data centre service that was not tied to any carrier or ISP became technically feasible and economically viable.

Starting and funding Teraco

While the idea of vendor-neutral data centres was promising, building and managing a data centre is capital-intensive.

To fund the business initially, van Wyk received investments from friends, family, and venture capitalists.

He started the company with 6 staff members in 2008 and started to solve problems like finding the right location for a data centre and getting sufficient power from Eskom.

Van Wyk and his team overcame these challenges and Teraco launched its first data centre soon afterwards.

It took Teraco 2 years to make its first R10 million in revenue, but the demand for space in its data centres increased rapidly.

This demand was driven by South African enterprises which needed unrestricted choice in how they interconnected their facilities and connected to the Internet.

Teraco a big success story

Since its humble beginnings in 2008, Teraco has received strong support from the market with enough funding to build world-class data centres in Cape Town, Durban and Johannesburg.

The company also created NAPAfrica in 2012 – a fully funded non-profit neutral Internet Exchange Point.

Teraco and NAPAfrica are now the backbone of the South African Internet with all the major local and international tech players having some presence in these data centres.

Van Wyk attributes the success of the business to building a strong team with excellent employees and sticking to Teraco’s vendor-neutral data centre model.

He said identifying and employing the right person for every position without risking the business’ culture is core to the success of a new company.

“From finance to sales and operations, all the functions are key in their own right,” said van Wyk.


Lex van Wyk’s tech and business choices

MyBroadband asked Teraco CEO Lex van Wyk about his tech and business choices.

What was your first ever business?

Valuecom. I was employee number 2 and had a very small share.

What was your first job and what was your salary?

I started my career at Telkom and was paid R702 per month.

How did you get into the tech field?

Through my experience at Telkom I was approached to join Valuecom

What laptop do you currently use?

Apple Macbook Air.

MacBook Air Deal

What smartphone do you currently use?

iPhone Xs Max.

What is the best gadget you have ever bought?

Philips Airfryer.

What is the worst gadget you have ever bought?

Bluetooth car speaker.

What was your best ever investment?

Teraco.

What was your worst ever investment?

Property.

What is the best business advice you have ever received?

Always employ people better than you in every position.


Now read: Teraco confirms Berkshire Partners is its new owner

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How Teraco was started, and how long it took to make its first R10 million