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Building Silicon Cape: How Much of a Difference Can One Guy Make?

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Some people, ahem, are predicting a big resurgence in business software. Given how outdated most tools are, that’s probably a safe bet –  whether it happens now or in the next few years. While software as a service and open source have plugged many holes, most large companies still run themselves on one of two companies: Oracle or SAP. That can’t last forever.

But the amazing thing is, when it comes to small business software, the market is still pretty wide open, with most businesses still running themselves on pen-and-paper or Excel spreadsheets. There is a reason that Intuit has managed to keep a stranglehold on small business software—because it is hard to build and even harder to market to such a huge, fragmented market with so many different needs. Especially when the revenues per customer are necessarily puny.

So, it’s a huge market but, let’s face it, it’s not a sexy one. And that’s one reason a company like Yola doesn’t get more press. (Here’s our previous coverage.)

I hung out with Yola’s founder Vinny Lingham while I was in Cape Town last week and came away impressed for a few reasons. For one thing, this guy has forgotten more about acquiring traffic than a lot of people in Silicon Valley know. (I originally published those verbs backwards. Thanks commenters and apologies, Lingham. I blame jetlag.) He spent the bulk of his career building search campaigns for huge multinational companies and made a pretty sweet living at it. (Check out his BMW convertible in the video below–those cost about double in Cape Town.)

That business was lucrative, but Lingham soon saw what many entrepreneurs in emerging markets are realizing: Services companies don’t scale the way product companies do. And Lingham wants to build a big company. A big company helping small businesses build Web sites.

You may be thinking, doesn’t everyone who wants a Web site have one by now? Astonishingly, no. Yola has a few competitors—most notably Y Combinator graduate Weebly and Israel’s hometown darling Wix. (Lingham–who carries his iPad everywhere–is quick to point out Wix is Flash-based, while Yola bet on HTML5.) But ultimately, this is a business that will be won on distribution not necessarily product, and Lingham is pretty relentless when it comes to bringing people to his site and converting them.

Here’s the other thing notable about Lingham: He really wants Cape Town to be a tech hub. He moved to Silicon Valley to get greater access to deals, talent and money, but he returns to Cape Town several times a year and invests in and mentors companies there. I’ve written before that one of the reasons India has gotten so much US venture capital is because of the Indians who made it in the Valley and were determined—either out of nationalism or opportunity—to pay that forward to the home country. I’ve also theorized that the paucity of huge, Brazilian-born startup successes in the Valley is a big reason that Valley VCs largely ignore Brazil and South American generally. Simply put: No one is hounding them to go. The famed Israeli Web investor Yossi Vardi calls it “profitable patriotism.”

To Lingham, success is Yola becoming a billion dollar business. But equally success is Cape Town giving rise to lots of other successes. I don’t mean to suggest he’s alone in this effort. I was in Cape Town last week to speak at an excellent conference on African Web entrepreneurship called Net Prophet where more than 800 people crowded in a hall to share ideas and absorb advice from those like Lingham. Still, how much of a difference can one guy make? In my experience traveling to more than a dozen markets in the last year, one guy (or girl) can make more of a difference than most well-meaning government institutions. Good entrepreneurs need role models, mentorship and angels more than any other raw materials.

Here’s a short video I shot with Lingham on the way to the airport my last day in town. (Yeah it gets dark, get over it. I’m on the road.) We talk about the Silicon Cape initiative, why you should care about small business software and how his wife feels about him spending all his money on startups.




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