Telecom August 20, 2009, 7:45PM EST

MXit Mixes Mobile Networks with Social Conscience

The South Africa-based wireless service is gaining millions of developing-world users by emphasizing social change, not just music and games

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Herman Heunis isn't your typical social-media startup founder. He's 50 years old, was raised on a sheep farm in Namibia, and is a veteran of the South African Navy. Little surprise that the company he built is no garden-variety social network either.

The company is called MXit Lifestyle and offers a range of mobile social networking tools, including instant messaging and music downloads. Since its launch in 2005, MXit has attracted more than 14 million users across the developing world, from Buenos Aires to Beijing, and it's adding 25,000 users a day. Initially funded by Heunis alone, the company broke even in its second year of operation.

Part of the appeal is MXit's dirt-cheap fees; for example, it doesn't charge users to register, as do rivals such as South Africa's The Grid. But what keeps many users loyal is its mix of civic-minded services, such as low-cost book downloads, education tools for kids, and even real-time drug counseling.

Heunis sees MXit as a vehicle for change—a social network with a social conscience—in countries where many people remain unconnected to the Web. In some parts of Africa, in-home high-speed Internet access can cost as much as eight times more than Web connections over wireless networks. MXit can play a key role in "unleashing the educational potential of Africa," Heunis says. "For a true entrepreneur, the satisfaction of creating outweighs the money rewards."

Obama Connection

What he's creating is getting wide attention. When U.S. President Barack Obama visited Africa in early July, he leaned heavily on MXit—not just larger, more established tools such as Facebook or Twitter—to connect with the continent's youth. "We were very happy to be engaging in the newest of new media on the mobile phone," says Mark Davidson, the State Dept. official who coordinated the effort. MXit users sent more than 200,000 messages to Obama. "Do you believe you are the Nelson Mandela of the 21st century?" one user asked. The U.S. Embassy in South Africa recently signed a yearlong partnership with Stellenbosch-based MXit to broaden U.S. government outreach in Africa.

But Heunis' strategy isn't just good citizenship; it's good business, too. Heunis, a shaggy-haired South African of Dutch descent, founded the company with his own money, generated from sales of earlier tech startups. He won't disclose financial specifics, but says MXit gets half its revenue from selling such content as music, games, and digital accessories, and half from advertising alongside content. In 2007, Heunis sold a 30% stake to Naspers, an African media giant, for an undisclosed sum. "I don't know of any other (company) that has focused its strategy on being a community-cause network first, entertainment second," says Christine Perey, a mobile social networking consultant in Montreux, Switzerland. "It's a unique differentiator."

Standing out is vital in a field dominated by bigger mobile social networking companies that have more money and better technology. Tencent Holdings' Tencent QQ Mobile last year generated about $200 million from sales of such content as avatar downloads, while Mig33, based in Burlingame, Calif., provides a widely used Internet-based calling service akin to eBay's (EBAY) Skype.