Clickatell's Pieter de Villiers on 25 Years From Four Lines of Code

From optometry to the internet: how the idea actually found them

De Villiers did not set out to build a messaging company. He qualified as an optometrist, a science degree he chose because it looked interesting, only to realise within weeks of practising that, as he puts it, "you're really a shopkeeper." A scholarship obligation kept him in the job for a year; his wife Maria, then the household earner, gave him the room to walk away once it was served.

The founding team of four, de Villiers, his twin brother Casper, Patrick Lawson and Danny De Toit, went looking for what was making money on the early web. The two honest answers were travel and adult content, and since they were not going to sell the latter to their parents, they chose travel. The plan was a lastminute.com style service pushing 50 percent discounts on low-cost airline seats. It broke on a simple fact: the average person read email only every third day, and the offers expired in 24 hours. Drawing on his exposure to pagers in optometry, de Villiers wondered whether the deals could be delivered by text message instead. After three months searching AltaVista and Excite for a way to get information from a website to a mobile phone in real time, the team found that the capability simply did not exist. They tore up the business plan and built it.

The first SMS gateway and the problem of giving it away free

Clickatell launched its SMS interface in November 2000, claiming the title of the first SMS gateway in the world. The proof of concept was as garage-built as any Silicon Valley origin story: old Nokia phones, wires and cables, and a radio in the background whose signal was constantly interrupted by the da-da-da of outgoing messages, until the team gave up on music altogether. Within weeks they were the largest sender of mobile text messages on the African continent.

The distribution model was radical and, de Villiers concedes, reckless. Any website could copy and paste four lines of code onto its HTML page and send a text message anywhere in the world, for free. Golf sites booked tee-off times with it; others used it for critical notifications. The team did not know how people would use it, only that more than 67,000 websites had embedded the code and that the monthly SMS bill to the carriers was mounting with no revenue behind it. "We had no idea how we were going to pay for them," he said. What the flood of adoption did prove, before the founders even had the vocabulary for it, was product market fit. It was the arrival of their angel investors that forced the question of monetisation.

Raising capital: Sand Hill Road, Sequoia, and the WhatsApp connection

Capital was the hard part, and South Africa in the early 2000s could not supply it. The founders bootstrapped on roughly $9,000 between the four of them, with de Villiers selling his car to help fund it. Local private equity came attached to EBITDA-positive goals the founders did not fully understand and later regretted signing. Real venture capital, they concluded, lived in the US.

The first attempt was brutal. De Villiers drove up and down Sand Hill Road handing out around 45 printed business plans on mini discs and received, by his count, zero replies. The breakthrough came through acquiring a Silicon Valley company, Multimode, in a stock transaction, which gave Clickatell a San Mateo footprint and, with it, access to US capital. By then the business was worth $11 million and profitable, built off an initial angel investment of about $60,000.

Networks did the rest. Clickatell ended up with three term sheets and chose Sequoia Capital, partly because its term sheet was a straightforward two-pager. The partner was Roelof Botha, an accomplished Afrikaans South African whose grandfather had been close to de Villiers's father, though de Villiers had not known Botha existed. The often-told link to WhatsApp, he was careful to correct, was not a Sequoia introduction. WhatsApp's founders Jan Koum and Brian Acton had been building on Clickatell's platform and API years before they started WhatsApp, because Clickatell was the first SMS platform in the market. A shared investor simply let the two companies elevate the conversation later.

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Why South Africa keeps losing its founders

De Villiers is unusually candid that building from South Africa nearly cost him the company, and that the structural barriers remain. All three of his US term sheets came with the same condition: the investment would only happen in a Delaware corporation, because no US firm would try to understand South African law. Navigating exchange control regulations, some of them remnants of apartheid-era isolation policy, to secure a special dispensation took 18 months and more than $800,000 in legal fees. "It's certainly not a scalable proposition for South African founders," he said.

The consequence, he argues, is that Nigeria and Kenya are now leapfrogging South Africa on exits and raising capital abroad, and that talented founders are decamping to the UK and the Netherlands, taking their job and knowledge creation with them. His response has been to put time into policy reform and ecosystem building through Simodisa, Collective X and Endeavor, prompted by an encounter with Bill Gates who told him not to wait until he was successful to have impact. There is a note of hope: Clickatell is working with the Reserve Bank and SARS on a "permissible loop" pilot to let companies raise international funding without leaving, and de Villiers openly invited founders weighing a move abroad to reach out to him through Colin.

The regret: how playing by the rules handed Twilio the market

Asked what he would tell his younger self, de Villiers named a single regret: he would take more risk. Clickatell was first to many things, one-time pins over SMS, and later the first payments inside WhatsApp and the first KYC banking on the world's largest chat platform. Its infrastructure carried the Hudson River rescue coordination on the day of Captain Sully's landing and let people text Barack Obama in real time from the streets of Accra for the US State Department.

Then in late 2007 and early 2008, the US regulator ruled that Clickatell could not let any business send a text message, because consumers were paying to receive them. Clickatell backed down. That caution, he says, opened the space for Twilio, which was more brazen with the regulator, had less to lose, and took the market share and ran. "We grew up in conservative households as South Africans," he said. "We are kind of rules-based and rules followers." He would still follow the rules, but he wishes the younger team had been bolder.

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When should a founder approach a VC, and should they protect the idea?

Stop worrying about protecting the idea, de Villiers advises, because it only slows you down and most VCs will not sign an NDA anyway. He points to his own experience: within a week of Clickatell becoming a US corporation in 2007, a lawsuit arrived alleging patent infringement on mobile SMS, which the company beat only because it could prove it had been commercially in market two years before the patent filing. Being first in market, not paperwork, was the protection. On timing, he says it is a question of market maturity and homework. South African VCs increasingly want revenue evidence, which does not help a founder without product market fit, so ask firms directly whether they invest at your stage before wasting time, and turn to angel networks if you are very early.

Is Clickatell going to list, and does valuation even matter?

Clickatell is listing material, de Villiers confirmed, and the company came within about four weeks of an IPO before market conditions shifted and it chose to raise privately instead. But he personally has no wish to be a public company CEO if he can help it. His sharper warning is about the "valuation treadmill." Reported valuations, he argues, hide the terms that actually matter: the liquidation preferences of two, three or four times, and performance warrants, that make many unicorn cap tables gnarly. He says he knows about 16 unicorn founders personally and describes their lives as complex and often dark, with investors breathing down their necks. Clickatell, last valued at around $500 million as a near-unicorn, took reasonable valuations at reasonable terms so it could get on with selling real products to clients such as Discovery, Absa, Standard Bank, Fly Safair and Pick n Pay.

What actually keeps Pieter de Villiers up at night?

It is not the competition, de Villiers told the audience, but "the intern and the spreadsheet," the CIO or CTO who assumes messaging infrastructure is easy and decides to build it in-house. In some markets there is a strong pull for middle managers to make their next career jump on an AI or conversational commerce project, so a vendor can invest heavily in thought leadership only to watch the client attempt to build it themselves. The opportunity often comes back once those projects fail, but the cycle is long and a lot of business falls by the wayside in the meantime. The deeper lesson, tied to Clickatell's "why" of giving people back time, is that a 25-year-old technology company survives by staying curious and by having investors who did not rip the carpet out on an eight-year venture cycle.