We Interviewed an Online Business Owner who has Invested his Future In South Africa

Jethro Solomon • April 25, 2020


A bit about Michael Osterloh & HOSTAFRICA

Originally from Germany, Mr Osterloh relocated to South Africa and founded HOSTAFRICA, a company providing web hosting solutions including Cloud VPS & Dedicated servers. Prior to this, he was the Managing Director of one of the largest providers of virtual servers in Germany.

HOSTAFRICA has since grown considerably, acquiring several local hosting companies including VPS.co.za, CLOUD.co.za and Amplehosting.

Why we wanted the interview

South Africa, known for suffering an exodus of skilled professionals for greener pastures, is not the first place South African's think of investing their money. While many South Africans were dreaming of departing, Mr Osterloh instead saw an opportunity. We wanted to see South Africa from his perspective and find out what we could learn from his experience.

We reached out to Mr Osterloh and were pleasantly surprised when he replied within 15 minutes and agreed to answer our questions.


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Q: In brief, how and why did you come to start a web hosting business in South Africa?

A: Mid or long term I think Africa is the place to be. There is lots of opportunity and potential here. Africa is underrated, especially in Europe and the USA. Finally, of course, moving from Germany to South Africa is an adventure for me and my family.

Q: It would seem that HostAfrica has expanded greatly, with several acquisitions of local hosting companies. How large has the team gotten, and does everyone work from a central location?

A: Indeed, we've acquired four hosting companies in the last 7 months. Our team has grown to 20 people. Fortunately, the power of the 21st Century affords us the luxury of having a distributed workforce based around South Africa, as well as overseas in Lithuania and Germany.

Q: What were the biggest hurdles that you had to overcome in the first year or two of business in South Africa?

A: Business here is not completely different from the rest of the world. However, there are some challenges when it comes to the mentality of the people here. It's difficult to find both skilled and motivated employees. This took us quite a while to overcome, but now I am happy with our team.

Moreover, securing funds to invest is another considerable challenge, for all entrepreneurs. I have been very fortunate that I'm not in on this alone. We are a few partners that invested together and brought in great entrepreneurial spirit and knowledge.

Q: Can you describe the challenges you face today as an online business that you feel are unique to Africa or South Africa?

A: Loadshedding is a huge inconvenience and added effort to overcome that is unique to Africa. Businesses in developed countries don't have to battle just to get power and get online. This leads me to the next challenge: Consistent, stable and fast internet speeds is something that is a luxury in Africa, not a basic necessity as in developed countries. Worse still, it's not even guaranteed for businesses who pay for the fastest speeds. We all suffer as a result in Africa.

Lastly, a lot of people personally do not have regular access to the internet, and unsurprisingly many have no “tech savvy”, so simple processes such as online payments, that are effortless and streamlined in developed countries, are an added challenge here; not to mention time consuming.

Q: What, if any, offline marketing channels do you use? Do you see value in offline marketing for online businesses?

A: We attend conferences and expos like the annual MyBroadband Cloud Conference. These are huge opportunities for brand exposure by word of mouth, networking as well as learning from other industry executives. Other than that, we don't make use of offline marketing. It's quite expensive and reach is limited, as well as hard to track reach and retention.

Q: Let's talk about current issues. How is your business impacted by the SARS-CoV2 (COVID-19) pandemic?

A: Firstly, we had to disperse our Cape Town office and send everyone to work from home. Even for an online business this posed some challenges in terms of getting employees set up at home with secure internet connections and office equipment to maintain our high level of support. Teamwork collaboration and communication is more difficult virtually, it's much quicker to talk to a colleague face-to-face than to type to them. Not to mention the team spirit of being together in the office and working towards something together is just not the same online, it's easy to lose touch on a human level. But there are ways to stay on top of these changes and we are fortunate that we can let our employees work from home.

More importantly, we see now more than ever individuals and businesses depend on web hosting and internet companies like ours to access the world through the internet and trade online. Subsequently, there's been a large increase in demand for our services, especially dedicated Server Hosting, as people try to get online or get their businesses in the cloud to boost performance. In contrast, however, some of our clients have fallen on hard times and will need to temporarily or permanently close their businesses/pursuits. Of course, anything that affects our customers affects us too. In order to lighten the burden on them we have put some scheduled price increases on hold and are running promotions in the hopes that we can weather this together.

Q: Do you feel being an online business gives you a leg-up at a time of social distancing and uncertainty?

A: Most definitely. The fact that we are able to operate entirely online has been a saving grace for us. We already have the business infrastructure set up on our cloud servers and being a cloud hosting company, this is what we do best. Additionally, our employees all have the technical expertise to troubleshoot their own technical issues that arise when working from home, a challenge many businesses find themselves facing for the first time.

However, being online doesn't mean we are immune to the hardships that COVID-19 presents. We depend on our customers and if they suffer, so do we.

Q: If someone wanted to take their business online, what advice do you have for them in their first year of business?

A: Concentrate on your core products and clients. Don't try to address everything from the starting line and at once. This creates too much complexity. Keep things simple. Try to understand the needs of your customers and address it. Lastly, look to industry leaders and learn from their successes, it's not wrong to copy the best. Normally there is space for many players.

Some Key Take Aways

Africa has potential

While doing business in South Africa, and Africa does pose some unique challenges, there is plenty of unrealised potential. As South African's we judge our country and continent harshly. Do yourself a favour, and read this article detailing why our thought processes regarding our nations future may be off-target, as written by a neurologist.

The future is online - but we are not quite there yet

As Mr Osterloh mentioned, South African users are not always tech-savvy, and may not have fast internet. Therefore, when doing business online, we need to ensure the systems we put in place are very easy to use and light on bandwidth. Something as trivial as putting a video on the front page of your website needs to be carefully considered.

Find your Niche

I cannot agree more with the words "Try to understand the needs of your customers and address it". By speaking to your customers, you can gain greater insight into the pain points they need a remedy for. What do they like about your product? What don't they like about your product? Even if you have a handful of customers, asking these questions is the quickest shortcut to producing a product or service that people need and want.