There’s no such thing as a free lunch right? There’s got to be a catch somewhere within a so-called free service? Think of Facebook, Google, and Twitter. These are all based on “freeconomics”. They are free tools. These services are subsidised by advertising and that model has, obviously, proved extremely successful. Why not apply the same model to mobile messaging? Launched last year, FSMS.co.za is doing just that.
Memeburn had a chat with FSMS CEO Daniel Schwartzkopff to find out more about the start-up and their future plans.
How did you come up with the idea for FSMS?
Daniel: After looking at the mobile industry, there was a clear need for lowering the cost of communication for South Africans as SMS and call charges are quite exorbitant. The fusion of advertising revenue to offer a free service to the end user provides a winning formula, similar to how Google and Facebook operate. It’s our way of re-distributing the advertising wealth to make communication free for the end user.
Give us some background into the difficulty of birthing of the start-up.
Daniel: It was an incredibly arduous, oft testing, journey to get to where we are today. The difficulty of developing the concept into a working prototype pales in comparison to the struggle of getting your name out there. As an entrepreneur you need to be prepared to make endless calls and arrange countless meetings – initially it may feel like you’re only being met with rejection but criticism allows you to evolve your product into what may end up being a resounding success.
How did you manage to raise capital and get investors interested?
Daniel: Initially I raised capital from an angel investor, Johnny Graaff, whom I had contact with via a previous business that I owned (an SEO/SEM/Social Media consultancy). After rapid growth in our initial launch phase and some impressive press, such as being featured on iAfrica, News24 and MyBroadband, we managed to initiate talks between ourselves and several venture capital firms.
Eventually we decided to pursue a relationship with Alan Knott Craig Jr.’s firm, World of Avatar (WoA) as they provided the necessary infrastructure to scale our product competitively. WoA is focused primarily on mobile products for the developing world and so we found exceptional synergy with our service and what they already had to offer. Alan proceeded to purchase a 50% stake in our business.
What advice can you give to potential entrepreneurs?
Daniel: The advice I would give to people who are interested in pursuing a similar venture would be to keep trying and never give up – there are times you might even question your conviction, and whether it will all be worth it. You never want to wake up in twenty years time and wonder if it all could have worked out if you tried harder or made some sacrifices. If your idea fails and you have pursued it to the utmost of your ability, you have gained a wealth of experience that will be a catalyst to your success in the future.
Tell us how FSMS has been received by the public in terms of uptake?
Daniel: FSMS has been wonderfully received by the public. We receive many e-mails daily thanking us for the service we provide, and we are equally grateful to the community for spreading the word.
We have just over 100 000 registered users and are growing incredibly quickly. We have roughly 5 million pageviews on our website every month. It is just awesome to know that there are that many people out there that use our service and find it helpful.
What is your current business model?
Daniel: Currently we provide text-based advertisements on the bottom of SMSes based on user demographics and keywords present in the SMSes. Campaigns are fully trackable and we have the ability to develop mobile sites for the advertiser’s campaigns. These can be clicked through to directly from the SMS ads on most mobile phones. We have a fully functional advertiser back-end which could be likened to Google’s AdWords.
We are also developing our FSMS Premium service, which removes all advertising from the website and the SMSes, for a small fee – we are working on R5 for a week’s access. This will give the user 20 full 160 character SMSes per day. The equivalent cost during peak times for similar providers equates to about R120 – this is a massive saving for the end user. We also provide bulk SMS services at the lowest rates in South Africa.
How has the model been received by potential advertisers?
Daniel: Yes, some of the major advertisers we have serviced include, but are not limited to : Selfmed, Outsurance, Old Mutual, Savanna Dry and SportsBet.
I see you’ve moved into local rates for international calls? Please explain this new model too.
Daniel: We have developed a VOIP (Voice Over IP) network that allows you to place internet calls from your mobile phone instead of through your computer. When you dial the access numbers, you are connecting to a Voice Over IP International Gateway. From there your call is placed over the internet in the same way as Skype and other VOIP services. When your call reaches the country you are dialing, we convert it back over to the local phone system, and it rings the dialed number just like a regular phone call. It’s just another way FSMS is trying to bring down the cost of communication for South Africans who do not have access to computers or special software.
Which platforms and technology are you using?
Daniel: We have a mobisite accessible from the regular fsms.co.za domain that automatically resizes the site to look its best based on what phone and browser you are using. All FSMS technology in use has been developed in-house.
How have the Service Providers reacted to your model?
Daniel: We have not received much of a response from the providers as of yet, since we may have been operating under the radar. I personally do not think we will see a major negative response regardless – anyone who wants to try take down a free community service would be seen as quite the tyrant and it would be incredibly bad publicity for them. We might just see a reduction in provider SMS costs, which would be great for everyone.
There were some initial issues with lag to certain providers like MTN. Has this been resolved?
Daniel: There was a temporary capacity issue but it has now been resolved completely.
What other platforms are you going to use, specifically with reference to mobile apps.
Daniel: We have completed development for iPhone and Android apps and are in a testing phase. These will use Push notifications when sending/receiving messages between other smartphones so your daily free SMSes will be unlimited if your contacts also have the application installed.
What are you doing in terms of marketing?
Daniel: We have ran brief Facebook campaigns and they have been quite effective. Currently we are running a promotion on 5FM, that will culminate with daily giveaways of iPads on the Fresh drive starting on the 4th of April.
Future plans, investors, global aspirations?
Daniel: If all goes well we plan to consolidate our operational base in South Africa and expand to provide reduced cost, and free if possible, telecommunications to the rest of the African continent.