SA instant messaging startup Notafy wants to kill SMS for good

Whatsapp, Facebook Messenger and WeChat have become the norm for mobile communication. At least that’s the case for the majority of consumers. Most banks, insurance companies, telecoms and other large service providers are still sticking with an outdated SMS technology to communicate with millions of people on a daily basis.

SMS technology, according to B2C instant messaging startup Notafy, is a bad thing. Not only is SMS costly, its clunky infrastructure makes for a terrible user experience in our smartphone world. That’s not to mention security threats.

If Notafy has its way, though, that is all about to change.

Founded by entrepreneurs Andrew Cook and Andrew Burns, the Johannesburg-based instant messaging startup is behind an app that hopes to bring service providers out of the Dark Ages and into the modern world.

Ventureburn recently caught up with company CEO Andrew Cook following the startup’s trip to Sibos in Singapore in October, where it pitched alongside 19 other fintech companies.

Since launching in late 2013, Notafy has boarded 20 customers (including the University of South Africa), sending roughly eight million messages a month. On top of that Cook is also behind the successful research firm, Smoke Customer Care Solutions.

In order to understand how Cook and his company got to where it is today, though, let’s go back to the beginning.

Born an entrepreneur

For Cook, being an entrepreneur all started back in primary school, when he was renting out magazines to other kids (he didn’t want to say which kind, but he did say that he got into trouble).

After school, he started up a bluetooth advertising business in Johannesburg, which gave customers information on sales when they walked into specific stores via their smartphones. “That was my first real business,” he said, adding that while it was turning a good couple of grand per month, it ended up being more of a “headache”.

The juice just wasn’t worth the squeeze, and he called it quits.

In between these ventures and at some point “owning a music equipment store,” Cook got his accounting degree and ended up spending a few years at KPMG. Though the experience was invaluable, it didn’t satisfy that entrepreneurial itch. And in 2010, he founded market research company Smoke Customer Care Solutions.

Two years later, Andrew Burns joined the company’s board as technical director and Smoke went on to become one of Africa’s largest distributor of multi-channel surveys, conducting over 2.5 million surveys per month across 11 different channels. One of these channels was SMS, which is where Cook and Burns received first-hand experience in the technology’s massive inefficiencies.

Read more: Does the future of instant messaging apps lie in bulk?

The team estimates that, in the United States, around US$70-billion is being spent on business to consumer SMS messaging every year. Moreover, SMS has no customisation for users and, therefore, creates a terrible experience. The infrastructure is also less secure — messages are not encrypted and can be intercepted and hacked.

The pair then bootstrapped Notafy and has since dedicated a “few million rand” to the business.

Growing through sales, not equity

Customers download the app onto their smartphones which would enable them to manage and customise their messages. Service providers, on the other hand, cut down on costs. So if an SMS costs a bank 15 cents, Notafy messages would cost it five cents instead. If the customer doesn’t have the app installed, the message will just default to SMS.

Notafy is currently targeting the insurance industry, financial services, security, as well as IT companies. Though Cook said it just needs that “first major client” that would help snowball its traction.

“That’s the funny thing. The argument is simple: cut down your costs by 30% to 80%. But some people don’t like change,” Cook noted, adding that some clients have been hesitant of the idea that customers need to install a third-party app.

But regardless of whether the customers have the app on their phone, Notafy is still able to offer cheaper rates than the usual bulk SMS services. “That’s our big play at the moment. We make sure our customers save costs from day one,” said Cook.

Asked whether the company has considered letting clients piggyback on their infrastructure to leverage the power of instant messaging through their own apps, Cook explained that it’s important to build a brand first.

“We’ve been toying with the idea of providing our tech as a white label solution,” Cook said. “But we’ve got a lot of advice from big organisations that build billion dollar apps around the world — we all agree that you’ve got to create the brand and have your own app.”

Read more: Ubongo, Lekki Peninsula Affordable Schools named Africa’s top edupreneurs

Being based in Johannesburg has contributed a lot to Notafy’s growth. He said that while Johannesburg doesn’t have a lot of small business support, it forces startups to think outside the box. It’s a double-edged sword, he said.

“It helps that you can’t just go and sign a check — you’re forced to think outside of the box. It’s about growing your business through sales, not equity,” Cook continued.

The co-founder adds that a lot of entrepreneurs tend to use the lack of business support as an excuse. “They’re lazy. They’re not willing to do the hard yards and do the work. It’s like many are looking for a hand-out instead of getting their hands dirty.”

Having said that, though, Notafy is looking for outside funding to expand into other markets as quickly as possible, before the WeChats or Facebook Messengers enter the corporate messaging space.

“Whether corporate is going to choose to use Facebook Messenger to push notifications, I don’t think so but things can change in the future,” Cooks says. “But that’s the thing at the moment. We need to get to market. And we need to get to market fast.”