Two credit cards lead to success
TWO men, two credit cards and an idea, untried anywhere, does not, on the face of it, sound like a solid formula on which to build an international telecommunications business, but that is how Melbourne-based MessageMedia started in 2000.
Today it has offices in the US and Britain as well as its headquarters in Bourke Street. the company employs more than 30 people and has a turnover approaching $13 million a year, generated by the transmission of SMS text messages for government departments, utilities, banks, insurance companies and other corporations that need to communicate quickly and reliably with anyone, from an individual to thousands.
MessageMedia co-founder, chief executive and sole owner Grant Rule says the original concept came from his friend Justin Lau. ''In those days the only SMS messages were sent by telcos to notify customers that they had voicemail and by younger people sending texts,'' he said.
Then, SMS was possible only within a single network, not as now, across the whole global infrastructure. ''But Justin saw that if you could send to all networks you got a compelling proposition for businesses to reach people in an instant way that until then had not been conceived of,'' he says.
''We hired some uni students to write the code and struggled along, not really knowing how to build a business or to sell or market, and we didn't have any real money, either. The whole thing was funded off a couple of credit cards.''
The company got some key customers, including Coca-Cola, which started a trickle of revenue; enough to attract a tiny group of angel investors in 2002. ''But it was touch and go,'' Rule says. ''By the time the investors came on board in May 2002 our credit cards were maxed out and we didn't have a cent.''
How close they were to disaster hit Rule a week before the investors, themselves new to funding anything, let alone an IT
start-up, stumped up the funds. He and some friends were heading for a weekend in Sorrento.
''I went to the ATM to get some money, and there wasn't a cent in the account,'' he says. ''That was it. The end. If the investors had not come good we would have been finished.''
The investors did not know then how close to the financial abyss MessageMedia had come. ''I told them later and we are still good friends, although I bought them out in 2009 and I now own the company outright,'' Rule says.
Today MessageMedia buys time on mobile network channels across Europe, the US and Australia at wholesale rates and provides the system and the services to distribute their client companies' messages.
''The SMS business is exploding,'' Rule says. ''Our volume has gone up nearly 80 per cent in the past 18 months and revenue similarly. We have been in the Deloitte Top 50 list for the past five years and we are confident we will be in again this year.
''It is old technology, but the business has grown rapidly because companies are embracing it. We have 8000 clients and that number is growing rapidly.
Rule believes the potential for growth is huge, but not in Asia. SMS rates in China and other Asian countries are generally so low there is nothing there for a wholesaler. But in Australia, Europe and to a smaller
but still large extent in the US, where other technologies compete with SMS, the outlook is good.
''The average Australian might get two or three SMS messages (of the kind we handle) a month,'' he says. ''If you look at (our client list) - libraries, video stores, the ATO, banks and companies - I think that average could be 10 or 20; not marketing messages but information delivered to individual handsets. It might be a hair appointment reminder or notice that something ordered from a shop has arrived.''