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From student entrepreneurs to billion-rand business

Published 3 months ago
By BrandVoice Partner

Launching from a garage 18 years ago, SMSPortal has grown into a billion-rand business, remaining ahead by focusing on what it does best – delivering SMS marketing to consumers.

It is something of a stereotype that successful entrepreneurs tend to launch their businesses from their garage, but even stereotypes have a grain of truth in them. This has certainly been the case for Charles Stretch and James Pearce, co-founders of SMSPortal. Some 18 years ago, the two then-university students launched a side business from a place where cars are traditionally parked in order to earn some extra cash, only to find they had stumbled onto a concept that could be turned into a career.

Today, SMSPortal has over 10 000 customers across the continent and beyond, is the largest business of its kind in Africa, and has an annual turnover in excess of R1 billion.

Pearce explains that the company was born out of another business the two initially launched, Blue World.co.za. At the time, he explains, digital cameras had recently hit the market, and the idea was to visit clubs and festivals, take photos of those attending and then post these to a website. People who had been at the event were then required to register and log onto the site to view their photos. “What this created for us was a substantial database of people and the areas where they lived. We soon had pubs, clubs, functions and festivals contacting us, asking us to assist in marketing their event to our database. After considering several approaches, we decided on SMS as the most suitable tool,” he notes.

“SMS was the logical channel of choice, so we built a rudimentary SMS gateway that could load sets of numbers and the message the client wanted, could be disseminated to people in the area and we began sending these out on behalf of our new clients.”

This was the foundation for SMSPortal, although plenty of work was still required to make it the huge enterprise it is today. The business needed to work on not only better dissemination of the message, but also the speed at which messages could be pushed through. For comparison, Pearce points out that in the beginning, the company was processing around one SMS every eight seconds, compared to the present, where the company can send between three and four thousand messages a second.

Once they had made these improvements, they began to diversify away from the clubs that had been their bread and butter, moving into a range of new fields, including lead generation, debt collection, banking and marketing for a number of blue-chip organisations and stock exchange companies – anyone, he says, that had a message they needed to get out at scale.

Keys to success

Stretch suggests that one of the keys to their success was that, as two naive students, they approached their challenges with the simple mantra of putting one foot in front of the other. “We had no massive capital behind us, no board of directors or business advisors to assist. We merely took it a step at a time and as we found we needed more for the business – whether it was new premises, staff or dedicated servers – we worked on acquiring it.”

“We had the distinct advantage of having come straight out of university, so we had no dependents or any of the other additional expenses people find themselves facing in later life. Our overheads were low and our cost base was non-existent, so we could afford to take bigger risks,” he points out.

This approach to the business has enabled it to achieve steady, organic growth throughout the years, although Stretch adds that since this was essentially their first real job, their

business credentials are effectively ‘qualified by experience’. “We had no real plan to take over the world originally, we just saw a demand for this service and decided to do what we could to meet it. Obviously, we have learned some hard lessons along way, and made our mistakes, but overall, the journey has been great.”

Pearce adds that SMSPortal has achieved the kind of growth now that the next step is to begin looking beyond SA. The company does go where its clients require, he says, growing with them into new territories, but adds that not every other region has a network infrastructure that is as advanced or comprehensive as SA’s, which adds to the complexity.

Asked about the advent of services like Whatsapp and whether these pose a threat to their business model, he suggests not. This is because these services tend to focus on person-to-person messaging, which is not the space in which SMSPortal plays.

“We are an app-to-peer (A2P) messaging service, ideal for commercial entities that need to disseminate millions of messages quickly. SMS is the only ubiquitous technology for this purpose that doesn’t require the installation of an app, it doesn’t need data connectivity, or Wi-Fi, or even a smart phone, and it remains carrier-agnostic. If you have a number, regardless of the phone you use, we can communicate with you – I think this is the key reason our business continues to grow,” notes Pearce.

Staying ahead of the pack

Stretch suggests that the partners thrive on success and went into the business with a view to being successful and providing a good service. “For us it has always been about passion for the business – the money has followed, but it was never the central goal.”

“Of course, we aim to remain successful, and our goal is to continue to be the number one SMS aggregator in Africa. This is actually more difficult than becoming the number one in your field, because of course, the tallest tree gets the most wind and is the one everyone wants to cut down to size. Nonetheless, we continue to have fun as we work to retain this position.”

He adds that one of the keys to their ongoing success has been retaining a tight focus on what they do well. They have always remained focused on their core business, without being greatly concerned about what the competition does. He explains that although they are not ignorant as to what their rivals are doing, they never undertake kneejerk responses to something new the competition does.

“By keeping focused and believing in our business we have risen to top,” states Pearce, “rather than buying into the hype narrative that is so often prevalent in the ICT space. We also know there are plenty of legs in our business – internationally, some competitors who play in this space are listed on the New York or London stock exchanges, so we still have a long way to go to emulate this level of success. Nonetheless, we have achieved continuous growth for 18 years, simply because we have attended to our bird in the hand, rather than chasing the two in the bush.”

So what words of advice do they have for entrepreneurs who are only now looking to launch a business?

The two are adamant about one thing: “Always focus on your passion. Don’t do it only for the money. People can see when you are passionate, and that is an attractive quality to customers. If you enjoy what you do and give 110%, you are more likely to succeed than if you are simply trying to get rich. Besides, you can have a ton of money in the bank and still be miserable if you are doing something you don’t really love – and that’s no way to live life!”

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