Deal Radar 2009: SMS GupShup

SMS GupShup is a social messaging platform launched in 2004, at a time when SMS was only used for person-to-person (P2P) messaging and content players were selling ringtones and wallpapers to mobile subscribers.

SMS Gupshup, founded by Beerud Sheth and Rakesh Mathur, goes beyond one-to-one messaging to social messaging. People can use the consumer platform to share and connect with friends and fans easily over their mobile phone. They can publish content on the go (in the form of micro-blogs) and follow topics of interest, all via SMS. They can create their own groups and engage with celebrities via fan communities. Further, they can send SMS to group members (whether hundreds or thousands) free. Businesses can use SMS GupShup’s mobile marketing solution to advertise their services and engage with customers. Brands interact with their consumers, thereby building loyalty, referrals, and revenues.

SMS Gup—based in both Mumbai, India and Cupertino, California—is free for consumers. For businesses, ad rates are per impression or response, depending on the nature of the advertising campaign. For enterprise messaging, the company offers competitive cost-per-message pricing. Premium content is priced on an à la carte or per-package basis.

SMS GupShup splits its total available market into three sections by revenue source: mobile marketing revenue from advertising; content sales from consumers; and SMS revenue from carriers. The company estimates that the first market, mobile marketing revenue from advertising is a $3 billion market worldwide (about $50 million in India), with rapid growth expected over the next few years. The second market, content sales from consumers, is estimated at $45 billion worldwide and about $1 billion in India, and the third market, SMS revenue from carriers, worldwide is a $90 billion market (roughly $1 billion in India) while social messaging is just taking off.

The company feels that SMS Channels, recently launched by Google Labs, are similar in some respects to SMS GupShup. On the mobile marketing side, the company sometimes competes with SMA aggregators, content providers, and other mobile ad marketplaces. However, SMS GupShup feels that content providers are usually limited to downloadable items such as ringtones, wallpapers, and games or allow users to subscribe to certain content channels (generated by the service provider). They do not enable users to generate and consume content the way SMS GupShup does. And although SMS aggregators provide bulk SMS services for SMEs and corporates and some might offer direct advertising, SMS GupShup follows a strict permission-based no-spam policy for advertising.

SMS GupShup ended 2007 with 1 million users, 2008 with 14 million and currently has over 22 million users sharing through 1 million groups. The company claims that its traffic is trending towards 400 million SMSes per month with corporates and SMEs using GupShup to engage with their employees, partners and customers. The SMS traffic from enterprises is past 50 million SMSes per month. The company’s customers include Indian Premiere League (IPL) cricket teams (Delhi Daredevils, Deccan Chargers and Rajasthan Royals), UTI Mutual Funds, Nokia, ITC, Titan Watches, and Pepsi among others.

The company got its start at the Society for Innovation and Entrepreneurship (SINE) incubator at the Indian Institute of Technology (IIT) Bombay and has raised around $25 million over two rounds of funding. Its most recent round of $12 million was co-led by Charles River Ventures and Helion Ventures. The company is currently on a strong revenue trajectory with around $200,000 in revenue per month and project triple-digit quarter-over-quarter growth in Q3. While SMS GupShup is not profitable yet, it expects to break even in the first half of next year.

Suggested Reading:
*Deal Radar 2008: Twitter Gaining Momentum
*Deal Radar 2009: Chaupaati
*Forbes Column 2009: India’s Innovation Gap

This segment is a part in the series : Deal Radar 2009