Rizwan Kassim: There’s also a term in telco called breakage. If you sell 500 minutes to someone at two cents a minute, they don’t necessarily use all 500 minutes. That helps with forward pricing. We spent a lot of time on what sort of message communicated best with first-generation Indians. We used people we knew. This was the time when A/B testing was considered new technology.
Sramana Mitra: Why did you decide to move on from this business or put this business on lower gear? It sounds like you switched gears to something else.
Rizwan Kassim: In the 2010 to 2011 time-frame, we were doing well. We had some ancillary businesses. By definition, someone who creates a company wants to go on and create another company. We all had this itch to try to do something more. Our head of marketing theorized, “We’re getting around $6 from these people but we’re only finding them through online avenues. By the time we hit 2010, the online avenues will saturate. How do we continue to grow?”
We then started looking into this concept of MVNO. At that time, calling cards in the US was a $2.5 billion industry. They’re notoriously low quality. There’re all sorts of fees attached to it. People would walk into a store and put down $5 and get a piece of paper that they need to scratch. They dial a phone number, dial a PIN number, and then dial the number they wanted to call. If you called India at that time from Verizon or Sprint, it would cost you 10 times than what you could get from a calling card. What if someone tied all that together? We probably spent a year just trying to meet the right people and get introduced at the right times.
MVNO seems like a very attractive business because you’re able to wholesale someone else’s network. It took quite a while in order to get the attention of the right people for a deal. Largely, it was both impatience with the current business and recognizing that we could be getting $5 to $6 dollars for India calling in a market that was now racing towards less and less margin, or we could provide better services.
Sramana Mitra: What was the solution that you came up with? What was going to be the next level of offer that you wanted to put out there?
Rizwan Kassim: It’s the company called Ultra Mobile. We met the right people at our carrier partner. We started to onboard and build out a platform. Instead of selling calling cards, we sell SIM cards to people through various distribution channels. Those SIM cards would have unlimited talk and text and some amount of data. If anyone called international, it would route back to us. At our launching, we had $29. You would get unlimited talk and text as well as some calling to certain countries.
This segment is part 4 in the series : Bootstrapping to $100 Million Plus: Ultra Mobile Chief Strategy Officer Rizwan Kassim
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