Bootstrapping to $100 Million Plus: Ultra Mobile Chief Strategy Officer Rizwan Kassim (Part 5)

Sramana Mitra: Let me try to understand this. At the end of the day, the value proposition that you were offering was international calling at affordable rates from anywhere in the world to anywhere in the world.

Rizwan Kassim: No, it would be their US cellphone service. Instead of using Verizon or AT&T, they would use Ultra as their phone service. Many of the people who are calling internationally are also first-generation immigrants. We entered a marketplace that exists already. It’s called the independent wireless channel. ABC Wireless sells a number of brands of wireless service. It’s all a prepaid business. Prepaid mobile makes up a third of US subscribers while, overseas, it’s usually 80% to 90% of revenue. It’s an anomaly in the US that people effectively get a credit account with their carriers. Typically, it’s a prepaid service. Our differentiation though was instead of offering just talk and text, you can be in the US and call overseas too. You don’t have to go and buy a card, dial a phone number, and then dial another number. You could just click, “Call my cousin in Dubai.” Effectively, we integrated two products – calling cards and phone service.

Sramana Mitra: From your US cellphone, you were getting affordable calling to multiple different countries wherever it is that you have family?

Rizwan Kassim: Exactly, as well as very low-cost service within the United States. At that time, $29 was probably one of the cheapest calling plans you could get. Our current lowest plan at $19 is still one of the lowest talk and text plan in the US.

Sramana Mitra: You launched this in 2011?

Rizwan Kassim: In 2011, we formed the company. We started doing the deals. The brand launched right in the middle of hurricane Sandy. That would have been October of 2012.

Sramana Mitra: You basically funded the launch of this company with the profits of the other business.

Rizwan Kassim: Exactly. We took a friends and family round but it was further on. When I look at companies that I look at acquiring and I do due diligence and see the cap table, it’s five pages long. I think about what a blessing it is to be able to control your own destiny and not be beholden to outside investors.

Sramana Mitra: Very much so. This is a separate company?

Rizwan Kassim: Yes, it’s called Utra Mobile.

Sramana Mitra: Talk about how the business ramped from there. The Google customer acquisition scenario is very different today right?

Rizwan Kassim: Ultra is not a Google AdWords play. It’s not even an online play. It was entirely born on the backs of distribution. We learned very rapidly how important distribution was in the cellphone marketplace because that’s how people were used to getting their cellphone service. It’s an expensive channel because you have to compensate the people who bring you the dealers. You have to compensate the dealers. It also gets your scale very quickly. We cut margin to the bare bones. If you don’t have scale, it doesn’t work.

In an MVNO business, you’re a reseller. At a core level, you’re reselling your carrier partner’s network. That cost is the largest percentage of your cost. Managing that is as important as getting subscribers. We focused on an international segment – Chinese, Indians, Brazilians. These were people who were calling home who didn’t have a cheap and effective way of calling home. We struggled with our technology and our connectivity for the first few months. The growth was substantial and far surpassed our previous business within a year.

This segment is part 5 in the series : Bootstrapping to $100 Million Plus: Ultra Mobile Chief Strategy Officer Rizwan Kassim
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