Here, Robert Gerstmann explains why the CLX founders left their well-paid jobs to pursue an unlikely dream.
If you think about it, there’s a lot ‘wrong’ with SMS. Messages are limited by length: just 160 characters – and that includes numbers, symbols and spaces. You can’t include any rich media. No group chat. The list goes on.
Ten years ago, these limitations were compounded by the neglect of quality by the main aggregators of the time. Messages went missing. Reporting was appalling – when there was any. The industry’s sole focus was low cost.
So it’s small wonder that hardly anyone believed in text as a communications channel for enterprises. Analysts dismissed it. Aggregators primarily saw text as a tool for reverse billing, i.e. premium SMS, the billing of content via SMS, for simple entertainment content. Even operators failed to see the potential.
The six founders of CLX knew this very well. We’d seen it first-hand. Johan Hedberg, Kjell Arvidsson, Kristian Männik, Henrik Sandell and Björn Zethraeus and I had all worked in the messaging space – for mobile operators and for aggregators like Ericsson IPX and Mblox.
But what united us was this: we saw past the limitations of SMS and how it was being used at the time.
We didn’t just think the channel was unfairly overlooked. We believed it could be the greatest communications channel the world had ever seen.
Why? Lots of reasons. But essentially this: ubiquity.
SMS was then, and is now, the only messaging channel on every mobile phone in the world. You can’t overestimate the importance of that. It more than makes up for any perceived limitations.
We could see that ten years ago. And we were all frustrated that no one else could. So that’s why we started CLX.
A decade later, the fantastic utility of SMS seems obvious. Today, we deliver 25 billion messages a year on behalf of enterprises as diverse as Uber, Microsoft and Air Canada. These businesses would scarcely be able to function without texts that remind customers about appointments, confirm deliveries, send authentication pass codes and convey marketing messages.
But in 2008, we weren’t thinking about any of this. Our focus for CLX was not to create new use cases, but merely to clean up a broken messaging ecosystem.
Frankly, it was a cowboy market. To repeat: connectivity was poor; messages went missing; reporting was almost non-existent. We believed we could fix this. We knew that between us, we had the market understanding, technical know-how and the industry connections to build something better.
It helped that we had no real competition. As said in 2008, the main messaging aggregators worked primarily with the new breed of mobile value-added services (VAS) providers and focused on premium SMS. The aggregators helped VAS companies employ text to market to customers, and to reverse-bill them for paid content.
As a result, the aggregators didn’t focus on messaging quality or reliability.
We knew this from personal experience. Having worked at IPX and Mblox, and we believed they had the capability to be better at connectivity. But they had other priorities. It was the same inside most operators. Many did not even offer the full feature set the restricted SMS standard provides for enterprises to use and kept price points far higher than the market was willing to pay. The ecosystem just didn’t support the people trying to make enterprise messaging a viable long-term business.
Therefore, we saw an opportunity to be an aggregator to the aggregators. Essentially, we were saying to them: don’t bother buying connectivity from operators – buy it from us instead.
Of course, to make this model work, our service had to be cheaper and more reliable for the aggregators than the ’do it yourself’ option. To achieve this we needed a handful of very reliable and commercially insightful operator partners. In addition, building on a solid messaging platform, something most companies at the time did not have, was a must. As such ours was a simple procurement business. We had to buy connectivity and also sell it, so we needed good relationships on both sides powered by strong technology.
Happily, the team had the right balance of skills to realize this. Kjell and Björn had excellent operator contacts, while Johan, Kristian and I had great customer relationships and product knowledge. Finally, Henrik was brilliant at technology and operations. It was the perfect team for what we were trying to do.
All we had to do was find the courage to pursue it. That moment came in 2008, just when the world’s economic order was collapsing.
For more on CLX’s terrible launch timing, please read the post entitled ‘The Beginning‘.
First published by CLX Communications