Second Time Around for a Tech Entrepreneur

by Startacus Admin

Henry Cazalet is a founder and Director of The SMS Works, a low cost and reliable SMS API for developers. He has nearly 20 years of experience in mobile and SMS marketing and is keen to help companies of all sizes reduce their business SMS bill. Henry set up his first tech business in 1999 and now is in the process of launching his second! What's changed in nearly 20 years? Henry shares all...

Second Time Around for a Tech Entrepreneur

I set up my first tech business in 1999.

I was thoroughly dispirited, working at a large oil company at the time.

It was the sort of organisation that can suck the energy from the most enthusiastic employee.

Any new idea was briefly inspected, then spat out by a platoon of grey-suited lawyers and compliances officers. 

I had to escape.

I persuaded two friends that my idea for a texting system for car dealers was worth investigating. Working in the evening and at weekends, we built a rudimentary website and texting platform that car dealers could use for texting service and MOT reminders. 

It worked, most of the time.

To sell our new service, I bought myself a pay as you go phone and started cold calling prospects from my car. (I was still working for the oil company at this point.)

Within a few months we had a dozen or so customers, paying us a modest monthly fee of £29.50 + VAT plus the costs of text messages.

We’d proved that the concept worked and we could sell it, so with a spring in my step, I handed in my notice.

13 years later in 2013, the business had 7 staff members and was highly profitable. My colleagues and I felt the need to move on to pastures new, so we sold the business to competitor who was looking to expand.

Moving on

Four years later the time felt right to set up another business.

I decided to play it safe and go back to business texting. It’s an industry I know well and the new business would stand a better chance of success than if I did something unfamiliar.

The SMS Works is now up and running. We provide a low cost and reliable SMS API for developers. We have a simple and powerful USP. Customers only pay for delivered messages, failed texts are refunded back to customers’ accounts. 

What are the main differences between launching a startup now and 1999? 

Although we’re essentially offering exactly the same service (business texting tools), the two experiences could not be more different.

The only thing that has remained the same is my mobile number. 

The biggest contrast by far has been the web technology that we now have available and how relatively easy it is to implement.

Website production now a stroll in the park

Web designers have a much easier time now. In 1999 you started with a blank screen and a basic understanding of HTML. Just getting sites to work properly on Internet Explorer required saintly patience.

Now there are countless templates that allow you to launch a great looking site for just a few dollars in an hour or so.

Tools of production becoming low cost or free

The culture of freely licensed, open source software has allowed developers to venture into technical areas that would been a major headache even just a few years ago.

The learning opportunities for developers are endless, with little difficulty in finding supportive articles and helpful forums.

There’s a spirit of collaboration that didn’t exist in 1999.

No need for hardware

In 1999 we had our own server. It buzzed reassuringly in the corner of the office until it overheated and started belching out smoke.

These days we own nothing. Everything is the cloud. We could chuck all our kit into a river and be up and running again in a couple of hours. (As long as we could remember the passwords.)

So running costs are based on how much you use a service rather than a fixed cost. You no longer have to guess what capacity you’re going to need.

And as more and more companies use cloud based services the cost is falling dramatically.

These days, things are much simpler and much cheaper.

Low bar to entry

Greater access to low-cost tools have really lowered the bar to entry for start-ups.

No longer can competition be strangled just because new entrants can’t afford the set up and running costs.

The landscape is now wide open to anyone with a great idea and a laptop.

Competition has exploded

When we set up our first company, there were probably about 8 competitors offering business SMS services. Today there are probably over 50.

Most of them have a decent product at an affordable price. 

This makes it even more important to have a genuine point of difference or you’ll struggle to get your voice heard.

Customer choice

With this expansion of suppliers, customers have become much harder to please.

Services have to fit the customer need precisely or they’ll find another supplier.

I wince when I think of what we put our customers through in those early days and appreciate their loyalty for sticking with us.

Selling is much, much tougher

SEO.

We’d never heard of it in the late 90s. We launched our website and to our amazement, people found us and became customers.

Today, most companies are producing vast quantities of content to increase their inbound link profile and their search engine positioning.

Margins are shrinking

9.5 pence + VAT.

That’s what you could expect to pay for a text credit in 1999. In 2017 we’re charging 2.9 pence with all undelivered texts recredited back to customer accounts.

Margins are miniscule which means that we are going to need to sell huge numbers of texts to achieve the same profit.

To help counter this our running costs are also much lower, so it’s not all doom and gloom.

What’s the main focus for 2018?

Customer service should remain centre-stage.

Making sure that you’re giving customers exactly what they need at a sensible price is the new mantra for start-ups in 2018.

We’re certainly relishing the challenge. I think.

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Published on: 8th December 2017