From The Reject Shop reject to global business baron, Carl Krumins is a prime example of how to seize an opportunity to disrupt a marketplace and deliver real value for customers.
The very beginning
Carl began his working life as many young people do: in retail. However, he quickly realised that the industry was just not for him.
“The first time that I ever worked for anybody else was The Reject Shop and I was 16,” he recalls.
“It lasted two weeks: I got fired for not cleaning the floor properly!”
So he set out to develop his own business, SMSGlobal. From those humble beginnings, SMSGlobal now operates in 213 countries and ranks prominent brands including Facebook, Google, Samsung, Emirates and the AFL among its clients.
Disruption from the outset
In essence, SMSGlobal is a tech company that allows large corporations to engage with both internal and external stakeholders via text messaging.
“Telstra was wanting to charge 25 cents for an SMS, and with a lot less common denominator globally [than other modes of communication] – it needs a SIM card,” explains Carl.
“So I built an SMS gateway in about 2007, and I started that out by racking up 10 credit cards on the initial development.”
Around 12 months later Carl had a working product on his hands, and the business has been expanding rapidly ever since.
“SMS messaging can apply to any industry,” Carl says.
“So, for example, with Emirates, for every passenger that flies on every flight in every country, they get an SMS before they board the plane saying 'Your flight is this, so check in online'.”
However, as Carl explains, the applications of SMS are far-reaching.
“For every match and every club, the AFL will send out an SMS to their 20 or 30,000 members saying 'Hey, don't forget to come to our game this week'. It's cheaper than a telephone call, cheaper than a stamp in the mail, and people get the message instantly,” he explains.
The technology can also be used to communicate urgent messages internally.
“Going back to Emirates, they send messages flat out to their crew staff on the ground – not to their customers, but their ops people, saying 'This plane is delayed for whatever reason, it's going to be rescheduled to a different gate'.”
As well as the immediate nature of SMS communication, and the cost benefits, the technology is also more effective, according to Carl.
“Compare it to other verticals like email, and people often don't get the message, it goes to their junk folder and you've got one chance for them to read it or hit delete. Whereas on your phone, 98 per cent of the people are going to read that message,” he says.
For not only a new business but an entirely new service, establishing credibility can be a difficult feat. Carl admits that there has been a degree of customer education involved in promoting the business benefits of his service offering, as well as getting them to sign up with his company.
“I took a hit on my initial sale price – buy in bulk and save model – so once I knew that I had the volumes up, then my cost price would go down,” says Carl.
“Telstra was charging 25 cents, and there was only two or three other [companies] targeting corporate customers and banks and the like, and they were charging about 20 cents a message.
“So in my initial sell price … we offered SMS at a flat rate of anywhere between 5 and 10 cents straight off the bat to our customers.”
This was followed by local and international trade shows to get both his brand and his service in front of prospective customers.
“Some of [our] challenges are competitors, but because they are late entrants to the game, they don't have that buying power that we have to go head-to-head.”
Adding scale through corporate clients
According to Carl, SMSGlobal has since been able to scale rapidly by being the first to identify an opportunity for big companies to engage directly and cost-effectively with their extensive databases of contacts. And each client success increases the business' word of mouth.
“Emirates fly planes – they don't want to have to deal with Telstra and Optus and all the other carriers in the world,” explains Carl.
“We set up and deal with them, and then for every passenger on every flight in every country ... they will get an SMS on their phone. It's something that I see is good for another 10 years; growth is exponentially compounding year on year on year. There's a lot of countries we can expand in, especially emerging markets as well.”
Carl encourages others with a winning business idea to get it out to market as soon as possible, to cement your position and head off possible competitors.
“It's actually been quite smooth sailing recently,” he says.
“Some of [our] challenges are competitors, but because they are late entrants to the game, they don't have that buying power that we have to go head-to-head on a tender or something like that.”
Business name: SMSGlobal
Location: Melbourne, with satellite offices in Dubai and New York
Employees: Approximately 60, with most based in Australia
Too many SMEs are making this mistake
By Adam Joy
Taking digitisation out of the ‘too hard’ basket for SMEs
By Jason Brouwers
The insanity of consumer expectations
By Jason Dooris