Andrew Patterson talks to Ben Northrop whose company delivers 200 mln text messages a year for enterprises via multiple channels

By Andrew Patterson

We tend to think of many smaller technology businesses these days as being recent start-ups.

But how have those businesses fared that started out life at the very beginning of the new millennium during the first wave of the tech revolution?

After all, a decade in technology is almost the equivalent of a lifetime in human terms.

A case in point is Wellington based text messaging company Run the Red.

Established in 2001 (the name comes from a particularly memorable red light moment that spawned the brand) originally as a WAP products and development business, co-founder Ben Northrop quickly caught on to the global explosion in text messaging at the time.

These days the company manages over 200 million messages per year for clients in a diverse range of sectors including telecommunications, IT, finance, government, health and education, media and entertainment located in a range of countries.

Northrop says the ability to constantly adapt to the changing nature of the market that has been a key aspect of the businesses success.

Spotting an early opportunity

“We came from an internet web development background. We were completely self-taught so my original business partner and I had a book on HTML and a computer and sitting in the corner of a friend’s office we tried to launch our own business.”

“However, we quickly realised that it wasn't going to take us where we wanted and so we began to latch on to the potential that text messaging offered from a marketing perspective.”

“Originally it was all WAP (Wireless Application Protocol) and so we presented to the local carriers about a WAP portable idea, and they told us in no uncertain terms not to worry about WAP that text messaging is going to be the next big thing.”

“I have to admit at the time I really didn’t know too much about text messaging so I went away and rewrote our business model. It was pretty early days, so at the time you couldn't text between different carriers. You couldn't text from Vodafone to Telecom, and there was certainly no big campaigns running so it presented us with a real opportunity to embrace this new offering.”

While that seems hard to believe these days; it was the America’s Cup campaign in 2001 that was to give the company its first big break.

“The Cup campaign was huge. I've still got it on the wall actually - a screen shot of the web dashboard with a million texts. So that was a big moment. Nowadays of course we're doing 220 million texts a year so it puts it into perspective about how far we’ve come in a bit over a decade.”

Change is constant

In the 12 years Run the Red has been in business it’s had to run the gauntlet of both economic change and technology advancement. But how relevant is text these days as a marketing communications channel in a world that is increasingly dominated by social media?

“We’ve certainly had to adapt the business model. In fact, we saw the changes coming a while ago. Early last year we realised peer-to-peer messaging is changing and declining globally. For the carriers themselves it’s a big issue because they’re looking at the trends and realising that texting in the future probably won’t be the cash cow it’s been in the past and they’re wondering what they’re going to do to replace those revenues."

Quickly realising its business model was being challenged in multiple ways along with the fact that the founders weren’t getting any younger and were no longer the young kids on the block initiating award winning text based campaigns it was time to go back to the drawing board.

“We realised that the best business we were doing – the clients that were most profitable and were adding the most value – were the annuity services, so the ones with an ongoing enterprise focus. So they’ve become our new focus. It was much easier to target these businesses as opposed to simply creating individual campaigns. We matched that to the micro conditions of peer-to-peer declining because of social and apps and so we changed our model to really focus on enterprise as our core customer base.”

“Enterprise messaging is still growing globally. As peer-to-peer's dropping off the big guys are still doing more messaging because it's still much cheaper and easier to use for banks, utilities and other niche providers.”

Late adopters emerge

Banks in particular have recently begun to latch on to the power of texting to provide added value services for customers reminding them of credit card payments or account balances falling below certain pre-determined levels.

Northrop says other sectors are beginning to realise the potential of text to drive customer value.

“We've been fortunate to work with some good banks over the years. They're still growing the volume but increasingly we're expanding out more into utilities as well as into the actual mobile networks themselves. We’re even tying into app developers now because we really see the future really as being multichannel delivery. So as opposed to saying text messaging's the one, or e-mail's the one it's much more a case of you may prefer this option to an email. I might like a text, someone else might want an app alert, or a phone reminder and I think companies that will really want to stay engaged with their clients will have to be able to provide all of these options, as opposed to just one.”

Run the Red caters for a variety of customers allowing campaigns to be configured based on specific needs.

“It’s our job to take the pain away. We say our most important role is to make it easy for the customer. So if you've got a service that requires a reasonably high volume of messaging - which is what we're geared up to do – then we handle all of that. We then in turn, deliver your messages through to Vodafone, Telecom, 2degrees or international gateways. We also handle the billing side, the compliance and all the regulatory issues. Then on the other side we can assist with promoting the campaign,  managing best practice, ideas, how to promote it etc, we can manage all of that as well.”

“Even for companies wanting say as few as 500 texts we have an offering for them too. It doesn't really cost a lot of money to set up these days. Most of the over the years has been in the capital to make it easy to connect. These days it’s really just a matter of scale.”

Learnings along the way

While the business has grown globally it hasn’t all been smooth sailing.

“We’ve learnt a lot along the way. I must say we've had some great adventures, learned a lot about what not to do at the same time. Like many Kiwi companies we’ve chased plenty of shiny rabbits in our time and ran out there looking for the next big thing pretty early on. In the case of our business in Brazil we sold out to our JV partner and came back and now we're doing the whole approach in a completely different way. We've put a lot of our investment back into the technology and people here, and we're growing in a much more organic and strategic way as opposed to chasing any opportunity that comes past.”

“So I guess the biggest learning has been to understand the opportunity before you go chasing it.”

“The partnership model has worked very well for us. We try to find people that have a really good model that we can assist and just make it easy for them to do what they want to do.”

Given the low barriers to entry and the dynamic nature of the tech base how aggressive is the competitive landscape?

“On the competitive side a lot of the people that originally started in this space have found their own niches along the way. You’ve got the Hyperfactory, Frond and various others and we all started off 10 years ago doing a little bit of everything, but now people have specialised into their own areas over time as it's evolved. There aren't many partners who got direct SMS connectivity to the mobile networks and you can't get that now. That's kept it rather exclusive so we're quite fortunate in that respect.”

Flexible staffing levels

Staffing numbers have varied quite considerably over the years. At its peak the business had more than 30 staff but these days its slimmed down to just a third of that total.

“From a staffing perspective we’ve tried to remain very flexible. The global crisis we all went through did make us look at our books and our whole business model in terms of keeping our overheads a lot leaner going forward which has been a great discipline for us. Now, as the business is growing again and growing quite strongly, we maintain that same approach to keeping overheads down which means we get to share the benefits with our clients.”

In a world of constant disruption Run the Red has had to also adapt its business to reflect the change in the diversity of its offerings.

“Previously we used to offer a much wider range of services than we do these days. But now the new technology stack that we're using for our gateway is really built to work with other technologies. For instance tying mobile apps on to social streams. So instead of saying: we only offer text messaging we make it really easy to partner with e-mail providers, social streams, app developers that kind of approach.”

Peering into the future

So where to from here for Run the Red?

“You'll have to keep your eyes posted on that. More of what we’re doing right now is working really well. We're really happy with how things have gone. The change in the model over the last 18 months into the enterprise space is fantastic. We've got some great clients that we're hoping to take further afield including expansion into the Asia Pacific regions, exploring new territories and places as crazy as Myanmar. Singapore, Indonesia. We’ve got plenty to keep us occupied.”

But the question has to be: will we still be texting in another decade or will that form of short message communication all be via free chat streams?

KEY FACTS