Fortumo, an Estonian developer of mobile phone services, is planning a penetration into Asia, targeting China, Malaysia, Indonesia, Taiwan and other countries. In order to achieve success there, a Taiwanese sales team has been recruited to work in Tartu.

Fortumo – create your own SMS service in five minutes and earn money! – is one of the few new media companies in Estonia (mobile plus Internet) which has understood one of the basic formulae for global business success: sell, sell, sell. You may have the best software, service or solution in the world, but if people do not know about it and are not buying it, you might as well let it collect dust at home.

Took the bull by the horns

However, Fortumo took the bull by the horns and employed a competent regional manager for Asia to work at the company’s Tartu office – the Taiwanese, Po Han Chang. He used to be in charge of the Asian operation (ring tones, phone wallpapers and other similar items of entertainment) for the German group, Fox Mobile (formerly known as Yamba), and is now “fighting” for the Estonian cause at Fortumo.

“There are few companies who can say that they have done zero sales work, yet have users and cash flowing in from every door and window,” says Fortumo’s executive director, Martin Koppel (pictured right). “We, at least, cannot sit and idly hope that we will become the next Twitter, YouTube or Facebook.” Each of these has achieved their popularity relatively fast and without much effort.

Following the example of Skype

If an Estonian company claims that they wish to repeat the success of Skype, there are those who would laugh at the idea. But with its structure and corporate culture, Skype is a great role model for many ambitious Estonian companies, Fortumo included. When Skype soared to the telecommunications heaven several years ago, the media talked a lot about its founders, Niklas Zennström and Janus Friis, and also about the Estonian development team which was headed by Toivo Annus.

But many of the key people behind the company’s success were never brought into the limelight. For example, there is creative director Malthe Sigurdsson who was behind Skype’s image and user interface, or Taavet Hinrikus who paved the way for Skype in Asia.

Now, Po Han Chang has the job of paving the way for Fortumo in the same region. He is the key person behind the scenes. This man, who now lives in Tartu, has nothing but praise for the company: “This is one of the most creative business models in the field of web and mobile services, as far as I know. This job is an opportunity that would have been hard to reject.” It was not difficult for Po Han to move to Estonia, seeing as he is a true cosmopolitan, as most sales gurus are today in the world of technology.

Po Han has a fellow countryman in Tartu, someone who is also realising Fortumo’s Asian ambitions. This is Yichun Liu (pictured left), and her expertise covers marketing and customer relations.

A unique service in each country

Fortumo is an Internet portal which allows any person or company to create and launch their own SMS service, without needing any special skills. It could be an SMS poll, an SMS consumer campaign, an SMS chat or an SMS payment to be used for making a profit without any start-up and fixed costs.

The service creator, ie. the customer, will receive between forty to sixty percent of the turnover of their SMS business, depending on the country. As a rule, Fortumo will get five percent and the local network operator will get the rest. For example, if a company creates a web game, it can use Fortumo to charge the participants for playing. If players are required to send a 1o EEK (less than 1 USD) text message to be able to play, up to six kroons of this amount will be transferred to the game’s creator.

Koppel says that different countries have a different understanding, different practices and different legislation when it comes to SMS business. Fortumo cannot use the same model of operation everywhere. The big countries, India and China, have especially strict requirements, but luckily Fortumo has a man who knows these countries well. That man is Po Han.

“Asia is a tough nut to crack but its advantage is the huge population and the fact that people there like texting,” explains Koppel. For example, in Malaysia, a mobile phone user sends twenty text messages a day on average!

A completely new business model for China

Po Han says that Fortumo’s business model for Asia is innovatively unique because so far SMS services have only been available to large companies. Instead, in Fortumo’s vision, its target group includes smaller companies and ordinary people. “It is definitely possible to do business in China. Around 7,000 text messages a day could be sent there via our services,” says Koppel. “The greatest amount of energy must be spent on educating users. Also, the local market regulations might change overnight.”

Something completely normal in Europe might be strictly prohibited in Asia, such as all kinds of adult services – utterly prohibited! Gambling and lottery – prohibited! In some countries (such as Indonesia) the use of SMS for payments is also prohibited. Po Han knows all of this. We would hate to imagine what would happen if some crafty Chinese person were to use Fortumo to create a service which attempted to discredit the Communist Party. Koppel says that China has subjected even SMS services to severe censorship which require stronger monitoring from the company in order that they don’t get their fingers burnt.

As for India, Fortumo must still fine-tune their plans for the region. The problem is that Indian mobile network operators charge seventy to eighty percent of the cost of a text message. After Fortumo has charged its five percent, there is barely anything left for the customer or service creator. What would the sales pitch be then?

People jump at the chance

On the other hand, India has an extremely vast market and the people readily embrace SMS services. “In Scandinavia, people are slow to start an SMS business, but in Eastern Europe and India particularly, people jump at the chance,” says Koppel.

It appears that it is not at all easy to recruit specialists from abroad into Estonian companies, even though we boast of the export of IT services and an open economy. For years, Skype has hinted at the difficulties which specialists coming from outside the European Union face when applying for a residence and work permit in Estonia. Fortumo was once even asked to meet officials from the Security Police.

Koppel explains that they had found an Indian trainee through the AIESEC student organisation. The aim was to train him so that he could later help launch Fortumo’s business in India and Pakistan. “When we wished to renew his residence permit, the Security Police called us and invited us over for coffee. They enquired why he should stay in Estonia, whether we have checked his background and whether or not he might pose a threat to national security,” adds Koppel.

All the red tape no longer surprises Fortumo. To secure a residence permit for Po Han, the company had to prove that they would not have found a similarly qualified specialist in the European Union.

Target for 2009: at least ten more countries

This year, Fortumo wants to make its services available in at least ten more countries. In addition to the “riskier” market of Asia, the company will focus on Europe.

The Estonians have also US market in mind, which they have planned to target more thoroughly in the long run. According to Koppel, the US market has its own acute problem in the form of strict regulations.

Under US regulations, each service must correspond to a separate short code (a short-format number). Elsewhere, Fortumo’s services are identified with keywords. “If we had 30,000 customers in the USA, we would need 30,000 short codes, something that would require us to change our service,” explains Koppel. “We are also apprehensive of possible court cases in USA: a business with an open platform, something that can be achieved in Europe, is not possible there. All it would take is one malevolent customer to do some shady business and we would be blacklisted in the entire country.” On the other hand, seeing the amount of time Americans spend on the Internet and in social networking, the US market seems to have endless potential.

Where will Fortumo be in five years’ time? “We have no idea. Five years is an eternity in our line of business,” says Koppel.

More than 70,000 Fortumo services

Fortumo helps people to create services in Estonia, Latvia, Lithuania, Poland, Romania, Bulgaria, Serbia, Croatia, Czech Republic, Finland, Sweden, Norway, Denmark, UK, Ireland, Germany, Spain, Portugal, Netherlands, Belgium Switzerland, China, Mayalisa, Taiwan and Australia.

As of September, there were more than 23,000 service providers who had used Fortumo to create more than 70,000 SMS services in fourteen countries. The number of text messages increases by more than ten percent each month.

Fortumo’s main customers are web-based social, information, entertainment and business environments and Internet portals, but also radio stations, local newspapers and advertising agencies. Signing up to Fortumo is free.
Five to seven percent of the users are active and earn money on their services. Around 70% of the services have been created out of interest in order to test the platform.

In 2004, Fortumo launched a “My M-Business” service in Estonia which won first place in the Estonian national contest at the 2005 World Summit Awards, in the e-Business category. In 2007, Mobi Solutions transferred the “My M-Business” service to a separate company called Fortumo, in order to create better preconditions for the export of the service. In 2007, Fortumo simultaneously launched its services in seven Baltic and Scandinavian countries.

In 2009, Fortumo was chosen as one of the world’s twenty most exciting mobile service start-ups at the Mobile Monday Peer Awards.

The fortumo.com portal is operated by Fortumo, which is a subsidiary of Mobi Solutions, a leading Estonian provider of mobile value added services. The key shareholders in Mobi Solutions are Linnar Viik, Rain Rannu, Veiko Raime, Veljo Otsason, Janek Pello and Lauri Kinkar.

 

How can you earn money with Fortumo? from Toivo Tänavsuu on Vimeo.