April 16, 2013

SMS-First Startups


I recently wrote about email-first startups and the benefits of building and launching a product on this medium. The post generated a lot of discussion as others contributed their opinions and examples of startups founded with this approach.

As a follow-up, I’d like to explore SMS. The name itself sounds archaic - short messaging service - but SMS still has its place in the world. In fact, I argue that SMS is one of the most underutilized, under-appreciated mediums today.

SMS-first startups exhibit some of the same benefits as email-first startups - easier to build than a complete web or mobile app using services like Twilio; “fakeable” as asynchronous communication enables creators to delay building actual functionality; ubiquitous and accessible to anyone with a phone (even for the large population of non-smartphone users); and forces focus on a specific use case due to the medium’s inherent constraints.

But SMS products also have their own unique advantages, enabling startups to:

  • Cut through the noise - the average smartphone user in the U.S. has 41 apps installed[1]. As everyone else adds to the flood of push notifications and email, SMS startups have an opportunity to directly reach their users. When a user’s pockets buzzes, they respond as SMS is largely used to communicate with close friends and family.
  • Connect more personally - the mobile phone is arguably the most personal consumer electronic device[2] and arguably SMS is its most intimate form of communication. SMS startups have a direct line to their users and opportunity to build a more personal connection than other communication mediums.
  • Bypass bandwidth and latency issues - the simplicity of SMS reduces the amount of data that is sent and received, decreasing user’s concerns of surpassing telecom bandwidth caps. Additionally, users don’t have an expectation of immediacy minimizing the need to build robust, responsive infrastructure.
  • Reliably identify users - users rarely change their phone number, making it arguably the most permanent identifier available. SMS startups build a permanent connection with their users and unlike email, phone numbers are difficult to fake, reducing fraudulent and duplicate registrations.
  • Own their network - SMS is an open protocol and doesn’t rely on a single platform provider. Startups building a network using phone numbers have a direct connection to their users and social graph, reducing dependency on third party platforms such as Facebook which is becoming increasingly unpredictable as it bans potentially competitive applications[3].
  • Surprise users with rich media - most smartphones support video and images via SMS (well, technically MMS). The web, mobile apps, and even email is full of imagery and animation that we’ve come to expect it; however, SMS is not as it’s largely used for text messaging. SMS startups have an opportunity to delight their users with unexpected, rich media.[4]
  • Reach a broad audience - nearly everyone with a phone, smartphone or not, has access and knows how to use SMS. Simplicity engenders adoption.

Here are a few examples of SMS-first startups:

  • Twttr - there’s a reason Twitter is limited to 140 characters per tweet. The service was born on SMS, a protocol restricted to 160 characters (the remaining characters are reserved for usernames). This limitation elegantly restricted the service to short-form messages, shaping the design of the service. Twitter arguably would not be what it is today without this constraint.
  • ChaCha - users simply send a question via SMS to ChaCha (242242) and a human responds with an answer. ChaCha was able to relatively quickly build and validate its offering using manual processes without investing in sophisticated natural languages processing (NLP) or other costly technical functions.
  • Dodgeball - this early location-based service enabled users to text their current location and in return, the service would respond with nearby friends. Dodgeball cleverly used SMS to connect people together in a pre-smartphone era.
  • GroupMe - the group messaging service was born at the Techcrunch Hackathon and within 24 hours the team built a working prototype using SMS, garnering a fair amount of positive attention that eventually led to the formation GroupMe as we know it today.[5]
  • Venmo - this peer-to-peer payment service launched lean, leveraging SMS as a means to communicate and authenticate the exchange of money between friends with a simple text (e.g. “pay Bobby $3 for the delicious coffee”).[6]

SMS certainly isn’t without its own challenges. Not everyone can send and receive SMS messages free of charge (that’s one of the primary drivers of the explosion of messaging apps). SMS startups have limited analytics, reducing their insight into the behavior (e.g. when did they view the message?) and context (e.g. what platform are they on?) of the user. Of course, the medium itself is very limiting and while this can be a good thing as I’ve argued, it also inhibits the capabilities of the product.

Despite these limitations, don’t discount SMS as an invalid strategy. Consider how your startup might use SMS to validate your product quickly and build something truly unique.

New innovations and platforms create new possibilities, often concealing opportunities hidden within familiar technologies. As everyone else looks in the other direction, consider how “old” technology can be used in your product.

P.S. if you enjoyed this post, you should follow me on Twitter (@rrhoover).


[1] According to a Nielson study in May, 2012, the average smartphone user has 41 apps installed on their device. I’m willing to go out on a limb and say this has increased since then and is likely much higher for early technology adopters (a common audience for startups).

[2] In 2008 at the Future of Mobile Conference, Tomi Ahonen reported that
91% of mobile phone owners left their phone within 3 feet 24/7. Crazy but this isn’t far from my own behavior.

[3] MessageMe is the latest startup to receive Facebook’s
almighty ban hammer due to its competitive threat.

MyFaceWhen, Cinemagram, and others leverage SMS to share animated GIFs. What’s more awesome than receiving an unexpected animated GIF from a friend?

[5] GroupMe co-founder, Jared Hecht,
shares his story of how the service came to be.

[6] GigaOm
describes Venmo in its early days.

Special thanks to
Stefano Bernardi and Alex Godin for providing feedback on early versions of this post.

More Writing by Ryan