Pitching to be Pakistan’s ‘National’ messenger

• The indigenous version of WhatsApp

In next to no time, the country’s first home-grown over-the-top (OTT) instant messaging app Tello Talk has gained quite a traction, high retention and engagement rates. Counting on its vast experience in Pakistan’s mobile value-added services industry, the company’s leadership is optimistic about becoming the household name in OTT like regional peers Hike of India and WeChat of China whose familiarity of their local markets earned them phenomenal success.

KARACHI: Kavin Bharti Mittal, the 29-year-old scion of Indian Telecom tycoon Sunil Mittal, had placed an early bet on the future of over-the-top (OTT) instant messaging apps when he launched Hike in 2012 – three years after WhatsApp was founded.

Today, Hike is the most popular local OTT service in India with a user base of more than 100 million, second only to the global giant WhatsApp that has 200 million, or about a fifth of its total users based in the South Asian nation.

India’s tech industry is much ahead of Pakistan and has 10 unicorns (companies valued at more than $1billion) including Hike, while the latter has yet to produce one. Despite many dissimilarities, political differences and territory and water resources claim that made them engage in wars since the partition in 1947, the cultural similarities between the two countries often mean what happens in that market usually follows suit this side of the border.

Mittal’s bet on Hike was a resounding success mainly because of the app’s familiarity and know-how of the local market. There are signs of something similar happening in Pakistan – or this is at least the impression one gets from carefully studying the business model and strategy of Tello Talk, Pakistan’s first home-growth OTT app that aspires to become the country’s national messenger.

There are signs of something similar happening in Pakistan – or this is at least the impression one gets from carefully studying the business model and strategy of Tello Talk, Pakistan’s first home-growth OTT app that aspires to become the country’s national messenger.

Four months into the launch, the app is close to 100,000 installs already that going by the management’s claims have come without a single ad dollar spent. Tello, a wordplay on Telephone and Hello, has a four-plus (4.3) rating on Play Store. What makes the startup optimistic is the ‘high’ retention and engagement rates it has been able to fetch thus far.

“Our retention rate is over 70 per cent, our users log in to the app four to five times a day and have one-minute sessions on average,” said Tello Talk CEO Shahbaz Jamote, who is also country manager for Tilism Technologies, the parent company of Tello Talk that previously ran M3 Technologies, the pioneers of mobile value-added services in the country.

These retention and engagement rates are quite impressive, especially because it is all organic, Jamote excitingly told Profit in an interview at his office in Karachi — the app hasn’t even added the voice calling feature yet.

Can Tello become what Hike is to India or WeChat is to China? Jamote is confident, it can.

Before we talk about what is driving the CEO’s optimism, it is important to understand what makes Hike India’s national messenger – especially because Tello seems to be working on a similar strategy.

Made with love

“Made with love in India” was the tagline with which Hike was launched, but the app did more than just a catchy phrase to prove that.

Hike is best known for its 15,000 stickers across a wide range of local dialect that allows users to share images including those of Indian festival greetings to Bollywood celebrities and cricketers and even Game of Thrones characters.

According to a report by CNNTech, Hike users send each other over 300 million stickers a day, in addition to the 40 billion text messages shared on the platform. Many people use Hike’s stickers to communicate instead of messaging around with clunky local-language keyboards, the report said.

One can find similar stickers on Tello. Some of these include classics like Mustafa Qureshi’s ‘Nawaan Aya Ain Soneyaa…’ while others are inspired by famous social media memes like that of controversial show host Amir Liaquat Hussain’s ‘Kaisa Diyaa? Hain?’. Though small in number, the company says it is constantly developing more localised stickers to increase its range.

If numbers from Hike are any indication, its consumers use the app mainly for instant messaging, often through sharing these stickers rather than typing tedious messages. That also explains why Tello is not yet bothered about introducing voice calls and rather focused on improving existing features – a strategy that seems to be inspired by Hike.

“One of the biggest things we tackled very early on was localisation,” Mittal told CNNTech in a recent interview. The Tello’s team is doing exactly that.

“We have done the difficult task by hosting it completely in Pakistan,” Jomote said. He, however, added that local hosting is very expensive. Tello’s infrastructure is based in Pakistan, which is why costs of storage, servers, firewall, security, and bandwidth and data centres are borne by the company itself – unlike most startups who pay for hosting their apps on cloud-based services abroad.

Going local, all the way

“But by doing that [local hosting] we have become regulator compliant, we are a licensee of Pakistan Telecommunication Authority,” Jamote says. Asked if customer’s data is secured, he said that they are using standard encryption and their content is encrypted, even the company can’t read users’ chats. The local hosting, he said, makes them available for audit by the regulator who can easily find whether Tello’s infrastructure is secured.

The local hosting also reduces the risk of suspension or a possible ban by the government, which recently warned official circles to avoid using WhatsApp and other OTT services, which sends customers data to remote servers listed abroad.

Before we talk about what is driving the CEO’s optimism, it is important to understand what makes Hike India’s national messenger – especially because Tello seems to be working on a similar strategy.

“Our data will not leave Pakistan and that also satisfies the critical requirement of banks,” Jamote said counting advantages of local hosting – banks have traditionally been their major clientele in the mobile value-added services (MVAS) segment. If the government seeks decryption of Tello’s data, it may have to comply or face banning, but Jamote believes that scenario is highly unlikely.

Hike and WeChat may have been their inspirations, but Tello is heavily counting on its experience in the MVAS area to turn the product into the success.

Tello’s core team consists of 10 people with 13 years of experience in mobile value-added services industry, the CEO said, adding, they pioneered SMS-based short code technology, which was introduced in 2004 – an aeon ago in the Nokia 3310 era.

“We were B2B mainly and operated as M3 Technologies,” Jamote said of their leadership, which served 100 brands and 23 financial institutions in the past — Tilism Technologies’ founder and Chairman Arshad Ashraf is a Stanford alumnus with vast experience in Silicon Valley.

Tello is taking an early bet since there is no other locally-developed OTT service available in the country, but it comes at a time when WhatsApp is already a known name and Veon, the parent company of Pakistan’s largest cellular company Jazz, has just launched its own OTT service in the country. In other words, making a name for it may not be easy.

“The fact that Veon has launched its OTT app in Pakistan endorses one thing: we are on the right path,” Jamote said of the future of instant messaging apps in Pakistan.

The market is still in its nascent stages and there is room for growth for everyone, the CEO said referring to the 2015 US Mobile App Report, which says that smartphone owners use up to three OTT apps on their devices. “We believe many more OTT players will come, some will close, others will thrive; only experience building will differentiate path because the user will dictate what it wants,” Jamote said. “WhatsApp will remain there, but we would like to be the national messenger,” he added.

However, the CEO believes they have a competitive advantage over international apps because their people have served this market for over a decade and ‘know exactly what it wants’.

“Just look at the success of homegrown wallet services EasyPaisa and JazzCash,” Jamote said, adding that they are successful because they know what the market wants. “We know this market, and understand its needs and critical needs of sophisticated customers like banking sector.”

Giving the example of Japan’s LINE, he said that they came to Pakistan, spent huge money here and built 7 million users but then they faded away. Reason? They did not know the market dynamics and tried to replicate Japanese app in the Pakistani market. China’s WeChat, on the other hand, was smart not to enter Indian market so they bought stakes in Hike instead, he added.

Explaining, the CEO said international apps have limitations. For example, if you send a message to more than 250 people on WhatsApp, it blocks you thinking it is a spam. Even the broadcast option, which can send unlimited messages, has limitations, for it doesn’t meet critical needs of brands, especially banks. Unlike shortcodes, which are given by Pakistan Telecommunication Authority, the credibility of the message on WhatsApp remains in doubt even if it is coming from a legitimate source. Secondly, it doesn’t offer customisation of service to brands’ specific needs.

For example if Coke Studio wants its music to be played when user receives a promotional message or alert, you don’t have that option in WhatsApp, the CEO said — Tello enables this and users have access to Coke Studio seasons 7 through 10, in addition, to live promotions and alerts from the brand and they charge Coca-Cola for that.

Tello’s infrastructure is based in Pakistan, which is why costs of storage, servers, firewall, security, bandwidth and data centres are borne by the company itself – unlike most startups who pay for hosting their apps on cloud-based services abroad.

Besides live brand promotions, the app has other channels whereby users can receive news alerts within the app and aims to tap lucrative clients like banking sector by offering a range of options within the app. The purpose is to ensure that users don’t have to download a separate app for their bank, a different one for keeping track of their children’s school work and using browsers or other apps for news alerts, Jamote said. All of this will be in this app, he added.

He said that they have an exciting pipeline of features to be added later, but refused to share the details.

The numbers of broadband subscriptions in the country have skyrocketed in the last three years to almost 50 million, up from under 4 million before the April 2014 auction of licenses for 3G and 4G services. However, the pace of digitisation remains much slower as there is a dearth of local content to be consumed by this growing market. Similarly, on the e-commerce front, 95 per cent of total transactions are still processed in cash. So far, the country hasn’t really seen tech startups making it big like their counterparts in India, China, Europe and America.

Jamote sees it as an opportunity.

“This is an exciting time to be in tech startups, this nation has just begun coming into the digital world and our market is very open for experiments. With time, it will only grow,” the CEO said responding to a question about the growth potential for OTT apps.

Based on current infrastructure, Tello can host 2 million users with ease, but Jamote says they are constantly improving their infrastructure. The company has received seven-figure seed funding (in dollar terms) from Silicon Valley-based investors, he said without disclosing the exact amount.

“We will reach out to new users after two months and touch the 1-2 million milestones in four months,” the CEO said. “Currently, we are focused on retaining users rather than more downloads,” he said and added, “Providing existing users with improved experience is a priority, bringing new users is last on my list.”