Vakow, Mumbai based mobile startup, it seems is looking for a prospective buyer. The startup raised seed fund from Rediff and looks 
like their attempt to raise more funds hasn’t been very successful.
And as some sources tell us, they are looking for a buyer.
While this may/may not be true, this does speaks of challenges of running a sms based business – the more users you have, the more you bleed. And monetization is still a distant dream.
If you were running a similar service (say you send out 0.5mn sms a month), what would you do? How will you monetize? What kind of services will you build?
I wonder how MyToday manages all these free services. Vakow service has been disrupted since some time and we users are looking for such great services. I don’t see any good ways of monetization for services like this. In India, the sms based ad market may grow when mobile internet users increase in number..
The cost of sending an sms is still too high and cannot be discounted by the sparse sms ads inventory in the market. The idea of monetizing sms traffic is probably too early for the market. It needs some cushion like mytoday/smsgupshup.
>If you were running a similar service (say you send out 0.5mn sms a month), what would you do?
Sometimes, things don’t happen as we would have liked to…and that is OK. Be glad that we had the opportunity to chase something we believed in. Learn what needs to be learnt and move on…
-Mahesh
Celebrating Life…
Some more factors to support that vakow founders are looking for an exit :
“You can NOT send SMSes to your followers.
We know that we’ve been quiet for very long. We sincerely apologise and will be writing to you all very soon. Thanks. – Vakow! Team ”
above message is displayed on their website since long time (2-3 months).
Last post by RG (ceo of vakow) was made about a month ago.. check http://www.vakow.com/user/rahulg/ and by Amit U was made about 2 months ago.. http://www.vakow.com/user/amitu/
SMSgupshup getting $11mn funding, entry of players like Google ( google sms channel) in similar space and their inability to raise funds can also be a reason.
The economics of an SMS based mass market business are such that it is tough to scale. SMS is one of the most expensive media to transfer data. Even @ 5 ps per SMS and assuming 10SMS/kb you send data at the rate of Rs 500/mb. To put this in perspective , if you were to pay at the same rate for your monthly internet broadband bill you will end up paying Rs 5 lacs (if you downloaded 1G) per month.
That’s why SMS is a great way to send messages when volumes are low. But unfortunately most monetization strategies tend to focus on selling enterprises solutions to business with large perceived SMS outgo needs. I say perceived because the moment a business needs to send SMS at such volumes it will realize its not viable operationally. The only other way to monetize then is to sell to the long tail – small customers with low volume requirements who can pay Rs500/mb to send updates to customers or employees. But then this means a startup like Vakow has to spread thin and build a sales force.. not a great thing for a startup
Ofcourse there is advertising. Even if you get to sell an ad for 30ps (almost Rs 30 CPM) you need to send ads on atleast 1 in 6 messages you transmitted via the network( assume 5 ps/sms) to breakeven. I doubt how much targeting one can do on a network like Vakow .
I don’t deny the utility of SMS but I don’t think mass market SMS networks are the way to monetize. SMS is useful as an auxiliary medium for information delivery. Startups should tap such niches where customers value data they get and go after such markets
I had blogged about various ways on how one can monetize services like vakow/smsgupshup
For details : http://sushrutbidwai.com/2008/10/evangelism-how-to-mobile-platforms-as-case-study/
Though there are challenges to overcome in those methods as well but for a start those can be employed… Problem is people are not very open for non-traditional non entertainment ways of monetizing a service which is really sad.