Yes! If you were one of the lucky viewers of the SMS Text News live video feed, care of our QIK channel, you’ll have seen Truphone CEO, James Tagg, answering to key questions that have been percolating around the minds of the readers at SMS Text News recently. After yesterday’s ‘has anyone got any good news‘ post, Tim from Truphone called and asked me to pop in and put some SMS Text News reader questions to James. If you’d like to know about these sorts of things when I’m doing them, get on the SMS Text News Twitter feed.
Here’s the 3 minute QIK video:
There were two burning issues you, the readers (on the basis of the questions I was sent this week), wanted me to address.
The first issue was their SIM4Travel purchase — there’s been lots of speculation that this will (perhaps obviously) lead to a GSM-led Truphone service, but no actual direct confirmation or dates. Well, no dates, but as you’ll see in the QIK video, James himself has a working WiFi/GSM integrated Truphone service on his handset. When he walks out his house, his handset switches from WiFi to his Truphone sim… and, rather smartly, since Truphone roams on all five UK networks, he is rarely without service wherever he goes. That functionality really appeals to me. If there’s cell coverage, you’ll have access. I like that single feature a lot.
The second issue is the Truphone burn rate and in particular, the amount of cash they’ve been spending on their offices. It’s been causing a lot of consternation amongst many people I’ve spoken to — disappointed, alarmed (or, in some cases, I think it’s fair to say, mild-to-green-eyed-jealousy) — at the amount of money that’s gone into fitting out the Truphone offices. The general line of thinking expressed often to me has been words to the effect, ‘if they’re spending that much on 700 pound chairs, what are they doing with the rest of the business.’ Well, we can lay this one, officially to rest. James explains in the video that they simply inherited the offices.
“If I was to look again at the issue of our offices, perhaps they simply are too nice. We hadn’t realised that by taking on these facilities, they might cause people to get the wrong idea,” says James.
He went on to explain that a bank, the previous tenants, decided to relocate their team to India after having fitted out the offices in sumptuous Â£700-per-chair style. With only 21 months left on the lease, Truphone picked it up 5,000 square feet (including all existing fittings, desks etc) at 40 quid a go. That’s about 350,000 pounds on my back-of-the-fag-packet calculations (200k/year, divided by 12, multiplied by 21 months) which equates to about Â£7,000 per person. Divide this by 21 to get the monthly cost and you’re at Â£333 per head. That is, by the way, 55% cheaper than putting every single Truphone London employee at their own desk with eOffice. So, that one can definitely be put to rest.
There’s no question Truphone are burning a lot of money, of course. They’re not running the service on hamster power and hot air. They’ve got some pretty hefty kit and, when you consider that they’ve over 100,000 live users (more on that shortly) and that they’re competing against the Vodafones of this world, well, there’s certainly a cost to doing business.
Now, to other questions I had from readers.
The recent funding…
“It took a lot longer,” James explains, “We raised Â£16.5 million — that’s good money — and it’s a hard market at the moment for funding.”
“And you recently bought Sim4travel?”
“Yes,” he says, relaxing back in his chair, “It was a very timely deal seeing as we’re coming into the travel season and we’ve got a lot of relationships with travel magazines to get the word out.”
Turns out the Sim4Travel service was, I suspect, a sweet purchase for Truphone. James was pleased to tell me that the business is often seeing growth, month-by-month of 10-40% (depending on season). Further, when he explains the three key points for purchasing the company, you can’t help but agree on the strategy.
“We bought them for three key reasons: 1) To acquire an additional revenue stream, 2) We’ve added their people to our team and 3) We can now roam on to GSM.”
Smart. James is keen to point out that through the purchase, they also acquired the infrastructure they were planning to build this year. Ergo they’ve managed to jump ahead 12 months and put their time into other efforts.
“With Truphone and Sim4Travel, we can now offer the best possible costs for making calls at home and abroad,” he says. Right. I buy that concept.
“So, to be clear,” I ask him, “I could conceivably — shortly — stop paying Vodafone 75 pounds per month for my service and swap to Truphone?”
“Yes, totally,” he confirms. Right then, well what about the rates?
I decided to direct and read out one of the questions I’d got earlier from reader, Jonathan, “Why have you moved to per-minute call fees?”
“Ah,” says James, “Well, look — we need to get an idea of call volumes so we can look toward introducing a bundle or unlimited package.”
“We won’t go through the summer without that. It will be done,” James confirms. So, look out for a bundle/unlimited package coming soon. It might be a little too much to ask for a Skype-Out-style Â£9 per month unlimited calling to one country sort of service. But Truphone have a track record of ballsy pricing options so we’ll see.
“Ok James, one imagines that the Truphone end goal is to rival the existing incumbents — Vodafone’s millions of users — for example. How are you going to make that happen? How are you going to get to the normobs?”
James clearly relishes the question as he’s in there, right away, no hesitation.
“First, by providing a SIM. Second, by providing a bundled offer through well known sales channels. For example, the ability to buy your broadband, Truphone and router all in one package. Something your mum or family member could easily purchase and start using immediately.”
Ok. I buy that too.
Right then, users. How’s it going with users?
“We use the same measurement as the mobile networks for tracking live users — that is, someone who has been live on the HLR or SIP registrar in the last quarter,” explains James.
Right. So what’s that in cold hard cash?
“That’s over 100,000 users and growing at roughly 10-20% per month.”
“Ok,” I ask, “What about downloads/SIM cards?”
James is in there with figures right-away, “We’ve shipped 245,000 SIMs, and we’ve had well over 150,000 downloads.”
“And calls to Truphone? Some users on UK networks are being charged ridiculous rates to call Truphone numbers at the moment?”
“Yes, we are…” James chooses his words carefully at this point, “Negotiating in a robust and friendly manner about the decision to price Truphone numbers out of the bundle. It’s unfair and unreasonable.”
“Ok, final question James,” I say, as the chap for his next meeting arrives, “Roaming data. The holy grail for the likes of me. Where are you on that?”
He smiles. I bet he’s already got it enabled on the Nokia E61i on his desk, “We’re trying to pull that together for both WiFi and GSM,” he explains.
James, thanks for taking the time. It’s excellent to be able to report good news!
And James, thanks for the exclusive. More on that tomorrow!