Jaxtr SMS can be bigger than Hotmail: Sabeer Bhatia

Source: The Economic Times
24 Nov, 2011, 11.58AM IST, Lison Joseph & Satish John,ET Bureau

Sabeer Bhatia, serial entrepreneur believes he’s on to the next big idea after Hotmail. Critics say none of his ideas have been hot after Hotmail, which he sold to Bill Gates Microsoft for $ 400 million dollars back in 1998. The new idea, Jaxtr SMS is an advertisement supported multi-platform mobile application that he claims will make SMS as we know it redundant as it lets users with data connection send messages to any other mobile phone – domestic and international – free.

Bhatia who spends most of his time in silicon valley, deflects all questions pertaining to his other ventures, such as Live Documents and Arzoo, which are yet to taste success. Jaxtr is growing “virally” claims Bhatia, an effusive marketer offering free android based Micromax phones to journalists to “enable” them check out the Jaxtr app. He also shares a few ideas about how he would have run Hotmail differently, in an interview with ET . Excerpts:

So what is the big announcement?We’ve developed an application that runs on all the mobile phone platforms – iPhone, Blackberry, Android, Windows, Java– and once you download this application you can send free text messages to any other mobile phone in the world. So we think it’s pretty revolutionary because world over people spend $200 billion to send text messages. Now this application will make it completely free. We did a beta launch a month ago, and in a short span of one month it has covered 200 countries already.When did this idea come about?

About an year ago. September last year. My wife who had an iPhone wanted to switch back to Blackberry and I asked her why and she explained that my sister and I could do BB messaging and that’s a lot cheaper than sending smses. So I started discussing possibilities with Yogesh, the Jaxtr co-founder and we eventually came up with this.

Lot of Indian companies accrue sizeable revenues from smses. Is it disruptive? And you say this would be a threat to the blackberry messenger?

Yes. It will make it completely irrelevant. It has a limitation, that it is only Blackberry to Blackberry. You tell me, would you buy a scooter that takes you from your home to just your uncle’s home? No, I would want something that takes me from my house to any friends house. In Jaxtr, I can send anybody in this world a free text message. It is a disruptive technology. You do require a data connection. Operators might lose some revenue on SMS but they’ll make it up in data revenue as people have to buy data plan to send text messages.

How many subscribers do you have now?

We’ve got hundreds of thousand subscribers now. We’re getting anywhere around 10,000 subscribers every day.

Is it comparable with hotmail?

It is very comparable to the experience of hotmail because when I reached out the first few days we got fifty to hundred hotmail subscribers and it took us months to get to where we were. With Jaxtr, we got there in few weeks. All we did was to put it up in the app store of the iphone, the android and just word of mouth. The first day we got hundred subscribers and it is increasing every day. We are now adding 10,000 a day. It is a hotmail like idea.

What is the revenue model?Revenue model will be two fold. One will be contextual advertising. Within the application itself we put in an ad, based on the context of the message. The second is services. While the basic texting will be free, if you want to do an MMS or video file, advanced pictures or have all your text messages archived, we’ll charge something extra. So how much data will be used for sending messages?

Actually, very miniscule from a data-usage perspective. Look at it this way, what are we sending. We are sending a 160 character message, with a little bit of over head.

So one Kilobyte per message?

Since you are getting very technical, let me put it this way. Every carrier (telecom operator) has a minimum limit for data transmission and we would be well below even that. I can’t disclose beyond that for competition reasons.

Is this something that you see yourself staying invested in or scale up and then let other investors take over like you did with Hotmail?

This is something that we would like to take all the way to the end. There are five billion mobile users and this is exciting.

A year down the line, say you have 300 million subscribers and an Airtel or Vodafone want to talk to you about buying out, would you look at that option?

Sure. I mean we are all business men, right? We will definitely look at that to see how they can help us, how we can help them.

The first deal, Hotmail, the start to finish that was the biggest success but you have found it difficult to replicate that success?

No. It is not difficult. Just that it takes that long. The timing is just right. The Jaxtr sms will be as big if not bigger than hotmail. Only one and half billion internet connected personal computers in the world but there are five billion phones. Every body has a phone. We are really excited. It is similar to the hotmail story. Hotmail was about free email. This is free texting. We are disrupting the world by giving people free texting. It is all about time. I was fortunate about hotmail. The timing was just right and it took off. We’ve been working hard and it is all culminating. We are working on many interesting telecom products but all of them are on hold because this is such an incredible once in a life-time opportunity.

Would you have done anything differently with Hotmail?

One is I would have created features that Facebook had early on. Hotmail kind of missed that boat. Then what Facebook did with universal sign on using Facebook credentials, Why didn’t Hotmail think of it and do it themselves? So those are some of the things. Hotmail is just a division in Microsoft.

How is the funding for Jaxtr?

So far I have been funding it and we’ve been growing like crazy. We will close a bigger round from the venture capital fraternity, mostly in the US. They are waiting to see the response post the formal launch today. We are open to participating with funding partners here too, but so far the interest have been coming from Silicon Valley.

How much have you invested so far?So far, I have invested in the millions. I can’t disclose the exact amount because I don’t want our competition to know. But it is a significant amount.There is a view that SMS itself will become redundant with other modes of communication. If you look at actual data, SMS traffic is actually going up and up. SMS revenues is going up. SMS revenues are poised to cross $210 billion dollars and is expected to grow to $300 billion over next 2-3 years. Email came and people said that’s going to go away when instant messaging became popular. It hasn’t. We don’t think text message is going to go away. It is the behavioral aspect. Indian government has restricted bulk smses. We comply with all the laws. We wont allow people to send bulk smses or spam. We are not a spam company.

The US Post is going bankrupt and in nine months if the government doesn’t infuse more cash, it will die. Did you spark it several years ago with Hotmail?

They will start downsizing. We all sparked it in some way. The internet did, the ability to send email.

There are lot of documents that need signature. we all need receipts confirming receipt of mail. We all need personalized mails. Postal service is useful in building communities around it. It turns out that all businesses that build around post offices do well because people come to post offices to buy stamps, collect passport services. It builds foot traffic for all the other businesses. It should not be viewed as a profit center as what the US government is trying to do.

Coming back to Hotmail, are you happy with how it evolved?

Not really. I would have done a few things differently. Hotmail was a bit slow in terms of coming out with more features and its evolution. That is why it allowed the likes of Gmail to overtake by offering more features and storage. As in anycase, if it is run by an entrepreneur, it would be different. Just like Steve Jobs did with Apple when he came back and saved it from the brink of a disaster to make it the most valuable company in America. So having entrepreneurs at the helm of the company would always make it different.

But Bill Gates is also an entrepreneur?

Well, now he is more of a statesman than an entrepreneur. He is not so much involved in the day to day running of the company as Steve Balmer. And Steve Balmer did not found the company.

Whats the update on your other project Live Documents?

It is doing fine. It is now being adapted to run on tablet devices such as iPad. You should see launch very soon.

What about competition from Office Live or Google Docs?

That is why we decided to move on to the hand held devices space as the giants compete in the PC space.

How many users do you have now for Live Documents?

You will have to speak to our CEO who sits out of Bangalore. I will put you in touch with him.

What about Arzoo?

Again, you will have to speak to the company CEO. Right now we are very focused on Jaxtr.

You had a brief brush with politics, helping Mamta Banerjee of Trinamool Congress?

They came to me for help and I said yes.
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