What do mig33, iSkoot and Truphone have in common? They are all startups that have raised gobs of money from venture capitalists. They all offer mobile VoIP clients. And now, all three are looking beyond plain vanilla voice services as they try and navigate the new, post-credit crunch economic reality.
These startups are realizing that in order to make real money they would need to create billions of minutes in calls to off-net services. It is a game only the biggest -– Skype, for instance –- can play. And even then, making profits isn’t all that easy. More than a few startups have died trying to play the low-margin minutes game. (Related post: VoIP – Dead or Alive?)
For these three , the sheer size of their VC funding — over $100 million among the trio — provides a cushion while they plot their evolution.
Truphone, one of my favorite applications, has already gone from being just a mobile VoIP client to becoming an all-encompassing communications offering. By supporting Skype, Twitter and other communications services, Truphone is hoping to become the default (or at least the most used) communication application on the iPhone, which would allow it to generate more call-out minutes and also open up other e-commerce opportunities.
Mig33 is taking a different tack: going after digital goods for additional revenues. These digital goods would include virtual gifts, emoticons, and other means of self-expression. Such virtual gifts have been hugely popular in other online communities, such as virtual worlds and social networks. (Related Post: Venture Capital Loves Virtual.)
During our conversation, Steve Boom, a former Yahoo executive who recently took over as the chief executive of Burlingame, Calif.-based mig33, said that so far that company’s revenues have come from VoIP and digital goods, and that it will be focusing on the latter over the next six months. The company is looking to become cash-flow positive, and that is a big focus for Boom. Its application (and services) are extremely popular in Southern and Southeastern Asia, in addition to some parts of the developing world, where cheap calls are a lure for signing up new customers. (Related: Mad Money for mig33.)
Like its peers, San Francisco-based iSkoot has also tweaked its focus. So far, the company has been pushing a client-server solution that allowed folks to use Skype on their mobile phones. Its offering is the underpinning of the Skype service on 3, the UK-based 3G service provider owned by Hutchinson Wampoa. The company raised a whopping $19 million in Series C funding in November 2008.
The funds are to be used to develop a new platform for AT&T that would allow Ma Bell to offer iSkoot’s myriad services to its customers. For starters, iSkoot has released Notifier, a mobile application that allows folks to read RSS, and to interact with Facebook and Gmail on plain-vanilla mobile phones.
Company executives say that while iSkoot will continue to offer its Skype solution, the company has bigger ambitions, and Notifier is part of a bigger strategic shift by the company. (Related post: iSkoot Looks at a New Mobile Future) Who can blame them? It’s awfully hard to make a living selling a Skype solution to carriers who hate Skype to begin with.
Like mig33 and Truphone, iSkoot is making a smart move and losing its reliance on voice, a commodity business with razor-thin margins, and instead looking elsewhere for growth. Let’s hope by losing their (proverbial) voice, these three companies find something to sing about in the future.