mig33 has been through an odyssey to find the right way to make money from its data networking business on cell phones. But now it looks like the company has hit its stride by moving into emerging markets where it can bring the Internet to mobile phones for the first time.
The mig33 story in a nutshell: A few Asian Aussies started a voice-over-Internet-protocol (VoIP) service for mobile phones. They moved to Silicon Valley and won a DEMOgod award at their U.S. launch and a Tesla award at VentureBeat’s first MobileBeat conference. But they found the market for their service was really in Asia, not in the U.S, and that the way to monetize was to build out the service to be a social network for chatty people. They relocated to Singapore and are now competing with China’s biggest mobile chat service, Tencent’s QQ service, which has 500 million users.
Tencent operates in China, but mig33 is going for other territories. Steven Goh, co-founder of mig33 (right), said in an interview that the relocation to Singapore has definitely paid off. It was difficult, as only eight of the company’s 55 employees relocated. But the company has built itself back to 50 people with a new team. During the change, Goh resumed the CEO title, and Steve Boom became executive chairman.
“Up until August of last year, we were trying a range of things to grow,” Goh said. “The team realized it wasn’t going to happen in the U.S. market. Now we’re hitting our goals in the international markets. “
The company now has 40 million registered users, including 4 million monthly active users. The dominant activity among those users is chat.
Goh says that the average revenue per paying user is $1 to $2. That is very low for established markets such as Korea, Japan or the U.S. But for emerging markets in areas such as India, Bangladesh and Vietnam, those numbers are respectable. And usage is skyrocketing. Every day, mig33 delivers 500 million messages. Every month, it delivers about 15 billion messages.
“There is massive disruption happening in mobile,” Goh said. “We are building out the mobile web.”
The success of the chat feature is very similar to the outstanding performance of Tencent’s QQ service, which last year generated $1.8 billion in revenue in China. mig33 makes money through things such as virtual gifts, avatars, chat rooms and social gaming on the chat platform. Those things are popular on the mig33 platform because the mobile phone has become the primary computing platform in the countries where it operates. People don’t have computers or smart phones, so they perform computer-like functions on their old-fashioned feature phones.
“Last year, we experimented with a range of different functions,” Goh said. “Now we have decided we want to be like QQ, but for the rest of the emerging world outside of China.”
mig33 is strong in Southeast Asia. In Indonesia, mig33 drives as much data traffic as Facebook does. That’s because there are only two million broadband lines in a country of 240 million people. But there are more than 100 million mobile phone users in Indonesia, and those users only have to pay 0.01 cents per megabyte for data service. The company has customers in 220 countries and has a decent presence in the Middle East, Africa and Eastern Europe. Some fans are spending thousands of dollars a month on mig33′s social services.
The company is not yet profitable, but Goh said he expects to become so in the second half of this year. To date, mig33 has raised $23 million in two rounds of funding from Accel, DCM and Redpoint. Goh said the company is contemplating raising another round.
As for Silicon Valley, Goh said, “I do miss the U.S. I don’t miss the politics or the taxes. Singapore is great. The labor market is fantastic.”