The story of deal 13

The story of deal 13

Oscar werner 2021.jpg

Sinch CEO Oscar Werner tells Melanie Mingas how and why the firm got its foothold in India, and why the coming years will see more app dollars rerouted to messaging innovations

Sinch is no stranger to an acquisition. Founded on $10,000 in share capital and fully funded on cash flow, at the time of writing it had closed 14 deals since its 2015 IPO.

The strategy is simple: leverage new investments to acquire new capabilities, teams and markets, and continue the growth. It’s a strategy that slows for nothing, not even 2020, and it has seen Sinch scale to a point where it handles 110 billion mobile transactions a year.

“On average, that’s 10 to 15 transactions per mobile phone on the planet, per year,” says CEO Oscar Werner.

With a leading foothold already in the US, Europe and Latam, last year Sinch closed deal 13: one that took it into a new, mobile-first playing field, this time with a population of 1.3 billion.

“India is hyper competitive, and it is very fast growing. We truly believe that to operate well you need a strong local management, and processes need to be local, too. That is a key MO for us,” says Werner.

The acquisition of ACL Mobile brought Sinch three strategic capabilities: a high-value, long-standing customer base — inclusive of half of India’s private-owned banks — a local team, and volumes into the Indian operators. Such gains go down well with “eight out of 10 of the biggest tech companies in the US” who are Sinch customers that also have business in India.

Since the deal closed Werner says integration has focused on branding, operations and selling “some of the more innovative solutions we have”, such as Chatlayer, into the local market via ACL’s network. And, of course, there are new services to add, too.

“We go into a country, buy a good base or a regional player, but they don’t have everything, so we add the innovative services we have, and we can increase the growth of this regional player. So that’s the other benefit,” Werner says.

Mobile first

With a read rate of 95% within two minutes, Werner is quick to confirm that the humble text “beats email hands down” — however, the future of messaging doesn’t lie in read rates, but in the evolution to next generation messaging. Combining the response time of text with app-like functionality and removing character limitations means, Werner says, the experience “as a consumer is 10x and for the enterprise they have a happier customer”.

Based on the prominence of WhatsApp in India, Werner says: “India is going to be one of the leading markets for that and I think we are going to see a wave now where innovation is coming not from the west but from the likes of India and China flowing into the west.

“We see this strategically because India will be more advanced than the US and western Europe in terms of messaging-based services, because of WhatsApp, the size of the market and because it’s a true mobile-first market. If you ask about one big change, that would be it.”

Latin America, too, is ahead of the curve, but India is pioneering the use of blockchain to prevent spam, among other things; it is also playing host to other nations’ technological endeavours.

“A lot of the Chinese phone brands are pioneering a certain form of IP messaging in markets like India, that might be rolled out later to other markets. There are a lot of these innovations coming out of India,” Werner says.

The end of the app?

Last year also saw Sinch welcome a new shareholder, when Softbank invested $690 million. By the end of February this year, the acquisition cycle had started again, with the $1.14 billion purchase of Inteliquent.

Although he can’t share the specifics of the next move, Werner does disclose that scale and profitability are the prime considerations when looking for the next buy. Further, there is a massive market shift under way that is likely to change everything.

Gartner figures predict API alone will be used by 90% of the world’s enterprises by 2023 — incidentally, up from 20% in 2019 — and with character counts no longer a limit, Werner says next generation messaging is pushing investment dollars from apps into messaging innovations.

He explains: “Imagine, if you can have an app-like experience for your consumers without them having to download the app, and it’s unified across all mobiles. That’s a pretty strong story.

“The problem in the app industry is that only 10%-15% of your best customers are downloading your app, whereas in this market you get the same experience but address everybody.

“That’s one massive shift where app investment dollars are moving to messaging.”

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