Pando

CallFire acquires FireText, planting its enterprise SMS flag in the UK and Europe

By Michael Carney , written on December 4, 2014

From The News Desk

CallFire, a Santa Monica-based mobile marketing and customer communication platform for the enterprise, is expanding its footprint into the UK and Europe via the acquisition of FireText. Both companies are in the hot B2C cloud-based SMS and voice messaging category that is rapidly growing in importance as consumers shift their Web browsing, content consumption, and online shopping behavior to mobile. Terms of the deal were not disclosed.

FireText is four-year-old, bootstrapped success story that counts household names like Eventbrite, Constant Contact, and Zendesk as customers. In addition to these customer relationships, and the obvious addition of on-the-ground talent in a new market, the deal also brings to CallFire some proprietary technology around message tracking and analytics that it will no longer have to build internally, according to CallFire CEO and founder NetZero Ron Burr.

“FireText caught our eye as they’ve been successful in not only growing their company but also helping shape the market overall in the UK,” Burr says. “This acquisition is an important move for CallFire as it marks our expansion into the international marketplace with a highly successful brand already known among UK-based businesses of all sizes. With a product that aligns well with the CallFire suite of products and a skilled management team, we believe that the similarities across both organizations will make this a seamless cultural fit.”

CallFire would have expanded into Europe in the near-term, with or without this acquisition, Burr says. But this deal significantly accelerates that timeline and also the speed at which the company can establish itself in this key market. The same is true of offering CallFire customer message tracking and analytics functionality.

“Like every tech company, we have a product and business road map that’s a mile wide and just as deep, but not enough resources to get it all done at once,” he says. “It would have been a multi-month man effort to duplicate the technology that FireText has built and tapping into their existing customer relationships only accelerates our entrance into this new market.”

The world is going mobile. We can see it in shifting content consumption patterns as well as in data about online shopping. And with this behavior shift, consumers are changing how they want to communicate with corporations. Email is on the way out. And while mobile apps are in, the need to download and install proprietary apps for each brand presents a major gating problem.

“Every phone in the world already has SMS, which is our app,” Burr says. “I think that’s a huge advantage. Also, unlike native apps, SMS still works when users have no access to data and is much faster than dealing with a mobile browser.”

FireText co-founders James Huff and Dan Parker and their teams have agreed will remain with the company and will continue building the European business. CallFire will continue to operate the FireText brand, with much of the integration and value of the product consolidation happening on the backend, out of the view of the end enterprise user, according to Burr. Bringing FireText’s message tracking and analytics solution to the US market will be a major boon to CallFire customers as well, he says. For CallFire’s 160,000 existing customers, including the likes of AllState, Pepsi, and Dominoes, the ability to know when a message was read, and whether that consumer clicked through an in-message link should be extremely valuable, and also a first.

One thing working in CallFire’s favor in terms of this technical integration is that the company has spent much of the last year focused on retiring technical debt. This included building out a common back-end server designed to accommodate new messaging products in a plug-and-play manner, according to Burr.

“In a lot of ways, its like we’ve built our own messaging aggregator,” he says. “It makes acquiring and integrating new brands and products that much easier. It’s one way of future-proofing our platform.”

Both companies are part of a fragmented and highly competitive global enterprise mobile messaging market that very much lacks an 800 pound gorilla. The closest thing to a dominant force would be Twilio, but while solving a similar problem, Burr believes they target a different customer with a fundamentally different solution.

“We’re talking to different constituents,” he says. “You need to be a developer to use Twilio because it’s an API. We’re a full front-end, self-serve dashboard sort of like ConstantContact is for email. Twilio is ahead of us in terms of international access – they started focusing on that 1.5 years earlier than us. But, over time, we will probably end up in a lot of the same markets. In order to play in this space you need to have full coverage of international markets, because a lot of the customers themselves are multi-national.”

CallFire has grown considerably since its founding in 2004. In August of this year, the company crossed the 2 billion messages sent milestone (it's now sending millions, monthly) and during the most recent election-cycle, the company’s Call Center product was used for 116,000 agent hours. CallFire has raised an undisclosed sum, including most recently a previously undisclosed $30 million  Series A investment in 2012 from  Morgan Stanley Expansion Capital and IGC. FireText is the second acquisition made by CallFire, following its Winter 2012 pickup of EzTexting following the above-mentioned round.

Looking ahead, the roadmap for CallFire includes expansion into additional international markets, including both Africa and Latin America, where mobile is even more dominant than North America and Europe. On the technology side, Burr also has his sights on adding payment functionality, something he could accomplish via an acquisition – he’s looking at a deal in Africa right now that would do just that – an integration with a third-party solution, or by building it internally.

“The problem with the payments market today, is that most people have approached the problem with an app,” Burr says. “But not everyone in the world has a smartphone – although that’s changing rapidly. And even if you do, you don’t always have access to data. Companies also don’t want to worry about ensuring that each of their customers downloads a proprietary app. But if we could offer an MMS-based payment product, we feel we could eliminate a lot of those obstacles.”

SMS marketing is hardly a new technology, but it’s only recently become a preferred method of communication for large corporations – and in parallel an accepted one among consumers. This may not be the case forever, but SMS has enough advantages – universal reach and ease of use, among them – that it will likely remain relevant for some time to come. This is particularly true in emerging markets where mobile data is a scarce, and highly-valuable commodity making app- and mobile Web-based communication that much more challenging.

We’re still in the land grab phase of the enterprise SMS communication market, with early leaders like CallFire vying for dominance of the next generation of corporate communication. By snatching up FireText and planting its flag rather convincingly in Europe, the company ensures that it will be a force to be reckoned with in this rabidly maturing category.