It’s 2022. Is offering paid international calling for affordable prices still a growing business? It is if, like Netherlands-based Talk360, you’re willing to put your feet on the ground in Africa and focus your hard work there.
Talk360 allows people with lower incomes in Africa to make longer calls more frequently to their families back home. To get these people on board though, founder and CEO Hans Osnabrugge, together with co-founders Dean Hiine, Jorne Schamp and the team, basically had to build an entire financial ecosystem all over the continent from scratch. Now, they are ready to evolve from phone-app to fintech.
The birth of Talk360
In the case of Osnabrugge, before offering cheap phone calls, there were free phone calls. His previous business was Ringcredible. The service offered free VoIP calls for anyone that had the app installed. An ideal product for making international phone calls. All you need is a steady internet connection, and you can talk to the other side of the world for no extra charges.
For those thinking: isn’t that exactly what Whatsapp and the likes are offering? Well, yes. And competing on a global level with behemoths like that did Ringcredible in. In 2015 Osnabrugge had to throw in the towel and file for bankruptcy. But when a door closes, a window often opens.
‘Great tech, wrong audience’
Osnabrugge cracked that window while winding down his Ringcredible venture. He got introduced to South African entrepreneur and Talk360 co-founder Dean Hiine. “He told me that our technology was great, but we were targeting the wrong audience”, says Osnabrugge. “He invited me to Soweto, Johannesburg, where he grew up to see how much the Nigerians, Bangladeshi, Pakistani and Zimbabweans needed such a product. The chance for them to speak to someone back home through the internet is just incredibly small.”
“There are so many people that need this”, Osnabrugge saw. Creating the product itself wasn’t the biggest challenge. Talk360 allows users to call any landline or mobile number in the world at a strongly reduced rate. It can do so by using VoIP technology to cross most international borders and then buy local call minutes in bulk at a discount. The result is that end-users pay far less for calling regular phones, while not having to fully rely on an internet connection.
As easy as buying a bread
The biggest challenge for Talk360 was getting the target audience on board. “These people in the African townships are at the base of the pyramid. Trust is of the essence. They don’t trust corporations to do the right thing, so we had to localise our product and get the community involved.” The second challenge is that over 70 per cent of all African consumers are unable to purchase international digital services. So Hiine insisted that the service could only work if topping up an account was as easy as buying local bread.
That was the tricky part. Africa is a huge continent with wildly differing payment cultures. It has 45 different currencies, thousands of different payment providers and many different areas preferring many different ways of paying. “South Africa, for instance, is very cash-driven”, says Osnabrugge. “About 80 per cent of the people there are underbanked.”
Creating its own payment infrastructure
It basically meant Osnabrugge had to develop two different businesses. “The call-app was the basic part”, he says. “We could do that straight away in 2016.” The harder part was putting the payment infrastructure in place. Dean has travelled all over Africa to connect all the different payment methods for our platform. Meanwhile, in The Netherlands, Jorne Schamp joined as a co-founder to build the product here in The Netherlands.”
It took about three years of hard work when Hiine and Osnabrugge found they’ve made enough progress on the payment side. “In 2019 we started to fit the two sides of the business together, ramped up our marketing efforts and showed the world that what we had envisioned was actually going to work.”
Not just a phone-app
Fast forward to 2022, and Talk360 is not just an app that lets people call to another country. In the background, it’s basically a fintech company connecting local vendors, ATMs and other payment options. Talk360 has 1.25 million physical points of sale worldwide, 750,000 of them in Africa, where people can top up their accounts. It supports 60 payment methods in more than 40 currencies. They have teams in The Netherlands, South Africa, Nigeria and India, a country that has many people leaving for work in Africa.
“That is where we make an impact”, says Osnabrugge. “It’s the main lesson I learned from Ringcredible. It was the easiest-to-use app to make calls with, but I had no assets. There were other apps like it, and they were just as easy to download so they were all competitors. With Talk360 we have no competition because it involves a buttload of work no one wants to do.”
‘No investor understood us’
A lot of work requires a lot of money. Much of it came from Osnabrugge’s own venture builder Brooklyn Ventures. “No other investors understood what we could do with this. And even my partners at Brooklyn Ventures had their doubts. But they trusted me. And I believed in Dean (Hiine) and Jorne (Schamp). In the end, it took two years longer to get the payment structure in place and we had to do about a million euros in loss financing.”
Now, Talk360 is getting ready to have an even bigger impact. That already becomes clearly visible during times of crisis. Osnabrugge recalls the beginning of the pandemic. The uncertainty of many people working abroad led to a massive spike in traffic on their network. More recently, they’ve witnessed local spikes. When the unrest in Sudan happened late last year, calls from their platform to that location went through the roof. Same with the recent protests in Kazakhstan. It shows that whenever the internet is down or unreliable, Talk360 offers a solution.
Reliable internet: more scarce than you think
This also speaks for the long-term viability of the scaleup. From a first-world perspective, it is easy to forget that many parts of the world do not have reliable, high-speed internet. And many parts will not get it for a while. In fact, Osnabrugge argues, even in Western Europe it is sometimes spotty: “In countries like Germany, coverage is still an issue. Try to have a Whatsapp video call on the German Autobahn. Good luck with that.”
“Internet penetration is good in certain countries, for a certain group of people and sometimes even in certain times. In South Africa, the internet is great. But it is about 20 times more expensive than here. Many people won’t download apps that are over 10MB for that reason.” As coverage spreads, it will get more people online, but Osnabrugge says they can’t rely on it full-time. “They’ll be connected every now and then. So sometimes they can place a free phone call home. But there has to be a reliable alternative for when they can’t.”
Looking beyond cheap phone calls
In 10 years, that may be different, acknowledges Osnabrugge. So what happens to his affordable phone calls then? “That’s when we’ve built the trust with our audience to have a financial relationship with them. Fintech in Africa is huge. It’s like South East Asia 15 years ago. There is a huge opportunity and we’re building something based on a problem we’ve experienced ourselves.”
Now others seem to latch on as well. Talk360 is ready to open its payment structure to other parties, allowing tech companies to reach a whole new audience through a trusted means of payment. Osnabrugge says the first third party to use their payment platform will be an edtech company. “With Talk360, we are basically the first customer of our fintech business. That’s not a great way to build a company, I admit. But it is a great way to evolve into something bigger.”
Addressing growing pains at Rise
To make sure the evolving process runs smoothly, Osnabrugge recently joined the Rise programme, organised by Techleap.nl. It showed him that even though his business may be unique, his growing pains aren’t. “Scaling up is sector agnostic. Everybody runs into the same challenges. It’s good to realise that some problems, as stressful as they may be, are not unique and not necessarily your own fault. That gave me peace of mind. And with peace comes vision.”
“Before we joined Rise, we just started our fundraising efforts. The programme helped me to really bring the company back to the core. Some people brought in by the programme have seen it all. When they do a deep-dive into your company, they can come back with some harsh, fair criticism. It helped us to improve our pitch, which gave us a better position during fundraising.”
Now, Talk360 is ready to close a seed-funding round in Q1 of this year. Osnabrugge can’t share any details yet, other than that it will be with ‘a combination of fintech angels and African VCs’. It will allow them to grow their business, as well as their impact. Osnabrugge: “We’ve chosen the blue ocean. Talk360 could’ve gone to the American market and try to battle it out with competitors, but who cares? We’re trying to do something meaningful here, but that means we do need to go through the struggle first.”