Mint wins over market with wireless business vision
Friday, June 27, 2008/
A young start-up tech entrepreneur, who was first to market with exciting mobile technology, is counting on the iPhone for success. By MIKE PRESTON
By Mike Preston
A young start-up tech entrepreneur, who was first to market with exciting mobile technology, is counting on the iPhone for success.
Mint Wireless chief executive Alex Teoh is one of many people excited about the imminent arrival of the iPhone in Australia, and not just because he wants to keep up with the latest tech trends.
Teoh hopes the hype surrounding the iPhone will increase the uptake of smartphones by Australia’s business owners, a progression crucial to Mint’s success.
ASX-listed Mint’s core business is a remote payment system that runs on smartphones such as the BlackBerry, allowing businesses to receive and process payments from clients remotely and feed them back into accounting software in real time.
Like the iPhone, big expectations have developed around Mint Wireless and its mobile payment system – expectations that are yet to be fully realised.
Since founding the company with his brother from a spare room in 2002, Teoh has succeeded in selling a vision of a technology that, by delivering on a promise of increased efficiency and convenience, he hopes will become a pervasive business tool.
With his brother and a small development staff – funded by seed investment from his own pocket and that of his family – Teoh, now 32, took three years to get the payment system to the point where it was ready for the market.
To take that next step, however, the business needed a capital injection. Teoh took his vision to wealthy friends of the family – he describes them as just “people who have done well in property” – and, despite being only 27 at the time and without yet having earned a dollar in revenue, persuaded them to back the business.
“It wasn’t easy to get the investment and there was a lot of pressure,” Teoh says. “They were people who believed in us and what we were trying to do. Once we carefully explained the risks and the upside to them, and the fact we had invested significantly ourselves, they were comfortable with the idea of supporting us to commercialise our idea.”
It helped that a part of Teoh’s vision was already coming to fruition, as smartphones became increasingly popular – as did his experience as a management consultant specialising in CRM software.
Mint’s next step was to build a customer base. Rather than attempting to go straight to the small business market, however, Teoh opted to forge relationships with partners with pre-existing channels to market.
That meant hitting the streets, and the phone, in order to get an audience with big corporates in the telecommunications and broader business sectors.
Teoh says getting a hearing from busy executives who had never heard of anything like his product was one of the toughest challenges he has faced in the job.
“It is incredibly tough when you are the first in the market place and you’re dealing with established companies like the telcos or banks. You have to go in there and be absolutely clear on how you add value, and you are constantly validating what you are doing and why you are in existence,” he says.
Sheer persistence and a thorough understanding of the needs of potential partners eventually helped Teoh get companies such as Optus to sign on the dotted line.
“We’ve been negotiating with Optus for one or two years (they signed a three year supply agreement in October 2007) and have strong leverage with them now, but it all started with one phone call,” Teoh says.
“Basically, I did a bit of desktop research and spoke with people I knew in the industry to find out who is who. Once I had some names I started calling, and they are busy people so it did take some time. But eventually we made enough noise and were able to explain our product in a way that made sense to them.”
At the same time as Teoh was negotiating with potential commercial partners, he was also preparing to take his vision to the big time by floating on the ASX.
Driven by a desire to provide an exit opportunity for his original private investors, the need for further capital and the additional brand equity listing brings, Teoh led Mint to a $32 million float completed in August 2007.
As it turned out, Teoh’s timing was exquisite, with market sentiment turning sharply against smaller, more speculative company listings just months after the float. Mint has not yet turned a profit, incurring a loss of just over $2 million on revenue of $1.25 million in 2006-07.
“It would be much more difficult for us to list now; the market is not the same now with credit, so it was a good time to enter the market from a capital equity perspective and also good timing overall,” Teoh says.
The challenge now facing him is to balance the obligations that come with running a public company with the effort it will take to turn his vision of Mint’s mobile payment system as a ubiquitous business tool into a reality.
He has so far faired reasonably well in managing the sometimes unreasonable expectations of the market for immediate profit, although Mint’s current share price of around 4c is well down on the 20c shareholders paid at listing.
A subsidiary business that distributes and sells consumer technology products such as USB drives and card readers, Mint Trading, has become a crucial part of that effort, contributing much needed additional cash flow while the wireless business finds its feet.
But the main game for Mint is to build the customer base for its mobile payment software. In addition to the partnership with Optus, Mint has also entered distribution deals with Crazy John’s and the Jim’s Group of franchises.
Even so, the business must grow the 1000 or so users currently on its books if it is to succeed, a challenge Teoh acknowledges.
“We’d like to see numbers up around the tens of thousands, but it will take time to get there and making relationships with channel partners like Optus and Crazy John’s work,” he says.
The further penetration of smartphones in the small and medium sized business market will also be crucial to Mint’s fortunes.
“Smartphone take-up is definitely a barrier,” Teoh says. “Smartphones are spreading and we will be in a leading position when it happens, and things like the iPhone will only accelerate that process,” he says.
Expansion into Asia shapes as a golden opportunity to tap a massive new market – as long as Teoh can bring yet another set of stakeholders on board with his vision, this time the local companies he is already talking to in the hopes of building new partnerships in countries such as Singapore.
“We see a lot of upside in Asia as countries there take up these developing technologies and have a requirement for a payment collection at point of sale system,” Teoh says. “Singapore, Indonesia, Hong King, China… there is a huge growth story in all of these countries for us.”