”If I obtain cooperation from a cellular company, I can do anything that can be done with WAP. It’s not as attractive or easy, but it’s no different. It looks like WAP, but it’s SMS. With WAP, you surf special sites. There are, say, five headings, and you use one of them to get into text. That can also be done using GoSMS, but with fewer SMS commands. Every operation is a new command. You can’t go backwards, like you can with the Internet”.
Founded: Summer 1999
Product: Information services through mobile telephones
Market: Mobile telephone companies
Competition: WAP technology
Ownership: Tochna Lainyan 56%, Gaon Holdings investors 25%, employees 5%, other investors 14%.
This is the key saying of Yuval Golan, general manager of GoSMS.com and Tochna Lainyan, who is swimming against the current by providing information services on mobile telephones with GSM technology (in Israel, Orange) from Internet sites, without actual Internet surfing. What trend is Golan bucking? Partner, which operates the Orange network, is not cooperating with him, and is even trying to interfere. Golan is having to offer Partner subscribers free services, which compete with those offered by Partner itself. Since Golan requires cooperation from the cellular operator, he is being pushed away from the Israeli market to the global market in order to profit from the service.
”I can transmit information to a mobile telephone from any site, including those requiring a name and password, such as CNN headlines, share prices, weather, and so on. The service examines the site and brings the relevant parts to the mobile phone”, Golan explains.
Tochna Lainyan was founded in 1987 as a partnership between Yuval Golan and his brother Michael. The company developed DOS applications for portfolio management. In 1988, the company began to provide share prices information services, thereby competing with Trend Line, which had absolute control of the market for many years. In the beginning, they took a diskette from the stock exchange; afterwards, they received a line and began to provide online services. In 1996, Tochna Lainyan acquired a competitor named Business Graph Software, and began to market independent financial services in cooperation with Bezeq Gold. The company was in a position to acquire control of Trend Line in March, but the Anti-Trust Authority director general refused to approve the deal.
According to Golan, the company has developed over the years expertise in the field of texts, including the ability to handle any text from an Internet site. Golan: “We wrote our own language, which uses our general libraries, and that enables us to easily provide GoSMS.com services. This has proved worthy of a patent, which we are registering. To our surprise, this proved to be futuristic. We didn’t plan it; we didn’t think we were so advanced”.
Last August, GoSMS.com raised $1 million from a group of investors connected to Benny Gaon and Gaon Holdings at a company value of $4 million after money. The group currently holds 25% of company shares. Tochna Lainyan, owned by Yuval and Michael Golan, holds 56%. Employees hold 5%, two additional investors hold 5%, and there are more.
”Globes”: I am trying to understand the difference between you and WAP. Internet is a medium of choice. You choose where to go and through what connection to continue from there. SMS is a medium of writing commands.
Golan: ”WAP doesn’t replace the Internet. It provides services, as does GoSMS.com. WAP, however, is more friendly and easier to use”.
So why use GoSMS and not WAP?
”Because SMS is faster, cheaper, and doesn’t disable the telephone during use. It works on a control channel, without wasting air time or Internet time. With WAP, at least with the first generation still using circuit switches, the telephone is out of use when the Internet is accessed. When we go over to the new GPRS generation that works on packet switching, then it will be possible to speak and surf at the same time”.
Are there any other advantages?
”All current digital cellular phones support GoSMS. On GSM, SMS is interactive, hence we work only with GSM. There is no need to change to a WAP phone. You don’t have to write special sites or invest in WAP services. There’s also something else that goes unmentioned. WAP will not be democratic and free like the Internet. Every operator will sign agreements with content providers, and the customer will be limited to their sites. With GoSMS, you are not limited by the operator’s decision; you can access any site”.
If it’s so attractive, why do we hear only about WAP, and not about GoSMS?
”If we had come with this technology two years ago, it would have been treated differently. Today, cellular Internet is identified with WAP. That’s our biggest problem”.
When did it start operating?
”It’s been in operation since June 1999, and it’s improving all the time. To date, over 12,000 different individuals have used the service. That is without marketing or advertising. Two thirds of them have entered more than once. We provide all financial services, currencies, shares, indexes around the world, news of every type, weather, take-offs and landings, bestsellers on Amazon, jokes by subject, e-mail, and more”.
I understand that all this is free to cellular subscribers, so what is your business model?
”The money has to come from operators, since we increase traffic in their SMS services, for which they collect a per-minute fee. We are expanding system use. We have 3,000-6,000 incoming and outgoing messages per day”.
It looks like Partner should pay you.
”Partner is not cooperating, since they see GoSMS as a competitor. They want to provide the same services. There are other operators in the world besides Partner, though”.
Do they pay?
”No operator has yet agreed to pay. We still have no agreements. Our problem in Israel is that Partner currently has a monopoly on two-directional SMS”.
There is also a problem of usage rights.
”Partner signed an agreement with CNN for the supply of news services, which we supply by entering their free site. CNN sent us a letter of protest at Partner’s instigation claiming that we have no right to use the information. We petitioned the Tel Aviv court for a declarative ruling that there is no problem of usage rights”.
In the Internet, the database of callers is regarded as a company’s most significant asset. Millions are paid for databases. How do you stand regarding this?
”I only know the caller’s telephone number and what information he wants, not his name or other details. This brings me to another version of a business model”.
Are there other business models?
”There is, of course, advertising on the site”.
You may be excited over an idea that came too late.
”I am fascinated by the subject and the new field. It’s the playing field of global cellular companies, copyrights, and cellular Internet”.
Published by Israel's Business Arena on December 28, 1999