TextNow, your favorite free phone service, has been around for more than twelve years now. In dog years, that means we’re at retirement age. But far from retiring, we’re just getting started.
Given our longevity, I thought it would be a nice thing to take a peek behind the curtain to see the origins of TextNow. If the famous maxim is correct – “Greatness from small beginnings” – it doesn’t get much smaller than my student apartment in Waterloo, Ontario, Canada.
The Small Beginning:
I lived in this very apartment along with our co-founder, Jon Lerner, when we hatched what would become TextNow. At the time Jon and I were in our last year of university, wondering where to go for our final internship. But instead of going the internship route, we decided to start TextNow (then called Enflick) as an opportunity to work on something more interesting than what an internship could provide. We didn’t want to work on stuff we weren’t passionate about. We wanted to build cool stuff.
Or in other words, as codified as our founding principles:
Work should not feel like work.
People should look forward to coming to the office – not dread it.
Work should be fulfilling in and of itself, not a means to an end.
Great start I thought. We knew how we wanted to work. Now we needed a product.
Not surprisingly we had a lot of ideas. But instead of choosing one idea, we immediately went to work on a bunch of prototypes, to see which one got the most traction:
That Sports Chat idea didn’t stick around long. Neither did that middle one. But the free texting idea – people really liked that one. In hindsight, it seems obvious TextNow filled a big hole in the market. Back in 2009 it was all too common to have to pay your carrier for phone service, and for data on top of that, and you still had to pay extra to send text messages. Absurd, we thought. With TextNow, you could do what the big guys were charging extra for, completely for free. We built the app for free texting, but what we didn’t expect was the popularity of our app as a way to turn iPod Touches into phones – which led us to the bigger vision: free phone service.
But the late lamented Sports Chat did provide some key insights:
- Always experiment! You don’t know what works until you try.
- Do not over-invest in an idea – focus on the most viable product from your experimentation.
- Further invest in ideas that have traction.
- Embrace failure, learn & iterate quickly.
Now armed with knowledge, we set to work on turning the SMS idea into a viable product. We eventually came up with this, the TextNow app out of prototype, and into a most viable product stage (MVP):
The tech world of 2009 was a lot different than the venture capital-infused juggernaut it is today. Twelve years ago, it didn’t seem like anyone in their right mind would give a couple of college kids money to go off and make this thing.
Still, the first step was done. We had a viable product. But could this product reach what I refer to as ramen profitability? In other words: could we quit our regular jobs and work on TextNow full time and make enough to live on instant ramen noodles in perpetuity?
Turns out the answer was yes (obviously, or you wouldn’t be reading this). After making the assumption that no VC funding was guaranteed to come down the pipe, we formulated the other founding principles of TextNow:
Embrace frugality (not to be confused with being cheap).
Don’t be shy to take risks & make bold investments in yourself.
Free > Paid?
The next lesson is, on its surface, wildly unintuitive. We had a free version of the app that was ad supported and also a paid version. The free version of the app had limited functionality where a user could only send a limited number of texts per day before they’d have to convert to the paid version. Then we looked at the data and realized we didn’t want our users to convert to paid because we were actually making more money from the ads they were seeing as free users.
This is something we didn’t expect at all, to say the least, and kept analyzing the data over and over again to make sure we were right.
That is stratospheric growth. So while it might seem unintuitive, we could gain more users and make more money by giving away the product than we could by charging for it. In 2021, this seems more self-evident than it did in 2009. Games like Fortnite and Pokemon Go have shown the free model can work very, very well.
What we took away from that realization were two more of our founding principles:
Make as many decisions as possible based on data.
Make as few decisions as possible based on assumptions.
Flush with success from our TextNow MVP, we tried branching out into other products like Ping Chat and a retail brand of grab-and-go phones preloaded with TextNow, called Touch. Neither of these took off in the way we hoped, but they led to some very important lessons. Mistakes are how you learn, after all. What these distractions taught us were:
- The key to success is FOCUS.
- Do fewer things extremely well, rather than multiple things poorly.
- 1 great product > many mediocre products.
After deciding to concentrate on TextNow as our product, we set out to iterate and improve on it. We grew VERY popular, hitting well over 100 million downloads sometime in 2017 and recently topping 200 million downloads. Not bad, right? But all through this period we kept hearing the same thing: “Why can’t we use TextNow off of WiFi?”
Our internal answer was always “Well, because we can’t break the physical laws of the universe.” Or… could we?
Turns out, no, but we did find a way to get TextNow to work off of WiFi with the introduction of our Nationwide Talk & Text service: with a TextNow SIM card and a compatible device, customers can now have unlimited calling and texting to the US and Canada on a nationwide mobile network. With that, we took another huge leap towards achieving our mission:
We are on a mission to help people connect with technology for free or as close to free as possible.
And this mobile breakthrough brought us to our most important lessons yet:
- A “can do” mentality is important for innovation
- Don’t default to “it can’t be done”
- There are solutions to many seemingly impossible problems.
And that brings us up to today — twelve years of work, prototypes, successes, failures, and ramen noodles later. We don’t eat as much instant ramen as we used to, but we’re still innovating and pushing our mission as far as we can. We believe communication belongs to everyone. It’ll be a blast to see how far we can get from our beginnings in that student apartment in 2009.