Silicon Valley Cloud Startup ItsOn Enlists Saudi Carrier STC

  • Company valued at $300 million in latest funding round
  • ItsOn has drawn interest from suitors, CEO Raleigh says

ItsOn, a Silicon Valley startup that helps wireless carriers let customers personalize their monthly plans, has signed up Saudi Arabia’s STC Group, the largest telecommunications provider in the Middle East and North Africa.

With the STC Jawwy service starting this month, ItsOn will now serve four of the world’s largest telecom companies, including Telefonica SA and Africa’s largest operator MTN Group. That’s up from one customer, Sprint Corp., less than two years ago. The companies mostly use ItsOn’s software so that subscribers can adjust and share minutes, data and text allotments with a mobile app. The technology is actively used on some 12.5 million devices. 

Valued at $300 million during its latest round of funding in December, ItsOn’s revenue has increased an average of about 70 percent annually for the past three years, said Chief Executive Officer Greg Raleigh. It has raised $60 million from investors including Andreessen Horowitz and venture arms of Verizon Communications Inc. and Vodafone Group Plc, and will seek a new funding round this year to raise in the $25 million ballpark, he said.

“Every gigantic vendor starts off as a small vendor,” John O’Farrell, a partner at Andreessen Horowitz, said in an interview. “Cisco started off the way ItsOn is starting today. The company has plenty of business and good sources of funding, so I would envision them staying independent and building a very large company.”

‘Consistent’ Interest

That’s Raleigh’s plan for now for the Redwood City, California-based company, which has doubled the number of employees in the past 14 months to just under 200. ItsOn has received acquisition interest from social-networking, telecom-equipment and other companies, he said. 

“So far nothing has turned our head yet,” Raleigh said. “Nothing is imminent, but the interest has been consistent for some time.”

ItsOn, started in 2009, was the brainchild of Raleigh and Charlie Giancarlo, a former managing director at private-equity group Silver Lake Partners and an executive at Cisco Systems Inc. They had a hard time selling an unproven service.

Sprint suggested the duo first prove the concept with their own mobile service, and in 2013, they started Zact, which let users adjust their wireless packages on the fly.

Personalization ‘Beacon’

“We were able to prove in a little over a one-year period that this is what people love,” Raleigh said. “The service was profitable. Zact really started the personalization trend, and really was a beacon in the industry for what was possible.”

After that, carriers began showing interest, and the team decided to end Zact, transitioning subscribers to Sprint brand Virgin Mobile USA in August 2014. ItsOn decided to refocus on selling its cloud-based software, which means that carriers don’t need their own data centers to run it. Sprint signed on in 2014. Raleigh said ItsOn has more carriers under contract or in the pipeline that he declined to name, and plans to make announcements about them later in the year.

“It looks like a well-presented, self-service platform that lowers the cost to serve a customer,” said Roger Entner, an analyst at Recon Analytics LLC.

‘My Way’

STC’s Jawwy, which means “my way” in Arabic, is aimed at young people, with two-thirds of the Saudi population under the age of 30. Customers can use on-demand car service Uber to get new phones delivered to their door. The devices will have an app powered by ItsOn, which lets them build their own plans, share them across devices and view usage history in real time, among other features, according to Jawwy CEO Subhra Das.

STC officials said they expect to see an increase in average revenue per user and a decrease in customer turnover. The ItsOn platform is a “perfect” match, Khaled Hussain Biyari, STC’s CEO, said in an interview.

“We wanted to deliver more services in a completely new way,” Biyari said. “We wanted an approach where that young customer would feel at ease when it comes to joining the service, getting exactly what they want, designing their own packages, being able to get support online.”

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