Small Business

An App to Help Migrants Phone Home

Rebtel serves immigrant communities with service that links the web to the traditional phone network.
Illustration: 731

When Rebtel Networks AB opened its doors a decade ago, it sought to offer what it dubbed “rebel telephony”—inexpensive service aimed at students and expats phoning home to places such as Barcelona, Boston, or Brisbane. With that business plan pretty much wiped out by voice service from Facebook, WhatsApp, and Apple’s FaceTime, Rebtel today is more likely to carry calls to Bangalore or Beijing.

Two years ago, the Swedish company shifted its focus to immigrants in the U.S. seeking to stay in touch with their families. For $2 to $12 per month, users get unlimited calls to places such as China, India, and Mexico. On one end is a FaceTime-like calling app. On the other, Rebtel connects to the local network to reach any fixed or mobile number. “Traditional phone companies typically haven’t built their services with this target group in mind,” says Magnus Larsson, who initiated the change when he took over as Rebtel’s chief executive officer two years ago.

Just as important, Rebtel has tapped into those same immigrant communities to create an army of Avon-style ambassadors, who earn commissions of up to $21 per customer they bring in. These 10,000-plus salespeople can more easily reach members of groups such as Miami’s 1.2 million Cubans or Houston’s 150,000 Nigerians. While the average salesperson earns about $100 a week, some take home thousands monthly. “When you land in a new country, you have a number of basic needs—food, housing, the ability to communicate with family back home,” Larsson says. “Quite soon, you’re also looking to earn a living, and we offer that.”

International calling, once hugely profitable, has been undermined by free voice apps—but those require both callers to be connected to the internet. Since that’s difficult or impossible in many developing countries, Rebtel contracts with local phone companies to complete calls from customers in the U.S. or Europe. Rebtel offers free calls between people with the app, and it lets users in many countries ring the U.S. for free, betting that some of those on the receiving end will become customers. Last year the company started selling phone and data credits for Cuba that émigrés can send home for use by relatives or friends, a first step into the vast remittances market. “Rebtel has built a strong brand in first- and second-generation immigrant communities around the world, making it well-positioned to extend their offering beyond calling,” says Ben Holmes, a partner at Index Ventures, a Rebtel backer that’s also invested in BlaBlaCar, Dropbox, and Facebook.

Larsson is seeking as much as $20 million in funding in the company’s first round of financing since 2006. He aims to use the money to expand the sales associate program across the U.S. and Europe and into Africa. Rebtel says it’s profitable and expects sales this year to increase more than 20 percent, to $95 million.

Rebtel changed its business model following a trip Larsson made to New York and Miami in 2015, where he met with immigrants and quizzed them on the problems they have with communications. He soon recruited the first salesman, in Hialeah, a Miami suburb that’s three-quarters Cuban. Today the company has small sales offices in Florida and Texas, where Larsson travels at least four times a year, as well as 80 employees at headquarters in the Swedish capital. “You can run a tech company from Stockholm,” he says. “But to really understand the customer, you need to be on the ground.”

Miguel Lara, an Ecuadorean immigrant to Miami, found Rebtel about six months ago through a Facebook ad. He mans a red Rebtel bus plying the streets of Little Havana that’s offered free calls home since Hurricane Irma. By passing out his card to everyone he meets, he says, he earns about $1,000 a week. “I’m never standing still,” he says. “I can manage my own time and work the hours I want.”

    BOTTOM LINE - After free internet calling felled its business, Rebtel shifted to an app that connects to the traditional phone network.
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