TextMagic Profile

TextMagic logo.

TextMagic is a text messaging service that provides an effective customer engagement solution for small businesses looking to leverage the power of SMS marketing campaigns.

Founder(s): Dan Houghton

Industry: Tech

Founded in: 2001

Location: United Kingdom

Email: support@textmagic.com

Interview With Priit Vaikmaa, CEO of TextMagic

Describe your product or service:

“TextMagic is an international text messaging company that helps small businesses engage with their customers. TextMagic enables companies to transform customer experiences through its easy-to-use text messaging marketing software, which can be used to send notifications, alerts, reminders, confirmations, and SMS marketing campaigns anytime, anywhere.”

Describe your company values and mission:

“Our goal is to make business communications easy for businesses of all sizes — for all industries across the globe. In doing so, we aim to help businesses grow and engage with their clients by acting as a reliable cooperation partner.”

How are you funded? I.e. venture capital, angel investors, etc.

“TextMagic has never previously raised external capital, but we are conducting an initial public offering (IPO) of shares this year on First North Tallinn, an alternative market within Nasdaq Baltic. The funds provided by our IPO will be used to further develop our upcoming Touchpoint product, grow our brand recognition in global markets, and recruit talented new team members to the business.”

How big is your team? Tell us a little about them (I.e. co-founders, freelancers, etc.)

“TextMagic currently employs 40 people across four countries. Our teams are based in Estonia, Ukraine, Russia, and Romania. Our leadership team consists of myself, COO Kärtu Vaikmaa, CPO Eduard Tark, CMO Ioana Sima, and VP of Engineering Dmitry Stanulevich.”

Did you always want to start your own business? What made you want to become an entrepreneur?

“It happened more by chance really. I originally joined TextMagic as a manager in 2007 before buying the company in 2013. The founder of TextMagic was moving on to a fast-food venture, and I felt that the TM business was poised to take off, so I decided to take the plunge.”

How did you come up with your startup idea? How did you decide to actually act on the idea? What gave you confidence that you were on the right track?

“It was TextMagic’s founder, Dan Houghton, who came up with the original idea for TextMagic. The company started with zero turnover and had grown to a turnover of €10,000 [$11,300] a month by the time I took charge. Naturally, I was hesitant at first about joining such a small business, but I decided to take the risk when Dan sold the company, and [I] invested all of my time and energy into growing it into the company I knew it could develop into.

While the business was still in its infancy, I knew this could work as a starting point to build upon as I had previously made successful investments in companies with much smaller turnover than this. The timing was also important in giving me confidence, as the rise in smartphones at that time created a huge opportunity for TextMagic, as well as affirming that we were heading in the right direction.”

How did you come up with your company name? Did you have other names you considered?

“The current name was coined by TextMagic’s original founder, Dan. We have considered changing it as we are expanding to non-text-related services, but we decided to leave the SMS-based service with the TextMagic name and created the ‘Touchpoint’ name for our upcoming product.”

What is the greatest challenge you faced in starting your business, and how did you overcome it?

“The greatest challenges I faced were around the time I took over TextMagic. It seemed [like] there was a never-ending amount of work to do and the financial burden of making the business purchase loan payments made me question whether I had made the right choice. However, TextMagic was also seeing rapid growth and that gave me the motivation I needed to push through.”

Who is your product or service made for? Who is your target market?

“TextMagic predominantly serves small and medium-sized businesses. Our customer base is very broad, however, and includes industries from ecommerce to legal services.”

What’s your marketing strategy?

“We provide an ideal solution to many of the communication problems our target audience can face as a growing business. All of our marketing content is focused primarily on first addressing those issues while also introducing the solution — that means a focus on content marketing backed up by SEO research to understand the questions we need to answer.

We apply the same level of focus to creating useful content such as guides and videos to help our users get the most out of our product, keeping our long-term customers on board, and showing leads how easy it is to get started. We also actively promote our affiliate partner program, working with digital marketers, content creators, and websites to reach a wider audience.”

How did you acquire your first 100 customers?

“As a startup, TextMagic had the benefit of offering a service that was very useful to other startups. In the early days, this helped a lot as the business found customers among its peers and was able to expand its network through word of mouth in this way.”

What are the key customer metrics / unit economics / KPIs you pay attention to to monitor the health of your business?

“We pay close attention to the number of new users who register with us each year as well as the number of loyal customers that continue to use our service. Tracking the number of free trials that are started — and how many of those convert to customers — is another key area, along with the total number of texts our users send each year. 

Beyond those metrics, we always pay close attention to any customer feedback we receive and any problems that are reported by our customers.”

What’s your favorite book on entrepreneurship?

“Napoleon Hill’s ‘Think and Grow Rich’ had a big influence on me when I started out 20 years ago. Believing in an idea is the first step in making it happen, but you also need to take steps towards achieving your goals.

That’s why I now spend more time reading books that focus on more practical information, such as how to plan finances and invest wisely. For anyone interested in the Baltic stock market, Jaak Roosaare’s ‘Getting Rich Textbook: Knowledge of Money You Weren’t Taught in School!’ (Rikkaks saamise õpik: teadmised rahast, mida Sulle koolis ei õpetatud!) is a great read that is full of practical advice.”

What is your favorite startup or business podcast?

“I think there is a lot to be gained by learning from people completely outside of your own sphere, so I really like the broad range of topics and guests on podcasts like ‘The Tim Ferriss Show.’ However, I also listen to podcasts that focus on my own areas of interest, such as the ‘Startup in Estonia’ podcast, which recounts interviews with people like Kaidi Ruusalepp, former CEO of the Nasdaq Tallinn Stock Exchange.”

What is something that surprised you about entrepreneurship?

“The amount of administrative work and minor details that need to be taken care of can be a surprise, especially in the beginning when you might not have a large team to delegate such tasks to. It is very different now, of course, as TextMagic has a great team that keep[s] the business running smoothly and moving forward.”

How do you achieve work/life balance as a founder?

“While it is not always possible with the responsibilities of a CEO, work should stay at work. At the beginning of a new venture, there are going to be some long workdays and weekends, but don’t let this become the norm. 

Today, I make sure that I always allow [for] plenty of free time to spend on my hobbies, taking part in sports, and driving my car. I take a long summer break to ensure that I come back fresh and ready to push the business forward in the autumn.”

How do you stay motivated?

“Pushing forward towards new goals is what motivates me the most. Also, setting regular milestones for myself and the business helps me keep moving forward. 

To me, it is important not to become complacent over past accomplishments. Taking on a new challenge keeps things interesting and boosts my motivation. For example, conducting TextMagic’s IPO and expanding our services to include a new product ensure[s] I have plenty to work towards.”

Did you have to develop any habits that helped lead you to success? If so, what are they?

“Being able to step back and let your team do their thing instead of trying to be on top of everything is an important habit for any CEO to cultivate.”

What are you most proud of as an entrepreneur?

“It sounds like an obvious answer, but the growth of TextMagic to its current status is something I’m extremely proud of. When I joined the company, I was the first official employee, the company was valued at around €200,000, [$226,000], and we had a turnover of around €10,000 [$11,300]. Now, our turnover is around €10 million a year [$11 million], we are valued at hundreds of millions of euros, and we have a team of more than 40 highly talented employees.”

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