Meet The Disruptors: How Derek Ting of TextNow Is Shaking Up The Telecommunications Industry

At TextNow, we believe that everyone needs access to communication to stay connected to family and friends, to get a job, or to run their own business. A lot of people can’t afford the high monthly costs of the traditional carriers, so we’ve made it our mission to provide phone service for free, or as close to free as possible.

As a part of our series about business leaders who are shaking things up in their industry, I had the pleasure of interviewing Derek Ting, CEO and Co-founder of TextNow, the leading mobile app offering affordable cellular and WiFi-enabled phone service. A lifelong entrepreneur, Derek created TextNow while studying computer science at the University of Waterloo. Under Derek’s leadership, the free TextNow app has been downloaded more than 200 million times around the world. He was named the Ernst & Young Emerging Entrepreneur of the Year in 2012.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?

Thanks for taking the time to speak with me! I’ve always been interested in entrepreneurship and passionate about computers and technology. I started my first company when I was 15 and eventually sold it while I was still in high school.

I created TextNow as a student at the University of Waterloo with my friend and business partner Jon Lerner, but neither of us set out to turn it into a company. We knew we wanted to work on projects and problems that we were passionate about, and we didn’t feel that way at the big companies we were working for.

At the time, mobile phones and mobile apps were pretty new. We were frustrated by traditional phone carriers who were charging for mobile data, but also charging to send text messages. We designed an app that allowed users to send text messages over the internet for free, and it caught on pretty quickly. We realized early on that our creation filled a need in the market, so we expanded to provide free phone service as well.

We had offers to go work at big companies when we graduated but opted to work on TextNow and try to build our own business. Today, the app has been downloaded more than 200 million times around the world and we are the largest provider of free phone service in the United States.

Can you tell our readers what it is about the work you’re doing that’s disruptive?

At TextNow, we believe that everyone needs access to communication to stay connected to family and friends, to get a job, or to run their own business. A lot of people can’t afford the high monthly costs of the traditional carriers, so we’ve made it our mission to provide phone service for free, or as close to free as possible.

There are two ways that TextNow is disrupting the telecommunications industry. First, with the TextNow app you can get a real 10-digit phone number and phone service for free, supported by ads. There are no hidden fees, contracts, or monthly charges unless you want to pay for an add-on like a data plan. An even bigger game changer is the Free Nationwide Talk & Text service that we launched earlier this year. With a compatible device and a TextNow SIM card, you can get true cellular service at no cost. In the past you needed to be connected to WiFi to make calls and send texts. Now, no matter where you are in the U.S., you can make unlimited calls and send unlimited texts to the U.S. and Canada, for free.

Secondly, we’re using mobile app infrastructure to deliver our service. It’s software. That means consumers no longer have to go to a carrier’s physical store or wait on hold with customer service to get set up. It also means we’re able to give our customers features that carriers can’t. For example, with TextNow you can use your phone number on multiple devices, whether that’s a smartphone, tablet, or computer. If you forget your phone at home, you can log on to your account from your desktop computer and still stay connected by calling and texting.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When we first started the company, we were looking to develop a host of products alongside TextNow. One idea was a private social network called Touch. There was one problem: the domain name touch.com was taken. We already had in our minds set on the name, so I did some detective work and traced the owner of the domain to Ottawa. I looked up his number in the phone book and called him to negotiate. He eventually agreed to sell me the domain for $100,000.

Two weeks before we launched the product, I got a call from a broker offering to buy the name Touch.com for many multiples of what I paid for it — it was a seven-figure offer. But we were so close to launching, and we were excited about it, so I said “thanks, but no thanks”.

Touch.com didn’t catch on, and we still own the domain and the Touch trademark today.

There were two lessons: one, we probably should have taken the money when it was offered. But the bigger lesson was the importance of focusing on your core product. We knew that TextNow was a winner, and the experience with Touch taught us to spend our time improving on our core competency instead of trying to branch out into unrelated areas.

We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?

There have been a lot of people who have taught me things along my journey, but none more than my mom. The resilience it took for her to leave communist China, build her own successful company in Hong Kong while raising me by herself, and then starting all over again after immigrating to Canada, was so inspiring. She taught me that nothing is impossible if you work hard and have resilience, persistence, and belief in yourself.

When we first launched the company, we were a part of an incubator in Waterloo, Ontario called The Accelerator Centre. When we started, we didn’t know much about how to run a business. They really taught us the basics like bookkeeping, filing tax returns, and hiring employees.

In 2011, we raised $1.5 million in seed funding from a group of investors, including Freestyle Capital’s Dave Samuel. I was young and it was my first time running a company. Dave has done it all in the tech industry, so his advice was invaluable when it came to things like hiring, scaling, and iterating new products and services.

In today’s parlance, being disruptive is usually a positive adjective. But is disrupting always good? When do we say the converse, that a system or structure has ‘withstood the test of time’? Can you articulate to our readers when disrupting an industry is positive, and when disrupting an industry is ‘not so positive’? Can you share some examples of what you mean?

There are a lot of industries that have benefitted from disruption. After years of doing the same thing, companies can lose focus on providing the best experience for the customer. New entrants bring a fresh perspective and innovative ideas that make products and services faster, simpler, and cheaper for consumers. Using technology, they change the status quo and force incumbents to be more customer friendly. For example, the rise of ecommerce has forced traditional retailers to reconsider how their customers want to shop.

However, we’ve also seen platforms that seek to dominate the market at the expense of everyone else. When ride sharing apps first came along, they were convenient and affordable. However, their grow-at-all-cost mentality has created a race to the bottom for wages, poor treatment of gig workers, and hasn’t made any discernible improvements to competition in the taxi industry.

We’ve seen the same thing in the media industry. Giant tech platforms have surely disrupted traditional journalism and gained a massive share of advertising dollars. That’s led to huge layoffs in the press and intensified the spread of misinformation. I don’t believe that society is better served by centralizing control within a few companies, who are disseminating information that hasn’t been fact-checked or reviewed by a professional editor.

Can you share 3 of the best words of advice you’ve gotten along your journey? Please give a story or example for each.

I’ve been given a lot of good advice through my career, and I always try to learn more from the people around me. Some of the best advice I’ve gotten about running a company includes:

1. Have money in the bank, even in the good times. TextNow has been profitable almost since the start, and we’ve always been scrappy and resourceful to make sure that we don’t overextend ourselves. This was crucial when the pandemic began. Our financial flexibility allowed us to weather the storm and come through the worst of the pandemic stronger than ever.
2. Put people first. Fostering the right culture has always been one of my top priorities. We don’t tolerate ‘brilliant jerks’ at TextNow. We understand that it’s people that build great products, so we invest in attracting and retaining the best talent. Our people-first culture has helped us to retain our talented team and tackle problems effectively.
3. Work-life balance is important. Every entrepreneur needs to work hard, but it’s just as crucial to work smart. We work in a creative field, and I believe that you can’t be creative if you’re feeling burned out. I want to bring my best self to work every day, and I want my team to do the same. This is a marathon not a sprint, so I make sure that I take breaks and vacations and encourage all of our employees to do the same through things like our unlimited vacation policy.

Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?

We’re a consumer company, so we’re mainly focused on user acquisition. First and foremost, I’m a product person. I love when our users enjoy the TextNow experience so much that they recommend it to family and friends. Word of mouth is the most cost-effective way to gain new customers, so we want to deliver the best customer experience in the industry which then turns our users into evangelists for the product. Advertising and sales conferences are important, but for us, our users are the best source of customer growth. We didn’t start spending money on marketing until our sixth year in business because our users have been such a great source of word-of-mouth recruiting.

We are sure you aren’t done. How are you going to shake things up next?

We’re always working on improving the product and figuring out ways to provide more communication services for free. With Free Nationwide Talk & Text, we’ve made cell phone service free. Now we’re looking at what else we can provide at no cost. We’re exploring ways to offer data plans for free as well, so stay tuned.

We’re also looking at new products or services that we can add. For example, we’d like to add a free second phone number on each device that people can use for a business line, online dating, selling things online — any situation where you might not want to give out your primary phone number. We’re also looking at adding parental controls, so parents feel secure using TextNow as a means to stay in touch with their children.

Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?

In the early days of TextNow, Good to Great by Jim Collins really changed the way I thought about leadership. The book compares the differences between companies that build long-lasting success, and those that don’t. He found a lot of interesting things about the way successful companies operate, including the concepts of finding and hiring the right talent — first bring the right people onto the bus, and then figure out where the bus is going- and focusing on core competencies that you do really well.

I also really enjoyed Radical Candor by Kim Scott. It’s a book that really helped to shape my career and leadership style. It’s one of our core values at TextNow — be respectfully candid. I think it’s important to have difficult conversations, but in a respectful, constructive way. And it goes both ways — I want our team to feel like they can talk to me if they think we’re headed in the wrong direction.

I listen to the podcast Masters of Scale by LinkedIn co-founder Reid Hoffman on a regular basis. It provides a lot of interesting insights from business leaders about how they scaled their companies and some of the lessons they learned along the way.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

The Dalai Lama said, “sleep is the best meditation”. It sounds obvious, but as I’ve gone through my career I’ve had to learn about the importance of sleep. When I’m well-rested I’m more creative, I’m better at solving problems, I handle stress more easily, and I just feel better in general. So that’s some advice to founders just starting out on their journey — make sure you’re not neglecting your physical and mental well-being and get enough sleep.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I think one of the biggest challenges we face right now is making the educational system work for everyone. I’ve been really fortunate in life — my mom valued education and made it a priority for me which helped me to get where I am now.

My wife is a teacher who has worked in a lot of different settings with kids from various socioeconomic backgrounds. It really breaks my heart to see how underfunded a lot of schools in North America are, and unfortunately a lot of lower income students are getting left behind from a really young age. That exacerbates the inequality problem. We need to make sure that every child has access to a high-quality education and experiences like team sports and camps, to make sure they have the opportunity to reach their full potential.

How can our readers follow you online?

You can follow me on Twitter @DerekTing13, and you can learn more about TextNow on our website, www.textnow.com.

This was very inspiring. Thank you so much for joining us!