“Brazil is a laboratory of the future”, says founder of tech giant

When a bank, airline or e-commerce sends an SMS or a WhatsApp message notifying that the purchase has been approved or that an order is ready for collection, there is a good chance that this communication has passed through Sinch’s infrastructure.

Founded in 2008 in Stockholm, the Swedish company specializes in connecting brands with consumers through messages and digital channels — and today processes almost a trillion transactions per year.

For this global company, the Brazilian market is essential. “Brazil is a priority for two reasons: 1) it is a large, dynamic and advanced market; and 2) it functions as a laboratory of the future. [Em termos de mensageria e comunicação] What happens here today tends to happen in Europe and the United States in a few years”, says Robert Gerstmann, co-founder and now Chief Evangelist of the company, with exclusivity to InfoMoney.

In addition to being a country made up of heavy users technology, Brazilians also have the distinction of being some of the biggest Whatsapp users. So, although SMS is still widely used by companies — mainly for authentication and notifications — WhatsApp also dominates conversational communication between brands and consumers. The reason for this, explains the executive, is the dominant type of smartphone. “Countries like Sweden and the United States have high iPhone penetration, where iMessage already solves a large part of communication. In markets with more Android devices, WhatsApp becomes essential”, he says.

With a team of around 300 people in Brazil, the company has already made two acquisitions here. “We acquired the companies TWW and Wavy, which consolidated our local presence,” says Gerstmann.

The M&As strategy is not limited to Brazil. Since the IPO in 2015, the company has made around 20 acquisitions, with total investments of approximately US$5 billion. The objective was to expand geographically and incorporate new products, such as email and voice.

Invisible infrastructure

Sinch helps companies communicate with their consumers through messages and digital channels, summarizes Gerstmann. “This includes SMS, WhatsApp, email, voice calls and also new technologies such as RCS. In some markets in Asia, for example, we work with applications such as WeChat, KakaoTalk and Line.”

The company operates a global platform connected to mobile operators around the world and giants such as Meta, Google and email providers such as Microsoft, Gmail and Yahoo. “In practice, we act as a large message distribution infrastructure. Brands connect to our platform and we deliver these messages to the correct channel, be it a telephone operator, WhatsApp or another service”, explains Gerstmann.

In the global crisis

Sinch’s story begins at the height of the global financial crisis, in 2008, just two months before the collapse of Lehman Brothers, in the middle of the global financial crisis. “That’s why, from the beginning, the company was created without venture capital and grew in a bootstrapped way.”

The initial bet was on corporate SMS, at a time when banks and airlines were beginning to use the channel to communicate with customers. The six founders, all coming from the telecommunications sector, rented a small room inside a travel agency for $600 a month. In just a few months they were able to generate traffic. “We managed to pay salaries in January 2009 and hired the first person in April of the same year”, he states.

In the first seven years, growth was completely organic. “We acted a lot as suppliers to other players in the sector and expanded geographically. We went from scratch to a relevant operation only with international expansion and a focus on SMS”, he says.

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From one-way messaging to AI-powered conversation

The most profound change in Sinch’s business model came recently, with conversational communication. “This is probably the biggest transformation in Sinch’s history. SMS is a one-way channel. With WhatsApp and similar channels, communication becomes two-way”, says Gerstmann.

He uses a simple example to illustrate: “An example is medical scheduling. Before, the patient received an SMS reminding them of the appointment. Now, they can respond, reschedule, choose times — all automatically, without needing to call a call center. This reduces costs for companies and greatly improves the consumer experience.”

Artificial intelligence is now added to this conversational layer. “The combination of conversational messaging with AI is extremely powerful. AI works as an intelligent attendant, capable of accessing data, understanding context and automating complex interactions”, he says. “This allows for a more personalized, more efficient service with lower operating costs. It is a structural change in the relationship between brands and consumers.”

At the same time, AI brings challenges, such as the risk of hallucinations. “This is still an evolving topic. The main recommendation is to combine generative AI with deterministic, more controlled flows”, he points out. “For open-ended questions, AI can look for answers in FAQs. For critical information, such as bank balance, a strict flow is required, with no room for error. Creating ‘safety rails’ is essential to avoid hallucinations.”

Security, fraud and the evolution of SMS

If, on the one hand, digitalization opens up new fronts of interaction, on the other hand, it expands the attack surface for fraud. “Fraud is a global problem, but with different intensities. Brazil is among the most challenging markets in this aspect”, recognizes Gerstmann.

Part of the vulnerability is in the origin of the SMS. “SMS was created in the 1990s without a focus on security for corporate use, which makes it more vulnerable. Channels like WhatsApp were born with stricter rules and barriers”, he explains. “Still, fraud is a constant race between attackers and defenders. We work closely with operators and platforms like Meta to continually improve protection mechanisms.”

In this context, RCS emerges as the next stage in the evolution of SMS — with particular relevance for Brazil. “RCS is the evolution of SMS. It offers features similar to WhatsApp — such as rich messages, buttons and carousels — but is operated by the mobile operators themselves, with technology from Google”, he states.

“In Brazil, it is estimated that 60% to 70% of messages that look like SMS are, in practice, RCS”, says Gerstmann. “In the future, business communication should mainly focus on two channels: WhatsApp and RCS.”