A small, picturesque village on the Mediterranean coast isn’t usually what comes to mind when we think of the typical birthplace for a global tech unicorn. But Croatia-based Infobip has grown into a global communications giant reaching more than seven billion mobile devices and “things” in more than 200 countries and generating close to $2 billion in revenue.
Amid a generative AI revolution, Infobip is helping companies change how their customers interact with technology and conversational interfaces. In an interview with McKinsey’s Philipp Hillenbrand, Infobip’s CEO and cofounder Silvio Kutić shares his insights on how the company navigates rapid growth and expansion, the importance of a positive growth mindset and being in touch with customers, and how organizing around agile, mission-based teams promotes innovation from employees.
Key insight #1: Infuse a positive growth mindset into all aspects of your business.
Philipp Hillenbrand: How did starting a company in the small Croatian village of Vodnjan affect your approach?
Silvio Kutić: With just 3,500 inhabitants, Vodnjan is not exactly the ideal starting ground for IT. So there was even more pressure than usual when launching a business to be creative and innovative, and to do things differently. First, I found the right people to be cofounders—people who were the right cultural fit. Then we instilled a sense of urgency and purpose in our small community. We focused on a niche business with high growth potential: customer engagement through digital interactions. We asked, “How could this technology really impact people’s lives and change the world?” It challenged us to think bigger and not be bound by our location.
Three forces drive our sense of purpose at Infobip: our fascination with the technology, our impact on the community, and our impact on the lives of our employees.
Our culture focuses on a positive growth mindset—enabling and empowering people to innovate and collaborate, and also learning where we can be better. It comes in part from the founding team having a background in engineering, which involves a mindset of trying to understand things and learning by doing. When we started, we didn’t know anything about this business. We learned a lot by sharing knowledge, reading books, and researching online. We have this very beautiful way of creating through acquiring knowledge. That’s what’s pushing us forward.
Key insight #2: Small, mission-based teams fuel purpose and connection to the customer.
Philipp Hillenbrand: How did you understand the problems in your niche and create this great product‒market fit? How did you understand what you wanted to solve in a different way than what was already out there?
Silvio Kutić: It’s critical to be in front of customers as much as possible to understand the problem. You have to speak to customers constantly. We’ve been laser-focused on solving customer pain points in segments like B2B platforms, digital natives, or enterprise where we believed we could grow a lot in the next few years. Again, we’ve always had this sense of urgency fueling our work. We’ve been very quick to deliver new features and test them with customers. If a feature is functioning well, we scale it to all new customers in the same cohort.
Philipp Hillenbrand: How do you organize to ensure this customer focus is adopted across a company of a few thousand employees?
Silvio Kutić: In the past few years, we grew from approximately 1,000 to 3,500 employees. With this growth, the organization became much more complex. The most important thing was to organize around an ecosystem of products and capabilities instead of departmental silos. Departmental silos can be detrimental in a start-up because you end up with 20, 30, or 50 people doing the same thing repeatedly. Also in a silo model, employees are organized around tasks, and tasks don’t give them context, purpose, or impact.
Instead, we are organized in small, mission-based teams and squads that can deliver something end-to-end with the least amount of dependency possible. These small teams can then be in touch with customers. We urge team leaders to dedicate a certain amount of time to speaking with customers. This allows the team to stay connected to the real value they are providing and see the broader context and why their work is important. They feel free to innovate because they don’t feel they’re just a number in the company. They feel significant. That’s important for us.
We have had ups and downs in the organization, which is normal when you have this hypergrowth. We tried to reorganize into silos, but it always came back to needing people from different disciplines to work together to solve something. The interactions between people are where innovation is happening and where value is created. Silos minimize these kinds of interactions.
Key insight #3: Be cost-conscious and invest in high-growth, high-yield, low-cost markets first when expanding internationally.
Philipp Hillenbrand: From Vodnjan, you expanded in Croatia and now have 60-plus offices around the world. When you went international, what markets did you target?
Silvio Kutić: Five years prior to when we founded Infobip, I was already selling this service all around Europe. In those five years, we were profitable because we bootstrapped the company from day one. It worked for us to be cost-conscious because we had to prioritize how we were developing products. We had to be laser-focused on what we were doing and where we were investing the limited amount of money and resources we had. By the time we founded the company, we already had offices on three continents, which gave us an advantage when we were ready to go international.
When we started exploring international expansion, we chose markets we could enter with low investments and high yield. For example, we entered markets such as Nigeria, Indonesia, Brazil, and India—big markets that were not as expensive as the United States or Western Europe but that still had very high growth, high population, and high mobile penetration. Companies and executives in these markets were more willing to try new technologies and experiment with what technology could bring them. And everything in these markets moves quicker. We did not focus on the United States or Western Europe until recently.
Key insight #4: Build a collaborative ecosystem to generate successful tech companies.
Philipp Hillenbrand: What can Europe do better or differently to create a more encouraging environment for rapid-growth tech companies?
Silvio Kutić: Europe has a very strong, highly skilled talent pool. Where we are lagging is in having an entrepreneurial mindset. People in the United States, by contrast, are more inclined to be entrepreneurs and are more willing to fail. In Europe, failure is still a taboo, though that is slowly changing.
Also important is access to financial capital. Most private equity growth is based out of the United States. Having a financial lever based in Europe is important, especially because as European companies grow and become successful, they are often acquired by companies in other geographies. They then become another region for a non-European company as opposed to creating new technologies for Europe.
Last, to be successful, you need to build an ecosystem of other companies that can collaborate with each other. We have more and more start-ups and tech unicorns in Europe. Within such an ecosystem, companies can build the right skills to implement the technology of today, not just theoretical things we learn at universities in Europe. This collaborative ecosystem helps companies become very practical.
Key insight #5: Learn from the past and stay focused on your vision.
Philipp Hillenbrand: What mistakes have you made and what lessons have you learned that other start-ups and scale-ups could learn from?
Silvio Kutić: We’ve had more failures than successes. When building various products, we didn’t validate all of them and we left some to die slowly. We should have dropped the product as soon as we saw that it wasn’t a fit for the market, that we were too late bringing it to the market, or that it didn’t bring a special value to the customer base. When you are spending your time and resources on something that’s not bringing impact for the customer and the long-term health of the company, it has a negative effect on morale. People will leave the company because of that. So we’ve learned to jump on opportunities that align with the vision and mission of our company and to discard the rest.
Philipp Hillenbrand: What’s to come for Infobip in the next ten years?
Silvio Kutić: Since we started the company, we’ve been focused on how to democratize the future of digital interactions between businesses, services, and people. We started with simple SMS technology, and then we added different types of channels and functionalities. Basically, we started with interaction 1.0—the desktop applications customers would use to interact with different services. Interaction 2.0 was web applications, distributed systems, and so on. Interaction 3.0 was mobile apps. Now we’re at interaction 4.0, which is the conversational user interface.
We’re very excited about generative AI and ChatGPT because this type of interaction is not bound to any platform or channel. It can happen anywhere and everywhere. It’s really in line with our vision. So whatever we do now is fueling this type of conversational user interface. We want to be the technology that’s powering this revolution.