Image via CrunchBase

When companies first launch, they’re often best at focusing in on their mission, on what they do best or – ideally – on the single biggest market problem they can address. Point is, they focus. And while this is often thanks to a strong leader, it just as often can be the sheer force of capital restraint (ie. only have enough cash for one thing at a time). It’s once companies mature, have cash or have public investors to manage, that distraction sets its. And it can kill, or at least injure – see Cisco for more on this phenomena.

Last year I mused to those that would listen (not that many) that Skype was falling victim to just this – the curse of distraction. After years of excelling at what it did best, suddenly it aspired to grow old overnight and become everything to everyone. This included a very aggressive and capital intensive play for the enterprise market – a segment that, if a car, would be ticketed for going too slowly. And if a club, would have a very strict, blue-blood membership policy. The new Skype’s been seen angling to  to be your SIP trunk by day and your living room conference room by night. Again, see Cisco for more on how this story goes.

For my money (and it certainly wasn’t mine) I thought the two biggest opportunities – and I tend to think it terms of markets companies can own, and not just about sheer size – was to flat out dominate the small business collaboration market, with a voice spill over, and to heavily exploit the developer generation by opening up the platform and network to them.

Alas, Skype had bigger ideas. But while it looked like they were ramping all these new markets to appease would-be Wall Streeters, perhaps it was all about an exit after all. Think about it: there was no way enterprise revenue was ever going to pump fast enough to impress anyone. But, having an enterprise foundation – including staffing and partnerships (as Dave Michels talked about earlier this week when he called out MSFT as the buyer) - may have given them that extra oomph towards bumping up its valuation.

Ultimately Facebook could only drive value out of their consumer business; Google could have found a way to drive something out of the consumer and corporate units, but – as Andy Abramson commented before the deal – they may have done the deal just for the joy of slowing Facebook down. But Microsoft, they have the money and their hand in all sorts of spots that Skype could juice if well executed. Including, albeit ironically, enterprise. And who knows, maybe with the help of their BizSpark program, developers will get their hands onto Skype after all.

Other Random Thoughts on the Deal:

• Gaming just got voice. While ViVox has made big strides putting VoIP in gaming, this changes everything.
• Inflation has come in a serious way to VoIP: In 2005 MSFT bought Teleo (I’m guessing for under $100M to, yes, better integrate voice into products. Granted that was a technology and not community buy, but still.)
• Even when something is free like Skype has been, when performance tails off people will complain – and it will hurt the brand. Although apparently not the valuation.
• Favorite quote of the day: “Great. Now it’s up to MSFT to fix my Skype 5.0 for Mac…”)
• Nice to have such big, huge valuation news in our space. Seems like the last time was when MSFT bought TellMe for $800M.

Enough said.

Last week’s Amazon’s EC2 outage is being used by some as a call to question our move to the cloud. I understand the issue in a personal way; one service that I am running was down for hours as Heroku struggled to get their service back online.  So, is the “cloud” ready for primetime? It does seem like yesterday was a bit of evidence that it’s not.

However, I think there’s a different analysis that suggests that nearly all companies should strongly consider a move to the cloud, even as effects of yesterday’s crash are still being felt. The main question to answer is not “Is the cloud secure and stable?”, but “Is the cloud more secure and stable than what I’m able to provide?” In short, and to be specific about it, do you feel like your resources and technical staff can at least equal those of Amazon’s? If you are Verizon, then maybe so. If you are a small startup… obviously not. The safe bet is that Amazon’s infrastructure and staff are way more sophisticated than you could possibly afford. The fact that Amazon experienced an outage simply means that their substantial investments were not enough to maintain service levels; it does not mean that you could have done any better.  It’s like the old joke about the two explorers in the jungle who meet up with a tiger. One screams “Hey, we gotta run! Why are you sitting down to tie your shoes?! We gotta outrun that tiger!” “No,” said the other explorer. “I don’t have to outrun that tiger, I just have to outrun you!”

This is a principle that we can extend to any part of the cloud question. Can a third party do a better job than I can? If so, it’s perfectly rational to outsource it, even when the outsourcer isn’t perfect.

Related articles

• Amazon’s outage in third day: debate over cloud computing’s future begins (venturebeat.com)
• Amazon EC2 Outage Shows Risks of Cloud (pcworld.com)
• Amazon’s cloud crash takes down Foursquare, Reddit and others (venturebeat.com)

The article is filled with truisms and gentle reminders of yesteryear, but it was these two paragraphs that caught my attention most. Unimaginable today, in so many ways….:

“When the telephone first appeared, there were all kinds of etiquette issues over whom to call and who should answer and how,” Dr. Fischer, a sociology professor at the University of California, Berkeley, told me when finally reached by phone. Among the upper classes, for example, it was thought that the butler should answer calls. For a long time, inviting a person to dinner by telephone was beyond the pale; later, the rules softened and it was O.K. to call to ask someone to lunch.

Telephones were first sold exclusively for business purposes and only later as a kind of practical device for the home. Husbands could phone wives when traveling on business, and wives could order their groceries delivered. Almost immediately, however, people began using the telephone for social interactions. “The phone companies tried to stop that for about 30 years because it was considered improper usage,” Dr. Fischer said.

The rest of the article can be found here….

Shows have a way of telling you the pulse of the industry and of the broader economy. The energy level, the conversation in which you engage and of course the sheer size of them all leave you with indicators in one direction or another. Enterprise Connect serves as a bellwether, perhaps even more so than others because of its intimate ties to big business. And this year’s message was a clear one: people are forward instead of backward thinking, people are buying or at a minimum preparing to do so, and, as an important qualifier to this — the buying motivation is once again to leverage innovation to create competitive advantage rather than to simply shave costs. The last point of course is my favorite.

Here is what I liked, and what I took away from Orlando:

‘Now’ Talk: Conferences have a tendency to talk more about what’s coming and less so about the now. You can’t really blame the show; ultimately the vendors pay their bills and use it to show off what’s coming. But this time around we talked about what’s actually (or finally) here, and about addressing problems companies actually have, rather than will have. Subtle difference for some; huge meaning for others.

Social/Video/Mobile Mash-up: I don’t hear the term ‘mash-up’ so much any more, but this is what I saw. Social media and communications, video and mobility have each long been touted as the future. In MickeyLand this year, these three critical pulons of our industry’s future not only arrived as purchase-orders-to-be, but they also intersected big time. And maybe it’s the sum of the parts that will really push each forward. Think about it: mobile and social, so dependent on one another, are going faster than we can process. And video, well one needed only to walk the floor to see its place. Put the three together (say, in tablet) and as Cisco demonstrated, you have mash-ups like we never dreamed of for enterprise.

Collaboration, collaboration, collaboration: Once relegated as a buzz word for project management applications, the communications industry seems to have literally acquired all rights to the term. Case in point: After the Cisco keynote, I tweeted my approval (as if they needed it) for using collaboration as a driver to their market positioning and differentiation. Yet, five minutes later, Avaya’s CEO was on stage beating the very same drum. Either way, it fits. After all, voice – the forgotten one – has been a collaboration technology forever. We just never bothered to call it that.

So yes, no more feelings of routine. And if an enterprise show – no disrespect intended – can get me out of bed, things are rolling.

(I previously posted this at NoJitter)

Image via Wikipedia

Among other things, including how service providers like his will monetize the mobile revolution (ie. sip-enabling the accelerating number of mobile end-points), we touched on video. Same dialog many of us have had before: where is video, who’s asking for it and who will own it from a sale/delivery perspective. Actually, here at the conference, video is not a big topic. This community is more focused on the SMB than the enterprise, for one, and the cloud as a whole representes a huge migration for this group of sellers — so a focus on video may have to wait.

But opportunity is pending for those Service Providers who can find some focus for video, align themselves with the right suppliers and begin testing and iterating positioning a comprehensive video solution to their prospects. Jeff and I agreed that if you want to be a leader as video demand starts to take, you need to be learning how your customers are thinking about video and training sales people on selling video solutions.

We also sensed together that it’s starting to smell a bit like the early days of voice mail (for those of us who were around for that). While selling voice mail to those who had never bought it was very difficult (I can attest to that), at one point the switch turned on. Prospects who once threw me out, suddenly called me back in with a story about a customer who called their switchboard and asked to be transferred to a voice mail box. Only to find out there wasn’t one. Boom – voice mail took off. Can the same happen to video? Will three parties schedule a call only to find out that one doesn’t yet run video and the call needs to go voice only?

PS. My YouTube obsessed daughter found this video of her father, spouting off on his opinions on the video space. I had forgotten that friend David Spark had grabbed me in the hallway at IT Expo in February to pepper me with questions…

First the particulars, then some editorial. To date we’ve been lucky with highly accomplished and engaging keynote speakers, who serve to launch the evening with stories from their trenches and advice for entrepreneurs of all kinds. This time around is no different. With a little help from my friend Andy Abramson and a little luck on timing, Craig Walker of DialPad-to-Yahoo! and GrandCentral-to-Google Voice fame will offer his support to the event with a highly anticipated keynote address.

The panel of judges are no slouches either. Thomas Howe, Jamie Siminoff and Wesley Chan (of Google Ventures; he only founded Google Analytics) will be on bench questioning and critiquing the early-stagers at the podium.

So no lack of start power. But – the real stars of the show are the startups themselves and the innovation in our sector they represent. And in this age of uber-entrepeneurialsm, this group of applicants and the selected presenters do not disappoint. At least not in their diversity of ideas.

I was going to say that if I only knew how to do Word Cloud, I would use it as the best way to present the wide variety of ideas pitched to us over the last many weeks. While many applicant are building more so what I would call classic telephony apps (ie. but better, faster, easier) – and there is nothing wrong with that – just as many are dipping into to our most common set of tools (voice, video and texting) to build applications that address problems in verticals ranging from Marketing, to Health and more.

Alas, I stumbled on Wordle, that yes….creates instant word clouds for you. So here it goes…

Well, not exactly what I was going for – but I imagine you get the point.

If you’ll be in Miami this week, please come by to support the founders of SatCourier, Call Loop, hookflash, FastCall411 and Hootme – and to judge for yourself who is heading for great successes. If not, have a look at all the startups who applied and be satisfied that not only are we innovating here in telecom but doing so in no less than seven ways to Sunday.

As I prepare for next week’s Cloud Communications Summit and Startup Camp at IT Expo, I’ve been reflecting over the past year. Even though it’s been a nasty one for the average Joe, the economy as a whole has done pretty well (all considered), and our own little niche (cloud communications) seems to be heating up.  Probably more than that, actually.  When we started this little exercise in 2007, there were very few cloud communications companies – and four years later – we’re beating them  back with a stick. In fact, I would venture a guess that the next three years will be chock full of investments, exits and everything in between.  Most of us who have been around the block remember what it was like in 1999, where any booth at the VON show was a ticket to the next round of funding. It’s coming, and pretty soon.

That all said, here’s Thomas’ word of caution for this market, and I’m going to take it right from a personal hero, Warren Buffett. Warren once said “The market, in the short term, is a voting machine. In the long term, it’s a weighing machine.”  As all you would-be bazilionaires line up at Startup Camps around the globe in the coming weeks, take that one to heart. Simply said, as much as the hype of a good idea will convince you, your investors and your significant other of the inevitability of your world domination, remember that at the end of the day, a good, solid business will be valuable – and anything less is a future write-off.

I feel like we are entering a very dangerous time for investors in this market, and by that I mean cloud communications market. There are many, many companies that will base their new service off of something hacked together in a Startup camp, placed on  somebody’s API, and then slapped with a very pretty web site.   There’s going to be thousands of them. Which ones win? The heaviest ones. The ones that have a valuable, hard to replicate service that average companies need, need often, and need to exist.  Ones that you can’t write in a weekend, not because you have to work hard, but because businesses takes a long time to get right.

Let me get factual about this, and give some real examples.

• GroupMe? Light – carriers hate SMS traffic that exponentiates. Why? Because most consumers are on all-you-can eat  plans, so carriers want to limit traffic so they can boost profits.  Any GroupMe service with that sort of traffic pattern is a non-starter for any large carrier.  Twitter? Heavy. There’s no other mechanism for brands to get that sort of real-time insight.
• Textaurant? Light. Any large chain will just write their own. IfByPhone? Heavy. They are essentially the SalesForce of voice, enabling small groups in large enterprises to get their needs met.
• Ribbit? Light.  The BT acquisition killed them for the general public. Without a heavy business service, they just evaporated.  Twilio? Heavy. Great buzz, good attention – they will be a part of the toolbox for the foreseeable future. Each developer will add an ounce to their weight, and the it will accumulate.  Voxeo/Tropo? Black Hole Heavy. If Twilio does it right, they might generate a fraction of the Voxeo revenue. As Twilio adds legions of small developers, Voxeo adds legions of Fortune 500s.  We all love the Spartans, but the Persians won Thermopylae.

Don’t measure your business from anything but what your accountant sees. The rest is great stuff, but it’s not business. Get heavy.

What a difference a year can make. Scratch that…comparing 2009 to 2010 is b-o-r-i-n-g.

But the closing quarter of 2010 was anything but boring for a growing crop of entrepreneurs in the emerging communications sector. In 2008 I wrote often about the surge of new blood entering the communications space, many of whom who hailed from anything but telecom. This gang has played a pivotal role in pushing communications to the cloud and in creating a community that thinks more like the web – and less like the telco.

Now a few years later, a handful of these CEO’s just got themselves bountiful top-ups from investors, in the closing weeks of 2010:

GroupMe: What a story. Founded over a weekend at a TechDisrupt event and built on the Twilio platform, Jared Hecht and his team have had the year of their lives. The company raised a angel round within a few months of the product launch then not 6 months later raised $9M! Side note: Twitter had a good look at them but bowed out when the valuation climbed over $30M

TokBox: I give this group high marks for the guts to pivot to keep the dream alive. What was originally a basic video chat platform built on the Adobe platform, is now re-branded and re-positioning as OpenTok – the first fully open video chat platform for developers. While the world (well, some of it) waits for Skype to open up, it will fun to see what $12M and a channel filled with developers will do with a simple integration tool kit like OpenTok. Their mission: Bring the (video) conversation to the content, instead of the other way around.

Twilio: If you have not heard of Twilio by now, you’re probably not reading this post. In their case – like OpenTok - the $12M they just raised not only propels this set of brash entrepreneurs but also the huge community of developers Twilio’s outreach tactics have nurtured. Expect lots of texting-based applications to come from this community in ’11.

Ifbyphone: A year ago we wrote about CEO Irv Shapiro and his acquisition of CloudVox. This time, we tell the tale of plenty more funding for the other Chicago-based startup. With well established traction delivering voice applications that automate sales and marketing businss processes for the SMB, Shapiro just secured the National Association of Realtors®, through its strategic investment fund Second Century Ventures, as a strategic partner in the round. This means close collaboration to build and deploy applications designed for realtors. Not a bad channel….

Ring Revenue: And last – not counting those who closed smaller, non-announced rounds – Jason Spievak in beautiful Santa Barbara also topped-up in time to accelerate their call performance marketing business. More on him and RingRevenue here.

Not bad for a 6 week period. Happy New Year, all.

The recipe for a successful StartupCamp Comms is fairly straightforward. Not always easy to pull off, but at least the formula is simple:

1. An engaging keynote speaker with tales to tell and from whom the audience can learn something. James Siminoff (’10 – Miami) and Jeff Bonforte (’10 – LA) more than filled the slots in the first two editions.

2. Five, early stage startups innovating in some way with voice, video or SMS. We’ve seen a little bit of everything so far, with several past candidates doing quite well in the marketplace since.

3. A fair, well-spoken and a bit controversial panel of judges. No qualms there either, to date.

4. And of course some supportive sponsors, of which we not only have had our share but some that have supported us repeatedly.

So — StartupCamp at IT Expo Miami is just around the corner and I’m pleased to announce that the pieces are once again coming together:

Keynotes: Craig Walker, one of few people who will have sold companies to both Yahoo! and Google in one lifetime has agreed to cross the country to speak to the StartupCamp crowd! And he’s planning on bringing a friend, no less than his colleague at Google Ventures Wesley Chan (his Linkedin profile points out that apart from his role in creating Google Voice, he also helped created a little product called Google Analytics). A rare combination, no doubt, that should be a real treat for those attending. (PS. thank you to colleague Andy Abramson for lending me his Rolodex on this one).

Startups: Our official call for startups is coming next week but the application period is already open. Beyond the large pool of startups that applied for October (who all qualify this time around since it was only a few months ago) we have already received some very compelling new ones in voice and video.

Judging Panel: This lives in the ‘to-be-determined’ category. We never fail to come up with some industry people who can provide constructive feedback for the startups and some entertainment for the audience.

Sponsors: We have some big announcements coming in the first week of January both on first-time sponsors and on those coming back to support the event again. Stay tuned.

Well, here we go again. Now all I need to do is to get the four recipe parts to come together in time for February 3rd. Hope to see you in Miami.

While Earthlink contributed significantly to early adoption and education around VoIP (in their case consumer VoIP), ultimately they were early. They pivoted away from voice and continued to build what became a healthy business around dial up, broadband and hosting.

Fast Forward: What’s old is new again. Recently Earthlink purchased Deltacom as way to firm up its IP infrastructure and create a powerful Managed Services Provider. CEO Rolla Huff recently said:

The capabilities we acquire with the Deltacom acquisition will be complemented by our existing New Edge Networks business as we combine our nationwide MPLS network capabilities with Deltacom’s state-of-the-art infrastructure. The combined company will be especially well positioned to serve Fortune 1000 companies across the country…

Now comes the news this morning of Earthlink acquiring One Communications, a leading provider of local voice and data services with major markets along the Northeast corridor. With the deal, Earthlink expands their SMB customer base by almost 120,000; they get a bunch of talent in provisioning and managing voice and data applications for these customers – and they get a platform (along with able resources) to deploy business voice applications from the cloud (ie. Hosted PBX, Messaging).

So the trend continues. Companies looking for ways to scale their geography, given the void of truly national solutions provider, and turning to M&A. And by doing so, they expand their product lines to enable much larger monthly recurring revenues per customers, and of course increased stickiness.

The competitive landscape for the platform provider is also changing. In what was once a BroadSoft-only market – in terms of the platform used in the cloud to deploy multi-tenant applications – there are now signs of change. Cbeyond purchased Aretta and their Open Source hosted platform, and now Earthlink purchases One along with which comes their MetaSwitch back end.

None of this is particularly bad news for BroadSoft, mind you. As with any market and technology maturing the way Hosted VoIP is now doing, competition arrives. Ultimately, either of these mentioned could still choose BroadSoft for part of their services portfolio and, more importantly, these definitive signs of market maturation are being driven by end-user demand for hosted and managed services. BroadSoft has more than enough installed base to take full advantage of this. Competition is never a bad thing.

My only question: Who will be next to the altar?