Voip2020

iPhone GPS: Game Changing

3G Internet and a host of new apps for the iPhone are exciting news to be sure, but in my mind, adding GPS is the game changer.   Having your iPhone know where it is (and thus where you are) is not just about avoiding the need to enter a starting address when looking for directions.  Its about ANY software knowing where you are. 

The possibilities are endless and mind-boggling.  Looking for a friend to join you for a drink? Check your iPhone and see whose nearby and in a drinking mood.  Hungry for a slice?  The nearest pizza shops are mapped out for you, and your iPhone will take you there, turn by turn, as you walk or drive.  Nearest and next showing of "Iron Man?"  No brainer.  Forget where you were when you took that photo? Your iPhone tagged it with its location.  911 put you on hold?  Don’t worry, they’ll know where you are even if you pass out before they pick up.  Lost your iPhone?  Go online and find out where it is.

Apple is not alone in adding GPS to cell phones – ABI research, for one, predicts more than half a billion GPS-enabled cell phones will ship in the next four years. But by combining GPS with a platform open to third-party developers, the iPhone will harness the “location aware computing” revolution better than anybody else.  This is going to take us to amazing places we cannot yet imagine.  But at least we'll know where we are.    

Business phone service - that was easy!

Today Toktumi launched its first distribution deal, on Staples.com.  We wanted to start with Staples because its such a perfect fit for Toktumi.  First, they are extremely effective at reaching the millions of very small businesses that will find Toktumi useful.  Second, their focus on making things easy aligned perfectly with Toktumi's philosophy of making business phone service easy.

Staples invented the office superstore category in 1986 and today has more than 74,000 employees and 2000 stores worldwide.  Their total sales in 2007 exceeded $18 billion.  They are the clear leader in their category and set a high standard of excellence.  It has been humbling to work with such an impressive company. 

There is a tremendous amount of work that goes into launching in a channel like Staples.  We are starting first with their website, and hope to be distributed in their stores later in the year.  Even with that, there was a lot to do.  We had to provision product to 6 different fulfillment centers around the country so that they can ship to customers within a day from any center.  There were banners to be created for the website, and cross-selling plans that had to be put into place.  We also learned from Staples that having a flash demo on the product page dramatically increases sales, so we hired an excellent firm, Sellpoint. to create one for us.  Then there was getting the press release approved, including a quote from Staples Senior Vice President Pete Howard. As the launch date approached, all of this had to be coordinated and synchronized like a dance.  It wasn't without the occasional hitch, but we pulled it off, and much of the credit goes to the amazing team at Staples, whose dedication to excellence and personal attention to our product meant putting in long hours despite many competing obligations.  Thanks, Staples!

The Sting of Fraud

It only took them a week. I thought it might take longer, but its amazing the speed with which fraudsters with stolen credit card numbers found Toktumi.  We were able to shut down the fraudulent accounts quickly and permanently block the PCs from creating new accounts, but it hurt to see it happen so fast.  We refunded the charges to the stolen cards and informed the cardholders who contacted us of the situation and warned them they needed to contact their banks immediately.    We've now tightened security with a variety of methods that I shall not reveal. 

Telecom and fraud have a long history and despite the best efforts of Cybersource, our credit card authorizer, bad cards still got through.  Its up to providers like us to develop our own proprietary ways to protect ourselves and customers from fraud.  Over time we'll get better and better at stopping them.  Its part of the IP that is created in the course of doing business online.  Although it stung to be hit with fraud so early in our history, I know that now, while we are still in our beta, is the best time to do our learning and refine our approaches to reduce its impact on our business.

What is Viral?

I had a very interesting conversation with Mike Cassidy last Friday.  For those of you who don’t know him, Mike founded three successful startups, the most recent being Xfire.  Xfire is an application for gamers that grew 2% a week to 2M users before it was acquired by MTV Networks in 2006.  It now has over 9M users.

So what about Xfire made it viral?  Mike explained that an application can only be viral if it requires others to use it to make it useful to you.  So hotmail was clearly viral, as was Xfire, because it allows you to monitor and communicate with your gamer friends.    You need your friends to use it to make it useful to you – so you spread the word and get others to download it.  That’s what makes it grow.

But that’s not enough. You still need some math to work to achieve exponential growth, which is when a viral application takes off.  Here’s the math, as explained by Mike, who attributes this to Ed Baker, a 2nd year Stanford b-school student:

X = % of people who accept invitations and activate an account

Y = % of that group that invite at least one other person

Z = Average number of invitations sent per user (of those that invite at least one person) in the period of measurement

Viral Exponent = X * Y * Z

If your Viral Exponent exceeds 1, then you’ve got a viral application.  And it doesn’t need to exceed by much.  Xfire’s exponent was 1.02 based on a one week period.  That meant it grew at 2% a week.  Knowing that, Mike could predict exactly how many users he would have – and his predictions were right every month over three years!

Toktumi is alive and kicking

Well, the company is launched.  Its been going surprisingly smoothly - I'm waiting for the shoe to drop - I know there will be drama at some point - but so far it was a great week. We've gotten good coverage (see www.toktumi.com for some of the articles and to see our demo) and made at least three "top picks" lists from folks covering the conference.  We've had a fairly steady stream of people signing up for the service (although it slowed today going into the weekend).  Our best signup day was Thursday.  We are seeing existing customers invite new ones, which is encouraging.  We made our first sale on our first day, which I hope was a good omen.  We've also had customers convert to the full paid service already, despite our still being in beta.  So all in all, a good first week. 

Toktumi's launch at DEMO 2008

Toktumi is Live!  We launched yesterday at 10:03 am, but not without drama! Despite endless rehearsals, we forgot one scenario - what if MSFT powerpoint pops up an unexpected message during the demo!?!?!  Well, that happened, and it threw off my biz partner Ben.  We managed to get most of what we wanted to show done, and finished within 6 minutes as required, but is was a moment of shear terror for both of us.  Lucky for us, we got to do a redo - so that unhappy start has been vaporized and replaced with a fine demo on our website.  I thank the DEMO tech team for offering us the redo - it's a very rare thing! I must say I can't help but wonder if we were helped a little bit by Ben's expressiveness.  The stream of words that came out of his mouth (words spelled like this: *#&%@!) were picked up on the mic, loud and clear!

Sent from my iphone, 'cause I'm a chump?

Apple dropped their iPhone price by $200 a week after I bought mine.  I felt foolish but at least I can use the 30-day exchange policy to get my money back.  Many criticized Apple for the move.  I think it makes good business sense.  Pricing is about extracting the value people place on a product or service.  Apple believed that early adopters would pay $600 for their phone, and they were right.  Many hundreds of thousands did.  After tapping that, they are now broadening its reach with a lower price.  This allows the iPhone to go mainstream in time for the upcoming holiday season.  Establishing a beachhead in mobile will be tremendously valuable to the company, not just for the huge market it represents, but because ultimately it will help them sell more Macs.  If you think the iPod helped Mac sales, wait until you see what the iPhone will do.

Welcome to Voip2020!

Hello everybody!  As a first blog entry, I'd like to give you some background.

I’m a phone geek turned serial entrepreneur.  I'm currently Founder and CEO of Toktumi  (say it out loud and you'll get it).  Toktumi is going to revolutionize small business phone service and make a lot of people selling expensive phone systems a bit mad. 

Toktumi was founded September 1, 2006, the day I came off my non-compete with Microsoft.  I signed a one-year non-compete with them after they acquired my first VoIP company, Teleo, in August 1995.  Teleo was a white-label softphone solution, similar to Skype but standards-compliant, and with click-to-call integrated into Outlook and Internet Explorer

Prior to Teleo, I cut my teeth on two startups.  The first, WineShopper.com, was funded by Kleiner Perkins and Amazon to the tune of $46 million. It didn't make it. The second, Mixonic, is profitable and growing well. 

So now to the phone geek part.  When I was a kid I used to take apart telephones and could put them back together (unlike my older brother), and phone pranks were a part of my life through college. After graduation, I joined AT&T Bell Laboratories.  My first job there was writing operating software for Office PBX systems, and later I worked on feature set design and other projects.

After Bell Labs, volunteer work in Micronesia, and my MBA, I worked at Arthur D. Little, a consultancy, on international telecom projects ranging from writing the plan for deregulating Colombia’s telecom market to helping companies bid on cell phone spectrum in India.   While there I authored “The New WTO Telecom Agreement”, published in Telecommunications magazine, analyzing the impact of deregulation on global telecom markets.

My last job before going the start-up route was an associate equity research position at Montgomery Securities.  While there I co-authored a white paper called “Voice and Fax over IP Networks.”  That was back in January 1998, when VoIP was new and didn’t work! 

Now VoIP does work, and I believe we are at the cusp of a major revolution which I rather unoriginally call VoIP 2.0.  Voip2020, the name of this blog, is a play on that, and the voip revolution will be the primary subject of this blog, along with the occasional entry about startups, telecom industry news, and what I’ve learned from my failures and successes.  I hope you enjoy it!