This $22B Business is Ripe for Disruption!

If I would tell you that the Telephone Industry is about to be disrupted, you would probably think that I am off my rocker, right?

We have seen so much disruption in the last 10 years, VoIP, Skype, Vonage, Whatsapp, Viber etc. etc. It is hard to believe that there is still something is still waiting for change.

Well there is! Stay with me for 2 minutes and I will explain. Almost all businesses have some kind of Switchboard aka as a PBX, Phone System, IVR, or Auto Attendant. In fact there are around 62 million active phone extensions in businesses in the USA alone.

For years businesses have installed a system on their premises. Companies like Panasonic, Tadiran, Avaya, Nortel and LG made tons from selling and servicing these systems.

Then, along came “The Cloud” and companies were told you can now save on your CAPEX, there is no need to buy a box for your phone system anymore. We will put a box in The Cloud for you and you can connect your phones to our box over the internet. Now it is the turn of companies like RingCentral, 8X8, Vonage Business and others to make tons charging businesses $30 a month (and up) per extension for their phone service. RingCentral (NYSE: RNG) is trading at crazy multiples and the landrush is on with new service providers joining the fray every day.

But, there is a catch. These “Cloud” phone companies do not innovate. They put the switchboard boxes in the cloud, but they are still complicated to use and service providers still employ large support staffs. Moreover the cost of customer acquisition is sky high and RingCentral the current leading player is losing over $30m a year.

So what will happen next? Lets look at a few points –

The majority of businesses are still on old “on premise” legacy systems. The “new” cloud systems are complicated to use. Gross Margins (before support expenses) are obscenely high.

The time is ripe for someone to come along and build a phone system for small businesses that is easy to setup, easy to maintain and costs less than the existing solutions.

Stay Tuned. Disruption is coming.

Please Join me on Project:REBOOT

Since we founded The Flat Planet Phone Company in 2006 we have been doing the same thing. Providing Small Businesses and Call Centers the best Hosted PBX System with unbelievable support.

At the time we were a pioneer. Today there are hundreds if not thousands of providers. It is time to look ahead and
become a pioneer again! While I am very proud of what our team has done, building a successful and profitable organisation with thousands of customers, the world is changing and we we need to change with it!

Therefore I decided to step back and for the next few months work on Project:REBOOT. I plan to learn more about technology, the market and users needs, speak with thought leaders and poll our customers. We don’t want to be another me too company! We need to look 5 and 10 years ahead and built solutions based on the future not the past.

I am inviting you my friends and colleagues to join me on this exciting journey. Don’t be shy! Let me know what you think about the future of business communications!

OK, So Why Do People Immigrate?

Historically, immigration was caused by economic or political reasons. Wars, religious persecution, economic hardships have all been strong factors behind immigration trends over the years.

Surprisingly, over the last decade a new factor has joined the list. Technology is not only changing the way we live, but also where we live! On the forefront of these life changing technologies is IP Telephony (also known as VoIP – voice over Internet Protocol).

Nowhere is this more evident than in the State of Israel. Tens of thousands of new immigrants to the Startup Nation are employed in jobs that would not have existed without VoIP (Which by coincidence, or not, was first invented and patented in Israel). In fact many new immigrants made the decision to move to Israel, based on the knowledge that they would be able to continue their existing job in their new home due to VoIP.

How does this work? We all are familiar how we can see our email from any computer no matter where we are, just by entering our user name and password. Well with VoIP, a telephone number is just like an email address. I can take my VoIP phone and plug it anywhere in the world and calls made to my NY number will ring there. Physically in Timbuktu or Kalamazoo, telephone-wise I am in NY and no one knows otherwise…

Joe Asher is a good example. Joe was a stock market analyst living in Los Angeles with his wife and three kids. Since they finished college, Joe and his wife had dreams of moving to Israel. One day sitting at home during their Sabbath meal, they decided to make the move. “With the kids starting school, it was either now or putting off our dream until we retire”, Joe related.
Today the Asher family lives in Jerusalem, Joe works for a NY investment firm while sitting in a small 2 desk office in Jerusalem. On his phone are two buttons, one for his Israeli number and one for the his USA number.

But VoIP is not only for individuals. Aryeh Freund the CEO of Newtel Systems (a Lawrence, NY based IP Telephony Provider for the SMB market) relates with excitement the story of “1-800-ICE” (not their real name). “It is unbelievable what they are doing. They are disrupting a whole consumer sector back in the states, a sector with a legacy of high pricing, “1-800-ICE” is offering customization, low prices, fast delivery and great customer service, all from their office in a suburb of Tel Aviv!”
Newtel provided “1-800-ICE” with a USA 800 number and customers don’t have a clue that when they call this innovative company they are actually speaking to someone in Israel.

Based on the number of telephone lines that Newtel and other IP Telephony companies are selling to Israeli based companies, success stories like these are only the beginning.