by Judith Dinowitz
The Entrepreneur's Road: Bumpy and Full of Surprises
On Monday night, April 27th, at the JTech (Jewish Tech) meetup, hosted by Dorsey and Whitney, LLC, a crowd gathered to hear from Alon Cohen, one of the premier names in Voice Over IP (VOIP) technology. Alon was one of the founders of VocalTec, the first company to offer phone service over the Internet, and is now the Executive Vice President and Chief Technology Officer (CTO) of Phone.com. His journey as an entrepreneur had quite a few twists and turns, and lessons that I, a budding product manager interested in both technology and the startup world, find both instructive and entertaining.
With humor and passion, Alon described how he did not start out intending to provide phone service over the internet, but came to the idea through a series of challenges in his business, and through a fortuitous phone call from a customer overseas. One could even say that the growth of VocalTec as a VOIP company was a combination of luck and quick thinking on the part of Alon and his partner and friend, Lior Haranaty.
The duo began by selling sound technology for the PC, in 1989, at a time when PCs did not come with built-in sound. They gambled on the fact that sound would become an integral part of the PC experience. In its early years, Vocaltec sold sound cards, created a Hebrew audio program for blind people, and took on projects such as an MP3 player for ice cream truck drivers that could withstand the freezer box.
From these beginnings, how did Alon arrive at the idea for VOIP? At the time, VocalTec was in stiff competition with Soundblaster, and Soundblaster was winning; realizing they had to pivot. Alon and Lior started with the idea of building a phone that uses personal computers and a network. They weren't even thinking of the Internet, which was still in its infancy, but of local or wide area networks (LANs or WANs). They came up with a list of technical problems that they would face and tried to solve them. These issues, such as latency, lag or jumps in the sound because one end of the signal moves at a faster or slower rate than the other, and loss of packets in transmission, are the same problems faced today when streaming sound and/or video over the Internet.
One day Alon received a technical support communication from a customer who said that he was trying to use VocalChat, VocalTec's LAN communication program, to talk on computers between England and France and it wasn't working. After helping the customer, Alon realized that using his technology over the internet would save his customers lots of money on long distance phone calls. The need was clear; Alon and Lior moved to solve it. In 1995, VocalTec released Internet Phone, the first ever VOIP program, the end result of that fortuitous customer complaint.
In 2008, Alon joined Phone.com, which focuses on phone service for businesses.
Tips and Lessons Learned
Alon had many good tips and lessons in his speech. Here are what I consider the top 10, the ones that made the strongest impression.
Lesson 1: Customer Research is King
Throughout Alon's journey, he stressed, he would consult with many -- customers, colleagues. A key quality for a successful entrepreneur is the ability to listen and to keep an open mind. Entrepreneurs should be curious and inquisitive and keep asking, asking, asking.
Lesson 2: Ask Many. Decide with a Few
Get as much advice and feedback as you can. Consider the source when judging how useful the advice is. At the same time, too many decision-makers can slow down the process and impede progress.
Lesson 3: Identify Problems in Your Surroundings
Looking around to see what problems need solving is a good way to come up with a viable business model (and a good product).
Lesson 4: Always Have a Business Model
Alon scoffed at the idea of building something without a good business model. Build it and monetize later is a foolish strategy.
Lesson 5: A Business Model that Includes Creating Your Own API is Better
APIs can help spread your business, and open doors that you may never have thought of. When you plan your business model, see whether you can build an API that others can use. If nothing else, it's a great way to spread your name.
Lesson 6: Be a Mensch: You never Know How Far that Can Take You
If you treat your customers and employees well, they will help you. When creating Internet Phone, VocalTec used university IRC servers to transmit its packets, and at a certain point, these universities were trying to block the VocalTec signals. Jeff Pulver, a well-known IT person, hacker and CPA, loved the product and became one of VocalTec's staunchest supporters. He offered the use of his own personal server to circumvent these blockages. Support from him and people such as Professor Henning Schulzrinne (now CTO of the FCC), helped the company to overcome resistance and to grow.
Similarly, if you treat your employees right, later on, you never know -- they may want to hire you.
Lesson 7: Good PR People (and Good People in General) Are Priceless
Alon recognized the help of his public relations team, who were instrumental in getting VocalTec's name out to the press. Without the extensive and well-crafted PR campaign, the company would not have become such a strong name in VOIP.
Lesson 8: Be Wary of Investors and Avoid Them, if Possible
At one point, Alon was a victim of con artists who became investors in his company but were harmful to it. Eventually, he and Lior had to buy them out to take back control of the company. While there are exceptions, he stressed that investors have their own agenda, one that may not benefit the company in the long term. If you can find the money through other means, such as gifts from family and friends or investment from you and your partner, it's best to avoid investors.
Thefunded.com is a site that gives very specific information on investors. It's not open to the public, however, and you'll need to find someone with an invite to get in.
Lesson 9: Stay Thrifty and Never Work for Free
If you're careful not to overspend, you'll have that money saved for when you need it, and you can extend your runway. At the same time, don't cut costs by working for free. Your time is valuable.
Lesson 10: Never say simple to an investor
Investors think simple means there's no barrier to entry, which is a good way to lose their interest. Also, don't build the product and then show the investor. It's easier to sell an investor on a dream, not a working product.
Creativity, Curiosity and Spirit: The Basis for Successful Entrepreneurship
A successful entrepreneur needs luck, an open and questioning mind, the conviction to stand behind an idea and the willingness to reject it or refine it based on research, and the courage to experiment, jump in and take a gamble. The entrepreneurial life is not for the faint of heart, but if done with "saichel" (the Hebrew word for forethought), it can be very rewarding.
Thank you to Devora Mandell, coordinator of the JTech Meetup, to Alon Cohen for his insightful presentation, and to Dorsey and Whitney, LLC for hosting the meeting.
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