The voice business these days lives mostly either in the cloud or in the past. Companies that specialize in the former are young and hungry and often not household names. One of those is netsapiens, which has built a platform for cloud communications that underlies the offerings of many service providers today. With us today to discuss netsapiens’ approach to VoIP and cloud communications is co-founder and CEO Anand Buch. Before helping found netsapiens in 2002 he was at Nuera, which was later acquired by AudioCodes.
TR: What’s your background and how did you come to launch netsapiens?
AB: I’ve been in what I call the converged communication space since I got out of school. My background is in digital signal processing from an academic standpoint. Back in the early ’90s, when people were just starting to converge voice and data, a lot of the work revolved around digitizing real-time voice and putting it over a data medium. At the time, we were really in the hardware space building what was called voice and data multiplexers, taking real-time communications, digitizing them, and putting them on a data medium. Of course, now everything is moving over IP or if it hasn’t already it is moving in that direction. When we founded netsapiens in 2002, the whole idea was to build a core platform that is purely SIP-based and which would be the underpinning for an application platform that would ultimately push into next generation voice applications.
TR: How did you plan to break into a voice market controlled by the big players?
AB: One thing that we noticed was that the level of choice, and the level of customized application that existed couldn’t meet the needs of what we considered a fragmented market. If you look at the end user’s in the business market as a whole you’ll find that 80% is covered by the big players. However, in a very broad, consumer-orientated market, they have to commoditize the product because they have to be able to scale it such that they can offer it to the masses. What we focus on is the other 20%, which is really a massive market of $15-20B served by tens of thousands of smaller MSP’s, ISP’s, CLECs. And I say smaller with a grain of salt, because even if you look at tier 2 and below some of these smaller service providers themselves are quite large. Those service providers are all competing really to create a lot of value for the end user whether it’s small business, small enterprise, large enterprise , or regional residential.
TR: How does netsapiens position itself to serve those providers?
AB: They’re trying to stay relevant and continue to provide better choice to the end user when it comes to next generation communication applications. The lowest hanging fruit there is quite honestly is just replacing old telephone systems. Many, many businesses today are still operating on old legacy telephone systems that just don’t do the things that can be done now. If you look at the data, the data shows that it’s still probably three, four, even five year away from the point at which phone systems will be predominately cloud-based. So the 120+ clients that we have today that have built their next generation communication architecture based on our platform are all trying to grow their business in those areas. We have a software platform that we basically allow our service provider clients to build a cloud offering themselves. They can use it for anything from simplistic PBX functionality all the way up to very sophisticated contact center, chat, video, mobile applications and so forth.
TR: Where are we now when it comes to the adoption of modern voice technologies?
AB: Quite honestly, I think it’s we’re at a point now where it’s much more about the experience than it is about the available tools. So we’ve been talking about UC for a long, long time and even before we started off on UC products per se. You have over the last five or ten years always had the ability to say, “Yes I can have all of the unified communications tools,” but those unified communication tools were not unified from an experience standpoint. Now we’re getting to the point where because of mobility, and quite honestly because the end user is more sophisticated and familiar with mobile applications as a way of life. I think the thing that up until now has prevented it is the lack of users to really say, “Look. This is what I really want as a unified experience.” I hate the term because it’s overused, but the millennials are now becoming the workforce and some are actually driving the decision making as we go forward.
TR: Yet even today not everyone has the same unified experience in mind. How do you service that kind of marketplace?
AB: We believe that we continue to have to have service providers that understand most segments of the market and understand exactly what that unified experience needs to be. What they need is to have a platform and a service or a technology provider behind them that allows them to customize that for the market segment that they go after. So I think instead of finding the Holy Grail that will cover everybody’s needs, I think we got to think of it backwards. There are clusters of people that use communication a particular way, and what we really need is we need service providers that focus on those clusters and to provide the best possible experience for them.
TR: So do you sell your technology as a service or license the software?
AB: We don’t run infrastructure ourselves, rather we sell software into our service providers who then turn around and host it. Our clients are the ones that run the infrastructure. We have two models via which we sell the platform. There is the deployment model where we’ll go in and based on what services the client wants to offer and the size and scale of the network, we will recommend a particular size of license. They can choose to either purchase that license or subscribe to that license. A key differentiator is that we do not sell by the seat. We actually sell via a usage-based model, i.e. capacity in the form of concurrent sessions. And then our service provider is free to over-subscribe that usage and sell it by the seat or use whatever business model they want.
TR: How mature is your platform today, and how do you view the ecosystem it lives in?
AB: We are always adding features and continuing to make the platform more robust. But today we have probably in excess of 400,000 application seats across all of our service provider clients. That continues to grow. But we continue to innovate, and there are a lot of things in the pipeline that not only our clients want but that we see in the space and in the industry that we need to be able to add to. We continue to build a bigger ecosystem because while our platform sits at the core and does all of the communications aspects, our clients need to integrate that with other applications – for example for billing or CRM. For those things we have built an API layer and that ecosystem continues to grow. In some cases, we actually offer that as a combined package, and in other cases we simply have an API connector that goes to that application and then we refer the client over to whoever that application that wants to integrate to us may be from a vendor perspective.
TR: What kind of features and technologies are on the drawing board that I should be aware of?
AB: Right now we are in beta with our video application, so that will be ready sooner rather than leter. Other areas that we also continue to see some further evolution in are really in the UC aspects of the system and more integration with the next generation of mobile applications that really unify some of the applications that we already have on the desktop version. And then we continue to enhance the ecosystem with more integration between disparate systems.
TR: How do you view M&A in the UC space?
AB: We’re a growing company, and we continue to look at ways to grow and accelerate, and grow the business. I think it’s something that we haven’t directly been involved in much yet, but something that over the next 12 to 18 months I need to take a closer look at simply because there may be avenues and opportunities for us to continue to grow the business in the best interest of our clients. I think in certain areas you’re starting to see some level of maturity. If I rewind back to what I was referring to earlier about these kind of clusters of applications, some of these clusters are maturing but the integration of those clusters is not, and that’s something that interests me quite a bit.
You are starting to see some of the larger service providers get into the platform as a service side, and bring in and try to figure out how to compete with the likes of Twilio, which is very, very interesting. I have to be focused on that in the best interest of our clients because I’ve got keep them competitive. And so I look at that area and I go, “Okay. How does that impact us? Do we have to have a tighter relationship with a CPaaS company? Do we have to look at some things in that area to continue to grow that?” We must continue to build a stronger network of partners so that we continue to strengthen our service provider base, and give them access to all the tools that they need now.
So as we get more established in the space, I suspect the scope of what M&A really means could be as interesting as us looking at acquisitions or it could be just being very cognizant of the M&A that’s going on in the ecosystem to make sure that we’re partnering with the right folks that are going through that. I mean, today, we’re still relatively small compared to some of the bigger players that are going through an M&A process.
TR: Do you have any plans to address international markets?
AB: We have started seeing some growth over the last couple years, if not longer, into some of the international markets. But again, because of the size of our staff and the size of our team, we’ve really done that more organically and out of referrals. We are keeping a closer eye on what’s going on in Asia and trying to establish some because there is a need there. But it becomes something that we’re being very surgical about because in a lot of Asian and European markets you really need a strong partner locally that understands those markets very, very well. We’ve got a handful of clients in Australia, Singapore, England, and New Zealand, and we are using those relationships to try to understand the market more. We’re in the process of determining what the best strategy is as we go international.
TR: What’s the biggest challenge on the horizon? What keeps you up at night?
AB: I think what keeps me up at night is not being able to grow faster. I think as an entrepreneur, you’re always trying to push the limits. What I mean is that at the end of the day, our organization is extremely purpose-focused. And by the purpose, I mean we have to continue to give our client base the ability to compete in a very fast-moving space. And even though they’re all on the leading edge, we continue to have to get out ahead of that curve and help them grow, and grow faster than them. Not just throwing bodies at a problem, but making sure that we’ve innovating across all the different dimensions, but innovating with a purpose, right? Not just building products to build products, but really trying to solve the right problems. I believe we are, but we continue to need to stay on top of things because it’s a very fast-moving industry.
TR: Thank you for talking with Telecom Ramblings!
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