How I created a software company worth $ 350 million without knowing anything about software (Part 2)

The first part is here .

I always dreamed of making a big fortune and doing wonderful things, I wanted people to pay attention to me. I just did not know how to come to this.

... And it was one of my first lessons about entrepreneurship, or maybe about America itself. After a huge number of refusals, I myself wanted to give up my undertaking, but then I found someone who sent me a check for 40 thousand dollars, even in the conditions of the economic crisis, because they themselves were the owners of a risky business.
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After that, I realized that America is a fabulous place for entrepreneurs. Even those who know nothing about entrepreneurship.

Thanks to this $ 40,000 check, we were able to afford to hire my former boss from a brokerage firm, as well as a sales manager from a startup that was taken over by Cisco, and now the five of us worked in a small office at Walnut Creek.

We started shipping Dell machines with Dialogic phone cards that were preinstalled with our call center software. Yes, not a fountain, but it gave enough money to hire some more people and start growing.

Then one day, it is not clear for what reasons, another insight struck me.

Instead of creating software for subsequent uploading to cheap servers and selling them (as everyone else did), why not build a single “mega-server” and allow people to connect to them over the network and use our software?

My former boss said this: "No, this is a stupid idea, so we will kill the goose that laid the golden eggs."
Engineers told me: "No, it is very difficult to create, it is a real headache." They sent me various research results from reputable analysts who showed that ASPs (abstract service primitives — the name was very popular until it was replaced with SaaS) are not a profitable business model.

I said, “Guys, what alternatives can you offer? Do you want to sell cheap software until the end of your days by pushing these crappy boxes? ”I pointed to the growing mountain of Dell boxes in our small office.

Fighting with them for a month, I realized the following: software provision services were unprofitable because everyone simply tried to use traditional client-server software and provide hosting on their own.

Few people thought about working in a collective lease and IP-telephony.

Nobody thought about creating something that would really provide an opportunity for collective renting, that is, developing software that would be built exclusively to work with many clients and treated as a service. If we could create something like this, then we would have a huge advantage, and besides, in such a case, we would not have to buy this amount of iron, and it would be easier to manage customer accounts.

But there was another problem. A handful of other startups developing in our niche, at once received more than 100 million dollars of financing (against the background of which our 150 thousand dollars seemed insignificant) and actively made their way forward.

Then one day, the Machine let me play with one gadget that supports VoIP. We both loved the gadgets and thought it was a very cool opportunity to make long distance calls over the Internet for free.

And then I was struck by the “second eureka” - our competitors had solutions for one tenant who demanded a huge material base and maintenance of customer support services, and besides, they had to double their bills for long-distance calls.

Since SaaS products for telephone call centers should provide three telephone connections for each agent center (as opposed to the traditional two in the local model), this is very expensive, not taking into account the fact that customers will have to go through the transition to SaaS. A service based on IP telephony would give us a huge advantage in the market, since customers would have lost money on phone bills.

Only a few people thought of working in collective rent mode and IP telephony, but I finally began to agree with their train of thought. And I was lucky with Alkash, Mashina and my former boss, who turned my vision into reality thanks to their super abilities. I am still very grateful to each of them.

And the “fateful day” overtook me at the Safeway grocery store (where I often had to worry that I could not pay with the card due to the lack of funds in my account) when the car called me on my BlackBerry.

“Dude, dude, dude. Guess where I'm calling you? ”He asked.

"Um, our apartment?" I began to read the inscriptions on the cover of People magazine, standing in line at the box office. Britney Spears started dating someone there.

“Yes,” Machine answered excitedly, “But this is the first call I’m making using our IP protocol. Sounds damn good, right? ”

I almost fell to my knees, the news literally knocked me down. We faced many obstacles, I knew that, but at that moment, and for the first time in my entire life, I was sure that we would succeed. We will tear everyone - competitors, skeptics, everyone. We will destroy this industry and recreate it in our own way.

And it was then that we started the "hockey stick effect" (sharp rise in sales - approx. Translator). We were finally able to create our own product, which was 10 times better and 5 times cheaper.

This scene in line to the cashiers in Safeway, where I received my first call through our IP protocol, reminded me of that scene in “Escape from Shoushenk”, where the main character is forced to crawl kilometers through the sewers to find freedom.

Soon after, we officially launched (created a new website) “Virtual Call Center”, and our business began to grow at a rapid pace. Our competitors, most of whom did not consider it necessary to respond to my previously sent letters inviting to have dinner together somewhere in the city, were suddenly shocked at how low our prices were.

As it is not ironic, but we have ceased to be leaders in the budget segment precisely because the price of our product was very low. We received good funding using venture capital from great firms who believed in us and eventually moved to a wonderful office that impressed everyone except my father, who tirelessly asked me why I still hadn't defended my PhD.

In the first year, our income was 0, next year - 900 thousand dollars, and a year later - 3 million dollars. I led the company to an annual regular income of $ 10 million, and then left it. The truth is that the company at this stage no longer needed me.

Today, the company, which I called Five9, is traded on the NASDAQ Stock Exchange; it provides jobs for hundreds of Gulf residents in San Francisco. The company became PAO and was valued at $ 350 million. When I call the call centers that use my software, I involuntarily smile. At least the first two minutes of waiting for a response.

I'm not sure if I can give any wise advice to other entrepreneurs, but this experience made me understand one important truth. Namely, the fact that you do not need to be a graduate of the Ivy League (I am not) or have a lot of money (we did not have them). You just have to believe in yourself even in spite of any rational logic, however banal it may sound.

Believe me: even if you do something stupid (for example, quit your job without the slightest idea about doing business), then you still have the opportunity to turn the situation around to your advantage. Believe that after many years of life like a prison, which an entrepreneur may encounter, having come a long way down the drain pipes, you will be free to feel the rain that washes away all the dirt from your face.

And also believe that you will get lost on the beaches of Mexico with a bag of money, meeting your accomplices over a glass of tequila.