James Siminoff

Take control over your destiny

The reason that PhoneTag had a successful deal and survived and thrived in such a difficult market was a direct result of our retail platform.  The retail platform brought in enough profit to cover all of the costs of the business including a small profit. Additionally as Bijan pointed out in his post today (included below) it allowed us to have full control over our destiny.

Having tens of thousands of individual customers is a incredible strong foundation to build off of.  When you have that many customers, they do not all move at once, so it gives you a stable platform to go for the more risky deals.

When you go after the wholesale or carrier business as a small provider you have to have unlimited runway.  Getting a carrier deal can be the most rewarding financial thing for a small business but many go bancrupt in the process.

One carrier that rolled out voicemail to text (a very large one) took over 3 years from picking a vendor to going live… 3 f*cking years!  The bigger problem is that it was not supposed to be 3 years it was supposed to be 6 months, imagine if you had 9 months of runway and you were relying on this deal, you would be dead.

Even though our retail brand will never be as big of a opportunity as the carrier business it was a very key part of our success in building the business.

(I described this exact issue in my keynote speech at ITexpo and used the above picture to describe startups that “get stuck” going after the big deal)

bijan:

I’ve seen a number of consumer startups trying to reach massive scale by doing deals with carriers or device manufacturers (cell phone manufacturers)

Some worked out nicely for the startups but most don’t.

I like consumer startups that are taking charge of their own destiny. They are not white labeling their product or brand. They are not licensing intellectual property. They are not comprimising the user experience to make the big “partner” happy. They are not indifferent to those decisions.

Instead they are 100% focused on the user (and developers) and establishing their brand and purpose.

Awhile back I wrote about a problem I encountered when I ported my phone number. I asked for a better way to communicate this info to my friends, family and business associates. I received about a dozen emails from startups going after this problem. Unfortunately most of them built a product and approach that assumed that a deal with carriers was better if not essential.

I’d like to think that the open web and open mobile platforms allow us to finally go direct to our users and figure this stuff out together.

Now there are times where partnership and distribution deals make sense. I like them if they add value to the network and don’t hide the consumer brand or force the startup to make unnatural choices.

But in the absence of those things, I say damn the torpedoes and take control over your destiny. Don’t outsource it.

(clarification: this post is about consumer applications. i’m not talking about infrastructure or technology licensing companies, etc).