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Friday, January 15, 2010

Key to success: offer something people want

Matt Marshall of VentureBeat has an interesting article about how VoIP provider Jajah landed a $207m acquisition (on a $33m investment) when many of its competitors were dying.

Marshall asked CEO Trevor Healy for the keys to success, and the list should be familiar to all. For example, the company decided to stick to a conventional revenue model — being paid for calls — while competitors tried to snare traffic by giving service away free.

The company also had a great engineering team (offshore in Israel), and an experienced management team. It also made employees eat their own dogfood — guess which telecom provider carried all calls by Jajah employees?

Finally, as any ICT architect will tell you, design systems that can grow into platforms for other products, rather than design point products. It worked for Cisco — while Netscape failed — and of course that’s what Facebook and Twitter are hoping to pull off as well.

The story notes that the management was not perfect — they haggled over a $300m deal because they thought they were worth more than a rival that sold for $105m. Still, nobody’s perfect.

Jajah’s exit shows that it’s still possible (if rare) to build a successful startup in this environment. Due to miserly VC investments, there won’t be many high-growth startups founded in 2009 or 2010, but let’s see how many others launched before the recession are able to grab the brass ring.