Death Of The Exit Strategy

Recently two service provider execs had conversations with me where they told me they hate the mentality of today’s VoIP market. Everyone it seems is talking “exit strategy.” Now I am sure everyone wants to be the next company Cisco picks up but what concerns service provider executives is — how do you run a company if your goal is to be retired on a beach in Hawaii in the next few months.

After all, is an exit strategy what you should be aiming for? What about a customer acquisition strategy? A profit generating strategy or even better, a success strategy? We all went through one bubble where companies did their best to get picked up before they had any real customers. The focus was more on impressing VCs and other investors/acquirers and not on actually doing anything useful at work. How about a successful PR strategy aimed at customers? A marketing strategy aimed at those that will purchase from you?

Has the entire VoIP market become a breeding ground of companies that are only selling to one another? Are there no customers out there? I have to hand it to Packet8 and Vonage who shifted their strategy immediately to focus on consumers when service providers weren’t buying. They showed entrepreneurial spirit and drive. They didn’t throw in the towel and just try to unload technology and the company.

What really scares me is due to the shortsighted nature of many of the companies in the VoIP space, some enterprise and a service provider customers are only considering purchasing from companies that are publicly traded. Can you see how damaging this can be to start-ups if all customers were to adopt this purchasing position?

This is why I am sounding the alarm bell early. Stop talking exit strategy. Who cares?!? Customers want you around for the long-term so you need to be focusing on a success strategy.

  • David Hunt
    April 14, 2005 at 2:41 pm

    I agree wholeheartedly. We are starting three new telecommunication companies and during discussions this week we told someone that our plans did not include an exit strategy for our founders. Our objective is to make the companies profitable so that they can pay dividends to the initial investors and provide quality jobs for the employees for many years to come. When I worked for a large ILEC, there were always managers who changed jobs or got promoted just before their house of cards came tumbling down around their successor. We believe that a long term success is better than a quick buck. When CLECs started, many of them did so with the idea that they would sell before they had to operate it and make a profit. The lucky ones did, but that attitude has hurt the entire telecommunication industry. Let’s mamnge whatever business we are in so that the customers win and we will also.

  • Rich Tehrani
    April 14, 2005 at 3:00 pm

    As you point out, it is important to worry about the needs of employees as well. These people build companies and are treated as second-class citizens in some organizations. Worry about customers and employees (At TMC we are truly part of a team) and you will be successful.
    The whole CLEC fiasco really killed the communications market for years and you cite valid reasons for the death of this market.
    The rise of CLECS and the focus on them are what depressed the VoIP market for so long and almost kept it from blossoming.
    In the end, if you hear exit strategy more than you hear customer service and sales, you should consider doing business or working elsewhere.

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