How the ‘CEO-Janitor’ Cleaned Up With Dell

air_combat.jpg Chris Lyman, the founder of the VoIP startup, Fonality, blogs under the moniker Janitor— which he prefers to his other title: CEO. Chris has shared some of his management ideas with us here, too including Startup Math: 1 + 1 = 1/2 and The Power of “I Don’t Know.” We also recommend you take a look at his recent treatise on open source.
Today Chris has some big news: his four-year-old company just landed a deal to partner with Dell to hawk its open source VoIP boxes to the PC giant’s 6 million small- and medium-sized businesses. In four years his own 40 salespeople had netted 5,000 customers. Not bad, but not Dell. In an interview for GigaOM, Chris called the deal “a company defining event.” Something every founder dreams of, in fact.
Chris has written a long post about what he learned on the march to closing with Dell:

This would be a big day for any startup anywhere — struggling to establish its credibility in an aggressive tech world full of behemoths… I can clearly remember almost four years ago – to the day – when [the] four of us working at Fonality back then were sitting around a room and hypothesizing about our plan to revolutionize telephony. (Isn’t that what all founders do when they are staring at the back of a napkin?).

How many of you are nodding right now? Chris’s piece is filled lessons, but here are the key takeaways.
Chris’ biggest lesson boils down to NOT reinventing the wheel.

Our aim back then was to build the world’s easiest-to-use and most affordable business phone system…But, we also knew that *even if we did build it* our next greatest challenge would be: reach.
We asked: “How will the whole world ever find out about our awesome new product?”
… I can tell you that it did not happen by accident — nor were we the expected choice.
Chris focused on 3 painful characteristics about his industry that gave Fonality a reason-for-being, vis a vis Dell…

1. Telecom has always been ridiculously high priced.
2. Telecom has always been ridiculously hard to use
3. Telecom has always been proprietary
In my opinion, the most unique thing that Fonality presented over the competition was item #2. Our hybrid-hosted architecture was specifically designed to take the “hard” out of telecom.
So how did Fonality do it? by building…

… “architecture [that] is a clever halfway-point between the old world of premise phone systems and the new world of hosted phone systems.”
…we liked the old premise model because it has great quality and reliability (this is because it uses the PSTN/POTS/things-birds-sit-on).
… we liked the new model of hosted telephony [VoIP] because it provides great mobility to the customer, letting them work from home, from the road, pick up voicemail in their inbox, etc.
So, we sat down and intentionally built a model that straddled both worlds.

It was tough sometimes to explain the rationale behind Fonality’s model:

[Investors, journalists and customers] all would ask: why would you choose an approach that was exactly between the old-and-the-new?
Our answer was always simple: the old has lasted us > 50 years, it is not going away over night. Quality on the old phone network will not be surpassed by VoIP for at least 10 years. And, we all know that 10 years is plenty-enough time for a few billion-dollar telecom companies to go bankrupt and plenty-enough time for a few billion-dollar telecom companies to be birthed.

Fonality landed Dell, in part because the company didn’t try to reinvent the wheel, which helped the company expend its resources more efficiently.
Chris’s 3 Tips:
* Understand your market
* Leverage what’s there, and still working, to your benefit. (Straddle the old and new)
* Make your product the aspirin to a painful business headache.