Equity Notes: Timing plays its part in rise of
videoconferencing
07/21/2003 08:33 AM
By: Jeff Miller
Videoconferencing has long been an industry that seems as if it should
take off just about any time soon.
“It hadn’t happened that way,” said Todd Luttinger,
a longtime player in the conferencing industry and now president of Braintree-based
Videré Conferencing Inc. “It was always an industry where
people talked glowingly about its potential but never actualized those
visions.”
After the Sept. 11 attacks, however, the buzzword for business became
conferencing. People were skittish about taking an airplane to attend
business meetings. Besides, it’s expensive to travel. Every dollar
counts in a cruddy economy.
“Not to sound mercenary,” Luttinger said, “but with
budgets cut and the aftermath of 9-11, if there was a time for conferencing
to grow, this was it.”
Talk about grabbing hold of a trend.
Videré’s three founders all knew one another from their work
in the videoconferencing industry at PictureTel Corp. and VTEL Products
Corp. in the 1990s.
But by 2001, they had moved into other areas. Steve Cogliano was head
of sales engineering for softswitch maker Convergent Networks (its assets
were bought by Quincy-based data carrier Global Naps earlier this year).
Luttinger was working for Canton-based Network Engines, and Bill Benoit
was at California-based Visto Corp.
“Customers were still using their old videoconferencing systems,”
Luttinger said, “but a lot of the high-touch sales organizations
had really been pared away. The kernel of our idea was to be a boutique
with higher customer service, better tools and a high level of support.”
So in the months following Sept. 11, they banded together and each invested
about $50,000 into their new venture. Ironically, they bought all of their
furniture at rock bottom rates from Polycom Inc., thanks to the consolidation
that ensued following that company’s acquisition of PictureTel.
Videré established reseller relationships with a large number of
equipment vendors and relied on the founders’ industry experience
to install and service systems.
Business started rolling in.
“Some of it was luck,” Luttinger said. “Those same customers
we did due diligence with had spotty support from the big manufacturers.”
Putnam Investments, Ropes & Gray, Hale and Dorr, the University of
Massachusetts Medical Center — the founders paid themselves back
for their original investment within a year.
“We’re tracking this year at a $3 million revenue run rate,
which is certainly beyond what we expected,” Luttinger said. “We’re
making money and paying ourselves.”
The company plans to hire its ninth employee before the end of this month.
So what were the secrets to their rapid success? First, the founders knew
the market cold and saw there was a need. There were no 500-pound gorillas
offering conferencing support service and, with the conferencing equipment
industry in consolidation, their level of service had been slipping.
Second, when Videré established reseller relationships with equipment
vendors, it didn’t get sucked into an exclusive arrangement, though
they felt pressure to do so.
“We explained that they really didn’t want to us to do that,”
Luttinger said. “We had more credibility recommending their products
when customers knew we could recommend any product but chose theirs.”
It also allowed Videré to choose the right equipment to solve a
problem rather than fit a square peg into a round hole.
Last, the founders already had a strong network of contacts within the
conferencing industry.
“At VTEL, I was head of North American sales and at the time it
was a $250 million company,” Luttinger said. He and his partners
kept up with their friends in the industry, and it paid off when they
returned.
That’s not to say they didn’t make mistakes. Luttinger said
that the company initially took on more product relationships than it
should have and bought more demonstration equipment than it needed.
“But we recovered quickly and focused on products that won’t
take our focus away from the core of what we want to do,” Luttinger
said.
Going forward, the company has its eye on expanding into other markets
where it already has customers: San Francisco, Washington or New York.
And, of course, they’ve got a potential product brewing in the background.
“We’re looking at a few things on the software side, developing
products that have to do with network scheduling and Web conferencing
products,” Luttinger said. “But that’s 12 months down
the road. We’ll stick to our knitting.”
Jeff Miller reports on telecommunications, finance
and venture capital. He can be reached at jmiller@masshightech.com.
