56 Comments

Summary:

+ Mark Evans: Given VCs love liqudity events such as IPOs, you have wonder whether Vonage and CEO Jeff Citron made a strategic mistake by waiting too long to do an IPO. My take is Vonage wanted to be acquired rather than go through the IPO […]

+ Mark Evans: Given VCs love liqudity events such as IPOs, you have wonder whether Vonage and CEO Jeff Citron made a strategic mistake by waiting too long to do an IPO. My take is Vonage wanted to be acquired rather than go through the IPO process.
+ Jeff Pulver: Five years ago, during the summer of 2000 after Jeffrey Citron joined the Min-X team and came in as the lead investor, he told me that he was looking at any investment with a five year time horizon.
+ Techdirt: The fact that they need so much to stay competitive, however, may point to larger problems with the business model.
+ Paul Kapustka: From here, an IPO looks dubious since it’s going to take a lot more than the $600 million Vonage is reportedly seeking to successfully battle the SBCs and Verizons of the world

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  1. Vonage controls so little that you keep wondering how it can be called a business model. I am a customer for half a year, but have you ever tried to discuss quality issues with Vonage? Their international lines are hiccupy, the call center is in India, where you spend just half an hour spelling your name, and the standard response is that it must be your ISP problem. The day Comcast rolls out anything nationwide and attractive as far as price, Vonage will have to spend much more money to acquire new and keep the existing customers.

  2. SIPthat.com – Erik’s daily musings on VoIP and IP Communications Thursday, August 25, 2005

    Slow VoIP roll-outs drive Vonage revenue

    When I read articles like this one, I have to laugh. Have these guys ever tried to get phone service from an incumbent? It’s like trying to negotiate a mortgage for your home. Hmm, no.. that was easier actually. Recently…

  3. The business model for VoIP parallels the business model for DSL; which is a money loser and no-one has really figured out how to make serious money.

    Vonage’s IPO filing is to flush out a lurking buyer or take advantage of the VoIP buzz at investment banks. Speaking of buzz, take a look at Bidu, the stock is at $79 down from it’s high of $130 (apprx.) This is probably what will happen to Vonage’s IPO.

  4. Jesse Kopelman Friday, August 26, 2005

    Who’s losing money on DSL? Most numbers I see have the cost to serve at less than $10/month/sub, which is a lot less than the charge for the service.

  5. True the costs are around $9-$15. There is constant pressure on DSL pricing and most DSL subscriptions are tied to “mandatory” telephone service for a given duration. I’m not sure how long they can keep up the margins.

  6. Jeff Citron is a smart businessman and everything he touches turns to gold. Who ever heard of Skype before E-Bay?

  7. Two years ago I met with Jeff Citron about running Vonage’s retail sales. I was told that the plan was to paint a good picture so Citron could sell the company. What has happened is greed. No one wants to pay $500 million for a company that never had a long term goal. The only reason Vonage was started is to make Citron a Billionair before the age of 40. Don’t get fooled again. Vonage will hirt you in the long run.

  8. Charles Turner Monday, March 27, 2006

    I think they will do well with an IPO and get some new employees to answer the phone and reply to E-Mails. I cannot understand the calls I received from India. They need money to hire people to make the company run. They have 100,000 call a week because its a good idea. Any company would love to have this response to their product.It’s to bad that no one is taking advantages of this opportunity.

  9. I have been a Vonage customer for over 2 years. Their main problems are the voice quality is better than cell it isn’t as good as Ma Bell. The second concern is that their service is dependant on a broadband provider that may or may not like Vonage running over its lines. I use Comcast which also has a phone service to offer. With all that being said, I am very satisfied with Vonage and tell people about it every chance I get. I have not had that much need to call Customer Service, which frankly sucks at every telecom company I have ever had to deal with (bellsouth, comcast, savvis, AT&T, Charter, just to name a few) so in short, getting rid of Bellsouth was one of the happiest days of my consumer life. Vonage is a great product/service for the money.

  10. I will say Alex’s reply is a little exaggeration and racially motivated in reference to customer service in India. Vonage has issues with Customer Service right here in NJ. They are growing at a rapid pace from Subscribers prospective but quality of service is going down not from Call QoS standpoint but in their administrative processes like Billing,Shipping equipment and keeping track of customer issues. They need a big time Management revamp. People in India even do not have authorization to transfer the call back to NJ in case of escalation.I hope you can understand further. Vonage is going to be a good stock for short term investment purposes as this company knows how to market its products. Comcast cannot reach the same level as Vonage easily without a acquisation or a better price model.

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