BT Buys Ribbit for $105 Million

31 Comments

BT (British Telecom) has acquired Silicon Valley-based Ribbit for roughly $105 million, according to various news outlets. Rumors of the deal first emerged on Venturebeat, though company officials vociferously denied any deal. Our sources say the delays were mostly due to internal issues at Ribbit.

Michael Boustridge, President, BT Americas said: “The Ribbit platform makes it simpler, cheaper and faster to build communications functionality into applications, enabling developers to introduce new revenue-generating voice services in hours, rather than weeks. By combining the Ribbit platform with BT’s existing web services, we have the potential to deliver some of the world’s finest applications for communications innovation benefiting consumers and businesses alike.”

As we have pointed out before, there seems to be a lot of interest in merging voice with Internet applications, but the whole process hasn’t been a slamdunk. Dameon Welch-Abernathy, in his post earlier this month pointed out:

Ribbit, a company whose business model is to make telephony available through APIs. The thinking is that they’ll make their money on revenue shares as developers create interesting applications.

If Jaduka’s experience is any indication, however, I don’t expect Ribbit will last too much longer without a complete change of strategy. Ribbit might have 4,000 developers, but how many of them are actually making applications on which Ribbit is able to share revenue?

Taking that into context, this is a great exit for Ribbit founders Tedd Griggs and Crick Waters — and for Mountain View, Calif.-based Ribbit’s backers: Alsop Louie Partners, Allegis Capital, KPG Ventures and Peninsula Ventures. Ribbit was long on hype and underwhelming on end results.

As far as the buyer is concerned, I am not sure how much of a benefit BT is really going to see from the deal. BT has always been long on promise, but short on execution of its grand vision. Its 21CN is a perfect example. It was supposed to be this new network and a platform that would enable new services and seamless bandwidth. Someday it will.

The 21CN plan included a platform that allowed developers to embed voice into internet applications. That platform still exists, but one wonders if anyone is using it. So perhaps it had to go out and buy what is essentially a Class Five switch with a pretty Internet interface.

Ribbit, as an independent company, was able to get some — not a lot — of developer interest. I am not sure how BT is going to do that. It is, after all, a telecom operator that wants to operate like an Internet company. Sure, in a circus you can make a dog walk on two legs as well.

31 Comments

Larry Lisser

I am more than a little late to this post but, much has happened since the Ribbit announcement that makes commenting of interest today. Of course, all of us implicated in the emerging telephony space rejoiced at some level when the deal went firm. Someone had to go first and no one is complaining about where the initial bar was set. Will BT be able to monetize the acquisition? Anybody’s guess, and I can’t offer much in that direction as I don’t work much in BT’s market.

More interesting to me is that the notion of a voice platform is firmly alive and well. For 2-3 years now we’ve called them hosted services and wondered how they would make money. Now, they’re platforms (notwithstanding the fact that most if not all are in some way interconnected to a network). And while for some we are still wondering how they will monetize, this is a process. Three short years ago, even the term hosted was difficult for people to grasp. Now, we don’t go to market in any other way.

Since the announcement, other leading ‘platform’ providers have been busy – coincidentally or not. Jon Arnold – an ‘A’ student in this market – recently wrote about Jajah and IfByPhone in the context of the Ribbit deal. Worth a read at http://voipservices.tmcnet.com/feature/articles/37107-platform-play-updates-solid-proof-points-service-providers.htm

In my opinion, IfByPhone deserves a closer look for those taken by the Ribbit transaction. The two companies have very different histories; and their packaging and go-to-markets differ in many ways. For the moment, Ribbit depended more on developers to commercialize. IfByPhone – whose platform was built entirely with web developers in mind – is widely available to the developer community yet at the same time they choose to package services that small business can afford, can use and can quickly see benefit from. By doing so, they create market validation, they monetize and they show the development community what can be done. What is perhaps most impressive – and indicative of the depth of the platform – is how quickly they can enter market segments. They see a market requirement through their commercial efforts, they package the application and bang the SMB community can jump on.

So while we ponder if BT can take what is truly a platform and monetize it inside their own ecosystem, should we not wonder what it would take for one of our stateside players (ie. Comcast) to make a similar decision? In my opinion, it will take proof of concept and it will take a pure SMB offer. IfByPhone should be watched.

Paul

@Gary, What is your experience with Ribbit? We weren’t happy with the kind of response we were getting from them. Maybe they only support big names :-)

We are building a RIA (flash based) wherein we wanted to integrate flash-based voice communication but didn’t get any satisfactory answers on performance, scalability or telecom specific questions from Ribbit.

So, after some more research, we are now finally building our application on tringme platform after a successful prototype. So far tring me is responding well to our requirements.

Carlos Slim

@Senor Grande

Don’t forget that RingCentral signed a deal with BT just a few months back.
RingCentral’s customer acquisition costs are probably through the stratosphere and they are competing with J2 Global who has lots more cash (NASDAQ: JCOM). Also, because the barrier to entry for virtual pbx is so low I’dbe willing to bet there are some very high customer churn issues.
Also, don’t forget that GOOG bought Grandcentral. When they relaunch that will be a nail in the coffin for many virtual pbx companies. AND a rumor floating around is that Vonage may be launching a similar virtual pbx service.

Senor Grande

Have to think that RingCentral will be in play shortly. Lines have become so commoditized that the value now likes in the virtual pbx.

Prime suitors imo include:

– Cisco
– ATT
– TMobile
– Verizon
– Comcast

Jason

I would like to know how they came to the $ 105 M valuation. Ribbit is indeed a very creative platform with a tremendous potential, but 100M is high for a company without signoficant revenue.

Matt Aiken

BT will make this work. Remember that the BT 21CN network isn’t due to be complete in the UK until 2012 but it’s going well so don’t underestime BT. BT are implimenting 21CN across their network in 170 countries. This should add more choices for them Voip wise. Whether they’ll be embedding the software inside their hardware, or adding it as a free service to their existing customers remains to be seen. A great purchase and very timely so good luck to them both.

Gary D.

Good for Ribbit but I don’t understand a $100M valuation from a BT perspective. The Ribbit solution is well developed and fairly complete but not anything that can not be duplicated fairly easily. An API stack on top of a softswitch. Many companies, including ouselves, have built something similar for their internal business needs. Most are not as visible as Ribbit and are not marketing the functionality as an external service.

Good PR, a Silicon Valley buzz, and a grand ambition buyer pays off in this case.

mat

For telcos to stay relevant, they must embrace the voice 2.0 world. BT made a bold first step into this world with the Web21C SDK but it struggled to find the business dedication to really capitalise on the opportunity. The Ribbit acquisition not only presents a natural and welcome techncal extension to their developer program but also brings on board a team that really know and care about driving revenue from third party voice applications. Ribbit is in fact the only voice player with a robust and proven ecosystem model, and the opportunity that this marriage to BT presents to web developers to voice enable any kind of web applications is awesome.

Sergio

Wow, this is great news for Ribbit !! I guess the race for traditional telcos to embrace the open market and get out of their walled gardens has begun. Flash telephony and in general voice 2.0 is here to stay and is the future.

So, for the telcos, it’s either move with the force or stay closed and perish. I think BT is trailblazing the path of integrating the traditional and next generation (flash telephony) with Ribbit acquistion.

This ups the stake for the other flash telephony players in the market, ones which have a compelling platform for voice 2.0. OM, who do you think are the players ?

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