Surviving Near-Death Experiences and Going Public in London: Michael Hughes, co-CEO of LoopUp (Part 3)

Sramana Mitra: How much money did you raise from this round? It sounds like it was a friends and family angels round.

Michael Hughes: It was about $400,000.

Sramana Mitra: What did you tell these people who invested that first $400,000?

Michael Hughes: We used to be called Ring2 Communications back then. The original idea we had was to basically turn your computer into a giant speed dial. If you send me an email and if your signature had your phone number, we enabled dialing on double-clicking that number.

Whilst you were on that call, you could add in a second, third, or fourth person. It was a way to drive a bit of efficiency into the way that people are communicating. We had a very positive feedback from most of the customers that we had. Just as we were doing this, the phone companies were beginning to move away from the old line rental usage model. They were all moving towards bundling minutes with the price of the phone. What that meant was, because we were an overlay service, we became a relatively expensive add-on to the phone service, which meant that it became harder and harder for us to sell.

Sramana Mitra: Were you selling to the consumers or were you selling to the carriers?

Michael Hughes: We were selling to small to medium enterprises. We didn’t go through any other channels. We were just knocking on doors, selling ourselves direct.

Sramana Mitra: What happened? When this situation developed, what did you do?

Michael Hughes: Fairly quickly after we started, we realized that we had made a mistake. We screwed up our understanding of the market. We had to figure out what else to do. We had probably two good years until 2005 where the business was growing quite nicely. We were making enough money to keep the wolf from the door. As the pricing policies of the carriers changed, they made it very hard for us to continue to sell.

What we then did was we actually started to talk to a bunch of our existing customers and said, “Looks like this is not going to work in the long run.” We had a lot of feedback that people really liked this ability to see what was going on on the call. We had one law firm in particular in London. We were having a conversation with one of their partners. They said, “The most useful thing about this service to me, in addition to the ability to easily dial, is the capability around scheduling conference calls.”

This person was telling us that what they really wanted was to be able to take the information that we were displaying on our client and put it on to their Blackberry. We realized that this might be a good idea. If you look at the collaboration space, there are loads of people who were investing. Most of the money was going into the web and video part of the space. Everybody was trying to be the WebEx competitor. If you look at the market, that market was still massively dominated by plain old dial-in conferencing.

Here we are in 2017 and we are using dial-in conference call to have this meeting. That is very true of the vast majority of companies all over the world. The data is a little bit guarded by the industry because they don’t want to let the cat out of the bag too much. Some people would suggest that almost as much as 80% of minutes of collaboration that are going on are still plain boring audio minutes. There’s a number of reasons for that. One of the biggest ones is if I send you a dial-in number and an access code and you can’t get on the call, that’s probably your problem. That’s something that you need to sort out and deal with.

If I send you a link or something to get you on to a web or video session and you have some issue, that now becomes my problem as the organizer of the call. What you see is this real risk aversion. Quite often, conference calls are a little bit stressful. You don’t want to deal with one people getting on and then one person who can’t get on. We found that a lot of people were going for the dial-in approach.

Very quickly, we realized that that service, even though it’s popular, has a huge number of everyday problems that have now grown up with it. Have you got the right dial-in number? There’s somebody from Germany who’s trying to join. When someone joins, you just hear this beep and you have to guess who joined. If someone joined from their car and they’ve got background noise, how do you deal with it? We realized that if we could go after this boring audio bit and maybe loop in the mobile device as a way to give visibility and control to the leader of the call so that they can see who’s coming in and mute anyone, that would be a great way to go after a bit of the market that everyone else is ignoring.

That market is a big chunk of the global minutes. We thought that if we have a bit of technology there, no one else is worrying about this. It’s a slightly contrarian strategy. That’s where we decided to take what we learned from doing the original product, marry that with the visibility piece that was liked by lawyers and some other people that we were working with and put that out to a Blackberry as a way to solve those everyday conferencing problems.

This segment is part 3 in the series : Surviving Near-Death Experiences and Going Public in London: Michael Hughes, co-CEO of LoopUp
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