1Mby1M Incubation Radar 2010: Ringio

By guest author Praveen Kumar

Ringio is a cloud-based phone system service for small businesses. The company considers its product to deliver “rich calling” – a system that goes beyond virtual private branch exchange (PBX) and call routing and integrates call routing and CRM data. By bringing the context of a call to a conversation, the company aims to help employees make their business calls more meaningful and productive and offer better customer service. By creating the solution in the cloud, Ringio can bring capabilities previously available only through call centers and proprietary customizations to small and medium-sized businesses.

The Herndon, Virginia–based company was founded in April 2009 and is headed by Sam Aparicio, who drives Ringio’s strategy and tactics, customer and revenue acquisition, marketing, and product management. Prior to Ringio, he was the CTO at Angel.com, a speech and interactive-voice-response (IVR) provider, where he was responsible for the company’s technology strategy and the design, implementation and launch of its virtual call penter product. The other cofounders are Michael Zirngibl and Ashish Soni, who were CEO and VP of technology and operations, respectively, at Angel.com. Zirngibl, chairman of Ringio, is an inventor who holds more than thirty voice technology patents. Soni, Ringio’s CTO and president, is an expert in building scalable, high-availability cloud computing systems. He has managed more than forty major software releases. The three worked together at Angel.com for more than ten years, building the company into prominence as a provider of automated IVR and call center solutions for medium and large businesses.

Ringio has taken advantage of a number of technology trends such as the growing popularity of of SaaS among businesses of all sizes, the growing importance of mobile phones and smartphones as the main communication device for employees at smaller companies, and the adoption of cloud computing and open Web standards to make data integration between multiple systems easier. Aparicio says that the success of consumer services such as Skype and Google Voice are indicators that the time of hardware-based phone systems is coming to an end and that users want their phones to become more like software applications that give them more features and greater flexibility and control over how to handle phone calls.

The products main features include smart voice menus for callers that greet contacts by name, treat them according to priority (normal, VIP, or blacklist), and remember who the call last spoke to; screen pop-ups for employees that describe the context of the call; smart collaboration features that allow employees to share information such as address books and call histories; and Ringio mobile, which turns a cell phone into a virtual call center and synchronizes Ringio data on landlines and smartphones. The product can be used with a company’s existing phone infrastructure.

Ringio costs $99 a month for up to four users; this package comes with a 1-800 number, four additional toll-free or local numbers, and a pool of 2,000 monthly minutes. The company charges $25 a month a seat for extra users, who come with an extra number and 500 minutes to add to the pool. In comparison, hosted call center solutions typically range from $150–$300 a month. Although many solutions are at the high end of the market (so-called virtual call centers with custom CRM integrations), there are a growing number of players with various areas of overlap that, like Ringio, are going for small or medium businesses. Two notable open source competitors are OpenVBX (from Twilio) and OpenVoice. TechCrunch offers a deeper look into competition on the PBX market. See the recommended readings for more of Sramana’s coverage of this space. Ringio competes by offering a “Skype-like” online self-service model with rapid setup, ease of use, and customer acquisition driven through online marketing and PR.

The company’s target customer are businesses with five to fifty employees that have regular phone-based customer contact; businesses with multiple departments within the company or that have a high number of customers and callers, use an online customer database, or use SaaS solutions for sales, marketing, and support; businesses that want specifically to improve customer relationships; users of Google Voice that need a multi-user or more sophisticated solution; and users of commodity virtual PBX services that are interested in integrating CRM data into their phone solution. Approximately 500,000 to 600,000 small and medium-sized businesses in the United States meet a sufficient number of qualification criteria to be considered prime target customers. Ringio’s target segments and verticals are technology companies, software companies, business services, and e-commerce and online retail.

The company first gained traction through PR and launch activities in which it defined rich calling (using and presenting customer data in the context of a phone call) as a new segment in the market for Communications-as-a-Service. At present, Ringio has around 350 business customers in public beta and 4,000 unique visitors a month. There are about 100–150 new users who sign up each month. Although the primary target is small and medium-sized businesses, Ringio’s upcoming release will enable departmental roll-outs for enterprise customers. Aparicio says that OEM partnerships will be announced later this year.

Ringio is pre-revenue and in the final stages of public beta. It expects to begin generating revenue this month. The three founders contributed a total of $275,000 to fund the company in April 2009, and in January 2010 they raised a friends-and-family round of $645,000. At present, Ringio is raising venture money and aims to raise $5 million to $10 million in the next three to six months.

Later, the company plans to market its product as a private-label offering through a number of distribution channels and has started discussions with a number of international distribution options in Europe and Latin America. The founders are committed to building a solid business based on a sound business model, and their target is break even in less than twelve months. They expect substantial interest in their private-label offering from a diverse group of distribution partners including telecom service providers, telecom infrastructure providers, and SaaS/CRM providers. Aparicio says that offer from any major players in these areas who may be interested in the potential acquisition of Ringio to shorten time to market or to fend off competitive threats in their space would be considered.

Recommended Readings
PBX as SaaS: RingCentral CEO Vlad Shmunis
College Bootstrapping Buddies: Grasshopper Cofounders Siamak Taghaddos And David Hauser

This segment is a part in the series : 1Mby1M Incubation Radar 2010