As some of you know, over the past 9 months, I’ve been heavily involved in the establishment of Humbug. For those who may not know, Humbug is a Call Analytics and Fraud Analysis SAAS. Now, differing from many of the current telephony SAAS projects, we are not based on Amazon EC2 or some other public cloud infrastructure, we build our own cloud environment. Why do we build our own cloud? simple, we need to keep your data secured and confidential. At Humbug, we see ourselves as a cross between Google Analytics – in our ability to analyze and handle data and Verisign – in our security and confidentiality requirements and methodologies.

Question be asked, why do people trust Verisign to provide SSL certificates around the world. What makes Verisign’s CA better than a privately owned CA – the answer is simple, it’s a third party 2 entities can entrust at the same time. Humbug aims to provide the same lever of trust, simply because we regard your data as sacred and valuable.

Since about 2 months ago, we’ve been contacting various Asterisk integrators around the world, inviting them to evaluate Humbug services. Now, while some integrators and vendors were somewhat reluctant, others were more than happy to join. We now have over 250 monitored systems around the world, with system being monitored and analyzed in Israel, USA, UK, Brazil and more.

The thing that amazed me in regards to some of the integrators who decided not to participate was that they claimed: “we provide our customers our own brew of fraud analysis service, we don’t require your SAAS”. Now, while I can accept the fact that an integrator would offer such a SAAS as an in-house service, I can’t see why a customer would rely on these services. In my view, relying on your integrator to provide fraud analysis services is like relying on the integrator of your alarm system to provide hired guard services – it just doesn’t make any sense to me. Why doesn’t it make sense? in Hebrew we say: “Go prove that you have a sister”. Imagine that your PBX integrator offer you such a service, then, in some obscure manner, your PBX gets hijacked and you get slammed with 50K$ worth of phone calls to Somalia. Now, your integrator would say: “Hmmmmm… that’s odd, we didn’t even get those CDR events to our system… you really got hacked bad…” – sure, if you only rely on CDR records to do your analysis (which is what 99.9% of integrators do). There is much much much much more to fraud analysis than just CDR analysis – if it all began and finished with CDR analysis, then by far Cvidya, Verint, NICE and many others would have been made redundant.

Allowing your integrator to provide you with fraud analysis SAAS is like putting the fox to guard the hen house, when things louse up (and they may), he’s the first one to bail out saying: “It’s not my fault”.

Humbug takes a totally different approach to fraud analysis, specifically, in the way we regards the various PBX systems and integrators. We are vendor agnostic and integrator agnostic – we will provide you with the clear and concise information you require in order to make an educated decision as to how you were de-frauded (if de-frauded) and provide you a faster alerting and response time. Our recent adventures had lowered our fraud alert response time from 60 minutes, down to 14 minutes in some cases. Most fraud analysis system carry a 24-36 hour turn around time, by that time, you can be out of 50K$ – our aim is to lower that number to no more than a 100$ in the worst case. Ambitious? yes, down right crazy? probably so, but we always say: “Aim for the moon, you’ll land on a star!” – so we know we’ll get there.

The following post doesn’t really fit in line with the normal spirit of the blog, simply because it’s not funny nor directly related to technology. It’s called Business 2.0, as it relates to the ever problematic question any business owner has: “When should I grow and how?”.

As you may know, I’ve been a freelance Asterisk Platform developer since early 2003, turned to freelance development (Penguin for hire) around April 2007. Since that time, I’ve built systems and platforms for some of the better known brands around the world. Be it working directly with the customer or through a 3rd party (as a sub contractor) – I can easily say that I’ve completed over 120 different large scale projects within 3 years time. Now, when I refer to projects, I’m not referring to installing PBX systems, I don’t do that at all – I’m referring to highly complex application level development, creating some of the most innovative Asterisk based systems I’ve ever seen.

Image via CrunchBase

Image via Wikipedia

Putting aside everything, finalizing a rough estimate of 40 development projects on a yearly base, most of these performed solely by myself is a fairly challenging task. Sure, at times I’ll outsource some work to other freelancers like myself, specifically in fields where I’m not all that fluent (Database, Web Development, UI) – but yet, doing that means that I’m conducting 3 – 5 projects on a monthly basis.

After doing so for 3 years now, I can’t help but start thinking about expanding my business, taking it to the next level by hiring more people and building it up to a new level. Question remains for this: “How? What is the natural track of expanding your business?” – of course the simple answer would be: “Just hire another developer or two, and start doing more sales” – it’s not as simple as it sounds. After thinking about it for some time, I’ve concluded there are a few models of expansion:

Model 1: Organic Growth

Organic growth can be described as the simplest way of growth: “Hire a new guy and get more work in”. The problem with this model that it is fully reliant on your ability to sell more. However, as you concentrate on sales more, you take time from the development and delivery process – thus, the addition of the new developer is not a 100% addition, it’s actually 100% (developer) minus 40% (you) – so you are not at 200% capacity, you are 160% capacity. Surely 160 is 100, however, for the initial 6 months, till the guy learns the ropes, you are not at 160, you are actually at 80 – can you and your business sustain that?

Thus, the main issue with Organic growth is cash flow, can your business sustain the elevated expenses with less income for the period of transition? If the answer is NO, then you need a different method. If the answer is YES, then you are in the best place in the world, however, bear in mind that taking someone to work for you is a responsibility – people are not resources, they are human beings, with families and children – taking someone to work for you is like taking responsibility for their lives.

Model 2: The Partner

A partnership with a person who is equally matched to you is always a good option. Technically speaking, it means that you are teaming with someone who generates as much work as you do and is capable of finalizing the work as fast and as good as you can. Yet, taking a partner doesn’t negate the requirement for a new employee or two. In this case, you may end up with too much sales with too little staff to deliver – that is a big problem.

Another issue with partners is the issue of trust. While most partners tend to rely on each other and trust each other, that trust can easily be broken (in most cases by stupid things). It’s enough for one partner to now carry its weight in sales/development to initiate a chain reaction, shortly ending in the partnership dissolving.

So, the partner is a good option, however, may prove to be problematic if the wrong partner is chosen – in addition, dissolving a partnership solely on these issues isn’t all that simple – and usually ends up in litigation and other judicial issues – YUCK!

Model 3: Un-intrusive Angel

Some people ragard Un-intrusive Angels as “Stupid Money” – an Angel investor that doesn’t interfere in your company business model and operations. In many cases, this is how start-up companies start – someone gives them a lump sum of money to start their business, signing off to own a portion of the new company.

An un-intrusive investor usually gives you the money and pays you a visit once every few months to see how his money is spent. Don’t expect to raise a whole lot from these people, usually you will get anything from 25K$ to around 250K$ – tops. If you are getting an investment from an Angel, make sure you plan your business carefully – and make sure your investor knows what he is getting into. The Angel is not a found piggy bank, he is a business man looking for profit – if you make sure his expectations of profits (time frame, amount, percentage, etc) are kept within the reason of your business – he will make an educated decision and invest accordingly. Promises like: “you’ll double your money in 3 years” are stupid – make sure it’s realistic and to the point. If you promise the moon, and reach a star – that’s a problem, if you promise the skies and hit a start – that’s wonderful.

Model 4: The Strategic-Intrusive Angel

Image by TheFemGeek via Flickr

A strategic angel is similar to the previous one in terms of funds, however, he is more capable in assisting your business meet its goals. Usually, it would be someone who is already a well established figure in your business sector, had made his money from previous companies and is now looking for new ideas and businesses. I call him an intrusive Angel, as sometimes he may have ideas as to where your business should go – and he will make sure you hear his ideas. You may regard it as annoying, but you should still listen to your Angel and pay him the respect he deserves.

Sometimes this Angel may invest in your business due to the fact that he has a hidden agenda. An agenda can be: The angel looks at your business and see a certain potential you are not planning, he’ll invest and try to re-direct your company to the agenda he sees. This is usually the case when your angel is invested into several endeavours that is either parallel to each other or may have orthogonal intersection points. These angels can be the builders of your business or the destroyers, it is up to you to make sure the latter doesn’t happen.

Prolog:

So, which model did I choose? – I didn’t choose yet, I’m still figuring it out myself. What ever the model may be, the choice isn’t simple nor straight forward. At best, whatever choice I’ll take will have a profound impact on my business and me – so I’ll need to weigh my options carefully. If you can think of an additional model, I’d love to hear about it – so just comment on this post.

Revenue sharing is one of the oldest methods of earning profits, actually, I believe it may just be right up there with trading of goods and food. For those of you not in the know, I’ll explain what revenue sharing is:

1. A content provider wishes to distribute a certain type of content – charging for it.
2. The content provider has not ability to charge the consumers directly, thus he partners with another party – the transport maintainer.
3. The transport maintainer charges the consumer, while keeping a certain percentage in his pocket.
4. Everybody’s is happy.

In general, this model works really well in many markets – specifically those that are driven by unique content – for example the mobile content market (ringtones, screen savers, games, apps) – the Apple App store is a wonderful example of how this works.

In the telecom industry, the revenue shares business is very common – however, in many cases it is highly guarded as a secret – main reason is that now one wants anybody else to know how they do it. This hiding of information, usually results in some problems – as when there is hiding of information, only those in the know are able to access it. Those in the know are called “mediators” or in Herbew “Machers”. In this entire ordeal, the mediator also takes a small percentage – leaving the content provider with slightly less. So, now it looks like this:

1. A content provider wishes to distribute a certain type of content – charging for it.
2. The content provider has not ability to charge the consumers directly, thus he contacts a mediator to find him a transport partner.
3. The mediator engages the prospective transport maintainer.
4. The transport maintainer charges the consumer, while keeping a certain percentage in his pocket and passing some funds to the mediator as well.
5. Everybody’s is happy.

So, if everybody’s so happy – why am I bitching about it? very simple – people are Greedy and always want more – putting the entire model into a frenzy. In order to give an example, let’s imagine the following scenario:

1. Company A provides IVR based content utilizing Asterisk server, connected to the internet.
2. The mediator engages a premium number company, getting the total revenue of 0.08$ for every inbound minute of traffic.
3. The premium number company leaves 0.01$ in its pocket and also pays the mediator a fee of 0.01$ per minute.
4. The content provider gets 0.06$ of the 0.08$ – 75% of the net profit goes to the content provider.
5. Content provider says: “Hell, I want the mediators 0.01$ as well, and I think the premium company should only get 0.005$, so I would get 0.075$ at the end”
6. Content provider contacts the premium provider and starts complaining
7. Premium provider negotiates and strikes a deal for 0.07 to the content provider, leaving the premium provider with 0.005$ and the mediator with 0.005$
8. Premium provider says: “I’m not making enough money on this, actually, I’m loosing money – I’ll find a better alternative service for that access number”
9. Premium provider asks mediator to bring in a new customer, providing similar content – mediator has sure incentive here
10. Premium provider gets new customer and transfers the access number to the new customer – returning back to previous profits
11. Original content provider is left with no profits and only greed in his hands

Over the past 10 years, I’ve seen this vicious cycle happen over and over and over again, in various formats and scenarios – but always ending in the same outcome – the content provider always suffers. If you’re a content provider and you provide IVR based services, let the people that provide you the access make their cut and the people in the middle, without them, you will have a service with no access – which means no service at all. Don’t go about thinking you can keep all the profits to yourself, you will break the equilibrium of this business, and eventually, no one will want to do business with you.

Last time, I’ve contemplated upon the various aspects of being an Asterisk consultant, mainly judging these from the Asterisk/Open Source point-of-view. Today, I’d like to contemplate upon a different approach of being a consultant, mainly, the various aspects that are usually not associated with Asterisk consultancy, however, can increase your overall perception by your prospective customer.

Be Targeted, Don’t be Limited

Most Asterisk consultant tend to restrict themselves to the Asterisk arena, at best, they will expand their knowledge into the realms of SIP and networks – but never beyond that point. It is true that telephony makes for over 80% of the Asterisk consultancy world, however, Asterisk isn’t limited to telephony only. More than 40% of the people using Asterisk are utilizing it for something completely different. Ranging from simple IVR to complex Micro Payment systems, Asterisk is there. Surely you can consult about Asterisk, but imagine the benefit your customer will gain if you are able to advise about other issues as well?

You are most probably saying: “I’m an Asterisk expert, I can’t be a **** expert as well!’ – you’re not being asked be one. You are being asked to expand your horizons beyond the Asterisk realm, being asked to be able to answer preliminary questions about various subjects. Over the course of my work I’ve been asked about subjects as: Google Adwords, Business Models, possible business partners, applicability of solutions and many more. Surely, there are people more qualified than myself to answer each of these, however, being able to answer my customer in a short time yielded something interesting, my customer became more at ease consulting with me about other matters as well – sometimes surpassing the realms of VoIP and Networking. When I was unable to answer I always replied with: “I’m not an expert about this, but I can check it out”. If I had an answer I would reply: “Per the information that I have, the answer is ………., however, I do suggest talking to someone more skillful than I on these matters”. This approach yielded an interesting response from my customers, mainly, their appreciation at me being able to supply a form of preliminary answer for a question – while on the other hand admitting at the same time that I’m not the best at this field.

Subjects that are fairly close to Asterisk include: GPL compliance, programmatic approach, platform design, billing considerations, scalability and redundancy and more. Again, always target your knowledge to Asterisk and VoIP, but don’t be limited to these.

Advocate for GPL compliance

As a consultant, you’ll be asked to perform various projects – some of these will most probably clash with the GPL spirit. If you encounter such a request, turn down this project immediately. There is no use or advancement by doing a project that violates the GPL code of conduct. No matter if you’re violating GPL v1, v2, v3 or any other of the Open Source license variants, at the end of the day, it will creep up behind you and bite you in the behind.

An Asterisk consultant who doesn’t advocate for GPL compliance is an outbound liar and a con-man. Consulting for the Asterisk market is prmoting the usage of GPL and Open Source software. Performing projects that violate both put you into the position of being perceived as a consultant without any code of conduct and no personal believes. You will be perceived as only being interested in money, thus, you will attract the type of customers you don’t want to attract.

Business Partners

The business partners you choose tell much about yourself. Sometimes, the big partners, which you really want to put their logo on your website as a partner is the wrong partner for you. Since the Q4 2008, my company had been approach by multiple companies wishing to become partners with my company – many have been declined. They were declined due to a simple reason – they were the wrong partners, even if they were companies generating over 25M$ of income per year. Does it make me sound stuck up and elitist, maybe, but there is no use partnering with a company that may clash with your own business model. Just like customers, partners tend to attract one another. Team up with the wrong partners, you’ll start attracting the wrong partners all over.

The current economical situation of the world had gotten me thinking about various things. I would say that while most people think about “how to survive the economical desert” we are currently passing – my thoughts are going to another place – I see an opportunity.

About 6 months ago a team of 58 engineers joined forces in Israel to create the itribu.com service, a “pay-it-forward” type service. The amazing thing about itribu is the fact that it was completely built within a period of less than 72 hours!

Is that logical? creating a full service in less than 72 hours? is that actually doable? even extreme programming techniques and scrum/agile don’t offer this kind of development turn around. Actually, coming to think of it, I’ve created web based services in the past on my own which took less time to develop. I’ve developed a web based telephone conferencing system in less than 2 days, on my own, so – developing a full grown service with 58 engineers in 72 hours – sounds logical.

You are probably wondering: “What is he talking about? how does itribu relate to the current economic situation? where is the opportunity?” – the answer is simple, you’re simply too stuck thinking in normal development and financial paradigms – that you are blind to the obvious. Over the course of the past month, over 2000 engineers were let go from their jobs in Israel. These are highly qualified, highly original individuals ranging the full spectrum of the hi-tech industry. Imagine that a company that had let go 10 engineers, and imagine that these engineers had decided to start a web based service. Now, imagine that these 10 engineers get into a single place for a full weekend. Can they build a service in a single weekend? the answer is a definite YES!

If creating a service is so simple, how come people are not doing it – the answer is usually simple: EGO and PRIDE. When I talked about this idea to a couple of friends of mine they both replied a simple thing: “Hmmm… Ok, sounds cool, but, what is our take in the company? how much money are we going to make from it?” – and then I actually realized: the world had completely forgotten what the term start-up means. In 1996, when the ICQ team started working on their product, they had no idea they would end up selling ICQ to AOL for 400,000,000 USD. When Sergey and Larry started Google they basically had nothing in their pockets, they almost closed Google due to a poor business model in the beginning – that’s the idea behind a start-up, you have an idea and you go for it. We had become so obsessed with business models, revenues, making money, ego, status, driving a big car – all he things that had become synonyms to Hi-Tech success, but had completely forgotten that it takes time to get there. VC’s start giving money to any company that looked like a Web 2.0 application, when actually, there was nothing behind the idea. In my view, any team of 10-15 engineers can surely spend anything between 2 to 4 weekend building a service, continue on to running it – the VC’s will shortly follow once your service becomes a craze – trust me (I’ve seen it happen more than once).

Digium started from a loan Mark got from his folks for 5000$, and grew into a multi-million dollar company. In 2006 Digium received an investment of roughly 13M$ from Matrix Partners, but that’s long after Digium was already racking up about 14M$ sales per year. JaJah started off from funds of their founders, slowly growing in number of users, shortly to follow by investments from Intel Capital and Sequoia – in other words, obsess about creating the service first – the money will soon follow after wards. Starting to argue about who gets what and how much is stupid, after all, if you don’t build it – its value is still 0!

Ever since the introduction of JaJah to the world, the world of free telephony services had been booming with various solutions and services. While each service concentrated on a different market niche, none of the services really is free of charge (at least not in full). For example, JaJah requires you to register and purchase additional air-time, RebTel operates under a similar approach, so does TruPhone and others alike.

Over the past 10 months, I’ve been working closely with a company called Parrot-Media, who operate the PokeTalk.com website.

PokeTalk Website

PokeTalk is a free international calls service, allowing users to make international calls FREE of charge. The service allows a user to make up to 50 free calls per month, of up to 10 calls per calls (that’s 500 of FREE minutes per month). Judging from normal ACD traffic around the world, a normal call duration is around 5-6 minutes, thus, the service is a great solution for making phone calls for FREE.

According to the PokeTalk economic model, the calls are being funded by the advertisement on the website. So, while you watch the ads on the website, the advertisers are paying for your call – it’s as simple as that.

As you may have guessed, the service utilizes the Asterisk Open Source PBX (after all, this is what I do). In addition, it utilizes a highly advanced, high-speed, highly-reliable Asterisk based dialer framework – enabling the system to initialize up to 140 calls per second, and sustain a total of 1200 concurrent phones calls across the entire platform. All in all, a fairly big and robust platform for a new service.

To enjoy the service, simple point your browser to http://www.poketalk.com, regsiter, and start making calls to your loved ones.