After meeting multiple Vonage employees during my research for my consumer VoIP book, I feel I have a decent grasp on the company culture. That culture strongly echoes Jeffrey Citron, the now ex-CEO and new Chairman and Chief Strategist. Make no mistake – Citron is a sales guy, a high-end sales guy who collects large sums of money wherever he goes. The move from CEO was a bone thrown to the SEC for restrictions placed on Citron from an earlier company (Citron paid a $22.5 million dollar fine but admitted no wrong doing). Call him by whatever title you want, but he will continue to be a sales guy.
I expected Vonage to be sold or go public this year, because they’ve already burned through $600 million in venture capital funding, and investors want some return. Frankly, I expected someone to buy Vonage, but I bet the growth in phone service from cable companies scared off buyers. Read about the IPO here.
Leading the market now with about 1.4 million subscribers, Vonage faces strong growth pressure from cable companies bundling phone service with TV and Internet access. There’s always a chance the FCC will allow cable companies to “shape traffic” to support their own services, which will degrade the service of companies like Vonage that don’t have their own networks. Look for more lawyers to start making even more money, much of it from lobbyists, over the next two years.
Vonage proved the market for telephone-centric consumer VoIP existed, and they retain leadership of that market. But Super Bowl ads are an expensive way to get new customers, and the IPO will supposedly go mostly to marketing. So it appears Vonage has not changed their tactics over the past few years. This means the changing market may cause them more trouble than they expect.