Max: 00:00 We do a lot of business with cable companies. They’re fantastic. We do have a ton of fiber to blow with cable. These organizations are amazing at installing I mean, they’re really good at installing service. Right?
Max: 00:09 But the average person has experience with a cable company because they had a cable modem in their house with god awful service that was terrible and horrible support cycles. And so then when you start talking to them about doing business with a cable company, they, like, lose their mind. Like, the cable company is awful. Why would I do business with them? And you’re like, no.
Max: 00:23 No. No. No. Your residential service with your cable modem at a $60 a month service was terrible. But, like, this other thing over here that you actually want for your business is amazing.
Max: 00:32 You know? I’m like, oh, use this thing over here. So, Rick Garcia, you are the founder of g 12 Communications as I understand. Is that am I saying this correctly or am I butchering your title?
Rick: 00:56 No. No. I’m the I’m the founder. On LinkedIn, I show the I’m the COO, but I’ve dropped the COO stuff because we’ve hired smarter people than me now. So now I I literally get to go focus on driving revenue.
Rick: 01:08 So my goal is to drive revenue, create new products for the organization. Right? And I have a CEO. He’s my business partner. So he’s in charge of, you know, accounting, finance, and all the stuff that I don’t particularly like.
Rick: 01:20 But product and sales, I love that stuff. And so that’s what I do. I like to drive products into the marketplace.
Max: 01:27 So I think that title is now called a CPO. You’re the chief product officer. Right?
Rick: 01:33 So the revenue is my primary goal, so I’m keeping the CRO. So it’s driving the revenue.
Max: 01:38 I had an executive at a company, and his title, he had this acronym, and it was oh, I I don’t remember the letters, but it was VP of all things not covered by other VPs.
Rick: 01:49 That’s fantastic. That’s great. And it was just
Max: 01:53 it was just the initials, right, of all the different things, like VP, you know, and, like, you you and it was like, what the heck is this? And it was VP of all things not covered by other VPs. And I was like I was like, okay. Cool. Like, I I get it.
Max: 02:04 I know what you’re up to.
Rick: 02:05 I should just put janitor. Let me just go clean things up. Right?
Max: 02:08 That’s the other one. Right? What was the other one I I read long time ago? It was, like, being the founder and CEO is always sucking at your job. Because until you can figure out how to hire better people than you, you have to do the job, and it’s not the job that you know.
Max: 02:20 So you just kinda get to suck always.
Rick: 02:22 That is a 100% accurate. You know? Like, I was a technologist. I mean, I was the one that launched all of our technology stuff initially. Didn’t know anything about servers at the time or anything like that.
Rick: 02:32 And I’m, yeah, in a data center sticking servers in, going, where does this go? Where does that go? You know? And I I contracted help at the very beginning. It was terrible.
Rick: 02:40 And so, you know, from technology to product and to, you know, support and sales and all of it. I’m a salesperson by trade. That’s what I love to do. And so I ended up doing all that stuff, and then operationally running, you know, stuff from an operations perspective. And then I was, like, oh, boy.
Rick: 02:58 This is we need some smart people. So it was fantastic to be able to hire, you know, 2015, start hiring a bunch of people.
Max: 03:04 So what I mean, let’s go to inception. Like, what is the inception of g 12? I mean, as you say, if you’re, like, a salesperson starting a technology company, what was the market opportunity that you saw? And so, I mean, where did g 12 come from?
Rick: 03:16 Yeah. So so here’s how we started. My cofounder, and he’s our CEO, Rick Coma, and myself. So we were both the guys that built a company called 360 Networks. And at 360 Networks, we were the wholesale provider for guys like Vonage, 8 by 8, you know, Google Voice, J2 Global, who’s EFAX.
Rick: 03:35 So we were the providers, the underlying telco providers for those organizations. So we built a wholesale network in 36 different states. So the wholesale CLEC network. Right? We were the fiber infrastructure, the switching infrastructure, and we were the CLEC.
Rick: 03:47 So we sold that to Zayo in 2011. So when we sold that to Zayo prior to the close of that deal that happened in December of 2011, you know, October, we started talking about starting a different business or a business. And so I started g 12, I think it was October 31, 2011. And he joined after the close of Zayo, you know, in December of 2011. And so we started g 12 Communications then.
Rick: 04:09 But it was just because we knew the market. Right? All of the cloud providers at the time were our customers. And we came out of the gate as a UCaaS provider and mostly a SIP trunking provider back then. Like, back then, there was a lot of SIP trunking still to go deploy in the market.
Rick: 04:23 Right? To Cisco’s, Avaya, Shoretel’s, Mitel’s, etcetera. So it was a SIP trunking operation predominantly. Cloud started to take root, you know, state started to take hold in the marketplace. And then we slowly converted from SIP trunking to our cloud offering, and that’s kind of where we started.
Rick: 04:40 There was a cloud and SIP for a long time.
Max: 04:42 So today, would you say you’re predominantly focused on Teams? Are you still offering SIP trunking and, you know, other UCaaS? Or
Rick: 04:49 Here’s what’s interesting. This is great. Because, you know, you see this shift from SIP trunking to Cloud PBX to Microsoft Teams. So this path that we’ve followed has led us to Microsoft Teams. But what we do I mean, our core has was always SIP trunking early on, and we still sell SIP trunking today.
Rick: 05:06 It’s shocking to me. But as an example, we do a lot of SIP trunking for call centers. So if you have a a call center provider like 5 nines, Talkdesks, Genesys, you know, inContact, we’ve got connectivity between us all. Right? So we’ve got private trunks built to each of those contact center providers.
Rick: 05:23 And so a customer will come to us and say, you’re providing my hosted PBX service, and now I want a fancier call center solution. Can you do my dial tone into this? So either doing SIP trunking into those platforms and bringing that together. Right? And bring the dial tone provider for both the contact center solution and their cloud PBX solution.
Rick: 05:42 So that’s how we continue to sell that product. Our cloud PBX, obviously, it started to take hold from a market, you know, sort of standardization early. And I think I would say 2017, 2018, 2019, it started to really take hold. Right? But we’re still deploying SIP for their Ciscos at the time.
Rick: 05:59 But then the pandemic hit. And just prior to the pandemic, we were literally testing the Teams integration. I think about 4 months prior to the pandemic, we were literally testing the Teams integration. I think about 4 months prior to the pandemic, we were testing our Teams integration for our cloud PBX. And that was across some audio codes that we had deployed and things like that.
Rick: 06:10 And so the integration was working well. And really, before, we’re like, yay, team right or right before an announcement, you know, the pandemic sort of started. And we were like, well, we’re already running this. We internally, we were running it. So we’re like, this is a great solution.
Rick: 06:28 And so that led us into our you know, from SIP to Cloud PBX with Microsoft Teams. And then to we did direct routing between all that stuff. So we started doing some direct routing because we have an AudioCode infrastructure that we had deployed. And then we went to Operator Connect because we were doing direct routing. We worked with Microsoft to deploy our Operator Connect solution.
Rick: 06:48 Microsoft, you know, kind of, I’ll say, anointed us, you know, in in their ecosystem, their operator connect ecosystem, which was great. And that’s kinda where we’re at. So we’re still focused on all things because here’s the deal. When we deploy Teams solutions, they still require some ancillary services sometimes, right, to deliver a full solution. Okay?
Rick: 07:09 So whether it’s analog devices for overhead paging or door actuators or intercoms. Right? Fax lines or, you know, stuff like that.
Max: 07:19 All those stuff that every enterprise needs and they forget about until you go do it.
Rick: 07:23 Yeah. If you’re not a knowledge worker facility if you’re not a knowledge worker organization, right, and you’re a take a hospital. If you’re a facility, you’ve got the red phones on every floor. Right? And those are all typically run on analog lines that congregate, you know, 66 block down in the basement of the hospital.
Rick: 07:40 How are you gonna turn those on to SIP? You know what I mean? You can, and you’d need some ad trans. We’ve got a hospital where we’ve got a daisy chained 11 ad trans that we support for these red phones throughout this massive hospital. Right?
Rick: 07:54 But that’s the kind of stuff where you couldn’t possibly try to put that on Teams. Right? So you need some ancillary services. So when we go to market, and we go to an organization that has 5 or 600 users or whatever it is, that’s great. But then they invariably, they’ll have some solution that needs a legacy type service that we bring into the fold.
Max: 08:12 From a technology standpoint, I think it’s surprising how many providers are not actually in control of their own integration with Teams. And this is one of those things where, you know, there’s a big run by the UCaaS market into supporting Teams. But then you start peeling back the onion a little bit, and you find out how many of them are dependent on, like, click to Teams, you know, as their integration layer. So, you know, I think AudioCode’s ribbon and I forget the other SBC are, like, the only real certified pathways into being, like, a true Teams provider. So, I mean, already having AudioCode’s SBCs obviously gave you guys quite an advantage and leg up into that.
Rick: 08:44 I did. And that’s, again, starting down that path early on led us into okay. Here’s some and it it is some trial and error. Right? Because we picked up some software from AudioCodes early on, and that software really wasn’t the right market fit.
Rick: 08:56 You know, it’s like, you know, you can have a partner layer, then you can have the customer layer. So so it really took some trial and error to kinda get that product set right. So we know a a portal for our team’s integration attached to our cloud PBX solution, and then a completely separate sort of package for our operator connect platform. So, yeah, it does. It takes a little bit.
Rick: 09:14 It’s interesting how when you go to market, you have you envision what this should look like. And then you go to market, and the market pressures go, now this is what we’re looking for. And you have to go back and retool. And this is one of the reasons why I look at some large organizations. I go, there’s just no possible way to be really successful because they’re not able to retool and be nimble and pivot when they need to, right, from a technology perspective.
Rick: 09:38 And so that’s kinda what’s exciting about what we’re doing. So, I mean, with the AutoCodes SBCs, did you
Max: 09:41 build your own PBX platform? Did you go out and license a BroadSoft? No. No. So we’re a NetSapiens shop.
Rick: 09:47 So, obviously, everybody knows NetSapiens. So we’ve been in NetSapiens. I mean, 2011. And and this is funny because, you know, you’re asking me about the founding of g 12, and it was interesting. I just remembered too because we started October.
Rick: 09:59 I remember signing for the NetSapiens deal on my own at the time, October 31st. It was Halloween night, 2011. And I was on the phone with Anand, who’s the CEO of NetSapiens, and he’s like, I need signatures today. I’m like, are you serious? You need signatures today?
Rick: 10:14 So I remember feeling like I was signing away my life at the time. Now we had sold, you know, 3.60, and I knew I was getting a pop of income, you know, a pop of money. So I was like, okeydokey. We’re signing away. Let’s go.
Max: 10:26 So NetSapiens, I probably signed a deal with them right around the same era, had and still probably has one of the best phone provisioning platforms out of all these systems you can go out. And if you haven’t actually tried to configure, you know, Polycoms or Yealinks and do auto provisioning at scale, you don’t really appreciate how much of a pain this actually is, and their platform was was very good at doing that. I mean, in even today’s market, when you look at, you know, the open source world doesn’t really exist around this. There’s a lot of really good, like, Camelio and OpenSair, Open Sips. I mean, take your version of name you wanna call it, you know, that’s really good at, you know, at doing session management and routing.
Max: 11:04 But then that, of course, introduces strange things for you if you’re a service provider because you don’t get a good, sane, you know, billing record out of these platforms.
Rick: 11:11 But I’ll tell you that’s sort of the one of the reasons I told you early on. I was a sales guy. Right? And I needed something that was completed and where I didn’t have to, you know, bundle in any additional platforms. You take BroadSoft platform, you had to bundle in, you know, a call trace platform.
Rick: 11:25 Right? You had to put a call at the time, it was, like, Callhammer. That was, like, the big one at the time. Right? So you had to put a call hammer attached to a BroadSoft.
Rick: 11:31 That was just to give you call traces and a SIP ladder. Right? And then not to mention device provisioning. So there was a lot of different components you have to put into a a BroadSoft. So when I looked at NetSapiens, I looked at Metaswitch, and I took met NetSapiens, and then BroadSoft at the time.
Rick: 11:43 I’m like, NetSapiens had this complete bundle. They weren’t as large, but they had this complete bundle that allowed me to do everything I needed to do. And for me, being a non technology guy, their UI was not completed yet. I remember building my first auto attendant, and it was, like, at, you know, 4678 slash, you know, star star star star, And I was just like, how am I ever gonna scale this business like that? You know?
Rick: 12:08 Those are the
Max: 12:08 admin the admin interface for managing the auto attendants versus their operator interface is just completely night and day difference. You know, BroadSoft, we ran BroadSoft for a while. I mean, show me a phone provider and tell me their underlying per you know, infrastructure, and I’ll tell you what their cost structure is and where they’re gonna break. Right? And, I mean, for a while, BroadSoft was just what you had to run because it was the only thing that was out there.
Max: 12:30 But, you know, at scale, you’re still talking about, you know, 6 to 7, $8 per seat as a base cost for licensing. When I talk with, you know, companies that are pushing into UCaaS a UCaaS space based on BroadSoft, and you look at where the market pressure is going. You’re just like, how do you like, there’s no margin for you to survive in this.
Rick: 12:49 It’s where we came out and we said, we can go get bigger customers than everyone else in the hosted space because we don’t have a per seat licensing fee at the time. Right? We had a concurrent call session model. So you look at that and you go, I can go provide a 1,000 users service, and no one can compete with me.
Max: 13:06 Yeah. It, obviously, was a good choice. So one of the things I look at and I think about a lot with these platforms, just what kinda like r and d are they investing in with the push to mobile. I mean, there’s a lot of companies that still wanna have phones on desks, and they’re really physical phone centric environments. You talk about hospitals, roaming users, all these sorts of things.
Max: 13:23 And then you have this other pressure around mobile users, cell phone based, you know, softphone on a desktop, you know, these sorts of things. And I feel like that’s I mean, of course, Microsoft bundling Teams in with Office 365, you know, really just sucked all the oxygen out of the room for a lot of people. When you’re talking with organizations now and you’re going through this process of, like, you know, are you a hosted PBX a cloud PBX customer, or are you a Teams customer? What are you seeing in market? And what is that conversation looking like for you?
Rick: 13:56 I think you hit it right. I mean, we go to market. This is, again, what makes us a bit unique. We have an understanding because we come from the UCaaS space. So you have an understanding of what companies need from a facility perspective, and then you understand what Microsoft Teams can deploy because now we’ve hired more and more Microsoft Teams people here.
Rick: 14:12 And so you look at it and you go and this is where where my job is interesting because I look at it and go, let’s go take a look at what Teams can do. And and how does it look from a deployment perspective? And how do you know, how does an organization use it? And then how does that compare to my UCaaS solution? So literally, I I did a video the other day on, you know, why someone would choose UCaaS versus Teams.
Rick: 14:33 Right? And so what I do, literally, we take it and we go, here’s the UCaaS option, and here are your pros and cons, and here’s the Teams option, and here are your pros and cons. They’re exactly the same price. Which one do you want? That’s where we have really tight controls over what we deliver, and we understand our cost structure.
Rick: 14:53 And can we come from the wholesale space? Right? So we understand cost structure. And so we’re able to lay out, Right? So we understand cost structure.
Rick: 14:55 And so we’re able to lay out, you know, what’s better for this. I’ll give you an example. I spoke to a government agency yesterday. And this government agency had a Microsoft they called it a Microsoft moment is what they had. Right?
Rick: 15:10 A Microsoft moment where some sort of update was pushed, and it took, you know, a couple hours for it to get resolved. And so they are so shy or so gun shy where they’re just like, we can’t pull the trigger on a phone system in Microsoft Teams, so we want your UCaaS plus Teams. It’s a great example. I don’t know that it’s a if it’s valid because I’ll tell you, I mean, everyone’s gonna at some point, everyone’s gonna have a hiccup. Right?
Rick: 15:32 I mean, understand that people are concerned about going down, but Microsoft increased their SLA to 4 nines. Right? I mean, that’s 53 minutes of downtime a year. So you look at that and you go, alright. It’s 53 minutes of downtime.
Rick: 15:45 But here are the options for you. I’ll lay them both out. And that’s the beautiful thing about you can go to market and you go, which one do you want? There’s some great benefits to both. Which one is right for your organization?
Max: 15:56 Microsoft seat licensing for other PBX was very expensive. I mean, you know, originally, a $12 per named user just to add the PBX functionality onto Teams. You know, this conversation starting around like, oh, we’re gonna save money by using Teams for voice, and then do you actually, you know, start running down the spreadsheet of what it would actually cost? You know, like, this is nowhere near saving you money in terms of, like, an actual seat cost. Maybe it’s saving you money from an admin and deployment standpoint, but it’s not saving you money in terms of cost.
Max: 16:23 Now, fortunately, Microsoft, you know, changed that pretty significantly, which changes the cost equation. I mean, as we’re recording this, Microsoft is having a pretty big cloud outage. I don’t know if you guys have seen this yet, but, you know, it it does happen. Some of the complaints I’ve seen with teams are just things like and this one was when I first heard it, it was surprising for me, I guess, in the sense of, like, it’s so such like a contrarian thought, but I’ve had a lot of clients deploy teams that then are looking for a way to unplug from the external world and only be responsive to internal into their company and voice enabling teams then immediately kills that ability for you of being able to say, hey. I’m not answering my phone for the next hour, but, you know, if I get a chat message from somebody that I need to be responsive to, I can be responsive to them.
Max: 17:14 And that was a very interesting one for me when I started seeing that. I wasn’t really expecting that because, I mean, again, that’s everything’s convergence, convergence, convergence, you know, unified, unified, and you kinda fall into that trap pretty easily. And then you find out, like, no. No. I wanna unplug my phone and not answer any phone calls for the next 4 hours, but I hate to still be on Teams because people need to reach me.
Max: 17:32 Right? Like, what do you do?
Rick: 17:34 We run into that every now and then. You take, like, software development firms. Right? It’s like I was on a with a consulting firm actually. Not even software development, but I was on with a consulting firm not too long ago.
Rick: 17:43 And that consulting firm, they used Zoom and Google. And they said everything that we do from a PSTN perspective we just basically set meetings. So everything’s a meeting. Everything’s collaboration. So they don’t do the, you know, they don’t have PSTN coming in from, you know, in their phone system.
Rick: 18:00 And they use mobile if they need to use mobile, which is their cell phones. Isn’t it you know, just normal cell phones. But the majority of their business, they said, is all scheduled meetings, which is interesting because, you do see the collaboration time increasing. Right? And you see the PSTN traffic decreasing.
Rick: 18:18 Right? Look at it from an aggregated standpoint of customers. And it’s because people are booking meetings more. I find it really difficult though. I think some select businesses can do that and operate that way.
Rick: 18:29 But I feel like if you’re at the mercy of the public, right, and you want customers, you’ve gotta find a way to ingest calls from the external world.
Max: 18:37 I’ve known a lot of these. It’s the same thing. We give everybody cell phones, so we just they just give everybody out their cell phone numbers, and that’s how they talk. I mean, there’s there is a certain amount of video fatigue that kicks in. Like, it’s nice to be on a phone call for me personally.
Max: 18:50 Like, I actually like talking on the phone versus on being on video always. But where I’ve seen these things fall over really, it’s like, you know, Bob or Susie leave the company, and they were the sale AE or AM for an account, and then there’s no contact information that’s available on that cell phone sit turned off, sitting in a drawer, or in transit somewhere, and you’ve got a client that can’t get a hold of you. That’s a pretty big problem. Customer support. You know?
Max: 19:16 Like, people like calling people on for support. So it’s, you know, I’m but this goes back I mean, you know, a lot of this also stems back. You say, like, consulting or software development. I can remember, like, 20 years ago, you know, and one of the big things was this, you you know, okay, do not allow any external callers to call any of the people in the software development teams. Like, recruiters were just calling, like, doing, like, war dialing of extensions, looking for software developers to answer and be like, hey.
Max: 19:43 Are you interested in a new job? And so then it became this mandate of, you know, we had to figure out how to, like, effectively disconnect all these stations from being able to receive inbound phone calls, which was then, of course, very strange too. Like, everything always boils down to a business problem at some point. Right? You know, it’s like
Rick: 19:59 100% it does. And that’s it. It’s funny. I mean, that’s exactly right. It comes down to a business process or what sort of business process can we help?
Rick: 20:08 Like, what are you trying to accomplish? And that’s what it all comes down to is how do we make a business more efficient, more productive, better experience for your customers. Those are things that it I think it just all boils down to.
Max: 20:20 So let’s talk about direct routing versus operator connect. You know? I mean, thank you, Microsoft, for creating even more confusion in the marketplace for this product. Why would you deploy direct routing versus operator connect now if you’re gonna voice enable Teams?
Rick: 20:33 There’s a couple of things that you’ll need to like, for context here. Right? Direct routing was the first thing that was deployed. Right? It’s a whole separate set of APIs associated with or not API, but just whole separate set of, you know, infrastructure for direct routing to dive into Teams or to get into the Teams environment.
Rick: 20:48 Right? And it was deployed into really, it was deployed by the partners. Right? So if you think about they needed something to bring voice in. They need they gave a product to the partners, so the partners can go go deploy this voice service.
Rick: 20:59 And what the partners do is, you know, they’ll deploy an SBC and, you know, take SIP from, as an example, the existing PBX there and tie it into the Microsoft Teams infrastructure. Right? And now the customer has their physical phone system and Microsoft Teams. So when I think of direct routing and I explain it to people, I explain to them that, you know, obviously, you could just put an SBC in and tie it directly to Teams. You still need trunking.
Rick: 21:22 Right? So you still need your dial tone provider. So you look at that, and I tell people, like, if your phone system and this is kind of the biggest differentiator for me that I explain to people. If your phone system your existing phone system and the investment that you have in that take, again, a hospital as an example. They’ve got, you know, 6,000 Cisco 79 sixties or 40 still lying around and a call manager that is limping along.
Rick: 21:46 Okay? But they’re paying licensing on everything, by the way. Right? So you take that infrastructure and you go, I still need this to run for another few years. Okay?
Rick: 21:53 And, you know, give me a couple more years out of the Cisco phone system. And yet we absolutely need Teams. So then you can go deploy an SBC, and it’s gonna be I mean and what do you care at that point? If you’ve got a Cisco call manager infrastructure, you don’t care about throwing in a one USB c or a couple of one USB USB Cs. Right?
Rick: 22:11 Or if you’ve got a big virtual machine, you throw it on a virtual machine. Right? So you go get your SBC. You license your SBC for direct routing. Your SBC then ties right into Microsoft Teams.
Rick: 22:21 I’m gonna use a dial tone for my Cisco call manager. Maybe I throw in a Cisco cube to to shoot a dial tone right over to my new SBC, whether it be ribbon or audio codes. Right? So and I’ve got a partner that’s deploying all this for me because it’s really complex. Right?
Max: 22:38 So Yeah.
Rick: 22:38 So that’s what I’m doing. So I I look at it and go, direct routing is important if you need to keep that infrastructure. And it’s gonna be really expensive because not only you still have your telco, your normal telco you’re paying for, but now you’ve got licensing for an SBC, you know, support for an SBC. You’ve got the one time cost of an SBC plus the the professional services because you need pro services to to deploy, you know, to deploy SBCs. You just need you need it.
Rick: 23:04 So so that’s direct routing. That’s how I explain direct routing to organizations. And if you’re think if you’re Microsoft, you’re just going, it’s a whole separate set of infrastructure components. That’s what you know, it’s what it boils down to. So there was a point in
Max: 23:14 time where if you wanted to run intercept like media, for instance. I mean, so contacts and our overlays for Teams interface or receptionist console overlays for Teams that required direct routing versus operator connect. Has that changed, or does that still push you into direct routing?
Rick: 23:30 Some of that has moved into Operator Connect now, but early on and that’s the other component was connecting other physical things. Right? Like, there was no way to connect to the Director Operator Connect initially. There was no because teams didn’t have a way to connect analog devices. So you come to an organization like g 12, we connect analog devices via SIP or via our Cloud PBX, and that’s how we would do it.
Rick: 23:49 And then we tie it to Teams on the back end. Right? Not in Teams natively. So you’re exactly right though when it comes to if it if it’s media interceptor, if you’re looking at deploying the door actuators or some sort of, you know, analog infrastructure, you know, you would need that. If you were a school and you were tying in InformaCast, right, you needed a way to tie in an InformaCast platform into your system.
Rick: 24:09 Right? So all those physical things that are on-site that are complex. Right? Those things require direct routing at the time. More and more, you’re seeing, as an example, up up you know, the platforms come out.
Rick: 24:22 So our platform is an example that ties into Opera Connect, on its own, has its own cluster of SBCs that it controls. And so what that does is I can deliver services tied to a team’s infrastructure, but not in teams, you know, outside of teams on the back end with these SBCs. So if I go tie in InformaCast, you know, if I go tie in other physical components, you know, then I can do that. But it still stays within the infrastructure of my team software, so it’s visible to the client. Right?
Rick: 24:50 So they can see or to the customer. So they could see what components they have are being delivered via SIP or registered agents versus, you know, inside Teams and operate connect. But more and more with Teams with the Metaswitch axe acquisition, Teams is able to deploy, you know, and bring in, you know, more legacy solutions that are now being tied to Microsoft Teams in a way that works on top of the advanced stuff that they’re doing for, like, Azure cloud services, right, or Azure communication services. Right? So there’s a lot that’s going on in that space, which is pretty interesting.
Max: 25:21 What are you seeing for Doctor and business continuity? There was definitely a period of time where the conversation got centered around if Teams goes down, you know, what do you do with your phone calls? And that was one of the big value points for a direct routing partner was was the ability to actually take and deliver those calls to something else. Is this still something that, you know, is active and you guys are dealing with?
Rick: 25:41 All the time. I mean, this this is where we go, you know, do you want UCaaS, do you want Teams? But even if you’re in Teams as an example, because you hit my infrastructure and my software platform before I even send a call to Teams, right, you have the ability to redirect calls. And because we’re a UCaaS provider, we often in fact, we did a financial firm that there are, like, 6 or 700 users, but they had turrets or they had these, you know, you know, they had lines that needed to stay open and all that good stuff. They’re like, so we can’t go down.
Rick: 26:11 But we don’t want UCaaS plus teams. We want Microsoft Teams. And so you look at that, you go, well, I can put stuff on my UCaaS solution right here, or I can back it up with my UCaaS solution. So there’s a a an amazing sort of job that my engineering team does where, basically, I can go back up. I instead of going UCaaS plus Teams, in this solution, what we did was we did Teams, but we built out a whole system for these organizations that were on a on our own native softphones, our NetSapiens softphones, essentially.
Rick: 26:39 So our native softphones. So now and they allow a ring down, if you will, from Teams to get to other devices. Right? In the event there’s a massive delay for some reason. Right?
Rick: 26:50 You get an a 500 not found, or if you get a 404, you know, it’s not 404 is not found, or a 503 redirect. You know? So you get those different errors, and I can send that call over to a softphone that’s available. Right? So it’s really it’s a really weird solution where it’s like, you know, hey.
Rick: 27:05 We’re gonna rely on Teams because we really wanna rely on Teams. Because every CIO is saying, if you’re not saying Zoom, which I don’t know who says Zoom, but, you know, if you’re a CIO and you’re saying Teams, but you really want something that backs it up. And so that’s why we kinda built that solution like that to back up that. But, yeah, I mean, that’s of course, we deal with it still for, you know, y’all like yesterday. But if Teams goes down
Max: 27:24 I mean, it happens.
Rick: 27:25 You know, again, I point to the SLAs that have been changed recently. Right? I point to yesterday was Microsoft’s earning call earnings call, and they added 5,000,000 lines, you know. And it’s like they they’re I mean, they’re larger than any UCaaS provider out there already. And, you know, there’s a giant market.
Rick: 27:43 And guess what? The public, and I say the public, normal businesses don’t even know yet that Microsoft is a phone system.
Max: 27:49 How much of a threat is the EU to Microsoft and Teams right now?
Rick: 27:54 Oh. You know, I don’t know the answer to that. In fact, I don’t even have an opinion on that at all. Do you mean from an antitrust perspective? Or
Max: 28:02 So the EU has officially launched investigation for enforcement against Teams and Microsoft bundling of Teams with Office 365 and anti competitive practices against and a complainant was Slack in 2020, I think, that they’re using to, you know, lead this charge. But I have to imagine they’re gonna have other people that are interested in having an opinion against Microsoft bundling Teams and Teams being part of Office 365 and team, you know, yada yada yada.
Rick: 28:30 I think the saving grace to that and I this is I have I really don’t have an opinion, but if I’m thinking about it, I thought about antitrust just for a bit a few weeks ago because I did a video on, you know, Microsoft Teams. I looked at it and go, I think Microsoft is gonna own 60 to 65% of the business world voice communication platform. Right? And I think Zoom will own 18 to 20%. And I think the rest will be, you know, the 20% that’s left over will be, well, you know, the UCaaS providers that are still around.
Rick: 28:59 Right? And when I operate independently in small markets, etcetera. So that was my thought. And I thought, well, you know, I think the saving grace of that is that Microsoft Teams is building an ecosystem for people to deliver services. Right?
Rick: 29:11 So they’re building this ecosystem of, you know, carriers in in operator connect. And so I look at that. I go, that’s not anticompetitive. That’s inclusive. They’re, you know, adding carriers all the time.
Rick: 29:22 They there’s a lot of carriers that want to be added into the ecosystem to deliver services. So in a way, they’re anticompetitive now. The bundling of teams, it’s, in I mean, it’s part of their software solution. Right? So I get that, but they’re allowing other people to take a other organizations to compete and take a piece of the revenue p.
Rick: 29:38 They’re not saying I’m doing the dial tone. Because obviously, we know that Microsoft does their own calling plan and, you know, organizations can pick Microsoft as as the carrier.
Max: 29:49 But All you have to do is try to port numbers once onto Microsoft by with Microsoft and never wanna deal with Microsoft again. I mean, we had a port. We did it for just out of curiosity. We started a port. I think Microsoft officially terminated the porting process at, like, 5 or 6 months.
Max: 30:02 Wow. I mean, I have I have this somewhere where I had, like, a log of time where, you know, we started the port, and it was hilarious. I mean, it was, you know, it just it was this is not what we do. You know? It was, like, if you get new numbers allocated, it was phenomenal.
Max: 30:14 You know, it was like, you just click and then you turn on. But who wouldn’t try to port numbers with Microsoft? Especially since it’s not like you call, like, 1800 Microsoft phone porting support. You know? It was just email interaction.
Rick: 30:24 And that’s it’s what makes, you know, from an ecosystem an operator connect ecosystem. That’s what makes it, I guess, okay for customers. Because you look at guys like us that have been in the CLEC world since, you know, 2006. Right? And some of the people that we brought over from 360 Networks were our original porting team that they’ve been doing for 15 years.
Rick: 30:41 Right? So we tell everyone we port numbers in 5 business days, you know. And so they’re just and people are just, what? You know, 5, 7 days? What do you need?
Rick: 30:48 That’s our expertise. So I can appreciate that like, they’re building a phone system, and they’re doing it from, I would say, from the ground up. But they built a phone system that they thought need they have that addressed the market. I think some of the things were ahead of their time a little bit. And now they’re going back, and they’re facilitating some of the features that needed to be added that have been used since before voice mail was available.
Rick: 31:09 Right? I mean, that’s a a lot of the phone features that we use today are features that were deployed before phone service or before voice mail was a a thing. And so you go back and you pick up some of those features, yet the advancement of, their feature platform is print turned good.
Max: 31:23 So Slack is an interesting as a complaint in the sense that they’re not offering phone service. There’s no phone system, you know, service overlay with Slack. I mean, this is pure chat. Right? So, you know, you know, who knows?
Max: 31:33 We’ll see where this goes.
Rick: 31:35 It’ll be interesting for sure.
Max: 31:36 I mean, going back to early 2000 and even, like, early 2000 tens, you know, there was a lot of value in going through the process of becoming a multistate CLEC and, you know, getting feature group detrunks everywhere, and there was a big price and cost advantage to doing that. Is that still the case today? I mean, did you go through the process of, you know, select registrations with g 12? Or or
Rick: 31:55 No. No. We did this at 360 Networks, and we thought to ourselves, why in the world would anyone do this? It’s ridiculously difficult and time consuming and expensive. Why would anyone do this?
Rick: 32:08 And so we looked at that and just I mean, now particularly, there it used to be advantageous whenever there was a lot of switch to access to be had, so that’s carrier to carrier compensation. Right? So if your callers called toll free numbers, they were on your network, and they call it toll free. You get to bill the toll free carrier in a little fraction of a penny or whatever it is. Right?
Rick: 32:28 But the amount of volume starts to rack up if you the more users you have on our platform. That’s why the free conference call stuff was a big thing at the time that it did.
Max: 32:35 Yeah. RecipComp was huge.
Rick: 32:37 On the inbound so it was RecipComp and switched access. So on the inbound side, it was the switched access. So you look at those two things or reciprocal compensation on the inbound and switched access on the outbound. So you look at those two things, and you could create a revenue model just based on the traffic. Right?
Rick: 32:52 It’s what free conference call did. Put an app out there, music calling, all sorts of different apps that were on a CLEC, that they shared revenue with the CLECs, you know, in rural areas. And they drove up the cost basis for those things for the carriers. So we looked at all this stuff, and we thought, you know, we don’t even, as an organization, do least cost routing. Right?
Rick: 33:09 Because it’s just it’s just not worth doing, you know let me have 25 carriers, and then we get the cheapest one so I can deliver a call that may have questionable quality. Look. We’re delivering services to hospital states, cities, counties, you know, like like important businesses here. And it’s like, we just you know, so we have major, you know, kind of LD providers on the back end of g twelve. Right?
Rick: 33:31 And we have all sorts of, you know, 27 SIP trunk connections to different people and some fiber. And we have actually 10 gigs in the Microsoft Teams, so we have to part of the operating connect platform is that you have to be securely connected to Microsoft to be compliant. And so it’s got a really robust infrastructure, but not necessarily for seal, like, a registration and all that good stuff. We don’t want any part of that.
Max: 33:50 I’m so refreshed to hear that you’re not doing LCR. The last platform that we had, we built to do LCR when we’re doing wholesale voice. I mean, this is, like, a decade ago. And we were doing you had to do 7 it was 7 digit depth. Right?
Max: 34:00 So MPNXXY. Three jurisdictions. So enter enter and undetermined. Right? So then all of a sudden, you have 1,500,000 routes per jurisdiction.
Max: 34:09 So, you know, each carrier had 4 and a half 1000000 routes in the database. And then you go out and you’re like, okay. Great. You know, like you said, you have 27, 30, 35, you know, whatever the different quantity is. Right?
Max: 34:19 And all of a sudden you’re like, okay. We have 60,000,000 routing combination options in this thing that has to, like, process instantaneously. Now the technology was amazing. I mean, we were able to do it, but maintaining that nightmare was a nightmare.
Rick: 34:31 Or troubleshooting like that. At the end of the day, we chose quality over savings like that, and it’s just like, we just don’t have those issues. Right? And you look at that stuff and you go, why would you even do that as a carrier?
Max: 34:42 So SIP trunking you know, the launch of SIP trunking was really you know, like, most operators are really pushing channels until you got to wholesale, and then it went from, you know, wholesale to minutes. And there were always different billing games around, like, how the minutes were staged and charged and what the billing increments were, and there were different ways to, like, suss out some, you know, some margins of profit, right, in the business model. What do you think happens with Microsoft Teams? I mean, are you seeing people switching from a named user model from Teams for voice into a per minute basis? Do you think that’s gonna happen?
Max: 35:11 Or is it gonna kinda you know, where do you think this is going?
Rick: 35:14 I think the the carry the we’ll we’ll call it carriage. My friends in Australia call it carriage. Alright. So we’ll call it carriage for just a second. That piece will ultimately there is it’ll get down to a usage model.
Rick: 35:25 Right? You know, take an organization that has 3,000 users. Take a university. Right? That’s a good example.
Rick: 35:31 University. They’ve got 3,000 users. They have a 100 of the users that actually use a system, you know, on a regular basis from a dial tone perspective. And they’ve got, you know, 3 or 400 classroom phones that are barely used, but they need dial tone connectivity attached to them. We’re addressing this right now, where we have basically you pay a dollar it’s a dollar a user, and then a per minute fee in and out.
Rick: 35:50 Right? So we’re doing that today. So it’s like you’ve got our model that you’ve got unlimited in and out, US and Canada, and you’ve got usage, you know, in and out, flat rated, you know, here you go. And it’s to address that exact, you know, sentiment. So I think at some point, what you’ll see is organizations will get to a point where they’re comfortable.
Rick: 36:10 I think what you have to look at is look at from their context. Right? We’re in this business, so we have a little you know, our depth of knowledge is, you know, several layers down. Right? But if you look at an organization, and they’re coming off of legacy TDM, and they are coming off of a Cisco, you know, platform, and they’re used to paying all these different fees.
Rick: 36:28 And now they’ve got 2 fees to pay. They’ve got Microsoft licensing to pay for their phone system, and they’ve got operator connect per user as an example. Right? You look at that, and the savings are pretty significant. They don’t need to address it anymore.
Rick: 36:40 They can leave it there for 3 to 5 years and be happy campers. Right?
Max: 36:44 Yep. It’s also easy. It’s simple. You don’t have to deal with anything. Right?
Max: 36:48 Like, it’s just
Rick: 36:49 Really simple. Yeah. And then there’s the organizations that take the small biz that are really cost conscious right now, and maybe they were using a Ring or an 8 or somebody. And now they can go say $8 a user, and if I go buy, you know, a dollar, you know, you know, seat from g 12 plus usage, my cost may be down because I barely use the phone. I’m a software development firm, so I barely use the phone.
Rick: 37:10 So it’s funny. We see, I would say it’s, I think, 15 to 18%, maybe just under 20 percent, actually take the dollar usage service that we have, a dollar plus usage. They take that option because they feel like they barely use a phone. In some instances in some instances, they they realized quickly that they should have taken the unlimited version and not that one. And we’ll move them to the unlimited at that point because there was a school district or university, I can’t remember which one it was, that ended up, like, shooting over what they thought, like, $10,000 over there what they expected.
Rick: 37:47 And I’m like, guys, we should just move you to the right plan. Okay? Let’s and they’re like, okay. Sorry about that. They’ve thank you for taking that off and just you know?
Rick: 37:55 So so it works for some, you know, where literally they have a $12 bill. You know what I mean? And so so, I’m, like, fortunate that we only send out bills via email. Right? So you got a $12 bill in this one, and then you’ve got the overage over here.
Rick: 38:12 So you get you get the gamut with it. But, yeah, I think it’s all gonna go that way at some point. Europe’s a good example. Right? Europe is well they’ve well they’ve adapted really well to the per minute model from the carriers, almost exclusively now.
Rick: 38:23 Right? So there’s not this bundled in package that we hear that we do hear in the US. In Europe, they’re used to paying for usage. You know? So I think from a telephony perspective, they’re oftentimes ahead of the US in the direction of where we’re going.
Rick: 38:38 Right? And I think, you know, they see a lot of that today, and I think at some point, we’ll see the same thing.
Max: 38:41 So, you know, in order to be a Microsoft Direct Writing Partner or to be a Microsoft Operator Connect Partner, right, you have to go through, you know, you have to jump through the Microsoft hoops. Right? You have to have your interconnects. You have to have a certified SBC. You have to you know, like, there’s a bunch of stuff you have to do.
Max: 38:55 And as you’ve said, right, Microsoft, of course, is building on this ecosystem. There’s a lot of logos now if you go to the Operator Connect page. You know, there’s a lot of different companies that are offering this service. You know, some have native hardware. Some are using third party.
Max: 39:08 I mean, there’s a whole, you know, mishmash of stuff that’s actually going on, you know, like I said, when you start peeling back the onion a little bit. But, like, this question is, like, really twofold. Like, as an end user, how do you pick? And the second half of that becomes, you know, y g 12. Right?
Max: 39:22 So, like, how do people navigate this buying decision after they’ve decided that they wanna go into Teams and they know that Microsoft isn’t the right company to provide the dial tone?
Rick: 39:31 It’s interesting. I often wonder how we get picked in OperatorConnect too because we’re just, you know, if you sort by US carriers, we’re probably 1 we’re 1 of 15 or 16 carriers that are in the US. Right? And then some of the ones that are provided services in the US are European based companies that just provide US dial tone. Right?
Rick: 39:47 So you look at those and you eliminate there’s probably 7 or 8, maybe 9 carriers that you could actually choose here in the US that you need to do. Okay. That’s a carrier for me. And you go pick the logo and you you add them more. And every one of them, nearly all of them, there’s a few of us out there that are a bit progressive in how we let people come into the system before they do anything.
Rick: 40:07 If you go and you submit to the queries that people are asking, like, okay, you know, choose us. Right? I’m not gonna use any names, but they say choose us. The next thing you get is a form. Contact us.
Rick: 40:17 You know what I mean? And you fill out the form. And on that form, it says, you know, how many users do you have? And you say, I’ve got 75 users. You’ll be lucky if you get a call back in 2 weeks, a week.
Rick: 40:29 You know what I mean? So I think as people go through the progression of people not contacting them, so I think that’s a big one. And the name recognition, obviously, people look at, you know, take theirs in the AT and T in there as an example. The reality is is that organizations need help understanding how to connect dial tone to Microsoft Teams. We make it as easy as possible.
Rick: 40:47 You could go in and start a free trial. We we’ll walk you through the process. We’ve got a series of emails that come out to you that where you go, you know, or say, don’t forget to do this. Here’s something that you need to do. Here’s the instruction, you know, to do it, you know, step by step.
Rick: 41:00 And we give them full control over taking down test DIDs, and we say you can be calling in 15 minutes. Right? You know, start your process, be calling in 15 minutes. The reality is is that even though we’re probably the easiest provider out there to turn on, right, people still need help understanding what this looks like. And then not only that, people still don’t understand what the capabilities of Microsoft Teams’ phone is.
Rick: 41:22 Right? And so I often say this is a an analogy that I’m I’m like, and I’m pitching to everyone. Basically, we’re like the tires on a Ferrari. Right? Like like, the operator connect is stuff.
Rick: 41:34 It’s like, I see everyone advertising operator connect, and I love it because I’m going, who the hell’s calling for operator connect? Like, seriously, there’s like a handful of Microsoft partners that know what we’re talking about when we say operator connect. The customer sure is doesn’t know what operator connect is. So we’re marketing Microsoft Teams’ phone. Right?
Rick: 41:53 And, you know, the tires come with the Ferrari. Right? Here you go. Like, you’re buying the Ferrari. We’ll give you the tires.
Rick: 41:59 You need them to roll around in it, don’t you? So that’s my analogy. So we’re pitching Microsoft Teams phone to customers, and we’re letting them know what we can do. So our team is knowledgeable in teams, and that is why I look at organizations like I’m just gonna pick on AT and T because they’re a lot of stuff there. You know, you you you look at AT and T, and and AT and T is likely not gonna provide you and I don’t know this, I’m just guessing, but they’re not gonna provide you Teams support as an example just to help get you up and running and tell you, hey.
Rick: 42:25 Yeah. Teams can do this, this, and this, and this, that. Right? Like I said, you’re lucky if you get a callback, much less, let me help you understand what Teams can do. If you don’t have a Microsoft partner, sure, we’ll help you.
Rick: 42:35 Otherwise, your Microsoft partner can help you build this and we’ll give you the dial tone, or we’ll help you do it as well.
Max: 42:40 I think the comment there, the expansion to that thought is sometimes organizations are looking for other organizations of a similar size or appearance, and then they understand each other. Right? So, like, if you’re talking to a you know, if you’re a Fortune 100, it’s easier to work with other Fortune 1 100 for certain things because just the way that your bureaucracy works lines up with their bureaucracy, and, like, the 2 bureaucracies can kinda, like, figure things out with each other. And it’s hard to get outside of that world sometimes. And, you know, and there’s also you know, we do a lot of business with AT and T.
Max: 43:12 And one of the negatives with AT and T is if you’ve ever had or let’s we’ll make an easier target. Let’s pick on the cable companies for a moment. We do a lot of business with cable companies. They’re fantastic. We do have a ton of fiber deployed with cable.
Max: 43:24 These organizations are amazing at installing. I mean, they’re really good at installing service. Right? But the average person has experience with a cable company because they had a cable modem in their house with god awful service that was terrible and horrible support cycles. And so then when you start talking to them about doing business with a cable company, they, like, lose their mind.
Max: 43:40 Like, the cable company is awful. Why would I do business with them? And you’re like, no. No. No.
Max: 43:43 No. Your residential service with your cable modem at a $60 a month service was terrible. But, like, this other thing over here that you actually want for your business is amazing. You know? I’m like, go use this thing over here.
Rick: 43:54 It’s true. That’s their wheelhouse. Right? Like, that’s their wheelhouse. They do a really good job at that.
Max: 43:59 So now and this is something I’m just curious. Right? Because you see this at a bigger scale. Microsoft did something incredible with Teams, which was dictate the user experience on physical devices. Right?
Max: 44:08 So Teams phones go out and buy any phone from anybody. I mean, they commoditize the hardware just the same way they did with Windows. It has a Teams interface on the phone. So Polycom, Yealink, whatever, Grandstream. I mean, go down the list.
Max: 44:18 Right? Audio codes, it is still Teams on the phone. They don’t look different. You know, outside of, like you know, you talk about hospitals or classrooms with a phone on the wall for a common station. Are you seeing a lot of deployment of physical phones for knowledge workers?
Max: 44:31 I mean, is this a I mean, there’s some cool phones out there too, man. These some of these things are really slick, but, I mean, what percentage of companies are actually still on a physical device versus just saying, heck, you know, use your softphone on your computer?
Rick: 44:41 So the reality is that organizations still have to cater to a generation that likes phones, that likes a physical device. Right? But they are reluctant. So if you talk to the IT teams of organizations, they are reluctant to deploy phones. They don’t wanna deploy phones because it’s something else they have to manage.
Rick: 45:00 However, in every deployment, nearly every deployment, there is a small percentage of devices that are still deployed. Right? And I say it’s small. It’s actually pretty small. So if I go to a 1,000 user organization, they’re gonna deploy about 80 to a 100 phones.
Rick: 45:15 Right? So about 10% hardware is still being deployed into some organizations. And it’s an exercise now because they actually will go take polls in the organization. Right? They’re like, okay.
Rick: 45:25 Who wants a physical phone, and do you really need a physical phone? So that’s kind of our experience of the deployment process these days. So outside of your government agency that’s got physical devices set up in different, you know, in different ways. So so those organizations and hospitals as an example, those ones are still deploying a larger amount of devices, physical devices. But the normal business is about, I would say, 10% of their users are deploying devices.
Rick: 45:53 And then the bigger facility you get. Right? So the again, the hospitals and things like that, the more physical devices they’re deploying. But even we’re seeing even universities as an example, deploy more softphones than anything else, hands down. And they’re not, you know phone in the classroom is now on your PC.
Rick: 46:09 That’s your phone in the classroom.
Max: 46:11 So, earlier prediction that you gave was 60% of market on Microsoft Teams, 20% on Zoom, you know, 20% everything else. Right? And there’s a lot of consolidation action, you know, layoffs recently. I mean, layoffs hit everybody, but, you know, there’s a lot of motion with, like, the traditional UCaaS companies of what’s actually going on with them. You know, that’s been expected for a while with this, like, UCaaS race to 0 and consolidation of UCaaS, which seems like it’s getting ready to to start, like in a there’s gonna be some kind of frenzy of acquisition and merger activity going on.
Max: 46:44 And then there was this big push into direct routing, you know, of course, because there’s this huge land grabbing opportunity with Microsoft Teams coming online. And now, of course, it’s turned into operator connect, and the operator connect partner portal’s being really busy. At what point does the same happen there? I mean, it and not everybody can operate or connect at scale and be good at it. Right?
Max: 47:01 Like like, what kind of cycle do you think we’re on, and how long before we start seeing it go? I mean, I would expect if it’s 15 right now, it’s probably gonna balloon to 30. Right? But then, you know, where how long does it take for us to get to that point, and how long does it take for it to contract back down?
Rick: 47:15 Okay. There’s a lot of components in there that I get excited about the talk. Right? Like, because I I’ve got some strong opinions when it comes to some of this stuff. Right?
Rick: 47:21 I look at traditional UCaaS. If you’re a traditional UCaaS provider, not a collaboration provider, you know, I look at that and I say, you know, you probably have a good 5 to 8 years to operate, 5 to 7 years to operate, and be okay being independent and being a UCaaS provider. The likelihood is you’ll probably lose customers, and you’ll you know what I mean? And you’ll have to struggle to keep up with your growth if there is growth. On the Microsoft Teams side and it’s because we know Microsoft.
Rick: 47:47 I know the person who runs, you know, the Opera Connect infrastructure. Right? Or program. And you look at that, and what I’m sort of predicting or what I talk when I talk about, let’s say, AT and T, difficult to get a call from as an example. Right?
Rick: 47:58 When you fill out a form to get operator connect, even Microsoft sees that in the way that the nimble nature of a smaller organization is easier for them to pull into the system, because there is some software development that goes into doing it. It’s not just, let me bolt some things on and turn the lights on. It just doesn’t happen that way. There’s a you know, Microsoft has their process of things to go through, and it’s not easy. And it’s not, you know, certainly not cheap, and it’s not easy.
Rick: 48:25 And if you don’t have an organization that’s really focused on it, I mean, it could take a year to do it or 2 years to do it. It’s just and so I look at that and I go, I think, you know, UCaaS, you know, certainly has a run. UCaaS plus Teams has a pretty decent run ahead of it. And then the Operative Connect is just in its infancy. Right?
Rick: 48:46 The direct routing was really not even in the carrier space. It was really the partner space. Right? That the direct routing was a thing. And now, operator connect is, you know, the carrier space that gets to do this.
Rick: 48:58 And I think because it is a complex thing to go turn a customer on, it’s gonna take Teams, Operator Connect, it’s gonna take that another 3 years before that hits its stride. And everyone’s just like, okay, let’s just go get you some numbers in Teams, and let’s go pick your provider, and it’s super simple for everyone. And everyone’s on board from a software perspective to easily activate numbers and easily port numbers. Right? I look at it and go where I stand, I’ve got a probably a 3 year head start on everybody.
Rick: 49:28 Right? Just because of the product set that we offer combined with the support that we offer. And so I look at that and go, we’re well ahead of everyone, and it’s because we are our nimble nature. So there is some time frames, I think. I don’t know that the OperatorConnect site is going to if it run a site I don’t think it’s gonna run a cycle.
Rick: 49:45 I think you’re gonna see that operator connect is gonna hit its stride from a growth perspective and hit that hockey stick in 3 years. And I think it’s gonna continue on for, you know, 5 to 7 years. Been that before it reaches, call it, saturation. Right? Here’s the I’ll leave you with this thought, and I’ll leave you with this up.
Rick: 50:02 But here’s my thinking behind this is that we have never had, since the 96 breakup of the Dell Organizations, anyone that can successfully roll up the business space with a ubiquitous product. Right? It’s been fragmented since the very beginning. You know, large organizations, small organizations, the different offerings, it’s been completely fragmented, which is great. It’s com it’s created a competitive landscape for everyone.
Rick: 50:27 K? But the market now, I, as my belief, is really ready for some sort of now I’m not gonna call it consolidation because there’s still all the underlying providers that are providing services. Right? That give it their unique spin like we do. But the market I think is really interested in some ubiquitous way to connect and collaborate.
Rick: 50:49 And that’s what Microsoft Teams is able to develop, this ubiquitous way that a large number of portion of the organizations can connect. But here’s the other cool thing. Everyone wants to get rid of the PSTN anyway. Right? Nobody wants the PSTN.
Rick: 51:01 And even the carriers, AT and T wanna turn let’s turn off all this stuff. It’s just a heavy infrastructure to operate. So if you look at Microsoft Teams, and you go, okay, now there’s a personal teams. If you have personal teams, right, now you’ve got personal teams and you’ve got, you know, businesses with teams, how is that person gonna connect? It’s not gonna be through the PSTN.
Rick: 51:20 So a lot of that connectivity becomes instant connectivity to organizations and businesses, right, and individuals. So you look at that and you go, that’s gonna be a massive now mobile phones are being layered. I am Microsoft Teams mobile. That’s an instant connection into your organization. Right?
Rick: 51:36 Now so I look at that and go, Microsoft’s gonna have a really good hand in the communication space. And I think it’s gonna be really game changing for the communication space. So in that argument,
Max: 51:48 I don’t disagree with anything that you’re saying here. In this argument, I see 2 companies on the sidelines that are strange to me. Right? And Google bought GroundCentral, I mean, eons ago and created Google Voice and, for all intents and purposes, have done absolutely nothing with that product. I mean, you know, like, I don’t even know if they have a percentage of the market, you know, deployed on Google Voice at this point.
Max: 52:12 And the other one that’s really surprising to me is Slack. You know? Because Slack has a huge install base, you know, probably in part because Google Workspace never really had a unified chat. You know? So I don’t really feel like there’s gonna be a lot of Windows environments running Slack instead of Teams.
Max: 52:25 Right? It’s kinda like that migration has either happened or is happening. So now your Slack exists because Google hasn’t really figured out chat in any meaningful way, but now it’s entrenched. So does Slack ever come out? Probably not.
Max: 52:36 You know, it’s like it’s almost too far gone. But, you know, does Google get serious with voice at some point? I don’t know. And or does Slack, you know, at this point I mean, you know, does Slack go out and buy somebody and become a voice company overnight and make a run at, you know, Teams and Teams Voice? I mean, it kinda feels like they have to if they wanna be competitive in this space.
Max: 52:53 If you look at what Teams is bundled, you know, imagine that conversation’s happening somewhere at some level. Somebody’s gotta be looking at this.
Rick: 52:59 But Slack’s owned by Salesforce, though, now, isn’t it? Right? So it’s like you you have an organization that is that’s not their that’s not their bag. Right? Collaboration is just not in their wheelhouse.
Rick: 53:09 It’s not their core. And so you look at Slack, and you’re like, okay, great. I’ve we’ve got this, you know, this, you know, this chat platform where we keep everybody connected, but not really. Right? And, you know, collaboration, the meeting space turned out to be the, you know, the real winner in this stuff.
Rick: 53:26 Right? That’s the so, you know, Teams and Zoom and the embedded base of, you know, they each have, you know, several 100,000,000 user, 2 or 300,000,000 users each of embedded base of users. And you look at that, and you do see that the drive down, you know, from a PSTN perspective usage, because we’re connected and we’re mostly operating from scheduled meetings now. Right? There’s not very many, room, you know, phone calls I take that are just ad hoc, unless it’s on my cell phone.
Rick: 53:48 Right? So, Slack I think Slack could come out with a platform. Right? I think they could, and they’d have a large and better base of users to go after. Albeit, would say smaller organizations, but it’d be a great opportunity for them to pull in a real telephony organization to go embed calling and have a calling platform that help those organizations deploy because that will be the competitive landscape at that point.
Rick: 54:14 Google is interesting because I know Craig Walker, you know, he’s the founder of Grand Central, and now Dialpad as an example. And, I sold them voice services a long time ago. Right? 360 Networks. And so you look at that, you go, well, I don’t understand why they didn’t do anything with it.
Rick: 54:30 I fully expected Google to acquire Dialpad, you know, at the time, because, Dialpad was, you know, they sold Grand Central into Google, and then I think he he went and deployed. It was called switch dotco, I think is what it was called, or Switch Co or something like that early on, and he had UberConference, I think is another one that he had, and then kinda rolled it all into, you know, Dialpad. And Dialpad was a a company that he had sold originally the name to Yahoo. So he was brought into the anyway, so I look at that, and I go, are they just gonna acquire Dialpad at some point? But, you know, I I I don’t know because I don’t see an offering from Google that’s gonna go compete in the space, and probably not at the level of teams because there’s you know, I don’t know very many organizations that are significant in size that operate in a Google business environment.
Rick: 55:18 Now, schools certainly do. Right? And then small business, the my I’ll call it the micro business. They quite a bit. Right?
Rick: 55:25 Slack, Google, Zoom, those are their platforms. Right?
Max: 55:28 Yeah. I mean, you you’re talking about, like, age of, the organization and industry. Right? So tech companies, Internet companies are gonna be Google Workspace almost exclusively. You know, anything that was started in the last decade, probably Google Workspace over Office 365, unless, you know, older founders can’t get rid of Outlook.
Max: 55:43 Right? And which is I mean, Excel. Like, Excel is the drug that you can never get off of. I mean, once you’re hooked on Excel, it’s just impossible to get off of Excel. And yeah.
Max: 55:52 You know, it just Salesforce the Slack acquisition is really interesting, and Salesforce came out recently and had some numbers that weren’t great. And, you know, the stock took a wasn’t very happy. Right now the market wasn’t happy with them. What they were really showing was they weren’t getting a crossover between existing Salesforce clients, because Salesforce customers, and Slack. You know, they they haven’t been able to cross sell Slack into a Salesforce install base yet.
Max: 56:17 And, you know, I don’t know what they’re gonna have to do in order to change that because, you know, Salesforce had its own, you know, messaging with Chatter. It’s not great, but they had it. And, you know, organizations that they already have Teams, I mean, displacing Teams with Slack, you know, good luck. Right? I you know?
Max: 56:31 So it’s like as as much as some of this feels like it’s already set in stone, it’s so much of it still feels very much up in the air of what could happen.
Rick: 56:38 And that’s that’s kind of the the next sort of I think it’s the next stage of competitiveness. Right? Because if again, you you got the UCaaS guys here fighting it out right now with Teams as an example and Zoom, you know, from the collaboration space. But now you look at this and you go, if Slack could get that embedded base to adopt some sort of collaboration that they put out. And so just it’s funny because you said that because I was just thinking that when we first started, we were a Slack organization and Zoom.
Rick: 57:03 Right? So we’re Slack and Zoom. So you look at that, and you go, why do you have to have 2 platforms? So you’re if you’re Google, Slack, and Zoom, if you’re a yeah. An engineering firm or a newly founded company, you’re you’re 3 sort of vendors in.
Rick: 57:15 Right? You’re Google, Slack, and Zoom. That’s your combination right there. I mean, it’s exactly what Teams offers all in one thing. And I’ll tell you, when we went to Teams from Slack, we hated Teams initially.
Rick: 57:26 Right? Like, it’s because Slack is such a good communication chat platform. It’s so clean. It’s so easy. It’s so organized.
Rick: 57:34 Right? It’s just a good experience. And then you get into Teams, and you have to get used to Teams. And then once you understand it and get used to it, then you go, oh, good platform. I like it because it’s integrate with everything that I do.
Rick: 57:45 That’s where Slack and Zoom and Google, you know, just don’t have a product to appease or not Zoom does, obviously. I consider Zoom a good competitor to Teams. But, yeah, you look at that, there’s just not a good way to bring those things together just yet. Right?
Max: 57:58 So Coming out of the SIP wholesale business, I would say that you’ve got a leg up on a lot of people in the sense that you’ve probably been through a lot of pain already related to anybody that was running, you know, LCR at some point had somebody, you know, find some route that they could abuse and shove a lot of traffic down, and all of a sudden you’re like, wait, my cost versus my cell, it might you know, does what what happened to me here this month. Right? And, you know, there are a lot of really big, you know, b k’s in the world of, you know, operators, you know, early 2000 that had this happen to them just because people could take advantage of it. But, you know, Teams imposes and OperatorConnect imposes a very different cost structure, you know, for an organization. I mean, still good margin, but just, you know, absolute revenue is much lower.
Max: 58:39 You know? And I look at these UCaaS companies pushing into Teams native environments where, you know, let’s say they were advertising a $40 per month seat cost, you know, we know that they were really selling that probably for, like, 12 or $15. Right? So but going from that down into what their license seat cost is on top of Teams, I mean, especially public companies want top line revenue growth, not top line revenue decline. And, you know, I kind of expect this is gonna create some very interesting pressure.
Max: 59:05 And, you know, I come curious how you think about this too. Because, I mean, if starting from a wholesale set basis, you know, you’re not, like, eating your own revenue to go into teams. You’re just changing, you know, the categories coming from.
Rick: 59:16 They’re gonna have a really hard time. I think when I say they, I don’t put myself in the UCaaS only category because we’re I mean, we’re at this inflection point where we’re really kind of, you know, both. We kinda dance on both lines right now, and I can see the future it’s gonna be, you know, on this side quite heavily. But they’re gonna have a really tough time. Not anymore, money was cheap.
Rick: 59:35 Right? So so a top line revenue is easy. Because if money’s cheap and top line revenue is the goal, I can throw a bunch of money at this and go scale my top line revenue and not worry about making any money. I mean, has RingCentral made any money yet? I think they have.
Rick: 59:48 And so you look at this and you go, they’re gonna have a really hard time. They’re feeling that right now. They’re feeling the pain right now. The what they haven’t felt yet is the declining growth and the pressure that they’re gonna the pricing pressure that they’re going to experience in the near future. Right?
Rick: 01:00:05 They haven’t felt that just yet, which is why, you know, there’s rumors of acquisition in the UCaaS space of big players. Right? So I don’t need to mention who they are, but there’s that going on. And that’s because money is no longer cheap. You can’t scale at the level you wanna scale anymore.
Rick: 01:00:20 You’re gonna see massive pressure, and your values of your organization is gonna be completely depressed. Right? And so and again, you haven’t even come up against the churn that’s going to happen yet, because there is going to be churn. I tell you right now, I don’t know the exact percentage, but, decent number of the people coming to us for operator connect are coming off of a UCaaS provider. 3 UCaaS providers that they’re coming off of right now.
Rick: 01:00:44 And you look at that, and you go, that’s a very telling sign to me. It’s not just they’re not coming just from legacy PBX organization. They’re coming from UCaaS providers. And so they haven’t experienced the churn yet, and they have not experienced the pricing pressures that they’re gonna see just yet. That will, ultimately, if they don’t adjust, lead to churn.
Rick: 01:01:04 So that is gonna be an interesting so they’re gonna get hammered in the marketplace for it for sure, and that’s what’s gonna drive this consolidation that you’re gonna see. Over the next 6 to 8 months, you’ll see this consolidation start to happen. 2 or 3 acquisitions will happen that are gonna be seismic in the space.
Max: 01:01:17 I mean, we could talk about this for days, but it’s you know, I think if you really wanna get into this, you get on Seeking Alpha message boards and make your predictions and, you know, stick your bets. Right? I think the one the one was coded like a strategic strategic acquisition, and you’re reading that and you’re like, no. No. No.
Max: 01:01:31 No. No. That is by the company. Fire everybody, shut down the platform, and do a forced migration of whoever’s left and hope that you get over a certain percentage of the enterprises just to stick with you as opposed to fleeing somewhere else when this all goes down. Rick, any last words or thoughts?
Rick: 01:01:45 I appreciate you guys having us and walking through g 12 a little bit. The market in general, this is, you know I I love to talk about the space. It’s, you know, not very many of us get to go to our wives or significant others and have this kind of a discussion. So so this is great to sit here and and have a discussion like this. And it’s an interesting space right now.
Rick: 01:02:04 You know, operator connecting teams is just it’s a force to be reckoned with. It’s a great opportunity for carriers to be a part of the Microsoft ecosystem, and it’s a great opportunity for customers to realize really robust solutions that make their life so much easier. And I think it’s a great opportunity for them. And particularly in 2023, it’s a great opportunity for them to drive cost savings into their organization. So, you know, I appreciate you having us on.
Rick: 01:02:27 And if people wanna chat with us and work with us, that’s great. We’d love to chat with you and help deliver services to your customers and
Max: 01:02:33 to the end users. Awesome. Rick, thank you very much. This is great.
Rick: 01:02:37 Max, it’s been a pleasure. Have a good day.
