Software Serves Global Telecom Market
A communications protocol quandary triggers opportunity for a pair of British- and Russian-born entrepreneurs
With $5.4 million in venture capital in hand and several months of development work behind it, LightSpeed International Inc. is poised to stake a claim in the global marketplace with a unique software product for telecom operators.
Lev Volftsun, LightSpeed's Russian-born president and chief executive officer, and Ian Landy, the company's British-born executive vice president of sales and marketing, have developed a software application program that translates protocols for global telecom operators. According to Landy, there has traditionally been no standard in communication protocols, leaving telecom operators, particularly in Europe, unable to translate the different protocols. The product, so new it has not yet been given a commercial name, is described as a universal voice network protocol converter.
The product is designed to augment communication when manufacturers use a variety of protocols to connect voice networks, a common hurdle inside international networks. LightSpeed's software can translate any protocol and convert it into any other protocol.
The co-founders recognized the protocol conversion problem while working together as service providers in Washington. They worked together at Concert, an alliance between British Telecom and MCI, defining, designing, implementing and managing global telecom services. In June 1995, the partners devoted full attention to their idea and sought out venture capital. In March 1996, $5.4 million came from Vanguard Venture Partners in Palo Alto, Calif., Sevin Rosen in Dallas, Jasco in Tokyo, Investment Advisors Inc. in Minneapolis, and the University of California in Berkeley, Calif. In February they opened an office in Reston, Va., and in April they moved to Sterling, Va.
"Our revenues are expected to exceed what our original business plan says," said Landy, adding that he expects the company to experience significant growth over the next 12 months. Currently, LightSpeed has 23 employees and plans to double that number within a year. The company's location could not be better for luring new communications executives, Landy said.
"We are located in telephony Silicon Valley," said Landy. "This is the prime spot to attract talent and partnerships."
LightSpeed recently signed an application provider agreement with Stratus Computer Inc. of Marlborough, Mass. According to Landy, the agreement will eventually turn into a value-added reseller agreement. LightSpeed will ship Stratus' hardware with LightSpeed's software. Stratus, the publicly traded manufacturer of fault-tolerant hardware and super minicomputers, reported sales of $514 million in 1995. Thirty-three percent of the company's revenues come from the telecom industry.
"Our field sales force is real excited about this agreement," said Jim Williams, vice president of channels and business development for Stratus, which was established in 1980. "We have some major telecom prospects for their product in Europe."
LightSpeed plans to penetrate the international market with the product. According to Landy, the protocol barrier problem arises most frequently in international communication infrastructures. The partnership with Stratus will help LightSpeed penetrate this market. Twenty-five percent of the company's revenues comes from international business.
LightSpeed is hoping to attract more partnerships like the one with Stratus, but Landy says that an increase in reseller agreements may cause the company to seek a second round of venture capital to keep up with the company's growth.
Meanwhile, Landy and Volftsun are negotiating with other major switch manufacturers and multiplexer manufacturers to form future reseller agreements.
"The issue is that we are a small company selling mission-critical applications to large companies," said Landy, underscoring the need to closely monitor its reseller relationships. "We don't need a mass-market approach. We know who our customers are."
LightSpeed's business plan called for shipment of the product by the end of the second quarter of 1997, but Landy says they will start to ship the product four or five months ahead of schedule.