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THE BIGTIME INTERVIEW:
BEN LILIENTHAL

The CN Interview with Ben Lilienthal, founder of Vapps, Inc.

10 March, 2004

Ben Lilienthal is the co-founder and CEO of Vapps, Inc. He previously founded Nascent Technologies which developed and licensed carrier-class, enhanced services software for web-enabled email. Nascent licensed its products to service providers like France Telecom, Belgacom, Hong Kong Telecom and Singapore Telecom. Nascent was sold to CMGI in 1999 and then to Sendmail in 2001. Mr. Lilienthal is a graduate of Amherst College and received his MBA from the Stern School of Business in 2004.
Conferencing News: So, Ben, tell us about Vapps? Who are you guys, where are you located, and when was Vapps formed and why?
Ben Lilienthal: The two founders of Vapps are myself and Jerry Norton, the CTO. Besides us, we have a very talented team of technical and management folks. My background is in building carrier-class software. My earlier company, Nascent, built web-enabled software for national phone companies like France Telecom, Hong Kong Telecom, Singapore Telecom, Belgacom, etc. Jerry's background is in building and licensing telecommunications products with companies like Timeplex and Lucent, and more recently, as VP with Delta Three, running converged telecom networks. So, between the two of us, we have expertise in almost every discipline of the telecommunications industry.
We are located in Hoboken, NJ, and we formed Vapps in March, 2002 to capitalize on a couple of converging trends that we had observed. First, and foremost, it was clear to us that VoIP was on its way and SIP was the path. The standards weren't quite there but they were getting there. Second, the enhanced services segment was continuing to experience explosive growth. With 9/11 and a recession, corporations were looking for ways to save money and conference calling was one of them. Third, and this was the clincher for us, Moore's law was finally reaching into higher-end telecommunications hardware. Specifically, the Digital Signal Processing ("DSP") technology required for conference calls was getting commoditized and we could leverage this into a product with sound quality equal to the incumbent products but at a much lower price point. Like Dell did for PC's using Intel chips, we think we have hit on a similar concept for conferencing. This becomes important as volume in the conferencing business continues to grow and prices and margins to erode.
CN: Who are the investors of Vapps?
BL: Mainly folks who made money off of my first company. I have put some of my own capital into the business as well.
CN: What's behind the name?
BL: Vapps stands for Voice APPlicationS -- you can tell who the real geeks are because they get the name right away.
CN: Hey, we knew that, and we're not even geeks! What's the Vapps business model, hardware supplier or wholesale services provider?
BL: We are an equipment vendor. We license IP conferencing bridges to service providers who run them for enterprise customers, and we license to enterprises, too.

CN: So what's in the guts of your bridge, the Vapps CB 1000? What's special about your technology?
BL: Well, the CB 1000 runs linux and uses DSP cards from Natural MicroSystems (""NMS"). Our software is the special sauce that puts all the pieces together. It was developed by Jerry and his team over the last two years and has been running in the field since late last summer. To dumb down the application -- basically it's a bunch of C code that answers the phone, finds out who the callers are and puts them into the correct DSP slot on the NMS boards over and over again. We can answer about 4,000 calls at once on one machine. Having built software for companies like France Telecom, Hong Kong Telecom, etc... we know the exacting requirements of large scale service providers and built our technology to meet these requirements. Oh, did I mention, that we can authenticate from an existing database and output the CDR's in any format required to a flat file or to a database?
CN: Well, uh, yes, you did just mention that. So who manufactures the Vapps CN 1000?
BL: Our hardware distributor, Channel Access, is a multi-billion dollar systems integrator. They deliver a telco-grade system to our customers ready to plug into the network. Our partnership with them is such that they put all the hardware and software together and burn in the components. We don't lay a hand on the boxes until they arrive on site and this is only if there is a new release of the software or to walk our customers through how the systems work. We have no manufacturing or distribution facilities.
CN: Tell us about features and pricing for your bridging systems. How do they compare with the competition?
BL: With our latest release, 1.5, we have achieved feature parity with the incumbent vendors. A partial list includes hearing the menu of options, operator assistance, dial out to a participant, record a conference, increase volume on the line, decrease volume on the line, lock the conference, unlock the conference, mute individual line, un-mute individual line, mute all participant lines, un-mute all participant lines, continue conference after moderator hangs up, and get participant count.

CN: Wow, that's impressive. But we wondered if you had one feature that's a recording of Donald Trump's voice from "The Apprentice" that summarily announces to the entire group, "You're fired." But please, continue.

BL: As you can see, we have the same features found on all the incumbent bridges. It is interesting that a lot of the emerging vendors who use media servers have not quite matched this feature set yet. Also, we have a tiered administration feature so multiple resellers can log in to the same bridge and can only see their account not the entire bridge database.

Our per port pricing is about half of the other vendors. We are able to achieve this price point because we do not develop the DSP's nor do we manufacture the systems. An interesting side note is that the DSP's we use have more R&D dollars invested in them, about $250 million, than all the other bridge vendors combined. That is the beauty of leveraging our relationship with NMS just like Dell leverages its relationship with Intel to bring out better machines at lower prices every year.
CN: What about integrated web-conferencing technology in your bridging platform? Are you providing this? Are your customers asking for this?
BL: Here we are laser-focused on what we are good at, reservationless audio. We partner with third-party web conferencing providers to offer powerpoint, application sharing and text chat. Our customers are more interested in lowering their costs for reservationless audio and already have a web conferencing solution. We are market driven and have sourced web conferencing for our customers on a pass-through basis. If the demand is great enough (and we have looked into it) we could easily integrate a web-conferencing solution into our bridge.
CN: How do or will you provide support for your system installations?
BL: Generally, our support goes through a couple of tiers. Initially, we will send somebody on site to walk a customer through an install and provide training on the hardware and software. Then, we have a 24x7 technical support line. There are a series of escalation procedures depending on the severity of the problem. Jerry, our CTO, is at the end of that chain and will get called if the problem can not be resolved by the other members of the support team.
CN: Ultimately, what's the value-proposition for enterprises or conferencing service providers to purchase the Vapps bridge?
BL: Better quality, more features, lower price. We compete on both sides of the value proposition - features and price. Furthermore, we are adding new features frequently, and as the price of DSPs continue to come down, the price of our solution will track that. Also, we designed the bridge to integrate into existing service provider environments. We do things like read from remote databases via ODBC and XML. This means that service providers and enterprises can just drop our bridge in without changing their provisioning procedures.
CN: Ben, in your view, what will the conferencing industry look like in five years?
BL: I believe conferencing is heading into a mass market business where it will be high volume and low margins. In this "perfectly competitive" scenario, prices converge to marginal cost and the low cost producers do well. In this world, scale and cost are the two main drivers.
CN: And where does Vapps fit in to that picture? What are the plans for Vapps as a corporate entity?
BL: Vapps is a leading developer of VoIP audio conferencing solutions. By focusing on developing a high quality, reliable bridging product and by focusing on serving our customers needs, I believe we will be able to capture some business now and going forward. We are going to continue to focus on innovating, driving efficiencies from our technology and listening to what the market tells us and reacting accordingly.
CN: Thanks, Ben. Good luck with Vapps.

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