Peter Sisson, CEO of Line2 (also known as Toktumi), is an entrepreneur and VoIP pioneer whose last company, Teleo, was acquired by Microsoft in 2005. He has been on the forefront of the Internet industry for 15 years, starting four companies and nurturing many others through advisory roles. He was named one of the top 10 “people to watch” by CNET, and won the Arthur Anderson Best Practices Award for Strategic Leadership with Wineshopper.com. He is a graduate of Dartmouth, Stanford and Cornell Universities.
Question: What’s the story of your career?
Peter Sisson: I have always wanted to start a business. I have always felt that running my own company was really the best place for me, the best home for me, for a lot of reasons which we can go into. And typically I'd look at different opportunities and see what could pan out. And the trick is to be very hard on yourself when you're first thinking of an idea, and talk to smart people to make sure that you kind of vet it out. Typically you want to solve a problem, right? And the problem I had was that I liked wine, but I would go into a wine store, and I had no idea which wine was good and which wasn't, which is still a problem today. So you could read Wine Spectator, other magazines, to learn about wine, but then you could never find the wines that they were talking about. So there was a mismatch between the ability to learn about a wine and then act on that information and make a purchase. WineShopper was my first company, which was a site that combined the ability to buy wine with the information, including ratings from Wine Spectator and wine enthusiasts and other agencies' reviews, community and all this. This was in 1999. It was a bubble company. It was funded by Kleiner Perkins and Amazon.com, raised $46 million and built a 200-employee company very quickly, and ultimately learned some painful lessons in terms of access to capital and how quickly that can dry up. The company was ultimately acquired by a competitor, and -- but that competitor did not survive. So that was my first sort of big venture kind of deal. Good experience, lots of learning, but nobody made any money.
I was pretty upset for a little while, and then I realized that you've just got to pick yourself up and dust yourself off. Entrepreneurship is really like sales in that you get a lot of discouragement along the way, and you have to be really strong and just keep going. So I just got right back up on the horse, started a company called Mixonic, which is now profitable and growing nicely, still private. I'm on the board. So that one's a wait and see, I'd say.
Then I started something called Teleo, which was a white-label version of Skype, if you know what Skype is; I think most people do now. And that was very lucky timing and was acquired by Microsoft within 18 months of its being founded. And I didn't want to work for Microsoft so I signed a noncompete, took a year off and traveled, and then started my latest venture, Line2, also known as Toktumi. But Line2 is really a solution for where business is headed today in terms of the way people work.
Question: What is the mission of Line2?
Peter Sisson: So if you think about land lines, more and more people are saying, why do I need a land line? They're getting rid of them. And they're sticking entirely to their mobile phone, and there are some problems with that because it doesn't always work in your home, and there's battery-life issues and stuff. But a lot of people are getting rid of land lines. We believe with Line2 the same thing is happening in the office environment, particularly small businesses. You don't really need an office where everyone has to drive their car in and park in order to be productive. You have all of this technology; you can use the Internet and communication technologies to be productive virtually.
So Line2 basically is a business line on your mobile phone. It's a second line, so you add a second line to your mobile phone -- that's why it's called Line2 -- that has all the features, ultimately, that that office phone had: transferring calls, setting up conferences and stuff like that. And so we just released it. It was approved by Apple in early September, and sales have been very strong. I think there's a lot of need for that, and ultimately, the problem we're solving is that people want to work and be productive, but they don't want or need an office, and they don't want to be tethered. Everyone's using WiFi; there's not even a jack into which to plug an office phone in most office environments, for new companies. So that's what we do. So the long answer to your question, to sort of give you a synopsis of each business, it's always about trying to solve a problem.
Question: How important is social media?
Peter Sisson: Very important. I was skeptical at first, and I still scratch my head about Twitter, but I now it's here to stay. You know, it's one of those things that it's a self-fulfilling -- it became popular because it became popular; I don't know how to describe it. But at any rate, the guy that does my marketing is religious about that. So for example, there are a lot of cool tricks. There's a lot of stuff that's important, and one of them is, you need to blog. And I was like, why do I need to blog? Part of it is, if you have constantly changing content on your Web site -- so the blog has to be on your Web site -- then search engines reward that. So like a news site or something, constantly changing content. So if you put up a Web site and do nothing with it, you'll slip down. If you keep changing the content and making that content relevant to the service that you offer and the types of customers you're trying to attract, you'll start to go up in natural search.
The other thing that you do is, once you blog a post -- this is where the social media comes in -- post a blog entry, then you Tweet it and you post it to LinkedIn, Facebook, everywhere, and to different groups. And then what happens is, this magic thing happens where it just reverberates through the Web. It's really fascinating. And so one blog post suddenly translates into multiple hits, and those hits are all then linking back to your blog post, and that means you're getting more links into your Web site, which, as you probably know in search engine optimization, that's another thing that's very important, is to generate links back to your site. So I was sort of dragged kicking and screaming, but now I’m a true believer. It really does work.
Question: How are you rising above the fold of competitors?
Peter Sisson: There's a lot of companies offering phone service, obviously, and you know, we are -- our differentiation is our focus. And I think this is an important lesson for all startups, is that we have a lot of people, because we only charge $14.95 a month, who ask us if they can hook up an ATA, which is what Vonage provides you, which is a little box that you plug your phone into. One end is Internet, the other end is the phone. They want an ATA. But I know from looking at Vonage and other companies that the biggest support expense for those companies is that ATA, because getting people to get under their desks and play with their routers and hook that thing up is a pain. And everyone practically needs a customer support person holding their hand through the process, so it's very expensive. And so we're like, yes, our customers -- there are customers that are trying to drag us in that direction, but we are razor-focused on our belief that the future is not about wired phones, that the future is about mobile and laptop calling. So it's like Skype and your mobile phone. So what does business phone service look like in a world of Skype and mobile phones? And that's what we're laser-focused on, and we're the only ones positioned that way. And by being that focused, it just makes everything better. One, you can communicate your position to the market in a much more laser-focused way so that you can actually stand out as a brand.
Question: Do you have plans to expand out of the SOHO market?
Peter Sisson: That's an interesting question because we are increasingly getting consumers who come to us, and so the Line2 app, as I talked about earlier -- particularly young people, they're like, a land line? Why? Why does it make sense for me to buy a phone wired to a wall? And particularly young people because they're moving from dorms and then apartments, and many apartments -- it just makes no sense, and you can't even use it most of the time because you're out and about and what have you. What's the point? People want to get rid of their land line. The problem is, some can't because either they don't have cell phone reception at home or, you know, they talk a lot and they don't want to wear down the battery. You know, there are all sorts of reasons. And so you can use Line2 -- the current version works over cellular, but the version coming out in a couple months will work over cellular or over WiFi, and that's going to be the first dual-mode thing on your iPhone, phone on the market in the U.S. So like Skype can only work over WiFi; it can't go over broadband. So bottom line is -- excuse me, it can't go over cellular; Skype only works over WiFi on the iPhone. So if you can, this now gives you a way to ditch your land line. So a long answer to your question, but you could use a Line2 number as your land line substitute. You can use it over WiFi when you're at home and you don't have cell phone reception.
You can use it as sort of a number you give out to everybody else, not the number -- your best friends have your cell phone number. But your bank people and credit card company statement. You know, anyone billing, anyone where they ask for your home phone number that you're doing business with or something, and you don't want to be bothered on your cell phone. You do that on your Line2 number, and then you have all these controls where you can say let certain people through, depending on the time of day, who they are, whether they're a friend, whether a business, different greetings depending on who they are. You can do all this stuff to sort of make it much more of a tool rather than a nuisance, which I think -- like my land line phone at home I never answer any more because it's all spam. It's -- even though I'm on the Do Not Call list and have been since they started it, people -- I don't know where they get my number, but every call I get is some kind of marketing call, so it's useless.
Recorded on October 1, 2009