Doug Ranalli often tells people he’s never held a proper job. That’s not really the truth – though regular office life clearly wasn’t his deal. Ranalli’s first taste of entrepreneurialism came aged just 19, when he bootstrapped Student Life Magazine while still an undergraduate at Cornell University. So well did it perform that when Ranalli graduated in 1983 he continued with it, growing a readership of over a million until Time, Inc swooped in to buy it in 1987.
A year later Ranalli turned to tech, his first love, and completed an MBA at Harvard Business School. When he completed his studies it was 1990. Internet ubiquity hadn’t arrived and Ranalli saw an opportunity in telecoms – specifically fax – and founded Fax International with a view to providing fax-over-IP services worldwide.
Ranalli hadn’t tasted failure. He wouldn’t with Fax International either, which grew from a backroom project to a 750-employee firm with offices in ten countries. INC magazine rated it 20th in its fastest-growing private company list from 1992 to 1997. Things were looking very, very good.
Then everything changed. The Internet came along, killing fax and stripping Fax International of its 16,000 corporate clients almost overnight. “We went from nothing to 750 people in five years,” Ranalli tells Red Herring. “And literally at that point we were dead: nobody cared about fax.”
It could have crushed him. But Ranalli hopped right on the entrepreneur wagon again, this time seeing potential in a “small aspect” of the telco industry: “Interworking between legacy public cellphone networks and next-generation IP networks.”
Within a year of Fax International’s demise Ranalli bought a handful of patents in his new space and used them to found NetNumber in Lowell, Massachusetts. He took 25 of his favorite engineers from his former firm and soon raised a million dollars from VCs.
Ranalli’s previous ventures had taken off almost immediately. NetNumber was different. He and his team spent four-and-a-half years building technology with no revenue whatsoever. “We were stumbling around in the desert trying to find our way,” he says, adding wryly, “It took Moses 40 years.
As an entrepreneur, Ranalli says, “you really have two choices: You’re either going to try to innovate within an existing market where you know exactly what to do. Or you could innovate in a new space.”
NetNumber was doing the latter. It meant there was a potential windfall in leaping ahead of competition. But it also ruled out a quick buck – something that, in today’s age of phenomenally quick tech success, can feel anathema.
“It’s a different story to most startups you see,” Ranalli admits, adding that he did get nervous that it could all come crashing down before a single client had been won. “I intentionally looked for a space that was undefined. I didn’t want the risk of the business disappearing on me in the middle of the process. And I was ready to take four years of nothing.”
NetNumber’s solutions enable telecommunications companies to accelerate the implementation of services across multiple network generations – all the while reducing complication and operational cost. The firm believes it has discovered the end of silo signaling services.
“Our job is to radically simplify signaling control,” says Ranalli. There are 20 specific functions that every carrier in the world must implement in their network, he adds. “Customers have been told they have to buy 20 different platforms, integrate 20 different platforms, train 20 different teams of people, manage vendor relationships for those 20 platforms, upgrade. That’s really complicated, expensive and inflexible.
“Imagine you pull your smartphone out of your pocket,” he adds. “And on that smartphone you have 20 different apps. Wouldn’t it be worse if you had to carry around 20 different smartphones? Our competitors sell customers 20 different smartphones.”
NetNumber can integrate the 20 functions across one solution. It is a model that has won it well over 100 clients, and which has allowed it to expand into Europe with a continental headquarters in Utrecht, the Netherlands.
“We are working in a huge industry – one of the biggest in the world – so of course it’s full of really big competitors,” he adds. “It gives us the ability to achieve competitive superiority over much bigger competitors. Bigger competitors bundle. We can prove that competitors will leave clients with inferior functionality that we can deliver with our niche technology.”
In its first four, unprofitable years the company grew to 180 employees and is looking ahead at a period of “significant growth,” says Ranalli. “We’ve got the staff, we’ve got the product, and we know we’re going to see tremendous growth.”
In a sector that is often loathe to eliminate technology, once a firm like NetNumber gives a communications tool to customers, it takes a very long time for them to give it up. It appears, 18 years into NetNumber’s existence, that Ranalli’s instinct to trust his team and tech and wait for the industry to catch up, has paid off.
He knows it pits him against the lightspeed-moving Facebooks and Ubers of the modern tech landscape. He doesn’t care. “First you build the story, then you get the finance,” he says. “There’s not always a six month cycle from start to finish.
“In truth it’s never that fast.”