SM: What were the dynamics of involving your family in your venture?
ST: Entrepreneurship runs in my family. My father ran an accounting firm when he was young in Iran. He had been in a similar situation as David and I had. When we started this company, he was great at providing some of the initial capital as well as advice and help that only someone with experience can provide. He has been involved from day one.
SM: David, did your family get involved as well?
DH: My family was not involved, but I have seen their family businesses over the years. I had a lot of opportunities to watch them and that definitely was a beneficial influence.
SM: What level of financing did you get from the family?
ST: It was minimal. When David and I looked at the startup requirements to start a true telecommunications company with infrastructure, we needed a few million dollars. We did it for less than $500,000. We had very creative vendor negotiations thanks to David for our cost of goods sold from our technology providers. That made it a very variable expense.
DH: We first picked the technologies that we wanted, and we picked the best ones we knew of. We then went and found companies that sold those technologies and made them partners. We told them up front that we did not have all the money and we asked for creative terms. We offered to pay starting at the 30-day point and then spread that over five installments. Ultimately that meant we had to sell them on the idea of what we were doing. They were buying into our vision with real dollars because by extending us those terms it was as if they were providing us financing. We did that with a number of different vendors to allow us to get going quickly.
SM: In your initial stages, what was your company’s value proposition? What vision did you sell to the vendors?
DH: It was a virtual phone system for entrepreneurs. That is still exactly what we are selling today. We wanted to get people to understand the market and vision.
SM: What is a virtual phone system for entrepreneurs?
ST: It is a capability for a one- to five-person team of entrepreneurs to sound like a big company. They can work remotely and have a phone number regardless where they are working from. If you and I wanted to start a company right now and we did not have a physical office or $10,000 to buy a phone system, we could then just sign up with Grasshopper to get phone numbers with multiple extensions. That would let us start a company from wherever we are and let all phone calls be forwarded to your home office or my cell phone. When we started this, one of the vendors we were working with agreed to be paid as we grew the customer base.
SM: What did you need to put this service together?
DH: There was software as well as the physical infrastructure for the telecom. We needed servers to handle the data, Oracle databases, and all the telecom infrastructure to handle the load. All of that was required in our data center.
SM: David, were you doing the technical work yourself?
DH: Yes, it was my responsibility. I have never had any formal training but I am pretty technical. I handled all the technical aspects and I learned a lot about telecom that I did not know before.