Q&A with Technology Entrepreneur Mark Galvin
"At heart, I am an engineer, so my interest is to see my products proliferate. I want to see them end up in as many people’s hands and make as many people happy as possible"
Mark Galvin, 47, can best be described as a serial entrepreneur who has helped launch such New Hampshire companies as RAScom, and most notably, Cedar Point Communications.
Now president and CEO of Whaleback Systems since its incorporation in 2005, he has led the company — named after Portsmouth’s Whaleback Ledge lighthouse — to develop one of the first business broadband phone services with its flagship CrystalBlue product.
Q. Explain how VoIP works.
A. When you go to Google or MySpace on the computer, the language of that is “Internet protocol,” or IP. It’s basically packets or envelopes of data that fly around. Instead of having a completely different infrastructure for voice or video traffic, it made sense to work out protocols and technologies to allow voice and video to use that same transport protocol.
Q. How did you get involved with VoIP?
A. My training was in math and computer science. I went to McGill University in Montreal, so I’ve kind of been into sciences and computers growing up. My first job out of college was with Z-Tel [now known as Trinsic], which was a large voice data PBX development company. My second job was with a smaller-scale voice data PBX company, LAN-TEL. I led the data processing group.
After that, I ended up doing contract engineering and protocols. I got used to having a variable income based on how much work there was and how you sold people on hiring you to work. That’s where some of the salesmanship came from. I was fairly steeped in the technology and I understood the markets because I had been in the middle of them since the ‘80s.
Q. It sounds like the contracting experience paved the way for starting your companies.
A. Yes. I’ve started four high-tech companies so far in southern New Hampshire. The first one was called Primary Rate Inc., or PRI. That was founded in the basement of my house in Hampstead in 1989. In 1995, that company merged with another company from the West Coast, Xircom Systems. They were the leader in the cards you plug in a notebook computer. In January ’96, I started RAScom, which developed dial-access routers.
Basically, they were the devices which answered the modem phone call in your computer and connected you to the Internet. That company merged in ’99 with Excel Switching, a company that did central office-based adjunct switches. I became the vice president of local access switches for them, which was a logical step for what we would be doing at Cedar Point. Excel got acquired by Lucent almost immediately after we merged with them. So I went from running a 75-person startup company to being vice president of nothing in a 140,000-employee company. I was a little out of my element.
Q. So that’s when Cedar Point came into being.
A. Yes. I quickly ended up leaving Lucent and co-founded Cedar Point Communications in 2000 with a fellow I met at Lucent while I was there, George Kassas. I ran that as president and CEO for 3-1/2 years. We built the equipment behind the infrastructure that would allow a provisional telephone on a cable modem and provide residential phone service.
Q. When was Whaleback founded?
A. Ray West and I co-founded Whaleback in 2004, but we incorporated in March 2005. Ray was the VP of engineering at Cedar Point. We were looking to extend broadband further into small and medium businesses for telephony. We can build a phone system for a small or medium business from the ground up built purely on broadband. By doing that, we have a very unique architecture that allows us to add some capabilities that you can’t get with any other system for small or medium businesses.
Q. How many clients do you have now?
A. We have about 300. They range from a two-person law office to 240-phone installation at a retreat center in western Massachusetts. On average, our customers tend to be a 25- to 30-person office.
Q. Are there certain key elements you look for before starting a venture?
A. You always look to see if you can fill an existing need or improve on something that people need and then re-educate the customer from one thing slightly further over to the thing the company is bringing out. If you can look for market trends and where other people’s marketing dollars are going to go towards trying to educate customers towards something new, then show up with something that’s highly differentiated, you might do well. But it’s important to make that differentiation very clear to set yourself apart from others in a similar market.
Q. I read that you never really have an exit strategy in mind when you start a business.
A. At heart, I am an engineer, so my interest is to see my products proliferate. I want to see them end up in as many people’s hands and make as many people happy as possible. Of course, I’ve also gotten a taste for what you can do with some extra cash. It also puts me in good alignment with the investor community. These have been venture investment-backed companies. When you take investments from venture capital, people are generally looking for a return on their investment. There needs to be a plan at some point to create liquidity. That typically takes place with an M&A [merger and acquisition] transaction or through an initial public offering. My first two were M&As, which were successful. With Cedar Point, we have yet to see what that’s going to do for everyone, but the company’s grown to be pretty substantial. I think last year they did in excess of $60 million in revenue. Not too bad for a little company in Derry.
Q. Is Whaleback venture-backed?
A. Whaleback is venture backed. We have three Massachusetts-based venture capitalists involved — Ascent Ventures, which has been the initial investment in all four of my companies, Castile Ventures and Egan-Managed Capital. That group was started by Richard Egan, who’s the founder of EMC Corp.
Q. Does it get easier to raise money once you’ve proven yourself?
A. It gets much easier if you have successes. I don’t know about the failure side. My first company, PRI, literally took me two years to raise the initial venture capital for it. I was hitting the pavement week over week over week. At the same time, we had a bootstrapped company going in the basement of my house, and I was trying to make payroll.
After that success, the next company took me one day to raise the money. I think I raised 50 percent more than I was looking for. So it was a difference. Cedar Point was a little trickier, not because of any lack of success, but because the air was out of the communications technology bubble as we started to look for money. I raised $45 million for that company in 2002, which has got to be a record. It was led by Battery Ventures and Charles River Ventures. Then it was back to Ascent for Whaleback.
At this point, for me, I can pretty much, with Ascent, get them in on a handshake. They’ll say they’re in without knowing what it is, necessarily, but they won’t give the money until they rake you back and forth over the coals. But really, getting raked over the coals by a bunch of smart investors actually helps you think through a lot of things that you might not have otherwise thought about.