During my visit to Iceland earlier this week I met with a local VoIP company called Global Call. While there are many VoIP companies around, Global Call had managed to arouse some serious interest and hate towards them. First of all, many of their clients like them for their low rates where as the other telcos seriously hate them for competing with them. I talked to Benedikt Bjarnason and Höskuldur Darri Ellertsson about their business and how they’re doing.
Global Call is a small company, by the size of their team, but have managed to become profitable pretty much from day one. They are 6 people in total, but only Benedikt and Höskuldur work in the company full time. They have backgrounds in working in the telephone business and have thus accumulated a good amount of knowledge of the ecosystem and the way things work in the industry. They were also able to see the possibility of setting up a VoIP company in the market as the margins companies still accrue are out-of-this-world. For example, Global Call is getting on average 50% margins on their cheap calls. If VoIP is able to hang on to margins like that, take a minute to conside the margins you pay your own telco.
Global Call caters to two sectors of customers, only in Iceland at the moment; business and consumer. Business sector is the one where they are able to pull their good margins and consumer sector is the area where the most minutes are terminated. They’ve come to realise that Iceland is simply too small for them and that’s no surprise, based on my previous experience talking with entrepreneurs.
Despite being a somewhat regular VoIP company, what made me smile was the determination Benedikt and Höskuldur had in keeping the costs as low as possible. They had pretty much built all the tech themselves, relying on open source alternatives and thus avoiding licensing costs. Secondly, they had realised that on top of selling minutes online they’d need to tap into the offline market as well. Tehy began selling pre paid cards. What this in essence did was that they were able to get the money up front for the minutes and thus bring in better cash flow.
The maturity of companies regarding their business models suprised me positively in Reykjavik. Many had began to think about revenues and cash flows from day one – a very healthy sign in my opinion and perhaps something other startups could also look into.