The Big Idea at Acme Packet: Smoothing the Way for Voice and Video on the Internet

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three-year stretch of extreme cash conservation, Ory says. But just as important, the company faced what you might call the inverse network effect: Telecom companies wouldn’t want to buy session border controllers for the edges of their own networks until there were lots of session border controllers at the edges of other companies’ networks for them to hand off sessions to. Otherwise, it would be like trying to get consumers to buy telephones before there was a phone network.

Solving that problem was Ory’s main job, from the company’s creation right up to the time it went public in 2006, raising $109 million. “We proselytized,” Ory sums up. “We spoke to the 200 largest network providers in the world for five years, telling them that they were going to move from TDM to IP, and that they were going to want to adopt a technology like this. And it wasn’t just Acme, but a whole cavalry of us doing this.” The company also partnered with established telecom giants like Alcatel, Ericsson, Lucent, Motorola, Nokia, and Nortel, helping them to build gateways that made their TDM networks look like IP networks and vice-versa. Eventually, the strategies worked—and now 89 of the largest 100 Internet service providers have Acme controllers at their network edges, Ory says.

Things have been going so well that Acme was able to spend $23 million in April to purchase Maynard, MA-based Covergence, which makes software-based SBCs that are more affordable for small enterprises than Acme’s big controller boxes. And the VoIP revolution has now built up so much momentum, Ory says, that the latest recession has hardly dented Acme’s revenues, which hit $84 million in 2008.

“We’ve never been busier,” says Ory. “What seemed to happen last October is that people started realizing that the [employees] who are going to keep their jobs are the ones who figure out how to do things better, faster, and cheaper, and that means moving to IP.” To date, Acme has sold between 7,000 and 8,000 SBCs—but over the next five years, Ory thinks the company will ship 50,000 to 100,000 more. “Then you’ll see a session-oriented world emerge,” he says. “The majority of communications will be session-oriented, and the rest will be best-effort.”

In that world, Ory will no doubt be off in search of the next element in the telecommunications universe that needs fixing. Either that, or he’ll be helping other Massachusetts entrepreneurs get their own starts. He’s already active as co-chair, with Flybridge Capital Partners’ Michael Greeley, of the entrepreneurship subcommittee of Governor Deval Patrick’s IT Collaborative, which has been charged with finding ways to build on the state’s strengths in information technology. He has also volunteered to be a CEO mentor as part of Greeley’s “12 by 12 by 12 by 12 by 12” initiative, which aims to recruit 12 successful CEOs to work with 12 venture capital partners to mentor 12 young entrepreneurs and launch 12 new companies over the next 12 months.

“I feel a moral responsibility, when you create an enterprise, to create as much good as you can for all the stakeholders,” says Ory. “If you can, employ locally. Be a net exporter. Be a taxpayer. Get involved in some level of social philanthropy. Raise people’s standard of living. And help people create wealth and build value in the economy. Certainly I’m the beneficiary of a lot of folks who have created enterprises and trained a workforce in New England, and I want to be a link in the chain.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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