My Lunch with Andy Ory: Acme Packet CEO Talks Startup Lessons, Growing Pains, and Building the Next Great Boston Company
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where Henry Paulson was white-faced looking in the abyss, saying the economy is going to seize up. People started thinking differently. We started going back to these service providers. After November ‘08, people realized they could get laid off if they hitch their wagon to something that’s not lower cost, higher revenue. The status quo may not suffice. We saw our business really pick up in November ’08, and then it accelerated again in the second half of ’09.”
But why is that—what was the key to the turnaround? “My philosophy is all job security is local,” Ory says. “If you’re a telecom guy, the way you’ve been keeping your job is to say no to everything. You’re basically bureaucratic, in the name of security, flexibility, functionality. But imagine there’s five of us who eat every day in the Verizon cafeteria, and we’ve all been saying no to those marketing weenies who want to do all this interesting stuff. Now we realize some of us are going to lose our jobs, there’s going to be downsizing. The ones that are going to stay are the ones that actually help those marketing folks offer new services and generate new revenues—it can only happen on IP. That notion of disruption and localized perception of job security enabled, finally, breaking the logjam of bureaucratic no-no-no in the IT organizations.”
So it sounds like the recession shook up the telecom network operators enough that they were willing to try something new—Acme’s services. And the company’s business picked up major steam from there.
Now Acme Packet faces new challenges. Fending off buyout offers might be one of them, as Ory continues to try to build the next great New England company—and keep it local. “I do think Massachusetts needs some great businesses. That’s where the spinouts occur,” he says. “When we lost three of the top 10 computer companies—Data General, Digital Equipment Corporation, and Wang—that really hurt. That was painful. I’m cognizant of the fact that we exist because of them. We stand on their shoulders. And there is an obligation for us to give back to the community so there are businesses that stand on our shoulders.”
“That all being said, we’re a public business,” he says. “Part of the issue of deciding to take your business public is the moral and the financial responsibility that if somebody pays for enough of your future value, what you want to have happen becomes a lot less relevant. We’ve been very lucky that we’ve been able to articulate a very healthy valuation, which sort of acts like an inoculant. When the stock was down at $4 a share, I was very nervous. We bought back as much of the company as we could. Now at [around $70] a share, I feel like it’s harder for people to pay a significant premium. The quicker we create value, the more that’s reflected in our market price, the harder it is for someone to pay a premium.”
Ory also thinks uncertainty in the market has helped keep Acme Packet from getting overexposed. “Complexity is increasing,” he says. “Part of what a session delivery network does is it … Next Page »