Asterisk (News - Alert) became an open source sensation about a decade ago, and as a Digium board member, Danny Windham had a front-row seat to the show. Soon after, Windham was tapped as Digium’s CEO, and he and his team have been working to translate the success of Asterisk into a growing business.
Things have been moving forward on that front at a nice clip, although it’s taken the company on a couple of twists and turns along the way. But, as we all know, the communications space is a dynamic one, and those organizations that can adapt as market needs change are the ones most likely to survive and thrive in this highly competitive marketplace.
INTERNET TELEPHONY recently caught up with Windham to learn how Digium is doing just that.
Where are you from?
Huntsville, Ala. I’ve been here for 30-something years.
What was your first job?
I worked for my dad doing physical labor, and I am convinced he did that so he could show me I didn’t want to do that later in life.
When you’re not working, how do you like to spend your time?
I’m a pilot, and I enjoy flying (a Cirrus SR22). I also enjoy road biking, water and snow skiing, and wind surfing. I like motorcycles. I like boats. There’s some technological aspect to most of the activities that interest me.
How would you describe your leadership style?
I try to ensure we have the right people in the right seats on the bus and give them the power to do their jobs. I’m not a hands-on micromanager. I’m a consensus builder.
Before you moved into your current position you were president and COO at ADTRAN (News - Alert), which is a stone’s throw from Digium. What led you to move from ADTRAN to Digium back in February of 2007?
I have been a board member of Digium since its founding. ADTRAN provided seed funding to Digium to get it started.
When I was a board member, Asterisk went from being a not very well known technology to a worldwide phenomenon. At the time I had been at ADTRAN for 18 years, and ADTRAN was big, and I like small companies.
We did a CEO search for Digium and at some point a board member suggested I be named CEO, and at first I said I wasn’t interested, but six months later I was in the job.
What did Digium look like at the time?
As I said, at the time Asterisk was really becoming this worldwide phenomenon. There was this investor, David Skok, who became interested in Asterisk and made an investment in Digium. It was his involvement in the company that led to the search for a CEO.
Mark Spencer, who was the founder of Digium and the creator of Asterisk, is a technology enthusiast who preferred developing software to running the company. At the time, Digium was very young both in terms of the age of the company and in terms of the age of the workforce. It was full of people who were enthusiastic and vibrant and smart, but who had very little experience in running a business or making money.
How does that compare to the Digium of today?
Digium is probably four times the size it was when I got there – in terms of people, revenue, virtually any metric. The company has grown, and we have evolved our business model to understand what things are possible, and what things are practical, and what can be successful.
What accomplishment are you most proud of during your time at Digium?
Asterisk played a significant role in the disruption of what at the time was a $50 billion market – not many companies ever find themselves in such a position. Correspondingly we have successfully not killed the golden goose – because Asterisk today is such a widely deployed, successful, and vibrant open source project. Asterisk has brought so much good to the world that there is a sense of contribution.
For emerging countries Asterisk fulfills a need that is difficult for them to meet any other way – because it’s free and provides them with the ability to construct an operational phone system.
Millenials especially feel some sense of pride by being part of an organization that gives back to society. Millenials are the majority of the workforce at Digium today.
What has been your biggest challenge at Digium?
Our biggest challenge has been translating the success of Asterisk into business success for Digium. But we have a great company, we’ve been successful, and we’ve been growing. But we’re still small for having helped disrupt a $50 billion market.
Digium has a dual-license model for Asterisk. How does that work?
You get Asterisk free under GPL version 2; it’s a restricted license that says if you make changes to source code, you have to make that available to anybody who you provide it to. If you get it for free, you don’t get support from Digium, you get it all through the Asterisk community.
But if you’re trying to build a business around Asterisk, you might want Digium’s support. That’s available through a different license. That way, if you have a bug, for example, Digium will fix it.
It’s the razor and razor blade model. We give away the razor and sell the razor blades.
Beyond the Asterisk engine, what else has Digium had success selling and to whom?
Digium has also built gateways we have sold as commercial products, and that was very successful for us. But, as SIP messaging protocol became accepted, you don’t need gateways, so demand for gateways is not a long- term market opportunity.
So we started packaging Asterisk and selling it as an application and not just an engine. The most common application people were looking to build using Asterisk as an engine is a unified communications solution/phone system for small and medium businesses. What we learned from people coming to the project is there are two main groups interested in this: customers with no money, and customers with an abundance of technical know-how. Prospects not in these categories are likely less interested in the DIY market.
What’s next for Digium?
We’ve transitioned to building commercial products based on Asterisk.
SMBs don’t want to be in the IT business any more, they would like to employ their resources instead on their core competencies. We offer our UC solution, which is based on Asterisk, and is called Switchvox (News - Alert). In the last couple of years we’ve become very active in becoming a service provider.
So we were first a hardware supplier, then we were a software company, and now we’re transitioning to become a service provider – and at the moment we’re all of them simultaneously.
What is the breakdown of Digium’s current business between those three product categories?
The services business is the fastest growing component, but one of the newer components. Right now it’s maybe a fifth of our business – and that’s valuable recurring revenue. Software in general is maybe 40 percent of our business. The remainder is hardware.
What is Digium’s growth rate looking like?
The company has achieved CAGR of 14 percent in the last five years. And our cloud services business will be up 50 percent year over year this year (2106), and was up 70 percent year over year last year (2015).
What is Digium doing related to WebRTC?
We’ve spent a lot of energy in the WebRTC market. We built the basis of a CPaaS that we trialed last year and is a WebRTC API. We got customers on it, and there are still customers on it. But we decided we can’t compete on as many fronts as we are on, so we morphed it to be the basis of our cloud services. At this moment we aim to use that technology internally for future Digium products.
Today, in essence, communications is its own application, but in the future communications capabilities will be built directly into apps and websites – creating demand for CPaaS offerings. Integrating communications into existing business tools will be a trend. Even our commercial products are built with APIs to make it easy to integrate with other platforms, like Facebook.
The Internet of Things is another prevalent trend in communications and networking right now – and some believe its impact will be larger than that of the Industrial Revolution. How does the IoT relate to what Digium does and what it’s going to do?
There was a keynote at our recent AstriCon event called the Asterisk of Things. The premise of that presentation, given by Chris Matthiue of Citrix (News - Alert) and formerly of Octoblu, was that today machines talk to machines, but what you really need is for people to talk to machines and machines to talk to people. Asterisk provides the engine to enable people to talk to machines.
Digium CEO Danny Windham
Edited by Stefania Viscusi