Raindance handling deluge of phone, Web conferencing

LOUISVILLE ? After undergoing two name changes and redefining its business plan three times since its inception, Web- and voice-conferencing company Raindance Communications Inc. has identified its niche. And with virtual meetings quickly picking up in popularity in the business world since Sept. 11, Raindance will likely remain Raindance for some time to come.

?2002 is going to be one of the most intense periods of growing the business,? said Paul Berberian, chief executive officer of the Louisville-based company. He founded the company as Vstream in Boulder, which became Evoke Communications, which became Raindance. Berberian raised $116 million in venture capital, moved the company to Louisville and generated another $52 million when the company went public in 2000.

?Sept. 11 was a great wake-up call for the conferencing industry. After Sept. 11, there was a great upsurge in the business,? he said. ?In the long term, more businesses are going to see the importance of conferencing, not just the top companies in the United States.?

Volume has climbed at Raindance since Sept. 11, when business air travel nosedived in response to the terrorist hijackings. Whereas the company billed 45.8 million conferencing minutes in the first quarter of 2001, 52.1 million minutes in the second quarter and 62 million minutes in the third quarter, Raindance logged more than 80 million minutes in the final quarter of 2001. Berberian said the company already logged more than 40 million minutes in January 2002 alone.

?Raindance has really shocked me with its growth rate,? said Elliot Gold, president of Telespan Publishing Corp., a Calif.-based market research company. He tracked a 40 percent increase in the use of teleconferencing services in the three days following Sept. 11, a usage spike that sustained itself for nearly the rest of the year.

?With companies like Raindance, it’s clear that they are hitting a sweet spot with the cutback in travel,? said Bob McCullough, director of enterprise applications with the Hurwitz Group in Framingham, Mass. ?It took the events of September 11 to push this concept over the top.?

The concept of teleconferencing is not new — what is new is the technology behind it and the advanced capabilities it has created for remote communication across an organization. Raindance combines traditional voice conferencing with Web conferencing. As long as the participants in the virtual meeting — whether they are located in Bangkok, Caracas or Minneapolis — have a phone and an Internet connection, they can partake in an audio/visual presentation at the same time.

According to Aamir Siddiqi of Raindance’s professional services division, Raindance will do more than just run a meeting. It will announce the meeting, notify all participants electronically of when and how to convene, and will even provide follow-up services, like questionnaires and polling.

?Raindance goes beyond the content delivery of an event,? Siddiqi said. ?It is also involved in pre and post-event management.?

Participants join a meeting by dialing a toll-free phone number, typing in a URL into their browser and entering a conference ID number on their telephone keypad. The Web-conferencing component requires a small 140-kilobyte Java applet that needs no plug-in and can run on any kind of connection, from dial-up to high-speed broadband.

A moderator presents visual material using Power Point, Corel 8 or Lotus Freelance, narrating the slides over the phone as they appear on people’s computer screens. Participants around the globe can see in real-time the presenter highlighting items as he or she moves the mouse around the screen. The moderator can even send everyone to a Web site without the participants having to lift a finger.

With Raindance’s Web Conferencing Pro product, customers get more features in their meetings. Extras include live chat, a whiteboard for freehand sketching, multiple presenter capabilities, and the capability to share with all participants any document residing on the moderator’s computer or company database. All conferences are recordable for later playback to those who were unable to attend the live event.

The United States Geological Survey (USGS) has used Raindance’s Web conferencing services for two years. Diane Jeffries, director of training for the 10,000-employee federal agency, said Raindance is mostly used to conduct training sessions across the organization. By eliminating just one big, nationwide agency convention and running it as a Web conference instead, USGS saved big dollars.

?Had we flown all these people to a central location, it would have cost us more than our initial investment in the Raindance tool. For an organization like USGS that is so dispersed, this kind of tool is a lifesaver.? Jeffries said. She said USGS paid Raindance $20,000 last year to run hundreds of meetings.

Raindance counts Honeywell, Oracle, H&R Block and Ericsson among its more than 1,770 customers. The company charges 27 cents per minute per connection for the basic package and 39 cents per minute per connection for the Pro package, though significant volume discounts are common.

While the company still loses money, it lost less last year than the year before, reporting a net loss of $52.7 million on revenues of nearly $40 million in 2001 versus a net loss of $98.8 million on revenues of $18 million in 2000. Berberian sees profitability on the horizon, and Telespan’s Gold praised Raindance’s automated processes, saying they would save the company lots of money over time.

?When you are able to take the operator out of the call, you can drop the costs of handling that call and margins go up,? Gold said. ?His business plan is to remain ahead of the rest of the field by not adding a lot of labor.?

Raindance employs 200 people, down from more than 500 in its early days. Because the company’s services are automated, Raindance can run an average of 8,000 meetings a day, for a total of 1.8 million to 1.9 million billable minutes. While it makes available technical assistance around the clock for each meeting it runs, Berberian boasts that less than 1 percent of its meetings require such assistance.

Gold is also impressed with Raindance’s early investments of $45 million for telephony and network equipment and $15 million for research and development. However, he worries that Raindance could face financial difficulties when it comes time for the company to significantly sink millions more in capital expenditures.

Berberian contends that Raindance is protecting itself from sudden large purchase obligations by continuously investing in the company’s infrastructure to the tune of $1 million to $2 million a quarter. Presently, Raindance’s platform can handle 1 billion minutes a year, a total that exceeds the company’s estimated volume for 2002 by a factor of two.

Dick Schulte, chief marketing officer for Voyant Technologies Inc., a Westminster-based manufacturer of voice-conferencing systems and Raindance’s sole supplier of such equipment, agrees with Berberian. ?They do an excellent job of capacity planning. In terms of the path they’re on, they are cognizant of the capacity they need to service their customers,? Schulte said.

No matter how well it plans, though, Raindance must still face stiff competition. AT&T, Worldcom, Sprint and Genesys, among others, all play in the conferencing field. At last check, they all had deeper pockets than the 5-year-old company in Louisville. Contact John Aguilar at (303) 440-4950 or e-mail jaguilar@bcbr.com.

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