Ribbit acquired by BT
When we were raising our first fund, the founders of Ribbit decided to take a chance on us. They accepted the terms for our financing of the company before we had even completed the first closing of the fund (which happened in August, 2006). Now, just two years later, BT (British Telecom) has bought the company. 
This is bookends: The founders of the company helped us raise our fund by showing our investors that experienced entrepreneurs would agree to work with us and now they have made us look good by creating our first outcome. We feel pretty good about these four guys, the cofounders: Ted Griggs, Ramani Narayan, Peter Leong, and Crick Waters, not to mention the other 25 employees of the company.
More important to us, however, is what happened between the bookends. From our point of view, there were two key events in the development of Ribbit in which we believe we played a role. First was finding out about the company; the founders discovered us because of the very first post I wrote on our web site, “I Want To Buy Phones“. In that post, I bemoaned the state of office telephony based on the experience that I had trying to get a telephone system for our office. We wanted a telephone service that didn’t require old proprietary hardware or that didn’t obligate us to a particular service. The founders of Ribbit were just beginning to develop a platform for delivering just that set of services. (One thing that’s true: We will be customers for Ribbit, even if we no longer own equity in the company!)
Second was pushing the company toward a riskier strategy when it wasn’t clear that that was the right thing to do. We pride ourselves on being risk-oriented, big-idea investors looking for the most impactful, world-changing business plan. Last summer and fall, Ribbit was struggling with how much it believed it could accomplish: Should it be a platform for developers? An enterprise services company? Or a consumer services company? Classic venture investing would argue that the company should focus on one thing that it knows it can accomplish. Gilman and I talked about it between ourselves and decided that we should take the chance to push the company toward doing everything at once; Gilman, as the director of the company and lead for our investment, pushed hard for the company to take on the developer platform as a path toward providing both enterprise and consumer applications of the technology.
The company took up the challenge. It introduced its developer platform in September last year; its enterprise application, Ribbit For Salesforce, in October, and its consumer service, Amphibian, in January of this year. And, thanks to the chief marketing officer, Don Thorson, the company adopted a position as “Silicon Valley’s First Phone Company”. We think it’s the combination of all of these things that lead BT to see so much value in the company so early.
Ribbit isn’t just bookends; it’s a demo for our style of venture capital: aggressive, risk oriented, go-for-broke investing looking for ways to change the world we live in. Thank you, Ribbit!
July 29th, 2008 at 4:22 pm
Great post Stewart! One bit of the story - a fun bit - that’s worth telling. When Ted and I visited A-L offices the first time, we were interested in one thing only: market research. “What, exactly, with all your knowledge and connections, was missing for you from available telephony services?” So we put our $2.00 worth of quarters in the parking meter outside your (brand new) office for our visit.
Forty minutes into our “interview,” Stewart and Gilman turned the table on us. The question on the table became, “Are you great entrepreneurs?” Fifteen minutes later, our meter was about to run out, and since Stewart and Gilman had no fund yet, we were thinking the cost of a $40 parking ticket outweighed any more time at the table and got up to leave.
It was then that Stewart pulled a handful of quarters from his pocket and said, “You can’t leave yet, we haven’t talked about the terms.”
“Don’t you need to have a fund first?” I naively asked.
“We’ll get a fund. The only question is whether Ribbit will be the first deal for A-L.” Those were strong words - risk taker’s words. Ted and I liked this kind of aggressive, risk-oriented, go-for-broke attitude; found that Stewart and Gilman “got Ribbit” - and so took a risk ourselves by signing a term-sheet from the then un-funded venture partnership.
Thank you Stewart, and thank you Gilman, for taking a risk on Ribbit. We’re very happy that we took the risk on you, and delighted that together we were able to be the first money out of your first fund, and the first money back!
Crick
July 30th, 2008 at 7:03 am
Great post Stewart. I guess it took no time for the the geek and the gadfly to spot another bunch of geeks. Eventhough Gilman’s push towards the triple play ( Platform, consumer and enterprise play) pushed engineering way beyond its limits and endless sleepless nights and working weekends we had fun along the way in putting this together and taking it to the market. Gilman’s role on the board was key in shaping us up and keeping us focussed on the product. In all I had to admit it was worth taking the risk that we took to get here.
Thanks to the Geek and the Gadfly!
Nara
August 2nd, 2008 at 4:21 pm
Congratulations to Ted and his team, and to ALP!
Now, when Patty puts someone on hold, they’ll be treated to a British female voice sternly advising “your CALL is in a QUEUE and will be dealt with SHORTLY.” :-)
August 3rd, 2008 at 11:21 pm
Thanks for sharing this, Stewart. Giving me some food for thought for things we’re dealing with. Again, thanks for visiting us in Paris, even though the bill for that breakfast was pretty steep! Best regards, Michael
August 5th, 2008 at 4:34 am
Stewart,
Great news and great to see you back in the startup space! It always takes a great first deal to be legitimized for further great things.
Gunther
August 12th, 2008 at 12:25 pm
It sounds like you all developed a pretty strong camaraderie in the last 2 years. What is the key to identifying whether your business partner or investors are the right people for you. Can you be absolutely different people, but have a shared vision for success, and make it happen. At what point, can these differences boil over? That’s a tough question to ask and is circumstantial but any insights?
Ryan
www.gothamtechminute.blogspot.com/2008/07/must-read-business-thriller-answer-by.html