Interview with James Graham, Founder of Community Phone

Transcript

Ledge: James, it’s great to have you on the show. Thanks for joining us.

James: Ledge, thank you for having me. I really appreciate being here.

Ledge: I came to know of your story in a roundabout way, and I thought it was super interesting and it would be fun to have you on and tell the story of Community Phone and everything that came from your work. Then kind of tick you up to where you guys are now.

You can introduce the company a little bit. Tell the listeners what it’s about and give your own personal take on that story.

James: Totally. The problem is that phone companies have been truly terrible for a while. They’re hard to work with, they’re hard to get a hold of, and they have inflexible prices that are really, really high. I like to think of there being three major religions in the United States. Number one is the NFL. Number two is Christianity. Number three is sort of, United we Stand against Comcast and Verizon.

We’re really trying to help address that third world religion or US religion. How we do that is by buying in bulk – minutes, text messages and high speed gigabytes – from all the major carriers around the world whose networks already work. We match you – a subscriber or a business or a state government or a trust or whatever – with the best possible plan for you in a streamlined, simple way.

I’m happy to go into a lot of the current business stuff in a moment, but how we got there is really more a lesson in not really having much of an idea of where we were going but more just hanging on.

I initially started a previous company that’s called Café Computing, or CAFFEI.net. Caffeine is the fastest way to establish a TLS connection on iOS, to make HTTPS much, much faster.

At the time, I was running a development consultancy out of Boston, and we observed that a lot of our clients would forgo the use of HTTPS for one of two reasons. The first one is that a lot of them didn’t know how to set it up. A lot of the developers were more familiar with writing animations than getting the right. Then, secondly, that it would slow down the application. It would actually increase the latency because you have those additional roundtrips and so on.

So we ventured, in the form of Caffeine, to remove that dichotomy. To improve the performance and security of applications. We’ve created this drag and drop framework that we dynamically link into your application that would use a protocol entirely separate from HTTPS. It uses Daniel J. Bernstein’s NaCL. Perfect for its secrecy, certificate pinning, all out of the box. It would reduce round trips on mobile networks to improve the latency.

We saw this as a solution for long tail user privacy problems. We thought, all apps, all startups will think this is the second coming of Christ in a handbag because they’ll finally be able to get their application secure and performant! But really the only people who really were interested at all were already very large and established applications that saw it as a causal method that would mean reducing latency to improve revenue.

Our whole lives at Caffeine became helping already massively established retail companies – selling shoes or selling plane tickets online – squeeze out an additional 3.5% more per month. I’m like, they don’t need help. We got in the business to try to help the small guys have the same privacy parity as the next big Red Hat, or whatever. The only people who would buy it are the most filled with steroid, capitalist corporations you could think of. That doesn’t pull the heartstring.

We kept on thinking, this is wrong. We kept on seeing all these wrong things. For example, none of the product managers of any of the apps that you use really care at all about data usage, or battery life. As a consumer, that’s what you paid for.

You pay in the form of your electricity bill or you pay in the form of literally gigabytes to your phone carrier. So much so that, even in a 1:20 ratio, 1 part data that you see as use on your screen and 20 parts all the third parties they stuff into your application just sort of sucking up your data and constantly turning your radio on and off – which by the way is the number one cause for battery life ‘badness’. It’s not actually a problem of battery life on the phone, it’s a problem of a far overactive network from all these frameworks that we don’t see.

Ledge: Using it terribly. A very inefficient usage of a resource.

James: Yeah. What’s going on? The network’s always free. Right? Well, the problem is, users aren’t attributing it to those apps. They blame themselves or their phone company or their device OEM. So there’s an attribution problem.

We decided between educating the market or just going directly to the consumer. We tried to repackage the benefits of Caffeine in a lot of different ways. One was a VPN. Then we tried, actually, what if we just imbued these benefits literally in Layer 3, Layer 4 as a wireless carrier? What if we could bring to bear actually saving battery life, improving performance, reducing data usage, just in a SIM card?

I had to really quiet my engineering mind and just try to prove out, would these benefits actually be salient to users? Do people care enough about this to actually switch their SIM card, or to call a different phone company when they have a billing question, or to change phone companies? Do they actually care enough or is it still all lip service?

In bringing this to market, what we started to do was just really talk to other engineers about this, because that’s who we knew. We just knew engineers. All of them who could understand their benefits were on their parent’s plans. You can’t beat free, because it also comes with hugs and kisses and care packages. We can’t compete there.

What started to happen at the same on the other side was, a lot of our older friends – professors in the Boston area – would come to us and say, “Hey, man. I’ve been on Verizon for really since I got a phone in the late ‘80s, early ‘90s. I’m paying them $200 a month and I think that’s a whole car I could be getting. Can you help me?”

For the first like four months, five months of this – and this is embarrassing – we’re saying, “No. Talk to your kids.” We can’t help you enough, basically is what we’re saying. Like, you need to go to that support group, talk to your kids, stay out of the streets. Just stay safe out there and online.

But eventually this just kept happening. These people, who were older than 40/50 years old and really were not as familiar with technology as we were, kept asking us for things. Eventually we relented and were like, “Sure. We’ll let you on.” Their money’s just as green.

What we started to realize was that the problems for these types of people are much more severe in nature, even though they’re less technical. It was a personal discomfort, at least at the start – and I’ve actually learned a lot about myself recently – and it’s actually a much more satisfying problem to be solved. Now we take people a lot of the time who have never had a smartphone before. This even includes a Nobel laureate. We get them onto the modern internet.

The benefits of that are magical. They’re harder to measure, but they’re magical effects. They share discovering the mobile internet, discovering Uber. For the first time, we help a lot of these older people who are more afraid or less inclined to experiment with technology, harness its power – whatever that means to them.

So our real ‘mission’ today is helping people live a better life via that connectedness, rather than just providing the connectedness.

It means specific goals. “I want to use Lyft because it’s four times cheaper and I can see my mom four times more a month,” or whatever. Like, “Sure. we’ll put that in a drip campaign and check in with you three months after you’ve joined just to make sure you’re using it. We’re here to support you.” That’s not just a good thing to do, it’s selfish because we can attribute a lot of our growth to referrals. It just makes sense to funnel a lot of our marketing dollars into higher quality customer service.

That’s sort of where we are today as this nationwide cell phone carrier. We carry all the devices as well. We’ve got iPhones and the Androids and the Huaweis and all those things. That’s what we do. We’re just a friendly phone company.

Ledge: That story is fantastic. You touch in the engineering puddles and the customer experience stuff. You could not possibly have wound your way to that in a future-looking pitch without having had that experience. It’s just a serendipity kind of happy accident.

James: You’re really nice to say that to me, otherwise we would start worrying about how much time did we waste, or whatever?

I totally agree with you, and I guess the afterglow of that ‘experience’ – as if it ended – is that there’s a lot of skepticism when we hear people pitch things in this very tightly knit way. Like, “This is the future. This is where it’s going. This is why.” It’s much messier than words will let on. Words try to approximate nature but they aren’t nature itself. I think a lot of people get hung up on the descriptions rather than the uncertainties between the descriptions, which arguably is where the real opportunities are.

Ledge: What did this look like, putting together this company? You kind of jumped from lab story to making SIM cards, to now we’ve got a customer service and CX sort of focus. There’s got to be some human changes and change management that went into that. I’d love to hear the story of that.

James: It’s really messy. First, telcom is a very old boys-ey world. It’s not as accessible as SaaS. In order to spin up an ‘instance’ you have to have paperwork, there’s stuff with the FCC. There’s inherently a bit more red tape.

I have no telcom experience, and so the first [00:11:22] is like, we’re going to look at every deal that was ever done in the industry really since 2000, just to get a footing on what is actually going on.

What we found is that there was a big bubble of telcom startups between 2000 and 2008 – after the first dot com. Disney Mobile was a thing – Mickey Mouse ears on the phone. ESPN Mobile. Amazon Wireless. All these foreign companies trying to break into the US. Big brands trying to open up tertiary cash flows by monetizing just their name in these more commoditized services or products – and some of those services are commodities.

We found one deal with a company called NETGEAR. They make the networking hardware for consumers and businesses. The interesting part in this deal was that they sold to businesses. Their virtual carrier service still existed, pulling down gigabytes from the Sprint network and then allowing businesses to re-appropriate them for whatever their need. Whereas all these other carriers were trying to compete just on new devices and prices to the consumer and they went the way of the dodo. This company was still around.

The second interesting part with that deal was, the rights and software were held by neither Sprint nor NETGEAR. It was held by this third-party company which were more people that were just engineers and deeply interested in getting telcom right.

We were able to get an exclusive done with them to do their consumer. So, not only could we go to market much faster because they had a lot of the boilerplate already written, but from Sprint’s point of view at that time we could enjoy the unit economics on gigabytes typically reserved for a NETGEAR size. That’s how we were able to get it done.

I’m very biased, but I think that that’s the first instance that there’s been a bootstrapped, nationwide cell phone carrier in the United States. It was because we found that secret. So we were able to just recycle that capital immediately – which we needed otherwise we would have died – and just keep living, basically.

There’s a lot of weird supply chain. Getting SIM cards that come from this large Mexican company. It’s all very spider-webbed and interconnected, but it’s just a matter of looking into everything that you can possibly… All the deals. We just got lucky. We just found a deal that happened to be carrying a lot of information about what was possible.

Typically, these carriers, they don’t care about thousands of subscribers. Like, Verizon loses 2.5 million subscribers a quarter, so they won’t even smell your existence unless you have millions and millions and millions of dollars in capital just to get the deal done. We have like thousands of subscribers today, and we have been in business – it will be our birthday on August 15th. Our first birthday. We’re just meaningless to them.

The world is massive. All you need is one person to say yes. We weren’t optimizing for getting the most yeses per number of asks or something. You just need one yeah and then you’re in.

Ledge: You were whale hunting. This is deal whale hunting. It may never have existed. This is a unique level of entrepreneurial crazy because you’re really looking for the only thing, the one, and it may not exist. This sort of research environment, I don’t think you could pull that off without an engineering/research sort of mindset. You have to love that.

James: I guess. It sort of presents in the moment. It presents itself just in the form of pain. Only retroactively would I use a word like ‘love’. Obsession maybe is better.

Same with investing, by the way. I just mentioned to you we just raised our seed round.

A lot of this comes from how people grow up. While you’re growing up, you have institutions and authorities all around you whose sole job is to filter the raw world for you and to give you the labels for you. It’s very uncomfortable if you get all these rejections – if you’re raising money or trying to find carriers or what have you – because you’re dealing directly with the raw world and you don’t understand the import of that rejection. If there is an import. Does it have any information? Am I totally incompetent or no? It just all has to be self-described.

The beautiful part is that, similar, you just need one. With investments or whatever you just need a couple of good partners and you’ve done your round. But of course what’s reported in the media is not like how many nos they received or how long they’ve been fundraising, it’s just like it happened.

So there’s such a survivorship bias from the world’s point of view I think because we just see the successes. Then when we go and we do the thing and we start encountering failure we start thinking, oh, this is different. I must have something wrong compared to two of the people that I read about. It’s like, “No man, just keep pushing. You probably just… Listen carefully, but just keep doing it.”

Ledge: Right. Keep doing it because you refuse to fail. Absolutely. You’re probably learning what every salesperson learns, and that’s, I need to eat nos for breakfast with milk on. That’s how it’s done. I need a lot of targets, and I need to get to know in the quickest way possible.

James: Right. I know that you’ve done a lot of stuff in sales. Hopefully you can get a no. As you will, I’m sure, understand, no is the second best answer.

Ledge: No is the second best answer. The worst answer is maybe.

James: Yeah. Or, “I like you as a person, let’s meet again. But I’m not going to close…” No, they won’t. It’s not closing. They have no interest.

Ledge: Right. You have to get the confidence together to just know that anything but a yes is a no and put it away because you need them to call you back later, because you don’t keep checking back. I think the siren song of the maybe is what kills so many people.

You may just be in a space where you’re selling or pitching or whatever, you’re putting a thing out there that will never work. So you do have to make sometimes the decision of, what’s my tolerance for this and at what point have I determined that in fact the equation will never work?

That’s the thing. The crazy entrepreneurs that win push it a little further than anybody else.

How do you handle the whole being a technology guy and somebody… You’re a pretty big thinker, I can tell. You’ve got to run a company. You’re a CEO/founder and there’s 80% mundane sort of running company things that you must have to do that don’t scratch the itch. How do you fit that all together, get it done to be that executive leader now? You’re a company.

James: Not well.

Ledge: Right.

James: The first step is, I probably have even those internal metrics mislabeled. I’m probably thinking that I am doing a good enough job, or at least understanding the extent to which I’m not doing a good enough job already? I’m probably wrong on that.

I probably don’t even know consciously what I’m allocating to the described mundane or necessary important stuff of following our process versus the more open-ended stuff. I’m probably not even instrumenting that well enough first.

Secondly, I think the best answer that I can come up with – and it’s maybe not even a good answer, hopefully I’ll have a better one for you later – is to find people who already have a very intense interest in some component of the business. Whether that’s the customer success, or a specific part of the stack, and who have a real clear idea or set of questions for what it could become and why and how that fits into our mission as a business. I just try to have them give me instructions.

But then it becomes, how do we find those people? That is so hard. They need a product like Gun, or whatever, because finding those people is probably one of the most important things, if not the most important thing. But once you have them, what I try to do is I listen real carefully and I’ve got to shut up more than I have been.

Ledge: That’s absolutely right. That’s my own experience. I think you collect great people as an entrepreneur, and you take them with you and you continue to build things together. It’s all who you know, whatnot, in that sort of access kind of way. That we now share brainwaves. The reconstruction of that psychic gel would be so cumbersome that I don’t ever want to do it again, just come with me to the next one.

James: Right. You’re in this boat and you guys are going together. One of them might have started smelling halfway through the journey, but he’s still great at whatever.

Ledge: You get to the people that you just start keep bringing along and they’re just like, “I don’t even know what you’re talking about but, sure, let’s do another one.”

JAMES: “I know this has got to get done over here, and you’ve got to stop bothering me. I respect you, but you just got to stop talking and let me do my job.” It’s like, “I appreciate you for saying that. Thank you.”

Ledge: A lot of open communication. Not dissimilar to marriage.

James: I think. I’m not married but I think that that is a great analogy for a lot of things in business.

Ledge: You’ll see soon enough, eventually. Before we go, I want you to give a clean pitch of Community Phone. I think this is awesome. I never heard of it until we got introduced, and people should know about your product. I think you guys are doing some awesome stuff. Just lay that out there because I want the listeners to hear about it.

James: Totally. Also, I think if any of the listeners come from here they should definitely let us know, because we have free months and so on available.

If you’re paying more than $35 a month for your cell phone bill, or you are upset with your coverage, or you don’t like the way your phone company treats you and know that you deserve a bit more respect, we’re definitely worth looking into. Community Phone.

We have the exact same nationwide coverage as all of the same networks that you use because we use them, except we get much cheaper rates because we buy in mass bulk. We do a lot of prediction to understand your usage over time, and so are able to get your prices much, much lower because we’re not overbuying from there in an ongoing basis.

All our plans are month-to-month with no types of contracts at all. We have all the GSM and CDMA networks. We sell iPhones and Androids. You can bring over your existing phones. It’s just a friendly phone company, finally, is available.

That would be it.

Ledge: That’s awesome. Well, James, I’ve really enjoyed this. You are obviously a brilliant guy and we’re going to have to pick your brain some more on some other more esoteric things in the future.

James: I appreciate that, Ledge. Again, I’m good at making it maybe seem that way, but only a couple of questions away from me being exposed.

Ledge: All I do is ask questions. Thank you for spending time with us.

James: Thank you, Ledge. I really appreciate it.