Another Skype Partner Acquired: VAPPS Goes to Citrix

We have often reported on HiDef Conferencing as a leader in high quality voice conferencing. It’s a service built around servers that specialize in connecting up to 500 conferencing participants from either the PSTN or Skype, and managing the call participants’ level of participation. Should a participant be connected by Skype, they will hear all other Skype participants across their HD Audio service with all its benefits for providing better voice clarity (thus, the name HiDef Conferencing).

But HiDef Conferencing’s owner, VAPPS Inc. has not let their success depend solely on Skype activity; they have been wholesaling their conferencing service to other conferencing and collaboration service providers. As one example, I often participate in (but do not host) conference call and desktop sharing sessions involving Citrix’s GoToMeeting service and recently noticed that these calls were using the VAPPS service for provisioning the audio component of the calls.

Friday evening New York Times blogger Claire Miller reported that VAPPS venture capital partner, Azure Capital Partners, had concluded a deal to sell VAPPS to Citrix for $26.6 million plus $4.4 million in bonuses, provided founders Ben Lilienthal and Jerry Norton and their team meet certain goals. For Azure Capital Partners this provides a 3.6 times return on an 18-month investment. From Claire’s post:

Azure first looked at Vapps in 2006, but did not invest until the spring of 2007. First, they asked the company to change their business model. It used to focus on selling equipment. Instead, Azure wanted it to charge by the number of minutes people used the equipment to talk because they knew that number would grow exponentially, Mr. Weinstein said. At the time, people talked using Vapps’ technology only a few million minutes a year and now pay for half a billion minutes a year.

Acquisition is becoming the primary exit route for today’s start-ups. Build a business and service that can readily complement another service that has capital for acquisitions and you may find yourself being acquired. At least this is one service that is not going to Google or Microsoft. On the other hand Citrix has been a leader in developing virtualization and collaboration technologies along with related services for over 15 years.

Congratulations to Ben, Jerry and the entire VAPPS team on this achievement. It has been a pleasure to watch, and to report on, the evolution of their service over the past couple of years.

For Andy Abramson’s Comunicano Internet marketing agency this represents a third client acquisition over the past fifteen months; previous ones being IBM Lotus Software Group’s acquisition of Unyte and Logitech’s recent acquisition of SightSpeed.

Related posts:

• Fierce VoIP’s Doug Mohney also comments.
• HiDef Conferencing Aids Business During Credit Crunch

Full disclosure; in 2004 the author provided business development and general management services for Citrix partner Runaware, whose Test Drive service, built on a Citrix virtualization platform, powers many online software evaluation programs, including Microsoft Office.