Bill Rainey seems to relish the underdog role and that's probably a good thing, considering the immense challenges of his job.

As president of Vonage Canada, an organization that is cast in the role of David against the domineering Goliaths of the Canadian telecommunications market, he certainly has his work cut out. Yet, you'd be hard pressed to find many business leaders as upbeat and combative as Rainey, a man who pulls no punches in discussing his powerful rivals, including his one-time employer Telus and recent sparring partner Shaw Communications.

Since the one-time Xerox Canada sales rep was hired by Vonage Holdings Corp. to start up Vonage Canada two summers ago, the organization has grown from one employee to 160 employees.

In recent months, the Vonage headlines have been more about the U.S. parent company's bungled initial public offering in May on the New York Stock Exchange, shareholder class-action lawsuits related to the IPO, and the battered Vonage shares and patent infringement lawsuits than the company's business of marketing broadband telephone services known as VoIP (voice over Internet protocol).

Larry MacDougal, Business Edge
Bill Rainey seems to relish the underdog role and that's probably a good thing, considering the immense challenges of his job.

But Rainey downplays the issues facing the embattled parent company as he focuses on the task of marketing the innovative VoIP technology, winning market share in the cut-throat telecom market and, as he puts it, converting Canadian consumers into eVONgelists.

1. What career did you aspire to as a youngster?

"I was very clear in my mind what I wanted to do very early on. I wanted to be an orthopedic surgeon. I wanted to work with children when it came to kids that couldn't walk or kids who needed reconstructive surgery and things like that. I had very good marks in university, but I just couldn't get them high enough to be able to get into medical school. I was very disappointed and went and worked on drilling rigs and seismic crews to pay off all my student loans. Then, I went to Europe for a year. At the time, I had the Volkswagen van, the beard, the whole bit. When I came back from Europe, I realized that I didn't want to go into a master's program with my biology and genetics degree. So I got a job with Xerox. It was the company that put its mark on me when it came to work ethic, professionalism and communication. It's a company that is known for those things and I got that little 'X' tattoo. I believe my career has been an incredible journey all based on starting with Xerox because I couldn't get into medical school. I just get turned on with technology. It is so much fun and always changing. There's so much you can do in leverage with technology in so many different ways."

2. What are your early memories of working in technology as a sales rep with Xerox Canada in the late 1970s?

"Xerox was actually the company that invented the computer, but didn't do anything with it. I remember when we got the first computers in our office in Calgary at Xerox. They were these great big huge things with tiny little screens. And we thought, 'What a pain to go through all this stuff, it's like an electronic typewriter, it's so-o-o-o cumbersome.' You had to be a weightlifter to carry these things. And of course today, computers have changed the world. You and I would be completely dead if we didn't have access to a high-speed Internet connection where we can go and have the equivalent of a thousand Encyclopedia Britannicas at our fingertips. In those days, I was just a junior salesperson, banging on doors, selling photocopiers and paper."

3. You spent five years with Telus in the 1990s. Why did you leave that company in '99?

"While I was there, they had carved off a business called Telus Advanced Telecommunications. It was a data company. And there were about 10 or 12 of us who were selected to build out this company and make it more like (Telus) Mobility with a separate board of directors, a separate business unit and just go crazy. Well, we did. And we did it so well that the telephone company went, 'Well, you're doing things very differently than the telephone company and we don't like that.' So they brought us back into the telephone company and then everybody left. With no disrespect to past employers or monopolies, that's just their culture. It's micro-management, it's control and things just go along at a monopolistic snail's pace. That's typical of very large companies and government. So unfortunately a lot of extremely talented and driven people left the organization and moved on. We said, 'We don't want to be part of that old monopoly thinking, we want to be more entrepreneurial and grow this wonderful company.' So a few of us left at that point, hooked up with a gentleman by the name of Bob Wolfe and we started up a company called Group Telecom (GT Group Telecom Services). I was one of the original six executives there and we built Canada's first gigabit ethernet-based, fibre-optic network across Canada."

4. How did you hook up with Vonage?

"They came to me. The Americans didn't have a lot of connections into Canada, so they did a full-blown search. They selected me and it's been a real love affair. They like me and they like the team we've put together. We love them and it's all part of our culture. It's very entrepreneurial, extremely fast-paced and it's leveraging a disruptive technology to the advantage of a customer. I remember sitting in my den at home on June 28, 2004 after getting the job. I was going, 'Oh my gosh, what am I going to do to start a huge company in Canada?' The first thing I thought about was what our vision was going to be in Canada. Drawing on past experiences that worked or didn't work, I thought, 'We are going to create a new benchmark of service in Canada for telecommunications, we're going to call it the Vonage Canada experience and we're going to take service to an experiential level.' What do we mean by that? It's why you and I go to Starbucks and spend $4 versus $1 for a cup of coffee. It's not the coffee. It's the experience that you want to go through. We believe that Canadians have been overcharged and underserviced for decades (in telecommunications) and there's this huge void in service that we wanted to fill and create a whole new benchmark."

5. So how did you get moving on that vision?

Bill Rainey

"From that vision, which is pretty lofty when you're taking on the giants, it starts with the genetics of the people you bring. So we began to hand-select people and we ended up getting our VP of sales and our VP of operations who I'd known from the past and I had absolute trust in. We sat in my den and we drew pictures and we created and then it started to grow. And my wife said, 'Enough's enough, get out of here, you're making too much noise at two o'clock in the morning.' And we went to Tim Horton's and Tim Horton's became our office. And then as we got big there, they said, 'Get out of here, you can't have the executive corner anymore.' So then we got our space in Mississauga. When we moved in, we had a Costco table for $100, we had beach chairs and one cellphone.

"And now, 18 months since we officially launched, we have about 160 employees, 33,000 square feet and growing and now we are self-sufficient in Canada. We have our own call centre in Mississauga, we speak 16 languages and now take all of our calls for Canadian customers. It's a very dramatic growth."

6. What's the key to selling Canadians on an innovative technology such as VoIP?

"People feel that they haven't had choice and have not been in control. So what we've given them is a technology that allows them to be in control for the first time. And they get control from three key aspects. First, they get to pick what high-speed service they want because we're agnostic and we don't care if it's cable, DSL, high-speed wireless or satellite. Secondly, they get to choose their equipment, whether it's a wireless router, a wired router, a terminal adapter or our new little V-Phone.

So being agnostic to access and to equipment was very important to our strategy in putting our customer in control. The third piece was the tool to let them do all that - their online account. As you go on the Vonage website and log on to your account, up comes everything you need in the way of a tool to manage your account. Every call you make is live. You don't have to wait a month for your phone bill. It's sitting right there for you to look at and manage."

7. Do you think the traditional local phone companies in Canada have become complacent because of what you describe as a monopoly?

"Very much so. They're wonderful companies that Canada is very proud of, but when you're in a monopolistic environment, there's nobody prodding you from behind to be innovative with a new product. When was the last time the telephone companies came out with something really truly innovative? What they're wonderful at is managing a network and taking other technologies and building that into what they do."

8. When it comes to VoIP technology, who's the competitor that causes you to lose sleep at night?

"It's not the phone companies, because the only one that has launched this product is Bell and they have really not been aggressive or even used it. Even though they have lost some significant market share in Quebec, they have not leveraged their own voice over IP product with their digital phone. Alliant (Communications), MTS (Manitoba Telecom Services) and Telus have not even launched a VoIP product. They're all saying they are, but they're being extremely slow because we believe where they want to win is in the regulatory world, to use the VoIP ruling (by the CRTC that requires fixed VoIP providers to provide the same level of emergency telephone service that is provided by consumers' existing telephone companies) and the forbearance rulings to actually stymie competition. The cable companies have moved quite quickly, including Videotron - who had a customer base and a language advantage to aggressively move into Quebec - Rogers (Communications) in Ontario and Shaw in the West. So there's no question that the big, big movers and shakers for us, that we want to compete with, are the cable companies."

9. Are you pleased with the progress Vonage Canada has made in this competitive environment and what is your market share for VoIP?

"Now that we're public, I can't provide any projected numbers. The only numbers we supply are global numbers because we are a global company that uses the Internet. So Vonage is at about 1.7 million customers globally, which is just about all in North America. We don't split those numbers out by country. But we're absolutely thrilled with the progress we've made."

10. What's your biggest obstacle in moving your business forward?

"Actually, it's a very classical one. When you move past the startup mode, which we're quite a ways past now, and you go into a classic high-growth mode, the biggest obstacle is educating the public about what we do. Once you get your name recognition and your brand out there so people know who you are, then our biggest challenge is how quickly we can educate a country on the advantages of voice over IP as a new technology. It's no different than when the car was invented, or the cellphone or the Internet. So we have to educate everybody on the advantages of what voice over IP means to them in their personal lives and their business lives. So that's why you see all the advertising and that's why we have 1,300 retail locations with wonderful brand partners across the country. We've got everybody helping to get the word out and educate Canadians on VoIP and what it means to them."

11. What's the big advantage of the service Vonage Canada provides?

"The first and really the biggest thing is that people need to understand the difference that a network makes.

"If you're a telephone company or a cable company, you have a regional network. Our network is the Internet. It's global. Our service can be used anywhere on this planet where you can get a high-speed connection, whether that is cable, DSL, high-speed wireless or satellite. You can still access and use your Vonage service with your telephone number. That's the huge difference. It means that if you and I are talking and I'm in Europe, it's a local phone call. So the Internet has made long-distance go away."

12. What's the response been like for Vonage's V-Phone that you recently launched?

"There's been a huge response. It was targeted in a number of key markets like education and kids, obviously, because it's cool. It's like a neat little toy. You can hang it around your neck. You can put it on a keychain. Your phone goes anywhere. It's a 256-megabyte memory stick and we'll have them coming out in much larger quantities that you can keep your documents or keep your phone lists on. So it's a multi-purpose device and you can plug it into any computer anywhere and it self-loads the software so that the computer doesn't need anything."

13. Shaw recently came out with what has been described as a "quality of services enhancement fee" of $10 that has been charged to VoIP customers. What do you think of that?

"We were told about it by numerous customers who phoned us and asked, 'what is this?' We wanted the facts so we went to Shaw directly and asked them. And they wouldn't tell us. We've escalated that (issue) to the CRTC, that was posted on their website and they're investigating that on our behalf. Shaw has made it public that there is a legal case now between Shaw and Vonage because of what we were saying in the press. And we countered right back (with legal action). Of course, I think we will (settle it). Cooler heads will prevail."

14. Do you anticipate the big telcos will go to great lengths in the future to make life difficult for Vonage Canada?

"Oh, absolutely, because any kind of disruptive technology and aggressive cultures that focus on increasing customer service and driving innovative products are a threat to their customer base. And they're certainly not going to sit by idly, nor would I if I was running one of those companies. Now, some of the telephone companies have dragged their feet, no question. They won't go out of their way to make life easy. But on the other side, some of the telephone companies have been incredible to work with. There's a retail and a wholesale side to our business. We compete with the retail side of their business, but we buy our services - our access to the networks - from the wholesale side of the telephone companies. So while Vonage is spending millions of dollars for leasing network services from one side of a telco, they're in mortal combat on the other side. And of course all we hear about is the side that we compete on. They never want to bring up the side where we're working very nicely together and we're paying them a lot of money for access to their networks."

15. Can Vonage Canada thrive and meet its goals in the current regulatory environment?

"We're very aggressive with the regulatory world and getting the message out there that the minister of industry and the prime minister's office say that small business is the engine for Canada. We all know that. If they truly believe there should be sustainable competition in telecommunications, then we all believe strongly that there will be a regulatory environment that will allow that to flourish and it won't put current monopolies that currently have 97 per cent of the local marketplace in even more control."

16. Do you still personally use your local telephone company?

"Actually, I do because we have an alarm right now and not all providers of alarm services are VoIP-capable right now. Of course I've got two Vonage lines at my home.

But we're working with the suppliers of alarm services to build out their VoIP-capable services and as soon as I get that from my current supplier, I'll drop my Bell line."

17. What's the most important lesson you've learned about running a business?

"To treat people the way you'd like to be treated, and if you honestly do that, the payback is in spades. If you do that, it opens up a whole new less hostile approach to business based on trust. Your turnover goes down. Creativity goes up. To me, it's just one of those life lessons that says to be nice to people."

18. If one of the major telephone companies wanted you on their side, what would it take for them to lure you over from Vonage?

(Chuckling) Oh, I've thought of that, if that day ever happened. I wouldn't be against it. My genetics is built around a more entrepreneurial spirit and for me to move over to a large company, especially if it was a telephone or cable company, I would have to be put in a position that would allow me the flexibility to actually change the culture of that company to be much, much more customer-focused. Can I do it? No question. I've done it twice before."

19. What's the best thing about running Vonage Canada?

"As much as I'd like to say that it's dealing with people every day, with employees and watching the sparkle in their eye, what turns me on the most is when I see a customer understand how what we do with voice over IP can really change their world personally, like grandparents having a virtual number and saving a whole bunch of money and being able to talk to their grandchildren."

20. What do you think you'll be doing 10 years from today?

"I hope to be doing the very same thing. What I love to do is to take companies, put in awesome teams and go out and do things that weren't there before and to build value so that people get more than what they had before. And whether that's a technology or some kind of service, it's just so exciting to be able to build small companies up, give people jobs, leave a legacy where people look back and say, 'Wow, I learned something, I've got life skills and there are things I learned at Vonage or Group Telecom that I would not have learned before from another company.' I'm just going to keep going because that's what I love to do. We're just going to keep going full speed."

Bill Rainey

* Title: President, Vonage Canada.

* Born/Raised/Age: Duncan, B.C./ Calgary/52.

* Lives: Oakville.

* Education: University of Alberta, bachelor of science; University of Calgary, certificate of management.

* Career: Rainey was appointed president of Vonage Canada in 2004. He has spent most of his 28-year career working for technology companies, starting as a sales rep with Xerox Canada (1978-88). He has also worked for Royal Trust (director of marketing), Telus (assistant vice-president of sales) and GT Group Telecom Services (senior vice-president of commercial services).

* Pastimes: Scuba diving, golf, reading history, music.

* Recommended book: The Art of War, Sun Tzu.

* Boyhood hero: Batman.

* Drives to work in: BMW X5.

* He won't leave home without: His iPod, featuring the album Ridin' with the King, by Eric Clapton and B.B. King.

Vonage Canada

* Profile: Vonage Canada is a provider of broadband telephone services known as VoIP (voice over Internet protocol). It is a division of Vonage Holdings Corp., a New Jersey-based company with about 1.7 million subscribers in the U.S., Canada and the U.K. The parent company has about 1,400 employees, including 160 in Canada.

* What's New: Vonage Canada recently launched the V-Phone, a tiny gadget that fits on a keychain with the capability of essentially transforming a personal computer into a telephone.

* Headlines: Vonage (NYSE:VG) has been under fire over its controversial initial public offering in May that has resulted in shareholder class-action lawsuits and the collapse of the company's shares from an IPO price of $17 US to $6.95 recently.

* Web Watch: www.vonage.ca

* Canadian headquarters: 2660 Matheson Blvd. E., Mississauga, Ont., L4W 5M2.

* Phone/Fax: 416-907-6100/ 907-6101.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)