Entrepreneurial inspiration came for Jorge Granados in a phone bill. A 25-year veteran of the telecom industry, Mr. Granados was running a Miami-based software development company that sold point-of-sale software to Latin America and fielded long-distance customer-service calls. Noticing that phone bills were skyrocketing, Mr. Granados began experimenting with the then-new voice-over-Internet protocol (VoIP) as a more cost-effective way to return phone calls – and Latin Node Inc. was born.
The company's revenues that first year were a meager $24,000. But fast-forward to 2004 – after persistence, niche focus, and solid market timing – and the telecom-company-that-could is now producing revenues of more than $26 million. With a five-year growth rate of 107,993 percent, Latin Node ranks No. 1 on the 2004 Hispanic Business Fastest-Growing 100® directory.
Founded in 1999 by Mr. Granados, Olivia de la Salas, and Stephan Nathusius, Latin Node is a wholesale provider of Internet voice-communications service for major providers, such as AT&T and Bell South. The company started with $925,000 from friends and family, and a $1 million loan in cash and equipment from Cisco Systems, an Internet giant that was funding similar start-ups at the time. Using a Colombia-based contact, Latin Node landed its first contract with Telecom Colombia, a nationally owned telephone operation.
Though profitable in its first year, Latin Node faced two major challenges: It was a small, Hispanic-owned company in an industry ruled by giants, and it was committed to using innovative new technology.
"Back then it was a laughing matter for a Latino company to get into the telecom industry," says Mr. Granados, Latin Node's CEO. "In 1996, I could count on one hand the number of people who knew about VoIP. The technology was in its infancy."
Latin Node's break into fast growth came with a sharp turn of events in the telecom industry. Between 2001 and 2003, several Fortune 500 telecommunications companies crumbled under the weight of faulty management, corruption, fraudulent accounting, and bankruptcy. At the same time, Latin America had begun liquidating several state-owned telecommunications companies, further opening the market for long-distance providers.
Facing the fallout and deregulation of some of the largest telecom companies in the world, long-distance providers began looking to smaller, more transparent companies to carry their calls.
Today, Latin Node employs 44 bilingual representatives throughout Latin America, owns termination facilities in Guatemala, and prepays legal contracts with national suppliers in exchange for discounts. The employees are committed to customer satisfaction and quality service, and the discounts equate to lower calling prices that give Latin Node greater competitiveness.
Mr. Granados also credits the optimization of VoIP technology, which uses the same technology that transmits e-mail to transmit voice. The benefits include lower cost per long distance call and lower infrastructure costs for the provider. "We provide the same service as major companies with a device that measures 3 feet by 3 feet, instead of 20 feet by 200 feet," Mr. Granados says. "We use one-tenth of the bandwidth; our company operates with one third or less of the employees. It's a matter of productivity."
VoIP currently makes up roughly 15 percent of the long-distance market and is expected to grow to 55 percent of the market by 2009, according to some industry estimates.
Craig Clausen, senior vice-president of New Paradigm Resource Group, a telecom research and consulting firm, says Latin Node's timing and focus is key. "They're capitalizing on a fast-growing Latin American market that is highly profitable," says Mr. Clausen. "And on the cost-effective transition from circuit-switched networks to packet networks. The results are a company effectively offering the right technology at the right time. The company is a unique, successful attack on the market."
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