Steve Waldis, Synchronoss Technologies

In December 2001, Telephony picked Bethlehem, Penn.-based business process outsourcing provider, Synchronoss Technologies as one of the top 10 companies to watch in 2002. After all, the small start-up had come out swinging by landing contracts with Tier 1 carriers to provide outsourced order processing and activation. But by mid-year, just as the company was coming out with a major new release of its ActivationNow platform, it was starting to look like there soon would be only nine companies left to watch as Synchronoss struggled with circumstances mostly beyond its control. Well, we’re still watching, and if things continue to go well, maybe 2003 will be its year. The following is a conversation with Synchronoss CEO Steve Waldis as he looks back on a year that could have gone either way, and ahead to the year we all hope this will be.

What was the biggest surprise that affected your business for better or worse in 2002?

As crazy as this sounds, the events, which were negative, were also, at the end of the year, the most positive ones. The biggest surprise was that within a six-week period the company could have gone in one of two directions: either down or up. And we went up. I walked away feeling that we are very critical to our customers because roughly around this same time Peregrine, who is a big provider to us, went bankrupt; AT&T was exiting the fixed wireless business; we were just getting underway with [other parts] of AT&T; and then WorldCom filed for Chapter 11. But all of a sudden, six weeks later, WorldCom is continuing to value us as a critical partner, AT&T starts to scale their business and says they want to use us for our Wi-Fi. They all had every opportunity to say, ‘Thanks for stopping by,’ but we ended up growing our revenues by 100% in the fourth quarter. If you told me in August that that was going to happen, well, it could have gone 100% in the other direction.

What did you learn from that?

The only way you are going to win business from a service provider today is if you walk in and put your money where your mouth is, and that’s what we do. We offer a guaranteed savings, and if these savings work out in trial then they’ll sign us up. You have to have a lot of confidence in your technology to do that, but that’s the only way they are going to pull the trigger. I really didn’t imaging finding out I was a critical supplier to carriers by having to go through the nightmares WorldCom and AT&T went through last year. But it was good coming out of the year knowing we would continue to supply them service and grow the company. And that we were still standing.

How did you wind up the year financially?

We grew a lot during 2002. We grew profitable. We ended up with about 35 large enterprise accounts and have done a lot with those accounts. We are getting a nice reputation as the ADP of order processing for carriers and enterprise customers.

To what else do you attribute your revenue gains and basic survival?

Revenue assurance [which we recently added] was probably the biggest hit last year. That really helped from a financial perspective. For one customer, we found about $7 million with our software by comparing bills to contracts and to the different rates the customer had signed up for. That was real money that was either going out the door that they were missing or were going to become disputes with their customers they would have to deal with on a manual basis down stream.

How are your relationships now with your two biggest customers?

We ended up scaling significantly with AT&T. When AT&T wireless exited their fixed wireless offering that affected us, but when they launched 3G and message services and Wi-Fi they turned to us right away.

WorldCom had to determine which vendors they do business with and which ones they don’t need. They are still a large customer of ours. A lot of vendors got left in the cold and found out where they stood. I can’t be happier with the way we have been treated with WorldCom. It has actually presented opportunities for us to partner with them more directly. Our revenue uptick and scaling has significantly increased since the bankruptcy because I think we are one of the vendors they continue to rely on.

If you didn’t have a vested interest in WorldCom, would you want to see them survive?

Yes, I would. I believe where there is competition there is opportunity. I think it’s great to have all kinds of companies competing. I would like to see five to seven competitors. I don’t want to see it go back to two or three providers. Anybody that has a small business today should be praying for that because when there is competition there is heightened interest in what we vendors do. I believe they are on the right track, for what it’s worth. I think they are getting focused on what they’re doing.

And next year?

We are in a very, very strong cash position as a company. We don’t give specifics, but we have in the teens of millions left in cash in the bank, and we’re in double-digit revenue numbers. So we’re starting to get scale, and we have zero debt. That will help us going forward to look at other companies or other opportunities to become a bigger force in the industry.