Richard Chirgwin writing in the Australian telco industry newsheet "Communications Day" under the heading How to Burn your IPO really let loose on Vonage. It is a great pity that I can't link to the article, but after the style of Alan Ramsey in the Sydney Morning Herald I'm simply going to quote extensively.
Chirgwin opened, "Nobody at Vonage asked one simple question: what happens if customers buy into our IPO, and the share price collapses? When I looked last Friday, the company was trading at under $US12, having kicked off at $US17. The customers took a bath, and the psychology which helped Vonage attract a loyal following is now inflicting damage."
He then described the risk that having an IPO for your customers might have if your share price goes down, not up. But then he gets into the real swing by pointing out that Vonage doesn't have "normal" customers.
"Let’s look again at the customer demographic. Granted that not all of Vonage’s customers are full-on Netheads, there would still be a greater concentration of them in the customer base than in the general public. Moreover, we’re talking about a cluster of bolshie, “beat the big bad Bellheads” Netheads. Believers in the vision have some other characteristics, however: they’re noisy bloggers, Slashdotters,
newsgroup junkies with a chip on each shoulder and a self-basting foam-at-the- mouth that would make Australia’s right-wing columnists blush."
"So: supposedly intelligent people made a conscious decision to sell shares to a customer demographic which was most likely to turn nasty if their share purchase wasn’t rewarded with a daytrader’s wet dream in the first hour. The psychology of the “customer offer” looks worse the more you think about it."
When the share price did sell, the angry customer/shareholders started cancelling in droves, only as Chirgwin writes, to then discover that the world of VoIP wasn't all they thought it was, "A scan of various blogs tells me that it’s only after the Vonage sans-culottes started cancelling their accounts that they found out that their numbers aren’t portable. Yes, customers should read their terms and conditions, just like everybody doesn’t. But these were true believers: VoIP is not
about service, it’s about solidarity and the religion of the revolution. To the utopian, there is no downside, and T&Cs are for wimps and lawyers. Now bitten by the T&Cs, the angry ex-customers are now full- scale revolutionaries."
Now that's the kind of graphical writing we see all too rarely in the business press.