Taking on the telecom industry

April 3, 2015

Alumnus Bayan Towfiq, CEO of Flowroute Inc., discusses bootstrapping a successful startup with a team of ICS alumni.

Few students take regular business trips around the world while studying for finals, but Donald Bren School of Information and Computer Sciences (ICS) alumnus Bayan Towfiq (B.S. ’06) can claim that distinction. Towfiq, along with ICS alums Jordan Levy (B.S. ’06) and Sean Hsieh (B.S. ’07), navigated UC Irvine’s computer science major while fostering burgeoning professional careers. Having met their first week of college, the trio went on to found Flowroute Inc., the world’s first virtual telecommunications carrier. The company, headquartered in Seattle, has innovated on the traditional telecom carrier model by allowing users more powerful and affordable access and control, making waves in a notoriously restricted industry. Towfiq was recently elected to the board of SMS/800, the Federal Communications Commission’s regulatory subcontractor for the toll-free industry. It’s a board long monopolized by incumbent carriers Verizon, AT&T and CenturyLink. Below, Towfiq discusses how his time at ICS prepared him for his career and how his team bootstrapped a successful tech startup.

What are some highlights of your college career with ICS?
The environment at ICS gave me a lot of flexibility to learn what I wanted and needed to. While I was a telecom consultant in college, I uncovered some major vulnerabilities in open-source telecom software when I was 18, most significantly in Asterisk, a widely used private-branch-exchange (PBX) telephone system that had a million downloads worldwide 10 years ago. From there, I started to consult for tech companies and telephone companies all over the world. I became financially independent and paid my way through my last three years of college. It was a good balance: I’d work on the weekends and go to school during the week.

Do you feel that ICS fostered your entrepreneurial spirit?
ICS helped me develop many skills, such as being able to look at big problems and not be intimidated by them, and understanding that even the biggest problem can be split into small, easy-to-execute pieces. This has served Flowroute and myself well as we tackle big challenges in a changing communications service industry.

How did Flowroute’s founding team meet?
Jordan Levy, our CTO, was my roommate in the dorms. Sean Hsieh, our Chief Growth Officer, and I met in our very first class. I don’t really remember this, but he says I walked into the room with a briefcase and he thought I was the teacher’s assistant. Jordan and I started working together while we were in college. I brought him in on a couple of contracts I was working on; from there, we developed a very close friendship. We tried to take the same classes and did our ICS project course together.

How did Flowroute grow from a dorm room startup to a firm with a Seattle headquarters?
Right after college, Jordan and I were working together on a consulting contract. We saw the opportunity to provide innovative telecom services using new technology so we started Flowroute together. Sean joined us a few months in, before we had a website or shipped products, and he was instrumental in helping get Flowroute off the ground. We completely bootstrapped the company. We were broke: Jordan and I each lived off $5,000 for the entire first year. We were sleeping on friends’ couches and getting friends and family to feed us. I often traveled to Jordan’s parents’ house to write code and stay with them for two weeks at a time. Nine or ten months passed before we had a prototype of Flowroute and had our first customers. We never accumulated debt, there were no angel investors and there was no venture capital. We’ve also grown quite a bit—we now have 30 employees (as of January 2015) and that number will double in the next 12-15 months.

Flowroute offers a kind of voice over Internet protocol (VoIP) that provides simplified and direct access to the global telephone network at a low price. How does this set you apart in the telecommunications market?
We’re solving a three-pronged problem: One, phone service is a thousand times more expensive than data for no technological reason. Two, the access to telecommunications isn’t at the same level as the data world. It’s a lot easier to get a Gmail account or a Skype ID than it is to get a phone number. Three, in the data world, you have control of infrastructure, application and service layers; in the telecommunications world, it’s completely walled off. You have to go to specialized providers to get access to various elements of the telephone network, and even then, telephone numbers are restricted and heavily regulated by the FCC and state public utility commissions. We’re the first virtual carrier and software company with FCC and state approvals for direct access to a telephone network. We also have our own telephone numbers. We have direct access to a lot of different telecommunications databases and resources like the toll-free system. The difference is that we provide this transparency and access to our customers, instead of forcing them to contact us to make each and every change. Since we have a strong technology and software background, we’ve been able to impact an industry dominated by some noteworthy 800-pound gorillas, like AT&T, Verizon, Windstream and Level 3. The telecom expertise has been critical. Jordan and I developed a lot of that expertise doing consulting work and playing around with telephones in our free time, including the work we did while at ICS. Being in Irvine, in particular, was very useful because there are a lot of tech companies around there and we were working with everyone from data centers to startups.

It sounds like you found an untapped need in the telecommunications industry.
We have done something unique. We’ve become a virtual carrier and are in a place to do to telecom what Amazon Web Services has done to computing: provide a platform as a service for telecommunications, or the foundation of communications, if you will.

Would you say exploiting an untapped need is a key to success for a startup?
Definitely. There just aren’t many tech companies that are interested, or as many entrepreneurs that are as deeply involved in this space as we are. Jordan and I were at an FCC numbering workshop earlier this year. We were one of just a handful of companies that stood up and discussed the evolution of numbering in the United States. In the future, telephone numbers may have a username and password where you’ll log in to your phone number the same way you log in to Facebook. The whole landscape of telecommunications is changing. Changes in technology are pushing up against regulation and policy right now, because a lot of things don’t make sense. Flowroute is taking advantage of that in the meantime. We’re in a position to drive that forward, because as a small company we can be nimble.

How did your time at ICS prepare you for your career?
In addition to providing an environment that fostered the entrepreneurial motivations of my partners and I, the foundational computer science knowledge has been the most useful: understanding everything from data structures and algorithms to computer science theory, as well as certain aspects of software engineering, like breaking down large problems and understanding where to start. Studying computer science helped us to become comfortable with ambiguity. It’s part of what gave us the confidence to start a business, and to know the pieces we needed to work on without being bogged down by everything that was important but not urgent. There was definitely a solid workload in many of the classes that we had, but there wasn’t a lot of extra work to show that we already knew what we knew. I remember our experience being very flexible. It was an environment for us to learn, not an environment where we had to prove that we had learned.

What advice would you offer students graduating with degrees from ICS?
There were a number of my classmates who became successful as entrepreneurs and sold their companies for millions of dollars, but there were also people who looked at computer science as vocational training. They just wanted to learn what they needed to get a job and that’s it. A lot of those people had trouble finding jobs. Several of them do not work in tech fields at all. Not that there is anything wrong with that, but I think the successful approach involved developing your mind. If something was difficult, confusing or frustrating, successful classmates were more interested in understanding and learning it. To be successful in computer science, passion has to be there. Embracing frustration is a critical component of success in computer science.

What would you look for in a potential hire?
One of the difficulties in hiring new grads for a lot of tech companies is that the experience really isn’t there. They may be passionate, but at that point it is sometimes too late to have your pick, unless you’ve been working on things while in college. A couple of our best employees, who never finished college, went above and beyond in studying algorithms and data structures, past the level that many get to as an undergraduate. That kind of passion starts very early on, where students have developed their own projects and honed their skills before and during college. That makes a candidate much more attractive. It’s really difficult to bring a candidate in who has the coursework but hasn’t done much on his/her own.

— Story by Courtney Hamilton

UCI ICS Feature: Taking on the telecom industry