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As more than one person has already pointed out, the much-anticipated — and much delayed, and much criticized — Vonage IPO just keeps setting new records for how screwed up a public share offering can get. In what no doubt seemed like a Web 2.0-type gesture for a tech issue, the company offered its customers stock as part of the IPO, and that has turned into a gigantic boomerang that just clocked Vonage in the back of the skull. Since the stock tanked after it started trading, many of those eager investors are now saying they won’t pay.

Even if my friend Paul Kedrosky is right (which he often is) and the investors who grabbed those shares should have known what they were getting into — since skeptics on the Vonage IPO weren’t exactly difficult to find — the company is still caught between a rock and a hard place, or maybe two rocks and a hard place. It has now said it will reimburse the brokerage firms for any stock that disgruntled Vonage customers (see the Vonage forum here) don’t pay for, but all that’s going to do is piss off the ones who actually paid money for a stock that was tanking.

So then you have a company that is already losing money at a prodigious rate of speed — losing more last year than it made in revenue, which is no mean feat — spending more money to soothe the egos of the customers it convinced to buy shares. The only other option is to sue those customers, and what kind of marketing would that be? It’s a lose-lose-lose proposition, a rare money-losing hat-trick in hockey terms. It’s no wonder that Om thinks it’s a shoe-in for Business 2.0’s 101 dumbest things list. Mike Urlocker, a former tech analyst, has a nice take here.

Update:

Vonage now says that it will pursue legal action against those who don’t pay for their stock, but as I pointed out above, that is just one of the three losing options available to the company (the third being to do nothing).

About the author

Mathew 2420 posts

I'm a Toronto-based senior writer with Fortune magazine, and my favorite things to write about are social technology, media and the evolution of online behavior

7 Responses to “Use your VOIP to call a lawyer”
  1. […] A post by Mathew Ingram and one by Mike Urlocker on the recent Vonage IPO really sum up my point on VoIP. Voice is truely free. No longer is it a money-making commodity. Voice service is like the free toaster you get when opening an account at a bank. You know, functional, easy to use, simple, free, and occasionally not worth what you paid for it. […]

  2. […] Use your VOIP to call a lawyer […]

  3. […] Use your VOIP to call a lawyer […]

  4. Forget Vonage I tried it and it was awful. I then went on to try the magicJack. Currently I am still using the wonderful little gadget and it has served me well. Occassionally you can be doing too much on your computer and in turn that makes the voices from yourself and the person you are speaking to scramble and echo. Other than that for 20 bucks a year it is wonderful!

  5. Internesting, i never new vonage was in such bad shape

  6. Well… I visit your website first time and found this site very useful and interesting! Well… you guys doing nice work and I just want to say that keep rocking and keep it up!!!!
    Barbara
    Find Lawyer

  7. Well… I visit your website first time and found this site very useful and interesting! Well… you guys doing nice work and I just want to say that keep rocking and keep it up!!!!
    Barbara
    Find Lawyer

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