Secret sauce at Inc 500 star Bandwidth.com? It’s a matter of faith

CARY, N.C. – The key question people want to ask successful entrepreneurs is simple: “What’s the secret sauce of your success?”

Henry Kaestner and David Morken, the co-founders of Bandwidth.com, offer an unexpected, succinct but powerful answer – especially when it comes to life’s bottom line, not just dollars and cents.

“We’ve been very blessed by God,” Kaestner told me. “We work hard to honor Him and the talents He’s given us.”

Instead of cents, make that sense.

Kaestner and Morken, who are well known for their charity work, have obviously made faith an integral part of their 9-year-old company. The Cary-based firm was just named to the Inc. Magazine “500” for the third consecutive year, one of only nine firms to accomplish that.

Bandwidth.com provides a variety of telecommunications and data services over its own nationwide network, and its revenues have exploded over the past three years by more than 700 percent. (Virtually all their 170 employees are based in Cary.)

And the growth isn’t stopping for Bandwidth.com, which is privately held, with Kaestner and Morken owning more than 50 percent of its shares.

“We’ll do better than $75 million in revenue this year,” Kaestner said.

Kaestner focuses on his role as executive chairman. Morken recently assumed the chief executive officer role from Kaestner and also serves as president. (Earlier this year, they strengthened their management team by hiring Matthew Petzold, who had been chief financial officer at Motricity, to handle Bandwidth.com’s finances.)

Success is not new for either Kaestner or Morken, though.

The two had successful careers before teaming up to launch Bandwidth.com. Kaestner was a telecommunications broker and founder of Chapel Hill Broadband. Morken (a former Marine and an Ironman competitor) co-founded of an online tax filing service back in 1994 – one of the first. Both were honored as CEO of the Year in the Internet Protocol Communications Services industry by Frost & Sullivan.

In the decade since launching Bandwidth.com, they have grown what started as a reseller and provider of other network provider offerings into their own national network based on Internet protocol.

Voice over IP is their biggest-selling product, but growing fast are customer-relationship-management applications, such as Salesforce.com, Kaestner explained.

Bandwidth.com sells services for big-name providers, helping customers get faster service and installation at lower prices. But they also compete with the big carriers, focusing on, in Kaestner’s priority list: “Cost savings, call quality and expanded features over analog voice.”

With such fast growth and given its profitability, Bandwidth.com would be considered by many as a candidate to either go public so stakeholders could make some more cash or to raise capital to increase growth through acquisitions. But Kaestner said there’s no rush. The IPO question certainly was raised when the company hired Petzold.

“We’re on a trajectory to be able to seriously consider it in a few years, but it’s not a top priority,” Kaestner said in response to the IPO question. “Building a successful and sustainable business by innovating and taking care of customers is.”

As for raising money, he didn’t rule out the possibility.

“We’re proud of the fact that our growth comes without significant venture funding and acquisitions,” Kaestner explained. “We have no significant fundraising plans in place, though we may consider looking at some longer-term debt options, as we haven’t yet used debt to grow the business.”

What’s the future hold for Bandwidth.com? There are no guarantees, especially in the turbulent telecommunications sector. For now, Kaestner, Morken and company remain focused on customer service, value, and – I would suspect – a lot of faith.