NEW YORK (FORTUNE) - Jeffrey A. Citron probably was feeling a little ambivalent Wednesday as Vonage, the Internet phone company he founded, struggled in its first day as a public entity.

Vonage (Research) opened at $17 a share, raising some $500 million for its expansion plans, but the stock steadily sank to close the day at about $15 a share. Critics of the company declared the IPO a bust, but Citron, Vonage's largest individual shareholder, ended the day more than $700 million richer.

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Still, for Citron, the decision to take Vonage public probably was not a simple one. Just before the company filed its initial public offering prospectus, Citron stepped down as CEO of the company (he remains chairman and chief strategist) presumably to ease potential investors' concerns about a settlement he entered with the Securities and Exchange Commission a few years back. (Citron paid the SEC a $22.5 million fine to settle charges that he engaged in unlawful trades; as part of the settlement he neither admits nor denies the SEC's allegations.)

And as a public company, Vonage will be subject to even greater scrutiny and criticism than it was as a private concern. Indeed, in the weeks leading up to the IPO, Vonage was the subject of many skeptical news articles questioning its financial health, technology and even its customer service.

But Citron's willingness to take Vonage public also raises fresh questions about his long-term strategy for the company. Since its earliest days pioneering voice-over-IP, or VOIP, phone service, analysts have thought the company would be an ideal candidate to merge with a cable operator or Internet service provider looking to jumpstart its phone business.

The sale last year of peer-to-peer phone company Skype to eBay (Research) for more than $2 billion only heightened speculation that Vonage would follow suit. Instead Citron has sent a signal that he feels Vonage can go it alone even as its competitors are partnering with bigger players or offering bundles of phone, television and data services.

Daniel Berninger, an analyst with technology specialists Tier 1 Research, says he believes Citron certainly looked at opportunities to sell Vonage to another company but passed. (Berninger has an interesting history with Vonage: in a prior job he helped facilitate a meeting between Citron and Jeff Pulver, founder of Vonage's predecessor company.)

"I think he's going into Steve Jobs mode: 'This is going to be my platform and I'm going to stick with it and rock the world.' ''

Others offer a more cynical view: Citron didn't sell because he couldn't get the price he wanted, and his investors pushed for an IPO to get their money out while the company still has the lead in voice-over-IP services.

"Why an IPO?" says Rich Nespola, CEO of The Management Network Group, a telecom and media consultancy. "Because the investors are seeking an exit strategy. End of story."

Either way, Vonage now has to craft a strategy to compete against the cable operators and Bell telephone companies with their bundles as well as Internet companies such as Yahoo (Research), Microsoft (Research) and AOL (like Fortune and CNNMoney.com, a unit of Time Warner (Research)) that offer free PC-to-PC calling services to their subscribers - without the benefit of a big partner. Nespola believes Vonage has to either develop value-added services for its customers or find a way to match the big guys' bundles.

Neither will be easy. Because Vonage's service rides on the broadband connections controlled by cable or phone operators, it is somewhat limited in the kinds of new services it can roll out. The cable operators, for example, have been offering faster speeds over the cable modem connection for an extra monthly fee. Vonage wouldn't be able to offer that kind of premium service to its subscribers because it doesn't control the pipeline to the customer.

And as for selling other services, such as cable-television or wireless phone service, sure Vonage could resell another providers' offer, but reselling is a pretty low margin business.

The company has been in a quiet period and thus Citron hasn't been able to say much about the company's strategy. Based on past interviews with him, though, we suspect he isn't interested in reselling Sprint wireless service or satellite TV or even figuring out a way to offer Vonage users faster Internet connections. He's probably looking at what the other companies aren't doing already – just as he did with VOIP.

Instead of cellular phone service, for example, Vonage will probably look at new ways to offer voice-over-WiFi. Thanks to its recent IPO, the company certainly has the money to experiment with some new services.

What isn't clear is whether Vonage – even with all its innovative mojo – can win huge numbers of customers, especially selling services a la carte. Today Vonage has a mere 1.6 million voice customers, a fraction of the more than 100 million households in the United States. How many consumers will trade in their trusty cell phones for a Wi-Fi phone?

The bulk of consumers may be willing to try new technologies, but they also like to buy from big brands they already know and trust. If Vonage can't capture mass-market share, Citron may yet end up selling the company to a partner that can.