Interview with Roman Scharf, CEO of Jajah

JAJAH is what we call a voice to client phone company. We are offering free international calls from mobile phones. Customers use their landline phones or cell phones for free international calls or they have the option to do a very cheap international call or local call to all the other destinations they want to call.

The idea behind JAJAH was to simplify Internet telephony, which is currently limited due to technical requirements. People are not very familiar with complicated software, which are difficult to download, and they do not like to wear headsets when they make calls. They do not want to buy new hardware and we want to take away all these barriers and make Internet telephony as simple as finding a keyword in a search engine. That’s how it all started.

We have a very sophisticated infrastructure. We use 200 servers in 85 countries to call individuals in each of the countries. We have created our own proprietary software that connects these individual servers and then connects these servers to the specific phones; we set up a normal connection, a standard connection like any other phone call in the world. This means that if you call from New York to London, there will be a termination server in New York connecting to your phone and a termination server in London connecting to the destination phone, and between the termination servers, through the worldwide Internet cloud, we transmit the voice through the IP protocol.

They’re calling the actual numbers. Our machines call the actual number and our machine in New York calls the originator, and then we just connect those two calls.

There are two types of competitors within this space. One type of competitor provides IP enabled hardware with a phone number to individual customers. These types of companies have to convince people to change their phone number, which isn?t always the best for the client.

We find this quite complicated. People like their phone number, they see their phone number as part of their identity, and we regard it as one advantage of our service that our users keep their phone number, keep their phone, keep their contract, and still can benefit from the low rate, or free calls through the Internet telephony software.

The second type of VOIP service requires that download specific software. You need to be able to adjust all the settings. You need to be able to go to your firewall, if you have one. You need to have a broadband connection to enjoy an acceptable quality, and also based on the Internet’s potential reach.

A study compiled last September by the IDC, the International Data Corporation found that only three percent of the worldwide Internet population are capable of using VoIP software solutions. 97 percent of the Internet population did not use VoIP software at that time, but 95 percent were using search engines. Our services allows individuals to quickly and easily utilize VOIP and reap the cost savings while not requiring new hardware, new phone numbers, or downloading any software.

The initiator needs to activate the call, and then can switch off the computer and walk away and the receiving end doesn’t have to be at any computer at all. They don?t have to be close to a computer. People are more and more on the run, so it’s a frees people from being tied to their PC or Mac.

It is possible to initiate a call from Internet enabled phones. There is a JAJAH application when you open jajah.com on your cell phone, you can get a minimized version where you can also activate the call. Within the year, we will provide the ability for people to initiate a call using their phones, but without a necessity for entering the Internet to do so.

Free calls apply between registered JAJAH users in North America, most of Europe and in Asia on landlines. Depending upon the country, this applies to landlines and / or mobile phones. The calls to users to people who are not registered, are very inexpensive at 2.5 cents. So, from New York you can call a person in London for 2.5 cents if this person is not a member of JAJAH, and 0.0 cents if this person is a member of JAJAH.

The free calls are the main driver for membership growth. It very much a viral strategy. People have a very big motivation to invite their friends, their business partners and their family to sign up as well. When we have the application for mobile phones, we will also have packages that we use on the mobile phone as well on the computer.

Soon it will be possible to do conference calls with JAJAH in a never before seen price range. So, you will be able to go to the JAJAH website and enter the phone numbers of the destinations and you will be able to talk to five people. You need to call the JAJAH conference calls service to connect to these five people. The initiator will pay 10 cents for the call, and all the others pay nothing. This compares to minute prices of five to 20 US dollars that are common in the call bridge business.

Ten cents per minute for the initiator, and free for all the participants. Call bridge services have a monthly subscription and they have a minute fee for the bridge. Then you have to see that all the participants, including the originator, need to call the bridge. So you have to sum up all the costs of all the participants, the bridge and the availability of the bridge. We will send out, to all the media people who are in touch with us, some charts that we compiled to compare JAJAH with the well known and popular conference call services, and the price difference in this specific case, beyond any expectation.

We see that our user base is already beyond the early adopter stage. I would not call a 49 year old lawyer an early adopter. I would not say that grandmothers are early adopters. We have gone beyond this already, as we have a very wide range of customers from the very young to very old. Approximately one third of our users in Europe, one third in Asia and one third in the US.

We have a large percentage of tech-phobic users. I would never call a tech-phobic person an early adopter. They adopt it because it’s so simple, because somebody recommended it because they tried it and they loved it. On our web page, every user can try five free minutes, and the conversion rate from those who tried the five minutes to who registered is 90 percent. So, nine out of ten people who try it register and use it. It’s really convincing. In my career, I’ve never come across a service that has a higher conversion rate.

Yes. Skype is not a mass-market product. Skype has a huge amount of users but it’s still nothing compared to the telecom industry. T-Mobile in Europe has more revenue in a day than Skype does in a year.

We see ourselves today as the only option for normal people to participate in any free communication, because it’s such a big difference in usability. People like their phone, they like how it works, and they like the number they have. The only thing they do not like is high rates, and that’s the only thing we take away. They can continue to use their phone. We provide them all the usability that’s attached to the phone. Some of our users took two years to understand how their cell phone really works. We wouldn’t want them to buy a new WiFi phone to benefit from lower phone bills.

The key motivation is to make a difference and to offer something that has a great value. It’s not about making money. It’s not about having fancy technology. I personally do like technology only when it provides a benefit to people. I don’t like technology that exists only in its own respect. Technology should give you a genuine value. I had a phone with I don’t know how many features: camera, video, radio, whatever, and it’s just too complicated for people to use. For me, this is not an exciting technology. For me, exciting technology is something that benefits the largest possible number of people. To take part in a company that offers such services and that makes a difference for them, this is the exciting thing.

In our specific case it’s a necessity to have a global team. You cannot address the Asian customers with European staff. You cannot address the European customers with American staff. Since we operate on three continents, we have a very multi-cultural team. We have special procedures and structures that ensure that everything we do is seen in a global context. When we design something, it has to be secure that the Japanese are comfortable with it as much as people in Denmark and people in Mexico. This is a specific situation, and also we have to keep our organization as slim and structural as possible because this international approach is very complicated. It’s a necessity that we act fast and focus.

It was self-funded by myself and Daniel. We funded it for the first year. We came from the Internet telephony software side, so we had a software base that was similar to Skype. Our wives couldn?t use the original software. It was just too complicated for normal people. That understanding was the genesis behind Jajah, we needed to create a service for normal people.

Simplicity for this specific project is of highest importance. In my previous project, I had a company that was providing software for engineers and architects, and at that company functionality was a very important issue and compliance with standards and norms was a very important issue. I would say that the key aspect of the project is very much depending on what specific project it is. My previous project was not focused on simplicity. This one is focused on simplicity because that’s what will make the difference.

We are very complimentary. Daniel is the engineer. He’s the guy who programmed the initial code, who developed the codec for our VOIP stuff, and who also built the infrastructure for the telecom package that we’re using. He built a peer-to-peer system with many proprietary components, while I’m the marketing guy and the business development guy, so I look out for partners that could be helpful for our project, and I try to wrap the technology in a way that is most appealing to the users that have a specific visual impression and also have a specific language. Basically, we decide everything together, but there’s always somebody that needs to be the CEO, who can make executive decisions. If I decide on a slogan, or on a new measure or something, we discuss it before. The one who is in charge of this task is in the lead. When there’s new technology coming out like the conference call, I’m involved in the process, in the product description, in the different phases of the beta testing, but here, Daniel is obviously in the lead and manages the this area of the business.

We look for a spark in the eye. We want people that get excited about what they do. We do not look for people who do not show emotion. We look for people who show excitement and people who want to take part because they want to make a difference. We do not look for people who come here because they can earn 50k more a year than somewhere else. There’s a special spirit in the team that we created and we try to find something of that sprit in all the new members that we hire.

JAJAH is intended to be one of the great companies in the industry. We want to see JAJAH surrounded with names like Yahoo and Google and Amazon and eBay. We do want to keep our focus. We think that the focus is important, but the focus that we have chosen is communication, gives a lot of space and there are many things in the communication world that you can do better. One of the best things that a company can do is relieve people from pain – solve problems, make life easier. In the long run, the vision and in the mid-term or short-term we see that this project is going in a dynamic direction that will probably lead us to the stock market. Based upon our current situation we are looking at going public in late 2007 or early 2008.