Thursday, July 19, 2007

Oddest commodity startup

Business Week telecom reporter Olga Kharif writes today about a new VoIP startup called “ooma.” (Yet another example of lousy brand names due to cybersquatters).

The wrinkle (presumably patented) is that they claim free service for life once you buy the $40 box. They are creating a P2P network that uses its members’ local phones to terminate PSTN calls. So if I call my mom in San Diego and we both have ooma boxes, then our call is free (as with Skype and most stand-alone VoIP services). But if I call a strange in Seattle, some ooma-owner in Seattle sees his phone line used to dial out.

If I have to dedicate a landline to ooma, why would I want it? The landline is $20 and a regular VoIP is $20-25, so why not just go with the simpler solution that’s pay as you go — and doesn’t require betting on the survival of an unproven business model.

The company raised $27 million in stealth mode. But, like Kharif, I think the timing is awfully late for an industry segment that’s already seen its first fatality. VCs are not infallible.

Ashton and DemiThe company got funded because it has a typical cast of industry retreads veterans, in this case from Apple, Cisco, TiVo and Yahoo. The odd wrinkle is that its “creative” director is Ashton Kucher, a minor TV star best known as Bruce Willis’ stand-in with the December-May marriage that elevated Kucher to become Mr. Demi Moore #2. Wrinkle may be a misnomer since Mr. Moore is not quite 30, and there’s no evidence his wife (who will turn 45 on Veterans’ Day) is involved in the venture.

The service is called White Rabbit, supposedly after the Alice in Wonderland character — presumably not referring to the Jefferson Airplane 1966 song of the same name about recreational drug use. The innocent explanation is somewhat plausible given that Ooma’s 27-year-old founder (and certified Business Week “techno-wonderboy”) Andrew Frame was not born for at least a decade after Grace Slick sang about her favorite pills.

Update 1:30pm: While eating lunch, I read Walt Mossberg’s review of ooma in the WSJ. Obviously some of that $27 million was spent on a review guide, but the favorable review is a good sign since Walt is not easily intimidated by anyone. OTOH, Walt reviewed the technical functionality not the business proposition — he notably did not say that he’d spend his own money on the service (but then reviewers rarely spend their own money).

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