Jajah Goes Mobile

by alec on September 27, 2006

I don’t know about you, but there’s nothing that frosts my socks quite the same way as my monthly, sky high, mobile phone bill.  Well, this morning Jajah’s founders Daniel Mattes and Roman Scharf gave us all a new option.  Jajah mobile is a compact applet that you download to your cell phone, and which automatically makes choices for you about how to direct your long distance phone calls on your cell phone.  Dial a long distance number, and Jajah will automatically redirect the call over their network at just 2.5 cents per minute.

To put that in perspective, I have a 1600 minute plan which I regularly exceed. It’s a pretty rich plan, allowing unlimited roaming throughout North America, and one rate for all calls within North America too. It costs me 20.625 cents per minute.  Rogers best rate for a local plan is 10 cents a minute, and Jajah is 2.5 cents on top of that.  Using Jajah Mobile would knock the $330 I pay monthly down to $200.

Too bad they can’t reduce my Blackberry data plan the same way!

Wanting to know more about the story behind Jajah, I had a long, but very illuminating call with Roman, and his new VP of Marketing Don Thorson, last Friday night. 

Jajah’s goal is to be the first global telecom company.  By taking a different approach to VoIP, by not insisting that you scrap your telecom company, but rather by being an adjunct to it, Jajah believes that they can be everybody’s second phone company, rather than what Vonage is trying to be. And in the process, they can build out a user community, and platform hooks which will allow them to offer new services more quickly, and more easily than others.

My pal Andy Abramson would call them a “minute stealer”, but there’s a lot more to Jajah than that name conveys.   

The most interesting aspect of the business model is the way they have shied away from providing DIDs, and other tools for originating calls.  By building out a network to do terminations only, they’ve kept their costs lower than any of their competitors.  All they’re paying for is terminations, and in 80 countries they have a physical presence of their own with over 200 servers.  What that means is that at 2.5 cents per minute, they earn $10/month per subscriber with a 30% margin.  According to Jajah investor Venky Ganespan, of Globespan Capital, Jajah is already profitable.

Although they say that calls in North America are free, like their rival SipPhone, the details are little more subtle than that statement might imply.   

  1. Any call between any two Jajah subscribers in North America is free.  If you’re not calling a Jajah subscriber, then it costs 2.5 cents per minute. 
  2. Any call that takes advantage of any of their features is not free: if you use their scheduled call feature, or their conference call feature, you’re paying.   Having said that, you’re only paying their already low rates.  

Students of viral marketing, pay close attention to those two statements.  Jajah has created a powerful one-two stroke that encourages many people to register for their free service, while maximizing revenue from those willing to pay the freight.

As I chatted with Roman and Don, a much larger vision emerged.

Jajah wants to be present at the point that the communication need arises, and also when the call has finished.  In other words, where they the incumbents are merely handling a call, they want to be an engine for the complete communication – including the time before and after the call.   Hence their integration with Plaxo, and Outlook on the outbound side, and their plans to allow calls to be recorded, and followed up post call.

In keeping with this business vision, Jajah has delivered a new conferencing service, a scheduled calling service and a click-to-call button for businesses. The click to call piece is especially interesting, as they’re building a whole infrastructure around it.  They’ve got caller pays, called party pays, anonymous number, public number and “expiry dates” for the buttons all in the works.  They’re also working with companies that build blogging tools, browsers, and so on – the fundamental building blocks of the web.

In other words, they see themselves providing some of the core applications building blocks in a Voice 2.0 world. 

The system itself is built on some proprietary software, and Asterisk.  They have a proprietary voice codec, for instance, and a proprietary algorithm for routing the calls. They built their initial prototype in just two weeks, and version 1 of the product in 92 days.  It makes a good case for using open source!

While Roman declined to answer exactly how much traffic they’re carrying today, he did offer these statistics:

  • In excess of 1 million users have registered for Jajah today. 
  • All their core metrics – registered users, minutes, and so on — are doubling on a monthly basis. 
  • 82% of visitors hitting their web site try the service right away (that’s a phenomenal conversion rate), which Roman attributes to the ease with which you can make your initial call.
  • They’re earning $10/month per user, with 30% margins. I estimate that means that they’re probably paying for about 550 minutes of traffic per user per month, but getting paid for 400 minutes. 
  • As volume has increased, their termination costs have decreased by 50% since February
  • 40% of revenues come from Europe.  That’s also where the largest pain is. 

I should note that some Jajah competitors I spoke with expressed doubts about the veracity of some of these claims.  My opinion?  Jajah mobile could change the mobile landscape very quickly, making them one of the most important VoIP companies in the market today. It’s natural to find that a little too good to be true. 

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