Jingle bells ringing for Jajah

Larry Lisser · December 23, 2009 · Short URL: https://vator.tv/n/ca4

How they created a perceived value of $200M


 I can clearly remember the first time I tried Jajah's, then called, ‘Web telephony’ service, back in 2007. I was impressed with its value proposition: allow users to use their computers to place a call, yet use their phone of choice to complete it.

The offering had a cool factor, was well funded and grew rapidly, thanks principally to its innovative user experience.  

But it’s really not how Jajah came to be valued at more than $200 million (145 million Euros) and sold to Telefonica, a deal that was announced Wednesday.

Instead, Jajah’s march to an exit of more than six times the money invested in it started in earnest in 2008 when – along with many other VoIP startups – it moved quickly from a consumer, to a distribution business model. Platforming, as many of us came to call it.

The  $200 million pricetag is no small number. What interests me though is how they created perceived value in the business itself.

Well, apart from the obvious future than an IP-enabling platform offers a mobile giant like 02, I would argue that Jajah created value in itself – and a supposed bidding war for its assets – by carefully blending scale, product positioning and innovation over the last 18 months.

Scale: Choosing partnering over a consumer channel to get to scale has become commonplace for young companies; successful execution though is less common. Putting a deal together with Yahoo – actually themselves once an early leader in Voice over IM, but one that could no longer afford to focus on it – proved to be a game changer. Following up with one with MSFT didn’t hurt either.

Product Positioning: Scale through an audience like Yahoo’s brought credibility and cash flow. But Jajah’s ability to re-purpose its voice platform as a means to add value to the massive online dating business turned a light bulb on. It provided the evidence that there would soon be other ways to monetize voice. Deals with Match.com and others likely enabled margin growth than the pure transport business could have never provided.

Innovation: Every startup, no matter its maturity, must find a way to nurture its disruptive culture. And in doing so, keep the brightest engineers motivated, like the Jajah team based in Israel. Jajah’s foray into the real-time web earlier this year with its Jajah@Call helped to do just that. Sure, this may have been news more than anything else but it successfully jogged the memory that Jajah was well placed to innovate.

It’s not my place nor intent to comment on whether 02 under or over paid. What I can say is that by combining proof of scale, evidence of incremental ways to commercialize voice services and by reminding the audience of its ability to innovate, Jajah stimulated the appetite required for exit. And as a result, emerging telephony can now leave the decade standing proud -- with a substantial exit in tow.

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