Say Hello to Tello

The startup promises to revolutionize business communications. The involvement of four tech veterans lends that grandiose claim some credence

The months after the stock market crash of 2000 were tough ones indeed for tech startups. And for communications startups, things were even worse. Telecom entrepreneur Royce Holland once compared the period to a "nuclear winter." At the time, Jeff Pulver was busy doing the near impossible, launching a new company with a focus on the Internet and telecommunications. The company, Vonage Holdings, has survived and prospered. Today it's a leader in the market known as Voice over Internet Protocol, VoIP for short.

VoIP has taken off in a big way. The number of VoIP users in the residential market alone tripled to 3 million in 2004. The figure is expected to double to 6 million this year, according to market researcher IDC (see BW Online, 4/25/05, "VoIP Rings Up Subscribers"). Companies like Vonage allow consumers to use regular phones that are connected to a broadband Internet connection. They enjoy cheaper prices, high-quality service, and features such as the ability to listen to their voicemail on the Web.


  Companies like Vonage (see BW, 6/20/05, "Vonage: Spending As Fast As It Can ")are a bit different from rivals such as eBay's (EBAY) Skype (see BW Online, 9/12/05, "Why eBay Is Buying Skype"), which allow users to download a software program to a PC and make voice calls from one computer to another for free.

Now, Pulver wants to help revolutionize business communications. His latest venture, Tello, is set to launch on Jan. 23 with the support of three high-profile partners, including cell-phone pioneer Craig McCaw, former Apple (AAPL) CEO John Sculley, and veteran telecom banker Michael Price.

Like Vonage, the company uses the Internet as a platform for communications. But it goes way beyond voice. The idea is to help businesspeople get in touch instantaneously in groups of two or more, bridging a multitude of devices and communications platforms.


  How would it work? Let's say an investment banker in New York needs to get in touch with a colleague in Greenwich, Conn., an attorney at home in Stamford, Conn., and a client in Walnut Creek, Calif. The banker in New York would go to his address book and look up the contact file for the client, which would have a Tello toolbar with a series of icons representing various modes of communication -- from home and work phone, to cell phone, e-mail, and instant messaging.

If the client happened to be in a car, with access to his cell phone, e-mail box, and IM account, the banker could initiate communication by tapping one of the three highlighted icons. Once he had contact with the client, he could add the attorney, using the same method. All three could communicate at once, using any combination of voice, IM, or e-mail.

But getting in touch is just the beginning of what Pulver envisions. As their conversation progresses, the banker could pull up a spreadsheet on his PC. And he could click on a Tello icon that allows his business associates to view or edit the same document.

So the Tello concept isn't just about instant communications. It's about instant collaboration on spreadsheets, slides, Web pages, and other documents and files. "We are going to offer enterprises an opportunity for real instant collaboration and features that they can't get from the regular phone network," Pulver said.


  Pulver said that any venture with the support of his fellow investors and board members is "bound to have legs." Pulver, Sculley, and Price contributed equal amounts of money to seed the venture, although they won't reveal details.

They're working to promote the project and have brought in additional money from chip giant Intel (INTC) and a number of venture capital firms. McCaw built a huge cell phone enterprise and sold it to AT&T (T) in a deal that Price worked on.

Price is now vice-chairman of Evercore, the investment bank created by former Deputy Treasury Secretary Roger Altman. He's worked on other deals, such as the sale of AT&T Wireless to Cingular and the sale of AT&T's remaining business to the former SBC. SBC has since adopted the AT&T moniker. Scully, a venture capitalist, is known mostly for running Apple, but he was CEO of Pepsi (PBG) before he took that job.


  Sculley says he thinks the launch, which was two years in the making, is well timed. "Instant messaging and voice over IP are catching on with business. I think we're getting to a big inflection point in 2006 and 2007," he says. A new generation of multipurpose mobile devices, such as Research in Motion's (RIMM) Blackberry, the Palm (PALM) Treo, and others, will drive the growth of instantaneous communications and collaboration, Sculley adds.

One tech analyst, Bill Whyman of researcher Precursor Group, agrees that enterprise spending on new technologies, such as mobility, is about to surge. "We're seeing rotation away from consumer to enterprise. The outlook for consumer spending is slowing. But enterprise spending on tech is on the rise," Whyman says.

Tello isn't the only company targeting the new market. Microsoft (MSFT) is backing the idea of instant communications and collaboration, too. But Tello has two competitive advantages, according to CEO Doug Renert, former vice-president for applications development at Oracle (ORCL).


  Renert says Tello will be priced lower than rival products from big companies like Microsoft, making it more affordable for small and medium-size customers. And he says Tello will embrace open technological standards as well. If rivals like Microsoft try to push proprietary standards, they could find themselves at a disadvantage.

And if a company like Microsoft embraces open standards, it runs the risk of cannibalizing its own standards-based business. But Renert expects the market to be competitive, and he believes that rivals such as Microsoft will be successful.

There's no question that the Internet already has changed business communications. E-mail is everywhere, and IM, Web conferences, and voice over IP are catching on. "But those communications are still synchronous and structured," Pulver says. IM happens instantaneously, but only if the people you want to chat with are available on IM. Pulver says that tools like Tello will extend the freedom of IM to other platforms, making it easier for everyone to stay in touch.

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