Sree's Stories

German Pop Singer Sets Sights on Virtual Office

Monday, September 23, 1996

By SREENATH SREENIVASAN

Even in the unconventional world of Internet business, Jaye Muller does not appear to be a typical entrepreneur. With his tight orange pants and blond-streaked hair, he looks more like a rock musician than the founder of an ambitious young company that wants to change the way business people communicate.

Indeed, Muller is a pop singer from the former East Germany whose first album, "We are the Majority," sold 350,000 copies worldwide. But now, as president of JFAX Personal Telecom Inc., this 24-year-old has turned his sights on E-mail in-boxes everywhere. Using the Internet and the telephone system, he believes he can make the much-discussed "virtual office" a reality.

"JFAX turns the one piece of the Internet that every user needs every day into a one-stop shop for all types of messages," said Muller in an interview at his apartment in Lower Manhattan's Silicon Alley. "They can use their E-mail to get faxes, voice messages and, of course, E-mail, from anywhere in the world."


An example of how JFAX works for Anthony Delore, who runs a garment exports business in Cape Town, South Africa.


For $12.50 a month and a $15 setup fee, the JFAX system enables a consultant in, say, Des Moines to set up an "office" in Manhattan in less than 24 hours with a personal phone number. Her New York City clients can then send her faxes or voice messages for a local call. And no matter where she goes, she can receive her faxes and messages.

Right now, New York, London, San Francisco, Los Angeles, Atlanta and California's Silicon Valley are on line with local telephone numbers, as is the rest of the country via toll-free 888 numbers. Plans call for Boston, Chicago, Toronto and Johannesburg to be added soon.

David Farber, a telecommunications professor at the University of Pennsylvania, has been a JFAX customer since it came on line three months ago, using it as "my primary fax routing service" and for messages.

"When I am in Japan, for instance, I can pick up my voice-mail and decide who is worth the energy and expense to call back," he said.

JFAX is just one of several companies competing for what is potentially a lucrative market: reaching out and touching someone far away for the cost of a local call via the Internet. Some offer fax-to-E-mail-to-fax, others E-mail-to-fax, and others phone-to-phone connections, while still others promise paging and phone calls in a single service. For example, Netcentric is a company based in Cambridge, Mass., that offers cheap faxing via the Internet through its "Fax Storm" service.

But so far, JFAX appears to be the only one that offers so many features in a service that can be set up with a personal phone number in less than 24 hours.

David Goodtree, director of telecommunications strategies at Forrester Research in Cambridge, Mass., said, "JFAX is a unique, smart combination of technologies that already exist."

But, he noted, Muller and his service face a considerable challenge down the line. "It is now up to this guy to market it well, and that costs serious money," Goodtree said. "Phone companies are the biggest threat."

And Netcentric's chief executive, Sean O'Sullivan, while acknowledging that the JFAX model is "interesting" and "creative," said, "The question is whether JFAX will be able to survive when all major Internet service providers start offering the same services in the next few quarters."

So why exactly should anyone take a musician and his service that seriously?

"That's a question we get asked a lot," Muller said. "We believe our service is better because we did not originally set out to start a business, but to fill a need."

Muller and his record producer, Jack Rieley, dreamed up the JFAX service during their 1994 European tour. "Jaye was tired of having his faxes forwarded a day late from hotel to hotel," said Rieley, JFAX's chairman, who was a producer of the Beach Boys in the earlier 1970s. "Things were getting lost, and hotel staff were reading all our confidential faxes. We looked around to see if there was a product that would allow us to get faxes and messages quickly and confidentially. But there wasn't any."

Drawing on his part-time work in an East Berlin technology company in the late 1980s, Muller came up with a plan for an E-mail-based service. "This was so important to me that we postponed work on my second album and went about finding the right people to put this together," he said.

After two years of intensive work by an Australian telecommunications software development team, JFAX was born. While they will not reveal how much has been spent on the product so far, Rieley said that "more than a couple of million dollars" of his own and Muller's money has been invested in JFAX.

But like many startup companies, JFAX has yet to make a profit.

Farber pointed out that one part of the system that still needs to be installed is the ability to send voice messages back via E-mail, and the ability to access E-mail through a phone call, if you are away from a computer. JFAX has plans to offer both these features in the next quarter.

One concept behind the JFAX service is that it is not browser-based, so that it does not depend on a Web browser such as Netscape Navigator or Microsoft Internet Explorer. "We think browsers are going to lose their importance in the years ahead, as all applications will come with built-in navigating capability," Muller said. He chose to make it phone number-based, which commands, he believes, a certain sense of loyalty compared with other means of communication.

"Of all products we have looked at, this is one of the most interesting, and one with real upside potential," said Ben Epstein, vice president of business development for France Telecom N.A. "Unlike most Internet-based products, this has a real revenue stream. Most other products only talk of their potential to make money, and how they will bring in advertising one day."

Professor Farber also notes that unlike many on-line products, JFAX is not giving anything away, but rather getting money from customers upfront.

While Epstein of France Telecom said JFAX had several positive factors that separated it from other products in the market today, he also said that their technology is not, per se, unique. There are several off-the shelf products that duplicate some aspects of the JFAX service. But "most of these are not robust enough for business use," he said.

According to Epstein, JFAX's biggest advantage is that it is already establishing market share.

"Time-to-market is the most crucial part of JFAX's future," Epstein said. "Once they are on a roll, they'll be hard to push away. Given enough time and resources, one of the big boys could, in theory, blow them away. They should not give them a chance."