When you ask Jeff Pulver why he recently chose to invest in a dying company like VocalTec Communications (Nasdaq: VOCL), he explains that his investment was based on the company’s future performance, not its past performance. “I look at VocalTec as a pioneering, innovative company that has served as an incubator for several different entrepreneurs,” he says.
When you ask him whether he is concerned that his reputation as a world-class expert in the voice over Internet protocol (VoIP) industry could be damaged if the company continues its cash burn rate, he remarks that he “isn’t Warren Buffet yet. I’ve founded 52 companies to date, and not all of them succeeded. I invest in what I believe; I don’t necessarily force my beliefs on other people.”
Incidentally, Pulver may not be a Buffet, but the impression is that in the VoIP sector, his reputation as a guru is approaching that of Buffet in finance. He entered VoIP ten years ago, when he encountered a free Internet voice chat program, and decided to devote his time to the subject. He was one of the founders of US Internet telephony provider Vonage, and founded telephony company LibreTel, which he says already has 50,000 subscribers in Israel. He also publishes two magazines: “The Pulver Report” and “VON Magazine”.
His own private fund
Without delving deeply into VocalTec’s great promise and missed opportunity, let it be said that the share is currently traded at $0.91. The company lost $2.2 million on revenue of $1.1 million in the first quarter. Pulver does not disclose how much he has invested in VocalTec, but it is probably a negligible sum that will not significantly add to the company’s cash reserves, which totaled only $5 million, as of the end of the first quarter.
Incidentally, VocalTec is not Pulver’s only investment in Israel. He says that he has invested in a number of Israeli start-ups to date, “some of which are no longer around.” His investments include Kayote Networks, in which he invested two years ago. “I manage a private fund, which is unofficially mine. It’s financed with my money, and of course managed by me, not by professionals.”
"Globes": Which companies will stand out in VoIP in the coming years?
Pulver: ”In my opinion, those that go against the market trend. I’m a believer in taking risks, and building something you believe in, not copying something already on the market that somebody else invented. Personally, I see that people don’t like to take chances, and that’s the reason they don’t succeed in creating leadership.
”I think that there are big opportunities to develop a next-generation communications network that will combine cellular, VoIP, and instant messaging, so that people will be able to communicate with each other without knowing which network they’re using. I think that it’s boring to talk about founding another VoIP provider that will merely offer a replacement for ordinary telephone services.”
Where does Israel stand in VoIP development?
”Israel has a duality in the VoIP field. In certain areas, it’s the leader, while it’s being led in others. Israel has people with technical capabilities to do everything in a very short time. On the other hand, those same people are unable to market their ideas and services. At the same time, there are other people with marketing capabilities who lack the technical capabilities, but who succeed in moving forward. I’m not a marketing expert, but I’m convinced that by using the right marketing channels, Israeli companies that are currently invisible can become visible.
”There is clearly a high degree of synergy between countries with widespread deployment of broadband and VoIP. In countries like China, users are expanding infrastructures in order to use VoIP, while in the US, they use VoIP to expand the package being offered to broadband customers. In Japan, Hong Kong, and South Korea, deployment of Internet on broadband and VoIP services is widespread. Scandinavia is also very advanced.
”Another thing that is special about Israel is that during the Jewish holidays, LibreTel, which I founded, offered free calls to Israeli households. Israelis succeeded in hacking into our software, and obtaining free cellular telephone calls.”
Published by Globes [online] - www.globes.co.il - on June 19, 2005