SAN FRANCISCO (Business 2.0 Magazine) -- The Disruptor: Jajah

The Innovation: Free phone calls over the Web with no downloads, headsets, or adapters

The Disrupted: Telecoms and existing VOIP services such as Skype

So you thought VOIP was disruptive? How about making free calls from your desk or mobile phone -- with no downloads, headsets, or even broadband? Building on the existing disruptive force of VOIP technology, Jajah has hit the market with a new level of simplicity likely to encourage mass adoption of VOIP, disrupting revenue models for telecoms and VOIP startups alike.

"We see Jajah as Voice 2.0, the next generation of VOIP," says co-founder Roman Scharf, a Viennese entrepreneur who sold his last company in a deal he values at roughly $100 million.

He and partner Daniel Mattes, the startup's technical brains, formed Jajah late in 2004. Based on an early version of its service that debuted in July 2005, Jajah got $3 million in funding from Sequoia Capital. Relaunched in February, Jajah now has nearly a million paying customers, according to Venky Ganesan, a managing director at Globespan Capital Partners, another investor. He says Jajah's paying-customer numbers already rival those of Web telephony pioneer Skype. (Skype does not disclose paying-customer numbers.) "Jajah removes all the drawbacks from the existing VOIP solutions," Ganesan says. "Its growth rate is phenomenal."

Here's how Jajah works: Let's say Jane is about to leave work in San Francisco and wants to call Philippe in Paris. She enters nothing more than her mobile number and Philippe's home number at Jajah.com and clicks the "Call" button. Her mobile rings, and a voice explains that Jajah is connecting the call. Then Philippe's phone rings in his Left Bank flat. He picks up, and the two can speak for free.

Economically, there are two tricks to making this work. First, the Mountain View, Calif., firm does charge for some calls -- to European mobile phones, for example -- and for services such as conference calls. On average, Scharf says, Jajah is making $10 monthly from each paying customer. These fees subsidize the free calls.

Jajah has cut deals with many telecoms for access to cheap local "last-mile" connections; only the long-distance part of the call goes over the Web. That's a huge advantage, since calls received over regular phones are generally of high quality. Users of Skype and similar services typically receive calls over a computer or require cumbersome phone adapters or software downloads, and computer-based call quality can be shoddy.

VOIP companies that route voice calls from end to end over the Web could mimic Jajah's approach. But they would have to completely change their business and technical models. Jajah's method also avoids the firewall troubles that many other VOIP systems encounter as their calls come in solely over the Web. Ultimately, Jajah expects to take the computer completely out of the call equation; increasingly, people can access the Web by phone, so Jajah customers won't even need a computer to input the initial call.

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