That VoIP Show: Actor Kutcher Helps ooma Get Creative

In Silicon Valley, names like Apple, Cisco Systems Inc., Yahoo! and Napster are on par with MTV, Pixar or Steven Spielberg in Hollywood — they’re all innovators, challenging the boundaries and definitions of communications or entertainment. Now, those two worlds are intersecting in the form of an upstart that sells consumers $400 in equipment in exchange for free VoIP phone calls for life. Oh, and did we mention that ooma Inc.’s creative director is actor Ashton Kutcher? Really.

The Rumor on Scout

At the heart of ooma is the Hub and Scout hardware. The Hub looks like a futuristic answering machine, which it is, in part. Meanwhile, the Scout is about a third of the size of the Hub, and attaches to a second phone in the home.

Andrew Frame, actor Ashton Kutcher, Napster co-founder Sean Parker and TiVo's Mike Ramsay (standing).

Yet one might wonder how ooma, which officially launched in mid-September, will build a long-term business model from sales of single devices. Is the company a one-trick “phoney”? ooma says no, that applications will bring in recurring revenue. For now, two applications are included in the ooma launch: Broadband Answering Machine lets users screen calls, send calls to voice mail and check for messages online. Instant Second Line adds, well, a second line on the same phone number. It also accommodates three-way conferencing. It doesn’t work with expandable cordless handsets, however.

More apps will follow. Nine months from now, ooma “will be so much beyond what it is today,” says Tim Weingarten, ooma investor and managing partner at Worldview Technology Partners. The company won’t go into details about what those other applications might be, but does cite landline ringtones as an example of wireless-type innovations that can be layered over POTS. ooma will make money from sales of the Hub and Scout, and by charging a small monthly fee for some of the applications; others will remain free.

Helping ooma’s outlook is the ease-of-use factor, too. The boxes self-configure thanks to a routing protocol “that Apple and Microsoft would kill for,” says Weingarten. “This is like plugging in a toaster oven — you plug it in, sit back and it starts working.”

Dude, Where’s My Customer Base?

Still, ooma’s got a challenge on its hands since consumers are likely to balk at the large upfront cost of the gear and won’t necessarily distinguish between a VoIP product and a VoIP service, says Yankee Group analyst Patrick Monaghan.

Some consumers “are happier paying $40 a month to Verizon” because that doesn’t seem like so much money, he says. To offset that perception, Monaghan suggests ooma experiment with different pricing scenarios, such as a lease-to-own model.

If that doesn’t work, perhaps the many talents of Kutcher will do the job. The actor has “radical thinking” about viral marketing, which is exactly what ooma needs to reach the masses, says Weingarten.

A mutual friend connected ooma founder and CEO Andrew Frame and Ashton Kutcher, and soon they were having breakfast in L.A., discussing the ooma product and business model. Suddenly, Kutcher “started asking me better questions than any VC had ever asked me,” and even delved into pricing philosophies, says Frame. “It was amazing to watch his energy light up.”

Kutcher is so active in ooma’s development, brainstorming marketing ideas and copy for the Web site, that ooma executives hear from him weekly. “He’s really engaged,” Frame says.

In all, Frame sees ooma as the “unfossilization of phone service.” But he doesn’t want to stop there. With the help of Kutcher and the rest of its staff (which come from such companies as Apple, Cisco, IBM Corp., Redback Networks Inc. and Yahoo!), Frame plans to push landline technology out of a century-old rut and “really deliver on the promise of voice over IP.”

Guess Who

Financial supporters and board members of ooma include:

Warren Packard, a partner at venture capital firm Draper Fisher Jurvetson (DFJ), which also backed Skype Ltd. and Hotmail.

Tim Weingarten, a managing partner at Worldview Technology Partners. He helped take Redback Networks Inc. and Extreme Networks Inc. public.

Sean Parker, who co-founded Napster and Plaxo, and is now a partner at Founders Fund.

Mike Ramsay, TiVo’s co-founder, who also is on the board.

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