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Voiceglo is offering the fastest way in the world to a working U.S. telephone
number
Communications
Computer Services
(TGLO-OTC: BB)
theglobe.com
Voiceglo
110 East Broward Boulevard Suite 1400
Fort Lauderdale, FL 33301
Phone: 954-769-5900
Edward A. Cespedes
President
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
March 10, 2005
BIO:
Edward A. Cespedes, President
Edward A. Cespedes has served as the president of theglobe.com since June 2002 and as a
director of theglobe.com since 1997. In 2002, he co-launched its subsidiary,
Voiceglo, a Voice over Internet Protocol (VoIP) communications company, and
currently serves as its president. Mr. Cespedes is also the president of E&C Capital
Partners, a privately held investment company. He also previously served as the vice
chairman of Prime Ventures, LLC, from 2000-02. From 2000-01, Mr. Cespedes served as the
President of the Dr. Koop Lifecare Corporation and was a member of the Company's board of
Directors. From 1996-2000, Mr. Cespedes was a Managing Director of Dancing Bear
Investments where he had primary responsibility for all mergers, acquisitions, and capital
markets activities for Dancing Bear and its portfolio companies. Prior to joining Dancing
Bear Investments, Mr. Cespedes was the director of corporate finance for Alamo Rent-A-Car.
In the late 1980’s and early ‘90’s, he worked in the Investment Banking
Division of J.P. Morgan and Company, where he focused primarily on mergers and
acquisitions. In his capacity as a venture capitalist, Mr. Cespedes has served as a member
of the board of directors of various portfolio companies. He is also the founder of the
Columbia University Hamilton Associates, a foundation for university academic endowments.
In 1988, Mr. Cespedes received a bachelor's degree in International Relations from Columbia
University.
Company Profile:
Headquartered in Fort Lauderdale, Fla., Voiceglo (OTCBB: TGLO) is a global communications
and networking company. A subsidiary of theglobe.com (www.voiceglo.com), Voiceglo provides
award-winning communications services to thousands of customers worldwide via broadband or
dial-up connection. Voiceglo's strategy is to provide easy access to Internet phone
services for consumers and businesses worldwide to make local, long distance and
international calls at rates lower than traditional telecommunications companies.
Voiceglo's products include the GloPhone (www.glophone.com), a Web and PC-based phone that
enables users to make calls while online; GloPBX, a next-generation wireless
communications system that turns wireless routers into virtual PBX systems; and GloConnect
(www.golconnect.com), a new overlay application that interacts with Web messengers and
allows instant messaging (IM) users to communicate across all IM platforms using advanced
IM, e-mail and voice functions.
CEOCFOinterviews:
Mr. Cespedes, what was your vision when you started Voiceglo, and how has that developed
for you?
Mr. Cespedes: "When we started Voiceglo, our view was
that the internet was a more efficient means to transfer voice and for that matter,
anything else. We realized right away when we saw the business plan that in the future,
and it is already happening that the internet would be basically and virtually the only
way that voice was moved around the world in the future. We wanted to build a company that
would be in position to take advantage of that new economy. That was the genesis of
Voiceglo. Once you have determined that the medium is right, the question becomes how do
you let people access the medium. We realized immediately that the wrong way to do it was
to get right in the faces of the big phone companies, so we developed a desktop solution
that is known as GloPhone. It is going well so far. We are at about three million desktops
throughout the world and we have paying customers (although still small in numbers) in
around ninety countries. That means that people all over the world are getting and using U.S.
and Canadian phone numbers courtesy of the GloPhone Network."
CEOCFOinterviews:
How have you gotten to these three million desktops and how do you get on more?
Mr. Cespedes: "The three million have come from a
combination of partnerships marketing and word-of-mouth. Part of the benefit of having the
GloPhone, is you can talk to any other GloPhone in the world free. Someone like you gets
the phone and their first call is to somebody else, and they encourage them to get the
phone so now they can speak free of charge. Aside from the value asset, partnerships have
been important. VOIP is very hot right now; it is not much different than the internet was
in 1988 or 1989; it is something people are watching and it is the next big thing. Many
people want to play in it that don’t have necessarily the expertise of being a VOIP
company. That is why we have some partnerships. We have been able to partner with Office
Depot (NYSE: ODP) and others. We leverage those partnerships as well for new customers.
Going forward, I think with any product that starts free and is as cheap as fifty bucks a
year for phone service, the key driver of a product like that will be word-of-mouth and
the key driver of word-of-mouth advertising is having a good product that works every
time. We continue to improve the product and add features and functionality to it. We just
launched in BETA something called GloConnect, which enables people who use instant
messengers, to turn those instant messengers into fully functioning phones. That is how we
plan to grow, by continuing to improve the product and thereby extending the market."
CEOCFOinterviews:
What do you need in-place in terms of infrastructure to make this happen?
Mr. Cespedes: "It is very small. This is the advantage
of the business model compared to what we will just call Legacy voice systems. I have
spent in the lifetime of Voiceglo, on infrastructure, probably less than $20 million
dollars and maybe less than $15 million. We offer phone service or voice service in
virtually every area code in America and Canada globally. When you compare that to Bell
South for instance, they offer area codes in the southeast part of the United States, they
have 100,000 employees and literally billions of dollars invested in their infrastructure.
The 10 or $15 million that I have invested so far would virtually represent most of their
required investment until we surpassed millions of customers. What that does, and you see
it already is it enables us to offer our services extremely cheap. With us you can
literally get a working U.S. telephone number with the minutes included for $49 dollars a
year or as little as $4.99 a month. All of these efficiencies in our infrastructure
translate to consumer savings."
CEOCFOinterviews:
You mentioned the U.S. phone numbers availablity; are people outside the U.S. looking for
that, and how important is that on a global basis?
Mr. Cespedes: "It is extremely important and yes, they
are looking for it. In the United States, the 290 million people, 49 million like them are
like me; I am a first generation American. My parents come from Peru. There are 49 million
people in this country that are either immigrants like my parents or first generation
Americans like myself, who have a couple of things in common. The first is they speak a
second language equal to or better than they speak English and in my case it is Spanish.
They still have a significant portion of their family, friends, and professional
relationships etc., outside of the country. There is a tremendous demand for voice service
among those 50 million people just naturally. What happens in the case with my family,
which I will use as an example, is my grandmother in Peru has a local Florida
number to my mother in Fort Lauderdale. What used to be $400 dollars a month in calling
card costs for my mother is now free and they talk ten times as much.
It turns out that there is quite a bit of demand for U.S. telephone numbers outside of the
U.S. The cheapest international long distance minute in the world, originates in the U.S.
and terminates outside of the United States. I can deliver a call from New York to London,
for four cents a minute or less; a call from Paris to London might be eighty cents a
minute. That Parisian who calls London frequently, by getting a U.S. based GloPhone, now
spends four cents a minute to London instead of eighty cents. It has a very powerful toll
by-pass aspect to it as well. It is important to know that when you think of markets in
the world and economy, you usually are driven right to the United States as a sort of
growth and ability to absorb new products. There is absolutely no reason why we couldn’t
or wouldn’t provide phone numbers outside of the United States as we got critical
mass in-place. We are looking at adding numbers in the U.K. and Mexico as regulations
there free-up a bit. It is just a matter of deciding where it is important to have local
numbers. Right now, the U.S. numbers are very effective marketing tools."
CEOCFOinterviews:
How does a company get numbers?Mr. Cespedes: "We
contract with between twelve and fifteen major tier one and tier two carriers such as MCI
(NASDAQ: MCIP) and Global Crossings Ltd. (NASDAQ: GLBC). They have exceptionally cheap
networks available and have all been through bankruptcy etc., and there is a massive
over-capacity. We get numbers from them and we do that by buying circuits from them and
that is how we are able to provide numbers anywhere in the U.S and Canada."
CEOCFOinterviews:
It is a popular space that you are in; will you tell us about your competitative
advantage?
Mr. Cespedes: "We think of competition a little
differently than you might imagine. We have never once felt that the competition was all
of the new VOIP companies coming to market. There are what seem to be ten new ones
everyday. We are very aware that the competition or existing phone companies, cell phone
companies and cable companies, not because they can do VOIP any better than we can because
they cannot, but because they have all of the customers. Everybody in America has a cell
phone, and most people in American still have home phones. The challenge for us in terms
of competition is, that is who we are up against. You cannot turn the television on
without seeing the 'can-you-hear-me-now' guy from Verizon or that strange sprint guy in
the trench coat from Sprint. Those are the kinds of dollars and competitors we are up
against. They are also the ones that are most at risk because it is very hard when your
base product is on average fifty bucks a month. You have tens of millions of customers and
you all of the sudden wake up one day and say I am going to be in the five dollar a month
phone business to compete with voice club. We are in an interesting space. The reason
there is a lot of entrance is because it is among the biggest markets in the world and the
Legacy players cannot move swiftly enough to adapt. We have positioned our company to
compete with them but also to be able to work with them as partners if necessary. Where we
are different from some other players that have come to market and said, instead of paying
fifty bucks for your phone service, you can have ours for twenty-five bucks. We are on a
desktop, we are global where five bucks a month is free and we think that is a win for
us."
CEOCFOinterviews:
Where are you free and how does that work for you?
Mr. Cespedes: "We are free for anyone who goes to
glophone.com and downloads a GloPhone and that encourages anyone someone else to dial at a
GloPhone so they can speak free. Any GloPhone user anywhere in the world, without paying
us a dime, can speak free to any other GloPhone user anywhere in the world. How we make
money off that is, in about the second half of this year we will begin to overlay an
advertising model on that. For example, this call from me to you has been a GloPhone to
GloPhone call; prior to completing the call, I would have heard a message like this; this
free Glo Phone call proudly sponsored by Coca Cola. That would be the only advertisement
you would hear, and then that call would be monetized that way for the company. It is very
appealing to consumers because it is not so disruptive, and I am not forcing you to hear a
one minute ad or I am not forcing you to answer six questions about who you are and how
much money you make. It is a simple, non-intrusive advertisement that takes a few
seconds."
CEOCFOinterviews:
What happens when you are not in front of your computer?
Mr. Cespedes: "You don’t have to be in-front of
your computer. We have in our lap now what we call Wi-Fi phones and probably in the second
half of this year you will begin to see the first of what are called combination Wi-Fi
cell phones. When you are in a Wi-Fi hotspot, you would automatically default to the
GloPhone. A bunch of companies are competing in the Wi-Fi space to get Wi-Fi out there and
that will be more prolific as time goes by. We have all kinds of call forwarding features
so if I want to forward my GloPhone to my cell phone that is easy to do. Mobility in
wireless is the future. We work with all Wi-Fi devices and we will be very mobile as time
goes by. We are new so we announce new products as fast as we can; we have to make sure
they work right and there is a little development cycle."
CEOCFOinterviews:
I see you have won a fair number of awards; what does that mean for Voiceglo?
Mr. Cespedes: "If you just go to Google and do a search
on voice-over, I am sure you will probably come up with thousands of names. To try and
differentiate yourself in a crowded space, is difficult. The awards, and especially the
awards that make their living from analyzing industries like Frost and Sullivan, a global
leader in growth consulting and some others, helps to legitimizes us. If anything else, it
helps in the sales process. Other than that, it is nice to win awards. We don’t put a
lot of stock in them; we don’t walk around wearing medals or anything, but it is
important. It is important from a public relations perspective, from a legitimacy
perspective and certainly internally. It helps with moral and lets our staff know that we
are doing something meaningful."
CEOCFOinterviews:
You are part of a public company; will you tell us how you are funded for the development
that is ahead?
Mr. Cespedes: "Voiceglo is 100% wholly owned subsidiary
of The Globe.com, of which I am also the president and my partner and I control. We have
market capitalization of somewhere between 70 or $80 million today; I think the company is
worth a lot more than that. We have been funded by ourselves; my partner and I have put
our own money in. We have also raised some outside money from some very sophisticated
investors; large funds. We also own another subsidiary called SendTec, and that is a
profitable business that helps us fund the company internally."
CEOCFOinterviews:
What should potential investors know that they might not realize when they look on the
surface?
Mr. Cespedes: "I think what they should know that an
investment in our company should be looked at as a high-risk/high-reward situation. They
should know that my partner and I are seasoned businessmen whom have lived through ups and
downs and we really do look at this as a business that we think we can create a lot of
value. They should also know that when they make an investment in our company, risky as it
is, it is right next to our investment in the company, and that we have millions of our
own dollars at risk here. We have not sold a single share since we took over the company
in June. Secondly, despite all the noise in VOIP, we are still just at the beginning. VOIP
is now sort of where the internet was in 1998. We don’t know how it is going to play
out for sure. In 1998, we certainly understood that the internet was going to become an
imbedded, important, and critical part of everyday life. That turned out to be true. We
are certain that voice-over internet will be the majority of voice traffic, just do to
pure efficiency in the future. How people access networks, who the winners and
losers are, is still very much in question and with that comes a lot of risk. We are very
up-front with our investors all of the time. We are not in this for ten cents but for ten
times or one hundred times the money. If we hit it right, that is what it is worth and if
we hit it wrong, there are many other players out there. I think those are the things that
are readily apparent."
CEOCFOinterviews:
In closing, what would you like our readers to remember about Voiceglo?
Mr. Cespedes: "I think that what readers should remember
about Voiceglo is that it is a global company and that in the midst; we actually call it
the fastest way to a working U.S. telephone number in the world. Someone sitting in Paris,
can log on to glophone.com and have a working U.S., New York City phone number in less
than three minutes. That is unparalleled anywhere in the world and no other company can do
that. There is no equipment required. All you need is an internet connection, dial-up or
broadband. That is the message it is a sort of instant global telepathy. You don’t
have to wait between 12:00 and 5:00 for the phone guy to show up; that is the
message."
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