These may be the best of times for innovation and opportunities for telecom startups as seen through two New Jersey companies, OpenMediaLabs and VoiceNext Inc. Telecom land line may be in decline, but the new Telecom is emerging as a convergence of broadband, wireless and digital applications.
Joe Mele, founder of OpenMediaLabs, is no stranger to telecom entrepreneurship having co-founded elemedia (a pioneering venture in the Voice over IP space that was acquired by Lucent Technologies in 2000). His new company, OpenMediaLabs, builds software to improve multimedia in mobile phones. Gary Cooper, CEO and co-founder of VoiceNext is not a telecom veteran, but he was part of the management team of a well known family business, Cooper Electric Supply. Now in partnership with Mike Galkin, a telecom entrepreneur of a cellular wireless company that went public, VoiceNext provides hosted PBX services for small to mid sized businesses.
Both these companies represent the State's hope for the industry to create future high paying technology jobs in New Jersey. In October 2006 Dr. Hosein Fallah of the Stevens Institute of Technology presented a report to the New Jersey Assembly Telecommunications and Utilities Committee entitled Regaining New Jersey's Leadership in Communications Innovation. His report noted that states such as Texas have fostered a telecom industry cluster to compete with New Jersey, once a leader in the industry. In the last ten years Texas has leapfrogged over New Jersey to be second behind California in telecommunications patents, while New Jersey has moved down to fifth. Texas has had rising telecom employment, while New Jersey has experienced declining employment. Accordingly, there is a perception here in New Jersey that telecom is a declining industry, though actually the total global telecom industry is expected to grow to $4 trillion by 2010 from $1 trillion in 2002.
What do entrepreneurs like Joe Mele and Gary Cooper feel would make New Jersey more supportive for their success? They both quickly respond "access to capital". Both companies are looking for funding to grow. OpenMediaLabs needs money to build out its development team and complete its initial commercial release, having just finished their first prototype which is being shared with customers and leading vendors. VoiceNext is seeking funding to expand its sales and marketing capabilities to build on its rapid growth since its founding in late 2004.
Dr. Fallah agrees that access to capital is a key ingredient for New Jersey to become more competitive with other states. He explains, "Once a business has passed its proof of concept and is a "toddler" company, funding for on going R&D is necessary for these companies to grow. These "toddler" companies can then become the engines of a technology economy to create the high paying jobs New Jersey needs."
Joe Mele explains why access to capital is greater outside of New Jersey, "It is more difficult to secure early stage funding on the East Coast than the West Coast, as East Coast investors are more risk averse, often seeking business model validations more typical of later stage investment rounds. Somehow...a more efficient and more readily available model of bridging this early stage investment gap would be extremely helpful and could promote a stronger environment for technology innovation and commercialization in New Jersey".
In addition to funding Dr. Fallah feels that a supportive environment also greatly contributes to a company's ability to grow. Joe Mele concurs as he has benefited greatly from his association with the many contacts he made at Bell Labs during his first venture. Gary Cooper and Mike Galkin of VoiceNext, both long time New Jersey business owners, see the importance of an emerging business being able to reach out to resources in New Jersey to sustain their growth. "Now that we are into a high growth stage, we are putting greater value on outside support. We will be participating in the upcoming New Jersey Technology Council Telecom Conference, as well as attending the forums that bring out angels and venture capital firms such as the Venture Association of New Jersey."
Dr. Fallah sees large corporations as having an important role in fostering an industry cluster in New Jersey. He explains, "The success of a cluster is analogous to a shopping mall where one or two big stores serve as anchors to draw in activity and business for the benefit of the numerous smaller companies." He also feels that incentives can be offered by the State that would encourage these relationships by promoting the potential upside for the large company, while limiting some of the risks. Large companies would then become involved earlier with emerging businesses, long before they would benefit from the entrepreneurial company's new product or service. These incentives also can be an alternative form of financial support for toddler companies such as Joe's and Gary's that could include an R&D matching fund, R&D tax credits, or subsidies for joint projects between large corporations and toddler companies. Another possibility is to provide credits for when large corporations buy from toddler companies as has been successfully implemented in Texas.
Current efforts by the State are falling in line with Dr. Fallah's observations and suggestions to make New Jersey more competitive. The Corzine Administration recently established the Edison Innovation Fund that will provide resources to support technology and life sciences initiatives with $150 million committed in partnership between the EDA and the Commission on Science and Technology that will leverage $350 million in private capital. This will build on existing infrastructure such as the WINLAB (Wireless Information Network Laboratory) at Rutgers that has been key to assisting the New Jersey telecom industry for over eighteen years. WINLAB is an industry-university cooperative research center that is part of the School of Engineering at Rutgers that undertakes federally or industrially funded projects to advance the development of wireless networking technology. This is a prime example of how government, industry and academia are working together. One project currently under development is being funded by the auto industry to develop wireless communication between cars actually enabling them to communicate with each other to assess their environment and reduce accidents.
Joe Mele of OpenMediaLabs and Gary Cooper of VoiceNext are New Jersey entrepreneurs who are optimistic about the opportunities telecom is offering. Their businesses have achieved milestones that they feel will attract investors and they are encouraged by the increased attention by the State to support their efforts. Gary Cooper enthusiastically says, "We are the phone company that answers the phone! Our model enables smaller companies to communicate like big ones with a lower total cost of ownership. Our model is proven, now it is only a matter of capital to grow our business on a grand scale." These words are music to the ears of Dr. Fallah as they hint at the enormous potential these toddler companies possess to increase State employment and contribute to New Jersey re-gaining its leadership position within the new emerging communications industry.
Entrepreneurship 
