August 24, 2005

Talking It Up

Kodiak Networks makes a suite of add-on voice-related features that wireless carriers can offer their customers.

By Jon Burke

Company: Kodiak Networks HQ: San Ramon, CA Founded: 2001

Management: F. Craig Farrill is co-founder, president, and CEO. Previously, he was managing director at inOvate Communications Group, a venture capital firm focusing on wireless startups. He also held the prestigious position of chief technology officer for Vodafone AirTouch.

Investors: In August 2005, the company raised $14.63 million in Series B funding from Kleiner Perkins Caufield & Byers and Redpoint Ventures

Business Model: Kodiak sells a suite of voice technology enhancements, the RTX system, to wireless carriers. It allows carriers to add new features that leverage their existing voice networks. Their offerings currently include four key ones: Push To Talk is a walkie-talkie function that allows cell phone users to push a single button to make a call or convene a conference. Nextel offers its own version of Push to Talk -- and it helps keep Nextel users loyal. Another feature, which should attract businesses, is Voice Bridge, a simple way to initiate a conference call with up to 30 different phones. Instant Availability offers icons similar to those in instant messaging applications, which indicate voice availability. Finally, Instant Voice Messaging allows users to leave voice messages with an individual or group -- without dialing or listening through greeting messages.

Competitors: Nextel, Sprint, and Verizon have competing features.

Dirt: Management and investors have been patient with Kodiak -- it's been in business for four years without major customer wins. However, in the past five months it has signed significant agreements with carriers and handset makers, gaining commitments from Alltel, Sony Ericsson, Samsung, Lucent, and Amp'd Mobile. Kodiak-enabled services are currently available to Alltel users and Amp’d plans to launch services in the fall of 2005.

If users take to Kodiak's features, as we expect they will, other wireless carriers will be lining up. Carriers can't allow their competition to offer valuable new services without providing those same services. And working with Kodiak is a fast and easy way to get those new features. Additionally, of course, carriers can charge fees for this new functionality. To date, for instance, conferencing revenues have been the domain of land-line carriers; now wireless carriers have a chance to take a bite out of that apple.