Say you’re surfing the Web, looking for a shirt to buy. You find one at a reputable site, but you can’t quite tell from the picture whether the shirt has the kind of collar you like. Not to worry; the page has a “Push-to-Talk” button that connects you in real-time with a customer-service representative. You click it, talk to the rep and ask questions about the shirt you’re interested in. What’s more, the rep looks at the page you’re viewing — and pushes a clearer picture of the shirt back to your browser. Much better. Yep, it’s got the collar you want, and you’re ready to make a purchase.
This experience will soon be possible for all online shoppers, Ajit Pendse, president and CEO of eFusion. The company designs Internet telephony gateways and software that merge data and voice over a single phone line. Internet service providers can use these products to offer customers enhanced options (like call waiting and voicemail that engages while you’re surfing the Web); e-commerce businesses can use them to link their sites with real-time call-centers. Just two years old, the Beaverton, Oregon-based eFusion is already turning heads: Fortune magazine named it one of 12 “Cool Companies” in 1998 and its revenues are growing rapidly.

The idea behind eFusion seems simple enough, but its implications are far-reaching. “Basically, we merge PSTN (public switched telephone network) technology and voice over IP [with a conferencing standard] known as H.323. We licensed the source code about two years ago from Intel and put that into the core of our product,” explains Pendse. With initial backing from bigwigs like Intel and AT&T Ventures, eFusion rapidly talked other industry leaders into taking equity positions in the firm. Microsoft, France Télécom and Telecom Italia were quick to jump on board, and the company is partnering with the likes of Belgacom, 3Com, Ascend Communications and US West to provide business-savvy PSTN-IP applications to end users.

A Bold Proposition

While at Intel, Pendse was infused with the idea for fusing voice and data over IP. “We instinctively knew it would have gotten killed over time if it had been pursued within Intel,” he says. So Pendse and his collaborators made a proposal: They would spin off the firm if Intel would give them the initial boost. Intel agreed, and the two parted company in 1996. “They supported us, let us license the technology and put money into the company,” he says. As spin-offs go, this smooth exit was rather unusual; most high-tech offspring aren’t weaned from their parent companies so easily.
Supporters were excited to fund the nascent company, says Pendse, because it was committed to an open-architecture model. “We said, ‘If you want this market to grow in a nonproprietary fashion, you need to fund the company that’s going to make it happen.’ They knew they had to build that base now. This was an opportunity to work with a vendor who’s dedicated to open value-added services.” It helped, of course, that Pendse’s dealmaking experience had built him a large network of contacts both inside and outside Intel.

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