Saturday, February 6, 2010

magicJack CEO Dan Borislow Interview Part II

Each year at CES, queues for taxis, coffee, and lunch always seem to take a month, particularly during the first two days of the show.

Pretend it’s still CES…it’s been a long month. You don’t read me for snippets, you read me for analysis. Maybe even insight, at least occasionally.

When we left off four weeks ago, I’d just broken the news that magicJack was stirring up the telecom market once again, with the announcement of their forthcoming femtocell, which I (and now most others) call the “femtojack”. After Dan’s team published their release on the femtojack, I was inundated with a ton of technical and regulatory questions. I’m not going to attempt to answer them here—not only is doing so magicJack’s job, but I’d rather focus on a topic I consider more compelling—customer service, particularly in the context of making things right.

What’s the secret to success for just about any company? Ideas. Innovation. Passion. Execution. The magicJackers are short on none of these. Borislow and his team exude passion, whether discussing hardware, software, networking, saving consumers money, or their competition. I have to laugh at some outlets taking Dan to task for swearing when describing a competitor. You know what? Good for him—this walking-on-eggshells, politically correct world in which we live today can be stifling. I enjoy hearing someone call it like it is. Precious few entrepreneurs are willing to publicly call out their competition, out of fear that doing so might hurt fundraising efforts. Less need to raise capital means less need to do or say the politically correct thing. Free the mind, and the mouth will follow. Or something like that. Exhibit A: Mark Cuban. He’s having fun.

(Speaking of having fun, just for goofing around sake, we conducted a fairly unique magicJack call—Dan’s laptop using a magicJack connected to the world via a Sprint 4G modem to my Mac using a magicJack connected to the world via my a Verizon MiFi. And it worked!)

While most people think “magicJack” (which is how I refer to them for simplicity’s sake) as the company itself, the actual parent company is named YMAX. YMAX owns magicJack, but they also own and operate a voice network, and own companies dedicated to software and hardware development, among other things. What makes this particularly cool is that Dan has assembled the entire end-to-end ecosystem to minimize risk in his business equation. While owning each component by no means ensures success, ownership enables integration on a scale all but impossible for the typical system developer—and rest assured, magicJack is a system, rather than a couple of best-effort Internet clients common in most VOIP offerings.

Case in point—magicJack’s silicon subsidiary has developed a chip integrating unheard-of capability for the cost. Don’t believe me? The femtojack’s core silicon contains technology for echo cancellation; serial flash; a CD-ROM emulator; controllers for GSM and the femtocell; audio codecs; and subscriber line (SLIC) and USB interfaces—and probably some other stuff I’m forgetting. When you do the math on the bill of materials to bring this type of device to market at a price of $40-$50, you begin to understand just how large-scale this integration actually is.

Right then. Back to customer service.

A year ago, I had no experience with magicJack. When I showed up at the It Won’t Stay in Vegas CES party, one of the pieces of swag was magicJack. I grabbed a couple, both for testing use in the lab and for use from overseas. During the sign-up process, I was dismayed to see a really lousy effort on privacy, with the user required to give up a bunch of personally identifiable information (PII) before even seeing magicJack’s privacy policy. That was bogus, and I called out magicJack, challenging them to resolve this.

Shortly after my post, I received e-mails from both magicJack’s PR person and from Borislow himself. I couldn’t quite figure out if I’d lightly struck a nerve or thoroughly pissed him off, but we ended up parrying in a conversation both on the blog and privately on e-mail. Dan stressed how much progress they’d made in improving their customer service ratings over the previous year, as well as their commitment to ongoing customer care. As most readers know, all too often this type of talk isn’t worth the paper it’s not written on—basically, it’s bullshit with a capital BULL.

Except, in this case, it wasn’t. Dan made the commitment that they were going to get better, and they did, going from an F from the Better Business Bureau to an A- today. That’s snatching victory from the jaws of defeat. Yow. You don’t make a transition like this overnight…so how did they do it?

Dan realized that he had a company-defining issue, one requiring an innovative solution that a typical call center couldn’t handle. As part of reinventing magicJack’s approach to customer service, he set some very aggressive goals—first and foremost, establishing customer communication in less than five seconds. How could a company with this type of growth rate achieve such a high customer satisfaction rate while keeping costs low enough to maintain margins and operational efficiency? Off-shoring.

But, not your typical off-shoring.

Most readers are familiar with the debacle so many companies have encountered when off-shoring technical support, leading to lost customers, negative press, and eventually re-on-shoring (perhaps coining a term…maybe “repatriating” would be better.). magicJack decided to offshore to countries with a wealth of competent English writers/readers—but to only offer support via online chat. Why? Economies of scale. An operator taking a voice call can address a single issue at a time. An operator conducting an online chat can handle up to five incidents simultaneously, maintaining the efficiency that magicJack must have to deliver quality service at a cut-rate price. Beyond that, the percentage of English-fluent readers/writers is (in Dan’s estimation) as much as ten times higher than the pool of English-fluent speakers—meaning, someone who has learned written English is a great tech support employee for magicJack, regardless of how well that person actually speaks English, or how strong a spoken accent might be. A bigger pool of applicants means better-qualified customer service agents, a more competitive internal support environment, and a better overall solution.

Dan had one of his team members walk me through their back-end support setup, allowing me to watch typed chat exchanges between real, live customers scattered across the globe. I must say, magicJack’s system is pretty sweet—efficient, effective, and extremely beneficial from a cost standpoint.

I mentioned that agents service multiple customer support chats simultaneously. Eavesdropping on the screen of an agent half a world away who’s conducting three, four, five simultaneous chats made me think of two things—instant messaging and intentional latency. Watching an agent move from chat window to chat window to chat window reminded me why I don’t use traditional IM clients, and why I only log into Skype when I actually need to chat with someone. If a bunch of chat windows were my job, I think I’d be great at it, but since it’s not, I’ll remain largely IM-free. “Intentional latency” may not be the exact term, but it’s a concept that’s stuck with me since taking a class from Jim Carlini at Northwestern two decades ago—the concept that an automated call distribution (ACD) system is as valuable for routing calls to the proper operator as it is in training customers to not expect the phone to be picked up on the first ring. Outside of Southwest Airlines, I can’t think of the last time I called any service provider who didn’t make me go through a phone chain to reach the proper person. (Thanks, Southwest.) I’m conditioned to deal with some amount of delay (and angst) before reaching somebody who can actually help me out. With magicJack’s agents supporting multiple chats at once, customers can see a delay of 10-20 seconds or more from the time they end up typing a response until the agent begins his or her own response. But, since that’s set as the norm, I don’t think customers do too much teeth-gnashing. Chats are initiated quickly, usually in less than five seconds; agents keep the customers engaged; and most importantly, customers anonymously grade the agent at the end of the chat.

Grades. Not just for schoolwork any more.

I love the grading concept. I wish that more customer service interactions could be graded immediately upon completion. A couple of weeks ago, United had a big fail at ORD, when their inability to get a jetway to a gate-arrived airplane for 11 minutes caused four of us on a flight to SFO to misconnect, even through the SFO airplane was still on the gate; based on the number of us who were ready to burst out of the starting gates to get off of our plane, I know that we weren’t the only four who ended up missing connections we should’ve easily made, but didn’t. United, you earned an F. A few days earlier, I’d pulled into a Marriott property with an unplowed parking lot, even though it hadn’t snowed in days. I don’t typically mention stuff like this to the hotel, but this was egregious, particularly since I ruined a new pair of shoes trudging in from the lot. The front desk agent shrugged off my comment about the lot not being plowed; even when I pressed her on the issue of why it wasn’t plowed, she showed no interest in providing an explanation. Marriott, you earned an F—but you raised it to a B courtesy of the property’s general manager dropping me a note within 48 hours of my website complaint, offering to pick up the cost of my shoes and put some extra points in my account. Here at the Marriott Wardman Park where Shmoocon attendees are currently enduring (?) the snowpocalypse, Marriott gets an A+, having kept employees on-property last night to ensure that they could meet the expected level of service for the ~1500 of us in attendance.

Anyway, back to magicJack support. I think they’re light years ahead of what most companies are doing—not all, but most. They’re using tools to not only manage customer service, but to measure customer service, then act upon that data. The idea of tracking agents’ output for purposes of reward, penalty, or compensation certainly isn’t new. But, the ability to combine the server-side monitoring of agents with customer-side innovation (such as setting a 24-hour tracking cookie on a client’s computer, and immediately escalating the chat to a “superagent” if the client initiates a second call in a 24-hour period) is compelling. Tying that together with the ability to remotely take over a customer’s machine via LivePerson to actually show them how to resolve the issue, or simply fixing it for them, makes for a further compelling solution—one which ideally leads to a customer grading an agent as an A.

The three call regions are staffed 24 hours a day, seven days a week, with an average of about 120 agents in service at any given moment; roughly ten or so of the highest-rated agents (superagents) are on duty at any time, ensuring escalation coverage no matter the hour. Average chat length is about 16 minutes; with agents supporting up to five chats at a time, the efficiency factor works out well. Sure, you might say that single-tasking a chat could result in a faster time-to-resolution; but, when you think about the time that troubleshooting takes (plug in your magicJack, make sure your phone cord is tightly seated, tell me what’s on your screen now, etc.), multitasking becomes much more attractive.

Even more interestingly, agents are compensated based on their call volume—and a grade multiplier. Meaning, an agent can’t simply rush through support calls to ring up a high number of calls complete, regardless of quality. The grade multiplier ensures that agents will provide due care to each caller (or at least, to the vast majority); sloppiness leads to low grades, which leads to less compensation, which leads to no longer being a customer service agent for magicJack.

I’m intrigued by this story and this model not because I got a couple of freebie units last year. I’m intrigued by this story because to me, this is really a case of “ain’t necessity a mother”. Or something like that. magicJack had a serious, serious problem a couple of years ago, when their Better Business Bureau rating was an F. Folks, it don’t get much worse than that. Memories are long, hearsay even longer. I had dinner at CES with a buddy of mine who’s in the VOIP space. He mentioned that he’d seen my femtojack post, and asked how I could respect a company whose BBB rating was an F. I told him that I couldn’t respect a company whose BBB rating was an F—and asked him if he’s bothered to check magicJack’s BBB rating recently. When I told them that magicJack had improved to an A-, he mumbled something along the lines of “they suck”, then ordered another drink.

Well, yeah. magicJack did suck. And, some portion of geekdom and the phone-calling public will continue to think they suck—but for a pretty high percentage of their user base, magicJack must be doing something right. Shelf space in Wal-Mart and Best Buy isn’t cheap to obtain, and is even tougher to hold onto if product return rates are too high. Units are obviously selling in, selling through, and being used with a decent level of customer satisfaction.

I’m hopeful that the femtojack will achieve similar or even more widespread success. No, I don’t know whether YMAX is going to be able to overcome the wrath of mobile carriers, and whether they’re on the verge of an avalanche of grief from the FCC.

But I can’t wait to find out.


  1. Our average number of chats at a time is about 2.5.Consumer reports called us a "great deal" last month.BBB put us on front cover of B to B publication this month.My last company we recieved a JD Power award.If you grade us poorly,you also go to super agent next time on tech chat,if you come in second time on same day,you go to super agent.Our grades are 1 is bad and 5 is great.When we started we were 1 to 3.Now we get days where we are 1 to 30.We have the best customer care in the business and the lowest price.Your right,I am proud of it to.We also have where my rep can take over your desktop with a click of your mouse on an invite,this is super popular and the grades are often 1 to 70.There is no question,as disruptive as we are in the business,many will have negative things to say.That is fine,as long as it is not our customers.That is my number one concern,because if I do right by them,we can accomplish anything.Most of our sales are word of mouth,and over two years later,we are enjoying are best sales.This is why we consider blogs so vital.It is a good way that people can keep score of how well we are doing or not.Sorry about all the bragging,but a bottle of wine later,I could not help myself...Dan Borislow Inventor of magicJack

  2. MagicJack is the best. I'm surprised everyone doesn't have one.
    I've had mine for almost two years. I quit using it shortly after I bought because of audible problems.
    I started back using it almost exclusively about two or three months ago. The audible is as clear as any phone I have ever used. I've not had the first problem with it since.
    Whatever they did, they got it right. Fred

  3. Does anybody has any comments regarding magicjack performance when you are abroad? Let's say you are in Cancun on vacation and want to use your magicjack using the hotel WiFi? Would that work? performance?

  4. Dan Borislow...inventor of magicjack.

    I bought a magicjack a mere 7 weeks ago. I logged into my Magicjack account today to enable call forwarding to my cell phone since I was going to be out most of the day. When I went to the login page I was directed to this page:

    *** ***

    On the page there is a button that says "Update for Windows 7". I wasn't there to update but downloaded and attempted to update anyway since the page made it look like it was an important update for Windows 7 users and I had been having call issues with the magicjack(unbearable noise sometimes, can't answer when it rings, etc). I downloaded the update, ran the program, it completed and my magicjack restarted. I now have a BRICK.

    Magicjack shows my phone number as 000-000-0000. Remember...everything has worked(well not near as reliable as a regular phone but...when it worked pretty good) for seven weeks. It died after the update. I did a little digging and found that my units serial number was now showing 0123456E6680. The first few numbers are a good indication of a flash gone bad.

    To make a long story short...I spent over 8 hours texting with your tech support since you don't have phone support. I continuously told them it was a bad flash(what do I know...I thought that my BSEE degree would qualify me as being a little knowledgeable on the subject...I guess I was wrong)

    They finally agree it is bad and then want to charge me 9.95 to send a replacement.

    Doesn't sound like a lot of money so why am I complaining? Right???

    I'm pissed that I've only had it 7 weeks and it is already broken.

    I'm pissed that I followed the advice of your website and flashed my phone.

    I'm pissed that you obviously don't do enough QC with your product or testing of update files before releasing them to the public.

    I'm pissed that you have the audacity to charge me 9.95 for a replacement magicjack that was bricked by no fault of my own.

    I'm pissed that your tech support took 8 hours to tell me what I already knew.

    I saved the conversations with ALL FIVE of the tech people I went through. I would be more than happy to let you read them so you can see that in the first two minutes I told EACH of them that the serial numbers were scrammed and that this would indicate a bad update. I told EACH of them that unless you can tell me how to manually reset my serial numbers...we are wasting time.

    Just so you know that I do know what I'm talking about...

    The serials get stored in the registry.

    The device should be a YMAX with serial number A92103000*****.

    It now shows up as a USB Combo with serial number 0123456E6680.


    Unhappy Customer

  5. He is a fraud and ripoff artist. Are you blind to the numerous complaints about his MagicJack
    company. Wake UP!

  6. I hsving troubles with my magicjack adding internationa credit.
    In many occasions the magicjack have taken the money of my bankaccount without add credit for international calling.
    Could you explainme what is the problem in my case.

  7. On customer service - still not helpful if you have any question that can't be answered by the FAQs already. Started using for a business (not telemarketing!) over two years ago. Just got one line terminated permanantly for making over 50 calls in one day to 50 different numbers. This was not on the TOS we agreed to when we signed up and the rep we talked to at that time and today repeatedly assured us that the calls were unlimited. It is on the current TOS but we received no notice that this was changing. Customer service simply sent us the TOS blurb and said automatic policy, nothing they can do. We are out of a business line and no refund on unused months prepaid for. No explanation would be given on why they changed the policy and no recourse to talk to anyone else. Very frustrating.

  8. I own two magicJacks and I have been very pleased with the ability to make the calls I make for my business, HOWEVER, I am thoroughly convinced the company's customer service ABSOLUTELY STINKS! I purchased my original magicJack in the US and then moved to Mexico where I own a large Real Estate Firm. One of my magicJacks went on the fritz and the only recourse you have is their useless CHAT system which wastes a lot of your time trying to solve problems which cannot be solved online. When the problem is not resolved there is NO BACKUP SYSTEM IN PLACE TO HELP YOU! They simply tell you to reboot your computer which effectively cuts off the contact with their technician and they just move on and foget about your problem- and you still have the problem. Both of my magicJacks were integrated into our business telephone system in our office and I can receive and dial calls from either of my two magicjacks from any of my extensions (each magicjack is installed in a separate computer). One of them suddenly would not allow dialing from my actual phone any longer (just able to dial from the "softphone" on the screen). They could not fix the problem after no less than seven or eight hours on the Chat with numerous technicians. The problem was never resolved - I simply went and bought another device and installed it and had to contact the technicians to figure out how to assign the same telephone number to my new device (the number was printed on our website, and business cards and distributed internationally). Then, came time to renew, and since I now live in Mexico, their system would not accept my card for payment. Their window on their site indicates that they accept international payments, but in my case it was not true. No matter what I did, I could not add my card to my account. I even enlisted the help of several technicians from magicjack and they assured me that they could fix the problem- not even close. I literally had to contact someone in the States and ask my friend to pay the renewal from his card and I reimbursed him for it. Then, I had the same problem with my second magicjack (the dialing problem). I contacted Chat and told them this was a problem which happened before and they could not solve- it still took me over two hours of wasted time to get to the point where they said they would replace my deice for 9.95 Shipping and Handling. I was even willing to do that even though I thought that was pretty bad customer service since this was the second time in two devices with the identical problem. They could not get my card added to the system so that I could make payment. Also they were supposed to help me with renewing my second device. After wasting several more hours on the Chat with them, the Chat just simply ended - no more response from the technician- I think he gave up and needed to move on to the next suck.. customer. There is no recourse with this company - they do not have any system to carry forward with an unsolved problem. There is no e-mail you can contact them on, no phone to call- they simply ignore you. I hope some other company comes up with a similar system so that I can give them my business. How can this company claim they have improved customer service when it is so substantially poor?
    Craig Rochlis

  9. Dan please invent a magic jack cell phone,we can use mobile like a cell phone, or a wireless wify magic jack phone that you can use to tap into wify when your out at McDonald's or wall mart.with out having your lap top along that would be real cool.. put the cell phone company's out of business

  10. MIKE,

    I am glad my course had some residual impact on you. I cannot believe it has been so long, but it has.

    Looks like you are doing well. I do remember you and hope that the class has helped you achieve.

    You can read my BLOG for some new CARLINI-isms and perspectives.

  11. Does anyone have a number other than the live chat to speak with? I've spend literally hours talking to a supervisor (supposedly) of MJ and they still want to blame my internet connection. I didn't use the MJ for 7 months because it didn't work within 2 mos. or so after first purchasing it. The techs were ignorant and did everything they could to not replace it, and now a year later still blaming it on my internet connection. The techs are not out the money so why do they care. All I asked after spending 2 hrs. with the tech support that I wanted a replacement MJ and after getting the new one that I would send them the "bad one" and if the 2nd didn't work I'd send it back also and get credit. I even signed up for the 5 yrs. just in case that would do the trick. But NO they simply said they wouldn't replace the unit because it was my connection. How stupid are they.

    My daughter had to finally get her 3rd one 5 years ago before it worked correctly. Has worked great for about the entire 5 yrs. but is now starting to have problems and she also wants to get a replacement.

    This gets so frustrating and wonder why Mr.
    Dan Borislow the CEO and inventor doesn't have a number or even email that he can be contacted at regarding issues like this. You
    'd think he's be more than happy to make people happy with his product. So if anyone has an email or number that I can speak to or email regarding this matter I'd appreciate it.

    My email is Thanks.

  12. As of today, November 16,2010, thousands of magic jack's customers have experinced a huge problem of not being able to recieve calls from outside of their calling area. Callers to magic jack Customers need to a third party phone number in order to get connected. Please check this link to see the depth of the problem .. Mo for Austin, Texas