Tax breaks, location attract entrepreneurs to Hawaii

Hawaii’s high-tech tax incentives and proximity to Asia have enticed Silicon Valley startup PacifiCall to move operations here.

"I look at Hawaii as the gateway to Asia," said Rob Romero, a self-titled serial entrepreneur, who was in town this week to lay the groundwork for moving his company here.

By:
Terrence Sing
Pacific Business News

PacifiCall plans to bundle its proprietary software with cell-phone distributors to facilitate international phone calls. Direct-dial features will eliminate the multiple steps used with calling cards.

The software would be installed at the distributor level, before the phones reach consumers, but also can be downloaded through PacifiCall’s Web site, Romero said.

"We have a deal with a national provider to bundle our software with all their phones," he said, declining to disclose the company’s name. "We are going to partner with the biggest distributors of cell phones in the United States, Hong Kong and Spain."

PacifiCall will operate like an interexchange carrier, but without the expense of network hardware and operations, Romero said. The company therefore can offer lower calling rates, he added.

"You can access your account information over your phone and find out the details for each call, including how long, where you called and how much you paid," he said. "The beauty of it is you don’t even know it’s there. But it’s there if you need it."

Romero is scouting for office space on Oahu, possibly with an incubator.

"We are all about saving money," he said.

The company is also looking for money, to the tune of $4 million to $6 million, from telecom-savvy investors. It also has received a "comfort letter" from the state’s Tax Department to entice investors. ConnectiveCapital seed-funded PacifiCall with $200,000, Romero said.

A comfort letter is basically a ruling from the state that a company is a qualified high-technology business.

"We’re now ready to get to Hawaii," he said. "We’ll know exactly where our offices will be in a week or two and plan to open and begin operations by year’s end."

PacifiCall is targeting the $7 billion international mobile-calling-card market, Romero said.

"Our strategy is basically to go after a market that exists rather than taking the risk of creating a brand-new market and new behaviors," he said.

The first opportunity is mobile international calling, which is an existing market, Romero said.

There appears to be a need for the application PacifiCall is developing, said Tareq Hoque, chairman of the Hawaii Technology Trade Association.

"Romero’s application brings cost savings and ease of use to a fairly significant population of global cell phone users," he said. "Overseas, calling cards are much more important than they are in the United States. The wireless area, especially overseas, is a very healthy market. It’s one of the few areas that’s experiencing growth and profitability in the telecom industry."

Hoque considers PacifiCall a good example of the right use of Act 221, the state’s high-tech tax-incentive law.

"It’s really about creating innovation and job creation in the tech sector," he said.

PacifiCall’s longer-term plans include a feature that allows callers to switch a cell phone call to a land line seamlessly by pushing a button. The feature also would allow a land-line call to be transferred to a cell phone.

"The person on the other end of the line would never know you switched phones," Romero said. "But this feature would be useful if you had to leave the office or, as often happens, received a cell call while in the office and wanted to transfer to a land line. That way, you don’t waste your cell phone minutes."

Romero also is managing director of Palo Alto-based venture capital fund ConnectiveCapital and is an investor in Kailua-based AssistGuide. His background in tech startups includes co-founding nationwide voice mail provider eVoice, which was acquired by America Online in 2001.

PacifiCall plans to have a staff of about 15 in Hawaii and is seeking Java programmers, network engineers and telecom-signaling professionals to work here.