New Israeli company set to revolutionize fax machine

TEL AVIV — The headquarters of Aliroo are a perfect example of a start-up company office.

Far away from any industrial zone, the company is a four-bedroom apartment in a residential neighborhood of Kfar Saba. In the living room are two desks furnished with notebook computers. This is where the company's president and vice president sit.

A fax machine occupies a place of honor between the two desks, appropriate since the company provides privacy in faxing.

Aliroo produces software that allows anyone sending a fax to electronically scramble their message so that the person receiving the fax gets a sheet of unreadable symbols. That person can then easily use the software at his end to "decode" the fax within his own computer. The paper copy of the fax can remain encoded, unreadable to prying eyes.

"Today, the natural way to send a letter is to fax it rather than to send it by mail," says Aliroo president Yitzhak Pomerantz. "It's cheaper, faster, more convenient.

"But we have essentially moved from communicating by letters to communicating by postcards. Because a fax is essentially a postcard, it's open for anybody to read. So for eight years we had to sacrifice privacy in order to be able to compete as far as speed and convenience are concerned."

Judging from the response to Aliroo, fax users won't be worrying about privacy much longer. Pomerantz has been negotiating with potential distributors in several countries, after unveiling the product at the Comdex computer trade show last November.

The product, which can be used with any Windows application, fax or printer, is already being sold from Aliroo's headquarters and from its subsidiary, Aliroo America, under the name Privasoft.

The company plans to manufacture two additional products: Privaside, a small device to be attached to a fax machine so that documents can be scrambled without the use of a computer, and Privasint, a device that would be incorporated directly into the fax machine.

Japanese fax manufacturers have already voiced interest in adding a "scramble" button to their product.

Pomerantz is confident that he is offering the right product at the right time.

"The only practical alternative we can think of to Privasoft right now is [having] your recipient stand by the fax machine, which is of course a very awkward solution."

Though heading a small startup, Pomerantz, 46, has tasted life in the executive suite. After 16 years as an engineer with the IDF intelligence corps, he went to work at Scitex in 1985. When the project he was heading spun off into its own company, Cubital, he became its president. He left after six years, when "the company grew to such a size that I was not the right person to adequately manage it."

While at Cubital, "I came to the idea that civilization needs a secure way to send faxes, because I, as the president of a company, needed a secure way to use faxes. And not being able to find any, I had to invent one."

Fax security is not something that a businessman tends to contemplate until disaster strikes — a fax is misdialed and sent to the wrong place, or is read in the mail room by the wrong person.

For Pomerantz the problem crystallized in Japan.

"One cold, sunny day in the winter of 1991, I was walking in Tokyo, and realized I had to send a fax to the office of Cubital, and it had to do with letting an employee go. I couldn't send it because I didn't know who would see it at the other end."

That evening, he drafted the outline of a product that would be inexpensive, universal, usable in any language and with any kind of graphics. When he returned to Israel, he secured a patent on the idea.

Two years went by while the concept remained in the patent office, and in Pomerantz's drawer. He opened that drawer when he left Cubital in 1993, and found that it was still viable.

Pomerantz raised an initial $500,000 from a group of Jewish investors in Minneapolis that invests in Israeli start-ups, a similar partnership in Toronto, and from an Israeli family.

And Aliroo's secure fax was born.