January 27, 2005
Comprehensive deals in sight with North America ’s largest wireless carriers
Not quite a year ago, Spotwave Wireless CEO and founder Shane Young had the talk with his board of directors. The one that many founders dread, about whether the startup has the right person in place at the top.
Young was OK with it, though. He and Paul Simpson , a fellow Canadian Marconi Co. alumnus, had launched Spotwave in 2000 at the peak of the tech boom. By 2004, they had sold their technology which eliminates ‘‘dead zones'' inside homes and office buildings to every major carrier in Canada and the U.S. Spotwave looked on track that year to reach nearly $10 million U.S. in sales. Spotwave's revenues were doubling year over year and the potential beyond 2004 seemed breathtaking.
"I've never taken a company to $100 million in (annual) revenue," says Young. "There was a recognition from management, the board and investors that this opportunity is big, so we'd better get the right people in place with the right experience."
Spotwave hired a headhunter in the spring, eventually drumming up a dozen or so serious candidates for CEO. Young was deeply involved throughout, interviewing potential replacements and providing the board with his detailed assessments. This was not a case of the board easing out the founder. Young remains president of the firm, as well as a significant minority shareholder. In fact, it was understood all along that he would continue to play a key role in the firm.
The winning candidate, Bill Carlin , intrigued Young from the beginning but it wasn't until their third or fourth meeting that he felt secure that this was the right guy for CEO. To put it mildly, Carlin, 46, is an unusual choice. It could prove a brilliant one but it's possible he may not work out at all. On the plus side, Carlin knows the wireless industry inside out and appears to be a top-notch salesman. He has worked a series of assignments at Hughes Network Systems, STM Network Systems, Adaptive Broadband, ViaCast Networks, Terrapin Broadband and, most recently, interWAVE Communications. The three common threads were sales jobs, travel and wireless technology.
The two question marks over Carlin are whether or not he will be a good CEO and whether he can continue to run the company from his home near Washington , D.C. Before taking over at Spotwave last October, Carlin did enjoy a short stint as chief operating officer, the No. 2 job, at interWAVE Communications International, a maker of compact mobile network gear. But, within weeks of his promotion in June to COO, he was faced with a takeover proposal from Alvarion Ltd., a Tel Aviv-based provider of wireless access networks. Negotiations over the $56 million U.S. acquisition started in July and closed last month.
Little wonder that Carlin continued to respond to overtures from Spotwave throughout the summer. Besides, the more he dug into Spotwave's technology and prospects, the more he liked what he was seeing. "Our early discussions revolved around what was the best way to scale the company to tackle the opportunity," Carlin says.
By September his hiring was a done deal; he started his first commute to Ottawa as CEO on Oct. 4. Carlin is wasting little time. In the next few days, he will announce the hiring of former interWAVE colleague Paul Tinney as vice-president of global sales for Spotwave. He and Tinney are also opening offices in Asia and South America.
Spotwave, which employs 63, is also expected on Jan. 31 to unveil a new suite of products compatible with third-generation wireless technologies. The company intends later this summer to add fresh features to its flagship product, a three-kilogram system of antenna and electronics that provides reliable wireless coverage in home or office spaces measuring up to 100,000 square feet.
Carriers such as Verizon Wireless and Telus Mobility like the product for a number of reasons. Wireless customers who use it are more likely to continue to rely on their cellphones indoors rather than revert to the ordinary phone system. The Spotwave technology doesn't tend to interfere with other communications networks. And it's relatively inexpensive.
Finally, the concept itself is relatively easy to sell. Carriers know that people spend the majority of their time on cellphones and other wireless devices either at their home or in the office. If they can improve the coverage of those two spots for each subscriber, people will be much more comfortable giving up conventional, wired phones.
Now comes an interesting juncture for Spotwave, not to mention a terrific test for its new CEO. Carlin says he is in intense discussions with three of America's top five wireless carriers over the possibility of using Spotwave's gear throughout their networks. Similar talks are also under way at two of Canada 's biggest wireless carriers. Given the presence of Telus Mobility's CEO George Cope on Spotwave's board, it's a safe bet that Telus Mobility is one of them.
The tricky part is figuring out who is going to pay for Spotwave's gear. The carriers reckon that serious wireless subscribers — ones that rely on wireless data and use their cellphones mainly for business — would be willing to pay for the Spotwave electronics themselves, much as Bell ExpressVu customers shell out their own money for satellite dishes. On the other hand, carriers are also toying with the idea of offering premium quality wireless services for which they can charge more. And there is some talk that carriers could subsidize the gear.
The precise agreement, assuming one is signed, will have a huge bearing on how rapidly Spotwave's revenues will grow. Carlin is even giving some thought about how Spotwave could set up distribution channels in America 's largest electronics retailers including Best Buy and Circuit City . "The question is not if this will happen," says Carlin, in reference to the arrangement being negotiated with the big wireless carriers. "It's when."
He acknowledges that this could mean sometime this year, maybe even next year. In technology terms, that's a long time for things to be hanging out there unresolved. But, from the vantage of his new apartment along Bank Street, his weekday home, Carlin likes the way things are shaping up.
James Bagnall can be reached at jbagnall@thecitizen.canwest.com.
