The Best of Business Week Online: Entrepreneurs
The Man behind All Those E-Ads
InfoSpace's Naveen Jain puts in a 120-hour workweek finding new applications for his Net tech star
In the driven culture of technology startups, marathon workdays and scorn for vacations have become a mark of entrepreneurial machismo. By that measure, Naveen Jain, the 40-year-old chairman of InfoSpace Inc., cuts a Schwarzenegger-like figure among the techno-crowd.
Since founding the Redmond, Wash., company four years ago, Jain has worked 20-hour days to build it into one of the biggest Internet companies you've never heard of. InfoSpace makes deals with all sorts of content providers--from news services and yellow-pages suppliers to weather forecasters and online mapmakers--and sells that information as a packaged service to Web sites. Now, for his next act, Jain is using that same business model to grab a piece of the growing market for wireless-Internet services. The all-consuming work pace leaves little time or even inclination for play.
Oh sure, Jain goes on vacation. When he took his family to a Club Med in Mexico last March, his wife and three school-age kids played in the sand, swam in the pool, and soaked up sun. But Jain was busy running up a $1,000 phone bill. "I had a terrible time," Jain says. "I didn't know what to do."
That drive has built an Internet company that's not only growing fast but also making money--if only a little bit. InfoSpace has racked up four straight quarters of profit, if you exclude one-time charges. In the first quarter ended Mar. 31, InfoSpace earned $1.89 million, or 1 cents a share, excluding acquisition and stock-option charges--compared with a loss of $5.3 million, or 3 cents a share, a year earlier. And revenue continues to soar at hyper-growth levels, climbing 260%, to $19 million, in the quarter. That performance has helped InfoSpace withstand the spring swoon in Internet stocks: Regaining some of its losses, it is trading close to $60, its price back in January.NEW NO. 2. In April, there was some speculation that Jain might be slowing down: He handed over his CEO duties to Arun Sarin, former CEO of Vodafone AirTouch PLC's U.S. and Asia Pacific regions. But Jain, who serves as chairman and chief strategist, insists that he will keep up his 120-hour-a-week schedule. Adding Sarin was simply a way to put more firepower in the top ranks. "Zero responsibilities have changed," Jain insists. Both he and Sarin are jetting around the globe to set up new deals. With two top executives, Jain jokes, InfoSpace is able to cram 48 hours into a 24-hour day.
Current customers include America Online Inc. and Lycos, which run InfoSpace's classified advertising on their Web portals. Go.com uses the company's white pages. Snap.com uses its yellow pages and mapping services. Each time surfers click on an InfoSpace service, they're shipped to a Web site run by InfoSpace. The company gets licensing fees from the sites, and it shares advertising revenue from traffic that's sent to its services. While other companies offer similar services, none offers as broad a range to as many customers as InfoSpace.
Now, targeting the market for wireless-Internet services, InfoSpace wants to provide the technology that connects users to e-mail, traffic reports, stock quotes, and e-commerce sites. It has created new services designed specifically for wireless gizmos and also is reformatting existing Web content to work on smaller devices.
Because cell phones send out signals that reveal a user's location, the business potential is exploding. It doesn't make much sense for a small restaurant to develop a Web site. But a wireless service can attract a hungry cell-phoner with the information that an Italian restaurant is within two miles--and can offer a $2 digital coupon as an added lure. InfoSpace has developed the technology to do that and wants to persuade wireless providers to include the service. Ultimately, InfoSpace hopes all sorts of retailers--from florists to dry cleaners to restaurants--will take advantage of the service. InfoSpace and the wireless carrier would share a cut of the sale from customers that use the promotion.OBSCURE. The opportunities seem vast. By 2004, 1.3 billion people are expected to have wireless access to the Web, up from just 5.7 million last year, according to International Data Corp. That's why grabbing Sarin, with his background as a top-notch cell-phone exec, was important. "He definitely brings credibility, contacts, and wireless experience," says Crispin Vicars, senior director at Yankee Group Research Inc.
To be sure, Jain isn't the only one who sees the potential. Such powerhouses as America Online Inc. and Yahoo! Inc. have mapped out strategies to go for the same wireless infrastructure-services business as InfoSpace. But if InfoSpace has an advantage, it's that the company is happy enough being the obscure unit that runs the service in the background. The strategy is working well so far. InfoSpace has lined up a Who's Who of wireless carriers--AT&T, GTE, Bell Atlantic, US West, and Vodafone, to name a few. "It's a very coherent strategy," says Jack Ripsteen, an analyst at Chase H&Q in San Francisco.
What InfoSpace has lacked has been management depth. Jain has led the company since the beginning--not just in title, but through the force of his personality. And he has struggled to find a second-in-command. In January, 1999, he hired Bernee Strom, a founder and principal at Gemstar Development Corp., which developed VCRPlus+ video-programming technology. But early this year, she moved to a job as president of InfoSpace's venture-capital fund, set up by Jain to forge links with companies strategic to InfoSpace's business. The $30 million fund, open only to InfoSpace and its employees, has invested in such companies as Catalog City, Gift Tree, and Emarketplaces, a B2B Web site.
Jain makes no apologies for his hard-driving lifestyle. A native of India who moved to the U.S. 21 years ago, Jain refers to himself as a "cult leader" who doesn't have much of a life outside his work. It's a pattern he developed during his seven-year stint at Microsoft Corp. He led the marketing efforts on the company's first version of Windows NT, its industrial-strength operating system. Later, Jain helped develop Microsoft Network, the company's failed bid to compete with AOL. And while he often cites Microsoft Chairman William H. Gates III as a personal hero, he's quick to point out that even his old boss is slowing down. "I'm not backing off and learning golf," Jain says."FOURTH CHILD." Does Jain's family mind his logging all those hours? Anu Jain, who is vice-president for community affairs at InfoSpace, worries a bit that her husband is missing out on their children's upbringing. But she has been married to him for 12 years and realizes that's just who Naveen Jain is. And for her, the company--whose success has made the Jains worth $3.2 billion--is like family. "I look at it as our fourth child," Anu Jain says. And Naveen's dedication to his work is instilling values that are important for their children. "Naveen's a great role model," she adds.
It seems to be working. Not too long ago, Jain asked his 10-year-old son if he wanted to work at InfoSpace someday. The boy was unambiguous. "He said: `That's your company. I want to start my own,"' says Jain with a laugh. It's enough to make a father proud.By Jay Greene; Greene Covers Internet Companies from Seattle.