How the Founder of Spain's Gowex Bet the Farm (Twice) and Won
Spain isn't known for its big tech success stories. Try naming three. How about two?
One company that has managed to stand out and become a global brand is Let's Gowex SA, a Madrid-based provider of free outdoor Wi-Fi services. Its growth, largely from increasing smartphone and tablet usage, has also been fueled by founder Jenaro Garcia's willingness to bet the farm.
Or more specifically, his house. Twice.
When Garcia asked his wife 14 years ago if they could sell their home to raise money for his startup -- an endeavor that also meant he would have no salary for several years -- it took some convincing. His wife called her mother, who's also a business owner, seeking advice. The answer she got? Please, follow your husband's idea.
Turns out mom was right. The 150,000 euros they got from the sale funded a company that today is worth around 344 million euros ($448 million). Shares of Gowex, which went public in 2010, have doubled in value this year.
When the company was founded in 1999, investors were turning to Spanish real estate as the dot-coms were going bust. That didn't deter Garcia, a former futures trader trainee and wealth management manager, who put his life's savings and salary into an Internet startup anyway.
One of the better bets the 45-year-old made was to grow internationally early on, a move that would later insulate his company from Spain's six-year economic slump. Gowex is in 70 cities worldwide, including Buenos Aires, Hong Kong, Paris and New York City.
The company makes money from selling roaming, advertising, e-commerce and other services to local governments and mobile carriers. Garcia said business was slow until the iPhone arrived almost six years ago. Last year, Gowex's revenue climbed 71 percent to 114 million euros ($146 million). Profit rose 136 percent to 17 million euros ($22 million).
Still, finding success as it continues to expand won't be easy. Gowex faces a growing challenge from companies offering similar services, such as U.S.-based Boingo Wireless. As for its competition with phone giants such as AT&T and Deutsche Telekom, Gowex is trying to strike more partnerships with those traditional operators.
Then there are the cultural barriers the company will face as it enters new markets and the challenge of finding the right talent. Those will become bigger issues as Gowex plans to expand to 300 cities by 2018.
To finance that growth, Garcia, who is now renting a 150-square-meter apartment in downtown Madrid, recently turned again to his significant other. He said his wife "went nuts" when he suggested putting all of their savings for a new house into the company once more.
As it turns out, the investment has almost doubled in value.
"She is very, very happy, even if we still don't have our own house," he said.
This story was first published in Bloomberg's Global Tech Today newsletter. To get an early jump on the top tech news from around the world, sign up for the free weekday report.