WBT interviews John Sculley and David Steinberg about InPhonic... and in doing so takes us behind the scenes of a big player in the fast-emerging "wireless management" space.

InPhonic, Inc., of Washington, DC, is the largest developer of virtual private wireless networks in the United States today, specializing in enabling its enterprise clients - large corporations and large member groups - to build a wireless network to interact with all of their employees and end users. Partners on the service side include AT&T Wireless, Verizon, and Cingular, while on the manufacturing side they include Motorola, Nokia, Ericsson, AudioVox, and RIM.

WBT: What prompted you to found InPhonic?
DAVID STEINBERG: Well, my last business was Sterling Cellular, a wireless phone distributor and integrator, and it evolved from there. It was clear that data would be the new frontier of the wireless universe, but we also knew that if we couldn't wrap voice in with it, it would be difficult. So even though we work with RIM devices, most of our clients are still using wireless/WAP enabled phones as well.

What kinds of clients is InPhonic supplying?
DS: Quixstar is one current example -  they have one of the world's largest sales forces, with approximately 1 million independent business owners working with them. They've hired InPhonic to build a virtual private wireless network for them.What we're doing is enabling their user group to disseminate information back and forth through different channels, utilizing a WAP gateway and an SMS gateway.

How do you integrate InPhonic's solutions with the client's existing infrastructure?
DS: We do it through a series of best practices and proprietary applications, including device management securement and nationwide activation. What we do is merge the client's products and services with our proprietary applications and allow people to view, in addition to pushing information out to the devices. We can actually allow people to view mission-critical functionalities of their corporate Internet through their wireless devices.

How did you snag John Sculley for your management board?
DS: Well, I first met John at a YPO conference two years ago. I approached him after he'd given the keynote speech, explained to him what we were doing...and he really liked the idea, so he invited me and a consultant up to New York. We spent some time with John in New York and he ended up not only joining our board but becoming my mentor. He wound up investing in the company as well.

John, what was your first reaction when you met David?
JOHN SCULLEY: Well, like he says, David and I met when I was giving the keynote speech, in interview format with Larry King, at a YPO event in Washington. To be frank, I've obviously met a lot of people over the years that have come up and introduced themselves to me for one reason or another, but that evening we ended up sitting next to one another at dinner and he started telling me his story - what his dream was and what he'd already done and why he thought it could work. And I became interested. I said if you're up in New York, stop by and see me. He came up to New York - I told him I'd give him 30 minutes. He wound up spending the entire day with me.

What do you look for, then, in a potential business partner?
JS: First of all, I invest and work only with CEOs that are on their second company. I like to work with someone who already knows how to build a business successfully, so that he or she can focus on building that business, not on learning how to be a CEO. What impressed me about David was that he could really explain what he was able to do. And then as I have gotten to know him, I've found he's extremely good at many other things. One of the things that David is really good at is attracting very good people who want to work with him in his organization, and he can actually deliver the stuff that he is talking about. He's an amazing deal closer. He's one of those people who can go in and tell his story and persuade people why they ought to be a partner or a customer with him and he closes the deals. And these are very big deals. I don't think a week goes by where there isn't one or two big deals that David has just closed. So this is a guy who has demonstrated to me that he not only has a vision in a very hot space at the right time, but he knows how to deliver and he's doing it big-time.

David, what was your life like before InPhonic?
DS: Well, I founded Sterling Cellular in my basement in 1993, and we grew it into one of the largest distributors of wireless phones in the U.S. before we sold it last year. What we did was to outsource service contract work for wireless carriers - some of our partners on the carrier side were BellSouth, Cellular One, Southwestern Bell, and AT&T. We built the distribution through a series of retail stores and through telemarketing distribution.

What about John, what kinds of things have you learned from him and his many years of experience?
DS: Well, in all frankness, John's one of the brightest guys I have ever known when it comes to marketing and technology. He really has the ability to capture very complicated technology and to make it very simple, which is really the crux of marketing technology. He has taught me a lot about simplifying - delivering a solution that people can not only utilize but also understand.

What about bumps in the road - have there been any yet along the way in your relationship?
DS: Not yet. John is one of the most amazing human beings I've ever interacted with - not only incredibly brilliant but also one of the nicest human beings you could ever meet. And for a guy who's considered by many to be an icon in the technology world, he's just an incredibly kind, nice person.

What expectations do you have for InPhonic as it continues to grow?
DS: Our goal is to continue to grow InPhonic into the cutting-edge wireless technology company that we have come to be known as today. How's that for a line? The reality is that as wireless technology and communications expand and change, we want to be on the cutting edge of that. Plus we are going to have a big job over the next three to five years helping our clients and our future clients integrate their legacy systems into a wireless platform - that is what a big part of our mission is.

Do you feel that wireless as a technology differs from other phenomena, like the Internet and previous technology revolutions?
DS: Much like a lot of technologies, wireless is an evolution of the Internet and other technologies that came before it. You know a lot of people try to make wireless very, very complicated; it's simply taking the wires away from what you are doing on the Internet. That's the holy grail in the wireless space. The trick to making it work in the U.S. is going to be switching from a circuit-switched world to a packet-switched world, and enabling enough bandwidth, so that the type of data connectivity that can come through high-bandwidth channels through the Internet will be able to be broadcast through wireless devices.

How do you propose to avoid the slowdown/meltdown of tech-stock prices we've been seeing already this year?
DS: This is the third company I've built - and we started running this company from Day One on solid business principles, with real P&L considerations from the outset. It's not to be confused with one of those "dot-bombs." We didn't set out just to ramp up quickly, for example. We started our company, on the contrary, with the aim of building a business to achieve profitability. We haven't had to make a lot of definitive moves, to cut back expenses, or to change our formula. At the same time we're in a funding environment - we funded our last round in October and we'll have plenty of capital on hand to do everything we need to do over the next year.

David, what about you? What expectations do you have for InPhonic?
JS: I'm frankly very bullish. I think that the biggest opportunities in wireless are going to be focused, first, on enabling business and enabling enterprises through solutions that really take advantage of communications. So the company is nicely positioned, with its ability to first take e-mail and then various future derivatives of it, like unified messaging services, and help enterprises to implement that on a customized basis.

Dave and his team are able to build private wireless networks and be the virtual wireless provider of this customized service for very large organizations that are doing MLM (multi-level marketing). I think e-mail is still a killer app. When you get to wireless, just as e-mail is a killer app for the wireline Internet, it's going to be even more so for the wireless world, with the one difference that with the wireless world, you want to be able to integrate e-mail back into your legacy systems if you're a large organization.

You also want to be able to customize it with various kinds of other time- or location-based information, like, Is my flight going to be on time?, How do I get directions?, all of those kinds of location-based information content. These are all the things InPhonic is set up to do.

So it really has soup-to-nuts, end-to-end solutions and services, which puts it ahead of the curve in that we can really deliver these services and are getting real traction with real revenue.

How involved are you in the day-to-day operations of the company?
JS: I am not in the management of the company, but we talk, probably at least three times a day. I'm more interested in being a mentor than being a manager. I can really be more valuable to David as a confidant and as an advisor, opening doors for business development opportunities and things of that sort, along with marketing strategies, giving him advice there as opposed to managing. That's how we work together. It seems to be working!

How about the same question that David answered earlier: Any bumps in the road with your working relationship?
JS: Nope. Partly this is because I only work with people I like and with things that interest me. There has to be a mutual respect from the very beginning. Plus I think we've both learned that we're working together basically because we enjoy doing it. It's been a very natural and easy progression. I'm having a lot of fun and I hope David is, too.

SIDEBAR
who inphonic works with Carrier Partners:
AT&T Wireless
Verizon Wireless
Cingular Wireless
MCI WorldCom Wireless
Alltel Wireless
Suncom Wireless
Motient

Technology Partners:
Microsoft
IBM
Cisco Systems
Compaq
Exodus
Brience
Xpedior
CELLIT
Compaq

Service Providers:
Arthur Andersen
Piper Marbury Rudnick & Wolfe
MWW Group
Metrocall
Appiant
iSyndicate
Advertising.com
WindWire

e-Business:
85 top-tier sites including:
Lycos
Quixtar
Kozmo
Snowball
Sandbox
Talk City

Enterprise:
Quixtar

SIDEBAR
company background
Founded in 1999 by David Steinberg, former CEO and founder of Sterling Cellular, InPhonic has become the premier B2B solutions provider in the development and management of private wireless networks. As a wireless infrastructure provider, InPhonic enables its e-business and Enterprise clients to deliver wireless data and mobile commerce solutions to their end users through a combination of wireless and Web-based platforms, products, and services in order to maximize the communication and monetization opportunities created within each private wireless network.
Complemented by an unrivaled fulfillment capability that includes device configuration and activation, InPhonic provides a comprehensive distribution network and back-end support program to companies seeking to implement value-added wireless services. InPhonic offers its client companies the capacity to distribute wireless phones, wireless services, two-way pagers, and PDAs.

InPhonic has forged alliances with an expansive group of wireless device manufacturers and carriers including AT&T, Verizon, Cingular, MCI, Nokia, Motorola, RIM, and Ericsson.

InPhonic's president and CEO, David Steinberg, has an accomplished career in the wireless telecommunications industry. He founded Sterling Cellular from his basement in 1993 and grew the company into one of the largest distributors of wireless communication products nationwide, including management and operation in excess of 40 retail points of distribution.

Talented professionals that have joined the management at InPhonic include John Sculley, former CEO of Apple Computer Inc. and PepsiCo, Tom Davidson Sr., CEO of Davidson Capital Group, and Bob Adelson, president of RAF NetVentures, one of the original seed investors in the Internet Capital Group.

http://www.inphonic.com

John Sculley is best known in the wired world for his 10-year tenure as CEO of Apple Computer, prior to which he'd been CEO of Pepsi-Cola Company for six years. Since 1997 John has been what he calls a "venture catalyst," with active holdings and participation in information, communications, and entertainment start-ups both in the U.S. and around the high-tech world. He divides his time between California and New York.

David Steinberg is founder and CEO of InPhonic, Inc., pioneer of Virtual Private Wireless Networks. He built his former company into a $25 million-dollar operation in just six years and has a history of creating cutting-edge distribution models for the wireless industry.