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Small tech companies, big wins

Nov 21, 2011, 13:02 (0 Talkback[s])
(Other stories by Carla Schroder)

[ Thanks to Carla Schroder for this link. ]

"When Ricochet was introduced it was a hit: wireless mesh Internet at 128kbps. Customers were freed from their phone lines and could roam freely inside the network. We take this for granted today, thanks to the broadband cellular network, but back then it was all new. Metricom had ambitious plans to go nationwide, and had over 50,000 customers in 14 states who were happy to pay a premium rate of as much as $75 per month. But their growth was fueled by venture capital and debt rather than revenues; the money ran out and in July 2001 they had to file bankruptcy, leaving debts of nearly a billion dollars and assets worth maybe $140 million. Paul Allen, the multi-billionaire co-founder of Microsoft, and other investors sunk over half a billion dollars into Ricochet. Eventually Ricochet was sold for about $8 million, and became part of Proxim, Inc.

"Meanwhile back at the ranch (literally), Marlon Shafer of Odessa Office Equipment in Odessa, Washington wanted to bring the Internet to the Odessa area. The telcos, cable companies, and big-time Internet service providers were uninterested in serving a rural population. So in 1997 he borrowed $15,000 -- that's fifteen thousand, not million or billion-- and hired a Spokane ISP to build Mr. Shafer his own ISP in Odessa. He figured out how to set up DSL without the telcos, homebrew DSL, and for awhile life was good. Until the telcos caught on and decided to squash him. Never mind that they didn't want to serve the area; he was making money and having happy customers, and that was intolerable. So they raised the prices of dry copper circuits until Mr. Shafer was forced to look for an alternative. In 2000 he launched his first wireless rollout. His first antenna was mounted on a grain silo. It wasn't easy, and he made mistakes, but he did what Paul Allen and other Ricochet investors couldn't do -- turn a profit delivering wireless Internet."

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