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Oh sure, he goes on vacation. But he's not quite sure what to do when he gets there. He took his wife and three school-age kids to a Club Med in Mexico last March. While his wife and kids played in the sand, swam in the pool, and soaked up some sun, Jain was busy running up a $1,000 phone bill. "I had a terrible time. I didn't know what to do," Jain says. Jain is nothing if not manic. A fireball of energy, he has worked 20-hour days for the last four years, building Redmond, (Wash.)'s InfoSpace Inc. into one of the biggest Internet companies you've never heard of. InfoSpace cuts deals with all sorts of content providers -- from white- and yellow-page services to weather forecasters to map providers to news services -- and offers that information as a packaged service to Web sites. DOUBLETIME. Such companies as America Online and Lycos use 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 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. All that adds up to an Internet company that makes money, if only a little bit. InfoSpace has strung together four straight profitable quarters, excluding one-time charges. In the first quarter that ended Mar. 31, InfoSpace earned $1.89 million, or 1 cent 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 percent, to $19 million in the quarter.
MOVING TARGETS. For Jain's next act, he wants to grab a piece of the growing market for wireless-Internet services. It's the same business model for a slightly different medium. InfoSpace wants to provide the technology that connects users to e-mail, traffic reports, stock quotes, and e-commerce sites. InfoSpace has created new services designed specifically for wireless gizmos and it also reformats existing Web content to work on smaller devices. Because cell phones send out signals that indicate a user's location, the business potential explodes. It doesn't make much sense for a small restaurant to develop a Web site. But a wireless service that lets a hungry cell-phone user know that an Italian restaurant is within two miles and offers a $2 digital coupon has some value. 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. 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, a top-line cell-phone exec, was important. "He definitely brings credibility, contacts, and wireless experience," says Crispin Vicars, senior director at Yankee Group. FORCE OF PERSONALITY. To be sure, Jain isn't the only one who sees the potential. And some of the biggest players on the Web are angling for the same market as InfoSpace. Such powerhouses as America Online and Yahoo! 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 to be the obscure unit that runs the service in the background.
InfoSpace's biggest problem may have been a lack of management depth. Jain has led the company, not just in title, but through the force of his personality, since the beginning. And he has struggled to find a second-in-command. In January, 1999, he hired Bernee Strom, a founder and a principal at Gemstar Development Corp., which developed VCRPlus+ video programming technology. But by early 2000, Strom was out of that job, working now as president of InfoSpace's venture-capital fund, set up by Jain to partner 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, Emarketplaces, and Gift Tree. CHIP OFF THE OLD BLOCK. Jain makes no apologies. 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 of work. It's a trait he developed during his seven-year stint at Microsoft. He led the marketing efforts on the company's first version of Windows NT, its industrial strength operating system. And later, Jain helped develop the Microsoft Network, the company's failed bid to compete with America Online. 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. 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 three children's upbringing. But she has been married to him for 12 years and realizes that's just who Naveen Jain is. Because of that, 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. Greene covers technology for Business Week |
