By Greg Netzer
Oregon Business Magazine
Will It Fly?
Eleven Wireless: Making the world safe for wireless networking
WHO ARE THEY? Eleven Wireless, incorporated in March 2002. Employs 10 in Portland.
WHAT ARE THEY? “Eleven provides high-performance software for
building and managing Wi-Fi infrastructure,” says Josh Friedman, yet
another Intel alum turned entrepreneur. The company’s name is a riff on
the numeric identifier for wireless networks, known as 802.11; “802”
means network, and “11” means wireless.
MARKET? Eleven targets wireless ISPs, venues such as hotels
and larger telecommunications carriers. There are 44,000 hotels with 15
or more rooms, but less than 3,000 currently have broadband networks.
Eleven already has networks in 15 hotels and a conference center. It
just announced a deal with Portland Roasting to provide 200 Northwest
coffee houses with Wi-Fi.
COMPETITION? Small but growing rapidly. Some companies, such
as T-mobile, deploy and manage networks. (T-mobile manages the
“hotspots” - areas with wireless reception - at all Starbucks.) Mainly
the field is full of fledgling startups like Eleven.
BUSINESS MODEL? Initially, Eleven deployed Wi-Fi networks,
setting up base stations and antennae. Now, it markets ElevenOS, its
proprietary software, via ASP to other service providers who deploy the
networks. The software’s base cost is related to the number of accounts
a client carries, charging for active users only. There are discounts
for volume.
FUNDING OUTLOOK? Early angel investment of less than $100,000
has kept the company afloat [along with revenues]. They’re just
starting to look for $750,000 to $1 million for extending software
development efforts, rolling out sales, building channel development
and making key hires.
WILL IT FLY? You can’t turn around without seeing
another business magazine cover heralding wireless as the Next Big
Thing, though few will say how big it will actually be. Eleven’s Josh
Friedman compares its potential to that of the cellular phone market 20
years ago. Wi-Fi’s allure is certainly easy to see. Business travelers
and coffee-shop slackers alike enjoy the ease of access to the Internet
from their laptop; business offices like the prospect of a local
network without yards of cable tangled underfoot. Seems like a gold
rush waiting to happen.
That’s what the folks at Eleven thought. They began deploying
hotspots in early 2002 but soon saw another opportunity. “There’s a
great need to manage wireless networks,” says Friedman. “It’s a huge
weakness in this nascent market.”
So they changed their business model and developed ElevenOS, which
performs billing, authorization, administrative reporting and other
functions - all necessary for network admin. Eleven is phasing out of
deploying networks at year’s end. “Deployment is not as scalable,”
Friedman says. “There are plenty of people qualified to deploy
hotspots. So we’re going to partner with them.”
This is just smart business strategy. Eleven has also racked up an
impressive list of strategic partners in Cisco, Intel and Microsoft,
the companies to whom all of their clients turn for equipment. Things
are looking rosy. So what’s the big hurdle? Brand awareness. “We need
to create a strong industry position in the very noisy Wi-Fi
marketplace,” Friedman says. This could be tricky because his customers
aren’t end-users. Friedman and Co. need a few big customers to sign on,
and fast. Still, with paying customers across the country and an
absurdly low burn rate for overhead, Eleven likes its prospects. It
should, because they’re excellent.
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