PAGE AMERICA GROUP (55)
Although the formal name of the new venture was Radio Page-America, the grease-stained T-shirt David Post ceremonially presented to Valerian Podmolik that afternoon two years ago said simply, "Val and Dave's Garage." Post, chairman and founder of Page America Group Inc., a New York City -- based radio paging company with $5.3 million in 1984 sales, and Podmolik, president of RCA Global Communications Inc., a wholly owned subsidiary of RCA Corp. that has about $225 million in sales, had joined their companies in a partnership to develop Post's idea of pocket electronic mail. Together, they were gambling that they could create what Post terms "the NBC of the information business." The T-shirt, Post says, was a reminder that "all great companies start in a garage," and that the venture would have to keep its entrepreneurial spirit to succeed.
Post has always been willing to gamble on the future. A Wall Street investment banker specializing in emerging industries, he targeted radio paging as "idiot proof" when he decided to start his own business in 1977. At the time, the airwaves were closely regulated, and Post Couldn't acquire his own paging frequencies, so he positioned the company as the only national reseller of paging time. Setting up shop in his Manhattan apartment, he bought time from local operations coast-to-coast, then marketed that national capability to large corporations.
When the airwaves were deregulated in 1982, Post was able to seize the opportunity: He acquired his own license and a modest amount of venture capital, hired a chief operating officer, and started to grow. From 1,800 customers and $600,000 in sales in 1982, Page America shot up to 60,000 customers and $5.3 million in sales for fiscal 1984.
But the company has yet to make a profit. Instead, Post has plowed everything into his next gamble. He is, he says, on the leading edge of a technology that will expand the use of pagers beyond local one-to-one communication, allowing subscribers to receive messages from several different sources anywhere in the world on a miniature display screen no larger than a deck of cards. Those sources will also be able to transmit the same message to many different subscribers at the same time. "Today's pager is tomorrow's electronic mailbox," Post says.
To implement this pocket-mailbox plan, however, Post needed a sophisticated data-communications network -- something a small, undercapitalized company couldn't afford. That is where RCA came in. Two years ago, Post approached the communications giant, hoping to use its services at arm's length. Instead, recalls RCA's Podmolik, "we covered blackboard after blackboard and finally decided that the best thing was a joint venture." Page America owns 70% of RPA while RCA owns 30% and provides the general management. The three-member executive committee is made up of Post, Podmolik, and an outside chief operating officer. In addition, RCA has become a capital source. Last January, it acquired 15% of Page America for $6 million, the first time in recent history that RCA has invested as a minority partner. Another $6-million infusion, this one a loan, is planned for this year, when the partners hope to have their product on-line.
"We think they're going someplace," says Podmolik. "And we certainly didn't enter into it for a passive interest. We made sure that the vehicle was there for us to acquire majority control sometime in the future." According to a written agreement, however, "sometime in the future" won't be for at least four years.
For the moment, Podmolik prefers to keep the spirit of "Val and Dave's Garage." "You need the drive and the freedom that an entrepreneurial company can bring," he explains. "They don't have a bunch of policies and procedures, and the atmosphere they have is the best one for the business to develop rapidly."
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.