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Lessons learned from Wi-Fi firm's demise

    In response to the February 28 news story by Richard Shim, "Start-up Joltage unplugs Wi-Fi service":

    My phone has been ringing virtually off the hook since we announced that Joltage was closing its doors.

    Joltage was a New York-based company focused on building an operational support system (OSS) to enable wireless Internet service providers to become hot spots.

    In plain English, this means we built the back-end plumbing that allowed any hotel, motel or coffee shop to buy an access point and sell Internet access to their customers. Our software authenticated the users, charged them on their credit cards for the access and then divided the revenue between ourselves, the venue owner and the broadband wireline provider.

    The success of Joltage was predicated on two assumptions: First, that a substantial number of consumers would materialize and, in fact, clamor for public Internet access; and second, that a Wi-Fi company focused on building an OSS could attract significant financing.

    Like a house built on a shaky foundation, when these assumptions failed to materialize, the company collapsed. The lessons from Joltage are instructive in the Wi-Fi space and more broadly in starting any business.

    • Mass-market adoption for a new technology always takes longer than imagined.

    • Consumers have many alternatives for wireless Internet access. Just because people are willing to use it, it doesn't mean they're willing to pay for it.

    • In a weak wartime economy, venture capitalists only fund businesses with a clear and visible path to profitability. (So if all these lessons aren't enough--there is the final lesson, this one about venture capital.)

    Even in a space as sexy and revolutionary as Wi-Fi, funding is for those with significant traction and predictable cash flow. Joltage had neither.

    Andrew Weinreich (formerly of Joltage)
    New York