The stories behind my companies
Published by MartinVarsavsky.net in General with No Comments
Urban Capital, Medicorp Sciences, Viatel, Jazztel, Einsteinet, Ya.com…
A real estate development company based in New York City and Colorado. Since its founding in 1985, Urban Capital has developed over 400,000 square feet.
Urban Capital is the company I could have retired with at 27 and lived happily ever after. And I did then, but only for a couple of years. I started Urban Capital while finishing my MBA at Columbia University raising $12 million dollars in debt and equity. Don´t ask me how I did it. Even now, 18 years later I still wonder how I did it. I guess it was a combination of finding the right properties, associating myself with Len Kahn, 8 years my senior in the Real Estate field, and the trust of my early investor, Manuel Madanes, one of the most wonderful entrepreneurs I ever met. But to exemplify let´s use 32 Varick Street. I bought that building in 1984 and personally invested $25K in that transaction for which I raised $12 million. Now that is leverage! And it worked out. Last year for example this property yielded around $1 million of distributable proceeds. I own around one quarter of it. Not a bad return for an investment of $25 K 18 years before. And last year was good, but not unusual. We bought this building for $50 per sq ft, fixed it up for another $50 sq ft and turned it into one of the first loft office buildings in Tribeca. Now Miramax is our main tenant. And there are other good ones in there. At Urban Capital we also made another very good deal, 350 West Street. A flip in which we doubled our money in one year. But not everything went well. We also lost money in a couple of hotels. But overall we came ahead very, very well. And it´s nice to live in Spain and get those checks from Len every month.
And real estate did not end in the 80s. In 2001, after selling Ya.com, I went back in the field with enthusiasm. I felt technology was overvalued and that real estate had room to move. And it did. I bought farms in the Hamptons, Long Island, as well as land in Madrid and Menorca. So far so good. I recently sold a farm in the States though. Real Estate moved with declining interest rates. But I’m afraid those fell as much as they could fall.
Two argentine scientists in exile, the Nobel prize winner in Medicine Cesar Milstein and Doctor Claudio Cuello, started this company with me.
I started Medicorp Sciences a year after Urban Capital, serendipitously. By the end of 1985 I travelled to Oxford to visit my uncle Carlos Blanco and my aunt Ruth Waisman. My uncle Carlos was doing his PhD in Medicine over there. While at Oxford, at a Christmas party, I met with two of Argentina´s and probably the world´s best scientists in their field. Nobel Prize winner Cesar Milstein and Dr Claudio Cuello. Now, exactly why Drs Milstein and Cuello, two scientists who had tons of offers to start biotech companies and join large established companies, decide to start Medicorp Sciences with me will never be totally clear to me. I think I remember Dr Milstein say something that he disliked capitalism but that he would rather deal with 25 year old me, than with Roche. And he did, and so did Claudio Cuello. And we started Medicorp Sciences a year later in Canada (Dr Cuello had become the head of Pharmacology there) and other major scientists joined the effort.
While Medicorp Sciences was never a major success it wasn´t a failure either. We were among the first to make AIDS and Cancer products of different kinds (HIV tests, PSA tests) and Medicorp Sciences is still there selling its products.
Founded in 1991, Viatel is a specialist provider of high quality, competitively priced communications services to businesses and carriers.
I used to own a hotel in Boulder, Colorado, the Holiday Inn. The hotel went bust and it was a bad investment. However, in my attempts to save it, I came accross an idea that led to a company that I started in 1991 with $200,000 and that, in only 8 years, by the time I sold my 20%, got to be worth $1.2 bn. This company was Viatel, presently the owner of one of the largest European fiber optic networks.
The original idea of Viatel was to use the phone system of the hotel in Boulder, Colorado, USA, to switch calls not out of the hotel but into the USA and from any country to any other country paying US rates, which in 1991 were around 70% cheaper than rates in most other countries. Once that worked, I automated this system under a new method that became known as Call Back. Call Back went on to revolutionize the way phone calls were made around the world, radically cutting the cost of international calling.
In 1993, when the call-back business got increasingly crowded, Viatel evolved into another original idea of mine, the first pan european fiber optic network, where the company layed bandwiddh-rich fiber-optic cables between London, Frankfurt and other major European cities. With the telecommunications starting to sweep across Europe, the timing was ideal. In 1997, I decided to move on, I resigned my official positions at Viatel, sold most of my stock, and went on to concentrate on Jazztel.
Jazztel became the largest CLEC in the Iberian Peninsula and is now the second largest publicly traded telecom company in Spain.
I started Jazztel in 1998, when I was leaving Viatel. Jazztel became the largest CLEC in the Iberian Peninsula and is now the second largest publicly traded telecom company in Spain. A very distant second to Telefonica. Jazztel, as Viatel, also went through a boom and bust period in its quest to sell broadband fiber optic services. But the bust wasn´t as pronounced and the company is still worth around 400 million euros in the Madrid Stock Exchange. In building this company I was accompanied by two fantastic managers, Antonio Carro and Miguel Salis.
EINSTEINet AG, was founded in 1998 and is now part of ECD Computer Partner.
Einsteinet was the opposite story of Ya.com. A complete disaster. My black eye in business. My 30 million euro black eye. I was one of the first people who came up with the concept of the ASP (Application Service Provider), the companies that were supposed to sell you Word, Excel, Power Point, SAP, Siebel, Oracle and any software you can imagine over the Net. But not the Internet. The Einsteinet. And we tried very, very hard to make this work. And we failed miserably. The company was in Germany and unfortunately German clients just did not go for the ASP concept. And what kills me is that I am absolutely convinced that ASP will rule the software world in the long run. But as Keynes said, in the long run we are all dead. And we are. Einsteinet is now part of ECS Computer Partner. Fortunately not all jobs were lost. And if any of my Einsteinet employees or clients ever read this web site all I can say is “My big apologies to you”. We tried earnestly and the market just wasn´t large enough to keep going.
Ya.com Internet Factory is Spain’s second largest Internet content company. It was founded in May 1999, and following an initial investment of 38 million dollars, was sold in September of 2000 to T-Online, the Internet subsidiary of Deutsche Telecom, for 550 million Euros.
What a short and sweet story that was. Started in 1998 with an investment of 38 million euros mostly owned by Jazztel and partly by me directly, in only 14 months we sold this company to T Online, a subsidiary of Deustche Telekom for 550 million euros in cash and shares that we quickly turned to cash. Ya.com was and still is Spain´s second largest internet content company. I owe much of the success of this company to the original Terra management team who courageously left the former monopolist to join me. Antonio Saez, Rosalia Lloret, Alvaro Ibañez to name a few of the many, many fantastic managers who managed to capture the imagination of the Spanish internet public as it joined the net.
Follow Martin Varsavsky on Twitter: twitter.com/martinvars
Leave a Comment
You must be logged in to post a comment.
Karl Boyd on January 4, 2008 ·
Since ECS Computer Partner filed for bakruptcy a while back – what happened to remains of Einsteinet? The Hamburg Data Center was an impressive set-up (though it did cost Nortel a bit:). Who is the current owner of the Data Center?