Seattle has a long list of great entrepreneurs – Bill Gates, Howard Schultz, Jeff Bezos, to name some of the better known. But of that great group, much less known is about Craig McCaw, whose aura endures almost apart from the momentary performance of his businesses.
McCaw, 58, was profiled recently by The Wall Street Journal in a fascinating page one piece by reporter Amol Sharma, whose story paradoxically told another chapter of the genius who had stumbled – or had he? Such is the legend of Craig McCaw that when he seems to fail there's speculation that it's all part of his plan for even bigger success.
From an investor's standpoint, those who bought shares in McCaw's Clearwire must be sorely disappointed. Since going public in March, shares are down from a summer high of $35.41 to a recent low of $12.81. McCaw's plans to build a nationwide high-speed wireless network using WiMax technology went off course when Sprint Nextel dropped a joint development plan.
Now what? Like the Zen master who stays calm and speaks in riddles, McCaw would only hint of his next steps. "There's always been this sort of messiness that's created opportunities," he told the Journal.
Huh? But that's classic Craig McCaw. He's one of very few executives of a public company who can do that because of his reputation as an oracle, the guy who sees the future of wireless communications. Bill Gates has a similar status as the visionary of personal computing. He and McCaw have been wrong about certain forecasts. Gates long ago predicted the disappearance of the keyboard, for example. McCaw's disappointments have been even bigger, such as Teledesic, his failed partnership with Gates and others to create an "Internet in the sky" with 300 satellites. Not a single satellite was launched, but McCaw's reputation stayed in orbit.
If journalists have been insufficiently skeptical of McCaw's forays in the digital frontier, I'm guilty along with many others. I've met my share of billionaires, but he's the most eccentric of the lot. A former top executive of a McCaw company once said that of 10 Craig ideas, three or four would make you a fortune while another three or four would bring you ruin. The trick was picking the right ones.
If you have followed Craig McCaw's career over the past 20-plus years, a certain pattern emerges. For stock pickers, it's clear you can make or lose money depending on your timing (McCaw's Nextlink rose very high, then sunk, rewarding market timers, not faith-based investing.)
The recent Wall Street Journal article on Clearwire laid out all the familiar steps in the evolution of a Craig McCaw company:
Identify spectrum that might be available. McCaw believes that spectrum almost always has value. He started in wireless communications with paging and later gained some of the first licenses from the Federal Communications Commission for cellular telephones. According to the Journal, for Clearwire McCaw recognized that high-spectrum frequency used since the 1960s by universities, churches, and others might be adapted for commercial use.
Get the spectrum fast before anyone else realizes its value. At McCaw Cellular (later AT&T Wireless), McCaw sent aides with checkbooks to buy up licenses at prices people thought were crazy. For Clearwire, many potential competitors saw the Wi-Max spectrum as unattractive.
Persuade the FCC to make decisions that favor you or disfavor rivals. Of all the celebrated talents of Craig McCaw, this is the one that gets least recognition: his ability to work a system dominated by lobbyists for big broadcasting and telephone companies. Early in his career, he persuaded the FCC to allow license swaps. Later, he obtained permission to change the allowed uses of spectrum; he repeated that trick with Clearwire in 2004. The FCC agreed to reorganize spectrum used by Clearwire so it would function better. He also persuaded the FCC to pressure AT&T to divest itself of spectrum that he bought before competitors took notice.
Persuade those who control the money (bankers, partners, Wall Street analysts) that your idea will eventually cause a gusher of revenue. When building McCaw Cellular, Craig McCaw had to explain how a cell phone worked and how huge investment in cell towers and networks would pay off later. With Clearwire, McCaw convinced lenders and others that spectrum leased from license holders would work just as well as spectrum held directly.
Bet on the right wireless technology. Observers debate whether McCaw made the right picks as wireless telephones migrated from analog to digital systems. With Clearwire, he bet on WiMax, a more powerful version of the familiar Wi-Fi systems we find in places like Tully's. The Journal says WiMax is unproven for large-scale use.
Clearwire's stock fell 25 percent in a single day following the collapse of the Sprint Nextel deal, but there remains the possibility that new arrangements with Sprint or even others can be reached.
So is he thinking of selling the company? More likely, he's gearing up for something bigger. McCaw's past suggests some possibilities. Expect some whopper deals before he considers selling.
Stay calm, Grasshopper. The Zen Master has it all figured out.
