Steelberg Bros. Are Back With Latest Venture
By ANDREW SIMONS
They’re back, but this time they’re on the radio.
Newport Beach brothers Chad and Ryan Steelberg, perhaps best known for now-defunct free Internet service provider Winfire Inc. they founded two years ago, have started another company with their own money.
The new company’s hook: charge fees to radio stations that want to send targeted messages via radio waves.
With a tip of the hat to radio pioneer Guglielmo Marconi, the Steelbergs call their new venture dMarc Networks Inc.
The company makes software that along with computer gear sits inside radio tower transmitters. DMarc sends a stream of content that radio stations can select and direct to car radios.
The text message,say a station’s call letters,is displayed on the radio’s screen. DMarc says it can send song, artist, concert, news, stocks, weather, traffic and ad information to radios.
DMarc’s content is broadcast over a subcarrier system,the 20% of a broadcaster’s frequency that is unused.
“Think of us only as a pipe,we direct content,” said 28-year-old Ryan Steelberg, president of dMarc. “It’s a large opportunity.”
The Steelbergs estimate that 75% of new cars could support their radio display system.
They say revenue will be earned from software licenses, royalty fees and servicing contracts based on their technology, which is awaiting a patent.
Chad, the elder Steelberg at 31, is dMarc’s chief executive and chief technology officer.
The venture is the Steelberg brothers’ third major one together since Ryan turned 20. The two founded Costa Mesa-based AdForce Inc. in 1995, an Internet advertising company that allowed advertisers to target marketing messages to a specific audience.
The duo started Winfire in 2000, flush with cash from selling AdForce to Internet holding company CMGI Inc. in 1999. (CMGI shuttered AdForce in 2001.)
Winfire didn’t go as well as AdForce for the Steelbergs. The company,formerly called FreeDSL,created a buzz in the market with its catchy free digital subscriber line model. Catchy as it was, the company folded six months after it started offering high-speed Internet service in a few California markets.
Winfire ran into the same problems that for-pay high-speed Internet companies ran into: line provisioning, customer problems and overwhelming set-up costs.
“We just couldn’t get SBC out of the way,” Ryan said.
Broadband service providers such as Winfire needed to rent phone lines from SBC Communications Inc., the parent company of Pacific Bell, to provide Internet service to customers.
“There were just too many costs delivering to the last mile,” he said.
The Steelbergs blame SBC for the mess caused when Winfire went out of business, leaving its customers without their high-speed links.
But the brothers say they have taken note of their mistakes since Winfire shut its doors two years ago.
“We’re young guys and we’ve learned along the way,” Ryan said.
One thing they’ve picked up: it’s easier to reach millions of customers through the radio than via the Internet.
DMarc has inked a deal with San Antonio-based Clear Channel Communications Inc. to provide content through five Los Angeles stations.
The Steelbergs launched dMarc in earnest in December, meeting with Clear Channel to see if they could use the empty portions of the company’s signal. When Clear Channel agreed, the brothers’ staff began installing its software and systems into Clear Channel’s towers.
Clear Channel owns or operates about 1,200 radio and 35 TV stations in the U.S.
Dmarc has a staff of 10 workers,most of which are the engineering team the Steelbergs worked with at AdForce.
