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Getting Iridium Off The Ground


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GETTING IRIDIUM OFF THE GROUND

Ed Staiano is racing to power up a global wireless system

It was a crucial meeting. So, last April, Iridium CEO Edward F. Staiano boarded a 12-hour flight to Beijing despite a terrible cold and sore throat. Once in China, his condition was so bad he could barely speak. Still, Staiano wasn't about to miss his one chance for a powwow with China's powerful Minister of Information Industry, Wu Jichuan. And when Wu offered him an odd-looking Chinese cold remedy, Staiano gamely downed the dark, steaming brew without flinching. The meeting was a success, and Iridium got its coveted Chinese license.

Doing whatever it takes to advance the ball has long been standard operating procedure for the 62-year-old former Motorola Inc. hotshot. But these days, with the debut of Washington-based Iridium's hugely ambitious global wireless-phone system falling behind schedule and its stock price plummeting by nearly half since May, Staiano is even more driven than usual. Indeed, he has staked his reputation on the monumentally complex system, which relies on 66 satellites, reams of software code, and scores of sensitive agreements with foreign governments.

In recent months, Staiano has been under especially intense pressure as the Sept. 23 deadline, set five years ago, for the system's inception has come and gone. Over the summer, two satellites failed and had to be replaced. Then a rocket explosion, hurricanes, and even a lightning strike delayed launching the last set of Iridium satellites. Even more troubling, a spate of computer glitches on the ground has postponed offering service until Nov. 1 at the earliest.

Staiano insists he isn't fazed. Known as "Fast Eddie" during his Motorola days, he built the electronic giant's huge cellular-phone business from zip to $11 billion during a frenzy of growth in the late '80s and '90s. Still, Iridium's $5.7 billion satellite network is an enormous technological and marketing challenge. If all goes as planned, it will provide a reliable dial tone anywhere on the globe. But, even assuming its numerous technical snags can be worked out, Iridium's $3,000 handsets and up to $7-a-minute airtime charges make commercial success far from certain.NUMBERS GAME. What is certain is that Staiano has been pushing his team of 500 engineers and sales staffers with a ferocity that borders on obsession. At recent board meetings--which consist of 28 telecom executives and investors from around the world--Staiano has taken to egging on members in front of their peers for falling behind schedule, says one executive present at the meetings. At one recent board meeting, members were ranked with little green, yellow, or red race cars--green cars for those who were ahead of schedule and yellow and red ones for those who had fallen behind.

If there is one thing Staiano hates, it's being behind schedule. As it became clear Iridium might miss its deadline, he canceled all employee vacations in August and September. But for many staffers, a missed vacation is the least of their worries. Late last year, for instance, Staiano gave Vice-President Craig W. Bond four weeks to identify every wireless-phone number now in use around the globe to ensure that Iridium doesn't assign those numbers to its customers. "We pulled out all the stops to do as much as physically possible," recalls Bond. At the end of four weeks, Bond's team had rounded up 60% of the planet's phone numbers, but Staiano said the results were "`totally unacceptable."' Says Bond: "He gives absolutely no leeway. He shows no mercy."

Staiano insists he has little choice. With a $1 billion bank loan due at the end of the year, and Globalstar Limited Partnership, a Loral Space & Communications Ltd.-backed competitor, set to offer a competing yet more affordable satellite service late next year, Staiano needs paying customers. The Globalstar system, which makes more extensive use of ground networks than Iridium's, cost just $2.6 billion, and its handsets are likely to retail at a third the price of Iridium sets. Staiano maintains Iridium's one-year lead and better technology will still give it the edge over Globalstar.PARTY TIME. To maintain his own edge and boost morale among the ranks, the 6-foot, 4-inch Staiano starts each day with a three-mile run at 6:30 a.m., eats a turkey sandwich at his desk for lunch, and works seven days a week. The longest vacation he has ever taken is five days. "You have to be prepared to walk the same mile that the technical people in the trenches do every day," he says. "I pride myself on equal pressure on everyone."

The son of an Italian immigrant father and a Canadian-born mother, Staiano grew up in a working-class neighborhood where few kids ever considered going to college, let alone running a multibillion-dollar business. His father, Dominick, ran a produce business on Long Island, N.Y., where Ed, the middle child, grew up with his two sisters. More interested in hanging out than in pursuing an education, Staiano was "very happy driving a truck for my dad for $200 a week," he says. But papa had loftier ambitions for his only son. To persuade Ed to go to college, Dominick Staiano even offered to buy him a car. That clinched the deal.

Once at Bucknell University, Staiano seemed to excel only at partying with his fraternity pals and working on the huge wooden floats for the homecoming parade. As a result, he wound up on academic probation. "I didn't buy any books the first year," he says. "I was there because I wanted my car." Some teachers, though, were impressed with Staiano's potential despite his poor showing. "He had a lot on the ball beyond some of the other kids who were getting better grades," says retired professor Charles H. Coder. A summer school course in engineering proved Coder right. "It was like a switch" going on, says Staiano, who developed an instant passion for the field. Staiano went on to earn a doctorate and was teaching at Bucknell before he went to work for Motorola in 1973.

In 1984, Staiano became head of the then tiny cellular-phone unit. By 1996, the division he ran was generating $11 billion, 40% of the company's total revenues. And Staiano had long since established his reputation as an unyielding boss. Former Motorola engineer Chris Jenner, now an executive at Sphere Communications, recalls a series of monthly quality review meetings in the spring of 1990. They tended to last four hours and proceeded along predictable lines. "One day, Ed sticks his head in," says Jenner. "He went on a tirade: `You call this a quality review?"' For the next 18 months, Staiano presided over each meeting. Starting at 6:30 a.m., they lasted 12 hours. Stragglers arriving just two minutes late were met with a cold stare from Staiano. "It was definitely effective," says Jenner, who adds that he admires Staiano's work ethic.STREET TROUBLE. By 1996, Staiano had hit a wall. Motorola was stumbling, and Staiano, now in charge of 30,000 workers, "wasn't having fun anymore," he says. Meantime, Motorola had spun off its Iridium venture and was looking for a CEO. As a member of the search committee, Staiano threw his hat into the ring and got the job.

At Iridium, Staiano's first stop was Wall Street, to raise $2.8 billion needed to complete the system. But many investors balked. Staiano appeased skeptics by agreeing to make Iridium handsets compatible with ground-based cellular systems. Calls can now bypass Iridium satellites when within range of existing networks, making them more affordable but less lucrative for Iridium.

Now, after blitzing the media with a $180 million ad campaign, Iridium has yet to commence service. Staiano insists he's not disappointed. "To pick a date five years ago and be within a month of it is phenomenal," he says. Still, for the man who hates to miss a deadline, these are anxious times indeed.By Catherine Yang in Washington and Roger O. Crockett in ChicagoReturn to top


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