Corrections or additions?
This article by Barbara Fox was published in U.S. 1 Newspaper on
November 3, 1999. All rights reserved.
On the Rebound, Peter Martin finds a Backer
The plane hits the tarmac at Newark Airport, and a
first class traveler from Japan switches off the phone at his seat
and opens a package delivered by the stewardess. It is the cellular
phone that he will use for the next three days. As soon as he leaves
the plane and heads for customs, he starts making calls.
Asians and Europeans are even more addicted to their cellular phones
than Americans are, but because their phones are not compatible with
United States systems, overseas travelers are often left stranded.
Either they punch in endless codes on pay phones, borrow a phone from
an American business associate, or wait until they reach their hotel
rooms to get or make important calls. A company called NOWfone,
in Nassau Broadcasting’s old building on Witherspoon Street, has a
nifty solution — affordable short-term cell phone rentals for
overseas visitors, delivered to the airport or the hotel.
It’s an interesting concept for a business plan that promises fast
growth. Even more interesting are its backers — two men who have
endured the experience of having fast-moving businesses explode in
their faces. Louis F. Mercatanti Jr., a high flyer who had his wings
clipped in the early ’90s, has incubated and bankrolled NOWfone. Peter
S. Martin, the founder of Symedco, saw his fast-growing firm Symedco
go bankrupt in the same time period; he now is the president of
(National & Overseas Wireless Fone).
Mercatanti says he is backing Martin because of — not in spite
of — the Symedco debacle. Having navigated stormy waters himself,
he picks investments based on similar scenarios. "I back a couple
a year. Given my experience, I wouldn’t touch a business plan unless
the people involved had a problem in the past. That is the best
to predict how they would react to a problem now," says
Based at 619 Alexander Road, Mercatanti’s company, Nassau Holdings,
owns one-third of Nassau Broadcasting, comprised of 20 radio stations
including WHWH-FM, WPST-FM, and WNJO-FM. It also has what he terms
"significant investments," and he has some new surprising
plans for expansion — including going into the local and long
distance telephone business. But in the late 1980s and early ’90s
the Mercatanti empire looked like it might topple. "It was mostly
financial, some real estate difficulties, with not enough attention
to detail," he says now.
Mercatanti, 43, grew up in Trenton, attended American University,
and worked at a Ford dealership and an electric car research firm
before investing in two ice cream companies and a liquor importing
firm. In 1986, at a time when he was a relatively unknown investor,
he bought out the 80 percent share of Herb Hobler, founder of Nassau
Broadcasting, for $8 million and put almost no money of his own into
the deal. In a leveraged buyout arrangement he took out a $7 million
loan and gave Hobler a $1 million note. When he continued to make
other real estate investments, he upped his loan to more than $9
Then came the real estate bust. Soon Mercatanti was facing sheriff’s
sales (for 140-144 Nassau Street, for instance). Then there was a
nasty legal imbroglio with the other owner of Nassau Broadcasting,
Johnny Morris, who ran the radio stations. To untangle this mess,
Mercatanti found a buyer for the stations, but the deal fell through
in another nasty snafu of charges and counter charges. Every week,
it seemed, Mercatanti was in the headlines.
"I have seen how difficult it is to go to work when you are not
happy and no one else is happy," says Mercatanti with atypical
understatement. "It is a special person who is able to jump back
in the saddle. I did that, and that is why I can talk first
Getting out of difficulties means hard work: "You roll your
up, parcel out what you can, make deals where you can." He keeps
pointing out that "it takes a special kind of person" to
from financial woes, and he deems himself that kind.
Both Mercatanti and Martin had to contend with
family law problems during that time period. Shortly after Mercatanti
had his worst business troubles, he watched Martin go down. He had
seen Martin found and grow his medical publishing business, Symedco,
and he believes Martin was given bad financial advice, tried to do
too much too soon, and lost focus. He emphatically believes that
was not "by any means" a failure. "The clients all loved
his company, and I am talking about the big pharmaceuticals. The
thing to find, the customers, he already had."
Born in Spain, the son of an infantry general who later went into
politics, Peter Martin anglicized his name when he came to the United
States and worked for a medical communications firm, Excerpta Medica.
In 1983 he and Ann Wallace founded Symedco; she left in 1986 and in
1988 he moved the firm to a prestigious building at the Forrestal
Center. In 1989 he won the Ernst & Young Entrepreneur of the Year
award, had 23 employees, and did $8.7 million of business.
But though his firm quadrupled in size, it did not even double its
gross revenues. Employees complained publicly about working conditions
and charged Symedco with wage and hour violations. Critics charged
Martin with mismanagement and overspending, but Symedco supporters
said that the company was suffering because the pharmaceutical
had drastically changed. UJB Financial cut off a $1 million line of
credit (prematurely, Symedco officials claimed) giving Symedco no
choice but to file Chapter 11, in part, to meet payroll. Then came
Chapter 7 and a closing of the doors in November, 1993.
Martin’s business difficulties were compounded by a bitter divorce,
followed by the death of his father in Spain, and he spiraled into
a depression. "I was defeated on all fronts," he says now.
"I had nothing to hold onto. It was not only a professional
but very hard personally. I am beginning to believe in myself again.
What is important is not how many times you fall, but how many times
you get up."
Contrary to rumors circulating at that time, Martin says he did not
leave the United States and did not take any money out of Symedco.
He says that when he was down and out, his family in Spain sent money
for him to live. "They liquidated my assets," he says, adding
sardonically, "when Symedco fell, three other companies grew out
of it. There is a saying in the old country, from any fallen tree,
everybody makes wood."
Mercatanti now says he was ready then to put money on the table to
help Martin save the firm. "I thought it was a company that just
needed a little stability, and I think we could have brought that.
But Peter was not prepared to slug it out and try to get the business
back together again," says Mercatanti.
After Symedco’s fall Martin came to Mercatanti with some other ideas,
but Mercatanti set a high gate for any future investment. "I said,
when you are prepared to roll up your sleeves and sit down in an
then come and talk to me. Until then, ideas are ideas, like a plane,
easy to take off but very difficult to land."
Eighteen months ago Martin got to the point in his recovery process
where he was ready to put his shoulder to the wheel of an idea. The
idea he had — cellular phones for foreign travelers — came
to him when he was in Germany, needed to make an important call, and
had to wait three hours until he got back to his hotel. Cell phones
that work in any country, such as the Iridium satellite phones, are
prohibitively expensive. What if travelers could get short-term
With Martin ready to "roll up his sleeves,"
as Mercatanti had specified, Mercatanti gave NOWfone incubator space
(including access to the supply closet and a computer) plus some
time and a bank account. That was in 1997. A formal agreement was
drawn up in 1998 for Martin to do the legwork on a consulting basis.
"Last June I presented a business plan," says Martin. "I
will be grateful to him for life."
"I was buying a business plan, not one that was technology driven,
but marketing driven. I felt very good about being that conduit,"
says Mercatanti. "I gave him time, supported him with a couple
of employees, some space, corporate oversight, and capital." He
estimates that he provided more than $250,000. "Next thing you
know, we have a business."
"Lou has a very good sense of where he is taking the company,
good vision, and good management," says Martin. "I know he
is not in it for a quick exit."
Because of Mercatanti’s ongoing relationships with the Federal
Commission, national and international licenses were speedily
After 14 months of operations the firm has an inventory of nearly
200 cellular phones using Bell Atlantic Mobile coverage. After
charges (UPS overnight for $11, or second-day delivery for $8) the
cost is $4 or $5 per day, $26 per week, plus the cost of air time
— 95 cents for each minute, either incoming or outgoing, or $1.95
for international calls.
NOWfone’s marketing plan includes direct mail, the Internet, and of
course the "free" air time on Nassau Broadcasting’s radio
stations. Anthony Mecca, director of operations, is working on
agreements with hotels, limousine services, and airlines. Mecca
in marketing at St. Peter’s College in Jersey City, Class of 1977,
worked in the family catering business, and as production manager
for an engineering company. "We have the most success with the
small independent business person, individuals who are traveling in
the country on business," says Mecca. "Also with travelers
coming from different parts of the country and find their roaming
agreements don’t work in the east."
The "one-fee" charge is very popular. It’s the same whether
you call Paris or Sri Lanka, New York or North Dakota. The fee is
much higher than that offered by carriers such as AT&T, but AT&T does
not offer short-term rentals. Other competitors include car rental
companies, but not every overseas traveler rents a car.
"No service that we are aware of targets several million users
coming to our airports," says Mercatanti. "Since New Jersey
is the pharmaceutical capital of the United States, and Wall Street
the financial capital, the sheer number of business travelers measures
in the tens of thousands." He estimates there are 3 million
from target companies, and just 10 percent penetration would bring
300,000 potential users a year, 6,000 individual users per week.
have the opportunity to capture a market, but it is very
says Mercatanti. "And we have taken a huge leap of faith that
we can offer one price and still make money."
Mercatanti’s plans don’t stop there. He wants to go into the reselling
of land-based local and long distance phones, to be a CLEC
local exchange carrier). He would package that with Internet access
and cell phones for a four-way wallop. For the Internet offerings,
he is partnering with Arthur Zysk, founder of the nine-year-old
service provider named New Jersey Internet. Zysk has moved his
office from North Jersey to within the Nassau Broadcasting compound.
Mercatanti is impressed at the level of service that New Jersey
offers. In return, Zysk is delighted with the marketing wallop that
WPST offers. "He has gathered 5,000 subscribers, and we are
with a company that has three times that," says Mercatanti.
could find ourselves with 20,000 subscribers very quickly. And Nassau
Broadcasting covers an area with 3 million people that are most
to be online. We find that 60 percent of our listenership is
The four-way package will be advertised over the radio stations.
radio station covers 1 million people a week. We think we can
them by advertising directly to them," says Mercatanti. "We
will go after the consumer business, and we would be very happy in
New Jersey to have two percent of penetration, get 100,000 phone
and offer a high level of service."
Other services under the NOWfone name might include offering cell
phones for use by traveling Americans overseas.
About that airplane scenario: NOWfone has several options for
but it is not yet ready to get the phones brought to the airline
seat, as described above. But the company is negotiating with several
airlines on this matter. In the meantime, the traveler can pick up
the phone at his or her hotel or business address in the U.S. Soon,
says Martin, "we will be able to deliver the phones, for use here,
to an address in Europe."
"I am making a new beginning in an industry that has a lot of
potential," says Martin, "and I hope I can do even better
than I did in the pharmaceutical industry. It is like training for
the Olympics, you go for the gold."
08542. Peter Martin, president. 609-683-8222; fax, 609-683-0604. Home
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