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MAXroam: 100,000 & Counting

While most of media attention at TechCrunch’s annual start-up showcase in San Francisco was on the latest and shiniest start-ups, I ended up spending most of my day walking the demo pit, quietly checking out what was on display.

And after that I checked on the health of the alumni of 2007. I was most interested in Pat Phelan’s company Cubic Telecom, which got a reluctant and very partial thumbs up from me a year ago. To jog your memory, Cubic has a service called MAXroam, which sells you a SIM card that saves you crazy amount of money when roaming overseas. Instead of paying the outrageous rates to incumbent carriers, MAXroam uses a VoIP-based architecture to offer calls at pretty cut rate prices.

Phelan, is an odd man out at these Web 2.0 events. For starters, like me he was in his 20s a long time ago. He is telecom disrupter. And he is obsessed with real world metrics such as revenues and profits. Now that’s old school! Perhaps that is why I enjoy the company of this acerbic Irishman with a heart of gold.

When I showed up at his booth, he was all flustered. Pat had just busted Michael Arrington’s iPhone. He was showing off a new iPhone SIM-unlocking hack that allowed you to use any service on the iPhone including data, not just the carrier who sold you the iPhone. Something went wrong and it took about 30 minutes to get the iPhone working again. And that was long enough to have Pat reaching for those nasty things I gave up in January. After giving him hell for sucking down on them coffin nails, I asked him how is business?

Pretty good, he said. And it was about to get better. MAXRoam now has over 100,000 paying customers. The company is bringing in substantial revenues (and some profits.) It is enough for Phelan has no plans to raise more capital for his company. He has announced Version 2 of its service which includes data roaming and USA roaming. Overseas travelers could pay 40 cents a minute for roaming in USA, a huge saving when you compare to roaming charges of around $2.99 for every minute of talk time.

Will that be enough? I don’t think so.

My argument last year was - selling discount minutes is a tough business and making money off it is even tougher. What you need is scale. Phelan thinks he will get their by selling MAXroam V2 as a white label solution for other consumer brands. For instance, Phelan is very close to announcing a deal with one of world’s largest travel agencies which will sell branded MAXRoam-powered service in places like India. He feels that by working with such well known consumer brands, he can accelerate the number of people making calls using MAXroam, which would allow the company to make more money. We will check in with Pat in a couple of months and see how he is doing.