Can You Scale?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Can You Scale?

I've been talking about Scale and Culture a lot lately. As companies hit revenue plateaus, the growth is difficult.

How do you hire the right employees that will fit in your corporate culture? Especially if your culture is what is one of your differentiators like Paetec likes to say (or Zappos). 

How do you manage the growth?

We have had a $1B CLEC before - Intermedia. It imploded under its own weight. Lousy integration of the companies it bought. Does that remind you of anyone?

The piled on debt was the ultimate killer. Intermedia had a lot of short term debt. It also had back-office issues that prevented installations and created billing errors. Scale kicked its ass.

By all accounts TW Telecom has successfully integrated Xspedius onto a single BSS/OSS system. It's all one now. If only AT&T or VZT/VZB could say the same thing. (I don't even think they care about it).  Does anyone know if Paetec has integrated Allworx, USLEC and McLeod onto one platform?

How do companies that hit $50M get to $100M? Or companies at $5MB hit $10M? The bigger question is can a $1B still grow? TWT and Paetec are at $1B. XO too. Can they grow beyond that? Can they keep monthly churn under 1.4%? Can they raise ARPU? Increase margin? Use scale to their advantage to cut costs? 

I think the he-who-gets-you-here-can't-get-you-there comes into play. Al-Lu and Nortel certainly saw some of that. GM too. 

I look at the XO, AT&T and VZ catalogs and think: WTH? Why is it so wide, so vast, so full of stuff that they will never do well?  Why not have a small catalog of stuff that you will deliver with excellence? That was GE's lesson under Jack Welch. If you can't be Number 1 or 2, sell it or close it.  

Everyone wants growth, until the scale part defeats you.

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