CxO Download: Tom Fallon of Infinera
What has been your biggest challenge leading Infinera in 2010?
The biggest challenge is that we've always been an innovation company. We've always taking on the biggest technology challenges, forcing a very health tension between the necessary path of innovation and balancing its progress with a long-term business model. We're not a startup anymore, and we need to make sure our customers have the best competitive solution.
What will be your biggest challenge running the company in 2011?
Our challenge is our biggest opportunity. We have a leading 38 percent share in optical networking in North America, but a 15 percent market share worldwide. How do we take our technology to these new markets? We have a fairly good presence in Europe, we're smaller in Asia, and a little bit in Africa, the Middle East and Latin America. Our key issue is hot to attack that opportunity. We have the best optical technology on the planet, and we need to put the right infrastructure in place to sell it.
You're in a business notorious for lumpy sales. Has Wall Street gotten used to Infinera's ups and downs yet?
It is a lumpy industry, always has been, and will continue to be. You need to continue to add more customers, and continue to expand into new geographies. That way you even things out when Europe is buying [but] America is not. You expand in markets where companies are investing in core optical technologies that covers those areas that are not doing the same in the metro or submarine space, and vice versa.
What does Infinera to for a second act? Is DWDM enough to sustain a public company forever?
We're an optical transport company. The optical networking space is some $15 billion plus. There is a huge amount of capability to grow our business. We intend to be the best optical transport business on planet. We want to be an innovator, and are willing to take the technical risk to capture this market. Innovation will trump commoditization over time, and bring more value to customers. The optical space will serve us for a long time.
What happens after 100G?
100G is just a milestone. Our vision is to create the ability for an infinite pool of intelligent bandwidth. There's a study [that says] by 2020 there will be on order of 30 billion connected devices, up from a billion today. To support that connectivity is not about providing big pipes. You need an intelligent optical infrastructure that responds to the need to handle large amounts of data that is fluid, like working around with a movie camera. Our job is to provide efficient pipes and efficient optical architectures. We think we can roughly double the capability every three years.
What's the smartest thing you did coming in after the founder and visionary Jagdeep Singh?
The thing I did pretty quickly was to kill [the] 40G [photonic integrated circuit] and focus on 100G [PICs] instead. There was a level of skeptical response, like some were wondering if we found 40G too hard. I said we could do the 40G transition, but we didn't have the resources to do 40G and 100G simultaneous, and our customers didn't want us to do it either. I'm more sure than ever we did the right thing and I'm hoping history will judge that to be true. As it stands right now, our Q3 showed tremendous growth, with 51 points of margin. That's an important proof point.
What is most important advice you can give for someone who wants to run a telecom company?
My advice would be make sure you have a long view of the world. Investors can be shortsighted, and things can come along that are bright and shiny. The thing is to pick a technology path that is hard and big and that creates an opportunity for your customers to differentiate.
What has been your biggest mistake?
Allow Carl Russo to suck me into optical industry from the router business. Seriously, it's when I haven't followed my intuition and made decisions for short-term gain. A good leader creates a wealth of experiences and develops good intuition. Early in my career while in the workstation business, there was a quality problem that impacted customers. We decided to fix it and not go out and proactively identify it to customers. It was a horrible mistake. In the culture I have here, we're extraordinarily forthright. When we have issues, we tell our customers. While there is inevitably pain, the customer walks away trusting you more. It's an important lesson for everybody. Do the right thing.
What has been your biggest success?
I will take credit here for helping build the culture that has intense focus on customer satisfaction, doing whatever is right for the customer. We have one job, making our customers successful.
What do you think your legacy will be when you leave?
I would hope people reflect that I drove company, that we made customers successful, that shareholders were rewarded, and that I created an environment where employees achieve potential.
What book are you currently reading?
Unbroken by Laura Hillenbrand. It's a great inspirational story.
He's also reading Tracy Kidder's Soul of a New Machine. Why is he reading a 30-year-old book about the race to build a minicomputer for the now defunct Data General? "One of our sales guys used to work there," he explains. "It's a great book about how you continue to spur innovation and be fast to market, and the need to do things like creating skunk works to do massive reinvention. Lots of lessons from history you forget and you have to take the time to keep relearning them."
— Joe Braue, Group Director and SVP, Light Reading