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mendyk
mendyk
7/26/2016 | 1:15:26 PM
Let's put it to the test
If this works, does Verizon win some sort of prize for proving that two wrongs can in fact make a right?
Mitch Wagner
Mitch Wagner
7/26/2016 | 3:05:23 PM
Re: Let's put it to the test
What's the overall strategy here? Verizon seems to have two businesses without an overall connection here: Service provider and ad platform. 
wanlord
wanlord
7/26/2016 | 1:35:04 PM
I get it
I get why they are doing it. Desperation. They haven't been able to figure out how to create anything internally, or change the telecom culture that exists. The culture clash will be very interesting.  There is a big difference between how things are managed and how employees are treated in VZ vs. these companies. Just go to the VZ HQ and see how quiet the sterile office is and how sad it feels with everyone stuck in their little cubicles not communicating. Blocked from any use of social media or tools to communicate and be open.  They don't even see the value of providing free coffee in work areas, forcing employees to take 20 mins out of their day going to the cafe and standing in line. Huge productivity suck.  They want to be Google and Facebook, but don't want to pony up the perks that bring in the best talent and inspire employees to make them happy. The moment I see the VPs and XOO's sitting out with their teams instead of hiding out in their bunker offices, then I will believe they are serious.
mendyk
mendyk
7/26/2016 | 2:04:57 PM
Re: I get it
Good points -- they also reinforce the perception that Verizon's top management struggles with the issue of effectively managing both its legacy businesses and its new-growth opportunities. Also, it's hard to escape the conclusion that VZ's top management sees its workforce strictly as a cost burden, as opposed to a revenue-generating asset.
brooks7
brooks7
7/26/2016 | 2:12:39 PM
Re: I get it
Dennis,

I would argue that the residential assets are primariy a drain.

seven
mendyk
mendyk
7/26/2016 | 2:26:22 PM
Re: I get it
Yes, and McAdam has made no secret about his disdain for that business. Still, as the CEO of the entire company, it's his job to make that part of the business work as best as it can. And to wanlord's point, VZ isn't acting like an organization that understands what it takes to compete with the Webscale bunch.
brooks7
brooks7
7/26/2016 | 2:41:14 PM
Re: I get it
Dennis,

I completely and utterly disagree.  If you have a bad business, then stop doing it.  Don't throw good money after bad.  The challenge is that they can not just abandon the business from a regulatory standpoint.  They have been selling it off chunks at a time.  But you can not assume that it is possible to make the residential wireline business a good business into the future.  

I took Wanlord's point to be that you can't make a telco into Google.  I agree with that.  The best thing you can do is fire all the telco guys.  Problem is that this is not realistic.  So, the next best thing is to stop trying to build the business and to buy it.  When you buy it, run it separately and let your legacy business wither.

Let me use a bit more detail on the commentary from the post I did earlier in the other thread.  I see advertising as a 95% GM business.  If I can buy a cash machine that is there and cobble together good pieces of failed businesses, then I have a scaled business already.  The problem is trying to put telco people in charge of that business.  It never works.

They are treating Verizon as a giant P/E fund and repositioning the firm.  Seems most excellent to me.

seven

 
mendyk
mendyk
7/26/2016 | 2:47:31 PM
Re: I get it
So then why doesn't McAdam engineer a spinout and isolate what he and others consider to be dead weight? He's getting paid close to $20 million a year. Are shareholders getting their money's worth from that spend? As far as the cash machine goes, if things were that easy, more companies would be doing it. That's kind of the problem when top management gets lazy -- they start looking for giant piles of money that take little or no effort to secure. I see nothing to suggest that Verizon can execute the plan you suggest.
brooks7
brooks7
7/26/2016 | 3:10:41 PM
Re: I get it
Dennis,

HE HAS!  See Frontier.

It is a slow but sure problem.  There are many regulatory issues involved and the network they would like to keep is intertwined with the stuff they get rid of.  The easy stuff has all been dumped.  The hard stuff to get rid of is in front of them.  

How do you deal with a base station fed by FiOS and there is shared equipment and personnel?  It is not a miracle, but it will be a lot of work to put all the right assets and people in the right buckets at the same time they are trying to run a business.

We are not talking about 3 lines and a couple of boxes.  We are talking about a network with millions of lines.  Go into a CO and figure out who will end up owning what equipment.  I am glad you think you can do it in 20 minutes.  But for the rest of us, it takes years.

You don't like his plan.  Great.  But residential wireline networks are a troubled business.  Take a look at Google and their rapid plan to deploy massive amounts of fiber.  How about the cable guys taking yet another extension to DOCSIS.  Or AT&T with more announcements then customers of fiber.  The reason?  There are so many better places to invest the money.  That is why there isn't competition.  If if was a great business, then networks would spring into existence.  

So - if you are an investor - would you prefer to hear a company is doubling down on residential wireline OR one that has decided to transform the business?

By the way, that is why I found the whole Carl Russo thing HYSTERICAL.  Calix hasn't disrupted anything ever.  They are a very nice little company.  But talking to the CEO of the number 5 player in a dead market about disruption?  Come on (Nokia, Adtran, Huawei, and ZTE are all ahead of Calix).

seven
mendyk
mendyk
7/27/2016 | 11:35:31 AM
Re: I get it
I still come back to this very simple question -- What is the value of a CEO who thinks a significant part of the business he's responsible for is more trouble than it's worth?
brooks7
brooks7
7/27/2016 | 12:59:10 PM
Re: I get it
Its a simple answer....he maximizes the value is selling it or shutting it down.  Given the regulations, it is impossible to shut down.  Therefore, you try to sell it.  Given the scale of the business, you have to have willing buyers.

Think about IBM.  Over the years they have shuttered many older businesses (Typewriters, Mainframes are examples).  General Electric is the same way.  If a business is bad, you get out of it.

So let's recap the problem with the legacy business at Verizon:

- it has negative growth that is market based

- it has significant employee challenges and lots of union employees

- it is low margin

- it is highly regulated

- it the mandated to be wholesaled out to its competitors

If you were starting a business in our space, few would actively choose to be in the space.  

seven

 

 
mendyk
mendyk
7/27/2016 | 1:09:50 PM
Re: I get it
If you are in a business that you don't believe in or respect, then leave it and do something else. That holds for everyone in an organization, bottom to top.
Joe Stanganelli
Joe Stanganelli
7/26/2016 | 2:50:57 PM
Re: I get it
@wan: I think there are numerous fair criticisms one can level at VZ, but their culture not being like that of a "hip" startup that provides free coffee is not, in my mind, one of them.  Dumb, desperate Millennials who overpaid for their college degrees and went into too much debt may fall for the "oh, boy, free snacks!" benefit as making up for low salary, but even modestly more seasoned workforce members understand that work doesn't have to be -- and probably shouldn't be -- like a giant playground.  (Indeed, a number of ex-employees of such "free food and fun times" startups have gone on to bitterly complain about their former employers' poor culture, poor hopes for advancement, poor benefits, and poor salary on such sites as GlassDoor.)

Sure, there is productivity to think about, but there is also practicality.  FB, Google, and the like in Silicon Valley pay TONS of money on benefits to keep their employees on campus and in the office working and collaborating as long as possible... but that environment isn't for everyone, and isn't worth it for everyone.

(Also, I've learned from personal experience that if you're interviewing for a job and you discover that the executives don't have real offices, run away.)
wanlord
wanlord
7/27/2016 | 2:28:40 PM
Re: I get it
@Joe S. I was using those as visable examples, but it's more than those things. It's the culture in general. Pay, Stock, etc. Those "dumb" millenials are the ones running companies in Silicon Valley and you can't argue that many of them are disrupting the telcos. They move faster, don't get bogged down with politics, and strive to hire the best and brightest from all over the world. Telco companies don't pay nearly as well, consider their employees an expense, continue to practice bell curve performance policies forcing employees into a standard percentile instead of recongizing that is not natural. They don't practice 360 degree feedback leaving decisions up to management which leads to bias. Overall Top Down management culture with the "Ape in the Corner" office has to go away for them to compete. When employees dread coming into the office and wonder whats going to be taken away next (whether it's the free coffee, or arguing for with an admin on the need for more dry erase markers for an brain storming session), it just demotivates them overtime. 
KBode
KBode
7/27/2016 | 3:31:45 PM
Re: I get it
"Those "dumb" millenials are the ones running companies in Silicon Valley and you can't argue that many of them are disrupting the telcos. They move faster, don't get bogged down with politics, and strive to hire the best and brightest from all over the world. Telco companies don't pay nearly as well, consider their employees an expense, continue to practice bell curve performance policies forcing employees into a standard percentile instead of recongizing that is not natural."

 

Absolutely. you dont' pivot from a generation of turf protection and lobbying to protect legacy interests -- to becoming a disruptive and innovative force in new media -- magically. I think this is going to be (and has been, if you look at SugarString) a pretty painful learning process for Verizon.

Telco culture breeds yes men and women. I've seen it for years. Silicon Valley has other problems, but that level of myopia is not one of them. These companies are not good at innovation.
Joe Stanganelli
Joe Stanganelli
7/27/2016 | 5:47:34 PM
Re: I get it
You misunderstand me.  I did not call all Millennials dumb.  I called the Millennials who take jobs at strategy-less startups for low pay and long hours dumb.

I'm far from the only person to make such an observation.  (See, e.g., HubSpot criticism.)
brooks7
brooks7
7/27/2016 | 8:27:33 PM
Re: I get it
Nobody is denying that there are lots of really bad startups.

What is happening is like a frothing foam.  By the time a telco has made a committee to study something new, 5 firms South of Market in San Francisco have it up and running.  3 of those will fail miserably and 1 will greatly struggle, but that 5th one will have captured the bulk of the market before the Telco even starts working on it.

3 years later a Telco makes a team to start prototyping the competitive product and are shocked when nobody buys it.

The methods and time frames are so different that they are not in the same zip code.

And finally Dennis, I agree with you and so does Verizon.  They ARE trying to shut down their legacy business.  Have been doing so slowly for years.  They are fighting regulators and unions to do so.  It may take another 5 - 10 years but they will be out of it as soon as they can.

seven

 
steve q
steve q
7/26/2016 | 10:01:06 PM
Re: I get it
What reason is Verizon chasing after Facebook when the key company to look at is google and Comcast they are pushing for better service to their customer and by that they are gaining over Verizon. With the move into Boston Ma Verizon should only look at the plus of having more people that can have both FiOS and Verizon wireless at the same time then what any other large company can provide. If I was yahoo/AOL I move the part of the company that Verizon does not own looking at gaining the ground of the 5g license.
Mitch Wagner
Mitch Wagner
7/26/2016 | 3:06:16 PM
What next for Marissa Mayer?
Common wisdom is that she's a failure. 

But is she? Or did she keep the company going longer than others woudl have, and deliver maximum return for shareholders?
Joe Stanganelli
Joe Stanganelli
7/27/2016 | 5:45:34 PM
Re: What next for Marissa Mayer?
@Mitch: Just because others are bigger failures than Marissa Mayer doesn't really make her any less of a failure.  Not that being at the helm of Yahoo in her tenure is/would have been an easy task by any means, but she kept up the acqui-hire and acqui-destroy strategies of her predecessors -- and she did it with a lot of high-falutin' talk about mobile but with no actually executable strategy that rose to the surface in any appreciable or tangible way.

Marissa Mayer is very good at one thing, though: Marketing Marissa Mayer.  Little wonder she's holding on to her job.
Mitch Wagner
Mitch Wagner
7/28/2016 | 2:37:19 PM
Re: What next for Marissa Mayer?
Mayer works for the shareholders. If they decide she gave them good return on their investment -- or minimized loss, if that's a better descriptor -- then her tenure is successful. 

I'm reminded of the way Eric Schmidt took over as CEO of struggling Novell, sold it to private investors, and went on to Google. 


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