Interviewed by Dustin S. Klein | firstname.lastname@example.org
When Marcelo Claure got into the mobile phone business in 1997 as it was just getting started, there were 1 million mobile phones sold a year. Today, there are 1.7 billion sold every year.
The founder, president, chairman and CEO of Brightstar Corp. lives and breathes the fact that massive growth and change are part of the territory. Smaller, more powerful and robust smartphones and wireless technologies are being developed constantly.
“Change is part of our culture and our game,” he says. “We need to adapt to change. Being a distribution company at our core, we’re constantly changing suppliers, not just to change but because they become less and less relevant.”
What started as an effort to be the leading distributor of mobile phones in Miami soon became the leading distributor in Latin America.
“Then we said, ‘What about in the U.S., too?’’ he says. “Then we said, ‘What about the world?’ Today, we are the world’s largest distribution company.”
And it couldn’t have happened without a concerted effort to find executives who could operate in a dynamic, changing environment — very different from the traditional executive.
“They’re very unique and hard to find; at the beginning, we made a lot of mistakes,” Claure says, describing how the talent was having a difficult time keeping up with the technology.
But under Claure’s leadership, Brightstar has attained unprecedented growth, expanding to 51 countries in only 15 years. With $6.8 billion in revenue and 5,500 employees worldwide, the company is in a great position today, realizing growth in all areas. Here is an inside look on how to deal with frequent change, explosive growth and the necessary talent to rein it in.
Take an ‘on-your-toes’ approach
Claure says a large part of how you deal with change is your approach. If you can establish a team that is always on its toes, that’s one of the first steps to what in simplest terms is a two-part culture.
“Change forces you to have a culture of innovation and a culture of ‘What’s next?’” he says. “If you look at what our company is today and what it was 10 years ago, it’s a completely different company.
“We are a lot more service-oriented now; from being a trader of mobile phones to today, we’re a leading supply chain company in our industry. We’re one of the leading insurance companies in the arena. We’re the world’s largest buy-back and trading company. Pretty much one thing is always thinking of what’s next.”
Many companies who stay on the cutting edge of technology look for individuals who are often the type to be called “early adopters.” These employees stay up on all the latest developments and are eager to try the latest product, even before all the bugs are out of it. However, an executive with impressive credentials doesn’t always equal an early adopter.
“We thought that by bringing big executives from big firms they would automatically yield success,” Claure says. “We couldn’t have been proven more wrong. The type of execs that fit our profile are the innovators and people who are used to building stuff, who operate in a changing environment, are very different than your traditional executive who is pretty good at grabbing something and keeping it constant or making it grow at suboptimal levels.”
It’s a somewhat painful process of trial and error. You are looking for a good fit when the tolerances are very narrow.
“We’ve learned and figured out the profiles of what makes somebody flexible at Brightstar,” Claure says. “Definitely it’s enough flexibility and adaptability to change and willingness to try new ideas, to bring new ideas to the table and to do different things in the course of their career. That’s what makes an executive at Brightstar shine.
“We’ve gone through a lot of hits and misses, but I think we’re getting better at recruiting the right talent.”
Be flexible to evolve
Once you think you have the right talent in place, you will be in a position to stress that, as the technology evolves, the company has to evolve with it.
“You have to build the culture and company that is ready to be flexible and be able to change pretty fast,” Claure says.
“If you look at the players we’ve dealt with since our founding, we’ve seen the rise of Motorola and Nokia. Nokia is struggling. If you look at where we’re working today, the focus now is on, ‘How can we offer a high-end smartphone like an iPhone or Galaxy for lower-income people so they can pay us a dollar a day?’
“If you go back 15 years ago, would we ever think that was possible? Absolutely not. So we’re used to change, we’re used to mobility. If you just see my industry, Apple was nonexistent there 15 years ago; today, it takes 75 percent of the industry profit.”
What began as a distributor is transforming into a service company for Claure.
“We’ve built our services around the phone and leveraging the structure we have around the world,” he says. “It’s pretty unique. Today, we run supply chains for some of the world’s leading operators.”
An entrepreneur is always looking for ways to expand his or her business, and Claure set his focus on ancillary products and services in that vein.
“We now buy more than 25 million used phones from consumers, we recycle them and we sell them in American markets,” he says. “Then we focused on the consumers who are accidentally losing their mobile phones; we launched an insurance company.”
Insuring the devices filled an expanding need in the market. Devices are misplaced, lost, dropped or stolen every day because, in part, of their convenient size.
“We wanted to be in the insurance business so we bought a small insurance company,” Claure says. “We fix our systems so they can scale, we fix the management team and then put that insurance business into our 51 different countries so that it immediately explodes our growth. Our insurance company has grown 450 percent in the 1½ years since we bought it. Next year, it will grow 1,000 percent.
“Then we figured out that retailers needed help in managing the growing wireless complexities so now we manage wireless categories at the world’s leading and biggest retailers in the world.”
Learn to use your advantages
Once you have been evolving your business in tune with how the industry is evolving, you often get a very good sense of where trends are going so that you can make some solid predictions, which can lead to expansion.
Claure says in addition to those skills, an advantage can be had in just being a bigger company.
“Being big now means ideas come to your company — a lot of people come with them,” Claure says. “That’s a lot easier now. Now your job is to pick the right idea, pick the right product and solution and make the right decision. It was a lot harder seven to eight years ago when you had to invent everything. We’re very good at identifying and saying we want to play in a specific business.
“We’re constantly being approached by smaller entrepreneurial companies. We buy them or partner with them or figure out other ways and then put them into the Brightstar platform. It gives them pretty amazing growth. It’s a lot more fun now when you can choose than it was before.”
As competitors try to encroach upon your space, use your experience and foresight to decide what new partnerships to explore.
“More than mobility, we’re going to experience in the next few years the connected world,” Claure says. “Everybody has a mobile phone today. There isn’t much more to mobile phones but not everybody is totally connected.
“Today, each person probably has a couple of devices — like tablets and your phones. If you look at the future and what’s expected by 2020, we’re going to have 50 billion connections, which means every human being is going to have a connection. So what does that mean?”
He sees opportunities to wirelessly connect smartphones, computers, digital cameras, cars, refrigerators, washers and dryers — whatever. It all will be connected.
“We’re moving toward a completely connected world, which means new supply chains need to be formed to operate that connected world,” Claure says. “There are new ecosystems, new businesses and new players.”
It all boils down to who has the capability to execute, he says.
“The keys are how do you execute? How can you scale? How can your systems and people scale?
“We sit in a position where we have sufficient business for the next couple of years. The potential with this business, if you execute an opportunity, then nobody tells you how good you do, that’s expected.
“But when you screw up or do something wrong, news travels fast, and that’s a problem. We need to make sure we continue to do what we do. Never take our customers for granted. Make sure we execute. A lot of activities we execute are because customers are outsourcing to us so their expectation is that we’re going to do a lot better with price than they used to do themselves.” ?
How to contact: Brightstar Corp., www.brightstarcorp.com or (305) 421-6000
The Claure File
Founder, chairman, president and CEO
Education: Claure holds a bachelor’s degree in economics and finance from Bentley College in Massachusetts. He also received an honorary doctorate degree of commercial science from Bentley College and an honorary doctorate degree from the Universidad Tecnica Privada de Santa Cruz.
Claure on how to deliver exceptional service: Talent, talent, talent. I spend 40 percent of my time interviewing new talent. I have replaced 80 percent of my management team in the last two years and the reason for that is the people who got us to a certain point aren’t the same people who are going to get us further.
Out of that 80 percent, half are still with Brightstar but they’re not the leader, the same COO, CFO, CTO. A company’s most important asset is its talent base. For every company and every industry, if you have great people running your company, great things will happen. If you have mediocre people in your company, bad things will happen. You might be good for a certain period of time in your company; it doesn’t mean you’re going to be good forever. Talent management is a very important process.
Secondly, you have to do the painful exercise of investing in having the right systems and processes. It’s painful because it’s expensive but also because it’s disruptive. Every time you have to implement a new ERP or a new warehouse management system, your initial reaction is delay. Delay — but then you pay for the consequences later on.
We’re learning. For example, I won’t tell you the customer but in a very large country we grew faster than our systems. There was a point where we couldn’t shift devices. They were like, ‘Oh my God.’ Those are problems you can’t fix at once. Those are problems that you have. … As we build our new products and services, we have to be dedicated to investing to make sure we can scale our systems, people or processes.
Interviewed by Dustin S. Klein | email@example.com
With more than three decades of experience in the lodging industry, including the last seven years as president and CEO of LQ Management LLC, the company that owns the La Quinta hotel chain, Wayne Goldberg is a man on the move. The company’s two major brands, La Quinta Inn and La Quinta Inn & Suites, are in major expansion mode: La Quinta had 425 hotels at the end of 2005; today, it has more than 800, with 9,000 employees. The growth has been fueled in part by technological innovations that enable La Quinta’s customers to make fuller use of the technological devices with which they travel.
Goldberg recently talked with Smart Business about the technological modernizations and some of the other strategies he has used to drive La Quinta’s growth over the last few years.
SB: Let’s talk about innovation. How are you becoming innovative leaders in your space — not just in the properties, but how you market yourselves and build your brand?
WG: I’ll start with technology, because what I like to say is that I view us as the little engine that could. We have done some things that we’ve received a lot of recognition for. We were recognized this year by Technology Innovator magazine as Technology Innovator of the Year. In our little company of 845 hotels, we have done some very creative things.
First of all, what I would tell you is that the world has changed. It used to be that it was all about giving the guest the technology that they needed and wanted. You would make that technology available and put it in the room, whether it was a fax machine or the delivery of bandwidth to the room. The actual hardware and software — you gave the guest all of the technology they needed.
Today, it isn’t about giving them technology. It’s about giving them the capability of using the technology that they’re traveling with.
We’ve taken a different approach. We’ve done a number of firsts. In 2012, we launched a new mobile site, the first of its kind. On this site, we launched a platform called LQ Instant Hold. When you go to book a room, you’ll see a banner that says LQ Instant Hold. If you click on it, we will hold a room for you for up to four hours. All you have to do is enter your phone number. It’s unique.
We launched this in February, and by June, 40 percent of all our mobile bookings were coming through LQ Instant Hold.
SB: Are your properties franchised or company-owned?
WG: It’s a combination. It’s a different model than most of our competitors. In my view, this is another point of innovation; we own and operate 400 of our 845 hotels. We are significantly invested in the real estate and in the operation of our business, which I think is a big positive for us because we have real skin in the game.
We are going to our partners and saying, ‘Look, you need to change the bandwidth from 1.5 megs to 3 megs as a minimum standard. By the way, we can show you the return on the investment and the improvement in guest satisfaction. We can show you the reasons you should do it. And we’re doing it at 400 hotels. We’ve invested millions on our corporate side.’
All of a sudden, we have more credibility than someone just brand-building and telling people to increase profitability by spending money.
We don’t ask our partners to do anything that isn’t economical. It’s all about doing the things that are economical, and if it makes economic sense, then you can get the troops around those issues and initiatives and really make progress. But if you’re doing it just for the brand, where is the real economic value? And why would I do it?
I can tell you that being a franchisee of another brand — which we are — we see this all the time. We’re asked to do things and invest capital [where] there is no economic value. And, by the way, some of our competitors make money every time they require their franchise partners to do something by making them use certain vendors and products and then by taking a percentage of everything you’re buying. There’s a little bit of conflict of interest in that type of approach.
SB: Would you discuss your brand from both an ownership standpoint and a franchise standpoint. How has your brand changed and evolved?
WG: What I would tell you is that in 2000, we were 99 percent company-owned. We owned and operated 298 hotels, and we had one franchise property. What we have done over the last several years is our entire focus has been to leverage the brand, not the balance sheet.
For us, what that means is that we started the franchise business, and we decided we were going to grow our way out of a challenge we had of owning a large amount of older real estate.
Many of our owned assets are some of our older assets. In many cases, they were our inns. We’re one brand with two products. We have La Quinta Inns, which are limited-service hotels that operate in the upper end of the economy segment, and then we have the La Quinta Inn & Suites, which operate in the middle to upper end of the midscale category.
As I said, we wanted to grow our way through some of the challenges we have with our own real estate, so we have sold some older hotels. We have identified hotels that we felt were obsolete or at the end of their life and took them out of the system and sold them.
We’ve done this a number of times. From 2000 to 2006, prior to our acquisition and public-to-private transition to Blackstone, we were 99 percent company-owned, approximately 70 percent of our properties were Inns, the average age of our hotels was 26.1 years, and about 70 percent of our properties were exterior-corridor.
Today, we’re 53 percent franchised and 47 percent company-owned, we’re 70 percent Inns & Suites, the average age of our properties is 15 years, and we’re 70 percent interior-corridor. And it absolutely enhances our brand when we move to interior.
SB: Let’s go back to wireless service. How is your company innovating with the delivery of wireless to La Quinta customers?
WG: For Internet, bandwidth has been and continues to be the key issue. We embarked on a program two years ago where we fundamentally changed the way we deliver bandwidth to our properties and changed our brand standards.
For most of our competitors in our space, the typical bandwidth requirement for a property is 1.5 (Mbps), so to speak. We began about two years ago integrating circuits, and now it’s almost like delivering bandwidth “on tap.” So you’re not paying for extra bandwidth that you’re not using. We’re only buying and using what is needed.
What we do is integrate circuits with a multitude of providers, and we deliver bandwidth to the hotels based on what is actually being used. It changes based on the usage, so that the bandwidth being delivered is sufficient for the property.
We also changed our minimum from 1.5 to 3 megs. On average, we’re closer to 6, and we actually have a property with 19 megs of bandwidth. Now, that property is a hotel where we have a contract with a dorm, and they have a whole building, and there are two students per room and they’re on the Internet 24/7, so in order to give them what they need, we deliver 19 megs. So that is an extreme and an exception. But we basically doubled our minimum.
And what we watch for is 90 percent of the capacity being used. When that happens, then you move and integrate an additional circuit and additional bandwidth.
SB: So you basically have bandwidth on demand and there’s a trigger point where you flip a switch and it’s on?
WG: Well, it’s a little more complicated, but we would change the bandwidth for that property based on what the usage is over a period of time.
SB: So it’s not just for a day or a week? You bump it up because you’re seeing the trends?
SB: How are you gauging and monitoring the system?
WG: We monitor the percentage of what is being delivered and the usage of what is being delivered.
SB: Is there a correlation between that and the room occupancy rate?
WG: It plays a part, and it’s a significant correlation, but it also has a lot to do with the demographics of the property. For example, if you’re in a location next to a technology park and you’ve got a sophisticated, technologically advanced consumer staying with you, they will be using more bandwidth, so you have to deliver more.
What happens in this industry and what used to happen with us is that there are small percentages of people using a large percentage of the bandwidth. What most of our competitors are still doing today is when folks are streaming video and using an inordinate amount of the capacity, they bump them off the system basically to make room for the folks that are just checking email. They’re not allowing people to use the kind of bandwidth they may require. ?
How to reach: LQ Management LLC, (214) 492-6600 or www.lq.com
The Goldberg File
President and CEO
LQ Management LLC
Education: Bachelor’s degree, University of Louisville
Goldberg on fee-based franchising: We have very strategically focused on growth through our franchise fee-based organization. Today, we are 70 percent Inns & Suites, and if we take our pipeline and take some things we’re going to do with additional assets, where we have identified some noncore assets, we’re going to look to divest.
In 2014, those numbers will change. The breakdown between Inns versus Inns & Suites will be 75 percent Inns & Suites. If you look at the average age in 2000 — 26.1 years — today, it’s 15 years, and in 2014, it will be 13. The average age has come down dramatically because the bulk of our new franchise fee-based has been new construction. Even the ones that aren’t new construction are much newer properties, because we’re not allowing anything out of the system.
Goldberg on growth: We were recognized in 2012 as the fastest-growing limited-service hotel brand. If you look over 10 years, we have grown 166 percent. Our closest competitor, Holiday Inn Express, grew 62 percent. And in addition to begin the fastest-growing brand in the segment over 10 years, we’re also the fastest-growing brand over five years. According to Smith Travel research, we’ve grown 62 percent over five years. The closest competitor is Hampton Inn at 43 percent.
Goldberg on evolving the company’s brand: Speaking to the evolution of the brand and the product and the positioning of the organization, last year we were recognized by Forester Research. We were recognized across all brands, full-service brands included, on customer experience. They asked how easy the company was to transact with, and whether you would transact with them again. We ranked No. 2 in consumer experience among all brands, one point beyond Hampton Inn & Suites.