Interview: Wind Mobile CEO Tony Lacavera on never throwing in the towel

The chairman and CEO of the fourth carrier explains his approach to Bay Street

 
Wind Mobile chairman and CEO Anthony Lacavera

“My role is to continue to be a cheerleader for our culture and business model.” (KC Armstrong)

Tony Lacavera never thought launching a new wireless carrier would be easy, but even he was surprised at the number of roadblocks he’s faced. Those included a court challenge over how much of Wind Mobile was foreign-owned; struggles to negotiate tower-sharing agreements with Rogers, Bell and Telus (Rogers owns Canadian Business); and doubt about Wind’s future when its biggest investor, Dutch carrier VimpelCom, revealed it was exploring “strategic alternatives” for its stake.

Lacavera resolved that issue in September by partnering with Toronto-based West Face Capital and others to buy out VimpelCom for $135 million and assume $150 million in debt. Lacavera says Wind is on solid ground and can fully focus on growing its subscriber base and improving coverage. The new ownership structure also puts to rest questions about Wind’s long-term viability, he says. Now he’s just got to convince everyone else.


You recently formed a consortium to buy out VimpelCom, the biggest investor in Wind Mobile. What does this new arrangement mean for Wind?

We’ve battled for a long time at Wind, with the regulators and with the marketplace. And all that time, there’s been a lot of speculation as to what the future of Wind is going to look like. We’ve had our own startup challenges, as well as a lot of external challenges, but it’s clear we’re here to stay. That’s what it means.

VimpelCom had been looking to exit Wind for some time now, and a lot of potential partners were tossed around in the media, including Verizon. How hard was it to get this done?

It was definitely a very long and painful road to get here. And I’m not trying to suggest that we’re by any means done. We still have to invest in our network and address the gaps. But I’ve heard this so many times: “Why don’t you just throw in the towel? With all these regulatory roadblocks, court battles and huge incumbents that dominate…” I’m just persistent in my approach.

Why haven’t you thrown in the towel?

I’ve always believed in the business plan, even when I was maybe the only one who did. And I think that more people in Canada have to take risks like I’ve taken. It’s constructive. It’s good for the economy. And to have competitors in the communications market is something I believe in. For the longest time, people speculated that there’s no business plan that would make sense for a fourth carrier. But our plan has been validated.

How so?

The federal government has put the conditions in place to ensure the viability of a fourth carrier, especially in the last two years, by setting up a framework for newcomers to access roaming, tower sharing and spectrum. And look at our operating results. There’s a notion out there that Wind and the other fourth carriers are still nascent, and that’s just not the case anymore. We’re approaching 800,000 subscribers. The business is doing well and we know our market. The fourth carrier model is working.

You seem to have a knack for convincing investors to back you even when the odds appear to be stacked against you. How do you do that?

I am 100% transparent about the risks, about mistakes, and I always take full accountability. That’s the advice I give whenever someone asks me about raising capital. You’ll probably be dealing with very sophisticated, smart investors who have a lot more knowledge than you may think they have. If you approach them with a balanced, rational representation of the opportunity and the risks, you will have a much greater probability of getting financed. It’s that simple.

Surely you’ve had rejections, though.

Well, even after 16 years as an entrepreneur, “no” is a far more common answer than “yes.” I still wish I could convince people that I couldn’t convince, but I’ve gotten better at moving on much more quickly when someone isn’t getting it. You have to be talking to investors all the time. You have to be creating milestones for yourself and relaying those milestones back to the people who say no. That’s a key thing. Say someone tells you, “I’m not interested.” You say, “Fine. Would you be interested in me keeping you up to date?” And 99% of investors will say, “Yes, for sure.” I’ve found I’ve gotten a lot more support from investors that way, but very few entrepreneurs do it. It’s not like it’s a complicated thing to do. It’s just a question of doing it.

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How do you prepare for meetings with potential investors?

I start a meeting with two things in my head. One is: Stay out of the weeds. I’ve got to remember that this is a meeting with very sophisticated people, but they aren’t really deep into the details. If I spend too much time in the weeds, I’m going to lose them. And I always tell myself to run up the hill. I just show up and try to take those steps forward. What it leads to, hopefully, is communicating two, three or four big themes that you leave people with. People walk out with a memory of how they feel about that meeting. If it’s too granular, they lose sight of the big dream. But if it’s only big dreaming, you’ll lose people because they have no idea how to execute.

How have you positioned Wind to attract customers, especially when Rogers, Bell and Telus dominate?

We give you good value for money. We don’t claim to be the fastest. We don’t claim to have the best coverage. We service a clearly defined market for Canadians who want good value. We’re very careful to invest in customer service, too. Canadians want to see better customer service in wireless. We’re certainly not the cheapest in the market either. You saw where “cheap” got companies like Mobilicity and Public Mobile. People have the perception that cheap is just not as good.

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It’s true that while Wind has had its struggles, the other two new entrants are in creditor protection. What has Wind done differently?

Look at our investment level. We’ve invested over a billion dollars in network infrastructure and spectrum. If you just look at the scale of our investment in Ontario, B.C. and Alberta, it’s bigger compared to the other new entrants. That allows us to have good coverage and a good customer service platform. But we pivoted our business very significantly in late 2010, and if we had not done that, we would have failed.

What happened in 2010? 

We started our business with a prepaid-only proposition, meaning you sign up, buy your own phone, sign up for a plan and away you go. We learned quickly that Canadians do not want to pay up front for a phone. And it became clear that without a postpaid offering—handset financing—Wind would not have made it. That was a very difficult, painful change, and it took us 12 months to fully roll out. In the end, that’s what got the company on solid footing.

Wind’s initial goal was to have 1.5 million subscribers by the end of 2012. You’re at 765,000 today. How come?

The whole business is smaller than we projected at the outset. We did say we would get 1.5 million subscribers after two years, and we subsequently revised that plan when Mobilicity and Public Mobile launched. But the revision was never picked up by analysts or the media. They still refer to the 2008 plan when they say, “Wait a minute, you’re supposed to have 1.5 million subs.” Mobilicity, Public and Wind together would have gotten 1.5 million, and did, in fact, if you added them up. But we split the market three ways, and it was a disaster for all three of us. There is obviously not room for six wireless carriers in Canada. But there is room for four.

Are you meeting your revised targets?

Yeah, our company has been on or ahead of target for almost three years now.

Still, Bay Street analysts have been pretty hard on you. Last year, an analyst at Canaccord Genuity called Wind an “abject failure.”

[Laughs.] That’s awesome. Obviously, I don’t agree. Wind has got nearly 800,000 subscribers, and they wouldn’t call it a failure. They’re voting with their dollars. Our postpaid churn, the percentage of people cancelling accounts, is 1.3%, which is right in line with the incumbents. I think that’s a telling stat. It’s not like people are signing up for Wind, trying it and leaving because it’s not good.

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Do you need Bay Street on your side?

Our customer today is not reading an analyst report and saying, “I’m not going with Wind because an analyst says it’s an abject failure.” And we’re not a public company, so we don’t have any obligation to disclose everything. But we want to have a good relationship with Bay Street in the long term. Of course we do. I’ve just got to keep showing up and hammering my points.

Was there a time when even you thought Wind wouldn’t make it?

For sure, there were times when I felt like I was facing a crazy roadblock and all I can do is keep trying to work on solutions. By definition, if I don’t work on a solution, we’re going to fail. So I may as well keep working on it because we all know what the alternative is. It becomes an obvious choice, really.

How do you motivate employees to stay committed when terms like “failure” are being thrown around?

We’ve got three extremely well-run, big, big competitors that are totally entrenched, sure, but I always say to everyone that the consumer is on our side. There’s a lot of opportunity because we can offer good value and a higher level of customer service. I always just say that we have a reason to be here. We’re not going to be perfect, but we’re going to keep showing up. I just hammer that theme.

Will your role at Wind change at all?

My role is to continue to be a cheerleader for our culture and business model. One audience is Bay Street, but the critical audience is our customers. I talk to customers anonymously all the time. Sometimes I stop people right outside my door at 48 Yonge St. here and ask them about Wind on the way by. Most say, “Huh?” But usually people talk to me.

Now that Wind appears to be on stable ground, will you be staying on as CEO?

I was going to step down if I had been bought out, but that didn’t happen. There are no immediate plans to change any management. There’s a very good team here that I’m very proud of, and the business does not rely on me at this point. It didn’t ever really rely on me. What the business needs me to do is be the guy who doesn’t care when everything goes wrong with the regulator, the market or investors. So yeah, when everything goes wrong, that’s when the company needs me.

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