In earlier BLOG posts we talked about Carl’s views on leadership [1], on perception management [2], and product-market fit [3]. Much of this philosophy he exported to his later, long-term gig at Calix. Complementing his views was a fierce competitiveness.
Carl came to Cerent with the objective of driving the revenue line in order to go public or position the company to be acquired. This set up a battle in the telecom industry between upstart startups, such as Cerent (and others of its ilk), and the established suppliers of telecom equipment – Nortel Networks, Lucent, Fujitsu, and Alcatel.
Like the biblical story of David and Goliath, the startup Davids were forced to eventually take on Goliath.
Initially, Cerent flew “under the radar” and the marketing team of Terry Brown and yours truly (Rob Koslowsky) sought to differentiate Cerent from the legacy SONET vendors, who Carl would come to call the “evil oligopoly.”
Carl Listens
Carl worked closely with us in marketing and sales, and he listened intently as we described the access market, the broadband market, and the long-haul market. Carl, a newcomer to the telecom sector, recognized that the Cerent 454 was more of a transport vehicle and that it fit very well into metropolitan optical transport markets.
Ajaib Bhadare remembers our marketing team’s contributions, “Once we had drawn that transport space, we started to promote the box fitting into transport and so we identified the market space and then we claimed that we were the first and the better product to fit into it. That was a brilliant marketing strategy.”
In a competitive market place, it’s about “us” versus “them.” Carl binned our larger rivals as the evil oligopoly [5]. He colorfully painted the picture of them as bad and us as good. In one of his many all-employee “Cerent-foyer-meetings” Carl chose to pick on Nortel, making a mockery of Nortel’s ability to compete and bring a “like product” to market. Nothing could touch the Cerent 454 in terms of value or functionality. It turns out, Carl was right.
On the flip side of the evil oligopoly, some economists feel that oligopolies (and monopolies) perform a social good by limiting competition and thereby avoiding competitive battles that often destroy more wealth than they create. Joseph Schumpeter and his concept of creative destruction outlined this notion in his 1942 book, Capitalism, Socialism and Democracy. Many believe this notion is not applicable in today’s disaggregated structure led by arbitrage-oriented firms [6]. Carl did not believe it and referred to oligopolistic behavior as evil.
[1] In a past BLOG on leadership, I wrote, “Carl [Russo] remains a believer in establishing culture, creating the strategy, and then hiring the right talent so that execution becomes possible. He noted in 2013, ‘We want the employees talking about the strategy, what are we doing, what does the market look like, how are we going to get there, then back to the strategy, what are we doing, over and over and over.’”
[2] “In a previous BLOG post, I wrote, “The perception roadmap describes where you want to be. It’s all about messaging ahead of where you are and making the promise of what you’re ultimately going to deliver. Part of the balancing act is not to look too far ahead though. Milestones have to be met so progress can be demonstrated. This, in turn, establishes credibility that the next target on the roadmap will be hit. Only a great product with an engineering team that executes on the product roadmap is able to string a wire for the perception cartographers to walk.”
[3] Carl was an advocate of product-market fit and a key element of Cerent’s communication focus became product positioning. The key attributes of how the Cerent 454 fit the optical transport market were clearly developed and articulated to the target audience of network planners, engineers, and operations personnel within the service provider (telecom) ecosystem.
[4] One of Cerent’s largest customers, Williams, recognized the focus of the Cerent team, a group of people not distracted by rumors of its possible IPO or takeover during mid-1999. Wayne Price, Williams CTO, at the time, said, “It was obvious to me that these guys were building a company and not just trying to cash in on the Internet hype to get rich.”
[5] An oligopoly is a market structure in which a small number of firms have the majority of the market share in the marketplace. From another point of view, an oligopoly is similar to a monopoly, except that rather than one firm dominating the market, two or more firms dominate the market. In the optical transport sector, the oligopoly comprised Lucent, Nortel, Fujitsu, and Alcatel, and, to some degree, Tellabs.