Telerama: Standing Eight Count

On March 23, 2007, in Computers, by peterb

My internet provider of choice (and former employer) Telerama has been having a few problems lately. This has engendered some morbid conversations, Irish wake-style, among some folks about whether and when the business will completely give up the ghost.

Regardless of what happens to Telerama — and I hope it’s around for a long time, and regains a solid financial footing — I think it brings some lessons that are of interest to anyone who wants to run a small business. I’m going to wander far afield and talk about some of these, and also talk a little bit about Telerama.

A friend of mine asked me yesterday whether I had switched my DSL over to some other company yet. “No, not yet,” I said. “I’m going to ride it out for a few days and give Doug some time.” “Is that an emotional attachment, or a financial calculation?” she asked. “Neither. It’s just, well, having my DSL through these guys keeps things interesting.”

Now, the unfortunate thing for Telerama is that “interesting” is not really what most people want out of their service providers.

The intriguing thing about Telerama as a case study is that it was clear from around 1995 or so that it was in the wrong business. Small businesses can’t make money and grow selling internet services to end users. Yes, I’m aware that there are a number of other providers in the Pittsburgh region in this market, but that doesn’t make the statement any less true: unless you are offering some substantive service that isn’t available elsewhere, you’ll eventually be pushed out of the market by larger players, who will offer better service for lower cost.

So the key question for Telerama in the early 1990s was: how could the company exploit its early start and find new markets? That’s what never happened. Why not?

Unwanted Guests

Most of the people who started internet companies in the early 1990′s had, to put it mildly, strong personalities. This is not coincidental. The Internet in 1990s was largely controlled by an oligopoly of entities that worked on behalf of universities and research institutions. For-profit network operators were unwanted. Early on, your ability to resell service lived or died at the pleasure of someone who had no interest in actually selling you bandwidth. The only people who started ISPs were those who were prepared to take risks that others were not willing to take.

In order to start an ISP in the early 1990s, you had to be willing to look your upstream provider in the face and lie to them about what you were doing. That really meant that only a certain type of person could start a succesful ISP.

This very attitude let Doug, Telerama’s owner, do some things that others were unwilling or unable to do. Doug was a superb judge of technical talent, as distinguished from technical knowledge. He was constantly hiring people who had very sparse technical resumes, but who would prove to be sharp, quick-learning, and adept. I know of many people working as software developers, networking researchers, and network operators today whose careers were launched because Doug gave them a chance before anyone else did. The importance of his ability to recognize this kind of talent can’t be overstated.

It’s also important to note that Telerama has been an ISP for 16 years. In that time, countless other ISPs have started and gone bankrupt. Keeping an ISP afloat in the marketplace for this long is no mean feat.

The Control Paradox

The key paradox in running (and growing) a small business is that you can’t grow without dividing up control and responsibility, but there’s incentive against doing so. Giving the wrong guy too much control can result in someone taking the company you worked hard to build and driving it into the ground. But in my experience, failing to find the right people to give control to will result in the same end — it’ll just take longer. You can’t do it all yourself, and you shouldn’t try. Finding the right people to give responsibility to will increase your control over the company.

This can be summed up as follows: as an entrepreneur who owns a startup, your number 1 priority should be hiring your replacement.

You need 4 good people to have a hope of managing any business:

1. The Guy Who Manages People. This is the person who hires the people who do the “real work”, and whom they report to.
2. The Guy Who Sells Things. This is the person whose job is to help you plan where you will make your money, and to help you execute that plan (yes, I am well aware that I am mixing marketing and sales together. You will unmix them as you grow).
3. The Guy Who Watches The Cash. This is the person who can, at a moment’s notice, answer the questions “What are we spending money on?” and “What can we do to improve our cash flow?”
4. The Idea Guy. This is the person thinking about products or services that you can be selling several years down the road.

In most of the successful companies I’ve seen, the founder ends up being The Idea Guy, since that’s how he came up with the idea for the company in the first place. If you actually plan to grow, and not just maintain your business, you’ll very quickly need an HR person (“The Guy Who Keeps You From Getting Sued Too Much”).

The road to failure is littered with the corpses of companies who let their Idea Guy also be The Guy Who Watches The Cash or, for that matter, any of the other guys. One or more of these people will also be your Guys Who Raise Money, but that’s a subject that’s beyond the scope of this article.

The thing I’m trying to make clear here is that it is in your business’s best interest if these are all physically separate Guys. There are a number of reasons for this, but it boils down to two things. First, the most important part of fixing a screwup is figuring out that the screwup exists. Second, you want accountability. You want to be able to make the minimum number of staff changes needed to fix the problem, and no more.

My impression at Telerama is that at any given time they really only had 2 Guys: “Doug” and “This other guy that Doug hired to do everything.”

That’s not enough Guys.

An Illustrative Story

In early 1994, Doug and I were in our early 20s. Neither of us had a lot of experience running a business. When things at Telerama needed to be done, we just did them. The idea of hiring (for example) a Sales Guy didn’t really occur to us.

Once, we showed up for a sales call on a local Internet startup (motto: “We don’t produce anything of value!”). These folks were looking to lease a modest amount of high speed internet services. The local phone company was still charging usurious rates for DS1 service, and the expertise to operate the lines was still fairly specialized. Telerama had already demonstrated competence at operating such services, and was quoting a price significantly less than our closest competitor.

I wore a suit. Doug, who was used to dealing with techically savvy people who didn’t trust people who wore suits, was wearing very casual street clothes.

Since this potential customer was a very “straight” company, that’s really all you have to say. The numbers we put up, the value proposition, none of that mattered. To this company, Telerama had just become the oddly-dressed guys, and there was no chance of making the sale.

On the way out to the parking lot, Doug said “Huh, that didn’t go so well, I guess.” I looked over at him. “You’re buying a suit.” “I can’t afford a suit!” he said. “The company is buying you a suit,” I said.

We got Doug a suit. We started making sales after that. This particular potential customer went bankrupt in 1997, so at least some good came out of the meeting.

The interesting thing about this story, to me, is that it could have gone either way: had the client been a different sort of company, the sale might have been lost because I was wearing a suit. “Why should we trust these guys? They’re a bunch of suits.”

If you have a Guy Who Sells Things, she knows exactly what the customer expects her to be wearing before she shows up.

100% of $0 is $0

One thing about Telerama that I think most people don’t realize is that it mostly grew by its bootstraps. Most of the money invested in the company came from its customers. This is unusual. Many companies, especially tech companies, choose venture capital. The most egregiously unselfconscious of entrepreneurs even choose VC and then whine about how they had to sleep in the bed they made. VC comes with strings, and for many businesses those strings are very helpful. But the secret of VC is that the real value it brings isn’t cash, but expertise — expertise in running a company. A good VC helps you hire your replacements. That will help your company grow.

All of this sounds obvious, but the missing link is that founders are not always rational about money. Many of them don’t view the company as an intangible holder of value, but as an emotion-laden opus into which they’ve poured their hopes and dreams. And so the rational argument “bringing in more expertise will help the company grow” sometimes can’t outweigh the desire to keep tight control on “their baby.” All you can do as an employee is learn to recognize when this is happening, and run in the opposite direction as fast as you can.

Memento Mori

In Republican Rome, when a victorious general would receive a triumph, a slave dressed in rags would be perched behind him. That slave would periodically lean over and whisper in the general’s ear, reminding him that he was merely a man. In a business, that role is served by your partners, by your board, and by your shareholders. If you have no partners, no board, and no shareholders, then you are navigating a very strong current with only a very weak rudder. I think that, more than anything else, is what has put Telerama into its present dire strait. No matter how good Doug’s judgment is, he’s just one guy, and without a group of people with brains, experience, and a vested interest in the matter, he’ll continue to struggle.

I don’t know how one can salvage the situation. But if there’s one thing I know about Doug, it’s that he’s not afraid to try new things. If he can find the fortitude to find funding, gather a competent team, give them responsibility, and execute a plan, then who can say where the company will go. This is Telerama’s standing eight count. “Down and out” may seem likely, but it’s not a certainty. Not yet.


8 Responses to “Telerama: Standing Eight Count”

  1. gwen says:

    On behalf of Deeann Mikula, I’d like to point out that she occupied more than one of the “guy” roles for quite some time, specifically “The Guy Who Manages People”, and “The Guy Who Sells Things”. Granted, it doesn’t take away from the point of the article, as she occupied these roles (and more) at the same time. However, I think that assuming that men are the ones who occupy these roles is a mistake in today’s world, and particularly when you’re writing about a company that didn’t have that assumption.

    Otherwise, this is all very sound advice.

  2. Chris says:

    Dee was a dude. Gender notwithstanding she was a dude.

    I think what’s is also worth pointing out is that Doug would often let people rise as high as they wanted to. The aforementioned Dee started out as a receptionist after all. She had no knowledge of computers, networking, or the internet beyond what she saw on my computer at home. That Doug, or any one for that matter, would let someone rise as high as their competence would allow them is remarkable. Of course, het got burned by this a number of times and one of the side effects of this is that the people he brought in started to feel they had more than just an employee’s interest in the company. I personally believe that when this happened is when Doug started forcing people out – it was his company after all and if he wasn’t going to share it with VC (or even get a loan) I really doubt he was going to share it with employees.

    This being said, Doug is a remarkably resourceful and intelligent person who has, for all intents and purposes, been able to get exactly what he wanted out of Telerama. He was able to do it using highly unconventional methods and hires. In the process he put a lot of people onto career paths they might have never had the opportunity to explore otherwise.

    Personally, I do feel I owe Doug (and Pete) and debt of gratitude for getting me on my career path. Even if I do hate computers.

  3. Chris says:

    I remember when Telerama’s only Internet connection was a 56k modem link to bung.cheme … hehe :) Heady times. (or something like that)

    Also, most likely Doug was the one that put me on this career path, interesting as I think back on it. Thanks Pete.

  4. peterb says:


    You’re right about my use of “Gal” for HR. I was trying to make a joke, but since it’s a joke based on stereotypes, it doesn’t really work. It’s tangential to my point, so I’ve changed it.

    I stand by Guy though. The people you hire to fill these roles are Guys. Even if they’re women.

    I respect Dee very much, but my central point is that anyone you have doing more than one of these roles isn’t a Guy. They’re just a guy. Your Guy doesn’t learn on the job: you hired them because they were already an expert.

    That Doug was willing to hire people (like me, like Chris, and like Dee) who didn’t start out as domain experts certainly made it a special place to work.


  5. Glenn Fleishman says:

    So whatever happened to Telerama and Doug? He moved out here to Seattle, started a few Wi-Fi locations here that pretty quickly got off his network (and went free), and then disappeared sometime after having this third kid. I used to chat with him occasionally, as I write extensively about Wi-Fi, but he stopped responding to email maybe a couple years ago.

  6. Ben Wechsler says:

    Well, Telerama went offline AGAIN last evening (Feb. 5th). I have to agree with everyone — they USED TO BE great! Easy to work with, helped a charity that I worked with by providing free space, great people, etc. But I guess their days are numbered, and the numbers are getting smaller than Rudy Giuliani’s share of the vote! I have tried to stick it out with them, but that is looking less and less wise. They have no phone so there is nobody to even try to call. My email is down, and this is a day when I need it very badly.

    As a note to peterb’s comments, I called them a couple of years ago looking for a speaker for my Rotary club. That is a great chance to get out and tell people you are there and what you have to offer. If nothing else, they had great customer support (when they weren’t BSing about why they were down). They never returned my phone call. One of the great causes of failures wasn’t the number of guys, but the failure to realize that you were in fact in business and needed to do business. The old economic system never died, the dot coms only provided a new business that ultimately had to deal with customers — something they never got good at.

    To peterb: hello — you helped me out years ago with some early web sites and lots of technical issues. Good to “hear” your voice out there.

  7. I’ve tried to stick with Telerama even though I am on Comcast broadband (no choice where I live). I would have liked to maintain my email on Telerama anyway just to avoid changes. They had been good in general.

    Telerama is making that impossible with virtually nonexistent contact ability for normal or emergency customer service. Their email support function does not work either. No matter their great history, there is no excuse for treating customers this way.

    Why don’t you try to access my Telerama web page right now? Ha-ha!

    Just recently and last year, I have had to beat on them to accept my payment (via CC). I have had to fight to pay them and it still has not gone through after 2 months this time. How can you stay in business or increase business that way?

  8. Mark says:

    It would appear that Telerama has been down since last week?

    Any news from Doug and company?

    Hopefully this is not the end…