Adventures in Marketing, Collaborations, Joint Ventures and Merger Flirtations
As 1998 evolved, Telalink Corporation became very visible in Nashville, thanks to a big contract that we signed with Bohan Carden & Cherry. We hired Chris Ferrell (then, a young, popular Metro city council member and now the CEO of SouthComm, Inc.) away from Citysearch.com as our marketing director and he embarked on an ambitious spending campaign with the Bohan Carden & Cherry team to make Telalink ubiquitous in Nashville. The cartoon-styled Telalink logo started showing up all over town on bus benches and a major ad campaign had our staff members appearing in The Tennessean all the time. I remember awaking one morning to read the paper and, as I sat down at the breakfast table, I did a genuine “spit-take” with my coffee upon viewing a quarter-page ad showing Hagan Rose (posed in front of a barnyard background) in overalls and talking about farming, giving blood and playing soccer...oh, and selling Telalink services.
“Wow!” I thought, “How much did all of THAT cost?!”
It turns out that we had developed a whole series of ads with Hagan the farmer, Michele the Chef and I can’t even remember the rest of the campaign but it was REALLY expensive. I think one ad placement in The Tennessean was $7,000.00 not to mention the actual ad production costs. I don’t think we had spent that much for an entire year in the past. All of those ads and bus benches enhanced our branding and awareness, for sure, but I was very uneasy about such a hit to our cashflow. Before it was all over, I ended up having to work out a payment plan with Bohan Carden & Cherry because we had racked up a $150,000 debt with them! We were growing but not fast enough to pay for those kinds of bills.
It was about this time that partnerships and collaborations started coming into focus for us. First, our relationship with Nextlink (later to be called and now known as XO Communications) was essential. They loved us and we loved them. Nextlink’s CEO, Don Hillenmeyer, and Telalink’s president, Bill Butler, were talking openly about how great it would be for Nextlink to acquire Telalink. Nextlink had gone public in 1997 and was spending a lot on building out its own fiber network in various markets but they were also looking at strategic acquisitions with some of that cash. To Don, acquiring Telalink was a no-brainer and he solicited Kevin Crumbo to assist with making the case for an acquisition. However, the Nextlink HQ leadership, which included Craig McCaw of cellular phone success (he sold out to AT&T for many dollars), was not as hot on the idea. Nextlink had already acquired an ISP in Atlanta and it didn’t go so well. They didn’t want to repeat that debacle, especially in a smaller market. We believed that it was a bad comparison but it didn’t matter. Nextlink soonafter announced plans to enter into a collaboration with PSINet, one of the first large, commercial ISPs in the country. PSINet prided itself on NOT being a phone company and only being an internet company. Much of the internet traffic of the world traveled through PSINet’s network. In the early days, Bob referred to them as “pissy-net.”
“Well that’s that,” I thought. “PSINet’s going to squeeze us out of the relationship with Nextlink and we’re going to lose.”
It was around this same time that we started thinking about having someone represent us to potential buyers.
“If Nextlink can’t buy us, then maybe PSINet will, especially, when they see how much we can already bring to the table with Nextlink in Nashville. They don’t have nearly the depth that we have in this market. We could be a great acquisition for them,” so I thought. During that same time, we had retained Mr. Frank Woods, a local business broker, to represent Telalink to actively search for buyers.
“Frank, can you see if a company called PSINet would be interested in buying us?” I asked.
“Absolutely, Thomas! I‘ll let you know what I find out” replied the always-dapper, gentle-spoken Frank.
Within days, Frank called with bad news. “PSINet says Telalink is too small and they’re not interested. I’m sorry. We’ll keep looking for a better fit.”
While the marketing/ad campaign and Nextlink adventures were in full swing, we were also cultivating a rather interesting and innovative partnership with one of our main Nashville competitors- ISDN-Net (now called The Nexus Group). Born around the same time as Telalink (but we claim the earlier birth!), ISDN-Net was a very different feeling operation. While the Telalink team was younger, more playful and unconventional in its style, ISDN-Net was more serious, traditional-sales focused, offered consulting services and they just seemed more serious. Let’s just say our two cultures were very different. I mean, ISDN-Net probably forbade office cats and white Russian Fridays and probably didn’t have a cuss jar. The two owners, Jerry Dunlap and Ken Russell, were not likely to show up at a meeting in shorts or sandals ("He's wearing 'Jesus shoes,'" remarked someone at the golf course about Bill one day) like Telalink people. However, we DID respect each other as competitors and there was no doubt among anyone that Bob Collie was the most brilliant networking expert of anyone...and that’s how NREP was born.
Nashville Regional Exchange Point was a 50/50 joint venture between Telalink and ISDN-Net. Basically, it was a carrier-neutral data center. Customers could lease space on racks and have their servers that much closer to the highest speed telecommunications lines in town. Internet traffic that only needed to occur locally could now occur. I always compared it to the old “bank clearing house” model. At the end of every business day, local banks would meet up and exchange items that were drawn on one another. For example, if a check drawn on Bank A were presented for cashing at Bank B, then the two banks could settle up directly with one another that evening rather than through a more elaborate network involving other banks. The concept was the same for internet traffic except instantaneous. If I wanted to send an email to someone in Nashville but my provider was Telalink (meaning we were using Sprint internet “upstream” and Nextlink phone lines) and the recipient’s provider was ISDN-Net (let’s say they were on BellSouth phone lines and using UUNet internet), then my email would travel all over different networks and through multiple servers all over the country before landing in the recipient’s mailbox. NREP made this process much easier. The safety, redundancy and maintenance of data center services was projected to be one of the next big things so we were ahead of the game on this concept in many ways.
NREP sat atop One American Center in space that was once occupied by a mobile services company. I can’t remember which provider it was but we determined it was perfect for our needs... and oh-so-convenient to Telalink. This was an added benefit since Bob was running NREP and he could easily walk the block up the hill to One American Center to meet customers and show off the facility to prospects. By all measurements, NREP was almost an immediate success. We even hosted a ribbon-cutting ceremony in which then-mayor Phil Bredesen officially announced this as a huge step for Nashville advancing as a formidable player in the tech industry.
With such great publicity for NREP, an obvious hit with the service and its implementation, not to mention a good feeling all around about our work as a team (i.e. Bob was clearly a desirable team member for ISDN-Net), it wasn’t too long before Ken and Jerry were openly talking about what a merger of ISDN-Net and Telalink might look like.
“We’d be the biggest game in town and no one could enter this market without contending with us,” said Jerry, with an enticing tone in his voice.
“And just think about what kind of multiple we could earn on our sales revenue if we sold out,” said Ken.
"Interesting. Verrrrry interesting.....” thought Bill, Tim, Bob and myself. “Marriage made in heaven or clash of two hopelessly different cultures?”
“Let us talk to more about this marriage.”
To be continued...
AUTHOR: Thomas Conner
Thomas Conner is the co-founder, president and chief financial officer of Sitemason, a hosted, supported alternative to Wordpress and Drupal, built for agencies, freelance designers and developers.