Las Vegas-based MPower Communications Corp. opened less than half a decade ago with 30 employees. Today, nearly 1,000work for the firm in seven markets.
Nield Montgomery knows the telephone industry. The 50-year-old retired father of five and grandfather of three found his first job in the business in 1962. Fresh out of high school, he started at AT&T, took some time off for a tour with the U.S. Army then earned his bachelor’s and master’s degrees in business administration (with an engineering minor) in Springfield, Mass. After graduation, he continued with AT&T, followed by New England Telephone, moving up through the engineering ranks.
By 1980, he found himself sick of the Northeastern cold and the politics and came to Nevada as a Centel recruit. His background in network design helped him run outside operations for the company. Continuing his upward climb through Centel’s merger with Sprint, he became general marketing and sales manager for the company’s western region. In 1993, he left Sprint to start his own company, but it was too early. “I could see the opportunity,” he says, “but the law and the general market were not quite right.” So he took a consulting job with ICG out of Denver commuting from Las Vegas to perform duties as general manager for switch implementation, network development and network design.
His decision to remain in Nevada was fortuitous. In 1995, Nevada law finally caught up with Montgomery’s dreams: legislation was enacted to open the local telephone service market to competition, a year before federal statutes did so. The summer of 1995 saw him hard at work perfecting his concept of providing competitive telecommunications service using a new technological model enabling better service and boosted profits. “It’s analogous to a four-year-old company that still uses 486 computers having to compete with a new firm operating Pentium computers with more power and fewer costs:’ he described. As with computers, the newest generation of technological advances in the telecommunications industry combines performance and capability with a significant reduction in price. “That gave us a unique opportunity in the market,” says Montgomery. That same year, 1995, saw the certification of Montgomery’s baby — NevTEL.
“It’s a capital-intensive business,” asserts Montgomery, who knocked on a lot of doors and went down a lot of dead-end streets. “I realized that every potential lead is something you’ve got to pursue, and every one of them works as a lesson that you carry back, add to your knowledge base and do better with next time?’ Within about four months of hard pitching, Montgomery found the perfect partner in Maury Gallagher. “I just kept knocking on doors:’ says Montgomery. “You do that enough, and somebody who knows somebody or who is ready himself or herself makes it happen.” The two met in 1996, the same year federal law deregulated the local telephone industry nationally.
Gallagher’s background was in finance and the airline industry; he was familiar with the deregulation process and what it could do for a business. Add to that expertise, an interest in technology, as well as an awareness of its potential additive value to a company, and Montgomery had found the perfect partner. “Maury brought that combo of understanding of finance and the importance of automation:’ says Montgomery, “and I brought the project and knowledge of telecommunications. It was a unique combination of skills and ability — a true synergistic experience.”
With a $4 million investor on board (between Gallagher and his partners), the company incorporated and an interconnection agreement was signed with the Nevada Public Utilities Commission (NPUC). Montgomery’s NevTEL was the first competitive local exchange carrier to be licensed by the NPUC. Within six months of the initial capital investment, the company was operational and very rapidly proved a success. The first customer came online in December 1996; by July, the company was serving 10,000 customers. December 1996 showed only 30 employees; by December 1999, there were 800. Investors were so excited that Montgomery was able to raise $15 million dollars the second time around, and subsequently changed the firm’s name to MGC (Montgomery, Gallagher and Company) Communications, Inc. to take the company national (NevTEL sounded too parochial for a national market).
MGC became MPower in January 2000 and now services seven U.S. markets. According to Jeff Rein, manager of corporate development, the company plans to enter 20 new markets in 2000, and hire more than 2,400 employees by year’s end. But the journey has not been without its potential pitfalls.
Hem says one of the biggest challenges was building name recognition. Through news releases and radio shows, the company reached out to Southern Nevadans Hein says the firm was lucky to begin operations in Las Vegas, a city where people are open to change. Nevertheless, there’s always the dilemma of whether people want the product, especially if they’re used to receiving service from a corporate titan such as Sprint. “It took a while to get the word out,” says Hein, “but three years later, people know they have a choice.”
Small business owners are usually surprised to learn that MPower sales representatives listen attentively and often implement their suggestions for improving service or adding products. “One of the challenges,” Hein continues, “was to come up with a product set the public would buy. We are constantly listening to what people want and putting together packages to reflect that.”
MPower continues to implement technological evolution and is currently upgrading to combine voice and data transmission thought digital subscriber lines (DSLs), where the customer can get up to eight voice conversations and unlimited Internet access off a single phone line. “it offers small business customers a real value proposition by combing phone and super-fast Internet access, both for about the same price they are paying for phone service right now.” Hein explains.
All the growth at MPower has les to another challenge- space. The company started in a small office complex with two buildings housing 30-40 people. “We ran out of room very quickly,” remembers Hein. Luckily, Gallagher owned some land, and subsequently constructed a 33,000- square-foot operations center. This past December, another 33,000-square-foot building was added. Before the buildings were ready, however, the company successfully overcame the challenge of moving 100 people to temporary facilities for three months- without interrupting service.
Moving, fast growth, and competing with the likes of Sprint, Bell South, and Pac Bell have taught MPower to be efficient. The innovative company had learned to streamline back-office procedures and continually take advantage of new technology, but Hein says the true key to success has been leadership. “I came from a PR background,” he reveals, “and knew nothing of the phone world. Nield is a good teacher and an honest, ethical man; we fed off his enthusiasm.”
Montgomery lists finding and retaining talented employees as n of MPower’s biggest obstacles. His goal is to hire people who share the company’s vision for success. “We put together a combination of things to attract people,” he says. “Obviously, we offered competitive compensation packages. In particular, we included options featuring opportunities for a big payday down the road.” And he counted on the excitement of people in the telecommunications industry who were hungry for a challenge. “We stressed that they weren’t going to find a book to tell them how to do this,” he says. “We hired people because they are capable of making their own decisions.” The concept proved attractive for innovators who felt constrained by all of telephony rules and regulations. Hein says. “It’s a matter of people believing in a business plan and then working their butts off to bring it to fruition. It is the ultimate reward for people who put the time in.” And that reward paid off well when the company went public in March 1998.
Put together a strong multi-faceted telephone background with a Wall Street background, add incentives to lure the best employees and you have a success story. But that doesn’t mean it didn’t take work. “I wanted a unique enterprise for pole who work here,” says Montgomery, who retired in November of 1999, “and a success for investors who early on believed in the concept for the corporation, as well as a great product for customers.” Toward that end, he spent six months on the business plan alone, writing, rewriting and restructuring it with new projections and updated physical changes in the activities affecting the industry statewide. The vision was perfected before any money came into his hands- a vision strong enough to keep propelling MPower toward higher levels of success on a national level.
Ask Montgomery for his advice to other entrepreneurs and the answer is simple — persistence. But ask Hein and he will enthuse about the founding vision, drive and expertise. “Leadership,” he says, “is key to success of any organization. There are many people out there with good ideas, but unfortunately in this world, not a lot of people have the business acumen or follow came through to make it work.”