Radiant heat: David Buffett is as much at home leading a smaller broadband player like Radiant as he was leading Nortel Networks’ European invasion.
Mission: Capitalize on Radiant’s momentum after being first to market with a suite of new broadband products
Assets: 25 years of climbing the ranks at Nortel Networks
Yield: A drastic restructuring that eliminated Radiant’s heavy debt and has it straddling profitability
David Buffett knows a sinking ship when he sees one.
He did, after all, spend 25 years climbing the ranks at Nortel Networks before leaving the company in 2005 – after Nortel’s accounting scandal in 2001, but before the company filed for creditor protection in 2009.
When Buffett became president and CEO of Radiant Communications Corp. (TSX-V:RCN) in May 2006, the Vancouver-based broadband reseller’s ship was not sinking in the same way as was Nortel’s, but it was in need of righting.
Radiant, which was founded in 1996, had begun a restructuring in 2005.
It had crushing debt, a widening loss that grew to $5.2 million in 2005 and less than $2 million in the bank.
In Buffett’s first year leading the company, Radiant decreased operating expenses by 13%, reduced its operating loss to $192,000 from $2.3 million and posted a small profit.
Radiant has continued to improve its operational margins and, while it isn’t as large a ship as Nortel, its righting is impressive nonetheless.
“I treat it as if it’s my own company and my own money,” said Buffett from his office, sounding very unlike some of Nortel’s former executives.
He was hired by Nortel in 1980 only days after graduating with a science degree from the University of Waterloo.
“I wrote my final exams on the Wednesday; on the next Monday I showed up for work,” he recalled.
Over more than two decades, Buffett took on increasing responsibility at Nortel, rising eventually to the role of president of the firm’s wireline networks for Europe, the Middle East and Africa.
There was a time at Nortel when executives like Buffett could not hire fast enough.
“People were yelling and screaming at you to just hire, hire, hire,” said Buffett.
It turns out those people were wrong. While Buffett at one time loved the culture and the people at Nortel, he was not fond of being among those charged with laying off employees en masse.
Radiant has grown from 88 employees when Buffett joined the company to 106 today. Buffett calls it sustainable growth.
“I don’t want to go through 20% layoffs again. Not on my shift. I take it very, very personally,” he said.
“If it takes six months to find the right candidate, wait the six months.”
Another lesson Buffett learned at Nortel: “Don’t drink your own Kool-Aid.”
“Always have some outside council and listen to other people that are grounded in reality,” he said.
Buffett’s formative years were with Nortel, but his career also includes short stints as director of applications at Oracle Canada and a vice-president of Belair Networks, a smaller Wi-Fi and Wimax developer.
The common thread in Buffett’s career is that he has always worked in communications technologies.
And while he’s attuned to manoeuvring larger teams, he’s also at home leading a smaller firm like Radiant.
“It’s invigorating because you can make a difference, and you don’t have to be the CEO to make a difference,” said Buffett. “We have a product manager here who has as much influence as any vice-president at Telus or Bell.”
As a reseller of broadband supplied by larger carriers, Radiant requires innovation different from invention.
Buffett describes the company’s core strategy as sourcing raw broadband from other carriers and “servicing the heck out of it” with value-added services like instant troubleshooting and detailed reports about network status.
Its customer base is made up of businesses that include large multi-location companies like Wal-Mart, Lululemon, Burger King and Sun Life.
It manages all the broadband traffic for Tim Hortons’ 2,800 locations.
“When you buy a Timbit, it’s bought on our network,” said Buffett.
Pender Financial Group initially invested in Radiant in 2005 on the condition that the company would restructure to incorporate better cost controls and focus on products with growth potential.
“We hired David to focus very specifically on sales and marketing,” said Kelly Edmison, Pender’s president and CEO.
“We had to be more responsive to the market and, if you look at the base numbers, they’ve clearly increased ever since David arrived – he’s done a real good job on that.”
Pender made additional investment in Radiant last January to advance the company’s new Ethernet FirstMile offering, which the company has been branded as SureLink and launched in the second quarter through a network-sharing agreement with MTS Allstream.
Buffett saw SureLink’s technology being widely used in Europe, but it was only introduced to North America by Radiant as a result of his experience working in Nortel’s London office.
SureLink uses copper infrastructure that has been in some buildings for decades but that has been ignored by larger telcos to provide cheap and fast broadband.
Since launching the SureLink service, Radiant has signed on 40 new customers.
And, like many communications providers, Radiant sees much of the industry’s future in cloud computing.
Its cloud computing and virtual server offering, which is dubbed AlwaysThere, was launched two years ago and generated $1.7 million in revenue last year.
The company increased its revenue 21% last year to $30 million and is on a similar trajectory this year, although it’s still straddling the line between profitability and a loss each quarter.
Radiant requires a different kind of innovation than Nortel, but, said Buffett: “It still requires you to be fleet of foot and have some creativity.”