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All of the US telecom chiefs kicked off their careers in the industry with a job at a phone company and worked their way up through the system.
Sprint
Marcelo Claure got his start by being in the right seat on the right flight.
Such is the unorthodox journey of Claure, who on Monday will take over as CEO of Sprint, the nation’s third-largest wireless carrier by subscribers. Claure, 43, isn’t part of the traditional telecom establishment, having made his fortune through his own global phone distribution company, Brightstar. As a result, he boasts a background that’s more entrepreneurial and flexible, able to shift quickly into new businesses.
Which is why Sprint Chairman Masayoshi Son tapped Claure for the job.
Claure’s track record of building a global business out of nothing makes him a kindred spirit with Son, who is also the CEO of Japanese carrier SoftBank, Sprint’s parent company. That entrepreneurial mindset is critical to kickstarting Sprint, which continues to lag behind AT&T and Verizon with subscriber losses and a network consumers perceive as far behind the competition.
“Marcelo is a successful entrepreneur who transformed a start-up into a global telecommunications company,” Son said in a statement on Wednesday announcing Claure’s ascendancy.
Claure and Son have become BFFs.The two struck a deal in October in which SoftBank bought a majority stake in Brightstar. When the $1.26 billion transaction closed in January, Claure joined Sprint’s board.
Claure and Son have a far better relationship than Son had with Sprint CEO Dan Hesse, who had led the company for seven years. Hesse and Son were often at odds, and didn’t see the world the same way, according to a person familiar with the situation. Son was seen as more aggressive and willing to take risks, countered by Hesse’s more reasoned and methodical process.
Stephen Shankland/CNET
In addition, Claure and Son, in charge of one of the largest Japanese companies, share several key traits. Both were immigrants who started with little before establishing their fortune. Bolivian-born Claure and Son, who is of Korean-Chinese descent, each had a successful first venture, which funded their existing businesses.
The duo also managed to keep evolving their businesses. SoftBank started as a software distributor before growing into a massive conglomerate, while Brightstar grew from a simple phone distributor to a company that provides services such as phone refurbishing, retail support, and device insurance.
Claure is also known as a youthful, charismatic executive who understands how to market a product. He’s a tireless worker, says a person who has done business with Claure and asked not to be named. He’s also flashy, as evidenced by a 40th birthday party that featured appearances by Marc Anthony and Jennifer Lopez. He also hobnobs with David Beckham, having partnered with the soccer superstar to bring a Major League Soccer team to Miami.
That’s not unlike another flamboyant telecom executive. “Is Marcelo Claure the next John Legere?” asked Kevin Smithen, an analyst for Macquarie Securities, a reference to the firebrand CEO of T-Mobile. “We expect Sprint to go on the offensive.”
Sprint said Claure wasn’t available for an interview.
Marcelo Claure’s Star Studded 40th Birthday Party (MC40), with Marc Anthony, J.Lo & The Gypsy Kings Performing from Concept Lounge Creations on Vimeo.
Early entrepreneurial spirit
While AT&T CEO Randall Stephenson or even T-Mobile’s Legere can point to a resume laden with early telecom experience, Claure got his start earlier. At the age of 10, he bought and sold his mother’s clothes outside his home in La Paz, Bolivia, Claure told an audience of entrepreneurs at an event in Barcelona at the Mobile World Congress trade show in February.
After immigrating to the US, he started his next venture while still a student at Bentley College in Waltham, Mass., in the early 1990s. He bought and sold frequent flier miles, an endeavor that proved lucrative enough to provide for his modest student lifestyle.
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“He is an entrepreneur’s entrepreneur,” said an industry consultant who has worked with Claure.
He landed his first official job by dumb luck when he sat next to the head of the Bolivian Football Federation on a flight back to Bolivia. As international marketing manager for the league, he helped take Bolivia to the World Cup, an uphill battle given that the country’s last appearance in that sporting contest was 44 years earlier in 1950.
Claure said in his talk in Barcelona that his job wasn’t easy since Bolivia, one of the poorest countries in Latin America, had little money to spend. But even though money was sparse, they hired the right coach who pushed the team to new heights.
Bolivia qualified for the 1994 World Cup, playing champions Germany in the tournament’s opening game in Chicago.
That experience, he said in his speech, was a defining moment in his life. “Big dreams can move mountains,” Claure said, adding that with the right plan anything is possible.
Brightstar shining
The following year, Claure returned to the US just as the wireless business was getting off the ground. In 1995, he bought USA Wireless, a cellular retailer. As the already competitive retail market became even more so, Claure knew he needed to do things differently.
Claure borrowed a popular marketing gimmick from pizza delivery companies and began offering cellphone delivery to consumers within 30 minutes. He equipped drivers with cellphones and took out huge ads in local newspapers touting a 1-800 number and promising a delivery guarantee. After expanding the chain, Claure sold USA Wireless a year later.
He moved to Miami and used the proceeds to launch Brightstar, which started as an equipment supplier to wireless providers mostly in Latin America. The name came from a mash-up of two competitors, Brightpoint and Cellstar. Over the past 17 years, the business has expanded from simply distributing handsets in volatile emerging markets to managing supply chains for some of the largest wireless operators in the world, including Vodafone, Telefonica, and Verizon Wireless.
Sarah Tew/CNET
In 2011, Brightstar reinvented itself again through the company’s first acquisition. It bought Georgia-based insurance company eSecuritel, which offers cell phone insurance policies to consumers. But settling insurance claims with brand new phones as replacements was not sustainable. In an effort to control costs, the company began buying used and refurbished handsets. And so began another new business within Brightstar: device trade-ins.
The company became one of the biggest buyers and distributors of used cell phones in the market. This division of Brightstar manages the retail trade-in programs at retailers Target and Best Buy, and also oversees the cellphone trade-in programs for large wireless providers such as AT&T. Verizon Wireless was also a customer before ending its relationship with Brightstar in June.
Brightstar’s success earned it a $2.2 billion valuation when SoftBank agreed to acquire a 57 percent stake in the business. The company now operates in more than 50 countries and posted revenue of $7 billion for the 12 months ended June 2013. With Claure now joining Sprint, SoftBank said it would acquire the remaining stake in Brightstar.
Tepid reaction
New CEOs are usually judged by the stock reaction, but Claure’s appointment also coincided with reports that Sprint’s long-hoped for merger between Sprint and T-Mobile was dead. Sprint’s shares plunged nearly 20 percent to $5.90 Wednesday.
Analysts consider Claure’s appointment a positive for the company.
“Claure has a worldwide network of industry contacts to draw upon and has been on the Sprint board since January,” said Kevin Manning, an analyst at BMO Capital Markets. That “should enable him to hit the ground running.”
Claure is expected to hit the gas pedal on Sprint turnaround efforts, a contrast to Hesse’s more measured approach.
Sarah Tew/CNET
There are other reasons to be cautiously optimistic about Sprint. The company has wrapped up the hard part of its network upgrade, including shutting down its Nextel network, and replacing its 3G voice network. The Sprint Spark enhanced LTE network — which uses three different bands of spectrum for more speed and capacity — is slowing making its way into more US markets.
And the company finally has a CEO and chairman who are on the same page.
“A ‘controlled entity’ like Sprint can be most effective when the majority owner and the CEO are fully aligned and are great partners,” Hesse said in his farewell memo to employees. “Marcelo and Masa enjoy an exceptional relationship which has grown out of mutual respect between two very successful entrepreneurs.”
In his February keynote in Barcelona, Claure offered some comments as a Sprint director that seem prescient now that he’s taking over as CEO.
“When you’re an entrepreneur, you’re always going to try to do things outside the box,” he said. “I plan to apply the same methodology that we learned at Brightstar, in terms of figuring out how to make Sprint more of an entrepreneurial company and find different ways, different products and different services to try to change the game.”
