Vertical Leap -- Global Crossing president and chief operating officer David Walsh shows how a narrow market focus can draw wide returns.
Lori M. Allen
10/01/2001
tele.com
We have a fully funded business plan, which means we have all the cash we need to get the job done. We're in a very good position, and the incumbents are struggling with their legacy networks.
We understood that we had to start with the sweet spot and build from there-and do an extraordinary job in the area that we decide to stake out. It's a "land-and-expand" strategy, and we've set our sights on very definite customers.
If you understand customers and how they live inside their community, their ecosystem, you're going to help them with their business transformation. Business transformation is what drives networking.
From the moment he walks in the door, David Walsh seems to mean business. Even the way he sits in a chair-straight, rigid and yet comfortable-gives the impression that, while he may be approachable, he's definitely there to get things done. That's good, because Walsh-president and chief operating officer of Global Crossing Ltd. (Hamilton, Bermuda)-has plenty on his plate as he attempts to shift the carrier's focus toward several vertical markets-including financial, governmental, media and entertainment-and multinational corporations. "David is tireless," says Jim Demitrieus, president of Global Crossing Financial Markets. "I've worked with him 36, 40 hours straight with no sleep. He's one of the most positive people that I've ever met in terms of managing people and dealing with heightened tensions and crisis modes."
By many accounts, Walsh has already accomplished a lot. He has served as president, co-chief operating officer and head of global sales and marketing at Global Crossing. Prior to joining the carrier, he served as CEO of Ixnet, which he founded in 1993, and IPC Communications, which together set up a massive network linking thousands of traders and financial exchanges worldwide. His newest responsibilities include overseeing all of Global Crossing's product and service development and management, as well as the continuing growth and operation of Global Crossing's worldwide optical infrastructure.
Walsh's commitment to vertical markets has been apparent for some time. In fact, when he came to Global Crossing in June 2000 after the carrier bought Ixnet, he underscored the point by giving birth to Global Crossing Financial Markets, an integrated communications platform over a high-performance global extranet designed specifically for the financial community. The platform, which serves more than 2,000 financial services firms in more than 44 financial centers worldwide, includes IPC Trading Systems' digital Alliance MX voice trading system. IPC focuses exclusively on the financial trading environment by designing, manufacturing, installing and servicing products that allow traders to communicate with one another instantly and reliably. "Walsh has done a great job at redefining Global Crossing's mission to make the company more industry-focused," says Larry Tabb, vice president of securities and investment practice at TowerGroup (Needham, Mass.).
About a decade ago, long before coming to Global Crossing, Walsh was recruited by the presidents of the four New York Futures and Commodities Exchanges to design and deploy the technology platform for a shared trading floor. Their call helped him recognize the rising demand for a high-performance, worldwide network designed as a linked environment for financial traders. Hence, the seed was planted for Global Crossing Financial Markets. "What's exciting about Global Crossing Financial Markets is the fact that there is now this community and that everybody is going to the same place. It begs the question: Why should everybody build?" says Walsh.
Fortunately for Walsh, Global Crossing-which provides wholesale services to other carriers and next-generation Internet service providers (ISPs)-is on track with its own building plans. It just finished its global network on time and on budget. The network links 27 countries and more than 200 major cities worldwide, using fiber optic cables that run below the Atlantic and Pacific oceans and emerge at landing stations along the coasts of North America, South America, Europe and Asia. "This is where everyone wants to be, and Global Crossing is already there. The real differentiator will be its ability to deliver," says Brownlee Thomas, senior industry analyst at Giga Information Group (Cambridge, Mass.).
Nothing, however, is guaranteed in this market, no matter how thorough the plan or how energetic the leader. Other providers have tried vertical marketing before and failed. What's more, Walsh and Global Crossing face a host of competitors as they attack different markets. Yet Walsh has managed to become recognized as a permanent and viable presence in these areas through extremely targeted marketing efforts and partnerships with the right players. That may be why those around him, including Demitrieus, remain confident. "David figures out what the customer needs and how the customer is going to be successful, and then he applies the technology to the solution," he says, "as opposed to just getting caught up in the technology."
Walsh talked to associate editor Lori M. Allen about remaining confident without getting caught up in technology.
Global Crossing spun off the local business it acquired as part of its acquisition of Frontier last fall, so now it has no local presence. Why did you choose to get rid of a local presence now, of all times? Well, the ILEC [incumbent local exchange carrier] is principally a bunch of small or rural telephone companies, and that really didn't fit with our strategy of going after the largest multinational global companies. We thought that would fit better with somebody else, so we sold it to independent telephone company Citizens Communications. The deal is closing here this month, and we'll use the proceeds to develop our global network.
With the capital market shutting down and companies across the board getting hit hard, how is Global Crossing operating in the market right now? I think it comes down to a few things. One is that although we're only four years old, we earned in excess of $5 billion in revenue last year. So this is a substantial, formidable company. The other thing that I would say is that we have a fully funded business plan, which means we have all the cash we need to get the job done. We're in a very good position, and the incumbents are struggling with their legacy networks. They don't have the money to invest to improve them. And on the other side of the coin, all these new startup companies are realizing they're not going to make it, so that leaves us on a very short list of formidable companies that have modern infrastructure and real technology.
Global Crossing is involved in several vertical markets. Why is the carrier honing in on particular segments like Global Crossing Financial Markets instead of getting involved in many different markets? We've got this huge network, and what's unique about it is not just that it's huge but the fact that it's actually built for operating. It's a broadband infrastructure that's in all the major cities around the world. Who would see value in that? Global multinational companies. So we started looking at these global multinational companies and tried to figure out how to go after them. We looked at different segments and decided to target only a few, because you can't do everything. You can only realistically do a few things well. We wanted a market that was large and had substantial revenue, like the financial industry. We wanted to go after one that was data-intensive, because our assets were built for data and there's high growth in data, and we wanted to find a market that was going through business transformation changes, like straight-through processing. The final thing we looked for in a segment of customers was a community of interest or ecosystem because you can build a much more leverageable network in a community of interest.
Do you feel that you're competing with your own customers by being involved in several different vertical markets? No. If you look at it, we have clearly said that we are not going to be a content provider-we move content. We believe strongly in the principle of separation of content and network. If you buy your network from one group, then you receive your content from others. So in the financial markets, we have no intention of becoming a market data provider. We have no intention of becoming a news provider. We have no intention of becoming a research company. We have no intention of becoming an analytics company, and we have no intention of becoming an exchange, electronic broker dealer, none of that. What we do intend to do is enable our customers' application to move around in the financial community. And that's what an extranet is all about.
What's attractive about Global Crossing Financial Markets? What's attractive to me is the community of interest. If you look at the financial market-Goldman, Morgan, Merrill, Citibank, New York Stock Exchange and Nasdaq-all of these firms are building private networks that go to the same exact place. And all the telecom providers around the world would sell the ingredients, the different connections, to allow those firms to build those networks. Building one shared utility would eliminate thousands of separate networks. The major financial firms would be able to eliminate most of their connectivity and get access to superior connectivity at much lower cost points. It would be much more efficient in the industry. Think of it this way: There's really no need to build 500 one-lane highways. You build one 12-lane superhighway.
Would you say you are out in front in your ability to serve this market? Absolutely. We set out to build an extranet in June of '95, and that was before there were even defined terms for extranet and virtual private network. So I think we were out there moving way ahead of everyone else. Most of the major financial players were already connected to infrastructure and were moving some of their most critical applications and services.
Is there a risk of getting involved in too many things, too many markets? You can't do everything well. We've said that we're going to focus on about 7,500 accounts worldwide. I heard the other day that AT&T is also trying to narrow their full focus down to 6 million business customers in North America. This didn't surprise me, but I thought it was interesting information. So we understood that we had to start with the sweet spot and build from there-and make sure we do an extraordinary job in the area that we decide to stake out. So it's a "land-and-expand" strategy, and we've set our sights on very definite customers. We feel that's important. Now, we may decide to go to more vertical markets or offer more products. We've got a half-dozen vertical markets and a little more than a half-dozen products. We may eventually open that up, but right now we're limited. We can only put the appropriate amount of energy into those areas so that we make sure we're going to be successful.
Do you feel other carriers will want to get involved in vertical markets? It's a great way to differentiate yourself, but the price of admission is pretty high. A lot of people have come down to Wall Street and kind of retreated and run back home. So I don't know. I think this is one of those markets where you have to be more than 100 percent committed or you shouldn't take a stab at it. For other companies that really feel they can commit themselves long-term to the industry, it's a great way. But I also feel that they probably should have made that commitment a few years ago, when the business was going through transformation.
Do you derive benefits in other verticals because you own the infrastructure? Absolutely. Media and entertainment companies all want to move digital, but they can't afford it today. So the way we are going to move and transform that industry is by building a shared network for them. We've rolled out an extranet community, and since we own the infrastructure and already have it in place, we could afford to build a consumption-based model for all the participants to share.
How important is Global Crossing Financial Markets to the global strategy of the company? I think it's very important. We find that understanding the customers' needs is critical, especially when you're competing with people who have a stronger brand.
What does being customer-oriented better enable you to do? If you understand customers and how they live inside their community, their ecosystem, you're going to help them with their business transformation. Business transformation is what drives networking. By the time somebody comes along and says, "I need an ATM [asynchronous transfer mode] network or a frame relay network," they've already figured out the business transformation, so you're on the outside looking in. You haven't been part of their planning process. Our intention is to help them understand where the industry is going and how we can help get them there.
What is the key differentiator for Global Crossing? Two things. We own and operate the world's largest, most technically enhanced network, so we have a technology advantage that results in a performance advantage in the products and services that we offer. The second thing is that our knowledge of these particular vertical markets, our talent and our understanding really set us apart. Sometimes we take for granted the fact that we operate globally-one seamless network, one seamless organization, one seamless bill, one seamless support organization, one company that operates globally, focused on specific customers.
How does targeting specific markets help get Global Crossing to where it wants and/or needs to be? Well, we've looked at 200 markets as being the key, and most of the telecom span in those 7,500 multinational companies takes place in 200 markets. It actually takes place in 20,000 buildings in 200 markets. You don't have to be everywhere to get at most of that. Once again, it's very narrowly focused: Just go to the places where commerce takes place. That's what we're doing.
What are your main responsibilities with Global Crossing? My main responsibility is the revenue production side of our business, which primarily includes sales and marketing. We have seven sales channels, including media and entertainment, financial markets, government and multinational corporations. We also have our broadband group. And then we have nine product categories, nine sets of products. Each of those products has a leader, and each of the verticals has a leader. So my emphasis is to drive those businesses and those folks.
What is the vision that enables you to be a successful leader? I think I try to provide a vision for the company that sets us apart from the competition, but one that is also obtainable and believable. I give the company a goal to shoot for, but at the same time I participate in every respect along the way. And I spend an enormous amount of time with the customers. I think it's very important that your vision has to be the vision of an industry or a group of people.
What do you do to rally the company behind you? What you do is find like-minded people and create a culture. I think it's very important that you only have one in a company, but you've got to pick one. And our culture is bold, aggressive; it's customer-focused. That's what we look for. We look for people who are willing to work long, hard hours; people who won't go home until the job is done, who focus on the customers and on providing the best possible service that we can provide.
What is Global Crossing's relationship with the Belgium-based financial messaging cooperative Swift? Swift processes $5 trillion worth of currency transactions a day. Historically, its real focus has been in the movement of money associated with foreign exchange trades. What we were looking to do is shrink from three days to one day the time it takes to settle a trade, from the time a transaction is made until it's actually cleared. Swift is a key player in getting the industry in line so that the workflow of clearing a trade can be done in a more real-time mode. So what Swift said was, "Look, we're a major player in clearing, and we're going to be a major player in the straight-through processing game. To accomplish that, we're going to need to have an incredible network that connects all these institutions." They're an application, and we're the network. We don't compete. We work together. It's a great partnership.
Analysts with whom I spoke mentioned that Swift's decision to go with Global Crossing was a big sign that your company had finally established itself as a player in the market. I think that's right. I think a lot of people stuck their toe in the water when we first got started, maybe for the first two years. But after that, we started getting more substantial players, particularly the more aggressive players that wanted a technology image. And now, with companies like Swift moving on and bigger financial firms crossing that chasm, you're getting the majority players that are recognizing us as the market leader. And there's a comfort zone in terms of people's perceptions just because we're bigger. We've done it and proved ourselves. |
