Here's the WSJ article:
Out of America Online's shadow,MindSpring faces growing pains
By Andrea Petersen THE WALL STREET JOURNAL
ATLANTA — In a darkened room in a downtown
building here, rows of young employees — many
of them pierced and tattooed — work at
telephones around the clock. Above them, an
electronic board flashes a constant reminder of
how many customers are waiting and how long
they've been on hold.
THE PHONE TEAM MUST MEET a quota of
customers served each hour or risk losing their quarterly bonuses. MindSpring Enterprises Inc. didn't start out thisway. Five years ago, it was an upstart Internet service provider with eight modems, 32 subscribers and a commitment to coddle its customers. Now, after a dizzying run-up on Wall Street and three major acquisitions, it finds itself with more than one million customers, competing head-to-head with American Online Inc.
MindSpring is also at a precarious point, facing both
technological hurdles and the challenge of maintaining its
scrappy spirit amid spectacular growth. “The reason for us
being able to outperform the industry is the culture,” says
Charles Brewer, MindSpring's 40-year-old founder. “The
only way to hold it together is if everyone is on board with
that.”
Mr. Brewer set the tone for the company even before
he knew what business he wanted to be in. He left a career
in the software industry after becoming frustrated with
corporate cultures that he thought stifled talent and
innovation. Eager to launch a business that embodied
humble and humane ideals, he crafted nine statements of
“core values and principles,” including such homilies as “We
insist on giving our best effort in everything we undertake”
and “We are believers in the Golden Rule.” He still prints
those rules on the back of all MindSpring business cards.
‘EASY TO USE'
Mr. Brewer decided to launch an Internet business
after experiencing problems with his own account on
NetCom, a service provider he later acquired. “It took me
three months to get it to work,” he says. “I thought, ‘If only
someone could deliver a service that was easy to use.' ”
He started MindSpring in his studio apartment, using
modems and routers located in a borrowed basement. He
found his first customers by posting a message on an online
discussion group, offering the service for free to anyone
who would try it. He met his first employees and his
software designer the same way — in chat rooms in the
Internet's early days.
From the start, MindSpring's edge was service,
including extensive one-on-one help when customers had
trouble getting online. Mr. Brewer also emphasized honesty.
His early e-mail messages to users were dotted with
apologies about busy signals and hold times. Now, though
the new acquisitions have given it far more resources, the
company still posts on its Web site problems with its
network or customer support.
That attitude has paid big dividends. In less than a year,
MindSpring had grown to 700,000 customers. It still gets
almost 25% of new customers through word-of-mouth
referrals.
“You could charge twice as much for this kind of
service, and I wouldn't mind paying it,” wrote a customer
named Kris on MindSpring's Web site.
“Always quick, friendly and helpful. This is the main
reason I stay with MindSpring,” wrote “Clyde F.”
The company's first big break came in November
1994, when ITC Holding Co. of Westpoint, Ga., which has
stakes in various telecommunications and technology
companies, invested $755,000 for a 51% stake in the
business. Today, after dilution, ITC has a 20% stake valued
at $44 million.
THE $197 MILLION MAN
MindSpring went on to become one of Wall Street's
hottest performers. After going public three years ago at $8
a share (or $2.66 after adjusting for a 3-for-1 split last
July), MindSpring now trades at about $85. That values the
upstart business at $2.47 billion and Mr. Brewer's shares at
$197 million.
But some of MindSpring's decisions have reined in its
free-wheeling culture. After its first major acquisition —
buying the New York provider Pipeline from PSINet Inc. in
June 1996 — the company instituted a quota system to
handle the burgeoning load of customers. Some employees
saw that as selling out.
“People were adamant that this wasn't the MindSpring
they had signed up to work for,” says Carter Calle, vice
president of call center operations.
Mr. Brewer says he sees no conflict. “There's quality
and quantity and we need them both,” he says. “If we have
the greatest quality in the whole world but we can only
handle one person's call a day, that won't do.”
Last September, MindSpring bought SpryNet, an
Internet service provider owned by AOL that didn't fit into
the giant's business profile. And in January, MindSpring
paid $235 million for NetCom's 400,000 dial-up customer
accounts from ICG Communications Inc., a
telecommunications company based in Englewood, Colo.
Such acquisitions now account for almost 40% of
MindSpring's new customers, and hundreds of new
employees.
Mr. Brewer and MindSpring President Mike McQuary
concede that transporting the company's customer-focused
ethic to these recent acquisitions has been a challenge.
“You've got to teach people that we expect you to read
your own e-mails and take your own phone calls,” says Mr.
McQuary, a former wrestler who is known for hosting beer
bashes on the company's back porch.
“I think the assistants have assistants who have
assistants at NetCom,” adds Mr. Calle.
The flurry of acquisitions also has meant that Mr.
Brewer and Mr. McQuary aren't around as much as they
used to be. Mr. McQuary says he spends about half his
time traveling to new offices. Mr. Brewer has become a
mini-celebrity, in demand on television and the speaking
circuit. Employees who have been with him since the early
days of MindSpring have an almost cultlike devotion to Mr.
Brewer, and his frequent absences are often felt. Both men
also expect to become fathers for the first time later this
year.
Some MindSpring traditions are being taxed. The
company still holds weekly staff meetings. But what started
as an intimate brainstorming session has turned unwieldy. At
one recent meeting, introductions of the booming staff took
up 20 minutes of the half-hour session, with most of the
people beamed in, “Star Trek” style, on video links from
new offices in Harrisburg, Pa., and Phoenix.
MindSpring's biggest challenge involves technology.
Internet traffic now primarily moves at a poky pace through
skinny phone lines. But the industry expects that within a
few years, most traffic will travel through fat cable lines or
enhanced phone lines. MindSpring, which offers dial-up
Internet access over phone lines, must win access to these
faster pipes. But the cable industry is reluctant to give up its
monopoly, arguing that since it is investing heavily to
upgrade its lines for Internet traffic, it should get the majority
of the revenue.
Mr. Brewer has fought passionately for open access,
testifying at a Federal Communications Commission hearing
in December. He also recently hired Dave Baker, a former
commissioner at the Georgia Public Service Commission, to
lobby federal and state representatives and work on
regulatory and access issues full time.
STILL A PIPSQUEAK
MindSpring is still a pipsqueak compared to AOL's 16
million subscribers. But it is now on par with EarthLink
Network Inc., an Internet service provider based in
Pasadena, Calif., that has been growing aggressively
through marketing, rather than through acquisitions.
EarthLink says this is a more sustainable strategy. “Who
else is MindSpring going to go out and buy?” asks Garry
Betty, EarthLink's chief executive officer. “We have a
platform for growth. We're going to kick those MindSpring
guys' butts.”
Mr. Brewer believes MindSpring can become even
bigger while still retaining its original mission of service, thrift
and humility. And in a nod to the speculation surrounding his
company's future independence, he isn't ruling out a
potential sale. One way or another, he thinks MindSpring
will need size to compete in the growing telecommunications
market. “If we're going to be a big player in it,” he says,
“we're going to be pretty darn big.”
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