AT&T CEO Randall Stephenson is interviewed September 6, 2012 by Rich Lyons, the Dean of the Haas School of Business at University of California Berkeley
This was the first Dean’s Speaker Series I have attended.
I have been aware of this series for years, but I assumed attendance was restricted to friends of the Dean, Rich Lyons, because of the name of the event.
I’ve met and spoken with the Dean about ten times over the years, I estimate, including when he was the Acting Dean when Dean Tom Campbell took a leave of absence to help then Governor Arnold Schwarzenegger manage the finances of the State of California.
A couple of weeks ago I was looking over the Haas website and marveled at the outstanding list of upcoming individuals the Dean will be interviewing on stage. There in front of me were the magic words — the events are open to members of the Haas ‘community.’ I was pretty sure I qualified, since I am a sponsor of one of the school’s premier events, the Berkeley Startup Competition, and have been every year since 2000. I inquired and I got a seat — I was and am thrilled.
I am an AT&T customer, both for my home’s broadband Internet connection and for my wireless Apple iPhone 3GS, which I bought soon after launch. I no longer have a wired phone. I like AT&T’s service — I get great reception and few dropped calls.
My regard for AT&T went up after listening to Stephenson speak for an hour. Stephenson was Chief Financial Officer and Chief Operating Officer prior to becoming Chair and CEO, among many roles.
He started at a job he called a ‘tape monkey’ at Southwest Bell Telephone in 1982 loading 19 inch diameter magnetic tapes of billing data onto tape drives. He did this work 12 hours a day — reading a video screen for instruction on which tape to load, finding the tape in storage, loading the tape and then pressing ‘Run.’
I did this same job, though not full time and not for 12 hours a day, when I worked at Cooley LLP. Thankfully I only had to do this role about two weeks a year, when the regular tape technician, Bill Calhoun, went on vacation.
Stephenson said he figured a way to rework his tape loading job to make it much more efficient and enjoyable, though he didn’t tell us the details of what he changed.
During his introductory remarks, Rich Lyons said Stephenson worked in Mexico City as SBC’s Director of Finance.
At some point, Stephenson worked in Mexico for Carlos Slim, the iconic leader of Telmex. Stephenson did not explain how he came to work for Carlos Slim, who presumably was not an SBC employee at any point in his life.
Stephenson said Carlos Slim is ‘the most inherently brilliant individual that I’ve ever worked with.’
Stephenson was in Mexico working for Slim in 1994 when there was an economic crisis that began December 19, 1994, when the Mexican government lifted all restraints on the Mexican Peso and let its value float. The Mexican currency lost 40% of its value in one day, Stephenson recalled.
Slim had 20,000 wireless subscribers in 1994, and thanks in part to the aggressive investments Slim made in the aftermath of the economic crisis of 1994, TelMex now has over 200 million wireless subscribers and Slim has made himself reportedly the wealthiest man in the world.
Stephenson took his job as CEO in June 2007 when ATT was a $100B annual revenue company with 300,000 employees, the same month that Apple launched its first iPhone. Stephenson invested heavily when the 2008 financial crisis came.
Stephenson said that 170,000 of AT&T’s employees actively participate in its TIP — The Innovation Pipeline — system conceived by the company’s CTO, a guy so tough to hire that it took ten years for Stephenson to do so. This system allows employees to propose ideas for the company to work on developing. People vote on the ideas and the best ones that float to the top are funded and pursued. In response to a question from a student in the audience, Stephenson said that apart from advertising the program to employees the company does little to promote participation. He said participation is quite good.
Stephenson and and his public relations person Larry (last name not mentioned) said they were so excited about a couple of their ‘tattooed up’ technologists in their Palo Alto, California research lab named the ‘Foundry’ that they put photographs of them in AT&T’s Annual Report. Stephenson divulged that competitors now are ‘coming after’ these programmers trying to hire them away from AT&T.
A student from the audience asked Stephenson to discuss wireless handset subsidies. Stephenson answered at length and concluded that the current system in the United States is overwhelmingly what customers want. He said AT&T performed studies where customers were asked if they would like to finance a phone via a separate finance contract, in exchange for markedly lower rates for service. Stephenson said customers did not like this proposal.
I think the survey respondents that answered this way are short sighted.
The way things operate in the United States, where one can buy a USD $700 iPhone for $200 because of the carrier subsidies, there is a perverse incentive to upgrade your phone exactly every two years. That is because contracts generally run for two years. If you keep a phone for three years, that final year you are paying much more than is warranted for service.
People should be encouraged to save money, not spend, so I admire the relatively new system reported by Stephenson to be the norm in Europe — phones are not subsidized and rates for service are [I hope] commensurately lower. Stephenson said phone sales dropped dramatically when this policy was implemented, but I say that is just what the world needs. People keep a home phone for decades. People keep televisions, stereos and other household appliances for years. Stephenson told me one-on-one after the event that fully 90% of his company’s customers upgrade their wireless phone every 14 months. Since contracts are two years long, 90% of its customers are paying early termination fees, which decline over time. That is a waste of the world’s resources, even in this day of a vibrant resale market for used mobile phones. I’m pretty sure a lot of people just throw their old mobile phones in a drawer, to benefit nobody. I understand mobile phones improve rapidly, and I do plan to get the latest iPhone when it’s available, having skipped the iPhone 4 and iPhone 4s. I just don’t approve of upgrading exceptionally frequently, which I consider 14 months to be.
I encourage AT&T and all carriers to offer unbundled rates for mobile service, as an option.
Rich Lyons is a good interviewer. The setting was photogenic — two handsome cushioned arm chairs on an elevated stage, with a small end table between the chairs. Lyons and Stephenson wore wireless lapel microphones. There was a backdrop behind the men that repeated the logos for UC Berkeley and the Haas School of Business, so the logos made it into every photograph of the people on stage. As a photographer, I applaud the Dean for creating such an inviting, warm and photogenic environment for his interviews. I look forward with enthusiasm to the next Dean’s Speaker Series interview, which I hope to be able to attend.
Former Haas Dean Dr. Laura D’Andrea Tyson is on the Board of Directors of AT&T, and presumably she helped Lyons recruit Stephenson to visit the Haas School. Tyson was Dean when I was a finalist in the Berkeley Business Plan Competition in 1999 with my company Hotpaper.
I took the photographs that accompany this blog post.
I used a Canon 5D Mark II camera with the following lenses: Canon 135mm soft-focus lens set to sharp, Canon 16-35mm L zoom lens. I upload pictures to this blog at maximum camera resolution at maximum image quality. Click on the photographs twice in delayed succession to see the full size images. If you would like to use these pictures, please send me a message. If the purpose is reasonable, I will allow usage. I enjoy having my pictures displayed elsewhere. I pursue photography only as a hobby, not as a profession.
Finally, I have some advice for Berkeley students reading this post — introduce yourself to the speaker.
I don’t recall seeing any students introduce themselves to Stephenson. I did see a professor and a president of a good sized company say hello, but that’s it. Stephenson spent several minutes talking with me because there was nobody waiting after me to speak with him. The room had rapidly cleared out. The interview was during the lunch hour, so perhaps the students had to be in class immediately after. It’s rare for so prominent a CEO to speak to such a small group — there were about 140 students in the room by my quick count. I’m sure Stephenson won’t be back this academic year. Make a point of meeting all such prominent speakers. In my mind, Stephenson should have been surrounded by dozens of students trying to shake his hand. Stephenson didn’t appear to be in a rush to depart, and I left before he did.