Ep.175 Business Blueprints: Lessons from Leaders in the Channel with Rob Hale of Granite
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Josh Lupresto (00:01)
Welcome to the podcast designed to fuel your success selling
solutions. I’m your host, Josh, Lupresto SVP of sales engineering at Telarus And this is next level biz tech.
Hey, everybody. Welcome back. We got a special episode for you today. We’re doing business blueprints lessons
and who better than to have on Mr. Rob Hale, CEO and founder of Granite. Rob. Welcome on, man.
Rob Hale (00:28)
Josh, I’m happy to be here. Thank you for having me.
Josh Lupresto (00:30)
Appreciate you making time. This is about helping our partners and our advisors that are out there building businesses understand how people have built struggles, ⁓ strategies, all that kind of good stuff. So walk us through for anybody that doesn’t know, you’ve built granted into this billion dollar plus powerhouse after some setbacks early on. So walk us through the early parts of your journey and kind of what fueled this comeback.
Rob Hale (00:41)
Mm-hmm. Mm-hmm. Mm-hmm. Mm-hmm.
Sure. ⁓ I’ll give you my checkered history. Anybody who’s considering partnering with Granite probably should know it. I graduated in 88. I went to work for MCI, the long distance company in sales. ⁓ Loved it. There was an opportunity called aggregation, which was bulk buying of AT &T services. And our customers, my customers asked me about it. I said, I don’t really know what that is, but I’ll look into it. And as I looked into it,
I said to my parents, I, we can do this. and so I, it’s very important to me to tell you that my parents put up 400,000 bucks in 1990. Um, you know, so there’s a lot of zeros around granite and me, and it can get lost in the shuffle, but 400,000 bucks in 1990, they bit the, my parents, but their retirement on me in 1990. Uh, so they were the funders, uh, and I was the founder of a company called network plus.
1990 we lost money from 91 to 98. We grew profitably. Um, by 98 we’d grown probably about $150 million business. We net 10, 11, 12, 13 % every year. We had an awesome business. I just know how great it was. Goldman Sachs, the investment bank called, called me and said, Hey Rob, you want to do a bond offering? I said, listen, I’m a phone guy, not a finance guy. didn’t even know what that means. If you do a bond offering, you could do an IPO and you, you will be a billionaire. And I was like, yeah, yeah, I definitely want to, I want to do that bond offering. Yes, please.
And so what they said was going to happen happened. went public. Goldman was our lead bank. In June of 1999, first trade of the stock was supposed to happen at $16 a share. The demand was so high, there was no trade until $26 a share. Over the next eight or nine months, it got up to $63 a share. I owned 27 million of those shares, so had a billion four next to my name. According to Forbes, I was the seventh wealthiest guy in the world under 40.
March of 2000, a bubble burst. felt like it burst primarily in my face. So first eight or nine months stock goes like this. Next 18 months stock goes like this. ⁓ Fall of 2001 Goldman and Fleet, TSFB called me and said, ⁓ we had a credit line. You have a credit line when it expires, we’re not gonna renew it. Bad luck. And I said, hey, listen, we were EBITDA positive. We never missed a covenant. They said, we don’t bank Seelux anymore. You’re out of luck. So February 4th of 2002,
I hit bottom. February 4th of 2002, when we declared bankruptcy, all of the equity became zero. So to lose all that money, hurts. It hurts really badly to think, hey, if I peeled a tiny bit out of that out, I could have taken care of my family for life. And to let that opportunity slip through your fingers, it hurts. It hurts bad. That morning, it got worse. I think I run the sales force.
Josh Lupresto (03:33)
⁓
Rob Hale (03:52)
here at Granite, I thought that I ran the sales force at Network Plus. We’d gotten debtor in possession financing, which is financing you take into bankruptcy. It had a contingency, which was I had to tell 400 salespeople, I think you trusted me, that’s probably why you joined. I have betrayed you. All 400 of you are let go on a phone call. And then afternoon calls got worse. My wife was at home with a two-year-old, four-year-old and a six-year-old. Phone rang and the guy on the end of the call, when she picked it up, said, because of what your husband’s done, I’m gonna come over and k**l you.
So, I’ve been to the bottom, uh, you know, accepting your health. I’m not sure anything business wise can happen worse than what I’ve seen. Uh, I we had a string of bad luck. Uh, now I’m not passing the buck. I drove the bus. I made all those decisions, but I think we had a string of bad luck, uh, in the year or two preceding our failure, but we had a string of great luck for the next couple of years.
So we were sold at, we were bankrupt, February 4th of 2002, sold at auction March 15th, 2002, when we started Grant at June 3rd of 2002. And by the way, I would have started faster, but this, as you guys know, in this business, it’s a regulated business. And so you needed state and federal approvals to be in the business. But we started Grant up and our industry said that the only way you could create value was to control the customer.
which was to build a switched based architecture where the customer ran through your apparatus. And I’m telling you the truth, that’s what we were intending to do at the beginning of Brad. I’m telling you that’s what we were doing. And we did wholesale with Verizon ⁓ just because the only way we could get in the game was to do wholesale. ⁓ And so we did wholesale with Verizon and Walmart and Walgreens said, hey, listen, if you… ⁓
If you want to beta test the idea of consolidating and discounting our phone lines in the Boston stores, go ahead. We did it a month or two later. So far so good. Let’s consolidate and discount the phone lines in our New England stores. So far so good. Let’s consolidate and discount the phone lines throughout the Northeast. Then almost to the same day, they brought us to Bentonville and to Chicago and they said, hey, this consolidation, this is good for us. We’re going to do this for the rest of the country. We may or may not do this with you, but we are going to do this for the rest of the country.
And so by the time the wheels touch home, we, got to make a decision. we going to do, you know, now our industry and Wall Street said the only way to create value is to control the customer with, which was with a switch based solution. But we thought, well, the number one and the number five retailer think there’s a need for essentially national consolidation, you know, the aggregation model, which by the way, in 2002 didn’t exist. And so we created aggregation and
Josh Lupresto (06:27)
Right.
Rob Hale (06:44)
and we get lots of awards for entrepreneur of the year. We’ve created 2000 American jobs. We got a lot of cool things that happened at Granite. And people say, how’d you get that awesome idea? The truth is we didn’t have that awesome idea. The big customers did. Yes. Yes. Yeah. Yeah. Yes.
Josh Lupresto (06:58)
You listened. Yeah, you listen to the customers, right? It seems like there’s a common theme in that. All these great products, all these great inventions start out here. And
then inevitably the thing that makes it becomes this product. So you listen to the customers.
Rob Hale (07:09)
Yes,
sit. So, you know, when I, and as I mentioned, we had a string of bad luck. We had a string of great fortune, which like I’m telling you, I’m certain I would not be sitting here with you today, having all the fun that I have in my job. If we had not had the opportunity to, to begin that relationship with those two great companies and then listen to them. the great, the good fortune that we had was listening.
getting those opportunities, getting those partnerships and then listening to them. And it’s created the path to all of our progress.
Josh Lupresto (07:45)
I love it. I love the story. ⁓ So if you think about then, ⁓ you started out in this, you know, that piece of the business, right? And you’ve moved now innovation, you’ve kind of fostered this culture of innovation in what might have started out as something transactional. I mean, how do you keep this culture of innovation and continue building? What’s the mindset from your perspective?
Rob Hale (07:47)
Thank you.
Hmm? Hmm?
Hmm?
I think stay true to your core. And then and again, listen to the customer. So what we learned in 2002 03, 04, 05, and so on was that what we are good is for multi location big business. That’s what we’re good at. And that’s what granted good at. So if you got a lot of devices, you got a lot of locations and you want someone to help you drive uniform as a form of the consistency replica replicable skill sets.
know, scalable model with cost efficiencies. We’re your guys. If you got, you know, one great big building and you just need a couple of data pipes and a hosted solution inside that building, I don’t think we’re your guys. So I I know that no one’s ever gotten the show before and said, Hey, don’t give us that piece of the business, but I’m telling you, we are what we are. Multi-location, big business, lots of devices. That’s what we’re great at. Beyond that, I’m not sure we’re the right solution. ⁓ And so the way I look at this is we know what we are.
but then within that church, we should move to different pews. And so when we talk about innovation and you talk about the award-winning Edge Boot product, which is the rebooting product, again, I’d love to tell you that we invented that. I’m telling you the truth, TJ Maxx is the one who, I have a very bright teammate who created that product, but TJ Maxx is the one who catalyzed that idea. So everybody in this call has certainly had
times when this location goes down and the rebooting will restore the service. But they can’t get to it because the circuit that went down, it was the access to that box. And TJ Maxx said to us, the problem is when that circuit goes down, I got to sell a manager, tele-manager, stop selling sweaters and go start pushing buttons and she doesn’t want to do it. Or I got to wait for a tech and it’s 400 bucks and it’s tomorrow. They said to us, wouldn’t it be cool if you could do this?
Josh Lupresto (09:46)
In band. Yeah.
Rob Hale (10:06)
wirelessly if you could access this box because the wireline went down now let’s come through the sky and get to it. We said, yeah, that’d be cool. And, and we scoured the earth and it didn’t exist. And so we built, you know, patent first created the product, then patented EdgeBoot. And it’s as you know, it doesn’t exist in our space today. And it award winning and booming in the, on the sales side. I’d love to tell you, oh my goodness that, know, we concocted that in some lab. I’m telling you that.
TJ Maxx, is the biggest retailer in Massachusetts, they’re the ones who catalyze the idea. So listen to that multi-location big business and they’ll keep helping you. They’ll keep creating growth.
Josh Lupresto (10:46)
Yeah, it.
I mean, it says a lot to kind of about how you guys go to market with these customers of clearly they trusted you. They were in a spot where they thought, hey, I wonder if these guys can help with with help us with this. And you know, they didn’t try to figure it out themselves. They said, hey, you guys have been a great partner for us. Maybe you guys maybe you can help with us. And you’re sitting here going, my gosh, this is a great idea product, right? Coming from a guy that grew up in it, the how many times is resetting something, fix something. I mean, it’s, it’s phenomenal. So let’s make it easy. So
Rob Hale (10:59)
Mm-hmm.
⁓ Yes. Yes.
Yes.
Josh Lupresto (11:15)
you know, kudos to you guys for figuring that out and just listening and being in that spot to be aligned.
Rob Hale (11:17)
Thank you.
Thank you. mean,
that’s culturally, ⁓ we’re private. we have the luxury of taking a long-term view, ⁓ which is luxury. ⁓ And we have a bunch of right teammates and we’re willing to invest today to be rewarded tomorrow. So we can take 10 guys and say, hey, for the next four months, you’re not doing anything. You figure out how to make this thing work.
And is that a cost? Of course. But is there, and by the way, are we going to come up with some things that don’t work? Yeah. But the ones that do, man, we’re going to be rewarded for rewarded for the longterm. So we have that luxury.
Josh Lupresto (12:02)
Yeah, yeah, the long game always wins. People don’t play the long game enough. So I like to hear that. So think about the nature of a TA, right? They’re entrepreneur, they’re hungry, they’re aggressive, they’re ready to go. And so that’s kind of the audience, right? That’s the TA base. And so they’re out there, you know, struggling through some of the things in different forms or fashion that you’ve mentioned. So you’re here.
Rob Hale (12:06)
Mm-hmm. Mm-hmm. Agreed. Thank you.
Hmm? Hmm? Hmm?
Hmm? Hmm? Hmm? Hmm?
Josh Lupresto (12:29)
You’ve built this multi-billion dollar fortune. You’ve got ownership in the Celtics. You’ve achieved this level of success that I love seeing founder led success down this route and seeing founders still involved. What drives you? What’s your advice? You’ve reached that level of success that you think is, hey, this is where I want to be. And you’re still out here grinding. You’re still in there. Bednars tells me you’re still in there every morning early. How do you want partners to take away with?
Rob Hale (12:34)
Hmm?
Hmm? Hmm.
Mm-hmm. Mm-hmm.
Josh Lupresto (12:59)
you know, them doing how you’re doing.
Rob Hale (13:01)
So I would correct you when you said, this is where I want to be. This is not where I want to be. Like to be clear, um, you know, with the, whatever the numbers they say in the internet are, they’re probably true. want more. Uh, and again, it’s not, and I, didn’t, you know, I’m probably oversharing, but I don’t, I don’t have a fancy car. I don’t have fancy things. don’t need to spend money on, uh, you know, you know, what might.
Most people might think showy items. don’t care about that. I like the competition of the game. I’m being honest. Like the idea of, doing more than other people have ever done before in our space. That feels intoxicatingly exciting to me. The idea of making granite bigger, you know, and we’re a billion seven five, uh, every day makes me get up and, I, know,
As Kevin said to you, I get to work at 545 every morning. As you could see, I sit in a queue. The team is right over the other side of that queue. know, 200 or so folks. I work and it’s because I want to compete. And again, I don’t need money to buy stuff. Whatever I need, have. And candidly, think, it’s most well renowned for philanthropic initiatives. And I’m being honest, that’s…
likely where the rest of my fortune over time goes. ⁓ But the idea of excelling where others have said we couldn’t, it matters to me a lot, a lot. so ⁓ the most fun in my job is meeting with your TAs and doing deals and meeting with my teammates and doing deals. And then over the years, developing long-term friendships with the customers. I love that.
Like that, that’s the best part of my job and I can’t get enough of it. And so I promise you I’m pedal to the metal and you can count on that.
Josh Lupresto (15:05)
I love it. I love it. I love the energy. ⁓ So, you know, from a hard decisions process, things like that, right? Everybody’s out there building businesses, they’re going to come into problems. These things, things are hard, right? We have to figure out how do we work through them? Everything, you know, everything’s just an opportunity, just disguised in work clothes, right? ⁓ What’s your framework when the stakes are high, the path isn’t clear? What do you kind of use as your guiding principles? Is it
Rob Hale (15:26)
Mm-hmm. Mm-hmm. Mm-hmm.
Josh Lupresto (15:34)
Is it a mentor? Is it a, you know, pass lessons? What’s your framework there?
Rob Hale (15:42)
There are a couple rules that help guide us. one of them, two of them came out of that bankruptcy, right? And so ⁓ first one, as I think I mentioned to you, from 1991 to 1998, we had grown Network Plus. It was private, my father owned half, I owned half.
When you think about it, you have $130 million business with your dad netting 10, 11, 12 % a year. Like, I how could you have it any better than that? I had that. And then I listened to Wall Street and I screwed up. My bad. Like my mistakes. But what, what I, and we got away from was sales and customer service. We got into building local networks and we raised, you know, through a bunch of different vehicles, hundreds of million dollars.
But local networks cost billions of dollars. And if you don’t have the back half of the bridge, the front half of the bridge isn’t going to do a whole lot of good. And so we got out of the customer business and into the network business. And so I vowed, you know, after that bankruptcy, I ever get a chance to start a business again, number one, we’re going to stick to our knitting. So we’re in the customer business, get and keep customers. Generally, it’s a wholesale business. Generally, we’re
You know, the underlying fabric is some other carrier and we cobbled together a whole bunch of location specific solutions to give the best of each geographic solution to a multi-location big business. But somebody else’s network and some other company’s physical structure, what we do is the secret sauce is pull it all together and add an elite level of customer service. And so number one, that I made a mistake getting away from that in 97, 98.
and got into the network business, which required that you get into the finance business. Granite, it’s 22 years old. We just turned 23 ⁓ a week ago. ⁓ We’re a billion, seven, five. So you do the math. We’ve grown about 90 million a year, 20 years in a row. It’s kind of straightforward stuff. It’s not sexy. ⁓ It’s consistent. It’s hard work. ⁓ And it’s sticking to your knitting. And our knitting is taking great care of customers. And the lesson I learned is don’t leave that. And I’m not gonna.
Two, the lesson I learned from that painful experience is preceding 97, 98, my father and I own Network Plus, and we were beholden to our customers and our teammates. And then I made the mistake of letting others invest in us. And I didn’t know at the time, but you let them in and then they can control things.
And so I vowed again, if we have successes in that next company, that we’re not going to let anyone else in. And so I look you in the eye, we don’t have any debt. We’ve never had a penny of outside investment. We’ve made a singular acquisition, which is a great product. The company called Epic, it was pretty little. It’s gotten pretty big, but we bought it to replace analog lines, not to get big, but to help our customers transition. But we’re not an acquisitive company. So we don’t make acquisitions. We don’t have outside investment.
and we don’t have debt. And so I’m still a call, I’m accountable to the Telarus partners. I’m accountable to your customers. I’m accountable to our customers. Those are the people we’re accountable to. So we control our destiny and I want to keep it that way. And the last one that I learned is integrity matters. So. ⁓
long winded story, you know, in 19 and 2000, 2001, couple of the guys from quest called me and said, Hey Rob, you want to do fiber swaps? And I was CEO of a public company and fiber swaps is essentially taking capex from them and making it our op ex and taking capex from us and making it their capex from us and making it their op ex. It’s, it’s dirty.
I am but I you know I was a history major I didn’t know what that really meant so I asked our CFO hey what does this mean and he said I wouldn’t do it and I’m forever indebted to Bob Kabusey for that old salt had been around you know a couple times around the blocks before I said can you ask Pricewater’s Cooper’s price far as Cooper said Rob I don’t think you should do this so I called back quest and I said quest we’re not going to do this and a day or two later the guy calls me he goes Rob you’re a pissant little reseller you know Twitter fifty million dollars we’re a
$20 billion lack and we have Arthur Anderson. That’s the same big five as price. What are us Cooper’s? How can they do it? We can do it and you can’t do it. I’m like, I don’t know. Good point. I went back to Bob and I went to PWC and I’m like guys, do you think we should do this? And they, they said, Rob, I don’t think you should. Now I’m CEO. So I made the decision. ⁓ we decided, we’re not going to do this. ⁓
And I promise you, as CEO of a public company, a couple million dollars worth of found earnings is like pennies from heaven. Would it have made us last a quarter or two longer? It may have, it may not have, I don’t know. Will we have failed no longer? I do think we would have, but Socrates said, better to fail with honor than succeed through fraud. What I learned from that is keep your integrity. So the guys from Quest, jail, banned from public industry for the rest of their lives. Me.
We failed and it hurt and it’ll never not hurt. But because you keep your integrity, you get a chance to play the game again. So, ⁓ cut born out of those failures, three important lessons. One, stick to your knitting. Like be good at what you’re at good at to control your own destiny. Don’t let, know, if it takes longer, that’s fine. But if you control your own destiny, you’re, you’re, you’re going to in the long run benefit from it. And three, keep your integrity.
Josh Lupresto (21:39)
I love it. Final thoughts here. I want to go back to legacy, impact, some of the things that you talk about. You’ve done some amazing philanthropic things, 350 million plus cancer research, education, and that’s the area that hits home for me. I want to think of, if you look forward 10, 20, 50 years, what do you want the legacy to be?
Rob Hale (21:45)
Mm. Mm. Mm.
Mm. Mm.
Mm-hmm.
Number one good dad
start there. ⁓
We talked about it a little bit earlier, the real reason I compete, first of all, I just compete because like I’m born to do this. Like I like it. We talked about the financial resources. Again, I don’t need things. have whatever I have, need. Whatever I want, I already have. I’m great with that. I would like to be able to put a dent in pancreatic cancer. And that’s a potent disease. We fund 80
Doctor, scientists and researchers solely focused on the eradication of that insidious disease at Dana-Farber. That’s the largest lab solely focused on that in the United States, ⁓ Sahara Labs. And I’m telling you, we have things headed to FDA approval that are gonna make early detection, which is the problem with pancreatic cancer is that it’s the early detection. If you don’t get it, unfortunately it gets you and it’s almost undetectable. We’re gonna make early detection accessible to
Josh Lupresto (23:04)
Mm-hmm.
Rob Hale (23:14)
millions and if that’s the case, then man, that’s a great legacy.
Josh Lupresto (23:20)
I love it. I love it, man. ⁓ Awesome, Rob, I think that’s where we wrap it. Appreciate all you’re doing. You know, just out there in the community with the partnership with Telarus. Just I love your hunger and your ability to get on deals. And then of course, ⁓ all the philanthropic pieces as well. Thanks for all you do.
Rob Hale (23:21)
Thank you.
Thank you, it’s an honor to work with you. It’s an honor to work with Telarus and to anybody who’s considering partnership with Granite, please do and let me know if I can help you.
Josh Lupresto (23:46)
Awesome. Hey, go Celtics too, right? All right. Until next time. Thanks, everybody. Rob Hale, CEO, founder, Granite. I’m your host, Josh Lupresto SVP of sales engineering at Telarus
Rob Hale (23:48)
Thank you, Josh.