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Transcript: Community Broadband Bits Episode 297
This is episode 297 of the Community Broadband Bits podcast. Christopher Mitchell speaks with Gary Evans from Hiawatha Broadband Communications. They discuss the history of the company and what Disney learned from them. Listen to this episode here.
Gary Evans: I'm proud of HBC. I'm proud of what it did. I am proud of what it's doing.
Lisa Gonzalez: This is episode 297 of the Community Broadband Bits podcast from the Institute for Local Self-Reliance. I'm Lisa Gonzalez. Every once in a while Christopher gets the opportunity to interview established voices in the industry for our podcast. It's always a pleasure to hear from people who've been working for many years to bring better connectivity to businesses and residents in America's communities. This week Christopher talks with an old friend, Gary Evans, who has served as president and CEO of Hiawatha Broadband Communications. In this interview, Gary shares the history of the company that serves southeastern Minnesota. He describes some of the early challenges and triumphs along with the partnerships and collaborations he and HBC have established over the years. We wanted to bring Gary on the show because we feel it's important to document the history of the Internet and the role small companies played in bringing Internet access to America. In many places, it was the relatively small unknown companies that were the first to deliver internet access not the large national ISPs we all know today. Because Gary has so many interesting stories to share and we didn't want to exclude anything that could be helpful for our listeners, this interview runs longer than most Community Broadband Bits episodes -- about an hour. Now here's Christopher with Gary Evans.
Christopher Mitchell: Welcome to another edition of the Community Broadband Bits podcast. I'm Chris Mitchell and I'm on the road today with Gary Evans, the now retired founder of Hiawatha Broadband Communications. Welcome to the show, Gary.
Gary Evans: Chris, it's wonderful to be with you.
Christopher Mitchell: We were joking just before we started recording that you said you were the unhappily retired. I defy anyone who listens to this to find the moment in which you appear to be unhappy.
Gary Evans: I doubt that. The fact of the matter is I think that I'm working on my fifth retirement so that sort of tells you that it's been an uneasy time for me .
Christopher Mitchell: Sure, yes, and I believe that you've been active in many things as well cover this will be a longer interview than are that are most which we aim for 20 to 30 minutes because every now and then when I have a chance to interview someone like you who's been so active for so long and has so many different insights I want to take a little extra time. So I think maybe we'll start with what is HBC Hiawatha Broadband Communications?
Gary Evans: HBC is a community centric organization that seeks to create community betterment through connectivity and that that was the second vision for HBC if you will. Let me just take you back to 1992 when -- it's sort of interesting to be sitting here with you because I was visiting with Bob Kierlin who really gets the credit for the initial vision. Bob as you probably know was the founder of Fastenal company was also a state senator for a time in Minnesota and a long time ago there were a group of us who went to work very early in the morning, and if we talked we talked very early in the morning and Bob, Bob sometimes talked cryptically and I got a call at
5:00 one morning saying Gary you're going to get a call this afternoon from a friend of yours and I hope you're going to say yes. And that ended the call. Now interestingly enough two years prior I got a similar call and he said Gary you're going to get a letter from the Bishop this afternoon and I hope you'll say yes. That was a bit disconcerting because being Lutheran I wasn't certain what the bishop would want.
Gary Evans: I said the advice of the Catholic friend who told me he thought in my case maybe they'd consider human sacrifices. In any event I had been part of the meeting that had asked Bob and his Fastenal partners to consider the purchase of the College of St. Teresa campus in Winona, a campus that was going to be vacant at the end of the 1988-89 school year and less than 10 hours after the meeting ended I got a call from Bob saying they'd purchased the campus and the Bishop wrote to ask if I would be part of a task force to plan how that campus would be used. There doesn't perhaps seem to be a great connection between the two except that, as Bob and his partners moved to put the campus again to productive use, state of the art telecomm became part of the vision for that campus.
Gary Evans: And although Bob and I argued and still do about whether it fulfilled its mission because it was entirely Apple based and I thought it should be mixed platform. When the campus opened in 1990, it was in fact a wonderful, wonderful mecca of communication. It had everything including a TV studio, if you a commercial TV studio.
Christopher Mitchell: So these are these are the seeds of HBC and for people who didn't grow up in the area around here it's Winona is in the southeastern part of Minnesota and Fastenal is a very successful company that is based out of there.
Gary Evans: It is and the Fastenal partners have been uncommonly generous and so they sought to create an education park on the campus. Let's go back then to the call that said I'd get a visit or a call from a friend. That was my backyard neighbor saying that Bob wanted us to take a look at this new stuff called fiber-optics to see if there was any advantage in it for education.
Gary Evans: We met in Bob's home in February of 1993 and gave Bob what he had requested which was a three page feasibility study including the budget and we said that fiber-optic connectivity for Winona's educational institutions could be a real benefit but would also be costly. We got up dusted off our hands. My partner Bud Baechler who's a rather well-known personality in southeastern Minnesota as the result of his work in public relations. And I got ready to leave Bob's house when he tapped me on the shoulder. Handed me a check for $600,000 and said, "You guys must think you know what you're doing why don't you get at it?" That was a little heart-stopping. To be honest with you Chris as I don't know if we really did know how to do it or what we were doing but ultimately we connected all of the city's educational institutions with fiber. We also included City Hall purely for political purposes. I might add we had met with the mayor and city manager who suggested their approval would be routine if we would make sure they were connected and we readily agreed to that. We also included our hospital because it was both a provider and a consumer of education and we thought that would be beneficial. Luminet, that venture began in 1995 and along the way we created a number of user groups. Interestingly enough. Dan Pecarina the current CEO of HBC was the information systems manager at Winona State where I also worked. And Dan wound up chairing that Gateway Internet group. And after the first meeting of that group he came to me and said Gary can I get Somsen auditorium for our next meeting. And that totally puzzled me because Somsen was a 900 seat auditorium and they filled that doesn't it. That's how -- if we go back to 1992 -- that's how veracious the appetite for internet connectivity. You know most of us were making cold calls to AOL in Chicago for our connectivity and and so Luminet diverted from let's not for profit status to become also one of the nation's first small town Internet services. And I joke all the time about that being the best and worst decision we ever made. All wrapped up into one decision. It was clearly the best because of all it did for Winona and it was clearly the worst because our human resource never quite equaled what was necessary to deliver superb service.
Christopher Mitchell: So you are always struggling to get to where you wanted it to be.
Gary Evans: We absolutely were. There was a time in about 1996 when 80 percent of Winona's 27,000 residents had e-mail addresses, if you can believe it, as the result of what was then known as Luminet. In 1997 and trying to catch us up here and not be so verbose we were at a Luminet board meeting both by Baechler and I were on the board along with Bob Kierlin , Bob Hyne [spelling?] who was a local CPA and Kant Gernander [spelling?] a local attorney who had been instrumental in helping get Luminet going when Bob said, "Is this that time?" and it was one of those questions delivered in such a way that it sort of caught you up short and made you think a minute. And I remember saying that time for what? And he said were you guys in the last sentence of that feasibility study you gave me said that it wouldn't be a complete project until we enable connectivity to all Winonans who wanted.
Christopher Mitchell: So that was something that was sticking around in his head probably more so than your head.
Gary Evans: It absolutely was. I mean we were scrambling to try and keep up with the demand on the Internet site. And I remember making those same comment. Yeah. I had made earlier when I said "Jeepers, Bob, that's going to be expensive." And he said "Well you know didn't it work out OK last time? I sort of handled the money. You guys handled the other stuff and we got it done."
Gary Evans: And the higher education foundation which was comprised of Bob and his four partners gave us the first $8 million to get the build started. We activated the first node in Winona in 2000. We finished the fifty seventh node in 2001 and that's when all were known and did have access to high speed communications although high speed communication then was far different than than it is today. And that first network we built was in hype was a hybrid fiber coax network that was sort of the state of the art back then right.
Christopher Mitchell: And when you say nodes those are in the way that I think a number of people are more familiar now you had fibre to the node and then you had the cable system out to Rezko X to the residences right.
Gary Evans: Those are regional nodes were built to serve 500 customers
Christopher Mitchell: Which is a pretty small split at the time.
Gary Evans: It was a very small split at the time. It was funny because we made a major marketing mistake. We decided to publicize our progress with a map in the Winona newspapers that showed node by node where connectivity was and that simply enabled Charter our competition to move ahead and offer multi-year deals to people in exchange for contracts.
Christopher Mitchell: Now if we just pause for a second here this is a time of incredible predatory pricing. And I happen to have followed some of the HFC networks. In retrospect I wasn't paying attention at the time but I looked back in history and in the very early 2000s as when Charter was in some places offering people effectively free internet services seems like and giving them like $200 cash if they sign up for a multi-year contract.
Gary Evans: So it's this is bad worse than it is today even where we see that practice you know as as we talk about HBC which at least I consider to be an incredible success story. We made a heck of a lot of mistakes. And the first one is exactly what you talk about. We opened up with prices that were lower than charterers and soon we were in a downward cycle that we knew we couldn't survive. And so we had to stop our second communities St. Charles from Minnesota. It's a very interesting story for me as well. In 2005 the HBC story was spreading pretty pretty incredibly across Minnesota. In our pre planning stages tonight I need to include but backward here because he was very influential in helping us with the planning and what we did, Chris, was we sat down and talked about every negative we could think of that was connected to modern day telecom service was terrible.
Gary Evans: If you wanted to sign up you got a day window and you had to take a whole day off from work.
Christopher Mitchell: I'm glad we don't do that anymore now we have four hour windows
Gary Evans: But in Winona you have time specific and and and if the installer is going to be late the customer gets a call
Christopher Mitchell: From you?
Gary Evans: Yes. I mean it's you know so we look at everything and we decided that the hallmark of our business had to be customer first you know in retrospect that's kind of interesting because Fassino House measure is growth through customer service so that the companies had had the same base of if you will. And and we tried very hard. We also had a rule that said if something breaks today it's fixed today.
Gary Evans: If you want it fixed today it will be. And I remember my son not being too happy one day when one of our repairman wound up at his house at
10:00 at night wanting to fix his TV service which was out.
Gary Evans: But I think that HBC did in those early days try very hard to be a very different telecom company if you will a very customer centric one.
Christopher Mitchell: Did you look at the record of others? I mean there is a history of overbuilding as the industry calls it are just competitive companies that tried to do this believing that there was a market opening because of the bad service and all the problems that you describe most of them went out of business. It seems like or or you know consolidated into RCN or something like that.
Gary Evans: We didn't. And it's probably a good thing we didn't we might not have started if we had. And so we learned as we went to you know I can't tell you that we were a perfect story from the get go.
Gary Evans: We had to make modifications along the way and everything that we did. But I I think that our penetration statistics which frequently ranged up in the 80s would demonstrate that we were certainly better than the competition. And I think that the customer feedback that we got and solicited by the way would demonstrate that people thought we were a good deal better than the competition but back to St. Charles for just a minute for the listeners who don't understand Minnesota Winona is about where Iowa Wisconsin and Minnesota come together and 20 miles west of Winona is St. Charles and 20 miles west of St. Charles is Rochester, home of the Mayo Clinic.
Gary Evans: I mention that because in 2005 Rochester and Mayo were beginning to flex their muscles around a new initiative to create a super clinic in Rochester if you will. And St. Charles who had a bunch of visionary residents on their economic development association wanted to be the number one bedroom community to Rochester. And and a whole EDA [Economic Development Association?] came to visit me at HBC one day and said, "We want you to build the network in St. Charles. Will you think about it? We'll give you whatever you want need money. You've got it. Need rights of way. You've got it whatever you want. Just let us know." After meeting with them on several occasions we realized how serious they were about their vision and we said yes said we do it ourselves with our own money which we did. We built St. Charles richer in fiber than Winona was.
Christopher Mitchell: When you say richer in fiber, do you mean it was all fiber?
Gary Evans: No it was still hybrid fiber coax but the nodes were built with 200 residents customers in mind. When we started the network there were two tiny housing developments underway in St. Charles a year and a half after the network was activated St. Charles had doubled in size and was completely ringed by new housing developments so I think the people there who were on the EDA at the time would tell you that they achieved their goal and many of them are new residents are people with high incomes who want small town life. Rochester has now ballooned to more than 100,000 residents because of mail and there are a number among them who want smaller communities.
Christopher Mitchell: I think a lot of those people are a little crazy because I want to live as close to John Hardy's as I possibly can -- possibly the best pulled pork in otherwise barbecue in the upper Midwest.
Gary Evans: My now now I'm probably going to have to go back through Rochester Thank you for that.
Gary Evans: In any event St. Charles was another wonderful success story for HBC the third community that we built was Wabasha. Wabasha is the Mississippi River community like Winona about 30 miles north
Christopher Mitchell: And Walter Matthau lived there for a while in the movie Grumpy Old Men.
Gary Evans: That is correct. And by the way Grumpy Old Man was written by a Winona State student was written about a Winona State professor who was played by Ann-Margaret. And it's pretty true to life story for those of us who know it and lived it kind of. But Wabasha was our first all fiber community and Wabasha represented another first. We decided after St. Charles that when we activated the community or when we got ready to build one we would hold the community dinner and we would invite everybody in town to come out and enjoy dinner on us.
Gary Evans: We would make a brief presentation on what we were doing and we would allow people to sign up for service promising them that they would be installed in the order that they signed up. We also used every restaurant here in town to provide food for the community dinners so they wouldn't miss out on a pay day. As a result of us inviting everybody out. We did the dinner at the Wabasha high school and we signed up more than 80 percent of the residents in town and had a original night. That's incredible.
Gary Evans: Yeah. And so community dinners became part of that strategy. From there forward although in the case of Redwing when we built that we had to do neighborhood barbecues because there wasn't a place large enough to hold the whole town. HBC is now 21 communities we're sitting today in one of the newer ones. Cannon Falls Minnesota. Cannon came to us while I was still at HBC we began talking with the community at that time. We provided some help to their economic development association early on and now HBC is building the town. We pretty much blanket southeast Minnesota and penetration rates have remained very very high above 70 percent in the aggregate. It was it was for me a marvelous marvelous ride both educationally and from a results point of view.
Gary Evans: But but the biggest thing was I will say this probably causing some of my former fellow board members to cringe. Profit was never as important to me as customer satisfaction. And we tried to make that the hallmark of what we did.
Gary Evans: We we were not as profitable as we might have been. For instance one of the things we did was in the rush to create community television stations Winona didn't get a station price and Rochester had stations.
Christopher Mitchell: When you say the rush to create their community TV stations this was not HBC this was the more the community media movement absolutely public access and back and I'm guessing 50s out probably 60s and 70s cable television gets introduced people start thinking we need to make sure it's not all commercialized but Winona kind of misses out on that.
Gary Evans: Yes. Yes. And and so part of HBC's program was local television programming. We did daily newscasts. We produced lots of local shows. We did a lot of local sports HBC still does.
Christopher Mitchell: And you didn't charge for us was just content that you--.
Gary Evans: We created almost all of it at our expense and we did sell advertising. Not enough but people got the offering for free as part of our service.
Christopher Mitchell: And it's worth noting people in Winona have a certain fondness for Winona State basketball.
Gary Evans: Very much so.
Christopher Mitchell: It's a lot of help. I think that you know that everywhere may not have that exact same advantage.
Gary Evans: Well that's true because during that time that HBC was really moving along and gearing up. Winona won two Division 2 NCAA national championships and sandwiched between the two was a runner up.
Gary Evans: So the fact that HBC did all the Winona State games was indeed a big deal to Winona.
Christopher Mitchell: And let's talk about one other sports thing which if I'm remembering correctly this is something that I believe I learned 10 years ago from either you or Dan Pecarina was that widows and baseball had had a certain impact on your bottom line.
Gary Evans: Absolutely. I will never forget it. We discovered that the Twins We're a can't-get-along-without-it commodity for elderly spinsters if you will or widows. And if if we go back, Chris, to this moment you will remember that there was a period when the twins started their own television network. It didn't last very long. But HBC was the first customer of that network.
Christopher Mitchell: And you didn't know this at that time no way.
Gary Evans: We found out as the result of our purchase of that channel that day that the women in Winona were absolutely rabid baseball fans.
Gary Evans: You know we're known it has a phenomenal baseball history. Many of us remember the old Southern many way that wasn't as popular as triple A baseball. I think at one point in time and and Winona was was a member and people still talk about the good old days with with the Chiefs. Something else happened that that I count among the really really big successes. And you know I've learned in life that vision is perhaps the greatest treasure of Bill. You know people always point to money. I think vision vision is good enough. I think money follows. But another thing that we learned is that sometimes accident isn't as important as on purpose. I get a cold one day in early 2000 from a friend who had worked for me back in the very early 1960s who said to me I'm sitting here with the CEO of Cerner Corporation in Kansas City and he just got done telling me that there is no place that he can find that meets his criteria.
Gary Evans: He wants to find a community of 50,000 or less with a single hospital system, a predominant clinic and a broadband network and he can find all of the first three but he can't find a broadband network. And I told him Winona had one. Well that afternoon Neil Patterson, who just died a couple of months ago, and I talked by phone and he was astonished to find out that yeah Winona did have a broadband network and a week later a very big airplane filled with Cerner executives flew into Winona allegedly going to make a 20 minute stop and stayed for nine hours. Looking at what we had done and were doing and at the end of nine hours produced a partnership saying that they would like to make Winona there their testbed community for their technological advances and so Winona health benefited from millions of dollars of investment by Cerner.
Gary Evans: You know we had the first electronic, one of them, well one of the first perhaps the first working electronic medical records in the country. We had one of the first physician order entry on the Pharmaceutical front. I mean it's amazing and all of that all came all that investment because of the broadband network that was in place in Winona. So you know as as I look back on that time that 5 a.m. telephone call from Bob Kierlin ultimately set a path for me. That was an incredible. Unplanned but incredible as we plan to move into HBC. I don't know. Chris, if you ever met a fellow by the name of Tom Vistrecky [spelling?]. Tom is a Twin Cities resident wonderful wonderful man.
Christopher Mitchell: I don't know them all.
Gary Evans: I know you don't didn't. But perhaps not.
Gary Evans: In any event Tom was the number two man in US West at the time that HBC was gearing up
Christopher Mitchell: and US West would go on to become what is now CenturyLink so a very large income a telephone company yes
Gary Evans: Yes. And interestingly enough we had partnerships with both I met a fella by the name of Will Ketchen [spelling?] who was sort of popular man about town if you will. I think he might now live abroad will had just been named the head of communities of interest networks for US West. And I remember encountering him at the state capital and asking him what he was doing. And he said you know I need to figure that out. And I said well what are communities of interest. He said well I need to figure that out too. And so he said Well can we sit down and figure it out together sir. And and we did that. And so as you know moving through a large corporation is a big challenge and we didn't make very much progress. And finally I said to Will isn't there anybody we can talk to in your company who might be interested. And you know I'm a story teller and this is a favorite one of mine but Will said. "Well you know there's the number two guy in US WEST There's a guy by the name of Tom Vistrecky [spelling?] I'd never met him but I'm guessing that he could make a decision. So I wrote this well frankly it was a nasty letter about not making decisions and so on. And at that time I was vice president at Winona State and three days later I'm in my office and the student receptionist says there is a Mr. Vistrecky [spelling] in the line. Who wants to talk to you.
Gary Evans: Not a common name. No no. So now I'm cringing a bit.
Gary Evans: And so I picked up the phone and he said So what in the world is so important about well known. My response was you know Mr. biassed Ricky if you'd get out of your ivory tower and make a trip down river we'll leave and send a plane to get you. What a dumb comment that was. Yeah isn't it in any way will send a plane to get you but you need to come down and know what we're doing because we'd like your help.
Gary Evans: So about a month later that meeting was set and I got a call from Will Ketchen early in the morning and you could hear his voice trembling with nervousness. He said, "Gary biassed Ricky just got on the airplane here for the trip to went on and he grabbed me by the knee and said well kid this better be worth my time. Right. And he said So boy it better be worth his time. So Bob Dylan's airplane which was on lease to US West flew into went on with a group of US West executives and they spent a number of hours kicking around Dhari Quitman and the College of Saint Teresa campus and then they laughed and and Tom was very cordial but noncommittal. The next call I got was about 20 minutes later from Wilcke kitchen. They were back in the cities and well was saying how he got on the airplane and said you know kid I'm really grateful to you for free.
Gary Evans: We missed a great opportunity. So US West became our partner and put money into the project Lumina project in Winona and was our partner and when we decided to go to HBC Tom was a leading influence. He by then had become a good friend. He made regular trips to him went on I need to back up because he said I suppose you think I'm calling you because of your letter. That was the original call and I said well I can't think of why else you call. And he said Well you know I know something you don't know. And I said Yeah I suppose you know a lot of things I don't know and he said My wife is a graduate of Winona state and if she knew I got a letter from a vice president that I didn't respond to I'd be in trouble sir. So Tom was really the genesis for the thinking about Hiawatha Broadband because he said you know Gary as I look ahead we're not going to be investing much money in tier 2 and Tier 3 markets.
Christopher Mitchell: But this is this is a time when people are mostly on dial up. This is a time in which what you're doing is terrific for them because you're making people excited about having much more time on the phone. I mean when I lived in Rochester in high school I was fortunate enough my dad would move to Rochester so he could work at IBM. Computers were a very big part of my life. In junior high and high school so we had a second telephone line. We could be on much more often and when other people were fighting over it with their families so that made a lot of money for us.
Gary Evans: Yes yes Tom said you know we probably aren't going to be making those investments. If I were you guys I'd think a move moving ahead as you're planning with the build and your vision probably shouldn't stop with Winona.
Christopher Mitchell: So he's this is a time also this is on the on the horizon are also being deployed in some places and he's basically telling you to to build a network that's going up because they're not going to build theirs so the market is yours.
Gary Evans: Yep that's right actually. And I think I can say this now since it's a long time later time was scheduled to be the first CEO of HBC. And remember him saying to me one day as we sat and talked he said you know Gary I'm just not happy. I'm a builder and now I sit in my office and I don't build anything. And I said Well you know Tom you had to get out of that office and come down and join us. And he said you'd have me. I said yes well bottom line he didn't come for reasons of personal finance and no compete clause. And I became a poor second choice. Well when when he quit I remember calling Cantor and are on my way home from St. Paul I'll tell him that time couldn't be interested because of personal circumstances.
Gary Evans: And this. It's kind of funny to think about because this was back in the days of early cell service when you needed a weight lifter to carry your phone. Right. And so I called them when I was going through Redwing because there was service.
Gary Evans: And as I got to the end of Redwing I heard him say Call me when you get to Lake City. Well I talked to him again in Lake City. And by the time I talked to him and while I show I he was saying I needed to become the CEO of HBC. So that's sort of how all that unfolded.
Gary Evans: It's a situation, Chris, of marvel, a marvelous series of stories. Yes there was investment but mostly there was vision. You know people call me the vision behind HBC. I wasn't. It was Bob Kierlin . It was Bud Baechler . It was Tom Bistrickey [spelling]. Sprint was our partner and a fellow by the name of rich Cal Brenner who was a Winona native and an executive in Sprint was another part of the story.
Gary Evans: So because we were new because we were early we made a lot of friends that helped us sell.
Christopher Mitchell: I don't think that's unique and you know I think one of the things that we find is these businesses succeed in that way. ISPs particularly, you know, I'll say a lot of the ISPs that I know of even if they might be hostile to some of their competitors they're often their engineers are talking or they're taking some sort of a brotherhood or a sisterhood of --
Gary Evans: There is that there definitely is that. And it's a good thing. It enables progress. The synergistic approach enables progress that wouldn't otherwise be achieved I think.
Christopher Mitchell: There was a time when you visited the Federal Communications Commission I think and you said that you were profitable and people who their job is to understand the U.S. telecom communications market. Their jaws dropped. You remember that.
Gary Evans: I sure do. Well there are a lot of things happened as a result of that. I don't remember all of the names but back in the day when the broadband plan was being written by 2009 I think maybe we got a call one day asking if we would come out and tell the committee our story and they didn't believe that there was an overbilled or in the country that was profitable. And I didn't have enough brains to be frightened of the people I was meeting with. So I just told that as I saw it.
Christopher Mitchell: You didn't grow up going to elite colleges and things like that.
Gary Evans: I certainly figured out as you went along and so you know I just told them about the business as I saw it and I told them that there were a number of things that they were doing that were inhibiting progress and and maybe they should see it differently.
Gary Evans: I got a call from Blair Levine inviting HBC to become one of their advisers as they went through the broadband plan and we wrote a lot of white papers for them. I'm disappointed to say that I would have liked to see more of the input included in the plan. I didn't think it then was friendly to competition. I thought you know you learn in politics that money talks. And big money was being spent to make sure that companies like HBC didn't gain any particular foothold. I think we were very fortunate to start where we started. There wasn't a lot of attention on a market like Winona and if you're building in Minneiska with 68 people in it nobody looks at that.
Christopher Mitchell: Well this is this is something I really want to follow up with you on because I think most of the overbilled there were building in Boston. They were building in the Lehigh Valley where I grew up and there -- that had more density maybe had higher build costs because there was a sense that you absolutely needed to hit that density to make your business model work.
Gary Evans: You know I don't think that was that was true at all. I think what we discovered was that you could build an all fiber network you couldn't leverage resources in such a way that you could build a community of 68 residents if you will you could deliver outstanding at least an arm mind customer service and you could be profitable. And you know we also discovered that sharing that story with people with our customers didn't bring a negative reaction the fact that you were profitable I think was pretty much understood to be the basis for continuing to exist.
Christopher Mitchell: I don't think I don't think most people are going to be upset when they go to grocery stores that are profitable they think they would renting videos or video stores. I think the concern was always that with the cable and telephone companies it's not that they are profitable the big ones that they were excessively so it's that you had a sense that they weren't happy just to give the money that you offered they wanted to pick your pocket for the rest of it.
Gary Evans: That's absolutely true. And in addition if something went down they weren't very aggressive about fixing.
Christopher Mitchell: Right. Right there wasn't really a contract. It was all one sided.
Gary Evans: Yeah it was a one sided thing. But you know along the way we many asked is a fun one to talk about because we had to run fiber from Winona to why be shy to serve that community because along the way one of the things that made us profitable was that we could leverage our head to India and were known to provide service to other communities. And you know that was also my biggest fear if something had happened to that had end it would have been terrible. I mentioned earlier that we had a partnership with CenturyLink and I remember walking into CenturyLink one day and meeting with Duane Ring who is now the chief executive in the Twin Cities and Bob Brown who is the Wisconsin president and asking them if they had ever thought about delivering television content. They seemed interested but not excessively so and although we had a good talk. Nothing happened until two years later when I got a call from Duane's saying "Are you serious about providing us with TV signal?" Man what a mess that was getting through with the red tape. That was crazy.
Christopher Mitchell: And this was essentially it was small comparatively.
Gary Evans: Yes. Yes. LaCrosse was was a major hub of theirs and Duwayne was the chief exec there but we provided them with television signal for two years until they proved that they wanted that to be part of their customer offerings and built their own head in Missouri. So we lost the business but you know what we had gained some real real friends. CenturyLink pledged to allow us to use their head and if we ever had trouble with ours.
Gary Evans: And the thing that just absolutely astounded me was that we had a phenomenal destructive flood in 2007. You remember that we had 28 inches of rain in a 40 hour period or something.
Christopher Mitchell: I remember coming down HBC one month after that happened because Jeff Daly someone who is unfortunately not as involved in telecom anymore he was going through I ran into him and that was my first introduction HBC but one of the things I remember learning is St. Charles still had standing water and your fiber was totally underwater but you're delivering signals just fine.
Gary Evans: We were but you know on Monday morning I got home from a golf trip to Ireland on Friday night. It was Saturday that we realized that much of a good view the suburb in which I live was underwater. And on Monday morning at seven o'clock I get a call from Bob Brown in LaCrosse, and he said Gary, every one of our construction companies are at your disposal if you need our help just call me. I'll have men and machines in Winona this afternoon. There are wonderful stories about friendship that exist in spite of competitive issues. You know we had eyes on LaCrosse at one point in time but when we got into the partnership with Redwing those sort of evaporated you must you must have looked at Rochester from time to time I mean it's right in the center of certainly now it's certainly the center.
Gary Evans: It's very hard to exist where we exist and not look at Rochester. I can tell you without fear of contradiction that we lusted after Rochester. We also know that it was going to be the biggest thing that we ever did. We grappled with how to how to deal with the time to build how we dealt with the outflow of money when there was no inflow and we would have huge huge expense lines there and then there was another factor. In many ways when our big push started IBM was on the decline in Rochester I just see that the building has been sold now. Oh wow. I think I read that last week.
Christopher Mitchell: Right this is Rochester is famous for the AS400s those big machines that boy when I was there in high school I had an internship working with a company that was working with them and the most impressive was three terabytes of hard drive space.
Gary Evans: It was amazing. And you know we had we had some experiments with mayo and we had some with IBM as well but we also didn't believe that those two industries were under or about. And we also believe that because they weren't underserved Rochester was going to be a more difficult sell than anything we had previously done. And before I retired we never got around to it.
Christopher Mitchell: So the. I just think it's worth revisiting that I mean you specifically went after areas that a lot of other people disregarded you pulled off take rates of 80 percent in these places. Not only that but 80 percent initial.
Gary Evans: Yes sometimes before an action or before connectivity.
Christopher Mitchell: Right. And one of the ways you did that was was I think I mean once you've built up a reputation as nice but you treated people like they were people and you opened offices in those communities you didn't just send crews out from window and something broke.
Gary Evans: No that's correct. We determined early on that if we were going to exist successfully in St. Charles and Wabasha, Lake City, and Redwing that we were going to have to have offices and these are close enough proximity that presumably for a large telecommunications company today like one of the incumbents they probably have one office serving all of those. That's correct. I mean you know Winona has a limited personnel charter office I believe but but all of their repair and all of their maintenance comes out of LaCrosse opening offices was another big thing that helped us because that was an economic development advancement that was major in some communities. One of the things that was great to contemplate was the fact that I think when we were working with the FCC in 2009 and 10 that we discovered that every community that we had built was larger than it had been when we started to build.
Christopher Mitchell: Yeah I forgot to put that in my notes that's one of the things you said some of them had had five decades of decline.
Gary Evans: Five and six and you know Minneiska here we go again 68 people. Right. And they wound up with two new residents who were professors one in the Dakotas and one in western Minnesota who were teaching classes online from their home in many Aska which which was great. So HBC enabled a lot of things. It helped save a lot of lives because of the medical partnership we had with Cerner. It tried to do the right thing. I'm sure we didn't always but we tried to make it right. I remember once we had a customer who we installed and we let their dog go and the dog got away and we had virtually every one of our employees after office hours looking for that dog. Well the dog came home and the next day our installers took over dog food and other things and it was funny because the gentleman was a physician in lacrosse and my wife my wife found that being referred to here. And he wound up telling Kurd's the story he'd be safe which you know there were there all those fun things that you know the kind of person that's going to take credit for that.
Christopher Mitchell: So let me ask you how did you hire people that would also maintain that ethic and have that situation in which you didn't just say we're sorry we let your dog out but instead we're going to dedicate all of these staff has a purpose only that someone didn't call you and ask you that there was someone underneath you know there was a there was a moment in time.
Gary Evans: We did a strategic planning exercise every year.
Gary Evans: And I remember that we were ending one on Saturday and we had been talking about what our managers wanted and needed to do their job. And Dan Pecarina said to me Gary what do you want. And I said you know what Dan. Once before I retire I want to work for a company where people come to work because they want to not because they have to. And and Dan's comment and I will never forget it was. Oh you mean like Disney.
Gary Evans: And I said Well Dan I'm not sure all Disney employees feel as happy as they look.
Christopher Mitchell: I don't know that Dan spent a summer underneath the goofy man.
Gary Evans: Yeah right. But now just a minute because that afternoon I went to the Disney Web site just for fun.
Gary Evans: I discovered they had an institute and there was a questionnaire. And the third question and this is at the heart of right talent which is a Disney term. The third question was my company hires for attitude not aptitude. And that was like getting hit in the head with a baseball bat because and I'm thinking you know everyone we hired was for aptitude. Right. They had to have a background like you had coming out of Rochester right. And suddenly. And then we'd spend six months training them and then they do leave in two months. Right. And and so I wrote to Disney. I wrote on their little respon Tufts thing and on Monday I got a call and the guy said are you serious. You want to build the company where people come to work because they want to unsterile because they have to. And I said Yeah absolutely. Were you guys help us. And they said well you know we're really intrigued by this. We'd like to come up and visit. So Disney sent two guys to Minnesota in February and they have arrived without coats.
Gary Evans: Do those guys lose a bet. Probably and without boots and they spent a week with us and they just sat around and watched how everything worked.
Speaker 16: And then Friday rolled around and they were going home and we had a blizzard and they had to drive to the cities to catch an airplane and no courts no boots and you know driving on Minnesota roads when you're from Florida.
Gary Evans: You've got to be kidding me.
Christopher Mitchell: This is not interstate.
Gary Evans: From Winona to the city. So I just I am so frightened about the prospect. While they made it and now we got a call saying we'd like to have you bring your workforce down and we'd like to work with you for a week or so. And there was a price tag and there was also a commitment for numbers and we had a number of employees. But you can't just take a week off to go to Florida and send a note to your subscribers. We'll be back in a week. And so we partnered up with the hospital and the hospital. We split our workforce. The hospital took it's managers in two different teams and we went to Disney and we learned a lot and they helped us define a plan for finding and hiring right fit talent. So we started hiring for attitude made a lot of difference.
Christopher Mitchell: That's great. All of our employees are stars. That's why we keep them on. But one that I'm particularly fond of, the story was she applied at our organization without a lot of the background that you might think were looking for someone in those telecom technology and whatnot. She graduated with a classics degree and doing the posting for the internship position we spelled internet we capitalized intern and it was just this goofy little thing you know and she saw that and saw that we are you know perhaps whimsical and decided to apply and she has made an incredible difference to our work.
Gary Evans: It's amazing isn't it? And from a simple little question. My company hires for attitude not aptitude. And do you stop hiring for aptitude? No. But does attitude become an equation? Absolutely. And I I think that has helped a lot.
Gary Evans: I think that Dan would tell you that turnover at HBC is incredibly small.
Christopher Mitchell: You have low churn in all aspects of business?
Gary Evans: We do! We do! You know our churn was was way under 1 percent on a customer level. You know if if we lost more than one employee to a different opportunity that would have been a large number in any given year. So I'm proud of HBC I'm proud of what it did. I'm proud of what it's doing and I think Dan is doing a marvelous job. He has new challenges now because the old HBC ownership is gone now. They have a new owner. I think the board of which I was a member until the end tried to do a great job in finding a new owner for HBC that would not get in the way of what it does and how it does.
Christopher Mitchell: Good. I want to I want to turn this into a two part interview now because we've spent more time this has been terrific. I would like to see there's several other topics that we didn't get through that I would like to. And so because I asked you have more stories that I realized that I thought you had a lot but we are going to wrap it there. I'll tell people that there is more of the story and we will aim to try. I will aim to talk Gary into telling more of it in this deal a little bit more with some of your role in the broader range of rural broadband policy some of the role of HBC and helping other networks other cities and a few other issues. But we're out of time for today so thank you very much Gary.
Gary Evans: You're quite welcome I've had a great time. Chris you been a wonderful friend for many years. And it's fun to sit down and reminisce with you.
Christopher Mitchell: Yes yes yes.
Christopher Mitchell: It's a long time from I remember 2000 eight years after the election. We knew Obama was going to be taking office we knew those who me a stimulus plan and I was working on e-mails at a chain with you and several of the people trying to figure out what we would suggest that they might do in terms of stimulus and my dad looking at me and thinking it's Christmas. Take a break. And I was thinking this is work I want to do. Yeah you're right. Well thank you very much.
Lisa Gonzalez: You're welcome. That was Christopher with Gary Evans former president and CEO of Hiawatha Broadband Communications in southeastern Minnesota. For more about the company visit HBCi.com. You can also check out our coverage on MuniNetworks.org at the HBC tag. We have transcripts from this and other podcasts available at MuniNetworks.org/BroadbandBits. Email us at podcast@MuniNetworks.org with your ideas for the show. Follow Chris on Twitter. His handle is @CommunityNets. Follow MuniNetworks.org stories on Twitter. The handlers @MuniNetworks. Subscribe to this podcast and the other ILSR podcasts --Building Local Power and the Local Energy Rules. podcasts you can access them on Apple podcasts, Stitcher, or wherever else you get your podcasts. Never miss out on our original research. You can subscribe to our monthly newsletter at ILSR.org. We want to thank Arnie Huseby for the song "Warm Duck Shuffle" licensed through Creative Commons, and we also want to thank you for listening to episode 297 of the Community Broadband Bits podcast.
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