Dane Jasper | Crain's San Francisco

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Dane Jasper

Background:  

Santa Rosa-based Sonic is an independent telecommunications company and internet service provider that serves as a competitive local exchange carrier in 125 cities in the state, including San Francisco.

The Mistake:

My mistake was not looking beyond the immediate market and not realizing we needed to behave differently from our competitors.

Sonic is a regional competitive telecommunications carrier. That makes us the David to our national Goliaths: the big national cable and telephone companies.

In 2006, we began construction of our own network to deliver internet access and telephone services. When we designed our products, we priced them at different speeds and different prices, as consumers expect. In our industry that means that 5 megabits costs $30, and 10 megabits of internet access costs $35 and 15 megabits costs $40, and so on.

Our incumbent competitors each had three to five different tiers of speed and price, so we launched at five different speeds and five different price points, similar to the model they used. The result was—after we spent two years and millions of dollars building this network—our business was completely flat. We spent a year operating the network and trying to understand why we weren’t succeeding.

In 2009, I saw this article that outlined this all-in-one price business model that had proven to be very disruptive in Europe.

In doing that, you can say, the cost of doing this is “X” dollars, whether internet access is one speed or another, or whether long distance is included or not included. You can throw in all those things for one price because your costs are totally flat across.

So that was the realization moment, and I said, “Oh wow, why didn’t I figure this out before?”

It’s critical for business leaders to look beyond the market they operate in and seek approaches that are different from the competitors they seek to unseat.

The Lesson

We woke up in 2009 and we realized we had made a horrendous mistake. We had behaved like an incumbent who was needing to engage in market segmentation to maximize revenue artificially out of every household.

It took us a number of months to change the billing platforms, the marketing platforms and the sales platforms, and we launched that in 2010 and growth tripled.

It was an interesting and humbling experience when I look back at it. It took off the blinders and allowed me to see things another way.

It’s critical for business leaders to look beyond the market they operate in and seek approaches that are different from the competitors they seek to unseat.

 

Follow Dane Jasper on Twitter @dane

​Photo courtesy of Dane Jasper.