CDF Key Takeaways – Fireside Chat with Viasat CEO, Mark Dankberg

CDF Key Takeaways – Fireside Chat with Viasat CEO, Mark Dankberg

  • Evolution of Viasat
    • Began in 1986 with three brilliant engineers who worked out of Mark’s house. They had all worked together at the same company and aspired to create something together.
    • It started with no money and no product, but they knew they wanted to have a company that they would want to work for (culture and product wise).
    • Their initial goal was to just stay in business for at least one year.
    • They quickly learned that building products was the right business model.
      • Built test equipment / simulators for satellite communications
      • Made $300k and was profitable by the end of the first year
    • Pivot point once Viasat began to build their own satellites
      • Started with defense satellites, then moved to enterprise / commercial applications
      • In the early 2000’s, broadband boomed and they won several broadband satellite programs. The contract with WildBlue, which made consumer electronics, provided good exposure into the consumer broadband market.
      • There was a disagreement on the core value of satellite broadband at this time. They determined that what made a company successful was providing a lot of bandwidth.
      • In 2008, they saw a lot of opportunity to create a new business model to work in a space others weren’t.
      • Stock was around $30/share. Once they announced that they bought a satellite, the stock fell to $15. It was a very bad couple days.
      • Their stock was relatively concentrated with 10 large shareholders, 6 or 7 of which stood by them, but 3 or 4 which did not.
      • Viasat tried to learn from their own mistakes, but more importantly, the mistakes of others within the satellite broadband market (WiMax as an example).
      • At that time, it cost roughly half a billion to launch a satellite. Some companies were launching them with 10 Gigabits/second.
      • Viasat saw the opportunity to make a faster and better product (100 Gigabits/second)
      • In 2007 with the invention of the iPhone, the number of passengers on planes requiring bandwidth increased dramatically, which increased the need for fast bandwidth.
      • Viasat had good market insight and felt they could create competitive barriers.
      • Teamwork was essential in making Viasat successful (done across functional disciplines, heard arguments for and against their plans, worked through all different scenarios).
    • Convincing the board to bet the company on this new business model
      • Acquired WildBlue ($1B investment for a company doing $500M in revenue). Felt it was a capital project worth financing when the capital markets had completely dried up.
      • Had to explain the intrinsic value of assets to the Board.
      • They financed it on operating cash flow with no additional financing for 2 years.
      • The stock price rose once people realized they could and would be successful.
      • Viasat got bandwidth at 1/10th cost of others since they owned WildBlue.
    • What’s Viasat’s road map? Where is it going?
      • 1996 went public, raised $300k before going public. It was very capital light before 2008, but is not very capital intensive.
      • Viasat1 was very profitable, so the plan was to do more and make them with much greater capacity and open up the global market further.
      • Issue was what’s the market value? It seemed like too much bandwidth at the time, but Viasat was asking “What’s the market value of that bandwidth?”
      • 4 billion people still don’t have access to the internet.
      • Two parts to this business:
        • Fulfilment or supply: Can it be made at a price point where people can afford to buy it?
        • Can you get it to those people?
      • What is the corporate culture and what role does the board play in culture shift?
        • With 30ish geographic locations, culture is what people do without even thinking about it. The Chairman/CEO is the figurehead of the culture, but not the creator of it.
        • Employees are the ones that support and preserve the culture and are the dominant influence.
        • Mark is a big believer in servant leadership. The Viasat culture is collegial. Allow people to be productive and get out of their way. Let talent flourish.
        • Viasat tries to have a holistic culture, so different disciplines and areas are working together and not competing against each other. It takes a lot of work.
        • Hiring recent college graduates is a good way to grow talent and culture.
      • New Viasat initiatives.
        • #12 on Fortune’s list of companies changing the world this year.
        • Connecting school kids/rural towns in third world countries that wouldn’t have connectivity otherwise.
        • It’s not just about money but rather having a positive impact.
        • Facebook is working with Viasat to look at how many new people are connected due to access that wasn’t there before and the quality of that connection.
      • How do you encourage innovation and entrepreneurship as you grow?
        • They spend a lot of time understanding the market, technical innovations and the intersection between the two (recruit people who understand all three).
        • They give people the opportunity for self-expression and to pursue their passion instead of trying to draw it out of them.
      • How does 5G impact Viasat’s business?
        • It will be going to urban areas, but not in the areas where they aspire to grow. In many of the areas where they are going, 2G and 3G aren’t even there.
      • How do you view the boards role in strategic decision-making?
        • It’s hard to innovate by committee. You still need a vision.
        • The companies that are the most successful tend to have Chairman/CEO’s that are aggressive and ambitious and have built teams that can execute.
        • Prudent risk is important, but it should be explained and rationalized and requires quantitative research for the board and investors.
        • If you think of it like a bell curve, the largest company boards have had Chairman/CEO’s that have been aggressive, but lower cap companies may require something different.
        • Getting feedback from investors is important.
      • Mark’s Words of Wisdom
        • Teamwork is essential. A leader can only do so much. Make sure everyone is working on a common goal that is attainable and aspirational and stay out of their way.
        • The key as an entrepreneur is to have your team be able to keep the company going even if you aren’t there.
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