By guest blogger John Scarano a.k.a. Johnny Scannns

Thank you for the opportunity to share these thoughts with you via posts to Dan’s blog. This is the last of 5 parts of my inaugural blog series. This has been a great learning experience. You should try it (posting blogs).

A couple weeks back, I had the opportunity to present the Zayo story to the shareholders of one of our major equity syndicate members. Thus far in this short series, I’ve offered thoughts and preparation leading up to and the key messages of the presentation to Investor #6 and their key shareholders. Today’s topic: So what did I learn?

Sadly (and embarrassingly), I did not really appreciate the importance of the essential requirement to ‘make money’ until fairly late in my own career. Certainly, I’ve been fortunate to learn and experience and be accountable for nearly every aspect of the competitive telecom business at various companies. And of course it is simple; our for-profit business is just like every other for-profit business. It’s about making money (oh—did I just repeat this again?)

The point to me on this score is that as long as making money remains our chief goal, then all necessary supporting elements logically fall into line. We cannot make money without happy (i.e., well serviced) customers. We cannot have happy customers without investing in our network and services properly in order to maintain high quality services. We cannot deliver these customer requirements steadily without treating employees with respect and fairly with regard to remuneration. It is a virtuous cycle if managed properly, but the shareholder is at the top.

I fret that investment bankers or accomplished business persons who read these posts will laugh heartily about how naïve I sound. Nonetheless, my observation is that the “operators” who work in or manage businesses like Zayo’s tend to not be formally trained in banking or in the importance of managing a business FOR profit. As a result, they often overlook what might seem so obvious. I believe that most Zayo folks understand these concepts at least generally and over time will cause our overall performance to improve as we embrace them more. A metronome-like beating of this drum cannot hurt. It takes time to absorb fully. And I welcome Zayo folks (or anyone) to chime in and support or to challenge.

After this presentation experience, I cannot be happier that I have conveyed the views discussed in these posts repeatedly and will not soon stop doing so. We have chosen to work for our shareholders in order to make them money on the investment they have entrusted to us. We as employees and managers had better do a very good job. It’s that simple.

By the way, not-for-profit institutions and charities are so valuable and necessary for our society (and economy) to thrive. Please do not assume that because I talk about making money that I suggest this is all that matters in life. I am happy to talk about my own involvement in these things one day, but then I would have to create a competing blog, and… well… we already have one of those at Zayo!

In closing, it is always enjoyable to learn (and re-learn). Investor #6 (and all of Zayo’s investors) are extremely disciplined, thoughtful and conservative in their approach to managing their (and their shareholders’) money for a good return on this money. Our job is to do the same for them for the portion they have entrusted to us to manage. Pretty simple.

Thanks for your time reading these posts. And thank you, Dan, for the opportunity to do so, and for your own clear guidance which I believe is reflected by these posts. However, I am hopeful there will be no comments. This way, if I have harmed your readership volume, you will no longer ask me to post again. (Just joking of course)

So Now What?

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Remembering Who We Work For (part 2 of 5)
Preparation, the Audience and the Cold Shower (part 3 of 5)
Introduction
Did we learn anything?
Management Ethics – 1(b) of 4 — the last one

By guest blogger John Scarano a.k.a. Johnny Scannns

I am day 4 into my inaugural 5-part blog series. The topic is a presentation I gave a couple weeks back to the shareholders of one of Zayo’s private equity investors. As I prepared for the presentation, I reflected on what we are doing at Zayo and I thought it might be helpful to share these reflections with others. As an added benefit, Dan can take a week off of blog-writing and maybe do some real work for a change.

Today, I will offer the key messages I sought to deliver in the presentation:

1) Zayo is profitable – we make more money than we spend – by choice. That is, our capital program is enormously discretionary. If we chose to reduce investments to extend the reach of our network on behalf of our customers, we can and would return meaningful cash flow to our investors;

2) We are experienced – our leadership and working level teams have a track record of successfully navigating complexity while remaining focused on key priorities. We are able to conduct M&A and the resulting integration efforts while maintaining double digit organic growth; and,

3) We accomplish these things by way of our owned and operated bandwidth infrastructure operating platform. Bandwidth demand into the foreseeable future is unwavering. Barriers to entry are high where unique network exists. Remaining disciplined regarding how we invest our shareholders’ money, whether for inorganic or organic growth purposes will continue.

Assuming I successfully conveyed these messages, I would re-assure the investors of our investor that we are good custodians of their money.

So Now What?

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Preparation, the Audience and the Cold Shower (part 3 of 5)
Closing Thoughts: What Did I Learn? (part 5 of 5)
Remembering Who We Work For (part 2 of 5)
Introduction
Estimating your EBITDA Multiple

By guest blogger John Scarano a.k.a. Johnny Scannns

Thank you for the opportunity to share these thoughts with you via posts to Dan’s blog. This is the third of 5 parts. Thus far in this short series I’ve offered thoughts leading up to the presentation to Investor #6 and their key shareholders. So how did I prepare and what did I learn?

The format for the overall presentation was for two of what are currently a dozen or so ‘portfolio companies’ to be featured with 20 minute presentations. The 100+ sized group in attendance included the entire Investor #6 partnership and support team members (about 20 people) as well as the representatives of most of the firms who have invested their money with Investor #6.

As an aside, the night before the presentation I and the CEO of the other featured business and several of the specific team members of Investor #6 had a dinner together. The CEO of the other featured business had presented many times to this same audience previously. He is a very accomplished and trusted business leader. He did not hesitate one moment when I asked his advice for the key message to deliver – “tell them how you’re going to make them money” he said. He followed up with, “what else matters?”

With prior guidance from our sponsors, I knew that it was important to present background about our industry before presenting the focused Zayo Bandwidth Infrastructure oriented business plan and status. This way there was context before diving in. And, to be sure (for those of you who know me), it was very tempting to talk in great detail about all that has transpired in our industry over the last 100 years and at Zayo in just the last two years.

Of course, the preparation objective, which was confirmed by the experienced CEO, was simple: tell them how you’re going to make them money. After all, isn’t that what really matters to shareholders and to the shareholders of shareholders?

This was the cold shower. What cash investors of any sort care about is that we make them money. How we get there is interesting but not entirely relevant (to them). Crass? Calous? Perhaps. But what else matters? Think about the stocks you yourself have sold for a loss, do you care why there is a loss? You care that you trusted someone (or some entity) to deliver a benefit to you, and this benefit was not delivered. Pretty simple.

Having taken to date nearly $260M of our shareholders’ money to manage on their behalf is the burden we at Zayo bear at this time.

So Now What?

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Introduction
Closing Thoughts: What Did I Learn? (part 5 of 5)
Remembering Who We Work For (part 2 of 5)
Key Messages (part 4 of 5)
High Stock Price = Bad (sometimes)

By guest blogger John Scarano a.k.a. Johnny Scannns

Thank you for the opportunity to share these thoughts with you via posts to Dan’s blog. This is the second of 5 parts following the introduction post (part 1).

Two weeks ago, I had the opportunity to present the Zayo story to the shareholders of one of our major equity syndicate members. In this Part 2 of my blog series, I will share my thoughts leading up to the presentation:

As Zayo’s employees know, the Zayo business unit leadership teams hold monthly all-employee meetings with our teams. The Zayo Bandwidth meetings tend to follow a fairly consistent format.

We provide a summary level and deep dive financial review. We discuss various key factors that have enabled our success to date such as pending acquisitions, sales performance, installs performance, service maintenance, etc. We are open about feedback, results, progress against plan, good and bad. We solicit for questions in advance of our meetings and we open the calls to questions during the meetings.

Additionally, we hold once weekly a sales, installs and service maintenance meeting with all service delivery personnel as well as all management team members across Zayo Bandwidth. We are a geographically distributed team which is nimble and adapting to the way our customers need us to support them. These consistent discussions have helped bind us together as we have evolved.

At the top of most of these meetings I find myself almost instinctively presenting the ‘state of the business’ in a snapshot form. Periodically, I have begun offering the simple view that there are two types of work environments – for profit and not for profit. Either we work for a cause—as do educators, government employees, charities OR we work for a return for our shareholders.

And this is the point. As a for-profit enterprise, we at Zayo work for our shareholders and they expect a good return on their investment. This is our top priority.

Specifically, we work for our private equity shareholders. These shareholders in turn raise money (typically) from wealthy individuals or a wide range of institutions such as endowment funds or insurance companies who seek a return on their money diversified from their other investments. These parties all TRUST US to work for THEM to make money.

By the way, were we publicly traded instead of privately held, should this trust in us offered by more distributed shareholders be handled any differently by us? Of course not.

And yet, ironically, I have offended people at times having heard feedback after having relayed the points above. I have been told that I am ‘crass’ and ‘callous’; that I am ‘all about the shareholders and by extension, not the employees’. And other things I should not write.

Frankly, I have ignored this criticism as naïve, and have continued to repeat and provide context for this key message. These points above were my own key thoughts leading up to the presentation to our shareholders of shareholders.

So Now What?

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Related posts:

Introduction
Closing Thoughts: What Did I Learn? (part 5 of 5)
Preparation, the Audience and the Cold Shower (part 3 of 5)
Key Messages (part 4 of 5)
Work/Life Firestorm

By guest blogger John Scarano a.k.a. Johnny Scannns

Dan, since you have asked me only ~10,000x to make a post to your blog, and as I had the opportunity to present the Zayo story to the shareholders of one of our major equity syndicate members (I’ll refer to them as Investor #6) earlier this month, it seems a near perfect time to make the inaugural entry.

The rationale is simple. Firstly, I am tired of you asking me to make a post. Secondly, it is not often that one has the opportunity to speak with the shareholders of your shareholders directly – yes, the people who are directly affected by how well or how poorly we manage their money. I wish that everyone at Zayo were able to have the privilege. This experience is like taking an ice cold shower (in a good way), forcing one to reflect on what really matters.

I’ll relay the thoughts going through my own mind leading up to the event as well as some take-away thoughts. This way, I am hopeful to remind our entire Zayo team (and others) of what matters the most -> turning a good profit ultimately to the individuals and institutions (and their representatives) whom have trusted us enough to fund our thesis and business operations which, in-turn, enables us to take care of our customers and remunerate our employees for delivering results.

Please stay with me. I’ll break this posting into 4 subsequent parts:

1) My thoughts in general leading up to the presentation

2) Preparation, the audience and the cold shower

3) Key points of the presentation

4) Closing thoughts

Thanks for the opportunity to make this inaugural post. Two achievements result: 1) you’re hereby officially off my back, and 2) another perspective is presented (and I hope taken to heart and mind) on our key business priority – our shareholders (and theirs). Frankly, these thoughts may come off as naïve, particularly to our investors. I hope that, instead, what is gleaned is an adjacent and related perspective to yours (Dan) into the guts of not how but WHY the Zayo sausage is made…

So Now What?

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Related posts:

Preparation, the Audience and the Cold Shower (part 3 of 5)
Closing Thoughts: What Did I Learn? (part 5 of 5)
Remembering Who We Work For (part 2 of 5)
Key Messages (part 4 of 5)
Management Ethics – 1(a) of 4