When Robert Laikin co-founded Brightpoint in 1989, he encountered a skeptical financing community hesitant to back his fledgling wireless telecommunications distributor.
“The theme bankers kept giving me was that car phones were a fad, like the pogo stick,” says Laikin, chairman and CEO.
Fueling the bankers’ skepticism were traditionally low margins in the distribution industry and a young executive management team.
“The average age of our team was under 30,” Laikin says, referring to his former partners and co-founders Joel Cohen, Dan Koerselman and Jim Philbin. “That was enough to scare off traditional investors.”
So Laikin turned his attention to securing a small line of credit and worked closely with his suppliers’ credit managers to keep his business afloat.
“We honored our commitments,” he says. “Money was tight, but we communicated openly with the manufacturers about our situation.”
Such has been the central theme of Laikin’s career — make promises, then stand by his word, no matter how difficult times are.
Five years after its founding, Laikin’s perseverance paid off as Brightpoint became one of the industry’s rising stars. And as the company grew, Laikin no longer had trouble landing capital to fuel its expansion.
“It was surprising,” he says. “We filed our IPO in January of 1994, and bankers started calling me offering bank debt.”
That year, Laikin employed 29 people and operated one facility in Indianapolis. Over the next five years, Brightpoint offered public stock four more times, and Laikin established the company as a significant industry presence.
“We were able to attract and retain talent and design our infrastructure and systems, while balancing our spending,” Laikin says. “Companies in this industry that were able to expand and invest in the future were the only ones to survive when the economy got rough.”
Today, Brightpoint operates in 13 countries and employs more than 2,000 people. Its clients include such manufacturing giants as Nokia Mobile, Sony Ericsson, LG and Motorola. Last year, the company posted net income of $11.7 million on total revenue of $1.8 billion, a drastic improvement from the previous year, when Brightpoint announced losses of $42.4 million on sales of $1.27 billion.
Laikin credits the turnaround to a more streamlined global operating philosophy and following his beliefs and principles.
Building value
Brightpoint’s success has not come easy, especially considering the beating the telecommunications industry has taken over the past few years.
“There were 50 significant companies competing in the United States, and 500 competing globally,” Laikin says about the period before the dot-com bubble burst. “It was a highly competitive industry, and access to inventory was crucial.”
But when the bubble burst and sent the U.S. economy into a tailspin, it took the global telecommunications industry into recession with it. Laikin says Brightpoint was able to survive and emerge as one of the industry’s top players by following the same philosophy he used when he received his first credit line — sticking to his commitments to clients, creditors, employees and shareholders.
“If it meant that a senior executive packed boxes to get an order out, then that’s what we did,” says Laikin. “We were developing relationships with our suppliers and our customers, and we found that they were more apt to do business with companies they could rely on.”
With that in mind, last year Brightpoint explored the dependability factor a bit more deeply. Laikin set out to develop a strategic plan for brand positioning and hired an independent firm tasked with determining why Brightpoint’s clients did business with the company.
“The overwhelming answer was that we do what we say we will do,” says Laikin, who quickly adds, “And we have to continue to do so.”
That’s because Laikin recognizes that while the company is thriving today, its balance sheet wasn’t that healthy even just a year ago. And in an industry that moves as quickly as telecommunications, it’s imperative to never assume today’s success will translate into the same results tomorrow.
“Two years ago, we had $50 million in outstanding bond debt on the balance sheet,” says Laikin, underscoring the point.
That spurred the decision to pull out of places where Brightpoint was not profitable — China, Taiwan, Brazil, South Africa, United Kingdom, Poland and the Middle East. Laikin’s goal was to reduce hard costs and begin to generate more cash.
“We negotiated with the bond holders and repurchased all of our bond debt,” he says.
Laikin also hired Frank Terence as CFO and tasked him with helping focus the company on sustainable profitability.
“Frank Terence came in and helped us change our mentality,” says Laikin. “We have implemented strategies based on an underlying theme that our job is to enhance shareholder value and focus on our balance sheet.”
Terence’s work has led Laikin to develop a balanced approach to position Brightpoint as a low-cost provider for its customer base, while still providing profits to shareholders.
Explains Laikin, “I am not a believer of going after business at any cost. My shareholders pay me to get a fair and reasonable profit, but not too much, or we would not be compelling enough to customers to give service as a low-cost provider.”
Expanding the brand
Perhaps the greatest change resulting from the company’s new balanced focus is how it determines which markets to expand into and the approach it takes in each new market.
Laikin has laid out four key goals that outline Brightpoint’s growth strategy — expand into new geographic markets, expand existing product and service offerings in current markets, add new products and services in current markets, and continue to build and promote the Brightpoint brand within the wireless industry.
He points to India, Eastern Europe and Asia as the three most attractive prospects for growth, and says establishing a footprint in each won’t require a departure from the company’s strengths.
“We are taking what we know how to do best in one market and exporting it into the new markets,” Laikin says.
The last element to Laikin’s plan may be the most important to ensuring a return on the company’s investment — developing a strategic branding initiative.
“Even though we are a market leader, there are still a lot of companies that don’t know who Brightpoint is,” he says.
Laikin boils down the strategy to accomplish this to the same one he used to build the company from scratch — keep customers satisfied by providing the goods and services they need. It’s all part of the company’s six core principles — integrity, accomplishment, quality, respect, learning and community involvement.
And adapting to changing times.
“Ten years ago, we didn’t have a logistics facility,” Laikin says. “We bought inventory by the truckload and sold less than a truckload.”
Today, Brightpoint operates an entire logistics service, offering customers its ability to manage all aspects of the provisioning and distribution of their products. Laikin says his company can take title and then resell products into authorized territories and channels. This year, he expects to distribute millions of products across the world.
“There were 500 million units sold globally this year,” Laikin says. “We touched 20 million of those.”
Not only does Brightpoint operate is own logistics facilities, it also has the capability to customize products to its customers’ specifications. That is only possible, Laikin says, because of the rapid advancements in technology.
“Wireless access to the Internet is starting to drive what products and life will be like 10 years from now,” Laikin says. “Already, people can play a game while riding the bus, take pictures and wirelessly send them to a friend, record video and edit it on a hand-held device. Those features are just the tip of the iceberg of how people will use this technology.”
And, he claims, customization will be the wave of the future, especially when it comes to commercial business.
“We are now a provider of customized services,” Laikin says. “Customers will be looking for all-in-one products, and retailers will demand more customization. Companies like Brightpoint will be more in demand.”
And if history is any indicator, believe it. When Laikin gives his word, he aims to keep it. HOW TO REACH: Brightpoint Inc., (317) 707-2355 or www.brightpoint.com
