While CEO of internet service provider NetZero, Mark Goldston led the highly publicized 2001 merger of his company and rival Juno to create one of the largest ISPs in the business. Since then, the former Einstein/Noah Bagel Corp. and L.A. Gear executive has been on a growth tear. A marketing guru, Goldston knows how to give consumers what they want. He pioneered the idea of high-speed dial-up connections, forging an active user base of 5.3 million people and annual revenue in excess of $448 million. Goldston has used a combination of organic growth and targeted acquisitions, buying complementary Internet businesses — such as Classmates.com and, most recently, PhotoSite — to strengthen his company’s core. Goldston shares his thoughts on management, focus, core competences and merging rival companies.
We are a very focused enterprise. We are strategic. We are clear in our communication of our goals, and we are clear in the execution and accountability measurements related to those goals. So everybody in the company understands what we’re trying to accomplish, the timetable upon which that has to be accomplished and the measurement of success that we will utilize to determine whether we do a good job.
The fundamental business model that we have is to be the Dell or Southwest Airlines of the Internet. We were in a category where we pioneered the notion of being value-priced. We were the ones who built the low-cost provider model, and we created such an automation-based company that we were able to do what our competitors were doing, with, in some cases, one-seventh to one-tenth the number of employees. So we generated in excess of $700,000 of annual revenue per employee, when most of our competitors were less than half of that. While they had thousands of people, we had hundreds. A lot of that had to do with our investment in state-of-the-art software and hardware architecture that would allow us to scale the company without having to increase our manpower base on a linear basis.
Our core competencies are what drove us to acquire these companies. Our core competencies are our marketing ability, our ability to create scalable software and our ability to bill people on a monthly, recurring basis at a cost that’s virtually lower than anybody in the industry. Those are our three core competencies. So when we look for companies to acquire, they have to fit within our strategy of consumer Internet subscription services, and they have to fit within those three core competencies.
The most difficult part of the [NetZero-Juno] merger was creating the spirit that we were one. These were two companies that spent the better part of two years just slugging it out against each other. (They were) very competitive and sued each other several times. The hardest part was getting everyone to understand that business is business, and now we’re all one big happy family and on the same team.
We don’t manage by consensus. You want to get a lot of people’s input and create a forum for spirited debate. You want to allow people to have their day to disagree with what might be the accepted group opinion. But at the end of the day, you have to call the ball. Rarely will we have anybody come to me saying, ‘I wouldn’t have done it this way.’
Our top management has been here together for a long time. So our continuity — the top 40 or 50 people in the company — is virtually unparalleled. If you look at some of the great companies of the Internet — eBay, Amazon or Yahoo — the management teams have turned over. We’ve got people here who have pretty much built this company brick by brick. They’re really living in a house that they’ve built.
I am a real student of marketing. I’ve spent my entire career in marketing and consumer products, so I have a very distinct way of looking at business opportunities, where I tend to do a very sophisticated level of segmentation of the markets I’m thinking of either going into or acquiring companies within.
The best advice that I ever got came from my dad. He passed away right when I got out of graduate school. The first job I took was with Johnson & Johnson. I worked on the marketing team for Tylenol. The best advice he gave me was, ‘You have to be passionate about what you’re doing, but most importantly, you have to try to figure out how to develop your go-to-war skill.’ He said that if they declared World War III tomorrow and we all had to be specialists in something, regardless of how broad your experience and responsibilities are today, what would your specific go-to-war skill be? That one thing that you think you do better than anybody. I decided that my go-to-war skill would be marketing. Even though over the years I’ve done a lot — turnarounds, management and the like — my go-to-war skill has always been my marketing. I always come at something from a marketing bent. And so I seek opportunities that need better marketing. I’m trying to play off my strength.
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