In June 2007, on Rolla Huff’s first day as chairman and CEO of EarthLink Inc. (Nasdaq: ELNK), he purchased 100,000 shares of the Internet company’s stock.
And these weren’t stock options.
He opened his own checkbook and wrote a check for $725,000 to reflect the $7.25 per share price.
“I wanted people to understand that I was going to think like a shareholder,” Huff says. “… I wrote a check out of my checking account to buy shares, so I was going to think about this business like a shareholder, and I wanted my shareholders to know that.”
The move was necessary to rebuild confidence in the business. The former CEO, who was well respected and loved by employees and shareholders, had been diagnosed with cancer the previous November and passed away within a couple of months, so EarthLink was being led by an interim CEO.
On top of that, the company had been highly focused on growth, so it had gone off on several paths that it probably shouldn’t have been traveling on, resulting in some not-so-stellar financial results — it would go on to finish the year with a $145 million loss.
“The business was grappling with the loss of their leader, had an interim leader in place, and had two or three growth initiatives going on that were consuming meaningful amounts of cash and also were resulting in the company reporting net losses,” Huff says. “That was the situation. The share price had been under a bit of pressure, but I think, more than anything, shareholders were looking at the cash being consumed, saw the uncertainty in the executive team and were really pressing to understand what the strategy was and when the company would be profitable and create value for shareholders.”
So after Huff bought those 100,000 shares that first day, he began work on making EarthLink profitable for its shareholders once again.
Recognize your strengths
Coming in to the position, Huff knew EarthLink had a lot going for it.
“The first thing I tried to come to grips with was what the core strengths of EarthLink were,” he says. “I would start with the fact that we have an incredible group of employees at EarthLink that were very dedicated to the company and to its customers. That was hugely important.”
He also recognized that the company had millions of customer relationships, and customers actually liked EarthLink.
Seeing these two facts, he came to his first conclusion for how to move forward.
“So I thought that the first thing that needed to happen was we needed to leverage the fact that we had millions of customer relationships and a great team,” he says. “Then, as much as anything, make sure, especially with everything going on in the business that was causing uncertainty, to become very transparent with everybody that we got involved with.”
As a result, after the stock purchase on his first day at the helm of the company, Huff did another big thing on his second day. He had a companywide podcast — the first of many to come — to communicate with his employees around the world.
“While I didn’t have a business plan at that point, I wanted to make sure that people understood that we were in business to create value for our shareholders and take care of our customers,” Huff says. “Those were the prime objectives. While we absolutely wanted to have fun and have a great place for our people to work, if we couldn’t take care of customers and be profitable with the business, that was going to be a problem.
“Secondly, I wanted people to understand that it was critically important that we establish credibility around what we say when we make statements and make commitments to each other and to our shareholders; it was vitally important that everybody was fully bought in to meeting their commitments — their personal commitments and the commitments we had to make as a business — so credibility was absolutely critical.”
Then the last part of his message was that EarthLink needed to retain its customers.
“It was sort of the idea that the customer that we had was far more important to us than the customer we didn’t have,” he says. “That was just a core value that I wanted people to understand. Customers had made investments in us, and we had made investments in the customer, and we wanted to preserve both. That was really critical.”
At the end of this, he had to communicate the ultimate goal to everyone.
“We got everybody’s head around what needed to happen, and part of that was we needed to reduce our cost structure — it was going to impact people, and we needed to make a commitment to our people that they would be extraordinarily valuable in whatever the company did next, but there would be some people that might not be with us a year from now, but we were going to take care of everybody.”
