A Cat in a Basement in Oregon

A big name local ISP owes its success, its founder says, to the teamwork of everyone who works there and, of course, to Cleo the cat.

by Alex Goldman ISP-Planet Managing Editor [March 11, 2005]

After Rich Bader built the PCEO division of Intel into a $200 million a year business providing anything from fax to graphics for PCs, he spent a few years in the consulting business but decided that was not what he wanted to do. So he took a few of his closest friends and embraced what would prove to be a more daunting challenge.

The idea, in 1994, was to change the city of Portland, Oregon completely by bringing the internet into every home and business to create a profitable community. The VCs were skeptical, Bader says, even though he and his colleagues had cred from their work at Intel. "We worked with the VCs like a sculptor chipping away the things that didn't fit and we were left with business oriented internet services."

The sculpting and the foundation of the business took a year. The subsequent year was the most challenging EasyStreet has ever faced. "We almost went out of business that summer. I was spending more money than I should have been," Bader admits. "Accounts were not getting signed fast enough. We were watching our checking account shrink and came within $15,000 of running out of money. But we started sending out invoices and people started sending us checks."

This near death experience seems to be part of the learning curve in the ISP business, and today's brand new ISPs, the WISPs, often go through it too. The lesson learned: "turning opportunities into successful business lines was harder than it looked and you needed to focus."

Bader adds that he learned to listen to his customers instead of trying to anticipate what they wanted. The result, a decade later, is a business that's still local to Portland but offers a wide variety of services including wired roaming, anti-spam, LAN services, VPNs, webhosting, managed services, automated backup, and marketing programs from referral incentives to specials for non profits. "Our footprint is bigger and we offer more services but the focus is still the same," says Bader.

Roots in the basement
EasyStreet was founded in Bader's basement, where he already had what every consultant had in their home at the time: a genuine ISDN line. "It was an office in the basement of my house, and there were six or seven of us on one ISDN connection," he remembers.

They left the door to the upstairs open, and the cat came down the stairs.

"Cleo would always find a lap to sit on and became the mascot of the place. Whenever we needed a generic word, like a user name in the documentation, it was Cleo."

Of course, it took more than a cat to build a team. Until the bursting of the bubble in early 2000, the business was growing at 60 percent each year. The company added to its data center every year, and also added to its service portfolio.

Throughout, Bader says, the key was being in constant communication with employees. "We've had monthly all company meetings since the start of the company. We presented the financials every month, and we did it in a way that was as unvarnished as possible."

That helped when the business stopped growing in 2000. "When we had to do tough things, when we had to do a round of layoffs, people already knew things were tough. The trick is to have been communicating consistently from early on. It's tough, if you haven't been communicating, to say suddenly that things are bad," Bader warns.

He adds that companies can do little things that employees appreciate a great deal. "We still have the free coffee and the regular run to Costco for free snacks. These things help more than they cost."

When employees stay, that helps the business in many ways. "Employee retention here is very high, and we use is as a selling point. Customers value the fact that they have the same account manager year after year."

Portland rising
Bader says that Portland's economy was hit harder by the recession than most because the local economy is strong in the manufacturing and high tech industries and those two were hurt the hardest. But he's cautiously optimistic about 2005.

"In the last month or two, we've seen a positive bump. It could be a temporary bump like we've seen before, or it could be a trend. However, I've personally met with more startups in town since the beginning of the year than during all of last year," says Bader.

The town now has plenty of fiber. Although EasyStreet does not work with all of the available providers, the company still has more than one to choose from.

Bader says this can only help the data center business. He believes that companies will want to outsource to a trusted partner as IT management becomes more central to most businesses. "The opportunity we see is to add more value-added services to our data center capabilities, making services more transparent and predictable," Bader says.

"New regulations such as Sarbanes Oxley are already affecting public companies. The CEO now has to know how IT works, and the IT department has to explain to the CEO and to regulators how it works."

The ISP already provides the internet, which is a key component, and an opportunity for the ISP. "Business people already see IT and the internet as blended. It's a great opportunity to sell our IT capabilities to customers who see us as providing more than just the internet, as providing auditability and ease of use."

He thinks the change will be pervasive. "It is already affecting public companies, and we expect it will affect private companies that do business with them and also new startups that expect to go public."

Safe in Oregon
Although he's not confident about the national regulators, Bader is pleased with state and local people. "We don't do much on a national level. It feels like spending the time locally is more fruitful. We know our PUC and are active there. The city of Portland is very much in favor of open access. Remember, they're the ones who took on AT&T. David Olsen is still here and itching for a fight."

He's confident that any municipal deployment would ableo be open access. "If the city is involved, there will be an emphasis on open access, and we'll encourage that as much as we can."

—End