Headquartered in Los Angeles, Boingo Wireless is a company that operates a WiFi network in major airports around the world. In addition to WiFi connectivity, Boingo builds and operates cellular networks -- called distributed antenna systems -- in airports, stadiums and universities. These networks allow people to connect in places that would otherwise be difficult for their traditional cell towers to do. As CFO, Peter Hovenier has been instrumental in Boingo’s transformation from a startup to a wireless industry powerhouse.
Not adapting and focusing more on short-term successes and commitments versus true long-term viability and success for the company.
I’m a finance guy, so I look at things in a pretty binary way; I tend to focus on numbers in the here and now, rather than a couple of years from now, and I drove Boingo accordingly.
Boingo Wireless went public in 2011, and our story to Wall Street was that we were a paid WiFi access company, primarily in airports, but also in locations around the world. You walk into O’Hare Airport in Chicago, for example, pull out your laptop, tablet or smartphone, connect to a network, and put in your credit card number, and pay us. About 2 percent of users would do that. That’s a spectacular business because you can make a lot of money running that way. That was our business model for the first ten years of our existence.
Then the world shifted because of the iPhone and other smart devices. People started to expect connectivity to be free — specifically, they wanted WiFi connectivity to be free. That permeated through our airport and venue partners, who came to us saying that we needed to make the network free.
As a company, we pushed back a bit because it challenged our business model. We had invested millions of dollars building out these networks, and needed to make a return. But our account management team and the people closest to our airport partners would come to me and say that we needed to give the venues what they wanted. I would say, “We have a contract, and our contract goes for another four years. So in another four years, we can talk about it. Today, we can’t.”
The reason we couldn’t do it “today,” from my perspective, was because the shift from paid access to some sort of sponsorship — whether it be supported by ads , or paid for by the venue or a major telecommunications carrier — the result, somewhere between a 30 and 40 percent decline in revenue. As a fairly new public company, that would put major pressure on us to find other sources of growth, so I continued to say “no.”
Through continued pressure, we realized we couldn’t fight the trend. As a result, I had to go back out to Wall Street and reset expectations about us making this shift from end user pay to some sort of ad-supported model, where users could walk into a venue and connect seamlessly. Through this model, you’ll see about 80 percent of people in a venue connecting. That doesn’t necessarily restore all the value you had in the pay model, but it gets you closer.
As we made this shift, we found that our venue partners appreciated our flexibility and gave us more business. By being a good partner and showing a willingness to be flexible, we became the partner of choice when opportunities came up for more telecommunication services. That wasn’t the case when we focused on the short-term — the next 1 to 2 years — versus the long-term — the next 10 to 20 years.
You have to look beyond the near-term and think about how to be a really good partner, rather than just a supplier.
Again, I’m a finance guy, so I think about the four corners of the contract; if it’s not in the four corners of the contract, you have nothing. When you have a deep and longstanding relationship, however, you can oftentimes move past the four corners of the contract; it might not be written in there, but when you build trust, things work out. At times, they don’t. But in aggregate, good things will happen when you do the right thing.
You have to look beyond the near-term and think about how to be a really good partner, rather than just a supplier. It’s important to value those relationships and build trust.
When we take a step back today, we see a company that’s never been healthier: We’ve never had more revenue or more network assets, and our stock is at a longtime high. We’ve never been in a better place. The number one reason that is? We have deep, longstanding relationships with our venue partners.
Be a good partner and build trust, and you’ll become the service provider of choice.
Follow Boingo Wireless on Twitter at @boingo.
Photo courtesy of Boingo Wireless.
Editors note: A change was made to this article on 9/9/17 to reflect that the company has longstanding relationships with venue partners.