Tower companies, data centers, fiber businesses — communications infrastructure are like “internet plumbers.” Communications infrastructure is crucial for preparing the world for digital transformation. As cloud technology evolves and moves out from the core markets to the “edge” where people live, hyperscalers rely on the foundation created by fiber, data centers and cell towers to grow into this new, connected future. In this episode Steve Smith, CEO of Zayo, shares the way their company positioned itself in the last 16 years of communications infrastructure growth as that foundation. Finally, he emphasizes how important culture is in building this connected future.
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Laying the Foundation for a Connected Future with Steve Smith of Zayo
I am so excited that you are here with me. I have a wonderful guest that I am excited about. I have wanted to get him on the show for a while. It is Steve Smith, the CEO of Zayo. Steve, welcome to the show.
I am glad to be here. Thanks for having me.
I always start by asking a little bit about the guest’s journey. How did you get from where you were to the seat you are in now?
I have got a very long journey. I am happy to talk through that. My business journey has run over many years. I went to West Point. I spent four years at the academy. You have to serve for five, and I ended up serving for seven. I stayed in a couple of extra years and was out in Asia. I was at an aid to a four-star general, which was fascinating duty. When I got out in the late ’80s, I went from one real military to another military. My first company was Ross Perot’s company EDS. A lot of your readers may not remember it because it does not exist anymore. It got acquired by HP in 2008. That is where I started my career in electronic data systems.
They had been around since the early ’60s. They had created an industry called Outsourcing. They were Dallas-Texas based. Everybody that was around in those days, in the ’70s, ’80s, and ’90s, remembers Ross Perot. It is quite an interesting character and culture. I was there for sixteen years. It has been a long time and I lived all over the world. I lived in 4 countries and 10 cities over that 35 years. My family and I lived in the United States and multiple cities. We lived in Singapore, Hong Kong, and New Zealand. My career has to a handful of other companies, including Lucent Technologies, for one year, and then I went to HP for about three years. That is what brought me to the West Coast.
I ran a company called Equinix, which became the largest data center company in the world. I did a couple of years with a private equity firm, helping them raise infrastructure funds, similar to our two infrastructure investors. I am in Zayo now. I have been fortunate that I have the opportunity to be a salesperson and a sales leader. I was a country manager in three countries. I was the president of all of our businesses in Asia during my EDS tenure. I ran all Lucent services business and all of the HP services for Carly Fiorina, who was a super high profile CEO.
She got replaced by a guy named Mark Hurd, who was a high-profile CEO who also ran Oracle for Larry Ellison. I have had the great fortune to work for talented CEOs that I learned a lot along the way. I would not say I pro ran EDS. I did not work directly for Ross, but I worked for the original executives that started that company, which was a fascinating place. I am fortunate. I have been able to learn from very talented leaders.
Tell me more about Zayo for the readers who do not know Zayo. Who are your customers? Tell me about your services. What do you do and who do you serve?
It is private now. I got taken private years ago. It is a company that was made up of 46 plus acquisitions. It was considered a roll-up. The founder was one of the most visionary executives in the fiber industry, which we will get into here. I will try to simplify it as much as possible for your readers because it is an internet infrastructure company. We connect things. It is a young company. It grew very fast through acquisitions, and it got the business up. We bought networks and the company. We became the largest independent network provider in the United States behind Verizon, AT&T, and T-Mobile. Those are big networks that provide services for the devices that we carry around.
There is a fourth player called Dish. That is deploying the fourth largest wireless network in the United States. We service all of them. This is the largest independent network. It is all over the biggest markets in the US through those acquisitions. We provide the fiber that connects buildings, data centers, towers, and cell towers.
We pretty much are the behind-the-scenes critical infrastructure provider that makes the internet work. On top of the fiber, we provide lit services. It is the wavelengths of capability. We are unique in that space. We do some internet connectivity and some security services. We are the foundation of the communications architecture that underpins all this data and things that move around the internet.
What is your vision for Zayo since you have come aboard?
I got convinced after running Equinix for a decade. I did not know what I was going to do next. I followed one of my leaders, Mark Hurd, who passed away a couple of years ago, but was a great CEO for three big companies. He worked right until he was not around anymore. I learned through my time at work that I enjoy work. I love being around people, building things, and seeing people grow and advance their careers. I was not ready to retire. I did not have another hobby. The two investors and both of our investors came to me and said, “Would you ever entertain running another company?”
The founder and I have built a good relationship. I knew the business. The internet infrastructure spaces simply put its data centers, towers, transport companies, and fiber cable. Those are the big industries that make up the internet infrastructure communication space. I knew the model, people, and culture. I knew it was successful. I also knew that the growth had slowed down and they had run into a pivot point. That is primarily why it went private so that the investors could come and invest in it. I knew that was an interesting time.
The founder CEO asked me if he would step aside if I would come in and run this thing. We did that but I do not want to wander too far from the founding idea. It is dangerous for the next CEO to try to change the business model. We are very clear on differentiation. We are a network. We provide great service excellence. We want to innovate on behalf of our customers. It is all about cost and speed of delivery in the network business. It is critical that we position ourselves for the next wave, which I am sure we will get into here with 5G and the cloud going to the next phase. We are like data centers and towers in what we do in the transport space. We are the internet plumbers.
These are incredible business models. Tower companies, if you go look at their history financially, they are incredible investments for the investors. Data centers have been incredible investments. The fiber businesses have been. Our investors are super sophisticated about now investing in the future of the internet, which is the communications infrastructure pieces of it.
Digital transformation is accelerating at a very rapid pace.
How is Zayo preparing the world for digital transformation?
As you and the readers know, digital transformation is accelerating at a very rapid pace. We all saw the pandemic accelerate that. Particularly, with communications and bandwidth to the rural areas, to the home. I believe we are in the new norm. Most companies are coming back to work as we speak. We have got years behind us of working virtually, which has been pretty mind-boggling. I have done this entire transition for eighteen months virtually. We have 3,210 employees. I have met probably 200. If you think about that, we have done this whole Zayo transformation virtually for the last years. It is almost unthinkable. If you had asked somebody, “Could you do this virtually years ago?” Nobody would have believed we could have worked with it.
The cloud is continuing to evolve. We have had a good decade-plus of this thing called the cloud, which is a Software as a Service, infrastructure as a service, and network as a service. It is moving further out from the core NFL markets to the tertiary and the tier 4 and 5 markets. That referred to in the industry has more compute storage and networking moving out to the Edge. The Edge is where lots of people live.
Not everybody lives in New York, Washington DC, Chicago, Dallas, or West Coast. They live in these smaller markets. All of the companies, the hyperscalers like Microsoft, Google, Facebook, and AWS are all pushing more capability further out from the core markets. In the last decade, they put a lot of infrastructure in data centers and bought a lot of fiber in lit services from Zayo and others to get the cloud set up.
The next wave for the next decade is simply known as Edge. It could mean a lot of things. The Edge someday will be a self-driving car, a data center, could be in your home, at a cell tower, at one of our points of presence in our network. That is exciting because there is a lot of connectivity required to handle all of these things that we carry around. If you walk around and look at any city or building, there are cameras, sensors, and major amounts of data being processed, moved around the network and analyzed to make the world go. The third big concept is this thing called the internet of things.
All these things are being enabled by 5G. It is the fourth time that the wireless industry has read it. Every ten years or so, the wireless industry rearchitects the network. If you thought back many years ago, 2G enabled email, and then a decade later, we had this thing called 3G, and it enabled the internet. About a decade later, they rearchitected again, and it was called 4G. It enabled the world of apps. We all have that. Our kids and everybody live in a world of apps.
5G now is being built with the cloud in mind. It is going to be 10 times faster and 100 times the bandwidth to handle all of this content and data being produced by these things. That is what’s happening. We are going to live with this now for a decade. 4G won’t go away. In some markets, you can still on your phone see 3G. It takes a while for these architectures to take place. What that means is our customers are putting more network, more densification in big markets, and pushing it further out to smaller markets to make all of this stuff possible.
You talked about the transformation that Zayo went through. Let’s talk about culture because I know that you have a vision for sales culture. Can you talk a little bit about what that vision is?
Culture is super important. I know you have many companies and work with many companies. If you peel back what’s the secret sauce inside of a company, they normally have an operating model that is working at a high rate and the flywheel spinning. It is the old Jim Collins’ concept of Good to Great. You will find that they have a good plan and strategy, whether it is a 3 or 5-year plan. Those are the first two things we did here in my first year. The third piece of this tool is getting our culture refined. I saw this in the companies I have worked in and led at Equinix. In my simple language, culture is the personality of the company.
If you have not written it down and have not understood what it is, you need to do that. Most companies have values, mission, vision, and positioning. All that is morphing nowadays, but it can be an extremely powerful tool in a company. We discovered as a new leadership team that the values had got a little stale. We have refreshed the values. The way I think about culture, and the simplest way to describe sales culture is it is the behavior of your leaders. It starts there. Leaders get the behavior they tolerate. If they push the culture of the company, culture can become a differentiator for you. I believe culture can help determine your destiny.
I will give you the characteristics here. We are going to be very informal and open. We were not like that before. Everything had to go up to the top. In this day and age, you have to have a sense of belonging in your culture if not to make a difference. We are pushing hard to think more deeply about our customers. I want to have deep points of view about our customers. Everyone can make a difference here. We have 3,200 employees, and I want everybody to feel like they can make a difference. We have brought a lot of new leaders. It is amazing to watch fresh thinkers come in, fit into the culture and make a difference. It is lifting the old guard up to change their game.
We are injecting a high performance with relentlessly high standards here, and that is super important. The last thing I would say about our culture in this business model is I want it to be understated. We are not fancy pants here. This is a group of people that come from ordinary backgrounds, but collectively together, we are going to do extraordinary things. It is pretty powerful when you can do that. When people trust each other, like the place, trust their leaders, get along with each other, and are happy about coming to work every day, that can become infectious. That, for me, drives the culture. It is a powerful thing to watch. We are right in the middle of injecting that new thing here.
I love what you said that culture is the personality of a company. I have not ever learned that before, but it fits so well. Let’s talk a little bit about how you and your team handle the challenges of nowadays’ talent landscape. Do you have any interesting plans for talent, acquisition, development, or anything that is working for you?
We do have one example. This has been a tough time. I am sure you hear this from your other folks and accompanies you spend time with, which is this Great Resignation that we faced the last years. It has been tough for technical resources because they are highly sought after. We have a lot of technical resources, and we get the big hyperscalers like our people. It has been tough, but I will take you back to what we talked about. If you have a culture that high potential people want to be part of, you can attract them. When we redesigned our culture, we asked ourselves the question. Top talent wants to be part of cool and great culture. We got to make sure that it is that place.
We have had to hire a lot of people because we are changing the company, and we have done these things that we have referred to as blitz campaigns. I will give you an example. We hired a new CIO, Chief Information Officer. It had been an under-invested function here at Zayo. She was a rockstar from one of our big hyperscale customers. She came in here, and we gave her a budget to build up the function. We have been trying to hire about 50 people into her organization. Now her total organizations are probably 130 or 120.
We are injecting 50 people, and we did it in a quarter. We did full-day interviews and piloted this thing. We called them blitz campaigns. Within a quarter, we hired 38 people out of the 50 in less than 2 months. It was pretty unique. It was the first time we had tried it here. Our story is cool. It is easy to tell what’s going on in the company.
Culture is the personality of the company.
People get excited about companies turning in the corner, start winning, and you are growing at a higher rate. That is important because when employees come in, the first thing they ask you is, “Describe your culture. What does the company value? Are there operating norms here? How do people behave with each other? I want to be part of a place that is growing, great culture, and great values in a place where I can be successful.” You have to answer those questions.
I know that your teams in the past and current hired a lot of leaders. What would you say are the qualities you look for in extraordinary leaders? I would like to know the leadership principles you value and live by.
I have certainly learned a lot about that one for the people I have mentioned that I have worked for. There is probably a handful of things that come to the top of my mind for me. I would like to hire leaders that are disciplined about how they think and act about people. That is a hard thing to measure in an interview or a couple of interviews.
I poke at examples of that every time I interview top leaders. I want people who insist on high standards. Leaders get the behavior they tolerate. If you tolerate low standards, you are going to get low standards. If you tolerate high standards, you are going to get high standards. I love leaders that do what they say they are going to do. I love that phrase. I have been in some companies that have that posted in their core values.
I like people that deliver on their commitments. It is important when we talk about leaders at the top of a company that they have a business, financial, organizational people, and acumen, that if they are going to manage the groups of people, you have to have a sense. You do not have to be an expert in each of those, but I have always been a believer that you know what you are strong in, you know your borders, and you surround yourself with people around you who need that other expertise. That is critical.
Here at Zayo, I am holding our leaders accountable to be very thoughtful about strategy and hard-nosed on metrics, “Let’s make our numbers. Let’s meet our metrics every quarter,” and push inspirational leadership down to the front lines. If you do those three things in our company, you will see good things. The art of great leadership is getting people to do what must be done without a bunch of lips. That is the X factor.
I have always believed that if your actions inspire people to dream more, learn more, do more, and become more, you are a great leader. Drive the whole strategy, a hard-nosed execution on your metrics. You have got to make your numbers, whether public or private. I want you to make your numbers and drive and inspire leadership all the way to the front.
I love that because the company’s weakness is right in that middle. Up here, everybody you know is great, the culture and inspiration. Everybody is in a good place here, but by the time it gets here, we have lost some of it.
That is where we are pushing our culture change down now. We call it the spine. It is that middle layer of leadership that can either make or break you. I completely agree with you. Your second question personally about the principles that I live by, I had had these two things that I had lived with my whole life that I learned when I was in Asia. One is called the 3Ls.
Every leader I have come in and have been around for many years, I tell them, “When you come into a company, you need to do the 3Ls, Listen, Learn, and then Lead.” I have had horrible experiences where people come in from big sophisticated companies, and they are all, “I know how to do this. I do not need to listen and learn. I will just start leading,” and they fall on their faces.
That is a very important attribute that I look for and live by. I love the 5Ps. This comes from my military background. It is Prior Planning Prevents Poor Performance. I’m reminding people all the time about the 5Ps. I am a big planner. I am disciplined. I learned this from Mark Hurd at HP about this concept of operating mechanisms.
It is the written rules of what you do daily, weekly, quarterly, semi-annually, and annually. It is your fixed set of meetings where you communicate and make decisions. We have a disciplined set of operating mechanisms here on how we run the company. I have got it on one page. I can show you how we inspect our funnel, deal reviews, and have staff meetings.
Some meetings are for listening and collaborating. Some meetings are for decisions. Some meetings are for passing information around. If you get clear on that and everybody buys into it, it makes you go fast. You have fast meetings, fast talk, and fast follow-up, speed matters in a business. I pay a lot of attention to that. I am big on brutal facts. I like to confront brutal facts. I like people getting right to the point that matters. Straight talk speeds things up. I have a huge bias for action and urgency.
I had a coach along the way that had me build a personal credo. I did not even know what that was. She asked me three questions, and this was about my personal beliefs and leadership principles. She said, “What do I need to be successful?” Secondly, “What am I passionate about?” Thirdly, “What is my higher purpose?” I thought long and hard about it. She wanted me to draw it up into a framework, and I answered all three questions. I have lived by this for the last few years. What do I need to be successful? It is relationships built on trust, humility, and authenticity. I am big on relationships. That is what makes the world go round in terms of business.
What am I passionate about? Winning. I always laugh when people say, “It is okay to lose it as long as you learn.” If winning is not important, why does everybody keep score? Ask yourself that question. What am I passionate about? I got it down to one word, significance. It has got to be being part of something bigger than me. I was telling leaders, “There has got to be something bigger than yourself.” Lastly is the concept of legacy. You want to leave a legacy and leave people better off than where you started with them.
Let’s look down the road. A few years from now, what will people say about Zayo?
If your actions inspire people to dream, learn, do, become more, then you’re a great leader.
Here is what I would like them to say when we are successful. “Zayo was critical to the success of my business. It has to be part of that language. I love dealing with Zayo people because they think big, get stuff done and have fun with me. That is the kind of people I want to work with.” The platform that we build and this network we are going to push all around the world are helping them connect their business at a higher rate than they ever did before.
I want them to love our brand promise. It is that we connect what’s next. We are always looking around corners. The great news about our business model is the core of that. It is fiber, which is the speed of light that connects things. There is not anything out there that is going to disrupt the speed of light. Not that I am aware of. You know this better than I do.
Are you safe from disruption? Is that what you are saying?
CEOs of many companies are always thinking about, “What could disrupt me?” There are plenty of business models that can be disrupted. We could not execute and do this or that wrong, but with our technology, there is nothing out there that anybody’s working on that is going to disrupt the speed of light. That is the powerful advantage we have.
What excites you the most about your role as CEO of Zayo? What makes you jump out of bed every morning, ready to go?
It is the trend. We talked about this, and you introduced it with the topic of 5G. We are fortunate. We play at the intersection of the greatest trends in our lifetime. I personally believe the amount of change in the next years is going to surpass the changes in many years. I love that customers are digitizing almost everything around them. We can help them do that. There is another wave of cloud unfolding this, pushing further out to the Edge. We can help with that because we provide network, density, and connectivity. 5G is changing the next decade of communications infrastructure.
We are providing fiber to the tower for all the wireless players around the world, mostly in the US initially. I love that the web scalers, the big hyperscale companies, are all getting more network dense and more connected around the world. It requires what we have in our toolkit. The last thing that I get excited about, and we are starting to do this now, is software is eating the world. The software is defining almost everything. We have to pay attention to software enabling the network. Our futures, customer, and inspiration are all focused on software facilitated networks as software-defined networking.
We are spending a lot of time thinking about that, and that excites me. Walk around with your devices, watch self-driving cars, and you will see all these things. If you are not in that industry, you do not even step back and say, “How does that stuff all work? How does the internet work?” It sits in data centers, riding on our networks, connected to cell towers. That is an exciting place. It is growing. You want to be around growth.
Here at Broadstaff, we staff for Zayo. We hear candidates and employees and what they say. Everything that you have talked about is congruent with what we are learning. I know that what you are saying is in the process of happening. This future that you and your team are creating is going to happen. I want to thank you so much for coming to the show. This has been so insightful. I want to go back and take some notes. You should write a book at this point. You have got a book inside you here.
I love the questions. I thank you for the work you are doing with us. I love getting a fresh and outside perspective. I look forward to seeing you again at some point. Thanks for taking the time and for inviting me.
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About Steve Smith
Steve M. Smith is Chief Executive Officer at Zayo, the leading independent provider of communications infrastructure. Steve has over 30 years of expertise as a global leader in the technology sector and a deep background in managing market leading technology businesses.
Most recently, Steve was a Managing Director at GI Partners, a leading private investment firm. From 2007 – 2018, he served as Chief Executive Officer and President of Equinix, the largest data center company globally.
Under his leadership, Equinix grew from $2 billion to $34 billion in market value, while revenue increased from $400 million to $4.4 billion. Equinix also successfully integrated 21 acquisitions over 10 years representing over $25 billion in organic and inorganic investments during his tenure.
Prior to Equinix, Steve served as Senior Vice President of HP Services, where he was responsible for management of the organization’s Consulting and Integration, Managed Services, and Technology Deployment and Support business groups.
Previously, Steve served as Senior Vice President of Global Professional and Managed Services at Lucent Technologies. He has also held various management and sales positions during his 16 years with Electronic Data Systems Corporation, including Chief Sales Officer, President of EDS Asia-Pacific, and President of EDS Western Region.
Steve currently serves on the Board of Directors of Zayo and NextDC, a publicly traded data center company in Australia, and formerly served on the Boards of NetApp, F5 Networks, and Flexential.
Steve had a successful eight-year career in the U.S. Army where, among other roles, he was aide-de-camp to the office of the Commander in Chief of the U.S. Armed Forces in the Pacific. He graduated from the U.S. Military Academy at West Point and holds a B.S. in Engineering.
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