Photo of Dennis Miller by Jeff Silker
He is on the wildest ride of his life, having recently burst through the turbulent stratosphere on his way up, up and away towards the outer reaches of the ionosphere. But don’t worry: it’s a self-imposed ride, and Dennis Miller has a wireless telephone in his rocket for emergencies to summon help if things really get out of hand.
Even though 2000 revenues for the business he pilots, Midwest Wireless L.L.C., officially won’t become known until mid-March, preliminary figures suggest the company — owned by a private group of nearly 50 independent telephone companies — has passed the $100 million mark for the first time. That’s quite an updraft for a business that didn’t officially begin until 1996, and had 1998 revenues of only $43 million. In contrast, it took North Mankato’s Carlson Craft nearly 50 years to pass $100 million.
Such a swift ascent towards the wireless heavens is all the more amazing when viewed within the context of a tighter-than-tight labor market. To speed from zero to $100 million Midwest Wireless first had to formulate a recruitment strategy that could speed the company from its one employee in 1996, Miller, then 37, to the over 300 it has today.
It accomplished the goal in part by having its marketing effort double as a recruiting tool. The strategy has been a triangulation of sorts: first, affix your name to the region’s most eye-catching building and tag it the “Midwest Wireless Civic Center”; then affix your name to the region’s second most eye-catching building, this one on U.S. 14 near River Hills Mall, and tag that “Midwest Wireless Headquarters”; and lastly, produce all your TV commercials in a medium, film, which yields the ultimate eye-catching experience. Apparently all this “eye-catching” has paid dividends: from April 2000 through January 2001 alone, Midwest Wireless received over 1,500 job applications.
For this interview, Connect Business Magazine aimed its searchlight at Miller to learn more about the rocket he pilots — this high-profile, private, Mankato-based company with the Chicago-sounding name — and why it has risen so high so fast.
CONNECT: How did Midwest Wireless begin?
MILLER: The story begins in 1983 when the Federal Communications Commission (FCC), after finishing its trials in Chicago, concluded that cellular worked. All the FCC had to do then was decide on how to get cellular technology out to the general population.
They didn’t want to create a monopoly, but instead settled on a ‘duopoly’ that allowed competition in every market. Every market was assigned two cellular licensees, an “A” and a “B” licensee. The areas they carved up for these licenses were called MSAs, or Metropolitan Statistical Areas, which is a U.S. Census term, and the way it categorizes labor statistics and housing starts.
The “A” licensees in each market were to be entrepreneurial and were created, literally, when entrepreneurs filled out applications and dropped their names into a barrel. It was a lottery. If your company’s name was picked, and you met all the criteria, you won the license. The “B” licensees consisted of local telephone companies. If your telephone company had so much as one subscriber in an MSA you had an equal right to that license. These B applicants formed partnerships because they figured it was better to own 10 percent of a “B” license than 100 percent of nothing. The licensing was mutually exclusive.
In 1988, after the FCC carved up the MSAs, they began creating Rural Service Areas (RSAs) for the rest of the country. This company began as a marriage of different B-side RSA partnerships. Minnesota was assigned eleven RSAs. Our company started with 41 companies within its partnership. Today it has about 50.
In the early days the partnership that would later become Midwest Wireless consisted of five RSAs: RSA 7, 8, 9, 10 and 11. Draw a line west out of Minneapolis through Willmar to the Dakotas and everything south of that line, except Olmstead County, which was an MSA, was the beginning territory for our partnership. Early on these partners recognized they didn’t have the expertise to design and operate a wireless company, so they hired a Wisconsin firm, Pacific Telecom Cellular, to design and construct the enterprise on their behalf. I worked for Pacific Telecom. The marriage began in 1990, in Mankato, and I was the first employee. I worked for the partnerships in the five RSAs under the Cellular 2000 brand.
CONNECT: So you were on contract then to the telephone companies?
MILLER: I was vice president of operations for Pacific Telecom Cellular, a company which had contracted with the partnerships to provide management oversight. That arrangement worked until 1995 when the Mankato operation began taking off. We were achieving a critical mass. The partners from the five RSAs decided then that they should consolidate their interests and create a new company. In 1995 that effort began, and in 1996 it concluded.
Each of those five partnerships put their equity into a limited liability company, Midwest Wireless. I was asked to take on the role of president, which is basically what I’d been doing before while vice president at Pacific Telecom Cellular. I was the first person on the beach, so to speak, to begin the wireless operation in rural Minnesota.
CONNECT: Then you’ve been with this company, technically, only five years?
MILLER: Yes, and technically the company has been in existence only five years. Prior to that it was five individual partnerships operating under a common brand, which was Cellular 2000. Their prior arrangement was a very common one used elsewhere in the nation and industry because of the complicated ownership structures for both A and B sides. The Cellular One brand was another example of that, with common branding for multiple ownership groups.
CONNECT: According to documents filed with the Securities and Exchange Commission, your revenue growth has been phenomenal. Midwest Wireless did $43 million in 1998 and $57 million in 1999. With all the acquisitions in Iowa and Wisconsin you’re probably over $100 million a year now.
MILLER: Yes, we are.
CONNECT: It’s one thing to do that kind of business, it’s another to do it and maintain a semblance of sanity while doing it. How have you done it?
MILLER: (Laughter.) It’s been a rocket ride. Really there’s no magic or secret except to surround yourself with very good and competent people committed to getting the work done. It was a rocket ride in 2000 when we closed on the Iowa and Wisconsin acquisitions.
CONNECT: March, wasn’t it?
MILLER: After the FCC approvals, we closed February 29 on the Iowa acquisitions and March 17 on the ones in Wisconsin. The effort all our employees put forth to assimilate those operations is the reason why it was a successful acquisition.
CONNECT: But Dennis, Mankato isn’t Minneapolis, where a large labor pool of qualified workers exists to help you grow. How have you grown in numbers so quickly?
MILLER: We’ve grown to 307 employees and expect to be at 420 by the end of the year. Most of these employees will be in Mankato. To recruit we’ve done a couple of things. We try to create an environment where people have an opportunity to succeed. We have tools available that help us attract employees in this very tight labor market. We have had, since April 2000, over 1,500 applicants come through our operations. We are very pleased with the number of folks who see the opportunity and want to be a part of it.
It’s attractive to people to want to make a difference in how people live. Maybe it sounds simplistic but there aren’t many jobs where you get that opportunity. But we have it. We have profoundly changed the way people live and go about their daily lives. Think back to 1991 or 1992, and if you knew someone who used a wireless telephone in their car it was an anomaly. You stopped and looked. The traditional profile of a wireless user then was of a high-profile business executive using his wireless telephone in his gunmetal grey Porsche. By 1995 that all changed, and consumers began adopting our technology — and they have in droves since. To be a participant in a lifestyle-changing industry is really very satisfying.
CONNECT: What about your personal history?
MILLER: I grew up not far from here in Ellendale, near Albert Lea, and graduated from Minnesota State University in 1982. After graduation I immediately went to work for Motorola, and it became a wonderful educational experience. I rose through the ranks fairly rapidly, with my last position being the sales manager for all southern Minnesota. I lived in Owatonna. In 1988 I was recruited by Pacific Telecom in Wisconsin to be its corporate sales manager for its telephone, and regulated/non-regulated enterprises. I moved to LaCrosse.
I didn’t leave Motorola because I was dissatisfied, but because I didn’t want to work in Chicago. I’m a rural Midwesterner. Then the opportunity to be on contract with the five RSAs in Minnesota arose. The president of Pacific Telecom said I was the logical choice for the position since I had all the wireless experience with Motorola in southern Minnesota, and the experience with telephony, and having been from Ellendale. My familiarity with Mankato, and also the fact it was a regional hub for southern Minnesota, made it an easy choice to locate here.
CONNECT: Long before I knew of your sales and marketing background, it seemed obvious to me that the person running Midwest Wireless came from a sales and marketing background. Your sales and marketing thumbprints are all over this company. Whenever I think of Midwest Wireless I think of marketing. Many companies are run by accountants. I look at your company buying the naming rights to the former Mankato Civic Center as nothing an accountant would do.
MILLER: That’s a good observation.
CONNECT: And having this very visible, high-profile billboard-of-a-headquarters along Highway 14 is nothing an accountant would do either. A CEO with an engineering background likely wouldn’t have done it.
MILLER: That’s a very fair description. I take all that as compliments. Having the technology and wizardry is nothing if it doesn’t apply to people’s everyday needs, and we use the marketing of our services to reach our customers at their point of need. That’s what we have to focus on. That has been our charge from Day One and it will continue to be even as we move into the next generation of wireless services.
CONNECT: Your TV commercials are unique in that they are shot in film. Shooting a commercial in film is very expensive. Why go that route?
MILLER: It is more expensive to use film. We do it because it fits our whole philosophy. We are building our business on quality, and that’s what we need to present to the public. Not just in our brochures that say we’ll provide the highest quality of wireless conductivity, but the concept of quality really has to permeate the whole organization.
CONNECT: Have you done any research on whether buying the naming rights to the civic center, the look of your building on Highway 14, and your commercials in film, have helped in, not only sales, but in other areas?
MILLER: It certainly has made a difference in our ability to hire. Like I said before, we’ve had 1,500 applicants since last April.
CONNECT: Is there a way to quantify the payback beyond that?
MILLER: One way to quantify is in our cost to recruit, which has dropped tremendously as a result of the initiatives you named. All those things are working in concert, purposely. The civic center naming rights has been a tremendous success. We have a great partnership with Pat Hentges and the City of Mankato. Burt Lyman at Midwest Wireless Civic Center has been wonderful. He has helped make the deal work for us. The naming rights deal was accomplished at the same time we were bringing the Midwest Wireless name to the forefront — and transitioning from Cellular 2000, our marquee brand, to the umbrella name of Midwest Wireless. We needed to show people then that we were a company of substance, and here for the long haul.
CONNECT: Did you approach the civic center? or did they approach you?
MILLER: Actually, it was mutual, and began with Burt Lyman while we were looking to rent a civic center suite. One thing led to another. The timing was absolutely perfect for both of us.
CONNECT: I’ve heard so many figures about how much the deal was worth. What’s the real number?
MILLER: It’s a matter of public record: $110,000 a year, for twenty years.
CONNECT: Plus whatever else comes with the contract, of course.
MILLER: Yes, including hosting a number of shows. The $110,000 is paid to the City of Mankato.
CONNECT: Is it worth the investment?
MILLER: Absolutely and unequivocally, and the intangibles have been enormous. Again, we wanted people to know the size and scope of our organization. The deal clearly did that and for a wide area. We have wireless customers in Mason City, for instance, who travel to Mankato for civic center events, and this further underscores to them the scope and magnitude of the company.
CONNECT: If you could, better explain why you changed the name from Cellular 2000 to Midwest Wireless?
MILLER: The ownership structure prior to 1996, when we formed Midwest Wireless, didn’t lend itself to having each partnership name in front and trying to build a common brand under it. But the real reason, and the driving force behind it, was that “Cellular 2000” was a first-generation, analog-based, wireless service product. In 1996 we were the first rural carrier to deploy some digital technology, which we now refer to as “second-generation” wireless.
The name “cellular” had become synonymous with first generation wireless, and the number “2000,” which meant something in 1990, had lost its sizzle by 2000. We needed an umbrella under which we could promote new brands. The number 2000 has become so common. It’s almost looked at the way Kleenex is with facial tissue, even losing its connotation with the year 2000.
CONNECT: Your corporate structure is an L.L.C., a popular one in Minnesota the last couple years. From your viewpoint, what are the advantages of organizing as an L.L.C.? and why do it in Delaware?
MILLER: You need to go back to 1995 when the process began. The answer to the Delaware question is that Minnesota statute hadn’t been completed in 1995. The limited liability company was a very new animal then, and Delaware was one of the first states to incorporate it into its statutes. Delaware was ready when we were ready. We also have a subsidiary that’s a Minnesota-based limited liability company, and it’s wholly owned by a Delaware limited liability company.
The L.L.C. is a hybrid between a corporate structure and a partnership in that it offers protection to the shareholders. It offers the same sort of protections that a corporation offers except you have taxation like a partnership.
CONNECT: The way I understand an L.L.C., is it true that you don’t pay taxes but your shareholders do?
MILLER: Exactly. In corporations, dividends are taxed twice: the corporation pays taxes, and the dividends sent out to shareholders are taxed. The taxation is the key area of difference with an L.L.C. Also, individual shareholders aren’t liable for debts in an L.L.C.
CONNECT: You have about 50 shareholders, which means you also have about 50 bosses. Do you have three or four that call you daily, want progress reports, and second-guess your decisions?
MILLER: No, our structure is very much like a corporation. We have a board of managers elected by shareholders. Out of the group just 11 are on the board of managers.
CONNECT: Are there some areas where they give you free rein? and others where they keep you in check?
MILLER: It’s a collaboration. We have gone through uncharted waters together. Not one of us had experienced this kind of explosive growth before. And we’ve been the innovators in so many different areas. What we do is plot strategies that will take care of our customers. That’s the bottom line: we provide services our customers want and need, and do it at a price they find affordable.
CONNECT: It’s one thing to obtain a technology but it’s another to develop the infrastructure to service it, then sell it, then maintain it. At times there must be a great deal of pressure around here to be first in the market with a product or service. Do you have an in-house gym for employees to work out their frustrations?
MILLER: (Laughter.) You were going down the same litany of questions we ask when a new technology pops up. Technological changes are happening at a break neck pace. Sometimes it can be rather stressful. We try to deal with that in positive and healthy sorts of ways.
But again, it goes back to our foundation. Our mission statement says we’re here to provide services to our customers. There are services you could put out into the marketplace, ones that generate a lot of ‘gee-whiz’, but those potential services might have less-than-robust real-world applications. Just because we can do it doesn’t mean people will want to pay for it.
CONNECT: Let’s talk about your background some more. What was there about you that led the Midwest Wireless board to hire you as president in 1996?
MILLER: I think they may have seen in me leadership, vision, and also an ability to pull together the resources of the organization to achieve its goals. From the get-go, we had been leaders, even in first-generation wireless. The board believed I had the vision to lead them into the future. What has happened here, though, hasn’t been a Dennis Miller phenomenon. It’s really about the 300 others here. They are the ones who have done most of the work to make it successful.
CONNECT: Why isn’t Midwest Wireless an Internet service provider?
MILLER: In fact we are. The services we offer on our wireless network today allow you to surf the web. We are an ISP. We’re also looking at more traditional Internet provider models.
CONNECT: You’re a conduit for Internet but not a provider like HickoryTech Internet or Prairie Lakes Internet.
MILLER: Stay tuned.
CONNECT: Could it be that you haven’t been one yet because some of your shareholders now offer Internet services and they may look at your entry into that as competition?
MILLER: The value of Midwest Wireless has grown to such an extent that we have to do what is best for the entity — not what’s best for individual shareholders, but for the entity. Your observation on the Internet is a good one because profound changes are happening in telecommunications, both wire and wireless. A consolidation of the Internet with telephony, in general, is happening at a break neck pace. It’s happening because the Internet has, and will continue to, change the world.
We will move towards less circuit switched conductivity — and by that I mean picking up the telephone and hearing a dial tone or pushing send and end — to more on-all-the-time and real-time. And that will change things dramatically in how networks are configured and what it means to be an ISP in the future.
CONNECT: Do you think wireless will replace land-line?
MILLER: No. I don’t think so.
CONNECT: A lot of wireless folks think that.
MILLER: Yeah, it depends on how the question is asked. There will be, and there already is right now, a shift of minutes of use particularly for long distance from wired to wireless networks. You need to define a little more what you mean by wired networks. Bandwidth is really what we’re talking about and broadband applications, for the most part, are wired. There really is no best answer to that question because it’s application driven. An application can be delivered to a home or business via wire, coax, copper, fiber optics, or a wireless extension.
CONNECT: You seemed to have formed a strategic alliance with Nokia. Why partner with them?
MILLER: This coming from an ex-Motorolan: Nokia has done an absolutely phenomenal job of understanding consumer needs and delivering products that meet those needs. In 1994, when Nokia had an infinitesimal market share, they set out to find what consumers needed in a wireless device, i.e., in shape, style, model, and color. They have positioned their company extraordinarily well to take advantage of, and to influence, new services and generations of wireless offerings.
CONNECT: Again, more specifically, how have they done that?
MILLER: They have an absolute focus on consumers. They find out what the end user wants to do with the device, and they partner with carriers to get it done. Our relationship with them goes way back. Together we have tried a number of things, even experimented on occasion. We find the information Nokia brings us, from a worldwide perspective, is enormously valuable to us when we set our strategies. The information we provide is enormously valuable to them. We represent a microcosm of America, from urban and very technologically driven Rochester, to very rural. In one company, regional in nature, which has a reasonably short decision-making cycle, we can test things quickly.
CONNECT: As a company, why not go public?
MILLER: You never say never. There are reasons that companies go public. The most traditional is an immediate need to raise capital. But we don’t have that need. We have a very strong balance sheet, with lines of credit and capacity with several banks. We have all the sources of capital we need at this point.
By staying private we aren’t subject to the fickle nature of Wall Street, and are able to make investments that may take longer than 90, 120 or 240 days to mature. As a publicly traded company you have to report quarterly. If there are surprises, and the surprises are shortfalls, Wall Street traders aren’t happy.
CONNECT: And with a business and industry changing so rapidly you would want to be able to have the freedom to have a bad quarter or two?
MILLER: That’s precisely the point — and “bad quarter or two” is a relative term here.
CONNECT: Also, you can’t be bought out if you’re not public.
MILLER: It’s more difficult to do, which allows us to control our destiny.
CONNECT: On a personal note: What makes you happy? What really flips your switch when you come to work?
MILLER: I’m a very fortunate person. This really isn’t work. True, it’s a vocation, but it’s work I love. What really trips my trigger is to see this organization continue to grow and prosper, to lead in new areas of innovation, and to see people grow that have had opportunities for growth. A number of people today in senior positions began here at the entry level. I also get a big kick out of having the opportunity to positively change the way people live.
I also get excited about the future —bringing on new innovations, and products and services which are going to profoundly impact the quality of life.
CONNECT: What does the future hold?
MILLER: We’re moving right now from second generation wireless telephony to third generation. Third generation involves delivering broadband capability to a mobile device. You’ll be able to access the Internet wherever and however you want. And if that means a video clip or a large file or a CAD drawing or a photograph, you’ll be in the position to move information where you want it moved to, and receive it in the places where you want to receive it. When people have a need to access a school snow closing list, for example, they can find out that information immediately. Or when they need to know when their son plays hockey on Saturday afternoon. Or you can go to the Internet to pull a video clip of a sports highlight to show a co-worker while you’re standing there talking to him. The applications are endless.
We’re seeing an evolution: People are beginning to understand the notion of calling a person instead of a place. In accessing and delivering information, the same thing is going to happen.
CONNECT: Ten years from now companies like yours likely will be delivering content, such as movies and TV shows. You may be buying the rights to sporting events and broadcasting them live to mobile wireless devices.
MILLER: I agree. It’s what Ted Turner did with cable. I think you’ll see interesting partnering arrangements in the years ahead. Today, the relationship I have with my customers is one-to-one. Midwest Wireless provides its customers a service, it invoices them for the service, and our customers compensate us. In the future, when our customers start looking for content, we will be able to provide it.
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