“I wouldn’t want to eat at a nice restaurant that had the same strategy as me.”
It’s a smart piece of advice from David Glickman, an entrepreneur who specializes in one thing: speed. Even in an era that prioritizes growth above all else, marked by app companies that rocket to millions of users seemingly overnight, Glickman stands out as someone who has jump-started three separate companies to revenue over $100 million.
His current startup is Ultra Mobile, a mobile virtual network operator (MVNO) that sells wireless phone plans catered to immigrants in the U.S. who frequently call home to places like Mexico or India. The business zoomed to $118 million in 2014 revenue, just three years after he cofounded it with four other partners.
That kind of growth didn’t come by accident. Glickman optimized for it, at the expense of other metrics like profit margin. “If I were selling airplanes and needed to sell four this year, that would be different,” he says. “But I don’t know anyone in our business that has hundreds of thousands of customers or less and is profitable. If you’re in a business like mobile phones, the economies of scale are tremendous. So the trick is to get there quickly.”
Not every industry pushes entrepreneurs to go fast. Most restaurateurs, for example, don’t have dreams of being the next McDonald’s. But if you are in an industry that prioritizes growth, Glickman thinks you need to be committed to that vision from the start. “If growth is important, then you need to believe in yourself and your company and plan everything for growth,” he says.
With Ultra, Glickman committed to licensing more than $50 million in wholesale wireless service from T-Mobile before launch—meaning they’d have to get well over that amount in subscriber fees to break even. “We turned around and said we have no choice but to do this big,” he says. It was a risky move that’s paid off so far.
In addition to literally forcing his business to grow or die, Glickman structured Ultra to pass the bulk of the profit to his distributors and value to his end customers, even at his own expense. He says Sprint, which has competing brands like Boost Mobile, wants $10 a month in margin per customer. “I don’t need that fat margin,” he says. “We are going to have the thinnest margins and tell the stores they are going to make more money selling our product than any other in the store, and customers are going to be happy. In that model, somebody’s going to get the short end of the stick.”
The short end of the stick is Ultra, which hopes to make up in growth what it forgoes in profit. It helps, in this case, that Glickman has picked an industry with an oligarchy of behemoth wireless carriers. Facing off against the Verizons and AT&Ts of the world is often suicidal, but those telecom mainstays have high prices ripe for undercutting. Ultra is currently in 25,000 stores, selling 1 million SIM cards a year—the cheapest way to sign up new customers who already have cell phones. Glickman says the business is cash flow positive, but will not comment on net profit, only saying that some months Ultra operates at a net loss.
Another growth hack: pretend you’re bigger than you really are. It’s a trick Glickman picked up at one of his previous companies, TelePacific, which he launched in 1998 to compete with monopoly landline phone exchanges. “Everything had to look and feel like the company has been around forever,” he says. “We went to marketing folks and asked what a monopoly phone company says. Our marketing campaign eventually was that it’s obvious we’re big, but we’re here to help, we’re not too big to care. People never questioned that we weren’t big.” Today, Ultra practices the same pitch.
Long term, all businesses come to a reckoning about what to prioritize as growth slows. Glickman isn't worried about that yet for Ultra. He's after a market of 40 million immigrants to the U.S., and will be offering a new service in the coming months that provides cheaper plans for people who travel abroad and currently suffer from huge international roaming bills. Ultra, says Glickman, has already been approached for acquisition by larger US and foreign wireless carriers. The long term outlook may include such a deal, as he is "open to it." Today, Ultra's MVNO partner is T-Mobile.
Glickman also admits that while emphasizing growth has worked for him, it may not be healthy for everyone. Still, he thinks every startup should at least be ready for the possibility of breakout success. “If you have a new food company, you have to have an eye on Coca-Cola and think what it would be like if you were distributed nationally,” he says. Hyper growth is more than happenstance—it’s a mindset.
