Thread by @NeckarValue

Craig McCaw made a fortune by thinking like a ‘business anthropologist’ and having conviction on the value of new technology. Landline phones made humans “slaves to places” - cellular telephony was inevitable.

To turn his conviction into a billion-dollar fortune, he had to be fast, focused, and go all-in. He needed leverage a team that could make up for his dyslexia.

Craig’s father Elroy was a spy turned entrepreneur who bought radio and televisions stations, piling leverage on handshake deals. When he passed away in 1969, Craig was 19. The family’s fortune crumbled overnight.

tenwatts.blogspot.com/2014/12/the-ci…

“My father was a visionary who did not hire great people.’’

“I'm picky about the people I do business with. He wasn't picky. I learned to be fastidious about accounting, to be careful about the ethical nature of people. And to keep things simple, to focus on quality.”

The McCaw brothers were left with one asset: a tiny Washington cable system.

They used the cable roll-up formula: buy small operators with bank leverage. Consolidate costs and get volume discounts to boost EBITDA. Borrow more and do the next deal. Reinvest, avoid taxes.

McCaw was dyslexic and built companies in a way that fit his personality: “A dyslexic tends to be more conceptual and do things which others wouldn’t see as obvious. I can’t go and organize things as most people would in a way that they could understand and come up with a plan.”

“I have trouble quantifying people. I look at their ideas, rather than at them as individuals.

If you pass autonomy as far down in any grouping of people as you can, you will get extraordinary results if you ask for a lot. The greatest burden you can put on someone is trust.”

He hired Wayne Perry, a former tax attorney, to handle details. Perry called the company “an efficient predator. Always hungry, it kept moving, kept buying. We were like a shark — eat or die.”

Speed was key. Once they found an interested seller, they worked around the clock to get to “90% comfort.” Then they’d visit in person immediately. Whoever was on the scene had authority to negotiate and strike the deal.

The motto was “sign ‘em quick, close ‘em slow”

“We always leveraged future growth,” said Perry. “We would go to a programmer… we want you to give us discounts equal to 250,000subscribers and we’ll promise to be there by the end of the contract. If not, we’ll have to rebate you all the money.”

McCaw also bought a small paging business which brought him radio spectrum. This meant he was one of the first to hear about cellular spectrum licenses that would be awarded in the early 80’s.

McCaw had experience with regulators. “I knew from cable you had to promise big dreams,” meaning broad coverage and service. “Take care of people. That’s what [regulators] want to see.” McCaw was granted licenses in six of the top 30 markets in the US in 1983.

Spectrum was a gold rush for small speculators: dentists, businessmen, retirees. Even the Clintons made money in a partnership that acquired a license.

McCaw’s team crisscrossed the country with a one-page sales agreement: "what will it take to get you to sign right now?"

But licenses and equipment required capital. When other bankers failed, McCaw went to Michael Milken.

Milken’s comment on the other bankers: “Your problem is, you went to veterinarians when you wanted brain surgery.”

Milken made a key deal possible: the acquisition of MCI’s cellular and paging business. The disappointed long-distance carrier wanted out of the market.

McCaw bought it for $120mm, sold paging for $75mm, and was left with cellular assets worth $1bn a few years later.

"Let's talk about Craig McCaw. He went everywhere in the world and no one would give him money. People couldn't understand why they needed mobile. Craig had this belief that your communication device was where you were, not the communication device itself.” Milken

"I told Craig his vision was going to require so much capital, if he and his family wanted to own a significant share of the company, he was going to have to sell everything."

In 1987, the McCaws sold their cable business for $755 million to go all-in on McCaw Cellular.

His acquisition spree culminated in the $3.5 billion deal to acquire LIN Broadcasting with more spectrum.

Through partnership agreements, McCaw achieved a vision of leading coverage.

But the company was buckling under its debt load. One McCaw exec commented: "We got close to the edge a couple of times. McCaw was viewed as a great risk taker, but we were also very much infused with a sense that we have to be careful, too."

McCaw always believed in exit strategies.

“Never go through the front door unless you’ve got a back door. Playing chess with my father, I give him credit for that. If you haven’t thought three moves ahead. You can take chances, but you never, ever play the game without an out.”

His back door was selling the company to AT&T in 1993. McCaw and his brothers made $2.3 billion.

It was a tough decision. He told a friend, "Well, I guess my career is over."

At least he could bet on the internet now.
"Two years before the Netscape IPO, Steve Jobs came to Seattle and we were just chitchatting. He said, 'The Internet is it. I think it is the greatest change coming in computing.' And I thought, 'It sounds great. How do we buy it?'"

McCaw bet on fiber, satellites, and more wireless.

His most ambitious project was Teledesic, an early version of Starlink. “Typical Craig. Leave it to him to try something greater than the sum of the whole world's experience.”
@trengriffin wrote about it:
25iq.com/2016/07/23/a-d…

Even during the dotcom bust he maintained his humor: "The way things are going in the industry; it feels as though I'm on an episode of Survivor and could be voted off the island at any minute."

I wrote about his journey here:
neckar.substack.com/p/how-craig-mc…