This week, Verizon Communications CEO Hans Vestberg joined us for an episode of Extra Crunch Live.
Vestberg is leading the company through the midst of one its biggest rollouts to date with the push into 5G connectivity. In our discussion, he spoke about how he’s managing the organization during this global crisis, his thoughts on work from home and acquisition strategy, and the ways in which 5G will change the way we work and live.
(Disclosure: Verizon Communications is TechCrunch’s parent company.)
Extra Crunch members can check out a partial transcript of the conversation (edited for length and clarity) or watch it in its entirety via YouTube video below.
Extra Crunch Live features some of the brightest minds in tech and VC, including Aileen Lee, Roelof Botha, Kirsten Green and Mark Cuban. Upcoming episodes will include Aaron Levie from Box, GGV’s Hans Tung and Jeff Richards, Eventbrite’s Julia Hartz and others. Extra Crunch members can submit questions to speakers in real time, so please sign up here if you haven’t already.
His initial reaction to news of the lockdown
We’re a large company with 135,000 employees in 70 different countries around the globe. So, of course, we had an early warning when it started actually in Asia. We have employees in Asia, so we got the feeling that this could be really serious. It was early in the first week of February, we moved to the highest emergency or crisis level in the company. That means that we go to a certain crisis mode on how we organized and how we galvanized the company.
That’s usually put into place every time there is a big national disaster because you need to split between people taking care of the crisis and people taking care of running the business. So we were very early on with that. In the beginning of February, we started the emergency crisis operations center that was taking care of employee questions and prioritization of important things. At the same time, we continued to run the business. That was the first thing we did very early on.
The other thing we did very early on is that we understood that this was something unprecedented. I mean, you have been in crisis before. I mean, I’ve been in the telecom crisis, and we’ve been in the banking crisis when everything just went boom. This is something totally different. You cannot use any of your historical experience when it comes to this pandemic, which actually impacts each and every one of us when it comes to health. So I was honest, and thought that they’re going to be a lot of questions. We decided very early on to run our noon live webcast to our employees. We are on our… I think it’s the 11th week, where at noon every day, we run the webcast for all our employees. That was two of the first things we did.
We didn’t think we were going to run for 11 weeks on the new live webcast, but we have done it because we see there’s a very good tool to communicate with all our employees.
Communicating with employees during work from home and employees around the globe
For the past 11 weeks, my main message when I open the live webcast is that we have two priorities. The first is the health and safety of all our employees. That’s the number one. The second is seeing that our customers can actually use the second most important infrastructure that there is at this time, and that’s communication. The first, of course, is healthcare. That’s the most important infrastructure. But secondly, it’s communication. We decided our priorities very early on. But we also decided a third priority very early on, that was to serve our communities at the same time.
We’re a large corporation, and we have a huge responsibility. We keep it on a high level, and then of course we have detailed communication for each and every country. But that’s sometimes not enough. Sometimes, we need to go down to municipalities or to offices in order to have the right communication. We’re a full team that works 24/7 just answering questions for our employees, as well as following all the new rules that come out. When there are different rules for different states in the U.S., we need to comply with them and see that we’re actually understanding them.
Is there any risk of over-communicating?
No. There is no risk with over-communication and transparency. The complication is that we don’t have all the answers. I don’t have all the answers, but you say what you know and what you’re doing. I think that is equally important because, ultimately, it’s about reassurance that the leaders in our company can not only reassure our employees of what we’re doing but also be clear that we don’t know all the answers. I don’t think anybody has all the answers for this pandemic or how it will end, how it will impact our economy and our society long term. But at least you can talk about what you’re doing about it and how you go about it. I’m not worried about over-communication during these times, even though we communicate at lunchtime every day for 11 weeks, which sounds really crazy.
But we have viewership between 30,000 to 70,000 employees live on those webcasts, which is just enormous from a corporation like ours because, remember that we never closed stores. We have thousands and thousands of our employees that still are out in the front line. They’re either managing a store that never closed because we need to serve our customers or they’re a field engineer that needs to keep up the hospital or a remote test center that is put up by the government. Or it’s someone ensuring that our customers actually can use the network. If it’s an enterprise customer or a consumer, it doesn’t matter. Today, having connectivity and being able to use broadband is just essential.
Verizon’s strategy for returning to the office and the future of work
We have a return-to-office strategy that we want to be very staggered, very slow. We are going to open our offices where no more than 25% can be there. And it’s more for the ones that need an office, rather than we would ask somebody to go there. Of course, over time we will gradually bring more and more people into the office. There are going to be certain things that never go back to normal. We’re going to see much more hybrid work, where we are in between all working from home and being in-office. Maybe I’m old fashioned, but I still believe meeting people and being in the same environment has a value for many people.
Of course, it’s great to be home and work, but it’s also great to come to another environment when you work sometimes. So I think when you’re in this environment like this, you might feel that this is great and that you can probably work from home forever. I think it’s going to move more toward hybrid work. But it’s got to be much more relaxed than we’ve had in the past. Ultimately, the employees will decide when that’s how the world is working. So clearly, we’re going to see changes to the future.
On the BlueJeans acquisition
We have 1,200% growth in our network when it comes to collaboration tools since COVID-19 broke out. That’s basically where we’re at right now. That’s videoconferencing mainly. There are some messaging platforms as well, but it’s video that is 1,200% up. That means that we have seen a surge of data and users on the network that we’ve never seen before. We already had a partnership with BlueJeans, and we had had discussion about them. As we came into this COVID-19 era, we had been talking about acquiring them. We fast-forward up in this process and thought it was a good idea. The seller had thought the same. So, it had started before but it was accelerated by COVID-19.
How he evaluates acquisitions broadly
First of all, you need to have a firm strategy. I’ve been through a couple of different crises before, and seldom should you change your strategy. You don’t say, “now I want to do something totally different.” You don’t do that. Instead, you change your tactics. So, you look at how you implement and how you do strategy execution. For example, we saw clearly that remote learning, telehealth and collaboration will be here for a long time, but all are built on a network of service, which is our main strategy. It was more opaque. There are going to be trends that are going to be long-lasting here. Of course, BlueJeans fits in. It was not like we invented a new strategy, but the strategy execution was accelerated based on the feedback we had from the market around what we’re doing. That’s how you deal with it.
It’s no different. I have no new process for M&A. I have the same strategy. It’s just that you need to split your team. The risk in a crisis like this is that you have everyone running to the crisis. We don’t know how long this will be. I mean, we’ve been on the highest alert for 11 weeks. I don’t know how long it’s going to be. I cannot have my executive team and their executive team only working on a crisis. So you need to bring them back to the main business, as well, because that’s how we serve.
Managing Verizon’s 5G rollout in the midst of a pandemic
For a long time, almost 10 years, I’ve said that the only sustainable infrastructure is actually mobility, broadband and cloud. Those technologies can actually scale sustainably. We can create better equality in this world if everybody can get the same education wherever they’re born, or the healthcare they need, they can do that remotely. That’s the only way. I was born in Sweden, where you have a hospital close by and you have a school close by, and they were brick and mortar.
There are many people on [the] planet that don’t have that and the only way for them to get it, in a short time frame, is using mobility, broadband and cloud. When you see this pandemic happen, and you see some of those barriers that we’ve seen before be broken, people are actually deciding, “I can do telehealth, or I can do a hybrid education. I can do it.” That is one of the benefits on this because now, suddenly, we can start broadening this out. And that’s where 5G comes in as well, because 5G is very much about doing low latency, enormous throughput, real broadband not only for consumers, but for enterprise, as well.
5G is absolutely in the right moment right now to continue to execute on that. You have your consumer offerings, you have your enterprise, small and medium business offerings, the home offerings with 5G because we’re doing all three of them. That’s partly why we increased our capex for this year. We saw that one of the possibilities for us would be to make the speeds even higher. When I reported the first quarter earnings just a month ago, we basically said we’re on time with all the deliveries for this year. We’re doing five times more radio base station on 5G this year compared to last year. We’re going to launch more than 60 cities with 5G this year.
We’re going to do minimum 10 mobile edge computing centers this year. And we’re going to do at least 10 markers of 5G Home this year. When we came up on the first quarter, we said we are on time for all of them, despite a lot of challenges in the field. Our team has been innovating and seeing that we can do it. It’s a moment where mobility, broadband and cloud service is going to be even more important for our society going forward to see that each and everyone has the equal opportunity and can actually perform things and execute things even without being physically in the same place.
5G supports Verizon’s long-term IoT plans
We have a great IoT strategy. It’s based on the fact that we have the connectivity, of course. You need the connectivity, either 4G or 5G or whatever else, to power IoT. Secondly, we also have our platforms where we are working straight to devices. And then we have applications. We have a big telematics business, for example, connecting fleets across the globe. So we are in three dimensions into IoT. Then, if you’re thinking about 5G, for example.
Today, on 4G connectivity, we can connect, let’s say, 50,000 to 75,000 devices per square kilometer. That’s probably what you want to have in a stadium or in a very crowded place. In 5G, that’s one million devices per square kilometer. That’s very clearly designed for the IoT devices, not only for humans. That’s how you start seeing the difference between 4G and 5G. You’re never gonna have one million people in one square kilometer. I think also new technologies will enable it even more and give us a greater opportunity to take part in the IoT business.
Changing marketing strategy during COVID-19
We pivoted quickly in the midst of COVID-19. You cannot start doing marketing about buy one phone and get one phone and things like that. It’s just tone deaf in a time where people are suffering in one of the biggest pandemics. We pivoted talking about the reliance on our network and what we’re doing for society, and how our engineers are doing the work. That’s what we talked about. For our customers and for society, we thought it was more important than trying to do something else.
Slowly, we’ll come back and start talking about offerings. It was clear that you pivot very quickly on to see that you’re actually being socially aware of what’s happening around you. It’s just useless to do marketing in that time. It was more about their resilience of the network and the engineers being out there doing the job they’re doing. That’s what we’re doing and investing in for our society, which we think is important. And it’s part of our strategy. So it’s not like, “hey, suddenly we think the society was important.” We have been focused on that for a long time.
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