Brightstar Corp.'s shining success illustrates how a driven entrepreneur's startup can grow quickly and exponentially, becoming a dominant global player in a sharply competitive industry.
R. Marcelo Claure launched Brightstar in 1997, distributing cell phones to Latin America out of a nondescript warehouse. By 2002, the Miami-based company had become the largest independent distributor of cell phones in Latin America.
Now, Brightstar is the world's largest wireless phone distribution and supply chain solutions company. And with Mr. Claure at its helm as president and CEO, it's aggressively expanding into North America, Asia, Australia, the Middle East, Africa, and Europe. It distributes in 49 countries, but that number may increase to as many as 65 in the next five years, Mr. Claure says.
The CEO's dedication to quality service and aggressive growth has produced annual revenue increases of more than 50 percent for nine consecutive years. In 2006, Brightstar posted revenues of $3.6 billion, earning the No. 1 spot on this year's Hispanic Business 500®. The company's 2007 revenues will likely grow by another billion dollars and its five-year plan calls for $10 billion in revenues, Mr. Claure says.
The 36-year-old son of a Bolivian diplomat has succeeded with the following deeply held philosophies: "You must have a vision and go at it with no fear, as if you have nothing to lose. In speeches, I tell young people that the only way to succeed is by taking risks."
Also: "The day that we stop exceeding our customers' expectations is the day that we will begin to stop existing."
His multicultural background is well suited to Brightstar's global expansion. Mr. Claure lived in several countries, including the Dominican Republic and Morocco. He attended high school in Bolivia and came to the United States in 1989 to attend Bentley College in Waltham, Massachusetts. After graduation, he worked with the head of Bolivia's soccer federation to help the nation's team qualify for the 1994 World Cup.
Mr. Claure later returned to the United States and purchased a cell phone retail store in Boston. "After developing a relationship with the owner, I bought the store for zero money down," Mr. Claure says. A year later, he had built a chain of 134 wireless stores throughout the Northeast.
He later sold the business and became president of Small World Communications, a cell phone chain based in Rancho Palos Verdes, California. After turning around the unprofitable chain, Mr. Claure started Brightstar with Dave Peterson, who is now vice-president of sales in Brightstar's Chicago office.
Mr. Claure sold some of his possessions to launch the project in October 1997. He named the company by combining the names of two top competitors, Coppell, Texas-based CellStar Corp. and Plainfield, Indiana-based Brightpoint Inc.
Brightstar did not undergo the typical lengthy entrepreneurial struggle for revenue and financing. The company raked in sales of $14 million during its first three months. Miami-based Ocean Bank granted Brightstar a $2 million loan. Suppliers such as BellSouth and Spain's Telefonica connected their bankers to Brightstar and growth has soared ever since.
Right Time in the Right Places
Brightstar fills several needs in the global mobile phone industry. The company distributes cell phones and accessories while managing inventory, logistics, billing, and customer support for local wholesalers, resellers, network operators, and equipment manufacturers worldwide.
It serves more than 160 operators and 15,000 resellers, making its distribution and inventory management more efficient. And that makes Brightstar's customers more competitive, says Jane Zweig, CEO of The Shosteck Group, a Columbia, Maryland-based telecom consulting firm.
"Distribution is one of the hardest things cell phone network operators face. Fullfilling orders and handling distribution and inventory channels produce great savings for the operators," she says.
Brightstar manages inventory with a patented proprietary system that contains all historical data for a product in one database accessible by Brightstar and its customers.
So far, the company's growth has been completely financed by debt. In August 2004, it did file to raise $115 million through an IPO of common stock on the Nasdaq, but the company withdrew the offering two months later, citing "market conditions and certain other factors."
Mr. Claure currently owns 60 percent of Brightstar, venture capitalists and investors own 27 to 30 percent, and employees own nearly all of the remaining interest, he says.
Brightstar's second-largest owner is Mitsui & Co. Ltd., a Japanese trade and manufacturing conglomerate. In August 2006, Mitsui invested $50 million and took a seat on the company's board of directors. As this story was being reported, Mr. Claure said he had recently made a presentation to raise an additional $250 million.
In the years ahead, he says, Brightstar may again consider going public. But that won't happen anytime soon, he adds.
"So far, we have been able to convince private investors to value us the exact same way as comparable companies are valued on Wall Street," Mr. Claure says. "The reason is that this company has experienced incredible growth."
Rapid growth has enabled Brightstar to make private equity placements and retire them as the company's value increases.
Nurtured in Latin America
Brightstar thrives in a growing international cell phone market. Worldwide wireless phone sales surpassed 990.8 million units in 2006, a 21.3 percent increase from 2005, according to Gartner, Inc., an IT research company. Gartner forecasts unit sales of about 1.2 billion units this year.
Brightstar is the largest independent cell phone distributor in every Latin American country in which the company does business. Mexico, followed by Venezuela and Brazil, accounts for most of its revenues in the region.
The company still has plenty of room for growth in Latin America, where 40 to 45 percent of people in the region use cell phones. Latin America now accounts for about half of the company's revenues.
The company's five-year goal: Derive 25 percent of revenues from Latin America, 25 percent from the United States, 25 percent from Europe, and 25 percent from the rest of the world.
Mr. Claure is determined to make Brightstar No. 1 in every country where the company does business.
"Just because we are the world's largest on a combined basis doesn't mean we are the largest in every country that we are in," he says. "In the U.S. we are No. 2. We are No. 3 or No. 4 in a lot of Asian and European countries."
But not for long, if Mr. Claure can help it.
In March, the company launched Brightstar Europe, formed through a joint venture with United Kingdom-based Tech Data, the largest IT distributor in Europe. U.K.-based Brightstar Europe has access to at least 10 logistics centers and 16 sales offices in the region and is the only pan-European wireless distribution business. About 75 percent of Tech Data's sales take place online. Brightstar Europe plans to use Tech Data's Web-based sales system to attract customers, promising to deliver products anywhere in 16 European nations within 24 hours.
In the intensely competitive U.S. market, Brightstar is growing briskly. Revenues will exceed $700 million this year, and Mr. Claure believes it can surpass $1 billion within two years. With U.S. market penetration of cell phones exceeding 80 percent, most sales consist of new replacements for older devices.
Next Stop: The World
Brightstar is on the rise in other regions of the world, too. Over the last 18 months, the company has set up several distribution facilities and offices in Southeast Asia, Hong Kong, the Middle East, and Africa. In May 2006, Brightstar announced a joint venture with United Arab Emirates-based technology distributor Aptec to form Brightec, with operations in the UAE, Saudi Arabia, Kuwait, Turkey, Egypt, and Lebanon.
In 2005, Brightstar launched operations in Mumbai, India, with other branches throughout the country. With 1.1 billion people and fewer than 10 percent cell phone subscribers, India represents a potentially lucrative market for Brightstar.
The company has a facility in Singapore that serves the Philippines, Malaysia, Indonesia, Vietnam, and Thailand.
Also in 2005, Brightstar started operations in Australia, signing an agreement to be the exclusive wireless phone and accessories provider for Telstra Corp., which is headed by former US West CEO Sol Trujillo.
Motorola's partnership with Brightstar has been a key to Brightstar's growth. In 2001, Brightstar signed agreements to become Motorola's master services distributor in Latin America, and to support the company's brand in the United States. In 2005, Brightstar began selling and distributing Motorola products in Australia. In January 2007, Motorola and Brightstar announced a global distribution agreement.
Motorola is also pleased. "Motorola and Brightstar have a dynamic and growing relationship," says Ray Roman, executive vice-president of Motorola and co-leader of its Mobile Devices business. "Marcelo is a respected leader who's known for his energy, vision, and ability to recognize and capitalize on opportunities for both Brightstar and their stakeholders."
Success has cut a high profile for Mr. Claure in the high-tech industry and illustrated the key role that Hispanics can play in the sector's international expansion.
Two of Mr. Claure's key executives are Hispanic: former Motorola executive Juan Carlos Archila is president and CEO of Brightstar's Latin America region. Javier Villamizar is president, High Growth Markets.
"Hispanics have an edge because we combine two cultures, and we can use that edge to grow outside the U.S.," Mr. Claure says.
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
SEPTEMBER 2, 2014
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