News Column

Why Brightstar Shines

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Boasting double-digit growth for six consecutive years, Brightstar Corp. owes much of its success to smart use of technology and an aggressive approach to training. Founded in 1997, the cellular phone distributor now operates 21 facilities in 16 countries, and total revenue last year topped $1 billion. The company currently ranks No. 2 on the Hispanic Business 500. The driving force behind Brightstar is Marcelo Claure, winner of the 2003 Hispanic Business Magazine Entrepreneur of the Year Award.

Mr. Claure accepted the award at a gala ceremony in Los Angeles in November (see story "Night of the Entrepreneurial Stars"). The award judges, accountants at the firm Macias Gini & Co., commented that Mr. Claure's company "exhibits the spirit of this award: empowerment of the Hispanic community in all channels of society."

To hear Mr. Claure tell it, Brightstar proves that the right idea plus the right time equals success. "We opened for business in October 1997, and our original business model was to achieve $50,000 in sales in our first three months. We did $14 million. That confirmed we had a winning formula," he says.
Mr. Claure came to the United States in 1989 from his native country Bolivia to attend school. After graduating from Bentley College in Waltham, Massachusetts, he managed a telemarketing center for Bell Atlantic. He later became president of Unplugged Communications, a California-based cellular telephone distributor.

"I saw a real opportunity in Latin America," he recalls. "Clearly the wireless boom was about to take off and there was no one well-positioned to be the leader in driving that market."

In response, Mr. Claure and Brightstar co-founder Dave Peterson moved from California to Miami and borrowed money to pursue their dream. We "literally sold everything we had and plugged it into our business," Mr. Claure says. But within the first year Miami-based Ocean Bank loaned the company $2 million, and soon BellSouth and Spain's Telefonica introduced their bankers to Brightstar executives. To date, the company has been completely debt financed.

When asked for advice to other entrepreneurs, Mr. Claure says, "build your company around your customers." He follows his own counsel, but on a practical level because his definition of "customer" extends both ways along the supply chain. Of course, Brightstar must satisfy the more than 15,000 local wholesalers, resellers, and cellular network operators in Latin America and the United States that form the retail end of the distribution system. But Mr. Claure seems equally intent on pleasing the equipment manufacturers. In fact, the manufacturer's branding, marketing, service, and product performance largely determine a distributor's success.

"They're a very flexible company, and I think that's a reflection of Marcelo's style," says Fernando Gomez, General Manager of Motorola PCS Latin America, the largest supplier of handsets to Brightstar. "I think the companies that have success in the marketplace stick to what they do well. Motorola is good at developing and manufacturing products, but when it comes to dealing with distributors and managing a network of customers, Brightstar is very effective. … It's not that [Motorola] couldn't do it, but together we do it better."

According to Herschel Shosteck, chairman of Maryland-based telecommunications consultancy The Shosteck Group, Brightstar has demonstrated leadership in a global trend of outsourcing by wireless operators. "The issue for Latin America is multiple vendors and multiple operators and multiple countries," says Mr. Shosteck. In smaller markets such as Uruguay, Paraguay, and even Chile, the wireless operators aren't set up to distribute handsets, and economics of scale work against them. In larger markets such as Argentina and Brazil, debt exposure makes them leery of investing in handset inventory. Besides phone sales, cellular companies have outsourced construction, tower management, customer service, billing, and inventory control, Mr. Shosteck explains. "All this is not mainline business for network operators. The Brightstars of the world have filled the space and provide an important function to the industry," he concludes.

An example of how Brightstar services its suppliers occurred in 1999 when Ericsson introduced a new customer-service system. The selling point was that customers could have their mobile phones repaired in a store in 15 minutes. The project required 2,000 retail outlets with the capability to fix cosmetic and minor mechanical problems as well as install new software into the phones. Brightstar won the contract over logistics heavyweights United Parcel Service, FedEx, and Ryder for the North America, Latin America, and Caribbean regions. As the EOY judges noted, Brightstar's "approach to business is exemplary. [The company] implements a philosophy of customer-centric focus effectively."

Brightstar's competitors in Latin America include Cellstar, Ingram Micro, and Tech Data all huge, well-funded technology wholesalers. But Brightstar also has some big names in its corner: Motorola, Sony Ericsson, BellSouth, and TeleCel. In November 2003, Motorola signed a new multiyear contract with Brightstar that "extends the successful relationship between the two companies which began in 2000," according to a statement from the companies.

Mr. Claure has developed a series of administrative and management strategies to deal with the high-growth risks of international commerce. Monthly meetings with the company's numerous subsidiaries keep the various country and regional operations on the same plan. Technology plays a role in holding the organization together through teleconferences and online meetings.

To quickly replicate the skills of its labor force, the company uses a method called "job shadowing." Brightstar veterans act as trainers to assist new facilities in getting up to speed immediately. The experienced trainer actually takes a long-term assignment at the new facility in Latin America or in the United States, with Brightstar paying for all living and travel expenses during the training period. In some instances the trainers decide to stay at the new location, thus ensuring a broad coverage of the market in terms of sales and service skills.

By 2002, Brightstar had become the top distributor in every country where it operated. In response, Mr. Claure decided to aggressively enter the highly competitive U.S. market. Although contrary to normal business logic (most companies begin concentrating on domestic markets and later go international) the U.S. initiative has paid off. "Now two years old, the U.S. subsidiary is our fastest-growing and our second-largest in the company," Mr. Claure says.

For the future, Brightstar's near-term prospects look brighter than ever. Mr. Shosteck reports global handset sales for 2003 should total approximately 460 million, beating the consensus projection of 444 million. Furthermore, "The focus is shifting from Europe and North America to Asia and Latin America, largely based on economics," Mr. Shosteck says, and that plays well with Brightstar's extensive infrastructure in the Latin American region.

"The last couple of years, the market hasn't grown globally, but this year growth is accelerating," confirms Motorola's Mr. Gomez. "In Latin America, it's still in a very high-growth mode, and Motorola-Brightstar has grown faster than the market." He adds that in addition to handsets, Brightstar carrier Motorola is geared for Wi-Fi (wireless local networks), the next market-driver for the telecom industry.

Although Mr. Claure expressed initial shock at winning the EOY Award, he won't be resting on his laurels. His future plans include preparing Brightstar to go public, moving into Europe and Asia, and investing more in people and infrastructure. "In the next three years," he says, "we expect to be the biggest telecom-solutions provider in the world."

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