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Dreaming of Business Success, Not Dwelling on Color

Silicon Valley telecommunications executive Robert E. Knowling, Jr. acknowledges he’s hardly a "household word" in mainstream Black America. But given his personal and professional goals, Knowling likes it that way.

Even his recent resignation as president and chief executive officer of Covad Communications Group Inc. of Santa Clara, Calif., hasn’t put him in the spotlight beyond Wall Street.

Knowling as Anomoly

Bob Knowling, Jr. is an anomaly of sorts — an African-American business leader who is better known in Fortune 100 corporate circles than in the communities in which he was reared. He has been a leading architect of today’s all-encompassing telecommunications revolution, one of a number of key leaders reshaping how people will live, work and conduct business in the new Internet economy.

Knowling exited Covad, a national packet-based Competitive Local Exchange Carrier (CLECs) born out of the landmark Telecommunications Reform Act of 1996, on November 1, 2000, in the face of his company’s declining stock price. Covad is a leading provider of digital subscriber line (DSL) technology that is connecting people and corporations to the Internet at high speeds. Like many high-flying tech companies, Covad’s rapid growth couldn’t be matched by its non-existent profits. Since the CEO serves at the whim of shareholders, when that happens change comes swiftly.

In October 2000 alone, more than 125 CEOs from all industries announced their resignations or were fired, according to John Challenger, president of the Chicago-based national outplacement firm of Challenger, Gray & Christmas. But, like so many CEOs before him, expect a youthful Knowling to resurface. While he has been featured in Forbes, Fortune, Business Week, Time, Newsweek, Fast Company and other widely circulated business and general interest publications since taking over the helm of Covad in July 1998, Knowling remains largely a mystery in Black America.

The May 2000 issue of Ebony magazine presented its annual list of the “100 Most Influential Black Americans,” but there is no mention of Knowling among the prominent African-American business people, entertainers, religious leaders, government officials, politicians and civil rights leaders. Knowling sat in the VIP box at the Capitol on January 27, 2000, with then First Lady Hillary Rodham Clinton for the President’s State of the Union Address. And on February 11, 2000, then Vice President Al Gore toured Covad’s operations center in San Jose, California with Knowling at his side. Running for president, Gore chose Covad to deliver a major policy speech on the role of technology in the American economy. Knowling counts among acquaintances Michael Jordan and Florida Governor Jeb Bush.

“By and large, to the mainstream people of color, I’m not a household word,” says the hard-charging Knowling, who speaks directly and matter-of-factly. “Yet in the land of the corporate sector, I think I am about as big a name as you will find in terms of the sheer level of responsibility and the positions that I had.”

So who is Bob Knowling, Jr. and how did he find his way to the upper reaches of corporate America? Like so many African Americans, Knowling hardly was raised with a silver spoon to feed on. He was the seventh of 13 children born to a terribly poor welfare family in Kokomo, Ind. Later he lived on his grandparents’ 140-acre cotton and soybean farm in Missouri, going on to play collegiate basketball and earn a bachelor’s degree in theology from all-male Wabash College in Crawfordsville, Ind. He has an MBA from Northwestern University outside Chicago.

“The environment I grew up in pretty much is the stuff you read about everyday,” Knowling says. “I’ve seen everything — every form of crime, drugs, prostitution, child neglect, child abuse, aggressive crime, murder, you name it. I’ve seen those things. So that environment quite frankly was something I wanted to escape from.” He continues, “I look around at cousins and friends that I grew up with and I never wanted to be a part of the environment. I wanted to actually get out and go stake a fortune somewhere.”

"Bob Knowling is a terrific executive, great leader and great motivator. He’s a perfect combination of being tough and being fun to be around,” says Bob Hawk, a former president and chief executive officer at U S West and Covad board member who recruited Knowling to the company.

Enter the Leader

Dhruv Khanna, one of three executives working at chip maker Intel Inc. who co-founded Covad in 1996, says the mix of Knowling’s executive expertise and personal nature were exactly what Covad needed when the board tapped him as the start-up’s leader. Khanna, Covad’s executive vice president, general counsel and secretary, explains that while a DSL provider’s business model is different from traditional telephone companies, it remains at its core a utility-type business, with trucks in the field to do installations and order and entry personnel to get the service up and running.

“He clearly had relevant expertise. No ifs and doubts about that — 20 years at the phone company. There was no doubt about actual training and ability,” Khanna says. “The second area that struck us as being relevant was leadership. I immediately made a personal connection with him, and it struck me that he was really a man of the earth. No pomposity about him. No pretensions. No sort of holier than thou. No airs about him. Clearly it seems to me he was somebody who could relate to all kinds of personnel.”

Ever confident, Knowling adds, “This was considered a major coup for this company to land someone of my caliber.”

At Covad, Knowling clearly had the company on a fast track. When he took over, Covad had only about 1,000 DSL lines installed and $27,000 in revenue. Today, the company has installed more than 100,000 DSL lines and more than $66.5 million in revenue for the fiscal year that ended Dec. 31, 1999. Its market capitalization, a barometer that gauges the value of a company, had surpassed $9 billion. Additionally, Covad’s stock price had tripled under Knowling's leadership before falling dramatically last year.

In announcing his resignation, Covad’s board of directors praised Knowling’s tenure, but amid an increasingly competitive and changing telecommunications industry, said the company needed a “change in leadership along with a continuing focus on achieving cash flow positive status as quickly as possible.”

While Covad’s revenues rose 15 percent during third quarter 2000, ending Sept. 30, it suffered a net loss of $189.9 million. Shareholders don’t look at the color of CEO’s skin in deciding who leads the company. “The nice part about a start up business is it really is a colorless, creedless, environment,” Hawk says. “People with talent have a place, and nobody looks beyond talent. You’re hungry for whoever can make a contribution, whoever can lead, whoever can design, develop, sell, build and manage.”

Clearly, in an interview earlier last year, Knowling understood the score of running a company. “At Covad Communications, if I don’t grow this enterprise and make it the next great admired company, my shareholders, quite frankly, could care less what color my skin is. Shareholders see one thing, and their color is green,” says Knowling, who is married with three daughters and a son.

Under Knowling, telecommunications analysts cited Covad’s ability to achieve key strategic relationships with some of the top companies in the industry as one of his strengths. Partners and customers have included AT&T, Cisco Systems, Qwest Communications International Inc., RealNetworks Inc., Yahoo! Inc., and Regional Bell Operating Companies. In addition, Covad had built a brisk business with the federal government.

Covad is precisely what regulators had in mind when the telecom reform act was crafted — to create competitive choices for consumers and businesses in the provisioning of telecommunications services. Ironically, several years from the passage of the reform act, some CLECs, like Covad to gain cash, are partnering with incumbent phone companies — the very ones they were supposed to compete with.

Adam Guglielmo, an analyst with Tulsa, Okla.-based telecommunications research firm TeleChoice Inc., said Covad seems to have the clearest strategy among the three leading firms that compete in national DSL provisioning. The two others are Rhythms NetConnections Inc. and NorthPoint Communications Inc. “Covad seems to be succeeding probably to a much larger degree than the other two competitive providers,” Guglielmo says. “They just seem to be pretty effective at marketing their services. They’ve been very good at making partnerships with service providers. They’ve done a good job at getting their own name out there.” Guglielmo adds, “One thing that really seems to speak volumes is that they’re out front in terms of lines reported.”

DSL, along with cable modems from the cable market, are expected to be the two major platforms from which people access the Internet at high speeds. DSL industry revenues are expected to surpass the $2 billion mark by as soon as 2003, according to International Data Corp., a Framingham, Mass., market research firm. Some larger telephone companies like Bell Atlantic Corp. and GTE Corp. are reporting far fewer DSL installs than the brash Covad, Guglielmo notes.

The Secrets of Success

Knowling attributes his success to his own genetic makeup. He simply doesn’t back off from challenges. “I’ve been driven from an early age to not repeat some of the steps that I’ve seen. I’ve learned a lot of lessons from my mother in terms of perseverance — doing something about a problem instead of whining about a problem. And I’ve always been somewhat challenged with every scenario where I’ve been told that I couldn’t do something.”

Meeting challenges translates into a certain business toughness, as well. Covad, for instance, is among the companies credited with pushing a favorable 1999 ruling from the Federal Communications Commission that allows competitive carriers to share lines with incumbent telephone companies to deliver services rather than having to buy costly stand-alone lines from the telcos.

While he understands that his race will always be a footnote to who he is, Knowling says that mantle almost is too much of a burden to place on an African-American chief executive. While he understands he must be a role model to other African Americans, Knowling calls it a “heavy tag to wear” because being a role model invades a person’s privacy and personal life. He is so protective of his family that he does not display their pictures in his office. The focus should be on his business ability just like with white CEOs, says Knowling, who supports affirmative action programs as a means of helping minorities make up for past and institutional discrimination in the workplace. Knowling asks, “Is someone going to write the story that Bob Knowling went into US West with a $26 stock price in 1996 and when he left it was $58? Is somebody going to write that he took a billion and a half dollars out of the cost structure and took service levels to an all time high?”

"There’s a part of me that says, Let’s get to the real essence of the business contribution.’ I know there are people out there who want to know about the Black man, but I have to tell you, I think that they are not getting the full array of what I’m able to do from a business perspective,” Knowling explains. African Americans, Knowling advises, must get ahead of the technology curve. Everybody needs to, especially since technology will continue to change and be more pervasive in society.

Knowling serves as chairman of a committee, the Digital Opportunity Initiative, through the industry group Information Technology Association of America that is working to diversify IT work forces. He also has been elected to the Hewlett-Packard Company Board of Directors. “The (telecommunications) revolution is well under way and if people don’t understand how it is affecting their lives, then they’re a part of those who are being left behind. You cannot be in this world in the future and not be a part of what’s happening,” Knowling says. According to him, students also need to understand the tremendous career opportunities being created by technology in the new economy. “There is a severe job shortage in the IT space. It’s a buyer’s market. If you’ve got those skill sets, you pretty much can pick your lot in terms of where you want to go,” says Knowling.

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