Building a Business - and Careers - in a World Powered by Digital Access| DeVry University
(upbeat music) - Hey everyone, I'm Tom Monahan, President and CEO of DeVry University. During this Digital Dialogue, I'll be speaking with my friend and colleague, Julius Genachowski, Managing Director in the Carlyle Group's U.S. Buyout team and Former FCC Chair.
Julius has obviously served as a policymaker and recently as an investor in the sector and in his tenure as chairman and his tenure as an investor, the FCC took major actions to extend broadband access, roll out advanced mobile networks and preserve a vibrant internet and media landscape. Since transitioning back to the private sector, he's been on the cutting edge of leading investments that take advantage of the digitization of services for both consumers and businesses. Because of his expertise, I'm excited for Julius to join me as we explore the latest developments in broadband and how it may be impacting the next generation of the workforce. Welcome, Julius. - Hey Tom. - I'm just gonna start with your story.
You trained as a lawyer, you clerked for the Supreme Court and you kind of crossed over into business and specifically the technology business and kind of never looked back, but I'd love to hear you tell your own story in your words, what you drew you to the sector and what's kept you in the sector. - Well, you know, I went into law and law school thinking I'd be a lawyer. I wasn't one of the students who did that as the leftover option.
And I actually, I love law school, I love the law, but after spending a couple years as a law clerk and thinking about what the future might look like, I realized that I didn't want to be an expert in legal process. I had this insight that almost whatever you do over time, you become an expert in something. And I liked the idea of being an expert in legal process, but I didn't love the idea of being an expert in legal process. And I thought, I think I'd probably enjoy more really digging into something, a subject matter. And I've always been a little bit of a tech geek, my dad is an immigrant as an engineer, I was always an early adopter of consumer tech.
This was around the dawn of the internet. And I just thought, wow, the area of technology, technology media, telecommunications, that's a fun area and I might do some law in that area, I might do some policy, I might do some business, I don't really know. And so I made that shift and I went from the Supreme Court actually to join the staff of the Federal Communications Commission, really, to kind of dig into that space and it stuck. I've spent my entire career since then, in and around tech media telecom, though, it's been a mix of government policy, a little bit of law, and then over the last number of years, business and investing.
- One of the things that we spend a lot of time thinking about at DeVry is obviously our mission is to give people access to careers in the technology economy, which in big, simple terms is more and more and more of the economy every single day. You must get asked for where we spend, infuses our curriculum, as we think about how we help people find the right path through engineering technology, through computer science, through cyber or through digital health, whatever the right path is into the technology economy. You must get asked for career advice on a reasonably regular basis. And as you think about your journey so far, what are the, if someone's starting out or pursuing an education or thinking about a career pivot, what sort of advice do you give them about finding a home, in industry after industry that's being reshaped by technology? - I think it helps a lot to like what you do.
I think if you kinda look at people over the course of the career and people who've found jobs, found good jobs, advanced in their career, more often than not, they actually like the area that they're in. And so I think the single, look, the advice I give to my kids is find something you really enjoy, 'cause you're more likely to be good at that and advance and have optionality, than if you're doing something that you don't enjoy. Now nothing's perfect and you don't love everything and sometimes you're in something and you have to look for what is it about it that you really enjoy, but that's number one. And then that relates to, I think the second piece, which is, and this is definitely true around technology, say, versus history. If you're a teaching history, if you're an expert in history to a certain extent, you only have to learn it once. Now, that's not really true, but if you're around technology, it's really a lifetime learning kind of space.
I think that's one of the attractions of being in the technology space. It's exhilarating, it's interesting, it's a great area for the curious, but it gets to this next thing where to be successful in technology over time, it helps to have both a good basis, a good base in the skills and the tech, and then also a desire, not just a willingness, but a desire at some level a hunger, to keep on learning because technology keeps on changing, if anything, the pace of change is accelerating. - Yeah, it's funny, that's obviously cyber is a hot area everywhere right now in security and info security and data security. And it's been really interesting that there's this almost two pronged approach to education where there's a baseline understanding of how technology works and then a perpetual change every week, every month in threat vectors and the technologies used to compete against them.
So it's really interesting, our faculty are having to think through what never changes, what's sort of the three foot shelf of stuff that you're always gonna wanna know, and then how how do you have the feed stream that comes in across time? Talk a little bit, if you would, around as an investor, you see not only technology companies, but see companies where technology is basically changing the business. In some sense, being a technology investor means being an investor in almost every sector in the economy these days, what do you look for? How do you think about approaching such a vast canvas and where you place bets or what themes you find really attractive? - Yeah, well, actually I'll start not with themes, Tom, but with people and the management team and the folks running the company, and that's, in some ways, it's a key part of what we look at because of this point about technology constantly changing and the competitive event landscape constantly changing, whatever business you happen to be looking at, if it's not run by someone who has the ability to run a business successfully, but also adapt to new technologies in a changing landscape, it just not gonna work. So people really matter, even if your expertise and your focus is technology. Now it's not the only thing that matters, the second thing, I think certainly for later stage investors like we are at Carlyle, you can look at business metrics.
Has the business been growing or not? If it's been growing, how fast is it growing? How is it growing compared to its competitors, compared to the market overall? You can look at its profitability, is it making money or is it losing money? How does its profitability compare to others in the market? It's better to invest in a high quality business than to invest in a low quality business as measured by its actual performance. But the third thing is, you know, there are a lot of people who wanna invest in really good businesses. So, if you find a really good business and you find a really good management team, I guess that I actually, I should mention one other thing, you asked about themes. You do wanna have a point of view on whether the business is benefiting from thematic tailwinds, are things happening around technology in the marketplace and customer or consumer adoption that are good for the business, or is it facing headwind? So you wanna have that point of view, I'd phrase the question that simply. And then finally, if you actually want to not just admire a company, but invest in it, you need ultimately to be able to win the deal and convince the decision maker that you're the best investor. There are a lot of different ways to do that.
At Carlyle, we spend a lot of time thinking about how can Carlyle as an investor add value? What can we do to support the management team, to help them accomplish their objectives to grow and to speed up their growth, et cetera? - It's really, back to your lifelong learning point, like companies need to be lifelong learners in a strange way, right? They have to be willing to grow and change and you as an investor, you have to be able to sort of seed that sort of intellectual and lifelong learning growth through the resources and assets. Let me go back to, I don't know if you'd call it your signature achievement as FCC Chair, but certainly like the media would call it really important, but the National Broadband Plan. And we're still seeing that come to fruition. The most recent dialogue has been about 5g, but it was a much broader ambition and it's being realized in lots of different, exciting ways. And I think through the lens of the pandemic, we could say, and not a moment too soon, because if that hadn't been in place, it's hard to imagine how we would've survived as an economy.
But can you talk a little bit about what it was, why you prioritized it, why it mattered and just kind of the genesis of it. And now watching it, having rolled out, kind of what you're most proud of. - Yeah, boy, it's interesting to talk about now, as you said, Tom, coming out of COVID and the ways in which broadband has really mattered for just our country and the world, making it through COVID and lockdowns and everything else. But to turn the clock back a little bit, when I was at the FCC, and we did the National Broadband Plan, I'd say a couple of things, one is no one even knew what broadband meant. And we actually did some kind of a little bit of testing of that.
And it was just a word that applied to something to do with the internet and no one understood that it meant high speed internet. And in fact, the internet wasn't widely available, and in fact, the internet at the time was primarily dial up and slow. Very early days of the internet.
We did the National Broadband Plan in, you know, we started working on it in 2008 when candidate Obama called for it in his campaign, and really started on it in 2009. And there were a few things that were pretty clear right from the start, one is that the internet could provide enormous opportunities, that it could create opportunities for new businesses, new investment, new jobs, lots of new jobs, that it could help in various important verticals like education, healthcare, public safety. So that was really clear, the details of it weren't clear, but conceptually it was clear because new technologies always do that, they have opportunities, and then they also have challenges. And the obvious challenges, or at least the challenges we were focused on at the time were, okay, how do we get broadband to everyone, everywhere? And it's a real challenge because networks have to be built out.
It requires investment to do that, it's harder to build out networks in some areas than others. It's harder to build out a profitable network in a rural area than an urban area. And we're just talking about wired broadband for the moment. Another challenge that we knew we would see is universal access, not just in terms of physically being able to get broadband, but being able to afford broadband. And so you live in an urban area and broadband passes your home, but the bills are expensive, what do you do? And then, it was very early days of wireless broadband, and we knew that would be a real challenge too, because it's nice to imagine that maybe wireless broadband relies on an infinite infrastructure that if you're sending signals from one place to another, it doesn't look like there's any obstacles in the way, but as it turns out, spectrum itself is a finite resource and you need more spectrum to have faster wireless broadband, and that's a complex thing.
And so what the National Broadband Plan really set out to do was one, better define the opportunities. What were we trying to accomplish by promoting universal, wired and wireless broadband, and then more important, what is a plan to revise rules and policies, et cetera, to accomplish those objectives? So the National Broadband Plan itself was a plan, it was a strategic plan. It was a very detailed strategic plan with an extraordinary team. We did that early in my tenure at the FCC, and it really became the four year or strategic plan for the agency, I said four years 'cause when you take over an agency like that, you really don't know if you're gonna have more than four years because the country gets to decide what happens in the next presidential election. And so we were very focused and it's a great forcing event. What can we get done in four years? But that wasn't the only thing, there were longer term initiatives in there as well.
And I'm glad that we did it, because a couple of things that I'll say right now, one is we weren't the first country in the world to do a National Broadband Plan, but we were the first country in the world to include wireless broadband as part of the thinking. And that turned out to be really important because we wouldn't have 5g, we wouldn't even have 4g if we hadn't really focused early on how do we clear more of the airwaves for broadband? And then the next thing I'm proud of is that in addition to the horizontal challenges of right, how do we build out broadband everywhere, how do we try to make progress on affordability, we also looked at these verticals, what about education? What's it gonna take to really harness the benefits of broadband in education? How about healthcare, what's it really gonna take, what are the obstacles? Same thing for public safety. And I'm really glad that we did that, it opened the door for the FCC to do a number of things, but also for the FCC to work in concert with the Education Department in Washington, but also local, education bodies, state and local on a coordinated set of policies, same thing in healthcare.
So I'm pretty happy with, I think we tackled the right issues. We worked really hard and we got the US to a good start. Listen, one of the ways you can measure it is at the time, the US was behind Europe, South Korea, Japan in 3g, right? All those other countries had faster wireless speeds than we did in the US.
But by 4g that had changed, and the US had rolled out 4g with more spectrum, more infrastructure than those other countries and that helped spur a cycle of innovation, job creation that's been quite positive. - You know, it's interesting, you could look at the pandemic and COVID, and it could be seen first as a stress test on our broadband infrastructure that there's a lot not to like about pandemic, obviously, but you at least have to say, as an economy we adapted very quickly and effectively and the data data would support that. And even probably more equitably than we could have imagined 10 years ago. I know the equity issues aren't solved, but for the National Broadband Plan, it would've been a very different scenario. - I'll say one thing about that, that people often miss in this area and that I'm glad we really highlighted and set in motion a set of policies that helped. The broadband isn't the first technology that America tried to universalize, right? So we universalized electricity, we got it to every part of the country.
We universalized telephone service, we got it to everyone. And so in some ways you could look at broadband and say, oh, okay, it's the next thing, let's just like, do that stuff. But we realized early in our work, in the National Broadband Plan, that there was one critical difference between broadband on one hand and telephone and electricity on the other hand.
And that is that telephone, electricity are binary, right? Either you have it, or you don't, you have a dial tone or you don't, broadband is different, you can have slow, medium, fast broadband. And what was fast five years ago is pretty slow today for the software and products that people use. And building that into the policy framework ended up being really important because we designed a set of policies to make sure, essentially that we would never be satisfied with where we were on broadband, because we just assumed that innovators would take advantage of faster and faster broadband.
And so even if on the rural issue, if you get a broadband wire to a rural community, that's not the end, 'cause that might be just not enough capacity for fast broadband. And then similarly for the affordability issue, if you get someone onto an on-ramp for slow broadband, well, that's a start, but it's not, it's not the end. And I think that created some resiliency and some, I don't know, being ahead of the currentness in our broadband strategizing that we benefited from in the pandemic. And I'm not saying, and you're not saying that everything went perfectly and that everyone had the broadband they needed when they needed, of course not.
But I do think we were in better shape than one might have thought we would've been. - You know, one of the funny things and you and I have seen this in a lot of boardrooms, which is, five years ago, four years ago, there was a lot of talk in most boardrooms around business continuity planning. How would the business react to an event that made it impossible to go to headquarters, made it necessary for people? And ironically, I would say one topic that's gone down in importance is most boards have seen their organizations be very resilient and able to adapt and respond in ways that would've been inconceivable even even five years ago. And that includes the companies in every sector, including the three education, healthcare and public safety that just the way those sectors, our sector and others operate would've boggled the mind five years ago. Maybe just flipping a little bit to the pandemic in many respects from strictly a technology standpoint, compressed a cycle of innovation and adoption that could have taken 10 years into about two years. You know, you can pick any statistic you want, which is what percentage of students at any level had had class online in 2018.
And effectively that answer now is everyone has been to class online, so that compressed adoption and compressed innovation, same with healthcare, percentage of primary care visits that were conducted via telehealth in 2018 was probably one-ish percent, it's probably close to 50% now. And so, we've had the chance to compress adoption and innovation of technology and digital ways of shopping, working, and living. What has sort of caught your eye? What has surprised you, just, it's kind of curious as to this use case seemed really important, didn't matter. This use case was widely and quickly adopted and proved to be really important.
Just kinda, just what has caught your eye and what surprised you as we've come through this period. - The thing that caught my eye actually was how much of the kind of product infrastructure was already in place, right? So it's not like Zoom or Teams, was invented after the lockdown. It's not that Shopify was invented after the lockdown. It's not that AWS came after the lockdown, and you can go on and on. Cloud-based software as a services business, not like the ability for a company to connect with its customers remotely only the ability that started there.
So what's been interesting to me was the bets that so many different innovators made across the landscape on what a broadband world could look like in the future were proven to be really smart bets. No question that the pandemic accelerated the trends, but that's the single thing that impresses me the most, that for the most part, when it came to the technology and the platforms, they were already there. My second point here is that is some of the areas where we saw the most rapid innovation was less technology than policy. What do I mean by that? By the way, I'm not saying that there wasn't a whole ton of new technological innovation during the pandemic, there was, and some of it we see, and some of it we won't see for another year or two or more, but the thing that happened fast, relatively fast during the pandemic was the ecosystems, particularly in some of the verticals shifted. So take telehealth, right? So telehealth wasn't invented during the pandemic, it's existed for a while, the platforms were there, but they were very slow in being adopted for a few different reasons.
Some of it was, there were reasons that some of the main users of it didn't use it. There were reasons that some doctors didn't really wanna use it, some patients didn't really like using it. Well, all of a sudden, when there's a strong reason for doctor and patient to communicate with each other through a screen, and that can really help, whether it's physical health or mental health, well, the platform was there. In some cases, there had to be changes made to policy to accommodate that.
So, you know, insurance reimbursement for remote telehealth consultations, enabling that made a big difference. You would know better than me, but there were a whole series of kind of policy decisions that had to be made, both as kind of a legal regulatory matter, but also as an educational institution matter to say, all right, we're just changing what, you know, this thing we wouldn't allow in the past and now we're allowing it. So I've been impressed by the speed of that. We haven't always gotten it right and I'm worried that kids will never see snow days again, because like school can just say, oh, no, it's a remote day, which I think that would be a tragedy. But as I said, I'm impressed by how much of the innovation infrastructure was already in place, not just the hardwired and wireless broadband infrastructure, but the products that people in businesses use and are using now during the pandemic.
- Yeah, I know it's been, and whatever we believe about behavioral change at the two-year mark, a lot of these changes are now permanent. So not only is the infrastructure permanent, but the human, whatever cognitive adoption biases we might have had, have been, it's been interesting, our professors who pioneered a lot of remote learning, not just the technology, but how do you actually get a conversation going in a virtual classroom? That has really, students now sort of expect that, and that's a totally different frame of mind. And our professors were able to leverage that in exciting and compelling new ways.
One last question for you, one idea that we've been trying to drive forward is the idea, you'll remember the Five-Foot Shelf that was anything anyone needed to know, the Harvard Classics and Charles William Eliot said, "Hey, if you read everything on the shelf, "you'll know everything you need to know "to be an educated human being." I don't know if that was ever a great idea, but we're trying to update that for the digital age to say, what would, and it won't be five-foot shelf, it would be a thumb drive or whatever. And, but I'm always curious to collect, if you were to share with our students, faculty, friends, and family of the institution, what you are influenced by as a reader, as a listener, could be book, could be a podcast, could be a whatever, what you'd nominate for inclusion on the Five-Foot Shelf or two gig drive or whatever it is that we're put together. What's on your listen, read ingest list. - Yeah, it's a great question, Tom.
I read a book recently that I'd recommend for inclusion on it, and it's a book called "Ask Your Developer," by Jeff Lawson. Jeff happens to be the Founder and CEO of Twilio, which is a company that was started before the pandemic, and then really benefited from the pandemic in the way that it enables developers to work in a whole series of technologies, phone calls, texts, whatnot. Anyway, he's written a great book. His background, by the way I should say, is he was very early at AWS Amazon's Cloud Service and helping build that from an idea to an actual business that really has changed the world in significant ways.
And then he also had an unsuccessful startup and has that experience. And it's actually, it's a terrific book, one, because it explains a lot of the tech around the cloud and software platforms like Twilio, built around the cloud in a way that's sophisticated, but accessible. And then it's also really great book about starting businesses. His stories are great as are the lessons from the stories. And then second, scaling businesses, which is a separate skillset, as you know.
Anyway, I like that book a lot, I'll mention a couple of others that are a little bit older and, you know, in technology, when you recommend older books, in some ways, they're always gonna be a little bit outta date, but they also, in some cases reflect a style of thinking that's helpful in technology. So one is a book called "The Big Switch" by Nicholas Carr. And it's really, it's a history of universalizing electricity, but in a way that's relevant to broadband. And I'd recommend that. And I'd recommend a book called "The Power of Productivity" by Michael Lewis, which is a book that digs into why productivity is a good thing, how technology increases productivity and why that's a good thing, and also it's reviewing on the ways in which it's not a straight line process, because technology disrupts.
Disruption means that some companies get hurt and some jobs are lost. And the argument for why on a net basis, productivity and disruption creates more jobs than it destroys. And I go back and forth on whether or not I really believe that argument, but it's a great book for laying that out.
I guess I'll just mention one more, problem solving is just so important in the technology world as an approach. And I rewatched a movie called "The Martian," Matt Damon is in the movie, the book is by Andy Weir. And basically an astronaut kind of gets stuck on Mars alone, and he has to figure out how to survive. And it's actually, it's a really good book on, all right, now, what do I do? I've got some problems to solve, how do I go about solving them one step at a time? As one of my mentors used to say, Barry Diller used to say, "Just one foot in front of another, "how do I solve a complicated problem? "Just one step at a time." - Yep, that's great, thank you, it's funny.
The productivity issue is one that there's been a long running debate around automation and whether this next wave of technology will prove the productivity will come at the cost of opportunity. And I've been tempted, I've been long on the side of that over time, certainly there will be pockets of disruption and we have work to do to help those pockets transition. But over time, technology changes inevitably are gonna boom for the economy. And I'm tempted with the labor situation we find ourselves in right now to say, told you so, but every time I ever say, I told you so, I'm proven immediately wrong on the other side.
So I'm not gonna, there'll be no spiking the football here. Julius, thank you for joining, this has been fantastic. I really appreciate your sharing your time and your perspective with our audience on this topic. I hope our audience found it useful as well. And obviously, I'll be a out on LinkedIn and other places, fostering conversation in some of the topics that came up today.
- Thanks Tom, great to do this with you. - Thanks, Julius. (upbeat music)