The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software and Vetro FiberMap.
Pete Pizzutillo:
This episode of The Broadband Bunch is sponsored by ETI Software and VETRO FiberMap.
Hello, and welcome to another episode of The Broadband Bunch. My name is Pete Pizzutillo. This is the Broadband Bunch podcast where we like to explore stories, issues, and trends across our industry. Today’s show is sponsored by ETI Software and VETRO FiberMap. We’re grateful for their continued support, and we encourage you to check them out. Speaking of support, please be sure to subscribe or rate us on your favorite app. That helps us continue what we’re doing today. Today’s guest is Dee Anna Sobczak. She’s the CEO of ThinkBig Networks. Dee Anna, I really appreciate you joining us today.
Dee Anna Sobczak:
Thank you, Pete. It’s a pleasure being here. I’m looking forward to it.
Pete Pizzutillo:
Yeah, so am I. There’s a lot to talk about. But before we get into that, perhaps we can paint a little bit of a background on how you ended up where you are today.
Dee Anna Sobczak:
Absolutely. When I started my career, I was an accountant. Quickly, I realized that wasn’t the field that I wanted to stay in for the rest of my life. In 1998, I was a co-founder and a partner in CSS Antenna. We were an antenna manufacturing company. We sold to large carriers across the United States. And many times, we were Verizon’s number one or number two antenna provider.
In 2013, we sold the company to JMA Wireless. I could have ridden off into the sunset, but I wasn’t ready. I was still young, and I really wanted to have an opportunity not only to have a great career but to also be able to make a lasting impact on society. So I floundered for two years trying to figure out what to do. One of my friends, Mark Wagner, who’s also my co-founder of ThinkBig, had just sold his company.
He had worked in the commercial internet service providing space in Baltimore, and he sold that network. So we both collaborated on a, I don’t know, weekly basis trying to figure out what to do. And we came across this project in Kent County where they put out an RFP. They wanted to build fiber to all of their facilities across the county that would give them a fiber connection to all their facilities but also become an open access ring so that internet service providers could rent space and begin building the last mile.
The company that started building out the ring that actually won the RFP ended up having financial hardship in 2017. We acquired their assets, and we continued working with Kent County to complete that project and to help fulfill the original mission. So we very quickly realized that the lack of broadband in rural areas wasn’t just limited to Kent County, but it was a statewide problem.
I personally have always lived in the suburbs. Up until that time, I don’t think I would’ve even asked if a house I was purchasing had internet. I would’ve just assumed it did like electric, water, and sewer. We have so many stories of people calling our office now on a daily basis trying to explain to us that we don’t understand. They have no access whatsoever to the internet. Our reply is always, “We understand, and actually, that’s what we specialize in.”
A funny story, we had just been awarded a grant in one of the rural areas in Kent County. I’m a visual person, so I like to drive the routes. So I drove out this one particular day, and I wanted to understand everything about that route. It was July 2020, so COVID was at its height. I stopped to talk to a man who was just moving into this beautiful waterfront property.
He went on to explain that he was an attorney from Bethesda. And he was so excited to have this wonderful property. But he just realized he had no access to the internet, and he didn’t know what he was going to do. He had just spent a ton of money on a home, and he wasn’t going to be able to work from there. I filled him in on the grant that we had just received and the expansion plan to bring fiber to his property. And remember, this is COVID. He actually grabbed me, hugged me, and acted like his long-lost friend. And fortunately, I didn’t get COVID.
But very early on, Mark and I knew we wanted to expand into other counties. So we began responding to county RFPs for partnering in some fashion or another with other counties to bring fiber to unserved areas. And we subsequently were successful in partnering with three other counties to build in their rural areas. And we continue working closely with them now trying to fulfill their missions of bringing service to all their residents.
Pete Pizzutillo:
Wow. This is why I love doing the show. You’re an accountant. You said you floundered for a couple of years. Then you decided to start this business, and it’s like a hard business. Joe and I have been floundering for 50 years, and we still haven’t decided to open up an ISP. So kudos to you.
Dee Anna Sobczak:
I couldn’t do something easy. I had to go in; I was all in.
Pete Pizzutillo:
That’s funny. So thank you for that timeline. I think it’s really interesting how folks in the startup mode prior to COVID. COVID definitely shone a light on the space and really solidified the idea of this essential utility. So how were you able to get the counties and states thinking about investing in this? What was that landscape like back then?
Dee Anna Sobczak:
From that business standpoint, Kent County actually came up with the idea of building an open-access network to try to solve their own problem. They had a gentleman that headed up their IT department. He was very forward-thinking. So he was able to bring this forward to the commissioners, and they voted and brought this project to life.
But overall, in Maryland, we are very fortunate to be doing business here. We immediately realized as we started building that in order to build a business case for a rural expansion, you have to be subsidized by local or state governments. Not for them to give you a handout, but actually to subsidize the bill to make it a sustainable business to turn it into a business model. Governor Hogan, our governor at that time, had made broadband one of his initiatives when he was elected. We immediately started showing up after he was elected to all of his events and had opportunities to talk to him about issues.
Ironically, the first time we spoke with him, he had just completed a road trip going all through the Eastern Shore of Maryland. So my opening line to him was, “How was your experience with broadband while you were on that trip?” And it led to a great conversation because he said it was horrible. The conversation just soared from there. And every time I saw him, we talked about broadband. He did a great job. And he really helped push these initiatives the entire time he was in office.
He started a broadband task force and based on recommendations from that task force, the state created the Office of Rural Broadband, which now has been renamed the Office of Statewide Broadband. It’s not only there to get to unserved citizens, but there’s also an equity component. They realize that it’s not just that people don’t have broadband available to them. Some people have broadband available, but they just don’t have the resources to pay for it.
I think that the first round of funding came out in late 2018. With this funding, the state started to award grants for 50% of the costs to do expansion builds. An expansion build is something where you find an area that’s right off of your existing network. And they subsidize it by 50% to have you expand and bring internet access to those folks along the way. The local counties and towns could also participate in that funding if they wanted. You didn’t have to pay the exact 50%.
We were lucky with Kent County at that time. They actually also continued to participate because they wanted to get service to their residents. That was only the beginning. The next year, they came out with an additional funding round. With that, you had the ability to apply for an infrastructure grant which basically meant it didn’t have to be off of your existing backbone.
It could be a new build in a different area as long as it was unserved. It didn’t have to be adjacent to your existing network. And then once COVID hit, everything changed. The state since then has had three consecutive years where they granted around $95 million each year to providers to build in unserved areas. And we’re proud to say that we are one of the providers that participated every year. We actually were awarded grants every year. And every year, they even changed the structure of the grants.
Early on, they would help you build out the roads, meaning the laterals of your network. They would pay 50%, but they started putting more funding into it realizing that sometimes 50% still didn’t make it a business model. So they upped the game the next year with 60%, and then the last several years it’s been 70, 80, or 90%. They would participate all based on how many homes you pass per mile.
Pete Pizzutillo:
Yeah. Thanks for that. So you have a lot of experience working with public money and public officials. And there’s a lot of attention on grants and public money today. So what advice do you have for other operators trying to bridge that gap?
Dee Anna Sobczak:
First, I would say to realize what you’re committing your company to do. All the current funding besides RDOF, as far as I know, is a reimbursement. It’s not front-end loaded. So you have to actually make sure that you have the capital to front the expenses and then wait to be reimbursed. Secondly, really understand the project that you’re bidding on. We’ve had huge issues in several of the areas that we’re building with right of ways. In many of the rural areas in Maryland, property owners either own all the way to the edge of the road, to the center of the road, or both sides of the road. So there are no public rights of ways.
In these cases, the county actually maintains the road, but they have no ability to issue a permit for us to build. So you have to acquire easements from each individual property owner. All it takes is one landowner along the way that owns both sides of the road to stop the build. So this is going back to the days when we were bringing electricity across the country and having to get permission to go through everyone’s yards. Acquiring easements is expensive. You have to throw a lot of labor at it.
As a company, we have a policy that we don’t pay for easements. These projects are already tough and expensive, and that would just add one more layer. I am grateful to say we are in the process of finishing up a project which we actually had to get about 500 easements. It was brutal and time-consuming, and we spent many hours trying to get with the communities and the neighbors. It takes a village. We really had to rely heavily on the neighbors and get them involved and have them basically peer pressure their neighbors into allowing us to cross their property.
Third, I would say to make sure that the jurisdiction you’re applying for funding in is your friend. And when I say this, I mean you have to work on having a great relationship with the county or town partner. You’re going to need each other throughout the project because these projects aren’t easy. So make sure that you work on that relationship, and add contingencies both dollars and time to the projects. With the amount of money that’s rolling out now, we all need to worry about supply chain issues and inflation.
Then I would say most importantly, understand the opportunity cost. If you have limited resources, make sure that this is the space that you want to participate in. You get a great take rate because you don’t have any competition, but you don’t pass a lot of homes, which plays a vital role in the valuation of a fiber business. So really look at your business model and make sure that it’s the direction you want to go.
Pete Pizzutillo:
Yeah, that’s a great insight. I appreciate that. I think also more recently you’ve decided to partner with private equity to get some private funding. What drove you in that direction, and what are some key points to consider when you’re looking down that path?
Dee Anna Sobczak:
This is probably the easiest question you’ve asked me so far because building a fiber business is very expensive. We started the company with friends and family dollars, and then we grew through grant subsidies. But we realized if we wanted to continue to grow, we needed additional dollars. Unfortunately, businesses like ours are very capital-intensive and struggle in the early years for EBITDA. So we don’t fit into the typical banking model. So you have no other alternative than to turn to private equity. And we also knew that we wanted to grow faster. In order to do that, we could not wait until we could do it organically based off of our monthly revenue. We knew we had to bring in a partner.
Pete Pizzutillo:
Have the winds of change hit private equity since you started today? Yeah. In what way?
Dee Anna Sobczak:
Yes, it’s changed a lot, but actually, all in a positive way. When we were small and bootstrapped, you do what you need to do to keep building. We had systems in place, billing systems, fiber mapping systems, and financial reporting. But we were doing what we needed to just to continue to operate and get by, file our taxes, and have our annual audit. But we weren’t really monitoring our financials and everything about our company through KPIs like we should have been.
Once we brought in private equity, we had to become totally transparent. We might know internally what’s going on, but now we have to be able to share that information with our funders. But our private equity partners have been great to work with. They struck a check, but it was only the beginning. They really became true partners. They’re seasoned professionals, and they want us to grow and succeed.
They come with a wealth of knowledge and experience, and they continue to share with us daily. Our business isn’t one that can ever go away. When you think about it, we’re building infrastructure. This has to stand the test of time. When we first got funded, we took two steps back and looked at the entire company under a microscope. We knew we wanted to scale, so we had to look at every process and make improvements so that we could actually scale.
So we added an additional layer of management. We brought in seasoned professionals both in finance and operations, and that’s paved a path for us so that we have future opportunities for growth. We are still in the process of modifying and adding to our existing BSS software. We’ve developed strong financial reporting packages. We track KPIs daily now and consistently on a regular basis, and we share them with our employees. So we’re excited, and we’re looking forward to the future.
Pete Pizzutillo:
Yeah, you have a lot going on there. You mentioned community engagement. You said, “It takes a village.” What are some of the things that operators can do to start fostering those relationships?
Dee Anna Sobczak:
So we work with local towns and counties and anyone that’s on the government level, but we also get involved with economic development, the Chamber of Commerce, and actually neighborhoods, HOAs, or just neighbors in general. In every one of our footprints where we have a large footprint, we also have an office, and we’re local.
So we have the opportunity to get involved in the town and county, and we do that. We sponsor local events. We try to make ourselves available for questions and answer sessions. Actually, just last night, we had what we called a winter warming station. It’s within a new footprint where we had our company representatives out on the one hand to answer questions on installation and service, and we shared hot chocolate and cookies.
It was a great event. I actually was there. It was cold, but it was great. And we work with the towns themselves. So not only do the residents in a lot of areas need some help with fiber and internet resources, a lot of the towns and counties need help also in expanding their network. So we work very closely with them providing fiber when needed. You just have to become a partner. It’s not just a partner with private equity and your employees, it’s a partner with anyone that you do business with. And we pride ourselves on customer service and involvement in communities. We’re really proud of the way we handle it.
Pete Pizzutillo:
Yeah, it’s interesting. One of the observations I have made about this space is there’s a tendency to be very technical and speak at a, we call it, a PhD level. Here everyday citizens now are charged with this money that’s coming down from a public policy side as well as consumers trying to figure out what the heck we’re all talking about. So I can definitely see taking a step closer to those folks and speaking more their language than our language.
Dee Anna Sobczak:
Right. And their stories are so interesting. Again, I know I talked about this earlier. But the amount of people that come up and talk to us about the fact that they don’t have internet. They’re like, “I don’t have bad internet, I just don’t even have internet.” And they always say, “You don’t understand.”
We’ve heard so many stories. This woman would call us during COVID. We were building to her, and we couldn’t get there quick enough. She had a motor home, and she would have to go leave her house and take her motor home over to her friend’s yard, park in the yard, and piggyback on their Wi-Fi. Especially in Kent County, we had multiple areas where people could go, and we just would have public Wi-Fi available, whether it be sitting outside of the library or sitting on a boat ramp. We became very creative, in parks, just so that people could have access.
Pete Pizzutillo:
Yeah, that’s great. I want to switch gears. So you recently told us about how you were moving towards challenging a legacy cable operator. You guys started serving the unserved, and now this could be considered overbuilding. What led to that decision, and can you tell us a little bit more about it?
Dee Anna Sobczak:
Sure. This is also a byproduct of bringing in private equity. But we deep dove into our financial model, and we realized that building a network with subsidies is great. But we needed to begin building in a competitive area if we truly wanted to add value to the company. Our private equity partners helped us. When I say helped us, they basically developed a tool for us to begin looking into potential build areas and having a method to assess the demographics and begin rating the communities that we were interested in expanding in.
And subsequently, since then, we’ve started our first large-ever build. When I say large, it’s large for us, not large for a company like Comcast or Verizon. But we’ve started it. We’re going up against one incumbent cable provider, and we’re really excited about it. It’s interesting also that now in these suburban areas and urban areas, people are becoming envious of people in the rural areas that actually are beginning to be connected with fiber networks. These towns have a 30-year-old worn-out cable system. And also, in many areas in these suburban areas, there’s only one incumbent provider. People are really looking for choices. Not that they won’t leave their provider, but they want to know they have a choice if they want to.
Pete Pizzutillo:
I totally get it. I live outside of Philadelphia in Comcast country. And I moved a mile, and I lost FiOS. So I’m on Coax at this point in time. Now, I’m like, “Please, somebody, please.” So I get it.
Dee Anna Sobczak:
And there are a lot of opportunities for overbuilding against cable providers. I personally wouldn’t go up and make a plan, at this point in time to overbuild a fiber provider. I don’t think it would be a great business model for us because fiber is fiber. But there’s a tremendous difference between cable and fiber.
Pete Pizzutillo:
Yeah. Cable is adequate, but you’re right. I don’t know how long it’s sustainable. You’ve been listening to The Broadband Bunch. We’ve been speaking with Dee Anna Sobczak. She’s the CEO of ThinkBig Networks telling us a little about her journey. Dee Anna, you have an impressive growth story going from just a couple of people and an idea to managing a growing network. What are some of the growing pains that you’ve encountered, and have any of those been a surprise to you?
Dee Anna Sobczak:
Yeah, we’ve had so many challenges. I think the first surprise was when we started to expand into the rural area. We received a grant, and we realized that we had to get 500 easements in order to complete a project, that basically. It even surprised the county at the time because we did talk to them about their roads on the front end. And they did not think it was going to be as much of a problem as it was, but we got through it. Other growing pains, money and dollars. This is really an expensive business. To build a mile of fiber is very expensive. So we have a lot of great ideas, but we need the financing behind it to make sure that it’s financially feasible.
What other growing pains? Labor. We have a great team. We’ve been able to keep our workforce, but I know that a lot of folks in our industry are struggling with labor. And then supply chain issues. It’s kind of gotten back into check. But once COVID hit, a hand box that might’ve cost $150 is now $400. Just the cost inflation has skyrocketed. So that was a surprise. No one could have, number one, known that COVID was coming. In our business, it was good, and it was bad. It was great because it showed that everyone needs access to broadband, so the funding has come. But at the same time, because the funding is coming, costs have skyrocketed.
Pete Pizzutillo:
There are a lot of people struggling with the same type of dynamics there. I’m torn about asking you this question, but I’m going to ask you anyway.
Dee Anna Sobczak:
I Can’t wait.
Pete Pizzutillo:
Yeah. So what has it been like for you as a woman entrepreneur not just this telecommunication space, but the business space? Can you share your thoughts on that journey? Is there any advice to some of our female listeners?
Dee Anna Sobczak:
Yeah. I wouldn’t say that it hasn’t had challenges. I’ve gotten very comfortable being the only woman in the room, but this isn’t the only industry where you become the only woman in the room. It’s interesting, as we were going out and raising money, I saw a lot of that in private equity that they might have one woman in the room. But I have many great male peers, and they’ve gone out of their way to make me feel respected. And I built a collaborative team of peers that are in my industry that are outside of my footprint. We talk on a regular consistent basis. We share ideas, horror stories, and call and ask for advice. So it hasn’t been bad. Women bring a different perspective to any business, and I think that the world is open to it. It’s time.
Pete Pizzutillo:
Yeah, for sure.
Dee Anna Sobczak:
I would say to other women that you can do this. Don’t back down. Don’t be afraid. We do bring a different perspective, and it’s needed. So embrace the challenge; embrace the journey.
And I have a great team. I have to tell you. For a long period of time, I was one of two women in our company. We built out our team, and there are more women now. But my team has been so respectful and just so embracing from the beginning that I couldn’t imagine it any other way.
Pete Pizzutillo:
Yeah, that’s great. Well, what about going back in time? What would you tell yourself 20 years ago? What would you do differently? Or what would you tell yourself to do sooner?
Dee Anna Sobczak:
So I realized this when I sold my old company. When we started, everything was about growth and getting to the end game of growing the company, getting to the end, selling the company, making money, and riding off into the sunset. But quickly, I realized, “Enjoy this journey and just stay focused. Don’t blink.”
The joy is actually in building the company and in developing these relationships. We’re building something that’s going to stand the test of time. Building a fiber network, it’s a utility. It will be here long after I’m gone. So I would just tell myself if I could go back in time, “Enjoy the journey.” I tell that to my kids all the time now, “Just live in the moment and enjoy it. When you look back, you’re going to realize, yeah, it took a village to do it, but you did it. And the happiest times in the memories are not at the end. It’s as you’re building.”
Pete Pizzutillo:
Right. It’s the journey, not the destination.
Dee Anna Sobczak:
That’s true. It’s so true.
Pete Pizzutillo:
Do you have one more in you? If you do end up monetizing ThinkBig, is there some harder job you can find to do?
Dee Anna Sobczak:
I’m just not going to say anything right now.
Pete Pizzutillo:
Fair enough.
Dee Anna Sobczak:
But hopefully, I’m still involved with ThinkBig for a long period of time.
Pete Pizzutillo:
I hope the same. So last question. There’s a lot going on as you mentioned. Thank you for walking back your journey and some of the ways you guys have moved forward.
This is more of an industry perspective. Looking at the next 24 months, where do you think we are going to succeed? Where are you concerned there might be some shortfalls in terms of helping meet this digital divide?
Dee Anna Sobczak:
Yeah, I’m really hopeful that as the BEAD funding comes out and other grant programs come out, we are able to get everyone and allow everyone to have access to the internet. If you don’t have access to the internet, then you’re the underdog. From education, work, social, medical, and every area of your life, every aspect. If you don’t have access to the internet, somehow you’re not as well off as the person who does.
So I’m really, really hopeful that the funding continues. I’m hoping that providers are responsible and that they roll it out in a responsible way. If they commit to something, we all follow through with whatever we commit to. And then I’m also hopeful that in the areas that aren’t rural spaces in the suburban areas, people have access to choices.
They do have cable from 30 years ago. But I’m hopeful that across the entire country, our infrastructure is great in all areas and everyone has access to fiber. We have no idea all the benefits that fiber’s going to bring to us down the road. It remains to be seen. So I’m really hopeful that that happens, but it’s going to take a lot of money. So I’m just very hopeful that the funding continues and it’s done in a way that allows a provider to build a business model, not make the provider rich, but to just build a business model so that they can succeed and keep these networks going.
Pete Pizzutillo:
Yeah, that would be great. Thanks again. How can our listeners learn more about you and ThinkBig Networks?
Dee Anna Sobczak:
Sure. So you can go to our website, thinkbignets.com. Or if you’re in the Maryland area, and you think you might be in our footprint, feel free to call us at (888) 318-1372. And we’ll be happy to help.
Pete Pizzutillo:
Great. Hey, Dee Anna, I really appreciate the time and it was a pleasure talking to you. Thanks for joining us.
Dee Anna Sobczak:
Pete, thank you so much. I really appreciate it.
Pete Pizzutillo:
And to our listeners, thanks for listening to another episode of Broadband Bunch. If you have enjoyed this episode, please be sure to subscribe or rate us. You can also follow us on our social media handles or on our website at broadbandbunch.com. Thanks again for investing your time in our show. I appreciate it. See you next time.
