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T-Mobile's CEO on Winning Market Share by Trash-Talking Rivals

It was 2011, after 10 years as CEO of Global Crossing, I sold the company and left the job. It was the first time in my adult life that I wasn’t working full time, and I ended up getting divorced the same month.

It was a very different stage in my life. I spent some time sitting around, reading The Power of Now, and self-actualizing. I quickly realized that I sucked at not working. When a headhunter asked me to interview for the top job at T-Mobile, I did some checking and decided to take the meeting.

At the time, T-Mobile wasn’t publicly traded; it was owned and controlled by Deutsche Telekom (DT). AT&T had tried to acquire T-Mobile, but the deal fell apart owing to opposition from the Justice Department and the Federal Communications Commission. DT and T-Mobile’s employees were left adrift. During that initial meeting I wound up giving the DT CEO a bit of a pep talk, telling him the situation wasn’t as bad as he thought—a strange dynamic for a job interview, but not atypical for that CEO, who was both open and interested in all kinds of ideas and options. From where I sat, T-Mobile had great brand awareness and some clear steps it could take to turn things around. I said that I saw six or seven obvious strategic things to do, but if he wanted T-Mobile to fail, the company should keep doing what it was doing. If he wanted to change things, it needed to begin fighting hard—and that included aggressively taking on the industry leaders, Verizon and AT&T.

At most large companies, CEOs are overly diplomatic: They never say anything negative about anyone publicly, and many even avoid speaking a competitor’s name. That’s an old-school approach. I’m different. I grew up as a competitive runner, and I thrive on rivalry—it’s just part of who I am. I like winning, but I enjoy it even more when I’m making someone else lose. It’s not all smack talk; I have a deep background in business strategy. I spend most of my time thinking about where our company needs to go over the next few years and then aligning employees around how to get there. Especially in a saturated market—where one company’s market share gains must come largely at a competitor’s expense—I try to find and exploit our rivals’ weaknesses. Public attitudes have shifted about the rhetoric and candor we want and expect from leaders—fortunately, more toward my approach. Look at the 2016 presidential campaign, or at how people like Mark Cuban and Elon Musk communicate. The era when CEOs needed to have every statement cleared by the legal team is over—and good riddance. People want authenticity from leaders, not canned phrases full of legalese.

Ask Why Again

On my first day at T-Mobile, in September 2012, I recognized several things immediately. The first was that even though employees’ morale was beaten down, the overall culture was intact and had the potential to be powerful. The average age of field employees was 27, and they were looking for someone to energize them. They really just wanted a leader who could assure them that everything would be OK and channel their energy in the right direction.

I also realized that the company was being run like a paramilitary organization, with the legal and HR departments exerting too much control. I wanted to hold an employee meeting that first day, but I was told I could speak only to the senior staff. I insisted that we broadcast the event to the entire employee base and allow anyone to ask questions. Too much hierarchy is not a good thing! On my second day I met an employee, a veteran who’d served in Afghanistan. He’d been told he couldn’t display a platoon photo on his desk, because it might upset people who opposed the war. I took a photo of the soldier sitting at my desk with the platoon photo on it and told him that if he got any more questions about the photo, he should send the person to see me. Corporate bureaucracy can really waste time and kill morale. Not on my watch! On my third day I learned that T-Mobile did not allow employees to have tattoos or facial piercings. I said that my older daughter had a pierced tongue and my younger daughter had six tattoos, and it was upsetting that they couldn’t get a job at a company I was running. The policy was changed immediately. When I see something I disagree with, I ask why, and when I hear the answer, I ask why again. It’s a leadership technique you can learn from a five-year-old.

But the most important thing I recognized wasn’t specific to T-Mobile; it was true for the wireless industry in general: People hated it. I have a special line on my office phone so that I can instantly listen in on customer service calls without anyone’s knowing. I use it every day, and especially in the beginning it gave me great insight into customer pain points. For example, customers hated being locked into contracts. They hated being gouged by extra fees for things they didn’t understand or couldn’t fully control, such as data and roaming. Because of the industry’s early ways of marketing, people thought cell phones were free, when in essence the manufacturers hid behind the carriers, making wireless providers charge more in monthly fees so that their $700 phones would seem cheap. It became clear that the best way to succeed in this industry was to do things as differently as possible from the existing carriers—to do the complete opposite. That was the start of the strategy we named Un-carrier.

I Just Snapped

First, though, I tackled the obvious problems—the ones I’d laid out to the DT CEO in my job interview. T-Mobile wasn’t selling the iPhone, so we went to Apple and made a deal. Historically, T-Mobile’s coverage had been terrible, so we began buying up all the wireless spectrum we could. We also bought MetroPCS, a smaller competitor, to create the market leader in the rapidly growing prepaid segment. T-Mobile had suffered while it was run as the subsidiary of a German corporation. Combining with MetroPCS made it possible to go public through a reverse IPO and use the capital to keep investing in the infrastructure. There wasn’t anything particularly brilliant about those moves—any Wall Street analyst would have suggested the same things. But we actually took action and we did it fast.

With those pieces in place, and with our network getting better every month, we needed to relaunch the brand. In January 2013 we went to the Consumer Electronics Show in Las Vegas and held a press conference. After one question during the Q&A, I just snapped. I went on a rant. I said that if a Martian came to Earth and tried to understand the way the wireless industry works, he wouldn’t believe it—he’d go back to Mars. Carriers locked customers into long contracts and treated them like crap. Their networks were terrible. “I saw more honesty on a ad than on AT&T’s coverage maps,” I said. My remarks were spontaneous, but I meant them. The online video went viral, which proved how much pent-up consumer hostility there was toward this industry.

However, I know that you can’t shoot off your mouth unless you do the work to back it up, so I challenged my leadership team, and together we began making dramatic and ultimately successful changes to our product strategy. We wanted to make the whole industry better for consumers forever. We got rid of long-term contracts and replaced them with a transparent pricing model. We made it easier to upgrade to a new smartphone and eliminated charges for global roaming, which often led to giant bills for our rivals’ customers. We offered to pay off competitors’ early-termination fees for people who wanted to switch to T-Mobile. We made it easy to call free over Wi-Fi networks. As streaming video became more popular, we created Binge On, which allows customers to watch YouTube, Netflix, and other video without hitting their data buckets. Over time, rivals have tried to copy us, particularly in abandoning long-term, restrictive contracts. Fortunately, they don’t do a great job emulating our Un-carrier moves.

Most important, we kept investing in our network. We put our money where my mouth was. When I’m out in a bar, one of my favorite things to do is challenge strangers to a speed test: We set our phones’ browsers to a website that measures download speed and see who’s faster. My T-Mobile phone almost always wins.

We Picked Our Villain

As we changed our business and rebuilt our network, we began pointing out the contrast with our rivals— loudly. Every good narrative has a villain, and we picked ours early on: AT&T. AT&T had exclusive rights to the iPhone when it was launched, and people felt the company had taken advantage of that in pricing and customer service. Research showed that people hated AT&T—the company had off-the-chart negatives. Whenever I spoke in front of a group, I could ask, “How many of you have AT&T as your provider? Now, how many of you hate them?” and hands would go up all over the room.

Another factor led us to choose this aggressive approach: We needed to get noticed. AT&T and Verizon were each spending $5 billion a year on ads, and we couldn’t match that. In the beginning we had about 10% of the wireless market, and they each had nearly 40%. We believed that if we could drag them into the fight with us, we’d win.

We started with ads focused on our innovation. We attacked competitors directly. At one point we had someone take an AT&T phone to Europe, where he ran up enormous roaming charges; we highlighted the ridiculous bill and compared it with our free-international-roaming plan. For the 2015 Super Bowl, we had an ad with Kim Kardashian talking about how T-Mobile’s plan to allow people to carry over unused data would let them view more of her selfies, and we had Sarah Silverman and Chelsea Handler running around their homes, showing off their ability to make Wi-Fi calls. For the 2016 Super Bowl we went after Verizon, which had been running ads falsely claiming that its network was faster. We used Steve Harvey, who’d recently announced the wrong winner of the Miss Universe pageant, and had him poke fun at Verizon for misrepresenting its performance. “Verizon got it wrong!” he said. “Yes! Not me!” We even launched print ads via social media, just to solicit consumers’ opinions.

Whether in advertisements, on social media, or in my public statements, there are some lines I won’t cross. Unlike some presidential candidates, I don’t make fun of people’s families. And when another carrier is suffering technical problems, such as a network outage, I don’t make fun of that, because I realize that many people are being inconvenienced. We also pulled back on saying anything too negative about Sprint—it was once a legitimate rival, but it’s become so weak that I usually feel bad kicking it when it’s down.

Tweet Reach

Social media has become a key part of my leadership strategy. It happened somewhat accidentally. I was having dinner with my daughter, who thought it would be funny to set up a Twitter account for me. I handed her my smartphone. Minutes after we finished creating the account, T-Mobile’s corporate security called to say that someone was impersonating me on Twitter.

I assured the caller that it really was me. Our lawyers said it was a terrible idea for me to tweet, but I ignored them. One of the first interactions I had on Twitter was with someone who was looking very earnestly for advice about how to build a successful career. I asked my older daughter, who’s a big video gamer, what she thought would be helpful. I ended up replying very simply: “Play World of Warcraft. Get to Level 90.” Suddenly I had a lot of gamers and techies following me. Today I have more than 3 million followers, and because many of them are famous people (including Oprah), I have enormous reach via retweets. We did an analysis of this, and it’s not unusual for one of my tweets to get 150 million impressions. This is no game. It’s a way of driving my business.

I spend a lot of time on my phone and my tablet, tweeting. I live alone—I don’t even have a dog—and aside from running and spending time with my daughters, I work. Much of what I do online is listen to customers, and social media is perfect for that. No filtering. If someone complains about T-Mobile, I’ll tweet him or her my e-mail address and make sure we follow up internally. When I sit in meetings at headquarters, I know what’s going on outside, because people are constantly tweeting to me. If an analyst says something about our stock, or a competitor makes an announcement, I often learn about it from Twitter, sometimes even before my team has had a chance to let me know.

Some of my tweets are directed at competitors. When the CEO of Verizon admitted at an investor conference that the company’s new video service was “overhyped,” I posted a link to the story with a tweet saying, “My God, Verizon, you’re making this too easy.” Then I followed up with “If @Verizon’s ‘realistic expectations’ = spending billions to build a service no one wants/uses, then #NailedIt!” My social media presence reinforces our ad strategy. Sometimes we’ll mock up an ad taunting AT&T, and I’ll post it on Twitter; because so many people will see it, we never even need to run it in print or broadcast it for it to have an impact.

Number One In Service

I spend a lot of time in our call centers—places that previous T-Mobile CEOs rarely visited. The employees there have the most difficult job on the planet, and I have tremendous respect for them. They really are my favorites. They love it when I go after AT&T and Verizon. We have a common enemy, and when we fight together, it makes them proud. They work ridiculously hard in one-on-one conversations to explain to people why we’re better for them than our competitors are, and to see the CEO making those same claims so publicly helps energize them. Our customer service team’s enthusiasm is apparent—it’s the reason we’re often ranked number one in customer service for wireless by J.D. Power & Associates.

I was poking fun at competitors before people outside the industry began to notice—and when they finally did, it was because of the company’s performance. We’ve added customers for more than three years running, going from 33 million when I started to more than 69 million at the end of Q3 2016. Even more impressive, T-Mobile captured all of the industry’s growth in postpaid phone customers—the most valuable customers in wireless since 2013. We did that while driving down our postpaid churn rate from 2.5% in Q4 2012 to 1.3% in Q1 2016. AT&T and Verizon didn’t take T-Mobile seriously until it was too late, and I really have to thank them for that.

As we get bigger, we may need to find new villains to fight—but that won’t be hard. Sometimes the best way to motivate people is to create the idea of an evil force. At Global Crossing, for instance, the enemy was bankruptcy. Elsewhere it might be bureaucracy or some other internal problem. Right now the wireless industry is beginning to compete more directly with the cable companies, so there are plenty of options for a new bad guy in the future. Maybe the cable companies?

When it comes to changing how the wireless industry operates, we’re only getting started. We’ll do much more to solve customer pain points. Our competitors are making it easier all the time.

Inukshuk Change Management mountain (left)
Inukshuk Change Management mountain (right)
Inukshuk change management logo (black)
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