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Experience is a Great Teacher

Question: What’s the one thing you wish you knew before you started your business and why?

Answer: Never start a price war with someone who has deeper pockets.

What a conundrum; from thousands of lessons, pick one. Challenging and daunting, at the least.When Hiawatha Broadband Communications (HBCI.com) was born in 1997, the brainchild of

Bob Kierlin, founder of Fastenal Company, and Bud Baechler of Mediawerks, there were no roadmaps for alternative entrant mass communications companies, no highways to follow, no mentors. But it wasn’t a lonely landscape like the one that greeted the pioneers as the move to settle the west began. Oh, no, it was filled with mass com giants anxious to knock the socks off the tiny upstarts and make certain they were dead before they could sign a single customer.

HBC was designed to take on the gigantic incumbent, TCI, and offer Winonans a choice. The decision came at a board meeting in 1997 and suddenly the two volunteers (Bachler and I) had the ominous task of constructing a cable system across the width and breadth of Winona, Goodview, Minnesota City and Rollingstone Township in Southeastern Minnesota, an area of 35,000 residents not far from where Minnesota, Wisconsin and Iowa connect.

With only the few years of experience developing and operating a not-for-profit communications initiative that was known as Luminet, Buc and I knew little about the mass com world. Luminet connected Winona’s educational institutions with fiber-optic cable and became Winona’s Internet Service Provider (ISP).

Somehow, through all the wars, HBC has not only survived but thrived. That is due mostly to doing the right thing, offering great customer service and respecting our friends’ and neighbors’ wishes.

To be fair, HBC had a jump start because Luminet had also become an Internet Service Provider. Internet connectivity was the first product HBC offered, across lines leased from U S West. HBC

immediately began a push and soon more than 80 percent of Winonans, enthused by this new service to connect Winona to the world, had email addresses.

Cable joined the family of products early in the new century and telephone came along a couple years later. And as we gobbled up customers from first TCI, then Bresnan Communications and finally Charter (our competition changed hands three times as we were getting ready to start business), suddenly the giant noticed the gnat.

As we readied the cable plant, a board meeting defined HBC’s differentiators (service, price and more service), we opened with prices lower than Charter. We quickly found out that was a mistake. Suddenly we were in a price way we knew we couldn’t win. Charter quickly lowered its prices, then lowered them again. Our swell of new customers slowed. Tempted to go even lower, which would have made cable a lost leader, it seemed wiser to me to set our prices the same as Charter’s and rely on service to make the material difference. It worked. Although most alternative entrant companies failed or were gobbled up by their competition, HBC stands as poster child for the service equation. It now is the dominant provider in Southeastern Minnesota.