Interview Date: June 13, 2023
Interviewer: Stewart Schley
Abstract
Joel Susel, President, Eagle:xm SOLUTIONS (parent company,1Vision), talks about his long marketing career in the cable industry. He describes his education as a Harvard MBA, learning the first spreadsheets using VisiCalc, and his work at Pepsi USA leveraging data to improve beverage industry marketing practices . Then he describes his time at United Cable Television, based in Denver. He talks about the marketing “dream team” led by Nimrod Kovacs and his work with members of the Schneider family, including Gene, Tina, and Mark. Susel outlines pioneering marketing initiatives undertaken by United Cable, especially the first national deployment of interactive two-way impulse pay-per-view. He describes specific cases of transitioning linear Playboy TV to a superior performing on-demand PPV platform; the last large Urban new build in inner-city Baltimore; and the creation of a highly successful cable system in Israel (Tevel). He next discusses his move to Eagle, Eagle founder Howard Harris, and the creation of the industry’s first marketing database by using micro-computing networks to extract granular information from cable system mainframe billing/operating databases. This was the start of scientific marketing in the industry. He describes success stories from marketing databases developed for MSOs such as Jones Intercable, Cablevision Industries, and Time Warner Cable. He explains the creation of broadband propensity segments and his current work with a new generation of small broadband companies delivering advanced fiber-to-the-home internet capabilities in underserved smaller towns and rural areas across the USA. Since joining Eagle, Joel and his team have closely supported more than 120 Cable/Broadband marketing teams in the industry, including over 10 operators today, the balance have moved on due to ongoing industry consolidation. Eagle continues to become the marketing team to support client marketing teams with its experience and best practices. The journey continues…
Interview Transcript
Part 1: Background; 0:22
Part 2: United Cable Television; 9:40
Part 3: EagleDirect; 54:33
Part 4: What’s Next; 1:26:47
Part 1
STEWART SCHLEY: Well, greetings, welcome, and happy to have you at this episode of the Hauser Oral History Series, presented and curated by the Syndeo Institute at The Cable Center. We’re mid-June 2023 at The Cable Center Studios, and there are two reasons for a very elevated mood here in Denver. Last night, after 56 years of futility, our basketball team won an NBA title. And the other reason is that, after trying to hornswoggle my guest for several years into this chair, I finally have him. Please meet Joel Susel, whose imprint and pedigree and impact on the marketing practices and history of the cable industry runs deep. Joel, we’re happy to have you here today.
JOEL SUSEL: It’s a great honor. I’ve been coming to The Cable Center ever since the doors opened, and am very honored to be able to show the history, not because it’s my history, but more because it’s the history of the cable pioneers and amazing people I’ve worked with over the years. And I’m really honored to be able to share it.
SCHLEY: Well, we appreciate it, and I am not exaggerating, you really have a reach and a rich and deep history, and we’re going to talk about it in sort of a quadrant of chunks. We want to talk about your early background and education, how you got into the industry. You worked for a seminal company called United Cable Television for a long time, and we’re going to talk about that. We’re going to talk in a third section about your work with Eagle Direct, the preeminent direct marketing and scientific marketing company serving this industry.
SUSEL: Eagle:xm SOLUTIONS today.
SCHLEY: Eagle:xm SOLUTIONS today. And then I want to hear from you about, what’s next? Both for Joel and what you see coming around the horizon for the cable business. So that’s a lot.
Take me to your life as a student at Claremont McKenna College, that’s kind of where you began your professional career, the education preceding it. What was life then for Joel Susel?
SUSEL: Well, I think it really starts with the fact that I’m first generation, and my parents immigrated to the United States in 1951 as Holocaust survivors, having lost most of their families. And the opportunity that I’ve had as a first-generation is really amazing. And I knew, growing up, that I wanted to be in business. And when I was in high school, I was pretty fixated on the idea of getting into the best business school, and my college counselor told me that if you want to get into someplace like Harvard, you need to go to Claremont, CMC. And he was right. Claremont was named the number one undergraduate economics program in the United States. It had the highest acceptance rate into the Harvard business school for its size. And I was — I couldn’t afford to go there, but I was lucky to get a full tuition scholarship. And it was life-changing. When I went to Claremont, I majored in economics and computer sciences. My brother inspired me to do that, because he actually went to the Stanford business school and pioneered decision computing in the United States government.
SCHLEY: Older brother? Younger brother?
SUSEL: My older brother, who was actually born in the displaced persons camp and emigrated with my parents. He was 10 years older than me. But he was brilliant and he used computers to help the Environmental Protection Agency; later DOE, Department of Energy, which he helped create later; Homeland Security, to make decisions with computers. So my brother had a big influence on me. His name was Irv Susel. And he was the reason I did a dual major in computer sciences as well.
SCHLEY: So I’m going to skip you forward. You get into Harvard Business School.
SUSEL: Yeah. So, that was a miracle. A white male getting into the Harvard Business School that didn’t have a pedigree family, it was a miracle. And it was an amazing two years. But the part of it that was game-changing for me is that my section, out of 12 or 13 sections in the class of 1983, was selected to participate in an experiment. Using a PC donated by the Tandy Corporation, because they were the leading ones, and a Harvard MBA created the first spreadsheet, called VisiCalc. So we had to use DOS and four of us had to share a computer, learn DOS, learn spreadsheets, for a finance case where the case was on floppy disks. And it turned out to be a disaster because it was just too much to add to our curriculum, but it was a blessing for me, a silver lining, because I learned spreadsheets before anybody knew what they were. When I was at Harvard, I knew I wanted to come back to Denver. I knew I wanted to work in the cable industry. I was overqualified for the Denver market, but there are eight cable companies headquartered in Denver and I had two role models. One was Charlie Townsend, Harvard MBA, Pepsi alum, that was the head of marketing at United Cable, and Steve St. Marie, who let the marketing at ATC. Also Pepsi — Harvard MBA, Pepsi alum. So I went to work for Pepsi as a summer intern —
SCHLEY: In New York City, right? In the city?
SUSEL: — at headquarters in Purchase, with the hopes of that being my ticket to get to Denver.
SCHLEY: Joel, I’ve got to ask, why did cable even show up on your radar at that time?
SUSEL: Because there were eight cable companies headquartered in Denver.
SCHLEY: But cable was barely born. I mean, we’re starting to enter the go-go years.
SUSEL: Because I wanted a job in Denver. My parents were Holocaust survivors and I wanted to come home.
SCHLEY: I see. Okay.
SUSEL: And the cable industry was hiring a bunch of Harvard MBAs from Pepsi, so it was like, okay. So I ended up getting hired by a fellow named Scott Wills who led the Pepsi Challenge brand group, and what was significant there is that my summer project was to figure out why the Pepsi Challenge worked, because nobody could explain why it was so successful. And the breakthrough was that there were four databases that didn’t talk to each other that gave us all the metrics nationally for Pepsi. You know, sales performance, ad displays, how we performed in the stores in terms of what was on the shelf, and I basically spent the summer with a ruler. I printed out, on dot-matrix printers, data on the top 50 markets from four different databases, and I spent the whole summer entering it into a spreadsheet, which nobody knew what it was. Indexing it and ranking it. And the answer was there. So they thought I was a genius, but that’s all I did. (laughs)
SCHLEY: But, you know, you tell this story and I can see how this later infiltrates your career, you know?
SUSEL: Well, it did, because I went to work fulltime at Pepsi. I worked at Pepsi when John Sculley was there. So I was literally there when Steve Jobs recruited him away. And I came back under Roger Enrico, who was a legendary CEO, and I was there for a year, and I did a lot of cool stuff, working on all the new products. But a year into my career, the head of marketing walked into my office and said, “We need your help. We spent millions of dollars on a study with McKinsey and IRI on the industry’s first scanner tracking data,” and they presented to the board and they were fired because they provided a lot of intelligence but they had no idea how to implement it. “So, you have a new job, you have to figure out how to implement the McKinsey study.” So I ended up writing the company’s 1986 food store strategy based on scanner tracking data, and it was the industry’s first utilization of data for marketing strategies. So we — I hired an agency — we created something called consumer preference merchandising, and the simple formula was that you needed to behave differently if you were the share leader versus parity share versus low-share. And we created floppy disks for ourselves for us to take into supermarkets, and it was a game-changing strategy. And I was the youngest person ever to present to the management and bottling committee. I mean, the lowest-titled person. So I kind of became the data guru at Pepsi marketing.
Part 2
SCHLEY: Okay. I want you to take me, now, to Denver, Colorado. You get hired, now, by who?
SUSEL: Well, so what happened is, when I graduated from business school, I got a job offer from United Cable, from Charlie Townsend and Nimrod Kovacs, to be manager of new products. And it wasn’t a very sexy job, and I had this better offer from Pepsi, and my fiancée at the time, Leslie Swid, also a Harvard MBA from my section, we both had offers in New York. So we had to go to New York. So, in October of 1985, I got a call at my office on my desk phone, because we didn’t have mobile phones then, from Nimrod. And he said, “Charlie Townsend just left to go to Colony Communications,” I think. “I have his job.” He said, “How would you like my job?”
SCHLEY: That’s very good Nimrod, by the way.
SUSEL: Yeah. (laughs) So, he basically offered me his job. So instead of manager of new products, I was director of national marketing.
SCHLEY: Did you say yes right away?
SUSEL: No, I had to go home and talk to Leslie first.
SCHLEY: Fine, okay. But you were excited about the prospect.
SUSEL: I was heartbroken to leave Pepsi at the pinnacle of my career, but Leslie thought she was pregnant, she hated her job at the time and wanted to leave, and the cost of living in New York was untenable. And I wanted to go home. So it only took about a week to accept the job.
It was truly an honor to join Nimrod’s dream team, as he liked to call us. This photo was taken in 1986 for the United Cable TV Corp. annual report. It shows Sherri Herman, our director of programming; Nimrod Kovacs, VP of marketing, programming and research; Lee Clayton, who was director or research, and I was in the bottom right hand corner as director of national field marketing. Our dream team truly came together during a magical time in the company’s history. Every one on the dream team evolved to very special career paths, during and after United Cable days. Especially Nimrod, who catapulted his career into a myriad of programming network investment deals that changed the industry. Later, Nimrod pioneered and led landmark international cable television companies for nearly two decades across Eastern Europe for United International Holdings, starting with his home country of Hungary. This later became integrated into today’s Liberty Global.
SCHLEY: Joel, let’s talk about United Cable Television. I used this word earlier, but really one of the seminal MSOs [multiple system operators], as we called them in the day, in the industry. You arrived to begin your job. Take me there, what was that like and what did you focus on?
SUSEL: It was like drinking through a fire hydrant in terms of the number of things that we were taking on, the number of initiatives, and the degree of responsibility that Nimrod gave me, in part because he had other things that he was pursuing. So the next two years were probably the best two years of my entire career, for a couple of reasons. One is that the Schneiders were the most extraordinary entrepreneurs and risk-takers in the industry, in a way that most people really — it wasn’t on their radar. And I became an entrenched insider and literally felt part of the family. I worked really closely with the Schneiders, as did Nimrod and his whole team. And, as Nimrod blossomed as an entrepreneur, he ended up not being able to assume many of his responsibilities as vice president of marketing and programming. So I wasn’t just director of national marketing, I was really kind of, like, in his shoes more than half the time. And the most important part of that is that I spent the next two years in the boardroom all the time, with Gene Schneider, our CEO and chairman; Fred Vierra, our president; Bill Elsner, our CFO. And there was a department — there was a head of every department. So I was in Nimrod’s chair as the head of marketing as, you know, we had at least weekly, if not biweekly, big meetings that involved all the department heads. And, some of them, leading people in the industry would flow through the boardroom, and we would watch our leaders, Gene and Fred, interact with just dozens and dozens of industry figureheads, along with all the budgets, along with all the internal planning. So I was deeply entrenched as an insider.
And the Schneiders, Gene and his brother Richard, were engineers, committed to the industry’s cutting-edge technology in a way that nobody else was, none of the other MSOs. And we invested in technology broadly, more aggressively, nonstop. And that kind of meant a couple things. One is that we, I, inherited the largest channel lineup in the industry. Companies like TCI were capacity-limited with only 20 or 25 channels. We had 120 channels in most of our cable systems. So we carried everything imaginable. We leased every channel imaginable. We carried every religious channel, we were the largest distributor of PTL. You know, we were the largest distributor of everything. There was nothing that we weren’t willing to carry.
SCHLEY: And, Joel, how many — how big was United? I mean, just give us a sense of context.
SUSEL: That’s a really good question. So I’m going to mention about five or more of the key assignments that I got. The first one was to figure out how to celebrate our millionth customer.
SCHLEY: Oh, okay.
SUSEL: So, I joined in October of 1985, and we were on the brink of hitting a million customers. By the time United Cable ceased to be United Cable and merged with Daniels and United Artists, we were up to 1.2 million. And when we merged with Daniels and United Artists, we were 2.8 million. So, when I started, United Cable was the 10th-largest MSO, and when I ended, United Artists Cable was the fourth-largest MSO. And I also ran the national marketing at United Artists Cable.
SCHLEY: Okay. It’s just interesting, you had exposure at a high level to, let’s just say, a lot of bigshots in the industry.
SUSEL: Unusually high level. It was — well, it was unusual in part because we were doing out-of-the-box things, which we’ll talk about. So, there were four things that we’re going to touch on today about United Cable. The first is the highest channel capacity in the industry, and the implication of this is, cable had just been deregulated. And my first assignment was to figure out how to take basic cable — which was ten to twelve dollars, and we were about 40, 45 percent penetrated in the country — to expanded basic, adding really special channels like A&E and Nickelodeon and Discovery and CNN and more, for an additional five dollars.
SCHLEY: Okay. Deregulation permitted you now to do some of these things.
SUSEL: Deregulation allowed us to charge for those channels, but also invest in those channels, to give them royalties which would help them improve their programming. The big problem, back then, is we were competing with the big three networks: ABC, CBS, and NBC. And they had the lion’s share of the viewership, and we worked really close with John Sie, who brilliantly headed SSI — you know, TCI’s programming arm — and created Starz. And so I worked very closely with John, because TCI had 25 percent interest in United Cable on a standstill agreement. Ultimately, we needed to invest in programmers to make the programming better, but John — the reason I mention John is, he used to tell me, “The programming is a hell of a lot better than the viewership.” And the reason is, people were hooked habitually on the big networks and they could get them for free from their set antennas in their attics. And that’s what we were competing with. So the first challenge was to win viewers from the big networks and to get people to take 50 percent rate increases to buy better, exclusive programming, like CNN 24-hour news, like A&E Networks, you know, quality programming, Nickelodeon, the Disney Channel, things that you couldn’t get with your antenna. So, during my era, we significantly grew basic and expanded basic penetration, even though prices grew more than 50 percent overnight.
SCHLEY: No mean feat, by the way.
SUSEL: That was a big challenge. So, one of the things that I just donated to The Cable Center is something called the Cable Challenge Sweepstakes that we got about six or seven programmers to invest in. It was almost a million-dollar project. Where it was a scratch-off game, and people got a bunch of scratch-off cards where they had to pick which three channels go with this network. And if they scratched the correct three boxes on all eight cards, they’d get 25 dollars on cable value network.
SCHLEY: So, you see, you’re bringing people kind of deeper into the realization, right?
SUSEL: Well, we were trying to get them to understand, especially people that already had these basic channels but weren’t watching them, expanded basic, but we’re also trying to get people to upgrade to the expanded basic channels. And it was very successful. We actually had a 20 percent response rate. We were expecting a six percent response rate to the game. And we won four CTAM Mark Awards. It was the first time anybody won more than one Mark Award for the same project. And I did that with Eagle being my supplier and partner, I was the client. But that was an example of how we moved the needle on letting people understand that we had better programming than the networks.
SCHLEY: Talk to me, then, about a next big segue or step involved, pay-per-view programming. You were a pioneer there.
SUSEL: Well, I would say that United Cable was the pioneer, the Schneiders were the pioneer. I was just responsible for the marketing piece of it. And it was a hugely collaborative thing, including Hal Krisberg, who was the CEO of Jerrold, who spent a lot of time in our boardroom developing the most advanced cable box technology on the planet. And we were the first ones to deploy it on a large scale.
SCHLEY: Pay-per-view, Joel, for our audience, required a technology upgrade. You had to be able to do new things over the network, right? Over the system.
SUSEL: Well, the thing that is significant about it is that the way most of the industry had pay-per-view was called one-way pay-per-view, and it was antiquated. You had to use a telephone line and get a special telephone jack installed to communicate with the headend. On the phone. And then the headend knew to send you the movie. It was terribly clunky, and Gene wouldn’t have anything to do with that. There’s no way United Cable would ever use that kind of technology. That’s what many of the cable companies did, including — TCI had it broadly. We had the first large-scale deployment of what’s called interactive two-way impulse pay-per-view. So we had to put in extraordinarily expensive — it’s like when HDTV started, the first HDTVs were expensive. So we were the pioneer buyers of Jerrold’s most advanced boxes.
SCHLEY: So you had the high prices. (laughs)
SUSEL: Yeah, they didn’t have scale yet. So we were buying boxes for, like, 600 dollars back then, a box. And what it allowed the customer to do was to have an advanced remote with all kinds of other advantages, and of course we needed that for our huge channel capacity. So we needed it to drive viewership anyway, so the remote and the box had all kinds of bells and whistles. But, most significantly, you could use an on-air guide and pick the movie and push a button, and it was instantly delivered.
SCHLEY: And your management team had faith and conviction that this investment was worth it, obviously.
SUSEL: Well, Gene was an enormous risk-taker, and when Gene decided to deploy these 600-plus-dollar Jerrold boxes nationally, one of the things that made us unique is we had more major markets than any other MSO. So, out of our million customers, we were large players in places like Los Angeles, San Francisco, Chicago, Baltimore, Hartford, Connecticut. You know, and a lot of other markets. Santa Fe. I could go on and on. But we were in big, important markets, along with other cable companies. Nobody controlled any market back then, but we were big players in those markets. And Gene was hellbent to do pay-per-view the right way, and — no matter what it cost. And I remember him coming in the boardroom, red-faced, and the whole management team is there, and he said, “I just got off the phone with John Malone and he doesn’t want us to do this.” And then we discussed it — because the boxes are too expensive, he wanted us to wait. And then Gene, who famously always had a cigar in his mouth, started to get red-faced, which he did from time-to-time in the boardroom. And he pounded his fist on the table, and he said, “God damn it, if we don’t fill the goddamn seats, Hollywood will never give us the movies, and pay-per-view will never happen the way it needs to happen. And we’re going to do this. I don’t care what anybody thinks.” And what they did is they pulled Tina Schneider, one of Gene’s daughters, who was in the Denver system and an expert in cable data, RMIS system, into corporate marketing. And she reported to me as manager of pay-per-view, because we were decentralized and Fred and Gene knew that the field would object. And they didn’t want to take “no” from anybody. So the reason Tina reported to me, even though I really reported to her because she was part of the Schneider family, was to basically help me deploy pay-per-view, because this was the fall of, I think, 1986. And Gene said, “On January 1, 1987, we’re going to offer in-house pay-per-view in every market, period.”
SCHLEY: And was the vision for not just boxing and timely events but movies as well?
SUSEL: Well, that’s a big part of it. So, this had a couple implications. One is, we have to have a way to monetize the 600 dollar boxes, and the way that we did that was with a $5.99 club fee. So, to have the privilege of getting one of these advanced boxes with the fancy remote and interactive pay-per-view, you had to accept a six-dollar rate increase.
SCHLEY: Per month, six dollars, you’re in.
SUSEL: Yes. So what that did is it slowly metered the deployment of this new technology to our best customers in a way that monetized itself over the life of the customer.
SCHLEY: Smart.
SUSEL: It was brilliant. But it also made the demand for pay-per-view miniscule at the beginning while we learned how to deploy it.
SCHLEY: So you could manage.
SUSEL: And it ramped up exponentially after that. But it was a way to get all of our systems, all of our people — technologically, marketing-wise, et cetera — kind of into the pay-per-view spirit. Now, in parallel with that, the team vetted all of the possible pay-per-view programming sources. And like everything else, we carried all of them.
SCHLEY: You were United. Yeah.
SUSEL: We were United. So we carried every channel. We carried every pay-per-view supplier. So the big one, at the time, was Cable Video Store, and we were their largest distributor, which was Hal Krisberg’s product at Jerrold. Secondarily, we also carried Request Television, which was Jeffrey Reiss’s product, which kind of took a backseat but ended up being in the front seat and taking everything over in the following years. And then, third, we offered — we pioneered the use of pay-per-view to offer things like adult television. And that’s how we turned around the Playboy Channel, by the way.
But one of the big challenges we had is we had to decide what to call pay-per-view. And our agency came up with 50 names, everybody in the company came up with 50 names, we had 100 names, and the industry wanted to call pay-per-view something — they all thought pay-per-view was boring. We decided, collectively, that we needed to call pay-per-view pay-per-view. And that’s something that had to be explained. And the reason is, pay per view explained what it was. So I had our agency — we had a lot of different ways of creating the pay-per-view logo. And this was the winner. I’m donating this to The Cable Center. There’s only one that exists in the world today.
SCHLEY: All right. (laughs)
SUSEL: But this was in all of our offices. Eagle actually produced them and distributed them to all of our systems. So this has been on the wall at Eagle Direct for the last 30 years. But this was done by one of my designers, and you can see how we’re emphasizing pay per, and we actually had, on the television, we actually had this in lights. This was actually a lit-up sign. So, for the TV ads, we actually — and the view would flash, and it was “the hottest way to see the hottest movies and special events.” And we were the largest distributor of pay-per-view boxing in the country, too.
SCHLEY: But you were good with it, right? You thought that was the right way to express this unknown, unfamiliar —
SUSEL: We knew that we needed something the whole industry would adopt and, collectively, this was, collectively, everybody felt like this was the best direction for the industry. And this was the only direction that, if we created some name, then it wouldn’t be adopted nationally. So this was actually in our business offices. This was a poster.
SCHLEY: Okay. That’s a great story, and I appreciate you explaining that. Joel, you also were at the heart of this symbiosis between operators and programmers. You talked about it earlier. There was sort of a virtuous loop of investment being made back into the networks. Can you talk about that category wan what United’s role was?
SUSEL: Yeah. So, the problem we had — and this is where Nimrod’s career exploded — was, our best networks were going bankrupt. The pending bankruptcy of Discovery Channel was tragic. And Nimrod personally stepped out of the box, ahead of anybody in the industry, and became very close with Ruth Otte, who was the president back then, and John Hendricks, who ultimately led Discovery into a multibillion-dollar enterprise. And Nimrod went on their board, and Gene led the industry’s first collaborative investment in programmers. Basically, we got — and this was under Nimrod’s leadership — we got, I think, six MSOs to each invest 50 million dollars.
SCHLEY: Joel, what was the reason? Why did you need that network? Why did you need to make sure it could be alive?
SUSEL: Because it had a brilliant future, and no money and no distribution. So, what happened is, six times 50 million is 300 million dollars. The financial projections showed that, if they improved their programming exponentially to be better than the [broadcast] networks’, and if we all gave Discovery distribution in all of our cable systems, they’d have millions and millions and millions of households and could sell advertising. That became the model. And Nimrod got TCI involved, Newhouse was one of the first investors, I don’t remember them all, but this became the model of the future. And Nimrod ended up spending most of his time — we had investments like this — soon John Sie and TCI were leading investments. We did this with AMC. We did this with QVC. Even though we built — Peter Barton built CVN from scratch to compete with Home Shopping so that we’d have our own shopping channel, and Nimrod led the acquisition of QVC, which ultimately acquired CVN. And then we did the same thing with Ted Turner. I don’t know if you remember —
SCHLEY: Absolutely, at huge level.
SUSEL: — Turner Broadcasting was going to go bankrupt. I’ll never forget the time in the boardroom. It was, like, an amazing time, because everybody was freaking that one of the networks was going to buy Turner Broadcasting —
SCHLEY: Like, CBS, I think, was the name. Yeah.
SUSEL: — which, I can’t remember which one, but I think it was CBS. Because, you know, Turner had the only international, 24-hour — it had all the infrastructure. And CBS wanted to buy them and basically make it theirs. And there was no way Gene was going to let that happen. I remember the whole industry debating buying Turner Broadcasting, which we all did. Nimrod ended up having a glorious career there before he moved on to international cable but, at the end of the day, what’s significant about this is, this became what ultimately was Liberty Media.
SCHLEY: The company Liberty Media.
SUSEL: And the reason is, TCI ended up inheriting all these stakes.
SCHLEY: At the point at which there was a consolidation of these companies.
SUSEL: Because of the consolidation.
SCHLEY: It really was a history-making set of decisions, when you look back on it, that probably saved some of the household brands that we know of today, right?
SUSEL: Well, it nourished them with the world’s best programming in a way that the networks couldn’t compete. So if you look at network viewership during those decades, you know, you’ll see that the viewership switched from networks to cable each and every year. And the other thing you see is that, concurrent with that, cable penetration grew every year. So, even though we were raising prices every year, we were increasing our penetration because the product was better.
SCHLEY: One of the great business models ever. And then, I don’t want to call it the final chapter, but the Schneiders were pioneers geographically in the international expansion of the business.
SUSEL: Yeah. Again, nobody wanted to do it, and we were in a lot of different markets. I supported them peripherally. Initially, we were in Croydon, the first English cable system. We cobbled together cable systems in Sweden. We were in a bunch of places, but the big thing that we did is we became the largest cable company in Israel. And Mark Schneider came into my office and said, “I want you to help us with the Israel franchising.” And it was the coolest thing I’d ever done. We had a 50-50 partnership with Israelis, and I was the token Jew on the team, because it was a bunch of cowboys. We worked with the Israel Discount Bank, a guy named Michael Engel who had been a Harvard Business School professor. And I went out there on the first trip with a guy named Bob McLaughlin to figure out how to handle the franchises. What was the P&L going to look like? What would the penetration be? How much would we sell it for? What would we sell? You know, and it was just unbelievable. The parts of it that I’ll share with you is that it became the most profitable cable system in the history of the world. Ten years later.
SCHLEY: Because?
SUSEL: Well, one was that Israel had the highest density of any other cable market, so we were deploying the most advanced cable infrastructure and we had more homes per plant mile than anywhere else in the world, so the payback was very high at a certain threshold of penetration. Two is that it already had illegal cable called pirate cable. It was illegal and, basically, they were like little gangsters that controlled buildings and blocks.
SCHLEY: And they’re running cable into the –?
SUSEL: Well, what they did is they would go to the video stores, they’d put a VCR in the basement, they would wire from the basement into the kitchen windows of each apartment one channel that they programmed on the VCR, and then they intimidated the people to buy it. And it was fairly expensive, and that’s what they knew as cable. And there was a lot of blue movie stuff at night. So there was already a high penetration of illegal cable.
SCHLEY: There was demand, you had proven demand.
SUSEL: At a high price. So we went out there and we went to the world’s largest dish farm. It had over 100 dishes. You might remember the Ayatollah Khomeini burning a bible? Well, that was captured on this dish farm. The CIA was their biggest customer. We went into a trailer and met this genius, and he basically was capturing all the satellite signals that Israel could receive. So we went there and basically picked his brain, for a fee, and figured out all the channels in Europe that we could import and subtitle into Hebrew. We did interviews, focus groups. The most memorable one with Israeli — turned out to be just housewives. And I had a translator in the back trying to explain to them that they were going to get 30 channels, and what it would be and what the demand would be. And the big breakthrough was, one lady screamed and said, “There’s no way I would do this! I already have one wire coming into my kitchen, I’m not going to stand for 30 wires.”
SCHLEY: Hey, she made a point. (laughs)
SUSEL: So it taught us that people in Israel didn’t understand the concept of multichannel cable. So Tevel became the name, which was an Israeli word that helped explain multichannel. Because we had 30 or 40 vertical channels. And then the last part is, we did pricing research, quantitative research, with Gallup Israel. And the price elasticity was such that, no matter how much we charged, the demand was high. So the demand in Israel was projected to be higher than the United States at any price point because they were hungry for American TV.
SCHLEY: And were you there physically, were you in market when this was all occurring? Or were you running it from Denver?
SUSEL: I went twice. One big trip where we did the franchises, and they asked me to go there full-time. And for a lot of reasons, I wasn’t willing to move to Israel. But I later found out from Michael Engel, our partner, that the profitability was — he said, “The only thing more profitable in the world is the Cali drug cartel.” Because it was gravy. High households per plant mile, high revenue, high penetration. It was like a gold mine. Up until Bezeq, the phone company, a decade later, introduced satellite TV and clobbered the cable industry.
SCHLEY: And these international odysseys led to, I think, the creation of a company called —
SUSEL: United International Holdings.
SCHLEY: Thank you.
SUSEL: So what happened was, we were going to merge in a friendly merger with United Artists Cable.
SCHLEY: United Artists, right.
SUSEL: Because they didn’t have a corporate staff and we were going to be the corporate staff. And Black Monday killed the deal. So the standstill agreement was lifted. We agreed to become United Artists Cable. We were going to become the corporate headquarters, build a big new building. And then Black Monday happened and we had to back out of the deal. And then, all of a sudden, we’re a company in play. And our board didn’t want to do the merger anymore. And then TCI did a backdoor deal with Bill Daniels and brought them into the deal. So Daniels ended up merging with —
SCHLEY: United Artists. Yeah.
SUSEL: — United Artists Cable first, and becoming the corporate staff. And we were forced, because the deal was already in play, to join the merger as well. So, instead of a two-company merger, it became a three-company merger, which complicated things. And the United Cable management team didn’t want to be part of that. They got all the international assets as part of the deal. And they spun off, and then I was invited to go with that deal, but I didn’t want to be an international mercenary because I had young kids and parents that were aging. So I was one of the few that stayed to be part of United Artists Cable. Almost everybody else went to United International Holdings. So those are the four pillars. The channel capacity, the —
SCHLEY: Pay-per-view.
SUSEL: — the two-way interactive pay-per-view, the programming investments, and the pioneering of international cable. But I have three or four favorite stories. So one of my assignments, was right out of the box, was to turn around the Playboy Channel.
SCHLEY: It was struggling?
SUSEL: Well, they were going bankrupt. And the reason is that they only had limited distribution, and the reason is, a lot of the cable companies had ethical concerns that people would object to it. A lot of them didn’t have channel capacity. And there was a problem with signal leakage in a lot of the technologies, so that if you carried Playboy, it would leak onto a channel that wasn’t secure. So — even though the technology wasn’t such. So we were Playboy’s largest distributor, so Christie Hefner came to our boardroom with her presidents over the years many times, and my assignment was to figure out how to turn around the Playboy Channel. And we did a test, and it was in our Oakland County, Michigan system, where we had the suburbs of Detroit. Where we had a double-trunk — we had way too much capacity we had to give it, because of the franchise agreement. We had double-trunk two-way interactive capabilities, large cable system. And we took the linear Playboy Channel, which was basically 24 hours a day on one channel, seven days a week, and we’re selling it for 12 dollars. And that was called Playboy TV, the Playboy Channel. In half of the market, we took that away and we offered the exact same channel by the day. And we called it Playboy At Night.
SCHLEY: Okay. I remember.
SUSEL: And we sold it for $4.99 a day.
SCHLEY: You could literally subscribe for a 24-hour period?
SUSEL: It was a pay-per-view event. The other thing we did is we made it anonymous. So the Playboy Channel said “Playboy Channel” on the bill; Playboy At Night said “pay-per-view event” on the bill. So that people could order it anonymously if they wanted to. And the bottom line is that the demand — the number of households ordering Playboy grew, so we increased household penetration, and the people who had been paying 12 dollars a month were, on average, spending 28 dollars a month.
SCHLEY: Because they’re racking up multiple days. Brilliant.
SUSEL: Because a lot of them were buying it many times. And it was a home run. It was — that test was the end of the Playboy Channel, it was the beginning of Playboy At Night, and the security with pay-per-view was also tighter, so the leakage issue went away. So I actually was at a big event that was for all the biggest distributors, big event meaning, you know, their eight biggest distributors, of which we were the largest, hosted by Playboy TV. I used to go to their headquarters all the time, it was fun. I worked for both Disney and Playboy, I used to joke I’m visiting both pairs of ears in Hollywood. But I got to be at a private lunch with Hefner —
SCHLEY: Christie or the iconic founder Hugh?
SUSEL: Hugh — I met Hugh Hefner, in the grotto at the Playboy Mansion. They cancelled Playboy Bunnies at the last minute, but they have a big dormitory so they’re all hanging around in their normal clothes. But turning around the Playboy Channel was very colorful, and Playboy became my first big client when I went to Eagle. We did the first pay-per-view national database for Playboy when I moved to Eagle. So that was one favorite story.
The other favorite story was, one of my first assignments was to do the marketing for the last big urban new build, the very last one, which is inner city Baltimore, which had very challenging demographics and very difficult construction conditions. And it was my first assignment when I first got there, and a legendary fellow named Sam Street was in charge of that. And he had just met with Gene and Fred, and he walked into my office, and I was brand new and I’d never met him. And he said, “Hi, I’m Sam Street. I understand you’re going to be in charge of marketing my new build.” He said, “I’m looking forward to working with you, but I have one condition. I’ll only work with you if you do this with Howard Harris at Eagle.” And I’m thinking, Who are you to tell me who I’m going to work with?
SCHLEY: Yeah, but fate, right?
SUSEL: And that’s how I met Howard. And we became very close. We did some breakthrough marketing, Baltimore’s best TV. A lot of interesting stories. One of the things we learned — it was interesting, Sam and I went door-to-door. It was the old Coca-Cola building, and we bought the old Coca-Cola building because it had truck ramps and stuff for the United Cable trucks. And before I started, Sam — United Cable had wired one block for free, for a taste of cable. So Sam and I walked to every household to ask them how they liked their free cable.
SCHLEY: That’s hardcore. Yeah.
SUSEL: You would — talk about focus groups, you’re not going to believe what we learned. So, here, this was a poor market, and most of them paid with cash. We were worried about non-pays and stuff. We walk in there and what do we find? We found multigenerational households with a lot of viewers who couldn’t afford to go to the movies. And they were raving about how they can only spend 10 dollars for HBO and all of them can watch all the movies they want, all month long.
SCHLEY: So they loved this.
SUSEL: Baltimore ended up having one of the highest levels of multi-pay subscription in the country, and nobody expected that. And the reason is that it was such a good value because these households, which were poor — you know, what do you call the homes that are next to each other —
SCHLEY: The row homes?
SUSEL: The row homes. You know, relatively low-income, but cable was such an incredible value for them.
SCHLEY: Was that counterintuitive to you, as well? Were you shocked or surprised, you know?
SUSEL: We weren’t expecting that, but it proved to be true, and it affected our marketing. So that was worth sharing. The other thing I’ll share with you is why I’m at Eagle today, and it was because of Tina Schneider. So Tina was working for me on pay-per-view, and TCI did this big deal with HBO and Showtime and Disney that basically gave us growth for no royalty charge for a year.
SCHLEY: Help me understand that.
SUSEL: So, we had to — you know, we’re selling HBO and Showtime and Disney, we’re paying them a royalty of, whatever, five or six bucks.
SCHLEY: Okay. Like a revenue-sharing kind of thing?
SUSEL: Well —
SCHLEY: Just a licensing fee?
SUSEL: All of the programming deals are based on royalties. We pay so much a month for every basic channel. But the way HBO makes money is, we sell it for 12, they get six. Well, we were part of the TCI agreement that basically took our collective HBO customers. For example, let’s just say it was, between us, six million customers, let’s just say. And anything we sold above that would be royalty-free for a year. Well, TCI did this famous deal where they just gave HBO and these other services away for three bucks. Because it was — they tried to drive growth, but what happened is they churned away after a year, because you can’t take them from three bucks to 12 bucks. So Nimrod comes in, we’re meeting with Fred and Gene, TCI wants us to do the same thing. And it’s like, that was crazy, we don’t want to do that. You know, we need to sell HBO closer to its full price so that people don’t churn. And Howard happened to be in the office, and we were trying to figure out how to do the TCI royalty deal in a way that wouldn’t cause all these problems. And my big frustration is, we didn’t have any data. And what we wanted to do was only market incremental things to people — so, for example, if you already had two of the services, we’d offer the third. And we didn’t offer it for less than $4.99. And we were kind of frustrated because we’re paralyzed because our billing system had no marketing capabilities. And Tina was with us, and Howard was there, and he said, “I can help you with that.” And Howard was a genius. He was in think tanks, and his genius was he was a pioneer in microcomputing and he understood how to network microcomputers to take data from the billing system — at the time, it was CableData — put it in a micro network so that we could target the right things to the right people. And Tina was there, and she said, “I can help you understand how CableData rate codes work, and I’ll get you the data.” And we did a pilot, and Tina, of course, who had a lot of authority and knowledge, gave Howard a dataset from our Tandem mainframe computer. And he figured out how to make it work, and we ended up knocking it out of the ballpark with our $4.99 sell.
SCHLEY: So the data was in there. Like, it was — you talked about these codes. It just needed to be extracted and understood?
SUSEL: Well, this is what we — this kind of gets to my career at Eagle. The billing systems, the mainframes that drive all the operations in a cable system, have basically been patched together over the years. And the primary reason for them is invoicing, finance, and operations, which includes call centers and field techs. And it’s so overwhelmed by those things, as the industry grew and changed, there was never an ability to do anything from a marketing standpoint. So the only way to do — and, of course, I was marketing-driven from day one. Paul Case, who was our CIO — when I started, you know, I tried to do this stuff. He said, “Don’t worry,” you know, “I’m backing everything up to mag tapes. You’re covered.” Well, you know, so we had a warehouse full of mag tapes that nobody could do anything with. So —
SCHLEY: Mag tapes.
SUSEL: — Howard was brilliant in doing this, and back then, we made all of our programmers pay for our marketing, so we raised a boatload of money from HBO, Showtime, and Disney to help us market. Because they all believed in what we were doing, and they knew that if we grew and retained those customers, that they would make a pile of money. So that made Eagle famous, because we built the industry’s first marketing database. It was funded by HBO and Showtime and Disney. And it was miraculous, because we marketed the right way to the right people and we could track their retention. And it was groundbreaking. Howard later ended up starting industry databases for two of them as a result of this project while I moved on to United Artists Cable. But Tina Schneider enabled that just like Mark Schneider enabled my work in — so that’s just part of the family dynamic.
Part 3
SCHLEY: Joel, I want to talk about sort of the next transition for you. Kind of in the dust-up surrounding the consolidation of three prominent cable companies, you end up taking on a new role with a new company. Just kind of take me through the progression there.
SUSEL: Integrating three cable companies with three proud histories and different cultures was messy. And I was the most senior person in the marketing department. I mean, we — our marketing department had 24 people, and only two of us stayed with United Artists Cable. And after a while, though, things started to hum, and United Artists Cable took on its own culture and rhythm, and we were doing a lot of great things about a year in. But then TCI decided to ramp up the consolidation and eliminate United Artists Cable, and gave us one-year notice that United Artists Cable was going to go away and become a TCI-branded property. Concurrent with that, a lot of jobs were eliminated with severance, and my level was eliminated, but all the people that reported to me stayed. And, of course, I was still close with everybody, including our systems, and I had six months’ severance to figure out what I was going to do next. And I had opportunities all over the world with United International Holdings, but I didn’t want to do that. I had opportunities on the East Coast and the West Coast that I won’t detail. I had an opportunity to join US West, which became Media One. They wanted to hire me, but the job never got approved.
And then my heart was still in the stuff we had done with Eagle, where we pioneered database marketing. And I knew all the CMOs in all the top cable companies because we went to industry gatherings that were organized by places like HBO and Showtime. So I was friends with peers in the industry, and I had an opportunity to pioneer database marketing at Eagle and stay home, meaning not leave Denver, and I decided to give that a run. And, concurrent with that, United Artists Cable agreed to become my biggest client. And the team there that had reported to me basically gave us all the business for a year, which bridged my work there. But, more significantly, we set on to create the industry’s first cable system-focused implementation database, and the Denver system, which is our flagship system, Denver suburbs. I was very close with Steve Dougherty, the GM, and Barbara Brown, the marketing manager. They agreed — enthusiastically agreed to be our pilot.
SCHLEY: Joel, is it fair to think of — when you think of database marketing, you’re extracting information from these records, this vast pool of information that is available from a cable company?
SUSEL: Yes.
SCHLEY: Tell me how this all kind of — how it worked in the day.
SUSEL: So, at the time — we later came up with more dynamic extraction methods — but, at the time, we had to bring the CableData mainframes to its knees in the middle of the night, when it wasn’t busy, and basically take a snapshot of everything that it had that we needed. So we would get the data on mag tapes like this, and we took a picture every month of everything we needed to build a marketing database, then we would read this into a networked — a PC network, early generation. So this is when we were networking 10-megabit PCs.
SCHLEY: I remember.
SUSEL: And we’re the little engine that could. We could dance circles around the mainframes. So we had a highly enthusiastic cable system become our beta site where we just did test after test after test that just set new standards.
SCHLEY: Joel, for the uninitiated, what this tells me is who a customer is, what she or he subscribes to, where they live?
SUSEL: Well, what it gave us is — that’s a really good question. What it gave us is all the granular transactional data. So we knew where they lived, we knew how long they had been a customer. We knew if they upgraded, if they downgraded services, we knew what they upgraded and downgraded. We knew what their cable bill was, we knew their life so we could measure their lifetime value. We could see whether they responded to our marketing campaigns, so if we sent them a solicitation in the mail, we could see if they’d bought it or not, so we could do campaign tracking. And we pioneered all kinds of stuff.
I’ll give you a few examples, because these things led to doing big, industry-wide MSO databases the next year. So one example is, Barbara called me and said, “We’re doing a promotion with Pizza Hut, and we want to do 30,000 pieces of mail.” Of course, the Denver system had about a half a million non-customers, give or take, whatever. And at the time, they had a couple hundred thousand, quarter million customers. They said, “We want to increase the take, the household’s getting pay-per-view. And what we want to do is, we’d like you to find people with high pay-per-view propensity.” And we had other data. We had a segmentation system overlaid, so we had not only all the transactional data, but we overlaid something, at the time, called Donnelly Cluster Plus.
SCHLEY: Donnelly Cluster Plus, right.
SUSEL: But now it’s PRIZM — Claritas PRIZM, Claritas Connections. We’re a service bureau,
we were then too. And we have other databases called Simmons, for example, where we could see which clusters — we’d assign a cluster to every household, which had its socioeconomics and we understood what its propensity was. So we could see which clusters had a propensity to eat pizza and which ones had a propensity to order out. We also could see which clusters, in our transactional database, had a propensity to buy pay-per-view. So out of the —
SCHLEY: I see where this is going, right?
SUSEL: Out of the quarter million customers that were customers, only 10 percent, let’s say, 15 percent, were pay-per-view-buying households. We wanted to drive trial in an incremental group, because once people tried pay-per-view, especially impulse pay-per-view, it’s habitual. So the lifetime value of a new customer is extraordinarily high.
SCHLEY: You’re not just trying to sell one movie.
SUSEL: No, if you get them to buy one movie, they get hooked. Because you need to get them — and at the time, Blockbuster was taking off. So what we needed to do is get them to not go to Blockbuster and see they could just order at home. So we targeted this mail piece that was co-funded by Pizza Hut and it was a home run, because Pizza Hut sold a lot of pizzas and we substantially exceeded the goals of driving new household penetration on pay-per-view.
SCHLEY: Joel, I always wondered about this —
SUSEL: And we could see if they bought the second time. We could see if they bought next month as a result of the trial.
SCHLEY: Is the moment unnerving, you’re waiting to see the data come in? You know, you’re a marketer, and at some point, now, you have proof, you have evidence, right? How does that happen?
SUSEL: Well, we’re going to get to the breakthrough we had at Time Warner Raleigh a little bit later, but you saw the Cable Channel interviews and one of our clients there — well, both of our clients there said, repeatedly, “We’re just scratching the surface. It’s continuous learning. There’s an enormous amount of opportunities.” So this was the tip of the iceberg, but it was the beginning of an exponential period of growth, of knowledge and capabilities. Because we were also measuring who was responding to what offers, we were measuring ROI on direct mail for the first time. A huge breakthrough that really drove our growth bigtime is that we were able to see — you know, basically, the industry used to do mass marketing, and we’d send a mail piece that wasn’t segmented in any way to everybody. Well, what we were able to measure time and time again is that we could measure — is that we could mail 20 percent less and get 98 percent of the same results.
SCHLEY: Does that fall under the rubric of what you began to call scientific marketing, would you say?
SUSEL: That was a dramatically higher level of evolution that came later. So that comes later in this. It evolved to scientific marketing, but it was the early stages of it. Because the way this thing started is, nobody had budgets for databases. And I could tell you three or four other tests that we did, but basically, it got us at the front row of many of the top MSOs making the case for database marketing. We pioneered database marketing. It was all based on the ability to extract data from the billing systems, create marketing databases, and then we used this amazing took called spreadsheets to enable reporting systems. And we just danced circles around the Tandem — around what anybody could do.
SCHLEY: You invented spreadsheets at the outset. By now, they’ve progressed a bit, right?
SUSEL: They’ve progressed dramatically, but this was only a few years — this was only five years after I learned about spreadsheets in business school. And they got dramatically better after — I mean, this is still when — DOS, pre-Windows time, right? So —
SCHLEY: Okay. I guess I was —
SUSEL: But I’ll get there. So I kind of became the pied piper of database marketing. Over the next 10 years, we would do probably 30 large MSO databases for a large part of the industry throughout the ’90s. I started at Eagle in 1990. But how it started is important, and it started by basically saying, “Look, we can point to 10 to 20 percent waste. That’s how you’re going to pay for your database. That’s how you’re going to pay for your demographic cluster overlays,” because there were licenses. “And that’s how we’re going to get smarter and have continuous learning and be able to do testing and measurement.” And we had two big breakthroughs. One that I’ll never forget was Jones Intercable. You might remember a fellow named John Mathwick who was the CMO. And I’ll never forget this, because I would go visit John, and when you walk into Jones headquarters, which is this palace that Glenn Jones built, the first thing you see, going in the front entrance, is this glass wall with all their big mainframes. You probably remember.
SCHLEY: Oh, that’s right.
SUSEL: Yeah. Everybody remembers that. And it was glass elevators and atrium, and I’m walking by these big showcase of CableData Tandem computers, going in to sell our little micro network. And I’m thinking, We’re the little engine that could, because we can do what they can’t. And John was sold, but he needed a big story to get the management team to let us do an MSO-wide database. So I came in one day — and we’re close because we were peers when I was a cable operator — and he said, “I’ll tell you what. I have a big problem. Glen is breathing down my neck. His pride and joy cable system is Augusta, Georgia, and it’s been one of our three worst cable systems every year for the last five years, and he’s making us crazy. And he’s getting involved in the marketing, writing these poetic mail pieces and stuff.” He said, “If you can help me figure out how to turn around Augusta, Georgia, we’ll give you the national deployment. And they’re going to be our first national deployment.” And we did it. Within six months, Augusta went from the worst-performing, top worst three, to the top three. And we’re talking, I don’t know, 60, 70 cable systems. So you know how it went from the bottom to the top?
SCHLEY: No, I’m going to ask.
SUSEL: We profiled the Augusta market. And we determined that roughly half of the Augusta market was super fluent and educated, and the other half of the Augusta market was relatively poor, many of them living in mobile homes, and not educated. So these fancy mail pieces that Glen was sending, that had poetry and — you know, he was personally a poet, right. He was a genius, I love Glenn Jones. But that’s why it wasn’t working.
SCHLEY: They were falling flat.
SUSEL: It was falling flat. So a lightbulb went off with John, and basically, he did a door-to-door direct sales sweep with a special offer. We told him the addresses for the, what I’ll call bottom-up marketing. And for the top-down marketing, we marketed to them appropriately through the mail. And overnight their performance shot up like a rocket.
SCHLEY: That’s a great — it’s a great anecdote, and direct mail really was, and perhaps still is, the medium, right?
SUSEL: Yeah. When I inherited the United Cable marketing, I was told that we were one of the top 100 mailers in the United States, and I didn’t know anything about mail. So, to Howard Harris’s credit, who’s one of the founders of Eagle at the time, he and I were like, one and one is three. And between us, magic happened. And he taught me everything I knew, but I also enabled him to do things that were outside of the box for him, and as a result, we pioneered breakthrough after breakthrough after breakthrough together. Because Eagle enabled me to do things with cutting-edge technologies, including complex personalization. Targeted.
SCHLEY: In a passing remark, Joel, you once told me, I think, how many mail pieces you’ve touched or had a hand in in your career, and it’s a lot.
SUSEL: Well, I mean, if you’re getting into the big picture stuff, so, since I started at Eagle, I’ve worked for well over 100 MSOs. Most of them don’t exist anymore because of consolidation. We’ve tracked probably 60 million households in the United States. I’ve been involved in probably two to three billion —
SCHLEY: With a B.
SUSEL: — with a B, pieces of mail. But I like to think that, you know, we made mail interesting and relevant. We made it — by marketing the right way with the right level of investment at the right time for the right reason, you know, and being able to speak to individual customers’ idiosyncrasies — their life stage, single versus family versus mature, their education, their behaviors. We did predictive modeling, we understood customer lifetime value. So what we did is we reduced a lot of waste, we improved the ROI, and we made direct mail much more efficient and productive. And the continuous learning that came from — I mean, we’ve done thousands of campaigns, thousands of tests, measuring statistics. We have statisticians on our staff. So we’re able to push the marginal benefits of mail, increasingly, in a world today that, you know, is heavily digital, too. So we’re making the two work in harmony, but that’s, again, looking a little bit farther than we are. But that’s the volumes.
And the other story I want to tell, though, juxtaposed to the Jones story is, while Jones was dilly-dallying with the Augusta test, I had an opportunity to do another big database deal with Cablevision Industries, which became one of our most advanced clients. And I’ll never forget this, a guy named David Gill who had come from A&E, and we had done a test in the Denver system with A&E and he was the head of research, and it was also a breakthrough test. He called me out of the blue and he said, “You know, I’m the new head of research and marketing, marketing research, at Cablevision Industries, and I want to do a database for Cablevision Industries like you did in Denver. Will you come visit us?” Now, in those days, there was no internet. I had a slide projector– I traveled with a slide projector. Right? Or a notebook. And I went to Liberty, New York, and I went to a meeting in Alan Gerry’s family appliance store.
SCHLEY: Of course.
SUSEL: So Liberty — I mean, I’m not going to get into what Liberty, New York is in detail, but this appliance store was one of the — this is where, basically, Alan Gerry, you know, put a TV in the front window, put an antenna on the mountain, and showed how he could deliver cable signals with his TV, and he became a multibillionaire. And so I’m sitting — David Gill’s office was literally in a closet in the appliance store. So I’m sitting in this little closet, I have my notebook on my lap and I’m flipping through it, and a guy named John Pascarelli, who’s the CEO of Mediacom today, was the VP of marketing at the time. John comes in. I’m presenting — I can’t use my slides, so I’m presenting on my laptop, and I cut the deal in the closet.
SCHLEY: A historic moment in database marketing for the cable business.
SUSEL: But what made that significant is that that was our first CSG database. CSG has different technology than the Tandem. So we eventually read data from 15 different billing companies, but the leaders were CableData and CSG, and it was a big technological challenge. We knew how to do CableData, we didn’t know CSG. And CVI did a contract with us before Jones. So now Jones is having to wait in line, because we had to hire people and we did three-year deals, while we’re building the CVI database, which was revolutionary for us. And by the time I came back to present cable insights in our new reporting system to maybe 50 people in a massive auditorium, it was at CVI’s new headquarters, which was palatial. I don’t know if you’ve ever been there.
SCHLEY: But they had moved out from the appliance store and the closet office.
SUSEL: It was one of the most impressive places I’d ever seen. And Alan Gerry’s office was the entire first floor of this building, and it was just palatial. And it was such a juxtaposition to — my first trip to Liberty, versus my second. And then we, shortly thereafter, did Jones, and within the next five years we did many large MSO databases, and I was like the pied piper of database marketing.
SCHLEY: I love that expression.
SUSEL: It was — everybody wanted it. And we got to do their mail, which is what really fed the economics of our infrastructure. Plus, we needed to do more sophisticated mail, because it was too clunky before. We did it in an integrated way that enabled the more sophisticated approaches.
SCHLEY: Tell me about scientific marketing, what that means. And you’ve talked about some of the ingredients that go into it just now.
SUSEL: Well, my favorite way to showcase scientific marketing is the success we had at Time Warner Cable. We worked for Raleigh Division, and they had 900– eight, 900,000 customers. So they were like a big MSO. Time Warner was humungous. And we did two Cable Channel interviews there that you saw. One in 2003, which was getting started, which was scratching the surface. And then we did one in 2005, which was called “smart marketing.” So, we called it “scientific marketing,” they called it “smart marketing.” But, within that two-year period, Time Warner Raleigh became the number-one performing division out of the 30-plus divisions in Time Warner Cable. And the intelligence from Raleigh was being used to make boardroom decisions for the whole company. You might remember John Billock.
SCHLEY: Ran marketing for Time Warner Cable, right?
SUSEL: No, well, he basically ran HBO. He ran marketing, but he went from HBO to Time Warner Cable and he ultimately became chief operating officer. And he knew us from HBO because we did the HBO tracking database, too. But they were using our databases, we had them in multiple locations — Los Angeles was our other showcase one — but they rose, using scientific marketing, our most advanced approaches, to be the number one performing division. And I gave you something here to read. This is actually for a deal we were working on in Japan.
SCHLEY: Yeah, it’s a good encapsulation.
SUSEL: But it’s our best executive summary of what scientific marketing is.
SCHLEY: Okay, we ready? Here we go. Scientific Marketing, Joel Susel. “An evolutionary process that moves away from mass marketing toward individualized customer relationships using customer level information to create intelligence-driven marketing communications, which improve marketing performance and customer value by using measurement systems, predictive modeling, and testing techniques that enable,” what you’ve talked about, “continuous learning.” So there you have it.
SUSEL: There we have it.
SCHLEY: And that’s what you’ve been applying at Eagle and onward.
SUSEL: Well, and what ended up happening is, Time Warner forced us into an advanced database platform that we called Ahead. And what ended up happening is we, over the years — and at Cable One, for example, we stopped doing this [holding up mag tape] and we worked with CableData and Cable One’s CIO to develop a real-time replication methodology. So, instead of sending us mag tapes, they created an intermediate step where — because it was a lot to do this big download in the middle of the night, because we’re competing with system resources. So, basically, it would gradually collect the data in real-time and accumulate it, and then we could go grab it. And what we ended up doing for Time Warner Cable was near-real-time replication.
SCHLEY: And around what time was this, Joel?
SUSEL: Well, that’s a really good question, because our business imploded and almost disappeared at the end of the ’90s because of what happened to the cable industry. The consolidation that was AT&T Broadband gobbling up so many things, that was Charter gobbling up 16 MSOs, more than half of were our clients in consolidation. Adelphia gobbling up a whole bunch. And then all of them went bankrupt. We lost 80 percent of our cable business by the end of the decade.
SCHLEY: So this real-time conversion was preceding that, or on the eve of that?
SUSEL: Well, we ended up having a huge play in dotcom in the interval, while we were licking our wounds and waiting for the cable industry to recover from bankruptcy — because, basically, they paid — they overbought these properties and they took on too much debt and the values fell. And they all went bankrupt, including Paul Allen. So — and that’s when Comcast bought AT&T Broadband, and — anyway, during that period, we flew high in dotcom, and then the dotcom bust happened. And then, right after the dotcom bust, we lost our dotcom clients, the cable industry started to recover. And that’s when this happened. For Time Warner LA, Time Warner actually hired some of our best people, and then we hired some of them back. Time Warner corporate. And then what happened is we ended up building for Time Warner LA, which is their showcase property, an advanced scientific marketing process where, when calls went into the call center, we, on the fly, modeled 300 different variables. So we knew whether they had customer service problems, we knew their customer value, we knew their socioeconomics, we knew their product purchase propensity. And our model would path the call to the right call center team with the proper script.
SCHLEY: Amazing. Right, depending on what kind of customer I am, and —
SUSEL: Breakthrough. It was so advanced that nobody else could do it. I mean, nobody else could afford to buy it. And then there was a huge management change and it all evaporated. You know, because the industry keeps turning over. And, you know, when the 2008 recession happened and competition came into the game, decentralization started to go away, and there was more consolidation. So, anyway, that was kind of the evolution of it.
But I just want to see here — so, during this period, though, when — before the industry crashed, we had the world’s largest Novell network. Now, Novell, in Utah, was the most advanced system for networking PCs. So Federal Express would come every week and they would wheel in hundreds of these tapes. We had three full-time people reading the mag tapes into our network. And we keep running into capacity issues, because we were the only company in the world that was telling Novell that they didn’t have the capacity they advertised. So we became the beta site for Novell R&D, because nobody in the world — because granular cable transactional data is an enormous amount of content. All the different granular things. So — every pay-per-view purchase, et cetera. So, what happened is, microcomputing, the IT people used to think it was, you know, why would anybody do that? And by the time we got to 2000, they all had servers, they were all starting to use it themselves. So things changed a lot as we headed into the next decade.
SCHLEY: Joel, you had one more thought about scientific marketing that I think is interesting.
SUSEL: Yeah. I think the big breakthrough that we had — so we created something called Cable Value Groups, which is understanding the lifetime value of a cable customer and how to invest appropriately based on a customer’s life. Well, about 10 years later, nine — eight years later, broadband, fiber, came into play. And, all of the sudden, we had high-speed internet, all of the sudden we had phone, all of the sudden we had satellite competition. So, our data team, headed by a brilliant guy named Dave Born who used to work with me at United Artists Cable —
SCHLEY: Yeah.
SUSEL: Well, that’s because you know Dave from Daniels days.
SCHLEY: I do, I do.
SUSEL: Dave was the first person that we hired in our data team, and it grew close to 30 people at our peak. And we created something called broadband segments that revolutionized the industry. I actually did a Cable Channel interview about them. But what it did is it basically allowed us to understand, for customers and non-customer households, who had the propensity to do these things. Who had the propensity to buy high-speed data, which is a big deal, because there was half of the world that wanted it and half of the world that didn’t? So we knew who to market it to. Who had the propensity to switch to satellite? Who had the highest propensity to buy all of our products? Who had the highest propensity to churn, which reduced their lifetime value? And we had things like that, and we came up with four different handles for four different segments that would help describe them. Like, the lowest one was called churning something, the others were called blazing something, or – [graphic shows all four segments: Tech Blazers, Hearty Pragmatists, Simple Solutions, Churning Spuds]
SCHLEY: You gave names to all four.
SUSEL: But we marketed strategically to each segment, invested strategically in each segment, and we knew what to sell and we knew what to defend against. And broadband segments was a revolutionary phase in our scientific marketing process.
SCHLEY: Okay. And it was adopted by or used by numerous cable companies.
SUSEL: Every one of our clients used it. A lot of people became clients because of it.
Part 4
SCHLEY: What’s next? I mean, the richness of what you’ve seen, the world always changes, what are you working on now and where do you see the industry kind of going?
SUSEL: So what ended up happening is all the stuff that we pioneered in the ’90s was brought in-house by the big cable companies. So it basically made them non– At Eagle, I’ve invented 10 to 20 solutions to improve marketing performance, especially for places like Comcast, where we could no longer sell databases but we had other programs that leveraged data and automation. Like customer touchpoint optimization, more up-high vacancy home marketing systems, other automatic marketing programs to do trigger marketing to the right people at the right time for the right reason based on an event. So that’s what ended up happening there. But our databases kind of only started working for us with the smaller broadband companies that were more like the original pioneers. So we developed a relationship with NCTC, and we still have a partnership with them. So, in the last 10 years, I have worked predominantly with the smaller, emerging cable companies.
SCHLEY: NCTC, kind of a collective of smaller cable companies, right?
SUSEL: Right, it was originally the National Cable Television Cooperative. It was a group buying organization, 750 members, that would handle the royalty negotiations with the big companies. But it evolved into being equipment, streaming. We’ve been helping them with marketing. So, basically, they package solutions for the 700 smaller cable broadband companies that serve the 80 percent of the United States where the big guys don’t play.
SCHLEY: Do they remind you of the early cable guys?
SUSEL: A hundred percent! It’s like I’m working with a whole new generation of cable entrepreneurs. And NCTC — Lou Borrelli, who’s the CEO, was one of our best clients. He was one of the first users of our cable insights product when he was COO of Marcus Cable, who was one of our first clients. And Lou used to pat me on the back, saying, “You make me look smart.” He’d pop our floppy disk into his laptop when he was landing into a cable system, and he said, “By the time I got there, I knew more than the marketing manager and the general manager,” because he looked it up on Cable Insights. So Lou’s a big fan of our stuff. He’s CEO of NCTC now. The NCTC has a new logo and a new name: the National Content & Technology Cooperative.
But what’s happening now is revolutionary, because there’s a whole new generation of entrepreneurs that are being funded by 22 billion dollars, I think, of federal money that is helping subsidize the expansion of more advanced cable technology in underserved markets. And this is small communities and rural communities where speeds are not impressive, AT&T DSL still exists, prices are high, service is mediocre. So we’re now working for a whole bunch of people doing overbuilds over traditional footprints. Many of them are just antiquated providers that have really low speeds. And what we’re building is the most advanced fiber to the home technologies, with the most capabilities up to 10 gigabit speeds, at the most economical prices, with better services, and a lot of the management teams came from the big cable companies like Comcast. And we’re basically doing exactly what we did in the ’90s but with — we now have something called Ahead Light, which is a lower-cost version of the monstrous Ahead that we did in Time Warner, because it’s more economical. And, you know, we’ve become, like, an extension of all of our clients, so we’ve been insiders in all of these cable companies, basically providing the — we’re kind of like the marketing department to the industry. We have 35 years of collective, continuous experience and knowledge, where the whole industry keeps turning over. So that’s how we try and add value, help create best practices, help improve ROI. Because a lot of these folks, they’re too small to figure it out themselves. And we’re doing a lot of new build marketing. So a lot of our focus is on, what do you do two months before you bring this miraculous fiber to the home?
SCHLEY: To a new neighborhood —
SUSEL: How do you communicate that you’re going to be doing construction, we’re going to be in your yard because we’ve been given permission by the city council. But here’s why, and here’s what’s coming in a month, and here’s what’s coming in two weeks, and it’s here now, you know, come and get it. And then — so we — it’s called cadence marketing. So, for one of our clients, we have fourteen touchpoints with different communications, different formats for different reasons, to kind of walk people through the life of pre- and post-getting the ability to have fiber to the home capabilities that are better than ever, better than the community ever imagined.
SCHLEY: Astonishing.
SUSEL: Astonishing. Yeah.
SCHLEY: I have, for the pied piper of database marketing, in the cable industry and now in this new independent broadband collective, two more questions.
SUSEL: Yeah. Well, I’ll tell you, I’ve been honored because I’m running a panel at the NCTC’s Independent Show in Minneapolis. It’s a private meeting of — it’s called the Marketing Innovators’ Group, and Pam Gillies, who’s the VP of NCTC, has invited me to lead a panel on best practices. And two of my clients are going to be on there along with my partner from Claritas. And we’re basically educating these people who are kind of early — just evolving at different stages. And some of them are tiny, and some of them are growing very rapidly.
SCHLEY: It’s a gamut.
SUSEL: It’s a whole new chapter.
SCHLEY: We have talked a lot about the odyssey and the journey. What, besides earning a paycheck, has been absolutely rewarding and satisfying and fun for you?
SUSEL: I was really lucky, because the Schneiders — hanging around the early cable planners all the time. I mean, I’ve been to every industry event. Hanging around the generation of pioneers that’s no longer with us, getting to know them, all including people like Bill Daniels and Alan Gerry and Rocco Commisso and, oh gosh, I don’t even know where to start. Glenn Jones.
SCHLEY: Legends of the business.
SUSEL: The legends — yeah. Legends of the business. So, just kind of admiring them, and then watching the next generation evolving. And this industry, when I left Pepsi, the VP of marketing called me into his office and said, “What, are you crazy? Your career’s at a pinnacle, and you’re going to Denver to join this industry that’s not going to survive?” And this industry has been the number one industry on the planet. You know, and of course, video is no longer important to the industry. It’s all about the internet and, you know, as you probably know, Cable Labs is working on 50 gig and beyond, and we’re — It’s just unimaginable how much farther the industry’s going to go as the internet continues to exponentially grow. So, being part of this industry, and meeting so many of the players, and being inside so many of these entrepreneurial companies has just been a dream.
SCHLEY: I’ve known you for a long time, and to have the chance to sit down and kind of review the history has been delicious and remarkable and we greatly appreciate your generosity of time and visiting with us at the Syndeo institute.
SUSEL: I just have one last thing.
SCHLEY: Throw it in.
SUSEL: I need to acknowledge my parent company, 1Vision. I probably wouldn’t be here today if we weren’t acquired by a Mississippi-based company that is one of the three political marketing implementation companies in the United States.
SCHLEY: 1Vision?
SUSEL: T Enterprises, but we’ve been rebranded 1Vision. We have facilities in four states. But the reason I mention it is, and that’s really empowered me, because of the scale of our work now, we have the world’s most advanced production technologies. And the reason that’s important is something called variable color on demand is now finally economical. So if you can imagine, I mean, in the old days it used to be impressive that I could send you a variable black message that was tailored to you. Well, now, I can send you a personal — a totally, 100 percent individualized communication, including a QR code just for you, with exactly the right message, in color, exactly the right images, exactly the right offer to match your appetite. So the degree of complexity that we can now economically implement in many different innovative mail formats. And the other key thing is the level of advancement in our automation and the software driving our automation is unprecedented. So we’re kind of in a whole new generation of how powerful we can make a communication to an individual in a personalized way in color, that really makes a difference. And that’s the culmination. And 1Vision has given me tools to do things economically that we could only have imagined before.
SCHLEY: The evolution continues. Joel, we really appreciate your time and generosity of time today.
SUSEL: Sure, thank you.
SCHLEY: Thank you for joining us at the Hauser Oral History Series, presented by the Syndeo Institute at The Cable Center. With Joel Susel, I’m Stewart Schley. Thank you for watching.
