Starry’s Path Forward: A Q&A with Starry’s CEO and COO on What’s Next
Feb 21st, 2023
Starry is restructuring for its future, to spread #HappyInterneting for many years to come.
During the past year, in a difficult economic climate, Starry actively pursued sources of additional capital to ensure the company’s financial stability. Additionally, Starry took measures to reduce costs, conserve available cash and streamline its operations. Today, Starry announced its intention to restructure and strengthen the business by voluntarily filing a pre-arranged Chapter 11 restructuring, with the support of its lenders.
Starry’s blog team sat down again with CEO Chet Kanojia and COO Alex Moulle-Berteaux to discuss the company’s future and how this series of decisions is helping position the company for long-term growth and success.
The following interview has been edited and condensed for clarity.
Can you explain in simple terms, what exactly did Starry announce today?
CK: Sure, but a little background first. As everyone knows, Starry went public in March 2022 through a business combination (SPAC) transaction. Since that time, we’ve been very open about the fact that we needed to raise more capital in order to fund our expansion. The capital markets over the last year have had other ideas and it’s been very difficult for high growth, negative cash flow companies like ours, and frankly, many others across industries, to raise capital. And unfortunately, we were not able to get the crank turned over one last time before reaching profitability.
Last year, we retained investment bankers to advise the Company and our Board of Directors on mergers and acquisitions, capital raising, and potential balance sheet solutions. At the same time, we made a series of decisions to reduce spending and conserve capital to get us through this process. That included our really tough decision to leave Columbus.
And now, due to continuing macroeconomic headwinds, we’re taking the next step to stabilize and strengthen the company’s balance sheet by voluntarily filing for Chapter 11 Bankruptcy Protection and initiating a restructuring of our business. We’ve entered into what’s known as a “Restructuring Support Agreement” with our lenders that will provide us with the funding needed to continue our operations as normal, through this restructuring process and beyond, and a clear pathway to getting the business out the other side of that process.
You might see our restructuring referred to as "pre-arranged" and wonder what this means. Generally when a company files for Chapter 11 protection, it does so with a goal of working through financial challenges with lenders and other stakeholders and outlining them in a "Plan of Reorganization," which serves as a roadmap for how the company will emerge healthier on the other side. Our case being "pre-arranged" means that we already have the plan and have vetted it with our lenders who have agreed to support it. This makes the process quicker and more efficient.
Taking this path allows us to continue operating uninterrupted, as we work to reduce the company’s debt and optimize its capital structure – all of which better positions us for long-term success. When we emerge from this process, which should take a few short months, we will again be a privately-held company positioned for success and growth.
OK, so Starry is not going out of business, right? If I’m a customer, should I be concerned?
CK: No, absolutely not. We’re not going out of business. I cannot stress enough: it is business as usual for Starry and our customers.
AMB: From a customer perspective, there should be no difference in your service experience. Starry’s teams are out in the community signing up and installing new customers and deploying our network. We’re operating as normal across our five core markets.
For employees, how does this change their roles, if at all?
CK: We made some difficult business decisions over the last several months to reduce spending and conserve capital that included a significant reduction in our workforce. Layoffs of any size are difficult on teams, especially when you have to part ways with very talented and dedicated colleagues. And we’re cognizant that as we move ahead, it’s important that our leadership team is ultra clear about our business goals, the path forward, and what success looks like 6 months, 18 months, and five years from now. Our employees’ roles haven’t changed, per se, but our responsibility as leaders to continue to communicate frequently and openly becomes even more important.
AMB: I couldn’t agree more. Moving forward, our job is to ensure that every employee believes in the goals and the path we’ve set for the company. That requires a reset on how we communicate and how often. While getting to this next chapter for the company was immensely challenging for so many reasons, it’s also given us an opportunity to put into practice lessons we’ve learned over the course of growing this business. And that will make us more efficient, and ultimately, a better company – and when we work better, that benefits all of our employees.
From an operational standpoint, what is the business focus today?
AMB: We’re focused, as always, on providing our customers and building partners with the best internet service experience possible. That hasn’t changed. Our focus, however, is more narrow for the time being, as we direct our operational energies towards our existing five core markets and growing our footprint and customer base there.
The only big change - and it’s temporary - is that we’re not actively expanding to new cities. We’re still focused on innovating products and services that will enhance the customer experience and we’ll roll out new initiatives in the coming months. Our focus is on growing the business as efficiently as possible and continuing to deliver a customer experience that delights. If we get those two things right, we’re putting ourselves on a path to success and future growth.
CK: I think it’s also important to note that our focus on mission is still intact. We still deeply believe that competition is absolutely necessary in this industry. It’s important for the consumer experience, but it’s also important to innovation. We’re also not backing away from our commitments to serve historically underserved communities, namely families living in public and affordable housing. There is still such a deep need for high-quality, truly affordable access in these communities and Starry is fulfilling that niche and continuing to make meaningful impacts in the neighborhoods we serve.
I know it’s hard to predict the future, but what do you see for the company further down the road? In the next five years?
CK: I don’t have a crystal ball - obviously - but I feel very confident that the future for Starry remains bright. We’ve taken all of the necessary steps to guide the company through this difficult period and made the tough decisions, so that the company can emerge stronger. And I think that’s what will happen.
AMB: That’s exactly right. This has been, no question, a challenging period for the company. But, on the other side of this is growth and expansion of our footprint to more cities and more households. When we set out to build this business, we knew it wasn’t going to be easy. But, we’re in it for the long haul because we believe in the fundamentals of our technology, our team’s ability to execute and the market opportunity to provide a competitive, high-quality broadband option to consumers. The need for better bandwidth is only increasing and Starry is going to play a key role in delivering it to consumers for many years to come.