2011 Year in Review

Sometimes this business feels a lot like dog years. The past 12 months have flown by, and at the same time, it's mind-blowing have far we've come as a company since last year. Let's start back in January 2011, in our small, dreary office in Draper.

We had just learned from Comcast executives that we had been selected to be one of three national distributors. New people were hired to help us keep up with the demand that was soon to hit us like a ton of bricks. January was spent in and out of Comcast trainings - it was pretty hard to distinguish our back office from the actual Comcast support team near the end. Sandra Jeffs (new), Jessica, Daniel Smith (new) - we all trained backwards and forwards. Our IT team also put in the midnight oil to create the first (and still - only) Comcast automatic paperwork generator to help alleviate some of the support burden. It was full-steam ahead in preparation for the grand launch of the Comcast Business Class Solution Provider Program, which happened in March in Las Vegas, during the 2011 Channel Partner Show. Press releases flowed, and we created our comcast.telarus.com page to "catch" the influx of partners that Comcast sent our way. By the end of the year, in just 3 quarters, Comcast went from last to first on our carrier stack - an impressive, never-before-achieved feat in our company's history.

At the beginning of the year we also brought on a new channel manager, Phil Chandler. We had known Phil a very long time during his service as an XO local channel manager for Salt Lake City. His professionalism, tact, and whit endeared him to us since the first time we met him in 2008. Oh, did I mention he knows just about every agent in the state of Utah?

Why was that important? Because, in January 2011, we ripped apart our sales organization and put it back together in a neat, organized team. We split up the country into four areas, and attached each of our four channel managers to each zone: Phil Chandler - Northwest, James Knight - Southwest, Mike Gottwalt - Northeast, Aaron Cavin - Southeast. Robert Butler received a

promotion to VP of Sales - West, over Phil and James. Lance was reassigned to focus on the east, supervising both Mike and Aaron. This effort has since help us place new agents as close as possible to their Telarus channel manager, allowing us to travel a LOT more. Spending quality face-time with our agents is one of our core objectives for 2011 and the future, and this year we made a record number of visits.

So, just when we got our footing with the weight of Comcast on our shoulders, and a complete re-vamp of our Sales organization, we discovered that our 2,000 sq foot office was woefu

lly inadequate. Through a friendly referral we discovered a great office space in Centennial Plaza Tower in Sandy, Utah. The space could be build-to-order, the location was terrific, and the landlords were in a negotiating mood. The lease was signed and in June we moved in to the new space. One of the features we had the architects design into the new floorplan was our revolutionary Sales Operations Center (SOC), patterned after a carrier NOC. Since moving in we've written software to automatically pull the status of ALL of our orders every 12 hours from every carrier. When something changes, agents are notified via email. More importantly, when something doesn't change when it's supposed to, our operations team is greeted with a massive warning signal on the overhead displays. Issues that used to slip right by us are now caught almost the hour they pop up.

The new office ushered in a wave of carrier and agent visits. Our brand new board room has been used extensively to negotiate carrier contracts, train new agents, hold company-wide conferences, and our kids have even enjoyed watching cartoons on the large LCD monitor that adorns the wall. Each room in the new

office is furnished with a magnificent photograph of beautiful Utah vistas. It's a place that we're proud to call home.

In 2011 we welcomed some brand new suppliers to our roster: Advantix (wireless mobility management) in Feb, Comcast (coax in March, Fiber in October), Integra (August), and cBeyond (December). We also saw the combination of many of our carrier partners, which kept our overall carrier count unchanged. New Edge Networks and One Communications combined into Earthlink Business. Windstream and PAETEC/Cavalier are turning in to Windstream.

With all of this flux in suppliers we realized the need to have someone on our staff who just worked with carriers on a full-time basis. Paula McKinnon, one of the all-stars of our support team, was promoted to the role of Supplier Manager. Now we always know who our local channel managers are, we know what promotions are running, we know what new product needs to be added to GeoQuote, and most importantly, we're now matching up carriers and agents in strategic relationships - taking destiny into our own hands.

In marketing, my director, Justin Chugg, has created a media empire. Ruppert Chugg is his new nickname in the office. Last year he started a little LinkedIn group called "Telecom Channel Updates" and built it up to 2,000 members. By the end of 2011 the group now boasts 13,500 members - more than PHONE+ (Channel Partners) and Telecom Association combined. In November 2011 Justin also became an associate administrator of VAR Talk, a group of over 11,000 VARs and system integrators.

In late summer we added three new employees, Teresa Tompson (office administrator), Seth Ferguson (sales support - Comcast), and Angie Hefner (sales support - Comcast). All three have been performing at an extremely high level and have greatly helped our company.

So, from the college dorm to a nice office full of new faces, Telarus has seen tons of change - all for the better. Next year you'll see more hires in operations, marketing, and sales. Jessica Martin has recently accepted a promotion to corporate trainer and will begin onboarding new agents who join our ranks in early 2012. The Telarus Partner Summit, to take place in Park City Utah, is all queued up and ready to go.

http://www.TelarusPartnerSummit.com

The exhibitors are committed, the venue is paid for (well, at least a HUGE deposit!), travel arrangements are being planned. It's going to be the biggest most tightly choreographed and well-planned event the Channel has ever seen. Throw in 4 different trade shows (Miami, Las Vegas, Orlando, and Austin), dozens of "road shows" in the field, and odds are you'll have a great chance to see us in person in 2012.

Lastly, something near and dear to my heart, we'll be revving up the SEO (search engine optimization) engine again. I've been quietly acquiring new domains for the past few years and will be hiring a full-time Telarus employee in Q2 to help me manage them all. This will give us ample ammunition to win business away from our competitors and to expand the channel in my new role as VP of Business Development.

Someone asked me the other day what "Telarus" means. I think the appropriate answer is "progress".

A New Chapter in the Telarus Story

This week marks some very important milestones in the development of Telarus from a 2-man shop to industry super-power. Our technology, training, and physical facilities are getting major upgrades in the next few days that will pave the road to the future and help us scale like we've never been able to before.

On Friday, May 20 we will be relocating to our new office in Sandy, Utah. The new location has over 5,000 sq feet of office space and comes repleat with a nice conference room, an operation center (with 4 LCD monitors that will allow our team to literally watch the progress of all of our agent's orders in the carrier provisioning process), rooms for all executives and directors, a break room, a war room (covered in white dry-erase paint so IT can draw up details plans and brainstorm together), and a very nice reception area for our guests to check-in when they visit us.

On the technology side, we have made huge progress toward the automation of carrier order paperwork. Right now we are 100% fully-integrated with Comcast Business Class. Time Warner Cable is coming shortly, and by the end of this year we hope to have as many Data T1 carrier's paperwork automated as possible. This automation will allow agents who have to or choose to play on the low end of the product spectrum to be efficient - keeping the ROT (Retrun on Time) investment in proper balance. The lower the MRC, the less time it should take to process an order.

The last area in which we've made massive progress in the past month is in the area of Agent Training. We've produced 9 different videos that explain to our newer agents (we've added over 100 in the past 60 days) exactly how our back office works, how to get quotes, where to see how much they get paid, etc. Prior to that, each training session would have to be produced by one of our four channel managers, each and every time. It was a huge burden on our staff to on-board all of our new partners and this new training will allow them to spend more time discussing specific deals and sales opportunities and less time teaching which buttons to push to generate real-time quotes.

It's pretty safe to say Telarus is now on very firm ground in terms of office space, technology, training, and overall morale, which has never been higher. Being chosen as one of Comcast's exclusive three master agents has forced us to make these changes, to mature in a hurry, and to create the necessary software and processes to allow us to scale.

And scale we will.

We've got a plan, right?

While most other master agents are out there trying to figure out new ways to grow their business in the face of declining margins, the Telarus thought machine continues to crank out new and exciting ideas, technology, and partnerships that will keep us on the leading edge for the foreseeable future.

Here are some strange examples of ways other masters are trying to innovate:

1. Become master agents for hardware vendors (ready to learn how to program voicemail and wait on hold prompts?)

2. Invest in a call center to generate leads to be closed in-house (that's a lot of cold calls and overhead to generate a $250 PRI)

3. Offer energy (seriously, it's going to be huge ... some day)

4. Offer agents cash advances to easy the pain of crossing the desert (we've done that for years, just never published it)

All in all, without access to software, it would be really hard to continue innovating. At our annual agent conference in Las Vegas on March 12, 2011 we'll be unveiling the newest addition to our line of agent support / business expansion software that is sure to make our agents MUCH more money that anything we've come out with to date (including XML plug-ins and Premium web sites)

We've also added sales management staff (Phil Chandler, formerly of XO) to help support our agents like they're red carpet A-list celebrities. Phil is now supporting the northeast, James Knight is over California and the Southwest, Mike is over the midwest and northeast, and Aaron is supporting the south. Robert Bulter was promoted to VP of Sales - West (over James and Phil) and Lance is now VP of Sales - East (over Aaron and Mike). That is a total of six all-stars that work with our agents day in and day out.

Sales support also continues to grow. Under the leadership of Doug Miller, a 12-year veteran of Qwest, we are processing more manual quotes (complex networks), auditing order paperwork for accuracy (cutting days/weeks/months of delays from our customer's install intervals), supporting agents with renewal reminders and product education, and performing weekly audits of GeoQuote to ensure accuracy of both the pricing and the promotions being offered by each carrier. Under Doug is Jessica Martin (recently promoted) and Paula McKinnon - both all-stars in response time, helpfulness, and attention to detail.

Our IT department had a banner 2010 to say the least. In 2010 we deployed own own fully-redundant web and SQL server system in two different Telx facilities. We also deployed an internal email server, witness server, and marketing web server at a colocation facility here in Salt Lake City. All three locations work together to ensure automatic fail-over in the event something, somewhere breaks. Last week we learned first hand that our new system works - our main SQL server had a fan die, which put the machine into self-preservation mode. No worries! The witness server in Utah discovered that our primary system wasn't responding and instantly routed ALL traffic to our backup network. No agents or employees even had a clue that we were in backup mode - all of our sites continued to operate and no data was lost. Once the Telx tech was able to replace the fan and bring the machine back online, everything reverted back to the primary as if nothing had happened. Terrific work IT!

Last but not least, we've spend the better part of 2010 working on two main projects: internal software (Sabiona) to help us better manage agents, specifically individual opportunities that we are working on. Secondly, reprogramming our commission system to handle even more nuances, exceptions, spifs, automatic auditing, and easier importing. With the last upgrade our commission specialist can handle over 5,000 commission entries each month in just 20 hours/week - with lethal accuracy.

It's safe to say, we've come a LONG way in 2010. But if you think we've reached the end of our creativity rope, come on down to our Agent Conference in Las Vegas on March 12, 2011 - and you'll see otherwise!

Cheers!

Telarus Continues on the Rise

I realize it's been a while since my last blog post. Been pretty busy.

Telarus ... wow, what a ride. We're making more people, more money, than ever in our history. The economy is slow, but our book of business continues to grow. The general mood of businesses is of gloom, yet to step into the Telarus office in Draper and you'd swear you're in a Tony Robbins seminar. It's a special magic that comes when you have great people (agents and staff) working together to have incredible success.

Carriers have noticed it too. We just returned from the Channel Partner Show in Washington D.C. and while there, had a great time to sit down with our carrier partners. We reviewed our 2010 YTD sales numbers, discussed ways to increase sales (which usually entails better provisioning and better GeoQuote API integration), and ways to increase efficiency in general. We also had the opportunity to meet with a few of our brand new vendors: TelX and Broadview Networks. I was very impressed by both and we look forward to working with them!

Now, the path to Vegas is being charted. We have a ton of new technology that will help agents make more money than every before in our 8-year history. I'm not at liberty to disclose details here, but suffice it to say that we'll make front page headlines when we roll it out.

Thank you all for your business and for making Telarus the master of the future.

Time to Give Back

When I'm not making web pages, working with our programmers to create new quoting tools for GeoQuote, or changing diapers (my kids still aren't potty trained yet), I like to do triathlon. Swimming, cycling, running - they all help to keep my blood flowing to my most important muscle: my brain. I began doing triathlon in 2005 at the last-minute request of a friend and Telarus agent, Jason Oliver. Although the first race was a horrible experience, it left me wanting to get better; better equipment, better training, better prepared. I signed up for some more races, trained hard every day, and wouldn't you know it, I went from almost last to almost first. Then, I got it in my mind to become an Ironman - like the ones you see on TV every November riding across the big island of Hawaii. 140.6 miles ... wow. I hired a coach, got new race wheels, and began to train like never before, for hours on end. In June 2008, with the help of all of the training, my coach, and the right equipment, I finished the 140.6 course in 11 hours, 24 minutes. The thrill and sense of accomplishment overwhelmed me. M-dot (the slang for finishing an official Ironman race) was mine, and no one could ever take it away from me! To get a sense for how I felt about the accomplishment, I instructed my wife to engrave the M-dot symbol on my gravestone so everyone who ever saw my grave would know that an Ironman lay 6-feet under where they stand!

Finishing that triathlon did more for me mentally than physically. It's a feeling that can cure depression, desperation, self-pitty, or any feeling that brings someone down. It's a feeling that I'd like to help bring to people who battle with those feelings everyday they wake up: injured Iraq veterans. Through the Challenged Athlete Foundation, more and more wounded Iraq (and Afghanistan) vets are being helped out of their wheelchairs and into the water, and onto a bike, and into a specialized cycle-chair - for Ironman California (70.3 miles). I've done the race twice myself in the past, and I'm planning on doing it again on April 3, 2009. However, this time I'm racing for the troops:

• 1st Sergeant John Blue (lost leg below the knee in Iraq)


• Colonel Patty Collins (lost her leg below the knee)


• 2nd Lieutenant Melissa Stockwell (lost her leg above the knee in Iraq)


• Former Reconnaissance Marine Oscar “Oz” Sanchez (spinal cord injury)


• Sergeant Michael Gallardo (lost his leg below the knee in Iraq)


• Corporal Evan Morgan (lost his left leg below the knee, right leg above the knee and vision in one eye in Iraq)


• Petty Officer 1-Class Casey Tibbs (lost his leg below the knee)


• Ret. Staff Sergeant Chris Chandler (lost his leg below the knee in Afghanistan)

If you would like to join me and lend a helping hand to John, Patty, Melissa, Oz, Michael, Evan, Casey, and Chris, please donate what you can to the Challenged Athletes Foundation.

For me, the war is a whole lot more personal when you're running next to one of these heroes. This year, my conscience won't let me run by without knowing I did all I could to show my thanks and appreciation. Thanks in advance for your support.

Another Lead Source Emerges

As I sat in quiet meditation on the flight from Salt Lake City to Boston, I took a mental tour of the past year's events that had transpired since the 2007 Channel Partner Show in Seacacus, New Jersey. Back then I was presenting my first marketing plan to our vendors. The plan included things such as Telarus Agent Conference sponsorships, trade show booth sponsorships, joint press releases, and co-branded magazine ads. Up to that point, Telarus has never exhibited at any trade show, we had never run an ad in a magazine, or engaged in any other form of marketing. The Telarus brand was built purely a result of public perception of our agents, our staff, and the founders.

Without any traditional marketing, we were still able to grow the number of agents, VARs, and referral partners from 0 to 20,000 in under 5 years. "How was it possible for us to grow organically and by word of mouth for so long?" I thought.

In my opinion, it all boils down to value. The stated goal of our company is to "make agents more successful with us than they would be on their own or with any other competing master agency." The only real way to provide value, in my estimation, is to help agents make up for areas in which they are deficient.

Some agents are great at selling, but horrible at finding leads. Others, like equipment dealers and network integrators, have the business, but lack a system that makes ordering and tracking telecom circuits easy. Others lack the back office software they need to scale their business so they can break through the glass ceiling of customer saturation.

By having a balanced approach to value creation, Telarus has attracted new partners each and every month since we opened our doors in 2002. Our first priority was leveraging my search engine optimization skills to generate warm leads. One thing that most agents always need is warm leads, even more than a top tier commission. Agents gravitate to companies who help them grow their business, not just provide contracts and process their orders. It took a few months to jump start the lead engine, but once it fired up in 2003, our agents have received over 500,000 opportunities as a result.

The second piece of the equation that we sought to provide agents was productivity tools that enabled agents of all backgrounds to become telecom consultants. GeoQuote, the main productivity tool in use by Telarus agents today, has required a massive and continual investment to build and maintain. I estimate that we have spent north of $2M to build and maintain that piece of software alone. And its not done yet. We are still struggling to get all of the data we need from our vendors so GeoQuote can accurately quote all of the products our carriers have to offer. Right now we can only quote about 50% of all offerings. However, with the help of our new GeoQuote Specialist, Danny Steer, we hope to change that equation. In the long run, our agents sell what they see quoted in GeoQuote. More products, more quotes, more business.

As the plane readied itself to land in Boston's Logan International Airport, I thumbed through my 2009 Marketing Plan that I had printed and ready-to-go in anticipation of numerous vendor meetings at the trade show. This time, I was able to think of more ways to generate leads - ways that would truly bring new and valuable business to our carriers as well as make a lot of agents rich. The simple scheme should have been an obvious one, but I failed to see it until recently. By realizing that Telarus has a CRM that can manage large numbers of leads effectively, and that many Telarus agents are eager for new leads, and (this is the one point that wasn't apparently obvious to me for some time) carriers have lead lists generated by their marketing research departments, I was able to create a new program called the "Vendor Provided Lead Calling Program."

That's right! Telarus can be more that just an Internet lead shop. Telarus has the technology, the people, and the resources to function as a carrier's de facto outbound call center. It's genius: a call center that costs a carrier nothing for phone minutes, for cubicle space, for telecom hardware, for salary, for bonuses, for health care - nothing. The carrier only has to invest in the marketing research, turn it over to us, and pay only for performance. Imagine that! Paying nothing for a TV ad if it got zero response rate! Paying nothing for a billboard that yielded no results!

To put it mildly, the Vendor Provided Lead Calling Program won rave reviews from every carrier I pitched it to. The success of the program will rest on my ability to ensure that the lead lists we receive are accurate, targeted, and compelling - so that the entire program doesn't turn into a dry ice cold calling exercise that isn't interesting to agents.

The program entered its pilot phase this week as Broadweave, new owner of the iProvo municipal fiber network, outsourced its outbound calling campaign to Telarus. Though it is still to early to tell how successful it will be, we know that we can modify it to meet our agents' very high expectations.

I don't know why I didn't think about this sooner!

Awards Anyone?

Man - this past month has reallly kept me and the marketing department busy. Trying to keep up with the torrent of press releases I've had to put out has pushed me to my limit, but I'm more than happy to do it.

Some of the recent awards Telarus has won includes:

• 2008 Telecom Assocation Member's Choice Award Winner to Top Master Agent
• 2008 VAR Business Magazine Gold 5-Star Award
• 2008 Top Agent - Covad Communications
• 2008 Top Agent - Nuvox Communications
• 2008 Top Agent - Telnes Communications
• 2008 Top Agent - MegaPath
• 2008 AT&T Circle of Excellence Award Winner
• 2008 XO Communications Club MVP
• 2008 ACC Business Platinum Cup (4th consecutive year)

To put it mildly, we had a lot of momentum this year going into our annual Telarus agent conference and PHONE+ Channel Partner Show in Las Vegas 2 weeks ago. We even exhibited for the first time! Here are some pictures from the show!



The Telarus booth where we gave live demos of the back office and GeoQuote.



The Telarus team at our "pre-game" meal on Sunday night. The top row is: Pam Simon (AT&T/Qwest specialist), Thomas Hernandez (Channel Manager), Mike Gottwalt (Channel Manager), Daniel Pentecost (System Admin), me, Carole Calderon (Internal VAR Manager), Adam, Robert Butler (Director of VAR Network), Andrew Morgan (VP of Web Development). The bottom row is: Jessica Martin (Business Administrator), Aaron Jay Lieberman (Cold Fusion/PHP/SQL Programmer), James Knight (Channel Manager), Lance Akins (VP of Sales), and Chris Reynes (GeoQuote Specialist)

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Telarus agents after the annual Telarus Agent Conference on Monday, March 10, 2008. The conference was sponsored by Cavalier Telephone and XO Communications - both of which did a fantastic job. We were blessed to have such great sponsors!

Adam (blue shirt) receives the ACC Business platinum cup award (for the 4th consecutive year). Every agent you see to the right of him did less volume than Telarus. There were only two other masters in the country that did more ACC business than us, and one of them is actually two masters sharing the same contract! (Microcorp and X4!)

Overall, we've never had more momentum than now. Following up on all of the many leads we've received in the past few weeks will be ulta-critical to our success. We know that we've got a winning formula - we just have to tell more poeple about it!