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Ken Klaer

Ken Klaer 2019

Interview Date: Monday, February 4, 2019
Interview Location: The Cable Center, Denver, CO 80210, USA
Interviewer: Stewart Schley
Collection: Cable Center Oral History Project

STEWART SCHLEY: Greetings, thanks for tuning in to the Cable Center’s Hauser Oral History series. A former boss of mine, a mentor who is featured in this series, Paul Kagan, gave me a good piece of advice decades ago, and he said, “If you want to understand the modern evolution of the cable industry, follow the set-top box.” And it was advice that served me well. We have a chance today to do just that, in a big way, with Ken Klaer, who is a Senior Vice President for Comcast Technology Solutions, and really lives out a roadmap of set-top box evolution, and thus can talk a lot about where this industry has been, and I think where it’s going, too.
KEN KLAER: Happy to.
SCHLEY: Thanks for joining us.
KLAER: Thanks for having me.
SCHLEY: Appreciate it. Let’s start with a question that’s not on your CV, where did you grow up as a kid?
KLAER: Yes, I grew up on the East Coast. I was born -- my parents live in Philadelphia, ironically, then New Jersey, then from New Jersey we moved to Boston, Boston to Pittsburgh, Pittsburgh to Atlanta. I finished high school and college in Atlanta.
SCHLEY: Were you a “take-apart-the-radio” kid, were you into electronics and stuff?
KLAER: So, I had a cousin who was constantly throwing in my face -- because he did all that kind of stuff -- and so no, I didn’t.
SCHLEY: Okay, but you found yourself -- I think your academic background is in industrial engineering?
KLAER: I was an industrial engineer from Georgia Tech.
SCHLEY: And then, how did you find your way, Ken, into the cable business? What happened?
KLAER: So, I started out college as a chemical engineer, and then halfway through, I had an epiphany walking across campus. I was taking my second quarter organic, thermal, and p-chem all at the same time, and I said, “You’re going to do this the rest of your life? You hate it.” So, I switched to industrial engineering and it was one of the best decisions I ever made, because it was so much different and it just fit my personality. But while I was at Georgia Tech, I was a co-op, and when I switched from chemical to industrial, I had to switch jobs. So, I previously worked in a copper refinery, and fortunately I ended up going to work for Scientific Atlanta, as a co-op, in 1979.
SCHLEY: Which, as the name attests, was indeed based in Atlanta? Is that correct?
KLAER: That’s correct.
SCHLEY: What did you know about SA -- as we’ll call them -- before that? Anything?
KLAER: Very little. I know they hired co-ops, I knew they were in cable. Scientific Atlanta had a reputation as a growth company, but also had a reputation of riding its people pretty hard, because it was growing so fast.
SCHLEY: When was this?
KLAER: 1979.
SCHLEY: Okay. So, what was your job? What was your introduction?
KLAER: So, I had probably one of the best co-op experiences in my life -- that anybody could have in their life. Originally, I did an implementation of an MRP system -- so how do you plan factories?
SCHLEY: Oh, okay.
KLAER: Yeah, so that was pretty cool. We work with -- what’s now Accenture -- but Arthur Andersen in those days. One of my rotations we expanded into a new building and I laid out the new building, and was responsible for the move-in of the new building. And then -- they actually asked me to string a couple quarters together -- which was atypical, as they were getting into the set-top box business, to work on that. So, I got exposed to it while I was still in college.
SCHLEY: What was the state of the art in cable -- we used to call the converters.
KLAER: That’s right.
SCHLEY: What was going on in the market at that time?
KLAER: So, in the late-’70s, the set-top devices were mechanically tuned devices. So, they were -- you know, we had some devices that we procured from [Arata?], there was the Hamlin box that slid, the GI that had these little sliders on it -- not very secure, not very complicated. But they were all mechanically tuned, as opposed to electronically programmable, which we all take for granted today.
SCHLEY: Did they -- they literally sat on top of the television set, was that the idea?
KLAER: They sat on top and a lot of them had wired remotes -- if you remember the days when you had a wire across your living room.
SCHLEY: Yeah, be careful of not tripping on the wire.
KLAER: I used to joke with my kids -- who don’t understand this -- when I was a kid, I was the remote. My dad would say, “Go change the channels.”
SCHLEY: Yeah, been there.
KLAER: You can relate.
SCHLEY: What was wrong with the mechanical approach to tuning?
KLAER: It was limited in what it could do with respect to security. I mean, the defeats were fairly straightforward and easy. And it was also limited, in those days, with respect to how many channels you could put through the devices.
SCHLEY: Which was how many?
KLAER: In those days, it was 36 channels.
SCHLEY: And a converter, that word came from what? What was going on in the box?
KLAER: So, inside the box you would take a broadband signal in -- in those days 300, 330 megahertz -- and then you would have a tuner that would go select a particular carrier, and then it would up-convert to some intermediate frequency, before it down-converted to the output that your TV could take.
SCHLEY: Because television sets were never intended to tune in these frequencies.
KLAER: No, in those days it was all Channel 3 or Channel 4.
SCHLEY: Yeah, I remember flipping the dial. How did people -- what were the mechanisms that pirates would use to get through a converter?
KLAER: (laughs) So, I’ll bring forward -- when I got involved with the set-top box, it was, we called it the 6700 -- which I’m pleased to see that you have a few of them downstairs here.
SCHLEY: At the Cable Center?
KLAER: Yep, and it was -- in those days -- it was state of the art electronically -- design, anyhow. It was 54 channels, if I remember right -- yeah it was a big deal to go to 400 -- or whatever it was -- megahertz -- 450. And it was electronically --
SCHLEY: Managed -- as opposed to mechanical.
KLAER: As opposed to mechanical. The way you would defeat that, at one point in time -- you know, the kids will test anything and try anything -- and so, we had a keypad, you know, just 16-digit keypad, and we found out if you push four buttons at the exact same time it defeated all the security in it. So, that had --
SCHLEY: That seems random.
KLAER: Well, that’s what you find out. You find out these random things. So, we were transitioning from mechanical to electrical, and we call those programmable, because it had an EPROM in it.
SCHLEY: Okay, what’s an EPROM?
KLAER: Erasable Programmable Read-Only Memory. So, in this EPROM, you could put configurations that that device was allowed to decrypt. So, if you were not authorized for HBO, the EPROM would not have that in it. And so, nowadays we do it all addressably through a control system. In those days, it was a piece -- a little IC that you plugged into the set-top box, and it controlled what the box was allowed to see.
SCHLEY: I’m glad you made the allusion to HBO, because that mattered at that time.
KLAER: Oh, very much so.
SCHLEY: If you couldn’t secure those, I don’t know, five, six, seven dollar-a-month channels, there went the revenue.
KLAER: It was all about security, yeah.
SCHLEY: Did you have a sense that the cable industry was on the verge of something kind of big at the time?
KLAER: The truth was, I was a kid out of college, and I wouldn’t think that I’m all that -- I felt very lucky to be part of an industry that was growing.
SCHLEY: Because things were happening.
KLAER: Things were happening. It was growing. Keep in mind, in those days, there was no broadband. It was just a video business.
SCHLEY: Oh, absolutely. One-way video.
KLAER: It was the satellite earth station, you know, and getting into the converter business.
SCHLEY: Did you run across Sid Topol, I think the co-founder of Scientific Atlanta?
KLAER: So -- no, he wasn’t a co-founder.
SCHLEY: I’m sorry.
KLAER: Glen Robinson was the founder. Sid was brought in, just before I got there -- so, he got in there in the ’70s.
SCHLEY: He was the CEO, though, right? The President?
KLAER: He was the CEO -- he came from Raytheon. And I know Sid quite well.
SCHLEY: What’s he like? What was he like?
KLAER: So, (laughs) Sid was a very smart technologist, deep down inside he had sales in his genes. He had some traits that were quite characteristic. He would, if he heard a phone ring, he would stop and pick it up, because it might be a customer.
SCHLEY: Really?
KLAER: He encouraged us to always answer our own phone. He had the same -- it was fun, when I was young, because he would come by and you’d be so excited to see the CEO. And he would ask the same three questions: “What’s your name? What do you do? And how do you help the company make money?”
SCHLEY: (laughs) Really?
KLAER: He had the same three questions all the time, and he’s quite a character. But he -- I give him a lot of credit for the success of SA.
SCHLEY: Yeah, legendary figure, right?
KLAER: Totally.
SCHLEY: Not just on the set-top side, but the distribution side.
KLAER: Yes. So Ken’s version of history there. The world was going to go from analog to digital, and it was going to start with a satellite before it got to the converters, right? And so, Sid bought a company in Toronto -- I think it’s called Digital Video Systems, or something like that -- and it had something called BMAC, that was going to be the satellite encryption and security technique that was going to compete with what Digicipher was doing with --
SCHLEY: So, you’re setting up the signal in an encrypted fashion. Up and down.
KLAER: Correct. But Sid had a strategy that said, “look I can do a better technology than what our competitors were doing,” and he bought a company to do that. And he thought had assurances from certain content owners -- and then there was a very famous taxi ride, where somebody very senior in the industry told Sid it wasn’t going to happen.
SCHLEY: Oh no.
KLAER: And so, Sid actually -- he bet big on that -- and we ended up -- turning out to be some viable business for the company out of it, but it wasn’t quite the --
SCHLEY: That’s a tough taxi ride.
KLAER: The industry almost had two satellite encryption techniques.
SCHLEY: Ultimately, everybody rallied around the other --
KLAER: Well, VideoCipher to start, and that morphed into DigiCipher from GI. GI Motorola.
SCHLEY: But you guys, Sid and everybody there, you bet the company. Well, maybe you didn’t bet the company, but you made a big commitment to set-top technology, right?
KLAER: That’s correct.
SCHLEY: How -- why?
KLAER: So, I graduated in March of ’81 and they hired me into work on the production area for the 6700 set-top. The theory was at the time, we were building call it 1000-ish receivers and modulators and processors. We said, “Oh, we can build 1000 a day of set-tops and devices.” So, the company had, what I would characterize in hindsight, maybe a little bit of hubris of what we could do. And frankly it damn near sunk the company. It sunk the company in a very negative way. With that said, the senior leadership team -- which, it wasn’t just Sid, it was people like Jack Kelly, Jay Levergood, Jim Hart, Larry Bradner. What they did was they recognized that this was not a winning strategy, and they collectively went to Japan, and they built a relationship with Matsushita. And that’s when the world transitioned from programmable to addressable. Addressable meaning you can send a transaction back to the box, and change the state, without changing the device in the box.
SCHLEY: In the comfort of your headend or wherever you might be.
KLAER: Wherever your control system is. And so, what was interesting was the state of the art, in terms of reliability for these converters, was double-digit failure rates, generically. Which today, we would all laugh at and turn our nose up at. When we went to Matsushita, we took it well down below single-digits. We had lots that we learned from all that. We worked with the Japanese company, we transitioned from programmable to addressable, and that went from a problem for the company to being a huge success for the company.
SCHLEY: What was the challenge of not having double-digits -- why were they hard to make, these things?
KLAER: Well, going back on the history, the kinds of problems that we had. When we built the 6700, the very first one, we had all kinds of ingress and egress inside the box. Remember I talked about how we up-converted and then down-converted? Well, if the signal is going from one area into the other, it could distort or cause a problem with how it performs.
SCHLEY: In the box?
KLAER: In the box itself. When we later -- you know, the cable industry -- it can be a tough environment, right? And so, there were things like surges coming in on the RF network that would blow up the front-end of the devices, and we had to put more protection on the devices. And getting good grounding in the cable network plant is an art that people in this Center probably know more about than I do, but if it’s not done well, it can have an impact on the devices.
SCHLEY: You have to deal with this as a manufacturer.
KLAER: Right. And so, over the decades we’ve learned how to design it and get better at it, but that’s why you had high failure rates, for things like that.
SCHLEY: So, addressability came into vogue. About what timeframe is that?
KLAER: This would have been the early-’80s.
SCHLEY: What did addressability change about the way cable worked?
KLAER: Oh, it was huge. I mean, if you had a device in your home that you wanted to change its authentication, as to what it’s allowed to receive, in the old days you had to roll a truck, or figure out how to bring the box, and swap the box. With addressability, we’re able to just send a transaction to the box. It was huge. It was huge to eliminate calls and truck rolls.
SCHLEY: And, from what you knew, how did cable companies get those boxes in the home and what was the inducement for the customer. Did you sort of force-feed an addressable box into a customer’s home, say “this is what you got to use”?
KLAER: Well, so in the case of Scientific Atlanta, we had a lot of customers that had this 6700 that were not happy with us.
SCHLEY: A lot of cable industry customers?
KLAER: A lot of cable industry customers, in North America primarily, U.S. -- well, some in Canada, I guess. But the main thing that we did, is we gave them a trade-in policy. So, they were not happy with us, we were not happy with the product, and we wanted to make it better. And so, when we came out with this next generation leapfrog of addressability it was an easy sell. If you go to an operator and say, “Look, let me talk about how I take cost out of your system,” it will resonate. So, we gave them trade-in credit towards what they had purchased that they weren’t happy with, and that got us started with addressability. And then, we had such a great box, and our reliability was probably an order of magnitude better than the industry standard at the time. So, not only did we come out with a better, broader-scoped, if you will, featured product, we came out with a more reliable product at the same time.
SCHLEY: You sort of set the standard. I always wondered about this, because you can tell me from a technology development standpoint. It seems like multiple companies, who are competitors in the market, get to a similar place around a similar time. Is it just because the body of knowledge sort of disperses throughout an industry? How does that happen? Because, you were first, but...
KLAER: There’s a couple ways to answer that. Let’s talk about the transition from analog to digital. When we first launched our Explorer 2000 --
SCHLEY: Oh, I remember that.
KLAER: Yeah, yeah. It had four meg of flash and eight meg of D-RAM, because that’s what you could afford to put in a box.
SCHLEY: That’s not a very hardy...
KLAER: No, no, today you laugh at that. So, a lot of it has to do with the state of the art of the processors -- we at Scientific Atlanta had a joint venture, call it relationship, with ST. And we developed our own video silicon together with them. And parallel to that, then you had BroadCom doing what they were doing at the time. So, those were the two, primarily, basic development --
SCHLEY: Chip companies.
KLAER: -- chip companies. It was more tied to the state of the art as it evolved.
SCHLEY: So, you’re dependent on what’s kind of the broader ecosystem, to some extent.
KLAER: We have a lot of -- even at Comcast today, we have a lot of people that stay very close to the state of the art of what’s going on.
SCHLEY: And then, one element worth noting, because I think we take it for granted, is, what was going on with what we call the EPG, or the on-screen guide, in that evolutionary era?
KLAER: So, EPG actually came out in the analog days. Originally, it was -- we had a joint venture -- not a joint venture, but a license arrangement with Starsight, if you remember those guys.
SCHLEY: Starsight, yes.
KLAER: Starsight got acquired by Gemstar -- I believe is now part of TiVo, Rovi, whatever. It’s all morphed. But that came out in the analog days. And it was -- in the old days of cable, you had to go to your newspaper to figure out the channel guide and --
SCHLEY: What was on TV.
KLAER: -- what was on TV. And then, the EPG basically put it into the device itself.
SCHLEY: Did the EPG live in the box, or was it broadcast to the box?
KLAER: So, depending on what time of the evolution of set-top you’re talking about, but for most of the history, it resided in the box. Now, you could download it -- and of course downloading had challenges, and risks, and issues, because not everything always got properly seated like they were in the boxes. Everything resided in the box. Now, today, if you look at our X1 products, in the digital world today, the guide sits up on the cloud.
SCHLEY: That’s a big breakthrough for that -- the way you display information. Your journey took you to a company called ANTEC after Scientific Atlanta. What was ANTEC and what was attractive about that?
KLAER: So, I left Scientific Atlanta in July of ’92. I joined ANTEC roughly a year later. I did a startup in the middle of it, but it didn’t really work out so much for me. ANTEC at the time, literally the day I joined it, they had just done their IPO. ANTEC was a spin-off from Anixter -- remember Anixter-Pruzan, which was largely a distributor. This was a guy named John Egan, who was in the cable industry --
SCHLEY: Former football player, is this right?
KLAER: Miami Dolphins’ center. He broke his back the year before they went to the Super Bowl.
SCHLEY: Oh my gosh.
KLAER: Yeah, yeah, but he’s quite an interesting, dynamic character. Anyhow, so ANTEC was largely a distributer -- and a very good one, frankly, and I joined them -- with some friends of mine, if you know the names Steve Necessary, and Jack Bryant, and some of those guys. And I joined the day ANTEC had their IPO, so we were flush with cash, and I was given the assignment to figure out how to spend some money, which was kind of fun. So, I helped spearhead the acquisition of a company called ESP -- ESP was three principals -- a guy named John Lapington, Jim Farmer, and Tom Engdahl -- and they had a relationship with this company called Nortel. I’ll give you the shorter version of the story, but basically, we were able to take that relationship with Nortel and create a joint venture between ANTEC and Nortel, that is now called ARRIS. So, that’s how ARRIS was formed.
SCHLEY: What did you work on, early on, with the ESP/Nortel coalition?
KLAER: I had a number of different jobs with them. I ran the fiber optics business for a period of time --
SCHLEY: This was early fiber era?
KLAER: It pretty much had just come out, yeah, early days. So, this would have been -- I’ll have to think about this -- would have been ’94, ’95-ish.
SCHLEY: That’s what I got.
KLAER: And then, they had purchased a company -- that I had nothing to do with -- in Opelika, Alabama -- called Power Guard. And so, they asked me to go down there and run it and make some changes to it. There’s a lot of stories on that one, too, but I won’t go into that one.
SCHLEY: Okay, fair enough.
KLAER: And then, I went back to Scientific Atlanta. Steve Necessary went back and he pulled me back.
SCHLEY: In terms of your professional pedigree, how would you describe what you were learning, in terms of management style? Obviously you had the confidence and resolve to make a big acquisition, and to be strategic. But also, I think, to attend to the day-to-day management stuff.
KLAER: I was very fortunate -- and still am very fortunate, frankly, to be surrounded with leaders that are phenomenal at what they do. So, at Scientific Atlanta, the names we rattled off earlier, they’re class acts. They’re all brilliant. And so, one of the things you learn from Sid, is you need a plan, but then you need to execute. So, I’ve seen a lot of crappy strategies turn out to be pretty good through good execution, and I’ve seen the opposite as well. I mean, you might have had a good strategy, but it failed because you didn’t execute.
SCHLEY: Somewhere there’s a sports analogy here, but yeah, I hear you.
KLAER: So, you know, a lot of it is knowing how to focus on both. I love the current -- you know, the current buzzword today is agile. And I think Scientific Atlanta was a very agile company. We didn’t know it at the time --
SCHLEY: Early on.
KLAER: -- but, yeah, you have to be. You have to know how to adapt and adjust and I think we always had a very strong bias of listening to our customers.
SCHLEY: Okay, so that’s --
KLAER: Which has always helped me through my careers. Listen to your customers, deliver what you represent, and execution and excellence always pays off.
SCHLEY: What made a good leader -- or what makes a good leader within that kind of context? I mean, what are the traits?
KLAER: So, in my case, I like to describe my job as that of being a catalyst. And what happens with a catalyst is -- you are an agent that is part of a reaction that really doesn’t make the reaction happen, but helps facilitate getting it done. And so, I’ve always had a philosophy of hiring people better than me, hiring people smarter than me, that know their stuff. Well, it’s always pay off. Having guys pushing you up and out of the way is actually not all bad. And so, I’m very, very proud and pleased of the org I have today, because every one of them is an expert in what they do.
SCHLEY: So, identifying and cultivating human skills is part and parcel with technology development, I’m assuming.
KLAER: One hundred percent.
SCHLEY: What was going on internationally with the cable industry around this time?
KLAER: That’s a good point. So, Scientific Atlanta launched digital, and in those days, I was responsible for marketing and business development, and it was a blast. We had the best digital offering -- you know, my oversimplification. If you were, in those days, TCI, and you were losing to satellite, you went to GI and said, “I’ve got to quickly neutralize what satellite’s doing. I need to match them.” Our biggest customer in those days was Time Warner, and Time Warner in those days had a lot of networks that had relatively a lot of bandwidth. So, they had a lot of channels, which originally some of the old TCI properties did not. So, they needed to go to digital, so they could have more channels, so they could counter --
SCHLEY: Because that was the satellite argument -- lots of stuff.
KLAER: Lots of stuff. Time Warner in those days, in my view, had analog still, but a relatively robust infrastructure, and they said, “If I’m going to compete with satellite, I want to compete with their weakness” -- which is a return path -- “so we can have interactive games and things.” So, Scientific Atlanta was a year behind GI launching. When we launched, we had an infrastructure that allowed for interactivity from the very, very start. And we created a program, it was called Creative Edge, that had an applications development community.
SCHLEY: It’s like an early version of the App Store, right?
KLAER: That’s right. We didn’t know, we were ahead of our time. Lots of good stories about -- in fact, I remember -- it’s kind of silly now, but our beta site, of all places, was in Hawaii, with Time Warner.
SCHLEY: Time Warner Oceanic.
KLAER: Time Warner Oceanic, yeah. And one of the applications that they had was pizza on demand.
SCHLEY: Boy, so there really was a pizza on demand!
KLAER: There was a pizza on demand.
SCHLEY: That’s the cliché of interactive television. Pizza.
KLAER: Pizza on demand was first. Now, if you looked at how it worked, it was a lot of behind the scenes stuff, but it was the concept.
SCHLEY: But from the consumer’s standpoint, you could order a pizza on a cable system.
KLAER: In Hawaii, yeah. And then, of course, the big thing became video on demand, and so -- now you asked about international, so I got detoured.
SCHLEY: That’s okay, we’ll go back to video on demand and transactions, but I do want to hear about international market.
KLAER: So, what happened was, we launched, we were very successful, we won more than our fair share. We went from basically zero digital footprint, to -- I guess by the time the company was sold -- about 50/50 with GI. So, it was great considering we were behind them. Then they came to me and said, “We want you to do international.” And I said, “Great.” It sounded like fun, and I like travel. So, you’ll love this -- I went over to Europe and said, “Look, what we have is a great end-to-end system. With this conditional access called Power Key that nobody’s hacked, and has all this reliability built into it.” And they said, “Well, does it do DVB?” And I said, “Well, what’s DVB?” That’s where we started.
SCHLEY: Trouble.
KLAER: That’s where we started.
SCHLEY: What is DVB?
KLAER: Digital Video Broadcast. It’s the international standard for television. And so -- now, I’m a little tongue-in-cheek, but what I really learned is, internationally, what the customers were saying is, “Look, we are not going to follow the U.S. model. We’re not going to have evil duopoly lock us in to the end-to-end solution. We are going to be the integrators and we’re going to pick best-of-breed components.” And so, that forced us to come up with an alternative strategy. And so, what we did, was we said, “Look, what we have are brilliant people that know digital end-to-end.” What we said is, “We are going to be the world’s finest integrator of third-party components.”
SCHLEY: That’s a big change.
KLAER: Huge change for Scientific Atlanta, but we built the business from nothing to -- I don’t know the total number, but probably over time in the billions. I don’t know, I have to come back with the right number, but --
SCHLEY: Big business.
KLAER: -- big number. It went from nothing to decent-sized. And so, what we had to do was -- if you looked at the landscape in Europe, there were so many flavors of conditional access -- NDS, NAGRA, Irdeto -- lot of those flavors. Then there were multiple flavors of middle-ware that was doing a lot of the transactioning and processing in the box. And then, you have applications sitting on top of it. And then, of course, the metal and the hardware that all this stuff ran on, which was what I wanted -- I wanted to sell the metal. And so, what we ended up doing, is we -- brilliant guy named Diego Gastaldi did his mapping of the world, and at that particular time, we felt like the cable -- the companies with the most momentum were two you may have heard of: Open TV for middle-ware, and then NAGRA for conditional access. And so, we intentionally started a courtship with them, and then what we ended up doing was becoming very good at integrating Open TV and NAGRA with somebody else’s applications on top. Well then, NAGRA bought Open TV, and that kind of made it interesting.
SCHLEY: Sealed the deal. But that was important to those guys, because you were almost an intermediary between them and the cable industry.
KLAER: So, what happened was, the CTOs all liked the concept of being the integrator, but they didn’t know how hard it is. And I will tell you, in my view, just about every CTO, internationally, that did the “I’m best-of-breed and put it all together” lost their jobs, because they ended bringing in Accenture and spending a lot of money for integration.
SCHLEY: It does sound complicated --
KLAER: Very complicated. So, what we did is, we came in and said, “Look, I will eat some of that cost, so you don’t have to hire an Accenture, as long as you commit to buying boxes.” And that was --
SCHLEY: I did not know that.
KLAER: That’s the recipe of how we got into this, and believe me, there’s lots of -- we ended up integrating Liberate, ending up finding its way over into Telewest at the time. We integrated with lots of third parties.
SCHLEY: Ken, why was it that Europe was in a different sort of state of mind to begin with? As opposed to the U.S. model.
KLAER: I think it was primarily -- they looked at the U.S. and said, “Oh, you guys got trapped into the evil duopoly. We’re not going to let that happen.”
SCHLEY: Because cable -- it was later to Europe, right, generally? Sophisticated cable.
KLAER: Yeah, that’s right, that’s correct.
SCHLEY: So, you ran -- or you had a big role in running international for a couple of years with SA?
KLAER: I’d say ten years, plus or minus.
SCHLEY: Can I ask you to -- for the benefit of our audience, when we talked about the digital transformation, we talked about Scientific Atlanta being maybe a year behind your arch-rival, GI. What was the digital transformation? What was going on architecturally or technologically that we call that era the “digital era”? How were signals getting to the home?
KLAER: You mean from a competitive point of view?
SCHLEY: No, I mean, just describe -- we used to send signals in analog electronic language, and then suddenly we started doing it digitally. Why? Like, what was the impetus?
KLAER: So, the beauty of digital is that you can compress and get more channels into that same amount of spectrum. So, in the analog days, in the U.S., you would get six megahertz channels -- so one channel took six megahertz of spectrum. In the international, with the DVB world, it is eight megahertz. And so now, with MPEG2 you can compress it and get, whatever it was -- three or four channels -- and with MPEG4 you can get even more.
SCHLEY: So, you’re literally tripling the capacity.
KLAER: And with HEVC, even more so again. And not only that, while you’re tripling capacity, you are also bringing about better technology, because when we started there was no such thing as HD. I remember we first did digital --
SCHLEY: Good point. How soon we forget, right.
KLAER: That’s a funny story, too. I remember sitting down the street from here, with Jim Chiddix and Mike Hayashi in the Time Warner Building, and HBO wanted to be the first with HD, and our digital set-tops, at the time, did not have HD -- the silicon wasn’t ready. And so, I can remember Jim -- who I have great respect for -- he said, “Look, just do a daughter board. It doesn’t have to be pretty -- in fact, you can codename it Ugly One. If you want to, we have to do a second generation, it can be Ugly Two. We just have to be there fast.”
SCHLEY: It would literally attach, or be part of the next generation of the box?
KLAER: Think of it as a daughter-card that sat inside of an Explorer 2000. And it was damned expensive, and it was brute-forced, and then -- lots of funny stories about how they then --. Because we had done that, then they wanted us to work with the silicon guys -- in our case ST -- to integrate it into the chip, which obviously made a ton of sense. Of course, then, HD happened.
SCHLEY: Did HBO get out there with those HD signals?
KLAER: Oh yeah, they were first. Yep.
SCHLEY: I want to talk about -- you mentioned Oceanic pizza -- again, and go to this. So, digital not only expanded the carrying capacity of the cable system, but it let you do -- coupled with the return path -- interesting things, such as pizza on demand, video on demand.
KLAER: The video on demand was the big one. In those days, it was C-Change, Concurrent, Ncube, a couple others.
SCHLEY: They made the servers, right? That would spit out on demand signals?
KLAER: Correct and the commercial relationships, and a lot of pieces of it. But that was state of the art at the time. Getting video on demand to work. I would tell you that the applications domain in the digital world, really didn’t develop as much as we had hoped or would have liked -- other than the VOD. And of course, video on demand, there’s different variants of video on demand -- there’s subscription on demand --
SCHLEY: Pay-per-view.
KLAER: Pay-per-view is another that came out, yeah all that.
SCHLEY: Why do you think that didn’t happen? Didn’t gestate in the way that people had hoped at the time? Was it the Internet coming along at the same time?
KLAER: The Internet wasn’t there when we started, you realize.
SCHLEY: Oh, duh, right?
KLAER: So, when we built our Explorer 2000, we used an interactive return path called DAVIC, because it was, at the time, a state of the art -- and relatively small pipe, but it was state of the art opening.
SCHLEY: It got a signal back to the other end, to the headend.
KLAER: Yeah, and then, nowadays, it’s all done on the DOCSIS pipe. So, it’s more from there, but DOCSIS didn’t exist. I was with some Time Warner executives -- I won’t give you the names -- but it was interesting how they summarized the success of broadband. It was -- and in fact, they built the two-way network on the cable plant and everything, for video on demand, which meant that they could then capitalize it when the Internet showed up.
SCHLEY: Someone once said that cable was such a great parley business, because one enabling element lead to another. I guess that’s an example.
KLAER: A hundred percent, that’s exactly what happened.
SCHLEY: So, it’s interesting when you talk about the relationship with the Silicon Valley companies -- obviously there was a seminal transaction in this industry that affected you guys, when Cisco acquired Scientific Atlanta. What set the stage for that? We had always thought of Cisco as an Internet company, and a router maker, and now they’re in deep in the cable business.
KLAER: Not so much anymore, they’ve sold off most of their holdings.
SCHLEY: No, I know, but at the time, right?
KLAER: So, Cisco -- you’re right -- builds routers and switches -- and damn good ones. If you are somebody selling routers and switches, what do you want? You want more bits going through them. What creates bits? Video. Video is far more bandwidth intensive than most other applications, and so what they wanted to do is they wanted to figure out how to position their -- you know, remember at that time they had the CMTS -- Cable Modem Termination System.
SCHLEY: Cisco did.
KLAER: Yeah. And so, they had routing, if you will, built into cable through the DOCSIS side of stuff and they wanted to figure out how to build on and grow the video, just in general. Getting more bits running through the infrastructure. Scientific Atlanta was the 105th acquisition by Cisco, and they’re now, well, I think they’re well north of 200.
SCHLEY: They saw a need to be in place at the residential set-top level?
KLAER: They wanted to help influence the residence, and then the traffic coming out of those homes, going through their routers and the core network.
SCHLEY: So, you stayed aboard then? Is that correct?
KLAER: I was there for ten years. They acquired Scientific Atlanta, I want to say in 2005, and I left in 2014.
SCHLEY: I will give you all the leeway to answer this as delicately or diplomatically as you wish.
KLAER: (laughs) I like it already.
SCHLEY: What was the cable industry’s reaction to having companies, like Cisco and other participants, sort of swoop in?
KLAER: So, I would say mixed. On one hand, Cisco had a balance sheet to die for, and they were not afraid to do acquisitions, and they did a bunch in the space. Scientific Atlanta, when I was there, whether Sid Topol, or Jim McDonald, or Bill Johnson in the middle, we would look at a thousand companies and buy one. Cisco had -- they are -- people joke about them being the Borg, but --
SCHLEY: The Collective.
KLAER: They are good at that. So, if you had something that could leverage the Cisco balance sheet -- like, for example, on the international side--. I’ll give Cisco some credit where it’s due. One of the things we could do, we could go into places like India, and other places that aren’t the best credit worthiness, and we could give them a line of credit, because of our balance sheet.
SCHLEY: Because you had the financial resources to do it.
KLAER: And Scientific Atlanta could have never done that. So, on the positive side, they had nuclear weapons and were not afraid to use them. And so, that part was good. On the other side of it -- and I’ll try to be delicate, to use your word -- Cisco didn’t really understand what they bought. And so, when I described earlier how you integrate third-party devices, that is a very foreign concept to Cisco. Cisco’s very good at selling devices -- a router, or a switch, or a telephone system. They’re not good at end-to-end integration. And so, the companies that were successful that they acquired were things that were global in nature, that could lean on the Internet, and they could apply their marketing machine, and they could blow it out to the world.
SCHLEY: It was a very comfortable world to belong in.
KLAER: If it was generic, they could train up everybody, they could get it to market incredibly fast. On video, you know, if I walked into Hong Kong Cable, what they would want would be something materially different than what UPC would want, right? And so, there was a lot of bespoke, if you will, custom engineering work that they weren’t really tooled to do. And so, they had challenges with that.
SCHLEY: And they maybe didn’t necessarily -- they weren’t cognizant of that at the outset.
KLAER: Apparently not.
SCHLEY: But in their defense, do you agree that cable is a little bit clubby? It’s a different industry than some industries, to an outsider.
KLAER: And then the club’s getting smaller every year.
SCHLEY: The club’s getting smaller every year, that’s true.
KLAER: But I will say, Scientific Atlanta did deliver. When Cisco buys something, they create what’s called a “commit case,” which is basically how much, among other things, what profit you’re going to deliver. And so, for five years, we delivered what we represented.
SCHLEY: That’s a good business.
KLAER: Yeah, so it was good business for the first five years. During that same five years, we had five different bosses.
SCHLEY: Yeah, I sort of remember that.
KLAER: Yeah, so it was kind of an interesting evolution.
SCHLEY: Was it culturally different? Was it fun? Was it looser? Was it more rigid in the management style?
KLAER: So, when you’re with a company that’s four billion in revenue, you can walk down the hall and have a debate with whoever has input, whoever is a decision maker. It’s really easy, and four billion is a good-sized company. When you’re part of a -- what is it -- 50 billion, at the time, or whatever, company, and their headquarters is Silicon Valley, a lot of times, you don’t even know who you’re fighting with to get something done. And so, I personally spent more time figuring out how to work the internal -- if I wanted to do a deal that was good for my customer, I had to chase down many different people inside of Cisco to figure out how to do the right thing by the customer. And ultimately, they would do it, it would just take so much more energy.
SCHLEY: But the part of it is the complexity of having 105 companies and trying to put them together.
KLAER: Well, we were one of how many product lines? So, I understand the complexities, and at the same time it was just the nature of being part of a big company. So, again, being balanced about it, they had a balance sheet that we could leverage and they had some great tech -- some wonderful brilliant technical people. On the other hand, you had the rigidity that came with size and scale, that made it a little bit harder to get things done.
SCHLEY: And then on the other side, Ken, I’m trying to follow the lineage of the Anixter, ANTEC, ultimately ARRIS. So, ARRIS really, was your competitor. Is that right? In the set-top world?
KLAER: So -- now I’ve got to resurrect -- so ARRIS was born out of DOCSIS, primarily voice. So, remember --
SCHLEY: Oh, that’s right.
KLAER: We all take it for granted now, that wireline into your home, and to Bob Stanzione’s credit, I mean, he came from Lucent and he had a passion for DOCSIS and voice, and that’s what they built their anchor, if you will, their business around. They didn’t get into the set-top business until they acquired Motorola from Google.
SCHLEY: That’s right, from Google. See, how soon we forget. This pattern. You’d known of Comcast all your career, obviously. Watched them become a large company from a mid-sized company. What opportunity arose for you, with regard to Comcast?
KLAER: So, I’ve known Comcast way back when they were the little guy. (laughs) I used to sell to people like -- I tried to sell to Frank Raggone. I sold a fair amount to Brad Dusto, and successors. And David Fellows actually was a Scientific Atlanta guy, before he became the CTO. He was my boss when I was doing some of the work at SA. And then, Tony Werner was a customer of mine, when he was from Liberty Global -- when I was doing the international stuff. And so, I’ve kind of -- you know, you called it a club -- I think I’ve grown up in the club, I’ve been very fortunate. So, I knew them when they were big, and as you would expect, Cisco would reorganize our group quite a bit. So, I went from just being international at one point, to helping with international and domestic.
SCHLEY: With Cisco.
KLAER: With Cisco. And I started helping them, helping Cisco, get back into the gateway business at Comcast. And so, I got reacquainted to a lot of people -- some great people there, Mark Hess, Steve Reynolds at the time -- if you know Steve, he’s at Imagine now.
KLAER: So, I guess they liked what they saw in me when working with us on the XB3, and I got a call from Sree Kotay and Tony Werner saying, “Hey, would you look at coming to help do some device stuff with us.”
SCHLEY: What device family were you focused on?
KLAER: So, Steve Reynolds, I replaced him. He wanted to move back to Denver, get done travelling. So, I pretty much had -- and again, Comcast has evolved the org design, but effectively all customer premise devices were rolled up in that group. I will say that, I initially started heavily focused on video. We had the XB3, as I said -- in that case, I was fortunate enough to hire a really brilliant savant, a guy named Fraser Stirling, who was super, super special.
SCHLEY: One of these many hires that you think are better than you.
KLAER: He’s actually better than me. I am the biggest fan and supporter. And basically, what I did was help Fraser was figure out how to reinvent how we do things at Comcast.
SCHLEY: Big charge though.
KLAER: I’ll tell you an interesting story, from my point of view, as a vendor and then on the other side. So, you ever wonder why Comcast has had, historically, big ugly boxes?
SCHLEY: Sure, why?
KLAER: So, the cable industry standard for operating temperature range, for years and years and years, inside a home, was zero to 40 degrees Celsius.
SCHLEY: Okay, who knew?
KLAER: And then some folks inside Comcast who had influence said, “Well, you know, somebody could take that set-top and put it inside a home entertainment center, and the doors sometimes could be closed, and the air flow is bad. We should figure out how to change the spec to zero to 50.” And of course, when I’m on the other side of the table, I said, “Well, zero to 50, that means you’ve got to have air flow, and make it bigger” --
SCHLEY: Yeah, you’re starting to worry about all the --
KLAER: Heat. You’ve got to get rid of the heat, right? And then -- you’ll get a chuckle out of this -- and he said, “But we’re going to test to zero to 60.” And my engineers are coming in, “What do I design to? Is it 50 or 60?”
SCHLEY: Oh my gosh. (laughs)
KLAER: And so, the short version is, if you look at our XB3 and compare it to our XB6, XB6 obviously shows off how far we’ve come in terms of design. XB3 is a big device.
SCHLEY: To accommodate that range?
KLAER: To accommodate this -- yeah.
SCHLEY: Oh my gosh.
KLAER: So, one of the first battles I had to fight was wrestle control. If I owned the product, I owned the specs. And I had to explain to people, “Look, you’re burdening 100 percent of the devices, for a small percentage, and” --
SCHLEY: For this really narrow use case.
KLAER: Yeah, yeah, and not only that, if you look at -- “Who’s our competitor of the future? It’s Apple, Amazon, Google. Look at their devices. Look at our devices. Which one would you rather have?” And I’ll go back to Fraser. Fraser’s the one that came up with the design standard, and we fought and we wrestled control back in to where it belonged, and if you look at our devices now. I’ll give Fraser and the team credit, they have won some design awards. We’re now, in my mind, as sexy as anything anybody else is doing.
SCHLEY: Sleek looking boxes. I think the parable’s interesting though, because it testifies to this need to sort of divine what’s going to happen in a future environment, right?
KLAER: A lot of it is knowing who your competition is going to be. For the future, right? In the history of cable, one could argue, that it was not nearly as competitive as it is today. I’ll say it that way. You know, we grew up franchise, then we had satellite competition, and then the telcos. They went from broadband into video, and now with all the virtual MVPDs and over-the-top players. Now we’ve got the content owners are going direct to consumers. It is a hyper-competitive market that is much different today than when you or I started in the industry a few years ago. So, you have to adapt and adjust -- which I give Brian Roberts, and Tony Werner, and Dave Watson, the credit for.
SCHLEY: But keeping an eye on the competitive landscape is equally important to trying to figure out what consumers are going to want down the road, I guess.
KLAER: They’re linked. You’ve got to know what they have an appetite for, where they place value. But I will also say, one of the things at Comcast that we’re very proud of, with X1 -- we’ve cloudified pretty much everything that you can. And what that means is, if you want to make a change, you change it one place, versus 23 million places, right? And so, what that means is, you can actually experiment with things. So, we don’t always have to know what consumers are going to love, all we can do is put stuff up in the cloud and -- if you ever play with your X1, there’s Comcast Labs in the settings -- and you can see some of the stuff that’s coming, and we have lots of --
SCHLEY: You can measure response and --
KLAER: Yeah, we have lots of ways of figuring out if people value it or not.
SCHLEY: I can’t leave it at that. You have to wax poetic a little bit about moving to the cloud. It’s an enormous platform transition.
KLAER: So, you know, we talked about it years ago, at Scientific Atlanta, and the conclusion at the time it was --. First off, the cloud isn’t what it is today, but there’s different variances on what you could say “cloud” means -- but the real problem in those days was the network, meaning the --
SCHLEY: Getting to the cloud.
KLAER: -- the two-way broadband HFC network was not to the point where it was viewed to be reliable enough that you would want to have, if you will, lifeline -- and I say “lifeline” meaning always have an access, always on, at a high enough reliability. And so, Comcast has invested billions in getting that infrastructure to the number of five-nines, four-nines, whatever it is, needed so that you have that part of the equation solved. In parallel to that, then what happens is, you know, Amazon’s come out with what they’re doing with the public cloud. We’ve looked at a bunch of different analysis of doing it privately -- meaning servers and stuff on our premise -- and publicly, and frankly, they’ll be a hybrid of both, because applications make sense to do locally, and some are fine to put public. And there’s a lot of value to public. So, we take advantage of Amazon. We’re working with others as well. It’s very easy to spin up an instance, it’s very easy to have redundancy and protection, and things that didn’t exist years ago.
SCHLEY: It’s amazing, hearing you talk, how fluid telecom technology is. It never stops, right?
KLAER: Not in my lifetime.
SCHLEY: I guess that’s part of the glory and part of the stress of managing a technology business.
KLAER: I think when you stop evolving is when you start shrinking and start losing. The good news about Comcast, there’s great awareness of the state of our industry, and what’s changing about it, and we’re making adjustments as appropriate, and I feel like I’m part of a winning team that’s going to navigate through all of this stuff.
SCHLEY: Well, awareness is an interesting word, because I think one of the gems and jewels of the cable industry today, is this creation called “RDK.” Can you explain what it is?
KLAER: Sure, so -- this is another funny story. So, RDK stands for Reference Design Kit -- some engineer must have come up with that name.
SCHLEY: Of course. (laughs)
KLAER: And, if Sree heard me talking he would kick me, but RDK effectively replaces, if you will, the middleware that was in these digital devices. And RDK is the plumbing inside the set-top box -- oversimplifying. We -- Comcast, before I joined, but shortly thereafter -- created a joint venture with Time Warner, at the time, and Liberty Global -- so it’s now Charter and Liberty Global, and Comcast. With the idea being that we wanted to promote, as much as we can, a global standard for what I would characterize as “service provider customer premise equipment devices.” So, it started out as video, but now it’s broadband, it’s cameras, it’s a bunch of other stuff. And so, the funny story is, Cisco had acquired a company called NDS.
SCHLEY: Yeah, I remember that.
KLAER: NDS had a piece of software called “Fusion,” that they thought was going to be the next generation of middleware for cable.
SCHLEY: Doing some of the same things that RDK was --
KLAER: Functionally the same things, but not nearly as well, in my opinion. So, I went to the very first RDK conference in New York, as a Cisco employee, and I wrote a memo back to the senior managers at Cisco, that was probably not very popular. But I remember I wrote off --
SCHLEY: This is your Jerry Maguire memo.
KLAER: I wrote a memo to Jesper Andersen, I said, “I went in a skeptic and I came out a believer, Fusion is dead.” (laughs) And I was right for cable.
SCHLEY: Can I ask why it didn’t have a good prognosis?
KLAER: So, Fusion -- let me back up. So, RDK -- I’ll get the number wrong because it evolves all the time -- on the video side is 90 percent open source. RDK is an open community, so if you join RDK you have access. It’s free. And unlike Android, there’s no anti-fragmentation, or any of these other terms that people don’t like. You can branch anytime you want. You don’t have to come back in. If you don’t come back in, you miss the benefit of staying with the tip of the trunk. One big thing is it is proprietary with Fusion versus open source with RDK.
SCHLEY: That’s a huge difference.
KLAER: But the other thing, too, is if you’re part of RDK, you’re drafting behind Comcast spend. We are the biggest component -- we own most of the components that we try, but not all of them. Cisco, for example, contributed the bus structure for the RDK broadband.
SCHLEY: So, they’re in.
KLAER: Yeah, oh there’s 400 companies are in.
KLAER: It’s gotten to be a very big thing. And so, it is an open community. The reason it’s not 100 percent open source is stuff like security-type things, you have to be very careful. So, it started with video, and now it’s broadband. But I’ll give you an example of some of the modules. “Hardware abstraction layer” it’s called, on the Wi-Fi. So, we now have Wi-Fi in the broadband device, we have Wi-Fi in the set-top device, we have Wi-Fi in the camera -- and guess what, it’s the exact same abstraction layer, the same APIs, and same code. So, we have the ability through RDK to be very, very efficient in how we develop, and how we test, and again, we make it transparent and open. Anybody that’s part of the community.
SCHLEY: And originally, you wanted scale, right? It’s not just Comcast and Liberty and Charter.
KLAER: We did want scale. As big as Comcast is, we’re not Apple, we’re not Google. So, the more we can align an industry around a common standard, for the goodness of the industry, everybody wins.
SCHLEY: Did RDK precede the X1 evolution, or...?
KLAER: No, it was concurrent. They were at the same time.
SCHLEY: Don’t you find it interesting how even your competitors have great praise for X1? I mean, it’s -- even the tech guys, the elites of Silicon Valley love X1.
KLAER: Having been a device guy, all of my life -- and I’ve travelled the globe, I’ve seen all kinds of stuff all over the place -- in my heart of hearts, I believe it is the state of the art, right now.
SCHLEY: Yeah, I don’t think that’s self-serving, I think the people have come to the same conclusion. But isn’t it interesting, Ken, to think about at the early end side of your career, you had closed systems, proprietary architecture -- the industry has come a long way.
KLAER: I was going to say, it was a great time to be a vendor. (Laughter) Nowadays it’s a little different.
SCHLEY: You mentioned the “duopoly,” referring to what used to be, you could choose one of two companies, and not a third.
KLAER: As the industry’s consolidated, we’ve taken more control of our own destiny. One of the things about RDK that I love to brag on -- do you know how often we push code to the set-top box? Every two to three weeks – on par, or faster than some of the biggest technology providers.
SCHLEY: No kidding.
KLAER: And so, what’s different from the world that I grew up in. The world I grew up in is -- because I would test it in my lab environment, and then I would carry it over to the customer’s environment, and all that. And you would do one major code release in one year, and you might do some bug fixes --
SCHLEY: And that’s it.
KLAER: And so, it’d be huge, it’d be big, and so what happens in RDK world is instead of having big, monolithic updates, you’re pushing small bits of code. Well, guess what, when you push small bits of code, you have less probability for error, because you’re changing less things.
SCHLEY: I would think.
KLAER: You can test it faster, you can spin it quicker. So, I would argue that our disposition of the way we push code is state of the art.
SCHLEY: Right. And much more iterative.
KLAER: Very iterative.
SCHLEY: I wanted to ask, while we still have a little bit of time. When you aren’t developing, and selling, and working on technology, you’ve been a prolific volunteer with the YMCA organization, in particular. How does that fit with your professional life and why does it matter?
KLAER: I think it’s always good to give back. And I found that when I was in Atlanta. It was a particular area of the YMCA that I felt like I could add value and bring back, and I was on the board for a number of years. We did a lot of good things, and helped a lot of people. I’d like to do more of that, frankly. When I moved to Philly, I was so engrained in my new job, and I moved to Denver and -- one of the things I like about Comcast is that we’re big in believing of giving back, and, I don’t know if you’re familiar with Comcast Cares --
KLAER: We crossed our 1 millionth person doing that --
SCHLEY: Volunteer.
KLAER: Volunteerism, yes. So, I love doing that kind of stuff, I’d like to do more of it, I’d love to work with Jana here at the Cable Center. I mean, whatever -- I like the idea of giving back.
SCHLEY: What sort of advice or counsel would you give to someone who’s coming into this industry today? Well, first of all, why? Why would you work in the cable industry if you’re a 21-year-old super coder, or a technology savant?
KLAER: Well, I don’t know about the cable industry. I would talk about Comcast. If I were a super coder or savant, I would want to work on the coolest technology, and I got to tell you, we’re driving the coolest technology. We believe in tightly integrated teams that own things end-to-end, cradle-to-grave. So, you wouldn’t just be doing dev, you could be part of a team -- not only dev, but you got it out in the field and you operated it, so you own it through the lifecycle. We are a culture of micro-cultures, which -- this is going back to the Cisco analogy, or comparison -- by virtue of allowing differences, you can have groups focus on things that motivate them, and recognize that what works in Seattle may not be the same for Reston, Virginia. And we actually encourage people -- don’t get me wrong, we share the Comcast values at the core -- but each entity is entitled and encouraged to create their own micro-culture around what’s important to them.
SCHLEY: It’s a little bit of a bold departure, I think, because sometimes inviting lots of ideas can be chaotic, right?
KLAER: I think what you could say is, inviting micro-cultures, you could end up with some duplication of type work, I wouldn’t necessarily call it chaotic. You have a bunch of well-meaning teams that are on a mission, and what you might argue is that we may not be one hundred percent efficient -- meaning, you know, people are doing code that another group may have already done that we don’t know about, because we’re so diverse.
SCHLEY: That’s an acceptable outcome.
KLAER: Because the individual groups are working that much faster than the alternative. And so, we’re always looking for ways to optimize and get better, and more efficient. Don’t misinterpret, but I think the benefits far outweigh the penalties.
SCHLEY: I think it’s an interesting organizational precept, that maybe didn’t exist five or ten years ago.
KLAER: Well the technology -- when you talk about the public cloud, you’re often talking about these micro-services. When Amazon talks about their teams, they have the two-pizza rule. You know the two-pizza rule? If you have to have a team, and you want to serve them lunch, and it takes more than two pizzas, your team is too big.
SCHLEY: I like it.
KLAER: So, we try -- I don’t have the right number, but it’s in the thousands -- we have thousands of micro-services. And you’re able to create these small working teams that own things cradle-to-grave, and the young talents love that.
SCHLEY: Ken, you’ve mentioned a few names -- people who’ve been influential from Sid Topol, to Necessary, to Bradford, to Tony Werner. Are there other figures or people you’d care to comment about that have, sort of, been really important to your professional development?
KLAER: It strikes me that every one of the names that we’ve rattled off, so far, have been males. So, I’ll do it another way. My first boss was a woman named Melissa Timmons, who taught me so much at Scientific Atlanta about being a professional. At Comcast I work with some great women, Noopur Davis is a rock star, she does our security and product -- corporate and product security. And then, Sherita Ceasar, who I worked with at SA, and now at Comcast. So, these are all people that had an influence on me. I’d like -- one of my own goals in life is to figure out how to promote the diversity. We believe a diverse workforce is best, because our customers are diverse, and you want to make sure we have multiple points of view as we’re doing anything.
SCHLEY: The other thing that I think has come out a couple times, I think it’s really interesting. I’ve heard this elsewhere, but you really seem to articulate with some degree of presence, is trying to hire people who could take your job someday, who could be better than you. What’s that all about?
KLAER: It has just served me well. Probably shouldn’t tell this story, but I went to Tony and said, “Hey, this guy Fraser...” At some point, he’s thinking it would be like a year or two down the road. Well, three months there was another reorganization and Tony said, “Hey, I’d like you to do this other stuff.” And so, I’m good with that. I’m also at the twilight of my career. I’m happy to do whatever the company would like me to do, and I really think the value that I could bring the company is growing and developing people. I think that’s all healthy and all good.
SCHLEY: Well, it’s been a great conversation, and I think, I think that admonition I expressed at the outset -- “follow the set-top box” – was pretty good. I think it still carries us through. We went from EPROMs to X1 in the space of an hour, that’s not too bad.
So, you’ve had a lot of international experience, but one initiative that you’re involved deeply in, is the India Engineering Center of Comcast. What is that?
KLAER: I’ll go back to my Scientific Atlanta days -- I said we didn’t buy very many companies -- one of the ones we did was a company called BarcoNet, and they had a development center in Chennai. It was done on the transmission side of the shop, and I was on the subscriber side of the shop, and so the transmission guys were going to shut it down, and myself and Burchall Cooper -- if you know that name -- we went to the management and said, “Let’s try it. We think there’s really good talent over there, and it’s very cost effective, and so let’s try it.” I guess I lost track of the number of years, but call it ten-plus years of working with them. We’ve learned that if you do things the right way, the productivity coming out of that development center was really, really good. So, fast forward, I come to Comcast, and I’m running the CPE -- Customer Premise Equipment -- team, and I had -- I forget the number, 700 employee organizations -- two-thirds of them were contractors. And, a large percentage of the contractors were in India. So, I said to the management, “Why don’t we have badged employees in India?” and they said, “Well, if it makes sense, put a story together.” So, I worked with some friends of mine in India, and put a strawman together, and basically what I was able to convince them of is, “Look, if you do it right, you have badged employees that are worrying about their promotions, versus a contractor who’s worried about their next contract. And not only that, the contractors have a margin. And so, if you hire them directly, there’s actually some financial benefit. Which frankly wasn’t the real driver, but it all helped with the story. So, a little over two years ago, we started. In December, we finished year two. We went from zero to 400 badged employees, we now have a third module -- so we have seating now for another 225-ish, or so. And, basically, what we’re doing is we’re taking contractors in India and making them badged employees. Comcast is so big, you can imagine the number of contractors we have in India being a very big number. And so, this is just taking a percentage of them, and what’s very exciting to me is the efficacy of all of the groups that are there today, including people working on RDK. If you want to improve, you’ve got to measure, right? And, we track and measure all kinds of stuff, and the efficacy out of the teams in India -- once they get up the learning curve, once they do the recruiting and hiring -- the efficacy is universally better than what it was with the contractors.
SCHLEY: What kind of work are they doing?
KLAER: So, we have -- I’ll call it four or five groups there -- the first one was RDK, because that’s who used to work for me --
SCHLEY: Makes sense.
KLAER: If you know Labeeb Ismail -- who’s probably one of the best software development leaders I’ve ever worked with -- is Indian, and so he had a passion for doing it. We have what we call our IT Infrastructure folks are there -- so when we push Microsoft or whatever updates it’s done by those guys. You may be familiar that we now have Xfinity Mobile, and so, some of the back-office billing work is done by a team in India. We recently launched a security operations center. So security, as you can well imagine, is becoming more and more intense as the hacking world continues to grow, and so we’ve expanded by using some great resources in India for that. And then, ironically, the last group moving in will be my video team. So, the stuff that I have responsibility for today’s moving in this year.
SCHLEY: It truly is a small world, right? That’s amazing, thanks for that.
KLAER: Well, it’s been great, they’ve done a fantastic job.
SCHLEY: So, Ken, for having spent an hour with us, talking from about the evolution of the set-top from the EPROM to X1, we totally appreciate your insights. Thank you for watching for the Cable Center’s Hauser Oral History series, I’m Stewart Schley.