MAY 15, 2000
COVER STORY -- E.BIZ -- THE E.BIZ 25

By: Peter Burrows


Robert Knowling


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Covad Communications
----------
Position: Chairman & CEO

Contribution: Since joining the company in July, 1998, Knowling has led the charge to equip the masses with broadband Web connections.

Challenge: Knowling will have to operate on lower margins as Covad begins targeting consumers, in addition to the more lucrative businesses the company already serves.

At a recent Silicon Valley powwow on the Digital Divide, Covad Communications Group Inc. (COVD) CEO Robert E. Knowling listened quietly on stage as President Bill Clinton, Hewlett-Packard Co. CEO Carleton S. ''Carly'' Fiorina, and basketball star Rebecca Lobo waxed eloquent on the need for more programs to get blacks and Latinos involved in the high-tech workforce. But when it came his turn to talk, this apostle of high-speed Internet connections broke through the feel-good rhetoric. Noting that there actually are lots of minority engineers with the necessary training, he hinted that racism--not a lack of education or government programs--was the problem. Then, he equated Clinton's words to a Sunday church service. ''We all feel really good as we sit here, and we'll leave feeling all fired up. But by next Friday, we'll have forgotten everything he's told us.''

That's how it has always been for Knowling: He values results, not words. As a kid in rural Missouri, he overcame racism and abject poverty. ''I'm one of the few CEOs who actually knows how to pick cotton,'' he says.

He became the first in his 13-kid family to go to college. And then he made sure his six younger siblings did, too. Afraid younger sister Freeda Warren was too sensitive to withstand the rigors of school and career, he badgered her so she'd learn to stick up for herself. ''He was just trying to toughen me up,'' she says. Now, all six younger siblings are professionals, and any kids in the family who maintain a B average will have their college tuition paid by Uncle Bob. ''Bob's not very affectionate, but he loves deep,'' says Freeda, now a network consultant with Xerox Corp.

Knowling brings that same determination to the stewardship of Silicon Valley-based Covad. He could well become the man most responsible for bringing high-speed Net to the masses--creating a powerful tool for e-business. Covad is among a group of startups challenging the Bells in the market for superfast digital subscriber lines to businesses. Now he's moving beyond the business sector to consumers, where 94% of online homes use pokey dial-up modems. ''I plan to make Covad the largest, most pervasive broadband company in the world,'' he says. That will give e-biz a turbo boost. Says Knowling: ''If we [cybersurfers] can't get to the information we want in 13 seconds or less, we abandon it--so there's a lot of transactions being left on the table. The Net Economy is being held hostage by this thin pipe.''

Knowling will need to summon all his personal strength to succeed. Covad has 100,000 subscribers--far better than its two closest rival startups, NorthPoint Communications Group Inc. (NPNT) and Rhythms NetConnections Inc. (RTHM) But shares of all three are on the ropes as larger rivals stir to action. Covad's stock has dropped to 26 from an all-time high of 66 on Feb. 28--although Northpoint and Rhythms fared a little worse. SBC Communications Inc. has been slow to roll out high-speed phone lines but plans to sign up 1 million subscribers by yearend.

Knowling is not one to take on fights he can't win. A four-letter star athlete at Wabash College in Indiana in the late 1970s, he was offered the place-kicking job for the Denver Broncos and considered a run at the NBA. But convinced he would only be a marginal pro athlete, he opted for a career in telecom. By the mid-1990s, he had blazed up the ladder at Ameritech and US West, where he was hired as executive vice-president for operations and technology.

He became CEO of Covad in July, 1998, and shook up the two-year-old company. He instituted a new strategy and replaced 10 of the top 12 executives. Next step: Make Covad grow. Knowling has deployed broadband infrastructure faster than rivals, and signed distribution pacts with 250 Internet service providers, which sell his service under their own brands. While many rivals plan to offer cable or DSL, Covad plans to offer both. It expects to have 1 million subscribers within two years. Analysts say that's no problem.

Knowling is just as committed to charitable causes. He requires employees to devote at least one day a year to community service. And Knowling himself is a spokesperson for the Digital Divide. ''I hate it, but I don't have a choice since I'm one of the few role models [in high-tech] for people of color,'' he says. Indeed, Knowling doesn't talk up sports to his own kids. ''Too many black children think of success in terms of athletics. But the world's so full of opportunities--and you can have some of them, too.'' That is, after Knowling is done taking his share.



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