Joe Mallahan: Candidate built a reputation as T-Mobile's idea man

Among the two candidates for Seattle mayor, there is little doubt which is the businessman. Joe Mallahan is the one in the pressed shirts, the self-proclaimed "proven leader" who "drives efficiencies" and wants to make Seattle more business-friendly.

The question for Seattle voters Nov. 3 is how Mallahan's skills translate into running a city government with 11,000 employees, from police to librarians to utility crews.

Despite a distinguished business career, Mallahan has never managed anything close to the size of the city. He's never had to negotiate a union contract or had his decisions dissected in the public spotlight.

In his nine years at T-Mobile, Mallahan has never led a group larger than 500. Instead, he's been more of an idea man, running a small, elite in-house think tank that analyzed data and hunted for customers and profits.

Those ideas were strong enough to make T-Mobile an early leader in cell service for customers with poor credit, and to develop a reputation for improved customer service. Mallahan himself once carried the title of "Vice President of Customer Delight."

Mallahan and his supporters say he'd use that problem-solving attitude to make City Hall less "top-heavy" and more friendly to customers — city taxpayers.

"Joe has this uncanny ability to see opportunities that are frequently in plain sight but that others miss," said Dean Willard, a former T-Mobile manager and a friend of Mallahan.

That's evident in Mallahan's rather audacious entry into the mayor's race. Despite being a virtual unknown in civic and political circles — and not voting in many local elections — Mallahan stepped into a race that had scared away some better-known political figures.

He got through the primary with an aggressive campaign that consisted mainly of bashing Mayor Greg Nickels for management failures, such as during the December snowstorm. Mallahan put $230,000 of his own money into the campaign — a record for a Seattle mayoral candidate.

Mallahan's reputation at T-Mobile has helped him raise $55,600 from employees of the Bellevue wireless company. But the close tie also has caused him heartburn as Mallahan has had to answer on the campaign trail for T-Mobile's record of resisting union organizing.

It's difficult to fully assess Mallahan's T-Mobile record because top company executives wouldn't talk about him.

T-Mobile declined requests for an interview with company CEO Robert Dotson, who has donated to Mallahan's campaign, or other information about Mallahan's work at the company.

Discussing Mallahan's career could be interpreted as an endorsement, said Glenn Zaccara, an external-relations manager with the company. "We have to work with whomever comes into office. We want to be agnostic."

Politics had longtime appeal

Mallahan, who grew up the seventh of nine children of a Catholic family in Everett, says he always intended to get into politics.

While in college in Washington, D.C., he interned for Democratic U.S. Rep. Al Swift and Republican Sen. Slade Gorton. It was in Swift's office, Mallahan says, that he was advised to get business experience before entering politics.

He earned a master's in business administration at the University of Chicago in 1993, then joined a consulting firm.

A consulting gig with Century Tile, a Chicago retailer that sells bathroom and kitchen tiles, led to Mallahan becoming the company's chief financial officer, then president.

Phil Spiewak, Century's co-owner, said Mallahan brought an outsider's fresh eyes to the family-owned company, which had about 10 retail stores and 200 employees.

While president, Spiewak said, Mallahan worked the night shift in the warehouse for two weeks to see how orders were pulled and to cut down on errors.

Mallahan left the job after two years to return to consulting, specializing in corporate mergers.

In 2000, he again was lured away by a client — this time VoiceStream Wireless, the predecessor of T-Mobile — after Mallahan helped the company with a merger.

Mallahan said he wanted to move back home to be near his mother, who had Alzheimer's. Mallahan and his wife, who had adopted two girls while in Chicago, bought a house in Seattle's Wallingford neighborhood.

A simple lesson in a plum job

In 2004, T-Mobile, seeking to distinguish itself from larger competitors, launched an experiment in Hawaii that provided gold-plated customer service, giving customers credit for dropped calls and allowing them to quit contracts if they were dissatisfied.

Running that effort was a plum job, and it had a unique name: Vice President of Customer Delight.

Mallahan got the job and several trips to Hawaii. Asked about the job title recently, he began laughing. "There's been all kinds of jokes ... "

The Hawaii experiment ended after about a year and was not taken nationwide. Mallahan said he learned a simple lesson: "The best way to delight the customer is to deliver whatever it is she thinks she's buying."

Mallahan next settled into a three-year stint that defined his reputation at T-Mobile, running what amounted to an internal think tank as vice president for corporate strategy.

He grabbed in-house talent and hired outside the company for a team of about 20 employees, most of them with Ph.D.s or master's degrees, including a former rocket scientist from M.I.T.

Mallahan developed a reputation for cultivating the people who worked for him, encouraging ambition and getting loyalty in return. The atmosphere was casual — Mallahan was a "bluejeans holdout" even as the dress code became more formal.

Gavin Dillon, who worked with Mallahan in Chicago and was recruited to T-Mobile by him, said Mallahan was "great to work with, tough to work for," because of his high expectations.

"There was never any 'yes-man' stuff," Dillon said. "He would get on you if he wasn't hearing enough counter opinions or at least your opinion."

Mallahan's biggest idea at T-Mobile emerged after a retreat to a family cabin on Whidbey Island. It was called FlexPay, which lowered rates for customers who prepaid for cellphone minutes and gave them access to features available to customers with multiyear contracts.

There was resistance within T-Mobile because prepaid customers are typically poorer and are less lucrative in the long term.

Mallahan, in selling the idea, blended business models with social-justice messages that struck some co-workers as bordering on inappropriate.

"What I would tell people is, poor people's money is green, too," Mallahan said. "When you're in the ivory tower, it's easy to think about people with low credit as people who are trying to rip you off."

Mallahan directly managed a small number of people during the launch of FlexPay, but persuaded other, large departments to help.

"People who report directly to you, they do what you tell them to do. It's a whole other feat to get people who don't report directly to you to be accountable," he said. "To do that successfully and not have people assassinate you is quite an accomplishment."

FlexPay was "innovative" and credited with attracting millions of customers, increasing company profits, since it was launched last year, said wireless analyst Bill Ho.

But the strategy of targeting prepaid customers has caused T-Mobile financial "stress," said Chetan Sharma, a wireless analyst in Issaquah. In the second quarter of this year, 82 percent of T-Mobile's new customers were prepaid, and revenue from those customers averages about half that of postpaid customers, Sharma said.

"If this continues, it's an issue," Sharma said.

"Joe has built a brand"

While Mallahan's entry into the mayor's race came as a surprise to local political observers, it was expected at T-Mobile.

"He said his love was politics, and that was a path he was going to go down," said Steve Heaps, a T-Mobile vice president. "It was a matter of the right time."

The time proved to be 2009. Mallahan says his wife told him he'd "go nuts in the Legislature" because of his executive background, and he had been increasingly disappointed with Nickels.

When Mallahan entered the mayor's race, he signed a confidentiality agreement with T-Mobile that, among other things, prohibits him from disclosing his salary, he said. He also was barred from fundraising at work. He took a leave of absence after the primary.

Mallahan said that if he wins, he'd like to recruit talent out of T-Mobile, but that the city's relatively low pay would make it unlikely.

"He wants and demands very high-quality, very detailed work," T-Mobile employee Mike Katz said. "In each of the departments he's worked in, Joe has built a brand. If you see his name on it, you know you're seeing a high-quality product and presentation."

News researcher David Turim contributed to this report. Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com

Jonathan Martin: 206-464-2605 or jmartin@seattletimes.com