TeleCore Has Half the National Market for Installation; Looks to Diversify Services
As the foot soldiers of the broadband revolution, equipment installers aren’t usually in the technological spotlight.
But that ignominy doesn’t bother John Clarey, founder and CEO of TeleCore Inc., a Newport Beach company that jumped from 40 employees a year ago to more than 300 today and captured half of the digital subscriber line installation market in the process.
The 4-year-old company is close to finalizing a $15 million second-round venture-capital deal in anticipation of a public offering later this year. At the same time, officials there are setting the stage for a suite of new services designed to take advantage of its growing customer base. The company secured $2.5 million last year from Palomar Ventures, which is expected to lead the next round closing in the next month or so.
“Five years ago, I had never heard of DSL,” Clarey said, referring to the high-speed digital subscriber line explosion that has fueled the company’s growth. “So it’s not like I’m in any way qualified to do this.”
The venture grew out of an earlier construction company Clarey had launched. The company took part in a fiber-optic wiring project in 1994, giving Clarey a taste of what the market had to offer. Clarey had also launched an Internet service provider called Spider.net, but calls the effort a major source of frustration.
“I found myself spending most of my time educating people about what the Internet was and how it was going to change their business,” he recalls.
Not anymore.
Thanks to a combination of market timing and quick execution, TeleCore has been able to snag important contracts with some of the biggest telecommunications companies in the country as the DSL providers rush to meet demand for high-speed data lines. The company,Clarey’s fourth, counting a firewood-delivery service he started in high school,employs a national contingent of specialists that help the regional telecommunications providers install equipment at end-user sites and integrate the DSL systems into the users’ computer networks.
Digital subscriber lines are high-speed connections that use upgraded telephone wiring to deliver data, video and other services. Phone companies and other telecommunications providers have clambered to install the service to business and residential users.
TeleCore’s customer roster includes well-known providers such as Northpoint Communications, DSL.net, and SBC Communications in more than 35 markets.
The money from an IPO would fund “strategic acquisitions” that would include companies specializing in network services, remote network surveillance and possibly the red-hot application service provider market. It will be a necessary shift in strategy as more companies begin to crowd the installation market and makes the service into the inevitable commodity.
“We know competition is coming, so we’re going for a major land grab,” he says, adding that securing customers now is crucial. Customers gained now, by either TeleCore or competitors, will be reluctant to change providers later when every second of network downtime hurts.
The company has been making a similar rush for workers, adding about 30 per month. In an industry that prides itself on the closeness of upper management and the frontline worker, Clarey freely confesses he doesn’t know the names of half his employees.
That’s not surprising, considering that most of them live in other parts of the country. The company maintains no regional offices; workers check in by using company-provided laptops to log into TeleCore’s intranet. While the strategy sounds costly, Clarey says it’s far less expensive than maintaining physical offices or using alternate technologies such as wireless pagers for dispatch operations. Eliminating the cost of maintaining physical offices, the system has allowed a wider margin and a bigger pricing cushion than some competitors.
And just as importantly, it allows the company to quickly ramp up in new markets, providing crucial flexibility.
Having employees scattered across the map does create obstacles to establishing a corporate culture, Clarey admits, but he says the company has almost no turnover, despite the high demand for workers.
Clarey expects his company’s revenue to jump from $25 million in 1999 to more than $75 million this year. That growth coincides with the company’s upcoming move into new headquarters at the UCI Research Park, a stone’s throw from offices run by AOL, Cisco and Broadcom.
That might not be much of a coincidence. All have been beneficiaries of a dot-com explosion and the insatiable demand for faster connections.
“If we had waited until now to do this, it’d already be too late,” Clarey says. n
