Return of Steelberg Brothers Draws (Win)Fire
Cox Finishes Wiring Spectrum; Quantum’s Daly Goes to Startup Avamar
TECHNOLOGY by Andrew Simons
Normally reader feedback goes in the back of our paper.
But with a June 17 story about dMarc Networks Inc., the new venture of Newport Beach brothers Chad and Ryan Steelberg, the response was so great it seemed to warrant attention here.
Those who got back to us were small vendors who had worked with Winfire Inc., the now defunct free high-speed Internet service started and ended by the Steelbergs in 2000.
For them, the issue still is a sore spot, and they make no distinction between Winfire the company and its quasi-celebrity founders.
When Winfire dissolved, many of its unsecured creditors, providers of staffing services and office supplies, felt stiffed.
The Steelbergs started Winfire in 2000, flush with cash from selling AdForce to Internet holding company CMGI Inc. in 1999. (CMGI shuttered AdForce in 2001.)
Winfire didn’t go as well as AdForce for the Steelbergs.
The company’s free digital subscriber line model created a big stir at first. But catchy as it was, the company folded six months after it started offering high-speed Internet service, eventually in 15 markets.
Winfire ran into the same problems that pay high-speed Internet companies ran into: line provisioning, customer problems and big set-up costs.
To be fair, in any case where a person or business lends money without securing it hardly can beg for pity.
As happens in company dissolutions, not everyone who was owed money from Winfire was paid back. Winfire didn’t actually file for bankruptcy but did pay secured creditors as part of its closure.
But that doesn’t make those who didn’t get paid feel any better.
The Steelbergs minced no words about wanting to set up a company entrenched with their network of friends and acquantinces. In this case, hurt feelings seem to be in play.
“They gave me their word,” said one reader, who worked with the Steelbergs.
Another said her son went to school with the Steelbergs and she trusted them.
“I just want to spank his butt,” she said of Ryan.
Another said her Business Journal copy was red with blood from how hard she was squeezing the paper when she saw “his smiling face” on page 3.
The Steelbergs declined to comment for this column.
That the Steelbergs are able to start dMarc Networks “proves they had the money to pay their employees and vendors but chose to keep it for themselves,” said one letter submitted to the Business Journal.
But it’s not like the Steelbergs got away with a killing on Winfire either, according to Rick Weiner, an attorney with The Busch Firm who had represented the brothers.
“They didn’t make any money on Winfire,” he said. “They made all their money from AdForce.”
The Steelbergs have acknowledged that Winfire was a failure, and that they’ve learned a thing or two.
“We’re young guys and we’ve learned along the way,” Ryan said in an earlier interview.
The Steelbergs’ latest venture offers radio stations a way to send messages,station call letters, song details, news and other data,to car radios via unused portions of their signals. DMarc has inked a deal with San Antonio-based Clear Channel Communications Inc. to provide content via 53 Southland stations.
Cox Finishes Laying Fiber
Rancho Santa Margarita-based Cox Business Services LLC, part of Atlanta’s Cox Communications Inc., recently said it finished piping office buildings in the Irvine Spectrum with fiber optic cable.
Cox now says it can wire 2,500 businesses in the Spectrum.
The word comes just as Cox rival Adelphia Communications Corp., which wires about 200,000 subscribers in North County with cable and high speed Internet access, filed for bankruptcy, putting much of its cable holdings in question.
Avamar Grabs Former Quantum Exec
Kevin Daly, who had once headed Quantum Storage Solutions Group, a division of Milpitas-based Quantum Corp., recently joined Irvine upstart Avamar Technologies Inc., where he will be chief executive.
Daly has been an OC business fixture. He headed up ATL Products Inc. when it was still a part of Anaheim-based Odetics Inc. Daly oversaw ATL’s blockbuster public offering in 1997 and subsequent purchase by Quantum.
For a while, Quantum Storage Solutions went by Quantum/ATL before being integrated into Quantum under the unit’s present name.
Daly, who had headed up the division for some time, was replaced by Lawrence Orecklin earlier this year.
“Kevin is a dynamic leader, who has demonstrated the ability to grow a startup into a successful public company,” said Bill Gurley, general partner at Benchmark Capital and a member of Avamar’s board. “Kevin is perhaps the most outspoken visionary on enhanced backup technologies in the business.”
HireRight Gets Financing
HireRight Inc., an Irvine developer of Internet employment screening software, recently landed a $2 million credit line from the local arm of Detroit-based Comerica Inc.
HireRight recently completed its second equity-funding round in April, bringing its total financing to more than $22 million. Investors include Baird Venture Partners and Mellon Ventures.
HireRight’s screening services include background screening, drug screening and skills assessment.
