Start-Up Firm TelePacific on the Fast Track
Things are going well for David P. Glickman.
He’s standing in a room with $10 million worth of phone equipment. He has signed contracts with several major Los Angeles companies that will bring $2 million a month in business. A floor above him, colleagues are completing negotiations with an institutional investor who plans to invest about $15 million in his company.
All this after just a few months in business.
Glickman’s company, Los Angeles-based TelePacific Communications, sells local phone service as well as high-speed Internet access, long-distance and international calling and other features.
TelePacific is one of hundreds of companies angling for a slice of California’s business phone market. But what makes this company unusual is that it’s one of the few to have accomplished so much so fast.
The company has raised $7 million from “friends and family,” Glickman said, and TelePacific is working on a credit line to finance further expansion this year into the small- and medium-sized business communities in San Francisco, San Diego and Las Vegas.
Last week, TelePacific acquired DigitalVelocity, a Los Angeles-based Internet service provider for businesses, in a stock deal of unspecified value. Glickman said TelePacific will focus on California and Nevada, and hopes to capture more than 5% of the California telecommunications market by 2008.
That’s an ambitious goal for a start-up with only 45 employees--especially since it must lure that business from such entrenched powerhouses as Pacific Bell and GTE Corp.
But the company plans to grow to 200 workers by the end of the year. And it already boasts nearly 100 years of combined telecommunications experience among its top executives, many of whom came from one of the country’s most successful local phone competitors--Teleport Communications Group, or TCG, which was bought last year by AT&T; Corp.
Three-fourths of TelePacific’s employees have TCG roots, including President and Chief Operations Officer Ira Morris, a former regional vice president for TCG and a 15-year veteran of AT&T.;
The company’s vice presidents for sales, business development and operations are also former TCG executives.
“Almost all of our people have local exchange experience and start-up experience,” Glickman said.
Glickman’s own experience didn’t come from TCG but from six years at the helm of Justice Technology Corp., a Culver City company that started out handling specialized overseas calling and now is on pace to sell more than $100 million in long-distance services this year.
In 1998, Justice topped Inc. magazine’s list of the nation’s fastest-growing private companies (based on 1997 results).
TelePacific was spun off from Justice in mid-1998. Glickman remains chairman of Justice but has also joined the new firm as chairman and chief executive.
TelePacific’s executive team was a key selling point for Rader Reinfrank & Co., the Los Angeles-based private investment firm that agreed to invest $15 million in the young phone company, according to R. Rudolph Reinfrank, a managing member at the firm.
TelePacific is currently the largest single investment for the firm, which has bought into several other media and communications companies. “In a deregulating and newly competitive market, we think TelePacific’s focus on customer service will be a defining factor” in the telecommunications business, Reinfrank said. “We think there is plenty of market share to be had by providing a combination of customer service, quality and price versus Pacific Bell and GTE.”
The company’s small size and experienced staff have allowed it to remain nimble in the highly competitive market, where companies must earn customer trust while navigating regulatory, technical and competitive pitfalls.
For James Dorian, president of Los Angeles start-up First American Bank, TelePacific’s handling of a rush phone-installation job for the bank sold him on its service.
“We gave them a chance, and they proved themselves,” Dorian said. “They did it literally overnight . . . and they are much less expensive than some of the more established companies.”
TelePacific has also used its ability to move quickly to secure critical equipment. While exploring purchases, TelePacific got wind of a new switch that would soon be sold by a company that had filed for bankruptcy. The switch was available at a good price and was already installed and ready to go in the third floor of a downtown Los Angeles building, Glickman said.
And finally, to help win clients the company not only offers low phone rates but also gives certain customers the opportunity to share some revenue.
“We are out-of-the-box thinkers,” Glickman said.
