Meet O.C.’s New Power Elite : For Business Influence, High-Tech Moguls Gain on Developers

They wire their hilltop estates for seven computers and shun living anywhere they can’t get blisteringly fast access to the Internet.

In Land Rovers outfitted with tiny cell phones, they glide the freeways to fortress-like plants in Irvine and Costa Mesa. They commute to Taiwan and Singapore with nonchalance, work 100 hours a week for fun and install Pentium chips in their home computers on New Year’s Day for kicks.

They are the upstarts of the start-ups, these high-tech titans of Orange County at thirtysomething; suddenly rich, Silicon Valley-style, from founder’s shares, stock options and new ideas. Many foreign-born, they live in relative anonymity, seldom dressing in anything more formal than sport shirts and chinos.

To be certain, they are not as wealthy or well-known as the development giants who transformed Orange County from a region of farms to one of subdivisions and malls. None have accumulated the vast wealth of billionaire Donald Bren or multimillionaires Henry Segerstrom and George Argyros.

But as the number of affluent high-tech moguls grows, so does their influence. Already shaping the future of UC Irvine, they are poised at the millennium to make their presence felt along the social, cultural and economic strata of Orange County.

“There are seasons for communities just like there are seasons for years, and this is the season of high-tech in Orange County,” said Joel Kotkin of the Pepperdine University Institute for Public Policy, who has studied the emergence of the computer industry in the county.

“It’s not happening overnight. The change is coming in waves, but now you’re beginning to have this critical mass of high-tech millionaires who are changing the social economy of the county in every conceivable way.”

Dave Yonamine, Hawaiian-born, founded Upstanding Systems in the dining room of his Mission Viejo tract house in 1990, when he was 35. Now he lives in a $1.1-million Newport Coast home with a panoramic view of the ocean and computers amid the antiques. An intense man with a penchant for sprinkling his conversation with software terms, he spent last New Year’s Day installing a chip on a computer he bought at a garage sale. His 3-year-old daughter has an e-mail address and knows how to use it. His software development company, which markets a product that makes it easier for personal computers to network with other computers, is doubling its revenue every year. It has yet to go public.

Nick Shahrestany moved from Tehran to live with an uncle in Irvine in 1979, when he was 15. He founded Procom Technology eight years later with three friends in a two-room office in Santa Ana. The computer hardware company, which designs and manufactures high-capacity storage systems, went public in 1996 and drew $109 million in revenue last year. Now Shahrestany, 32, who lives in Newport Beach’s Spyglass Hill, buys up smaller companies and spends weekends scuba diving from his speedboat.

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At 47, Safi U. Qureshey qualifies as the elder statesman of the group. The slightly built engineer from Pakistan came to the United States as a student in 1970. Now he’s chairman emeritus of AST Research, a personal-computer manufacturer he founded with two others in 1980. True to the roller-coaster image of high tech, recent years have been rocky for AST. Last December, with profits way down, it slashed its worldwide work force 37%. But Qureshey is still worth more than $80 million.

Dressed in jeans and button-down shirts open at the collar, bypassing his secretary to e-mail clients directly, he invests in high-tech start-ups up and down the California coast from his office in a vast $2-million house in Lemon Heights.

All of a Sudden, They’re Millionaires

Qureshey has contributed almost $2 million to UCI over the last three years and hundreds of thousands of dollars more to small foundations scattered throughout Orange County and Pakistan.

These three and other high-tech execs live in a world bound by extreme hours and extreme travel time. They make their money staring at computer screens and seeing something most of us don’t see.

“All over the county the entrepreneurs are making tremendous amounts of money. You just can’t believe how much you make and how fast,” said Scott Purcell, 38, who founded his firm, Epoch Internet, in 1994. Epoch, an Internet service provider, had revenue of $24 million in the fiscal year that ended in June. Purcell said the company expects to do three times that this year.

Fast is the operative word in the high-tech industry in Orange County, which takes its cues from the Silicon Valley and has replaced real estate construction as the fastest-growing industry in the county for the last four years.

More than 250,000 people work in the high-tech industry in the county, according to the Orange County Business Council. Pay in the industry averages $55,000 a year. Thousands of programmers and marketers are making more than three times that. In the inflated world of high-tech profits, which entrepreneur Yonamine gleefully calls “obscene,” it is not uncommon for the 34-year-old founder of a start-up to suddenly be worth millions in stock alone.

“A lot of my buddies have bought bigger houses, bigger cars,” said Purcell, dining on seared tuna at a trendy Irvine restaurant called Trilogy. “But we’re different than the developers were.”

With more than 1 million miles saved on his frequent-flier account, he had flown in that morning from meetings in four cities over four days. The next day, he was off to Asia.

“It’s not a few kings and queens. It’s lots of girls and guys like me. For the most part, there aren’t a few personalities in high tech who drive the community. But we’re driving the economy, no doubt. We’re making it possible for people to buy the homes the developers are selling. Ours is the money going into the banks. We’re the engine in Orange County.”

The high-tech boom has left hardly a city in the county untouched. There are successful companies in Anaheim and San Juan Capistrano. Costa Mesa’s flat streets are lined with heavily secured buildings housing software start-ups, along with video and computer game developers. Wildly successful Kingston Technology Corp., whose Taiwanese founders David Sun and John Tu are worth about $600 million each, is based in Fountain Valley.

Orange County community leaders say high tech’s ultimate impact on the region is just beginning to be felt. Fund-raisers at major arts organizations and charities are looking for ways to tap this new wealth as the new century approaches, with invitations to dinners, performances and galas.

A few nonprofits already are benefiting.

“Ten years ago, you couldn’t have a gathering of Orange County movers and shakers without having a bunch of real estate people sitting around the table,” said Maria Chavez-Wilcox, who as president of United Way of Orange County regularly courts the powerful for donations.

“Today, if you want to look for the people who make things happen, you have to look to a new cadre that comes, increasingly, from these fast-growing industries.”

One of the first to recognize and promote the growth of high tech in the county was the Irvine Co., with its vast holdings of still-undeveloped land and its sprawling subdivisions across the old Irvine Ranch. In 1984, it turned a bean field at the intersection of the county’s two largest freeways into the Irvine Spectrum, an office park designed specifically for high-tech and biotech companies.

The neat, white buildings of the complex now house 2,200 companies, from such start-ups as Rainbow Technologies and Kofax, to major employers Ingram Micro and Toshiba Corp.

On Newport Coast, the Irvine Co.’s upscale development in Newport Beach, the costliest custom home sites have been selling rapidly for $2 million and more to buyers in the high-tech industry. Of a dozen such sites purchased in the last year, nine were bought by high-tech professionals, according to the Irvine Co. and real estate brokers who specialize in the homes. Of Newport Coast homes in general, more than 70% were bought by entrepreneurs under 50 with their own companies. Most moved from another home less than 10 miles away, and most paid cash, Irvine Co. officials said.

“The economy doesn’t revolve around developers here the way it used to. It’s no longer a matter of, ‘If we build it, they will come,’ ” said Dick Sim of the Irvine Co. “We need to build to demand, to what our customer wants. These days it’s techies who are our customers. It’s techies who have the money.”

UC Irvine as Incubator

Where the new money is, other businesses follow. Chic Irvine restaurants such as Troquet depend on the high-tech millionaires to fill their tables and order their best wines.

Lawyers, public relations firms, accountants and a Silicon Valley-based bank have set up offices in Orange County over the past few years to serve high-tech clients.

With their newfound money, the high-tech millionaires are showing up on the boards of major county arts organizations and nonprofits, especially ones that might help them recruit highly educated engineers and computer designers.

Nowhere is this more pronounced than at UC Irvine, which the industry has adopted in the past decade as its preferred training ground for new high-tech talent.

The UCI Chief Executives Roundtable, created in the 1980s to build business support for the university, was dominated by developers and real estate brokers in its early years, said Thomas Moebus, vice chancellor of university advancement at UCI. Twenty-one of its 70 members now come from the high-tech industry, more than any other sector. By contrast, four are in real estate.

Nearly a fourth of the research at UCI last fiscal year, about $31 million worth, was funded by the high-tech industry. The rest came from federal money and other grants, Moebus said.

For the last two years, the university has courted high-tech businesses, publishing a newsletter geared to their needs, and inviting industry leaders to university functions and retreats.

When Ted Smith, president of Filenet, discovered last year that the university’s only computer lab was not equipped for Windows programming software, he raised more than $300,000 from technology leaders to refurbish the lab. It was more than philanthropy: Smith said he was driven by his company’s need for programmers familiar with the Microsoft software. Now the lab is operating in two shifts because of overwhelming demand, and Smith is raising more money to expand it again this year.

When Safi Qureshey became preoccupied with the science of head injuries after his daughter’s death in a swimming pool accident, he turned to UCI to make a donation. The result was a gift of $1 million toward construction of the Qureshey Research Laboratory, part of the Center for the Neurobiology of Learning and Memory. The $4.8-million building is the first one on campus funded strictly with private money. Another major donor to the building fund was Robert Bonney, CEO of the high-tech firm EECO.

Other high-tech executives have raised more than $300,000 since March to recruit faculty members for the information and computer sciences department, which has grown under the guidance of high-tech leaders to the largest in the UC system. In the 1997-98 school year, the department had 764 undergraduate majors. Of those, 67% were of Asian descent.

The dominance of that ethnic group among those studying computer science at UCI reflects one of the most significant changes the high-tech industry is bringing to Orange County--the diversification of the white-collar work force. Unable to find enough qualified job applicants in the United States, high-tech companies consistently hire the foreign-born to fill their midlevel and upper ranks.

More than half the high-tech companies in the county are headed by foreign-born entrepreneurs, most from Asia and the Middle East, estimates Bob Kelly, founder of the Southern California Technology Executives Network, a trade group. Of the 10 most profitable minority-owned firms in the county ranked this year by the Orange County Business Journal, eight are high-tech computer manufacturers.

No study has tracked how many foreign-born or minorities make up the white-collar high-tech work force, but the numbers are widely thought to be large. A tour of any high-tech firm turns up a rainbow of faces.

“When we started (the trade group) we were dealing principally with your typical WASPs. Now the face is completely changed,” Kelly said.

The high-tech industry is also affecting more pedestrian matters, such as what sort of technology is available for connecting to the Internet from home.

Cox Communications Orange County installed its first cable modem in the nation in Mission Viejo two years ago. The technology speeds access to the Internet by using cable television hookups. Since then, the company’s marketing studies show, high-tech professionals demand the technology, leading Cox to offer it across South County.

“There is just so much pent-up demand, I can’t believe it,” company spokesman Mark Stucky said. The company now has more than 10,000 cable modem subscribers. Most work in the technology field, hold postgraduate degrees, have several computers in their houses and like to read computer magazines, Stucky said.

“The contractors came in and they couldn’t believe how anyone could possibly want all the cable modem connections that I have,” said Yonamine of Upstanding Systems, who had the technology installed in every room of his home. Yonamine also has seven phone lines, six computers, stereo connections built into the walls throughout his house and a shelf full of books with such titles as “How to Think Like a CEO.”

“But we’ve already exceeded what we have. I have to bring them back to install some more.”

Political Interests Narrow in Scope

The newly minted millionaires are less inclined to take the reins of local political power than were developers. Fundamentally apolitical, their interest is in rising technologies, not rising politicians.

The industry’s only significant political stand stems from its desire to draw top employees by offering a good quality of life. Several hundred high-tech firms have come out in opposition to an airport at the soon-to-close El Toro Marine base, saying it would send planes over their offices and the South County homes where their workers tend to live.

That stance has put the high-tech millionaires leading the opposition--Chuck Haggerty of Western Digital and Peter Craig of Rainbow Technologies--at loggerheads with some developers who favor the airport plan.

While many high-tech leaders are still too busy reinvesting money and time into their start-ups to be major community donors, in the last year several such leaders have given $100,000 and more to the Orange County Performing Arts Center and the Orange County Museum of Art.

“We understand the impact and the number of companies who have moved in and started up in this area in the high-tech industry,” said Terry Jones, vice president for development at the Performing Arts Center. “We want to tap into that to support the center. When they do get to the point where they can donate, we want to be first in their minds.”

United Way of Orange County last fall for the first time held a breakfast with high-tech leaders at The Center Club in Costa Mesa. The same year, high-tech companies, including former aerospace giant Rockwell International, raised more than $3 million for the United Way, more than any industry except manufacturing.

Among the 74 members of the group the United Way calls the Alexis de Tocqueville Society, made up of people who have contributed $10,000 or more to the organization, 10 are from high tech. Four are developers. In 1990, 40% of the 65 members were developers, and only one member was from high tech.

“Apart from the Irvine Co., we really don’t have any developer support right now,” said Chavez-Wilcox, the local United Way president. “Our bread and butter is coming from a totally different demographic, a totally different corporate culture.”

The board of the Performing Arts Center, dominated by developers since it was born on the initiative of real estate king Henry Segerstrom, also draws growing high-tech support. Of the center’s 58 board members, 13 are from the high-tech industry, compared with five years ago when there were four, center President Jerry Mandel said.

Contributions to the center from high tech made up about 12% of the $8 million the center took in last year, up from less than 1% in 1995, Mandel said.

He said the center also is gearing its programming to the young high-tech leaders. A new late-night jazz and cabaret series is designed to re-create the atmosphere of a New York nightclub. Trendy musicals such as “Rent” and performances by Latin American salsa groups are lightening what had been a repertoire heavily weighted with classical music.

“We’re in the beginning of the transition, but we can see it happening very fast,” Mandel said. “It’s changing our entire lives. These young, highly educated, phenomenally successful people are the future of Orange County.”

* EDUCATION PAGE

Guide to Web sites on computing--with kids’ input. B2

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Rising Stars

Not long ago, nearly all of Orange County’s top-tier movers and shakers gained their wealth and power through real estate development. But a new crop of savvy, moneyed individuals is emerging from the county’s growing technology industry.

THE OLD GUARD

Dominant industry: Real estate development

Major players: Builder/developers William Lyon, Donald Bren and George Argyros; ranchers Henry Segerstrom, Anthony R. Moiso and Richard J. O’Neill, who became developers

Market: Local

Competitors: Local

Demographics: White males, most in their 60s

Politics: Highly involved, since local influence is essential to development; they contribute heavily, particularly on state and local levels

Social/charitable scene: Pillars of society; contribute to charitable causes and attend A-list charity functions

Wealth: Billionaire Donald Bren leads the group, which includes numerous multimillionaires

‘90s NEW MONEY

Dominant industry: High-tech

Major players: Includes Safi Qureshey of AST Research, Scott Purcell of Epoch Internet, David Dukes of Ingram Micro, Richard Nichol of CoCensys, Al Cordero of PowerWave Technologies, Dave Yonamine of Upstanding Systems, Nick Shahrestany of Procom Technology

Market: International

Competitors: International

Demographics: Ethnically diverse, mostly male, 20s to late 40s

Politics: Less active because local politics have less impact on their industry

Charity/arts scene: Remote, travel a lot; typically less active but becoming more involved

Wealth: No billionaire, but may soon produce one; many became millionaires after taking their firms public or through fast profit growth.

Where the Jobs Are

Orange County has one of the highest concentrations of high-tech jobs in the nation. Nearly 10% of the county’s jobs are in high-tech fields. Percentage of jobs in high-tech: Region

1. San Jose: 28%

2. Lowell, Mass.-New Hampshire*: 16

3. Fitchburg-Leominster, Mass.: 14

4. Austin-San Marcos, Texas: 11

5. Washington, D.C.-Maryland-Virginia-West Virginia: 10

6. Middlesex-Somerset-Hunterdon counties, N.J. 10

7. Orange County: 9

8. Boston, Mass.--New Hampshire**: 9

9. Raleigh-Durham-Chapel Hill, N.C.: 9

10. Stamford-Norwalk, Conn.: 9

15. Los Angeles-Long Beach: 8

* Includes Pelham Town, N.H.

** Includes portions of Rockingham County, N.H.

Sources: Wharton Econometrics, Orange County Business Council

Graphics reporting by JANICE JONES DODDS / Los Angeles Times

Profile: Scott Purcell

Age: 38

Founded: Epoch Internet, an Internet access provider, in 1994

Titles: Chief executive officer, chief operations officer, acting vice president of marketing

Residence: Laguna Niguel

Personal: Married, no children

All in a Day’s Work

When Scott Purcell returned with his wife, Nancy, from their first vacation in five years, it didn’t take long for work to come to the fore. Here’s how the next day, Wednesday, Oct. 21, unfolded for Purcell:

5:30 a.m.

* Wakes up, packs for a late afternoon flight

5:45 a.m.

* Leaves his Laguna Niguel home for Epoch’s Irvine headquarters; checks voice mail and returns calls on his cellular phone en route

6-11 a.m.

* Arrives at work

* Reads and personally responds to all e-mail messages

* Reads CNN Online (he doesn’t own a TV) and online version of Interactive Week, an Internet trade publication

* Calls board members

* Talks to in-house legal counsel about customer and reseller contracts

* Talks on the phone with potential business partners

11:30 a.m.-12:30 p.m.

* Eats lunch at his desk; Purcell often goes out to lunch with employees or business prospects

12:30-3 p.m.

* Reads and replies to incoming e-mail

* Calls the firm’s investment banker

* Reviews copy for marketing material

* Meets with various Epoch officers

* Checks incoming e-mail

3 p.m.

Leaves to catch a 4:30 flight to attend a telecommunications research conference in Washington, D.C., where he will speak on high-bandwidth Internet access. Purcell spends about 50% of his time on the road, meeting with partners, speaking at technical forums, participating in trade shows and visiting Epoch offices in San Francisco, Dallas, Chicago, Atlanta, Seattle, Tampa, Fla., and Vienna, Va.

When Purcell is in town, the rest of his day usually plays out like this:

6 p.m.

* Arrives home and eats dinner with his wife

* Works out at home gym

* Reads books and various trade, business and news magazines; spends time with wife and nephew, Zachary

9 p.m. Turns in for the night

Source: Epoch Internet

Graphics reporting by JANICE JONES DODDS / Los Angeles Times

About the Series

Beyond 2000 is a series of articles that explore how our lives will change in the next millennium. The series will continue every Monday through the end of 1998 as The Times Orange County examines what’s in store for the county in such areas as transportation, education, growth and technology.

On The Internet

The Beyond 2000 series and an interactive discussion are available on the Times Orange County Edition’s Web site at https://www.timesoc.com/HOME/NEWS/ORANGE/beyond.htm