DSL Gives Newport Man Quick Access to Riches
Add John M. Clarey, 34, to the list of newly minted Internet millionaires.
Four years ago, the Newport Beach man launched TeleCore Inc. from a tiny office near John Wayne Airport, positioning it as a technical staffing firm and installer of fiber-optic equipment.
In the fall of 1998, he took his company into the business of providing digital subscriber lines, which provide high-speed Internet service through traditional phone lines.
Little did he know then how hot DSL services would be. Last month, Clarey sold Newport Beach-based TeleCore for $172.5 million in cash and stock to a Florida broadband communications company, personally walking away with a cool $16.8 million in cash. And that’s not all: He also got more than 8% of the acquiring firm’s shares.
“I’m so excited I don’t know what to do with myself,” said Clarey, who has resigned as TeleCore’s chairman and chief executive officer. “My family’s taken care of forever.”
On June 1, Viasource Communications Inc., which provides long-term maintenance and service for cable television, cable modems and satellite television, snapped up TeleCore to gain access to the DSL market.
Viasource, which is based in Fort Lauderdale, weighed in with an offer “too good to refuse,” said Clarey, adding that otherwise he probably would have tried to take the company public later this year.
TeleCore’s 500 employees, including 150 in Orange County, are expected to keep their jobs.
“We felt like they were the leading company in the DSL market,” Viasource Chief Executive Craig Russey said.
Clarey is no stranger to building a successful company from scratch. He started an Internet service provider, Spider.Net, in 1994, selling the firm a year later for nearly $1 million. In 1996, he launched TeleCore.
Initially, TeleCore focused on technical staffing services and installing fiber-optic transmission equipment, businesses that Clarey figured would be in heavy demand from the growing number of long-distance and local phone carriers.
But the firm didn’t blossom until after Clarey decided late in 1998 to focus on the DSL market after noting investors’ enthusiasm for upstarts in that industry.
Clarey’s instincts were on target. Nationwide, telecommunications companies are racing to piece together high-speed data links across the country. Over the next three years, for example, SBC Communications, the owner of Pacific Bell, plans to spend $6 billion to improve the reach and speed of its DSL service.
TeleCore’s big break came last year when it secured $6.5 million in funding from investors, allowing it to open six regional offices and add 400 workers. Palomar Ventures, which has offices in Irvine and Santa Monica, gave TeleCore nearly $2.5 million.
The company’s revenue soared to $9.5 million last year from $800,000 the year before. Despite the surge, TeleCore lost $100,000, largely because of expansion costs.
Having completed his latest successful venture, Clarey plans to spend time with his wife and two young children--for a while. He is taking his family to Sydney, Australia, for three weeks for the Summer Olympics.
After that, it’s back to work for the self-described workaholic. Clarey said he hopes to launch another high-tech company soon in Orange County. Fearful of tipping off potential competitors, he will say only that the new business, which he initially will finance himself, will manufacture telecommunications equipment.
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John M. Clarey
Age: 34
Residence: Newport Beach
Family: Married to Christy Clarey; daughter, Catherine; son, John Morgan, II
Education: Bachelor’s degree, University of Arizona; currently in executive program at Harvard Business School
Career background: Founder and CEO of Spider.Net Inc., an Internet service provider, 1994-1995; CEO of Clarey Construction Inc., 1991-1994
Next Venture: Found a telecommunications equipment manufacturer
