Timing is Everything

I graduated from college in 1977, with a bachelor’s degree in Political Science and a Master’s Degree in Counseling. At the time, I didn’t have much with respect to job prospects; in fact, I didn’t have any. Fortunately at exactly the same time my father and brother were starting a business in the town where I went to college, San Luis Obispo, California. So, on the first day after graduation, I found myself with a shovel in my hand burying telephone cable. That was the real beginning of my education.

That business, which began with just the three of us, and an original capitalization of $30,000, was by any measure wildly successful for a number of years. Our principal customer was Pacific Telephone and Telegraph, part of the old AT&T (or Bell Telephone) system, which at that time had a virtual monopoly on telephone service in the United States. In 1977, the parent company of Pacific Telephone conducted a quality survey, by county, of its operations in the United States. San Luis Obispo County was nearly at the bottom of the list, with the 4th poorest service in the United States.

We were in the right place at the right time. Suddenly, there was more work to be done than people to do it. The Bell system at the time was a great place to be a contractor—the bid list was exclusive, and the unwritten rule was once your company became part of the system, you were given enough work on a cost-plus basis to pay the overhead. The larger projects were competitively bid, but the competition was limited. For several years, being a contractor in San Luis Obispo County for Pacific Telephone and Telegraph was akin to having a license to print money.

Of course, eventually that party came to an end. It took several years, but the telephone infrastructure in San Luis Obispo County was brought up to the standards of the Bell System, and the flow of local work slowed dramatically. In 1983, the Bell system monopoly was broken up by a US Department of Justice mandate. That resulted in major changes to how the so-called “Baby Bells” which followed the breakup allocated their work, and the new terms were not as favorable from a contractor’s perspective. In addition, a new technology was coming online, fiber optics, which dramatically changed the landscape of telecommunications worldwide.

As a company, we responded by widening our area of operations, as well as acquiring other customers outside of the Bell System, such as General Telephone, Southern California Edison, and others. However, margins in the entire industry had narrowed precipitously. We were looking elsewhere, and unexpectedly another opportunity arose. We decided to take that fork in the road.

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